Portfolio Management Offices – P3O®
A portfolio is the totality of an organisation’s investments in the changes required to achieve its strategic objectives.
Portfolio management is the coordinated strategic decisions and processes that enable the optimal balance of organisational change and business as usual.
P3O Portfolio, Programme and Project Offices
A P3O is the decision-making and support business structure for all business change within an organisation.
The structure may consist of single or multiple, permanent or temporary offices providing a mixture of centralised and localised services. These offices integrate with the wider corporate business functions and operate within corporate governance rules.
Portfolio management office
A portfolio management office differs from a programme or project management office in several ways:
- They are mainly concerned with ensuring funding is given to the right changes, whereas programme and project management offices are concerned with delivering those changes correctly;
- They prioritise those changes which contribute best to the strategic objectives and exhibit the best balance of risk, cost, benefits, time and impact on business as usual;
- They are permanent structures and align with corporate financial governance structures;
- They should have direct contact with the senior management board.
Organisation and hub portfolio management office
A portfolio management office can be either an organisation-wide office or a hub office.
Organisation portfolio management office
An organisation portfolio management office supports the definition and delivery of a portfolio of change across the organisation or enterprise.
Hub portfolio management office
A hub portfolio management office supports the definition and delivery of a portfolio of programmes and projects within a department, division, geographical region or business unit.
Portfolio management office value
A portfolio management office advises senior management about whether the right things are being done – i.e. the right projects and programmes are being invested in. It will also advise senior management about the portfolio progress against the portfolio plans.
As the priorities of an organisation can change over time, the portfolio office must provide information about conflicting priorities, and current issues and risks. It must also provide scrutiny and challenge to portfolio decisions in the face of a changing business environment. It must also provide information and recommendations to support those decisions.
In this way, a portfolio office provides real value by focusing decision-making on the things which matter strategically to the organisation.
Portfolio office reporting
An organisation portfolio office would normally report directly to a main board director. A hub portfolio office would report directly to the most senior management of the hub (division or business unit).
This enable the portfolio office to have visibility into the investment decisions and the authority to undertake the necessary work.
Without the commitment of the senior management, any portfolio management office is likely to fail.
Portfolio management office responsibilities
There are many things which a portfolio office is responsible for, including:
- Ensuring project and programme investment processes are embedded across the organisation;
- Ensuring projects and programmes contribute to strategic objectives;
- Allocating the right resources to the right projects and programmes;
- Manage inter-dependencies between projects and programmes;
- Resolve conflicts (resources, technical, business requirements) between projects and programmes;
- Identify and manage the aggregate risk across the portfolio;
- Identify and manage strategic issues;
- Monitor performance of projects and programmes against key objectives;
- Ensure the ongoing successful deliver of projects and programmes;
- Achieve value for money by rationalisation of projects and programmes;
- Facilitate continuous improvement in capability by ensuring lessons from projects and programmes are captured and acted upon.
A portfolio office may also provide services when programmes start up and close. When projects and programmes are initiated, they may require their own temporary project or programme office. Also, they may require their own hub portfolio office. In all cases, these might be resourced by the organisation’s permanent portfolio management office.
P3O® is a registered trademark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.