Portfolio Management – Definition and Benefits

What is a Portfolio?

A Portfolio is a group of

  • projects
  • programs
  • sub-portfolios
  • other related work or program activities

managed and coordinated in a way to achieve strategic business goals.

The projects or programs of the portfolio may not necessarily be related or interdependent, other than the fact that they are helping to achieve a common strategic goal.

portfolio

 

What is Portfolio Management?

It is defined as the centralized management of one or more portfolios to achieve strategic business objectives.

It is important to understand the difference between Program management and Portfolio management here, While Program management focuses on the inter-dependencies between the components of a Program, Portfolio Management is concerned about achieving the strategic goals of the organization.

Benefits of Portfolio Management 

  • Helping in choosing the optimal mix of projects and programs as part of the portfolio.
  • Aligning portfolio components and their execution with the Overall Organizational Strategy.
  • Helps in prioritization of the available resources (both financial and human resources).
  • An organizational view is taken regarding the risk of various components of the portfolio, thus effectively managing the overall risk profile.
  • Increases the likelihood of realizing the desired Return on Investment.
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