ISO 21504:2015 Project, programme and portfolio management — Guidance on portfolio management is the international standard globally accepted of best practices for managning portfolios of projects.
The ISO 21504 was formally approved in July 2015, three years after the publication of the ISO 21500 (the international standard for Project Management). The ISO/TC 258 (Tecnical Comittee) is the responsible of building the family of international standards for project, programme, portfolio, and project governance (i.e. project management offices). The next international standard will be ISO 21003 Guidance on Programme Management, and next the ISO 21005 Project, programme and portfolio management — Guidance on governance. If you have interest to know in which stage of development are these guides, you can visit the technical committee page.
In my personal opinion, this ISO will drive the future of the profession. All of us, along our years of experience have discovered that the real path for project management mastery it is not just to follow a systematic complex processes map, but to lead effectively. In my opinion the correct professional path should be:
1. Learn the International Standard of the profession. Understand and use its globally accepted language. This should be your professional guide (the ‘big picture’). Your delivery framework.
2. Learn tools and techniques from the experts. Other propietary frameworks may also be a helpful, but not use them as ‘The Bible’. But remember, these are only partial views of the picture! The International Standard is your main guidance, and they can complete some specific areas or needs. The more techniques and tools you know, the better.
3. Focus on developing your leadership skills! Period. Points 1 and 2 are just for being a good professional, this point 3 is for being a great professional!
Said this, let’s get into the ISO 21504, and let’s see how can this international standard help to you grow your career. And definitely the ISO 21504 will help on your career growth, because they have avoided to enter again into the PMI processes for portfolio management (as they did in the ISO 21500, where they got into each of the project management processes), and have focussed on the most important: the foundaments of portfolio management.
So, the ISO 21504 International Standard provides guidance on the principles of project and programme portfolio management. Typically, management of a project and programme portfolio supports the organization’s strategies to deliver organizational value.
The ISO 21504 International Standard is intended to be used by Project Directors in general, including:
a) executives and senior managers responsible for setting and implementing organizational strategy and business planning;
b) decision makers responsible for selecting, authorizing and governing projects, programmes and portfolios;
c) teams and individuals responsible for implementing and managing the project and programme portfolios;
d) project and programme managers and other stakeholders.
Let’s do a quick overview to the ISO 21504 structure of the document. You can buy this standard in the ISO official website.
- 1 Scope
- 2 Terms and definitions
- 3 Principles of portfolio management
- 3.1 Context and need for portfolio management
- 3.2 Overview of portfolio management
- 3.3 Portfolio management
- 3.4 Roles and responsibilities
- 3.5 Stakeholder engagement and management
- 4 Prerequisites for portfolio management
- 4.1 Overview
- 4.2 Justification for portfolio management
- 4.3 Portfolio management framework
- 4.4 Types of portfolio components
- 4.5 Criteria for selecting and prioritizing portfolio components
- 4.6 Alignment with organizational processes and systems
- 4.7 Visibility of the portfolio
- 4.8 Portfolio performance reporting structure
- 4.9 Improving portfolio management
- 4.10 Governance of portfolios
- 5 Managing portfolios
- 5.1 Overview
- 5.2 Defining the portfolio
- 5.3 Identifying potential portfolio components
- 5.4 Assessing and selecting portfolio components
- 5.5 Validating portfolio alignment to strategic objectives
- 5.6 Evaluating and reporting portfolio performance
- 5.7 Balancing and optimizing the portfolio
- 6 Annex A (informative) Governance of portfolios
Here it is described the scope of the document. It is said that this International Standard is relevant to any type of organization including public or private and any size organization or sector. This is one of the principles of ISO: and international standard must be industry wide (i.e. for any sector).
Terms and definitions
There are covered in this section the main terms and definitions that apply to porfolio management discipline.
They clarify that term “portfolio” is used throughout the whole ISO 21504 International Standard document to mean “project and programme portfolio”. They have done this for a easier readability of the document. In fact, this adoption is a ‘de facto’ market standard. Many times I write ‘project portfolio’ only for clarifying that I am talking about a portfolio in the project management discipline (take into account that there are also general business portfolio management, such as financial portfolio management).
The ISO 21504 defines portfolio as the “collection of portfolio components grouped together to facilitate their management to meet, in whole or in part, an organization’s strategic objectives.”
ISO 21504 defines a portfolio component as a “project, programme, portfolio, or other related work.”
A portfolio manager is defined in the ISO 21504 as the “person or organization responsible for applying portfolio management to a portfolio who may be supported by a portfolio management team.”
Strategic alignment is defined in the ISO 21504 as the “result of selecting and adjusting portfolio components to contribute to accomplishing an organization’s strategic objectives.”
Principles of portfolio management
Context and need for portfolio management
In this point it is described the general context and and why we need for porfolio management.
Overview of portfolio management
Here it is presented an overview of what is portfolio management.
Portfolio management is desfined in this point, and it’s the globally accepted definition. It is important to adopt a common languange.
Here it is described how is a portfolio structure, based on programmes and projects.
Capabilities and constraints
A project portfolio will turn into action corporate capabilities and constraints.
Opportunities and threats
A project portfolio will turn into action corporate opportunities and threats.
Roles and responsibilities
The main roles and resposibilities in portfolio management are described in this section.
There are some general principles on porfolio management to learn.
Defining decision rights for portfolio content
Stakeholder engagement and management
It’s a key for a good portfolio buy-in to get engagement from stakeholders and senior management.
Prerequisites for portfolio management
Justification for portfolio management
One of the keys of porfolio management is a proper justification of business investment, implementing the right programs and projects, and doing it in the right way.
Portfolio management framework
The ISO 21504 provides a portfolio management framework that any business should implement for improving business value through programs and projects.
Types of portfolio components
In this point it is covered the different types of components that form a portfolio.
Criteria for selecting and prioritizing portfolio components
Here it is provided some guidance on criteria to select and prioritize the portfolio components.
Alignment with organizational processes and systems
It is important to adapt your portfolio management framework to the organization’s needs, including its alignment with organizational processes and systems.
Visibility of the portfolio
The visibility of the portfolio is another point covered in the standard.
Portfolio performance reporting structure
Effective and efficient reporting requires to be layered into portfolio, programmes, and projects. In each level the appropiate information must be managed. Reporting and escalation through this layers is required for a proper full portfolio management.
Improving portfolio management
Here is provided some guidance for improving portfolio management.
Governance of portfolios
Governance of portfolios is introduced here. It is also covered in the Annex A. But the real complete guidance on this subject will be covered in the coming soon ISO 215005 Project, programme and portfolio management — Guidance on governance. In the end, it is not enough to govern your portfolio, because it is built over programmes and projects and governance and information must flow all the layers.
Here the ISO 21504 enters more in detail, and presents its full process framework for portfolio management, with a 7-step approach:
- Define the portfolio
- Identify potential portfolio components
- Define the porfolio plan
- Assess and select portfolio components
- Validate portfolio alignment to strategic objectives
- Evaluate and report portfolio performance
- Balance and Optimize the portfolio
Defining the portfolio
This is the first step. Only well justified programmes and projects in terms of business strategy, once prioritized, must be included in the portfolio. This is a critical step, because this defines where are we going?
Identifying potential portfolio components
This is the second step. As we said in the point 2.2 Portfolio components, components may be “projects, programmes, portfolio, or other related work”. This is a high-level identification of the portfolio potential compoments.
Assessing and selecting portfolio components
This is the third step. Here it is done the final portfolio components selection. An assesment is required for making the right decision. This third step can be subdivided into 2 substepts: current state assessment, and portfolio components selection.
Here it is included a brief overview of these substeps.
Assessing current state
The ISO 21504 recommends doing an current state assesment for getting a better knowledge of current situation and make a better decision.
Selecting portfolio components
This is the decision-making substep. Here are selected the projects and programms that will be included in the portfolio.
Validating portfolio alignment to strategic objectives
This is an overview on validating portfolio alignment with strategic objectives.
Alignment with strategic objectives
Here it is described the need for alignment of the portfolio with the business strategic objectives.
Maintaining alignment with risk tolerance and resource capacity and capability
It is described the need to maintain the alignment of the porfolio with the risk tolerances and resources capacities and capabilities.
Documenting and evaluating results of alignment actions
Is describes the need to document the results of this evaluation and the actions.
Evaluating and reporting portfolio performance
Establishing the portfolio performance measurement baseline
It covers the need to stablish the baseline for measuring performace on portfolios.
Managing portfolio performance
Here it is described the need to manage performance on porfolios.
Reporting portfolio performance
Is describes the need report performance on portfolios.
Managing the integration of benefits
A very important point, as we can find interest conflicts along the path, here it is described the need to manage the integrations of benefits of the different programmes and projects of your portfolio.
Balancing and optimizing the portfolio
This is a general view on the need to balance and optimize portfolios.
Optimizing portfolio components
Here it is described the different component with regards to portfolio optimization.
Maintaining the portfolio
A very important one: the need to maintain your portfolio.
The need to optimize resources on a project portfolio.
Managing portfolio risks
Here it is covered the need to manage risks on your portfolios.
Controlling portfolio change
It is provided guidance for control change management over your portfolio.
Annex A (informative) Governance of portfolios
As it was said in the previous point 4.10 Governance of portfolios, this will be expanded with the coming soon ISO 215005 Project, programme and portfolio management — Guidance on governance.