Project Management – Introduction: According to the Project Management Institute, what is portfolio management within an organisation?

Introduction / Context:
Portfolio management is the highest level view of project related work in an organisation. It ensures that resources are invested in the mix of projects and programs that best support strategic goals. While program management focuses on delivering benefits from a group of related projects, portfolio management focuses on selecting the right projects and programs and keeping them aligned with business strategy. This question tests your understanding of this distinction and your familiarity with the PMI definition of portfolio management.

Given Data / Assumptions:
- The question is part of the introductory material on project management concepts.
- It asks specifically about portfolio management, not project or program management.
- The options include descriptions of program management, risk management, operations management and archival activities.
- The correct answer must talk about choosing and controlling projects and programs in line with strategy.

Concept / Approach:
According to PMI, a portfolio is a collection of projects, programs and other work that is grouped together to facilitate effective management of that work to meet strategic business objectives. Portfolio management is the centralised management of one or more portfolios. It includes identifying, prioritising, authorising, managing and controlling all these components. The emphasis is on maximising value and strategic alignment rather than on managing interdependencies among related projects, which is the focus of program management. Portfolio management may include both related and unrelated projects and programs, as long as they contribute to strategic goals.

Step-by-Step Solution:
Step 1: Recall the PMI definition of a portfolio and of portfolio management. Step 2: Focus on key phrases such as strategic objectives, prioritisation and authorisation of projects and programs. Step 3: Review the answer options and look for the one that mentions strategic alignment and centralised management of multiple projects and programs. Step 4: Eliminate options that refer to a group of related projects only, which indicates program management rather than portfolio management. Step 5: Choose the option that most closely matches the PMI wording about centralised management and alignment with strategy.
Verification / Alternative check:
A useful way to verify your choice is to ask whether the description would still make sense if the projects in the group were completely unrelated. For portfolio management, this is possible as long as each project supports some aspect of the organisation strategy. For program management, projects must be related and share common benefits. Applying this check quickly eliminates the option that talks about related projects as the primary focus, confirming that the strategic selection and control option is correct.

Why Other Options Are Wrong:
The first option describes program management, where related projects are managed together. The option about analysing risks and opportunities in a single project refers to project risk management, not portfolio management. The operations management option is incorrect because operations are ongoing, not temporary, and do not represent portfolios. The archival option is more related to lessons learned and knowledge management than to portfolio level decision making.

Common Pitfalls:
Students sometimes believe that portfolio management is simply a larger version of program management. In reality, the focus and decision criteria are different. Another pitfall is to confuse the portfolio of financial investments with a project portfolio; while the analogy is useful, the context is organisational change, not only financial instruments. Understanding these distinctions helps you answer conceptual questions correctly and also clarifies roles in complex organisations.

Final Answer:
Portfolio management is the centralized management of one or more portfolios, including identifying, prioritising, authorising, managing and controlling projects and programs so that they are aligned with strategic business objectives.