Project Portfolio Management
Link to Slides From Panel Discussion
I just wanted to thank you for the organization and
content of the PMO presentation I attended. I am sure I am adding to the
list of people that appreciated the quality of the discussions as well
as the quality of the panelists. Much as I anticipated, the talk did not
follow textbook rhetoric as written, but rather, used it as a guide to
qualify and quantify real world application of project management of a
project portfolio. I thoroughly enjoyed myself and look forward to
having the ability to participate in future meetings....
Project Selection Methods
Project Selection Methods are used to
determine which projects the organization will authorize. Methods according to
PMI generally fall into 2 categories: Benefit Measuring Methods and
Benefit/Cost Ratio(BCR) = Total benefit divided total cost
Internal Rate of Return (IRR) = Compares project cost/benefit to
Present Value = Current value of future benefits
Net Present Value = PV less current value of all project costs
Payback Period = Period until benefits recovered equal project costs.
Shorter payback is preferred
Opportunity Cost = The value of the next-based alternative. Lowest
Scoring Models = Scores based on defined criteria. Best score wins.
Review Boards/Murder Boards = Ask challenging questions. Try to kill the
project before starting.
uses math models and complex criteria.
1. Project Selection Tools and Techniques
the link above to see selection tools.
Project Selection Links:
http://www.maxwideman.com/issacons/iac1004d/, (found by Josiah Wedgewood,
http://www.isixsigma.com/me/project_selection/, (found by Josiah
Wedgewood, UoP 2005)
http://www.proactdev.com/pages/ProjSel.htm, (Found by Frank Merrell,
Selection web link Website owner: Proactive Development:
website helps by explaining how to prioritize product development
projects. A quote from the site...“Many projects that are doomed from
the beginning or that will never do much to help the organization
accomplish its objectives are started and waste scarce resources. We
believe that only those projects that support the organization's
strategy should ever be undertaken. One problem is that many
organizations do not really have a strategy in place. Another problem is
that their strategy is not in a form that is useful for project
Frank Merrell, UoP 2005
Building A Portfolio For Innovation Projects
you “could only” look into the seeds of time, And say which grain will grow and
which will not.
Macbeth, Act I, Scene III
Probability Low for Any One Innovation Project Being 100% Successful Through
Entire Life-Cycle. Therefore, we need a portfolio of projects and more
than one project type.
portfolio should include:
Internal Push of Technological Limits - to grow into the future
External Pull of Technology - to fulfill the market's desires.
Market High Risk (Stretch)
Low Risk (Cash Cow)
when the decision maker knows the probability of each and every state of nature
and thus each and every outcome. An expected value of each alternative action
can be determined.
- when a decision maker has information that is not complete and therefore
cannot determine the expected value of each alternative.