Post on 18-Jan-2016
MIS5102:Process Improvement and InnovationProject Portfolio Management
What is Project Portfolio Management (PPM)?
Five Questions(Pennypacker and Retna)
• Are we investing in the right things?
• Are we optimizing our capacity?• How well are we executing?• Can we absorb all the changes?• Are we realizing the promised
benefits?
Are we talking about “singular” or “comparative” evaluations?
What’s the difference?
Two broad approaches
Quantitative Qualitative
There are pros and cons of each approach…
Quantifying Options Using a Decision Tree
http://en.wikipedia.org/wiki/Project_portfolio_management
Each project has an associated• Cost• Revenue• Risk
Project Investment #1
-$3,500,000
Project Revenues$4,275,000
Opt. 50%$4,750,000
50%$1,250,000
Pess. 50%$3,800,000
50%$300,000
Project Investment #2
-$2,800,000
Project Revenues$3,250,000
Opt. 50%$3,900,000
0%$1,100,000
Pess. 50%$2,600,000
0%-$200,000
A Closer Look
TRUE
FALSE
= $4,750,000 * .5 + $3,800,000 * .5
= -$3,500,000 + $4,750,000
= -$3,500,000 + $3,800,000
= -$2,800,000+ $3,900,000
= -$2,800,000+ $2,600,000
Expected value of this part of the project portfolio:$1,250,000 * .5 + $300,000 * .5 + $1,100,000 * .0 + -$200,000 * .0 = $775,000
What are the pitfalls of this approach?
= $3,900,000 * .5 + $2,600,000 * .5
A more qualitative approach
Decision Points for PPM(Wikipedia)
• The criteria for filtering and ranking
• Which criteria are most important
• Which project ideas are worth developing
• Which projects should be considered as part of the portfolio
• Which projects to fund
http://en.wikipedia.org/wiki/Project_portfolio_management
But how do you prioritize?
politicsWhoGets
What?When?Where?Why?How?
Portfolio Categories
Innovation
NewBusinessModels or Competitive Capability
Discretionary
Growth
Increase RevenueIncrease Intimacy
Efficiency Cost-OutProductivity
Run the Engine Sustain Operations
Run The Engine
Some of the Big Questions
How can you blend quantitative and qualitative approaches? Should you?
How can a “do nothing” option help?
Why are lists important?
When doesn’t any of this matter?