Project Portfolio Management

 

    07262007 PMIPMOLIG

Link to Slides From Panel Discussion

 

Craig,

 

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....

  

Thanks again,

 Kurt Grishaber

 

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 Mathematical Models. 

 

Benefit Measuring Methods:

1.     Benefit/Cost Ratio(BCR) = Total benefit divided total cost

2.     Internal Rate of Return (IRR) = Compares project cost/benefit to investment/interest rate.

3.     Present Value = Current value of future benefits

4.     Net Present Value = PV less current value of all project costs

5.     Payback Period  = Period until benefits recovered equal project costs. Shorter payback is preferred

6.     Opportunity Cost = The value of the next-based alternative. Lowest preferred.

7.     Scoring Models = Scores based on defined criteria. Best score wins.

8.     Review Boards/Murder Boards = Ask challenging questions. Try to kill the project before starting.

 Mathematical Models: uses math models and complex criteria.

1.     Linear Programming

2.     Non-linear Programming

3.     Integer Algorithm

4.     Dynamic Programming

5.     Multi-objective Programming

1. Project Selection Tools and Techniques

Go to the link above to see selection tools.

Project Selection Links:

  1. http://www.maxwideman.com/issacons/iac1004d/, (found by Josiah Wedgewood, UoP 2005)

  2. http://www.isixsigma.com/me/project_selection/, (found by Josiah Wedgewood, UoP 2005)

 

http://www.proactdev.com/pages/ProjSel.htm, (Found by Frank Merrell, UoP 2005)

Project Selection web link Website owner: Proactive Development:

This 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 selection.”
 

Frank Merrell, UoP 2005

 

Building A Portfolio For Innovation Projects

If 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.

The portfolio should include:

  1. Internal Push of Technological Limits - to grow into the future

  2. External Pull of Technology - to fulfill the market's desires.

  3. Market High Risk (Stretch)

  4. Low Risk (Cash Cow)

Risk Versus Uncertainty

Risk - 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.

Uncertainty - when a decision maker has information that is not complete and therefore cannot determine the expected value of each alternative.