Purpose
- To regulate the transition of new work to the operational teams in a manner that
promotes the balance of the overall portfolio against the set of strategic
objectives, measurements, and targets
- To apply review and analysis techniques and models that can provide
the required insight and effectively drive support systems and controls
for executive decisions
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Relationships
Roles | Primary Performer:
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Inputs | Mandatory:
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Outputs |
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Main Description
Develop and evaluate a set of potential portfolio scenarios, and select the
set of components that generates the most value yet minimizes the overall portfolio
risk.
Validate and update the strategic targets and constraints against which
the portfolio is balanced. Each target and constraint, in turn, represents
a key dimension of the executive decision framework, such as these dimensions:
Take the inputs to this task plus the strategic targets and constraints listed
above to make recommendations to approve new work, reprioritize existing work, keep
work as-is, or postpone or cancel components currently being worked on.
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Steps
Validate and update portfolio metrics and targets
Understand and represent, as currently as possible, all of the conditions
under which work is executed and the portfolio managed, so that the portfolio
optimization can be performed in an effective manner. Update the portfolio targets
and metrics to reflect changes in conditions such as financial constraints and
market conditions. These can drive changes to the expected risk level, which
can impact the portfolio risk tolerance, thresholds, and targets. |
Develop or adapt portfolio analysis techniques and models
Modify the analysis techniques used to optimize the portfolio, as needed, to reflect the changes within the
portfolio environment.
For example, a sudden change to market demand might create the need to introduce
a probability analysis (such as decision tree models) to support executive actions
to temporarily divest a new platform, while understanding the impact on commitments
made to critical customers. Another common source of change is rapid increases
in the number of criteria needed to prioritize components, which might impact
the design, structure, and weights of a scorecard. |
Develop and evaluate portfolio scenarios
A common portfolio scenario is to accommodate a reduction in funding
for a given fiscal year, in which case some work might be rescheduled for a
following period. Another common scenario is to accommodate changes in
market conditions and demands for a given product. Other scenarios to consider
are the entry of new competitors in the market, potential withdrawal of
an important supplier, and emergence of a new technology or platform. Any of
those changes can cause substantial reduction or increase in the expected profitability
of a given product investment.
Understand the changes in conditions that might impact the portfolio, and
develop corrective actions or required adjustments to the overall portfolio
and its components to keep the balance of the portfolio optimal. Survey the
internal and external conditions of the portfolio to identify such potential
or actual changes. Develop a set of recommendations and submit them to
the portfolio stakeholders and review board for consideration. |
Generate and communicate recommendations to the portfolio
Make recommendations at the component level, for components to be approved,
reprioritized or canceled. For example:
- Component A: Maintain as is
- Component B: Invest
- Component C: Retire
Also, make recommendations of suggested assignments and responsibilities for
the work in each component. Update the list of components to reflect
changes in priorities, new components added, components put on hold,
and so on. When the final recommendations are ready and documented in the required
format, formally communicate those recommendations to the portfolio
stakeholders and review board to ensure that all decision-makers are basing
their positions and actions on common and validated information. |
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More Information
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