THE STANDARD FOR PORTFOLIO MANAGEMENT PDF
Project Management InstituteThe Standard for Portfolio Management$ CHFM The Standard for Po. The Project Management Institute, Inc. (PMI) standards and guideline publications, of which the document contained herein is one, are. Now in its fourth edition, The Standard for Portfolio Management reflects current practices and has been updated to reflect the evolution of the profession.
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Projects. • Performance reports. • Change requests with impact on portfolio components. Source: Standard for Portfolio Management, 3rd Edition, Figure The Relationships among Portfolio, Program, and Project Management, [ 1],1 The Standard for Portfolio Management , Implementing Organizational. Get this from a library! The standard for portfolio management. [Project Management Institute.;].
Poplos, Ed. Phil Steven F. Sanap Kulasekaran C. Toney, Jr.
Smith Jamie B. Solak, M. Stockwell Anthony P. Tu Dr. Ulagaraj, Ph. Valle, M. Robert E.
Hanford Dr. Winston, Esq. Ian M. Julia M. It does not contain an all-inclusive list of tools and techniques used; instead it focuses on the main requirements of portfolio management and on how they can be addressed. The typical tools listed and presented are thus illustrated in a generic manner to indicate their intent and workings, while leaving to the reader the latitude required to adapt them to a specific situation and the project portfolio management requirements of upper management.
Part 2. Part 3. Therefore, some of those tools and techniques will be illustrated more than once to reflect the new value added by the acquisition of portfolio realization data. This group identifies what will be managed in the portfolio, in which categories, as well as how elements will be evaluated and chosen for inclusion or not in a given portfolio of projects. This group is highlighted in Table 1.
This group is highlighted in Table 2.
When all the components of the portfolio are selected, properly aligned with strategic objectives, prioritized and authorized for realization, some other tools and techniques are required to ensure the proper monitoring of their evolution, both as individual components as well as a whole.
Such tools and techniques will thus have to provide indicators to permit comparison between expectations, planned objectives, and past, current, and evolving situations, as well as forecasts and recommendations for future action. Note that the heading numbers correspond with those in Chapter 3, Portfolio Management Processes.
As indicated in Chapter 3 of the standard, key descriptors may include, but are not limited to: At this stage of the portfolio management process, available tools and techniques include, among others: Such judgment and expertise can be applied to any technical and management details during this process. It also facilitates portfolio balancing later on, by ensuring that components are selected and managed within a set of categories addressing all of the strategic objectives of the organization.
As noted in Chapter 3, these categories need to be defined and widely understood throughout the organization. Each category may also include subcategories to generate comparative tables, graphs or charts such as: Such judgment and expertise is applied to any technical and management details during this process. Tools and Techniques for Evaluation Process Tools and techniques for evaluation aim at helping the organization to effectively evaluate and compare the categorized components under consideration, in order to eventually recommend those that should be selected for further prioritization and inclusion in a balanced portfolio.
This is done by using a series of preset criteria associated to various business concerns. Typical criteria may include, but are not limited to: As illustrated in Figure 4, a scoring model comprises a series of evaluation criteria having a weight expressed as a percentage and a score.
The evaluation criteria may comprise Figure 4. The weight for each criterion is expressed in percentage and determines the relative importance of each criterion in the component evaluation.
The score applies to each criterion and should be discriminating such as 0, 5, The score measures if each criterion is met or not. Each score level must be clearly defined to ensure consistent evaluation from project to project. The score multiplied by the weight provides a value for each criterion and the total of all these criteria values is the total value of the component. A typical scoring model can be effectively designed and used by going through the following simple implementation steps: Graphical representations include Figure 5.
Two-criteria comparison grids, like the example illustrated in Figure 5, are among the most utilized and effective graphical tools to compare components that must meet more that one selection criterion.
A typical pair of criteria used by organizations is benefits criterion. One can effectively design and use a two-criteria comparison grid by using the following simple implementation steps: Such judgment and expertise are applied to any technical and management details during this process. Tools and Techniques for Component Selection Tools and techniques for component selection aim at helping the organization to effectively reduce, if and whenever possible, the number of components that will be considered for further prioritization and inclusion in a balanced portfolio.
The analysis must be done by skill sets to understand the constraint generated by certain skill-set limitations. Internal resource capacity must be measured and external resource availability must be established to have a complete capacity picture. The human resource capacity will be a limiting factor for the number a projects that the organization can execute. Internal financial capacity must be measured and external financial capacity availability must be established to have a complete capacity picture.
The financial resource capacity will be a limiting factor for the number of projects that the organization can execute. The analysis must be done by type of assets equipment, building, etc. The asset capacity will be a limiting factor for the number of projects that the organization can execute. This might be done by using the same criteria and indicators used in the scoring model to evaluate and select components. In this case, however, the components will be compared as being part of a whole with many criteria to be met both as separated and combined entities, in an effort to prioritize them in a coherent way, ensuring the best alignment possible with the strategic plan.
Figure 8. Single Criterion Prioritization Model Figure 9. Multiple Criteria Weighted Ranking Ranking can be done using one or more criteria, as illustrated in Figures 8 and 9. In the example presented in Figure 8, each project is compared to each of the others, then scored and prioritized using the following steps: A multiple criterion model for weighted ranking, as the one illustrated in Figure 9, can be designed and used effectively by going through the following simple implementation steps: Tools and Techniques for Portfolio Balancing Tools and techniques for portfolio balancing aim at helping the organization to effectively select and implement a portfolio ensuring the best overall alignment possible with the strategic plan.
These methods may include: The analysis can be further enhanced by incorporating numerous baselines. Components are evaluated using success and failure probabilities for estimated cost, anticipated revenues, risk, and other desired criteria. The next two figures present some of the graphical representations most often used by organizations to balance and monitor their portfolios.
A bubble graph uses indicators from the scoring model or new indicators concerned with portfolio balance: The bubble graph also uses other indicators from the scoring model or new indicators concerned with portfolio balance: Tools and Techniques for Component Authorization Tools and techniques for component authorization are mainly concerned with helping the organization to effectively communicate the decisions with respect to components included in the balanced portfolio and to assign roles, responsibilities, and performance milestones for their implementation and monitoring.
It can exchange information with the systems and applications used by components. The tools and techniques used at the portfolio level are similar to those used in a component, such as earned value.
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Value measurement techniques. This is where management applies performance indicators and models which the organization may be using to measure strategic performance. The same type of graphical tool can also be used to compare several components as they evolve either between themselves or with preset global portfolio performance indicators, in order, for example, to see global tendencies towards the respect of specific criteria and uncover a possible systemic issue affecting the portfolio as a whole.
The example illustrated in Figure 17, shows that strategic changes due to some new business conditions call for the reweighting of two of the six criteria used for portfolio management by the impacted organization Figure A documented economic feasibility study used to establish validity of the benefits of a selected component lacking sufficient definition and that is used as a basis for the authorization of further project management activities.
The resources human resources, financial, physical assets which an organization puts at the disposal of portfolio management to select, fund, and execute its components. The process of grouping potential components into categories to facilitate further decision-making. A predetermined key description used to group potential and authorized components to facilitate further decision-making. Categories usually link their components with a common set of strategic goals. A key descriptor telling if a potential component is a business case, a project, a program, a portfolio or other work.
Component Portfolio. Determining Factors. Key descriptors of the portfolio such as component definition, category definition, key criteria definition, and resources capacity to support the portfolio management process. The determining factors are agreed upon by the executive group and are based on the organization strategic plan.
The process of scoring specific potential components using key indicators and their related weighted criteria for comparison purpose for further decision-making. The process of documenting and assembling, for further decision-making, the inventory of ongoing and proposed new components as potential components for categorization.
A set of components, comprising all active components as well as proposals for new components, properly documented using key descriptors, use as a basis for portfolio management decision-making. Key Criteria. Predetermined measures, values or conditions used in a scoring model to measure alignment with strategic goals.
Key Descriptors. A set of characteristics used to categorize and document a component for further decision-making. It might include among others, specifics about scope, schedule, budget, actual performance using key performance indicators , class, category, evaluation scores, priority, and approval status.
Key Indicators. A set of parameters that permits visibility into how a component measures up to a given criterion. Key Performance Indicators. A set of parameters that permits measurement and reporting on the performance of the portfolio or of one of its components for further decision-making. New Component. A component that is being added to an existing project portfolio.
The process by which an organization directs and controls its operational and strategic activities, and by which the organization responds to the legitimate rights, expectations, and desires of its stakeholders.
Other Work. Phase Gates. A collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives.
The projects or programs of the portfolio may not necessarily be interdependent or directly related. Portfolio Balancing. The process of organizing the prioritized components into a component mix that has the best potential to collectively support and achieve strategic goals. Portfolio Management.
The centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work, to achieve specific strategic business objectives. Portfolio Management Communication Plan. A plan defining all communication needs, establishing communication requirements, specifying frequency, and identifying recipients for information associated with the portfolio management process.
Portfolio Management Life Cycle. A life cycle of processes used to collect, identify, categorize, evaluate, select, prioritize, balance, authorize, and review components within the project portfolio to ensure that they are performing compared with the key indicators and the strategic plan.
Portfolio Periodic Reporting and Review. The process of reporting on the portfolio components as a whole using key indicators and reviewing the performance of the component mix by comparing actual with anticipated evolution, value, risk level, spending, and strategic alignment. Potential Component. The process of ranking the selected components based on their evaluation scores and other management considerations. A group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually.
Programs may include elements of related work outside of the scope of the discrete projects in the program. Program Management. Program Management Office. The centralized management of a particular program or programs such that corporate benefit is realized by the sharing of resources, methodologies, tools, and techniques, and related high-level project management focus.
A temporary endeavor undertaken to create a unique product, service, or result. Project Management.
The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. Scoring Model. A set of weighted criteria and corresponding key indicators to measure and score components for comparison and prioritization purposes.
The process of deciding on the components to be put forward from evaluation to prioritization based on their evaluation scores. Strategic Change. Any change in the strategic intentions and plans of the organization that can impact the contents of component definition, categories, filters, key indicators, and other decision-making parameters used for portfolio management. Strategic Goals. Strategic Plan. A collection of components which includes programs, projects, portfolios, and other work grouped together within a larger portfolio.
A multiplication factor used to convey the relative importance of key criteria used in a scoring model. The Standard for Program Management. Read more. Agile Portfolio Management. Modern portfolio management. Advanced Bond Portfolio Management. Credit Portfolio Management. Portfolio management in practice. A Standard for Enterprise Project Management.
Portfolio Management with Heuristic Optimization. Portfolio Construction, Management, and Protection. Robust Portfolio Optimization and Management. Investment Management: Securities and Portfolio Management. Portfolio management with heuristic optimization. Project Portfolio Management: Leading the Corporate Vision.
Practice Standard for Scheduling. Strategic Information Technology and Portfolio Management. Investment Analysis and Portfolio Management, 7th Edition. Active Credit Portfolio Management in Practice.
The Standard for Portfolio Management – Fourth Edition
Bond Portfolio Investing and Risk Management. Recommend Documents. Modern portfolio management P1: Yet to come Modern Portfolio Cash Flow Forecasting Corporate Valua LeRoy Ward, Executive Your name. Close Send. Remember me Forgot password?
Managers select stocks and other securities listed on an index and apply the same weighting. The purpose of passive portfolio management is to generate a return that is the same as the chosen index instead of outperforming it. A passive strategy does not have a management team making investment decisions and can be structured as an exchange-traded fund ETF , a mutual fund, or a unit investment trust. Index funds are branded as passively managed because each has a portfolio manager replicating the index, rather than trading securities based on his or her knowledge of the risk and reward characteristics of various securities.
The idea is to be able to see the situation of all projects at one glance. Projects are listed and followed by the categorization columns indicating the different impacts on the projects.
The colors green, yellow and red give the status of a particular project. The up and down triangles indicate the state of change from last report: upwards for better and downwards for worse.
Arrows indicate better green, pointing up , same grey, pointing right and worse red, pointing down. Project Classification Principles During the classification process, the Portfolio Steering Group gives scores to the projects based on compliance with the classification criteria. Below figure is an example list of a classification criteria. Criteria may vary depending on the company or portfolio size. Besides scoring, the Portfolio Steering can also give priorities to projects by addressing the business impact.
For example, in some cases it is enough for a project to qualify as major based on its business impact, even if only one criteria is met.
Project Portfolio Management as in Enterprise Development Every company has to collect and prioritize their development initiatives. The decision to implement a development initiative as a project is made by Project Portfolio Management. The four cornerstones of Project Portfolio Management are Common classification supporting prioritization and the balancing of risks. Classification helps direct resources to development initiatives of strategic importance.
A Common project phasing model makes for unified project steering and promotes understanding of the whole project portfolio.
Office of Portfolio Management & Customer Engagement
Common reporting practices make it easy to follow all developments on the project, program and portfolio levels. Common evaluation practices enable project-independent value appraisals. The development initiatives in the project portfolio should be evaluated and classified using common criteria and prioritization.
An essential part of managing the project portfolio and Enterprise Development is assessing how appropriate the project portfolio is and making decisions on it regularly. Every project in the portfolio has to have a valid business justification, and all project dependencies must be identified. The projects in the portfolio often have different Project Managers, so it is very important to identify all project dependencies and communicate changes clearly.Key Takeaways Active management is when managers actively pick investments in an effort to outperform some benchmark, usually a market index.
WorldCat is the world's largest library catalog, helping you find library materials online. A category may include components originating from various departments or business units of the organization. Some features of WorldCat will not be available. The 7 activities comprise all 5 concept steps that apply to strategic planning, together with monitoring during program or project delivery and a post-implementation review.
It treats business and portfolio interchangeably, both involving strategic planning as their first step.
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