Selection & Prioritization Models

Portfolio Management Domains

Portfolio Strategic Management

Portfolio Governance

Portfolio Capacity and Capability

Management Portfolio Stakeholder

Engagement

Portfolio Value

TheManagement Portfolio
Standard for Portfolio Management, 4th
Edition, PMI
Risk Management
Strategic Alignment
Strategic Alignment

Organizati
on

Portfoli
o

Proje
ct
Organizational Strategic Plan

• Importance to SPPM
– Forms the foundation for SPPM
– Focuses PPM activities toward vision &
contributing to achievement of vision
• Project Portfolio Manager
– Understands the strategic planning process &
strategic plan
– Views strategic planning as part of SPPM
Portfolio Strategic Plan

A formal, approved document that describes the

portfolio vision, objectives, and goals to achieve
organizational strategy and objectives.

Glossary The Standard for Portfolio Management

4th ED, PMI
Portfolio Strategic Plan Components

Visio
n

Goal
s
Missio Objectiv
es

n
Risk
Appetit
e
Portfolio Strategy & Efficient Frontier
Portfolio Process Model
Portfolio Process Steps

Selection

Prioritizatio

n Kick-off

Manageme

nt

Reporting

Communicatio
ns
Step 1 - Selection
Why Screen

• Screening is necessary to identify serious contender

projects for inclusion into the project portfolio.
• Maximize the value of the portfolio
• Balance the portfolio
• Ensure strategic fit
Project Selection
The screening process
– Define project categories
• Project buckets
• Strategic, operational, regulatory
– Create a screening model
• Identify criteria for screening proposed
projects
– Review and evaluate projects against screening
model
– Select acceptable projects
Project Categories

• Categories
– Concept used to balance the portfolio
– Categories are allocated to particular strategies;
• Used to determine how much of a total
portfolio can be allocated to a category
Types of Screening Models

• Benefit Measurement (comparative)

• Constrained optimization (mathematical)
Benefit Measurement (comparative)

• Peer review
• Cost Benefit Analysis
• Scoring models
• Economic models
Constrained Optimization (mathematical)

• Present Value (PV)

• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Payback Period
• Benefit Cost Ratio
• Return on Investment (ROI)
Types of Screening Tools

• Checklist
• Scoring Model – Excel Spreadsheet
• Analytical Hierarchy Processing
• Profile model – risk/return – Efficient Frontier
• Financial
What gets screened?

• All active & proposed Work

• Business Cases
The Business Case

• Project purpose
• Strategic alignment
• Resources required
• Project cost
• Project risks
• Benefit realization
Develop Screening Model

• List projects
• Determine rating criteria
• Weight the criteria on organizational importance
• Score each project on how well it satisfies each
criteria
Step 2 - Prioritization
Prioritization Matrix

• Means for ranking projects

• Based on criteria deemed to be important
• Defines what projects should be focused on first
• Defines what projects can be held
• Defines what projects should be terminated
Benefits of a Prioritization Matrix

• Quick and consistent way of evaluating projects

• Removes the emotion from decision making
• Quantifies the decision with a numeric ranking
• Helps prioritize competing criteria
• Can be used to facilitate group decision making
Creating a Prioritization Matrix

1. Determine criteria and rating scale

2. Establish criteria weighting
3. Create the matrix
4. Score the projects
5. Discuss results and prioritize the list
Questions