Projectportfolio Management Approaches
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The document outlines various project prioritization approaches, including net present value, checklist, value-of-benefit, paired comparison, and analytical hierarchy process, each with its respective advantages and disadvantages. It emphasizes the necessity of structured decision-making and the importance of integrating project prioritization with strategic management and planning cycles. Additionally, it highlights the need for effective leadership in project evaluation and prioritization processes.
Projectportfolio Management Approaches
- 1. Net Present Value Approach Checklist Approach Value-of-benefit Approach Paired Comparison Approach Analytical Hierarchy Process Portfolio Techniques Project Prioritization Approaches
- 2. The NPV Approach description Net Present Value necessary informations needed Investment for project payment of project in period (t) discounting interest ( interest rate + uplift ) a project is profitable if the value of NPC > 0 method is frequently used for business cases Disadvantages Payments are not safe additional gains or benefits are left out
- 3. Checklist Approach description • senior management defines criteria • a committee rates and valuates the criterias in terms of fulfillment • a project is being chosen when the minimum requirements are met Dis- /advantages • advantage • simple • comprehensible • disadvantage • criterias are measured equally
- 4. Value-of-benefit Approach description weighing the compliance of different objectives in terms of quantity and quality definition of objectives and their value ( importance ) weighing and scaling their achievement Dis- /advantages Scale 0…10 Effective weight Van Roadster Loading space 50% 8 1 Easy to park 20% 2 6 affordable 30% 7 2 Sum 100% 6.5 2.3 advantages forms objectivity of decisions based on subjective aspects structured and traceable decision- making model provides quantification of quality criteria disadvantages weighing and rating are rather subjective values
- 5. Paired Comparison Approach description compare each project with others in terms of important less important same important generating of a matrix identify how often a project could prevail vs. others Dis- /advantages advantage precise and reflects the direct consequences of individual decisions disadvantage enormous effort
- 6. Project A B C D E F A 3 1 B 1 3 C 3 1 D 1 2 2 E 2 2 1 F 3 1 1 Σ 10 9 8 Rank I II III Paired Comparison Approach (cont’d) 1 = less important 2 = equally important 3 = more important
- 7. Analytical Hierarchy Process description Dis- /advantages advantages goals and targets are being objectified to norm their prioritization disadvantage enormous effort criterias being compared and normed by pairs goal X is 6x more important then goal Y, goal Y is 3x more important then goal Z…. projects being valued / rated and normed in pairs towards each goal in relation to goal Y project A = 3x better then project B normed ratings and assessments will be combined to form a priority coefficient
- 8. economical strategical Resource Priority 0 1 2 3 4 graphical Projectportfolio Project A Project B Project C Project D Potfolio Techniques
- 9. Portfolio Techniques ( cont’d) conventional prioritization processes determine the order of project execution projects on the priority list will be executed until the budget is maxed out possibly it might be more beneficial to execute several projects with less priority then the all big priority projects Knapsack
- 10. KISS your prioritization ( Keep It Smart and Simple ) management needs to be cognizant in his responsibility to prioritize their projects ( assurance of invest ) strategic Projectportfolio Management has to be lived throughout all hierarchy levels a close association to general strategy processes needs to be established the prioritization of projects has to be integrated in the planning cycles launching of a tool alone will not be sufficient or effective introduction of a responsible person for the central steering and controlling is absolutely necessary benefit evaluation should be done during or after closure of the project Recap and Recommendation