The digital portfolio management objective is to determine the optimal resource mix and schedule to best achieve the organisation’s operational and financial goals.
Selecting the Portfolio
- Establish the viability of projects based on their strategic alignment, return on investment and resource requirement
- Carry out risk assessment and build contingency into the portfolio by integrating contingency planning
- Do more with less by systematically reviewing project management processes and removing inefficiencies
One simple way of achieving a primary selection is to rate each project’s alignment to corporate strategy by assessing whether it is:
- strategic (contributes to corporate goals)
- efficiency (increase output or reduce costs)
- operational (to maintain services)
Some organisations use a ‘hurdle rate’ or minimum return on investment (ROI) rate to ensure that projects return a positive benefit.
The final assessment of each project or program could be carried out using the following types of evaluation criteria:
- Project Type: is it mandatory (to meet regulatory or operational continuity requirements) or discretionary (to meet business needs, increase efficiency or infrastructure)?
- Strategic Fit: is it critical, important, supportive (one or more strategic priorities), tenuous or has no link?
- Potential Benefit: the expected net present value of the business benefits (which is likely to be a range rather than an exact figure)
- Cost: the expected net present cost of the project (which is also likely to be a range rather than an exact figure)
- Non Quantifiable Benefits: any other benefits such as customer satisfaction or business simplification
- Resources: are the resources required to deliver the project fully available, partly available or not available?
- Delivery Risk: is it a high, medium or low risk and high, medium or low complexity?
The final step is to balance the portfolio by adding or removing projects in order to achieve the best possible outcome for the organisation with the human resources and finance available to it, a simple street light report can help:
- Red (critical and urgent): immediate action needs to be taken on the recommendations or the project or program is likely to fail.
- Amber (critical but not urgent): the program can move ahead but action on the recommendations should be addressed before key decisions are taken.
- Green: the program is on target to succeed but may benefit from the uptake of recommendations.
To be successful an organisation needs to change and evolve in line with the environment and also to take advantage of new opportunities. This means the vision, mission and strategy will change and therefore the portfolio must change to reflect that by re-examining all existing programs, projects and operations and any new potential programs, projects or operations.