Techniques That Help
Graphical representations of various types are very effective in presenting the results of portfolio analyses making it easier for Executive management to reach decisions. Such charts include X-Y charts, bubble charts, pie charts and histograms for example. If the charts are presented in color, even more data can be indicated as, for instance, the respective shares between competing business units. Microsoft Excel provides an easy way to create dozens of different types of chart display automatically from numerical data.
Bubble charts appear to be particularly popular for presenting portfolio data because it displays a set of numerical values as circles. This is especially useful for data sets with dozens to hundreds of values, or when the values differ by several orders of magnitudes, as is often the case in comparing projects in a portfolio.
Probability analysis similarly includes a variety of approaches such as Decision Trees, Flowcharts, Monte Carlo Simulations and so on. Here, portfolio components are assessed using success and failure probabilities for such variables as estimated cost, projected benefits and so on. Probability analysis is particularly relevant in examining relative project risks and is used extensively in project risk management.
Quantitative analysis typically involves the use of spreadsheets for comparing the factors of interest such as resource requirements, or cash flow, spread over the planning horizon, usually the fiscal year. In Scenario Analysis the idea is to draw up a range of portfolio component collections of different projects and other work, both ongoing and new, for Executive consideration. The intent is to examine the impacts of each and to select that collection that appears to be the most favorable to the organization as a whole.
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Tips
on Step 6 - Balance and Optimize the Portfolio (Balancing)
