Key deliverables
• Budget estimates
• Business unit
• Market risk level estimates
• Market definition and impact.
.4 Inventory of All Existing Components
The inventory of all ongoing components is a list of components that have been authorized previously and are being executed through the project or program management process, or that have been put on a waiting list at the end of the previous portfolio cycle.
.5 Inventory of All New Component Proposals
The inventory of all new component proposals is a list of components that have been proposed since the previous portfolio cycle.
3.2.1.1.2 Identification: Outputs .1 List of Components
The list of components comprises all the qualifying components meeting the definition, complete with appropriate documentation. This may include a list of relationships between various components.
.2 Key Descriptors for Each Component
The key descriptors for each component represent the complete documentation for each qualifying component presented on proper templates.
.3 List of Rejected Components
The list of rejected components comprises all components that do not meet the component definition or that are not correctly and completely documented. These component proposals may be eliminated, rewritten, or regrouped to be resubmitted to the portfolio (or to another) process.
3.2.1.2 Categorization
The purpose of this process is to group identified components into relevant business groups to which a common set of decision filters and criteria can be applied for evaluation, selection, prioritization, and balancing. The categories are defined on the basis of the strategic plan. The components in a given group have a common goal and can be measured on the same basis, regardless of their origin in the organization. The categorization of the components allows the organization to balance its investment and its risks between all strategic categories and strategic goals. Key activities within this process include:
• Identifying strategic categories based on the strategic plan
• Comparing identified components to the categorization criteria
• Grouping each component into only one category.
Table 3-2: Categorization: Inputs and Outputs
3.2.1.2.1 Categorization: Inputs .1 List of Components
Described in Section 3.2.1.1.2.1
.2 Key Descriptors for Each Component
Described in Section 3.2.1.1.2.1
.3 Categories from Strategic Plan
The categories are based on the strategic plan. They are used to group and compare components having a common strategic goal and common measurement criteria. The organization executives and portfolio management team establish the categories jointly. The categories need to be defined and widely understood throughout the organization. The categories may change or evolve if the strategic plan changes or evolves. A category may include components originating from various departments or business units of the organization. The number of categories is usually limited and may include:
• Increased profitability (revenue increase, cost reduction, etc.)
• Risk reduction
• Efficiency improvement
• Legal obligation
• Market share increase
• Process improvement
• Continuous improvement
• Business imperatives (e.g. internal toolkit, IT compatibility or upgrades).
Each category may also include subcategories to generate comparative tables, graphs, or charts such as:
• Component type (e.g., projects, programs, other work)
3.2.1.2.2 Categorization: Outputs .1 List of Categorized Components
The result is a list of components grouped by category, comprising all identified components divided within all the strategic categories. When a component cannot be categorized, it is up to the portfolio management group to decide whether they keep it on the list for further evaluation and selection.
3.2.1.3 Evaluation
This is the process for gathering all pertinent information to evaluate components, with the purpose of comparing them in order to facilitate the selection process. Information is gathered and summarized for each component of the portfolio. The information can be qualitative or quantitative, and comes from a variety of sources across the organization. The data collection is iterated several times, until reaching the required level of accuracy. Graphs, charts, documents, and recommendations are produced to support the subsequent selection process. Key activities within this process include:
• Evaluating components with a scoring model comprising weighted key criteria
• Producing graphical representations to facilitate decision-making in the selection process
• Making recommendations for the selection process.
Table 3-3: Evaluation: Inputs and Outputs
3.2.1.3.1 Evaluation: Inputs .1 Strategic Plan
Described in Section 3.2.1.1.1.1
.2 List of Categorized Components
Described in Section 3.2.1.2.2.1
.3 Key Descriptors for Each Component
Described in Section 3.2.1.1.2.2
3.2.1.3.2 Evaluation: Outputs
.1 List of Categorized and Evaluated Components
A list of evaluated components is produced and approved for each category. Components can be compared by category or for the entire portfolio.
.2 Value Score for Each Component
A total value score is calculated with the scoring model for each component.
.3 Graphical Representations
A number of graphical representations (e.g., scoring matrices and bubble charts) are produced to support decision-making
.4 Evaluation Process Recommendations
Recommendations are made at the end of the evaluation process. The recommendations can be made for a component, a category, or the entire portfolio, based on the value of each component or a group of components.
3.2.1.4 Selection
This is the process necessary to produce a short list of components based on the evaluation process recommendations and the organization's selection criteria. The evaluation determines the value of each component and produces a list of components that are ready for prioritization.
Key activities within this process include selecting components based on the evaluation results and comparison to selection criteria. This process will produce a list of components for prioritization.
Table 3-4: Selection: Inputs and Outputs
3.2.1.4.1 Selection: Inputs .1 Strategic Plan
Described in Section 3.2.1.1.1.1
.2 List of Categorized and Evaluated Components
Described in Section 3.2.1.3.2.1
.3 Value Score for Each Component
Described in Section 3.2.1.3.2.2
.4 Graphical Representations
Described in Section 3.2.1.3.2.3
.5 Organizational Resources
Organizational resources may include internal or external human resources, financial resources, equipment, and other assets.
.6 Recommendations from Component Evaluation Process
Described in Section 3.2.1.3.2.4
3.2.1.4.2 Selection: Outputs
.1 List of Categorized, Evaluated, and Selected Components
A list of evaluated and selected components is produced and approved for each category. Components can be compared by category or for the entire portfolio.
.2 Recommendations
Recommendations are made at the end of the selection process. The recommendations can be made for a component, a category, or the entire portfolio. These recommendations can include prioritization, component segmentation, acceptance, or rejection of a component.
3.2.1.5 Prioritization
The purpose of this process is to rank components within each strategic or funding category (e.g., innovation, cost savings, growth, maintenance, and operations), investment time frame (e.g., short, medium, and long-term), risk versus return profile, and organizational focus (e.g., customer, supplier, and internal) according to established criteria. This step ranks the components to support subsequent analysis required to validate and balance the portfolio.
Key activities within this process include:
• Confirming the classification of components in accordance with predetermined strategic categories
• Assigning scoring or weighting criteria for ranking components
• Determining which components should receive highest priority within the portfolio.
Table 3-5: Prioritization: Inputs and Outputs
3.2.1.5.1 Prioritization: Inputs
.1 List of Categorized, Evaluated, and Selected Components
Described in Section 3.2.1.4.2.1
.2 Recommendations
Described in Section 3.2.1.4.2.2
3.2.1.5.2 Prioritization: Outputs
.1 List of Prioritized Components within Each Strategic Category with Supporting Documentation
The prioritized list of components for portfolio balancing, along with appropriate documentation.
3.2.1.6 Portfolio Balancing
The purpose of this process is to develop the portfolio component mix with the greatest potential, to collectively support the organization's strategic initiatives and achieve strategic objectives. Portfolio balancing supports the primary benefits of portfolio management—the ability to plan and allocate resources (i.e., financial, physical assets, and human resources) according to strategic direction, and the ability to maximize portfolio return within the organization's predefined desired risk profile.
Balancing of activities involves reviewing selected and prioritized portfolio components. The portfolio is then balanced to support established strategic objectives using predefined portfolio management criteria, the organization's desired risk profile, portfolio performance metrics, and capacity constraints. A recommendation for either maintaining the portfolio ''as is'' or adjusting the portfolio is issued at completion of the balancing activities. In essence, this process includes:
• Adding new components that have been selected and prioritized for authorization
• Identifying components that are not authorized based on the review process
• Eliminating components to be suspended, reprioritized, or terminated based on the review process.
The selection of the mix of components in order for the portfolio to achieve a desired return (while still complying with the established portfolio management criteria) should also take into account similarities and synergies that exist between components. This could include dependency relationships with existing portfolio components. Enhancing these interconnections fully leverages all aspects of the portfolio to generate the greatest return with a minimum of investment.
Inputs
.1 List of prioritized components within each strategic category .2 Portfolio management criteria .3 Portfolio management performance metrics .4 Capacity constraints .5 Portfolio rebalancing recommendations from reporting and review
Outputs
.1 List of approved portfolio components .2 Updated master list of approved, inactivated and terminated elements .3 Updated approved portfolio component allocations
Table 3-6: Balancing: Inputs and Outputs
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