Nicole Gullatt_Project Engages Presentation (Spring Semester Presentation)
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Leadership, Strategic IQ, and Organizational Health
BY RAHUL GUPTA BCAF005
Portfolio Management
Overview of Project Portfolio Management
Portfolio is a combination of securities such as stocks, bonds and money market instruments
WHAT IS PORTFOLIO??
Overview of Project Portfolio Management
Project portfolio management is a combination of various management disciplines:
%Management Disciplines
General management
Business management
Project and program management
Overview of Project Portfolio Management
Portfolio Management is an ongoing process that
includes decision-making, prioritization, review,
realignment, and reprioritization.”
Financial Portfolio Quote
“Portfolio management is the strategy-
based, prioritized set of all projects and
programs in an organization reconciled to
the resources available to accomplish
them.”
Overview of Project Portfolio Management
Portfolio is constructed on following basis :
• Determining the objectives of the portfolio.
• Selection of securities to be included in the portfolio.
Overview of Project Portfolio Management
The Purpose of Portfolio Management
• Execute Strategy
• Deliver Business Value
• Enhance Decision Making
• Manage Organizational Change
Overview of Project Portfolio Management
SELECTION OF SECURITIES
Once the asset allocation decision has been made, the portfolio manager has pick the securities that go into the portfolio.Again, the decision can be made on Active basis or on Passive basis.
Overview of Project Portfolio Management`ACTIVE STRATEGIESThe objective is to use the skills of your security analysts to select stocks that will outperform the market, and create a portfolio of these stocks. The security selection skills can take on several forms. Technical Analysis, where charts reveal the direction of future price movements
Fundamental Analysis, where public information is used to pick undervalued stocks
Access to private information, which enables the analyst to pinpoint mis-valued securities.
Overview of Project Portfolio Management
PASSIVE• Index FUNDS are created by holding STOCKS in a wider index in
proportion to their MARKET value. No attempt is made to trade on a frequent basis to catch market upswings or downswings or select 'good' stocks.
• Assumptions:MARKETS are efficient. Attempts to time the market and pick good stocks are expensive and do not provide reasonable returns. Holding a well diversified portfolio eliminates unsystematic risk.
• Advantages: Transactions costs are minimal as is the cost of searching for
information.
Overview of Project Portfolio Management
Markowitz Portfolio:• A Markowitz efficient portfolio is created by searching through all possible
combinations of the universe of securities to find that combination that maximizes expected return for any given level of risk.
• Assumptions: The portfolio manager can identify the inputs (mean, variance, covariance) to the model correctly and has enough computer capacity to run through the optimization exercise.
• Advantages: If historical data is used, the process is inexpensive and easily mechanised.
• Disadvantages: The model is only as good as its inputs.
Overview of Project Portfolio Management
Factors affecting investment decisions in portfolio management
RISK TOLERANCERETURN NEEDSINVESTMENT TIME HORIZONTAX EXPOSURE
Overview of Project Portfolio Management
HOW THE SELECTION PROCESS GOES ??
Overview of Project Portfolio ManagementAt the highest level, Project Portfolio Management has four basic components:
All the steps necessary to construct an optimal portfolio given current limitations and
constraints
Ensure value is delivered by comparing expected benefits
with actual benefits; drive PPM maturity
Selected projects must align with the business strategy and meet other important criteria
OptimizePortfolio Value
Project benefits must be protected in order to deliver
maximum portfolio value
ProtectPortfolio Value
DeliverPortfolio Value
The Goal: Maximize value
delivered to customers and stakeholders
Select the Right Projects
Overview of Project Portfolio Management
Deliver Portfolio Value
Optimize Portfolio Value
Select the Right Projects
Protect Portfolio Value
Prioritization
Portfolio Balancing
Project Sequencing
Capacity Planning
Portfolio Analysis
Project Monitoring
Portfolio Risk Mgt
Benefits Realization
Lessons Learned
Improve Portfolio Maturity
Efficient Frontier
Portfolio Planning
Portfolio Selection
Ideation
Work In-take
Decision Gates
Opportunity Mgt
Overview of Project Portfolio Management
Art Science
Successful portfolio management is a combination of art and science
Overview of Project Portfolio ManagementYou need portfolio management when…
Your Project Managers feel like this
Employees react to organizational goals like this
Your organization acts like this
`
Overview of Project Portfolio Management