Enterprise ProjectPortfolio Management

Building Competencies forR&D and IT Investment Success

Richard M. Bayney, Ph.D.Ram Chakravarti

J.ROSSP U B L I S H I N G

Contents

About the Authors viiForeword ixPreface xiiiAcknowledgments xixWeb Added Value™ xxi

Section 1. Introduction to Enterprise Project Portfolio Management 1

Chapter 1. Basic'Concepts of Enterprise Project Portfolio Management 31.1 The R&D Portfolio . 31.2 The IT Portfolio 71.3 The CREOPM™ Framework 121.4 Organizational Dynamics Behind Enterprise Project Portfolio Management 181.5 The Future of Enterprise Project Portfolio Management 24

Section 2. Prerequisites for Enterprise Project Portfolio Management 27

Chapter 2. Scenario Analysis and Strategic Planning 292.1 Key Concepts of Strategic Planning 292.2 Summary 39

Chapter 3. Decision Framing and Data Integrity 413.1 Key Concepts of Decision Framing and Data Integrity 413.2 Summary 51

Section 3. CREOPM™: A Framework for Enterprise Project PortfolioManagement 53

Chapter 4. Project Categorization 554.1 Key Concepts of Project Categorization 554.2 Summary 59

Chapter 5. Risk Analysis 615.1 Key Concepts of Risk Analysis 615.2 Summary 77

Chapter 6. Integrated Evaluation 796.1 Key Concepts of Integrated Evaluation 796.2 Summary 103

Chapter 7. Portfolio Optimization 1057.1 Key Concepts of Portfolio Optimization 105

vi Enterprise Project Portfolio Management

7.2 Summary 121

Chapter 8. Project Prioritization 1238.1 Key Concepts of Project Prioritization 1238.2 Designing Prioritization Models—An Example 1338.3 Summary 147

Chapter 9. Best Practices in Portfolio Management 1499.1 Capability Maturity Model 1509.2 Portfolio Analysis and Presentation 1629.3 Risk Management 1719.4 Resource Management 1769.5 Stakeholder Management 1829.6 A Practical Approach to Improving Portfolio Management Competencies 1899.7 Summary 196

Section 4. Case Studies in Enterprise Portfolio Management 197

Chapter 10. Case Study in IT Portfolio Management 19910.1 Case Study Outline: SIRC Corporation 19910.2 SIRC IT Portfolio Selection 21010.3 Prioritization vs. Optimization—Lessons Learned 24610.4 Summary 248

Chapter 11. Case Study in R&D Portfolio Management 24911.1 Introduction to the R&D Case Study 24911.2 Portfolio Selection Based on Project Prioritization 24911.3 Portfolio Selection Based on Deterministic Optimization 26011.4 Portfolio Selection Based on Stochastic Optimization 26911.5 Summary 275

Chapter 12. Epilogue 277

Appendix A. A Primer in Decision Analysis 281A. 1 Introduction to Decision Analysis and Its Utility in Decision Making 281A.2 Risk—The Language of Probability 285A.3 Uncertainty—The Language of Outcomes 292A.4 Decision Making Under Conditions of Risk and Uncertainty 295A.5 Summary 304

Appendix B. A Primer in Mathematical Programming 305B.I Mathematical Programming 305B.2 Linear Programming 307 -B.3 Goal Programming and Multiple Objective Linear Programming 309B.4 Stochastic Optimization 313

Appendix C. MODA Models for IT Investment Prioritization 317

Appendix D. SIRC's Enterprise IT Portfolio 335

References 349

Index 351