Project PortfolioOptimisationDeploy capital more effi ciently

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Fund a portfolio of capital projects that generate the biggest bang for the buck

Common challenges and solutionsPPO can provide the solution to a range of capital deployment challenges, including:

• Measure the value of non-fi nancial variables. Value creation involves more than incremental revenue and cost savings. It includes indirect benefi ts—such as brand value, health and safety improvements, environmental impact, sustainability, and stakeholder perception. It also includes the "Real Option Value" of management's ability to change course with the project as time goes by. PPO provides the tools to consider these variables as part of the portfolio decision process.

• Obtain a “bird’s eye” view of all current and planned projects. PPO provides a view across the spectrum of your organisation’s capital projects. Seeing all projects on a level playing fi eld helps you better compare relative risks and reward and to answer questions such as: Are we ahead or behind on the budget? Are we investing enough in brand, image and stakeholder perception?

• When budgets are cut, which projects take priority? PPO helps you accomplish more with less and documents which projects deserve funding. You can also monitor and update portfolio value priorities throughout the budgeting cycle. That way, you can nimbly make adaptive decisions as needed, and be accountable—even after the funding variables change.

Label Unit Portfolio summary

Number of projects 241

Cost (CY) $M 321.4

Total cost (PV) $M 817.5

Capital projects 194

Maintenance projects 47

Total cost of capital projects (PV) $M 752.3

Total cost of O&M projects (PV) $M 65.2

Mandated projects 14

Total cost of mandated projects (PV) $M 41.6

NPV (incl. all benefi ts) $M 932.0

Portfolio summary: PPO provides an overview into your portfolio of projects, summarising key metrics.

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Total project value: PPO values indirect benefi ts, such as environmental impact, talent, and health and safety the same way that you measure fi nancial value. As a result, projects that contribute intangible value receive due consideration.

Total project value

Project Portfolio Optimisation (PPO) can help improve your organisation’s approach to capital deployment. PPO uses state-of-the-art tools and methodologies to quantify the potential cost, benefi ts and risks of the projects you are considering or have underway. The result is a systematic way of assessing and defending capital deployment decisions.

PPO begins with creating a template specifi c to your organisation’s priorities, idiosyncrasies and data availability that will help quantify a project’s value. Relevant resource constraints will be taken into account as part of the process. In the end, a sophisticated project valuation and portfolio prioritisation system delivers a new level of insight. Leadership will have access to a suite of information to help guide, value and defend funding decisions, and increase your organisation’s effi ciency.

Selected PPO benefi ts, by industry

Industry PPO can help evaluate and prioritise:

Communications Network/capacity improvements

Mining/Oil & Gas New exploration projects and site expansions

Manufacturing Process/facility/equipment improvements

Not-For-Profi t Grant/funding requests

Pharmaceuticals/Life Sciences

Drug/device development

Real Estate Development projects

Retail/Financial Services

New product development/ expansion into new markets

Technology Research and development initiatives

Utilities & Power Generation

"Smart grid" initiatives Value to risk: PPO helps you prioritise individual projects by evaluating risk versus reward on a level playing fi eld.

Value to risk

The old way: Avoid these common traps Using PPO helps organisations avoid these common traps when deploying capital:

• First in, fi rst funded. Projects are approved in the order presented, until the budget is exhausted.

• Minimum benefi t-to-cost ratio. Projects that meet pay-back thresholds get funded; others do not.

• "Token" strategic initiatives. Projects are handpicked to address intangible needs, such as improving brand value, bettering local communities, or stewarding the environment—regardless of the project's cost or fi nancial benefi ts (or lack thereof).

• Immunity by default. The plug is never pulled once a project is funded—even it better projects come along.

• Squeaky wheel syndrome. Projects pushed by the most vocal or most politically powerful proponents get funded.

Effi cient frontier: By identifying alternative funding combinations, PPO can help you identify how to:• (B) decrease the total cost of your portfolio while delivering

the same value • (C) squeeze out more value for the same budget

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Is our portfolio of projects too concentrated? Too diversifi ed? What risks are we most exposing ourselves to?

If our budget continues to get cut, where should I make the cuts to preserve the most value?

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How PwC can helpPwC's Project Portfolio Optimisation team has over 12 years of experience helping clients to prioritise their capital projects. We can design a customised approach to help solve your organisation’s project portfolio management challenges. Our tools and approach help you optimise your project portfolio and communicate its multi-criteria impact on the organisation.

PwC uses proven methods and a powerful software solution that incorporates your organisation’s know-how, metrics, and idiosyncrasies to create a customised valuation model. Portfolio dashboards (see sample illustrations below) provide senior management with a bird's-eye view into critical measures to help steer corporate strategy and keep a real-time pulse on value creation. The result is a better way to manage competing priorities while supporting growth and quantifying risk.

For more information contact:Hervé C. KieffelPrincipal, Project Portfolio OptimizationTel: +1 (415) 498 6236herve.c.kieffel@us.pwc.com

Renato J. CedolinDirector, Project Portfolio OptimizationTel: +1 (415) 498 5187renato.j.cedolin@us.pwc.com

© 2012 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP, which is a member fi rm of PricewaterhouseCoopers International Limited, each member fi rm of which is a separate legal entity. AT-13-0134

Portfolio dashboards

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www.pwc.com/ppo