Monday, December 29, 2014

Optimizing Value --- Managing Risk

Chapter 11 of my recent book "Managing Project Value" is all about how portfolio management enters the frame. For me, the theme of portfolio management is 'best value':

The most scope and the most important scope attainable with the resources available.  

I write:
From the business unit scorecard, the portfolio manager derives many decision drivers. Some decisions involve disaggregating strategy into properly sequenced steps among programs, projects, or independent activities, and other decisions affect best value in other ways
That brings us to the "big three": Sequencing, value, and risk. When am I going to get it; of what value will it be? And, what risk do I have to take to get there?

Sequencing among projects and programs:
  • Importance, now or later?
  • Commitments made, especially to customer
  • Technical feasibility and constraints (walls before the roof, etc)
  • Resource availability (WIP already programmed)
Value optimization:
  • Distribution of resources that can affect velocity, quality, and functionality
  • Distribution of scope among projects that can affect quality, workload, risk, and schedule
Risk minimization:
  • Diversify portfolio scope to isolate risks
  • Allow redundancy among projects to put down single point failures
  • Be anti-fragile in all respects. Be able to absorb shocks 

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