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Guiding Principles of Portfolio Management
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Guiding Principles of Portfolio Management

The Standard for Portfolio Management – Fourth Edition (2017), published by PMI, lists the following principles:

  •  Strive to achieve excellence in strategic execution;
  •  Enhance transparency, responsibility, accountability, sustainability, and fairness;
  •  Balance portfolio value against overall risks; 
  •  Ensure that investments in portfolio components are aligned with the organization's strategy; 
  •  Obtain and maintain the sponsorship and engagement of senior management and key stakeholders;  
  •  Exercise active and decisive leadership for the optimization of resource utilization;  
  •  Foster a culture that embraces change and risk; and 
  •  Navigate complexity to enable successful outcomes.

These principles provide guidance for portfolio managers in creating, establishing, implementing, and managing portfolios.

"By creating strong links between strategic planning and strategic business execution, organizations can achieve greater organizational performance while improving resource utilization, exploiting new opportunities, and minimizing threats." (PMI)

After you have read the content for this week, think about what types of project portfolios are used by companies you know of or you are interested in. Then, perform a web search to find examples of project portfolios used by companies.


Choose one that interests you and provide a link (if available), then summarize the key points. If you can, add a few comments about the project portfolio from what you have learned in this course.

Facilitates: Decision Making and Prioritization Decision Making Based On:

Perceived opportunity & acceptable risk

Prioritization Based On:

Opportunity

Cost, Risk, Strategic Fit & Portfolio Balance

Executive Management pressure

Project Portfolio Management

Benefits: Efficiency

Recognizes business strategy & scarce resources

“How all company projects fit together”

Facilitates focus on strategic decisions

Portfolios as unified assets – both multiple and shared objectives = efficiency

AVOIDS: Managing project as independent entities

Structure: Collection of Projects and Programs

Manage projects under umbrella

Range of structures From 1 Portfolio for the Company

To multiple portfolios by Line of Business, Products or as Investments

Focus on enterprise success when creating portfolios 

Build discipline into project selection process Links project selection to strategy

Prioritizes project proposals using common criteria (not politics or emotion)

Allocates project resources based on strategy Balance risk across all projects

Justifies cancelling projects that don’t fit strategy Improves communication & agreement on project goals

Monitor & adjust project selection criteria to fit strategic focus of organization

Small organization – managed by small group of key employees

Large organization – managed by project office

Priority team balances by risk, type and resource demand

Risks to organization or project

Provides perspective on organization

support
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