Quantifying Project Portfolios

  Estimating   Portfolio Management  

One of the greatest challenges in managing IT projects within a portfolio is gathering the metrics that will aid in understanding just how well the projects are performing and how much these projects are contributing to the overall corporate strategy. Understanding how IT investments benefit the corporate goals are critical in times of growth and especially in times of budget constraints.

However, the vast majority of companies do not have the disciplines or infrastructure to be able to capture information about IT projects, much less gather these projects within a portfolio. More than 75 percent of companies operate projects at a Software Engineering Institute Capability Maturity Model Level of 1, meaning they have chaotic processes and have no repeatable methods for building and maintaining software.

Christian Verhoef of the Free University of Amsterdam attempted to address this problem in his article entitled "Quantitative IT Portfolio Management," published in the 2002 journal Science of Computer Programming. Verhoef states that his approach is to provide "a set of mathematical formulas based on public benchmark information to quantitatively manage IT portfolios." The intent is to provide a set of formulas that could be added to a spreadsheet or a statistical calculator to capture and analyze portfolio data.

The Key …

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