Creating a Portfolio of Prioritized Projects

Dr. Richard Bayney, PMP

Do you want to create or maximize portfolio value for your company? How much portfolio value is being unintentionally destroyed in your company?

Everyone likes a “prioritized portfolio.” We prioritize (rank order) projects in a portfolio to determine the sequence in which we should operationalize them during a specific time period. Or, we should! By rank ordering projects, many companies mistakenly assume that—going top-to-bottom until a resource constraint is met—all projects above the resource line constitute a “prioritized portfolio” that maximizes portfolio value. In reality, most portfolios of prioritized projects are inefficient (i.e., they fail to maximize value or, stated in less politically correct language, they destroy value). Nevertheless, the correct term that should be used is “a portfolio of prioritized projects,” not a “prioritized portfolio.”

If most companies have attained protracted success by conducting portfolio selection via rank ordering of projects, what’s the problem? Indeed, if you are not concerned with portfolio value destruction (i.e., if “good enough” is good enough), there is no problem. But, if you are suspicious that you may not be getting the most out of your constrained resources (e.g., budget, people, manufacturing capacity), you may well be …

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