The Undervalued Role of Portfolio Modeling

Andy Jordan is President of Roffensian Consulting S.A., a Roatan, Honduras-based management consulting firm with a comprehensive project management practice. Andy always appreciates feedback and discussion on the issues raised in his articles and can be reached at [email protected]. Andy's new book Risk Management for Project Driven Organizations is now available.

  Business Analysis   Estimating   Portfolio Management  

Strategic planning is evolving from the big annual offsite meeting of a decade ago, but as it becomes more adaptive, more frequent and less fixed, it is still a critical component in determining whether an organization’s longer-term goals and objectives can be met. And one of the most important elements of strategic planning is portfolio modeling. However, for many organizations, there is no real understanding of how it works or what it is designed to achieve, and modeling is skipped completely, or conducted in theory.

Planning units

The portfolio is the vehicle by which an organization achieves its goals and objectives. There are three to five key goals set for the next period — typically a year — and a budget is set aside for investment in initiatives that will collectively achieve each of those goals. However, when it comes down to the planning processes around that portfolio, the base unit is the project or perhaps the program — never the portfolio. Business cases are developed for individual initiatives, approvals are made at the project level, and the portfolio only becomes a factor when it comes to looking at the total amount of the investment budget that has been allocated.

In some ways this makes sense, individual projects cannot be ignored because that is how work is defined and will ultimately be executed. We can consider projects as …

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