This slides briefly describes the approaches of Projectportfolio Management and their advantage or disadvantage. It is derived from on the PMI Portfolio Management Professional. Finally it comes along with a recap and recommendation.

1.  Net Present Value Approach
 Checklist Approach
 Value-of-benefit Approach
 Paired Comparison Approach
 Analytical Hierarchy Process
 Portfolio Techniques
Project Prioritization Approaches

2. The NPV Approach
description Net Present Value
 necessary informations
needed
 Investment for project
 payment of project in period (t)
 discounting interest ( interest
rate + uplift )
 a project is profitable if the
value of NPC > 0
 method is frequently used
for business cases
Disadvantages
 Payments are not safe
 additional gains or benefits are
left out

3. Checklist Approach
description
• senior management defines
criteria
• a committee rates and valuates
the criterias in terms of
fulfillment
• a project is being chosen when
the minimum requirements are
met
Dis- /advantages
• advantage
• simple
• comprehensible
• disadvantage
• criterias are measured equally

4. Value-of-benefit Approach
description
 weighing the compliance of different
objectives in terms of quantity and
quality
 definition of objectives and their value
( importance )
 weighing and scaling their
achievement
Dis- /advantages
Scale
0…10
Effective
weight
Van Roadster
Loading
space
50% 8 1
Easy to
park
20% 2 6
affordable 30% 7 2
Sum 100% 6.5 2.3
 advantages
 forms objectivity of decisions based on
subjective aspects
 structured and traceable decision- making
model
 provides quantification of quality criteria
 disadvantages
 weighing and rating are rather subjective
values

5. Paired Comparison Approach
description
 compare each project with
others in terms of
 important
 less important
 same important
 generating of a matrix
 identify how often a project
could prevail vs. others
Dis- /advantages
 advantage
 precise and reflects the direct
consequences of individual
decisions
 disadvantage
 enormous effort

6. Project A B C D E F
A 3 1
B 1 3
C 3 1
D 1 2 2
E 2 2 1
F 3 1 1
Σ 10 9 8
Rank I II III
Paired Comparison Approach
(cont’d)
1 = less important 2 = equally important 3 = more important

7. Analytical Hierarchy Process
description Dis- /advantages
 advantages
 goals and targets are being
objectified to norm their
prioritization
 disadvantage
 enormous effort
 criterias being compared and
normed by pairs
 goal X is 6x more important then goal
Y, goal Y is 3x more important then
goal Z….
 projects being valued / rated and
normed in pairs towards each goal
 in relation to goal Y project A = 3x
better then project B
 normed ratings and assessments will
be combined to form a priority
coefficient

8. economical
strategical
Resource
Priority 0
1
2
3
4
graphical Projectportfolio
Project A
Project B
Project C
Project D
Potfolio Techniques

9. Portfolio Techniques ( cont’d)
 conventional prioritization
processes determine the order
of project execution
 projects on the priority list will
be executed until the budget is
maxed out
 possibly it might be more
beneficial to execute several
projects with less priority then
the all big priority projects
Knapsack

10.  KISS your prioritization ( Keep It Smart and Simple )
 management needs to be cognizant in his responsibility to prioritize
their projects ( assurance of invest )
 strategic Projectportfolio Management has to be lived throughout all
hierarchy levels
 a close association to general strategy processes needs to be
established
 the prioritization of projects has to be integrated in the planning cycles
 launching of a tool alone will not be sufficient or effective
 introduction of a responsible person for the central steering and
controlling is absolutely necessary
 benefit evaluation should be done during or after closure of the project
Recap and Recommendation