Investment portfolio management - Revision history

S183272: /* Project Portfolio Funnel Management */

2019-03-04T21:12:21Z

Project Portfolio Funnel Management

← Older revision		Revision as of 21:12, 4 March 2019
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	Despite a heavy investment of people and money in projects, the organization still gets poor results because people are working on the wrong projects or on too many projects. Trying to do too much work, causes all projects to suffer from delays, cost overruns, or poor quality<ref name="pmi">https://www.pmi.org/learning/library/project-portfolio-management-limited-resources-6948</ref>		Despite a heavy investment of people and money in projects, the organization still gets poor results because people are working on the wrong projects or on too many projects. Trying to do too much work, causes all projects to suffer from delays, cost overruns, or poor quality<ref name="pmi">https://www.pmi.org/learning/library/project-portfolio-management-limited-resources-6948</ref>
	===Project Portfolio Funnel Management===		===Project Portfolio Funnel Management===
	[[File:Ppm-project-funnel.png\|thumb\|500px\|Portfolio Management ~~Connets~~ Strategy with Execution<ref name=pmi></ref>]]		[[File:Ppm-project-funnel.png\|thumb\|500px\|Portfolio Management Connects Strategy with Execution<ref name=pmi></ref>]]

	Sufficient project organizations, focus their limited resources on the first-rate projects, declining to contribute on projects that are not good enough. Project Portfolio Funnel Management (PPfM) empowers them to make and implement these tough project selection decisions. PPfM is a funnel that connects strategic planning to the execution of projects, making the strategic objectives executable. The inputs of the funnel takes in all of the ideas for projects or financial products that the organization might invest to. These ideas may come from strategy, customer requests, regulatory requirements or ideas from individual contributors. The purpose of the funnel is to select only those projects that meet certain criteria and not move forward with others. The resulting collection of projects is a focused, coordinated, and executable portfolio of projects that will achieve the goals of the organization. The same process is also applicable in financial or investment portfolio management as well. In this case instead of project selection organizations do the wright selection between financial products.		Sufficient project organizations, focus their limited resources on the first-rate projects, declining to contribute on projects that are not good enough. Project Portfolio Funnel Management (PPfM) empowers them to make and implement these tough project selection decisions. PPfM is a funnel that connects strategic planning to the execution of projects, making the strategic objectives executable. The inputs of the funnel takes in all of the ideas for projects or financial products that the organization might invest to. These ideas may come from strategy, customer requests, regulatory requirements or ideas from individual contributors. The purpose of the funnel is to select only those projects that meet certain criteria and not move forward with others. The resulting collection of projects is a focused, coordinated, and executable portfolio of projects that will achieve the goals of the organization. The same process is also applicable in financial or investment portfolio management as well. In this case instead of project selection organizations do the wright selection between financial products.

S183272: /* Annotated Bibliography */

2019-03-04T18:57:44Z

Annotated Bibliography

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	'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.		'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.

	'''~~https://~~www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management/fourth-edition''' Project management institute, standard for portfolio management fourth edition.		'''www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management/fourth-edition''' Project management institute, standard for portfolio management fourth edition.

	==References==		==References==
	<references/>		<references/>

S183272: /* Annotated Bibliography */

2019-03-04T18:57:24Z

Annotated Bibliography

← Older revision		Revision as of 18:57, 4 March 2019
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	'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.		'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.

			'''https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management/fourth-edition''' Project management institute, standard for portfolio management fourth edition.

	==References==		==References==
	<references/>		<references/>

S183272: /* Annotated Bibliography */

2019-03-04T15:39:51Z

Annotated Bibliography

← Older revision		Revision as of 15:39, 4 March 2019
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	'''Mike Fontaine,Enterprise Risk Management, Chapter 4, 2016''' This chapter describes a typical project life cycle (conceptual study, prefeasibility study, feasibility study, project execution) and the various risk management deliverables produced during each project phase (e.g., risk management policy, risk management plan, risk registers, and Monte Carlo simulation of capital cost estimates and project schedules).		'''Mike Fontaine,Enterprise Risk Management, Chapter 4, 2016''' This chapter describes a typical project life cycle (conceptual study, prefeasibility study, feasibility study, project execution) and the various risk management deliverables produced during each project phase (e.g., risk management policy, risk management plan, risk registers, and Monte Carlo simulation of capital cost estimates and project schedules).

	'''Shawkat Hammoudeh,Michael McAleer,Advances in financial risk management and economic policy uncertainty:An overview,February 2015''' This scientific paper describes the difficulties of financial risk management and especially the presence of economic uncertainty and financial crises.		'''Shawkat Hammoudeh,Michael McAleer,Advances in financial risk management and economic policy uncertainty: An overview,February 2015''' This scientific paper describes the difficulties of financial risk management and especially the presence of economic uncertainty and financial crises.

	'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.		'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.

S183272: /* Annotated Bibliography */

2019-03-04T15:39:31Z

Annotated Bibliography

← Older revision		Revision as of 15:39, 4 March 2019
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	==Annotated Bibliography==		==Annotated Bibliography==
	'''Pelle Willumsen, Josef Oehmen, Verena Stingl, Joana Geraldi,Value creation through project risk management,Denmark,May 2018''' This scientific paper, provides a critical ~~view~~ view on current and further research on the actuality of risk management in projects and gives and insight of the value of project risk management.		'''Pelle Willumsen, Josef Oehmen, Verena Stingl, Joana Geraldi,Value creation through project risk management,Denmark,May 2018''' This scientific paper, provides a critical view on current and further research on the actuality of risk management in projects and gives and insight of the value of project risk management.

	'''Mike Fontaine,Enterprise Risk Management, Chapter 4, 2016''' This chapter describes a typical project life cycle (conceptual study, prefeasibility study, feasibility study, project execution) and the various risk management deliverables produced during each project phase (e.g., risk management policy, risk management plan, risk registers, and Monte Carlo simulation of capital cost estimates and project schedules).		'''Mike Fontaine,Enterprise Risk Management, Chapter 4, 2016''' This chapter describes a typical project life cycle (conceptual study, prefeasibility study, feasibility study, project execution) and the various risk management deliverables produced during each project phase (e.g., risk management policy, risk management plan, risk registers, and Monte Carlo simulation of capital cost estimates and project schedules).
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	'''Shawkat Hammoudeh,Michael McAleer,Advances in financial risk management and economic policy uncertainty:An overview,February 2015''' This scientific paper describes the difficulties of financial risk management and especially the presence of economic uncertainty and financial crises.		'''Shawkat Hammoudeh,Michael McAleer,Advances in financial risk management and economic policy uncertainty:An overview,February 2015''' This scientific paper describes the difficulties of financial risk management and especially the presence of economic uncertainty and financial crises.

	'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is ~~vulnearable~~ to economic changes and how project managers can ~~hande~~ construction financial risks.		'''Augustin Purnus, Constanta-Nicoleta Bodea, Educational simulation in construction projects financial risks management, Bucharest, 2015''' This scientific paper describes, how much the construction sector is vulnerable to economic changes and how project managers can handle construction financial risks.

	==References==		==References==
	<references/>		<references/>

S183272: /* Conclusion */

2019-03-04T15:38:00Z

Conclusion

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	==Conclusion==		==Conclusion==
	This article proves that Investment Portfolio Management and Project Portfolio Management have similarities according to the managerial process perspective.		This article proves that Investment Portfolio Management and Project Portfolio Management have similarities according to the managerial process perspective.
	The obvious ~~diferences~~ are in the identification and managing the different kind of risks.(Projects risks versus Financial risks).		The obvious differences are in the identification and managing the different kind of risks.(Projects risks versus Financial risks).

	==Annotated Bibliography==		==Annotated Bibliography==

S183272: /* Financial Risks */

2019-03-04T15:37:20Z

Financial Risks

← Older revision		Revision as of 15:37, 4 March 2019
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	==Financial Risks==		==Financial Risks==
	[[File:Types-of-Financial-Risks1.jpg\|thumb\|450px\|Types of Financial Risks <ref>https://www.simplilearn.com/financial-risk-and-its-types-article</ref>]]		[[File:Types-of-Financial-Risks1.jpg\|thumb\|450px\|Types of Financial Risks <ref>https://www.simplilearn.com/financial-risk-and-its-types-article</ref>]]
	In contrast with project risks, anything that relates to money flowing in and out of a business is financial risk. Financial risk is often understood in terms of financial loss and uncertainty about the extent of its loss. In simple terms, what is the amount of money a business may lose and what is the ~~probabillity~~ of losing it. Since the list of potential risks si so long most experts place them into one of four categories as follows<ref>Shawkat Hammoudeh,Michael McAleer,Advances in financial risk management and economic policy uncertainty:An overview,February 2015</ref>.		In contrast with project risks, anything that relates to money flowing in and out of a business is financial risk. Financial risk is often understood in terms of financial loss and uncertainty about the extent of its loss. In simple terms, what is the amount of money a business may lose and what is the probability of losing it. Since the list of potential risks si so long most experts place them into one of four categories as follows<ref>Shawkat Hammoudeh,Michael McAleer,Advances in financial risk management and economic policy uncertainty:An overview,February 2015</ref>.

	'''Market Risk:''' is any risk that comes out of the marketplace in which a business operates. For example if there is a brick-and-mortar clothing store, the increasing tendency of customers shop online would be a market risk. Businesses that adapt to serve the online crowd have a better chance of surviving than businesses who stick to the offline businnes model. More generally and in any sector, every business runs the risk of being outpaced by competitors.		'''Market Risk:''' is any risk that comes out of the marketplace in which a business operates. For example if there is a brick-and-mortar clothing store, the increasing tendency of customers shop online would be a market risk. Businesses that adapt to serve the online crowd have a better chance of surviving than businesses who stick to the offline businnes model. More generally and in any sector, every business runs the risk of being outpaced by competitors.

S183272: /* The Portfolio Management Process */

2019-03-04T15:34:32Z

The Portfolio Management Process

S183272: /* Project Portfolio Funnel Management */

2019-03-04T15:30:00Z

Project Portfolio Funnel Management

← Older revision		Revision as of 15:30, 4 March 2019
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	[[File:Ppm-project-funnel.png\|thumb\|500px\|Portfolio Management Connets Strategy with Execution<ref name=pmi></ref>]]		[[File:Ppm-project-funnel.png\|thumb\|500px\|Portfolio Management Connets Strategy with Execution<ref name=pmi></ref>]]

	Sufficient project ~~organisations~~, focus their limited resources on the first-rate projects, declining to contribute on projects that are not good enough. Project Portfolio Funnel Management (PPfM) empowers them to make and implement these tough project selection decisions. PPfM is a funnel that connects strategic planning to the execution of projects, making the strategic objectives executable. The inputs of the funnel takes in all of the ideas for projects or financial products that the organization might invest to. These ideas may come from strategy, customer requests, regulatory requirements or ideas from individual contributors. The purpose of the funnel is to select only those projects that meet certain criteria and not move forward with others. The resulting collection of projects is a focused, coordinated, and executable portfolio of projects that will achieve the goals of the organization. The same process is also applicable in financial or investment portfolio management as well. In this case instead of project selection organizations do the wright selection between financial products.		Sufficient project organizations, focus their limited resources on the first-rate projects, declining to contribute on projects that are not good enough. Project Portfolio Funnel Management (PPfM) empowers them to make and implement these tough project selection decisions. PPfM is a funnel that connects strategic planning to the execution of projects, making the strategic objectives executable. The inputs of the funnel takes in all of the ideas for projects or financial products that the organization might invest to. These ideas may come from strategy, customer requests, regulatory requirements or ideas from individual contributors. The purpose of the funnel is to select only those projects that meet certain criteria and not move forward with others. The resulting collection of projects is a focused, coordinated, and executable portfolio of projects that will achieve the goals of the organization. The same process is also applicable in financial or investment portfolio management as well. In this case instead of project selection organizations do the wright selection between financial products.

	===The Portfolio Management Process===		===The Portfolio Management Process===

S183272: /* The Business Problem */

2019-03-04T15:29:26Z

The Business Problem

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	One of the main problems associated with organizations, is that the ratio between Human resources, money and perspective or future projects is inordinate. A usual phenomenon connected with ''over-loading'' phenomenon, mentioned above is the difficulty of management teams to deny new projects. Instead, present day management teams try to do everything by cramming more work onto the calendars of already overworked project teams or by cutting corners during the project.		One of the main problems associated with organizations, is that the ratio between Human resources, money and perspective or future projects is inordinate. A usual phenomenon connected with ''over-loading'' phenomenon, mentioned above is the difficulty of management teams to deny new projects. Instead, present day management teams try to do everything by cramming more work onto the calendars of already overworked project teams or by cutting corners during the project.

	Despite a heavy investment of people and money in projects, the organization still gets poor results because people are working on the wrong projects or on too many projects. Trying to do too much work, causes all projects to suffer from delays, cost ~~overuns~~, or poor quality<ref name="pmi">https://www.pmi.org/learning/library/project-portfolio-management-limited-resources-6948</ref>		Despite a heavy investment of people and money in projects, the organization still gets poor results because people are working on the wrong projects or on too many projects. Trying to do too much work, causes all projects to suffer from delays, cost overruns, or poor quality<ref name="pmi">https://www.pmi.org/learning/library/project-portfolio-management-limited-resources-6948</ref>
	===Project Portfolio Funnel Management===		===Project Portfolio Funnel Management===
	[[File:Ppm-project-funnel.png\|thumb\|500px\|Portfolio Management Connets Strategy with Execution<ref name=pmi></ref>]]		[[File:Ppm-project-funnel.png\|thumb\|500px\|Portfolio Management Connets Strategy with Execution<ref name=pmi></ref>]]

← Older revision		Revision as of 15:34, 4 March 2019
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	===The Portfolio Management Process===		===The Portfolio Management Process===
	The Project Portfolio ~~Managemet~~ Process contains five primary steps. Those steps are:		The Project Portfolio Management Process contains five primary steps. Those steps are:
	* ~~Carify~~ business objectives<ref name="pmi"></ref>		* Clarify business objectives<ref name="pmi"></ref>
	Portfolio management requires a systematic method of ~~seperation~~ between candidate projects to determine which ones are more vital. For example, one company might value environmental stewardship most ~~higly~~, while another places top priority on research and development<ref name="pmi"></ref>.		Portfolio management requires a systematic method of separation between candidate projects to determine which ones are more vital. For example, one company might value environmental stewardship most highly, while another places top priority on research and development<ref name="pmi"></ref>.

	* Capture and research requests and ideas		* Capture and research requests and ideas
	The first step is the creation of an inventory of candidate projects for the portfolio. Include on-going projects as well as ideas for new projects. Sources can include initiatives from strategic planning, regulatory requirements and good ideas from employees and project managers. The second step is gathering of data for each candidate project on the inventory. These include data that will allow a company to rate the projects against the criteria that the company has developed. It may also include early estimates of dependencies and high-level resource requirements.		The first step is the creation of an inventory of candidate projects for the portfolio. Include on-going projects as well as ideas for new projects. Sources can include initiatives from strategic planning, regulatory requirements and good ideas from employees and project managers. The second step is gathering of data for each candidate project on the inventory. These include data that will allow a company to rate the projects against the criteria that the company has developed. It may also include early estimates of dependencies and high-level resource requirements.

	* Select the best projects using ~~difined~~ differentiators that align, ~~maximixe~~ and balance the portfolio		* Select the best projects using defined differentiators that align, maximize and balance the portfolio
	Based on step's two collected data, the company or the portfolio management office should determine which combination of projects creates the highest total value for the portfolio, given high-level resource constraints. This is called portfolio ~~maximazation~~. A maximized portfolio may be out of balance in important ways. For example, it may have an inappropriate risk profile, subjecting the organization to either too much or too little risk. According to Cooper (Cooper, Edgett, & Kleinschmidt, 2001, p. 73), balance is the second weakest element in portfolio construction, after “too many projects.”		Based on step's two collected data, the company or the portfolio management office should determine which combination of projects creates the highest total value for the portfolio, given high-level resource constraints. This is called portfolio maximization. A maximized portfolio may be out of balance in important ways. For example, it may have an inappropriate risk profile, subjecting the organization to either too much or too little risk. According to Cooper (Cooper, Edgett, & Kleinschmidt, 2001, p. 73), balance is the second weakest element in portfolio construction, after “too many projects.”

	* Validate portfolio feasibility and ~~intiate~~ projects		* Validate portfolio feasibility and initiate projects
	To keep the amount of data manageable, a portfolio is initially constructed at high level of abstraction. The resulting portfolio ignores some important constraints and details about its projects. For example, a portfolio’s demand for resources often appears feasible when analyzed at the FTE (full-time equivalents) level. However, this masks bottlenecks caused by limited availability of certain skill sets. Thus, a portfolio may not be feasible to execute even though it is maximized and balanced. When a company or an investor is looking at portfolio feasibility, they have to consider those parameters: Interproject dependencies, knowledge and capabilities of the performing organizations, time-phased resource demand and availability including considerations of key skill sets, Budgetary constraints.		To keep the amount of data manageable, a portfolio is initially constructed at high level of abstraction. The resulting portfolio ignores some important constraints and details about its projects. For example, a portfolio’s demand for resources often appears feasible when analyzed at the FTE (full-time equivalents) level. However, this masks bottlenecks caused by limited availability of certain skill sets. Thus, a portfolio may not be feasible to execute even though it is maximized and balanced. When a company or an investor is looking at portfolio feasibility, they have to consider those parameters: Interproject dependencies, knowledge and capabilities of the performing organizations, time-phased resource demand and availability including considerations of key skill sets, Budgetary constraints.

	* Manage and monitor the portfolio		* Manage and monitor the portfolio
	After the validation of the portfolio, the project management office should put it into execution. Moreover the portfolio manager is responsible for day-today execution of each projects. He or she monitors the execution of the portfolio and its component projects, ensuring that it continues to meet its original design objectives. In this step, the portfolio manager works closely with the project managers to: Gather information to monitor the performance of the portfolio, identify and resolve issues within the portfolio, including reallocating resources,~~Steer~~ the portfolio, making changes when necessary to rescue, re-scope, cancel, or introduce new projects, manage escalations and midcycle requests for changes to portfolio composition, for example, adding new projects and initiate a full portfolio review and reconstruction on a scheduled basis, such as quarterly or annually.		After the validation of the portfolio, the project management office should put it into execution. Moreover the portfolio manager is responsible for day-today execution of each projects. He or she monitors the execution of the portfolio and its component projects, ensuring that it continues to meet its original design objectives. In this step, the portfolio manager works closely with the project managers to: Gather information to monitor the performance of the portfolio, identify and resolve issues within the portfolio, including reallocating resources, steer the portfolio, making changes when necessary to rescue, re-scope, cancel, or introduce new projects, manage escalations and midcycle requests for changes to portfolio composition, for example, adding new projects and initiate a full portfolio review and reconstruction on a scheduled basis, such as quarterly or annually.

	===Investment Portfolio Management versus Project Portfolio Management===		===Investment Portfolio Management versus Project Portfolio Management===