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FIG. 15
Example of use of a productivity graph to help prioritization. |
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earnings. This is addressed directly through an optimization method called integer programming. |
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Integer programming has not been used extensively with portfolio management. However, it does have the potential to help determine the greatest value of the portfolio with given resource constraints. An objective such as maximize return (i.e., sales minus costs) is programmed with a preestablished resource limit. The program determines the mix of projects that produces the highest return. In this example, if resources were just short of $800M, an integer programming solution suggests dropping project Y, even though it has a better return on investment than project X. In a large, complex portfolio, the optimal mix may not be so obvious. |
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VIII.
Organizational Issues |
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This section explores the cultural and organizational concerns raised by implementing a portfolio review process. |
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Successful portfolio review poses a number of organizational challenges. Key issues include |
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