Portfolio management, when applied to real assets, entails selecting a collection of investments that will best maximise organisational wealth. The optimal portfolio will be that combination of current and future projects that results in the greatest combined value. This portfolio becomes the program of projects that the organisation manages.
A portfolio management system must be able to compare and assess a variety of different investment opportunities and prioritise them. An important consideration is that at the project selection phase many portfolios can become misaligned from their initial vision and strategy, leading to persistent project failure.
mbh enables organisations to classify and rank the programs and projects within portfolios, so only those with the highest potential to add value continue. mbh’s services include the development of methodologies and consulting support for:
Prioritisation frameworks. Similar to financial asset portfolio management that classifies assets into Australian Shares, International Shares and the like, each organisation needs to create its own portfolio classification system. A multi-dimensional prioritisation framework is then constructed to identify, evaluate and prioritise programs and projects within the portfolio(s).
Business cases. These are arguments about whether an investment opportunity is valid or not. They provide justification for undertaking a project after assessing benefit, cost and risk of alternative options and the rationale for the preferred solution. The business case’s purpose is also to obtain management commitment and approval for the project investment.
Financial evaluations. These cost/benefit analyses helps ascertain whether a project is financially feasible or not. mbh uses proven, proprietary evaluation approaches based on Discounted Cash Flow and Real Option Pricing to assist organisations in deciding whether a portfolio is likely to generate incremental cash flows.
Benefit realisation management. This discipline involves the forecasting, measurement, and management of a portfolio’s anticipated economic, financial, operational and strategic benefits to ensure their optimum realisation. The process also consists of driving accountability for achieving these results across the organization.
Enterprise portfolio management software. This web-based software product known as UniPhi assists clients in automating, embedding and communicating the managing by project methodology across their organisations, while also using the approach to dynamically track and manage project portfolios. See www.uniphi.com.au for more information.