OVERVIEW

The objective of project valuation most often is not only to evaluate a project for its own merit but also to compare how it stacks up against other projects competing for the same investment pool. To maximize returns on their investments, today s corporations especially their product development and IT organizations are taking a portfolio approach. The project portfolio is designed to maximize the portfolio value by assessment, prioritization, selection, tracking, and termination/completion of projects based on the strategic goals of the organization and resource availability.

Figure 2-1 presents the Funnel & Filters model to represent a portfolio of projects. Each project s end-to-end life cycle is characterized by three distinct phases:

• Assessment

• Development

• Production

Figure 2-1: Portfolio Management: Funnels & Filters

In the assessment phase, project ideas are initiated and assessed for their merit as well as how they compare with other competing ideas. The ideas go through a filter(s), which helps in selecting those that are deemed worthwhile for investment and reject those that are not. The selected ideas become formal projects and enter the next phase. The objective of the development phase is to develop the target product (or service). In this phase, there are additional filters that facilitate management s contingent decisions (defer investment; abandon, expand, contract, or continue the project at the planned scale; etc.) on the product development. The end of this phase is marked by launch of the product associated with the project.

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