, , , ,

Whether your organization is an oil & gas major or an elementary school, making smart investment decisions and managing the performance of a portfolio of projects is essential to maximize returns on limited resources.

Hopefully you have better investment screening rigor than Kramer. But how clearly can you articulate the relative performance of your investment options? Should you cancel an in-flight project that is underperforming, and redirect the resources? The two essential charts below should be included in any executive dashboard for portfolio project management in any organization, regardless of mission or industry.

  1. Portfolio Analysis Bubble ChartPortfolio Analysis Bubble Chart: The two axes on this chart are NPV (Net Present Value, which is the expected future returns minus investments, discounted to today’s value) and IRR (Internal Rate of Return, which is the rate by which you’d have to discount the future returns to equal zero today). Accounting jargon aside, the chart compares the magnitude and efficiency of investments. The third component, bubble size, could be anything that is appropriate for the organization (in this example, something really specific like “impact to stakeholders”). You want to select the big bubbles in the top right corner that have large, efficient returns. pre- and post-money options on the same chart (in different colors), and you can inform a decision to sell or wind down a current project in favor of a more favorable option.
  2. Project Health Trend ChartProject Health Trend Chart: A snapshot of any portfolio of projects could be misleading if your projects tend to have large up-front costs and generate returns towards the end of their life. This chart measures the performance of projects on an arbitrary 12 point scale: 4 points each for 3 factors (in this example, financial health, impact, and innovation). By plotting this score for each project on intervals from their start dates, a leadership team can make both absolute and relative comparisons.

What other charts would you include in your “desert island” project portfolio management package? Have you used either of these? Leave a comment with your questions and feedback.