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.
Portfolio 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.
Project 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.
Tired of all those inspiring, motivational ring-in-the-new-year articles by happy, successful people? Had enough of all that pressure to make next year arbitrarily “better,” just because the Earth has finished another lap as defined by a very clever, very dead pope? Tell me about it. Follow these five simple steps to make sure that your 2014 feels like Blackberry plus JC Penney, raised to the power of Kozlowski. Maybe we’ll see you soon on the outside, Dennis!
Devote a few hours each month to making random strangers feel frustrated. Buck the trend of increasing volunteerism in America by performing random acts of savagery. Push yourself to go beyond driving rudely into the realm of vandalism, and see how many bad days you can leave in your wake.
Publicly humiliate your family and alienate your longtime friends. Take a page from the Book of Spitzer or channel DSK to see if you can flush your professional and personal relationships through a series of short-sighted, self-indulgent choices.
Clean out your savings and destroy your credit to speculate on cryptocurrency and foreign exchange trading. After ruining your health, family, friendships, career, and community, the final step in ensuring 2014 is your worst year ever is to gut your financial standing. Rely on your deeply rooted mammalian instincts to chase returns, sell in a panic on price dips, and get cleaned out by well-researched, professional traders on high speed platforms.
No matter how 2013 treated you, this advice will guarantee 2014 feels like moving to Greece in comparison. Thanks to everyone who has followed Leadertainment so far, and have a terrible year!