Concepts
Portfolio decision-making encompasses the processes of choosing the right components, developing the optimal plans, setting the appropriate budget, and creating a progressive roadmap. The process doesn’t just entail decision making at the portfolio manager’s level but also incorporates obtaining approval from key decision makers within the organization’s governance model.
II. Making Recommendations for Portfolio Decisions
1. Components:
The portfolio manager must evaluate all potential projects and programs regarding their alignment with the company’s strategic goals. They must assess the value, risk, and return of each piece, creating a well-balanced portfolio that combines high-risk high-reward components with secure, low-risk elements. Recommendations should be based on thorough analysis and clear understanding of project interdependencies.
2. Plans:
Planning needs to merge strategic orientation with operational feasibility. Outline of project scheduling, resource allocation, and risk mitigation strategies should be at the core of your recommendations. They must also account for contingencies and provide a pragmatic vision of the venture’s outcomes.
3. Budget:
Constructing a budget that justifies the resources expended in relation to the expected returns is critical. Your suggestions should factor in all potential costs—human resources, material resources, third-party services—against the project’s benefits and returns.
4. Roadmap:
This is a strategic tool that visualizes the timeline, key milestones, and end objectives of projects in the portfolio. Clear, adaptable and comprehensive roadmap recommendations are needed to inspire confidence and secure approval.
III. Obtaining Approval from Key Decision Makers
Communication is the backbone of obtaining approval for your portfolio decisions. A persuasive rationale of your portfolio decisions, delivered to the appropriate stakeholders, can garner the necessary approval.
1. Clear Communication:
Explain your decisions in simple language that decision makers can comprehend. Make your case by demonstrating the benefits of your choices.
2. Visual Representation:
Use tables, graphs, and charts to effectively communicate complex data. Visualizations make it much easier to absorb, understand, and accept.
3. Active Engagement:
Cultivate relationships with decision makers for their active involvement. This can make them feel a sense of ownership and responsibility towards the portfolio.
4. Strategic Alignment:
Show that your recommendations align with the organization’s strategic objectives to win the buy-in of top-level executives.
IV. Role of Governance Model in Portfolio Decision Making
The governance model determines who the key decision makers are in portfolio decisions. It outlines the roles, responsibilities, and powers of everyone involved in the portfolio management, including the various committees and boards.
1. Strategic Alignment:
The governance model ensures the portfolio decisions are in line with the company’s strategic goals.
2. Control and Accountability:
The model sets the framework for monitoring, reporting, and evaluating portfolio performance.
3. Approval Authority:
The governance model stipulates who has the power to approve decisions concerning portfolio components, plans, budgets, and roadmaps.
A robust decision-making process for portfolio management is much more than just the portfolio manager making choices. It incorporates reasoned recommendations and successful communication strategies to gain approval from key decision makers as mandated by the governance model. Consequently, leading to the effective execution of the portfolio with the full backing of all stakeholders.
Answer the Questions in Comment Section
True or False: In portfolio management, it is recommended to obtain approval for decisions from key decision makers through communication.
- True
Answer: True
Explanation: Proper communication with key stakeholders, who are often key decision makers, is vital to obtain necessary approvals and authorizations for the execution of the portfolio.
The key decision makers in portfolio management are defined by which of the following?
- A. The governance model
- B. The project management team
- C. The finance team
- D. The implementation team
Answer: A. The governance model
Explanation: The governance model defines the key decision makers who authorize the execution of the portfolio.
The components, plans, budget, and roadmap of a portfolio are decisions that need to be:
- A. Made by the portfolio manager alone
- B. Approved through communication with key decision makers
- C. Made without consideration to stakeholders
- D. Approved by the project team
Answer: B. Approved through communication with key decision makers
Explanation: These crucial decisions need to be made through communication and collaboration with key decision makers to obtain authorization and ensure alignment with the business’s strategic objectives.
True or False: The governance model is not crucial in defining who key decision makers are in the portfolio management process.
- False
Answer: False
Explanation: The governance model is crucial in defining the key decision makers as these are the individuals who will authorize the execution of the portfolio.
What is the main role of key decision makers in the governance model of portfolio management?
- A. Delegating tasks to the project team
- B. Authorizing the execution of the portfolio
- C. Developing the portfolio roadmap
- D. Formulating the project budget
Answer: B. Authorizing the execution of the portfolio
Explanation: The key decision makers in the governance model are responsible for granting approvals for portfolio decisions and authorizing the execution of the portfolio.
True or False: Making recommendations and obtaining approval for portfolio decisions is not a necessary step in portfolio management.
- False
Answer: False
Explanation: This step is critical in portfolio management as decisions such as the selection of components, planning, budgeting, and roadmap creation all require approvals from key decision makers.
Who can typically be a key decision maker in a portfolio management governance model?
- A. The Portfolio Manager
- B. A Senior Executive
- C. Both A and B
- D. Neither A nor B
Answer: C. Both A and B
Explanation: Key decision makers can include the Portfolio Manager and Senior Executives, among others. Their role is to authorize decisions critical to the portfolio management process.
True or False: The portfolio manager is always the key decision maker as defined by the governance model.
- False
Answer: False
Explanation: While the portfolio manager plays a key role, key decision makers can also include senior management and other stakeholders as defined by the governance model.
If a portfolio decision requires a change in budget, who should the portfolio manager communicate with to get approval?
- A. Project Team
- B. Stakeholders
- C. Key Decision Makers
- D. None of the above
Answer: C. Key Decision Makers
Explanation: Any changes that affect decisions such as budgeting should be communicated with and approved by key decision makers as defined by the governance model.
True or False: Recommendations in portfolio management must always be followed for successful execution of the portfolio.
- False
Answer: False
Explanation: Recommendations provide valuable insight and guidance but are not always necessarily followed. The key decision makers decide the necessary steps needed for the successful execution of the portfolio based on the particular business and strategic needs.
Thanks for the insightful post, I appreciate the clarity on the importance of obtaining approval from key decision makers.
Can you elaborate on the process of mapping out portfolio components to the roadmap?
The section on budget allocation was particularly helpful. Any tips on presenting budget proposals to the governance board?
What tools do you recommend for tracking and managing the portfolio performance?
Great post, it really helped me understand how to effectively communicate with stakeholders.
I’m still unclear on how to handle conflicting priorities within the portfolio. Any advice?
Really informative blog, thank you!
Interesting read, but the section on risk management felt too brief.