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Leadership, Strategic IQ, and Organizational Health BY RAHUL GUPTA BCAF005 Portfolio Management

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Page 1: Sapm presentation

Leadership, Strategic IQ, and Organizational Health

BY RAHUL GUPTA BCAF005

Portfolio Management

Page 2: Sapm presentation

Overview of Project Portfolio Management

Portfolio is a combination of securities such as stocks, bonds and money market instruments

WHAT IS PORTFOLIO??

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Overview of Project Portfolio Management

Project portfolio management is a combination of various management disciplines:

%Management Disciplines

General management

Business management

Project and program management

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Overview of Project Portfolio Management

Portfolio Management is an ongoing process that

includes decision-making, prioritization, review,

realignment, and reprioritization.”

Financial Portfolio Quote

“Portfolio management is the strategy-

based, prioritized set of all projects and

programs in an organization reconciled to

the resources available to accomplish

them.”

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Overview of Project Portfolio Management

Portfolio is constructed on following basis :

• Determining the objectives of the portfolio.

• Selection of securities to be included in the portfolio.

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Overview of Project Portfolio Management

The Purpose of Portfolio Management

• Execute Strategy

• Deliver Business Value

• Enhance Decision Making

• Manage Organizational Change

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Overview of Project Portfolio Management

SELECTION OF SECURITIES

Once the asset allocation decision has been made, the portfolio manager has pick the securities that go into the portfolio.Again, the decision can be made on Active basis or on Passive basis.

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Overview of Project Portfolio Management`ACTIVE STRATEGIESThe objective is to use the skills of your security analysts to select stocks that will outperform the market, and create a portfolio of these stocks. The security selection skills can take on several forms. Technical Analysis, where charts reveal the direction of future price movements

Fundamental Analysis, where public information is used to pick undervalued stocks

Access to private information, which enables the analyst to pinpoint mis-valued securities.

Page 9: Sapm presentation

Overview of Project Portfolio Management

PASSIVE• Index FUNDS are created by holding STOCKS in a wider index in

proportion to their MARKET value. No attempt is made to trade on a frequent basis to catch market upswings or downswings or select 'good' stocks.

• Assumptions:MARKETS are efficient. Attempts to time the market and pick good stocks are expensive and do not provide reasonable returns. Holding a well diversified portfolio eliminates unsystematic risk.

• Advantages: Transactions costs are minimal as is the cost of searching for

information.

Page 10: Sapm presentation

Overview of Project Portfolio Management

Markowitz Portfolio:• A Markowitz efficient portfolio is created by searching through all possible

combinations of the universe of securities to find that combination that maximizes expected return for any given level of risk.

• Assumptions: The portfolio manager can identify the inputs (mean, variance, covariance) to the model correctly and has enough computer capacity to run through the optimization exercise.

• Advantages: If historical data is used, the process is inexpensive and easily mechanised.

• Disadvantages: The model is only as good as its inputs.

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Overview of Project Portfolio Management

Factors affecting investment decisions in portfolio management

RISK TOLERANCERETURN NEEDSINVESTMENT TIME HORIZONTAX EXPOSURE

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Overview of Project Portfolio Management

HOW THE SELECTION PROCESS GOES ??

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Overview of Project Portfolio ManagementAt the highest level, Project Portfolio Management has four basic components:

All the steps necessary to construct an optimal portfolio given current limitations and

constraints

Ensure value is delivered by comparing expected benefits

with actual benefits; drive PPM maturity

Selected projects must align with the business strategy and meet other important criteria

OptimizePortfolio Value

Project benefits must be protected in order to deliver

maximum portfolio value

ProtectPortfolio Value

DeliverPortfolio Value

The Goal: Maximize value

delivered to customers and stakeholders

Select the Right Projects

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Overview of Project Portfolio Management

Deliver Portfolio Value

Optimize Portfolio Value

Select the Right Projects

Protect Portfolio Value

Prioritization

Portfolio Balancing

Project Sequencing

Capacity Planning

Portfolio Analysis

Project Monitoring

Portfolio Risk Mgt

Benefits Realization

Lessons Learned

Improve Portfolio Maturity

Efficient Frontier

Portfolio Planning

Portfolio Selection

Ideation

Work In-take

Decision Gates

Opportunity Mgt

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Overview of Project Portfolio Management

Art Science

Successful portfolio management is a combination of art and science

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Overview of Project Portfolio ManagementYou need portfolio management when…

Your Project Managers feel like this

Employees react to organizational goals like this

Your organization acts like this

`

Page 17: Sapm presentation

Overview of Project Portfolio Management