Portfolio Management Knowledge Areas

Portfolio Management Knowledge Areas


5.3 Optimize Portfolio

The purpose of this process is to optimize and balance the portfolio for performance and value delivery. Portfolio optimization involves evaluating the portfolio based on the organization's selection criteria, ranking those portfolio components, and creating the portfolio component mix with the greatest potential to collectively support the organizational strategy. Portfolio optimization includes planning and allocating resources according to organizational strategy and objectives and maximizing portfolio return within the organization's predefined risk profile and tolerances. It is important to balance the portfolio with respect to the diverse goals of the organization, such as financial, organizational development and operational performance goals. This process is closely aligned with the Define Portfolio process.

Portfolio optimization evaluates trade-offs of portfolio objectives, such as the management of risk and return, balancing short-term goals against long-term goals, and balancing project types to align with the organizational strategy and objectives. Limited resources are also balanced across the portfolio to reflect strategic priorities. Portfolio components that deliver a lower level of benefit are removed from the portfolio to allow the organization to focus its resources on higher priority portfolio components that deliver more value. Optimization also incorporates groupings of portfolio components to ensure that portfolio components include all component dependencies, including cost and benefit dependencies for the entire group.

Balancing activities involves reviewing selected and prioritized portfolio components. The portfolio is then balanced to support organizational strategy and objectives using predefined portfolio management criteria, the organization's desired risk profile, portfolio performance metrics, and capacity constraints. Maintaining the portfolio "as is" or adjusting the portfolio is made at completion of the optimization activities.

Portfolio components can be balanced with one another, usually within the same category (categorization also being an attempt to balance portfolio components to address all of the diverse concerns and organizational strategy), using a variety of qualitative and quantitative methods and tools to support the decision-making process and to allocate a budget.

Key activities within this process include:

·         Assigning or reassigning, scoring, or weighting criteria for ranking portfolio components;

·         Performing risk analysis on portfolio components based on the organization's risk profile;

·         Evaluating and determining performance and expected value and benefits (financial and non-
financial) of portfolio components;

·         Determining resource (human, assets, and technology) capability, resource capacity available, and
constraints for portfolio components;

·         Determining which portfolio components should receive the highest priority within the portfolio; and

·         Identifying portfolio components to be suspended, reprioritized, or terminated based on the
balancing or rebalancing activities.


.1 Portfolio

.2 Portfolio roadmap

.3 Portfolio management plan

.4 Portfolio reports

.5 Portfolio process assets

Tools & Techniques

.1 Capability and capacity analysis

.2 Weighted ranking and scoring techniques

.3 Quantitative and qualitative analyses

.4 Graphical analytical methods


.1 Portfolio updates

.2 Portfolio roadmap updates

.3 Portfolio management plan updates

.4 Portfolio reports

.5 Portfolio process assets updates