Module 4 – Portfolio Strategy

What is
Organizational Strategy
What is Organizational Strategy?
The Project Management Institute (PMI) defines organizational strategy
as "a plan that integrates an organization’s major goals, policies, and
action sequences into a cohesive whole."

According to PMI, a well-formulated strategy helps to marshal and

allocate an organization's resources into a unique and viable posture
based on its relative internal competencies and shortcomings, anticipated
changes in the environment, and contingent moves by intelligent
opponents.
Organizational strategy is closely tied to the principles of project
management, as PMI emphasizes the alignment of project, program, and
portfolio management functions with the organization’s strategic
objectives. This ensures that the projects undertaken are not only
managed well but also contribute to the strategic goals and long-term
vision of the organization.
What is Organizational Strategy?
Organizational strategy, therefore, refers to the
comprehensive plan developed by an organization to achieve
its long-term goals and objectives.

It serves as a guiding framework for decision-making and

resource allocation across the company.

This strategy is typically designed to create a competitive

advantage in the marketplace, ensuring the organization can
successfully contend with competitors, address customer
needs, adapt to changes in the external environment, and
achieve sustainable growth and profitability.
What is Organizational Strategy?
Key components of an organizational strategy include:
1. Vision and Mission: The fundamental purpose and aspirational goals of the
organization, which set the direction for strategic objectives.
2. Strategic Objectives: Specific, measurable goals that the organization aims to
achieve within a certain timeframe.
3. Tactics and Action Plans: Detailed steps and initiatives that the organization
will take to meet its strategic objectives.
4. Resource Allocation: Decisions regarding the distribution of resources such as
capital, personnel, and time to support strategic initiatives.
5. Performance Measurement: Systems to track progress against strategic
objectives, allowing for assessment and adjustment of the strategy as needed.

An effective organizational strategy is not static; it requires continuous evaluation

and adjustment to remain relevant in a dynamic business environment.
What is Organizational Strategy?
5 key areas to focus on an organizational strategy include:
1. Strategic Management Fundamentals:
• Definition and components of strategic management.
• The role of strategic management in project management.
• The strategic management process: vision, mission, goals, objectives.
2. Strategy Formulation and Analysis:
• Conducting internal and external environmental analyses.
• Tools and frameworks for strategic analysis (e.g., SWOT, PESTEL, Porter’s Five
Forces).
• Formulating business-level, corporate-level, and global strategies.
3. Strategy Implementation:
- Translating strategy into actionable projects and programs.
- Designing organizational structures to support strategic initiatives.
- Change management and communication strategies for effective implementation.
What is Organizational Strategy?
4. Portfolio Management in Strategic Alignment:
• Principles of portfolio management and its role in strategic alignment.
• Selection and prioritization of projects based on strategic objectives.
• Balancing and optimizing the portfolio for risk, resources, and returns.
5. Measuring Strategic Performance:
• Key performance indicators (KPIs) for strategy execution.
• The Balanced Scorecard and other strategic performance measurement tools.
• Continuous improvement and strategic learning in organizations.

These topics provide a structured approach to understanding how organizational

strategy is closely linked with project management and how strategic goals shape the
selection, prioritization, and execution of projects within an organization.
 What is project
portfolio management?
What is Project Portfolio Management?
Project Management Institute (PMI) defines project
portfolio management as
"the centralized management of one or more
portfolios to achieve strategic objectives".
It is a way to bridge the gap between strategy and
implementation, and it involves the identification,
prioritization, authorization, management, and control
of projects, programs, and other related work to
achieve specific strategic business objectives.
What is Project Portfolio Management?
The key components of project portfolio management according to PMI include:
1. Aligning the portfolio with strategic objectives: Ensuring that all projects within
the portfolio are contributing towards the overarching goals and objectives of the
organization.
2. Optimizing the portfolio: Balancing the portfolio to maximize its value, including
the appropriate allocation of resources across the portfolio.
3. Efficient resource management: Ensuring that resources are used effectively
across the portfolio, avoiding overallocation or conflicts between projects.
4. Performance management: Monitoring the progress of the portfolio to ensure
that it is on track to deliver the expected strategic benefits and outcomes.
5. Governance: Establishing and maintaining processes and decision-making
frameworks that support effective management of the portfolio.
PMI offers guidelines and standards for project portfolio management through its
publications, like "The Standard for Portfolio Management-Forth Edition" which
provides best practices and processes to be followed by portfolio managers.
What is Project Portfolio Management?
Let's say college is like a big investment firm, and you're now in
charge of managing your own set of investments. But instead of
stocks and bonds, your portfolio consists of all the projects and
activities you're involved in, like your courses, internships, clubs, and
personal projects.
Project portfolio management is like being an investment
manager for your own college experience, making sure that
everything you're involved in is helping you grow and preparing you
for your future career. Here's how it works:

1. Setting Goals (Your Investment Strategy): First, you define

what success looks like for you. Is it academic achievement,
building professional skills, personal growth, or a mix of these?
This is your strategy.

2. Choosing Projects (Picking Investments): You decide which

courses, extracurriculars, or work experiences to take on. Like
choosing investments, you select projects that you believe will
benefit you most and align with your goals.

3. Balancing Your Portfolio (Diversification): You wouldn't invest

all your money in one stock, right? Similarly, you balance your
What is Project Portfolio Management?
4. Prioritizing (Assessing Value and Risk): Some projects are like
high-yield stocks—they require more effort but have the potential
for great rewards (like an intensive research project or leadership
role). You’ll decide which projects are worth that extra effort and
which ones might be too risky or time-consuming.

5. Monitoring and Adjusting (Portfolio Rebalancing):

Throughout the year, you'll review how your projects are doing.
Are they helping you move towards your goals? If not, it might be
time to cut back on some activities or take on new ones that are
more aligned with your objectives.

6. Reflecting on Performance (Annual Review): At the end of

the year, you'll look back on what you've achieved, learn from
your experiences, and use those insights to make even better
'investment' decisions the next year.

In essence, project portfolio management for a college student is

about making conscious choices regarding where to invest your time
and effort to maximize the returns—in terms of learning, experience,
and personal growth—towards your long-term goals.
What is Project Portfolio Management? – Real World Example
One notable real-world project portfolio undertaken by the City of
Toronto is the "City of Toronto Corporate Real Estate Management
Net Zero Carbon Plan."

This project focuses on aligning the city's real estate portfolio with its
commitment to achieving net-zero greenhouse gas emissions. The
plan was developed in response to Toronto's declaration of a Climate
Emergency in October 2019 and aims to support the city's vision of
becoming a clean, green, and sustainable city.

The Net Zero Carbon Plan includes various initiatives and strategies
to reduce carbon emissions across the city's real estate assets. It
aligns with Toronto's 2019 Corporate Strategic Plan and addresses
the need to protect the city's economy, ecosystems, and community
from climate change.

For more detailed information, you can view the document related to
this project here.
Project Portfolio Management
What is a Portfolio
Strategy?
What is Project Strategy?

According to the Project Management Institute (PMI), Portfolio

Strategy in project management refers to the centralized
management of one or more project portfolios to achieve strategic
objectives.
This involves overseeing a collection of projects, programs, and
possibly other work that is grouped together to facilitate effective
management and alignment with the organization's strategic goals.

Portfolio management is distinct from project and program

management, as it focuses on evaluating, prioritizing, and
overseeing a collection of projects and programs from a strategic
perspective.

The primary goal of portfolio management is to ensure that the

organization's resources are invested in projects and programs that
align with its strategic objectives, and that these initiatives
collectively deliver the expected business value.

For more detailed information, you can refer to PMI's resources on

portfolio management here.
What is a portfolio
strategic plan?
What is Project Strategy?

According to the Project Management Institute

(PMI),
a Portfolio Strategic Plan in project management is
a comprehensive plan that outlines the
management of a collection of projects, programs,
and possibly other work, grouped together to
achieve strategic objectives.

This plan is central to portfolio management, which

involves overseeing these collections to ensure
they align with and contribute effectively to the
organization's overall strategic goals.
 What is Project Strategy?

The Portfolio Strategic Plan typically includes:

1.Strategic Objectives: Clear articulation of the strategic goals and
objectives that the portfolio is intended to achieve.
2.Portfolio Governance: Framework and processes for guiding
portfolio management activities, ensuring alignment with
organizational strategies and goals.
3.Resource Allocation: Decisions regarding the allocation of
resources (human, financial, material, etc.) across the portfolio to
optimize investments and outcomes.
4.Risk Management: Strategies for identifying, assessing, and
mitigating risks within the portfolio.
5.Performance Metrics: Criteria and metrics for evaluating the
performance of the portfolio in terms of delivering value and
achieving strategic objectives.
6.Change Management: Processes for managing changes within
the portfolio, including adapting to shifts in organizational strategy
or external factors.

The Portfolio Strategic Plan is essential for ensuring that the

collection of projects and programs within the portfolio are not only
managed effectively on an individual basis but also contribute
cohesively towards the broader strategic aims of the organization.
Modern Portfolio
Theory
 What is Modern Portfolio Theory?

Modern Portfolio Theory (MPT) is an investment theory that provides

a method for constructing a portfolio of assets that maximizes
expected return for a given level of risk.
Developed by American economist Harry Markowitz and published in
his paper "Portfolio Selection" in the Journal of Finance in 1952, MPT
earned him a Nobel Prize for his work.

Key aspects of Modern Portfolio Theory include:

1.Diversification: MPT emphasizes the importance of diversifying
investments. It suggests that a diversified portfolio can reduce the
overall risk because different assets often perform differently under
the same economic conditions.
2.Risk-Return Trade-Off: The theory posits that most investments
can be categorized as either high risk and high return or low risk
and low return. Investors can achieve optimal results by choosing a
mix of these assets based on their risk tolerance.
3.Efficient Frontier: MPT introduces the concept of the 'efficient
frontier', which represents the set of portfolios that offer the
highest expected return for a given level of risk or the lowest risk
for a given level of expected return.
 What is Modern Portfolio Theory?

4. Mathematical Framework: MPT uses a mathematical

framework to build portfolios. This involves plotting every possible
combination of assets on a graph, with risk on one axis and
expected return on the other, to identify the most efficient
portfolio.
5. Assumption of Rational Investors: The theory assumes that
investors are rational and will choose the less risky portfolio when
two portfolios offer the same expected return.
6. Quantitative Analysis: MPT relies heavily on quantitative
techniques to assess risk and determine the best asset allocation.

For more detailed information, you can refer to the Investopedia

article on Modern Portfolio Theory here.
Portfolio Strategic Plan
Components
 What are Portfolio Strategic Plan Components

The components of a portfolio plan in project management typically

include the following elements:

1.Portfolio Strategic Management: This involves aligning the

portfolio with the organization's strategic objectives. It includes
setting goals, defining the vision for the portfolio, and ensuring that
the projects and programs within the portfolio contribute to these
strategic objectives.

2.Portfolio Governance: This component focuses on the decision-

making processes, policies, and guidelines that govern the
management of the portfolio. It includes establishing roles and
responsibilities, decision-making frameworks, and performance
metrics.
 What are Portfolio Strategic Plan Components

3. Portfolio Value Management: This component focuses on

ensuring that the portfolio delivers the maximum possible value.
It involves prioritizing projects and programs based on their
expected value contribution and monitoring the realization of this
value.
4. Portfolio Risk Management: This involves identifying,
assessing, and managing risks that could impact the portfolio. It
includes developing risk mitigation and contingency plans.

These components work together to ensure that the portfolio is

strategically aligned, well-governed, effectively managed, and
delivers value to the organization while managing risks appropriately.

For more detailed information, you can refer to resources such as

ProjectEngineer.net.
Questions