The importance of ranking in portfolio management1153112

The rating of projects is the foundation for portfolio management. A good system of ranking the projects in the portfolio should not only make simpler and improve the process, but also provide better outcomes than when it is done by hand or by means of electronic tables. Just about any system of portfolio management has its own "flavor" with respect to the ranking of projects: some are great, others are simply decent, and there're those who're wrong. Microsoft project system is a great tool for portfolio management. An understandable system of ranking projects is an important part of the portfolio management system. It should be based on a clear, quantified and modern decision theory and it must be available for free training.

Below are a few crucial factors that you should take into account when thinking about the ranking system projects in the portfolio: - Stay away from systems dependent solely on financial measurements like net present value (NPV). The principle limitation of using a purely financial metrics is that you may over estimate the actual value of the projects. - Stay away from systems that apply the method of analysis of hierarchies (MAI) for ranking projects. MAI is one of the frequent methods of ranking projects and attractive in its simpleness, yet it is not the most suitable strategy for ranking projects. - Try to find a system that will allow you to test the sensitivity and will simplify of how the portfolio may differ in different cases. Sensitivity testing may be important to test the reliability of your rankings. Most systems only permit you to rank on such basis as the "most possible" case. - Choose the system which can manage the questions in the data and parameters of the ranking system. Systems which use Monte Carlo simulation method together with a plurality of portfolio options immediately become the best option for you. - Search for systems that have an obvious and simple to comprehend visual presentation of data, but keep in mind that beautiful chart won't replace a great analysis of the data. If you require a lot of diagrams to explain your results, then you are more likely to mistake everyone involved. - Opt for the system that has trustworthy mathematical and theoretical methods. Make sure that you understand how it works, and that you can explain it to others (as that is precisely what you may will need in the future).

In general, make sure that the logic of the ranking method is trustworthy and testable. You can search more about EMPA online.

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