The incredible importance of ranking in portfolio management1269354

The ranking of projects is the basis for portfolio control. A good program of ranking the projects in the portfolio shouldn't only make simpler and speed up the procedure, but also have better effects than when it is done manually or by means of electronic tables. Virtually any system of portfolio management possesses its own "flavor" with respect to the ranking of projects: some are excellent, others are just decent, and there exist those who're wrong. Microsoft project system is a good 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 should be readily available for free training.

Here are some essential elements that you should take into account when thinking about the ranking system projects in the portfolio: - Avoid systems based entirely on financial analytics like net present value (NPV). The primary constraint of using a purely financial metrics is that you might over calculate the real value of the projects. - Avoid programs which use the method of analysis of hierarchies (MAI) for ranking projects. MAI is one of the popular methods of ranking projects and appealing in its simpleness, yet it's not the best option way of ranking projects. - Try to find a system that will allow you to test the sensitivity and will make clear of how the portfolio may differ in different cases. Sensitivity testing could 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 that can manage the uncertainties in the data and parameters of the ranking system. Systems which utilize Monte Carlo simulation method along with a plurality of portfolio options instantly become the ideal option for you. - Search for systems that have an obvious and easy to understand visual presentation of data, but remember that beautiful chart won't replace a decent analysis of the data. If you need many diagrams to explain your results, then you're likely to confuse everyone involved. - Choose the system which has reliable mathematical and theoretical methods. Be sure that you recognize how it works, and that you may explain it to others (since that's precisely what you may need in the future).

Generally speaking, be sure that the logic of the ranking method is trustworthy and testable. You can search more about EMPA on the web.

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