Project Selection and Portfolio Management

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What is Project Portfolio Management (PPM)?

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PPM is the process of selecting, supporting, and managing a collection of projects to ensure they align with a company's strategic goals.

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What are the key objectives of Project Portfolio Management?

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The key objectives are to prioritize projects, allocate resources effectively, and regularly review and adjust the portfolio.

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What are the six criteria for a useful project selection model?

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1. Realism 2. Capability 3. Flexibility 4. Ease of Use 5. Cost Effectiveness 6. Comparability

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What is the Net Present Value (NPV)?

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NPV calculates the difference between the value of future cash inflows and outflows, discounted to present value. A positive NPV indicates a project adds value.

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What does the Payback Period measure?

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The Payback Period measures how long it will take for a project to recover its initial investment from the cash flows it generates.

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What is the Internal Rate of Return (IRR)?

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IRR is the discount rate that makes the NPV of a project zero. A higher IRR indicates a more attractive project.

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What are the common challenges in Portfolio Management?

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1. Conservative technical communities 2. Out-of-sync projects 3. Unpromising projects 4. Scarce resources

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What is the Analytic Hierarchy Process (AHP)?

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AHP is a decision-making method that breaks down complex decisions into smaller parts, allowing for a structured comparison of projects based on criteria.

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What is the purpose of the Project Portfolio Matrix?

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The Project Portfolio Matrix classifies projects based on their commercial potential and technical feasibility to help prioritize investments.

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What are the four types of projects in the Project Portfolio Matrix?

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1. Bread and Butter: Low-risk, high-return projects. 2. Pearls: High-risk, high-reward projects. 3. Oysters: High-risk, high-return, but difficult to implement. 4. White Elephants: Low-risk, minimal return projects.