Role in Periodic Portfolio Reviews

During the year managers may decide to hold portfolio reviews[1] for one of two purposes – budget setting and implementing changes in strategy.  The budget setting portfolio review forecasts which projects will be in the portfolio next year, in order to understand the cost of the R&D portfolio (not all projects run up the same cost) and tends to happen before the end of the year.   The strategy change portfolio review will happen whenever needed.  In either case, the portfolio review allows input from both line and matrix managers and project leaders.  Portfolio managers are instrumental to the portfolio review in gathering data from the project leaders and line managers that are not already available (unique to special themes of the review), creating analyses that address these themes, and developing scenarios for discussion.  Portfolio managers must be aware that the analyses may suggest certain conclusions, and should be certain that the data accurately supports such conclusions, but the decisions will be made by the decision makers.  The portfolio discussion rarely leads to one possible conclusion, but several which involve different trade-offs.  Portfolio analyses can help feature the differences among all possible trade-offs.[2]

The decisions resulting from either type of portfolio review can have serious consequences for individual scientists, project teams, project leaders, line department managers, and therapy area managers.

[1] Section 3.4.2 The Standard for Portfolio Management, 2nd Ed. P. 43, Project Management Institute, 2008

[2] A nice discussion of presenting trade-offs in a portfolio review – Dan Smith, Enrich Consulting, “The Last Mile: Enabling Effective Portfolio Decisions”, Strategic Resource & Portfolio Management Conference, Nov. 17-19, 2008.