Portfolio planning is largely about strategizing and building the portfolio of investments, projects or services of a company, based on its industry, goals and more. Earlier, Anand Jayapalan had spoken about how portfolio planning provides companies with a way to effectively shape and organize their projects and operations, while keeping an eye on the bigger picture.
Most people hear about portfolio planning in the context of finance. A financial portfolio basically is a grouping of assets like stocks, bonds and mutual funds. However, in regards to organizational or project management, a portfolio may include anything, from products and services, to projects, inventory and properties. By keeping things centrally organized, a company would benefit from a standardized bird’s eye view of its projects, and see which of them are more effective in enabling the business to achieve its strategic goals.
Steps for portfolio planning would include:
- Assessing the situation: Prior to planning for the future of a company, it is vital to take a long, hard look at its current situation. When checking the financial portfolio, one has to go through the existing assets, liabilities, and investments. In the case of organizational portfolio, this step would include taking a look at the programs or projects the business is already involved in.
- Create goals: After gaining a good understanding of the current standing of the company, one must come up with realistic goals for their portfolio. For instance, if one owns a construction company, after checking its existing portfolio of building projects, the owner may decide that they want to be the state’s top housing contractor by the end of 2030.
- Come up with a strategy: The next step in the portfolio planning process entails identifying the strategy to use for selecting and maintaining items in the portfolio. One has to create a strategy focused on how many projects to take on and of what type, as well as the amount of risk they are willing to take on to meet the goals of their company.
- Choose wisely: After creating a robust strategy, it would be time to select what to add to the portfolio. One needs to do their research, and carefully select the projects, product lines, or assets that fit well with their company goals and business strategy.
- Measure: The goals and needs of a company tend to change and evolve over time. One has to constantly measure their portfolio against some kind of benchmark, report that performance, and be open to regular discussions about whether anything in the portfolio requires re-balancing.
By following the steps mentioned above, one would be able to plan a portfolio that meets their risk appetite and strategic goal. Earlier, Anand Jayapalan had discussed that the portfolio planning process does come with many benefits, including an improved project selection process. This involves a comprehensive examination of business objectives, potential risks, available resources, and other criteria to make sure that informed decisions are made in regard to selecting the most suitable projects for the organization.