216
Advanced Project Portfolio Management and the PMO
NPV
High
0
RISK
High
Figure 14.2 Bubble Diagram Showing Four Portfolio Variables — NPV Range, Risk Range, Internal/External Projects, and Originator
is that many executives find these images far too complicated. For more indepth discussion on diagramming techniques, see the book referenced in the Bibliography called Portfolio Management for New Products, by Cooper, Edgett and Kleinschmidt. For example, in Figure 14.2, there is a project in the lower, right quadrant that has a potential to yield a negative NPV. Part of its range falls below zero. The rectangular shapes denote internal improvements, while the ovals denote projects addressing external factors, such as markets, suppliers, and distribution channels. The fillers denote from which functional area the project originates. For example, bricks are projects sponsored by IT. Dots are from marketing. These kinds of representations are usually brought into play after the executives have had some experience with the basics. Looking back at Table 14.1, it is obvious that some key information is missing. For example, what percentage of the total NPV does each project represent? What percentage of the total portfolio investment does each project represent? Are these two figures in balance? We would hate to see a situation where we were investing 25% of our total portfolio in a project that would yield only 5% of the value needed to meet our goals.