Feb. 26, 2004


There is a growing body of literature in our industry that addresses the use of portfolio management techniques to find “optimum” mixes of projects that meet company goals while managing risk.  These investigations usually start by describing “risk” in some manner, then proceed to illustrate how combinations of properties can be chosen that minimize this risk function subject to the other goals of the company.  The probabilities of meeting individual metric targets in discrete time frames can and should also be quantified. 


This type of analysis is valid and useful, and forms the backbone of project portfolio management.  However, when dealing with risk and probability concepts it is easy to lose sight that specific events will occur in time, and that the portfolio must include enough flexibility to allow reaction to these events.


Specifically, acceptable portfolio results may depend on a small number of projects performing at a certain level. The chance of them not performing at this level may be relatively small, and so the risk is deemed “acceptable”.  If one of the projects subsequently fails to perform, what was once “acceptable risk” can become an exercise in saving a company.  


In this paper, we will show how portfolio management techniques can be used to plan a portfolio robust enough to recover from a feared future disaster.  We will demonstrate with examples how the techniques can lead us to make investment choices today that might not be obvious if projects are evaluated solely using their mean values, but which, if made judiciously, can provide insurance against possible future disaster. 

Featured Speakers



Peter Stan

Date and Time

Thu, Feb. 26, 2004

11:30 a.m. - 1 p.m.
(GMT-0500) US/Central

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The Courtyard on St. James Place, 1885 St. James, Houston, TX