Project Portfolio Optimization As A Part Of Strategy Implementation .

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Business Administration and ManagementPROJECT PORTFOLIO OPTIMIZATIONAS A PART OF STRATEGY IMPLEMENTATIONPROCESS IN SMALL AND MEDIUM-SIZEDENTERPRISES: A METHODOLOGYOF THE SELECTION OF PROJECTSWITH THE AIM TO BALANCE STRATEGY,RISK AND PERFORMANCEEmil Vacík, Miroslav Špaček, Jiří Fotr, Lukáš KracíkIntroductionProject Portfolio Management (PPM) dealswith the coordination and control of multipleprojects that pursue the same strategicgoals and compete for the same resources,whereby managers prioritize among projectsto achieve strategic benefits. PPM deals withsimultaneously managing multiple projects andincludes defining values, specifying priorities,solving conflicts between projects as well asdefining organizational structure and the rulesof its functions (Spradlin & Kutoloski, 1999).To provide maximum value to theorganization, the portfolio must containa balance of project types and risk levels aswell as limit the number of projects to ensurethat all projects can be resourced effectively(Killen, Hunt, & Kleinschmidt, 2008). Accordingto numerous studies, project portfoliomanagement is currently applied in the practiceof nearly all modern enterprises (Miguel, 2006).In order to use PPM methodologysuccessfully, it is necessary to form aneffective portfolio configuration to controlproject prioritization and how set goals arefulfilled. It is also necessary to create a suitableorganizationalstructurethroughouttheentire organization (Kunz, 2007). The maingoal is to implement suitable projects at thecorrect time together with the optimum use ofavailable resources. It is often asserted that theintroduction of a PPM process is a key factorfor project success (Wideman, 2005; Cooper,Edgett, & Kleinschmidt, 2001).DOI: 10.15240/tul/001/2018-3-007EM 3 2018.indd 107Project management processes are includedin international standards such as the PMBOK (PMBOK, 2013), the PRINCE 2 (PRINCE2,2017) and the IPMA (IPMA, 2015). Thesestandards are internationally recognized and used.In this context, the German environment regularlyuses the term ‘multi-project management’, whichmeans the complex planning, coordination andcontrol of multiple, mostly mutually dependentprojects within one organisation / organisationunit. The definition of multi-project managementis based on DIN 69901, which defines multiproject management as ‘an organisationaland procedural framework for managing morethan one partial project’ and is thus ranked intothe systems of management. If more projectsare to be implemented simultaneously withinan organisation, the nature of multi-projectmanagement enables this expectation.This subject has been addressed bymany authors such as Aritua, Smith, andBower (2009), Seidl (2011), Lomnitz (2004),Lukesch (2000), Steinle, Eßeling, and Mach(2010), Archer and Ghasemzadeh (1999) andmany others. A survey of empirical studies isexemplified by Martinsuo (2013) or Verbano andNosella (2010). Project portfolio development isone of the key phases of PPM. Its output is anoptimized portfolio, the implementation of whichcontributes to the fulfilment of strategic goalsand complies with the firm’s strategy. To meetthis demand, the portfolio development processmust meet specific requirements in terms of thecontent and progress of its creation.3, XXI, 201810731.8.2018 10:44:41

Ekonomika a managementDuring portfolio development the valueof each single project, which represents keyinput information for portfolio optimization,must be taken in account. After performinga preliminary screening, unsuitable projectsare eliminated from the portfolio. Managers ofproject portfolios must pay continuous attentionto these characteristics even beyond the phaseof portfolio selection. Project portfolios mustbe managed as periodic dynamic decisionmaking processes that encompass projectevaluation, selection and prioritization inorder to achieve a firm’s strategic objectivesand ensure projects are balanced withoutexceeding available resources or breaching setconstraints (Ghasemzadeh & Archer, 2000).Attention is paid to tools and techniques forportfolio evaluation and prioritization (Ringuest,Graves, & Case, 1999), portfolio-orientedproduct development process management(Cooper, Edgett, & Kleinschmidt, 2002), as wellas resource management.The aim of the PPM is to ensure thatresources are allocated to projects in anoptimum manner with respect to the entireportfolio (Engwall & Jerbrant, 2003). Therefore,portfolio development represents the key phaseof project portfolio management. Forminga balanced and effective portfolio is the initialstep in transparent project implementation,which is necessary for meeting both the set ofparameters of single projects and the portfolio.Finally, a well-developed project portfoliocontributes significantly to the fulfilment ofthe firm’s strategic goals. The use of strategicmethods results in better alignment of projectsin the portfolio with current business ly influence the future success ofmanaging corporate strategy. According to theoutputs of the study made by EY in the Czechand Slovak Republics (EY, 2013), the numberof implemented internal projects that supportcompany strategy is increasing. These findingssupport the hypothesis that organizations aremore able to effectively manage their strategiesby means of these projects. Along with the risingnumber of projects, their complexity and thedemands upon their flexibility, the requirementsconcerning project management are alsogrowing. While the notion of the project portfoliohas already been commonly used in the Czechand Slovak Republics, PPM approaches haveyet to be systematically or broadly implemented.108EM 3 2018.indd 108After a careful review of the literature andanalysis of recent contributions, we find thatmany methods and models for project portfoliodevelopment and management have beenformulated and reported in literature overthe past years. These methods and modelsare often based on theoretical frameworks.Strengths and weaknesses may be highlightedin each of them. The present models are mainlybased on fuzzy theory. For instance, four ofthem may be mentioned: (1) Distributionallyrobust fuzzy project portfolio optimizationproblem with interactive returns (Liu & Liu,2017); (2) New Optimization Model for ProjectPortfolio Selection under Interval-ValuedFuzzy Environment (Mohagheghi, Mousavi, &Vahdani, 2015); (3) A Study on Project PortfolioModels with Skewness Risk and Staffing, whichproposes a project portfolio model with staffingbased on credibility measure theory and fuzzytheory under uncertain circumstances (Xu, Liu,& Li, 2017); and (4) R&D project evaluation andproject portfolio selection by a new interval type-2fuzzy optimization approach (Mohagheghi,Mousavi, Vahdani, & Shahriari, 2017).These sources of literature mostly fail toinclude methods for implementing the principlesof project portfolio design and incorporate it intothe routine practice of SMEs. This finding wasfundamental to the further research described inthis paper. Although financial metrics are part ofmost PPM processes, some literature indicatesthat financial methods may not be the mostbeneficial portfolio method to use. Strategicmethods and portfolio maps have the mostpositive influence on portfolio performance.On the other hand, financial methods correlatewith positive performance on only one PPMmetric and do not lead to higher values of theprojects in the portfolio as expected. (Killen,Hunt, & Kleinschmidt, 2008). The process ofthe preparation of effective project portfoliosby means of the use of available software toolsto facilitate risk-based managerial investmentdecision-making in SMEs has not yet beendescribed in any scientific literature.It is well known that there is a longstanding difference between the complex andsophisticated tools developed by academicsand the simple techniques requested bymanagement (Fahrni & Späting, 1990; Poh,Ang, & Bai, 2001).This paper aims to bridge this gap by offeringmethodology based on applying the computer2018, XXI, 331.8.2018 10:44:41

Business Administration and Managementsupported stochastic optimization model, whichuses the available software tool OptQuest.This methodology makes it possible to developand evaluate multiple project portfolios andthus prepare a quality basis for managerialinvestment decision making. The goal of thispaper is to develop the methodology of projectportfolio optimization, which could supportstrategic goal fulfilment and verify benefits ofusing such methodology in the practice of theSmall and Medium-Sized Enterprises (SMEs)segment. The other benefit is the flexibility ofthe development and assessment of portfoliosunder the changing conditions of the businessenvironment.It is up to company management to decidewhether to place more emphasis on the valueof projects, which is determined by multicriteriaevaluation or expected Net Present Value(NPV) of a portfolio. Increasing the efficiencyof the portfolio process requires gatheringinformation concerning the minimum numberof elements needed to capture the essentialdecision dynamics required by managers(Mathews, 2009). The objective is to ensureportfolio performance enhancement.The case study, based on a selectedcompany, represents a more complex approachto the application of the methodology on how todevelop optimum project portfolio with respectto existing constraints and performance goals.The case study proved that this methodologymay be feasible in the SME segment.1. Theoretical BackgroundContemporary firms often implement strategyby means of project portfolios. Selection,planning, management and monitoring ofproject portfolios in an organisation or its unit isthe subject of PPM. Regarding the set strategicgoals of the organisation, the aim of PPM isto ensure the selection of effective projectsand simultaneously respect the efficient use ofresources (technological, financial, personnel,informational and organisational). Conformitybetween these formulated strategic goals andthe investment policy of an organisation ispursued in this manner.The task of project portfolio evaluation andchoice of an effective portfolio has been dealtwith by many other authors. Seidl (2011) appliesa four-level filter for evaluation, optimization andselection of projects that enables formal controlof the projects, their evaluation according to setcriteria, identification of mutual relationshipsand decisions concerning their implementation.Lukesch (2000) assumes the establishment ofbenefits and risks of partial projects. Emphasisis put on a value analysis based on Free CashFlow. When defining the impact of risk, even thevalue of options is respected. Lomnitz (2004)prioritizes the systematic selection of projectsbased on gradual evaluation of ‘the projectideas’ according to four basic evaluation criteria– conformity of projects with strategy, level ofproject risk, disposable capacities and thenecessary know-how. Kunz (2007) recommendsthat pre-screening projects go into the selectionprocess based on several main criteria. Kockand Gemünden (2016) studied the quality ofinnovation project portfolio development andthe ability to quickly adapt the portfolio. Aas,Breunig, and Hydle (2017) focused their efforton practices of portfolio management in thefield of new service development.Effective PPM leads to: (1) effective allocation/reallocation of resources, (2) reinforcement ofcompetitiveness within the firm, (3) balancedportfolios that include short-term and long-termprojects that cover high-risk and low-risk projects,(4) possible suspension or termination of ineffectivemembers within the project portfolio, (5) use ofsynergies between projects, (6) developmentof skills and competencies, (7) unification ofterminology, reporting and communicationwhen managing projects and (8) searching fornew opportunities for effective projects withininvestment limits (Fotr & Souček, 2015).Holistic,strategy-basedportfoliomanagement methodologies and practicessuggest that portfolio-level decisions shouldbe made at the single-project level or throughdevelopment processes. These single-projectand portfolio management practices are linked tocompany level performance indicators (Cooperet al., 2004). Some studies provide initialevidence on a potential link between singleproject management and portfolio managementefficiency (De Reyk et al., 2005). On the otherhand, projects should attempt to enhance theirautonomy and optimize their resource use inpursuing their own performance and businessgoals (Martinsuo & Lehtonen, 2007).The success of an accepted strategy oftendepends on its flexibility and capability to switchover to more useful strategic alternatives. Theimportant parameter of performance beside itseconomic aspects, such as NPV, is a portfolio3, XXI, 2018EM 3 2018.indd 10910931.8.2018 10:44:41

Ekonomika a managementvalue based on the multi-criteria evaluation ofprojects. Managerial decisions concerning a firm’sfuture strategy must respect the circumstancesof entrepreneurial development that are usuallyformulated within strategic scenarios (Fotr etal., 2010; 2015). The task of project portfoliomanagement is then to formulate such portfolioconfigurations that reflect all its main strategicparameters and are feasible for implementationwithin the disposable potential of the firm. Insome studies (Brester, Ryzhikov, & Semenkin,2017) the project portfolio decision-makingproblem was even reduced to a 0 -1 knapsackconstrained multi-objective optimization problem.Companies are always required toimplement mandatory conditions such asenvironmental impact restrictions and worksafety enhancement. Otherwise, the companyis penalized or conditionally closed down. Thisshould be reviewed separately from the projectin question. On the other hand, mathematicalprogramming has a scientific basis andtherefore either replaces or complementsintuitive approaches in developing an optimuminvestment portfolio. Its limitation lies in thenecessary qualification of investment analyststo cope with various programming techniques.In industrial practice, it is sometimes difficultto persuade top managers of the substance andreasons behind this scientific approach, whichmay seem slightly obscure to them. There isevidence that portfolio managers are often notproperly informed and their criteria and routinesmay not solve multi-project problems asexpected (Engwall & Jerbrant, 2003). Decisionmaking on project and portfolio selection isless planned and rational and often morepolitical (Sanwal, 2007) and path-dependentthan normative models would suggest. Someauthors showed evidence (Aaltonen, 2010)of a path of dependence leading from pastdecisions to future decisions in portfoliomanagement and the evolution of the portfoliobased on both planned and co-selected projectfeatures. Possible explanations include the lackof awareness of practice (i.e. what managersactually do) and context (i.e. what are uniqueconditions in which the project portfolio is beingmanaged) (Martinsuo, 2013).2. Research Questionsand MethodologyAfter reviewing current research and literature,it seems the main goals of the PPM process110EM 3 2018.indd 110are generally agreed to be: (a) to maximise thefinancial value of the portfolio, (b) to ensurebalance among projects by limiting their numberto fit organisational capacity, and (c) to ensurethat the portfolio reflects the company strategy(Cooper & Edgett, 2003; Dawidson, 2004).There are many PPM methods used to assistwith strategic decision-making, risk evaluation,and resource allocation for both new andongoing projects. Many papers concerningproject portfolio development and optimizationwere directed to specific fields of application,such as e.g.: (1) power engineering (Pérez,Watts, & Flores, 2018; Qiang, 2017), (2) watersupply (Wu, Dandy, Maier, Maheepala, Marchi,& Mirza, 2017), (3) railway construction (Joubert& Pretorius, 2017), (4) toll road forecasts (Shah& Jammalamadaka, 2017), and (5) oil andgas industries (Korotin, Popov, Tolokonsky,Islamov, & Ulchenkov, 2017). To complementprevious studies, a firm acting in the genericpharmaceutical industry was chosen asa typical representative of the SME segment.To ensure a correctly optimised projectportfolio, managers must consider the differentphases, progress, interdependencies, conflictsand characteristics of their projects (Verbano& Nosella, 2010). The best metrics applicablefor one development activity may not apply toothers (Hauser & Zettelmeyer, 1997). Someearly PPM methods attempted to developsimilar solutions through mathematical modelsand optimization techniques; however, theseare not widely used due to the complex natureof the environment (Coldrick, Longhurst, Ivey, &Hannis, 2005). Sometimes the project selectionprocess is supported by both specific softwareand the role of external experts, who makean important contribution to identify the mostsuitable projects (Yong-Hong et al., 2008).Contextual interviews were conductedwith top, middle and first line managers and/orexperts. In total, 23 interviews were conducted incompanies operating in the pharmacy, chemistry,machinery and construction business. Suchnumber of interviews is in consonance withCreswell’s findings. Creswell considers 20-30interviews sufficient (Creswell, 2007). Aas et al.(2017) conducted 52 in-depth interviews withmanagers and employees involved in the areaof new service development. The interview wascompleted the moment no new findings aboutthe topic could be objectively obtained. Theusual duration of each interview varied from2018, XXI, 331.8.2018 10:44:41

Business Administration and Management70 to 80 minutes. The interviews were usuallyconducted by some of the authors of the paper,which ensured an acceptable professional levelof the interview. The aim of these interviewswas to examine (i) the scope of the activeportfolio, (ii) the links between the portfolio andcorporate strategy, (iii) fulfilment of portfolioperformance parameters (i.e. goals, deadlinesand budget within predefined constraints),(iv) the risk exposure impact on project portfoliodevelopment, and (v) the usual method of thedecision-making process concerning projectportfolio development.Ethnographic research performed in SMEsmade it possible to formulate two hypotheses:(1) effective project portfolio development isa necessary precondition for the fulfilment ofstrategic goals and (2) effective project portfoliodevelopment is a necessary precondition formeeting the performance parameters of sucha portfolio. That is why three basic researchquestions were raised: (1) What changeshave to be made in the SME environment toexecute investment strategies by using ProjectPortfolio Management? (2) How can the projectportfolio parameters be changed depending onrisk exposure change? (3) How can the projectportfolios that are developed via this methodpositively influence the managerial decisionprocess?The following analysis is focused ondetermining a portfolio efficient frontier, whichis determined by the introduction of variablelimitations to portfolio risk. The models handlemulti-criteria evaluations and respect portfoliorisks. As a tool supporting portfolio optimization,we used the OptQuest software application.This program is part of the Crystal Ball systemthat enables a Monte Carlo simulation (Fotr &Hnilica, 2014).For the purpose of this research, the setof input data necessary for project portfoliooptimization involves the following parameters:(1) Value as a result of multi-criteria evaluationof the project. The criteria used for projectevaluation were more extensive. In addition,value beside NPV includes other criteria such ascompliance with the corporate strategy, intensityof contribution to the accomplishment of thecompany’s strategic goals, product competitiveadvantage, support of key competencies andmarket appeal. In the pre-defined criteria for theevaluation of projects, NPV was ranked as theprimary criterion. (2) Probability distributionof NPV as determined by the Monte Carlosimulation. This probability distribution mustbe approximated by the most convenient typeof theoretical probability distribution becausethe project portfolio optimization by means ofOptQuest requires such input data conversion(the most frequent distributions were betaand sometimes normal distribution). (3) Theprobability distribution of investment costswas determined on an expert basis as subjectiveprobability distribution. To some extent flexiblebeta PERT distribution was chosen as the mostappropriate distribution. This distribution isusually asymmetric with positive skewness (aninclination towards higher values of investmentcosts which indicates the danger of exceedingplanned investment costs). Based on inputparameters of probability distribution (typicallylower limit, modus and upper limit), expectedvalues were generated along with standarddeviations of investment costs for each project.(4) A headcount necessary for each investmentproject. (5) Upon optimization, both the statisticdependence between investment costs and NPVof each project and the statistic dependencebetween NPVs of individual projects wereevaluated. In both cases, this was based on anexpert estimation of correlation coefficients.3. Research and Its ResultsThe research was performed using the casestudy model in a company. PharmaComm, Ltd.is a privately owned mid-size Czech genericpharmaceutical company (105 employees,sales approx. 150M CZK, assets/liabilities over150M CZK) focused on the production of activepharmaceutical ingredients (API). The companyhas developed a strategic plan, part of whichwas an extensive research and developmentprogram. This company was selected becauseof its ability to manage a wide portfolio ofinvestment innovative projects that werea condition for the company’s future strategicdevelopment. The successful implementationof their strategic plan was contingent uponmeeting several key success factors suchas availability of capital, employees withrequired competency profiles, establishment ofa company information and knowledge base,etc. In conjunction with strategy development,the company had to solve a problem concerningthe optimization of a product portfolio that wouldmaximize shareholder value at an acceptablerisk level and respect all pre-defined constraints.3, XXI, 2018EM 3 2018.indd 11111131.8.2018 10:44:41

Ekonomika a managementThe production of active pharmaceuticalingredients (API) is a branch of business wherespecialized chemical and pharmaceuticalbusinesses overlap. API business combinesstrict regulatory requirements that are typicalfor the pharma business with technicaldemands that are pertinent to specializedchemical businesses. The case study dealswith investment project portfolio optimization ina mid-size Czech pharmaceutical company thatoperates a generic API business.Both the current and proposed productportfolio is aimed at the production of verycomplex hormone-based generic drugs.The company faces several problemsregarding the operation of several innovationprojects in parallel. The first is a restrictedinvestment budget, preferably to be used forthe purchase of new facilities. The secondrepresents constraints regarding available inhouse human resources. In order to developtechnology and testing methods, but alsoto validate processes and testing methods,skilled or at least technically knowledgeablestaff is necessary. The interviewees includedcompany investment managers who werepurposefully involved in the research as well asdirectors and external experts originating fromprofessional associations such as the ChemicalIndustry Association, the Association of Smalland Medium-Sized Enterprises and Crafts CZetc. The criteria for the selection of personsfor ethnographic research were the following:deep involvement in company strategicmanagement, experience in project portfoliomanagement, skills in risk management andresource constraints , as obtaining additionalfinancing through increased debt is either riskyor too costly for the company. Similarly, hiringadditional staff which possesses the requiredskills in the chemical and pharmaceuticaldevelopment of special APIs is out of thequestion. In general, there is a long-lastingshortage of technically educated specialistsin the Czech labour market and special inhouse training in pharmaceutical developmentcapabilities is painstaking and time consuming.As a matter of practice, the education andtraining of pharmaceutical specialists takes atleast one year and usually more.Another point worth discussion is themanagement of an innovation products112EM 3 2018.indd 112portfolio from the marketing point of view.The company is required by its customers tooffer a balanced product portfolio regardlessof economic effectiveness. As an example,both latanoprost and travoprost are aimedat glaucoma treatment, but the tolerabilityof either drug among patients varies. Somepatients better tolerate latanoprost while otherstravoprost. For this reason, these drugs cannotbe regarded as substitutes and customerswant the producer to offer some proportion ofboth drugs, both of which are to be included inportfolio optimization. This strategy is endorsedby the owner because he considers a balancedproduct portfolio to be a meaningful provisionfor risk mitigation.Management of innovation projects inpharma is a complex matter. R&D in pharmatackles the development of new (often termed‘innovative’) drugs along with ‘generic’ brands.The former represents the costly developmentof quite new drugs whose therapeutic effectsare based on new principles while the latterrefers to generic copies of drugs whose patentprotection has already expired. Even thoughthe generic drug business produces productswhose structure is known but not easily imitatedin the exact form, properties and stability ofthe original drugs. Companies use varioustechnologies to produce products that meetrequirements for both quality and economy(Gassmann & Reepmeyer, 2005).3.1 Characteristics of the Initial Setof ProjectsThe company developed eighteen researchprojects, each of which was consideredfor extending its current product portfolio.The following parameters were set for eachproject: (1) value as a result of multi-criteriaevaluation (weighed summation, qualitativecriteria using point scale, quantitative linearapproximation); (2) probability distribution ofNPV and its parameters (expected value andstandard deviation) (3) expert estimation ofsubjective probability distribution of investmentcosts and its parameters (expected value andstandard deviation); (4) demand for technicaland operator staff. Each project was executedin several variants that reflected differentscenarios of environment development anddifferent strategic variants prepared by thecompany. During preliminary screening thevariants with negative NPV were ruled out of2018, XXI, 331.8.2018 10:44:41

Business Administration and Managementthe portfolio because their implementation wasout of the question.Each project was characterized bya different level of risk. Some projects likealprostadil-alfadex or dinoprost made use ofexisting technologies and represented only anextension of current technological procedures.Their risks were relatively low (measuredby std. deviation). Additionally, chemicalspecialties projects were not high risk sincetheir technical know-how and testing methodswere transferrable from the parent company.HeadcounttechniciansHeadcount workersInvestment decision12,8475801,753150210/12alprostadil alfadex - var. B3527,8801,5033,479250310/13bimatoprost - var. B5599,23315,49215,1681,603340/14bimatoprost - var. C65226,76239,09951,5464,5915150/15epoprostenol - var. A256,2137934,310446220/16epoprostenol - var. B5527,7433,89410,531960320/17epoprostenol - var. C7080,91910,09010,8271,020440/18epoprostenol - var. D90177,39622,20834,4782,9401580/19chemical specialties - var. A6056,2352,89711,3944691910/110chemical specialties - var. B4533,0481,8568,1234131410/110,9665861010/1Project nameσ(NPV)28E(NPV)alprostadil alfadex - var. AValue1No. of projectσ(IC)Key parameters of project portfolio optimization in the pharma branchE(IC)Tab. 1:The balance of the project listed innovationprojects that were considered significantlyriskier. These risks were mostly of a technicaland market character. Moreover, the risks ofthe project varied even for individual reasons.This was because their varied production scaleas well as extended customer portfolios poseddifferent levels of risk for each variant of theproject. The set of projects is shown in Tab. 1.Tab. 2 shows disposable resource volumesincluding capital budget and headcounts oftechnicians and operators. Tab. 2 also includes11chemical specialties - var. C2516,11578012iloprost - var. A6026,2693,7565,302209230/113iloprost - var. B7455,8278,27611,326510250/114latanoprost - var. B8044,6808,24915,5411,908540/115Travoprost - var. A7020,6212,4527,094858330/116dinoprost - var. A424,0072914,972515240/117dinoprost - var. B6019,0941,57717,1581,829470/118unoprostone - var. C283,4735503,704475220/1Source: ownNote: E(NPV) expected value of NPV (thous. CZK); (NPV) standard deviation of NPV (thous. CZK); E(IC) expected value of investment cost (thous. CZK); σ(IC) standard deviation of investment cost (thous. CZK).3, XXI, 2018EM 3 2018.indd 11311331.8.2018 10:44:42

Ekonomika a managementTab. 2:Available values of resources and their consumptionResourcesQuantityCapital budget(thous. e xceeding valueSource: ownresource volumes in the event that we would liketo realize all eighteen projects. The exceedingvalue indicates the volume of additionalresources, which needed to be obtained for therealization of all the projects.3.2 Project Portfolio OptimizationWhen optimizing, it is necessary to payattention to three constraints in res

as resource management. The aim of the PPM is to ensure that resources are allocated to projects in an optimum manner with respect to the entire portfolio (Engwall & Jerbrant, 2003). Therefore, portfolio development represents the key phase of project portfolio management. Forming a balanced and effective portfolio is the initial

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