This is the first in a series of articles that will examine some of the most commonly used decision-making methods for the selection or rejection of individual projects throughout the project portfolio management process. These methods determine whether or not a given project (either proposed or in process) should be included in your next capital budget. After a brief discussion of the economic theories upon which these individual methods are based, I’ll cite the rationales for (1) not relying on these theories alone and (2) using as well, and sometimes instead, practical rules of thumb in real-world decision making.
Although no specific background is assumed, a little prior knowledge of project management and corporate finance, including probability theory and statistics, will facilitate your reading of the articles. For those readers wanting or needing up-to-date tutorials on these subjects, the References provide pertinent information. In addition, the appendixes at the end of this article contain supplementary material for the reader interested in further insight into these topics. And, throughout this series, I’ll illustrate how commercial, off-the-shelf (COTS) software tools can aid in the management of larger, more complex portfolios. In short, these articles will be about computer-assisted common sense.
Read more at:
http://www.developer.com/mgmt/article.php/3595036