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Building a Portfolio Roadmap

Instructor: Brianna Whiting
A company is often faced with many potential projects. But how do they know which ones to choose? In this lesson we will learn how a company and stakeholders work together to use a portfolio roadmap.

Looking at a Portfolio

Meet Chip! Chip just found out he was left a large inheritance from an aunt of his. Having lived paycheck to paycheck his whole life, he has no idea what to do with all of his money. Sure he could go out and buy extravagant things, but what would happen if he spent all of it? Chip does not want to go back to living paycheck to paycheck, so he decided that the best idea would be for him to invest some of it with the hopes of making even more money.

What Chip is ultimately trying to achieve is creating his very own portfolio which is basically a collection of his financial assets and investments consisting of things like stocks and bonds. Think of it as a picture of where Chip decides to invest his money. Portfolios consist of money from the investor, but are often times actually handled or managed by someone who is working professionally in finance. So, once Chip decides what he will invest his money in, he will have the help of someone with more financial experience to help manage his assets along the way.

Portfolio Roadmap

Like Chip, businesses also make investments from time to time. But unlike Chip, usually there are many investors known as stakeholders that invest their money into a business trusting that management will make the best decisions with their money. In other words, many stakeholders invest money in the company and then management decides what to do with that money so that both the company and the stakeholders become more financially successful.

How do managers know what the best choices are for using investments by stakeholders? Well, that is where a portfolio roadmap comes in. It is the process of identifying, prioritizing, exploring, and confirming the projects and investments that, together as a collection, make up the company's portfolio. In the following sections we will look at each step in more depth.

Identifying

The very first step discusses goals and strategic alignment. Strategic alignment is the process of making the most from the investments of the stakeholders so that goals are reached. This step allows stakeholders to give their input on projects they would like to see completed and discuss which projects will bring the company the most success. Think of it as understanding which ones should have the most attention and which ones are less important.

Prioritizing

When the stakeholders and the company decide which projects they would like to take on, the next step is to prioritize them. Projects are prioritized based on risks, and potential value so that everyone is aware of the potential outcomes of the project. This is also where an interdependency analysis is conducted which allows a company to see which projects depend on one another. Obviously, if you need one project to complete another, you will have to decide to do both or put both on hold.

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