7 Portfolio Value Management Flashcards
Sense of Portfolio Value Management
ensure that investment in a portfolio delivers the required return as defined in the organizational strategy
most important principles for portfolio value management (2)
- ensure that investments in portfolio components are alligned with the organization´s strategy
- balance Portfolio Value against overall risks
Def value
an indicator of the effect an entity or offeing can deliver
forms of value (2)
- tangible
- intangible
def and examples for tangible value
can be directly measured: resource capacity, market share, client satisfaction, economical value
def and examples for intangible value
cannot be directly measured: brand awareness, reputation, risk exposure,…
key activities to effectively manage value (5)
- negotiate expected value
- maximize return
- realize value
- measure performance
- report value
what is negotiated with whom under “negotiate expected value”?
Portfolio Manager negotiates the expected portfolio value vs. the required portfolio value including risk appetite of the organization and expectations with component owners and the strategy functions of the organization.
possible assessment approaches to negotiate expected value (6)
- trade off analysis
- market - payoff variability
- budget variability
- performance variability
- market requirement variability
- time- to market variability
Concepts that support the negotiation of expected value (3)
- value management framework
- evidence- based value statements
- efficient frontier
tools for maximizing value (6)
- Risk appetite related to input & output quality assigned to components
- Design guidance applied to components (to prevent over- specification)
- Application of solution constraints to force synergy between components
- Requirement on individual components to exercise effective financial management
- Exercise of effective financial management on the portfolio level
- Use of the efficient frontier
pillars of portfolio financial management (5)
- portfolio financial framework
- portfolio financial management plan
- portfolio components cost estimation
- portfolio budget
- financial management effort
Purpose of value assurance
to ensure that the portfolio can realize the negotiated required value
Intrests of the Portfolio Manager concerning assurance of value (4)
- requirements tracking
- acceptance criteria
- gated reviews
- quality assurance
topics for reporting value (6)
- Risk reporting
- costs required to achieve required portfolio outcomes
- reasons for cost shifts
- cost synergies achieved between portfolio components
- achieved value
- reasons for any shift in value