How to Create a Portfolio of Investments

How to Create a Portfolio of Investments

Creating a portfolio of investments includes the following tasks:

• Managing and planning for the investments using high-level targets for cost, benefits, and resources.
• Distributing financial and resource targets by time periods so that you can understand how investments use up money and resources over the portfolio planning horizon.
• Setting the role targets either by distributing the high-level set target or by populating existing resource capacity from roles in the system.

Example: Creating IT Portfolios for Annual Planning

Vicki is the IT Operations Manager responsible for creating and maintaining the IT investments for the CIO at Forward Inc. Vicki is preparing for annual planning and has to create an IT investments portfolio to reflect existing work and proposed work. Vicki creates the portfolio as follows:

• Defines some basic portfolio properties such as the start date, end date, and cost.
• Builds content by selecting active projects in the Investment OBS for the IT department for the coming fiscal year.
• Includes the ideas that are being considered for the coming fiscal year.

The following diagram describes how the portfolio manager creates a portfolio of investments:

To create a portfolio of investments, perform these steps:

1. Verify the prerequisites.
2. Define the portfolio properties.
3. Define the portfolio sync properties.
4. Build the portfolio content.
5. Define detailed planning targets.
6. Define role targets.
7. Review the waterline view for investments.

Verify the Prerequisites

To create a portfolio of investments, complete the following requirements:

• Review the How to Get Started with Portfolio Management scenario and set up the required data in the product.
• Create active investments and ideas in the product that are planned for the time period that the portfolio covers.

  Note: For more information about creating investments, see the Project Management User Guide. For more information about creating ideas, see the Demand Management User Guide.

• Create any child portfolios that you want to associate to the parent portfolio so you can see the parent-child relationship. No data is pulled in from the child portfolio to the parent portfolio.
• Review the How to Configure the Waterline View scenario for details on how to display the waterline, portfolio constraints, and attributes on the Waterline view.
• Review the How to Display Capital and Operating Costs scenario for details on how to configure investment financial plans for displaying capital and operating costs.
• Verify that you have the following access rights for creating and editing the portfolio content:
  • Portfolio - Create
  • Portfolio - Navigate

Define the Portfolio Properties

To start the portfolio creation process, define the high-level properties of the portfolio. These properties set the time, monetary, and resource boundaries of the portfolio within which you can plan and manage your investments. You can create multiple versions of a plan within these boundaries for comparison purposes and can implement the best plan.

For example, the following portfolio properties show how to use a data range to plan for your portfolio investments within that range:

• Portfolio Horizon: Starting on 01/01/2013 and ending on 12/31/2014
• Total Cost: 10,000,000 USD
  • Capital Cost: 7,000,000 USD
  • Operating Cost: 3,000,000 USD
• Resources: 20 FTE
• Benefits: 15,000,000 USD

Follow these steps:

1. Open Home, and from Portfolio Management, click Portfolios.
2. Click New.
3. Complete the requested information in the General section. The following fields require explanation:

   Owner

   Identifies the portfolio owner or creator, typically an operations manager, or director. The owner is automatically assigned view and edit rights to the portfolio and its content. You can select more than one owner for a portfolio.

   Stakeholder

   Identifies a stakeholder in the business who wants to review the portfolio content and provide feedback. The stakeholder is automatically assigned view rights to the portfolio and its content. You can select more than one stakeholder for a portfolio.

   Start Date/Finish Date

   Specifies the planning range of data for the portfolio. The data within the portfolio is clipped to stay within this set horizon. If an investment starts within the portfolio horizon but finishes after the horizon, you can analyze costs for the investment from both the following perspectives:

   • The aggregate cost of the investment irrespective of the portfolio horizon.
   • The cost of the investment relative to the time periods in the portfolio horizon.

   For example, an investment has a total cost of $10 million but you plan to spend only $2 million within the portfolio horizon. In this case, the portfolio surfaces both the total cost and the planning horizon costs of the investment.

   Dashboard View

   Specifies the default view or page layout for the portfolio. If you have installed the PMO Accelerator add-in, you can change this default view to PMO-Portfolio Investment Dashboard.

   Currency

   Specifies the portfolio currency. In a multi-currency situation, the portfolio currency sets a default preference for reporting investments of differing currencies in aggregate. The financial data for both budget (cost) and benefit are rolled up in this portfolio currency. If your product is configured for a single currency, you cannot edit this value.

   Capacity Unit Type

   Defines the resource unit (hours or FTE) for measuring resource capacity for investments in the portfolio. You can set this unit only once for a portfolio.

   Sync Schedule

   Specifies how often to refresh the portfolio data and associated plans with actual investment data. This field appears after you define the initial portfolio properties. You can set up a sync schedule to refresh the portfolio automatically or you can sync the portfolio data manually.

4. Complete the requested information in the Targets section. The following fields require explanation:

   Total Cost

   Displays the total cost that the portfolio is targeting to spend during the planning horizon. This target is an aggregate of the capital and operating costs so you cannot set it directly.

   Capital Cost

   Specifies the capital cost that the portfolio is targeting to spend during the planning horizon.

   Operating Cost

   Specifies the operating cost that the portfolio is targeting to spend during the planning horizon.

   Currency

   Defines the portfolio currency or the currency in which you want to account for all investment cost and benefit amounts. In a multi-currency setup where portfolio investments use different currencies, all costs and benefits are rolled up in the portfolio currency.

   Benefits

   Specifies the total benefit that the portfolio is targeting to gain during the planning horizon.

   Roles

   Defines the effort that the portfolio is targeting to use during the planning horizon.

   Capacity Unit Type

   Specifies the unit in which you want to represent the roles target. Select one of the following units:

   • FTE. An average number that is based on the resources that are involved and the time periods. For example, say the planning horizon spans two months. One FTE is planned in the first month and 3 FTE are planned in the second month. In this case, the total target resources for the planning horizon are 2 FTE.
   • Hours. A total number that applies to the portfolio planning horizon. For example, say you have a two-month planning horizon and set a target of 1000 hours. In this case, you can use a total of 1000 hours for the whole portfolio.

5. Save your changes.

Define the Portfolio Sync Properties

The portfolio data represents a snapshot of the actual investment data in real time. You can update the portfolio data with the actual investment data by running a sync job. Syncing is important because portfolio stakeholders want to know how current the data they are reviewing is. To establish how often you want to refresh the portfolio data, define the properties of the sync job.

Based on how often you review the latest portfolio data, run the sync job manually anytime you want or set up a sync schedule. You can set up a sync schedule to refresh the portfolio automatically at a recurring time interval such as weekly.

Example: Setting Up a Portfolio Sync Schedule

Mary, the IT portfolio manager at Forward Inc. presents at the weekly stakeholders meeting every Monday. Mary covers all months in the portfolio planning calendar. To prepare for this meeting, Mary sets up the sync schedule to run every Sunday of every month at 9:00 A.M. The sync job populates the portfolio with the latest data from the actual investments. Mary then reviews the data and prepares the highlights for the meeting the next morning.

Follow these steps:

1. Open Home, and from Portfolio Management, click Portfolios.
2. Open the portfolio for which you want to define sync properties.
3. Click the Manual link next to Sync Schedule.

   The portfolio sync properties appear.

4. To set up a sync schedule for the sync job, select Weekly or Monthly and complete the requested information. The following field requires explanation:

   Recurrence

   Defines the frequency at which you want to sync the portfolio. You can select one of the following options:

   • Manual. You can run the sync job manually anytime by clicking Sync Now.
   • Weekly. The days in the week on which you want to sync the portfolio and for which months. For example, select Wednesday and then select all months. The sync job runs every Wednesday of every week and for all months in the portfolio horizon.
   • Monthly. The days of the month on which you want to sync the portfolio and the respective months in the portfolio horizon. For example, enter numbers 1 through 31 and select all to run the sync job every day, for all months in the portfolio horizon.

5. Save your changes.

   When you return to the portfolio properties, the Manual link next to Sync Schedule has now changed. The link now reflects the new sync schedule that you just set up. To change a schedule, click the link again. You can see the date when the portfolio was last refreshed.

Build the Portfolio Content

Add the investments to your portfolio that you want to monitor, track, and plan for at a high level. As you build the portfolio, you can preview the content. Previewing helps you understand what is included in the portfolio as you are building it.

Note: The limit for the number of investments that you can include in a portfolio is 100. The limit for the number of roles you can include in a portfolio is 25. These limits helps ensure better performance when you work with a portfolio.

The Database Administrator can change the limits to the portfolio content. Any changes to the limits can potentially impact the application and database performance. Before introducing a change in a production environment, thoroughly test the changes in a staging environment.

Example: Building Your Portfolio Content

Max the IT portfolio manager at Forward Inc., builds the portfolio content by including the following investments:

• All active projects in the Investment OBS for the upcoming calendar year.
• All ideas that the company is considering for the upcoming calendar year.

Max uses the power filter available in the Contents Editor to create the following expression so that only active ideas are included in the portfolio:

idea.is_active == 1

Max uses the power filter to create the following expression so that only active projects, not designated as templates are included in the portfolio:

project.is_active == 1 &&  project.is_template == 0

Follow these steps:

1. Open Home, and from Portfolio Management, click Portfolios.
2. Open the portfolio to which you want to add content.
3. Click Contents Editor.
4. Select the investment types (for example, project, application, asset) and click Include.

   Note: Limit the number of investments for each investment type by using the Power Filter. Filter on any attribute that is associated with an investment type. For example, for the Project investment type, set the power filter to filter on and include only active projects. To add individual investments to the portfolio without setting the power filter, use the Individual Investments section.

5. To copy the investments and related data to the portfolio, click Sync Now.

   Depending on the size of the portfolio, the sync job can take some time to run.

6. (Optional). Check the progress of the job by completing the following steps:
   1. Open Home and click Reports and Jobs.
   2. From Jobs select Log.
   3. Check to see if the Synchronize Portfolio Investments job type is still processing or if the job has completed.

All investments included or added individually to the portfolio are listed in the Investments tab.

Define Detailed Planning Targets

You can view, edit, and distribute the high-level portfolio targets for cost, resource, and benefit in a time-scaled view. These period-based targets show up on the Waterlines view where you can analyze your portfolio performance.

Set these detailed targets either as part of the initial portfolio creation process or later when you have added content.

Typically, you set targets at a high level while creating the portfolio. Later, as you add content, you can provide more details for these targets using the following methods:

• Spread the total cost and benefit targets uniformly across the periods by populating the Distributed Target field.
• Populate each period and update the Distributed Target field with the total amount. If the breakout costs total is greater than the total portfolio cost, a variance amount appears in red. You can enter amounts for time periods that are outside the portfolio planning horizon. For example, if the end date for the portfolio horizon is 12/31/2014, you can still add values for Jan 2015.
• Edit the targets by period and see the impact on the distributed target and how that compares to the original target.

Note: As you edit the targets, affected cells are flagged with a red, pending edits flag. The flag appears on the top left corner of the cell. To make the edits permanent, save them. The Save button is only active when there are changes to the page.

The planning periods that you see on the time-scaled view are based on the time period setting you configure on the Waterlines view.

Example: Providing Details for the Cost and Benefit Targets

Vicki, the IT Investments portfolio manager at Forward Inc., initially populates the cost and benefit targets in the portfolio properties. On the Targets page, the total and distributed values for cost and benefit are automatically created based on the values on the Properties page. Vicki fine-tunes the distribution by manually tweaking the values in each cell.

Follow these steps:

1. Open Home, and from Portfolio Management, click Portfolios.
2. Open the portfolio for which you want to define detailed targets.
3. Click Targets.
4. Complete the requested information for Cost: Portfolio Cost Totals. The following fields require explanation:

   Target

   Specifies the aggregated planned cost for the portfolio investments including capital and operating costs. You initially define this value in the portfolio properties as an aggregate of the capital and operating costs. You can edit this value when providing details for the targets.

   Distributed Target

   Displays the planned cost for the portfolio investments as it scales over time (weekly, monthly, quarterly) within the portfolio horizon.

   Variance

   Displays the difference between the distributed and approved target amounts.

   Distributed Target (Total)

   Specifies the planned cost for the portfolio investments as an aggregate of the distributed amounts. To distribute the total amount uniformly across the portfolio planning periods, enter an amount in this field.

5. Complete the requested information for Benefit: Portfolio Benefit Totals. The following fields require explanation:

   Target

   Specifies the aggregated planned benefit for the portfolio investments including capital and operating benefits. You initially set this value in the portfolio properties but you can edit it here too.

   Distributed Target

   Displays the planned benefit for the portfolio investments as it accrues over time within the portfolio horizon.

   Variance

   Displays the difference between the distributed and approved benefit amounts.

   Distributed Target (Total)

   Specifies the planned benefit for the portfolio investments as an aggregate of the distributed amounts. To distribute the total amount uniformly across the portfolio planning periods, enter an amount in this field.

6. Complete the requested information for Role: Portfolio Role Totals. The following fields require explanation:

   Target

   Specifies the planned resource capacity in hours or FTE units for the portfolio investments over time (weekly, monthly, quarterly) within the portfolio horizon.

   Distributed Target

   Displays the planned roles for the portfolio investments as it accrues over time within the portfolio horizon.

   Variance

   Displays the difference between the distributed and approved target amounts for the resource target.

   Distributed Target (Total)

   Specifies the planned effort for the portfolio investments as an aggregate of the distributed amounts. To distribute the total amount uniformly across the portfolio planning periods, enter an amount in this field.

7. Save your changes.

Define Role Targets

When you create a portfolio, you typically provide an overall target for effort in hours or FTE units. As you build the portfolio content, you can view, edit, and distribute this high-level target in a time-scaled view. You can define the role constraint in the following ways:

• Define an overall role target in the portfolio properties when you create a portfolio. Spread the overall target uniformly across the periods by populating the Distributed Target (Total) field. You can overwrite the distributed values by entering values directly into the time period cells.
• Populate each period and update the Distributed Target field with the total amount. If the breakout amount total is greater than the total portfolio amount, a variance amount appears in red.
• Edit the targets by period and see the impact on the distributed target and how that compares to the original target.
• Add specific roles that you want to plan and set constraints for. When you initially populate the capacity, filter actual capacity using the attributes that are associated with the resources. For example, rather than populate the capacity for all engineers, filter by engineers that are associated with a specific OBS or resource manager.
• Select the Populate Capacity option for specific roles and view how the existing capacity aligns with the targets for those roles. You can see the actual capacity for these roles across the portfolio planning horizon. By comparing the target with the distributed target column, you can quickly see if you have enough capacity to fill your targets.

Example: Define Role Target

Vicki creates a portfolio for application sustainment for the following year. The resources are estimated to spend 20 percent of their time on sustainment for the following year. To set a role target for the portfolio, Vicki sorts the overall portfolio resource capacity in the following manner:

• Filters the roles information by the OBS Unit and the Booking Manager attributes.
• Adds the desired roles to the portfolio targets.
• Populates specific roles with the resource capacity available in the system. For example, Vicki populates the capacity for the Sr. Developer role within the Back-Office IT team. The role is populated with the available number of hours from the system for the associated resources.
• Aligns populated capacity with resource time estimates for application sustainment by scaling capacity by 20 percent.

With the role planning framework set-up, Vicki proceeds to edit or populate values for each period.

Follow these steps:

1. Open Home, and from Portfolio Management, click Portfolios.
2. Open the portfolio for which you want to define detailed targets.
3. Click Targets.
4. Navigate to the Role: Portfolio Role Totals section and perform one or more of the following tasks as needed:
   • To filter or add roles, click Add Roles.
   • To populate a role with the existing capacity available for the associated resources, select the role and click Populate Capacity.
   • To scale the populated capacity to align with the estimated resource time, select the role and click Scale Capacity.
5. Save your changes.

Review the Waterline View for Investments

After building the portfolio content and defining targets, use the default Waterlines view to see how the planned targets align with the portfolio investments.

By default, the approved investments with the most recent finish dates sort to the top of the list. The unapproved investments with later finish dates sort to the bottom of the list. You can change this default ranking either by dragging and dropping or by setting up rule-based ranking.

The Waterlines view can help you understand the following aspects of your portfolio:

• The list of prioritized work with investment attributes including data about budget, resources, and benefits.
• How the portfolio targets spread over the portfolio horizon.
• The list of approved and unapproved investments.
• The initial alignment of the portfolio with the goals.
• The actual amounts that are spent on investments as compared to the initial targets of capital and operating costs. You can see where and when demands exceed the targets.

As you review data, use the Waterline view as a "what if" environment to manipulate the items on the list and view the impact. You can also review the effects of the changes on the portfolio targets. For example, drag a time line to move out an investment start date and see its impact on the budget by time period. You can affect the portfolio in the following ways:

• Suggest a change to the existing portfolio by recommending small, focused changes on specific investments. The following examples show small changes:
  • Alter the start of an investment to later or earlier than planned.
  • Cancel an investment.
  • Put an investment on hold.
  • Initiate a change request that is related to the investment.
• Hypothesize on changes to multiple investments and to the portfolio constraints in a planning or scenario mode.

Follow these steps:

1. Open Home, and from Portfolio Management, click Portfolios.
2. Open the portfolio for which you want to review the Waterline view.
3. Click Waterlines.

   Note: For information about configuring the Waterlines view to see the fields you want, see the scenario named How to Configure the Waterline View.

4. To change the default time periods, click the Options icon and select Gantt. Adjust the settings according to your preferences. These settings are specific to your login. You can change the display on the Targets page for your session but they always default back to the settings set on the Waterlines page.