1.2 The project portfolio

An organization's project portfolio is the set of all projects, planned or in execution, formally acknowledged by the organization. Formal recognition usually comes in the form of the project clearing some type of gate put in place to separate the good projects from the not so good. At a minimum, the project scope will have been documented, the resource requirements estimated, the window of opportunity established, and the benefits to be derived from the project's execution evaluated so that an informed decision can be made regarding whether or not to go ahead with the proposal. Typical questions asked at the portfolio level include the following:

Do we have the resources necessary to execute project x in the time frame defined by its window of opportunity?
What is the opportunity cost of project x?
How does the cost-benefit ratio of project x compare with that of other projects in the portfolio?
Can we rearrange the project mix in order to maximize the return?
How can we offset the risk associated with project x?

The important thing about the project portfolio is that, similar to an investment portfolio, it allows the organization to select initiatives consistent with acceptable levels of return and risk.