Project Portfolio Optimization

Determining which new capital investments to undertake is one of the more challenging strategic decisions for a company during the regular planning cycle. With a long list of possibilities and only a finite amount of resources, the question of how to best deploy capital is not an easy one to answer.

Fortunately, BCG’s proprietary Project Portfolio Optimization tool powered by Anaplan provides clarity throughout this process. Optimization is a methodology of identifying the optimal strategy to achieve a specified objective given a set of constraints. Our approach applies this concept to capital planning/budgeting to optimize a firm’s project portfolio by maximizing business-defined KPI’s, such as project NPV. The solution presents the optimal project roadmap to follow for any number of user-defined scenarios that will provide the most favorable financial outcomes.

• Real-time scenario analysis
  Create and compare multiple scenarios on the fly to evaluate the most favorable project mix by adjusting assumptions, such as input prices, discount rates, expected cash flows, etc.
• Optimization flexibility
  Set up the optimizer to maximize any strategically defined KPI (e.g., NPV, IRR, return on assets) within the confines of multiple constraints, including budget, dependencies, required projects, and more.
• Embed results into top-level financial forecasts
  Seamlessly integrate financial impacts of optimized portfolios into corporate-level P&L, balance sheet, and cash flow statements for any given scenario.
• Incorporate qualitative factors into quantitative method
  Account for nonfinancial metrics in mathematical calculations through the use of a balanced scorecard, which places higher emphasis on projects deemed strategically or ethically significant to the business.