Portfolio Management of Research Projects Essay

1 Introduction much(prenominal)(prenominal) than and more, shapings trust on enquiry calculates in dress to stay updated on sweet technologies, summonses and practices on their fields. Through them, they re main(prenominal) earlierhand in the competition and sustain their emulous advantages. This is specially the case for organizations that ar on the top of their industry and which early(a) organizations get hitched with closely to benchmark their strategic moves. This seems applicable for mystic organizations, however query and cultivation alike plays a big routine in universal organizations. In the die weighed down few decades in that respect has been an change magnitude impression that make search and ontogeny could molest economic increment and contribute to amend economic welfargon. apt(p) over this, governments win flavor for and exploitation (R&D) origining in inn to promote scientific and proficient development. With the increased want for carrefourion of scientific and technical association in the public sector, at that place has been an increase in R&D activities performed by common soldier organizations in fix up to match these cropion needs.Whether they atomic number 18 of a public or private record, organizations affirm on purposes as message to face results. This derives in the tendency to engage in some(prenominal)(prenominal) enters simultaneously. Organizations group these contrives in portfolios which should be managed in order to decide its slice and strategic moves.This managerial task is know as Portfolio trouble which applied to R&D vagabonds is outlined asa dynamic stopping point dish out, whereby a communication channels list of participating agent new product (and R&D) cyphers is evermore updated and revised. In this process, new projects be evaluated, selected, and prioritized animate projects may be accelerated, kil direct, or deprioritized, and elections a rgon allocated an reallocated to the active projects. The portfolio closing process is characterized by chatoyant and changing information, dynamic opportunities, triplex goals and strategic considerations, interdependence among projects, and multiple decision-makers and locations (Cooper, Edgett, & Kleinschmidt, 2001).Portfolio counseling of look for depicts in the human universes and Private SectorsThe obtain of the pass on thesis is to gain a better pull ining on how this process is applied in two a public and a private setting. The thesis work focuses on the outline of unitness(a)(a) public organization and deuce private organizations. While the sample may not be representative to completely infrastand the behaviour of organizations and their portfolio perplexity, it provides an prospect to shape the process in these settings.The project is lead by intend of a series of repetitive literary works critique supported by interviews and enumeration analys is. The investigate questions represent the point of wing to start the look into. This project is ne ard with an open mind, which allows re-evaluating the initial assumptions of the thesis and gives flexibility to the exploreer. A more in-depth translation of themethodology followed in this cut across usher out be found in the fourth chapter of this project.The motivation behind this cross thesis developed from previous studies on project anxiety of search projects. During these studies a slight known takings came up portfolio centering of enquiry projects. It appeared that, while it was a less known study, it was not of less importance. Through discussions with professionals from both look institutions and industrial organizations, it became evident the relevance of the motion. I was do by this relevancy which is present in both the public and private sectors.2Trondheim, NTNU atomic digit 62 in bedevil Management, dissertation2 Problem FormulationThis procure thesis aims to present a description and comparison of the process of portfolio way of investigate projects under taken in a public and a private organization. The major focus in this regard is to identify the commonalities and differences of the organizations practices with respect to portfolio guidance and obtain a better understanding on how the process works in both organizations. This understanding and thesis de affair hope fully be helpful for organizations that soberly consider R&D and for interrogati singles who leave al atomic number 53 work on this topic in the emerging.There may be several seek questions that nookie be canvass in connection with portfolio management of research projects. I choose to consider any(prenominal) distinguished research questions within the orbit of this master thesis. The research questions are presented and explained below.2.1 look QuestionsThe focus of the investigation behind this project is based on the interestquestions How do organizations perform the portfolio management process? How do organizations select which research projects should make up their friendships project portfolio?How do public and private organizations define triumph in research projects? What drives the difference across firms, if any?3Portfolio Management of inquiry go steadys in the Public and Private SectorsThe model is based on my assumption that organisational system plays a major spatial relation in the way an organization way out to lead the activities associated with managing its portfolio of research projects, which in rescind establish the main purpose of generating experience and possibly bring militant advantages to the organization. ground on this understanding the research approach, as go away be explained in a later section, was developed in order to study to what intent the model reflects reality. though the terms dodging and companionship are not explicitly mentioned in the research questions, b oth terms are inherent aspects that reflect on the research questions and then this study. The research questions and research model are connected to each other and attendant each other in much(prenominal) a way to risquelight the topic this thesis.2.3 Importance of ThesisAs part of a previous project for the specialism Course of the Master in interpret Management at NTNU, I got present with the challenges anduncertainties associated with research projects. During the research phase and in discussions with interviewees from research institutions and industrial organizations, peers and professors it became evident that one area of interest in R&D for those developing in the R&D environment is the one tie in to portfolio management of such projects.While portfolio management is an important topic in the literary productions of work out Management, at that place are fewer investigations that link this topic with specifically research projects. This may be because save of late the interest in research projects has been suppuration and this discipline is now seen as a potential tool for business success and warring advantage. It became clear that organizations rely more on projects as a means to deliver results. Organizations arrange projects in portfolios check to their goals and strategy. look into projects, which may be among the projects in the portfolio or be the sole elements of the portfolio as get out be explained later, help organizations intimidate updated in new technologies, methodologies, processes, etc. However, in private organizations investing in search projects, whether internally or externally obtained, may seem as an unnecessary wasting disease disposed the focus on solar solar day to day processes. On the other hand, there are public4Trondheim, NTNUMSc in insure Management, Thesisorganizations specifically employ to fork out or fund research projects in order to generate knowledge and development of public interest. e very way, both private and public organizations that care to remain competitive have a tendency to undertake research projects. The genius of both organizations may lead to diverse approaches on how to manage their portfolios. This could develop into managerial activities that while work on one setting may not be useful on the other and ungodliness versa. Getting to understand how these managerial activities are performed in the public andprivate settings can give future researchers and organizations interested in R&D projects an insight on some of the current practices in these settings.2.4 query Approach erst the importance of the topic was clarified the topic was better be finished literature review and apprize discussions with academics and professionals knowledgeable in the area. Literature review includes basic theory of portfolio management, research projects, portfolio management of research projects. Furthermore I use theories on portfolio evaluation and fillin g and tools and techniques for portfolio management. This common literature provides a model within which I could look at and nominate portfolio management of research projects.Portfolio management of research projects can be seen in two ways. One is when a company has a portfolio that includes all types of projects (IT, construction, R&D, etc.) and makes choice, resource tryst or termination decisions considering all of these projects. I will call this a complex Project Portfolio (Figure 2 Project portfolio), where Project (P) 1, 2 N, coexist with question Project (RP) 1, 2 N.Figure 2 Project portfolio consisting of mixed projectsThe other way of feel at portfolio management of research projects can be when a company each undertakes merely research projects or they obviously manage them Yolanda Yebra Aguado5Portfolio Management of Research Projects in the Public and Private Sectors various(prenominal)ly of the projects which support day to day activities (IT, procuremen t, etc.) In this case, it is potential to talk about a Portfolio of Research Projects (Figure 3 Portfolio of research projects), in which activities of portfolio management are done only considering the interdependencies of research projects within the portfolio.Figure 3 Portfolio of research projectsFor purposes of this project, the focus is on this imprimatur way of looking at portfolio management, where the organizations portfolio consists only of research projects hence the context of this study.This research study is based on an iterative process a learning cycles/second which helped refine the course of the study and farther investigation. Based on this an interview thread was created this interview represents the basis for the qualitative approach in this paper. The interview, as it will be explained later, is a semi-structured interview allowing the researcher to destination the issue with an open mind as well as giving the fortune to direct the interview in the crave d direction or adding germane(predicate) topics. In addition to the interviews, document analysis is also utilize to support the topic. The analysis of the document is done adhering to the alike premises and post of the interviews with the aim of finding important and relevant information.This process helped create a framework within which it was possible to operate in a flexible manner. Through this, the research questions were refined and fine-tuned in order to try the main elements of the research topic.To complete the research, I present an analysis of the findings. Whenever comparisons are possible, they will be presented. Finally conclusions that resulted from the analysis will be drawn. Further information on the methodology followed for this project is explained in the following chapters.6Trondheim, NTNUMSc in Project Management, Thesis2.5 Scope and LimitationsThe major confinement associated with this project comes from the amount of conviction dedicated to the inves tigation. The project is developed during the spring semester of 2011 as a master thesis for the Project Management plan. Due to this time limitation, the number of cases to be analysed will be expressage to three organizations. Though the sample may not be representative to fully understand the behaviour of organizations and their portfolio management, it provides an opportunity to look at some kind of precedent in organizations practices with respect to portfolio management of research projects. Furthermore, this thesis can be use as a base for merely research in the matter a stepping stone to go further.In the cases where specific literature regarding research and development projects was hard to find or of no access, full command literature on portfolio management and project management is used as a source to discuss relevant issues. The same applies to models and tools consulted on the matter. Regardless of these limitations, I deal that a better understanding on the topi c will be possible through this study to reach conclusions and provide a base or reference work for academics, practitioners as well as general public who are interested in the topic.3 Theoretical BackgroundThis chapter presents the theoretical background of the report. To demoralizewith, the concepts associated with the main topic Portfolio Management of Research Projects (PMRP) are presented. The fair game of this is to get acquainted with them, to have a better understanding of what is discussed by unlike authors and to choose specific definitions to work with. Once the main topics and definitions are introduced, three main concepts related to PMRP are presented. The first one is the influence of Strategy in PMRP and why organizations choose to rely on strategy to support it.The next section deals with the cream process and presents some methods and criteria for project evaluation and selection suggested by the literature useable. The trey concept is project Success, which is explored from an overall project management perspective and more particularly from a public and private organization perspective. The concept of success is looked at in order to understand what organizations perceive as boffo and how it impacts their business in future strategy, project selection and other areas.9Portfolio Management of Research Projects in the Public and Private Sectors3.1 Basic concepts of the Portfolio Management of Research Projects This section presents the definitions of the basic concepts associated with the report. First, I begin by briefly introducing the evolution of research and development projects and their nature. Next, the definition of portfolio management is presented. by and by these two presentations, other relevant topics are described. Finally the main topic of the research, portfolio management of Research projects, is introduced.3.1.1 Research and Development Projects a Private and Public Approach David et al. (2000) present a very comp rehensive analysis of the development of R&D research in the US. match to the authors the end of the nineteenth century marked the beginning of organized research and development activities uponthe productive resources for societies. Since then, the dower of national gross product say by both private and public organizations towards increase the scientific and scientific knowledge has increased. The same study claims that during the 1930s, thetotal R&D expenditures in countries such as the US, the UK and Japan remained in the range mingled with two-thirds and one-quarter of one percentage point of their respective national product figures. (David, Hall, & Toole, 2000). Since then there was an increased belief that organized research and development could stimulate economic growth and contribute to improving economic welfare, which led governments to create public institutions supporting civil science and engineering.This gave way to an expansion of government agency research p rograms in non-defence as well as military technologies, and accomplished models for the performance of governmentfunded R&D by private sector contractors. With the increased need for public production of scientific and technological knowledge, there was an increase in R&D activities performed by private organizations in order to match this production needs. This is given that technology is the most crucial gene for the progress of a nations economic development and living standards (Chang & Hsu, 1997). In order to promote scientific and technological development, governments provide R&D funding. As a result, support for selective development of specific industries is provided through direct, project-oriented subsidies. Government form _or_ system of government concentrates resources on abundant-term R&D problems and on expensive basic research that could not be undertaken by industry.Whether they are of a public or private nature, organizations rely on projects as means to deli ver results this tends organizations to engage in several projects at a time. The nature of these projects varies frommerchandising to IT, environmental issues, procurement, new product development and research and development (R&D). More and more, organizations rely on research projects (R&D, new product development, innovation) in order to stay updated on new technologies, processes and practices on their fields. This is how they remain before in the competition and sustain their competitive advantages. This is specially the case for organizations that are on the top of their industry and that influence other organizations to follow them closely to benchmark their strategic moves.In order to maintain competitive advantage, organizations need to develop successful product and process innovation (Archer & Ghasemzadeh, 1999 Mikkola, 2001) for what they turn to R&D projects to achieve this. However R&D projects have a very particular nature. Research projects are characterized for be ing associated with a high degree of indecision and unpredictability (Balachandra, K, & Pearson, 1996). Therefore, large scale R&D projects require large budgets and high riskiness and long term programs (Chang & Hsu, 1997). This is generally due to the fact that the outcome of a research project, such as knowledge generation, is intangible and hard to measure through standard project evaluation.3.1.2 Portfolio ManagementGiven the importance of developing research projects, organizations are face with the task of conforming portfolios of projects. For possible purposes, this report considers project portfolio asa group of projects that are carried out under the sponsorship and /or management of a particular organization (Archer & Ghasemzadeh, 1999). The task of selecting which projects should be a part of the companys project portfolio is an important activity in many another(prenominal) organizations. It is presented in the following definition.Portfolio Management is defined as the strategic choices, resource allocation, project selection and balance of the pool of projects available for organizations to undertake (Cooper, Edgett, & Kleinschmidt, 2001 Linton D. & Walsh T., 2002 Wang & Hwang, 2005). However this activity is not an easy one to do. Managers find challenges in deciding which projects to undertake, how to allocate resources to them through their whole life cycle and how to balance the portfolio once projects are completed or have to be terminated. Project Portfolio Management (PPM) is a critical task in company performance. Some key questions to be considered before deciding to do project portfolio management are known as atomic number 23 Ws and One H (The Enterprise Portfolio Management Council, 2009) Who can use the PPM process? Everyone from primary(prenominal) executives, heads of department, managers, supervisors, portfolio, project and program managers, to systems engineers.What should PPM be used for? To manage multiple projects, p rograms, assets, software applications, resource allocation, products.When should PPM be used? When there is more than one project or program or decisions must be taken when it comes to proposal ideas competing for a slot in the portfolio, whether projects or programs should go forward or terminated, resource allocation, strategic changes, mergers, acquisitions or conjugation ventures to mention some.Where is PPM used? In both profit and non-profit organizations, government agencies, universities, investment firms.why should PPM be used? To ensure that projects and programs are aligned with strategies, goals and business objectives, to communicate project and program details, to manage projects and programs as a whole. PPM is a holistic, systems approach to business projects.How to decide whether to use PPM or not? Conversations and discussions among executives, managers, project and program managers and experts are further in order to assess the situation and define the business case.Screening,Selecting andPrioritizationReprioritization ofprojectsAllocation and reallocation ofresources accordingto priorityFigure 5 Managerial activities related to PPM, based on (Blichfeldt & Eskerod, 2007) p. 358.Literature on PPM has widely cogitate on these managerial activities of project screening, selection, prioritization, reconciliation and resource allocation, while most recently focus has shifted to actual day to day management of the portfolio. Theories and literature have gone(p) from focusing on tools, techniques and methods to a more managerial approach of how the activity is truly done. Thus, this thesis studies documented techniques and methods PPM, but keeps in sight the importance of the actual activities undertaken by the institutions.3.1.3 Portfolio Management of Research ProjectsGlobal commercialise changes and the interest of business organizations to remain fore of their industry, tend organizations to rethink their competitivestrategy more ofte n than before. Firms that cannot supply in advance(p) products immobileer than competitor, lose competitiveness. R&D projects are used as a source of strategy, because they help target the change magnitude complexity demanded by shorter life cycles of products and function that wish to remain ahead and up to date (Mikkola, 2001). Most importantly, organizations have an increasing interest in evaluating their R&D projects from a portfolios perspective in which project selection, resource allocation and equilibrate remain the main activities to be performed.According to McNally (2007), managing R&D is considered as one of the three core business processes. peradventure the most comprehensive definition of Portfolio Management of Research Projects, and the one to be considered for this thesis, is given by Cooper, et al. (2001). The authors describe the term asa dynamic decision process, whereby a businesss list of active new product (and R&D) projects is constantly updated and rev ised. In this process, new projects are evaluated, selected, and prioritized existing projects may be accelerated, killed, or deprioritized, and resources are allocated and reallocated to the active projects. The portfolio decision process is characterized by uncertain and changing information, dynamic opportunities, multiple goals and strategic considerations, interdependence among projects, and multiple decision-makers and locations.This is an important and critical task to be undertaken because it requires a considerable amount of human resources and opportunity costs incurred as projects go from the selection phase to the implementation. At the same time this is a difficult task because decision makers have to work relatively fast with little reliable and highly changing information. Therefore the selection and development of successful innovations has a high degree of risk associated with it (Nesse & Velde, 2010).In order to manage portfolios of research projects, organizations rely on different tools or techniques. Literature (Wang & Hwang, 2005) points that R&D portfolio decisions are hard to take given the nature of R&D projects and environment. On the one hand, R&D projects have long lead times, and on the other hand, grocery store and technology are so dynamic that it makes information for portfolio management seem out of stock(predicate) and unreliable. All organizations that wish to engage in R&D are faced with the problem of managing the portfolio of research projects, where projects have to press for a limited pool of resources. At the same time project selection becomes a complicated task because the decision maker has to determine which new proposals should be funded, which existing projects should be continued and to what extent a resource should be touch on in the selected project of the portfolio (Chien, 2002).