Portfolio optimization explained … a bit different

It can be kind of boring just to play with test data, of course. So here is an approach to explain it a bit differently: optimize your vacation with proposals, dependencies and the portfolio analysis!

A portfolio is more than the sum of all projects you have in the system. It is a smart collection of selected projects based on some criteria, project metadata and more. And while you could look at all your projects as one portfolio it is more common that you have to stick to some boundaries and you want the best out of your projects within those boundaries.

As for a typical portfolio and any project we also have some boundaries to respect for our vacation:

  • Time: As an employee there are some limitations regarding the number of days you can take off and you have to align it with your team and manager when you can go on vacation.
  • Budget: A vacation can cost a lot of money. If you like adventure travelling in foreign countries like me – I am not that all-inclusive-lying-at-the-beach guy – budget is definitely a topic.
  • Scope: What to do and where to go? Wellness, Adventure, camping in the Outback?

The business drivers

For the scope you have to think about a strategy and the strategic impact of your choice. What could be better for that than using some business drivers and rate them!

1 - Business Drivers

The driver prioritization

You also have to weigh the business drivers. Nature and Adventure could be much more important than population. Hot and dry climate might be better and everybody loves the sea. Language is also a benchmark, but not the most important one: There is always a way to communicate with people! And just like this you go through all your drivers and prioritize them against each other.

2 - The driver prioritization

As a result of the pairwise comparison the system came up with this

3 - The driver prioritization

So it makes sense, although the consistency ratio makes clear, that not all pairwise ratings are really consistent. But what does those numbers really mean? Well in this case it means that Scenery/Nature has the highest priority for me and any destination that gets a good rating for that driver in the next step will be ranked higher at the end. (Public transport obviously doesn’t interest me at all, most of the time I travel by my own with a car)

The project proposals

And here are the project proposals proposed destinations for the portfolio vacation. First of all you set up all the proposals with a estimated timeline and budget.

4 - The project proposals

The rest is pure portfolio optimization.

The Portfolio Analyses

Now it is important to set up the dependencies. It is pretty clear that you cannot travel South America and Southeast Asia at the same time. And although it would be nice I think you don’t have to visit the Fijis and the Cook Islands. Both consists of several smaller islands where you can do some island hopping. So one of both destinations is good enough to get settled to “island time” and I want only on of those pacific paradises in my portfolio. I don’t want to slow down too much!


Using the Finish-Start dependencies gives you a logical order of the proposals. For example from Antarctica it makes sense to go up to South America and North America.

5 - The Portfolio Analyses

The mutual exclusion allows us to rule out too difficult combinations.

6 - Mutual Exclusions

While the mutual inclusion combines useful proposals.

7 - Mutually inclusive projects

And of course we can set the dependency that if we travel to North America, we want to visit the Cook Islands first – because there are direct flights

8 - dependencies between projects

A complete setup of dependencies can look like this and translated into the travel planning it means simply that

  • North America should by a direct successor of the Cook Islands
  • With the Finish to Start Dependency I give my proposed destinations a logical order
  • The first mutual exclusion says that I either visit Antarctica, Oceanic OR the Asian continent (only one or none of this collection) while the second one says I visit either Cook Islands or the Fijis (again, only one or even none of both)
  • The mutual inclusion simply tells the system that if it selects Costa Rica it also has to select Panama or vice versa

9 - Dependencies between projects

The Portfolio Analysis itself

It is time to setup the analysis. So we give it a name, select the prioritization, the projects and our Estimated Costs field for the later following constraint analysis. The name is just the identifier for this single analysis. You can later play with the boundaries and save more scenarios of this analysis under different names.

10 - Project portfolio analysis

Now it’s time to rate the proposals. No big secret that North America offers the better infrastructre than Australia. But the scenery (You remember, everybody loves the sea) on one of the south pacific islands is a must see. New Zealand is only nature and as mentioned before you might prefer more the hot and dry climate in Ausralia and the weather during October is really nice there. For Costa Rica or Panama maybe you should learn a few words Spanish first. To make it short, here is a rating: Project Server gives you a nice matrix to enter the ratings between weak (mathematical value 0) and extreme (mathematical value 9)

11 - Rating project proposals

All right, I should book a seat on the Polarstern and become an antarctic explorer. That seems to be my highest priority


But looking at the budget we might have to optimize it a little bit.

13 - Project Portfolio Budget

Only $21,550.00? Maybe the antarctic cruise is out of budget as long as we do not come up with a good reason why a research facility should fund us. So we force it out for now

14 -Project Portfolio Budget

Maybe we should have set up a mutual exclusion as we do not want to visit Australia and New Zealand. And South America is maybe also too much. Not enough time for everything

The scatter chart shows clearly that we selected the proposals with less costs than the one with the most strategic value but with a total of $4.150,00 we have a realistic cost estimation (flights not included) and with a strategic value of 30.15% more than just with the Antarctica Trip. As a quick tip how to read the scatter chart: The green dots (selected and forced in projects) should be in the upper left corner. This means more strategic value with a less costs.

15 - Scatter chart

With a second look we can see two more grey dots in the target area (low costs, high value) so if there would be just enough time we could easily increase the strategic value to 37.14% by forcing them in. But when you visit Australia you most certainly will have a stop over in one of the Asian cities, so why not spent some days there without additional costs.


By the way I choosed Singapur for the stop-over,
travelled 6 weeks according to this “portfolio”
and had a “strategic life value” of 100%


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