Applying financial portfolio analysis to government program portfolios
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Authors
Botkin, Bradford L.
Subjects
Advisors
Hensel, Nayantara
Date of Issue
2007-06
Date
Publisher
Monterey, California. Naval Postgraduate School
Language
Abstract
Government agencies and the Department of Defense in particular, require decision-support tools when making funding decisions regarding portfolios of programs or projects. Government agencies have had some success in applying Project Portfolio Management (PPM) when choosing among potential programs; however, once programs are underway, financial managers routinely face funding optimization decisions similar to those of private-sector stock market portfolio managers. While private-sector portfolio managers rely on "stock-price" based financial portfolio analysis to aid decision making, government financial managers lack an equivalent "stock-price" metric for program or project performance. This research suggests the government's Earned Value Management System (EVMS) metrics may be used to generate a suitable proxy with which financial portfolio analysis can be conducted. From this analysis, risk and return trade-offs can be quantified and used when making portfolio decisions. An example using representative EVM data is presented. Recommendations on the possible applicability and limitations of the technique are discussed.
Type
Thesis
Description
Series/Report No
Department
Organization
Naval Postgraduate School (U.S.)
Identifiers
NPS Report Number
Sponsors
Funder
Format
xii, 95 p. ;
Citation
Distribution Statement
Approved for public release; distribution is unlimited.