With such a strong presence in management decision making, what makes the AHP so appealing for portfolio managers today? In short, the methodology is relatively simple, very flexible, and extremely powerful. The methodology is valuable for multiobjective decision making in general and for PPM specifically. The AHP shows considerable advantages for organizations challenged with complex portfolio decisions involving long (or even short) lists of projects, constrained resources, multiple stakeholders, multiple objectives, and compliance challenges. Adopting the AHP combined with advanced optimization can deliver immediate value to an organization's PPM efforts, primarily through the methodology's inherent ability to:
• Structure complex portfolio challenges.
• Measure benefits, costs, and risks on ratio scales.
• Leverage and synthesize data, information, and judgments from multiple stakeholders.
• Conduct sensitivity analysis with what-if scenarios.
• Generate and examine an efficient frontier of optimum portfolios over varying budget amounts.
• Measure and improve portfolio performance.
• Pick project winners and losers quickly and effectively.
In sum, organizations that adopt the AHP as the measurement method of choice for their PPM efforts can expect improved portfolio alignment, better stakeholder buy-ins, and stronger organizational confidence in portfolio decisions.
James Devlin is vice president of professional services for Expert Choice. During the past three years, he has helped senior leaders from America Online, Sovereign Bank, the Mayo Clinic, the Office of the Secretary of Defense, the Federal Aviation Administration, and the Bureau of Alcohol Tobacco and Firearms, among other organizations, to make complex portfolio, risk, and governance decisions. He is working on his doctorate in knowledge management at the George Washington University.
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