Portfolio Balancing

Timeline: May 13th May 25th 2015

Introduction and Aims of the Project

I am currently a MEng student reading Manufacturing Engineering at the University of Cambridge. As
part of my final project I am investigating the implementation of portfolio balancing principles in
manufacturing-oriented companies. This project aims to identify practical tools and processes that
are being used to ensure a balanced portfolio and evaluate methods of managing dependent
projects and visualising the portfolio to inform balancing and wider portfolio management decisions.

How to get involved

This project is focused on the use of portfolio balancing as a portfolio management practice,
whether implicitly or explicitly, in manufacturing-oriented companies. As a key deliverable, an
anonymised report will be produced comparing portfolio balancing tools and processes and
identifying best and common practices. This study will benefit from a diverse range of industry
sectors and engagement will contribute to a varied and extensive comparison. Engagement with
companies aims to provide insight into current portfolio balancing practices, its context in wider
portfolio management and general perspectives on the process.

What is Portfolio Balancing?

Portfolio balancing is a portfolio management tool that is used to ensure that the portfolio contains
the most promising mix of projects, evaluated using a variety of parameters. The parameters used
for balancing vary depending on the type of portfolio (operations, marketing, NPD, etc) and the
overall strategy of the firm. Examples of parameters used are risk (high vs. low risk), project type
(innovation, improvement, growth, etc.), inventive merit (low, medium, high) and timing of delivery
(short-term vs long-term), with far more than can be listed here. Various methods are used to
implement balancing and visualise the portfolio to make decisions. These vary by company and level
of formalisation, ranging from informal gut feeling checks to ideal ratios to structured frameworks.
Regardless of the parameters and processes used, almost every company carries out some form of
portfolio balancing.

How does it fit with Portfolio

Management?
In any portfolio, the resources (financial, people,
equipment, etc.) are limited and so portfolio
management focuses on maximising the value
(financial and non-financial) derived from these
resources. To succeed, portfolio management must
result in a winning combination of projects that are
aligned with the corporate strategy. To achieve this
winning combination, portfolio management employs
prioritisation to choose the most valuable projects
and balancing to ensure the best mix of projects.

Contact
Email: sn417@cam.ac.uk