All companies should have a breakdown of project cost, but not all companies capture project value. For those that do, a Pareto chart ordered by financial contribution (e.g. NPV) provides aggregate portfolio visibility of the most valuable projects. We also find that the 80/20 rule often applies (20% of the projects deliver 80% of the portfolio’s value). This type of Pareto chart provides great visibility of the entire portfolio and highlights how a subset of projects support overall financial contribution. It is a great report for focused discussions regarding how to manage the long tail of low value projects. It is critically important for the portfolio governance team to recognize this tail of projects and how to deal with it.
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