Typically the stress test comprises a number of "What if?" calculations which are used to analyse, in different situations and scenarios, prerequisites which help to cope with any difficult times in future. Portfolio management includes methods which can be applied as a part of project portfolio analyses and management.
You can start the project portfolio stress test by tracing a situation where you have to make cuts to the development investments, 30% off, for example. The starting point of the project portfolio stress test is the fact that the scenario to be analysed is possible.
The stress test can also be used to analyse how big a cut or squeeze the project portfolio can bear before the entity loses its power. The portfolio's power is formed from different development programmes and projects which often have strong connections between them. The project portfolio stress test is important for future preparations. We receive daily new ideas and Business Cases for analysis, and by identifying the stress level the project portfolio can bear we can also observe the entity against which new ideas and Business Cases are assessed.
A glance from the project budget to the cash flow it produces
It is important that cash flow is strongly observed in project portfolio management. A project which is realised only within the budget and the timetable does not bring business benefits if there is no need for its final results at the time of completion. With a view to the future it is important to terminate these projects which have lost their Business Cases even in the last stages of the project. This means that an up-to-date Business Case is just as important as the project's budget and timetable.
Priority must be given to the development of project portfolio management
An organisation without a project portfolio is adrift – this is why it is especially important to act fast and implement at least a simple method of project portfolio management. Spread sheets are a good place to start and many have already done so. After listing the project we can move on to a more illustrative tool. One of the quick-to-use, cost-effective and easy to understand tools is the popular Thinking Portfolio project portfolio. At its best the Thinking Portfolio project portfolio can be utilised as a cloud service within one month. Finally I quote the view of a consultant in the Bank of Finland: "These results are like a five-day weather forecast – not the final truth, but on such firm basis that they are interesting".