Budget Scenario Optimization Overview

The Optimization tool enables portfolio managers to make optimal project selections for their portfolios by taking into account both total and time-phased budget constraints. Given a set of constraints and specified objectives, the tool simulates the selection of different combinations of projects, and suggests the optimal set of projects for inclusion in a budget scenario to realize the maximum portfolio value.

During the optimization process, the tool maximizes a primary objective value based on the input cost constraints. For example, you may want to maximize the Evaluation Score or Net Savings of your portfolio while applying budget constraints to your Planned Budget or Proposed Budget. Optionally, you can maximize or minimize a secondary objective value to further refine your optimization results. For example, you might select a primary objective which maximizes the Evaluation Score of your portfolio and a secondary objective that minimizes the Total Cost value.

Cost constraint fields and values are typically input manually, but you can also use portfolio funds as your constraints. Portfolio managers often have different sources available to fund the projects in their portfolios. Funds can have their own total and yearly cost constraints, as well as restrictions on the types of projects they can be used to fund. After adding funds to your portfolio, run Optimization with fund constraints to generate an optimal selection that meets your objective and adheres to all fund restrictions. With funds as your constraints, the Optimization process automatically assigns funds to your projects and allocates total and time-phased cost values to each fund. You can use the tool to view how your funds might be distributed in an optimized scenario.

Optimal project selections for both total and time-phased cost constraint values are visually represented on an efficient frontier analysis curve, an additional aid in the decision-making process for project selection. The Total Cost Constraint line shows the best possible project selection using only a total cost constraint. The Total & Time-phased Cost Constraint line shows the best possible selection of projects using all possible cost constraints. After running the optimization process, project selections are made automatically that represent the primary and secondary objective values within the given constraint limits. An Optimal Selection point is drawn on the chart that reflects the total cost value and total objective values of the projects selected.

If possible, the Optimization tool also generates alternative constraint solutions that may achieve greater value than your current selection. The tool suggests different possible distributions of your time-phased constraints that would allow for a greater portfolio value at the same or lower total cost. Review up to two recommended solutions and use the values to overwrite an existing scenario or create a scenario. Recommendations are not generated when using funds as constraints.