Answer to Question #224307 in Management for Melaku

Question

Project Manager, how do you 

identify and recommend the portfolio of projects that will yield the maximum value or return 

to your organization in the long-run

Answer 1

You start by determining each projects' profitability index and compare. Pick the project which as the best profitability index. The profitability index is calculated by dividing the present value of future cash flows that will be generated by the project by the initial cost of the project. A profitability index of 1 indicates that the project will break even. If it is less than 1, the costs outweigh the benefits.