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When To Consider Synergies In Project Portfolio Decisions, Jeffrey Keisler

College of Management Working Papers and Reports

Portfolio decision analysis often evaluates R&D projects one at a time and uses these evaluations as the basis for profit-maximizing funding decisions. This approach can overlook strategic fit between projects. In theory, it is possible to identify synergies between projects and then fund the set of projects that maximize profit. In practice, the time and attention required to identify all such synergies may be prohibitive. Several analytic strategies are applied to simulated project portfolios with varying characteristics, using a matrix representation of interdependent portfolio elements. The results illustrate the potential impact on portfolio profit accruing from various means of considering …