Maximizing R&D portfolio value

Abstract

OVERVIEW: R&D portfolio planning involves the selection and prioritization of research and development projects to assure an effective and efficient use of the company's resources. Although detailed scheduling can be employed, the necessary effort to collect and process data gets in the way of a successful application. Hence, a model for project selection and prioritization is proposed that makes use of aggregated information. The model takes into account the value of projects as well as project interactions due to the demands on scarce resources. Employing the model can significantly increase a company's portfolio value and support both strategic and operational decision-making. It has been successfully applied to optimizing the R&D portfolio of one large pharmaceutical company, and can be applied to other industries in which the resource needs of projects are evenly distributed over the project duration. © 2005 Industrial Research Institute, Inc.