Glossary

Payback Period | Glossary

Definition

Payback period is the time required for a company to recover the cost invested in a project. The The payback period of a given investment or project is an important determinant of whether to undertake the position or project, as longer payback periods are typically not desirable for investment positions.

The Payback Period helps to determine the length of time required to recover the initial cash outlay in the project. Simply, it is the method used to calculate the time required to earn back the cost incurred in the investments through the successive cash inflows.It is very simple to calculate and easy to understand. This method is helpful to analyze risk, i.e. to determine how long the investments will be at risk. It is beneficial for the industries where the investments become obsolete very quickly. It measures the liquidity of the projects. The major drawback of this method is that it ignores the Time Value of Money. It does not take into consideration the cash flows that occur after the payback period.

Further Reading:

Book: Disciplined Agile Delivery by Scott W. Ambler and Mark Lines

 

Portfolio Plan | Glossary

Definition:

Portfolio Plan is strategic business process set by an organization to determine the investments and funds allocated for innovation and New Product Development (NPD) in order to achieve their business objectives. It is also called as investment portfolio strategy. An activity for determining which products (or projects) to work on, in which order, and for how long. Sometimes referred to as portfolio management or Project Portfolio Management (PPM).

The objective of Project Portfolio Management (PPM) is to determine the optimal mix and sequencing of proposed projects to best achieve the organization’s overall business objectives typically expressed in hard economic measures and business strategy goals. With Portfolio Management a business can achieve

Further Reading:

Book: Disciplined Agile Delivery by Scott W. Ambler and Mark Lines

          Essential Scrum: A Practical Guide to the Most Popular Agile Process by Kenneth S. Rubin