Making the Compelling Business Case by Wolfgang Messner

Author:Wolfgang Messner
Language: eng
Format: epub
Publisher: Palgrave Macmillan

Figure 5.3 Example: Upgrading from client–server to cloud application

Project portfolio interdependencies

The business case and NPV calculations generally assume that investments are standalone and mutually exclusive. However, the timing of investments can be further complicated when investments are viewed in a portfolio of projects.

There can be logical interdependencies in the project portfolio; one project requires input from another and therefore cannot be started before the other one is completed.

Also, while two investment projects may have similar NPVs, one may generate cash flows in the early years and the alternative may release its cash flows only much later. If the first project is chosen, it may be impossible to take on a third investment project because the available funds are tied up in the first project. This leads us to the issue of decision-making under capital restrictions.

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