Introducing the PIT-plot – a new tool in the portfolio manager’s toolkit

ArXiv ID: 2506.12068 “View on arXiv”

Authors: Stig-Johan Wiklund, Magnus Ytterstad

Abstract

Project portfolio management is an essential process for organizations aiming to optimize the value of their R&D investments. In this article, we introduce a new tool designed to support the prioritization of projects within project portfolio management. We label this tool the PIT-plot, an acronym for Project Impact Tornado plot, with reference to the similarity to the Tornado plot often used for sensitivity analyses. Many traditional practices in portfolio management focus on the properties of the projects available to the portfolio. We are with the PIT-plot changing the perspective and focus not on the properties of the projects themselves, but on the impact that the projects may have on the portfolio. This enables the strategic portfolio management to identify and focus on the projects of largest impact to the portfolio, either for the purpose of risk mitigation or for the purpose of value-adding efforts.

Keywords: Project Portfolio Management (PPM), Sensitivity Analysis, R&D Investment, Tornado Plot, Strategic Management, Corporate Finance

Complexity vs Empirical Score

  • Math Complexity: 2.0/10
  • Empirical Rigor: 3.0/10
  • Quadrant: Philosophers
  • Why: The paper presents a new conceptual tool (PIT-plot) for project portfolio management with only basic algebraic formulas and no advanced mathematics, and while it mentions quantitative modeling, it lacks any code, backtests, or empirical implementation details, making it primarily a theoretical framework.
  flowchart TD
    A["Research Goal: Develop a new tool for project portfolio prioritization"] --> B["Data Input: R&D Project Portfolio Data"]
    B --> C["Methodology: Shift focus from project properties to portfolio impact"]
    C --> D["Computation: Calculate impact sensitivity of each project<br/>(PIT-plot: Project Impact Tornado plot)"]
    D --> E["Analysis: Rank projects by impact magnitude<br/>(Value-add or Risk-mitigation potential)"]
    E --> F["Outcome 1: Identification of high-impact projects"]
    E --> G["Outcome 2: Enhanced strategic decision-making<br/>for portfolio optimization"]