Selection of a portfolio of R&D projects

While portfolios of research are increasingly discussed, a portfolio perspective is infrequently taken when selecting two or more projects. Consequently, this chapter considers the current state of knowledge in project and portfolio selection, identifies why we can and cannot apply knowledge from the highly developed field of financial portfolio management, and finally consideration is given to what still needs to be done in this field. Perhaps more troubling is the fact that many R&D managers cannot appreciably perceive improved decisions in terms of project selection when using best practices as described in the management literature (Chien, 2002). This is a challenge but also an opportunity to provide managers with tools that lead to better decisions in practice. Decision makers currently have several tools that can be used to rank projects and to assign relative importance weights to individual projects. Projects are typically measured individually based on merit, with little or no consideration of greater strategic goals or their impact on other projects being considered for approval. For example, it is common for decision makers to approve several research projects that make use of a single methodology in a narrow area of science based on merit alone – placing several bets in a specific research methodology