Your portfolio management team is a bit confused about the order of steps to follow when defining a portfolio. They have been having debates and they came to you asking for the correct order of steps

Question

Options

• AIdentification, categorization, ranking, scoring, selection, prioritization, resource allocation
• BIdentification, categorization, scoring, ranking, prioritization, selection, resource allocation
• CIdentification, selection, categorization, scoring, ranking, prioritization, resource allocation
• DIdentification, categorization, scoring, ranking, selection, prioritization, resource allocation

• A
  3% (1)
• B
  6% (2)
• D
  90% (28)

Explanation

According to PMI's Standard for Portfolio Management, the correct sequential steps for portfolio component selection are: (1) Identification – discovering and gathering potential portfolio components; (2) Categorization – grouping components into relevant categories aligned with strategy; (3) Scoring – evaluating each component against predefined strategic criteria and scoring them; (4) Ranking – ordering components relative to one another based on their scores; (5) Selection – deciding which ranked components will be included in the portfolio; (6) Prioritization – establishing the relative priority among the selected components; and (7) Resource Allocation – assigning available organizational resources to the prioritized components. Option D reflects this exact sequence. The common mistake is confusing the order of scoring/ranking and selection/prioritization, or placing selection before scoring, as seen in the incorrect options.

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