Background:
Client had an R&D pipeline of 90
projects. Client needed a
methodology to determine the
value of each project so they
could be prioritized and
investments could be allocated
appropriately. We used a
discounted cash flow method to
determine the value of each
project and adjusted the
internal cost of capital to
reflect the risk inherent in
each project.
Cash flow was projected for each
project over the next 7 years.
The internal cost of capital was
adjusted for the risk level on
each project and used as the
discount rate. After a value was
determined for each project, we
recommended a prioritized list
of R&D projects and appropriate
level of investment to achieve
maximum return from the
portfolio. The analysis resulted
in client's reduction of the
portfolio from 90 projects to 27
and indicated that the optimized
R&D portfolio would reduce time
to market for the portfolio of
25%.
Output:
Client presentation and detailed
book of analysis and findings
