Manufacturing Projects Cash-Flow Dynamics and Risk Management

A project portfolio is referred to as an optimal combination of specified projects to best achieve defined goals of an enterprise. The goals may imply either economic and business strategies, or technical strategies. This paper presents an idea of project portfolio management in intelligent decision support systems (IDSS), which emphasizes on the problem of resource allocation, in particular cash. A rational way of distributing cash among different projects is modeled. We propose a concept of cash-flow dynamics module, which can be plugged into IDSS. The IDSS allows project managers to make decisions regarding the order of priority for projects' launching times based on risk and profitability of projects. This paper describes how this module can support cash-flow management processes, from budgeting for future periods to tracking real-time cash flow. Based on an analogy between cash-flow processes and physical flow of fluid, a cash-flow dynamics model is introduced. The theory of Bernoulli principle for cash-flow planning and tracking is applied.