Cover: RAND's Portfolio Analysis Tool (PAT)

RAND's Portfolio Analysis Tool (PAT)

Theory, Methods, and Reference Manual

Published Oct 20, 2009

by Paul K. Davis, Paul Dreyer


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Strategic planning often involves investing in a mix of capabilities and activities and assessing the adequacy of options for meeting a variety of objectives. Such an analysis “portfolio” may be characterized by allocation across investment categories or by the corresponding allocation across objectives. RAND's Portfolio Analysis Tool (PAT) was designed to facilitate strategic analysis dealing with both uncertainty and differences of perspective. PAT generates high-level summary depictions for discussing issues of balance. It uses a spreadsheet-based format with options shown in rows and various measures of option goodness in columns. The PAT user can drill down (zoom) to understand the basis of high-level characterizations and to identify troublesome problems. PAT can depict various types of risk in a number of ways and present options that mitigate or hedge against those risks. Built on an earlier application-specific tool, PAT-MD, which was developed for the U.S. Missile Defense Agency's Program Integration Office (MDA/PI), PAT reflects lessons learned, and it has evolved considerably. The approach to analysis enabled by PAT is oriented toward assisting high-level decisionmakers to frame their thinking about balance, to construct good multifaceted options for consideration, and to make subsequent choices. This report documents the theory and methodology of PAT and serves as a combined reference manual and user's guide. It will be of interest primarily to analysts and those who manage analysis.

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

This report is part of the RAND technical report series. RAND technical reports may include research findings on a specific topic that is limited in scope or intended for a narrow audience; present discussions of the methodology employed in research; provide literature reviews, survey instruments, modeling exercises, guidelines for practitioners and research professionals, and supporting documentation; or deliver preliminary findings. All RAND reports undergo rigorous peer review to ensure that they meet high standards for research quality and objectivity.

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