Within most large organizations – as well as smaller businesses – time and resources are in short supply yet high demand, making project selection more difficult. Evaluating and prioritizing projects can be complex, but this vital first step can negatively impact the business if not assessed carefully.
Regardless of business size, industry or structure, many projects today are unfortunately still selected and initiated in a siloed department-by-department manner, without considering the overall strategic impact. What are the risks of initiating projects in this manner? Businesses run the risk of more than one area competing for the same project resources, including people and technologies, and also conflicting deadlines and goals. They may even risk some project outcomes negatively impacting other areas of the business.
All too often every department or unit deems their projects a top priority. The bad news is unless a business has unlimited resources, time and no real clear direction, it is impossible to assess all projects as top priority. The good news is, there are some proven strategies for evaluating and prioritizing projects.
1. Become involved in strategic level planning
The first step for a program, portfolio or project manager is to become involved in strategic level planning. Sit down with the leadership team to gain a full understanding of the direction of the business, the timing, and their overall vision; there is no such thing as too much detail here.
This may require more than one strategic planning session, and will provide valuable insights to help guide decision-making for programs, portfolios, and projects. Consider this similar to a roadmap or blueprint that will not only mark the desired destination but also provide additional markers along the way to follow, to help confirm if you are navigating in the right direction.
2. Identify project drivers
Projects can be driven by various factors like some of the ones below. Some of these drivers may motivate a business to initiate a project for the purpose of creating or enhancing something, meeting a requirement or hurdle, reducing the risk, removing an existing or potential problem, increasing revenues, offering an opportunity not previously available or simply streamlining a process. Talk with management to identify which of the following drivers are motivating each proposed project.
- Competitive advantage
- Cost savings/financial benefit
- Operational efficiency/process improvement
- Legislative/legal/ tax implications
- Improving quality
- Risk reduction
- Growth/ business opportunities
3. Quantify strategic value
Ask management to discuss the various projects they are considering to determine the impact and desired project outcomes. This will help to better understand and quantify the strategic value, immediate and/or long-term impact as well as anticipated benefits of each project being considered. The risks of not starting certain projects on schedule will also have to be weighed carefully. For instance, some projects may be of great strategic value, and add numerous benefits, yet may not be top priority when compared to another project driven by legal, tax or legislative requirements.
4. Determine factors that may impact project success
Additional factors that should carefully be considered are the return on investment (ROI), budgeted funds, available resources, and timing, and if there are any dependencies or limitations (among other factors). Company budgets and timing are almost always limited, making it impossible to take on all project ideas conceived. Some projects may need to be put on hold if they depend on the successful outcomes of other projects, or there may be factors outside of the business’s control that could delay or prevent the success of one or more projects.
5. Create an evaluation and prioritization matrix
Once you have gathered all the applicable information from management and other sources, create a project evaluation and prioritization matrix to identify and rate each project in terms of criteria. Use a weighted scale (for example 1 to 5, with 1 = very low, 2 = low, 3 = medium, 4 = high, 5 = critical) to put a rating on each of the criteria in order to accurately evaluate the priority of each project.
6. Close the loop
After projects have been carefully weighted and prioritized, before initiating any of the projects sit down again with management and review the project evaluation and prioritization matrix, and any other findings, to ensure expectations are clear with all parties involved. This allows management an additional opportunity for added input, and to confirm if they are in agreement with your findings.