Quick Take:
- Prioritization is rightly the first component of the Project Portfolio Management (PPM) process
- Your project prioritization framework should be data-driven
- Defining the value your organization seeks is critical to success
- Your prioritization process should take into account these steps: Intake, Scoring, Selection, and Strategic Alignment
- The data contained in your PPM software system is critical to project prioritization success
While the four steps of the Project Prioritization process can be undertaken by several means, sufficient, accurate, real-world data and an application that can help you derive insights at each step is critical.
Getting Project Prioritization Right is Critical to PPM Success
Your organization probably does not lack for ideas for projects to improve efficiency, accountability, revenue, and other facets. But how can you determine which projects will deliver the biggest value? Deciding by the seat of your pants might work for very small organizations, but when there’s lots of work to be done, you need a way to rigorously evaluate project proposals and prioritize them.
Project Prioritization is the first and one of the most impactful components of a Project Portfolio Management process. It enables your organization to focus on projects that deliver the most value. (The other PPM process components are Project Management, Resource Management, and Project Portfolio Reporting.)
Start identifying the best projects by examining projects’ business goals, time, money, and resources required. Your project prioritization framework should be data-driven, objective, and scalable. It should support the concepts of Governance and Transparency.
It’s likely that your organization has many different definitions of value. For some, value is determined by increasing revenue. For others, value means reducing cost. Or a measure of value could be a qualitative goal such as “going green.” And on, and on. To begin the project prioritization process, you must first define the value that a project or group of projects will bring to the organization. Once you have that sorted out, you can begin the project prioritization process.
For most organizations, the project prioritization process consists of the following steps:
- Project Intake
- Project Scoring
- Project Selection
- Strategic Alignment
A PPM software solution that features a project prioritization template and other tools to capture or create data for each of step of the process will be critical to delivering maximum value from your project portfolio.
Project Intake
In some organizations, there are many ways to get projects into production. Often these are ad hoc processes that generally are not the best way to select high-value projects. It’s best to create a framework to support this important process for project initiation. That framework should be able to track and contain the various decisions and ranking of projects required to fully vet new projects. Your process should include the following:
- Definition: The project intake process includes the steps for submitting an initiative for evaluation
- Data Gathered: Capture important details such as sponsor, project name, business goal, priority and requested due date
- How To Implement: Project Portfolio Management software tools include an intake form template that you can customize to gather the appropriate information
Project Scoring
You want an objective process to ensure rational Project Prioritization. To be a success, this process must be able to score each project competing for funding. Doing so weeds out the nice-to-have projects from the critical projects and can surface projects that deliver the best value. PPM software can help make the scoring process move smoothly.
- Definition: A scoring model is used to quantify a project’s various components along one or more axes that represent the quality and impact of the project
- Data Gathered: Risk, reward, complexity, cost, revenue, and strategic alignment measures will feed the scoring process
- How To Implement: Project Portfolio Management software usually enables a weighted scoring model to build a project scorecard to track results
Strategic Alignment
A project that is not strategically aligned with an organization’s goals can be distracting as well as a waste of resources. Your project may have scored well during the Project Scoring phase, but it may not be aligned for a variety of reasons. For example, management may have changed direction or failed to accurately communicate the strategic goals of the organization. Ensuring alignment is critical to effective Project Prioritization.
- Definition: How well a project aligns with organizational goals
- Data Gathered: Score vs. goal
- How To Implement: Aligning projects to business strategy should be crucial in your Project Portfolio Management software scoring model
The bottom line is that your Project Portfolio Strategy must be aligned with the organization’s Business Strategy. It’s not enough for your project strategy to just align with the Project Management
Project Selection
So, your projects are aligned strategically. Finally it’s time to do what may be the most difficult step of the Project Prioritization process: selection followed by prioritization.
- Definition: Determining if/when a project proceeds to the next stage in the PPM process
- Data Gathered: Active projects, canceled projects, the project submitter, and the project score
- How To Implement: Your project selection criteria should include the elements described above
As part of Project Selection, you can determine or incorporate your organizational risk/reward baseline and use that to select projects.
A robust project prioritization process will allow you to answer, at a minimum:
- Who submitted this project and what is its purpose?
- How do I compare these projects?
- Which strategic goal does this project support?
- Why was my project not approved?
- If I have limited resources, do I cancel any of my projects? Which projects?
- Do I hire additional resources for my project backlog?
With the help of the right Project Portfolio Management software, you can streamline the Project Prioritization process and ground it in reality. PPM software can also reveal risks, rewards, and insights that can improve prioritization accuracy.
Project prioritization ensures that you are making the best use of your organization’s resources. To learn more about the additional benefits that PPM can deliver please see our “Definitive Guide to Project Portfolio Management.”
