Customer Demand Priority - An Objective Methodology to Project Prioritization

September 9, 2012 | Author: PM Hut | Filed under: Program Management, Project Portfolio Management

Customer Demand Priority - An Objective Methodology to Project Prioritization
By Gary Hamilton, Gareth Byatt, and Jeff Hodgkinson

Program, Portfolio and PMO Managers understand the ‘benefits to value’ of a project and can use ROI (Return on Investment), IRR (Internal Rate of Return), or other financial metrics, as well as non-financial criteria (‘intrinsic value’ criteria) to evaluate projects at the start of and during their full lifecycle into ‘operations mode’. Selecting which projects to charter within your organization have long-term implications both for you individually and your organization. Conducting in-depth pro-forma ROI, IRR of other financial analysis can be costly and time consuming. What about an alternative method that is relatively quick and easy to undertake and can provide you with an objective ‘weighting’ criteria for your stakeholders and Program/Project Team to consider? If you manage a PMO, Portfolio or Program of work (in any discipline – Finance, Manufacturing, IT, etc), the Customer Demand Priority (CDP) tool we put forward below may be helpful to you at the front-end decision-making process of project prioritization. It is a simple method that is similar to a risk matrix table to evaluate and score projects on a scale from 2 to 11 where 2 are the lowest challenge and 11 is the most intensive.

The ‘CE’ or ‘Customer Demand Priority’ is based on the total of Customer Impact (CI) and Technical Severity (TS) whereas CE equals the CI Factor plus the TS Factor with a possible value range of 2 to 11. Similar to the Risk Management or Project ‘Stoplight’ values, the scores of 8 to 11 are high impact, 5 to 7 is medium impact, and 2 to 4 is low impact and the tables below give the suggested actions. Looking at the table below, you will see the scoring matrix and suggested actions.

Customer demand possible valuesFigure 1: Customer demand possible values

The customer challenges are weighted on a score of 7,5,3, and 1 and the technical challenges on a score of 4,3,2, and 1 with the philosophy that proper engagement and agreement with the customer (or people issues) are slightly more challenging that the technical hurdles. Also, providing an empirical number weighting to a project hopefully removes a lot of the ambiguity that can otherwise exist. Additionally, the weighting can be used for inclusion in assigning staffing and other resources. Theoretically, three #3 and one #2 project equal in ‘value’ to one #11 and therefore a Project Manager assigned to four projects of that weighting has the same amount of workload as a Project Manager with one #11 project. This may not be exactly true, and can be offset by the quality of the original evaluation criteria but does provide some ‘guideline’ to use. If you manage a PMO then this may be a simple means of first evaluation of your projects and assignment of PM’s.

Attribute Weighting Factors

Here’s an example of how it works. Take a look at the attribute weighting factors in the table below. You will notice that the higher scoring boxes have a much more intensive criterion than the boxes below. The key to the successful use of the matrix is for the team and stakeholders’ to agree on a set use of criteria for inclusion in the matrix which directly reflects on the mission of the group.

Attribute Level CI (Customer Impact) Factor TS (Technical Severity) Factor
1 7 =
Directly Affects Major Customer’s Business Objectives
Directly Affects Revenue Required/Affects most/all of the company
Negative Impact to your organization and/or business
No Solution and/or no progress and the is solution overdue
Group has high degree of influence / impact to effect change or solution
Great time investment
4 =
No known technical solution or owner at the company
2 5 =
Customer business impacted without requirement
Direct Impact to IT Organization and/or Business Commitment made by org but not being implemented
Required/Affects multiple customers and sites
Solution in progress Completion date unknown
Group has some degree of influence/impact to effect change or solution
Good time investment
3 =
Some technical investigation, theory, or direction as to fix.
Technical Solution Owner(s) identified
3 3 =
Customer can work without this requirement /request
Solution in progress and completion is date known
Required by single customer or unique need (small scope)
Project Team being formed
No resource or funding
Group has little degree of influence/impact to effect change or solution
Questionable time investment
2 =
Technical Solution currently being designed.
Could be near Alpha quality
4 1 =
Solution done – in maintenance or monitoring mode
Project Team (resourced/funded) working on implementation
Solution in place & monitoring progress w/ customer/supplier
Group has no degree of influence or impact to effect change or solution
Poor time investment
1 =
Technical Solution currently being designed.
Could be near Beta quality.
Solution currently being tested or implemented.
Technical Work-around exists / usable

Even though the CE tool uses a Technical Severity rating, this does not limit it to evaluation of IT projects. Consider for a moment the rational for the two measures. The CI is a measurement of the impact to the customer. TS, while it is named Technical Severity, is a measurement of difficulty the project would be to execute. The TS can easily be adopted to fit any type of project. Once the CI and TS criterion are developed, they should be reviewed and approved by your stakeholders.

Attribute Level CI (Customer Impact) Factor TS (Technical Severity) Factor
1 7 =
Directly Affects Major Customer’s Business Objectives
Directly Affects Revenue Required/Affects most/all of the company
Negative Impact to your organization and/or Business
No Solution and/or no progress and the is solution overdue
Group has high degree of influence/impact to effect change or solution
Great time investment
4 =
Current available resources could not deliver the project within timeframe and contractors are not an option
2 5 =
Customer business impacted without requirement
Direct Impact to IT Organization and/or Business Commitment made by org but not being implemented
Required/Affects multiple customers and sites
Solution in progress
Completion date unknown
Group has some degree of influence /impact to effect change or solution
Good time investment
3 =
Available resources may be able to complete, but would cause impact to other projects or funding pool
3 3 =
Customer can work without this requirement/request
Solution in progress and completion is date known
Required by single customer or unique need (small scope)
Project Team being formed
No resource or funding
Group has little degree of influence impact to effect change or solution
Questionable time investment
2 =
Adequate resources are available, alignment will not cause impacts
4 1 =
Solution done – in maintenance or monitoring mode
Project Team (resourced/funded) working on implementation
Solution in place & monitoring progress w/ customer/supplier
Group has no degree of influence or impact to effect change or solution
Poor time investment
1 =
Adequate resources are available, and available to begin the work when needed without resource realignment from other projects

Summary

In today’s marketplace, resources are limited and must be allocated to projects that have the highest chance of return. Equally, we are all pushed for time and we are not always in a position to conduct detailed financial metrics analysis. The Customer Demand Priority (CDP) tool may be a helpful alternative for PMO, Program and Project Managers to use at the front-end decision-making process of project prioritization. Once the criterion is determined then all projects can be reviewed, weighted, and expectations to implement can be determined accordingly.

Gareth Byatt, Gary Hamilton, and Jeff Hodgkinson are experienced PMO, program, and project managers who developed a mutual friendship by realising they shared a common passion to help others and share knowledge about PMO, portfolio, program and project management (collectively termed PM below). In February 2010 they decided to collaborate on a five (5) year goal to write 100 PM subject articles (pro bono) for publication in any/all PM subject websites, newsletters, and professional magazines / journals. They have been translated into Arabic, Czechoslovakian, French, German, Italian, Spanish, Portuguese, and Russian and published on websites in 23 countries including Australia, Brazil, Canada, Chile, Czech Republic, France, Germany, Hong Kong, Italy, India, Jamaica, Netherlands, New Zealand, Nigeria, Pakistan, Panama, Poland, Russia, Trinidad, Turkey, UK, USA, and Sri Lanka. Their mission is to help expand good program and project management practices by promoting the PM profession, to be a positive influence to the PM Community, be known as eminent influencers of PM practices, and in earnest hope readers can gain benefit from the advice of their 65+ years of combined experience and expertise and include the expertise of co-authors who write with them on certain articles and subjects. Along with writing articles, each also champions a role in the overall writing program collaboration process:

  • Gareth manages all requests for additional guest author collaborations
  • Gary manages the article development tracking and readership metrics
  • Jeff manages the article distribution and new readership demographics

Each can be contacted for advice, coaching, collaboration, and speaking individually as noted in their bios or as a team at: Contactus@pmoracles.com

Gareth Byatt is Head of the Group IT Portfolio Management Office for Lend Lease. Gareth has worked in several countries and lives in Sydney, Australia. Gareth has 16+ years of project, program, and portfolio management experience in IT and construction. He can be contacted through LinkedIn.

Gareth holds numerous degrees, certifications, and credentials in program and project management as follows: an MBA from one of the world’s leading education establishments, a 1st-class undergraduate management degree, and the PMP®, PgMP®, PMI-RMP®, & PRINCE2 professional certifications. Gareth is currently a Director of the PMI Sydney Chapter, he is the APAC Region Director for the PMI’s PMO Community of Practice and he chairs several peer networking groups.

He has presented on PMOs, portfolio and program and project management at international conferences in the UK, Australia, & Asia including PMI APAC in 2010. Email Gareth: Email Gareth: gareth.byatt@gmail.com

Gary Hamilton has 16+ years of project and program management experience in IT, finance, and human resources and volunteers as the VP of Professional Development for the PMI East Tennessee chapter. Gary is a 2009 & 2010 Presidents’ Volunteer Award recipient for his charitable work with local fire services and professional groups. He has won several internal awards for results achieved from projects and programs he managed as well as being named one of the Business Journal’s Top 40 Professionals in 2007. Gary holds numerous degrees and certifications in IT, management, and project management and they include: an advanced MBA degree in finance, and has the PgMP®, PMP®, PMI-RMP®, PMI-SP® , CAPM®, Project+, PRINCE2, ITIL-F, MCTS, MCITP, and SSGB professional certifications. Email Gary: Gary@PMOracles.com or contact him through LinkedIn.

Jeff Hodgkinson is a 32 year veteran of Intel Corporation, where he continues on a progressive career as a program/project manager. Jeff is an IT@Intel Expert and blogs on Intel’s Community for IT Professionals for Program/Project Management subjects and interests. He is also the Intel IT PMO PMI Credential Mentor supporting colleagues in pursuit of a new credential.

Jeff received the 2010 PMI (Project Management Institute) Distinguished Contribution Award for his support of the Project Management profession from the Project Management Institute. Jeff was also the 2nd place finalist for the 2009 Kerzner International Project Manager of the Year AwardTM. He lives in Mesa, Arizona, USA and volunteers as the Associate Vice President for Credentials & Certifications and the Agile CER (Chapter Engagement Representative) for the Phoenix PMI Chapter. Because of his contributions to helping people achieve their goals, he is the third (3rd) most recommended person on LinkedIn with 555+ recommendations, and is ranked in the Top 60 (currently 54th) most networked LinkedIn person. He gladly accepts all connection invite requests from PM practitioners at: www.linkedin.com/in/jeffhodgkinson.

Jeff holds numerous certifications and credentials in program and project management, which are as follows: CAPM®, CCS, CDT, CPC™, CIPM™, CPPM–Level 10, CDRP, CSM™, CSQE, GPM™, IPMA-B®, ITIL-F, MPM™, PME™, PMOC, PMP®, PgMP®, PMI-RMP®, PMI-SP®, PMW, and SSGB. Jeff is an expert at program and project management principles and best practices. He enjoys sharing his experiences with audiences around the globe as a keynote speaker at various PM events.

Email Jeff: jghmesa@gmail.com or at: phxpmicredentials@yahoo.com

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1 person has left a comment

I’ve always liked the idea of simple matrices to communicate the parameters on which to make priority calls. This, for me, is perhaps a little too crude, but I could imagine it as a useful overview or first look?

The other subtelty I’m always sensitive about losing in similar matrices is the possibility of clouding the priority of a business requirement with the complexity associated with its delivery. For me, those are two separate (albeit related) discussions.

Daniel Beverly wrote on September 10, 2012 - 4:42 am | Visit Link

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