Effective Approaches to Project Prioritization

October 30, 2012 | Author: PM Hut | Filed under: Project Portfolio Management

Effective Approaches to Project Prioritization
By Claire Schwartz

‘The key is not to prioritize what’s on your schedule, but to schedule your priorities’ – Stephen R. Covey

Like most of us, I have a tendency to attend to tasks that interest me the most, especially when I am expected to deliver on multiple projects within the same time frame. The problem here is that, what interests me the most may not necessarily be the most important thing that needs to get done. Personal priorities help us direct our attention to activities that give us the greatest value as individuals while organizational priorities are intended to focus more on teams and on matters that provide optimal value to the organization.  Without organizational priorities, individuals will set their own priorities (like doing what they like), hence the important stuff doesn’t get done on time. Conversely, clear organizational priorities guide us better to make decisions that are ‘directionally’ correct.

Well-defined governance outlines who sets priorities for what. While all the work in an enterprise gets prioritized by someone, there are often multiple managers or management groups that are independently prioritizing that work. While this is totally appropriate for tactical operational work, using the same approach for projects – especially cross-functional efforts – can derail project progress while project work waits for resources that are working on locally defined priorities.

Project prioritization is not tactical – it’s strategic and, as such, it is a function of portfolio governance. Portfolio Governance Committees or Teams are typically made up of senior-level managers and as a team they are responsible for representing the broader interests of the enterprise – rather than the individual groups that they lead. The portfolio governance team meets periodically to review the progress of high-value or strategically significant projects, consider new project
proposals, and establish or revise the priorities of projects in the portfolio.

It is important to note that the Portfolio Governance Committee is not concerned with day-to-day prioritization of work efforts but instead focuses on longer term, strategic prioritization of projects. Short-term issues or resource conflicts are handled by tactical management teams guided by the project priorities that have been set. For example, if a lower level project is in trouble the tactical team may temporarily redeploy resources from a higher priority project — but only to the extent that it does not impact the performance of that higher priority effort. The priority of the projects does not change – only the tactical priority of some of the work does.

The second attribute of an effective project prioritization process is having a consistent set of criteria for evaluating projects by themselves and against others. Using consistent criteria make the prioritization process more efficient and effective since we know what information is needed before we take a project to our governing body for consideration.

While there are a number of techniques for achieving consistency in evaluation, the most popular is accomplished with a scoring model. The scoring model consists of a set standard criteria that reflect the key attributes of a project to be considered in the prioritization process and a set of measures or ‘scores’ that will assign a value to each criteria. For example, let’s say that one of our evaluation criteria is cost reduction. In building our scoring model we’ve decided that any project expected to reduce costs by more than $1M will receive the highest score value and any cost savings less that $10K should receive the lowest. We can also establish intermediate score values to represent the levels between the highest and lowest levels between our highest and lowest values. By providing the criteria with pre-defined values we have the ability to compare projects on an ‘apples to apples’ basis.

Good scoring models take a while to create – and the best ones I’ve seen generally have evolved over time as the governance team refines their view of the portfolio and the individual projects within. If you’re building a scoring model, there are a few things to keep in mind:

  1. Identify criteria that reflect both the potential upside and downside of the project. While, the example cited earlier used a scoring criteria based upon a benefit (cost reduction) you also want criteria that evaluate project cost, duration or risk dimensions of the project.

  2. Consider strategic objectives in defining benefit criteria.  While many projects may seem like a good idea, if they don’t support your organizational strategy they shouldn’t score as well as those that do.

  3. Clearly define both criteria and scoring values. Take some extra time to both define and validate the definition of your criteria – ambiguity will only create confusion and reduce the credibility of the scoring process.

While using a scoring model to evaluate projects is a high-value component of project prioritization, the score of a project and the priority of a project may not be exactly the same thing. While the score will inform the prioritization process, external factors such as regulatory deadlines, seasonal demand, or unforeseen business opportunities may dictate that a lower-scoring project is prioritized above one with a higher score. For example, if a project is almost done it generally makes more sense to complete it rather than putting it on hold to start a new one. While you could build all these factors into your scoring model it would be highly unlikely that you could anticipate everything and every time something came up all the projects would need to be re-scored, adding chaos and rework to the process. By establishing a priority rank (1 to n) or priority value (high,medium, low) in addition to the score you have the flexibility to accommodate minor prioritization changes without having to re-score the entire portfolio. Even here we need to be cautious: While minor adjustments may be needed, continual, significant re-prioritization can be disruptive.

Last but not least is communication – project priorities are only useful if the people impacted by those priorities know what they are. The individuals responsible for priority-setting are in the best position to communicate those priorities across the organization and to communicate the business rationale for them and typically will craft the message regarding initial priorities. But one-time communication is only part of the story, regular reminders are necessary to maintain focus and commitment to priorities. Here is where an the PMO can play a significant role by reinforcing the message in obvious ways like written announcements and meetings or more subtly, like always showing the project priority in listings and reports. Constant visibility of project priorities can go a long way to making these priorities an integral part of how projects are viewed and executed in the organization.

Establishing a project prioritization process is neither simple nor fast. It requires a great deal of organizational buy-in and support, especially from individuals who may see prioritization as a threat to their authority and control. However, organizations that invest the time in establishing repeatable, fact-based processes for prioritizing projects find it quickly yields positive results and is well-worth the effort.

Claire Schwartz is a Senior Business Process Consultant with Daptiv (www.daptiv.com) and has over 30 years’ experience in designing and implementing Project Portfolio Management processes and tools. She has worked with a wide variety of organizations and disciplines including information technology, new product development, supply chain management, education, transportation, and financial services.

Prior to joining Daptiv in 2009, Claire was the Director of Projects and Plans for the Information Technology Division of Saint Louis University where she was responsible for designing, implementing and supporting project management, project portfolio management, resource management, and strategy development and management. While at Saint Louis University, Claire managed the evaluation, selection and implementation of Daptiv across the Information Technology organization.

An authority in her field, Claire has developed and taught numerous courses in project and project portfolio management and written on a variety of topics including project management maturity, project and portfolio management methodology and implementation approaches, and choosing and implementing project management software packages.

Claire is a graduate of the University of Michigan and has earned a Stanford Certified Project Manager (SCPM) credential from the Stanford Center for Professional Development.

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