Resources that work on multiple projects need to understand where to focus their time. Higher priority projects need the best resources available to complete the work on time and on quality. It enables the governance team to navigate critical resource constraints and make the best use of company resources. Prioritization is about focus-where to assign resources and when to start the work. Good companies violate the principal of focus ALL THE TIME and frequently try to squeeze in “just one more project.” Prioritization is About Focus Even though experienced leaders understand the need to focus on a select group of projects, in practice it becomes very difficult. Without a clear and shared picture of what matters most, lower-value projects can move forward at the expense of high-value projects.
Gaylord Wahl of Point B Consulting says that priorities create a ‘true north’ which establishes a common understanding of what is important. Strictly speaking, we should distinguish portfolio selection from project prioritization and for the purposes of this post we will focus strictly on using the scoring model for prioritization. Unfortunately, this approach does not result in an optimal portfolio, but is acceptable for lower maturity organizations. For many organizations, the process of selecting projects and prioritizing projects is merged together to develop a rank order list of projects where the governance team “draws the line” where budget or resources run out is an acceptable way to define the portfolio. Once there is an established portfolio, the same value scores can be used to prioritize work within the portfolio. When evaluating new projects for inclusion in the portfolio, the governance team must understand the relative value of the proposed project in relation to the rest of the projects in the portfolio this will help inform the governance team’s decision to approve, deny, or postpone the project. In the context of the portfolio lifecycle, assessing project value is particularly important in the first two phases: Define Portfolio Value and Optimize the Portfolio. A poor scoring model will not adequately differentiate projects and can give the governance team a false precision in measuring project value. A good scoring model will align the governance team on the highest value work and measure the risk and value of the portfolio. The tool for assessing project value is a scoring model, which includes the criteria in the model, the weight (importance) of each criterion, and a way of assessing a low, medium, or high score for each criterion in the model. Portfolio Management Lifecycle The Scoring Model is the Prioritization Tool Any organization that manages a portfolio of projects needs to define and communicate what kinds of project work is of highest value. Hence, “value” is not clear cut or simple to define. Furthermore, even within a company, each department may interpret the strategic goals uniquely for their organization. However, the definition of “value” will differ at every company because every company has different strategic goals, places varying emphasis on financial metrics, and has different levels of risk tolerance. In order to select a winning portfolio, every governance team needs to share a common understanding of value without it, you’ll fail to realize the benefits of your portfolio. Understanding the relative “value” of each program and project in the portfolio is at the heart of portfolio management and determines what work is selected, how it is prioritized, where resources are allocated, etc. In order to maximize value delivery, the governance teams that approve work and prioritize projects need to share a common view of “value” in order to use a scoring model to select the most valuable work and assign the right resources to that work. Portfolio management is about maximizing organizational value delivery through programs and projects. PRIORITIZATION IN THE CONTEXT OF PROJECT PORTFOLIO MANAGEMENT
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