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The Practical Project Manager

The place to look for practical solutions to help in the journey of project management

How Projects Are Selected

As project managers, we tend to be assigned a project that has already been decided upon. This means that an executive decision has already been made by the board or the CEO to proceed with this project. In most organizations, the decision on what projects to undertake are decided upon when the strategy is being discussed and set forth.

Projects selected make up what is called the project portfolio. Project portfolio is a term that refers to an organization’s group of projects and the process in which they are selected and managed. The project portfolio is strategically selected to advance the corporation’s organizational goals.

Project Portfolio Management is the continuous process of identifying, selecting and managing a portfolio of projects in alignment with key performance metrics and strategic business objectives.

Why is this so critical to an organization? Projects are the vehicles used to deliver strategy. The strategy of an organization is defined, then broken down to create initiatives that make the strategy a reality. Also, organizations operate within finite resources and it is important to apply resources where there will be most returns.

What do we need to know when creating the methodology or framework to support selection of projects?

Know the genetic makeup of your organization and the industry you work in.

A lot of times the initiatives developed work great in one industry but are a total disaster in another industry. It may also be that the same initiative applied to two very similar organizations produces very different results. This is the case because all organizations function differently. There is no one-size-fits-all solution.

Be clear on what the strategy is

For most people strategy is an abstract concept. Sometimes the strategy statement is full of ambiguous words. The same strategy statement means different things to different members of the leadership and the rest of the staff in the organization. This is why it is critical to have sessions detailing the strategy and hearing what the direct reports to the custodian of the strategy, who is usually the CEO, think of it. As the Portfolio Manager, you need to understand what the strategy is.

Collect ideas and initiatives from the key players in the organization

It is important to ensure you engage the right people in the organization for this task. This would be the people mandated to deliver specific deliverables and are best placed to know what is actually feasible. This would typically be heads of departments. Ask them to provide their ideas and initiatives and list them down.

Score the projects and rank them

Numbers don’t lie. Selection of projects can be very subjective. Each head of department may want to have their initiative implemented. Develop a scoring matrix that works for you. The goal is to have the initiative with the highest score approved first.

Assign the highest score to the ideal outcome. For example, on a project with high complexity, assign a low score because the more complex a project, the lower chances of success. Likewise, assign a high score to a project that aligns with the strategy.

For each project, estimate what the man hours would be.

See an example below.

See the list of projects provided.

Project Strategic Alignment Complexity Financial Returns Total Score Resources
Project A 5 15 5 25 150
Project B 10 15 5 30 250
Project C 15 10 15 40 300
Project D 5 5 10 20 250
Project E 10 5 15 30 100

Table A – List of all Projects

Based on the score, the initiatives are now ordered as below.

Project Strategic Alignment Complexity Financial Returns Total Score Resources
Project C 15 10 15 40 300
Project B 10 15 5 30 250
Project E 10 5 15 30 100
Project A 5 15 5 25 150
Project D 5 5 10 20 250

Table B – List of projects as scored

Let’s look at the resource constraint. In this example, the organization has 750 man hours. If we apply this to the portfolio, the cumulative man hours needed are 1,050. Hence we can only apply resources to the first three projects.

Project Strategic Alignment Complexity Financial Returns Total Score Resources
Project C 15 10 15 40 300
Project B 10 15 5 30 250
Project E 10 5 15 30 100
Project A 5 15 5 25 150
Project D 5 5 10 20 250

Resource constraint can be man hours, funding or even time to market. Look at what is critical to your organization.

Perform Due Diligence

Even after the list has been developed and projects selected, work on a business case and perform due diligence. Sometimes you may find that during this process, a project may be cancelled or dropped. The devil is always in the details.

Does your organization follow a project selection process? Have you implemented portfolio management methodology? What was your experience?

Leave a comment below or drop me an email on thepm@thepracticalpm.com.

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