Prioritising Projects
Prioritising Projects
In the current economic climate, more and more business departments are being given a reduced budget. This coupled with an increasing workload makes it more imperative to select the RIGHT projects. Bestoutcome have developed a project prioritisation process that we have used with many of our clients. This process is supported by our project, portfolio management tool, PM3. The RIGHT projects are selected by considering:
- Benefits to the business;
- Cost to develop and implement;
- NPV;
- Payback period;
- Risk of not delivering the benefits;
- Risk of not delivering all or part of the solution.
Overview of Prioritisation process.
- Understand overall business strategy. Back office functions such as IT and HR exist to support the overall business goals and strategy. In many organisations, however, this is not cascaded down to the back office departments. It is essential that the strategy is understood so that the next step, ‘Establish Value Factors’ can take place.
- Establish Value Factors. A value factor describes a benefit to the business, e.g. increase revenue per square foot of retail store. In some organisations one set of value factors can be used to assess a project against regardless of department, e.g. HR, Marketing. However, it is more likely that a set of value factors needs to be established by department that support the business strategy. Once value factors by department are established these can be entered into PM3. The value factors are represented by the vertical axis in the value matrix below.
- Establish project costs. Revenue (opex) and capex costs should be gathered by month for the duration of each project. If necessary these costs can be broken down into sub-categories but this is not usually necessary at this stage.
- Capture Benefits. All projects should have a business case that includes both intangible and tangible benefits. Also, any Net Present Value (NPV) information should be collected at this stage.
- Understand discretionary nature of the project. Some projects are non-discretionary, e.g Sarbanes Oxley, Regulatory, etc that have to be delivered in order to still operate. Non-discretionary are represented on our portfolio plan by a red circle.
PM3 screen showing relative ranking of projects
- Agree Exposure Factors. Each project needs to be assessed against a set of organisational/ departmental risk (exposure factors). The Bestoutcome process requires 2 sets of exposure factors to be agreed; delivery exposure (the risk of non-delivery of part or all of the system), and value exposure (the risk of non-delivery of the benefits).
- Develop Project scenarios. Once the information above has been collated, this can be entered into our project, portfolio management system where projects can be mapped onto PM3’s 3x3 grid that shows each project’s relative ranking based on risk and value to the business.
- Produce Capacity planning scenarios. Once the resource and financial data has been collated in the tool, PM3, its capacity planning engine can run different scenarios based on different budget limits. For example, if the board decides to reduce project spend by 15% next year, this can be fed into PM3 and projects can be deferred or cancelled to see which combination can be delivered with the new budget taking into account the benefits each project delivers to the organisation.
PM3 screen showing resource capacity planning scenarios
Using a tool like PM3 enables multiple project prioritisation and capacity planning scenarios to be modelled. The most important feature of the process is that all projects ‘get a fair hearing’ against company or departmental wide value and exposure factors. This is preferable to the ‘decibel management’ of some project prioritisation processes.
For more information on how to establish the right portfolio of projects using our tool, PM3, please click here: selecting the right portfolio.
For more information on using scenarios to plan different capacity levels, i.e. either resource capacity or financial capacity, click here: capacity planning using PM3
