Within most large organizations—as well as smaller businesses—time and resources are in short supply yet in high demand, making project selection more difficult. Evaluating and prioritizing projects can be complex, but this vital first step can negatively impact the business if not assessed carefully. Let’s take a closer look at project drivers, factors that may impact project success, project evaluation criteria, project valuation, and prioritization methods and tools, and more.
Regardless of business size, industry, or structure, many projects today are unfortunately still selected and initiated in a siloed department-by-department manner, without considering the overall strategic impact. What are the risks of initiating projects in this manner? Businesses run the risk of more than one area competing for the same project resources, including people and technologies, and also conflicting deadlines and goals. They may even risk some project outcomes negatively impacting other areas of the business.
All too often, every department or unit deems its projects a top priority. The bad news is that unless a business has unlimited resources, time, and no real clear direction, it is impossible to assess all projects as a top priority. The good news is that there are some useful strategies for evaluating and prioritizing projects.
Become involved in strategic-level planning
The first step for a program, portfolio, or project manager is to become involved in strategic-level planning. Project leaders should sit down with the leadership team to gain a full understanding of the direction of the business, the timing, and the overall vision; there is no such thing as too much detail here.
This may require more than one strategic planning session and will provide valuable insights to help guide decision-making for programs, portfolios, and projects. Consider this similar to a roadmap or blueprint that will not only mark the desired destination but also provide additional markers along the way to follow and to help confirm if you are navigating in the right direction.
Identify project drivers
Projects can be driven by various factors like some of the ones below. Some of these drivers may motivate a business to initiate a project for the purpose of creating or enhancing something, meeting a requirement or hurdle, reducing the risk, removing an existing or potential problem, increasing revenues, offering an opportunity not previously available, or simply streamlining a process.
Talk with management to identify which of the following drivers are motivating each proposed project:
- Competitive advantage
- Cost savings or financial benefit
- Operational efficiency or process improvement
- Legislative, legal, and tax implications
- Improved quality
- Risk reduction
- Growth or business opportunities
Quantify strategic value
Ask management to discuss the various projects they are considering to determine the impact and desired project outcomes. This will help to better understand and quantify the strategic value and immediate or long-term impact as well as anticipated benefits of each project being considered. The risks of not starting certain projects on schedule will also have to be weighed carefully. For instance, some projects may be of great strategic value and add numerous benefits, yet they may not be a top priority when compared to another project driven by legal, tax, or legislative requirements.
Determine factors that may impact project success
Additional factors that should carefully be considered are the return on investment (ROI), budgeted funds, available resources, and timing, as well as any dependencies or limitations (among other factors). Company budgets and timing are almost always limited, making it impossible to take on all project ideas conceived.
Some projects may need to be put on hold if they depend on the successful outcomes of other projects, or there may be factors outside of the business’s control that could delay or prevent the success of one or more projects.
Create evaluation and prioritization methods and tools
Make prioritizing of projects a top priority—not every project is a need; some will just be wants.
Once you have gathered all the applicable information from management and other sources, determine the most appropriate methods and tools to assess, prioritize, identify, and rate each project in terms of project evaluation criteria. Make sure that these are relevant and effective ways of evaluating each of the criteria within each project in order to most accurately assess company-wide priorities.
Close the loop
After projects have been carefully weighted and prioritized and before initiating any of the projects, sit down again with management and review the project evaluation criteria, results, company-wide strategic goals, and any other findings in order to ensure that expectations are clear with all parties involved. This allows management an additional opportunity for added input and for confirming if they are in agreement with your findings.
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