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It takes a certain amount of skill and expertise to manage a complex project. A project manager has to juggle the inherent risks, interdependent tasks, constraints, allocation of resources, budgets and schedules that come with all projects whatever their size or complexity.
So how do you decide which tasks to prioritize to get the best outcomes from your projects? Let’s take a look at how a project prioritization process works, and why you need one.
Why do you need a project prioritization process?
To manage a single complex project, using a systematic process that follows best practices that have developed in the industry over several decades saves you time and effort. Why reinvent the wheel when you can take the best that others have learned, and apply it to your projects?
Experienced project managers will often have developed the skills and expertise required to prioritize projects through both on-the-job experience, formal training, and study for project management qualifications like APM, PMP, or PRINCE2.
But rarely in business is there just one project occurring at any given time. There are more likely to be several projects on the go, and a portfolio manager or program manager will have overall responsibility of a number of projects all competing for attention and, consequently, requiring an effective project prioritization process. This can be taxing even for experienced project managers to handle without an effective method in place.
Before we look at the different ways of prioritizing projects let's look at the difference between portfolio and program management. These are two areas closely related to project management but with their responsibilities and issues and requiring a distinct set of project management skills.
What is program management?
Program management is merely the process of project managing a group of projects at the same time. This is usually because they are related to each other and are all required as part of a broader strategic aim within an organization.
One of the main advantages of managing projects as part of a program of changes is to avoid teams working in silos and potentially ending up with final deliverables that don't work well together.
It is also useful for ensuring adequate resources are applied where necessary, and those skill sets are shared across projects
What is portfolio management?
Where a project manager has responsibility for a single project, and a program manager has responsibility for a group of related projects, a portfolio manager, on the other hand, has the even greater responsibility to oversee a much broader group of projects and programs; the aim being to implement broader business objectives.
A portfolio manager is responsible for budgets, resources, and schedules across a much wider section of a business or even across the entire enterprise. They tend to be accountable for projects in a variety of different areas of the business. For that reason, portfolio management is much more focused on strategy and vision and, hence, future projects that might be required to deliver long term objectives.
Portfolio managers, therefore, are responsible for determining the relative priority of individual projects across an organization. And, of course, the need for a systematic process to prioritize these projects.
Project prioritization processes
It's reasonably obvious that projects need to be prioritized because we cannot do everything – or not all at the same time. Budget, talent, or both constrain most organizations.
So a methodical process is required to determine what projects can be done to deliver the most value, given budget and resource constraints. There is a wide range of techniques that can help with this prioritization and they will typically cover:
- Business Objectives
- Financial Analysis
Let's take a quick look at a couple of them:
The MoSCoW method
This is a well-known technique for determining what is necessary to stakeholders. It is quick and simple to use but is limited in its ability to accurately categorize stakeholder requirements. For that reason, it is best suited to less complex projects.
MoSCoW is an acronym (with o's added to make it easier for us to remember) of the following stakeholder requirements:
- Must have – critical elements without which a project could not succeed.
- Should have – essential elements that could impact the success of the project.
- Could have - “nice to have” elements that are not essential to the project's success.
- Won’t have – additional elements that can be eliminated.
The Kano model
The Kano model is based on the assumption that end-user satisfaction with the final deliverable of a project is related to the features and functions available. The level of satisfaction is usually determined through a standard questionnaire. The model breaks the elements down into four separate categories:
- Performance – ease-of-use and speed are typical performance measures
- Must-be – these are features that are basic expectations
- Attractive – not necessarily expected but features that are a bonus
- Indifferent – these features are neither necessary nor missed by their absence
Net Present Value
The net present value refers to the difference between the amount of money now, versus the value of money at a future date. When it comes to prioritization, projects with a higher NPV are preferred. Cash today is worth more than cash in the following years. This means that projects with longer life spans may have a lower NPV than a project with a shorter life span.
The payback period refers to the time taken to recoup the project investment. It’s calculated by dividing the cost of the project over the average annual cash inflows. Using this formula helps the PMO determine which of the projects will regain the original investment faster. However, only using this method to prioritize projects is reductive as it doesn’t include the risks in undertaking a project or the time value of money.
A scoring model is a flexible way of prioritizing projects. The scoring criteria can be molded to fit the values and needs of your PMO, and the process can be as informal or as thorough as needed. The process is as follows:
- Select three or four scoring criteria (e.g., benefits, size, risk, impact, margin, cost, feasibility)
- Assign ranges to the criteria to rank the projects (e.g., 0-5 or 0-10)
- Assign weights to each category (e.g., Risk may be a more significant deciding factor than impact)
- Test out the model with different business units to assess whether the model provides meaningful results
These are just a few techniques for prioritizing projects using various criteria. There are many more out there including Story Mapping and Internal Rate of Return if you are interested in looking into more prioritization methods that you could potentially try.
Over to you
Managing one project can be a tricky business, and maintaining a handful can be… well, a handful! So no doubt managing a project requires the use of well-understood procedures and processes if the project is to be a success.
Readers, have you tried any of these project prioritization processes – which do you prefer?
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