- Date: July 4, 2014
- Posted by Litcom Team
- No Comments
- Category: IT Management, Project Management
Your company is most likely spending millions of dollars executing projects to support efforts in order to achieve strategic goals, as well as maintain daily operations. Each project consumes staff, equipment, physical space, and budget. You may have likely found yourself in a position where your resources are stretched to the limit, just before the CEO tells you about a new project that must be started immediately. As well, in all likelihood, there’s one smaller detail-there isn’t any available budget to go outside and get help.
The approval and initiation of a new business or IT project requires significant resources. Although these resources exist within your company, they are limited and need to be used in a way that maximizes their value to the company. The active portfolio is comprised of many different types of projects (e.g. maintenance, regulatory, strategic, enhancements). Each one competes for the same set of resources, staff, budget, equipment, and work space from the same source. So how do you introduce a new project into the active portfolio, when not all the necessary resources are available?
The answer is easy; borrow (or steal) them from one or more of the current projects. The tricky part is determining which resources can be reassigned while still allowing the company to achieve its strategic goals. To solve this problem requires a quantitative way of evaluating the importance and value of each project, without introducing emotion.
Emotion must be eliminated because most portfolios contain “pet” projects that are considered important by some members of the company’s management team, but when analyzed, aren’t really strategic to the company’s goals.
This requires a Project Ranking strategy.
A Project Ranking strategy is a valuable part of the Project Approval process and an ongoing Project Portfolio Management strategy. When evaluating if a new project should be added to the portfolio, a number of attributes are reviewed, including:
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Which company strategy is aligned with the project (e.g. develops new lines of business, achieve financial targets, mature staff capabilities)?
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What category does the project fall into (e.g. Regulated, Innovation, Growth, Steady State)?
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What level of risk does the project represent?
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What are the expected benefits to be realized from the project?
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What other projects share dependencies with this project?
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Can the project budget be capitalized?
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What resources are required to position the project for success?
Each category evaluated is given a weighted ranking, and by summing the weighted rankings, an overall ranking is assigned. Once the set of low ranking projects has been identified, you’ve identified the target pool of resources.
When performing the project ranking as a part of ongoing Project Portfolio management, you also need to include the project’s state of health. This is a valuable tool for identifying projects that should be paused and reset (e.g. redefine scope, budget, and/or schedule), or projects that should be cancelled because they have a low probability of successful delivery.
If you are interested in a Project Risk Profile Assessment checklist, please contact us at [email protected].
Written by Terry Cohen. Terry Cohen is a Senior Associate with Litcom.
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