Archive for June, 2010

PostHeaderIcon Project Prioritization Criteria

Sorting the Best from the Rest

For most organizations, a critical component of portfolio management is a framework for prioritizing project work. This involves evaluating the merits of current and candidate projects against a common set of criteria and using the results to rank-order the importance of those projects for the purposes of optimizing the portfolio (see “The Goals of Portfolio Management”). But which prioritization criteria should be used?

Strategy Drives Priorities

Criteria should be directly driven by strategies – assigning a single criterion for each strategy is a good starting point. They should also be multi-dimensional in the sense that they appropriately balance strategic concerns across differing perspectives, such as financial, technical, commercial, process, people and customer; typical examples include:

Financial

  • Revenue, Profitability, Investment cost

Technical

  • Solution complexity, Innovation quotient, Technical risk

Commercial

  • Market need, Market growth, Commercialization risk

Process

  • Efficiency, Quality, Time to solution

People

  • Skills development, Existing resource leverage, Functional interdependence

Customer

  • Business impact, Customer satisfaction, Image

Note that criteria lie on a continuum of tangibility; while some are easily quantifiable for any project, the more intangible may be challenging to rate.

Keep it Simple

Once established, each project is scored against the prioritization criteria to determine its strategic fit and importance. Well-defined prioritization criteria and scoring models allow for clear differentiation between “clear winners” and “obvious losers”. Too often however, this all gets over-complicated. Here are a few guidelines to ensure that the prioritization framework is practical as well as accurate. Criteria should be:

  • few in number
  • measurable
  • mutually exclusive
  • linked directly to a business strategy
  • appropriately balanced for the portfolio’s type of projects.

To quote Einstein: Keep it as simple as possible – but no simpler.