Beauty is in the eye of the beholder. This is a major problem for the PMO.
In just a couple of months, organisations around the world will be knee-deep in the planning process. When it comes to picking a portfolio of projects, the selection process often resembles a beauty pageant.
It will be no surprise to anyone when I suggest that project-selection-by-beauty-pageant is close to professional negligence, and yet many organizations still use this project prioritization method.
Why beauty parades don’t work
You have a team of executives sitting in a meeting room for two days. A succession of project sponsors parade in front of them. Each sponsor explains why their project is the best, how they can manage risk and how the financial return of their particular project is irresistible.
After the first five presentations the executives’ eyes glaze over.
Then in comes the project sponsor for the VP of Sales’ pet projects. The VP of Sales wakes up and starts to advocate aggressively. He wants this project to be approved and is in maximum sales mode.
Then another project sponsor steps into the room. Her pitch strikes a chord with one of the Executives. “I had that problem just last week!” he cries. The CEO laughs as she says, “Yes, we all heard about that one!” Chuckles ripple around the table…
Suddenly all the other pitches, all the facts and figures, have melted into the distance and you end up with a portfolio that is stuffed full of pet-projects and knee-jerk projects, politically expedient projects.
Okay, so I’m exaggerating slightly, but I’m willing to bet that most of you recognize this scenario.
This is not rational decision making. It’s negligence.
Project Prioritization Drives Project Success
Selecting projects by beauty parade is negligent because it almost never delivers a portfolio that is aligned to strategy.
This isn’t important simply because “strategic alignment” sounds good, like something you’d learn about during a Harvard MBA. Oh no, it’s much more important that that.
Strategic alignment matters because it has a direct impact on project success rates and on the business impact your projects deliver. Projects that are well-aligned with strategy are 57% more likely to deliver the intended business value. Fifty seven percent!
So picking projects by beauty parade is having a negative effect on your ability to successfully deliver projects.
This year, make it different
It doesn’t have to be like this. I’ll go further and say it should not be like this.
The decision on what projects to choose should be driven by the value project delivers to the organization. In a way that’s what return on investment is trying to get at, but unfortunately it fails.
The real challenge is to define value. Every executive, every department and every stakeholder will have their own definition of what is valuable. Unless you can build a clear picture of what value means across the organisation, your decision will simply be based on biased opinion and politics.
There are some very good methodologies for agreeing and defining the value of potential projects. For example, the analytic hierarchy process (AHP) is a highly collaborative mechanism for defining value and then selecting projects (project prioritization) based on value for money. In fact, according to researchers (Danesh et al, 2017) who reviewed over 200 methods for prioritizing projects, AHP is one of only two suitable methods.
This is not just about scribbling a few criteria down and scoring projects against them. It’s about really understanding what value means to the organisation and then delivering that value as a balanced portfolio of projects.
There are several project prioritization tools out there, our own among them, that make this process pretty straightforward. Whatever you use, however, it should be collaborative, inclusive and based on real decision science (which rules out weighted scoring spreadsheets, the project prioritization matrix and pretty much every PPM tool). That will give you the best chance of picking a high value portfolio and building the kind of support you need to implement the portfolio successfully.
We’ve created this ultimate guide to project prioritization for you.
This is the place to get the basics of how to do project prioritization properly and of how it can support strategic project selection. It includes a discussion on different methods and techniques for prioritizing projects and gives some guidelines on how to pick a balanced portfolio of projects.
If you’d like to understand how project prioritization can improve project success rates, I would recommend reading this e-Book.
And with the annual planning cycle only a few months away the time to get started is now.
After all, nobody wants to sit through another beauty contest.