5 Signs That You Need To Improve Project Selection

written by Stuart Easton

Poor Project Prioritization Can Give Your CFO a Heart Attack

Okay, so you have a portfolio of projects or initiatives. Perhaps you're a CIO managing IT projects. Perhaps you're a government Minister selecting policy interventions. You all have the same problem: you simply don't have the time or resources to do everything.

Time for some serious project prioritization.

But sometimes people can't see it. It can be difficult to convince others to change the way things are done. So we thought we'd come up with a blog to help you articulate the pain, to make it visible. If you see any of these 5 signs in your organization, it is ammunition you can use to get things started.

Let's go…

The Business Case for Project Prioritization

Before we dive into our "top 5", let's refresh our memories on the business case. We’ve covered this in other blog posts, but briefly here’s the logic.

  • According to research, 86% of organizations under-deliver on the value of their projects by at least 25%1.

  • If you’re spending $10m a year on your project portfolio, this means that a typical organization is losing at least $2.5m per year, and poor prioritization is a key contributor.

  • Putting in place a good project selection process will slash that waste and costs very little. It’s not difficult to get started.

So, if your organization is typical, it is wasting at least 25% of its project budgets. Don’t tell the CFO – he’ll have a heart attack!

But how do you tell if you are a typical organization? Well, here are our Top 5 signs that you are typical, that you need to improve your project selection process.

Cue up-beat music…

Number 5: Your Departments Set Their Own Priorities

In at number 5, here is an old favourite: “Let’s push ownership out to the individual departments”. By letting them prioritize their own projects, surely their selections would reflect the needs of the guys on the ground…?

The problem is that you end up with a disjointed portfolio that reflects local drivers… if you’re lucky. Unfortunately, department managers are not usually experts at prioritizing IT projects, so the projects they pick are not well prioritized and we’re back to square one!

When you let departments pick their own projects, you also end up having to address the question of “how do I allocate budget?” Just because one department has more people doesn’t mean that it should always have a larger projects budget. The fact that Product A has twice the sales of Product B doesn’t mean that their budget should be twice as big. It makes no sense – and I suggest that it’s impossible to put together a system for allocating budget to departments without first having a corporate level prioritization process.

One customer I spoke to a few weeks ago had project lists from each department, but he “… had no overall list, so I used my head and my stomach and made my own best guess of what the portfolio should be. But it was very clear to me that we needed to develop a more sophisticated model so we could select a good, company wide portfolio, not just one for each of the directors.”

Number 4: You Cannot Write Down a List of Prioritization Criteria

Okay, I bet you can. But is it the same list that Fred over in accounting would write down? Or Joan in sales? Thought not.

If you can’t say how you’re going to prioritize your projects… well, you can’t prioritize them.

In fact, our customers tell us that the process of coming up with a prioritized list of criteria is the most valuable part of their whole PMO programmes. Really!

One customer I spoke to recently put it like this; “We got some very essential discussions about priorities going with the executive board which we would not have had a year ago. We get the business involved, and get managers looking at the whole company, not just their own department. Everything else flows from there.”

Number 3: Project Prioritization is Highly Political

In at Number 3 is one I call “blood on the wall!” A colourful metaphor, perhaps, but it’s the phrase customers use most often when talking about prioritization meetings.

Often, the executive team sits in a room and a succession of project managers troops in. The project managers are beaten to death… and much of the conversation is politically motivated, not issue-driven. Executives are really arguing about their position in the pecking order, their power, their budget, their influence.

This is a sure sign that your prioritization process is broken. You can fix it. One customer recently told me that they had got away from the political battles and now enjoy “a specific discussion about a specific point of opinion or fact, not a political discussion.” Cool!

Number 2: Your Projects Are Obsolete Before They Are Finished

Coming in at Number 2 is “An Elephant in the Room”. It's a big one, but it's often invisible… simply because nobody looks for it. But that's what we want you to do. Take a look at the last year or two worth of projects and see how many of them are still "valid". You might be shocked at how many are, in fact obsolete. One client I recently spoke to claimed that around a third of their projects were obsolete before they were even half way through the year!

What's going on here? Well, it comes down to priortization and alignment. If you don't prioritize your projects, if you don't make decisions that are aligned with your business drivers. You’re making decisions based on what happened yesterday, or on the Director’s pet project. If this is you, the truth is that your projects are not becoming obsolete... you are picking obsolete projects in the first place. 

At this point, it's common for me to hear nervous chuckles on the other end of the phone followed by a comment such as, "We don't measure project obsolescence because we don't really want to know the answer..." Lucky for you, when it comes to aligning projects with business requirements, someone else has done the hard work for you.

And it turns out that a whopping 78% of respondents in a survey admitted that the “business is usually or always out of sync with project requirements”. No wonder there’s such a high obsolescence rate.

Every project that is obsolete is waste. And much of it is avoidable so let’s go elephant hunting!

Number 1: 75% of Your Projects Are Priority 1

Top of the pops, coming in at Number 1 is “The Priority 1 Problem”. One customer had inherited a portfolio of 80 projects – this is what he said; “When 60 projects have top priority, you can say there is no priority.”That’s a whopping 75% of his projects tagged as Priority 1. Little wonder his team didn’t know how to allocate resources.

This might be an extreme case, but I challenge you to take a look at your portfolio. Specifically, look at the top-priority projects and see if they really are top priority. If some of them are not… well, it’s time you looked at your prioritization process.

Doctor, Can You Help?

We don’t want the CFO to have a heart attack. He’s such a cuddly character.

So let’s get those projects aligned with corporate strategy; let’s reduce that 25% under-delivery number. In short, let’s get serious about project prioritization and selection.

Remember, prioritization is a process and it is never "over". Priorities change, people change. Your project selection process needs to be transparent and flexible.

So, you've taken the first step. We're there to help you for the whole journey. Good luck!

(1) KPMG Global IT Project Management Survey

How to improve project success rates.