Project Prioritization: Gotta do it Right!
Written by Stuart Easton
This blog is going to be pretty short and it's aimed at PMO leaders and at the executive management layer of the organization. Here's the message:
There are lots of ways of prioritizing projects. Most of them are not very effective.
There ARE some ways that research shows are "the right way". If you want your business to succeed, you have to fix the prioritization process and that means adopting one of these "right" methods.
That's it. That's the core message. Stop prioritizing by "pin the tail on the donkey" and do it right!
The rest of this blog will go deeper. It will look at the research and what it tells us we should be doing, and the answer is, I believe, clear. We should be using an AHP-based project prioritization process.
If you want to see how to do prioritization right, watch this webinar. If you want to know more about how we can even talk about a "right way," read on!
Current Prioritization Methods Don't Work
Now of course, most methods of selecting projects work in the sense that you manage to select some projects.
The internet is awash with advice about the "common ways" of selecting projects. "Use my simple spreadsheet to prioritize projects!" "How to use the priority matrix!" and so forth.
Many of the people who publish their method for prioritizing projects are experienced professionals. They may have felt successful implementing these methods, but the research tells a different story.
For example, PMI data suggests that 20% of projects are so badly aligned that they should be stopped tomorrow -- that's 20% of your money and resources being spent on the wrong activities.
At the same PMI research suggests that half of projects are under-resourced. That's the same as saying you have too many projects and that's one way to guarantee that projects will overrun or fail!
So clearly, all the "traditional methods" aren't really working.
Luckily, there is quite a lot of research on the topic of project prioritization. This research was pulled together by researchers in 19971 and the result was really interesting. Out of over 100 methods of prioritizing projects, only 2 were found to be suitable.
Only TWO methods of prioritization are suitable
The two methods were called the Analytic Hierarchy Process (AHP) and Data Envelopment Analysis (DEA). DEA can be quite tricky to use, but AHP (despite it's rather scary sounding name) is pretty easy to use and there are now a small number of good tools that do all the hard work for you.
In concept, AHP is like a super-charged priority matrix. You set up criteria, weight them and then score your projects against those criteria. This gives you a weighted score for each project and this score (if you've done it right) gives a good indication of how "important" or "valuable" each project is.
The secret sauce is in HOW you do it. AHP has a structured method that helps the leadership team work out what strategic alignment means. The actual scoring of projects is relatively straight-forward, it's getting alignment between your stakeholders that's difficult.
AHP really works
I recently read an academic paper looking at AHP in the context of prioritizing IT projects2 . The paper looked at the case of a large company that had put a lot of effort into improving its project prioritization process using more traditional methods. This lead to 85% of stakeholders "feeling good" about the new process, but actually, gave them no benefit in terms of actually aligning projects to strategic goals.
Think of this as the "before AHP". They'd invested in (what I assume was) a priority matrix, or some other spreadsheet based method of selecting projects. They "felt like" they were doing a good job, but the real impact just wasn't there.... and this is how I believe most organizations are.
They then implemented AHP. The researchers collected performance and perceptual data before, during and after the implementation of AHP -- this is proper research, not just some "marketing case study".
The result was a significant improvement in strategic alignment. This is exactly what I would expect. What I did not expect was a table showing some other areas in which they derived benefits. The benefits included;
- Finding a good solution [to the question of which projects to do] through consensus
- Creating more and better "viable alternatives"
- The ability to better pinpoint "the problem" you're trying to fix
- Making the decision more rational (and less about emotion, gut feelings or politics)
- Getting everyone involved and bought-in
- Reduced conflict between different areas of the business
- Improved transparency in decision-making
- Improved execution of projects
I spoke to one of the researchers who wrote the paper and he told me that the biggest benefit that the company achieved was "getting all the senior leadership aligned" and it's that alignment that makes many of the other benefits possible.
Job done? No!
I could go on, but I think we've made the point. "Traditional" (and popular) methods of selecting projects just aren't very effective (though they may "feel good"). AHP, on the other hand, is proven by research to be effective.
Stop playing "Pin the tail on the donkey". Job done!
Except that this is just the start of the job. This is where you need to actually do something and my suggestion is to set yourself (or a member of your team) a clear goal: Within a month, come back with an AHP-based process for prioritizing projects.
I would recommend our Ultimate Guide to Project Prioritization as a great starting point, and I would also recommend this webinar (by one of the authors of the paper we discussed in this blog, as it happens) on how to select criteria for project prioritization. This webinar covers more than just criteria and is well-worth a watch if you're going on this journey.
Finally, here's a webinar that will give you a high-level overview of how to prioritize projects the right way.
1. Danesh*, Ryan and Abbasi (2017), School of Engineering and Information Technology, University of New South Wales
2 da Silva Neves, Camanho -- Information Technology and Quantitative Manahement, 2015