I was asked to present at the recent Project Challenge event at Olympia in London, and the organizer wanted me to talk about something a little different from the topics of project management; the PMO; and methodologies that a lot of presentations were focused on.
I’ve been working in the project & portfolio management (PPM) space for almost 17 years now, and I have seen a lot of businesses who are trying to improve their maturity over these years. I've met a number of people who think PPM is about software, but it is very much more than that...
It is a critical ongoing process that is the vehicle to take strategic plans and turn them into reality. In today's digital era, the velocity of change is ever increasing and the PPM processes are needed right across the organization, not just in the IT department.
I believe that choosing the right projects to deliver is the most important part of the process. I used one of Peter Drucker’s great quotes on one of my slides “There is nothing quite so useless as doing with great efficiency, something that should not be done at all” Many millions of dollars/pounds/euros (choose your currency…) are wasted each year on projects that are: not aligned to strategic goals; of low business benefit; an executives pet project; or are destined to fail from the start.
Are you focusing too much on the project delivery process and too little on project portfolio prioritization? Then perhaps it is time to focus on the Project Prioritization Challenge.
why do so many projects fail to deliver real business value?
Why is a lack of executive support such a big cause of project failure?
What can you be doing to improve this situation?
Well the Elephant in the Room that needs to be talked about is how prioritization decisions are made. Do you recognize any of these approaches?
He who shouts loudest!
The beauty parade
An estimated financial return – that is never tracked
Organizations that get this right see a huge improvement in project success, and a big increase in the value from their investments (Some statistics quote 40% but let’s just think about what a 20% improvement would mean – I was talking to a company the other day who invest around 20m€ in projects on an annual basis, and the numbers get big very quickly) By this stage of my presentation a lot of people were nodding heads as they recognised the problems. The biggest problem is that it is the executives who need to acknowledge that the current approach is flawed, and that they need to do something different.
Risk is a criterion you’d see used to evaluate potential projects in almost all decisions, but a Transformational portfolio will treat risk differently to a ‘Run-the-business’ portfolio.
Innovation will always be riskier. Not every project can be about increasing revenue or cutting cost. Some projects will need to be about increasing the satisfaction of customers or employees. Some will be safety related, or regulatory.
Not every criterion will be of equal weighting when prioritizing projects. Getting the executives to collaboratively define, discuss, agree and weight the right criteria to drive business value from the decision is critical if the right projects are to be approved. It can also be a very productive exercise for them as it can identify different views and perceptions on what business values should drive decisions. Getting agreement and buy-in now can have a huge impact on sponsorship and business adoption of deliverables later in the process.
Then you need to make sure that you utilize the knowledge and expertise in your business to evaluate the potential projects, but only against the criteria that they are experts on. What does an accountant know about technical risk, or most engineers know about net present value? Again, make this a collaborative exercise so that any differences in opinion can be identified and addressed early on.
It is also important to balance the portfolio. Your highest ranking projects after scoring might all be aligned to a strategic goal, but:
Are too may aligned to one goal, and other goals have too few projects and will therefore not be achieved?
Is one region or divisions getting too much funding whilst other are starved?
Are your critical resources being overloaded and set up to fail?
Is value for money being achieved?
Optimizing the investment in project portfolios is not a process that can be taken lightly. It is the link between strategic planning and executions, and can be the difference between business success and failure, sothe time for you and your executives to focus on the Project ‘Prioritization’ Challenge is now…
Would you like to hear more? Here is a recording of the presentation