As organizations have grown savvier about project management, successful execution is on the rise, however choosing the right projects to deliver remains a challenge for many companies.
The risks around deciding on appropriate projects are myriad and not unlike any other large investment a corporation might make:
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Indecision leads to missed opportunities, or a competitor outmaneuvering you while you side on the sidelines analyzing, pondering and pontificating. Poor decisions lead to bad investments, or an abundance of activity in one area at the expense of missed opportunities in another, potentially more important area.
In addition, nothing saps the morale of your people more than continuously making a decision then revisiting and revising that decision every week; bouncing your teams between objectives like larger and vastly more costly game of ping pong.
So, how does your organization ensure it effectively and efficiently gives a potential project a yea or nay?
Know Thy Portfolio
Most investors have a defined allocation model for their investment portfolio; placing a certain percentage of their assets in emerging markets, for example. An organization needs to have a similar allocation model for their project spending, funding a certain percentage of infrastructure projects, and a certain percentage of R&D-type projects for example.
While perfecting this allocation model is a large piece of work in and of itself, it is critical to providing a framework for choosing projects. Without a defined allocation model and knowledge of what is in your current portfolio, your organization is akin to the investor that picks the flavor-of-the-month stock or mutual fund based on someone elses advice.
It is rare for this type of investor to succeed in the long run, nor will an organization that chooses projects based on articles in the IT rags, or what competitors are doing at that particular moment.
Once the allocation model is defined, any potential project can be analyzed to determine how it fits within the model, and the allocation model serves as the basis for choosing projects. With the model in place, the following three areas will help ensure your company effectively and efficiently selects projects for execution.
Well-Defined Selection Process
No one likes a rigged or vague process, where decisions are made in a closed room with unknown criteria, and a verdict is handed down without any understanding of the process that engendered it. Rather, subject each project to a group of standard selection criteria that everyone is aware of in advance.
Estimates on the projects return, cost and resource requirements are obvious criteria, as well as how the potential project fits within the organizations current project portfolio. Assessments of the projects risk and impacted business units are also helpful.
The goal of a well-defined selection process is not to create demands for reams of documentation, but to require certain metrics that can be used to compare different projects on the same terms. This adds some rigor to the process of building a case for a particular project, and allows for an apples-to-apples comparison among different potential projects.