Project Portfolio Management: Project Prioritization

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Project Portfolio ManagementProject
Prioritization
Enterprise Business Partners July 16, 2004
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What is a Project Portfolio

• A collection of projects
• Similar to an investment portfolio
• Usually independent of one another
• Grouped to meet a business need
• Shared resources

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Project Portfolio Key Phases

• Charter How work requests are received and the
  queue is managed.
• Prioritize How projects are funded and approved.
• Execute How projects are scheduled, balanced and
  delivered.
• Closure How project information is archived and
  used to improve the process.

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Best-Practice Framework for Prioritization
Process
Mission, Goals, Values, Vision
Financial Review
Strategic Planning (Resource Allocation)
Rank Candidate Projects
As Is (Givens) Status, Competition, Technology
Risk Review
Criteria For Selection
University Business Strategy
Enterprise Technology Strategy (Role of IT)
Architectural Compliance
Scoring And Evaluation
Resources Available, Client Demands
Business Impact Review
Selection Resource Allocation
Enterprise Architecture As Is/To Be Guidelines
University Strategy Direction, Initiatives, Spen
ding Plans
Business Value
Business Alignment
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Criteria Used to Prioritize
Four Perspectives
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Criterion Financial

• As complete picture as possible ...
• Cash Flow By month (CFO-acceptable)
• Out Capital expenses, purchasing, labor, future
  support
• In Cost savings labor, quality, capital, cost
  avoidance
• Analysis Options Payback, ROI, IRR, NPV
• (ROI Return on Investment
• IRR internal rate of return, NPV net present
  value)
• Other Factors
• Time to demonstrable results
• Capital-intensive vs. reallocating existing
  staff
• Options to withdraw
• Relative scale

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Criterion University Business Impact

• Contributions to achieve a weighted business
  strategy ...
• Tactical
• Economic business cost impact
• Non-economic performance improvement
• Speed (time to market, cycle), quality, function
• Ease of use, convenience
• Choice, personalization
• Image, employee satisfaction
• Threat avoidance security, continuity
• Strategic
• Leveraging competence
• Knowledge management
• Enriching customer experience

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University Business Impact Seen via Portfolio
Management

• Classification Options
• Value vs. ability to implement or risk
• Operational, informational, transformational,
  enabling
• Contribution to improved enterprise performance
• Application Options
• High
• Low
• contribution

• Aligned
• with
• business
• strategy
• Source of
• business
• value

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Characteristics of the Portfolio Categories
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Criterion Risk or Uncertainty

• Exposure to negative consequences or uncertain
  benefits means low evaluation ...
• Business Risk
• Results delivered are of no value
• Organizational Risk
• Targeted user audience resists system
• Major change-management effort or abandonment
• Technical Risk
• Vendor fails, does not perform, standard
  superseded
• Execution Risk
• Large volatility in cost, time estimates
• Not previously achieved
• Major implications for support costs, time and
  integration

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Criterion Technical Architectural Fit

• Internally Generated Systems (Build)
• Use established guidelines
• Launch new technique/tool toward to be
• Extend use of obsolescent products
• Introduce duplicate technology
• Hinder information integration strategy
• Contracted Packaged Application, Contract
  Programming (Buy)
• Package has its own architecture (e.g. unique
  database)
• Focus on information exchange guidelines
• Metadata, semantics
• XML
• Less concern regarding platforms

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Result Creation of an Initial Prioritized List
of Projects

• Appearance
• May seem obvious or anticlimactic
• Rarely surprising
• Seems logical, simple
• Why expend the effort?
• Reality An Important Difference
• Before Variety of personal options diverse
• After Any participant can explain the program
  and choices to the Executive Council
• A consistent, agreed-to plan

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Final Step Match Priorities to Resources

• Explore Dependencies, Sequence Requirements
• Resource Review
• Approximate level of resources required
• Coarse level of skills, resources
• Map out demands vs. capacity
• Evaluate available external resources
• Optimize Prioritized Results vs. Resource Cost
• Reverse sequence and project time spans
• Prepare external resources
• Build/shift internal resources
• Create Finalized, Prioritized Projects List

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Next Steps to Establish Project Prioritization

• Inventory of Existing and Planned Projects
• Define/Confirm Criteria for Project Evaluation
• Apply Criteria to Known Projects
• Assess Resource Availability
• Assess the Current Project Portfolio and Begin
  Using the Process