Why prioritize projects?

Projects are initiated to capitalize on opportunities (the Chinese character for crisis is the same as opportunity I've been told) that a company faces. However, not all projects are created equal.

To quote George Orwell's Animal Farm, "All animals are created equal, but some are more equal than others." Some projects are more beneficial than others.

Prioritizing projects is very much like managing investments. In fact, it is the same. How likely are you to perform due diligence before making an investment decision such as buying a bond?

You need to understand:

• The anticipated returns
• The potential risk
• The timing of the returns
  

With this information you can perform a net-present value calculation to determine the value of one investment versus another. Combined with other factors such as your risk-tolerance and investment goals you'll choose the most appropriate ones for you. The purpose of all of this is to introduce objectivity into your decision-making.

Extending this principle to project prioritization means you should:

1. Understand how important a project is to you. How well does it align with your objectives?
   
2. Prioritize your projects early to allow for lead time for effective decision-making.
   
3. Introduce objectivity into your prioritization process. Just because someone yells loudly does not mean his project is the most important.

Do not take the position that:

• Prioritized projects must be executed sequentially. Some minor projects are dependencies for others. Some projects are easy to slot into non-peak times.
  
• You only prioritize when you need to make a decision. The earlier you prioritize, the more potential problems you can avoid before they become critical.
  

It's a bigger world

We've all encountered situations where difficult decisions had to be made concerning a project.

• Should we continue?
• What features do we need to pare back?
• Do we need more money?
• Are we missing needed skill sets?
  

These decisions are normal things that occur within any project. However, the ramifications for handling them may impact things outside of the project in question. What if an increased budget means another initiative has to go unfunded? Or perhaps the added resources need to be taken from another project's resource pool?

Instead of managing a specific project, decisions have implications across a collection of inter-dependent projects. The management of the collection is termed program management. The purpose of program management is to use the scarce resources and funds available to orchestrate projects to deliver maximum benefit. If you've taken basic economic theory you may remember the definition of scarcity.

The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently.(Investopedia.com)

It's true, you just can't do everything!

One thing I was told very early about projects is that, "Projects end. If it doesn't, then it's not a project." If that's true, then programs, being a collection of projects, end as well.

But we also know that businesses constantly evolve. Their products and services are impacted by innovation and change caused by internal or external sources. If you will, the portfolio of service offerings evolves continuously. To me, I view this evolution as portfolio management. Clearly, this terminology evolved from finance however, it is also applicable to the management of a company's set of offerings and how they are transformed over the passage of time.

The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk vs. performance.

Expanding further upon the concept of program-wide decision-making is the notion that decisions across a portfolio can have implications in many of the different programs within it. A portfolio is governed by the higher level strategic goals of a company whereas program decisions are governed by lower level objectives.

For example, suppose one of your strategies is to become a low-cost provider for a given product. Your product development team may look at projects that reduce the cost of the materials used while your service team may reduce the number of agents who handle customer inquiries and beef up the self-help sections of your website. Together, these two programs work towards meeting your strategy.