Projects are initiated to solve a business problem – create something new, improve processes, remove risks, increase revenue, and so on.
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With limited resources to deliver strategic goals, it makes sense for organizations to rigorously prioritize new project requests.
Unfortunately, many organizations suffer from ‘initiative overload’, with too many projects running at the same time. This situation wastes resources, causes clashes between departments, and leads to high employee turnover.
In this article, we’ll review project prioritization from two perspectives: an existing project portfolio and managing new project requests.
We’ll start by taking a closer look at the causes of project overload.
Causes of Project Overload
Project request management is integral to project portfolio management (PPM).
PPM helps organizations to define their long-term goals, which influences project selection.
Simply put, understanding where a company wants to go informs decisions around projects – what is approved, when projects are executed, and who is assigned to work on these projects.
Strategic vision thus drives project prioritization and selection.
Without a structured approach to the project pipeline, organizations lose control over projects and resources very quickly.
There are a few reasons why organizations struggle with project overload.
1. Impact Blindness
As noted in Harvard Business Review, many organizations have no way to identify, measure, and manage the impact of projects on teams and managers.
More work is simply added to the backlog, with no insight into the consequences for other projects and resource allocation.
2. Planning in Silos
When projects are planned by individual departments, priorities are determined in isolation from the overall vision of the organization
Projects are launched without considering how the work or deliverables will impact other areas of the business.
In addition, resources are stretched across multiple, competing projects, answering to numerous managers.
3. Poor Problem Definition
Sometimes, projects are launched to solve a surface problem, not the root cause. This leads to an ongoing pipeline of short-term fixes.
4. Resources
In some cases, projects are approved without the necessary budget or resources. In other instances, organizations may lower headcount without reducing the work.
Either way, teams struggle to do more with less, leading to project and budget overrun.
5. Initiative inertia
Many organizations can’t or won’t end failing projects. There are many reasons for this such as:
- ‘Sunk-cost fallacy’, a tendency to continue with work due to the time, money, and resources already invested in it.
- The lack of a ‘sunset clause’, a process for ending projects by a certain date.
6. Low-risk Appetite
Approving too many projects can indicate a risk-averse culture.
If senior executives worry about missing the latest market opportunity or upgrading to new technology, the project pipeline becomes quite full.
By contrast, companies such as Appel, Amazon, and Ikea have a tight focus, supported by a small number of projects.
Let’s put the cost of these challenges into context.
According to the Project Management Institute:
- Poor project management practices waste around $2 trillion dollars per year.
- Organizations lose 9.9 percent of every dollar due to poor project performance.
- 31% of projects do not meet their goals.
- 35% of projects are not aligned to strategic goals.
- 52% of projects experience scope creep.
Poor project performance is expensive, making project prioritization even more urgent.
Prioritizing projects requires focus and a shared understanding of what is important to the company.
Taking a structured approach to project prioritization makes it easy to:
- Align projects with strategic goals.
- Plan projects with a holistic view of the pipeline.
- Sequence projects.
- Manage resources more effectively.
- Help teams understand where to focus their time.
Now that we’ve discussed the consequences of project overload, let’s review how to prioritize an existing portfolio of projects.
4 Ways to Prioritize Your Project Portfolio
Below is a four-step process to help you get an existing project portfolio under control.
Start by assessing the current situation before setting priorities with senior management.
With this information, you can decide what to do with your pipeline and set criteria for maintaining the portfolio in the future.
1. Assess the portfolio
Firstly, you need to understand the current state of play. Find out:
- How many projects are under way.
- The status of these projects.
- The business case, including strategic alignment, of each project.
- Resource allocation and budgets.
If your organization is using project portfolio management software, gathering this information should be straightforward.
If not, you’ll need to work closely with project managers and senior executives to collect the data.
You’ll also need to review the pipeline of proposed projects:
- What projects are planned?
- When will these projects start?
- Are resources evenly distributed?
- Is the business case for each project still applicable?
- Are there any dependencies between projects?
- What is the cost of doing or not doing a project?
2. Establish Priorities
Next, work with senior management and departments to identify priorities for the entire company.
These priorities should align with the organization’s strategic goals.
If these goals are not clearly defined, you can use the following questions to guide the conversation:
- What is the purpose of the organization?
- How should we pursue this purpose?
- What is our vision?
- What matters most to the organization now and in the future?
- What are our priorities now and over the next two to five years?
Part of these discussions should focus on what drives projects in your organization. Projects are often used to:
- Gain competitive advantage
- Save money
- Streamlines processes
- Meet regulatory requirements
- Reduce risk
- Improve quality.
Departments interpret strategic goals differently so it’s important to understand when and why projects are initiated.
You may even need to develop a common understanding of what a project actually is!
With this information, decide what value looks like to your organization. What is the expected impact of a project? How is ROI (return on investment) measured? What is the best use of your resources? How is risk assessed?
Again, you’ll need to gather input from all departments to ensure a balanced approach.
3. Update the Portfolio
With agreement from senior management and project managers, review the portfolio to decide which projects to continue, pause, or end.
A simple way to prioritize the portfolio is a weighted scale, for example,
- 1 = very low
- 2 = low
- 3 = medium
- 4 = high
- 5 = critical.
For teams using SharePoint for project management, the Project Request Manager Template from BrightWork makes this ranking process easy with drag-and-drop functionality.
Once the portfolio is updated, let relevant managers and departments know if a project is paused or canceled, and why. It’s important for teams to understand there is a limit to how many projects can be delivered successfully.
4. Maintain the Portfolio
In the next section, we’ll take a closer look at some questions to ask when evaluating new project requests to improve project selection.
For now, our focus is on adding some larger check-points to the portfolio. These include:
- Creating a sunset clause for every project. This is an end-date for funding and resource allocation to prevent projects rolling on for too long.
- Requiring managers to reapply for project funding and resource allocation during the annual planning cycle.
- Leveraging real-time, cross-project reports and dashboards to monitor project execution.
- Introducing a standard intake form for new project requests to standardize and improve the selection process.
- Limiting the number of projects assigned to a project manager at any given time.
- Mixing short and long-term projects to free up resources and deliver goals quickly.
9 Questions to Prioritize New Project Requests
With a balanced, strategic portfolio in place, it’s time to improve project selection.
Ideally, this process should be facilitated by software to help with:
- Collecting new project requests.
- Sending automated updates to a requester when the project is approved or rejecting.
- Creating a new project site for approved requests.
Here are some questions to ask when evaluating a new project request:
- What problem will this project fix?
- Is this desired outcome supported by data?
- What resources are needed to complete this work?
- Who will be responsible for the final deliverable, for example, a new document management system?
- Will you need to hire new employees or outsource part of the work?
- How does the cost of resources stack up against the proposed business value of the project?
- Who are the key stakeholders?
- What happens if we don’t deliver this project?
- Is there a sunset clause in place?
Conclusion
Prioritizing the project portfolio is an opportunity to deliver better projects and become more focused.
As Steve Jobs said:
People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying “no” to 1,000 things.
