Project Portfolio Management Cheatsheet
popping..I wrote an article back in 2007 called Should ROI drive your Portfolio where I argued that ROI is just one of many factors that should be used to help prioritize projects and resources. Today I am recording a podcast for the folks at Tech Target discussing project portfolio management (PPM). PPM is becoming a hot topic again due to the current state of the economy. As I mentioned in the past, projects should be prioritized based on a number of factors in a few different categories:
There are at least four categories of business drivers that should be considered:
1) Financial Analysis
2) Strategic Alignment
3) Tactical Importance
4) Risk Mitigation
I have seen companies that only focus on financial factors like ROI or cost savings. When that occurs it becomes extremely difficult to get priority on strategic and tactical initiatives which are often good projects for the long term health of the company. Many of these projects even pave the way for better revenue opportunities in the future.
I have attached a cheat sheet of what I call the prioritization matrix. This matrix has a handful of criteria by which we weight our projects. Each variable has a value of 1 through 3. You can make these weights any value you want. The goal is to look at your projects across the four categories and assign a value to each variable. When finished you get a total value for each project. It is important to note that the totals are meant to give you the potential value of the project. It is not intended to give you a definitive rating. Use it for guidance. It helps score projects but you still need to make the ultimate decision on what order to work on these projects.
The variables in the cheatsheet are ones that are important to my company. Every company should figure out what the most important variables are for their business. The same goes for the weights and the assigned values to each weight. The cheatsheet is simply an example of a tool that can be tailored to help teams prioritize projects. I highly recommend that the business is included in both deciding what variables to use to measure the projects and for deciding what the values are for each project.
You can download the document here
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Comments
Indeed project prioritization should be governed by a lot more than just ROI. But adding the scores up to a total (any total) is like the theory that if smoking narrows the veins and drinking expands them, you are fine if you do both.
Or, with the current financial crisis in mind, a very high risk is fine if the potential reward is high. Some things cannot be mathematically added (it’s like answering: do you like cookies or music?). Building on simple visualization techniques as pioneered by lean manufacturing, portfolio management tools visualize such dilemmas using advanced graphical techniques like multi dimensional bubble charts.
Gregor Petri
community.ca.com/blogs/ppm
@Gregor,
Thanks for the feedback. As I mentioned in the post, the numbers don’t give you the answer, they simply give you guidance. You have total control over which attributes are important and how much weight is assigned to each. If you want to visualize it, you can do it. It is just Excel. Simply apply your favorite charting tool to the data and your done. I will also add that this is a “poor man’s” PPM tool. If your company has a tool that it has invested in, it is probably much more effective than this tool. In my previous job, my company did not practice PPM and I could not convince them too. So I put this together and was able to influence the project prioritization within my domain. Thought I would share it.
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Portfolio Manager
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