Which projects will deliver recurring revenues

Direct contribution

Indirect contribution

Partial contribution

No contribution

^ .<s> .<s> .<s> .<s> .<s> .<s> .<s> .o>

The portfolio's contribution to achieving a single strategic BE objective

No Partial Indirect Direct contribution contribution contribution contribution

Will this project contribute to the _!

company securing £500,000 worth of recurring revenues during the coming year from clients that have always _

previously paid one-off payments?

Will this project contribute to the company delivering three implementations during the coming year of its standard product in seven weeks rather than nine weeks? j j j

Will this project contribute to the company implementing its own project management method based upon an industry-recognised standard during the coming year?

Will this project contribute to the company delivering two projects in the coming year using the new project management method?

Will this project contribute to the company's reduction in the turnover j of staff of more than 10 years'

experience by 20% during the coming _i__j year?

Which projects will shareholders find most attractive?

100 90

30 20

Risk and reward (or benefits) management is discussed in Chapter 5; however, little detail about a project may be known in its early life. Many questions will need to be answered, but few can be pursued until fuller funding is made available. In the absence of being able to undertake a detailed analysis of the benefits and risks that any project may promise, the organisation can obtain the high-level information it needs by recording each project against a series of measures, some focused on rewards and some on risks (see Table 2.6). Each statement is answered "yes" or "no".

Table 2.6 Rewards and risks of a project

Rewards

Risks

• This project is strategically imperative.

• The project will present significant technical

• This is a regulatory or legally mandated

challenge.

project.

• The project will require significant

• There is potential for long-term value

procedural change.

creation.

• The project will require significant

• Perceived expected financial benefits are

organisational change.

high.

• Implementation costs are expected to be

• Expected value to customers is high.

high.

• Expected value to employees is high.

• The project cannot be implemented quickly.

• This project includes a "wow" factor.

• There is little appetite and/or capacity for

this proposal.

• There will be significant impact on business

as usual.

Each statement with a "yes" is given a score of 1. Once each project has been measured against these statements, it is possible to assess the overall balance of risk and reward inherent in the portfolio. The matrix on which the projects will appear is shown in Figure 2.8 overleaf.

e Empty vessels. These can be pursued easily but will not deliver much reward. They may appear attractive because of their relative ease of implementation, but if they fail to deliver much reward, they will tie up resources that could have been invested elsewhere. e Money pit. Projects that are high in risk and low in reward may appear unpalatable, but they may be necessary. Like empty vessels, they deserve debate to avoid the danger of their being discounted merely because of their risk profile.

Risk and reward matrix

1 2.8

H IG HI

Q Project 6

Project 8Q

Project 5

Project 7

R

O

^ Project 1

Project 4

o

LOW

Risk

HIGH

e Low-hanging fruit. These are preferable to empty vessels. Not only are they relatively low-risk projects, but they also appear to promise high rewards. e Make or break. Projects in this category will be the ones people in the organisation know about already. They will be controversial and challenging and may divide opinion. They will make or break the portfolio, the department or even the entire business. If any projects in the portfolio deserve further and full examination of their costs and benefits, these do.

Such analysis will make it much easier for senior managers to debate the merits of projects that are under consideration. The information itself may be simply expressed, but the discussion it generates will be valuable and should avoid the tacit acceptance of a portfolio of projects that may be flawed.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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