Once you have an inventory of proposed projects to consider, you must have a system to assign relative value to them. How do you compare a proposed customer relations management (CRM) project to a proposed storage area network? It's difficult, if not impossible, without a way to quantify previously qualitative beliefs, opinions, assumptions, and incomparable metrics. Without a rational system of quantitative comparison, decisions are made emotionally and by the most politically powerful or persuasive.
Yet quantitative financial gauges used alone are not enough, as they are lagging indicators that often fail to properly capture short-term benefits of certain business initiatives. Rather, translate company strategy into seven to ten business drivers and prioritize the drivers using conjoint analysis to determine their weighted importance. Next, determine the impact of proposed projects on business objectives, and mathematically derive a strategic currency from which one project can be compared to another.
Aligning projects to business strategy creates a visible link between the aim of the project and its intended benefits. It also allows all projects to be compared to each other based on a new system, a common currency.
Prioritization of the portfolio should be based on the degree to which each project supports organizational goals (strategic value). However, it is unlikely that the optimum project mix will consist simply of those projects that rank highest in this list. In order to optimize a portfolio, organizations should look to maximize the total strategic value their project portfolio can yield in relation to its constraints on resources.
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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.