Tactical Decisions Picking the Right Development Projects

Tactical portfolio decisions focus on projects and address the questions: What specific new product and development projects should the business undertake? What are their relative priorities? And what resources should be allocated to each? These tactical decisions are shown at the bottom part of Figure 7.1-1.

To make effective tactical decisions, two project selection processes should be installed (gates and portfolio review), both working in harmony, as in Figure 7.1-1 (bottom).

Project decisions are made at gates (bottom right of Figure 7.1-1). Embedded within the idea-to-launch new product framework are go/kill decision points called gates (see Stage-Gate® in Chapter 7.1). Gates provide an in-depth review of individual projects, and render go/kill, prioritization, and resource allocation decisions; hence, gates must be part of the portfolio management system.

Many companies already have a gating process in place and confuse that with a comprehensive portfolio management system. Doing the right projects is more than simply individual project selection at gate meetings; it's about the entire mix of projects and new product or technology investments that the business makes. Project selection deals only with the fingers: go/kill decisions are made on individual projects, each judged individually and on its own merits. Portfolio management deals with the fist: it is holistic and looks at the entire set of project investments together.

The second decision process is the periodic portfolio review (bottom left of Figure 7.1-1). Senior management meets perhaps two to four times per year to review the portfolio of all projects. Here, senior management also makes go/kill and prioritization decisions, where all projects are considered on the table together, and all or some could be up for auction. Key issues and questions are:

• Are all projects strategically aligned (fit the business's strategy)?

• Does management have the right priorities among projects?

• Are there some projects on the active list that should be killed or perhaps accelerated?

• Is there the right balance of projects? The right mix?

• Are there enough resources to do all these projects?

• Is there sufficiency? If one does these projects, will the business achieve its stated business goals?

Both decision processes, gating and portfolio reviews, are needed. Note that the gates are project specific and provide a thorough review of each project in depth and in real time. By contrast, portfolio reviews are holistic: they look at all projects together, but in much less detail on each project. In some businesses, if the gates are working, not too many decisions or major corrective actions are required at the portfolio review. Some companies indicate that they don't even look at individual projects at the portfolio review, but consider projects only in aggregate. But in other businesses, the majority of decisions are made at these quarterly or semiannual portfolio reviews.

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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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