Ask five different colleagues what they think the most important project in your organization should be and you will get five different answers. If your organization had an infinite number of resources, you could work on all five projects at once, but the reality is that resources are limited. Deciding which projects to prioritize over others is difficult to say the least and if not done correctly, could have serious consequences for your business. To tackle the challenge of what projects should be done first, companies use different prioritization methods. However, not all methods are right for each company. Just like Goldilocks, you need the method that’s just right. We’re going to break down three of the most common prioritization methods so you can determine which one is right for your organization.
The Ranking Method
What Is It?
The Ranking Method is the simplest prioritization method and the one that most people are probably familiar with. When you use the Ranking Method, you determine one (or possibly two) criteria to evaluate a project. For example, things such as return on investment (ROI) and customer benefit could be criteria for evaluation. Projects are then ranked based solely on that one criteria. If ROI is your evaluation criteria, your #1 ranked project will deliver the biggest ROI and is staffed with resources before all other projects. This doesn’t mean that projects ranked #2 and #3 (and so on) don’t have an impressive ROI; they just don’t have the highest ROI. The remaining projects are staffed in order of rank (from the highest rank to the lowest rank) until there are no more resources available. When resources run out, the remaining projects are put on hold.
One of the biggest advantages of this method is that it forces organizations to make decisions. The process for making decisions is clear and easy to understand. However, the Ranking Method works best when organizations have a small number of projects (ideally less than 20 projects) and when projects are similar in nature making them easy to compare with only one criteria. When organizations grow and begin to take on more projects, they will need evolve their prioritization process.
The Scoring Method
What Is It?
If you want to evaluate projects for prioritization with more than one criteria or if you want to compare very different types of projects, you should consider the Scoring Method. The Scoring Method works by taking numerous evaluation criteria to calculate a priority score. Criteria can also have a weighting to emphasize which criteria is most important. Common criteria used can include:
- Payback Period
- Project Cost
- Alignment to Corporate Strategy
- Impact on Customer Satisfaction
- Other Project Dependencies
- Adherence to Regulatory Requirements
Many organizations choose the Scoring Method for the high degree of customization it offers. Organizations can determine exactly which criteria and weighting are most relevant to their specific business. When evaluating a project, the project is evaluated and scored for each criteria. The score for each criteria is then adjusted if there is a weighting and the total of all criteria scores are added to provide a final project priority score. Projects are then staffed according to the project priority score with the highest scoring projects staffed first.
While customization is the Scoring Method’s advantage, it can also be a disadvantage. Many organizations make the mistake of overcomplicating the process by developing too many project evaluation criteria. Project evaluation needs to be thorough, but organizations with a lengthy list of evaluation criteria will find themselves buried under complex weighting formulas. Because at least one individual will need to provide a score for each project criteria, adding criteria also adds more work so each criteria should be deliberate. It’s also important to note that the Scoring Method would not be the best choice for organizations with hundreds or thousands of projects, even if there were only a few evaluation criteria. Filling out criteria for each project would take too long. For organizations of this size, prioritization will need to be broken down further.
The Decentralized Approach
What Is It?
At a certain size, centralization only slows down an organization. While organizations may start with only a few decisions makers, the more it grows, the more the decision-making will need to be decentralized. This is the only way to avoid bottlenecks and maintain the adaptability needed to compete in the marketplace. The Decentralized Approach works by breaking down projects by department, business unit or sometimes even teams. This effectively creates mini-organizations that make up an entire company.
These mini-organizations will assume the responsibility for projects and the prioritization of projects within their own mini-organization. By doing this, the number of projects for prioritization by one person or body decreases to a more reasonable number. Each mini-organization can use whatever prioritization method they see fit and they will show their projects to a portfolio board or other decision-making body to obtain approval, budgets and resources.
When the portfolio board doesn’t have to evaluate every project, the approvals process happens much more quickly and frees up more of their time. It may take some time for portfolio board members to adjust to the decentralization, but they still have control over the budgets and resources assigned to each mini-organization so they can assure alignment to the corporate strategy.
What to Do after Prioritization
Prioritization is not the only hurdle to getting projects completed and reaching corporate goals. Prioritization is part of a process of initiating new project ideas, evaluating them, executing on them and measuring their success. To help companies with prioritization and beyond, we developed the Lean Project Portfolio Management™ framework. Our Lean PPM™ framework outlines all the roles, responsibilities and meetings companies need to organize their project portfolio and finish more projects. Most organizations are already using some type of PPM process, so mapping the Lean PPM™ framework on top of current processes is easy. When organizations successfully implement Lean PPM™, they can answer the question, “Who should implement which projects, when?”
Project Portfolios From Start to Finish with Meisterplan
Meisterplan is a project portfolio management and resource management software that allows organizations to build powerful project portfolios that help them execute on their corporate strategy. Unlike other tools, Meisterplan is quick to implement, easy to scale and adaptable for when plans change. Meisterplan supports project prioritization with drag and drop project ranking, customizable project score formulas and as many sub-portfolios as needed for decentralized organizations. To see how Meisterplan can help you prioritize projects and maintain a healthy project portfolio, sign up for a free 30 day trial today.
There is no other product that does what Meisterplan does in terms of portfolio management and resource management without unessential extra features. If there were another product that does what Meisterplan does, I would have found it, because I tried them all.