Project Prioritization: The Ultimate Guide

Effective project prioritization is the foundation for a successful portfolio. It's how you deliver strategy. It's how you maximize resource performance. It's how you eliminate waste. Roll these factors together, and it's how you can double the ROI of your portfolio.

Let's start with what poor prioritization does to your portfolio:

  • Working on low value "pet" projects that don't deliver benefits destroys value
  • Starting too many projects leads to delivery team overload, and with that poor delivery KPIs
  • Failure to execute against strategic goals frustrates executives and reduces support

If you fail to address these fundamental challenges, the PMO will never be able to fulfill it's potential as a value-creation engine. Conversely, if you commit to fixing prioritization, then you are enabling a huge upside in delivering value.

We've seen it happen, and have developed a simple 5-step change-program which any PMO can follow. But before you rush off to chase these benefits, you must first understand how to solve prioritization. Here are the core points we've learned:

  • Prioritization is a decision making challenge, so solve it with Decision Science, specifically the Analytic Hierarchy Process (AHP).
  • Fixing prioritization needs commitment to change to a data-led, collaborative approach rather than a "Loudest Voice" model.
  • Getting leadership buy-in for the case for change is the key to successful governance (even more than documentation...)
  • Prioritization is the start of your journey to a high performing portfolio, not a mid-way point in a maturity model.
  • Prioritization is too important to trust to spreadsheet, and AI too powerful an enabler to ignore.

 

TransparentChoice has helped manufacturing companies, financial services companies, government departments, life science companies, technology companies and charities around the world improve the effectiveness of their project prioritization processes, and we've learned a lot about what works and what doesn't.

That’s what we want to share with you in this document: the real story of how to prioritize projects properly and how to avoid the common mistakes:

You can download this eBook as a pdf so you can read it offline if this is too much to cover right now.

We've done our best to pack in as much as we can to this guide, but we're always happy to speak - just book a meeting with us and we can connect. 

What is project prioritization?


Prioritizing projects is one of the most important capabilities for any organization. It is where the entire success of your portfolio begins, and enables you to:

  • Align projects with strategy to reduce waste
  • Quantify which projects add most value
  • Say "no" to low value projects
  • Improve project flow through enabling staggering
  • Gain buy-in from both stakeholders and delivery teams
  • Balance the portfolio of projects in the backlog
  • Build an achievable portfolio roadmap

In plain English, prioritization is a process where you work out which projects are the most important so you can focus resources on successfully delivering them.

There are good ways and bad ways to prioritize projects. This guide will show you a proven solution built on Decision Science. It will also highlight common traps that drive poor prioritization in many organizations.

Why prioritize projects?

It’s no longer enough for a PMO to focus on training, process, templates and reporting. 

The PMO’s job, in fact, is to help the organization maximize the strategic impact from its investment in projects. It is, in other words, all about executing the strategy of your organization.

Done well, good project prioritization will help eliminate waste, allocate resources more effectively, accelerate project delivery and reduce project failure.

We will explore 5 key benefits of prioritization:

  1. Better financial returns
  2. Better project delivery KPIs
  3. Foundation for effective portfolio governance
  4. Build stakeholder alignment to the plan
  5. Your CEO will love you

Prioritization improves financial returns

Getting more for less is central to the success of any PMO, and prioritization is proven to provide outstanding returns:

Have these stats handy when you talk to the CFO with our exec-ready slide deck here.

Prioritizing projects improves project delivery KPIs

The PMI have researched this space and produced revealing KPIs that show that the biggest potential win for a PMO is not how projects are executed, but how they are selected. They measured that projects which are aligned to strategy are:

  • 57% more likely to succeed
  • 50% more likely to complete on time
  • 45% more likely to be on budget

These stats should be enough alone to convince your manager this is a good idea. Why not download and start building your business case.

Prioritization enables effective portfolio governance

Improving portfolio planning means better performance during delivery for 4 main reasons:

  • Improve accountability, which cannot exist without prioritization. Without clearly determining which of their projects are resourced, how can leaders commit to their deliverables? Read more: 'Organizational Accountability and Its Role in Strategy Execution'
  • Reduce conflicts. There will always be tough choices to make, and curveballs to deal with. Having clearly prioritized projects will make this far less political, enabling sensible escalation and data-led decision making.
  • Boost project flow. Creating a portfolio roadmap that avoids resource log-jams can really help accelerate your project flow, increasing productivity by 2x plus and enabling quick wins on highest value projects.
  • Proactively reduce risk. Dramatically reduce resource contention before you hit a milestone disaster. Identifying and resolving bottlenecks at the planning stage means fewer projects going over time or budget and, importantly for the delivery team, less stress!

Put simply, prioritization is the foundation upon which you build best-in-class governance. If you're looking at this thinking "we lack maturity" then you probably need support for this jounrey from a trusted expert, as it means a cultural transformation as well as a new process. It should not mean ignoring the problem.

Prioritization builds buy-in for the plan

Good prioritization gets everyone marching to the same drumbeat, and with shared purpose comes better outcomes:

  • Alignment increases productivity. Involve people in scoring, show them the process is well built, and they are more likely to commit to delivery. Check out this video from Stanford University.
  • Low value projects drain morale. Conversely, nobody gets excited by working on a pointless assignment that probably won't ever go live. Their productivity will suffer, according to research from Adam Grant.
  • Fair prioritization reduces rogue behavior. Stop shadow portfolios and ‘corridor conversations’ that circumvent the approvals process. They indicate that people don’t trust the process.
  • Close the Strategy Gap. A shocking 95% of colleagues don’t know how their work fits with the company strategy. Inclusive, well-communicated prioritization helps solve this.

It's also important to remember that prioritization must value people as far more than just resources if it is to unlock their full potential for the organization.

Your CEO will love you

Good prioritization is key for leadership, even if they don’t realize it (yet). Why? Well, project prioritization is the foundation of their ability to achieve their strategic goals.

In fact, project prioritization can unlock a doubling in the strategic ROI from your project portfolio, and that will really get the CEO's attention!

  • Better control of resources, while reducing the need to micro-manage detailed requirements. Leaders need to focus on the big calls, and prioritization lets them do just that.
  • Build alignment around what matters. Done well, the process of setting prioritization policy fosters empathy and alignment within the C-Suite.
  • Enable data-led decisions with clear actionable insight on project value. Rational choices with super-fast scenarios and easy-to-read data. What’s not to like?
  • Organizational agility. When the world changes, it is the C-Suite who must lead the response. Achieve a no-fuss pivot to face into the new normal.

Don’t assume that because you’re not being told to sort prioritization right now that it’s not important. Many senior leaders simply expect this to happen, and only realize it’s not when things go badly wrong. This slide deck will help start that conversation.

10 signs of a broken project prioritization process

At some point on this change journey someone will challenge you - do we really need to bother about this now? It's important to look inwards and articulate the reasons as you build the case for change.

Here are some classic signs that you have a problem, presented as a pop-chart count-down (why not?)

Number 10: A lot of projects fail

According to the PMI, 44% of project failure is due to a lack of clear alignment between project goals and organizational objectives. Conversely, projects aligned with strategy are 57% more likely to achieve their business goal.

In the video on this page, PMO Global Alliance Influencer of the Year, Laura Barnard looks at the root cause of project failures and overruns... yep, you guessed it: the root cause is project prioritization!

What's really sad is that failure becomes an expectation. 75% of business leaders believe their (IT) project is doomed from the start. They simply don’t trust the delivery team to “get stuff done.” Now, if you're an IT leader reading this, consider the impact you could have by turning this around and making the ability to deliver the right technology a source of competitive advantage. Dust off your black polo-neck... next stop TED talk, right?

Number 9: I don’t even know how many projects we have

Consider Schrodinger’s backlog. If projects are scattered across teams, undocumented, locally "owned" and not subject to any consistent evaluation, then can they truly be considered to exist?

The answer of course is yes. There are people on payroll doing "stuff" - often lumped into a somewhat unaccountable hard to control "business as usual" bucket. And they could be delivering far more value if you had better governance… which starts with (wait for it) better prioritization! For some, this simple step of getting all the projects in one place, of creating a “front door”, is a huge value step in its own right, even before you apply prioritization rigor.

Also consider the value of consolidating shadow portfolios of work, squirrelled away as "business as usual" to support the agenda of a specific director, when they could be used to drive the strategy of the business.

Number 8: No leadership alignment on selection criteria

We often ask people how they currently do prioritization. Then we get a slightly awkward pause, before they tell us that (basically) they muddle along until things go wrong (which is when they talk to us).

Or perhaps they have a review process that hangs off the side of budgeting. So not a prioritization process, more a horse trading exercise swapping headcount for projects, as frustrated execs attempt to deliver their agendas.

The key is that they skip the step where they align on objectives, and dive straight into a land grab / beauty parade, often leaving the delivery team to "multi-task" at >100% capacity, or make their own judgements based on who they want to annoy least.

Critically they usually decide setting criteria and defining a clear process is "too much work"... when in fact aligning the exec team behind a selection framework is an invaluable step that saves tons of time by giving clarity to the business. The key is that disagreements don't get solved by ignoring them. Solutions come from grown-up discussions that give everyone the chance to contribute.

As one CEO put it – “we should have done this years ago”.

Number 7: Resource allocation is painful

Let's assume you have a set of projects agreed. This is only half the prioritization battle, because now you've got to figure out how to get them done.

Naturally the stakeholders are happy that their projects are approved, and expect work to commence immediately. The nitty-gritty of 'having people to actually do the work' is someone else's problem (probably yours). But what do you do when 5 projects all need the same person now? Which 4 stakeholders get to wait?

Good prioritization provides a simple answer by flagging the highest value work. Brilliant prioritization goes further, flipping the question to be, how can we schedule projects to maximize value, given our resource bottlenecks?

And new technology is going even further. TransparentChoice’s AI-driven resource planning tool will use your prioritization data to automatically create a roadmap that accelerates project delivery, and means even the projects that start later finish sooner.

Number 6: Disjointed local priorities

At number 6, is an old favorite: “Let’s push ownership to individual departments”. By letting them prioritize their own projects, surely their selections reflect the needs of the guys on the ground…?

The problem is that you end up with disjointed portfolios that reflect local drivers rather than overall strategic goals… if you’re lucky. Moreover, department managers are not usually experts at prioritizing so they’re also liable to fall into all the traps we’ve already talked about.

Then you try and get these siloed teams to work together, and the complexity starts to get exponential as multiple creaky prioritization approaches try to knit together to get things done. No wonder frustrated execs end up mandating "special projects" that ignores this mess.

We also hear a lot about duplicate projects across the organization. Having a solid project prioritization / project intake process lets you identify this kind of waste, and fix it at the source.

Also, how do you decide what each department’s budget should be? Without a systematic way to compare project backlogs it tends to revert to a combination of “he who presents the best slides” and “last year plus a bit”, which we know is not a winning formula.

Number 5: Stakeholders keep changing their minds

There is nothing quite as demotivating as creating something that nails the brief... only to find stakeholders have lost interest and have no intention of implementing the project. This may be because your stakeholders are idiots. But let's assume they are well meaning professionals, and ask how can we stop being so wasteful.

The first point is to lock down what stakeholders need in order to deliver their objectives. Be clear about what KPIs or OKRs (depending on what flavor of business school gobbledygook you speak) will drive your organization forward. If you can turn this into a solid prioritization model (spoiler alert: you can by using AHP, more on this to follow) you'll save the hours many times over when it comes to not working on the (seventeenth) "great idea" the marketing director had over his cornflakes this morning.

Secondly, include stakeholder commitment as a criteria in your selection process. If there is clear sponsorship and a plan to extract value from the project then this should be recognized in scoring.

Finally, build a governance process which recognizes that value is not a static data point. Markets shift, understanding of problems evolves, and if the business case behind your project shifts too far south, then be prepared to cut your losses. This is also another reason to stagger project start date. By working on fewer projects you accelerate completion, therefore reducing the time between business case and delivery.

Finally, make your governance process dynamic. Things change: costs, benefits, milestones. Having an annual plan is no longer enough. This is where AI helps, being able to dynamically update your roadmap to adapt to new realities in way that would have your excel spreadsheet simply can't handle.

Number 4: Most projects are priority 1

One of our customers had a portfolio of 80 projects... but 60 were "top" priority. That’s a whopping 75% of his projects tagged as Priority 1. Little wonder his team didn’t know how to allocate resources. They may as well have not bothered with any classification.

This might be an extreme case but take a look at your portfolio. Specifically, look at the top-priority projects and see if they really are top priority. 

Better yet, prioritize your projects using AHP so you have a score for each one. Then you know which projects are more important and can allocate resources accordingly. Priority 1 is not enough.... you need priority 1,2,3,4,5,6,7,8,9...

Number 3: Pet projects

We asked about Pet Projects on a recent webinar. "Is there any other kind?" came one reply... this is a massive problem that needs solving.

What's going on here? Well, it comes down to prioritization and alignment. If you don't prioritize your projects, you end up doing the boss' pet projects. This happens for two reasons. Firstly, there is a disconnect between project selection and business KPIs. Secondly, there is no process to apply the brakes when the boss gets it wrong.

One example of this is the not-so-well-known Amazon Fire Phone (what is that I hear you say... well exactly):

“We poured surreal amounts of money into it, yet we all thought it had no value for the customer, which was the biggest irony. Whenever anyone asked why we were doing this, the answer was, "Because Jeff wants it." No one thought the feature justified the cost to the project. No one. Absolutely no one.”

This is a particularly epic fail, but most portfolios have similar examples of their own, where a robust prioritization process would have stopped the waste.

Most leaders, when pushed, will value their goals ahead of their ideas. So if they have a bad idea, then the way to stop it is to show that it is not going to deliver their goals. We have seen this happen - directors happily surrendering their own pets when the data shows them they made the wrong choices.

Number 2: He who shouts loudest

Imagine airport immigration without a queuing system. No line for families, no line for citizens, no portable barriers to control who's turn it is next. And definitely not enough staff on duty. Just a massive huddle of tired travelers all competing to get through as fast as possible.

That's your backlog without a proper prioritization process.

Every director is pushing their agenda. Delivery teams are trying to avoid work because they're already stacked. Volumes rise, and eventually the winner is the Loudest Voice, the loser is everybody else.

Not only does this usually end up with the wrong projects, it also creates a culture which rewards poor behavior. The Loudest Voice gets promoted on the back of the results he gets by hogging resources, while more thoughtful leaders see their future elsewhere.

One note of caution when you decide it's time to move to a proper prioritization process. Work out who is currently the Loudest Voice and make sure they buy into why things are not working, because for them things might seem to be working fine, so they might well (loudly) question the need for a new approach to prioritization.

Number 1: Too many projects

Some people talk about having too many projects, others worry about having too few resources. These are the same thing - an imbalance between the volume of work and the resources available to deliver it.

This is toxic and leads to project failure. It's easy to see why; too many projects means people are task-switching (inefficiently) and, because they're rushing you don’t get their best efforts. Indeed PMI research suggests that project completion could increase by 80% with less multi-tasking (this is a far from simple statistic to unpack, so I recommend reading this and this to explore further).

If you have too many projects your prioritization process is broken. There's no other reason. Your project success rates are probably lower than they should be, your people are stressed, yet the fix is quite quick and easy: a new project prioritization process.

It’s often said that less is more – you just need to know which projects to send to the back of the line.

Project prioritization methods

Various project prioritization methods have been employed over the years, each presenting unique benefits and limitations in capturing and aligning a project's value with an organization's strategic objectives. Based on the research into project prioritization, we believe the Analytic Hierachy Process is the only effective solution, but before we explore it let's start with some of the ideas we rejected (and why):

Commonly used methodologies (that don't work for portfolios)

Remember that awkward statistic from the PMI; 20% of a typical portfolio is so badly aligned with the goals of the organization that they should be stopped? 

20% of a typical portfolio, in other words, is waste!

Well, here are the prioritization methods that generate those less-than-spectacular results:

  • ROI Model. Traditional finance tool for determining value, loved by CFOs, but liable to underplay the value of hard-to-quantify criteria such as strategic impact, stakeholder engagement and risk, and leave you with value-destroying projects in your portfolio. NPV and Payback are similar finance orientated models.
  • Product Management Methodologies. Lots of snappy sounding methodologies have emerged from the product management space - Kano, MoSCoW, Rice. While all have virtues in a contained product/feature backlog they tend to be too narrow to deliver strategic alignment, so they are not advisable for a broader PMO brief. We've seen people try and it wasn't pretty.
  • Loudest Voice, aka Squeaky Wheel. Simply put a political bun fight typically played out through the budgeting process, that tends to favor those managers who are best at spinning up a compelling looking business case. Street smart managers may well like this approach, because they are good at it, but it creates an agency problem, whereby prioritization is as much about career development as it is doing the right thing. This is a terrible way to prioritize anything.
  • Spreadsheet-based scoring and prioritization matrix methods. Define criteria in a spreadsheet, and score projects to produce an overall score for each competing project. This approach has the benefit of being flexible and delivering a quantified outcome. However, there are flaws with home-grown prioritization spreadsheets. Firstly, a criteria model built without Decision Science invites a series of structural mistakes. Then weights applied tend to be the arbitrary choice of the "HIPPO", ignoring decades of Decision Science in favor of picking a number that "feels about right". Likewise, project scoring scales are often pretty random, creating plateaus in models. Add to this a lack of collaboration and you soon have a black box "magic spreadsheet" which nobody trusts.
  • Allocation of budgets to departments gives individual departments the autonomy to prioritize their projects. While this approach promotes departmental engagement, it risks creating a disjointed project portfolio due to potential misalignment between departmental and organizational goals.
  • The CEO or COO Decision method offers a swift and clear decision-making process, with the highest-ranking executive making the final call. However, this approach can inadvertently promote projects based on personal biases or lobbying efforts, and usually does not reflect the diverse needs of the organization. The CEO of a large organization cannot know enough detail to know what needs fixing everywhere. Their job should be to set the goals (define scoring criteria and weights) so that the organization can evaluate (using the C-suite’s scoring model) how best to achieve those goals.
  • PPM prioritization modules typically take the logic of the spreadsheet and move it into software. Despite providing nice data visualization there is no Decision Science here. What didn’t work in a spreadsheet doesn’t suddenly work just because it has prettier pictures. If you cannot customize criteria and collaborate to build alignment then you're probably not going to solve prioritization effectively. 

Despite these methods' popularity, research from the University of New South Wales underlines the importance of evidence-based project prioritization methodologies. The selection of a project prioritization technique should be guided by evidence-based research, decision science, and organizational strategic goals.

Validated by Decision Science - the right way to prioritize portfolios

In case you don’t have time to review hundreds of methodologies for Project Prioritization, The University of New South Wales have done you a favor and narrowed down the field two recommendations:

  • Analytic Hierarchy Process (AHP): AHP is a project prioritization method designed to minimize human error such as bias, noise, blind spots, and anchoring, while promoting outcome-oriented collaboration. It's easy to understand and straightforward to implement with the right tools. Besides these benefits, AHP offers a structured approach that aids the leadership team in defining what strategic alignment means. The scoring of projects is relatively simple, but attaining stakeholder alignment can be challenging. The most significant benefit, as noted by researchers, is achieving senior leadership alignment, which paves the way for many other benefits.
  • Data Envelopment Analysis (DEA) is the other method that was discovered to be “suitable” for prioritization in complex organizations. While it’s a valid method, it is also rather difficult to implement successfully, so we don’t advise using it.

Given these reasons, AHP emerges as the best approach for project portfolio prioritization, and is the basis of our project prioritization software design. It combines the best quality with high buy-in potential. When compared to other methods, AHP stands out as a clear winner on both fronts.

However, it's crucial to remember that recognizing the effectiveness of AHP is just the beginning. Organizations need to put effort into developing and implementing an AHP-based process for project prioritization.

AHP vs. Rest

AHP is best practice for Project Prioritization

Committing to use Analytic Hierarachy Process is a fantastic decision, but it’s important to understand why it’s such a strong solution, so you can deploy it to maximum effect, and get your colleagues on-board.

Defining value is tricky

Every organization aspires to deliver ‘value’ - be it shareholder value for corporates, societal value for an NGO or public service value for government. But “value” is a vague concept that will mean different things to different people, even within the same team.

AHP turns value into a quantified framework that considers competing versions of the truth – we show you how below.

With this clarity value stops being a buzzword and becomes a 'North Star' metric.

Decision Science matters

Research by Prof. Paul Nutt and others has shown that half of strategic decisions end in failure. Putting a more positive spin on it, half of strategic decisions succeed!

By applying decision science, the success rate can jump to 80 out of 100 projects… a 60% improvement. That’s huge! Decision science makes a big difference!

We already talked about how AHP is the best “decision science” to use for project prioritization. AHP includes rigorous mathematics, but you shouldn’t have to worry about eigenvectors, normalization or consistency scores. Good software lets you jump in and 'have a go' yourself.

It's not just math(s). There’s psychology, too.

Again, the PMO doesn't need to know the details about noise, bias, anchoring or blind spots, but pretending they'll have no influence on decision-making is a rather extreme example of optimism bias.

AHP is, above all else, a collaborative process. You can do the numbers in a spreadsheet, but you’d miss out on most of the value - the collaboration. Good AHP-based project prioritization software on the other hand, will allow you to get the most from the decision science.

Collaboration needs scaffolding

We know that collaboration improves decision-making, but most of us have also experienced how endless meetings can paralyze decision making.

AHP provides a format to deconstruct complex decisions into solvable chunks, encouraging debate but never at the expense of an actionable outcome. Again, this makes teamwork a reality rather than a box you tick while shouting / spending hours on a PowerPoint / building a spreadsheet everyone thinks is nonsense.

Conversely, a bad model breeds bad behavior. Stakeholders operate rogue parallel processes to protect ‘their’ projects. Delivery teams second guess briefs, on the basis that they know leadership will change their mind next month.

AHP creates a platform for defining best practice that people can trust. When plans are published, they know they are aligned, fair and well thought through, giving teams confidence to focus on execution.

Check out this blog if you would like to read more about Why AHP works for Prioritization..

How to prioritize projects

To achieve brilliant prioritization that can act as the foundation for a value-led PMO, you need to follow this simple 3-step process.

1. Make the case for change

2. Build an AHP model

3. Add projects with business cases

Make the case for change

You feel prioritization isn't working, but now you need to define exactly why it is critical to fix and how that value will be delivered.

  • Quantify the opportunity: Most people would agree good prioritization is PMO best practice, but this is unlikely to get leadership terribly excited. They want value, and for this you need a business case that demonstrates how good prioritization, when linked to project delivery & planning, can double portfolio ROI. Start with these key facts:
    • Poor prioritization means average portfolio waste is 20%, according to the PMI.
    • Task switching wastes 40% of peoples’ time, according to the American Psychological Association.
    • Companies with active cross-portfolio re-allocation based on strategic alignment achieve 40% outperformance according to a long term McKinsey study. 
  • Get people engaged. Fixing prioritization is a change process, and it's critical to know who needs to join you on this journey, for both senior sign-off and peer group influencers. Slides help but more than this it's a challenge to win the hearts and minds of people who need to start making decisions based on value rather than habit. This is why a successful PMO must have strong stakehodler alignment skills. Whisper it, but maybe even more important than good excel skills...
  • Decide on your approach. Putting in place a plan that leadership support is key. Good prioritization can't be done on the fly by a PMO with good intentions but no senior mandate for driving change. Let's start with 5 decisions: 
    • Fast or Slow? Prioritization can be done well in 6-8 weeks if you focus. Or you can be more gradualist to build buy-in, but failing to set an appropriate cadence can lead to drift. 
    • Define portfolios.  Prioritization works best when it is homogenous. You can't compare renovating the staff loos to transforming the marketing strategy, so decide how to slice and dice your portfolios. Pick one to pilot. 
    • Central vs. Local. A big dilemma for corporate leaders is how to balance the power of local planning vs. the alignment of top down. Both have virtues, but failing to make a clear choice is never the right solution.
    • Detail vs. Light touch. If your projects are very small you want a light-touch prioritization process. If you're making big investments, detailed analysis is appropriate. Or maybe one size fits all is simpler. Decide which approach you need for your organization.
    • External help vs. Internal drive. Moving to a value-led prioritization model isn't a trivial undertaking. We've worked with really driven transformation leaders who make it happen, and we've also built a fantastic network of partners who can provide external support. Just don't try and get this done on your own as number 32 on your To-Do list.

If this sounds like a lot to take on we can help. Book a call and we'll talk you through it. We have templates, partners and experience to help.

Build an AHP model

If you're still reading you've hopefully bought into "why" AHP. Now let's focus on "how".

  • Leadership alignment. Bring together key stakeholders to brainstorm a list of portfolio goals. You can use strategy papers, KPIs or OKRs for inspiration, but be careful not to get carried away and create an overly complex model. Essentially criteria are the pros and cons for doing projects so test a few sample projects against your criteria to see if they work. 

    Producing good criteria is not just a task: it's also a value-add journey in its own right.

    If you put your five executives in a room and asked them to write down the criteria they think should be used, you’ll get five different lists (maybe more!). There is likely to be some overlap, but there will be some significant differences too. Merging their 'competing' perspectives into one framework might take some doing, but it's critical, as achieving leadership alignment on the model is the foundation for buy-in, and must be done thoroughly, even if it means donning the brave pants and telling the CEO their idea should be refined.

     

  • Typical Criteria. Good prioritization must have custom criteria. Generic criteria are not specific enough to differentiate projects, and not relatable enough to build buy-in. That said, we do see repetitive themes that can help inspire that initial brainstorm:

    • Short term goals: Objectives, financial KPIs, service levels - basically things important people get bonused on.
    • Strategic goals: The CEO's vision, consultant's report, off-site slides, or formal policy statements. Strategic goals are usually written down, so build them into your model.
    • Efficiency gains: Levers that drive productivity - automation, eliminating duplication and increasing cadence for core processes, for example. Fixing bottlenecks can be an especially good goal as it enables exponential growth in value delivery.
    • Stakeholder support:  Commitments to colleagues, suppliers or the environment are all potential criteria for project selection.
    • Business Risk: Reducing risk is another reason to do projects, whether that’s reputational, cyber, regulatory, tech debt, or something else.
    • Project Risk: Some projects are riskier than others. Measuring potential for the likelihood of things going wrong will up-weight ‘safer’ choices in your portfolio.

    Read more in this blog to understand these project prioritization criteria examples.

    If you're ready to really get stuck in, we have this free e-book with 80 project prioritization criteria based on real examples.

  • Weight Criteria. Not all criteria are equally important, so they need to be weighted to build a scoring framework. For this we recommend a process called pairwise comparison.

    By asking your executive team about the relative importance of competing criteria you are forcing them to quantify what really matters. This is a critical step in building a scoring model capable of distinguishing critical projects from average ones. There’s Decision Science logic at play. People work better with relative judgements (which tree is taller?) than they do with absolute estimates (how tall are those two trees?)

    This is why pairwise works better than coming up with a set of ‘gut feel’ weights (it’s 23.7%!) Another mathematical benefit of pairwise is the ability to identify where your own value judgements are inconsistent with themselves – enabling scores to be fine-tuned to increase accuracy (although with our clients we turn this into a smiley / grumpy emoji; the detail of the math(s) isn't important).

    This is a big reason why AHP is better than a weighted scoring model in Excel.

    Also note that we said executive team. Setting up weights is a team sport, and it’s where your leaders can put their empathy training to good use. Different directors will have different perspectives on what matters. By having a structured conversation, you can zoom in on areas of misalignment, then use limited time to resolve these conflicts.

    The result is not only an AHP scoring model for projects, it’s also better alignment within your C-Suite. That’s a real win-win.

Add projects with business cases

You now have a weighted framework for scoring projects, and a leadership group aligned and eager to see results. Next it's time to get project level data. We can split this process into three phases:

  • Get everything into 1 place. Depending on your current level of maturity it's possible that putting all projects into one place is already a really good win that builds transparency. Better still make that place a Kanban board with a decision pipeline that shows what step a project has reached. Here are some key points to think about at this point in the process: 
    • Project submissions.  Do you need an ideation process, downloads from PPM tools or a project amnesty from the shadow portfolios hiding around your organization?
    • Stage gates & automation.  Will you have a multi-staged review to weed out poor proposals, or a step to assign seed funding for research? A clear process is key if you have a large portfolio.
    • Manage regulation. For regulated sectors why not add a "must do" model to identify the real mandatory projects. These don't need to be prioritized, just verified and scheduled.

  • Score projects. Our end game is to get every project a 0-100 score that everyone can trust. We've already build the AHP model, so now let's use it to rate projects. Here's how: 
    • Create good scales. To turn judgements into data you need a verbal scale that reduces ambiguity, differentiates between projects and produces good results. This usually means a 5 point scale with a "0" - you can learn more about why in our e-book. 
    • Engage experts. Pick Subject Matter Experts to do your scoring. Divide up the work if there's a lot. Asking the sponsor to take a massive survey does not build engagement.
    • Use the wisdom of the (small) crowd. As humans we are prone to poor judgement: so work together to reduce error, or "Noise" as it's called by smart folks. We recommend 3+ people answer each question to improve data quality.
    • Focus on disagreements. If you have 30 questions, don't waste time agreeing on 20 - it's the 10 where views differ where debate adds value. Resolving them as a team also builds buy-in. 
    • Build Business Cases. AHP lets you combine hard data (revenue increase, cost savings, resource requirements, CapEx, etc.) with more qualitative factors (employee satisfaction, brand support, etc.). This means you can build a full, rounded business case for your project with all the benefits in one place.
  • Estimate cost & resource requirements. Effective prioritization requires quantifiable constraints. Put another way, if you can't differentiate between small projects and big ones, how can you decide which to do? Data quality here varies drastically, so let's look at the range:
    • Got no data. Sometimes you ask for this data and back comes the awkward silence. Here the win is to create the data - maybe via a quick T-Shirt sizing survey that uses the wisdom of the small crowd to get to a decent data point at pace.
    • Basic cost data. There's often a finance system with a data point. Use this to be able to work out a "Value for Money" estimate for your project, as it's this KPI which is the most important selection driver for a value-led portfolio.
    • High-level resource estimates. Projects need more than funding. Having the skill-set available to work on them is often the difference between prioritized and de-prioritized. Capture that data and you'll be taking a big step forward. Turn it into time-series requirements and you're only a little AI away from a portfolio roadmap.

You will now have all the data you need to rank your projects according to value for money, which could be enough if you're operating a simple agile backlog. But for many portfolios further work will be required in order to unlock the full potential of 2x ROI.


Building a prioritized portfolio: How to Double ROI

Picking the right projects in the right order seems like a ridiculously easy way to step change the value of your portfolio... and if you've invested in doing prioritization right then it really is, especially if you leverage AI-enabled technology to make complex data sets bend to your will. Here's how:

Portfolio prioritization

Project prioritization gives you a score for each project. It represents how much strategic value that project will deliver to your organization, but picking projects is about maximizing impact in a world where you have limited budget and resources. In that world, value for money matters. The simplest option is to compare value against cost.

  • Where value is high and cost is low, then it's a Star and should cover priority 1 items. For high cost, low value it's a pet project. Killing these projects is a great way to prevent that 20% waste from entering your portfolio.

    Project prioritization matrix

    At the core of any credible prioritization solution is this chart. The key point of difference for AHP is that data for “value” and “costs” will be rock-solid; built using decision science and collaboration.
  • The 'Efficient Frontier' ranks projects based on their value. This way you can identify the obvious winners, then work out how many more projects you can afford before the budget is gone. From this you can easily differentiate between 'Plan A' priorities and the long tail within your portfolio.
  • Better yet, use data to inform you where the budget cut-off should be for a given portfolio. You might just find that you can cut significant budget without losing significant value – what a win!

This analysis brings to mind an old marketing adage, “I know half of my spend is wasted... I just don’t know which half”.

It’s the same for a portfolio... except now you do know which half before you’ve spent the money. So ask yourself this... If you cannot produce this view of your portfolio, are you doing prioritization properly?Efficient frontier


Check out this blog to learn more about how data drives decision making for portfolio management.

Resource optimization

When you overload your team, bad things happen. First, productivity drops. When people are task-switching, you lose up to 40% of their capacity - FORTY PERCENT!

Second, project timelines extend and budgets get blown. Not good.

Finally, quality tends to suffer. People under pressure don't do their best work, after all.

This is not a resource management problem. No, the root cause of having too much work is a weak project prioritization process. Even after prioritizing, you have to be able to select the portfolio that adds most value - that "puts you on top of the hill".

This video will show you how new developments in AI can help you optimize your portfolio by finding a balanced portfolio that delivers maximum value.

Here are a few other techniques / tips to help reduce overload;

  • Match work you take on with the resource available. Add a utilization buffer to protect deadlines with contingency, since we know “Murphy’s Law” will render our initial estimates wrong.
  • Productivity starts declining after 80% utilization, so resist the temptation to stuff in 'just one more' project (even a wafer thin one) as it will dilute overall value delivery.
  • Identify over-stretched resources early in the planning cycle and look for ways to increase bandwidth, for example outsourcing low value business as usual tasks or automation.
  • Make smart calls about fungible resource - e.g. look for opportunities to cross-train people to support the most constrained resources in your team.
  • Where value for money is similar for two projects, favor the ones which do not need key in-demand resource. This preserves those key resources allowing you to add one or two more projects to the portfolio.

For more on this check out this webinar with our partner and project flow guru, Mike Hannan. If you think this sounds complex, that's because it can be, especially if you have multiple resource types, multiple sub-portfolios and a lot of projects. That's why TransparentChoice have built AI to solve it.

Challenge 'Business As Usual' spend

Most organizations have at least 2 buckets of projects - "keep the lights on" (or "run the business") projects and "growth and transformation" ("business projects", "Strategic projects" - whatever YOU call them).

Often, "keep the lights on" projects consume the majority of resources, leaving little money and resource for the projects that your executives really want - the "growth and transformation" projects.

Good quality prioritization lets you make better decisions about where your money and people are best deployed. Usually we find you can reduce the investment in "keep the lights on" without a large increase in risk in the business. 

By moving these resources to the "growth and transformation" portfolio, you can get a massive boost to the value that part of your portfolio delivers. Remember, that's the value your executives really want!

This video shows you how this portfolio rebalancing works. It's all about those efficient frontiers that we talked about earlier!

Project staggering

Most organizations have some kind of annual planning process. The budget gets carved up, projects approved. Then the first day of the new financial year arrives and... 

BANG!

The race begins. Executives jump up-and-down wanting you to start their projects so that's exactly what you do. You start all the projects at the same time. The execs are happy for a while. They see a kick-off meeting and people being busy.

But your resources are not happy. They are totally overloaded and have to task-hop between projects to keep all the plates spinning. This kind of task-hopping is massively inefficient and is costing you up to 40% of your capacity (American Psychology Association). 

And because the projects are competing for resources, they take longer than you'd planned. And cost more than you planned. And the quality is not what you'd like. 

So here's an idea. Stagger your projects. Lay them out on a roadmap so that you only start projects when you expect resources to be available. This has three huge advantages;

  • Your people are happier. They aren't being chased by 6 different project managers all demanding an update. They can focus on delivering their work.
  • Your people are more productive. By focusing them on one task at once, you get back that 40% that you've lost to task-switching. Which means you can probably fit in a few extra projects for free!
  • Your projects complete earlier. This means you get the benefits earlier which means you look like a superhero!

This seems like witchcraft... I mean it looks like we're starting later, delivering earlier and making our people happy all at the same time! Watch this video to see how the witchcraft works. 

While the idea of staggering projects is not new, it can be very slow and painful in a PPM tool or a spreadsheet.  That's why TransparentChoice has built some rather clever AI means that you can create your portfolio plan / resource plan in minutes. You can update it in minutes which means your plan is always up-to-date and your team is delivering at peak velocity.

Benefits realization

Most organizations we speak with have no mechanism to transfer value to the business, much less measure it. And yet realizing the benefit is the only reason we do projects at all.

Strangely though, benefits realization starts at the other end of the project lifecycle. It starts by clearly defining the value you want to achieve as a business and selecting projects to deliver that value. This is so important, in fact, that TransparentChoice has built in a "Profit and Loss" statement into your portfolio analysis that shows what value you expect your portfolio to deliver over time.

Your AHP scoring model / business case captures this definition of the value you want to realize. During the project, you want to focus on protecting the value. Keep asking the questions;

  • What are the key risks to my value and how can I protect it?
  • Are we delivering the project in the best way, one that maximizes value? This is in contrast to trying to "minimize work"...
  • What are the right decisions across the portfolio that will maximize the value we actually delivery? Some projects might "help protect" the value of other projects by "lending resources", etc.

By using your AHP model / business case to clearly define value and then have a governance process built around these three questions, you give your executive sponsors what they need to really take accountability for project outcomes. And being accountable means they are less likely to "game-play" in the project selection process (inflating value, downplaying risks, etc.)... a wonderful, beautiful virtuous cycle!

This video gives a brief overview of how to think about benefits realization that really works - all in 6 or 7 minutes.

We've said repeatedly that your execs love nothing more than value (aside from golf perhaps). That's not entirely true. Even more important is predictability, with a portfolio that delivers its promises. Creating a full governance life-cycle which starts with your business goals, uses them to generate ideas and ends with predictable value will give the PMO the kind of career boost on par with getting that elusive scratch handicap (see what we did there).

Project prioritization tools

If you're building a prioritization toolkit you might be tempted to do so without specialist software. We believe that is a mistake:

  • Effective prioritization needs quality data which only comes from AHP & collaboration
  • Complex portfolios need structure to enable corporate level alignment
  • Excel is the wrong tool for the job. Too easy to break and too much effort to maintain.
  • Artificial Intelligence is the only way to keep a roadmap current
  • Free solutions have hidden costs. Your portfolio, your time, your sanity...

Good prioritization is more than a number

AHP is more than a 0-100 number for a project. It's a data-led process that uses decision science to bring teams together. Most PPM tools will have a field for prioritization, or a way to tag projects based on strategic alignment but tend to suffer from the old adage - ‘garbage in, garbage out’.

Consider, the reliability of those numbers, then compare it to the awesome-ness of matching up your shiny new PPM tool with quality prioritization data. Think of it like putting the premium gas in your fancy new car (you just would, wouldn't you?)

Excel hurts

When you tell your executives that prioritization needs fixing, someone will most likely pipe up, “let’s just do this ourselves in a spreadsheet”. DO NOT AGREE

Here are just a few of the ways the "magic spreadsheet" falls short.

  • A model put together in a spreadsheet will likely not follow all the rules of decision science. That’s why your execs then call out the project down at the bottom of your Excel table and promote it to “must do status”: your model doesn’t reflect reality!
  • You could do basic AHP in a spreadsheet if you have the time to learn it. But don't forget that AHP works because it structures collaboration between stakeholders, building buy-in. Excel doesn’t.
  • Excel can be brittle, so when you update your model there will be a lot of scope for a bug to mess up your results / career.
  • Excel isn’t designed for version control and data collection, so accountability is poor, stress is high.
  • Don’t re-invent the wheel. Prioritization is not a new challenge. Focus your energy on driving change, not becoming a spreadsheet jockey.

Check out this blog for prioritization spreadsheet war stories.

Unleash the power of AI

New technology, specifically artificial intelligence (AI), is changing the way organizations can use prioritization and scoring data to drive massive value. For example, TransparentChoice uses AI to find the optimal set of projects given your resource constraints. This not only allows you to eke out more value from those resources, but it also allows you to run multiple what-if resourcing scenarios then compare the optimized portfolio for each.

This video shows how AI in combination with AHP-based prioritization could double the strategic return on investment in projects.

Your execs will be delighted when you double ROI and the “magic AI button” will become your new best friend.

‘Free’ can be costly

Your portfolio represents an investment of millions of dollars. It only takes a small improvement in prioritization to generate a huge return. And we know that good prioritization can do so much more than small gains.

Remember, 20% of a typical portfolio is waste, so if you’re spending $10m a year on projects, that’s $2m waste. Ouch.

But it’s worse than that. That 20% should be generating strategic return – let’s say you expect an average of 3x. In that case, you’re missing out on $6m of extra value. Every year. Cumulatively...

That’s one expensive spreadsheet… so ask yourself, can your spreadsheet:

  • Identify the 20% waste found in an average portfolio?
  • Drive up delivery KPIs by reducing ‘too many projects’?
  • Improve strategic execution with alignment to high level goals?
  • Reduce opportunity cost of being late to market due to resource problems?
  • Provide the basis for cumulative outperformance vs. competition?

If the answer to the above is 'no' then it's time to think about the business case for fixing prioritization, or book a meeting to talk through what a best-in-class prioritization tool could do for your portfolio.

The Business Case for prioritization

"Priorities change and, if managed successfully, have the capacity to fundamentally change organizations, but only if top management makes tough choices"
- Antonio Nieto-Rodriguez, Harvard Business Review

As we mentioned above, your current prioritization process is costing you millions of dollars in waste and missed opportunity, yet many people struggle to present a strong business case for improved prioritization to executives.

This is partly because most business cases we see are intended to “sell prioritization,” but from the executives’ point of view, it’s not prioritization that’s broken – it’s project delivery, the cost of projects, the speed of projects, the fact that not enough projects deliver the intended benefits.

In short, they are frustrated at the lack of ROI from their investment in projects and that’s where your business case-for-change should start.

A good business case should contain the following:

  • Clear statement of what’s broken (from the exec point of view) – we are struggling to deliver a strong ROI from our portfolio of projects
  • Offer a bold vision – we can double the amount of strategic value you get from the same resources (double your ROI). We will achieve this by improving the way we do portfolio management (including project prioritization). 
  • Clear benefits that drive ROI – “Our goal is to double the strategic return from our investment in projects” (or something) delivered through less waste, fewer late / over-budget projects, more projects delivered more quickly
  • Remember the personal WIIFM - "What's in it for me?" (WIIFM) is a personal thing. Doubling the ROI is the BUSINESS case. The WIIFM might be as simple as giving your leadership team visibility and control over resources, or reviving that project that's been stuck for the last 2 years!
  • Clear plan with asks - an outline of what resources you need, a summary timeline, etc.... and most importantly, ask for executive sponsorship to make the change happen

Remember, you’re not asking for money & time to simply improve prioritization. You’re asking for money & time to radically increase the ROI.

This video might be a good place to start, explaining exactly how doubling ROI happens..

Or get in touch. We can help you work through these value levers, work out which apply to your portfolio, and help you build your very own case for change.

  • Quickly assess whether or not you’re a candidate to “double your ROI”
  • If you are, we’ll help you build your very own business case-for-change
  • We can even help you present it to your executive team

Next Steps for Fixing Prioritization

If you're still reading then I suspect you know you need to fix prioritization.

Here are 6 steps to get started:

  1. Prioritization HealthCheck. This could be as simple as listing warning signals you recognize from our list above, or a full-on consultancy engagement (we have fantastic partners for this).
  2. Engage decision makers. You'll need the boss (and probably their boss) on board. Check out our handy slide deck to help make the case, or download the full guide as a PDF.
  3. Build a business case. Consider the opportunity cost of not fixing prioritization, and then ask yourself, is my prioritization spreadsheet really 'free'? ... and can I afford to ignore this?
  4. Identify criteria. Start with a simple review of projects' pros and cons & existing documentation. When you're ready for detail, check out our project prioritization criteria guide.
  5. Research project prioritization tools. We believe Transparent Choice is the best, but if you're shopping around here's what to look out for. Be wary of anything not based on Decision Science.
  6. Schedule a Demo. AHP is the best-in-class approach for prioritization. Better than a PPM tool, a spreadsheet, or even a magic-eightball. Book a meeting to see how it could work for you.

Not feeling quite ready to start? Implementing quality prioritization is a change process, and change can be scary - this blog might help you deal with the angst.

Free webinars

Learn more about project prioritization from these free webinars.

 

 Project prioritizatio guide pdf