Executive Corner - Project Selection
by Paula K. Martin, CEO, Martin Training Associates
Do all of the projects in your organization fit with the your strategic plan? Will your project portfolio enable you to meet your strategic goals? Is there a structured process for selecting which projects will be pursued? Are you sure the benefits of each project outweigh the true costs (including effort hours)? Does the senior management team, as a group, decide which projects will be initiated? If your answer to these questions is "yes," then you're in the distinct minority and you may stop reading now. If the answer to any of these questions is "no," you're reading the right column.
The questions just posed relate to project selection, the first phase of the project or portfolio steering process. A project steering process, or PSP, needs to be in place in order to manage the portfolio of projects that when added together will achieve the strategic goals of the organization. The portfolio is managed by the Project Steering Council, which is a cross-functional team of senior managers whose job it is to steer the portfolio of projects from inception to completion. (A project or program office can be helpful in providing the data and reports needed by the management team to make sound portfolio decisions, but the accountability for steering the portfolio lies with management.)
The PSP starts with project selection, the purpose of which is to decide which project ideas meet the first hurdle for inclusion in the portfolio. During the selection phase you weed out project ideas that: a) don't fit with strategic goals, b) are not doable, c) have costs which outweigh the benefits, and/or d) are not going to meet an important customer need.
Project selection is about taking the first pass at rejecting those project ideas that just don't make good business sense and then selecting those projects that are worth studying further. Project selection should address four basic questions. What are the overall benefits of the project and how important are those to the business? Is the project feasible? What are the major risks involved? What are the gross costs of the project? This is not the time to look at specifics. You're merely trying to get a handle on the overview of the project - the big picture.
The selection phase starts with a request by the project initiator. The initiator should spell out how the proposed project fits with the strategic plan and what the expected benefits, risks and costs will be (in broad terms). If the project concept is a good idea and fills a need in the project portfolio, then the Project Steering Council (PSC) can commission one or more additional studies to explore the benefits side of the equation. Examples of studies include:
- Business analysis - What is the business case for this project? What are the business requirements?
- Market analysis - What is the market for the product or service?
- Problem analysis - What are the root causes of the problem being experienced and what is the best possible solution?
- Feasibility - Is this technically feasible? Economically feasible?
- Concept analysis - Is this a viable concept?
- Product/service definition - What does the end-user need or want from a new or improved product or service?
- Process problem definition (the 'Define' stage of Six Sigma) - What is the process problem being experienced?
Once the benefits are clearly defined, the PSC might then commission the development of a detailed project plan (created by the project team) in order to get detailed costs and risks. In both cases, while studying benefits or defining costs, funds must be allocated by the PSC to perform the work. (User requirements would be gathered at this stage in the process.)
Once the detailed benefits and costs are known, the project is resubmitted to the PSC for full funding consideration where it is prioritized and then funded or not, depending on the resources available. This completes the second or Funding phase of the PSP.
In some organizations the Selection and Funding phases are combined. The problem with this approach is that the studies and planning required to generate the detailed data that are needed to make a funding decision must be completed before the project concept is ever evaluated by the PSC. That means the organization must invest resources in every project idea, even those that the PSC might have no interest in. In addition, if you require detailed information at the front-end teams will have to bootleg the resources needed to gather the required information. This is not only unfair to the team, it also undermines the resource allocation process. It's better to evaluate the concept first and then decide if it warrants investing resources to study it further and develop a detailed project plan.
A sound project selection process is the first step to developing a portfolio of projects that will enable you to meet your strategic goals. If you're not convinced that project selection is important, ask yourself this question, "Why expend a lot of resources working on a portfolio of junk?"
©2003 Paula Martin. All Rights Reserved. Published on ProjectConnections by permission of the author.
Paula Martin is the CEO of Martin Training Associates, a management training and consulting firm. She's the author of seven books including the Project Management Memory Jogger™ and Executive Guide: The 7 Keys to Success. For more information, visit their website: www.martintraining.net. Phone: 866-922-3122.
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