Prioritizing Projects

Most organizations today have a large number of projects to be completed to meet both short-term and long-term strategic goals. The most effective organizations, however, prioritize their projects, based on prioritization factors that make sense for them, in order to ensure that they work on the right projects, at the right time, to meet organizational goals.

Projects may be prioritized using any or all of the following criterion (this is just a partial list of potential criterion for prioritizing – each organization will have different crtieria important to them):

• Alignment to organizational strategic goals
• Risk tolerance (vs. project benefit)
• Significant financial investment required (project cost high)
• Alignment to customer expectations/enables for increased customer satisfaction
• Enables for improved competition (competitive advantage)
• Significant revenue, profitability or cost reduction impact
• Does it make sense given other projects in the works
• Technology requirements of project

When you use a variety of criterion to prioritize projects, be sure to determine a weighting factor for each criteria. There is likely some criteria more important than others. Rate the more important criteria higher – for example, using a scale of 1 = least important to 5 = most important. Rate individual projects against those criterion using a similar 1 – 5 scale with 1 = least impactful to criteria and 5 = most impactful to criteria. Multiply the rating by the weight to determine priority. Of course there will be outliers that may need further consideration. However, whenever possible be sure to stick to using the criterion and selection process to ensure fairness in projects selected. The better developed the criterion used for prioritizing projects, the better the process overall.

For example:

This is a simplistic example certainly; but in this example, if we have to choose between the two projects, we may choose Project A over Project B because it scores higher overall.  However, other considerations may come into play in prioritizing projects. For example, Project B has more technology requirements which may be an issues if we are working on other projects with heavy technology requirements. Since both projects have the same profitability impact, we may decide that Project A may be the one we move forward with due to the lesser technology requirements. While prioritizing projects is essential for organizations, it does not mean that this is the only selection process used. But it is effective for managing projects to be completed in a given time period.

Prioritizing projects reduces the risk of the wrong projects being done and also reduces the risk of “pet projects” being launched to meet individual goals. Of course this doesn’t mean that your list of projects to be completed won’t change during the year. Changes within the organization (such as loss of customers, increased competition, mergers and acquisitions) may require going back to the drawing board to re-prioritize projects.

As another benefit, when projects are prioritized, organizations find they are able to better manage their projects with fewer resources and reduced budgets and complete them in shorter timeframes, all while finding time to fit in other project initiatives that may present opportunities for the organization.