Project Prioritisation and the PMO
In this PMO Flashmob evening session, we learnt about what good portfolio prioritisation and business case management looks like, and how the PMO can become a key enabler and participant during the design, set-up and running of these management processes.
Demand management is challenging for a number of organisations, with many seeking a more holistic approach combined with practical guidance. In this session, we hear about best practice and learn from real-life examples. By the end, we had an understanding of the basic concepts of demand management, the business case management and portfolio prioritisation process, and role that PMO can and should play.
Why listen to the Session?
- Alignment to the Business Case competency and focusing on the portfolio context.
- Good for PMO Managers and Directors who are implementing or have implemented services around business cases and project prioritisation
- Great for PMO Administrators and Analysts to understand what business case and project prioritisation means in a PMO context.
Here’s what was covered during the session:
You can also check out the doodly notes from the session too – written throughout the session with snippets from the presentation deck.
What We Learnt
As ever with PMO Flashmob sessions, there is a lot going on with the presentation and also the chat between PMO Flashmobbers. We also had polls and an interactive session too.
Here we highlight some of the areas that got people chatting and engaged plus there are links out to other bits of reading you could be doing too.
Most of us will be familiar with MoSCoW – the Must-Have, Should-Have, Could-Have, Won’t-Have approach when prioritising (some models use Wish-For or Would-Have) – here’s a good overview about it.
It’s a simple approach, perhaps too simple when it comes to prioritising in a portfolio. There’s also the Equity/Equality Model, which can be found in many different industries such as healthcare, it’s about prioritisation based on doing the right thing, everyone being treated equally, and in this case it’s about doing the right projects regardless of which area of the business it is and what budget is available. If you’re interested in this model take a look at this article. Same goes for the acronym HiPPO which means prioritisation gets done based on the Highest Paid Person’s Opinion!
We asked the PMO Flashmobbers in a poll, which prioritisation approach they use the most. MoSCoW took the top slot with 60% followed by a joint place with 27% “We don’t priortise – we get the job done” and the Eurovision Model, which is essentially all about tactical voting and office politics!
If you enjoy this side of the work we do, check out a book worth reading called Noise – from cognitive bias expert Daniel Kahneman
Quite simply the book looks at variability in judgements. Kahneman talks about the book in this podcast.
There was another term that the PMO Flashmobbers weren’t familiar with and that is the hockey stick effect. For those with an interest in data and graphs, have a quick read. We talked about it in relation to capital allocation, how organisations seem to get to the end of the financial year and have money that needs spending.
The Prioritisation Process
All PMO people like a good process and the prioritisation one has three parts – the selection criteria, the rankings and the decision.
Ultimately the most important criteria is strategic fit – if the project doesn’t fit the organisation’s strategic objectives it should not go any further in the process.
After that, there are many different criteria that can be chosen and are often chosen or tailored based on the organisation:
Next comes the part where you are trying to get a list of projects in the right order based on the selection criteria. Ranking – or Multi-Criteria Analysis (MCA) is used to do this.
We were introduced to something called Waterline Analysis:
Waterline Analysis is where you take all potential projects and score them based on what’s more important to your organization—whether that criteria is based on strategic priorities, budgets, or other factors is entirely up to you. Then, you order the projects from high to low, adding projects to your portfolio, from the top down, until you hit your (budget or resource) limit, aka your “waterline.” All projects that didn’t make the initial cut go below this line; however, this doesn’t mean those projects are dead in the water. Quite to the contrary, you can make trade-offs between projects above and below the waterline. For example, you could choose to replace one larger project above the line with multiple smaller proje
cts below the line, only if their combined score is higher than the larger one’s on its own. From Planisware.
The multi-criteria analysis enables you to do that scoring and start to get that list together and see where the waterline is.
The ranking shared in this session focused on four areas – keeping it simple – by financial; business impact; risk and compatibility.
The other danger to MCA is that the ranking is seen to be the decision, rather than allowing the c-suite to make the final decision – even if they choose to go against the objective ranking.
We asked the PMO Flashmobbers to break out into groups to discuss these three questions:
Here are some of the ways that the PMO gets involved in project prioritisation:
- The PMO helps to define the criteria
- The selection criteria chosen gets played back to senior executives first before going ahead
- The PMO works with and supports those during the ranking exercise
- The PMO acts as a referee on the scoring with business stakeholders
- The PMO doesn’t get involved with it because it’s done at the next level up.
- The PMO inherited the process from Finance and is now taking ownership and making changes
- The PMO facilitates the discussions / runs the workshops
- The PMO knows it needs to be done but it’s not being done at any level of the organisation.
Following the ranking session, it is ultimately the responsibility of senior management to take those rankings and make a decision on the final list. The PMO will ultimately be responsible for ensuring the final list is recorded and of course maintaining that going forward. So what next?
The next stage in the process where the PMO gets involved is business cases.
Take a look at the process from Accenture that shows the next stage:
The key here is that there are individual business cases written for each project – these are analysed. Then, each business case is compared to each other – comparing like-for-like, across the whole organisation. The greater success comes when there is alignment across the whole organisation.
We asked the PMO Flashmobbers, what do you use when writing business cases? The majority use a bespoke template created by their own organisation, however, some do use the 5 Case Model (Better Business Cases) and the Lean Business Case from SAFe. Another option would be the Investment Appraisal.
What the PMO Flashmobbers Were Chatting About
- How much information do you need for Return on Investment (ROI), would there be too much work to do to get an ROI and then you find out it isn’t worth it. Are you wasting too much money in finding out something isn’t worth it? It depends on the process. in Better Business Cases (BBC), you don’t do the ROI calculation until you’re down to a choice of 3 options.
- Regarding regulatory projects that we touched in group 2: my lesson learnt is to review requirements and validate how much is of it regulatory and how much is business development under the regulatory project. Some projects if not fully cancelled, at least might end up having a smaller scope.
- Prioritisation does help out with the SPOD problem with resources (SPOD – Single Point Of Dependency)
- Our prioritization factors in some items that are subjective and some that are not. Such as is it revenue-generating? Non-subjective.