Project Prioritization and funding - whether to fund and how
An organization needs a process for evaluating new opportunities or methodologies. Without a rigorous process for evaluating the priorities of projects, organizations are subject to a lot of opinion-based debate about which projects have merit and which do not. This is such a fundamental problem for an organization that we think it is one of the first that an organization needs to create and agree on.
The method we advocate for prioritization of competing projects is to identify what attributes are most important to the company. This is dependent on the strategy and the weightings of the attributes can change over time. Examples might be customer satisfaction, customer retention, profit margins, revenue growth, leverage, partnerships, executive decree etc. The attributes are socialized and weighted, and then stake-holders discuss the projects and decide on each project's contribution to that attribute. We have developed proven techniques in developing an operational decision matrix. This decision matrix allows an organization to discuss and debate analytically and effectively to ensure appropriate priorities are created and communicated.
We can also develop different project funding models which will evaluate core strengths, weakness and trade offs of personnel or other resources and its impact to the top line or bottom line growth.
Challenge: a client had a yearly prioritization system where managers would fight over resources. The results were largely based on how articulate, patient, and conflict-tolerant the directors were, instead of how well the proposal met the company's strategy.
Action: Using a six sigma tool called a Pugh Matrix, we were able to identify the factors that were most important to meeting our strategic objectives, and rank them. We then used a similar spreadsheet to rank the critical factors of a large number of proposals, and score each proposal against each factor. We had open discussions about why various proposals would merit a particular score in a particular factor which supported the strategy. We used the results to rank the proposals, and then line management would staff the proposals in order based on resource availability and suitability.
Result: the process removed a huge amount of emotion, politics, and personal preference out of the process. It provided a very clear, easy to follow decision output which could be ratified or debated by others.