Appendix D: Portfolio Prioritization Process

Portfolio prioritization needs to happen periodically to ensure that the business maintains its focus on the highest-priority projects and that they remain staffed for success. At any given time, a business may be running numerous projects simultaneously. These projects should be aligned into programs that support the business objectives and strategy. Businesses operating in an environment of uncertainty can expect frequent changes in the direction of both the business and individual projects. Without periodic efforts to reprioritize the project portfolio, we run the risk of wasting time and resources pursuing the wrong projects.

This process is meant to be used in conjunction with the Project Prioritization template and the Program View example, both of which are also provided in this appendix. An electronic copy of this process can be downloaded from http://www.xocp.com.

Project Prioritization

Align programs and projects with current	Start with your most recent copy of the Program View diagram. Verify the status and placement of all projects and strategy programs currently on the diagram. Remove any completed projects. Add any new projects under the appropriate program and business objective. If a new (or old) project doesn't seem to fit under any current programs or business objectives, then create a "Misc". column and file them there for now. Move and/or consolidate projects as appropriate. Ensure that you reflect any moves or consolidation activities on the Project Data Sheets for the respective projects. The output of this step is an up-to-date Program View and Project Data Sheet (PDS) for all projects. The program and project managers should do this work offline (i.e., independent from the management team).
Update the resource estimate	Once you have updated the Project Data Sheets for all projects, you have current information from which to update the resource estimates at both the project and portfolio levels. An example of project-level resource estimation can be found in Chapter 7, and an example of portfolio-level resource estimation can be found in Chapter 11.
Identify your prioritization criteria	Work with the management team to identify the criteria that will be used to prioritize the projects. The criteria should reflect the business strategy. They should be expressed in tangible terms. Examples are: Probability of technical success Planned completion in next quarter/month Supports ABC business objective Is critical to getting new business
Assign a scoring method to each criteria	For each individual criterion, assign a noncomplex scoring method that will be used later for voting on the respective projects. Example scoring methods would be High-Medium-Low, or Yes-No, or a rating scale of 1 to 5. Whatever scoring method you decide on, you should be as consistent as possible in using it on all criteria. For example, do not rank one criterion on a scale of 1–10 and the others as H-M-L, because this will make tabulating the final scores more complicated. Once you decide on your scoring method, you can add it your criteria as follows: Probability of technical success (H-M-L) Planned completion in next quarter/month (H-M-L) Supports ABC business objective (Y-N) Is critical to getting new business (H-M-L) You may assign a numeric score to any qualitative scoring methods, such as High-3, Medium-2, Low 1to normalize the criteria for easier comparison, if necessary.
Identify any go/no-go thresholds	Identify any thresholds that will eliminate a project. Examples of thresholds may be: No projects with a low probability of technical success No projects requiring additional funds above $X No projects with projected completion dates more than X months out Thresholds should map to a particular score for a criterion.
Build the project prioritization matrix	Complete the Project Prioritization template by listing the projects (organized by program) down the left column and the criteria across the top.
Quantitative vote	Hold a prioritization meeting of project managers, technical leaders, management, and other key contributors who should have an influence on the prioritization effort. For each project, you should hold a vote on each criterion. This exercise prompts a lot of discussion, which should be encouraged since whole new perspectives on the project portfolio may be discovered. Record a single result from each vote. Try to facilitate the discussion to reach a consensus. If you can't gain unanimous agreement, then adopt the policy that the majority rules.
Break (optional)	This may be a good time for a break in the process. A time-out will let the facilitator update some of the materials before leading the team through the rest of the prioritization process. However, a break is not required or may not be desirable, especially if it would interrupt the group momentum.
Tabulate the quantitative score	Once the vote is completed, tabulate the score for each project using the scoring method previously defined. Record the score for each project on the Project Prioritization template and add the score to each project on the Program View diagram. Identify any projects that do not meet minimum thresholds and therefore should be eliminated or postponed.
Identify understaffed projects	Review the previously updated resource matrix and identify any understaffed projects. Identify them on the prioritization matrix and Program View diagram.
Qualitative adjustment	Have the team take a look at the newly updated Program View diagram, which should now have quantitative scoring and any resource deficiency assigned to each project. Since our quantitative scoring model is relatively unsophisticated, don't expect it to put the projects in perfect prioritized order. The team should take this opportunity to express their "gut feeling" on the results of the quantitative scoring. Go through each project, and discuss the current score. Decide as a group whether the score should stand or be adjusted upward or downward. Record the qualitative adjustments on the prioritization matrix and Program View diagram.
Assess new prioritization	Review the newly prioritized Program View to ensure that the highest-priority projects are staffed adequately for success. Decide if any projects should be postponed or canceled. Moving a project "below the line" is a difficult task, but it is something that may greatly enhance the chance of success for the remaining projects.
Prioritization complete	At this point, the project prioritization is complete. You should have a Program View diagram updated with a numerical score assigned to each project. You may want to highlight the "top 10" projects on the diagram to give them additional visibility.

Project Prioritization Template

	Supports ABC bus. objective (H-M-L)	Planned completion in current quarter (Y-N)	Critical to get new business (H-M-L)	Probability of technical success (H-M-L)	Score: L=1, M=2, H=3 Y=1, N=0	Scoring adjustments	Total score
Program 1
Project 1	H	Y	M	M	8		8
Project 2	H	Y	M	H	9		9
Project 3	M	Y	M	M	7	+2	9
Program 2
Project 4	M	Y	H	M	8	+1	9
Project 5	M	Y	H	H	9	+1	10
Program 3
Project 6	M	Y	L	H	7		7
Project 7	L	N	L	H	5		5
Program 4
Project 8	M	N	L	H	6		6
Project 9	M	N	L	H	6		6
Project 10	L	N	L	H	5		5