PLAN Phase, Steps 5 & 6
Step 5 - Prioritize the Work (Prioritization)
One of the key assumptions of Project Portfolio Management is that there is
much more work requested than the organization can execute in one year. (If, in
fact, you could do everything requested, you might not need such a process. However,
experience tells us that this is very unlikely unless, perhaps, the business is
in a state of decline.)
Once all the work has been selected, a prioritization process begins. First,
work is prioritized within each business unit or group, and the Business Cases
for all the work are then prioritized to come up with a final list of prioritized
work. This process is easily described, but hard to accomplish because of the
need for collaboration and consensus amongst all the senior managers and/or stakeholders.
Step 6 - Balance and Optimize the Portfolio (Balancing)
Having selected and prioritized the work, it is important for you to step back
and take an overall hard look at the resulting work now contemplated. The question
is, is it "balanced"? That is, does the resulting mix satisfy the overall direction
of the organization and its overall priorities? Just as important, does the resulting
mix produce the best or optimum benefit value?
You may find the answer to the first question is relatively easy to answer
by adding up the estimated work under each of the categories and comparing that
with the strategic plan. The answer to the second question is more difficult because
you not only need to estimate the value of the anticipated future benefits, but
you may find yourself trying to compare different types of benefits. Some of these
benefits may not necessarily be identifiable in financial terms and you will need
to apply subjective judgment.
As an example, a new process or system will lead to a reduced number of steps
compared to a previous process. However, the benefit is not likely to be realized
in reduced cost because no one will be laid off as a result, but it should lead
to reduced errors, consequent higher customer satisfaction, customer loyalty and
repeat business. Here there is a clear and desirable benefit, but not one that
can be readily compared in direct financial terms.