There’s a lot riding on what project your organization moves forward with, especially if you’re managing a program or portfolio. The investment of money, time and effort can be huge, not to mention determining where to allocate your resources. The reward can be big, too, but it can just as easily end up as a loss. Thankfully, there’s project prioritization to help guide your decision-making process.
Let’s take a look at the process for project prioritization and the various models you can use to judge the viability of potential projects. We’ll cover the process of allocating resources across a variety of projects and we’ll even throw in a free project prioritization template for Excel. Make sure to read it before you start your next project.
What Is Project Prioritization?
Project prioritization is a process that allows an organization to figure out which potential projects are worth doing. It helps project managers determine the existing projects that require immediate attention and those that can wait for resources.
For this to be effective requires evaluating criteria to make an educated decision on projects that align with your organization. Think of it as ranking projects based on their return on investment (ROI) or the critical nature of the project depending on your needs, objectives and goals. The same process can be applied to tasks in a single project.
This is more difficult as it’s likely that every contemplating project has some value. And aren’t all tasks important? It’s rare to find projects so cut and dry to easily divide between must-do and must-pass. Having a dedicated and thorough process to help make an objective decision is key to whether that potential project is successful.
Project prioritization is a well-reasoned way to determine how an organization should allocate its resources. It allows PMOs to define their needs and find aligning projects or tasks while staying within scope. This helps organizations avoid wasting time and money on projects not in their best interest.
Project management software can help with project prioritization and overall project success. ProjectManager is project management software that helps you plan, schedule and track projects in real time. Project prioritization is essentially a list of projects organized by certain criteria. This can be done on our task list, where comments can be added and files attached. When a project is chosen, it’s easy to switch to the Gantt view and start planning, assigning and tracking progress in real time.
Project Prioritization Process
For a project prioritization to be objective and accurate, you must have a project prioritization process. You can use this project prioritization process to determine which project you want to pursue. If you’re managing a portfolio, it can help you plan resource allocation in a manner that’s beneficial to all of your projects.
1. Define a Prioritization Criteria
The first step is understanding the strategic value of your portfolio, program or project, or the strategy of your organization. Any attempt at project prioritization without first defining the prioritization criteria is bound to fail. This begins by interviewing the key stakeholders in the organization or the project. Have them brainstorm the strategic goals for the organization or the project and use these criteria to score the project or projects.
2. Use a Project Prioritization Matrix
A project prioritization matrix is simply a structured approach to finding the critical project or tasks. It can be simplistic such as what’s called an Eisenhower chart. It’s a box divided into four quadrants. Across the top is a column for urgent and not urgent, while up the left side are two rows for not important and important. The top left quadrant is where you can place projects that are urgent and important. The top right is for projects that are important but not urgent. At the bottom is urgent but not important and neither urgent nor important. This helps you separate the wheat from the chaff by using the criteria developed in the first step to determine what goes where.
3. Score Your Projects
We used a simple project prioritization matrix as an example but there’s a more complex option. Once you have a project prioritization matrix, you can begin to evaluate and score projects. Whichever you use, you’ll need to understand the basic information for each project and score each against the criteria you defined. Also, estimate costs, including resources, that you’ll need to deliver the project. Explore the risk for each project and any other pertinent information that will help you make an objective decision.
Related: Free Resource Plan Template for Excel
Project Prioritization Methods
Again, project prioritization sounds like a simple ranking, but it can be exceedingly difficult—especially when you’re working with a lot of projects. A project prioritization matrix is a great tool, but you’ll also want to apply project prioritization methods. The more work you put into this process, the better your results. You don’t want to be misled and choose the wrong project because you didn’t do the due diligence. Here are some project prioritization methods you can use to help you through the process.
The scoring model is helpful when there are many selection criteria as well as when you’re comparing dissimilar projects. Both of these increase difficulty, but the scoring model simplifies this by grouping criteria by strategic alignment, benefits, ROI, risk and so forth. On top of that, each group is weighted so some have more significance than others. Beware, it’s hard to accommodate a lot of criteria accurately and biases and guesswork can cloud your findings. If you have time, you can use the scoring model against existing projects to gauge its accuracy.
The payback period method is relatively straightforward. Managers look at projects in terms of how long it’ll take for the project to recoup its cost. More attractive are projects with a short payback period as opposed to those with a longer payback period. The longer the payback period, the riskier. Who knows what changes or issues will arise? However, the shorter the payback period is not a guarantee of a higher rate of return. This is a straightforward method but perhaps a bit too simple in some scenarios.
Net Present Value
Net present value is about investing in projects that have a positive net present value and avoiding those with a negative net present value. This accounts for the time value of money, meaning future money is less valuable than presently available capital. That’s because of the earnings potential of the present money. When deciding on a project, the organization uses the net present value rule to decide whether the project is viable. If it’s negative, then the project is likely a loss. But if the net present value is positive, the project should be profitable. A neutral net present value will require non-monetary factors, such as intangible benefits, to make a more accurate decision.
The MoSCoW method is a prioritization technique that breaks up criteria into four categories: must have, should have, could have and won’t have. As with any prioritization method, you must first define your objectives and the project scope. Then you need to include key stakeholders and figure out how to resolve disagreements when making ranking choices. You’ll set up milestones, establish acceptance criteria and rank your projects. Don’t forget to assign resources to get a full picture. It helps to get feedback afterward and adjust your findings accordingly. This cycle continues until you feel you’ve reached the right answer.
Kano is primarily used when prioritizing features on a product roadmap. The criteria, in this case, is how likely the feature is to satisfy a customer. Product managers use this method to help them prioritize potential new features by grouping them into categories, such as disappoint, satisfy and delight customers. This method is unique in that it’s designed for a product development team and focuses on customers rather than costs versus benefits.
Risk Priority Matrix
In this project prioritization method, you try to identify all the project risks and then rank them. This allows project managers to know which risks will potentially be most harmful and should be addressed first when and if they arise in the project as an issue or problem. The ranking of each risk is from tolerable to low, medium and high, with intolerable being the most severe. Each is determined by how likely it is to occur and what its impact will be.
Project Prioritization Template
To help you get started with project prioritization, download our free project prioritization matrix for Excel. It’s an Eisenhower box that allows you to place projects in specific categories so you can determine which project will align best with your organization’s strategy, goals and objectives. This is only one of the dozens of free templates you can find on ProjectManager’s template page. There are free templates for Excel and Word that cover every phase of project management.
Key Benefits of Project Prioritization
We’ve already touched on some of the benefits of project prioritization, but there are so many that it’s worth listing a few more.
- Manages the project pipeline so you know where projects go in the delivery timeline
- Helps run projects smoothly as you’ve done the due diligence to ensure they fit within your organization’s overall strategic goals
- Matches the projects you initiate with the resources you have
- Keeps risky projects that can damage your bottom line out of your portfolio
- Improves project success rates
ProjectManager Is a Project Prioritization Tool
We offered you a free project prioritization matrix template for Excel, but that’s only the first step in project prioritization. ProjectManager is online project management software that helps you prioritize projects and better manage them. We provide users with real-time data that helps them make better decisions and a suite of powerful features to prioritize and manage projects.
Get a Real-Time Portfolio Summary Dashboard
If you’re managing a portfolio, it can be difficult to know how to allocate resources across those projects. Our software has a portfolio summary dashboard that gives you a high-level view of your portfolio in real time. You can quickly see time, cost, workload, progress and total cost for all projects and zoom into each project for more detailed data. This helps portfolio managers make insightful decisions as to which projects need immediate attention.
Create a Portfolio Roadmap
Managing one project or a portfolio is hard, but having a roadmap to lay out your work on a timeline is the first step toward success. We have a robust Gantt chart that can be used in the traditional sense of organizing tasks but can also make a portfolio roadmap showing you all the projects in your portfolio. Having that big picture helps you see what needs attention and what can wait.
We also have a full suite of features to help you better manage your project, program or portfolio. Resource management tools allow you to balance your team’s workload to work more productively. You also get visibility into their availability when making assignments. Teams can use task management tools and comment and share files on our collaborative platform to work better together.
ProjectManager is award-winning software that helps you prioritize projects and track their progress and performance in real time. Teams can collaborate, and managers get transparency into their process to reallocate resources as needed to avoid roadblocks. Join the teams at NASA, Siemens and Nestle who deliver success using our tool. Get started with ProjectManager today for free.