As part of a worldwide study on Project Prioritization, MBA student, Stephen Wessels conducted a study of 74 project management professionals on the way they and their organizations currently go about project prioritization.
We’ve written a number of articles in the past outlining the importance of project prioritization and strategic alignment. Overall, the topic has been quite well documented and it was pleasing to see that 55% of respondents believe their organization considers value creation when prioritizing projects and 64% agree that their current prioritized projects within their organization could be considered as value-to-business projects. So, how are they prioritizing their projects?
This helps to demonstrate the dominant prioritizing methods, which include ROI, payback period, and ongoing cost of ownership, all of which relate to the bottom line. Again, it suggests that perhaps we are placing a lot more value on the financial outcome rather than the value add or strategic alignment when selecting projects.
On the other end of the spectrum, hurdle rates, ECV, IRR and scoring models are less commonly used. Whilst these aren’t all directly related to adding value or strategic alignment, they are further removed from the focus on cost.
While, these findings help to spot industry trends and provide benchmarks to compare our own practices, they don’t necessarily point out what best practice should be.
Overall, the findings highlighted do show that in general it appears that the cost of a project will still determine whether or not a project gets prioritized even after it may have been initially considered because of the potential business value it could create. With limited resources, these results aren’t surprising.
So, how do your prioritization practices compare to these findings?