This lesson dives deep into the crucial first step of project management: ensuring projects align with organizational strategy and selecting the right ones. We'll explore frameworks for strategic alignment, techniques for prioritizing projects, and methods for assessing project viability beyond just financial metrics.
Projects are not isolated endeavors; they are strategic investments designed to achieve organizational goals. Understanding these goals, and how a project contributes to them, is paramount. This lesson will emphasize the 'Why' behind a project. Think of a project as a piece of a larger puzzle. Without the bigger picture, the piece is meaningless. We need to understand the business strategy, market position, and desired future state of the organization to place projects effectively. This includes understanding the company's vision, mission, and objectives, and how a project supports them. For example, a company aiming to increase market share should focus on projects that expand reach or improve customer acquisition. A company wanting to improve profitability would look towards projects that reduce costs or improve operational efficiency. We often use frameworks such as the Balanced Scorecard to cascade strategic goals to the operational level, including projects.
Several frameworks help organizations identify projects that align with their strategy. These frameworks provide a structured approach to analyze the business environment and identify opportunities or needs that can be addressed through projects.
1. SWOT Analysis: (Strengths, Weaknesses, Opportunities, Threats) Identifies internal and external factors. Use the opportunities and strengths to identify projects that capitalize on them, and use projects to minimize weaknesses and address threats. Example: A software company, through a SWOT, discovers it has strong technical expertise (Strength) but a weak marketing strategy (Weakness). An opportunity to enter a new market and a threat from a competitor's new product will mean projects on marketing plans and product upgrades.
2. Porter's Five Forces: Analyzes industry competition. Helps identify projects related to competitive advantage, industry threats, and bargaining power of buyers/suppliers. Example: A retailer analyzing supplier power may identify a project to diversify its suppliers or develop its own sourcing capabilities to decrease its dependence on high-priced suppliers.
3. PESTLE Analysis: Considers external factors (Political, Economic, Social, Technological, Legal, Environmental) that can impact projects. Identifies opportunities and risks related to projects. Example: An investment bank analyzing a new fintech project will consider how political regulations affect the company. If the regulations aren't helpful for this project, then it would not go ahead.
Organizations typically have more project ideas than resources to execute them. Prioritization is critical. Techniques used include:
1. MoSCoW Method: (Must have, Should have, Could have, Won't have) Categorizes requirements and helps prioritize features/deliverables within a project scope. It can also be applied to overall project selection, where the project is broken down into deliverables that are 'Must Haves', 'Should Haves', 'Could Haves', or 'Won't Haves'.
2. Scoring Models: Assigns weighted scores to projects based on criteria like strategic alignment, ROI, risk, and resource availability. A simple scoring model might look like this:
| Criteria | Weight | Project A Score | Project B Score | Explanation |
|------------------------|--------|-----------------|-----------------|------------------------------------------------------------------------------------------------------------|
| Strategic Alignment | 30% | 9 | 7 | Alignment with key strategic goals. Higher score means more alignment. |
| ROI | 25% | 8 | 6 | Return on Investment. A higher score means a higher ROI. |
| Risk | 20% | 6 | 8 | Risk assessment (lower score means lower risk). |
| Resource Availability | 15% | 7 | 9 | Availability of necessary resources. Higher score indicates more resource availability. |
| Urgency | 10% | 8 | 7 | Level of need - urgent or not. Higher score means higher urgency. |
| Total | 100% | 7.6 | 7.3 | Score = (Weight * Project Score) for each criterion, then summed up across all criteria. Project A wins! |
The project with the highest score is often prioritized, and the individual scores help explain why each project made it onto the priority list.
While financial metrics like ROI, NPV, and IRR are important, a holistic feasibility assessment considers other factors.
1. Strategic Fit: How well does the project align with the organization's strategic goals? Does it contribute to long-term vision or core competencies?
2. Resource Availability: Are the necessary resources (personnel, budget, technology, time) available? Can the project be adequately staffed?
3. Technical Feasibility: Are the technical requirements of the project achievable with current capabilities? Is the technology mature enough?
4. Risk Assessment: Identify potential risks (market, technical, operational, financial) and their potential impact. Develop mitigation strategies for high-impact risks. This requires analysis of the project's assumptions and the uncertainties it has (risks). Example: If a project depends on a key supplier, analyze that supplier's stability and look for alternative suppliers. Risk can be analyzed and assessed using risk registers. For example, risk probability and impact can be rated on a scale, then these scores multiplied to get a risk score. The riskiest projects can be given priority for mitigation.
5. Stakeholder Analysis: Consider the needs and expectations of stakeholders (e.g., customers, employees, investors) and their level of support for the project. High support is more desirable.
Explore advanced insights, examples, and bonus exercises to deepen understanding.
Welcome back! Building on our initial lesson about project selection and strategic alignment, we'll delve into more sophisticated aspects. This extended content explores advanced techniques and real-world applications to elevate your project management acumen.
Organizations evolve. Market conditions shift. Focusing solely on a static strategic framework can lead to missed opportunities or ultimately, irrelevant projects. Consider a 'Dynamic' approach. This involves regularly revisiting and revising strategic alignment, project prioritization, and project portfolios as a whole. This often leverages:
Business Analysts are not just project team members; they are key players in PPM. Their skills are critical for ensuring the project portfolio is strategically aligned and delivering optimal value. They contribute to PPM in the following ways:
Risk management shouldn't start after a project is approved; it should inform the selection process.
Assume a company is considering a new product launch. Develop three strategic scenarios (optimistic, pessimistic, and most-likely) based on market research and external factors (economic trends, competition, technological advancements). For each scenario, analyze the project's viability, including potential ROI and risk factors. What adjustments would you make to the project plan based on each scenario?
Review your existing prioritization model (e.g., MoSCoW, scoring model). Identify how you could incorporate risk assessment and dynamic elements (e.g., quarterly review of strategic fit) into your model. Explain how your refined model would impact project selection decisions in a hypothetical case study.
Consider these real-world examples:
Research and present a case study of a company that successfully (or unsuccessfully) implemented Agile portfolio management. Analyze the key success factors or failures.
Explore these areas for continued development:
Your organization, a regional grocery chain, is considering a new online ordering and delivery service. Conduct a SWOT analysis to help identify the key factors. List at least three items for each category (Strengths, Weaknesses, Opportunities, Threats). After completing the SWOT, identify 2 potential projects to consider.
Using the Scoring Model provided above as a template, create a scoring model to compare 3 proposed projects for a new software development company. Define the criteria, assign weights, and determine the scores for each project. Provide a rationale for your weighting and scoring choices. Discuss which project should be chosen and why.
Imagine you are working with a startup company that is launching a new app. Use the MoSCoW method and identify the deliverables, in order of importance (Must have, Should have, Could have, Won't have). What are the main features of the app? Give examples of each category.
For one of the projects from the Project Prioritization exercise, create a basic risk register. Identify at least three potential risks, assess their probability and impact (High, Medium, Low), calculate a risk score (e.g., Probability x Impact), and propose mitigation strategies.
Your company is a growing cybersecurity firm. You are receiving several project proposals related to threat intelligence, penetration testing, and security awareness training. Apply the concepts and techniques learned in this lesson to prioritize these projects. Include a SWOT analysis to identify company strengths, weaknesses, opportunities, and threats. Then create a scoring model to prioritize these 3 projects by using different criteria (strategic fit, ROI, resource availability, risk, etc.).
Prepare for the next lesson, which covers project initiation and stakeholder management. Review the basic components of a project charter, and consider some of the challenges that a project manager may face when dealing with stakeholders.
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