THE 5 KEYS TO IMPROVING PROJECT SELECTION

THOUGHT LEADERSHIP WHITE PAPER

Introduction
Flawlessprojectexecutionismeaninglessifyourorganizationisnottacklingthe rightprojectsinthefirstplace.Workonredundantprojectsorthosethatdont advancecompanyobjectivescanbeahugesourceofcorporatewaste.Strategic projectselectioniscrucialtoensuringthatteamsarefocusedonthoseinitiatives thatalignbestwithkeyprioritiesanddeliverthemostimpact. Yetthesimplefactisthatmostorganizationsstillstrugglewiththis.Of103 participantspolledduringarecentPowerSteeringThoughtLeadershipwebcast, just24%indicatedtheirorganizationhasastandardizedenterpriseprojectselection process,andonly4%statedtheyuseformalfeedbackloopstocontinuallyrefine andimprovetheirprojectselectionmodel. Partofthechallengeisthattheconsiderationsofprojectselectioncanseem overwhelming.Ideagathering,screening,chartering,prioritizing,resourcing, tracking,measuring,optimizingthatsalotofactivitiestomanage.Exacerbating thesituationisthatthereisnolimittohowsophisticatedapproachestoproject selectioncanbe.AdvancedtechniquessuchaswhatifscenariosandMonteCarlo simulationmayinitiallysoundintriguing,becausetheyarecomplexandhavethe benefitofbeingscientific(thusseemingtoimpartcontrolandpredictability) buttheseapproachesareoftenoverkill,especiallyforthoseyettomasterproject selectionfundamentals. Ifyourorganizationisstillgrapplingwithhowtobringdisciplineandcontrolto thewayprojectideasaresolicited,evaluated,andselected,takeastepback. Focusingonthefollowing5keyareasshouldhelpyourealizeimmediate improvementinyourselectionprocessandultimatelyyourprojectsuccessrate.

1. Define your process for gathering ideas

Presumably,thepurposeofeveryprojectyourorganizationundertakesistoyield somechangethatimprovesthebusiness.Ifthatwasntthecase,whybotherwith theprojectatall?Whenthoughtofthisway,itbecomesclearthatmanagingproject selectionisreallyaboutmanaginginnovation.Andthewellspringofinnovationis thegenerationandshepherdingofgoodideas.Thisrequiresthatyourorganization craftaclearanddeliberatemethodforbothsolicitingideasandmakingsurethose ideasdontslipthroughthecracks.Whilesimpleenoughintheory,inpracticethis ofteninvolvesmanagingaseriesofdifficulttradeoffs:Shouldtheprocessbe formalorinformal?Shouldtheprivilegeofsubmittingideasbelongtoaselectfew, orallstaff?Theanswers,ofcourse,dependgreatlyontheuniquecultureofyour company.Butherearesomekeyissuestoconsider:

The 5 Keys to Improving Project Selection

Howwidespreaddoyouwanttocastthenet? Often,frontlineemployeesrepresentanuntappedresourceofinsight forhowtoimprovebusinessoperations.Butthewiderthepoolof wouldbeinnovators,themoreideasyourorganizationwillneedtosift through.Thiscancreateaclassicneedleinahaystackconundrumand challengeyourprocesscapacity.Alternatively,theprivilegeof submittingprojectideascouldbelimitedtoemployeesofacertainjob levelorspecificcommitteesandteamsbutofcoursethisrisksmissing outonpotentiallygroundbreakingideasthatmaybepercolating elsewhereinthecompany. Howwillideasbegeneratedandcaptured? Optionsincludeinnovationworkshops,regularlyscheduledplanning sessions,ortheoldfashionedsuggestionbox(ineitheranonlineor offlineformat). Whowillberesponsibleforinitialscreening? Clearlyallprojectideaswillnotmerittheeffortofacomprehensive feasibilitystudy.Itisimportanttohaveamechanisminplacetoreview therawideasubmissionsanddeterminewhichmeritfurtherevaluation. Thiscanbeaddressedbyanindividual,team,orcommittee,andeither handledperiodicallyorastheyarereceived.

2. Require common information for all project ideas & proposals

Inanidealworld,proposalswouldbeevaluatedsolelyontheirmerit,not presentationaestheticsorwhotheycamefrom.Definingasetofcommondata pointsthatmustbeprovidedbeforeanyideacanbesubmittedforconsideration allowsforamoreapplestoapplesevaluationofproposalsandvastlystreamlines theadministrativeeffortinvolvedindeterminingwhichshouldbeundertaken. Thisisespeciallyimportantinlargeorganizationswithahighvolumeofpotential projectideasthatspandifferentfunctionsorentirelydifferentbusinesses,andare thusinnatelydifficulttocompare. Further,enforcingastandardformatforprojectproposalsensuresthatatleasta minimumthresholdofthoroughnessisrequiredofthesubmitter,whichlowersthe numberofhalfformulatedideastossedoverthetransom.Theresultshouldbethat thoseoriginalbackofthenapkininnovationsaretakentothenextlevelofdetail bytheircreators,insteadofmakingextraworkfortheideascreeners. Ofcourse,therighttypedataandlevelofdetailwillvaryaccordingtothespecific needsandprocessesofyourspecificbusiness,butsomecommoninformationto requireinclude:

The 5 Keys to Improving Project Selection

Projectdescription Whatstrategicgoalorhighlevelobjectiveitalignswith Businessunit/departmentinvolved Expectedbenefit Expectedresourcerequirements

3. Evaluate proposals against consistent criteria

Establishingwelldefined,consistentcriteriaagainstwhichproposalswillbescored allowsyoutomoreobjectivelyevaluateideasrelativetooneanother.Theend resultshouldbeasingle,easytograspscorecard,withthehighestscoringprojects representingthemostattractivecandidatesforyourorganization.Adoptingsucha scoringsystemhelpsensureteamsareonlyworkingonthehighestimpactand moststrategicprojects,andshouldfurtherimprovetheselectionprocessby reducingtheeffectofbiasesorculturalblindspots. Therearenearlyaninfinitenumberofdimensionsagainstwhichanideacanbe rated.Evaluationcategoriescanbebrokenintosubcategories,whichcanbe brokenintospecificlineitemcriteriaadnauseam.Thedevil,asalways,isinthe detailsofdeterminingwhicharetherightonesforyourorganization,andhow manyistherightnumber.Someofthemoreimportant,andthereforemore popular,criteriaare: Strategicimportanceoralignment Estimatedimplementationeffort Time Costs Resourcerequirements Expectedbenefit Financial CustomerSatisfaction Organizational(capabilitybuilding,etc.) Risklevel Costuncertainty Schedulingrisks Opportunitycosts Degreeofexecutivesponsorship Asallcriteriaarenotcreatedequal,nearlyallorganizationsuseaweightedmodel togenerateafinalscore.

The 5 Keys to Improving Project Selection

Itisperhapsobviousbutnonethelessimportanttopointoutthattheinformation suppliedduringtheideasubmissionphasemaynottranslatedirectlyintoaproject ratingorscore.Rather,somepersonorgroupwilllikelyneedtotaketheidea submittedandinterpretitinordertoassignscoresinthevariousevaluation categories.Thusacriticalconsiderationiswhowillberesponsibleforthescoring. Leavingitsolelytothediscretionofasingleindividualrisksallowingahighlevel ofbiasandsubjectivitytocreepbackintotheselectionprocess. Ofcourse,somelevelofsubjectivityisdesirable.Partofthereasoncompaniespay goodmoneytoexecutivesisinexchangefortheirjudgmentandintuitionsodont discarditcompletely!Noevaluationsystemwillbeabsolutelyperfect.The mechanicsofscoringareonlymeanttomakeiteasiertocompareprojectproposals inadisciplinedandconsistentmanner.Forthisreasonithelpstoassessthescoring intermsofthresholdsorbands.Itshouldnotbetakenonfaiththataproject scoring92outof100,forexample,shouldbeprioritizedoveranotherscoring91or even87.Itisgenerallymorehelpfultogroupeveryprojectscoringbetween85and 100(tocontinueourexample)asaprimecandidatetofasttrack,ortomapthe projectideasonaclassic2x2matrixwithkeyevaluationcategories(suchas expectedbenefitvs.risk)asthexandyaxestoseewhichbubbleuptothetop.

4. Use project results to refine the selection process

Tostatethatevaluationcriteriashouldbeconsistentlyappliedinscoringprojects doesnotmeanthecriteriathemselvesshouldbeimmutable.Itisimportantto refinethecriteria,aswellastheweightingthereof,ascorporateprioritieschange andsuccessivegenerationsofcompletedprojectsallowyoutounderstandwhich criteriaactuallyprovetobegoodpredictorsofprojectsuccess. Nomatterhowwellthoughtouttheprocess,projectselectionwillremainlargely anacademicexerciseifyourorganizationdoesnottracktheperformanceofthose projectsthatmakeitbeyondtheselectionhurdlesandintoexecution.Onlyin measuringprojectoutcomescanyouunderstandhowwellyourselectionmodelis workingandwhereitmaybeimproved. Mostorganizationswillreflexivelytracktheharddollarcomponents,suchas costsandrevenuecreation.Ifyoureallyhopetounderstandthedriversofproject success,though,youalsoneedtomonitormorenittygrittyprojectlevelmetrics suchasprojectcycletimeandcomparetheresultsagainstoriginalestimates. Commonassessmentsinclude: Howdidtherealizedprojectbenefitscomparetotheestimatesduring theinitialscreeningand/ortheportfolioprioritization? Howdidtherealizedprojectcostscomparetotheestimates?

The 5 Keys to Improving Project Selection

Howdidtheprojectcycletimecomparetotheestimates? Didthesetofprojectscompletedachievetheirstatedstrategic objectives?

Conductingsuchanalyseswillallowyoutocompileatroveofhistoricaldatathat inturnwillenableyourorganizationtocalibratetheestimatesmadeduringthe ideasubmissionandevaluationphase.Inthisway,figuressuchasexpectedvalues andbestandworstcaseestimatescanbebasedonactualdatainsteadofsheer guesswork.Thisincreasedcertaintyineffectreducesbusinessrisk. Asmentionedearlier,accumulatingdataoncompletedprojectsalsoallowsfor analysisofwhichevaluationcriteriahavethehighestcorrelationwithproject success.Thisunderstandingmaythenbeusedtorefinetheweightingofthose criteriasotheyaccuratelyreflecttheactualresultsofwhatconstitutesagood project.Forexample,letussaythatduringthefirstpassattheselectionprocessit wasassumedthatexpectedbenefitwasthemostimportantattribute,andthat criterionthereforereceivedthehighestweightingduringprojectscoring.However, inexaminingourfirstbatchofcompletedprojects,itwasdiscoveredthataprojects scoreinthecategorylevelofleadershipsupportwasmorecloselytiedtothat projectsultimateimpact.Theweightingshouldthenbechangedtogivemore importancetoleadershipsupportrelativetoexpectedbenefit,and(holdingall othervariablesequal)thesuccessrateoffutureprojectsshouldimprove.

5. Apply appropriate technology

Thatwehaveleftadiscussionoftechnologyuntiltheendisdeliberate. Technology,asconventionalwisdomlikestoremindus,isnosilverbulletor panacea.Ifanorganizationhasnotdeliberatelyplannedoutitsprocesses, technologywillnotoffermuchinthewayofimprovement. However,nowthatwehavedefinedthedesiredfuturestateofaprojectselection model,itishardtoimagineitsucceedingwithoutatleastsomedegreeof supportingtechnology.Ataminimum,theneedtoaggregateideas,evaluatethem, andmonitorthemthroughtheprojectlifecyclerequiressomesortofproject databasesystemtobothensureinformationintegrityandreduceadministrative burden.Therearemyriadotherwaystechnologycanbenefitprojectselection,but someofthekeyonestoexploreare: Usingformstoensuredataconsistency. Theuseofforms,particularlywebforms,tocaptureandscoreproject ideasguaranteesthatthesameinformationisbeingcollectedevery time.

The 5 Keys to Improving Project Selection

Automatingworkflow. Rulesbasedsoftwarecanautomatemuchoftheprojectselection processandhelpensurethatallstepsarecompletedproperlyandinthe rightsequence.Forexample,completedprojectideaformsmightbe automaticallyroutedtotheappropriatepersonorteamsforscreening. Proposalsmightnotbeallowedtoadvancetothenextphaseuntil certainactionsarecompletedorvalidatedforinstance,beforeitis assignedresourcesaprojectmayrequirereviewfromaVPvalidating thattheevaluationstagehasbeencompletedappropriately. Improvingdataanalysisandgraphicdisplay. Thereisreallynomagictoscoringprojectsagainstmultiplecriteria, calculatingweightedscores,orplottingthosescoresona2x2matrix. Muchofthisanalysiscouldbeconductedusingsimplespreadsheets. Butamorerobustsystemthatisdirectlytiedtotheprojectandidea databasecanallowyoutoquicklyreconfiguredataontheflytopresent itinthewaymostusefultoyou,withoutthereworkandriskoferror thatcomesfrommanualreentryofthesamedataintonewspreadsheet tablesandcharts. Trackingprojectbenefits. Onceanideahaspassedalloftheselectionhurdles,aproject managementsystemcanhelptrackexecutionprogressandthe realizationofcostsandbenefits.Thisisfundamentaltogatheringthe dataneededtovalidateandrefinetheselectionprocess.

Whiledifferentsystemscouldbeadoptedforeachoftheseareas,asingle integratedapplicationsuchasPowerSteeringprovidesendtoendvisibilityanda centralrepositoryforallprojectrelatedinformation,greatlystreamlining administrationandimprovingdataaccessandreliability.

Conclusion
Developinganeffectiveapproachtoprojectselectiondoesnothavetoincorporate thefulluniverseoftechniquesandmethodologiesavailable.Infact,thereisno surerrecipefordisasterthanattemptingtoboiltheoceanallatonce.Forthose organizationslookingtobringrigorandconsistencytotheirselectionprocess,the5 suggestionsdiscussedabovewillallowyoutoestablishadisciplined,manageable waytogatherideas,evaluateandprioritizeproposals,andultimatelyselectonly themoststrategic,highimpactprojects.

The 5 Keys to Improving Project Selection

ABOUT POWERSTEERING
PowerSteering Software is the leader in On-Demand Enterprise PPM software for managing Operational Excellence, Information Technology, Business Transformation, Corporate PMOs and other project-intensive enterprise programs. Our easy-to-use software provides executives at the US Army, Raytheon, Ingersoll Rand, Merck, Johnson & Johnson, UnitedHealth Group, TD Bank, Washington Mutual, Heinz, Best Buy and over 90 other customers with executive visibility, strategy alignment, and enhanced team productivity to drive strategy and accelerate results across the enterprise. For additional information, please visit www.powersteeringsoftware.com or call us at 617-492-0707.