If your PMO’s project selection process is like most, it probably works something like this:
1) Project Identification—Ask each business unit to submit their top 10 project candidates, along with summary descriptions and some cost/benefit info for each.
2) Project Validation—Perform some high-level validation of the full list of project candidates, throwing out those candidates that don’t meet minimum criteria, which seem only minimally compelling to the business as a whole, or which lack the strong political backing necessary to be considered seriously.
3) Project Prioritization—Convene an investment review board (IRB) comprised of top-echelon executives from across the organization, and have the IRB rack and stack the project candidates and place them in priority order.
4) Project Selection—Draw a line below the lowest-priority project candidate that still fits within the overall PMO budget, fund all projects above that line, and list the remaining below-the-line projects as “future candidates” (or just remove them from consideration altogether).
5) Portfolio Politicking—This has been going on the entire time, of course, but often gets particularly intense just before decisions are locked in. Watch the political wheeling and dealing kick into high gear, resulting in a “political peanut-butter spread” that avoids favoring or neglecting any business unit excessively, and that avoids alienating the most powerful business units.
There’s a lot to like about this project selection process—it shows some discipline and alignment with organizational priorities, it fits within budget constraints, it’s inclusive and tries to be fair, and it’s flexible enough to bend to political realities. You might even wish your PMO’s project selection process was as good as this one. However, it’s also almost guaranteed to give the organization a mish-mash of middling results.
A real-world example might help illustrate why. I had a client whose IT project selection process looked a lot like this—it had taken a lot of leadership initiative and trial-and-error to mature their process to this level, and they were justifiably proud of how far they’d come. Whereas there hadn’t really been much of a process at all previously—they essentially just had Step 5 (the political wheeling and dealing)—now they could claim real IT project portfolio governance.
To their surprise, however, this new process resulted in an IT project portfolio that delivered essentially the same benefits and ROI as the old process. They asked me to take a look at their list of newly approved projects, and offer any insights I might have on ways to boost ROI. The list looked reasonable enough, and I couldn’t take much issue with the merits of any project in particular. So I began by asking a simple question:
Me: “What projects have the greatest potential to deliver the highest impact to overall organizational performance?”
Client: “I’d say Projects 1, 2, and 3…the ones that made it to the top of the priority list.”
Me: “OK, but Project 1 is for Business Unit 1, Project 2 is for Business Unit 2, and Project 3 is for Business Unit 3. Are there any projects that have the potential to deliver high impact to multiple business units?”
Client: “Yes, we have a few infrastructure upgrade projects that will benefit all business units, and a few projects that were actually proposed jointly by multiple business units.”
Me: “OK, but if you could point to a single business process that, if significantly improved, might deliver enormous benefit to the entire business, what would that business process be?”
Client: “Well, that would have to be the procurement process—we contract out a large portion of our budget, so any improvement in procurement would have immediate impact everywhere, and in a way that is central to our mission. But no one wants to touch procurement, because of all the complex regulatory requirements and mystifying legal issues—in fact, we’ve tried to improve procurement processes in the past, and gotten nowhere. Plus, our head of procurement has no real power base—it’s the revenue-generating business units that have the power around here, not cost centers like procurement. And on top of all that, the head of procurement isn’t a believer in IT, and hasn’t even submitted any project proposals for consideration.”
Me: “OK, so you’re saying that delivering high-impact results requires dealing with complexity, succeeding where others have failed, overcoming political hurdles, and taking leadership initiative when others won’t. I think all that will look a lot better on your resume than ‘average results delivered via lack of leadership, playing it safe, and a peanut-butter spread approach to project selection.’ ”
Client: “Fine, point taken, but unless you help me find ways to mitigate/share/deflect the high risk of failure, it’s still political suicide.”
Me: “Fair enough—let’s start by changing your project selection process so that truly high-impact projects are identified, using simple logic like we just did in this conversation. Then let’s see if we can get your CEO to stick her neck out a bit more to make sure that these high-impact projects get serious consideration. Finally, let’s see if we can get a few of the business units on board with what we’re trying to do. And if all that still fails, you can always blame the consultant (me).”
Client: “Sounds like a plan—in order to ‘blame the consultant’ should things go wrong, however, I’ll need to put you front and center, facilitating the part of the project selection process that identifies procurement and other “high-impact-but-politically-weak” project candidates. Assuming you’re OK with that, I’ll need to show everyone something more methodical and specific than just your ‘simple logic’ approach.
Me: “You’ll have a written description of the approach on your desk tomorrow—we at Fortezza Consulting call it Maximal Impact Project Selection™, and we base it on the proven discipline of the Theory of Constraints framework, which was designed specifically to help identify the “critical few” high-impact business processes where you should focus your energies.
For details on this approach, and how it can drive dramatic improvement in an IT PMO’s project selection process, click here.