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When life was simpler, projects could be assessed on their claimed return on investment (ROI). If the project was financially worthwhile (at the time of approval) and supported by some executive, it would be approved.

Projects tended to be approved in isolation creating problems at the portfolio level clashes and when they came to be implemented.

So the evaluation of projects has become more sophisticated. Or has it? A recent analysis of eight major approved projects found that seven should not have been approved in their current form. One was solving a non-problem, one was delivering a solution that was incompatible with the organization’s future direction, one was a project that was already off-the-rails! And so on.

Yet each of these projects had been evaluated by their divisional investment committees as well as the enterprise investment committee. The problem was that this (and most) organization did not have a clear and effective evaluation model.

The following evaluation model makes the bases for evaluating projects clear:

(Targetting Investments)

The first question is, “What’s the project’s value?” — why are we considering doing this project, what will we get from it? Obviously if you fail on this test, you don’t go any further.

Then the question is, “Will we get the value?” — is the project too risky, too complex, too vague or mismanaged to deliver the value promised? The value proposition is only as good as its ability to be delivered.

The next question is from the corporate perspective, “Does it advance our strategy?” — is it relevant to what we’re trying to do, the problems we are addressing, the direction we’re taking? If not, why are we doing it?

The fourth question looks at the organization’s capability to deliver the project “Can we deliver this type of project successfully?”

The reaction to many a failed project is to start it again with a new team, but sometimes the reason for the failure is that the project is beyond the capability of the organization to deliver. If you don’t know your organization’s project delivery capability you can be wasting large sums of money on projects you’re just not able to deliver.

The next perspective is whether we have the capacity to do this project — do we have the resources to deliver it, can the business absorb it effectively? Too much concurrent change reduces the actual value delivered as the staff become change-weary. Also, too many concurrent projects spreads people’s attention and commitment to thin. Can we do this project well? is the key question.

Then the portfolio perspective is applied. “Does it fit in with our existing portfolio?” — does it support other projects, can we accommodate it and implement it when due? A high-risk project by itself is not necessarily a concern, the fourth concurrent high-risk project is a concern. So how this project fits with what is already in-flight is important.

The final question, “Is this something we should do now?” — is it the most important, the most valuable project on offer? Is it worth the effort? What will happen if we defer or even stop it? This question needs to be asked whenever the project is being re-evaluated for continued funding. Just continuing to do a project because you’ve started it is no basis at all, it is better to cut your losses and reapply the remaining funds to a higher priority project.

Accompanied with a thorough evaluation process, this process culls irrelevant projects, projects you cannot do, projects that overload the organization and refocuses your investment funds onto the projects with the most value and likelihood of success.

Our Guide, “Understanding Prioritisation” will be available shortly — more details to follow soon