With the economy in a nose-dive,
organizations are sharpening their
knives, putting everything from
employees to office supplies on the
chopping block. And the project portfolio is no exception. Yet determining
which projects should be slashed and
which ones should be kept isn’t always
Establishing the strategic value of
projects is more art than science, and,
given the magnitude of the current economic crisis, there are few precedents.
One thing is for sure: Companies with
project management processes already
in place have the advantage.
“Different organizations approach
the process in different ways, but
there’s little doubt that organizations
with a good portfolio management
process already in place are in a much
better state to make efficient progress,”
says Andrew Wicklander, PMP, chief
executive of Ideal Project Group LLC,
a project management consulting firm
in Chicago, Illinois, USA.
A basic starting point is to inventory
what projects are actually under way, he
says. But that’s just the precursor to the
main event—the process of deciding
which projects will live on and which
That’s where things get tricky.
One common approach is to establish a cut-off, says Bob Tarne, PMP, senior
business process management program
manager at Lombardi Software Inc.,
Austin, Texas, USA.
“Rank the projects and then cancel
those that you can’t afford,” he says.
“There’s an economic downturn. A year
ago, you might have been able to afford
10 projects, but now you can only
Choosing which five make the final
cut can get ugly, and portfolio leaders
looking for a quick fix are out of luck.
Rarely will a single measure provide
adequate insight into the choices that
must be made, Mr. Tarne says. In practice,
it’s often better to construct a combined
measure, giving weight to both ROI
year ago, you
been able to
—Bob Tarne, PMP, Lombardi
Austin, Texas, USA
and other factors such as regulatory
Simon Ardron suggests asking three
1. Which projects have a legal or strategic imperative?
2. Which projects are luxuries?
3. Which projects are likely to drive
future revenues and growth?
“Once you understand that, you can
move on to look at costing and budgets, and make prioritization decisions,”
says Mr. Ardron, an East Finchley,
England-based business analyst at fast
food behemoth McDonald’s.
Organizations should focus on
the business value of the projects in
question—and more importantly, the
demand for the deliverables, says Vipin
Arora, a New Delhi, India-based program
director and change management lead
for Tata Consultancy Services Ltd. To
Rather than shortc
make changes to s
the most value out
that end, Mr. Arora suggests adding
another query to the list: “What are the
potential risks to the business if you do
not service these demands?”
GOOD TIMES, BAD TIMES
Portfolio leaders gearing up for a lean
patch should adopt a holistic
approach that factors in risk analysis.
“Without a quantification of risk,
you can’t make an informed decision
about risk and reward—and companies’
tolerance for risk during a downturn can
be very, very different from their tolerance when times are good,” says
Gaylord Wahl, a project management
office and project portfolio management
practice leader at Point B, a consulting
firm in Seattle, Washington, USA.