Packaging your project
strategic selection and executive presentation
In the often highly competitive internal organizational landscape, sponsors and project managers need to present the business case for their projects in order to position the benefits of their proposal against the other potential projects in the portfolio. They also must provide evidence of a clear linkage to the strategic direction of the business. In addition, the case must be clear and easily understood without requiring voluminous supporting data. This paper will identify the benefits of framing the “relative and absolute benefits” argument so that executives can easily select “better” projects from a group of “good” project proposals. Additional information is provided regarding current trends in portfolio management, preparation and communication checklists, as well as common project proposal pitfalls.
In corporate efforts to improve financial performance, the line has been drawn: when organizations invest in projects that reflect the best alignment with their strategic direction, the bottom line improves. Purse strings are tight, and project sponsors need to up the ante and effectively position a desired project to earn selection within any given portfolio. Given this challenge, how can a project manager support the effort to get funding? By properly selling projects to executives.
When presenting to a leadership team, sponsors and project managers are often so caught up in identifying the specific benefits of one project, they fail to compare aggressively the strategic value of their project relative to other proposals. They habitually neglect to tailor project presentations for their time-crunched audience---executives who want to cut to the chase and hear business (read financial) implications (risks/benefits) first. Inability to embody an executive mindset results in failure to deliver vital information to decision makers.
Strategic project selection and continuous performance monitoring are the keys to fiscally responsible project portfolio management (PPM). “PPM includes fundamental practices for project prioritization and selection, and the balancing of an organization's portfolio to achieve the best results” (Pennypacker & Cabanis-Brewin, 2003, p. 1). Providing the decision makers with both the relative strength of your project's business case against other options as well as the means by which to measure achievement will make your case clear and will streamline the selection process.
Project Portfolios and Selection Trends—Not Just “Good”…“Better”
Project portfolios must be linked to the strategy of the organization in order to be successful. In well-designed and well-operated planning and execution situations, strategic planning is used to define, at a high level, how an organization intends to carry out its mission and achieve its objectives. Essentially, all projects must be either mandated by regulatory or other authorities, or manifest themselves as supporting the objectives of the business strategy.
Many organizations will perform a first pass within the project portfolio to identify “discretionary” versus “nondiscretionary” projects. The definition of these terms can often be a source of great debate. Typically, nondiscretionary will be defined as an effort required by an internal (e.g., audit) or external (e.g., federal government) authority. It should be noted that simply being identified within the nondiscretionary category does not automatically assure project approval, as the requirement of the authorities can often be satisfied in different ways. Even within the nondiscretionary category, your project proposal must represent the best way of approaching the solution.
The discretionary portfolio will often have categories for project positioning and evaluation. This will enable equitable evaluation of like projects and an overall division of available resources across the spectrum of project types to support the business strategies. While some of the projects are major endeavors, such as the installation of enterprise management software, other projects are frequently grouped under categories such as new product development, expense reduction, customer service improvements, or IT infrastructure refreshment/enhancement. In the well-designed situation, the evaluation process for proposed projects is clearly defined and has specific criteria for project selection. The criteria for selection will often be on two levels:
- The first level is usually a standard set of evaluation criteria that applies to all projects. It typically reflects expected financial return and complexity and implementation risk evaluations. Examples of financial measurements are internal rate of return, payback period, and net present value. Project complexity and implementation risk evaluations are usually represented in a high/medium/low manner.
- The second level of evaluation criteria is usually specific to the category and may represent a mix of qualitative and quantitative measurements.
All of the evaluation criteria must be linked to the overarching business strategy. It is on these criteria that project sponsors and project managers must base their presentations to executive portfolio steering committees.
The Business Case as Part of the Project Life Cycle
Although some organizations commit to a project during an annual budget cycle (along with many other projects), more mature organizations employ a multi-phased commitment to project approvals utilizing phase gates or checkpoints. This process will also start with the budget cycle but will require additional governance for business case validation checkpoints at the end of the initiation and planning phases, as indicated in Exhibit 1.
Exhibit 1--Nominal Project Life Cycle (adapted from McGrath, 1996, p. 28)
In well-designed processes, information about candidate projects’ benefits will be prepackaged and made available to the portfolio committee prior to the formal meeting, so that ample time for consideration as well as an opportunity for clarification are provided before the formal decision process. In the Project Management Institute's The Standard for Program Management, benefits management is identified as one of three key themes and an integral part of the initiate phase. “A benefits realization plan is a critical component of the Initiate Program Process that includes intended interdependencies between benefits, alignment with the strategic goals of the organization, benefit delivery scheduling, metrics and measurement, responsibility for delivery of the final and intermediate benefits within the program, and benefit realization. Expected benefits should be defined in the business case on which the program is based…. The benefits realization plan for the program is based on this information and is the main output from the Initiate Program Process” (Project Management Institute, 2006, p. 35).
When a sponsor and project manager build their business case based on initial cost and schedule plans during the budget process and stop there, they miss an opportunity to improve the plan's cost and schedule---and potentially to achieve a superior rate of return---by evolving the plan during the initiation and planning phases. Note that although many organizations may not identify a project manager until the planning phase, both the sponsor and the project manager will be involved in the initial and/or refined business case for these checkpoints.
Preparing the Business Case: A Summary Checklist
Although much can be said about preparing a business case and how to format it, the following represents a short list of key considerations when preparing any project business case:
- Project Portfolio: Does your organization have one? What are the key evaluation criteria? If there is no formal portfolio management process, is there at least a clear and stable organizational “vision” statement or “strategic intent” against which you can align your project? (Hamel & Prahalad, 1996, p. 141)
- Product or Application Portfolio/Roadmap: Is your project addressing the part of the product or application portfolio targeted for future investment (or is it in the “sell” part of the buy/hold/sell portfolio)?
- Who's accountable for the business benefits realization? Will this be in scope for the project manager or the business sponsor? Does each party realize the commitments/accountabilities being represented in the business case?
- Where's the money really coming from? Many functional organizations support other areas that actually provide the funding. Look for the P&L source of funding and engage them for support before the formal presentation is made.
- Who makes decisions on project selection and what are their key objectives? Key executives typically have publicly known “critical few objectives” each quarter or year. What are they and how does your project align with them?
If your organization does not already have a standard template for project business case presentations, it should be considered. Project business cases that truly support the business’ strategic intent will benefit from an apples-to-apples comparison against other projects.
How to Communicate Project Proposals to Executives
In more mature portfolio management environments, a project manager is not always involved in the initial presentation of a candidate project during the selection phase (the “fuzzy front-end” illustrated in Exhibit 1) of the portfolio process. However, as indicated earlier, in many portfolio management processes, there will be multiple occasions for which a presentation to the portfolio management committee is required. In preparing for any project decision checkpoint presentation, you should:
- Clearly link the project to the portfolio performance selection criteria. If a project is not linked to preestablished criteria, then the portfolio committee would, in effect, need to set aside or bypass a considerable amount of thinking and effort already expended to define the criteria in the first place. In addition, the criteria link the portfolio process to the strategic planning activity and, ultimately, to the strategic intent of the organization. Thus, ignoring the criteria represents a significant “disconnect” with the organization's strategic intent.
- Know the competitive landscape. Other projects will compete for scarce resources. Your project must stand out and be better than the competition. If you intend to be better, it really helps to know the competition, so a bit of research is called for. Additionally, if your project has already been placed in the portfolio and you are presenting at a decision checkpoint, then the ranking of the project in the portfolio is a fact that you must know and be prepared to discuss.
- Know the relevance of the project to the audience. It's imperative that you know how the project fits into the personal thinking and measurement scheme of the portfolio committee members. Because all selection approaches allow for some “wiggle room” in the decision process, knowing the personal connections that may exist between your project and committee members can help you successfully position your project.
- Keep the presentation short, simple, and to the point. In presenting your project, consider “headlining” the project. That is, making your case in a very few (try 10 or fewer!) words and include the “why,” the “why now,” and the value statement (why is it worth the expense).
- Have supporting data available, but do not flood the presentation with details. For example, be prepared to discuss specific benefits, both hard and soft---the financial and nonfinancial impacts---and the synergies with other projects and programs. In addition, be prepared to address the impact of not pursuing or of delaying the project. The cost of delays, in particular, are fruitful ground for making a case, including the aforementioned synergies, legal mandates, competitive activity, and market place dynamics.
- Bearing in mind existing organizational procedures and norms, precirculate your case to the committee members. Exposing portfolio committee members to decision data for the first time at a committee meeting is a sure prescription for problems, especially if your project is controversial or in a competitive dog-fight for resources. Executives frequently prefer to review cases (and supporting data, as needed) when they have time to appreciate it. Asking for a decision on a tough question that committee members are hearing about for the first time, in the midst of what is probably a crowded agenda, is not a recipe for success.
Pitfalls Often Associated with Project Presentations
In many cases, perfectly good projects or project candidates have not-so-obvious negative factors that you need to look for and mitigate, if possible. In some cases, these negative factors may turn out to be good reasons to abandon a project, whether it is at the “fuzzy front-end” phase, or perhaps further along in the development cycle. Looking at such factors is akin to some dimensions of risk management, in that the negatives could be probabilistic rather than actual and, therefore, might be amenable to proper risk management. Thus, a balanced view of opportunity and risk is mandatory for credibility and life cycle success. Possible pitfalls include:
- A good project may not be the right project. Large benefits often require significant investment in both time and resources, and, therefore, you should look for the relative return as well as the timing of delivery of the benefits to see if resource availability or competition factors exist.
- Imbalanced cost and benefit analysis. Often, one part of the organization will have the expense but another component will realize the benefits. This could result in a divided portfolio committee, so it's important to understand the degree to which the funding organization can afford the project, is obligated to support it, and can handle the timing.
- Failing to identify the resource availability needed to complete the project. This is an often fatal flaw. If your organization has a mature portfolio process, resource availability will be a factor that you are expected to address, and the data for you to work with will be available. Even if there is no effective resource management process working in concert with the portfolio process, you can canvas the sources of resources that will be needed for your project and make a rough determination as to availability, as well as the competitive landscape. This knowledge may allow you to adjust your project plan to allow for the demands on scarce resources.
- Enhancing end-of-life products, applications, or infrastructure (e.g., waxing the car in the junkyard). In such cases, it may be possible to construct valid business cases, linked appropriately to the portfolio selection criteria. However, it's essential to understand that such projects typically do not rank high on the absolute priority list of the portfolio.
- Not identifying interdependencies or potential conflicts with other projects and programs. It's the portfolio committee's job to ensure that such conflicts are identified and, in appropriate circumstances, avoided. If you fail to perform the identification and accompanying risk analysis and the committee catches the mistake, then not only will your project be rejected but your personal credibility will suffer a blow.
- Accepting the business case before performing sufficient analysis. This is a situation that can arise in the early stages of a life cycle, but can be costly if the environment is immature. Iterative analysis and planning should uncover any deficiencies in the business case, and in a mature environment, the project manager and team should be empowered to raise the problem at a decision checkpoint and recommend either redefinition or killing the project.
In the end, effective project managers take the responsibility to gain a clear understanding of both the technical (as in triple constraint) and business cases for a project, and learn how to package that understanding in targeted and compelling presentations that allow them to be effective in gaining and maintaining support in the highly competitive internal landscape (Hamel & Prahalad, 1996).
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McGrath, M. (1996). Setting the pace in product development. Newton, MA: Butterworth-Heinemann.
Pennypacker, J., & Cabanis-Brewin, J. (2003). Why corporate leaders should make project portfolio management a priority: The business case for project portfolio management. Retrieved June 23, 2008, from http://www.primavera-aus.com/pdf/npd/PPM.pdf.
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© 2008, James H. Foreman and Paul Travers
Originally published as part of 2008 PMI® Global Congress Proceedings – Denver, Colorado, USA