Priority setting, part 2
a qualitative approach
|EXECUTIVE NOTEBOOK |
Although priority-setting is a subjective process, following this four-step program can reduce uncertainty and frustration.
In life, few things are constant; in a very real sense, planning is where it all begins in management. And, in life, reality dictates that time does not permit us to do all the things that our conscience or imagination tells us we might. Whether our week runs 40, 60, or 80 hours makes no difference, and the proportion of “can-do” to “might-do” remains small. Lyndon Johnson said that “the trouble with our country is that we constantly put second things first.” He may well have spoken for we Executives! If there is any consolation in this rationalization it is the knowledge that we are not alone in having difficulty establishing priorities. The difficulty is in how to determine which of the array of undone and emerging tasks is really first.
This month's article, written by Ken Mosteller, addresses a qualitative approach to priority setting. As you read this, consider last month's article on the quantitative approach: compare and contrast the similarities and differences in approach to the projects you are currently working on. Parts 1 and 2 of the Priority Setting Process should provide some clarity in your crusade to level the mountain of priorities growing on your desk.
Joan Knutson, Feature Editor
Today's business environment requires organizations to identify and prioritize projects. Typically, this approval is obtained through some type of process that compares the project objectives to the overall business objectives in order to ensure that the organization's scarce resources are being appropriately allocated. In last month's article a quantitative approach to project prioritization was addressed. The approach followed a rigorous process of identifying and weighing organizational variables in order to prioritize the projects being evaluated. This article addresses a subjective approach that also allows an organization to prioritize its projects; however, it is based upon answering only three questions:
- Is the project right for the success of the organization?
- Should resources be applied to this project versus some other project?
- Are there enough resources available to maintain day-to-day operations and complete the project?
This article presents a process that some organizations are using to answer these prioritization questions.
Before an organization can begin the prioritization process it must have a solid understanding of what is important to the organization and what resources (dollars and people) are available for project-related work.
Typically, the goals and objectives are documented in the organization's strategy and operating plans. These plans take several forms; however, they always contain a statement of the organization's short-term and long-term goals and organizational focus. The strategic plan takes a long-term view and may be the basis of capital-type projects, whereas the operational plan will be the basis of short-term, tactical projects. Both should be considered when prioritizing projects; however, the type of project will determine which plan is of a greater relative importance. The plans assist the priority-setting board in answering the first question: Is the project right for the success of the organization?
|Departmental rankings from Step 2:|
|Department A||Department B||Department B|
|Project A1||Project B1||Project C1|
|Project A2||Project B2||Project C2|
|Project A3||Project B3|
|Initial projects being compared:|
|Project A1||Project B1||Project C1|
|First project ranked overall:|
|Organizational Project 1 = B1|
|Projects being actively compared after first selection:|
|Project A1||Project B1||Project C1|
|At any one point in the discussion there will only be three projects being compared. For example, if Projects B1, B2, A1 and B3 were the top four organizational projects, then the three projects being compared would be:|
|Project A2||Project B4||Project C1|
The resource questions are more difficult to answer since the organization needs to simultaneously solve for resource availability and resource demand. This may sound simple; however, the basis of the total resource demand is a direct result of the type and size of projects being prioritized and the type and size of projects being approved is dependent on resource availability. In other words, the resource questions can only be solved as part of the prioritization process.
A Subjective Prioritization Process
Step 1. The first step is to ensure that all entities presenting projects to the priority-setting board have a clear understanding of the projects they are presenting and how the projects relate to overall business objectives and strategies. The identification and initial description of the project is the basis for determining whether the project is presented to the priority-setting board. At a minimum the Who, What, Why and high-level How of the project needs to be documented. There should be a direct relationship between the project's What and Why and the organization's strategic and operating objectives.
Step 2. Each organizational entity rank orders the projects they are interested in taking to the priority board. This ranking is a numerical ranking with no ties. It is not the process of identifying high-, medium- and low-priority projects, rather it is a rank order of project importance at a departmental level. The basis for the departmental ranking should be the same criteria that will be used at the overall priority board level, not a set of criteria unique to the department. The purpose of the departmental rank order process is to prepare for the organizational prioritization process.
Step 3. The organizationwide priority process takes the departmental rank ordering of projects and uses a forced comparison method whereby each department's current top-ranked project is compared to every other department's current top-ranked project. Each department has an opportunity to state its case as to why its project is important to the organization. Only the current top project is compared to the other departments' top projects at a time. From this limited list the priority committee selects one project as the top organizational project based on their collective opinion as to the overall value of the project to obtaining the organization's objectives. As one project is put in the overall organizational ranking that department introduces its next project, which is then compared to the current projects listed by the other departments. This process continues until there are no more projects to rank.
The process is subjective and allows arguments to be made for infrastructure-type projects that may not score well in a quantitative prioritization process, but may be important to the implementation of longer-term business strategies. Since the process is directly linked to the business strategies and operational plans, it also supports a quick adjustment to priorities as organizational strategies evolve.
Table 1 shows the forced comparison process for an organization with three departments prioritizing nine projects.
Step 4. Now that the organization's projects have been ranked 1 through x, the questions regarding resources can be answered. As previously stated, the answer is based upon resource availability versus resource demand. The cutoff used for final project approval is based upon the number of projects that can be supported given available resources.
If resource requirements have been defined as part of the project documentation, this question may be answered during the priority meeting. However, many organizations choose to refine project-level resource requirements after obtaining some type of organizational approval. In this scenario, a second prioritization meeting needs to be held where final resource estimates are presented. These “final” numbers are then used as the basis for determining the cutoff point for approved projects.
To support the priority-setting process, organizations should:
- Ensure buy-in to the process by involving key departments and individuals in its development.
- Use the organization's strategic and operating plans as the basis for making prioritization decisions.
- Establish a clear understanding with functional and project managers about how these priority decisions are going to be made.
- Establish a mechanism for revising and updating the process itself, including such issues as selecting new review board members and maintaining synchronization between the strategies and the prioritization criteria.
The multiple project problem is most clearly characterized by competition for resources and management attention. Decisions made by the priority-setting board will support functional and project managers in their efforts to effectively manage resources by focusing attention on the organization's most critical need and priorities. Although this process won't solve all of a multiple-project organization's challenges, it can save time and reduce uncertainty and frustration for project participants at all levels. ■
PM Network • December 1995