Project Management Institute

A closer look

Like a portfolio of investments, some projects warrant additional resources, while others should be cut. These tough decisions should be based on a thorough analysis of the strengths, weaknesses, opportunities and threats (SWOT) of each project in the context of your business environment.

By conducting an objective analysis, you can exclude emotional factors, such as a personal attachment to a pet project, from your decision-making. With a SWOT analysis, you also can ensure that your decisions will hold up to the scrutiny of disgruntled stakeholders and will enable you to support the most profitable projects at the opportune time.

From the Top

Begin your analysis with the big picture in mind. Every project in your portfolio should support your organization's vision, mission, goals and objectives. A matrix (such as shown in Table 1) can visually link your individual projects to your organization's strategy. Your SWOT analysis will include:

To truly keep ahead of the competition, use a project SWOT analysis to make better portfolio business decisions.

image
image

Strengths, which improve a process, increase efficiency, drive down cost, gain greater market share or elevate customer satisfaction—basically any aspect of your project that supports your organization.

Weaknesses, which do not support the strategy, such as obsolete technology, limited scalability and commodity pricing.

Opportunities, or options, which are the potential for a project to enable or add value to your company.

Threats, which are problems that may hinder your strategy. These issues can be internal or external to your organization, political as well as technological. Threats are relative to the size of a project and should be evaluated in the context of your business environment. For example, a project to develop a fuel cell should take into account the extensive research currently underway to determine the most efficient chemical composition. Until a standard evolves, there is the potential threat of a more efficient fuel cell winning market share. Public opinion on the safety of fuel cells also could limit their application and adoption rate.

Measuring Your Results

Once you place projects in a SWOT matrix, you can apply quantitative metrics to your project portfolio using a 10-point scale in each of the SWOT categories. For example, a project with a perfect strength score—the effort could accomplish great things—would receive a 10. A perfect weakness score indicates the project has few or no flaws. A 10 in the opportunity score means the project may enable great things, while a perfect threat score implies the project has little or no threats.

A three-point multiplier can increase the differentiation among projects. For example, if you value project strengths highly, you would multiply your strengths score by three. Similarly, if you do not value low weakness as an important portfolio factor, you would multiply that score by one. Multiply those factors that are equally important/not important by two.

Last, projects within a portfolio are ranked from the highest SWOT score to lowest—the higher the score, the greater the value and probability of success. Projects with a low score either should be re-scoped or cancelled.

Executives with General Electric Power Systems (GEPS), headquartered in Atlanta, Ga., USA, evaluated the firm's portfolio during a recent high-technology project to develop and deploy a collaborative design-engineering application.

Emerging Technology

At GEPS, the emerging technology, which would enable engineers across the world to collaboratively design a product in synchronous real-time, meant to revolutionize the global product development process. GEPS’ e-Engineering general manager spearheaded the project to develop and deploy this new technology, and GEPS executives sponsored the initiative, while GE Capital made an initial investment of $3 million. Along with several high-profile venture capital investors, the executives at GEPS and GE Capital felt like the upside clearly outweighed any potential risks.

It didn't take long for an “A-team” to compile and begin work. The goal was clear: Deploy the new technology across the enterprise to work out the kinks and mature the product, then market the product to GEPS partners for a percentage of the revenue and potential windfall from a possible Initial Public Offering (IPO).

The project began with great expectations. The team created a promotional video with interviews of all the stakeholders, and marketing collateral was distributed across the enterprise. Press announcements were released, and meetings were held with investment analysts eager to understand this new technology's potential.

The SWOT Method

Needless to say, everyone was concerned when, three years later, the project stalled without gaining a foothold at GEPS. Optimists and pessimists debated whether to invest more resources or cut the project. Emotions were high, and proponents of several other high-profile projects, such as e-Bill of Material (BOM), sought additional resources.

Working with an outside consultant, GEPS examined if the project could be salvaged. Using a SWOT analysis matrix, the team created a bulleted list of strengths, including engineers’ ability to design a product in synchronous real-time over the Internet using multiple computer-aided design systems with varying math kernels. The strengths garnered a score of 10. Because this strength was valued, the firm multiplied the score by 3.

Next, the team reviewed the project's weaknesses, including stripping parameters from the engineering solid model, an automatic—albeit slight—geometric modification to the solid model during translations and a Windows operating system requirement. The majority of GEPS’ engineers were using UNIX systems with long-term leases. Weaknesses were significant and justified a score of 2. Again, because the team wanted to invest in projects with low overall weaknesses, the score was multiplied by 3. However, many of the weaknesses identified were actually due to the processes and computing environment of GEPS. These same weaknesses would be considered strengths in a different organization.

Next, the team worked to uncover opportunities the new technology would provide, including the potential to significantly increase the IPO equity investment and gain sales revenue from GEPS partners if the system became an industry standard. The opportunities were good, but not highly probable given the technology's prior performance in the GEPS context, so the team decided on a score of 7. However, opportunities were not highly valued, so the score was multiplied by 1.

Last, the team brainstormed both the internal and external threats of the project. Internally, the project had lost support and was viewed as a sinking ship. Externally, other companies such as EDS had introduced similar technologies over the prior three years. What had been an advantage was quickly turning into a commodity marketplace, as high-end application providers developed collaboration technology designed to optimize their particular systems. The threat score was a 3. Keeping threats out of the picture were neither highly prized nor to be avoided, so the team multiplied this score by 2.

image The SWOT analysis allowed executives to evaluate objectively an emotionally charged project and ultimately encourage a better business decision.

Objective Decisions

The results did not look promising. The total SWOT score was only 22 (10 + 2 + 7 + 3), with a weighted score of 49 (30 + 6 + 7 + 6). Typically, any project below a weighted score of 50 (using a 3, 3, 1, 2 weight scale) was cut. The projects falling between 50 and 90 were divided into four groups, with the higher scored projects getting the most consideration.

A formal review of the SWOT analysis was presented to the GEPS senior management team. The analysis revealed the technology was, in fact, promising for smaller companies with flexible processes, but not a good fit for a large enterprise like GEPS with fully mature processes. In other words, the collaborative design engineering application was a fantastic product, but GEPS would have to make enormous process and computing environment changes to utilize the technology.

The application presented equally impressive options. Based on the relatively high score of 7 for opportunities, the current equity position was a reasonable long-term investment, but the project to develop and deploy the application across the GEPS enterprise was cancelled.

The SWOT analysis allowed executives to evaluate objectively an emotionally charged project and ultimately encourage a better business decision. GEPS’ initial interest in the collaborative design engineering application proved to be well-founded, but it took a lot of trial and error and a thorough SWOT analysis to realize the project was not the most profitable at the most opportune time for GEPS. PM

 

John R. Maculley Jr. is a staff systems engineer for the Center for Systems Management, headquartered in Herndon, Va., USA, and an executive consultant at the NASA Academy of Program and Project Leadership, Washington, D.C.

Take Advantage of PM Network's Pass-Along Value!

Have you found an article in PM Network you'd like to use as a presentation tool? Would you like to distribute a project management article as part of a newsletter?

Contact the Project Management Institute (PMI®) for information on reprinting articles (reprint@pmi.org) and permission to distribute them (permissions@pmi.org).

Plan for Increased Business!

Your best opportunity to reach project managers is to advertise in PM Network-both online and in print. For more information, contact Richard Barwis (adinfo@cornerstone-media.biz), Cornerstone Media, at 215-540-9447.

This article is copyrighted material and has been reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK | JULY 2003 | www.pmi.org

Advertisement

Advertisement

Related Content

Advertisement