Making Project Portfolio Decisions—And Getting Buy-In
Transcript
STEVE HENDERSHOT
When it comes to making strategy a reality, projects are critical. Project leaders must be able to look across portfolios to determine which projects will deliver the most value.
There’s a lot riding on the decision to pursue one project instead of another—and there are often highly invested stakeholders to contend with. That means communication and securing buy-in can be nearly as important as the decision itself.
B. FIRAT DENGIZ
Life is not so easy, therefore, making [a] sound decision is not so easy. One of the most important tools that a project or portfolio or even program manager have is communication. The way you communicate and the information that you put into this communication will be the key. When you demonstrate that the projects or the portfolio of projects [are] delivering good results, then they will start thinking like you, and they will start thinking about your approach to their strategic objectives.
NARRATOR
The world is changing fast. And every day, project professionals are turning ideas into reality—delivering value to their organizations and society as a whole. On Projectified®, we’ll help you stay on top of the trends and see what’s ahead for The Project Economy—and your career.
STEVE HENDERSHOT
This is Projectified®. I’m Steve Hendershot.
Organizations that have to make decisions about which worthwhile projects to pursue have a good problem on their hands. This is what you want, after all: lots of good ideas, lots of proposed solutions to the challenges you face. That said, organizations have to make decisions to prioritize some projects over others, giving some the green light while either delaying or rejecting others. And that calculus can have a big impact not only at the level of the teams or departments pushing these various projects, but it can also affect the trajectory of the organization as a whole.
So, what’s the secret to choosing wisely? Today we’ll ask two project leaders—both of whom have the PfMP certification from PMI—exactly that. You heard earlier from B. Firat Dengiz, a program leader at Turkish Aerospace Industries. We’ll talk with him later, but first, Projectified®’s Hannah LaBelle spoke with Sunando Chaudhuri, the director of IT and a member of the project management office at the Abu Dhabi National Exhibitions Company Group, also known as the ADNEC Group. In his PMO role, Sunando works with senior leadership to strategize which projects best align with the organization’s strategy, goals and objectives.
MUSICAL TRANSITION
HANNAH LABELLE
What strategies are you using when it comes to prioritizing projects, and what metrics help you make those calls?
SUNANDO CHAUDHURI
We prioritize projects to really show what business value it can deliver. When I say “business value,” what does it mean? Sometimes ROI comes into the picture, but I think if you look at a longer term, I would consider it as a business value than just an ROI. And when you say metrics, how do you calculate value? There are some easy metrics, and there might be some slightly more difficult metrics. So things like, say, profitability or penetration of new markets, stabilizing of workforce, increase utilization—these are fairly straightforward metrics. You can measure them, monitor them, increase them, improve them, and projects can be identified or strategized using them.
However, if you look at slightly different kinds of metrics—things like customer satisfaction—this is a hard one. This is a very difficult measuring criteria. I know it can be put in a number, but what’s really the customer satisfaction, goodwill or reputation? These kinds of things are also difficult. You look at all of it, depending on what kind of a project we are looking at. And, [at the] end of the day, I think it’s: What’s the value that’s going to be delivered? What kind of stakeholder focus is there? What kind of innovation it’s bringing in?
HANNAH LABELLE
So what are the biggest challenges to prioritizing project portfolios?
SUNANDO CHAUDHURI
I would say [there are] two of them typically that I see in most cases. Number one is a lot of the time, projects get into an implementation phase very quickly without doing due diligence. The other one that I have noticed a lot in my career has been personal agendas or needs instead of prioritizing over value to the business. A lot of the time pet projects are there where senior members think that’s the most important project they want to achieve during maybe a financial year or the next two years, and they really, really go ahead and try to sell it across the business and then push for it.
HANNAH LABELLE
What are some ways portfolio leaders can overcome these challenges?
SUNANDO CHAUDHURI
For the due diligence part, I think there’s always a tendency to get on and start delivering because that’s what looks nice, where you start seeing some outputs, instead of really investing an amount of time there. If you look at a lot of technology projects, a lot of them fail. When I say “fail,” maybe they are called successful, however, they don’t deliver the promised value that they would have intended to because they were rushed into. They were not really thought through. So you invest in money, invest in people, invest in everything else, just to do something which could have [been] done in a very, very minimal cost if time was created upfront.
And about blind spots on pet projects and all—it’s a case of you’d have to eliminate them or to show the real value. I think sometimes a longer-term ROI helps to show them, or you compare against certain projects. This is something I’ve used quite often, which helps to not prioritize a pet project against something else. When you start showing the value against one another on various parameters, whatever is your driving criteria, it sometimes gets kind of pushed back and it’s not taken. Another thing that I think can be done is if you start showing the risks that might come up. For a pet project, typically if there is a blind spot, if you start showing the risks, if you start showing the potential pitfalls that might come up early, then there’s a chance that [you] might be able to mitigate it before you have to embark on the project.
HANNAH LABELLE
Say you’re looking across the project portfolio. Okay, you know what you want to prioritize. Now, the next step: How do you build buy-in from the C-suite and executive leaders to move forward with your prioritization decisions?
SUNANDO CHAUDHURI
There has to be not only a KPI-based, but [also] a value-based, approach where you identify what any project or program is going to deliver. A linkage with the strategy and the goals and objectives is extremely important. All these things have to be highlighted upfront. When you try to convince a group of C-suite or senior execs, if there’s a project which can really deliver value across the business, I think it’s very easy to convince anybody.
Goodwill also works. If they have seen that as a PMO function or as a project manager or a program manager you have been able to deliver, and you’ve shown that these kind of projects would deliver value in the past, that can also help. So, what is the short-term, medium-term, long-term value that’s going to be delivered? How would it meet the targets? How will it build on something maybe that’s already there? As long as you can showcase this, you would be in a position to provide enough justification and confidence.
HANNAH LABELLE
Why is project portfolio prioritization so critical for organizations? And how does a well-prioritized portfolio deliver more value?
SUNANDO CHAUDHURI
A well-prioritized project portfolio can only be delivered when it’s completely aligned with the strategy. Because [at the] end of the day, an organization’s strategy would deliver excellence, value, longer-term goals, look at the bigger picture. If you do not prioritize your projects and programs to be aligned with the strategy, then you’re not actually answering the why.
I personally think it’s extremely important to list down everything, prioritize what is going to deliver business value—it can be short-term, medium, longer term—and then what’s important to the organization? Is it customer value? Is it human capital value? Is it purely financial targets? Is it you’re trying to develop trust, maybe innovation, stakeholder focus, strategic thinking? Anything that comes out as your key strategic objectives would determine what’s your prioritized set of projects or programs. Because if that’s not the case, then you’ll never be able to deliver your strategy or your mission, vision, goals. You need to understand why you’re delivering, and if you can answer why you’re delivering, it would definitely be with the organization’s strategy.
MUSICAL TRANSITION
STEVE HENDERSHOT
One big driver in decisions about which projects to prioritize is: Which will deliver the greatest business value? But what does that look like in practice—how do you compare a modest-but-meaningful project with a high likelihood of success with a moonshot that may fail but could also have transformative implications? I asked B. Firat Dengiz, a program leader at Turkish Aerospace Industries in Ankara, about how he approaches these critical project portfolio decisions.
MUSICAL TRANSITION
STEVE HENDERSHOT
Tell me about your process—the criteria you’re looking at when evaluating different projects, and the way you blend all of those inputs when making a decision.
B. FIRAT DENGIZ
All over the years of managing the project and portfolios and the programs in my career, one of the challenges that I have is the prioritization of any component of my portfolio or program. I had several prioritization models. They have some common aspects for analyzing their contributions to the organization’s strategy. One of the most common aspects was their values. It’s common to use a multi-criteria analysis for the prioritization, having both tangible and intangible criteria like cost of the project, continuity of the current work, resource consumption, and availability of the resources, and on top, the value which those components deliver.
When I talk about the value, I mean the benefits that the project brings to the organization. Also, an important criterion is the transition of that benefit into indigenous products or platforms that the organization designs and manufactures. Then, of course, the business case comes to stage. The value of that project needs to support a valid business case. The business case does sure have to have monetary values, like return of investment, like net present value, et cetera. But some values, like ease of manufacture, like improved quality, are also important actors when calculating the business case.
STEVE HENDERSHOT
What role do stakeholders play in this process? Do you factor them into your decision-making or try not to think about those dynamics?
B. FIRAT DENGIZ
I’m running my portfolio and programs under a matrix organization, therefore, I strongly depend on buy-ins of the higher-level executives and functional leaders, as well as the customers. One of the most important skills for a program or a portfolio manager like myself is to engage the stakeholders into their program or portfolio.
I try to make them into my decision-making process to understand their attitude and their approach to the projects or project portfolios. And then I try to explain what are the benefits, what are the values that they would like to gain from that project. Therefore, in order to let them understand what the project [will] bring them, I need to understand what their expectation is. And then I constantly work with the stakeholders, including the C-suites and the customer. And then I introduce the project to their values and their expectations.
STEVE HENDERSHOT
How do you compare projects with different risk/reward profiles? I’m thinking of a case where one potential project might make a modest impact but also has a high likelihood of success, versus a big, moonshot-type project that has a higher risk of failure but could be transformative if it works.
B. FIRAT DENGIZ
It really depends on the values that they are bringing. I would like to introduce the cost and the benefits that we would like to gain from those projects, even though it is a high-risk project or a low-risk project. Then this cost-benefits ratio comes into play to understand what will be the benefit that I get from this project in terms of the cost that I need to carry on. From this point, I rely on the stakeholders or the organization’s culture about their risk appetite. If the organization is risk-aware or having a high-risk appetite, then those projects having a higher risk, but high revenue or higher value, have some priority. Therefore, it depends really on the organization’s culture based on the risk appetite.
STEVE HENDERSHOT
What are the most significant obstacles to making project prioritization decisions? Are there any soft spots in your process, and if so, how do you make sure to account for those?
B. FIRAT DENGIZ
There are several challenges when you try to make a reliable and sound decision. When you are calculating the business case, you need to put some estimates. Coming from the nature of the estimating process, every estimation has a risk on it. To overcome or at least minimize that risk, historical data plays an important role. Even though I trust the historical data collected by my organization, I double-check them for two main topics: first, relevancy of the data, if it can be scaled. And second, cleanness of the data, what it includes and what it excludes. In this kind of a disruptive economy all over the world, also the inflation rates, the currency exchange rates, as well as conflicts which endanger the smooth supply of the resources, like critical raw material, also play an important role. To overcome the negative impacts of these uncertainties, I closely follow the global and local reliable analysis reports. They drive me to provide a sound decision.
The most important soft spot of any decision-making process is people, from my belief. When people don’t know what their role is, it makes it difficult to engage in the discussion productively, as they are not sure whether their opinion is valid or wanted. To overcome this, I try to make sure everyone knows what their role in the decision [is] and whether I’m waiting for them to decide. Those making the decision should be the ones to discuss it, allowing them to fully understand the options and make the more informed choice.
STEVE HENDERSHOT
Once a decision to pursue a certain project is made, how do you go about building buy-in from the C-suite?
B. FIRAT DENGIZ
The key is simplicity. Their time is extremely limited, and their focus is constantly shifting. Therefore, they need some comprehensive information. First, I analyze their expectation for my portfolio and projects. Then I explain [to] them what the impact of the decision to their expectations will be and the value they will obtain. If they need some more insights, of course, I have my preparations with me to give them more facts and figures. Also, sometimes, based on their expectation analysis, I need to perform some personality type analysis. Majority of the C-suites that I work with need in-a-nutshell information and would like to go directly to the point. For those type of C-suites, simple and on-the-point information will ease the buy-in.
However, sometimes I need to spend more time to get buy-in. They need to be excited. Therefore, I need to show them both the direction that the project will drive the organization and the outcomes when we deliver the project. Those outcomes have to have both tangible and intangible facts and kind of figures. Making C-suites buy [into] your decision may be even harder than making the decision itself. In order to overcome this dilemma, I try to include the C-suites during the decision-making process. The more they are in the process, the more possibility to ensure their buy-in.
MUSICAL TRANSITION
STEVE HENDERSHOT
We tend to think of project success in terms of execution. But just as important is ensuring that you’re pursuing the right projects—those that can be completed successfully and that will deliver maximum value. The leaders who master the art and science behind those prioritization decisions are putting their teams and organizations on a path toward sustained success.
NARRATOR
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