Mastering Portfolio Management with Project Online 2/5: Create Driver Prioritization

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When strategic goals are grouped into categories (for example based on a balanced scorecard) and business drivers are derived from the strategy, we need to create driver prioritization. This will allow us to design a desired portfolio constellation that we can work on when analyzing portfolios.

Purpose and goal of driver prioritization

Prioritizing a set of business drivers puts them in a hierarchical order to determine the strategic importance of projects relative to the overall portfolio. While technology is supposed to be a decision-support aid, it frees up the mind of the decision makers from repetitive discussions. Usually, those revolve around the importance of the business goals and come when the portfolio is is analyzed. This is detrimental, as the organization gets distracted and adjusts the portfolio to the dynamics of corporate culture (and internal politics), instead of maximizing the value of the portfolio.

The prioritization of business drivers can be based on a balanced scorecard (as described in part 1) or an exercise of organizational learning. The latter can be accomplished in a workshop setting after defining the business drivers. As an output, the approach to categorizing strategic objectives might be subject to review. Discussions around priorities can reveal new opportunities.

Finally, driver prioritization helps executives to focus on the content of the projects and qualitative aspects of individual projects, rather than running numbers manually. This saves a fair amount of time in the process of portfolio management.

Reviewing driver prioritization

Driver prioritizations should be reviewed in the same cycle as business drivers because they adhere to the same rules. It is worthwhile to stress the need for discipline in reviewing the business drivers and prioritizations. While business drivers logically derive from the respective strategy, prioritizations are based on subjective weighting and rely on the leadership style of the executive(s) in charge. This is a highly systematic and well-defined process, and discussions around that should be started with care. A portfolio analysis aims at adjusting the portfolio performance without the need to change the strategic priorities. It would dilute the goals and invalidate the original baseline taken when the priorities were set.

To optimize portfolio performance the executive or the governing body needs to create a balance between the goals, cost and resources. The business driver prioritization helps us to analyze the portfolio from a strategic perspective. The strategy analysis is an integral part and a precursor to balance cost & resources with the projects in the portfolio.

Portfolio Triple Constraint

Figure 1 – Portfolio Triple Constraint

 

Exercise 1: Determine the number of prioritizations

Depending on the organizational structure, there might be the need for more than one set of driver prioritization for an organizational entity. Figure 2 shows an example, where the budget of the CMO is required to be controlled by different governing bodies. Setting the other prioritizations aside, there are three perspectives on the project portfolio in the annual project portfolio of the marketing unit.

Driver Prioritization Hierarchy

Figure 2 – Driver Prioritization Hierarchy

How many prioritizations are needed is a matter of project sizes, volume and the dependence on other departments. In complex situations it is good practice to provide multiple portfolio analysis for one organizational entity on the basis of different driver prioritizations. This can quickly eliminate unhealthy scenarios and facilitate a discussion from different perspectives, rather than arguing on a high-level about estimations of business benefits.

Exercise 2: Identify driver prioritization

Guiding questions to help identify sets of driver prioritizations include:

Creating the primary prioritization set

  • Which business drivers are relevant to reach the goals of our entity?
  • Are all business drivers in this mix situated on the same organizational level?
  • Do the business drivers have similar times of validity? (e.g. short-term, mid-term, long-term)
  • Will we cannibalize efforts of colleagues by including a business driver that is exclusive to another organizational entity?

Creating the secondary & tertiary prioritization sets

  • Are multiple people heading this organizational unit? (each one might have her/his own prioritization needs)
  • Are there multiple procedural initiatives involving multiple organizational entities? (e.g projects between product groups to unify standards; projects between sales, marketing and HR, …)

Option A) How to create driver prioritization in Project Online: Organizational learning method

To create a driver prioritization in Project Online click “Driver Prioritization”.

 

Navigate to Driver Prioritization Overview

Step 1 – Navigate to Driver Prioritization Overview

You will see a list of driver prioritizations with metadata information. Be aware by whom and when driver prioritizations have been recently modified. It might hint an adjustment (or if abandoned disconnect) from the strategy of the organizational entity that you are designing the project portfolio for.

Click “New”.

Driver Prioritization Overview

Step 2 – Driver Prioritization Overview

Name the driver prioritization and enter a precise description. Select the prioritization type “Calculated”. Then, select the business drivers that you want to prioritize in this set. Consider the necessity of certain business drivers and if they are necessary for this set. Keep it as simple as possible. One set should have one purpose of analysis. If the portfolio is very complex and scattered, it is wiser to create multiple sets and analyze the portfolio from different perspectives than mixing everything.

When ready, click “Next: Prioritize Drivers”.

Create New Business Driver Prioritization

Step 3 – Create New Business Driver Prioritization: Define Properties

Determine if the business driver on the left is much more important, more important, as important, less important or much less important than each of the business drivers on the right.

Pairwise comparison

Step 4 – Pairwise comparison

Through pairwise comparison the next screens will eliminate a choice one at a time.

Pairwise comparison

Step 5 – Pairwise comparison (continued)

Finally, review the calculated prioritization. It should match the goals of the organization. Also, make sure that the answers were consistent. If consistency falls below 85% consider redoing the exercise.

Review calculated priorities and consistency

Step 6 – Review calculated priorities and consistency

Option B) How to create driver prioritization in Project Online:
Manual weighting in percent

Click “Driver Prioritization”.

Navigate to Driver Prioritization Overview

Step 1 – Navigate to Driver Prioritization Overview

You will see a list of driver prioritizations with metadata information. Be aware by whom and when driver prioritizations have been recently modified. It might hint an adjustment (or if abandoned disconnect) from the strategy of the organizational entity that you are designing the project portfolio for.

Click “New”.

Driver Prioritization Overview

Step 2 – Driver Prioritization Overview

Name the driver prioritization and enter a precise description. Select the prioritization type “Manual”. Then, select the business drivers that you want to prioritize in this set. Consider the necessity of certain business drivers and if they are necessary for this set. Keep it as simple as possible. One set should have one purpose of analysis. If the portfolio is very complex and scattered, it is wiser to create multiple sets and analyze the portfolio from different perspectives than mixing everything.

When ready, click “Next: Prioritize Drivers”.

Create New Business Driver Prioritization Manual

Step 3 – Create New Business Driver Prioritization Manual

Enter the percentage for the business drivers manually. Priorities can be determined on an ordinal scale, as normalization will distribute the percent allocations evenly.

Create New Business Driver Prioritization Manual Percentage

Step 4 – Create New Business Driver Prioritization Manual Percentage

Once you are contend that the prioritization reflects the business strategy, click “Save” and then “Close.

Create New Business Driver Prioritization Manual Review

Step 5 – Create New Business Driver Prioritization Manual Review

Summary

Business Drivers prioritizations are sets of business drivers in an order of importance to the strategy of the organizational entity. They depict a consensus between multiple stakeholders forming a governing body, a joint venture between departments, or an accountable executive in charge of the portfolio. Multiple sets of driver prioritization for a single organizational entity can open up different perspectives on the same set of projects and facilitate decisions during portfolio analysis. Senior leadership is accountable to make sure that driver prioritizations are only reviewed when necessary to avoid circular, unproductive discussions. Project Online helps with prioritizing business drivers through pairwise comparison. As an alternative, business drivers can be prioritized manually.

Key Takeaways

  • Driver prioritizations aligns the portfolio under analysis with goals of the organizational entity.
  • Multiple driver prioritizations for a single organizational entity can support analysis from different viewpoints and facilitate decision-making.
  • As an exercise it is good practice to calculate business drivers through pairwise comparison. This leads to productive discussions and oftentimes reveals hidden opportunities and re-prioritization of objectives for clarity purposes.

Q & A

Q: I don’t see the “Driver Prioritization” on the left side. What can I do?

 

Q: How do I use a driver prioritization for a specific department?

A: You need to define departments and assign the business driver only to the department that is allowed to use it. Be aware that one set of driver prioritizations can have only one department.

Assign Driver Prioritization to one Department

Assign Driver Prioritization to one Department

Assign Driver Prioritization to one Department

Assign Driver Prioritization to one Department

Assign Driver Prioritization to one Department

Assign Driver Prioritization to one Department

Discussion

Portfolio Management and the definition of it’s goals is a very sensitive and challenging topic. In the course of this post I’d like to spark some thoughts and appreciate if you could share your experience. The topics are not restricted to, but include, the following:

  • Which methods in workshops are you using to create driver prioritizations?
  • Do you have multiple perspectives from a strategy viewpoint on one portfolio?
  • Are there ongoing conversations about the wording and interpretation of driver prioritizations?
  • How frequent does your organization revise driver prioritizations?
  • What alternate methods are you using to name and describe driver prioritizations? (e.g. by product or service line, hierarchy, subdivision, …)
  • How is the power play between major stakeholders in the process of defining priorities of business drivers? Where lies the decision-making power?

Slides

LinkedIn

https://www.linkedin.com/pulse/mastering-portfolio-management-project-online-25-create-marciniak

By | 2017-11-17T11:30:36+00:00 January 11th, 2017|Categories: Business Drivers, Portfolio Management, Project Online, Strategy|Tags: , , , , , , , , , , |Comments Off on Mastering Portfolio Management with Project Online 2/5: Create Driver Prioritization

About the Author:

Jakub reduces complexity and increases productivity in Projects and Portfolios for Fortune 500 and DAX 30 companies through educational methods and analysis of people, processes and technology. As a Solution Consultant he guides efforts on digital transformation. He further raises awareness in NGOs for Project Management to build sustainable solutions with a focus on strategic partnerships. Jakub is especially passionate about thought leadership in the areas of Demand Management, Portfolio Analytics & Selection, Business Intelligence & Reporting as well as Resource Management.