However, this is not an easy evolution for most organizations given the size and complexity of their project portfolios. With a small portfolio size, a governance committee could use pair-wise comparisons to order the projects, but the significant effort involved in applying this methodology to fifty or a hundred projects reduces the benefits and applicability of this approach. Scoring models are another commonly used method that can be used to prioritize portfolios â€“ the challenge with these is that scoring of individual factors is often done subjectively, and it is difficult to guarantee a lack of bias from the analysts that are performing the scoring.
Instead of just relying on financial portfolio management theory which emphasizes the use of key performance indicators as a prioritization method, perhaps we can apply some lessons from modern consumer marketing theory?
In her book, The Art of Choosing, Dr. Sheena Iyengar explores a common consumer paradox â€“ we like the idea of choice when selecting products, but we overestimate our capacity to effectively manage those choices. Faced with too many product choices, the actual task of choosing causes us stress or pain instead of the pleasure that one would expect. Given this, four approaches are suggested which can be adapted to project prioritization.
- Cut the number of options â€“ It will be easier to prioritize 10 critical projects than 50. Of course, this requires more discipline in selecting which projects will be accepted now, and deferring all others.
- Create confidence through expert recommendations â€“ While scoring models must not exclusively be used to prioritize project portfolios, they can â€ścaptureâ€ť expert opinions and could be a valuable input into a governance committeeâ€™s discussions.
- Categorize your offerings so that the consumers better understand their options â€“ This is a basic principle of project portfolio management as this categorization or classification can facilitate multi-dimensional analysis which in turn can increase the likelihood of balanced decision making.
- Help consumers by gradually introducing complexity â€“ While a governance committee might be overwhelmed if asked to prioritize 50 projects during their first review meeting, starting them off with a handful of projects and then slowly increasing the number as their confidence and capabilities improve might be a better approach.
Bringing objectivity to project prioritization can be an arduous task, but exploring and applying the lessons from other business disciplines may help to ease your governance committees through this transition.
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