Many management teams today have a difficult time seeing the value of the organization’s projects and how those projects contribute to achieving the organization’s strategies and goals. At the same time, more and more projects are being completed on time and on budget-but perhaps not to the extent they had intended.
How can that be? Completing projects but not benefiting from them is the same as winning the battle but losing the war. If an organization is to succeed with its project activities, it must successfully negotiate the following steps:
In a series of articles I will touch on some of the aspects of these points. There is not enough room to go into the details of how it can be done, which is why I will concentrate more on the importance of successfully negotiating the points mentioned above. In this article I intend to cover the first three processes.
Companies, organizations, countries, and even people have always engaged in different projects-projects that were intended to create new values, changes, or benefits of some kind for some person, organization, country, or people. From the very beginning, individual projects were intended to conduct regular business, whatever that might be, in a better or new way. Ensuring that they were fully carried out was often the most important factor. Time and cost considerations were sometimes of secondary importance, especially in projects such as building the Great Wall of China, winning wars, or constructing a new opera house. Today organizations spend an ever increasing amount of their resources on projects; normal business is often managed today as a series of different projects. The line is beginning to disappear. It will become more important for these projects to succeed on all fronts.
Choosing the right project
Choosing the right project may seem trivial. No one would propose a project that is not the right project, would they? In order to answer that question, we must first consider what is right, that is what is right from an organizational perspective. The decision as to what is right is made by what long-term and short-term goals the organization has, and which strategies are in place. To be chosen and become a part of the organization’s project portfolio, the project must contribute to the goals and strategies. I would argue that a project that will deliver a very high yield should not be carried out if it does not also contribute to the organization’s strategic direction and goals. In order to choose this project, the goals and strategies should first be changed, and if you are not willing to do that then the project should not be started.
There are many examples of product ideas that did not lie within the company’s strategic direction and were sold to outside parties or carried out by a group of employees that started their own company where the product became very successful. Perhaps the strategy should have been changed to include this new line of business?
The number of examples of projects that did not support business strategies, but were still started, is even bigger. Often the combined total of the effects on the organization were negative and at times even devastating. The effects might be that the organization becomes sprawling and diversified and that more and more resources go towards coordinating the business. Other effects include spending enormous resources on projects that would either never be finished or not deliver any benefits equal to the cost even if they are finished.
To choose the right project, the organization has to have established goals and an established strategy. I would argue that practically all organizations have them even if they are not documented in nice sounding phrases and attractively packaged in glossy brochures. The way in which goals and strategies have been produced or, rather, developed over time is another question of great importance, not least for how wide-spread and accepted they are. This has been discussed in a variety of articles and books and will not be dealt with here.
Another aspect of choosing the right project is striving to have a balanced portfolio. The meaning of ‘balanced’ varies between different kinds of organizations and between different organizations in the same industry-it is an individual consideration. Essentially, balanced means not putting all your eggs in the same basket but instead distributing your portfolio in ways that include:
The first section of the points listed above must be in place to successfully navigate the second section. At the same time, you cannot focus solely on this because then there will be nothing to create the organization’s future and long-term survival. There has to be a balance.
Choosing projects and programs to be included in the organization’s project portfolio also means choosing those that will not be included. You cannot include all of them, and the organization also has to actively exclude the projects that will no longer contribute to its goals and strategies. Some projects may need to be excluded due to the fact that the organization’s goals and strategies have changed and the project has changed by shifting the scope, increasing costs, or falling behind on a schedule that has a ‘best before’ date.
In conclusion, the projects and programs you choose must correspond to the organization’s goals and strategies; otherwise, resources are being spent on areas that are not part of the organization’s area of interest and that will take resources away from the organization’s target business. The organization has to survive in the short term if it is to have a future, but to reach that future there have to be projects and programs that create that future and the organization’s part in it. There are a number of ways to weigh different aspects in order to determine whether a project should be included in the portfolio or not. It is important to do this in a consistent, conscious, and communicated manner.