6: The Evaluation Model



When life was simpler, projects could be assessed on their claimed return on investment (ROI). If the project was financially worthwhile (at the time of approval) and supported by some executive, it would be approved.

Projects tended to be approved in isolation creating problems at the portfolio level and when they came to be implemented.

So the evaluation of projects has become more sophisticated. Or has it?

A recent analysis of six major approved projects found that five should not have been approved in their current form. One was solving a non-problem, one was delivering a solution that was incompatible with the organization’s future direction, one was a project that was already off-the-rails! And so on.

Yet each of these projects had been evaluated by their divisional investment committees as well as the enterprise Investment Committee. The problem was that this (and most) organization did not have a clear and effective evaluation model.

Project perspective

From the project perspective, the first question is, “What’s the project’s value?” — why are we considering doing this project, what will we get from it? Obviously if the project fails on this test, it should not go any further.

The next question is, “Will we get the value?” — is the project too risky, too complex, too vague or mismanaged to deliver the value promised? The value proposition is only as good as its ability to be delivered.

Corporate perspective

Then the project needs to be assessed from the corporate perspective,

“Does it advance our strategy?” — is it relevant to what we’re trying to do, the problems we are addressing, the direction we’re taking? If not, why are we doing it?

Then does your organization have the capability to deliver the project “Can we deliver this type of project successfully?” The reaction to many a failed project is to start it again with a new team. But sometimes the reason for the failure is that the project is beyond the capability of the organization to deliver. If you don’t know your organization’s value delivery capability you can be wasting large sums of money on projects you’re just not able to deliver successfully.

Then you need to assess if you have the capacity to do this project — do we have the resources to deliver it, can the business absorb it effectively? Too much concurrent change reduces the actual value delivered as the staff become change-weary. Also, too many concurrent projects spreads key people’s attention and commitment too thin.

Can we do this project well? is the key question.

Portfolio perspective

Then the portfolio perspective is applied. “Does it fit with our existing portfolio?” — does it support other projects, can we accommodate it and implement it when due? A high-risk project by itself is not necessarily a concern, the fourth concurrent high-risk project IS a concern. So how a project fits with what is already in-flight or planned is important.

The final question, “Is this something we should do now?” — is it the most important, the most valuable project on offer? Is it worth the effort? What will happen if we defer or even stop it? This question also needs to be asked whenever the project is being re-evaluated for continued funding. Just continuing to do a project because you’ve started it is not a valid basis at all. It is better to cut your losses and reapply the remaining funds to a higher priority project.

Validation

Asking these questions plus subjecting projects to a thorough validation process, your evaluation process will cull irrelevant projects, projects you cannot do, projects that overload the organization and refocus your investment funds onto the projects with the most value and likelihood of success.

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Revision History

First published: Simms, J. (Mar 2008) as "6: The Evaluation Model"

Updated: Chapman, A. (March 2020), Revisions and Corrections