Many organizations struggle with how to prioritize their projects - how to objectively select the highest priority projects that are strategically relevant, worthwhile, doable and which are required to be done now. Yet project prioritisation is really quite simple.

Many organizations struggle with how to prioritize their projects - how to objectively select the highest priority projects that are:

  • strategically relevant,
  • worthwhile,
  • doable and, 
  • required to be done now. 
Yet it really is quite simple.

BUT there is a prerequisite – that the ‘powers that be’ in the organization accept up-front that prioritization means that some of their projects will not be approved or be actioned.

Many executives will accept the need for project prioritization – so long as it doesn’t impact their pet projects!

This acceptance of potential pain, of the potential loss of a desired project is where many prioritization processes fail – they just don’t have the commitment of the senior executives. The best solution to this is to get the CEO on side and committed – to ensure the rest follow.

Assuming you’ve got the commitment, the prioritization process is a sequential series of criteria. Failure on any one criterion is not necessarily fatal; failure on two or more usually is fatal. There are seven criteria.

1 Is it ‘Mandatory’?

The ONLY projects that are ‘mandatory’ are those required by legal or regulatory change. Many other projects may be ‘necessary’ but not mandatory. The replacement of a failed server, for example, may be urgent and necessary, but it is not mandatory.

Mandatory projects don’t get a free pass. The key questions for mandatory projects are

1 Can we use this mandatory requirement to create an opportunity for business improvement?

2 If not, what is the lowest possible investment required to be compliant?

A legal or regulatory change can be used as the opportunity to make other changes in the business. However, if this approach is taken, the additional investment needed to define, develop and deliver these additional changes needs to go through the whole prioritization process to ensure it is worthwhile.

Where compliance is the only goal, then the key question is how cheaply you can achieve this. In one organization IT estimated that to meet a new legal requirement would cost $5 million. The solution adopted was a $30,000 data extraction program supported by a temp typist who would produce a spreadsheet once a month – a total annual cost of less than $100,000. Very unsophisticated but also very low cost.

Where a project is being justified as ‘mandatory’ it must also justify that it is proposing the lowest practical delivery cost.

2 Is it relevant?

It makes sense that you should only be doing projects that deliver your strategy. Yet, in our research we have found that at least 15% of projects being done are strategically irrelevant; others have found up to 80% of a portfolio’s projects to be strategically irrelevant – especially when you analyze all of the enhancements and upgrade work.

The primary problem here is that most organizations have a bad-to-appalling process for measuring strategic relevance. From worse to best, the common strategic relevance measurement processes are:

1 Tick one box – from a choice of six or so ‘strategies’ the project must tick one box (only) to identify the strategy it most aligns to. So vaguely relevant and strongly relevant projects score the same degree of relevance - this is just misleading and renders the measurement worse than useless.

2 Tick more than one box – same principle as above but this time you can tick as many boxes as you can claim relevance to. At least this will differentiate between the vaguely relevant to one strategy and the relevant to several strategies options. But what constitutes ‘relevance’? Without a degree of impact the measure is next to useless.

3 No strategic alignment assessment – at least with no attempt to assess your strategic relevance and contribution you know where you stand and are not faced with pseudo relevance data.

4 Objective, measured strategic contribution score – the project’s strategic contribution to the 25-to-40 ‘strategic imperatives’ – weighted factors that drive and deliver the strategy – is scored in normalized, justified levels of impact. Some projects may contribute with differing levels of impact to, say, 4 strategic imperatives while others impact 13 imperatives. Now you can really assess the relative strategic contribution of each and every project (and track and measure your strategy’s execution).

The TOP Strategic Contribution Assessment Tool enables simple, objective, measured strategic relevance scoring.

If a project is strategically irrelevant (scoring an insufficient level of contribution) it may still be worthwhile if, say, the financial benefits are extraordinary and all other criteria are met.

3 Is it viable?

Do the financial benefits outweigh the costs of their delivery? Please note how we have phrased this. We have prioritized the benefits and then looked at their cost of delivery – as opposed to the more common approach of starting with the costs and seeing if they can be ‘justified’ by the benefits.

Your business case financials section should aim to maximize and then optimize the benefits’ value and only then compute the costs of delivery – which few organizations can do. The benefits of starting with the benefits instead of starting with the costs can be millions a year in both reduced delivery costs and increased delivered value.

Some projects will not be financially viable but are still worth pursuing as they fix a competitive disadvantage or are an operational imperative. While not every project has to have a positive financial return, the overall portfolio needs to deliver a positive financial return otherwise you’re burning capital.

4 Is it deliverable (risks)?

Are the project’s risks within your organization’s risk appetite and ability to manage? High-risk projects can deliver high returns but require far higher levels of business management attention and focus to be successful. Few organizations can take on more than one or two high-risk projects simultaneously.

On their own, a project’s list of risks is more a measure of the project team’s ability to identify risks than of the project’s level of risk. To be able to assess and compare each project’s risk profile on a consistent basis you need a common set of risks and a consistent basis for scoring risk levels.

5 Is it deliverable by us (capability risk)?

Your organization’s ‘value delivery capability’ determines the types of projects it can successfully deliver. If you take on projects beyond your capability to deliver they will go over time, over budget, under deliver or just ultimately fail. You can start any project; but the value comes from what is delivered.

You therefore need to know both your organization’s ‘value delivery capability’ level and the project’s required capability level. If the project’s required capability level is above the organization’s level you either need to immediately upgrade the organization’s capability or downgrade the project to fit within the organization’s capability to deliver.

Taking on projects beyond the capability of the organization to deliver is one of the most common reasons why projects are (unknowingly) set up to fail from the outset.

6 Can we do it at this time (capacity risk)?

The results you get from a project are determined by the people you have on the project. If you put the ‘C’ team on a project you’ll get ‘C’ level results. If you don’t have the caliber of resources for the project, don’t take on the project, as you’ll fail to one degree or another.

You can buy in some capacity (consultants/contractors) but you can’t buy-in internal knowledge and expertise. Even if you buy in externals, you need to have the resources to manage them effectively. Unmanaged consultants/contractors is a recipe for being ripped off.

Quality resources are scarce. In every organization of whatever size there appears to be about 20 people that everyone wants on their project. These 20 people are also vital to ongoing operations. If they are spread too thin the results are compromised (as is their health on occasions). Better to wait for their availability than to go with the ‘C’ team.

Also, you don’t want your key resources working on multiple projects at once – it is highly unproductive and leads to errors and omissions that compromise the results delivered.

Pick your ideal team and then know that everyone substituted is a compromise that can potentially damage the project. If your level of substitutes exceeds 10% then you should delay the project.

7 Is it a priority now?

A project can ‘pass’ all of the above criteria but still not be a priority, now. People off and on the project, deliverers and recipients of change, all have limited capacity. If you overload the organization with change you will generate resistance (as people try to cope with too much concurrent change) and increase confusion as projects compete for management and staff’s attention.

Criteria 1-to-6 can be assessed by the Strategic Portfolio Office – “Does this project meet the minimum criteria to be prioritized?” Projects that fail two or more criteria can be referred back to be redesigned or just stopped.

This final criterion (“Is it a priority now?”) is the accountability of the Investment Committee or Board as part of their strategy and capital management roles. At the end of the day they need to show

1 They have delivered the strategy and the expected results

2 They have managed capital effectively – allocating it to the highest priority projects,

3 They have generated an overall acceptable level of return on capital

4 And that this return on capital is increasing year on year.
(The subject of another blog soon.)

Therefore, they may choose not to prioritize and approve certain ‘valid’ projects but focus their attention (and capital) on other opportunities and projects. But they now do so on an informed basis.

They can

· reject proposals completely,

· defer them until later,

· return them for redesign or re-scoping

· or approve them as a high priority investment knowing they are

o strategically relevant (or mandatory),

o viable and

o within the organization’s risk appetite, capability to deliver and capacity to resource

IE Relevant, worthwhile, doable and required to be done now – the definition of high priority projects.


© Totally Optimized Projects, 2014

Topics: Prioritization, Project Controls, Project Governance

Further Reading



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Revision History

First published: Simms, J. (Dec 2014) as "Project Prioritization Is Simple"

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