Every once in a while, there’s a need for drastic measures in the PMO. When unexpected events force new strategies or solutions in the organization, a complete reprioritization can be the way to regain control of active projects, running portfolios, and potential intakes.
Zero-based prioritization is that drastic measure.
With zero-based prioritization, you get a powerful method to reevaluate running and upcoming projects and initiatives completely.
The approach is radical and time-consuming but can leave the organization with more streamlined portfolios that enact the strategy.
In simple terms, zero-based prioritization involves removing all initiatives, starting with nothing. The method focuses on which projects actually belong. All projects that don’t make the cut should be terminated.
It starts where every process starts: with your data.
Any portfolio balancing that is done without proper preparation can have disastrous consequences. For zero-based prioritization to succeed, your organization must be aligned on what it is you want to do and how to measure it.
All project data should be assessed, evaluated, and updated to give a comprehensive overview of status, issues, and projected returns.
Strategic Portfolio Management solutions like Power PPM can be a great tool for minimizing the extent of this task. If you regularly keep your project information updated, you’re always in the best possible position for optimization in the PMO.
Define metrics for comparing initiatives to ensure a fair base for comparison. It may be possible to compare all projects on return of investment or alignment with strategy, but some projects will likely be important for maintenance, compliance, or enabling other projects.
Categories and types should be clearly defined to ensure that it’s as easy as possible for the portfolio manager to categorize the projects. Most project managers think their projects are the most important – they wouldn’t be running them if they didn’t. With clear categories, you avoid disparity in portfolios, where some portfolios have too many mandatory or transformation projects.
Answering questions like, “When do you terminate a running project?” and “What ratio between a possible benefit versus the actual cost would you allow for?” will be an important guideline during the prioritization.
All initiatives that aren’t mandatory should correspond to a strategic area. The strategy should be clear, or else the prioritization will be useless.
Before balancing a portfolio, prioritization must take place.
According to Gartner, you can prioritize in these different categories; mandatory, transformation, core differentiation, growth, and improvement.
In Power PPM you can use the Kanban feature to sort the projects according to type and rank them. With this you also get a roll up of budget and projected benefits.
Balancing your portfolio is a complex decision-making process that has to ensure that all the different activities support your organization in keeping the operation stable and ensuring a certain element of growth. A portfolio without risk means that the organization remains stagnant.
When performing Gartner’s zero-based prioritization, the categories are there to aid in balancing the portfolios. However, there is usually a budget in place that must be adhered to.
Tools like What If make it easier to see when the budget is exceeded. Adding projects according to the different categories gives you a clear overview of how the projects balance within a budget or how the current composition supports the strategic initiatives.
Initiatives can be moved into the next fiscal year, or similarly, prioritized projects can be swapped for each other.
