July 18, 2024 by Ore Ayodele Leave a Comment Maximizing Portfolio Value: The Critical Role of Project Selection and Prioritization As the Director of Capital Projects at AP-Networks, I’ve observed a concerning trend across our extensive database of projects: owners are losing significant value in their project portfolios due to poor project selection and prioritization. This insight underscores the critical and urgent need for a more robust and aligned approach to project selection and prioritization. The Root of the Problem Our data reveals that project selection criteria often misaligned with the company’s vision, mission, and current market conditions. This misalignment can lead to approving projects that don’t truly serve the organization’s best interests. Moreover, we’ve noticed that selection criteria are not always fit for purpose across different types of projects, leading to a one-size-fits-all approach that fails to account for project-specific nuances. Another challenge we’ve identified is the phenomenon of “pet projects.” Once selection criteria are established, stakeholders may attempt to adapt their favored projects to fit these criteria, even when they wouldn’t stand up to objective scrutiny. This practice can lead to the approval of projects that don’t align with the organization’s strategic goals. The Prioritization Puzzle Even after selection, project prioritization remains a complex issue. Many projects start and stop due to factors such as time constraints, cash flow issues, resource availability, or attempts to capitalize on unforeseen opportunities. This volatility underscores the need for organizational designs that account for uncertainty and adapt quickly to changing circumstances. Key Areas for Improvement To address these challenges, organizations must focus on several critical areas in their selection and prioritization processes: Business Alignment: Ensure selected projects align closely with the overall business strategy and goals. Comprehensive Evaluation: Consider each project’s benefits, costs, and risks holistically. Flexibility: Develop criteria that are applicable across a range of project types. Manageability and Repeatability: Create manageable and consistently replicable processes. Conflict Resolution: Establish clear methods for resolving conflicts between competing projects or priorities. Organizations can significantly improve their project selection and prioritization processes by focusing on these areas. This, in turn, will lead to a more valuable and strategically aligned project portfolio. The Path Forward Improving project selection and prioritization is not a one-time effort but an ongoing process. It requires commitment from leadership, clear organizational communication, and a willingness to adapt as business needs evolve. By investing in these areas and maintaining a continuous improvement mindset, companies can ensure that their project portfolios drive business value and support long-term strategic goals. TJ Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Δ