The lifeblood of any Project Management Office (PMO) is a stream of new ideas that turn into projects. Projects help deliver strategy, and they keep the team busy doing valuable work that helps the business achieve its objectives.
The biggest challenge for business leaders is to decide what to work on. There aren’t enough hours in the day or money in the bank to do everything we want to do.
That’s where project selection criteria come in. With a defined set of criteria, you can push every idea through the same process and pop out the other end with a clear idea about whether this project should go ahead.
However, there is a tiny problem with applying the same process to every project proposal.
In the Business or On the Business?
There are two types of project: those that help advance your business goals, and those that help you do business more effectively. You can often hear entrepreneurs talking about working ‘in’ their business and ‘on’ their business – normally in conversations about spending more time in the business serving clients than on their business growth and strategy plans.
Whether you are entrepreneur running your own company, or the PMO leader of an organization, that leaves you with a dilemma when it comes to project selection criteria. The criteria to take into consideration for choosing projects are different. Decision making criteria that work well for a project that supports teams working ‘in’ the business are not suitable for the types of project that are to do with business efficiency.
What this means is that you have to be smart when applying selection criteria to projects. Business improvement projects may take a slightly different path to projects designed to support business growth.
Here are 10 project selection criteria that you can adapt for your own project selection process, whatever your projects.
Criteria for Projects Working In the Business
1. Expected revenue
Delivering new products and services generally come with a revenue expectation. This should be recorded in the project proposal or business case so that you can easily see how much extra cash this project should be delivering to the bottom line once it is live. Note that new product launches often make up the largest source of projects that are to do with working in the business.
2. Market share growth
In a competitive market, grabbing a bit more of the market share is always going to be an aspiration for senior leaders. Make this part of your project selection criteria and they will easily be able to compare projects that aim to grow market share. The way you measure market share should be transparent and easily replicable, with a defined definition and calculations that can be repeated for each project. This also helps with benefits tracking, as you’ll be able to look back (should the project go ahead) and compare what market share improvements were expected to what were achieved.
3. Improvement to brand awareness
Sometimes projects aren’t about making more money or growing the business in such an overt way. Improving brand recognition is also a metric that can be used at project selection. Depending on the phase of your business growth, many of your projects may use this as part of their justification. Again, if this makes it on to your criteria list, specify how you expect brand awareness to be measured and how the project team will be able to report against the improvement.
4. Risk assessment
Some projects are riskier than others, and this needs to be taken into account during project selection. As a PMO team, you should be advising decision makers to keep the portfolio adequately balanced at all times. This means not taking on a bunch of high risk projects when the business’ risk appetite is low. Equally, if all projects are very low risk, you could probably afford to take a few chances.
5. Resources required
All projects require resources, whether that is people or cash. Every project proposal should include clear statements about what these resources are and where it is proposed the funding comes from. Then decision makers can compare the relative cost of projects against their expected benefits.
Tip: You may want to introduce a slightly different project approval process for projects over a certain budget. You may need to get Board members to sign off spend over a particular amount, for example.
Criteria for Project Working On the Business
6. Improvement to key business metrics
Let’s use healthcare as an example here. In a healthcare business, you may have business metrics around patient outcomes, infection rates and customer satisfaction. The business case for a project that influences these key business metrics should include how much improvement you should see as a result of the deliverables.
7. Reduction in cycle times
Cycle time is how long it takes you to do something. A project to cut three days from the process of paying an invoice could then be compared against a project to shave 30 seconds off producing something on the factory line.
8. Improvement to customer satisfaction
All businesses have customers, and even those departments that only serve internal customers can still measure customer satisfaction. Whether you are surveying your accountancy clients or members of the public who recently bought your new shampoo, you can calculate expected improvements to customer satisfaction and present these in the project proposal.
9. Cost reduction
Many business change projects focus on process improvement, with the overall goal of reducing the cost of doing work. Perhaps that’s automating a process, or moving something online. The project proposal should outline how the project meets this criteria and by how much. This enables it to be compared against other cost saving initiatives.
10. Resources required
Projects that work on the business still need to be conscious of resources required to deliver the work. You want to ensure that you aren’t over-committing existing resources or stretching the budget. And you want to know what’s required before you commit to the project going ahead. Whether it’s capital expenditure or people’s time, a clear view of the resources required will help you decide whether this project is going to be worth it.