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2023 Portfolio Planning
Mark Pratt
232

Introduction to project planning

‘2023 Portfolio Planning’ means looking at ways in which we prioritise the projects that we deliver more successfully. One of the problems that we repeatedly when we talk to clients, is prioritisation. There’s contention with resources with cash and complexity.

Let’s look at how you, or your company, currently prioritise projects. Some people do it where the loudest person shouts, some take their lead from HIPPOs (highest paid person’s opinion), some businesses do it based on what is realistic, and some companies do what the regulator told them: there are various ways to prioritise projects.

Unfortunately, it’s usually it’s quite haphazard and opinion based, and we would like to help you to do something a little bit more robust.

The ABCDE way

For those who aren’t familiar with our ABCDE way, it’s Project Partners’ change and project management methodology. It’s a very simple methodology that’s designed so even non-project professionals can use it.

We start with a hypothesis, and that is all about starting with ‘why?’ Everyone is full of great ideas, but a hypothesis is about validating whether an idea is good or not. When we talk about a hypothesis, the first thing that happens is that somebody comes up with an idea. Then we like people to build out their idea. Clearly state what you think the idea will achieve and whom it will achieve it for.

Finally, clearly state how you’ll measure whether it achieves it or not. If you’re not measuring whether an idea has been successful, how do you know if it was a good idea? That’s what the hypothesis framework is all about. It’s simple and those people who’ve implemented it in their projects have found it a really useful way to start understanding whether they want to move forward with ideas.

Structuring your ideas

We believe [idea]

We start with ‘we believe [idea]’. Here you want to concisely articulate what the idea is that you are proposing. It should be directional and non-ambiguous, plain English is good. It may be a fully formed idea, alternatively, it could be the starting point of a design process.

For [people]

‘For [people]’ we need to look at which people this idea targets. Are they internal? Are they customers? Is it some other group of people? A small group of stakeholders? We need to know whom the idea is going to impact. If at any point, your different user types are not clear, then you should probably stop everything and make that the priority, because you probably will not be engaging all the right stakeholders if you don’t.

Will result in [outcome]

The next thing is, ‘Will result in [outcome].’ This is what we expect to happen once we’ve implemented our idea. Ideally, this statement should address a clear value to the people and/or business. It should also tie in with the strategic goals of the business or the project, depending on the context that you are operating within. If you’re trying to get an idea off the ground and it’s not doing that, it’s not going to be successful.

Will know this is true if [evidence]

Lastly, ‘Will know this is true if [evidence].’ What metrics can we use to show success? Ideally, these should be quantitative measures. Qualitative is okay, and we’ll go into those in a second.

So that is how we state the hypothesis. Which is the very first part of the ABCDE way.

Improving your hypothesis

Writing a ‘better’ hypothesis

A ‘better’ hypothesis would start with the word ‘because.’ And ‘because’ adds to the things we know or believe. Be specific. Aim for a range of evidence. Don’t discount hunches because the gut feeling is also a valid evidence point.

Evidence

We have discussed evidence being the first part there, the ‘because,’ versus the evidence ‘will know if it’s true if’… those are more outcome-based evidence points. These are input-based evidence points.

You can measure evidence points across two axes. We’ve got value across the horizontal axis there and we’ve got confidence across the vertical axis. If something will be of low value to the business or the project, and you’ve got low confidence in delivering it, then don’t do it.

Up at the top right-hand segment there, straight forward. If it’s of high value, and if you’ve got high confidence, it will be successful, then definitely do it. Bit of a no-brainer. Get on and do it. Proceed.

The ‘maybe’ section

However, there is some ambiguity, in the top left and the bottom right. Those could be considered the ‘maybe’ section. So, if something is of low value but high confidence, you could consider proceeding, if it’s low effort.

Similarly, in the bottom right segment there, if you’ve got low confidence but it could be of high value, you might consider proceeding. You would then try to move your hypothesis to that top right section as that is the whole point of this exercise: can a low value/ high confidence idea be reused in a different way to make it high value? Or if you have a low-confidence/high-value idea, can more evidence be gathered to increase the confidence?

Evidence to Confidence

Moving on, how do we get from evidence to confidence? Up at the top there we’ve got high confidence, and at the bottom, we’ve got low confidence. All these evidence points are valid, but when you’re explaining them to stakeholders or validating them for yourself, certain evidence points will give you more confidence than others. At the top of the list of evidence points, we would include things like quantitative hard evidence, business data, financial data and website data. Anything that has been quantitively gathered and stored well. If you’re basing your evidence on those sorts of metrics, you’re going to have a high level of confidence that that’s going to be a good thing to do.

Types of evidence

Going down the list then in terms of high to low confidence:

  • Empirical evidence: so how do people behave? This is another solid evidence point: if you’ve been able to measure that quantitatively.
  • Attitudinal observations e.g., what do people say they want? And of course, we all know that what people say they want and what they want can be two different things.
  • We could look at what our competitors are doing. But we don’t always know where our competitors are in their life cycle, so not always a good thing to look at.
  • Experience in other projects, we’ve all got the war wounds, and so on, from projects that haven’t gone so well, and so we can use evidence points that we’ve gathers from those projects.
  • What the business ‘wants’ (in inverted commas. We’re in the HIPPO territory there.)
  • What is the best practice? But of course, best practices can always be improved upon.
  • And then, at the bottom, assumptions and hunches. Not to be discounted, but a bit lower confidence.

If we were explaining a project that we’re trying to conduct to a stakeholder, and we had lots of quantitative hard evidence, the project was likely to be successful in getting our project signed off than if we based it on an assumption or a hunch. So that’s the sort of approach that we’re talking about here.

Articulating a hypothesis

Regarding the articulation of the hypothesis, we’re working towards a mandate. The mandate is the sponsor’s instruction of what they would like to try and achieve. You’ll recognise the words from the previous slides there: because we believe, for, will result in, will know this is true if. What we do is, add a couple of statements to the bottom of that hypothesis statement: we, invest and deliver by.

The ‘we’ and the ‘and’ bits, you can see there in the template it says ‘must’ and it says ‘should.’ You’ve got a choice; you’ve got to remove one. Whichever one you delete in the first instance you’ve got to eliminate the other one in the second instance.

The change triangle

For anyone familiar with the change triangle (at Project Partners we call it ‘the balls of change’, which you’ve got to constantly juggle) you can’t fix your scope and your time and your cost. It’s not possible. It will break. You can only fix two points and then the other one has got to be variable.

In this example, what we’ve done is fixed our scope because we’ve said, ‘what we want to achieve,’ so we’ve only got two variables left: time and cost. Therefore, you’ve either got to fix time or you’ve got to fix cost. Then, if either of those things becomes invalid, or not relevant, you’ve got to go back and look at your scope again.

That’s what the point of filling in this template is. It says, ‘well, if we can achieve this great idea which results in these great outcomes, for a cost that looks like this, in the time scale it looks like that, then I would sponsor that project.’ And that’s what the hypothesis is all about. Getting that mandate from the sponsor that says, ‘if you guys can deliver that project that would cost me X, and deliver by Y, and achieve all those great results, I’m in. I will sponsor you.’ That is what the hypothesis is all about. Nice, simple statement. Other project methodologies talk about this, but at Project Partners, we think this is a simple way to articulate what a mandate is from a sponsor.

How the framework can work for you

Change for the better

What we’ve done to try and help you prioritise is we’ve made little change to our framework because we’re always trying to improve our ABCDE way. Each of these boxes is (and these boxes might be different for your organisation) these are the enhancements and the measures that are supposed to align with either the programme or the businesses’ core strategic goals. So, the business that you’re working with, or the programme that you’re working with, might have a particular financial goal, or a people goal, or a customer goal, or a brand goal, or any other goal that you could choose to measure against.

With this in mind, we’ve tried to parameterise it a little bit more. You would fill in the goals that you’re trying to achieve in those boxes. That might be ‘it will generate a financial return of £100,000,’ or it might mean that your customer satisfaction result would go up from 50 NFI to 60 NFI, or it might be that your brand advocacy would go up, it might be that your people would be happier. Whatever that might be. You’re trying to quantify the delta that you’re trying to go from and to in each of those boxes. It’s just a little bit more of parameterised way to articulate the priorities.

Priority matrix system

This is the data we’re then going to use in our priority matrix system. We’re taking the output data that we’re trying to achieve there, the financial, people, customers, brand and the input data, like cost and time. Every organisation has got different goals. Every other organisation has got different things that are important to them.

In our priority matrix system, for each category that we’re trying to categorise time, cost, financial, customer, brand, whatever it might be… we’ve set some distinct and discreet descriptions. For example, if you look at time there; we said that the categories for time could be ‘under three months,’ ‘three to six months’ or ‘over six months.’ Then we assigned them values. These are scores out of 100.           We said that if the time is under three months: that’s a great thing. That’s what we’re about as a business. That’s a score out of 100. If we’re three to six months, it’s a 50. And it was over six months: it’s O. Your scores will be different because every business is different. But the point is, you categorise each area that is of interest to you.

Portfolio Prioritisation planner

Back to our portfolio prioritisation planner. We’ve got our list of 10 projects here. What we’ve done is we’ve put, for each of the projects, the data that we’ve gathered from the hypothesis statement. Time and the cost, and then from an output to the benefit perspective, the financial benefit, the people benefit, the customer benefit and the brand benefit. Then we’ve got the weightings. We weigh the importance of each of those inputs and benefits to the business proportionally, again all out of 100: a percentage. That gives your project an overall score.

This means you can then change the data against each of the projects and then it will calculate a different score. As an example, project 9, had a score of 52.5. We changed it to be over six months and suddenly, it’s now got a score of 20. All we then need to do is order our sheet in order of overall score which will then leave you with a prioritised list of projects.

Conclusion

It is important that we understand the ‘why?’ of our project. To write down why we’re trying to achieve this and therefore what the mandate is from our sponsor. Know what our benefits are, in a parameterised way. Have a standard way of comparing the benefits of each project, by putting all your different projects into a ready reckoner like the portfolio prioritisation planner and assign each project score.

Then prioritisation becomes very simple because projects are ordered by that score. Voila, your projects are prioritised. If you’ve got this right, with the right weightings and the scores for your business, the prioritisation should be obvious. It should come out in the order in which whoever is sponsoring your project should expect.

* This blog was adapted from a session at the Project Partners: 2023 and Beyond event called ‘2023 Portfolio Planning.’ It was presented by Mark Pratt from Project Partners.

The full session can be viewed here.

Slides from the presentation are available here.

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