One of the consistent themes in my work is this notion of making sure you’re doing the right thing before doing the thing right. While the word juxtaposition is slight, their implications are anything but.Last week Sanjiv Augustine came to town to give a talk at Agile Richmond (photo above). In addition to being an author, entrepreneur and agile practitioner, he’s also a heck of a nice guy. We enjoyed chatting over dinner on a variety of topics and I came away thinking it was nice to connect with an agile thought leader who lives in the area. Sanjiv’s talk was on the The Agile PMO - From Process Police to Adaptive Governance.
The main takeaways for me were the concepts of optimizing your project portfolio for throughput not utilization and the governance models for supporting an Agile PMO. Sanjiv presented a very tangible way to make this happen, including ideas for how to prioritize all projects by business value and then to limit the number of active projects to the capacity of the delivery team. This typically means canceling lower-value projects and re-distributing those resources to higher-value projects so they can be completed quicker. The end goal is faster time to market for high-value projects - not optimization of resources across all projects.
One surprising point I learned was that, according to one study, 53% of project prioritization is driven by politics. In this climate, adapting more open and transparent project prioritization activities can be extremely difficult. There are powerful people who like the way things are and may have “pet projects” that are near and dear. But that doesn’t mean we shouldn’t try and prioritize by value - it just means bringing change may be harder than we think.
While Sanjiv’s points were all familiar to me, the way he presented the information was new. He helped me understand the concepts and how I can do them in practice. During his talk, I couldn’t help but think of a few Evo concepts that could be included in the adaption of his Lean-Agile PMO framework.
The next day over lunch my colleague Jimmy and I kicked these ideas around and agreed to try and put them into practice at our next opportunity. Since Jimmy leads up our Operations and Technology Strategy solution that helps clients manage their project portfolios, he’s in a good position to try them.
Specifically, we discussed two “plugins” that could be used with the Lean-Agile PMO based on Evo:
Quantify Business Objectives
Project Prioritization using Impact Estimation
Quantify Business Objectives
Sanjiv presented a simple framework for prioritizing projects based on weighted values for certain criteria. Projects get weighted scores of 10, 20, 30, etc. based on criteria and when added up, the project with the highest score is the most important - resources should be focused here. He said this is one example, and there are others, for how to prioritize projects in the Lean-Agile PMO. His explanation reminded me of the plugin architecture I’m familiar with in software - how different prioritization methods could be used to extend the Lean-Agile PMO approach.
With my Evo background I recognized there was, I’d argue, a more robust way to define business value that would allow a Lean-Agile PMO to prioritized by business value. This plugin would use Planguage to quantify the business objectives first and then prioritize the projects through the use of Impact Estimation. Doing so will show us how well we think the project will meet our business objectives, and at what cost.
I can use examples from my Value Delivery article to illustrate the concept. Let’s pretend we want to prioritize our portfolio of projects based on business value so that we can ensure our resources are focused on the highest priority initiatives.
Step 1 is defining business value - which means defining the business objectives (aka results) of the business unit our PMO is working with. Instead of putting weighted scores next to a business unit objectives such as Increase Market Share or Increase Monetary Donations, we’ll go a step further and define them using a scale (what to measure) and meter (method to measure):
Step 2, is to understand where we’re starting from (benchmark), what’s success (target) and what’s failure (constraint):
Charting the results helps us quickly grasp which objectives we are doing ok with and which ones need our attention now.
So why this approach over a weighted scoring system? Yes, it is more work, but I’d argue not that much more once you understand the concepts. So is it worth it? I’d argue that with project portfolios in excess of millions of dollars, the decisions around which projects to fund is a critically important one that has an enormous impacts. So in this case, a little more effort can be justified.
If you want some additional arguments, see “What is Wrong with the Weighting Process for Determining Priority” in this paper.
Project Prioritization using Impact Estimation
With our objectives defined, we can use Impact Estimation for evaluating how well our proposed projects will help us meet our objectives, and what resources are required to make this happen. Here’s an example that illustrates which of the three proposed projects (Recurring Payments, Facebook Integration, Image & Video Uploads) will deliver the greatest business value:
The important point is that projects aren’t evaluated on just the expected value (Total Objective Impact), but the ratio of value to resources (Benefit to Cost Ratio).
For example, in Figure 5, the Facebook Integration project isn’t selected because it has the highest expected value. At 110%, it’s actually 3rd with respect to value delivered. But, it does this with 40% of the resources - compared with the other projects that use 70% and 100% of the resources to deliver value. Thus it represents the best “bang for the buck” and should be prioritized high in our portfolio.
Summary
For those in charge with prioritizing the projects in your portfolio, next time consider using a more robust method than simple weighting based upon arbitrary values. If you need help, email me and I’ll provide you guidance.
Remember: Don’t just sort your portfolio, engineer it to delivery business results!
