How to Increase Your Project Portfolio ROI by 2X

All organizations manage multiple projects simultaneously. Have you ever measured whether you are working on the right projects? Did you know that the 80/20 rule applies to project portfolios too?

Yes, 20% of your projects will likely contribute to about 80% of the value expected to be gained from your full portfolio.

On the other end of the spectrum, 50% of your projects will only contribute 5% of the value. Yes, you could stop working on half of your projects tomorrow, and immediately increase your project portfolio ROI by almost 2X.

Remember this is how to allocate projects to resources:

A Projects (20% projects, 80% value)

Clearly, these projects should be prioritized to ensure that they have sufficient resources. The first step then is to estimate the resource requirements per month for each of these projects, to see if any potential constraints exist. If so, get them resolved immediately. There should be a regular review of these projects, governance should be enforced etc.

B Projects ( 30% projects, 15% value)

These projects will account for 30% of projects and receive about 15% of the total score. Once resources have been allocated to the A projects, then resources can be allocated to B projects, starting with the ones with the highest score. Once you start to hit against resource constraints, then seriously consider stopping those projects, otherwise you will be pulling resources from higher priority projects

C Projects (50% projects, 5% value)

Your organization should seriously consider halting these projects, unless there is a compelling reason not to. 

How do you calculate the value of a project?

Develop a scoring model to prioritize projects but keep it simple and don’t overthink the model. Select a few drivers that are meaningful to the organization and weight them. For example,

1.      Alignment to strategy

2.      ROI

3.      Compliance

4.      Growth

Rate the impact (High, Medium, Low) of each project against these drivers, so each project now has a score. Take the model for a test drive by scoring a handful of projects to see if it generates credible prioritization and modify as necessary.

Please contact me at steve@biosupplyconsulting.com if you have any questions.