Factors Used To Prioritize Change Projects In Best-Practice Organizations

June 28, 2017

Prioritizing change projects

Best-practice organizations prioritize change projects for implementation based on set criteria around value, risks, and change fatigue. By using set criteria, these organizations are able to develop a portfolio of projects whose resources and timing are based on their potential impact and ability to provide value for strategic goals. This process helps companies prioritize the changes to be made first, which was identified as a continuing challenge for businesses in APQC’s “2017 Process and Performance Management Priorities and Challenges” survey.

To ensure alignment with organizational goals—be they revenue, market-based, or organizational performance or improvement goals—organizations can conduct a systematic review of all potential projects as the first step of creating a portfolio. This means standardizing the inputs through business cases that will provide decision makers with the information they need to determine the value of each project and make apples-to-apples comparisons for entry into the portfolio.

Best-practice organizations stress two important factors for deciding which projects enter the portfolio: value and risk. Many organizations include formal value and risk assessments or scorecards as part of a project’s business case for submission.

Prioritizing change projects by potential value

Although the value and risk criteria vary among organizations, best-practice organizations include some version of the following in their value assessments:

Strategic alignment. This assesses how a project aligns with the organization’s strategic goals. Some organizations ask project managers to list the strategic objectives, whereas others use a scale to measure the level of support.

Effectiveness or financial value. Not all projects will have the same end goal. Some look at creating a brand-new product that can be expected to bring in revenue, and other projects look at increasing intangibles such as stakeholder engagement. This measure can include everything from net present value to new behavior adoption rates. The key is to provide a measurable value of the project’s worth.

Payback period. Look at how long it will take to pay back the project’s investment. This information helps put the project’s time and value into perspective and supports prioritization, scheduling, and comparison of projects with similar values.

Prioritizing change projects by relative risk

Just as important as the potential value of the project is its relative risk. This is a sometimes overlooked factor. For innovation portfolio management, risk is often measured by the technology readiness of the potential product. For change-related projects, however, common risk factors include:

Resource requirements. These help decision makers understand the investment.

Dependency among functions, departments, or regions. These help decision makers understand the complexity of the project.

Timeline for the project. This helps with the sequencing of the project.

Capacity. This includes the availability of resources and mitigation plans to address reliance on resources that are already committed to other projects.

Change management. This looks at the amount of change associated with the project, its effect on the organization, and how well that change is understood by stakeholders.

One interesting trend is the use of change management, or potential for change fatigue, as a risk factor. For example, some best-practice organizations provide decision makers with information on the degree of change a project and portfolio will have on an organization. When preparing project information, the team will look at each department, function, and role to see how many of the projects in the portfolio will affect them and when.

For instance, the team might identify 10 projects that have dependencies on the legal function and see that 5 of them will occur in the second quarter of the year. This information helps the organization prioritize projects based on potential change fatigue and plan for traditional change-resistance challenges. One can pinpoint who is affected and when, and then time communications and engagement accordingly. This schedule ensures the project portfolio is not overburdening employees and can be used to adjust project sequencing.

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As companies take on a growing number of projects, they need skilled managers who understand the project life cycle and the tools and techniques of successful project management.

About The Author

Holly Lyke-Ho-Gland is principal research lead, process and performance management, at APQC. She conducts and publishes APQC research on process management and improvement, quality, project management, measurement, and benchmarking for APQC’s Process and Performance Management research team. Her research supports APQC members and clients across disciplines and centers on helping professionals and project managers solve business problems with strategy, process, and measurement.

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