Project selection: more than just ROI
When we select what projects to do, return on investment is one of the major decision-making factors for many companies. Financial measures like cash flow and ROI are essential: after all, who wants to work on a project that isn’t going to contribute to the bottom line? What’s the point?*
The financial justification of a project is normally worked out by whether the financial benefits outweigh the project’s total lifecycle costs, by how much and when this happens. Your finance team or portfolio office will probably have a selection of measures that they use to calculate the important sums behind project selection.
However, financial benefits aren’t everything.
What else needs to be considered?
You’ll probably have worked on projects that don’t have huge financial benefits but contribute to the company strategically or tactically in other ways. Here are 4 additional ‘soft’ benefits that can (and should) be taken into account during project selection:
1. Increased customer satisfaction
Happy customers generate return business and it’s a commonly held belief that it costs less to keep a customer than it does to attract a new one. So it really does pay to get your customers on side and keep them happy. How do you measure customer satisfaction? Whether it is through surveys, an Exceed customer satisfaction review, focus groups or amount of ‘likes’ on social media sites, you’ll need to take a baseline first before your project implements anything so that you can do a comparison later on.
While customer satisfaction is often considered a soft benefit, customers do spend money so there are financial implications of keeping customers happy. Normally though, this is really hard to work out in terms of adding numbers into a business case, so unless you’ve got some complicated models it gets lumped under the ‘soft’ benefits category. Pair it with increased revenue as a hard financial measure.
2. Improved brand awareness
While brand management and PR agencies would probably say that there are tangible financial measures relating to brand awareness, it is hard to measure and in my experience isn’t worked out for project business cases. If you are opening a new store, for example, this will increase brand awareness of your business in the area where the store is, but how do you measure this? It’s tricky. And even if you can measure it reliably, can you link it to a financial measure? Just because people know about the company doesn’t mean they will spend money with you.
3. Better staff morale
Lots of internal projects are done to improve staff morale, whether that’s decorating the staff canteen or implementing a suggestion scheme. Staff morale is something that can be measured and many companies run internal staff surveys to track how employees feel about the company. Compare these results year on year and you’ll be able to see how morale changes, but there are many factors at play so tying these results to one particular project is difficult.
I’ve read research that shows happier staff are more productive, so if you equate productivity with revenue, you can see that there is a financial link. However, it’s one of those that is again tricky to prove or to calculate without some complex models. Still, go for it if you feel you can!
4. Improved processes
OK, some processes do link directly to cash. If it takes a couple of hours less to complete a process you can work out the salary savings of the people involved. But normally with this sort of project you don’t move those staff on to a contract that says they work fewer hours per week. They will fill the time with other things, so the gain is in productivity and the ability to complete more work rather than in direct salary savings.
Even so, improved processes are a good thing, so whether your tangibly calculate the saving or report it as a soft benefit, it’s definitely something to record in the business case for project selection.
Of course, not all business cases will include all these elements, and many will include other soft benefits as well as all the financial measures. Next time I’ll be looking at 4 more soft benefits that could be a deciding factor in project selection so stay tuned!
* The point might be to meet regulation or for other compliance reasons, so I am aware that there are some projects that have to be done, regardless of whether the company is going to make any money.
Advancing your career: the new Portfolio Management Professional credential
PMI have launched a new credential recently: the Portfolio Management Professional (PfMP)SM. The pilot finished in February and at the moment you can’t sit the exam while they review the feedback from that, but you can still apply and it won’t be long before exam dates can be booked.
Credentials in general are a good way to advance your career. This one demonstrates your experience in managing organizational portfolios and could enhance your chances of getting a pay rise. Anything that means your bosses recognise that you are doing a good job and are professional in the way you go about it improves your standing at work (or if your company doesn’t value that sort of thing, help you find a company that will). PMI’s literature claims it helps make you more marketable so you may find employers starting to ask about this credential if you are going for PMO and strategic level jobs.
So, as this month is all about Portfolio Management on projectmanagement.com, I thought I’d explore the PfMP a bit more.
Is it for you?
It won’t be for the majority of people. It’s aimed at people who are responsible for portfolio management in their companies. PMI define a portfolio as:
“a collection of programs, projects and/or operations managed as a group. The components of a portfolio may not necessarily be interdependent or even related—but they are managed together as a group to achieve strategic objectives.”
You can see that this will only relate to a few people in your business, or one particular team. It’s a strategic, high level job rather than a hands-on project management job, although you don’t have to have the job title of Portfolio Manager to be eligible to apply.
What are the pre-requisites?
As with the other PMI credentials, you’ll need to meet certain criteria before you can apply. You’ll need a high school diploma or equivalent with at least 7 years of portfolio management experience in the last 15 years. Or 4 years’ experience if you have a bachelor’s degree or equivalent.
Then you’ll need to demonstrate 8 years of professional business experience. As PMI say that one of the roles of the Portfolio Manager is to establish and guide the selection, prioritization, balancing, and termination processes for portfolio components to ensure alignment with organizational strategy you’ll have to show that you’ve been working at a senior level in your firm.
What’s involved in the application process?
Your application will be reviewed by a panel of expert volunteers who are also portfolio managers. This bit takes around 4 weeks. Then there’s the exam. You’ll have to take the exam within a year of passing the panel review. It’s a multiple choice computer-based exam, so if you have taken any other PMI credentials you will be familiar with the format.
Will it help my career?
Who can say? Only you can answer that question.
On one hand, it’s a new credential so until there is a critical mass of portfolio managers holding it employers may struggle to recognise its worth.
On the other hand, getting it in the early days will set you apart from the rest of the field when you apply for new jobs.
As with any credential, having it shows that you have demonstrable skills and experience and the commitment to the profession to study for and sit an exam. I think it’s too early to tell if candidates with the PfMP credential will earn more than others in the same role but from past experience and the salary surveys from PMI it’s probably likely that they will in time.
Credentials and certificates are an investment, and it is always worth talking to your manager about whether he or she will fund your application and exam fees, or even give you time off work as study leave. They may say that they won’t fund it but you might be pleasantly surprised! I’m looking forward to watching this credential as it evolves and more people take it: as PMI are positioning themselves and project management as a strategic thing this fits well with their current focus (or at least that is how it looks from the outside).
Has anyone got any experience of PfMP credential process or the pilot? Let us know your thoughts on it in the comments.
Ann Pilkington, in her book Communicating Projects, has a short section about managing project communications on a budget. I’ve never worked on a project that has had a large budget for project communications, although I know that many public works and civil engineering projects have money set aside for this. Somehow engaging with the public seems to warrant more cash than engaging with your colleagues, even if the actual user group is the same size or smaller.
Pilkington starts off by advising that you should spend your communication budget wisely by targeting the audience and what they want to know. A scatter-gun approach that is not targeted is going to be more costly and will probably have poorer results. She says that you should prioritise setting your strategy, which means assessing your stakeholder group and spending some time planning how and when you will reach them, and with what message. Once you’ve cracked that, you can move on to actually delivering that strategy through your communications plan.
She has 5 tips for managing your project communications on the cheap. They are:
1. Use your network
“Identify people who can help to deliver the communication strategy,” she writes. In other words, don’t feel you have to rely on an expensive agency or professional communicator such as your PR department. If you can give them a toolkit and some materials, enthusiastic colleagues can be a great asset to your communication plans. They will need to know enough about the project and what you want shared to be able to do a good job. She also suggests finding alternative ways to get them some reward and recognition as they will be taking on the project communication role above and beyond their normal day job.
2. Piggyback off other initiatives
Link in with other projects, programs or corporate initiatives. “This can save resources and is also an effective, best practice communication approach, helping to tell a joined-up story for people,” she says. If another project produces a newsletter, ask to run a small article in it about your project and the joint benefits. Or talk to your central media team and find out if they have templates, newsletters, or anything else you can use or join in with.
3. Use lessons learned
What communication practices worked on other projects? Find out from your corporate lessons learned database or by asking other project managers. Then avoid making the same mistakes (and spending money on them).
Not everyone has access to a lessons learned database, and not all lessons learned meetings include anything about project communications, so you may have to look quite hard before you find anything that you can reuse or learn from.
4. Evaluate your communications
“If something isn’t working then it doesn’t make sense to continue with it,” she writes. “Remember too that if something cheap isn’t working, then it isn’t cheap – it’s a waste of resources.” A communication audit is a good way to evaluate the success of your communications. Spend some time going through what you have communicated and the outcomes it has achieved. If you aren’t meeting your communication goals, then it’s time to think again. For example, an intranet page for your project might be cheap to set up and maintain, but if no one is looking at it then it hasn’t been a success. Think again about how you can reach your audit and tailor your approach accordingly.
5. Use technology
Technology is your friend, because it is cheap and easy. But it only works if people are using it. “There is no point running an online campaign if the project stakeholders have limited access to email or the internet or aren’t users of social media,” Pilkington says. So if your new online product database is aimed at tech-savvy consumers who want to buy from the company directly via the web, then an online communication campaign is going to be a good use of your resources. However, if you are launching a new health service for the elderly in residential homes, they are less likely to be users of social media, so spending lots of time Tweeting about your project isn’t necessarily going to help you reach the people who need to know about it.
You don’t have to spend a lot of cash on project communications, but you should spend enough time on it. The more you plan, the cheaper you can get your project communications because the better prepared and more effective you can make them.
3 More Pitfalls of Project Estimating
In this video I look at three more pitfalls to avoid when doing your project estimates. Don't fall into these traps!
5 Things for a Friday afternoon
In his book, How To Be A Productivity Ninja, Graham Allcott talks about how to manage your time more effectively. It’s a good book, but one of the best things I took away from it was his idea of how you should spend your Friday afternoons (assuming that your working week finishes on a Friday).
He recommends spending time working through a weekly checklist and clearing out your email inbox, reviewing your To Do list, updating your processes, consolidating notes from the week and preparing ahead. So what does that look like in practice? Here are 5 things that you can do on a Friday afternoon to clear your head for the weekend and start the following week with the least possible disruption.
1. Clear your inbox
Allcott is a huge fan of ‘Inbox Zero’ which means not using your email inbox as a dumping ground where emails go to die. He thinks we should all clear out our inboxes, and when better to do that than a Friday, when you’ve got all the messages from the week to look over and deal with.
Go through your inbox and delete anything that can go. File anything that you need to keep for reference. Forward any messages that require other people to do actions on the project with instructions on what you are delegating to them. Anything that takes less than a couple of minutes to do, do now. You’ll probably have to put any other email-related tasks to one side as otherwise you won’t get the rest of your Friday afternoon checklist done.
2. Update your To Do list
What actions have you written in your project notebook or stuck on sticky notes around your monitor this week? Consolidate all that into your master To Do list. I take this a step further by writing the 3 most important tasks for Monday on a sticky note and sticking it on the front of my laptop. Then when I get my laptop out of my bag on Monday morning I know exactly what I should be focused on.
3. Update your files
Make some time to update your filing system and files. Create new folders for stuff if you need to. Otherwise, make sure that your project schedule reflects reality, and that all the risks and issues have up-to-date statuses.
4. Prepare for next week’s meetings
What are you up to next week? Book train or travel tickets. Check meeting room reservations and who is coming to your meetings. Send out agendas if you haven’t done so already, or call round the venues and sort out coffees and teas for people on arrival. It’s easy to put these little admin tasks off during the week but it’s getting a bit late now and you don’t want to be issuing driving and parking instructions on the morning of the meeting, so sort it out now.
5. Review what’s going to stop you
Finally, Allcott suggests thinking critically about what is going to stop you achieving your goals next week. That could be anything from a project team member being off ill, to not having the template for this quarter’s budget submission, to not being able to find time on your calendar to meet with the project sponsor. Once you identify the things that are going to hold up your progress, you can start to think about what you can do about them (if anything). Anything major can go on your project risk log. Anything that is more about your personal productivity can either be dealt with or accepted. Having this time to think about blockers will hopefully make them less stressful when they do happen next week – it’s another sort of risk management to do.
That seems a lot to me for a couple of hours on a Friday, because your project team members won’t stop emailing you or asking questions, and your project sponsor will still expect a weekly report to be produced in the same time slot or to turn up at your desk unannounced and ask for the latest earned value figures to take to the board. But give it a go. I think a period of updating and reflection on the last working day of the week will certainly make it easier to leave the project behind at the office. What do you think?