Arbitrating projects: How to facilitate arbitration in project portfolio management

Project arbitration is THE key decision in project portfolio management. Many companies struggle to find the right balance between a growing list of new projects, ongoing projects and insufficient financing capacity. Which project should be launched? More precisely, which projects should be included in the project portfolio? How do you prioritize one project over another? Without wishing to spoil the rest, project arbitration is first and foremost a decision to abandon projects. The project office or PMO registers more requests than its company is capable of fulfilling. The means are more scarce than the ideas...

As a result, you want to make the best decision regarding the allocation of project resources. It's worth noting that the management of project requests is often cited by our customers as a process that has been drastically improved thanks to the PPM platform.

CONTENTS :

• How do you set up a project portfolio management system?
• What tools can be used to help arbitrate between projects?
• When it comes to arbitration, what can we know to inform the decision?
• Project decision must be informed by cost and impact
• Project membership: the final key to project prioritization?

What tools can be used to facilitate arbitration in project portfolio management?

Project portfolio management software such as Project Monitor can automatically build a graph and change the axes analyzed (budget, finance, risk, value, deadline, etc.). It's also a very useful tool for arbitrating projects, combining current projects and project requests. Several features help you make the right decisions.

Configurable dashboards help you speed up project decision-making.

During your project reviews, it's essential to track the progress of the various monitoring indicators : schedule budget and resources, using appropriate evaluation tools.

The bubble graph visualizes the project portfolio and candidate projects.

A classic Project Portfolio Management tool can be used to bring together several decision keys: the bubble graph. It can be used to combine the keys of interest and the means to be mobilized. It also makes it easy to compare projects with one another. This 3-axis graph (x-axis, y-axis, bubble size) visualizes the project portfolio and candidate projects.

Flash reports for more detailed analysis

The aim is to provide a macro view of projects at a given date. The information to be completed for the committee is pre-filled according to a standard template, with the essential kpis. The project manager carries out his reporting and updates his project indicators. Data is consolidated in real time.

Web slideshows to animate governance bodies

From the portfolio dashboard, you can create governance bodies and animate them via a web slideshow. The slideshow can be configured to display the state of health of each project in the portfolio. With Project Monitor, the project session minutes are automatically generated and can be shared directly with collaborators.

When it comes to arbitration in project portfolio management, what can we know to inform the decision?

Identify challenges projects when managing project requests

The project issue: why does this request come up for arbitration in project portfolio management? The description of the why and the objective must take precedence over the way to answer it. Express a need rather than a "project product" response. The response may differ significantly from what was initially envisaged. Submitting a request should allow for several project responses.

It's the purpose of the project that will also inform the interest in carrying out a project. Here are a few questions to ask yourself:

• Who will benefit from the project? Employees? Customers? Citizens?
• Is the project aligned with strategic priorities? To which strategic axes will it contribute?
• Does the project generate sales? If so, what are the revenue forecasts (optimistic, pessimistic)?
• Does the project aim to make a process more efficient? If so, what are the benefits?
• What value will the project generate?

To make these criteria objective, and thus enable prioritization according to the "challenge" axis, we can rely on "scoring" grids. The MAREVA method provides a reference framework for analyzing the value of a digital project, enabling projects to be positioned relative to one another.

The simple act of questioning is already a real plus. It allows us to get out of the "ask / do" cognitive rut, which is often biased by the "news" effect, the "authority" effect, the "decibel" effect.

Project requests, a key function in PPM software to channel portfolio flow

Project Monitor allows you to define customized project or request sheets according to your needs. You can create all the analysis and prioritization criteria you need: strategic interest, level of risk, ROI, etc.

Each applicant updates his or her project before the prioritization meeting. Updates can be tracked in real time, according to user rights.

Depending on your organization's maturity, size and processes, candidate projects can follow a workflow-driven validation process.

Our Project Monitor solution allows you to create customized forms to describe your project requests and formalize their challenges :

• Quantitative field: an evaluation of requests according to your decision criteria
• Qualitative field: beyond the notes, describe what's at stake in the request. You'll be able to refer to it throughout the life of the project.
• Linking to strategic axes: the secret weapon for ensuring a balanced project portfolio
• Calculated value: equate, weight and score your criteria. A clever way to position your projects on a prioritization matrix and arbitrate projects easily.
• Form library: because an IT project is not described in the same way as a building construction project, the form is adapted to the type of request.

Arbitrate projects with a view to balancing the project portfolio

The balance of the project portfolio is measured on its support points:

• Strategic directions
• Direct and indirect beneficiaries of the project (or project owner)
• Project backers
• The project managers - we'll talk more about them later.

Arbitration must ensure that projects are evenly distributed. For example, are projects contributing to the strategic axis of sustainable development sufficient or are they surplus to requirements? In the case of territorial impact, the question may also arise as to the proportionality of project investments from a geographical point of view.

Arbitration at project AND portfolio level

We can also, as an industrial customer does, take a look at the time axis. Time measures not the duration of the project, but the expected impact of the project:

• "For yesterday": poorly-anticipated constrained projects (there are always some)
• Short-term: only projects subject to regulatory or legislative constraints
• Medium-term: project to optimize processes and existing facilities
• Long-term: investment, R&D and innovation projects

This reading grid is designed to ensure that we are preparing for the future. If you don't have any long-term profit projects in your portfolio, this is a danger signal. Short-term pressure tends to postpone, endlessly, decisions that will prepare the future. Long-term projects are the ones that will create tomorrow's value. Depending on the sector, innovation and investment are just as crucial as optimization.

Informing project decision-making by cost and impact

Consider the impact of the project according to the level of risk

Here is an initial list of questions to help "rough out" the decision, and which will need to be clarified in the event of a favorable decision:

• What is the level of technical mastery? Is this a completely new project? Is it a project that will use proven technology?
• What organizational novelty? "Project as usual" or a completely new approach? A totally new project scope
• How legally complex is the project?
• How much uncertainty - and therefore how much confidence - is there that the value will be achieved?
• How complex is the project's financial package?
• How dependent is profit on schedule ? Is time-to-market a determining factor?

These risk analysis grids depend on the sector of activity. An approach based on a list of questions is an effective practice. It can also be combined with a scoring system. Relative project risk scoring is more interesting than absolute scoring. In other words, compare two projects with each other: which is riskier? Enriching risk questioning grids with "Rexes" (project feedback) is a useful practice. Finally, when in doubt, it's a good idea to get an outside perspective on a project. In particular, to question the benefits of the project.

Analyze project feasibility

The second area is project implementation. This is the axis of project feasibility. From the point of view of the "project triangle", it's the analysis of the "costs" / "deadlines" summits.

In concrete terms, this means :

• Do we have the budget to carry out the project?
• Do we have the necessary resources (time and skills)?
• Do we have any overlaps between project deadlines?

Prioritize projects according to budgets

Project selection will also be based on economic criteria. Project budgets cannot be stretched to the limit, even if the value added can help finance unplanned projects. So choices will have to be made (and projects that are too expensive will have to be abandoned). The financial aspect of prioritization will depend on the culture and activity of the organization. In IT and building departments, for example, projects are at the heart of the business, and budgets are built for and around them. Project prioritization is therefore a two-stage process:

• First step: negotiating the overall budget for the project portfolio
• Second step: allocating budget resources to individual projects

Budgets are drawn up on the basis of an inventory of future projects, a financial estimate, and sometimes several scenarios. The structure or management will therefore first have a global negotiation phase to acquire resources for the project portfolio. Next, the resources are allocated to the projects. This allocation will be the subject of a second, more unitary arbitration, integrating the progress and financial execution of current projects.

This financially-informed arbitration process relies on a large amount of data that needs to be structured:

• Collection of project requirements, broken down by hypothesis
• Project budget monitoring
• Revised estimate of portfolio projects
• Investment schedule

Relying on resource workloads and capacity to deliver

If you have dealt with the elements in the order of the document, you have: a project aligned with the strategy, with identified impacts, with possible financing... that leaves the question of the project team:

Do you have the resources to carry out the project? This question can be asked from two angles:

• Do you have the skills? Do you have the right method for choosing the right project manager? The answer is "Make or Buy"... and a potential return to the budget.
• Do you have the availability or capacity to carry out the project? The workload of your teams will help you decide.

The answer on capacity will be all the more precise if you have established :

• An internal skills repository and modeling of "generic resources
• A forecast workload plan by "generic resources
• A forecast workload by "named resource

Otherwise, there's always the incantation "it should go through", but that's not the best guarantee. Project management software lets you calmly manage the capacity of your project resources. Switch to proactive project planning!

Project membership: the final key to project prioritization?

If there's still any doubt at this stage, a visit to schedule will complete the "go / no go" decision process.

A project is never carried out in a "bubble". It is carried out among other projects. And while these other projects can compete with budgets and resource allocations, they are sometimes direct "predecessors" or "influencers". This is where the notion of rendezvous and milestones in project dependency comes into play.

The decision may therefore be "yes", but not right away. This delay is motivated by :

• A concentration of major deadlines over a given period
• Chaining of deadlines and the need to keep the predecessor under control
• Time to wait for key players to become available to take on projects

Multi-Gantt projections of the project portfolio will shed some very interesting light on this subject.

All that's left is to decide on your projects 🙂

We have explored the variables and decision keys for arbitrating projects. The aim of this inventory is to reduce the uncertainty involved in prioritizing projects. It remains a complex process that involves a certain amount of "gambling".

• Time prioritization key: When should the project be carried out? What are the major deadlines? What are the dependencies on other projects?
• Budget arbitration key: how much for the project phase, how much for the Run?
• Resource" prioritization key: who will carry out the project, for how many days? what skills should be mobilized?
• Benefit variable: how much will the project contribute (and when)?
• Risk variable: what level of risk
• Barycentre variable: what a balance