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The Right Projects by usvoruganti

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									The Right ProjectsTM
2nd Edition


How to Select and Prioritise
Projects that Really Drive
Strategy

David Hinks (PhD)




         Copyright © 2007 David Hinks
Copyright © 2007 David Hinks.
The Right ProjectsTM reference guide is the outcome of a
five    year    investigation into   best-practice  project
prioritisation.   It has been written to help define and
communicate the principles of project selection and
prioritisation. Users are encouraged to provide feedback to
the author at david.hinks@tiscali.co.uk
            Strategy Poor Projects
"Many companies are harbouring strategically redundant
projects potentially costing millions of dollars per annum
because they fail to effectively quantify project value. It's
the age old story of trying to pick winners but not
understanding how they fit into the business as a whole.

A recent investigation has revealed that in many
organisations, project redundancy rates are in excess of
20%. Project prioritisation is fast gaining recognition as a
means by which executives can differentiate between high
and low value projects.”
The Boardroom Report, Vol 2, Issue 19, November 2004.
                                                             The Right ProjectsTM




1       FOREWORD ........................................................... 6
2       OVERVIEW .......................................................... 10
2.1      Purpose of this Guide............................................. 10
2.2      Scope .................................................................. 10
2.3      Audience .............................................................. 10
2.4      Sponsors.............................................................. 11
2.5      Reporting ............................................................. 11
2.6      Guide Maintenance ................................................ 11
2.7      Disclaimer ............................................................ 11
3       WHY PROJECT PRIORITISATION? ....................... 12
3.1      Project Redundancy ............................................... 12
3.2      A Common Issue ................................................... 12
3.3      The Impact........................................................... 14
4       METHODOLOGY ................................................... 16
4.1      Introduction ......................................................... 16
4.2      Strategy Life Cycle ................................................ 16
4.3      The Right ProjectsTM - Process Overview................... 17
4.3.1       Create SMART Goals................................................... 19
4.3.2       Define Scope of Review............................................... 20
4.3.3       Determine Project ROI ................................................ 21
4.3.4       Assess Probability of Success ....................................... 22
4.3.5       Finalise Project Priorities ............................................. 23

5       BENEFITS ............................................................ 24
5.1      Introduction ......................................................... 24
5.2      Generate Great Project Ideas.................................. 24
5.3      Align Strategic Efforts ............................................ 24
5.4      Drive Strategy ...................................................... 25
5.5      Fewer Business Cases ............................................ 25
5.6      Reduce Project Spend ............................................ 26
5.7      Increased Likelihood of Project Success ................... 26
5.8      Balance your Investment Appraisal Approach............ 27




                                           4
                                                            The Right ProjectsTM




6       APPENDICES ....................................................... 28
6.1      Workpapers .......................................................... 28
6.1.1      Common Industry Goals (Sales and Marketing) .............. 28
6.1.2      Common Industry Goals (Operations) ........................... 29
6.1.3      Common Industry Goals (Finance)................................ 30
6.1.4      Goal Summary Form................................................... 31
6.1.5      Sign-Off Form............................................................ 32
6.1.6      Project Summary Form ............................................... 33
6.1.7      Portfolio Summary Form ............................................. 35
6.2      Glossary............................................................... 36




                                          5
                                             The Right ProjectsTM




1   Foreword
    In the majority of organisations, projects are generally
    recognised as the primary vehicle through which strategy
    and change are delivered. Any change in the direction or
    goals of an organisation cannot be readily achieved
    without the selection and successful implementation of
    projects that provide the necessary effect or benefit.

    It is the management and delivery of project benefit which
    represents the primary objective for project managers –
    how can a project’s optimum benefit be delivered within
    cost and time constraints? (Figure 1)

    Figure 1: Triple Project Constraints




                   Cost               Time




                            Benefit

    Over the past few decades, a lot of thought has been
    brought to this issue. Project management methodologies
    have evolved (and continue to evolve) to meet the
    challenges of deriving benefit from projects of increasing
    complexity. In their desire to maximise return on project
    spend, organisations have invested significant amounts of
    time and money in embedding these methodologies.



                                6
                                          The Right ProjectsTM




However, whilst project management methodologies will
often improve the probability of project success, they do
not allow for the comparison of the benefits of distinct
projects (i.e. how to prioritise projects.) The net effect is
that many organisations struggle when it comes to
selecting one project over another and may well be
implementing low value projects.           The best project
managers will deliver little true benefit if they are working
on low value projects.

With project approval rates often exceeding the rate of
completion, management are under increasing pressure to
deliver more with less. In an attempt to resolve this
issue, attention is now focussing on how to differentiate
between high and low value projects.

Contained within this guide is a methodology which
attempts to highlight the principles of project selection
and prioritisation. It begins with a structured analysis of
common industry goals as a basis for the creation of a
balanced set of strategic objectives.

One of the guide’s key aims is to highlight the rewards
that can be realised through the unlocking of an
organisation’s project ideas potential. It is often the case
that projects ideas are conceived by senior management
with little input from the wider organisation. We believe
that by harnessing the collective knowledge of an
organisation, the quality and applicability of project-ideas
will increase significantly.

With a series of project-ideas to select from, the guide
then goes on to introduce a framework through which
individual projects can be valued based upon their
contribution to goals.



                             7
                                          The Right ProjectsTM




The guide then aims to bring focus to determining the
probability of project success as not all high value projects
will necessarily be the preferred option for the
organisation.

As you create and prioritise your project lists, it is
important to keep asking yourself the following questions:

   How can we make use of the collective knowledge of
   our organisation to come up with better project ideas?;
   How do we differentiate between high and low value
   projects?
   How do we better understand which projects our
   organisation is capable of delivering?
   How do we ensure that all goals can be realised
   through the projects we decide to undertake?; and
   How can we prevent our project list expanding to the
   point that resources become overstretched?

These are big questions facing all organisations and it is
important that consideration be given to each. It is only
through the development of a structured approach to
project selection and prioritisation that an organisation will
truly start to find workable answers.




                              8
                                          The Right ProjectsTM




In writing this guide, it was never an objective to provide
a failsafe means by which projects can be prioritised.
Projects by their very nature are one-off exercises and
tend to bring with them much that is unknown at their
outset. It is this unknown that makes assessing and
comparing project value so difficult. What we do hope to
demonstrate, however, is a structured approach through
which the reader can gain an understanding of the key
principles of project selection and prioritisation. Delivering
projects is all well and good, but only if you are delivering
The Right Projects TM.




                              9
                                             The Right ProjectsTM




2   Overview
    The Right ProjectsTM has been written to provide a
    framework for the development of project prioritisation
    methodologies. This section outlines the purpose and
    scope of the guide, its intended audience and includes
    considerations for reporting.

    2.1   Purpose of this Guide

    The primary purpose of The Right ProjectsTM is to enable a
    standard and practical approach to the development of
    project prioritisation methodologies.

    2.2   Scope

    The Right ProjectsTM provides an introduction to the topic
    of project prioritisation and the reasons for its importance
    as a management discipline.

    It contains practical guidelines to facilitate the
    development of project prioritisation methodologies and
    includes detailed information on the benefits likely to be
    realised through the correct application of such
    methodologies.

    2.3   Audience

    The Right ProjectsTM is intended for use by senior
    management and experienced program managers
    planning for major change initiatives.  Users should
    typically have practical experience in organisational
    change and in the delivery of strategy.




                                10
                                          The Right ProjectsTM




2.4   Sponsors

Typical sponsors for project prioritisation include anyone
with; responsibility for the delivery of multiple projects, an
appropriate budget and the authority to resolve potential
disagreement amongst project sponsors.

2.5   Reporting

It is important that all stakeholders appreciate that business
strategy is dynamic and that established project priorities
may change over time.

2.6   Guide Maintenance

The Right ProjectsTM will be updated periodically with
controlled releases of revised material being issued via
selected knowledge databases.

2.7   Disclaimer

This document is for reference purposes only and the author
undertakes no responsibility in any way, in respect of the
information set out in this report, including any errors or
omissions therein arising, however caused.




                             11
                                            The Right ProjectsTM




3   Why Project Prioritisation?

    3.1 Project Redundancy

    There is a trend for organisations to define long term
    strategies to position themselves to achieve a desired
    goal. Business plans (project portfolios and programs) are
    then developed to direct the implementation of these
    strategies.

    However, because business directions change, there is a
    definite need to revisit and revise these plans. If this is
    not carried out, projects can become misaligned to
    strategy (redundant) as business directions change over
    time.

    3.2 A Common Issue

    In 2003, Caritas undertook an investigation into the levels
    of project redundancy within a sample of large
    organisations across Australia.     Participants included
    executives from 57 companies selected from published
    Top-200 listings.

    Each participant was asked to estimate the percentage of
    total projects within their business not making a clear and
    direct contribution to an existing business goal. Their
    responses are presented in Figure 3.1.




                                12
                                            The Right ProjectsTM




Figure 3.1: Project Redundancy Rates


                 100%


                 80%
   Respondents
                 60%


                 40%


                 20%


                  0%
                        <10%     10-20%     >20%

                               Redundancy




It is evident from these results that project redundancy is
believed to be a common issue within participating
organisations.

Of the executives surveyed:
   79% estimated that project redundancy              in   their
   organisations was over 10%; with
   28% believing that project redundancy was likely to be in
   excess of 20% (i.e. 1 in 5 of their projects did not
   contribute towards a business goal.)

It is believed that these results are representative of the
situation within large organisations across Australia.




                                  13
                                                             The Right ProjectsTM




3.3 The Impact

During the course of this investigation, participants were
asked to comment on what they believed were the three
main impacts of project redundancy within their
organisations. Their responses are summarised in Figure
3.2.

Figure 3.2: Impact of Project Redundancy


                   100%


                   80%
     Respondents




                   60%


                   40%


                   20%


                    0%
                          Overstretched   Missed Goals   Unnecessary
                           Resources                       Spend

                                           Impact



It is evident from Figure 3.2 that project redundancy is
viewed by many as having a number of negative impacts.

   Given the amount time and money that organisations
   invest in projects, it was generally believed that
   redundant   projects   placed   a  significant and
   unnecessary burden on resources.




                                             14
                                          The Right ProjectsTM




   Similarly, it was also     felt that redundant projects,
   detracted efforts from     high value initiatives thereby
   impeding the strategic     drive of the organisation and
   ultimately impacting its   ability to meet goals.

   Thirdly, redundant projects were deemed to have a
   serious financial impact. For most large organisations,
   project spend can amount to millions of dollars per
   annum.      If the majority of these have project
   redundancy rates of between 10% and 20% (Figure
   3.1) it would appear that significant sums of money
   are being spent unnecessarily.

The application of a robust project prioritisation
methodology represents one of the simplest and most
effective means by which an organisation can address
these issues.




                              15
                                              The Right ProjectsTM




4   Methodology

    4.1 Introduction

    This section of The Right ProjectsTM describes how project
    prioritisation relates to wider strategy definition and
    delivery activities. It includes a detailed process to enable
    the practitioner to tailor a project prioritisation framework
    to support their own business goals.

    4.2 Strategy Life Cycle

    The Strategy Life Cycle (Figure 4.1) illustrates the main
    phases of strategy from definition to delivery. The initial
    phase [Define] is concerned with the setting of an
    organisation’s strategy. The second phase [Drive] is the
    selection and prioritisation of projects that take the
    organisation towards those goals.        The final phase
    [Deliver] is the day-to-day management of projects and
    their benefits.

    Figure 4.1: Strategy Life Cycle




                     1                    2
                   Define               Drive




                               3
                             Deliver



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                                               The Right ProjectsTM




The Right ProjectsTM methodology is a five-step process
that brings greater focus and control around the second
phase activities (driving strategy.)

4.3 The Right ProjectsTM - Process Overview

In The Right ProjectsTM, every project (or its key benefit)
must make a clear contribution to an organisational goal.
Figure 4.2 illustrates this point. A project may contribute
to one or more goals (e.g. projects A and B.) A project
that does not contribute to any goals is termed redundant
(project C.)

Figure 4.2: Strategy - Project Link



        Project A                Project B


       Benefit A1                Benefit B
                                                           Goal
                                                            1
                                         Project C
                    Benefit A2
                                                           Goal
                                                            2



Figure 4.3 (overleaf) highlights the key phases involved in
project   prioritisation.  Detailed    process   flowcharts
describing the key activities within each phase are also
provided. Each flowchart is made up of three columns
showing a process Input, Action and Output. A written
description of the process is also included, in addition to
templates of the standard workpapers (highlighted in
blue) which can be found in the appendix.


                                 17
                                                                                          The Right ProjectsTM




Figure 4.3: Key Phases of Project Prioritisation




        Define       Drive 1      Drive 2       Drive 3      Drive 4         Drive 5        Deliver
           Set        Create       Define      Determine       Assess         Finalise      Manage
        Strategy      SMART       Scope of      Project      Probability      Project       Delivery
                       Goals       Review      ROI Score     of Success      Priorities



                   Flowchart    Flowchart    Flowchart     Flowchart       Flowchart
                       1            2            3             4               5




                                                   18
                                                                                                           The Right ProjectsTM




4.3.1    Create SMART Goals
   Input       Action         Output                                        Description

                                Goal     When prioritising projects, the first step is to establish the underlying prioritisation
  Strategy       1.1                     criteria (i.e. what the projects are to be prioritised against). In the majority of cases,
                              Summary
                Create                   projects will be prioritised against goals or stated business objectives. By making such
                                Form
   Common     SMART Goals                goals SMART, we create a situation whereby we can readily assess the relative
   Industry
    Goals
                                         contribution of each project. The Right ProjectsTM contains a set of Common
                                         Industry Goal tables which can assist in this process (Appendix 6.1.1 – 6.1.3). SMART
                                         goals should be recorded on the Goal Summary Form (Appendix 6.1.4).

                                         Not all goals will be of equal importance to an organisation. In order to highlight this
                                Goal     and to facilitate the development of a numerically driven project prioritisation process,
                 1.2                     each goal should be allocated a weighting (normally 1, 2 or 3) based upon its relative
                              Summary
                Weight
                                Form     value. Weightings should be recorded on the Goal Summary Form (Appendix 6.1.4).
              SMART Goals


                                         The selection and weighting of goals is a critical step as it forms the basis for the
                                         subsequent project prioritisation exercise. It is recommended that the sponsor of the
                              Sign-Off   work, complete the Sign-Off Form (phase 1) indicating their approval of the goals and
                  1.3
                               Form      weightings (Appendix 6.1.5).
                Sign-Off




                 Phase
                   2




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                                                                                                         The Right ProjectsTM




4.3.2   Define Scope of Review
  Input         Action         Output                                        Description

                                         In any organisation, communication is key to the realisation of strategy. This is
   Goal
                2.1                      especially true when attempting to identify and develop project-ideas that will take an
 Summary
             Communicate                 organisation towards a desired goal. In generating project-ideas, The Right
   Form
             SMART Goals                 ProjectsTM recommends that senior management should aim to harness the collective
                                         knowledge of their entire organisation. If all staff are made aware of SMART goals (or
                                         those which can be communicated without commercial risk) and are given the
                                         opportunity to suggest projects-ideas, the organisation will have a greater pool of
                   2.2                   projects from which to select.
              Create Great
              Project Ideas              If project prioritisation is to be undertaken on an existing portfolio, agreement should
                                         first be reached on what qualifies as a project. A common working definition is “a
                                         finite piece of work which is undertaken within cost and time constraints to achieve
                                         a stated benefit (Buttrick, R. 2000). It is important that the sponsor is aware of the
                                         selected definition as it will govern which activities are included.

                                         The names of each project (or project-idea) for review should be entered into a
                               Project
                   2.3                   separate Project Summary Form - phase 2 data (Appendix 6.1.6) along with details
                              Summary
              Define Scope               of a project reference number and project sponsor.
                                Form
               of Review



                                         It is recommended that the sponsor of the work, complete the Sign-Off Form (phase
                              Sign-Off
                  2.4                    2) indicating their approval of the projects (or project-ideas) selected for further
                               Form
                Sign-Off                 review.




                 Phase
                   3



                                                          20
                                                                                                           The Right ProjectsTM




4.3.3     Determine Project ROI Score
  Input          Action        Output                                         Description

                                         Each project (or project-idea) should be assessed for its contribution to SMART goals
                               Project
 Business           3.1                  and assigned a score based upon the Benefit Score Descriptions provided on the
                              Summary
  Case           Determine               Project Summary Form (Appendix 6.1.6). The Value Score of the project is the sum
                                Form
                Value Score              of the scores awarded against each goal multiplied by any goal weighting. Scores should
    Goal
  Summary                                be entered into the Project Summary Form - phase 3 data.
    Form
                                         Note 1: All compliance projects should be identified. Compliance projects are those
                                         that deliver to a legal requirement (i.e. there is no discretion over whether or not they
                                         are implemented).

                                         Note 2: It is preferable at this stage to conduct the scoring in an open discussion forum
                                         with the key project sponsors all able to contribute to scoring process. Individual bias
                                         can be voted out and the final scores will reflect the collective view of the group.

                               Project   With project Value Scores determined, the organisation is now in a position to calculate
                   3.2                   Return-On-Investment (ROI Score) based upon Value Score ÷ Cost of each project.
                              Summary
                Determine
                                Form     This figure provides a strong ‘bang-for-buck’ index. ROI Scores should be entered into
                ROI Score
                                         the Project Summary Form – phase 3 data.


                              Sign-Off   It is recommended that the sponsor of the work, complete the Sign-Off Form (phase
                   3.3                   3) indicating their approval of the ROI Scores.
                               Form
                 Sign-Off




                  Phase
                    4




                                                           21
                                             The Right ProjectsTM




4.3.4   Assess Probability of Success




                                        22
                                                                                                         The Right ProjectsTM




4.3.5   Finalise Project Priorities
Input         Action        Output                                         Description

                                      Before any final prioritisation of projects is possible, project interdependencies should be
                            Project
                5.1                   established. A low value project may be an essential precursor to a higher value project
                           Summary
                Map                   and so may have to be implemented first. Details of all interdependencies should be
                             Form
            Dependencies              entered into the Project Summary Form (phase 5 data).


                5.2         Project   Not all projects will need to be implemented concurrently. By determining the deadline
             Determine     Summary    and anticipated duration of each project, it should be possible to better schedule the
              Project        Form     implementation of projects over time.
              Urgency



                                      Data from all the Project Summary Forms should be entered into the Portfolio
                 5.3        Project
               Finalise    Summary    Summary Form (Appendix 6.1.7). The organisation is now in a position to select and
               Project       Form     prioritise projects based upon key information relating to their (1) compliance status,
              Priorities              (2) ROI score, (3) probability of success, (4) dependencies and (5) urgency.



                                      The project prioritisation process is now complete and sign off should be obtained from
                           Sign-Off
                5.4                   the sponsor.
                            Form
              Sign-Off




                 End




                                                         23
                                               The Right ProjectsTM




5   Benefits

    5.1 Introduction

    The Right ProjectsTM is a structured process through which
    organisations    can     develop     project   prioritisation
    methodologies. Application of such methodologies can
    yield a number of significant benefits.

    5.2 Generate Great Project Ideas

    The Right ProjectsTM encourages a culture of openness
    around the development of project-ideas.              By
    communicating the desired goals throughout an
    organisation and empowering all staff (not just senior
    management,) to come up with project-ideas, an
    organisation stands well positioned to harness the
    collective group knowledge and identify opportunities for
    projects that may otherwise be overlooked.

    5.3 Align Strategic Efforts

    One of the key issues for any organisation seeking to
    prioritise a list of projects is the removal of individual bias
    over perceived project value and the subsequent reaching
    of agreement over project priorities. At the very heart of
    this issue lies the Key Performance Indicator (KPI.)

    Whilst there can be little doubt that KPI’s play an
    important role in focussing effort, their presence can also
    be the source of diverging viewpoints over project value –
    a project which delivers an operational benefit will be
    deemed of greater importance by an operations executive
    than by a marketing executive and vice versa.




                                  24
                                         The Right ProjectsTM




The Right ProjectsTM promotes open forum discussion and
transparency around the assessment of project value. It
can help individuals with differing goals to reach
agreement over project priorities.

5.4 Drive Strategy

Insufficient project resources are often considered a
contributing factor when organisations fail to meet their
goals (Figure 3.2.)

The Right ProjectsTM allows for the assessment and direct
comparison of project values. By reallocating resources to
projects of highest value, organisations should be better
positioned to drive strategy and realise their goals.

5.5 Fewer Business Cases

The cost of completing a comprehensive project business
case is often a significant proportion of the total
investment in the project. With many business cases
failing to gain final approval, it becomes evident that
significant savings can be realised through an improved
upfront (pre-business case) analysis of anticipated project
value.

The Right ProjectsTM can help with the identification of low
value project proposals prior to the development of full
business cases.




                            25
                                          The Right ProjectsTM




5.6 Reduce Project Spend

Changing goals will often lead to the viability of projects
decreasing over time (section 3.1.)      For example, a
business in a growth phase will employ different projects
from one in a period of consolidation.

Periodical project prioritisation can help to ‘spring-clean’ a
project portfolio through the identification of projects that
no longer add value to the existing strategy.

5.7 Increased Likelihood of Project Success

Given the complexities of today’s projects, it is not
surprising to learn that project failure is a common
occurrence. The underlying causes of this failure are often
attributed to either:

   a lack of appreciation over project complexity; or

   insufficient delivery capabilities of the organisation
   attempting to implement it.

The Right ProjectsTM brings increased focus to determining
the probability of project success.        Consideration of
project complexity and the organisation’s delivery
capabilities provides an indication of the possibility of each
individual project delivering the anticipated benefit.
Armed with this information, an organisation is less likely
to embark upon a project which it cannot realistically
deliver.




                             26
                                         The Right ProjectsTM




5.8 Balance your Investment Appraisal Approach

Traditional investment appraisal techniques have tended
to focus upon short-term financial returns as an
assessment of project value. When used in isolation,
these approaches often fail to recognise that projects can
offer wider (non-financial) benefits.

The Right ProjectsTM allows a number of investment
appraisal criteria to be used simultaneously to create a
much stronger final ROI figure. In this way, a more
holistic approach to investment analysis is created, giving
each project a ROI score that reflects its true worth to the
organisation.




                            27
                                                                                                                                                              The Right ProjectsTM




6 Appendices

  6.1      Workpapers

  6.1.1    Common Industry Goals (Sales and Marketing)




                                                                                                                               Manufacturing
                                                                                        Construction




                                                                                                                                                                                          Transport &
                                                                                                                                                                    Recreation




                                                                                                                                                                                                        Wholesale
                                                                                                                                                        Resources
                                                                            Communi-



                                                                                                       Insurance


                                                                                                                   Education
                                                                                                       Finance &
                                                                 Business




                                                                                                                    Health &
                                                                 Services




                                                                                                                                                                                              Storage
                                                                                                                                                          Natural
                                                                              cations




                                                                                                                                               Mining




                                                                                                                                                                                 Retail
           Focus                             Goal

                        Market Share Growth
                        Customer Acquisition
        Market Share    Customer Retention
                        Business from Competitors
                        Customer Profitability
                        Increase in Market Awareness
          Revenue       Excess Capacity
                        Sales Growth
                        Sales from New Products
   Market Development   Differentiation
                        Sales from New Markets
                        Customer Net Present Value
                        Profit Growth
           Profit
                        Errors in Customer Database
                        % Sales from Proprietary Products


                                                            28
                                                                                                                                                      The Right ProjectsTM




6.1.2     Common Industry Goals (Operations)




                                                                                                                      Manufacturing
                                                                               Construction




                                                                                                                                                                                 Transport &
                                                                                                                                                           Recreation




                                                                                                                                                                                               Wholesale
                                                                                                                                               Resources
                                                                   Communi-



                                                                                              Insurance


                                                                                                          Education
                                                                                              Finance &
                                                        Business




                                                                                                           Health &
                                                        Services




                                                                                                                                                                                     Storage
                                                                                                                                                 Natural
                                                                     cations




                                                                                                                                      Mining




                                                                                                                                                                        Retail
        Focus                               Goal

                     Time to Introduce Products
        Speed        Delivery Time
                     Production Flexibility
                     Process Errors
                     Break-Even Time
                     Standard Cost
                     Budget and Variance
                     Machine Efficiency
                     Labour Efficiency
         Cost
                     Capacity Utilisation
                     Raw Material Cost
                     Profit per Employee
                     Rightsizing
                     Excess Capacity
                     Wastage per Sale
                     Cost per Output Grade
                     Service Performance
                     Warranty Cost
        Quality
                     % Repeat Business
                     Customer Down Time
                     % Returns

                                                   29
                                                                                                                                                        The Right ProjectsTM




6.1.3     Common Industry Goals (Finance)




                                                                                                                         Manufacturing
                                                                                  Construction




                                                                                                                                                                                    Transport &
                                                                                                                                                              Recreation




                                                                                                                                                                                                  Wholesale
                                                                                                                                                  Resources
                                                                      Communi-



                                                                                                 Insurance


                                                                                                             Education
                                                                                                 Finance &
                                                           Business




                                                                                                              Health &
                                                           Services




                                                                                                                                                                                        Storage
                                                                                                                                                    Natural
                                                                        cations




                                                                                                                                         Mining




                                                                                                                                                                           Retail
        Focus                                  Goal

                        Gearing Ratio
                        Share Price
  Shareholder value
                        Dividend Payment
                        Price to Earnings Ratio
                        Revenue Growth
                        Customer Growth
        Revenue         Operating Cash-flow
                        Growth in Operating Income
                        Debtor Days
                        Gross Margin
         Profit         Profit Ratio
                        Sales on Credit
                        Capacity Utilisation
                        Variance from Budget
                        Return on Capital Expended
 Return on Investment   Payback Period
                        Internal Rate of Return
                        Net Present Value
                        Asset Utilisation




                                                      30
                                                The Right ProjectsTM




6.1.4   Goal Summary Form


                            Phase-1 Data

 Ref                           SMART Goal              Weight

  A

  B

  C

  D

  G

  H




                                           31
                                                                        The Right ProjectsTM




6.1.5   Sign-Off Form


 Phase                Statement                Signature   Print Name             Date

   1      I have reviewed the Goal
          Summary Form and confirm that
          all goals have been accounted for
          and are appropriately weighted.

   2      I have reviewed Project
          Summary Forms and confirm
          acceptance of the list of projects
          for prioritisation.

   3      I have reviewed the Project
          Summary Forms and confirm
          that I accept the ROI Scores as
          being accurate.

   4      I have reviewed the Project
          Summary Forms and confirm
          that I accept the probabilities of
          success figures as being accurate.

   5      I have reviewed the Portfolio
          Summary Form and confirm that
          I accept the outcome of The Right
          ProjectsTM prioritisation process.


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                                                      The Right ProjectsTM




6.1.6    Project Summary Form


                              Phase-2 Data

 Ref                     Project Name                             Sponsor




                              Phase-3 Data

  Goal       Weight      0           2           5          10        Total

    A

    B

    C

    D

    E

                                                 Value Score


                      Benefit Score Descriptions

         0                2                     5                  10

 Project makes     Project makes         Project adds       Project is
 no contribution   minor                 significant        essential for
 to goal or        contribution to       value to goal or   realisation of
 objective.        goal or               objective.         goal or
                   objective but         Realisation of     objective.
                   will not              goal or            The goal or
                   significantly         objective may      objective will
                   affect the            be delayed or      not be realised
                   outcome.              compromised if     if the project is
                                         project not        not completed
                                         completed.


                              Phase-3 Data

         Cost                 Value Score                   ROI Score



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                                                                         The Right ProjectsTM




                                                  Phase-4 Data

                           Complexity              Capability              Prob’ of Success




Project Complexity and Capability Descriptions

                                          1                 2            3             4

 Complexity                             Simple      S-forward        Challenging   V-Complex

 Capability                             None            Basic          Some        Experienced



                                      Probability of Project Success

                            1
  Probability of Success




                           0.8
                                                                               Capability 1
                           0.6
                                                                               Capability 2
                                                                               Capability 3
                           0.4
                                                                               Capability 4
                           0.2

                            0
                                  1           2         3        4
                                        Project Complexity




                                                  Phase-5 Data

           Precedes                           Follows           Deadline           Duration




                                                        34
                                                                          The Right ProjectsTM




6.1.7   Portfolio Summary Form

         6.1.Phase 2                    Phase 3                 Phase 4        Phase 5
              Data                       Data                    Data           Data

                           Comp-    Value                ROI     Prob’     Urg-
 Ref       Project Title                         Cost                                Priority
                           liance   Score               Score   Success   gency

  1

  2

  3

  4

  5

  6

  7

  8

  9

 10




                                            35
                                             The Right ProjectsTM




6.2     Glossary

Asset Utilisation   Managing an organisation’s assets to
                    optimise a return on their investment.

Benefits            The process of managing the delivery of
Realisation         anticipated project benefits.

Break-Even Time     The time taken to reach a level of activity
                    at which investment costs are recouped.

Business Case       A document detailing the anticipated
                    primary business benefits of an investment.

Business Goals      A series of business strategies against
                    which future efforts will be aligned.

Business Plan       A high-level plan detailing how the
                    company will achieve its goals.

Business Process    A procedure or methodology by which a
                    business function is performed.

Capacity            The task of managing an organisation’s
Utilisation         production capacity to optimise a return.

Cost per Output     A measure of cost against product or
Grade               service quality.

Customer Net        The present value of the expected future
Present Value       cash flows of a customer minus the
                    associated costs.

Debtor Days         A measure of outstanding monies owed by
                    customers.




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                                              The Right ProjectsTM




Delivery Time        The time taken to deliver the goods or
                     services to the customer after an order has
                     been received.

Differentiation      To differentiate the company’s brand,
                     products or services from its competitors.

Duplicate Projects   Two projects that offer the same (or a
                     similar) business benefit.

Economic Value       EVA is determined by subtracting from
Added                total income, the sum of the cost of
                     capital, multiplied by the invested
                     capital.

Flowchart            A visual representation of a business
                     process detailing process inputs, actions
                     and outputs.

Gearing Ratio        The relationship between long term
                     liabilities and capital employed.

Gross Margin         Gross profit divided by sales, which is equal
                     to each sales dollar left over after paying
                     for the cost of goods sold.

Inter-               The relationship between projects.
Dependencies         Mapping project dependencies can help
                     when scheduling.

Internal Rate of     Ratios that are designed to measure the
Return               profitability of the company in relation to
                     various measures of the internally invested
                     funds.

IT Strategy          A high-level plan detailing how Information
                     Technology will help the business to meet
                     its strategic goals.




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                                           The Right ProjectsTM




KPI               Pre-determined measure of business
                  performance. Often referred to as Key
                  Performance Indicator.

Methodology       A standardised, documented approach to
                  the delivery of a business function or
                  output.

Payback Period    The time required by a project to recover
                  its initial financial investment.

Post              A formal review following the completion of
Implementation    a project. Determines whether the project
Review            has met with its original objectives.

Profit Ratio      Net profit after taxes divided by sales for a
                  given 12-month period, expressed as a
                  percentage.

Process Errors    An error in a business process that results
                  in the process output being compromised.

Production        The ability of operations to accommodate
Flexibility       short-term changes in the level of demand
                  for a product or service.

Project           A finite piece of work which is undertaken
                  within cost and time constraints to achieve
                  a stated business benefit (Buttrick, R.
                  2000)

Project Benefit   The business benefits offered by the
                  successful implementation of a project.

Project           The day to day planning, organising,
Management        managing and controlling of organisational
                  resources to deliver a pre-agreed project
                  benefit.




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                                             The Right ProjectsTM




Project Office      The central business function responsible
                    for assembling, co-ordinating, tracking,
                    monitoring, maintaining and distributing
                    project related information.

Project Plan        A document of the activities, timings and
                    resources required to achieve a project’s
                    objectives.

Project Portfolio   A collection of projects (often related by
                    their contribution to a specified business
                    objective)

Project             A front end approach to strategy delivery
Prioritisation      which focuses on the identification of
                    projects    that    make     the greatest
                    contribution to business goals.

Program             A collection of change actions (projects and
Management          operational activities) that when combined,
                    allow the business to realise a strategic
                    objective.

Redundant Project   A project which holds little or no strategic
                    value - the project benefits are not aligned
                    to the existing goals of the business.
                    Project redundancy normally occurs as a
                    result of a change in strategic direction. Its
                    frequency will normally increase over time.

Reprocessing        The act of repeating a failed business
                    process. In today’s technology centric
                    businesses, reprocessing will often require
                    manual intervention.

Risk                A measure of the consequence and
                    likelihood of an event occurring.




                              39
                                           The Right ProjectsTM




Risk Management   The process, through which risks are
                  identified, evaluated and treated.

ROI               A measure of the value of a business
                  investment. Also referred to as Return on
                  Investment.

SMART Measures    Specific, Measurable, Actionable, Realistic
                  and Time-bound) measures

Standard Cost     The cost to product one unit of product.

Strategic Value   A holistic measure of a project’s
                  contribution to a set of pre-defined goals.

Strategy Life     A three-phased approach to the
Cycle             management (define, drive and deliver) of
                  business strategy. Project Prioritisation
                  helps an organisation to drive its business
                  strategy.

Weighted Goal     A goal that has been numerically weighted
                  to differentiate its relative importance to
                  the overall strategy of the business.




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