Prioritization of Projects in Multi-Project Management
| Translated by Julian Hammer
In multi-project management (MPM), several projects with different objectives and resource requirements are managed simultaneously within a company. This allows to achieve synergy effects by shared resources or complementary project objectives. A comprehensive project portfolio is often essential in a modern and fast-moving business world in order to implement your own corporate strategy and remain competitive.
Why is the prioritization of projects important in multi-project management? An effective project prioritization makes sure that the most important resources are used for the most valuable projects. They then receive the highest level of attention and are also the projects that best meet the company’s objectives.
If multi-project management lacks of efficient project prioritization, resource bottlenecks and project delays may occur. These problems impair the company’s ability to achieve their longterm objectives.
To respond to these challenges, there are different methods to prioritize projects. This does not only include selection criteria for clear prioritization but also the right project management software as a support in planning and as a decision-making aid for efficient multi-project management. Details are presented in our article.
Why Is an Effective Project Prioritization Decisive for Multi-Project Management?
Effective multi-project management leads to an increase in efficiency, can minimize risks, optimize resource allocation, and support the adherence to deadlines and budgets.
If projects are prioritized depending on their strategic significance and urgency, critical projects can be started and concluded in good time. The optimized use of scarce resources like personnel, time, and budget lead to an increase in efficiency in the company-wide project portfolio.
An inefficient resource allocation increases the risk for budget overruns and delays in project implementation. If unimportant projects receive too much attention, strategically important projects are neglected and company goals may be missed.
Advantages of a Structured Prioritization Process
A structured prioritization of projects includes, a.o.:
- Identification of project ideas and the creation of projects
- Determination and weighting of evaluation criteria
- Project evaluation by a scoring model
- Resource allocation based on project priorities
- Stakeholder engagement and communication
- Monitoring and adjustment of the priorities
As a result, the following advantages arise in multi-project management:
- Clarity and uniform understanding of the prioritization of all projects
- Improved decision-making based on defined and weighted project risks and opportunities
- Quicker overview and reaction to changes and new challenges
- Optimizes communication and collaboration of project teams
With the help of project prioritization, limited resources like time, financial means, and skilled workers are deployed specifically where they create the greatest added value. Less important projects are more likely to wait for free capacity than critical projects.
If sufficient resources are made available for important projects, they can be completed on time. Adherence to budgets is enhanced by clearly prioritized projects since resource overlappings and risks are taken into account in good time.
How Can Prioritization Methods (Selection Criteria) Improve Project Prioritization?
Prioritization methods can facilitate the evaluation of projects considerably by providing systematic and transparent decision-making criteria.
Clearly defined selection criteria are, a.o.:
- Strategic relevance
- Expected opportunities for the project
- Resource requirements
- Risks
- Urgency
These criteria enable an objective evaluation and comparability of projects. They are implemented in various prioritization methods and decision tools in project management.
In the ranking method, values are assigned to the evaluation criteria and they are then added. The project with the highest score gets the highest priority. A good choice is the ranking in projects with a maximum of three evaluation criteria that can easily be calculated.
Strategic projects can be better evaluated with a scoring model. This allows for an extensive weighting of a multitude of selection criteria. Criteria that are less easy to calculate, such as strategic relevance, risk factors, urgency or economic benefit, are also included in a scoring assessment.
For particularly large project portfolios, the domain approach is suitable. Projects are compiled by subject areas and managed in a decentralized manner. Some companies use ranking or scoring models to set priorities within the respective subject area.
Example from Practice with the Scorecard Model
A practical example by Projektmagazin describes the use of the scorecard model. In a software development company, the balanced scorecard was successfully implemented for a profit center. The aim was to increase customer satisfaction and productivity through employee motivation and agile methods. Using key figures like personnel costs, clearing rate, and customer satisfaction index, the achievement of the project objectives was monitored successfully.
What Prioritization Methods are There in MPM?
Every prioritization method in multi-project management is defined by different characteristics and areas of use and comes with different advantages and disadvatages.
| Prioritization method | Characteristics | Area of application | Advantages | Disadvantages |
|---|---|---|---|---|
| Cost-benefit analysis | Compares the expected benefit of the project with the effort in the form of costs | Projects with focus on ROI (Return on Investment) |
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| Scorecard model | Weighs several criteria, is considered particularly versatile | Versatile strategic and complex projects |
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| Eisenhower matrix | Categorizes tasks and projects by urgency and importance | Short-term projects |
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| MoSCoW method | Categorized tasks in the project by
Must have, Should have, Could have, Won’t have |
Agile projects and in application management |
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| AHP method | Represents objectives, criteria and alternatives hierarchically and compares the characteristics for evaluation with each other | For complex and long-term projects |
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The type of your projects determines the prioritization method you can use. Usually project management software maps a method, e.g. cost-benefit analysis.
The scorecard model is considered an all-rounder since it allows for a holistic project evaluation. Financially driven projects in which the focus is on ROI use the cost-benefit-analysis. For short-term projects or in the case of an emergency situation, the Eisenhower matrix can be helpful. The MoSCoW method is used in agile project management to prioritize requirements. With the AHP method, complex and long-term projects can be analyzed.
Below we explain the different prioritization methods a little more in detail:
Costs-Benefit Analysis
- It uses measurable data like costs, turnover, or time spent. The highest benefit, for example a better ROI, should be achieved with the least effort.
- The cost-benefit analysis is often the basis of projects with measurable financial results, e.g. in public administration or in huge companies with comprehensive budget decisions.
- It helps to make investment decisions and serves to evaluate the economic efficiency of activities and projects.
- This evaluation helps to resolve the problem of budget shortage by ensuring that only the projects with the greatest financial benefit are implemented.
- The advantage is that the evaluation is clear and objective and a simple comparison of projects is possible.
- A disadvantage that should be mentioned here is that qualitative project objectives are not considered and exact data are required for a more precise analysis.
Eisenhower Matrix
- This method classifies tasks based on urgency and importance. Tasks are subdivided into four categories: important and urgent, important but not urgent, urgent but not important, neither important nor urgent.
- The Eisenhower matrix is not only used in smaller projects but often in prioritization of personal tasks and in time management as well.
- This matrix places the focus on really important tasks. Activities that are not important or urgent can be delegated or eliminated.
- It resolves the overload problem caused by too many task running in parallel by defining clear priorities. Software features like “Work in Progress” (WIP) help to restrict the maximum number of permitted parallel tasks.
- The convincing advantages are the simple operation and the quick implementation regarding time management and productivity.
- A disadvantage is the subjectivity of evaluation.
| Eisenhower Matrix | Urgent | Not urgent |
|---|---|---|
| Important | Urgent and important These tasks (e.g. important meetings or the management of crises) requires a high degree of attention and have a huge impact on objejctives and projects. |
Important but not urgent These activities primarily include long-term planning. They are relevant for sustainable and future-oriented success, but do not have to be completed immediately. |
| Unimportant | Urgent but unimportant Interruptions, calls or e-mails that are urgent but unimportant can be delegated, postponed or reduced, as they do not contribute to long-term success. |
Unimportant and not urgent These duties are usually trivial and can be neglected, as they are not crucial to the success of the project. |
Scorecard model
- Different categories like strategic meaning, market potential, technical feasibility, and resource requirements are weighted.
- The scorecard model is primarily used in strategic planning processes in huge companies and in software development.
- The model helps to ensure a holistic evaluation and prioritization of projects by several weighted criteria.
- It resolves the problem of one-sided evaluation, by taking several relevant factors into account.
- The biggest advantage is the balanced and comprehensive evaluation which can be applied to different projects.
The time-consuming implementation does not count as a disadvantage.
MoSCoW Matrix
- With the Must have, Should have, Could have, and Won’t have categories, the priorities of project outcomes are clearly defined.
- The matrix is particularly suitable for agile projects and software development projects, where requirements must be prioritized quickly.
- It helps to place the focus on the most important requirements to allocate resources accordingly.
- It helps to resolve the problem of resource shortage and to ensure that the most important tasks are completed first.
- The convincing advantages are the clarity in prioritization. Furthermore, the matrix can be applied in a simple and flexible way.
- However, the categorization of requirements can be very subjective, which presents a disadvantage of this evaluation. In addition, too many tasks are often classified as must-haves.
AHP Method
- The AHP method breaks down the main problem into a hierarchy of objectives, criteria, and alternatives and evaluates the elements according to their importance by pairwise comparisons.
- This complex method is used in project management for large projects, in strategic planning and when choosing technologies.
- They offer structured decision-making with a high degree of transparency and objectivity by systematic pair comparisons.
- Complex projects with numerous criteria are simplified and subjectivity is reduced.
- The advantage of the AHP method is a structured approach in the decision-making process which is transparent and comprehensible.
- The bigger the project, the more complex and time-consuming this method becomes, which can be regarded as a disadvantage.
Project Prioritization with the Suitable MPM Software by PLANTA
Software solutions play a decisive role in multi-project management, since they support companies in tackling complex project prioritizations efficiently. The software automates the data acquisition, processing and analysis process, which saves time and increases precision. The visualization of data and results also makes it easier to identify trends and make informed decisions.
Our PLANTA software provides companies with an effective solution for the prioritization of project ideas and proposals in accordance with different criteria like objective contribution and risk value. Based on these assessments, clear decisions can be made as to which projects should be implemented and which should not. Furthermore, PLANTA Project supports a project simulation so that, e.g., resource overlappings can be identified at an early stage.
PLANTA Project: A project simulation helps you to verify the feasibility of projects and to resolve possible resource conflicts.
Which Areas of Project Management are Decisive for Prioritization?
In the effective prioritization of projects, different areas play a decisive role, including resource planning and project portfolio management.
The planning of resources in project management includes the assignment of personal, budget, and other resources. Careful resource allocation is crucial to ensure that the most important projects are prioritized, provided with sufficient capacity and funding and thus completed without delay.
The project portfolio management is focused on the selection and evaluation of the projects themselves with regard to their impact on the company objectives. By systematically analyzing and evaluating their projects, companies ensure that they focus their limited resources on those projects that make the greatest contribution to the company’s success.
These areas of project management have a major impact on prioritization, as they allow companies to plan projects strategically and to organize and control them. This enables organizations to achieve their long-term goals and improve their competitiveness.
How Does Project Portfolio Management Influence the Company’s Strategy?
All projects of a company are counted as part of the project portfolio. KPIs (Key Performance Indicators) and metrics play a decisive role, since they measure and evaluate the performance and the progress of the projects .
By taking into account the needs and objectives of different departments, companies can ensure that the projects selected support the overall goals of the company and synergies are created between the departments. This requires close collaboration and communication between the various departments, which can be facilitated by project management software such as PLANTA Project.
PLANTA Project: A graphical representation of the project criteria supports the decision-making process and helps to minimize risks and identify opportunities.
How Does Resource Planning Influence the Prioritization of Projects?
Resources are managed using capacity planning or resource management methods:
- Capacity planning contains the pre-calculation of available resources and their assignment to projects according to their availability.
- Resource management includes the monitoring, assignment, and optimization of resources throughout the entire project cycle to ensure that they be used efficiently.
Effective resource planning in project management contributes significantly to the success of projects by ensuring that the most important resources are in the right place at the right time.
Tools Like the PLANTA Software Can Support Resource Planning
Resource planning with the PLANTA software provides a comprehensive overview of the utilization of individual departments or teams. Drag-and-drop functions make it easy to move projects around to resolve potential resource conflicts. Furthermore, the software offers simulations at the push of a button, which allows for a fast optimization of resource assignments. Subsequently, these simulations can be exported as road map in PowerPoint to communicate the planning results transparently.
What are the Challenges of Project-Prioritization in Multi-Project Management?
The challenges in multi-project management include:
- Resource shortage
- Conflicts between projects
- Prioritization of strategic company objectives
Transparent decision-making promotes the commitment of those involved by creating understanding and acceptance for the decisions taken and the underlying process. Stakeholders understand better why certain prioritizations have been made and are more likely to accept them if they can understand how they came about, namely by taking a close look at the risks and opportunities of the projects in the company portfolio.
Multi-project management strategies and the identification of synergies between projects allow companies to make common use of resources such as time, budget, and specialist expertise across projects. Companies save time and costs and improve their overall performance.
What Are Common Mistakes in Project Prioritization?
Project prioritization is a decisive step in project management which is often connected to a series of challenges and obstacles. To ensure effective prioritization, it is important to be aware of the most common mistakes and develop strategies to avoid them.
These are some of the common mistakes in project prioritization:
- Unclear definition of objectives: Unclear or contradictory project objectives can lead to confusion and ineffective resource utilization. Clear and unique objectives are decisive for successful projects and their prioritization.
- Missing prioritization criteria: Without clear criteria for prioritization, projects can be selected on a subjective basis. A definition of objective criteria is important.
- Negligence of risks: Projects with high risk should not be overlooked, since this may lead to a substantial financial loss. An integrated risk evaluation is indispensable.
- Lack of stakeholder involvement: The involvement of relevant stakeholders is decisive to consider their perspectives and requirements.
- Missing flexibility: With a rigid approach in project prioritization you are unable to react appropriately to changes or new information.
Conclusion on the Prioritization and Selection of Projects in Multi-Project Management
The Prioritization of Projects in Multi-Project Management is decisive to ensure that resources are used effectively and projects achieve the greatest possible benefits for the company. It requires clear objectives, objective criteria and risk evaluation. A lack of prioritization of projects or avoidable errors lead to inefficient use of resources, delays and ultimately to unachieved project goals. The PLANTA Project software facilitates the project prioritization process by transparent decision-making. Project evaluation with a supporting software solution is therefore essential for efficient multi-project management in your company.
FAQs on the Prioritization of Projects in MPM
How does resource planning influence the prioritization of projects?
Through clear communication, stakeholder involvement, as well as the definition of transparent criteria such as an objective risk analysis, the management can eventually make their own decisions when conflicts in project prioritization arise.
Which metrics are crucial for monitoring the effectiveness of project prioritization?
Important metrics are, e.g., ROI, the significance of concluded projects, or the impact of the prioritized projects on company objectives.
Do stakeholders play a role in the project prioritization process?
Stakeholders should be taken into account when prioritizing projects, as their interests, needs, and expectations have an influence on the project and they can contribute to the improvement of the acceptance of the project and the avoidance of conflicts.
