How to practically evaluate project ideas?
Deciding to launch your next project almost always involves a financial commitment. Why? Every project requires a commitment of resources—either your human resources or external purchases—and all resources have a cost. It is also important to note that most projects implemented should have an inevitable return on investment. The lower the costs and the greater the benefits of implementation, the more value the project will bring to the organization. Your role in this process is crucial as a vital part of the organization. There are often more ideas for good projects than the organization can implement in a certain period. The most common reason for this situation is the company has limited resources. Therefore, developing a process that is as objective as possible to select the best project ideas becomes crucial. By best, I mean those that will have the most significant impact on increasing the company’s value. This article will discuss three tools that, when used simultaneously, will significantly support good decision-making:
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Business case of the project
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Scoring assessment
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Linking projects to company strategy
Tool #1: Develop a good business case for the project
In the simplest terms, a project business case is a statement of the costs and benefits of a project that a company intends to implement. In addition, to justify potential revenues or savings and expenses, the business case should describe the project assumptions, market opportunities, threats, and the most critical risks. The business case should also include fundamental financial indicators such as NPV or Payback Period example.
Tool #2: Scoring assessment
This article will discuss project scoring based on the “Scoring” module, part of the FlexiProject project management system.
In FlexiProject, any number of scoring models can be developed. Each project is evaluated in two dimensions: benefits and complexity. For each dimension, you can arrange questions and assign weights to them. An additional advantage in this case is the option to define who in the organization should answer these questions to assess the attractiveness of the project idea.
Figure 1: Sample set of questions for the “benefits” dimension and weights, as well as evaluators
Figure 2: Card for a single question showing the evaluator’s possible answer choices
If a company divides projects into project portfolios and uses the scoring module simultaneously, the FlexiProject management system will automatically rank ideas and projects in terms of their attractiveness, as shown in Figure 3.
Illustration No. 3: Projects ranked by attractiveness in a given portfolio
A tool like the one shown in Figure No. 3 allows a company’s management to efficiently lead a discussion about which projects to pursue and which are most attractive to the company.
Tool No. 3: Linking project ideas/projects to the company’s strategy
Companies with a formulated corporate strategy often implement the goals contained in the strategy by implementing specific projects. Such a linkage can be implemented in FlexiProject similarly to the scoring analysis using the “strategy” module.
Figure No. 4: Linking ideas/projects with the company’s strategic goals
As shown in the illustration above, the rows contain the company’s strategic goals, and the columns contain projects or project ideas. Assessing the attractiveness of an idea involves determining the level of support for a given strategic goal by a particular idea. Thus, if at the intersection of a given goal and project, there are the digits 9, it means solid support of a given goal, and if the digit 1, it means fragile. Thus, with limited resources, it is worth pursuing those projects that contribute most to implementing the company’s strategy.
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Leverage tools for accurate project idea assessment
Using the above-described tools simultaneously is advisable, rather than relying exclusively on one. It is also worth noting that the results presented by each tool may not be identical. Then, a final expert decision is needed based on experience and knowledge of the company and its competitive environment. Nonetheless, these tools somehow structure and objectify such a discussion and are worth using in practice.
