A Project Selection Strategy is Critical, Unless you can go “Back to the Future”

16 December 2011
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For many project-driven organizations, especially those in new product development and innovation, one of the toughest challenges is managing a pipeline of potential projects and making an objective and well-informed decision on which project to place your bet on.  A strategic project selection process will ensure that the right metrics, experts and stakeholders are involved in the assessment and prioritization of your pipeline.  The right project selection strategy allows for an organization to maximize its potential for success and improvement across its current and future portfolio.

Recently I read an article that announced the launching of a new DeLorean in 2013 that I think goes contrary to a formal selection process. Although both famous and infamous at the same time, the DeLorean brings back memories of a failed auto company that had the opportunity of reaching a “one hit wonder” status in the movie Back to the Future back in 1985.  Although there is the nostalgia factor that can help in the successful return of the DeLorean, from a project selection and risk management viewpoint a $90,000 electric sports car based on a failed auto company’s design does not sound very promising.  I wonder what success factors (if any) were considered for this venture?  With no real traction in the last 17 years, the new DeLorean project seems to be an idea based on chance (more than on a strategic selection process) with the hope that a whole bunch of wealthy Generation Xers will be shortly experiencing a mid-life crisis in an effort to shed their inner McFly.

In order to gauge how well you are evaluating your project pipeline, you may want to pose the following questions concerning your project selection strategy:

1.    Are your ranking metrics aligned with stakeholder needs?
2.    Is your portfolio balanced by allowing for the ranking of ideas based on relative importance?
3.    Do you have enough visibility into your resources current and future abilities to accurately assess your pipeline’s future viability?
4.    Are you employing fact-based metrics, such as Return on Investment (ROI), Internal Rate of Return (IRR) and Net Present Value (NPV) to assist in product selection?
5.    Does your selection of project ideas take into account your active portfolio of projects?

To learn more about my thoughts on project selection, please refer to my recent webcast and white paper on the subject.  As always, I welcome your comments and feedback.

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