Initiate the Project

No organization has the resources to meet all of its business needs. This is true in the best of times. It certainly is even truer when times are tough. Even if your organization is a rare one that has all the money it needs, you definitely do not have the people capacity to complete everything you would like. The typical response to managing scarce resources against an unlimited demand is to come up with some type of prioritization process to ensure that you approve and fund the work that will provide the most value.

The Project Management Process describes how to pro-actively plan and manage projects. However, this assumes that there is a project to begin with. Every organization has processes in place to identify and authorize a project. In the process this identification and authorization process is called Project Initiation.

Every organization has some type of process for Project Initiation. Usually there are two instances when these processes are invoked. One is the annual business planning process. This is the yearly process that takes place to identify organizational goals, strategies and objectives for the next one to three years. Each organization then has some process for identifying and authorizing the work for the coming year to help meet these goals, strategies and objectives.

In addition to the annual business planning process, there is always unexpected and unplanned work that arises during the year. Each organization needs to have some way to prioritize and slot this work as well.

The framework for identifying and authorizing work is fully explained and explored through a model that is called the PortfolioStep Portfolio Management Framework ( Portfolio management is a process to ensure that your organization or department spends its scarce resources on the work that is of the most value. If you practice portfolio management throughout your organization, this process helps to ensure that only the most valuable work is approved and managed across the entire enterprise. If you practice portfolio management at a departmental level, it will provide the same function at this lower level.

Department leaders that do not understand how their budgets are spent, and who cannot validate that the work being funded is the most important, will find themselves under greater scrutiny and second-guessing in the future. Portfolio management can help your department answer some of the most basic, yet difficult, questions regarding work performed and value provided.

Portfolio management includes 10 steps for approving and managing the work of the portfolio. The first two steps are explained below – categorization and identification.

Initiate the Work – Categorization

The Project Management Institute defines categorization as: “The process of grouping potential components into categories to facilitate further decision-making”, and it defines a category as: “A predetermined key description used to group potential and authorized components to facilitate further decision-making. Categories usually link their components with a common set of strategic goals.”

The categorization step is completed first. This is where you define the terms, scope and definition of your portfolios, and gain agreement on your basic portfolio model. For instance, you need to define information like the following:

  • The organizations covered. For instance, will you include the entire company or just certain organizations?
  • The type of work included. For instance, does your portfolio include projects, support, operations, etc.?
  • The categorization scheme. This helps you balance your portfolio in areas that are important to you so that you can optimize the overall allocation of resources. For instance, categories could include work that supports the business, grows the business and leads the business.
  • The balance points. For each categorization you define, you would also set some guidelines as to how you think the work should be balanced.
  • The financial models. It is impossible to compare apples to apples if each project has different financial justification based on different models. You need to understand the financial models that your organization wants to utilize and make sure all projects are justified using those models.

Initiate the Work – Identification

Many implementations of portfolio management start directly with trying to identify and prioritize the work of the portfolio, most likely because that is obviously where you will find the greatest value. However, if you start there directly, you will soon find your group is in disagreement over what work provides the most value.

The value that work brings to your organization is typically based on the financial cost/benefit implications and how well it aligns with your organization’s strategy, goals and objectives. The financial cost/benefit can be calculated and compared once you have the common financial model(s) in place. Goals and strategies are needed to align your work to what the organization has identified as the most important.

You cannot make decisions on prioritizing work without knowing what the company or organization feels is important. The Identification step results in establishing the context within which work priorities and approvals are made. Identification starts with first evaluating your environment through a Current State Assessment and then contrasting the current state with a Future State Vision that describes where you want your organization to be in the future. The process results in the validation (or creation) of your mission, vision, strategy, goals and objectives. In particular, your strategy and goals will provide the high-level direction that will help align and prioritize all the work for the coming business cycle.

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