What a company wants to do is not always what it can do. The critical constraint is normally the availability and quality of the critical resources. Companies usually have an abundance of projects they would like to work on but, because of resource limitations, they have to develop a prioritization system for the selection of projects.
One commonly used selection process is the portfolio classification matrix shown in Figure below.
Portfolio classification matrix:
Each potential project undergoes a situational assessment for strengths, weaknesses, opportunities, and threats. The project is then ranked on the nine-square grid, based upon its potential benefits and the quality of resources needed to achieve those benefits. The characteristics of the benefits appear in Figure below, and the characteristics of the resources needed are shown in Figure below.
Potential benefits of a project:
Characteristics of the resources needed to achieve a project’s benefits:
This classification technique allows for proper selection of projects, as well as providing the organization with the foundation for a capacity planning model to see how much work the organization can take on. Companies usually have little trouble figuring out where to assign the highly talented people. The model, however, provides guidance on how to make the most effective utilization of the average and below average individuals as well.
The boxes in the nine-square grid can then be prioritized according to strategic importance, as shown in Figure below. If resources are limited but funding is adequate, the boxes identified as “high priority” will be addressed first.
The nine-square grid in Figure below can also be used to identify the quality of the project management skills needed, in addition to the quality of functional employees. This is shown in Figure below. As an example, the project managers with the best overall skills will be assigned to those projects that are needed to protect the firm’s current position. Each of the nine cells in Figure 9–17 can be described as follows:
Strategic importance of projects:
Strategic guide to allocating project resources:
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