Classify projects based on the frequency with which your organisation carries out different types. Classification is related to the concepts of volume, variety and complexity. There are four types of project:
- Runner: something we know how to do, easy to plan and estimate, low risk and easy to carry out.
- Repeater: a runner with a difference, something outside the norm.
- Stranger: something we have little experience of, but know can be done, harder to plan and estimate, higher risk and harder to carry out.
- Alien: a project nobody has done before, hard to plan and estimate, high-risk and unclear how to carry out.
Use these categories to decide how difficult a project is likely to be, the risk and the likelihood of success. When balancing your project portfolio, make sure you have a good mix of project types. The majority should be runners and repeaters, with a few strangers and aliens. Having a high number of strangers and aliens creates a high-risk strategy.
Although this technique is subjective, it helps create a first pass analysis of your project portfolio.
I'm interested in hearing how others balance their portfolios and assess overall risk.