Are There Too Many Aliens in Your Project Portfolio?

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Balancing a project portfolio is a tricky business, and getting it wrong can lead to running a high-risk strategy. Here's a simple technique to help grade your projects and ensure a properly balanced portfolio.

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.

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I can agree with the above for a portfolio of unrelated projects where one has the benefit of being able to pick and chose which project to do in whatever sequence.

However, in the business world, portfolios generally have project events that have to logically follow one after another. In some cases several projects must be completed in order to feed into a larger product that itself fits in with other large products in a main strategy.

An example of this could be a firm moving away from a supply chain strategy to a value chain strategy while at the same time introducing within the company an internal total customer care culture. The objective of this strategy would be to move the focus of the firm from being inwardly looking i.e. having bureaucratic systems and procedures focused on 'our main objective is to make a sale and increase profit' to an outward looking system geared up to address 'our main objective is to not only satisfy our customers (which every firm is aiming for) but to go a few steps further to delight them and in doing so turn them into life long advocates for our business. In this philosophy every aspect of the firm is designed to cut out wasted time, effort and proceedures that do not directly add value to the customers experience in doing business with the firm.

This business wide strategy would consist of a portfolio of projects that cover all of the risk factors shown in the above submission. However, the projects would have to be very carefully planned and sequenced according to the logical chain of events necessary to efficiently complete the overall strategy.

In this case, and I would suggest in most large portfolios of projects, cherry-picking projects according to the level of complexity and risk would not be a viable option.

Stephan Toth
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