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When Should a Prioritization Matrix Be Used?
Prioritization matrices are good for organizations new to the portfolio management process. Due to the simplicity, organizations can quickly get the benefit of prioritization without spending the time to do a thorough scoring of each project. Even in organizations where projects are scored and ranked, prioritization matrices can be used for “pre-screening” purposes to do a preliminary prioritization. This would be commonly used in a stage-gate process before a formal business case has been developed. A governance team could quickly determine a categorical priority for the project at an early gate review. Prioritization matrices can also be used to triage large volumes of project requests to focus the organization on the hottest projects. I have seen this approach used in an organization that received a high volume of small project requests. In this case, scoring would be an over-kill; the organization just needed to determine the most important work at that time.

Weaknesses
Prioritization matrices are unable to produce a rank ordered list of projects in a portfolio. At best, such a matrix can provide a categorical ranking of projects in the portfolio, but this won’t help prioritize projects within the same category. Prioritization matrices cannot do a good job of evaluating projects based on multiple criteria, and therefore cannot do a thorough job of distinguishing important projects from less important projects. When evaluating multiple large projects, a scoring system will provide a more accurate analysis over a prioritization matrix.

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Project prioritization is one of the most common topics in portfolio management literature. Within the context of project prioritization is the matter of scoring models because scoring models are the most widely used approach to prioritize projects. Although there are a lot of opinions on the effectiveness of common scoring models, they are nonetheless the most common method for prioritizing projects. However, most people may not realize the many uses of a scoring model and how it drives better decision making beyond project prioritization. In this post, we will look at five uses of a scoring model.

In summary, portfolio optimization delivers significant strategic benefits to any organization, but getting the right processes in place to collect good data is not easy. Having the right data can enable your organization to know what is happening to the portfolio (descriptive analysis), what could happen (predictive analysis), and what senior leaders should do (prescriptive analysis).

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1) Project prioritization is the most common reason for using scoring models. As we saw in a previous post, project prioritization is for resource allocation. Since portfolio management is about delivering the most business value through projects, it is logical to ensure that resources are spent on the most important work. Ranking projects helps provide a common understanding of what is most important in the organization and scoring models are one of the easiest ways of establishing a rank order. For more information on using prioritization scoring models to rank order projects, please see .

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2) A prioritization scoring model is also used for project selection. The idea is to rank projects from highest value to lowest value and select projects until resources run out. This approach has merits over other approaches that do not sufficiently take account of strategic drivers. However, it can be shown that even simple optimization techniques can yield a higher value portfolio at the same cost. For organizations that do not employ portfolio optimization techniques, using a scoring model to rank order projects and fund projects until resources runs out is a reasonable way to go.

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The following diagram summarizes the above points and highlights how having the right data inputs combined with constraints and other strategic criteria can produce optimial outputs across four dimensions of portfolio optimization.

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Point B Consulting’s 5-step methodology for conducting PMO analytics enables organizations to realize the full potential of their analytic processes.

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Portfolio optimization is major part of the prescriptive analysis described above. Organizations should endeavor to get to this point because it delivers substantial value and significantly improve strategic execution. In order to optimize any part of the portfolio, organizations must understand the constraints that exist (e.g. budgetary, resource availability, etc.). These constraints are the limiting factors that enable optimal scenarios to be produced. There are four basic types of portfolio optimization described below:

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Once this is done you can focus on expression. This means looking at sentence structure, tense usage and vocabulary. It’s important to write clearly and economically. This can mean either rephrasing ideas in two sentences instead of one, or rewriting two longer sentences as one shorter sentence. So, go over your first draft, looking for ways of improving sentence structure, tense usage and vocabulary.

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3) is very useful for identifying higher-value portfolios than merely using scoring models as discussed in the previous paragraph. The scores for each project can represent a “utility score” which can then be used as the input for the optimization calculations. In this way, projects are optimized based on all the scoring inputs, not merely on net present value or some other financial estimate. For more information about this technique, please refer to Richard Bayney’s book .

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