The Right ProjectsTM

2nd Edition

How to Select and Prioritise

Projects that Really Drive
Strategy

David Hinks (PhD)

Copyright © 2007 David Hinks

Copyright © 2007 David Hinks.
The Right ProjectsTM reference guide is the outcome of a
five year investigation into best-practice project
prioritisation. It has been written to help define and
communicate the principles of project selection and
prioritisation. Users are encouraged to provide feedback to
the author at [email protected]
 Strategy Poor Projects
"Many companies are harbouring strategically redundant
projects potentially costing millions of dollars per annum
because they fail to effectively quantify project value. It's
the age old story of trying to pick winners but not
understanding how they fit into the business as a whole.

A recent investigation has revealed that in many

organisations, project redundancy rates are in excess of
20%. Project prioritisation is fast gaining recognition as a
means by which executives can differentiate between high
and low value projects.”
The Boardroom Report, Vol 2, Issue 19, November 2004.
 The Right ProjectsTM

1 FOREWORD ........................................................... 6
2 OVERVIEW .......................................................... 10
2.1 Purpose of this Guide............................................. 10
2.2 Scope .................................................................. 10
2.3 Audience .............................................................. 10
2.4 Sponsors.............................................................. 11
2.5 Reporting ............................................................. 11
2.6 Guide Maintenance ................................................ 11
2.7 Disclaimer ............................................................ 11
3 WHY PROJECT PRIORITISATION? ....................... 12
3.1 Project Redundancy ............................................... 12
3.2 A Common Issue ................................................... 12
3.3 The Impact........................................................... 14
4 METHODOLOGY ................................................... 16
4.1 Introduction ......................................................... 16
4.2 Strategy Life Cycle ................................................ 16
4.3 The Right ProjectsTM - Process Overview................... 17
4.3.1 Create SMART Goals................................................... 19
4.3.2 Define Scope of Review............................................... 20
4.3.3 Determine Project ROI ................................................ 21
4.3.4 Assess Probability of Success ....................................... 22
4.3.5 Finalise Project Priorities ............................................. 23

5 BENEFITS ............................................................ 24
5.1 Introduction ......................................................... 24
5.2 Generate Great Project Ideas.................................. 24
5.3 Align Strategic Efforts ............................................ 24
5.4 Drive Strategy ...................................................... 25
5.5 Fewer Business Cases ............................................ 25
5.6 Reduce Project Spend ............................................ 26
5.7 Increased Likelihood of Project Success ................... 26
5.8 Balance your Investment Appraisal Approach............ 27

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 The Right ProjectsTM

6 APPENDICES ....................................................... 28
6.1 Workpapers .......................................................... 28
6.1.1 Common Industry Goals (Sales and Marketing) .............. 28
6.1.2 Common Industry Goals (Operations) ........................... 29
6.1.3 Common Industry Goals (Finance)................................ 30
6.1.4 Goal Summary Form................................................... 31
6.1.5 Sign-Off Form............................................................ 32
6.1.6 Project Summary Form ............................................... 33
6.1.7 Portfolio Summary Form ............................................. 35
6.2 Glossary............................................................... 36

5
 The Right ProjectsTM

1 Foreword
In the majority of organisations, projects are generally
recognised as the primary vehicle through which strategy
and change are delivered. Any change in the direction or
goals of an organisation cannot be readily achieved
without the selection and successful implementation of
projects that provide the necessary effect or benefit.

It is the management and delivery of project benefit which

represents the primary objective for project managers –
how can a project’s optimum benefit be delivered within
cost and time constraints? (Figure 1)

Figure 1: Triple Project Constraints

Cost Time

Benefit

Over the past few decades, a lot of thought has been

brought to this issue. Project management methodologies
have evolved (and continue to evolve) to meet the
challenges of deriving benefit from projects of increasing
complexity. In their desire to maximise return on project
spend, organisations have invested significant amounts of
time and money in embedding these methodologies.

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 The Right ProjectsTM

However, whilst project management methodologies will

often improve the probability of project success, they do
not allow for the comparison of the benefits of distinct
projects (i.e. how to prioritise projects.) The net effect is
that many organisations struggle when it comes to
selecting one project over another and may well be
implementing low value projects. The best project
managers will deliver little true benefit if they are working
on low value projects.

With project approval rates often exceeding the rate of

completion, management are under increasing pressure to
deliver more with less. In an attempt to resolve this
issue, attention is now focussing on how to differentiate
between high and low value projects.

Contained within this guide is a methodology which

attempts to highlight the principles of project selection
and prioritisation. It begins with a structured analysis of
common industry goals as a basis for the creation of a
balanced set of strategic objectives.

One of the guide’s key aims is to highlight the rewards

that can be realised through the unlocking of an
organisation’s project ideas potential. It is often the case
that projects ideas are conceived by senior management
with little input from the wider organisation. We believe
that by harnessing the collective knowledge of an
organisation, the quality and applicability of project-ideas
will increase significantly.

With a series of project-ideas to select from, the guide

then goes on to introduce a framework through which
individual projects can be valued based upon their
contribution to goals.

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 The Right ProjectsTM

The guide then aims to bring focus to determining the

probability of project success as not all high value projects
will necessarily be the preferred option for the
organisation.

As you create and prioritise your project lists, it is

important to keep asking yourself the following questions:

ƒ How can we make use of the collective knowledge of

our organisation to come up with better project ideas?;
ƒ How do we differentiate between high and low value
projects?
ƒ How do we better understand which projects our
organisation is capable of delivering?
ƒ How do we ensure that all goals can be realised
through the projects we decide to undertake?; and
ƒ How can we prevent our project list expanding to the
point that resources become overstretched?

These are big questions facing all organisations and it is

important that consideration be given to each. It is only
through the development of a structured approach to
project selection and prioritisation that an organisation will
truly start to find workable answers.

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 The Right ProjectsTM

In writing this guide, it was never an objective to provide

a failsafe means by which projects can be prioritised.
Projects by their very nature are one-off exercises and
tend to bring with them much that is unknown at their
outset. It is this unknown that makes assessing and
comparing project value so difficult. What we do hope to
demonstrate, however, is a structured approach through
which the reader can gain an understanding of the key
principles of project selection and prioritisation. Delivering
projects is all well and good, but only if you are delivering
The Right Projects TM.

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 The Right ProjectsTM

2 Overview
The Right ProjectsTM has been written to provide a
framework for the development of project prioritisation
methodologies. This section outlines the purpose and
scope of the guide, its intended audience and includes
considerations for reporting.

2.1 Purpose of this Guide

The primary purpose of The Right ProjectsTM is to enable a

standard and practical approach to the development of
project prioritisation methodologies.

2.2 Scope

The Right ProjectsTM provides an introduction to the topic

of project prioritisation and the reasons for its importance
as a management discipline.

It contains practical guidelines to facilitate the

development of project prioritisation methodologies and
includes detailed information on the benefits likely to be
realised through the correct application of such
methodologies.

2.3 Audience

The Right ProjectsTM is intended for use by senior

management and experienced program managers
planning for major change initiatives. Users should
typically have practical experience in organisational
change and in the delivery of strategy.

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 The Right ProjectsTM

2.4 Sponsors

Typical sponsors for project prioritisation include anyone

with; responsibility for the delivery of multiple projects, an
appropriate budget and the authority to resolve potential
disagreement amongst project sponsors.

2.5 Reporting

It is important that all stakeholders appreciate that business

strategy is dynamic and that established project priorities
may change over time.

2.6 Guide Maintenance

The Right ProjectsTM will be updated periodically with

controlled releases of revised material being issued via
selected knowledge databases.

2.7 Disclaimer

This document is for reference purposes only and the author

undertakes no responsibility in any way, in respect of the
information set out in this report, including any errors or
omissions therein arising, however caused.

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 The Right ProjectsTM

3 Why Project Prioritisation?

3.1 Project Redundancy

There is a trend for organisations to define long term

strategies to position themselves to achieve a desired
goal. Business plans (project portfolios and programs) are
then developed to direct the implementation of these
strategies.

However, because business directions change, there is a

definite need to revisit and revise these plans. If this is
not carried out, projects can become misaligned to
strategy (redundant) as business directions change over
time.

3.2 A Common Issue

In 2003, Caritas undertook an investigation into the levels

of project redundancy within a sample of large
organisations across Australia. Participants included
executives from 57 companies selected from published
Top-200 listings.

Each participant was asked to estimate the percentage of

total projects within their business not making a clear and
direct contribution to an existing business goal. Their
responses are presented in Figure 3.1.

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 The Right ProjectsTM

Figure 3.1: Project Redundancy Rates

100%

80%
Respondents
60%

40%

20%

0%
<10% 10-20% >20%

Redundancy

It is evident from these results that project redundancy is

believed to be a common issue within participating
organisations.

Of the executives surveyed:

ƒ 79% estimated that project redundancy in their
organisations was over 10%; with
ƒ 28% believing that project redundancy was likely to be in
excess of 20% (i.e. 1 in 5 of their projects did not
contribute towards a business goal.)

It is believed that these results are representative of the

situation within large organisations across Australia.

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 The Right ProjectsTM

3.3 The Impact

During the course of this investigation, participants were

asked to comment on what they believed were the three
main impacts of project redundancy within their
organisations. Their responses are summarised in Figure
3.2.

Figure 3.2: Impact of Project Redundancy

100%

80%
Respondents

60%

40%

20%

0%
Overstretched Missed Goals Unnecessary
Resources Spend

Impact

It is evident from Figure 3.2 that project redundancy is

viewed by many as having a number of negative impacts.

ƒ Given the amount time and money that organisations

invest in projects, it was generally believed that
redundant projects placed a significant and
unnecessary burden on resources.

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 The Right ProjectsTM

ƒ Similarly, it was also felt that redundant projects,

detracted efforts from high value initiatives thereby
impeding the strategic drive of the organisation and
ultimately impacting its ability to meet goals.

ƒ Thirdly, redundant projects were deemed to have a

serious financial impact. For most large organisations,
project spend can amount to millions of dollars per
annum. If the majority of these have project
redundancy rates of between 10% and 20% (Figure
3.1) it would appear that significant sums of money
are being spent unnecessarily.

The application of a robust project prioritisation

methodology represents one of the simplest and most
effective means by which an organisation can address
these issues.

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 The Right ProjectsTM

4 Methodology

4.1 Introduction

This section of The Right ProjectsTM describes how project

prioritisation relates to wider strategy definition and
delivery activities. It includes a detailed process to enable
the practitioner to tailor a project prioritisation framework
to support their own business goals.

4.2 Strategy Life Cycle

The Strategy Life Cycle (Figure 4.1) illustrates the main

phases of strategy from definition to delivery. The initial
phase [Define] is concerned with the setting of an
organisation’s strategy. The second phase [Drive] is the
selection and prioritisation of projects that take the
organisation towards those goals. The final phase
[Deliver] is the day-to-day management of projects and
their benefits.

Figure 4.1: Strategy Life Cycle

1 2
Define Drive

3
Deliver

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 The Right ProjectsTM

The Right ProjectsTM methodology is a five-step process

that brings greater focus and control around the second
phase activities (driving strategy.)

4.3 The Right ProjectsTM - Process Overview

In The Right ProjectsTM, every project (or its key benefit)

must make a clear contribution to an organisational goal.
Figure 4.2 illustrates this point. A project may contribute
to one or more goals (e.g. projects A and B.) A project
that does not contribute to any goals is termed redundant
(project C.)

Figure 4.2: Strategy - Project Link

Project A Project B

Benefit A1 Benefit B
Goal
1
Project C
Benefit A2
Goal
2

Figure 4.3 (overleaf) highlights the key phases involved in

project prioritisation. Detailed process flowcharts
describing the key activities within each phase are also
provided. Each flowchart is made up of three columns
showing a process Input, Action and Output. A written
description of the process is also included, in addition to
templates of the standard workpapers (highlighted in
blue) which can be found in the appendix.

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 The Right ProjectsTM

Figure 4.3: Key Phases of Project Prioritisation

Define Drive 1 Drive 2 Drive 3 Drive 4 Drive 5 Deliver

Set Create Define Determine Assess Finalise Manage
Strategy SMART Scope of Project Probability Project Delivery
Goals Review ROI Score of Success Priorities

Flowchart Flowchart Flowchart Flowchart Flowchart

1 2 3 4 5

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 The Right ProjectsTM

4.3.1 Create SMART Goals

Input Action Output Description

Goal When prioritising projects, the first step is to establish the underlying prioritisation
Strategy 1.1 criteria (i.e. what the projects are to be prioritised against). In the majority of cases,
Summary
Create projects will be prioritised against goals or stated business objectives. By making such
Form
Common SMART Goals goals SMART, we create a situation whereby we can readily assess the relative
Industry
Goals
contribution of each project. The Right ProjectsTM contains a set of Common
Industry Goal tables which can assist in this process (Appendix 6.1.1 – 6.1.3). SMART
goals should be recorded on the Goal Summary Form (Appendix 6.1.4).

Not all goals will be of equal importance to an organisation. In order to highlight this
Goal and to facilitate the development of a numerically driven project prioritisation process,
1.2 each goal should be allocated a weighting (normally 1, 2 or 3) based upon its relative
Summary
Weight
Form value. Weightings should be recorded on the Goal Summary Form (Appendix 6.1.4).
SMART Goals

The selection and weighting of goals is a critical step as it forms the basis for the
subsequent project prioritisation exercise. It is recommended that the sponsor of the
Sign-Off work, complete the Sign-Off Form (phase 1) indicating their approval of the goals and
1.3
Form weightings (Appendix 6.1.5).
Sign-Off

Phase
2

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 The Right ProjectsTM

4.3.2 Define Scope of Review

Input Action Output Description

In any organisation, communication is key to the realisation of strategy. This is

Goal
2.1 especially true when attempting to identify and develop project-ideas that will take an
Summary
Communicate organisation towards a desired goal. In generating project-ideas, The Right
Form
SMART Goals ProjectsTM recommends that senior management should aim to harness the collective
knowledge of their entire organisation. If all staff are made aware of SMART goals (or
those which can be communicated without commercial risk) and are given the
opportunity to suggest projects-ideas, the organisation will have a greater pool of
2.2 projects from which to select.
Create Great
Project Ideas If project prioritisation is to be undertaken on an existing portfolio, agreement should
first be reached on what qualifies as a project. A common working definition is “a
finite piece of work which is undertaken within cost and time constraints to achieve
a stated benefit (Buttrick, R. 2000). It is important that the sponsor is aware of the
selected definition as it will govern which activities are included.

The names of each project (or project-idea) for review should be entered into a
Project
2.3 separate Project Summary Form - phase 2 data (Appendix 6.1.6) along with details
Summary
Define Scope of a project reference number and project sponsor.
Form
of Review

It is recommended that the sponsor of the work, complete the Sign-Off Form (phase
Sign-Off
2.4 2) indicating their approval of the projects (or project-ideas) selected for further
Form
Sign-Off review.

Phase
3

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 The Right ProjectsTM

4.3.3 Determine Project ROI Score

Input Action Output Description

Each project (or project-idea) should be assessed for its contribution to SMART goals
Project
Business 3.1 and assigned a score based upon the Benefit Score Descriptions provided on the
Summary
Case Determine Project Summary Form (Appendix 6.1.6). The Value Score of the project is the sum
Form
Value Score of the scores awarded against each goal multiplied by any goal weighting. Scores should
Goal
Summary be entered into the Project Summary Form - phase 3 data.
Form
Note 1: All compliance projects should be identified. Compliance projects are those
that deliver to a legal requirement (i.e. there is no discretion over whether or not they
are implemented).

Note 2: It is preferable at this stage to conduct the scoring in an open discussion forum
with the key project sponsors all able to contribute to scoring process. Individual bias
can be voted out and the final scores will reflect the collective view of the group.

Project With project Value Scores determined, the organisation is now in a position to calculate
3.2 Return-On-Investment (ROI Score) based upon Value Score ÷ Cost of each project.
Summary
Determine
Form This figure provides a strong ‘bang-for-buck’ index. ROI Scores should be entered into
ROI Score
the Project Summary Form – phase 3 data.

Sign-Off It is recommended that the sponsor of the work, complete the Sign-Off Form (phase
3.3 3) indicating their approval of the ROI Scores.
Form
Sign-Off

Phase
4

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 The Right ProjectsTM

4.3.4 Assess Probability of Success

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 The Right ProjectsTM

4.3.5 Finalise Project Priorities

Input Action Output Description

Before any final prioritisation of projects is possible, project interdependencies should be

Project
5.1 established. A low value project may be an essential precursor to a higher value project
Summary
Map and so may have to be implemented first. Details of all interdependencies should be
Form
Dependencies entered into the Project Summary Form (phase 5 data).

5.2 Project Not all projects will need to be implemented concurrently. By determining the deadline
Determine Summary and anticipated duration of each project, it should be possible to better schedule the
Project Form implementation of projects over time.
Urgency

Data from all the Project Summary Forms should be entered into the Portfolio
5.3 Project
Finalise Summary Summary Form (Appendix 6.1.7). The organisation is now in a position to select and
Project Form prioritise projects based upon key information relating to their (1) compliance status,
Priorities (2) ROI score, (3) probability of success, (4) dependencies and (5) urgency.

The project prioritisation process is now complete and sign off should be obtained from
Sign-Off
5.4 the sponsor.
Form
Sign-Off

End

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 The Right ProjectsTM

5 Benefits

5.1 Introduction

The Right ProjectsTM is a structured process through which

organisations can develop project prioritisation
methodologies. Application of such methodologies can
yield a number of significant benefits.

5.2 Generate Great Project Ideas

The Right ProjectsTM encourages a culture of openness

around the development of project-ideas. By
communicating the desired goals throughout an
organisation and empowering all staff (not just senior
management,) to come up with project-ideas, an
organisation stands well positioned to harness the
collective group knowledge and identify opportunities for
projects that may otherwise be overlooked.

5.3 Align Strategic Efforts

One of the key issues for any organisation seeking to

prioritise a list of projects is the removal of individual bias
over perceived project value and the subsequent reaching
of agreement over project priorities. At the very heart of
this issue lies the Key Performance Indicator (KPI.)

Whilst there can be little doubt that KPI’s play an

important role in focussing effort, their presence can also
be the source of diverging viewpoints over project value –
a project which delivers an operational benefit will be
deemed of greater importance by an operations executive
than by a marketing executive and vice versa.

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 The Right ProjectsTM

The Right ProjectsTM promotes open forum discussion and

transparency around the assessment of project value. It
can help individuals with differing goals to reach
agreement over project priorities.

5.4 Drive Strategy

Insufficient project resources are often considered a

contributing factor when organisations fail to meet their
goals (Figure 3.2.)

The Right ProjectsTM allows for the assessment and direct

comparison of project values. By reallocating resources to
projects of highest value, organisations should be better
positioned to drive strategy and realise their goals.

5.5 Fewer Business Cases

The cost of completing a comprehensive project business

case is often a significant proportion of the total
investment in the project. With many business cases
failing to gain final approval, it becomes evident that
significant savings can be realised through an improved
upfront (pre-business case) analysis of anticipated project
value.

The Right ProjectsTM can help with the identification of low

value project proposals prior to the development of full
business cases.

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 The Right ProjectsTM

5.6 Reduce Project Spend

Changing goals will often lead to the viability of projects

decreasing over time (section 3.1.) For example, a
business in a growth phase will employ different projects
from one in a period of consolidation.

Periodical project prioritisation can help to ‘spring-clean’ a

project portfolio through the identification of projects that
no longer add value to the existing strategy.

5.7 Increased Likelihood of Project Success

Given the complexities of today’s projects, it is not

surprising to learn that project failure is a common
occurrence. The underlying causes of this failure are often
attributed to either:

ƒ a lack of appreciation over project complexity; or

ƒ insufficient delivery capabilities of the organisation

attempting to implement it.

The Right ProjectsTM brings increased focus to determining

the probability of project success. Consideration of
project complexity and the organisation’s delivery
capabilities provides an indication of the possibility of each
individual project delivering the anticipated benefit.
Armed with this information, an organisation is less likely
to embark upon a project which it cannot realistically
deliver.

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 The Right ProjectsTM

5.8 Balance your Investment Appraisal Approach

Traditional investment appraisal techniques have tended

to focus upon short-term financial returns as an
assessment of project value. When used in isolation,
these approaches often fail to recognise that projects can
offer wider (non-financial) benefits.

The Right ProjectsTM allows a number of investment

appraisal criteria to be used simultaneously to create a
much stronger final ROI figure. In this way, a more
holistic approach to investment analysis is created, giving
each project a ROI score that reflects its true worth to the
organisation.

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 The Right ProjectsTM

6 Appendices

6.1 Workpapers

6.1.1 Common Industry Goals (Sales and Marketing)

Manufacturing
Construction

Transport &
Recreation

Wholesale
Resources
Communi-

Insurance

Education
Finance &
Business

Health &
Services

Storage
Natural
cations

Mining

Retail
Focus Goal

Market Share Growth

Customer Acquisition
Market Share Customer Retention
Business from Competitors
Customer Profitability
Increase in Market Awareness
Revenue Excess Capacity
Sales Growth
Sales from New Products
Market Development Differentiation
Sales from New Markets
Customer Net Present Value
Profit Growth
Profit
Errors in Customer Database
% Sales from Proprietary Products

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 The Right ProjectsTM

6.1.2 Common Industry Goals (Operations)

Manufacturing
Construction

Transport &
Recreation

Wholesale
Resources
Communi-

Insurance

Education
Finance &
Business

Health &
Services

Storage
Natural
cations

Mining

Retail
Focus Goal

Time to Introduce Products

Speed Delivery Time
Production Flexibility
Process Errors
Break-Even Time
Standard Cost
Budget and Variance
Machine Efficiency
Labour Efficiency
Cost
Capacity Utilisation
Raw Material Cost
Profit per Employee
Rightsizing
Excess Capacity
Wastage per Sale
Cost per Output Grade
Service Performance
Warranty Cost
Quality
% Repeat Business
Customer Down Time
% Returns

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 The Right ProjectsTM

6.1.3 Common Industry Goals (Finance)

Manufacturing
Construction

Transport &
Recreation

Wholesale
Resources
Communi-

Insurance

Education
Finance &
Business

Health &
Services

Storage
Natural
cations

Mining

Retail
Focus Goal

Gearing Ratio
Share Price
Shareholder value
Dividend Payment
Price to Earnings Ratio
Revenue Growth
Customer Growth
Revenue Operating Cash-flow
Growth in Operating Income
Debtor Days
Gross Margin
Profit Profit Ratio
Sales on Credit
Capacity Utilisation
Variance from Budget
Return on Capital Expended
Return on Investment Payback Period
Internal Rate of Return
Net Present Value
Asset Utilisation

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 The Right ProjectsTM

6.1.4 Goal Summary Form

Phase-1 Data

Ref SMART Goal Weight

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 The Right ProjectsTM

6.1.5 Sign-Off Form

Phase Statement Signature Print Name Date

1 I have reviewed the Goal

Summary Form and confirm that
all goals have been accounted for
and are appropriately weighted.

2 I have reviewed Project

Summary Forms and confirm
acceptance of the list of projects
for prioritisation.

3 I have reviewed the Project

Summary Forms and confirm
that I accept the ROI Scores as
being accurate.

4 I have reviewed the Project

Summary Forms and confirm
that I accept the probabilities of
success figures as being accurate.

5 I have reviewed the Portfolio

Summary Form and confirm that
I accept the outcome of The Right
ProjectsTM prioritisation process.

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 The Right ProjectsTM

6.1.6 Project Summary Form

Phase-2 Data

Ref Project Name Sponsor

Phase-3 Data

Goal Weight 0 2 5 10 Total

Value Score

Benefit Score Descriptions

0 2 5 10

Project makes Project makes Project adds Project is

no contribution minor significant essential for
to goal or contribution to value to goal or realisation of
objective. goal or objective. goal or
objective but Realisation of objective.
will not goal or The goal or
significantly objective may objective will
affect the be delayed or not be realised
outcome. compromised if if the project is
project not not completed
completed.

Phase-3 Data

Cost Value Score ROI Score

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 The Right ProjectsTM

Phase-4 Data

Complexity Capability Prob’ of Success

Project Complexity and Capability Descriptions

1 2 3 4

Complexity Simple S-forward Challenging V-Complex

Capability None Basic Some Experienced

Probability of Project Success

1
Probability of Success

0.8
Capability 1
0.6
Capability 2
Capability 3
0.4
Capability 4
0.2

0
1 2 3 4
Project Complexity

Phase-5 Data

Precedes Follows Deadline Duration

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 The Right ProjectsTM

6.1.7 Portfolio Summary Form

6.1.Phase 2 Phase 3 Phase 4 Phase 5

Data Data Data Data

Comp- Value ROI Prob’ Urg-

Ref Project Title Cost Priority
liance Score Score Success gency

10

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 The Right ProjectsTM

6.2 Glossary

Asset Utilisation Managing an organisation’s assets to

optimise a return on their investment.

Benefits The process of managing the delivery of

Realisation anticipated project benefits.

Break-Even Time The time taken to reach a level of activity

at which investment costs are recouped.

Business Case A document detailing the anticipated

primary business benefits of an investment.

Business Goals A series of business strategies against

which future efforts will be aligned.

Business Plan A high-level plan detailing how the

company will achieve its goals.

Business Process A procedure or methodology by which a

business function is performed.

Capacity The task of managing an organisation’s

Utilisation production capacity to optimise a return.

Cost per Output A measure of cost against product or

Grade service quality.

Customer Net The present value of the expected future

Present Value cash flows of a customer minus the
associated costs.

Debtor Days A measure of outstanding monies owed by

customers.

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 The Right ProjectsTM

Delivery Time The time taken to deliver the goods or

services to the customer after an order has
been received.

Differentiation To differentiate the company’s brand,

products or services from its competitors.

Duplicate Projects Two projects that offer the same (or a

similar) business benefit.

Economic Value EVA is determined by subtracting from

Added total income, the sum of the cost of
capital, multiplied by the invested
capital.

Flowchart A visual representation of a business

process detailing process inputs, actions
and outputs.

Gearing Ratio The relationship between long term

liabilities and capital employed.

Gross Margin Gross profit divided by sales, which is equal

to each sales dollar left over after paying
for the cost of goods sold.

Inter- The relationship between projects.

Dependencies Mapping project dependencies can help
when scheduling.

Internal Rate of Ratios that are designed to measure the

Return profitability of the company in relation to
various measures of the internally invested
funds.

IT Strategy A high-level plan detailing how Information

Technology will help the business to meet
its strategic goals.

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 The Right ProjectsTM

KPI Pre-determined measure of business

performance. Often referred to as Key
Performance Indicator.

Methodology A standardised, documented approach to

the delivery of a business function or
output.

Payback Period The time required by a project to recover

its initial financial investment.

Post A formal review following the completion of

Implementation a project. Determines whether the project
Review has met with its original objectives.

Profit Ratio Net profit after taxes divided by sales for a

given 12-month period, expressed as a
percentage.

Process Errors An error in a business process that results

in the process output being compromised.

Production The ability of operations to accommodate

Flexibility short-term changes in the level of demand
for a product or service.

Project A finite piece of work which is undertaken

within cost and time constraints to achieve
a stated business benefit (Buttrick, R.
2000)

Project Benefit The business benefits offered by the

successful implementation of a project.

Project The day to day planning, organising,

Management managing and controlling of organisational
resources to deliver a pre-agreed project
benefit.

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 The Right ProjectsTM

Project Office The central business function responsible

for assembling, co-ordinating, tracking,
monitoring, maintaining and distributing
project related information.

Project Plan A document of the activities, timings and

resources required to achieve a project’s
objectives.

Project Portfolio A collection of projects (often related by

their contribution to a specified business
objective)

Project A front end approach to strategy delivery

Prioritisation which focuses on the identification of
projects that make the greatest
contribution to business goals.

Program A collection of change actions (projects and

Management operational activities) that when combined,
allow the business to realise a strategic
objective.

Redundant Project A project which holds little or no strategic

value - the project benefits are not aligned
to the existing goals of the business.
Project redundancy normally occurs as a
result of a change in strategic direction. Its
frequency will normally increase over time.

Reprocessing The act of repeating a failed business

process. In today’s technology centric
businesses, reprocessing will often require
manual intervention.

Risk A measure of the consequence and

likelihood of an event occurring.

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 The Right ProjectsTM

Risk Management The process, through which risks are

identified, evaluated and treated.

ROI A measure of the value of a business

investment. Also referred to as Return on
Investment.

SMART Measures Specific, Measurable, Actionable, Realistic

and Time-bound) measures

Standard Cost The cost to product one unit of product.

Strategic Value A holistic measure of a project’s

contribution to a set of pre-defined goals.

Strategy Life A three-phased approach to the

Cycle management (define, drive and deliver) of
business strategy. Project Prioritisation
helps an organisation to drive its business
strategy.

Weighted Goal A goal that has been numerically weighted

to differentiate its relative importance to
the overall strategy of the business.

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