7.2 Evaluating and Balancing Project Types

As IT leaders shape their project portfolios, a key challenge is determining the optimal mix of initiatives. Each project type—whether innovation, maintenance, compliance, or strategic—competes for finite resources such as budget, talent, and executive attention. Effective evaluation and balancing involves not only selecting the right projects but also sequencing, funding, and monitoring them in alignment with overall business goals. This section explores how organizations can define criteria for assessing project contributions and strike the right equilibrium among the various project types.

7.2.1 Criteria for Evaluating Each Project Type

1. Strategic Alignment
   • Objective: Gauge how each initiative supports corporate objectives, OKRs, or IT strategy.
   • Key Questions:
     • Does this project directly advance a strategic pillar (e.g., digital transformation, market expansion)?
     • How critical is the project to competitive positioning or future growth?
2. Risk and Complexity
   • Objective: Understand potential pitfalls, ranging from technical complexity to market uncertainties.
   • Key Questions:
     • What is the likelihood of significant scope creep or technology failure?
     • Are there external compliance or regulatory risks if not executed properly?
3. Resource Intensity
   • Objective: Estimate the people, skills, and financial resources each project will consume.
   • Key Questions:
     • Is specialized expertise required, and is it readily available?
     • How much direct and indirect cost (CapEx, OpEx) does the project represent?
4. Time to Value
   • Objective: Assess how quickly the project can deliver tangible or intangible benefits.
   • Key Questions:
     • Will it produce quick wins or require a long incubation period?
     • Is iterative delivery possible (e.g., via Agile), or does it require a big-bang approach?
5. Benefit Realization
   • Objective: Evaluate the overall potential return and how it translates into financial and strategic gains.
   • Key Questions:
     • What is the expected ROI, NPV, or other financial metric?
     • Are there non-financial benefits like customer satisfaction or brand enhancement?

7.2.2 Techniques for Portfolio Balancing

1. Avoiding Over-Investment in One Category
   • Rationale: Concentrating too heavily on a single type of project—such as innovation—can yield high rewards but expose the organization to greater risk or neglect critical maintenance. Conversely, over-investing in maintenance can stifle growth and innovation.
   • Approach:
     • Establish portfolio targets (e.g., X% for strategic, Y% for maintenance) and track against these.
     • Conduct quarterly or semi-annual reviews to rebalance project types as new priorities emerge.
2. Balancing Risk vs. Reward
   • Rationale: Not every project will have the same risk profile. A diverse portfolio typically includes low-risk/steady-return maintenance projects alongside higher-risk/higher-reward innovation ventures.
   • Approach:
     • Use a risk-reward matrix to plot projects, helping visualize overall risk exposure.
     • Employ scenario planning for high-risk initiatives, defining contingency plans if expected outcomes don’t materialize.
3. Sequencing and Phased Approaches
   • Rationale: Even if the organization needs multiple initiatives, they might not all have to start simultaneously.
   • Approach:
     • Create a multi-quarter or multi-year roadmap, phasing high-priority projects earlier while deferring lower-value or higher-risk ones until resource availability improves.
     • Use stage gates or milestone reviews to confirm readiness before moving to the next phase.
4. Weighted Scoring and Prioritization
   • Rationale: A structured approach to deciding which projects get approved or accelerated.
   • Approach:
     • Develop a simple scoring model that ranks projects on strategic alignment, risk, ROI, and resource requirements.
     • Compare the total “weighted scores” of proposed projects and select the top performers based on available budget or capacity.

7.2.3 Tools and Methodologies for Evaluation

1. Portfolio Dashboards
   • Visualize how each project aligns with strategic goals, current status, and resource consumption.
   • Highlight variances (budget, schedule) and provide a quick snapshot of project health.
2. PMO or EPMO Processes
   • A centralized Project Management Office or Enterprise PMO can facilitate consistent evaluation criteria and maintain a holistic view of the portfolio.
   • Leverage common frameworks (e.g., PMBOK, PRINCE2, SAFe®) adapted to organizational needs.
3. Scenario Planning
   • Explore different outcomes (best case, worst case, likely) for each project and how they might affect the overall portfolio.
   • Conduct “what-if” analyses for cost overruns, schedule delays, or market shifts.
4. Collaboration and Governance
   • Foster cross-functional steering committees or governance boards that regularly review project performance, resource needs, and strategic alignment.
   • Encourage transparent discussions about trade-offs, giving stakeholders visibility into decision-making.

7.2.4 Common Pitfalls in Balancing Project Types

• Incomplete Data or Vague Criteria: Without standardized metrics or a robust data set, decisions may rely on personal biases or departmental politics.
• Ignoring Dependencies: Projects often share resources or depend on each other’s outputs; failing to factor these in can create resource conflicts or missed deadlines.
• Reactive Instead of Proactive Management: Waiting until a crisis (e.g., budget cuts, compliance deadlines) forces re-prioritization can derail strategic objectives.
• Lack of Ongoing Reassessment: The optimal mix of projects may shift as market conditions, technologies, or corporate strategies change. Periodic portfolio reviews are essential.

7.2.5 Key Takeaways

• Holistic Evaluation: Use multiple criteria—strategic alignment, risk, resource intensity, time to value—to assess how each project contributes to the broader portfolio.
• Strategic Balancing: Strive for a balanced mix of innovation, maintenance, compliance, and strategic projects to spread risk and optimize value creation.
• Structured Decision-Making: Formal frameworks (e.g., weighted scoring, risk-reward matrices) and consistent governance enable data-driven decisions over gut feelings.
• Continuous Review and Adaptation: Regularly revisit your portfolio composition. As business needs evolve, so should the portfolio strategy.

Balancing project types ensures that your organization can maintain operational continuity, comply with regulations, drive innovation, and strategically position itself for long-term success. By applying rigorous evaluation methods and periodic reviews, senior IT leaders can build a dynamic portfolio that not only meets today’s requirements but also anticipates tomorrow’s opportunities.