There are many methods of Prioritising your Projects. These can be both quantitative and qualitative. Here we will provide you with 6 methods.
1) Business Case: The Business Case offers a programme or project with its motive/ justification and is an important component of both PRINCE2 and Managing Successful Programmes. It outlines grounds for investing in a project, furnishes a framework for bringing about business change and runs for the life of the project to ensure that it stays on track. A precise Business Case has five main parts. Strategic fit considers issues such as business must have and strategic benefits.
2) Earned Value Analysis (EVA) for Prioritising Projects: Viewed with caution by some because it is associated with large projects and requires, amongst other things, a tradition of reporting within a company, this can be a helpful technique. Organisations can manage and appraise a project to get an integrated view of its cost, spend and progress so allowing them to estimate resources that will have been used at completion. Managers can use EVA to help them keep an eye on project performance and correct variances, put a project on ice or ditch it if necessary.
3) Payback Period: By using this fairly straightforward method, managers can calculate how long it will take for project benefits to match cost, that is, recoup the initial cost. Projects with a quick payback period are naturally more appealing than those with a longer payback period during which more can go wrong; all the time keeping in mind that a swift payback period does not guarantee a higher rate of return. It is worth acknowledging that whilst payback’s ease of use is its specialty, some might consider it over-simplistic to be used alone.
4) Net Present Value (NPV): Much favoured by the public sector to compare the discounted value of a stream of further costs or benefits, this defines the difference between the ongoing value of a stream of costs (NPC) and a stream of benefits. A positive NPV would indicate that a project should be profitable and pursued whilst a adverse value would indicate that the project should be abandoned. A raft of first-rate resources about NPV on the Office of Government Commerce website demonstrates its successful use through detailed examples and case studies. The PRINCE2 Training covers this and similar topics.
5) Internal Rate of Return (IRR): This approach calculates the estimated rate of return of a project, with a higher rate of return making investment more conceivable. Organisations will generally set a minimum rate of return below which they will not normally look into a project.
6) Balanced Scorecard (BSC): Organisations practice this to align vision with business activities by viewing the company from four perspectives. For a financial perspective firms might look at every thing from return on investment to cash flow. To obtain a perspective on internal business processes managers might work out factors such as process automation or alignment. To realize high customer satisfaction levels factors like customer sustaining rate might be examined. Through the learning and growth angle firms can focus on areas such as employee expertise and job satisfaction.