portfolio scoring model

The next company to be discussed in our ongoing project portfolio management series is a rail transport engineering company that has encountered several challenges in the past several years. The organization has been reporting heavy losses from its operations for the past decade with no sign of potential improvement.

The analysis of the company's operations has shown that one of the main reasons for the poor performance of the company was the large number of products produced by the organization as a result of various customization requests from their customers.

This in its turn led  to a very large number of concurrent projects with a lion's share of them being customization rather than new product development ventures. As a result the quality of the project products has also declined leading to major delays in the product delivery to the customers.

Strategy

As a result of the above-mentioned events the executives of the company came up with the following strategy:

• Implement rigorous project portfolio management system in order to (a) prioritize projects and (b) cut low-priority ventures
• Create platform products in order decrease the degree of customization and to eliminate complexity
• Increase sales and margins per product category
• Expand the markets to China, Africa, South America
• Improve customer care
• Improve product quality

The Scoring Model

The scoring model developed as a result of the project portfolio management initiative has consisted of the six variables (see also Table 1):

• Market attractiveness
• Fit to existing supply chain
• Product and competitive advantage
• Technical feasibility
• Time to break even
• NPV

Table 1

Interestingly enough the company management decided not to include the strategic fit as one of the variables in the model, arguing that the combination of the variables selected would address all of their strategic initiatives in a more efficient way.

Introduction

A president of one of the North American universities e-mailed me to chat about the issues they were having and see if a potential solution can be found for them. The university was located in one of the smaller towns near US-Canada border and had approximately 15,000 on campus students.

The university management has undertaken a significant expansion of their services including a massive distance education portal, as well as opening of the Law and Medical faculties. The president also mentioned that one of the most important goals of the university was to attract more Canadian, American and international students to their university as the competition was getting very stiff due to their proximity to the border and a number of both American and Canadian schools located nearby.

Problems and Challenges

Among the issues mentioned by the president and later confirmed by all other executives of the university were:

• We are experiencing stiff competition from Canadian and US universities. We need innovative and effective projects to fight this battle. How do we identify such opportunities?
• Value of our projects is low. We have no way of measuring, but the proverbial “gut feel” tells us that we are not getting our money’s worth. Is there a way to remedy this situation?
• We have too many projects in our pipeline since we say “yes” to every initiative. How do we cut unattractive ideas?
• Our resource pool is fixed, but the number of projects is growing and they are getting more complex. How do we prioritize them and address the resourcing constraint?

Constraints

As always there were several external and internal constraints limiting our ability to find quick nd efficient solutions to the organization’s problems: