Ranking the Portfolio Components
Assuming that there has been a general categorization in Step
1, as described earlier, you can now perform ranking of the categories and
components within each category. If the gathering of potential portfolio components
has taken place at, say, a departmental level, but portfolio management takes
place at the next management level up, say, at the divisional level, then this
Step 5 may be conducted twice. That is, assembly and ranking will take place once
at each level.
Ranking of portfolio components may be assigned according to some hierarchy such as:
- Mandatory. You do not need to rank this work. It will all be authorized, although you may have some discretion in how much funding you provide and when the work starts.
- Business critical. This category of work must also be performed; however, there is much more discretion in terms of scheduling, funding level and balancing.
- High priority. These projects are ranked in terms of value, urgency and alignment to your goals, objectives and strategy.
- Medium priority. As for high priority but at a lower level.
- Low priority. Everything else goes here. It is likely that anything in this category will not be funded.
Note that in some companies, funding is authorized on a project basis and any project-allocated funding not consumed in one year is carried over to the next. This approach to project financing is much more robust and auditable. From a resource planning perspective, it means that on-going projects have first call on the available resources.
Who Does the Ranking?
Ostensibly, the ranking is done by the organization's Steering Committee. Remember that this Steering Committee is a group of high-level clients and stakeholders who are responsible for providing portfolio strategic guidance, prioritization and approval of the work for the portfolio and then monitoring the portfolio throughout the year. If new work comes up or if changes occur in the authorized workload, the Steering Committee determines the impact on the portfolio and adjusts accordingly.
In practice, because this work is numbers intensive, it may be assigned to a supporting committee, or it may be done by people in the PMO who will present their recommendations.
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Tips
on Step 5 - Prioritize the Work (Prioritization)
