Jan 5 2023

Project Planning Best Practices You Must Know About

Project Leadership
3 minutes

Companies that generate more revenue and better products prioritize project planning as the core strategy of their business. Project planning best practices enable you to reduce costs and time. They also mitigate potential risks by helping you execute a perfect project portfolio. A project portfolio is similar to an investment fund where the fund manager chooses stocks with the highest anticipated return on investment. In his article for PMWorld 360, Francesco Pecoraro shares what project planning best practices you must implement for efficient business operations.

How to Select a Project

Different factors determine the selection of a project. Here is a list of essential points that you must keep in mind while selecting a project:

  1. Payback time – The time a project takes to recover an investment
  2. Strategic orientation – How efficiently the project aligns with the strategic operations of a firm
  3. Product duration – The overall life of a product in the market in terms of years
  4. Market opportunity – The ability of the company to satisfy the market need
  5. Competition level – How intense the competition is for the product you are working on
  6. Efficiency level – How skilled and capable your team is in executing the project
  7. Chances of success – The overall probability of project success
The Risk-Reward Chart as Project Planning Best Practices

A risk-reward chart is an innovative variant of the popular risk-return chart. It undertakes the qualitative value of rewards. Furthermore, the range extends from moderate to excellent, integrated with the chances of overall project success. There is another method to measure the financial quotient of the reward. It is called the probability-adjusted NPV of the project. In this, the probability of technical success is positioned on the vertical axis. The probability of commercial success is positioned on the horizontal axis.

Categories of the Project Portfolio Model

Here are the four types of project portfolio models:

  1. Pearls – Potential succeeding factors
  2. Oysters – Projects with potentially high revenue and fewer chances of technical success
  3. Bread and Butter – Small and simple projects that have a high chance of success but are subject to a comparatively lesser reward
  4. White Elephants – Low probability and low reward projects

If you want to grow your company, it is crucial to have the following:

  1. Less white elephant projects
  2. Less investment in bread-and-butter projects
  3. Execution of more pearl projects
  4. Allocation of the correct number of resources to Oyster projects
Managing Project Planning Best Practices

Ensure the right balance between the different resources and components of your project. When introducing a risk-reward chart, you must understand that the project bubbles are not static. Your projects will evolve over time. Therefore, it is essential to compare their growth and track the progress of your projects.

Click on the link to read the original article: https://www.pmworld360.com/how-to-create-a-balanced-project-portfolio/