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Where is your "R"?

Each project that a company does is expected to provide a return-on-investment. We should all be able to agree on that, but if we think about how we manage a project or a list of projects (our portfolio) we should consider what we really track. Are we considering returns or are we thinking only about our investments – i.e. our spend?

Most dashboards track project health across a variety of measures. Budget, risk, resources, scope, time. Green, Yellow, Red (though let’s be honest about the Red – how often do we really see that?). Project managers make sure that the dashboards are up to date, sponsors sign off on them. Most organizations have regular review meetings where all projects are to provide updates. The crucial question for most is “Are we on time/on budget?” We manage towards making sure that our spend and our time is Green with the goal of changing the status to “Complete”. Check off another accomplishment for the annual appraisal process. The project is no longer on the project review agenda.

Is this how an investment portfolio review is structured? Is the accomplishment that we spent the money? Clearly not. Investment portfolio reviews, at a minimum, consider (under the context of the overall objectives):

  • the health of the investments,

  • risk (market, company, technology, etc),

  • current and expected returns, and

  • funding actions (should a particular investment receive more funding, less funding or should it be removed from the portfolio?)

Some things become clear when we think about traditional project tracking versus treating project investments as a portfolio.

  • The expected return should be a part of the review process. - Have the assumptions that drove our expected benefit changed? If we spend more (or less), what is the impact on our return? If the project takes longer than expected, will that impact our return? If our scope changes, what impact does that have on our expected benefits?

  • We should be prepared to make funding decisions in the review process. - If the project looks more promising as time passes, will increasing spend provide a better benefit – larger, sooner? If a new project looks more promising than existing projects, should we defund those and shift funding to the new? If we learn that our assumptions have changed negatively, should we stop the project and hold the funding for other investments?

  • Our review process should continue past project completion. - Tracking the expected benefits (return) from each project holds people accountable for delivering value. Including completed projects’ returns in our portfolio gives a much better understanding of the health of our investments. After-action reviews focus on project completion activity, but we need feedback into our decision-making process regarding returns so that we can make better choices going forward.

Project spend is actually the least important part of our Return on Investment, it’s the “I” not the “R”. Expanding the scope of project reviews to include expected and eventually realized returns is a good step towards treating projects like investments in an overall portfolio. Certainly, completing a project is an accomplishment, but realizing the return is where value is delivered and these are accomplishments that should be maximized.


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