In an ideal world, a company could allocate sufficient time and money to every project they run. However, we know that, in the real world, this is not the case.
So, how do you choose which projects get the resources they need and which don’t?
You prioritize them.
This article will:
- Explain what project prioritization is,
- Show why it’s important,
- List the prioritization steps,
- Explain relevant project prioritization frameworks, and
- Provide you with free project prioritization templates.
Table of Contents
What is project prioritization?
Project prioritization is a process of categorizing projects according to chosen criteria, such as:
- Return on investment,
- Project length,
- Client satisfaction, etc.
It’s a way for project stakeholders to decide which projects are worth the investment and which can be abandoned or left for a later point in time.
According to project management statistics, the number one challenge in managing projects is attempting to run too many of them at once. To avoid this, you have to decide which projects to move forward with and which to put on hold.
Project prioritization helps you make the right choices, ensures you don’t discard valuable projects, and helps you stay organized with multiple projects at hand.
Why is project prioritization important?
Project prioritization enables you to direct your project resources and your best efforts toward high-priority projects. It also ensures an important project isn’t left buried under a bunch of low-impact projects.
Some of the biggest benefits of project prioritization are:
- Better resource allocation,
- Increased success rate, and
- Strategic alignment.
Benefit #1: Better resource allocation
It’s a truth universally acknowledged that all projects are in need of resources. But resources are often scarce and need to be distributed with care.
If you know which projects are the priority, you can allocate resources adequately. This means that resources are not scattered over multiple low-level projects, leaving a major project without sufficient funding, time, or manpower.
Benefit #2: Increased success rate
Project prioritization positively affects project success rate by ensuring that projects are aligned with company goals.
Having adequately prioritized projects means you know in which direction the company is heading and what is important and urgent. This knowledge can help you make decisions faster.
This is important because decision latency affects project success.
When leadership makes decisions within an hour, the project success rate is 58%. The number drops to 18% when it takes them 5 hours. Therefore, prioritization can lead to a higher success rate.
Benefit #3: Strategic alignment
Organizations often have many departments and teams working on different projects. Naturally, each department may feel that their project is important and should be approved.
This is where project prioritization comes into play.
By prioritizing projects across the organization, you ensure that all projects are strategically aligned with the organization’s goals. Also, you can eliminate projects that are not in agreement with the organization’s strategy, saving time and money.
How do you prioritize projects?
The process of project prioritization consists of 3 steps. You need to:
- Make a list of projects — first, you must compile a list of all of your projects. Make sure to include both the existing and planned projects. It’s best to consult other stakeholders to confirm all projects are on the list and you haven’t overlooked anything. You can use to-do list software to make a comprehensive list of projects with all the necessary information.
- Define your project prioritization criteria — every business has different priorities, so decide which criteria matter most to you. Is it return on investment, client satisfaction, or maybe resource availability? Criteria should align with the goals and principles of your organization.
- Analyze and score projects — now that you have all your projects and criteria listed, you can start prioritizing. You can use one or more project prioritization frameworks to score projects and prioritize them accordingly.
10 Project prioritization frameworks you can follow + templates
Prioritizing projects is complex — sometimes, you may not know where to start and which criteria to implement.
But there are many frameworks that can help you make informed decisions. Here, we have listed the most common ones.
Framework #1: The MoSCoW method
The MoSCoW method is a technique stakeholders can use to prioritize project requirements.
MoSCoW is an acronym for:
- Must have,
- Should have,
- Could have, and
- Won’t have.
It is a useful way for stakeholders to differentiate between essential and nonessential requirements.
It classifies project requirements into 4 groups:
- Must have — essential requirements without which the project can’t be successfully completed. The lack of them could mean that the end result of the project can’t function, or it isn’t legal or safe. For example, if you are building a hotel, it must have a reception and both single and double rooms.
- Should have — important requirements, but not essential. They should be included in the project if possible. Leaving them out could cause problems you would have to work around, but the project can still be finished without them. In our example, the hotel should have a presidential suite and a café.
- Could have — elements you want to include, which would be a good addition to the project, but aren’t important. There wouldn’t be a big impact on the project if they were left out in comparison to the should haves. So, if you are building a hotel, you could include a swimming pool and a conference room.
- Won’t have — elements that the stakeholders have agreed to eliminate. They will not be included in the project but may be considered in the future. The project can be successful without them. You can decide that your hotel won’t have a gym or a Michelin-star chef working in the restaurant.
Categorizing requirements like this means you can have a more realistic view of a project’s progress than if you just looked at a list of requirements.
For example, if all must haves are on track, but some could haves are behind schedule, you can still say that the project is progressing well.
On the other hand, if one of the must-have requirements can’t be fulfilled, the project is in trouble even if all the could-have and should-have requirements are on track.
If you’d like to put this framework into action, try our free template:
🔽 Download the MoSCoW method template
Framework #2: The Kano model
The Kano model, developed by dr. Noriaki Kano, puts customer satisfaction into focus. The features are prioritized according to the level of customer satisfaction vs the implementation investment.
The Kano model is especially useful for product teams when deciding which features to include in the new product and which to eliminate.
There are 3 types of features that should be implemented:
- Basic features — features your customers are expecting. They must be included in the product because if they are missing, customers will be dissatisfied. For example, if you are making a communication app, basic features would be private messages and group chats.
- Performance features — features that will result in an increase in customer satisfaction. These are the features customers know they want, and including them in the product is directly related to the rise in customer satisfaction. In our example, performance features would be attaching files and adding reactions to messages.
- Excitement features — features customers are not expecting. They are the surprising additions that have a wow effect on the customer. This is what sets your product apart from the competition. For a communication app, that could be group video calls or setting reminders for already-read messages.
Framework #3: The priority matrix
A priority matrix is a visual tool that can show you which projects or project activities are crucial for your business and which are not, making it easy for you to prioritize them.
Having clearly prioritized project activities can in turn help you organize your project management workflow.
The simplest form is a 2×2 matrix, but a project prioritization matrix can be more complex.
The most common priority matrices are:
- The Eisenhower priority matrix, and
- The action priority matrix.
The Eisenhower matrix
The Eisenhower matrix is a simple matrix with 2 variables.
It consists of the X and Y axes, which represent the 2 criteria for prioritization:
- Importance, and
- Urgency.
The space between the X and Y axes is divided into 4 quadrants:
- Important and urgent — projects/activities that should be done first.
- Important but not urgent — projects/activities you can do later.
- Not important but urgent — projects/activities you should delegate to someone.
- Not important and not urgent — projects/activities that can be eliminated.
If you want to try out the Eisenhower priority matrix, try our free template here:
🔽 Get the Eisenhower Matrix template
The action priority matrix
Same as the Eisenhower matrix, the action priority matrix has 2 criteria and 4 quadrants. However, the criteria are different.
The action priority matrix criteria include:
- Impact, and
- Effort.
The 4 quadrants represent projects which are:
- High impact and high effort — major projects that should be planned thoroughly.
- High impact but low effort — quick wins that you can do first.
- Low impact but high effort — thankless tasks you should avoid if possible.
- Low impact and low effort — fill-ins you can do when you have time.
If you’d like to use action priority matrix, try our free template:
🔽 Get the action priority matrix template
Framework #4: The risk priority matrix
Risks are an inevitable part of running a project — that’s why risk management is crucial for project success.
To ensure that problems don’t sneak up on you and catch you off-guard, you need to think about potential risks at the planning stage.
The risk priority matrix helps you visualize potential project risks and assess them.
It consists of 2 variables:
- Likelihood, and
- Severity.
Both of these variables can be divided into 3 categories. You have to decide how likely the risk is and how severe it could be and fill in the fields in the matrix accordingly.
If you want to try the risk priority matrix, try our free template:
🔽 Get the risk priority matrix
Framework #5: The scoring model
The scoring model assigns numerical values to projects, making it easier for you to prioritize them.
More precisely, you score each project based on the criteria you have chosen and compare the scores of each project to prioritize them.
There are 4 steps to creating a project prioritization scoring model:
- Decide on the scoring criteria — choose the most important criteria for your projects. Try not to go overboard with the number of criteria to keep the scoring process simple.
- Choose the range of scoring — the range of scoring is arbitrary, but usually, it’s either 0–5 or 0–10.
- Assign a weight to each criterion — not all criteria carry the same weight. So, to keep the scoring as accurate as possible, decide which criteria have more influence on the project than others. For example, you may decide that return on investment is more important than entering a new market, so you will assign greater weight to it.
- Score each project — give a score to each category for every project.
Once you have calculated the score for each project, it’s easy to prioritize them — the one with the highest score has the highest priority.
If you are interested in using this framework, try our free template:
🔽 Get the scoring model template
Framework #6: The payback period
The payback period is a technique for determining the extent of time needed to get back the money invested in the project.
This is a straightforward technique for project prioritizing, especially if you have a steady income — you just have to divide the amount of money you invested with the expected income across a period of time.
Payback period = investment/income across a period of time
So, if you need to invest $50,000 in a project, and you expect that you will earn $10,000 a year, you will earn back the money in five years.
Payback period = $50,000 / $10,000 a year
Projects with shorter payback periods are preferable because the longer the payback period is, the higher the chances are for problems to arise. This is why the payback period is one of the project prioritization criteria.
Framework #7: Net present value (NPV)
A Business Insider’s article describes net present value as “the product of the difference between an investment and all future cash flow from that investment in today’s dollars”.
Net present value compares the value of money today with the value of money in the future.
The money you have now is more valuable than future money because you can use it, for example, to invest in a new project that will earn you more money or to buy the equipment you need to develop your business.
This implies that projects which result in income faster are better for business, which can be one of the criteria for prioritization.
Net present value focuses solely on the financial aspect of the project — it doesn’t take into account other factors, such as resource availability or strategic alignment.
Framework #8: The Internal Rate of Return (IRR)
Investopedia defines the Internal Rate of Return as “the expected annual amount of money, expressed as a percentage, that the investment can be expected to produce for the company over and above the hurdle rate”.
In other words, the IRR is used to decide if the project is worth the investment. You do that by comparing it with the project’s hurdle rate — the minimal rate of return the project must make to balance out the investment.
So, if the IRR is higher than the hurdle rate, the project is worth the investment.
Projects with higher IRR are prioritized over projects with lower IRR.
For example, a company can have 2 potential projects. Project A requires a $10,000 investment, while project B requires only $6,500. But the IRR of Project A is 25%, and the IRR of project B is 15%. Project A will be prioritized over Project B even though it requires a higher investment.
The downside of the IRR is that it doesn’t consider inflation in its calculations.
Framework #9: The story mapping
Story mapping is the process of creating a user experience map. This map illustrates how users interact with the product, i.e. how the product helps them achieve what they need.
Story mapping was first developed by Jeff Patton. He describes user story mapping as a way to “talk about a user’s journey through your product by building a simple model that tells your user’s story as you do.”
A story map consists of 2 parts:
- User activities — what users do and why they use your products. Activities are complex and consist of steps. For example, a user activity could be signing up for an account on a website.
- User tasks — user tasks are things people do to complete activities. In our example, that would be entering an email address, first and last name and agreeing to terms and conditions.
| User activities | User tasks |
|---|---|
| Signing up for an account | Entering email address Entering first and last name Agreeing to terms and conditions |
| Setting up a profile | Adding a profile picture Adding contact info |
Story mapping can be used to better understand how users interact with your product. It can show which aspects are more important and need more attention and consequently help you prioritize your future projects.
Framework #10: The Analytic Hierarchy Process (AHP)
The Analytic Hierarchy Process (AHP) was developed by Thomas L. Saaty. It is used to compare multiple options in a pairwise manner.
So, when you have a lot of options, you do not analyze them all together, but you compare each one with every other option to make the decision-making process easier and more precise.
In the paper The Analytic Hierarchy Process (AHP), Nadja Kasperczyk and Karlheinz Knickel list 4 steps of the process:
Step #1: Structuring a decision problem and selecting criteria
You name a goal you want to reach, the criteria for prioritization, and the options that will be scored according to the criteria.
For example, let’s say that your company wants to buy interior design project management software. That is your goal. The criteria for deciding are:
- Price,
- Security,
- Integrations, and
- User interface.
And the options are the top 5 most popular interior design PM tools on the market.
Step#2: Priority setting of the criteria by pairwise comparison
You assign weight to each criterion by comparing each of them in pairs. You then calculate the average weight of each criterion from the pairwise comparison.
So, you grade the criteria — price vs security, price vs integrations, price vs user interface — until you go through all the options. This way, you can see which criterion is more important than the others. After you have all the results, you calculate the weight of each criterion.
Step #3: Pairwise comparison of options on each criterion
Next, you compare options in pairs for each criterion. Once all options have been compared in relation to each criterion, the results are averaged.
In our example, this means you grade interior design PM tools according to each criterion. So, you compare the price of tool 1 vs the price of tool 2, integrations of tool 1 vs integrations of tool 2, etc., and average the results.
Step #4: Obtaining an overall relative score for each option
At the end, the final score for each option is calculated by combining the option’s score with the weight of the criterion. Now, each option for reaching the goal has a numerical value and can be prioritized.
You combine the results each tool got for the price, security, integrations, and user interface and get the final result for each interior design PM tool. This makes it easy to compare them and choose the one that’s best for you.
Although this process may seem complicated and long with many comparisons, it’s actually a rather straightforward technique.
When faced with too many options, it’s often hard to make a choice. On the other hand, most stakeholders won’t have a problem saying which option between the two is more appealing.
💡 Plaky Pro Tip
Yet another great prioritization framework you may find handy is RICE. It’s especially useful if you’re a product manager looking for a useful roadmapping aid. Check out what it’s about here:
How to use Plaky for project prioritization
Google Docs and Sheets are not the only way to prioritize your projects and tasks. In fact, task management tools are a much more elegant solution.
Project management tool Plaky is a great choice for creating priority matrices.
Its colorful interface gives you a clear overview of your projects and tasks. You can make a card for each task and assign it to a team member. You can also add a tag field for each criterion of prioritization and a status field to show your project progress.
Moreover, once you’ve prioritized projects or tasks, you can sort and filter them as you see fit.
Conclusion: Make sure to practice project prioritization
Project prioritization is an important part of managing projects. It enables you to have a clear picture of which projects are urgent and require your immediate attention and which can wait or even be discarded.
There is a great variety of frameworks that make project prioritization simple. You just have to choose the one that fits your business needs best.
Now, after reading this article, you are ready to prioritize your projects. Download one (or all) of our project prioritization templates and begin or try Plaky to prioritize your projects in a fast and simple way!
✉️ Has this article helped you in managing your projects? Can you think of any other important prioritization framework? Let us know at blogfeedback@plaky.com, and we may include your ideas in our future posts. If you think this post is interesting or useful, share it with someone you think would benefit from it.
