Frequently, at the beginning of the fiscal year, little progress is achieved as the projects included in the investment plan are not mature enough to be implemented or sufficiently understood to ensure their critical activities receive the attention required. As the months go by, a sense of urgency begins to develop to try to deliver on the promises that were made, forcing projects to be launched when they still require definition. This results in cost overruns, missed deadlines and lower-than-expected returns on investment. In all, stakeholder expectations are not met. Worse still, projects that would have best served the company are not necessarily pursued.
Adopting a step-by-step approach
The solution includes implementing portfolio management and establishing a “stage gate” project definition process. Portfolio management consists of managing project groups, prioritizing these projects based on their alignment with the company’s strategic objectives and developing studies with the same aim.
The stage-gate process is a methodology for progressively investing in a project and, at each stage, checking that key objectives continue to align with strategic objectives. Based on an established authority matrix, officials or an investment committee approve continuation to the next study level or even approve project implementation.
Focus on methodical execution
After selecting studies and projects, they need to yield the expected results. To do this, the project scope definition must support a clear execution plan, an estimation of the cost and time required to complete the work per the stage-gate criteria, the identified opportunities and associated risks, and an accurate expression of measurable expected benefits. It goes without saying that it is essential to apply best practices in project management when executing each approved project. Using a project management office (PMO) and establishing project management processes are important steps in this direction.
To fully benefit from this solution, projects must be adequately prioritized, having already been sufficiently defined beforehand, to optimize the return on the investment plan. To do this, studies must have been conducted to demonstrate that some of the prospective projects will ensure profitability consistent with strategic objectives or will make it possible to meet the company’s obligations. To get there, you need to study many ideas and then reject the ones that will not be cost-effective, put lower-priority projects on the back burner and identify interesting opportunities and obligations.
Consider an underground mine: when too much emphasis is placed on extracting ore at the expense of creating access ramps, eventually, there will not be enough accessible ore to maintain the planned rate of extraction. Similarly, by the time the defined project pipeline is exhausted, and in the absence of completed studies, the opportunities to optimize the investment plan have disappeared.
This optimization will become as critical in times of crisis as it is in times of growth. Choosing the right projects when conditions are more challenging is a way to maximize operational performance and prepare for growth. The company will be a step ahead when the time is right to launch projects.
Finally, rigorously monitoring the progress of each study and each project will ensure optimal support for the investment plan in the short, medium and long term.