Project Portfolio Management: A View From The Management Trenches

10.2. DECISION CRITERIA

The decision criteria are usually of two types used for two different purposes.

Lesson Learned Criteria are essential for qualification of project proposals and prioritization of projects in a portfolio.

The first type is often called screening or qualification criteria. The purpose of these decision criteria is to screen, or qualify, project proposals. These criteria are used to eliminate projects that do not meet some essential business strategy or set thresholds for investment. For instance, these may include key business absolutes, such as:

• Is this project in "X" market?

• Will this project cost more than $X next year?

• Is this project being done to meet a regulatory requirement?"

• Is this project being done to meet a company directive?

• Does this project exceed "X" level of risk?

These are criteria that can easily be given a yes or no answer based on whether they meet the standard set.

The second criteria type is usually termed prioritization or evaluation criteria. The purpose of these decision criteria is to prioritize, or evaluate, projects that have passed the initial screening, or qualification, hurdles. These criteria are not usually "yes or no" in nature, but are usually measured in ranges of values. In addition, these criteria can be weighted and used to balance the portfolio effectively.

We have found through experience and practice that prioritization criteria tend to fall into four major groupings. These are value, strategy, balance, and linkage. ...