I keep seeing discussion threads in various project portfolio management and PMO forums that discuss the “how” of project prioritization but not the “why.”

Ultimately, the usefulness of a prioritized project list is to determine which set of projects that you’re going to execute and which you’re going to reject or delay. If you’re going to execute all of your projects, then project prioritization is a meaningless exercise, since it really has no impact on any business decision.

So for portfolios of any substantial size, you need to have a rigorous and defensible way to select the set of projects that will give you an optimized return from your financial and resource constraints.

Why?

Consider that for a portfolio of 20 projects, there are over 1 million possible sub-sets of projects to choose from. For a portfolio of 40 projects, there are more than 1 trillion possible sub-sets of projects to choose from. So trying to choose the right set that will deliver the highest value manually using spreadsheets is virtually impossible.

That’s why I say that prioritization without optimization is like soup without water.

And the best optimization system in the world is meaningless without a sound, rigorous and defensible project ranking system. In other words, just having water doesn’t guarantee good soup – all of the ingredients have to be good.

So if you’re going to rank your projects using a particular methodology, be sure that you know how your results are ultimately going to fit into a project selection or portfolio optimization process.

Remember that a sound optimization system won’t compensate for a poor project prioritization system and a good project prioritization loses much of its value if the project selection/optimization methodology is poor.

I discuss this in more detail with a demonstration of our integrated portfolio prioritization-optimization tool in my webinar Project Ranking and Prioritization on Steroids! You can see a two-minute preview by clicking here.