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Managing Project Demand

Demand can come from anywhere, so it needs to be managed and standardized to align with strategy.

Most organizations are trying to deal with the dual challenge of controlling the amount of demand and where it’s coming from, and the ability to analyze and prioritize that demand. Effective strategic portfolio management (SPM), enables you to address both of those issues.

Demand can come from anywhere, but should it?

As organizations evolve from project focused delivery to product or program focused delivery and ultimately capability focused delivery, they can also change where demand is driven from. When and organization decomposes the key initiatives it needs to work on directly from strategy – it’s taking a top-down demand management approach, which is how the core of your demand should be derived.

This doesn’t prevent demand from also bubbling up from the front line, but it does place it in the proper perspective. which is a significant contrast from when all work is project-driven and virtually every project proposal is developed from the bottom up. Bottom-up demand isn’t necessarily ‘bad’, but it should be producing ancillary demand items – proposed initiatives that support strategy but aren’t directly driven by strategy.

Right sizing the business case

So how does one control the amount of demand? Historically the business case was the ‘sanity check’ for managing demand. An early assessment of how much a proposed piece of work would cost and how much benefit it would deliver allowed for the ‘bad’ ideas to be weeded out early. But business cases have gotten a bad rap over the last few years, and that’s led to the removal of those sanity checks.

But business cases are important tools in managing and analyzing demand. The reason they have become devalued in recent years is that they were often used as ‘sales pitches’ with understated costs and overstated benefits. This could be done because the proposers of an initiative knew that after approval the business case would never be looked at again.

Aligning all demand with strategy

For strategic portfolio management to succeed, the business case must be accurate, consistent across all proposed initiatives and an integral part of the historic record of an investment. It must be a living document that is updated throughout the process and contributes to the review process that forms part of continuous and adaptive planning. Effective business cases help to eliminate inappropriate or misaligned initiatives early, preventing them from making it to the demand funnel and allowing for improved analysis and prioritization of those initiatives that do make it into the demand process. And it must be one queue.

Centralizing and standardizing your demand is key

All information around all demand items must be consolidated in one place and must be consistent in its nature and structure. Only then can better decisions be made between the different initiatives. Only then can prioritization be effective. Centralized demand also makes it much easier to implement bulk funding models, funding that is higher up the organization and tied to strategy and capabilities.

Demand management in many organizations is a tactical process that frequently gets lost in the weeds and rarely results in the ‘best’ initiatives being approved. Indeed, in many cases there is no understanding of what those best initiatives are because the business cases can’t be relied upon. When you implement strategic portfolio management effectively you can drive demand directly from strategy and you can rely on your business cases which are managed and maintained throughout the process. And that makes it far easier to maintain benefit projections and manage those benefits so you actually deliver on the promise of value.