PMcrunch

A great question that we can ask ourselves as project managers is, “Would we invest in our projects”? This is probably the single best indicator, if we are honest with ourselves, as to the health of our projects, our positions, our teams, our organizations and more. Here is a look at an investment perspective to managing projects.

The Investment Perspective on Projects

Investors are looking for a number of key things before they invest in a company or stock. Here is the list – not exhaustive – of some of the key things that investors look at:

1. What is the price?
2. Who is running the show?
3. What are the overall objectives?
4. What are the risks?
5. What is the return?

These are roughly the top factors that someone would consider before investing in the company, and therefore, why not use these same criteria on our projects?

Applying Investment Principals to Projects

Here is how a project might readily map to these investment criteria:

1. How much does it cost? Any project is going to cost money. It may seem obvious to state this, but with each project there is a point at which it no longer becomes attractive and just simply costs too much. Having a grip of what it is going to cost and what the variations are among the cost components, is critical to determining this.
2. Who is running the show? In projects, the project manager is obviously one of the key people running the show. In an investment type of thinking, a project manager is kind of like the chief operating officer - implementing, communicating, executing, but not really the CEO. The executive level is probably the equivalent of the project sponsor. Therefore, the strength of that sponsor, both intellectually and politically positioning within the organization, is going to be key to a successful outcome of the project. “Who is running the show” also refers to any other lead roles on or surrounding the project, depending on the size of the project.
3. What are the overall objectives? Do they make sense, and do they jive with trends and overall organizational strategy?
4. What are the risks? What are the chances of a successful outcome? What are the chances of negative things happening? This is the same as with an investment. Typically, with investments we earn a higher return for taking on higher risks. This really should be the same on projects. Your expected return on a risky project should be a higher payoff for a riskier project.
5. What is the return? The project needs to at some point pay for itself, as does the investment. If somebody is going to invest $1 million in a project, they want to see that $1 million investment and more returned to them within some reasonable period. Investors want to know what they are getting for their money - their return on investment or ROI.

Evaluate your Projects from an Investment Perspective

Use these factors to do a quick review of your project. You should quickly be able to see if your project is healthy, or if it is in danger for one reason or another. It will also help you to think about the true effectiveness of yourself, your project stakeholders, your project sponsors, and your project team, and whether you are truly on the right tract to a successful project.

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John Reiling, PMP

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