All right, work with me here for two seconds… Imagine that you are the CEO of a consultancy firm and new projects keeps knocking on your door. You just have to invite them in and the job is yours. That’s the dream – right?
Not always! The dream might not be as sweet as it sounds. I recently worked with a client who faced this as their biggest challenge. You need to be geared for a situation like this, if you aren’t, you will experience project overload. You lose track of who is doing what and as a result, your green numbers turn red and the customers get a horrible experience.
Yes, it says reject! Sometimes it is more valuable for you to turn down a project than accepting it. Allow me to explain why…
You have a limited amount of time and energy available each day. You want to use this time and energy on as many value adding activities as possible. Each time you go from one project to another it costs you time and energy. This is a switching cost. Obviously, the more projects you work on the higher is the switching costs.
Changing activity equals higher switching costs which results in less value adding activities
Accepting too many projects per employee will force you and your colleagues to switch between projects too often. Smith and Reinertsen (1998) illustrates this in their book “Developing Products in Half the Time” and with the graph below. You can read more about efficient project management in the article “Fewer Projects per Person”
The time spent on value adding activities falls dramatically from one to three projects per engineer.
So how do you decide what projects to reject?
What projects do I reject?
This sounds like a difficult thing to decide. But that is not necessarily the case. You just have to organize the selection process. A great and simple tool to do that is the Scorecard.
In this example you have the resources to do the project but the earnings and synergies are not worth it. It is better to save your resources and use them on another project.
To get started, you determine all the variables that affect the success of your organization. These variables are your selection criteria on your scorecard. It could be: A projects alignment with your strategy, resources available, earnings, potential synergies and the effort needed to complete the project.
The next step is to determine a minimum required score and use this as a guideline. Doing this will guarantee you that only the most valuable projects are accepted and you and your colleagues have the time and energy needed to complete them.
To summarise, the lesson I learned together with our client was that it sometimes create more value to reject a project than accepting one. You need to consider your resources, structure your selection process and learn to say no.