Managing projects is all about making decisions. The most challenging choices that project managers, PMOs, and other project management professionals face are usually trade-off decisions. That is, the decisions whereby teams give up or compromise on one thing in return for another. Balancing the costs of project management trade-offs with their benefits can be tricky, but when implemented wisely, these decisions can actually help your organization move ahead.
Defining the Notion of Trade-Offs
For the purposes of this discussion, trade-offs are the opportunity costs of decisions. Simply put, a trade-off is a choice that involves making a sacrifice.
We all make trade-offs in our daily lives without even thinking about it. Going for a veggie salad, even though you’d prefer a yummier (yet less healthy) pizza, is a trade-off. Accepting you’ll have to pay a little more for a plane seat with extra legroom is a trade-off.
Now, let’s circle back to the project management realm. Organizations have limited resources, which means they can’t do everything. Deciding to launch a project, for instance, will tie up funds and resources that will no longer be available for other project opportunities. Placing a premium on the speed of delivery may require accepting extra costs.
Your preferences and even your mood will influence your choice of what to eat and how to travel. However, as a project portfolio management professional, you should base your project trade-off decisions on value considerations. In other words, your trade-offs should not only minimize the sacrifices your organization makes but also strive to bring plenty of benefits to the table.
Understanding the Different Types of Trade-Offs
Strategic project management trade-offs exist at different levels, which means that they can present different challenges and involve different stakeholders. PPM teams typically juggle trade-offs of all kinds. But understanding how they function within specific projects and large-scale portfolios or programs is key.
Unique factors and considerations influence trade-offs at each tier of the project management ecosystem. Let’s take a closer look.
Trade-Offs at the Project Level
Project trade-offs are usually made to optimize the balance between time, cost, and performance. The final piece, performance, encompasses:
- the quality of the deliverables
- the ability to cover the expected scope
- the efficiency of execution
Together, these three constraints shape a triangle that project managers are expected to navigate. However, intelligent and effective trade-off decisions should take into account factors outside of the domain of pure project management.
This might include considering other resources or organizational goals, among other examples, to determine which trade-offs bring the most value and the least downsides.
For instance, depending on an organization’s size, available cash flow, and priorities, it may make more sense to accept slight budget overruns in order to maintain top quality. Or maybe it’s wiser to delay delivery a little bit in order to avoid a hike in costs because cutting back on financial commitments is a key organization-wide goal.
Whatever they look like, trade-offs at the project level can occur both during the planning stage and during the course of project execution. That’s because unexpected events and issues may render the initial assumptions invalid and require charting a new course. This scenario happens more often than not.
Trade-Offs Between Projects
Additionally, project and portfolio management professionals may need to perform trade-offs at the level of a program or a portfolio.
Making decisions about how to prioritize new and existing projects, launching new initiatives, and other similar moves requires taking a step back and looking at the big picture.
Does the organization have the means and resources to take on new work? Would the costs associated with outsourcing some of the work exceed the entire portfolio’s prospective revenue? Is it smart to take a chance and prioritize a high-value, high-risk project over a safer but lower-yielding initiative?
Questions like these are a good jumping-off point, but they’re only a few examples of factors to take into account. Based on their findings and conclusions, project portfolio managers and PMOs can make informed decisions about when to start, terminate, accelerate, or delay projects under their purview.
How to Manage Project Management Trade-Offs
Regardless of their scope, project management trade-offs usually involve many moving parts. Having the support of a powerful digital tool like Sciforma can come in handy, as it allows teams to simulate hypothetical scenarios and see the potential impacts of trade-offs before decisions are made.
The need for a software solution becomes even more clear when it comes to trade-off decisions that affect an entire portfolio or larger program. The more stakeholders and areas across an organization are impacted by a change, the more crucial it is to ensure that new decisions do more good than harm.
Of course, not all decisions will be purely advantageous. That is, after all, the nature of a trade-off. But even if the options available all seem feasible, it’s likely there’s a hidden gem in the mix that could enhance your organization instead of holding it back. That’s the benefit of smart trade-off decisions: they help you keep moving forward instead of forcing you to grind to a halt.
Maybe you skip the pizza and choose a salad instead of soup because you know you need more greens and vegetables in your diet. Perhaps your project management team decides that prioritizing deadlines for a portfolio makes more sense than staying under budget because of your client’s own goals.
The best way to know which trade-offs truly advance your organizational goals and optimize the resources you have available is to put them into action. With Sciforma, you can do just that: preview the impacts and factors that go into your project management decisions so you make the right call every time.
