Corporate projects always compete against each other because there is a limited budget for the portfolio. They are grouped as non-discretionary or discretionary to identify whether they are crucial or nice to have. Non-discretionary projects are usually requested for security, legal, compliance, regulatory or system availability purposes. Discretionary projects might be still approved if there is extra budget left and if they have a good case laid out with the project charter.
There are some tips to get your annual projects approved easier even if they are discretionary:
- Create a long-term plan: Instead of focusing on annual goals and returns, create a rolling plan for 5-10 years and calculate ROI to make your case stronger. Upper management would prefer numbers and looking forward to the future in order to support discretionary and innovative initiatives. This plan needs to be updated and presented for repeating or multi-year projects.
- Focus on what you need: Providing a clear distinction of what is absolutely necessary and what is nice to have would help approvers review projects. They need to know about the risks if the project is not approved and acted upon. They might request changes in the scope based on must-have vs. nice-to-have activities. Therefore, it is important to be specific with your request.
- Provide past performance proof: If you had a similar project in the past, it would be very beneficial to include results of this project’s financial savings, business gains, or technical improvements. It is always easier to get approval for something that has proof of previous success.
- Clear distinction of Opex and Capex: Make sure to present operational expenses separately and do not mix them into capital project requests. Otherwise, there is going to be a lot of questions raised, which may result in the project being rejected prematurely. Focus on what can be capitalized and include everything else in your operational budget. As a rule of thumb, a company must receive economic benefit from an asset beyond the current year it is implemented in order to capitalize it, e.g., inventory cannot be capitalized since it is usually sold within a year.
- Valuable to a wider audience: Some projects provide value to a specific team and some others provide value to a whole department or even for the company. Collaborating with other teams while creating the business case helps to create more value by including their needs and ideas.
- Gather required support: Research your costs carefully by requesting preliminary price quotes from vendors instead of just estimating based on past purchases. There might be changes with the product selection or pricing alternatives, so it is always good to be up to date with this type of information. Other supporting documents might be technical white papers, diagrams, charts, or tutorials to explain suggested solution and change verbally and visually.
- Stay on track: It is impossible to be 100% accurate with our estimates but it is a good indicator to be within an acceptable range of deviation. Up to plus or minus 10% is acceptable for majority of companies. However, some might be very strict about not going above budget, even a penny. If your budget requests in the past was close to actuals, approvers are going to feel more comfortable when approving your requests.
- Support Company Growth: Another criterion for projects to get approved would be support for the company’s growth; whether they increase revenues or decrease costs. Some projects may provide organic growth or create synergy through merger and acquisitions, while some others may only support maintenance activities. Be warned, if the project is requested for maintenance and it is discretionary, there is a very low chance of getting approval.
In summary, everyone wants their projects to ultimately be approved and funded. However, sometimes it may be tricky and require a little more work. Put forth the extra effort and incorporate the tips above to give your project the best opportunity for approval.
I hope you find this blog post helpful. For more tips and tricks on Project Management, please visit www.EPMAinc.com.