The need for project prioritization arises when an organization has more projects to work on than the available resources. And every organization has finite resources. Thus, at some point, organizations face the challenge of choosing between the projects to pursue, hold, and cancel.
Project prioritization is a formal process or technique of prioritizing projects to choose the right projects that are aligned with the strategic objectives of an organization in order to maximize business value. It involves evaluating and ranking proposed or ongoing projects within an organization based on pre-defined prioritization criteria. It focuses on making the most of available resources by investing in projects that deliver maximum business value and contribute highest to the organization’s strategic objectives.
In this post, we will understand the step-by-step process of project prioritization, the methods of project prioritization, and the common challenges in project prioritization. But before that, let’s understand a few foundational concepts for project prioritization.
Foundational concepts for project prioritization
Project prioritization is a part of project portfolio management. The purpose of the project portfolio management is to choose the right work (projects) that align with the organization’s strategic objectives to maximize the business value from the resources invested. By selecting the right projects, organizations make the most efficient and effective use of the available resources.
Let’s explore the meaning of Business value, Strategic objectives, and project portfolio management to build the foundation for a comprehensive understanding of project prioritization.
Business value
Business value is a concept that is unique to each organization. It is defined as the entire value of the business – the total sum of all tangible and intangible elements. Tangible elements include monetary assets, stockholder equity, etc. Whereas intangible elements include brand awareness, brand image, etc.
Every project is evaluated based on its contribution to the business value. Various factors play a role in project prioritization based on the common view and definition of the business value of an organization.
Factors to evaluate business value of a project can be broadly categorized as either financial factors such as return on investment (ROI), internal rate of return (IRR), payback (PB), and net present value (NPV), or nonfinancial factors such as business judgment, strategic fit, impact, resource capacity and demand, brand establishment, social responsibility, etc.
Strategic objectives and organizational strategy
Strategic objectives are the goals that help an organization achieve its mission and vision. Organizational strategy is a part of a plan of goals, policies, and actions that provide the overall direction and focus of the organization. Organizational strategy and objectives provide long-term direction, vision, and goals.
Project portfolio management (PPM)
Project portfolio management (PPM) is the process of selecting, prioritizing, executing, and managing the right programs and projects in a portfolio of an organization to achieve the strategic objectives of the organization. A PMO is responsible for PPM.
PMO or project management office
A Project Management Office or PMO is a department that establishes criteria for project selection and prioritization, defines organizational project policy, process, & procedures, tracks project, program, & portfolio governance and performance, and manages shared resources across all projects administered by the PMO.
Portfolio manager
A project portfolio manager is an individual responsible for evaluating, selecting, prioritizing, and managing the projects to be approved, funded, and executed in a portfolio. Further within a portfolio, there are programs and projects managed by a program manager and a project manager, respectively.
For effective project prioritization, you need to establish a formal PMO structure and governance framework, define the common business value and strategic objectives, and create a formal process of project prioritization.
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What is project prioritization in project management?
Project prioritization is a process of evaluating and ranking the project requests based on the pre-defined prioritization criteria to determine which projects are the most valuable for an organization. It ranks the project based on its importance, value, impact, and contribution to the organizational strategic objectives. The purpose of project prioritization is to maximize the business value by investing the resources in the right work.
Every organization needs project prioritization because organizations have finite resources and they need to decide which projects to approve, hold, and cancel. And every organization has a project prioritization process, irrespective of whether it is defined or not. They use some sort of measures to make project prioritization decisions.
For example, a Reddit user explained, “We do not have an overarching prioritization process at the institution level. Often prioritization falls within the teams and/or departments. We have a PM department, but they barely touch a fraction of the overall projects that come through the door. Each team generally has a supervisor that also acts as the PM. Across the board, it’s fair to say that higher priority projects are those that have some level of urgency with mandates or generally have a broader customer-base. There are also requests given a higher priority when the requestor is within the c-suite, or some higher level of leadership. Other than that, teams address prioritization in different ways – some FIFO, some based on which requestor makes the most noise, the ease of a project, the overall reach of a project, etc.”
Even in the early stage of our own product development, ProofHub, we did not have established processes for project prioritization in product development or a certified Scrum Master and a Product Owner to lead the development. I was guilty of pursuing immediate passion feature requests rather than evaluating the contribution to the strategic objectives and maximizing business value. However, with time, we developed a formal project prioritization process to make rational decisions rather than emotional ones.
A formal project prioritization helps choose the project of most importance that brings the highest business value to the organization and contributes most to the achievement of organizational strategic objectives. In the absence of project prioritization, organizations may end up working on projects that do not deliver the highest business value and the best contribution to the strategic objectives.
Read more: What is project management?
Why is project prioritization important?
Project prioritization plays an important role in organizational success by choosing the right projects to work aligned with organizational strategic objectives to maximize the business value. It offers a vast range of benefits for organizations. Have a look at it.
1. Efficient use of the project resources
Project prioritization includes evaluating the project requests based on the prioritization criteria and then allocating the available resources to the projects of the highest importance. This makes sure resources are utilized on the projects that offer the highest business value, resulting in the most effective use of company resources.
2. Improve strategic alignment
Project prioritization criteria are designed by the key stakeholders of the organization, keeping the organization’s strategic objectives in mind. When projects are selected based on that criterion, this improves the strategic alignment of the projects to the overarching organizational strategic objectives.
3. Ensure sufficient resources for each project
In the absence of a structured and formal project approval and funding process, projects in a portfolio of an organization start competing for resources. Decisions are made based on the highest level of influence, or who makes the most noise, or the ease of doing. Thus, resources are reassigned to cater to the requests that might not offer the best business value. Project prioritization creates a structured system for project intake and approval that ensures each approved project has the necessary resources and immediate requests are entertained through the formal channels so that existing and approved high-priority projects are not suffering and competing for resources due to external influences.
Read more: Why project management is important? Benefits, significance, and how to do it!
What are the main methods used for project prioritization?
Various methods are available to prioritize the projects. The preference to select a particular prioritization method is based on the needs of the project and what works best for the organization. Below are some of the most commonly used methods for project prioritization:
1. Scoring model
The scoring model is one of the most commonly used methods to prioritize projects. It includes defining a list of criteria or factors for evaluating projects, such as ROI, risk, and strategic alignment, defining a weight percentage for the criteria, and assigning a score to each project for each criterion or factor.
Here is how it works:
- List your criteria: Strategic alignment, ROI, Customer impact.
- Assign weights: Assign a percentage weight to each criterion based on its importance. The total must equal 100%.
- Score each project: Rate each project on a scale of 1-5 for each criterion.
- Calculate the weighted score: Multiply the score by the weight and sum the results.
A scoring profile is developed for each project and ensures all new projects are scored and prioritized prior to final approval. This is the gold standard for business decision-making. It removes bias and quantifies why one project is chosen over another.
2. Value vs. effort matrix
The value vs. effort matrix is a commonly used method for project prioritization for projects with less complexity. It includes plotting each project on a 2×2 grid where the X-axis represents “Effort” (a combination of cost, time, and resources) and the Y-axis represents “Value” (a combination of your criteria like strategic alignment and customer impact). This creates four quadrants, and projects are placed in each quadrant based on value and effort.
- High value, low effort – quick wins: Execute these projects first as they deliver immediate value.
- High value, high effort – major projects: Plan these projects carefully and schedule them next, as these are the most important for the achievement of strategic objectives.
- Low value, low effort – fill-ins: Do these projects only if you have spare capacity. Don’t let them distract you from more important work.
- Low value, high effort – thankless tasks: Avoid these projects. Even actively question why these are being proposed. The goal is to stop these projects before they start.
This method creates a project prioritization matrix to make decisions.
A project prioritization matrix allows project teams to determine which projects are most urgent, which will bring the most value to the organization, and which have the best chance of success.
Several types of project prioritization matrices allow you to compare various criteria that may impact the success of your project. If you want to create a project prioritization matrix based on urgency and importance, you can use the Eisenhower Matrix to prioritize projects.
3. MoSCoW technique
This prioritization technique derives its name after the first letters of the following labels: Must have, Should have, Could have, and Wish to have but not at this time.
Here is the description of this method:
- Must have: These are mandatory requirements, projects, or features that lay the foundation for any system. In the absence of these, the system will not work or will have no value.
- Should have: These features are relatively important and should be present for the system to work correctly.
- Could have: These features are useful additions to the system that will add tangible value.
- Would have: These requirements are nice-to-have features that are noted in the backlog and will be added to the scope after the must-have, should-have, and could-have requirements are addressed.
4. Kano analysis
Kano analysis is another good method to prioritize projects. It consists of four quadrants that help to classify customer preferences in four categories: Delighters/Exciters, Satisfiers, Dissatisfiers, and Indifferent.
Project stakeholders can use these categories to assess the customer needs and then map them to customer satisfaction. Here is the description of these:
- Delighters/Exciters: These features deliver unforeseen, extraordinary features that were not envisioned by stakeholders before. These features yield high levels of customer support.
- Satisfiers: These features bring value to the customer and provide vital functionality to execute the operations.
- Dissatisfiers: These are the features that cause the user to dislike a product if they are not present, but will not necessarily spur excitement if they are present.
- Indifferent: These are the features that will not have any impact on the customer. These features should be avoided because they yield no value to the customer.
5. ROI, IRR, PB, NPV, and MVP
A set of financial factors is used to prioritize projects. To evaluate the projects against those financial factors, here are some of the most common methods used for project prioritization:
- Return on investment (ROI): ROI measures the profitability of an investment that can deliver fast and maximize returns by quickly producing valuable deliverables in a given timeframe. A project that yields the highest ROI is very likely to be prioritized by the organization to maximize benefits over the costs incurred by the organization.
- Internal rate of return (IRR): IRR expresses the profit in terms of the interest rate earned. The higher the IRR for a project, the higher the probability of the project getting prioritized by the organization.
- Payback (PB): Payback refers to the period of return on the entire investment if the returns are evenly distributed over the years with little or no salvage value.
- Net present value (NPV): NPV helps determine the overall value of the project by representing the value in terms of total dollars for all the future cash flows. The more the NPV for any given project, the better the project is for the investment.
- Minimal viable product (MVP) or minimum marketable feature (MMF): The MVP approach is mainly applicable to the agile methodology, where features are decomposed into the smallest marketable packages that deliver significant business value within the chosen timeboxed period. Those features that deliver the highest customer value are considered critical and are given the highest priority to be implemented before less significant features.
How to prioritize projects?
There are certain steps you need to follow to prioritize projects.
1. Define the strategic objectives and business value of an organization
The first step to prioritizing projects is to clearly know organizational strategic objectives and what business value looks like. It helps you define clear project prioritization criteria.
2. Established a project prioritization criterion
After defining the strategic objectives and business value of an organization, establish project prioritization criteria. It includes measures and factors like:
- Strategic alignment: How well does this project support the organization’s strategic objectives?
- Business value: What is the expected business value from a project, such as return on investment (ROI), revenue increase, or brand recognition?
- Effort & cost: What is the estimated total cost, person-hours, or timeline?
- Risk: What is the level of technical, market, or operational risk?
- Customer impact: How many customers will this affect? Will it significantly improve satisfaction or solve a major pain point?
3. Gather project requests at a central place and conduct a portfolio review
For effective project prioritization, it is important to have all the project requests in a central place, including the existing projects, and conduct a portfolio review. Map out all of your projects and initiatives, and ask the following questions:
- What projects exist or are proposed?
- What progress or results have been achieved so far?
- Do all of these projects align with your strategic vision?
- Do we have the necessary time, people, or other resources we need to make this successful?
- What strategic gaps remain?
Performing a portfolio review provides you with an overview of the status of ongoing projects, how your resources are allocated at that moment, and where your organization is before you start taking on any new project.
This will help you decide whether you have a basic structure for project prioritization or you need to build one.
4. Evaluate, score, and rank the projects
Evaluate, score, and rank the projects based on the chosen methods for project prioritization. Gather key stakeholders to score and rank projects. Create a ranked list from highest to lowest priority.
5. Validate against constraints and communicate, execute, and re-prioritize
Your work is not done once the list is made. You need to find out whether you have enough resources and dependencies resolved to approve, fund, and execute the project.
Ask questions:
- Do you have the people, money, and time to actually do the top projects on your list?
- Does a lower-ranked project need to be completed before a higher-ranked one can start?
- Share the final prioritized portfolio with the entire organization. This provides everyone with the reasoning behind why we are working on this.
- Create a schedule, allocate resources, and grant authority to project managers to start working on the top-priority projects with confidence.
- Re-prioritize the list as the market changes, new opportunities arise, and estimates are wrong. Prioritization is not a one-time event. Schedule a recurring meeting to re-run this process and ensure your portfolio always reflects the current reality.
What are the common challenges in project prioritization? (Best practices for successful project prioritization)
1. Lack of shared vision for strategic objectives
The most common challenge is the lack of a shared vision on the organization’s strategic vision, mission, objectives, priorities, and goals. This results in different departments or stakeholders bringing their own priorities that don’t actually align with the organizational strategy.
Decisions often rely on opinions of influential stakeholders rather than objective data, known as the HIPPO effect or the Highest Paid Person’s Opinion. This leads to conflicts, competition for resources, and resentment, lower motivation, and lack of buy-in and support from less influential stakeholders.
Solution:
Create a shared understanding of the organization’s strategic objectives.
- Define the organization’s vision and mission.
- Clearly define the strategic objectives and goals of an organization. Write measurable goals using the SMART framework.
- Conduct a workshop session to define the organization’s values, mission, vision, priorities, strategies, and objectives and goals
2. Unclear project prioritization criteria
Inconsistent project prioritization criteria across the departments lead to conflicts. One department might be valuing revenue while the other is focusing on feasibility and strategic contribution. Thus, stakeholders from different departments all claim their projects are “critical” and “urgent”. When everything is a priority, nothing is a priority. Thus, the absence of shared project prioritization criteria leads to conflicts.
Solution:
Create uniform project evaluation criteria.
- Define project evaluation criteria or factors such as strategic alignment, ROI, and risk, and share across departments
- Create a “Project Portfolio Dashboard” that shows all active and proposed projects.
- Use a transparent scoring system to rank projects
- Facilitate decision-making workshops that include cross-functional representation to reduce individual bias.
- Train teams on how to apply the criteria equally
3. Poor consideration of interdependencies and resource demands
The organization’s resources are shared across projects. Poor visualization of resource allocation and project interdependencies across departments leads to scheduling conflicts. This creates bottlenecks and results in competing demands, especially when multiple teams rely on the same resources.
Solution:
Map out project dependencies and visualize workload.
- Use a Gantt chart or a flow diagram to showcase connecting projects and dependencies between the projects.
- Visualize resource schedule using an integrated calendar across teams to identify overlapping workloads and resource allocation using a shared workload chart
- Conduct regular cross-departmental reviews to coordinate schedules.
4. Ignoring risks
In the hope of maximizing business value by making the most of the available resources, sometimes portfolio managers ignore the risks. This results in creating an aggressive schedule and unrealistic capacity planning. It leads to resource burnout and poor risk management that can put all the projects at risk.
Solution:
Implement proactive risk management.
- Include contingency planning and sensitivity analysis during project selection.
- Add “risk level” as a weighted criterion in the scoring framework.
- Use a balanced “value-to-risk” matrix when ranking.
5. Ignoring intangible benefits
In many cases, portfolio managers end up ignoring the projects with soft intangible benefits, such as building brand reputation, to the projects with hard financial metrics and tangible benefits, such as ROI. This leads to missing crucial projects that can contribute to the achievement of strategic objectives.
Solution:
Incorporate intangible benefits into prioritization criteria.
- Include intangible benefits in your Weighted Scoring Model as explicit criteria
- Score based on estimated impact on brand awareness
- Quantify the cost of inaction. For a project to improve brand awareness, calculate the number of new customers reached. Translates directly into possible revenue or leads generated.
What are the tools that help with project prioritization?
Various tools help you with project prioritization, such as team communication and collaboration software and project management software. Here is how these tools can help you:
- Project management software: Project management software like ProofHub, Asana, Jira, Wrike, and Smartsheet helps you centralize all projects in a centralized place. It helps you evaluate all the project requests, evaluate projects based on the set prioritization criteria, and approve, execute, and manage projects from a single place. You can create an approval workflow for project prioritization and assign task owners at various stages to approve or decline project requests.
- Team communication apps: Team communication apps like Slack, Microsoft Teams, and Zoom help you communicate with stakeholders and team members in real time by facilitating discussion over chat and audio and video calls. It helps you clearly define and understand the strategic objectives and priorities, and business value to establish project prioritization criteria. Most of the apps provide digital collaboration features like whiteboard, screensharing, and integration with co-editors like Google Docs, Dropbox, and Confluence for online document collaboration.
- Pre-made templates: Various pre-made templates for popular project prioritization techniques like the Eisenhower Matrix, RICE Scoring Model, RACI Matrix, Stakeholder register, and SMART framework help you with the establishment of a formal project prioritization process in the organization.
Read more: 15 Best Project Management Tools in 2025
Who is responsible for project prioritization?
A PMO, portfolio manager, or program manager is officially responsible for the project prioritization. However, in a small organization with a small scale and a small number of projects with informal processes, a CEO, a department head, or even a project manager is responsible for the project prioritization. The question of who is responsible is less important than the question of how to do it appropriately.
What is the need for project prioritization?
Every organization has limited resources, irrespective of the business size, and the work to be performed is endless, irrespective of the constraints. Thus, organizations need to decide which projects to approve and which projects to hold. Businesses of all sizes need project prioritization to decide where to invest resources to maximize business value.
How does project prioritization improve resource management?
Project prioritization ensures an organization’s finite resources are allocated to the most valuable initiatives. It approves and funds projects that contribute highest to the strategic objectives of an organization. This guarantees that the work being done delivers the highest possible return on investment, prevents resource burnout, and reduces costly context-switching for teams.
What is the difference between project prioritization and task prioritization?
The main difference lies in the focus and scope – project prioritization is strategic, whereas task prioritization is tactical. Project prioritization focuses on long-term strategy and initiatives, and decisions are planned by high-level leadership. On the other hand, task prioritization focuses on the short-term objectives and tasks at hand. The project team decides the execution order of specific steps to complete the project efficiently.
What happens when projects are not prioritized?
When projects are not prioritized, organizations invest resources that might not deliver the highest business value and contribute most to the strategic objectives of an organization. In addition to that, resources are over-allocated across too many projects, leading to delays, burnout, and mediocre results. The most impactful initiatives may be starved of attention, ultimately wasting time and money on low-value work and sacrificing competitive advantage.
When should you reprioritize projects?
You should reprioritize projects in case of events that have the potential to put the achievement of strategic objectives of an organization at risk or negatively impact the business value of the initiatives.
Key triggers include:
- A significant shift in business strategy or market conditions.
- New, urgent opportunities or threats emerge.
- A major project’s scope, budget, or timeline changes dramatically.
- Feedback reveals that an earlier priority is no longer delivering expected value.
- The completion of a major project phase.
How does project prioritization work in Agile project management?
In Agile, prioritization is continuous and collaborative. At a high level, leadership prioritizes the Product Backlog. The primary driver is business value, often framed as user stories. The Product Owner is responsible for this ranking. During sprint planning, the development team then pulls the top-priority items into the Sprint Backlog for execution. This two-tiered system ensures the team always works on the most valuable tasks next, adapting to feedback and change.
