Project Selection

PROJECT Definition: The Project Management Institute defines as ‘A Project is a temporary endeavor undertaken to create a unique product, service or result. A Project is a combination of human and non-human resources pooled together in a temporary organization to achieve a specific purpose. Projects should not be considered with everyday work A Program is a group of related projects designed to accomplish a common goal over an extended period of time

Some example of projects: Construction of a star hotel, building, dam, bridge, ship, power plant ,etc, New product launching, research to develop a new technology, etc

PROGRAM A Program is a group of related projects designed to accomplish a common goal over an extended period of time.Each project within a program has a Project manager. The major difference lies in scale and time span.

PORTFOLIO: The term portfolio is applied to a collection of projects and programs that are grouped together for pursuing objectives focused on some specific business strategy. The scope of Portfolio is wider than Project or programs. The portfolio of diversified large companies may include projects and programs in the wide spectrum. Portfolio management is handled at the highest managerial level, often by the owner/entrepreneur themselves or their close associates.

CHARACTERISTICS OF PROJECT Objectives -A project has a set of objectives or a mission. Once the objectives are achieved the project is treated as completed. Life cycle : A project has a life cycle. The life cycle consists of five stages i.e. conception stage, definition stage, planning & organising stage, Implementation stage and commissioning stage.

CHARACTERISTICS OF PROJECT Uniqueness : Every project is unique and no two projects are similar. Eg Setting up a Cement plant & Constructing a 5 star hotel Team Work : Project is a team work and it normally consists of diverse areas. Complexity : A project is a complex set of activities relating to diverse areas.

CHARACTERISTICS OF PROJECT Risk and uncertainty : Risk and uncertainty go hand in hand with project. Customer specific nature : A project is always customer specific. Change : Changes occur through out the life span of a project as a natural outcome of many environmental factors.

CHARACTERISTICS OF PROJECT Optimality : A project is always aimed at optimum utilization of resources for the overall development of the economy. Sub-contracting : A high level of work in a project is done through contractors. Unity in diversity : A project is a complex set of thousands of varieties. The varieties are in terms of technology, equipment and materials, machinery and people, work, culture and others.

TYPES OF PROJECT: Projects are classified in two ways : 1. On the basis of Product versus nature of work Tangible/Intangible : Craft/Intellect project 2. On the basis of Application areas (Construction/Research/Reengineering/Procurement/Business implementation)

THE PROJECT LIFE CYCLE: DEFINING/INITIATION STAGE Major Steps involved: Specification of the project is defined/Development of a business case, Performing feasibility study, appointment of project team and its office   PLANNING STAGE Major Steps involved: Project planning, Resource planning, Financial planning, Quality planning, Risk planning, Communication planning, Procurement planning, Acceptance planning, contracting the suppliers

(Contd..) THE PROJECT LIFE CYCLE EXECUTING STAGE (Longest phase and consumes lots of energy and resources) A range of management processes is used to monitor & control the project. These processes are used to manage time,cost,quality,change,risks, issues,procurement,acceptance and communications CLEAN UP PHASE/CLOSING STAGE The activities of this stage includes handing over deliverables to the customer, passing the documentation to the business, cancelling supplier contracts, releasing staff and equipment(redeploying project resources).After some time post-implementation review is conducted to record new lessons learned during the project and also to determine the level of success.

PROJECT SELECTION: Project selection is the process of evaluating proposed projects or group of projects and then choosing to implement some set of them so that objectives of the parent organization will be achieved.

PROJECT SELECTION CRITERIA: Although there are many criteria for selecting projects, selection criteria are typically identified as FINANCIAL & NON FINANCIAL. Whether for inside or outside clients, the projects will use the organisation’s own resources and both type of projects are usually dealt with as ‘ COMPETING’ for the same pool of resources. It is very important for a PM that he/she fully understands the parent’s organisation objectives in undertaking a project that a PM is expected to lead.

(Contd..) PROJECT SELECTION CRITERIA: Is only one of the many decisions associated with project management The process of carving away the unwanted reality from the bones of a problem is called ‘MODELING THE PROBLEM’ (This process abstract the relevant issues about a problems from the mass of detail in which the problem is embedded)

Important criteria related to Project selection mode-Based on Souder (1973): 1. REALISM 2. CAPABILITY 3. FLEXIBILITY 4. EASE OF USE 5. COST 6. EASY COMPUTERIZATION *Critical facts: 1.Models do not make decisions 2. All models, however sophisticated are only partial representation of reality

TYPES OF PROJECT SELECTION MODELS: A) FINANCIAL/NUMERIC CRITERIA (Most preferred method to evaluate projects) PAYBACK PERIOD (Total fixed investment/Annual net cash inflows) AVERAGE RETURN ON INVESTMENT (ROI) METHOD... NET PRESENT VALUE INTERNAL RATE OF RETURN ACCOUNTING RATE OF RETURN

B) NON FINANCIAL/NON NUMERIC CRITERIA 1. THE SACRED COW: In this case the project is suggested by a senior and powerful official in the organization (Initiated with simple comment such as “If you have a chance why don’t you look into.....) 2. THE OPERATING NECESSITY (Not requiring much formal evaluation eg. If a flood is threatening the Hotel, a project to build a protective dike does not require much formal evaluation) 3. THE COMPETITIVE NECESSITY (In order to survive in the market e.g.. Restructuring of the MBA & BBA program by many B-Schools) 4. THE PRODUCT LINE EXTENTION (To develop & distribute new products)

(Contd..) NON-FINANCIAL CRITERIA   5.COMPARATIVE BENEFIT MODEL (Not a formal model) This model is applied in an diversified organization with several projects to consider. 6. SUSTAINABILITY (One Problem-It is not really accurate) It calls for incorporating environmental concerns, also covers social social issues and the bottom line. Eg. Jewellery companies avoid use of blood diamonds., Taipei 101,Taiwan the World’s tallest building. 7. CHECKLIST MODELS: This approach basically uses a list of questions to review potential projects & to determine their acceptance or rejection 8. MULTI WEIGHTED SCORING MODEL: This model typically uses several weighted selection criteria to evaluate project proposals.

Info. Related to Project selection : Is only one of the many decisions associated with project management The process of carving away the unwanted reality from the bones of a problem is called ‘MODELING THE PROBLEM’ (This process abstract the relevant issues about a problems from the mass of detail in which the problem is embedded)