What factors must an organization consider when developing a project selection strategy?
Chapter 2 – Culture and Structures of Organizations Show
Factors that Affect Project SelectionIn any organization, project selection is influenced by the available resources. When money is short, organizations often terminate existing projects and postpone investing in new ones. An organization’s project selection process is also influenced by the nature of the organization. At a huge aerospace technology corporation, for example, the impetus for a project nearly always comes from the market and is loaded with government regulations. Such projects are decades-long undertakings, which necessarily require significant financial analysis. On the other hand, at a consumer products company, the idea for a project often originates inside the company as a way to respond to a perceived consumer demand. In that case, with less time and fewer resources at stake, the project selection process typically proceeds more quickly. Size is a major influence on an organization’s project selection process. At a large, well-established corporation, the entrenched bureaucracy can impede quick decision-making. By contrast, a twenty-person start-up can make decisions quickly and with great agility. Human Resources plays a vital role in making sure organizations articulate their purpose and values for the organization and projects.. It is HR that forms the employee experience. HR can support the project selection by offering talents and skills required on projects, compensation requirements for team members, assist with recruitment for team members, and participate on the designated project teams as advisors. Getting the right people on the project creates value to the project. HR can provide data to hire, develop and motivate project teams. In turn, HR plays the role of a service provider to the project to ensure high returns or highly successful projects. Value and RiskKeep in mind that along with the customer’s definition of value comes the customer’s definition of the amount of risk he or she is willing to accept. As a project manager, it’s your job to help the customer understand the nature of possible risks inherent in a project, as well as the options for and costs of reducing that risk. It’s the rare customer who is actually willing or able to pay for zero risk in any undertaking. In some situations, the difference between a little risk and zero risk can be enormous. This is true, for instance, in the world of computer networking, where a network that is available 99.99% of the time (with 53 minutes and 35 seconds of down time a year) costs much less than a network that is 99.999% available (with only 5 minutes and 15 seconds of down time a year) (Dean, 2013, p. 645). If you’re installing a network for a small chain of restaurants, shooting for 99.99% availability is a waste of time and money. By contrast, on a military or healthcare network, 99.999% availability might not be good enough. Identifying the magnitude and impact of risks, as well as potential mitigation strategies, are key elements of the initial feasibility analysis of a project. Decision-makers will need that information to assess whether the potential value of the project outweighs the costs and risks. Risk analysis will be addressed further in chapter six. For some easy-to-digest summaries of the basics of risk management, check out the many YouTube videos by David Hillson, who is known in the project management world as the Risk Doctor. Start with his video named “Risk Management Basics: What Exactly Is It?” The Project Selection ProcessNo matter the speed at which its project selection process plays out, successful organizations typically build in a period of what Scott Anthony calls “staged learning,” in which the project stakeholders expand their knowledge of potential projects. In an interesting article in the Harvard Business Review, Anthony compares this process to the way major leagues use the minor leagues to learn more about the players they want to invest in. In the same way, consumer product companies use staged learning to expose their products to progressively higher levels of scrutiny, before making the final, big investment required to release the product to market (Anthony, 2009). You can think of the project selection process as a series of screens that reduce a plethora of ideas, opportunities, and needs to a few approved projects. From all available ideas, opportunities, and needs, the organization selects a subset that warrant consideration given their alignment with the organization’s strategy. As projects progress, they are subjected to a series of filters based on a variety of business and technical feasibility considerations. As shown in Figure 2-9, projects that pass all screens are refined, focused, and proceed to execution. This same concept is applied in Stage-Gate™ or phase-gate models, in which a project is screened and developed as it passes through a series of stages/phases and corresponding gates. During each stage/phase, the project is refined, and at each gate a decision is required as to whether the project warrants the additional investment needed to advance to the next stage/phase of development. “The typical Stage-Gate new product process has five stages, each stage preceded by a gate. Stages define best-practice activities and deliverables, while gates rely on visible criteria for Go/Kill decisions” (Cooper, et al., 2000). Figure 2‑9: A project selection process can be seen as a series of screensThis approach is designed to help an organization make decisions about projects where very limited knowledge is available at the outset. The initial commitment of resources is devoted to figuring out if the project is viable. After that, you can decide if you are ready to proceed with detailed planning, and then, whether to implement the project. This process creates a discipline of vetting each successive investment of resources and allows safe places to kill the project if necessary. Another approach to project selection, set-based concurrent engineering, avoids filtering projects too quickly, instead focusing on developing multiple solutions through to final selection just before launch. This approach is expensive and resource-hungry, but its proponents argue that the costs associated with narrowing to a single solution too soon—a solution that subsequently turns out to be sub-optimal—are greater than the resources expended on developing multiple projects in parallel. Narrowing down rapidly to a single solution is typical of many companies in the United States and in other western countries. Japanese manufacturers, by contrast, emphasize developing multiple options (even to the point of production tooling). In an article for the International Project Management Association, Joni Seeber discusses some general project selection criteria. She argues that first and foremost, you should choose projects that align with your organization’s overall strategy. She suggests a helpful test for determining whether a project meaningfully contributes to your organization’s strategy:
Project Selection MethodsProjects are selected by comparing the costs and benefits of potential projects. Some of the selection methods are more subjective than others, but all try to use a standard set of criteria To determine which project is the best for an organization to pursue. Methods can include:
In project management, these methods can include:
We might also refer to Constrained Optimization Methods as mathematical approaches to project selection. These methods are beyond the scope of this text, but students preparing to take PMI exams should know that if they see any type of programming or algorithms used for project selection, a Constrained Optimization Method is being used. All the above approaches and methods may required training which HR would provide to ensure the success of the project. Also, they may be involved in the actual method used to help make decisions about projects. Have you ever had too many projects on the go at one time? Many students find it difficult juggling academic work with a job, family, and social life. Prioritizing projects is a great way to eliminate stress for us personally, as well, as in project management. If you were to prioritize your projects, which method would you choose? Why? What are the factors they consider for project selection?Typically, when project managers select a project, they may consider the following factors:. Costs.. Resources.. Benefits or ROI.. Time to complete the project.. Risks associated with the project.. What are the factors that affect project selection in an organization choose three?There are five factors of project constraint that affect any project – scope, time, cost, risk and quality.
What are the five 5 methods for selecting projects?Project Selection Methods Top 5 Criteria. Time Value of Money.. Present Value.. Future Value.. Present Value & Future Value Relationship.. What are the 4 steps of project selection?This project management process generally includes four phases: initiating, planning, executing, and closing. Some may also include a fifth “monitoring and controlling” phase between the executing and closing stages. By following each step, a project team increases the chance of achieving its goals.
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