Session-3-Unit-1 Introduction To Project Management
Session-3-Unit-1 Introduction To Project Management
Project selection in project management refers to the process of choosing the next possible plan of
action for your team. It is one of the crucial stages for an enterprise.
There are two categories of project selection methods:
Benefit Measurement Methods
Constrained Optimization Methods
2. Benefit/Cost Ratio:
Cost/Benefit Ratio, as the name suggests, is the ratio between the Present Value of Inflow or the
cost invested in a project to the Present Value of Outflow, which is the value of return from the
project.
Projects that have a higher Benefit-Cost Ratio or lower Cost-Benefit Ratio are generally chosen
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over others.
CW3007/IT PROJECT MANAGEMENT/III CSBS/V-SEM/KG-KITE
PROJECT SELECTION METHODS
3. Economic Model
EVA, or Economic Value Added, is the performance metric that calculates the worth-creation of
the organization while defining the return on capital.
It is also defined as the net profit after the deduction of taxes and capital expenditure.
If there are several projects assigned to a project manager, the project that has the highest
Economic Value Added is picked. The EVA is always expressed in numerical terms and not as a
percentage.
4. Scoring Model in Project Management
The scoring model in project management is an objective technique: the project selection
committee lists relevant criteria, weighs them according to their importance and their priorities,
then adds the weighted values.
Once the scoring of these projects is completed, the project with the highest score is chosen.
5. Payback Period
Payback Period is the ratio of the total cash to the average per period cash. It is the time necessary
to recover the cost invested in the project.
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1. Integer Programming:
In this method, the integer value of the product is given preference over the fractional value. For example,
producing a certain product like computers can never be fractional.
2. Linear Programming:
It is a method where the overall cost of the project is reduced by reducing the time spent on each activity.
The project is either run at the normal time or crash time. For example, you can sell more products if you
make them faster within the same period.
3. Dynamic Programming:
In this method, the complex project is broken down into simpler problems. Various techniques are used to
solve a problem in this method. Thus, instead of building a computer, the company will break it down to
build several parts that would add up to the development of the whole computer. 21
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