Project Management

PROJECT MANAGEMENT
ORGANIZATION STRATEGY
AND
PROJECT SELECTION
Changes in the Organization
Mission and Strategy
Project manager must Why Project
respond to changes with
appropriate decision about
manager need to
future project and adjustment understand the
to current project. Strategic
Project managers who
understand their organization’s Management
strategy can become effective Process
advocates of projects aligned
with the firms mission.
Strategic Management Process:
An Overview
Strategic Management
Provides the theme and focus of the future of the direction for the firm
Responding to changes in the external environment
Allocating scarce resources of the firm to improve its competitive position
– internal respond to new action programs
 requires strong links among mission. Goal, objectives strategy and
implementation
Four Activities of
Strategic Management
1. Review and define the organizational mission
2. Set long-range goals and objectives.
3. Analyze and formulate strategies to reach objectives.
4. Implement strategies through project.
S Specific Be specific in targeting an objective

M Measurable Establish a measurable indicators of progress
A Assignable make the objective assignable to one person for
completion
R Realistic State what can realistically be done with available
resources
T Time related this could be the deadline of your goal
Project Portfolio Management Problems
 The Implementation Gap

 The lack of understanding and consensus on strategy among top management and
middle-level (functional) managers who independently implement the strategy
 Organization Politics
 Project selection is based on the persuasiveness and power of people advocating the
projects.
 Resource Conflicts and Multitasking

 The multiproject environment creates interdependency relationship of shared
resources which result in the starting, stopping, and restarting project.
Benefits of project Portfolio Management
 Build discipline into project selection process.
 Links project selection to strategic metrics.
 Prioritize project proposal across a common set of criteria, rather than on
politics or emotion
 Allocates resources to projects that align with strategic direction.
 Balances risk across all project.
 Justifies killing projects that do not support organization strategy.
 Improves communication and support agreement on project goal.
Portfolio of Project by Type
Two Multi-criteria selection models
 COMPLIANCE AND EMERGENCY PROJECT
 Are typically those needed to meet regulatory condition required to operate in a
region, compliance and emergency usually have penalties if they are not
implemented
 STRATEGIC PROJECT
 Are those that directly support the organization’s long run mission, they frequently
are directed toward increasing revenue or market share.
 OPERATIONAL PROJECT
 Are those that are needed to support current operation. These project are designed
to improve efficiency of delivery system, reduce product cost and improve
performance
A Portfolio Management System
Selection Criteria
Financial: payback, net present value (NPV), internal rate of
return (IRR)
Non-financial: project of strategic importance to the firm
Multi-weighted Scoring Models
Use several weighted selection criteria to evaluate project
proposal.
A Portfolio Management System
The Payback Model
Measures the time it will take to recover the project
investment.
Shorter payback are more desirable
Emphasizes the cash flow, a key factor in business.
Limitation of payback
 Ignores the time value of money
 Assumes cash inflows for the investment period
 Does not consider profitability
Net Present Value (NPV) and internal Rate of
Return (IRR) Example Comparing Two Project
Financial Models
 The Net Present Value (NPV) Model

 Uses management minimun desired rate of return (discount rate) to compute the
present value of all net cash inflows.
 Positive NPV: the project meets the minimum desired rate of return and is eligible for
further consideration
 Negative NPV: project is rejected
Nonfinancial Criteria
To capture large market share

To make it difficult for competitors to enter the market
To develop an enabler product
To develop core technology that will be used in next –generation
products
To reduce dependency on unreliable
To prevent government intervention and regulation
Two Multi-criteria selection models
Since no single criterion can reflect strategic significance,

portfolio management requires multi-criteria screening
models, two models, the checklist and multi-weighted
scoring models, are describe next.
Checklist Models
The most frequently used method in selecting project has

been the checklist. This approach basically uses aa list of
question to review potential projects and to determine
their acceptance or rejection. Several of the typical
questions found in practice are listed in Exhibit2.4
EXHIBIT 2.4
Sample Selection
Questions Used
Checklist Models
in Practice
Project Screening Matrix
The most frequently used method in selecting project has

been the checklist. This approach basically uses aa list of
question to review potential projects and to determine
their acceptance or rejection. Several of the typical
questions found in practice are listed in Exhibit2.4
EXHIBIT 2.3 Project Screening Matrix
Applying Selection Model
PROJECT CLASSIFICATION
 Deciding how well a strategic or operation project fits the organization
SELECTING A MODEL
 Applying a weighted scoring model to bring projects to closer with the
organization’s strategic goals.
 Reduces the number or wasteful projects
 Helps identify proper goals for projects
 Helps everyone involved understand how and why a project is selected.
Project Proposal
Sources and Solicitation of Project Proposals

Within the organization
Request for proposal (RFP) from external sources (contractors
and vendors)
Ranking Proposal and Selection of Projects
Culling through so many proposal to identify those that add the
most value requires a structured process
Figure 2.4A
Major Project
Proposal
Figure 2.4B
Risk Analysis
Managing the Portfolio
SENIOR MANAGEMENT INPUT
 Provide guidance in selecting criteria that are aligned with the
organization goal
 Decide how to balance available resources among current projects
THE PRIORITY TEAM RESPONSIBILITIES
 Publish the priority of every project
 Ensure that the project selection process is open and free of powers
politics
 Reassess the organization goals and priorities
 Evaluate the progress of current projects
PROJECT
SCREENING
PROCESS
PRIORITY
ANALYSIS
PROJECT
PORTFOLIO
MATRIX
Project Portfolio Matrix Dimension
Bread and Butter Project
Involves evolutionary improvements to current products and
services
Pearls
Represent revolutionary commercial advance using proven
technical advances.
Oyster
Involve technological breakthroughs with high commercial
White Elephants
THANK YOU

Project Management

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PROJECT MANAGEMENT

S Specific Be specific in targeting an objective

 The Implementation Gap

 Resource Conflicts and Multitasking

 The Net Present Value (NPV) Model

To capture large market share

Since no single criterion can reflect strategic significance,

The most frequently used method in selecting project has

The most frequently used method in selecting project has

Sources and Solicitation of Project Proposals

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