The organizations invest a lot of money on projects. It is important that the project selection must go through a lot of scrutiny to find out the projects thus selected meet the benefits requirements of the organization is doable and bring long term customers and bring reputation to the organization. Also, there are a lot of projects that come to the organization but the organization cannot invest in all the projects, they need to be selective and only the best projects that suit the benefits and requirements of the organization must be selected. Thus the project selection process is a very important and crucial process for the organization. Enroll for Online PMP Training at StarAgile institute to know more about the project management subject. In this article, we will discuss various project selection methods.
There are 7 criteria in the project selection process are discussed below.
1. The priority of the Business - This is the number 1 criteria to be met in project selection. You need to answer the questions based on the internal and external environment whether the business can take this project. Will the project bring benefits to the organization? Can the organization sponsor this project? Is it a high priority number to be taken as a project for the organization? etc.
2. Customer satisfaction - Whether the project is going to be completed as per the requirements of the customer? Whether the organization can benefit from this customer? Whether the organization can learn and execute the project to meet the expectation of the customer? Is it possible to retain the customer for the longer-term? These are the questions that need to be asked when engaging with the customer. This is the second criterion to be fulfilled while making the project selection. Take up the PMP Training Course at StarAgile to become PMP certified professional.
3. Resource availability - Before selecting the project we must analyze whether the organizations can bring to the table the staff working in the project whether the types of equipment are available or can be procured to start the project and complete the project. Etc
4. Timelines - The next criteria the organization to evaluate is whether the timelines can be met to complete the project within the stipulated time. Time is an important parameter when considering project selection. Is this is the right time to select the particular project at this moment etc
5. Profit and benefits - Is the project that we are making the selection contribute to the organizational growth in terms of the profit, return of investment, and other intangible benefits such as reputation, positivity, becoming the market leader and beat the competition, etc. The profit in terms of money and value add is an important criterion to be achieved for the organization.
6. Required information availability - Now this step is important to consider for the project selection, it points out whether the technical depth, the functional depth, and requirements clarity is readily available in the organization to select the project and complete it. If these parameters are not available then we cannot complete the project within the cost, time, and scope.
7. Success rate - The last criterion for making the project selection is the success rate. Whether the project can be completed on time, within budget, and by meeting scope and quality to successfully meet the agreed-upon requirements of the customer? If not the project cannot be considered for the selection.
The 3 main questions that need to be answered are,
Once we ensure we answer the questions we are on right track in the project selection. Want to know what it takes to become a successful project manager then take up the Online PMP Certification at StarAgile institute.
Let us consider how we are going to answer by considering the project selection processes.
Step1: Identification of the projects - Whether it is investment projects, or customer-oriented, or defined scope projects or enhancement projects there are a lot of types of projects. So the first step is the project identification that is identifying the nature of the project. Then comes, whether the project is aligned to the organizational vision and strategy etc.
Step2: Prioritizing and evaluation of the projects - We have several mathematical formulae for evaluating the projects such as Net Present Value, Internal Rate of Return, Benefit/Cost Ratio, Opportunity Cost, Payback Period and Initial Risk Assessment, etc. Once we are evaluated and are making a substantial profit we can prioritize the projects based on our assessments.
Step3: Selection and Initiation of the projects - For some of the project customers demand proof of concepts or demo of how the project will run and how we can complete the projects. In this step, we may make a Proof of Concept or demo which not only helps the customer but supplier organization also. Based on our evaluation we initiate the selected projects for successful completion.
Step4: Review of projects - In this step we track, manage, control, and constantly monitor the progress of the project till its closure. This is very important as the lessons learned in this step helps us in the future in making the selection of projects decision.
These 8 methods are called as Benefits measurements methods.
1. Benefit/Cost Ratio - It is the ratio of the cost incurred in present value in the project to the benefit received in the current value.
2. Economic Model - It calculates the value creation of the organization while defining the return of revenue.
3. Scoring Model - This model scoring is done for the projects based on the weights of importance and priorities. The project with the highest summed up weights is selected.
4. Payback period - It is the ratio of the total cash to the average per period cash.
5. Net Present Value - It is the difference between the project's current values of cash inflow to the current value of the cash outflow.
6. Discounted Cash Flow - This evaluates the future value of money when compared to the current value.
7. Internal Rate of Return - It is the annualized effective compounded return rate or the discount rate that makes the net present value of all cash flows (both positive and negative) from a particular investment equal to zero.
8. Opportunity Cost - It is the cost that is not coming to us when selecting another project. For example, the project with the least opportunity cost is selected.
We will also see what are the constrained optimization methods of calculations that we need to select the projects. The techniques in constraint optimization methods are Linear programming, Non-linear programming, Integer programming, Dynamic programming, and Multiple objective programming. To know more about the various project selection methods with real-world example register for Online PMP Certification Training at StarAgile.
We have discussed various project selection methods and their importance in brief. If you are interested and want more information then we recommend you join the PMP Certification Training Course at StarAgile institute. What are you waiting for? Register now to get the benefits of becoming a certified project management professional by taking the PMP Certification Training Online at StarAgile. StarAgile is an official training partner of the Project Management Institute (PMI) for providing PMP Certification Training Online.
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