Beruflich Dokumente
Kultur Dokumente
2-1
Chapter outline
2-2
2.1 PROJECT SELECTION
2-3
Problems With Multiple Projects
2-4
Project Results
2-5
Challenges
2-6
Project Management Maturity
2-7
Project Selection and Criteria of Choice
Project selection
Evaluating
Choosing
Implementing
Same process as other business
decisions
2-8
Types of Companies
2-9
Model Criteria
Realism
Capability
Flexibility
Ease of use
Cost
Easy computerization
2-10
The Nature of Project Selection Models
2-11
Types of Project Selection Models
Nonnumeric models
Numeric models
2-12
Nonnumeric Models
2-13
Types of Nonnumeric Models
Sacred Cow
A project, often suggested by the top management,
that has taken on a life of its own
Operating Necessity
A project that is required in order to protect lives or
property or to keep the company in operation
Competitive Necessity
A project that is required in order to maintain the
companys position in the marketplace
2-14
Types of Nonnumeric Models Continued
2-15
Numeric Models
2-16
Profit/Profitability Models
2-17
Payback Period
2-18
Payback Period Example
Project Cost
Payback Period
Annual Cash Flow
2-19
Payback Period Drawbacks
2-20
Discounted Cash Flow
2-22
NPV Formula
n
Ft
NPV (project) A0
1 k
t
t 1
2-23
NPV Formula Terms
2-24
NPV Example
$1,939
2-25
Projects with Unequal Lives
0 1 2 3 4
Machine A -500 -120 -120 -120
Machine B -600 -100 -100 -100 -100
2-40
Profitability Index
2-41
Advantages of Profitability Models
2-42
Disadvantages of Profitability
Models
2-43
Scoring Models
2-44
Unweighted 0-1 Factor Model
Factors selected
Listed on a preprinted form
Raters score the project on each factor
Each project gets a total score
Main advantage is that the model uses
multiple criteria
Major disadvantages are that it assumes
all criteria are of equal importance
2-45
Unweighted 0-1 Factor Model Example
2-47
UnWeighted Factor Model
2-48
Weighted Factor Model
2-49
Weighted Factor Model Example
2-52
Disadvantages of Scoring Models
Relative measure
Linear in form
Can have large number of criteria
Unweighted models assume equal
importance
2-53
Risk Considerations in Project Selection
2-54
2.2 PROJECT PORTFOLIO PROCESS
(PPP)
2-55
The Project Portfolio Process (PPP)
2-56
Symptoms of a Misaligned Portfolio
More projects
Inconsistent determination of benefits
Projects that dont contribute to the
strategy
Competing projects
Costs exceed benefits
No risk analysis of projects
Lack of tracking against the plan
No client for project 2-57
Purpose of Project Portfolio Process
Identify nonprojects
Prioritize list of projects
Limit number of projects
Identify the real options for each project
Identify projects with good fit
Identify co-dependent projects
2-58
Purpose of Project Portfolio Process
Continued
2-59
Project Portfolio Process Steps
2-60
Step 1: Establish a Project Council
Senior management
The project managers of major projects
The head of the Project Management
Office
Particularly relevant general managers
Those who can identify key opportunities
and risks facing the organization
Anyone who can derail the PPP later on
2-61
Step 2: Identify Project Categories and
Criteria
Derivate projects
Platform projects
Breakthrough projects
R&D projects
2-62
Step 3: Collect Project Data
2-63
Step 4: Assess Resource Availability
2-64
Step 5: Reduce the Project and Criteria
Set
2-65
Step 6: Prioritize the Projects Within
Categories
2-66
Step 7: Select the Projects to be Funded
and Held in Reserve
2-67
Step 8: Implement the Process
Communicate results
Repeat regularly
Improve process
2-68
Project Proposals
Cover letter
Executive summary
The technical approach
The implementation plan
The plan for logistic support and
administration
Past experience
2-70
END OF CHAPTER 2 !!!