{"id":30,"date":"2021-11-16T22:39:25","date_gmt":"2021-11-17T03:39:25","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/projectcostsrisksqualityprocurement\/chapter\/1-5-project-organization-and-selection\/"},"modified":"2022-01-16T20:27:59","modified_gmt":"2022-01-17T01:27:59","slug":"1-5-project-organization-and-selection","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/projectcostsrisksqualityprocurement\/chapter\/1-5-project-organization-and-selection\/","title":{"raw":"1.5 Project Organization and Selection","rendered":"1.5 Project Organization and Selection"},"content":{"raw":"Projects are the way organizations operationalize strategy and therefore executing a strategy effectively means pursuing the right projects. In other words, it is a matter of aligning projects and initiatives with the company\u2019s overall goals. As we discussed earlier a portfolio is made up of programs and projects. An organization\u2019s strategy is the game plan for ensuring that the organization\u2019s portfolios, programs, and projects are all directed toward a common goal and prioritized appropriately.\r\n\r\nProject selection proceeds on two levels: the portfolio level and the project level. On the portfolio level, management works to ensure that all the projects in a portfolio support the organization\u2019s larger strategy. In other words, management focuses on optimizing its portfolio of projects.\r\n\r\nOn the project level, teams focus on selecting, refining, and then advancing or, if necessary, terminating individual projects that are not aligned with organizational goals. Many organizations find that they have three kinds of projects in their portfolios; compliance (emergency \u2013must do), operational, and strategic projects. Compliance projects usually have penalties if they are not implemented.\r\n\r\nOperational projects are those that are needed to support current operations. These projects are designed to improve efficiency of delivery systems, reduce product costs, improve performance etc. Strategic projects on the other hand are those that directly support the organization\u2019s long-run mission. The goals of such projects are to increase revenue or market share and examples of strategic projects include new products, research and development.\r\n\r\nIt is important to note that some compliance-related projects have to be completed no matter what. But companies typically generate far more ideas for new projects than they can reasonably carry out. So to optimize its portfolio, every organization needs an efficient process for capturing, sorting, and screening ideas for new projects, and then for approving and prioritizing projects that are ultimately green-lighted. We will discuss the factors that influence project selection and some project-selection methods.\r\n\r\nIn 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.\r\n\r\nAn organization\u2019s project selection process is also influenced by the nature of the organization and its priorities. 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. 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.\r\n\r\nSize is a major influence on an organization\u2019s 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.\r\n\r\nAccessing the value of the project to customers and other stakeholders and 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 such information to assess whether the potential value of the project outweighs the costs and risks.\r\n

Financial and Non-Financial Criteria<\/h2>\r\nWhen you have a number of interesting and challenging projects to choose from, finding a project that is the right fit for the organization is the first step in effective project management. Project Selection Methods offer a set of time-tested techniques based on sound logical reasoning to choose a project and filter out undesirable projects with a very low likelihood of success. Project selection methods are an important concept for practicing project managers. The criteria can be classified as financial and non-financial.\r\n\r\nAssuming the organization you are working for has been handed a number of project contracts. Due to resource constraints, the organization can not handle all the projects at once, so they need to decide which project(s) will maximize profitability. Note that financial return such as profitability while important does not always reflect strategic importance. Organizations have to be disciplined in saying no to potentially profitable projects that are outside the realm of their core mission. This may require the consideration of other criteria beyond profitability such as:\r\n