Professional Documents
Culture Documents
Project
Initiation
Project Management
2-2
Chapter 2
Strategic
Management
and Project
Selection
2-4
Project Results
30
2-5
Challenges
Making
2-6
2-7
selection
Evaluating
Choosing
Implementing
Same
2-8
Types of Companies
2-9
Model Criteria
Realism
Capability
Flexibility
Ease of use
Cost
Easy computerization
2-10
2-11
models
Numeric models
2-12
Nonnumeric Models
Models
2-13
Cow
Operating
Necessity
Competitive
Necessity
2-14
Line Extension
Comparative
Benefit
2-15
Numeric Models
Models that return a numeric value for a
project that can be easily compared with
other projects
Two major categories:
Profit/profitability
Scoring
2-16
Profit/Profitability Models
Models
Payback period
Discounted cash flow (NPV)
Internal rate of return (IRR)
Profitability index
NPV
2-17
Payback Period
The
2-18
Project Cost
Payback Period
Annual Cash Flow
$100,000
Payback Period
4
$25,000
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2-20
The
2-22
NPV Formula
NPV (project) A0
t 1
Ft
1 k
2-23
Ft
NPV Example
8
$25,000
NPV (project) $100,000
t
t 1 1 0.15 0.03
$1,939
2-25
Finding
Profitability Index
a
2-27
2-28
Disadvantages of Profitability
Models
Scoring Models
Unweighted
01 factor model
Unweighted factor model
Weighted factor model
2-30
selected
Raters
Figure 2-2
2-32
Column
of scores is summed
Projects with high scores are selected
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A good
Figure B Page 60
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2-37
Relative measure
Linear in form
Can have large number of criteria
Unweighted models assume equal
importance
2-38
There
Subjective probabilities
Uncertainty
about:
Timing
What will be accomplished?
Side effects
Pro
forma documents
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2-40
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
2-41
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
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Eliminate
risky projects
Eliminate projects that skip the formal
selection process
Keep from overloading the organization
To balance the resources with needs
To balance returns
To balance short-, medium-, and longterm returns
2-43
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
2-45
Derivate projects
Platform projects
Breakthrough projects
R&D projects
2-46
the data
Document assumptions
Screen out weaker projects
The fewer projects that need to be
compared and analyzed, the easier the
work of the council
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2-48
goals
Have competence
Market for offering
How risky the project is
Potential partner
Right resources
Good fit
Use
strengths
Synergistic
Dominated by
another
Has slipped in
desirability
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2-50
categories
Leave some resources free for new
opportunities
Allocate the categorized projects in rank
order
2-51
results
Repeat regularly
Improve process
2-52
Project Proposals
The
letter
Executive summary
The technical approach
The implementation plan
The plan for logistic support and
administration
Past experience
2-54