There are no guarantees and many organizations throw their hooks into every pond available in order to get a few bites. But you can only put so many perches in the freezer, and after a while you want something else to eat.
Each project has its cost. Financially, you may be able to gather enough to feed the project, but there’s also the matter of time and resources. Your personnel can only be stretched so far before the line breaks.
Taking a minute to go through the different methods of project selection can help your organization determine which lures to buy and what fish should be thrown back in.
While most project managers don’t get to pick their own projects, they are often included in how the organization selects the projects. Companies understand that as a professional project manager, you can lend insight that sponsors, board members, even clients can’t.
Project Selection Objectives: What are you fishing for?
The first key is understanding the environment of the organization, the industry or individuals they serve. Again, as a project manager, you are in a unique position to offer input.
The project selection process starts before the project is initiated. It’s taking the time to determine what pole, line strength, hooks and lures that your company has before casting the line.
By getting in on the selection process you can help ensure that the end product is a success, for you, your team members, the client, and the organization as a whole.
Two approaches: Fly Fishing or Casting a Line
Constrained Optimization Method: Casting a Line
Integer programming, linear programming, and dynamic programming are all techniques used in Constrained Optimization Methods. The mathematical approach to analyzing the project allows the organization to set minimums. It uses limits and constraints that are generally cost based.
Most project managers aren’t involved in Constrained Optimization Project Selection Methods. They are used, mainly, to satisfy cost constraints. They are logic based, used in many financial and economic situations, and rely on finding the minimum amounts necessary for the maximum benefit.
Linear Programming: Linear Programming is a simple method that utilizes data to find a straightforward approach to selecting the project.
Integer Programming: Unlike linear programming, integer programming only looks at the pure integers, not the fractional data.
Dynamic Programming: Dynamic programming looks at the problem by taking the best combination of the data. It utilizes standards set by the subproblems in order to come up with the maximum benefit.
Multi-Objective Programming: As the term signifies, multi-objective programming allows you to use different methods to come to a solution. It is used when a single solution can’t optimize all of the problems. It allows you to combine several
Each of these mathematical programming methods rely on numbers, concrete data. Program managers, on the whole, rely on more information to make a selection.
Benefit Measurement Methods – Fly Fishing
Benefit Measurement Methods are most often used by project managers. They don’t require advanced degrees in mathematics, finance, or economics. Each of the six methods can be used by anyone in the project selection process.
Cost Benefit Analysis
This analyzes the overall costs of the project compared to the benefits it will provide. For example: If the cost of expanding the widget factory is $1,000,000, in a cost benefit analysis, the cost would be weighed against the benefits of increasing the output of widgets by an additional 50%, making the company an additional $2,000,000 after the first year.
Back to the widgets, if the project takes 6 months to complete and the estimated increase is $2,000,000, then the investment of $1,000,00 will be paid back in 3 months after the project is complete.
Discounted Cash Flow Analysis
For this we need to know:
- The recovery time
- The interest rates and/or rate of inflation, and
- The amount of recovery.
Net Present Value (NPV)
Similar to Discounted Cash Flow Analysis, NPV looks at the cost recovery amount as well as the future gains and expenditures. It allows you to see what the value of the project is over time and how much it will cost to keep it going.
This method is used when trying to determine which project to go forward with. Calculating the initial cost of the project isn’t enough. One project may cost less but have an overall return of more or visa versa.
Scoring models move away from the finances and incorporate the other benefits, costs, and values that the project may have. By selecting different criteria, profitability, resource management, sustainability, community impact, etc., this model of benefit measurement is where most project managers shine.
By analyzing the different factors, projects can be chosen, not only by how much money will be spent and made, but also how much time, how much personnel will be required, what approvals need to be obtained, and how will the community look at the project.
Conclusion: Baiting the Hook
Which approach and method used is ultimately up to the organization. If you are part of the selection process make sure you are up to date on the projects you are choosing from. Figure out if your company is casting a wide net, or jumping the line in a running stream.
The right project may not be a matter of cost, but might come down to scheduling. You may be on a project already and asked to be part of the Project Selection Board because you understand where the current resources are being used and when they will be available.
Remember, your input is valuable to the organization. You have your finger on the reel and know when to cast the line and when to bring it in. Bring your knowledge to the table. It’s time for catching, not just fishing.
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