Project Management

Chapter 9 : Project Selection

Criteria for Project Selection Models

Project Selection Models

Nonnumeric Models
Numeric Models

Analyzing the Uncertainty of a Project

Risk Assessment
Simulation Analysis
Window-of-Opportunity Analysis

Project Proposal

Chapter Summary

The right project has to be selected before resources are allocated. After careful market analysis, demand analysis, technical analysis and financial analysis, the project manager selects a project from the various alternatives in hand. The project manager considers a selection criterion that better meets the objectives and interests of the organization. The project selection model should be realistic, capable, cost effective, flexible, easy to use and easily computerized.

Project selection models can be of two types: numeric and non numeric. Non - numeric models do not use quantitative numbers whereas numeric models use mathematical equations and numbers to arrive at a selection criterion. Sacred cow, extention of Product Line, Operating Necessity, Competitive Necessity, Comparative Benefit and Q-Sort Technique are some of the non numeric techniques. Numeric models include profitability models and scoring models.

The profitability models are Payback Period method, Average Rate of Return (ARR) method, Net Present Value (NPV) method, Internal Rate of Return (IRR) method, and Profitability Index method. Unweighted 0-1Factor Model, Unweighted Factor Scoring Model and Weighted Factor Scoring Model are the useful scoring models.

To analyze the uncertainty of a project, the project manager uses risk assessment, simulation analysis, and Window – of – Opportunity Analysis. The project proposal is a document prepared and sent by the project manager after a project is selected for implementation to the concerned authority for approval.

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