Project Selection Criteria

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Definition of a Project

According to The Open University of Hong Kong, (2016), "A project is a temporary endeavor undertaken to create a unique product, service or result." Portfolio on the other hand refers to a group of projects or programs grouped together to help an organization meet set strategic objectives (Darnall, & Preston, 2010). From the definition, it is clear that a project must be unique from other projects either being undertaken or completed, and at the same time, must bring into existence a new product or service, otherwise it will not be worth being called a project. These two key words relative to the definition of a project forms the basis for project selection criteria.

Identification and Selection of a Project

The first step in the identification and selection of a project within an organization is the scrutiny of the goals, objectives and mission outlined by the firm. A viable project to an entity should be one which supports the organizational goals, objectives and mission (Schwalbe, 2015). The three gives meaning to the operations, people, culture and beliefs harbored by an organization hence, undertaking a project outside this framework would result into compromising the organization in all ways.

Economic Viability of a Project

After striking an agreement between the organizational goals, objectives and mission and the potential project, the firm should consider the economic viability of the project or portfolio in question. Economic viability can be assessed through various methods including the IRR, simple payback period method, Benefit Cost Analysis (BCA), discounted cash flows methods, opportunity cost method or the Net Present Value (NPV) method (The Open University of Hong Kong, 2016). All these methods come with special speculative tool that can help identify how the investments made presently will perform over a certain period of time, mostly a year.

Opportunity Cost of Project Selection

The successful selection of a project and commissioning of work to kick off however comes with a foregone opportunity. The foregone chance to make an investment in another sector of the firm is referred to as the opportunity cost (The Open University of Hong Kong, 2016). The finances, labor and time invested in a project could have been used by the organization as either an investment, or to undertake another different project. For instance, if a company invests in a new IT system, classic examples of opportunity costs would include investing in marketing campaigns or even in the construction of a new office for administrative duties.

Other Considerations for Project Suitability

Besides the economic aspect of a project, an organization has to be wary of other factors that weigh in on the suitability of a project. Such considerations will include the quest by the company to keep up with its investment or should it deem the fitness to develop and maintain a competitive edge over the competition (Schwalbe, 2015). Further, an organization may be forced by the urge to meet the legal requirements to undertake a new project. Regulations like those touching on environmental preservation may for example mean a company develops a new more legally compliant waste disposal system. Finally, the firm may decide to improve its public image. This will include such projects like bringing up new structures, or even engaging active image boosting advertising and marketing efforts.

Example of a Project

A project I was involved in is the designing and installation of new hand washing machines for K12 institutions in the district of Greshman, Chicago. This was after a cholera outbreak was reported within the district.

Economic Value and Utility of Projects

Darnall, & Preston (2010) argues that it matters whether something amounts to a project or not due to the investment and the utility it brings to a firm or an individual as well. Most projects are quite an expensive affair in terms of costs and if they amount to no new product or service to the stakeholders, then that would be an economic loss to them. Utility comes from the value for consuming the new product or service arising from a project, which if not realized would be a loss of resources, time and effort.

Conclusion

Going by the definition given in the PMBOK, and considering the fact that the DMBA's 620 content are similar to project AMBA 640 / AMBA 640 Hybrid, then the former amounts to no project since it lacks the crucial aspects of uniqueness and ability to deliver a new product or service.

References

Darnall, R., & Preston, J. M. (2010). Project management from simple to complex.

Schwalbe, K. (2015) An Introduction to Project Management, "Project, Program, and Portfolio Selection," (eReserves)

The Open University of Hong Kong, (29 April, 2016). Project Management. Retrieved from http://www.opentextbooks.org.hk/ditabook/15694

January 19, 2024
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