Project Selection

Selecting the right project is a critical part in any project success. If project manager do not put enough effort into selecting the right opportunity for improvement, a project can end in disaster, or create unnecessary work and complexity for the project team. Project Selection is the process of evaluating individual projects or groups of projects and then choosing to implement a set of them so that the objectives of the parent organization are achieved. 

Before a project begins its life cycle, the project should have been selected for funding by the parent organization. Whether the project was proposed by someone within the organization or an outside client, it is subject to approval by a more or less formal selection process. The major function of the selection process is to ensure that several conditions are considered before a commitment is made to undertake any project. Some of the conditions that are considered before selection of a project are the followings –

(i) Is the project potentially profitable? Does it have a chance of meeting our return-on-investment hurdle rate?

(ii) Does the firm have or can it easily acquire the knowledge and skills to carry out the project successfully?

(iii) Does the project involve building competencies that are considered consistent without firm’s strategic plan?

(iv) Does the organization currently have the capacity to carry out the project on its proposed schedule?

Non-numeric Selection Methods

The Sacred Cow – In some of the cases, the Chief Executive Officer/MD casually suggests a potential product or service that the organization might offer to its customers. Whatever be the selection process, the project suggested by the top authority is accepted and is shown technically feasible even if the project may not be feasible economically. In such cases, senior management’s intelligence and valuable years of experience are ignored. It also overlooks the value of support from the top of organization, a condition that is necessary for project success.

The Operating/Competitive Necessity – This method selects any project that is necessary for continued operation of a group or facility. If the answer to the question “Is it necessary ____?” question is “yes”, i.e., the project is needed for continuing the business in uninterrupted manner, the project is selected. The same questions can be directed toward the maintenance of a competitive position. A well-known MNC almost decided to sell a facility that manufactured the large, mercury vapor light bulbs used for streetlights and lighting large parking lots. The lighting industry had considerable excess capacity for this type of bulb and the resulting depressed prices meant they could not be sold profitably. The MNC, however, felt that if they dropped these bulbs from their line of lighting products, they might lose a significant portion of all light bulb sales to municipalities. The profits from such sakes were far in excess of the losses on the mercury vapor bulbs.

Comparative Benefits – Many organizations have to select from a list of projects that are complex, difficult to assess, and often non-comparable. Such organization often appoints a selection committee made up of knowledgeable individuals. Each person is asked to arrange a set of potential projects into a rank-ordered set. Typically, each individual judge may use whatever criteria he or she wishes to evaluate projects. Some may use carefully determined technical criteria, but others may try to estimate the project’s probable impact on the ability of the organization to meet its goals. While the use of various criteria by different judges may trouble some, it results from a purposeful attempt to get as broad a set of evaluations as possible.

Rank-ordering a small number of projects is not inherently difficult, but when the number of projects exceeds 15 or 20, the difficulty of ordering the group rises rapidly. The Q-Sort method proposed by Helin and Souder in 1974 is a convenient way to handle the task. First, the projects should be separated into three subsets – ‘good’, ‘fair’ and ‘poor’, using the desired criteria. If there are more than seven or eight members in any classification, the group should be divided into two subsets, for instance, “good-plus” and “good-minus”. Subdividing should be continued until no set has more than seven or eight members. After that the items should be ranked in each subset. The subsets should be arranged in order of rank and the entire list will be in order.

Method may be any, but the criteria may be based on impact on Customer, Process stability, Defect definition etc. Project manager should prepare a project viability matrix to calculate the total score of each and every proposed score and put the conclusion before management for approvals.