A Journey from Project Selection, through Implementation, till Project Winding-Up
Selection of a Project:
Project Selection is a process to assess each project idea and select the project with the highest viability and highest priority. Often there will be a number of suggested projects but not enough resources, money or time to undertake all of the projects. Choosing a project using the right method is therefore of utmost importance. By following the Project Selection Stage one follows a step by step objective method for prioritizing projects - this can be used to explain to stakeholders the reasoning behind why a particular project has been selected. Project Selection is often conducted by the stakeholders or a committee of senior managers in the organization based on the report generated by the project manager. Top down budgeting is done, based on available data from the similar projects being formulated by senior managers/consultants having experience in similar projects. The major function of the selection process is to ensure that several conditions are considered before a commitment is made to undertake any project. The conditions vary widely from firm to firm but several are quite common: i. Is the project potentially profitable? Does it have chance of meeting the ROI hurdle rate? ii. Does the firm have or can it easily acquire, the knowledge and skill to carry out the project successfully? iii. Does the project involve building competencies that are considered consistent with the firm’s strategic plan?
The selection process for choosing a particular project is broadly categorized as: i. Preliminary Activities : To identify the potential of the proposed project, if it is having synergy with the existing business i.e. horizontal integration, or if there is any scope for vertical integration. It also consists of conducting a market research, analysis for strength of competitors, psyche of the prospective consumers,price of the product in different regions and the equipments and the technology required. ii. Intermediary Activities : Done to filter down the initially identified ventures based on certain financial and non-financial parameters. iii. Final Activity : It is required to know the viability of each project, and finally one project is selected. It is after the final stage of the selection process is over that the Project Life Cycle is launched.
The detailed selection process, in order to choose a project from the many given, is as follows:
EVALUATION OF PROJECT IDEAS BASED ON FINANCIAL & NON-FINANCIAL PARAMETERS
VENTURE ANALYSIS USING THE PROJECT SELECTION MODELS
FINAL SELECTION OF A PROJECT
Evaluation of Projects:
The stakeholders are required to hold a practical approach, be open minded and absolutely un-emotional for any particular project, otherwise he would develop biasness for that project. The people evaluating the project should have concrete vision so that the most viable project could be finally selected. There are three evaluation criterion as follows: 1. General Evaluation Criterion :These are the criterion which evaluate different business plans on the grounds other the the financial benefits. Financial benefit is required but it is not the end and they alone cannot be the criterion for selection of a venture for investment. Even before the financial evaluation, this evaluation is done: * Proper assessment of internal strengths and weaknesses. For example – not having an in-house technician is an internal weakness. In that case there is a possibility to appoint outsiders, if appointed, then the question is, does the company have financial strength to maintain them by paying them more than others so that they stay with the organization. * The severity of the potential risk needs to be evaluated like: * Information regarding activities and strength of competitors. * Technological advancement in the World.