module-2
module-2
Easy
Ease of use Cost
computerization
Project selection
Numeric models do, but the criteria being measured may be either objective or subjective. It is
important to remember that the qualities of a project may be represented by numbers, and
that subjective measures are not necessarily less useful or reliable than objective measures.
Models
• Models do not make decisions—people do. The manager, not the model, bears responsibility for the decision.
The manager may “delegate” the task of making the decision to a model, but the responsibility cannot be
abdicated.
• All models, however sophisticated, are only partial representations of the reality they are meant to reflect.
Reality is far too complex for us to capture more than a small fraction of it in any model. Therefore, no model
can yield an optimal decision except within its own, possibly inadequate, framework.
Non-Numeric models
• The Sacred Cow-the project is suggested by a senior and
powerful official in the organization.
• Often the project is initiated with a simple comment such as, “If you
have a chance, why don’t you look into…,” and there follows an
undeveloped idea for a new product, for the development of a new
market, for the design and adoption of a global data base and
information system, or for some other project requiring an investment
of the fi rm’s resources.
• The immediate result of this bland statement is the creation of a
“project” to investigate whatever the boss has suggested.
• The project is “sacred” in the sense that it will be maintained until
successfully concluded, or until the boss, personally, recognizes the
idea as a failure and terminates it.
The Operating Necessity If a flood is threatening the plant, a project to
build a protective dike does not require much formal evaluation, which
is an example of this scenario.
Example -XYZ Steel Corporation has used this criterion (and the
following criterion also) in evaluating potential projects. If the project is
required in order to keep the system operating, the primary question
becomes: Is the system worth saving at the estimated cost of the
project? If the answer is yes, project costs will be examined to make
sure they are kept as low as is consistent with project success, but the
project will be funded.
• The Competitive Necessity Using this criterion, XYZ Steel undertook a major plant
rebuilding project in the late 1960s in its steel-bar-manufacturing facilities near Chicago.
• It had become apparent to XYZ’s management that the company’s bar mill needed
modernization if the firm was to maintain its competitive position in the Chicago market
area. Although the planning process for the project was quite sophisticated, the decision
to undertake the project was based on a desire to maintain the company’s competitive
position in that market.
• Example education campus enhancements.
• The Product Line Extension In this case, a project to develop and distribute new products would
be judged on the degree to which it fits the firm’s existing product line, fills a gap, strengthens a weak link,
or extends the line in a new, desirable direction. Sometimes careful calculations of profitability are not
required. Decision makers can act on their beliefs about what will be the likely impact on the total system
performance if the new product is added to the line.
• Comparative Benefit Model For this situation, assume that an organization has many projects to
consider, perhaps several dozen. Senior management would like to select a subset of the projects that would
most benefit the fi rm, but the projects do not seem to be easily comparable. For example, some projects
concern potential new products, some require the conduct of a research and development project for a
government agency, some concern changes in production methods, others concern computerization of certain
records, and still others cover a variety of subjects not easily categorized (e.g., a proposal to create a day care
center for employees with small children). The organization has no formal method of selecting projects, but
members of the Selection Committee think that some projects will benefit the firm more than others, even if
they have no precise way to defi ne or measure “benefit.”
• Payback Period
• The payback period for a project is the initial fixed investment in the project
divided by the estimated annual net cash inflows from the project. The ratio of
these quantities is the number of years required for the project to repay its
initial fixed investment.
Numeric • For example, assume a project costs $100,000 to implement and has annual
Models: net cash inflows of $25,000. Then
A project manager is identified and assigned as early in the project as is feasible, preferably while the
project charter is being developed and always prior to the start of planning.
It is recommended that the project manager participate in the development of the project charter, as
the project charter provides the project manager with the authority to apply resources to project
activities.
Identify
Stakeholders
The enterprise environmental factors that can influence the Develop Project Charter process include, but are
not limited to:
• Governmental or industry standards,
• Organization infrastructure, and
• Marketplace conditions.
The organizational process assets that can influence the Develop Project Charter process include, but are not
limited to:
• Organizational standard processes, policies, and standardized process definitions for use in the organization;
• Templates (e.g., project charter template); and
• Historical information and lessons learned knowledge base.
• Expert Judgment
• Expert judgment is often used to assess the inputs used to develop the project charter. Such judgment and expertise is applied to any technical and
management details during this process. Such expertise is provided by any group or individual with specialized knowledge or training, and is available from
many sources, including:
• Other units within the organization,
• Consultants,
• Stakeholders, including customers or sponsors,
• Professional and technical associations,
• Industry groups,
• Subject matter experts, and
• Project management office (PMO).
• Develop Project Charter: Outputs
• Project Charter
• The project charter documents the business needs, current understanding of the customer’s needs, and the new product, service, or result that it is
intended to satisfy, such as:
• Project purpose or justification,
• Measurable project objectives and related success criteria,
• High-level requirements,
• High-level project description,
• High-level risks,
• Summary milestone schedule,
• Summary budget,
• it is appropriate to consider what
documentation is needed to evaluate a
Project project that is being considered. The set of
documents submitted for evaluation is
Proposal called the project proposal, whether it is
brief (a page or two) or extensive, and
regardless of the formality with which it is
presented
• These are:
• 1. Which projects should be bid on?
• 2. How should the proposal-preparation process be
organized and staffed?
Problems in • 3. How much should be spent on preparing
preparing proposals for bids?
• 4. How should the bid prices be set? What is the
proposal bidding strategy? Is it ethical?
Cover Letter
• Managed conflict
ent • Positive atmosphere
• Cooperative relationships
• Participative leadership
Team-Building
Activities
• Forming
• Storming
• Norming
• Performing
• Adjourning