Project Selection Methods: How do you choose the right project?
An organization can have many projects. But which ones are the best? It is impossible to complete every project within an organization. Why is there a need for project selection within organizations? As you can see, it is all about the project constraints. These are time and budget. Executing every project will naturally cost a lot. However, even if you can overcome the budget constraint, it will still be difficult to complete multiple projects due to market competition.
What should you do as a Project Manager when selecting project managers? What are the most popular methods for project selection? This article will discuss the various project selection methods and the best times to use each one. The PMP training provides more information on project selection.
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The Objectives of Project Selection
As mentioned above, not all projects can be implemented in an organization. Project selection methods are necessary. This is why organizations evaluate different projects before initiating projects and decide which projects to start. The Project Managers are responsible for understanding why the project was chosen and how it fits in with the organization’s strategic plans. This is important because it is essential to plan activities that will meet the project objectives once the project is complete.
What are the common approaches to project selection?
There are two main approaches to project selection. These are:
Benefit Measurement Methods, also known as Comparative Approach, is a method that evaluates multiple projects based upon their benefits, revenues, and profits. The best project is then authorized.
Constrained Optimization Methods, which is Mathematical Approach. This project selection method, on the other hand, uses the mathematical approach. Software programs are used to model many inputs about a project. These programs also outline the possible outputs of a project mathematically.
Let’s now see which approach is best for which project selection method:
Methods for measuring benefits
There are four types of project selection models for Benefit Measurement Methods. These are:
It is a group of people who attempt to stop a new project. The panel acts as the devil’s advocate, claiming negative aspects that could arise from the project’s implementation. These negative aspects can be defended by a project, and it is then approved for induction based on the panel’s findings.
This method allows you to evaluate projects using the perspectives of people within an organization.
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This model assigns a score to each category of candidate projects. Higher scores are considered for initiation.
This is the most commonly used approach by companies to project selection. There are many economic models that can be used to select a project.
The present value is the amount of money that we have today and will receive in the future.
Net Present Value: This is the value today of all future transactions (inbound or outbound).
Internal Rate of Return: This is how much of the investment we can expect to turn into future revenue.
Payback Period: This is the time that the project will pay off.