Chapter 2 Selection and Initiating Projects

Describe the importance of aligning projects with business strategy, the strategic planning process, and using a SWOT analysis. Explain the four-stage planning process for project selection Understand the importance of top management commitment and organizational standards in project management. Identify project stakeholders, and perform a stakeholder analysis.

Prepare a business case to justify the need for a project. Create a project charter to formally initiate a project. Describe the importance of holding a good project kick-off meeting. Develop a preliminary project scope statement to help understand project requirements.

Most organizations cannot undertake most of the potential projects identified because of resource limitations and other constraints. An organizations overall business strategy should guide the project selection process and management of those projects.

Strategic Planning and SWOT

Strategic planning involves determining long-term objectives by:

analyzing the Strengths and Weaknesses of an organization, studying Opportunities and Threats in the business environment (SWOT)- can help to identify potential projects, predicting future trends projecting the need for new products and services.

Strategic planning provides important information to help organizations identify and then select potential projects.

Organizations

often follow a detailed planning process for project selection. It is very important to start at the top of the pyramid to select projects that support the organizations business strategy.

Pyramid for the Project Planning Process

Focus

on competitive strategy and broad organizational needs. Perform net present value analysis or other financial projections. Use a weighted scoring model. Implement a balanced scorecard. Address problems, opportunities, and directives. Consider project time frame. Consider project priority.

 Competitive

strategies:

Cost leadership: Attract customers primarily because products or services are inexpensive. Focus: Develop products and services for a particular market niche.
Broad

organizational needs: People agree there is a need for a project, they will make funds available, and there is a strong will to make the project succeed.

Financial

considerations are often an important aspect of the project selection process. Three important methods include:
Net present value analysis Return on investment Payback analysis

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A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria. To create a weighted scoring model:

Identify criteria important to the project selection process:

support key business objectives has a strong internal sponsor uses a realistic level of technology can be implemented in one year or less has low risk in meeting scope, time, budget

Assign a weight to each criterion (so they add up to 100 percent). Assign numerical scores to each criterion for each project. Calculate the weighted scores by multiplying the weight for each criterion by its score and adding the resulting values.
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Problems

are undesirable situations that prevent an organization from achieving its goals. These problems can be current or anticipated. Opportunities are chances to improve the organization. Directives are new requirements imposed by management, government, or some external influence.
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 Another

approach to project selection is based on the time it will take to complete a project or the date by which it must be done. For example, some potential projects must be finished within a specific time period. If they cannot be finished by this set date, they are no longer valid projects. Some projects can be completed very quicklywithin a few weeks, days, or even minutes. However, even though many projects can be completed quickly, it is still important to prioritize them.

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Many

organizations prioritize projects as being high, medium, or low priority based on the current business environment. Organizations should always focus on highpriority projects.

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Without top management commitment, many projects will fail. How top managers can help project managers succeed

Projects are part of the larger organizational environment, and many factors that might affect a project are out of the project managers control. Provide adequate resources. Approve unique project needs in a timely manner. Encourage cooperation from people in other parts of the organization and deal with political issues. Mentor and coach them on leadership issues. Develop and enforce organizational standards. Support a Project Management Office (PMO).

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After a project is approved, senior managers should meet to accomplish the following tasks: Determine the scope, time, and cost constraints for the project. Identify the project sponsor (the person who provides highlevel direction and often the funding for the project). Select the project manager. Meet with the project manager to review the process and expectations for managing the project. Determine if the project should be divided into two or more smaller projects because it is easier to manage smaller projects than larger ones.
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Identify and understand project stakeholders. Prepare a business case for the project (if needed). Create the project charter. Hold a kick-off meeting. Develop a preliminary scope statement.

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Project stakeholders are the people involved in or affected by project activities. Internal project stakeholders generally include the project sponsor, project team, support staff, and internal customers for the project. Other internal stakeholders include top management, other functional managers, and other project managers. External project stakeholders include the projects customers (if they are external to the organization), competitors, suppliers, and other external groups that are potentially involved in or affected by the project, such as government officials and concerned citizens.

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Includes the following information: Names and organizations of key stakeholders Their roles on the project Unique facts about each stakeholder Their levels of interest in the project Their influence on the project Suggestions for managing relationships with each stakeholder Because a stakeholder analysis often includes sensitive information, it should not be part of the official project plans, which are normally available for all stakeholders to review.

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Target Groups, Direct and Indirect Beneficiaries (grants)

Target groups, direct and indirect beneficiaries = those who are affected directly or indirectly by the project. Relationship between target groups and direct beneficiaries is part and whole. Partners = direct influence of project organization. Organizations may be in the same area, different areas, national or international. Collaborators = neither partners nor beneficiaries, the project helps the possibility of voluntary or reward. Give value to the project by the weight of their CV (experts).

Preparing a Business Case for the Project or Project Justification

Successful organizations initiate projects to meet business needs, and a common business need is to spend money wisely. A business case is a document that provides justification for investing in a project. It is a good idea to have one of the companys financial managers review the information for accuracy.

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Introduction/Background Business Objective Current Situation and Problem/Opportunity Statement Critical Assumptions and Constraints Analysis of Options and Recommendation Preliminary Project Requirements Budget Estimate and Financial Analysis Schedule Estimate Potential Risks Exhibits
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A project charter is a document that formally recognizes the existence of a project and provides a summary of the projects objectives and management. It authorizes the project manager to use organizational resources to complete the project. Ideally, the project manager will play a major role in developing the project charter. Instead of project charters, some organizations initiate projects using a simple letter of agreement or formal contract. A crucial part of the project charter is the sign-off section.

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Project Title and Date of Authorization Project Start Date Project Finish Date Other Schedule Information Budget Information Project Manager Project Goal Project Objectives Approach Roles and Responsibilities Sign-off Comments
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Delimitation the project area (goal/aim) Project Scope

The

project area

If the problem is complex, impossible to achieve through a single project Limiting the proposal to achieve some things too grandiose with the risk of obtaining a insignificant impact or difficult to estimate or achieve It is delimited by the goal of the project

Delimitation the project area (goal/aim)

Goal/Aim What should be done, the selected solution to the problem identified, what needs to cover Concisely in a sentence or two => create a general overview of the project's final outcome. Contains references to what the problem is not solved If the aim is complex => sub-projects decomposition

Project Objectives

Types of objectives In terms of time:

long-term objectives (general or institutional objectives) sometimes downloads / adaptations / adjustments of funding programs or objectives of the organization short and medium term objectives (operational objectives) - project specific quantitative - can be measured during and immediately after the end of the project qualitative their measure need time

In terms of quantification

Objectives should reflect a state that is needed to achieve

Experienced project managers know that it is crucial to get projects off to a great start. A kick-off meeting is a meeting held at the beginning of a project so that stakeholders can meet each other, review the goals of the project, and discuss future plans. Often used to get support for a project and clarify roles and responsibilities. The project champion should speak first and introduce the project sponsor and project manager. Often a fair amount of work is done to prepare for the meeting.

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A scope statement is a document used to develop and confirm a common understanding of the project scope. It describes in detail the work to be accomplished and is an important tool for preventing scope creepthe tendency for project scope to continually increase. It is helpful to create a preliminary, or initial, scope statement during project initiation so that the entire project team can start important discussions and work related to the project scope. There are usually several versions, and each one becomes more detailed as the project progresses and more information becomes available.
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Contents and length will vary based on the project. Typical contents include:

The product or service requirements and characteristics A summary of all deliverables The project success criteria References to related documents

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