Project Selection and Prioritization

1. Project Selection and Prioritization KM-1: Project Management Principles Technical Knowledge Module Competency: Project selection process using a scoring matrix By Dr. Kanabar, 2015

2. Unit Goal This is applicable to KM:1 – LO-2 • Project Selection is important competency for project managers. • Introduce how an organization will select a project.

3. Learning Outcome This is KM:1 – LO-2 • Evaluate factors important to project selection and prioritization as evidenced by organizational capability and available resource capacity. • Competency: Project selection using a scoring matrix

4. Activity: Scoring Matrix Model • Students identify important factors for project selection. A scoring matrix helps with the prioritization. • List a few relevant critical success factors (CSF) criteria, weigh them according to their priorities and importance. • Transferable Skill: • Can create a project selection scoring matrix for several projects in a portfolio. • Justify the CSFs • Recommend the best project. Organizational capability (desire for high/low risk projects) and resource capacity may constrain the final outcome.

5. Terms • Critical Success Factors (CSFs) • Factors that will play a role in project selection • Scoring Matrix • A scoring model with CSFs and weights assigned to competing projects

6. Activity: Instructions for Instructor In this class room activity students are asked to consider a scenario for project selection. They can evaluate projects for any hypothetical scenario. In a classroom setting, since students work in teams, each can be asked to propose a competing project for the hypothetical project selection scenario.

7. Activity Example “Create a scoring matrix to purchase a used car for family with two children”. • Each student will propose one used car for consideration. • They will identify CSF’s in the top row which serves as evaluation criteria against which projects will be scored. Typicallysafety, miles and cost figure in most scoring matrix proposals. • They will assign weights for each of the competing used cars and select the winner as shown in the next slide.

8. Activity: Create a Scoring Matrix Students will multiply the Weight by the CSF And will recommend used car 3, 1 and 2 in that order. • Identify Critical success factors on the X axis.

9. Foundational Project Selection Theoretical Concepts to Introduce • Benefit Measurement Methods • Uses present value of estimated cash inflow and outflow. • Determine costs and benefits, and then compare them with other projects to make a decision. • Introduce the following: Benefit/Cost Ratio, Economic Model, Scoring Matrix model, Payback Period, Net Present Value, Discounted Cash Flow, Internal Rate of Return and Opportunity Cost • We focus on the Scoring Matrix model. • Constrained Optimization Method • Mathematical Model of project selection often used for large projects. • Involves complex Linear or non-linear programming and dynamic or integer mathematical calculations.

10. Slides The following slides are provided as a teaching resource.

11. Case Study • Students appreciate seeing a real world example of a scoring matrix. • One such case study to consider is the project selection technique being used at South Florida Regional Transportation Authority (SFRTA) in the USA. • The project selection committee will score each grant application according to evaluation criteria set forth. • The attributes considered in a recent scoring matrix are shown in the next slide.

12. Case Study Reference: SFRTA, 2015. • Other Attributes listed: • Project Implementation • Management Capability • Fiscal Capability • Effectiveness Indicators

13. Critical Success Factors (CSF) In the previous example we saw attributes that the organization considers as a CSF for eventual project implementation success. A unique, differentiated product that provides significant benefits and supe­rior value to the customer. A strong market-driven, customer focused orientation aimed at an “attractive market.” Solid up-front project definition. Don’t stray from core competencies. Execute a disciplined process.

14. Scoring Matrix In this activity students evaluate multiple projects for a hypothetical scenario. They will identify CSF’s in the top row which serves as evaluation criteria against which projects will be scored. They will assign weights for each of the competing projects. A sample scoring matrix is shown in the next slide. The X axis and list the CSF in the Y axis.

15. Activity: Create a Scoring Matrix Students will multiply the Weight by the CSF And will recommend a project. For example: Project 3, 1 and 2 in that order. • Identify Critical success factors on the X axis.

16. Graduation Celebration Project Ideas • Project 1: Picnic Party (the case study in textbook) • Project 2: Six flags outing • Project 3: Black Tie party at a Five Star hotel • Project 4: Dinner Cruise

17. Practice the Project Selection Matrix The school is interested in a graduation Party. Where are we going to celebrate? The winner is ------->

18. CSF Scoring Planning: scale of 1-10 with 1 being easy to plan and 10 being harder to plan, meaning more planning requirements. Cost: on scale of 1-10 with 1 being inexpensive and 10 being expensive. Uniqueness: on a scale of 1-10 with 1 being the least unique and 10 being the most unique.

19. Comments on Calibration • The weights might be somewhat arbitrary: • They are assigned based on what the company thinks is important. • For a company starting out on the project selection process, this is about the best that can be done. • Over time, however, the weights can be calibrated, making the selection process more reliable

20. What next? The Team moves on to Create a POS Create a Project Overview Statement for the winner (POS) PROJECT OVERVIEW STATEMENT For SIX FLAGS PROJECT OBJECTIVE To organize Project Team at Six Flags on May 15, 2016 within a budget of $ 2500 DELIVERABLES • A successful visit to Six flags Amusement Park • Good food. • Lots of fun without roadblocks MILESTONES Website (communication) (throughout the project) Fundraising (completed by 1/31/2016) Registration and sign-up (2/5/2016) Book Rental Bus(2/10/2016) Organize details (Tickets) and logistics (2/20/2016) Preparation complete (2/25/2016)

21. Financial Evaluation Criteria • Project managers also must be able to calculate, evaluate, and defend the financial implications of their projects. • This is generally referred to as return on investment, (ROI). • The following methods are widely used: • Payback • Net Present Value (NPV).

22. Payback Payback is a simple calculation of the time it will take to recover an investment. We propose a project that will cost $30,000, and estimate it will improve cash flow by $10,000 per year. The payback is:

23. Conclusion • Portfolios and Alignment with Organization is important. • Resource availability (constraint) and strategic objectives (alignment) are key factors that drive an organization during project selection. • They may select a less risky project if there is a concern • Or be opportunistic and consider an innovative high risk project that could provide them with maximum profit and recognition.

24. Conclusion • Project selection process using a scoring matrix was introduced. • Related concepts to talk about include: • The Project Environment • Projects, Programs, and Portfolios • Alignment of Portfolios with Organizational Goals. • Critical Success Factors (CSF) • Financial factors

25. References • SFRTA, JARC/NEW FREEDOM PROJECTS SELECTION PROCESS AND SCORING MATRIX, South Florida Regional Transportation Authority’s, Viewed on 8/8/2015 at http://www.sfrta.fl.gov/docs/Grants/JARC_NFScoring%20Matrix_Selection_Criteria.pdf. • Warburton, R., Kanabar, V. Art and Science of Project Management, RWPress, Newport, 2nd Edition, 2014.