Chapter 2 - Organization Strategy and Project Selection

Flashcards covering vocabulary and key concepts from Chapter 2: Organization Strategy and Project Selection, including strategic management, evaluation models, and project types.

Strategic Management

The process of assessing 'what we are' and deciding and implementing 'what we intend to be and how we are going to get there.'

Phase Gate Model

A series of gates that a project must pass through in order to be completed, serving as decision points to ensure organization investment in worthwhile projects.

Implementation Gap

The lack of understanding and consensus of organization strategy among top and middle-level managers.

Optimism Bias

A behavioral bias where individuals are overly positive about the outcomes of planned activities.

Uniqueness Bias

A behavioral bias where individuals see themselves as more singular than they actually are.

Sacred Cow

A project that a powerful, high-ranking official is advocating, often selected based on persuasiveness rather than facts.

Multitasking

Involves starting and stopping work on one task to go and work on another project, then returning to the work on the original task.

Compliance Projects

Also known as 'must do' projects, which are necessary for the organization to operate.

Strategic Projects

Projects that are directly linked to the achievement of the organization's long-term mission.

Operational Projects

Projects that support current operations within an organization.

Payback Model

A financial selection model that measures the time the project will take to recover the project investment and desires shorter durations.

Net Present Value (NPV)

A financial selection model that uses management’s minimum desired rate of return to compute the present value of all net cash inflows.

Checklist Model

A multi-criteria selection model that uses a list of questions to review potential projects for acceptance or rejection but fails to compare project importance.

Multi-Weighted Scoring Model

A selection model that uses several weighted qualitative and/or quantitative criteria to evaluate and compare project proposals.

Bread-and-butter Projects

A project type in the Matheson classification involving evolutionary improvements to current products and services.

Pearls

A project type representing revolutionary commercial advances using proven technology.

Oysters

A project type involving technological breakthroughs with tremendous commercial potential.

White Elephants

A project type that showed promise at one time but is no longer viable.

SMART

An acronym for Characteristics of Objectives: Specific, Measurable, Assignable, Realistic, and Time related.

Project Portfolio Management

A system that builds discipline into the selection process and links project selection to strategic metrics.

Review and Define the Organizational Mission

The first activity of the strategic management process, identifying 'what we want to become' and the scope of products and services.

Analyze and Formulate Strategies

The activity in the strategic management process that answers the question of what needs to be done to reach objectives.

Set Objectives to Achieve Strategies

The process of translating organization strategy into specific, concrete, and measurable terms.

Implement Strategies Through Projects

The final activity in the strategic management process which addresses how strategies will be realized given available resources.

Specific

The characteristic of an objective to be specific in targeting a goal.

Measurable

The characteristic of an objective to establish a measurable indicator or indicators of progress.

Assignable

The characteristic of an objective to be assigned to one person for completion.

Realistic

The characteristic of an objective to state what can realistically be done with available resources.

Time Related

The characteristic of an objective to state when it can be achieved, or its duration.

Behavioral Biases

The predisposition of individuals, including optimism bias and uniqueness bias, that can create problems in project implementation.

Organization Politics

A problem where project selection is based on the power of advocates rather than facts and sound reasoning.

Resource Conflicts

A problem in multiproject environments caused by project interdependency and the need to share resources.

Go

One of the three possible outcomes of a gate decision in the Phase Gate Model, meaning the project proceeds.

Kill

One of the three possible outcomes of a gate decision in the Phase Gate Model, meaning the project is cancelled.

Recycle

One of the three possible outcomes of a gate decision in the Phase Gate Model, meaning the project is revised and resubmitted.

Financial Criteria

Selection criteria such as Payback and Net Present Value ($NPV$) used to assess project value.

Nonfinancial Criteria

Selection criteria used for projects of strategic importance, such as capturing market share or preventing government regulation.

Enabler Product

A strategic nonfinancial project whose introduction increases sales in more profitable products.

Project Screening Matrix

A tool used in Multi-Weighted Scoring Models that evaluates projects against criteria such as 'Strategic fit' and 'ROI of $18.00\%$ plus.'

Request for Proposal (RFP)

A formal document used to solicit project proposals from external sources such as contractors and vendors.

Governance Team

The body responsible for publishing project priorities, ensuring an open selection process, and evaluating progress.

Internal Environment Analysis

The process of assessing strengths and weaknesses to answer 'What are we now?'

External Environment Analysis

The process of identifying opportunities and threats in the strategic management process.

Project Charter

A document issued once a project is accepted and resources are assigned to officially initiate the project.

Priority Team

The group that evaluates project proposals, returns them for more information, or pursues them for implementation planning.

Matheson Classification Scheme

A scheme that categorizes projects into four types based on degrees of difficulty and commercial value.

Project Proposal Form

A document identifying project classification, problem solved, strategy alignment, deliverables, risks, and estimated cost.

Decision Step

The role of a gate in the Phase Gate Process Diagram, leading from one phase to the next.

Discount Rate

The minimum desired rate of return used in the Net Present Value ($NPV$) formula to compute present value.

Project Portfolio

A collection of projects balanced for risks and types, reviewed by the Priority Team for strategic alignment.