Identifying and Selecting Projects

Learning Outcomes

• After studying this chapter, the learner should be able to:

  • Discuss how projects are identified.

  • Explain how projects are prioritized and selected.

  • Identify and describe at least eight elements of a project charter.

  • Prepare a project charter.

  • Prepare a request for proposal.

Project Identification

• The initiating phase of the project life cycle begins with recognizing a need, problem, or opportunity requiring a project.

• Projects are identified in various ways:

  • During strategic planning of an organization.

  • As part of normal business operations.

  • In response to unexpected events.

  • Through individuals organizing a project to address a specific need.

Examples of Project Identification

• Business Strategies Driving Projects:

  • Market opportunities: Development of a new educational product for preschool children.

  • Competition: Redesign of a product to regain market share.

  • Technology: Building a factory in India for a growing Asian market.

  • Not-for-profit identification: Developing a new website from member surveys or building a clinic by a foundation to address health care needs.

• Operational Needs:

  • Consolidation of office space to reduce costs.

  • Compliance projects like installing a new wastewater treatment system due to government regulations.

• Unexpected Events:

  • Natural disasters (e.g., earthquakes) necessitating the construction of infrastructure like bridges or schools.

• Volunteer Initiatives:

  • Community projects such as fundraising for a local food bank or organizing town festivals.

Importance of Clearly Defining Needs

• Clearly defining the need may require:

  • Gathering data about the opportunity.

  • Proposals to support project evaluations (e.g., layout changes for new production equipment).

• Evaluating Project Feasibility:

  • Estimating expected benefits versus costs.

  • Example: If reducing scrap rates from 5% to 1% saves $100,000/year, investment of $200,000 for equipment might be justified.

  • Businesses prefer to allocate funds to projects with the greatest return on investment (ROI).

Project Selection

• The project selection process involves:

  • Evaluating potential projects to decide which should be implemented.

  • Assessing benefits, consequences, and advantages/disadvantages of each project (quantitative vs. qualitative).

Steps in Project Selection Process

1. Develop a set of evaluation criteria:

   • Criteria should cover both quantitative and qualitative factors (e.g., financial benefits, public image).

   • Example: An evaluation by a pharmaceutical company might consider intangible benefits and implementation costs.

2. List Assumptions:

   • Assumptions underpinning the rationale for each project (e.g., assumption about obtaining funding for a daycare center).

3. Gather Data for Evaluation:

   • Collect preliminary financial estimates, revenue projections, implementation costs, and stakeholder feedback.

   • Conduct surveys/focus groups if necessary.
     E.g., gauging employee needs for a daycare center can help estimate usage.

4. Conduct Evaluations:

   • Engage multiple individuals with diverse backgrounds in the evaluation team to ensure comprehensive assessments.

   • Each member contributes unique insights related to their expertise (e.g., marketing, finance).

5. Evaluation and Consensus Building:

   • Use forms to list evaluation criteria, allowing team members to prepare assessments before group discussions, ensuring thorough preparation.

   • Group consensus may lead to higher acceptance and a better quality decision.

Project Charter

• A project charter is a formal document used to authorize and outline key details of the project.

• Elements of the project charter include:

  1. Project Title:

  • Concise vision of the project outcome (e.g., "Implement a CRM System").

  1. Purpose:

  • Summary of the need and justification for the project, referencing prior documents if necessary.

  1. Description:

  • High-level overview of the project, including tasks/phases and preliminary work breakdown structures.

1. Objective:

   • Statement of expected accomplishments and deliverables (e.g., "Launch a new website in eight months with a budget of $100,000").

2. Funding:

   • Authorization of project budget, potentially released in stages (e.g., $2,000,000 authorized with phases of funding).

3. Success Criteria:

   • Define expected quantitative outcomes (e.g., sales volume, reduced waiting times).

4. Milestone Schedule:

   • List of major target dates for project milestones.

5. Major Deliverables:

   • List of tangible items or outputs expected from the project.

6. Acceptance Criteria:

   • Criteria used to evaluate deliverables, ensuring they meet performance specifications.

7. Constraints:

   • Considerations like workflow disruption or necessary outsourcing due to lack of expertise.

8. Key Assumptions:

   • Underlying expectations for project success.

9. Positive and Negative Risks:

   • Identify potential risks that could impact project success.

10. Approval Requirements:

    • Define limits on the authority of the project manager, including what needs board approval.

11. Project Manager:

    • Appointed individual responsible for executing the project.

12. Reporting Requirements:

    • Define frequency and type of reports to project sponsors.

13. Sponsor Designee:

    • Individual designated by the sponsor to act on their behalf.

14. Approval Signature and Date:

    • Indicates formal authorization to proceed with the project.

Preparing a Request for Proposal (RFP)

• The RFP is essential for soliciting proposals from potential contractors and includes:

  1. Project Objective:

  • Clearly defined purpose, including background information.

  1. Statement of Work (SOW):

  • Outline of major tasks needed to accomplish the project.

  1. Customer Requirements:

  • Define specifications for deliverables (e.g., size, color).

  1. Expected Deliverables:

  • Detailed tangible items expected from the contractor.

  1. Acceptance Criteria:

  • Conditions for determining if deliverables meet requirements.

  1. Customer-Supplied Items:

  • Items provided by the customer for project execution.

  1. Payment Terms:

  • Specify how and when payments will be made.

  1. Required Schedule:

  • Timeline for project completion and key milestones.

  1. Proposal Format:

  • Instructions for the format and content of submissions.

  1. Submission Deadline:

  • Date by which proposals must be submitted.

  1. Evaluation Criteria:

  • Criteria used to assess proposals from contractors.

  1. Budget Indication:

  • Optional indication of available funding for the project.

Soliciting Proposals

• After creating the RFP:

  • Notify potential contractors via selected group invitations or public announcements.

  • Ensure fairness by providing equal information to all interested parties.

  • Recognize that some projects may bypass the RFP process entirely and rely on internal resources or informal arrangements.