Question

Project Selection

Larson and Gray (2014) describe three classes of projects found in most organizations: (1) compliance or emergency projects; (2) operational projects; and (3) strategic projects. Compliance or emergency projects are those that must be done; operational projects support current operations; and strategic projects support the organization’s long-term mission. Disregarding compliance or emergency projects, describe the process used in your organization to determine which projects will be undertaken. What financial selection criteria are considered? Do financial selection criteria generally take precedence over non-financial selection criteria?

Project Management

Answer 1

Project are generally classified into 3 categories: The Emergency Project, The Operational Projects and The Strategic Project. All these project have their own benefits and limitations regarding the requirements and criteria selection.

The processes used in my organisation to determine which projects will be undertaken are both Quantitative and Qualitative aspects for the project selection considering both the operational as well as strategic projects in the management.

Usually for the operations of the business, our firm tries to used the quantitative methods like Net Present Value, Profit Index, Interest Rate of Return, Payback Period and other Time value of money instruments to determine the outflow of the project about how much money are we investing in it and inflow of the project that how much money we will expect to get in return. Higher the inflow, more profits could be retained and earned. Thus, low outflow and higher inflow is expected for a good operational project to be worked upon and get selected.

The strategic projects which are usually for the long term benefits of the organisation are usually selected on the basis of Qualitative aspects like the skills and development embedded in it, technology used, goodwill provided and other benefits that help the firm use the skill set, competencies and capabilities of the organisation, its resources and other employees to stand different in the market and provide sustainable solutions to everyone.