Project selection methods and the project portfolio play an important role for c
ID: 462496 • Letter: P
Question
Project selection methods and the project portfolio play an important role for corporate sustainability and strategic planning. It is important to distinguish between financial and non-financial models for project selection, since each can yield different results.
Search the internet for some of the project selection methods (financial or non-financial) or software applications.
Summarize your findings and explain some of the benefits and/or shortcomings of the particular method.
If you were an executive in a Fortune 100 medical device company, what criteria would you choose for project selection methods?
Explain your choices!
Explanation / Answer
The project selection methods can be divided into two parts
a. Financial : Given that an organization has limited resources, it cannot choose to do its projects. Thus projects need to be assessed from the point of view of its returns with given resource constraints. There are two broad categories under financial methods of project selection :
a.1 Benefit Meausrement methods : The aim of these methods is toensure that all the projects are implemented with a continual focus on benefits realization. benefits can be measured by using various techniques such as cost benefit ratios, calculating payback period, opportunity cots, discounted cashflows etc. These methods invlove data collection and analysis. They help stakeholders reveal any shortcomings or fallouts in the projects, so that timely correction steps can be taken.
a.2. constrained optimization methods : Constraint optimization methods are used for large complex projects. These methods include solving problems in which one seeks to minimize or maximize a real function by systematically choosing the values of real or integer variables from within an allowed set. The different techniques under this method include linear programming, non- linear programming integer programming, mutliple objective programming etc.
b. Non- Financial : Certain non- financial considerations need to be taken care of while choosing a project. These could include, the time and complexity of the project, the impact of the project on the brand value of the company, the market and competitor reaction amongst other things.
I am an excutive in a Fortune 100 medical device company, I shall choose a combination of both financial as well as non financial methods. This is because, being a fortune 100 company, the effect of a project on brand reputation is very crucial and should be taken into consideration. Further, my project selection choices would vary according to the complexity of the project. In case the project is not very complex, I shall choose benefit measurement method, if the porject is complex then I shall choose Cosntraint Optimization Method.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.