Developing the organizational strategy and performing the project selection process are the first steps the organization takes in deciding what projects to invest their time and money. In some ways a company is like you and me; they have limited resources and have to decide where is best to allocate usage of those resources. Cash flow is critical to a company’s ability to succeed in the marketplace, and projects burn up available cash.
Organizational Strategy / Strategic Management
Strategic Management is an important piece of the project selection process. In order to spend their money wisely, projects that are undertaken must align with the vision and objectives of the company. For …show more content…
The Strategy is an activity that involves senior leadership and functional managers. A Functional Manager is one who is responsible for an operational area such as accounting, manufacturing, purchasing, etc. Along with senior leadership, the functional managers will consider the strategies that will eventually result in projects.
Each functional area then develops their individual area’s plan, which outlines their functional area’s plan to support the strategy that is aligned with the vision. That plan will invariably include a list of projects each area wishes to undertake in order for their department to fulfill their portion of the vision and strategy.
Every candidate project that is submitted by a functional area should present a business case for that project. In other words, they should have undergone some analysis to ensure that a project meets the minimum criteria to deserve consideration.
The business case will include the following:
• An explanation of how this project aligns with the vision/goal and strategy.
• A list of important/critical features the project will …show more content…
The more bias involved in a decision, the more likely it is that the decision will be based on individual gain and not the common good.
The project selection process flow is shown below.
The methods involved in the project vetting and selection process are explained below.
Non-Numerical Methods
Sacred Cow – a project that is championed by an individual who is in senior leadership and results in sub-optimization of resources and misalignment with the vision and strategy.
Operating Necessity – a project that is necessary so that the company can continue operating. This may include projects such as updating technology.
Compliance – a project that is undertaken to satisfy government regulations, such as controlling emissions from a manufacturing plant.
Alignment – How well the project aligns with the vision and strategy of the company.
Numerical Methods
Numerical methods of selecting projects provide reasonable rationale for choosing a project. Note that non-numerical methods can become numerical. Take for example Alignment. This does not have to be a yes/no decision. The projects can be ranked on a scale from 1 – 10 on how well the project aligns with the vision and