Project Strategy and Selection.pptx
- 1. Organization Strategy & Project Selection Dr. Shuja ul Islam
- 2. Organizational Strategy Organizational strategy specifies the organization’s mission, vision and objectives and develops policies and plans, often in terms of projects and programs, created to achieve the organization’s objectives. It also allocates resources to implement them. Organizations use projects to convert strategy into new products, services and process needed for success.
- 3. Strategic Management Process Four activities of Strategic Management Process Review and define the Organizational mission Set Long range goals & objectives Analyse & formulate strategies to reach objectives Implement strategies through projects
- 4. Organization Strategy & Project Management Project managers need to understand strategy for two reasons: To make appropriate decisions and adjustments To make effective project advocacy to senior management
- 5. Project Portfolio Management System Need for a project portfolio management system: Problem 1: The Implementation Gap Problem 2: Organization Politics Problem 3: Resource conflict & Multi-tasking Portfolio: A portfolio refers to projects, programs and operations managed as a group to achieve strategic objectives. The projects or programs of the portfolio may not necessarily be interdependent or directly related.
- 8. Project Portfolio Management (PPM) Versus Project Management (PM)
- 10. Portfolio Management System Classification of the Project Compliance Projects Strategic Projects Operational Projects Selection Criteria Financial Payback period NPV Non Financial Checklist Model Multi-Weighted Scoring Model Classification of Projects Complianc e Project (Must do) Strategic projects Operational Projects
- 11. 2–11 Financial Models The Payback Model Measures the time the project will take to recover the project investment. Uses more desirable shorter paybacks. Emphasizes cash flows, a key factor in business. Limitations of Payback: Ignores the time value of money. Assumes cash inflows for the investment period (and not beyond). Does not consider profitability.
- 12. 2–12 Financial Models (cont’d) The Net Present Value (NPV) model Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows. Positive NPV: project meets minimum desired rate of return and is eligible for further consideration. Negative NPV: project is rejected.
- 13. 2–13 EXHIBIT 2.3a Example Comparing Two Projects Using Payback Method
- 14. 2–14 EXHIBIT 2.3b Example of Comparing Two Projects Using Net Present Value
- 18. Balancing the Portfolio for Risks and Types of Projects Bread-and-butter Projects Involve evolutionary improvements to current products and services. Examples include software upgrades and manufacturing cost reduction efforts. Pearls Represent revolutionary commercial opportunities using proven technical advances. e.g. easypaisa Oysters Involve technological breakthroughs with high commercial payoffs. e.g. concept mobile White Elephants Showed promise at one time but are no longer viable. e.g. Nokia
- 20. PPM Process & Firm Strategy
- 21. PPM Process & Firm Strategy
- 22. Thank You