Balanced scorecard for effective project selection process

Title Layout

Balanced Scorecard (BSC) For Effective Project Selection Process
By
Abhinav Sabharwal

Paper Abstract
Abstract
A Balanced Scorecard approach of step-wise refinement from Vision to Implementation of projects can be
achieved by integrating the Balanced Scorecard approach with Project Selection Process. This will increase
the quality of the project portfolio and improve the confidence of business sponsors that their Investment in
projects will return benefits that they perceive to be of value.

My Intro
I am a Business Analyst, Project Manger, ISO14001 Implementer & Quality Analyst with 7 years of Experience currently working
with:

Companies That I have Worked With Educational Qualification

M.B.A in Marketing &
I.T

B.Sc. in Information Technology

Difficulties In Effective Implementation Of Strategy
 Methods operating at the strategic level cannot ensure that enabling initiatives are implementable,

 Methods operating at project level cannot ensure that projects are aligned with organizational strategy and
will effectively deliver value.

 Business sponsors of projects generally judge project success by measures other than the delivery of a quality
product within schedule and budgetary constraints.

 The key concerns of executives include improved governance of the project portfolio & ability to deliver
value through change,

Finite Resources & Exaggerated Benefits

• As resources are finite, capital rationing technique or form of project selection and prioritization scheme is used

• To ensure the maximum R.O.I of its resources. All project proposals are evaluate against the same Benchmark

 Cost/benefit,
 Strategic alignment
 Portfolio balance
 Risk & Return

• To achieve their own ends, Sectoral interest groups may overstate the advantages of their proposal over all other
proposals, leading to selections which are either invalid or inappropriate, and a portfolio which is suboptimal.

list of 7 Ways To Get a Project Approved

 The first entry in this list is “Designate The Project as being strategic ”

 Presence of strategic objectives without a top-down implementation plan, leaves the scope for claims that tactical
projects are ‘mandatory’ because they somehow support one of the organization’s strategic objectives.

 Such claims go unchallenged, as strategic objective is somewhat vague,

Project Goal ?
Install new hardware and software to improve our customer service to
world class levels.

versus
Respond to 95% of our customers’ inquiries within 90 seconds with less
than 5% callbacks about the same problem.

A Really Good Goal
Our goal is to land a man on the moon and return him safely by the end of the decade.

John F. Kennedy

Project Selection and Approval
Project Selection Process Value Chain
 The Project Selection Decision

 Project must map to organization goals

 Project must provide verifiable MOV

 Selection should be based on diverse measures
such as:

 Tangible and intangible costs and benefits

 Various levels throughout the organization

Gauging Projects Contribution the Balanced Scorecard Way

Gauging Projects Contribution Balanced Scorecard Way
 Most organizations need a way to deal with their intangible
assets, since a significant proportion of their market valuation is
derived from their intangible assets.

 B.S.C being strategic in its approach, allows performance
management system, of an organization to translate its vision and
strategy into implementable change initiatives.

 Core competency in effectively managing change by detecting
and responding to changes in its environment, including
implementing internal change initiatives, more effectively than
their competitors is likely to be valued more than an otherwise
identical organization

Balanced scorecard for effective project selection process

Criterion Weight Alternative A Alternative B Alternative C

ROI 15% 2 4 10
Financial Payback 10% 3 5 10
NPV 15% 2 4 10
Alignment with strategic
objectives 10% 3 5 8
Organizational
Likelihood of achieving
project’s MOV 10% 2 6 9

Availability of skilled
team members 5% 5 5 4

Maintainability 5% 4 6 7
Project
Time to develop 5% 5 7 6
Risk 5% 3 5 5
Customer satisfaction 10% 2 4 9
External
Increased market share 10% 2 5 8
Total Score 100% 2.65 4.85 8.50
Notes: Risk scores have a reverse scale – i.e., higher scores for risk imply lower levels of risk

Measurable Organizational Value (MOV)

 The project’s goal
 Measure of success
 Must be measurable
 Provides value to the organization
 Must be agreed upon
 Must be verifiable at the end of the project
 Guides the project throughout its life cycle
 Should align with the organization’s strategy and goals

Process for Developing the MOV
1.Identify the desired area of impact E.g. 3. Develop an Appropriate Metric
 Strategic  Should it increase or decrease?
 Customer Centric  Metrics:
 Financial  Money ($ £ ¥ )
 Operational  Percentage (%)
 Social  Numeric Values

4. Set a time frame for achieving the MOV
2. Identify the desired value of the project to Organization  When will the MOV be achieved?
 Better  Project manager and team can only
 Faster guide the process
 Cheaper
5. Summarize the MOV in a clear, concise statement or
 Growth table. This project will be successful if __________.

 MOV: The B2C project will provide a 20%
return on investment and 500 new customers
within the first year of its operation

MOV and the Balance Scorecard
Balance Scorecard MOV

Reasons Balanced Scorecard Approach Might Fail
 Non-financial variables incorrectly identified as primary drivers

 Metrics not properly defined

 Goals for improvements negotiated not based on requirements

 No systematic way to map high-level goals

 Reliance on trial and error as a methodology

 No quantitative linkage between non-financial and expected financial results

References
Ref:
 Key Success Factors for Managing Projects ;
Nader Sh. Kandelousi, Ooi. J., Abdollahi. A

 Aligning Projects to Strategy using Balanced Scorecards and Benefits Models ;
G J Rankins
CPPD Goal Professional Services Pty Ltd, www.goalgroup.com.au

 Balanced Scorecard IT Strategy and Project Management ;Glen B. Alleman
Director, Program Management Office Kaiser–Hill Company, LLC Rocky Flats Environnemental Technology
Site Golden Colorado

 Seven Ways to get Your Favored IT Project Accepted – Politics in IT Evaluation
Egon Berghout, Menno Nijland and Kevin Grant
Centre of IT Economics Research (CITER), University of Groningen, The Netherlands M&I/Partners,
Amersfoort, The Netherlands Glasgow Caledonian University, Caledonian Business School, Scotland

Feel free to send any questions on:
consultabhinav@gmail.com
OR
skyabhinav@gmail.com

Balanced scorecard for effective project selection process

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