Chapter 2 Identifying and Selecting Projects

Chapter 2

Identifying and Selecting Projects

Content

How projects are identified and selected

A project charter

Outsourcing projects using a request for proposal(RFP)

The proposal solicitation process

Leaning Outcomes

Discuss how projects are identified

Explain how projects are prioritized and selected

Identify and describe at least eight elements of a project charter

Prepare a project charter

Prepare a request for proposal

Project identification

4 stages 

Initiating, planning, performing, closing phase

We need to clearly identify the need

Start of Initiating phase

Recognize need, problem, or opportunity

Various ways for identification

Organizations strategic planning

Response to unexpected events

Group organized to address a need

Important to clearly identify need to determine if worth pursuing

Use decision making process to prioritize and select project with greatest need

【•        The initiating phase of the project life cycle starts with recognizing a need, problem, or opportunity for which a project or projects are identified to address the need.

•        Projects are identified in various ways:

•        During an organization’s strategic planning

•        As part of its normal business operations

•        In response to unexpected events

•        The result of a group of individuals deciding to organize a project to address a particular need

•        It is important to clearly define the need. This may require gathering data about the need or opportunity to help determine if it is worth pursuing.

•        Sometimes organizations identify several or many needs, but have limited funds and people available to pursue potential projects to address all of those needs. In such cases, the company must go through a decision-making process to prioritize and select those projects that will result in the greatest overall benefit.】

Project selection

Evaluate needs, cost and benefit

Determine which projects are

Select project

  Develop criteria

  List assumption

  Gather data

  Evaluate each opportunity

No one look at ROE, but cost

Combine “gut” feelings and quantitative information to make decision.

People who own software is the gut.

【•Project selection involves evaluating various needs or opportunities and then deciding which of those should move forward as a project to be implemented. 

•The benefits and consequences, advantages and disadvantages, plusses and minuses of each opportunity need to be considered and evaluated. They can be quantitative and qualitative, tangible and intangible. Each person's decision will be a combination of quantitative evaluation and "gut" feelings based upon experience.

•The steps in project selection are:

•Develop a set of criteria against which the opportunity will be evaluated. For example:

•Alignment with company goals

•Anticipated sales volume

•Increase in market share

•Establishment of new markets

•Anticipated retail price

•Investment required

•Estimated manufacturing cost per unit

•Technology development required

•Return on investment

•Human resources impact

•Public reaction

•Competitors’ reaction

•Expected time frame

•Regulatory approval

•Risks

•List assumptions that will be used as the basis for each opportunity. 

•If an opportunity is to build an on-site day care center for children and elderly relatives of company employees, one assumption might be that the company would be able to obtain a bank loan to build such a center.

•Gather data and information for each opportunity to help ensure an intelligent decision regarding project selection. 

•It may be necessary to gather some preliminary financial estimates associated with each opportunity, such as estimated revenue projections and implementation and operating costs. 

•In addition to gathering hard data, it may also be necessary to obtain other information, such as opinions and reactions from various stakeholders who would be affected by the opportunity.

•Evaluate each opportunity against the criteria.

•Once all the data and information has been collected, analyzed, and summarized for each opportunity, it should be given to all the individuals responsible for performing the evaluation.  It is beneficial to have several individuals involved in the evaluation and selection decision in order to get a variety of viewpoints.  These individuals will combine the collected data with their gut feelings regarding the project when making their decision.】

Project charter（important）

Have your sponsor support. Whatever “O” is in your team.

Purpose

Provides sponsor approval

Commits funding for the project

Summarizes key conditions and parameters

Establishes Framework （project plan）to develop base line plan （when it start, end ,who is involved）

We need purpose first before we get start.

【Once a project is selected, it is formally authorized using a document referred to as a project charter, sometimes called a project authorization or project initiation document.

】

Possible responses to student discussion

Examine the project charter and comment on

  Completeness of the information

  Possible evaluation criteria

Completeness of information

Describes the project that needs to be addressed

Lists requirements, constraints, assumptions, and risks

An RFP could be developed from the charter’s information

Possible evaluation criteria

Meets the purpose

Cost

Reduces delivery costs by 26% the first year

Experience

Risks

Appropriate instructional strategies

Preparing a request for proposal（important）

RFP what is the best you can offer a proposal based on request

Decision made to outsource to external resource

Comprehensively describe project requirements

May be communicated informally or formally, in writing or verbally.

【•        If an organization does not have the expertise or staff capacity to plan and perform the project or major portions of the project, outsourcing the work to an external resource (such as a contractor) is a good choice.

•        An RFP helps the organization decide which contractor to use.

•        The purpose of preparing an RFP is to state, comprehensively and in detail, what is required, from the customer’s point of view, to address the identified need.

•        A good RFP allows contractors or a project team to understand what the customer expects so that they can prepare a thorough proposal that will satisfy the customer’s requirements at a realistic price.      

•        It should be noted that in many situations a formal RFP might not be prepared; the need is instead communicated informally, sometimes orally, rather than in writing.

•        This is often the case when the project will be implemented by a firm's internal staff rather than by an external contractor.】
Soliciting proposal (a lot of people bid on it)

Solicitation

Notify potential contractors

§  Identify selected group in advance to send copy

Advertise in selected journals, newspapers, or websites

Maintain competitive situation

§  Provide equal information to all bidders

§  Hold bidders’ meeting to answer questions

Conditions

§  Requirements are sometimes communicated verbally instead of via a formal RFP

§  All RFPs start with identification of a need, problem, or opportunity

【Once the RFP has been prepared, the customer solicits proposals by notifying potential contractors that the RFP is available.

•        One way for customers to notify potential bidders is by identifying a selected group of contractors in advance and sending each of them a copy of the RFP.

•        Another approach is to advertise in business newspapers and on websites that the RFP is available. 

•        For example, federal government organizations advertise their RFPs in Commerce Business Daily.

•        Business customers and contractors consider the RFP/proposal process to be competitive.

•        Customers should be careful to provide the same information to all interested contractors.

•        Business or government customers may hold a bidders’ meeting to explain the RFP and answer questions from interested contractors.

•        Not all project life cycles include the preparation of a written RFP. Some bypass the proposal steps and move right into planning and performing the project.

•        There are other projects in which requirements are not written down in a formal RFP, but are communicated verbally to several providers or suppliers (contractors).

•        Although projects can vary from very formal and businesslike to highly informal, all RFPs start with the identification of a need, problem, or opportunity.】