PJM480 MOD3 Peer Discussion Responses

Please respond to both POST1: and POST2: in at least 200 words

Initial Post:

How should project selection criteria be determined? Define at least 5 criteria and why they are important to the process.

POST1:

Class,

Project selection criteria should be determined based on the goals ofthe organization. Project selection itself is described as a processaimed at the evaluation of projects to choose ones that meet therequirements of the parent organization (Geng et al., 2018). Sharifi andSafari (2016) assert that while the common place thought is thatprojects are selected based on risk versus reward, there is much more toit than that. Choosing though should look at several factors to selectthe best project or projects to proceed with.

First, the ability to complete the project needs to be looked at.This can be related to having enough resources or knowledge to completethe project or having them tied up with other projects and unable tocommit to the desired timeline. Without them, the project is destined tofail.

Some criteria are numbers based (Geng et al., 2018). This includesboth the evaluation of long-term fiscal value the project brings andreturn on investment. By maximizing the return on investment, somethingthat may be a short term project could provide a needed spike in cashflow where a longer project that is costlier may have a better long-termpayoff but be brought up when the organization is in a cashpreservation mode. In each of these cases, the criteria may result indelaying a project or choosing a project based on current needs.

Other non-number based criteria may include the legal need to addresssomething in order to stay in compliance with local or federal laws.Failing to do so puts the organization at risk for legal action. Anothermay be based on the desire to be better perceived by the public. Acompany like British Petroleum taking on projects to increase publicopinion after an environmental disaster they caused is one example ofthe importance of public image and the need to do something when anorganization’s brand becomes tarnished.

Thanks,
Ben

References

Geng, S., Chuah, K. B., Law, K. M. Y., Cheung, C. K., Chau, Y. C.,& Rui, C. (2018). Knowledge Contribution as a Factor in ProjectSelection. Project Management Journal, 49(1), 25–41. Retrieved from https://www.pmi.org/learning/library/knowledge-con…

Sharifi, M. M. & Safari, M. (2016). Application of net cash flow at risk in project portfolio selection. Project Management Journal, 47(4), 68–78. Retrieved from https://www.pmi.org/learning/library/net-cash-flow…

POST2:

Thereare many types and approaches to project selection criteria. Projectcriteria methods will play an active role during project initiatingphase. The project manager seldom has any involvement during the projectselection process. However, understanding the essentials of variousproject selection criteria adds value to the overall project. One of themost common challenges in project management is determining whether aproject is successful PMBOK (2017). That said the PMBOK has fivecriteria for successful project selection that include differentfinancial tools as a measure for project success. The identifiedfinancial measures are not only a measure for project success but arealso tools for project selection. Also, with an even more importance,project success criteria should have a link to the organizationalstrategy. Five tools for successful project selection are:

1. Net present Value
   1. Delta between the present value of cash inflows and the present value of cash outflows over a period
2. Return on Investment
   1. Performance measure used to evaluate the efficiency of an investmentor compare the efficiency of several different investments. ROI triesto directly measure the amount of return on a particular investment,relative to the investment’s cost
3. Internal Rate of Return
   1. Interest rate at which the net present value of all the cash flows(both positive and negative) from a project or investment equal zero.Internal rate of return is used to evaluate the attractiveness of aproject or investment.
4. Payback Period
   1. Time it takes to recover the cost of an investment. Simply put, thepayback period is the length of time an investment reaches a break-evenpoint
5. Benefit Cost Ration
   1. Ratio used in a cost-benefit analysis to summarize the overallrelationship between the relative costs and benefits of a proposedproject. … If a project has a BCR greater than 1.0, the project isexpected to deliver a positive net present value to a firm and itsinvestors.

References

A Guide to the Project Management Body of Knowledge (PMBOK Guide) Sixth Edition. (2017). Newtown Square, PA: Project Management Institute.

Milošević, D., & Martinelli, R. J. (2016). Project management toolbox (Second ed.). Hoboken, NJ: John Wiley & Sons.

Kerzner, H. (2013). Project management: A systems approach toplanning, scheduling and controlling (11th ed.). New York, NY: Wiley