project-selection-methods

Today, we will discuss project selection methods.

No organization has unlimited resources to go after every opportunity. In most cases, they have to select the best option.

All organizations apply project selection techniques.

Let’s say your organization has several proposals but they cannot undertake all of them. Therefore, they will select the least risky option that can provide the maximum profit. Often, brand recognition is also a factor.

作为一个项目经理,你可能不会有任何作用the selection process. But you should know why the project was selected and how it fits into the organization’s strategic objectives.

项目选择方法

您可以将这些技术分为两类：

  1. 益处测量方法
  2. Constrained Optimization Methods

项目选择技术复杂性不同,but the goal is the same: to let organizations select a project with maximum profit and recognition.

Every organization has a defined process that helps them choose projects aligned with their strategic objectives.

益处测量方法

The benefit measurement method is the most popular project selection method based on the present value of estimated cash inflow and outflow. Here, you calculate the cost and benefits of all projects and compare them.

The following are a few benefits measurement methods:

  • 利益/成本比率
  • 经济附加值
  • Scoring Model
  • 投资回收期
  • 净现值
  • 现金流折现
  • 内部收益率
  • 机会成本

在讨论这些技术之前，您需要了解折扣现金流。

现金流折现

今天收到的货币的价值比将来收到的钱还要大。

For example, the value of 10,000 USD after ten years will be far lower than the current value of 10,000 USD.

This phenomenon is known as discounted cash flow.

因此，在计算投资回报率的同时考虑折扣现金流。

现在，让我们回到福利测量方法。

福利成本比（BCR）

许多专家称这种技术为cost-benefit ratio。

It is the ratio between the present value of inflow (cost invested in the project) and the present value of outflow (value of return from the project). You will select the project with a higher BCR.

经济附加值(EVA)

EVA is a performance metric that calculates the value creation for the organization and defines the Return on Capital (ROC). It is the net profit after deducting all taxes and capital expenditure.

If you have several projects, you will select the one with the higher EVA. Please note that the economic value added is expressed in dollars, not as a percentage.

该技术也被称为经济模型。

Scoring Model

项目评审委员会将列出few relevant criteria and weigh them according to importance. Then they will assign marks for these parameters. Finally, the committee will add the marks and get a final score.

选择最高分的项目。

投资回收期

这是收回项目投资的成本所需的时间。

If other parameters are equal, you will select the project with a minimal payback period.

净现值(NPV)

This is the difference between the current value of cash inflow and the current value of the cash outflow of the project.

NPV应该始终是积极的，而价值最高的项目是更好的选择。

内部收益率(IRR)

This is the interest rate at which the net present value becomes zero. In other words, it is the rate at which the present value of the outflow is equal to the present value of inflow.

You should select the project with the highest IRR.

机会成本

This is what you lose by choosing another project. You will choose the project with the lower opportunity cost if you have several options.

These are a few of the benefits measurement techniques used in the selection of projects.

Now, we come to the constraint’s optimization methods.

约束优化方法

This is also known as the mathematical model of selection and is used for large projects requiring complex calculations.

The following are a few constraints optimization techniques:

  • Linear Programming
  • 非线性编程
  • Integer Programming
  • 动态编程

A detailed discussion of these topics is outside of the scope of the PMP certification exam; knowing the name of these techniques is enough.

项目选择中的角色

Upper management, the steering committee, the Project Management Office (PMO), the project selection committee, or any other equivalent group of stakeholders use these methods and select the project.

他们将使用各种标准，例如：

  • Whether they have the technical expertise to complete it.
  • If they have the resources required.
  • 如果该项目将帮助他们实现目标。

Summary

Project selection methods are vital for organizations. The right project helps an organization grow its business and earn recognition.

However, a bad choice can put a damper on progress and hurt credibility. Project selection techniques help you choose the right project with a better return on investment. Benefits measurement methods are sufficient for most organizations to reach a decision. You will use constraints optimization methods for large and complex projects.

What project selection methods does your organization use? Please share with us through the comments section.

This is an important topic for the PMP exam; you may see a few questions on it.