Fund Raising Project Selection
7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 /5 2 P ag e 2 4 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
C H APT ER T W O O rg an iz atio n S tr a te g y a n d P ro je ct S ele ctio n O rg aniz a tio n S tr a te g y a nd P ro je ct S ele ctio n T he S tr a te g ic M an ag em en t P ro cess: A n O verv ie w T he N eed f o r a P ro je ct P ortf o lio M an ag em en t S yste m A P ortf o lio M an ag em en t S yste m S ele ctio n C rite ria A pply in g a S ele ctio n M odel M an ag in g th e P ortf o lio S yste m S um mary A ppen dix 2 .1 : R eq uest f o r P ro posal ( R FP) 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 /5 2 P ag e 2 5 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . S tr a te g y i s i m ple m en te d t h ro ugh p ro je cts . E very p ro je ct s h ould h ave a c le a r l in k t o t h e o rg aniz a tio n's s tr a te g y.
S tr a te g y is fu ndam en ta lly d ecid in g h ow th e o rg an iz atio n w ill c o m pete . O rg an iz atio ns u se p ro je cts to c o nvert s tr a te g y in to n ew p ro ducts , s e rv ic es, a n d p ro cesse s n eed ed fo r s u ccess. F or e x am ple , In te l's m ajo r s tr a te g y is o ne o f d if f e re n tia tio n. I ts p ro je cts ta rg et in novatio n a n d tim e to m ark et. C urre n tly , I n te l is d ir e ctin g its s tr a te g y t o w ard sp ecia lty c h ip s fo r p ro ducts o th er th an c o m pute rs , su ch a s a u to s, se cu rity , c ell p hones, a ir c o ntr o ls .
A noth er g o al i s t o r e d uce p ro je ct c y cle t im es. I n te l, N EC , G en era l E le ctr ic , a n d A T& T h av e r e d uced t h eir c y cle t im es b y 2 0–50 p erc en t. P ro je cts a n d p ro je ct m an ag em en t p la y th e k ey r o le in s u pportin g s tr a te g ic g oals . I t is v ita l f o r p ro je ct m an ag ers t o t h in k a n d a ct s tr a te g ic ally A lig nin g p ro je cts w ith th e s tr a te g ic g oals o f th e o rg an iz atio n is c ru cia l f o r p ro je ct s u ccess. T oday 's e co nom ic c lim ate is u npre ced en te d b y r a p id c h an g es in te ch nolo gy, g lo bal c o m petitio n, a n d f in an cia l u ncerta in ty . T hese c o nditio ns m ak e s tr a te g y/p ro je ct a lig nm en t e v en m ore e sse n tia l f o r s u ccess. E nsu rin g a s tr o ng lin k b etw een th e s tr a te g ic p la n a n d p ro je cts i s a d if f ic u lt t a sk t h at d em an ds c o nsta n t a tte n tio n f ro m t o p a n d m id dle m an ag em en t. T he la rg er a n d m ore d iv ers e a n o rg an iz atio n, th e m ore d if f ic u lt it is to c re ate a n d m ain ta in th is s tr o ng lin k. C om pan ie s to day a re u nder e n orm ous p re ssu re to m an ag e a p ro cess th at c le arly a lig ns p ro je cts to o rg an iz atio n s tr a te g y. A m ple e v id en ce s till s u ggests t h at m an y o rg an iz atio ns h av e n ot d ev elo ped a p ro cess t h at c le arly a lig ns p ro je ct se le ctio n to th e str a te g ic p la n . T he re su lt is p oor u tiliz atio n o f th e o rg an iz atio n's re so urc es— peo ple , m oney, e q uip m en t, a n d c o re c o m pete n cie s. C onvers e ly , o rg an iz atio ns th at h av e a c o here n t lin k o f p ro je cts to s tr a te g y h av e m ore c o opera tio n a cro ss t h e o rg an iz atio n, p erfo rm b ette r o n p ro je cts , a n d h av e f e w er p ro je cts . H ow c an a n o rg an iz atio n e n su re t h is l in k a n d a lig nm en t? T he a n sw er r e q uir e s i n te g ra tio n o f p ro je cts w ith t h e s tr a te g ic p la n . In te g ra tio n a ssu m es th e e x is te n ce o f a s tr a te g ic p la n a n d a p ro cess fo r p rio ritiz in g p ro je cts b y t h eir c o ntr ib utio n to th e p la n . A c ru cia l f a cto r to e n su re th e s u ccess o f in te g ra tin g th e p la n w ith p ro je cts lie s in t h e c re atio n o f a p ro cess th at is o pen a n d tr a n sp are n t fo r a ll p artic ip an ts to re v ie w . T his c h ap te r p re se n ts a n o verv ie w o f th e im porta n ce o f str a te g ic p la n nin g an d th e p ro cess fo r d ev elo pin g a str a te g ic p la n . T ypic al p ro ble m s e n co unte re d w hen s tr a te g y a n d p ro je cts a re n ot lin ked a re n ote d . A g en eric m eth odolo gy th at e n su re s i n te g ra tio n b y cre atin g v ery str o ng lin kag es o f p ro je ct se le ctio n an d p rio rity to th e str a te g ic p la n is th en d is c u sse d . T he in te n ded o utc o m es are cle ar o rg an iz atio n fo cu s, b est u se o f sc arc e o rg an iz atio n re so urc es ( p eo ple , e q uip m en t, c ap ita l) , a n d i m pro ved c o m munic atio n a cro ss p ro je cts a n d d ep artm en ts . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 /5 2 P ag e 2 6 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
W hy P ro je ct M an agers N eed t o U ndersta n d S tr a te g y P ro je ct m an ag em en t h is to ric ally h as b een p re o ccu pie d s o le ly w ith th e p la n nin g a n d e x ecu tio n o f p ro je cts . S tr a te g y w as c o nsid ere d to b e u nder th e p urv ie w o f s e n io r m an ag em en t. T his is o ld s c h ool th in kin g.
N ew s c h ool th in kin g re co gniz es th at p ro je ct m an ag em en t is at th e ap ex o f str a te g y an d o pera tio ns. A aro n S hen har s p eak s to th is is su e w hen h e s ta te s, “ … it is tim e to e x pan d th e tr a d itio nal r o le o f th e p ro je ct m an ag er f ro m a n o pera tio nal t o a m ore s tr a te g ic p ers p ectiv e. I n t h e m odern e v olv in g o rg an iz atio n, p ro je ct m an ag ers w ill b e f o cu se d o n b usin ess a sp ects , a n d th eir r o le w ill e x pan d f ro m g ettin g th e jo b d one to a ch ie v in g th e b usin ess r e su lts a n d w in nin g i n t h e m ark et p la ce.” 1 T here are tw o m ain re aso ns w hy p ro je ct m an ag ers n eed to u nders ta n d th eir o rg an iz atio n's m is sio n an d s tr a te g y. T he f ir s t r e aso n i s s o t h ey c an m ak e a p pro pria te d ecis io ns a n d a d ju stm en ts . F or e x am ple , h ow a p ro je ct m an ag er w ould re sp ond to a s u ggestio n to m odif y th e d esig n o f a p ro duct to e n han ce p erfo rm an ce w ill v ary d ep en din g upon w heth er his co m pan y str iv es to be a pro duct le ad er th ro ugh in novatio n or to ach ie v e o pera tio nal e x celle n ce th ro ugh lo w c o st s o lu tio ns. S im ila rly , h ow a p ro je ct m an ag er w ould re sp ond to d ela y s m ay v ary d ep en din g u pon s tr a te g ic c o ncern s. A p ro je ct m an ag er w ill a u th oriz e o vertim e if h er fir m p la ces a p re m iu m o n g ettin g t o t h e m ark et f ir s t. A noth er p ro je ct m an ag er w ill a ccep t t h e d ela y i f s p eed i s n ot e sse n tia l. T he se co n d re aso n p ro je ct m an ag ers n eed to u nders ta n d th eir o rg an iz atio n's str a te g y is so th ey can b e e ff e ctiv e p ro je ct a d vo cate s. P ro je ct m an ag ers h av e to b e a b le to d em onstr a te to s e n io r m an ag em en t h ow th eir p ro je ct c o ntr ib ute s to th eir fir m 's m is sio n. P ro te ctio n a n d c o ntin ued su pport c o m e fro m b ein g a lig ned w ith c o rp ora te o bje ctiv es. P ro je ct m an ag ers a ls o n eed to b e a b le to e x pla in to te am m em bers a n d o th er s ta k eh old ers w hy c erta in p ro je ct o bje ctiv es a n d p rio ritie s a re c ritic al. T his i s e sse n tia l f o r g ettin g b uyin o n c o nte n tio us t r a d e o ff d ecis io ns. F or th ese re aso ns pro je ct m an ag ers w ill fin d it valu ab le to hav e a keen unders ta n din g of str a te g ic m an ag em en t a n d p ro je ct s e le ctio n p ro cesse s, w hic h a re d is c u sse d n ex t.
T he S tr a te g ic M an ag em en t P ro cess: A n O verv ie w S tr a te g ic m an ag em en t is th e p ro cess o f a ssessin g “ w hat w e a re ” a n d d ecid in g a n d im ple m en tin g “ w hat w e in te n d to b e a n d h o w w e a re g oin g to g et th ere .” S tr a te g y d escrib es h ow a n o rg an iz atio n in te n ds to c o m pete w ith th e re so urc es a v aila b le in th e e x is tin g a n d p erc eiv ed f u tu re e n vir o nm en t. T w o m ajo r d im en sio ns o f str a te g ic m an ag em en t a re re sp ondin g to c h an ges in th e e x te rn al e n vir o nm en t a n d a llo catin g s c arc e re so urc es o f th e fir m to im pro ve its c o m petitiv e p ositio n. C on sta n t s c an nin g o f th e e x te rn al e n vir o nm en t f o r c h an ges i s a m ajo r r e q uir e m en t f o r s u rv iv al i n a d ynam ic c o m petitiv e e n vir o nm en t. T he s e co nd d im en sio n is th e in te rn al r e sp onse s to n ew a ctio n p ro gra m s a im ed a t e n han cin g th e c o m petitiv e p ositio n o f th e f ir m . T he n atu re o f th e r e sp onse s d ep en ds o n th e ty pe o f b usin ess, e n vir o nm en t v ola tility , c o m petitio n, a n d th e o rg an iz atio nal c u ltu re . S tr a te g ic m an ag em en t p ro vid es th e th em e a n d fo cu s o f th e fu tu re d ir e ctio n o f th e o rg an iz atio n. It s u pports c o nsis te n cy o f a ctio n a t e v ery le v el o f th e o rg an iz atio n. I t e n co ura g es in te g ra ti o n b ecau se e ff o rt a n d r e so urc es a re c o m mitte d to c o m mon g oals a n d s tr a te g ie s. S ee S nap sh ot fro m P ra ctic e: D oes IB M 's W ats o n's J e o pard y P ro je ct R ep re se n t a C han ge in S tr a te g y? I t is a c o ntin uous, ite ra tiv e p ro cess a im ed a t d ev elo pin g a n in te g ra te d a n d c o ord in ate d lo ngte rm p la n o f a ctio n . S tr a te g ic m an ag em en t p ositio ns th e o rg an iz atio n to m eet th e n eed s a n d r e q uir e m en ts o f its c u sto m ers f o r th e lo ng te rm . W ith th e lo ngte rm p ositio n id en tif ie d , o bje ctiv es a re s e t, a n d s tr a te g ie s a re d ev elo ped to a ch ie v e o bje ctiv es a n d th en tr a n sla te d in to a ctio ns b y im ple m en tin g p ro je cts .
S tr a te g y c a n d ecid e th e s u rv iv al o f a n o rg an iz atio n. M ost o rg an iz atio ns a re s u ccessfu l in f o rm ula tin g s tr a te g ie s f o r w hat c o urs e (s ) th ey s h ould p urs u e. H ow ev er, th e p ro ble m in m an y o rg an iz atio ns is i m ple m en tin g s tr a te g ie s — th at i s , m ak in g t h em h ap pen . I n te g ra tio n o f s tr a te g y f o rm ula tio n a n d i m ple m en ta tio n o fte n d oes n ot e x is t. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 /5 2 P ag e 2 7 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . S N APSH OT F R O M P R A CTIC E D oes I B M 's W ats o n's J e o pard y P ro je ct R ep re se n t a C han ge i n S tr a te g y? * I B M 's in ves tm en t in a rtif ic ia l in te llig en ce p aid o ff . I n F eb ru ary 2 010, m illio ns o f p eo ple w ere g lu ed to th eir te le v is io n s ets to w atc h I B M 's W ats o n o utc la ss tw o f o rm er c h am pio n c o nte sta n ts o n th e J eo pard y q uiz s h ow . W ats o n p erfo rm ed a t h um an e x pert le v els in te rm s o f p re cis io n, c o nfid en ce, a n d s p eed d urin g th e J eo pard y q uiz s h ow . D oes W ats o n r e p re sen t a n ew s tr a te g ic d ir e cti o n f o r I B M ? N ot r e ally . T he W ats o n p ro je ct is s im ply a m an if e sta tio n o f th e m ove f ro m c o m pute r h ard w are to a s erv ic e s tr a te g y o ver a d ecad e a g o.
W AT SO N P R O JE CT D ESC RIP T IO N A rtif ic ia l in te llig en ce has ad van ced sig nif ic an tly in re cen t years . W ats o n goes bey ond IB M 's ch essp la y in g s u perc o m pute r o f th e la te 1 990s. C hess is fin ite , lo gic al, a n d re d uced e asily to m ath em atic s. W ats o n's s p ace is ill d efin ed a n d in volv es d ealin g w ith a b str a ctio n a n d th e c ir c u m sta n tia l n atu re o f la n guag e. S in ce W ats o n's s y ste m c an u nders ta n d n atu ra l la n guag e, it c an e x te n d th e w ay p eo ple in te ra ct w ith c o m pute rs . T he IB M W ats o n p ro je ct to ok th re e in te n se y ears o f re searc h a n d d ev elo pm en t b y a c o re te am o f a b out 2 0. E ig ht u niv ers ity te am s w ork in g o n s p ecif ic c h alle n ge a re as a u gm en te d th ese r e searc h ers . W ats o n d ep en ds o n o ver 2 00 m illio n p ag es o f s tr u ctu re d a n d u nstr u ctu re d d ata a n d a p ro gra m c ap ab le o f ru nnin g t r illio ns o f o pera tio ns p er s eco nd. W ith th is in fo rm atio n b ack up, it a tta ck s a J eo pard y q uestio n b y p ars in g th e q uestio n i n to s m all p ie ces. W ith th e q uestio n p ars ed , th e p ro gra m th en s earc h es f o r r e le v an t d ata . U sin g h undre d s o f d ecis io n r u le s, th e p ro gra m g en era te s p ossib le a n sw ers . T hese a n sw ers a re a ssig ned a c o nfid en ce s co re to d ecid e if W ats o n s h ould r is k o ff e rin g a n a n sw er a n d h ow m uch to b et.
W HAT 'S N EXT?
N ow th at th e h ype is o ver, I B M is p urs u in g th eir s erv ic e s tr a te g y a n d th e k now le d ge g ain ed f ro m th e W ats o n p ro je ct t o re al busin ess ap plic atio ns. W ats o n's artif ic ia l in te llig en ce desig n is fle x ib le an d su ggests a w id e varie ty of o pportu nitie s in in dustr ie s s u ch a s f in an ce, m ed ic in e, la w e n fo rc em en t, d efe n se. F urth er e x te n sio ns to h an dheld m obile a p plic atio ns th at ta p in to W ats o n's s erv ers a ls o h old g re at p ote n tia l. I B M id en tif ie d th e o bvio us lo w est h an gin g a p ple s o n th e tr e e a s p ro vid in g h ealth care s o lu tio ns a n d h as b eg un d esig n o f s u ch a p ro gra m .
© S ean G allu p/G etty I m ag es 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 5 /5 2 T o c re ate a “ d octo r's c o nsu lta n t” p ro gra m w ould lik ely f o llo w a d esig n p la tf o rm s im ila r to W ats o n's . F or e x am ple , i t w ould b e a b le to : D ata m in e c u rre n t m ed ic al d ocu m en ts to b uild a k now le d ge b ase I n te g ra te in div id ual p atie n t in fo rm atio n U se s y ste m 's c o m ple x a n aly tic s to s ele ct r e le v an t d ata U se d ecis io n r u le s to p ro vid e p hysic ia n s w ith d ia g nostic o ptio ns R an k o ptio ns w ith c o nfid en ce le v els f o r e ach o ptio n. C re atin g a d octo r's c o nsu lta n t s o lu tio n w ill n ot r e p la ce d octo rs . A lth ough th e s y ste m h old s tr e m en dous p ote n tia l, it is m an m ad e an d dep en ds on th e data b ase, data an aly tic s, an d decis io n ru le s to sele ct optio ns. G iv en th e docto r's c o nsu lta n t in put, a tr a in ed d octo r m ak es th e f in al p atie n t d ia g nosis to s u pple m en t p hysic al e x am in atio n a n d e x perie n ce. T he W ats o n p ro je ct p ro vid es IB M w ith a fle x ib le c o m ponen t to c o ntin ue th eir d ecad eo ld s tr a te g y, m ovin g IB M f ro m c o m pute r h ard w are to s erv ic e p ro ducts .
* F erru cci, e t a l. “ B uild in g W ats o n,” A I M agazin e. v ol. 3 1, n o. 3 . F all 2 010. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 6 /5 2 P ag e 2 8 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . T he co m po nen ts o f str a te g ic m an ag em en t are clo se ly lin ked , an d all are d ir e cte d to w ard th e f u tu re su ccess o f th e o rg an iz atio n. S tr a te g ic m an ag em en t re q uir e s str o ng lin ks a m ong m is sio n, g oals , o bje ctiv es, str a te g y, an d im ple m en ta tio n. T he m is sio n g iv es th e g en era l p urp ose o f th e o rg an iz atio n. G oals g iv e g lo bal ta rg ets w ith in th e m is sio n. O bje ctiv es g iv e s p ecif ic ta rg ets to g oals . O bje ctiv es g iv e ris e to fo rm ula tio n o f str a te g ie s to re ach o bje ctiv es. F in ally , str a te g ie s re q uir e a ctio ns a n d ta sk s to b e i m ple m en te d . In m ost c ase s th e a ctio ns to b e ta k en re p re se n t p ro je cts . F ig ure 2 .1 sh ow s a sc h em atic o f th e s tr a te g ic m an agem en t p ro cess a n d m ajo r a ctiv itie s r e q uir e d . F IG URE 2 .1 S tr a te g ic M an agem en t P ro cess 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 7 /5 2 P ag e 2 9 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
F ou r A ctiv it ie s o f t h e S tr a te g ic M an agem en t P ro cess T he ty pic al s e q uen ce o f a ctiv itie s o f th e s tr a te g ic m an ag em en t p ro cess is o utlin ed h ere ; a d esc rip tio n o f e ach a ctiv ity t h en f o llo w s: 1 . R ev ie w a n d d efin e t h e o rg an iz atio nal m is sio n. 2 . A naly ze a n d f o rm ula te s tr a te g ie s. 3 . S et o bje ctiv es t o a ch ie v e s tr a te g y. 4 . I m ple m en t s tr a te g ie s t h ro ugh p ro je cts . R evie w a n d D efin e t h e O rg an iz a tio n al M is sio n T he m is sio n i d en tif ie s “ w hat w e w an t t o b eco m e,” o r t h e r a is o n d ’ê tr e . M is sio n s ta te m en ts i d en tif y t h e s c o pe o f t h e o rg an iz atio n in te rm s o f its p ro duct o r se rv ic e. A w ritte n m is sio n sta te m en t p ro vid es fo cu s fo r d ecis io n m ak in g w hen s h are d b y o rg an iz atio nal m an ag ers a n d e m plo yees. E very one i n t h e o rg an iz atio n s h ould b e k een ly a w are o f th e o rg an iz atio n's m is sio n. F or e x am ple , a t o ne la rg e c o nsu ltin g fir m , p artn ers w ho fa il to re cite th e m is sio n s ta te m en t o n d em an d a re r e q uir e d t o b uy l u nch . T he m is sio n s ta te m en t c o m munic ate s a n d i d en tif ie s t h e p urp ose o f th e o rg an iz atio n to a ll sta k eh old ers . M is sio n sta te m en ts c an b e u se d fo r e v alu atin g o rg an iz atio n p erfo rm an ce. T ra d itio nal c o m ponen ts fo und in m is sio n s ta te m en ts a re m ajo r p ro ducts a n d s e rv ic es, ta rg et c u sto m ers a n d m ark ets , a n d g eo gra p hic al d om ain . In a d ditio n, s ta te m en ts fre q uen tly in clu de o rg an iz atio nal p hilo so phy, k ey t e ch nolo gie s, p ublic im ag e, a n d c o ntr ib u tio n to so cie ty . In clu din g su ch fa cto rs in m is sio n sta te m en ts re la te s d ir e ctly t o b usin ess s u ccess. M is sio n s ta te m en ts c h an ge in fre q uen tly . H ow ev er, w hen th e n atu re o f th e b usin ess c h an ges o r s h if ts , r e v is e d m is sio n a n d s tr a te g y s ta te m en ts m ay b e re q uir e d . S ee S nap sh ot fro m P ra ctic e : H P's S tr a te g y R ev is io n a s a n e x am ple o f a m is sio n a n d s tr a te g y r e v is io n. M ore s p ec if ic m is sio n s ta te m en ts te n d to g iv e b ette r re su lts b ecau se o f a tig hte r fo cu s. M is sio n s ta te m en ts d ecre ase th e c h an ce o f fa ls e d ir e ctio ns b y s ta k eh old ers . F or e x am ple , c o m pare th e p hra sin g o f th e fo llo w in g m is sio n s ta te m en ts : P ro vid e h osp ita l d esig n s e rv ic es.
P ro vid e d ata m in in g a n d a n aly sis s e rv ic es.
P ro vid e i n fo rm atio n t e ch nolo gy s e rv ic es.
I n cre ase s h are h old er v alu e.
P ro vid e h ig hv alu e p ro ducts t o o ur c u sto m er.
C le arly , th e f ir s t tw o s ta te m en ts le av e le ss c h an ce f o r m is in te rp re ta tio n th an th e o th ers . A r u le o fth um b te st f o r a m is sio n s ta te m en t i s , i f t h e s ta te m en t c an b e a n ybody's m is sio n s ta te m en t, i t w ill n ot p ro vid e t h e g uid an ce a n d f o cu s i n te n ded . T he m is sio n s e ts t h e p ara m ete rs f o r d ev elo pin g o bje ctiv es.
A naly ze a n d F orm ula te S tr a te g ie s F orm ula tin g s tr a te g y a n sw ers th e q uestio n o f w hat n eed s to b e d one to re ach o bje ctiv es. S tr a te g y fo rm ula tio n i n clu des d ete rm in in g a n d e v alu atin g a lte rn ativ es t h at s u pport t h e o rg an iz atio n's o bje ctiv es a n d s e le ctin g t h e b est a lte rn ativ e. T he fir s t s te p is a re alis tic e v alu atio n o f th e p ast a n d c u rre n t p osit io n o f th e e n te rp ris e . T his s te p t y pic ally in clu des a n a n aly sis o f “ w ho a re th e c u sto m ers ” a n d “ w hat a re th eir n eed s a s th ey ( th e c u sto m ers ) s e e t h em .” 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 8 /5 2 P ag e 3 0 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . S N APSH OT F R O M P R A CTIC E H P's S tr a te g y R ev is io n * A ugust 1 8, 2 011 , H ew le tt P ack ard an nounced a d ra m atic ch an ge in str a te g y. L eo A po th ek er, C EO o f th e w orld 's l a rg est s elle r o f p ers o nal c o m pute rs , d ecid ed to e x it th e lo w m arg in P C u nit. H e w an te d to re d ir e ct H P to b usin ess s o ftw are , n etw orkin g, a nd s to ra ge, w hic h c arry h ig her m arg in s. U nfo rtu nate ly , A poth ek er fa ile d to c o m munic ate th e s tr a te g ic c h an ge e ff e ctiv ely , lo st c re d ib ility , a n d w as d is m is sed . H e w as r e p la ced b y M eg W hitm an , w hile c o ntr o vers y o ver th e c o m pan y's h ap hazard d ir e ctio n c o ntin ued .
T H E P C M ARK ET F undam en ta lly , th e P C h as b eco m e a c o m modity . A lth ough th e H P p ers o nal c o m pute r u n it r e p re sen ts n early a th ir d o f t o ta l re v en ue a n d a b out 1 9 p erc en t o f H P's p ro fit, g ro w th a n d p ro fits a re s lo w in g. In cre ased c o m petitio n fro m A sia , f o r e x am ple , L en ovo, w ill c o ntin ue to e ro de m arg in s. M ore im porta n tly , in cre asin g u se o f s m artp hones a n d ta b le ts is a lr e ad y c an nib aliz in g th e P C m ark et.
F U TURE M ARK ETS I n H P's w ord s, th eir n ew co rp ora te w id e m is sio n i s to p ro vid e sea m le ss, secu re , co nte xt a w are exp erie n ces fo r a c o nnecte d w orld . * B usin ess s o ftw are , n etw ork in g, a n d s to ra g e c an b e n ic ely c o nnecte d f o r a g ra n d c o rp ora te s tr a te g y t o m eet th e n ew m is sio n. I B M , G oogle , O ra cle , a n d M ic ro so ft a lr e ad y d om in ate th e s o ftw are in dustr y . T hey a n d o th ers a re a ll m ovin g to c o lle ct a n d u se u nstr u ctu re d d ata to e n han ce d ecis io n m ak in g a n d/o r c lie n t r e q uests a cro ss n um ero us in dustr ie s. A ll a re d ev elo pin g b ette r searc h en gin es to so rt th ro ugh an y m an ner o f d ata fo r in fo rm atio n re le v an t to th e searc h . T hese d om in an t p la y ers le av e H P in a c atc h u p m ode. H P's p la n to c o m pete r e q uir e s q uic k a ctio n. E xecu tin g th e s o ftw are s tr a te g y w ill r e q uir e p urc h asin g s m alle r f ir m s o r d ev elo pin g c o lla b ora tiv e re la tio nsh ip s to a cq uir e s p ecif ic e x pertis e. H P h as m ad e tw o p u rc h ases to b uttr e ss th e n ew s tr a te g y. A uto nom y C orp ora tio n, U K, w ill c o ncen tr a te o n m in in g a n d s earc h in g la rg e s tr u ctu re d a n d u nstr u ctu re d d ata .
T heir p urc h ase o f V ertic a p ro vid es a n a n aly tic s p la tf o rm f o r la rg e s tr u ctu re d a n d u nstr u ctu re d d ata . W e c an e x pect to s ee m ore p urc h ases th at c o nnect s o ftw are , s to ra g e, a n d n etw ork in g, w hic h w ill c o m ple m en t H P's c u rre n t e x pertis e in t h e s erv er b usin ess.
E XECUTIN G S T RAT EG Y H P f a ces r is k s. H P h as b et th e f a rm o n th is r e v is ed s tr a te g y th at lo oks s im ila r to w hat I B M s ta rte d o ver a d ecad e a g o.
I B M h as s p en t b illio ns a n d te n y ears o f d ev elo pm en t to p erfe ct th eir s y ste m s ( s ee p re v io us W ats o n S nap sh ot) . H P is i n a “ fo llo w er” p ositio n. T his m ean s g ain in g m ark et s h are f ro m to ugh r iv als s u ch a s I B M , A pple , G oogle , O ra cle , a n d C is co . C an H P a ff o rd to g o f a ceto fa ce w it h o th ers in s tr o nger c ash p ositio ns? C an H P s ell o ff its P C d iv is io n a t a r e aso nab le p ric e? H P m ust m ove q uic k ly to c atc h u p. E xecu tin g th e n ew m is sio n s ta te m en t p re sen ts n um ero us le ad ers h ip c h alle n ges. T he c h an ges in H P s tr a te g ie s o ver th e la st 1 5 y ears h av e c au sed c o nfu sio n a n d a lo ss o f e m plo yee lo yalty . A dditio nal c h an ges in o rg an iz atio nal cu ltu re , alo ng w ith m an y n ew m is sio n critic al p ro je cts , w ill p la ce fu rth er str e ss o n th e o rg an iz atio n. H P m ust b e v ig ila n t in s ele ctin g, p rio ritiz in g, a n d b ala n cin g o rg an iz atio nal r is k f o r a ll p ro je cts . H P n eed s t o c o m munic ate a c o here n t s tr a te g y th at c an b e e x ecu te d c o nsis te n tly o ver tim e. A lth ough th ere a re o uts id ers w ho h av e p ra is ed o r c ritic iz ed th e n ew s tr a te g y, w e m ust w ait a n d s ee h ow th e d eta ils u nfo ld . H P's s tr a te g ic m oves w ill m ak e in te re stin g c ase s tu die s f o r y ears to c o m e.
* H P w ebsite , H P n ew sro om . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 9 /5 2 T he n ex t s te p is a n a sse ssm en t o f th e in te rn al a n d e x te rn al e n vir o nm en ts . W hat a re th e in te rn al s tr e n gth s a n d w eak nesse s o f th e e n te rp ris e ? E xam ple s o f in te rn al s tr e n gth s o r w eak nesse s c o uld b e c o re c o m pete n cie s, s u ch a s te ch nolo gy, p ro duct q uality , m an ag em en t ta le n t, lo w d eb t, a n d d eale r n etw ork s. M an ag ers c an a lte r in te rn al s tr e n gth s an d w eak nesse s. O pportu nitie s an d th re ats usu ally re p re se n t ex te rn al fo rc es fo r ch an ge su ch as t e ch nolo gy, in dustr y s tr u ctu re , a n d c o m petitio n. C om petitiv e b en ch m ark in g to ols a re s o m etim es u se d h ere to a sse ss c u rre n t a n d f u tu re d ir e ctio ns. O pportu nitie s a n d th re ats a re th e f lip s id es o f e ach o th er. T hat is , a th re at c an b e p erc eiv ed a s a n o pportu nity , o r v ic e v ers a . E xam ple s o f p erc eiv ed e x te rn al th re ats c o uld b e a s lo w in g o f t h e e co nom y, a m atu rin g l if e c y cle , 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 0/5 2 P ag e 3 1 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . e x ch an ge ra te s, or govern m en t re g u la tio n. Typic al opportu nitie s are in cre asin g dem an d, e m erg in g m ark ets , a n d d em ogra p hic s. M an ag ers o r in div id ual f ir m s h av e lim it e d o pportu nitie s to i n flu en ce s u ch e x te rn al e n vir o nm en ta l fa cto rs ; h ow ev er, in re cen t y ears n ota b le e x cep tio ns h av e b een n ew t e ch nolo gie s s u ch a s A pple u sin g t h e i P od t o c re ate a m ark et t o s e ll m usic . T he k ey s a re t o a tte m pt t o f o re cast f u ndam en ta l in dustr y c h an ges a n d s ta y in a p ro activ e m ode r a th er th an a r e activ e o ne. T his a sse ssm en t o f t h e e x te rn al a n d i n te rn al e n vir o nm en ts i s k now n a s t h e S W OT a n aly sis ( s tr e n g th s, w eak nesse s, o pportu nitie s, a n d t h re ats ). F ro m th is a n aly sis , c ritic al is su es a n d s tr a te g ic a lte rn ativ es a re id en tif ie d . C ritic al a n aly sis o f th e s tr a te g ie s i n clu des a sk in g q uestio ns: D oes t h e s tr a te g y t a k e a d van ta g e o f o ur c o re c o m pete n cie s? D oes t h e s tr a te g y e x plo it o ur c o m petitiv e a d v an ta g e? D oes t h e s tr a te g y m ax im iz e m eetin g c u sto m ers ’ n ee d s? D oes t h e s tr a te g y f it w ith in o ur a ccep ta b le ris k ra n ge? T hese s tr a te g ic a lte rn ativ es a re w in now ed d ow n to a c ritic al fe w th at s u pport th e b asic m is sio n. S tr a te g y f o rm ula tio n e n ds w ith c asc ad in g o bje ctiv es o r p ro je cts a ssig ned to lo w er d iv is io ns, d ep artm en ts , o r i n div id uals . F orm ula tin g str a te g y m ig ht ra n ge a ro und 2 0 p erc en t o f m an ag em en t's e ff o rt, w hile d ete rm in in g h ow s tr a te g y w ill b e i m ple m en te d m ig ht c o nsu m e 8 0 p erc en t. S et O bje ctiv es t o A ch ie ve S tr a te g ie s O bje ctiv es tr a n sla te th e org an iz atio n str a te g y in to sp ecif ic , co ncre te , m easu ra b le te rm s. O rg an iz atio nal o bje ctiv es s e t ta rg ets fo r a ll le v els o f th e o rg an iz atio n. O bje ctiv es p in poin t th e d ir e ctio n m an ag ers b elie v e th e o rg an iz atio n s h ould m ove t o w ard . O bje ctiv es a n sw er i n d eta il w here a f ir m i s h ead ed a n d w hen i t i s g oin g t o g et t h ere . T ypic ally , o bje ctiv es fo r th e o rg an iz atio n co ver m ark ets , p ro ducts , in n ovatio n, p ro ductiv ity , q uality , f in an ce, p ro fita b ility , e m plo yees, a n d c o nsu m ers . I n e v ery c ase , o bje ctiv es s h ould b e a s o pera tio nal a s p ossib le .
T hat is , o bje ctiv es s h ould in clu de a tim e f ra m e, b e m easu ra b le , b e a n id en tif ia b le s ta te , a n d b e r e alis tic . D ora n c re ate d t h e m em ory d ev ic e s h ow n i n E xhib it 2 .1 , w hic h i s u se fu l w hen w ritin g o bje ctiv es. 2 E ach le v el b elo w th e o rg an iz atio nal o bje ctiv es s h ould s u pport th e h ig her le v el o bje ctiv es in m ore d eta il; th is i s f re q uen tly c alle d c asc ad in g o f o bje ctiv es. F or e x am ple , if a f ir m m ak in g le ath er lu ggag e s e ts a n o bje ctiv e o f a ch ie v in g a 4 0 p erc e n t in cre ase in s a le s th ro ugh a r e se arc h a n d d ev elo pm en t s tr a te g y, th is c h arg e is p asse d to t h e m ark etin g, p ro ductio n, a n d R & D d ep artm en ts . T he R & D d ep artm en t a ccep ts th e fir m 's str a te g y a s th eir o bje ctiv e, a n d th eir str a te g y b eco m es th e d esig n a n d d ev elo pm en t o f a n ew “ p ull ty pe lu ggag e w ith h id den r e tr a cta b le w heels .” A t t h is p oin t t h e o bje ctiv e b eco m es a p ro je ct t o b e i m ple m en te d — to d ev elo p t h e r e tr a cta b le w heel l u ggag e f o r m ark et w ith in s ix m onth s w ith in a b udget o f $ 200,0 00. I n s u m mary , o rg an iz atio nal o bje ctiv es d riv e y our p ro je cts .
E X H IB IT 2 .1 C hara cte ris tic s o f O bje ctiv es 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 1 /5 2 P ag e 3 2 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
I m ple m en t S tr a te g ie s t h ro u gh P ro je c ts I m ple m en ta tio n a n sw ers th e q uestio n o f h ow s tr a te g ie s w ill b e r e a liz ed , g iv en a v aila b le r e so urc es. T he c o ncep tu al fra m ew ork fo r str a te g y im ple m en ta tio n la ck s th e str u ctu re a n d d is c ip lin e fo und in str a te g y f o rm ula tio n. I m ple m en ta tio n r e q uir e s a ctio n a n d c o m ple tin g ta sk s; th e la tte r f re q uen tly m ean s m is sio nc ritic al p ro je cts . T here fo re , i m ple m en ta tio n m ust i n clu de a tte n tio n t o s e v era l k ey a re as. F ir s t, co m ple tin g ta sk s re q uir e s allo catio n of re so urc es. R eso urc es ty pic ally re p re se n t fu nds, peo ple , m an ag em en t t a le n ts , t e ch nolo gic al s k ills , a n d e q uip m en t. F re q uen tly , i m ple m en ta tio n o f p ro je cts i s t r e ate d a s a n “ ad den dum ” ra th er th an a n in te g ra l p art o f th e str a te g ic m an ag em en t p ro cess. H ow ev er, m ultip le o bje ctiv es p la ce c o nflic tin g d em an ds o n o rg an iz atio nal r e so urc es. S eco nd, im ple m en ta tio n r e q uir e s a f o rm al a n d in fo rm al o rg an iz atio n t h at c o m ple m en ts a n d s u ppo rts s tr a te g y a n d p ro je cts . A uth ority , r e sp onsib ility , a n d p erfo rm an ce a ll d ep en d o n o rg an iz atio n s tr u ctu re a n d c u ltu re . T hir d , p la n nin g a n d c o ntr o l s y ste m s m ust b e i n p la ce t o b e c erta in p ro je ct ac tiv itie s necessa ry to en su re str a te g ie s are eff e ctiv ely perfo rm ed . Fourth , m otiv atin g pro je ct c o ntr ib uto rs w ill b e a m ajo r fa cto r fo r a ch ie v in g p ro je ct su ccess. F in ally , a re as re ceiv in g m ore a tte n tio n in r e cen t y ears a re p ortf o lio m an ag em en t a n d p rio ritiz in g p ro je cts . A lth ough th e s tr a te g y im ple m en ta tio n p ro cess i s n ot a s c le ar a s s tr a te g y f o rm ula tio n, a ll m an ag ers r e aliz e th at, w ith out im ple m en ta tio n, s u ccess is im possib le .
A lth ough th e fo ur m ajo r ste p s o f str a te g ic m an ag em en t p ro cess h av e n ot b een a lte re d sig nif ic an tly o ver th e y ears , th e v ie w o f th e tim e h oriz o n in th e s tr a te g y f o rm ula tio n p ro cess h as b een a lte re d r a d ic ally in th e la st tw o d ecad es. G lo bal c o m petitio n a n d ra p id in novatio n re q uir e b ein g h ig hly a d ap ti v e to sh ort ru n c h an ges w hile b ein g c o nsis te n t i n t h e l o nger r u n.
T he N eed f o r a P ro je ct P ortf o lio M an ag em en t S yste m I m ple m en ta tio n o f p ro je cts w ith out a s tr o ng p rio rit y s y ste m lin ked to s tr a te g y c re ate s p ro ble m s. T hre e o f th e m ost o bvio us p ro ble m s a re d is c u sse d b elo w . A p ro je ct p ortfo lio s y ste m c an g o a lo ng w ay to r e d uce, o r e v en e lim in ate , t h e i m pact o f t h ese p ro ble m s.
P ro b le m 1 : T he I m ple m en ta tio n G ap I n o rg an iz atio ns w ith s h ort p ro duct lif e c y cle s, it is in te re stin g to n ote th at f re q uen tly p artic ip atio n in s tr a te g ic p la n nin g a n d im ple m en ta tio n in clu des p artic ip an ts f ro m a ll le v els w ith in th e o rg an iz atio n. H ow ev er, in p erh ap s 8 0 p erc en t o f t h e r e m ain in g p ro duct a n d s e rv ic e o rg an iz atio ns, t o p m an ag em en t p re tty m uch f o rm ula te s s tr a te g y a n d le av es str a te g y im ple m en ta tio n to fu nctio nal m an ag ers . W ith in th ese b ro ad co nstr a in ts , m ore d eta ile d s tr a te g ie s a n d o bje ctiv es a re d ev elo ped b y t h e f u nctio nal m an ag ers . T he f a ct t h at t h ese o bje ctiv es a n d s tr a te g ie s a re m ad e i n dep en den tly at dif f e re n t le v els by fu nctio nal gro u ps w ith in th e org an iz atio n hie ra rc h y cau se s m an if o ld p ro ble m s. S om e sy m pto m s o f o rg an iz atio ns str u gglin g w ith str a te g y d is c o nnect a n d u ncle ar p rio ritie s a re p re se n te d h ere . C onflic ts f re q uen tly o ccu r a m ong f u nctio nal m an ag ers a n d c au se l a ck o f t r u st.
F re q uen t m eetin gs a re c alle d t o e sta b lis h o r r e n eg otia te p rio ritie s.
P eo ple f re q uen tly s h if t f ro m o ne p ro je ct t o a n oth er, d ep en din g o n c u rre n t p rio rity . E m plo yees a re c o nfu se d a b out w hic h p ro je cts a re i m porta n t.
P eo ple a re w ork in g o n m ultip le p ro je cts a n d f e el i n eff ic ie n t. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 2/5 2 P ag e 3 3 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . R eso urc es a re n ot a d eq uate . B ecau se cle ar lin kag es do not ex is t, th e org an iz atio nal en vir o nm en t beco m es dysfu nctio nal, c o nfu se d , an d rip e fo r in eff e ctiv e im ple m en ta tio n of org an iz atio n str a te g y an d, th us, of pro je cts . The i m ple m en ta tio n g ap r e fe rs to th e la ck o f u nders ta n din g a n d c o nse n su s o f o rg an iz atio n s tr a te g y a m on g to p a n d m id dle le v el m an ag ers . A s c en ario t h e a u th ors h av e s e en r e p eate d s e v era l t im es f o llo w s. T op m an ag em en t p ic k s t h eir t o p 2 0 p ro je cts f o r th e n ex t p la n nin g p erio d, w ith out p rio ritie s. E ach fu nctio nal d ep artm en t— mark etin g, fin an ce, o pera tio ns, e n gin eerin g, in fo rm atio n te ch nolo gy, an d hum an re so urc es— se le cts pro je cts fro m th e lis t. U nfo rtu nate ly , i n dep en den t d ep artm en t p rio ritie s acro ss p ro je cts are n ot h om ogen ous. A p ro je ct th at ra te s fir s t in th e IT d ep artm en t can ra te 1 0th in th e fin an ce d ep artm en t. Im ple m en ta tio n o f th e p ro je cts re p re se n ts co nflic ts o f i n te re st w ith a n im ositie s d ev elo pin g o ver o rg an iz atio n r e so urc es. I f th is c o nditio n e x is ts , h ow is it p ossib le to e ff e ctiv ely im ple m en t s tr a te g y? T he p ro ble m is s e rio us. O ne s tu dy f o und t h at o nly a b out 2 5 p erc en t o f F ortu ne 5 00 e x ecu tiv es b elie v e th ere is a s tr o ng lin kag e, c o nsis te n cy, a n d/o r ag re em en t b etw een th e str a te g ie s th ey fo rm ula te an d im ple m en ta tio n. In an oth er stu dy o f D elo itte C onsu ltin g, J e ff M acIn ty re re p orts , “ O nly 2 3 p erc en t o f n early 1 50 g lo bal e x ecu tiv es c o nsid ere d th eir p ro je ct p ortf o lio s a lig ned w ith t h e c o re b usin ess .” 3 M id dle m an ag ers c o nsid ere d o rg an iz atio nal s tr a te g y t o b e u nder t h e p urv ie w o f o th ers o r n ot i n t h eir r e alm o f i n flu en ce. I t i s t h e r e sp onsib ility o f s e n io r m an ag em en t t o s e t p olic ie s t h at sh ow a d is tin ct lin k b etw een o rg an iz atio nal str a te g y a n d o bje ctiv es a n d p ro je cts th at im ple m en t th ose s tr a te g ie s. T he r e se arc h o f F usc o s u ggests th e im ple m en ta tio n g ap a n d p rio ritiz in g p ro je cts a re s till o verlo oked b y m an y o rg an iz atio ns. H e s u rv ey ed 2 80 p ro je ct m an ag ers a n d f o und th at 2 4 p erc en t o f th eir o rg an iz atio ns d id n ot e v en p ublis h o r c ir c u la te th eir o bje ctiv es; in a d ditio n, 4 0 p erc en t o f th e r e sp onden ts r e p orte d th at p rio ritie s a m ong c o m petin g p ro je cts w ere n ot c le ar, w hile o nly 1 7 p erc en t r e p orte d c le ar p rio ritie s. 4 P ro b le m 2 : O rg an iz a tio n P olit ic s P olitic s e x is t in e v ery o rg an iz atio n a n d c an h av e a s ig nif ic an t in flu en ce o n w hic h p ro je cts r e ceiv e f u ndin g a n d h ig h p rio rity . T his is e sp ecia lly tr u e w hen th e c rite ria a n d p ro cess f o r s e le ctin g p ro je cts a re ill d efin ed a n d n ot a lig ned w ith th e m is s io n o f th e f ir m . P ro je ct s e le ctio n m ay b e b ase d n ot s o m uch o n f a cts a n d s o und r e aso nin g, b ut r a th er o n t h e p ers u asiv en ess a n d p ow er o f p eo ple a d vocatin g p ro je cts . T he te rm “ sa cre d c o w ” is o fte n u se d to d en ote a p ro je ct th at a p ow erfu l, h ig hra n kin g o ff ic ia l is a d vocatin g. C ase in p oin t, a m ark etin g c o nsu lta n t c o nfid ed th at h e w as o nce h ir e d b y th e m ark etin g d ir e cto r o f a la rg e f ir m t o c o nduct a n in dep en den t, e x te rn al m ark et a n aly sis fo r a n ew p ro duct th e fir m w as in te re ste d in d ev elo pin g.
H is ex te n siv e re se arc h in dic ate d th at th ere w as in su ff ic ie n t d em an d to w arra n t th e fin an cin g o f th is n ew p ro duct. T he m ark etin g d ir e cto r c h ose to b ury th e re p ort a n d m ad e th e c o nsu lta n t p ro m is e n ev er to s h are th is i n fo rm atio n w ith a n yone. T he d ir e cto r e x pla in ed t h at t h is n ew p ro duct w as t h e “ p et i d ea” o f t h e n ew 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 3/5 2 P ag e 3 4 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . C EO , w ho s a w it a s h is le g acy to th e f ir m . H e w en t o n to d esc rib e th e C EO 's ir ra tio nal o bse ssio n w ith th e p ro je ct a n d h ow h e r e fe rre d to it a s h is “ n ew b ab y.” L ik e a p are n t f ie rc ely p ro te ctin g h is c h ild , th e m ark etin g d ir e cto r b elie v ed th at h e w ould lo se h is jo b if s u ch c ritic al in fo rm atio n e v er b ecam e k now n. P ro je ct s p onso rs p la y a s ig nif ic an t r o le in th e s e le ctio n a n d s u ccessfu l im ple m en ta tio n o f p ro duct in novatio n p ro je cts . P ro je ct s p onso rs a re ty pic ally h ig hra n kin g m an ag ers w ho e n dors e a n d le n d p olitic al s u pport fo r th e c o m ple tio n o f a s p ec if ic p ro je ct. T hey a re in str u m en ta l in w in nin g a p pro val o f th e p ro je ct a n d in p ro te ctin g th e p ro je ct d urin g th e c ritic al d ev elo pm en t s ta g e. T he im porta n ce o f p ro je ct s p onso rs s h ould n ot b e ta k en lig htly .
F or e x am ple , a P M I g lo bal s u rv ey o f o ver 1 ,0 00 p ro je ct p ra ctitio ners a n d le ad ers o ver a v arie ty o f in dustr ie s f o und th ose o rg an iz atio ns h av in g activ e sp onso rs o n at le ast 8 0 p erc en t o f th eir p ro je cts /p ro gra m s h av e a s u ccess r a te o f 7 5 p erc en t, e le v en p erc en ta g e p oin ts a b ove th e s u rv ey a v era g e o f 6 4 p erc en t. M an y p ro m is in g p ro je cts h av e f a ile d t o s u cceed d ue t o l a ck o f s tr o ng s p onso rs h ip . 5 T he s ig nif ic an ce o f c o rp ora te p olitic s c an b e s e en i n t h e i ll fa te d A LT O c o m pute r p ro je ct a t X ero x d urin g t h e m id 1 970s. 6 T he p ro je ct w as a tr e m en dous te ch nolo gic al s u ccess; it d ev elo ped th e fir s t w ork ab le m ouse , th e f ir s t la se r p rin te r, th e fir s t u se r frie n dly s o ftw are , a n d th e fir s t lo cal a re a n etw ork . A ll o f th ese d ev elo pm en ts w ere fiv e y ears a h ead o f th eir n eare st c o m petito r. O ver th e n ex t fiv e y ears th is o pportu nity to d om in ate th e n asc en t p ers o nal c o m pute r m ark et w as s q uan dere d b ecau se o f i n te rn al i n fig htin g a t X ero x a n d t h e a b se n ce o f a s tr o ng p ro je ct s p onso r. ( A pple 's M acIn to sh c o m pute r w as i n sp ir e d b y m an y o f t h ese d ev elo pm en ts .) P olitic s c an p la y a ro le n ot o nly in p ro je ct s e le ctio n b ut a ls o in th e a sp ir a tio ns b eh in d p ro je cts . In div id uals c an e n han ce th eir p ow er w ith in a n o rg an iz atio n b y m an ag in g e x tr a o rd in ary a n d c ritic al p ro je cts . P ow er a n d s ta tu s n atu ra lly a ccru e to s u ccessfu l in novato rs a n d r is k ta k ers r a th er th an to s te ad y p ro ducers . M an y a m bitio us m an ag ers p urs u e h ig hp ro file p ro je cts a s a m ean s f o r m ovin g q uic k ly u p t h e c o rp ora te l a d der. M an y w ould a rg ue th at p olitic s a n d p ro je ct m an ag em en t s h ould n ot m ix . A m ore p ro activ e r e sp onse is th at p ro je cts a n d p olitic s in varia b ly m ix a n d th at e ff e ctiv e p ro je ct m an ag ers re co gniz e th at a n y s ig nif ic an t p ro je ct h as p olitic a l r a m if ic a tio ns. L ik ew is e , to p m an ag em en t n eed s to d ev elo p a s y ste m f o r id en tif y in g a n d s e le ctin g p ro je cts t h at r e d uces t h e i m pact o f i n te rn al p olitic s a n d f o ste rs t h e s e le ctio n o f t h e b est p ro je cts f o r a ch ie v in g t h e m is sio n a n d s tr a te g y o f t h e f ir m .
P ro b le m 3 : R eso u rc e C on flic ts a n d M ult it a sk in g M ost p ro je ct o rg an iz atio ns ex is t in a m ultip ro je ct en vir o nm en t. T his en vir o nm en t cre ate s th e p ro ble m s o f p ro je ct in te rd ep en den cy a n d th e n eed to s h are r e so urc es. F or e x am ple , w hat w ould b e th e im pact o n th e la b or r e so urc e p o ol o f a c o nstr u ctio n c o m pan y if it s h ould w in a c o ntr a ct it w ould lik e to b id o n? W ill e x is tin g la b or b e a d eq uate to d eal w ith th e n ew p ro je ct— giv en th e c o m ple tio n d ate ? W ill c u rre n t p ro je cts b e d ela y ed ? W ill s u bco ntr a ctin g help ? W hic h pro je cts w ill hav e prio rity ? C om petitio n am ong pro je ct m an ag ers can be c o nte n tio us. A ll p ro je ct m an ag ers se ek to h av e th e b est p eo ple fo r th eir p ro je cts . T he p ro ble m s o f sh arin g r e so urc es a n d s c h ed ulin g r e so urc es a cro ss p ro je cts g ro w e x ponen tia lly a s t h e 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 4/5 2 P ag e 3 5 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . n um ber o f p ro je cts ris e s. In m ultip ro je c t e n vir o nm en ts th e s ta k es a re h ig her a n d th e b en efits o r p en altie s fo r g ood o r b ad re so urc e s c h ed ulin g b eco m e e v en m ore s ig nif ic an t th an in m ost s in gle p ro je cts . R eso urc e s h arin g a ls o le ad s to m ultita sk in g. M ultita sk in g in volv es s ta rtin g a n d s to ppin g w ork o n o ne ta sk to g o a n d w ork o n a n oth er p ro je ct, a n d th en r e tu rn in g to th e w ork o n th e o rig in al ta sk . P eo ple w ork in g o n s e v era l t a sk s co ncu rre n tly are fa r le ss eff ic ie n t, esp ecia lly w here co ncep tu al o r p hysic al sh utd ow n an d sta rtu p are s ig nif ic an t. M ultita sk in g a d ds to d ela y s a n d c o sts . C han gin g p rio ritie s e x acerb ate th e m ultita sk in g p ro ble m s e v en m ore . L ik ew is e , m ultita sk in g is m ore ev id en t in org an iz atio ns th at hav e to o m an y pro je cts fo r th e r e so urc es t h ey c o m man d. T he n um ber o f s m all a n d l a rg e p ro je cts i n a p ortf o lio a lm ost a lw ay s e x ceed s t h e a v aila b le r e so urc es ( ty pic ally b y a f a cto r o f th re e to f o ur tim es th e a v aila b le r e so urc es). T his c ap acity o verlo ad in ev ita b ly le ad s to c o nfu sio n a n d in eff ic ie n t u se o f sc arc e o rg an iz atio nal re so urc es. T he p re se n ce o f an im ple m en ta tio n g ap , o f p ow er p olitic s, a n d o f m ultita sk in g a d ds to th e p ro ble m o f w hic h p ro je cts a re a llo cate d re so urc es fir s t. E m plo yee m ora le a n d c o nfid en ce su ff e r b ecau se it is d if f ic u lt to m ak e se n se o f a n a m big uous sy ste m . A m ultip ro je ct o rg an iz atio n e n vir o nm en t f a ces m ajo r p ro ble m s w ith out a p rio rity s y ste m th at is c le arly lin ked to th e s tr a te g ic p la n . I n esse n ce, to th is poin t w e hav e su ggeste d th at m an y org an iz atio ns hav e no m ean in gfu l pro cess fo r a d dre ssin g th e p ro ble m s w e h av e d esc rib ed . T he fir s t a n d m ost im porta n t c h an ge th at w ill g o a lo ng w ay in a d dre ssin g th ese a n d o th er p ro ble m s is th e d ev elo pm en t a n d u se o f a m ean in gfu l p ro je ct p rio rity p ro cess fo r p ro je ct s e le ctio n. H ow can th e im ple m en ta tio n gap be narro w ed so th at unders ta n din g an d co nse n su s of org an iz atio nal s tr a te g ie s ru n th ro ugh a ll le v els o f m an ag em en t? H ow c an p ow er p olitic s b e m in im iz ed ? C an a p ro cess b e d ev elo ped in w hic h p ro je cts a re c o nsis te n tly p rio ritiz ed to s u pport o rg an iz atio nal s tr a te g ie s? C an th e p rio ritiz ed p ro je cts b e u se d to a llo cate s c arc e o rg an iz atio nal r e so urc es— fo r e x am ple , p eo ple , e q uip m en t? C an th e p ro cess e n co ura g e b otto m u p i n itia tio n o f p ro je cts t h at s u pport c le ar o rg an iz atio nal t a rg ets ? W hat is n eed ed is a s e t o f in te g ra tiv e c rite ria a n d a p ro cess f o r e v alu atin g a n d s e le ctin g p ro je cts th at s u pport h ig her le v el s tr a te g ie s a n d o bje ctiv es. A s in gle p ro je ct p rio rity s y ste m th at r a n ks p ro je cts b y th eir c o ntr ib utio n t o th e s tr a te g ic p la n w ould m ak e lif e e asie r. E asily s a id , b ut d if f ic u lt to a cco m plis h in p ra ctic e. O rg an iz atio ns t h at m an ag ed in dep en den t p ro je cts a n d a llo cate d re so urc es a d h oc h av e sh if te d fo cu s to se le ctin g th e rig ht p ortf o lio of pro je cts to ach ie v e th eir str a te g ic obje ctiv es. T his is a quic k en in g tr e n d. T he ad van ta g es of s u ccessfu l p ro je ct p ortf o lio s y ste m s a re b eco m in g w ell r e co gniz ed in p ro je ct d riv en o rg an iz atio ns. S ee E xhib it 2 .2 , w hic h l is ts a f e w k ey b en efits ; t h e l is t c o uld e asily b e e x te n ded .
A p ro je ct p ortf o lio s y ste m i s d is c u sse d n ex t w ith e m phasis o n s e le ctio n c rite ria , w hic h i s w here t h e p ow er o f t h e p ortf o lio s y ste m i s e sta b lis h ed .
E X H IB IT 2 .2 B en efit s o f P ro je ct P ortfo lio M anagem en t B uild s d is c ip lin e i n to p ro je ct s e le ctio n p ro cess.
L in ks p ro je ct s e le ctio n t o s tr a te g ic m etr ic s.
P rio ritiz es p ro je ct p ro posa ls a cro ss a c o m mon s e t o f c rite ria , r a th er t h an o n p olitic s o r e m otio n.
A llo cate s r e so urc es t o p ro je cts t h at a lig n w ith s tr a te g ic d ir e ctio n.
B ala n ces r is k a cro ss a ll p ro je cts .
J u stif ie s k illin g p ro je cts t h at d o n ot s u pport o rg an iz atio n s tr a te g y.
I m pro ves c o m munic atio n a n d s u pports a g re em en t o n p ro je ct g oals . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 5/5 2 P ag e 3 6 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
A P ortf o lio M an ag em en t S yste m S uccin ctly p ut, th e a im o f p ortf o lio m an ag em en t is to e n su re th at p ro je cts a re a lig ned w ith s tr a te g ic g oals a n d p rio ritiz ed a p pro pria te ly . A s F oti p oin ts o ut, p ortf o lio m an ag em en t a sk s “ W hat i s s tr a te g ic t o o ur o rg an iz atio n?” ( 2 002) P ortf o lio m an ag em en t p ro vid es in fo rm atio n th at a llo w s p eo ple to m ak e b ette r b usin ess d ecis io ns. S in ce p ro je cts c la m orin g fo r fu ndin g a n d p eo ple u su ally o utn um ber a v aila b le re so urc es, it is im porta n t to fo llo w a l o gic al a n d d efin ed p ro cess f o r s e le ctin g t h e p ro je cts t o i m ple m en t. D esig n o f a p ro je ct p ortf o lio s y ste m s h ould in clu de c la ssif ic atio n o f a p ro je ct, s e le ctio n c rite ria d ep en din g u pon c la ssif ic atio n, s o urc es o f p ro posa ls , e v alu atin g p ro posa ls , a n d m an ag in g t h e p ortf o lio o f p ro je cts .
C la ssif ic a tio n o f t h e P ro je ct M an y o rg an iz atio ns fin d th ey h av e th re e b asic k in ds o f p ro je cts in th eir p ortf o lio : c o m plia nce (e m erg en cy — m ust d o), o pera tio nal, a n d s tr a te g ic p ro je cts . ( S ee F ig ure 2 .2 . ) C om plia n ce p ro je cts a re ty pic ally th ose n eed ed t o m eet re g ula to ry co nditio ns re q uir e d to o pera te in a re g io n; h en ce, th ey are calle d “m ust d o” p ro je cts .
E m erg en cy p ro je cts , s u ch a s b uild in g a n a u to p arts fa cto ry d estr o yed b y ts u nam i, is a n e x am ple o f a m ust d o p ro je ct. C om plia n ce a n d e m erg en cy p ro je cts u su ally h av e p en altie s if th ey a re n ot im ple m en te d . O pera tio nal p ro je cts are th ose th at are n eed ed to su pport cu rre n t o pera tio ns. T hese p ro je cts are d esig ned to im pro ve e ff ic ie n cy o f d eliv ery s y ste m s, r e d uce p ro duct c o sts , a n d im pro ve p erfo rm an ce. S om e o f th ese p ro je cts , g iv en t h eir lim ite d s c o pe a n d c o st, r e q uir e o nly im med ia te m an ag er a p pro val, w hile b ig ger, m ore e x pen siv e p ro je cts n eed e x te n siv e r e v ie w . C hoosin g to in sta ll a n ew p ie ce o f e q uip m en t w ould b e a n e x am ple o f th e la tte r w hile m odif y in g a p ro ductio n p ro cess w ould b e a n e x am ple o f th e f o rm er. T ota l q uali ty m an ag em en t ( T Q M ) p ro je cts a re e x am ple s o f o pera tio nal p ro je cts . F in ally , s tr a te g ic p ro je cts a re th ose th at d ir e ctly s u pport th e o rg an iz atio n's l o ngru n m is sio n. T hey fre q uen tly are dir e cte d to w ard in cre asin g re v en ue or m ark et sh are . E xam ple s of s tr a te g ic pro je cts are new pro ducts , re se arc h , an d dev elo pm en t. For a good, co m ple te dis c u ssio n on c la ssif ic atio n s c h em es f o und i n p ra ctic e, s e e C ra w fo rd , H obbs, a n d T urn e. F re q uen tly , th ese th re e c la ssif ic atio ns a re fu rth er d eco m pose d b y p ro duct ty pe, o rg an iz atio n d iv is io ns a n d f u nctio ns th at w ill r e q uir e d if f e re n t c rite ria f o r p ro je ct s e le ctio n. F or e x am ple , th e s a m e c rite ria f o r th e f in an ce o r le g al d iv is io n w ould n ot a p ply to th e I T ( in fo rm atio n te ch nolo gy) d ep artm en t. T his o fte n r e q uir e s d if f e re n t p ro je ct s e le ctio n c rite ria w ith in t h e b asic t h re e c la ssif ic atio ns o f s tr a te g ic , o pera tio nal, a n d c o m plia n ce p ro je cts .
F IG URE 2 .2 P ortfo lio o f P ro je cts b y T yp e 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 6/5 2 P ag e 3 7 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
S ele ctio n C rite ria A lth ough t h ere a re m an y c rite ria f o r s e le c tin g p ro je cts , s e le ctio n c rite ria a re t y pic ally i d en tif ie d a s f in ancia l a n d n onfin ancia l . A s h ort d esc rip tio n o f e ach i s g iv en n ex t, f o llo w ed b y a d is c u ssio n o f t h eir u se i n p ra ctic e. F in an cia l C rit e ria F in an cia l M odels F or m ost m an ag ers fin an cia l c rite ria a re th e p re fe rre d m eth od to e v alu ate p ro je cts . T hese m odels a re a p pro pria te w hen th ere is a h ig h le v el o f c o nfid en ce a sso cia te d w ith e stim ate s o f f u tu re c ash f lo w s.
T w o m odels a n d e x am ple s a re d em onstr a te d h ere — p ayb ack a n d n et p re se n t v alu e ( N PV ). P ro je ct A h as a n i n itia l i n vestm en t o f $ 700,0 00 a n d p ro je cte d c ash i n flo w s o f $ 225,0 00 f o r 5 y ears . P ro je ct B h as a n i n itia l i n vestm en t o f $ 400,0 00 a n d p ro je cte d c ash i n flo w s o f $ 11 0,0 00 f o r 5 y ears . 1 . T he p ay back m odel m easu re s th e tim e it w ill ta k e to r e co ver th e p ro je ct in vestm en t. S horte r p ay back s a re m ore d esir a b le . P ay back is th e s im ple st a n d m ost w id ely u se d m odel. P ay back e m phasiz es c ash flo w s, a k ey f a cto r in b usin ess. S om e m an ag ers u se th e p ay back m odel to e lim in ate u nusu ally ris k y p ro je cts (th ose w ith l e n gth y p ay back p erio ds). T he m ajo r l im ita tio ns o f p ay back a re t h at i t i g nore s t h e t im e v alu e o f m oney, a ssu m es c ash in flo w s fo r th e in vestm en t p erio d (a n d n ot b ey ond), a n d d oes n ot c o nsid er p ro fita b ility . T he p ay back f o rm ula i s E xhib it 2 .3 c o m pare s th e p ay back f o r P ro je ct A a n d P ro je ct B . T he p ay back f o r P ro je ct A is 3 .1 y ears a n d f o r P ro je ct B is 3 .6 y ears . U sin g th e p ay back m eth od b oth p ro je cts a re a ccep ta b le sin ce b oth re tu rn th e in itia l i n vestm en t in le ss th an fiv e y ears an d h av e re tu rn s o n th e in vestm en t o f 3 2 .1 an d 2 7.5 p erc en t. P ay back p ro vid es e sp ecia lly u se fu l in fo rm atio n fo r fir m s c o ncern ed w ith liq uid ity a n d h av in g su ff ic ie n t re so urc es to m an ag e t h eir f in an cia l o blig atio ns. E xhib it 2 .3 A p re se n ts t h e n et p re se n t v alu e m odel. 2 . T he n et p re se n t v alu e ( N PV ) m odel u se s m an ag em en t's m in im um d esir e d r a te o fre tu rn ( d is c o unt r a te , f o r e x am ple , 2 0 p erc en t) to c o m pute th e p re se n t v alu e o f a ll n et c ash in flo w s. I f th e r e su lt is p ositiv e ( th e p ro je ct m eets th e m in im um d esir e d r a te o f r e tu rn ), it is e lig ib le f o r f u rth er c o nsid era tio n. I f th e r e su lt is n eg ativ e, th e p ro je ct i s r e je cte d . T hus, h ig her p ositiv e N PV 's a re d esir a b le . E xcel u se s t h is f o rm ula I 0 = I n itia l i n vestm en t ( s in ce i t i s a n o utf lo w , t h e n um ber w ill b e n eg ativ e) F t = N et c ash i n flo w f o r p erio d t k = R eq uir e d r a te o f r e tu rn 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 7/5 2 P ag e 3 8 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
E X H IB IT 2 .3 E xam ple C om parin g T w o P ro je cts U sin g P ayback a nd N et P re se n t V alu e M eth od E xhib it 2 .3 B p re se n ts th e N PV m odel u sin g M ic ro so ft E xcel so ftw are . T he N PV m odel a ccep ts p ro je ct A , w hic h h as a p ositiv e N PV o f $ 54,2 35. P ro je ct B is re je cte d s in ce th e N PV is n eg ativ e $ 3 1,2 63. C om pare th e N PV r e su lts w ith th e p ay back r e su lts . T he N PV m odel is m ore r e alis tic b ecau se it c o nsid ers th e tim e v alu e o f m oney, c ash f lo w s, a n d p ro fita b ility . W hen u sin g th e N PV m odel, th e d is c o unt ra te (re tu rn o n in vestm en t h urd le ra te ) c an d if f e r fo r d if f e re n t p ro je cts . F or e x am ple , th e e x pecte d R O I o n s tr a te g ic p ro je cts is f re q uen tly s e t h ig her th an o pera tio nal p ro je cts .
S im ila rly , R O I's c an d if f e r f o r r is k ie r v ers u s s a fe r p ro je cts . T he c rite ria f o r s e ttin g t h e R O I h urd le r a te s h ould b e c le ar a n d a p plie d c o nsis te n tly . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 8/5 2 P ag e 3 9 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
U nfo rtu nate ly , p ure fin an cia l m odels fa il to in clu de m an y p ro je cts w here fin an cia l re tu rn is i m possib le to m easu re a n d/o r o th er f a cto rs a re v ita l to th e a ccep t o r r e je ct d ecis io n. O ne r e se arc h s tu dy b y F oti s h ow ed th at c o m pan ie s u sin g p re d om in an tly fin an cia l m odels to p rio ritiz e p ro je cts y ie ld ed u nbala n ced p ortf o lio s a n d p ro je cts t h at a re n 't s tr a te g ic ally o rie n te d ( 2 003).
N on fin an cia l C rit e ria F in an cia l re tu rn , w hile im porta n t, d oes n ot a lw ay s re fle ct s tr a te g ic im porta n ce . T he s ix tie s a n d s e v en tie s s a w f ir m s b eco m e o vere x te n ded b y d iv ers if y in g to o m uch . N ow th e p re v ailin g th in kin g is th at lo ngte rm s u rv iv al is d ep en den t u pon d ev elo pin g a n d m ain ta in in g c o re c o m pete n cie s. C om pan ie s h av e t o b e d is c ip lin ed i n s a y in g n o t o p o te n tia lly p ro fita b le p ro je cts th at a re o uts id e th e r e alm o f th eir c o re m is sio n. T his r e q uir e s o th er c rite ria b e c o nsid ere d b ey ond d ir e ct f in an cia l r e tu rn . F or e x am ple , a f ir m m ay s u pport p ro je cts t h at d o n ot h av e h ig h p ro fit m arg in s f o r o th er s tr a te g ic r e aso ns i n clu din g: T o c ap tu re l a rg er m ark et s h are T o m ak e i t d if f ic u lt f o r c o m petito rs t o e n te r t h e m ark et T o d ev elo p a n e n ab le r p ro duct, w hic h b y i ts i n tr o ductio n w ill i n cre ase s a le s i n m ore p ro fita b le p ro ducts T o d ev elo p c o re t e ch nolo gy t h at w ill b e u se d i n n ex t g en era tio n p ro ducts T o r e d uce d ep en den cy o n u nre lia b le s u pplie rs T o p re v en t g overn m en t i n te rv en tio n a n d r e g ula tio n L ess t a n gib le c rite ria m ay a ls o a p ply . O rg an iz atio ns m ay s u pport p ro je cts t o r e sto re c o rp ora te i m ag e o r e n han ce b ra n d re co gnitio n. M an y org an iz atio ns are co m mitte d to co rp ora te citiz en sh ip an d su pport co m munity d ev elo pm en t p ro je cts . S in ce n o sin gle crit e rio n can re fle ct str a te g ic sig nif ic an ce, p ortf o lio m an ag em en t re q uir e s m ulti c rite ria s c re en in g m odels . T hese m odels o fte n w eig ht in div id ual c rite ria s o th ose p ro je cts th at c o ntr ib ute to th e m ost i m porta n t s tr a te g ic o bje ctiv es a re g iv en h ig her c o nsid era tio n.
T w o M ulti C rite ria S ele ctio n M odels S in ce no sin gle crite rio n can re fle ct str a te g ic sig nif ic an ce, portf o lio m an ag em en t re q uir e s m ulti c rite ria s c re en in g m odels . T w o m odels , t h e c h eck lis t a n d m ulti w eig hte d s c o rin g m odels , a re d esc rib ed n ex t.
C heck lis t M odels T he m ost f re q uen tly u se d m eth od i n s e le ctin g p ro je cts h as b een t h e c h eck lis t. T his a p pro ach b asic ally u se s a lis t o f q uestio ns to re v ie w p ote n tia l p ro je cts a n d to d ete rm in e th eir a ccep ta n ce o r re je ctio n.
S ev era l o f th e ty pic a l q uestio ns f o und in p ra ctic e a re lis te d in E xhib it 2 .4 . O ne la rg e, m ultip ro je ct o rg an iz atio n h as 2 50 d if f e re n t q uestio ns! A j u stif ic atio n o f c h eck lis t m odels i s t h at t h ey a llo w g re at f le x ib ility i n s e le ctin g a m ong m an y d if f e re n t t y pes o f p ro je cts a n d a re e asily u se d a cro ss d if f e re n t d iv is io ns a n d lo catio ns. A lth ough m an y p ro je cts a re s e le cte d u sin g s o m e v aria tio n o f th e c h eck lis t a p pro ach , th is a p pro ach h as s e rio us s h ortc o m in gs. M ajo r s h ortc o m in gs o f t h is a p pro ach a re t h at i t f a ils t o a n sw er t h e r e la tiv e i m porta n ce o r v alu e o f a p ote n tia l p ro je ct t o t h e o rg an iz atio n a n d f a ils t o a llo w f o r c o m paris o n w ith o th er p ote n tia l p ro je cts . E ach p ote n tia l p ro je ct w ill h av e a d if f e re n t s e t o f p ositiv e a n d n eg ativ e a n sw ers . H ow d o y ou c o m pare ? R an kin g a n d p rio ritiz in g p ro je cts b y th eir im porta n ce is d if f ic u lt, i f n ot i m possib le . T his a p pro ac h a ls o l e av es t h e d oor o pen t o t h e p ote n tia l o pportu nity f o r p ow er p la y s, p olitic s, a n d o th er f o rm s o f m an ip ula tio n. T o o verc o m e th ese s e rio us s h ortc o m in gs e x perts r e co m men d th e u se o f a m ulti w eig hte d s c o rin g m odel t o s e le ct p ro je cts , w hic h i s e x am in ed n ex t. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 1 9/5 2 P ag e 4 0 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
E X H IB IT 2 .4 S am ple S ele ctio n Q uestio ns U se d in P ra ctic e T op ic Q uestio n S tr a te g y/a lig nm en t W hat s p ecif ic o rg an iz atio n s tr a te g y d oes t h is p ro je ct a lig n w ith ? D riv er W hat b usin ess p ro ble m d oes t h e p ro je ct s o lv e? S uccess m etr ic s H ow w ill w e m easu re s u ccess? S ponso rsh ip W ho i s t h e p ro je ct s p onso r? R is k W hat i s t h e i m pact o f n ot d oin g t h is p ro je ct? R is k W hat i s t h e p ro je ct r is k t o o ur o rg an iz atio n? R is k W here d oes t h e p ro pose d p ro je ct f it i n o ur r is k p ro file ? B en efits , v alu e, R O I W hat i s t h e v alu e o f t h e p ro je ct t o t h is o rg an iz a tio n? B en efits , v alu e, R O I W hen w ill t h e p ro je ct s h ow r e su lts ? O bje ctiv es W hat a re t h e p ro je ct o bje ctiv es? O rg an iz atio n c u ltu re I s o ur o rg an iz atio n c u ltu re r ig ht f o r t h is t y pe o f p ro je ct? R eso urc es W ill i n te rn al r e so urc es b e a v aila b le f o r t h is p ro je ct? A ppro ach W ill w e b uild o r b uy? S ch ed ule H ow l o ng w ill t h is p ro je ct t a k e? S ch ed ule I s t h e t im e l in e r e alis tic ? T ra in in g/r e so urc es W ill s ta ff t r a in in g b e r e q uir e d ? F in an ce/p ortf o lio W hat i s t h e e stim ate d c o st o f t h e p ro je ct? P ortf o lio I s t h is a n ew i n itia tiv e o r p art o f a n e x is tin g i n itia tiv e? P ortf o lio H ow d oes t h is p ro je ct i n te ra ct w ith c u rre n t p ro je cts ? T ech nolo gy I s t h e t e ch nolo gy a v aila b le o r n ew ? M ulti W eig h te d S co rin g M odels A w eig hte d s c o rin g m odel ty pic ally u se s s e v era l w eig hte d s e le ctio n c rite ria t o e v alu ate p ro je ct p ro posa ls . W eig hte d s c o rin g m odels w ill g en era lly in clu de q ualita tiv e a n d/o r q uan tita tiv e c rite ria . E ach se le ctio n c rite rio n is a sssig ned a w eig ht. S co re s a re a ssig ned to e ach c rite rio n fo r th e p ro je ct, b ase d o n its im porta n ce to th e p ro je ct b ein g e v alu ate d . T he w eig hts a n d s c o re s a re m ultip lie d to g et a to ta l w eig hte d s c o re f o r th e p ro je ct. U sin g th ese m ultip le s c re en in g c rite ria , p ro je cts c an th en b e c o m pare d u sin g th e w eig hte d s c o re . P ro je cts w ith h ig her w eig hte d s c o re s a re c o nsid ere d b ette r. S ele ctio n c rite ria n eed to m ir ro r th e c ritic al s u ccess f a cto rs o f a n o rg an iz atio n. F or e x am ple , 3 M s e t a ta rg et t h at 2 5 p erc en t o f t h e c o m pan y's s a le s w ould c o m e f ro m p ro ducts f e w er t h an f o ur y ears o ld v ers u s t h e o ld t a rg et o f 2 0 p erc en t. T heir p rio rity s y ste m fo r p ro je ct s e le ctio n s tr o ngly re fle cts th is n ew ta rg et. O n th e o th er h an d, f a ilu re to p ic k th e rig ht fa cto rs w ill re n der th e s c re en in g p ro cess “ u se le ss” in s h ort o rd er. S ee S nap sh ot fro m P ra ctic e: C ris is I T . F ig ure 2 .3 re p re se n ts a p ro je ct sc o rin g m atr ix u sin g so m e o f th e fa cto rs fo und in p ra cti c e. T he sc re en in g c rite ria se le cte d a re sh ow n a cro ss th e to p o f th e m atr ix (e .g ., sta y w ith in c o re c o m pete n cie s … R O I o f 1 8 p erc en t p lu s). M an ag em en t w eig hts e ach c rite rio n ( a v alu e o f 0 t o a h ig h o f, s a y, 3 ) b y i ts r e la tiv e i m porta n ce t o t h e o rg an iz atio n's o bje ctiv es a n d s tr a te g ic p la n . P ro je ct p ro posa ls a re th en s u bm itte d to a p ro je ct p rio rit y t e a m o r p ro je ct o ff ic e. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 0/5 2 P ag e 4 1 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . S N APSH OT F R O M P R A CTIC E C ris is I T I n M ay 2 007, F ro ntie r A ir lin es H old in gs h ir e d G erry C oad y a s c h ie f in fo rm atio n o ff ic er ( C IO ). N early a y ear la te r th e a ir lin e f ile d f o r b an kru ptc y u nder C hap te r 1 1 . I n a n in te rv ie w C oad y d escrib es h ow h e m an ag ed I T p ro je cts d urin g th e b an kru ptc y a n d r e cessio n c ris is o f 2 008–2009. F undam en ta lly , C oad y fa ced a situ atio n o f to o m an y p ro je cts an d to o fe w re so urc es. C oad y u sed a str a te g y o f f o cu sin g on re d ucin g th e num ber of pro je cts in th e portf o lio . H e put to geth er a ste erin g co m mitte e of sen io r m an ag em en t th at r e v ie w ed s ev era l h undre d p ro je cts . T he e n d r e su lt w as a r e d uctio n to le ss th an 3 0 p ro je cts r e m ain in g i n th e p ortf o lio .
H ow C an Y ou G et t o a B ack lo g o f o ver 1 00 P ro je cts ?
“ T here are nev er en ough re so urc es to get ev ery th in g done.” B ack lo gs build over tim e. S acre d co w pro je cts get i n clu ded in th e s ele ctio n s y ste m . P ro je cts p ro posed fro m p eo ple w ho h av e le ft th e a ir li n e s till re sid e in th e p ro je ct p ortf o lio . N onv alu ea d ded p ro je cts s o m eh ow m ak e th eir w ay in to th e p ro je ct p ortf o lio . S oon th e q ueu e g ets lo nger.
W ith e v ery one in I T w ork in g o n to o m an y p ro je cts c o ncu rre n tly , p ro je ct c o m ple tio n a n d p ro ductiv ity a re s lo w .
W hic h P ro je cts R em ain ?
T o c u t th e n um ber o f p ro je cts , th e s te erin g c o m mitte e u sed a w eig htin g s ch em e th at re fle cte d th e a ir lin e's p rio ritie s, w hic h w ere : f ly s afe , g en era te r e v en ue, r e d uce c o sts , a n d c u sto m er s erv ic e. T he w eig htin g s ch em e e asily w eed ed o ut t h e f lu ff . C oad y n ote d th at “ b y th e tim e y ou g et to th e 2 0s th e m arg in o f d if f e re n tia tio n g ets n arro w er a n d n arro w er.” O f th e r e m ain in g p ro je cts , p ro je ct s p onso rs h ad to h av e s o lid ju stif ic atio n w hy th eir p ro je c t is im porta n t. R ed uctio n o f t h e n um ber o f p ro je cts p la ces e m phasis o n h ig h v alu e p ro je cts .
© P R N ew sF oto /G en esis , I n c.
W hat A dvic e D oes C oady H ave f o r C ris is M anagem en t?
I n tim es o f c ris is , it is e asie r to ta k e b old s te p s to m ak e c h an ges. B ut y ou n eed to h av e a c le ar v is io n o f w hat y ou s h ould b e fo cu sin g o n w ith th e re so urc es a v aila b le . C oad y s u ggests , “ It c o m es b ack to re ally h av in g a g ood id ea o f w hat th e in itia l b usin ess c ase f o r a p ro je ct is a n d w hat r e so urc es it is c o nsu m in g, b oth p eo ple a n d o th erw is e.” S ou rc e: W orth en, B ., “ C ris is I T ,” T he W all S tr e et J ourn al , A pril 2 0, 2 009, p R 6. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 1/5 2 F IG URE 2 .3 P ro je ct S cre en in g M atr ix 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 2/5 2 P ag e 4 2 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
E ach p ro je ct p ro posa l is th en e v alu ate d b y its re la tiv e c o ntr ib utio n/v alu e a d ded to th e s e le cte d c rite ria . V alu es o f 0 to a h ig h o f 1 0 a re a ssig ned to e ach c rite rio n fo r e ach p ro je ct. T his v alu e r e p re se n ts th e p ro je ct's f it to th e s p ecif ic c rite rio n. F or e x am ple , p ro je ct 1 a p pears to f it w ell w ith t h e s tr a te g y o f th e o rg an iz atio n s in ce it is g iv en a v alu e o f 8 . C onvers e ly , p ro je ct 1 d oes n oth in g to s u pport r e d ucin g d efe cts (its v alu e is 0 ). F in ally , th is m odel ap plie s th e m an ag em en t w eig hts to each crite rio n b y i m porta n ce u sin g a v alu e o f 1 to 3 . F or e x am ple , R O I a n d s tr a te g ic f it h av e a w eig ht o f 3 , w hile u rg en cy a n d c o re c o m pete n cie s h av e w eig hts o f 2 . A pply in g th e w eig ht to e ach c rite rio n, th e p rio rity te am d eriv es th e w eig hte d t o ta l p oin ts f o r e ach p ro je ct. F or e x am ple , p ro je ct 5 h as t h e h ig hest v alu e o f 1 02 [ (2 × 1 ) + ( 3 × 1 0) + ( 2 × 5 ) + ( 2 .5 × 1 0) + ( 1 × 0 ) + ( 1 × 8 ) + ( 3 × 9 ) = 1 02] a n d p ro je ct 2 h as a lo w v alu e o f 2 7. I f th e r e so urc es a v aila b le c re ate a c u to ff th re sh old o f 5 0 p oin ts , th e p rio rity te am w ould e lim in ate p ro je cts 2 a n d 4 . (N ote :
P ro je ct 4 a p pears t o h av e s o m e u rg en cy, b ut i t i s n ot c la ssif ie d a s a “ m ust” p ro je ct. T here fo re , i t i s s c re en ed w ith a ll o th er p ro posa ls .) P ro je ct 5 w ould re ceiv e fir s t p rio rity , p ro je ct n se co nd, a n d so o n. In ra re c ase s w here r e so urc es a re s e v ere ly l im ite d a n d p ro je ct p ro posa ls a re s im ila r i n w eig hte d r a n k, i t i s p ru den t t o p ic k t h e p ro je ct p la cin g le ss d em an d o n re so urc es. W eig h te d m ultip le c rite ria m odels s im ila r to th is o ne a re ra p id ly b eco m in g t h e d om in an t c h oic e f o r p rio ritiz in g p ro je cts . A t th is p oin t in th e d is c u ssio n it is w is e to s to p a n d p ut th in gs in to p ers p ectiv e. W hile s e le ctio n m odels lik e t h e o ne a b ove m ay y ie ld n um eric al s o lu tio ns to p ro je ct s e le ctio n d ecis io ns, m odels s h ould n ot m ak e th e fin al d ecis io ns — th e p eo ple u sin g th e m odels s h ould . N o m odel, n o m atte r h ow s o phis tic ate d , c an c ap tu re th e to ta l r e ality it is m ean t to r e p re se n t. M odels a re to ols f o r g uid in g th e e v alu atio n p ro cess s o th at th e d ecis io nm ak ers w ill c o nsid er r e le v an t i s su es a n d r e ach a m eetin g o f t h e m in ds a s t o w hic h p ro je cts s h ould b e s u pporte d a n d n ot s u pporte d . T his i s a m uch m ore s u bje ctiv e p ro cess t h an c alc u la tio ns s u ggest.
A pply in g a S ele ctio n M od el P ro je ct C la ssif ic a tio n It is n ot n ecessa ry to h av e e x actly th e s a m e c rite ria fo r th e d if f e re n t ty pes o f p ro je cts d is c u sse d a b ove ( s tr a te g ic a n d o pera tio n s). H ow ev er, e x perie n ce s h ow s m ost o rg an iz atio ns u se s im ila r c rite ria a cro ss a ll ty pes o f p ro je cts , w ith p erh ap s o ne o r tw o c rite ria sp ecif ic to th e ty pe o f p ro je ct— e.g ., str a te g ic b re ak th ro ugh v ers u s o pera tio nal. R eg ard le ss o f c rite ria d if f e re n ces a m ong d if f e re n t t y pes o f p ro je cts , t h e m ost i m porta n t c rite rio n f o r s e le ctio n i s th e p ro je ct's f it to th e o rg an iz atio n s tr a te g y. T here fo re , th is c rite rio n s h ould b e c o nsis te n t a cro ss a ll ty pes o f p ro je cts a n d c arry a h ig h p rio rity r e la tiv e to o th er c rite ria . T his u nif o rm ity a cro ss a ll p rio rity m odels u se d c an k eep d ep artm en ts f ro m s u boptim iz in g th e u se o f o rg an iz atio n r e so urc es. A nyone g en era tin g a p ro je ct p ro posa l s h ould c la ssif y t h eir p ro posa l b y t y pe, s o t h e a p pro pria te c rite ria c an b e u se d t o e v alu ate t h eir p ro posa l.
S ele ctin g a M odel I n th e p ast, f in an cia l c rite ria w ere u se d a lm ost to th e e x clu sio n o f o th er c rite ria . H ow ev er, i n th e la st tw o d ecad es w e h av e w itn esse d a d ra m atic sh if t to in clu de m ultip le c rite ria in p ro je ct se le ctio n.
C oncis e ly p ut, 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 3/5 2 P ag e 4 3 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . p ro fita b ility alo ne is sim ply n ot an ad eq uate m easu re o f co ntr ib utio n; h ow ev er, it is still an i m porta n t crite rio n, esp ecia lly fo r pro je cts th at en han ce re v en ue an d m ark et sh are su ch as b re ak th ro ugh R & D p ro je cts . T oday, s e n io r m an ag em en t i s i n te re ste d i n i d en tif y in g t h e p ote n tia l m ix o f p ro je cts t h at w ill y ie ld t h e b est u se o f h um an a n d c ap ita l r e so urc es to m ax im iz e r e tu rn o n in vestm en t in th e lo ng r u n. F acto rs s u ch a s r e se arc h in g n ew te ch nolo gy, p ublic im ag e, e th ic al p ositio n, p ro te ctio n o f th e e n vir o nm en t, c o re c o m pete n cie s, a n d s tr a te g ic f it m ig ht b e im porta n t c rite ria f o r s e le ctin g p ro je cts . W eig hte d s c o rin g c rite ria s e em th e b est a lte rn ativ e to m eet t h is n eed . W eig hte d s c o rin g m odels re su lt in b rin g in g p ro je cts to c lo se r a lig nm en t w ith s tr a te g ic g oals . If th e s c o rin g m odel i s p ublis h ed a n d a v aila b le t o e v ery one i n t h e o rg an iz atio n, s o m e d is c ip lin e a n d c re d ib ility a re a tta ch ed t o t h e s e le ctio n o f p ro je cts . T he n um ber o f w aste fu l p ro je cts u sin g r e so urc es i s r e d uced . P olitic s a n d “ sa cre d c o w ” p ro je cts a re e x pose d . P ro je ct g oals a re m ore e asily id en tif ie d a n d c o m munic ate d u sin g th e s e le ctio n c rite ria a s c o rro bora tio n. F in ally , u sin g a w eig hte d s c o rin g a p pro ach h elp s p ro je ct m an ag ers u nders ta n d h ow th eir p ro je ct w as se le cte d , h ow th eir p ro je ct c o ntr ib ute s to o rg an iz atio n g oals , a n d h ow it c o m pare s w ith o th er p ro je cts .
P ro je ct s e le ctio n i s o ne o f t h e m ost i m porta n t d ecis io ns g uid in g t h e f u tu re s u ccess o f a n o rg an iz atio n. C rite ria fo r p ro je ct s e le ctio n a re th e a re a w here th e p ow er o f y our p ortf o lio s ta rts to m an if e st its e lf . N ew p ro je cts a re a lig ned w ith th e s tr a te g ic g o als o f th e o rg an iz atio n. W ith a c le ar m eth od fo r s e le ctin g p ro je cts in p la ce, p ro je ct p ro posa ls c an b e s o lic ite d .
S ou rc es a n d S olic it a tio n o f P ro je ct P ro p osa ls A s y ou w ould g uess, p ro je cts s h ould c o m e f ro m a n yone w ho b elie v es h is o r h er p ro je ct w ill a d d v alu e to th e o rg an iz atio n. H ow ev er, m an y org an iz atio ns re str ic t pro posa ls fro m sp ecif ic le v els or gro ups w ith in th e o rg an iz atio n. T his co uld b e an o pportu nity lo st. G ood id eas are n ot lim ite d to certa in ty pes o r cla sse s o f o rg an iz atio n s ta k eh old ers . E nco ura g e a n d k eep s o lic ita tio ns o pen t o a ll s o urc es— in te rn al a n d e x te rn al s p onso rs . F ig ure 2 .4 A p ro vid es a n e x am ple o f a p ro posa l f o rm f o r a n a u to m atic v eh ic u la r tr a ck in g ( A uto m atic V eh ic le L ocatio n) p ublic tr a n sp orta tio n p ro je ct. F ig ure 2 .4 B p re se n ts a p re lim in ary ris k a n aly sis fo r a 5 00a cre w in d f a rm . M an y o rg an iz atio ns u se r is k a n aly sis te m pla te s to g ain a q uic k in sig ht o f a p ro je ct's in here n t r is k s. R is k f a cto rs d ep en d o n th e o rg an iz atio n a n d ty pe o f p ro je cts . T his in fo rm atio n is u se fu l in b ala n cin g th e p ro je ct p ortf o lio a n d id en tif y in g m ajo r r is k s w hen e x ecu tin g th e p ro je ct. P ro je ct r is k a n aly sis is th e s u bje ct o f C hap te r 7 .
I n s o m e c ase s o rg an iz atio ns w ill s o lic it id eas fo r p ro je cts w hen th e k now le d ge re q uir e m en ts fo r th e p ro je ct a re n ot a v aila b le in th e o rg an iz atio n. T ypic ally , th e o rg an iz atio n w ill is su e a n R FP (R eq uest fo r P ro posa l) to c o ntr a cto rs /v en dors w ith a d eq uate e x perie n ce t o i m ple m en t t h e p ro je ct. I n o ne e x am ple , a h osp ita l p ublis h ed a n R FP th at a sk ed fo r a b id to d esig n a n d b uild a n ew o pera tin g ro om th at u se s th e la te st te ch nolo gy. S ev era l a rc h ite ctu re f ir m s s u bm itte d b id s t o t h e h osp ita l. T he b id s f o r t h e p ro je ct w ere e v alu ate d i n te rn ally a g ain st o th er p ote n tia l p ro je cts . W hen th e p ro je ct w as a ccep te d a s a g o, o th er c rite ria w ere u se d to s e le ct th e b est q ualif ie d b id der. S ee A ppen dix 2 .1 o f t h is c h ap te r f o r a c o m ple te d esc rip tio n o f r e q uests f o r p ro posa l ( R FP). 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 4/5 2 P ag e 4 4 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
F IG URE 2 .4 A A P ro p osa l F orm f o r a n A uto m atic V eh ic u la r T ra ck in g ( A V L) P ublic T ra n sp orta tio n P ro je ct.
R an kin g P ro p osa ls a n d S ele ctio n o f P ro je cts 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 5/5 2 C ullin g th ro ugh so m an y p ro posa ls to id en tif y th ose th at a d d th e m ost v alu e re q uir e s a str u ctu re d p ro cess.
F ig ure 2 .5 s h o w s a f lo w c h art o f a s c re en in g p ro cess b eg in nin g w ith th e c re atio n o f a n id ea f o r a p ro je ct. S ee t e m pla te f o r e v alu atin g c o ntr a cto rs i n A ppen dix 2 .1 . D ata a n d in fo rm atio n a re c o lle cte d to a sse ss th e v alu e o f th e p ro pose d p ro je ct to th e o rg an iz atio n a n d fo r f u tu re b ack up. I f th e s p onso r d ecid es to p urs u e th e p ro je ct o n th e b asis o f th e c o lle cte d d ata , it is f o rw ard ed to t h e p ro je ct p rio rity te am (o r th e p ro je ct o ff ic e). N ote th at th e sp onso r k now s w hic h c rite ria w ill b e u se d to a ccep t o r r e je ct t h e p ro je ct. G iv en t h e s e le ctio n c rite ria a n d c u rre n t p ortf o lio o f p ro je cts , t h e p rio rity t e am r e je cts o r a ccep ts t h e p ro je ct. I f t h e p ro je ct i s a ccep te d , t h e p rio rity t e am s e ts i m ple m en ta tio n i n m otio n. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 6/5 2 P ag e 4 5 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
F IG URE 2 .4 B R is k A naly sis f o r a 5 00A cre W in d F arm F ig ure 2 .6 is a p artia l e x am ple o f a n e v alu atio n fo rm u se d b y a la rg e c o m pan y to p rio ritiz e a n d s e le ct n ew p ro je cts . T he fo rm d is tin guis h es b etw een m ust a n d w an t o bje ctiv es. If a p ro je ct d oes n ot m eet d esig nate d “ m ust” o bje ctiv es, it is n ot c o nsid ere d a n d re m oved fro m c o nsid era tio n. O rg an iz atio n (o r d iv is io n) o bje ctiv es h av e b een r a n ked a n d w eig hte d b y t h eir r e la tiv e i m porta n ce— fo r e x am ple , “ Im pro ve e x te rn al c u sto m er s e rv ic e” c arrie s a r e la tiv e w eig ht o f 8 3 w hen c o m pare d to o th er w an t o bje ctiv es. T he w an t o bje ctiv es a re d ir e ctly lin ked t o o bje ctiv es f o und i n t h e s tr a te g ic p la n . I m pact d efin itio ns re p re se n t a fu rth er re fin em en t to th e s c re en in g s y ste m . T hey a re d ev elo ped to g au ge th e p re d ic te d im pact a s p ecif ic p ro je ct w ould h av e o n m eetin g a p artic u la r o bje ctiv e. A n um eric s c h em e is c re ate d a n d an ch ore d b y d efin in g crite ria . T o illu str a te h ow th is w ork s, le t's ex am in e th e $ 5 m illio n in n ew sa le s o bje ctiv e. A “ 0 ” is a ssig ned if th e p ro je ct w ill h av e n o im pact o n s a le s o r le ss th an $ 100,0 00, a “ 1 ” is g iv en if p re d ic te d s a le s a re m ore th an $ 100,0 00 b ut le ss th an $ 500,0 00, a “ 2 ” if g re ate r th an $ 500,0 00. T hese im pact a sse ssm en ts a re c o m bin ed w ith th e re la tiv e im porta n ce o f e ach o bje ctiv e to d ete rm in e th e p re d ic te d o vera ll c o ntr ib utio n o f a p ro je ct to str a te g ic o bje ctiv es. F or e x am ple , p ro je ct 2 6 c re ate s a n o pportu nity to fix fie ld p ro ble m s, h as n o e ff e ct o n s a le s, a n d w ill h av e m ajo r im pact o n c u sto m er s e rv ic e. O n th ese th re e o bje ctiv es, 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 7/5 2 p ro je ct 2 6 w ould re ceiv e a s c o re o f 2 65 [9 9 + 0 + (2 × 8 3)]. In div id ual w eig hte d s c o re s a re to ta le d fo r e ach p ro je ct a n d a re u se d t o p rio ritiz e p ro je cts . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 8/5 2 P ag e 4 6 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
F IG URE 2 .5 P ro je ct S cre en in g P ro cess R esp on sib ility f o r P rio ritiz in g P rio ritiz in g c an b e a n u nco m fo rta b le e x erc is e fo r m an ag ers . B ut p rio ritiz in g p ro je cts is a m ajo r re sp onsib ility f o r se n io r m an ag em en t. Prio ritiz in g m ean s dis c ip lin e, acco unta b ility , re sp onsib ility , co nstr a in ts , re d uced f le x ib ility , a n d lo ss o f p ow er. T op m an ag em en t c o m mitm en t m ean s m ore th an g iv in g a b le ssin g to th e p rio rity s y ste m ; i t m ean s m an ag em en t w ill h av e t o r a n k a n d w eig h, i n c o ncre te t e rm s, t h e o bje ctiv es a n d s tr a te g ie s t h ey b elie v e t o b e m ost c ritic al t o t h e o rg an iz atio n. T his p ublic d ecla ra tio n o f c o m mitm en t c an b e r is k y i f t h e r a n ked o bje ctiv es la te r p ro ve to b e p oor c h oic e s, b ut s e ttin g th e c o urs e fo r th e o rg an iz atio n is to p m an ag em en t's jo b.
T he g ood n ew s is , if m an ag em en t is tr u ly tr y in g to d ir e ct th e o rg an iz atio n to a s tr o ng fu tu re p ositio n, a g ood p ro je ct p rio rity s y ste m s u pports th eir e ff o rts a n d d ev elo ps a c u ltu re in w hic h e v ery one is c o ntr ib utin g to th e g oals o f t h e o rg an iz atio n.
M an ag in g t h e P ortf o lio S yste m M an ag in g th e p ortf o lio ta k es th e s e le cti o n s y ste m o ne s te p h ig her in th at th e m erits o f a p artic u la r p ro je ct a re a sse sse d w ith in t h e c o nte x t o f e x is tin g p ro je cts . A t t h e s a m e t im e i t i n volv es m onito rin g a n d a d ju stin g s e le ctio n c rite ria t o r e fle ct t h e s tr a te g ic f o cu s o f t h e o rg an iz atio n. T his r e q uir e s c o nsta n t e ff o rt. T he p rio rity s y ste m c an b e m an ag ed b y a s m all g ro up o f k ey e m plo yees in a s m all o rg an iz atio n. O r, in la rg er o rg an iz atio ns, th e p rio rity s y ste m c an b e m an ag ed b y t h e p ro je ct o ff ic e o r a g overn an ce t e am o f s e n io r m an ag ers . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 2 9/5 2 P ag e 4 7 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d .
F IG URE 2 .6 P rio rit y S cre en in g A naly sis S en io r M an agem en t I n pu t M an ag em en t of a portf o lio sy ste m re q uir e s tw o m ajo r in puts fro m se n io r m an ag em en t. Fir s t, se n io r m an ag em en t m ust pro vid e guid an ce in esta b lis h in g se le ctio n crite ria th at str o ngly alig n w ith th e cu rre n t o rg an iz atio n str a te g ie s. S eco nd, se n io r m an ag em en t m ust an nually decid e how th ey w is h to bala n ce th e a v aila b le o rg an iz atio n al re so urc es (p eo ple a n d c ap ita l) a m ong th e d if f e re n t ty p es o f p ro je cts . A p re lim in ary d ecis io n o f b ala n ce m ust b e m ad e b y t o p m an ag em en t ( e .g ., 2 0 p erc en t c o m plia n ce, 5 0 p erc en t s tr a te g ic , a n d 3 0 p erc en t o pera tio nal) b efo re p ro je ct se le ctio n ta k es p la ce, alth ough th e b ala n ce m ay b e ch an ged w hen th e p ro je cts s u bm itte d a re r e v ie w ed . G iv en t h ese i n puts t h e p rio rity t e am o r p ro je ct o ff ic e c an c arry o ut i ts 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 0/5 2 P ag e 4 8 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . m an y r e sp onsib ilitie s, w hic h in clu de s u pportin g p ro je ct s p onso rs a n d r e p re se n tin g th e in te re sts o f t h e t o ta l o rg an iz atio n.
T he G overn an ce T ea m R esp on sib ilitie s T he g overn an ce te am , o r p ro je ct o ff ic e, is r e sp onsib le f o r p ublis h in g th e p rio rity o f e v ery p ro je ct a n d e n su rin g t h e p ro cess is o pen a n d fre e o f p ow er p olitic s. F or e x am ple , m ost o rg an iz atio ns u sin g a g overn an ce te am o r p ro je ct o ff ic e u se a n e le ctr o nic b ulle tin b oard to d is p ers e th e c u rre n t p ortf o lio o f p ro je cts , th e c u rre n t s ta tu s o f e ach p ro je c t, a n d c u rre n t is su es. T his o pen c o m munic atio n d is c o ura g es p ow er p la y s. O ver tim e th e g overn an ce t e am e v alu ate s th e p ro gre ss o f th e p ro je cts in th e p ortf o lio . I f th is w hole p ro cess is m an ag ed w ell, it c an h av e a p ro fo und i m pact o n t h e s u ccess o f a n o rg an iz atio n. C onsta n t s c an nin g o f th e e x te rn al e n vir o nm en t to d ete rm in e if o rg an iz atio nal f o cu s a n d/o r s e le ctio n c rite ria n eed to b e c h an ged is im pera tiv e! P erio d ic p rio rity r e v ie w a n d c h an ges n eed to k eep c u rre n t w ith th e c h an gin g e n vir o nm en t a n d k eep a u nif ie d v is io n o f o rg an iz atio n f o cu s. R eg ard le ss o f th e c rite ria u se d f o r s e le ctio n, e ach p ro je ct s h ould b e e v alu ate d b y th e s a m e c rite ria . I f p ro je cts a re c la ssif ie d b y m ust d o, o pera tio n, a n d s tr a te g ic , e ach p ro je ct i n i ts c la ss s h ould b e e v alu ate d b y t h e s a m e c rite ria . E nfo rc in g t h e p ro je ct p rio rity s y ste m i s c ru cia l.
K eep in g th e w hole s y ste m o pen a n d a b oveb oard is im porta n t to m ain ta in in g th e in te g rity o f th e s y ste m a n d k eep in g n ew , y oung e x ecu tiv es f ro m g o in g a ro und t h e s y ste m . F or e x am ple , c o m munic atin g w hic h p ro je cts a re a p pro ved , p ro je ct r a n ks, c u rre n t s ta tu s o f i n p ro cess p ro je cts , a n d a n y c h an ges i n p rio rity c rite ria w ill d is c o ura g e p eo ple f ro m b ypassin g t h e s y ste m .
B ala n cin g t h e P ortfo lio f o r R is k s a n d T yp es o f P ro je cts A m ajo r re sp onsib ility o f th e p rio rity te am is to b ala n ce p ro je cts b y ty pe, ris k , a n d re so urc e d em an d. T his r e q uir e s a to ta l o rg an iz atio n p ers p ectiv e. H en ce, a p ro pose d p ro je ct th at r a n ks h ig h o n m ost c rite ria m ay n ot b e s e le cte d b ecau se th e o rg an iz atio n p ortf o lio a lr e ad y in clu des to o m an y p ro je cts w ith th e s a m e c h ara cte ris tic s— e .g ., p ro je ct ris k le v el, u se o f k ey re so urc es, h ig h c o st, n onre v en ue p ro ducin g, lo ng d ura tio ns. B ala n cin g th e p ortf o lio o f p ro je cts is a s im porta n t a s p ro je ct s e le ctio n. O rg an iz atio ns n eed to e v alu ate e ach n ew p ro je ct in t e rm s o f w hat it ad ds to th e p ro je ct m ix . S hort te rm n eed s n eed to b e b ala n ced w ith lo ngte rm p ote n tia l.
R eso urc e u sa g e n eed s t o b e o ptim iz ed a cro ss a ll p ro je cts , n ot j u st t h e m ost i m porta n t p ro je ct. T w o ty pes o f r is k a re a sso cia te d w ith p ro je cts . F ir s t a re r is k s a sso cia te d w ith th e to ta l p ortf o lio o f p ro je cts , w hic h sh ould re fle ct th e o rg an iz atio n's ris k p ro file . S eco nd are sp ecif ic p ro je ct ris k s th at can in hib it th e e x ecu tio n o f a p ro je ct, su ch a s sc h ed ule , c o st, a n d te ch nic al. In th is c h ap te r w e lo ok o nly to b ala n cin g th e o rg an iz atio nal r is k s i n here n t i n t h e p ro je ct p ortf o lio , s u ch a s m ark et r is k , a b ility t o e x ecu te , t im e t o m ark et, a n d t e ch nolo gy a d van ces. P ro je ct s p ecif ic r is k s w ill b e c o vere d i n d eta il i n C hap te r 7 . D av id a n d J im M ath eso n s tu die d R & D o rg an iz atio ns a n d d ev elo ped a c la ssif ic atio n s c h em e th at c o uld b e u se d f o r a sse ssin g a p ro je ct p ortf o lio . 7 T hey s e p ara te d p ro je cts in te rm s o f d eg re e o f d if f ic u lty a n d c o m merc ia l v alu e a n d c am e u p w ith f o ur b asic t y pes o f p ro je cts : B re a d a nd b utte r p ro je cts a re r e la tiv ely e asy t o a cco m plis h a n d p ro duce m odest c o m merc ia l v alu e. T hey t y pic ally i n volv e e v olu tio nary i m pro vem en ts t o 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 1/5 2 P ag e 4 9 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . c u rre n t p ro ducts a n d s e rv ic es. E xam ple s i n clu de s o ftw are u pgra d es a n d m an ufa ctu rin g c o st r e d uctio n e ff o rts .
P ea rls a re l o w r is k d ev elo pm en t p ro je cts w ith h ig h c o m merc ia l p ay off s . T hey r e p re se n t r e v olu tio nary c o m merc ia l a d van ces u sin g p ro ven t e ch nolo gy. E xam ple s i n clu de n ex t g en era tio n i n te g ra te d c ir c u it c h ip a n d s u bsu rfa ce i m ag in g t o l o cate o il a n d g as.
O yste rs a re h ig h r is k , h ig h v alu e p ro je cts . T hese p ro je cts i n volv e t e ch nolo gic al b re ak th ro ughs w ith t r e m en dous, c o m merc ia l p ote n tia l. E xam ple s i n clu de e m bry onic D NA t r e atm en ts a n d n ew k in ds o f m eta l a llo ys.
W hite e le p hants a re p ro je cts t h at a t o ne t im e s h ow ed p ro m is e b ut a re n o l o nger v ia b le . E xam ple s i n clu de p ro ducts f o r a s a tu ra te d m ark et o r a p ote n t e n erg y s o urc e w ith t o xic s id ee ff e cts . T he M ath eso ns r e p ort th at o rg an iz atio ns o fte n h av e to o m an y w hite e le p han ts a n d to o f e w p earls a n d o yste rs .
T o m ain ta in s tr a te g ic a d van ta g e th ey r e co m men d th at o rg an iz atio ns c ap ita liz e o n p earls , e lim in ate o r r e p ositio n w hite e le p h an ts , a n d b ala n ce re so urc es d ev ote d to b re ad a n db utte r a n d o yste r p ro je cts to a ch ie v e a lig nm en t w ith o vera ll s tr a te g y. A lth ough th eir r e se arc h c en te rs o n R & D o rg an iz atio ns, th eir o bse rv atio ns a p pear to h old t r u e f o r a ll t y pes o f p ro je ct o rg an iz atio ns.
S um mary M ultip le c o m petin g p ro je cts , lim ite d s k ille d re so urc es, d is p ers e d v ir tu al te am s, tim e to m ark et p re ssu re s, a n d l im ite d cap ita l se rv e as fo rc es fo r th e em erg en ce of pro je ct portf o lio m an ag em en t th at pro vid es th e i n fra str u ctu re fo r m an ag in g m ultip le p ro je cts a n d lin kin g b usin ess str a te g y w ith p ro je ct se le ctio n. T he m ost i m porta n t e le m en t o f t h is s y ste m i s t h e c re atio n o f a r a n kin g s y ste m t h at u tiliz es m ultip le c rite ria t h at r e fle ct t h e m is sio n a n d s tr a te g y o f th e f ir m . I t is c ritic al to c o m munic ate p rio rity c rite ria to a ll o rg an iz atio nal s ta k eh old ers s o t h at t h e c rite ria c an b e t h e s o urc e o f i n sp ir a tio n f o r n ew p ro je ct i d eas. E very s ig n if ic an t p ro je ct s e le cte d s h ould b e r a n ked a n d th e r e su lts p ublis h ed . S en io r m an ag em en t m ust ta k e a n a ctiv e ro le in s e ttin g p rio ritie s a n d s u pportin g th e p rio rity s y ste m . G oin g a ro und th e p rio rity s y ste m w ill d estr o y its e ff e ctiv en ess. T he p ro je ct g o vern an ce te am n eed s to c o nsis t o f s e aso ned m an ag ers w ho a re c ap ab le o f a sk in g to ugh q uestio ns a n d d is tin guis h in g f a cts f ro m f ic tio n. R eso urc es ( p eo ple , e q uip m en t, a n d c ap ita l) f o r m ajo r p ro je cts m ust b e c le arly a llo cate d a n d n ot c o nflic t w ith d aily o pera tio ns o r b eco m e a n o verlo ad t a sk . T he g o vern an ce t e am n eed s t o s c ru tin iz e s ig nif ic an t p ro je cts i n t e rm s o f n ot o nly t h eir s tr a te g ic v alu e b ut a ls o t h eir f it w ith th e p ortf o lio o f p ro je cts c u rre n tly b ein g im ple m en te d . H ig hly r a n ked p ro je cts m ay b e d efe rre d o r e v en tu rn ed d ow n if th ey u pse t th e c u rre n t b ala n ce a m ong ris k s, re so urc es, a n d str a te g ic in itia tiv es. P ro je ct s e le ctio n m ust b e b ase d n ot o nly o n th e m erits o f th e s p ecif ic p ro je ct b ut a ls o o n w hat it c o ntr ib ute s to th e c u rre n t p ro je ct p ortf o lio m ix . T his r e q uir e s a h olis tic a p pro ach to a lig nin g p ro je cts w ith o rg an iz atio nal s tr a te g y a n d r e so urc es. T he im porta n ce o f a lig nin g p ro je cts w ith o rg an iz atio n s tr a te g y c an not b e o vers ta te d . W e h av e d is c u sse d tw o t y pes o f m odels f o und in p ra ctic e. C heck lis t m odels a re e asy to d ev elo p a n d a re ju stif ie d p rim arily o n th e b asis o f fle x ib ility acro ss d if f e re n t d iv is io ns an d lo catio ns. U nfo rtu nate ly , q uestio nnair e ch eck lis t m odels d o n ot a llo w co m paris o n of th e re la tiv e valu e (ra n k) of alte rn ativ e pro je cts in co ntr ib utin g to w ard org an iz atio n s tr a te g y. T he l a tte r i s t h e m ajo r r e aso n 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 2/5 2 P ag e 5 0 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . t h e au th ors p re fe r m ulti w eig hte d sc o rin g m odels . T hese m odels k eep p ro je c t se le ctio n h ig hly f o cu se d o n a lig nm en t w ith o rg an iz atio n s tr a te g y. W eig hte d s c o rin g m odels r e q u ir e m ajo r e ff o rt in e sta b lis h in g t h e c rite ria a n d w eig hts . K ey T erm s I m ple m en ta tio n g ap , 3 3 N et p re se n t v alu e, 3 7 O rg an iz atio n p olitic s, 3 3 P ay back , 3 7 P rio rity s y ste m , 3 2 P rio rity t e am , 4 0 P ro je ct p ortf o lio , 3 2 P ro je ct s c re en in g m atr ix , 4 1 S acre d c o w , 3 3 S tr a te g ic m an ag em en t p ro cess, 2 8 R ev ie w Q uestio n s 1 . D esc rib e t h e m ajo r c o m ponen ts o f t h e s tr a te g ic m an ag em en t p ro cess. 2 . E xpla in t h e r o le p ro je cts p la y i n t h e s tr a te g ic m an ag em en t p ro cess. 3 . H ow a re p ro je cts l in ked t o t h e s tr a te g ic p la n ? 4 . T he p ortf o lio o f p ro je cts i s t y pic ally r e p re se n te d b y c o m plia n ce, s tr a te g ic , a n d o pera tio ns p ro je cts .
W hat i m pact c an t h is c la ssif ic atio n h av e o n p ro je ct s e le ctio n? 5 . W hy d oes t h e p rio rity s y ste m d esc rib ed i n t h is c h ap te r r e q uir e t h at i t b e o pen a n d p ublis h ed ? D oes t h e p ro cess e n co ura g e b otto m u p i n itia tio n o f p ro je cts ? D oes i t d is c o ura g e s o m e p ro je cts ? W hy? 6 . W hy s h ould a n o rg an iz atio n n ot r e ly o nly o n R O I t o s e le ct p ro je cts ? 7 . D is c u ss t h e p ro s a n d c o ns o f t h e c h eck lis t v ers u s t h e w eig hte d f a cto r m eth od o f s e le ctin g p ro je cts . E xerc is e s 1 . Y ou m an ag e a h ote l r e so rt l o cate d o n t h e S outh B each o n t h e I s la n d o f K au ai i n H aw aii. Y ou a re s h if tin g t h e f o cu s o f y our r e so rt f ro m a t r a d itio nal f u nin th es u n d estin atio n t o e co to uris m . ( E co t o uris m f o cu se s o n e n vir o nm en ta l a w are n ess a n d e d ucatio n.) H ow w ould y ou c la ssif y t h e f o llo w in g p ro je cts i n t e rm s o f c o m plia n ce, s tr a te g ic , a n d o pera tio nal? a . C onvert t h e p ool h eatin g s y ste m f ro m e le ctr ic al t o s o la r p ow er. b . B uild a 4 m ile n atu re h ik in g t r a il. c . R en ovate t h e h ors e b arn . d . L au nch a n ew p ro m otio nal c am paig n w ith H aw aii A ir lin es. e . C onvert 1 2 a d ja cen t a cre s i n to a w ild lif e p re se rv e. f . U pdate a ll t h e b ath ro om s i n c o ndos t h at a re 1 0 y ears o ld o r o ld er. g . C han ge h ote l b ro ch ure s t o r e fle ct e co to uris m i m ag e. h . T est a n d r e v is e d is a ste r r e sp onse p la n . i . I n tr o duce w ir e le ss I n te rn et s e rv ic e i n c afé a n d l o unge a re as. H ow e asy w as it to c la ssif y th ese p ro je cts ? W hat m ad e s o m e p ro je cts m ore d if f ic u lt th an o th ers ?
W hat d o y ou t h in k y ou n ow k now t h at w ould b e u se fu l f o r m an ag in g p ro je cts a t t h e h ote l? 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 3/5 2 2 . * T w o n ew s o ftw are p ro je cts a re p ro pose d t o a y oung, s ta rt u p c o m pan y. T he A lp ha p ro je ct w ill c o st $ 150,0 00 t o d ev elo p a n d i s e x pecte d t o h av e a n nual n et c ash f lo w o f $ 40,0 00. T he B eta p ro je ct w ill c o st $ 200,0 00 t o d ev elo p a n d i s e x pecte d t o h av e a n nual n et c ash f lo w o f $ 50,0 00.
T he c o m pan y i s v ery c o ncern ed a b out t h eir c ash f lo w . U sin g t h e p ay back p erio d, w hic h p ro je ct i s b ette r f ro m a c ash f lo w s ta n dpoin t? W hy? 3 . A f iv ey ear p ro je ct h as a p ro je cte d n et c ash f lo w o f $ 15,0 00, $ 25,0 00, $ 30,0 00, $ 20,0 00, a n d $ 15,0 00 i n t h e n ex t f iv e y ears . I t w ill c o st $ 50,0 00 t o i m ple m en t t h e p ro je ct. I f t h e r e q uir e d r a te o f r e tu rn i s 2 0 p erc en t, c o nduct a d is c o unte d c ash f lo w c alc u la tio n t o d ete rm in e t h e N PV . 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 4/5 2 P ag e 5 1 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . 4 . Y ou w ork f o r t h e 3 T c o m pan y, w hic h e x pects t o e arn a t l e ast 1 8 p erc en t o n i ts i n vestm en ts . Y ou h av e t o c h oose b etw een t w o s im ila r p ro je cts . B elo w i s t h e c ash i n fo rm atio n f o r e ach p ro je ct. Y our a n aly sts p re d ic t t h at i n fla tio n r a te w ill b e a s ta b le 3 p erc en t o ver t h e n ex t 7 y ears . W hic h o f t h e t w o p ro je cts w ould y ou f u nd i f t h e d ecis io n i s b ase d o nly o n f in an cia l i n fo rm atio n? W hy? 5 . * Y ou a re t h e h ead o f t h e p ro je ct s e le ctio n t e am a t S IM SO X. Y our t e am i s c o nsid erin g t h re e d if f e re n t p ro je cts . B ase d o n p ast h is to ry , S IM SO X e x pects a t l e ast a r a te o f r e tu rn o f 2 0 p erc en t.
Y our f in an cia l a d vis o rs p re d ic t i n fla tio n t o r e m ain a t 3 p erc en t i n to t h e f o re se eab le f u tu re . G iv en th e f o llo w in g in fo rm atio n f o r e ach p ro je ct, w hic h o ne s h ould b e S IM SO X f ir s t p rio rity ? S hould S IM SO X f u nd a n y o f th e o th er p ro je cts ? I f s o , w hat s h ould b e th e o rd er o f p rio rity b ase d o n r e tu rn o n i n vestm en t? P ro je ct: D ust D ev ils P ro je ct: O sp ry 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 5/5 2 P ag e 5 2 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . P ro je ct: V oyagers 6 . Y ou a re t h e h ead o f t h e p ro je ct s e le ctio n t e am a t B ro ken A rro w r e co rd s. Y our t e am i s c o nsid erin g t h re e d if f e re n t r e co rd in g p ro je cts . B ase d o n p ast h is to ry , B ro ken A rro w e x pects a t l e ast a r a te o f r e tu rn o f 2 0 p erc en t. Y our f in an cia l a d vis o rs p re d ic t i n fla tio n t o r e m ain a t 2 p erc en t i n to t h e f o re se eab le f u tu re . G iv en th e fo llo w in g in fo rm atio n fo r e a ch p ro je ct, w hic h o ne s h ould b e B ro ken A rro w 's fir s t p rio rity ? S hould B ro ken A rro w f u nd a n y o f th e o th er p ro je cts ? I f s o , w hat s h ould b e th e o rd er o f p rio rity b ase d o n r e tu rn o n i n vestm en t? R eco rd in g P ro je ct: T im e F ad es A w ay R eco rd in g P ro je ct: O n t h e B ea ch R eco rd in g P ro je ct: T on ig h t's t h e N ig h t 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 6/5 2 7 . T he C usto m B ik e C om pan y h as s e t u p a w eig hte d s c o rin g m atr ix f o r e v alu atio n o f p ote n tia l p ro je cts . B elo w a re f iv e p ro je cts u nder c o nsid era tio n. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 7/5 2 P ag e 5 3 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . a . U sin g t h e s c o rin g m atr ix b elo w , w hic h p ro je ct w ould y ou r a te h ig hest?
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M acIn ty re , J ., P M N etw ork , v ol. 2 0 ( 1 1 ) N ovem ber 2 006, p p. 3 2–35. M ag re tta , J o an , U ndersta ndin g M ic h ael P orte r: T he E sse n tia l G uid e t o C om petitio n a nd S tr a te g y ( B osto n: H arv ard B usin ess P re ss B ook, 2 011 ).
M ath eso n, D ., a n d J . M ath eso n, T he S m art O rg aniz a tio n ( B osto n: H arv ard B usin ess S ch ool P re ss, 1 998), p p. 2 03–09.
M ilo se v ic , D . Z ., a n d S . S riv an nab oon, “ A T heo re tic al F ra m ew ork f o r A lig nin g P ro je ct M an ag em en t w ith B usin ess S tr a te g y,” P ro je ct M anagem en t J o urn al, v ol. 3 7 ( 3 ) A ugust 2 006, p p. 9 8–11 0. M orris , P . W ., a n d A . J a m ie so n, “ M ovin g f ro m C orp ora te S tr a te g y t o P ro je ct S tr a te g y,” P ro je ct M anagem en t J o urn al, v ol. 3 6 ( 4 ) D ecem ber 2 005, p p. 5 –18. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 3 9/5 2 P ag e 5 5 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . M otta , S ilv a, a n d R ogério H erm id a Q uin te lla , “ A sse ssm en t o f N onF in an cia l C rite ria i n t h e S ele ctio n o f I n vestm en t P ro je cts f o r S eed C ap ita l F undin g: T he C ontr ib utio n o f S cie n to m etr ic s a n d P ate n to m etr ic s,” J o urn al o f T ech nolo gy M anagem en t I n nova tio n, v ol. 7 ( 3 ) 2 012.
P M I, “ P M I's P uls e o f t h e P ro fe ssio n,” M arc h 2 012, P ro je ct M an ag em en t I n stitu te , p . 7 .
R ask in , P ., e t a l., G re a t T ra nsitio ns: T he P ro m is e a nd L ure o f t h e T im es A hea d, r e tr ie v ed 6 3 0 8. S ee w ww.g tin itia tiv e.o rg /d ocu m en ts /G re a t_ T ra nsitio ns.p df S ch w artz , P ete r, a n d D oug R an dall, “ A n A bru pt C lim ate C han ge S cen ario a n d i ts I m plic atio ns f o r U nite d S ta te s N atio nal S ecu rity ,” G lo bal B usin ess N etw ork , I n c., O cto ber 2 003.
S hen har, A ., “ S tr a te g ic P ro je ct L ead ers h ip : F ocu sin g Y our P ro je ct o n B usin ess S uccess,” P ro ceed in gs o f t h e P ro je ct M anagem en t I n stitu te A nnual S em in ars & S ym posiu m , S an A nto nio , T ex as, O cto ber 3 – 1 0, 2 002, C D . A ls o s e e S hen har, A aro n, R ein ven tin g P ro je ct M anagem en t ( H arv ard B usin ess S ch ool, 2 007).
S m ith , D . K ., a n d R . C . A le x an der, F um blin g t h e F utu re : H ow X ero x I n ven te d , T hen I g nore d t h e F ir st P erso nal C om pute r ( N ew Y ork : M acm illa n , 1 988). S w an so n, S ., “ A ll T hin gs C onsid ere d ,” P M N etw ork , v ol. 2 5 ( 2 ) F eb ru ary 2 011 , p p. 3 6–40. W oodw ard , H ., “ W in nin g i n a W orld o f L im ite d P ro je ct S pen din g,” P ro ceed in gs o f t h e P ro je ct M anagem en t I n stitu te G lo bal C ongre ss N orth A m eric a , B altim ore , M ary la n d, S ep te m ber 1 8–12, 2 003, C D .
* T he s o lu tio n t o t h ese e x erc is e s c an b e f o und i n A ppen dix O ne . C ase H ecto r G am in g C om pan y H ecto r G am in g C om pan y (H GC) is an ed ucatio nal gam in g co m pan y sp ec ia liz in g in young ch ild re n 's e d ucatio nal g am es. H GC h as ju st c o m ple te d th eir fo urth y ear o f o pera tio n. T his y ear w as a b an ner y ear fo r H GC. T he co m pan y re ceiv ed a la rg e in flu x o f cap ita l fo r g ro w th b y is su in g sto ck p riv ate ly th ro ugh an i n vestm en t b an kin g f ir m . I t a p pears t h e r e tu rn o n i n vestm en t f o r t h is p ast y ear w ill b e j u st o ver 2 5 p erc en t w ith z ero d eb t! T he g ro w th ra te fo r th e la st tw o y ears h as b een a p pro xim ate ly 8 0 p erc en t e ach y ear. P are n ts a n d g ra n dpare n ts o f y oung c h ild re n h av e b een b uyin g H GC's p ro ducts a lm ost a s f a st a s th ey a re d ev elo ped . E very m em ber o f t h e 5 6p ers o n f ir m i s e n th usia stic a n d l o okin g f o rw ard t o h elp in g t h e f ir m g ro w t o b e t h e l a rg est a n d b est e d ucatio nal g am in g c o m pan y in th e w orld . T he fo under o f th e fir m , S ally P ete rs , h as b een w ritte n u p in Y o ung E ntr e p re n eu rs a s “ th e y oung e n tr e p re n eu r to w atc h .” S he h as b een a b le to d ev elo p a n o rg an iz atio n c u ltu re in w hic h all sta k eh old ers are co m mitte d to in novatio n, co ntin uous im pro vem en t, an d o rg an iz atio n l e arn in g. L ast y ear, 1 0 t o p m an ag ers o f H GC w ork ed w ith M cK in le y C onsu ltin g t o d ev elo p t h e o rg an iz atio n's s tr a te g ic p la n . T his y ear t h e s a m e 1 0 m an ag ers h ad a r e tr e at 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 0/5 2 P ag e 5 6 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . i n A ru ba to fo rm ula te n ex t y ear's s tr a te g ic p la n u sin g th e s a m e p ro cess s u ggeste d b y M cK in le y C onsu ltin g. M ost ex ecu tiv es se em to hav e a co nse n su s of w here th e fir m sh ould go in th e i n te rm ed ia te a n d lo ng te rm . B ut th ere is little c o nse n su s o n h ow th is sh ould b e a cco m plis h ed .
P ete rs , n ow p re sid en t o f H GC, fe els sh e m ay b e lo sin g co ntr o l. T he fre q uen cy o f co nflic ts se em s to b e i n cre asin g. S om e in div id uals a re a lw ay s r e q ueste d f o r a n y n ew p ro je ct c re ate d . W hen r e so urc e c o nflic ts o ccu r a m ong p ro je cts , e ach p ro je ct m an ag er b elie v es h is o r h er p ro je ct is m ost im porta n t. M ore p ro je cts a re n ot m eetin g d ead lin es a n d a re c o m in g in o ver b udget. Y este rd ay 's m an ag em en t m eetin g re v eale d s o m e to p H GC t a le n t h av e b een w ork in g o n a n in te rn atio nal b usin ess g am e f o r c o lle g e s tu den ts . T his p ro je ct d oes n ot f it th e o rg an iz atio n v is io n o r m ark et n ic h e. A t tim es it se em s e v ery one is m arc h in g to h is o r h er o w n d ru m mer.
S om eh ow m ore f o cu s is n eed ed to e n su re e v ery one a g re es o n h ow s tr a te g y s h ould b e im ple m en te d , g iv en th e r e so urc es a v aila b le t o t h e o rg an iz atio n. Y este rd ay 's m eetin g a la rm ed P ete rs . T hese e m erg in g p ro ble m s a re c o m in g a t a b ad tim e. N ex t w eek H GC is r a m pin g u p th e s iz e o f th e o rg an iz atio n, n um ber o f n ew p ro ducts p er y ear, a n d m ark etin g e ff o rts . F if te en n ew p eo ple w ill jo in H GC n ex t m onth . P ete rs is c o ncern ed th at p olic ie s b e in p la ce th at w ill e n su re th e n ew p eo ple a re u se d m ost p ro ductiv ely . A n a d ditio nal p ote n tia l p ro ble m lo om s o n th e h oriz o n. O th er g am in g c o m pan ie s h av e n otic ed th e su ccess H GC is h av in g in th eir n ic h e m ark et; o ne co m pan y tr ie d to h ir e a k ey p ro duct d ev elo pm en t e m plo yee a w ay f ro m H GC. P ete rs w an ts H GC t o b e r e ad y t o m eet a n y p ote n tia l c o m petitio n h ead o n a n d to d is c o ura g e a n y n ew e n tr ie s in to th eir m ark et. P ete rs k now s H GC is p ro je ct d riv en ; h ow ev er, s h e is n ot a s c o nfid en t th at s h e h as a g ood h an dle o n h ow s u ch a n o rg an iz atio n s h ould b e m an ag ed — esp ecia lly w ith s u ch a fa st g ro w th ra te a n d p ote n tia l c o m petitio n c lo se r to b eco m in g a re ality . T he m ag nitu de o f e m erg in g p ro ble m s d em an ds q uic k a tte n tio n a n d r e so lu tio n. P ete rs h as h ir e d y ou a s a c o nsu lta n t. S he h as s u ggeste d th e fo llo w in g fo rm at fo r y our c o nsu ltin g c o ntr a ct. Y ou a re f re e t o u se a n oth er f o rm at i f i t w ill i m pro ve t h e e ff e ctiv en ess o f t h e c o nsu ltin g e n gag em en t. W hat i s o ur m ajo r p ro ble m ?
I d en tif y s o m e s y m pto m s o f t h e p ro ble m .
W hat i s t h e m ajo r c au se o f t h e p ro ble m ? P ro vid e a d eta ile d a ctio n p la n t h at a tta ck s t h e p ro ble m . B e s p ecif ic a n d p ro vid e e x am ple s t h at r e la te t o H GC. C ase F ilm P rio rit iz a tio n T he p urp ose o f th is c ase is to g iv e y ou e x perie n ce in u sin g a p ro je ct p rio rity sy ste m th at ra n ks p ro pose d p ro je cts b y t h eir c o ntr ib utio n t o t h e o rg an iz atio n's o bje ctiv es a n d s tr a te g ic p la n .
C O M PA NY P R O FIL E T he co m pan y is th e film d iv is io n fo r a la rg e en te rta in m en t co nglo m era te . T he m ain o ff ic e is lo cate d in A nah eim , C alif o rn ia . In a d ditio n to th e fe atu re film d iv is io n, th e c o nglo m era te in clu des th em e p ark s, h om e v id eo s, a t e le v is io n c h an nel, 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 1/5 2 P ag e 5 7 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . i n te ra ctiv e g am es, a n d t h eatr ic al p ro ductio ns. T he c o m pan y h as b een e n jo yin g s te ad y g ro w th o ver t h e p ast 1 0 y ears . L ast y ear to ta l r e v en ues in cre ase d b y 1 2 p erc en t to $ 21.2 b illio n. T he c o m pan y i s e n gag ed in n eg otia tio ns to e x pan d its th em e p ark e m pir e to m ain la n d C hin a a n d P ola n d. T he f ilm d iv is io n g en era te d $ 274 m illio n in r e v en ues, w hic h w as a n in cre ase o f 7 p erc en t o ver th e p ast y ear. P ro fit m arg in w as d ow n 3 p erc en t to 1 6 p erc en t b ecau se o f th e p oor r e sp onse to th re e o f th e f iv e m ajo r f ilm r e le ase s f o r t h e y ear.
C O M PA NY M IS SIO N T he m is sio n f o r t h e f ir m : O ur o verrid in g o bje ctiv e is to c re ate s h are h old er v alu e b y c o ntin uin g to b e th e w orld 's p re m ie r e n te rta in m en t c o m pan y f ro m a c re ativ e, s tr a te g ic , a n d f in an cia l s ta n dpoin t. T he film d iv is io n s u pports th is m is sio n b y p ro ducin g fo ur to s ix h ig hq uality , fa m ily e n te rta in m en t film s fo r m ass d is tr ib utio n e ach y ear. In re cen t y ears , th e C EO o f th e c o m pan y h as a d vocate d th at th e fir m ta k e a l e ad ers h ip p ositio n i n c h am pio nin g e n vir o nm en ta l c o ncern s.
C O M PA NY “ M UST ” O BJE C TIV ES E very p ro je ct m ust m eet th e m ust o bje ctiv es a s d ete rm in ed b y e x ecu tiv e m an ag em en t. It is im porta n t th at s e le cte d f ilm p ro je cts n ot v io la te s u ch o bje ctiv es o f h ig h s tr a te g ic p rio rity . T here a re t h re e m ust o bje ctiv es: 1 . A ll p ro je cts m eet c u rre n t l e g al, s a fe ty , a n d e n vir o nm en ta l s ta n dard s. 2 . A ll f ilm p ro je cts s h ould r e ceiv e a P G o r l o w er a d vis o ry r a tin g. 3 . A ll p ro je cts s h ould n ot h av e a n a d vers e e ff e ct o n c u rre n t o r p la n ned o pera tio ns w ith in t h e l a rg er c o m pan y. C O M PA NY “ W ANT” O BJE C TIV ES W an t obje ctiv es are assig ned w eig hts fo r th eir re la tiv e im porta n ce. Top m an ag em en t is re sp onsib le fo r f o rm ula tin g, ra n kin g , an d w eig htin g o bje ctiv es to en su re th at p ro je cts su pport th e co m pan y's str a te g y an d m is sio n. T he f o llo w in g i s a l is t o f t h e c o m pan y's w an t o bje ctiv es: 1 . B e n om in ate d f o r a n d w in a n a cad em y a w ard f o r B est A nim ate d F eatu re o r B est P ic tu re o f t h e Y ear. 2 . G en era te a d ditio nal m erc h an dis e r e v en ue ( a ctio n f ig ure s, d olls , i n te ra ctiv e g am es, m usic C D s). 3 . R ais e p ublic c o nsc io usn ess a b out e n vir o nm en ta l i s su es a n d c o ncern s. 4 . G en era te p ro fit i n e x cess o f 1 8 p erc en t. 5 . A dvan ce t h e s ta te o f t h e a rt i n f ilm a n im atio n, a n d p re se rv e t h e f ir m 's r e p uta tio n. 6 . P ro vid e t h e b asis f o r t h e d ev elo pm en t o f a n ew r id e a t a c o m pan yo w ned t h em e p ark . A SSIG NM EN T Y ou a re a m em ber o f th e p rio rity te am in c h arg e o f e v alu atin g a n d s e le ctin g f ilm p ro posa ls . U se th e p ro vid ed e v alu atio n f o rm to f o rm ally e v alu ate a n d r a n k e ach p ro posa l. B e p re p are d to r e p ort y our r a n kin gs a n d ju stif y y our d ecis io ns. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 2/5 2 P ag e 5 8 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . A ssu m e th at all o f th e p ro je cts h av e p asse d th e estim ate d h urd le ra te o f 1 4 p erc en t R O I. In a d ditio n to th e b rie f film sy nopsis , th e p ro posa ls in clu de th e fo llo w in g fin an cia l p ro je ctio ns o f t h eate r a n d v id eo sa le s: 8 0 p erc en t c h an ce o f R O I, 5 0 p erc en t c h an ce o f R O I, a n d 2 0 p erc en t c h an ce o f R O I. F or e x am ple , f o r p ro p osa l # 1 ( D ala i L am a) th ere is a n 8 0 p erc en t c h an ce th at it w ill e arn a t le ast 8 p erc en t r e tu rn o n in vestm en t ( R O I), a 5 05 0 c h an ce th e R O I w ill b e 1 8 p erc en t, a n d a 2 0 p erc en t c h an ce th at th e R O I w ill b e 2 4 p erc en t.
F IL M P R O PO SA LS P R O JE C T P R O PO SA L 1 : M Y L IF E W IT H D ALA I L A M A A n a n im ate d , b io gra p hic al a cco unt o f t h e D ala i L am a's c h ild hood i n T ib et b ase d o n t h e p opula r c h ild re n 's b ook T a le s fr o m N ep al. T he L am a's lif e is to ld th ro ugh th e e y es o f “ G uoda,” a f ie ld s n ak e, a n d o th er lo cal a n im als w ho b efrie n d t h e D ala i a n d h elp h im u nders ta n d t h e p rin cip le s o f B uddhis m .
P R O JE C T P R O PO SA L 2 : H EID I A r e m ak e o f t h e c la ssic c h ild re n 's s to ry w ith m usic w ritte n b y a w ard w in nin g c o m pose rs S ysk le a n d O bert. T he b ig b udget f ilm w ill f e atu re t o pn am e s ta rs a n d b re ath ta k in g s c en ery o f t h e S w is s A lp s.
P R O JE C T P R O PO SA L 3 : T H E Y EA R O F T H E E C H O A lo w b ud get d ocu m en ta ry th at c ele b ra te s th e c are er o f o ne o f th e m ost in flu en tia l b an ds in ro ck a n dro ll h is to ry . T he f ilm w ill b e d ir e cte d b y n ew w av e d ir e cto r E llio t C zn erz y a n d w ill c o m bin e c o ncert f o ota g e a n d b eh in dth es c en es in te rv ie w s sp an nin g th e 2 5y ear h is to ry o f th e ro ck b an d th e E ch os. In a d ditio n to g re at m usic , th e f ilm w ill f o cu s o n th e d eath o f o ne o f th e f o undin g m em bers f ro m a h ero in o verd ose a n d r e v eal th e u nderw orld o f s e x , l ie s, a n d d ru gs i n t h e m usic i n dustr y .
P R O JE C T P R O PO SA L 4 : E SC APE F R O M R IO J A PU NI A n a n im ate d f e atu re s e t i n t h e A m azo n r a in fo re st. T he s to ry c en te rs a ro und P ab lo , a y oung j a g uar w ho a tte m pts t o c o nvin ce w arrin g j u ngle a n im als t h at t h ey m ust u nite a n d e sc ap e t h e d ev asta tio n o f l o cal c le ar c u ttin g. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 3/5 2 P ag e 5 9 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . P R O JE C T P R O PO SA L 5 : N ADIA !
T he s to ry o f N ad ia C om an eci, th e f a m ous R om an ia n g ym nast w ho w on th re e g o ld m ed als a t th e 1 976 S um m er O ly m pic G am es. T he lo w b udget film w ill d ocu m en t h er lif e a s a s m all c h ild in R om an ia a n d h ow sh e w as c h ose n b y R om an ia n a u th oritie s to jo in th eir e lite , sta te ru n, a th le tic p ro gra m . T he film w ill h ig hlig ht h o w N ad ia m ain ta in ed h er in dep en den t s p ir it a n d lo ve fo r g ym nastic s d esp ite a h ars h , re g im en te d t r a in in g p ro gra m .
P ro je ct P rio rit y E valu atio n F orm 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 4/5 2 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 5/5 2 P ag e 6 0 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . P R O JE C T P R O PO SA L 6 : K EIK O— ONE W HALE O F A S T O RY T he s to ry o f K eik o, th e f a m ous k ille r w hale , w ill b e to ld b y a n im ag in ary o ff s p rin g S eik o, w ho in t h e d is ta n t fu tu re is te llin g h er c h ild re n a b out th eir fa m ous g ra n dfa th er. T he b ig b udget film w ill in te g ra te a ctu al fo ota g e o f th e w hale w ith in a re a lis tic a n im ate d e n vir o nm en t u sin g s ta te o fth ea rt c o m pute r im ag ery .
T he s to ry w ill r e v eal h ow K eik o r e sp onded t o h is t r e atm en t b y h um an s.
P R O JE C T P R O PO SA L 7 : G RAND I S L A ND T he tr u e s to ry o f a g ro up o f ju nio r h ig h b io lo gy s tu den ts w ho d is c o ver th at a f e rtiliz er p la n t is d um pin g to xic w aste s in to a n earb y r iv er. T he m odera te b udget f ilm d ep ic ts h ow s tu den ts o rg an iz e a g ra ssro ots c am paig n to f ig ht l o cal b ure au cra cy a n d u ltim ate ly f o rc e t h e f e rtiliz er p la n t t o r e sto re t h e l o cal e co sy ste m . C ase F und R ais in g P ro je ct S ele ctio n c a se T he p u rp ose o f th is “ case e x erc is e ” is to p ro vid e y ou w ith e x perie n ce in u sin g a p ro je ct s e le ctio n p ro cess th at r a n ks p ro pose d p ro je cts b y t h eir c o ntr ib utio n t o a n o rg an iz atio n's m is sio n a n d s tr a te g y.
F U ND R AIS IN G P R O JE C T A ssu m e y ou a re a m em ber o f a c la ss o n p ro je ct m an ag em en t. E ach s tu den t w ill j o in a t e am o f 5 –7 s tu den ts w ho w ill b e r e sp onsib le f o r c re atin g, p la n nin g a n d e x ecu tin g a f u nd r a is in g p ro je ct f o r a d esig nate d c h arity . T he f u nd r a is in g p ro je ct h as tw o g oals : ( 1 ) r a is e m oney f o r a w orth y c au se a n d ( 2 ) p ro v id e a n o pportu nity f o r a ll te am m em bers t o p ra ctic e p ro je ct m an ag em en t s k ills a n d t e ch niq ues. I n a d ditio n to c o m ple tin g th e p ro je ct a n um ber o f d eliv era b le s a re re q uir e d to c o m ple te th is a ssig nm en t. T hese d eliv era b le s i n clu de:
a ) P ro je ct P ro posa l b ) I m ple m en ta tio n P la n c ) R is k M an ag em en t P la n d ) S ta tu s R ep ort e ) P ro je ct R efle ctio ns P re se n ta tio n f ) P ro je ct R etr o sp ectiv e/A udit A ppro ved p ro je cts w ill r e ceiv e $ 250 s e ed m oney t o b e r e im burs e d u pon c o m ple tio n o f t h e p ro je ct. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 6/5 2 “ M UST ” O BJE C TIV ES E very p ro je ct m ust m eet t h e “ m ust” o bje ctiv es a s d ete rm in ed b y t h e i n str u cto r. T here a re f o ur m ust o bje ctiv es: 1 . A ll p ro je cts m ust b e s a fe , l e g al a n d c o m ply w ith u niv ers ity p olic ie s. 2 . A ll p ro je cts m ust b e c ap ab le o f e arn in g a t l e ast $ 500. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 7/5 2 P ag e 6 1 3 . P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . A ll p ro je cts m ust b e a b le t o b e c o m ple te d w ith in n in e w eek s. 4 . A ll p ro je cts m ust p ro vid e a n o pportu nity f o r e v ery m em ber o f t h e p ro je ct t e am t o e x perie n ce a n d l e arn a b out p ro je ct m an ag em en t. A m ong th e fa cto rs to c o nsid er fo r th e la st o bje ctiv e w ould b e th e e x te n t th ere is m ean in gfu l w ork fo r e v ery m em ber o f th e te am , th e d eg re e o f c o ord in atio n r e q uir e d , th e e x te n t th e te am w ill h av e to w ork w ith e x te rn al s ta k eh old ers , a n d t h e c o m ple x ity o f t h e p ro je ct.
“ W ANT” O BJE C TIV ES I n a d ditio n to th e m ust o bje ctiv es, th ere a re “ w an t” o bje ctiv es th at th e in str u cto r w ould lik e to a ch ie v e. T he f o llo w in g i s a l is t o f t h ese o bje ctiv es: 1 . E arn m ore t h an $ 500 f o r a c h arity 2 . I n cre ase p ublic a w are n ess o f t h e c h arity 3 . P ro vid e a r e su m e w orth y e x perie n ce f o r s tu den ts 4 . B e f e atu re d o n l o cal T V n ew s 5 . B e f u n t o d o A SSIG NM EN T Y ou a re a m em ber o f th e c la ss p rio rity te am in c h arg e o f e v alu atin g a n d a p pro v in g f u nd r a is in g p ro je cts . U se t h e p ro vid ed p ro posa l e v alu atio n f o rm to f o rm ally e v alu ate a n d r a n k e ach p ro posa l. B e p re p are d to r e p ort y our r a n kin gs a n d ju stif y y our d ecis io n. Y ou s h ould a ssu m e th at th ese p ro je cts w ould b e h eld a t y our u niv ers ity o r c o lle g e.
F U ND R AIS IN G P R O PO SA LS P R O JE C T P R O PO SA L 1 : H OOPS F O R H OPE T he p ro je ct is a th re eo nth re e b ask etb all to urn am en t to r a is e m oney f o r th e D ow n S yndro m e A sso cia tio n. T he t o urn am en t w ill c o nsis t o f th re e b ra ck ets : C oe d , M ale , a n d F em ale te am s. T here w ill b e a $ 40 e n tr y fe e p er t e am a n d a d ditio nal f u nds w ill b e d eriv ed f ro m th e s a le o f c o m mem ora tiv e T s h ir ts ( $ 10). W in nin g te am s w ill r e ceiv e g if t b ask ets c o nsis tin g o f d onatio ns f ro m lo cal b usin esse s a n d r e sta u ra n ts . T he e v en t w ill b e h eld a t th e u niv ers ity r e cre atio nal c en te r.
P R O JE C T P R O PO SA L 2 : S IN G IN G F O R S M IL ES T he p ro je c t w ill h old a k ara o ke c o m petitio n w ith c ele b rity j u dges a t a p opula r c am pus n ig ht s p ot. F unds w ill b e r a is e d b y $ 5 a d m is sio n a t t h e d oor a n d a r a ff le f o r p riz es d onate d b y l o cal b usin esse s. F unds w ill b e d onate d t o S m ile T ra in , a n in te rn atio nal o rg an iz atio n th at p erfo rm s c le ft lip s u rg ery a t a c o st o f $ 250 p er c h ild . T he e v en t w ill f e atu re p ic tu re s o f c h ild re n b orn w ith c le ft lip s a n d w ith e v ery $ 50 e arn ed a p ie ce o f a p ic tu re p uzzle w ill b e a d ded u ntil t h e o rig in al p ic tu re i s c o vere d w ith a s m ilin g f a ce.
P R O JE C T P R O PO SA L 3 : H ALO F O R H ER O ES T he p ro je c t w ill b e a H alo v id eo g am e c o m petitio n to b e h eld o ver th e w eek en d u tiliz in g th e C olle g e's b ig s c re en e le ctr o nic c la ssro om s. T eam s o f 4 p la y ers w ill p la y e ach o th er in a s in gle e lim in atio n to urn am en t w ith t h e g ra n d p riz e b ein g a S ony P la y S ta tio n 3 d onate d b y a l o cal v id eo g am e s to re . E ntr y f e e i s 2 4$ p er t e am 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 8/5 2 P ag e 6 2 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . a n d in div id ual p la y ers w ill b e a b le to p la y in a lo se r's b ra ck et f o r 5 $. A ll p ro ceed s w ill g o to th e N atio nal M ilita ry F am ily A sso cia tio n.
P R O JE C T P R O PO SA L 4 : R AFFL E F O R L IF E O rg an iz e a r a ff le c o nte st. R aff le tic k ets w ill b e s o ld f o r 3 $ a p ie ce w ith th e w in n in g tic k et w orth $ 300. E ach o f t h e six te am m em bers w ill b e re sp onsib le fo r se llin g 5 0 ra ff le tic k ets . A ll p ro fits w ill g o to th e A m eric an C an cer S ocie ty .
P R O JE C T P R O PO SA L 5 : H OLD 'E M F O R H UNG ER O rg an iz e a T ex as H old 'e m p oker t o urn am en t a t a c am pus d in in g f a cility . I t w ill c o st 2 0$ t o e n te r t h e t o urn am en t w ith a $ 15 b uyin in f e e. P riz es in clu de $ 300, $ 150, a n d $ 50 g if t c ertif ic ate s to a la rg e d ep artm en t s to re . G if t c ertif ic ate s p urc h ase d fro m e n tr y fe es. A ll p la y ers w ill b e e lig ib le to w in tw o d onate d tic k ets to M en a n d W om en b ask etb all g am es. F unds r a is e d w ill g o t o l o cal c o unty f o od s h elte r.
P R O JE C T P R O PO SA L 6 : B U IL D Y O UR O W N B O X T he p urp ose o f th is p ro je ct is to ra is e a w are n ess o f p lig ht o f h om ele ss. S tu d en ts w ill d onate te n d olla rs to p artic ip ate in b uild in g a n d liv in g in a c ard board c ity o n th e u niv ers ity q uad fo r o ne n ig ht. B uild in g m ate ria ls w ill b e p ro vid ed b y lo cal re cy clin g c en te rs a n d h ard w are sto re s. H ot so up w ill b e p ro vid ed b y th e te am a t m id nig ht t o a ll p artic ip an ts . P ro ceed s f o r g o t o t h e l o cal h om ele ss s h elte r.
P ro je ct P rio rit y E valu atio n F orm 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 4 9/5 2 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 5 0/5 2 P ag e 6 3 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . A ppen dix 2 .1 R eq uest f o r P ro posa l ( R FP) O nce an org an iz atio n se le cts a pro je ct, th e cu sto m er or pro je ct m an ag er is fre q uen tly re sp onsib le fo r d ev elo pin g a r e q uest f o r p ro posa l ( R FP) f o r t h e p ro je ct o r s e ctio ns o f t h e p ro je ct. T he re sp onsib le p ro je ct m an ag er w ill re q uir e in put d ata fro m a ll sta k eh old ers c o nnecte d to th e a ctiv itie s c o vere d in th e R FP. T he R FP w ill b e a n nounced to e x te rn al c o ntr a cto rs /v en dors w ith a d eq uate e x perie n ce to i m ple m en t th e p ro je ct. F or e x am ple , g overn m en t p ro je cts f re q uen tly a d vertis e w ith a “ re q uest f o r p ro posa l” to o uts id e c o ntr a cto rs fo r ro ad s, b uild in gs, a ir p orts , m ilita ry h ard w are , s p ace v eh ic le s. S im ila rly , b usin esse s u se R FPs t o s o lic it b id s f o r b uild in g a c le an r o om , d ev elo pin g a n ew m an ufa ctu rin g p ro cess, d eliv erin g s o ftw are f o r i n su ra n ce b illin g, c o nductin g a m ark et s u rv ey. I n a ll o f th ese e x am ple s, r e q uir e m en ts a n d f e atu re s m ust b e in e n ough d eta il th at c o ntr a cto rs h av e a c le ar d esc rip tio n o f th e fin al d eliv era b le th at w ill m eet th e c u sto m er's n eed s. In m ost case s th e R FP als o sp ecif ie s an ex pecte d fo rm at fo r th e co ntr a cto r's b id p ro posa l so th e r e sp onse s o f d if f e re n t c o ntr a cto rs c an b e fa ir ly e v alu ate d . A lth ough w e ty pic a lly th in k o f R FPs fo r e x te rn al c o ntr a cto rs , in so m e o rg an iz atio ns R FPs a re u se d in te rn ally ; th at is , th e o rg an iz atio n se n ds o ut a n R FP to d if f e re n t d iv is io ns o r d ep artm en ts . T he c o nte n t o f th e R FP is e x tr e m ely im porta n t. I n p ra ctic e, th e m ost c o m mon e rro r is to o ff e r a n R FP th at l a ck s su ff ic ie n t d eta il. T his la ck o f d eta il ty pic ally re su lts in c o nflic t is su es, m is u nders ta n din gs, o fte n le g al c la im s b etw een th e c o ntr a cto r a n d o w ner, a n d, in a d ditio n, a n u nsa tis fie d c u sto m er. A ll R FPs a re d if f e re n t, b ut t h e o utlin e in F ig ure A 2.1 is a g ood s ta rtin g p oin t f o r th e d ev elo pm en t o f a d eta ile d R FP. E ach s te p is b rie fly d esc rib ed n ex t. 1 . S u m mary o f n eed s a n d r e q uest f o r a ctio n . T he b ack gro und a n d a s im ple d esc rip tio n o f th e f in al p ro je ct d eliv era b le a re g iv en fir s t. F or e x am ple , th ro ugh s im ula te d w ar g am es, th e U .S . N av y h as fo und th eir g ia n t w ars h ip s o f th e p ast are to o v uln era b le ag ain st to day 's te ch nolo gy (a n ex am ple is th e S ilk w orm an tis h ip m is sile s). I n a d ditio n, th e N av y's m is sio n h as s h if te d to s u pportin g g ro und f o rc es a n d p eacek eep in g m is sio ns, w hic h r e q uir e g ettin g c lo se r to s h ore . A s a r e su lt, th e N av y is r e v am pin g s h ip s f o r n ear s h ore d uty . T he N av y w ill s e le ct th re e d esig ns f o r f u rth er r e fin em en t f ro m th e r e sp onse s to its R FP. I n g en era l, it is e x pecte d th at th e n ew s h ip w ill b e c ap ab le o f a t le ast 5 5 k nots , m easu re b etw een 8 0 a n d 2 50 fe et in le n gth , a n d b e fitte d w ith r a d ar a b so rb in g p an els t o t h w art g uid ed m is sile s.
F IG URE A 2.1 R eq uest f o r P ro p osa l 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 5 1/5 2 P ag e 6 4 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . 2 . S ta te m en t o f w ork ( S O W ) d eta ilin g t h e s c o p e a n d m ajo r d eliv era b le s. F or e x am ple , if th e p ro je ct in volv es a m ark et r e se arc h s u rv ey, th e m ajo r d eliv era b le s c o uld b e d esig n, d ata c o lle ctio n, d ata a n aly sis , a n d p ro vid in g re co m men datio ns b y F eb ru ary 2 1, 2 014, fo r a c o st n ot to e x ceed $ 300,0 00. 3 . D eliv era b le s p ecif ic a tio n s/r e q uir e m en ts , f e a tu re s, a n d t a sk s. T his s te p s h ould b e v ery c o m pre h en siv e s o b id p ro posa ls fro m c o ntr a cto rs c an b e v alid ate d a n d la te r u se d fo r c o ntr o l. T ypic al sp ecif ic atio ns c o ver p hysic al f e atu re s s u ch a s s iz e, q uan tity , m ate ria ls , s p eed , a n d c o lo r. F or e x am ple , a n I T p ro je ct m ig ht s p ecif y r e q uir e m en ts f o r h ard w are , s o ftw are , a n d tr a in in g in g re at d eta il. T ask s r e q uir e d to c o m ple te d eliv era b le s c an b e i n clu ded i f t h ey a re k now n. 4 . R esp on sib ilit ie s— ven dor a n d cu sto m er. F ailin g to sp ell o u t th e re sp onsib ilitie s fo r b oth p artie s is n oto rio us f o r le ad in g to s e rio us p ro ble m s w hen th e c o ntr a cto r im ple m en ts th e p ro je ct. F or e x am ple , w ho p ay s f o r w hat? ( If t h e c o ntr a cto r i s t o b e o n s ite , w ill t h e c o ntr a cto r b e r e q uir e d t o p ay f o r o ff ic e s p ace?) W hat a re t h e l im its a n d e x clu sio n s f o r t h e c o ntr a cto r? ( F or e x am ple , w ho w ill s u pply t e st e q u ip m en t? ) W hat c o m munic atio n p la n w ill b e u se d b y th e c o ntr a cto r a n d o w ner? I f e sc ala tio n o f a n is su e b eco m es n ecessa ry , w hat p ro cess w ill b e u se d ? H ow w ill p ro gre ss b e e v alu ate d ? W ell d efin ed r e sp onsib ilitie s w ill a v oid m an y u nfo re se en p ro ble m s l a te r. 5 . P ro je ct s c h ed ule . T his s te p i s c o ncern ed w ith g ettin g a “ h ard ” s c h ed ule w hic h c an b e u se d f o r c o ntr o l a n d e v alu atin g p ro gre ss. O wners a re u su ally v ery d em an din g in m eetin g th e p ro je ct s c h ed ule . In to day 's b usin ess e n vir o nm en t, tim eto m ark et is a m ajo r “h ot b utto n” th at in flu en ces m ark et sh are , co sts , an d p ro fits . T he s c h ed ule s h ould s p ell o ut w hat, w ho, a n d w hen . 6 . C osts a n d p aym en t s c h ed ule . T he R FP n eed s to se t o ut v ery c le arly h ow , w hen , a n d th e p ro cess fo r d ete rm in in g c o sts a n d c o nditio ns f o r p ro gre ss p ay m en ts . 7 . T yp e o f c o n tr a ct. E sse n tia lly th ere a re tw o ty pes o f c o ntr a cts — fix ed p ric e a n d c o st p lu s. F ix ed p ric e c o ntr a cts a g re e o n a p ric e o r lu m p s u m in a d van ce, a n d it r e m ain s a s lo ng a s th ere a re n o c h an ges to th e s c o pe p ro vis io ns o f th e a g re em en t. T his ty pe is p re fe rre d in p ro je cts th at a re w ell d efin ed w ith p re d ic ta b le c o sts a n d m in im al ris k s. T he c o ntr a cto r m ust e x erc is e c are e stim atin g c o st b ecau se a n y u ndere stim atin g o f c o sts w ill c au se t h e c o ntr a cto r's p ro fit t o b e r e d uced . I n c o st p lu s c o ntr a cts t h e c o ntr a cto r i s r e im burs e d f o r a ll o r s o m e o f t h e ex pen se s in cu rr e d d urin g p erfo rm an ce o f th e co ntr a ct. T his fe e is n eg otia te d in ad van ce an d u su ally i n volv es a p erc en t o f to ta l c o sts . “ T im e a n d m ate ria ls ” p lu s a p ro fit fa cto r a re ty pic al o f c o st p lu s c o ntr a cts .
B oth ty pes o f c o ntr a cts c an in clu de in cen tiv e c la u se s fo r s u perio r p erfo rm an ce in tim e a n d c o st, o r in s o m e c ase s, p en altie s— fo r e x am ple , m is sin g t h e o pen in g d ate o f a n ew s p orts s ta d iu m . 8 . E xp erie n ce a n d s ta ffin g. T he a b ility o f th e c o ntr a cto r to im ple m en t th e p ro je ct m ay d ep en d o n s p ecif ic s k ills ; th is n ecessa ry e x perie n ce s h ould b e s p ecif ie d , a lo ng w ith a ssu ra n ce s u ch s ta ff w ill b e a v aila b le f o r th is p ro je ct. 9 . E valu atio n c rit e ria . T he c rite ria f o r e v alu atin g a n d a w ard in g t h e p ro je ct c o ntr a ct s h ould b e s p ecif ie d . F or e x am ple , se le ctio n c rite ria fre q uen tly in clu de m eth odolo gy, p ric e, sc h ed ule , a n d e x perie n ce; in so m e c ase s t h ese c rite ria a re w eig hte d . U se o f th e o utlin e in F ig ure A 2.1 w ill h elp to e n su re k ey ite m s in th e p ro posa l a re n ot o m itte d . A w ell p re p are d R FP w ill p ro vid e c o ntr a cto rs w ith s u ff ic ie n t g uid elin es to p re p are a p ro posa l th at c le arly m eets t h e p ro je ct a n d c u sto m er's n eed s. 7 /1 5/2 017 U niv ers ity o f P hoenix : P ro je ct M anagem ent: T he M anageria l P ro cess h ttp s://p hoenix .v ita ls ourc e.c om /# /b ooks/1 259822338/c fi/6 /2 6!/4 /3 42/1 02/2 /4 @ 0:0 5 2/5 2 P ag e 6 5 P R IN TED B Y: lttle m nta te @ em ail.p hoen ix .e d u. P rin tin g is f o r p erso nal, p riv ate u se o nly . N o p art o f th is b ook m ay b e r e p ro duced o r tr a n sm itte d w ith out p ublis h er's p rio r p erm is sio n. V io la to rs w ill b e p ro se cu te d . S E LEC TIO N O F C O NTR ACTO R F R O M B ID P R O PO SA LS I n te re ste d c o ntr a cto rs r e sp ond to p ro je ct R FPs w ith a w ritte n b id p ro posa l. I t is lik ely th at s e v era l c o ntr a cto rs w ill s u bm it b id p ro posa ls t o t h e c u sto m er. T he f in al s te p i n t h e R FP p ro cess i s t o s e le ct t h e c o ntr a cto r w ho b est m eets t h e r e q uir e m en ts r e q ueste d i n t h e R FP. T he s e le ctio n c rite ria g iv en in th e R FP a re u se d to e v alu ate w hic h c o ntr a cto r is a w ard ed th e c o ntr a ct to i m ple m en t th e p ro je ct. L osin g c o ntr a cto rs sh ould b e g iv en a n e x pla n atio n o f th e k ey fa cto rs th at le d to th e s e le ctio n of th e w in nin g co ntr a cto r/v en dor; ap pre cia tio n fo r th eir partic ip atio n an d eff o rt sh ould be a ck now le d ged . S ee F ig ure A 2.2 , C ontr a cto r E valu atio n T em pla te , a d ap te d f ro m o ne u se d i n p ra ctic e. F IG URE A 2.2 C on tr a cto r E valu atio n T em pla te 1 S hen har, A ., a n d D ov D vie , R ein ven tin g P ro je ct M anagem en t , H arv ard B usin ess S ch ool, 2 007, p . 5 . 2 D ora n , G . T ., “ T here 's a S m art W ay to W rite M an ag em en t G oals a n d O bje ctiv es,” M anagem en t R evie w , N ovem ber 1 981, p p. 3 5–36.
3 M acIn ty re , J ., P M N etw ork, v ol. 2 0 ( 1 1 ) N ovem ber 2 006, p p. 3 2–35. 4 F usco , J . C ., “ B ette r P olic ie s P ro vid e th e K ey to I m ple m en tin g P ro je ct M an ag em en t,” P ro je ct M anagem en t J o urn al, v ol. 2 8 ( 3 ) 1 997, p p. 3 8–41.
5 P M I, “ P M I's P uls e o f th e P ro fe ssio n,” M arc h 2 012, P ro je ct M an ag em en t I n stitu te , p . 7 .
6 S m ith , D . K ., a n d R . C . A le x an der, F um blin g th e F utu re : H ow X ero x I n ven te d , T hen I g nore d th e F ir st P erso nal C om pute r ( N ew Y ork : M acm illa n , 1 988).
7 M ath eso n, D ., a n d J . M ath eso n, T he S m art O rg aniz a tio n ( B osto n: H arv ard B usin ess S ch ool P re ss, 1 998), p p. 2 03–209.