Lecture 3

Project: Selection & Organization Structure

 Project Management Fundamentals
 https://www.youtube.com/watch?v=qTQsdJFG4SQ
Overview of Project Management
 Project Selection Methods: nonnumeric & numeric
 The Operating/Competitive Necessity
 This method selects any project that is necessary for continued operation of a group, facility,
or the firm itself. A “mandated” project obviously must be selected.
 If the answer to the “Is it necessary . . . ?” question is “yes,” and if we wish to continue using
the facility or system to stay in business, the project is selected.

 Comparative Benefits
 institutions often appoint a selection committee made up of knowledgeable individuals. Each
person is asked to arrange a set of potential projects into a rank-ordered set.
 Typically, each individual judge may use whatever criteria he or she wishes to evaluate
projects. Some may use carefully determined technical criteria, but others may try to estimate
the project’s probable impact on the ability of the organization to meet its goals.
 Project Selection Methods: nonnumeric & numeric
 Financial Assessment Methods
 The payback period for a project is the initial fixed investment in the project divided by the estimated
annual net cash inflows from the project (which include the cash inflows from depreciation of the
investment).
 The discounted cash flow method considers the time value of money, the inflation rate, and the firm’s
return-on-investment (ROI) hurdle rate for projects. The annual cash inflows and outflows are
collected and discounted to their net present value (NPV) using the organization’s required rate of
return (a.k.a. the hurdle rate or cut-off rate).
Solution
Project Selection: scoring methods
 Using a Weighted Scoring Model for an Election Campaign Project

As the campaign manager to elect Jennifer Allison to the city council, you have determined that winning the
election is largely dependent on Jennifer’s name recognition. One idea for increasing Jennifer’s name
recognition is to distribute car bumper stickers with her name on them. In selecting a vendor to design and print
the bumper stickers, you have two primary criteria of equal importance, cost and the reliability of the printer to
complete the work on time. You have a limited budget for the bumper stickers and would like to spend no more
than $4,200. Beyond cost and reliability, the reputation of the vendor for developing bold and aesthetically
pleasing designs is also an important consideration. Upon further reflection and since this is only a bumper
sticker, you determine that the reputation of the vendor is only half as important as either cost or reliability.
Table B shows a set of scales you created for the three criteria, converted into quantitative scores.
 Queries ???
 Please make yourself aware of PM terminology
https://www.youtube.com/watch?v=F25BGXAlaG0