Project Management

Project Selection Techniques–

Non-Financial Techniques
Group – 1
Harish Raut | 2011302
Lekhashree R | 2011121
Pallavi Soni | 2011159
Priyanka Sonawane | 2011180
Rishabh Gupta |2011317
Simran Thukral | 2011244
 Why Non-Financial Methods?

Financial evaluations don't consider two things Existence of firm's non-financial objectives
- Existence of non-financial risk & uncertainty factors

Excessive focus on financial indicators lead to unrecognizing of strategic implications of decisions

made

Financial methods overlook intangible benefits like greater manufacturing flexibility, improved
product quality, customer satisfaction, creation of competitive advantages

Ambiguity of project makes identification of targets unclear and results in different perception of
the objectives by decision makers

Traditional investment appraisal techniques assume that market and environment will remain
regardless of the investment decision
 The Non-Financial Aspects
Strategic Aspect Technical Aspect
Associated with technical viability of the project
Associated with compatibility of project with the
Technical risk considered as major factor for Time and
company objectives and with the present activities of
cost overrun of project
the company This aspect is important as financial
Aspects like scope change, technology and design
analysis does not recognize projects that may bring
change, technology and implementation methodology
future competitive advantage selection are major causes of project failure

Political Aspect
Includes factors imposed by government or
Environmental Aspect
regulatory bodies. During project selection and
Especially important for projects involving large
evaluation aspects like political system type, political
constructions, or process mining and energy sectors
stability or government policies must be considered.
Associated with the aim of minimizing damages
Most large-scale projects face political interference,
caused by projects, complying with local regulations
associated with legal authorizations, funding or
legislation
Organizational Aspect
Social Aspect
Success of project largely dependent on working
Project impact may b associated with possibility of
team and the way they interact
job creation, public health or local real estate
Important role of project manager on creating good
Cultural environment also have a strong impact on
team spirit and motivating project members
management techniques, negotiation styles and
In case of consortium decision making based on
living environment
perspective and strategic goals of each organization
 At which stage is it applied?

• When an organization has many projects to select from, it cannot undertake all of them due
to resource constraints
• It selects the project which is less risky and provides them with maximum profit
• Right application helps organization to grow business and recognition. A bad one can
hamper the progress and hurt credibility
 How is this applied?

Checklist Model
1.Widely used method
2.A list of questions to review potential projects under various categories
3.Allows a great flexibility in selection with important selection criteria

Sample Selection Questions Used

• Risk
•Likelihood of the technical success of the project
•How risky is the venture in terms of achieving our anticipated specifications? 
• Strategy:
• Does it fit into the organization goals and objectives?
• Is this project a one-shot opportunity, or could it be the forerunner in future?
• Cost of development: What is a reasonable cost estimate?
• Resources: Availability of resources? Skill availability? Patents status? 
• Governmental or stakeholder interference: Is the project subject to levels of governmental oversight that
could potentially interfere with its development?
 Example: A software company has two potential alternatives and the company has four
important selection criteria: Risk, Cost of Development, Growth Potential, time. The criteria is
rated as High, Medium and Low (preferred) in order to see which project accumulates the
most checks (considered as the best choice).
Performance on Criteria
Criteria High Medium Low
Risk X
Cost of Development X
Project X
Growth Potential X
Time x
Risk X
Cost of Development x
Project Y
Growth Potential X
Time X

Project Y has most preferred checks satisfying the criterion set by the company
Flaws:
1. Makes it difficult to prioritize and rank the criteria
2. The relative importance of a potential projects with other projects cannot be compared
3. The subjective nature of such ratings as high, medium and low are subject to
misinterpretation.
 Multi Weighted Scoring Models

1.They have both quantitative and qualitative criteria

2.Scores are assigned for each criteria, these are multiplied to the weights. 
3.This total weighted score is used to compare the projects
4.The weighted score reflects both the value that the team gives each criterion and the ratings that
the team gives each criterion as an output of the project

Example: Two projects A and B have four main criteria for selection, Time to Market, Profit
Potential, Development Risks and Cost. With the following weights, High = 3 Medium = 2 Low
= 1.
Project A Project B

Project A (with a total of 18) and Project B (with a total of 16) is the preferred project satisfying the criterion set
by the company
Thank You!