Project Identification and Screening

Dr. Jitesh J. Thakkar

Department of Industrial and Systems Engineering

Indian Institute of Technology Kharagpur

Dr. Jitesh J. Thakkar, IIT Kharagpur 1

Dr. Jitesh J. Thakkar, IIT Kharagpur 2
 My personal
philosophy is not to
undertake a project
unless it is manifestly
important and nearly
impossible.

Dr. Jitesh J. Thakkar, IIT Kharagpur 3

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 PROJECT SELECTION

• Project Identification
• Project Appraisal
• Project Selection

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Aggregate Project Plan

Dr. Jitesh J. Thakkar, IIT Kharagpur 8

 Derivative projects
• These are projects with
objectives or deliverables that
are only incrementally different
in both product and process
from existing offerings.
• They are often meant to replace
current offerings or add an
extension to current offerings
(lower priced version, upscale
version).

Dr. Jitesh J. Thakkar, IIT Kharagpur 9

 Platform projects
• The planned outputs of these
projects represent major departures
from existing offerings in terms of
either the product /service itself or
the process used to make and
deliver it, or both.
• As such, they become “platforms”
for the next generation of
organizational offerings, such as a
new model of automobile or a new
type of insurance plan.

Dr. Jitesh J. Thakkar, IIT Kharagpur 10

 Breakthrough projects
• Breakthrough projects typically involve
a newer technology than platform
projects.
• It may be a “disruptive” technology that
is known to the industry or something
proprietary that the organization has
been developing over time.
• Examples here include the use of fiber-
optic cables for data transmission, cash-
balance pension plans, and hybrid
gasoline-electric automobiles.

Dr. Jitesh J. Thakkar, IIT Kharagpur 11

 R&D Projects
• These projects are “blue-sky,”
visionary endeavors oriented
toward using newly developed
technologies, or existing
technologies in a new manner.
• They may also be for acquiring
new knowledge, or developing
new technologies themselves.

Dr. Jitesh J. Thakkar, IIT Kharagpur 12

 PROJECT
EVALUATION
FACTORS

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 Production Factors
• Time until ready to install
• Length of disruption during installation
• Learning curve – time until operating as desired
• Effects on waste and rejects
• Energy requirements
• Facility and other equipment requirements
• Safety of process
• Other applications of technology
• Change in cost to produce a unit output
• Change in raw material usage
• Availability of raw materials
• Required development time and cost
• Impact on current suppliers
• Change in quality of output
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 Marketing Factors
• Size and potential market for output
• Probable market share of output
• Time until market share is acquired
• Impact on current product line
• Consumer acceptance
• Impact on consumer safety
• Estimated life of output
• Spin-off project possibilities

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 Financial Factors
• Profitability, net present value of the
investment
• Impact on cash flows
• Payout period
• Cash requirements
• Time until break-even
• Size of investment required
• Impact on seasonal and cyclical fluctuations
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 Personnel Factors
• Training requirements
• Labor skill requirements
• Availability of required labour skills
• Level of resistance from current work force
• Change in size of labor force
• Inter- and intra-group communication
requirements
• Impact on working conditions

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 Administrative and Miscellaneous Factors
• Meet government safety standards
• Meet government environmental standards
• Impact on information system
• Reaction of stockholders and securities market
• Patent and trade secret protection
• Impact on image with customers, suppliers and
competitors
• Managerial capacity to direct and control new
process

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 PROJECT IDENTIFICATION

OBJECTIVES

STRENGTHS WEAKNESSES

THREATS OPPORTUNITIES

ALTERNATIVE
PROJECT POSSIBILITIES
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 SEARCH NEW IDEAS

• What are the objectives?

• Brainstorm to generate alternative solutions.
– Emerging market trends.
– SWOT analysis.
– Other constraints
• Shortlist candidate ideas for detailed
scrutiny.

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 MOTIVATION

• Projects are a means to accomplish

– Individual or family objectives
– Organizational objectives
– National or global objectives
• Project Identification begins in response
to the specific need or the objectives

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 OBJECTIVES

• To increase profits
• To minimize threats of losses
• To become more competitive
• To provide help after a disaster
• To train people in a new area
• To reduce pollution in Delhi
• To become a successful entrepreneur
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 SWOT ANALYSIS

• Objectives
• Experience
• Resources
• Environment pressures
• Keeping these factors in mind an analysis of
strengths, weaknesses, opportunities and
threats is made to identify and select suitable
projects.

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 STRENGTHS

• Experience and expertise

• Financial position
• Capital raising capability
• Industrial contacts
• Foreign collaborations

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 WEAKNESSES

• Newer unfamiliar technologies

• Inability to raise huge investments
• Lack of experience
• Lack of trained personnel
• Inability to forecast market trends

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 OPPORTUNITIES

• Emerging technologies
• New products with new markets
• New processes with better features
• Special financing schemes
• Government and other incentives

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 THREATS

• Competitors
• Poor state of the economy
• Outdated technology
• Unprofessional management skills
• New products and services

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 BRAINSTORMING

• A good means to generate new project ideas

• Focus on uninhibited participation by a
group
• Listing of ideas without suppressing
creativity at source
• List of ideas subjected to screening and
evaluation subsequently

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 SCREENING OF IDEAS

• Poor Fair Good Vgood Excellent

• (1) (2) (3) (4) (5) Weight
• Cost * 20%
• Risk * 30%
• Return * 40%
• Hazard * 10%
• (score = 2x0.2+3x0.3+4x0.4+2x0.1= 3.1)
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CRITERIA IN SCREENING PROJECTS

• Investment • Similarity to
• Rate of return existing business
• Risk • Expected life
• Likely profit • Flexibility
• Payback • Environment
impact
• Competition
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MORTALITY OF NEW PROJECT IDEAS

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 MORTALITY OF NEW PRODUCT IDEAS

• One study indicated that out of 35 new

ideas only 1 made it to the final product

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How to reduce
vehicular
pollution in
Kolkata?

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 REDUCE VEHICULAR POLLUTION IN KOLKATA

1 Restrict registration of new vehicles

2 Enforce strict emission regulations for
vehicles
3 Ban diesel run vehicles on road
4 Introduce MRTS for the city
5 Encourage use of car pools
6 Grow more trees/ green belts in the city

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 REDUCE VEHICULAR POLLUTION IN KOLKATA

7 Declaring no traffic zones in the city

8 Ban vehicles with an age of ten or more
years from plying on the roads

• These and more ideas could be generated

through a Brainstorming exercise

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 SCREENING OF IDEAS

• Criteria chosen for screening:

– Effectiveness to achieve objective
– Cost of the proposal
– Ease of implementation
– Time needed
• This is an illustrative list. Other criteria
could be added, if needed.
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 SCALE OF EVALUATION

• v poor poor fair average good excellent

(0) (1) (2) (3) (4) (5)
• Low Effectiveness High
• High Cost Low
• Difficult Implementation Easy
• Maximum Time Minimum

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 SCORING OF ALTERNATIVE PROJECTS
(Effectiveness/Cost /Implementation/Time)

• 1 Restrict registration • 3 1 1 2 7
of new vehicles
• 2 Enforce strict • 4 5 4 5 18
emission regulations
on vehicles
• 3 Ban diesel run
vehicles on the road • 3 1 1 2 7
• 4 Introduce MRTS for
the city • 4 0 1 0 5
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 SCORING OF ALTERNATIVE PROJECTS
(Effectiveness/Cost/Implementation/Time)

• 5 Encourage use of car • 2 5 4 4 15

pools
• 6 Grow more • 4 3 3 3 13
trees/green belts in the
city
• 7 Declaring no traffic
zones in the city • 2 3 2 2 9
• 8 Ban 10 year and
older vehicles • 3 2 3 3 11
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 RESULTS OF SCREENING

Project No.2: Enforce strict emission

regulations on vehicles (18 points)

Project No. 5: Encourage use of car pools

(15 points)
Project No. 6: Grow more trees/green belts
in the city (13 points)
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 PROJECT IDENTIFICATION

Objectives
Internal
SWOT Brainstorming
External
Project possibilities
Criteria Screening
Candidate project proposals
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Project Portfolio Process (PPP)
• Links projects directly to the goals and
strategy of the organization
• Means for monitoring and controlling
projects

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 PPP Steps
1. Establish a project council
2. Identify project categories and criteria
3. Collect project data
4. Assess resource availability
5. Reduce the project and criteria set
6. Prioritize the projects within categories
7. Select projects to be funded and held in reserve
8. Implement the process

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 Project Proposals
• The project proposal is essentially a project bid
• Putting together a project proposal requires a
detailed analysis of the project
• Project proposals can take weeks or months to
complete
• A more detailed analysis may result in not bidding
on the project

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 Project Proposal Contents

• Cover letter
• Executive summary
• The technical approach
• The implementation plan
• The plan for logistic support and
administration
• Past experience

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• Which of the many
purposes of the project
portfolio process are most
important to a firm with a
low project management
maturity? Which to a firm
with high maturity?

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After two weeks of
working on a
project, you know
whether it will
work or not.

Dr. Jitesh J. Thakkar, IIT Kharagpur 49

Points to PONDER!
• Project identification is generally done by brainstorming
• Broad objectives guide the brainstorming
• Introspection is necessary to identify the strengths and
weaknesses of the system
• Looking outside towards the environment provides new
opportunities and threats
• Evaluation of ideas is suspended during brainstorming to
encourage creativity
• A subsequent screening on relevant criteria produces a
candidate set of projects for detailed scrutiny
• An exercise to illustrate the procedure was undertaken

Dr. Jitesh J. Thakkar, IIT Kharagpur 50

 Tutorial 3
Instructions:
1. Student will send the scanned copy of handwritten solution
of the tutorial to e-mail ID: jtiitkgp@gmail.com
2. To be submitted in a Group of THREE STUDENTS.
3. Indicate Name and Roll No. of the students in the group on
the first page of your tutorial solution sheet.
4. Submission Deadline: 28/3/2018
5. LATE SUBMISSION WILL NOT RECEIVE ANY
CREDIT.
6. Weightage of Tutorial (in Final Evaluation/ Grading): 15%

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• Go through a brainstorming exercise (in groups of 3) to
identify a list of five projects each to achieve the following
broad objectives

Objective 1: To improve literacy in the country

Objective 2: To improve sanitation conditions in a jhuggi

cluster in Kolkata

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• For each of the projects identified, go through a screening exercise based on
factors like the following:
– Investment
– Risk
– Return
– Competition
– Difficulty of successful implementation
– Time to implement
– Impact on society
– Impact on environment
• Prepare a list of appropriate factors for each situation
• Assign weights to factors representing you priorities
• Devise appropriate scales of measurement (poor, fair, average, good) for
each factor
• Evaluate and rank projects
• Identify the three most important projects under each category of broad
objectives to be achieved.
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 Dr. Jitesh J. Thakkar, IIT Kharagpur
54
Thank you