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Chapter 2
Organization Strategy and Project Selection
Introduction
If organization selects the projects not related to its
strategic goals, consequences in poor utilization of its
resources, people, money and core competencies,
resulting in failure of projects. Reversely, if the projects
are selected related to its strategic goals, results in its
success.
Project
Manag
er
Strategic
Portfolio Analysis
There are three main problem concerning Portfolio
Analysis:
1)Implementation Gap-Lack of Understanding of
Strategy between Senior Management and
Functional Managers.
2)Organization Politics Sometimes project
selection is based on the persuasiveness and
power of Project Advocates.
3)Resources
Conflicts
and
Multitasking
Selection
Criteria
Sources of
Proposals
Evaluating
Proposals
Managing
the
portfolio of
projects
Classification
of Projects
Compliance
and
Emergency
Projects
Operational
Projects
Strategic
Projects
NonFinancial
Payback
Period
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
AED
AED
AED
AED
AED
AED
Operation & maintenance cost
(10,000.00)
(12,500.00)
(15,000.00)
(17,000.00)
(15,000.00)
(10,000.00)
Discount factors for 10%
1 0.909090909 0.826446281 0.751314801 0.683013455 0.620921323
0.56447393
AED
AED
AED
AED
AED
AED
AED
Time-adjusted costs(125,000.00) (9,090.91)
(10,330.58)
(11,269.72)
(11,611.23)
(9,313.82)
(5,644.74)
AED
AED
AED
AED
AED
AED
AED
Cumulative time-adjusted costs(125,000.00) (134,090.91) (144,421.49) (155,691.21) (167,302.44) (176,616.26) (182,261.00)
Benefits
AED
AED
AED
AED
AED
AED
AED
Benefits derived:
20,000.00
45,000.00
60,000.00
90,000.00
120,000.00
150,000.00
Discount factors for 10%
1 0.909090909 0.826446281 0.751314801 0.683013455 0.620921323
0.56447393
AED
AED
AED
AED
AED
AED
AED
Time-adjusted benefits
18,181.82
37,190.08
45,078.89
61,471.21
74,510.56
84,671.09
Cumulative time-adjusted AED
AED
AED
AED
AED
AED
AED
benefits
18,181.82
55,371.90
100,450.79
161,922.00
236,432.56
321,103.65
AED
AED
AED
AED
AED
AED
AED
Cumulative Benefits & Costs
(125,000.00) (115,909.09) (89,049.59)
(55,240.42)
(5,380.44)
59,816.30
138,842.65
Payback Analysis
0.0825262
12 4.082 YRS
Financial Criteria-NPV
IR
Year
0
1
2
3
4
5
10%
CashFlow
Present Value
AED
(125,000.00)
AED
9,090.91
AED
33,809.17
AED
49,859.98
AED
65,196.74
AED
79,026.35
$
(125,000.00)
$
8,264.46
$
27,941.46
$
37,460.54
$
44,530.25
$
49,069.15
NPV
$
42,265.86
MultiCriterial
Selection
Process
Checklist
Process
Weighted
Score Card
Model
Checklist Model
External
Project
Management
Plan
OUTPUT
Change
Requests
Performance
Reports
Expert
Judgement
Project
Management
Plan Updates
Project
Document
Updates
Priority Team
Responsibiliti
es