What criteria is are used to classify rank and select projects for development?

Possible evaluation criteria when classifying and ranking.Classifying and Ranking the IS Development Projects

Value Chain Analysis – Extent to which activities add value and costs whendevelopingproducts and/or services. Usually also includes a comparison with theactivities, addedvalue, and costs of other organization for the purpose of makingimprovement in theorganization’s operation and performance.Strategic Alignment: Extent to which the project viewed as helping theorganizationachieves its strategic objectives and long-term goals.Potential Benefits:- Extent to which the project is viewed as improvingprofits, customerservices, etc and the duration of these benefits.Resource Availability:- Amount and type of resources the projectrequires and their availability.Project Size/ Duration:- Number of individuals and the length of timeneeded to completethe project.Technical Difficulty/Risk:- Level of technical difficulty to successfulcomplete theproject within given time and resource constraints.3.) Selecting IS Development Projects.This is the process of considering both short and long term projects andselecting those likely toachieve business objectives. Numerous factors must be considered whenmaking projectselection decision ie perceived needs of theorganization, existing systems and on-going projects, resourceavailability, evaluation criteria, and current business conditions.Outcomes can occur from this decision, including; accept project, or reject.Accepting the projectimplies that funding for the next phases of SDLC have been approved.There may also be conditional acceptance or requests asked to modify andresubmit their requests making suggestedchanges and modifications.A selected project does not necessarily result in a working system due tothe principle of incremental commitment, where the project is reviewedafter each phase and continuation of theproject is rejustified in each of these review since businessconditions can change.CHAPTER FOURProject Initiation and Planning (pip)This is stage is aimed at transforming a vague system request documentinto a tangible projectdescription. A key consideration when conducting PIP is deciding when PIPends and when analysis begins.The major activities that occur during this phase:-Project initiationProject planningProject InitiationFocuses on activities designed to assist in organizing a team to conduct

project planning, some ofthe activities carried out during this stage are as follows; however somemay be unnecessarydepending upon the size, scope and complexityof the system.Establishing the project initiation teamSelecting those people within the organization who will become part of theanalysis anddesign team - requires matching people and skills to problems andcircumstances. The effective analyst should know the staff, their past workexperience, and individualpersonality traits as well as their technicalstrengths and weaknesses.

October 2nd, 2018

There is no lack of project ideas in organizations today. Rather, there seems to be a problem of too many ideas, as a long pipeline of proposals wait in queue, competing for attention. Given the large scale and complexity of projects, as well as constraints in resources such as time and budget, the challenge is to identify the perfect combination of projects that can fetch highest returns.

What Is Project Selection?

Project selection is the process of evaluating and choosing projects that both align with an organization’s objectives and maximize its performance.

Prioritization refers to ranking or scoring projects, based on certain criteria, to determine the order of execution. However, the terms “prioritization” and “selection” are often used interchangeably, as the two processes are intertwined.

Selection and prioritization are important elements of project portfolio management (PPM), an approach that connects the execution of projects with high-level business strategy. As per the 2017 PMI report, 37% of project failures are attributed to a lack of clearly defined objectives and discipline when implementing strategy. This demonstrates how crucial the PPM function is.

PPM implementation can be time consuming, which is why establishing a project management office (PMO) that works on selection and prioritization can be extremely beneficial.

Benefits of Project Selection and Prioritization

Project selection and prioritization are all about having a game plan that accounts for both capacity and strategy. Let’s take a look at the benefits that companies stand to gain when these are balanced right.

Better ROI: The fundamental outcome of any project selection process is to increase the ROI. Several selection criteria and prioritization methods, discussed later in the article, can be used to weigh projects against each other, based on their returns.

Increased efficiencies: By investing effort upfront to evaluate the project pool, companies weed out inefficiencies that may creep up later due to not having enough capacity for execution.

Strategic alignment: A project that does not cater to organizational goals, even if executed flawlessly, is a waste of time. The right selection helps companies stay on track with their goals.

Consistency and transparency: A standard selection approach helps the PMO benchmark projects against well-defined criteria rather than use ad-hoc processes that lead to inconsistent approvals. The upside of this consistent approach is transparent downstream communication, as project managers get clarity on why a certain project was approved or rejected.

Shorter time-to-market: As companies become larger, they struggle to maintain an aggressive time-to-market, with a sea of projects competing for attention. Prioritization of projects gives companies the first-mover advantage, enabling them to reach customers before competition.

Successful project delivery: When organizations have good project selection and prioritization processes in place, it leads to the successful delivery of projects.

Project Selection Criteria for Portfolio Management

Ideally, deciding whether to go ahead with a project or not should be straightforward. But, in reality, it’s not. The difficulty often lies in leaving projects off the table, and it takes strong leaders with a clear vision to do that.

For example, if there are two projects—one that extends capacity or flexibility of a plant, and another that improves efficiency and expected lifespan of that facility—which one do you select?

The answer is not simple. It depends on which promises better ROI, the long-term goals for the organization, etc. If there is an aim to expand the plant,, the former is a sensible option. However, if the goal is to cut costs and increase longevity, the latter option may be preferred.

A few examples of project selection criteria are:

• What is the payback or break-even point?
• What is the impact to the organization’s growth (e.g., customer volumes)?
• Does the project contribute to innovation?
• How much risk is involved?
• Are there sufficient resources in terms of time, budget, infrastructure, and people with relevant expertise?
• What is the cost/benefit ratio?

Defining selection criteria is an important function of project portfolio management that’s done in collaboration with various stakeholders, such as customers, leadership team, and project managers. Feedback from projects executed in the past is also useful to pick the right criteria.

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Project Prioritization Methods

Project prioritization is easier to manage with a small list of say, five projects. However, as this number grows significantly, the complexity can be difficult to handle, requiring more concrete methods.

Here are three useful methods for project prioritization:

1. Ranking Method

The ranking method is a simple approach that arranges the projects on a scale of, say, one to ten, based on their importance. Before assigning the rank, it’s important to ask the right questions.

Some ranking method example questions are:

• What is the project’s rate of return?
• What are the quantitative and qualitative benefits to the stakeholders?
• How do efficiencies improve if we go ahead with the project?
• Do we have the capacity and capability to execute the project? If not, how long would it take onboard new resources?

The advantage of this method is its quick approach that enables identification of top priorities. It works effectively when there are limited criteria to evaluate and it’s easy to assess the factors involved.

However, since it considers only one or two selection criteria, it could work out to be too simplistic for complex project evaluations. In such cases, the scoring model may be a better fit.

2. Scoring Model

The scoring model works when there are many selection criteria to consider and projects being compared are significantly different, making the process harder. Rather than selecting one or two criteria as in the ranking method, the scoring model considers one or two groups of factors, such as strategic alignment, benefits, ROI, risk, etc.

In addition to assigning a rating to each criterion, every group is given a weight. For example, benefits may have a factor of 1.5, whereas risk may have 0.75. The weighted average score is then computed to arrive at the final project score.

The challenge with the scoring model is that its attempt to accommodate a long catalog of criteria not only makes it more work for the PMO team, but it can also blur scoring. Along with that, the chance of biases and guesswork in the rating and weight criteria assignments makes it debatable whether the final score aptly reflects the project’s priority. One way to design the model is to test against existing projects and see how accurate the score is.

Usually, the PMO tends to take a middle ground by applying the scoring model on a shorter list of weighted criteria.

3. Analytic Hierarchy Process (AHP) Technique

AHP combines subjective elements with mathematical models to provide a more holistic technique than the ranking or scoring methods. Used commonly in many decision-making scenarios, it lends particularly well to complex project evaluations.

Similar to the scoring model, AHP works with a long list of selection criteria. However, it does a pairwise comparison, pitting every two criteria against each other, which reduces the possibility of errors and biases. After this apples-to-apples type of comparison, values are normalized, and the weighted score is computed. (For more details on this approach, review this detailed example from PMI).

Analytic hierarchy process’ strong reliance on quantitative techniques is its strength, as it translates an abstract problem into numbers and makes the reason behind a decision transparent. As the number of criteria increase, the math can get clunky. But, this isn’t something that the right PPM tool can’t solve.

AHP is definitely a more mature and recommended approach for complex decisions than the other two methods—it aims to understand the relative importance between two criteria rather than rank everything in absolute terms.

There is the possibility of guesswork in this technique, though. Factoring in multiple expert opinions and testing against existing projects for accuracy helps improve the model.

Continuous Monitoring in Project Prioritization and Selection

Project prioritization is usually perceived as an initial step, a decision point that leads to the actual execution of the project. However, many variables may impact the selection criteria as the project progresses. Project prioritization should instead be an ongoing process where project scores are reviewed and updated during project development and at designated stage gates. As project definition increases, the scoring becomes more accurate and definite.

Even after a project has begun, a new industry regulation may impact resources, processes, etc. All dynamic factors need to be continuously monitored by the PMO to re-prioritize as needed.

Ultimately, the goal is to strike a balance between constant disruption in schedules and adapting to stay aligned to the business objectives by having PPM tools and processes in place to manage the project portfolio.

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