Chapter2.pptx

8/9/2019 Chapter2.pptx

1/31

Organization Strategy and Project SelectionCHAPTER TWO

Copyright © 201 !c"ra#$Hill Ed%cation& All Right' Re'er(ed&Po#erPoint Pre'entation )y Charlie Coo*

ROJECTANAGEMENTThe !anagerial Proce''


2/31

WHERE WE ARE NOW

2–2


3/31

2–3

WHY PROJECT MANAGERSNEEDTO UNDERSTAND STRATEGY

• Changes in the organization’s mission andstrategy

– Project managers must respond to changeswith appropriate decisions about futureprojects and adjustments to current projects.

–

Project managers who understand theirorganization’s strategy can become e ectiveadvocates of projects aligned with the rm’smission.


4/31

2–4

PROJECTS AND STRATEGY

• Mista es caused by not understanding the role ofprojects in accomplishing strategy!

– "ocusing on problems or solutions with low strategicpriority.

– "ocusing on the immediate customer rather than thewhole mar et place and value chain.

– #veremphasizing technology that results in projects thatpursue e$otic technology that does not t the strategy

or customer need – %rying to solve customer issues with a product or service

rather than focusing on the &'( with )'( of the value*Pareto’s +aw,.

– -ngaging in a never ending search for perfection onlythe project team really cares about.


5/31

2–5

THE STRATEGICMANAGEMENT PROCESS:AN OVERVIEW

• /trategic Management – 0e1uires every project to be clearly lin ed to

strategy. – Provides theme and focus of rm’s future

direction.• Responding to c !nges in the e$ternal

environment2environmental scanning• A""oc!ting sc!#ce #eso$#ces of the rm to improve

its competitive position2internal responses to newprograms

– 0e1uires strong lin s among mission3 goals3objectives3 strategy3 and implementation.


6/31

%OUR ACTIVITIES O% THESTRATEGIC MANAGEMENTPROCESS• Review and define the organizational mission.• Set long-range goals and objectives.• Analyze and formulate strategies to reach

objectives.• Implement strategies through projects

2–6


7/312–7

St#!tegic

M!n!ge&entP#ocess

+,"-RE 2&1


8/31

CHARACTERISTICS O%

O'JECTIVES

2–8

E.H,/,T 2&1

S Speci ic Be specific in targeting an objective

! !ea'%ra)le stablish a measurable indicator!s" of progress

A A''igna)le #a$e the objective assignable to one personfor completion

R Reali'tic State what can realistically be done withavailable resources

T Ti e related State when the objective can be achieved%that is% duration


9/31

PROJECT PORT%O(IOMANAGEMENT THE NEED %OR A STRONG PROJECT PRIORITYSYSTEM• &he Implementation 'ap

– &he lac$ of understanding and consensus on strategyamong top management and middle-level !functional"managers who independently implement the strategy.

• (rganization )olitics – )roject selection is based on the persuasiveness and

power of people advocating the projects.• Resource *onflicts and #ultitas$ing

– #ultiproject environment creates interdependencyrelationships of shared resources which results in thestarting% stopping% and restarting projects.

2–9


10/31

'ENE%ITS O% PROJECTPORT%O(IO MANAGEMENT• 4uilds discipline into the project selection

process.• +in s project selection to strategic metrics.•

Prioritizes project proposals across acommon set of criteria3 rather than onpolitics or emotion.

• 5llocates resources to projects that align

with strategic direction.• 4alances ris across all projects.• 6usti es illing projects that do not support

strategy.• 7mproves communication and supports 2–10

E.H,/,T 2&2


11/31

2–11

A PORT%O(IO MANAGEMENTSYSTEM• 8esign of a project portfolio system!

– Classi cation of a project – /election criteria depending upon classi cation –

/ources of proposals – -valuating proposals – Managing the portfolio of projects.


12/31

PORT%O(IO O% PROJECTS

'Y TYPE

2–12

+,"-RE 2&2


13/31

2–13

A PORT%O(IO MANAGEMENTSYSTEM• /election Criteria

– %in!nci!" &ode"s: paybac 3 net presentvalue *9P:,

–

Non)*n!nci!" &ode"s: projects of strategicimportance to the rm.• Multi ;eighted /coring Models

–


14/31

2–14

%INANCIA( MODE(S•

%he Paybac Model – Measures the time the project will ta e torecoverthe project investment.

–


15/31

2–15

%INANCIA( MODE(S+CONT,D-• %he 9et Present :alue *9P:, model

–


16/31

E.AMP(E COMPARING TWOPROJECTS

USING PAY'AC/ METHOD

2–16

E.H,/,T 2& a


17/31

E.AMP(E COMPARING TWOPROJECTS

USING NET PRESENT VA(UEMETHOD

2–17

E.H,/,T 2& )


18/31

2–18

NON%INANCIA( STRATEGICCRITERIA• %o capture larger mar et share• %o ma e it di>cult for competitors to enter the

mar et• %o develop an enabler product3 which by its

introduction will increase sales in more pro tableproducts• %o develop core technology that will be used in

ne$t generation products• %o reduce dependency on unreliable suppliers• %o prevent government intervention and

regulation•

%o restore corporate image or enhance brandrecognition


19/31

2–19

MU(TI)CRITERIA SE(ECTIONMODE(S•

Chec list Model –


20/31

SAMP(E SE(ECTION0UESTIONS USED IN PRACTICE

2–20

E.H,/,T 2&

Topic 3%e'tion

Strategy4align ent What 'peci ic 'trategy doe' thi' project align #ith5

6ri(er What )%'ine'' pro)le doe' the project 'ol(e5

S%cce'' etric' Ho# #ill #e ea'%re '%cce''5

Spon'or'hip Who i' the project 'pon'or5

Ri'* What i' the i pact o not doing thi' project5

Ri'* What i' the project ri'* to o%r organization5

Ri'* Where doe' the propo'ed project it in o%r ri'* pro ile5/ene it'7 (al%e7 RO, What i' the (al%e o the project to thi' organization5

/ene it'7 (al%e7 RO, When #ill the project 'ho# re'%lt'5

O)jecti(e' What are the project o)jecti(e'5


21/31

SAMP(E SE(ECTION0UESTIONS USED IN PRACTICE

2–21

E.H,/,T 2& cont8d

Topic 3%e'tionOrganization c%lt%re ,' o%r organization c%lt%re right or thi' type o project5

Re'o%rce' Will internal re'o%rce' )e a(aila)le or thi' project5

Approach Will #e )%ild or )%y5

Sched%le Ho# long #ill thi' project ta*e5

Sched%le ,' the ti e line reali'tic5

Training4re'o%rce' Will 'ta training )e re9%ired5

+inance4port olio What i' the e'ti ated co't o the project5

Port olio ,' thi' a ne# initiati(e or part o an e:i'ting initiati(e5

Port olio Ho# doe' thi' project interact #ith c%rrent project'5

Technology ,' the technology a(aila)le or ne#5


22/31

PROJECT SCREENINGMATRI.

2–22

+,"-RE 2&


23/31

2–23

APP(YING A SE(ECTIONMODE(• Project Classi cation

– 8eciding how well a strategic or operationsproject ts the organization’s strategy.

•

/electing a Model – 5pplying a weighted scoring model to align

projects closer with the organization’sstrategic goals.

• 0educes the number of wasteful projects• @elps identify proper goals for projects• @elps everyone involved understand how

and why a project is selected


24/31

2–24

PROJECT PROPOSA(S•

/ources and /olicitation of ProjectProposals – ;ithin the organization – 0e1uest for proposal *0"P, from e$ternal

sources *contractors and vendors,• 0an ing Proposals and /election of

Projects – Prioritizing re1uires discipline3 accountability3

responsibility3 constraints3 reduced =e$ibility3and loss of power.

• Managing the Portfolio – /enior management input – %he priority team *project o>ce,


25/31

2–25

A P#opos!"%o#& 1o# !nA$to&!ticVe ic$"!#T#!c2ing +AV(-P$3"icT#!nspo#t!tionP#o4ect

+,"-RE 2& A


26/31

2–26

Ris2An!"5sis1o#677)Ac#e

Wind%!#&

+,"-RE 2& /


27/31

2–27

MANAGING THE PORT%O(IOSYSTEM•

/enior Management 7nput – Provide guidance in selecting criteria thatare aligned with the organization’sstrategic goals

–

8ecide how to balance available resourcesamong current projects• %he Aovernance %eam 0esponsibilities

– Publish the priority of every project – -nsure that the project selection process is

open and free of power politics. – 0eassess the organization’s goals and

priorities – -valuate the progress of current projects


28/31

2–28

P#o4ectSc#eeningP#ocess

+,"-RE 2&;


29/31

2–29

P#io#it5An!"5sis

+,"-RE 2&<


30/31

'A(ANCING THEPORT%O(IO %ORRIS/S AND TYPES O%PROJECTS• Bread-and-butter )rojects

– Involve evolutionary improvementsto current products and services.

• )earls – Represent revolutionary commercial

opportunities using proven technical advances.• (ysters

–

Involve technological brea$throughswith high commercial payoffs.• +hite lephants

– Showed promise at one timebut are no longer viable.

2–30


31/31

/EY TERMS

, ple entation gap=et pre'ent (al%eOrganizational politic'Pay)ac*Priority 'y'tePriority teaProject port olioProject 'creening atri:Project 'pon'or Sacred co#Strategic anage ent proce''

Documents

Chapter2.pptx