1
Chap 2
Organization Strategy
and
Project Selection
2
Chap 2
What does it mean to be Strategic?
Why do companies have a Strategic Plan?
Why is the Strategic Plan important to the Project Manager?
Organizational Strategy
3
Chap 2
1. Focusing on problems or solutions that have low priority
2. Focusing on immediate customers rather than the whole marketplace and value chain.
3. Overemphasizing technology as an end in and of itself
4. Trying to solve every customer problem with a product or service
5. Engaging in a never ending search for perfection that no one except the project team cares about.
Mistakes by Project Managers
4
Chap 2
Strategic Management Process
Review and define the Organizational Vision
Set Long term goals and objectives
Analyze and formulate strategies to reach objectives
Implement strategies through projects
Each project must be linked to and implements a goal
5
Chap 2
Planning by considering what market or organizational events might have high impact your company.
Scenario Planning
Planning• Assessing your core business and industry (SWOT)• Potential Scenarios and impact • Potential Strategies ( Contingency Planning)• Identification of triggers
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Chap 2
Purpose: Development of a priority system that promotes a balance of projects that best serves the organizational strategy.
Project Portfolio Management System
Potential Problems:1. Implementation Gap2. Organization Politics3. Resource conflicts and multitasking
Benefits:1.Builds discipline into project selection process2.Links project selection to strategic metrics3.Prioritizes project proposals across a common set of criteria4.Allocates resources to projects aligned with strategic direction5.Balances risk across all projects6. Justifies killing projects that do not support strategy7. Improves communication and supports agreements on project goals
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Chap 2
Project- Strategies Disconnect
How does a disconnect between Projects and Strategy impact the organization?
• Conflicts freq occur among functional mangers causing lack of trust
• Frequent meetings are called to establish or renegotiate priorities
• People shift from one project to another, based on current priority
• People are working on multiple projects and feel inefficient
• Resources are not adequate
Project needs to linked with a Strategic goal.
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Chap 2
Selection of which Project to implement?
Classification of Project• Operational• Strategic• Compliance
Selection Criteria• Financial • Non Financial
Which Classification most likely uses Financial Selection Criteria?
When would I not use Financial Criteria in the selection?
9
Chap 2
Selection Models
Financial
Net Present Value
Payback
Non Financial
Checklist
Multi-weighted scoring
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Chap 2
Checklist 200-250 questions; does not give a specific way to compare.
Multi-weight Prioritize based on numerical value Difficulty is defining the weights and each attribute score
Final selection is typically more than a numerical ranking• This is where Strategic goals benefit
Ranking
Risk is also considered in the final ranking
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Chap 2
Request for Proposal (RFP)
1. Summary of needs and request for action2. Detailed Statement of work (SOW) with scope and major
deliverables3. Deliverable specifications/ requirements, features and
tasks4. Responsibilities – vendor and customer5. Project Schedule6. Costs and payment schedule7. Type of contract (Fixed price or cost plus or ?)8. Experience and Staffing9. Evaluation Criteria
Clarity at the beginning with reduce misunderstandings at the end
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Questions
Chap 2
13
Case Study
Selection by an aerospace company of a technical representative to work and reside
outside the U.S.
The selection committee consisted of 3 members representing expertise in the technical, contractual and managerial areas.
Chap 2
14
Selection Process
Based on work related factors (Wilk & Capelli, 2003) Skill requirements, training and/or pay
Interview process is most common supplemented by:Psychological testing.Aptitude TestsMotor SkillsPersonality Traits
One of the most significant yet dreaded task by a manager:SubjectivityImpact on organizationCost of a wrong decision
Chap 2
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16
Interview Process Shortcomings
Judgments based on initial impressions
Evaluator Bias
Inconsistency of questions posed to candidates
No a priori weighing of questions
No consistency in recording candidate responses
Impact of Interview Shortcomings
Non-compliance with various regulatory
requirements
Selection of candidate on strength of verbal and
presentation skills rather than job related skills.
Chap 2
17
Overcoming Interview Shortcomings
• Use a structured interview process with predefined open ended questions based on task oriented questions. (Lindaman, 1997; Levine et al, 1997).
Structured Interview Methodology ( Green, 1991)
1. Perform a Job Analysis
2. Develop a selection criteria based on Job Analysis Characteristics.
3. Develop Interview questions based on occupational qualifications
4. Format of interview should provide a standard treatment
5. Interviewer notes should be descriptive and non-judgmental
6. A fair and consistent method of selection should be identified
Chap 2
18
Quantitative or Qualitative Selection Process
Consensus Building: All members of a group present their views with all members accepting the group decision.
• Member participation promotes buy-in.• Requires diversity in group members• Can suffer from influence of group dynamics• Can be time consuming
Taylor et al (1998) identified the selection process as a problem in identification, weighing and evaluation.
• Weighing provides a consistent emphasis on each attribute
• Provides focus on pre-determined job related qualifications
• Documented process supports defense of selection decision
• What method should be used to determine weights?
• Is the best candidate the one with the highest score?
Chap 2
19
Analytic Hierarchy Process
Personnel selection is best described as a Multiple Criteria Decision Making (MCDM) problem.
Saaty (1980) introduced AHP and its use of pair-wise comparison to determine criteria weighing.
Pair-wise comparison considers not only where the decision maker rates a specific criterion but also its relationship to other decision criteria.
AHP has been used for a variety of multiple criteria decisions:• Quality Management• Healthcare• Strategic Planning• Ranking investments
• Supplier selection• Military base closures• Public policy
Chap 2
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Attribute Identification
The committee performed a job analysis and identify the job attributes.
The committee determined 12 attributes:
- Customer Orientation - Composite Material
Knowledge
- Adaptability - Initiative
- Verbal Skills - Statistical Process
Control
- Quality Commitment - Tooling Knowledge
- Problem Solving Skills - Knowledge of Specific
Part
- Part Assembly Knowledge - Process Improvement
Exp.
Must be willing to spend two (2) years at this position
Chap 2
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Traditional approach is to develop weights by group consensus.
This committee chose to use Pair-wise Comparison
Each evaluator created a priority matrix to define the relative importance between each attribute using a 9 point Likert scale:VALUE INTERPRETATION
1 Attribute A and C are of equal importance
3 Attribute A is slightly more important than attribute C
5 Attribute A is strongly more important than attribute C
7 Attribute A is very strongly more important than
attribute C
9 Attribute A is absolutely more important than attribute C
Attribute Weights Chap 2
22
Attribute A B C D E
A 1 2 3 4 1/3
B 1/2 1 1/4 1/3 2
C 1/3 4 1 1/7 1/9
D 1/4 3 7 1 1/6
E 3 1/2 9 6 1
The number of assigned relationships is equal to n(n-1)/2- “n” equal to the number of attributes
Priority Matrix Chap 2
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Scoring Candidate Responses
A single question was developed for each of the twelve attributes.
Each evaluator assessed the candidate’s response based on a series of reference factors.
Each evaluator assigned on of 5 rankings based on how well the candidate addressed a specific reference factor.
CL (Clearly Lacking in Response)L (Lacking)
P (Some Presence) SP (Strong Presence)
VSP (Very Strong Presence in Response)
Based on reference factor rankings, each evaluator assigns an aggregate ranking for the attribute.
The candidate’s aggregate ranking for each attribute is compared to the other candidate’s ranking using a pair-wise priority matrix.
A 9 point Likert scale is used to assign the candidate relative score based on the distance between each candidate’s attribute ranking.
Chap 2
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Customer Orientation: Factors to consider Ratings
Communicates customer needs and expectations back to the home organization
CL L P SPVSP
Follows up with customers to seek feedback and ensure their requirements are met or exceeded
CL L P SPVSP
Provides accurate and timely response to customers
CL L P SPVSP
Ensures understanding of customer requirements and expectations regarding products, services and relationships
CL L P SPVSP
Identifies and communicates value added activities to the customer
CL L P SPVSP
Establishes and maintains systems for measuring and responding to customer needs
CL L P SPVSP
Initiates and encourages frequent customer contact
CL L P SPVSP
The customer is not satisfied with something. Explain a situation you have experienced relative to customer dissatisfaction and what actions you took to ensure customer satisfaction.
Interview Guide Chap 2
25
Calculating Attribute Weights/ Candidate Response Scores
Candidate (k) score =
N
i 1ii A * W
This computation is performed in two steps: 1. Dividing each of the cell entries in the priority
matrix by the sum of the column (j) it occupies.
2. Sum each normalized row (i) in the matrix and divide
by the number of entries (N) in each row.
n
iijijij CCr
1
NrWn
jiji
1
NrAn
jiji
1
Chap 2
26
Consistency Index
AHP utilizes a Consistency Index (CI). 1max
n
nCI
Compute ∆max :
n
1iT
T
max in Wentry ith
AWin entry ith
n
1
Compare CI to a Random Index (RI).
If CI/RI < 0.10: Consistent
RI is based on size of priority matrix
WT is each candidate’s relative score for a given attribute A is the attribute weightn is the number of attributes
Chap 2
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Making the selection
1. Each evaluator ranked the candidates based on the AHP derived aggregate attribute scores.
2. Create a single ranking of candidates by computing the geometric average of evaluators.
A review of the top 3 candidates is made to consider:• Potential imperfections in the quantitative results.• Pertinent factors not considerations• Discussion of evaluator impressions
Two selection approaches were considered:
The top 3 candidates are identified based on rankings.
Top candidate is based on final group ranking.
Chap 2
28
Results – Aggregate Candidate Score
Chap 2