Tips for selecting good Project

Being a A good project manager necessitates a wide range of abilities. It necessitates strong leadership, excellent communication skills, thorough preparation, and a variety of other vital qualities. However, in the realm of project management, there is one ability that is undervalued: smart and effective project selection. In fact, a recent Six Sigma survey of 43 different firms discovered that 75% of them didn't even follow the project selection methods.

“Ultimately, if you don't have a Project Selection process in place - one that is rigorously followed,” writes Six Sigma Qualtec, “you will falter.” A well-informed and experienced approach to project selection allows your firm to more efficiently manages prospective projects, identify significant initiatives with higher ROIs, and harness the capabilities currently in place to select projects that are well-suited to your organization's specific competencies.

Executive leadership, rather than project managers, will make the final choice on which suggestions are accepted in most circumstances. Few things about the tips given below are taught during the PMP training.

Some of the tips for selecting good projects are:

1.       Benefit measurement methods

As a project manager, the Benefit Measurement Methods are likely to be the only ones you use directly. While less sophisticated than Constrained Optimization Methods, they don't always necessitate a master's degree in finance to comprehend.

Benefit Measurement Methods, as the name implies, assign a score to possible projects based on a model and compare the results among project applicants. The most typical Benefit Measurement Methods you'll use as a PM are listed below.

a.       Cost benefit ratio

The cost benefit ratio, the most basic of the Benefit Measurement Methods, is an excellent way of describing the potential worth of a project in simple words. It compares the costs of investing in a project to the value of the return when it is finished.

A 4:6 (or 2:3) cost benefit ratio would be a project that costs $280,000 in resources to execute but expects a $420,000 return. In other words, for every $2 invested in this project, $3 in revenue will be generated. If just this strategy is used, projects with a lower cost benefit ratio (or a higher benefit cost ratio) should be chosen.

b.       Economic model

The Economic Model, also known as the Economic Value Added (EVA), is similar to the Cost Benefit Ratio technique in that it summarizes the difference between the costs spent and the income earned into a single number – profit.

EVA is defined as “net operating profit after tax – (invested capital X weighted average cost of capital)” by Investopedia. This approach gives you a clear picture of the measurable advantages of a project once it's over, and it can help you figure out what kind of returns to expect for each project.

c.       Payback period

The Payback Period Technique examines how long it will take your organization to return its costs with a specific project. The overall payback period for our $280,000 investment would be 14 years if it brought in $20,000 per year after done.

It's important to remember that while calculating returns over time, you should consider the present dollar value of future earnings, as inflation and interest will all be factored in.

d.       Discounted cash flow

The Discounted Cash Flow (DCF) model incorporates the time value of money, whereas the Payback Period Model is simple to calculate and understand. This principle aids in the conversion of future revenues into current dollar values, as a dollar in hand has greater earning potential than one promised in the future.

2.       Constrained optimization methods

Constrained Optimization Methods may be employed in addition to Benefit Measurement Methods, which are the most extensively utilized Project Selection methods for project managers. These methods are ideal for larger, more sophisticated tasks that require a significant number of complex mathematical calculations.The Mathematical Model of Project Selection is another name for the Constrained Optimization Methods.

However, because of their complexity, many project managers will likely opt for Benefit Measurement methodologies to meet their Project Selection requirements.

a.       Linear programming

b.       Non-linear programming

c.       Integer programming

d.       Dynamic programming

e.       Multiple objective programming

When it comes to project selection, you'll almost certainly have the potential to influence key decision makers as a project manager. Your experience, institutional knowledge, and field abilities can all play a role in ensuring that your organization only pursues the most promising initiatives.

With so many Project Selection methods and tools to pick from, you can be confident that you've made the best decision every time.

If you are taking PMP training from a good place you must be already aware of some if not all the tips.