Project Selection Models

Project Selection Models

Selection of projects is a key business process and is necessary to the ongoing economic health of the organization. This process includes the project managers, product line managers and business unit executives, and all the stakeholders in and out of the business organization. Getting the correct set of stakeholders involved in project selection and definition is critical to the ultimate project development success. Figure (a). illustrates the relationship among all the main entities.

Private Enterprise Stakeholders Map

Within the business organization are the employees and the organization's management. The greater part of the stakeholder entities reside outside the organization. The corporation's stockholders, represented through the Board of Directors, have a fiduciary interest in the financial success of the company. In that respect, they are concerned that projects are selected that will provide sufficient return on investment. Customers are concerned about the release of state-of-the-art products that meet their needs at an economic cost. Customers do not readily change from competent suppliers because the internal "switching" cost of changing most important software systems is extremely high.

The organization's suppliers are stakeholders in that they want to continue providing development teams with the best in software and hardware development products. Companies such as Microsoft, Sun, and Oracle have wide programs for their development partners and work hand in hand with them to produce industry-specific products that use their development and internal tools.

The government is a stakeholder in consumer product decisions - sometimes, a very proactive partner. Government regulations touch not only product strategies but also employees in areas from workplace safety to immigration laws to hazardous materials regulation. Many software products must be subjected to lengthy government agency approvals because they are installed in medical devices, provide for aircraft safety, or monitor hazardous materials.

Finally, competition is a stakeholder in product selection criteria. Although they may not have an active voice, decisions made in the same marketplaces influence decisions to develop new products. A competitor's missteps may signal an opening for a new product. A very strong product with loyal clients may be a model for an organization to follow in releasing a complementary product in another market. Competition also touches employees in their efforts to recruit the best developers.

Those project managers in the public sector have a similar stakeholders map with which to work. Figure (b). shows that relationship.
Government Stakeholders Map

Internally the organization could operate in a similar fashion to the business organization. The external stakeholders are very different. The owners and the customers are one and the same - citizens. Therefore, the government organization, by its nature, is subject to huge amounts of political pressure. The suppliers have a similar stakeholder position, but with more regulation and barriers to entry. Various suppliers will not work with government development groups because of the burdensome amounts of paperwork needed and the high risks related with completion of joint government and private-sector projects.

Competition plays an important role in this stakeholder map. Governmental agencies are tasked with creating their own competition by either "privatizing" agencies such as the U.S. Postal Service or passing laws that encourage competition in previously regulated industries, such as banking and telecommunications. A project manager in a governmental organization needs to pay special attention to pending regulation changes and efforts to build private competition to public organizations. Just as in private industry, the competition is looking to hire the best employees. Several companies look at the public sector as the "farm league" for their technical hires.

After the organization-wide and project-specific stakeholders have been mapped, the next process is to define the selection criteria for a project. The selection process estimates individual projects or groups of projects and then decides to implement some set of them to achieve the objectives of the organization. This practitioner's guide will not discuss how an organization sets its goals and objectives. For the domain process of project selection, it is assumed that the project manager and the project selection team understand and have available the organization's current objectives as a business or governmental organization. If these objectives do not exist, the selection process must be stopped until those are defined. If a project selection team does not know the organization's goals and objectives, selecting a project is the least of the organization's worries.

Project selection must be based on sound strategy and generally includes more than one stakeholder department. An interdisciplinary team performs the selection process because enough information common to all projects and product areas is required so that sound selection decisions can be made. Risk is a main driver in the selection process because of both the development risk and the market risk. Can the product be built? And can the product be sold?

In preparing for the project selection decision, these questions must be answered:

 1.  What stakeholders are included in this project selection decision?

 2.  What is the team's familiarity with the technology of the product?

 3.  What is the team's familiarity with the market for this product?

 4.  How technically complex is the product to build?

 5.  How complex is the product to explain to an end-user?

 6.  What is the organization's experience in developing this type of product?

 7.  What is the estimated product development effort in dollars?

 8.  How is the project life cycle defined?

 9.  How is the product life cycle defined?

10.  What is the risk in developing this product?

11.  What is the risk in not developing this product?

12.  Is this project a "sacred cow", suggested by executives or owners?

13.  Is this project an operating necessity that must support existing organization systems?

14.  Is this project a competitive necessity to keep abreast of competition?

15.  Is this a product line extension to our current portfolio?

The answers to these questions become the foundation of an organization's project selection model. A usual method for this involves the project selection team reviewing the statement of need document produced in the concept exploration phase and then answering these questions. When consensus is reached that the project should move forward, a project manager and organization owner should be assigned. A beginning software project management plan should be created and the project development environment should be established.


life cycle, project selection, project development, stakeholders
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