Chapter 2: Identifying and selecting Projects

Projects are identified in various ways: during a strategic planning, in response to unexpected events, or as a result of a group of people who see the need and decide to embark on a project that addresses the problem. Unexpected events such as an earthquake that leads to the collapse of a bridge, drought or famine that leads to the influx of internally displaced people. Projects are identified in various ways by different organization.

Project selection involves evaluating potential projects, and then deciding which of these should move forward to be implemented. The benefits and consequences, advantages and disadvantages need to be considered and evaluated. They can be quantitative and qualitative, tangible and intangible. Quantitative benefits could be financial, such as increase in sales or reduction in costs. The four steps in the project selection process include:

1.    Develop a set of criteria against which the project will be evaluated: For example if a pharmaceutical company has identified several potential projects to develop new products, it might evaluate each potential project against the following criteria:

·         Alignment with company goals

·         Anticipated retail prices

·         Increase in market share

·         Establishment of new markets

·         Anticipated retail price

·         Investment required

·         Estimated manufacturing cost p0er unit

·         Technology development required

·         Return on investment

·         Human resources impact

·         Public reaction

·         Competitors reaction

·         Expected time frame

·         Regulatory approval

·         Risks

2.    List assumptions that will be used as the basis for each project, e.g. obtain a bank loan.

3.  Gather data and information for each project to help ensure an intelligent decision regarding project selection.

4.    Evaluate each project against the criteria: once all the data and information have been collected, analyzed and summarized for each potential project, they should be given to all the individuals who are responsible for performing the evaluation.

Once the project is selected it is formally authorized using a document referred to as a project charter. In this document, the sponsor provides approval o go forward with the project and commits the funding for the project.