Identifying and Selecting Projects

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2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Chapter Concepts

• How projects are identified and selected

• A project charter
• Outsourcing projects using a request for proposal
• The proposal solicitation process

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Learning Outcomes

• Discuss how projects are identified and selected

• Explain how projects are prioritised and selected
• Identify and describe at least eight elements of a
project charter
• Prepare a project charter
• Prepare a request for proposal / understand a tender

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Project Integration Management
Project Management Knowledge
Areas from PMBOK® Guide
Project Procurement Management

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Project Identification
Projects are identified in various ways:
• during an organisation’s strategic planning
• as part of its normal business operations
• in response to unexpected events
• as a result of a group of individuals deciding to organise a project to address a particular
need.
• Start of Initiating phase
• Recognise need, problem, or
opportunity
• Various ways for identification
• Organisations strategic planning
• Response to unexpected events
• Group organised to address a
need
• Important to clearly identify need
to determine if worth pursuing
• Use decision making process to
prioritise and select project with
greatest need
© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Project Selection
The steps in the project selection process include:
• 1. Develop a set of criteria against which the project will be evaluated. These criteria will be used to
evaluate potential projects and support project selection and probably include both quantitative and
qualitative factors. 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 sales volume • Increase in market share • Establishment of new markets •
Anticipated retail price • Investment required • Estimated manufacturing cost per unit • Technology development required •
Return on investment • Human resources impact • Public reaction • Competitors’ reaction • Expected time frame • Regulatory
approval • Risks.
• Sometimes the potential projects may not be similar, such as several alternative new products. They could be very different and
all compete for a company’s limited funds. One project may be to put a new roof on the factory, another to implement a new
information system, and a third to develop a new product to replace one that is outdated and for which sales are rapidly falling.
• 2. List assumptions that will be used as the basis for each project. For example, if one project is to
build an on-site day care centre for children and elderly relatives of company employees, one
assumption might be that the company would be able to obtain a bank loan to build such a centre.
• 3. Gather data and information for each project to help ensure an intelligent decision regarding
project selection. For example, it may be necessary to gather some preliminary financial estimates
associated with each project, such as estimated revenue projections and implementation and
operating costs.
• 4. Evaluate each project against the criteria. Once all the data and information have been collected,
analysed and summarised for each potential project, they should be given to all the individuals who
are responsible for performing the evaluation. Several individuals should be involved in the
evaluation and selection process in order to get a range of viewpoints. E

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Project Selection summary
• Evaluate needs, costs,
benefits
• Determine which are
projects
• Select project
• Develop criteria
• List assumptions
• Gather data
• Evaluate each opportunity
• Combine ‘gut’ feelings and
quantitative information to
make decision

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Project Charter
Once a project is selected, it is formally authorised using a document referred to as a project
charter, sometimes called a project authorisation or project initiation document. In this document,
the sponsor provides approval to go forward with the project and commits the funding for the
project. The project charter also summarises the key conditions and parameters for the project
and establishes the framework for developing a detailed baseline plan for performing the project.
The content and format of the charter or authorisation is not standard, but varies depending on
the company or organisation.

Possible elements
Purpose • Milestone
• Project title schedule
• Provides sponsor approval • • Key assumptions
Purpose
• Commits funding for the • Description • Constraints
• • Major risks
project Objective
•
• Success criteria Approval
• Summarises key conditions or expected requirements
benefits •
and parameters •
Project manager
Funding • Reporting
• Establishes framework to • Major requirements
develop baseline plan deliverables • Sponsor designee
• Acceptance • Approval
criteria signature
© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Preparing a Request for Proposal
• Decision made to outsource to external resource
• Comprehensively describe project requirements
o Includes need, problem, or opportunity description
o Allows contractors to develop a thorough proposal
o Facilitates the development of evaluation criteria
• May be communicated informally or formally, in writing or
verbally

Read pg. 47-50 – can be

in the test or exam

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Guidelines for developing an Request for
Proposal (RFP)
• State project objective or • State type of contract
purpose • State payment terms
• Provide a statement of work • State schedule and key
• Include customer milestones
requirements • List format and content
• State deliverables the instructions
customer expects • Indicate due date
• State acceptance criteria • Include evaluation criteria
• List customer supplied items • Include level of effort or funds
• State approvals required available

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Soliciting Proposals
Once the RFP has been prepared, the customer solicits proposals by
notifying potential contractors that the RFP is available.

Solicitation Conditions
• Notify potential contractors • Requirements are
• Identify selected group in sometimes communicated
advance to send copy verbally instead of via a
• Advertise in selected journals, formal RFP
newspapers, or websites
• All RFPs start with
• Maintain competitive
identification of a need,
situation problem, or opportunity
• Provide equal information to
all bidders
• Hold bidders’ meeting to
answer questions

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Critical Success Factors
• The need must be clearly defined before preparing a request for proposal (RFP).
• When selecting a project from among several needs or opportunities, the decision
should be based on which project will provide the greatest overall benefits compared to
its costs and possible consequences.
• Having a well-understood evaluation and selection process and a well-rounded
committee will increase the chances of making the best project selection decision.
• Establish quantitative project success criteria, or expected benefits.
• A good RFP allows contractors to understand what the customer expects so that they
can prepare a thorough proposal that addresses the customer’s needs and
requirements.
• A request for proposal should include a statement of work, customer requirements,
expected deliverables, and the criteria by which the customer will evaluate proposals.
• An RFP should provide instructions for the format and content of contractor proposals
so that the customer will be able to make a consistent and fair comparison and
evaluation of all the proposals.
• Customers must be careful not to provide information to only some of the contractors
because it would give these contractors an unfair competitive advantage in preparing
their proposals.

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Summary
• The initiating phase of the project life cycle starts with recognising a need, problem, or
opportunity for which a project or projects are identified to address the need.
• Sometimes organisations identify several or many needs but have limited funds and people
available to pursue potential projects to address all of those needs. In such cases, the
company must go through a decision-making process to prioritise and select those projects
that will result in the greatest overall benefit.
• Project selection involves evaluating potential projects and then deciding which should move
forward to be implemented.
• Once a project is selected, it is formally authorised using a document referred to as a project
charter, sometimes called a project authorisation or project initiation document.
• In some cases, an organisation does not have the expertise or staff capacity to plan and
perform the project or major portions of the project, and therefore decides to have the
project completed by an external resource (contractor) and prepares and RFP.
• Once the RFP has been prepared, the customer solicits proposals by notifying potential
contractors that the RFP is available.
• Not all project life cycles include the preparation of a written request for proposal by a
customer and subsequent submittal of proposals from contractors. Some endeavors move
from the initiating phase, where a project is identified and selected, into the planning and
performing phases of the life cycle.

© 2018
2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.