Organization Strategy

and Project Selection

(Ch. 2 – T1)
BITS Pilani M K Hamirwasia
Pilani Campus WILPD
 BITS Pilani
Pilani Campus

ET ZC423/PE ZC423-Merged
Essentials of Project Management
First Semester 2024-25
Lecture No. 5
Strategy
Strategy – a plan of action to achieve a long-term
or overall aim.
Eg. Economic strategy, military strategy

Strategy is the direction and scope of an

organization over the long-term, which achieves
advantage for the organization through its
configuration of resources within a challenging
environment to meet the needs of markets and
to fulfil stakeholder expectations.

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BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Organization Strategy
Importance of Strategic Planning
• Aligning projects with the strategic goals of the Org’n is crucial for
project success, esp. in today’s economic climate which is marked by
rapid changes in technology, global competition and financial
uncertainty.
• Ensuring a strong link b/n strategy and projects is crucial to success.
• More difficult to create and maintain this strong link in larger and more
diverse organizations. Lack of a process that clearly aligns project
selection to the strategic plan results in poor utilization of the Orgn’s
resources.
• An Org’n can ensure this link and alignment thro’ integration of projects
with the strategic plan.
• Integration assumes the existence of a strategic plan and a process for
prioritizing projects by their contribution to the plan.

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Why Project Managers Need to
Understand Strategy
• It is time to expand the traditional role of the PM from an operational
to a more strategic perspective.
• Why PM’s need to understand their Organization’s mission and
strategy:
1. So that they can make appropriate decisions and adjustments. Eg. How to
respond to suggestions to modify the design of a product to enhance
performance! How to respond to delays!
2. So that they can be effective project advocates:
• Demonstrate to senior management how the Project contributes to the firm’s
mission. Protection and support come from being aligned with corporate
objectives.
• Explain to team members and other stake holders why certain objectives and
priorities are critical – essential for getting buy-in on contentious trade-off
decisions.

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THE STRATEGIC MANAGEMENT PROCESS

• SMP - It is the process of evaluating “what we are” and

deciding and implementing “what we intend to be and how
we are going to get there”. Strategy describes how an
organization intends to compete with the resources
available in the existing and perceived future environment.
• Two major dimensions of strategic mgmt. are:
1. Responding to changes in the external environment and
allocating scarce resources of the company to improve its
competitive position. Constant scanning of the external envn.
for changes is a major requirement for survival in a dynamic
competitive envn.
2. The internal responses to new action programs aimed at
improving the competitive position of the company.

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THE STRATEGIC MANAGEMENT PROCESS

• SM provides the theme and focus of the

future direction of the Org’n.
• SM positions the Org’n to meet the needs
and requirements of its customers for the
long term.
• SM requires strong links among mission,
goals, objectives, strategy and
implementation.

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THE STRATEGIC MANAGEMENT PROCESS

• The mission gives the general purpose of the Org’n.

• Goals give global targets within the mission.
• Objectives give specific targets to goals.
• Objectives give rise to formulation of strategies to reach
objectives.
• Finally, strategies require actions and tasks to be
implemented. In most cases the actions to be taken
represent projects.

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Vision, Mission, Core
Values…
•Vision – It provides a destination for the organization. Big picture of what you want
to achieve.
•Mission – General statement of how you will achieve the vision.
A companion statement often created with the vision and mission is a statement of
core values.
•Core Values – How you will behave during the process.
Once you have identified what your organization wants to achieve (vision) and
generally how the vision will be achieved (mission), the next step is to develop a
series of statements specifying how the mission will be utilized to achieve the vision:
•Strategies – Strategies are one or more ways to use the mission statement in order
to achieve the vision statement. Although an organization will have just one vision
statement and one mission statement, it may have several strategies.
•Goals – These are general statements of what needs to be accomplished to
implement a strategy.
•Objectives – Objectives provide specific milestones with a specific timeline for
achieving a goal.
•Action Plans – These are specific implementation plans of how you will achieve an
objective.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Vision, Mission, Core
Values
Vision Statement – A mental picture of what you want to accomplish or achieve. For
example, your vision may be a successful winery business or an economically active
community.
Vision of an Example Business – A successful family dairy business.

Mission Statement – A general statement of how the vision will be achieved. The
mission statement is an action statement that usually begins with the word "to".
Mission of an Example Business – To provide unique and high quality dairy products
to local consumers.

Core Values– Core values define the organization in terms of the principles and
values the leaders will follow in carrying out the activities of the organization.
Core Values of the Example Business:
•Focus on new and innovative business ideas
•Practice high ethical standards.
•Respect and protect the environment.
•Meet the changing needs and desires of clients and consumers.

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 Strategies, Goals
Strategies – A strategy is a statement of how you are going to achieve something.
More specifically, a strategy is a unique approach of how you will use your mission to
achieve your vision. Strategies are critical to the success of an organization because
this is where you begin outlining a plan for doing something. The more unique the
organization, the more creative and innovative you need to be in crafting your
strategies.
Goals – A goal is a general statement of what you want to achieve. More specifically,
a goal is a milestone(s) in the process of implementing a strategy. Examples of
business goals are:
•Increase profit margin
•Increase efficiency
•Capture a bigger market share
•Provide better customer service
•Improve employee training
•Reduce carbon emissions
Be sure the goals are focused on the important aspects of implementing the strategy.
Be careful not to set too many goals or you may run the risk of losing focus. Also,
design your goals so that they don’t contradict and interfere with each other.

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 Objectives, Action Plans
Objectives – An objective turns a goal’s general statement of what is to be
accomplished into a specific, quantifiable, time-sensitive statement of what is going to
be achieved and when it will be achieved. Examples of business objectives are:
•Earn at least a 20 percent after-tax rate of return on our investment during the next
fiscal year
•Increase market share by 10 percent over the next three years.
•Lower operating costs by 15 percent over the next two years through improvement in
the efficiency of the manufacturing process.
•Reduce the call-back time of customer inquiries and questions to no more than four
hours.
Objectives should meet the following criteria:
•Measurable: What specifically will be achieved and when will it be achieved?
•Suitable: Does it fit as a measurement for achieving the goal?
•Feasible: Is it possible to achieve?
•Commitment: Are people committed to achieving the objective?
•Ownership: Are the people responsible for achieving the objective included in the
objective-setting process?
Action Plans – Action plans are statements of specific actions or activities that will be
used to achieve a goal within the constraints of the objective.
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Actions Plans within the context of
goals and objectives

Examples of action plans within the context :

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 Vision, Mission, …
Examples of strategies, goals, objectives and action plans are
shown for a business organization designed to improve the
rural economy through developing rural businesses.
Remember, the vision is what you want to accomplish.
Mission is a general statement of how you will achieve your
vision.
Strategies are a series of ways of using the mission to achieve
the vision.
Goals are statements of what needs to be accomplished to
implement the strategy.
Objectives are specific actions and timelines for achieving the
goal.
Action plans are specific actions that need to be taken for
reaching the milestones within the timeline of the objectives.
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Example

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Four Activities of the
Strategic Mgmt Process
• Review and Define the Organizational
Mission
• Analyze and Formulate Strategies
• Set Objectives to Achieve Strategy
• Implement Strategies Through Projects

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Review and Define the
Organizational Mission
• Mission Statements Identify the Scope of the Organization in
Terms of its Product or Service.
• The mission statement communicates and identifies the purpose
of the Org’n to all stakeholders.
• Traditional components found in MS’s are: major products and
services, target customers and markets, and geographical domain.
• Frequently include Organizational Philosophy, Key Technologies,
Public Image and Contribution to Society.
Examples
• Provide Cloud Computing Services
• Provide Data Mining Services
• Provide Information Technology Services
• Increase Shareholder Value
• Provide High-value Products to Our Customer.

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Analyze and Formulate
Strategies
• What needs to be done to reach objectives.
• SF includes determining and evaluating alternatives that
support the Orgn’s objectives and selecting the best
alternative.
• The first step is an evaluation of the past and current
position of the enterprise – an analysis of who are the
customers and what are their needs as they see them.
• The next step is an assessment of the Internal and
External Environments.
• SWOT Analysis
• Formulating strategy might range around 20 percent of
management’s effort.

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Set Objectives to Achieve
Strategies
• Objectives Translate Org’n Strategy into Specific,
Concrete, Measurable Terms
• Typically, Objectives Cover Markets, Products,
Innovation, Productivity, Quality, Finance, Profitability,
Employees and Consumers
• Objectives should be as operational as possible, i.e.
objectives should include a time frame, be measurable,
be in an identifiable state, and be realistic.
• SMART Goals (Specific, Measurable, Assignable,
Realistic and Time Bound)

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SMART (Objectives)

• Specific : Be Specific in Targeting an Objective

• Measurable: Establish a Measurable Indicator of
Progress
• Assignable: Make the Objective Assignable to One
Person for Completion
• Realistic: State What can Realistically be Done with
Available Resources
• Time Related: State When the Objective can be
Achieved

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Implement Strategies
through Projects
• Implementation Requires Action and Completing Tasks:
• First, completing tasks requires allocation of resources:
Funds, People, Technological Skills, Management
Talents And Equipment. Multiple objectives place
conflicting demands on resources.
• Second, implementation requires a Formal and Informal
Organization that Complements and Supports Strategy
and Projects.
• Third, Planning and Control Systems must be in place.
• Fourth, Motivating Project Contributors.
• Finally, portfolio mgmt and prioritizing projects.

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THE NEED FOR A PROJECT PORTFOLIO
MANAGEMENT SYSTEM

1. THE IMPLEMENTATION GAP

– Conflicts Frequently Occur Amongst Functional

Managers And Cause Lack Of Trust
– Frequent Meetings Are Called To Establish Or Re-
negotiate Priorities
– People Frequently Shift From One Project To Another
– People Are Working On Multiple Projects And Feel In-
efficient
– Resources Are Not Adequate

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THE NEED FOR A PROJECT PORTFOLIO
MANAGEMENT SYSTEM

2. ORGANIZATION POLITICS

• Politics can influence which projects receive funding and high

priority
• Project Selection may not be on Facts and Sound Reasoning but on
Persuasiveness and Power of People Advocating Projects
• Sacred Cow Project: Project that a powerful, high ranking official
advocates
• New Baby: Irrational Obsession with a Project
• Project Sponsors’ Role
• Top Management should develop a System for Identifying and
Selecting Projects that Reduce the Impact of Internal Politics and
Fosters the Selection of the Best Projects

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THE NEED FOR A PROJECT PORTFOLIO
MANAGEMENT SYSTEM

3. RESOURCE CONFLICTS AND MULTI-TASKING

• Problem of Sharing and Scheduling Resources across

Projects
• Multitasking Involves Starting and Stopping Work on one
Task to go and work on another Project and then Return
to work on the Original Task
• Less Efficient People

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Benefits of Project Portfolio
Mgmt
• Builds Discipline into Project Selection Process
• Links Project Selection to Strategic Metrics
• Prioritizes Project Proposals across a common set of
criteria, rather than on politics or emotion
• Allocates Resources to Projects that Align with Strategic
Direction
• Balances Risk across all Projects
• Improves Communication and supports Agreement on
Project Goals
• Justifies killing Projects that do not support Organization
Strategy

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A PORTFOLIO
MANAGEMENT SYSTEM
• The aim of portfolio mgmt is to ensure that Projects are
aligned with Strategic Goals and prioritized appropriately.
• Since projects vying for funding and personnel usually
outnumber available resources, it is imp to follow a logical
and defined process for selecting the projects to implement.

• Design of a Portfolio Management System should include:

– Classification of a Project
– Selection Criteria
– Sources of Proposals
– Evaluating Proposals
– Managing the Portfolio of Projects

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CLASSIFICATION OF THE
PROJECT
 COMPLIANCE or EMERGENCY: “MUST DO PROJECTS” TO
MEET REGULATORY CONDITIONS REQUIRED TO OPERATE
IN A REGION

 OPERATIONAL / Infrastructure: TO SUPPORT CURRENT

OPERATIONS e.g. REDUCE DOWNTIME, IMPROVE
EFFICIENCY, ENHANCE QUALITY ETC.

 STRATEGIC: DIRECTLY SUPPORT LONG RUN MISSION e.g.

NEW PRODUCT, RESEARCH & DEVELOPMENT PROJECTS
ETC.

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CRITERIA FOR PROJECT
SELECTION
Financial Models: Preferred Method To Evaluate Projects

– PAY BACK PERIOD (in Years) : ESTIMATED

PROJECT COST / ANNUAL SAVINGS
– RETURN ON INVESTMENT (in %)
– NET PRESENT VALUE (NPV) : Uses Time Value of
Money, Cash Flows and Profitability

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 Non-financial Criteria
Long-term Survival (developing and maintaining core
competencies)

•To capture larger market share

•To make it difficult for competitors to enter the market
•To develop an enabler product
•To develop core technology that will be used in next-gen
products
•To reduce dependency on unreliable suppliers
•To prevent government intervention and regulation

Less Tangible Criteria - Restore Corporate Image, Enhance

Brand Recognition, CSR initiatives
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TWO MULTI-CRITERIA
SELECTION MODELS
Checklist Models
– List of Questions to Review Potential Projects
– Determine Acceptance or Rejection

– Flexibility in Selecting Different Projects With Some Variations in Questions

– Fails to Answer the Relative Importance or Value of Potential Projects
– Fails to Allow Comparison With Other Potential Projects
– Room for Power Play, Politics, Manipulation

Multi-Weighted Scoring Models

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MULTI-WEIGHTED SCORING
MODEL EXAMPLE

CRITERION WEIGHTAGE
A. STAY WITH CORE COMPETENCIES 2.0
B. STRATEGIC FIT 3.0
C. URGENCY 2.0
D. 25% OF SALES FROM NEW PRODUCTS 2.5
E. REDUCE DEFECTS TO LESS THAN 1% 1.0
F. IMPROVE CUSTOMER LOYALTY 1.0
G. ROI OF 18% + 3.0

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CONTRIBUTION VALUES TO EACH
CRITERION FOR EACH PROJECT

PROJECT A B C D E F G WT. TOTAL

1 1 8 2 6 0 6 5 66
2 3 3 2 0 0 5 1 27
3 3 0 10 0 0 6 0 32
4 1 10 5 10 0 8 9 102

• Highest Priority: Project 4, then Project 1.

• Projects Screened Out : Projects 2 and 3,
If criterion is; weighted total should be > 50.

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SOURCES OF PROPOSALS

• Encourage and Keep Solicitation Open to all Sources:

Internal Sources
External Sources
• Solicit Ideas for Projects when the knowledge
requirements are not available in the organization
• Request for Proposal
• Bid to design and build a new operating room that uses latest technology

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Ranking Proposals and
Selection of Projects
• Follow a screening process.
• Data and info are collected to assess the Value of the
Proposed Project to the Organization and for future backup.
If the sponsor decides to pursue the project on the basis of
collected data, it is forwarded to the project priority team or
the PO. Given the selection criteria and current portfolio of
projects, the priority team rejects or accepts the project. If
accepted, sets implementation in motion.
• Use Evaluation Form to Prioritize and Select New Projects.
• Consider Impact of Project on Meeting a Particular
Objective.

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APPLYING A SELECTION
MODEL
• Project Classification: Project’s Fit to the Organization’s
Strategy
• Selecting a Model: Multiple Criteria to Select the Project
• Best Use of Human and Capital Resources to Maximize
Return on Investment in the Long Run
• Researching New Technologies, Public Image, Ethical
Position, Protection of Environment, Core
Competencies, Strategic Fit

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MANAGING THE
PORTFOLIO SYSTEM
• Senior Management Input
– Guidance in Establishing Selection Criteria
– Balance Available Resources Among Different Types of Projects

• The Governance Team Responsibilities

– Responsible for Publishing the Priority of Every Project
– Periodic Priority Review

• Balancing the Portfolio for Risks and Types of

Projects

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L5 - Essentials of Project Management
First Semester 2024-25 (S1-24)

Thank You!
M K Hamirwasia
[email protected]

BITS Pilani, Pilani Campus