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It's being rather a tough choice on selecting projects. (Different case from what I had posted before.) Now in the scenario if there is Project A and B. Only one project can be executed and that has to be chosen. Both are given the same resources, costing/budgeting. Project A would generate revenue of 100$, and senior management would be happy. Project B will make 60$, increased productivity for staff and senior management will be happy as well.

TMS = Top management Satisfaction UWE = User Workflow Efficiency Increased

| PROJECT | RESOURCES | COST | REVENUE | TMS | UWE |
----------------------------------------------------
|       A |      r100 |   30 |     100 | Yes |  No |
|       B |      r100 |   30 |      60 | Yes | Yes |

Which project should be choosen and how to justify it?

Here is what I came up with and chose Project B, because:

  • The project that can be delivered in shorter period of time.
  • As staff is trained to and their workflow are more productive, they will increase the revenue generation in the long run not only for today.
  • 100$ seems like one time project and doesn't seem to have an impact on the company's business operations and backbone or users.
  • Probably Project B could leave re-usable prototypes, artifacts.
  • The project that uses development tools that doesn't have a high frequency of new versions coming in but stable plus possible to adapt to future changes in the business model and processes.

There will be expertise answers out there and mine could have loop holes. Hence please throw some perspective or any guidance/article that could support better justification.

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You should quantify TMS and UME. Rarely is anything black and white as a yes or no, but rather degrees. And you need a risk assessment as part of the analysis. –  David Espina Feb 21 '13 at 15:35
    
What does " increased productivity for staff " mean? How much of an increase? What is increasing? You really need to quantify this value if your going to make an intelligent comparison. –  Andrew Clear Feb 21 '13 at 20:19
    
@DavidEspina TMS is that to give a measure Top Management has given approval for both projects and they are equally satisfied with the expected outcome. For UME, it shows a measure of process quality improvement/CIQ. Thern there's is the usual risk measure. for your last statment, What constraints should I apply the risk assessment? Do you mean anything specific? –  bonCodigo Feb 21 '13 at 21:04
    
What is the overarching strategic goal/vision of the organization? This vision statement will provide context for you to help make the choice. –  Mark Phillips Feb 22 '13 at 17:16
    
@MarkPhillips can you give me a hint, how vission can help make the choice? Are we coming down to core-values or realizing future state and involve it to make the decision? What if on the way business model changes? Or a totally new industry opens up with the current business. E.g. Currently you provide financial services, then later you will be providing insurance or drastically health care ;) –  bonCodigo Feb 22 '13 at 19:18
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4 Answers 4

TL; DR

Project selection is the job of the project sponsor, product manager, or steering committee. It is not the job of the project manager. Very Bad Things™ (mostly for you) will often result from this.

Why You Shouldn't Do What You're Doing

Part of the problem here is that it seems like a project manager is being asked to select and justify a project. This is generally out of scope for the role.

Projects require an executive sponsor, who generally supports a given project for strategic reasons. Those reasons may be earnings, return on investment, efficiency or productivity improvements, or just because it will look good to someone else on Mahogany Row.

The point is, the reason doesn't matter for the purposes of project initiation. The goals of the project may certainly impact scheduling or the selection of project controls, but the decision of which project to pursue belongs at a pay grade above the project manager.

How a Project Manager Can Add Value to Portfolio Selection

If you have opinions about the feasibility or value of a given project, or wish to exert some influence on the strategic decisions of your company, go right ahead and expend a little political capital by sharing what you know with the steering committee or project sponsor. However, I'd personally recommend against playing the Dilbertesque game of trying to quantify a business decision that is fundamentally one of subjective organizational value, and that is firmly outside the project management domain of process control.

Division of Responsibilities

The executive sponsor has the responsibility to say "I want to champion this project because..." and then make the case for it. Your job, as a project manager, is to look at the proposed project and provide your professional opinion about the resources required to do it, and whether or not the goal can be met with the resources available to the project.

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Now that, How a Project Manager Can Add Value to Portfolio Selection is very helpful. +1 –  bonCodigo Feb 22 '13 at 19:19
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+1 For a great answer (and reminding us where a PM role should stop)! –  Jeach Feb 25 '13 at 22:29
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For the sake of maximum simplicity, let's say you have two projects that will take the same amount of time to complete (3 months) and will deliver the same benefit when they are complete ($10 per month). I'll also assume that you intend to do both projects eventually, assuming nothing more important comes in first.

One way to decide which to start is to look at the cost of delay for each project.

Starting both projects today you have a payoff that looks a bit like this: enter image description here

After 3 months of work where you get no benefit for either project, then you start earning your $10 a month.

Try modelling what happens to the payoff for each project if you start it after the other. For example, let's say there is a trade show or a competitor likely to beat us to market in month 5. If we start project A in month 4 (after the completion of Project B) we won't be complete in time for that event causing us to get less back each month for our investment.

enter image description here

By starting later, a pesky competitor get's their product out first and erodes our monthly benefit to $8 a month, the new expected payoff is the green area. The difference between stating now and starting after project B.

Next look at what happens if we do them the other way around. Project B isn't as time critical as project A - there is no competing product or other event likely to affect the payoff if we do project A first, then do B:

enter image description here

Again, the green area is our new expected payoff and the red area shows the cost of delay for starting after project A.

In this case, it's pretty obvious we should start project A now and start project B afterwards since the cost of delay is significantly higher for project A.

(I hope this makes more sense now!)

http://leanagilechange.com/leanagilewiki/index.php?title=Cost_of_Delay

And I recommend Don Reinertsen/Preson Smith 'Developing products in half the time' for more info.

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Thanks but I am not getting what you meant here. Delay could only occur if we are to execute both projects? No? Here, only one project can be executed and that has to be justified... –  bonCodigo Feb 21 '13 at 15:29
    
Sorry, I rushed that answer a bit, will edit and attempt to clarify! –  Ben Feb 21 '13 at 15:32
    
Have updated the answer - I am making (what might be a bad) assumption that the one you don't do now will still be a valid option to work on once the one you do is complete. –  Ben Feb 21 '13 at 16:35
    
That assumption doesn't apply to my scenario though. Only one can be done. There won't be a second one followed by.. Perhaps your answer could be answering another questions I had posted..please take a look –  bonCodigo Feb 21 '13 at 16:39
    
No, Cost of Delay still applies. The delay time in the project not done in this case is infinite. So you can still calculate and compare the two metrics. Also, Principles of Product Development Flow is Reinertsen's best work! –  Andrew Clear Feb 21 '13 at 20:17
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Think like a small business owner

One approach to making better decisions in such situations is to think of your department or section as a small business. Which Project will you opt to do if you were a small business?

  • If you were tight for cash, don't know where the cash is going to come from for your next payroll or for next month's rent, you will opt for Project A.
  • However, if your cash situation is not so dire, you can afford to wait for the potentially larger gains over the longer period that Project B seems to promise.

This is why finance people like to make profit centers within larger companies. They treat a section of a company as a separate business and calculate the profits or losses for that section separately - forcing people to think like business owners rather than employees.

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I haven't attended this course, but I'll cite it because it seems relevant How to Prioritize Projects When Each One is Critical.

I have no affiliation with the vendor - I just hoped it might help the OP (and provide some PDU's)

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