ameen
WEEK 2
Project Selection: 1.Aligning strategy with projects
2.Project investment criteria
3.Functional assessment
Production
Marketing
Financial
Human resources
Administration
Selection Models:
Selection (or screening) models help managers pick winners from a pool of projects. Screening models are numeric or nonnumeric and should have:
Realism
Capability
Flexibility
Ease of use
Cost effectiveness
Project Screening & Selection Issues:
Risk – unpredictability to the firm
Commercial – market potential
Internal operating – changes in firm operations
Additional – image, patent, fit, etc.
All models only partially reflect reality and have both objective and subjective factors embedded.
Project Selection Methods:
Non-numeric Models:
1.Sacred cow
2.Operating necessity
3.Competitive necessity
4.Product extension
5.Comparative benefit
6.Checklist
7.Simplified Scoring Models
8.Analytical Hierarchical Process
1. Checklist Model:
A checklist is a list of criteria applied to possible projects.
Requires agreement on criteria
Assumes all criteria are equally important
Checklists are valuable for recording opinions and encouraging discussion
Drawback:
Does not allow comparison with other potential projects
2. Simplified Scoring Models:
Each project receives a score that is the weighted sum of its grade on a list of criteria.
Scoring models require: agreement on criteria agreement on weights for criteria a score assigned for each criteria
Score = sigma ( Weight x Score )
3. Analytical Hierarchy Process:
The AHP is a four-step process:
1.Construct a hierarchy of criteria and sub criteria
2.Allocate weights to criteria
3.Assign numerical values to evaluation dimensions
4.Scores determined by summing the products of numeric evaluations and weights
Profile Models :
Show risk/return
Project Selection: 1.Aligning strategy with projects
2.Project investment criteria
3.Functional assessment
Production
Marketing
Financial
Human resources
Administration
Selection Models:
Selection (or screening) models help managers pick winners from a pool of projects. Screening models are numeric or nonnumeric and should have:
Realism
Capability
Flexibility
Ease of use
Cost effectiveness
Project Screening & Selection Issues:
Risk – unpredictability to the firm
Commercial – market potential
Internal operating – changes in firm operations
Additional – image, patent, fit, etc.
All models only partially reflect reality and have both objective and subjective factors embedded.
Project Selection Methods:
Non-numeric Models:
1.Sacred cow
2.Operating necessity
3.Competitive necessity
4.Product extension
5.Comparative benefit
6.Checklist
7.Simplified Scoring Models
8.Analytical Hierarchical Process
1. Checklist Model:
A checklist is a list of criteria applied to possible projects.
Requires agreement on criteria
Assumes all criteria are equally important
Checklists are valuable for recording opinions and encouraging discussion
Drawback:
Does not allow comparison with other potential projects
2. Simplified Scoring Models:
Each project receives a score that is the weighted sum of its grade on a list of criteria.
Scoring models require: agreement on criteria agreement on weights for criteria a score assigned for each criteria
Score = sigma ( Weight x Score )
3. Analytical Hierarchy Process:
The AHP is a four-step process:
1.Construct a hierarchy of criteria and sub criteria
2.Allocate weights to criteria
3.Assign numerical values to evaluation dimensions
4.Scores determined by summing the products of numeric evaluations and weights
Profile Models :
Show risk/return