Project Selection Method

Project Selection Methods

Due to a general lack of resources that is common among most companies, rarely can an organization chase all available opportunities. What happens in most cases is that, due to the limited resources, a selection process will have to be undertaken (Usmani, 2021).

As stakes can be high, organizations have many techniques when it comes to selecting a project. This is done to avoid costly mistakes.

The techniques can be divided into two categories, and within these categories, contain many different methods that can be employed. Firstly, the two categories are:

1. Benefit Measurement Methods

2. Constrained Optimization Methods

(Usmani, 2021)

Benefit Measurement Methods

· Cost Benefit Ratio – will measure the costs of investing in a project against the value of the return upon completion.

· Economic Model – this method describes the difference between costs invested and revenue generated in one number.

· Payback Period – this will look at the length of time it will take for your company to recoup its expenses for a particular project.

· Discounted Cash Flow – deals with the issues around calculating the present value of future earned dollars.

· Net Presented Value – this model will aid in putting the whole life-cycle of the project into perspective when discussing the earnings.

· Scoring Models – this is a very flexible way of allowing you to compare projects to each other.

· Internal Rate of Return – this incorporates the Net Presented Value into its calculations by setting it to zero.

· Opportunity Cost – this will look at what you’re missing out on by choosing one project over another on.

(Senapathy, 2021)

Constrained Optimization

· Linear Programming Method of Project Selection – for this method, you aim to reduce the project cost by efficiently reducing the duration of the project.

· Integer Programming Method of Project Selection – this method works on deciding based on integer values rather than fractional values.

· Dynamic Programming Method of Project Selection – this involves the breaking down of a complex problem into a sequence of simpler problems.

· Multi Objective Programming Method of Project Selection – this involves the making of decisions for multiple problems by using mathematical optimization.

(Testingbrain, 2021)

References

Senapathy, Y., 2021. 13 Top Project Selection Methods. [Online] Available at: https://www.4pmti.com/blog/project-selection-methods/ [Accessed 12 June 2021].

Testingbrain, 2021. Constrained Optimization Methods of Project Selection - An Overview. [Online] Available at: https://www.testingbrain.com/project-management/constrained-optimization-methods-of-project-selection.html [Accessed 12 October 2021].

Usmani, F., 2021. Project Selection Methods. [Online] Available at: https://pmstudycircle.com/project-selection-methods/ [Accessed 12 October 2021].