The first step in effective project management is deciding which project is a good match for your team’s skill set, level of competence, and is likely to be successful. Methods for selecting projects use logical reasoning to pick projects based on their likelihood of success and to weed out unwanted projects with low chances of success. Aspirants preparing for the PMP® training or exam and practising project managers alike benefit from learning about project selection methods.
Different Methods of Project Selection
Ratio Of Benefits To Costs
In the Cost/Benefit Ratio, the cost invested in the project is compared to the outflow or return from the project, which is the Present Value of Inflow. Benefit-Cost Ratios or lower Cost-Benefit Ratios are generally preferred over others in project selection.
Model Of The Economy
EVA, or Economic Value Added, determines the return on capital of an organization by calculating the value-creation of its activities. Taxes and capital expenses are deducted from the net profit. The project manager will select the project that has the highest Economic Value Added if several projects are assigned to them. Numerical values are always used for the EVA and not percentages.
Project Management Scoring Model
The scoring model is a widely used method in project management. Selecting committee members list relevant criteria, weigh them according to their importance and priority, then add the weighted values. The highest-scoring project is chosen after these projects have been scored.
The cash flow payback period is the difference between total cash flows and average cash flows per period. It measures the time it takes for the project’s costs to be recouped. The Payback Period is one of the most basic methods for selecting projects. The payback period refers to how long it will take an investment to pay back its investment. A return on investment must occur within a certain time frame in order to repay its original cost.
The Net Present Value is calculated by dividing the current cash inflow by the current cash outflow for a given project. It must be positive. The NPV of a project should be taken into account when selecting one. Overlooking the Payback Period in favour of the NPV has the advantage of taking into account future investment returns.
Considerations Other Than Financial
An organization must consider factors other than financial gains; these factors are related to the overall objectives of the organization. A project selection method’s organizational strategy affects the choice that the organization makes in choosing a project. One of these organizational goals is customer service relationships. It is essential to build effective, cordial relationships with customers in today’s business world.
There are various ways in which Project Selection may be conducted. For an organization to be as certain as possible that the right decision is made for the company, it is best to try different methods for project selection and to look at many factors before choosing a project. Those interested in a career in project management can find project management courses and learning paths from KnowledgeHut that can prepare them for qualifications such as the PMP® training but also practical real-world knowledge useful for any project management career.
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