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Project Management
Notes Choosing a project using the right method is therefore of utmost importance. This is what will
ultimately define the way the project is to be carried out.
But the question then arises as to how you would go about finding the right methodology for
your particular organisation. At this instance, you would need careful guidance in the project
selection criteria, as a small mistake could be detrimental to your project as a whole, and in the
long run, the organisation as well.
3.2.1 Selection Methods
There are various project selection methods practiced by the modern business organisations.
These methods have different features and characteristics. Therefore, each selection method is
best for different organisations.
Although there are many differences between these project selection methods, usually the
underlying concepts and principles are the same.
Following is an illustration of two of such methods (Benefit Measurement and Constrained
Optimisation methods).
Figure 3.1: Benefit Measurement and Constrained Optimization Methods
As the value of one project would need to be compared against the other projects, you could use
the benefit measurement methods. This could include various techniques, of which the following
are the most common:
1. You and your team could come up with certain criteria that you want your ideal project
objectives to meet. You could then give each project scores based on how they rate in each
of these criteria, and then choose the project with the highest score.
2. When it comes to the Discounted Cash flow method, the future value of a project is
ascertained by considering the present value and the interest earned on the money. The
higher the present value of the project, the better it would be for your organisation.
3. The rate of return received from the money is what is known as the IRR. Here again, you
need to be looking for a high rate of return from the project.
The mathematical approach is commonly used for larger projects. The constrained optimisation
methods require several calculations in order to decide on whether or not a project should be
rejected.
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