Chapter 2 Organization Strategy Flashcards
Project managers must respond to changes with appropriate decisions about future projects
Changes in organizations mission and strategy
Focus on:
- problems or solutions with low strategic priority
- immediate customer rather than whole market place
Mistakes caused by not understanding role of projects
Requires every project to be clearly linked to strategy
Theme and focus on firms future
Strategic Management
- Review and define organizational mission
- Set long-range goals&objectives
- Analyze&formulate strategies to reach objectives
- Implement strategies through projects
4 Activities of Strategic Management Process
- S pecific in targeting an objective
- M easurable indicators of progress
- A ssignable to one person for completion
- R ealistic ally done with available resources
- T ime related - objective can be achieved
Characteristics of Objectives
SMART
Lack of understanding and consensus on strategy among top management
Implementation Gap
Project selection is based on persuasiveness and power of people advocating projects
Organization Politics
Multiproject environment creates inter-dependency relationships
Resource Conflicts and multitasking
Builds discipline
Links project selection to strategic metrics
Prioritizes project proposals across common set of criteria
Allocates resources to projects
Benefits of Project Portfolio Management
Classification of project
Selection criteria depend upon classification
Sources of proposals
Design of project portfolio system
Compliance (must do projects)
Strategic align to strategic goals
Operational - car worn down, so get new tires
Portfolio of Projects by Type
Financial models: payback, net present value (NPV)
Non-financial models: projects of strategic importance to firm
Selection Criteria
Use several weighted selection criteria to evaluate project proposals
Multi-weighted scoring models
Measures time project will take to recover project investment
Uses more desirable shorter paybacks
Payback Model
Ignores time value of money
Assumes cash inflows for investment period
Limitations of Payback
Uses managements minimum desired rate-of-return (discount rate) to compute present value of all net cash inflows
Net Present Value (NPV) model
Project meets minimum desired rate of return& eligible for further consideration
Positive NPV
Project rejected
Negative NPV
Capture larger market share
Make it difficult for competitors to enter m
Develop enabler product, which will increase sales more profitable products
Nonfinancial strategic criteria
Uses list of questions to review potential projects
Fails to answer relative importance or value of potential project
Checklist Model
Uses several weighted qualitative and/or quantitative selection criteria
Multi-weighted scoring Model
Deciding how well strategic or operations project fits organizations strategy
Project Classification
Applying weighted scoring model to align projects closer with organizations goals
Selecting a Model
Within organizaton
Requests for Proposal (RFP) from external sources
Sources and Solicitation of Project Proposals
Prioritizing requires discipline, accountability, responsibility…
Ranking proposals/selection projects
Senior management input
Managing portfolio
Provide guidance in selecting criteria that are aligned with organizations goals
Senior Management input
Publish priority of every project
Ensure that project selection process is open
Governance Team Responsibilities
Involve evolutionary improvements to current products
Bread and butter projects
Represent revolutionary commercial opportunities using technical advances
Pearls
Involve technological breakthroughs with high commercial payoffs
Oysters
Showed promised but no longer viable
White Elephants
