project management

Thursday, June 29, 2006

Organization strategy and project selection
i. I learned about organization strategy and project selection
- Very important to understand linkage between project management and strategic management.
- If your company change mission or strategies, every thing in company have to change too.
- How to implement those strategies? strategies change, project change, because directly link between project management and strategic management.
- Strategies are very important, if they wrong, competitor can win you,
- Company must have mission and vision, direction of company or picture, from vision and mission we have goals, related to strategy to reach objectives, and implement strategies, project come here, carry up projects.
- We have to integrate project management, strategies, and knowledge management, automatic come together, can not use project management without SM and KM.
- Project manager need to understand strategy, because of it help project manager make appropriate decisions and adjustments and can be effective project advocates.
- Strategic management are responding to change in the external environment and allocating scare resource of the firm to improve its competitive position.
- Strategic management require strong links among mission, objectives, strategy, and implementation.(all are related)

ii. The strategic management process: 4 activities
Review and define the organizational mission.
Set long-range goals and objectives.
Analyze and formulate strategies to reach objectives. Formulate says 20% (not difficult)
Implement strategies through projects. Implement says 80% (important, and more difficult)
1. Review and define the organizational mission, Mission:
- What we want to become?
- Scope of the organization
- Provides focus for decision making when shared by organizational managers and employees
- Everyone in organization should be keenly aware of the organization’s mission
- Communicates and identifies the purpose of the organization to all stakeholders
- Used for evaluating organization performance
- Mission statement include organizational philosophy, key technologies, public image, and contribution to society
- Relates directly to business success
- Decrease the chance of false directions by stakeholders

2. Set long-range goals and objectives
- Target for all levels of the organization.
- Where a firm is headed and when it is going to get there
- Cover: markets, products, innovations, productivity, quality, finance, profitability, employees, and consumers.
- Time frame
- Measurable
- Identifiable state
- Realistic

Objective should have 5 characteristics: SMART
- Specific: be specific in targeting an objective
- Measurable: Establish a measurable indicators of progress
- Assignable: Make the objective assignable to one person for completion
- Realistic): State what can realistically be done with available resources
- Time related:

3. Analyze and formulate strategies
- what need to be done to reach objective
- determining and evaluating alternatives and selecting the best alternative
- Step: 1st step, realistic evaluate past and current position who are the customer and what are there need, 2nd, assessment of internal and external environment, used SWOT analysis: Strengths and Weaknesses, and the Opportunities and Threats.
- Strategies have to support mission and objective

What is SWOT?
SWOT analysis is a powerful technique for understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats you face.
SWOT Analysis is a simple but powerful framework for analyzing your company's Strengths and Weaknesses, and the Opportunities and Threats you face. This helps you to focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

4. Implement strategies through projects
- how strategies will be realized
- allocation of resources
- complements and supports strategies and projects
- planning and control systems
- motivating project contribution
- prioritizing project

iii. Project Portfolio
We need for project portfolio management system, because of almost of projects are complicated projects. We need roles criteria priorities and key issue for reduce or prevent 3 problems: implementation gap, organization politics, and resource conflicts and multitasking.
- Implementation gap: misunderstanding, or lack of communication and consensus on strategy among top management and middle-level managers who independently implement the strategy.
- Organization politics: project selection is based on the persuasiveness and power of people advocating the projects.
- Resource conflicts and multitasking: the multiproject environment creates interdependency relationships of share resources which results in the starting, stopping, and restarting projects.

We know why project portfolio management system is very useful for project management. Because
- Builds discipline into project selection process.
- Links project selection to strategic metric.
- Prioritizes project proposal across a common set of criteria, rather than on politics or emotion.
- Allocates resources to projects that align with strategic direction.
- Balances risk across all projects.
- Justifies killing projects that do not support organization strategy.
- Improve communication and supports agreement to project goals.

A critical factor to ensure the success of integrating the strategies plan with project lies in a process that is all participants clearly know, starts with top management’s directives, with projects first and integrates them with the strategic plan

We have 3 types of portfolio of projects: must do (compliance) projects, operational projects, and strategy projects.
- Compliance projects: must do projects.
- Operational projects: needs to support current operations, these projects designed to improve efficiency of delivery systems, reduce product costs, and improve performance. TQM is operational project.
- Strategy projects: directly support organization’s long-run mission, do these strategies to make project.
How to select the projects? We use
- Selection criteria: financial model (NPV, Payback, and IRR) and non financial criteria.
- Multi-weighted scoring models: uses several weighted selection criteria to evaluate project proposals,
Remark: Selection criteria need to mirror the critical success factors of an organization. Models should not make the final decision, the people using the model should. Models are tools for guiding the evaluation process so that the decision-makers will consider relevant issues and reach a meeting of the minds as to what projects should be supported and not supported.


iv. Applying a selection model
Project Classification: deciding how a strategic or operation project fits the organization’s strategy.
- The most important criterion for selection is the project’s fit to the organization strategy.
- The criterion should be consistent across all types of projects and carry a high priority relative to other criteria.
- This uniformity across all priority models used can keep departments from sub optimizing the use of organization resources.
- The appropriate criterion can used to evaluate their proposal.
Selecting a Model: applying a weighted scoring model to bring projects to closer with the organization’s strategic goals.
- Reduces the number of wasteful projects.
- Helps identify proper goals for projects.
- Helps everyone involved understand how and why a projects is selected.
- Senior management is interested in identifying the potential mix of projects.
- Weighted scoring models result in bringing projects to closer alignment with strategic goals.
- Using a weighted scoring approach helps project managers understand how their project was selected.
- How their project contributes to organization goals.
- How it compares with other projects.
- Project selection is one of the most important decisions guiding the future success of an organization.

v. Project proposals

Sources and solicitation of project proposals
- within the organization
- RFP (Request for proposal) from external sources (contractors/vendors) with adequate experience to implement the project.
- Encourage and keep solicitations open to all sources (internal and external sponsors)
Ranking proposals and selection of projects
- Prioritizing requires discipline, accountability, responsibility, constrains, reduce flexibility, and loss of power.

vi. Managing the portfolio system
Senior management input
- Provide guidance in selecting criteria that are aligned with the organization’s goals.
- Decide how to balance available resources among current projects.
The priority team responsibility
- Publish the priority of every project
- Ensure that the project selection process is open and free of power politics.
- Reassess the organization’s goals and priorities
- Evaluate the progress of current projects

Balancing the portfolio for risks and types of projects
- to balance projects by type, risk, and resource demand.

vii. Project portfolio matrix
- Bread and butter: involve evolutionary improvements to current products and services
- Pearls: represent revolutionary commercial advances using proven technical advances.
- Oysters: involve technical breakthroughs with high commercial payoffs.
- White elephant: projects that at one time showed promise but are no longer viable.