3

Identifying and Selecting Projects

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Chapter Concepts

How projects are identified and selected

A project charter
Outsourcing projects using a request for proposal
The proposal solicitation process
Project Identification
Start of Initiating phase
Recognize need, problem, or
opportunity
Various ways for identification
 Organizations strategic planning
 Response to unexpected events
 Group organized to address a
need
Important to clearly identify need
to determine if worth pursuing
Use decision making process to
prioritize and select project with
greatest need
Project Identification

Projects can also be identified as part of a company’s

normal operational or maintenance needs, i.e. to reduce
costs, complying government standards/regulations
Projects can also be identified as a result of unexpected
events—such as natural disasters
Projects may also be initiated in cases such as volunteers’
activities
In short, projects are identified in various ways by
different organizations and it is important to clearly
define the need
Gathering data about the need or opportunity before
the startup of any project to determine if it is worth
pursuing
Sometimes, organizations identify several or many
needs but have limited funds and people available to
pursue potential projects to address all of those
needs. So what do they do to solve this?
In such cases, the company must go through a
decision-‐making process to prioritize and
select those projects that will result in the greatest
overall benefit
Project Selection
Evaluate needs, costs,
benefits
Determine which
projects to be implemented
Select project
 Develop criteria
 List assumptions
 Gather data
 Evaluate each opportunity
Combine “gut” feelings and
quantitative information to
make decision
Project Selection

The benefits and consequences, advantages and

disadvantages, plusses and minuses of each project
need to be considered and evaluated
They can be quantitative and qualitative, tangible
and intangible.
Quantitative benefits could be financial, i.e. increase
in sales
Intangible benefits could be improving the
company’s image or employee morale
Steps in project selection process:
1. Develop a set of criteria against which the project will
be evaluated
• Include both quantitative and qualitative factors
• i.e. alignment with company goals, anticipated sales
volume, increase in market share, etc etc
2. List assumptions that will be used as the basis for each
project. For example: obtaining a bank loan to start up a
new business/project
3. Gather data and information for each project to help
ensure an intelligent decision regarding project
selection: how?
Steps in project selection process:

4. Evaluate each project against the criteria:

individuals from different backgrounds should be
included in the process of evaluation. WHY?
Project Charter
sometimes called a project authorization or
project initiation document
Purpose
Provides sponsor approval
Commits funding for the project: by who?
Summarizes key conditions and limitations
Establishes framework to develop baseline plan
Possible elements of a Project Charter
1. Project title should be concise and create a vision for the
end result of the project
2. Purpose summarizes the need and justification for the
project (the rationale)
3. Description provides a high-‐level description of the project.
It may include a description of the major work elements or
phases of the project or even a preliminary work breakdown
structure delineating the major work elements
4. Objective is a statement of what is accomplished—the end
product or deliverable. It can indicate the amount of funds
authorized for the project and the expected completion
time
5. Success criteria or expected benefits indicate the outcomes
or expected quantitative benefits that will result from
implementation of the project
6. Funding indicates the total amount of funds the sponsor
authorizes for the project
7. Major deliverables are the major end products or items that
are expected to be produced during and at the completion of
the performance of the project
8. Acceptance criteria describe the quantitative criteria for each
major deliverable that the sponsor will use to verify that each
deliverable meets certain performance specifications
9. Milestone schedule is a list of target dates or times for the
achievement of key events in the project timetable
10. Key assumptions include those that the project rationale or
justification is based on
11. Constraints could include such things as a requirement to
complete the project without disrupting the current
workflow or the necessity to outsource a project
12. Major risks identify any risk that the sponsor thinks has a
high likelihood of occurrence
13. Approval requirements define the limits of authority of the
project manager
14. Project manager is an individual in the organization who has
been identified to be the manager of the project
15. Reporting requirements state the frequency and content of
project status reports and reviews
16. Sponsor designee is the person who the sponsor designates
to act on behalf of the project sponsor
17. Approval signature and date indicate that the sponsor has
officially of formally authorized the project

• Example of a project charter in page 39 of the textbook

• Example
Preparing a Request for Proposal

Decision made to outsource to external resource

Comprehensively describe project requirements
 Includes need, problem, or opportunity description
 Allows contractors to develop a thorough proposal
 Facilitates the development of evaluation criteria
May be communicated informally or formally, in
writing or verbally
Guidelines for Developing an RFP, page 41
State project objective or purpose
Provide a statement of work
Include customer requirements
State deliverables the customer
expects
State acceptance criteria
List customer supplied items
State approvals required
State type of contract
State payment terms
State schedule and key
milestones
List format and content
instructions
Indicate due date
Include evaluation criteria
Include level of effort or funds
available
Soliciting Proposals

Solicitation
Conditions
Notify potential contractors Requirements are sometimes
 Identify selected group in communicated verbally instead of
advance to send copy via a formal RFP
 Advertise in selected journals, All RFPs start with identification
newspapers, or websites of a need, problem, or
Maintain competitive opportunity
situation
 Provide equal information to
all bidders
 Hold bidders’ meeting to
answer questions
Critical Success Factors
The need must be clearly defined before preparing a request for proposal (RFP).
When selecting a project from among several needs or opportunities, the decision should be
based on which project will provide the greatest overall benefits compared to its costs and
possible consequences.
Having a well-‐understood evaluation and selection process and a well-‐rounded committee
will increase the chances of making the best project selection decision.
Establish quantitative project success criteria, or expected benefits.
A good RFP allows contractors to understand what the customer expects so that they can
prepare a thorough proposal that addresses the customer’s needs and requirements.
A request for proposal should include a statement of work, customer requirements,
expected deliverables, and the criteria by which the customer will evaluate proposals.
An RFP should provide instructions for the format and content of contractor proposals so
that the customer will be able to make a consistent and fair comparison and evaluation of all
the proposals.
Customers must be careful not to provide information to only some of the contractors
because it would give these contractors an unfair competitive advantage in preparing their
proposals.
Summary
The initiating phase of the project life cycle starts with recognizing a need, problem, or
opportunity for which a project or projects are identified to address the need.
Sometimes organizations identify several or many needs but have limited funds and people
available to pursue potential projects to address all of those needs. In such cases, the
company must go through a decision-‐making process to prioritize and select those projects
that will result in the greatest overall benefit.
Project selection involves evaluating potential projects and then deciding which should move
forward to be implemented.
Once a project is selected, it is formally authorized using a document referred to as a project
charter, sometimes called a project authorization or project initiation document.
In some cases, an organization does not have the expertise or staff capacity to plan and
perform the project or major portions of the project, and therefore decides to have the
project completed by an external resource (contractor) and prepares and RFP.
Once the RFP has been prepared, the customer solicits proposals by notifying potential
contractors that the RFP is available.
Not all project life cycles include the preparation of a written request for proposal by a
customer and subsequent submittal of proposals from contractors. Some endeavors move
from the initiating phase, where a project is identified and selected, into the planning and
performing phases of the life cycle.