Project Selection

Project Selection

1. Models

   • Numeric Model
     • Usually financially focused and quantifies the project in terms of time to repay the investment (payback) or return on investment
   • Non Numeric Model
     • Look at a much wider view ofthe project considering items such as; market share, client retention, move to a new field, or environmental issues
   • Aid decision-making leading to project selection. When choosing a selection model the points to consider are; realism, capability, ease ofuse, flexibility and cost effectiveness
   • Most importantly the model must evaluate projects by how well they meet a company's strategic goals and corporate-mission.

2. Production Considerations

   • Method ofimplementation • Time to be up and running • Other applications ofthe system • Learning curve - time until the product is saleable • Amount of double processing and waste • Extent ofoutside consultants required • Cost of power requirements • Interfacing equipment required • Period ofdisruption • Safety of system

3. Marketing Considerations

   • Number of potential users • Market share • Time to achieve proposed market share • Impact on current system • Ability to control quality ofinformation • Customer acceptance • Estimated life of new system • Spin-offs • Enhanced image of company • Extent of possible new markets.

4. Financial Considerations

   • Cost of new system • Impact on company cash-flow • Borrowing requirement • Time to break-even • Payback period, NPV and IRR • Size ofinvestment required • Cost ofimplementation • Cost oftraining • Cost of mistakes • Level offinancial risk.

5. Personnel Considerations

   • Skills requirements and availability • Training requirements (technology transfer) • Employment requirements • Level of resistance to change from current workforce • Impact on working conditions • Ergonomics, health and safety considerations • Effect on internal communication • Effect on job descriptions • Effect on work unions • Effect on morale.

6. Administration and other Considerations

   • Compliance with national and international standards • Reaction from shareholders and other stakeholders • Cost of maintenance contract • Disaster recovery planning • Cost of upgrading the system to keep pace with new technology • Vulnerability ofusing a single supplier • Customer service • Effect of centralised databases • Extent of computer literacy • Legal considerations.

7. Numeric Models

   • financial models and scoring models.

8. Payback Period

   • tTme taken to gain a financial return equal to the original investment. The time period is usually expressed in years and months

9. Net Present Value (NPV)

   • Where the cash-flow timing is expressed in years from the start date of the project, the inflation effect is assumed to act at the end of the first year or beginning of the second year, therefore all cash-flows in the first year are at present value.
   • measure ofthe value or worth added to the company by carrying out the project

10. Scoring Models

    • simply lists a number ofdesirable factors on a project selection proforma along with columns for Selected and Not Selected.