CPM/U4 Topic 5 Project Evaluation and Selection Criteria
The project evaluation process uses systemic analysis to gather data and reveal the effectiveness and efficiency of your management. This crucial exercise keeps projects on track and informs stakeholders of progress.
Every aspect of the project is measured to determine if it’s proceeding as planned, and if not, inform how project parts be improved. Basically, you’re asking the project a series of questions designed to discover what is working, what can be improved and whether the project is in fact useful. Tools like project dashboards and trackers help in the evaluation process by making key data readily available.
The project evaluation process has been around as long as there have been projects to evaluate. But when it comes to the science of project management, project evaluation can be broken down into three main types: pre-project evaluation, ongoing evaluation and post-project evaluation. So, let’s look at the project evaluation process, what it entails and how you can improve your technique.
Three Types of Project Evaluation
There are three points in a project where evaluation is most needed. While you can evaluate your project at any time, these are points where you should have the process officially scheduled.
(i) Pre-Project Evaluation
In a sense, you’re pre-evaluating your project when you write your project charter to pitch to the stakeholders. You cannot effectively plan, staff and control a new project if you’ve first not evaluated it. Pre-project evaluation is the only sure way you can determine the effectiveness of the project before executing it.
(ii) Ongoing Evaluation
To make sure your project is proceeding as planned and hitting all the scheduling and budget milestones you set, it’s crucial that you are constantly monitoring and reporting on your work in real-time. Only by using metrics can you measure the success of your project and whether or not you’re meeting the project’s goals and objectives.
(iii) Post-Project Evaluation
Think of this as a postmortem. The post-project evaluation is when you go through the project’s paperwork, interview the project team and principles, and analyze all relevant data so you can understand what worked and what went wrong. Only by developing this clear picture can you resolve issues in upcoming projects.
Project Selection is a process to assess each project idea and select the project with the highest priority.
Projects are still just suggestions at this stage, so the selection is often made based on only brief descriptions of the project. As some projects will only be ideas, you may need to write a brief description of each project before conducting the selection process.
Selection of projects is based on
(i) Benefits: A measure of the positive outcomes of the project. These are often described as “the reasons why you are undertaking the project”. The types of benefits of eradication projects include:
- Social and cultural
- Fulfilling commitments made as part of national, regional or international plans and agreements.
(ii) Feasibility: A measure of the likelihood of the project being a success, i.e. achieving its objectives. Projects vary greatly in complexity and risk. By considering feasibility when selecting projects it means the easiest projects with the greatest benefits are given priority.
Process of Project Selection
(i) Identification of Projects
The first step of this process, identification, requires a clearly defined and communicated strategy. The best option would be to set up a strategy development process that contains project identification and project selection as an integral part (cf. “How to Find the Right Projects” in sub-section White Papers). In fact, we observe that most organizations identify investment projects within their strategy development process, but delegate the identification of customer projects to their key account and sales departments.
(ii) Evaluation and Prioritization of Projects
Central part of the project selection process is evaluation and prioritization of identified projects. There are a couple of methods available:
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Benefit / Cost Ratio (BCR)
- Opportunity Cost (OC)
- Payback Period (PP)
- Initial Risk Assessment
These methods require a certain minimum level of “planning” for each one of the projects to be evaluated. We need to know
- Project life cycle duration, in number of accounting periods,
- Expected project cost per accounting period,
- Expected project revenue per accounting period,
- Overall risk values of the projects to be evaluated.
(iii) Selection and Initiation of Projects
Project selection and initiation is the step that naturally follows evaluation and prioritization. A particularly delicate step of project initiation turns out to be the staffing of project teams. As mentioned earlier, resources are scarce, and in most organizations appear to be the most limiting factor in project selection. If we take in too many projects we overload our resources, if we do not take in enough we do not utilize them economically enough. As discussed in the sub-section Multi Project Management, having too many staff members working in multi-tasking mode, i.e. on two or more projects at the same time, decreases overall productivity of the organization. On a medium / long term scale, it seems to be the better option to initiate projects in a way so that the teams can focus and work on one project at a time, thus, avoiding disturbances of one project by the others. Of course, that needs clear prioritization of the selected projects, based on evaluation done in the previous step.
(iv) Review of Projects
After project selection we need to regularly review projects that are under way in order to find out if they are still in-line with our strategy. Thus, the first way of checking them is repeating the initial evaluation with more accurate estimates as they become available; the second way is holding regular project management review meetings in order to identify major problems on a per-project basis, via project status reports.