INTRODUCTION

INTRODUCTION

All organizations must select the projects they decide to pursue from among numerous opportunities. What criteria determine which projects should be supported? Obviously, this is no simple decision. The consequences of poor decisions can be enormously expensive. Recent research suggests that in the realm of information technology (IT), companies squander over $50 billion a year on projects that are created but never used by their intended clients. How do we make the most reasonable choices in selecting projects? What kind of information should we collect? Should decisions be based strictly on financial analysis, or should other criteria be considered? In this chapter, we will try to answer such questions as we take a closer look at the process of project selection. We will examine a number of different approaches for evaluating and selecting potential projects. The various methods for project selection run along a continuum from highly qualitative, or judgment-based, approaches to those that rely on quantitative analysis. Of course, each approach has benefits and drawbacks, which must be considered in turn. We will also discuss a number of issues related to the management of a project portfolio—the set of projects that an organization is undertaking at any given time. For example, Rubbermaid, Inc. routinely undertakes hundreds of new product development projects simultaneously, always searching for opportunities with strong commercial prospects. When a firm is pursuing multiple projects, the challenges of strategic decision making, resource management, scheduling, and operational control are magnified.