Project Selection

00:02 As I said in the previous lesson, a project must relate to a business strategy. But how were the two connected and what creates the demand for a project in the first place? Good questions.

00:15 So let's look into them.

00:18 There are a few key triggers that will jump start a business into executing a project.

00:24 There might be a market need.

00:27 This is when your company wants to develop a product to address their clients needs or to keep up with the competition.

00:34 For example, ATM bank needs to develop mobile banking, as other banks have done.

00:40 But to get there, the bank needs to manage a complex project with various activities like software development, security, financial and privacy regulations, etc..

00:51 And of course, all under time and budget constraints.

00:56 If you were too late to introduce it, you risk losing customers.

01:04 Or there could be a business need.

01:07 During the financial crisis, for example, many companies had to execute projects to reduce costs, optimize processes, or increase revenues by expanding the customer base just to stay in business.

01:20 Also the demand for a project may arise from technological advancement.

01:27 Technology may advance to the point where your business can be automated or your products need to change.

01:33 For example, anything you use your smartphone for nowadays paying for things, booking a taxi, even ordering lunch surely involved a project.

01:45 A project may come as the result of a customer request, say if a key customer requires a tailored service or product.

01:53 For example, you are a car dealer and your biggest client is a taxi company and they request making your internal systems more compatible with theirs.

02:03 You are likely to approve such a project.

02:08 Or due to legal requirements, regulations and laws change and the business will need to comply.

02:16 Social media is a prime example where laws and regulations are constantly updating as the technology and features advance.

02:24 You've probably noticed the general data privacy regulations introduced in the EU, right? If not, just check your email inbox.

02:34 There could also be social needs.

02:36 These can be anything from digging tunnels to extending hospitals to building an Eiffel Tower. Anything that a government or organization can do to satisfy a social need. And lastly, there are ecological impact considerations.

02:53 Companies are often required and obliged to improve their industrial processes to reduce emissions. Many countries have vowed to only allow electric cars on the road by a certain year. A massive project for car manufacturers.

03:07 See, there are many things that can create a demand for a project and all have to do with the companies or organisations.

03:14 Wider strategy.

03:16 Once a strategic goal is defined or a need arises, the project will be the instrument to achieve that goal.

03:23 But needs, such as the ones mentioned, are not likely to arrive one by one in a timely manner.

03:29 So how does a corporation choose which ones take priority and deserve a project? The demand will require a project proposal, and the owner of this proposal will need to put it to the attention of higher management to compete for the limited resources of the organization.

03:47 Management will then review the projects and decide which ones to execute, which to discard, and which to postpone for a later date.

03:55 Urgency is a key factor when selecting projects.

03:58 Say a new regulation is imposed which requires your company to comply with the latest standards or lose their license to work in the country.

04:07 You can bet that the Board of Directors will prioritise a project that resolves this first. This process is referred to as project selection. It's an essential task for top management.

04:21 They must select the projects which bring the most value to the company financial and non-financial. In the eyes of the board of directors, projects are investments. They use resources again, financial and otherwise, with the objective of seeing a worthwhile return for the business.

04:40 As you can probably guess, several projects are usually on the go at the same time.

04:46 That said, when the board of directors is presented with possible projects, they often select several of them and add them into a project portfolio.

04:55 The board of directors then dabbles in what is called project portfolio management.

05:00 This is the process of prioritizing projects and the administration and control of large sets of projects and programs.

05:07 Basically, the objective is to achieve the results and combine resources across projects in an optimal way.

05:15 Like we said, projects are investments and with any investment, the preliminary analysis needs to be performed with care.

05:23 Projects consume enormous amounts of resources, finances, time, effort and attention.

05:30 So if they're not aligned with the business strategy, then they're a massive waste leading to many disappointed stakeholders at best, and a bankrupt business at worst. No pressure, then.

05:42 Great. Next lesson, we'll have a look at the project manager themselves and what their role involves.

05:49 See you there.