Project Selection and Approval

Quick reference

• 00:04 Hi, I'm Ray Sheen.
• 00:05 I'd like to talk with you about project selection and approval, and in particular,
• 00:10 about some of the practices for deciding whether to do a project and
• 00:14 whether the organization is ready to start.
• 00:16 We've considered the requirements, the stakeholders, and the methodologies.
• 00:20 We now have a good understanding of what needs to be done, and
• 00:23 the approach that should be used.
• 00:25 It's time to decide, is this the right next project for the organization?
• 00:30 When discussing project selection, the key is to make sure that you've selected
• 00:35 the right project and not selected the wrong project.
• 00:38 It's as important to know when to say no as it is when to say yes.
• 00:43 The organization does not want to waste resources on an irrelevant or
• 00:47 ill-conceived project.
• 00:48 There are some criteria you can use to ensure that you are selecting the right
• 00:53 project.
• 00:53 First, make sure that the project is aligned with the strategy,
• 00:57 the project takes the organization in the direction that it needs to go.
• 01:01 In many organizations, a project ROI or return on investment is calculated
• 01:06 to ensure that the benefits offset the cost of the project.
• 01:10 Just because the topic is strategically aligned and
• 01:13 has a great potential benefits, it may not be the right time to initiate it.
• 01:18 For instance, if it is not yet well-defined, the goals, deliverables, and
• 01:22 boundaries aren't clear, there is some work to be done before full approval is
• 01:27 given, or the methodology needs to be an adaptive or iterative approach.
• 01:31 Also, before the organization should say yes,
• 01:34 there should be an idea about what they are committing to.
• 01:37 A high level budget and schedule should have been estimated.
• 01:40 This is not a detailed project plan,
• 01:42 that will come after the initial approval is given, and
• 01:45 the project manager can assemble the team and start that detailed planning.
• 01:50 The last consideration is the other projects that are in the pipeline.
• 01:54 This project may be a great idea, well-defined and understood, but
• 01:58 the organization is already over allocated on other projects,
• 02:02 adding one more is not helpful.
• 02:04 The project is not permanently cancelled but
• 02:06 the start date is delayed until there are adequate resources to do the work.
• 02:11 Let's look at some specific criteria used when selecting a project.
• 02:16 The project may be required because of compliance with changes of laws or
• 02:20 regulations.
• 02:21 When this is the case,
• 02:22 the organization may not have the option of saying no to the goal of the project,
• 02:26 but it can say no to a specific option for meeting the compliance requirements.
• 02:31 The key here is to select the best option, not just the first idea.
• 02:36 Many times projects are selected because of their strategic importance.
• 02:40 They may not have the best financial return in the near-term, but
• 02:44 they reposition the organization to better align with the strategy and
• 02:48 their completion enables other projects to be done.
• 02:51 When considering financial benefits, there are two ways to look at a project.
• 02:56 The first is how the project improves the entire portfolio of the business activity.
• 03:01 A specific project may only have a small ROI, but it becomes an enabler for
• 03:06 other projects and increases the ROI of the portfolio.
• 03:09 It may open a new market, expand a facility or capacity,
• 03:13 or provide a new system or technology.
• 03:15 The second perspective of financial return is the specific project return.
• 03:21 Hopefully, it has an excellent ROI,
• 03:23 the financial return more than offsets the project cost.
• 03:27 The final criteria is the project pipeline.
• 03:30 This can work both ways.
• 03:31 Sometimes we approve or accelerate a project to fill the pipeline and
• 03:35 keep the organization fully employed.
• 03:37 Other times, we delay or stop a project because there's not enough resources or
• 03:42 to prevent a conflict in a particular organization or facility.
• 03:46 Consider both the total resources and the potential collision of multiple
• 03:50 projects hitting the same milestone at the same time.
• 03:54 Once we've decided to move forward,
• 03:56 we now need to understand how we formally approve the project.
• 04:01 Every organization has a different process.
• 04:03 It may vary depending upon the type of project.
• 04:06 While every organization is unique,
• 04:08 there are a few best practices that we can look at.
• 04:10 Let's talk about the formal approach first.
• 04:13 A formal approach normally follows a formal review.
• 04:16 This is usually based upon the review of a project charter by an executive
• 04:20 management team.
• 04:21 The executives are often reviewing many project proposals,
• 04:25 they prioritize the projects, and based upon the resources available,
• 04:29 will find the highest priorities.
• 04:31 Depending upon the organization's project management methodology and the lifecycle,
• 04:36 they may fully fund the project or only fund the first few phases,
• 04:39 in which case the project must come back with the results of the work that they've
• 04:43 done to receive the additional funding to complete the project.
• 04:47 The executives may also impose constraints on the project, such as the methodology
• 04:51 the team must follow or the timing and availability of resources.
• 04:55 Formal approval is great when we have it, and is usually formally documented by
• 05:00 signing the charter or some other project authorization form.
• 05:04 However, many projects are informally approved.
• 05:06 This is usually done in the case of small, quick, or ambiguous projects.
• 05:11 These approvals may happen at a staff meeting or even a hallway conversation.
• 05:15 There's still a review of the charter or the project approach although often
• 05:20 the charter is just an informal list of the project W's, the what, who, why, when,
• 05:24 how, and where of the project boundaries.
• 05:27 The approval is often given in an informal manner,
• 05:30 with the project leader being told to just go do it.
• 05:33 Even when that's the case, I recommend that a follow-up email be sent,
• 05:37 documenting the approval.
• 05:39 A difficulty with informal approval for cross-functional projects is that
• 05:43 the other departments may not be aware of the need for their support.
• 05:47 The project leader must identify and recruit the resources that are needed for
• 05:50 the project.
• 05:51 If the project leader runs into problems getting those resources, he or
• 05:55 she must go back to the original stakeholder to get further guidance for
• 05:59 direction and to get their buy-in and
• 06:01 support to ensure that they can get the resources that are required.
• 06:05 Whether it's a formal approval or an informal approval,
• 06:08 it's important that the organization knows what projects have been selected and why.
• 06:14 It can then support those projects to successful conclusion.

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