2.1.4 Project Selection Tools and Techniques
Project selection tools, techniques and models are used by the
project selection team to evaluate both the qualitative and quantitative
characteristics of a given project or a group of projects. Their aim is to help
the project selection team select the project or group of projects that is
consistent with the strategic goals of the organisations. Souder (1973)
identified five criteria for project selection models:
- Realism: the model should reflect the
organisation's objectives and be applied throughout. The model should also take
into account the resource availability within the organisation
- Capability: the project selection model should
be able to deal with uncertainties
- Flexibility: the project selection model
should give clear results and be easy to modify when responding to specific
changes.
- Ease of use: The project selection model
should be convenient, easy to understand and use without requiring special
interpretation.
- Cost: the cost associated with using the
select project selection model should be low relative to the cost of the
projects and less than their potential benefits.
Meredith and Mantel (2010) argue that there are two types of
project selection models:
- Numeric project selection models: they use numbers as inputs
but the criteria they measure can be either objective or subjective.
- Non-numeric models: they do not use numbers as input.
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Furthermore, Cooper et al. (2001) broke down the project
selection models into five categories when discussing their popularity and
dominance for project selection and portfolio management:
- Use of financial methods: financial models are
used to rank projects against each other by determining their expected economic
value
- Use of strategic approach: these approaches
are concerned with the allocation of resources in the different strategic
buckets or categories within the organisation
- Use of scoring models: these models are used
as a ranking and prioritization tool with the project scores used to rank
projects against each other. The criteria mainly used with the scoring models
are the strategic fit, financial rewards and the risks.
- Use of bubble diagrams: these diagrams are
used to support the decision making process.
- Use of check list models: check lists act
as a supporting tool and are employed to make Go/Kill decisions on individual
projects.
Their study showed that organisations tend to use a combination
of tools, techniques, methods and models instead of one alone to boost their
chances of selecting good projects for their portfolios.
2.1.5 Decision Support for Portfolio Selection
Having understood the aim of the project portfolio selection
process, one important question still has to be answered; which project or
group of projects should be included in the portfolio? Different tools and
techniques are available for project portfolio selection hence making it easier
for an organisation to select the one that best matches its purpose. There is
however a lack of framework that would arrange both these tools and techniques
in a logical manner. It is therefore important for an organisation to adapt or
develop a framework that can used to evaluate project proposals and select a
portfolio which is in-line with its strategy (Sommer, 1999). Difficulties that
are associated with project portfolio selection are often caused by the
following factors according to Ghasemzadeh and Archer (2000): (1) multiple and
often conflicting objectives, (2) qualitative project objectives, (3)
uncertainty and risks which affect projects, (4) an unbalanced portfolio in
terms of factors such as risk and completion time, (5) independence amongst
projects and (6) an enormous number of
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feasible portfolios. It is important to develop a framework that
aims to address all these difficulties and at the same time takes advantage of
the different tools and techniques available. The frameworks that will be
presented in this section are the most widely cited in literature:
2.1.5.1 Cooper's Framework for Strategic Portfolio
Management Cooper (2005) proposes a hierarchical process made up of
two levels of decision making for project portfolio selection. These two levels
answer the following questions:
- Where should the business/organisation spend its funds?
- How should the resources be split across the different
projects? - What specific projects should be taken on board?
Figure 1 Cooper's Strategic Portfolio Management
Framework
The first level of Cooper's Framework called the Strategic
Portfolio Decisions is concerned with the strategy that the organisation
will follow when selecting projects for its portfolios and how the
organisation's resources will be utilised. This level helps in the
establishment of a Road Map for project portfolio selection in the
organisation. The second level of Cooper's Framework called Tactical
Portfolio Decisions is concerned with project selection, prioritization
and resource allocation. Projects are
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looked at individually on this level following the strategy set
on Level 1. Different tools and techniques are used on this level to select the
right projects that fit the agreed portfolio's strategy.
2.1.5.2 Archer and Ghasemzadeh Framework
To address the difficulties mentioned earlier, Ghasemzadeh and
Archer (2000) propose a framework which combines methods commonly used when
selecting projects for a portfolio because of their desirable decision support
characteristics. This framework is made up of two main phases: the
Pre-process stage and the Post-process stage; each made up of
sub-stages.
Figure 2 Archer and Ghasemzadeh Framework for Portfolio
Selection
The pre-process stage provides a guideline for the
general project portfolio selection process and helps the organisation in
determining the strategic focus of the portfolio and its resource constraints.
This stage also helps in the selection of a methodology including the different
techniques that will be used for the project portfolio selection. The following
sub-stages make up the Pre-process stage:
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- Pre-screening stage: during this stage,
projects proposals are analysed and only the projects that fit the strategic
focus of the organisation will be selected
- Individual project analysis: during this
stage, a set of parameters such as net present value or internal rate of return
will be calculated for each individual projects then used to compare the
selected projects
- Screening: attributes from the previous two
sub-stages are examined during this stage to eliminate any project that does
not meet the pre-set selection criteria.
The aim of the Pre-process stage is to eliminate projects that do
not fit the organisation's strategic goals and objectives therefore making it
the work of the project committee easier. The Post-process stage consists of
the following subprocesses:
- Optimal portfolio selection: projects are
matched against different objectives set for the portfolio while at the same
time considering factors such as the organisation's resource availability,
project timing, etc.
- Portfolio adjustment: during this final stage,
the decision makers apply their knowledge and experience to balance and make
adjustments to the portfolio by adding and deleting projects.
Archer and Ghasemzadeh's Framework for project portfolio
selection support Cooper (2005)'s critical factors for project portfolio
selection, i.e. alignment with corporate strategy, value maximization and right
balance and mix of projects.
2.1.5.3 Englund and Graham Framework
Englund and Graham (1999) framework is based on a study they
conducted at Hewlett-Packard and is concerned with selecting projects for their
strategic emphasis therefore creating an environment for successful projects
within the organisation. This framework consists of a series of steps that help
link projects to the organisation's strategy and it can be applied to any type
of organisation.
12
3. Decide
I list projects
I requirements
I capacity
I critical few
I out-plan
I prioritized list
I desired mix
I decision
I in-plan
I use
I fully fund
I communicate
I update
I people
I goals I
categories I
criteria
1. What
should do
4. Do it!
2. What
can do
I rejects
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Figure 3 Englund and Graham Framework for Portfolio
Selection
The focus of the framework is on developing cooperation across
the organisation to fulfil the overall strategy of the organisation. The
following four steps make up this framework:
- What the organisation should do: This step is
concerned with the identification of the people who will be deciding which
projects should be taken on board and the overall goal (s) of the whole
portfolio. Projects are also put into different categories to facilitate their
analysis by the project selection team. This idea of categorising projects is
similar to Cooper (2005)'s Strategic Buckets which give the organisation a
clear picture of what it is involved in. Furthermore, criteria should be set
within each category to assess whether or not a given project is in line with
the agreed goals of the portfolio.
- What the organisation can do: this step is
concerned with the evaluation of projects by the project selection team through
analysis and debate with a focus on the characteristics of the projects. As a
result of this evaluation process, certain projects will be eliminated while
others will be adjusted in respect with the priorities set in the strategy. The
second part of this step is concerned with the identification of the resources
both within and outside the organisation that will be required when
implementing the projects.
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- Analyse and decide on projects: a comparison
between the estimated resources and the available resources is done during this
step to prioritize the selected projects with a focus on their benefits.
Different project selection tools and techniques can be used during this step
but the authors suggest that using the Analytical Hierarchy Process is the
better alternative.
- Implementation: the selected projects can
finally be implemented following a well-defined plan that will serve as a
guideline for the management team when allocating resources and monitoring
progress and change.
2.2 International Development Organisations
2.2.1 Nature of International Development Projects
(ID)
International development projects are concerned with poverty
alleviation, living standards improvement, environment protection, capacity
building and the development of basic physical and social infrastructure (Khang
and Moe, 2008). Ika (2012) argues that international development projects are
technical, social and political undertakings. They are social because they aim
to improve directly or indirectly the wealth of the population and political
because the choice of project's options often results from a political decision
made by either the International development agency, the donors or the local
political leaders or policy maker (Diallo & Thuillier, 2004, 2005).
International development projects can be blueprint (physical capital-based)
projects or process (human-capital-based) projects (Bond and Hulme, 1999; Ika
and Hodgson, 2010). Blueprint projects are typical infrastructure projects that
provide a package of goods and services for low income beneficiaries (Morgan,
1983) while process projects include projects that deal with education, health
and capacity building. The social objectives of International development
projects are less tangible and have less visible and measurable objectives when
compared to projects in other sectors. This intangibility of project
deliverables requires the development of a new body of knowledge or the
adaption of the existing body of knowledge to help monitor the implementation
of International development projects. International development projects also
have a variety of stakeholders which makes them very complex as it was observed
by Youker (1999).
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They usually involve three separate stakeholders namely: the
funding agency which finances the project but does not benefit from its
outputs, the implementing unit which is in charge of managing project
activities from the initiation phase to its completion, and the targeted
beneficiaries who actually benefit from the project's outputs. Like other types
of projects, International development projects have a life cycle that has been
discussed widely in literature (Baum, 1970; Rodinelli, 1976; Youker, 2003;
Ahsan and Gunawan, 2010; Londoni and Corti, 2011). A six steps cycle that
provides a well-defined structure and direction for project activities while
keeping the focus on the development objectives of the projects was proposed by
Baum (1970, 1978). These steps are namely: identification, preparation,
appraisal, negotiation, implementation and supervision, and evaluation.
Radinelli (1976) however, suggest that well-planned international development
projects should follow a ten steps cycle: Identification and definition,
Formulation, preparation and design, Appraisal, Selection, negotiation and
approval, Activation and organisation, Implementation and operation,
Supervision , coordination and control, Termination and completion,
Dissemination of output and transition to normal administration,
Post-evaluation and follow-up. Due to the nature of International development
projects, Youker (2003) suggests that their life cycle should consider both the
Donor side of the implementation and the beneficiaries. He argues that the
Identification phase of the cycle should be carried out by both the donor
organisation and the beneficiaries to ensure that the projects identified meets
their needs.
2.2.2 Approaches to managing International Development
Projects Two main frameworks exist for managing International
Development projects: the Logical Framework Approach (LFA) and the Project
Management for Development Professionals (PMD Pro).
The Logical Framework Approach was developed for the United
States Agency for International Development (USAID) in the 1960's and was
described as a set of interlocking concepts used together to develop
well-designed, objectively-described and evaluable projects (Rosenberg and
Posner, 1979, cited in Hermano et al., 2013). The Logical Framework Approach
was introduced to (NORAD, 1999):
- Assist projects in establishing clear and realistic
objectives
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- Provide a basis for monitoring and evaluation and make planners
think in evaluator terms
- Improve communication between donor and recipient.
The Logical Framework Approach proposes seven steps for planning
development projects: participatory analysis, problem analysis, objective
analysis, alternative analysis, identification of project elements, development
of assumptions, and identification of project indicators. The first two steps
are concerned with the identification of the group or groups that will be
affected by the project and the problem that will be addressed. The third and
fourth steps are concerned with the transformation of the problem identified
into project objectives and the assessment of the different options available
for the project (technical, financial, environmental, etc.). The remaining
three steps form the project planning matrix of the Logical Framework Approach
and are concerned with the identification of the project goal, purpose,
outputs, activities and inputs. A description of the conditions outside the
control of the project that have to be met in order for the project to succeed
and the performance standard that have to be reached in order to achieve them
should also be provided. Despite its wide popularity in the development sector,
the Logical Framework Approach has been criticized in literature for various
reasons (Crawford and Bryce, 2003; Ika et al., 2012; Hermano et al., 2013).
These critics have highlighted the lack of body of knowledge of the Logical
Framework Approach in the monitoring and evaluation phase of the project
lifecycle has being its major drawback. Crawford and Bryce (2003) identified
the following four limitation of this framework: (1) the absence of time
dimension; (2) the inappropriateness of assigning efficiency-level objectively
verifiable indicators; (3) the inadequacy of the means of verification; and (4)
the static nature of the Logical Framework Approach. The application of
well-known project management standards to the Logical Framework Approach has
also been proposed as a possible means of addressing its limitations (Hermano
et al., 2013) in order to improve the performance of International Development
projects but as Khang and Moe (2008) observed, the uniqueness of international
development projects make the application of standardized tools and methods
difficult.
The Project Management for Development Professionals framework
(PMD Pro) was developed in 2010 by the Project Management for
Non-Governmental
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Organisations (PM4NGOs) International Group. This framework
provides guidelines for managing international development projects and it is
based on two assumptions: (1) project managers in the international aid
industry share similar challenges; (2) project managers in the international
aid industry can learn from project managers in other sectors. The PMD Pro is
organised into four sections (PMD Pro, 2013): Projects in the Development
Sector, Phases in the Life of a Development Project, Project management
Disciplines, and Adapting the PMD Pro. The first two sections of the framework
are concerned with the roles and responsibilities of the project manager when
managing international development projects and the importance of having
balanced project management throughout the lifecycle of international
development projects. The last two sections are concerned with the array of
project management disciplines that the project manager must apply throughout
the lifecycle of international development projects and how the PMD Pro
approach can be adopted by a development organisation. PMD Pro has been
described as an extension of the Logical Framework Approach by Hermano et al.
(2013) in that it mixes the Logical Framework guidelines with tools contained
in the widely used project management bodies of knowledge. The PMD Pro is built
around five principles:
1. Project management is balanced: equal rigor should be applied
throughout the project lifecycle
2. Project management is comprehensive: project management
disciplines should be used to manage all the work of the project
3. Project management is integrated: all the project
management aspects should be aligned and coordinated to ensure that project
elements run smoothly
4. Project management is participatory: the different
stakeholders should be involved during the project implementation to improve
quality, ensure transparency, increase human capacity and strengthen
stakeholder buy-in
5. Project management is iterative: the project management
processes should be revisited and repeated throughout the lifecycle to ensure
that the project is still relevant
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2.2.3 Critical success factors for International
Development Projects Literature on success factors and criteria for
international development projects is scarce which makes the identification of
success criteria in this sector difficult. An exploratory study of the success
criteria for international development projects in sub-Saharan Africa conducted
by Diallo and Thuillier in 2004 was the first empirical research on the
subject. Their research assessed project success as perceived by its key
stakeholders: the project coordinator, task managers, supervisors, project
team, steering committee, the beneficiaries, and the population. The resultant
set of criteria identified from the research include beneficiaries'
satisfaction, conformation of goods and services produced to the project
documents, achievement of project objectives and completion of project within
time and budget. Khang and Moe (2008) later grouped the success criteria
identified by Diallo and Thuillier for international development projects into
three main categories: Competencies, Motivation, and Enabling
Environment. Competencies relate to the project manager and the project
team members and are directly linked to their ability to perform project tasks
successfully. The competencies can be technical, interpersonal and
administrative. Motivation relates to the willingness to perform and the
dedication to the success of the project by the project manager and the project
team members. Motivation and competencies go hand in hand in this case because
without motivation, competencies will have no impact on the project. The
enabling environment refers to the relationship between the project's internal
and external environment. An enabling environment will provide adequate support
from the key stakeholders to the project manager thus facilitating the
implementation of the project. Furthermore, Hermano et al. (2013) identified
seven critical success factors for international development projects that they
later used to compare the Logical Framework Approach to the Project Management
for Development Professional (PMD Pro) approach. The success factors they
identified are also based on Diallo and Thuillier's research and other
researches on success factors for development projects. They identified the
following success factors: team building, local environment, implementation
approach, learning opportunities, policy characteristics, availability of
resources, and stakeholders/beneficiaries' satisfaction. Team building is
concerned with the characteristics of the project team members as mentioned by
Khang and Moe (2008) and the impact that proper competencies mixed with
motivation can have on the implementation of international development
projects. As Youker (2003) observed,
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the environment in which development projects are implemented is
quite complex and uncertain therefore using `'what if» scenarios when
selecting the right implementation approach becomes necessary. Transferring
knowledge to the beneficiaries is viewed as one of the most important goals of
international development projects therefore creating learning opportunities is
crucial. The implementation of international development projects must take
into account the characteristics and plans of the country in which the project
is being implemented (Rosenberg and Posner, 1979) therefore understanding local
policies with contribute to the successful implementation of development
projects.
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