1

Chap 2

Organization Strategy

and

Project Selection

2

Chap 2

What does it mean to be Strategic?

Why do companies have a Strategic Plan?

Why is the Strategic Plan important to the Project Manager?

Organizational Strategy

3

Chap 2

1. Focusing on problems or solutions that have low priority

2. Focusing on immediate customers rather than the whole marketplace and value chain.

3. Overemphasizing technology as an end in and of itself

4. Trying to solve every customer problem with a product or service

5. Engaging in a never ending search for perfection that no one except the project team cares about.

Mistakes by Project Managers

4

Chap 2

Strategic Management Process

Review and define the Organizational Vision

Set Long term goals and objectives

Analyze and formulate strategies to reach objectives

Implement strategies through projects

Each project must be linked to and implements a goal

5

Chap 2

Planning by considering what market or organizational events might have high impact your company.

Scenario Planning

Planning• Assessing your core business and industry (SWOT)• Potential Scenarios and impact • Potential Strategies ( Contingency Planning)• Identification of triggers

6

Chap 2

Purpose: Development of a priority system that promotes a balance of projects that best serves the organizational strategy.

Project Portfolio Management System

Potential Problems:1. Implementation Gap2. Organization Politics3. Resource conflicts and multitasking

Benefits:1.Builds discipline into project selection process2.Links project selection to strategic metrics3.Prioritizes project proposals across a common set of criteria4.Allocates resources to projects aligned with strategic direction5.Balances risk across all projects6. Justifies killing projects that do not support strategy7. Improves communication and supports agreements on project goals

7

Chap 2

Project- Strategies Disconnect

How does a disconnect between Projects and Strategy impact the organization?

• Conflicts freq occur among functional mangers causing lack of trust

• Frequent meetings are called to establish or renegotiate priorities

• People shift from one project to another, based on current priority

• People are working on multiple projects and feel inefficient

• Resources are not adequate

Project needs to linked with a Strategic goal.

8

Chap 2

Selection of which Project to implement?

Classification of Project• Operational• Strategic• Compliance

Selection Criteria• Financial • Non Financial

Which Classification most likely uses Financial Selection Criteria?

When would I not use Financial Criteria in the selection?

9

Chap 2

Selection Models

Financial

Net Present Value

Payback

Non Financial

Checklist

Multi-weighted scoring

10

Chap 2

Checklist 200-250 questions; does not give a specific way to compare.

Multi-weight Prioritize based on numerical value Difficulty is defining the weights and each attribute score

Final selection is typically more than a numerical ranking• This is where Strategic goals benefit

Ranking

Risk is also considered in the final ranking

11

Chap 2

Request for Proposal (RFP)

1. Summary of needs and request for action2. Detailed Statement of work (SOW) with scope and major

deliverables3. Deliverable specifications/ requirements, features and

tasks4. Responsibilities – vendor and customer5. Project Schedule6. Costs and payment schedule7. Type of contract (Fixed price or cost plus or ?)8. Experience and Staffing9. Evaluation Criteria

Clarity at the beginning with reduce misunderstandings at the end

12

Questions

Chap 2

13

Case Study

Selection by an aerospace company of a technical representative to work and reside

outside the U.S.

The selection committee consisted of 3 members representing expertise in the technical, contractual and managerial areas.

Chap 2

14

Selection Process

Based on work related factors (Wilk & Capelli, 2003) Skill requirements, training and/or pay

Interview process is most common supplemented by:Psychological testing.Aptitude TestsMotor SkillsPersonality Traits

One of the most significant yet dreaded task by a manager:SubjectivityImpact on organizationCost of a wrong decision

Chap 2

15

16

Interview Process Shortcomings

Judgments based on initial impressions

Evaluator Bias

Inconsistency of questions posed to candidates

No a priori weighing of questions

No consistency in recording candidate responses

Impact of Interview Shortcomings

Non-compliance with various regulatory

requirements

Selection of candidate on strength of verbal and

presentation skills rather than job related skills.

Chap 2

17

Overcoming Interview Shortcomings

• Use a structured interview process with predefined open ended questions based on task oriented questions. (Lindaman, 1997; Levine et al, 1997).

Structured Interview Methodology ( Green, 1991)

1. Perform a Job Analysis

2. Develop a selection criteria based on Job Analysis Characteristics.

3. Develop Interview questions based on occupational qualifications

4. Format of interview should provide a standard treatment

5. Interviewer notes should be descriptive and non-judgmental

6. A fair and consistent method of selection should be identified

Chap 2

18

Quantitative or Qualitative Selection Process

Consensus Building: All members of a group present their views with all members accepting the group decision.

• Member participation promotes buy-in.• Requires diversity in group members• Can suffer from influence of group dynamics• Can be time consuming

Taylor et al (1998) identified the selection process as a problem in identification, weighing and evaluation.

• Weighing provides a consistent emphasis on each attribute

• Provides focus on pre-determined job related qualifications

• Documented process supports defense of selection decision

• What method should be used to determine weights?

• Is the best candidate the one with the highest score?

Chap 2

19

Analytic Hierarchy Process

Personnel selection is best described as a Multiple Criteria Decision Making (MCDM) problem.

Saaty (1980) introduced AHP and its use of pair-wise comparison to determine criteria weighing.

Pair-wise comparison considers not only where the decision maker rates a specific criterion but also its relationship to other decision criteria.

AHP has been used for a variety of multiple criteria decisions:• Quality Management• Healthcare• Strategic Planning• Ranking investments

• Supplier selection• Military base closures• Public policy

Chap 2

20

Attribute Identification

The committee performed a job analysis and identify the job attributes.

The committee determined 12 attributes:

- Customer Orientation - Composite Material

Knowledge

- Adaptability - Initiative

- Verbal Skills - Statistical Process

Control

- Quality Commitment - Tooling Knowledge

- Problem Solving Skills - Knowledge of Specific

Part

- Part Assembly Knowledge - Process Improvement

Exp.

 

Must be willing to spend two (2) years at this position

Chap 2

21

Traditional approach is to develop weights by group consensus.

This committee chose to use Pair-wise Comparison

Each evaluator created a priority matrix to define the relative importance between each attribute using a 9 point Likert scale:VALUE INTERPRETATION

1 Attribute A and C are of equal importance

3 Attribute A is slightly more important than attribute C

5 Attribute A is strongly more important than attribute C

7 Attribute A is very strongly more important than

attribute C

9 Attribute A is absolutely more important than attribute C

Attribute Weights Chap 2

22

Attribute A B C D E

A 1 2 3 4 1/3

B 1/2 1 1/4 1/3 2

C 1/3 4 1 1/7 1/9

D 1/4 3 7 1 1/6

E 3 1/2 9 6 1

The number of assigned relationships is equal to n(n-1)/2- “n” equal to the number of attributes

Priority Matrix Chap 2

23

Scoring Candidate Responses

A single question was developed for each of the twelve attributes.

Each evaluator assessed the candidate’s response based on a series of reference factors.

Each evaluator assigned on of 5 rankings based on how well the candidate addressed a specific reference factor.

CL (Clearly Lacking in Response)L (Lacking)

P (Some Presence) SP (Strong Presence)

VSP (Very Strong Presence in Response)

Based on reference factor rankings, each evaluator assigns an aggregate ranking for the attribute.

The candidate’s aggregate ranking for each attribute is compared to the other candidate’s ranking using a pair-wise priority matrix.

A 9 point Likert scale is used to assign the candidate relative score based on the distance between each candidate’s attribute ranking.

Chap 2

24

Customer Orientation: Factors to consider Ratings

Communicates customer needs and expectations back to the home organization

CL L P SPVSP

Follows up with customers to seek feedback and ensure their requirements are met or exceeded

CL L P SPVSP

Provides accurate and timely response to customers

CL L P SPVSP

Ensures understanding of customer requirements and expectations regarding products, services and relationships

CL L P SPVSP

Identifies and communicates value added activities to the customer

CL L P SPVSP

Establishes and maintains systems for measuring and responding to customer needs

CL L P SPVSP

Initiates and encourages frequent customer contact

CL L P SPVSP

The customer is not satisfied with something. Explain a situation you have experienced relative to customer dissatisfaction and what actions you took to ensure customer satisfaction.

Interview Guide Chap 2

25

Calculating Attribute Weights/ Candidate Response Scores

Candidate (k) score =

N

i 1ii A * W

This computation is performed in two steps: 1. Dividing each of the cell entries in the priority

matrix by the sum of the column (j) it occupies.

2. Sum each normalized row (i) in the matrix and divide

by the number of entries (N) in each row.

n

iijijij CCr

1

NrWn

jiji

1

NrAn

jiji

1

Chap 2

26

Consistency Index

AHP utilizes a Consistency Index (CI). 1max

n

nCI

Compute ∆max :

n

1iT

T

max in Wentry ith

AWin entry ith

n

1

Compare CI to a Random Index (RI).

If CI/RI < 0.10: Consistent

RI is based on size of priority matrix

WT is each candidate’s relative score for a given attribute A is the attribute weightn is the number of attributes

Chap 2

27

Making the selection

1. Each evaluator ranked the candidates based on the AHP derived aggregate attribute scores.

2. Create a single ranking of candidates by computing the geometric average of evaluators.

A review of the top 3 candidates is made to consider:• Potential imperfections in the quantitative results.• Pertinent factors not considerations• Discussion of evaluator impressions

Two selection approaches were considered:

The top 3 candidates are identified based on rankings.

Top candidate is based on final group ranking.

Chap 2

28

Results – Aggregate Candidate Score

Chap 2