Appropriate Models for Projects
Projects can be evaluated using a number of models based on the aim of a firm. According to Mian (2011), in many cases, a firm may find itself faced with a situation where it has a number of projects that need to be completed within a short period. In such cases, it becomes necessary to prioritise the available options based on the most pressing needs and resource capacity of the firm.
In this context, the company will need to have a number of models to be sued in prioritising the projects. The first method that this firm can use is the Financial Metrics Model. This model has been very common in the past because it points out the projects that are beyond the financial constraints of a firm.
The IT Portfolio Model is another method that the firm can use to rank the projects. The third method that can be used is the Boston Consulting Group Model. Any of these three models may be appropriate in different contexts based on what a firm is striving to achieve within a specified timeframe.
Rationale Why the Models Were Selected
It is important to understand the relevance of choosing the three models to rank the projects provided. Financial Metrics Model has been identified as one of the most appropriate methods that can be used to rank the models. According to Rad and Anantatmula (2005), any project that a firm initiates needs some form of financial resources.
A firm must have its priority right financially when initiating a project. First, an organisation can only fund a project to a given limit within its financial capacity. It means that a project can only be funded if the needed financial resources are available to the firm at that particular moment.
This fact explains why a firm may postpone a good project to a future date when it has the resources to fund it. The second factor that is always considered on any project is the return on investment. Financial Metrics Model emphasises on the need to ensure that the invested funds can be earned back in form of profits within a reasonable time. Sometimes a project’s cost may exceed the expected returns.
Unless the organisation in question is a non-profit making firm, such investments should be avoided at all cost. The firm must be assured that its investment will be recovered within a reasonable timeframe (Laudon & Laudon, 2015). The IT Portfolio Model is particularly appropriate when a firm is automating its system or making upgrades.
As Mian (2011) says, in the modern society, technology plays an important role in the success of any firm. That is why many firms are currently struggling to automate their system to manage market competition. In some cases, the management may be forced to prioritise projects based on their relevance in terms of enhancing IT systems. This model is purely based on what a firm needs at a given time based on enhancement of the information and communication system.
One of the important issues given consideration in such rankings is the capacity of the new system, its relevance to the organisation, and the ability of the firm to run it amongst other factors. Boston Consulting Group is another popular model that this firm can consider using to determine the most appropriate projects that need funding. According to Lefley (2015), BCG can only be used to rank the existing projects.
Sometimes it may be necessary to re-evaluate the existing projects to determine if they are worth the investment put in them. This model classified the projects into four groups as shown in the appendix. The stars are attractive projects whose income is expected to rise hence worth more attention.
Cash cows are projects with attractive incomes, but the income is not expected to rise. Question marks are projects that have unpredictable future, and their current incomes are dwindling. Finally, dogs are projects whose income is not worth the investment put in them hence are worth reinventing.
Ranking the Projects According To These Criteria
When ranking the projects based on different models, it is important to note that different outcomes may be gotten because of the different priorities given to them. At this moment, the assumption is that the projects are yet to be implemented. For this reason, only the first two models will be used in the ranking.
Financial Metrics Model:
- Order Entry Website
- Tablets for Sales Staff
- ERP II study
- Business Intelligence
- EDI link to suppliers
- VOIP Network
- Security Upgrade
- Desktop Publishing
The IT Portfolio Model:
- Order Entry Website
- Tablets for Sales Staff
- VOIP Network
- Security Upgrade
- ERP II study
- Business Intelligence
- EDI link to suppliers
- Desktop Publishing
Rationale
In the first ranking model, the first priority has been given to the financial returns of each of the projects. The second priority is given to the cost of the project. In the second model, priority is given to the technology that will increase sales and efficiency.
List of References
Laudon, K & Laudon, J 2015, Management Information Systems: Managing The Digital Firm, Pearson, New York.
Lefley, F 2015, The FAP model and its application in the appraisal of ICT projects, Spring Space, New York.
Mian, M 2011, Project economics and decision analysis, PennWell Corporation, Tulsa.
Rad, P & Anantatmula, V 2005, Project planning techniques, Management Concepts, Vienna.