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Project Evaluation and Screening Methods

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Part 1: Discuss how excessive or exclusive reliance on other screening methods might lead to similar problems?
Name some key criteria that should be used in evaluating all new projects before they are added to the current portfolio. What is the effect of poor project-screening methods on a firm's ability to manage its projects effectively?

Part 2:
How would you explain the reasons for a divergence of opinion from one technique to the next in project evaluation? What are the strengths and weaknesses of each screening method? What do you think about the use of project selection methods in organizations?

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Part 1:
1. Using only one method of screening does not make good business sense and can easily lead to incorrect responses. It would be wise for the company to develop a decision making process that involves more than discounted cash flows. Focusing on cash flow alone may leave out several important advantages or opportunities that the project may hold. In addition to a financial analysis, a demographic analysis or competitive analysis should be done as well. Using only one method can normally offer only one point of view. As the consultant stated, the strategic fit of the organization, the portfolio management, and other concerns such as market penetration or market saturation should also be considered. By considering only financial projections for the basis of the decision, the company is making decisions in a silo with blinders on. The lack of other, pertinent information can (and has been) detrimental to the company as a whole. In a company that practices sound decision making procedures, multiple steps will be taken to ensure the reliability of the information and allow the employees and the company to make an educated decision. Without researching other components (marketing, accounting, customer service, logistics, technical support, manufacturing, legal, etc.) the decision is uneducated and simply unwise.

2. To ease the transition into multiple criteria decision making, the team could drill-down on the discounted cash flow projections and analyze the true cost of the project being considered. The variable and hidden costs should be identified to the best of their ability to determine the true profitability of the idea. Using a ...

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3. Bob Heckman, manager of the MIS department at ASW Publishing, has received a request from Virginia Griner, the head of Human Resources, to develop an interactive icon- and menu-driven software package to be used by the benefits specialists in her department. Based on preliminary discussions with Virginia, Bob has identified two basically different types of functions that the package will have to serve, so he is planning on having it written in two modules. Based on this initial information, Bob has broken the project down into eight basic activities, listed in Table 1.1 along with their immediate predecessors and estimated times.
a. Draw the project network.
b. Determine the early and late start and finish times and the slack times for the activities. Identify the critical path. How long will the project take if there are no problems or resource limitations?

Table 1.1: Activity Information for Software Development Project
Activity Description Immediate Predecessors Time (weeks)
Survey users for needs -- 2
B Design graphic icons A 3
C Develop flow chart A 1
D Design input-output screens B,C 3
E Code Module 1 C 4
F Code Module 2 C 5
G Merge modules & graphics D,E,F 1
H Test program G 2

4. The Little Lake Theater Company is planning a new production of The Boyfriend, scheduled to open during the second week of October. Will Disney, managing director of the company, has prepared a list of the activities (shown in Table 1.2) that must be completed before the play can open and has estimated the number of weeks for each.
a. Draw the project network.
b. Determine the early and late start and finish times and the slack times for the activities. Identify the critical path. How long will it take before the play is ready to be put on?

Table 1.2: Activity Information for the Little Lake Theater Project
Activity Description Immediate Predecessors Time (weeks)
A Audition & hire actors -- 4
B Design costumes -- 3
C Make costumes A, B 3
D Design sets -- 3
E Build sets D 5
F Design lighting D 2
G Create lighting F 2
H Rehearsals A 3
I Prepare advertising A 1
J Advertising campaign I 3
K Final rehearsals C, E, G, H 1

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