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Project Initiation: Part 1 – Create a Formal Structure for Project Selection

The five generally-accepted project process areas are shown in the figure below.

 

Initiation is completed by the customer (sometimes an internal customer, sometimes an external customer), but includes technical and cost proposals as important input from the provider(s).  After the project is approved and funded, the planning process produces a detailed project management plan.  In some cases, especially where the customer is internal, initiation and planning may overlap.  Execution and control will be concurrent with one another.  Closeout may be turning over a finished product, or it may involve training the operational employees and handing over as-built drawings, operation/maintenance manuals, software user manuals, etc.

A Formal, Structured Approach to Project Selection

Depending on the size of the company and who exactly has what expertise, members of the upper management team may perform all of these action items, or they could delegate some to most of them.  However, members of the upper management team must be involved and make the important decisions.

1. Brainstorm possible projects and write draft scopes: The overall goal and a few specific objectives should be written for each potential project.  Projects of varying types are likely being considered, ranging from capital projects to new marketing programs, research and development, switching to a new accounting system, upgrading employee benefits plans, creating a new training program, etc.

2. Determine the business value for each potential project: Be sure to consider both short-term and long-term implications.

3. Evaluate feasibility for each potential project – relative cost and time, degree of risk: What is the likely return on investment?  Would it be faster and cheaper to hire contractors or buy an off-the-shelf equivalent?  Is this the type of project your company is comfortable estimating in detail and completing, or would you be in new territory?  Should you bring in a temporary subject matter expert to help you with this evaluation?

4. Initial review by upper management, other stakeholders: It is better to recognize potential problems and trade-offs early on, before much time or effort is invested.  Do not allow your company to develop a kill the messenger culture if hard questions are being asked or bad news is being delivered.

5. Based on the above and the available resources, create shortlist of potential projects

6. Review and finalize scopes: At this point you have not begun detailed planning, but for each project surviving the shortlist evaluation, you should have sufficient information to prepare a draft project charter (this will be the subject of my next article – what goes into a project charter).

7. Prioritize the remaining projects: This will be useful later.  If one of your projects exceeds its budget or deadline, and resources must be reallocated from one project to another, it will have been determined in advance which project is most important and therefore deserves the resources.  Conflict will be minimized or avoided if the priorities were clearly established by upper management.

8. Upper management makes assignments, authorizes resources: At this point, you produce the project charter for each high-priority project that is about to begin.  A high-ranking company official signs the document, or approves it in an e-mail stating the project name and its scope, overall budget, overall deadline.  In some companies, this may be the project manager’s only basis for authority during planning, execution, and control.

9. Make subsequent course corrections as necessary: If your business situation has sufficiently changed while certain projects are underway, of course you can cancel the projects or alter their project charters (and everything that flows downstream from the charter).  If steps 1 – 8 above were dutifully performed, this should be a rare occurrence.  However, in these rare cases, return to steps number 2 – 8.  It is not advised to only repeat steps 6 and 8 for a single project; it must be reviewed in the context of the new business situation and the other ongoing and upcoming projects.

Why a Formal Approach is Useful

Following a formal approach to project selection and chartering ensures, to the extent possible, that projects strongly benefit the company, deliverables are aligned with the goals and objectives established by upper management, and that projects begun are actually completed.  In most companies, projects not only compete with other projects for resources, but they compete with ongoing operations.  As stated above, the project charter may be the project manager’s only basis for authority during planning, execution, and control.  The person who signed the project charter becomes the project sponsor, and he/she has the authority to support the project manager, as well as to prevent shared resources from disappearing.

Next Article in This Series:  More on project initiation.

 

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About the Author

An engineer by training, Randy Klein has 30 years of consulting experience, 20 of which have included project management duties.  His project management curriculum has been used by a variety of university continuing education departments and private resellers.  He invites your questions and comments related to project management, quality assurance, and organizational improvement.  Contact Randy at (801) 451-7872 or projects@streamlineut.com.