1         Project Management

Project management is a fundamental process in every sector of human life. It is from this that all the decisions in a project to be undertaken are decided. Every individual or organization aims to take a project that gives the intended result at the end of the process. Project management, then, is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.

In the case of application development, project experts would handle a project that would do the intended action at the end of the project process. It, therefore, means that a project must be realistic and within the budget plan. This will make its development process efficient and effective.

2         Methods of project selection

There are different ways in which the project selection process can be carried on. It is a recommendation for an organization or a business to put into use different methods before making a final decision of which project to undertake. This is healthy for the company since it will reap well on the project outcome if the best choice is arrived at. In this case, we are supposed to choose from four different potential projects. These are:

1. Development of fleet management system.
2. Development of a hotel booking system.

• Development of cybersecurity software.

1. Development of a financial management system.

All these four projects are promising, but we would only want one project. It will, therefore, mean that we should employ different project selection methods to make the best choice. These methods are:

2.1        Benefit Measurement Methods

The benefit measurement method is a selection technique which bases on the present value of the estimated cash outflow and inflow. Cash outflow is the amount of money getting out of a business in terms of cost, whereas cash inflow is the money the company receives in terms of revenue. Cost benefits, in this case, are calculated for every project and then, compared to other project outcomes and after that, making a suitable decision. There are various techniques used in Benefit Measurement. These are:

2.1.1        Techniques in Benefit Measurement Method

2.1.1.1       Benefit/Cost Ratio

The cost/benefit ratio is the ratio between the present value of cost injected into the project and the benefits/returns achieved from the said project. The project may be said to be higher than others if it has a higher benefit-cost ratio or, in other terms, lower cost-benefit ration. It means that the project with these characteristics would definitely be chosen over others. In the case of the four projects at hand, the project involving the fleet management system needs minimal cost in its development process. It promises a higher return due to the ever-rising number of vehicles in the present world. This means that our company will have a large client base, most of which being commercial vehicle companies.

2.1.1.2       Economic Model

Something that needs to be understood in this method is the Economic Value Added (EVA) metric. This metric calculates the organization’s worth-creation while at the same time defining the return on capital. The economic model can also be stated as the net profit after taxes, and capital expenditure has been deducted. In this case, the project that gives the highest Economic Value Added is the one that will be picked. The development of a fleet management system has the most top Economic Value Added and hence has high consideration. The metric is, in most cases, expressed numerically rather than as a percentage.

2.1.1.3       Scoring Model

This method is a scientific technique whereby a selected project committee comes together and list down the relevant criteria to be used in the project selection. These projects are then listed in the order of their priorities, and the weighted values added. The project with the highest value after ranking them, is the picked.

2.1.1.4       Payback Period

Payback period is the time required or necessary to recover the finances invested in the project. It is represented as a ratio of total cash to the average per period cash. This method is a basic project selection method which is required in telling the amount of time the original invested money will be recovered. In any business venture, investors or the investor would wish to know the time frame within which his/her money will be recovered. Return on investment is represented as ROI.

When payback period is used as a project selection method, investors or the company would prefer the project with a shorter payback period. This is because the investor of the project would wish to regain the invested amount faster. This method comes with some few limitations, which are:

1. The time value of money is not put into consideration.
2. The method puts more focus on liquidity rather than profitability whereby, benefits accrued after the payback period are not considered.

• There is also neglect of the risk faced by the projects individually.

2.1.1.5       Net Present Value

Net present value can be stated as the variance between the project’s cash inflow current value and the cash outflow current value. NPV as it is initialized, is supposed to always be a positive value. When using this selection method, the project with the higher NPV value is preferred over the other projects. This method can be considered to be better that payback period method in the sense that, it considers the future value of money. This does not mean that it has no limitations. Some of the limitations are:

1. When it comes to present value calculation, there is no standard method of deriving the discount value.
2. The Net Present Value fails to give any depiction of profit or loss that the business is able to make if it gets on a certain project.

2.1.1.6       Discounted Cash Flow

What business people and everyone in general must know is that the future value of money will not remain the same. It will always change overtime due to different forces affecting its value. A good example is that, the value a dollar had ten years ago is not the same value it has today. It is therefore a fact that, during calculations of cost investment and ROI, it is advisable to consider the concept if discounted cash flow.

2.1.1.7       Internal Rate of Return

The Internal Rate of Return is the interest rate at which the Net Present Value is zero—attained when the present value of outflow is equal to the present value of inflow. Internal Rate of Return is defined as the “annualized effective compounded return rate” or the “discount rate that makes the net present value of all cash flows (both positive and negative) from a particular investment equal to zero.” The IRR is used to select the project with the best profitability; when picking a project, the one with the higher IRR is chosen.

When using the IRR as the project selection criteria, organizations should remember not to use this exclusively to judge the worth of a project; a project with a lower IRR might have a higher NPV and, assuming there is no capital constraint, the project with the higher NPV should be chosen as this increases the shareholders’ profits.

2.1.1.8       Opportunity Cost

This is the cost that is given up for the sake of selection of another project. In this case, the project with the lower opportunity cost is always chosen during project selection.

2.2        Constrained Optimization Methods

This selection method is also referred to as mathematical model of project selection. It comes into use in cases whereby larger projects that are complex in nature and require wide-ranging mathematical calculations. There is technique used in constrained optimization method namely:

2.2.1        Non-Financial Considerations

There are other considerations to be made basing on the non-monitory aspect of project. These factors are related to the general organizational objectives of which is a major factor in project selection methods. These non-financial factors play major role on the project selection process. These factors are; customer relations services and marketing strategies which are vital in organizational goals achievement. The prosperity of a company operating in the modern world is dependent on the cordial customer relationship which help foster the picture of the company.

3         The initiation process

Project initiation is the first stage in the project management life cycle due to the fact that it involves starting of a new project. There is a lot of activities that take place at this stage which includes:

1. The first thing in the project initiation process is building a case. This will explain the reasons for starting a project and how the resources in place will help in undertaking the project in line with the business needs.
2. Carrying a feasibility study which is a documentation of relevant solutions to the opportunity or the business problem that the project is aiming at addressing. Feasibility study is very important in carrying out a successful project process.

• Creation of a project charter which outlines the purpose for starting the project and how the project is structured and undertaken.

1. The next important thing is to put a project team of which, are the main drivers of the project. They are supposed to be experts in the area under which the project is aligned so as to make sure that the set goals are achieved.
2. Setting up of a project site is another important aspect in the life cycle of the project since it provides the project team with a working space to carry out the project activities.
3. The last thing in this phase is the review of the initiation phase in order to identify loopholes that may need some adjustments.