Project Management, Selection and Initiation Process, Case of Fleet Management System Development

Table of Contents

2.1.1 Techniques in Benefit Measurement Method. 4

1 Project Management

Project management is one of the disciplines that has been in use for a very long time. It has contributed to the current success in the business world and other sectors since it provides people with the best approaches to tackle a particular project while at the same time making sure the best project from the pool of other projects. The sophistication of project management has had to improve due to the dynamism in the socio-economic world. In the past, project management components used to be fewer as compared to the current one, which has a lot of mathematical components which can make it possible in studying big data.

Project management is a crucial procedure in each part of human life. It is from this that all the choices in a project to be attempted are chosen. Each individual or association plans to take a project that gives the expected outcome toward the finish of the procedure. Project management, at that point, is the use of information, aptitudes, devices, and strategies to project exercises to meet the project necessities (Todorović et al., 2015).

On account of utilization advancement, project specialists would deal with a project that would do the proposed activity toward the finish of the project procedure. It, consequently, implies that a project must be sensible and inside the spending plan. It will make its advancement procedure productive and powerful.

2 Methods of Project Selection

There are various manners by which the project determination procedure can be continued. It is a suggestion for an association or a business to place into utilization various strategies before settling on an ultimate choice of which project to embrace. This is sound for the organization since it will harvest well on the project result if the best decision is shown up at. For this situation, we should look over four changed expected projects (Meredith et al., 2017). These are:

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

Development of cybersecurity software.

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 (Kaiser et al., 2015). 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 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. It 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 picked.

2.1.1.4 Payback Period

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

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

There is also the 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 always supposed to 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 than the payback period method in the sense that it considers the future value of money. It does not mean that it has no limitations. Some of the limitations are:

When it comes to the present value calculation, there is no standard method of deriving the discount value.
The Present Net Value fails to give any depiction of profit or loss that the business can make if it gets on a particular 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 over time 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 of discounted cash flow.

2.1.1.7 Opportunity Cost

it 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 a mathematical model of project selection. It comes into use in cases whereby larger projects that are complex and require wide-ranging mathematical calculations. There is a technique used in a constrained optimization method, namely:

2.2.1 Non-Financial Considerations

There are different contemplations to be made basing on the non-monitory part of the project. These variables are identified with the general authoritative destinations of which is the central consideration in project determination strategies. These non-money related components assume significant job on the project determination process. These variables are; client relations administrations and advertising techniques which are imperative in hierarchical objectives accomplishment. The flourishing of an organization working in the advanced world is reliant on the welcoming client relationship, which helps encourage the image of the organization.

3 The Initiation Process

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

The first thing in the project initiation process is building a case. It 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.
She was 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. A feasibility study is critical 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.

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 to make sure that the set goals are achieved.
Setting up of a project site is another essential aspect in the life cycle of the project since it provides the project team with a working space to carry out the project activities (Fernandes et al., 2020).
The last thing in this phase is the review of the initiation phase to identify loopholes that may need some adjustments.

In conclusion, project management is a vital tool in the success of any social or economic endeavour without which conflict in these sectors would arise. It will be true to argue that the initiation stage of any project is critical in determining the success of the said project. It is after undergoing different selection process that would make sure that the best project is picked from many more. Our picking of fleet management system development was pushed by the vast economic benefits that the project would have in the business. The project has a short period through which investment cost would be recovered, and the return on investment is very high.

4 Reference

Meredith, J. R., Shafer, S. M., & Mantel Jr, S. J. (2017). Project Management: A Strategic Managerial Approach. John Wiley & Sons.

Todorović, M. L., Petrović, D. Č., Mihić, M. M., Obradović, V. L., & Bushuyev, S. D. (2015). Project success analysis framework: A knowledge-based approach in project management. International journal of project management, 33(4), 772-783.

Fernandes, G., Pinto, E. B., Araújo, M., & Machado, R. J. (2020). The roles of a Programme and Project Management Office to support collaborative university-industry R&D. Total Quality Management & Business Excellence, 31(5-6), 583-608.

Kaiser, M. G., El Arbi, F., & Ahlemann, F. (2015). Successful project portfolio management beyond project selection techniques: Understanding the role of structural alignment. International Journal of Project Management, 33(1), 126-139.