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Balanced scorecard for effective project selection process

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A Balanced Scorecard approach of step-wise refinement ...

A Balanced Scorecard approach of step-wise refinement
from Vision to Implementation of projects can be achieved
by integrating the Balanced Scorecard approach with
Project Selection Process. This will increase the quality of
the project portfolio and improve the confidence of
business sponsors that their Investment in projects will
return benefits that they perceive to be of value.

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  • 01/29/13
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Transcript

  • 1. Title LayoutBalanced Scorecard (BSC) For Effective Project Selection Process By Abhinav Sabharwal
  • 2. Paper AbstractAbstract A Balanced Scorecard approach of step-wise refinement from Vision to Implementation of projects can be achieved by integrating the Balanced Scorecard approach with Project Selection Process. This will increase the quality of the project portfolio and improve the confidence of business sponsors that their Investment in projects will return benefits that they perceive to be of value.
  • 3. My IntroI am a Business Analyst, Project Manger, ISO14001 Implementer & Quality Analyst with 7 years of Experience currently working with: Companies That I have Worked With Educational Qualification M.B.A in Marketing & I.T B.Sc. in Information Technology
  • 4. Difficulties In Effective Implementation Of Strategy Methods operating at the strategic level cannot ensure that enabling initiatives are implementable, Methods operating at project level cannot ensure that projects are aligned with organizational strategy and will effectively deliver value. Business sponsors of projects generally judge project success by measures other than the delivery of a quality product within schedule and budgetary constraints. The key concerns of executives include improved governance of the project portfolio & ability to deliver value through change,
  • 5. Finite Resources & Exaggerated Benefits• As resources are finite, capital rationing technique or form of project selection and prioritization scheme is used• To ensure the maximum R.O.I of its resources. All project proposals are evaluate against the same Benchmark  Cost/benefit,  Strategic alignment  Portfolio balance  Risk & Return• To achieve their own ends, Sectoral interest groups may overstate the advantages of their proposal over all other proposals, leading to selections which are either invalid or inappropriate, and a portfolio which is suboptimal.
  • 6. list of 7 Ways To Get a Project Approved The first entry in this list is “Designate The Project as being strategic ” Presence of strategic objectives without a top-down implementation plan, leaves the scope for claims that tactical projects are ‘mandatory’ because they somehow support one of the organization’s strategic objectives. Such claims go unchallenged, as strategic objective is somewhat vague,
  • 7. Project Goal ?Install new hardware and software to improve our customer service to world class levels. versusRespond to 95% of our customers’ inquiries within 90 seconds with less than 5% callbacks about the same problem.A Really Good GoalOur goal is to land a man on the moon and return him safely by the end of the decade. John F. Kennedy
  • 8. Project Selection and Approval Project Selection Process Value Chain The Project Selection Decision  Project must map to organization goals  Project must provide verifiable MOV  Selection should be based on diverse measures such as:  Tangible and intangible costs and benefits  Various levels throughout the organization
  • 9. Gauging Projects Contribution the Balanced Scorecard WayGauging Projects Contribution Balanced Scorecard Way Most organizations need a way to deal with their intangible assets, since a significant proportion of their market valuation is derived from their intangible assets. B.S.C being strategic in its approach, allows performance management system, of an organization to translate its vision and strategy into implementable change initiatives. Core competency in effectively managing change by detecting and responding to changes in its environment, including implementing internal change initiatives, more effectively than their competitors is likely to be valued more than an otherwise identical organization
  • 10. Criterion Weight Alternative A Alternative B Alternative C ROI 15% 2 4 10Financial Payback 10% 3 5 10 NPV 15% 2 4 10 Alignment with strategic objectives 10% 3 5 8Organizational Likelihood of achieving project’s MOV 10% 2 6 9 Availability of skilled team members 5% 5 5 4 Maintainability 5% 4 6 7Project Time to develop 5% 5 7 6 Risk 5% 3 5 5 Customer satisfaction 10% 2 4 9External Increased market share 10% 2 5 8Total Score 100% 2.65 4.85 8.50Notes: Risk scores have a reverse scale – i.e., higher scores for risk imply lower levels of risk
  • 11. Measurable Organizational Value (MOV) The project’s goal Measure of success Must be measurable Provides value to the organization Must be agreed upon Must be verifiable at the end of the project Guides the project throughout its life cycle Should align with the organization’s strategy and goals
  • 12. Process for Developing the MOV 1.Identify the desired area of impact E.g. 3. Develop an Appropriate Metric  Strategic  Should it increase or decrease?  Customer Centric  Metrics:  Financial  Money ($ £ ¥ )  Operational  Percentage (%)  Social  Numeric Values 4. Set a time frame for achieving the MOV2. Identify the desired value of the project to Organization  When will the MOV be achieved?  Better  Project manager and team can only  Faster guide the process  Cheaper 5. Summarize the MOV in a clear, concise statement or  Growth table. This project will be successful if __________.  MOV: The B2C project will provide a 20% return on investment and 500 new customers within the first year of its operation
  • 13. MOV and the Balance Scorecard Balance Scorecard MOV
  • 14. Reasons Balanced Scorecard Approach Might Fail Non-financial variables incorrectly identified as primary drivers Metrics not properly defined Goals for improvements negotiated not based on requirements No systematic way to map high-level goals Reliance on trial and error as a methodology No quantitative linkage between non-financial and expected financial results
  • 15. ReferencesRef: Key Success Factors for Managing Projects ; Nader Sh. Kandelousi, Ooi. J., Abdollahi. A Aligning Projects to Strategy using Balanced Scorecards and Benefits Models ; G J Rankins CPPD Goal Professional Services Pty Ltd, www.goalgroup.com.au Balanced Scorecard IT Strategy and Project Management ;Glen B. Alleman Director, Program Management Office Kaiser–Hill Company, LLC Rocky Flats Environnemental Technology Site Golden Colorado Seven Ways to get Your Favored IT Project Accepted – Politics in IT Evaluation Egon Berghout, Menno Nijland and Kevin Grant Centre of IT Economics Research (CITER), University of Groningen, The Netherlands M&I/Partners, Amersfoort, The Netherlands Glasgow Caledonian University, Caledonian Business School, Scotland
  • 16. Feel free to send any questions on: consultabhinav@gmail.com OR skyabhinav@gmail.com