City University of SeattleMsc in Project Management

Cohort 2005

Master Thesis Presentation

Master Thesis Title:

“The Significance of Implementing a Well Organized Project Selection Methodology Using Multi-Criteria Analysis"

Personal Information

Last Name: Siskos

First Name: Dimitrios

Middle Name: Vasilios

ID number: 20063511

Advisor’s Name: Dr Athanasios Spyridakos

Problem Statement

Results in:

1. Failure to successfully control and complete projects

2. Failure to accomplish stakeholders’ expectations

and finally:

3. Withdrawal from the projects’ implementation

4. Compensation penalties

Lack of a systematic project selection methology

Literature Review

1. The importance of a capable project selection methodology

Project Management Books IJPM Articles

2. Identification of the variables affecting projects selection

Project Management Books

3. Recommended solution through project management strategies

Project Management Books Software Manuals

The research is oriented to the concept:

not ‘‘doing projects right’’

but

‘‘doing the right projects’’

Reyck et al (2005)

Methodologies and Procedures

1. Confirmation of the problem statement– The Questionnaire

2. Multicriteria Analysis– The steps in MCA– Connection to the problem statement

3. Solution of the problem– Application of the MCA steps– Risk incorporation into processes– Simulation using Crystal Ball– Selection of the Optimum Solution using OptQuest

Confirmation of the problem statement

• The Questionnaire– Remarkable Managers– Directors– Academic Professors

• The Results

Most significant reasons that influence organizations in order to select projects

0%

10%

20%

30%

40%

50%

60%

70%

80%

Criteria

Profitability

Perspectives

Resource availability

Know How

Company strategy

Added value

Relativity

Labor skills

Added value

Scientific research attitudes

1

See the Questionnaire

2

Type of specification Business Area

Constructing Services Developmental-co Financed(EU)

Academic

Cost 22,50% 51% 10% 20%

Schedule 22,50% 2,5% 10% 45%

Performance 16,25% 6,5% 0% 20%

Projects per year that getting failed to meet specifications

3

0%

10%

20%

30%

40%

50%

Constructing Services Developmental Academic

Types of software that organizations use in order to optimize project selection ability

Excel

Ms Project

Other

Nothing

4

Type of answer Business Area

Constructing Services Developmental-co Financed(EU)

Academic

Yes 50% 50% 50%

No 25% 20% 40% 100%

Not sure 25% 30% 10%

Satisfaction about the existing project selection methodologies used among organizations

5

Type of answer Business Area

Constructing Services Developmental-co Financed(EU)

Academic

Yes 75% 100% 50% 100%

No 25% 50%

Intention to reject a profitable project if that considered to be very risky for the organization

Multicriteria Analysis

• MCA technique:– Makes recommendations on the process of budgeting– Selects the best practice – Provides feedback on project selection methods– Enhances the project selection process

• The steps in MCA:– Identify the problem to be addressed– Identify the targets to be judged– Identify the criteria– Weight the criteria in relevance to decision– Score the criteria in relevance to targets– Incorporate risk analysis– Produce multiple combinations– Select the appropriate solution– View the results– Evaluation and recommendations

MCA Connection to the problem statement

Identify the

criteria

Weight the criteria in relevance to decision

Score the criteria in relevance to targets

the criteria

Incorporate risk analysis

Produce multiple

combinations

View the results

Select the appropriate

solution

Evaluation and recommendations

Identify the problem to be

addressed

All thecandidate projects

Parameters which

influence projects success

Weight the criteria according to how much each one influences the

decision

Score the criteria per project according to the extent each one

satisfies decision percentage

Which projects to

select

Runcontinuous simulations

Select the “right”

projects

View the generated reports and evaluate the

situation in a most realistic view

Compare the results before and after applying the

MCA process

Incorporate appropriate

risk distribution

MCA Steps MCA impact to problem statement

1 2 3 4 5

6 7 8 9 10

Identify the targets to be

judged

MCA Step – 1 What is the problem?

• Business Area: Constructing

• Eight possible projects

• Existing Data– (1) the expected revenue for each project if it is successful– (2) the multiple and different criteria which theirs scores impact success– (3) the estimated weighted project score for each project– (4) the initial investment required for each project– (5) the expected return and the expected profit for each project

• One Constraint– Available budget only $2.0 million (selecting all projects would require a total

initial investment of $2.8 million)

• Target– Determine which projects to select to maximize the total expected profit

while staying within the budget limitation

See the table

MCA / Step 2 – How many are the candidate projects to execute and how will the manager decide?

• 8 Constructing Projects

MCA / Step 3 – Identifying the criteria

• Profitability Resource availability Labor skills Perspectives Know how

MCA / Step 4 – Weight the criteria in relevance to decision

Criteria Weighting factorProfitability 40%

Resource availability 10%Labor skills 20%

Perspectives 20%Know how 10%

MCA / Step 5 – Score the criteria in relevance to projects

• Each criterion is computed depending on the percentage that fulfills decision

MCA / STEP 6 – Incorporate risk analysis

Resource Availability

Minimum Extreme Distribution

Labor skills

Uniform Distribution

Perspectives

Pareto Distribution

Know How

Yes-No Distribution

Allocate risk distributions into cells that represent criteria percentages values

Profitability

Normal Distribution

MCA / Step 7 – Produce multiple combinationsSimulate using Crystal Ball software

Select Project Portfolio using OptQuest tool

$690.000<TP<$2.050.000

Selected Projects: 1,2,3,4,6,8Rejected Projects: 5,7

Maximum TP=$1.148.000

MCA / Step 8 – Select the appropriate solution

MCA / Step 9 – View the results

$250.000 $230.000 1

$650.000 $370.000 1

$250.000 $146.000 1

$500.000 $553.000 1

$700.000 $0 0

$30.000 $69.750 1

$350.000 $0 0

$70.000 $101.250 1

Total profit $1.470.000  

• Results coming out without incorporating risk into process

• Rejecting 5,7

• TP=$1.470.000

• Results coming out after incorporating risk into process

• Rejecting 5,7

• TP=$1.148.000

MCA / Step 10 – Evaluation and Recommendations

TYPE OF RESULT Selected Projects Rejected Projects Estimated Total Profit(supposing the selected projects are 1,2,3,4,6,8)CATEGORIES

Results coming out after applying MCA but without incorporating risk into process

Not Known-Based on excel values

Not Known-Based on excel values

$1.470.000

The organization takes the “wrong” decision

TYPE OF RESULT Selected Projects Rejected Projects Estimated Total Profit

CATEGORIES

Results coming out after applying MCA and incorporating risk into process

1,2,3,4,6,8

-MCA technique

-Risk analysis

5,7

-MCA technique

-Risk analysis

$1.148.000

The organization takes the “right” decision

There is an accounting balance of $322.000 between the two last decisions

TYPE OF RESULT Selected Projects Rejected Projects Estimated Total Profit

CATEGORIES

Before applying MCA technique -Empirical-Randomly

-Empirical-Randomly

Unknown

The organization takes a rough decision

I.

II.

III.

Recommendations for Action

• Staffing a Project Portfolio Decision Team (PPDT)

Recommendations for Dissemination

• Deliver a handbook– PPDT– Upper level management – Project members

Recommendations for Additional Research and Study

• Survey that exacts results in relation to the Work Packages of the WBS Outcome: Better control of the portfolio per project

Cost and schedule controlling will be applied in a higher level

Thank you!