5 Universal Project Management Principles

Running head: PROJECT MANAGEMENT PRINCIPLES
PROJECT MANAGEMENT PRINCIPLES
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PROJECT MANAGEMENT PRINCIPLES1
Methods of project selection:
Implementation of any project is a complex process as it needs to define strategies and
implement those strategies according to project scope and objectives. Although this is
applicable for any type of project, when project is of large scale, it is not easy to manage
project activities as these projects are often complex in nature (Heagney, 2016). Therefore,
large organizations do not prefer selecting any project that they get from client. Instead an
extensive analysis of project is done to ensure that best project is chosen. Although there are
various criteria for project selection, one of the most important aspect is cost of implementing
a project and revenue from that project. However, it is not easy to identify which project is
most beneficial for a company. It requires to apply various project selection methods for
identifying and choosing the best project in terms of project investment and project revenue
as well.
SingularLogic which is one of the leading organization in Greece supplies enterprise
software to so many clients. These projects are therefore often implemented in large scale
which requires significant resources and investment as well. Therefore, like many large
organization, for SingularLogic also selecting a proper project is so important and this is
where application of project selection method plays an important role.
In this context, project selection methods that are considered are mostly analyses
economic aspects of the project as investment and revenue are two of the most important
aspects of large scale projects like projects that this organization needs to implement for its
clients as well.
Project selection methods that are analysed in this report are cost-benefit analysis,
economic value added or EVA, payback period and net present value. It includes overview of
these methods and details regarding how to apply these methods into project.

PROJECT MANAGEMENT PRINCIPLES2
i) Cost / Benefit Ratio:
When investment is made in project cash is invested into project which mean cash
flow is incoming in nature and therefore, it refers to a cash inflow (Badewi, 2016). When
revenue is taken from project, then cash is outgoing in nature and therefore, it is referred to as
cash outflow.
When a ratio is taken between these two cash flow in project, then it helps in
identifying whether this project will be economically beneficial or not. A project which has
more cash outflow than cash inflow is always preferred by an organization (Lappe & Spang,
2014). Therefore, while selecting any project this organization needs to choose project that
has higher cost-benefit ratio for ensuring that project is profitable.
ii) Economic Model:
Sometime in order to analyse a project, it is often required to measure performance of
the project in terms of the financial value and for this proper metrics need to be defined for
analysing project performance (Lotze‐Campen et al., 2014). When an investment in a project
is made, it is important to compare that with organizational value obtained from this project.
If a project provides organizational value that is higher than investment made in that project,
then project is always beneficial and organization needs to select that as well. When there are
many projects, it needs to be identified which project has most EVA value and then that
project needs to be chosen accordingly.
iii) Payback Period:
When investment is made in a projects, especially large projects, then it requires some
time before organization is capitalize on that investment. It means in order to obtain benefits
from that project, it requires some time which is referred to payback period (Dutra, Ribeiro &
de Carvalho, 2014). A project that has shorter payback period is attractive to organizations as