Lecture 2:

Project Strategy and Selection is the process of selecting the best approach to a construction
project.

Complex projects are those that are large, expensive, have multiple stakeholders, and involve
many different teams and processes.

governance theory refers to the coordination and control of projects, portfolios, and programs
by senior management in collaboration with project sponsors (stakeholders).
Organizational Project Management (OPM) is an approach to managing projects within an
organization in a coordinated and integrated way.
OPM provides a framework for planning, executing, and controlling projects, programs, and
portfolios in line with the organization's strategy and goals.
A maturity model refers to a framework or tool that assesses and measures the maturity or
capability of an organization in managing projects.
A project manager can also use the steering committees or project boards that are part of the
most governance structures of organization to resolve conflicts.
Governance Structure model aims to bring all project members together.
Project selection models are tools used to evaluate and select projects, based on criteria such as
cost, timelines, and technical requirements.
Project selection is the process of evaluating proposed projects or groups of projects,
Models represent the problem's structure and are useful for selecting and evaluating projects.
Nonnumeric Models These models do not attempt to reduce the evaluation process to numbers,
but instead look at other factors that make for "obvious" choices for that organization.
( justifications for projects)
Numeric Models: Profit/Profitability These models analyze the potential projects in terms of the
single criteria of monetary return.
The Sacred Cow model is a type of project selection model in project management. It is based
on the idea that the most important projects are identified by top-level management and are
implemented regardless of cost or benefit.
Operating Necessity model is a project selection model based on the idea that projects must be
carried out to maintain the current operations of a business.
The Competitive Necessity model is an example of a Project Selection Model which focuses on
the strategic importance of the project and its potential to increase the competitive advantage of
the organization.
The product line extension model is a specialized model that focuses on extending a product line
or range of products.
Comparative Benefit Model is a project selection model that employs the Qsort technique. The
Q-sort technique can be used to rank projects based on how they will benefit an organization.
The Sustainability Selection Model is based on the idea that projects should not only be selected
based on their financial return, but also on their environmental and social impact. The model
uses criteria such as financial performance, environmental impact, and social benefits to
identify projects that offer long-term value for the company, its shareholders, and society.
Q-Sort Method is a tool used in construction management to evaluate different options and
prioritize projects based on their comparative advantages, The purpose of this method is to
enable selecting complex project such as portfolios.
The purpose of this method is to enable selecting complex project such as portfolios.
Profit/profitability - Models that focus on project costs and revenues (profits)
Scoring Models:
Real Options Approach as a method of project selection that presents a way to select projects
that is analogous to selecting financial options.
There may be options that the organization might take to reduce each of the specific risks,
which Martino states are "shadow options"
Disadvantage include the time, efforts, and expense that are needed to implement the approach.
The Real Option method is a way of estimating the value of a project by taking into account
future options such as expansion, abandonment and postponement. The shadow option is a way
of estimating the value of a project by taking into account future risks such as cost overruns,
delays, and changes in market conditions.
critical window, a window of opportunity is the short period of time within which some action
can be taken that will achieve a desired outcome
Window-of-opportunity Analysis is a type of management technique which looks at a certain
period of time in which a company can take advantage of a certain market opportunity.
Discovery-driven planning This is a learning process about evaluating project assumptions for
their validity
Discount rate (hurdle rate or cutoff rate) : the percentage to be used to reduce future cash flows

profitability index (or benefit cost ratio) is the sum of the discounted cash flows divided by the
initial investment.
Risk - When the decision maker is aware of the probability of every possible state of nature as
well as every possible outcome.
Uncertainty - when a decision maker has information that is not complete and therefore cannot
determine the expected value of each alternative.
A Pro forma document is a financial document that outlines a company's projected financial
performance over a given period of time. It includes estimates of income, expenses, and cash
flow.
Project Portfolio Management is used to consistently and transparently select projects that
match the organization's goals.
Derivative projects Projects that are only incrementally different from previous efforts.
Platform projects Projects that impact organization outputs or the processes that create them.
Breakthrough projects Projects that involve implementing new, sometimes "disruptive"
technology. R&D projects Projects used to acquire new knowledge or create new technology.
Project Portfolio Process Steps (In details) 1. Step 1: Establish a project council 2. Step 2:
Identify project categories and criteria 3. Step 3: Collect project data 4. Step 4: Assess resource
availability 5. Step 5: Reduce the project and criteria set 6. Step 6: Prioritize the projects within
categories 7. Step 7: Select the projects to be funded and held in reserve

A Project Council is a group of people who are responsible for overseeing the progress of the
project and making sure that it is meeting the desired goals and objectives.