Project Management

nation of the four financial metrics presented in this

chapter.

• It is easy to construct and to interpret.


• It allows for management input. Management can deter-
  mine the appropriate attributes and the relative weight-
  ing. In fact, involving management in constructing the
  matrix may streamline the project approval process.


• It is well suited to what-if studiesand sensitivity analysis.
  Trade-offs between criteria are readily observable.
  There are also some disadvantages:


• The process relies
  almost entirely upon
  subjective measure,
  thus opening it up to
  questions of bias,
  halo effects, and
  reliance on opinion
  or judgment.


• The result obtained
  is only a measure of
  relative attractive-
  ness. There is no
  absolute verification
  that any of the alternatives identified is a justifiable
  investment from a business perspective.


• All attributes are assumed to be independent; there are
  no allowances made for interdependencies between or
  among factors.

Reality Check #2: Stop or Go?

Once a specific alternative has been identified, you should veri-
fy justification and feasibility again. The question of justification
should have been addressed by performing the financial calcu-
lations above. Feasibility can now be evaluated much more
readily than during the requirements stage, since you now know
what the solution is. Methods for verifying feasibility include

Defining Your Project 65

Use Financial and

Non-Financial Criteria

Considering both financial and non-

financial criteria is an excellent way to

ensure a comprehensive analysis of

alternative solutions. Use a weighted fac-

tor scoring model and include only

alternatives that are financially justifiable.

Include one or more of the financial

metrics as attributes.You can vary their

relative weight according to how domi-

nant you want financial criteria to be.

T

E

A

M

F

L

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