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- Subject Code : PROJ6000
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- Subject Name : Project Management 3
Principles of Project Management
Introduction to Principles of Project Management
The aim of the report is to examine project selection method for the Amec Foster Wheeler so that it can help the project to conduct its process. To achieve a required project objective, project management will be conducted as it will help in applying abilities and knowledge to the project. Business solutions are incorporated with strategies to execute various operational tasks through relevant devices and techniques. Project is considered as a one-time activity that aims to accomplish a definite goal in order to carry out a specific output (Laureate Education, 2013). The report will take help of PMBOK for project management in order to gain insights about effective project management techniques. According to PMBOK, there are three phases in project charter namely inputs, tools and techniques, and output (Project Management Institute, 2017). The report will also discuss the importance of business development charter within the project management scope.
Amec Foster wheeler – Project Management
The company ‘Amec Foster wheeler’ is one of the leading company around the world, having customers working in environment, clean energy, mining, gas and oil, and infrastructure market in more than 50 countries. The company is known for leading consultancy, project management and engineering companies. It has around 40,000 employees across the globe ranging from scientist to that of project managers (Government of Tasmania, n. d). The company’s aim is to create sustainable and successful company for long terms. To promote diversity, especially among women through participation in STEM (science, technology, engineering and math’s), the company has signed up a call for action in the campaign of UK government. All the employees working in the company has an access to Amec Foster Wheeler Academy. This academy helps to retain, develop and access the best talent possible, with a designed career path to provide a clear structure for personal growth and career development with a common approach. The aim of this academy is to develop a team and lead individual career to meet the future vision and aspiration challenges of global business through four key standards of collaborating, growing, improving and achieving.
Project Selection Method
Project selection method is a critical part of the business. Selecting an appropriate methods leads a company to achieve the desired output. These methods are used because the organization is not able to handle all the projects at once due to resource constraints. These methods are needed to decide which project will help the company to maximize its profit. There are two types of project selection approaches namely benefit measurement methods and constrained optimization methods (Monnappa, 2020). Benefit measurement method is the technique based on the present value of estimated cash outflow and inflow. In this method, first the cost benefits are calculated in order to compare with other projects. Then after that decisions are made and the project is selected. There are several techniques which are used in this method which include internal rate of return, net present value, scoring model, benefit/ cost ratio, opportunity cost, discount cash flow, payback period, and economic model (Ahmad, 2016). Different techniques in this model are discussed below.
Benefit/Cost Ratio: Through this technique, higher and lower benefit projects are determined. It is the ration of present value of inflow to present value of outflow.
Economic Model (EVA): While defining the return on capital, worth creation of the organization is calculated. It is performance matrix which determines the net profit for the organization. This model helps the project manager to select the project with higher economic value. The EVA is expressed in numeric terms rather than percentage (Monnappa, 2020).
Scoring Model: It is an objective technique in which the relevant criteria are listed by the project selection committee in order to weigh them according to their priorities and importance.
Payback Period: It is very important for a business to recover the invested cost. It is one of the basic selection methods which is defined as the ratio of total cash to the average per period cash. It takes payback period of investment into consideration (Ahmad, 2016). This method neglects the profitability and risks, and focuses on liquidity more.
Net Present Value (NPV): It can be defined as difference between current value of cash flow to current value of cash outflow (Monnappa, 2020). It should always be positive and project with higher are preferred. It takes the future value of money into consideration.
Discount cash flow: It should be considered during cost investment calculation and ROI as it is well know that the value of money in not going to be same in future as it is today. For example, $5000 will not have the same worth after five or ten years later from now.
Internal rate of Return (IRR): It is used to select a project that can provide maximum profitability to the organization. It is the interest rate at zero value of NVP. It is not used exclusively as project having lower IRR may have high net present value (Ahmad, 2016).
Opportunity Cost: It is the cost that is given up while selecting another project. Project having lower opportunity cost is selected.
Whereas, the constrained optimization methods are used when the project requires comprehensive and complex mathematical calculations. This method is used for greater projects. The techniques used in this method are multiple objective programming, dynamic programming, non-linear programming, linear programming, and integer programming (Monnappa, 2020). It is also called the Mathematical Model of Project Selection.
For the case study of AMP Corporate Accreditation, the selected projected method is Benefit Measurement Method in which Net (NVP) present value technique is considered. This method is selected as it consist of techniques which can help the company to meet the future vision and aspirations of the global business. NVP has benefits of taking future value of money into consideration (Ahmad, 2016). As Amec Foster Wheeler is providing free access in the academy to employees in order to improve their personal capabilities, these capabilities of every individual will help the company to earn profit in future. This method helps the business for long term profit as in the project individual performance in taken into consideration. The project of Amec Foster Wheeler focuses on developing the skills of existing employees (Monnappa, 2020). Moreover, the aim of the Amec Foster Wheeler Academy is to develop a team and lead individual career to meet the future vision and aspiration challenges of global business through four key standards of collaborating, growing, improving and achieving. Benefit of using this method is more as the project is based on increasing the productivity of employees which will further result in increase in profit/revenue of the business in future. Use of adaptive leadership framework can also be used which consist of nontechnical leadership skills for IT project management (Kaminsky, 2012).
Development of Business Charter
It is an important part of project management as it is a record through which the actuality of project is approved. It is used by project manager during its project activities as it defines the structure of the project from start to boundary. In the given case study of Amec Foster Wheeler, the business should engage stakeholders, discuss issues and gather agreement for initiation of project. The business has to follow three steps to develop charter (Government of Tasmania, n. d.). The first step involves, establishing the vision of the project for better understandability and projection. Furthermore, the vision can be divided into deliverables, objectives, or scope for creating a broader view to the project. The second step involves classification of project organization. It can be done by making a list of reporting lines, rules, responsibilities, customers and stakeholders. The last and final step involves approaching to the implementation of project plan which may include source plan, dependences, mileposts, and application plan (Government of Tasmania, n. d.).
Conclusion on Principles of Project Management
It can be concluded that the report has examined project selection method for the Amec Foster Wheeler so that it can help the project to conduct its process. The project method selected for the business is Benefit Measurement Method. It comprises with various techniques which includes internal rate of return, net present value, scoring model, benefit/ cost ratio, opportunity cost, discount cash flow, payback period, and economic model. Apart from this, the report also provides information about PMBOK along with different project selection methods. Mainly, two project selection approaches are discussed in the report which include benefit measurement methods and constrained optimization methods. Moreover, the report has considered PMBOK for project management in order to gain insights about effective project management techniques.
References for Principles of Project Management
Ahmad, B. (2016). Project Selection Techniques, Relevance & Applications in Pakistan. International Journal of Technology and Research, 4(2), pp.52-60.
Government of Tasmania (n. d.). PM-902 Business Case (Small) Template & Guide. Retrieved from http://www.egovernment.tas.gov.au/__data/assets/word_doc/0013/15520/pmantempopen-sml-proj-bus-case.doc
Herman, B. and Siegelaub, J. (2009). Is this really worth the effort?: The need for a business case. Retrieved from https://www.pmi.org/learning/library/need-business-case-6730
Kaminsky, J. (2012). Impact of nontechnical leadership practices on IT project success. Journal of Leadership Studies, 6(1), 30-49. doi:10.1002/jls.21226
Laureate Education (Producer). (2013). The practice of project management [Video file]. Baltimore, MD: Author.
Monnappa, A. (2020). Project Selection Methods for Project Management Professionals. Retrieved from https://files.transtutors.com/cdn/uploadassignments/4150769_3_proj6000-project-selection-methods-for-project-management-professionals.pdf
NSW Treasury. (2018). NSW Government Business Case Guidelines. Retrieved from https://www.treasury.nsw.gov.au/sites/default/files/201808/TPP1806%20%20NSW%20Government%20Business%20Case%20Guidelines.pdf
Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK guide) (5th ed.). Newtown Square, PA: PMI.
Project Management Institute. (2017). A guide to the project management body of knowledge (PMBOK guide) (6th ed.). Newtown Square, PA: PMI.
Project Management Institute. (n.d.). Code of Ethics and Professional Conduct. Retrieved from http://www.pmi.org/About-Us/Ethics/Code-of-Ethics.aspx
Project Management Videos. (2014). IT Project Management - Information Technology. Retrieved from https://www.youtube.com/watch?v=LNpGKYUB0UI&list=PL_rf_lwCV7MAc9LTxmx7BGStVu6IPEhB&index=2
Wysocki, R. K. (2014). Effective project management: Traditional, agile, extreme (7th ed.). Indianapolis, IN: Wiley.
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