From Experience: Linking Projects to Strategy
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Why are successful projects so important to Hewlett Packard?
How far should an evaluation team go in trying to quantify project contribution to the firms mission or goals? What is the role of financial selection criteria in HPs project selection process?
There isnt really a strict upper bound on how far an evaluation team should go in to quantify project contributions to a firms mission. If we consider the screening process as a two-dimensional view – with the criteria complexity being the horizontal view and number of screens being the depth, the extent to which the team could go on both direction tend to rely on how much data is available.
Technically, so long as the data supplies, the evaluation team can keep trying until the remaining projects are narrowed down to an approachable number for analysis. It is a subjective are satisfied to meet the projects mission and objectives.
The financial selection criteria in HPs project selection process is not considered as the single most important determinant for selecting a project even though it plays a critical role in assessing and comparing the projects.
The rationale behind this is that selecting projects based primarily on its financial value can sometime lead to unproductive team dynamics. It would distract the team by causing them to focus on financial data or computations rather than project missions and business strategy.
The team should establish criteria that support business goals rather than personal agendas. The financial selection criteria are intended to ensure that the projects generate a sufficient return on investment within a defined time frame. They are also intended to recognize that financial success is reflected in the portfolio of projects rather than in the financial contributions of individual projects.
As suggested in Figure, financial criteria are an important but small part of the business value created by projects. Senior managers recognize the value of qualitative contributions to business value, so it is not always necessary to quantify a projects contributions to business value.
Considerable attention is paid to the measures HP uses to evaluate its projects. Is the aim of carefully defining these measures to simplify the project selection process or something else?
What do the aggregate project plan and the plan of record illustrate to upper management?
When should out-plan projects be considered for inclusion?
What was the impression of the impact that HPs project selection process had on the number of projects in underway? How do you expect HP would score on project management maturity?