7/24/2019 PMB AC 1.2

1/5

AC 1

Appraising the viability of a Project Developing success andfailure criteria

7/24/2019 PMB AC 1.2

2/5

Appraising the viability of a Project Developingsuccess and failure criteria

NPV

IRR

ROI

Payback

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3/5

Types of project selection model Nonnumeric models

Operating necessity- Flood threatening a plant

Competitive necessity-bar mill needs modernization

Product line extension-fits existing product line fills a

gap strengthens a !eak link

Comparative benefit model-"ssumes that the organisationhas many pro#ects to consider$%enior managers select

subsets that most benefits the firm but the pro#ects may not

be easily comparable $e$g$ Research and &e'elopment &ay

care centre for employees Potential ne! products$

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4/5

Success and failure criteria

Pro#ect !ould be deli'ered on time according to its specified performance and cost$

Success or failure factor in relation to the initial project definition

(he pro#ect scope- (he extent of !ork is not clearly stated and understood$

(he technical re)uirements are 'ague$

*stimates of cost timescale or benefits are too optimistic

Risk assessment is incomplete or fla!ed$

(he intended pro#ect strategy is inappropriate

Insufficient regards is paid to cash flo!s and the pro'ision of funds

(he interest and concerns of stakeholders are not taken into consideration$

"ppro'al to proceed is gi'en for political personal and intuiti'e reason !ithout the due

consideration of the business plan$

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5/5

Primary objective Cost! performance and time

+ood pro#ect definition and sound business case$

"ppropriate choice of pro#ect strategy

%trong support for the pro#ect and its managers from higher management

"'ailability of sufficient fund and other resources

Firm control to changes to the authorised pro#ects

(echnical competence

" sound )uality culture throughout the organisation

%uitable organisation structure

"ppropriate regard for health and safety of e'eryone connected !ith the pro#ect

+ood pro#ect communications

,ell moti'ated staff uick and fair resolution of conflict