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AC 1
Appraising the viability of a Project Developing success andfailure criteria
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Appraising the viability of a Project Developingsuccess and failure criteria
NPV
IRR
ROI
Payback
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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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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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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
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