Question

A project model of some sort is implied by any conscious decision, including the selection of projects. The choice between two or more alternative projects requires reference to some objective. Determine the nature of project selection models

Answer 1

The nature of the project selection model talks about on what basis is the project is getting selected in an organisation. There exists basically two ways to select the project on the basis of the nature which are:

1. Numeric Selection: Numeric Selection talks about what is the numerical value of the project using some degree of formulas and determination factor to calculate what would the present factor return of this project if undertaken effectively as compared to the costs. The ways of calculating the numeric factor for project selection model are: Payback period, Average Rate of Return, Discounted Cash Flow, Internal Rate of Return and Profitability Index to check the inflows and outflows of the project and to see the valid profit associated with the project.

2. Non Numerical Selection: On the other hand, non numerical selection as the name suggests doesn't take the numerical figures as discussed above. It consides different factors on the basis on which a project is selected in an organisation. Different non numerical selection models for the project are: operating necessity model, sacred cow or top level model, product line extension, competitive necessity and comparative benefit model. Instead of numbers, factors like competition level, qualitative approach and the benefits and the goodwill associated with the project is calculated to select them in terms of the nature.