Explain the factors that determine how a company selects a project

Explain the factors that determine how a company selects a project. 

 Paper instructions: 

Explain the factors that determine how a company selects a project. 

Differentiate between top-down and bottom-up estimates, including when each would be used. 

Determine the methods for estimating project costs. 

Explain the types of costs. 

Format your 700- to 1,050-word paper consistent with APA guidelines.

A company may have numerous project requests but cannot implement all of them due to

insufficient resources, money, equipment, and time. Thus, it is necessary to have a selection

process based on several factors to enable the firm to choose the most beneficial projects. Some

of the factors to be considered include the ability to meet the corporate strategy, organization

readiness, ease of implementation, improving profitability, decreasing costs, increasing revenue,

and improving the firm’s public image (Carstens, Richardson, & Smith, 2016). Other factors

include improving quality, increasing market share, decreasing waste, cultural readiness, urgency

due to a particular need or competitive advantage, enhancing customer service, and getting

support from a sponsor or local department.

Estimating techniques are applied in either the bottom-up or top-down approaches. Top-

down entails estimating costs by considering the project in its entirety. Top-down estimates are

usually based on analogy to other projects or expert opinion (Nicholas & Steyn, 2008). The top-

down approach is suitable for process industries, including pharmaceuticals, petrochemicals, and

breweries in estimating project costs. The companies employ the analogy method to compare

current to previous projects by relying on project cost databases and documentation that

organizes cost information into categories such as type of project, task, and work package. After

a new project proposal, cost details about past similar work packages and projects ere extracted

from the database. Conversely, the bottom-up approach involves estimating costs by dividing the

project into elements, including end-item components and project work packages. Project

managers estimate each end-item element or work package’s costs separately and then combine

them to determine the total project cost (Nicholas & Steyn, 2008).


 

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