Today’s organizations must evaluate hundreds or even thousands of potential projects each year. Companies must have laser focus on the projects which will contribute to the most value in growing or transforming the business. They must have laser focus on the projects which will contribute the most value to the bottom line. Any company needs projects to run, grow or transform the business and each has its own set of challenges.
The big question is: How do you determine objectively which projects will bring the most value? This added value can come from revenue growth, cost savings or cost avoidance. If all the stars align the value can come from all three!.
Here are some examples of financial performance metrics: Return on Investment, Payback Period, Internal Rate of Return, Net Present Value, etc. The costs and benefits of the projects are determined though the development of a Business Case. Then each individual project must “compete” with other project initiatives (Business Cases) for scarce corporate resources like funding, IT resources and project personnel.
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