Content area
Full Text
INTRODUCTION
The first question that a firm involved in a tender for a project has to face is: How important is the project to the firm, from a strategic point of view?
Nevertheless, almost all firms are pushed to fight for a project, underevaluating the resources required to perform the project in a profitable way: it seems important to win the contract at all costs. As a consequence, performing that project means not only not being able to obtain the expected project profit, but also damaging or reducing the entire firm's profitability, due to a bad resources re-allocation among all projects managed. Project selection, in fact, is a part of firm's planning process.
This paper proposes a powerful tool, PSG (project selection grid), for project appraisal and shows in what manner it can be integrated with firm planning procedures in order to improve decision-making.
THE PLANNING PROCESS
The most important situation that a firm working by projects has to face is the management of several projects at the same time. This means that firm's managers have to attempt to coordinate projects by means of effective tools for planning and controlling in order to reach company's profit rates necessary to guarantee the survival in a strong competitive environment. Globa1 profit's goals are obtained if and only if all projects work to assure the realization of system of firm's targets.
It is clear that project coordination must be performed within an integrated planning process, taking into account all economic and financial components affecting the system of targets. Moreover, the integrated planning process has to be designed in order to allow the appraisal of projects that may be acquired and to verify the contribution of these projects to firm's wealth. Hence, an effective project appraisal must be able to measure the contribution of project itself in reaching firm's targets and must take into consideration the coordination with projects under execution.
Due to these requirements, project appraisal is a important aspect of the strategic planning process of a firm working by projects; it is necessary to analyze it in detail in order to introduce PSG.
ENVIRONMENTAL FACTORS AND CORPORATE STRATEGIES
The most peculiar source of project uncertainty that firms must face and consider in designing strategies is the...