Project Selection Criteria - Part 1 of 2

In this podcast Ricardo discuss the main criteria used in the project selection to the portfolio. In this part 1/2, he approaches the relevance of using also non-financial metrics as criteria, like strategic fit, urgency and risk.

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Hello, everybody. Welcome to the five minutes boom podcast. This week. I like to discuss with you the Project Selection Criteria and why this topic book will be covered this week and next week in this Podcast because this is such an important thing, because first all companies, we do not have enough money, enough time, and enough resource to do whatever you would want. We need to choose and choose. One means did not choose a, not a one and how we can do that.

We need to open our mind in thinking and different criteria is usually only financial criteria are available for this kind of Selection like net present Valley internal rate of return, economic value added cost benefit. This veal of only financial aspect. It's a myopia. It's not the mistake. And you are not looking ahead because there are many, many orders topics that must be considerate to make the right decisions.

A lot of projects, they do not have a clear financial target let's suppose things like an ERP implementation or a training program. It's very, very hard to calculate the cost benefit of something like that. For example, okay. ID an MBA course as a project in my personal portfolio, and then I spent 20 U S dollars and I'm expecting the payback in two years and three months, this doesn't exist.

Most of the time, they will not raise your salary or pay you X percent more because you have, this is something like an intangible Valley's and we need to consider this when we are doing the right portfolio management criteria to select the right products. Second example that I'd like to give second topic. It's the strategic fit. Okay. No will aspects I need to consider for sure will live in a Capella is, and we need to make profit.

I'm not saying, and I don't want to intend that I'm saying, okay, financial aspect. That's not important. Sure. Its critical, but that's not the only one. It's not the only one strategic fit is the second one. Sometimes I will decide to do a project that will mean for my company, the last profit, but more strategical fit, more strategic goal. So I'm losing a little bit of my profit to make a long term commitment to my strategy.

So it's very important. And a lot of people think, how do I measure that? It's easy. If you have something like balanced score card, you can rate them or you can use something like AHB and at least career RQ process. The rate then, and this is more close to my strategies. This is not the clothes. For example, let me give you one example. That's happening in Brazil during the crisis. In the about one year when year and a half ago, we have a major devaluation of Brazilian highs comparing $2 and some companies, they lost billions of Heise because of this, the valuation.

And this is the valuation is not because of their exports. No, it's because they're our portfolio of investments because this kind of company, product of companies, not banks, they're playing a role, have a bank. And the, and this is my own, my personal question. As a product manager, how they decided to do something. And then like the project that they did that drove them to this billion dollar losses and not doing something that is related to their business because it's very clear to see operations regarding currents, currents baskets, or something like that in banks, or to protect your company to export or import.

But this is to protect business and not to say that So look, look, this strategic fit. If you have the proper balance of strategy and financial aspects, you will reduce dramatically, this kind of problem, and above and beyond that next week, I want to discuss with you or the Criteria is it's not only strategic fit. It's not only financial aspects. It's a mood Criteria decision. I need to think audit topics X, but the stop because I wanted to discuss with you next week in another five minutes PM.

Podcast see you.

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Project Selection Criteria - Part 1 of 2

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