Swinging on the Branch of a Tree: Project Selection Applications

Abstract

Selecting research and development projects is always difficult because data for assessment are seldom available. ICI Americas used simple decision trees successfully to screen new product ideas and decide on a major effort in new process research. The new process research model incorporated only 10 variables, making estimation feasible; a visual sensitivity analysis gave management confidence in the model conclusions. The screening model incorporated qualitative selection criteria (for example, quick development, low risk, patentable, low capital, high sales) into a single quantitative expression of expected net present value. ICI Americas used it to select projects from 53 new product ideas. These examples illustrate the value of a logical, simple model even when data are sparse.

Project portfolio selection through decision support

“…According to Hess (1993) "management science has failed altogether to implement project selection models; we have proposed more and more sophistication with less and less practical impact". One of the major reasons for the failure of traditional optimization techniques is that they prescribe solutions to portfolio selection problems without allowing for the judgment, exp erience and insight of the decision maker (Mathieu and Gibson, 1993).…”

An Investigation of Fast and Frugal Heuristics for New Product Project Selection

“…It is therefore acceptable to sacrifice decision quality and choose a simpler, faster, and less expensive evaluation method. Decision aids for FFE screening must be able to address the needs of the FFE process [25,38,50,52]. The next section reviews different decision making methods that have been proposed for project selection, in terms of their applicability for screening projects at the FFE.…”

“…While the later stages deal with fewer numbers of projects, the early screening stage deals with tens, sometimes hundreds of R&D project concepts proposed for screening, which makes the number of screening decisions that need to be made, very large [52]. Since the initial screening is more concerned with identifying ideas that can be developed into concepts and can be evaluated for their technical feasibility and market potential, rather than providing detailed analysis, screening should not be very sophisticated and accurate and furthermore limited by the large number of projects that need to be screened, the limited time available, and a lack of information [25,29].…”

“…A review of project screening and evaluation practices shows that managers tend to use project management decision models near the end of the development process, where there is more information available, and market uncertainties become more important than technical uncertainties [9,25,52]. Relatively little time or money is spent on the up front activities [20,[38][39][40].…”

“…Research [20,22,37,40] show that gut feeling, past experiences, faith in certain individuals, hopeful guesses, and wishful thinking seem to be the decision factors in most cases. Ideas are rejected intuitively as a result of informal peer discussion or one or more levels of supervisory review [52], and if decision aids are used at all, they are very simple. Checklists are used in group decisions in about 11.6 percent of the cases, while in less than 2 percent of the cases, evaluators used a formal checklist questionnaire or scoring model to rate projects [38].…”