Case Study 3.2: Project Selection at Nova Western, Inc.
This case presents an example that is common, in which different screening methods may yield different findings. In this case, two projects are competing for funding; Project Janus, championed by the organization’s Software Development group and Project Gemini, which as the backing of their Business Applications organization. Using a weighted scoring model, it appears that Project Gemini offers the best alternative in terms of the criteria employed. On the other hand, when a Discounted Cash Flow approach is used, the results suggest that Project Janus will earn greater returns on initial investment. Instructors can use this case to illustrate the fact that many times, selection models will point to conflicting results, particularly when financial models are paired with non-financial approaches.
Instructors can fashion a debate from this case, in which they assign one team to serve as champions for Project Janus and the other for Project Gemini. It serves as a valuable exercise for requiring students to commit to one approach or another, defend their positions, and also examine these competing models for their strengths and weaknesses.
1. Phyllis has called you into her office to help her make sense of the contradictions in project evaluation. How would you explain the reasons for this divergence of opinion from one technique to the next? What are the strengths and weaknesses of each screening method?
The chapter notes several strengths and weaknesses of each project screening method and these should be considered in this case. It is not uncommon for financial and non-financial screening methods to yield competing information; thus, an argument could be made that using only these two methods is insufficient and in fact, an enhanced screening model should be developed for Nova that considers these factors are part of an overall, larger model of choice. Those instructors...