Initiation and Feasibility

Although project managers do not generally get involved in the feasibility part of choosing a project, it's important to note why a project is handed to a project manager in the first place.

Organizations must change to survive, and projects are the main mechanism for achieving change. The question of why to do a project is left to the senior management, and the following are some of the issues that senior management must consider in order to come to a conclusion about where money should be spent for various projects.

New projects either make money or save money. In the case of a product introduction, the project is designed to attract more revenue to the company through an offering to consumers. The senior managers charged with funding projects must look at how well the individual project will attract revenue in relation to other projects that are proposed. The project that forecasts out to be the most profitable for the organization is usually the one that gets the funding. (Watch out for pet projects; more on this later.)

If the project is being done to replace some part of an existing infrastructure, it is being done to save money. A new inventory system will save time and therefore money. The project is authorized because the organization must upgrade its capacity to control inventory in order to remain competitive.

It's often harder to get funding for this type of project than for new product introductions; this type of project is just as important for the organization, but it doesn't have the public component that makes product introduction exciting.

A third type of project comes from reaction to outside sources. Take for example HIPPA, the Health Insurance Portability and Accountability Act of 1996. This act mandates certain ways in which medical information must be transferred and stored. If you have an organization that deals with medical information, you will have already started complying with the new requirements given out by the government. This is an example of an outside force making your organization conduct a project that is not internally initiated. These projects are often both very complex and extremely crucial to the success of your organization.

Initiation is not where project managers live. It is the phase in which the project manager is assigned, but only after organization management has determined the reason for the project in the first place. In the Initiation phase, the reason for the project is laid out, the sponsor releases resources to get the project done, and the project manager is chosen.

The question on the exam pertaining to the Initiation phase most often looks like this:

Q.	A project manager is assigned to a project in the ________ phase of the project.
		A.	Management
		B.	Initiation
		C.	Closing
		D.	Controlling

The answer is B. The sooner the project manager is selected, the better for the project manager and the project.

We will look at feasibility and the different models for feasibility in the Cost section of the knowledge areas later in the book. However, the key to remember is that although there are many models for choosing projects for an organization, the project manager is generally not the one who proposes a project and has to defend his or her proposal personally. The financial models that will be shown later are interesting, but often project managers do not have to deal with them.