In last week’s article, we discussed the stage-gate processes and the evaluation criteria for each gate. In this week’s article, we will dive deeper into the different types of project evaluation and how projects are evaluated. 

Project evaluation refers to the process of measuring the success of a project, program or portfolio. Project evaluation is usually carried through gathering relevant data on the project and using an evaluation method to assess performance evaluation opportunities. One of the main reasons for project evaluation is that project evaluation keeps the project stakeholders up to date on the project status and changes that might be required to the budget or schedule.

The following are some of the common types of project evaluation that are implemented into projects.

Pre-Project Evaluation

Prior to the initiation of the project, the team would evaluate the feasibility of the project. This usually takes place in the developmental stage of project ideas and is crucial for the effective execution of the project. This form of project evaluation would focus on ensuring that everyone involved is clear of the objectives and goals of the project before any work begins. 

Ongoing Evaluation

Throughout the life cycle of the project, various metrics will be used to verify completed tasks. This includes budget, percentage of completed tasks and the overall quality of the work delivered so far. In ViTrox’s IPD solution, ongoing evaluation is normally carried out in various forms such as ERB reviews, Technical reviews and internal reviews with PMO. This form of evaluation primarily focuses on ensuring that the project keeps to its original objectives and goals and remains on track. 

Post-Project Evaluation

At the end of the project, it is important to assess the outcomes and impact of the project. Usually, this evaluation would be carried out in the form of a project retrospective review which assesses how effective the project was in meeting the objectives and goals set at the beginning. In addition to this, an evaluation of what was done well and what could be improved would also be carried out. 

Self-Evaluation

At any time during the project, team members can conduct a self-evaluation to assess if their work is contributing toward the greater objective and goals of the project. During this self-evaluation, it is essential to recognize one’s degree of contribution towards the project, strengths and weaknesses, and areas for improvement as this will help to increase their ability to work effectively as a part of the project team. 

External Evaluation

Another form of project evaluation would be through hiring external agencies to perform evaluations on the projects. Generally, these agencies should have no prior connections or involvement in the project which would result in a higher level of impartiality when conducting the evaluation and concluding. Usually, external evaluation is used for projects with a large number of stakeholders with several moving pieces.

Economic Analysis

Under economic analysis, the project aspects highlighted include requirements for materials, level of capacity utilization, anticipated sales, anticipated expenses and probable profits. Normally in a new product introduction (NPI) project, the estimated sales volume of the product will be used as the reference point for assessment. In addition to this, government policies and incentives in this regard should be taken into consideration. For instance in ViE, the pioneer status of each of their projects are taken into consideration when evaluating a project as obtaining the pioneer status incentives would help to increase the profitability of the project. As such, the demand for the product must be carefully spelled out as it is one of the major deciding factors when it comes to assessing the feasibility of the project.

Strategic Fit & Core Competencies

During the project evaluation process, the project’s alignment with the company’s business strategy is assessed. In other words, reviewers would assess the impact the project would have on the company. Generally, in a new product introduction project, one of the biggest areas of focus for project evaluation would be the product’s core competencies. This is because a unique, superior, differentiated product with a compelling value proposition is the number one driver of new-product success and a key marker or predictor. Therefore, it is important to establish clearly the value the project brings to each stakeholder as well as how it contributes to the company’s overall success. 

Project Progress & Effectiveness

Evaluating the project’s schedule and progress refers to evaluating whether the project’s immediate objectives were achieved, or are expected to be achieved while taking into account their relative importance. As the saying goes; “time is money”, the same can be said when it comes to project schedules. This is because delays in the project would result in an increase in labor expenses as well as may result in the loss of market shares. Generally, the project's actual schedule would be compared against the planned schedule in order to determine if the project is on schedule or if there are any delays that occur. 

Market Attractiveness

Market attractiveness is essential, especially in new product introduction projects. This is because misunderstanding the market and customer requirements can result in the product’s failure during launch. Thus, knowing the anticipated market for the product to be produced becomes an important element in every business plan. When assessing the market attractiveness of a project, the market size, demand and potential growth is one of the key criteria for evaluation. One good practice for project managers to highlight the market attractiveness of their project would be to establish a comparison table to benchmark their proposed product against current and potential competitors. Another assessment of market attractiveness would be through assessing the Total Available Market (TAM), Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM) of the product.

Technical Feasibility

Technical feasibility assesses whether the project is technically possible to manufacture a product or service. Technical feasibility helps determine the effectiveness of the proposed plan by analyzing the process, tools, technology, material, labor and logistics. A technical feasibility study helps organizations determine whether they have the technical resources to convert the idea into a fully functional and profitable working system. In ViTrox’s IPD solution, the technical feasibility of the project is assessed during the technical review sessions.

Financial Feasibility

During the project evaluation process, one of the key assessment criteria would be the projected financial performance of the project. The project’s financial analysis will serve to show if a project is financially viable to be continued or if it should be stopped. When assessing the financial performance of the project, evaluators would normally use the following criteria:-

• Return on investment (ROI)

Return on investment refers to the ratio of profit expected from an investment project and the proposed investment for the project. In simpler teams, ROI helps to assess the profitability of the project.

• Payback Period

Payback period refers to how long it takes for a project to recover the cost of its initial investment. In simple terms, the payback period helps to estimate when the project would break even. As such, when evaluating projects, a lower payback period would be favorable. 

• Net Present Value (NPV)

In project management, it is used to determine whether the anticipated financial gains of a project will outweigh the present-day investment. Generally, a project with a positive NPV will be profitable and therefore given a green light for consideration, while a project with a negative NPV will result in a financial loss, and may not be undertaken.

It is essential to note that financial analysis is not only to be done in the planning stages of a project but throughout every stage of the project. As such, it remains within the domain of the project manager to keep stakeholders up-to-date with the project’s cost and finances based on the baseline that was set initially.

As noted above, there are many aspects that can be measured through the project evaluation process. Project evaluation is always advisable as it can bring a wide array of benefits to the organization. Here are some of the main benefits of project evaluation.

Better Project Management

Project evaluation helps the project manager easily find areas of improvement when it comes to managing costs, tasks, resources and time. Project evaluation would help project managers to notice trends and patterns which would help them to have a clearer understanding of how the team can be improved.

Track & Improve Team Performance

Project evaluation allows project managers to keep a track of their team’s performance and increases accountability. Besides that, through project evaluation, the project team would be able to see the impact of the project in the public sphere with actual metrics and feedback to quantify it.

Better Project Planning

By referring to past evaluations, project managers would be able to better plan for upcoming projects based on newfound knowledge of how the team functions. In addition, project evaluation would help project managers to be able to compare the project baseline against actual project performance for better planning and estimating.

Helps With Stakeholder Management

Having a good relationship with stakeholders is key to success as a project manager. Creating a project evaluation report is very important to keep them updated. By involving them in the project, stakeholders would be more reassured about the quality of the completed, evaluated projects.