Project selection can be a costly affair because when we decides to invest money in a project; it will be very difficult to abandon it without suffering heavy losses. Therefore, it is very important to take project selection decision cautiously. There may be a large number of methods for selection of a project. But we can use a simple word LOVE for selecting or rejecting a project. Love is very important for maintaining a long term relationship and project selection is always a long-term decision. So, love is very important not only in personal relationship but also in project selection. Now let’s elaborate the term LOVE in relation to project selection.
L- the letter L stands for looking for the opportunity. In a project selection decision, we have to look for various opportunities available to us as per our decision variables. Here decision variables means the premises under which we have to select a particular project i.e. the amount of capital and other resources we can acquire, the technology available in the area of our project, the raw material, the infrastructure facilities, government policies and host of other things that are instrumental in deciding to invest in a particular project or not. We have to select the best opportunity available as per our requirements and available decision variables.
O stands for Objectively do the cost-benefit analysis. It is very important to do the cost benefit analysis not only on the financial aspects, but also the social cost benefit analysis. Though a project may be profitable for the investor but it may cause heavy loss to the environment. We must do the cost benefit analysis with almost care. Neither we should overestimate the benefits nor should we underestimate the cost; otherwise we will invest in project where certainly we have to lose money. On the other hand if we underestimate the benefits and overestimate the cost we will not invest a single penny in that project. In both the cases we will either lose money in a non-profitable project or we will miss a profitable opportunity without being invested in that project
V stands for verifying the results. It becomes very pertinent, to verify the results that we expect from the investment in the project through an outside agency. Second opinion is always helpful in making decision that is very high cost of reversion. After verification from the third party if same results are expected from the project we can go in for our decision making.
E-stands for embrace the project or escape from the project. After doing the cost benefit analysis, and verifying the result through third party, either way should embrace the project or escape from it. The last letter of the word LOVE is very important, because it has meaning on both positive and negative direction. On the basis of first 3 criterion of this evaluation either we have to go in for selection of the project or we must escape from the project. The similar kind of evaluation must be done even while choosing a life partner, an employee, school for the children, or any other thing where our decision have heavy cost of reversion.
Hope you all will use this love approach not only in your personal relationship but also in project selection decisions.
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