Holistic Decision Making

I was sitting in my Project Finance class (which is my next to last class before GWU will grant me my MSPM) and the topic of project selection came up. We reviewed NPV, IRR and other
methods. My issue is that, selecting a project based purely on financial returns seems highly flawed to me.

In a perfect world you could walk in with a list of 10 projects, show the ROI or NPV and then select the top 3. Done. Meeting ends and you go out and initiate them.

From my point of view this ideal world is an illusion. First and foremost, no decision is purely quantitative; there are many qualitative factors that need to be considered in project selection, such as:
- The politics of the organization
- The availability of resources
- The
impact of committing resources (similar to opportunity cost of money
committed)
- How is the project aligned with strategic objectives
- What are the risks of the project, is the organization adverse to those risks
- Does this help or hurt the stakeholders or customers (there are many projects that
could have a positive financial impact initially, but then anger your customers,
such as sending customer service to overseas call centers)

There are many more and I am not genius in pointing these out. In fact there are many methods to make a selection using both qualitative and quantitative values. I can recommended AHP, but there are others.

My point in bringing this up is that I think we, as PMs, need to push holistic approaches more often (or even all the time). Stats and financial models are nice, but they never show the whole picture. If you want to do your best to avoid things like unintended consequences, you need to be holistic in your decision making.