In project management, selection of project is the foremost activity. Since it is the foundation on which all the project management is based, it should be given top priority by keeping in view the organization’s strategy and business. Several factors influence the project selection process. This study focuses on the factors influencing the Information Technology (IT) project selection process. A survey was conducted in two mid-sized IT organizations, one public and another private, and nine small-sized IT companies to study their business practices in selecting projects, and major influencing issues were identified. Along with developing a framework, the study presents a System Dynamics (SD) influence diagram and describes the type of influence among the issues and ultimately on project selection.

Selection of project is very important and is the first step in the project life cycle.
It may be a problem to solve, a product to develop, or a service to perform, and also it may be a new system for modifying/extending the old system. Project selection is the process of evaluating individual projects or groups of projects and then choosing to implement some of them so that the objectives of the parent organization are achieved (Meredith and Mantel, 2003). Project selection is the process of evaluating the pros and cons of taking up a project. The selection of a right project for future investment is a crucial decision for the long-term survival of the parent organization. Project selection is merely making a commitment for the future. The organization should put up a serious effort in selecting a good project suitable to its business and capabilities.

According to William (2009), project management leadership should be involved in the project selection process. The same is true in the case of Information Technology (IT) projects also. Faced with larger demands, smaller budgets and an urgent need to justify the business case, the organizations must prioritize their IT projects and re-invent today’s best practices (Boyer, 2003). As organizations determine what projects gain approval and receive the funding to proceed, they have to decide whether the projects are really worth the expense (William, 2009). To identify good projects and to prioritize them, the organizations need to follow some criteria. According to Gray et al. (2010), project selection criteria are typically identified as financial and non-financial; for most managers, financial criteria are the preferred method to evaluate projects, and the financial models are appropriate when there is a high level of confidence associated with estimates of future cash flows. The financial return, while important, does not always reflect strategic importance; organizations may support projects to restore corporate image or enhance brand recognition and they may use non-financial multi-criteria selection models, namely, checklist models, multi-weighted scoring models, etc. Gray et al. (2010) also add that regardless of criteria differences among different types of projects, the most important criterion for selection is the project’s fit to the organization’s strategy. A project selection process provides value to many organizations that embrace the needs of business and provides a method to determine if a project will have a strategic impact to improve business (William, 2009).

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