SW Project Management IT Project Conceptualization

SW Project ManagementIT Project Conceptualization INFO 420 Glenn Booker Chapter 2

Project conceptualizing and initiation • Now we’ll expand on the project life cycle, and examine its first phase in detail • The ‘IT project methodology’ used throughout the text is fairly typical as a foundation, but everyproject tailors its base methodology to meet its own needs Chapter 2

Project conceptualizing and initiation • This chapter focuses on defining the goal for a project, and several objectives to help meet that goal • Then we’ll expand on the business case concept, including MOV and feasibility • The higher level governing structure to choose IT projects will be discussed Chapter 2

IT Project Methodology (ITPM) • A project methodology provides the overall strategy for managing and controlling them • This describes the overall game plan • The methodology recommends phases, deliverables, processes, tools to support projects; but your project’s needs may differ! • Sharing a common foundation also makes CMMI level 3+ happy Chapter 2

ITPM • Using a common methodology also helps managers decide which projects should be supported, and makes cross-project measurements feasible • The ITPM is flexible to accommodate any SDLC, and may be further adjusted for the skill level of the project team, project size, application type, etc. Chapter 2

ITPM phases and deliverables • Conceptualize and initialize project – delivers the business case • Develop project plan and charter – delivers them • Execute & control project – follows an SDLC, and delivers the completed system • Close project – delivers a final project report and presentation • Evaluate project – delivers a project evaluation and lessons learned Chapter 2

Phase 1 • Conceptualize and initialize project defines the goal of the project, and how it will add value to the organization • Do so by comparing project to possible alternatives, and making a cost/benefit, feasibility, and risk analysis to prove which choice is best • This produces the project’s business case Chapter 2

Phase 2 • Develop project plan and charter • The project charter defines the project organization, and how the project will be implemented • It clarifies the project goal in terms of scope, schedule, budget, and quality standards • The project plan answers the who/what/ where/when/why/how questions Chapter 2

Phase 2 • The business case (phase 1) and project plan (phase 2) are kept separate • The business case focuses on how well the project matches the business strategy • Should the project be done at all? • The project plan focuses on how the project will be achieved – more tactical concerns • How will we make the project happen? Chapter 2

Phase 3 • Execute & control project carries out the project plan • Project manager must make sure the resources and infrastructure are available to the project team • People, technical infrastructure • Development methods and tools Chapter 2

Also need to provide: Work environment Controls over scope, schedule, budget, and quality Human resources system And use plans for: Risk management Procurement Quality management Change management Communications Testing Implementation Phase 3 Chapter 2

Phase 4 • Close project transfers control from the development team to the client or sponsor • Team should make a final project report and presentation to document everything was accomplished • Allows final project cost and schedule to be measured • Archive project files, release resources Chapter 2

Phase 5 • Evaluate project success, often called a ‘post-mortem’ review • Project manager and team review what worked, what didn’t • Record lessons learned, look for broader best practices • Can review individual performance Chapter 2

Phase 5 - Third party review • Can get third party review of the project • Will project meet its goal? • How about scope, schedule, budget, and quality objectives? • Did we deliver everything promised? • Is the client happy? Chapter 2

Phase 5 - Third party review • Did we follow our own processes and methodology? • How did we handle risks and problems? • How well did we work with the sponsor? • Did we behave ethically and professionally? • Did the project provide value to the organization? (if you can tell yet) Chapter 2

ITPM Foundation • The ITPM is based on having five sets of resources available to the team • PM process groups • Objectives for this project • Tools • Infrastructure • And the PMBOK knowledge areas Chapter 2

PM process groups • These groups of processes are the activities needed to carry out the project life cycle • Initiating processes • Planning processes • Executing processes • Controlling processes • Closing processes Chapter 2

Objectives for this project • The objectives for this project, taken together, ensure the project goal is met • The objectives typically address four areas • Scope • Schedule • Budget • Quality Chapter 2

Tools • Tools support the project processes, and creation of the product itself • Could include estimation tools, requirements management tools, cost/schedule tools, quality tools, etc. • The development environment (IDE, CASE tools) are in this category too • (Yes,some consider this part of infrastructure) Chapter 2

Infrastructure • This includes three categories of infrastructure • Organizational – define project organization, roles, reporting structure • Project – the physical environment, processes, and controls • Technical – general tools: email, Office suite, Internet access, PM software, etc. Chapter 2

PMBOK knowledge areas • The lessons learned from past projects feeds into the PMBOK knowledge areas, • This can refine your project methodology to suit your needs, culture, and environment Chapter 2

Business case • Now we’ll look in detail at how to develop a business case for a project • What reasons might be used to justify an IT project? Reduce cost, create new product, improve customer service, processes, reporting, communication, decision making, create stronger connection to suppliers or customers, meet legal requirements Chapter 2

The process for preparing a business case has about eight steps Select core team Define MOV Identify alternatives Assess feasibility Assess TCO Assess TBO Analyze alternatives Propose & support recommendation Business case process Chapter 2

Select core team • The team to develop the business case should come from multiple perspectives – business, technical, management, etc. • Provides a better balanced viewpoint • Enhances credibility, gets buy-in across org. • Better alignment with organizational goals • Better access to detailed supporting data Chapter 2

Define MOV • MOV is Measurable Organizational Value • The MOV must be some characteristics that can be objectively measured, to prove the project provided real value to the org • MOV proves success or failure of the project • All key stakeholders must agree on MOV • MOV must also support the org’s strategy Chapter 2

Define MOV • There are six steps to defining MOV(Yes, all within step 2 of writing a business case) • Identify desired area of impact • Identify desired value of the project • Develop an appropriate metric • Set a time frame for achieving MOV • Get agreement from stakeholders • Summarize MOV in a statement Chapter 2

Identify desired area of impact • Where will this project affect the organization? (could be more than one) • Strategic: new markets, products & services • Customer: better products & services, better loyalty, higher satisfaction • Financial: increased profits, profit margins • Operational: lower costs, higher efficiency • Social: education, health, safety, environment Chapter 2

Identify desired value of the project • Ok, now within each area of impact, what will the project do to provide value? • Will it help you do something: • Better? (e.g. quality, effectiveness) • Faster? (speed, efficiency, cycle time) • Cheaper? (reduce cost!) • Or do more in some way? (new markets, products) Chapter 2

Develop an appropriate metric • So how will you measure that value? • $$ - generate $x in new sales • Percentage - reaching at least a certain number (customer satisfaction > 95%) • Numbers – have at least y new customers • Don’t get fancy – simple, clear measures are often the best Chapter 2

Develop an appropriate metric • Make it clear how the measure will be collected • Might need surveys, competitor data, etc. • Make sure the measure really addresses the value you wish to measure • Some things like loyalty or satisfaction are hard to nail down Chapter 2

Set a time frame for achieving MOV • Determine how long it’ll take to achieve the MOV • Could have multiple time objectives – reach x by 6 months, y by 12 months, etc. Chapter 2

Get agreement from stakeholders • Yup, easy to say, much harder to achieve • Everyone (project manager, sponsor, etc.) needs to agree the MOV is realistic • Don Quixote may like impossible dreams, but most techies hate impossible goals Chapter 2

Summarize MOV in a statement • So what’s the output from all this work? • A sentence or two, or maybe a short table, to summarize the MOV (or MOVs if there are multiple) and it/their time frames • “Project XYZ will achieve {the MOV} within {the time frame} after its completion” • Or something vaguely like that… Chapter 2

Identify alternatives • Now back to the overall business case, step 3 - Identify alternatives • Most problems can be solved more than one way, so your job is to brainstorm and find several* plausible ways to address the problem • One can be the ‘change-nothing’ answer * (for homework, at least three) Chapter 2

Identify alternatives • Alternatives can examine many possible approaches, such as • Change processes but keep the existing systems • Reengineer an existing system • Buy something off the shelf to replace an existing system • Start over, and make a new system Chapter 2

Assess feasibility • Step 4 is to assess the feasibility and risks of each alternative • Feasibility assessment consists of considering three dimensions • Economic feasibility – a full cost/benefit analysis is nice, but at least determine if the cost of each alternative is within reach Chapter 2

Assess feasibility • Technical feasibility measures whether the alternative can be accomplished • Do you have the infrastructure, skills, equipment, experience, etc. to implement each alternative? • If not, can the deficiencies be met reasonably? • Would you need to consider outsourcing or other outside sources? Chapter 2

Assess feasibility • Organizational feasibility considers each alternative’s impact on your organization • Would it result in major changes? • Will jobs be affected? • Will people welcome a new approach? • Other possible areas of feasibility could include legal or ethical concerns • Are there, e.g. union conflicts or labor law concerns? Chapter 2

Assess feasibility • The risk assessment should identify major plausible risks to the success of the project • Not the success of the product produced • What could keep the project from reaching its conclusion on time and within budget? Chapter 2

Assess feasibility • Identify each risk • Estimate the impact on the project – how much effort or money would it cost to fix? • How likely is the risk? Estimate the percent chance of it happening • Determine how the project could respond to the risk to reduce (mitigate) its impact Chapter 2

Assess TCO • Determine the Total Cost of Ownership (TCO) of each alternative, which is the sum of • Direct costs – the cost of implementing the project • Ongoing costs – the cost of maintaining the system • Indirect costs – the cost of lost productivity during development, unexpected system down time, etc. Chapter 2

Assess TBO • Determine the Total Benefits of Ownership (TBO); what are the benefits of each alternative? • What is the value of time not spent on paper-work, of reduced errors, of getting information faster, of sales of new products, etc.? • Tangible benefits are easy to estimate, intangible ones take more assumptions… Chapter 2

Analyze alternatives • Step 7, analyze alternatives to see which has the most value for the organization • There are five cash flow metrics most often used to answer that ‘most value’ question: payback, breakeven, ROI, NPV, and scoring models • Typically use a few of them for a given project Chapter 2

Payback • Payback is the amount of time (years) needed for an investment to pay for itself in new cash flow (or other benefit) • Payback = initial investment / cash flow • Initial investment is in dollars • Cash flow is in $/yr typically • A smaller payback period is good Chapter 2

Breakeven • Breakeven is like payback, but it’s typically expressed in terms of the number of units sold to recoup the investment, based on knowing a ‘net profit margin’ per unit sold • Breakeven = initial investment / net profit margin • The dimensions of breakeven are units sold, as in, “We have to sell 20 cars this weekend to break even from our ads on TV” • Want a smaller breakeven point Chapter 2

ROI • Return on Investment is probably the best known cash flow measure • It describes the percent by which project total benefits will exceed costs • ROI = 100*(total benefits-total costs)/(total costs) • Want a larger ROI • Often tricky to measure benefits Chapter 2

NPV • Net Present Value reminds us that, in a good economy, money can be invested over time to earn a profit – the ‘time value of money’ • To calculate NPV, need the expenses and benefits of the project, year by year, for its life Chapter 2

NPV • First find the net cash flow each year • Net cash flow = outflow – inflow = expenses – benefits • Then find the discounted cash flow of each year’s expenses • Discounted CF = net cash flow/(1+r)t • Where r=interest rate, t=number of years The interest rate used here is a critical assumption! Chapter 2

NPV • The NPV of the project is the sum of all discounted cash flows, minus the initial investment • NPV = S(discounted cash flow) – investment • You want NPV to be positive, and as large as possible Chapter 2

Scoring models • This is a catchall category, when you want to combine different measures to come up with an overall score for each alternative • Total score = S(wici) • Where wi is the weighting percentage for each score, and ci is the score value • The sum of all weighting percentages = 100% • The highest total score generally wins Chapter 2

SW Project Management IT Project Conceptualization