Project Management

Project Initiation & Selecting

Summer 2005

Session Objectives
Project initiation
Selecting Projects
Project Charter
Washington Mercy Hospital
case study
Summer 2005

Project Management Processes & IT PM Phases

Project Initiation: Strategic Planning

First step in initiating projects: look at
the big picture, organizations strategic
plan
Strategic planning involves determining
long-term business objectives
IT projects should (must) support
strategic & financial business objectives

Schwalbe: Why Firms Invest in IT

Identifying Potential Projects

Many organizations follow a planning
process for selecting IT projects
First develop an IT strategic plan based
on organizations overall strategic plan
Then perform business area analysis
Then define potential projects
Then select IT projects & assign
resources

IT Planning Process

Selecting Projects
Usually more projects than time &
resources available to implement
them
Important to follow logical process for
selecting IT projects to work on
Methods include focusing on broad
needs, categorizing projects, financial
methods & weighted scoring models
Summer 2005

Focus on Broad Organizational Needs

Often difficult to provide strong
justification for many IT projects, but
everyone agrees they have a high
value
It is better to measure gold roughly
than to count pennies precisely
Three important criteria for projects:
There is a need for project
There are funds available
Theres a strong will to make project
succeed
Summer 2005

Financial Analysis of Projects

Financial considerations are often
an important consideration in
selecting projects
Three primary methods for
determining the projected financial
value of projects:
Net present value (NPV) analysis
Return on investment (ROI)
Payback analysis
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Net Present Value Analysis

Net present value (NPV) analysis:
method of calculating expected net
monetary gain or loss from project by
discounting all expected future cash
inflows & outflows to present point in
time
Projects with positive NPV should be
considered if financial value is key
criterion
The higher the NPV, the better

Schwalbe: Net Present Value Example

Excel file

Weighted Scoring Model

Weighted scoring model: provides systematic
process for selecting projects based on
multiple criteria
First identify criteria important to project selection
process
Then assign weights (percentages) to each criterion
so they add up to 100%
Then assign scores to each criterion for each project
Multiply the scores by weights and get total weighted
scores

The higher the weighted score, the better

Schwalbe: Sample Weighted Scoring

Model for Project Selection

Excel file

Selecting Projects (cont.)

Buss Grid Approach
project selection team
grids with criteria, high-medium-low
criteria generally financial, technical, enhancing core
competencies, organizational fit against cost
review proposals, then quick collective judgment

Poor Mans Hierarchy

grid with criteria
compare each project against each other project
assign 1 or 0, sum results
Frame

Project Charters
After deciding what project to work on,
its important to formalize projects
Project Charter is document formally
recognizing existence of project &
provides direction on projects
objectives & management
Key project stakeholders should sign
project charter to acknowledge
agreement on need & intent of project
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Project Charters
Unfortunately authors disagree on
the details:
Schwalbe
Marchewka
Verzuh

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Schwalbe: Sample Project Charter

Project Title: Information Technology (IT) Upgrade Project
Project Start Date: March 4, 200
Projected Finish Date: December 4, 2002
Project Manager: Kim Nguyen, 691-2784, knguyen@abc.com
Project Objectives: Upgrade hardware and software for all employees (approximately 2,000) within 9
months based on new corporate standards. See attached sheet describing the new standards. Upgrades may
affect servers and midrange computers as well as network hardware and software. Budgeted $1,000,000 for
hardware and software costs and $500,000 for labor costs.
Approach:
Update the IT inventory database to determine upgrade needs
Develop detailed cost estimate for project and report to CIO
Issue a request for quotes to obtain hardware and software
Use internal staff as much as possible to do the planning, analysis, and installation

Schwalbe: Sample Project Charter (cont.)

Roles and Responsibilities:
Name
Walter Schmidt, CEO
Mike Zwack

Role
Project Sponsor
CIO

Kim Nguyen
Jeff Johnson
Nancy Reynolds

Project Manager
Director of IT Operations
VP, Human Resources

Steve McCann

Director of Purchasing

Responsibility
Monitor project
Monitor project, provide
staff
Plan and execute project
Mentor Kim
Provide staff, issue memo
to all employees about
project
Assist in purchasing
hardware and software

Sign-off: (Signatures of all above stakeholders)

Comments: (Handwritten comments from above stakeholders, if applicable)
This project must be done within ten months at the absolute latest. Mike Zwack, CIO
We are assuming that adequate staff will be available and committed to supporting this
project. Some work must be done after hours to avoid work disruptions, and overtime
will be provided. Jeff Johnson and Kim Nguyen, Information Technology Department

Purpose of Project Charter (Marchewka)

more comprehensive approach

Document the project MOV

Define project infrastructure
Summarize details of project plan
Define roles and responsibilities
Show explicit commitment to
project
Set out project control mechanisms
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What Should be in a Project Charter?

Project Identification
Project Stakeholders
Project Description
Measurable Organizational
Value (MOV)

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What Should be in Project Charter?

contd
Project Scope
Project Schedule
Project Budget
Quality Issues
Resources
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What Should be in a Project Charter?

contd
Assumptions and Risks
Project Administration
Acceptance and Approval
References
Terminology
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Project Rules (Verzuh #4)

Project success demands
goals agreed by all stakeholders
control of scope
management support

Project charter
brief, high level document formally
establishing project
understood & signed by all key stakeholders

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Project Rules (cont.)

Statement of Work (SOW)

NOT usual usage of term

per Verzuh establishes rules of game
goals, constraints, success criteria
negotiate, formally agree
ahead of game?
why not part of planning phase?

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Project Planning Framework

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Scope Planning and the

Scope Statement
A scope statement is a document
used to develop and confirm a
common understanding of the project
scope. It should include
a project justification
a brief description of the projects
products
a summary of all project deliverables
a statement of what determines project
success
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Establish

Initiate

Charter establishes project

Next must compete with other projects for
scarce resources
Prioritize go or no go?
Go ahead
Begin Analysis Phase

needs
requirements

detailed SOW
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Washington Mercy Hospital Case Study

Hospital contract with DCS
State of art patient info system
<3 sec response

Add ambulatory surgery center

Goes to arbitration
Management & project issues
Technical issues
Blame responsibility?
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