Introduction to Project Management

1

Topics
• Introduction • Project Management Context and Process • Integration Management • Scope Management • Time Management • Cost Management • Quality Management • Human Resource Management • Communications Management • Risk Management • Procurement Management
2

The Need...
• Most IT Projects fail
• A 1995 Standish Group study found that only 16.2% of IT projects were successful • Over 31% of IT projects were canceled before completion, costing over $81 B in the U.S. alone

• A 1999 ComputerWorld article listed Project Manager as the #1 position IT managers say they need most for contract help • The need for IT projects keeps increasing • Companies in general are emphasizing projects

3

What Is a Project?
• A temporary endeavor undertaken to accomplish a unique purpose • Results on a product of some kind

• Require resources, often from various areas • Involves uncertainty • Has a sponsor and customer(s)
• Different from an ongoing program
4

The Triple Constraint
• Every project is constrained in different ways by its:
• Scope/quality goals • Time goals • Cost goals
Scope Time

Cost

• It is the project manager’s duty to balance these three often competing goals

5

What is Project Management?
“The application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project”

(PMI*, Project Management Body of Knowledge (PMBOK Guide), 1996, p. 6)

6

Advantages of Project Management
• Clear definition of scope • Clear definitions of roles • Early identification of performance errors • Means of accountability • Product integrity • Team participation
7

Project Stakeholders
• Stakeholders are all of the people involved, in or affected by, project activities • Stakeholders include:
• • • • • • • The project sponsor and project team Support staff Customers Users Suppliers Business partners Opponents to the project
8

9 Project Management Knowledge Areas
• Knowledge areas describe the key competencies that project managers must develop
• 4 core areas lead to specific project objectives (Scope, Time, Cost, and Quality) • 4 facilitating areas are the means through which the project objectives are achieved (Human Resources, Communication, Risk, and Procurement Management) • 1 area (Project Integration Management) affects and is affected by all of the other areas
9

Project Management Framework

10

Project Management Tools and Techniques
• Assist project managers and their teams in various aspects of project management, such as:
• Scope: Project Charter and WBS • Time: Gantt charts, PERT charts, critical path analysis • Cost: Cost estimates and Earned Value Analysis

11

Sample WBS Chart
Intranet Project

Concept

Web Site Design

Web Site Development

Rollout

Support

Design User Interface

Develop Pages and Links

Design Server Setup

Develop Functionality

Design Server Support Infrastructure

Content Management/ Integration

Testing

12

Sample Gantt Chart
WBS Gantt Chart

13

Sample PERT Chart
A 1 o M a d 1 o M D 4 T d 4 F H 8 9 2 1 / 8 d e W s y a d 6 8 d e W J 0 1 9 0 2 / 8 u h T s y a d 3 9 4 2 / 8 n o M E 5 W B 2 M d 2 T F 6 /5 8 d e W 9 y a d 4 8 n o M d 5 8 e u T d e s y a

C 3 M d 3 W

G 7 6 / 8 u h T s y a d 6 3 1 / 8 u h T

I 9 /1 8 i9 r F 4 s y a d 2 8 n o M

Each box is a project task from the WBS. Arrows show dependencies between tasks. The tasks in red are on the critical path. If any tasks on the critical path take longer than planned, the whole project will slip unless something is done.
14

Advantages of Project Management
• Stakeholders do not like surprises • Good project management (PM) reduces risk • PM provides the tools and environment to plan, monitor, track, and manage schedules, resources, costs, and quality • PM provides a metrics base for future planning, as well as good (lean) documentation • Project members learn and grow by working in a cross-functional team environment
15

How Project Management (PM) Relates to Other Disciplines
• Much Project Management knowledge is unique • However, project managers must also have knowledge and experience in
• General management • The application area of the project • The technology of the project

• Project managers must focus on meeting specific project objectives
16

Project Management and Other Disciplines

17

The Project Management Context and Processes

18

Projects Function Within a Larger Environment
• Projects operate in a broad organizational environment • Project managers need to take a holistic of a project, and understand how it is situated within the larger organization

19

Project Phases and the Project Life Cycle
• A project life cycle is a collection of project phases • Project phases vary by project or industry • General phases include:
• • • • Concept Development Implementation Close-out
20

Phases of the Project Life Cycle
Closeout

Concept

Development

Implementation

Management Plan Preliminary Cost Estimate 3 level WBS

Project Plan Budgetary Cost Estimate 6+ level WBS

Last Work Package Definitive Cost Estimate Bulk of time spent here

Completed work Lessons learned Customer acceptance

21

Product Life Cycles
• Products also have life cycles • The Systems Development Life Cycle (SDLC) is a framework for describing the phases involved in developing and maintaining information systems • Typical SDLC phases include planning, analysis, design, implementation, and support
22

Sample SDLC Models
• Waterfall model: has well-defined, linear stages of systems development and support • Spiral model: software is developed using an iterative or spiral approach rather than a linear approach • Modified Waterfall model: iterative phases within a basic waterfall model • Incremental release model: progressive development of operational software • Prototyping model: used for developing prototypes to clarify user requirements
23

Waterfall SDLC
Initiation Analysis Design Implement Administer

24

Spiral Model of Software Development

25

Distinguishing Project Life Cycles from Product Life Cycles
• The project life cycle applies to all projects, regardless of the products being produced • Product life cycle models vary considerably, based on the nature of the product • Most large IT projects are developed as a series of products • Project management is a cross life cycle activity done in all of the product life cycle phases
26

Why Have Project Phases and Management Reviews?
• A project should successfully pass through each of the project phases in order to continue on to the next • Management reviews (also called phase gates or kill points) should occur after each phase, to evaluate the project’s progress, likely success, and continued compatibility with organizational goals

27

Functional, Project, and Matrix Organizational Structures
Functional

Project

Matrix

28

Recognize the Importance of Project Stakeholders
• Project stakeholders are the people involved in or affected by project activities • Project managers must take time to identify, understand, and manage relationships with all project stakeholders • Stakeholders may be either internal or external
29

Project Management Functions
• Define scope of project • Identify stakeholders, decision-makers, and escalation procedures • Develop detailed task list (work breakdown structures) • Estimate time requirements • Develop initial project management flow chart • Identify required resources and budget
30

Project Management Functions
• Evaluate project requirements • Identify and evaluate risks • Prepare contingency plan • Identify interdependencies • Identify and track critical milestones • Participate in project phase review • Secure needed resources • Manage the change control process • Report project status - Communicate!
31

Skills of a Project Manager
• Communication skills: listening, persuading • Organizational skills: planning, goal-setting, analyzing • Team Building skills: motivation, esprit de corps, empathy • Leadership skills: sets example, energetic, vision, delegates, positive • Coping skills: flexibility, creativity, patience, persistence • Technological skills: experience, project knowledge

32

Characteristics of Effective Project Managers
Effective Project Manager
Leadership by example Visionary Technically competent Decisive Good communicator Good motivator Stands up to upper management when necessary • Encourages new ideas • Supports team members • • • • • • •

Ineffective Project Manager
Sets poor example Functionary Lacks technical expertise Not self-assured Poor communicator Poor motivator Defers to upper management on all issues • Stifles creativity • • • • • • • • Concerned with self
33

Project Management Process Groups
• Project management can be viewed as a number of interlinked processes:
• • • • • Initiating processes Planning processes Executing processes Controlling processes Closing processes

34

Level of Process Group Activity Over Time

35

Project Integration Management

36

Project Management Framework

37

The Key to Overall Project Success: Good Project Integration Management
• Project managers must coordinate all of the other knowledge areas throughout a project’s life cycle • Many new project managers have trouble looking at the “big picture”, focusing on too many details
38

Project Integration Management Processes
• Project Plan Development: taking the results of other planning processes and putting them into a consistent, coherent document, the Project Plan • Project Plan Execution: carrying out the Project Plan • Overall Change Control: coordinating changes across the entire project
39

Interface Management
• Identifying and managing the points of interaction between various elements of the project • Project managers must establish and maintain good communication and relationships across organizational interfaces

40

Project Plan Development
• A Project Plan is a document used to coordinate all project planning documents • Its main purpose is to guide project execution • Project plans assist the project manager in leading the project team and assessing project status

41

Attributes of Project Plans
• Just as projects are unique, so are project plans • Plans should first and foremost guide project execution • Plans should be:
• Dynamic • Flexible • Updated as changes occur
42

Common Elements of a Project Plan
• Overview of the project • Description of the project organization • Management and technical processes used on the project • Scope • Schedule • Budget
43

Stakeholder Analysis
• A stakeholder analysis documents important (often sensitive) information about stakeholders such as:
• • • • • Stakeholders’ names and organizations Roles on the project Unique facts about stakeholders Level of influence and interest in the project Suggestions for managing relationships

44

Sample Stakeholder Analysis
Ke y Sta ke hole rs Ahm e d internal senior mgt. Orga niza tion Role on proje ct sponsor of project and one of company's founders demanding, likes Unique fa cts Le ve l of inte re st Le ve l of influe nce details, business focus, Stanford MBA very high very high - can call the shots keep informed, let him lead conversations, do as he says and quickly DNA sequencing expert very smart, Ph.D. in biology, easy to work with, has a toddler very high subject matter expert critical to success make sure she reviews specs and leads testing, can do some work from home Lead programmer best programmer I know, weird sense of humor high high - hard to replace keep him happy so he stays, emphasize stock options, likes Mexican food Supplies some instrument hardware start-up company, he knows we can make him rich if this works very high low - other vendors available just give him enough lead time to deliver hardware Susa n Project team Erik Project team Ma rk Hardware vendor Da vid Project Manager for other internal project Competing for company resources Nice guy, one of oldest people at company low - medium low - medium he knows his project takes a back seat to this one, but I can learn from him

Sugge stions on m a na ging re la tionship

45

Project Plan Execution
• Involves managing and performing the work described in the project plan • The majority of time and money is usually spent on execution • The application area or the product directly affects project execution because the products of the project are produced during execution

46

Important Skills for Project Execution
• General management skills:
• Leadership • Communication • Political skills

• Product skills and knowledge • Use of specialized tools and techniques

47

Tools and Techniques for Project Execution
• Work Authorization System: provides a method for ensuring that qualified people do work at the right time and in the proper sequence • Status Review Meetings: regularly scheduled meetings used to exchange project information • Project Management Software: special software to assist in managing projects
48

Overall Change Control
• Involves identifying, evaluating, and managing changes throughout the project life cycle • Three main objectives of change control:
• Influence the factors that create changes to ensure they are beneficial • Determine that a change has occurred • Manage actual changes when and as they occur

49

Change Control System
• A formal, documented process that describes when and how official project documents and work may be changed • Describes who is authorized to make changes and how to make them • Includes a Change Control Board, configuration management, and a process for communicating changes

50

Change Control Board (CCB)
• A formal group of stakeholders responsible for approving or rejecting changes on a project • Provides guidelines for preparing change requests, evaluates them, and manages the implementation of approved changes • Evaluates the impact of proposed changes on quality, schedule, budget

51

Configuration Management
• Ensures that the products and their descriptions are correct and complete • Concentrates on the management of technology by identifying and controlling the functional and physical design characteristics of products • Configuration management specialists identify and document configuration requirements, control changes, record and report changes, and audit the products to verify conformance to requirements
52

Suggestions for Managing Overall Change Control
• • • • • • Plan for change Establish a formal change control system, including a Change Control Board (CCB) Use good configuration management Define procedures for making quick decisions on smaller changes Use written and oral performance reports to help identify and manage change Use automated tools to help manage and communicate changes

53

Need for Top Management Commitment
• Several studies cite top management commitment as one of the key factors associated with project success • Top management should:
• Help project managers secure adequate resources • Get approval for unique project needs in a timely manner • Receive cooperation from people throughout the organization
54

What Helps Projects Succeed?
1987 Pinto and Slevin • Clear project mission • Top management support • Good project schedule/plan • Good client consultation 1995 Standish Group • User involvement • Executive management support • Clear statement of requirements • Proper planning

55

Need for Organizational Commitment to Information Technology (IT)
• If the organization has a negative attitude toward IT, it will be difficult for an IT project to succeed • Having a Chief Information Officer (CIO) at a high level in the organization helps IT projects • Assigning business staff to IT projects also encourages more commitment
56

Need for Organizational Standards
• Standards and guidelines help project managers be more effective • Senior management should encourage:
• Use of standard forms and software for project management • Development and use of guidelines for writing project plans or providing status information • Creation of a project management office or center of excellence

57

Project Scope Management

58

What is Project Scope Management?
• Scope refers to all the work involved in creating the products of the project and the processes used to create them • Project scope management includes the processes involved in defining and controlling what is or is not included in the project • The project team and stakeholders must have the same understanding of what products will be produces as a result of a project and what processes will be used in producing them • Projects with poor scope management often fail
59

Project Scope Management Processes
• Initiation: beginning a project, or continuing to the next phase • Scope planning: developing documents to provide the basis for future project decisions • Scope definition: subdividing the major project deliverables into smaller, more manageable components • Scope verification: formal acceptance of the project scope • Scope change control: controlling changes to project scope
60

Project Initiation: Strategic Planning and Project Selection
• The first step in initiating projects is to evaluate the project in the context of the organization’s strategic plan • Strategic planning involves determining long-term business objectives • IT projects should support strategic and financial business objectives

61

Identifying Potential Projects
• Many organizations follow a formal planning process for selecting IT projects:
• Develop an IT strategic plan based on the organization’s overall strategic plan • Perform a business area analysis • Define potential projects • Select IT projects and assign resources

62

Methods for Selecting Projects
• There are usually more projects than available time and resources to implement them • It is important to follow a logical process for selecting IT projects to work on, such as:
• Focusing on broad needs • Categorizing projects • Financial methods • Weighted scoring models
63

Focusing on Broad Organizational Needs
• It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value • Three important criteria for projects:
• There is a need for the project • There are funds available • There’s a strong will to make the project succeed

64

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

65

Net Present Value Analysis
• Net present value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time • Projects with a positive NPV should be considered, if financial value is a key criterion • The higher the NPV, the better
66

Net Present Value Example

67

Return on Investment
• Return on investment (ROI) is income divided by investment
ROI = (total discounted benefits - total discounted costs) / discounted costs

• The higher the ROI, the better • Many organizations have a required rate of return, or minimum acceptable rate of return, on investment for projects

68

Payback Analysis
• Another important financial consideration is payback analysis • The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the net dollars invested in a project • Payback occurs when the cumulative discounted benefits and costs are greater than zero • Many organizations want IT projects to have a fairly short payback period
69

Payback Analysis Sample
OAO Project Payback
2,500,000

2,000,000

1,500,000

Total ongoing incremental cost of OAO Accumulated Savings
1,000,000

500,000

0

Ja n02 A pr -0 2 Ju l-0 2 O ct -0 2 Ja n03 A pr -0 3 Ju l-0 3 O ct -0 3 Ja n04 A pr -0 4 Ju l-0 4 O ct -0 4 Ja n05 A pr -0 5 Ju l-0 5

Month

70

Project Charter
• After deciding what project to work on, it is important to formalize projects • A Project Charter is a document that formally recognizes the existence of a project and provides direction on the project’s objectives and management • The Project Sponsor should sign the Project Charter to acknowledge agreement on the need and intent of the project
71

Scope Planning and the Scope Statement
• A scope statement is used to develop and confirm a common understanding of the project scope. • It should include:
• • • • A project justification A brief description of the project’s products A summary of all project deliverables A statement of what determines project success
72

The Work Breakdown Structure
• After completing scope planning, the next step is to further define the work by breaking it into manageable pieces • Good scope definition:
• Helps improve the accuracy of time, cost, and resource estimates • Defines a baseline for performance measurement and change control • Aids in communicating clear work responsibilities
73

The Work Breakdown Structure
• A work breakdown structure (WBS) is an outcome-oriented analysis of the work involved in a project. • It defines the total scope of the project • It is a foundation document in project management because it provides the basis for planning and managing project schedules, costs, and changes

74

Sample Intranet WBS Organized by Product

75

Sample Intranet WBS Organized by Phase

76

Intranet WBS in Tabular Form
1.0 Concept 1.1 Evaluate current systems 1.2 Define Requirements 1.2.1 Define user requirements 1.2.2 Define content requirements 1.2.3 Define system requirements 1.2.4 Define server owner requirements 1.3 Define specific functionality 1.4 Define risks and risk management approach 1.5 Develop project plan 1.6 Brief web development team 2.0 Web Site Design 3.0 Web Site Development 4.0 Roll Out 5.0 Support

77

WBS and Gantt Chart
WBS Gantt Chart

78

Approaches to Developing WBSs
• Using guidelines: Some organizations provide guidelines for preparing WBSs • The analogy approach: Reviewing WBSs of similar projects • The top-down approach: Start with the largest items of the project, and keep breaking them down • The bottoms-up approach: Start with the detailed tasks, and roll them up
79

Basic Principles for Creating a WBS
1. A unit of work should appear at only one place in the WBS 2. The work content of a WBS item is the sum of the WBS items below it 3. A WBS item is the responsibility of only one individual, even though many people may be working on it 4. The WBS must be consistent with the way in which work is actually going to be performed; it should serve the project team first and other purposes only if practical 5. Project team members should be involved in developing the WBS to ensure consistency and buy-in 6. Each WBS item must be documented to ensure accurate understanding of the scope of work included and excluded 7. The WBS must be flexible, to accommodate inevitable changes, while properly maintaining control of the work content in the project according to the scope statement

80

Scope Verification and Scope Change Control
• It is very difficult to create a good scope statement and WBS for a project • It is even more difficult to verify project scope and minimize scope changes • Many IT projects suffer from scope creep and poor scope verification
• FoxMeyer Drug filed for bankruptcy after scope creep on a robotic warehouse

81

Factors Causing IT Project Problems
Factor Lack of user input Incomplete requirements and specifications Changing requirements and specifications Lack of executive support Technology incompetence Lack of resources Unrealistic expectations Unclear objectives Unrealistic time frames New Technology Rank 1 2 3 4 5 6 7 8 9 10

82

Suggestions for Improving User Input
• Insist that all projects have a Sponsor from the user organization • Have users on the project team • Have regular meetings and document them • Deliver something to project users and sponsor on a regular basis • Co-locate users with the developers • Use JAD and JAD/Plan Sessions
83

Suggestions for Reducing Incomplete and Changing Requirements
• Develop and follow a requirements management process • Employ techniques such as prototyping, use case modeling, and Joint Application Design to thoroughly understand user requirements • Put all requirements in writing • Use a process for reviewing requested changes • Track changes to requirements • Emphasize completion dates • Provide adequate testing
84

Project Time Management

85

Importance of Project Schedules
• Managers often cite delivering projects on time as one of their biggest challenges • Average time overrun from 1995 CHAOS report was 222% • Time has the least amount of flexibility; it passes no matter what • Schedule issues are the main reason for conflicts on projects, especially during the second half of projects
86

Project Time Management Processes
• Project time management involves the processes required to ensure timely completion of a project, including:
• • • • • Activity definition Activity sequencing Activity duration estimating Schedule development Schedule control

87

Schedules Come From Defining Activities
• Project schedules grow out of the basic document that initiates a project
• Project Charter includes schedule and budget information • Scope statement and WBS help define what will be done

• Activity definition involves developing a more detailed WBS and supporting explanations, to understand all the work to be done
88

Activity Sequencing
• Involves reviewing activities and determining dependencies
• Mandatory dependencies: inherent in the nature of the work; hard logic • Discretionary dependencies: defined by the project team; soft logic • External dependencies: involve relationships between project and non-project activities

• You must determine dependencies in order to use critical path analysis
89

Project Network Diagrams
• The preferred technique for showing activity sequencing • A schematic display of the logical relationships among, or sequencing of, project activities

90

Sample Activity-on-Arrow (AOA) Network Diagram for Project X

91

Arrow Diagramming Method (ADM)
• Also called activity-on-arrow (AOA) project network diagrams • Activities are represented by arrows • Nodes or circles are the starting and ending points of activities • Can only show finish-to-start dependencies
92

Precedence Diagramming Method (PDM)
• Activities are represented by boxes • Arrows show relationships between activities • More popular than ADM method and used by project management software • Better at showing different types of dependencies

93

Task Dependency Types

94

Sample Precedence Diagramming Method (PDM) Network Diagram

95

Activity Duration Estimating
• After defining activities and determining their sequence, the next step in time management is duration estimating • Duration includes the actual amount of time worked on an activity plus elapsed time • People doing the work should help create estimates, and an expert should review them
96

Schedule Development
• Uses results of the other time management processes to determine the start and end date of project activities • Ultimate goal is to create a realistic project schedule that provides a basis for monitoring project progress • Important tools and techniques include Gantt charts, PERT analysis, and critical path analysis
97

Gantt Charts
• Gantt charts provide a standard format for displaying project schedule information by listing project activities and their corresponding start and finish dates in a calendar format • Symbols include:
• A black diamond: milestones or significant events on a project with zero duration • Thick black bars: summary tasks • Lighter horizontal bars: tasks • Arrows: dependencies between tasks
98

Sample Gantt Chart

99

Gantt Chart

100

Sample Tracking Gantt Chart

white diamond: slipped milestone two bars: planned and actual times
101

Critical Path Method (CPM)
• CPM is a project network analysis technique used to predict total project duration • A critical path for a project is the series of activities that determines the earliest time by which the project can be completed • The critical path is the longest path through the network diagram and has the least amount of slack or float
102

Finding the Critical Path
• First develop an accurate project network diagram • Add the durations for all activities on each path through the project network diagram • The longest path is the critical path

103

Determining the Critical Path

104

Techniques for Shortening a Project Schedule
• Crashing tasks by adding more resources • Fast tracking tasks by doing them in parallel or overlapping them

105

Shortening Project Schedules
Original schedule

Shortened duration

Overlapped tasks

106

Many Horror Stories Related to Project Schedules
• The Mythical Man Month - adding resources to a late project often makes it later • Creating realistic schedules and sticking to them is a key challenge of project management

107

Importance of Updating Critical Path Data
• The critical path may change as you enter actual start and finish dates • If you know the project completion date will slip, negotiate with the project sponsor

108

Program Evaluation and Review Technique (PERT)
• PERT is a network analysis technique used to estimate project duration when there is a high degree of uncertainty about the individual activity duration estimates • PERT uses probabilistic time estimates based on using optimistic, most likely, and pessimistic estimates of activity durations
109

PERT Formula and Example
• PERT weighted average formula:
optimistic time + 4X most likely time + pessimistic time 6

• Example: PERT weighted average =
8 workdays + 4 X 10 workdays + 24 workdays = 12 days 6 where 8 = optimistic time, 10 = most likely time, and 24 = pessimistic time

110

Controlling Changes to the Project Schedule
• Perform reality checks on schedules • Allow for contingencies • Don’t plan for everyone to work at 100% capacity all the time • Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues

111

Working with People
• Strong leadership helps projects succeed more than good PERT charts • Project managers should use:
• • • • Empowerment Incentives Discipline Negotiation

112

Project 98 Features Related to Project Time Management
• • Reports Overview reports: critical tasks and milestones Current activities reports: unstarted tasks, tasks starting soon, tasks in progress, completed tasks, should have started tasks, and slipping tasks Assignment reports: who does what when Views and Table Views • Gantt chart, PERT chart, Tracking Gantt, schedule, tracking, variance, constraint dates, and delay • Filters All tasks, completed tasks, critical tasks, incomplete tasks, and milestone tasks

113

Words of Caution on Using Project Management Software
• Many people misuse project management software because they don’t understand important concepts, and have not had good training • You must enter dependencies to have dates adjust automatically and to determine the critical path • You must enter actual schedule information to compare planned vs actual progress
114

Project Cost Management

115

The Importance of Project Cost Management
• IT projects have a poor track record for meeting cost goals • Average cost overrun was 189% of the original estimates • In 1995, cancelled IT projects cost the U.S. over $81 billion

116

What is Cost and Project Cost Management?
• Cost is a resource expended to achieve a specific objective, or something given up in exchange • Costs are usually measured in dollars • Project cost management includes the processes required to ensure that the project is completed within an approved budget
117

Project Cost Management Processes
• Resource planning: determining what resources and quantities of them should be used • Cost estimating: developing an estimate of the costs and resources needed to complete a project • Cost budgeting: allocating the overall cost estimate to individual work items to establish a baseline for measuring performance • Cost control: controlling changes to the project budget
118

Basic Principles of Cost Management
• Most CEOs and boards know a lot more about finance than IT • IT project managers must speak their language:
• Profits are revenues minus expenses • Life cycle costing is estimating the cost of a project over its entire life • Cash flow analysis is determining the estimated annual costs and benefits for a project • Benefits and costs can be tangible or intangible, direct or indirect • Sunk cost should not be a criteria in project selection
119

Cost of Software Defects
Software Development Lifecycle Phase
1 5 10 20 50 200 Requirements Design Coding Unit Test Acceptance test Maintenance

Relative Cost to Repair
10

120

Resource Planning
• The nature of the project (and the organization) will affect resource planning:
• How difficult will it be to do specific tasks on the project? • Is there anything unique in this project’s scope statement that will affect resources? • What is the organization’s history in doing similar tasks? • Does the organization have or can they acquire the people, equipment, and materials that are capable and available for performing the work?

121

Cost Estimating
• The key output of project cost management is a detailed cost estimate • There are several types of cost estimates and tools and techniques to help create them • Develop a cost management plan, describing how cost variances will be managed on the project

122

Types of Cost Estimates
Type of Estimate Rough Order of Magnitude (ROM) When Done Very early in the project life cycle, often 3–5 years before project completion Early, 1–2 years out Later in the project, < 1 year out Why Done Provides rough ballpark of cost for selection decisions Puts dollars in the budget plans Provides details for purchases, estimate actual costs How Accurate –25%, +75%

Budgetary Definitive

–10%, +25% –5%, +10%

123

Cost Estimation Tools and Techniques
• Analogous or top-down: use the actual cost of a previous, similar project as the basis for the new estimate • Bottom-up: estimate individual work items and sum them to get a total estimate • Parametric: use project characteristics in a mathematical model to estimate costs • Computerized tools: use spreadsheets, project management software, or other software to help estimate costs
124

Typical Problems with IT Cost Estimates
• Developing an estimate for a large software project is a complex task requiring a significant amount of effort • Remember that estimates are done at various stages of the project • Many people doing estimates have little experience doing them • Provide training and mentoring
125

Typical Problems with IT Cost Estimates
• People almost always underestimate • Review estimates and ask questions to make sure estimates are not biased • Management often wants a number for a bid, not a real estimate • Project managers must negotiate with project sponsors to create realistic cost estimates

126

Cost Budgeting
• Allocating the project cost estimate to individual work items • Results in a cost baseline • Difficult and time consuming task that many PMs are unprepared for • Critical on larger and more complex projects

127

Cost Control
• Project cost control includes:
• Monitoring cost performance • Ensuring that only appropriate project changes are included in a revised cost baseline • Informing project stakeholders of authorized changes to the project that will affect costs

• Earned Value Analysis is an important tool for cost control

128

Earned Value Analysis (EVA)
• EVA is a project performance measurement technique that integrates scope, time, and cost data • Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals • You must periodically enter actual information to use EVA.

129

Earned Value Analysis Terms
• Budgeted cost of work scheduled (BCWS), also called the budget, is that portion of the approved total cost estimate planned to be spent on an activity during a given period • Actual cost of work performed (ACWP), also called actual cost, are the total direct and indirect costs incurred in accomplishing work on an activity during a given period • Budgeted cost of work performed (BCWP), also called Earned Value, is the percentage of work actually completed multiplied by the planned cost (or BCWS)
130

Earned Value Formulas

Term Earned Value

Formula Budgeted Cost of Work Performed (BCWP) = budgeted cost to date X % complete Cost Variance CV=BCWP-ACWP (actual cost of work performed) Schedule Variance SV=BCWP-BCWS (budgeted cost of work scheduled) Cost Performance Index CPI=BCWP/ACWP Schedule Performance Index SPI = BCWP/BCWS

131

Rules of Thumb for EVA Numbers
• Negative numbers for cost and schedule variance indicate problems in those areas. The project is costing more than planned or taking longer than planned • CPI and SPI less than 100% indicate problems

132

Using Software to Assist in Cost Management
• Spreadsheets are a common tool for resource planning, cost estimating, cost budgeting, and cost control • Many companies use more sophisticated and centralized financial applications software for cost information • Project management software has many cost-related features
133

Project Quality Management

134

Quality of Information Technology Projects
• Many people joke about the poor quality of IT products • People seem to accept systems being down occasionally or needing to reboot their PCs • There are many examples in the news about quality problems related to IT • Do we and should we accept lower quality for more innovation?
135

What Is Project Quality Management?
• The International Organization for Standardization (ISO) defines quality as the totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs • Other experts define quality based on:
• Conformance to requirements: meeting written specifications • Fitness for use: ensuring a product can be used as it was intended
136

Project Quality Management Processes
• Quality planning: identifying which quality standards are relevant to the project and how to satisfy them • Quality assurance: evaluating overall project performance to ensure the project will satisfy the relevant quality standards • Quality control: monitoring specific project results to ensure that they comply with the relevant quality standards, while identifying ways to improve overall quality

137

Modern Quality Management
• Modern quality management
• Requires customer satisfaction • Stresses prevention to inspection • Recognizes management responsibility for quality

• Noteworthy quality experts include Deming, Juran, Crosby, Ishikawa, Taguchi, and Feigenbaum

138

Quality Experts
• Deming was famous for his work in rebuilding Japan and his 14 points • Juran wrote the Quality Control Handbook and 10 steps to quality improvement • Crosby wrote Quality is Free and suggested that organizations strive for zero defects • Ishikawa developed the concept of quality circles and using fishbone diagrams • Taguchi developed methods for optimizing the process of engineering experimentation • Feigenbaum developed the concept of total quality control
139

Quality Planning
• Quality must be designed in to the product of the project in order to meet the customer’s requirements • Design of experiments helps identify which variable have the most influence on the overall outcome of a process • Many scope aspects of IT projects affect quality: functionality, features, system outputs, performance, reliability, and maintainability
140

Quality Assurance
• Quality assurance includes all the activities related to satisfying the relevant quality standards for a project • Another goal of quality assurance is continuous quality improvement • Benchmarking can be used to generate ideas for quality improvements • Quality audits help identify lessons learned that can improve performance on current or future projects
141

Quality Control
• The main outputs of quality control are
• Acceptance decisions • Rework • Process adjustments

• Some tools and techniques include
• • • • Pareto analysis Statistical sampling Quality control charts Testing

142

Pareto Analysis
• Pareto analysis involves identifying the vital few contributors that account for the most quality problems in a system • Also called the 80-20 rule, meaning that 80% of problems are often due to 20% of the causes • Pareto diagrams are histograms that help identify and prioritize problem areas

143

Sample Pareto Diagram

144

Statistical Sampling and Standard Deviation
• Statistical sampling involves choosing part of a population of interest for inspection • The size of a sample depends on how representative you want the sample to be

145

Standard Deviation
• Standard deviation measures how much variation exists in a distribution of data • A small standard deviation means that data cluster closely around the middle of a distribution, and there is little variability among the data • A normal distribution is a bell-shaped curve that is symmetrical about the mean or average value of a population
146

Normal Distribution and Standard Deviation

147

Sigma and Defective Units
Specification Range Percent of Population (in +/- Sigmas) Within Range 1 2 3 4 5 6 68.27 95.45 99.73 99.9937 99.999943 99.9999998 317,300,000 45,400,000 2,700,000 63,000 57 2 Defective Units Per Billion

148

Quality Control Charts, Six Sigma, and the Seven Run Rule
• A control chart is a graphic display of data that illustrates the results of a process over time. It helps prevent defects, and allows you to determine whether a process is in control or out of control • Operating at a higher sigma value, like 6 sigma, means the product tolerance or control limits have less variability • The Rule of Seven states that if seven data points in a row are all below the mean, above,the mean, or increasing or decreasing, then the process needs to be examined for non-random problems
149

Sample Quality Control Chart

150

Testing
• Many IT professionals think of testing as a stage that comes near the end of IT product development • Testing should be done during almost every phase of the IT product development life cycle

151

Testing Tasks in the Software Development Life Cycle

152

Types of Tests
• Unit testing is done by developers to test each individual component (often a program) to ensure it is as defect free as possible • Integration testing occurs between unit and system testing to test functionally grouped components • System testing tests the entire system as one entity • User acceptance testing is an independent test performed by the end user prior to accepting the delivered system • Parallel processing is often done in migration projects, comparing results of old and new systems
153

Improving IT Project Quality
• Several suggestions for improving quality for IT projects include:
• Leadership that promotes quality • Understanding the cost of quality • Focusing on organizational influences and workplace factors that affect quality • Following maturity models to improve quality

154

Leadership
• “It is most important that top management be quality-minded. In the absence of sincere manifestation of interest at the top, little will happen below.” (Juran, 1945) • A large percentage of quality problems are associated with management, not technical issues
• Unrealistic schedule • Unrealistic budget • Limited resources
155

The Cost of Conformance
• The cost of delivering products that meet requirements and fitness for use
• Prevention cost: the cost of planning and executing a project so errors are within an acceptable range • Appraisal cost: the cost of evaluating processes and their outputs to ensure quality • Measurement and test equipment costs: capital cost of equipment used to perform prevention and appraisal activities

156

The Cost of Non-conformance
• The cost of taking responsibility for failures or not meeting quality expectations
• Internal failure cost: cost to correct an identified defect before the customer gets the product • External failure cost: cost that relates to all errors not detected and corrected before delivery to the customer

157

Organization Influences, Workplace Factors, and Quality
• Study by DeMarco and Lister showed that organizational issues had a much greater influence on programmer productivity than the technical environment or programming languages • Programmer productivity varied by a factor of 1:10 across organizations, but only by 21% within the same organization • No correlation between productivity and programming language, years of experience, salary • A dedicated workspace and a quiet work environment are key factors in improving programmer productivity
158

Project Human Resource Management

159

What is Project Human Resource Management?
• The processes required to make the most effective use of the people involved with a project. • Processes include:
• Organizational planning • Staff acquisition • Team development

160

Keys to Managing People
• Important areas related to project management include:
• Motivation • Influence and power • Effectiveness

161

Motivation
• Abraham Maslow developed a hierarchy of needs to illustrate his theory that people’s behaviors are guided by a sequence of needs • Maslow argued that humans possess unique qualities that enable them to make independent choices, thus giving them control of their destiny

162

Maslow’s Hierarchy of Needs

163

Herzberg’s Motivational and Hygiene Factors
• Frederick Herzberg wrote several famous books and articles about worker motivation. He distinguished between:
• Motivational factors: achievement, recognition, the work itself, responsibility, advancement, and growth, which produce job satisfaction • Hygiene factors: cause dissatisfaction if not present, but do not motivate workers to do more, including larger salaries, more supervision, and a more attractive work environment
164

Thamhain and Wilemon’s Ways to Have Influence on Projects
• • • • • • • • • Authority: the legitimate hierarchical right to issue orders Assignment: the project manager's perceived ability to influence a worker's later work assignments Budget: the project manager's perceived ability to authorize others' use of discretionary funds Promotion: the ability to improve a worker's position Money: the ability to increase a worker's pay and benefits Penalty: the project manager's perceived ability to dispense or cause punishment Work challenge: the ability to assign work that capitalizes on a worker's enjoyment of doing a particular task Expertise: the project manager's perceived special knowledge that others deem important Friendship: the ability to establish friendly personal relationships between the project manager and others
165

Ways to Influence that Help and Hurt Projects
• Projects are more likely to succeed when project managers influence with:
• Expertise • Work challenge

• Projects are more likely to fail when project managers rely too heavily on:
• Authority • Money • Penalty
166

Power
• Power is the potential ability to influence behavior to get people to do things they would not otherwise do • Types of power include:
• • • • • Expert Reward Referent Legitimate Coercive

167

Improving Effectiveness Covey’s 7 Habits
• Project managers can apply Covey’s 7 habits to improve effectiveness on projects:
• • • • • • • Be proactive Begin with the end in mind Put first things first Think win/win Seek first to understand, then to be understood Synergize Sharpen the saw
168

Empathic Listening and Rapport
• Good project managers are empathic listeners; they listen with the intent to understand • Before you can communicate with others, you must have rapport • IT professionals often need to develop empathic listening and other people skills to improve relationships with users and other stakeholders
169

Improving Relationships Between Users and Developers
• CIOs push their staff to recognize that the needs of the business must drive all technology decisions • Some organizations require business people, not IT people, to take the lead in determining and justifying investments in new computer systems • Some companies reshape their IT units to look and perform like consulting firms
170

Organizational Planning
• Organizational planning involves identifying, documenting, and assigning project roles, responsibilities, and reporting relationships • Outputs and processes include:
• • • • Project organizational charts Work definition and assignment process Responsibility assignment matrixes Resource histograms

171

Sample Organizational Chart for a Large IT Project

172

Work Definition and Assignment Process

173

Sample Responsibility Assignment Matrix (RAM)

174

RAM Showing Stakeholder Roles

175

Sample Resource Histogram for a Large IT Project

176

Resource Loading and Leveling
• Resource loading refers to the amount of individual resources an existing project schedule requires during specific time periods • Resource histograms show resource loading • Over-allocation means more resources than are available are assigned to perform work at a given time
177

Resource Leveling
• Resource leveling is a technique for resolving resource conflicts by delaying tasks • The main purpose of resource leveling is to create a smoother distribution of resource usage and reduce overallocation

178

Resource Leveling Example

179

Team Development
• It takes teamwork to successfully complete any complex project • Training can help people understand themselves, each other, and how to work better in teams • Team based reward and recognition systems can promote teamwork • Focus on rewarding teams for achieving specific goals • Allow time for team members to mentor and help each other to meet project goals and develop human resources
180

General Advice on Teams
• Establish regular, effective meetings • Fix the problem instead of blaming people • Focus on meeting project objectives and producing positive results • Nurture team members, and encourage them to help each other • Acknowledge individual and group accomplishments
181

Project Communications Management

182

Importance of Good Communications
• The greatest threat to many projects is a failure to communicate • IT professionals have a reputation for being bad communicators • Research shows that IT professionals must be able to communicate effectively to succeed in their positions • Strong communication skills are a key factor in career advancement for IT professionals
183

Project Communications Management Processes
• Communications planning: determining the information and communications needs of the stakeholders • Information distribution: communicating information available in a timely manner • Performance reporting: collecting and disseminating performance information • Administrative closure: generating, gathering, and disseminating information to formalize phase or project completion
184

Communications Planning
• Every project should include a document that guides project communications, a Communications Management Plan • Creating a stakeholder analysis for project communications also aids in communications planning

185

Communications Management Plan Contents
• A method of gathering and storing communications • A method of distributing key project information: to whom, when, and how • A schedule for producing the information • Access methods for obtaining the information • A stakeholder communications analysis • Includes both internal and external stakeholders

186

Sample Stakeholder Analysis for Project Communications

187

Information Distribution
• Getting the right information to the right people at the right time and in a useful format is just as important as developing the information in the first place • Important considerations include:
• Using technology to enhance information distribution • Formal and informal methods for distributing information

188

The Impact of the Number of People on Communications Channels

2 people, 1 line of communication

3 people, 3 lines of communication

4 people, 6 lines of communication

Lines of communication = n(n-1)/2 10 people = 10(10-1)/2 = 45 lines 189

Performance Reporting
• Performance reporting keeps stakeholders informed about how resources are being used to achieve project objectives
• Status reports describe where the project stands at a specific point in time • Progress reports describe what the project team has accomplished during a certain period of time • Project forecasting predicts future project status and progress based on past trends • Status review meetings often include performance reporting
190

Administrative Closure
• A project or phase of a project requires closure • Closure of a phase allows the project to learn from experience, and move to the next phase • Project closure produces:
• Project archives • Formal acceptance • Lessons learned

191

Suggestions for Improving Project Communications
• Resolve conflicts quickly and effectively • Run effective meetings • Use templates for project deliverables • Develop better communication skills

192

Conflict Handling Modes, in Preference Order
• Problem-solving (confrontation) : directly face a conflict • Compromise: use a give-and-take approach • Smoothing: de-emphasize areas of differences and emphasize areas of agreement • Forcing: the win-lose approach • Withdrawal: retreat or withdraw from an actual or potential disagreement
193

Developing a Communications Infrastructure
• A communications infrastructure is a set of tools, techniques, and principles that provide a foundation for the effective transfer of information
• Tools include e-mail, project management software, groupware, fax machines, telephones, teleconferencing systems, document management systems, and word processors • Techniques include reporting guidelines and templates, meeting ground rules and procedures, decision-making processes, problem-solving approaches, and conflict resolution and negotiation techniques • Principles include using open dialog and an agreed upon work ethic
194

Using Software to Assist in Project Communications
• There are many software tools to aid in project communications • Microsoft Project 98 includes several features to enhance communications • Open Issues database • E-mail is a powerful software tool

195

Project Risk Management

196

The Importance of Project Risk Management
• Project risk management is the art and science of identifying, assigning, and responding to risk throughout the life of a project and in the best interests of meeting project objectives • Risk management is often overlooked on projects, but it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates
197

Information Technology Success Potential Scoring Sheet

198

What is Risk?
• A dictionary definition of risk is “the possibility of loss or injury” • Project risk involves understanding potential problems that might occur on the project and how they might impede project success • Risk management is like a form of insurance; it is an investment • Risks are both threats and opportunities
199

Common Sources of Risk on IT Projects
• Scope creep • Inadequate executive sponsorship • Insufficient time committed by business users • Loss of key team members • Vendor inability to perform • Decreasing hardware cost • New capabilities added to vendor product
200

What is Project Risk Management?
• The goal of project risk management is to minimize potential risks while maximizing potential opportunities:
• Risk identification: determining which risks are likely to affect a project • Risk quantification: evaluating risks to assess the range of possible project outcomes • Risk response development: taking steps to enhance opportunities and developing responses to threats • Risk response control: responding to risks over the course of the project
201

Risk Identification
• Risk identification is the process of understanding what potential unsatisfactory outcomes are associated with a particular project • Risk identification tools:
• Checklists • Lists of common risks • Flowcharts • Interviews
202

Potential Risk Conditions

203

Risk Quantification
• Risk quantification or risk analysis is the process of evaluating risks to asses the range of possible project outcomes • Determine the risk’s probability of occurrence • Determine the risk’s impact to the project if the risk does occur • Risk quantification techniques include expected monetary value analysis, calculation of risk factors, PERT estimations, simulations, and expert judgment
204

Expected Monetary Value (EMV) Example

205

Risk Response Development
• Risk mitigation: reducing the impact of a risk event by reducing the probability of its occurrence • Risk avoidance: eliminating a specific threat or risk, usually by eliminating its cause • Risk acceptance: accepting the consequences should a risk occur

206

General Risk Mitigation Strategies for Technical, Cost, and Schedule Risks

207

Risk Management Plans, Contingency Plans, and Contingency Reserves
• A risk management plan documents the procedures for managing risk throughout the project • Contingency plans are predefined actions that the project team will take if an identified risk event occurs • Contingency reserves are provisions held by the project sponsor for possible changes in project scope or quality
208

Risk Response Control
• Risk response control involves executing the risk management processes and the risk management plan to respond to risk events • Risks must be monitored throughout the life of the project • Sometimes workarounds or unplanned responses to risk events are needed when there are no contingency plans

209

Top 10 Risk Item Tracking
• Top 10 risk item tracking is a tool for maintaining an awareness of risk throughout the life of a project • Establish a periodic review of the top 10 project risk items • List the current ranking, previous ranking, number of times the risk appears on the list over a period of time, and a summary of progress made in resolving the risk item
210

Example of Top 10 Risk Item Tracking

211

Using Software to Assist in Project Risk Management
• Databases can keep track of risks • Spreadsheets can aid in tracking and quantifying risks • More sophisticated risk management software helps develop models and uses simulation to analyze and respond to various project risks

212

Project Procurement Management

213

Importance of Project Procurement Management
• Procurement means acquiring goods and/or services from an outside source • Other terms include purchasing and outsourcing • The worldwide information technology outsourcing market is well over $100 billion

214

Why Outsource?
• To reduce both fixed and recurrent costs • To allow the client organization to focus on its core business • To access skills and technologies • To provide flexibility • To increase accountability

215

Project Procurement Management Processes
• Procurement planning: determining what to procure and when • Solicitation planning: documenting product requirements and identifying potential sources • Solicitation: obtaining quotations, bids, offers, or proposals as appropriate • Source selection: choosing from among potential vendors • Contract administration: managing the relationship with the vendor • Contract close-out: completion and settlement of the contract
216

Project Procurement Processes Key Events

217

Procurement Planning
• Procurement planning involves identifying which project needs can be best met by using products or services outside the organization. It includes deciding:
• • • • • Whether to procure What to procure How much to procure When to procure How to procure

218

Procurement Planning Tools and Techniques
• Make-or-buy analysis: determining whether a particular product or service should be made or performed inside the organization, or purchased from someone else - often involves financial analysis • Experts, both internal and external, can provide valuable inputs in procurement decisions

219

Types of Contracts
• Fixed price or lump sum: involve a fixed total price for a well-defined product or service • Cost reimbursable: involve payment to the seller for direct and indirect costs • Unit price contracts: require the buyer to pay the seller a predetermined amount per unit of service

220

Statement of Work (SOW)
• A statement of work is a description of the work required for the procurement • Many contracts, mutually binding agreements, include SOWs • A good SOW gives bidders a better understanding of the buyer’s expectations

221

Statement of Work (SOW) Template

222

Solicitation Planning
• Solicitation planning involves preparing documents soliciting information from vendors or suppliers:
• Request for Proposal: used to solicit proposals from prospective sellers where there are several ways to meet the sellers’ needs • Request for Quotes (Information): used to solicit quotes for well-defined procurements • Invitations for bid or negotiation and initial contractor responses are also part of solicitation planning
223

Outline for a Request for Proposal (RFP)

224

Solicitation
• Solicitation involves obtaining proposals or bids from prospective sellers • Organizations can advertise to procure goods and services in several ways:
• Approaching the preferred vendor • Approaching several potential vendors • Advertising to anyone interested

• A bidders’ conference can help clarify the buyer’s expectations
225

Source Selection
• Source selection involves:
• • • • Evaluating bidders’ proposals Choosing the best one Negotiating the contract Awarding the contract

• It is helpful to prepare formal evaluation procedures for selecting vendors • Buyers often create a “short list”, and invite finalist vendors to make a presentation
226

Sample Proposal Evaluation Sheet

227

Contract Administration
• Contract administration ensures that the seller’s performance meets contractual requirements • Contracts are legal relationships, so it is important that legal and contracting professionals be involved in writing and administering contracts • Many project managers ignore contractual issues, which can result in serious problems
228

Suggestions on Change Control for Contracts
• Changes to any part of the project need to be reviewed, approved, and documented by the same people in the same way that the original part of the plan was approved • Evaluation of any change should include an impact analysis - how will the change affect the scope, time, cost, and quality of the goods or services being provided? • Changes must be documented in writing • Project team members should also document all important meetings and telephone phone calls
229

Contract Close-out
• Contract close-out includes:
• Product verification to determine if all work was completed correctly and satisfactorily • Formal acceptance • Administrative activities to update records to reflect final results • Archiving information for future use

• Procurement audits identify lessons learned in the procurement process

230

Project Success Factors
• • • • • • • • • • • • Dedicated Project Manager The project team’s commitment to project Accurate initial cost estimates Project team's capabilities Funding availability throughout project Effective and flexible planning and control techniques Absence of bureaucratic organization and controls Minimal amount of start-up difficulties Task (vs. social) orientation of project team Clearly established criteria for project success Constant monitoring of activity against plan Effective change control

231

Conclusion
• Clarity, openness, and communication are key to project success • Project Management is a team and not an individual effort • Effective Project Management guarantees that all team members are accountable to perform their agreed upon task • Effective Project Management orchestrates all aspects of a project to implement the plan on time and on budget
232

Sign up to vote on this title
UsefulNot useful