WEEK 1- Basic Project Quantitative exercises (Project Selection)

PPT: WEEK 1- Project Selection

Topics:
 Financial models: Payback, NPV, IRR, MIRR
Payback method
The length of time it takes the organization to recover the initial costs of the result (product or
service) of the project. Often used with non-discounted cash flows.
PAYBACK = Years before full recovery + (unrecovered cost at the start of the year/cash
flow during the year)

Initial investment = -$2000

500+1400 = 1900
Years before full recovery = 2 years
Unrecovered cost at the start of the year = 2000-1900 = 100
Cash flow during the year = 200
Payback = 2 years + (100/200) = 2.5 years

Net Present Value (NPV)

NPV = Present value of expected future cash flows – cost (inflows-outflows)
 NPV measures the value created by a financial decision (project)
 Positive NPV increases wealth
 A zero NPV decision earns the “fair” rate of return
 A positive NPV decision earns more than the fair rate of return
Here the rate (IRR) is 10%. Was not stated, however, the denominator indicates that 1 +0.10 =
1.10, therefore the rate has to be 10%.
CF Worksheet calculation
CF0 -2000
C01 1000
F01 1
C02 1500
F02 1
C03 2000
F03 1
NPV Worksheet
I 10
NPV CPT = 1,651.39
WEEK 2- Project Charter, TOR, Risk Register
PPT: WEEK 2- Project Initiation
Topics:
 Project Charter
 Terms of Reference (TOR)
Project Charter
 Is the official acknowledgement that the project exists
o Appoints the project manager
o Outlines authority
o Identifies project structure
o Contains an overview of the project and product goals
 Signed by project sponsor (stakeholder and other management)
 Distributed to all interested parties
A project charter is produced in the existing context of an organization, impacted by:
 Strategic plan, culture, structure, industry standards, existing human resources,
marketplace
 Previous work done on the concept (product description, business need, existing contract)
 Existing processes and procedures for conducting work (methodologies, templates,
controls)
 Existing corporate knowledge base (project files PMIS, lessons learned, various
databases)
Project charter elements
 Business need (updates)- why are we doing this? What do we hope to accomplish?
Purpose?
 Requirements (updates)- customer, sponsor or other stakeholders wants and expectations
 Project scope (updates)- what is included and not included in the project
 Project deliverables (updates)- what are we going to deliver (produce) along the way?
 Summary milestone schedule/methodology (updates)- significant steps to completion
(will include deliverables)
 Measures of success- how do we know we’re there? Aligns with deliverables
 Project constraints (updates)- restricts or dictates action
 Project assumptions (updates)- belief that if not true could affect the project charter
conclusions
 Project risks (updates)- potential events that if they occur will have a detrimental impact
on the project
 Summary budget
 Benefits (updates)- qualitative and quantitative benefits of the project outcome
  Project manager authority- team structure and sponsor sign-off
Terms of Reference TOR
 This is your agreement with your client and your sponsor (or advisor)
 Should be defined enough that if we do as we agreed, all will consider the project a
success
 Therefore, in broad terms, we want:
o To justify working on the project (need/benefits)
o Define the product and project requirements that will be acceptable to all
important stakeholders
o Define what we will do
o Define what we will deliver
o Ensure stakeholders are realistic about what can be achieved (assumptions, risks,
constraints)
Elements of TOR
 Project statement SOW (problem/opportunity statement)
o The business objective
o Underlying demand for the project
o Should relate to strategic goals of the company or competitive strategy
o Increase sales? Improve internal processes? “project processes for small projects
is unclear and consumes too many resources”
o Example of developing a problem statement
 Question 1: what is the problem that needs to be solved?
 Question 2: why is it a problem?
 Question 3: where is the problem observed?
 Question 4: who is impacted?
 Question 5: when was the problem first observed?
 Question 6: how is the problem observed?
 Administrative details (consultant/client info, etc.)
 Problem/opportunity statement
 Project goal
o What are you going to accomplish with the project and by when?
o “design a simple, easily understood process for prioritizing and completing small
projects by May 25, 2009”
o Difference between goal and objective?
 Project scope
o What is included in the project?
 Business functions
 Data
 Internal and external stakeholders
 Locations
 Systems
 Processes
 Many more…
o “identification of requirements and system design”
o Equally important what is out of scope!
o “construction, testing and implementation are not included”
 Project objectives & deliverables
o How are you going to get there? Major project components
o In this context they include deliverables
o The labels are not important, creating useful information that communicates the
work you intend to do and guides your project is important
o SMART (specific or precise, measurable, assignable and achievable, relevant and
realistic, time-related)
o “Reduces small project cycle time by 20% by sept 2009”
 Project constraints
o Time, cost, quality, but also resources, capability, culture
o “resource availability and technical capability are key constraints”
 Success criteria
o How do you know that we have arrived?
o Time, cost, quality/performance
o Needs to tie back to the goals/objectives
o Needs to tie back to the benefits
o For good objectives it should be very easily identified (20% cycle time reduction
by sept 2009)
 Resource requirements
o Inputs required to complete the project
 People
 Equipment
  Space
 Financial
 Including what, who, when, how long, etc.
 Project assumptions
o Key beliefs that need to be true in order for the plan to be valid
 Resources availability
 Privacy issues
 Completion (and capability) of a previous piece of work
o “a website designer will be available (0.5 FTE) for the duration of the project”
 Project risks
o Identifying and mitigating risk using a risk register
o What could go wrong? What needs to be watched?
o Likelihood (probability) of occurrence
o Consequence
o Mitigation
o Critical considerations: risks beyond the scope of the project (macro)
o “inability to resolve data security issues may impact schedule”
 “mitigation: include data security department in project planning”
Risk management
Risk management helps you make better business decisions. It involves reducing the things that
could have a negative effect on your business. for example, the reducing the risk of injury by
thorough safety procedures. You can also look for opportunities that could have a positive
impact on your business
Begin by finding out about risk management practices and how you can use them. You should
also talk to others involved in your business (including your employees and customers) to decide
on the best way to manage risk in your business
Before you decide what to do, you’ll need to work out what your risks are and which ones are
most urgent:
 Identify- work out what risks your business could face
 Analyze- find the level of the risks and which ones are most urgent
 Evaluate- compare the risk against set risk criteria to decide what to do
Why manage risk?
Managing risk can also help you to:
 Improve your relationships with customers, suppliers, employees, and the community, by
understanding and managing their expectations
 Improve staff confidence in a safe work environment, through workplace health and
safety (WHS) and worker’s compensation insurance
  Keep your business open during natural or economic disasters, by having an emergency
management plan
 Reduce your compliance and insurance costs, by having a lower risk of damages
 You wont always have enough information or the resources to manage every risk. A good
risk management plan will allow you to change your approach if it isn’t working, or when
unexpected risk happens
Legal requirements
 You’re required by law to manage some risks. For example, you must manage or reduce
the risk of:
o Accidents and injury by making your workplace safe under work health and
safety (WHS) laws
o Customer complaints by treating customers fairly under Australian consumer law
o Injury or harm to employees by having workers’ compensation insurance
o Damaging the environment by meeting the environmental laws that apply to you
Types of risk
It’s a good idea to understand the different types of risks your business may face so you can
recognize and plan ahead for them
Risks can be:
 Opportunity-based- risk from choosing one option over other options (such as buying a
new property)
o this type of risk comes from taking one opportunity over others. by deciding to
commit your resources to one opportunity, you risk:
 missing a better opportunity
 getting unexpected result
 opportunity-based risks for a business include moving a business to a
different location, buying a new property, or selling a new product or
service
 Uncertainty-based- risk from uncertain or unknown events (such as natural disasters or
loss of suppliers)
o This type of risk is from uncertainty around unknown or unexpected events. Its
hard to predict these events and the damage they can cause. It’s also hard to
control the damage once they occur
o Examples of uncertainty-based risks include:
 Damage by fire, flood or other natural disasters
 Unexpected financial loss due to an economic downturn, or bankruptcy of
other businesses that owe you money
 Loss of important suppliers or customers
 Decrease in market share because new competitors or products enter the
market court action
 o To reduce uncertainty:
 To reduce the impact of uncertain events on your business, you can do
things like:
 Develop an emergency management plan to reduce the damage to
your business in an emergency
 Keep a supplier database to help you manage your stock and
equipment
 Seek and use regular feedback from your customers and other
people you deal with in your business
 Check your business environment regularly for risks such as
changes in trends and customer expectations
 Seek expert advice every now and then to check the financial
health of your business and to get advice on how to improve your
business
 Hazard-based- risk from dangerous materials or actions (such as using hazardous
chemicals or working at heights)
o I.e. dangerous situations in the workplace
o Some examples include:
o Physical hazards caused by high noise levels, extreme weather, or other
environmental factors
o Equipment hazards caused by faulty equipment or poor processes when using
equipment such as machinery
o Chemical hazards caused by improper storage or use of flammable, poisonous,
toxic or carcinogenic chemicals
WEEK 3- Work Breakdown Structure (WBS)-Scope Management, Time Management
PPT: WEEK 3 PART 1 ScopeTime
Topics:
 Scope management
o Create WBS
 Time management
Scope Management
 Problem/opportunity (company level)
 Project goal (project level)
 Objectives and deliverables (details)
 Scope (in and out)
 Create WBS
 Scope control (impact on triple constraint)
WBS
Time Management
 Activity definition (from WBS)
 Activity sequencing (what order/sequencing)
 Activity resource estimating (who/what)
 Activity duration estimating (how long)
o Expert judgement
o Historical information
o Analogous: top-down, previous similar projects
o Parametric: statistical relationship between previous costs and other variables
o Three-point estimates (best, worst, likely)
o Reserve analytics: contingency
 Schedule development (network and gantt)
 Schedule control
WEEK 4- TOR, Risk Register, RACI Matrix, Deliverables
PPT: WEEK 3 PART 2- Risk
Topics:
 Risk management (risk register)
 Responsibility and accountability matrix (RACI Matrix)
Risk management (risk register)
 i.e. “Business Continuity Planning”
 risk management planning
 risk identification
o brainstorming, interviewing, root cause, SWOT, historical, assumptions analysis,
analysis of potential alternatives
o risk register
  qualitative risk analysis
 quantitative risk analysis
 risk response planning
o avoidance
 another route passed construction delays
o transference
 contracted out
o mitigation
 reduce the probability and/or impact
o acceptance
 do not try to avoid
 risk monitoring and control
RACI Chart
The RACI matrix is a responsibility assignment chart that maps out every task, milestone or key
decision involved in completing a project and assigns which roles are responsible for each action
item, which personnel are accountable, and, where appropriate, who needs to be consulted or
informed.
WEEK 5- Agile Vision Board
PPT: WEEK 7- Working in Agile
Topics:
 Product Vision
Agile projects, in involve planning up front and throughout the entire project.
 Planning agile projects
 Establishing the product vision
  Creating features and a product roadmap

Product vision statement

Four steps:
1. Develop the product objective
2. Create a draft vision statement
3. Validate the vision statement with product and project stakeholders. Revise the vision
statement based on feedback
4. Finalize the vision statement
Involve the development team
WEEK 6- Agile Product Road Map
PPT: WEEK 7- Working in Agile
Topics:
 Product Road Map
Product road map
Overall view of the product’s requirements and a valuable tool for planning and organizing the
journey of product development.
 Categorize requirements
 Prioritize them
 Determine a timetable
Involve the development team to a greater degree
To create your product roadmap, you
 Identify product requirements and add them to the roadmap
 Arrange the product requirements into logical groups
 Estimate requirement effort at a high level and prioritize the product’s requirements
 Envision high-level time frames for the groups on the roadmap
Priorities can change, expect to update your roadmap
WEEK 7- Agile Value Stream Map (VSM)
PPT:
Topics:
