SHRIVISHNUENGINEERINGCOLLEGEFORWOMEN::BHIMAVARAM

(AUTONOMOUS)
DEPARTMENTOFCOMPUTERSCIENCEANDENGINEERING SOFTWARE
PROJECT MANAGEMENT
UNIT–V&VI
ProjectIntegrationManagement

WHATISPROJECTINTEGRATIONMANAGEMENT?

Projectintegrationmanagementinvolvescoordinatingalloftheotherprojectmanagementknowledge areas
throughout a project’s lifecycle. This integration ensures that all the elements of a project come
together at the right times to complete a project successfully. Six main processes are involved in
project integration management:

1. Developing the project charter involves working with stakeholders to create the document
that formally authorizes a project—the charter.

2. Developing the project management plan involves coordinating all planning efforts tocreate
a consistent, coherent document—the project management plan.
3. Directing and managing project work involves carrying out the project management plan by
performing the activities included in it. The outputs of this process are deliverables, work
performance information, change requests, project management plan updates, and project
documents updates.

4. Monitoring and controlling project work involves overseeing activities to meet the
performance objectives of the project. The outputs of this process are change requests, project
management plan updates, and project documents updates.
5. Performing integrated change control involves identifying, evaluating, and managing
changes throughout the project life cycle. The outputs of this process include change request
status updates, project management plan updates, and project documents updates.

6. Closing the project or phase involves finalizing all activities to formally close the project or
phase. Outputs of this process include final product, service, or result transition and
organizational process assets updates.

 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.
 The project managers takes responsibility for

o Coordinating all the people, plans and work required to complete a project.

o Focusing on the big picture and steering the project team toward successful completion

o Makingthefinaldecisionswhenthereareconflictsamongprojectgoalsorpeople involved.

o Communicating key project information to top management.

 Project Integration Management Processes

⚫ Good project integration management is critical to providing stakeholder satisfaction.

⚫ Interface management – identifying and managing the points of interaction between

various elements of the project.

⚫ The number of interfaces can increase exponentially as the number of people

involved in the project increases.

⚫ Therefore, the PM must establish and maintain good communication and

relationships with all stakeholders, customers the project team, top
management, other PMs and opponents of the project.

⚫ This was one of Nick Carson’s mistakes – he did not find out what top
management expected of him as PM and did not see the big picture.

STRATEGICPLANNING&PROJECTSELECTION

⚫ Strategic planning involves determining long-term objectives, predicting future trends, and
projecting the need for new products and services.

⚫ Organizations of ten perform a SWOT analysis.

o Analyzing Strengths, Weaknesses, Opportunities, and Threats.

⚫ For example, a group of four people who want to start a new business in the film industry
could perform a SWOT analysis to help identify potential projects. They might determine the
following based on a SWOT analysis:
Strengths:

o As experienced professionals, we have numerous contacts in the film industry.

o Two of us have strong sales and interpersonal skills.
o Two of us have strong technical skills and are familiar with several film making
Software tools.
o We all have impressive samples of completed projects.
Weaknesses:

o None of us have accounting or financial experience.

o We have no clear marketing strategy for products and services.
o We have little money to investing new projects.
o We have no company Web site and limited use of technology to run the business.
Opportunities:

o A current client has mentioned a large projects he would like us to bid on.
o The film industry continues to grow.
o There are two major conferences this year where we could promote our company.

Threats:

o Other individuals or companies can provide the services we can.

o Customers might prefer working with more established individuals and organizations.
o There is high risk in the film business.

 Some people like to perform a SWOT analysis by using mind mapping, a technique that uses
branches radiating from a core idea to structure thoughts and ideas. The human brain does not
work in a linear fashion. People come up with many unrelated ideas. By putting those ideas
down in a visual mind map format, you can often generate more ideas than by just creating
lists.

Fig: Mind map of a SWOT analysis to help identify potential projects

Identifying Potential Projects

 The first step in project management is deciding what projects to do in the first place.
Therefore, project initiation starts with identifying potential projects, using realistic methodsto
select which projects to work on, and then formalizing their initiation by issuing some sort of
project charter.

 In addition to using a SWOT analysis, organizations often follow a detailed process for
project selection. The below Figure shows a four-stage planning process for selecting IT
projects.

IT Planning Process

AligningITwithBusiness Strategy

 This is consistentlythe top concernforCIOs.

 Research showsthatsupportingexplicitbusinessobjectivesisthenumber onereasoncitedfor why
organizations invest in IT projects.
 Anorganization’sstrategicplanshouldguidetheITprojectselectionprocess.
 ManyITsystemsare―strategic‖becausetheydirectlysupportkeybusinessstrategies.
o Wal-Mart’sinventorycontrolsystem.
o Fed-Ex’sonlinepackagetrackingsystem.

MethodsforSelectingProjects

⚫ Thereareusuallymoreprojects than availabletimeand resourcesto implement them.

⚫ Methodsforselectingprojects include:
1. Focusingonbroadorganizational needs.
2. Categorizinginformation technologyprojects.
3. Performingnetpresentvalueorother financialanalyses.
4. Usinga weightedscoring model.
5. Implementingabalancedscorecard.
⚫ Inpractice,organizationsusuallyuseacombinationoftheseapproachestoselectprojects.
1. FocusingonBroadOrganizationalNeeds

 Projects that address broad organizational needs are more likelyto be successful because they
will be important to the organization.
 Itisoftendifficulttoprovidestrong justificationformany IT projectsand/orestimatetheir financial
value, but everyone agrees they have a high value.
 ―Itisbettertomeasuregoldroughlythantocountpenniesprecisely‖.
 Threeimportantcriteriafor projects:
◦ Thereis a need for the project.
◦ Therearefundsavailable.
◦ There’sastrongwilltomaketheproject succeed.

2. CategorizingITProjects
Anothermethodforselectingprojectsis basedonvariouscategorizations,such as
I. Theproject’simpetus.
II. Timewindow
III. Generalpriority.
I. Theimpetusforaprojectisoftento respondto aproblem,anopportunity, oradirective.

Problems are undesirable situations that prevent an organization from achieving its goals. These
problems can be current or anticipated. For example, users of an information system may be having
trouble logging on to the system or getting information in a timely manner because the system has
reached its capacity. In response, the company could initiate a project to enhance the current system
by adding more access lines or upgrading the hardware with a faster processor, more memory, or
more storage space.

Opportunities are chances to improve the organization. For example, the project described in the
chapter’s opening case involves creating a new product that can make or break the entire company.

Directives are new requirements imposed by management, government, or some external influence.
For example, many projects that involve medical technologies must meet rigorous government
requirements.

II. Timewindow:Another categorizationishow longit willtaketo doandwhen itis needed.

III. Generalpriority:Anotheris theoverall priorityof the project.

3. PerformingNetPresentValueAnalysis,ReturnonInvestment,andPaybackAnalysis

 Financialconsiderationsareoftenanimportantconsiderationinselectingprojects.
 ―Projects are never ends in themselves. Financially they are always a means to an end,
cash‖Dennis Cohen and Robert Graham, The Project Manager’s MBA.
 Threeprimarymethods(A,B &C)fordeterminingthe projectedfinancialvalue of projects
A. Netpresentvalue(NPV) analysis.
B. Returnon investment (ROI).
C. Paybackanalysis.
D. WeightedScoringModel.
E. ImplementingaBalancedScore Board.
 PMsmustbecomefamiliarwiththelanguageofbusinessexecutivesinordertomaketheir case

A. NetPresentValueAnalysis

 Adollarearnedtodayisworth morethan adollarearnedfiveyearsfrom now.

 Netpresentvalue(NPV) analysisisamethodofcalculatingtheexpectednetmonetarygainor loss
from aproject bydiscounting all expectedfuturecash inflows and outflows to thepresent point
in time.
 Projects with a positive NPV should be considered if financial valueis a key criterionbecause
that means the return from a project exceeds the cost of capital (the return availableby
investing the capital elsewhere).
 NPVis the difference between the present value of cash inflows and the present value of cash
outflows.
 NPVcompares the value of a dollar todayto the value of that same dollar in the future, taking
inflation and returns into account.
 Below Figure illustrates this concept for two different projects. Note that this example starts
discounting immediately in Year 1 and uses a 10 percent discount rate.You can use the NPV
function in Microsoft Excel to calculate the NPV quickly.
 Project 1 has a negative cash flow of $5,000 in the first year, while Project 2 has a negative
cash flow of only $1,000 in the first year. Although both projects have the same total cash
flowswithoutdiscounting,theyarenotofcomparablefinancialvalue.Project2’sNPVof
$3,201 is better than Project 1’s NPV of $2,316. NPV analysis, therefore, is a method for
making equal comparisons between cash flows for multi-year projects.
 Notethattotals are
equal, but NPVs
are not because
of the time value
of money

NetPresentValueExample

B. ReturnonInvestment
Another important financial consideration is return on investment. Return on investment (ROI) is the
result ofsubtractingthe project costs fromthebenefits and thendividing bythe costs. For example, if
you invest $100 today and next year it is worth $110, your ROI is ($110 À 100)/100 or 0.10 (10
percent).NotethattheROIisalwaysapercentage. Itcan bepositiveornegative. Itisbesttoconsider
discounted costs and benefits for multi-year projects when calculating ROI.

Multiply
by the
discount
factoreach
year, then
take cum.
benefits –
costs to get
NPV
 TheaboveFigureshowsanROIof112percent,whichyoucalculateasfollows: ROI =
(total discounted benefits - total discounted costs) / discounted costs
ROI=(516000– 243200)/243200 =112%
The higher the ROI is, the better. An ROI of 112 percent is outstanding. Many organizationshave a
required rate of return for projects.
 InternalRateofReturn(IRR):Thediscountratethatmakesthenetpresentvalueof investment zero.

◦ It is an indicator of the efficiency of an investment, as opposed to NPV, which

indicatesvalue or magnitude.

◦ The IRR is the annualized effective compounded return rate which can be earned on the
invested capital, i.e., the yield on the investment.
◦ Aproject is a good investment proposition if its IRR is greater than the rate of return that
could be earned by alternate investments (investing in other projects, buying bonds, even
putting the money in a bank account).

▪ Thus, the IRR should be compared to any alternate costs of capital including an
appropriate risk premium.
 Mathematically the IRR is defined as any discount rate that results in an NPV of zero of a
series of cash flows.
 In general, if the IRR is greater than the project's cost of capital, or hurdle rate (minimum rateof
return that must be met for a company to undertake a particular project), the project willadd
value for the company.

C. Payback Analysis
 Anotherimportantfinancialconsiderationispaybackanalysis.
 Thepaybackperiodistheamountoftimeitwilltaketorecoup,intheformofnetcash inflows, the total
dollars invested in a project.
 Paybackoccurswhenthe netcumulativebenefitsequalsthenetcumulativecosts.
 ManyorganizationswantITprojectstohaveafairlyshortpaybackperiod.
D. WeightedScoringModel
 A weightedscoringmodelisatoolthatprovidesasystematicprocessforselectingprojects based on
many criteria.
◦ Identifycriteriaimportanttotheprojectselectionprocess,e.g.,
 Supportskeybusiness objectives.
 Hasstronginternalsponsor.
 Hasstrongcustomersupport.
 Usesrealisticleveloftechnology.
 Canbeimplementedin one yearor less.
 ProvidespositiveNPV.
 Haslowriskinmeetingscope,time,andcostgoals
◦ Assignweights(percentages)to eachcriterionsotheyaddupto 100%.
◦ Assignscorestoeachcriterionforeach project.
◦ Multiplythe scores bytheweights andget thetotal weighted scores.

Forexample,youcalculatetheweightedscorefor Project1inaboveFigureas:

(25%* 90)+(15%* 70)+(15%* 50)+(10%*25)+(5% *20)+(20%* 50)+(10%* 20 = 56

E. ImplementingaBalanced Scorecard

 Drs. Robert Kaplan and David Norton developed this approach to help select and manage
projects that align with business strategy.

◦
Abalanced scorecard:
Is a methodology that converts an organization’s valuedrivers, such as customer service,
innovation,operational efficiency, and financial performance, to aseries of defined metrics.
◦ Organizationsrecordandanalyzethesemetricstodeterminehowwellprojectshelpthem
achieve strategic goals.

 For example, the U.S. Defense Finance and Accounting Services (DFAS) uses a balanced
scorecard to measure performance and track progress in achieving its strategic goals. Its
strategy focuses on four perspectives: customer, financial, internal, and growth and learning.
TheAboveFigureshowshowthebalancedscorecardapproachtiestogethertheorganization’s
mission, vision, and goals based on these four perspectives.The DFAS continuouslymonitors
this corporate scorecard and revises it based on identified priorities.
 DEVELOPINGAPROJECTCHARTER

 Afterdecidingwhatprojecttoworkon,itisimportanttolettherestofthe organizationknow.
 A project charter is a document that formally recognizes the existence of a project and
provides direction on the project’s objectives and management.
 Key project stakeholders should sign a project charter to acknowledge agreement on the need
and intent of the project; a signed charter is a key output of project integration managementthe
following inputs are helpful in developing a project charter:

A project statement of work: A statement of work is a document that describes the products or
services to be created by the project team. It usually includes a description of the business need forthe
project, a summary of the requirements and characteristics of the products or services, and
organizational information, such as appropriate parts of the strategic plan, showing the alignment of
the project with strategic goals.

A business case: As explained in Chapter 3, many projects require a business case to justify their
investment. Information in the business case, such as the project objective, high-level requirements,
and time and cost goals, is included in the project charter.

Agreements: If you are working on a project under contract for an external customer, the contract or
agreement should include much of the information needed for creating a good project charter. Some
people might use a contract or agreement in place of a charter; however, many contracts are difficult
to read and can often change, so it is still a good idea to create a project charter.

Enterprise environmental factors: Thesefactors includerelevant government orindustrystandards,

the organization’s infrastructure, and marketplace conditions. Managers should review these factors
when developing a project charter.

Organizational process assets: Organizational process assets include formal and informal plans,
policies, procedures, guidelines, information systems, financial systems, management systems,
lessons learned, and historical information that can influence a project’s success.

 The main tools and techniques for developing a project charter are expert judgment and
facilitation techniques, such as brainstorming and meeting management.

 The only output of the process to develop a project charter is the charter itself. Although the
format of project charters can vary tremendously, they should include at least the following
basic information:

 Theproject’stitleanddateof authorization.

 Theprojectmanager’snameandcontact information.

 Asummary schedule, including the planned start and finish dates; if a summary milestone
schedule is available, it should also be included or referenced.

 Asummaryoftheproject’sbudgetorreferenceto budgetarydocuments.

 Abriefdescriptionoftheprojectobjectives,includingthebusinessneedorother justification for

authorizing the project.
  Project success criteria, including project approval requirements and who signs off on the
project.

 A summary of the planned approach for managing the project, which should describe
stakeholder needs and expectations, important assumptions, and constraints, and should
refer to related documents, such as a communications management plan, as available.

 Arolesandresponsibilities matrix.

 Asign-offsectionforsignaturesofkeyprojectstakeholders.

 Acomments section in which stakeholders can provide important comments related to the
project.

DEVELOPINGAPROJECTMANAGEMENTPLAN

 A project management plan is a document used to coordinate all project planning documents
and help guide a project’s execution and control.
◦ Documents project planning assumptions and decisions regarding choices, facilitates
communication among stakeholders, provides a baseline for progress measurement and
project control.
◦ Should be dynamic, flexible and subject to change when the environment or project
changes.
 Includesallprojectplanningdocuments.
◦ Plans created in the other knowledge areas are subsidiary parts of the overall project
management plan.

CommonElementsofaProjectManagementPlan
 The introduction or overview of the project should include the following information at a
minimum:
o Theprojectname
o Abriefdescription ofthe projectandtheneedit addresses
o Thesponsor’sname:
o Thenamesoftheprojectmanager and keyteam members
o Deliverablesoftheproject
o Alistofimportantreference materials
o Alistof definitionsand acronyms,if appropriate
 Thedescriptionofhow theproject isorganizedshould includethe followinginformation:
o Organizationalcharts
o Projectresponsibilities
o Otherorganizationalorprocess-related information
  Thesectionoftheprojectmanagementplanthatdescribesmanagementandtechnicalapproaches
should include the following information:
o Managementobjectives
o Projectcontrols
o Risk management
o Projectstaffing
o Technicalprocesses
 The next section of the project management plan should describe the work needed to perform
and reference the scope management plan. It should summarize the following:
o Majorworkpackages
o Key deliverables
o Otherwork-related information
 Theprojectscheduleinformationsectionshouldincludethefollowing:
o Summaryschedule
o Detailed schedule
o Otherschedule-related information
 Thebudgetsection ofthe projectmanagement planshould includethe following:
o Summarybudget
o Detailed budget
o Otherbudget-relatedinformation.

UsingGuidelinestoCreateProjectManagementPlans
Many organizations use guidelines tocreate project management plans. Microsoft Project2010 andother
project management software packages come with several template files to use as guidelines.

SampleContentsforaSPMP-SoftwareProjectManagementPlan
 DIRECTINGANDMANAGINGPROJECTWORK
 Directing and managing project work involves managing and performing the work described in
the project management plan, one of the main inputs for this process. Other inputs include
approvedchangerequests,enterpriseenvironmentalfactors, and organizationalprocessassets.

CoordinatingPlanningand Execution
 Projectplanningandexecutionareintertwinedandinseparable activities.
 Thosewho will do theworkshould help to plan thework.
 Projectmanagersmustsolicitinputfromtheteamtodeveloprealistic plans.
 Projectexecutioninvolvesmanagingandperformingtheworkdescribedintheproject management
plan.
 Themajorityoftime andmoneyisusuallyspentonexecution.
 The application area of the project directly affects project execution because the products
ofthe project are produced during execution.
ProvidingStrongLeadershipandaSupportiveCulture
 Project managers must lead by example to demonstrate the importance of creating and
thenfollowing good project plans.
 Organizationalculturecanhelpprojectexecutionby:
◦ Providingguidelinesandtemplates.
◦ Trackingperformancebasedon plans.
 Project managers may still need to break the rules to meet project goals, and senior managers
must support those actions.
◦ Requiresexcellentleadership,communicationandpoliticalskills.

CapitalizingonProduct,Business,andApplicationAreaKnowledge

 Generalmanagementskillslikeleadership,communication,andpoliticalskills.
 Product,business,andapplicationareaskillsandknowledge.
◦ Northwest Airlines spent millions of dollars and had a team of 70 full-time
peopleworkingon the project led bya PM who had never worked in an ITdept but had
extensive knowledge of the airline industry and reservation process.
 Useof specialized tools andtechniques.
ProjectExecutionToolsandTechniques

 Project management methodology: many experienced project managers believe the most
effective way to improve project management is to follow a methodology that describes not
only what to do in managing a project, but how to do it.
 Project management information systems: there are hundreds of project management software
products available on the market today, and many organizations are moving toward powerful
enterprise project management systems that are accessible via the Internet.
 PMs should delegate these tasks to other team members and concentrate on providing
leadership for the whole project.
 MONITORING&CONTROLLINGPROJECTWORK

 Changesare inevitableon mostprojects,soit’s importanttodevelopandfollow a processto monitor

and control changes.
◦ Onlargeprojects, 90%ofthePMsjobiscommunicatingandmanagingchanges.
 Monitoringprojectworkincludescollecting,measuring,anddisseminatingperformanceinformatio
n.
 Twoimportantoutputsofmonitoringandcontrollingprojectworkincluderecommended corrective
and preventive actions.

◦ Correctiveresultinimprovementsinprojectperformanceandpreventivereducethechances of
negative consequences associated with project risks.
◦ Otheroutputs–forecasts, recommendeddefectrepairsandrequestedchanges.

IntegratedChange Control

 Threemainobjectivesare:
◦ Influencingthefactorsthat createchangestoensurethatchangesarebeneficial
▪ Tradeoffonscope,timeandcostand quality.
◦ Determiningthata changehas occurred.
▪ PMmustbeontopofthestatusofkeyprojectareasatalltimesandcommunicate changes to top
management and stakeholders.
◦ Managingactualchanges astheyoccur.
▪ Changeisunavoidablesocarefulchangecontrolisacriticalsuccessfactortoaproject.
 Abaselineis the approvedprojectmanagement planplusapprovedchanges.

ChangeControlonInformationTechnologyProjects

 Former view: the project team should strive to do exactly what was planned on time and within
budget.
 Problem:stakeholdersrarelyagreed up-fronton theprojectscope, andtimeand cost estimates
were inaccurate.
 Modernview:projectmanagementisaprocessof constantcommunicationand negotiation.
 Solution:changesareoftenbeneficial,andtheprojectteamshouldplanfor them.

ChangeControl System
 A formal, documented processthat describes when and how official projectdocuments
andwork may be changed.
◦ Changeis necessarybut it needsto beproperlymanaged andcontrolled.
 Describeswhoisauthorizedtomakechangesandhowtomake them.
 Aformal groupofpeople responsiblefor approvingor rejectingchangesonaproject.
  CCBsprovideguidelinesforpreparingchangerequests,evaluatechangerequests,and manage the
implementation of approved changes.
 Includesstakeholdersfromtheentireorganization.
 SomeCCBsonlymeetoccasionally,soitmaytaketoolongforchangestooccur.
 Someorganizationshave policiesinplacefortime-sensitivechanges.
 ―48-hour policy‖ allows project team members to make decisions, then they have 48 hours to
reverse thedecision pending senior management approval.
 Delegatechangestothelowestlevelpossible,butkeep everyoneinformedof changes.

ConfigurationManagement
 Ensuresthatthedescriptionsoftheproject’sproductsarecorrectandcomplete.
 Involves identifying and controlling the functional and physical design characteristics of
products and their support documentation.
 Configuration management specialists identify and document configuration requirements,
control changes, record and report changes, and audit the products to verify conformance to
requirements.

SuggestionsforPerformingIntegratedChange Control
 It is the responsibilityof the PM to integrate all project changes so that the project stays on
track.

CLOSINGPROJECTS
 Tocloseaproject,youmustfinalizeallactivitiesandtransferthecompletedorcancelled work to the
appropriate people.
 Main outputs include:
◦ Administrativeclosure procedures
◦ Contractclosureprocedures
 ◦ Finalproducts,services, or results
◦ Organizationalprocessassetupdates

▪ Project documentation, project closure documents, historical information produced by

the project, lessons-learned report.

USINGSOFTWARETOASSISTINPROJECTINTEGRATIONMANAGEMENT
 Severaltypesofsoftwarecanbeusedtoassistinprojectintegrationmanagement.
◦ Documentscanbecreatedwithword-processingsoftware.
◦ Presentationsarecreatedwithpresentationsoftware.
◦ Trackingcanbedonewithspreadsheetsordatabases.
◦ Communicationsoftwarelikee-mailandWebauthoringtoolsfacilitate communications
◦ Projectmanagementsoftwarecanpulleverythingtogetherandshowdetailedand summarized
information.
◦ BusinessServiceManagement(BSM)toolstracktheexecutionofbusinessprocessflows
◦ Can helpimprove alignment betweenIT projects(network upgrade)andbusinessgoals
(reduce cost by processing customer order more quickly).