Introduction to Project Management

Dr. K. P. HewagamageMrs. G. I. Gamage

University of Colombo School of Computing

2Learning Objectives Explain what a project is, provide examples of

information technology projects, list various attributes of projects, and describe the triple constraint of projects

Describe project management and discuss key elements of the project management framework, including project stakeholders, the project management knowledge areas, common tools and techniques, and project success factors

3Learning Objectives Describe the role of the project manager by describing

what project managers do, what skills they need

Describe the importance of ethics in project management

Identify project management software

4Worldwide Interest on Projects and their Management

Many organizations today have a new or renewed interest in project management.

Computer hardware, software, networks, and the use of interdisciplinary and global work teams have radically changed the work environment.

The U.S. spends $2.3 trillion on projects every year, or one-quarter its gross domestic product, and the world as a whole spends nearly $10 trillion of its $40.7 gross product on projects of all kinds.*

*PMI, The PMI Project Management Fact Book, Second Edition, 2001.

5 IT projects have a terrible track record.

A 1995 Standish Group study (CHAOS) found that only 16.2 percentof IT projects were successful in meeting scope, time, and cost goals.

Over 31 percent of IT projects were canceled before completion, costing over $81 billion in the U.S. alone.*

*The Standish Group, The CHAOS Report (www.standishgroup.com) (1995). Another reference is Johnson, Jim, CHAOS: The Dollar Drain of IT Project Failures, Application Development Trends (January 1995).

International Status of IT Projects

Observation

It is really hard to find project that has ever finished on time, within budget

to requirement

6

71.1 What Is a Project? A project is a temporary endeavor undertaken

to create a unique product, service, or result.* Temporary means that every project has a

definite beginning and a definite end. Unique means that the product or service is

different in some distinguishing way from all similar products or services.

*PMI, A Guide to the Project Management Body of Knowledge(PMBOK Guide) (2004), p. 5.

8Advantages of Managing Projects Better control of financial, physical, and human

resources. Improved customer relations. Shorter development times. Lower costs. Higher quality and increased reliability. Higher profit margins. Improved productivity. Better internal coordination. Higher worker morale (less stress).

About projects A project ends when its objectives have been

reached, or the project has been terminated.

Projects can be large or small and take a short or long time to complete.

9

Examples of projects Developing a new product or service Acquiring/Implementing a software product Constructing a building or facility Running a campaign for political office Implementing a new business process

10

11

Examples of IT Projects A help desk or technical worker replaces

laptops for a small department.

A small software development team adds a new feature to an internal software application.

A college campus upgrades its technology infrastructure to provide wireless Internet access.

Example A Simple Project Buying a Birthday Gift

Goal: Purchase a birthday gift for friend. Scope: Decide on a suitable gift, then shop to find it. Complexity: To find a suitable gift, you should be familiar with

your friend's tastes. Gift should be nice but affordable. Completion: Limited to this birthday. Product: A suitable gift that is wrapped and ready to give.

Exercise Describe a simple project from your own experience in

terms of the project structure described earlier.

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Examples of IT Projects A cross-functional task force in a company

decides what software to purchase and how it will be implemented.

A television network develops a system to allow viewers to vote for contestants and provide other feedback on programs.

A government group develops a system to track child immunizations.

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Project Attributes A project:

Has a unique purpose. Is temporary. Is developed using progressive elaboration. Requires resources, often from various areas. Should have a primary customer or sponsor.

The project sponsor usually provides the direction and funding for the project.

Involves uncertainty.

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Projects vs. Operations

Projects Operations Temporary Unique

Ongoing Repetitive

Performed by people

Limited ResourcesPlanned,Executedand Controlled

Common Characteristics

What Triggers a Project? A market demand A business need A customer request A technological advancement A legal requirement A social need

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The Triple Constraint Every project is constrained in different ways

by its:

Scope goals: What work will be done?

Time goals: How long should it take to complete?

Cost goals: What should it cost?

It is the project managers duty to balance these three often-competing goals.

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The Triple Constraint of Project Management

Successful project management means meeting all three goals (scope, time, and cost) and satisfying the projects sponsor!

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1.2 What is Project Management?

Project management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements.*

*PMI, A Guide to the Project Management Body of Knowledge(PMBOK Guide) (2004), p. 8.

Project Management involves: Managing competing demands on Scope, Time,

Cost and Quality attributes. Managing Stakeholders with differing needs and

expectations. Managing identified requirements.

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21

Project Management Framework

22

Project Management Knowledge Areas Integration Management Scope Management Time Management Cost Management Quality Management Human Resource Management Communications Management Risk Management Procurement Management

23

Project Stakeholders Stakeholders are the people involved in or

affected by project activities.

Stakeholders include: Project sponsor Project manager Project team Support staff Customers Users Suppliers Opponents to the project

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Nine Project Management Knowledge Areas

Knowledge areas describe the key competencies that project managers must develop.

Four core knowledge areas lead to specific project objectives (scope, time, cost, and quality).

Four facilitating knowledge areas are the means through which the project objectives are achieved (human resources, communication, risk, and procurement management).

One knowledge area (project integration management) affects and is affected by all of the other knowledge areas.

All knowledge areas are important!

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Project Management Tools and Techniques

Project management tools and techniques assist project managers and their teams in various aspects of project management.

Specific tools and techniques include: Project charters, scope statements, and WBS (scope). Gantt charts, network diagrams, critical path analyses, critical

chain scheduling (time). Cost estimates and earned value management (cost).

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Project Portfolio Management Many organizations support an emerging

business strategy of project portfolio management:

Organizations group and manage projects as a portfolio of investments that contribute to the entire enterprises success.

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Improved Project Performance

The Standish Groups CHAOS studies show improvements in IT projects in the past decade.*

Measure 1994 Data 2002 Data Result Successful projects 16% 34% Doubled Failed projects 31% 15% Halved Money wasted on challenged and failed projects

$140 B out of $250 B

$55 B out of $255 B

More than halved

*The Standish Group, Latest Standish Group CHAOS Report Shows Project Success Rates Have Improved by 50% (March 25, 2003).

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Why the Improvements?The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.*

*The Standish Group, CHAOS 2001: A Recipe for Success (2001).

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Project Success Factors*1. Executive support2. User involvement3. Experienced project

manager4. Clear business objectives5. Minimized scope6. Standard software

infrastructure

7. Firm basic requirements8. Formal methodology9. Reliable estimates10. Other criteria, such as

small milestones, proper planning, competent staff, and ownership

*The Standish Group, Extreme CHAOS (2001).

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What the Winners Do* Recent research findings show that companies that excel in

project delivery capability: Use an integrated project management toolbox that includes

standard and advanced tools and lots of templates. Grow project leaders, emphasizing business and soft skills. Develop a streamlined project delivery process. Measure project health using metrics, including customer

satisfaction and return on investment.

*Milosevic, Dragan and And Ozbay, Delivering Projects: What the Winners Do, Proceedingsof the Project Management Institute Annual Seminars & Symposium (November 2001).

31

1.3 Project and Program Managers Project managers work with project sponsors, project

teams, and other people involved in projects to meet project goals.

Program: A group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually.*

Program managers oversee programs and often act as bosses for project managers.

*PMI, A Guide to the Project Management Body of Knowledge(PMBOK Guide) (2004), p. 16.

32

The Role of the Project Manager Job descriptions vary, but most include

responsibilities such as planning, scheduling, coordinating, and working with people to achieve project goals.

Remember that 97 percent of successful projects were led by experienced project managers.

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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.

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.

Fifteen Project Management Job Functions*

*Northwest Center for Emerging Technologies, Building a Foundation for Tomorrow: Skills Standards for Information Technology, Belleview, WA, 1999.

34

Suggested Skills for Project Managers

Project managers need a wide variety of skills.

They should:

Be comfortable with change.

Understand the organizations they work in and with.

Lead teams to accomplish project goals.

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Suggested Skills for Project Managers

Project managers need both hard and softskills.

Hard skills include product knowledge and knowing how to use various project management tools and techniques.

Soft skills include being able to work with various types of people.

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Suggested Skills for Project Managers

Communication skills: Listens, persuades. Organizational skills: Plans, sets goals, analyzes. Team-building skills: Shows empathy, motivates,

promotes esprit de corps. Leadership skills: Sets examples, provides vision (big

picture), delegates, positive, energetic. Coping skills: Flexible, creative, patient, persistent. Technology skills: Experience, project knowledge.

37

Good Project Management Skills from The Apprentice

Leadership and professionalism are crucial.

Know what your sponsor expects from the project, and learn from your mistakes.

Trust your team and delegate decisions.

Know the business. Stand up for yourself.

Be a team player. Stay organized and dont

be overly emotional. Work on projects and for

people you believe in. Think outside the box. There is some luck

involved in project management, and you should always aim high.

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Most Significant Characteristics of Effective and Ineffective Project Managers

Leadership by example Visionary Technically competent Decisive Good communicator Good motivator Stands up to upper

management when necessary

Supports team members Encourages new ideas

Sets bad example Not self-assured Lacks technical expertise Poor communicator Poor motivator

Effective Project Managers Ineffective Project Managers

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Importance of Leadership Skills Effective project managers provide leadership by

example. A leader focuses on long-term goals and big-picture

objectives while inspiring people to reach those goals. A manager deals with the day-to-day details of meeting

specific goals. Project managers often take on both leader and

manager roles.

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Top Ten Most In-Demand IT Skills

Rank IT Skill/Job Average Annual Salary 1 SQL Database Analyst $80,664 2 Oracle Database Analyst $87,144 3 C/C++ Programmer $95,829 4 Visual Basic Programmer $76,903 5 E-commerce/Java Developer $89,163 6 Windows NT/2000 Expert

$80,639

7 Windows/Java Developert

$93,785

8 Security Architect

$86,881

9 Project Manager

$95,719

10 Network Engineer

$82,906

Paul Ziv, The Top 10 IT Skills in Demand, Global Knowledge Webcast (www.globalknowledge.com) (11/20/2002).

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Top Information Technology Skills

60% 58%

42% 41%

0%

10%

20%

30%

40%

50%

60%

70%

Applicationdevelopment

Project management Databasemanagement

Networking

Cosgrove, Lorraine, January 2004 IT Staffing Update, CIO Research Reports (February 3, 2004).Information Technology (IT) Skill

Percentage ofRespondents

42

History of Project Management Some people argue that building the Egyptian

pyramids was a project, as was building the Great Wall of China.

Most people consider the Manhattan Projectto be the first project to use modern project management.

This three-year, $2 billion (in 1946 dollars) project had a separate project and technical managers.

43

Project Management Office (PMO) A PMO is an organizational group responsible for

coordinating the project management function throughout an organization.

Possible goals include: Collect, organize, and integrate project data for the entire

organization. Develop and maintain templates for project documents. Develop or coordinate training in various project management

topics. Develop and provide a formal career path for project managers. Provide project management consulting services. Provide a structure to house project managers while they are

acting in those roles or are between projects.

44

The Project Management Profession

Professional societies such as the Project Management Institute (PMI) have grown significantly.

There are specific interest groups in many areas, such as engineering, financial services, health care, and IT.

Project management research and certification programs continue to grow.

45

Project Management Certification PMI provides certification as a Project

Management Professional (PMP). A PMP has documented sufficient project

experience, agreed to follow a code of ethics, and passed the PMP exam.

The number of people earning PMP certification is increasing quickly.

PMI and other organizations are offering new certification programs.

46

Growth in PMP Certification, 1993-2003

1,000 1,900 2,8004,400 6,415

10,086

18,184

27,052

40,343

52,443

76,550

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

#

P

M

P

s

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1.4 Ethics in Project Management Ethics is an important part of all professions. Project managers often face ethical dilemmas. In order to earn PMP certification, applicants must

agree to the PMP code of professional conduct. Several questions on the PMP exam are related to

professional responsibility, including ethics.

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1.5 Project Management Software There are currently hundreds of different products

to assist in performing project management. Three main categories of tools:

Low-end tools: Handle single or smaller projects well; cost under $200 per user.

Midrange tools: Handle multiple projects and users; cost $200-500 per user; Project 2003 most popular (includes an enterprise version).

High-end tools: Also called enterprise project management software; often licensed on a per-user basis; VPMi Enterprise Online (www.vcsonline.com).

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Project Management Software Enterprise PM software integrates information from

multiple projects to show the status of active, approved, and future projects across an entire organization.

It also provides links to more detailed information on each project.

Many managers like to see status in color red, yellow, and green.

PM software is used to create artifacts/work products to manage projects

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Project Management Tools and Techniques

Project management tools and techniques assist project managers and their teams in various aspects of project management

Some specific ones include Project Charter and WBS (scope) Gantt charts, PERT charts, critical path analysis,

critical chain scheduling (time) Cost estimates and earned value management chart

(cost)

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Sample Gantt Chart

The WBS is shown on the left, and each tasks start and finish datesare shown on the right. First used in 1917, early Gantt charts were drawn by hand.

Work Breakdown Structure (WBS)

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Sample Network Diagram

Each box is a project task from the WBS. Arrows show dependenciesbetween tasks. The bolded tasks are on the critical path. If any task on the critical path takes longer to complete than planned, the whole project will slip unless something is done. Network diagrams were first used in 1958 on the Navy Polaris project before project management software was available.

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Sample WBS for Intranet Project in Chart Form

Concept

Design User Interface

Design Server Setup

Develop ServerSupport Infrastructure

Web SiteDesign

Develop Pagesand Links

DevelopFunctionality

ContentMigration/Integration

Testing

Web SiteDevelopment

Roll Out Support

Intranet Project

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Sample PERT Chart A

1 1day

Wed 2/24/99 Wed 2/24/99

D4 4days

Thu 2/25/99 Tue 3/2/99

H

8 6days

Fri 3/5/99 Fri 3/1/99

J

10 3days

Mon 3/1/99 Wed 3/1/99

B

2 2days

Wed 2/24/99 Thu 2/25/99

E

5 5days

Fri 2/26/99 Thu 3/4/99

F

6 4days

Fri 2/26/99 Wed 3/3/99

C

3 3days

Wed 2/24/99 Fri 2/26/99

G

7 6days

Mon 3/1/99 Mon 3/8/99

I

9 2days

Tue 3/9/99 Wed 3/10/99

55

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10 11 12

Month

$

BCWS or Cumulative Plan ACWP or Cumulative Actual BCWP or Cumulative EV

BCWS

ACWP

BWCPSchedule Variance

Cost Variance

EAC

BAC

Sample Earned Value Chart

56

Sample Enterprise Project Management Tool

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Summary

As the number and complexity of projects continue to grow, it isbecoming even more important to practice good project management.

A project has several attributes, such as being unique, temporary and developed incrementally.

A framework for project management includes project stakeholders, the nine knowledge areas, tools and techniques, and creating project portfolios to ensure enterprise success.

Successful project managers must possess and development many skills and lead their teams by example.

The project management profession continues to mature as more people become certified and more tools are created.

Information Technology Context and Process Groups

Dr. K. P. HewagamageMrs. G. I. Gamage

University of Colombo School of Computing

2Learning Objectives Describe the systems view of project

management and how it applies to information technology projects.

Explain why stakeholder management and top management commitment are critical for a projects success.

Learning Objectives Describe the concept of a project phase and the

project life cycle Discuss the unique attributes and diverse nature

of information technology projects Describe the five project management (PM)

process groups Describe how the PM process groups relate to

the PM knowledge areas

3

42.1 Projects Cannot Be Runin Isolation

Projects must operate in a broad organizational environment.

Project managers need to use systems thinking: Taking a holistic view of a project and

understanding how it relates to the larger organization.

Senior managers must make sure projects continue to support current business needs.

52.1 A Systems View of Project Management

The term systems approach emerged in the 1950s to describe a holistic and analytical approach to solving complex problems.

Three parts include: Systems philosophy: View things as systems, which are

interacting components that work within an environment to fulfill some purpose.

Systems analysis: Problem-solving approach. Systems management: Address business, technological, and

organizational issues before making changes to systems.

6Media Snapshot The Press Association Ltd., the largest news agency in

the United Kingdom, hired a consulting firm to help turn things around after management noticed that its profit margins were sliding.

The consultants suggested using a holistic view and a top-down strategy to make sure projects supported key business goals.

They also suggested releasing short-term results to accrue benefits on an incremental basis and reviewing projects on a regular basis to ensure strategic alignment.*

*Jackson, Lynne, Forge Ahead, PM Network (April 2004), p.48.

72.1.2 Three Sphere Model for Systems Management

82.2 Stakeholder Management Project managers must take time to identify,

understand, and manage relationships with all project stakeholders.

Using the four frames of organizations can help you meet stakeholder needs and expectations.

Senior executives and top management are very important stakeholders.

9Importance of Top Management Commitment

Several studies cite top management commitment as one of the key factors associated with project success.

Top management can help project managers: Secure adequate resources. Get approval for unique project needs in a timely

manner.

Receive cooperation from people throughout the organization.

Learn how to be better leaders.

10

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 non-IT people to IT projects also encourages more commitment.

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Need for Organizational Standards Standards and guidelines help project managers be

more effective. Senior management can encourage:

The use of standard forms and software for project management.

The development and use of guidelines for writing project plans or providing status information.

The creation of a project management office or center of excellence.

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2.3 Project Phases and the Project Life Cycle

A project life cycle is a collection of project phases that defines: What work will be performed in each phase. What deliverables will be produced and when. Who is involved in each phase. How management will control and approve

work produced in each phase. A deliverable is a product or service produced

or provided as part of a project.

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More on Project Phases In the early phases of a project life cycle:

Resource needs are usually lowest. The level of uncertainty (risk) is highest. Project stakeholders have the greatest opportunity to

influence the project. In the middle phases of a project life cycle:

The certainty of completing a project increases. More resources are needed.

In the final phase of a project life cycle: The focus is on ensuring that project requirements

were met. The sponsor approves completion of the project.

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Phases of the Traditional Project Life Cycle

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The Importance of 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 exitsor kill points, should occur after each phase to evaluate the projects progress, likely success, and continued compatibility with organizational goals.

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2.4 The Context of IT Projects IT projects can be very diverse in terms of size,

complexity, products produced, application area, and resource requirements.

IT project team members often have diverse backgrounds and skill sets.

IT projects use diverse technologies that change rapidly. Even within one technology area, people must be highly specialized.

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2.5 Project Management Process Groups

A process is a series of actions directed toward a particular result.

Project management can be viewed as a number of interlinked processes.

The project management process groups include: Initiating processes Planning processes Executing processes Monitoring and controlling processes Closing processes

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Level of Activity and Overlap of Process Groups Over Time

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2.6 Mapping the Process Groups to the Knowledge Areas

You can map the main activities of each PM process group into the nine knowledge areas by using the PMBOK Guide 2004.

Note that there are activities from each knowledge area under the planning process group.

All initiating activities are part of the project integration management knowledge area.

20

Table 3-1. Relationships Among Process Groups and Knowledge Areas

PMBOK Guide 2004, p. 69

21

Relationships Among Process Groups and Knowledge Areas (contd)

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Summary Project managers need to take a systems approach when

working on projects. Projects should successfully pass through each phase of

the project life cycle. Project managers need to consider several factors due to

the unique context of information technology projects. The five project management process groups are

initiating, planning, executing, monitoring and controlling, and closing.

You can map the main activities of each process group to the nine knowledge areas.

Section 3:Project Integration Management

Dr. K. P. Hewagamage

Mrs. G. I. Gamage

2Learning Objectives Describe what project integration management is

and outline its main processes Explain the strategic planning process and apply

different project selection methods Explain the importance of creating a project charter

to formally initiate projects Discuss the process of creating a preliminary

project scope statement Describe project management plan development

and its content Explain project execution

3Learning Objectives Describe the process of monitoring and controlling

project work

Describe the integrated change control process, planning for and managing changes on information technology project

Explain the importance of developing good procedures for closing projects

43. 1 The Key to Overall Project Success: Good Project Integration Management

Project managers must coordinate all of the other knowledge areas throughout a projects life cycle.

Many new project managers have trouble looking at the big picture and want to focus on too many details.

Project integration management is not the same thing as software integration.

5Project Integration Management (PIM)

It includes processes required to ensure that the various elements of the project are properly coordinated.

6Project Integration Management Processes

Develop the project charter: Work with stakeholders to create the document that formally authorizes a projectthe charter.

Develop the preliminary project scope statement: Work with stakeholders, especially users of the projects products, services, or results, to develop the high-level scope requirements and create a preliminary project scope statement.

Develop the project management plan: Coordinate all planning efforts to create a consistent, coherent documentthe project management plan.

7Project Integration Management Processes (contd)

Direct and manage project execution: Carry out the project management plan by performing the activities included in it.

Monitor and control the project work: Oversee project work to meet the performance objectives of the project.

Perform integrated change control: Coordinate changes that affect the projects deliverables and organizational process assets.

Close the project: Finalize all project activities to formally close the project.

83.2 Strategic Planning and Project Selection

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

Organizations often perform a SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats

As part of strategic planning, organizations should: Identify potential projects. Use realistic methods to select which projects to work

on.

Formalize project initiation by issuing a project charter.

93.2.1 Identifying Potential Projects Many organizations follow a planning process for

selecting IT projects. Its crucial to align IT projects with business strategy. Research shows that:

Supporting explicit business objectives is the number one reason cited for investing in IT projects.

Companies with consolidated IT operations have a 24 percent lower operational cost per end user.

The consistent use of IT standards lowers application development costs by 41 percent per user.*

*Cosgrove Ware, Lorraine, By the Numbers, CIO Magazine (www.cio.com) (September 1, 2002).

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Information Technology Planning Process

11

3.2.2 Methods for Selecting Projects

There is usually not enough time or resources to implement all projects.

Methods for selecting projects include: Focusing on broad organizational needs. Categorizing information technology projects. Performing net present value or other financial

analyses. Using a weighted scoring model. Implementing a balanced scorecard.

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3.2.2.1 Focusing on BroadOrganizational Needs

It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value.

It is better to measure gold roughly than to count pennies precisely.

Three important criteria for projects: There is a need for the project. There are funds available for the project. There is a strong will to make the project succeed.

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3.2.2.2 Categorizing IT Projects One categorization assesses whether the project

provides a response to: A problem An opportunity A directive

Another categorization is based on the time it will take to complete a project or the date by which it must be done.

Another categorization is the overall priority of the project.

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3.2.2.3 Financial Analysis of Projects

Financial considerations are often an important aspect of the project selection process.

Three primary methods for determining the projected financial value of projects: Net present value (NPV) analysis Return on investment (ROI) Payback analysis

15

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.

16

Net Present Value Example

Note that totals are equal, butNPVs arenot because of the time value of money.

17

JWD Consulting NPV Example

Multiplyby thediscountfactor eachyear, then subtract costs from cumulativebenefits toget NPV.

18

NPV Calculations Determine estimated costs and benefits for the life of the

project and the products it produces. Determine the discount rate (check with your organization

on what to use). Calculate the NPV (see text for details). Some organizations consider the investment year as year

0, while others consider it year 1. Some people enter costs as negative numbers, while others do not. Make sure to identify your organizations preferences.

19

Return on Investment Return on investment (ROI) is calculated by subtracting

the project costs from the benefits and then dividing by the costs.

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.

Internal rate of return (IRR) can by calculated by setting the NPV to zero.

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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 total 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.

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Charting the Payback Period

Excel file

22

3.3 Project Charters After deciding what project to work on, it is

important to let the rest of the organization know. A project charter is a document that formally

recognizes the existence of a project and provides direction on the projects 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 management.

23

Project Integration Management Overview

24

3.4 PreliminaryScope Statements

A scope statement is a document used to develop and confirm a common understanding of the project scope.

It is an important tool for preventing scope creep:

The tendency for project scope to keep getting bigger.

A good practice is to develop a preliminary or initial scope statement during project initiation and a more detailed scope statement as the project progresses.

25

Contents of a Preliminary Scope Statement

Project objectives Product or service

requirements and characteristics

Project boundaries Deliverables Product acceptance criteria Project assumptions and

constraints Organizational structure for

the project

Initial list of defined risks Summary of schedule

milestones Rough order of magnitude

cost estimate Configuration management

requirements Description of approval

requirements

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3.5 Project Management Plans A project management plan is a document

used to coordinate all project planning documents and help guide a projects execution and control.

Plans created in the other knowledge areas are subsidiary parts of the overall project management plan.

27

Attributes of Project Plans Just as projects are unique, so are project plans. Plans should be:

Dynamic Flexible Updated as changes occur

Plans should first and foremost guide project execution by helping the project manager lead the project team and assess project status.

28

Common Elements of a Project Management Plan

Introduction or overview of the project.

Description of how the project is organized.

Management and technical processes used on the project.

Work to be done, schedule, and budget information.

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Sample Contents for a Software Project Management Plan (SPMP)

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3.6 Project Execution Project execution involves managing and performing the

work described in the project management plan.

The majority of time and money is usually spent on execution.

The application area of the project directly affects project execution because the products of the project are produced during project execution.

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Coordinating Planning and Execution

Project planning and execution are intertwined and inseparable activities.

Those who will do the work should help to plan the work.

Project managers must solicit input from the team to develop realistic plans.

32

Leadership and a Supportive Culture

Project managers must lead by example to demonstrate the importance of creating and then following good project plans.

Organizational culture can help project execution by: Providing guidelines and templates. Tracking performance based on plans.

Project managers may still need to break the rules to meet project goals, and senior managers must support those actions.

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Important Skills for Project Execution

General management skills such as leadership, communication, and political skills.

Product, business, and application area skills and knowledge.

Use of specialized tools and techniques.

Information Technology Project Management, Fourth Edition 34

Project Execution Tools and Techniques

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: Hundreds of project management software products are available on the market today, and many organizations are moving toward powerful enterprise project management systems that are accessible via the Internet.

See the What Went Right? example of Kuala Lumpurs Integrated Transport Information System.

Information Technology Project Management, Fourth Edition 35

3.7 Monitoring and Controlling Project Work

Changes are inevitable on most projects, so its important to develop and follow a process to monitor and control changes.

Monitoring project work includes collecting, measuring, and disseminating performance information.

Two important outputs of monitoring and controlling project work include recommended corrective and preventive actions.

36

3.8 Integrated Change Control

Three main objectives are:

Influence the factors that create changes to ensure that changes are beneficial.

Determine that a change has occurred.

Manage actual changes as they occur.

A baseline is the approved project management plan plus approved changes.

37

Change Control on Information Technology Projects

Former view: The project team should strive to do exactly what was planned on time and within budget.

Problem: Stakeholders rarely agreed beforehand on the project scope, and time and cost estimates were inaccurate.

Modern view: Project management is a process of constant communication and negotiation.

Solution: Changes are often beneficial, and the project team should plan for them.

38

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.

39

Change Control Boards (CCBs) A formal group of people responsible for

approving or rejecting changes on a project.

CCBs provide guidelines for preparing change requests, evaluate change requests, and manage the implementation of approved changes.

CCBs include stakeholders from the entire organization.

40

Making Timely Changes Some CCBs only meet occasionally, so it may

take too long for changes to occur. Some organizations have policies in place for

time-sensitive changes. A 48-hour policy allows project team members to

make a decision and have 48 hours to seek approval from top management. If the team decision cannot be implemented, management has 48 hours to reverse a decision; otherwise, the teams decision is approved.

Another policy is to delegate changes to the lowest level possible, but keep everyone informed of changes.

41

3.9 Closing Projects To close a project, you must finalize all activities and

transfer the completed or cancelled work to the appropriate people.

Main outputs include: Administrative closure procedures. Contract closure procedures. Final products, services, or results. Organizational process asset updates.

42

Using Software to Assist in Project Integration Management

Several types of software can be used to assist in project integration management: Word processing software creates documents. Presentation software creates presentations. Spreadsheets or databases perform tracking. Communication software such as e-mail and Web

authoring tools facilitate communications. Project management software can pull everything

together and show detailed and summarized information.

43

Summary Project integration management includes:

Developing a project charter. Developing a preliminary project scope statement. Developing a project management plan. Directing and managing project execution. Monitoring and controlling project work. Performing integrated change control. Closing the project.

Section 4:Project Scope Management

Dr. K. P. Hewagamage

Mrs. G. I. Gamage

University of Colombo School of Computing (UCSC)

2Learning Objectives Describe the main processes in the project scope

management Explain the scope planning process and describe the

contents of a scope management plan Discuss the scope definition process and work involved in

constructing a work breakdown structure Explain the importance of scope verification and how it

relates to scope definition and control Describe the importance of scope control and approaches

for preventing Scope-related problems on information technology

projects

34.1 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.

A deliverable is a product produced as part of a project, such as hardware or software, planning documents, or meeting minutes.

Project scope management includes the processes involved in defining and controlling what is or is not included in a project.

4Project Scope Management Processes

Scope planning: Deciding how the scope will be defined, verified, and controlled.

Scope definition: Reviewing the project charter and preliminary scope statement and adding more information as requirements are developed and change requests are approved.

Creating the WBS: Subdividing the major project deliverables into smaller, more manageable components.

Scope verification: Formalizing acceptance of the project scope.

Scope control: Controlling changes to project scope.

5Scope Planning and the Scope Management Plan

The scope management plan is a document that includes descriptions of how the team will prepare the project scope statement, create the WBS, verify completion of the project deliverables, and control requests for changes to the project scope.

Key inputs include the project charter, preliminary scope statement, and project management plan.

6Sample Project Charter

7Sample Project Charter (contd)

84.2 Scope Definition and theProject Scope Statement

The preliminary scope statement, project charter, organizational process assets, and approved change requests provide a basis for creating the project scope statement.

As time progresses, the scope of a project should become clearer and more specific.

9Further Defining Project Scope

10

Media SnapshotMany people enjoy watching television shows like Changing Rooms or

Trading Spaces, where participants have two days and $1,000 to update a room in their neighbors house. Because the time and cost are set, its the scope that has the most flexibility. Designers on these shows often have to change initial scope goals due to budget or time constraints.

Although most homeowners are very happy with work done on the show, some are obviously disappointed. Unlike most projects where the project team works closely with the customer, homeowners have little say in what gets done and cannot inspect the work along the wayWhat happens when the homeowners dont like the work thats been done? The FAQ section of tlc.comsays, Everyone on our show is told upfront that theres a chance they wont like the final design of the room. Each applicant signs a release acknowledging that the show is not responsible for redecorating a room that isnt to the owners taste.

Too bad you cant get sponsors for most projects to sign a similar release form. It would make project scope management much easier!

11

4.3 Creating the Work Breakdown Structure (WBS)

A WBS is a deliverable-oriented grouping of the work involved in a project that defines the total scope of the project.

A WBS is a foundation document that provides the basis for planning and managing project schedules, costs, resources, and changes.

Decomposition is subdividing project deliverables into smaller pieces.

12

Sample Intranet WBSOrganized by Product

13

Sample Intranet WBSOrganized by Phase

14

Intranet WBS in Tabular Form1.0 Concept

1.1 Evaluate current systems1.2 Define requirements

1.2.1 Define user requirements1.2.2 Define content requirements1.2.3 Define system requirements1.2.4 Define server owner requirements

1.3 Define specific functionality1.4 Define risks and risk management approach1.5 Develop project plan1.6 Brief Web development team

2.0 Web Site Design3.0 Web Site Development4.0 Roll Out5.0 Support

15

Intranet WBS and Gantt Chart in MS Project 2000

16

Intranet Gantt Chart Organized by Project Management Process Groups

17

Executing Tasks for JWD Consultings WBS

18

Approaches to Developing WBSs

Guidelines: Some organizations, such as the DOD, provide guidelines for preparing WBSs.

Analogy approach: Review WBSs of similar projects and tailor to your project.

Top-down approach: Start with the largest items of the project and break them down.

Bottom-up approach: Start with the specific tasks and roll them up.

19

4.4 Scope Verification 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 (Ref. 1 page 187 What Went Wrong?). FoxMeyer Drug filed for bankruptcy after scope creep on

a robotic warehouse. Engineers at Grumman called a system Naziware and

refused to use it. 21st Century Insurance Group wasted a lot of time and

money on a project that could have used off-the-shelf components.

20

4.5 Scope Control Scope control involves controlling changes to the

project scope. Goals of scope control are to:

Influence the factors that cause scope changes. Ensure changes are processed according to

procedures developed as part of integrated change control.

Manage changes when they occur. Variance is the difference between planned and actual

performance.

21

Suggestions for Improving User Input Develop a good project selection process and insist that

sponsors are from the user organization. Place users on the project team in important roles. Hold regular meetings with defined agendas, and have

users sign off on key deliverables presented at meetings. Deliver something to users and sponsors on a regular

basis. Dont promise to deliver when you know you cant. Co-locate users with developers.

22

Suggestions for Reducing Incomplete and Changing Requirements

Develop and follow a requirements management process.

Use techniques such as prototyping, use case modeling, and JAD to get more user involvement.

Put requirements in writing and keep them current.

Create a requirements management database for documenting and controlling requirements.

23

Suggestions for Reducing Incomplete and Changing Requirements (contd)

Conduct adequate testing throughout the project life cycle.

Review changes from a systems perspective.

Emphasize completion dates to help focus on whats most important.

Allocate resources specifically for handling change requests and enhancements (as NWA did with ResNet).

24

Using Software to Assist in Project Scope Management

Word-processing software helps create scope-related documents.

Spreadsheets help perform financial calculations and weighed scoring models, and help develop charts and graphs.

Communication software, such as e-mail and the Web, helps clarify and communicate scope information.

Project management software helps create a WBS, the basis for tasks on a Gantt chart.

Specialized software is available to assist in project scope management.

25

Summary Project scope management includes the

processes required to ensure that the project addresses all the work requiredand only the work requiredto complete the project successfully.

Main processes include: Scope planning Scope definition WBS creation Scope verification Scope control

Section 5:Project Time Management

Dr. K. P. Hewagamage

Mrs. G. I. Gamage

University of Colombo School of Computing (UCSC)

2Learning Objectives State the importance of project schedules and good project time

management Define activities as the basis for developing project schedules Use network diagrams and dependencies to assist in activity

sequencing Identify the relationship between estimating resources and project

schedules Explain how various tools and techniques help project managers to

perform activity duration estimating Use a Gantt chart for planning and tracking schedule information, find

the critical path for a project, and use of the Program Evaluation and Review

Technique (PERT) as project time management techniques.

35.1 Importance of Project Schedules Managers often cite delivering projects on time as one of

their biggest challenges. Fifty percent of IT projects were challenged in the 2003

CHAOS study, and their average time overrun increased to 82 percent from a low of 63 percent in 2000.*

Schedule issues are the main reason for conflicts on projects, especially during the second half of projects.

Time has the least amount of flexibility; it passes no matter what happens on a project.

*The Standish Group, Latest Standish Group CHAOS Report Shows Project Success Rates Have Improved by 50%, (www.standishgroup.com) (March 25, 2003).

4Conflict Intensity Over the Life of a Project

0.000.050.100.150.200.250.300.350.40

ProjectFormation

Early Phases Middle Phases End Phases

C

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n

f

l

i

c

t

I

n

t

e

n

s

i

t

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SchedulesPrioritiesManpowerTechnical opinionsProceduresCostPersonality conflicts

AverageTotal Conflict

5Individual Work Styles and Cultural Differences Cause Schedule Conflicts

One dimension of the Myers-Briggs Type Indicator focuses on peoples attitudes toward structure and deadline.

Some people prefer to follow schedules and meet deadlines while others do not.

Different cultures and even entire countries have different attitudes about schedules.

65.2 Activity Definition An activity or task is an element of work normally found on the

WBS that has an expected duration, a cost, and resource requirements.

Project schedules grow out of the basic documents that initiate a project. The project charter includes start and end dates and budget

information. The 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, so you can develop realistic cost and duration estimates.

7Activity Lists and Attributes

An activity list is a tabulation of activities to be included on a project schedule. The list should include: The activity name An activity identifier or number A brief description of the activity

Activity attributes provide more information about each activity, such as predecessors, successors, logical relationships, leads and lags, resource requirements, constraints, imposed dates, and assumptions related to the activity.

8Milestones A milestone is a significant event that normally has no

duration.

It often takes several activities and a lot of work to complete a milestone.

Milestones are useful tools for setting schedule goals and monitoring progress.

Examples include completion and customer sign-off on key documents and completion of specific products.

95.3 Activity Sequencing

Involves reviewing activities and determining dependencies.

A dependency or relationship relates to the sequencing of project activities or tasks.

You must determine dependencies in order to use critical path analysis.

10

Three Types of Dependencies Mandatory dependencies: Inherent in the

nature of the work being performed on a project; sometimes referred to as hard logic.

Discretionary dependencies: Defined by the project team; sometimes referred to as soft logic and should be used with care because they may limit later scheduling options.

External dependencies: Involve relationships between project and non-project activities.

11

Network Diagrams Network diagrams are the preferred technique

for showing activity sequencing.

A network diagram is a schematic display of the logical relationships among, or sequencing of, project activities.

Two main formats are the arrow and precedence diagramming methods.

12

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

13

Arrow Diagramming Method (ADM) Also called activity-on-arrow (AOA) network

diagram.

Activities are represented by arrows.

Nodes or circles are the starting and ending points of activities.

Can only show finish-to-start dependencies.

14

Process for Creating AOA Diagrams1. Find all of the activities that start at node 1. Draw their finish

nodes and draw arrows between node 1 and those finish nodes. Put the activity letter or name and duration estimate on the associated arrow.

2. Continuing drawing the network diagram, working from left to right. Look for bursts and merges. A burst occurs when a single node is followed by two or more activities. A mergeoccurs when two or more nodes precede a single node.

3. Continue drawing the project network diagram until all activities that have dependencies are included in the diagram.

4. As a rule of thumb, all arrowheads should face toward the right, and no arrows should cross in an AOA network diagram.

15

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.

16

Task Dependency Types

17

. Sample PDM Network Diagram

18

5.4 Activity Resource Estimating Before estimating activity durations, you must

have a good idea of the quantity and type of resources that will be assigned to each activity.

Consider important issues in estimating resources:

How difficult will it be to complete specific activities on this project?

What is the organizations history in doing similar activities?

Are the required resources available?

19

5.5 Activity Duration Estimating Duration includes the actual amount of time

worked on an activity plus the elapsed time.

Effort is the number of workdays or work hours required to complete a task.

Effort does not normally equal duration.

People doing the work should help create estimates, and an expert should review them.

20

Three-Point Estimates Instead of providing activity estimates as a

discrete number, such as four weeks, its often helpful to create a three-point estimate: An estimate that includes an optimistic, most likely,

and pessimistic estimate, such as three weeks for the optimistic, four weeks for the most likely, and five weeks for the pessimistic estimate.

Three-point estimates are needed for PERT estimates and Monte Carlo simulations.

21

5.6 Schedule Development Uses results of the other time management processes to

determine the start and end dates of the project.

Ultimate goal is to create a realistic project schedule that provides a basis for monitoring project progress for the time dimension of the project.

Important tools and techniques include Gantt charts, critical path analysis, critical chain scheduling, and PERT analysis.

22

5.6.1 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: Black diamonds: Milestones Thick black bars: Summary tasks Lighter horizontal bars: Durations of tasks Arrows: Dependencies between tasks

23

Gantt Chart for Project X

Note: In Project 2003 darker bars are red to represent critical tasks.

24

Gantt Chart for Software Launch Project

25

Adding Milestones to Gantt Charts

Many people like to focus on meeting milestones, especially for large projects.

Milestones emphasize important events or accomplishments in projects.

You typically create milestone by entering tasks that have a zero duration, or you can mark any task as a milestone.

26

SMART Criteria Milestones should be:

Specific

Measurable

Assignable

Realistic

Time-framed

27

Sample Tracking Gantt Chart

28

5.6.2 Critical Path Method (CPM) CPM is a network diagramming 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.

Slack or float is the amount of time an activity can be delayed without delaying a succeeding activity or the project finish date.

29

Calculating the Critical Path Develop a good network diagram.

Add the duration estimates for all activities on each path through the network diagram.

The longest path is the critical path.

If one or more of the activities on the critical path takes longer than planned, the whole project schedule will slip unless the project manager takes corrective action.

30

Determining the Critical Path for Project X

31

More on the Critical Path A project team at Apple computer put a stuffed gorilla on top

of the cubicle of the person who was currently managing a critical task.

The critical path does not necessarily contain all the critical activities; it only accounts for time. Remember the example in which growing grass was on

the critical path for Disneys Animal Kingdom. There can be more than one critical path if the lengths of two

or more paths are the same. The critical path can change as the project progresses.

32

Using Critical Path Analysis to Make Schedule Trade-offs

Free slack or free float is the amount of time an activity can be delayed without delaying the early start of any immediately following activities.

Total slack or total float is the amount of time an activity can be delayed from its early start without delaying the planned project finish date.

A forward pass through the network diagram determines the early start and finish dates.

A backward pass determines the late start and finish dates.

33

Calculating Early and Late Start and Finish Dates

34

Free and Total Float or Slack for Project X

35

Using the Critical Path to Shorten a Project Schedule

Three main techniques for shortening schedules:

Shortening the duration of critical activities or tasks by adding more resources or changing their scope.

Crashing activities by obtaining the greatest amount of schedule compression for the least incremental cost.

Fast tracking activities by doing them in parallel or overlapping them.

36

Many Horror Stories Related to Project Schedules

Creating realistic schedules and sticking to them is a key challenge of project management.

Crashing and fast tracking often cause more problems, resulting in longer schedules.

Organizational issues often cause schedule problems. See the What Went Wrong?example that describes the need to take more time to implement Customer Relationship Management (CRM) software so that users will accept it.

37

Importance of Updating Critical Path Data

It is important to update project schedule information to meet time goals for a project.

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.

38

5.6.3 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: Duration estimates based on using optimistic, most

likely, and pessimistic estimates of activity durations, or a three-point estimate.

39

PERT Formula and Example PERT weighted average =

optimistic time + 4X most likely time + pessimistic time6

Example:PERT weighted average =8 workdays + 4 X 10 workdays + 24 workdays = 12 days

6where: optimistic time= 8 daysmost likely time = 10 dayspessimistic time = 24 days

Therefore, youd use 12 days on the network diagram instead of 10 when using PERT for the above example.

40

Schedule Control Perform reality checks on schedules.

Allow for contingencies.

Dont plan for everyone to work at 100 percent capacity all the time.

Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues.

41

Schedule Control Goals are to know the status of the schedule,

influence factors that cause schedule changes, determine that the schedule has changed, and manage changes when they occur.

Tools and techniques include: Progress reports. A schedule change control system. Project management software, including schedule comparison

charts, such as the tracking Gantt chart. Variance analysis, such as analyzing float or slack. Performance management, such as earned value (see Chapter 7).

42

Summary Project time management is often cited as the

main source of conflict on projects, and most IT projects exceed time estimates.

Main processes include: Activity definition Activity sequencing Activity resource estimating Activity duration estimating Schedule development Schedule control

Section 6:Project Cost Management

Dr. K. P. Hewagamage

Mrs. G. I. Gamage

University of Colombo School of Computing (UCSC)

2Learning Objectives Describe the importance of project cost management

Explain basic project cost management principles, concepts, and terms

Discuss different types of cost estimates and methods for preparing them

Identify the processes involved in cost budgeting

Prepare a cost estimate and budget for an information technologyproject

Describe what the cost control is

35.1 The Importance of Project Cost Management

IT projects have a poor track record for meeting budget goals.

The 2003 CHAOS studies showed the average cost overrun (the additional percentage or dollar amount by which actual costs exceed estimates) was 43 percent.

U.S. lost $55 billion in IT projects in 2002 from cancelled projects and overruns compared to $140 billion in 1994.*

*The Standish Group, Latest Standish Group CHAOS Report Shows Project Success Rates Have Improved by 50%, A Standish Group Research Note (3/25/03).

4What is Cost and Project Cost Management?

Cost is a resource sacrificed or foregone to achieve a specific objective, or something given up in exchange.

Costs are usually measured in monetary units, such as dollars.

Project cost management includes the processes required to ensure that the project is completed within an approved budget.

5Project Cost Management Processes

Cost estimating: Developing an approximation or estimate of the costs of the 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.

6Basic Principles of Cost Management Most members of an executive board have a

better understanding and are more interested in financial terms than IT terms, so IT project managers must speak their language. Profits are revenues minus expenses. Life cycle costing considers the total cost of

ownership, or development plus support costs, for a project.

Cash flow analysis determines the estimated annual costs and benefits for a project and the resulting annual cash flow.

7Cost of Software Defects*

It is important to spend money up-front on IT projects to avoid spending a lot more later.

*Collard, Ross, Software Testing and Quality Assurance, working paper (1997).

8Basic Principles of Cost Management Tangible costs or benefits are those costs or benefits

that an organization can easily measure in dollars. Intangible costs or benefits are costs or benefits that are

difficult to measure in monetary terms. Direct costs are costs that can be directly related to

producing the products and services of the project. Indirect costs are costs that are not directly related to the

products or services of the project, but are indirectly related to performing the project.

Sunk cost is money that has been spent in the past; when deciding what projects to invest in or continue, you should not include sunk costs.

9Basic Principles of Cost Management

Learning curve theory states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced.

Reserves are dollars included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict. Contingency reserves allow for future situations that may be

partially planned for (sometimes called known unknowns) and are included in the project cost baseline.

Management reserves allow for future situations that are unpredictable (sometimes called unknown unknowns).

10

Cost Estimating

Project managers must take cost estimates seriously if they want to complete projects within budget constraints.

Its important to know the types of cost estimates, how to prepare cost estimates, and typical problems associated with IT cost estimates.

11

Types of Cost Estimates

12

Cost Management Plan A cost management plan is a document that

describes how the organization will manage cost variances on the project.

A large percentage of total project costs are often labor costs, so project managers must develop and track estimates for labor.

13

Maximum Departmental Headcounts by Year

A large percentage of the costs of many IT projects are human resource costs.

14

Cost Estimation Tools and Techniques Basic tools and techniques for cost estimates:

Analogous or top-down estimates: Use the actual cost of a previous, similar project as the basis for estimating the cost of the current project.

Bottom-up estimates: Involve estimating individual work items or activities and summing them to get a project total.

Parametric modeling: Uses project characteristics (parameters) in a mathematical model to estimate project costs.

Computerized tools: Tools, such as spreadsheets and project management software, that can make working with different cost estimates and cost estimation tools easier.

15

Constructive Cost Model (COCOMO) Barry Boehm helped develop the COCOMO models for

estimating software development costs.

Parameters include: Function points: Technology-independent assessments of the

functions involved in developing a system.

Source Lines of Code (SLOC): A human-written line of code that is not a blank line or comment.

Boehm suggests that only parametric models do not suffer from the limits of human decision-making.

16

Typical Problems with IT Cost Estimates

Developing an estimate for a large software project is a complex task that requires a significant amount of effort.

People who develop estimates often do not have much experience.

Human beings are biased toward underestimation.

Management might ask for an estimate, but really desire a bid to win a major contract or get internal funding.

17

Sample Cost Estimate

See pages 262-266 for a detailed example that describes how to create a cost estimate for the Surveyor Pro project described in the opening case.

Before creating an estimate, know what it will be used for, gather as much information about the project as possible, and clarify the ground rules and assumptions for the estimate.

If possible, estimate costs by major WBS categories. Create a cost model to make it easy to change and

document the estimate.

18

Surveyor Pro Project Cost Estimate

19

Surveyor Pro Software Development Estimate

20

Cost Budgeting

Cost budgeting involves allocating the project cost estimate to individual work items over time.

The WBS is a required input for the cost budgeting process because it defines the work items.

Important goal is to produce a cost baseline:

A time-phased budget that project managers use to measure and monitor cost performance.

21

Surveyor Pro Project Cost Baseline

22

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.

Many organizations around the globe have problems with cost control.

23

Media Snapshot Australia: Problems with the installation of an ERP system at Crane

Group Ltd. led to an estimated cost overrun of $11.5 million.* India: As many as 274 projects currently under implementation in the

Central sector are suffering serious cost and time overruns.** Pakistan: Pakistan has sustained a cost overrun of Rs 1.798 billion (over

$30 million U.S. dollars) in the execution of the 66.5 megawatt JagranHydropower Project in the Neelum Valley.***

United States: Northern California lawmakers were outraged over Governor Arnold Schwarzenegger's announcement that commuters should have to pay construction costs on Bay Area bridges. Maybe it takes the Terminator to help control costs!****

*Songini, Marc L., Australian Firm Wrestles With ERP Delays, ComputerWorld (July 12, 2004).**Srinivasan, G., 274 Central sector projects suffer cost, time overruns, The Hindu Business Line (May 4,

2004).***Mustafa, Khalid, Rs 1.8 billion cost overrun in Jagran hydropower project, Daily Times (November 19,

2002).****Gannett Company, Governor Refuses to Pay for Bay Bridge Cost Overruns, News10 (August 17, 2004).

24Information Technology Project Management, Fourth Edition

Summary Project cost management is traditionally a weak

area in IT projects, and project managers must work to improve their ability to deliver projects within approved budgets.

Main processes include: Cost estimating

Cost budgeting

Cost control

Section 7

Project Quality Management

Dr. K. P. Hewagamage

Mrs. G. I. Gamage

University of Colombo School of Computing (UCSC)

2Learning Objectives Appreciate the importance of project quality

management for information technology products and services

Define project quality management and describe its main three processes

Describe given tools and techniques for quality control (Pareto Analysis, Statistical sampling, testing)

Summarize major contributions to the modern quality management

Describe major cost categories related to information technology project quality

37.1 The Importance of Project Quality Management

Many people joke about the poor quality of IT products (see cars and computers joke on pages 290-291).

People seem to accept systems being down occasionally or needing to reboot their PCs.

But quality is very important in many IT projects.

4What Went Wrong? In 1981, a small timing difference caused by a computer

program caused a launch abort.* In 1986, two hospital patients died after receiving fatal

doses of radiation from a Therac 25 machine after a software problem caused the machine to ignore calibration data.**

Britains Coast Guard was unable to use its computers for several hours in May 2004 after being hit by the Sasservirus, which knocked out the electronic mapping systems, e-mail, and other computer functions, forcing workers to revert to pen, paper, and radios.***

*Design News (February 1988).**Datamation (May 1987).***Fleming, Nic, Virus sends coastguard computers off course (http://news.telegraph.co.uk/news/main.jhtml?xml=/news/2004/05/05/ncoast05.xml) (May 15, 2004).

5What Is Quality? The International Organization for Standardization

(ISO) defines quality as the degree to which a set of inherent characteristics fulfils requirements(ISO9000:2000).

Other experts define quality based on: Conformance to requirements: The projects

processes and products meet written specifications.

Fitness for use: A product can be used as it was intended.

63.2 What Is Project Quality Management?

Project quality management ensures that the project will satisfy the needs for which it was undertaken.

Processes include:

Quality planning: Identifying which quality standards are relevant to the project and how to satisfy them.

Quality assurance: Periodically 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.

77.2.1 Quality Planning Implies the ability to anticipate situations and

prepare actions to bring about the desired outcome.

Important to prevent defects by:

Selecting proper materials.

Training and indoctrinating people in quality.

Planning a process that ensures the appropriate outcome.

8Design of Experiments Design of experiments is a quality planning

technique that helps identify which variables have the most influence on the overall outcome of a process.

Also applies to project management issues, such as cost and schedule trade-offs.

Involves documenting important factors that directly contribute to meeting customer requirements.

9Scope Aspects of IT Projects Functionality is the degree to which a system performs its

intended function. Features are the systems special characteristics that

appeal to users. System outputs are the screens and reports the system

generates. Performance addresses how well a product or service

performs the customers intended use. Reliability is the ability of a product or service to perform

as expected under normal conditions. Maintainability addresses the ease of performing

maintenance on a product.

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Whos Responsible for the Quality of Projects?

Project managers are ultimately responsible for quality management on their projects.

Several organizations and references can help project managers and their teams understand quality.

International Organization for Standardization (www.iso.org)

IEEE (www.ieee.org)

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7.2.2 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 generates ideas for quality improvements

by comparing specific project practices or product characteristics to those of other projects or products within or outside the performing organization.

A quality audit is a structured review of specific quality management activities that help identify lessons learned that could improve performance on current or future projects.

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Table of Contents for a Quality Assurance Plan*

*U.S. Department of Energy

1.0 Draft Quality Assurance Plan1.1 Introduction1.2 Purpose1.3 Policy Statement1.4 Scope2.0 Management2.1 Organizational Structure2.2 Roles and Responsibilities2.2.1 Technical Monitor/Senior Management2.2.2 Task Leader2.2.3 Quality Assurance Team2.2.4 Technical Staff3.0 Required Documentation

4.0 Quality Assurance Procedures4.1 Walkthrough Procedure4.2 Review Process4.2.1 Review Procedures4.3 Audit Process4.3.1 Audit Procedures4.4 Evaluation Process4.5 Process Improvement5.0 Problem Reporting Procedures5.1 Noncompliance Reporting Procedures6.0 Quality Assurance MetricsAppendixQuality Assurance Checklist Forms

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7.2.3 Quality Control The main outputs of quality control are:

Acceptance decisions Rework Process adjustments

Some tools and techniques include: Pareto analysis Statistical sampling Six Sigma Quality control charts

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7.3.1 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 percent of problems are often due to 20 percent of the causes.

Pareto diagrams are histograms, or column charts representing a frequency distribution, that help identify and prioritize problem areas.

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Sample Pareto Diagram

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7.3.2 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.

Sample size formula:Sample size = .25 X (certainty factor/acceptable error)2

Be sure to consult with an expert when using statistical analysis.

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7.3.3 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.

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Testing Tasks in the Software Development Life Cycle

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Types of Tests Unit testing tests 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 end users prior to accepting the delivered system.

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Gantt Chart for Building Testing into a Systems Development Project Plan

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Testing Alone Is Not Enough Watts S. Humphrey, a renowned expert on software

quality, defines a software defect as anything that must be changed before delivery of the program.

Testing does not sufficiently prevent software defects because: The number of ways to test a complex system is huge.

Users will continue to invent new ways to use a system that its developers never considered.

Humphrey suggests that people rethink the software development process to provide no potential defects when you enter system testing; developers must be responsible for providing error-free code at each stage of testing.

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7.4 Modern Quality Management Modern quality management:

Requires customer satisfaction.

Prefers prevention to inspection.

Recognizes management responsibility for quality.

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

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Quality Experts Deming was famous for his work in rebuilding

Japan and his 14 Points for Management. Juran wrote the Quality Control Handbook and

ten steps to quality improvement. Crosby wrote Quality is Free and suggested that

organizations strive for zero defects. Ishikawa developed the concepts of quality

circles and fishbone diagrams. Taguchi developed methods for optimizing the

process of engineering experimentation. Feigenbaum developed the concept of total

quality control.

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7.4.3 ISO Standards ISO 9000 is a quality system standard that:

Is a three-part, continuous cycle of planning, controlling, and documenting quality in an organization.

Provides minimum requirements needed for an organization to meet its quality certification standards.

Helps organizations around the world reduce costs and improve customer satisfaction.

ISO 15504, sometimes known as SPICE (Software Process Improvement and Capability dEtermination), is a framework for the assessment of software processes.

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Improving Information Technology Project Quality

Several suggestions for improving quality for IT projects include: Establish leadership that promotes quality.

Understand the cost of quality.

Focus on organizational influences and workplace factors that affect quality.

Follow maturity models.

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7.5 The Cost of Quality The cost of quality is the cost of conformance plus the

cost of nonconformance.

Conformance means delivering products that meet requirements and fitness for use.

Cost of nonconformance means taking responsibility for failures or not meeting quality expectations.

A 2002 study reported that software bugs cost the U.S. economy $59.6 billion each year and that one third of the bugs could be eliminated by an improved testing infrastructure.*

*RTI International, Software Bugs Cost U.S. Economy $59.6 Billion Annually, RTI Study Finds, July 1, 2002.

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Costs Per Hour of Downtime Caused by Software Defects

Business Cost per Hour DowntimeAutomated teller machines (medium-sized bank) $14,500Package shipping service $28,250Telephone ticket sales $69,000Catalog sales center $90,000Airline reservation center (small airline) $89,500

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Five Cost Categories Related to Quality

Prevention cost: Cost of planning and executing a project so it is error-free or within an acceptable error range.

Appraisal cost: Cost of evaluating processes and their outputs to ensure quality.

Internal failure cost: Cost incurred to correct an identified defect before the customer receives the product.

External failure cost: Cost that relates to all errors not detected and corrected before delivery to the customer.

Measurement and test equipment costs: Capital cost of equipment used to perform prevention and appraisal activities.

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