Project Management

Master in Information Technology (MIT) Graduate Program
Project Management
Pre-Project and
Project Initiation
Phase
J.S.Javier October 2014. All Rights Reserved.
Project Beginnings
Business Case
Definition
Justification
Initiating Process Group

Project Charter
Project Organization
Stakeholder Analysis
- 2-
Generic Life Cycles

TIme
R. D. Archibalds Generic Project Life Cycle
Concept
Definition
Execution
Closeout
Product Development Life Cycle
Idea
Business
Case
Phase 1
Phase 2
Phase N
System
Development Life
Cycle
Authorization
Pre-Project
Project
Project Development Life Cycle

- 3-
Definition : Business Case

A business case is an argument, usually
documented, that is intended to convince a
decision maker to approve some kind of action.
At its simplest, a business case could be a spoken
suggestion.
For more complex issues, a business case should be
presented in a carefully constructed document
The document itself is sometimes referred to as a
business case
As a rule, a business case has to articulate a

clear path to an attractive return on investment
(ROI)
- 4-
Key Elements : Business Case

Description of Problem (or Opportunity)
that exists in the business
Optionally, the impact of doing nothing to
address the problem or exploit the opportunity
Available options to solve the problem (or

exploit the opportunity)
Benefits and costs of each option (typically
include cash flow analysis)
Recommended solution
- 5-
Benefit and Cost Estimation

Tangible Costs / Benefits
Directly measurable
Typically recorded in Book of Accounts
Example : Hardware Cost, Development Cost,
Savings, Revenues
Intangible Costs / Benefits

Difficult to estimate
Example : Usability, Operational
Improvements, Improvement in Reputational
Asset, Goodwill
- 6-
Project Evaluation Techniques

Constrained Optimization Methods
aka Decision Models
Examine different criteria used in making decisions regarding
project selection
Algorithmic and highly mathematical approach for solving a
specific problem, such as Linear Programming and Decision
Tree Analysis
Benefit Measurement Methods

aka Calculation Methods
Provide a way to calculate the value of the project which is used
in project selection decision making
Examples : Scoring Models and Cash Flow Analysis Techniques
- 7-
Cash Flow Analysis Techniques
Net Present Value

Payback Period
Internal Rate of Return
Return on Investments
- 8-
Net Present Value

A method for calculating the expected net monetary gain
or loss from a project by discounting all expected future
cash inflows (benefits) and outflows (cost or expense) to
the present point in time, less initial investment (if any)
Formula : NPV = [ t=1..n DCF] initial investment
where :
t is year of the cash flow
n is the nth year (or last year) in the cash flow
series
DCF is discounted cash flow (present value of
cash flow)
- 9-
Time Value of Money

0
F1
F2
Ft
Time Period
PV1 = F1 / (1 + r) 1
PV2 = F2 / (1 + r) 2
PV t = Ft / (1 + r) t
Present
- 10-
Discounted Cash Flow

A discounted cash flow is the present
value of the cash flow
Formula : DCF = A x [ 1 / (1 + r) t ]
Where :
A is the cash flow (benefit cost or expense)
r is the discount rate (per year)
The discount rate is the minimum acceptable rate of
return on an investment
aka hurdle rate, rate of return, opportunity cost of capital
t is the year of the cash flow
- 11-
Sample Problem 1
ABC Company is evaluating two IT projects, each with the projected cash
flows as shown below :
Year
1
2
3
4
5
Project 1
14,000
14,000
14,000
14,000
14,000
Project 2
28,000
12,000
10,000
10,000
10,000
Project 1 will require an initial investment of $42,000, while Project 2 requires $45,000.
If the cost of capital to ABC is 10%, which project will they prioritize ? Compare using
the NPV method as a basis for your recommendation.
- 12-
NPV Selection Criteria

If the NPV of a cash flow is greater than or
equal to zero, a firm will earn a return
greater than or equal to its cost of capital
If NPV >= 0, accept the project
If NPV < 0, reject the project
In selecting from a list of projects, always

select that project with the highest positive
NPV as it gives the highest return relative
to the other projects
- 15-
Payback Period
The exact amount of time required for the project
to recover its initial investment as calculated
from the cash inflows
For annuity cases, this can be found by
dividing the initial investment by the annual
cash inflow
For mixed stream, the yearly cash inflows
must be accumulated until the initial
investment is recovered
The elapsed time required for accrued benefits
to overtake accrued and continuing costs
- 16-
Payback Period Criteria

Accept projects if the payback period is less than
or equal to the maximum acceptable payback
period
In selecting among projects, select that project
that has the shortest payback period
Typically used as a measure of risk exposure
The shorter payback period the less
exposure, and vice versa
- 19-
Initiating Process Group

Processes performed
to define a new project
or a new phase of an
existing project by
obtaining authorization
to start the project or
phase
Defining initial scope of project

Securing commitment to initial
financial resources
Identifying project stakeholders
Identifying the Project Manager
PMBOK Guide, 5th Ed. 2013, p.54

- 20-
The Project Charter

A document issued by the
project initiator or sponsor
that formally authorizes the
existence of a project
Project Charter
It provides the project manager

with the authority to apply
organizational resources to
project activities
Chartering a project links the
project to the strategy and
ongoing work of the organization
- 21-
Key Contents : Project Charter

Project purpose or justification
Measurable project objectives and related
success criteria
High level requirements
High level project description
High level risks
Summary milestone schedule
Summary budget
Project approval requirements
Project Charter
What constitutes project success

Who decides the project is successful
Who signs off on the project
Assigned project manager, responsibility,

and authority level
Name and authority of the sponsor or other
person(s) authorizing the project charter
PMBOK Guide, 4th Ed., 2008
- 22-
Why a Project Charter ?

Describes problems to be solved
Provides a vision of how the business
need will be resolved
Describes the elements of the solution
expected by the sponsor from the delivery
organization (i.e. the Project Team)
Identifies the main stakeholders in the
various organizations involved in the
project.
- 23-
Risks Without a Project Charter

Unclear need that is likely to give unstable
direction to the project
Possible ambiguity about the project
objectives and scope
Possible ambiguity concerning the solution
Possible lack of identifying an important
stakeholder for the project.
* May also be due to Poorly-Written Project Charter
- 24-
Project Charter : Aliases
Project Definition Document

Project Datasheet
Proposal
Reference Specification
Statement of Work
Plan of Record
Letter of Agreement
Work Contract
Reference : The Project Management Toolkit by Tom
Kendrick. 2010. AMACOM Books
- 25-
Project Boundaries
- 26-
Organizational Structures
Describes the set-up of project units in an
organization and establishes the authority
of the project manager
It constrains the availability or terms under
which resources become available to the
project
Classifications of Organizational Structure

Functional
Project
Matrix (Weak, Balanced, Strong)
- 27-
Functional Organizational Structure

Chief Executive
Functional Manager
Functional Manager
Project Coordination
Functional Manager
Staff
Staff
Staff
Staff *
Staff *
Staff
Staff
Staff *
Staff *
* Staff engaged in project activities
Characteristics :
Each unit is responsible for carrying out a
specific, similar set of activities
Reporting is hierarchical each

individual reporting to a single manager
Multiple people perform each type of activity
Project Manager s authority is low,

relative to functional manager s
authority
- 28-
Project Organization
Project Manager
Chief Executive
Project Manager
Project Manager
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Characteristics :
Each unit operates to complete a different project
Some organizations have separate support units and systems
per project unit (e.g. HR and Purchasing), while others have
common support units and systems
- 29-
Matrix Organization (Weak)

Chief Executive
Functional Manager
Functional Manager
Functional Manager
Staff *
Staff
Staff
Staff
Staff *
Staff
Staff *
Staff *
Staff *
Characteristics :
Project team composition comes from different functional units
Maintains many of the characteristics of a functional organization
Project Manager role is more of a coordinator or expediter than that of a
manager
- 30-
Matrix Organization (Balanced)

Chief Executive
Functional Manager
Functional Manager
Functional Manager
Staff *
Staff
Staff
Staff
Staff *
Staff
Project
Manager
Staff *
Staff *
Characteristics :
A member under a functional unit has an official management position with
low to moderate authority as a project manager
- 31-
Matrix Organization (Strong)

Chief Executive
Manager of Project
Managers
Functional Manager
Functional Manager
Functional Manager
Project
Manager
Staff *
Staff
Staff
Project
Manager
Staff
Staff *
Staff
Project
Manager
Staff *
Staff *
Staff *
Characteristics :
Maintains many of the characteristics of a project organization
A member under a functional unit has a project management position with
moderate to high authority for a project manager
- 32-
Org Structure Influences on Project
Management of IT Projects, Kathy Schwalbe, 2011

- 33-
Relative Authority of PM
- 34-
IT Project Org Chart Sample

Project Committee
IT Manager
Project Manager
QA Team
Counterpart IT Staff
Systems Analysts
System Owner
Support Team
Counterpart SubjectMatter Staff
Project Team Units
Programmers
Technology Group
- 35-
Who are the Project Stakeholders ?

Persons and Organizations
that are actively involved in
the project
Those whose interests may
be positively or negatively
affected by the execution or
completion of the project
Examples :
Customers
Sponsors,
Performing organization
General Public

- 36-
Key Project Stakeholders - 1

Executive Sponsor
A member of senior management
who is committed to the project
With enough clout to fill his / her
primary role
Is not involved in the details of the
project (may even be invisible to
the project team)
Authority to ensure compliance by
organization, if not cooperation
- 37-

Project Steering Committee
Consists of senior client
management
Job is to enforce, from
client s perspective, the
project s term of reference
Approve or deny requests for
additional resources or
changes to scope or
schedule
- 38-

User Group
Set of people who will be
responsible for the day-today details and decisions in
the project
Client Project Manager

A senior member of the
client s user group and is the
primary contact between PM
and client organization
- 39-
Characteristics of Stakeholders 1 of 2
May exert influence over the
project, its deliverables, and
the project team members
May be internal or external
to the project
May have varying levels of
responsibility and authority
when participating on a
project and these can
change over project lifetime
May have adverse impact
on the project objectives
- 40-
Characteristics of Stakeholders 2 of 2
Stands to gain or lose through
the success or failure of the
project
Provides funding for the project
Has invested resources in the
project
Participates in (works on) the
project
Is affected by the outputs or
outcomes of the project
Is in the chain of accountability
Project Management Briefcase (p.186). by

Gary R. Heerkens, PMP, McGraw-Hll. 2002.
- 41-
Chain of Accountability
A hierarchy of people who signs
off to approve the project in some
ways and are viewed as taking on
some accountability for the project.
As such, they may see themselves as
stakeholdersand feel that they have
the right to exert influence on the
project, if they sense the need.
Often found in Bureaucratic

Organization
Politically astute project managers
will pay close attention to who
Project Management Briefcase (p.186). by
these people are.
Gary R. Heerkens, PMP, McGraw-Hll. 2002.
- 42-
Relationship : Project & Stakeholders

- 43-
Project Team Responsibilities

Expectations Management
Identify both internal and external
stakeholders in order to determine
the project requirements and
expectations of all parties involved
Balance conflicting interests

Manage the influence of the various
stakeholders in relation to the
project requirements to ensure a
successful outcome
Interact with stakeholders in a

professional and cooperative
manner

Section 2.3, p. 23
- 45-
Technique : Stakeholder Analysis

A technique of systematically
gathering and analyzing
quantitative and qualitative
information to determine whose
interests must be taken into
account throughout the project
Identifies interests, expectations, and
influence of the stakeholders and
relates them to the purpose of the
project
Identify stakeholder relationships
that can be leveraged to build
coalitions and potential partnerships
to enhance the project s chance of
success
PMBOK Guide, 4th Ed., 2008, Sec. 10.1.2, p. 248
- 46-
Stakeholder Analysis : Step 1

Identify all potential
stakeholders and relevant
information
roles, departments, interests,
knowledge levels,
expectations, influence levels
Include anyone in a decisionmaking or management role
who is impacted by the
project outcome
Usually done by interviewing
identified stakeholders and
expanding the list until all
potential stakeholders are
included
- 47-

Identify the potential
impact or support
each stakeholder
could generate
Classify them so as to
define an approach
strategy
Multiple classification
models available

- 48-

Assess how key stakeholders
are likely to react or respond
in various situations
Plan how to influence them to
enhance their support and
mitigate potential negative
impacts

- 49-
Output : Stakeholder Registry

Contains all details related to the identified
stakeholders
Includes (but not limited to) :
Identification Information
Name, Organizational Position, Location, Role in
Project, Contact Information
Assessment Information
Major Requirements, Main Expectations, Potential
Influence in the project, Phase with most interest
Stakeholder Classification
Internal / External, Supported / Neutral / Resistor,
etc.
PMBOK Guide, 4 Ed., 2008, Sec. 10.1.2, p. 250
th
- 50-
Output : Stakeholder Strategy

Defines an approach to increase the support and
minimize negative impacts of stakeholders
throughout the entire project life cycle
Some of the information related to certain
stakeholder management strategies could be too
sensitive to be included in a shared document
Exercise judgment as to information to be included
Common way to represent is through the use of

a Stakeholder Analysis Matrix (SAM)

- 51-
Strategic Analysis Matrix Sample
- 52-

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Master in Information Technology (MIT) Graduate Program

Initiating Process Group

J.S.Javier October 2014. All Rights Reserved.

Generic Life Cycles

Product Development Life Cycle

Project Development Life Cycle

Definition : Business Case

As a rule, a business case has to articulate a

Key Elements : Business Case

Available options to solve the problem (or

Benefit and Cost Estimation

Intangible Costs / Benefits

Project Evaluation Techniques

Benefit Measurement Methods

J.S.Javier October 2014. All Rights Reserved.

Cash Flow Analysis Techniques

Net Present Value

J.S.Javier October 2014. All Rights Reserved.

Net Present Value

J.S.Javier October 2014. All Rights Reserved.

Time Value of Money

Discounted Cash Flow

t is the year of the cash flow

J.S.Javier October 2014. All Rights Reserved.

NPV Selection Criteria

In selecting from a list of projects, always

Payback Period Criteria

J.S.Javier October 2014. All Rights Reserved.

Initiating Process Group

Defining initial scope of project

PMBOK Guide, 5th Ed. 2013, p.54

The Project Charter

It provides the project manager

Key Contents : Project Charter

What constitutes project success

Assigned project manager, responsibility,

PMBOK Guide, 4th Ed., 2008

Why a Project Charter ?

Risks Without a Project Charter

J.S.Javier October 2014. All Rights Reserved.

Project Charter : Aliases

Project Definition Document

PMBOK Guide, 5th Ed. 2013, p.54

J.S.Javier October 2014. All Rights Reserved.

Classifications of Organizational Structure

Functional Organizational Structure

* Staff engaged in project activities

Reporting is hierarchical each

Multiple people perform each type of activity

Project Manager s authority is low,

J.S.Javier October 2014. All Rights Reserved.

Matrix Organization (Weak)

* Staff engaged in project activities

Matrix Organization (Balanced)

* Staff engaged in project activities

Matrix Organization (Strong)

* Staff engaged in project activities

Org Structure Influences on Project

Management of IT Projects, Kathy Schwalbe, 2011

J.S.Javier October 2014. All Rights Reserved.

IT Project Org Chart Sample

Counterpart SubjectMatter Staff

Project Team Units

J.S.Javier October 2014. All Rights Reserved.