1. CS-413 1 A Detailed Look to Initiation Phase of Scope Management (Part 8) Bilgisayar Mühendisliği Bölümü – Bilkent Üniversitesi – Fall 2009 Dr.Çağatay ÜNDEĞER Instructor Bilkent University, Computer Engineering Middle East Technical University, Game Technologies & General Manager SimBT Inc. e-mail : undeger@simbt.com.tr

2. CS-413 2 Scope Management Project Management Components (knowledge areas) –Project Integration Management –Project Scope Management –Project Time Management –Project Cost Management –Project Human Resource Management –Project Communication Management –Project Quality Management –Project Risk Management –Project Procurement Management

3. CS-413 3 Scope Management Phases Initiation Scope Planning Scope Definition Scope Verification Scope Change Control

4. CS-413 4 A Detailed Look to: Initiation The process of identifying and authorizing; –A new project, or –Continuation of an existing project.

5. CS-413 5 A Detailed Look to: Initiation Requires the following activities: –Identifying projects –Classifying and ranking projects –Selecting projects –Establishing project charter

6. CS-413 6 Identifying projects No single method to use Some organizations use; –Very careful planning process; Some use; –More ad hoc methods.

7. CS-413 7 Identifying projects Who is responsible? –A key member of top management (e.g. a CEO, a senior executive) –A steering commitee composed of managers –User departments; Head of a requesting unit A commitee of requesting unit –A senior IS manager

8. CS-413 8 Identifying projects Although carefully identifying new projects has advantages, –Many organizations do not use a systematic planning process. Projects are resulted from attempts to solve isolated organizational problems. Procedures are likely to change, –In time, It will be necessary to modify existing systems.

9. CS-413 9 Identifying projects Use planning based-approachs. Planning based-approachs ask the following question to identify new potential projects: –What information requirements will satisfy; Decision making needs or Business process of enterprice today and well in the future?

10. CS-413 10 Identifying projects Advantage of planning-based approach is that; –An organization’s informational needs are less likely to change than its bussiness process. To understand planning-based approach, need to understand; –Corporate Strategic Planning, and –Information Systems Planning.

11. CS-413 11 Identifying projects (Corporate Strategic Planning) To make effective decisions, you need to gain a clear idea of; –Where an organization is, –Where it wants to be in the future (vision of organization), and –How to make transitions to that desired future state. Planners develop a strategic plan to guide the transition.

12. CS-413 12 Identifying projects (Sample Vision Statement) Vision statement of SimBT Inc: –To provide national and international science and technology based original solutions in the area of modeling, simulation and simulators. –To realize company revolution on the concept of “Behaving flexible and simple as a small company, But meanwhile having the power of a big scale organization".

13. CS-413 13 Identifying projects (Corporate Strategic Planning) All successful organizations hava a mission. Mission statement of a company states what business the company is in.

14. CS-413 14 Identifying projects (Sample Mission Statement) Mission statement of Microsoft: –To enable people and businesses throughout the world to realize their full potential. Mission statement of SimBT Inc: –To develop the best M&S prototypes and turnkey products for Turkish and abroad customers.

15. CS-413 15 Identifying projects (Corporate Strategic Planning) Closely linked to their mission, –Organizations also define several objective statements that refer to broad and timeless goals for the organization In order to reach a desired future state.

16. CS-413 16 Identifying projects (Sample Objective Statement) Objective statements of Microsoft: –Broad customer connection: Connecting with customers, understanding their needs and how they use technology, and providing value through information and support to help them realize their potential. –A global, inclusive approach: Thinking and acting globally, enabling a diverse workforce that... –...

17. CS-413 17 Identifying projects (Sample Objective Statement) Objective statements of SimBT Inc: –To bridge the gap among: “Science, technology, turn-key systems“, “University, research centers” and “Industry, acquisition agencies" in the area of modelling, simulation and simulators. –To put ourselves in the position of our customers in order to understand their requirements. –To make our customers realize their requirements and utilize the state-of-the-art technology.

18. CS-413 18 Identifying projects (Corporate Strategic Planning) A competitive strategy: –The method by which an organization attempts, to achieve its mission and objective. –An organization’s game plan for playing in the competitive business world.

19. CS-413 19 Identifying projects (Corporate Strategic Planning) A competitive strategy: –Generic strategies: Low-cost producer Product differentiation Product Focus

20. CS-413 20 Identifying projects (Corporate Strategic Planning) Low-cost producer: –Competing in an industry on the basis of product or service cost to the customer (e.g. very cheap products).

21. CS-413 21 Identifying projects (Corporate Strategic Planning) Product differentiation: –Capitalizing on a key criterion requested by the market (e.g. high quality, high performance, original style).

22. CS-413 22 Identifying projects (Corporate Strategic Planning) Product Focus: –Similar to both low-cost and differentiation strategies. –But employs a much narrow market focus (focus on some specific products).

23. CS-413 23 Identifying projects Planning-based approaches: –Corporate strategic planning, and –Information Systems planning.

24. CS-413 24 Identifying projects ( Information Systems Planning) A second planning approach that can help identifying projects is information systems planning (ISP). An orderly means of; –Assessing information needs of an organization, and –Defining systems, databases, and technologies that will best satisfy those needs.

25. CS-413 25 Identifying projects ( Information Systems Planning) Model current and future organizational information needs. Develop strategies and project plans –To migrate current information systems and technologies to their desired future state.

26. CS-413 26 Identifying projects ( Information Systems Planning) A top-down process that takes into account; –Outside forces (industry), –Economy, –Relative size, –Geographic region, etc. Key activities are: –Describing current situation –Describing target situation, trends, and constraints –Developing a transition strategy and plan

27. CS-413 27 Identifying projects ( Information Systems Planning) Describing current situation: –Define the current organizational situation using top-down planning. –Top-down planning attempts; To gain a broad understanding of informational needs of entire organization.

28. CS-413 28 Identifying projects ( Information Systems Planning) Describing current situation: –Top-down planning; Begins with analysis of organization’s mission, objectives, and strategy; Continues with determination of information requirements needed to meet each objective. Requires involvement of top-level management.

29. CS-413 29 Identifying projects ( Information Systems Planning) Describing target situation, trends, and constraints: –Define target situation that reflects desired future state of organization. –Vision consists of desired state of; Locations, Units, Functions, Processes, Data, Information systems.

30. CS-413 30 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –When creation of current and target situation is completed, A detailed transition strategy and plan are developed.

31. CS-413 31 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Plan should be: Very comprehensive, Reflecting broad and long-range issues, and Providing sufficient detail to guide all levels of management concerning; –What needs to be done, –How and when it needs to be done, –Who in organization will be doing.

32. CS-413 32 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Outline of an information systems plan: Organizational mission, objectives & strategy Information inventory Mission and objectives of IS Constraints on IS development Overall systems needs and long-range IS strategies The short-term plan Conclusions

33. CS-413 33 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Organizational mission, objectives & strategy: Briefly describes mission, objectives and strategy of the organization. Presents current and future views of the organization briefly.

34. CS-413 34 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Information inventory: Provides a summary of various bussiness process, functions, data entities, and information needs of enterprise. Will contain both current and future views.

35. CS-413 35 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Mission and objectives of IS: Describes primary role of IS in transformation from current to future state. For example, role may be; –A necessary cost, –an investment, or –a strategic advantage.

36. CS-413 36 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Constraints on IS development: Briefly describes limitations imposed by; –State of the art technology, –Current level of resources within the organization (financial, technological, personnel).

37. CS-413 37 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Overall systems needs and long-range IS strategies: Presents a summary of; –Overall systems needs within the organization, –A set of long-range (2-5 years) strategies chosen by IS department to meet the needs.

38. CS-413 38 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –The short-term plan: Shows; –A detailed inventory of present projects and systems, –A detailed plan of projects to be developed or advanced during current year.

39. CS-413 39 Identifying projects ( Information Systems Planning) Developing a transition strategy and plan: –Conclusions: Contains; –Likely, but not certain events that may effect the plan, –An inventory of business change elements as presently known, –A description of their estimated impact on plan.

40. CS-413 40 A Detailed Look to: Initiation Requires the following activities: –Identifying projects –Classifying and ranking projects –Selecting projects –Establishing project charter

41. CS-413 41 Classifying and Ranking Projects Focuses on assessing relative merit of potential projects. All projects are feasible given unlimited resources and time, –But most projects must be developed within tight budgendary and time constraints. –Therefore, assessing feasibility and value of projects is essential.

42. CS-413 42 Classifying and Ranking Projects Factors: –Economical –Technical –Operational –Schedule –Legal and contractual –Political

43. CS-413 43 Classifying and Ranking Projects Economical Feasibility: –A comparison of financial benefits and costs associated with a development project. –Often reffered as Cost-Benefit Analysis. –Impossible to preciesly define costs and benefits, –But an estimation is required in order to compare rival projects.

44. CS-413 44 Classifying and Ranking Projects Economical Feasibility: –Determine project benefits: Tangible benefits Intangible benefits –Determine project costs: Tangible costs Intangible costs

45. CS-413 45 Classifying and Ranking Projects Economical Feasibility: –Tangible benefits; Can be measured in money and with certainty.

46. CS-413 46 Classifying and Ranking Projects Economical Feasibility: –Categories of tangible benefits: Cost reduction and avoidance, Error reduction, Increased flexibility, Increased speed of activity, Improvement of management, planning and control, Opening new markets and increasing sales opportunities, Others.

47. CS-413 47 Classifying and Ranking Projects Economical Feasibility: –Intangible benefits; Cannot be easily measured in money. –Some tangible benefits may be intangible in early stages of a project.

48. CS-413 48 Classifying and Ranking Projects Economical Feasibility: –Categories of intangible benefits: Increased competiveness with other companies, Increased organizational flexibility, Increased employee morale, Increased organizational learning and understanding, More timely information collection, Others.

49. CS-413 49 Classifying and Ranking Projects Economical Feasibility: –Tangible costs; Can be measured in money and with certainty.

50. CS-413 50 Classifying and Ranking Projects Economical Feasibility: –Categories of tangible costs: Hardware costs, Software costs, Labor costs, Operational costs (employee training, building renovations, etc.) Others

51. CS-413 51 Classifying and Ranking Projects Economical Feasibility: –Intangible costs; Cannot be easily measured in money.

52. CS-413 52 Classifying and Ranking Projects Economical Feasibility: –One-time cost: A cost associated with; –Project start-up and development or –System start-up. –Recurring costs: A cost resulting from ongoing evolution and use of a system.

53. CS-413 53 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: The use of a variety of analysis techniques for determining financial feasibility of a project.

54. CS-413 54 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: Commonly used analysis techniques: –Net present value (NPV) –Return on Investment (ROI) –Break-even analysis (BEA)

55. CS-413 55 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: Development and useful life of a system may span several years. Therefore, costs and benefits must be normalized into present day in order to compare. Time value of money (TVM) is used, –In order to compare present cash outlays to future expected returns.

56. CS-413 56 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: The rate at which money can be borrowed or invested is called; –The cost of capital, or –Discount rate.

57. CS-413 57 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: Formula to compute present value of a money that will be available in the future: PV n = Y x 1 (1+i) n Present value Amount of money that will be available n years from now Discount rate in a year Number of years required for money become available

58. CS-413 58 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis (Example): A seller sells a car for 4500 TL; –By 3 instalments. »1500 TL in cash, »1500 TL after 1 year, »1500 TL after 2 years. If seller were able to put money in a bank, –Would receive 10 percent return in a year for his/her investment.

59. CS-413 59 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis (Example): 1500 TL in cash: –PV 1 = 1500 TL 1500 TL after 1 year, –PV 2 = 1500 x = 1363 TL 1500 TL after 2 years. –PV 3 = 1500 x = 1239 TL 1 (1+0.10) 1 1 (1+0.10) 2

60. CS-413 60 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis (Example): Seller will actually benefit; »4102 TL (Net PV = 1500+1363+1239) –From 4500 TL sale.

61. CS-413 61 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis (Example): Seller will actually benefit; »4102 TL (Net PV = 1500+1363+1239) –From 4500 TL sale. Therefore, if buyyer gives equal to or more than 4102 TL in cash, –Seller will accept (if he/she knows enough matematics ).

62. CS-413 62 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: To perform analysis, –Useful life of project and –Cost of capital must be determined.

63. CS-413 63 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: Overall return on investment (ROI): –A useful value for trade-off analysis among projects. ROI = 35.003 = 0.24 145.236

64. CS-413 64 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: Break-Even Analysis: –Used to discover at what point benefits will equal to costs. Break-even occurs between year 2 and 3

65. CS-413 65 Classifying and Ranking Projects Economical Feasibility: –Cost-benefit analysis: Break-Even ratio = Yearly NPV Cash Flow – Overall NPV Cash Flow Yearly NPV Cash Flow Break-Even ratio = = 0.403 15.303 – 9.139 15.303 9.139 – (-6.164) Project break-even occurs at 2.403 years.

66. CS-413 66 Classifying and Ranking Projects Factors: –Economical –Technical –Operational –Schedule –Legal and contractual –Political

67. CS-413 67 Classifying and Ranking Projects Technical Feasibility: –An assesment of the developer organization’s ability to construct a proposed system. –Should include understanding of; Target hardwares, Target softwares, Target operating systems, Size and complexity of project, Experience of groups involved.

68. CS-413 68 Classifying and Ranking Projects Technical Feasibility: –All projects have risks. –Risk is not necessarily something to avoid. –Organizations typically expect a greater return on their investments for riskier projects. –Important thing is; To understand risks and To manage them in order to minimize.

69. CS-413 69 Classifying and Ranking Projects Technical Feasibility: –Primary factors for risk: Project size, Project structure, Developer group’s experience with application and technology area, User group’s experience with systems development projects and application areas.

70. CS-413 70 Classifying and Ranking Projects Technical Feasibility: –Project size: Larger projects are harder to manage, so are more riskier most of the time. Size of project is relative to the size which development group is familiar with.

71. CS-413 71 Classifying and Ranking Projects Technical Feasibility: –Project structure: A system in which requirements are; –easily obtained and –highly structured will be less risky. One in which requirements are; »messy, »ill-structured, ill-defined, or »subject to individual judgement will be more risky.

72. CS-413 72 Classifying and Ranking Projects Technical Feasibility: –Developer group’s experience with application and technology area: Development of a system employing commonly used or standard technology will be less risky. Development of one employing novel and non-standard technology will be more risky.

73. CS-413 73 Classifying and Ranking Projects Technical Feasibility: –User group’s experience with systems development projects and application areas: A project is less risky when user group is familiar with systems development. Successful projects require; –Active involvement and cooperation between user and developer groups.

74. CS-413 74 Classifying and Ranking Projects Technical Feasibility: –Many organizations look at risk as a portfolio issue. –It is acceptable to have reasonable percentage of; High-risk projects, Medium-risk projects, Low-risk projects.

75. CS-413 75 Classifying and Ranking Projects Other Feasibility Concerns: –Operational feasibility –Schedule feasibility –Legal and contractual feasibility –Political feasibility

76. CS-413 76 Classifying and Ranking Projects Other Feasibility Concerns: –Operational feasibility: Examining the degree to which a proposed system will; –Solve business problems or –Take advantage of business opportunities.

77. CS-413 77 Classifying and Ranking Projects Other Feasibility Concerns: –Schedule feasibility: Examining the degree to which; –Completion dates for all major activities can be met, and –Meeting these dates will be sufficient for dealing with organization’s needs with respect to timing.

78. CS-413 78 Classifying and Ranking Projects Other Feasibility Concerns: –Legal and contractual feasibility: Determining any potential legal and contractual ramifications (results) due to construction of a system. For instance, licence, ownership, source code,...

79. CS-413 79 Classifying and Ranking Projects Other Feasibility Concerns: –Political feasibility: Evaluating how key stakeholders within the organization view the proposed system. An information system will effect distribution of information (and power) within the organization, –Therefore have political results.

80. CS-413 80 A Detailed Look to: Initiation Requires the following activities: –Identifying projects –Classifying and ranking projects –Selecting projects –Establishing project charter

81. CS-413 81 Selecting Projects A process of considering both short and long term projects, and Selecting those most likely to achieve business objectives.

82. CS-413 82 Selecting Projects Factors for selecting projects: –List of potential and ongoing projects, –Existing and available resources, –Current organizational environment, –Evaluation criteria, –Perceived and real needs.

83. CS-413 83 Selecting Projects Some project evaluation methods: –Value chain analysis –Multi-criteria analysis

84. CS-413 84 Selecting Projects Value chain analysis: –The process of analyzing an organization’s activities; To determine where value is added to product and services and their costs, So to understand value chain of organization. –IS projects providing greatest benefits to value chain will be given higher priority over those with fewer benefits.

85. CS-413 85 Selecting Projects Multi-criteria analysis: –A project selection method that uses; Weighted scoring for a variety of criteria –To compare alternative projects or system features.

86. CS-413 86 Selecting Projects Multi-criteria analysis: –Assummed that there are 3 alternative designs for a system. 18x5 = 90

87. CS-413 87 A Detailed Look to: Initiation Requires the following activities: –Identifying projects –Classifying and ranking projects –Selecting projects –Establishing project charter

88. CS-413 88 Establishing Project Charter A short document prepared for customer during project initiation; Describes what project will deliver; Outlines generally at high level all work required to complete the project.

89. CS-413 89 Establishing Project Charter Often includes: –Project title, –Date of authorization, –Project manager name & contact information –Customer name & contact information –Project start and completion dates –Key stakeholders, their roles and responsibilities –Project objectives and description –Key assumptions and approach –Signature section for key stakeholders.