TOPIC 3 Project Scope Management Chapter 4

Name: TOPIC 3 Project Scope Management Chapter 4
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Description: TOPIC 3 Project Scope Management Chapter 4

TOPIC 3 Project Scope Management Chapter 4
Copyright Course Technology 1999

Importance of Good Project Scope Management
1995 CHAOS study cited user involvement, a clear project mission, a clear statement of requirements, and proper planning as being important for project success The program manager of Keller Graduate School of Management cites proper project definition and scope as the main reasons projects fail Copyright Course Technology 1999

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 Project scope management includes the processes involved in defining and controlling what is or is not included in the project The project team and stakeholders must have the same understanding of what products will be produced as a result of a project and what processes will be used in producing them Copyright Course Technology 1999

Project Scope Management Processes
Initiation: beginning a project or continuing to the next phase Scope planning: developing documents to provide the basis for future project decisions Scope definition: subdividing the major project deliverables into smaller, more manageable components Scope verification: formalizing acceptance of the project scope Scope change control: controlling changes to project scope Copyright Course Technology 1999

Project Initiation: Strategic Planning and Project Selection
The first step in initiating projects is to look at the big picture or strategic plan of an organization Strategic planning involves determining long-term business objectives IT projects should support strategic and financial business objectives Copyright Course Technology 1999

Table 4-1. Why Firms Invest in Information Technology

Identifying Potential Projects
Many organizations follow a planning process for selecting IT projects First develop an IT strategic plan based on the organization’s overall strategic plan Then perform a business area analysis Then define potential projects Then select IT projects and assign resources Copyright Course Technology 1999

Figure 4-1. Information Technology Planning Process

Methods for Selecting Projects
There are usually more projects than available time and resources to implement them It is important to follow a logical process for selecting IT projects to work on Methods include focusing on broad needs, categorizing projects, financial methods, and weighted scoring models Copyright Course Technology 1999

Focusing on Broad Organizational 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 There’s a strong will to make the project succeed Copyright Course Technology 1999

Categorizing IT Projects
One categorization is whether the project addresses a problem an opportunity a directive Another categorization is how long it will take to do and when it is needed Another is the overall priority of the project Copyright Course Technology 1999

Financial Analysis of Projects
Financial considerations are often an important consideration in selecting projects Three primary methods for determining the projected financial value of projects: Net present value (NPV) analysis Return on investment (ROI) Payback analysis Copyright Course Technology 1999

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 Copyright Course Technology 1999

Figure 4-2. Net Present Value Example
Excel file Copyright Course Technology 1999

Copyright Course Technology 1999
Return on Investment Return on investment (ROI) is income divided by investment 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 Copyright Course Technology 1999

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 net 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 Copyright Course Technology 1999

Figure 4-3. NPV, ROI, and Payback Analysis for Project 1

Figure 4-4. NPV, ROI, and Payback Analysis for Project 2

Weighted Scoring Model
A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria First identify criteria important to the project selection process Then assign weights (percentages) to each criterion so they add up to 100% Then assign scores to each criterion for each project Multiply the scores by the weights and get the total weighted scores The higher the weighted score, the better See “What Went Right?” on pg. 87 for a description of how a mortgage finance agency uses a weighted scoring model for IT projects Copyright Course Technology 1999

Figure 4-5. Sample Weighted Scoring Model for Project Selection

Project Charters After deciding what project to work on, it is important to formalize projects A project charter is a document that formally recognizes the existence of a project and provides direction on the project’s objectives and management Key project stakeholders should sign a project charter to acknowledge agreement on the need and intent of the project Copyright Course Technology 1999

Table 4-2. Sample Project Charter
Project Title: Information Technology (IT) Upgrade Project Project Start Date: March 4, 1999 Projected Finish Date: December 4, 1999 Project Manager: Kim Nguyen, , Project Objectives: Upgrade hardware and software for all employees (approximately 2,000) within 9 months based on new corporate standards. See attached sheet describing the new standards. Upgrades may affect servers and midrange computers as well as network hardware and software. Budgeted $1,000,000 for hardware and software costs and $500,000 for labor costs. Approach: Update the IT inventory database to determine upgrade needs Develop detailed cost estimate for project and report to CIO Issue a request for quotes to obtain hardware and software Use internal staff as much as possible to do the planning, analysis, and installation Copyright Course Technology 1999

Table 4-2. Sample Project Charter (continued)
Roles and Responsibilities: Copyright Course Technology 1999

Scope Planning and the Scope Statement
A scope statement is a document used to develop and confirm a common understanding of the project scope. It should include a project justification a brief description of the project’s products a summary of all project deliverables a statement of what determines project success Copyright Course Technology 1999

Scope Planning and the Work Breakdown Structure
After completing scope planning, the next step is to further define the work by breaking it into manageable pieces Good scope definition helps improve the accuracy of time, cost, and resource estimates defines a baseline for performance measurement and project control aids in communicating clear work responsibilities Copyright Course Technology 1999

The Work Breakdown Structure
A work breakdown structure (WBS) is an outcome-oriented analysis of the work involved in a project that defines the total scope of the project It is a foundation document in project management because it provides the basis for planning and managing project schedules, costs, and changes Copyright Course Technology 1999

Figure 4-6a. Sample Intranet WBS Organized by Product

Figure 4-6b. Sample Intranet WBS Organized by Phase

Table 4-3. Intranet WBS in Tabular Form
1.0 Concept 1.1 Evaluate current systems 1.2 Define Requirements 1.2.1 Define user requirements 1.2.2 Define content requirements 1.2.3 Define system requirements 1.2.4 Define server owner requirements 1.3 Define specific functionality 1.4 Define risks and risk management approach 1.5 Develop project plan 1.6 Brief web development team 2.0 Web Site Design 3.0 Web Site Development 4.0 Roll Out 5.0 Support Copyright Course Technology 1999

Figure 4-7. Intranet WBS and Gantt Chart in Project 98
Project 98 file Copyright Course Technology 1999

Approaches to Developing WBSs
Using guidelines: Some organizations, like the U.S. Department of Defense, provide guidelines for preparing WBSs The analogy approach: It often helps to review WBSs of similar projects The top-down approach: Start with the largest items of the project and keep breaking them down The bottoms-up approach: Start with the detailed tasks and roll them up Copyright Course Technology 1999

Basic Principles for Creating WBSs
1. A unit of work should appear at only one place in the WBS. 2. The work content of a WBS item is the sum of the WBS items below it. 3. A WBS item is the responsibility of only one individual, even though many people may be working on it. 4. The WBS must be consistent with the way in which work is actually going to be performed; it should serve the project team first and other purposes only if practical. 5. Project team members should be involved in developing the WBS to ensure consistency and buy-in. 6. Each WBS item must be documented to ensure accurate understanding of the scope of work included and not included in that item. 7. The WBS must be a flexible tool to accommodate inevitable changes while properly maintaining control of the work content in the project according to the scope statement. Cleland, David I. Project Management: Strategic Design and Implementation, 1994 Copyright Course Technology 1999

Scope Verification and Scope Change Control
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 FoxMeyer Drug filed for bankruptcy after scope creep on a robotic warehouse Engineers at Grumman called a system “Naziware” and refused to use it Copyright Course Technology 1999

Table 4-4. Factors Causing IT Project Problems
Johnson, Jim, "CHAOS: The Dollar Drain of IT Project Failures," Application Development Trends, January 1995, Copyright Course Technology 1999

Suggestions for Improving User Input
Insist that all projects have a sponsor from the user organization Have users on the project team Have regular meetings Deliver something to project users and sponsor on a regular basis Co-locate users with the developers Copyright Course Technology 1999

Suggestions for Reducing Incomplete and Changing Requirements
Develop and follow a requirements management process Employ techniques such as prototyping, use case modeling, and Joint Application Design to thoroughly understand user requirements Put all requirements in writing and keep them current Create a requirements management database Provide adequate testing Use a process for reviewing requested changes from a systems perspective Emphasize completion dates Copyright Course Technology 1999

Discussion Questions Give examples of IT projects and why they were or were not selected for implementation. What type of project selection process did the organization use? Discuss the theory and practice behind using project charters, scope statements, and WBSs. Describe a project that suffered from scope creep. Could it have been avoided? How? Can scope creep be a good thing? When? Copyright Course Technology 1999

Topic 3: Continued Project Time Management Chapter 5

Importance of Project Schedules
Managers often cite delivering projects on time as one of their biggest challenges Average time overrun from 1995 CHAOS report was 222% Time has the least amount of flexibility; it passes no matter what Schedule issues are the main reason for conflicts on projects, especially during the second half of projects Copyright Course Technology 1999

Figure 5-1. Conflict Intensity Over the Life of a Project

Project Time Management Processes
Project time management involves the processes required to ensure timely completion of a project. Processes include: Activity definition Activity sequencing Activity duration estimating Schedule development Schedule control Copyright Course Technology 1999

Where Do Schedules Come From? Defining Activities
Project schedules grow out of the basic documents that initiate a project Project charter includes start and end dates and budget information 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 Copyright Course Technology 1999

Activity Sequencing Involves reviewing activities and determining dependencies Mandatory dependencies: inherent in the nature of the work; hard logic Discretionary dependencies: defined by the project team; soft logic External dependencies: involve relationships between project and non-project activities You must determine dependencies in order to use critical path analysis Copyright Course Technology 1999

Project Network Diagrams
Project network diagrams are the preferred technique for showing activity sequencing A project network diagram is a schematic display of the logical relationships among, or sequencing of, project activities Copyright Course Technology 1999

Figure 5-2. Sample Activity-on-Arrow (AOA) Network Diagram for Project X Copyright Course Technology 1999

Arrow Diagramming Method (ADM)
Also called activity-on-arrow (AOA) project network diagrams Activities are represented by arrows Nodes or circles are the starting and ending points of activities Can only show finish-to-start dependencies Copyright Course Technology 1999

Process for Creating AOA Diagrams
1. 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. Continue drawing the network diagram, working from left to right. Look for bursts and merges. Bursts occur when a single node is followed by two or more activities. A merge occurs when two or more nodes precede a single node 3. Continue drawing the project network diagram until all activities are included on the diagram that have dependencies 4. As a rule of thumb, all arrowheads should face toward the right, and no arrows should cross on an AOA network diagram Copyright Course Technology 1999

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 Copyright Course Technology 1999

Figure 5-3. Task Dependency Types

Figure 5-4. Sample Precedence Diagramming Method (PDM) Network Diagram for Project X Project 98 file Copyright Course Technology 1999

Activity Duration Estimating
After defining activities and determining their sequence, the next step in time management is duration estimating Duration includes the actual amount of time worked on an activity plus elapsed time People doing the work should help create estimates, and an expert should review them Copyright Course Technology 1999

Schedule Development Schedule development uses results of the other time management processes to determine the start and end date of the project and its activities 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, PERT analysis, and critical path analysis Copyright Course Technology 1999

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: A black diamond: milestones or significant events on a project with zero duration Thick black bars: summary tasks Lighter horizontal bars: tasks Arrows: dependencies between tasks Copyright Course Technology 1999

Figure 5-5. Gantt Chart for Project X

Figure 5-6. Gantt Chart for Software Launch Project

Figure 5-7. Sample Tracking Gantt Chart
white diamond: slipped milestone two bars: planned and actual times Project 98 file Copyright Course Technology 1999

Critical Path Method (CPM)
CPM is a project network analysis 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 Copyright Course Technology 1999

Finding the Critical Path
First develop a good project network diagram Add the durations for all activities on each path through the project network diagram The longest path is the critical path Copyright Course Technology 1999

Figure 5-8. Determining the Critical Path for Project X

More on the Critical Path
If one of more activities on the critical path takes longer than planned, the whole project schedule will slip unless corrective action is taken Misconceptions: The critical path is not the one with all the critical activities; it only accounts for time 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 Copyright Course Technology 1999

Using Critical Path Analysis to Make Schedule Trade-offs
Knowing the critical path helps you 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 may be delayed from its early start without delaying the planned project finish date Copyright Course Technology 1999

Table 5-1. Free and Total Float or Slack for Project X

Techniques for Shortening a Project Schedule
Shortening durations of critical tasks by adding more resources or changing their scope Crashing tasks by obtaining the greatest amount of schedule compression for the least incremental cost Fast tracking tasks by doing them in parallel or overlapping them Copyright Course Technology 1999

Shortening Project Schedules
Original schedule Shortened duration Overlapped tasks Copyright Course Technology 1999

Many Horror Stories Related to Project Schedules
See “What Went Wrong?” example on pg. 126 about the National Insurance Recording System Creating realistic schedules and sticking to them is a key challenge of project management Copyright Course Technology 1999

Importance of Updating Critical Path Data
It is important to update project schedule information 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 Copyright Course Technology 1999

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 based on using optimistic, most likely, and pessimistic estimates of activity durations Copyright Course Technology 1999

PERT Formula and Example
PERT weighted average formula: optimistic time + 4X most likely time + pessimistic time 6 Example: PERT weighted average = 8 workdays + 4 X 10 workdays + 24 workdays = 12 days 6 where 8 = optimistic time, 10 = most likely time, and 24 = pessimistic time Copyright Course Technology 1999

Controlling Changes to the Project Schedule
Perform reality checks on schedules Allow for contingencies Don’t plan for everyone to work at 100% capacity all the time Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues Copyright Course Technology 1999

Working with People Issues
Strong leadership helps projects succeed more than good PERT charts Project managers should use empowerment incentives discipline negotiation Copyright Course Technology 1999

What Went Right? Chris Higgins used the discipline he learned in the Army to transform project management into a cultural force at Bank of America. Higgins learned that taking time on the front end of a project can save significant time and money on the back end. As a quartermaster in the Army, when Higgins' people had to pack tents, he devised a contest to find the best way to fold a tent and determine the precise spots to place the pegs and equipment for the quickest possible assembly. Higgins used the same approach when he led an interstate banking initiative to integrate incompatible check processing, checking account, and savings account platforms in various states. Law mandated that the banks solve the problem in one year or less. Higgins' project team was pushing to get to the coding phase of the project quickly, but Higgins held them back. He made the team members analyze, plan, and document requirements for the system in such detail that it took six months just to complete that phase. But the discipline up front enabled the software developers on the team to do all of the coding in only three months, and the project was completed on time. Copyright Course Technology 1999

Using Software to Assist in Time Management
Software for facilitating communications helps people exchange schedule-related information Decision support models help analyze trade-offs that can be made Project management software can help in various time management areas Copyright Course Technology 1999

Table 5-2. Project 98 Features Related to Project Time Management

Words of Caution on Using Project Management Software
Many people misuse project management software because they don’t understand important concepts and have not had good training You must enter dependencies to have dates adjust automatically and to determine the critical path You must enter actual schedule information to compare planned and actual progress Copyright Course Technology 1999

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