Project Management

Project Initiation & Selecting

Summer 2005

Session Objectives
Project initiation Selecting Projects Project Charter
Washington Mercy Hospital case study
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Project Management Processes & IT PM Phases

Project Initiation: Strategic Planning

First step in initiating projects: look at the big picture, organizations strategic plan Strategic planning involves determining long-term business objectives IT projects should (must) support strategic & financial business objectives

Schwalbe: Why Firms Invest in IT

Identifying Potential Projects

Many organizations follow a planning process for selecting IT projects First develop an IT strategic plan based on organizations overall strategic plan Then perform business area analysis Then define potential projects Then select IT projects & assign resources

IT Planning Process

Selecting Projects
Usually more projects than time & resources available to implement them Important to follow logical process for selecting IT projects to work on Methods include focusing on broad needs, categorizing projects, financial methods & weighted scoring models
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Focus on Broad Organizational Needs

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 project There are funds available Theres a strong will to make project succeed
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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
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Net Present Value Analysis

Net present value (NPV) analysis: method of calculating expected net monetary gain or loss from project by discounting all expected future cash inflows & outflows to present point in time Projects with positive NPV should be considered if financial value is key criterion The higher the NPV, the better

Schwalbe: Net Present Value Example

Excel file

Weighted Scoring Model

Weighted scoring model: provides systematic process for selecting projects based on multiple criteria
First identify criteria important to 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 weights and get total weighted scores

The higher the weighted score, the better

Schwalbe: Sample Weighted Scoring Model for Project Selection

Excel file

Selecting Projects (cont.)

Buss Grid Approach
project selection team grids with criteria, high-medium-low criteria generally financial, technical, enhancing core competencies, organizational fit against cost review proposals, then quick collective judgment

Poor Mans Hierarchy

grid with criteria compare each project against each other project assign 1 or 0, sum results Frame

Project Charters
After deciding what project to work on, its important to formalize projects Project Charter is document formally recognizing existence of project & provides direction on projects objectives & management Key project stakeholders should sign project charter to acknowledge agreement on need & intent of project
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Project Charters
Unfortunately authors disagree on the details:
Schwalbe Marchewka Verzuh

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Schwalbe: Sample Project Charter

Project Title: Information Technology (IT) Upgrade Project Project Start Date: March 4, 200 Projected Finish Date: December 4, 2002 Project Manager: Kim Nguyen, 691-2784, knguyen@abc.com 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

Schwalbe: Sample Project Charter (cont.)

Roles and Responsibilities:
Name Walter Schmidt, CEO Mike Zwack Kim Nguyen Jeff Johnson Nancy Reynolds Role Project Sponsor CIO Project Manager Director of IT Operations VP, Human Resources Responsibility Monitor project Monitor project, provide staff Plan and execute project Mentor Kim Provide staff, issue memo to all employees about project Assist in purchasing hardware and software

Steve McCann

Director of Purchasing

Sign-off: (Signatures of all above stakeholders) Comments: (Handwritten comments from above stakeholders, if applicable) This project must be done within ten months at the absolute latest. Mike Zwack, CIO We are assuming that adequate staff will be available and committed to supporting this project. Some work must be done after hours to avoid work disruptions, and overtime will be provided. Jeff Johnson and Kim Nguyen, Information Technology Department

Purpose of Project Charter (Marchewka)

more comprehensive approach

Document the project MOV Define project infrastructure Summarize details of project plan Define roles and responsibilities Show explicit commitment to project Set out project control mechanisms
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What Should be in a Project Charter?

Project Identification Project Stakeholders Project Description Measurable Organizational Value (MOV)

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What Should be in Project Charter? contd

Project Scope Project Schedule Project Budget Quality Issues Resources
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What Should be in a Project Charter? contd

Assumptions and Risks Project Administration Acceptance and Approval References Terminology
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Project Rules (Verzuh #4)

Project success demands
goals agreed by all stakeholders control of scope management support

Project charter
brief, high level document formally establishing project understood & signed by all key stakeholders

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Project Rules (cont.)

Statement of Work (SOW)
NOT usual usage of term per Verzuh establishes rules of game goals, constraints, success criteria negotiate, formally agree ahead of game? why not part of planning phase?
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Summer 2005

Project Planning Framework

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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 projects products a summary of all project deliverables a statement of what determines project success
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Establish

Initiate

Charter establishes project Next must compete with other projects for scarce resources Prioritize go or no go? Go ahead Begin Analysis Phase needs requirements detailed SOW
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Washington Mercy Hospital Case Study

Hospital contract with DCS State of art patient info system
<3 sec response

Add ambulatory surgery center Goes to arbitration Management & project issues Technical issues Blame responsibility?
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