Project Management Defining a Projects (Is and Not)

Introduction 1. Projects are temporary (Like a good

story; Have a beginning, middle,
Why Project Management? and, end)
- Work is interesting and challenging 2. Projects create unique results
- There’s plenty of job satisfaction (Projects are distinct)
- Variety is the spice of life 3. Projects are endeavors
- It’s a people business
- You’ll never be short of work *Progressive Elaboration
*Food for Thought
Project Features
1. A deadline Defining Project Management
2. Resources - Supervision and control of the work
3. A budget required to complete the project
4. End in mind / Goal vision
- Work processes that initiate, plan,
Why are projects important? execute, and close work
1. Shortened product life cycles
2. Narrow product launch windows Projects and Operations Management
3. Increasingly complex and technical - Both use employees
products - Both use limited resources
4. Emergence of global markets - Both use money
5. Economic period marked by low
inflation Project vs Operations Management
- Project Management have an end;
Examples of Projects Operations doesn’t
1. Designing a new product or service
2. Converting from one computer Process vs Project Management
application to another - Process (several objectives); Project
3. Building a new warehouse (one objective)
4. Moving from one building to another - Process (ongoing); Project (One
5. Organizing a political campaign time)
6. Designing and building a new - Process (Guide); Project (make your
airplane own system)

Why projects are created The Participants/Stakeholders

- An opportunity based on market - The project team carries out the
conditions work needed to complete the project
- Special needs within your company
(a.) Customers People who can help you
(b.) Technology - Finance people
(c.) Laws - HR people
- Marketing people
Project Management Knowledge Areas
- Integration
- Scope 1. Initiating
- Cost - Brainstorming ideas
- Time - Should we do it?
- HRM - Identify the need
- Quality - Can we do it?
- Communications - What to include: Reasons,
- Risk Results, Constraints,
- Procurement Assumptions, requirements,
resources
Related Areas of Project Management - Similar to a feasibility study
- Program Management - Creating the product
- Project Portfolio Management description (expected
- Subproject Implementation outcome, high-level solution)
- Project Management Office - Project Charter (Declaration,
- Project Management System Authorize, Officially starts the
project); A statement of
Determinants of Project Success purpose, tells people what
- Budget, Schedule, Performance, we will do and not do.
Client Acceptance = Success
2. Planning
Who is involved in the project? - The 6P Rule of Project
What is the project’s scope or boundaries? Management (Prior Planning
Why do this project? Prevents Poor Project
Performance)
Successful project
- Project management process * Planning prevents you from
- Solid plan wasting resources

Processes = the control of certain individual - Two extreme of planning:

activities(collection of activities); not solo Ready, Fire, Aim and
activities Paralysis by Analysis
Project Manager = find the best way to - Rolling wave planning
manage a project (temporary but adds on every
level or step)
- Iterative planning
- Projects are restrained by
time (Project Schedule)
- Project Network Diagram,
Work Breakdown Structure
- Project Financials
(Budgeting) - Completing
Estimates (Variance analysis)
 - Creating a Quality - Monitoring and Controlling
Management Plan (Specifics, the Project (Verify, Predicted
Guidelines) Cost, Schedule, Comparing)
- Quality Assurance Program - Managing Integrated Change
(Framework) Control (Change requests,
- Planning for Human Update)
Resources Needs - Providing Scope Verification
(Leadership) (Expectations of the scope,
- Creating Communications taking a walk-through)
Plan (who needs information,
how they need it, when it will II. The Project Management
be delivered) Processes
(Communicating equates to
project management) For A Project To Be Successful, We Need...
- Risk Management Planning 1. The application of the appropriate project
(Identifying Project Risks, management processes to complete the
Completing Qualitative and project
Quantitative Risk Analysis) 2. A solid plan and execution of this solid
- Planning for Project plan to meet project and product
Contradicting requirements
- Officially Launching the 3. A method to satisfy stakeholder
Project Work (Collective expectations
state) 4. An approach to keep the project’s time,
cost,
3. Executing quality, scope, resources, and risk in
- Preparing, Assigning, balance
Defining, Action
- Getting things done Elements of PM
- Directing and Managing 1. Cost, Time, Scope, Cultural Achievability,
Project Execution (Interfaces, Technical Achievability, and more are all
Project time, Budget) related and interdependent.
- Performing, Assuring, 2. A small change, delay, decision (or lack
Developing, Sharing thereof) can amplify into serious problems
Learning further down the project timeline.
- Developing Project Team
(Organizational structure, Learning the Project Processes
recruit) • All projects, from technology to
- Dispersing Project architecture,
Information are composed of processes.
(Communications) • Processes are a series of actions with a
- Managing Procurement common, parent goal to create a result.
Activities • People perform processes.
• Processes are not the individual activities,
but
the control of individual activities to
complete
a project phase.

Managing The Project

• There’s more than one correct way to
manage
a project.
• Role of Project manager to find the best
way.
• Processes are integrative and Identifying the Project Management Process
interdependent. Groups
1. Initiating = Project is authorized.
Identifying the Project Management Process 2. Planning = Project objectives are
Groups determined, as well as how to reach those
• These process groups are not solo objectives with the given constraints.
activities. 3. Executing = Project is executed utilizing
• The groups are a collection of activities acquired resources.
that 4. Monitoring and controlling = Project
contribute to the control and implementation performance is monitored and measured to
of the project management life cycle. ensure the project plan is being
• The output of one process group will act implemented
as to design specifications and requirements.
input for another process group. 5. Closing = Project, its phases, and
• Project management processes are the contracts are
processes you’ll want to study. brought to a formal end.
• Product-oriented processes, on the other
hand, are unique to the organization INITIATING PROCESS GROUP
creating • Idea Stage
the product. • Should we do it?
• Logical Flow • Are the benefits we expect to achieve
• Overlap with other groups worth
• Sometimes, they are repeated the costs we’ll have to pay?
• Are there better ways to approach the
The Project Process issue?

Initiating Planning Executing Identifying Needs

A project is called to solve a need,
examples are:
1. Reducing costs
2. Increasing revenues
3. Eliminating waste
4. Increasing productivity and efficiency
5. Solving a business or functional problem
6. Taking advantage of market opportunities
 opportunity cited.
Identifying the Business Needs 4. Study the cost of the solution in relation
• Examine the problem, opportunity, and to
solution to see how the potential project and the possible rewards gained by its
its expected outcome fits with the business implementation
vision and goals.
• Why is this important ? Creating The Product Description
• Describes what the expected outcome of
the project is to be.
Project Initiation • Describes the high-level solution or
• Can we do it? Is the project technically realized
feasible? Are the required resources opportunity that the project will accomplish.
available?
• Launches the project process Creating The Project Charter
• Allows the project manager to have the • Authorizes the project,
authority to begin the project. • Officially names the project manager
• Admits that there is some problem that a • Authorizes the project work.
solution should solve • Officially launch the project
• Should be approved/funded by someone
What To Include In Your Plan who has the power to authorize the project
• An overview of the reasons for your project manager, the needed funds, and the
• A detailed description of intended results resources that will be utilized within the
• A list of all constraints the project must project work.
address
• A list of all assumptions related to the Creating The Project Charter
project • Describes the needed resources to
• A list of all required work complete the project, and any identified
• A breakdown of the roles you and your assumptions and constraints.
team members will play • Allows the project manager to go about the
• A detailed project schedule business of getting the project work planned
• Needs for personnel, funds, and non- and then finished
personnel resources • Initial scope description
• A description of how you plan to manage
any significant risks and uncertainties It Should Contain...
• Plans for project communications 1. Project requirements for satisfaction.
• Plans for ensuring project quality 2. The big picture.
3. Project purpose.
Creating a Feasibility Study 4. Milestone schedule
1. Conducted to prove a problem actually 5. Stakeholder influences
exists; 6. Functional organizations
2. Document the opportunities at hand; 7. Assumptions
3. Determine if a project can be created to 8. Constraints
resolve the problem or take advantage of 9. Summary budget
the 10.Contract
 • “Paralysis by Analysis”
A Charter May Require...
• A contract Project Planning
• A project statement (the project purpose) 1. Iterative in nature
• Enterprise environmental factors such as 2. Obtain buy-in of stakeholders
the organization’s structure, culture, and 3. Stakeholders’ expectations and
relevant requirements
regulations and standards must be analyzed.
• Organizational process assets, including 4. Also known as rolling wave planning.
policies, standard project management
forms,
templates, and organizational procedures Rolling Wave Planning
that affect the project work • Planning on the immediate activities of the
project rather than on remote, future
Scope Statements activities that may be affected by the
• Defines what the project will accomplish, outcome of the direct project results.
create, and deliver. • Planning solution for long projects whose
• Defines the purpose of the project, in late activities in the project schedule are
detail, so that all stakeholders may share a unknown or will be determined based on the
common understanding of the project. results of early project phases

Creating the Scope Statement: Food For Thought

Preliminary Statement Must Identify • A good plan today is better than a perfect
1. Project vision plan tomorrow
2. Deliverable requirements • Although planning is as much an art as it is
3. Product requirements an exact science, prior experience and
4. Project boundaries common sense both have a big part to play.
5. Acceptance criteria
6. The high-level scope control Project Schedule
• Projects are scheduled according to time
PLANNING PROCESS GROUP constraints.
• Using the constraint of a deadline on the
Importance of Project Planning project, all activities must be scheduled,
from the project’s start to its completion, to
ensure the project can finish on time.

Completing Estimates
• Time through Project Network Diagram

Two Extremes of Planning

• “Ready, Fire, Aim”
 QA and QC Framework

• Time through WBS

Planning for Human Resource Needs

• Project manager must use human
resource
and leadership skills to guide and lead the
project team to project completion.

Project Financials Creating a Communications Plan

• Project budget is the cost of the project, • Determines who needs what information,
cash flow projections, and how the money how they need it, and when it will be
will be spent delivered.
• Should cover the cost of the team’s time, • Specifies team meetings, reports,
facilities, and all foreseeable expenses. expectations for reports, and expectations
of
Completing Estimates communication among team members.
• Cost: top-down estimates, bottom-up • Remember: 90 percent of a project
estimates, or informal “hallway estimates.” manager’s time is spent communicating.
• Identifies a range of variance reflective of Communicating equates to project
the degree of confidence of the estimate, management
the
assumption the estimate is based on, and Risk Management Planning
how long the estimate is valid • Risk is a perceived threat (or opportunity)
to the completion of the project.
Creating a Quality Mgt Plan • Defines the project manager’s obligations
• Details how the project will map to the to acknowledge, document, research, and
organizational quality policy plan for risks within the project
• Provide specifics on how the project team
will meet the quality expectations of the Identifying Project Risks
organizational quality assurance program. • Allows the project manager and the team
• Sets the guidelines for how the project will to determine what high-level risks may
adhere to quality control mechanisms and influence the feasibility, resources, and
ongoing quality improvement. requirements to complete the project.
• Steer the project toward a different team members to each other and to the
solution. project
• Ongoing, active project management – Giving and explaining tasks to all team
process. members
– Defining how the team will perform its
Completing Qualitative and Quantitative essential
Risk Analysis functions
• Qualitative risk analysis calls for a – Setting up necessary tracking systems
probability and impact matrix. – Announcing the project to the organization
• Quantitative risk analysis is a more
in-depth study of the identified risks. Directing and Managing Project Execution
• Uses simulations and decision tree models - The business of getting the project done
- Team executes the work as defined in the
Completing Risk Response Planning project management plan and the project
• Risks are analyzed for both positive and the manager manages the work.
negative impacts, entered through a risk - Management of the organizational and
matrix and then planned accordingly technical interfaces the project manager
• Risks may be accepted, avoided, must interact with to ensure that project
mitigated, countered, or planned for through work flows smoothly and as planned.
contingency. - Bulk of the project time and budget are
• Risks are assigned to risk owners who will consumed
monitor thresholds and triggers. 2. Performing
– Doing the tasks
Planning for Project Contracting – Assuring quality
• Follows the organizational policies and – Managing the team
procedures for procurement – Developing the team
• Finding qualified vendors, requesting – Sharing information
quotes or proposals, and reviewing those
proposals for the best vendor Project Execution
• Execution of the project plan,
Officially Launching the Project Work • Execution of the vendor management,
• Once the project has reached a collective • Management of the project implementation
state of agreement between the project • When projects go awry it’s time to revisit
manager, management, the project team, planning.
and the customer, the project is officially
allowed to begin. Developing the Project Team
• Based on the organizational structure
EXECUTING PROCESSES • Recruit the project team or the project
team will be assigned to the project
Execution manager.
1. Preparing • Staffing
– Assigning people to all project roles: • Roles and responsibilities are needed for
Introducing the project
• Subject to availability
 expectations of the scope
Dispersing Project Information • Done at project phase completion where
• Information is disseminated according to the customer formally accepts the product
the communications plan of the project work
• Example: milestone reports, variance • Inspecting, touring, and “taking a walk-
reports, and status reports, through” of the project deliverables to
confirm that the requirements of the project
Managing Procurement Activities have been met.
• Obtaining quotations, bids, and proposals
for the services or goods to be purchased Implementing Scope Change Control
for the project’s completion. • Ensures that the documented procedures
• Making a decision as to which identified to permit changes to the scope are followed.
vendor will be the source of the service or
good being procured. Enforcing Schedule Control
• requires constant monitoring of the
MONITORING AND CONTROLLING project’s progress, approval of phase
THE PROJECT deliverables, and task completion

Monitoring and Control Managing Cost Control

• Activities that ensure the project goes • Requires accurate estimates
according to plan and the actions that need • Check and balance against those
to be implemented when evidence proves estimates.
the project isn’t going according to plan
• Verify project work and the response to Mapping to Quality Assurance
that • As the project work continues, the project
work team and the project manager will need to
• Control the predicted cost and schedule of verify that the project work results are
the project mapping to the organization’s quality
• Comparing performance with plans assurance program as described in the
• Fixing problems that arise quality management plan.
• Keeping everyone informed
Ensuring Quality Control
Managing Integrated Change Control • Alignment with quality standards.
• Examining change requests, changes, • Inspection driven
preventive action, corrective action, and • Keeps mistakes away from the project
defect repair to see how these issues affect customer.
the remaining portions of the project.
• Update to the project plan and project Managing the Project Team
scope • Limited to the authority the project
• Approve or decline change requests manager has over the project team.

Providing Scope Verification Ensuring Performance Reporting

• Verifying that the work results are within • Accurate measurement by the project
the team, proof of work completion, and factual
estimates. • Account spending
• The status reports to management are • Procurement audit
reflective of where the project has been, • Debriefing
where it stands now, and where it’s heading.
Closing Vendor Contracts
Completing Performance Reporting • Confirmation that vendor invoices and
1. Status reports purchase orders have been fulfilled, met,
2. Progress measurement and paid
3. Forecasting
4. Performance reports Closing Administrative Duties
5. Recommended corrective actions • Finalize all reports,
• Document the project experience,
Managing the Project Stakeholders • Provide evidence of customer acceptance
• Stakeholders will look to the project • Learnings
manager for updates, guidance, and
leadership on the project.
• They’ll look to the project manager to Celebrating!
ensure that they get the things out of the • Thank and reward the project team for
project they want. their
hard work and dedication to the project is
Monitoring and Controlling Project Risks needed.
• Risk response may also include risk • Reflect on the work completed, the
impact statements that detail project risk, its challenges of the project, and to come back
possible impact on the project, and its together as a team before moving on to
probability. other projects and opportunities within the
• The project manager and management organization.
sign the risk impact statement for each
identified risk beyond a predetermined PROJECT INTEGRATION
score. MANAGEMENT

CLOSING THE PROJECT • Heart of project management

• Made up of the day-to-day processes the
Closing the project manager relies on to ensure that
• Get your clients’ approvals of the final all of the parts of the project work together.
results. • The way the gears of the project work
• Close all project accounts together.
• Help team members move on to their next • Art and science of ensuring that the project
assignments. moves forward, and that the plan is fully
• Hold a post-project evaluation with the developed and properly implemented
project team to recognize project • Assumptions should be documented
achievements and to discuss lessons you whenever they are used. This includes
can apply to the next project. estimates, planning, scheduling, and so on.
• Assumptions can be considered as risks
Auditing Procurement Documents
because false assumptions can alter the 6. Quality control charts, PERT charts,
entire project. Gantt charts, and other charting features
7. Calculations for the critical path, EVM,
Project Statement of Work target dates based on the project schedule,
• Summary of what the project will provide and more
– Provides the business needs of the 8. Resource tracking and leveling
project, 9. Reporting functionality
– Product/service the project must create.
– Product scope description Organizational Process Assets
– How the project fits within the strategic 1. Standards, policies, organizational
plan procedures
2. Standardized guidelines, performance
Enterprise Environmental Factors measurement
1. Organizational cultures and structures 3. Templates
2. Government and industry standards 4. Processes for project activities such as
3. Organizational infrastructures, such as closing, communications, financial controls,
facilities and equipment (or the lack thereof) and risk control procedures
4. The availability of human resources and 5. Process measurement for project
their competencies performance
5. Personnel administration 6. Project files
6. A work authorization system 7. Historical information from past projects
7. Marketplace conditions 8. Issue and defect databases
8. Stakeholder risk tolerances 9. Configuration management databases
9. Standardized cost estimating databases
10.Project Management Information Cutting Through the Chaos
Systems (PMIS) • Over the years, IT PM has gained a
reputation for failure, with many high-profile
Project Management Information Systems projects being abandoned mid-stream,
(PMIS) costing millions or even billions of pesos.
• Computer-driven system • Government is not good at running IT
• Aids project manager in the development projects because of the committee structure
of the project and too many vested interests.
• Calculate schedules, costs, expectations • The Standish Group has identified 10
• Goal is to automate, organize, and provide areas in their Chaos Manifesto 2013, which
control of the project management looked at 50,000 projects since 2002.
processes
Formula for Success
PMIS Contains: • Executive Management Support = Get
1. WBS creation tools support from an executive sponsor at the
2. Calendaring features start of your project and make sure they
3. Scheduling abilities have a good understanding of the project
4. Work authorization tools management process
5. EVM controls
• User Involvement = Encourage users to
participate in the project from the start, and (a.) Resource Management: deploying
tune the project team into their needs resources
where they are needed and will be most
• Optimization = Keep project scope small effective.
and focused. It is worth remembering the (b.) Demand Management: prioritizing
Pareto Principle says that 20% of the stakeholder requirements and matching
features and functions deliver 80% of the resources to them.
benefits. (c.) Portfolio Management: maximizing the
return on investment (ROI) while balancing
• Skilled Resource = Employ a small, highly cost and risk.
proficient and experienced team to increase (d.) Financial Management: creating
the success rate of your projects. estimates
and managing budgets.
• PM Expertise = Employ highly competent (e.) Cut through the chaos on your next
and experienced project managers with project by focusing your efforts to develop
good judgment and strong decision making and deliver a truly useful solution for your
skills. client.

• Agile Process = Keep projects small, use III. Project Selection

stepping stones to check the project is still
on the right track. Project Selection
- Resolving the unknown,
• Clear Business Objective = Make sure the - Predicting the likelihood of project
project objectives are aligned with the success,
businesses goals and strategy and that you - Expected value of that project’s
remain highly focused on the project success—or the cost of its failure.
Objectives. - Go/No Go decision making
- Done in phases
• Emotional Maturity = Run an assessment
of your project team's emotional maturity Before Anything Else...
and take steps to improve where needed. - Establish a selection committee.
Review the project concept
• Execution = Establish a set of rules, documents and decide, based on a
standards and guidelines for project myriad of criteria, which projects
execution aligned to the business goals and should go forward.
strategy. Communicate this to your project
teams It’s All About The Money...

• Tools and Infrastructure = Keep the - Organizations are in business to

number of tools and processes used to make a profit.
manage projects low. Experiment with - Concerned about choosing projects
different tool sets and processes until you with the greatest potential for
find a mix that works for you. Concentrate revenue.
on the following areas:
 - Nonprofits and government agencies benefits of a project and how the
aren’t concerned with making profits, project completion will contribute to
but they are concerned about getting the organization.
the greatest utilization out of their
operating funds as possible. Constrained optimization methods
- They want to select projects that - tools for selecting projects, but their
provide the most benefit for the least approach is much more scientific
cost. and math-driven.
- Not altogether different from their
profit-making partners, their Generic Criteria For Project Selection
motivation to use resources to their
fullest extent possible while 1. Return on investment
receiving the greatest return 2. Realized opportunities
possible is the same. 3. Market share
4. Customer perspective
Food For Thought 5. Demand for the product
- Taking on responsibility for a new 6. Social needs
project is a defining moment for a 7. Increased revenues
project manager. 8. Reduced costs

Quick Health Check Screening Models

1. Are the project’s objectives clear and - Screening models help managers
measurable? pick winners from a pool of projects.
2. Has anyone documented what the Screening models are numeric or
project needs to deliver – and have non-numeric and should have
your customers signed up to this?
3. At first sight, do existing Model Selection Basis
commitments to deliverables, 1. Realism
timescales and resources look 2. Capability
realistic? 3. Flexibility
4. If work is already well under way, is 4. Ease of Use
there a clear audit trail of significant 5. Cost Effectiveness
decisions taken and underpinning 6. Comparability
assumptions?
5. Is your team working together Screening & Selection Issues
productively and does everyone 1. Risk – unpredictability to the firm
know what they’re expected to 2. Commercial – market potential
deliver? 3. Internal operating – changes in firm ops
4. Additional – image, patent, fit, etc.
Examining the Project Selection Criteria
• All models only partially reflect reality and
Benefit measurement methods have both objective and subjective factors
- Tools that allow management and embedded
key stakeholders to examine the
You Are In Trouble When... 1. Requires agreement on
1. The project has changed its name at criteria
least once to try to leave its past 2. Assumes all criteria are
behind and to restore its good equally important
reputation. - Valuable for recording opinions and
2. You’re the latest in a long encouraging discussion
succession of project managers.
3. Other project managers seem far too Simple Scoring Model
pleased that this particular project - Based on a series of questions or
has fallen to you. models that score company goals or
4. Your project has already been project goals against criteria
running for a very long time without determined by the selection or
delivering anything. review committee.
- Each project receives a score that is
EXAMINING BENEFIT MEASUREMENT the weighted sum of its grade on a
METHODS list of criteria.

Historical Information Simple Scoring Models

- Has anyone ever done something
like this before? Scoring models require:
- Provides proven documentation of - agreement on criteria
the success or failure of - agreement on weights for criteria
performance, - a score assigned for each criteria
- Can be referenced for comparable
projects and how they performed
through to execution, as well as how
the deliverables of the project Relative scores can be misleading!
performed according to prediction.
- Basis of determining if an existing Analytic Hierarchy Process
project should move forward into the
next project phase. 1. Construct a hierarchy of criteria and
sub-criteria
Murder Boards 2. Allocate weights to criteria
- Committees that ask every 3. Assign numerical values to
conceivable negative question about evaluation dimensions
the proposed project. 4. Scores determined by summing the
- Goal is to expose strengths and products of numeric evaluations and
weaknesses of the project—and kill weights
the project if it’s deemed worthless • Unlike the simple scoring model, these
for the organization to commit to. scores are comparable!

Checklist Model Profile Models

- A checklist is a list of criteria applied Show risk/return options for projects.
to possible projects: Requires:
 - Criteria selection as axes the financial benefits gained from
- Rating each project on criteria doing so.
- You should consider all costs when
analyzing the cost benefits, including
the costs to produce the product,
costs to market the product, and
ongoing support costs.
- This is a simple decision tool.
- If the costs are lower than the
- Profit and nonprofit companies alike expected return, the project will
have limited resources and limited receive a go recommendation.
amounts of time.
- As such, they’re interested in Payback Period
knowing that if they invest the time - Amount of time it takes for the
and resources to produce the project to pay itself back.
product of the project, it will be a - Compares the total project costs to
good investment. the revenue generated as a result of
- Financial calculations can tell you the project and calculates how long
whether the project is likely to it will take for revenues to pay back,
produce a good return on your or equal, the initial investment.
investment. - Shortest payback period is chosen
- Are you going to get more out of it - How long does it take the project to
over the life of the project (or the “pay back” the costs of the project?
product the project is going to - One of the simplest, is also the
produce) than you put into it? weakest.
- Financial calculations are also used - Does not consider time value of
as selection criteria when comparing money
and deciding among several - Determines how long it takes for a
projects. project to reach a breakeven point

Financial Models

Based on the time value of money principal

1. Payback period
2. Net present value Cash flows should be discounted
3. Internal rate of return Lower numbers are better (faster payback)
4. Options models

All of these models use discounted cash

flows

Benefit/Cost Ratios
- Compares the costs to produce the
product or service of the project to
 – n is the number of time periods (years,
quarters, and so on)

NPV
- Evaluates the money returned on a
project for each time period the
project lasts.
- The faster the project can be
completed, the sooner the
organization will see a complete
return on their investment.

Discounted Cash Flow

- Time is money.
- Determine whether the potential
revenue stream for the project is
worth more than what it costs to
produce the product or service of the
project.
- Money in your hand today is worth
more than money you might receive
tomorrow.
- A financial calculation used to NPV Steps
determine the project’s worth or 1. Calculate the project’s cash flow for
profitability in today’s value. time units (typically quarters or
- Used as a selection criteria years).
technique when choosing among 2. Calculate each time unit total into
competing projects. the present value.
- Because you have access to the 3. Sum the present value of each time
money today, you could invest it and unit.
make a profit, put it in the bank and 4. Subtract the investment for the
draw interest, start a small business, project.
and so on. 5. Take two aspirins.
- Therefore, the money you may 6. Examine the NPV value. An NPV
receive tomorrow needs to be greater than one is good and the
related to what it’s worth today. project should be approved. An NPV
- Select the project with the highest less than one is bad and the project
return on investment. should be rejected.

Discounted Cash Flow NPV Example

• FV = PV (1 + I)n, where:
– FV is future value • Should you invest $60,000 in a project that
– PV is present value
– I is the interest rate
will return $15,000 per year for five years? of 17%; does this project meet the
You have a minimum return of 8% and threshold?
expect inflation to hold steady at 3% over
the next five years. Internal Rate of Return Example

IRR
- Calculates the rate you’d have to ROI
apply to the present value of the - Measures the amount of savings or
expected cash inflows (what the profit the project will generate.
cash inflows are worth in today’s - It can be expressed as a simple
pesos) to make the cash inflows percentage calculation that works
equal to the original investment. like this: If your initial investment is
- The higher the IRR, the more $20,000 and the profit generated
profitable the project. equals $30,000, the project has
- IRR assumes cash inflows are generated a 50 percent ROI.
reinvested at theIRR value.
Options Models
NPV and IRR methods don’t account for
failure to make a positive return on
investment. Options models allow for this
possibility.

Options models address:

1. Can the project be postponed?
2. Will future information help decide?

Constrained Optimization Methods

- Set of numerical methods used to
solve problems where one is looking
to minimize total cost or maximize
IRR Example
total revenues based on inputs
whose constraints, or limits, are
A project that costs $40,000 will generate
unsatisfied.
cash flows of $14,000 for the next four
years. You have a rate of return requirement
Constrained Optimization Methods - Extend optical fibers to improve the
• Linear programming government’s ability to serve its
• Nonlinear programming people and
• Integer algorithms - Promote seamless and effective
• Dynamic programming Communication.
• Multi-objective programming - The project team began work on on
July 6, 2006, over a year after they
Relying on Expert Judgment won the bid, and aimed to complete
• Relies on the experts within the the project by November of 2006
organization, - The total contract amount for the
consultants, stakeholders (including the project was US$3 million
project customers), professional - Staying on schedule was a primary
associations, concern
or industry groups for advice. - Signing of the contract, which would
• Contribute to the project selection method officially launch the project, was
by offering their opinion, research, and completed late in the schedule.
experience.
Challenges
China Telecom Corporation, Ltd - Due to the delay of the contract, the
team initiated the project according
- China Telecom is the world’s largest to the information in the letter of
landline telecommunications and intent,
broadband services provider. - It’s a problem as the letter of intent
- Covering cities and towns as well as and the actual contract differed
the rural areas of China, slightly.
- China Telecom has more than 220 - This caused the team to have to
million landline subscribers and make changes and modifications
more than 35 million broadband mid-project which, in turn, impacted
subscribers, and penetrates every the overall schedule.
corner of the world. - The Nanshan District Optical Fiber
- Shenzhen Telecom is a wholly Network consisted of 6 optical fiber
owned subsidiary of China Telecom networks: government, education,
in Shenzhen city health, network, community network,
- In May 2006, Shenzhen Telecom and politics and law network,
won the bid to develop the - All of which were connected to the 3
communications network for levels of Nanshan District
Shenzhen city’s Nanshan District of government, sub-district offices and
China, communities.
- A project that would connect - The project team needed to ensure
government offices, neighborhoods, that activities associated with each
schools and community healthcare unit were appropriately coordinated
service centers. with the greaterteam.
- Big project required 10 different
departments within the company
 - Participation of numerous related contact as the interface for
units of design, construction and communication with the client.
supervision, - This helped improve client
- Immense organization and satisfaction because each individual
management. Nanshan District Network was given
- Oversee the laying of more than 426 exclusive attention so
new routes of optical fibers, communications regarding changes
- Project execution required difficult and other issues were efficiently and
coordination and mandatory successfully addresses
approvals that threatened the - Project documentation processes
project’s schedule - Specific team members were
- So many people involved = high risk appointed to take charge of
of communication failures managing the documents and
project logs were developed and
Solution refreshed regularly.
- Formed a Project Management - Kept the team on task and
Committee,which would give the effectively controlled the many
China Telecom team structure and moving parts of the project.
standardized processes. - Anticipate difficulties in meeting the
- Committee composition: project schedule and then create
1. Client Coordination Team, plans and programs to overcome
2. Project Construction Team those potential issues.
3. Deployment & Delivery - “No. 1 Project War Room,” which
Team, released a daily countdown report to
- Built on a sound management create a sense of urgency and
platform. fulfillment among team members,
- To ensure timely and effective further helping them meet the project
communication, the team launched schedule
the “No. 1 Project Mailbox,”
- Provided a platform for the team to Results
share updates surrounding logistical - Successfully completed on
information, ongoing activities and November 28, 2006—ahead of the
scheduling, team’s target completion date.
- Gave all the individuals involved full - The project also produced significant
visibility into the project economic and social benefits for
- Routine meetings to discuss project Shenzhen Telecom.
initiatives - Enhanced Shenzhen Telecom’s
- Weekly reports to track project credibility as the top communications
progress. provider, truly making the Nanshan
- Unified client communication District Network project the
interface: a system where various undisputable “No. 1 Project” for
Shenzhen Telecom centers had a Shenzhen Telecom in 2006-2007.
designated Nanshan District channel
In Summary, These Are The Health availability, staff availability, pilot and
Checks.... review.
- Implementation: existence of
- Scope: initial definition, variation, implementation plans, launch
adjustment of the plan. support, authorization, delivery
- Cost: tracking processes, criteria, testing.
reconciliation, projections and - Governance: existence of
variations. management review checkpoints,
- Time: schedule suitability, currency, meeting standards, progress through
reflection of scope, use of 'gates', tools, skills and process
milestones, tracking, action plans. adequacy, compliance monitoring,
- Quality: existence of quality plan, company methodology.
quality review actions, testing, - Roles and Responsibilities:
resourcing. definition, accuracy, team support,
- Resources: sufficiency, executive support, responsibilities
appropriateness, time allocation, not covered in definition.
co-operation, team management, - Documentation: availability,
efficiency, team morale. organization, easy location, version
- Communication: existence of control, construction, meeting
communications plan, stakeholder agendas and minutes, signatures,
identification and engagement, glossary, decision register.
issues arising, expectation - Requirements: documentation,
management and monitoring. tracking of changes, documentation
- Procurement: use of external of changes and approval.
resources,contract negotiation and
management. Deck 3A: Communicating With People
- Risks: existence of risk plan,
stakeholder involvement, mitigation Keep your eye on the prize and focus on
strategy effectiveness, review your mission. Remember what you're
process, issues log, resolution, trying to do, what your value is, why it's
escalation processes. important, and at the same time, change
- Contingency Planning: existence course and direction. If the market's telling
of contingency plan, contingency you different things how are you going to
testing, robustness of contingencies. adjust to that?
- Benefits: review of projected
benefits, changes in relevance, Reading People
measurement of benefits, delivery • Angular distance
ownership. • Arm cross
- Business Process: impact on • Bend away
business processes, • Blank face
implementation, planning and • Broadside display
testing. • Chin jut
- Training: existence of training plan, • Conjugal lateral
time to produce materials, trainer eye movement
• Cut-off 6. Outline the client’s responsibilities
• Flexion withdrawal 7. Use a statement of scope
• Gaze down 8. Keep your invoicing current
• Lip compression 9. Get your clients out of the office
10.Ask what’s wrong
How To Talk
• Avoid the appearance of lying The Post Mortem
• Get good at small talk - Don’t simply identify what’s wrong,
• Learn socio-lects check why did it happen? Chronic or
• Never joke at another’s expense one off? Systemic weakness?
• Share the sentiments of the receiver - What outcome did it jeopardize?
• Don’t hem and haw What problems did it result in?
• Speak your chest voice - Initial effort estimates and final effort
• Know the room - Initial budget and final cost
• Know the audience - Initial staffing estimates and actual
• Know the material staffing profiles
• Relax - Initial milestones and schedules and
their final real values.
Dealing With Bean Counters - Total number of changes
• Accountants are a special breed.
• Thrive on precision and decimals. Building a Business Case for Your
• It’s nothing personal, it's their job. Project
• Be friendly. - Get stakeholders to approve your
• Learn to speak their language project
• Planning is long term not hours. - Demonstrate why the project is
• Don’t like to be surprised. needed and what the benefits of the
project will be when it is finished.
Interview - May not be so obvious to your
• Who? stakeholders.
• Members, Clients, Sponsors
• It’s all about information Building a Business Case for Your
• Be organized: What do I know? What don’t Project
I know? What do I need to know? - Can help your project standout in the
• Start small and ratchet up crowded field of everything that is
• Ask and ask again happening in the company
• Shut up: talk as little as you can. - Key to getting approval and finances
• Be dumb for your project.

Romancing the Client The Nuts and Bolts of Preparing a

1. Promise only what you can deliver Business Case
2. Acknowledge your errors 1. Expected cash flow consequences
3. Don’t surprise them of the action over time.
4. Invest in CRM 2. Methods and rationales used for
5. Insist on a contract quantifying benefits and costs.
 3. Overall impact of proposal in terms - Show off what the project will do for
of discounted cash flow, payback the business.
period and internal rate of return. - Whatever your project is going to do
for the business should be
Ensuring an Effective Business Case documented just as carefully as the
- Thorough (ensure that you have "as is" was documented.
researched all possible impacts, - Challenge all the assumptions, work
costs, and benefits) to evaluate carefully everything the
- Clear and logical in your project is going to accomplish.
presentation (write clearly the cause - The final documentation of the "to
and effect chain that leads to each be" becomes the initial scope
cost/benefit impact). statement for the project.
- Objective. Ensure that the good and
bad issues are included in your Step 3: Going From the "As Is" to the "To
finished product). Be"
- Systematic (it is important for you to
be consistent and methodical in your - Steps that will take you from the
presentation of findings and your starting point to the end of the
summary). project.
- This does not have to be a detailed
Step 1: The "As Is" project schedule or task list,
- If you do not understand where you - But it should give a high level
have been (or where you are overview of how the project team is
currently), how can you demonstrate going to take the business from one
where the project is going to take point to the next.
you or the company? - Include the resources and time that
- Documenting the "as is" should will be involved in the project.
involve a careful evaluation of the - This road map will show the decision
current business model and the makers and the stakeholders how
tasks that are completed by the they can help make the idea into a
people who are directly involved in reality and get the project off the
the processes. ground.
- Interview subject matter experts or
follow a day in the life of the workers Step 4: The ROI
who are on the front lines of the - Answer the question of how this
business in order to document the project is going to help the business.
"as is". - What are they going to get out of it?
- All assumptions must be challenged - If the return on investment can be
and researched so that there are no - quantified into pesos in the form of
surprises down the road when the savings or returns, then that will be a
project begins to change the "as is" great help in building your business
to something new and better. case
- It is difficult to argue with hard
Step 2: The "To Be" numbers.
 - All assumptions about the return on Scope and Boundaries
investment will be challenged - Duration
closely, - Location
- Do your homework very carefully - Function
when creating your business case. - Technology

Structure and Content Cost/Benefit

1. Overview/Introduction You can use incremental values if:
2. Methodology - The action is to be evaluated as an
3. Assumptions investment.
4. Scope and Boundaries - If the scenarios cannot be fully
5. Cost/Benefit analyzed.
6. Business Impact - Incremental costs and benefits
7. Risk and Contingencies would be negligible.
8. Conclusion and Recommendations - There are different funding sources
to cover varying costs.
Overview You can use full values if:
- Objectives, needs or problems - The action is to be evaluated in
addressed by the subject of the terms of total costs or total cost of
case. ownership.
- Other business considerations like: - It is possible to analyze all
increased competition, policies or scenarios.
management directives. - You need to evaluate the impact of
- Business plans, budgets, or special an action in terms of existing or
project or program plans. planned budgets.
- Important historical information.
- Alternative actions: alternatives that Business Impact
will be compared with these results. - Cash Flow Statement
- Result Analysis: Use charts, graphs
Methodology and tables to the fullest. Let the
- Know how much or what it will take numbers represent themselves.
to accomplish the goal. - Non-Financial Results: These are
1. Cash Flow not quantifiable, but should be made
2. Rate of Return known as clearly and explicitly as
3. Payback Period possible.
4. Return on Investments
5. Cost of Ownership Risk and Contingencies
- Risks should be recorder
Assumptions - Looks at the worst-case scenario
- Predicting future prices, salaries, and
and business volume. - Analyzes the impact of external
- You record assumptions whenever forces
you cannot take it for granted
 - Links the objectives of the case to • Sometimes, the interpersonal and
contributions of different behavioral
departments. aspects of project life are crucial to success.

Conclusion and Recommendation The Launch Meeting

- No new points are introduced in the • Senior Management introduces PM
conclusion. • PM chairs meeting, objectives:
- Case is reiterated here tying in the 1. develop general understanding of the
business objectives with the functional inputs the project will need
important decision criteria necessary 2. brainstorm the problem
for the case to achieve its objective. 3. develop preliminary plan
- Unusual results from your analysis
and any findings that may be Initial Project Coordination
nebulous may also be clarified in this • Understand the nature of the project
section. • Each participant in the project should
- You end with a formal approve this initial plan
recommendation statement. • The resulting plan is approved by senior
- This statement should remind the management
audience/reader that it's now up to • Senior management may...
them for action, and why they should (a.) Accelerate timetable
take a positive action and why the (b.) Reduce budget
action is recommended. (c.) Part of budget may be “held back” for
contingencies
III. Do you know where you are
going? Meeting Outcomes:
1. Understand scope of project understood
PM requires focus, organization, and a 2. Temporarily freeze scope
laser-like concentration 3. Areas of responsibilities
4. Technical scope
At This Point, the PM’s First Job Is... 5. Delivery dates or budgets noted
1. Understand the expectations that the 6. Risk management group created
organization for the project.
2. Identify who among senior managers has Tip
a major interest in the project. • Kick-off meetings can energize a
3. Determine if anything about the project is team...and rapidly promote team cohesion.
atypical.
Developing Invitation List
Tip 1. At least one representative from senior
• Avoid the trap of believing that because management.
you've been put in charge of a project, 2. Managers from functional areas that will
you’ve contribute to the project.
risen above your peers and that friendships 3. Perhaps highly specialized technical
no experts.
longer matter in all situations...
Outside Clients
• When it is for outside clients, specifications 1. Project Scope
cannot be changed without client’s - deals with the required work to
permission create the project deliverables and
• Client may place budget constraints on objectives
project - measured against the project plan.
• May be competing against other firms
2. Product Scope
PROJECT SCOPE - attributes and characteristics of the
MANAGEMENT deliverables the project is creating.
- measured against requirements
Project Scope Management
• Ability to get the required work done—and Project Scope vs. Product Scope Pt.2
only the required work—to complete the • Bound to each other
project • End result of the project is measured
against the requirements for the product
Objectives
1. It defines what work is needed to SCOPE MANAGEMENT
complete COMPONENTS
the project objectives.
2. It determines what is included in the Generic Components
project.
3. It serves as a guide to determine what
work is not needed to complete the project
objectives.
4. It serves as a point of reference for what
is not included in the project.

Product Analysis
• Analyzing the product the project will
create. STEP 1: CONCEPTUAL
• Involves understanding all facets of the DEVELOPMENT
product, its purpose, how it works, and its - The process that addresses project
characteristics. objectives by finding the best ways
to meet them.
Methodologies
1. Product Breakdown Key Steps in Conceptual Development:
2. Systems Engineering
3. Value Engineering
4. Value Analysis
5. Function Analysis
6. Quality Function

Project Scope vs. Product Scope

 General Basis of Project Scope Statement
1. Organization’s culture,
2. Defined tools,
3. Human resources,
4. Policies,
5. Project charter,
6. Preliminary project scope statement,
7. Project scope management plan,
8. Approved change requests.
Problem Statements
Successful conceptual development Project Scope Statement Process
requires: 1. Establish the project goal criteria
1. Reduction of overall project complexity a) cost
2. Goals and objects are clearly stated b) schedule
3. Reference points are provided c) performance
4. Complete understanding of the problem d) deliverables
e) review gates
Tip
• Identifying the customer’s true need—the The Scope Statement Process
the most fundamental problem or 2. Develop the project/management plan for
opportunity—is the most important step in the project
the entire process. 3. Establish a work breakdown structure
4. Create a scope baseline
Statement of Work (SOW)
• is a detailed narrative description of the What is WBS?
work required for a project. • Organizes and defines the project scope.
• Effective SOWs contain • Visual representation of the high-level
(a.) Introduction and background deliverables broken down into manageable
(b.) Technical description components.
(c.) Timeline and milestones • Chart of the activities to complete the
(d.) Client expectations work—it is a breakdown of the deliverables.
• Work that doesn’t fit into the WBS does
STEP 2: CREATING THE PROJECT not fit within the project.
SCOPE STATEMENT
CREATING THE SCOPE
Project Scope Statement MANAGEMENT PLAN
• Description of the work required to deliver
the product of a project. Scope Management Plan Should Define
• Defines what work will, and will not, be The:
included in the project work • Process to create a detailed project scope
• Guide for all future project decisions when statement
it comes to change management • Process to create the Work Breakdown
• Sets the tone of the project expectations
Structure (WBS) based on the project scope • Define the requirements that the project
statement must adhere to.
• Methods for maintaining the WBS integrity
• Process for WBS approval Project Boundaries
• Define what’s included in the project
Scope Management Plan Should Define: scope—and what’s excluded.
• Process for formal acceptance of the
project deliverables by the project customer Project Deliverables
• Process for evaluating, and approving or • Signal that the project scope has been
declining, project change requests completed.

Detailed Components Project Acceptance Criteria

1. Project objectives • Establishes what exactly qualifies a
2. Product scope description project’s success or failure.
3. Project requirements
4. Project boundaries Project Constraints
5. Project deliverables a) Predefined budgets,
6. Project acceptance criteria b) Schedules,
7. Project constraints c) Resource limitations,
8. Project assumptions d) Material availability,
9. Initial project organization e) Contractual restrictions.
10. Scheduled milestones
11.Initial defined risks Project Assumptions
12.Fund limits • Anything held to be true, but not proven to
13.Cost estimate be true
14.Project configuration management
15.Project specifications Initial Project Organization
16.Project approval requirements • The project team members, the project
manager, and the key stakeholders.
Project Objectives
• Specific conditions that determine the Milestones and Risks
success of a project. • Scheduled milestones = schedule
• Conditions are typically about: constraints
a) cost, • Initial defined risks = known risks and what
b) schedule, their expected probability and impact on the
c) quality metrics. project may be.

Project Scope Description Funds and Cost

• Defines the characteristics and features of • Fund limits = limitation on available
the thing or service the project is aiming to funding.
create. • Cost estimate = expectations for an
estimate of what the project should cost to
Project Requirements complete.
Project Configuration Management guide the scope planning process. It can
• Identifies the level of change control and come from experts within the organization
configuration management that can be or third- party experts, such as consultants.
expected within the project.
2. WBS templates, scope management plan
Tip templates, and project scope change control
• Generally, you do not want the project forms.
scope to change.
• The implication of the scope management CREATING THE WORK BREAKDOWN
plan concerns how changes to the project STRUCTURE (WBS)
scope will be permitted—and what the
justification is to allow the change. Sample WBS in MS Project

Project Specifications
• Specifications and the expectations on the
project team

Project Approval Requirements

• Documentation, processes, work, and
project acceptance

STEP 3: SCOPE REPORTING

● Determines what types of

information reported, Objectives of WBS
who receives copies, when, and how 1. It serves as a major component of the
information is acquired and disseminated. project scope baseline.
2. It’s one of the most important project
Scope Reporting management tools.
- Typical project reports contain 3. It serves as the foundation for planning,
(a.) Cost status estimating, and project control.
(b.) Schedule status 4. It visualizes the entire project.
(c.) Technical performance 5. It builds team consensus and buy-in to
the project.
Tip 6. It serves as a control mechanism to keep
• Admittedly, it can require substantial effort, the project on track.
but if done properly, documentation can be 7. It allows for accurate cost and time
much of a friend than foe. estimates.
8. It serves as a deterrent to scope change.
Scope Planning Tools and Techniques
Parts
1. Expert judgment is using someone • Smallest element is called the work
smarter than the project team, the project package.
manager, and even the key stakeholders to
• Components are mapped against a code
of accounts, which is a tool to number and Work Packages are based on the following:
identify the elements within the WBS. 1. Skill group(s) involved
2. Managerial responsibility
Work Breakdown Structure and Codes 3. Length of time
4. Value of task

Work Packages/Task Definition

• The work packages (tasks or activities)
that are defined by the WBS must be:
(a.) Manageable
(b.) Independent
(c.) Integratable
(d.) Measurable

Two-Level WBS

Decomposition
• Process of breaking down the major
project deliverables into smaller units of the
project deliverable that can be assigned
resources, measured, executed, and
controlled (manageable component).

WBS Is Needed In...

Three-Level WBS

How To Construct A WBS

1.Specify the end-item “deliverables” Design of a WBS
2.Subdivide the work, reducing the dollars “The usual mistake PMs make is to lay out
and complexity with each additional too many tasks; subdividing the major
subdivision achievements into smaller and smaller
3.Stop dividing when the tasks are subtasks until the work breakdown
manageable “work packages”
structure (WBS) is a ‘to do’ list of one-hour
chores. It’s easy to get caught up in the idea
that a project plan should detail everything
everybody is going to do on the project. This
springs from the screwy logic that a project
The manager's job is to walk around with a
checklist of 17,432 items and tick each item
off as people complete them....”
- The Hampton Group (1996)

Simplified Approach for Creating the WBS

1. Gather Project Team Linear Responsibility Charts
2. Provide Team Members with Pad of • Ties each work package to someone
Sticky-Notes • May also show interfaces between groups
3. Team Members Write Down all Tasks
They Can Think of. Sample Linear Responsibility Chart
4. Sticky-Notes Placed and Arranged on
Wall

WBS and The Team

• All jobs are easier when they are broken
into smaller pieces!
• Develop the project goal yourself
• Take a cursory pass at defining the
objectives–the preliminary plan
• Have teams refine the objectives
• Have teams break down the objectives STEP 3: WORK AUTHORIZATION
into
tasks - The formal “go ahead” to begin work
• Have doers break down tasks into
activities Steps
Follows the scope management steps of:
Organizational Breakdown Structure (OBS) 1. Scope definition
• Work definition 2. Planning documents
• Owner assignment of work packages 3. Management plans
• Budget assignment to departments 4. Contractual documents

OBS links cost, activity & responsibility STEP 5: CONTROL SYSTEMS

- Protecting the Scope from Change

Responsibility Assignment Matrix
Types of Control Systems
1. Configuration
2. Design
3. Trend monitoring
4. Document
5. Acquisition
6. Specification

Most Change Requests Are A Result of:

• Value-added
• External events
• Errors or omissions
• Risk response

Implementing a Change Control System

• Cataloging the documented requests and
paperwork
• Tracking the requests through the system
• Determining the required approval levels
for varying changes
• Supporting the integrated change control
policies of the project
• In instances when the project is performed
through a contractual relationship, the
scope
change control system must map to the
requirements of the contract.

After This..
1. Revisiting Performance Measurement
2. Completing Additional Planning
3. Updating the Project Scope
4. Correcting the Project
5. Updating the Lessons Learned
6. Adjusting the Project Baselines

Scope Verification
• Process of the project customer accepting
the project deliverables
• Happens at the end of each project phase

Coordination Structure Model for Project

Management