Department of Computer Science and Engineering

Programme: B.Tech in Computer Science and

Engineering (AI)
Semester VI
Course Name: Software Project Management
(OEC-CSM601A)

Module- 1: Project Evaluation and Project Planning

• Importance of Software Project Management: Activities, Methodologies

• Categorization of Software Projects
• Setting objectives
• Management Principles: Management Control
• Project portfolio Management
• Cost-benefit evaluation technology
• Risk evaluation
• Strategic program Management
• Stepwise Project Planning
What is project?

A project is an endeavour undertaken to create a unique product, service, or result within a defined
scope, timeline, and resources.

ICT Project
An Information and Communication Technology (ICT) project refers to development and installation
of new software product.
What is software project management?
The main goal of software project management is to enable a group of developers to work effectively
towards the successful completion of a project.

Importance of software project management:

It is the question of money. In the United Kingdom during the financial year 2002–2003, the
central government spent a lot on contracts for ICT projects (about £2.3 billion).
Unfortunately, all projects were not successful. In a report published in 2003, the Standish
Group in the United States analysed 13,522 projects and concluded that only a third of projects
were successful; 82% of projects were late and 43% exceeded their budget.
The reason for these project failures is often the management of projects. The National Audit
Office in the UK, for example, among other factors causing project failure identified ‘lack of
skills and proven approach to project management and risk management’.

Difference of software project with other projects

Management of software projects is much more complex than management of many other types of
projects. The main factors contributing to the complexity of managing a software project are enlisted
below:
Invisibility: Invisibility of software makes it difficult to assess the progress of a project and is a
major cause for the complexity of managing a software project. The best that he can do perhaps is to
monitor the milestones that have been completed by the development team and the documents that have
been produced.
Complexity: Even a moderate sized software has millions of parts (functions) that interact with each
other in many ways—data coupling, serial and concurrent runs, state transitions, control dependency,
file sharing, etc. Due to the inherent complexity of the functioning of a software product in terms of the
basic parts making up the software, many types of risks are associated with its development.
Changeability/Flexibility: Frequent changes to the requirements is another major factor making
software project management a complex task.
Uniqueness: Every software project is usually associated with many unique features or situations. Due
to the uniqueness of the software projects, a project manager in the course of a project faces many issues
which he may not encountered in the past.
Exactness of the solution: The parameters of a function call in a program are required to be in complete
conformity with the function definition. This requirement not only makes it difficult to get a software
product up and working, but also makes reusing parts of one software product in another difficult. This
requirement of exact conformity of the parameters of a function introduces additional risks and
contributes to the complexity of managing software projects.
Team-oriented and intellect-intensive work: Software development projects are akin to research
projects in the sense that they both involve team-oriented, intellect-intensive work. In a software
development project, the life cycle activities not only highly intellect intensive, but each member has
to typically interact, review, and interface with several other members, constituting another dimension
of complexity of software projects.

Phases of software project management

Usually, there are three phases in software project management.

(i) Feasibility study: The feasibility study assesses whether a project is worth starting i.e. it
has a valid business case.
(ii) Planning: If the feasibility study indicates that the prospective project appears viable,
the project planning can be started. For larger projects, we do not do all detained
planning at the beginning. An outline of the whole project and a detailed one for the
first stage are created. Detailed planning of subsequent stages is done before the
beginning of the corresponding stages.
(iii) Project execution: Execution of project often contains design and implementation of
sub-phases. Design is making decisions about the form of the products to be created.
This could relate to the external appearance of the software, i.e., the user interface or
the internal architecture.

Categorization of Software Projects

Software product development project concerns developing the software by keeping the
requirements in mind. A software product development project further be classified depending on
whether it concerns (i) a generic product or (ii) a domain specific product.
(i) A generic software product is sold to a broad spectrum of customers and is said to have
horizontal market. Eg., Microsoft’s Windos Operating System and Oracle Corporation’s Oracle
Database management system.
(ii) Domain specific software product are sold to specific categories of customers and are said to
have vertical market. Eg., Banking, finance, telecommunication and medical. Eg., BANCS
from TCS, FINACLE from Infosys in banking domain.
Software service cover a large gamut of software projects such as customization, outsourcing,
maintenance, testing and consultancy. At present, there is hardly any software project in which the
program code is written from scratch and software is mostly developed by customizing some existing
software. For example, to develop a software to automate the payroll generation activities of an
educational institute, the vendor may customise an existing software that might have been developed
earlier for a different client’s educational institute.
 Fig. Classification of software project
Outsourced project:
While developing a large project, sometimes it makes good commercial sense for a company to
outsource some of its parts. Main reason behind outsourcing is lack of expertise and cost.
Project success and failure
The project objectives are the targets that the project is expected to achieve. In case of software
projects, they can be summarised as delivering:

• The agreed functionality

• The required level of quality
• On time
• Within budget
Stakeholders: These are people who have a stake or interest in the project. Stakeholders can be
categorised as follows:

(i) Internal to the project team: This means that they will be under the direct managerial
control of the project leader.
(ii) External to the project team but within the same organisation: For example, the project
leader might need the assistance to carry out systems testing.
(iii) External to both the project team and organisation: External stakeholders may be
customers (or users).

Setting objectives

Stakeholders control the financing of the projects. They also set the objectives of the project. The
objectives should define what the project team must achieve for project success. Although different
stakeholders have different motivations, the project objectives identify the shared intentions for the
project. Objectives focus on the desired outcomes of the project rather than the tasks within it.
The mnemonics SMART is used to well defined objectives:
Specific
Effective objectives are concrete and well-defined. Vague aspirations such as 'to improve customer
relations' are unsatisfactory.
Measurable
Ideally, there should be measures of effectiveness which tell us how successful the project has been. For
example, 'to reduce customer complaints' would be more satisfactory as an objective than 'to improve
customer relations'.
Achievable
It must be within the power of the individual or group to achieve the objective.
Relevant: The objective must be true purpose of the project.
Time constrained: There should be defined point in time by which the objective should have been
achieved.

Management Principles
Software project management involves the following activities.
• Planning – deciding what is to be done
• Organizing – making arrangements
• Staffing – selecting the right people for the job, etc.
• Directing – giving instructions
• Monitoring – checking on progress
• Controlling – taking action to remedy hold-ups
• Innovating – coming up with new solutions
• Representing – liaising with clients, users, developers, suppliers, and other stakeholders
Among the above-mentioned activities, three are most important: planning, monitoring and control.
Planning
Initial project planning is undertaken immediately after the feasibility study phase and before starting
the requirement analysis and specification process. Initial project planning involves estimating several
characteristics of a project. Based on these estimates, all subsequent project activities are planned. The
initial project plans are revised periodically as the project progresses and more project data becomes
available. Initial project planning is undertaken immediately after the feasibility study phase and before
starting the requirement analysis and specification process.

Project planning involves several characteristics estimation of the projects.

• Cost: How much is it going to cost to complete the project
• Duration: How much is it going to take to complete the project
• Effort: How much effort would be necessary to complete the project

The next stage of planning is scheduling and staffing.

Scheduling: Based on the estimation of effort and duration, the schedule of manpower and other
resources are scheduled.
Staffing: Staffing plans are made in this phase.
Risk management: This activity includes risk identification, analysis and abatement planning.
Miscellaneous plan: This activity includes several other plans such as quality assurance plan,
configuration assurance plan etc.
Monitoring and Control:
Once the project execution starts, monitoring and control activities are taken up to ensure that the
project execution is proceeding as planned. The monitoring activity involves monitoring the progress
of the project. Control activities are initiated to minimize any significant variation in plan. While
carrying out monitoring and control activities, a project manager may sometimes find it necessary to
change the plan to cope with specific situations and make the plan more accurate as more project
data becomes available.
 Fig. The project control cycle

Project Portfolio Management

Project portfolio management provides an overview of all projects that an organisation is undertaking
or considering. It prioritizes the allocation of resources to the projects and decides which new projects
should be accepted and which existing one should be dropped.

The concerns of project portfolio management include:

(i) Identifying which project proposals are worth implementable.

(ii) Assessing the amount of risk of failure that a potential project has.
(iii) Deciding how to share limited resources, including staff time and finance.
(iv) Being aware of the dependencies between projects, especially where several projects need
to be completed for an organization to reap benefits.
(v) Ensuring that projects do not duplicate wirk.
(vi) Ensuring that necessary development have not been inadvertently been missed.

Three aspects of project portfolio managements are as follows.

(1) Project portfolio definition:

An organization should record details of all current projects in a single repository. For many
organizations, projects can be divided into two categories: (i) new product development (ii) renewal
project

(2) Project portfolio management:

Once the portfolio has been established, more detailed costing of the projects can be recorded. The
value managers hope will be generated by each project can also be recorded. Actual performance of
projects on these performance indicators can then be tracked. This information can be the basis of
more rigorous screening of new projects.

(3) Project portfolio optimization:

A performance of the portfolio can then be tracked by high level managers on a regular basis. A
better balance of projects may be achieved. Some projects could potentially be very profitable but
could also be risky. Other projects could have modest benefits but have fewer risks. The portfolio
ought to have a careful thought out balance between two types of projects.

Feasibility study

Its objective is to provide a rationale for the project by showing that the benefits of the project
outcomes will exceed the costs of development, implementation and operation (or production).

The feasibility study contains:

1. Introduction and background of the proposal

2. The proposed project
3. The market
4. Organizational and operational infrastructure
5. The benefits
6. Outline of the implementation plan
7. Costs
8. The financial case
9. Risks
10. Management plan

Project portfolio management plays important role in feasibility study.

Cost-benefit Analysis

Cost-benefit analysis is the most important part in feasibility analysis. Even when the estimated
benefits will exceed the estimated costs, it is often necessary to decide if the proposal project is the
best of several option.

• Net Profit

The net profit of a project is the difference between the total costs and total income over the life of
the project.

• Payback Period

The payback period is the time taken to break or pay back the initial investment. Normally, the
project with the shortest payback period will be chosen on the basis that an organisation will
wish to minimize the time that a project is ‘in debt’.
The advantage of the payback period is that it is simple to calculate and is not particularly
sensitive to small forecasting errors. Its disadvantage as a selection technique is that it ignores
the small profitability of the project.

• Return on investment

The return of investment (ROI) also known as accounting rate of return (ARR), provides a way of
comparing the net profitability to the investment required.
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑓𝑖𝑡
𝑅𝑂𝐼 − × 100
𝑇𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
The ROI provides a simple, easy-to-calculate measure of return of capital. Unfortunately, it
suffers from two severe disadvantages. It takes no account of timing of cash flow and
corresponding rate of interest of the bank.

• Net present value

The calculation of net present value is a project evaluation technique that takes into account the
profitability of project and timing of the cash flow that are produced. This is based on the view
that receiving Rs. 100/- today is better than to wait up to next year to receive it.
𝑣𝑎𝑙𝑢𝑒 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 =
(1 + 𝑟)𝑡
𝐶𝑡
𝑁𝑃𝑉 = ∑ − 𝐶0
(1 + 𝑟)𝑡
𝐶𝑡 → 𝐶𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 𝑎𝑡 𝑡𝑖𝑚𝑒
𝐶0 → 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 (𝑐𝑜𝑠𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑟𝑜𝑗𝑒𝑐𝑡)
𝑟 → 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒
𝑡 → 𝑡𝑖𝑚𝑒 𝑝𝑒𝑟𝑖𝑜𝑑
1
→ 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑓𝑎𝑐𝑡𝑜𝑟
(1 + 𝑟)𝑡
Example: The following table illustrate the cash flow forecast of four projects.

Assuming 10% discount rate, the NPV is calculated in the following table.
 Risk evaluation (Project risk)

In any project evaluation we should identify the risks and quantify their effects. Approach is to
construct a project risk matrix utilizing a checklist of possible risks and classifying risk according to
their relative importance and likelihood. The following table illustrate a basic project risk matrix
listing some of the business risk for a project, with their importance and likelihood classified as
high (H), medium (M), low (L) or exceedingly unlikely. For comparing the risk of the projects, the
list of risks must be the same for each project assessed.

Fig. A fragment of basic project risk matrix for an e-commerce application

Cost-benefit Analysis considering Risk

Where a project is relatively risky, it is common practice to use a higher discount rate to calculate
present value. Projects may be categorised as high, medium and low risk. A rather more sophisticated
approach to the evaluation of risk is to consider each possible outcome and estimate the probability
of its occurring and the corresponding value of the outcome. The value of the project is then obtained
by summing the cost or benefit for each possible outcome weighted by its corresponding probability.
The following example illustrates how this may be done.
Strategic program Management

It is a form of programme management where all projects in a portfolio contribute to a common

objective. Take, for example, a business which carries out maintenance work for clients. A
customer’s experience might be found to be very variable and inconsistent. The employee who
records the customer’s requirements is different from the people who actually carry out the
work and different again from the clerk who deals with the accounts. Often a customer has to
explain to one company employee a problem that has already been discussed at length with
some other employee. A business objective might be to present a consistent and uniform front
to the client. This objective might require changes to a number of different systems which until
now have been largely self-contained. The work to reorganize each individual area could be
treated as a separate project, coordinated at a higher level as a programme. These types of
programmes are most often needed by large organizations which have a large and complicated
organizational structure. Government departments are typical examples. United Kingdom
government agency which was responsible for the introduction of PRINCE2 project
management standards, has directed its attention to guidelines for effective programme
management.

Stepwise Project Planning

Many different techniques can be used for project planning among. Step Wise method is one
of them. Step Wise method aims to introduce the standardization of the project planning
method brought about by PRINCE. PRINCE stands for PRojects IN Controlled Environments.
PRINCE2 is a set of project management standards that were originally sponsored by what is
now the Office of Government Commerce (OGC) for use on British government ICT and
business change projects. It should be noted that Step Wise covers only the planning stages of
a project and not monitoring and control.
Fig. A overview of stepwise