SOFTWARE PROJECT MANAGEMENT

[KOE-068]
B.TECH CSE (3RD YEAR)
UNIT-1

PROJECT EVALUATION & PROJECT PLANNING

What is Project?

• A project is a group of tasks that need to complete to reach a clear result.

• A project also defines as a set of inputs and outputs which are required to
achieve a goal.
• Projects can vary from simple to difficult and can be operated by one person
or a hundred.
• A project is well-defined task, which is a collection of several operations done
in order to achieve a goal (for example, software development and delivery).
A Project can be characterized as:

❖ Every project may has a unique and distinct goal.

❖ Project comes with a start time and end time.
❖ Project ends when its goal is achieved hence it is a temporary phase in the
lifetime of an organization.
❖ Project needs adequate resources in terms of time, manpower, finance,
material and knowledge-bank.
 What is software project management?
Software project management is an art and discipline of planning and supervising
software projects.
It is a sub-discipline of software project management in which software projects
planned, implemented, monitored and controlled.
It is a procedure of managing, allocating and timing resources to develop computer
software that fulfills requirements.
In software Project Management, the client and the developers need to know the
⮚ Length
⮚ Period
⮚ Cost of the project.
The main phases
Initiation: This phase involves
of the project defining the project, identifying
management the stakeholders, and
establishing the project’s goals
process are: and objectives.

Planning: In this phase, the

project manager defines the
scope of the project, develops a
detailed project plan, and
identifies the resources required
to complete the project.
Execution: This phase involves the actual
implementation of the project, including the
allocation of resources, the execution of
tasks, and the monitoring and control of
project progress.

Monitoring and Control: This phase

involves tracking the project’s progress,
comparing actual results to the project plan,
and making changes to the project as
necessary.

Closing: This phase involves completing

the project, documenting the results, and
closing out any open issues.
Prerequisite of software project
management
There are three needs for software
project management. These are:
• Time
• Cost
• Quality

It is an essential part of the

software organization to deliver a
quality product, keeping the cost
within the clients budget and
deliver the project as per
schedule.
Software Project
A project manager is a character who has
Manager the overall responsibility for the planning,
design, execution, monitoring, controlling
and closure of a project.

Every decision the project manager

makes must directly profit their project.

Project manager may not be directly

involve in producing the end product but
he controls and manages the activities
involved in production.
 Role of a Project Manager:

1. Leader

A project manager must lead his team and should provide them direction to make
them understand what is expected from all of them.

2. Medium:

The Project manager is a medium between his clients and his team.

3. Mentor:

He should be there to guide his team at each step and make sure that the team has
an attachment. He provides a recommendation to his team and points them in the
right direction.
Responsibilities of a Project Manager:
Managing risks and issues.

Create the project team and assigns tasks to several team members.

Activity planning and sequencing.

Monitoring and reporting progress.

Modifies the project plan to deal with the situation.

Activities

Project planning and Tracking

Project Resource Management

Scope Management

Estimation Management

Project Risk Management

Scheduling Management

Project Communication Management

Configuration Management
 1.Project Planning

A detailed plan stating a stepwise strategy to achieve the listed objectives is an integral
part of any project.
It is a set of multiple processes.
Project planning refers to a task that is performed before the construction of the product
starts.
Planning consists of the following activities:
Set objectives or goals

Determine courses of action

Making planning decisions
Develop a software project plan
Set procedures and rules for the project
Document software project plans
Develop strategies
Develop project policies
Conduct risk management
 2.Project Resource Management

In software Development, all the elements are referred to as resources

for the project. It can be a human resource, productive tools, and
libraries.
Resource management includes:
• Create a project team and assign responsibilities to every team member
• Developing a resource plan is derived from the project plan.
• Adjustment of resources.
 3. Scope Management

It describes the scope of the project.

Scope management is important because it clearly defines what would do
and what would not.
Scope Management create the project to contain restricted and quantitative
tasks, which may merely be documented and successively avoids price and
time overrun.
 4.Estimation management

Project estimation may involve the following:

⮚ Software size estimation If we talk about the size, then Line of code depends upon
user or software requirement.
⮚ Effort estimation The managers estimate efforts in terms of personnel requirement
and man-hour required to produce the software. For effort estimation software size
should be known. Based on the size we can quickly estimate how big team required
to produce the software.
⮚ Time estimation Once size and efforts are estimated, the time required to produce the
software can be estimated. Software tasks are divided into smaller tasks, activities or
events by Work Breakthrough Structure (WBS).
⮚ Cost estimation This might be considered as the most difficult of all because it depends
on more elements than any of the previous ones
. For estimating project cost, it is required to consider -

▪ Size of software
▪ Software quality
▪ Hardware
▪ Additional software or tools, licenses etc.
▪ Skilled personnel with task-specific skills
▪ Travel involved
▪ Communication
▪ Training and support
 5. Project Risk Management

Risk management consists of all the activities like identification, analyzing and
preparing the plan for predictable and unpredictable risk in the project.
Risk may include the following:
❑ Experienced staff leaving the project and new staff coming in.
❑ Change in organizational management.
❑ Requirement change or misinterpreting requirement.
❑ Under-estimation of required time and resources.
❑ Technological changes, environmental changes, business competition.
 6. Scheduling Management

Scheduling Management in software refers to all the activities to complete in the specified
order and within time slotted to each activity. Project managers define multiple tasks and
arrange them keeping various factors in mind.
For scheduling a project, it is necessary to -
❑ Break down the project tasks into smaller, manageable form
❑ Find out various tasks and correlate them
❑ Estimate time frame required for each task
❑ Divide time into work-units
❑ Assign adequate number of work-units for each task
❑ Calculate total time required for the project from start to finish
7. Project Communication Management

Communication is an essential factor in the success

of the project. It is a bridge between client,
organization, team members and as well as other
stakeholders of the project.
From the planning to closure, communication plays a
vital role. In all the phases, communication must be
clear and understood.

Miscommunication can create a big blunder in the

project.
8. Project
Configuration
Management

Configuration management is about

to control the changes in software
like requirements, design, and
development of the product.
The Primary goal is to increase
productivity with fewer errors.
Ways to categorize software projects
Projects may differ because of different technical products to be created.
1. Compulsory versus voluntary users: POS software has different requirement and user than Games.
2. Information System versus Embedded Systems: Information Systems helps in office day to day processes
and embedded system are used to control machines. Examples of Information system are A stock control system,
transaction processing system, knowledge management system, learning management system, database system
etc. While Embedded systems control Microwave oven, AC, Mp3 Player, Digital Camera, Washing Machine etc.
3. Outsourced Project: Most of the companies outsource parts of its work to other companies. There can be
several reasons to outsource project, e.g. company does not have sufficient expertise, or project is to be
completed in limited period in that case it can be outsourced to company with their development centre.
Outsourced project fetch one time revenue in good amount while product based company project earn over
period of time.
4. Object-Driven Development: Project also vary depending on the aim of the project. If aim of the project is
to create product then client has the responsibility for justifying the product. In that case Service level
agreements are important as organisations contract out functions to external service suppliers.
 Software Development Life Cycle

Software Development Life Cycle (SDLC) is a process used by the software

industry to design, develop and test high quality software.
The SDLC aims to produce a high-quality software that meets or exceeds
customer expectations, reaches completion within times and cost estimates.
SDLC is the acronym of Software Development Life Cycle.
It is also called as Software Development Process.
SDLC is a framework defining tasks performed at each step in the software
development process.
 What is SDLC?
SDLC is a process followed for a software project, within a software
organization.
It consists of a detailed plan describing how to develop, maintain, replace
and alter or enhance specific software.
The life cycle defines a methodology for improving the quality of software
and the overall development process.
Stage 1: Planning and Requirement
Analysis
Requirement analysis is the most important and fundamental stage in SDLC.
It is performed by the senior members of the team with inputs from the customer, the
sales department, market surveys and domain experts in the industry.
This information is then used to plan the basic project approach and to conduct
product feasibility study.
Planning for the quality assurance requirements and identification of the risks
associated with the project is also done in the planning stage.
For Example, A client wants to have an application which concerns money
transactions. In this method, the requirement has to be precise like what kind of
operations will be done, how it will be done, in which currency it will be done, etc.
Stage 2: Defining Requirements

Once the requirement analysis is done the next step is to clearly define and
document the product requirements and get them approved from the customer or
the market analysts.
This is done through an SRS (Software Requirement Specification) document
which consists of all the product requirements to be designed and developed
during the project life cycle.
Stage 3: Designing the Product
Architecture

Based on the requirements specified in SRS, usually more than one design
approach for the product architecture is proposed and documented in a DDS
- Design Document Specification.
This DDS is reviewed by all the important stakeholders and based on various
parameters as risk assessment, product robustness, design modularity,
budget and time constraints, the best design approach is selected for the
product.
Stage 4: Building or Developing the
Product

In this stage of SDLC the actual development starts and the product is built.
Developers have to follow the coding guidelines described by their management
and programming tools like compilers, interpreters, debuggers, etc. are used to
develop and implement the code.
Stage 5: Testing

After the code is generated, it is tested against the requirements to make sure
that the products are solving the needs addressed and gathered during the
requirements stage.
During this stage, unit testing, integration testing, system testing, acceptance
testing are done.
This stage refers to the testing only stage of the product where product defects
are reported, tracked, fixed and retested, until the product reaches the quality
standards defined in the SRS.
Stage 6: Deployment

Once the software is certified, and no bugs or errors are stated, then it is
deployed.
Then based on the assessment, the software may be released as it is or with
suggested enhancement in the object segment.
Setting Objectives

A specific objective increases the chances of leading to a specific outcome Therefore

objectives shouldn't be vague..
Objectives should show how successful a project has been. While there may be one
major project objective, in pursuing it there may be interim project objectives. In lots of
instances, project teams are tasked with achieving a series of objectives in pursuit of the
final objective.
In many cases, teams can only proceed in a stair step fashion to achieve the desired
outcome.
Objectives can often be set under three
headings:

1. Performance and Quality -The end result of a project must fit the purpose
for which it was intended.
2. Budget -The project must be completed without exceeding the authorized
expenditure. a project might be abandoned altogether if funds run out before
completion. If that was to happen, the money and effort invested in the project
would be forfeited and written off.
3. Time to Completion -Actual progress has to match or beat planned progress.
All significant stages of the project must take place no later than their specified
dates, to result in total completion on or before the planned finish date
Management control
Management, in general, can be seen as the process of setting objectives for
a system and then monitoring the system to see what its true performance
is.
 Project Portfolio Management

When there are many projects run by an organization, it is vital for the
organization to manage their project portfolio
Project portfolio management (PPM) is the centralized management of an
organization's projects. While these projects may or may not be related, they
are managed under one umbrella (called a portfolio) to oversee and manage any
competing resources.
Portfolio management in project management also involves the intake process of
projects.
This includes identifying potential projects, authorizing them, assigning
project managers, and including them in the overall portfolio
it also includes high-level controls and monitoring to ensure ongoing projects
are directly related to the business's overall goals and strategies.
Why project portfolio management is
important?

According to the Project Management Institute, "portfolio management is a way

to bridge the gap between strategy and implementation.
The portfolio manager's job is to ensure the right projects are being done at the
right time to maximize the company's investment. This is particularly important
in an organization with a lot of internal projects.
Project portfolio management is necessary to understand which projects will
have the largest beneficial impact on the company and prioritize them
accordingly.
Objectives of Project Portfolio Management

the project portfolio management also has its own set of objectives. These objectives
are designed to bring about expected results through coherent team players.
1) The need to create a descriptive document, which contains vital information such
as name of project, estimated timeframe, cost and business objectives.
2) The project needs to be evaluated on a regular basis to ensure that the project is
meeting its target and stays in its course.
3) Selection of the team players, who will work towards achieving the project's
objectives.
Benefits of Project Portfolio Management

Project portfolio management ensures that projects have a set of objectives,

which when followed brings about the expected results.
The following benefits can be gained through efficient project portfolio
management:
• Greater adaptability towards change.
• Constant review and close monitoring brings about a higher return
• Advantage over other competitors (competitive advantage).
Project Portfolio Management Tools

There are many tools that can be used for project portfolio management.
Following are the essential features of those tools:
❑ A systematic method of evaluation of projects.
❑ Resources need to be planned.
❑ Costs and the benefits need to be kept on track.
❑ Undertaking cost benefit analysis.
❑ Progress reports from time to time.
some widely used tools for project portfolio management:
Decision tree analysis Decision tree analysis is a great tool for evaluating
situations with multiple subjective factors. It illustrates the multiple ways to
solve a problem along with their costs, outcomes, and consequences. Use this
method to evaluate project outcomes, identify opportunities, manage costs, and
solve problems.
Cost-benefit analysis A cost-benefit analysis is a quantitative method for
assessing the risk and reward of a project. Project success occurs when probable
benefits are more and the overall cost is lesser.
Objectives matrix In this method, the overall business strategy is divided into
multiple objectives. These smaller objectives are assigned to different projects
and scored for evaluation.
Scoring model Appraising a project using the scoring model is a good way to
balance the quantitative and qualitative factors. Weights and scores are assigned
to these factors, and every project gets a total score. It provides a rational way of
comparing projects based on their overall scores.
What Is a Stakeholder in Project Management?

In simple words, anyone having any type of relation/interest in the project is

known as stakeholder.
The term Software Project Stakeholder refers to, “a person, group or
company that is directly or indirectly involved in the project and who may
affect or get affected by the outcome of the project”.
It is important in order to identify the exact requirements of the project and
what various stakeholders are expecting from the project outcome
 Type of Stakeholders

• 1. Internal Stakeholder:
An internal stakeholder is a person, group or a company that is directly involved in the
project.
For example,
• Project Manager:
Responsible for managing the whole project. Project Manager is generally never involved
in producing the end product but he/she controls, monitors and manages the activities
involved in the production.
• Project Team:
Performs the actual work of the project under the Project Manager including
development, testing, etc.
• Company:
Organization who has taken up the project and whose employees are directly involved in
the development of the project.
• Funders:
Provides funds and resources for the successful completion of the project.
2. External Stakeholder:
An external stakeholder is the one who is linked indirectly to the project but has
significant contribution in the successful completion of the project.
For example,
• Customer:
Specifies the requirements of the project and helps in the elicitation process of the
requirement gathering phase. Customer is the one for whom the project is being
developed.
• Supplier:
Supplies essential services and equipment for the project.
• Government:
Makes policies which helps in better working of the organization.
Cost/Benefit Analysis

Cost Benefit analysis is thing that everyone must do so as to think of

a powerful or an efficient system.
But while thinking out on cost and benefit analysis, we also need to
find out factors that really affect benefits and costs of system.
Not all projects can be undertaken at any one time, the most valuable
projects should get the most resources.
Cost benefit analysis comprises of two steps:
⮚ Identifying all of the costs and benefits of carrying out the project and
operating the delivered applications.
⮚ Expressing these costs and benefits in common units We must express each
cost and benefit and the net benefit which is the difference between the two-
in money.
Most direct costs are easy to quantify in monetary terms and can be categorized
as:
• Development costs : including development staff costs.
• Setup costs: consisting of the costs of putting the system into place, including
cost of recruitment and staff training.
• Operational costs : relating to operating the system after installation.
Cash flow Forecasting
Cash flow is the movement of the money in and out of an organization. It
involves the expenditure and income of an organization.
In simple words, it is the estimation of the cash flow over a period of time
It is important to do cash flow forecasting in order to ensure that the project has
sufficient funds to survive.
It gives an estimation that when income and expenditure will take place during
the software project’s life cycle.
It must be done time to time especially for start-ups and small enterprises.
However, if the cash flow of the business is more stable then forecasting cash
flow weekly or monthly is enough.
Cash flow is of two types:

• Positive Cash Flow:

If an organisation expects to receive income more than it spends then it is said
to have a positive cash flow and the company will never go low on funds for
the software project’s completion.
• Negative Cash Flow:
If an organisation expects to receive income less than it spends then it is said
to have a negative cash flow and the company will go low on funds for the
software project’s completion in future.
Importance of Cash Flow Forecasting:

• It allows the management to plan the expenditures based upon the

income in future.
• It helps the organization to analyze its expenditures and incomes.
• Makes sure that the company can afford to pay the employees and
suppliers.
• Helps in financial planning.
Cost-Benefit Evaluation

The primary objective of cost-benefit analysis is to find out whether it is

economically worthwhile to invest in the proposed project.
The common methods for Cost-Benefit Evaluation are:
• Net profit
• Payback period
• Return on investment
• Net present Value
 Payback Period

Payback period method represents the number of years required to recover

the original cash outlay invested in a project.
The term payback period refers to the amount of time it takes to recover the
cost of an investment. Simply put, it is the length of time an investment
reaches a breakeven point.
People and corporations mainly invest their money to get paid back, which is
why the payback period is so important
In essence, the shorter payback an investment has, the more attractive it
becomes.
What kind of payback period is best?

The best kind of payback period is the shortest!

The faster something can pay back, and start bringing in profit, the
better in business terms. Once you have broken even, payback period
has been completed and any money earned after that is extra – the
benefits you were hoping to see.
 Example

Let’s say you own a hotel. You build a penthouse room on the top. It costs
100,000 to build.
The price for one night’s accommodation in the penthouse is 1000.
Therefore, you need to sell 1,000 nights of accommodation to break even.
100,000 / 1000 = 1,00
The payback period for this room is 1,00 nights.
Cash inflow are mainly of two types

Even Cash Inflow - Same amount every time

Uneven Cash Inflow - Different amount
Even Cash Flow

You can figure out the payback period by using the following
formula:
Payback Period= Cost of Investment / Annual Cash InFlow
Ques1 : Initial Investment = 25,00,000
Annual Cash Flow = 5,00,000
Calculate the Payback period.

Ques 2: Suggest the better Management

MACHINE A MACHINE B

Initial Investment= 15,00,000 Initial

Investment=20,00,000
Cash Inflow= 5,00,000 Cash Inflow =
5,50,000
Uneven Cash Flow

Payback Period = E + B/C

Where,
E= No. Of years before full recovery
B= Balance amount to be recovered
C=Cash inflow during the year of final recovery
Ques: An Industry is investing in a project which costs
Rs. 600000.
Cash Inflows are Rs. 1,20,000 , Rs. 1,40,000 , Rs.
1,80,000 , Rs. 2,00,000 , Rs. 2,50,000
Calculate Payback Period.
Return on Investment
The Return on Investment (ROI) , also known as accounting
rate of return (ARR),
Provides a way of comparing the net profitability to the
investment required. Return on investment (ROI) is a metric
used to denote how much profit has been generated from an
investment that’s been made.
Ques. Calculate the ROI for project 1, the net profit is Rs.
50,000 and the total investment is Rs.100,000.
ROI = Average annual profit 100
Total Investment
= 50,000/5 X 100
100,000
= 10%
Example:
Net Present Value
The calculation of NPV is a project evaluation technique that
takes into account the profitability of a project & the timing of
the cash flows that are produced.
This method considers the Time Value Of Money.
All cash flows (cash inflows & cash outflows) are discounted at a
given rate and their present values are determined.
• If NPV > 0 Accept the project
• If NPV < 0 Reject the proposal
 The Present Value of any future cash flow may be obtained by applying the
following formula:
Present Value = Value in year t
(1 + r )

Where r is the discount rate, and t is the number of years into

the future that the cash flow occurs.
Alternatively, and more easily, the present value of a cash
flow may be calculated by multiplying the cash flowby the
appropriate discount factor.
Internal Rate of Return (IRR)
The Internal Rate of Return (IRR) is the discount rate that makes the
net present value (NPV) of a project zero. In other words, it is the expected
compound annual rate of return that will be earned on a project or
investment.
Risk Evaluation
There is a risk that software might exceed the original specification and that
a project will be completed early and under budget. Every project involves
risk of some form. When assessing and planning a project, we are concerned
with the risk of the project's not meeting its objectives.
Risk identification and ranking :
In any project evaluation we should attempt to identify the risks and quantify
their potential effects. One common approach to risk analysis is to construct
a project risk matrix utilizing a checklist of possible risks and to classify each
risk according to its relative importance and likelihood.
Table below illustrates a basic project risk matrix listing some of the risks
that might be considered for a project, with their importance and likelihood
classified as high (H). medium (M), low (L) or exceedingly unlikely (—)
Risk and net present value :
Where a project is relatively risky it is common practice to use a higher discount rate
to calculate net present value. Projects may be categorized as high, medium or low
risk using a scoring method and risk premiums designated for each category. The
premiums, even if arbitrary, provide a consistent method of taking risk into account.
Cost-benefit analysis :
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. Rather than a single cash flow forecast for a
project, we will then have a set of cash flow forecasts, each with an associated
probability of occurring. The value of the project is then obtained by summing the
cost or benefit for each possible outcome weighted by its corresponding probability.
Strategic Programme Management
Having a strategy for a project gives your teams and stakeholders a clear
picture of what deliverables to expect and by when. No matter how small,
projects executed without a strategy can lead to delays, overspending, and
poor quality.
Strategic Project Management shows you the bigger picture of how certain
types of projects will affect the company’s efficiency and your business as a
whole. It’s based on a belief that modern projects can be fulfilled better
when considering all aspects of project management instead of just the
three vitals-budget, scope, and time. This can be achieved by combining
project management methodologies with different frameworks to achieve
organizational objectives. The main purpose of Strategic Programme
Management is to ensure that projects are completed successfully and each
project is aligned with your company’s goals.
Step Wise Project Planning
Planning is the most difficult process in project management. The framework described is called the
Stepwise method to help to distinguish it from other methods.

Step 0: Select Project

Step 1: Identify project scope and objectives

Step 1.1 : Identify objectives and practical measures of the effectiveness in meeting those objectives
Step 1.2 : Establish a project authority
Step 1.3 : Stakeholder analysis - identify all stakeholders in the project and their interests.
Step 1.4 : Modify objectives in the light of stakeholder analysis.
Step 1.5 : Establish methods of communication with all parties.

Step 2 : Identify project infrastructure

Step 2.2 : Identify installation standard and procedures
Step 2.3 : Identify project team organization
Step 3 : Analyse project characteristics
Step 3.1 : Distinguish the project as either objectives- or product-driven.
Step 3.2 : Analyse other project characteristics
Step 3.3 : Identify high-level project risks
Step 3.4 : Take into account use requirements concerning implementation
Step 3.5 : Select development methodology and life-cycle approach
Step 3.6 : Review overall resource estimates
Step 4 : Identify project products and activities
Step 4.1 : Identify and describe project products
Step 4.2 : Document generic product flows
Step 4.3 : Recognize product instances
Step 4.4 : Produce ideal activity network
Step 4.5 : Modify the ideal to take into account need for stages and
checkpoints
Step 5 : Estimate effort for each activity​
Step 5.1 : Carry out bottom-up estimates​
- distinguish carefully between effort and elapsed time​
Step 5.2 : Revise plan to create controllable activities ​
- breakup very long activities into a series of smaller ones​
- bundle up very short activities​
​
​
Step 6 : Identify activity risks
Step 6.1 : Identify and quantify activity based risks
Step 6.2 : Plan risk reduction and contingency measures where appropriate
Step 6.3 : Adjust overall plans and estimates to take account of risks

Step 7 : Allocate resources

Step 7.1 : Identify and allocate resources
Step 7.2 : Revise plans and estimates to take into account resource
constraints

Step 8 : Review/ Publicize plans

Step 8.1 : Review quality aspects of the project plan
Step 8.2 : Document plans and obtain agreement

Step 9 and 10 : Execute plan/Lower levels of planning