Project Management CSC 310 Spring 2017 Howard Rosenthal · Develop Project Charter 4.1 Develop...

ProjectManagementCSC310

Spring2017HowardRosenthal

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No?ce�  Thiscourseisbasedonandincludesmaterialfromthetext:EffectiveProjectManagement-Traditional,Agile,Extreme7THEditionAuthors:RobertK.WysockiPublisher:WileyISBN:978-1-118-72916-8,Copyright2014

�  Thecourseincludesandinterspersessomematerials,mostoftendiagrams,providedbyMr.Wysocki’sPowerPointslides,atthewebsite:www.wiley.com/go/epm7e

�  ItalsoutilizesgeneralinformationandfiguresfromthePMBOK:AGuidetotheProjectManagementBodyofKnowledge(PMBOK5THEdition)Publisher:ProjectManagementInstituteISBN:978-1-935589-67-9,Copyright2013

�  Italsoutilizes:AUser’sManualtothePMBOK®Guide—FifthEdition,Snyder,Cynthia

JohnWileyandSons,2013ISBN:978_1_118_43107_8

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LessonGoals

� Understandwhataprojectcharteris� Understandsomeofsomeofthefacilitationtechniquesandquantitativeanalysistoolsusedtodeveloptheprojectcharter

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ProjectManagementProcessGroupsandKnowledgeAreas

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61©2013 Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition

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3 - PROJECT MANAGEMENT PROCESSES

Table 3-1. Project Management Process Group and Knowledge Area Mapping

4. Project Integration Management

5. Project Scope Management

6. Project Time Management

7. Project Cost Management

8. Project Quality Management

9. Project Human Resource Management

10. Project Communications Management

11. Project Risk Management

12. Project Procurement Management

13. Project Stakeholder Management

Project Management Process Groups

Knowledge Areas Initiating Process

Group

Closing Process

Group

Monitoring and Controlling Process Group

Executing Process

Group

Planning Process Group

4.1 Develop Project Charter

13.1 Identify Stakeholders

4.2 Develop Project Management Plan

5.1 Plan Scope Management5.2 Collect Requirements5.3 Define Scope5.4 Create WBS

6.1 Plan Schedule Management6.2 Define Activities6.3 Sequence Activities6.4 Estimate Activity Resources6.5 Estimate Activity Durations6.6 Develop Schedule

7.1 Plan Cost Management7.2 Estimate Costs7.3 Determine Budget

8.1 Plan Quality Management

9.1 Plan Human Resource Management

10.1 Plan Communications Management

11.1 Plan Risk Management11.2 Identify Risks11.3 Perform Qualitative Risk Analysis11.4 Perform Quantitative Risk Analysis11.5 Plan Risk Responses

12.1 Plan Procurement Management

13.2 Plan Stakeholder Management

4.3 Direct and Manage Project Work

8.2 Perform Quality Assurance

9.2 Acquire Project Team9.3 Develop Project Team9.4 Manage Project Team

10.2 Manage Communications

12.2 Conduct Procurements

13.3 Manage Stakeholder Engagement

4.4 Monitor and Control Project Work4.5 Perform Integrated Change Control

5.5 Validate Scope5.6 Control Scope

6.7 Control Schedule

7.4 Control Costs

8.3 Control Quality

10.3 Control Communications

11.6 Control Risks

12.3 Control Procurements

13.4 Control Stakeholder Engagement

4.6 Close Project or Phase

12.4 Close Procurements

Licensed To: Howard Rosenthal PMI MemberID: 2552551This copy is a PMI Member benefit, not for distribution, sale, or reproduction.


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3 - PROJECT MANAGEMENT PROCESSES

Table 3-1. Project Management Process Group and Knowledge Area Mapping

4. Project Integration Management

5. Project Scope Management

6. Project Time Management

7. Project Cost Management

8. Project Quality Management

9. Project Human Resource Management

10. Project Communications Management

11. Project Risk Management

12. Project Procurement Management

13. Project Stakeholder Management

Project Management Process Groups

Knowledge Areas Initiating Process

Group

Closing Process

Group

Monitoring and Controlling Process Group

Executing Process

Group

Planning Process Group

4.1 Develop Project Charter

13.1 Identify Stakeholders

4.2 Develop Project Management Plan

5.1 Plan Scope Management5.2 Collect Requirements5.3 Define Scope5.4 Create WBS

6.1 Plan Schedule Management6.2 Define Activities6.3 Sequence Activities6.4 Estimate Activity Resources6.5 Estimate Activity Durations6.6 Develop Schedule

7.1 Plan Cost Management7.2 Estimate Costs7.3 Determine Budget

8.1 Plan Quality Management

9.1 Plan Human Resource Management

10.1 Plan Communications Management

11.1 Plan Risk Management11.2 Identify Risks11.3 Perform Qualitative Risk Analysis11.4 Perform Quantitative Risk Analysis11.5 Plan Risk Responses

12.1 Plan Procurement Management

13.2 Plan Stakeholder Management

4.3 Direct and Manage Project Work

8.2 Perform Quality Assurance

9.2 Acquire Project Team9.3 Develop Project Team9.4 Manage Project Team

10.2 Manage Communications

12.2 Conduct Procurements

13.3 Manage Stakeholder Engagement

4.4 Monitor and Control Project Work4.5 Perform Integrated Change Control

5.5 Validate Scope5.6 Control Scope

6.7 Control Schedule

7.4 Control Costs

8.3 Control Quality

10.3 Control Communications

11.6 Control Risks

12.3 Control Procurements

13.4 Control Stakeholder Engagement

4.6 Close Project or Phase

12.4 Close Procurements


PMBOKTable3-1

DevelopProjectCharter�  4.1DevelopProjectCharter

�  Theprocessofdevelopingadocumentthatformallyauthorizestheexistenceofaprojectandprovidestheprojectmanagerwiththeauthoritytoapplyorganizationalresourcestoprojectactivities

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ProjectIntegra?onManagementOverview

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4 - PROJECT INTEGRATION MANAGEMENT

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The links among the processes in the Project Management Process Groups are often iterative in nature. For example, the Planning Process Group provides the Executing Process Group with a documented project management plan early in the project and then updates the project management plan if changes occur as the project progresses.

.1 Inputs .1 Project statement of work .2 Business case .3 Agreements .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Facilitation techniques

.3 Outputs .1 Project charter

.1 Inputs .1 Project charter .2 Outputs from other processes .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Facilitation techniques

.3 Outputs .1 Project management plan

.1 Inputs .1 Project management plan .2 Approved change requests .3 Enterprise environmental factors .4 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Project management information system .3 Meetings

.3 Outputs .1 Deliverables .2 Work performance data .3 Change requests .4 Project management plan updates .5 Project documents updates

.1 Inputs .1 Project management plan .2 Schedule forecasts .3 Cost forecasts .4 Validated changes .5 Work performance information .6 Enterprise environmental factors .7 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Analytical techniques .3 Project management information system .4 Meetings

.3 Outputs .1 Change requests .2 Work performance reports .3 Project management plan updates .4 Project documents updates

.1 Inputs .1 Project management plan .2 Work performance reports .3 Change requests .4 Enterprise environmental factors .5 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Meetings .3 Change control tools

.3 Outputs .1 Approved change requests .2 Change log .3 Project management plan updates .4 Project documents updates

.1 Inputs .1 Project management plan .2 Accepted deliverables .3 Organizational process assets

.2 Tools & Techniques .1 Expert judgment .2 Analytical techniques .3 Meetings

.3 Outputs .1 Final product, service, or result transition .2 Organizational process assets updates

Project Integration

Management Overview

4.2 Develop Project

Management Plan

4.1 Develop Project

Charter

4.3 Direct and Manage

Project Work

4.4 Monitor and Control

Project Work

4.5 Perform Integrated

Change Control

4.6 Close Project or

Phase

Figure 4-1. Project Integration Management Overview


PMBOKFigure4-1

TheProjectCharter�  WhatistheProjectCharter?

�  Thecharterofficiallystartstheproject�  ItiscreatedduringthisDevelopProjectCharterProcess�  Itiscreatedbasedonsomeneed,andtheProjectChartermust

captureandexplainthatneed�  Itissignedbytheperformingorganization’sseniormanagement

andbytheprojectsponsor�  ItnamestheprojectmanagerandgivesthePMauthorityto

manage�  Itshouldincludetheveryhighlevelprojectrequirementsbasedon

thebusinesscase�  Itincludeshighlevelprojectmilestones,butdoesnotinclude

projectdetails�  TheProjectCharterisaninputtothevariousplanningprocesses

�  Ithasatop-levelsummarybudget�  YoumusthaveaProjectCharterbeforemovingforwardwiththeproject

�  TheProjectCharteristhesoleoutputofthisprocess

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FlowDiagramForDevelopProjectCharter

8PMBOKFigure4-3


4 - PROJECT INTEGRATION MANAGEMENT

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k

4.1Develop Project

Charter

4.2Develop ProjectManagement

Plan

Project Integration ManagementProject Initiator/Sponsor

Enterprise/Organization

5.3Define Scope

5.2Collect

Requirements

5.1 Plan Scope

Management

11.1Plan Risk

Management

13.1Identify

Stakeholders

7.1Plan Cost

Management

6.1 Plan ScheduleManagement

Figure 4-3. Develop Project Charter Data Flow Diagram

The project charter establishes a partnership between the performing and requesting organizations. In the case of external projects, a formal contract is typically the preferred way to establish an agreement. In this case, the project team becomes the seller responding to conditions of an offer to buy from an outside entity. A project charter is still used to establish internal agreements within an organization to assure proper delivery under the contract. The approved project charter formally initiates the project. A project manager is identified and assigned as early in the project as is feasible, preferably while the project charter is being developed and always prior to the start of planning. The project charter should be authored by the sponsoring entity. The project charter provides the project manager with the authority to plan and execute the project. It is recommended that the project manager participate in the development of the project charter to obtain a foundational understanding of the project requirements. This understanding will better allow for efficient resources allocation to project activities.


InputsToTheCharter-TheStatementofWork�  Theprojectstatementofwork(SOW)isanarrativedescriptionofproducts,

services,orresultstobedeliveredbyaproject.�  Forinternalprojects,theprojectinitiatororsponsorprovidesthestatementof

workbasedonbusinessneeds,product,orservicerequirements.�  Forexternalprojects,thestatementofworkcanbereceivedfromthecustomer

aspartofabiddocument,(e.g.,arequestforproposal,requestforinformation,orrequestforbid)oraspartofacontract.

�  TheSOWreferencesthefollowing:�  BusinessNeed

�  Anorganization’sbusinessneedmaybebasedonamarketdemand,technologicaladvance,legalrequirement,governmentregulation,orenvironmentalconsideration.

�  Typically,thebusinessneedandthecost-benefitanalysisarecontainedinthebusinesscasetojustifytheproject.

�  ProductScopeDescription�  Theproductscopedescriptiondocumentsthecharacteristicsoftheproduct,service,

orresultsthattheprojectwillbeundertakentocreate.�  Thedescriptionshouldalsodocumenttherelationshipbetweentheproducts,

services,orresultsbeingcreatedandthebusinessneedthattheprojectwilladdress.�  StrategicPlan

�  Thestrategicplandocumentstheorganization’sstrategicvision,goals,andobjectivesandmaycontainahigh-levelmissionstatement.

�  Allprojectsshouldbealignedwiththeirorganization’sstrategicplan.�  Strategicplanalignmentensuresthateachprojectcontributestotheoverall

objectivesoftheorganization.9

InputsToTheCharter-TheBusinessCase�  Thebusinesscaseorsimilardocumentdescribesthenecessaryinformationfroma

businessstandpointtodeterminewhetherornottheprojectisworththerequiredinvestment.�  Itiscommonlyusedfordecisionmakingbymanagersorexecutivesabovetheproject

level.�  Thebusinessneedandthecost-benefitanalysisarecontainedinthebusinesscaseto

justifyandestablishboundariesfortheproject,andsuchanalysisisusuallycompletedbyabusinessanalystusingvariousstakeholderinputs.

�  Thesponsorshouldagreetothescopeandlimitationsofthebusinesscase.�  Thebusinesscaseiscreatedasaresultofoneormoreofthefollowinginputs:

�  Marketdemand�  Acarcompanyauthorizingaprojecttobuildmorefuel-efficientcars(i.e.hybrids)inresponseto

gasolineshortagesorariseingasolineprices�  Organizationalneed

�  Duetohighoverheadcostsacompanymaycombinestafffunctionsandstreamlineprocessestoreducecosts

�  Customerrequest�  Anelectricutilityauthorizingaprojecttobuildanewsubstationtoserveanewindustrialpark

�  Technologicaladvance�  Anairlineauthorizinganewprojecttodevelopelectronicticketsinsteadofpaperticketsbasedon

technologicaladvances�  Legalrequirement

�  Apaintmanufacturerauthorizingaprojecttoestablishguidelinesforhandlingtoxicmaterials�  Ecologicalimpacts

�  Acompanyauthorizingaprojecttolessenitsenvironmentalimpactinordertocomplywithregulationsorbecauseithasdeterminedthatthereisabenefitinbeingsociallyresponsible

�  Socialneed�  Anongovernmentalorganizationinadevelopingcountryauthorizingaprojecttoprovidepotable

watersystems,latrines,andsanitationeducationtocommunitiessufferingfromhighratesofcholera 10

InputsToTheCharter-Other�  Agreements

�  Agreementsareusedtodefineinitialintentionsforaproject�  Agreementsmaytaketheformofcontracts,memorandumsof

understanding(MOUs),servicelevelagreements(SLA),letterofagreements,lettersofintent,verbalagreements,email,orotherwrittenagreements

�  Typically,acontractisusedwhenaprojectisbeingperformedforanexternalcustomer

�  EnterpriseEnvironmentalFactors�  TheenterpriseenvironmentalfactorsthatcaninfluencetheDevelop

ProjectCharterprocessinclude,butarenotlimitedto:�  Governmentalstandards,industrystandards,orregulations(e.g.codesof

conduct,qualitystandards,orworkerprotectionstandards)�  Organizationalcultureandstructure�  Marketplaceconditions

�  OrganizationalProcessAssets�  Organizationalstandardprocesses,policies,andprocessdefinitions�  Templates(e.g.,projectchartertemplate)�  Historicalinformationandlessonslearnedknowledgebaseincluding

�  Projects,records,anddocuments�  Allprojectclosureinformationanddocumentation�  Informationaboutboththeresultsofpreviousprojectselectiondecisionsand

previousprojectperformanceinformation�  Informationfromtheriskmanagementactivity 11

BenefitMeasurementMethodsForCost-BenefitAnalyses� Cost-benefitanalysesareproducedusingavarietyofbenefitmeasurementmethods� Usedtoquantifythemonetarybenefitsandexpectedcoststhatwillresultfromaproject

� Multipleprojectsarecomparedusingtheseanalyticsasapartoftheselectionprocess

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BenefitMeasurementMethodsForCost-BenefitAnalyses–BenefitCostRa?o�  TheBenefitCostRatio(BCR)measurestheratioofbenefitstocost�  Forexampleifallthecostsforconstructingabuildingare$3Mand

youbelieveyoucansellitfor$3.93M,thentheBCR=3.93/3=1.31�  Whentheprojectiscompletedthesenumbersareexamined�  YoumaybeincentivizedtoachieveahigherBCR

�  Question:WhatdoesaBCRof1.9mean?a.  Thecostsaregreaterthanthebenefitsb.  Revenueis1.9timesthecostc.  Profitis1.9timesthecostd.  Costsare1.7timestheprofit

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BenefitMeasurementMethodsForCost-BenefitAnalyses–EconomicValueAdded�  TheEconomicValueAdded(EVA)measureslooksathowmuchvaluehasbeencreatedfortheshareholders

�  EVAlooksattheopportunitycosts,notjustthenetprofitsEVA=(after-taxprofit)–(capitalinvested*costofcapital)Ifacompanyinvested$175,000inaprojectatacostofcapitalof6%andachievedaprofitof$10,000inthefirstyearthenEVA = 10,000 – (175,000 *.06) = 10,000 – 10,500 = -500 Therefore,atleastduringthefirstyearthiswouldnotbeagoodinvestmentsinceyoucouldhaveearnedmorebyputtingthemoneyinthebank

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BenefitMeasurementMethodsForCost-BenefitAnalyses–PresentValueandNetPresentValue(1)�  Present Value (PV) is based on the time value of money

�  Simply this means that a dollar today is worth more than a dollar tomorrow (Future Value)

PV = FV/(1 + r)n where r is the rate per period and n is the number of periods Example; If you are paid back $300,000 in three years and if the going interest rate is 10% per year (compounded yearly) what is the PV PV = (300,000)/(1 +.10)3 = $225,394 In the above example you lose. Why? If you had a simple ten percent interest compounded yearly then the $30000 would be worth 300000*(1.1)3 = 399300 in 3 years If you are only being paid $300000 then the maximum you should be paying up front is $225,394 The final price that you charge must be higher than present value of the the original investment to ensure that you recover all the costs

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BenefitMeasurementMethodsForCost-BenefitAnalyses–PresentValueandNetPresentValue(2)�  NetPresentValue(NPV)isthepresentvalueofthetotalbenefits

(income/revenue)minusthecostsovermultipletimeperiods�  ItispossibletocompareprojectsusingNPVandselectthebestproject

basedontheonewiththehighestpositivevalue

Simpleexample:IfthePVofabuildingis$500000anditcost$350000tobuildthentheNPVis$150000�  ANetPresentValue(NPV)thatispositiveisgoodandnegativeis

bad�  Itisusedbothbeforeandaftertheprojectto

�  Decidewhethertomakeaninvestment�  Determineiftheinvestmentpannedout

Note:duringtheevaluationNPVdoesnottakeriskintoconsideration,somethingthatneedstobeconsideredwhendeterminingyourfinalprice 16

BenefitMeasurementMethodsForCost-BenefitAnalyses–PresentValueandNetPresentValue(3)Example: A friend needs $500 now, and will pay you back $570 in a year. Is that a good investment when you can get 10% elsewhere? Money Out: $500 now You invested $500 now, so PV = -$500.00 Money In: $570 next year Calculate PV (of the $570) = $570 / (1+0.10)1 = $570 / 1.10 = $518.18 The Net Amount is: $518.18 - $500.00 = $18.18 So, at 10% interest, that investment is actually worth $18.18 In other words it is $18.18 better than a 10% investment, in today's money – a good investment

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BenefitMeasurementMethodsForCost-BenefitAnalyses–PresentValueandNetPresentValue(4)Net Present Value is sensitive to the interest rate: Example: A friend needs $500 now, and will pay you back $570 in a year. Is that a good investment when you can get 15% elsewhere? Money Out: $500 now You invested $500 now, so PV = -$500.00 Money In: $570 next year Calculate PV (of the $570) = $570 / (1+0.15)1 = $570 / 1.15 = $495.65 The Net Amount is: $495.65 - $500.00 = -$4.35 So, at 15% interest, that investment is actually worth- $4.35 In other words it is $4.35 worse than a 15% investment, in today's money – a bad investment

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BenefitMeasurementMethodsForCost-BenefitAnalyses–PresentValueandNetPresentValue(5)One more example that is a little more realistic: Andres invests $2,000 now, receives 3 yearly payments of $100 each, plus $2,500 in the 3rd year. What is his NPV if he uses a 10% interest rate throughout? Let us work year by year (remembering to subtract what you pay out): Now: PV = -$2,000 Year 1: PV = $100 / 1.10 = $90.91 Year 2: PV = $100 / 1.102 = $82.64 Year 3: PV = $100 / 1.103 = $75.13 Year 3 (final payment): PV = $2,500 / 1.103 = $1,878.29 NPV = ( $90.91 + $82.64 + $75.13 + $1,878.29) -$2,000 = $126.97 Looks like a good investment. Class Exercise: What happens at 6%?

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BenefitMeasurementMethodsForCost-BenefitAnalyses–PresentValueandNetPresentValue(6)Class Exercise Invest $2,000 now, receive 3 yearly payments of $100 each, plus $2,500 in the 3rd year. Use a 6% Interest Rate throughout Let us work year by year (remembering to subtract what you pay out): Now: PV = -$2,000 Year 1: PV = $100 / 1.06 = $94.34 Year 2: PV = $100 / 1.062 = $89.00 Year 3: PV = $100 / 1.063 = $83.96 Year 3 (final payment): PV = $2,500 / 1.063 = $2099.05 NPV = ( $94.34 +$89.00 + $83.96 + $2099.05) -$2,000 = $366.35 Looks like an even better investment

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BenefitMeasurementMethodsForCost-BenefitAnalyses–InternalRateofReturn(1)� TheformaldefinitionoftheInternalRateofReturn(IRR)statesthatitistheinterestrateatwhichtheNPVofallpositiveandnegativecashflowsfromaprojectorinvestmentequalzero.

�  SomeplacesstatethatahigherIRRisbetterbutthiscanbemisleadinginmanycases� However,thebasicideaissound,inthatyouhavemoreopportunitytocomeoutaheadiftheinterestrateishigher

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BenefitMeasurementMethodsForCost-BenefitAnalyses–InternalRateofReturn(2)Example:Samisgoingtostartasmallbakery!Samestimatesallthecostsandearningsforthenext2years,andcalculatestheNetPresentValue:At6%SamgetsaNetPresentValueof$2000.ButtheNetPresentValueshouldbezero,soSamtries8%interest:At8%SamgetsaNetPresentValueof−$1600Nowit'snegative!SoSamtriesoncemore,butwith7%interest:At7%SamgetsaNetPresentValueof$15Closeenoughtozero,Samdoesn'twanttocalculateanymore.ThistellsusthatiftheIRRismorethanalittleover7%thentheinvestmentisn’tworthit

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BenefitMeasurementMethodsForCost-BenefitAnalyses–PaybackPeriod� Thelengthoftimeittakesaprojecttorecoupitscostbeforeaccruingprofits

� Youwouldlikethepaybackperiodtobeasshortaspossible,buttherearesituationswhereitcouldmakesensetodelaytheinitialpaybackifyoucanincreasethefinalNPV

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BenefitMeasurementMethodsForCost-BenefitAnalyses–ReturnOnInvestment�  ThisReturnonInvestment(ROI)isapercentagemeasuringthereturnyoumakewheninvestinginsomething

ROI=((benefit–cost)/cost)*100%Ifacompanyinvests$100,000inprocessimprovementandsaves$120,000inthefirstyear,thenROI=((120,000-100,000)/100,000)*100=20%Whathappensifitrecoupsonly$90,000ofthecosts?

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BenefitMeasurementMethodsForCost-BenefitAnalyses–OpportunityCost�  Definesthecostofamissedopportunitywhenselectingone(ormore)projectsoveranothersetofone(ormore)projects

�  Acompanyhashastwoprojectstochoosefrom.ProjectAhasanNPVof$30,000andProjectBhasanNPVof$45,000.TheOpportunitycostofpickingProjectBis$30,000–thelostopportunity

�  Youcanloseopportunitieswhenyoudon’thaveenoughresourcestogoafterallthepotentialopportunities

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BenefitMeasurementMethodsForCost-BenefitAnalyses–SunkCost�  SunkCostsareexpendedcosts� Youarehalfwaythroughaprojectthatwasbudgetedat$100,000andhavealreadyspent$200,000.Isthefactthattheprojectisalreadyoverbudgettobeconsideredindeterminingwhethertocontinue.� No.Inaccounting,themoneyisalreadyspent.However,ifyoucanshowthatfutureinvestmentswon’timprovetheNPVthenyoumaycanceltheproject.

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Project Management CSC 310 Spring 2017 Howard Rosenthal · Develop Project Charter 4.1 Develop...

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