Copyright 2002 Prentice-Hall, Inc.

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Chapter 2-02

Initiating and Planning Systems Development Projects

6.1

Initiating and Planning System Development Projects

6.3

Deliverables and Outcomes

ν

ν

Baseline Project Plan (BPP)

• Scope
• Benefits
• Costs
• Risks
• Resources

Initiating and Planning System Development Projects

6.4

Project Initiation

ν

ν

ν

ν

ν

Establishment of project team Development of relationship with customer Project Initiation Plan

Establishment of Management Procedures

Establishment of Project Workbook and Project Management Environment

Project Planning

ν

Defining clear, discrete activities and the work needed to complete each activity

Assessing Project Feasibility

6.5

Six Categories

• Economic
• Technical
• Operational
• Schedule
• Legal and contractual
• Political

Assessing Economic Feasibility

6.6

Cost – Benefit Analysis Determine Benefits

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Tangible Benefits

^ω Can be measured easily

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Examples

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Cost reduction and avoidance Error reduction

Increased flexibility Increased speed of activity

Improved management planning and control

Opening new markets and increasing sales opportunities

Assessing Economic Feasibility

6.9

ν

Intangible Benefits

• Cannot be measured easily
• Examples

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ν

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ν

Increased employee morale Competitive necessity

More timely information

Promotion of organizational learning and understanding

Determine Costs

ν

Tangible Costs

^ω Can easily be measured in dollars

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Example: Hardware

Assessing Economic Feasibility

6.10

Determine Costs (Continued)

• Intangible Costs
• Cannot be easily measured in dollars
• Examples:
• Loss of customer goodwill
• Loss of employee morale

Assessing Economic Feasibility

6.11

• One-Time Costs
• Associated with project startup, initiation and development
• Includes
• System Development
• New hardware and software purchases
• User training
• Site preparation
• Data or system conversion

Assessing Economic Feasibility

6.13

ν

Recurring Costs

• Associated with ongoing use of the system
• Includes:

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Application software maintenance Incremental data storage expense New software and hardware releases Consumable supplies

Incremental communications

The Time Value of Money

Net Present Value (NPV)

Use discount rate to determine present value of cash outlays and receipts

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Return on Investment (ROI)

Ratio of cash receipts to cash outlays

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Break-Even Analysis (BEA)

Amount of time required for cumulative cash flow to equal initial and ongoing investment

6.15

Chapter 5

The Time Value of Money

Time value of money (TVM): the concept that money available today is worth more than the same amount tomorrow

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Discount rate: the rate of return used to compute the present value of future cash flows (the cost of capital)

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Present value: the current value of a future cash flow

6.16

Chapter 5

The Time Value of Money (Cont.)

Net Present Value

PVn = present value of Y dollars n years from now based on a discount rate of i.

NPV = sum of PVs across years.

Calculates time value of money

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6.17

Chapter 5

Net Present value

• Present value is the current value of a future cash flow.

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The Time Value of Money (Cont.)

Break-even analysis: a type of cost-benefit analysis to identify at what point (if ever) benefits equal costs

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6.19

Chapter 5

Assessing Technical Feasibility

6.21

Technical Feasibility

• Assessment of the development organization’s ability to construct a proposed system
• Project risk can be assessed based upon:
• Project size
• Project structure
• Development group’s experience with the application
• User group’s experience with development projects and the application area

Assessing Other Project Feasibility Concerns

6.22

Operational Feasibility

ν

Assessment of how a proposed system solves business problems or takes advantage of opportunities

Schedule Feasibility

ν

Assessment of time frame and project completion dates with respect to organization constraints for affecting change

Legal and Contractual Feasibility

ν

Assessment of legal and contractual ramifications of new system

Assessing Other Project Feasibility Concerns

6.23

Political Feasibility

^ν Assessment of key stakeholders in organization’s view toward proposed system

Building the Baseline Project Plan

6.24

Objectives

• Assures that customer and development group have a complete understanding of the proposed system and requirements
• Provides sponsoring organization with a clear idea of scope, benefits and duration of project

Building the Baseline Project Plan

6.25

Four Sections

• Introduction
• System Description
• Feasibility Assessment
• Management Issues

Building the Baseline Project Plan

6.26

Introduction

• Brief overview
• Recommended course of action
• Project scope defined
• Units affected
• Who inside and outside the organization would be involved
• Interaction with other systems
• Range of system capabilities

Building the Baseline Project Plan

6.27

System Description

• Outline of possible alternative solutions
• Narrative format

Feasibility Assessment

• Project costs and benefits
• Technical difficulties
• High-level project schedules

Building the Baseline Project Plan

Management Issues

• Outlines concerns that management may have about the project
• Team composition
• Communication plan
• Project standards and procedures

6.28

Reviewing the Baseline Project Plan

• Structured Walkthroughs: a peer-group review of any product created during the system development process

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• Roles: coordinator, presenter, user, secretary, standard-bearer, maintenance oracle

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• Can be applied to BPP, system specifications, logical and physical designs, program code, test procedures, manuals and documentation

6.30

Chapter 5

Reviewing the Baseline Project Plan

6.31

Walkthrough

• Peer group review
• Participants

^ωCoordinator

^ωPresenter

^ωUser

^ωSecretary

^ωStandards Bearer

^ωMaintenance Oracle

Reviewing the Baseline Project Plan

6.32

Objectives

• Assure conformity to organizational standards
• All parties agree to continue with project