Information Technology Project Management – Third Edition

The Nature of Information Technology Projects

Chapter 1

Introduction

• Information Technology (IT) projects are organizational investments that require
• Time
• Money
• And other resources such as people, technology, facilities, etc.
• Organizations expect some type of value in return for this investment
• IT Project Management is a relatively new discipline that attempts to make IT projects more successful and combines traditional Project Management with Software Engineering/Management Information Systems

An ITPM Approach

• Organizational resources are limited, so organizations must choose among competing interests to fund specific projects
• This decision should be based on the value a competing project will provide to an organization

The PMBOK® Guide’s Definitions for Project and Project Management

• A project is a temporary endeavor undertaken to create a unique product, service, or result.
• Project Management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. Managing a project includes:
• Identifying requirements
• Establishing clear and achievable objectives
• Balancing the competing demands for quality, scope, time, and cost
• Adapting the specifications, plans, and approaches to the different concerns and expectations of the various stakeholders

The Context of Project Management – Project Attributes

• Time Frame
• Purpose (to provide value!)
• Ownership
• Resources (the triple constraint)
• Roles
• Project Manager
• Project Sponsor
• SME (domain & technical)
• Risk & Assumptions
• Interdependent Tasks
• progressive elaboration – steps & increments
• Planned Organizational Change
• Operate in Environments Larger than the Project Itself

The Triple Constraint

Figure 1.3

The Project Life Cycle and IT Development

• Project Life Cycle (PLC)
• A collection of logical stages or phases that maps the life of a project from its beginning to its end in order to define, build, and deliver the product of the project – i.e., the information system
• Projects are divided into phases to increase manageability and reduce risk
• Phase exits, stage gates, or kill points are decision points at the end of each phase to evaluate performance or to correct problems or cancel the project
• Fast tracking is the overlapping of phases to reduce the project’s schedule
• Can be risky!

Generic Project Life Cycle

Figure 1.4

Systems Development Life Cycle (SDLC)

Figure 1.5

The Relationship Between the PLC & SDLC

Figure 1.7

Putting the SDLC into Practice

• Structured Approach to Systems Development
• Waterfall Method
• Iterative Development
• Rapid Applications Development (RAD)
• Prototyping
• Spiral Development
• Extreme Programming

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The Project Management Body of Knowledge (PMBOK®)

• The Guide to the Project Management Body of Knowledge (PMBOK® Guide) documents 9 project management knowledge areas
• The PMBOK® Guide is published and maintained by the Project Management Institute (PMI)
• http://www.pmi.org
• PMI provides a certification in project management called the Project Management Professional (PMP) that many people today believe will be as relevant as a CPA certification
• PMP certification requires that you pass a PMP certification exam to demonstrate a level of understanding about project management, as well as satisfy education & experience requirements and agree to a professional code of conduct

Project Management Body of Knowledge Areas

Figure 1.8

The Business Case

• Definition of Business Case: an analysis of the organizational value, feasibility, costs, benefits, and risks of the project plan.
• Attributes of a Good Business Case
• Details all possible impacts, costs, and benefits
• Clearly compares alternatives
• Objectively includes all pertinent information
• Systematic in terms of summarizing findings

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Process for Developing the Business Case

Figure 2.3

Developing the Business Case

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• Step 1: Select the Core Team
• Advantages:
• Credibility
• Alignment with organizational goals
• Access to the real costs
• Ownership
• Agreement
• Bridge building

Developing the Business Case

• Step 2: Define Measurable Organizational Value (MOV) the project’s overall goal

Measurable Organizational Value (MOV)

• The project’s goal
• Measure of success
• Must be measurable
• Provides value to the organization
• Must be agreed upon
• Must be verifiable at the end of the project
• Guides the project throughout its life cycle
• Should align with the organization’s strategy and goals

The IT Value Chain

Figure 2.4

The Project Charter

• Together with the baseline project plan, provides a tactical plan for carrying out the project
• Serves as an agreement or contract between the project sponsor and team
• Provides a framework for project governance

The Project Charter

• Documents the project’s MOV
• Defines the project infrastructure
• Summarizes the details of the project plan
• Defines roles & responsibilities
• Shows explicit commitment to the project
• Sets out project control mechanisms

What Should Be in a Project Charter?

• Project ID
• Project Stakeholders
• Project Description
• MOV
• Project Scope
• Project Schedule (summary)
• Project Budget (summary)
• Quality issues/standards/requirements
• Resources
• Assumptions & Risks
• Project Administration
• Acceptance & Approval
• References
• Terminology (acronyms & definitions)

Project Charter Template

Project Planning Framework

Figure 3.4

Project Planning Framework

• The MOV
• Define the Project’s Scope
• Initiation
• Planning
• Definition
• Verification
• Change Control

Project Planning �Framework – cont’d.

• Subdivide the Project into Phases
• Tasks-Sequence, Resources, and Time Estimates
• Sequence
• Resources
• Time
• Schedule and Budget-The Baseline Plan

The Kick-Off Meeting

• Officially starts the work on the project
• Brings closure to the planning phase
• Communicates to all what the project is about
• Energizes stakeholders
• Engenders positive attitudes

The Work Breakdown Structure and Project Estimation

Project Time Management�PMBOK^®

• Activity definition
• Identifying what activities must be completed to produce the project scope deliverables
• Activity sequencing
• Determining whether activities can be completed sequentially or in parallel and any dependencies that may exist among them
• Activity resource estimation
• Identifying the type of resources (people, technology, facilities, etc.) and the quantity of resources needed to carry out project activities
• Activity duration estimation
• Estimating the time to complete each activity
• Schedule development
• Based on the availability of resources, the activities, their sequence, and time estimates, a schedule for the entire budget can be developed
• Schedule control
• Ensuring that proper processes and procedures are in place in order to control changes to the project schedule

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Work Breakdown Structure (WBS)

• The WBS represents a logical decomposition of the work to be performed and focuses on how the product, service, or result is naturally subdivided. It is an outline of what work is to be performed
• PMBOK Guide^® (17).

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Work Package

Deliverables versus Milestones

• Deliverables
• Tangible, verifiable work products
• Reports, presentations, prototypes, etc.
• Milestones
• Significant events or achievements
• Acceptance of deliverables or phase completion
• Cruxes (proof of concepts)
• Quality control
• Keeps team focused

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Developing the WBS

• A work package is developed for each of the phases and deliverables defined in the Deliverable Structure Chart (DSC)

Deliverable: Test Results Report

• Logical Activities:
1. Review the test plan with the client so that key stakeholders are clear as to what will be tested, how the tests will be conducted, and when the tests will be carried out.
2. Carry out the tests as outlined in the plan.
3. Once the test results are collected, we need to analyze them.
4. The results should be summarized in the form of a report and presentation to the client.
5. If all goes well, the client will sign-off or approve the test results and then we can move on to the implementation phase of the project. If not, then we need to address and fix any problems.

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What are the deliverables? Milestones?

Example Work Breakdown Schedule

The WBS Should Follow the Work Package Concept

The WBS…

• Should be “deliverable-oriented”
• Should support the project’s MOV
• Have enough detail to support planning and control
• Should involve those who will be doing the work
• Should include learning cycles and past lessons learned

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PMBOK^® Project Cost Management

• Cost estimating
• Based upon the activities, their time estimates, and resource requirements, an estimate can be developed.
• Cost budgeting
• Once the time and cost of each activity is estimated, an overall cost estimate for the entire project can be made. Once approved, this estimate becomes the project budget.
• Cost control
• Ensuring that proper processes and procedures are in place to control changes to the project budget.

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The Project Planning Framework

Budget and Schedule Development

• The project’s schedule can be determined based upon the tasks and time estimates in the WBS
• The schedule will also depend on how these activities are sequenced
• The project’s budget can be determined based upon the activities and time estimates from the WBS as well as the cost of the resources assigned to the WBS tasks
• Iterations may still be necessary
• The objective is to create a realistic project schedule and budget!

Developing the Project Schedule

• Project Management Tools
• Gantt Charts
• Project Network Diagrams
• Activity on the Node (AON)
• Critical Path Analysis
• Program Evaluation and Review Technique (PERT)
• Precedence Diagramming Method (PDM)

Gantt Chart for Planning

Gantt Chart Reporting �Project’s Progress

Activity Analysis for AON

Activity on the Node (AON)�Network Diagram

Possible Activity Paths

* The Critical Path

Critical Path

• Longest path
• Shortest time project can be completed
• Zero slack (or float)
• The amount of time an activity can be delayed before it delays the project
• Must be monitored and managed!
• Project manager can expedite or crash by adding resources
• Fast tracking – running activities in parallel which were originally planned as sequential
• The CP can change
• Can have multiple CPs

PERT

• Program Evaluation and Review Technique
• Developed in 1950s to help manage the Polaris Submarine Project
• Developed about the same time as the Critical Path Method
• Often combined as PERT/CPM
• Employs both a project network diagram with a statistical distribution

Activity Analysis for PERT

Possible PERT Activity Paths

* The Critical Path

Precedence Diagramming Method - PDM

• Based on 4 fundamental relationships
• Finish-To-Start (FS)
• Start-To-Start (SS)
• Finish-To-Finish (FF)
• Start-To-Finish (SF)

PDM Relationships

Lead and Lag times

• Lead is starting the next task before the first task is complete
• Example: Begin installing the operating systems when half of the PCs are set up
• Lag (or negative lead) is the adding of a buffer of time before the next task begins
• Example: Once the walls have been painted, wait one day before laying the carpet so that the walls have had a chance to dry

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Project Measurement Systems Should…

• Allow the team to gauge its own progress
• Be designed by the project team
• Adopt and use only a handful of measures
• Track results and progress

Earned Value

• Suppose you just signed a contract with a consulting firm called Dewey, Cheatem, and Howe for developing an IS.
• Project Budget, Schedule, Tasks
• $40,000
• 4 months
• 20 Tasks (evenly divided over 4 months)
• $2,000 per task
• 5 tasks per month

The Planned

Project Schedule

And Budget

Earned Value Concepts

• Planned Value (PV)
• The planned or budgeted cost of work scheduled for an activity or component of the WBS
• In our case, our planned value for each task is $2,000
• The planned value for each month is $10,000
• Budgeted At Completion (BAC)
• The total budget for our project
• In our case, $40,000 is our BAC since this is what we expect to pay for the completed project
• The BAC is the total cumulative planned value

Planned Budget

At the end of Month 1, we received the following invoice…

This Looks Like Good News!

• We expected to pay $10,000 but we’re only being billed for $8,000
• Are we really ahead of our budgeted or planned value by $2,000?
• It depends on what work was accomplished for the $8,000 that is due

Therefore, we need to look at the rest of the invoice to be sure

It appears that only three

of the five tasks scheduled to be

completed in Month 1 were

completed as planned. In fact,

two of the tasks cost more

to complete than originally

estimated.

​

Maybe things are not as

good as we thought!

Planned Value versus Actual Cost

Some More Earned Value Concepts

• Actual Cost (AC)
• The actual cost incurred for completing an activity or component of the WBS
• For example, the actual cost for completing task 2 is $3,000
• Or, we have to write a check for $8,000 for the three tasks that were completed in Month 1
• Earned Value (EV)
• A performance measurement that tells us how much of the budget we really should have spent for the work that was completed
• We need to pay our consultants $8,000 in actual costs even though we should be paying them only $6,000
• This $6,000 is called the earned value

Planned, Actual, & Earned Values for Month 1

What we

planned to pay

What we

have to pay

What we

should pay

Comparison of Planned Value, Actual Cost, and Earned Value

We are spending $8,000 to achieve $6,000 worth of work!

Cost Metrics

• Cost Variance (CV)-the difference between a task’s or WBS component’s estimated cost and its actual cost:
• CV = EV - AC
• Negative Value = over budget
• Positive Value = under budget
• Value = 0 means project is right on budget
• Cost Performance Index (CPI)-percentage of work completed per dollar spent
• CPI = EV ÷ AC
• ratio > 1 = ahead of budget
• ratio < 1 = behind budget (cost overrun)
• Ratio = 1 means project is right on budget

Cost Metrics

Cost Variance (CV) = EV – AC

= $6,000 - $8,000

= ($2,000)

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Negative value tells us the project is over budget

Cost Metrics

Cost Performance Index (CPI) = EV / AC

= $6,000 / $8,000

= .75

ratio < 1 = the project is over budget

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For every $1 spent, only $0.75 of the work we budgeted was really completed.

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Schedule Metrics

• Schedule Variance (SV) – the difference between the current progress of the project and its original or planned schedule
• SV = EV – PV
• Negative Value = behind schedule
• Positive Value = ahead of schedule
• Value = 0 means project is right on schedule
• Schedule Performance Index (SPI) – a ratio of the work performed to the work scheduled.
• SPI = EV ÷ PV
• ratio > 1 = ahead of schedule
• ratio < 1 = behind schedule
• Ratio = 1 means our project is right on schedule

Schedule Metrics

Schedule Variance (SV) = EV – PV

= $6,000 - $10,000

= ($4,000)

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Negative value tells the project is behind schedule

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Schedule Metrics

Schedule Performance Index (SPI) = EV/PV

= $6,000 / $10,000

= .60

ratio < 1 tells us the project is behind schedule

For every $1.00 of work that was expected to be completed, only $0.60 was accomplished.

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Summary of Project Performance Metrics

Expected Time To Complete (ETC)

• Provides an estimate for completing the scheduled work that remains
• What if these variances from our planned schedule and budget are typical and we expect them to continue?
• What if they are atypical and we don’t expect them to continue?

Expected Time to Complete (ETC)

• ETC (typical variances)

= (BAC – Cumulative EV to date)/Cumulative CPI

= ($40,000 - $6,000) / .75

= $45,333.33

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If we believe the variances (i.e., problems) encountered so far WILL continue for the remainder of our project, then the funds needed to complete the rest of our project is estimated to be $45,333.33.

.

Expected Time to Complete (ETC)

• ETC (atypical variances)

= (BAC – Cumulative EV to date)

= ($40,000 - $6,000)

= $34,000.00

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If we believe the variances (i.e., problems) encountered so far will NOT continue for the remainder of our project, then the funds needed to complete the rest of our project is estimated to be $34,000.00.

Estimate at Completion (EAC)

• Estimates the most likely total or final value based on our project’s performance and any risks that should be considered
• We can ether revise the whole budget and schedule and start over,… or
• We can use the project’s current performance metrics to develop a more realistic picture
• Depends on whether we believe these variances are typical and expected to continue or atypical – i.e., we don’t expect variances or problems as we continue with the project.

Estimate At Completion (EAC)

• EAC (typical variances)

= Cumulative AC + ((BAC - Cumulative EV)/Cumulative CPI

= $8,000 + ($40,000 - $6,000) / .75

= $53,333.33

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If we believe the variances (i.e., problems) encountered so far WILL continue for the remainder of our project, then the total budget to complete this project is estimated to be $53,333.33

.

Estimate At Completion (EAC)

• EAC (atypical variances)

= Cumulative AC + (BAC - Cumulative EV)

= $8,000 + ($40,000 - $6,000)

= $42,000

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If we believe the variances (i.e., problems) encountered so far WILL NOT continue for the remainder of our project, then the total budget to complete this project is estimated to be $42,000

.

Another way to calculated Earned Value…

• In terms of completion of the planned value
• Just multiply the planned value (PV) of an activity, task, or WBS component by its percentage of completion

Earned Value = PV * Percent Complete