Copyright Course Technology 1999 1 TOPIC 3 Project Scope Management Chapter 4.

Copyright Course Technology 1999

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TOPIC 3Project Scope ManagementChapter 4


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Importance of Good Project Scope Management1995 CHAOS study cited user

involvement, a clear project mission, a clear statement of requirements, and proper planning as being important for project success

The program manager of Keller Graduate School of Management cites proper project definition and scope as the main reasons projects fail


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What is Project Scope Management?Scope refers to all the work involved in

creating the products of the project and the processes used to create them

Project scope management includes the processes involved in defining and controlling what is or is not included in the project

The project team and stakeholders must have the same understanding of what products will be produced as a result of a project and what processes will be used in producing them


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Project Scope Management Processes

Initiation: beginning a project or continuing to the next phase

Scope planning: developing documents to provide the basis for future project decisions

Scope definition: subdividing the major project deliverables into smaller, more manageable components

Scope verification: formalizing acceptance of the project scope

Scope change control: controlling changes to project scope


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Project Initiation: Strategic Planning and Project SelectionThe first step in initiating projects is to

look at the big picture or strategic plan of an organization

Strategic planning involves determining long-term business objectives

IT projects should support strategic and financial business objectives


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Table 4-1. Why Firms Invest in Information Technology

Reason for Investing in IT Projects Rank Based on Overall Value of ProjectsSupports explicit business objectives 1Has good Internal Rate of Return (IRR) 2Supports implicit business objectives 3Has good Net Present Value (NPV) 4Has reasonable payback period 5Used in response to competitive systems 6Supports management decision making 7Meets budgetary constraints 8High probability of achieving benefits 9Good accounting rate of return 10High probability of completing project 11Meets technical/system requirements 12Supports legal/government requirement 13Good profitability index 14Introduces new technology 15


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Identifying Potential ProjectsMany organizations follow a planning

process for selecting IT projectsFirst develop an IT strategic plan

based on the organization’s overall strategic plan

Then perform a business area analysisThen define potential projectsThen select IT projects and assign

resources


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Figure 4-1. Information Technology Planning Process


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Methods for Selecting Projects

There are usually more projects than available time and resources to implement them

It is important to follow a logical process for selecting IT projects to work on

Methods include focusing on broad needs, categorizing projects, financial methods, and weighted scoring models


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Focusing on Broad Organizational NeedsIt is often difficult to provide strong

justification for many IT projects, but everyone agrees they have a high value

“It is better to measure gold roughly than to count pennies precisely”

Three important criteria for projects:– There is a need for the project– There are funds available– There’s a strong will to make the project

succeed


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Categorizing IT Projects

One categorization is whether the project addresses– a problem– an opportunity– a directive

Another categorization is how long it will take to do and when it is needed

Another is the overall priority of the project


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Financial Analysis of Projects

Financial considerations are often an important consideration in selecting projects

Three primary methods for determining the projected financial value of projects:– Net present value (NPV) analysis– Return on investment (ROI)– Payback analysis


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Net Present Value AnalysisNet present value (NPV) analysis is a

method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time

Projects with a positive NPV should be considered if financial value is a key criterion

The higher the NPV, the better


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Figure 4-2. Net Present Value Example

Excel file


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Return on Investment

Return on investment (ROI) is income divided by investment ROI = (total discounted benefits - total

discounted costs) / discounted costs

The higher the ROI, the betterMany organizations have a required

rate of return or minimum acceptable rate of return on investment for projects


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Payback Analysis

Another important financial consideration is payback analysis

The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the net dollars invested in a project

Payback occurs when the cumulative discounted benefits and costs are greater than zero

Many organizations want IT projects to have a fairly short payback period


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Figure 4-3. NPV, ROI, and Payback Analysis for Project 1

Excel file


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Figure 4-4. NPV, ROI, and Payback Analysis for Project 2

Excel file


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Weighted Scoring ModelA weighted scoring model is a tool that provides a

systematic process for selecting projects based on many criteria– First identify criteria important to the project selection process

– Then assign weights (percentages) to each criterion so they add up to 100%

– Then assign scores to each criterion for each project

– Multiply the scores by the weights and get the total weighted scores

The higher the weighted score, the betterSee “What Went Right?” on pg. 87 for a description of

how a mortgage finance agency uses a weighted scoring model for IT projects


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Figure 4-5. Sample Weighted Scoring Model for Project Selection

Excel file


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Project ChartersAfter deciding what project to work on, it

is important to formalize projectsA project charter is a document that

formally recognizes the existence of a project and provides direction on the project’s objectives and management

Key project stakeholders should sign a project charter to acknowledge agreement on the need and intent of the project


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Table 4-2. Sample Project Charter Project Title: Information Technology (IT) Upgrade Project Project Start Date: March 4, 1999 Projected Finish Date:

December 4, 1999 Project Manager: Kim Nguyen, 691-2784, [email protected] Project Objectives: Upgrade hardware and software for all employees

(approximately 2,000) within 9 months based on new corporate standards. See attached sheet describing the new standards. Upgrades may affect servers and midrange computers as well as network hardware and software. Budgeted $1,000,000 for hardware and software costs and $500,000 for labor costs.

Approach: Update the IT inventory database to determine upgrade needs Develop detailed cost estimate for project and report to CIO Issue a request for quotes to obtain hardware and software

Use internal staff as much as possible to do the planning, analysis, and installation


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Table 4-2. Sample Project Charter (continued)

Name Role ResponsibilityWalter Schmidt, CEO Project Sponsor Monitor projectMike Zwack CIO Monitor project, provide

staffKim Nguyen Project Manager Plan and execute projectJeff Johnson Director of IT Operations Mentor KimNancy Reynolds VP, Human Resources Provide staff, issue memo

to all employees aboutproject

Steve McCann Director of Purchasing Assist in purchasinghardware and software

Sign-off: (Signatures of all above stakeholders)

Comments: (Handwritten comments from above stakeholders, if applicable)This project must be done within ten months at the absolute latest. Mike Zwack, CIOWe are assuming that adequate staff will be available and committed to supporting thisproject. Some work must be done after hours to avoid work disruptions, and overtimewill be provided. Jeff Johnson and Kim Nguyen, Information Technology Department

Roles and Responsibilities:


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Scope Planning and the Scope StatementA scope statement is a document used

to develop and confirm a common understanding of the project scope. It should include– a project justification– a brief description of the project’s

products– a summary of all project deliverables– a statement of what determines project

success


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Scope Planning and the Work Breakdown StructureAfter completing scope planning, the

next step is to further define the work by breaking it into manageable pieces

Good scope definition– helps improve the accuracy of time, cost,

and resource estimates– defines a baseline for performance

measurement and project control– aids in communicating clear work

responsibilities


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The Work Breakdown Structure

A work breakdown structure (WBS) is an outcome-oriented analysis of the work involved in a project that defines the total scope of the project

It is a foundation document in project management because it provides the basis for planning and managing project schedules, costs, and changes


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Figure 4-6a. Sample Intranet WBS Organized by Product


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Figure 4-6b. Sample Intranet WBS Organized by Phase


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Table 4-3. Intranet WBS in Tabular Form1.0 Concept

1.1 Evaluate current systems1.2 Define Requirements

1.2.1 Define user requirements1.2.2 Define content requirements1.2.3 Define system requirements1.2.4 Define server owner requirements

1.3 Define specific functionality1.4 Define risks and risk management approach1.5 Develop project plan1.6 Brief web development team

2.0 Web Site Design3.0 Web Site Development4.0 Roll Out5.0 Support


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Figure 4-7. Intranet WBS and Gantt Chart in Project 98WBS Gantt Chart

Project 98 file


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Approaches to Developing WBSsUsing guidelines: Some organizations,

like the U.S. Department of Defense, provide guidelines for preparing WBSs

The analogy approach: It often helps to review WBSs of similar projects

The top-down approach: Start with the largest items of the project and keep breaking them down

The bottoms-up approach: Start with the detailed tasks and roll them up


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Basic Principles for Creating WBSs1. A unit of work should appear at only one place in the WBS.

2. The work content of a WBS item is the sum of the WBS items below it.

3. A WBS item is the responsibility of only one individual, even though many people may be working on it.

4. The WBS must be consistent with the way in which work is actually going to be performed; it should serve the project team first and other purposes only if practical.

5. Project team members should be involved in developing the WBS to ensure consistency and buy-in.

6. Each WBS item must be documented to ensure accurate understanding of the scope of work included and not included in that item.

7. The WBS must be a flexible tool to accommodate inevitable changes while properly maintaining control of the work content in the project according to the scope statement.

Cleland, David I. Project Management: Strategic Design and Implementation, 1994


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Scope Verification and Scope Change ControlIt is very difficult to create a good scope

statement and WBS for a projectIt is even more difficult to verify project

scope and minimize scope changesMany IT projects suffer from scope creep

and poor scope verification– FoxMeyer Drug filed for bankruptcy after

scope creep on a robotic warehouse– Engineers at Grumman called a system

“Naziware” and refused to use it


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Table 4-4. Factors Causing IT Project Problems

Factor RankLack of user input 1

Incomplete requirements and specifications 2Changing requirements and specifications 3Lack of executive support 4Technology incompetence 5Lack of resources 6Unrealistic expectations 7Unclear objectives 8Unrealistic time frames 9New Technology 10

Johnson, Jim, "CHAOS: The Dollar Drain of IT Project Failures," Application Development Trends, January 1995, www.stadishgroup.com/chaos.html


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Suggestions for Improving User InputInsist that all projects have a sponsor

from the user organizationHave users on the project teamHave regular meetingsDeliver something to project users and

sponsor on a regular basisCo-locate users with the developers


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Suggestions for Reducing Incomplete and Changing RequirementsDevelop and follow a requirements management

processEmploy techniques such as prototyping, use case

modeling, and Joint Application Design to thoroughly understand user requirements

Put all requirements in writing and keep them current

Create a requirements management databaseProvide adequate testingUse a process for reviewing requested changes

from a systems perspectiveEmphasize completion dates


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Discussion QuestionsGive examples of IT projects and why they

were or were not selected for implementation. What type of project selection process did the organization use?

Discuss the theory and practice behind using project charters, scope statements, and WBSs.

Describe a project that suffered from scope creep. Could it have been avoided? How? Can scope creep be a good thing? When?


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Topic 3:Continued

Project Time Management

Chapter 5


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Importance of Project SchedulesManagers often cite delivering projects

on time as one of their biggest challenges

Average time overrun from 1995 CHAOS report was 222%

Time has the least amount of flexibility; it passes no matter what

Schedule issues are the main reason for conflicts on projects, especially during the second half of projects


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Figure 5-1. Conflict Intensity Over the Life of a Project

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

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ProjectFormation

Early Phases Middle Phases End Phases

Co

nfl

ict

Inte

nsi

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Schedules

Priorities

Manpower

Technical opinions

Procedures

Cost

Personality conflicts

AverageTotal Conflict


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Project Time Management ProcessesProject time management involves the

processes required to ensure timely completion of a project. Processes include:– Activity definition– Activity sequencing– Activity duration estimating– Schedule development– Schedule control


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Where Do Schedules Come From? Defining ActivitiesProject schedules grow out of the

basic documents that initiate a project– Project charter includes start and end

dates and budget information– Scope statement and WBS help define

what will be doneActivity definition involves developing

a more detailed WBS and supporting explanations to understand all the work to be done


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Activity SequencingInvolves reviewing activities and

determining dependencies– Mandatory dependencies: inherent in the nature

of the work; hard logic– Discretionary dependencies: defined by the

project team; soft logic– External dependencies: involve relationships

between project and non-project activities

You must determine dependencies in order to use critical path analysis


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Project Network Diagrams

Project network diagrams are the preferred technique for showing activity sequencing

A project network diagram is a schematic display of the logical relationships among, or sequencing of, project activities


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Figure 5-2. Sample Activity-on-Arrow (AOA) Network Diagram for Project X


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Arrow Diagramming Method (ADM)Also called activity-on-arrow (AOA)

project network diagramsActivities are represented by arrowsNodes or circles are the starting and

ending points of activitiesCan only show finish-to-start

dependencies


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Process for Creating AOA Diagrams1. Find all of the activities that start at node 1. Draw their

finish nodes and draw arrows between node 1 and those finish nodes. Put the activity letter or name and duration estimate on the associated arrow

2. Continue drawing the network diagram, working from left to right. Look for bursts and merges. Bursts occur when a single node is followed by two or more activities. A merge occurs when two or more nodes precede a single node

3. Continue drawing the project network diagram until all activities are included on the diagram that have dependencies

4. As a rule of thumb, all arrowheads should face toward the right, and no arrows should cross on an AOA network diagram


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Precedence Diagramming Method (PDM)Activities are represented by boxesArrows show relationships between

activitiesMore popular than ADM method and

used by project management softwareBetter at showing different types of

dependencies


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Figure 5-3. Task Dependency Types


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Figure 5-4. Sample Precedence Diagramming Method (PDM) Network Diagram for Project X

Project 98 file


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Activity Duration EstimatingAfter defining activities and

determining their sequence, the next step in time management is duration estimating

Duration includes the actual amount of time worked on an activity plus elapsed time

People doing the work should help create estimates, and an expert should review them


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Schedule DevelopmentSchedule development uses results of the

other time management processes to determine the start and end date of the project and its activities

Ultimate goal is to create a realistic project schedule that provides a basis for monitoring project progress for the time dimension of the project

Important tools and techniques include Gantt charts, PERT analysis, and critical path analysis


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Gantt ChartsGantt charts provide a standard format for

displaying project schedule information by listing project activities and their corresponding start and finish dates in a calendar format

Symbols include:– A black diamond: milestones or significant

events on a project with zero duration– Thick black bars: summary tasks– Lighter horizontal bars: tasks– Arrows: dependencies between tasks


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Figure 5-5. Gantt Chart for Project X

Project 98 file


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Figure 5-6. Gantt Chart for Software Launch Project

Project 98 file


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Figure 5-7. Sample Tracking Gantt Chart

Project 98 file

white diamond: slipped milestonetwo bars: planned and actual times


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Critical Path Method (CPM)CPM is a project network analysis

technique used to predict total project duration

A critical path for a project is the series of activities that determines the earliest time by which the project can be completed

The critical path is the longest path through the network diagram and has the least amount of slack or float


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Finding the Critical Path

First develop a good project network diagram

Add the durations for all activities on each path through the project network diagram

The longest path is the critical path


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Figure 5-8. Determining the Critical Path for Project X


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More on the Critical PathIf one of more activities on the critical path

takes longer than planned, the whole project schedule will slip unless corrective action is taken

Misconceptions:– The critical path is not the one with all the critical

activities; it only accounts for time– There can be more than one critical path if the

lengths of two or more paths are the same– The critical path can change as the project

progresses


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Using Critical Path Analysis to Make Schedule Trade-offsKnowing the critical path helps you

make schedule trade-offsFree slack or free float is the amount of

time an activity can be delayed without delaying the early start of any immediately following activities

Total slack or total float is the amount of time an activity may be delayed from its early start without delaying the planned project finish date


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Table 5-1. Free and Total Float or Slack for Project XTask Start Finish Late Start Late Finish Free

SlackTotalSlack

A Mon 8/3/98 Mon 8/3/98 Wed 8/5/98 Wed 8/5/98 0days 2daysB Mon 8/3/98 Tue 8/4/98 Mon 8/3/98 Tue 8/4/98 0days 0daysC Mon 8/3/98 Wed 8/5/98 Wed 8/5/98 Fri 8/7/98 0days 2daysD Tue 8/4/98 Fri 8/7/98 Thu 8/6/98 Tue 8/11/98 2d 2dE Wed 8/5/98 Tue 8/11/98 Wed 8/5/98 Tue 8/11/98 0d 0dF Wed 8/5/98 Mon 8/10/98 Fri 8/14/98 Wed 8/19/98 7d 7dG Thu 8/6/98 Thu 8/13/98 Mon 8/10/98 Mon 8/17/98 0d 2dH Wed 8/12/98 Wed 8/19/98 Wed 8/12/98 Wed 8/19/98 0d 0dI Fri 8/14/98 Mon 8/17/98 Tue 8/18/98 Wed 8/19/98 2d 2dJ Thu 8/20/98 Mon 8/24/98 Thu 8/20/98 Mon 8/24/98 0d 0d


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Techniques for Shortening a Project ScheduleShortening durations of critical tasks

by adding more resources or changing their scope

Crashing tasks by obtaining the greatest amount of schedule compression for the least incremental cost

Fast tracking tasks by doing them in parallel or overlapping them


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Shortening Project Schedules

Overlappedtasks

Shortenedduration

Original schedule


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Many Horror Stories Related to Project SchedulesSee “What Went Wrong?” example on

pg. 126 about the National Insurance Recording System

Creating realistic schedules and sticking to them is a key challenge of project management


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Importance of Updating Critical Path DataIt is important to update project

schedule informationThe critical path may change as you

enter actual start and finish datesIf you know the project completion

date will slip, negotiate with the project sponsor


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Program Evaluation and Review Technique (PERT)PERT is a network analysis technique

used to estimate project duration when there is a high degree of uncertainty about the individual activity duration estimates

PERT uses probabilistic time estimates based on using optimistic, most likely, and pessimistic estimates of activity durations


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PERT Formula and Example

PERT weighted average formula: optimistic time + 4X most likely time + pessimistic time

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Example:

PERT weighted average = 8 workdays + 4 X 10 workdays + 24 workdays = 12

days 6

where 8 = optimistic time, 10 = most likely time, and 24 = pessimistic time


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Controlling Changes to the Project SchedulePerform reality checks on schedulesAllow for contingenciesDon’t plan for everyone to work at

100% capacity all the timeHold progress meetings with

stakeholders and be clear and honest in communicating schedule issues


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Working with People Issues

Strong leadership helps projects succeed more than good PERT charts

Project managers should use– empowerment– incentives– discipline– negotiation


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What Went Right?Chris Higgins used the discipline he learned in the Army to transform project management into a cultural force at Bank of America. Higgins learned that taking time on the front end of a project can save significant time and money on the back end. As a quartermaster in the Army, when Higgins' people had to pack tents, he devised a contest to find the best way to fold a tent and determine the precise spots to place the pegs and equipment for the quickest possible assembly. Higgins used the same approach when he led an interstate banking initiative to integrate incompatible check processing, checking account, and savings account platforms in various states.

Law mandated that the banks solve the problem in one year or less. Higgins' project team was pushing to get to the coding phase of the project quickly, but Higgins held them back. He made the team members analyze, plan, and document requirements for the system in such detail that it took six months just to complete that phase. But the discipline up front enabled the software developers on the team to do all of the coding in only three months, and the project was completed on time.


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Using Software to Assist in Time ManagementSoftware for facilitating

communications helps people exchange schedule-related information

Decision support models help analyze trade-offs that can be made

Project management software can help in various time management areas


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Table 5-2. Project 98 Features Related to Project Time Management

Reports Views and Table Views Filters Overview reports: critical

tasks and milestones Current activities reports:

unstarted tasks, tasks startingsoon, tasks in progress,completed tasks, should havestarted tasks, and slippingtasks

Assignment reports: whodoes what when

Gantt chart, PERTchart, Tracking Gantt,schedule, tracking,variance, constraintdates, and delay

All tasks,completed tasks,critical tasks,incomplete tasks,and milestonetasks


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Words of Caution on Using Project Management SoftwareMany people misuse project

management software because they don’t understand important concepts and have not had good training

You must enter dependencies to have dates adjust automatically and to determine the critical path

You must enter actual schedule information to compare planned and actual progress

Copyright Course Technology 1999 1 TOPIC 3 Project Scope Management Chapter 4.

Documents

project scope slide

project initiation

copyright course technology

project success

project selection

project team

proper project definition

information technology