Management Project International (2)
1. PROJECT INITIATION PROCESS.
2. PROJECT SCOPE MANAGEMENT.
The only difference between stumbling blocks and stepping
stones is the way you use them (American proverb).
SELECTING A PROJECT:
Projects are typically authorized as a result of the following problems, opportunities or business requirements :
• A market demand, to meet increasing demand.
• A business need, to increase revenue and profit.
• A customer request, to increase their satisfaction.
• A technological advance, new product development.
• Legal requirement, to fulfill a specific need.
• A social need.
• PROJECTS ARE CREATED TO MEET THE NEEDS OF THE CHANGING MARKETS.
• PROJECTS ARE CREATED TO OVERCOME YOUR COMPETITORS.
• PROJECTS ARE CREATED FOR SURVIVAL.
• PROJECTS ARE TO BE USED AS A STRATEGIC WEAPON.
PROJECTS CAN ORIGINATE FROM:
• INSIDE THE ORGANIZATION
• OUTSIDE THE ORGANIZATION
WHEN SELECTING A PROJECT FROM A LIST
OF POSSIBILE PROJECTS, ALWAYS CONSIDER:
• ALIGNMENT WITH STRATEGIC PLAN/ GOAL.
• AVAILABILITY OF RESOURCES.
• FINANCIAL BENEFIT TO THE ORGANIZATION.
• ALIGN Projects with the Company’s Vision & Mission Statement.
• PRIORITIZE Projects due to limited Resources.
TIME VALUE of MONEY
Break Even, NPV & IRR.
NET PRESENT VALUE (NPV)
NPV is the total present value of cashflow generated
over a number of years by the project.
A Project is Profitable if the present value of the
cash inflow is greater than the initial investment.
NPV > 0 , profitable
NPV = 0 , break even, no profit and no loss.
NPV <>
IRR – Internal Rate of Return
• Search for the interest rate where the value of
the NPV becomes 0.
• Compare whether this interest rate is better
than the time deposit interest rate.
• Take into account the RISK factor.
Project Initiation
Initiation is the process of formally authorizing a new project or that an existing project should continue into it’s next phase.Authorization can either be formally or informally (e.g for internal service projects).
Product description:
It documents the characteristics of the product or the service.
In case of a buyer - seller relationship, the initial product description is provided by the buyer.
Initiation : PROJECT GOALS
1. GOALS: - TO CREATE SOMETHING
- TO COMPLETE within BUDGET
- TO FINISH within SCHEDULE
2. GOALS must be SPECIFIC
3. GOALS must be REALISTIC
4. GOALS must have a TIME COMPONENT
5. GOALS must be MEASURABLE
6. GOALS must be AGREED UPONE
7. RESPONSIBLE PERSON must be IDENTIFIED
Project Charter
Formal recognization of the project existence.
* Assignment of the Project Manager
* Issued by a ‘Higher Project Authority’
* Preferably to include :
> Business Needs
> Product Description/ Project Objective
> Constraints & Assumptions
> PM Authorities & Responsibilities
> Key deliverables & milestones
> Customer Contacts
> Other Attachments
Input to the Project Charter :
1. Contract Document
2. Project Statement of Work
3. Enterprise Environmental Factors
> Culture, Resource availability, Market conditions
> PM software, commercial databases, etc
4. Organizational Process Assets
> Procedures, Standards, Templates
> Lessons learned, Historical information etc
- Expert Judgment, from internal and external to the
organization.
Implementation Planning:
- What must be done ?
- Who will do each task ?
- How long will each task take ?
- What resources are required ?
- How much will each task cost ?
- How is it to be done ?
Knowledge 1: Project Scope Management
Scope Management:
the processes required to ensure that the project includes
all the work required, and only the work required, to
complete the project successfully. It is primarily
concerned with defining and controlling what is or is
not included in the project (PMBOK 3rd ed).
The key elements (Turner 1999) :
1. A sufficient amount of work is done,
2. Unnecessary work is not done,
3. The work which is done delivers the stated business purpose.
The 4 essential steps to Scope Management (J R Turner 1999)
1. Developing the concept through the project’s objectives and product breakdown structure.
2. Defining the scope of work through the work breakdown structure (WBS).
3. Authorizing and executing the work, and monitoring and controlling progress.
4. Commissioning the facility to produce the product and obtain the benefit.
1.1. Scope Management : Scope Planning
Scope Planning:
Is the process of progressively elaborating and documenting the project work (project scope) that produces the product of the project.
Progressively means proceeding in steps; continuing steadily by increments
Elaborating means worked out with care and detail; developed thoroughly.
PROJECT SCOPE STATEMENT
A scope statement provides a documented basis for making future project decisions and for confirming or developing common understanding of the project scope among the stakeholders.
The scope statement should include :
• Project justification : the business need
• Project product : a summary of the product description
• Project deliverables
• Project objectives : cost, schedule, quality etc
Preparation of the Scope Statement :
• Internal projects : by the project office w/ user input.
• External projects : by the customer or the contractor.
• Proposal Scope Statement will be developed into the Contract Scope Statement.
Scope Management plan:
this document describes how project scope will be managed (defined, verified, controlled), how the WBS will be created and defined and how scope changes will be identified, classified and integrated into the project.
A scope management plan may be formal or informal, highly detailed or broadly framed based on the needs of the project.
It is a subsidiary component of the project plan.
1.2. SCOPE MANAGEMENT : SCOPE DEFINITION
Developing a detailed project scope statement as the basis for future project decisions.
Includes:
• Project objectives, requirements
• Product scope description
• Project boundaries, deliverables
• Project acceptance criteria
• Project constraints and assumptions
• Project milestones
• Initial project organization
• Etc etc
1.3. Scope Management : Create WBS
DECOMPOSITION :
involves subdividing the major project deliverables into smaller, more manageable components until the deliverables are defined in sufficient detail to support development of project activities (planning, executing, controlling and closing).
* COMPOSITION
* DECOMPOSITION
* INTEGRATION
Work Breakdown Structure provides a common framework for (H Kerzner -1998) :
1. The description of the total program as a summation of subdivided elements,
2. Planning (incl risk analysis) can be performed,
3. Establishment of costs and budgets,
4. Tracking of time, cost and performance,
5. Tracking of company resources to fulfill objectives,
6. Establishment of schedules and status reporting procedures,
7. Initiation of network construction and control planning,
8. Establishment of responsibility assignments for each element.
A Work Breakdown Structure:
- Does not show the sequence of work.
- Is a list of activities, it is not a ‘grocery list’
- Can be in an:
* organization chart (hierarchical) format
* text indented outline format
- Is based on:
* deliverables
* process
* project phases
5. Does not need to go down the same level for each path.
The lowest WBS level/ element should meet
these conditions :
1. Manageble, authority and responsibility can be assigned,
2. Integratable, so that the total package can be seen,
3. Measurable in terms of progress,
4. Resources to perform the activity can be accurately estimated,
5. The duration to perform the activity can be established,
6. Other people can understand what action to take.
1.4. Scope Verification.
Scope Verification:
the process of formalizing acceptance of the completed project scope & associated deliverables by the stake-holders (sponsor, client, customer etc).
It reviews deliverables and work results to ensure that all were completed correctly and satisfactorily.
It is performed parallel with quality control to ensure both correctness and acceptance.
1.5. Scope (Change) Control.
Scope Control:
Change is inevitable so its impact should be controlled.
It is to ensure that changes are beneficial and managing the actual changes when and if they occur.
It should be thoroughly integrated with the other control
processes (time, cost and quality).
Establish a change control process to record updates to
WBS, baseline, project management plan etc.
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