Chapter 4: Project Integration Management Information Technology

Chapter 4: Project Integration Management Information Technology Project Management, Eighth Edition Note: See the text itself for full citations.

Learning Objectives, Part 1 Describe an overall framework for project integration management as it relates to the other project management knowledge areas and the project life cycle Discuss the strategic planning process and apply different project selection methods Explain the importance of creating a project charter to formally initiate projects Describe project management plan development, understand the content of these plans, and review approaches for creating them Information Technology Project Management, Eighth Edition Copyright 2016 2

Learning Objectives, Part 2 Explain project execution, its relationship to project planning, the factors related to successful results, and tools and techniques to assist in directing and managing project work Describe the process of monitoring and controlling a project Understand the integrated change control process, planning for and managing changes on information technology (IT) projects, and developing and using a change control system Explain the importance of developing and following good procedures for closing projects Describe how software can assist in project integration management Information Technology Project Management, Eighth Edition Copyright 2016 3

The Key to Overall Project Success: Good Project Integration Management Project managers must coordinate all of the other knowledge areas throughout a project’s life cycle Many new project managers have trouble looking at the “big picture” and want to focus on too many details (See opening case for a real example) Project integration management is not the same thing as software integration Information Technology Project Management, Eighth Edition Copyright 2016 4

Project Integration Management Processes, Part 1 1. Developing the project charter involves working with stakeholders to create the document that formally authorizes a project—the charter. 2. Developing the project management plan involves coordinating all planning efforts to create a consistent, coherent document—the project management plan. 3. Directing and managing project work involves carrying out the project management plan by performing the activities included in it. Information Technology Project Management, Eighth Edition Copyright 2016 5

Project Integration Management Processes, Part 2 Monitoring and controlling project work involves overseeing activities to meet the performance objectives of the project Performing integrated change control involves identifying, evaluating, and managing changes throughout the project life cycle. Closing the project or phase involves finalizing all activities to formally close the project or phase. Information Technology Project Management, Eighth Edition Copyright 2016 6

Figure 4-1. Project Integration Management Summary Information Technology Project Management, Eighth Edition Copyright 2016 7

What Went Wrong? The Surrey police force began looking into replacing its criminal intelligence system in 2005, but the project was finally cancelled in 2013, and the old system was replaced with a much less expensive one used by thirteen other forces The person in charge of the project would not take responsibility for it An audit report said the project was beyond their in-house capabilities and experience Organizations must make the right staffing/outsourcing decisions Information Technology Project Management, Eighth Edition Copyright 2016 8

Strategic Planning and Project Selection Strategic planning involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Organizations often perform a SWOT analysis analyzing Strengths, Weaknesses, Opportunities, and Threats As part of strategic planning, organizations identify potential projects use realistic methods to select which projects to work on formalize project initiation by issuing a project charter Information Technology Project Management, Eighth Edition Copyright 2016 9

Figure 4-2. Mind Map of a SWOT Analysis to Help Identify Potential Projects Information Technology Project Management, Eighth Edition Copyright 2016 10

Figure 4-3. Information Technology Planning Process Information Technology Project Management, Eighth Edition Copyright 2016 11

Best Practice A 2013 survey identified companies most admired for their ability to apply IT-related business capabilities for competitive advantage Best practices of these companies include: Customer-driven IT is essential IT can enable branding and customer recruitment Keep improving Information Technology Project Management, Eighth Edition Copyright 2016 12

Methods for Selecting Projects There are usually more projects than available time and resources to implement them Methods for selecting projects include: focusing on broad organizational needs categorizing information technology projects performing net present value or other financial analyses using a weighted scoring model implementing a balanced scorecard Information Technology Project Management, Eighth Edition Copyright 2016 13

Focusing on Broad Organizational Needs It 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 Information Technology Project Management, Eighth Edition Copyright 2016 14

Categorizing IT Projects One categorization is whether the project addresses a problem an opportunity, or 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 Information Technology Project Management, Eighth Edition Copyright 2016 15

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 Information Technology Project Management, Eighth Edition Copyright 2016 16

Net Present Value Analysis Net 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 Information Technology Project Management, Eighth Edition Copyright 2016 17

Figure 4-4. Net Present Value Example Empty cell A B C D E F G 1 Discount rate 10% Empty cell Empty cell Empty cell Empty cell Empty cell 2 Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell 3 Project 1 Year 1 Year 2 Year 3 Year 4 Year 5 Total 4 Benefits 0 2,000 3,000 4,000 5,000 14,000 5 Costs 5,000 1,000 1,000 1,000 1,000 9,000 6 Cash flow ( 5,000) 1,000 2,000 3,000 4,000 5,000 (with arrow. Note that totals are equal, but Net Present Values are not because of the time value of money) 7 Net Present Value (arrow) 2,316 Empty cell Empty cell Empty cell Empty cell Empty cell 8 Empty cell Formula np v(b1,b6:f6) Empty cell Empty cell Empty cell Empty cell Empty cell 9 Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell 10 Project 2 Year 1 Year 2 Year 3 Year 4 Year 5 Total 11 Benefits 1,000 2,000 4,000 4,000 4,000 15,000 12 Costs 2,000 2,000 2,000 2.000 2,000 10,000 13 Cash flow ( 1,000) 0 2,000 2,000 2,000 5,000 (with arrow. Note that totals are equal, but Net Present Values are not because of the time value of money) 14 Net present value (arrow) 3,201 Empty cell Empty cell Empty cell Empty cell Empty cell 15 Empty cell Formula np v(b1,b13:f13 ) Empty cell Empty cell Empty cell Empty cell Empty cell 16 Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell 17 Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell Empty cell Information Technology Project Management, Eighth Edition Copyright 2016 18

Figure 4-5. JWD Consulting NPV Example Discount Rate 8 percent Empty cell Empt y cell Empty cell Empty cell Empty cell Assume the project is completed in Year 0 Empty cell Empty cell Year Empty cell Empty cell Empty cell Empty cell 0 1 2 3 Total Empty cell Costs 140,000 40,000 40,00 0 40,000 Empty cell Empty cell Discount factor 1 .93 .86 .79 Empty cell Empty cell Discounted benefits 0 186,000 172,0 00 158,000 516,000 Empty cell Discounted benefits - costs (140,000) 148,800 137,6 00 126,400 (Net present value) 272,800 (arrow pointing) NPV (has arrow) Cumulative benefits – costs (140,000) 8,800 (Payback In Year 1) 146,4 00 272,800 Empty cell Empty cell ROI (with arrow) 112% (return on investment) Payback in Year 1 (with arrow pointing up) Empt y cell Empty cell Empty cell Empty cell Note: See the template called business case financials.xls Information Technology Project Management, Eighth Edition Copyright 2016 19

NPV Calculations Determine estimated costs and benefits for the life of the project and the products it produces Determine the discount rate (check with your organization on what to use) Calculate the NPV (see text for details) Notes: Some organizations consider the investment year as year 0, while others start in year 1. Some people entered costs as negative numbers, while others do not. Check with your organization for their preferences Information Technology Project Management, Eighth Edition Copyright 2016 20

Return on Investment Return on investment (ROI) is calculated by subtracting the project costs from the benefits and then dividing by the costs ROI (total discounted benefits - total discounted costs) / discounted costs The higher the ROI, the better Many organizations have a required rate of return or minimum acceptable rate of return on investment for projects Internal rate of return (IRR) can by calculated by finding the discount rate that makes the NPV equal to zero Information Technology Project Management, Eighth Edition Copyright 2016 21

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 total dollars invested in a project Payback occurs when the net cumulative discounted benefits equals the costs Many organizations want IT projects to have a fairly short payback period Information Technology Project Management, Eighth Edition Copyright 2016 22

Figure 4-6. Charting the Payback Period Information Technology Project Management, Eighth Edition Copyright 2016 23

Weighted Scoring Model A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria Identify criteria important to the project selection process Assign weights (percentages) to each criterion so they add up to 100% 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 better Information Technology Project Management, Eighth Edition Copyright 2016 24

Figure 4-7. Sample Weighted Scoring Model for Project Selection Empty cell A B C D E F 1 Criteria Weight Project 1 Project 2 Project 3 Project 4 2 Supports key business objectives 25% 90 90 50 20 3 Has strong internal sponsor 15% 70 90 50 20 4 Has strong customer support 15% 50 90 50 20 5 Uses realistic level of technology 10% 25 90 50 70 6 Can be implemented in one year or less 5% 20 20 50 90 7 Provides positive NPV 20% 50 70 50 50 8 Has low risk in meeting scope, time, and cost goals 10% 20 50 50 90 9 Weighted Project Scores 100% 56 78.5 50 41.5 Information Technology Project Management, Eighth Edition Copyright 2016 25

Implementing a Balanced Scorecard Drs. Robert Kaplan and David Norton developed this approach to help select and manage projects that align with business strategy A balanced scorecard is a methodology that converts an organization’s value drivers, such as customer service, innovation, operational efficiency, and financial performance, to a series of defined metrics See www.balancedscorecard.org for more information Information Technology Project Management, Eighth Edition Copyright 2016 26

Developing a Project Charter After deciding what project to work on, it is important to let the rest of the organization know A 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; a signed charter is a key output of project integration management Information Technology Project Management, Eighth Edition Copyright 2016 27

Inputs for Developing a Project Charter A project statement of work A business case Agreements Enterprise environmental factors Organizational process assets, which include formal and informal plans, policies, procedures, guidelines, information systems, financial systems, management systems, lessons learned, and historical information Information Technology Project Management, Eighth Edition Copyright 2016 28

Table 4-1. Project Charter for the DNASequencing Instrument Completion Project Project Title: DNA-Sequencing Instrument Completion Project Date of Authorization: February 1 Project Start Date: February 1 Projected Finish Date: November 1 Key Schedule Milestones: Complete first version of the software by June 1 Complete production version of the software by November 1 Budget Information: The firm has allocated 1.5 million for this project, and more funds are available if needed. The majority of costs for this project will be internal labor. All hardware will be outsourced. Project Manager: Nick Carson, (650) 949-0707, [email protected] Project Objectives: The DNA-sequencing instrument project has been underway for three years. It is a crucial project for our company. This is the first charter for the project, and the objective is to complete the first version of the software for the instrument in four months and a production version in nine months. Main Project Success Criteria: The software must meet all written specifications, be thoroughly tested, and be completed on time. The CEO will formally approve the project with advice from other key stakeholders. Information Technology Project Management, Eighth Edition Copyright 2016 29

Table 4-1. Project Charter Information Technology Project Management, Eighth Edition Name Role Position Contact Information Ahmed Abrams Sponsor CEO aabrams@dnaconsu lting.com Nick Carson Project Manager Manager ncarson@dnaconsul ting.com Susan Johnson Team Member DNA expert sjohnson@dnaconsu lting.com Renyong Chi Team Member Testing expert rchi@dnaconsulting. com Erik Haus Team Member Programmer ehaus@dnaconsulti ng.com Bill Strom Team Member Programmer bstrom@dnaconsulti ng.com Maggie Elliot Team Member Programmer melliot@dnaconsulti ng.com Copyright 2016 30

Developing a Project Management Plan A project management plan is a document used to coordinate all project planning documents and help guide a project’s execution and control Plans created in the other knowledge areas are subsidiary parts of the overall project management plan Information Technology Project Management, Eighth Edition Copyright 2016 31

Common Elements of a Project Management Plan Introduction or overview of the project Description of how the project is organized Management and technical processes used on the project Work to be done, schedule, and budget information Information Technology Project Management, Eighth Edition Copyright 2016 32

Table 4-2. Sample Contents for a Software Project Management Plan (SPMP) MAJOR SECTION HEADINGS Overview SECTION TOPICS Purpose, scope, and objectives; assumptions and constraints; project deliverables; schedule and budget summary; evolution of the plan Project Organization External interfaces; internal structure; roles and Responsibilities Managerial Process Plan Start-up plans (estimation, staffing, resource acquisition; and project staff training plans); work plan (work activities, schedule, resource, and budget allocation); control plan; risk management plan; closeout plan Technical Process Plans Process model; methods, tools, and techniques; infrastructure Plan; product acceptance plan Supporting Process Plans Configuration management plan; verification and validation plan; documentation plan; quality assurance plan; reviews And audits; problem resolution plan; subcontractor management plan; process improvement plan IEEE Standard 1058-1998. Empty cell Information Technology Project Management, Eighth Edition Copyright 2016 33

What the Winners Do "The winners clearly spell out what needs to be done in a project, by whom, when, and how. For this they use an integrated toolbox, including PM tools, methods, and techniques If a scheduling template is developed and used over and over, it becomes a repeatable action that leads to higher productivity and lower uncertainty. Sure, using scheduling templates is neither a breakthrough nor a feat. But laggards exhibited almost no use of the templates. Rather, in constructing schedules their project managers started with a clean sheet, a clear waste of time.“* *Milosevic, Dragan and And Ozbay. “Delivering Projects: What the Winners Do.” Proceedings of the Project Management Institute Annual Seminars & Symposium (November 2001). Information Technology Project Management, Eighth Edition Copyright 2016 34

Directing and Managing Project Work Involves managing and performing the work described in the project management plan The majority of time and money is usually spent on execution The application area of the project directly affects project execution because the products of the project are produced during execution Information Technology Project Management, Eighth Edition Copyright 2016 35

Coordinating Planning and Execution Project planning and execution are intertwined and inseparable activities Those who will do the work should help to plan the work Project managers must solicit input from the team to develop realistic plans Information Technology Project Management, Eighth Edition Copyright 2016 36

Providing Leadership and a Supportive Culture Project managers must lead by example to demonstrate the importance of creating and then following good project plans Organizational culture can help project execution by providing guidelines and templates tracking performance based on plans Project managers may still need to break the rules to meet project goals, and senior managers must support those actions Information Technology Project Management, Eighth Edition Copyright 2016 37

What Went Right? 2015 PMI report found that only 12 percent of organizations were considered to be high performers Percentage remained unchanged in past few years Organizations must make major cultural changes to improve Information Technology Project Management, Eighth Edition Copyright 2016 38

Capitalizing on Product, Business, and Application Area Knowledge It is often helpful for IT project managers to have prior technical experience On small projects, the project manager may be required to perform some of the technical work or mentor team members to complete the projects On large projects, the project manager must understand the business and application area of the project Information Technology Project Management, Eighth Edition Copyright 2016 39

Project Execution Tools and Techniques Expert judgment: Experts can help project managers and their teams make many decisions related to project execution Meetings: Meetings allow people to develop relationships, pick up on important body language or tone of voice, and have a dialogue to help resolve problems. Project management information systems: There are hundreds of project management software products available on the market today, and many organizations are moving toward powerful enterprise project management systems that are accessible via the Internet See the What Went Right? example of Kuala Lumpur’s Integrated Transport Information System on p. 169 Information Technology Project Management, Eighth Edition Copyright 2016 40

Monitoring and Controlling Project Work Changes are inevitable on most projects, so it’s important to develop and follow a process to monitor and control changes Monitoring project work includes collecting, measuring, and disseminating performance information A baseline is the approved project management plan plus approved changes Information Technology Project Management, Eighth Edition Copyright 2016 41

Media Snapshot The 2002 Olympic Winter Games and Paralympics took five years to plan and cost more than 1.9 billion. PMI awarded the Salt Lake Organizing Committee (SLOC) the Project of the Year award for delivering world-class games. Four years before the Games began, the SLOC used a Primavera software-based system with a cascading color-coded WBS to integrate planning The SLOC also used an Executive Roadmap, a one-page list of the top 100 Games-wide activities, to keep executives apprised of progress. Activities were tied to detailed project information within each department’s schedule. A 90-day highlighter showed which managers were accountable for each integrated activity. Fraser Bullock, SLOC Chief Operating Officer and Chief, said, “We knew when we were on and off schedule and where we had to apply additional resources. The interrelation of the functions meant they could not run in isolation—it was a smoothly running machine.”* *Foti, Ross, “The Best Winter Olympics, Period,” PM Network (January 2004) 23. Information Technology Project Management, Eighth Edition Copyright 2016 42

Performing Integrated Change Control Three main objectives are: Influencing the factors that create changes to ensure that changes are beneficial Determining that a change has occurred Managing actual changes as they occur Information Technology Project Management, Eighth Edition Copyright 2016 43

Change Control on Information Technology Projects Former view: The project team should strive to do exactly what was planned on time and within budget Problem: Stakeholders rarely agreed up-front on the project scope, and time and cost estimates were inaccurate Modern view: Project management is a process of constant communication and negotiation Solution: Changes are often beneficial, and the project team should plan for them Information Technology Project Management, Eighth Edition Copyright 2016 44

Change Control System A change control system is a formal, documented process that describes when and how official project documents and work may be changed Describes who is authorized to make changes and how to make them Information Technology Project Management, Eighth Edition Copyright 2016 45

Change Control Board (CCB) A change control board is a formal group of people responsible for approving or rejecting changes on a project CCBs provide guidelines for preparing change requests, evaluate change requests, and manage the implementation of approved changes Includes stakeholders from the entire organization Information Technology Project Management, Eighth Edition Copyright 2016 46

Making Timely Changes Some CCBs only meet occasionally, so it may take too long for changes to occur Some organizations have policies in place for time-sensitive changes “48-hour policy” allows project team members to make decisions, then they have 48 hours to reverse the decision pending senior management approval Delegate changes to the lowest level possible, but keep everyone informed of changes Information Technology Project Management, Eighth Edition Copyright 2016 47

Global Issues Rapid changes in technology, such as the increased use of mobile roaming for communications, often cause governments around the world to take action. Incompatible hardware, software, and networks can make communications difficult in some regions, and a lack of competition can cause prices to soar. Fortunately, a group called the Organisation for Economic Cooperation and Development (OECD) promotes policies that will improve the economic and social well-being of people around the world. In February 2012, the OECD called upon its members’ governments to boost competition in international mobile roaming markets. By the end of 2013, wireless broadband penetration grew to 72.4% in the OECD area Information Technology Project Management, Eighth Edition Copyright 2016 48

Configuration Management Configuration management ensures that the descriptions of the project’s products are correct and complete Involves identifying and controlling the functional and physical design characteristics of products and their support documentation Configuration management specialists identify and document configuration requirements, control changes, record and report changes, and audit the products to verify conformance to requirements See www.icmhq.com for more information Information Technology Project Management, Eighth Edition Copyright 2016 49

Table 4-3. Suggestions for Performing Integrated Change Control View project management as a process of constant communication and negotiation. Plan for change. Establish a formal change control system, including a change control board (CCB). Use effective configuration management. Define procedures for making timely decisions on smaller changes. Use written and oral performance reports to help identify and manage change. Use project management and other software to help manage and communicate changes. Focus on leading the project team and meeting overall project goals and expectations. Information Technology Project Management, Eighth Edition Copyright 2016 50

Closing Projects or Phases To close a project or phase, you must finalize all activities and transfer the completed or cancelled work to the appropriate people Main outputs include Final product, service, or result transition Organizational process asset updates Information Technology Project Management, Eighth Edition Copyright 2016 51

Using Software to Assist in Project Integration Management Several types of software can be used to assist in project integration management Documents can be created with word processing software Presentations are created with presentation software Tracking can be done with spreadsheets or databases Communication software can facilitate communications Project management software can pull everything together and show detailed and summarized information Information Technology Project Management, Eighth Edition Copyright 2016 52

Figure 4-8. Sample Portfolio Management Software Screen Source: www.projectmanager.com Information Technology Project Management, Eighth Edition Copyright 2016 53

Chapter Summary Project integration management involves coordinating all of the other knowledge areas throughout a project’s life cycle Main processes include Develop the project charter Develop the project management plan Direct and manage project execution Monitor and control project work Perform integrated change control Close the project or phase Information Technology Project Management, Eighth Edition Copyright 2016 54