Project Management

Introduction to Project Management
Dr. K. P. Hewagamage
Mrs. G. I. Gamage
University of Colombo School of Computing
Learning Objectives
Explain what a project is, provide examples of
information technology projects, list various attributes
of projects, and describe the triple constraint of
projects
Describe project management and discuss key
elements of the project management framework,
including project stakeholders, the project
management knowledge areas, common tools and
techniques, and project success factors
Learning Objectives
Describe the role of the project manager by describing
what project managers do, what skills they need
Describe the importance of ethics in project
management
Identify project management software
Worldwide Interest on Projects and

their Management
Many organizations today have a new or renewed interest
in project management.
Computer hardware, software, networks, and the use of
interdisciplinary and global work teams have radically
changed the work environment.
The U.S. spends $2.3 trillion on projects every year, or
one-quarter its gross domestic product, and the world as a
whole spends nearly $10 trillion of its $40.7 gross product
on projects of all kinds.*
*PMI, The PMI Project Management Fact Book, Second Edition, 2001.
International Status of IT Projects

IT projects have a terrible track record.
A 1995 Standish Group study (CHAOS) found that only 16.2 percent
of IT projects were successful in meeting scope, time, and cost
goals.
Over 31 percent of IT projects were canceled before completion,
costing over $81 billion in the U.S. alone.*
*The Standish Group, The CHAOS Report (www.standishgroup.com) (1995). Another
reference is Johnson, Jim, CHAOS: The Dollar Drain of IT Project Failures, Application
Development Trends (January 1995).
Observation
It is really hard to find project that has
ever finished on time, within budget
to requirement
1.1 What Is a Project?

A project is a temporary endeavor undertaken
to create a unique product, service, or result.*
Temporary means that every project has a
definite beginning and a definite end.
Unique means that the product or service is
different in some distinguishing way from all
similar products or services.
*PMI, A Guide to the Project Management Body of Knowledge
(PMBOK Guide) (2004), p. 5.
7
Advantages of Managing Projects

Better control of financial, physical, and human
resources.
Improved customer relations.
Shorter development times.
Lower costs.
Higher quality and increased reliability.
Higher profit margins.
Improved productivity.
Better internal coordination.
Higher worker morale (less stress).
8
About projects
A project ends when its objectives have been
reached, or the project has been terminated.
Projects can be large or small and take a short

or long time to complete.
Examples of projects
Developing a new product or service
Acquiring/Implementing a software product
Constructing a building or facility
Running a campaign for political office
Implementing a new business process
10
Examples of IT Projects
A help desk or technical worker replaces
laptops for a small department.
A small software development team adds a
new feature to an internal software application.
A college campus upgrades its technology
infrastructure to provide wireless Internet
access.
11
Example A Simple Project
Buying a Birthday Gift

Goal: Purchase a birthday gift for friend.
Scope: Decide on a suitable gift, then shop to find it.
Complexity: To find a suitable gift, you should be familiar with
your friend's tastes. Gift should be nice but affordable.
Completion: Limited to this birthday.
Product: A suitable gift that is wrapped and ready to give.
Exercise
Describe a simple project from your own experience in
terms of the project structure described earlier.
Examples of IT Projects
A cross-functional task force in a company
decides what software to purchase and how it
will be implemented.
A television network develops a system to allow
viewers to vote for contestants and provide other
feedback on programs.
A government group develops a system to track
child immunizations.
13
Project Attributes
A project:
Has a unique purpose.

Is temporary.
Is developed using progressive elaboration.
Requires resources, often from various areas.
Should have a primary customer or sponsor.
The project sponsor usually provides the direction and
funding for the project.
Involves uncertainty.
14
Projects vs. Operations

Common
Characteristics
Projects
Temporary
Unique
Operations
Performed by
people
Ongoing
Repetitive
Limited Resources
Planned,Executed
and Controlled
15
What Triggers a Project?

A market demand
A business need
A customer request
A technological advancement
A legal requirement
A social need
The Triple Constraint

Every project is constrained in different ways
by its:
Scope goals: What work will be done?
Time goals: How long should it take to complete?
Cost goals: What should it cost?
It is the project managers duty to balance

these three often-competing goals.
17
The Triple Constraint of Project

Management
Successful project
management means
meeting all three
goals (scope, time,
and cost) and
satisfying the
projects sponsor!
18
1.2 What is Project Management?

Project management is the application of
knowledge, skills, tools and techniques to
project activities to meet project
requirements.*

(PMBOK Guide) (2004), p. 8.
19
Project Management involves:

Managing competing demands on Scope, Time,
Cost and Quality attributes.
Managing Stakeholders with differing needs and
expectations.
Managing identified requirements.
20
Project Management Framework
21
Project Management Knowledge Areas

Integration Management
Scope Management
Time Management
Cost Management
Quality Management
Human Resource Management
Communications Management
Risk Management
Procurement Management
22
Project Stakeholders
Stakeholders are the people involved in or
affected by project activities.
Stakeholders include:
Project sponsor
Project manager
Project team
Support staff
Customers
Users
Suppliers
Opponents to the project
23
Nine Project Management

Knowledge Areas
Knowledge areas describe the key competencies
that project managers must develop.
Four core knowledge areas lead to specific project
objectives (scope, time, cost, and quality).
Four facilitating knowledge areas are the means through
which the project objectives are achieved (human resources,
communication, risk, and procurement management).
One knowledge area (project integration management)
affects and is affected by all of the other knowledge areas.
All knowledge areas are important!
24
Project Management Tools and

Techniques
Project management tools and techniques assist project
managers and their teams in various aspects of project
management.
Specific tools and techniques include:
Project charters, scope statements, and WBS (scope).
Gantt charts, network diagrams, critical path analyses, critical
chain scheduling (time).
Cost estimates and earned value management (cost).
25
Project Portfolio Management

Many organizations support an emerging
business strategy of project portfolio
management:
Organizations group and manage projects as a
portfolio of investments that contribute to the entire
enterprises success.
26
Improved Project Performance

The Standish Groups CHAOS studies show improvements in IT
projects in the past decade.*
Measure
Successful projects
Failed projects
Money wasted on
challenged and
failed projects
1994 Data
16%
31%
$140 B out
of $250 B
2002 Data
34%
15%
$55 B out of
$255 B
Result
Doubled
Halved
More than
halved
*The Standish Group, Latest Standish Group CHAOS Report Shows Project Success Rates
Have Improved by 50% (March 25, 2003).
27
Why the Improvements?

The reasons for the increase in successful
projects vary. First, the average cost of a project
has been more than cut in half. Better tools
have been created to monitor and control
progress and better skilled project managers
with better management processes are being
used. The fact that there are processes is
significant in itself.*
*The Standish Group, CHAOS 2001: A Recipe for Success (2001).
28
Project Success Factors*

1. Executive support
7. Firm basic requirements
2. User involvement
3. Experienced project
manager
4. Clear business objectives
5. Minimized scope
6. Standard software
infrastructure
8. Formal methodology
9. Reliable estimates
10. Other criteria, such as
small milestones, proper
planning, competent staff,
and ownership
*The Standish Group, Extreme CHAOS (2001).
29
What the Winners Do*

Recent research findings show that companies that excel in
project delivery capability:
Use an integrated project management toolbox that includes
standard and advanced tools and lots of templates.
Grow project leaders, emphasizing business and soft skills.
Develop a streamlined project delivery process.
Measure project health using metrics, including customer
satisfaction and return on investment.
*Milosevic, Dragan and And Ozbay, Delivering Projects: What the Winners Do, Proceedings
of the Project Management Institute Annual Seminars & Symposium (November 2001).
30
1.3 Project and Program Managers

Project managers work with project sponsors, project
teams, and other people involved in projects to meet
project goals.
Program: A group of related projects managed in a
coordinated way to obtain benefits and control not
available from managing them individually.*
Program managers oversee programs and often act as
bosses for project managers.
(PMBOK Guide) (2004), p. 16.
31
The Role of the Project Manager

Job descriptions vary, but most include
responsibilities such as planning, scheduling,
coordinating, and working with people to achieve
project goals.
Remember that 97 percent of successful
projects were led by experienced project
managers.
32
Fifteen Project Management Job

Functions*
Define scope of project.
Identify stakeholders, decisionmakers, and escalation
procedures.
Develop detailed task list (work
breakdown structures).
Estimate time requirements.
Develop initial project
management flow chart.
Identify required resources and
budget.

Evaluate project requirements.

Identify and evaluate risks.
Prepare contingency plan.
Identify interdependencies.
Identify and track critical milestones.
Participate in project phase review.
Secure needed resources.
Manage the change control process.
Report project status.
*Northwest Center for Emerging Technologies, Building a Foundation for Tomorrow: Skills Standards
for Information Technology, Belleview, WA, 1999.
33
Suggested Skills for Project

Managers
Project managers need a wide variety of skills.
They should:
Be comfortable with change.
Understand the organizations they work in and with.
Lead teams to accomplish project goals.
34

Managers
Project managers need both hard and soft
skills.
Hard skills include product knowledge and knowing
how to use various project management tools and
techniques.
Soft skills include being able to work with various
types of people.
35

Managers
Communication skills: Listens, persuades.
Organizational skills: Plans, sets goals, analyzes.
Team-building skills: Shows empathy, motivates,
promotes esprit de corps.
Leadership skills: Sets examples, provides vision (big
picture), delegates, positive, energetic.
Coping skills: Flexible, creative, patient, persistent.
Technology skills: Experience, project knowledge.
36
Good Project Management Skills from

The Apprentice
Leadership and
professionalism are
crucial.
Know what your
sponsor expects from
the project, and learn
from your mistakes.
Trust your team and
delegate decisions.
Know the business.
Stand up for yourself.
Be a team player.
Stay organized and dont
be overly emotional.
Work on projects and for
people you believe in.
Think outside the box.
There is some luck
involved in project
management, and you
should always aim high.
37
Most Significant Characteristics of Effective

and Ineffective Project Managers
Effective Project Managers
Leadership by example
Visionary
Technically competent
Decisive
Good communicator
Good motivator
Stands up to upper
management when
necessary
Supports team members
Ineffective Project Managers

Sets bad example
Not self-assured
Lacks technical expertise
Poor communicator
Poor motivator
Encourages new ideas

38
Importance of Leadership Skills

Effective project managers provide leadership by
example.
A leader focuses on long-term goals and big-picture
objectives while inspiring people to reach those goals.
A manager deals with the day-to-day details of meeting
specific goals.
Project managers often take on both leader and
manager roles.
39
Top Ten Most

In-Demand IT Skills
Rank
IT Skill/Job
Average Annual Salary
1
SQL Database Analyst
$80,664
2
Oracle Database Analyst
$87,144
3
C/C++ Programmer
$95,829
4
Visual Basic Programmer
$76,903
5
E-commerce/Java Developer
$89,163
6
Windows NT/2000 Expert
$80,639
7
Windows/Java Developert
$93,785
8
Security Architect
$86,881
9
Project Manager
$95,719
10
Network Engineer
$82,906
Paul Ziv, The Top 10 IT Skills in Demand, Global Knowledge Webcast
(www.globalknowledge.com) (11/20/2002).
40
Top Information Technology Skills

70%
60%
60%
58%
50%
Percentage of
Respondents
42%
41%
Database
management
Networking
40%
30%
20%
10%
0%
Application
development
Project management
Information Technology (IT) Skill

Cosgrove, Lorraine, January 2004 IT Staffing Update, CIO Research Reports (February 3, 2004).
41
History of Project Management

Some people argue that building the Egyptian
pyramids was a project, as was building the
Great Wall of China.
Most people consider the Manhattan Project
to be the first project to use modern project
management.
This three-year, $2 billion (in 1946 dollars) project
had a separate project and technical managers.
42
Project Management Office (PMO)

A PMO is an organizational group responsible for
coordinating the project management function throughout
an organization.
Possible goals include:
Collect, organize, and integrate project data for the entire
organization.
Develop and maintain templates for project documents.
Develop or coordinate training in various project management
topics.
Develop and provide a formal career path for project managers.
Provide project management consulting services.
Provide a structure to house project managers while they are
acting in those roles or are between projects.
43
The Project Management

Profession
Professional societies such as the Project
Management Institute (PMI) have grown
significantly.
There are specific interest groups in many
areas, such as engineering, financial services,
health care, and IT.
Project management research and certification
programs continue to grow.
44
Project Management Certification

PMI provides certification as a Project
Management Professional (PMP).
A PMP has documented sufficient project
experience, agreed to follow a code of ethics,
and passed the PMP exam.
The number of people earning PMP certification
is increasing quickly.
PMI and other organizations are offering new
certification programs.
45
Growth in PMP Certification, 1993-2003

80,000
76,550
70,000
# PMPs
60,000
52,443
50,000
40,000
40,343
30,000
27,052
20,000
18,184
10,000
0
10,086
1,000
1993
1,900
1994
2,800
1995
4,400
1996
6,415
1997
1998 1999
2000
2001
2002
2003
Y ear
46
1.4 Ethics in Project Management

Ethics is an important part of all professions.
Project managers often face ethical dilemmas.
In order to earn PMP certification, applicants must
agree to the PMP code of professional conduct.
Several questions on the PMP exam are related to
professional responsibility, including ethics.
47
1.5 Project Management Software

There are currently hundreds of different products
to assist in performing project management.
Three main categories of tools:
Low-end tools: Handle single or smaller projects well; cost under
$200 per user.
Midrange tools: Handle multiple projects and users; cost $200-500
per user; Project 2003 most popular (includes an enterprise
version).
High-end tools: Also called enterprise project management
software; often licensed on a per-user basis; VPMi Enterprise
Online (www.vcsonline.com).
48
Project Management Software

Enterprise PM software integrates information from
multiple projects to show the status of active, approved,
and future projects across an entire organization.
It also provides links to more detailed information on
each project.
Many managers like to see status in color red, yellow,
and green.
PM software is used to create artifacts/work products to
manage projects
49
Project Management Tools and

Techniques
Project management tools and techniques assist
project managers and their teams in various
aspects of project management
Some specific ones include
Project Charter and WBS (scope)
Gantt charts, PERT charts, critical path analysis,
critical chain scheduling (time)
Cost estimates and earned value management chart
(cost)
50
Sample Gantt Chart

Work Breakdown Structure (WBS)
The WBS is shown on the left, and each tasks start and finish dates
are shown on the right. First used in 1917, early Gantt charts were
drawn by hand.
51
Sample Network Diagram
Each box is a project task from the WBS. Arrows show dependencies
between tasks. The bolded tasks are on the critical path. If any task on the
critical path takes longer to complete than planned, the whole project will slip
unless something is done. Network diagrams were first used in 1958 on the
Navy Polaris project before project management software was available.
52
Sample WBS for Intranet Project in

Chart Form
Intranet Project
Concept
Web Site
Design
Web Site
Development
Design User Interface
Develop Pages
and Links
Design Server Setup
Develop
Functionality
Develop Server
Support Infrastructure
Content
Migration/Integration
Roll Out
Support
Testing
53
Sample PERT Chart
1day
Wed 2/24/99 Wed 2/24/99
B
2
Fri 3/5/99 Fri 3/1/99
10
3days
Mon 3/1/99 Wed 3/1/99
5days
4days
Fri 2/26/99 Wed 3/3/99
6days
3days
Wed 2/24/99 Fri 2/26/99
C
3
Fri 2/26/99 Thu 3/4/99
2days
Wed 2/24/99 Thu 2/25/99
Thu 2/25/99 Tue 3/2/99
D
4days
G
7
6days
Mon 3/1/99 Mon 3/8/99
I
9
2days
Tue 3/9/99 Wed 3/10/99
54
Sample Earned Value Chart

300
EAC
BAC
250
200
BCWS or Cumulative Plan

ACWP or Cumulative Actual
150
BCWP or Cumulative EV
BCWS
Cost Variance
100
ACWP
Schedule Variance
BWCP
50
0
1
7
Month
10
11
12
55
Sample Enterprise Project

Management Tool
56
Summary
As the number and complexity of projects continue to grow, it is
becoming even more important to practice good project management.
A project has several attributes, such as being unique, temporary and
developed incrementally.
A framework for project management includes project stakeholders,
the nine knowledge areas, tools and techniques, and creating project
portfolios to ensure enterprise success.
Successful project managers must possess and development many
skills and lead their teams by example.
The project management profession continues to mature as more
people become certified and more tools are created.
57
Information Technology Context

and Process Groups
Mrs. G. I. Gamage
University of Colombo School of Computing
Learning Objectives
Describe the systems view of project

management and how it applies to
information technology projects.
Explain why stakeholder management and
top management commitment are critical for
a projects success.
Learning Objectives
Describe the concept of a project phase and the
project life cycle
Discuss the unique attributes and diverse nature
of information technology projects
Describe the five project management (PM)
process groups
Describe how the PM process groups relate to
the PM knowledge areas
2.1 Projects Cannot Be Run

in Isolation
Projects must operate in a broad organizational
environment.
Project managers need to use systems
thinking:
Taking a holistic view of a project and
understanding how it relates to the larger
organization.
Senior managers must make sure projects
continue to support current business needs.
2.1 A Systems View of Project

Management
The term systems approach emerged in the 1950s
to describe a holistic and analytical approach to
solving complex problems.
Three parts include:
Systems philosophy: View things as systems, which are
interacting components that work within an environment to fulfill
some purpose.
Systems analysis: Problem-solving approach.
Systems management: Address business, technological, and
organizational issues before making changes to systems.
Media Snapshot
The Press Association Ltd., the largest news agency in
the United Kingdom, hired a consulting firm to help turn
things around after management noticed that its profit
margins were sliding.
The consultants suggested using a holistic view and a
top-down strategy to make sure projects supported key
business goals.
They also suggested releasing short-term results to
accrue benefits on an incremental basis and reviewing
projects on a regular basis to ensure strategic
alignment.*
*Jackson, Lynne, Forge Ahead, PM Network (April 2004), p.48.
2.1.2 Three Sphere Model for Systems Management
2.2 Stakeholder Management

Project managers must take time to identify,
understand, and manage relationships with all
project stakeholders.
Using the four frames of organizations can help
you meet stakeholder needs and expectations.
Senior executives and top management are
very important stakeholders.
Importance of Top
Management Commitment
Several studies cite top management commitment as one
of the key factors associated with project success.
Top management can help project managers:
Secure adequate resources.
Get approval for unique project needs in a timely
manner.
Receive cooperation from people throughout the
organization.
Learn how to be better leaders.
Need for Organizational Commitment

to Information Technology (IT)
If the organization has a negative attitude
toward IT, it will be difficult for an IT project to
succeed.
Having a Chief Information Officer (CIO) at a
high level in the organization helps IT projects.
Assigning non-IT people to IT projects also
encourages more commitment.
10
Need for Organizational Standards

Standards and guidelines help project managers be
more effective.
Senior management can encourage:
The use of standard forms and software for
project management.
The development and use of guidelines for writing
project plans or providing status information.
The creation of a project management office or
center of excellence.
11
2.3 Project Phases and the Project

Life Cycle
A project life cycle is a collection of project
phases that defines:
What work will be performed in each phase.
What deliverables will be produced and when.
Who is involved in each phase.
How management will control and approve
work produced in each phase.
A deliverable is a product or service produced
or provided as part of a project.
12
More on Project Phases

In the early phases of a project life cycle:
Resource needs are usually lowest.
The level of uncertainty (risk) is highest.
Project stakeholders have the greatest opportunity to
influence the project.
In the middle phases of a project life cycle:
The certainty of completing a project increases.
More resources are needed.
In the final phase of a project life cycle:
The focus is on ensuring that project requirements
were met.
The sponsor approves completion of the project.
13
Phases of the Traditional Project Life

Cycle
14
The Importance of Project Phases

and Management Reviews
A project should successfully pass through
each of the project phases in order to continue
on to the next.
Management reviews, also called phase exits
or kill points, should occur after each phase to
evaluate the projects progress, likely success,
and continued compatibility with organizational
goals.
15
2.4 The Context of IT Projects

IT projects can be very diverse in terms of size,
complexity, products produced, application area,
and resource requirements.
IT project team members often have diverse
backgrounds and skill sets.
IT projects use diverse technologies that change
rapidly. Even within one technology area, people
must be highly specialized.
16
2.5 Project Management Process

Groups
A process is a series of actions directed toward a
particular result.
Project management can be viewed as a number of
interlinked processes.
The project management process groups include:
Initiating processes
Planning processes
Executing processes
Monitoring and controlling processes
Closing processes
17
Level of Activity and Overlap of Process

Groups Over Time
18
2.6 Mapping the Process Groups to the

Knowledge Areas
You can map the main activities of each PM
process group into the nine knowledge areas by
using the PMBOK Guide 2004.
Note that there are activities from each knowledge
area under the planning process group.
All initiating activities are part of the project
integration management knowledge area.
19
Table 3-1. Relationships Among Process Groups

and Knowledge Areas
PMBOK Guide 2004, p. 69
20
Relationships Among Process Groups

and Knowledge Areas (contd)
21
Summary
Project managers need to take a systems approach when
working on projects.
Projects should successfully pass through each phase of
the project life cycle.
Project managers need to consider several factors due to
the unique context of information technology projects.
The five project management process groups are
initiating, planning, executing, monitoring and controlling,
and closing.
You can map the main activities of each process group to
the nine knowledge areas.
22
Section 3:
Project Integration Management
Mrs. G. I. Gamage
Learning Objectives
Describe what project integration management is
and outline its main processes
Explain the strategic planning process and apply
different project selection methods
Explain the importance of creating a project charter
to formally initiate projects
Discuss the process of creating a preliminary
project scope statement
Describe project management plan development
and its content
Explain project execution
2
Learning Objectives
Describe the process of monitoring and controlling
project work
Describe the integrated change control process,
planning for and managing changes on
information technology project
Explain the importance of developing good
procedures for closing projects
3. 1 The Key to Overall Project Success:

Good Project Integration Management
Project managers must coordinate all of the other
knowledge areas throughout a projects life cycle.
Many new project managers have trouble looking
at the big picture and want to focus on too many
details.
Project integration management is not the same
thing as software integration.

(PIM)
It includes processes required to ensure that the
various elements of the project are properly
coordinated.

Processes
Develop the project charter: Work with stakeholders

to create the document that formally authorizes a
projectthe charter.
Develop the preliminary project scope statement:
Work with stakeholders, especially users of the
projects products, services, or results, to develop the
high-level scope requirements and create a
preliminary project scope statement.
Develop the project management plan: Coordinate
all planning efforts to create a consistent, coherent
documentthe project management plan.

Processes (contd)
Direct and manage project execution: Carry out

the project management plan by performing the
activities included in it.
Monitor and control the project work: Oversee
project work to meet the performance objectives of
the project.
Perform integrated change control: Coordinate
changes that affect the projects deliverables and
organizational process assets.
Close the project: Finalize all project activities to
formally close the project.
3.2 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:
Strengths, Weaknesses, Opportunities, and Threats
As part of strategic planning, organizations should:
Identify potential projects.
Use realistic methods to select which projects to work
on.
Formalize project initiation by issuing a project charter.
3.2.1 Identifying Potential Projects

Many organizations follow a planning process for
selecting IT projects.
Its crucial to align IT projects with business strategy.
Research shows that:
Supporting explicit business objectives is the number
one reason cited for investing in IT projects.
Companies with consolidated IT operations have a 24
percent lower operational cost per end user.
The consistent use of IT standards lowers application
development costs by 41 percent per user.*
*Cosgrove Ware, Lorraine, By the Numbers, CIO Magazine (www.cio.com)
(September 1, 2002).
Information Technology Planning

Process
10
3.2.2 Methods for Selecting

Projects
There is usually not enough time or resources to

implement all projects.
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.
11
3.2.2.1 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 for the project.
There is a strong will to make the project succeed.
12
3.2.2.2 Categorizing IT Projects

One categorization assesses whether the project
provides a response to:
A problem
An opportunity
A directive
Another categorization is based on the time it will take
to complete a project or the date by which it must be
done.
Another categorization is the overall priority of the
project.
13
3.2.2.3 Financial Analysis of

Projects
Financial considerations are often an important aspect
of the project selection process.
Three primary methods for determining the projected
financial value of projects:
Net present value (NPV) analysis
Return on investment (ROI)
Payback analysis
14
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.
15
Net Present Value Example
Note that
totals are
equal, but
NPVs are
not
because of
the time
value of
money.
16
JWD Consulting NPV Example

Multiply
by the
discount
factor each
year, then
subtract costs
from
cumulative
benefits to
get NPV.
17
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).
Some organizations consider the investment year as year
0, while others consider it year 1. Some people enter costs
as negative numbers, while others do not. Make sure to
identify your organizations preferences.
18
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 setting
the NPV to zero.
19
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 cumulative discounted
benefits and costs are greater than zero.
Many organizations want IT projects to have a fairly
short payback period.
20
Charting the Payback Period
Excel file
21
3.3 Project Charters

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 projects 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.
22
Project Integration Management Overview
23
3.4 Preliminary
Scope Statements
A scope statement is a document used to develop and
confirm a common understanding of the project scope.
It is an important tool for preventing scope creep:
The tendency for project scope to keep getting bigger.
A good practice is to develop a preliminary or initial
scope statement during project initiation and a more
detailed scope statement as the project progresses.
24
Contents of a Preliminary Scope

Statement
Project objectives
Product or service
requirements and
characteristics
Project boundaries
Deliverables
Product acceptance criteria
Project assumptions and
constraints
Organizational structure for
the project
Initial list of defined risks

Summary of schedule
milestones
Rough order of magnitude
cost estimate
Configuration management
requirements
Description of approval
requirements
25
3.5 Project Management Plans

A project management plan is a document
used to coordinate all project planning
documents and help guide a projects execution
and control.
Plans created in the other knowledge areas are
subsidiary parts of the overall project
management plan.
26
Attributes of Project Plans

Just as projects are unique, so are project plans.
Plans should be:
Dynamic
Flexible
Updated as changes occur
Plans should first and foremost guide project
execution by helping the project manager lead the
project team and assess project status.
27
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.
28
Sample Contents for a Software Project Management Plan (SPMP)
29
3.6 Project Execution

Project execution 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 project execution.
30
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.
31
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.
32
Important Skills for Project

Execution
General management skills such as leadership,
communication, and political skills.
Product, business, and application area skills
and knowledge.
Use of specialized tools and techniques.
33
Project Execution Tools and

Techniques
Project management methodology: Many experienced
project managers believe the most effective way to improve
project management is to follow a methodology that
describes not only what to do in managing a project, but how
to do it.
Project management information systems: Hundreds of
project management software products are 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 Lumpurs
Integrated Transport Information System.
Information Technology Project Management, Fourth Edition
34
3.7 Monitoring and Controlling

Project Work
Changes are inevitable on most projects, so its
important to develop and follow a process to monitor
and control changes.
Monitoring project work includes collecting, measuring,
and disseminating performance information.
Two important outputs of monitoring and controlling
project work include recommended corrective and
preventive actions.
35
3.8 Integrated Change Control
Three main objectives are:
Influence the factors that create changes to ensure

that changes are beneficial.
Determine that a change has occurred.
Manage actual changes as they occur.
A baseline is the approved project management plan

plus approved changes.
36
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 beforehand 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.
37
Change Control System

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.
38
Change Control Boards (CCBs)

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.
CCBs include stakeholders from the entire
organization.
39
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.
A 48-hour policy allows project team members to
make a decision and have 48 hours to seek approval
from top management. If the team decision cannot be
implemented, management has 48 hours to reverse a
decision; otherwise, the teams decision is approved.
Another policy is to delegate changes to the lowest
level possible, but keep everyone informed of
changes.
40
3.9 Closing Projects

To close a project, you must finalize all activities and
transfer the completed or cancelled work to the
appropriate people.
Main outputs include:
Administrative closure procedures.
Contract closure procedures.
Final products, services, or results.
Organizational process asset updates.
41
Using Software to Assist in Project

Integration Management
Several types of software can be used to assist in
project integration management:
Word processing software creates documents.
Presentation software creates presentations.
Spreadsheets or databases perform tracking.
Communication software such as e-mail and Web
authoring tools facilitate communications.
Project management software can pull everything
together and show detailed and summarized information.
42
Summary
Project integration management includes:
Developing a project charter.
Developing a preliminary project scope statement.
Developing a project management plan.
Directing and managing project execution.
Monitoring and controlling project work.
Performing integrated change control.
Closing the project.
43
Section 4:
Project Scope Management
Mrs. G. I. Gamage
University of Colombo School of Computing (UCSC)
Learning Objectives
Describe the main processes in the project scope
management
Explain the scope planning process and describe the
contents of a scope management plan
Discuss the scope definition process and work involved in
constructing a work breakdown structure
Explain the importance of scope verification and how it
relates to scope definition and control
Describe the importance of scope control and approaches
for preventing
Scope-related problems on information technology
projects
4.1 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.
A deliverable is a product produced as part of a
project, such as hardware or software, planning
documents, or meeting minutes.
Project scope management includes the
processes involved in defining and controlling
what is or is not included in a project.
3
Project Scope Management

Processes
Scope planning: Deciding how the scope will be

defined, verified, and controlled.
Scope definition: Reviewing the project charter and
preliminary scope statement and adding more
information as requirements are developed and change
requests are approved.
Creating the WBS: Subdividing the major project
deliverables into smaller, more manageable
components.
Scope verification: Formalizing acceptance of the
project scope.
Scope control: Controlling changes to project scope.
4
Scope Planning and the Scope

Management Plan
The scope management plan is a document
that includes descriptions of how the team will
prepare the project scope statement, create the
WBS, verify completion of the project
deliverables, and control requests for changes to
the project scope.
Key inputs include the project charter, preliminary
scope statement, and project management plan.
Sample Project Charter
Sample Project Charter (contd)
4.2 Scope Definition and the

Project Scope Statement
The preliminary scope statement, project
charter, organizational process assets, and
approved change requests provide a basis for
creating the project scope statement.
As time progresses, the scope of a project
should become clearer and more specific.
Further Defining Project Scope
Media Snapshot
Many people enjoy watching television shows like Changing Rooms or
Trading Spaces, where participants have two days and $1,000 to update a room in
their neighbors house. Because the time and cost are set, its the scope that has
the most flexibility. Designers on these shows often have to change initial scope
goals due to budget or time constraints.
Although most homeowners are very happy with work done on the show,
some are obviously disappointed. Unlike most projects where the project team
works closely with the customer, homeowners have little say in what gets done
and cannot inspect the work along the wayWhat happens when the
homeowners dont like the work thats been done? The FAQ section of tlc.com
says, Everyone on our show is told upfront that theres a chance they wont like
the final design of the room. Each applicant signs a release acknowledging that
the show is not responsible for redecorating a room that isnt to the owners
taste.
Too bad you cant get sponsors for most projects to sign a similar release
form. It would make project scope management much easier!
10
4.3 Creating the Work Breakdown

Structure (WBS)
A WBS is a deliverable-oriented grouping of the
work involved in a project that defines the total
scope of the project.
A WBS is a foundation document that provides
the basis for planning and managing project
schedules, costs, resources, and changes.
Decomposition is subdividing project
deliverables into smaller pieces.
11
Sample Intranet WBS

Organized by Product
12
Sample Intranet WBS

Organized by Phase
13
Intranet WBS in Tabular Form

1.0 Concept
1.1 Evaluate current systems
1.2 Define requirements
1.2.1 Define user requirements
1.2.2 Define content requirements
1.2.3 Define system requirements
1.2.4 Define server owner requirements
1.3 Define specific functionality
1.4 Define risks and risk management approach
1.5 Develop project plan
1.6 Brief Web development team
2.0 Web Site Design
3.0 Web Site Development
4.0 Roll Out
5.0 Support
14
Intranet WBS and Gantt Chart in

MS Project 2000
15
Intranet Gantt Chart Organized by Project

Management Process Groups
16
Executing Tasks for JWD Consultings WBS
17
Approaches to Developing WBSs

Guidelines: Some organizations, such as the
DOD, provide guidelines for preparing WBSs.
Analogy approach: Review WBSs of similar
projects and tailor to your project.
Top-down approach: Start with the largest items
of the project and break them down.
Bottom-up approach: Start with the specific
tasks and roll them up.
18
4.4 Scope Verification

It is very difficult to create a good scope statement and WBS
for a project.
It is even more difficult to verify project scope and minimize
scope changes.
Many IT projects suffer from scope creep and poor scope
verification (Ref. 1 page 187 What Went Wrong?).
FoxMeyer Drug filed for bankruptcy after scope creep on
a robotic warehouse.
Engineers at Grumman called a system Naziware and
refused to use it.
21st Century Insurance Group wasted a lot of time and
money on a project that could have used off-the-shelf
components.
19
4.5 Scope Control

Scope control involves controlling changes to the
project scope.
Goals of scope control are to:
Influence the factors that cause scope changes.
Ensure changes are processed according to
procedures developed as part of integrated change
control.
Manage changes when they occur.
Variance is the difference between planned and actual
performance.
20
Suggestions for Improving User Input

Develop a good project selection process and insist that
sponsors are from the user organization.
Place users on the project team in important roles.
Hold regular meetings with defined agendas, and have
users sign off on key deliverables presented at meetings.
Deliver something to users and sponsors on a regular
basis.
Dont promise to deliver when you know you cant.
Co-locate users with developers.
21
Suggestions for Reducing Incomplete

and Changing Requirements
Develop and follow a requirements management process.
Use techniques such as prototyping, use case modeling,
and JAD to get more user involvement.
Put requirements in writing and keep them current.
Create a requirements management database for
documenting and controlling requirements.
22
Suggestions for Reducing Incomplete

and Changing Requirements (contd)
Conduct adequate testing throughout the project life
cycle.
Review changes from a systems perspective.
Emphasize completion dates to help focus on whats
most important.
Allocate resources specifically for handling change
requests and enhancements (as NWA did with ResNet).
23

Scope Management
Word-processing software helps create scope-related
documents.
Spreadsheets help perform financial calculations and
weighed scoring models, and help develop charts and
graphs.
Communication software, such as e-mail and the Web,
helps clarify and communicate scope information.
Project management software helps create a WBS, the
basis for tasks on a Gantt chart.
Specialized software is available to assist in project scope
management.
24
Summary
Project scope management includes the
processes required to ensure that the project
addresses all the work requiredand only the
work requiredto complete the project
successfully.
Main processes include:
Scope planning
Scope definition
WBS creation
Scope verification
Scope control
25
Section 5:
Project Time Management
Mrs. G. I. Gamage
Learning Objectives
State the importance of project schedules and good project time
management
Define activities as the basis for developing project schedules
Use network diagrams and dependencies to assist in activity
sequencing
Identify the relationship between estimating resources and project
schedules
Explain how various tools and techniques help project managers to
perform activity duration estimating
Use a Gantt chart for planning and tracking schedule information, find
the critical path for a project, and use of the Program Evaluation and
Review
Technique (PERT) as project time management techniques.
5.1 Importance of Project Schedules

Managers often cite delivering projects on time as one of
their biggest challenges.
Fifty percent of IT projects were challenged in the 2003
CHAOS study, and their average time overrun increased to
82 percent from a low of 63 percent in 2000.*
Schedule issues are the main reason for conflicts on projects,
especially during the second half of projects.
Time has the least amount of flexibility; it passes no matter
what happens on a project.
*The Standish Group, Latest Standish Group CHAOS Report Shows Project Success Rates
Have Improved by 50%, (www.standishgroup.com) (March 25, 2003).
Conflict Intensity Over the Life of a Project

0.40
Conflict Intensity
0.35
0.30
Schedules
0.25
Average
Total Conflict
0.20
Priorities
Manpower
Technical opinions
Procedures
0.15
Cost
Personality conflicts
0.10
0.05
0.00
Project
Formation
Early Phases Middle Phases
End Phases
Individual Work Styles and Cultural

Differences Cause Schedule Conflicts
One dimension of the Myers-Briggs Type Indicator focuses
on peoples attitudes toward structure and deadline.
Some people prefer to follow schedules and meet
deadlines while others do not.
Different cultures and even entire countries have different
attitudes about schedules.
5.2 Activity Definition

An activity or task is an element of work normally found on the
WBS that has an expected duration, a cost, and resource
requirements.
Project schedules grow out of the basic documents that initiate a
project.
The project charter includes start and end dates and budget
information.
The scope statement and WBS help define what will be done.
Activity definition involves developing a more detailed WBS and
supporting explanations to understand all the work to be done, so
you can develop realistic cost and duration estimates.
Activity Lists and Attributes

An activity list is a tabulation of activities to be included
on a project schedule. The list should include:
The activity name
An activity identifier or number
A brief description of the activity
Activity attributes provide more information about each

activity, such as predecessors, successors, logical
relationships, leads and lags, resource requirements,
constraints, imposed dates, and assumptions related to
the activity.
Milestones
A milestone is a significant event that normally has no
duration.
It often takes several activities and a lot of work to
complete a milestone.
Milestones are useful tools for setting schedule goals and
monitoring progress.
Examples include completion and customer sign-off on
key documents and completion of specific products.
5.3 Activity Sequencing

Involves reviewing activities and determining
dependencies.
A dependency or relationship relates to the sequencing
of project activities or tasks.
You must determine dependencies in order to use critical
path analysis.
Three Types of Dependencies

Mandatory dependencies: Inherent in the
nature of the work being performed on a project;
sometimes referred to as hard logic.
Discretionary dependencies: Defined by the
project team; sometimes referred to as soft logic
and should be used with care because they may
limit later scheduling options.
External dependencies: Involve relationships
between project and non-project activities.
10
Network Diagrams
Network diagrams are the preferred technique
for showing activity sequencing.
A network diagram is a schematic display of
the logical relationships among, or sequencing
of, project activities.
Two main formats are the arrow and precedence
diagramming methods.
11
Sample Activity-on-Arrow (AOA) Network

Diagram for Project X
12
Arrow Diagramming Method (ADM)

Also called activity-on-arrow (AOA) network
diagram.
Activities are represented by arrows.
Nodes or circles are the starting and ending
points of activities.
Can only show finish-to-start dependencies.
13
Process for Creating AOA Diagrams

1.
2.
3.
4.
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.
Continuing drawing the network diagram, working from left to
right. Look for bursts and merges. A burst occurs when a
single node is followed by two or more activities. A merge
occurs when two or more nodes precede a single node.
Continue drawing the project network diagram until all
activities that have dependencies are included in the diagram.
As a rule of thumb, all arrowheads should face toward the
right, and no arrows should cross in an AOA network
diagram.
14
Precedence Diagramming Method (PDM)

Activities are represented by boxes.
Arrows show relationships between activities.
More popular than ADM method and used by
project management software.
Better at showing different types of dependencies.
15
Task Dependency Types
16
. Sample PDM Network Diagram
17
5.4 Activity Resource Estimating

Before estimating activity durations, you must
have a good idea of the quantity and type of
resources that will be assigned to each activity.
Consider important issues in estimating
resources:
How difficult will it be to complete specific activities on
this project?
What is the organizations history in doing similar
activities?
Are the required resources available?
18
5.5 Activity Duration Estimating

Duration includes the actual amount of time
worked on an activity plus the elapsed time.
Effort is the number of workdays or work hours
required to complete a task.
Effort does not normally equal duration.
People doing the work should help create
estimates, and an expert should review them.
19
Three-Point Estimates
Instead of providing activity estimates as a
discrete number, such as four weeks, its often
helpful to create a three-point estimate:
An estimate that includes an optimistic, most likely,
and pessimistic estimate, such as three weeks for the
optimistic, four weeks for the most likely, and five
weeks for the pessimistic estimate.
Three-point estimates are needed for PERT

estimates and Monte Carlo simulations.
20
5.6 Schedule Development

Uses results of the other time management processes to
determine the start and end dates of the project.
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,
critical path analysis, critical chain scheduling, and
PERT analysis.
21
5.6.1 Gantt Charts

Gantt 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:
Black diamonds: Milestones
Thick black bars: Summary tasks
Lighter horizontal bars: Durations of tasks
Arrows: Dependencies between tasks
22
Gantt Chart for Project X
Note: In Project 2003 darker bars are red to represent critical tasks.
23
Gantt Chart for Software Launch Project
24
Adding Milestones to Gantt Charts

Many people like to focus on meeting
milestones, especially for large projects.
Milestones emphasize important events or
accomplishments in projects.
You typically create milestone by entering tasks
that have a zero duration, or you can mark any
task as a milestone.
25
SMART Criteria
Milestones should be:
Specific
Measurable
Assignable
Realistic
Time-framed
26
Sample Tracking Gantt Chart
27
5.6.2 Critical Path Method (CPM)

CPM is a network diagramming 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.
Slack or float is the amount of time an activity can be
delayed without delaying a succeeding activity or the
project finish date.
28
Calculating the Critical Path

Develop a good network diagram.
Add the duration estimates for all activities on
each path through the network diagram.
The longest path is the critical path.
If one or more of the activities on the critical path
takes longer than planned, the whole project
schedule will slip unless the project manager
takes corrective action.
29
Determining the Critical Path for Project X
30
More on the Critical Path

A project team at Apple computer put a stuffed gorilla on top
of the cubicle of the person who was currently managing a
critical task.
The critical path does not necessarily contain all the critical
activities; it only accounts for time.
Remember the example in which growing grass was on
the critical path for Disneys Animal Kingdom.
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.
31
Using Critical Path Analysis to Make

Schedule Trade-offs
Free 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
can be delayed from its early start without delaying the
planned project finish date.
A forward pass through the network diagram determines
the early start and finish dates.
A backward pass determines the late start and finish
dates.
32
Calculating Early and Late Start and

Finish Dates
33
Free and Total Float or Slack for

Project X
34
Using the Critical Path to Shorten a

Project Schedule
Three main techniques for shortening schedules:
Shortening the duration of critical activities or tasks by
adding more resources or changing their scope.
Crashing activities by obtaining the greatest amount of
schedule compression for the least incremental cost.
Fast tracking activities by doing them in parallel or
overlapping them.
35
Many Horror Stories Related to Project

Schedules
Creating realistic schedules and sticking to them
is a key challenge of project management.
Crashing and fast tracking often cause more
problems, resulting in longer schedules.
Organizational issues often cause schedule
problems. See the What Went Wrong?
example that describes the need to take more
time to implement Customer Relationship
Management (CRM) software so that users will
accept it.
36
Importance of Updating Critical

Path Data
It is important to update project schedule
information to meet time goals for a project.
The critical path may change as you enter actual
start and finish dates.
If you know the project completion date will slip,
negotiate with the project sponsor.
37
5.6.3 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:
Duration estimates based on using optimistic, most
likely, and pessimistic estimates of activity durations, or
a three-point estimate.
38
PERT Formula and Example

PERT weighted average =
optimistic time + 4X most likely time + pessimistic time
6
Example:
PERT weighted average =
8 workdays + 4 X 10 workdays + 24 workdays
= 12 days
6
where:
optimistic time= 8 days
most likely time = 10 days
pessimistic time = 24 days
Therefore, youd use 12 days on the network diagram instead of
10 when using PERT for the above example.
39
Schedule Control
Perform reality checks on schedules.
Allow for contingencies.
Dont plan for everyone to work at 100 percent
capacity all the time.
Hold progress meetings with stakeholders and
be clear and honest in communicating schedule
issues.
40
Schedule Control
Goals are to know the status of the schedule,
influence factors that cause schedule changes,
determine that the schedule has changed, and
manage changes when they occur.
Tools and techniques include:
Progress reports.
A schedule change control system.
Project management software, including schedule comparison
charts, such as the tracking Gantt chart.
Variance analysis, such as analyzing float or slack.
Performance management, such as earned value (see Chapter 7).
41
Summary
Project time management is often cited as the
main source of conflict on projects, and most IT
projects exceed time estimates.
Activity definition
Activity sequencing
Activity resource estimating
Activity duration estimating
Schedule development
Schedule control
42
Section 6:
Project Cost Management
Mrs. G. I. Gamage
Learning Objectives
Describe the importance of project cost management
Explain basic project cost management principles, concepts, and
terms
Discuss different types of cost estimates and methods for preparing
them
Identify the processes involved in cost budgeting
Prepare a cost estimate and budget for an information technology
project
Describe what the cost control is
5.1 The Importance of Project Cost

Management
IT projects have a poor track record for meeting budget
goals.
The 2003 CHAOS studies showed the average cost
overrun (the additional percentage or dollar amount by
which actual costs exceed estimates) was 43 percent.
U.S. lost $55 billion in IT projects in 2002 from cancelled
projects and overruns compared to $140 billion in 1994.*
*The Standish Group, Latest Standish Group CHAOS Report Shows Project Success
Rates Have Improved by 50%, A Standish Group Research Note (3/25/03).
What is Cost and Project Cost

Management?
Cost is a resource sacrificed or foregone to
achieve a specific objective, or something given
up in exchange.
Costs are usually measured in monetary units,
such as dollars.
Project cost management includes the
processes required to ensure that the project is
completed within an approved budget.
Project Cost Management Processes

Cost estimating: Developing an approximation
or estimate of the costs of the resources needed
to complete a project.
Cost budgeting: Allocating the overall cost
estimate to individual work items to establish a
baseline for measuring performance.
Cost control: Controlling changes to the project
budget.
Basic Principles of Cost Management

Most members of an executive board have a
better understanding and are more interested in
financial terms than IT terms, so IT project
managers must speak their language.
Profits are revenues minus expenses.
Life cycle costing considers the total cost of
ownership, or development plus support costs, for a
project.
Cash flow analysis determines the estimated annual
costs and benefits for a project and the resulting annual
cash flow.
Cost of Software Defects*
It is important to spend money up-front on IT projects

to avoid spending a lot more later.
*Collard, Ross, Software Testing and Quality Assurance, working paper (1997).

Tangible costs or benefits are those costs or benefits
that an organization can easily measure in dollars.
Intangible costs or benefits are costs or benefits that are
difficult to measure in monetary terms.
Direct costs are costs that can be directly related to
producing the products and services of the project.
Indirect costs are costs that are not directly related to the
products or services of the project, but are indirectly
related to performing the project.
Sunk cost is money that has been spent in the past; when
deciding what projects to invest in or continue, you should
not include sunk costs.

Learning curve theory states that when many items are
produced repetitively, the unit cost of those items
decreases in a regular pattern as more units are
produced.
Reserves are dollars included in a cost estimate to
mitigate cost risk by allowing for future situations that are
difficult to predict.
Contingency reserves allow for future situations that may be
partially planned for (sometimes called known unknowns) and
are included in the project cost baseline.
Management reserves allow for future situations that are
unpredictable (sometimes called unknown unknowns).
Cost Estimating
Project managers must take cost estimates
seriously if they want to complete projects within
budget constraints.
Its important to know the types of cost
estimates, how to prepare cost estimates, and
typical problems associated with IT cost
estimates.
10
Types of Cost Estimates
11
Cost Management Plan

A cost management plan is a document that
describes how the organization will manage cost
variances on the project.
A large percentage of total project costs are
often labor costs, so project managers must
develop and track estimates for labor.
12
Maximum Departmental
Headcounts by Year
A large percentage of the costs of many IT projects are

human resource costs.
13
Cost Estimation Tools and Techniques

Basic tools and techniques for cost estimates:
Analogous or top-down estimates: Use the actual cost of a
previous, similar project as the basis for estimating the cost of the
current project.
Bottom-up estimates: Involve estimating individual work items or
activities and summing them to get a project total.
Parametric modeling: Uses project characteristics (parameters) in a
mathematical model to estimate project costs.
Computerized tools: Tools, such as spreadsheets and project
management software, that can make working with different cost
estimates and cost estimation tools easier.
14
Constructive Cost Model (COCOMO)

Barry Boehm helped develop the COCOMO models for
estimating software development costs.
Parameters include:
Function points: Technology-independent assessments of the
functions involved in developing a system.
Source Lines of Code (SLOC): A human-written line of code that
is not a blank line or comment.
Boehm suggests that only parametric models do not suffer

from the limits of human decision-making.
15
Typical Problems with IT

Cost Estimates
Developing an estimate for a large software project is a
complex task that requires a significant amount of effort.
People who develop estimates often do not have much
experience.
Human beings are biased toward underestimation.
Management might ask for an estimate, but really desire a
bid to win a major contract or get internal funding.
16
Sample Cost Estimate

See pages 262-266 for a detailed example that
describes how to create a cost estimate for the Surveyor
Pro project described in the opening case.
Before creating an estimate, know what it will be used
for, gather as much information about the project as
possible, and clarify the ground rules and assumptions
for the estimate.
If possible, estimate costs by major WBS categories.
Create a cost model to make it easy to change and
document the estimate.
17
Surveyor Pro Project Cost Estimate
18
Surveyor Pro Software Development Estimate
19
Cost Budgeting
Cost budgeting involves allocating the project cost
estimate to individual work items over time.
The WBS is a required input for the cost budgeting
process because it defines the work items.
Important goal is to produce a cost baseline:
A time-phased budget that project managers use to
measure and monitor cost performance.
20
Surveyor Pro Project

Cost Baseline
21
Cost Control
Project cost control includes:
Monitoring cost performance.
Ensuring that only appropriate project changes are
included in a revised cost baseline.
Informing project stakeholders of authorized changes to
the project that will affect costs.
Many organizations around the globe have

problems with cost control.
22
Media Snapshot
Australia: Problems with the installation of an ERP system at Crane
Group Ltd. led to an estimated cost overrun of $11.5 million.*
India: As many as 274 projects currently under implementation in the
Central sector are suffering serious cost and time overruns.**
Pakistan: Pakistan has sustained a cost overrun of Rs 1.798 billion (over
$30 million U.S. dollars) in the execution of the 66.5 megawatt Jagran
Hydropower Project in the Neelum Valley.***
United States: Northern California lawmakers were outraged over
Governor Arnold Schwarzenegger's announcement that commuters
should have to pay construction costs on Bay Area bridges. Maybe it takes
the Terminator to help control costs!****
*Songini, Marc L., Australian Firm Wrestles With ERP Delays, ComputerWorld (July 12, 2004).
**Srinivasan, G., 274 Central sector projects suffer cost, time overruns, The Hindu Business Line (May 4,
2004).
***Mustafa, Khalid, Rs 1.8 billion cost overrun in Jagran hydropower project, Daily Times (November 19,
2002).
****Gannett Company, Governor Refuses to Pay for Bay Bridge Cost Overruns, News10 (August 17, 2004).
23
Summary
Project cost management is traditionally a weak
area in IT projects, and project managers must
work to improve their ability to deliver projects
within approved budgets.
Cost estimating
Cost budgeting
Cost control
24
Section 7
Project Quality Management
Mrs. G. I. Gamage
Learning Objectives
Appreciate the importance of project quality
management for information technology products and
services
Define project quality management and describe its
main three processes
Describe given tools and techniques for quality control
(Pareto Analysis, Statistical sampling, testing)
Summarize major contributions to the modern quality
management
Describe major cost categories related to information
technology project quality
7.1 The Importance of Project

Quality Management
Many people joke about the poor quality of IT
products (see cars and computers joke on pages
290-291).
People seem to accept systems being down
occasionally or needing to reboot their PCs.
But quality is very important in many IT projects.
What Went Wrong?

In 1981, a small timing difference caused by a computer
program caused a launch abort.*
In 1986, two hospital patients died after receiving fatal
doses of radiation from a Therac 25 machine after a
software problem caused the machine to ignore calibration
data.**
Britains Coast Guard was unable to use its computers for
several hours in May 2004 after being hit by the Sasser
virus, which knocked out the electronic mapping systems,
e-mail, and other computer functions, forcing workers to
revert to pen, paper, and radios.***
*Design News (February 1988).
**Datamation (May 1987).
***Fleming, Nic, Virus sends coastguard computers off course (http://news.telegraph.co.uk/news/
main.jhtml?xml=/news/2004/05/05/ncoast05.xml) (May 15, 2004).
What Is Quality?
The International Organization for Standardization
(ISO) defines quality as the degree to which a
set of inherent characteristics fulfils requirements
(ISO9000:2000).
Other experts define quality based on:
Conformance to requirements: The projects
processes and products meet written specifications.
Fitness for use: A product can be used as it was
intended.
3.2 What Is Project Quality

Management?
Project quality management ensures that the project
will satisfy the needs for which it was undertaken.
Processes include:
Quality planning: Identifying which quality standards are relevant to
the project and how to satisfy them.
Quality assurance: Periodically evaluating overall project performance
to ensure the project will satisfy the relevant quality standards.
Quality control: Monitoring specific project results to ensure that they
comply with the relevant quality standards.
7.2.1 Quality Planning

Implies the ability to anticipate situations and
prepare actions to bring about the desired
outcome.
Important to prevent defects by:
Selecting proper materials.
Training and indoctrinating people in quality.
Planning a process that ensures the appropriate
outcome.
Design of Experiments
Design of experiments is a quality planning
technique that helps identify which variables
have the most influence on the overall outcome
of a process.
Also applies to project management issues,
such as cost and schedule trade-offs.
Involves documenting important factors that
directly contribute to meeting customer
requirements.
8
Scope Aspects of IT Projects

Functionality is the degree to which a system performs its
intended function.
Features are the systems special characteristics that
appeal to users.
System outputs are the screens and reports the system
generates.
Performance addresses how well a product or service
performs the customers intended use.
Reliability is the ability of a product or service to perform
as expected under normal conditions.
Maintainability addresses the ease of performing
maintenance on a product.
Whos Responsible for the Quality

of Projects?
Project managers are ultimately responsible for
quality management on their projects.
Several organizations and references can help
project managers and their teams understand
quality.
International Organization for Standardization
(www.iso.org)
IEEE (www.ieee.org)
10
7.2.2 Quality Assurance

Quality assurance includes all the activities related to
satisfying the relevant quality standards for a project.
Another goal of quality assurance is continuous quality
improvement.
Benchmarking generates ideas for quality improvements
by comparing specific project practices or product
characteristics to those of other projects or products within
or outside the performing organization.
A quality audit is a structured review of specific quality
management activities that help identify lessons learned that
could improve performance on current or future projects.
11
Table of Contents for a

Quality Assurance Plan*
1.0 Draft Quality Assurance Plan
1.1 Introduction
1.2 Purpose
1.3 Policy Statement
1.4 Scope
2.0 Management
2.1 Organizational Structure
2.2 Roles and Responsibilities
2.2.1 Technical Monitor/Senior
Management
2.2.2 Task Leader
2.2.3 Quality Assurance Team
2.2.4 Technical Staff
3.0 Required Documentation
4.0 Quality Assurance Procedures

4.1 Walkthrough Procedure
4.2 Review Process
4.2.1 Review Procedures
4.3 Audit Process
4.3.1 Audit Procedures
4.4 Evaluation Process
4.5 Process Improvement
5.0 Problem Reporting Procedures
5.1 Noncompliance Reporting Procedures
6.0 Quality Assurance Metrics
Appendix
Quality Assurance Checklist Forms
*U.S. Department of Energy

12
7.2.3 Quality Control

The main outputs of quality control are:
Acceptance decisions
Rework
Process adjustments
Some tools and techniques include:

Pareto analysis
Statistical sampling
Six Sigma
Quality control charts
13
7.3.1 Pareto Analysis

Pareto analysis involves identifying the vital few
contributors that account for the most quality
problems in a system.
Also called the 80-20 rule, meaning that 80
percent of problems are often due to 20 percent
of the causes.
Pareto diagrams are histograms, or column
charts representing a frequency distribution, that
help identify and prioritize problem areas.
14
Sample Pareto Diagram
15
7.3.2 Statistical Sampling and Standard

Deviation
Statistical sampling involves choosing part of a
population of interest for inspection.
The size of a sample depends on how
representative you want the sample to be.
Sample size formula:
Sample size = .25 X (certainty factor/acceptable error)2
Be sure to consult with an expert when using

statistical analysis.
16
7.3.3 Testing
Many IT professionals think of testing as a
stage that comes near the end of IT
product development.
Testing should be done during almost
every phase of the IT product
development life cycle.
17
Testing Tasks in the Software

Development Life Cycle
18
Types of Tests
Unit testing tests each individual component (often
a program) to ensure it is as defect-free as possible.
Integration testing occurs between unit and
system testing to test functionally grouped
components.
System testing tests the entire system as one
entity.
User acceptance testing is an independent test
performed by end users prior to accepting the
delivered system.
19
Gantt Chart for Building Testing into a

Systems Development Project Plan
20
Testing Alone Is Not Enough

Watts S. Humphrey, a renowned expert on software
quality, defines a software defect as anything that must
be changed before delivery of the program.
Testing does not sufficiently prevent software defects
because:
The number of ways to test a complex system is huge.
Users will continue to invent new ways to use a system that its
developers never considered.
Humphrey suggests that people rethink the software

development process to provide no potential defects when
you enter system testing; developers must be responsible
for providing error-free code at each stage of testing.
21
7.4 Modern Quality Management

Modern quality management:
Requires customer satisfaction.
Prefers prevention to inspection.
Recognizes management responsibility for quality.
Noteworthy quality experts include Deming,

Juran, Crosby, Ishikawa, Taguchi, and
Feigenbaum.
22
Quality Experts
Deming was famous for his work in rebuilding
Japan and his 14 Points for Management.
Juran wrote the Quality Control Handbook and
ten steps to quality improvement.
Crosby wrote Quality is Free and suggested that
organizations strive for zero defects.
Ishikawa developed the concepts of quality
circles and fishbone diagrams.
Taguchi developed methods for optimizing the
process of engineering experimentation.
Feigenbaum developed the concept of total
quality control.
23
7.4.3 ISO Standards

ISO 9000 is a quality system standard that:
Is a three-part, continuous cycle of planning, controlling, and
documenting quality in an organization.
Provides minimum requirements needed for an organization to
meet its quality certification standards.
Helps organizations around the world reduce costs and improve
customer satisfaction.
ISO 15504, sometimes known as SPICE (Software

Process Improvement and Capability dEtermination), is a
framework for the assessment of software processes.
24
Improving Information Technology

Project Quality
Several suggestions for improving quality for IT
projects include:
Establish leadership that promotes quality.
Understand the cost of quality.
Focus on organizational influences and workplace
factors that affect quality.
Follow maturity models.
25
7.5 The Cost of Quality

The cost of quality is the cost of conformance plus the
cost of nonconformance.
Conformance means delivering products that meet
requirements and fitness for use.
Cost of nonconformance means taking responsibility for
failures or not meeting quality expectations.
A 2002 study reported that software bugs cost the U.S.

economy $59.6 billion each year and that one third of the
bugs could be eliminated by an improved testing
infrastructure.*
*RTI International, Software Bugs Cost U.S. Economy $59.6 Billion Annually, RTI Study
Finds, July 1, 2002.
26
Costs Per Hour of Downtime Caused

by Software Defects
Business
Cost per Hour Downtime
Automated teller machines (medium-sized bank)
$14,500
Package shipping service
$28,250
Telephone ticket sales
$69,000
Catalog sales center
$90,000
Airline reservation center (small airline)
$89,500
27
Five Cost Categories Related to Quality

Prevention cost: Cost of planning and executing a project
so it is error-free or within an acceptable error range.
Appraisal cost: Cost of evaluating processes and their
outputs to ensure quality.
Internal failure cost: Cost incurred to correct an identified
defect before the customer receives the product.
External failure cost: Cost that relates to all errors not
detected and corrected before delivery to the customer.
Measurement and test equipment costs: Capital cost of
equipment used to perform prevention and appraisal
activities.
28
Media Snapshot*
A 2004 study by Nucleus Research Inc. estimates that
spam will cost large companies nearly $2,000 per
employee in lost productivity in 2004 alone, despite
investments in software to block spam. Spam currently
accounts for more than 70 percent of total e-mail volume
worldwide.
In just one month (August 2003), at least 50 new Internet
viruses surfaced, and losses related to computer viruses
cost North American companies about $3.5 billion.
Businesses have suffered at least $65 billion in lost
productivity because of computer viruses since 1997.
*McGuire, David, Report: Spam Costs Are Rising at Work, Washington Post (June 7, 2004).
29
Summary
Project quality management ensures that
the project will satisfy the needs for which
it was undertaken.
Quality planning
Quality assurance
Quality control
30
Section 8:
Project Human Resource
Management
Mrs. G. I. Gamage
Learning Objectives
Define project human resource management and describe its
processes
Explain theories of managing people for active participation in
IT projects
Explain human resource planning and be able to create a
project organizational chart, responsibility assignment matrix,
and resource histogram
Explain the concepts of resource assignments, resource
loading, and resource Leveling
Describe how the training needs used to develop project
team
Explain techniques that can be used to manage a project
team
2
The Importance of Human

Resource Management
People determine the success and failure of organizations and
projects.
Recent statistics about IT workforce:
The labor market changed a lot early in the new millennium, with
shortages and then an abundance of IT workers.
A 2004 ITAA report showed a slight recovery in 2004.
The total number of IT workers in the U.S. was more than 10.5 million in
early 2004, up from 10.3 million in 2003 and 9.9 million in 2002.
Eighty-nine percent of new jobs came from non-IT companies, such as
banking, finance, manufacturing, food service, and transportation.
Hiring managers say interpersonal skills are the most important soft skill
for IT workers.*
*Information Technology Association of America (ITAA), Recovery Slight for IT Job Market in
2004, (September 8, 2004) www.itaa.org.
Digital Planet Reports

The global high-tech industry generated more
than $2.1 trillion in 1999, $2.3 trillion in 2000, and
$2.4 trillion in 2001.
The Internet and e-commerce were notable bright
spots in the global economy.
Global e-commerce increased 79 percent
between 2000 and 2001.*
China, Poland, and other developing countries are
playing an increasing role in the global IT market.
*Information Technology Association of America (ITAA), Global IT Spending to Rocket from
Current $2 Trillion to $3 Trillion, New Study Finds, Update for IT Executives (2001) p. 6 (15)
www.itaa.org.
Long Hours and Stereotypes of IT Workers

Hurt Recruiting
Many people are struggling with how to
increase and diversify the IT labor pool.
Noted problems include:
The fact that many IT professionals work long hours
and must constantly stay abreast of changes in the
field.
Undesirable stereotypes that keep certain people
(for example, women) away from the career field.
The need to improve benefits, redefine work hours
and incentives, and provide better human resource
management.
Media Snapshot
Heres the dirty little secret: U.S. productivity is No. 1 in the
world when productivity is measured as gross domestic product
per worker, but our lead vanishes when productivity is
measured as GDP per hour workedEuropeans take an
average of six to seven weeks of paid annual leave, compared
with just 12 days in the United States. Twice as many American
as European workers put in more than 48 hours per week.*
Sociologists have shown that many Americans, especially men,
would like to have more family or leisure time. Recent surveys
show that many Americans are willing to sacrifice up to a
quarter of their salaries in return for more time off!
*Williams, Joan and Ariane Hegewisch, Confusing productivity with long work week,
Minneapolis Star Tribune (September 6, 2004) (www.startribune.com).
8.1 What is Project Human Resource

Management?
Making the most effective use of the people involved with
a project.
Processes include:
Human resource planning: Identifying and documenting project
roles, responsibilities, and reporting relationships.
Acquiring the project team: Getting the needed personnel
assigned to and working on the project.
Developing the project team: Building individual and group skills
to enhance project performance.
Managing the project team: Tracking team member performance,
motivating team members, providing timely feedback, resolving
issues and conflicts, and coordinating changes to help enhance
project performance.
8.2 Keys to Managing People

Psychologists and management theorists have
devoted much research and thought to the field
of managing people at work.
Important areas related to project management
include:
Motivation theories
Influence and power
Effectiveness
8
Intrinsic and Extrinsic Motivation

Intrinsic motivation causes people to
participate in an activity for their own enjoyment.
Extrinsic motivation causes people to do
something for a reward or to avoid a penalty.
For example, some children take piano lessons
for intrinsic motivation (they enjoy it) while others
take them for extrinsic motivation (to get a
reward or avoid punishment).
8.2 Maslows Hierarchy of Needs

Abraham Maslow argued that human beings
possess unique qualities that enable them to
make independent choices, thus giving them
control of their destiny.
Maslow developed a hierarchy of needs, which
states that peoples behaviors are guided or
motivated by a sequence of needs.
10
Maslows Hierarchy
of Needs
11
Ways to Influence that Help and

Hurt Projects
Projects are more likely to succeed when
project managers influence people using:
Expertise
Work challenge
Projects are more likely to fail when project

managers rely too heavily on:
Authority
Money
Penalty
12
Power
Power is the potential ability to influence
behavior to get people to do things they would
not otherwise do.
Types of power include:
Coercive power
Legitimate power
Expert power
Reward power
Referent power
13
Improving Effectiveness:
Coveys Seven Habits
Project managers can apply Coveys seven habits
to improve effectiveness on projects.
Be proactive.
Begin with the end in mind.
Put first things first.
Think win/win.
Seek first to understand, then to be understood.
Synergize.
Sharpen the saw.
14
Empathic Listening and Rapport

Good project managers are empathic listeners,
meaning they listen with the intent to understand.
Before you can communicate with others, you
have to have rapport, which is a relation of
harmony, conformity, accord, or affinity.
Mirroring is the matching of certain behaviors of
the other person, and is a technique used to help
establish rapport.
IT professionals need to develop empathic
listening and other people skills to improve
relationships with users and other stakeholders.
15
8.3 HR Planning - What Went

Right?
Best practices for ensuring partnerships between
people in business and technology areas include:
Requiring business people, not IT people, to take the lead
in determining and justifying investments in new computer
systems.
Having CIOs push their staff to recognize that the needs of
the business must drive all technology decisions.
Reshaping IT units to look and perform like consulting
firms.
16
8.3.1 Organizational Planning

Involves identifying and documenting project
roles, responsibilities, and reporting
relationships.
Outputs include:
Project organizational charts
Staffing management plans
Responsibility assignment matrixes
Resource histograms
17
Sample Organizational Chart for a

Large IT Project
18
Work Definition and Assignment

Process
19
Responsibility Assignment Matrixes

A responsibility assignment matrix (RAM) is a
matrix that maps the work of the project, as
described in the WBS, to the people responsible
for performing the work, as described in the
OBS.
Can be created in different ways to meet unique
project needs.
20
Sample Responsibility
Assignment Matrix (RAM)
21
RAM Showing Stakeholder Roles
22
Sample RACI Chart
R = Responsibility, only one R per task

A = Accountability
C = Consultation
I = Informed
23
Staffing Management Plans and

Resource Histograms
A staffing management plan describes when
and how people will be added to and taken off the
project team.
A resource histogram is a column chart that
shows the number of resources assigned to a
project over time.
24
Sample Resource Histogram
25
Acquiring the Project Team

Acquiring qualified people for teams is crucial.
The project manager who is the smartest person
on the team has done a poor job of recruiting!
Staffing plans and good hiring procedures are
important, as are incentives for recruiting and
retention.
Some companies give their employees one dollar for
every hour that a new person who they helped hire
works.
Some organizations allow people to work from home
as an incentive.
26
Why People Leave Their Jobs

They feel they do not make a difference.
They do not get proper recognition.
They are not learning anything new or growing
as a person.
They do not like their coworkers.
They want to earn more money.
27
8.4.2 Resource Loading

Resource loading refers to the amount of
individual resources an existing schedule
requires during specific time periods.
Helps project managers develop a general
understanding of the demands a project will
make on the organizations resources and
individual peoples schedules.
Overallocation means more resources than are
available are assigned to perform work at a
given time.
28
Sample Histogram Showing an

Overallocated Individual
Whats wrong with this picture? Assume 100 percent means Joe is working eight
hours per day.
29
Resource Leveling
Resource leveling is a technique for
resolving resource conflicts by delaying
tasks.
The main purpose of resource leveling is
to create a smoother distribution of
resource use and reduce overallocation.
30
Resource Leveling Example
31
Benefits of Resource Leveling

When resources are used on a more constant
basis, they require less management.
It may enable project managers to use a just-intime inventory type of policy for using
subcontractors or other expensive resources.
It results in fewer problems for project personnel
and the accounting department.
It often improves morale.
32
8.5 Developing the Project

Team
The main goal of team development is to
help people work together more effectively
to improve project performance.
It takes teamwork to successfully complete
most projects.
33
Tuckman Model of Team

Development
Forming
Storming
Norming
Performing
Adjourning
34
Training
Training can help people understand themselves
and each other, and understand how to work
better in teams.
Team building activities include:
Physical challenges
Psychological preference indicator tools
35
Myers-Briggs Type Indicator

(MBTI)
MBTI is a popular tool for determining personality
preferences and helping teammates understand
each other.
Four dimensions include:
Extrovert/Introvert (E/I)
Sensation/Intuition (S/N)
Thinking/Feeling (T/F)
Judgment/Perception (J/P)
NTs, or rationals, are attracted to technology fields.

IT people vary most from the general population in
their tendency to not be extroverted or sensing.
36
Wideman and Shenhars Views on MBTI

and Project Management*
Most suited for project leadership:
100 percent: INTJ, ENTJ, ISTJ, ESTJ
50 percent: INTP, ENTP, ENFP, ENFJ
Best suited as followers:

100 percent: INFJ, ISFJ
50 percent: INTP, ENTP, ENFP, ENFJ, ESFJ
Not suited for project work:

100 percent: INFP, ISFP, ESFP, ISTP
50 percent: ENFP, ESTP
*Wideman, R. Max and Aaron J. Shenhar, Professional and Personal Development: A Practical
Approach to Education and Training, Project Management for Business Professionals, edited by Joan
Knutson, 2001, p. 375.
37
MBTI and Suitability to Project

Work*
What do
you think
about
these
views?
*Wideman, R. Max. Project Teamwork, Personality Profiles and the Population at Large: Do we
have enough of the right kind of people? (http://www.maxwideman.com/papers/profiles/profiles.pdf ).
38
8.6 Managing the Project Team

Project managers must lead their teams in
performing various project activities.
After assessing team performance and related
information, the project manager must decide:
If changes should be requested to the project.
If corrective or preventive actions should be
recommended.
If updates are needed to the project management plan
or organizational process assets.
39
8.6.1 Tools and Techniques for

Managing Project Teams
Observation and conversation
Project performance appraisals
Conflict management
Issue logs
40
General Advice on Teams

Be patient and kind with your team.
Fix the problem instead of blaming people.
Establish regular, effective meetings.
Allow time for teams to go through the basic
team-building stages.
Limit the size of work teams to three to seven
members.
41
General Advice on Teams (contd)

Plan some social activities to help project team
members and other stakeholders get to know
each other better.
Stress team identity.
Nurture team members and encourage them to
help each other.
Take additional actions to work with virtual team
members.
42
Summary
Project human resource management includes
the processes required to make the most
effective use of the people involved with a
project.
Human resource planning
Acquiring the project team
Developing the project team
Managing the project team
43
Section 9:
Project Communications
Management
Mrs. G. I. Gamage
Learning Objectives
Appreciate the communication skills and social
skills
Describe the main processes in project
communication management
Explain main elements in the communications
management plan
Perform a stakeholder communications
analysis
Describe various methods for distributing
project information and the advantages and
disadvantages of each
2
Learning Objectives (contd)

Explain how stakeholders can be kept informed
about project status and resolve any issues
List various methods for improving project
communications, such as managing conflicts,
running effective meetings, using e-mail and other
technologies effectively
9.1 Importance of Good

Communications
The greatest threat to many projects is a failure to
communicate.
Our culture does not portray IT professionals as
being good communicators.
Research shows that IT professionals must be
able to communicate effectively to succeed in
their positions.
Strong verbal skills are a key factor in career
advancement for IT professionals.
4
Management Processes
Communications planning: Determining the information
and communications needs of the stakeholders.
Information distribution: Making needed information
available to project stakeholders in a timely manner.
Performance reporting: Collecting and disseminating
performance information, including status reports,
progress measurement, and forecasting.
Managing stakeholders: Managing communications to
satisfy the needs and expectations of project stakeholders
and to resolve issues.
9.2 Communications Planning

Every project should include some type of
communications management plan, a
document that guides project communications.
Creating a stakeholder analysis for project
communications also aids in communications
planning.
Plan Contents
Stakeholder communications requirements.
Information to be communicated, including

format, content, and level of detail.
The people who will receive the information and

who will produce it.
Suggested methods or technologies for

conveying the information.
Plan Contents (contd)
Frequency of communication.
Escalation procedures for resolving issues.
Revision procedures for updating the

communications management plan.
A glossary of common terminology.
Sample Stakeholder Analysis for Project

Communications
9.3 Information Distribution

Getting the right information to the right people
at the right time and in a useful format is just as
important as developing the information in the
first place.
Important considerations include:
Using technology to enhance information distribution.
Formal and informal methods for distributing
information.
10
What Went Wrong?

A well-publicized example of misuse of e-mail comes from the 1998
Justice Department's high profile, antitrust suit against Microsoft. Email emerged as a star witness in the case. Many executives sent
messages that should never have been put in writing. The court used
e-mail as evidence, even though the senders of the notes said the
information was being interpreted out of context.*
See the example that describes the misunderstanding of the phrase
pedagogical approach on page 392.
*Harmon, Amy, E-mail Comes Back to Haunt Companies, Minneapolis Star Tribune (from the
New York Times) (November 29, 1998).
11
9.3.3 Distributing Information in an

Effective and Timely Manner
Dont bury crucial information.
Dont be afraid to report bad information.
Oral communication via meetings and informal
talks helps bring important informationgood and
badout into the open.
12
Importance of Face-to-Face
Communication
Research says that in a face-to-face interaction:
58 percent of communication is through body
language.
35 percent of communication is through how the
words are said.
7 percent of communication is through the content or
words that are spoken.
Pay attention to more than just the actual words

someone is saying.
A persons tone of voice and body language say
a lot about how he or she really feels.
13
Encouraging More Face-to-Face

Interactions
Short, frequent meetings are often very effective
in IT projects.
Stand-up meetings force people to focus on what
they really need to communicate.
Some companies have policies preventing the
use of e-mail between certain hours or even entire
days of the week.
14
Media Choice Table
15
Media Snapshot
Live video is a modern medium for sending
information.
Microsoft says that one in every five face-to-face
meetings can be replaced with Web conferencing
tools, and they estimate it will save $70 million in
reduced travel in one year alone.*
The medium can backfire, as in the case with the
Janet Jackson wardrobe malfunction during the
2004 Super Bowl half-time show.
*Lohr, Steve, Ambitious Package to Raise Productivity (and Microsofts Profit), The New York
Times (August 16, 2004).
16
9.4 Performance Reporting

Performance reporting keeps stakeholders
informed about how resources are being used to
achieve project objectives.
Status reports describe where the project stands at a
specific point in time.
Progress reports describe what the project team has
accomplished during a certain period of time.
Forecasts predict future project status and progress
based on past information and trends.
17
9.5 Suggestions for Improving

Manage conflicts effectively.
Develop better communication skills.
Run effective meetings.
Use e-mail effectively.
Use templates for project communications.
18
Conflict Handling Modes

1. Confrontation: Directly face a conflict using a
problem-solving approach.
2. Compromise: Use a give-and-take approach.
3. Smoothing: De-emphasize areas of difference
and emphasize areas of agreement.
4. Forcing: The win-lose approach.
5. Withdrawal: Retreat or withdraw from an
actual or potential disagreement.
19
Conflict Can Be Good

Conflict often produces important results, such as
new ideas, better alternatives, and motivation to
work harder and more collaboratively.
Groupthink: Conformance to the values or ethical
standards of a group. Groupthink can develop if
there are no conflicting viewpoints.
Research suggests that task-related conflict often
improves team performance, but emotional
conflict often depresses team performance.
20
Developing Better Communication

Skills
Companies and formal degree programs for IT
professionals often neglect the importance of
speaking, writing, and listening skills.
As organizations become more global, they
realize they must invest in ways to improve
communication with people from different
countries and cultures.
It takes leadership to improve communication.
21
Running Effective Meetings

Determine if a meeting can be avoided.
Define the purpose and intended outcome of the
meeting.
Determine who should attend the meeting.
Provide an agenda to participants before the
meeting.
Prepare handouts and visual aids, and make
logistical arrangements ahead of time.
Run the meeting professionally.
Build relationships.
22
Using E-Mail Effectively

Make sure that e-mail is an appropriate medium
for what you want to communicate.
Be sure to send the e-mail to the right people.
Use meaningful subject lines.
Limit the content to one main subject, and be as
clear and concise as possible.
23
Using E-Mail Effectively (contd)

Limit the number and size of attachments.
Delete e-mail you dont need, and dont open email if you question the source.
Make sure your virus software is current.
Respond to and file e-mails quickly.
Learn how to use important features.
24
Project Web Sites

Many project teams create a project Web site to
store important product documents and other
information.
Can create the site using various types of
software.
25
Figure 10-3. Sample Project Web Site
26

Communications
There are many software tools to aid in project
communications.
Today more than 37 percent of people
telecommute or work remotely at least part-time.
Project management software includes new
capabilities to enhance virtual communications.
New tools, such as instant messaging and blogs,
can enhance project communications.
27
Summary
The goal of project communications
management is to ensure timely and appropriate
generation, collection, dissemination, storage,
and disposition of project information.
Main process include:
Communications planning
Information distribution
Performance reporting
Managing stakeholders
28
Section 10:
Project Risk Management
Mrs. G. I. Gamage
Learning Objectives
Describe what the risk is and the importance of
managing it
List the elements involved in the project risk
management and contents in risk management
plan
Identify common sources of risks in information
technology projects
Explain the qualitative risk analysis process
and how to calculate risk factors,
Learning Objectives (contd)

create probability/impact matrixes, apply
the Top Ten Risk Item Tracking technique,
and use expert judgment to rank risks
Explain the quantitative risk analysis
process and how to apply decision trees
10. 1 The Importance of Project

Risk Management
Project risk management is the art and science of
identifying, analyzing, and responding to risk
throughout the life of a project and in the best
interests of meeting project objectives.
Risk management is often overlooked in projects,
but it can help improve project success by helping
select good projects, determining project scope,
and developing realistic estimates.
Research Shows Need to Improve

Study by Ibbs and Kwak shows risk has the
lowest maturity rating of all knowledge areas.
KLCI study shows the benefits of following good
software risk management practices.
KPMG study found that 55 percent of runaway
projectsprojects that have significant cost or
schedule overrunsdid no risk management at
all.*
*Cole, Andy, Runaway ProjectsCause and Effects, Software World, Vol. 26, no. 3, pp. 35
(1995).
Project Management Maturity by Industry

Group and Knowledge Area*
KEY: 1 = LOWEST MATURITY RATING
5 = HIGHEST MATURITY RATING
Engineering/ Telecommunicatio
Construction ns
Informati
on
Systems
Hi-Tech
Manufacturing
Scope
3.52
3.45
3.25
3.37
Time
3.55
3.41
3.03
3.50
Cost
3.74
3.22
3.20
3.97
Quality
2.91
3.22
2.88
3.26
Human
Resources
3.18
3.20
2.93
3.18
Communication 3.53
s
3.53
3.21
3.48
Risk
2.93
2.87
2.75
2.76
Procurement
3.33
3.01
2.91
3.33
Knowledge
Area
*Ibbs, C. William and Young Hoon Kwak. Assessing Project Management Maturity,
Project Management Journal (March 2000).
Benefits from Software Risk Management

Practices*
100%
80%
80%
60%
60%
47%
47%
43%
35%
40%
20%
6%
on
e
ed
u
ce
co
st
o
ns
ve
rru
sli
e
ul
R
ed
u
ce
sc
he
d
co
m
m
to
m
er
M
ee
tc
us
ps
ts
go
ne
to
ilit
y
ab
pr
ov
e
Im
itm
en
tia
ris
es
ts
ur
p
m
s
Pr
ev
en
le
pr
ob
oi
d
av
te
/
tic
ip
a
An
te
0%
*Kulik, Peter and Catherine Weber, Software Risk Management Practices 2001,
KLCI Research Group (August 2001).
Negative Risk
A dictionary definition of risk is the possibility of
loss or injury.
Negative risk involves understanding potential
problems that might occur in the project and how
they might impede project success.
Negative risk management is like a form of
insurance; it is an investment.
Risk Can Be Positive

Positive risks are risks that result in good things
happening; sometimes called opportunities.
A general definition of project risk is an
uncertainty that can have a negative or positive
effect on meeting project objectives.
The goal of project risk management is to
minimize potential negative risks while
maximizing potential positive risks.
Risk Utility
Risk utility or risk tolerance is the amount of
satisfaction or pleasure received from a
potential payoff.
Utility rises at a decreasing rate for people who are
risk-averse.
Those who are risk-seeking have a higher tolerance
for risk and their satisfaction increases when more
payoff is at stake.
The risk-neutral approach achieves a balance
between risk and payoff.
10
Risk Utility Function and Risk

Preference
11

Processes
Risk management planning: Deciding how to
approach and plan the risk management activities
for the project.
Risk identification: Determining which risks are
likely to affect a project and documenting the
characteristics of each.
Qualitative risk analysis: Prioritizing risks based
on their probability and impact of occurrence.
12

Processes (contd)
Quantitative risk analysis: Numerically estimating the
effects of risks on project objectives.
Risk response planning: Taking steps to enhance
opportunities and reduce threats to meeting project
objectives.
Risk monitoring and control: Monitoring identified and
residual risks, identifying new risks, carrying out risk
response plans, and evaluating the effectiveness of risk
strategies throughout the life of the project.
13
10.2 Risk Management Planning

The main output of risk management planning is
a risk management plana plan that
documents the procedures for managing risk
throughout a project.
The project team should review project
documents and understand the organizations
and the sponsors approaches to risk.
The level of detail will vary with the needs of the
project.
14
Topics Addressed in a Risk

Management Plan
Methodology
Roles and responsibilities
Budget and schedule
Risk categories
Risk probability and impact
Risk documentation
15
Contingency and Fallback Plans,

Contingency Reserves
Contingency plans are predefined actions that the project
team will take if an identified risk event occurs.
Fallback plans are developed for risks that have a high
impact on meeting project objectives, and are put into
effect if attempts to reduce the risk are not effective.
Contingency reserves or allowances are provisions held
by the project sponsor or organization to reduce the risk of
cost or schedule overruns to an acceptable level.
16
Common Sources of Risk in

Information Technology Projects
Several studies show that IT projects share some
common sources of risk.
The Standish Group developed an IT success
potential scoring sheet based on potential risks.
Other broad categories of risk help identify
potential risks.
17
Information Technology Success

Potential Scoring Sheet
Success Criterion
Relative Importance
User Involvement
19
Executive Management support
16
Clear Statement of Requirements
15
Proper Planning
11
Realistic Expectations
10
Smaller Project Milestones
Competent Staff
Ownership
Clear Visions and Objectives
Hard-Working, Focused Staff
Total
100
18
Broad Categories of Risk

Market risk
Financial risk
Technology risk
People risk
Structure/process risk
19
Risk Breakdown Structure

A risk breakdown structure is a
hierarchy of potential risk categories for a
project.
Similar to a work breakdown structure but
used to identify and categorize risks.
20
Sample Risk Breakdown Structure

IT Project
Business
Technical
Organizational
Project
Management
Competitors
Hardware
Executive
support
Estimates
Suppliers
Software
User support
Communication
Cash flow
Network
Team support
Resources
21
Potential Negative Risk Conditions

Associated
With
Each
Knowledge
Area
Knowledge Area
Risk Conditions
Integration
Inadequate planning; poor resource allocation; poor integration

management; lack of post-project review
Scope
Poor definition of scope or work packages; incomplete definition

of quality requirements; inadequate scope control
Time
Errors in estimating time or resource availability; poor allocation

and management of float; early release of competitive products
Cost
Estimating errors; inadequate productivity, cost, change, or

contingency control; poor maintenance, security, purchasing, etc.
Quality
Poor attitude toward quality; substandard

design/materials/workmanship; inadequate quality assurance
program
Human Resources
Poor conflict management; poor project organization and

definition of responsibilities; absence of leadership
Communications
Carelessness in planning or communicating; lack of consultation

with key stakeholders
Risk
Ignoring risk; unclear assignment of risk; poor insurance

management
Procurement
Unenforceable conditions or contract clauses; adversarial relations
22
Risk Identification
Risk identification is the process of
understanding what potential events might hurt
or enhance a particular project.
Risk identification tools and techniques include:
Brainstorming
The Delphi Technique
Interviewing
SWOT analysis
23
10.3 Qualitative Risk Analysis

Assess the likelihood and impact of identified
risks to determine their magnitude and priority.
Risk quantification tools and techniques
include:
Probability/impact matrixes
The Top Ten Risk Item Tracking
Expert judgment
24
Probability/Impact Matrix
A probability/impact matrix or chart lists the
relative probability of a risk occurring on one side
of a matrix or axis on a chart and the relative
impact of the risk occurring on the other.
List the risks and then label each one as high,
medium, or low in terms of its probability of
occurrence and its impact if it did occur.
Can also calculate risk factors:
Numbers that represent the overall risk of specific
events based on their probability of occurring and the
consequences to the project if they do occur.
25
Sample Probability/Impact Matrix
26
Sample Probability/Impact Matrix for

Qualitative Risk Assessment
27
Chart Showing High-, Medium-, and

Low-Risk Technologies
28
Top Ten Risk Item Tracking

Top Ten Risk Item Tracking is a qualitative risk
analysis tool that helps to identify risks and maintain an
awareness of risks throughout the life of a project.
Establish a periodic review of the top ten project risk
items.
List the current ranking, previous ranking, number of
times the risk appears on the list over a period of time,
and a summary of progress made in resolving the risk
item.
29
Example of Top Ten Risk Item Tracking

Monthly Ranking
Risk Item
This
Last
Month
Month
Number
Risk Resolution
of Months Progress
Inadequate
planning
Working on revising the

entire project plan
Poor definition
of scope
Holding meetings with

project customer and
sponsor to clarify scope
Absence of
leadership
Just assigned a new

project manager to lead
the project after old one
quit
Poor cost
estimates
Revising cost estimates
Poor time
estimates
Revising schedule
estimates
30
Expert Judgment
Many organizations rely on the intuitive feelings
and past experience of experts to help identify
potential project risks.
Experts can categorize risks as high, medium, or
low with or without more sophisticated
techniques.
Can also help create and monitor a watch list, a
list of risks that are low priority, but are still
identified as potential risks.
31
10.4 Quantitative Risk Analysis

Often follows qualitative risk analysis, but both
can be done together.
Large, complex projects involving leading edge
technologies often require extensive quantitative
risk analysis.
Main techniques include:
Decision tree analysis
Simulation
Sensitivity analysis
32
Decision Trees and Expected

Monetary Value (EMV)
A decision tree is a diagramming analysis
technique used to help select the best course of
action in situations in which future outcomes are
uncertain.
Estimated monetary value (EMV) is the product
of a risk event probability and the risk events
monetary value.
You can draw a decision tree to help find the
EMV.
33
Expected Monetary Value (EMV)

Example
34
Using Software to Assist in Project Risk

Management
Risk registers can be created in a simple Word or
Excel file or as part of a database.
More sophisticated risk management software,
such as Monte Carlo simulation tools, help in
analyzing project risks.
The PMI Risk Specific Interest Groups Web site
at www.risksig.com has a detailed list of software
products to assist in risk management.
35
Results of Good Project Risk

Management
Unlike crisis management, good project risk
management often goes unnoticed.
Well-run projects appear to be almost effortless,
but a lot of work goes into running a project well.
Project managers should strive to make their jobs
look easy to reflect the results of well-run projects.
36
Summary
Project risk management is the art and science
of identifying, analyzing, and responding to risk
throughout the life of a project and in the best
interests of meeting project objectives.
Risk management planning

Risk identification
Qualitative risk analysis
Quantitative risk analysis
Risk response planning
Risk monitoring and control
37
Section 11:
Project Procurement Management
Mrs. G. I. Gamage
Learning Objectives
Describe the main processes in the procurement
management
Describe given tools and techniques in acquisition
(make-or-buy analysis, and Expert Judgment)
List the topics in Procurement Management Plan
List the main contents of a Request for Proposal
Create a proposal evaluation worksheet
Summarize the key concepts in contract
administration
Describe the contract closure process
2
11.1 Importance of Project

Procurement means acquiring goods and/or
services from an outside source.
Other terms include purchasing and outsourcing.
Experts predict that global spending on computer
software and services will continue to grow.
India is the leading country for U.S. offshore
outsourcing.
Debates on Outsourcing
Some companies, such as Wal-Mart, prefer to do
no outsourcing at all, while others do a lot of
outsourcing.
Most organizations do some form of outsourcing
to meet their IT needs and spend most money
within their own country.
The U.S. temporary workforce continues to grow
as people work for temporary job agencies so
they can more easily move from company to
company.
4
Why Outsource?
To reduce both fixed and recurrent costs.
To allow the client organization to focus on its
core business.
To access skills and technologies.
To provide flexibility.
To increase accountability.
Contracts
A contract is a mutually binding agreement that
obligates the seller to provide the specified
products or services and obligates the buyer to
pay for them.
Contracts can clarify responsibilities and sharpen
focus on key deliverables of a project.
Because contracts are legally binding, there is
more accountability for delivering the work as
stated in the contract.
A recent trend in outsourcing is the increasing
size of contracts.
6

Processes
Project procurement management: Acquiring
goods and services for a project from outside the
performing organization.
Processes include:
Planning purchases and acquisitions: Determining
what to procure, when, and how.
Planning contracting: Describing requirements for
the products or services desired from the
procurement and identifying potential sources or
sellers (contractors, suppliers, or providers who
provide goods and services to other organizations).

Processes (contd)
Requesting seller responses: Obtaining information,
quotes, bids, offers, or proposals from sellers, as
appropriate.
Selecting sellers: Choosing from among potential
suppliers through a process of evaluating potential sellers
and negotiating the contract.
Administering the contract: Managing the relationship
with the selected seller.
Closing the contract: Completing and settling each
contract, including resolving any open items.
Planning Purchases and

Acquisitions
Identifying which project needs can best
be met by using products or services
outside the organization.
If there is no need to buy any products or
services from outside the organization,
then there is no need to perform any of
the other procurement management
processes.
9
What Went Right?

Several organizations, such as The Boots
Company PLC in England, outsource their IT
services to save money compared with the cost
of running the systems themselves.
Carefully planning procurement can also save
millions of dollars, as the U.S. Air Force did by
using a unit pricing strategy for a large office
automation project.
10
11.2 Tools and Techniques for

Planning Purchases and Acquisitions
Make-or-buy analysis: General management
technique used to determine whether an
organization should make or perform a particular
product or service inside the organization or buy
from someone else.
Often involves financial analysis.
Experts, both internal and external, can provide
valuable inputs in procurement decisions.
11
11.2.1 Make-or-Buy Example

Assume you can lease an item you need for a
project for $800/day. To purchase the item, the
cost is $12,000 plus a daily operational cost of
$400/day.
How long will it take for the purchase cost to be
the same as the lease cost?
12
Make-or Buy Solution

Set up an equation so both options, purchase and lease, are
equal.
In this example, use the following equation. Let d be the
number of days to use the item:
$12,000 + $400d = $800d
Subtracting $400d from both sides, you get:
$12,000 = $400d
Dividing both sides by $400, you get:
d = 30
If you need the item for more than 30 days, it is more
economical to purchase it.
13
Types of Contracts
Different types of contracts can be used in different

situations:
Fixed price or lump sum contracts: Involve a fixed total price

for a well-defined product or service.
Cost reimbursable contracts: Involve payment to the seller for
direct and indirect costs.
Time and material contracts: Hybrid of both fixed price and cost
reimbursable contracts, often used by consultants.
Unit price contracts: Require the buyer to pay the seller a
predetermined amount per unit of service.
A single contract can actually include all four of these

categories, if it makes sense for that particular
procurement.
14
Cost Reimbursable Contracts

Cost plus incentive fee (CPIF): The buyer pays
the supplier for allowable performance costs plus
a predetermined fee and an incentive bonus.
Cost plus fixed fee (CPFF): The buyer pays the
supplier for allowable performance costs plus a
fixed fee payment usually based on a percentage
of estimated costs.
Cost plus percentage of costs (CPPC): The
buyer pays the supplier for allowable
performance costs plus a predetermined
percentage based on total costs.
15
Contract Types Versus Risk
16
Contract Clauses
Contracts should include specific clauses to take
into account issues unique to the project.
Can require various educational or work
experience for different pay rights.
A termination clause is a contract clause that
allows the buyer or supplier to end the contract.
17
11.3 Procurement Management

Plan
Describes how the procurement processes
will be managed, from developing
documentation for making outside
purchases or acquisitions to contract
closure.
Contents varies based on project needs.
18
Contract Statement of Work (SOW)

A statement of work is a description of the work
required for the procurement.
If a SOW is used as part of a contract to
describe only the work required for that
particular contract, it is called a contract
statement of work.
A SOW is a type of scope statement.
A good SOW gives bidders a better
understanding of the buyers expectations.
19
Statement of Work (SOW) Template

I.
Scope of Work: Describe the work to be done to detail. Specify the hardware and
software involved and the exact nature of the work.
II.
Location of Work: Describe where the work must be performed. Specify the
location of hardware and software and where the people must perform the work
III.
Period of Performance: Specify when the work is expected to start and end,
working hours, number of hours that can be billed per week, where the work must
be performed, and related schedule information.
IV.
Deliverables Schedule: List specific deliverables, describe them in detail, and

specify when they are due.
V.
Applicable Standards: Specify any company or industry-specific standards that

are relevant to performing the work.
VI.
Acceptance Criteria: Describe how the buyer organization will determine if the
work is acceptable.
VII.
Special Requirements: Specify any special requirements such as hardware or

software certifications, minimum degree or experience level of personnel, travel
requirements, and so on.
20
11.4 Planning Contracting

Involves preparing several documents needed for
potential sellers to prepare their responses and
determining the evaluation criteria for the contract
award.
Request for Proposals: Used to solicit proposals from
prospective sellers.
A proposal is a document prepared by a seller when there are
different approaches for meeting buyer needs.
Requests for Quotes: Used to solicit quotes or bids

from prospective suppliers.
A bid, also called a tender or quote (short for quotation), is a
document prepared by sellers providing pricing for standard
items that have been clearly defined by the buyer.
21
Request for Proposal (RFP)

Template
I.
Purpose of RFP
II.
Organizations Background
III.
Basic Requirements
IV.
Hardware and Software Environment
V.
Description of RFP Process
VI.
Statement of Work and Schedule Information
VII.
Possible Appendices
A. Current System Overview
B. System Requirements
C. Volume and Size Data
D. Required Contents of Vendors Response to RFP
E. Sample Contract
22
Evaluation Criteria
Its important to prepare some form of evaluation
criteria, preferably before issuing a formal RFP
or RFQ.
Beware of proposals that look good on paper; be
sure to evaluate factors, such as past
performance and management approach.
Can require a technical presentation as part of a
proposal.
23
11.5 Requesting Seller Responses

Deciding whom to ask to do the work, sending
appropriate documentation to potential sellers,
and obtaining proposals or bids.
Organizations can advertise to procure goods
and services in several ways:
Approaching the preferred vendor.
Approaching several potential vendors.
Advertising to anyone interested.
A bidders conference can help clarify the

buyers expectations.
24
Selecting Sellers
Also called source selection.
Involves:
Evaluating proposals or bids from sellers.
Choosing the best one.
Negotiating the contract.
Awarding the contract.
25
Sample Proposal Evaluation

Sheet
26
Seller Selection Process

Organizations often do an initial evaluation of all
proposals and bids and then develop a short list
of potential sellers for further evaluation.
Sellers on the short list often prepare a best and
final offer (BAFO).
Final output is a contract signed by the buyer
and the selected seller.
27
Media Snapshot
Many organizations realize that selecting
appropriate sellers can often provide a win-win
situation.
Several companies, including those owned by
famous celebrities, work closely with outside
sources to help both parties come out ahead.
For example, Oprah Winfrey celebrated the
premiere of her shows nineteenth season by
giving each of her 276 audience members a new
car that was donated by Pontiac.
28
11.6 Administering the Contract

Ensures that the sellers performance meets
contractual requirements.
Contracts are legal relationships, so it is important
that legal and contracting professionals be involved
in writing and administering contracts.
Many project managers ignore contractual issues,
which can result in serious problems.
29
Suggestions for Change Control in

Contracts
Changes to any part of the project need to be reviewed,

approved, and documented by the same people in the
same way that the original part of the plan was approved.
Evaluation of any change should include an impact

analysis. How will the change affect the scope, time,
cost, and quality of the goods or services being
provided?
Changes must be documented in writing. Project team

members should also document all important meetings
and telephone phone calls.
30
Suggestions for Change Control in

Contracts (contd)
Project managers and teams should stay closely
involved to make sure the new system will meet
business needs and work in an operational
environment.
Have backup plans.
Use tools and techniques, such as a contract
change control system, buyer-conducted
performance reviews, inspections and audits, and
so on.
31
11.7 Closing the Contract

Involves completing and settling contracts and
resolving any open items.
The project team should:
Determine if all work was completed correctly and
satisfactorily.
Update records to reflect final results.
Archive information for future use.
The contract itself should include requirements for

formal acceptance and closure.
32
Tools to Assist in Contract Closure

Procurement audits identify lessons learned in
the procurement process.
A records management system provides the
ability to easily organize, find, and archive
procurement-related documents.
33

Word processing software helps write proposals and

contracts, spreadsheets help evaluate suppliers,
databases help track suppliers, and presentation software
helps present procurement-related information.
E-procurement software does many procurement
functions electronically.
Organizations also use other Internet tools to find
information on suppliers or auction goods and services.
34
Summary
Project procurement management involves
acquiring goods and services for a project from
outside the performing organization.
Processes include:
Planning purchases and acquisitions

Planning contracting
Requesting seller responses
Selecting sellers
Administering contracts
Closing contracts
35

Project Management

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Project Management

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Introduction to Project Management

University of Colombo School of Computing

Worldwide Interest on Projects and

International Status of IT Projects

1.1 What Is a Project?

Advantages of Managing Projects

Projects can be large or small and take a short

Example A Simple Project

Buying a Birthday Gift

Has a unique purpose.

Projects vs. Operations

What Triggers a Project?

The Triple Constraint

It is the project managers duty to balance

The Triple Constraint of Project

1.2 What is Project Management?

*PMI, A Guide to the Project Management Body of Knowledge

Project Management involves:

Project Management Framework

Project Management Knowledge Areas

Nine Project Management

Project Management Tools and

Project Portfolio Management

Improved Project Performance

Why the Improvements?

Project Success Factors*

7. Firm basic requirements

*The Standish Group, Extreme CHAOS (2001).

What the Winners Do*

1.3 Project and Program Managers

The Role of the Project Manager

Fifteen Project Management Job

Evaluate project requirements.

Suggested Skills for Project

Suggested Skills for Project

Suggested Skills for Project

Good Project Management Skills from

Most Significant Characteristics of Effective

Ineffective Project Managers

Encourages new ideas

Importance of Leadership Skills

Top Ten Most

Top Information Technology Skills

Information Technology (IT) Skill

History of Project Management

Project Management Office (PMO)

The Project Management

Project Management Certification

Growth in PMP Certification, 1993-2003

1.4 Ethics in Project Management

1.5 Project Management Software

Project Management Software

Project Management Tools and

Sample Gantt Chart

Sample Network Diagram

Sample WBS for Intranet Project in

Design User Interface

Design Server Setup

Sample PERT Chart

Wed 2/24/99 Wed 2/24/99

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