4-INTEGRATION MANAGEMENT - v3 No Question PDF

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Integration Management
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Agenda
• Overview of Integration Management
• Integration Management Processes
• Develop Project Charter Process
• Project Selection Methods
• Economic Models for Project Selection
• Develop Project Management Plan Process
• Direct and Manage Project Work Process
Agenda
• Monitor and Control Project Work Process

• Perform Integrated Change Control Process
• Change Control Board (CCB)
• Close Project or Phase Process
Overview of Integration Management
• Putting all pieces of a project together into a cohesive whole.
• Reason for Project Manager’s existence in an organization.
• Team members perform the work
• Sponsor protects the project
• Project Manager integrates all pieces!
Doing things faster, cheaper and fewer resources while meeting
objectives.
Integration Management Processes
• Develop Project Charter (Initiating)
• Develop Project Management Plan (Planning)
• Direct and Manage Project Work (Executing)
• Monitor and Control Project Work (Monitoring & Controlling)
• Perform Integrated Change Control (Monitoring & Controlling)
• Close Project or Phase (Closing)
Develop Project Charter
• First part of integration management.
• Authorizes the existence of a project and provides authority to
Project Manager.
• Output of the process: Project Charter
Project Charter Example
Project Title and Description: Golden Gate Bridge What is the
project?
• Population of San Francisco is increasing and transportation need
between two sides of the city increases in proportion. Sea
transportation cannot suffice for the need over the recent years.
This project will ease the transportation of vehicles between two
sides of the city.
Project Manager Assigned and Authority Level: John Winer
Who will lead the project and what is his authority?
• John Winer will be the project manager of this project and he has
the authority to determine budget, select team members, and
approve/reject changes to project.
Business Case: Why is the project being done?
• The project is being done in order to solve the transportation
problem of San Francisco between two sides. After the project
completion, 80% of the vehicle transportation is expected to be
done over the bridge which will solve the transportation
problem.

Resources Pre-assigned: How many or which resources will be
provided?
• Architects of the project are Gilbert Roberts and William Brown.
Head Construction Engineer is Henry Chor. Other resources will
be determined by the Project Manager.
Stakeholders: Who will affect or be affected by the project?
• Government
• Residents who are residing close to bridge area
• Project Team
• …
Stakeholder Requirements: Requirements related to both project and
product scope.
• It will have 3+3 lanes
• Must resist against 8.5 Richter earth quake
• Must carry 2.500.000 kgs.
• …
Product Description/Deliverables:
What are the specific product deliverables and what will be the end
result of the project?
Golden Gate Bridge is the end result of the project.
• Height: 227 m
• Width: 27 m
• Two legs of the bridge must be completed in first year.
• …
Measurable Project Objectives:
How does the project tie into the organization’s strategic goals?
Objectives need to be measurable.
• Opening a new transportation channel between two sides of city.
• Ending the project in 3 years
• Completing the project with 200m USD budget
Project Approval Requirements:
What items need to be approved, and who will sign-off the project?
• Minister of Transportation will approve the WBS of the project.
• Final project approval will be determined by the committee
constituted for this project in Ministry of Transportation.
• Final project will be approved by Minister of Transportation on
behalf of the Government.
High-Level Project Risks:
Potential threats and opportunities for the project.
• Bridge will connect the two continents which will increase the
geopolitical importance of Istanbul (Opportunity-Positive Risk)
• Ease of vehicle transportation may cause to higher usage of
vehicles which can increase the air pollution (Threat-Negative
Risk)
Project Sponsor Authorizing This Project:
• Franklin Roosevelt, President of USA
• Angelo Joseph Rossi, Mayor of San Francisco
• Joseph Strauss, Head of Golden Gate Project Committee
Benefits of Project Charter
• Without a project charter, Project Manager cannot be successful.
• Project charter may be prepared by Project Manager but must be
published by the sponsor.
• Project charter is broad enough therefore there is no need to
change during execution.
Benefits of Project Charter
• Recognizes (authorizes) the project
• Gives project manager the authority to spend money and commit
resources
• High-level requirements of the project are defined
• Links project to ongoing work of the organization
Project Selection
• Project Managers must know why their project was selected and
how it fits into the organization’s strategic plan.
• There are 2 common approaches for project selection
1. Benefit Measurement Methods (Comparative Approach)
2. Constrained Optimization Methods (Mathematical Approach)
Project Selection
1. Benefit Measurement Methods
Murder Board (a panel of people who try to shoot down a new
project)
Peer review
Scoring Models
Economic Models
Project Selection
2. Constrained Optimization Methods
Linear Programming
Integer Programming
Dynamic Programming
Multi-objective Programming

Economic Models for Project Selection
• Present Value
• Net Present Value
• Internal Rate of Return
• Payback Period
• Benefit-cost ratio
Present Value
• A dollar today worth more than a dollar tomorrow.
• Calculates the today value of future cash flows
Present Value
PV =
• PV = Present Value
• FV= Future Value
• r= interest rate
• n= number of periods
Present Value-Example
Lets assume that your project has three instalments.

1st Instalment: $100,000 (in the beginning)
2nd Instalment: $100,000 (at the end of 1st year)
3rd Instalment: $100,000 (at the end of 2nd year)
Interest Rate (r) = 10%
Present Value-Example
Present Value of Cash Flows:
$ , $
1st Instalment’s PV = = = $100,000
.
$ ,
2nd Instalment’s PV = = = $90,909
.
$ ,
3rd Instalment’s PV = = = $82,645
.
Total Cashflows = $300,000

NPV of Cashflows= $273,554
Net Present Value
• Present value of total benefits (revenue or income) minus the
costs over many time periods.
• If NPV > 0 investment in the project is a good choice.
• Projects with higher NPVs should be selected.

Net Present Value-Example
Lets assume that in previous example you will have following costs
in your project.
1st Cost: $90,000 (in the beginning)
2nd Cost: $120,000 (by the end of 1st year)
3rd Cost: $40,000 (by the end of 2nd year)
Interest Rate (r) = 10%
Present Value of Costs:
$ , $
1st Cost’s PV = = = $90,000
.
$ ,
2nd Cost’s PV = = = $109,091
.
$ ,
3rd Cost’s PV = = = $33,058
.
Total Cost = $250,000

NPV of Total Cost= $232,149
Net Present Value Calculation
Instal Nr of Instalment PV of Cost Nr of Cost PV of NPV
ment Periods Amount Instalment Periods Amount Cost
Amount
1 0 $100,000 $100,000 1 0 $90,000 $90,000 $10,000
2 1 $100,000 $90,909 2 1 $120,000 $109,091 -$18,182
3 2 $100,000 $82,645 3 2 $40,000 $33,058 $49,587
Total PV of $273,554 Total PV $232,149 $41,405
Instalments of Costs
NPV > 0 This Project can be selected.

Internal Rate of Return (IRR)
• Explains how much percent a project will turn back. (e.g. 12%
of the investment will return in 2 years)
• Calculation is complex.
• Know only that projects with higher IRR’s should be selected.
Payback Period
• Number of time periods it takes to recover investment of a
project.
• Projects with shorter payback period should be selected.
• E.g. if $100,000 invested, and payback period is 6 months, this
means, product or outcome of the project will bring $100,000 in
6 months. Then it will start to make profit.
Benefit Cost Ratio
• Costing projects to determine what work should be done.
• This ratio compares the benefits to the costs of the project.
(Benefit can be considered as revenue)
Benefit Cost Ratio > 1 Benefits > Costs
Benefit Cost Ratio = 1 Benefits = Costs
Benefit Cost Ratio < 1 Benefits < Costs
• Projects with higher Benefit Cost Ratio should be selected.
• If Benefit Cost Ratio < 1, project should not be executed.
Economic Value Added (EVA)
• Concerned with whether the project returns to the company
more than its costs.
• EVA is the amount of added value the project produces for the
company’s shareholders above the cost of project.
Opportunity Cost
• Opportunity given up by selecting one project over another.
• E.g. Project A’s NPV=$200,000, Project B’s NPV=$150,000
• If Project A is selected, then opportunity cost of selecting Project
A is $150,000

Sunk Costs
• Sunk costs are expended costs.
• Sunk costs are not considered when deciding whether to
continue a troubled project.

Law of Diminishing Returns
• After a certain point, adding more input will not produce
proportional increase in productivity.
• This might be due to extra coordination for instance.
Law of Diminishing Returns
• E.g. home constructing project
Number of Constructed Average 60
Construction Area per Constructed
Area Constructed Per Day

50
Workers day (m2) Area per
day (m2) 40
4 20 5.00 30
8 36 4.50 20
12 44 10
3.67
16 48 0
3.00
4 8 12 16 20
20 50 2.50 Number of Workers

Working Capital
• Working Capital = Current assets – current liabilities

• Amount of money available to invest for a company.
Depreciation
• Large assets (e.g. equipment, vehicles) purchased by a company
lose value over time.
• For instance you bought a brand new car now. Will it be in same
value after 5 years?
• Value of the car will decrease during time, and this is called as
depreciation.
Depreciation
1- Straight Line Depreciation
• Same amount of depreciation is taken each year.
2- Accelerated Depreciation
• Depreciation is higher during the first years or periods in
accelerated depreciation.
Depreciation
E.g. a bulldozer
$350,000.00
depreciation
$300,000.00
$250,000.00
Straigt Line Depreciation
$200,000.00 Accelerated Depreciation
$150,000.00
$100,000.00
$50,000.00
$0.00
1 2 3 4 5
Project Statement of Work (SOW)
• Created by customer/sponsor and describes their needs, product

scope, and how the project fits into their strategic plan.
Charters with Work Under Contract
• All projects should have charters.
• Buyer and seller should have independent charters for example.
Develop Project Management Plan
Management Plans
• Defines strategy for managing the project and the processes in
each knowledge area
• A management plan is unique to each project to address its
particular needs. (e.g. cost, risk, or communication of each project
is unique)
• Creation of management plans is an integral part of a project
manager’s job.

Management Plans
• A management plan covers how you will define, plan, manage
and control the project.
• Management plans look forward in time and try to address
management concerns.
• There are management plans for most knowledge areas (scope,
schedule, cost, quality, human resource, communications, risk,
procurement and stakeholder)
Project Management Plan
• Integration function: Integrates all knowledge area management
plans into a cohesive whole.
• Series of plans (because of iteration) and baselines.
Includes:
• Project management processes that will be used on the project.
• Management plans for knowledge areas
• Scope, schedule and cost baselines
• Requirements management plan
• Change management plan
Includes:
• Configuration management plan
• Process improvement plan
Baseline
Performance
Scope Schedule Cost
Measurement
Baseline Baseline Baseline
Baseline
• Scope Baseline: Project scope statement, WBS and WBS

dictionary
• Schedule Baseline: Agreed-upon schedule
• Cost Baseline: time-phased cost budget
Baseline
• Project manager must look into deviations from baseline when
work is being done.
• Baselines can be changed but it should not be so easy.
• Changes to baselines can be formally requested during executing
or monitoring and controlling process groups.
Baseline
• Changes are evaluated and approved in the Perform Integrated
Change Control process.
• Deviations from baseline are often due to incomplete risk
identification and risk management.
Requirements Management Plan
• Part of scope management
• Describes how requirements will be identified, managed and
controlled.
Change Management Plan
• Describes how changes will be managed and controlled.

• Negative effects of the changes should be limited.
• Changes should not be undertaken lightly.

Change Management Plan
Includes:
• Change control procedures (how and who)
• Approval levels for authorizing changes
• Creation of a Change Control Board (CCB) to approve
changes
• A plan of how changes will be managed and controlled
• Who should attend meetings regarding changes
• Organizational tools to use to track and control
changes

Change Control System
• Includes standardized forms, processes, procedures, and software

to track and control changes.
Configuration Management Plan
• Defines how you will manage changes to deliverables and the
resulting documentation, including which organizational tools
you will use.
Scope Management Plan v2.2
Schedule Management Plan v1.5
Project Quality Management Plan v1.1

Management
Plan v1.3 … (Other Management plans)
• In other words Versioning of changes

Configuration Management System
• May include Change Control System
• Part of Project Management Information System (PMIS)
• Contains organization’s standardized configuration management
tools, processes and procedures.
• In other words Tool for versioning
Process Improvement Plan
• Project manager identifies existing processes to use on the project
and may create some of his or her own.
• E.g. 100 PC will be installed in a project.
• After first 3 installations, project manager should create a process
to complete remaining installations faster (e.g. document of
installation steps, development of a script)
Summary of Steps
Signs
Sponsor/ Project Sponsor
charter
Customer Statement of
asks “What Work
do I want?”
Company
Sponsor/ Culture and Project Project
Customer existing Manager Manager
systems
Identifies Develop Project
Processes,
stakeholders and Management
Procedures,
documents Plan
historical
project charter
info
Summary of Steps
• Needs to be approved, realistic and formal
• Everybody in the project needs to believe it can be done according
to plan
• Designed to be as complete as possible before executing process
group begins.
Project Documents
• Any documents used to manage a project.
• They might be updated during project.
• Not part of a project management plan
• E.g. project charter, statement of work, activity list,
quality metrics… etc.
Project Management Plan Approval
• Project Management Plan must receive formal approval by
Management
Sponsor
Project Team
Other stakeholders
• Formal approval=sign off (signature)
Kick-Off Meeting
• Meeting of all parties just before Project execution starts
Customer
Seller
Project team
Sponsor
…
• Purpose is to make sure everyone is
on the same page.
Direct and Manage Project Work

• Integration part of executing process group.
• Involves managing people, doing the work and implementing
approved changes.
• Involves requesting changes and completing the work
accompanying approved change requests.
Direct and Manage Project Work New Change Requests
Deliverables
Project Planning Work Performance

Information
Direct and
Approved Changes Manage Implemented, previously
Corrective Actions Project Work approved changes,
Preventive Actions corrective actions,
Defect Repair preventive actions, and
defect repair
Updates to project
management plan and
project documents
• Corrective Action: Activity that realigns the performance
of the project work with the project management plan
– E.g. Project is 10% behind the Schedule baseline Extra resource
is assigned to Project.
• Preventive Action: Activity that ensures the future
performance of the project work is aligned with the project
management plan
– E.g. One of the senior Project team members might resign in 2
months Knowledge transfer and documentation is planned
• Defect Repair: Activity to modify a nonconforming
product or product component. (Rework).
– E.g. Developed smartphone camera does not activate flash
automatically at night fix the defect
• Approved change requests can be
Corrective Action
Preventive Action
Defect Repair
Monitor and Control Project Work
• Control function done from initiating till closing.
• Results of the process are Change Requests and updates to project
management plan and project documents.
• Change requests are evaluated in Perform Integrated Change
Control process.
Monitor and Control Project Work
• Involves monitoring performance measures
Work Authorization System:
• Authorizes the start of work packages or activities.
Change Requests:
• There will always be changes in projects.
Perform Integrated Change Control
• The changes are accepted/rejected/handled in this process
• A change in one of the constraints should be evaluated for
impacts on all of the other constraints.
• In order to evaluate the impacts of a change, it is necessary to
have
Realistic Project Management Plan
A complete product and project scope
• Generally, project manager should prevent the root cause of the
need for changes.
• It is expected that companies have established procedures for
managing and controlling changes
• If there are lots of changes in a project, it will be impossible to
coordinate the work.
Project Manager should make sure to:
• Work to obtain final requirements asap.
• Spend enough time in risk management to identify the risks
• Come up with time and cost reserves
Project Manager should make sure to:
• Have a process in place to control changes.
• Follow the process to control changes.
• Have a process and templates in place for creating change
requests.
• Have clear roles and responsibilities for approving changes
• Re-evaluate the business case if the number of changes become
excessive
• Consider terminating a project that has excessive changes and
starting a new project with a more complete set of requirements
• Allow only approved changes to be added to the project
baselines.
Change Control Board (CCB):
• Many projects have CCB.
• The board is responsible for reviewing and analyzing change
requests.
• Then approves or rejects changes.
• May include:
Project Manager, Experts, Customer, Sponsor… etc.
Process for Making Changes
1- Prevent the root cause of changes
2- Identify change
3- Look at the impact of change
4- Create a change request
5- Perform integrated change control
a) Assess the change
b) Look for options
c) Change is approved or rejected
d) Update the status of the change in the change
control system
6- Adjust the project management plan, project
documents and baselines.
7- Manage stakeholders' expectations by
communicating the change to stakeholders affected
by the change.
8- Manage the project to the revised project
management plan and project documents.
High Level Process for Making Changes
1- Evaluate the impact
2- Create options
3- Get the change request approved internally
4- Get customer buy-in
Close Project or Phase
• Focuses on closing out all knowledge areas.
• A project must be closed even if it stops or it is terminated.
• Getting final approval of the overall project from customer.

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• Monitor and Control Project Work Process

Develop Project Charter

Develop Project Charter

Lets assume that your project has three instalments.

Total Cashflows = $300,000

Develop Project Charter

Total Cost = $250,000

NPV > 0 This Project can be selected.

Develop Project Charter

Develop Project Charter

Area Constructed Per Day

Develop Project Charter

• Working Capital = Current assets – current liabilities

• Created by customer/sponsor and describes their needs, product

Develop Project Management Plan

• Scope Baseline: Project scope statement, WBS and WBS

• Describes how changes will be managed and controlled.

Develop Project Management Plan

Develop Project Management Plan

• Includes standardized forms, processes, procedures, and software

Schedule Management Plan v1.5

Project Quality Management Plan v1.1

• In other words Versioning of changes

Direct and Manage Project Work

Project Planning Work Performance

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