Project Management Project Initiation & Selecting Summer 2005

Session Objectives Project initiation Selecting Projects Project Charter Washington Mercy Hospital case study Summer 2005

Project Management Processes & IT PM Phases

Project Initiation: Strategic Planning First step in initiating projects: look at the big picture, organization’s strategic plan Strategic planning involves determining long-term business objectives IT projects should (must) support strategic & financial business objectives

Schwalbe: Why Firms Invest in IT

Identifying Potential Projects Many organizations follow a planning process for selecting IT projects First develop an IT strategic plan based on organization’s overall strategic plan Then perform business area analysis Then define potential projects Then select IT projects & assign resources

IT Planning Process

Selecting Projects Usually more projects than time & resources available to implement them Important to follow logical process for selecting IT projects to work on Methods include focusing on broad needs, categorizing projects, financial methods & weighted scoring models Summer 2005

Focus on Broad Organizational Needs 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 project There are funds available There’s a strong will to make project succeed Summer 2005

Financial Analysis of Projects Financial considerations are often an important consideration in selecting projects Three primary methods for determining the projected financial value of projects: Net present value (NPV) analysis Return on investment (ROI) Payback analysis Summer 2005

Net Present Value Analysis Net present value (NPV) analysis: method of calculating expected net monetary gain or loss from project by discounting all expected future cash inflows & outflows to present point in time Projects with positive NPV should be considered if financial value is key criterion The higher the NPV, the better

Schwalbe: Net Present Value Example Excel file

Weighted Scoring Model Weighted scoring model: provides systematic process for selecting projects based on multiple criteria First identify criteria important to project selection process Then assign weights (percentages) to each criterion so they add up to 100% Then assign scores to each criterion for each project Multiply the scores by weights and get total weighted scores The higher the weighted score, the better

Schwalbe: Sample Weighted Scoring Model for Project Selection Excel file

Selecting Projects (cont.) Buss’ Grid Approach project selection team grids with criteria, high-medium-low criteria generally financial, technical, enhancing core competencies, organizational fit against cost review proposals, then quick collective judgment Poor Man’s Hierarchy grid with criteria compare each project against each other project assign 1 or 0, sum results Frame

Project Charters After deciding what project to work on, it’s important to formalize projects Project Charter is document formally recognizing existence of project & provides direction on project’s objectives & management Key project stakeholders should sign project charter to acknowledge agreement on need & intent of project Summer 2005

Project Charters Unfortunately authors disagree on the details: Schwalbe Marchewka Verzuh Summer 2005

Schwalbe: Sample Project Charter

Schwalbe: Sample Project Charter (cont.) Roles and Responsibilities:

Purpose of Project Charter (Marchewka) more comprehensive approach Document the project MOV Define project infrastructure Summarize details of project plan Define roles and responsibilities Show explicit commitment to project Set out project control mechanisms Summer 2005

What Should be in a Project Charter? Project Identification Project Stakeholders Project Description Measurable Organizational Value (MOV) Summer 2005

What Should be in Project Charter? – cont’d Project Scope Project Schedule Project Budget Quality Issues Resources Summer 2005

What Should be in a Project Charter? – cont’d Assumptions and Risks Project Administration Acceptance and Approval References Terminology Summer 2005

Project Rules (Verzuh #4) Project success demands goals agreed by all stakeholders control of scope management support Project charter brief, high level document formally establishing project understood & signed by all key stakeholders Summer 2005

Project Rules (cont.) Statement of Work (SOW) NOT usual usage of term per Verzuh establishes rules of game goals, constraints, success criteria negotiate, formally agree ahead of game? why not part of planning phase? Summer 2005

Project Planning Framework Summer 2005

Scope Planning and the Scope Statement A scope statement is a document used to develop and confirm a common understanding of the project scope. It should include a project justification a brief description of the project’s products a summary of all project deliverables a statement of what determines project success Summer 2005

Establish Initiate Charter establishes project Next must compete with other projects for scarce resources Prioritize – go or no go? Go ahead Begin Analysis Phase needs requirements detailed SOW Summer 2005

Washington Mercy Hospital Case Study Hospital contract with DCS State of art patient info system <3 sec response Add ambulatory surgery center Goes to arbitration Management & project issues Technical issues Blame – responsibility? Summer 2005