1. Project Management Project Initiation & Selecting
Summer 2005

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

3. Project Management Processes & IT PM Phases

4. 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

5. Schwalbe: Why Firms Invest in IT

6. 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

7. IT Planning Process

8. 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

9. 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

10. 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

11. 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

12. Schwalbe: Net Present Value Example
Excel file

13. 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

14. Schwalbe: Sample Weighted Scoring Model for Project Selection
Excel file

15. 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

16. 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

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

18. Schwalbe: Sample Project Charter

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

20. 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

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

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

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

24. 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

25. 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

26. Project Planning Framework
Summer 2005

27. 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

28. 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

29. 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