1. Project Concept Formation Feasibility Studies & Reports Week 2
Project Management
Project Concept Formation
Feasibility Studies & Reports
Week 2

2. What is Project Management?
Project management is:
“the application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements”
(PMI*, Project Management Body of Knowledge (PMBOK Guide), 2000, p. 6)
*The Project Management Institute (PMI) is an international professional society. Their web site is

3. Advantages of Using Formal Project Management
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

4. What Is a Project?
A project is a temporary endeavor undertaken to accomplish a unique purpose
Attributes of projects
unique purpose
temporary
require resources, often from various areas
should have a primary sponsor and/or customer
involve uncertainty

5. Skills of a Project Manager
Management skills
Communication
Leadership
Political
Negotiating
Organisational
Teamwork
Coping
Technical
Motivational
Patient
Flexible
Creative
Persistent

6. Fifteen Project Management Job Functions*
Define scope of project
Identify stakeholders, decision-makers, 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

7. Suggested Skills for a Project Manager
Communication skills: listening, persuading
Organizational skills: planning, goal-setting, analyzing
Team Building skills: empathy, motivation, esprit de corps
Leadership skills: sets example, energetic, vision (big picture), delegates, positive
Coping skills: flexibility, creativity, patience, persistence
Technological skills: experience, project knowledge

8. The Triple Constraint
Every project is constrained in different ways by its
Scope goals: What is the project trying to accomplish?
Time goals: How long should it take to complete?
Cost goals: What should it cost?
It is the project manager’s duty to balance these three often competing goals

9. The Triple Constraint of Project Management

10. 9 Project Management Knowledge Areas
Knowledge areas describe the key competencies that project managers must develop
4 core knowledge areas lead to specific project objectives (scope, time, cost, and quality)
4 facilitating knowledge areas are the means through which the project objectives are achieved (human resources, communication, risk, and procurement management
1 knowledge area (project integration management) affects and is affected by all of the other knowledge areas

11. Figure 1-2. Project Management Framework

12. Project Stakeholders
Stakeholders are the people involved in or affected by project activities
Stakeholders include
the project sponsor and project team
support staff
customers
users
suppliers
opponents to the project

13. Understanding Organizations
Structural frame: Focuses on roles and responsibilities, coordination and control. Organization charts help define this frame.
Human resources frame: Focuses on providing harmony between needs of the organization and needs of people.
Political frame: Assumes organizations are coalitions composed of varied individuals and interest groups. Conflict and power are key issues.
Symbolic frame: Focuses on symbols and meanings related to events. Culture is important.

14. Project Phases and the Project Life Cycle
A project life cycle is a collection of project phases
Project phases vary by project or industry, but some general phases include
concept
development
implementation
support

15. 4 Phases of Project Life Cycle
Concept
high level summary plan/ feasibility reports. If OK then
Development
more accurate WBS and estimates. If OK
Implementation
definitive estimates, acquisition, development & delivery
Close-out
Work complete, Customer sign off, evaluation report

16. Phases of the project life cycle

17. Feasibility
The purpose of a Feasibility Study is to assess the viability of a potential project.
A Feasibility Report, is developed from the Feasibility Study.
It is presented to senior management to determine whether the project has sufficient merit to continue into more detailed phases.
The results of this phase are used to support the development of the Business Case.

18. Feasibility Types Economic Feasibility
Will the cost of implementing this system be within management’s expectations in terms of expenditure and cash flow?
Operational Feasibility
Will the system operate as desired in this organisation?
Technical Feasibility
Is the technology available to build this system and is it appropriate for this organisation?

19. Feasibility types con’t
Schedule Feasibility
Will the time frame fit with the project deadline?
Legal Feasibility
Does the project contradict any legal requirements?
Political feasibility
Will we upset anyone, will we incur ramifications later?

20. Economic feasibility Concerns returns from investments in a project.
determines whether it is worthwhile to invest the money in the project
Some organizations place great emphasis on economic analysis.

21. Economic feasibility study
place actual money values against any purchases or activities needed for project.
place money values against any benefits that will accrue from a new system created by the project.
Such calculations are often described as cost-benefit analysis.

22. Cost-Benefit Analysis
usually includes two steps:
producing the estimates of costs and benefits, and
determining whether the project is worthwhile once these costs are ascertained.

23. Producing costs and benefits
produce a list of what is required to implement the system and a list of the new system's benefits.
Cost-benefit analysis is clouded by both tangible and intangible items.
Tangible items are those to which direct values can be attached
Some tangible costs often associated with computer system development are:
Equipment costs for the new system.
Personnel costs.
Material costs.
Conversion costs.

24. Tangible costs
Tangible items are those to which direct values can be attached
Some tangible costs often associated with computer system development are:
Equipment costs for the new system.
Personnel costs.
Material costs.
Conversion costs
Training costs
Other costs.

25. Intangible costs
Values that cannot be precisely determined and are the result of subjective judgment.
For example, how much is saved by completing a project earlier or providing new information to decision makers?

26. Determining whether a project is worthwhile
The costs and benefits are used to determine whether a project is economically feasible. -There are two ways to do this: the payback method and the present value method.

27. The payback method
Defines the time required to recover the money spent on a project.
Determine the costs
Determine the benefits
The difference between the cost and the benefit for each year will be the saving or net benefit for the year.

28. Table 4.1 A present value evaluation
Year
Cost
Benefit
Present Value of benefit
Discount Factor (10%)
Discount Factor (15%)
$110,000 1
$20,000
$18,180
.909
.866 2
$40,000
$33,040
.826
.756 3
$60,000
$45,060
.751
.658 4
$30,000
$20,490
.683
.571 5
$10,000
$6,210
.621
.497
Total amount $122,980

29. The present value method
Determines how much money it is worthwhile investing now in order to receive a given return in some years' time.
The answer depends on the interest rate used in the evaluation.
The table above shows samples using both 10% and 15%
To some extent the present value method works backwards.
First, the project benefits are estimated for each year and then the present-value of these savings.
If the project cost exceeds the present value, then it is not worthwhile.
The formula is:
Present value x (1 + r/ 100)n = Benefit at Year n
We call 1/1(1 + r/ 100)n the discount factor in Table 4. 1.

30. Present Value The formula is:
Present value x (1 + r/ 100)n = Benefit at Year n
We call 1/(1 + r/ 100)n the discount factor in Table 4. 1.
Example, the present value of the $ benefit at Year 2 is computed as:
Present value = 40,000/(1 + 10/100)2
= 33,057
Note that the sum of the present values in Table 4.1 is $122, 980. As this exceeds $ , the project is worthwhile.

31. Return on Investment (ROI)
The result of subtracting the project costs from the benefits and then dividing by the costs.
Example: If you invest $100 today and next year it is worth $ your ROI is
($110 – 100)/100 = 0.10 (10%)

32. TEXT CASE D: Construction Company‑Defining the Problems
Read the handout: ’Concept and feasibility’
This text looks at the feasibility of an IT project for a construction company
5 broad concepts or solutions are considered for project feasibility
This case is similar to many IT project problems
After much work solution five is considered the appropriate alternative

33. Summary Project Life Cycle Feasibility Feasibility types
Cost Benefit Analysis
Payback method
Present Value method

34. Thanks for listening