1. Project Budgeting Lessons Presentation to IS 230 Fall 2002 Diane Ghorbani

2. Project Budgeting Lessons Outline  When is a budget needed?  What is included?  How do you get it approved?  What do you do after it is approved  Things to watch for  Post Mortem on Examples

3. Project Budgeting Lessons When is a budget needed?  New Project Idea Online Banking project Banking Center Automation Consumer Lending project  Extension/Enhancement new release on engineering product  Justification of current activities lease versus purchase decision on computer equipment  Change required by other activities HR/Payroll system decisions – vendor support

4. Project Budgeting Lessons What is included?  Starting point (Project Mgt Phase I) Project Sponsor – who is it and what are their motives Get team of people who will be key involved at this point! Determine what areas need to be considered  In-house developed vs Vendor supplied services  Number of locations impacted  Get the basic project definition if you can

5. Project Budgeting Lessons What is included?  RFP – request for proposal Have team members work on it Not bad to let a vendor review it Insist upon consistency in format for response and pricing information Know how you will evaluate before you send it out Have top 2 or 3 come on site for presentation Incorporate RFP response into contract, helps ensure performance

6. RFP – how much is enough? Introduction/overviewSection 1.0 TIFS backgroundSection 2.0 General requirementsSection 3.0 Response format requirementsSection 4.0 Proposed scheduleSection 5.0 Response content/formatSection 6.0 Current environmentSection 7.0 Organizational detailSection 8.0 Technology overviewSection 9.0 Management overviewSection 10.0 Specific areasSection 11.0 Network managementSection 12.0 System administrationSection 13.0 Other support servicesSection 14.0 Selection criteriaSection 15.0 General corporate informationSection 16.0 Network managementSection 17.0 MonitoringSection 18.0 NotificationSection 19.0 ReportingSection 20.0 InstallationSection 21.0 System administrationSection 22.0 Other support servicesSection 23.0 Help desk servicesSection 24.0 General supportSection 25.0 Value added servicesSection 26.0 BCA deploymentSection 27.0 PricingSection 28.0 GlossarySection 29.0 Appendices Corporate level details Systems administration table Location tables Network Diagrams

7. Project Budgeting Lessons What is included?  The Business Case Document  The Cost components  What is in vs out?  GAAP or Cash?  Revenue Assumptions  Understand how it will tracked by accounting

8. Project Budgeting Lessons What is included?  The Model – Know what can change and build it into model Build in levels of summarization Document assumptions clearly  Review Be sure the team is in agreement Have an accountant review it If vendor involved, be sure they review and agree

9. Project Budgeting Lessons How do you get it approved?  Presentation at various levels Understand the approval levels in org  Approval at sponsor level (usually a dept then absorbs costs)  Approval of an operational committee or steering committee (usually costs absorbs across various depts)  Board level approval If you are presenting, at any level, do some work ahead of time with parties to be sure they are not caught off-guard

10. Project Budgeting Lessons How do you get it approved?  Be sure to present assumptions made in the budget If risks are high enough, present scenarios – most likely case and worst case  In contentious situations, Sponsor may want to hire a consultant to review numbers, present and give recommendations

11. Project Budgeting Lessons What do you do after it is approved?  Determine who will be responsible for reporting on budget versus actual – someone will ask  If you are responsible find out what reports are available for you to monitor  Watch actual activities versus your assumptions – many problems with budgets resolved here  Make sure sponsor knows what the costs are so they can defend

12. Project Budgeting Lessons Misc things to watch for.  Be sure to consider what cost of outsourcing at all levels of the project is  Watch out for scope changes on the project  Manage the vendors you pick carefully during the project and long-term – especially with problems in IT industry, they may go out of business  KISS – fancy budgets are works of art but usually get little attention, most people want to see logical flow to the answer

13. Project Budgeting Lessons Project Post Mortem  Online Banking project  Banking Center Automation  Consumer Lending project  new release on engineering product  lease versus purchase decision on computer equipment  HR/Payroll system decisions