Faculty of
Computer
Science
Software Project
Management
(SWE 321)
Prof. Abdel Nasser Zaied 2023 / 2024
KEY AREAS OF
PROJECT
MANAGEMENT
1. Scope Management
2. Time Management
3. Cost Management
4. Quality Management
5. Communications Management
6. Risk Management
7. Procurement Management
8. Human Resource Management
9. Integration Management
Project Cost Management
Cost Management are related
activities achieved by
collecting, analyzing,
evaluating, and reporting cost
information used for budgeting,
estimating, forecasting, and
monitoring costs.
Project Cost Management
Cost management is the
process of planning, estimating,
budgeting, and controlling
project costs.
Project Cost Management
This process is required to
ensure that the project is
completed within the approved
budget and includes:
Resources, people, equipment,
materials and Budget.
Money
and
Cost
Money
Money
• Money is the medium of exchange. With the
help of money any exchange of goods and
services can take place.
Money
• Money is the medium of exchange. With the
help of money any exchange of goods and
services can take place.
• Value of money is inverse of price, when price
level increases, the value of money decrease
and vice versa.
• It implies how much of goods and services
can be obtained in exchange of a unit of
money.
Money
• Money is used simply to purchase goods and
services for consumption.
X
• Money can be classified into two groups:
Cash Money Credit Money Virtual Money
CAPITAL
• Capital is used to generate
wealth through investment.
• Capital is something owned
which provides ongoing
services.
• Capital is an input in the
production process, it refers
to financial resources
available for use.
Cost
COST
• The term “Cost” is used in
many senses and hence has
many concepts.
• All these need to be properly
and clearly understood.
1- Real Costs 2- Money Cost 3- Opportunity Cost
4- Selling Costs 5- Production Costs 6- Sunk costs
INFLATION
INFLATION
• Inflation is a situation
when too much money
against too few goods.
• It is an imbalance
between money supply
and Gross Domestic
Product.
• It arises when price level
of an economy goes on
rising continuously.
INFLATION • When demand for a
commodity in the
market exceeds its
supply, the excess
demand will push up the
price (‘demand-pull
inflation’).
• When factor prices rise,
costs of production rise
(‘cost-push inflation’)
• An economy may also
suffer from inflation
without any apparent
rise in prices.
Project Cost Management
The project cost management processes are:
Step 1: Resource planning
Step 2: Cost estimating
Step 3: Cost budgeting
Step 4: Cost control
Project Cost Management
Step 1: Resource planning
In the initial phase of a project
the required resources to
complete the project activities
need to be defined.
• Work Breakdown Structures (WBS) and historical
information of comparable projects can be used to define
which physical resources are needed.
• Once the resource types and quantities are known the
associated costs can be determined.
Project Cost Management
Step 2: Cost estimating
Several cost estimating
methods can be applied to
predict how much it will
cost to perform the project
activities.
The choice for the estimation method depends on
the level of information available.
Project Cost Management
Step 2: Cost estimating
• Analogous estimating: estimates are based on
past projects. It uses actual costs from a similar
finished project to estimate the costs of the new
project. The accuracy of these estimates will depend
on the similarities between the new project and the
old project.
Project Cost Management
Step 2: Cost estimating
• Parametric modeling: estimates are based on
mathematical formulas, typically following a
Regression Analysis or Learning Curve model. The
accuracy of these estimates depends on the
assumptions made.
Project Cost Management
Step 2: Cost estimating
• Bottom-up estimating: estimates are based on
individual work item cost and duration estimates.
This involves estimating the smallest activities and
then adding them up to create an estimate for the
whole project.
Project Cost Management
Step 3: Cost budgeting
The cost estimate forms
together with a project
schedule the input for cost
budgeting. The budget gives an
overview of the periodic and
total costs of the project.
The cost estimates define the cost of each work package or
activity, whereas the budget allocates the costs over the
time when the cost will be incurred.
Project Cost Management
Step 3: Cost budgeting
• Cost aggregation requires you to aggregate or
combine costs from an activity level to a work
package level. The final sum of the cost estimates is
applied to the cost baseline.
Project Cost Management
Step 3: Cost budgeting
• Reserve analysis requires you to create a buffer
or reserve to protect against cost overruns. The
degree of protection should be equivalent to the
risk foreseen in the project. The buffer is part of the
project budget, but not included in the project
baseline.
Project Cost Management
Step 3: Cost budgeting
• Historical data requires you to think about
estimates from closed projects to determine the
budget of the new project. This is very similar to
analogous estimation described earlier.
Project Cost Management
Step 3: Cost budgeting
• Funding limit reconciliation requires you to
adhere to the constraints imposed by the funding
limit. The funding limit is based on the limited
amount of cash dedicated to your project. To avoid
large variations in the expenditure of project funds,
you may need to revise the project schedule or the
use of project resources.
Project Cost Management
Step 4: Cost control
Cost control is concerned with
measuring variances from the
cost baseline and taking
effective corrective action to
achieve minimum costs.
• All changes to the cost baseline need to be recorded and
the expected final total costs are continuously
forecasted.
• Based on this analysis, corrective action might be
required to avoid cost overruns.
Project Cost Management
Step 4: Cost control
• Earned value management: uses a set of
formulas to help measure the progress of a project
against the plan.
Project Cost Management
Step 4: Cost control
• Forecasting: uses the current financial situation to
project future costs. The forecast is based on
budgeted cost, total estimated cost, cost
commitments, cost to date, and any over or under
budgeted costs.
Project Cost Management
Step 4: Cost control
• To-complete performance index (TCPI)
represents the level of project performance that
future work needs to be implemented to meet the
budget.
Project Cost Management
Step 4: Cost control
• Variance analysis: involves analyzing the
difference or variance between the budgeted costs
and the actual costs to indicate whether the project
is on budget.
Project Cost Management
Step 4: Cost control
• Performance reviews: used to check the health
of a project. Includes an analysis of project costs,
schedule, scope, quality, and team morale. By
learning how to estimate costs, determine budgets,
and control costs, you can be a better project
manager and leader. Effective cost management will
help you get projects done on time and under
budget, the golden ticket for any successful project
manager.
Project Cost Management
Project costs involve:
1.Direct costs
2.Indirect costs
3. Tangible costs
4. Intangible costs
Project Cost
Management
Project costs involve:
1. Direct costs – Direct costs are
those directly involved with,
and necessary in order to
complete the project. It include
the cost of:
• professionals working on the
project – i.e. company
employees or outsourced
contractors and freelancers
Project Cost
Management
Project costs involve:
1. Direct costs – Direct costs are
those directly involved with,
and necessary in order to
complete the project. It include
the cost of:
• equipment – i.e. the tools and
machines the employees,
contractors, or freelancers use
to finish the project
Project Cost
Management
Project costs involve:
1. Direct costs – Direct costs are
those directly involved with,
and necessary in order to
complete the project. It include
the cost of:
• materials – i.e. physical
materials (that are not tools or
machines) needed to finish the
project
Project Cost
Management
Project costs involve:
1. Direct costs – Direct costs are
those directly involved with,
and necessary in order to
complete the project. It include
the cost of:
• project management – i.e. all
tasks meant to facilitate project
completion before a given time,
and according to specific
requirements
Project Cost
Management
Project costs involve:
1. Direct costs – Direct costs are
those directly involved with,
and necessary in order to
complete the project. It include
the cost of:
• engineering tasks (if needed) –
i.e. all research, design work,
and installation of equipment
made in order to finish the
project
Project Cost
Management
Project costs involve:
2. Indirect costs – Indirect costs
are costs which do not directly
lead to project completion but
are still vital for the company or
individual working on said
project. It include the cost of:
• operating overhead expenses,
i.e. office rent, utilities,
insurance, general office
equipment, and materials
Project Cost
Management
Project costs involve:
2. Indirect costs – Indirect costs
are costs which do not directly
lead to project completion but
are still vital for the company or
individual working on said
project. It include the cost of:
• target annual salary, i.e. the clean
profit the company or individual
wants to make, in addition to the
money needed to cover overhead
and other expenses.
Project Cost
Management
Project costs involve:
3. Tangible costs or benefits are
those costs or benefits that an
organization can easily
measure in currency.
Project Cost
Management
Project costs involve:
4. Intangible costs or benefits are
costs or benefits that are
difficult to measure in
monetary terms.
Feasibility Study
A feasibility study, defined as:
• The study of the feasibility of creating benefit
from a given project.
Types Of Feasibility Study
Types Of Feasibility Study
There are six 1.Market Feasibility
types of 2.Technical Feasibility
feasibility 3.Financial & Economic
study
Feasibility
(areas that a
feasibility 4.Legal Feasibility
study 5.Operational Feasibility
examines) 6.Scheduling Feasibility
Types Of Feasibility Study
There are six 1.Market Feasibility
types of 2.Technical Feasibility
feasibility 3.Financial & Economic
study
Feasibility
(areas that a
feasibility 4.Legal Feasibility
study 5.Operational Feasibility
examines) 6.Scheduling Feasibility
Types Of Feasibility Study
1- Market Feasibility Study
Types Of Feasibility Study
1- Market Feasibility Study
• This assessment involves current and
potential demand of the product or idea in
the target market.
• Also, it contains information about the buyers
as well as the sales forecast over the first
coming (5 to 10) years
Types Of Feasibility Study
1- Market Feasibility Study
It is the process of learning the following:
• Who are my potential customers?
• What are their buying and shopping habits?
• How many of them are there?
• How much will they pay?
• Who are my competitors?
• What have their challenges and successes
been?
Types Of Feasibility Study
2- Technical Feasibility Study
Types Of Feasibility Study
2- Technical Feasibility Study
• This assessment focuses on the technical resources
available to the organization:
- Equipment. - Materials.
- Human Resources. - Energy.
• It helps organizations determine whether the
technical resources meet capacity and whether the
technical team can convert the ideas into working
systems.
Types Of Feasibility Study
3- Financial & Economic Feasibility
Types Of Feasibility Study
3- Financial & Economic Feasibility
• Financial analysis compares benefits and costs to the
enterprise, it uses market prices to check the balance of
investment and the sustainability of a project
• Economic analysis compares the benefits and costs to the
whole economy, it uses economic prices that are
converted from the market price by excluding tax, profit,
subsidy, etc.
Types Of Feasibility Study
3- Financial & Economic Feasibility
KEY INDICATORS
There are financial and economic indicators that
can be developed and derived, based on the
needs of the project.
▪ Present Value (PV)
▪ Future value (FV)
▪ Net present value (NPV)
▪ The internal rate of return (IRR)
▪ Return on investment (ROI)
Present Value (PV)
Is the value of the money now.
Money now is more valuable than money later
Present Value (PV)
PV = FV / (1+r)n
• PV is Present Value
• FV is Future Value
• r is the interest rate
• n is the number of years
Present Value (PV) Example:
• $500 next year, what is the Present Value? If interest
rate is 10%, (that means that money grows by 10%
every year).
• To take a future payment backwards one year divide
by 1.10
• So $500 next year is $500 ÷ (1+.10)1 = $454.55 now
• The Present Value for $500 next year is $454.55
Present Value (PV) Example:
$900 after 3 years, what is the Present Value?
To take a future payment backwards three years divide
by 1.10 three times
$676.18 $743.8 $818.18 $900
Present Value (PV) Example:
$900 after 3 years, what is the Present Value?
To take a future payment backwards three years divide
by 1.10 three times
So $900 in 3 years is = $900 ÷ 1.10 ÷ 1.10 ÷ 1.10
= $900 ÷ (1.10 × 1.10 × 1.10)
= $900 ÷ (1+.10)3
= $900 ÷ (1.331)
= $676.18 now
Future Value (FV)
FV = PV * (1+r)n
• PV is Present Value
• FV is Future Value
• r is the interest rate
• n is the number of years
Future Value (FV) Example:
FV = 1000 * (1+.1)3
= 1000 * (1.331)
= 1331
Net Present Value (NPV)
Net present value (NPV): is the difference between
the present value of cash inflows and the present
value of cash outflows that occur because of
undertaking an investment project.
Net Present Value (NPV)
= Future Value (FV) – Present Value (PV)
Net Present Value (NPV)
Positive NPV: If present value of cash
inflows is greater than the present value of
the cash outflows, the net present value is
said to be positive and the investment
proposal is acceptable.
Future Value (FV) > Present Value (PV)
Net Present Value (NPV)
Zero NPV: If present value of cash inflow is
equal to present value of cash outflow, the
net present value is said to be zero and the
investment proposal is acceptable.
Future Value (FV) = Present Value (PV)
Net Present Value (NPV)
Negative NPV: If present value of cash
inflow is less than present value of cash
outflow, the net present value is said to be
negative and the investment proposal is
rejected.
Future Value (FV) < Present Value (PV)
Net Present Value (NPV) Example:
You invest $500 now, and you will gain $570 in a
year. Is that a good investment when you can get
10% elsewhere?
• You invested $500 now, so PV = -$500.00
• Money next year, FV = $570
• PV = $570 / (1+0.10)1 = $570 / 1.10 = $518.18
Net Present Value (NPV) = FV – PV
= $518.18 - $ 500
= $18.18
The net present value is positive, and the
investment proposal is acceptable.
The Internal Rate of Return (IRR)
The internal rate of return (IRR): is a
measure used for assessing the profitability
of potential investments. The internal rate of
return is the discount rate that makes the net
present value of all cash flows equal to zero.
The Internal Rate of Return is the interest rate
that makes the Net present value zero
The Internal Rate of Return (IRR)
Example:
Invest $2,000 now, receive 3 yearly payments of
$100 each, plus $2,500 in the 3rd year.
Let us try 10% interest:
Now: PV = -$2,000
Year 1: PV = $100 / 1.10 = $90.91
Year 2: PV = $100 / 1.102 = $82.64
Year 3: PV = $100 / 1.103 = $75.13
Year 3 (final payment): PV = $2,500 / 1.103 = $1,878.29
Adding those up gets: NPV =
= -$2,000 + $90.91 + $82.64 + $75.13 + $1,878.29
= $126.97
The Internal Rate of Return (IRR)
Example:
Invest $2,000 now, receive 3 yearly payments of
$100 each, plus $2,500 in the 3rd year.
Let us try 12% interest:
Now: PV = -$2,000
Year 1: PV = $100 / 1.12 = $89.29
Year 2: PV = $100 / 1.122 = $79.72
Year 3: PV = $100 / 1.123 = $71.18
Year 3 (final payment): PV = $2,500 / 1.123 = $1,779.45
Adding those up gets: NPV =
= -$2,000 + $89.29 + $79.72 + $71.18 + $1,779.45
= $19.64
The Internal Rate of Return (IRR)
Example:
Invest $2,000 now, receive 3 yearly payments of
$100 each, plus $2,500 in the 3rd year.
Let us try 12.4% interest:
Now: PV = -$2,000
Year 1: PV = $100 / 1.124 = $ 88.97
Year 2: PV = $100 / 1.1242 = $79.15
Year 3: PV = $100 / 1.1243 = $ 70.42
Year 3 (final payment): PV = $2,500/1.1243 = $1,760.52
Adding those up gets: NPV =
= -$2,000 + $88.97 + $79.15 + $70.42 + $1,760.52
= -$0.94
Return on Investment (ROI)
Return on investment (ROI): is the ratio between
the net profit and cost of investment resulting from an
investment of some resources. A high ROI means the
investment's gains compare favorably to its cost. As a
performance measure, ROI is used to evaluate the
efficiency of an investment or to compare the
efficiencies of several different investments.
The return on investment formula is:
ROI = (Net Profit / Cost of Investment) x 100
Return on Investment (ROI)
Example:
An investor buys $1,000 worth of stocks and sells
the shares two years later for $1,200. The net
profit from the investment would be $200 and
the ROI would be calculated as follows:
ROI = (200 / 1,000) x 100 = 20%
The ROI in the example above would be 20%.
Return on Investment (ROI)
Example:
Gains = $535,000 and cost = 400,000. What is
ROI?
ROI = (535,000 − 400,000 / 400,000) x 100
= (135,000 / 400,000) x 100 = 0.34 × 100
= 34%
Return on Investment (ROI)
Example:
Gains = $3,640 and cost = $1,880. What is ROI?
ROI = (3,640 − 1,880 / 1,880) x 100
= (1,760 / 1,880) x 100
= 0.94 × 100 = 94%
KEY AREAS OF
PROJECT
MANAGEMENT
1. Scope Management
2. Time Management
3. Cost Management
4. Quality Management
5. Communications Management
6. Risk Management
7. Procurement Management
8. Human Resource Management
9. Integration Management
Project Quality Management
Quality Management is the process that
ensures the project will meet the needs.
• Quality is defined as:
❑ “Conformance to requirements” - Crosby,
❑ “fitness for use” – Juran,
❑ “a predictable degree of uniformity and dependability
at low cost”- Deming,
❑ “the totality of characteristics of an entity that bear on
its ability to satisfy stated and implied need’ - ISO
8402:1994
Project quality management
involves three main
processes:
• Planning quality Project
management includes
identifying which quality Quality
requirements and Management
standards are relevant to
the project and how to
satisfy them.
• Performing quality assurance involves
periodically evaluating overall project
performance to ensure that the project
will satisfy the relevant quality
standards.
Project quality management
involves three main
processes:
– Controlling quality Project
involves monitoring Quality
specific project results to
ensure that they comply
Management
with the relevant quality
standards while
identifying ways to
improve overall quality.
Project Quality Management Principles
The seven quality management principles are:
• QMP 1 – Customer focus
• QMP 2 – Leadership
• QMP 3 – Engagement of people
• QMP 4 – Process approach
• QMP 5 – Improvement
• QMP 6 – Evidence-based decision making
• QMP 7 – Relationship management
Project Quality Management
QMP 1: Customer focus
• Statement:
The primary focus of quality management is to
meet customer requirements and to strive to
exceed customer expectations.
Project Quality Management
QMP 1: Customer focus
• Key benefits
• Increased customer value
• Increased customer satisfaction
• Improved customer loyalty
• Enhanced repeat business
• Enhanced reputation of the organization
• Expanded customer base
• Increased revenue and market share
Project Quality Management
QMP 2: Leadership
• Statement:
Leaders at all levels establish unity of purpose
and direction and create conditions in which
people are engaged in achieving the
organization’s quality objectives.
Project Quality Management
QMP 2: Leadership
• Key benefits
• Increased effectiveness and efficiency in meeting
the organization’s quality objectives
• Better coordination of the organization’s
processes
• Improved communication between levels and
functions of the organization
• Development and improvement of the capability
of the organization and its people to deliver
desired results
Project Quality Management
QMP 3: Engagement of people
• Statement:
Competent, empowered and engaged people
at all levels throughout the organization are
essential to enhance its capability to create
and deliver value.
Project Quality Management
QMP 3: Engagement of people
• Key benefits
• Improved understanding of the organization’s
quality objectives by people in the organization
and increased motivation to achieve them
• Enhanced involvement of people in improvement
activities
• Enhanced personal development, initiatives,
creativity and people satisfaction
• Enhanced trust and collaboration throughout the
organization
Project Quality Management
QMP 4: Process approach
• Statement:
Consistent and predictable results are
achieved more effectively and efficiently when
activities are understood and managed as
interrelated processes that function as a
coherent system.
Project Quality Management
QMP 4: Process approach
• Key benefits
• Enhanced ability to focus effort on key processes
and opportunities for improvement
• Optimized performance through effective
process management, efficient use of resources,
and reduced cross-functional barriers
• Enabling the organization to provide confidence
to interested parties as to its consistency,
effectiveness and efficiency
Project Quality Management
QMP 5: Improvement
• Statement:
Successful organizations have an ongoing
focus on improvement.
Project Quality Management
QMP 5: Improvement
• Key benefits
• Improved process performance, organizational
capabilities and customer satisfaction
• Enhanced focus on root-cause investigation and
determination, followed by prevention and
corrective actions
• Enhanced ability to anticipate and react to
internal and external risks and opportunities
• Enhanced consideration of both incremental and
breakthrough improvement
Project Quality Management
QMP 6: Evidence-based decision making
• Statement:
Decisions based on the analysis and
evaluation of data and information are more
likely to produce desired results.
Project Quality Management
QMP 6: Evidence-based decision making
• Key benefits
• Improved decision-making processes
• Improved assessment of process performance
and ability to achieve objectives
• Improved operational effectiveness and
efficiency
• Increased ability to review, challenge and change
opinions and decisions
• Increased ability to demonstrate the
effectiveness of past decisions
Project Quality Management
QMP 7: Relationship management
• Statement:
For sustained success, an organization
manages its relationships with interested
parties, such as suppliers.
Project Quality Management
QMP 7: Relationship management
• Key benefits
• Enhanced performance of the organization and
its interested parties through responding to the
opportunities and constraints related to each
interested party
• Common understanding of goals and values
among interested parties
• Increased capability to create value for interested
parties by sharing resources and competence
and managing quality-related risks
Quality Management Plan
What is a Quality Management Plan?
• The quality management plan "is a component
of the project management that describes how
applicable policies, procedures, and guidelines
will be implemented to achieve the quality
objectives.
• It describes the activities and resources necessary
for the project management team to achieve the
quality objectives set for the project"
Who Should Develop the Quality
Management Plan?
• Project manager,
• Selected team members,
• Selected stakeholders from
quality assurance, legal,
and the operations,
• Customer representatives.
What Should Be Included?
• Your approach to quality management
• The deliverables (i.e., products, services, or results) and
processes that will be reviewed
• How the quality requirements will be defined for the
deliverables and the processes
• Roles and responsibilities
• When and how you will manage quality (i.e., make sure
the standards and processes are present)
• When and how you will control quality (i.e., how the team
will evaluate the deliverables)
• How defects will be prevented and corrected
• Definitions
Example Quality Management Plan
In a software quality management plan, here are a few sections
you could include:
• Project quality measurements: the things you’re measuring
and how you define their quality
• Key responsibilities: a list of people and who’s doing what
• Implementation checklist: tasks to make sure you’re
implementing your quality plan
• Requirements quality check: a log where you record specific
requirements and check off various quality management and
testing activities
• Target device list: a record of all your target devices where
your software quality criteria should be met
How To Create a Quality Management Plan
For Software Projects
1. Create a shared understanding of what quality means
for this project.
2.
• Divide up responsibilities
How important for quality
is performance management.
(e.g., load times) of
3. Determine
the product?your target devices.
4.
• Write
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to measure success? Is the result of
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a user story more intoimportant
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6. Set up a deployment
(acceptance criteria)? pipeline with optional quality
• checks.
What are some of the most critical areas of the
7. Set up a regression
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nogating
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8. Configure a process
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What project controls do we want to maintain?
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For Software Projects
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4. Write acceptance criteria.
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How To Create a Quality Management Plan
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How To Create a Quality Management Plan
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