Managing Information Technology

Projects, Revised Sixth Edition

Schwalbe

Note: See the text itself for full citations.

 Describe an overall framework for project
integration management as it relates to the other
PM knowledge areas and the project life cycle
 Explain the strategic planning process and apply
different project selection methods
 Explain the importance of creating a project
charter to formally initiate projects

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 Describe project management plan
development, understand the content of these
plans, and review approaches for creating them
 Explain project execution, its relationship to
project planning, the factors related to successful
results, and tools and techniques to assist in
project execution
 Describe the process of monitoring and
controlling project work

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 Understand the integrated change control
process, planning for and managing changes on
information technology projects, and developing
and using a change control system
 Explain the importance of developing and
following good procedures for closing projects
 Describe how software can assist in project
integration management

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 Project managers must coordinate all of the other
knowledge areas throughout a project’s life cycle
 Many new project managers have trouble looking
at the “big picture” and want to focus on too many
details (see opening case for a real example)
 Project integration management is not the same
thing as software integration

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 Develop the project charter: working with
stakeholders to create the document that formally
authorizes a project—the charter
 Develop the project management plan:
coordinating all planning efforts to create a
consistent, coherent document—the project
management plan
 Direct and manage project execution: carrying
out the project management plan by performing
the activities included in it

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 Monitor and control the project work:
overseeing project work to meet the
performance objectives of the project
 Perform integrated change control:
coordinating changes that affect the project’s
deliverables and organizational process assets
 Close the project or phase: finalizing all project
activities to formally close the project or phase

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 The Airbus A380 megajet project was two years behind
schedule in Oct. 2006, causing Airbus’ parent company to
face an expected loss of $6.1 billion over the next four years
 The project suffered from severe integration management
problems, or “integration disintegration...Early this year,
when pre-assembled bundles containing hundreds of miles
of cabin wiring were delivered from a German factory to the
assembly line in France, workers discovered that the
bundles, called harnesses, didn't fit properly into the plane.
Assembly slowed to a near-standstill, as workers tried to
pull the bundles apart and re-thread them through the
fuselage. Now Airbus will have to go back to the drawing
board and redesign the wiring system.”*

*Matlack, Carol. “First, Blame the Software,” BusinessWeek Online (October 5, 2006).

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 Strategic planning involves determining long-term
objectives, predicting future trends, and projecting
the need for new products and services
 Organizations often perform a SWOT analysis
◦ Analyzing Strengths, Weaknesses, Opportunities, and
Threats
 As part of strategic planning, organizations:
◦ Identify potential projects
◦ Use realistic methods to select which projects to work on
◦ Formalize project initiation by issuing a project charter

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 Only one in seven product concepts comes to fruition; why is it
that some companies like Proctor & Gamble, Johnson and
Johnson, Hewlett Packard, and Sony are consistently
successful in NPD?
 Because they use a disciplined, systematic approach to NPD
projects based on best practices
 Four important forces behind NPD success include the
following:
1. A product innovation and technology strategy for the business
2. Resource commitment and focusing on the right projects, or solid
portfolio management
3. An effective, flexible, and streamlined idea-to-launch process
4. The right climate and culture for innovation, true cross-functional
teams, and senior management commitment to NPD

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 There are usually more projects than available
time and resources to implement them
 Methods for selecting projects include:
◦ Focusing on broad organizational needs
◦ Categorizing information technology projects
◦ Performing net present value or other financial
analyses
◦ Using a weighted scoring model
◦ Implementing a balanced scorecard

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 It is 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 the project
◦ There are funds available
◦ There’s a strong will to make the project succeed

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 One categorization is whether the project
addresses:
◦ A problem
◦ An opportunity, or
◦ A directive
 Another categorization is how long it will take to do
and when it is needed
 Another is the overall priority of the project

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 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

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

 https://www.youtube.com/watch?v=hG68UMupJzs

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 Determine estimated costs and benefits for the life
of the project and the products it produces
 Determine the discount rate (check with your
organization on what to use)
 Calculate the NPV (see text for details)
 Notes: Some organizations consider the investment
year as year 0, while others start in year 1; some
people enter costs as negative numbers, while
others do not
◦ Check with your organization for their preferences

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 Return on investment (ROI) is calculated by
subtracting the project costs from the benefits and
then dividing by the costs
ROI = (total discounted benefits - total discounted costs) /
discounted costs
 The higher the ROI, the better
 Many organizations have a required rate of return
or minimum acceptable rate of return on investment
for projects
 Internal rate of return (IRR) can by calculated by
finding the discount rate that makes the NPV equal
to zero

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 Another important financial consideration is
payback analysis
 The payback period is the amount of time it will
take to recoup, in the form of net cash inflows,
the total dollars invested in a project
 Payback occurs when the net cumulative
discounted benefits equals the costs
 Many organizations want IT projects to have a
fairly short payback period

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 A weighted scoring model is a tool that provides a
systematic process for selecting projects based on
many criteria
 Identify criteria important to the project selection process
 Assign weights (percentages) to each criterion so they add
up to 100%
 Assign scores to each criterion for each project
 Multiply the scores by the weights and get the total
weighted scores
 The higher the weighted score, the better

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 Drs. Robert Kaplan and David Norton developed
this approach to help select and manage projects
that align with business strategy
 A balanced scorecard:
◦ Is a methodology that converts an organization’s value
drivers, such as customer service, innovation, operational
efficiency, and financial performance, to a series of defined
metrics
 See www.balancedscorecard.org for more
information

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 After deciding what project to work on, it is
important to let the rest of the organization know
 A project charter is a document that formally
recognizes the existence of a project and
provides direction on the project’s objectives and
management
 Key project stakeholders should sign a project
charter to acknowledge agreement on the need
and intent of the project; a signed charter is a key
output of project integration management

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 A project management plan is a document used
to coordinate all project planning documents and
help guide a project’s execution and control
 Plans created in the other knowledge areas are
subsidiary parts of the overall project
management plan

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 Introduction or overview of the project
 Description of how the project is organized
 Management and technical processes used on
the project
 Work to be done, schedule, and budget
information

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"The winners clearly spell out what needs to be done in a
project, by whom, when, and how. For this they use an
integrated toolbox, including PM tools, methods, and
techniques…If a scheduling template is developed and used
over and over, it becomes a repeatable action that leads to
higher productivity and lower uncertainty. Sure, using
scheduling templates is neither a breakthrough nor a feat.
But laggards exhibited almost no use of the templates.
Rather, in constructing schedules their project managers
started with a clean sheet, a clear waste of time.”*

*Milosevic, Dragan and And Ozbay. “Delivering Projects: What the Winners Do.”
Proceedings of the Project Management Institute Annual Seminars & Symposium
(November 2001).

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 Project execution involves managing and
performing the work described in the project
management plan
 The majority of time and money is usually spent
on execution
 The application area of the project directly affects
project execution because the products of the
project are produced during execution

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 Project planning and execution are intertwined
and inseparable activities
 Those who will do the work should help to plan the
work
 Project managers must solicit input from the team
to develop realistic plans

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 Project managers must lead by example to
demonstrate the importance of creating and then
following good project plans
 Organizational culture can help project execution
by:
◦ Providing guidelines and templates
◦ Tracking performance based on plans
 Project managers may still need to break the rules
to meet project goals, and senior managers must
support those actions

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 General management skills like leadership,
communication, and political skills
 Product, business, and application area skills and
knowledge
 Use of specialized tools and techniques

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 Expert judgment: experts can help project managers
and their teams make many decisions related to project
execution
 Project management information systems: there are
hundreds of project management software products
available on the market today, and many organizations
are moving toward powerful enterprise project
management systems that are accessible via the
Internet
 See the What Went Right? example of Kuala Lumpur’s
Integrated Transport Information System on p. 159

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 Changes are inevitable on most projects, so it’s
important to develop and follow a process to
monitor and control changes
 Monitoring project work includes collecting,
measuring, and disseminating performance
information
 A baseline is the approved project management
plan plus approved changes

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 Three main objectives are:
◦ Influencing the factors that create changes to
ensure that changes are beneficial
◦ Determining that a change has occurred
◦ Managing actual changes as they occur

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 Former view: the project team should strive to do
exactly what was planned on time and within
budget
 Problem: stakeholders rarely agreed up-front on
the project scope, and time and cost estimates
were inaccurate
 Modern view: project management is a process of
constant communication and negotiation
 Solution: changes are often beneficial, and the
project team should plan for them

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 A formal, documented process that describes
when and how official project documents and work
may be changed
 Describes who is authorized to make changes and
how to make them

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 A formal group of people responsible for approving
or rejecting changes on a project
 CCBs provide guidelines for preparing change
requests, evaluate change requests, and manage
the implementation of approved changes
 Includes stakeholders from the entire organization

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 To close a project or phase, you must finalize all
activities and transfer the completed or cancelled
work to the appropriate people
 Main outputs include:
◦ Final product, service, or result transition
◦ Organizational process asset updates

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 Several types of software can be used to assist in
project integration management
◦ Documents can be created with word processing software
◦ Presentations are created with presentation software
◦ Tracking can be done with spreadsheets or databases
◦ Communication software like e-mail and Web authoring
tools facilitate communications
◦ Project management software can pull everything together
and show detailed and summarized information
◦ Business Service Management (BSM) tools track the
execution of business process flows

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 Project integration management involves
coordinating all of the other knowledge areas
throughout a project’s life cycle
 Main processes include:
◦ Develop project charter
◦ Develop project management plan
◦ Direct and manage project execution
◦ Monitor and control project work
◦ Perform integrated change control
◦ Close the project or phase

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