OBJECTIVES

 To introduce software project management and to describe its

distinctive characteristics
 To explain the main tasks undertaken by project managers
 Define and describe four types of feasibility and their respective
criteria.
 Perform various cost-benefit analysis using time-adjusted costs
and benefits.
 Process planning
objectives
 Describe the systems view of project management
and how it applies to information technology (IT) projects
 Understand organizations, including the four frames, organizational
structures, and organizational culture
 Explain why stakeholder management and top management
commitment are critical for a project’s success
 Understand the concept of a project phase and the project life
cycle, and distinguish between project development and product
development
 Discuss the unique attributes and diverse nature of IT projects
 Agile project management
Content
1. A system view of PM
◦ Systems Approaches
◦ Three-sphere model of system management
2. Understanding Organizations
◦ Four frames of organizations
◦ Organizational structure
◦ Organizational Culture
3. Stakeholder management
4. Project phases and project life cycle
5. The context of IT Projects
6. Recent trends effecting IT PM
COMMON CHARACTERISTICS OF PROJECTS

 The need for planning

 The no-routine nature of tasks
 Having a pre-determined time span
 Specific objectives to be met
 Work being executed in phases
 Multidisciplinary (involving several specialism)
 Constrained resources
 Being large and/or Complex
IS THIS A PROJECT?

 - Building a house
 - Coming to school everyday
 - Getting married
 - Investigating in user’s computer problem
 - A programming coursework
 - Writing an Operating system
 - Installing a new application (Windows,…)
 -Doing undergraduate studies
SOFTWARE PROJECT SUCCESS RATE
 A successful project is one that has been delivered on time, on
budget, with the required functionality.

 A challenged project is one that is late, over budget or delivered with

less that the required functionality.

 A failed project is one that has either been cancelled prior to

completion or delivered and never used.
 Software Project Success Rates : 29% successul, 53%
challenged, 18 failed. (Standish Group, 2004).

 Software Project Success Rates : 16% successful, 74%

challenged, 10 failed. (Ox ford University, 2004).
 PROJECT SUCCESS

Customer Requirements Completed within allocated

satisfied/exceeded time frame

Completed within allocated

Accepted by the customer
budget
 PROJECT FAILURE

Poor Requirements
Scope Creep Gathering

Unrealistic planning and

Lack of resources
scheduling
 TRIPLE CONSTRAINT

Time

Quality

Cost Scope
 COMMON PROJECT TERMS

 Deliverables: Tangible ‘things’ that the project produces

 Milestones: Dates by which major activities are performed.

 Tasks: Also called Actions. Activities undertaken during the project

 Risks: Potential problems that may arise

 Issues: Risks that have happened

 Gantt Chart: A specific type of chart showing time and tasks.

Usually created by a Project Management program like MS Project.

 Stakeholder: Any person or group of person who may be affect by the project
 WHAT IS MANAGEMENT
 Planning-- deciding what to be done (Predetermining a course of
action for accomplishing organizational Objectives)

 Organizing --making arrangement (Arranging the relationships

among work units for accomplishment of objectives ).

 Staffing -- selecting right people (Selecting and training people for

positions in the organization)
 Directing -- Creating an atmosphere that will assist and motivate
people to achieve desired end results by giving instruction

 Monitoring -- checking on progress

 Controlling -- taking remedial action, Establishing, measuring, and

evaluating performance of activities toward planned objectives

 Innovating -- finding new solutions

 Representing -- liaising with users (clients, developer, suppliers and

stakeholders)
 SOFTWARE PROJECT MANAGEMENT

 Software project management is the process of planning,

organizing, staffing, monitoring, controlling and leading a
software project.

 Concerned with activities involved in ensuring

that software is delivered on time and on
schedule and in accordance with the
requirements of the organisations developing
and procuring the software.
 PROCESS AND PROJECT MANAGEMENT

 A software project has two main activity dimensions:

engineering and project management.

 The engineering dimension deals with building the system

such as how to perform requirement specification, design,
code, test and so on.

 The project management dimension deals with properly

planning, how to set milestones, organize personnel,
manage risks and controlling the engineering activities to
meet project goals for cost, schedule, and quality.
 For small project, project plan may be an e-mail specifies all the needs.
 For large project, activities planned and allocated to project personnel
and then tracked as the project executes.
 A process for a task comprises a sequence of steps that should be
followed to execute the task.
 For a successful project, project managers have to follow processes.
WHY SHOULD PROJECT MANAGERS FOLLOW PROCESSES?

 Processes represent collective knowledge—increase chance of success.

 A process may have some extra steps—don’t know beforehand which ones are not
needed, and hence you will increase your risks by taking shortcuts.
 Without processes, you cannot predict much about the outcome of your project.
FEASIBILITY ANALYSIS
 Feasibility is the measure of how beneficial or practical the
development of an information system will be to an organization.

 The decision to invest in a project should be based on Operational ,

technical, schedule and economic criteria. There are called Four Tests
For Feasibility.
 FOUR TESTS FOR FEASIBILITY

 Operational feasibility is a measure of how well the solution

will work in the organization. It is also a measure of how people
feel about the system/project.
 Technical feasibility is a measure of the practicality of a specific
technical solution and the availability of technical resources and
expertise.
 Schedule feasibility is a measure of how reasonable the project
timetable is.
 Economic feasibility is a measure of the cost-effectiveness of a
project or solution.
 COST-BENEFIT ANALYSIS
Costs:

 Development costs are one time costs that will not come back after the
project has been completed (e.g. Labor, resources, salaries,…)
 Set-up costs (e.g. installation cost, hardware, staff recruitment, training,
….)
 Operating costs are costs that tend to come back throughout the
lifetime of the system (e.g. support, maintenance).
Benefits:
 Direct (e.g. reduction in staff costs)
 Indirect (e.g. reliability, usability)
 Intangible (lower staff turnover, improve decision making,..).

 Cost- benefit analysis compares project development, setup and

operational costs with anticipated benefits.
 COST-BENEFIT ANALYSIS TECHNIQUES

- Net profit
 Pay-back period
 Average Rate of Return (ARR) or Return On Investment (ROI)
 Net Present value (NPV)
 1. NET PROFIT

 Net profit is the residual income of a firm after adding total

revenue and gains and subtracting all expenses and losses for
the reporting period; the money left over after paying all the
expenses of an endeavor.
Net profit = Total profit – Total investment
 2. PAYBACK ANALYSIS

 Payback analysis is a simple and popular method for determining if

and when an investment will pay for itself.
 Payback period is the period of time that it will take to pay back
the investment .
 Normally, a project with short payback will be chosen based on
that the organization wish to minimize the time that a project is in
debt.
3. AVERAGE RATE OF RETURN(ARR)

Average Rate of return or Return-on-Investment compares the

lifetime profitability of alternative solutions or projects.

The ARR for a solution or project is a percentage rate that measures

the relationship between the amount the business gets back from an
investment and the amount invested.
 If the project is financed from cash reserves then the cost is the
interest that could otherwise have been earned.
 Money used to finance a project itself cost money.
 If it has to be borrowed, the cost is the interest that has to be paid.
 ROI OR ARR FORMULAS

 ARR or ROI = (AVERAGE NET PROFIT/TOTAL INVESTMENT)* 100

 NET PROFIT=INFLOW(REVENUES) –OUTFLOW(EXPENSES)

 ARR PROJECT1

 ARR = (AVERAGE NET PROFIT/TOTAL INVESTMENT)* 100

 ARR= ((10.000 / 5)/ 10000)* 100
= 20
 The Time Value of Money is a concept that should be applied to each
technique in discount methods.
 The time value of money recognizes that a dollar today is worth more
than a dollar one year from now.
 FUTURE VALUE OF MONEY

 This is the sum to which an initial amount of principal or present value

is expected to grow over a period of t-years when the interest rate is at
a rate of i%
 $ 100 today is worth more than $ 100 tomorrow.
- It can earn bank interest
 Or save loan interest . 10% growth will turn $ 100

FV= PV (1+i) t
FV: Future value
PV: Present value
i: rate
T: no of years
 FV= 100 (1+0.1)1
 = 110; $ 110 after 1 year;
 FV= 100 (1+0.1)2
 = 121; $ 121 after 2 years.
 PRESENT VALUE OF MONEY

 This concept acknowledges the fact that a dollar losses value with time and as
such if it is to be compared with a dollar to be received in t year then the two
must be at the same values.
 Discount factor

 Df=1/ (1+i/100) t
 Example:
 The future value of $ 100 today at a rate of 10% is :
 PV = FV * DF
= $ 100 * 0.909
= $90.9 in 1 year time
 In 2 years time PV= $82.8
 4. NET PRESENT VALUE (NPV)

The difference between the present value of the future cash flows
from an investment and the amount of investment.

NPV is a central tool in discounted cash flow (DCF) analysis and is

a standard method for using the time value o money to appraise
long-term projects.
 Each cash inflow/outflow is discounted back to its present value
(PV). Then they are summed. Therefore NPV is the sum of all.

 (PV)=

 t - the time of the cash flow

 i - the discount rate;
 Rt - the net cash flow (the amount of cash, inflow minus
outflow) at time t.
Examples

 Project 1
 We have cash flow for 5 years
 Rate = 15%
 Calculate NPV
PV = FV * DF
NPV PROJECT 1
NPV PROJECT 2
NPV PROJECT 3
NPV PROJECT 4
 The table shows the timing of cash flow over the lifetime of a
project. The negative cash flow at the beginning represents the
initial investment (cost) and the positive cash flows each year
thereafter show investment return (benefits)

 The sum of the discounted cash flows (including the initial

cost) gives the net present value (NPV) of the project . This is
the projected profit discounted to reflect it’s value in today’s
money.
NP, Payback, NPV, ARR
NPV IN DECISION MAKING

 NPV > 0 the investment would add value to the firm;

the project may be accepted
 NPV < 0 the investment would subtract value from
the firm; the project should be rejected.
 NPV = 0 the investment would neither gain nor lose
value for the firm; We should be indifferent
in the decision whether to accept or reject
the project.
CRITIQUE OF METHODS
 Net profit
- Ignore payback time
- Ignore risk
 Payback period
- Ignore overall profitability
 Average Rate of Return (ARR) or ROI
- Ignore timing of returns
- Not directly comparable with bank rate
 NPV
- Takes account of profitability and timing of cash flows
 The Net profit, payback, Average rate of Return are less
scientific, but nevertheless important as they are the most
used. It has been estimated that many as 50% of firms still use
the pay-back and at least 10% use the Average Rate of Return
(ARR).

 Note that the ARR Formula is also known as return on

investment (ROI) or accounting rate of return, is sometimes
modified to take account of depreciation by reducing the
average annual profit figure.
 The discounting method is more scientific approach and are of
particular interest to economists because they take into account the
opportunity cost of the use of capital funds.

 Money used to finance a project itself cost money.

 If it has to be borrowed, the cost is the interest that has to be paid.

 If the project is financed from cash reserves then the cost is the
interest that could otherwise have been earned.
 Discount rates reflect a risk premium over Bank interest rates.
 Some project may be sensitive to small changes in rate
 OTHER CONSIDERATIONS

 Project must be considered within the political and economic

framework of the organization as a whole.
 - External factors may also influence a decision.
 - Contractual or legal obligations may force unprofitable project to be
undertaken.
 - Unforeseen change in legislation, taxation, ... And/or other interest
rate may invalidate a proposal.
 EXERCISE 1

 Mr Kalisa is trying to sell a piece of land located at kigali. He has

been offered 228450 frw by Kamali who will be paying the
amount by the end of year.
 And Kagabo has offered him 200000 frw, to be paid now.
 Advice Mr Kalisa on which offer he should take. The required
rate of return is 12% per year.
EXERCISES ; RATE 15%
PROCESS PLANNING
 Process models for software development exist; include the waterfall , iterative ,
prototyping, and timeboxing model.
 The waterfall model has been used as the primary software life-cycle process.
 However, the waterfall model could not be used if the customer wanted the
software delivered in stages, something that implied that the system had to be
delivered and built in parts and not as a whole.
PROCESS TAILORING
 Tailoring is the process of adjusting a previously defined
process of an organization to obtain a process that is suitable
for the particular business or technical needs of a project.

 Tailoring can be taken as adding, deleting, or modifying the

activities of a process so that the resulting process is better
suited to achieving the project's goals.
 Guidelines gives a set of permitted deviations.

 These guidelines define the conditions and the types of changes

that should be made to a standard process.
PROCESS TAILORING...
SUMMARY-LEVEL TAILORING

For development projects, the following characteristics are used

for tailoring:

 Experience and skill level of the team and the project

manager (high if a majority of team members have more than
two years of experience with the technology used; otherwise,
it is low).

- Peak team size : number of team.

- Clarity of the requirements
- Project duration (short if the project must be delivered in less
than three months).

- Application criticality (high if the effect of the application on a

customer's business is significant).
DETAILED TAILORING

 Detailed tailoring covers execution of activities, their review,

and documentation needs.

 When detailed tailoring is finished, the sequence of activities

to be performed in the process for the project is defined.

 These definitions are then used to plan and schedule activities

and form the basis of project execution.
 The standard development process used at Infosys resembles the
waterfall model, although the traditional phases have been broken
into smaller phases, or stages, to allow parallel execution of some
phases.
 This process specifies the entry and exit criteria, inputs and
outputs, participants, activities, and other information for each
phase (stage).

 This basic process is also used by projects that do iterative

development or prototyping or perform only some stages of
the life cycle.

 In these situations this standard process is adjusted to suit the

project. These adjustments are done through process tailoring.
REQUIREMENT CHANGE MANAGEMENT

 Requirements change. And changes in requirements can come

at any time during the life of a project.

 The later in the life cycle the requirements change, the more
severe the impact on the project.

 Instead of wishing that changes will not happen or hoping that

somehow the initial requirements will be "so good" that no
changes will be required, it is better to prepare to handle
change requests as and when they come.
 Uncontrolled changes to requirements can have an adverse effect
on the cost, schedule, and quality of the project.

 Requirement changes can account for as much as 40% of the

total cost.
STEPS FOR CHANGE MANAGEMENT PROCESS

1. Log the changes. (change request number, a brief description of

the change, the effect of the change, the status of the change
request, and key dates)

2. Perform an impact analysis on the work products(identifying

work products that need to be changed and evaluating the
quantum of change to each; reassessing the project's risks,
evaluating implications of the changes for the effort and schedule
estimates ).
3.    Estimate the effort needed for the change requests.
4.    Reestimate the delivery schedule.
5.    Perform a cumulative cost impact analysis.
6. Review the impact with senior management if thresholds are
exceeded.
7.    Obtain customer sign-off.
8.    Rework work products.
 A change might be classified as minor if the total effort involved in
implementing it does not exceed a predetermined value say, two
person-days.

 Minor changes typically become part of the project effort, utilizing

the buffer in the planned estimate.

 Major changes usually have a larger impact on effort and schedule

and must be formally approved by the client.
 Project managers sometimes plan some buffer for handling
change requests.

 As long as the cumulative effort for all change requests is less

than this buffer, nothing special needs to be done.

 If the cumulative effort of all changes exceeds this buffer,

however, further changes can have an adverse effect on total
cost and scheduling.

 In this situation, the project manager must revise the estimates

and get them approved.
 THE PROJECT MANAGEMENT PLAN(PMP)

 PMP document is the culmination of all planning activities

undertaken by project managers.
 PMP should not be confused with the detailed project
schedule.
 The outputs of the various planning activities appear in this
document, which becomes the baseline document guiding the
overall execution of the project.
 Documenting the planning outputs enables the project plan to
be reviewed for deficiencies.

 It gives the project team a comprehensive view of the project and

the roles of the individual team members.
 PROJECTS CANNOT BE RUN IN ISOLATION

 Projects must operate in a broad organizational environment

 Project managers need to use systems thinking:
◦ taking a holistic view of carrying out projects within the context of the organization
 Senior managers must make sure projects continue to support current business
needs
 A SYSTEMS VIEW OF PROJECT MANAGEMENT

 Describes a more analytical approach to management and problem solving

 Three parts include:

◦ Systems philosophy: an overall model for thinking about things as systems

◦ Systems analysis: problem-solving approach
◦ Systems management: address business, technological, and organizational
issues before making changes to systems
 Top management and project manager must follow a system
philosophy to understand how project relate to the whole
organization. They must use systems analysis to address needs
which a problem-solving approach.
 They must use systems management to identify key business,
technological, and organizational issues related to each project in
order to identify and satisfy key stakeholders and do what is best
for the entire organization.
 THREE-SPHERE MODEL

 The three-sphere model of systems management deals with the business,

organizational and technological aspects and/or issues related to the
project that should be defined and considered in order to select and
manage projects effectively and successfully.
THREE-SPHERE MODEL FOR SYSTEMS MANAGEMENT
UNDERSTANDING ORGANIZATIONS

 The systems approach require that project managers always view

their project in the context of the large organization.
 To improve the success rate of IT project, it is important to have a
better understanding of people as well as organizations.
PERSPECTIVES ON ORGANIZATIONS
FOUR FRAMES OF ORGANIZATIONS

 The structural frame deals with the organization

is structure. It focus on the coordination and control.
 The human resource frame focus on producing harmony
between the needs of the organization and the needs of the
people.
 The political frame sees organizations as jungles, arenas, or
contests.
 The symbolic frame captures organizational life as drama and
treats organizations as theatre, temples, or carnivals.
 Project managers must learn to work within all four frames to
function well in organization.
WHAT WENT WRONG

 In a paper titled “A Study in Project Failure,” two researchers

examined the success and failure of 214 IT projects over an eight-
year period in several European countries.
 The researchers found that only one in eight (12.5 percent) were
considered successful in terms of meeting scope, time, and cost goals.
 The authors said that the culture within many organizations is often to
blame
 Among other things, people often do not discuss important
leadership, stakeholder, and risk management issues
ORGANIZATIONAL STRUCTURES

 3 basic organization structures

◦ Functional: functional managers report to the CEO
◦ Project: program managers report to the CEO
◦ Matrix: middle ground between functional and project structures;
personnel often report to two or more bosses; structure can be weak,
balanced, or strong matrix
ORGANIZATIONAL CULTURE

 Organizational culture is a set of shared assumptions, values,

and behaviors that characterize the functioning of an organization
 Many experts believe the underlying causes of many companies’
problems are not the structure or staff, but the culture
TEN CHARACTERISTICS OF ORGANIZATIONAL CULTURE

 Member identity*
 Group emphasis*
  People focus
  Unit integration*
  Control
 Risk tolerance*
 Reward criteria*
 Conflict tolerance*
  Means-ends orientation
 Open-systems focus*
*Project work is most successful in an organizational culture where
these items are strong/high and other items are balanced.
STAKEHOLDER MANAGEMENT

 Project managers must take time to identify, understand, and

manage relationships with all project stakeholders
 Using the four frames of organizations can help meet stakeholder
needs and expectations
 Senior executives/top management are very important
stakeholders
 Top Management Commitment
 Organizational Commitment
 Organizational Standards
THE IMPORTANCE OF TOP MANAGEMENT
COMMITMENT

 People in top management positions are key stakeholders in projects

 A very important factor in helping project managers successfully lead
projects is the level of commitment and support they receive from top
management
 Without top management commitment, many projects will fail.
 Some projects have a senior manager called a champion who acts as a
key proponent for a project.
HOW TOP MANAGEMENT CAN HELP PROJECT MANAGERS

 Providing adequate resources

 Approving unique project needs in a timely manner
 Getting cooperation from other parts of the organization
 Mentoring and coaching on leadership issues
 Value IT.
 Value good project management and set standard for it’s use
 NEED FOR ORGANIZATIONAL STANDARDS

 Standards and guidelines help project managers be more effective

 Senior management can encourage
◦ the use of standard forms and software for project management
◦ the development and use of guidelines for writing project plans or
providing status information
◦ the creation of a project management office or center of excellence
 PROJECT PHASES AND PROJECTS LIFE CYCLE

 A project life cycle is a collection of project phases that defines:

◦ what work will be performed in each phase
◦ what deliverables will be produced and when
◦ who is involved in each phase
◦ how management will control and approve work produced in each phase
 A deliverable is a product or service produced or provided as part of a
project
MORE ON PROJECT PHASES
 In early phases of a project life cycle
◦ resource needs are usually lowest
◦ the level of uncertainty (risk) is highest
◦ project stakeholders have the greatest opportunity to influence the project
 In middle phases of a project life cycle
◦ the certainty of completing a project improves
◦ more resources are needed
 The final phase of a project life cycle focuses on
◦ ensuring that project requirements were met
◦ the sponsor approves completion of the project
PRODUCT LIFE CYCLES

 Developing a product often involves many projects.

 Products also have life cycles
 The Systems Development Life Cycle (SDLC) is a framework
for describing the phases involved in developing and maintaining
information systems
 Systems development projects can follow
◦ Predictive life cycle: the scope of the project can be clearly
articulated and the schedule and cost can be predicted
◦ Adaptive Software Development (ASD) life cycle: requirements
cannot be clearly expressed, projects are mission driven and
component based, using time-based cycles to meet target dates
PREDICTIVE LIFE CYCLE MODELS

 Waterfall model: has well-defined, linear stages of systems

development and support
 Spiral model: shows that software is developed using an iterative or
spiral approach rather than a linear approach
 Incremental build model: provides for progressive development of
operational software
 Prototyping model: used for developing prototypes to clarify user
requirements
 Rapid Application Development (RAD) model: used to produce
systems quickly without sacrificing quality
WATERFALL AND SPIRAL LIFE CYCLE MODELS
AGILE SOFTWARE DEVELOPMENT

 Agile software development has become popular to describe new

approaches that focus on close collaboration between
programming teams and business experts
THE IMPORTANCE OF PROJECT PHASES AND
MANAGEMENT REVIEWS

 A project should successfully pass through each of the project

phases in order to continue on to the next
 Management reviews, also called phase exits or kill points,
should occur after each phase to evaluate the project’s progress,
likely success, and continued compatibility with organizational
goals
AGILE PROJECT MANAGEMENT

 Agile means being able to move quickly and easily, but some
people feel that project management, as they have seen it used,
does not allow people to work quickly or easily.
 Early software development projects often used a waterfall
approach, as defined earlier in this chapter. As technology and
businesses became more complex, the approach was often
difficult to use because requirements were unknown or
continuously changing.
 Agile today means using a method based on iterative and
incremental development, in which requirements and solutions
evolve through collaboration.
Scrum

 According to the Scrum Alliance, Scrum is the leading agile

development method for completing projects with a complex,
innovative scope of work.
 The term was coined in 1986 in a Harvard Business Review study
that compared high- performing, cross-functional teams to the
scrum formation used by rugby teams.
SUMMARY

 Project managers need to take a systems approach when working

on projects
 Organizations have four different frames: structural, human
resources, political, and symbolic
 The structure and culture of an organization have strong
implications for project managers
 Projects should successfully pass through each phase of the
project life cycle
 Project managers need to consider several factors due to the
unique context of information technology projects