Managing Information Technology

Projects, 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

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Note: See the template called business_case_financials.xls

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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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 The 2002 Olympic Winter Games and Paralympics took
five years to plan and cost more than $1.9 billion. PMI awarded
the Salt Lake Organizing Committee (SLOC) the Project of the
Year award for delivering world-class games.
Four years before the Games began, the SLOC used a
Primavera software-based system with a cascading color-coded
WBS to integrate planning…The SLOC also used an Executive
Roadmap, a one-page list of the top 100 Games-wide activities,
to keep executives apprised of progress. Activities were tied to
detailed project information within each department’s schedule.
A 90-day highlighter showed which managers were accountable
for each integrated activity.
Fraser Bullock, SLOC Chief Operating Officer and Chief,
said, “We knew when we were on and off schedule and where
we had to apply additional resources. The interrelation of the
functions meant they could not run in isolation—it was a
smoothly running machine.”*
*Foti, Ross, “The Best Winter Olympics, Period,” PM Network (January 2004) 23.

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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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 Some CCBs only meet occasionally, so it may
take too long for changes to occur
 Some organizations have policies in place for

time-sensitive changes
◦ “48-hour policy” allows project team members to make
decisions; then they have 48 hours to reverse the
decision pending senior management approval
◦ Delegate changes to the lowest level possible, but keep
everyone informed of changes

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 Ensures that the descriptions of the project’s
products are correct and complete
 Involves identifying and controlling the functional
and physical design characteristics of products
and their support documentation
 Configuration management specialists identify
and document configuration requirements, control
changes, record and report changes, and audit
the products to verify conformance to
requirements
 See www.icmhq.com for more information

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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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