week 2
Post on 11-Nov-2014
340 Views
Preview:
DESCRIPTION
TRANSCRIPT
IS 556 Project Management
Week 2
2IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
What We Covered Last Week
Course Background and LogisticsWhat is a project, project manager,
project management?Software Project Management IssuesStarting A Project Team
Roles such as sponsor, pm, stakeholders, functional managers, members, customers.
3IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
What We Covered Last Week
Course Background and Logistics - Grade is made up of: 1) Final Exam (each person does this individually) - 30% 2) Groups are responsible for reviewing all cases with at least a 1 to 2
page recommendations and supporting material. [20%/#cases]. (group sizes 3-4)
3) Each group specializes in one of the cases and complete:a) Case write-up (elaborating on direction) [10%]b.) Power Point Presentation -> Time ~30 minutes (~60 minutes
with class discussion time added) 4) Project (case study on “real project”) [30%] - Group collaborates on
“real” project based on Hvd business review or real experience or some other source.
A. 15 page discussion/review/recommendations
b. Power Point Presentation -> Time 30 min. Note some people have asked if they can still work on a special project by themselves (because they have high interest in a particular project). I will allow this if you notify/clear it with me and let your group know also (in writing via the group system.) In this case your project grade would be separate from the rest of the groups.
5) Class attendance and participation [10%]
4IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
What We Covered Last Week
Course Background and Logistics (Cont) I have put up groups for each person responding. Your responsibility:
Make sure you are in a group and groups are correct. Let me know about mistakes or if you are not in a group.
What is a project, project manager, project management?
Software Project Management IssuesStarting A Project Team
Roles such as sponsor, pm, stakeholders, functional managers, p members, customers.
5IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
What we will cover today
Measuring Project Value Project Contracts Starting Your Project
(Charter/SOW)
6IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
What is a Project – Financially?
How do we know if we should work on a project? Consider 3 different project possibilities with these estimates:
Cash-flows are made up of: Expenses
Hardware/Software PurchasesLaborOverhead
Incomes/benefitsIncreased revenuesReduced costs
Year 1 Year 2 Year 3Cost -Benefit
Project 1 -100,000 50,000 90,000 40,000
Project 2 -80,000 10,000 100,000 30,000
Project 3 -10,000 20,000 25,000 35,000
7IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Value – Graphical cash-flows
Project Cashflows
-$400,000-$200,000
$0
$200,000$400,000$600,000$800,000
$1,000,000$1,200,000
Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04
Month
$
8IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
How do we calculate project value?
Break-Even When do I earn back the cost of the project?
ROI What is the return on the cost of the project? Result of subtracting the project costs from benefits and
dividing by costs. E.g., If invest 100 today and worth 110 next year:
• ($110 - $100) / 100 = .1 or 10% ROI
NPV Net monetary gain/losses after discounting future losses/costs.
Does the return from project exceed the cost of capital? What is the present value of the cashflows (+/-) associated with
the project? >0 ? <0?
9IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Break Even Point of Project
Source: Information Technology Project Management. Kathy Schwalbe. Pg 144
10IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Using Net Present Value
NPV = A way to compare project return VS cost of capital (the return on investing capital elsewhere)
Prefer projects with higher NPVs over lower ones NPV accounts for the time value of money
Money earned today is worth more than money earned in 5 years. Can compare projects with multi-year timelines:
Year 1 Year 2 Year 3 Cost-Benefit
Project 1 -100,000 50,000 90,000 40,000
Project 2 -80,000 10,000 100,000 30,000
Project 3 -10,000 20,000 25,000 35,000
NPV1 = $51,120.44
NPV2 = $35,933.43
NPV3 = $53,459.37 Recommend Project 3
11IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Another NPV Comparison Example
Source: Information Technology Project Management. Kathy Schwalbe. Pg 145
12IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Calculating NPV Example:
Source: Information Technology Project Management. Kathy Schwalbe. Pg 146
Note: Discounted ROI = (516,000 - 243,200) / 243,200 - 112%
13IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Calculating Net Present Value
1. Determine estimated costs/benefits of project during its life. (e.g., project built in 6 months and produce 3 years of benefits).
2. Determine discount rate - minimal acceptable return on investment. Often minimal ROI if invested somewhere else (e.g.,
8% per year)
3. Determine NPV - excel has built-in function:
=npv( discount rate, range of cash flows)range of cash flows for previous example project 1 for each
year• So it would be from slide 10 Project 1 -100,000 50,000 90,000
14IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Calculating Net Present Value - Manually
Sum of the present values of the cash flows NPV = SUM( t=1 .. N)A/(1+r)t
Where t = year of cash flows r = discount rate A = the amount of cash flow each year.
Calculating NPV by hand1. Determine discount factor - multiplier based on year and
discount rate:
1/(1+r)t
Year 0 = discount rate = 1/(1+.08)0 = 1 Year 1 = discount rate = 1/(1+.08)1 = .93 Year 2 = discount rate = 1/(1+.08)2 = .86 Year 3 = discount rate = 1/(1+.08)3 = .79
15IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Calculating Net Present Value
Calculating NPV by hand1. Determine discount factor - multiplier based on year and discount
rate:
2. Multiply the each year’s costs/benefits by its discount factor.A. e.g., Slide 12 figure 5.3
Year 1 costs discounted costs 40,000 40,000*.93 = 37,200 Year 1 benefits discounted benefits 200,000 200,000*.93 = 186,000Year1 discounted benefits - costs = 186,000 -37,200 = 148,800
Calculate each year’s discounted cost/benefits: NPV = (140,000) + 148,000 + 137,500 + 126,400 = 272,800
Year 0 is negative)
16IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Critical Questions
What is the discount rate?What are the cashflows?
CostsDirect Labor (E.g., Developer salaries)Direct Material (E.g., hardware/software purchased)Indirect Labor (E.g., Proj mgmr)
Benefits Revenue Increase Cost Decreases
Costs and benefits measured should be Direct result of projectQuantifiable
17IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Managing Project NPV
Cost Domain of PM Constrained by client
Benefit Domain of client Influenced by PM
Rate Domain of client
18IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Agenda
Measuring Project Value Project Contracts Starting Your Project
(Charter/SOW)
19IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Ch. 3 Contracts and Legal Issues
What is the relationship between customer and software developer?
How are contracts costed?
Two types of contracts: Cost-plus -> Time and materials Fixed Price
20IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Cost Plus
Expense plus agreed profit margin E.g., rent a car -> monthly cost + expenses
(gas, insurance) E.g.,$120 / staff hours + 20% support costs
Expenses might include Special purpose equipment Travel outside services
•Customer may have developers report to their management
Used w/ small projects when requirements hard to define. Sometimes use for requirements only.
21IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Cost plus contracts might contain:
Contracts might cover Persons assigned to project Work definition Percent of time each person assigned Hourly or daily work rate for each person Authorized expenses to be reimbursed Billing/Termination Procedure
22IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Cost Plus Advantages/Disadvantages
Advantages Low financial risk to development organization Earn while you learn
Minus Low profit Reduced control - often need to ask to
authorize expenses Developer may work within customer’s
hierarchy No commitment to complete project
23IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Fixed Price
Developer commitment to provide: Agreed product/service Agreed price Agreed timeframe
Example might be - custom built house: Decide on contact with developer building allowances for cabinets, flooring, lights Timeframe agreed upon
Clearly more appropriate for well defined product/service
24IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Developer View
Plus Complete control Higher profit (potentially) Commitment for complete project
Minus Risks -
competition may cause to underbid.May have cost overruns
Customer managementRequirements changesProject completion issues
25IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Customer View
Plus Fixed budget, etc Lower risk
Minus Reduced control Late delivery? Developer management
Requirements changesProject completion issues
26IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Request for proposal - RFP
Beginning of selection processOften organizations have pre-
defined processesUsed for
Software Selection Software Development Maintenance and/or Upgrades Equipment Selection
Might use RPF for entire project or just a portion (e.g., testing)
27IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
First Decide Overall Issues
Before Writing an RFP Need to know Type of contract (fixed price or cost-plus) Overall budget allocated? (Is it reasonable
amount?) Who are candidates to receive ( too wide
and have an evaluation mess, too narrow and miss potential solutions.)
How will decision be made - Who makes decision? Will make a recommendation (or decision)? What is important to him/her?
28IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
As you do this ...
Its critical you think through this process.Must make comparison fair and feasible
Must control response format. Might need to have an idea of how vendors will
respond Might need to “trial” RFP.
Need to decide if issue to limited, broad set or any who request basis. If issue to limited set, what criteria will use … How handle vendor sales staff? Will meet with
each?
29IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
RFP Details
Statement of Problem and Overall Objectives Overall problem, scope of solution, relevant diagrams,
as needed organization structure.
Technical Requirements - You must avoid leaky requirements!
The software must report on the error defects in processAutomatic weekly reports must be generated indicating:
• The daily and overall weekly percent of failures • An exception report dictating which items had failures per week
It helps to avoids compound requirements! The software must weekly post web reports that indicate daily
and weekly percent failures and percent failures over time.
LILO - Leaky in Leaky out
30IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
More RFP Details ...
Administrative Information - How will decision be made - what process Who is RFP open to?
Cost requirements - May indicate type of contract May include expectations they will supply (E.g.,
need to breakout software, hardware and loaded costs for each person
Ability to perform - For long-term relationship/longer contracts may need to know about company stability, (D&B report indicating likelihood of staying in business) past successes with similar items, customer references, etc.
31IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
RFP Outline - (See details Pg 43)
Reference documents - any references to standards or existing documentation
Required deliverables - clarify overall solution expectations, e.g., training, customization. hardware only, warranty
Required proposal format - how should vendor respond? Format of response, how answer technical requirements, how specify pricing, do they provide SOW?
Submission and Decision Schedule ...
32IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
RFP Outline - (See details Pg 43)
33IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
The Proposal for work ...
Many consultant houses have defined format and process for this
Usually indicates: (See Pages 47-49) Executive Overview - This goes to key
decision maker (1-6 pages just the bottom line). Technical proposal (what is being proposed,
how meet these requirements) Management proposal - Pricing Proposal (how much, cost structure) The Statement Of Work.
34IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Proposal Review
Review team - Likely includes all stakeholders. May need to differentiate between vital few and significant
other. Evaluation review can be highly emotion. (Sales teams often
not help to keep objective.) Sometimes narrow down process.
The more objective the better. Assume “losers” will want reasons and time. “Winners” of rounds likely get to refine and resubmit.
Major components Technical: what will be done? Management: how will it be done? Cost: how much? Background: who will do it?
35IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Example: RFP for software selection
Led a team for multi-site selection of UNIX backup software selection (~late 1980s) We were “major” site - We had 50% of
servers there were 5-6 other sites. Our site -> 100-200 servers
Project was started by our site, but management decided to expand to other sites
Developed a list of requirements based on our site’s needs.
36IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Example RFP - Software selection
Requirements (20 pages) Included things like Hardware connectivity - needed to backup (HP, SUN, IBM)
needed to backup to ATLs. Reporting mechanism - automated report Functionality of software - D/R capabilities, Tape rotation
schedules, automated restore, operation interface, etc. Costs of solution
Expanded requirements to other sites Expanded on requirements - many cared about specific
hardware Greatly helped clarify complex requirements
37IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Example RFP:Software selections
Once requirements approved, decided to release to 1 vendor. They agreed would get an early version and
would work with us.This was extremely impertinent ! caused us to greatly
increase level of specificity of requirements.
Developed a list of vendors to send out to: Because of scope of project lots of vendors
wanted to answer RFP: Who to send to? How much time is enough? What would be our
process with vendors? Decided based on sales volume and I would “pre-screen”
vendors.
38IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Example RFP: Software selection
Developed a evaluation process: Send out requirements Receive input and review with vendor Request clarifications Receive clarifications and our team would decide
on “score” for each item.Item Prod1 PRd2 Prd31. Backup system uses UNIX 5 4 3 (uses semi-prop)standard tape format such
as tar cpio: 2. Maintain list of offsite 3 (db has 4 5 tape volumes in database sz limits)
39IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
E.g.,RFP Software Selection
Issues with process: Vendors wanted to stay as involved as possible Negotiating weights for each category major issue
E.g., sites all wanted their favorite hardware/requirement Needed to do D&B and then leading company was not public Doing this process right takes time, severe management pressure. Hard to verify/determine where vendors “fudged” on answers.
(which ones are vaporware, not 110% accurate) Vendor references often “best case” users. Losers often wanted to “rattle the management chain” Final selection - Narrowed to 2 and did demos. Narrowed to 1 and
then did “trial”. (Issue with trial, how to get hardware needed) Scores were subjective (5 VS 3) and quibbled with the team and
vendors (why did we get a 3 for item 15?)
40IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Proposal Review
How evaluate proposal? More systematic the better. E.g.,
Technical: 35%Management: 25%Cost: 30% Company Background: 10%
IT may may sense to pre-define how each item will be defined in the requirements. E.g.,
Ability to generate reports via web (low - not there or can be built, med has some capabilities, high - automatically generates trend line)
Might use weights like page 51-52. (next page)
These can be cut up lots ofdifferent ways. Poor score in one might knock someone out. Might not even emphasize beyond 1 or 2 areas.
41IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Rating Scale Example (Pg 51)
42IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Legal Issues
Legal issues are an issue on to themselves Most major corporations have corporate
lawyers handle such things. Intellectual Property
Patents - Legal monopoly for use, manufacture, and sale of invention.
Copyrights - legal invention that enables holder to control how the work is used. (requires minimum originality and lasts for 75 years)
Trade secrets - often signed non-disclosure to keep secret
43IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Agenda
Measuring Project Value Project Contracts Starting Your Project
(Charter/SOW)
44IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Management Key Classic Success Factors
1. Agreement Among Project Team, Customer's) and Management2. A Plan That Shows Overall Clear Path3. Constant Effective Communication Among Everyone In Project 4. Scope Management - Defensive Measures Against Growing Scope5. Management Support -
45IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Definition & Critical Success Factors
• Project Definition Effects 3 of the 5 CSFs•Agreement, Scope, Management Support
•Tools of Project Definition Include 1. Charter 2. SOW 3. Responsibility Matrix 4. Communication Plan
46IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Purpose Of the Charter
• A Straightforward Announcement Of The Project•A One-Time Announcement That States
1. Name Of The Project 2. Project Purpose 3. Project Manager Name 4. Perhaps The Goal & Responsibilities of the PM5. Anything else to ensure responsibility is well defined
•Charter is reviewed and issued by sponsor.
47IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Definition & Critical Success Factors
•Tools of Project Definition Include 1. Charter 2. SOW 3. Responsibility Matrix 4. Communication Plan
48IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Statement Of Work
•Clarifies with stakeholders the goals, scope, and deliverables of project •Sometimes may be a contract (E.g., an outsourcing arrangement for SOW)•Other times a project clarification device•Reviewed by project board/sponsor (sometimes with team member input).
49IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Elements of SOW
• Project Purpose – •Specifically, why are we doing it?
• Project Goal - SMART • Project Goal - what is in or out of scope• Project Deliverables - What the project produces• Project Cost/schedule estimates - Rough OOM • Formal Stakeholder definition - • Chain of command - who reports to whom
50IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Defining The Goal
• Need to clearly think out the goal and define it in writing
•Should spell out the criteria for success •Entire team should agree to the goal
•Should be SMART •Specific, measurable, agreed upon, realistic, time-bound.
•Roll out a new version of XXX software•Deploy Version YYY of XXX software to ZZZ users by 4/22/04
•Every time you make a decision during the day, ask yourself this question, "Does it take me closer to, or further from my goal." If the answer is "closer to," then you've made the right decision. If the answer is "further from," well, you know what to do.
51IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Define The Scope
• Purpose: Define project boundaries • Should describe major activities in such a way that its impossible to add activities without adding to the scope statement •Clarify:
•What is relationship to this project and other related ones•What is within the scope •What is beyond the scope•What are the major deliverables
52IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Deliverables
Precise definition of what you are providing.Not requirements but major outputE.g.,
Internet based system that:Presents end-user survey input Stores based on user name Generates histogram reports of survey responsesSystem maintenance documentation
.
53IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Software Development SOW Items
54IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Elements of SOW • Project Purpose - Specifically, why are we doing it? • Project Goal - SMART • Project Goal - what is in or out of scope• Project Deliverables - What the project produces• Project Cost/schedule estimates - Rough OOM • Formal Stakeholder definition - • Chain of command - who reports to who
55IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
More on Charter/SOW
. Cost and Schedule Estimates- What are the budget concerns?
- How fixed is the budget it? - How good of an estimate can you
make?
- Can a reliable estimate be made?
56IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Formal Stakeholder Definition
•Create a table with at least the following•Role•Description•Who•Percent Involvement•Estimated Duration
57IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Formal Stakeholder Definition - Example
Planner Jane PM 100% 5 WeeksIT Admin Joe Sets up systems 50% 2 Weeks
configures themAp “A” Hans Identifies key data 50% 3 weeksOwner Ap “B” Mike Identifies key data 50% 3 weeksOwner Sponsor Jean Project Champion & <5% Monthly review
Sponsor App Janet Project Board of < 5% Monthly ReviewMgmt Directors Admin Frank Copies data & 100% 4 weeks.
programs
58IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Other SOW Items •Can also include information about the phases of the project.
•What methods will the project follow? •Incremental VS waterfall?
•Is there a phased approach?
•E.g., Phased - D/R plan•Phase 1 - Plan for vital data •Phase 2 - Plan for all business data•Phase 3 - Building facilities recovery
59IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Definition & Critical Success Factors
•Tools of Project Definition Include 1. Charter 2. SOW 3. Responsibility Matrix 4. Communication Plan
60IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Responsibility Matrix
•Defines key groups and their responsibilities.•Help define cross organization responsibilities
•E.g., change in tool design requires work in another department. Will other department have a role in decisions?
•Can be done for each major task or for specific areas•Best if done up-front before turf wars develop
61IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Responsibility Matrix
•List the major activities of project on vertical axis•List the stakeholder groups on horizontal axis •Code the responsibility matrix
•E - Execution responsibility (get work done)•C - Must be consulted •I - Must be informed•A - Approval authority
•Review matrix
62IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Project Definition & Critical Success Factors
•Tools of Project Definition Include 1. Charter 2. SOW 3. Responsibility Matrix 4. Communication Plan
63IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Communication Plan
A written strategy for getting the right info to the right people Sponsors - Probably a formal mechanism Project Review Board - Separate from sponsor? Functional management - as providers of resources
may need to know Customers - Make ultimate decisions, likely different
levels of customer involvement Project team - probably needs regular communication
64IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Sample Communication Plan
Stakeholder Info Needed Freq Medium Sponsor - High-level cost,
schedule, quality perf, - Problems and action
Monthly Written report, and meeting
PM supervising management
- Detailed cost, schedule,. Quality performance - problems, proposed actions, assistance required
Weekly Written report and meeting
Customer Exec - Detailed cost, schedule, quality performance - Problems and actions
Monthly Written report and meeting
Customer Contact - on-going cost information. Problems and on-going status
Weekly Project team meeting with written report.
Project Team - On-going cost and schedule information. Problems and on-going status
Weekly Project team meeting with written report.
65IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Communication Plan
What needs to be communicated? Authorizations - major document
agreements, such as project plans, SOW, product specifications
Regular Status Updates - Cost and status updates.
Coordination - General coordination generally among team members.
66IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
PM Should Be Defined Process
Charter Purpose review and publish
SOW A. Document goals, scope deliverables HL budget estimateReview with Project board
Communication Plan Document communication methods of various level Review with project board, various stakeholders
Risk Strategy Project PlanExecute
HL Plan
LL Plan
67IS 556 Spring 2004-2005
DePaul University CTI - John Fisher
Summary
Measuring Project Value Project Contracts Starting Your Project
(Charter/SOW)
top related