Chapter 5: Product Conceptualization and Definition James R. Burns You have been assigned the following HW b Burns EX. 1-8, 1-10, 1-12, p. 28 b Schwalbe Ex 2-1, EX 2-3 b Burns EX. 2-19, 2-20, p. 27 b Burns EX 3-4, 3-5, 3-6 b Burns Ch. Five, do Ex. 5-5, 5-19, 5-20, at the end of Chapter 5, pp b Requirements Scrubbing Spreadsheet b Burns 6-10, 6-11, pg b Homework 1 is due Thursday, February 11 Homework: b Due February 11, 2016 b One week from today b Turn-in Hardcopy in class Plan for Today b Recitation b THE FIVE PHASES OF THE PM LIFECYCLE b REVIEW: Functions/Tasks/Competencies/Skills of bProject Manager b Chapter 5Burns b Strategy & Portfolio Management PMBOKs five phases 1. Initiating 2. Planning 1.Part 1: Product Conceptualization and Definition 2.Part 2: Project Planning and Budgeting 3. Executing 4. Monitoring and Controlling 5. Closing Product Conceptualization and Definition is about b SCOPE b As determined by.. The requirements docThe requirements doc The WBS Work Breakdown StructureThe WBS Work Breakdown Structure 2/22/2016Texas Tech University -- J. R. Burns 7 Functions, Tasks, Expectations of the IT Project Manager b (coach, mentor, leader, negotiator, assessor, informer, motivator, delegator) b Selects Project leader, team leader, subordinates b Works hardest during the initiating and planning stages b Assesses progress during execution and reports on that b Negotiates with line managers for required human resources 2/22/2016Texas Tech University -- J. R. Burns 8 b Interfaces with customer, upper management on behalf of team b Negotiates with upper management and customer b Keeps everybody informed Expectations of the IT Project Manager 2/22/2016Texas Tech University -- J. R. Burns 9 More Expectations of the IT Project Manager b Is a positive leader, motivator, coach b Knows how to use PM software b Knows the technologies employed well b Must re-plan the remainder of the project after the completion of each deliverable, each phase 2/22/2016Texas Tech University -- J. R. Burns 10 Skills, Competencies of the PM b Leadership articulate the vision and hold everyone accountable to it b Delegation Competencies b An ability to develop people b Communication competencies b Interpersonal competencies b Able to handle stress b Problem solving skills b Time management skills b Negotiation skills 2/22/2016Texas Tech University -- J. R. Burns 11 Recall the Large Project Hierarchy Project Manager Project Leader Developer 1Developer 2 Developer N Team Leader 2Team Leader 1 Developer 3 Developer 4Developer 5Developer 6 Developer 7Developer 8 Recitation, Continued b What is the difference between competencies vs. skills b Name some competencies of PMs b What are the five stages of the PM lifecycle? b What are the four core knowledge areas b What are the four facilitating knowledge areas Chapter 5 Outline b Project Portfolio Management b The First Part b Using a SOW b Defining Project Boundaries/Scope b Why getting this right is so important b The use of surveys and interviews b Definition of Deliverables and Due Dates b Managing stakeholder expectations 214 Benefits of Project Portfolio Management b Builds discipline into the project selection process. b Links project selection to strategic metrics. b Prioritizes project proposals across a common set of criteria, rather than on politics or emotion. b Allocates resources to projects that align with strategic direction. b Balances risk across all projects. b Justifies killing projects that do not support strategy. b Improves communication and supports agreement on project goals. EXHIBIT 2.2 215 A Portfolio Management System b Design of a project portfolio system: Classification of a projectClassification of a project Selection criteria depending upon classificationSelection criteria depending upon classification Sources of proposalsSources of proposals Evaluating proposalsEvaluating proposals Managing the portfolio of projects.Managing the portfolio of projects. 216 Portfolio of Projects by Type FIGURE 2.2 217 A Portfolio Management System b Selection Criteria Financial: payback, net present value (NPV), internal rate of return (IRR)Financial: payback, net present value (NPV), internal rate of return (IRR) Non-financial: projects of strategic importance to the firm.Non-financial: projects of strategic importance to the firm. b Multi-Weighted Scoring Models Use several weighted selection criteria to evaluate project proposals.Use several weighted selection criteria to evaluate project proposals. 218 Financial Models b The Payback Model Measures the time the project will take to recover the project investment.Measures the time the project will take to recover the project investment. Uses more desirable shorter paybacks.Uses more desirable shorter paybacks. Emphasizes cash flows, a key factor in business.Emphasizes cash flows, a key factor in business. b Limitations of Payback: Ignores the time value of money.Ignores the time value of money. Assumes cash inflows for the investment period (and not beyond).Assumes cash inflows for the investment period (and not beyond). Does not consider profitability.Does not consider profitability. 219 Financial Models (contd) b The Net Present Value (NPV) model Uses managements minimum desired rate-of- return (discount rate) to compute the present value of all net cash inflows.Uses managements minimum desired rate-of- return (discount rate) to compute the present value of all net cash inflows. Positive NPV: project meets minimum desired rate of return and is eligible for further consideration. Negative NPV: project is rejected. 220 Example Comparing Two Projects Using Payback Method EXHIBIT 2.3a 221 Example Comparing Two Projects Using Net Present Value Method EXHIBIT 2.3b 222 Nonfinancial Strategic Criteria b To capture larger market share b To make it difficult for competitors to enter the market b To develop an enabler product, which by its introduction will increase sales in more profitable products b To develop core technology that will be used in next- generation products b To reduce dependency on unreliable suppliers b To prevent government intervention and regulation 223 Multi-Criteria Selection Models b Checklist Model Uses a list of questions to review potential projects and to determine their acceptance or rejection.Uses a list of questions to review potential projects and to determine their acceptance or rejection. Fails to answer the relative importance or value of a potential project and doesnt to allow for comparison with other potential projects.Fails to answer the relative importance or value of a potential project and doesnt to allow for comparison with other potential projects. b Multi-Weighted Scoring Model Uses several weighted qualitative and/or quantitative selection criteria to evaluate project proposals.Uses several weighted qualitative and/or quantitative selection criteria to evaluate project proposals. Allows for comparison of projects with other potential projectsAllows for comparison of projects with other potential projects 224 Sample Selection Questions Used in Practice EXHIBIT 2.4 TopicQuestion Strategy/alignmentWhat specific strategy does this project align with? DriverWhat business problem does the project solve? Success metricsHow will we measure success? SponsorshipWho is the project sponsor? RiskWhat is the impact of not doing this project? RiskWhat is the project risk to our organization? RiskWhere does the proposed project fit in our risk profile? Benefits, value, ROIWhat is the value of the project to this organization? Benefits, value, ROIWhen will the project show results? ObjectivesWhat are the project objectives? 225 Sample Selection Questions Used in Practice EXHIBIT 2.4 contd TopicQuestion Organization cultureIs our organization culture right for this type of project? ResourcesWill internal resources be available for this project? ApproachWill we build or buy? ScheduleHow long will this project take? ScheduleIs the time line realistic? Training/resourcesWill staff training be required? Finance/portfolioWhat is the estimated cost of the project? PortfolioIs this a new initiative or part of an existing initiative? PortfolioHow does this project interact with current projects? TechnologyIs the technology available or new? 226 Project Screening Matrix FIGURE 2.3 227 Applying a Selection Model b Project Classification Deciding how well a strategic or operations project fits the organizations strategy.Deciding how well a strategic or operations project fits the organizations strategy. b Selecting a Model Applying a weighted scoring model to bring projects to closer with the organizations strategic goals.Applying a weighted scoring model to bring projects to closer with the organizations strategic goals. Reduces the number of wasteful projects Helps identify proper goals for projects Helps everyone involved understand how and why a project is selected 228 Project Proposals b Sources and Solicitation of Project Proposals Within the organizationWithin the organization Request for proposal (RFP) from external sources (contractors and vendors)Request for proposal (RFP) from external sources (contractors and vendors) b Ranking Proposals and Selection of Projects Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power.Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power. b Managing the Portfolio Senior management inputSenior management input The priority team (project office) responsibilitiesThe priority team (project office) responsibilities 229 A Proposal Form for an Automatic vehicular tracking (AVL) Public Transportation Project FIGURE 2.4A The PLANNING Phase b Analogous to a missile or rocket b If the launch is bad, the project may have to be killed Just as a rocket that misfires must be detonatedJust as a rocket that misfires must be detonated Deliverables of this stage b Project stakeholders -- b Project charter b Project deliverables, what these will be b Requirements document (the main deliverable) b Project team members Project stakeholders b This group must be molded into one in which there is a lot of cohesion b If you cant get cohesion, then you may have to settle for a plurality or majority rule b If is most important that everyone knows up front what this project is about b Stakeholders who dont get what they want from the project need to know this up front Cohesion and Consensus b Youve got to have this prior to execution or youll never get it later on Requirements document b What the problem is b What functionality is needed b What outputs b What inputs b What performance b What reliability What kind of meeting is appropriate to begin discussions? b A Joint Requirements Definition Session, also known as a JAD Session b To create a strongly held shared vision of what the project is all about b To hammer out a REQUIREMENTS DOCUMENT JAD and JRD Sessions b They commit top executives to the software planning process b They shorten the requirements-specification phase b They eliminate features of questionable value b They help to get requirements right the first time b They help to get the user interface right the first time b They reduce organizational infighting Project Charter b Template appears in Chapter 5 b Advantage here is that the rules are made explicit from the outset b Helps remind the PM and team what the goals/objectives are b ANNOUNCES THE PROJECT What does the Project Charter announce? b Project b Project manager b Project stakeholders b Project scope b Project deliverables b Project assumptions b Project rules/processes b Project governance Methodology for Facilitation of a Requirements Planning Session b How to determine requirements b SWOT Analysis/Brainstorming/Brain- writing b Quality Function Deployment You should have seen this in your ISQS 3344 class.You should have seen this in your ISQS 3344 class. b Goldratt Thinking Process House of Quality Trade-off matrix Design characteristics Customer requirements Target values Relationship matrix Competitive assessment Importance Figure 3.7 House of Quality Figure 3.8 Irons well Easy and safe to use Competitive Assessment Customer Requirements Customer Requirements12345 X Presses quickly9BAX X Removes wrinkles8ABX X Doesnt stick to fabric6XBA X Provides enough steam8ABX X Doesnt spot fabric6XAB X Doesnt scorch fabric9AXB X Heats quickly6XBA X Automatic shut-off3ABX X Quick cool-down3XAB X Doesnt break when dropped5ABX X Doesnt burn when touched5ABX X Not too heavy8XAB House of Quality Figure 3.9 Energy needed to press Weight of iron Size of soleplate Thickness of soleplate Material used in soleplate Number of holes Size of holes Flow of water from holes Time required to reach 450 F Time to go from 450 to 100 Protective cover for soleplate Automatic shutoff Customer Requirements Presses quickly Removes wrinkles+++++ Doesnt stick to fabric-++++ Provides enough steam++++ Doesnt spot fabric+--- Doesnt scorch fabric+++-+ Heats quickly--+- Automatic shut-off+ Quick cool-down--++ Doesnt break when dropped++++ Doesnt burn when touched++++ Not too heavy Irons well Easy and safe to use House of Quality Figure 3.10 Energy needed to press Weight of iron Size of soleplate Thickness of soleplate Material used in soleplate Number of holes Size of holes Flow of water from holes Time required to reach 450 Time to go from 450 to 100 Protective cover for soleplate Automatic shutoff House of Quality Figure 3.11 Energy needed to press Weight of iron Size of soleplate Thickness of soleplate Material used in soleplate Number of holes Size of holes Flow of water from holes Time required to reach 450 Time to go from 450 to 100 Protective cover for soleplate Automatic shutoff Units of measure ft-lblbin.cmtyeammoz/ssecsecY/NY/N Iron A 31.48x42SS NY Iron B 41.28x41MG NY Our Iron (X) 21.79x54T NY Estimated impact Estimated cost Targets 1.28x53SS Design changes ******* Objective measures House of Quality Figure 3.12 Goldratt Thinking Process three steps b What to Change b What to Change to b How to Cause the Change What to Change b Lets talk about the problems with mainframe/glass house architecture b Data were isolated/non integrated Corporate visibility was impossibleCorporate visibility was impossible b Centralized MIS shop had long lead times Like 36 months for maintenance work on legacy appsLike 36 months for maintenance work on legacy apps b MIPS on mainframes were expensive and very much in demand b MIPS in PC were dirt cheap and idle most of the time We will build a tree b Called a current reality tree b Begin by identifying the UNDESIRABLE EFFECTS the stakeholders are experiencing b The basic tree relationship: b IF {box a is true}, then {box b}. Sales cannot see what is happening in accounts receivable Sales cannot track customer orders through the manufacturing/distribution process Information visibility across the enterprise is impossible Independent data pools are created that cannot be integrated or accessed Islands of automation are created End users develop their own independent applications that then run on departmental PCs Centralized MIS shops have lead times of 36 months or longer Centralized mainframes are computing bottlenecks Only the centralized MIS shop could do maintenance and new development work Mainframes were computational bottlenecks Each application had to reside entirely on the mainframe Many new applications were being built Change requests for existing apps were frequent and increasing Centralized MIS shop backlogs were extending out to 36 months Competitive and customer environments are changing rapidly Budgets for MIS shops were stretched to their limits What to change to b An architecture in which the data are totally integrated b An architecture in which most of the processing is not done on mainframes b Decentralization of MIS b What architecture was this??? How to cause the change b ERP implementation b Solves the problems identified above Feasibility Assessment Process b Identify Dependencies with other projects b Assess overall risk b Test alignment with/impact on strategies and plans b Test resource availability b Submit Stage one deliverables for a quality gate inspection b MAKE GO/NO GO Decision Making Decisions amongst Projects b _________________________________________________________________ b b efficiency 9 b frontier b G b R 8 b A b D 4 5 b E b b 3 b b 7 b b 2 6 b 1 b b _________________________________________________________cost__________ b Figure 5.8. Plot for Relating Proposal Cost to Grade Multi-attribute Tree for Grading Projects Solution Linear Programming (optimization) PROJECT NAMEABBREV- IATION BENEFIT SCORE (0-100)COST Customer Relationship ManagementCRM851.5M Data Warehouse FacilityDWF951.3M Scrubbing of Marketing DataSMD55.5M Supply Chain ManagementSCM801M Supply chain data PrepSCD50.4M CAD/CAM SystemCAD75.8M Finite Capacity Scheduling SystemFCS30.2M Process Flow AnalysisPFA35.01M Manufacturing Costing AnalysisMCA30.01M Process Charting SystemPCS30.01M Value Stream MappingVSM40.01M Collaborative Product CommerceCPC851M b b MAX 85*CRM + 95*DWF + 55*SMD + 80*SCM + 50*SCD + 75*CAD + 30*FCS + 35*PFA + 30*PCS + 40*VSM + 85*CPC b b s.t. b b 1.5*CRM + 1.3*DWF +.5*SMD +.1*SCM +.4*SCD +.8*CAD +.2FCS +.01*PFA +.01*PCS +.01*VSM + 1*CPC = 0 b b DWF SMD >= 0 b b 2SCM DWF SCD >= 0 b b FCS SCM >= 0 b b CAD + PFA + MCA + PCS + VSM >= 2 b b CPC SCM >= 0 More process steps b Obtain funding b Review alternative approaches b Obtain necessary signatures b Move to next stage A Caveat b If possible, avoid making quick and dirty estimates of duration and cost in this stage b If your superiors insist, make your estimates high and insist that there could be 75% variability in the estimate b Educate your superiors to the effect that you cannot give a definitive estimate until a well- defined product for the project emerges. Summary b The Planning phase is most important b There is a lot of PM involvement b PM must LeadLead communicatecommunicate NegotiateNegotiate DecideDecide b A most important focus: Build ConsensusBuild Consensus