Notes

Outline

Chapter 4: Project Scope Management

Importance of Good Project Scope Management 1995 CHAOS study cited user involvement, a clear project mission, a clear statement of requirements, and proper planning as being important for project success The program manager of Keller Graduate School of Management cites proper project definition and scope as the main reasons projects fail

What is Project Scope Management? Scope refers to all the work involved in creating the products of the project and the processes used to create them Project scope management includes the processes involved in defining and controlling what is or is not included in the project The project team and stakeholders must have the same understanding of what products will be produces as a result of a project and what processes will be used in producing them

Project Scope Management Processes Initiation: beginning a project or continuing to the next phase Scope planning: developing documents to provide the basis for future project decisions Scope definition: subdividing the major project deliverables into smaller, more manageable components Scope verification: formalizing acceptance of the project scope Scope change control: controlling changes to project scope

Project Initiation: Strategic Planning and Project Selection The first step in initiating projects is to look at the big picture or strategic plan of an organization Strategic planning involves determining long-term business objectives IT projects should support strategic and financial business objectives

Table 4-1. Why Firms Invest in Information Technology

Identifying Potential Projects Many organizations follow a planning process for selecting IT projects First develop an IT strategic plan based on the organization’s overall strategic plan Then perform a business area analysis Then define potential projects Then select IT projects and assign resources

Figure 4-1. Information Technology Planning Process

Methods for Selecting Projects There are usually more projects than available time and resources to implement them It is important to follow a logical process for selecting IT projects to work on Methods include focusing on broad needs, categorizing projects, financial methods, and weighted scoring models

Focusing on Broad Organizational Needs 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

Categorizing IT Projects 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

Financial Analysis of Projects 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

Net Present Value Analysis 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

Figure 4-2.  Net Present Value Example

Return on Investment Return on investment (ROI) is income divided by investment    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

Payback Analysis 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 net dollars invested in a project Payback occurs when the cumulative discounted benefits and costs are greater than zero Many organizations want IT projects to have a fairly short payback period

Figure 4-3. NPV, ROI, and Payback Analysis for Project 1

Figure 4-4. NPV, ROI, and Payback Analysis for Project 2

Weighted Scoring Model A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria First identify criteria important to the project selection process Then assign weights (percentages) to each criterion so they add up to 100% Then 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 See “What Went Right?” for a description of how a mortgage finance agency uses a weighted scoring model for IT projects

Figure 4-5. Sample Weighted Scoring Model for Project Selection

Project Charters After deciding what project to work on, it is important to formalize projects 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

Table 4-2. Sample Project Charter

Table 4-2. Sample Project Charter (continued)

Scope Planning and the Scope Statement A scope statement is a document used to develop and confirm a common understanding of the project scope.  It should include a project justification a brief description of the project’s products a summary of all project deliverables a statement of what determines project success

Scope Planning and the Work Breakdown Structure After completing scope planning, the next step is to further define the work by breaking it into manageable pieces Good scope definition helps improve the accuracy of time, cost, and resource estimates defines a baseline for performance measurement and project control aids in communicating clear work responsibilities

The Work Breakdown Structure A work breakdown structure (WBS) is an outcome-oriented analysis of the work involved in a project that defines the total scope of the project It is a foundation document in project management because it provides the basis for planning and managing project schedules, costs, and changes

Figure 4-6a. Sample Intranet WBS Organized by Product

Figure 4-6b. Sample Intranet WBS Organized by Phase

Table 4-3. Intranet WBS in Tabular Form

Figure 4-7. Intranet WBS and Gantt Chart in Project 2000

Figure 4-8.  Intranet WBS and Gantt Chart Organized by Project Management Process Groups

Approaches to Developing WBSs Using guidelines: Some organizations, like the DOD, provide guidelines for preparing WBSs The analogy approach: It often helps to review WBSs of similar projects The top-down approach: Start with the largest items of the project and keep breaking them down The bottoms-up approach: Start with the detailed tasks and roll them up

Basic Principles for Creating WBSs* 1. A unit of work should appear at only one place in the WBS. 2. The work content of a WBS item is the sum of the WBS items below it. 3. A WBS item is the responsibility of only one individual, even though many people may be working on it. 4. The WBS must be consistent with the way in which work is actually going to be performed; it should serve the project team first and other purposes only if practical. 5. Project team members should be involved in developing the WBS to ensure consistency and buy-in. 6. Each WBS item must be documented to ensure accurate understanding of the scope of work included and not included in that item. 7. The WBS must be a flexible tool to accommodate inevitable changes while properly maintaining control of the work content in the project according to the scope statement.

Scope Verification and Scope Change Control It is very difficult to create a good scope statement and WBS for a project It is even more difficult to verify project scope and minimize scope changes Many IT projects suffer from scope creep and poor scope verification FoxMeyer Drug filed for bankruptcy after scope creep on a robotic warehouse Engineers at Grumman called a system “Naziware” and refused to use it

Table 4-4. Factors Causing IT Project Problems*

Suggestions for Improving User Input Insist that all projects have a sponsor from the user organization Have users on the project team Have regular meetings Deliver something to project users and sponsor on a regular basis Co-locate users with the developers

Suggestions for Reducing Incomplete and Changing Requirements Develop and follow a requirements management process Employ techniques such as prototyping, use case modeling, and Joint Application Design to thoroughly understand user requirements Put all requirements in writing and current Create a requirements management database Provide adequate testing Use a process for reviewing requested changes from a systems perspective Emphasize completion dates