Project Management
   Fundamentals
Today
PMI Fundamentals
Project Organization
Project Selection
Project Portfolio Management
Procurement Management
Statemen...
Review
Project and Program
4 Project Dimensions
     People, process, product, technology
Rapid Development Strategy
     ...
Trade-off Triangle
Know which of these are fixed & variable
for every project
Project Phases A.K.A.
Project Success Rates
The 2001 Standish Group Report showed Decided
Improvement in IT Project Success Rates from
the 1995 ...
Project Success Rates ..2

Why the Improvements?
    Average cost reduced by half
    Better tools for monitoring and cont...
Why Do Projects Succeed?
How to identify a project’s success potential
– What metrics could you look at?
     Project size...
Why Do Projects Succeed?
–   Executive support
–   User involvement
–   Experienced project manager
–   Clear business obj...
Why Executive Support?
Top management can help to:
– Secure adequate resources
– Get approval for unique project needs in ...
Stakeholder Triad
1. Function Representative
     The ‘business person’
     Or SME: Subject Matter Expert
2. Executive Sp...
15 PM Job Functions
Define scope of project                        Evaluate project requirements
Identify stakeholders,   ...
PMBOK
Structures PM by
– A) Processes
– B) Knowledge Areas
Processes. 2 types
– 1. PM processes: describing and organizing...
PMI Framework




          Source: Project Management Institute
The 5 PMI Process Groups
1. Initiating
2. Planning
3. Executing
4. Controlling
5. Closing
Note: these can be repeated for ...
PMI Process Groups




             Source: Project Management Institute
PMI: Process Links
PMI Phase Interactions
Design Phase
  Initiating                  Planning
 Processes                   Processes
        ...
PMI: Initiating Process
Inputs                     Outputs
– Product Description      – Project charter
– Strategic plan  ...
PMI: Planning Process
Devising and maintaining a workable scheme to accomplish the
business need that the project was unde...
PMI: Executing Process
Coordinating people and other resources to carry out the plan


                                   ...
PMI: Controlling Process
Ensuring that project objectives are met by monitoring and measuring
progress and taking correcti...
PMI: Closing Process
       Formalizing acceptance of the project or phase
       and bringing it to an orderly end

Admin...
PMI Knowledge Areas
Importance of Phases
Define your management review points
– “Phase exits” or “kill points”
– Ensure continued alignment wi...
Understanding Organizations
Structural frame:           Human resources frame:
Focuses on roles and        Focuses on prov...
Organizational Structures
Functional
– Engineering, Marketing, Design, and so on
– Profit and Loss (P&L) from production
P...
Organizational Structures ..2
Matrix
– Functional and Project based
– Program Management Model
– Shorter cycles, need for ...
Functional Organization




• Pros                               • Cons
   – Clear definition of authority     – “Walls”: ...
Project Organization




• Pros                         • Cons
   – Unity of command            – Duplication of facilitie...
Matrix Organization




• Pros                            • Cons
   – Project integration across     – Two bosses for pers...
Matrix Forms
Weak, Strong, Balanced
Degree of relative power
Weak: functional-centric
Strong: project-centric
Organizational Structure Influences
               on Projects
      Organization Type                                    ...
Organizational Impact
Form can greatly impact your role
Determine what skills you’ll need from
which functions
The new “Pr...
Why Firms Invest in IT
IT Planning Process
Methods for Selecting Projects
 There are usually (always?) more projects than
 available time and resources to implement ...
Broad Organizational Needs

It is often difficult to provide strong justification
for many IT projects, but everyone agree...
Categorizing IT Projects
One categorization: whether project addresses
– a problem
– an opportunity
– a directive
Another:...
Project Portfolio Management
 Portfolio: a group of IT projects under a
 coordinated management structure
 Different ‘port...
Portfolio Management
A 5 level approach (from CIO magazine)
1. Create a Portfolio Database
     Project names & descriptio...
Portfolio Management
2. Prioritize Projects
– Try quantifiable rankings
    Risk and return
– Still subjectivity and disag...
Portfolio Management
4. Automate the repository
– Input of new data (new projects)
– Automated tracking (PM software integ...
Procurement Management
Procurement means acquiring goods and/or
services from an outside source
– a.k.a. purchasing or out...
Why Outsource?
To reduce both fixed and recurrent costs
To allow the client organization to focus on
its core business
To ...
Procurement Management

Procurement planning: determining what to
procure and when
Solicitation planning: documenting prod...
Procurement Management

Source selection: choosing from among
potential vendors
Contract administration: managing the
rela...
Project Procurement Management
   Processes and Key Outputs
Procurement Tools &
        Techniques
Make-or-buy analysis (build vs. buy)
    Determining whether a particular product o...
Types of Contracts
Fixed price or lump sum: involve a fixed total
price for a well-defined product or service
Cost reimbur...
Cost Reimbursable Contracts
Cost plus incentive fee (CPIF)
 –   Buyer pays seller for allowable performance costs plus a
 ...
Contract Types Versus Risk
Statement of Work (SOW)
A description of the work required for the
project
Sets the “boundary conditions”
SOW vs. CSOW (Co...
SOW Continued
Typically done after approval (after “Go”)
Can be multiple versions
– 1. List of deliverables for an RFP
– 2...
SOW Template
I.     Scope of Work: Describe the work to be done to detail. Specify the hardware and
       software involv...
Project Charter
A high-level project description:
– Business need, product, assumptions
Often precedes SOW
Often 2-4 pages...
Project Charter Outline
Overview
– Business need
– Objectives
– Method or approach
General scope of work
Rough schedule & ...
Project Charter Examples
Assumptions
– We will reuse architecture from the old ordering system
– Customer will provide bus...
Project Charter Examples ..2
Primary Stakeholders (from various projects)
– Sponsor: VP of Marketing
– Sponsor: Five Star ...
Project Charter Examples ..3
Deliverables
– Retail Web Site
       –   Full catalog
       –   Shopping-cart system
      ...
Project Charter Examples ..4
Deliverables
– Corporate Application
    Network and hardware
    Web-based HR portal
    Con...
Project Charter Examples ..5
Out of Scope
– News feeds                      - Dynamic pricing
– Auction engine            ...
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Software Project Management

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Software Project Management

  1. 1. Project Management Fundamentals
  2. 2. Today PMI Fundamentals Project Organization Project Selection Project Portfolio Management Procurement Management Statement of Work (SOW) Project Charter
  3. 3. Review Project and Program 4 Project Dimensions People, process, product, technology Rapid Development Strategy Avoid classic mistakes, development fundamentals, risk management, schedule-oriented practices Trade-off Triangle Process. One size does not fit all. 36 Classic Mistakes
  4. 4. Trade-off Triangle Know which of these are fixed & variable for every project
  5. 5. Project Phases A.K.A.
  6. 6. Project Success Rates The 2001 Standish Group Report showed Decided Improvement in IT Project Success Rates from the 1995 report. – Time overruns: 63% compared to 222% – Cost overruns: 45% compared to 189% – Required features: 67% compared to 61% – 78,000 U.S. projects successful vs. 28,000 – 28% of IT projects succeeded compared to 16%
  7. 7. Project Success Rates ..2 Why the Improvements? Average cost reduced by half Better tools for monitoring and control More skilled PM’s, more process, more user involvement And “The fact that there are processes is significant in itself.”
  8. 8. Why Do Projects Succeed? How to identify a project’s success potential – What metrics could you look at? Project size Project duration Project team size People technical skills People communication skills
  9. 9. Why Do Projects Succeed? – Executive support – User involvement – Experienced project manager – Clear business objectives – Focused scope – Standard software infrastructure – Firm basic requirements – Formal methodology – Reliable estimates Standish Group “CHAOS 2001: A Recipe for Success”
  10. 10. Why Executive Support? Top management can help to: – Secure adequate resources – Get approval for unique project needs in a timely manner – Receive cooperation from people throughout the organization – Provide leadership guidance
  11. 11. Stakeholder Triad 1. Function Representative The ‘business person’ Or SME: Subject Matter Expert 2. Executive Sponsor Project’s visionary & champion Also the ‘General’, ‘Fall Guy’, and ‘Minesweeper’ Not the PM, ‘Santa Claus’, or the ‘Tech Guy’ 3. Project Manager The ‘Linchpin’ Must be ‘multi-lingual’
  12. 12. 15 PM Job Functions Define scope of project Evaluate project requirements Identify stakeholders, Identify and evaluate risks Prepare contingency plan decision-makers, and escalation procedures Identify interdependencies Identify and track critical Develop detailed task list milestones (work breakdown structures) Participate in project phase Estimate time requirements review Develop initial project Secure needed resources management flow chart Manage the change control Identify required resources process and budget Report project status *Northwest Center for Emerging Technologies, "Building a Foundation for Tomorrow: Skills Standards for Information Technology,"Belleview, WA, 1999
  13. 13. PMBOK Structures PM by – A) Processes – B) Knowledge Areas Processes. 2 types – 1. PM processes: describing and organizing the work of the project – 2. Product-oriented processes: specifying and building the project’s product
  14. 14. PMI Framework Source: Project Management Institute
  15. 15. The 5 PMI Process Groups 1. Initiating 2. Planning 3. Executing 4. Controlling 5. Closing Note: these can be repeated for each phase Each process is described by: Inputs Tools & Techniques Outputs
  16. 16. PMI Process Groups Source: Project Management Institute
  17. 17. PMI: Process Links
  18. 18. PMI Phase Interactions Design Phase Initiating Planning Processes Processes Implementation Phase Initiating Planning Controlling Executing Processes Processes Processes Processes Controlling Executing Closing Processes Processes Processes Closing Processes
  19. 19. PMI: Initiating Process Inputs Outputs – Product Description – Project charter – Strategic plan – Project Manager – Project Selection assigned Criteria – Constraints – Historical Information – Assumptions
  20. 20. PMI: Planning Process Devising and maintaining a workable scheme to accomplish the business need that the project was undertaken to address Scope Planning Risk Planning Scope Definition Schedule Development Activity Definition Quality Planning Activity Sequencing Communications Activity Duration Planning Estimating Organization Planning Resource Planning Staff Acquisition Cost Estimating Procurement Planning Cost Budgeting Project Plan Development
  21. 21. PMI: Executing Process Coordinating people and other resources to carry out the plan Information Project Plan Execution Distribution Scope Verification Solicitation Quality Assurance Source Selection Team Development Contract Administration
  22. 22. PMI: Controlling Process Ensuring that project objectives are met by monitoring and measuring progress and taking corrective measures when necessary Overall Change Performance Reporting Control Risk Response Control Scope Change Control Schedule Control Cost Control Quality Control
  23. 23. PMI: Closing Process Formalizing acceptance of the project or phase and bringing it to an orderly end Administrative Closure Contract Close-out
  24. 24. PMI Knowledge Areas
  25. 25. Importance of Phases Define your management review points – “Phase exits” or “kill points” – Ensure continued alignment with goals – Form of Validation & Verification (V&V)
  26. 26. Understanding Organizations Structural frame: Human resources frame: Focuses on roles and Focuses on providing responsibilities, harmony between needs of coordination and control. the organization and needs Organization charts help of people. define this frame. Political frame: Symbolic frame: Focuses Assumes organizations on symbols and meanings are coalitions composed related to events. Culture of varied individuals and is important. interest groups. Conflict and power are key issues.
  27. 27. Organizational Structures Functional – Engineering, Marketing, Design, and so on – Profit and Loss (P&L) from production Project – Project A, Project B – Income from projects – PM has P&L responsibility
  28. 28. Organizational Structures ..2 Matrix – Functional and Project based – Program Management Model – Shorter cycles, need for rapid development process
  29. 29. Functional Organization • Pros • Cons – Clear definition of authority – “Walls”: can lack customer orientation – Eliminates duplication – “Silos” create longer decisions cycles – Encourages specialization – Conflicts across functional areas – Clear career paths – Project leaders have little power
  30. 30. Project Organization • Pros • Cons – Unity of command – Duplication of facilities – Effective inter-project – Career path communication • Examples: defense avionics, construction
  31. 31. Matrix Organization • Pros • Cons – Project integration across – Two bosses for personnel functional lines – Complexity –Efficient use of resources – Resource & priority conflicts –Retains functional teams
  32. 32. Matrix Forms Weak, Strong, Balanced Degree of relative power Weak: functional-centric Strong: project-centric
  33. 33. Organizational Structure Influences on Projects Organization Type Matrix Project Functional Weak Matrix Balanced Strong Matrix Projectized Characteristics Matrix Project Manager's Little or Limited Low to Moderate High to Authority None Moderate To High Almost Total Percent of Performing Organization's Virtually 0-25% 15-60% 50-95% 85-100% Personnel Assigned Full- None time to Project Work Project Manager's Role Part-time Part-time Full-time Full-time Full-time Common Title for Project Project Project Project Project Project Manager's Role Coordinator/ Coordinator/ Manager/ Manager/ Manager/ Project Leader Project Leader Project Officer Program Manager Program Manager Project Management Administrative Staff Part-time Part-time Part-time Full-time Full-time PMBOK Guide, 2000, p. 19
  34. 34. Organizational Impact Form can greatly impact your role Determine what skills you’ll need from which functions The new “Project Office” – A) As centralized project management – B) As coach and info. office to project teams The “Enterprise PMO” (EMPO)
  35. 35. Why Firms Invest in IT
  36. 36. IT Planning Process
  37. 37. Methods for Selecting Projects There are usually (always?) more projects than available time and resources to implement them Therefore: 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 – Weighted scoring models
  38. 38. 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
  39. 39. Categorizing IT Projects One categorization: whether project addresses – a problem – an opportunity – a directive Another: how long it will take & when it is needed Another: overall priority of the project
  40. 40. Project Portfolio Management Portfolio: a group of IT projects under a coordinated management structure Different ‘portfolio models’ are available: – Economic return model – NPV, IRR, ROI – Cost-benefit model – Can include less tangible factors – Market research model – For new products Each considers relative value and resource/budget interactions
  41. 41. Portfolio Management A 5 level approach (from CIO magazine) 1. Create a Portfolio Database Project names & descriptions Estimated costs, timeframes, staffing – Benefits Spotting redundancies Communication across organizations & teams Holistic view
  42. 42. Portfolio Management 2. Prioritize Projects – Try quantifiable rankings Risk and return – Still subjectivity and disagreements 3. Divide into budgets based on type – To align with business needs – Ex: utilities (‘keeping the lights on’), incremental upgrades, strategic investments
  43. 43. Portfolio Management 4. Automate the repository – Input of new data (new projects) – Automated tracking (PM software integration) 5. Apply modern portfolio theory – Ex: www.modporttheory.com – More advanced than most of us need
  44. 44. Procurement Management Procurement means acquiring goods and/or services from an outside source – a.k.a. purchasing or outsourcing Know how your project fits into this model – Are you building “in-house”? “for hire”? Thus are you the ‘outside source’? – As a startup? (thus in-house but as basis for the business itself)
  45. 45. Why Outsource? To reduce both fixed and recurrent costs To allow the client organization to focus on its core business To access skills and technologies To provide flexibility To increase accountability
  46. 46. Procurement Management Procurement planning: determining what to procure and when Solicitation planning: documenting product requirements and identifying potential sources Solicitation: obtaining quotations, bids, offers, or proposals as appropriate
  47. 47. Procurement Management Source selection: choosing from among potential vendors Contract administration: managing the relationship with the vendor Contract close-out: completion and settlement of the contract
  48. 48. Project Procurement Management Processes and Key Outputs
  49. 49. Procurement Tools & Techniques Make-or-buy analysis (build vs. buy) Determining whether a particular product or service should be made or performed inside the organization or purchased from someone else. Often involves financial analysis Experts Both internal and external, can provide valuable inputs in procurement decisions
  50. 50. Types of Contracts Fixed price or lump sum: involve a fixed total price for a well-defined product or service Cost reimbursable: involve payment to the seller for direct and indirect costs Time and material contracts: hybrid of both fixed price and cost reimbursable, often used by consultants Unit price contracts: require the buyer to pay the seller a predetermined amount per unit of service
  51. 51. Cost Reimbursable Contracts Cost plus incentive fee (CPIF) – Buyer pays seller for allowable performance costs plus a predetermined fee and an incentive bonus Cost plus fixed fee (CPFF) – Buyer pays seller for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs Cost plus percentage of costs (CPPC) – Buyer pays seller for allowable performance costs plus a predetermined percentage based on total costs
  52. 52. Contract Types Versus Risk
  53. 53. Statement of Work (SOW) A description of the work required for the project Sets the “boundary conditions” SOW vs. CSOW (Contract SOW) – Latter: uses legal language as part of a competitive bidding scenario Can be used in the final contract – be careful, be specific, be clear
  54. 54. SOW Continued Typically done after approval (after “Go”) Can be multiple versions – 1. List of deliverables for an RFP – 2. More detailed within final RFP – 3. Binding version from contract
  55. 55. SOW Template I. Scope of Work: Describe the work to be done to detail. Specify the hardware and software involved and the exact nature of the work. II. Location of Work: Describe where the work must be performed. Specify the location of hardware and software and where the people must perform the work III. Period of Performance: Specify when the work is expected to start and end, working hours, number of hours that can be billed per week, where the work must be performed, and related schedule information. Optional “Compensation” section. IV. Deliverables Schedule: List specific deliverables, describe them in detail, and specify when they are due. V. Applicable Standards: Specify any company or industry-specific standards that are relevant to performing the work. Often an Assumptions section as well. VI. Acceptance Criteria: Describe how the buyer organization will determine if the work is acceptable. VII. Special Requirements: Specify any special requirements such as hardware or software certifications, minimum degree or experience level of personnel, travel requirements, documentation, testing, support, and so on.
  56. 56. Project Charter A high-level project description: – Business need, product, assumptions Often precedes SOW Often 2-4 pages (can be longer)
  57. 57. Project Charter Outline Overview – Business need – Objectives – Method or approach General scope of work Rough schedule & budget Roles & responsibilities Assumptions
  58. 58. Project Charter Examples Assumptions – We will reuse architecture from the old ordering system – Customer will provide business experts as needed – System will use existing networking resources – Customer will sign-off on interim deliverables within one week of each delivery – All import data will be available in XML format – This will be a web-based application – We will partner with an overseas development firm to create the security systems
  59. 59. Project Charter Examples ..2 Primary Stakeholders (from various projects) – Sponsor: VP of Marketing – Sponsor: Five Star Brokerage Consortium – Sponsor: Bill Smith, CEO – Users: Call center operators – Users: Our partner banks – Customers: Attorneys from small-to-mid size law firms – Customers: Males 30-45 earning $75K or more
  60. 60. Project Charter Examples ..3 Deliverables – Retail Web Site – Full catalog – Shopping-cart system – Search engine – User registration system – Trading System – Equities order entry system – Portfolio management – Order execution engine – Integration with X legacy systems – Security infrastructure
  61. 61. Project Charter Examples ..4 Deliverables – Corporate Application Network and hardware Web-based HR portal Connectivity for VPN “Asset Management Viewport” application Customized Reporting Engine – Allowing users to Perseus data mart – Delivery into HTML and Excel User manuals
  62. 62. Project Charter Examples ..5 Out of Scope – News feeds - Dynamic pricing – Auction engine - EDI support – Legacy integration - Help system Schedule – We anticipate a 12-14 month development timeframe – The project is expected to start in Q1 2004 and complete in Q3 2005 – The initial release is expect within 10 months with the follow-on delivery within 4-6 months
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