Project Initiation This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation 1 Project Initiation Purpose of initiation phase Comparing project options Total cost of ownership The project charter This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation The Initiation Phase Business problem or opportunity defined Solution is defined Project is formed Business case created Project team appointed This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation The Business Case Problem or opportunity: Detailed description Introduction Problem/opportunity statement Assumptions and Constraints Alignment with organizational objectives solutions AnalyList of alternative sis of benefits, costs, and issues Description of the preferred solution Main project Requirements Potential risks Summarized plan for implementation Schedule Financial analysis This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Comparing Options Weighted Decision MatrixCriteriaWeightSJS EnterprisesGame AccessDVD LinkEducational15%9000Sports-related15%909090Secure payment10%905050(rows left out here—see textbook) Weighted Project Scores100%5614.512.5 This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Financial Considerations Can compare projects based on Net present value Internal Rate of Return (Return on Investment or ROI) Payback Analysis This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Net Present Value Analysis Considers the time value of money Costs for future years must be discounted to the present time Tangible benefits also discounted to the present time Must identify an appropriate discount rate Take risk into consideration This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation NPV Calculation t is the time of the cash flow Rt is the cash flow at time t i is the interest rate Apply the above formula to each annual inflow and outflow of cash Add all terms together to get the NPV Rt (1 + i)t This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation NPV AnalysisIf…It means…Then…NPV > 0the investment would add value to the firmthe project may be acceptedNPV < 0the investment would subtract value from the firmthe project should be rejectedNPV = 0the investment would neither gain nor lose value for the firmindifferent in the decision This ...

1. Project Initiation
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
1
Project Initiation
Purpose of initiation phase
Comparing project options
Total cost of ownership
The project charter
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
The Initiation Phase
Business problem or opportunity defined
Solution
is defined
Project is formed

2. Business case created
Project team appointed
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
The Business Case
Problem or opportunity: Detailed description
Introduction
Problem/opportunity statement
Assumptions and Constraints
Alignment with organizational objectives
solutions
AnalyList of alternative sis of benefits, costs, and issues
Description of the preferred solution
Main project Requirements
Potential risks
Summarized plan for implementation
Schedule
Financial analysis

3. This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Comparing Options
Weighted Decision MatrixCriteriaWeightSJS EnterprisesGame
AccessDVD LinkEducational15%9000Sports-
related15%909090Secure payment10%905050(rows left out
here—see textbook) Weighted Project Scores100%5614.512.5
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Financial Considerations
Can compare projects based on
Net present value
Internal Rate of Return (Return on Investment or ROI)
Payback Analysis
This work is licensed under a

4. Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Net Present Value Analysis
Considers the time value of money
Costs for future years must be discounted to the present time
Tangible benefits also discounted to the present time
Must identify an appropriate discount rate
Take risk into consideration
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
NPV Calculation
t is the time of the cash flow
Rt is the cash flow at time t
i is the interest rate
Apply the above formula to each annual inflow and outflow of
cash

5. Add all terms together to get the NPV
Rt
(1 + i)t
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
NPV AnalysisIf…It means…Then…NPV > 0the investment
would add value to the firmthe project may be acceptedNPV <
0the investment would subtract value from the firmthe project
should be rejectedNPV = 0the investment would neither gain
nor lose value for the firmindifferent in the decision
This project adds no monetary value.
Decision should be based on other criteria, e.g., strategic
positioning or other factors not explicitly included in the
calculation.
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation

6. Rate of Return
Can be used to compare different options
Organization may have a minimum acceptable rate of return for
projects
(Total benefits – Total costs) / Total costs
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Payback Analysis
Compares cumulative costs to cumulative benefits
Easiest to see in graphical format
Time on horizontal axis, money on vertical
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Payback Analysis

7. This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
The Project Charter
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Project Management
Chapter 7: Project Initiation
13
Purpose of the Project Charter
When signed off, you have approval to proceed to detailed
planning, followed by carrying out your project.
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).

8. Project Management
Chapter 7: Project Initiation
Organizational Process Assets
Is there a standard format for project charters?
Is there a standard process for developing and getting approval
for a project charter?
What can the PMO do for you?
What does the PMO require of you?
Are there applicable “lessons learned” available from other
projects?
If you are inexperienced, is there a mentor available?
Etc.
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Project Charter – Typical Contents
Identification section
Project purpose or justification
Measurable project objectives and related success criteria

9. High-level requirements
Assumptions and constraints
High-level project description and boundaries
High-level risks
Summary milestone schedule
Summary budget
Stakeholder list
Approvals
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Identification
Name of the project—make it meaningful
Name, title, department of project sponsor
Name of project manager
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Project Management

10. Chapter 7: Project Initiation
Clear Objective
SMART
Specific
Measurable
Acceptable
Realistic
Time based
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Project Management
Chapter 7: Project Initiation
Business Need or Opportunity
A concise statement of how the project’s deliverables will
contribute to organizational objectives
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Project Management
Chapter 7: Project Initiation

11. Scope
Clearly defines what is in and out of the project
Major Milestones
Identifiable points in time
Target dates will be added LATER
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Project Management
Chapter 7: Project Initiation
Major Deliverables
Break down the overall objective into smaller measurable units
Assumptions
Things you are not certain of but can proceed if you behave as
if they are true
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Project Management
Chapter 7: Project Initiation

12. Constraints
Anything that limits your ability to deliver or the range of
acceptable solutions
Preliminary Cost Estimates
How will the costs be defined and controlled
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Project Management
Chapter 7: Project Initiation
Risks
High-level statement about risks identified so far
Include the risk of NOT doing the project
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Project Management
Chapter 7: Project Initiation
Stakeholder List
The stakeholders identified so far, including their roles
Approval

13. A place for the project sponsor and the project manager to sign
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Project Management
Chapter 7: Project Initiation
Project Initiation: Summary
The first phase
Relationship of project to business objectives is key
Compare alternatives using weighted matrix
Financial analysis: NPV, ROI, payback
Project Charter is the primary output;
it includes the stakeholder list
Completion of Project Initiation is the signal that the project
has approval to proceed to the project planning phase.
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
Questions?

14. This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 7: Project Initiation
26
image2.jpeg
image1.png
Import - Export Assignment
Pick an import-export company that is of interest to you. It can
be a US or
foreign-based company. In a 2-page report, present an overview
of that company. It
should include:
● Country of headquarters/charter
● Number of employees

15. ● Years in business
● Countries where it exports/imports
● Type(s) of operations, e.g., truck, rail, container shipping,
etc.
● Types of goods it imports / exports
● Any other available/pertinent profile information
● Your personal thoughts pro and con about its operations
● Suggestions for improving / expanding their operations
Material for this assignment can be obtained from the
company’s web site, your
textbook, and other published/online sources. Please provide a
bibliographic list of your
references at the back of your paper. Your grade will be based
on the thoroughness of
your analysis and research. Submit your completed assignment
in hard copy.
Overview of Project Planning
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Creative Commons Attribution 3.0 Unported License (CC-BY).

16. Project Management
Chapter 8: Overview of Project Planning
1
Project Planning
After the project charter is approved, the Project Initiation
phase is complete and you are ready to proceed to the Project
Planning phase.
When the Project Planning phase is complete, you are ready to
proceed to Project Implementation
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Project Planning
Project planning is the second major project phase, and the
second of the five process groups identified in PMBOK.
After the project charter is approved, the Project Initiation
phase is complete and you are ready to proceed to the Project
Planning phase.

17. When the Project Planning phase is complete, you are ready to
proceed to Project Implementation
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Purpose
of the project planning phase
Establishing business requirements.
Establishing cost, schedule, list of deliverables, and delivery
dates.
Establishing resources plan.
Getting management approval and proceeding to the next phase.
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Basic processes
of project planning

18. Scope planning
Preparing the Work Breakdown Structure
Project schedule development
Resource planning
Budget planning
Procurement planning
Risk management
Quality planning
Communication planning
Stakeholder management planning
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Scope planning
Determining the scope is a key piece of being able to prepare a
plan.
What is in?
What is out?
Make it
Specific
Measurable

19. This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Preparing the WBS
Work breakdown structure:
List of all tasks and subtasks required to achieve the scope
(produce the deliverables)
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Project Schedule development
How long will each task on the WBS take?
What are the relationships between the tasks?
Independent
Direct Precedence

20. More complex relationships
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Project Management
Chapter 8: Overview of Project Planning
Resource Planning
What resources are required to carry out each task on the WBS?
Human
Budget
Specialized equipment
Etc.
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Budget Planning
What is the required budget?
When during the project will the amounts be needed?

21. Is an external source of funding required?
Etc.
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Procurement Planning
Will equipment/supplies/software/etc. be purchased from
another organization in order to carry out the project?
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Risk Management
What can you anticipate in the way of unknowns that might
impact the project?
Can you eliminate/reduce/mitigate the impacts of these risks?
How?

22. This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Quality Planning
What is the required quality?
How will it be measured?
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Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Communication Planning
What kinds of communication will be required throughout the
project?
With the team
With the sponsor
With other stakeholders
What forms of communication will you use?
Formal, informal, written, oral
What is the planned frequency of communication?

23. This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Stakeholder Management Planning
The project initiation phase identified the stakeholders
During the planning phase
Additional stakeholders may be identified
Detailed plans are made about the format and frequency of
communications with each stakeholder group
Tools are identified which can be used to track and control the
relationships between the stakeholders and the project
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Summary
Project Planning phase includes Scope planning, Work

24. Breakdown Structure, Project schedule development, Resource
planning, Budget planning, Procurement planning, Risk
management, Quality planning, Communication planning and
Stakeholder Management Planning
When the project plan is approved by the sponsor, you are ready
to proceed to implementation
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
Questions?
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 8: Overview of Project Planning
17
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