L03 integration management

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L03 integration management

  1. 1. IS5540 Project Management & Quality Assurance Week 3 - Project Integration Management Schwalbe: Information Technology Project Management, Chapter 4 Adapted by Janet Yu , Frank Lo
  2. 2. Story of Airbus <ul><li>The Airbus A380 megajet project was two years behind schedule in Oct. 2006 – expected loss of $6.1 billion over the next four years </li></ul><ul><li>Reason: integration management problems </li></ul><ul><ul><li>Before 2000, Airbus was a loose consortium of aerospace companies in several countries </li></ul></ul><ul><ul><li>In 2000, decided to go-ahead with the A380 project & transformed into an “integrated” company </li></ul></ul><ul><ul><li>However, Design Center in Germany used an earlier version a design software; the assembly plant used the latest version </li></ul></ul><ul><ul><li>Design specs cannot flow </li></ul></ul><ul><ul><li>Result: Pre-assembled bundles (from Germany) containing some cabin wiring didn’t fit properly into the plane (assembly in France) </li></ul></ul>*Matlack, Carol. “First, Blame the Software,” BusinessWeek Online (October 5, 2006).
  3. 3. Learning Objectives <ul><li>Understand the importance of project integration management and the processes involved </li></ul><ul><li>Learn how to apply different project selection methods to project selection </li></ul><ul><li>Describe in detail </li></ul><ul><ul><li>the Project Charter </li></ul></ul><ul><ul><li>the Project Management Plan </li></ul></ul><ul><ul><li>Change Control </li></ul></ul>
  4. 4. PMI Framework: 9 Knowledge Areas People Integration Scope Time Cost Quality Communication Risk Procurement
  5. 5. Why Project Integration Management <ul><li>The key to overall project success </li></ul><ul><li>Project managers must coordinate all of the other knowledge areas throughout a project’s life cycle </li></ul><ul><li>Many new project managers have trouble looking at the “ big picture ” and want to focus on too many details </li></ul>
  6. 6. So you know why Integration Management is so important ?! Now more details ……
  7. 7. Project Integration Management Processes <ul><li>Develop the project charter : working with stakeholders to create the document that formally authorizes a project—the charter </li></ul><ul><li>Develop the project management plan : coordinating all planning efforts to create a consistent, coherent document—the project management plan </li></ul><ul><li>Direct and manage project execution : carrying out the project management plan by performing the activities included in it </li></ul>
  8. 8. Project Integration Management Processes (continued) <ul><li>Monitor and control the project work : overseeing project work to meet the performance objectives of the project </li></ul><ul><li>Perform integrated change control : coordinating changes </li></ul><ul><li>Close the project : finalizing all project activities to formally close the project </li></ul>
  9. 9. Before We Have a Project…. Project Selection Methods….
  10. 10. Strategic Planning and Project Selection <ul><li>Strategic planning involves determining long-term objectives, predicting future trends, and projecting the need for new products and services </li></ul><ul><li>As part of strategic planning, organizations: </li></ul><ul><ul><li>Identify potential projects </li></ul></ul><ul><ul><li>Use realistic methods to select which projects to work on </li></ul></ul><ul><ul><li>Formalize project initiation by issuing a project charter </li></ul></ul>
  11. 11. Methods for Selecting Projects <ul><li>There are usually more projects than available time and resources to implement them </li></ul><ul><li>Methods for selecting projects include: </li></ul><ul><ul><li>Performing net present value (NPV) or other financial analyses </li></ul></ul><ul><ul><li>Using a weighted scoring model </li></ul></ul><ul><ul><li>Implementing a balanced scorecard </li></ul></ul><ul><li>But for some projects, they may be selected because of a directive from management or Government </li></ul>
  12. 12. Financial Analysis of Projects <ul><li>Financial considerations are often an important consideration in selecting projects </li></ul><ul><li>Four primary methods for determining the projected financial value of projects </li></ul><ul><ul><li>Net present value (NPV) analysis </li></ul></ul><ul><ul><li>Return on investment (ROI) </li></ul></ul><ul><ul><li>Internal Rate of Return (IRR) </li></ul></ul><ul><ul><li>Payback analysis </li></ul></ul>
  13. 13. Discounted Cash Flow <ul><li>Money in the future is worth less than money received today </li></ul><ul><li>The future value (FV) is calculated as </li></ul><ul><ul><li>FV = PV(1+i) n where i is the interest rate, PV the present value, n the no. of periods </li></ul></ul><ul><ul><li>PV = FV/(1+i) n </li></ul></ul><ul><li>Example: </li></ul><ul><ul><li>FV of $2000 is $2315.25 if i = 5%, n = 3 </li></ul></ul>
  14. 14. Net Present Value Analysis <ul><li>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 </li></ul><ul><li>= Total discounted benefits – Total discounted costs </li></ul>
  15. 15. Choose A Project to Invest <ul><li>NPV of Project A = 87K; </li></ul><ul><li>NPV of Project B = 57K ?? </li></ul><ul><li>NPV of Project A = -87K; </li></ul><ul><li>NPV of Project B = 57K ?? </li></ul><ul><li>NPV of Project A = -87K; </li></ul><ul><li>NPV of Project B = -57K ?? </li></ul>
  16. 16. Net Present Value Analysis <ul><li>The higher the NPV, the better </li></ul><ul><li>Projects with a positive NPV should be considered if financial value is a key criterion </li></ul>
  17. 17. Figure 4-4: JWD Consulting NPV Example Multiply by the discount factor each year, then take cum. benefits – costs to get NPV Note: See the template called business_case_financials.xls
  18. 18. Return on Investment (ROI) <ul><li>ROI = (total discounted benefits - total discounted costs) / discounted costs </li></ul><ul><li>The higher the ROI, the better </li></ul>
  19. 19. Internal Rate of Return (IRR) <ul><li>Rate at which the total discounted benefits and total discounted costs are equal </li></ul><ul><li>The discount rate when NPV = 0 </li></ul><ul><li>Difficult to calculate </li></ul><ul><li>The higher the better </li></ul>
  20. 20. Payback Analysis <ul><li>The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the total dollars invested in a project </li></ul><ul><li>Time when NPV = 0 </li></ul><ul><li>The shorter the better </li></ul>
  21. 21. Figure 4-5: Charting the Payback Period
  22. 22. Figure 4-4: JWD Consulting NPV Example Multiply by the discount factor each year, then take cum. benefits – costs to get NPV Note: See the template called business_case_financials.xls
  23. 23. Weighted Scoring Model <ul><li>A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria </li></ul><ul><ul><ul><li>Identify criteria important to the project selection process </li></ul></ul></ul><ul><ul><ul><li>Assign weights (percentages) to each criterion so they add up to 100% </li></ul></ul></ul><ul><ul><ul><li>Assign scores to each criterion for each project </li></ul></ul></ul><ul><ul><ul><li>Multiply the scores by the weights and get the total weighted scores </li></ul></ul></ul><ul><li>The higher the weighted score, the better </li></ul>
  24. 24. Figure 4-6: Sample Weighted Scoring Model for Project Selection
  25. 25. Implementing a Balanced Scorecard <ul><li>To help select and manage projects that align with business strategy </li></ul><ul><li>A balanced scorecard : </li></ul><ul><ul><li>Is a methodology that converts an organization’s value drivers to a series of defined metrics. Examples of such drivers are </li></ul></ul><ul><ul><ul><li>customer service </li></ul></ul></ul><ul><ul><ul><li>Innovation </li></ul></ul></ul><ul><ul><ul><li>operational efficiency </li></ul></ul></ul><ul><ul><ul><li>financial performance </li></ul></ul></ul><ul><li>See www.balancedscorecard.org for more information </li></ul>
  26. 26. Quick Quiz Project A Project B Choose NPV $87K $57K ROI 50% 40% IRR 12% 15% Payback Period 15 months 12 months
  27. 27. Project Charter ….
  28. 28. Project Charters <ul><li>After deciding what project to work on, it is important to let the rest of the organization know, especially the key stakeholders </li></ul><ul><li>A project charter is a document that formally recognizes the existence of a project and provides direction on the project’s objectives and management </li></ul>
  29. 29.
  30. 30.
  31. 31. <ul><li>Sample Project Charter </li></ul><ul><li>Project Title and Description </li></ul><ul><ul><ul><li>What is the project ? Brief background and purpose </li></ul></ul></ul><ul><li>Project Manager Assigned and Authority Level </li></ul><ul><ul><ul><li>Who is given authority to lead the project. Can he/she determine budget, schedule, staffing etc?? </li></ul></ul></ul><ul><li>Business Need </li></ul><ul><ul><ul><li>Why is the project being done? </li></ul></ul></ul><ul><li>Project Justification </li></ul><ul><ul><ul><li>Business case </li></ul></ul></ul><ul><li>Resources Pre-assigned </li></ul><ul><li>Stakeholders (and their requirements) </li></ul><ul><li> Requirements related to both project and product </li></ul><ul><li>Product Description/Deliverables </li></ul><ul><ul><ul><li>List of the deliverables and their descriptions </li></ul></ul></ul><ul><li>Constraints and Assumptions </li></ul><ul><li>Signed and Approved By </li></ul><ul><ul><ul><li>Has to be a person from senior management </li></ul></ul></ul>Another Sample Project Charter
  32. 32. Project Management Plan ….
  33. 33. Project Management Plans <ul><li>A project management plan is your plan on how to manage the project, e.g. </li></ul><ul><ul><li>How do you define the scope? </li></ul></ul><ul><ul><li>How to deal with changes? </li></ul></ul><ul><ul><li>How to do estimation? </li></ul></ul><ul><ul><li>How to identify risks? </li></ul></ul><ul><ul><li>How to communicate with stakeholders? </li></ul></ul><ul><li>Plans created in the other knowledge areas are subsidiary parts of the overall project management plan, like </li></ul><ul><ul><li>Scope Management Plan </li></ul></ul><ul><ul><li>Staffing Management Plan </li></ul></ul><ul><ul><li>Etc. </li></ul></ul>
  34. 34. Integrated Change Control….
  35. 35. Change Control System <ul><li>The Project Management Plan provides the baseline for identifying and controlling project changes </li></ul><ul><li>A baseline is the approved project management plan plus approved changes </li></ul><ul><ul><li>Used for comparing with actual </li></ul></ul><ul><li>A formal, documented process that describes when and how official project documents and work may be changed </li></ul><ul><li>Describes who is authorized to make changes and how to make them </li></ul>
  36. 36. Change Control Board (CCB) <ul><li>A formal group of people responsible for approving or rejecting changes on a project </li></ul><ul><li>CCBs provide guidelines for preparing change requests, evaluate change requests, and manage the implementation of approved changes </li></ul><ul><li>Includes stakeholders from the entire organization </li></ul>
  37. 37. Configuration Management <ul><li>Part of change management </li></ul><ul><li>Ensures that the descriptions of the project’s products are correct and complete, including their support documentation </li></ul><ul><li>Configuration management specialists </li></ul><ul><ul><li>identify and document configuration requirements </li></ul></ul><ul><ul><li>control changes </li></ul></ul><ul><ul><li>record and report changes </li></ul></ul><ul><ul><li>audit the products to verify conformance to requirements </li></ul></ul>
  38. 38. Revision <ul><li>Project Selection Methods </li></ul><ul><ul><li>NPV </li></ul></ul><ul><ul><li>ROI </li></ul></ul><ul><ul><li>IRR </li></ul></ul><ul><ul><li>Payback period </li></ul></ul><ul><ul><li>Weighted Scoring Model </li></ul></ul><ul><ul><li>Balanced Scorecard </li></ul></ul><ul><li>Project Charter </li></ul><ul><li>Project Management Plan </li></ul><ul><li>Integrated Change Control </li></ul><ul><ul><li>Baseline </li></ul></ul><ul><ul><li>CCB </li></ul></ul><ul><ul><li>Configuration Management </li></ul></ul>

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