This document provides an overview of work breakdown structures (WBS) and their role in project planning and management. It discusses approaches to developing WBS, basic principles for creating effective WBS, and the purpose of WBS for cost estimating, budgeting, resource planning, and other project functions. Specific topics covered include defining the scope of work, developing a hierarchy of deliverables and tasks, and using a WBS to improve scheduling, tracking, and managing changes to a project.

1. *
CSCI 714: Software Project Planning and Estimation
Lecture 4B: Work Breakdown Structure
Gursimran Singh Walia
North Dakota State University
[email protected]
*
The Work Breakdown StructureA work breakdown structure
(WBS) is an outcome-oriented analysis of the work involved in
a project that defines the total scope of the projectIt is a
foundation document in project management because it provides
the basis for planning and managing project schedules, costs,
and changes
Approaches to Developing WBSsUsing guidelines: Some
organizations, like the DOD, provide guidelines for preparing
WBSsThe analogy approach: It often helps to review WBSs of
similar projectsThe top-down approach: Start with the largest
items of the project and keep breaking them downThe bottoms-
up approach: Start with the detailed tasks and roll them up

2. Basic Principles for Creating WBSs*
1. A unit of work should appear at only one place in the WBS.
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. *Cleland, David
I. Project Management: Strategic Design and Implementation,
1994
Good WBS Design PrinciplesThe 100% RuleThe WBS defines
100% of the work of the projectAnything that isn’t defined in
the WBS is outside the scope of the project.The work content on
any item is the sum of what is included under that work
itemUpper Levels are Planned outcomes (deliverables), not
planned actionsEnds of WBS include the activities needed to
create the project deliverablesMutually-exclusive elementsWork
should only appear in one place in the WBSWBS must be
consistent with the way the project will be performed and
controlledMust be easy to update
WBS RolePartition the major project deliverables into smaller

3. components to improve the accuracy of cost estimatesProvide a
mechanism for collecting actual costsProvide a mechanism for
performance measurement and control
Why create a WBS?Cost EstimatingCost BudgetingResource
PlanningRisk Management PlanningActivity Definition
SchedulingScheduling forces:Quantification of discrete
effortPlacement of tasks in proper relationshipTwo most
common scheduling methodologiesBar Charts (aka Gantt
Charts)Critical Path Method (CPM) using Precedence
Diagramming Method (PDM)
Bar / Gantt Charts Defined:Analyze and specify the basic
approach in executionSegment into reasonable number of
activitiesEstimate the time required to perform each
activityManually places activities in time orderSequential
performanceParallel performanceAdjust to specified completion
time
Bar / Gantt Charts Advantages:Plan, schedule and progress are
all depicted graphically on a single chartEasily readProvides
simple way to schedule small undertakingProvides summary
display of more detailed plans and schedulesBest used for
management briefings

4. Bar / Gantt Charts Disadvantages:Planning and scheduling are
considered simultaneouslySimplicity precludes sufficient detail
for timely detection of slippagesActivity dependencies cannot
adequately be shownDifficult to determine how activity
progress delays affect project completionDifficult to establish
and maintain for large projects.
Bar / Gantt Chart Sample
Planned Progress
Actual Progress
Ahead of Schedule
Behind Schedule
Time Now
Completed Task
Microsoft Project WBS
Tools – Options – View – Show outline number
1. Start new projectTurn on the Project GuideOn the Tools
menu, click Options, and then click the Interface tab. In the
Project Guide settings section, select the Display Project Guide
check box.Manually set up a new project
Microsoft Office Project provides a Project Guide with easy-to-
follow instructions to help you set up a new project.

5. Project – Project Information…
or View – Turn on project guide…
http://office.microsoft.com/en-
us/project/HA102639631033.aspx
Priority Indicates how readily tasks in the current project are
delayed (delay: The amount of time between the scheduled start
of a task and the time when work should actually begin on the
task; it is often used to resolve resource overallocations. There
are two types of delay: assignment delay and leveling delay.)
when resources are leveled (leveling: Resolving resource
conflicts or overallocations by delaying or splitting certain
tasks. When Project levels a resource, its selected assignments
are distributed and rescheduled.) across multiple projects. Type
or select a number between 0 and 1000, with the higher number
indicating a higher priority (priority: An indication of a task's
importance and availability for leveling [that is, resolving
resource conflicts or overallocations by delaying or splitting
certain tasks]. Tasks with the lowest priority are delayed or
split first.) project. Setting the project's priority to 1000 means
that resources in the project will not be leveled. When leveling,
Project considers project-level priorities before task-level
priorities.
Tools - Options

6. 2. TasksThere are four major types of tasks:
1. Summary tasks - contain subtasks and their related properties
2. Subtasks - are smaller tasks that are a part of a summary task
3. Recurring tasks - are tasks that occur at regular intervals
4. Milestones - are tasks that are set to zero duration and are
like interim goals in the project
Add tasks
To display outline numbers, you can add the Outline Number
field to a table or sheet view, or you can choose to display the
outline numbers next to the task names. To display the outline
numbers next to the task names, on the Tools menu, click
Options, and then click the View tab. Under Outline options,
select the Show outline number check box.
Insert new task
Time DurationAbbreviation
Minute m–appears as min in the project plan
Hour h–appears as hr in the project plan
Day d–appears as day in the project plan

7. Week w–appears as wk in the project plan
Month mo–appears as mon in the project plan
Outlining tasks
Advantages of Outlining: (Initiating, planning, executing,
controlling, closing)
• It creates multiple levels of subtasks that roll up into a
summary task
• Collapse and expand summary tasks when necessary
• Apply a Work Breakdown structure
• Move, copy or delete entire groups of tasks
Tools – Options… - check “Show project summary task”
Predecessor

8. You now have a duration for each of the tasks but they all start
on the same day. Obviously, you will have to specify the
sequence of the tasks and the links between them. In MS Project
a task that must be completed before another task can start is
called a predecessor. The first task has no predecessor and each
of the following tasks has to have at least one. In some cases a
task may have several predecessors meaning that several tasks
have to be completed before that one can start. In other cases a
task may be predecessor to several others - its completion can
allow several other tasks to start.
Tasks can be linked in four waysFinish-Start F-S Task 1 must
finish before Task 2 can startStart-Start S-STask 1 and Task 2
must start at the same timeFinish-Finish F-FTask 1 and Task 2
must finish at the same timeStart-Finish S-FTask 2 cannot finish
until the start of Task 1
To link tasks in FS dependency:
1. Select the tasks you want to link. Tasks with a lower ID
number are taken as predecessors, but if you want to set the
order of tasks yourself, select tasks by holding Control while
you click the tasks in order.
2. Click Link Tasks button on Standard Tool bar or choose Edit
> Link tasks or Control+F2.
Summary tasks can be linked to other summary tasks or to
subtasks between summary groups. Subtasks can be linked to
each other too.
To unlink tasks, select tasks and click the Unlink Task in the

9. Standard Tool bar.
Do not attempt to remove a link by deleting a cell in the
predecessor's column and pressing delete as this will delete the
entire task.
b. Delayed and Overlapped Links:
Sometimes tasks may be dependent on other factors causing a
delay time or an overlap time, necessitating a lag or lead-time
to be incorporated in a link. Lag and lead-time can be entered as
units of time or as a percentage of the duration of the
predecessor.
Double-click a task and open the Task Information dialog box.
2. Click the predecessor tab.
3. Select the lag/lead field.
4. Enter a number or a percentage in the cell.
5. Click OK.
The Split task button splits tasks that may be completed in parts
at different times with breaks in their duration times.
The AutoLink feature is enabled by default and keeps linked
tasks intact when they are linked in the FS dependency. It can
be disabled in the Options dialog box if necessary.
Constraints Certain tasks need to be completed within a certain
date. Intermediate deadlines may need to be specified. By
assigning constraints to a task you can account for scheduling
problems. There are about 8 types of constraints and they come
under the flexible or inflexible category.
To apply a constraint:
1. Open the Task Information dialog box.

10. 2. Click the Advanced tab and open the Constraint type list by
clicking on the drop-down arrow and select it.
3. Select a date for the Constraint and click OK.
Flexible constraints (demarcated by a red dot in Microsoft
Project 2000) restrict scheduling to a great extent whereas
flexible constraints (blue dot) allow Project to calculate the
schedule and make appropriate adjustments based on the
constraint applied.
Inflexible constraints can cause conflicts between successive
and preceding tasks at times and you may need to remove such a
constraint.
b. To remove a constraint and apply an ASAP/ALAP constraint:
1. Select the tasks by holding Control and clicking on them in
the order you want.
2. Click Task Information button on the Standard Toolbar and
the Multiple task dialog box opens.
3. Click the Advanced tab and click the drop down arrow to
open the constraint type list.
4. Choose ASAP if the project has been scheduled from the
Start date and ALAP (As late as possible) if it has been
scheduled from the Finish date.
5. Click OK.
OR
Select Tools > Options > Schedule and clear the 'Tasks will
always honor their constraint dates' checkbox.
OR
Set deadline date instead of adopting an inflexible constraint.
Setting a task deadline does not affect the task schedule in any

11. way. If a deadline passes without the task being completed
Project indicates it in the Indicator column (a downward
pointing arrow in the Gantt Chart view).
3. Managing task
Double click on task
The degree of completion of each of the tasks.
You could do that every day as you go along. As soon as
something starts to go off track, you can react and adjust
accordingly.
It would be too long to go into the details of how to compensate
for delays and so on.
Priority Indicates how available a task is for delay (delay: The
amount of time between the scheduled start of a task and the
time when work should actually begin on the task; it is often
used to resolve resource overallocations. There are two types of
delay: assignment delay and leveling delay.) during resource
leveling (leveling: Resolving resource conflicts or
overallocations by delaying or splitting certain tasks. When
Project levels a resource, its selected assignments are

12. distributed and rescheduled.). Enter a number between 0 and
1000, with the higher number indicating a higher
priority (priority: An indication of a task's importance and
availability for leveling [that is, resolving resource conflicts or
overallocations by delaying or splitting certain tasks]. Tasks
with the lowest priority are delayed or split first.) task. The
higher the priority, the less likely a task will be delayed for
resource leveling. Set the priority to 1000 (do not level) if you
don't want Office Project 2007 to delay this task at all when
leveling.
Hide task bar Hides the task bar for the selected tasks when
viewing the Gantt Chart or Calendar views. To display hidden
task bars for the selected tasks, clear this check box. In the
Gantt Chart view, if the task is rolled up, both the task bar and
the rollup symbol on the summary bar are hidden. If the task is
a summary task and subtasks are rolled up to it, only the
summary bar is hidden. By default, this check box is cleared.
Roll up Gantt bar to summary Specifies whether you want the
subtasks you selected rolled up to the summary task bar so that
the bar displays symbols that represent subtask dates. If you
select a summary task, this check box is called Show rolled up
Gantt bars. Clear this check box to hide the symbols for rolled
up tasks on the summary task bar. By default, this check box is
cleared.
Defining a Timeline Find an optimistic value, D(o), a
pessimistic value, D(p) and a realistic value, D(r) .
Then: Duration = ( D(o) + D(p) + 4 x D(r) ) / 6

13. The importance of tracking progress Techniques to manage
projects effectively:Critical Path Management (CPM) and
Program Evaluation and Review Techniques (PERT). They are
similar and you will now often find the technique referred to as:
CPM/PERT.The technique involves using network models to
trace the links between tasks and to identify the tasks which are
critical to meeting the deadlines. Once you've identified the
critical path, any delay on any part of the critical path will
cause a delay in the whole project.
It is where managers must concentrate their efforts.In MS
Project, you use the Tracking Gantt diagram to show the critical
path in red and you can see the PERT diagram by looking at the
Network view.
Gantt Chart View – critical pathA Gantt chart is a type of bar
chart that illustrates a project schedule.Critical path: View –
More views… - Detail Gant
Henry Gantt used graphical bars in his industrial management
studies to compare and contrast timeframes. In Microsoft
Project, graphical bars are paired with a spreadsheet to give the
Gantt Chart View.
PERT diagram - Network view

14. ViewsViews allow you to examine your project from different
angles based on what information you want displayed at any
given time. You can use a combination of views in the same
window at the same time. Project Views are categorized into
two types:
• Task Views (5 types)
• Resource Views (3 types)
Saving a baselineBaseline plan: The original project plans used
to track progress on a project. The baseline plan is a snapshot of
your schedule at the time that you save the baseline and
includes information about tasks, resources, and
assignments.You can set a baseline for your project, enabling
you to compare your progress with the original plan and any
additional baselines you set at milestones throughout your
project.
Saving a Baseline
Tools – Tracking – Save
Baseline…http://office.microsoft.com/home/video.aspx?assetid
=ES102776241033&width=1024&height=768&startindex=0&CT
T=11&Origin=HA102751251033&app=WINPROJ&ver=12
*
On the View menu, click Tracking Gantt.
On the View menu, point to Table, and then click Variance.

15. RESOURCES
Manage the project resources: Resources are of three types:work
resources, material resources and cost resources. Work
resources complete tasks by expending time on them. They are
usually people and equipment that have been assigned to work
on the project (you track their participation by the amount of
time they spend).Material resources are supplies and stocks that
are needed to complete a project. You assign material resources
by the quantity that you need: two tons of gravel or 300 gallons
of diesel fuel, for instance. Because materials aren't measured
by time, quantities usually affect only the cost of your project.
Materials affect dates or duration only when you have to wait
for those materials to become available. Cost. Cost resources
are the new kid on the Project 2007 block, and they're strictly
cost; no time, no quantities—just dollars. Expenses, such as
travel or fees, increase the project price tag, but they aren't
associated with work or material resources.
You must start by identifying the resources available along with
their costs. Resource costs will be multiplied by duration to
calculate project costs.You have to open the Resource sheet to
specify the project resources and costs. people equipment
supplies
Resources are of two types - work resources and material
resources.
Work resources complete tasks by expending time on them.
They are usually people and equipment that have been assigned
to work on the project.
Material resources are supplies and stocks that are needed to

16. complete a project.
A new feature in Microsoft Project 2000 is that it allows you to
track material resources and assign them to tasks.
You will need people to accomplish all those tasks that you've
identified. Those people are resources that you have to manage
well in order to achieve the project's objectives.
You may also need some material resources - equipment ,
supplies, specialized environments - that you will have to
schedule and pay for.
You can easily include the management of resources in MS
Project along with the tasks because, after all, the resources are
essential to the accomplishment of the tasks in the first place.
You must start by identifying the resources available along with
their costs.
Resource costs will be multiplied by duration to calculate
project costs.
You have to open the Resource sheet to specify the project
resources and costs
The Max Unit's column contains the maximum capacity for
which a work resource is available to accomplish any tasks in a

17. certain time period. The default format is the percentage format.
For example, if the assigned units are 100% this will imply that
this resource will work for all the eight hours in a normal
working day. If the assigned units are 50%, then this resource
will work for four hours a day. In the case of a resource pool
consisting of 5 workers, their maximum units will be 500% or a
decimal value of 5.
Fields in the Resource Sheet may be blank or contain different
types of information depending on the type of resource. For
example, a work resource doesn't have a Material label, and
costs are calculated initially as dollars per hour. Material
resources have a cost per unit—per pound, gallon, or piece—
and the Material label field defines the units. Cost resources
receive a value only when you assign them to tasks.
You assign resources, people or material, to each of the tasks.
A task may have several resources.
To track costs, you insert a Cost column next to the Resources
column.
When you assign the resources to each task, the costs will be
calculated an displayed.

18. Use the Detail Gantt view to find slack (float)On the View
menu, click More Views. In the Views list, click Detail Gantt,
and then click Apply. On the View menu, point to Table, and
then click Schedule. In the chart portion of the view, slack
appears as thin bars to the right of tasks, with slack values
adjoining the regular Gantt bars.
25
01
08
15
22
Jan07
29
05
12
19
Feb07
26
05
12
19
Mar07
26
02
09
16
23

19. Apr07
30
07
14
21
May07
28
04
Jun07
Status Date: 02/Mar/2007
WBS Description
Sample Project Plan
1 Literature Search
2 Concepts Development
3 Lab Models
4 Design
5 Prototype
*
CSCI 714: Software Project Planning and Estimation
Lecture 4A: Cash Flow
Gursimran Singh Walia
North Dakota State University
[email protected]
*

20. PROJECT INITIATION: KEY ACTIVITIES
An opportunity to create or improve the business value from
using information technology – Project Identification
The feasibility analysis helps determine whether or not to
proceed with the IS project – Feasibility Analysis
Projects are selected based on business needs and projects risks
– Project Selection
PROJECT INITIATION: KEY PLAYERS
A key person (or a group of persons) who identifies business
values to be gained from using information technology – Project
Sponsor
The group of people who reviews system requests from groups
throughout the organizations and selects projects for the benefit
of the business – Approval Committee
IDENTIFYING PROJECTS WITH BUSINESS VALUE
Business needs should drive projects
Project sponsor recognizes business need for new system and
desires to see it implemented.
Business needs determine the system’s functionality (what it
will do) – high-level business requirements
The project’s business value should be clear.
*

21. PROJECT IDENTIFICATION: SYSTEM REQUEST
System Request: A document describing business reasons for
project and system’s expected value.
Lists project’s key elements
Project sponsor
Business need
Business requirements
Business value
Special issues or constraints
*
SYSTEM REQUEST: EXAMPLE
Project sponsor – VP of Marketing
Business need – Reach new customers and improve service to
existing customers
Business requirements – Provide web-based shopping capability
Business value - $750,000 in new customer sales; $1.8M in
existing customer sales
Special issues or constraints – System must be operational by
holiday shopping season
*

22. *ElementDescriptionExamples
Project SponsorThe person who initiates the project and who
serves as the source of contact for the project on the business
sideSeveral members of the finance dept
Vice president of marketing
IT Manager
CIO, or CEO
Business Need
The business-related reasons for initiating the systemIncreased
sales
Improved market share
Improve access to information
Improve customer service
Decreased product defects
Business Requirements
The business capabilities that the system will provideProvide
online access
Include product search capabilities
Produce Management reports
Include online user support
Business Value
The benefits that the system will create for the organization3
percent increase in sales
1 percent increase in market share
$200,000 cost savings from decreased supply costs
$150,000 savings from removal of existing systemSpecial Issues
or
ConstraintsIssues that are relevant to the implementation of the
system and committee make decisions about the
projectGovernment-mandated deadline
System needed in time for the Christmas holiday season

23. EXERCISE 1: DEVELOPING A SYSTEM REQUEST
Think about NDSU and choose an idea that could improve
student satisfaction with the course enrollment or course
selection process.
HINTS: Currently can students enroll from anywhere? How long
does it take? Are directions simple to follow? Is online help
available?
Next, think about how technology can help support your idea.
Would you need completely new technology? Can the current
system be changed?
*
FEASIBILITY ANALYSIS
Detailed business case to better understand the opportunities
and limitations associated with the proposed project –
Feasibility Analysis
Guides the organization in determining whether to proceed with

24. a project
Identifies the important risks associated with the project that
must be addressed if the project is approved
*
Once the need for the system and the business requirements
have been defines, it is time to create a more detailed business
case to better understand the opportunities and limitations
associated with the proposed project.
*
FEASIBILITY ANALYSIS
Most project teams will revisit their feasibility study
throughout the SDLC, and
Revisit its contents at various checkpoints during the project
If at any point the project’s risks and limitations outweigh its
benefits, the project team may decide to cancel the project, or
Make necessary improvements
*
TYPES OF FEASIBILITY ANALYSIS
Technical Feasibility
Economic Feasibility
Organizational Feasibility
Operational
Schedule
Legal and Contractual
Political
*

25. TECHNICAL FEASIBILITY: “Can we build it?”
What are different technical risks?
Users’ and analysts’ familiarity with the application
Familiarity with technology
Have we used it before? How new is it?
Project size
What is your idea of project size?
Why are larger projects more risky?
Compatibility with existing systems
*
ECONOMIC L FEASIBILITY: “Should we build it?”
Identify Costs and Benefits, and
Assign values to them
Determine cash flow
Assess financial viability:
Determine Net present Value (NPV)
Determine Return on Investment (ROI)
Calculate Break-Even Point (BEP)
Graph Break-Even Point
*

26. *Development Team salariesConsulting feesDevelopment
TrainingHardware and SoftwareVendor InstallationOffice Space
and EquipmentData Conversion CostsSoftware
UpgradesSoftware Licensing FeesHardware RepairsHardware
UpgradesOperational Team SalariesCommunication
ChargesUser TrainingIncreased SalesReduction in
StaffReduction in InventoryReduction in IT CostsBetter
Supplier pricesIncreased Market ShareIncrease Brand
RecognitionHigher Quality ProductsImproves Customer
ServiceBetter Supplier Relations
Development Costs
Operational Costs
Tangible Benefits
Intangible Benefits
*
Difficult, but essential to estimate
Work with people who are most familiar with the area to
develop estimates
Intangibles should also be quantified
If intangibles cannot be quantified, list and include as part of
supporting material
*
2. Assign Values to Costs and Benefits

27. *
“A formal Cost-Benefit analysis usually contains costs and
benefits over a selected number of years to show cash flow over
time”
1. Identify Costs and Benefits
2. Assign Values to Costs and Benefits
*
2003
2004
2005
2006
2007
Total
6%
*
–
PV = Cash flow amount
(1 + interest rate)n

28. interest rate = required return
n = number of years in future
3. Determine Cash Flow
*
If NPV >= 0,
Project is OK
2003
2004
2005
2006
2007
Total
If NPV < 0,
Project is unacceptable
ROI = Total benefits – Total Costs
Total Costs
3. Determine Cash Flow
4. Determine Net Present Value (NPV),

29. *
ROI = NPV
*
The point in time at which the costs of the project equal the
value it has delivered
3. Determine Cash Flow
4. Determine Net Present Value (NPV),
5. Return on Investment (ROI)
6. Break-Even point
*
Charting the Payback PeriodExcel file
ORGANIZATIONAL FEASIBILITY
Strategic alignment
How well do the project goals align with business objectives?

30. Stakeholder analysis
Project champion(s)
Organizational management
System users
*
EXERCISE 2: PERFORMING THE FEASIBILITY ANALYSIS
Consider a project to develop a Web-based information system
for providing transfers credit information for all colleges and
universities in the world. Is it economically feasible? Perform a
cash flow analysis
*
SAMPLE SOLUTION
*
*
PROJECT SELECTION
Approval committee works from the system request and the
feasibility study
Project portfolio – how does the project fit within the entire
portfolio of projects?
Trade-offs must be made to select projects that will form a
balanced project portfolio
Viable projects may be rejected or deferred because of project

31. portfolio issues.
*
*
Weighted Scoring ModelA weighted scoring model is a tool that
provides a systematic process for selecting projects based on
many criteria. Steps in identifying a weighted scoring model:
Identify criteria important to the project selection process.
Assign weights (percentages) to each criterion so they add up to
100 percent.
Assign scores to each criterion for each project.
Multiply the scores by the weights to get the total weighted
scores.The higher the weighted score, the better.
*
Sample Weighted Scoring Model for Project Selection
*
Implementing a Balanced ScorecardDrs. Robert Kaplan and
David Norton developed this approach to help select and
manage projects that align with business strategy.A balanced
scorecard is a methodology that converts an organization’s
value drivers, such as customer service, innovation, operational
efficiency, and financial performance, to a series of defined
metrics. See www.balancedscorecard.org for more information.
Self- Practice QuizA project manager is managing a software
development project for a hospital. There is a new computer

32. available that will speed up the development process
considerably. The new computer costs $50,000 including
shipping, installation, and start-up. The computer will cause a
gross savings of $100,000. What is the net present value of the
savings if they occur one year after the expenditure for the
computer? Assume a 10% interest rate.
HINT OR A project manager is assigned to a
project early in the project life cycle. One of the things that
must be done is to do a justification for the project. Since very
little information is known about the project, the estimates are
considered to be rough estimates. The following table is the
project manager’s estimate of the cash flows that will take place
over the next five years.What is the payback period for this
project? What is the net cash flow at the end of five years?
*
ANSWER
Cumulative cash flowYr 1; -500,000Yr2; -290,000Yr3;
+10,000Pay back period between 2 and 3 yrs. Net cash flow;
850,000 in 900,000 out Net flow is negative 50,000
*
Practice QuestionsThe four quantitative factors are: Benefit-
Cost Ratio (BCR); Present Value (PV); Net Present Value
(NPV); and Payback Period (PP) BCR compares benefits to
costs and determining BCR=Benefits/Cost. The higher the ratio,
then the better the deal is. For example: you have 2 alternatives
ways to perform a group of work packages worth of $ 200,000
in progress payments from the client. Using company A will
cost $ 50,000, but Company B is willing to do the same work
for $ 40,000. Which Company is a better deal based on the

33. BCR. Present Value: it is a simple process of calculating
the value today of future cash flows. PV= (future
value)/(1+i)n = the present value is future value discounted to
special interest rate per the time measure. Example: if you have
a deal with contractor to give you $ 3,000 today or $3,800 after
3 years. If the interest rate is 10% What is the present value of
$3,800? Is the value of $ 3,000 today better or worse than
having $ 3,800 after three years? NPV: net present value is the
real value of cash flow in a project is dependent on the dollar
amounts and the timing for both revenue and cost. NPV logic
looks at both the inflow and outflow of money over time.
NPV= PV revenue – PV costs (both over the flow of time). If
you are buying software, then you might make a decision
whether to buy from company A or B. Company A asks for $
8,000 at year o and $1,000 for year 1, 2 & 3. Company B asks
for $ 0 at year 0 and $ 4,000 at year 1,2 & 3. Which company
would you choose if interest rate is 10% per year?Payback
Period is approach that calculates how long it will take to
earn or save money as much as you have invested.
Example, if you invest $ 4,000 in a new equipment, then
receive zero benefits at year 1 &2 and then $ 1,000 per
year thereafter. What is the payback period?
*
Gradual, progressive increase in the project’s scope that is not
noticed immediately
Occurs when additional requirements result in scope change and
can cause cost and schedule overruns
*

34. (Read Definition from slide)
Scope creep occurs when additional requirements, sometimes
minor, are identified and added to the project. Overtime, these
collectively may result in scope change and cause cost and
schedule overruns.
OFTEN DON’T RECOGNIZE IT BECAUSE IT HAPPENS
WHEN EVERYONE IS AGREEING!
Delineate between requirements and enhancements. You need
buy-in from all of the stakeholders to add enhancements.
Project Management Framework
Stakeholders: The people involved in or affected by the projects
activities. These include the the project sponsor, project team,
support staff, customers, users, suppliers and even opponents to
the project.
T
*
Project Management Framework
Knowledge Areas: the NINE key competencies that project
managers must develop. T

35. *
Project Management Framework
Scope Management: involves defining and managing all
the work required to successfully complete the project.T
*
Scope Management involves managing what?
Project Management Framework
Time Management: includes estimating how long it will take to
complete the work, developing an acceptable project schedule,
and ensuring timely completion of the project.T
*

36. Managing How and When?
Project Management Framework
Cost Management: consists of preparing and managing the
budget for the project.T
*
Managing Who and How much?
Project Management Framework
Quality Management: ensures the project will satisfy the stated
or implied needs for which it was undertaken.T
*

37. Project Management Framework
HR Management: concerned with making effective use of the
people involved with the project.T
*
Project Management Framework
Comm. Management: involves generating, collecting,
disseminating and storing project information.T
*
Project Management Framework

38. Risk Management: includes identifying, analyzing and
responding to risks related to the project.T
*
Project Management Framework
Procure. Management: involves acquiring or procuring goods
and services that are needed for a project from outside the
performing organization.T
*
Project Management Framework
Project Mgmt. Integration: is an over-arching function that

39. affects and is affected by all of the other knowledge areas. (This
is where it is all brought together.)T
*
Project Management Framework
Tool and Techniques: these assist the project managers and
their teams in carrying out the management functions of the 9
Knowledge Areas. Examples of these include WBS Diagrams
and Gantt Charts.T
*
A cash flow analysis is performed using the following
assumptions:
e sign
based on the SRD
design.
implementation.
yearly.
have a scheduled completion 1 year after the

40. onset.
company.
host the system.
very
year.
which includes bandwidth costs, electricity costs, and
hardware upgrade costs .
first 5 years.
versity has on average 2 staff members that
handle transfer credit requests.
$60,000 per year.
of one of those staff members.
or university $30,000.
world.
of the project.
attract 15 new customers each yea r thereafter.
Based on those assumptions the following costs are expected:
investments.
The cash flow analysis for the first 5 years is as follows:
End of Year Cash Flow In Cash Flow Out Net Cash Flow

41. 1 0 600,000 - 600,000
2 300,000 300,000 - 600,000
3 750,000 300,000 - 150,000
4 1,200,000 300,000 750,000