The document provides an overview of project initiation and integration management. It discusses initiating a project, which includes developing a project charter and business case. Key outputs of initiation include assigning a project manager, identifying stakeholders, and getting signatures on the project charter. The document also discusses developing the project management plan, which coordinates all planning efforts. It consolidates subsidiary plans such as the scope, schedule, cost, quality, and risk management plans. Finally, the document discusses project integration management processes like developing the project charter and management plan, directing work, monitoring and controlling work, and performing integrated change control.

1. Foundations of Project
Management
Module 2:
Project Initiation and Integration

2. Session Outline
1.
2.
2
Project Initiation and Selection
Project Integration Management
2

3. Project Initiation




Initiating a project includes recognizing and
starting a new project or project phase
Some organizations use a pre-initiation
phase, while others include items like
developing a business case as part of
initiation
The main goal is to formally select and
kick-off projects
Key outputs include:
–
–
–
–
3
Assigning the project manager
Identifying key stakeholders
Completing a business case
Completing a project charter and getting signatures on
it
Initiating
Processes
4.1 Develop
Project Charter
13.1 Identify
Stakeholders
3

4. 4.1 Develop Project Charter
Inputs
1. Project
Statement of
Work
2. Business Case
3. Agreements
4. Enterprise
Environmental
Factors
5. Organizational
Process Assets
4
Tools and
Techniques
Outputs
1. Project Charter
1. Expert Judgment
2. Facilitation
Techniques
4

5. Business Case Template
5
5
Source: IT Project Management, J Marchewka, J Wiley & Sons

6. The Project Charter



6
Process of formalizing projects after deciding what
project to work on
A project charter is a document that formally authorizes 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
6
PMBOK: p.71
Schwalbe: p.157

7. Project Charter Questions









7

What business need is the project undertaken to address?
What is the purpose of the project?
What organizational strategic objectives is this project meant to
achieve?
What factors, criteria or tools are you using for your justification?
What are the customer’s priorities and in what order? Schedule, cost,
quality and scope?
What is your customer’s risk tolerance to changes in schedule, cost and
scope?
What are the project Requirements that will meet customer, sponsor or
other stakeholder needs, wants and expectations?
What are Stakeholder Influences?
What Human Resources will the project require?
What are the projects’ key Deliverables & Milestones?
7

8. Develop Project Charter – Inputs (4.1.1)
• Project Statement of Work
–
–
The Statement of Work (SOW) is a
narrative description of products or
services to be delivered by the project
The SOW indicates the business need,
the product scope description, and the
strategic plan
• Business Case
–
Provides the necessary information
from a business standpoint to
determine whether or not the project is
worth the required investment
• Enterprise
Environmental Factors
–
Governmental or industry
standards
–
Organization infrastructure
–
Marketplace conditions
• Organizational Process
Assets
–
Organizational standard
processes, policies, and
standardized process
definitions
–
Templates
–
Lessons learned
• Agreements
–
8
Any contract, letter, note, e-mail or
other communication describing intent.
Contracts most common for external
customers.
8

9. Project Kickoff Meeting
The purpose of the kickoff meeting is to formally notify all team
members, clients, and stakeholders that the project has begun
A kick-off meeting has some basic objectives:
–
–
Recap the information in the Project Charter, including the purpose of the
project, the scope, the major deliverables, the risks, the assumptions, the
estimated effort and budget, and the deadline
–
Discuss the major roles and responsibilities of the project team, clients and
stakeholders
–
Discuss the project management procedures
–
Discuss and answer any outstanding questions
–
9
Introduce the people at the meeting
Confirm that the project is now underway
9

10. Identify Stakeholders (13.1)
Is the process of identifying all people or organizations impacted by project, and
documenting relevant information regarding their interests, involvement, and impact
on project success
Inputs
1. Project charter
2. Procurement
documents
3. Enterprise
environmental
factors
4. Organizational
process assets
10
Tools and
Techniques
1. Stakeholder
analysis
2. Expert judgment
3. Meetings
Outputs
1. Stakeholder
register
This process is part of the Stakeholder Management
Knowledge Area
Section will be
discussed further in
Project Stakeholder
Management
10

11. Project Stakeholders
Government
Agencies
Project
Team
Contractors
External
Partners
Functional
Departments in
Organizations
Suppliers
The Public
Project
and/or
Internal
Partners
Community
External
Customers
11
Project
Sponsor
Internal
Customers
Performing
Organization
11
PMBOK:p.30
Schwalbe: p512

12. Stakeholder Roles
Stakeholder
Role and Responsibility
Sponsor
Project Manager
Defines, plans, implements and controls
project
Project Team
Provides the knowledge and skills and
performs the work to implement & control
project
Customer
Defines product requirements and funds the
project
Functional Managers
12
Provides approval, authority & guidance
Provide the organization’s policies and
sector-specific knowledge and experience
12

13. Project Selection
Project’s Product
Description
Project Selection
Process
Project’s Selection
Framework
Benefit Measurement
Framework
Organization’s
Strategic Plan
Project Selected
• Project Charter
• Assigned PM
• Constraints
• Assumptions
Project Denied
Decision Models
Project Knowledge
Base and Historical
Information
13
• Lessons Learned
13

14. Methods for Selecting Projects

There are usually more projects than available time
and resources to implement them

Project Selection Criteria
–
–
–
–
–
Generation of alternative ideas for project
Estimation of investment costs and benefits
Analysis of the cost/benefits of each alternative
Selection and implementation of appropriate Strategy
Evaluation of outcome of implemented investment
ROI
14
PBP
DCF
NPV
IRR
14

15. Project Selection Example
A Project task can be implemented by either Machine A or Machine B. The original
investment and cash flow from the two machines are shown below
Machine A
Original Investment $ 35,000
Year
1
2
3
4
Total Cash Flow
Profit
15
Cash Flow
20,000
15,000
10,000
10,000
55,000
20,000
Machine B
Original Investment $ 35,000
Year
1
2
3
4
Total Cash Flow
Profit
Cash Flow
10,000
10,000
15,000
20,000
55,000
20,000
15

16. Return on Investment

Return on investment (ROI) is calculated by subtracting
the project costs from the benefits and then dividing by the
costs
ROI = (total discounted benefits - total discounted costs) / discounted
costs



16
The higher the ROI, the better
Many organizations have a required rate of return or
minimum acceptable rate of return on investment for
projects
Internal rate of return (IRR) can by calculated by finding
the discount rate that makes the NPV equal to zero
16

17. Return On Investment (ROI)
ROI = [Average Annual Profit/Org. Investment] x 100
Machine A
Original Investment $ 35,000
Year
1
2
3
4
Total Cash Flow
Profit
Cash Flow
20,000
15,000
10,000
10,000
55,000
20,000
Profit/Yr. : (55K – 35K)/4 = 5000
ROI: (5K/35K) x 100 = 14%
17
Machine B
Original Investment $ 35,000
Year
1
2
3
4
Total Cash Flow
Profit
Cash Flow
10,000
10,000
15,000
20,000
55,000
20,000
Profit/Yr. : (55K – 35K)/4 = 5000
ROI: (5K/35K) x 100 = 14%
17

18. Payback Analysis




18
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 total dollars
invested in a project
Payback occurs when the net cumulative discounted
benefits equals the costs
Many organizations want IT projects to have a fairly short
payback period
18

19. Pay Back Period (PBP)
PBP is the time taken to gain Financial Return equal to the Original
Investment
Machine A
Original Investment $ 35,000
Year
1
2
3
4
Total Revenue
PBP = 2
19
Machine B
Original Investment $ 35,000
Cash Flow
20,000
15,000
10,000
10,000
Year
1
2
3
4
Cash Flow
10,000
10,000
15,000
20,000
55,000
Total Revenue
PBP = 3
55,000
19

20. Discounted Cash Value DCV
( Time Value of Money)
(Cash flow “n” years from today)
DCV =
( 1+ r )n
DCV = present value of future cash
r = interest Rate
n = number of years from today when
cash flow occurs
20
20

21. Time Value of Money Tables
No of Years
10%
20%
1
2
3
4
5
6
7
8
9
10
21
5%
.9524
.9070
.8638
.8227
.7835
.7462
.7107
.6768
.6446
.6139
.9091
.8264
.7513
.6830
.6209
.5645
.5132
.4665
.4241
.3855
.8333
.6944
.5787
.4823
.4019
.3349
.2791
.2325
.1938
.1615
21

22. Future & Discounted Value of Money

The Present (Discounted) Value of a future
income of $1000 at an interest rate of 10% is:
1 year
2 years
10 years

22
$909.10
$826.40
$385.50
The Future Value of a $ 1000 investment at an
interest rate of 10% is:
1 year
$1,100.00
2 years
$1,210.00
10 years
$2,594.00
22

23. 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

23
23

24. Net Present Value = Σ DCF - Initial
Investment
Machine A: Initial Investment= $ 35,000, Interest Rate = 20%
Year
1
2
3
4
Cash
Flow
20,000
15,000
10,000
10,000
Present
Value
20,000 x
.8333 =
16,666
15,000 x
.6944 =
10,416
10,000 x
.5787 =
5,878
10,000 x
.4823
=4,823
Total Present Value =
16,666 + 10,416 + 5,878 + 4,823 = 37,783
24
Net Present Value NPV =
37,783 – 35,000 = 2,783
24

25. Net Present Value = Σ DCF - Initial
Investment
Machine B:
Initial Investment= $ 35,000, Interest Rate = 20%
Year
1
2
3
4
Cash
Flow
10,000
10,000
15,000
20,000
Present
Value
10,000 x
.8333 =
8,333
10,000 x
.6944 =
6,944
15,000 x
.5787 =
8,681
20,000 x
.4823
=9,646
Total Present Value =
8,333 + 6,944 + 8,681 + 9,646 = 33,604
Net Present Value NPV =
33,604 – 35,000 = (- 1,396)
25
25

26. Internal Rate of Return (IRR)
IRR is the rate of growth a project is expected to generate.
It is an indicator of the efficiency or quality of an investment.
The Internal Rate of Return is the Value of the Discount
Rate at which the NPV is equal to zero, or at which ΣDCF
equals the Initial Investment.
Σ CF/ (1 + IRR)n = Initial Investment
The value of IRR is usually obtained by an iterative process.
26
26

27. Expected Monetary Value and Decision
Trees
Expected
Potential
Probability of
Uncertain
Event
Outcome
Decision
Node
Outcome
Monetary
Value
O11
P11 x O11
O12
P12 x O12
O21
P21 x O21
O22
P22 x O22
Decision
27
EMV1 = P11 x O11 + P12 x O12
EMV2 = P21 x O21 + P22 x O22
27

28. Example: Choosing
between 2 Projects
Outcome
probability
Potential
outcome
Possible
choices
20%
Bid on
Project 1
80%
EMV per
outcome
Profit of
$300,000
Total
EMV
60,000
+
Loss of
$40,000
-32,000
Profit of
$60,000
42,000
= $28,000
Decision
70%
Bid on
Project 2
10%
+
Loss of
$20,000
20%
28
-2,000
+
Loss of
$50,000
-10,000
= $30,000
28

29. Balanced Scorecard Approach
It is a performance
management approach that
involves measuring a
company’s vision and
strategy via four perspectives.
Financial
Perspective
How do we look to our
shareholders or to those
who provide funding to
us?
Customer
Perspective
Innovation and
Learning Perspective
How do we look to our
customers and other
stakeholders?
How do we keep getting
better?
By balancing internal process
measurement and financial
results with customer
feedback, the performance
picture becomes complete.
29
Internal Processes
Perspective
What internal processes
we must excel at in order
to attract and retain our
customers and other key
stakeholders?
29
Source: IT Project Management,
J Marchewka, J Wiley & Sons

30. Project Integration Management
• Project Integration Management includes the processes and
activities needed to identify, define, combine, unify and
coordinate the various processes and project management
activities
• Integration includes characteristics of unification, consolidation,
articulation and integrative actions that are crucial to project
completion
30
30

31. Project Integration Management
Processes






31
4.1 Develop Project Charter: working with stakeholders to
create the document that formally authorizes a project
4.2 Develop Project Management Plan: coordinating all
planning efforts to create a consistent, coherent document
4.3 Direct and Manage Project Work: carrying out the project
management plan by performing the activities included in it
4.4 Monitor and Control Project Work: overseeing project
work to meet the performance objectives of the project
4.5 Perform Integrated Change Control: coordinating changes
that affect the project’s deliverables and organizational process
assets
4.6 Close Project or Phase: finalizing all project activities to
formally close the project
31

32. 4.2 Develop Project Management Plan
The process of documenting the actions necessary to define, prepare, integrate
and coordinate all subsidiary plans.
Inputs
1. Project charter
2. Outputs from other
processes
3. Enterprise
environmental
factors
4. Organizational
process assets
Tools and
Techniques
1. Expert judgment
2. Facilitation
techniques
Outputs
1. Project
management plan
The Project Management Plan defines how the project is
executed, monitored, controlled and closed.
32
32

33. Project Management Plan

–
–
–
–
–
–
–
–
–
–
33
A Project Management Plan consolidates other subsidiary management plans
including:
Scope management plan
Requirement management plan
Schedule management plan
Cost management plan
Quality management plan
Process improvement plan
Human resource plan
Communication management plan
Risk management plan
Procurement management plan
33

34. Project Management Plan (continued)

–
–
–
–
–
–
–
–

–
–
–
34
A Project Management Plan includes:
Project Charter
Budget
Schedule
Resources
Scope Statement
WBS
Responsibility charts/assignments
Management Plans
The Project Management Plan also includes project baselines, including:
Schedule baseline
Cost performance baseline and
Scope baseline
34

35. 4.3 Direct and Manage Project Work
Is the process of performing the work defined in the project management
plan to achieve the project’s objectives.
Inputs
1. Project
management plan
2. Approved change
requests
3. Enterprise
environmental
factors
4. Organizational
process assets
35
Tools and
Techniques
1. Expert judgment
2. Project
management
information
systems
3. Meetings
Outputs
1. Deliverables
2. Work
performance data
3. Change requests
4. Project
management plan
updates
5. Project
documents
updates
35

36. Direct and Manage Project Execution
The process includes:
–
–
–
–
–
–
–
–
–
–
36
Perform activities to accomplish project requirements
Create project deliverables
Staff, train, and manage the team members assigned
Obtain, manage, and use resources
Implement the planned methods
Establish and manage project communication channels
Generate project data, such as cost, schedule, technical progress, and
status
Manage risks and implement risk response activities
Manage sellers and suppliers
Collect and document lessons learned
36

37. 4.4 Monitor and Control Project Work
Is the process of tracking, reviewing, and regulating the progress to meet
the performance objectives defined in the project management plan.
Inputs
1. Project
management plan
2. Schedule forecasts
3. Cost forecasts
4. Validated changes
5. Work performance
information
6. Enterprise
environmental
factors
7. Organizational
process assets
37
Tools and
Techniques
1. Expert judgment
2. Analytical
techniques
3. Project
management
information
system
4. Meetings
Outputs
1. Change requests
2. Project
management plan
updates
3. Project
documents
updates
37

38. Monitor and Control Project Work
• The process is concerned with:
– Comparing actual project performance against the project
management plan
– Assessing performance to determine whether corrective or
preventive actions are required
– Identifying new risks, and analyzing, tracking, and monitoring
existing project risks
– Maintaining an accurate, timely information base concerning the
project’s product
– Providing information to support status reporting, and forecasting
– Monitoring implementation of approved changes as they occur
38
38

39. 4.5 Perform Integrated Change Control
Is the process of reviewing all change requests, approving changes and managing
changes to the deliverables, organizational process assets, project documents and
the project management plan
Inputs
1. Project
management plan
2. Work performance
information
3. Change requests
4. Enterprise
environmental
factors
5. Organizational
process assets
39
Tools and
Techniques
1. Expert judgment
2. Meetings
3. Change control tools
Outputs
1. Approved change
requests
2. Change log
3. Project
management plan
updates
4. Project documents
updates
39

40. Perform Integrated Change Control
• Configuration management with change control provides a
standardized, effective and efficient process to centrally manage
changes within a project.
–
It includes identifying, documenting, and controlling changes to the
baseline
• Project wide application of configuration management system,
including change control processes, has three main objectives:
–
–
Provides opportunities to continuously validate and improve the project by
considering the impact of each change.
–
40
Establishes an evolutionary method to consistently identify and request
changes to the established baselines, and to assess the value and
effectiveness of those changes
Provides the mechanism for the project management team to consistently
communicate all changes to the stakeholders
40

41. 4.6 Close Project or Phase
Is the process of finalizing all activities across all the Project Management
Process Groups to formally complete the project or phase
Inputs
1. Project
management plan
2. Accepted
deliverables
3. Organizational
process assets
41
Tools and
Techniques
1. Expert judgment
2. Analytical
techniques
3. Meetings
Outputs
1. Final product,
service or result
transition
2. Organizational
process assets
updates
41

42. Close Project or Phase
The act of completing a project or a phase of a project, either because it
has been completed or because it has been terminated early.
•
•
•
•
42
The close project or phase process also establishes the procedures to
investigate and document the reasons for actions taken if a project is
terminated before completion
Includes all of the activities necessary for administrative closure of the
project or phase
Also includes Releasing team members
Celebration of completion
42