Chapter 3

Project Management
Introduction
 Project Management is the process of planning and
controlling system development within a specified time at a
minimum cost with the right functionality
 A project is a set of activities with a specified beginning and
end point meant to create a system that brings value to the
business
 Project Managers:
 monitor and control all tasks and roles that need to be
coordinated
 generate a system request based on a business need or
opportunity (Inception phase)
 perform a feasibility analysis; revise the system request
 approve or decline the project

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Project Identification
 Projects are driven by business needs
 Identified by business people
 Identified by IT people
 (better yet) identified jointly by business and IT
 The project sponsor believes in the system and wants to
see it succeed
 Should have the authority to move it forward

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Business Value
 Tangible Value
 Can be quantified and measured directly
 Example: 2% reduction in operating costs
 Intangible Value
 We know it will add value & save time, but we may not be able
to quantify or measure its benefits
 Example: improved customer service

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The System Request
 A document that describes the reasons for and the value
added from building a new system
 Contains 5 elements:
• Project sponsor: the primary point of contact for the project
• Business need: the reason prompting the project
• Business requirements: what the system will do
• Business value: how will the organization benefitfrom the
project
• Special issues: Anything else that should be considered

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Feasibility Analysis

 Is this project feasible?

 What are the risks?
 Can these risks be overcome?
 Major components:
 Technical feasibility (Can we build it?)
 Economic feasibility (Should we build it?)
 Organizational feasibility (Will they use it?)

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Technical Feasibility

 Identify risks in the following areas:

 The functional area: Are analysts familiar with this
portion of the business?
 The technology: Less familiarity generates more risk
 Project size: Large projects have more risk
 Compatibility: Difficult integration increases the risk

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Economic Feasibility
(Cost-Benefit Analysis)

 Identify the costs and the benefits

 Assign values to the costs and benefits
 Determine the cash flow
 Determine the value using one or more methods:
 Net present value (NPV)
 Return on investment (ROI)
 Break-even point

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Formulas for Determining Value

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Example Cost-Benefit Analysis

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Example Break-Even Point

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Organizational Feasibility
 Will the users accept the system?
 Is the project strategically aligned with the business?
 Conduct a stakeholder analysis
 Project champion(s)
 Organizational management
 System users
 Others

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Project Selection
 Projects are approved, declined or delayed based
on value added vs. risks
 Project portfolio management
 Goals:
 Maximize cost/benefit ratio
 Maintain an optimal mix of projects based on:
 Risk
 Size, cost & length of time to complete
 Purpose, scope & business value
 Limited resources require trade-offs
 Selected projects enter the project management
process
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Project Management Tools

 Aids in creating workplans

 Identify all tasks, their sequence and estimate the time
to complete each one
 Work breakdown structures (WBS): a hierarchy of tasks
to identify:
 Duration of each task
 Current status of each task
 Task dependencies (shows which tasks must be completed
before others can begin)
 Gantt charts: horizontal bar chart that shows the WBS
graphically
 Network diagrams: PERT and CPM
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Project Effort Estimation

 It is the process of assigning projected values for time and

effort
 Most accurate estimates come from experience
 Example: Use-case point method (see Chap. 5)

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Creating & Managing the Workplan

 Workplan: a dynamic and sequential list of all tasks

needed to complete a project
 Approaches:
 Modify existing or completed projects
 Derive the tasks from the methodology being used
 Unified Process:
 Iterative & incremental
 Workplan is also iterative & incremental
 Tasks and time intervals follow the phases
 Different tasks executed for each workflow

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Scope Management
 Scope “creep”
 Occurs after the project is underway
 Results from adding new requirements to the project
 Can have a deleterious effect on the schedule
 Techniques to manage the project scope:
 Identify all requirements at the outset
 Allow only those changes deemed absolutely necessary
 Carefully examine the impact of suggested changes
 Delay some changes for “future enhancements”
 Time boxing

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Staffing the Project
 Goals:
 Determine how many people are required
 Match skill sets to required activities
 Motivate the team to meet the objectives
 Minimize conflicts
 Deliverable—The staffing plan, which includes:
 Number & kind of people assigned
 Overall reporting structure
 The project charter (describes the project’s norms and rules)

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Creating a “Jelled” Team
 A team of people so strongly knit that the whole is
greater than the sum of its parts
 Characteristics of a jelled team:
 Very low turnover rate
 Strong sense of identity
 A feeling of eliteness
 Team vs. individual ownership of the project
 Team members enjoy their work

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The Staffing Plan
 Calculate the number of people needed:

 Lines of communication increase exponentially as

people are added to a project
 Create a reporting structure for projects with large
numbers of people assigned
 Form sub-teams as necessary
 Assign team leaders
 Pay attention to technical and interpersonal skills

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Environment & Infrastructure Management
 Environment—Choose the right set of tools
 Use appropriate CASE tools to:
 Increase productivity and centralize information (repository)
 Infrastructure—Document the project appropriately
 Store deliverables & communications in a project binder
 Use Unified Process standard documents
 Don’t put off documentation to the last minute

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 Software pricing

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Software pricing
 Estimates are made to discover the cost, to the developer,
of producing a software system.
 You take into account, hardware, software, travel, training and
effort costs.
 There is not a simple relationship between the
development cost and the price charged to the customer.
 Broader organisational, economic, political and business
considerations influence the price charged.

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Factors affecting software pricing

Factor Description
Contractual terms A customer may be willing to allow the developer to retain
ownership of the source code and reuse it in other projects.
The price charged may then be less than if the software
source code is handed over to the customer.
Cost estimate If an organization is unsure of its cost estimate, it may
uncertainty increase its price by a contingency over and above its
normal profit.
Financial health Developers in financial difficulty may lower their price to
gain a contract. It is better to make a smaller than normal
profit or break even than to go out of business. Cash flow is
more important than profit in difficult economic times.

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Factors affecting software pricing

Factor Description
Market opportunity A development organization may quote a low price
because it wishes to move into a new segment of the
software market. Accepting a low profit on one project may
give the organization the opportunity to make a greater
profit later. The experience gained may also help it develop
new products.
Requirements volatility If the requirements are likely to change, an organization
may lower its price to win a contract. After the contract is
awarded, high prices can be charged for changes to the
requirements.

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Pricing strategies
 Under pricing
 A company may underprice a system in order to gain a
contract that allows them to retain staff for future
opportunities
 A company may underprice a system to gain access to a new
market area
 Increased pricing
 The price may be increased when a buyer wishes a fixed-price
contract and so the seller increases the price to allow for
unexpected risks

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Pricing to win
 The software is priced according to what the software
developer believes the buyer is willing to pay
 If this is less that the development costs, the software
functionality may be reduced accordingly with a view to
extra functionality being added in a later release
 Additional costs may be added as the requirements
change and these may be priced at a higher level to make
up the shortfall in the original price

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 Discussion

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 Business need and benefits for the following projects:
 Edugate-like system
 Absher-like system
 Website of Saudi Airlines
 Microsoft Excel

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