UCCD2003 OBJECT-

ORIENTED SYSTEM
ANALYSIS AND DESIGN
• TopicTopic
3: 3: Project
Project Planning Planning and Control
and Control
• Chapter 3: Initial the project and planning the project
Chapter 3: Project planning and project
• Chapter 4: Planningmanagement
the project (cont.), executing the
project and close-down the project.

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Learning Objectives
• To describe the steps involved in the project initiation and
planning process
• To explain the process of managing an information systems
project
• To describe skills required to be an effective project manager
• Describe the project identification and selection process
• To list and describe the skills and activities of a project manager
during project initiation, project planning, project execution, and
project close down
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Learning Objectives
• To explain the need for and the contents of a Project Scope
Statement and Baseline Project Plan
• List and describe various methods for assessing project feasibility
• Describe the differences between tangible and intangible benefits
and costs and between one-time and recurring benefits and costs
• Perform cost-benefit analysis and describe what is meant by the
time value of money, present value, discount rate, net present
value, return on investment, and break even analysis
• Describe the general rules for evaluating the technical risks
associated with a systems development project
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Introduction
• Project Manager: is a systems analyst with a diverse set of skills
– management, leadership, technical, conflict management, and
customer relationship – who is responsible for initiating, planning,
executing, and closing down a project
• Project: is a planned undertaking of related activities to reach an
objective that has a beginning and an end
• Deliverable: is an end product of an SDLC phase
• Project management: a controlled process of initiating, planning,
executing, and closing down a project

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Introduction

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Project management activities
Introduction
• Planning phase process:
⮚Project initiation: the first stage of planning phase process in which
activities are performed to assess the size, scope, and complexity of
the project and to establish procedures to support later project
activities
❖Initiating the Project
⮚Project management: the second stage of planning phase process
after the project being initial.
❖Planning the Project
❖Executing the Project
❖Closing down the Project
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Initiating a Project
• The process of project initiation includes, establishing and developing:
⮚ An initiation team
❖ Organize an initial core of project team members to assist in accomplishing
project initiation
⮚ A relationship with the customer
⮚ A project initiation plan
❖ Define activities required to organize team while working to define the goals
and scopes of the project (Ex: agendas for several meetings, setting
deadlines) and creation of System Service Request (SSR) form
⮚ Management procedures
❖ Develop team communication, job assignment, claiming and reporting
procedures, project funding (standard operating procedures)
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Initiating a Project
⮚Project management environment
❖Collect and organize tools that will be used to manage the project and
to construct the project workbook (diagrams, charts, system
descriptions)
⮚A project workbook: an online or hard-copy repository for all project
correspondence, inputs, outputs, deliverables, procedures, and
standards that are used. To review project status, for project audits,
orientation of new members and performing post project reviews

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Initiating a Project

Example of project workbook

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Initiating a Project
⮚Developing a Project Charter
❖Project charter – a short (typically one page), high-level document
prepared for both internal and external stakeholders.
❖It briefly describes: project title, date of authorization, project manager
name & contact info, customer name, start & completion date,
objectives, key assumptions, stakeholders role and signature of key
stakeholders.

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Initiating a Project
• The key activity of project initiation is the development of the
project charter.
⮚A short document that is prepared for both internal and external
stakeholders.
⮚Provides a high-level overview of the project.
⮚Useful communication tool that helps to assure that the
organizations and other stakeholders understand the initiation of a
project.

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Initiating a Project
• A project charter typically contains:
⮚Project title and date of authorization
⮚Project manager name and contact information
⮚Customer name and contact information
⮚Project start and completion dates
⮚Key stakeholders, project role, and responsibilities
⮚Project objectives and description
⮚Key assumptions or approach
⮚Signature section for key stakeholders

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 13
A project charter for the customer tracking system at PVF
Identifying potential development projects
• Identification from a stakeholder group
• Each stakeholder group brings their own perspective and
motivation to the IS decision
• Top-down source are projects identified by top management or by
a diverse steering committee
• Bottom-up source are project initiatives stemming from
managers, business units, or the development group
• The process varies substantially across organizations

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Identifying potential development projects

Characteristics of alternative methods for making IS identification and selection decision; Each
group brings their own perspective and motivation to the IS decision
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Classifying and ranking IS development
projects
• Using value chain analysis or other evaluation criteria
• Value chain analysis:
⮚the process of analyzing an organization’s activities for making
products and/or services to determine where value is added and
costs are incurred
⮚Imagine your organization as a big input/output process.
❖Identify at which process value should be added/cost should be
reduced.

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Organizational value chain; Value chain analysis: need to understand each activity,
function, process. -> compare with others (competitors) == able to reduce
cost/increase benefit 17
Possible evaluation criteria when classifying and ranking projects 18
Selecting IS development projects
• Based on various factors.
• Consider both short- and long-term projects.
• Select those most likely to achieve business objectives.
• Is a very important and ongoing activity.

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Project selection decisions must consider numerous factors and can have numerous
outcomes 20
Why improved IS project identification and
selection is needed?
• Information systems costs continue to rise (approach 40% of total
expenses in some organizations)
• The inability of systems to handle applications that cross
organizational boundaries
• Systems not addressing the critical problems of the business as a
whole nor supporting strategic planning applications
• Data redundancy and lack of user confidence in the quality of data
• Out-of-control system maintenance costs
• Lengthy application backlogs (often creating redundant databases
and incompatible systems in the process)
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Approaches to IS Planning
• Top-down planning
⮚Attempts to gain a broad understanding of information system
needs of the entire organization
• Bottom-up planning
⮚Identifies IS development projects based on solving specific
operational business problems or taking advantage of specific
opportunities

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Approaches to IS Planning
• Benefits of Top-Down Planning
⮚Broader perspective – system will be implemented with the
understanding from the organization’s viewpoint.
⮚Improved integration – able to implement a system which is evolved
from the existing rather than implementing totally a new system.
⮚Improved management support – high management acceptance since
the system supports them in achieving business objectives.
⮚Better understanding – able to fully understand on the implementation
of the system across the entire business rather than an operating unit.
• But, bottom-up planning can be faster and less costly, so may be
beneficial in certain circumstances
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Planning the Project
• The key activity of project planning is the process of defining
clear, discrete activities and the work needed to complete each
activity within a single project
• The objective of the project planning process is the development
of a Baseline Project Plan (BPP) and the Project Scope
Statement (PSS)

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Planning the Project
• Focuses on defining clear, discrete activities and the work needed to complete
each activity within a single project
• Describe project scope, alternatives, and feasibility:
⮚ What problems or opportunities does the project address?
⮚ What are the quantifiable results to be achieved?
⮚ What needs to be done?
⮚ How will success be measured?
⮚ How will we know when we are finished?

• Divide the project into manageable tasks:

⮚ Work Breakdown Structure (WBS): the process of dividing the project into
manageable tasks and logically ordering them to ensure smooth evolution. It
consists of duration of each task, current status of each task and task
dependencies (shows which tasks must be completed before others can begin)
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Planning the Project

Example of gantt chart 26

Planning the Project
⮚Gantt chart: a graphical representation of a project that shows each
task as a horizontal bar whose length is proportional to its time for
completion
⮚The characteristics of a task:
❖Can be done by one person or a well-defined group
❖Has a single and identifiable deliverable
❖Has a known method or technique
❖Has well-accepted predecessor and successor steps
❖Is measurable so that percent completed can be determined

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Planning the Project
• Estimate resources and create a resource plan:
⮚Constructive Cost Model (COCOMO) – a widely used method which
uses parameters that are derived from prior projects of differing
complexity
⮚COCOMO uses these different parameters to predict human
resource requirements for basic, intermediate, and very complex
systems.
⮚Most critical resource?

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Planning the Project
• Develop a preliminary schedule:
⮚Information on tasks and resource available are used to assign time
estimates to each activity in the work breakdown structure
⮚Network diagram – depicts project tasks and their interrelationships
(predecessor & successor)

Example of network diagram

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Planning the Project
• Develop a communication plan:
⮚Who are the stakeholders for this project?
⮚What information does each stakeholder need?
⮚When, and at what interval, does this information need to be
produced?
⮚What sources will be used to gather and generate this information?
⮚Who will collect, store, and verify the accuracy of this information?
• Determine project standards and procedures:
⮚During this activity, you will specify how various deliverables are
produced and tested by you and your project team
⮚How members will report their progress to others? 30
Planning the Project
• Identify and assess risk:
⮚The goal of this activity is to identify sources of project risk and to estimate
the consequences of those risks
⮚Problem with new technology, unavailability of resources, user’s resistance
to change, team member inexperience with new technology and etc
• Create a preliminary budget:
⮚A preliminary budget outlines the planned expenses and revenues
associated with your project
• Develop a Project Scope Statement:
⮚Developed primarily for the customer, outlines work that will be done and
clearly describes what the project will deliver.
⮚Provides a clear understanding of project size, duration, and outcomes.
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Planning the Project

Example of preliminary budget 32

Feasibility Study
• The analysis and evaluation of a proposed project to determine if
⮚(1) it is technically feasible
⮚(2) it is feasible within the estimated cost, and
⮚(3) it will be profitable
• All projects are feasible given unlimited resources and infinite
time
• Unfortunately, most projects must be developed within tight
budgetary and time constraints
• This means that assessing project feasibility is a required activity
for all IS projects
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Feasibility Study
• Several types of feasibility
⮚Economic feasibility
⮚Technical feasibility
⮚Operational feasibility
⮚Scheduling feasibility
⮚Legal and contractual feasibility
⮚Political feasibility

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Economic feasibility
• A process
of identifying the financial benefits and costs associated with
a development project
• Often referred to as cost-benefit analysis
• Project
is reviewed after each SDLC phase in order to decide whether to
continue, redirect, or kill a project
• Determining Project Benefits
⮚Tangible benefits refer to items that can be measured in dollars and with
certainty.
⮚Examples include:
❖reduced personnel expenses,
❖lower transaction costs, or
❖higher profit margins. 35
Economic feasibility
• Determining Project Benefits (Cont.)
⮚Most tangible benefits will fit within the following categories:
❖Cost reduction and avoidance
❖Error reduction
❖Increased flexibility
❖Increased speed of activity
❖Improvement of management planning and control
❖Opening new markets and increasing sales opportunities

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Economic feasibility
⮚Intangible benefits are benefits derived from the creation of an
information system that cannot be easily measured in dollars or with
certainty.
❖May have direct organizational benefits, such as the improvement of
employee morale.
❖May have broader societal implications, such as the reduction of waste
creation or resource consumption.

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Economic feasibility
• Determining Project Benefits (Cont.)
⮚Intangible benefits (examples)
❖Competitive necessity
❖More timely information
❖Availability of new, better, or more information
❖Faster decision making
❖Improved resource control
❖Improved work process that can improve employee morale

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Economic feasibility
⮚Tangible costs: a cost associated with an information system that
can be measured in dollars and with certainty
⮚IS development tangible costs include:
❖Hardware costs,
❖Labor costs, or
❖Operational costs including employee training and building renovations

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Economic feasibility
• Determining Project Benefits (Cont.)
⮚Intangible costs: a cost associated with an information system that
cannot be easily measured in terms of dollars or with certainty
⮚Intangible costs can include:
❖Loss of customer goodwill,
❖Employee morale, or
❖Operational inefficiency
⮚One-time cost: a cost associated with project start-up and
development or system start-up

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Economic feasibility
⮚These costs encompass activities such as:
❖Systems development,
❖New hardware and software purchases,
❖User training,
❖Site preparation, and
❖Data or system conversion

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Economic feasibility
• Determining Project Benefits (Cont.)
⮚Recurringcost: a cost resulting from the ongoing evolution and use of a system
⮚Examples of these costs include:
❖Applicationsoftware maintenance,
❖Incremental data storage expenses,
❖Incremental communications,
❖New software and hardware leases, and
❖Supplies and other expenses (i.e. paper, forms, data center personnel).
⮚Both one-time and recurring costs can consist of items that are fixed or variable in
nature.
⮚Fixed costs are billed or incurred at a regular interval and usually at a fixed rate.
(example: a facility lease payment)
⮚Variable costs are items that vary in relation to usage. (example: long-distance
phone charges)
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Economic feasibility
• Determining Project Benefits (Cont.)
⮚Procurement cost
❖Hardware, software, facilities, infrastructure, staff
⮚Start-up cost
❖Initial operating costs, personnel hiring
⮚Project-related cost
❖Application software, software modification, personnel overhead,
training, data analysis, documentation
⮚Operating cost
❖System maintenance, rental, asset depreciation, operation and
planning
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Time Value of Money
• It is a methods to perform economic cost-benefit analysis
• Time value of money (TVM): the concept that money available today is worth more
than the same amount tomorrow
• Discount rate: the rate of return used to compute the present value of future cash
flows (the cost of capital)
• Present value: the current value of a future cash flow
• Net Present Value (NPV)
⮚Use discount rate to determine present value of cash outlays and receipts
• Return on Investment (ROI)
⮚Ratio of cash receipts to cash outlays
• Break-Even Analysis (BEA)
⮚Amount of time required for cumulative cash flow to equal initial and ongoing investment
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Time Value of Money
• Net Present Value
• PVn = present value of Y dollars n years from now based on a
discount rate of i
• NPV = sum of PVs across years
• Calculates time value of money:

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Time Value of Money
• Break-even analysis: a type of cost-benefit analysis to identify at
what point (if ever) benefits equal costs:

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Preliminary Budget Example
• Assuming monetary benefits of an information system at RM
85,000 per year, one time costs of RM 75,000, recurring costs of
RM 35,000 per year, a discount rate of 12 percent, and a five-
year time horizon, calculate the net present value of these costs
and benefits of an information system. Also, calculate the overall
return on investment of the project and then present a break-
even analysis. At what point does break even occur.

where NPV is 5 years net present value, CF is the cash flow, r is

the discount rate, and II is the Initial Investment.
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 Problems
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Totals
Net Economic
Benefit
Discount Rate ()

PV of Benefits

NPV of all Benefits

One-time Costs

Recurring Costs

Discount Rate ()
PV of Recurring
Costs

NPV of all Costs

Overall NPV

Overall ROI

Break-even Analysis
Yearly NPV
Cash Flow
Overall NPV
Cash Flow

Project break even occurs between ( ) and ( ) years

Use first year of positive cash flow to calculate break-even fraction
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Actual break even occurs at
Preliminary budget template
Preliminary Budget Example
• Analysis given information
⮚Benefit for each year (from year 1 to 5): 85000
⮚One-time costs (starting year): -75000
⮚Recurring costs (from year 1 to 5): -35000
⮚Discount rate: 12%

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Preliminary Budget Example
• Time value money (TVM) and net present value (NPV) of these benefits

Year Benefit value PV NPV benefit

0 0 0 0+0=0
1 85000 75893 0 + 75893 = 75893
2 85000 67761 75893 + 67761 = 143664
3 85000 60501 143664 + 60501 = 204156
4 85000 54019 204156 + 54019 = 258175
5 85000 48231 258175 + 48231 = 306406
NPV 306406
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Preliminary Budget Example
• Time value money (TVM) and net present value (NPV) of these costs
Year Cost value PV NPV costs
0 -75000 0 -75000 + 0 = -75000
1 -35000 -31250 -75000 + (-31250) = -106250
2 -35000 -27902 -106250 + (-27902) = -134152
3 -35000 -24914 -134152 + (-24914) = -159064
4 -35000 -22243 -159064 + (-22243)= -181307
5 -35000 -19860 -181307 + (-19860) = -201167
NPV -201167
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Preliminary Budget Example
• Overall NPV = NPV benefits + NPV costs, where costs always
negative value.
 Overall NPV = 306406 + (-201167) = 105239

• Overall return on investment (ROI)

⮚ROI = Overall NPV divide NPV costs.
⮚ROI = 105239 / 201167 = 52.31%
⮚NPV costs is always an absolute value when compute ROI.

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Preliminary Budget Example
• Break-even analysis to find break-even point.
Year PV PV Cost Overall NPV Accumulated Overall NPV
benefit per year
0 0 -75000 -75000 0+(-75000) = -75000
1 75893 -31250 44643 (-75000) + 44643 = -39357
2 67761 -27902 39860 (-39357) + 39860 = 9503
3 60501 -24914 35589 9503 + 35589 = 45092
4 54019 -22243 31776 45092 + 31776 = 76867
5 48231 -19860 28371 76867 + 28371 = 105283

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Preliminary Budget Example
• Based on the table, there is surpass within year 2. This means
the break-even point is occured between year 1 and year 2.
• Breakeven ratio = (39860 - 9503) / 39860 = 0.76
• Therefore, the break-even point occur in (1 + 0.76) = 1.76 years.

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Preliminary Budget Example 55
Technical Feasibility
• A process of assessing the development organization’s ability to
construct a proposed system
• The potential consequences of not assessing and managing risks
can include the following:
⮚Failure to attain expected benefits from the project,
⮚Inaccurate project cost estimates,
⮚Inaccurate project duration estimates,
⮚Failure to achieve adequate system performance levels, and
⮚Failure to adequately integrate the new system with existing
hardware, software, or organizational procedures.
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Project Risk Factors
• Project size
⮚ Team size, organizational departments, project duration, programming
effort
• Project structure
⮚ Newvs. renovated system, resulting organizational changes, management
commitment, user perceptions
• Development group
⮚ Familiarity
with platform, software, development method, application area,
development of similar systems
• User group
⮚ Familiarity with IS development process, application area, use of similar
systems 57
Technical Feasibility
• Risk can be managed on a project by:
⮚ Changing the project plan to avoid risky factors,
⮚ Assigning project team members to carefully manage the risky aspects,
⮚ Setting up monitoring methods to determine whether or not potential risk is

• Four general rules emerged as technical risk assessments:

⮚ Larger projects are riskier than smaller projects
⮚ A system in which the requirements are easily obtained and highly structured will
be less risky than one in which requirements are messy, ill structured, ill defined,
or subject to the judgment of an individual
⮚ The development of a system employing commonly used or standard technology
will be less risky than one employing novel or nonstandard technology
⮚ A project is less risky when the user group is familiar with the systems
development process and application area than if unfamiliar
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Other Feasibility Concerns
• Operational
⮚Does the proposed system solve problems or take advantage of
opportunities?
• Scheduling
⮚Can the project time frame and completion dates meet organizational
deadlines?
• Legal and Contractual
⮚What are legal and contractual ramifications of the proposed system
development project?
• Political
⮚How do key stakeholders view the proposed system? 59
Summary
✔ To explain the process of managing an information systems
project
✔ To describe skills required to be an effective project manager
✔ To list and describe the skills and activities of a project manager
during project initiation, project planning, project execution, and
project close down

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