Chapter 4

Report
Information Technology Project
Management, Sixth Edition
Note: See the text itself for full citations.
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Describe an overall framework for project
integration management as it relates to the other
PM knowledge areas and the project life cycle
Explain the strategic planning process and apply
different project selection methods
Explain the importance of creating a project
charter to formally initiate projects
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Describe project management plans
development, understand the content of these
plans, and review approaches for creating them
Explain project execution, its relationship to
project planning, the factors related to successful
results, and tools and techniques to assist in
project execution
Describe the process of monitoring and
controlling project work
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Understand the integrated change control
process, planning for and managing changes on
information technology projects, and developing
and using a change control system
Explain the importance of developing and
following good procedures for closing projects
Describe how software can assist in project
integration management
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The integration of all project components (people,
plans, work) and coordination of other knowledge
areas throughout project life cycle to successfully
complete the project
The integration of processes from all project
process groups (initiation, planning, execution,
control, and closing) throughout project lifecycle to
achieve project goals
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Integrating all project components (people, plans,
work) together to achieve project goals
Maintain good communication and relationships
with all stakeholders – interface management
Project managers must coordinate all of the other
knowledge areas throughout a project’s life cycle
Many new project managers have trouble looking at
the “big picture” and focus on too many details
Project integration management is not the same
thing as software integration
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Nick Carson recently became a project manager
of a critical biotech enterprise
The project involved creating HW and SW for a
DNA-sequencing instrument
Nick had been the leading software developer on
the project before being the project manager
CEO asked him to deliver a production version of
the SW for the DNA-sequencing instrument in nine
months
Nick had the technical background to make the
project success
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Nevertheless, top management was upset because:
Nick performed the role of SW integrator instead of
project manager
He focused on technical issues rather than management
issues and ignored the big picture of the project
He never provide top management with detailed plans or
accurate schedules
He ignored key stakeholders (top management) and
focus on his technical team
He thought the project integration management means
SW integration
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The Airbus A380 megajet project was two years behind
schedule in Oct. 2006, causing Airbus’ parent company to
face an expected loss of $6.1 billion over the next four years
The project suffered from severe integration management
problems, or “integration disintegration...Early this year,
when pre-assembled bundles containing hundreds of miles
of cabin wiring were delivered from a German factory to the
assembly line in France, workers discovered that the
bundles, called harnesses, didn't fit properly into the plane.
Now Airbus will have to go back to the drawing board and
redesign the wiring system.”*
*Matlack, Carol. “First, Blame the Software,” BusinessWeek Online (October 5, 2006).
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Strategic planning involves determining long-term
objectives, predicting future trends, and projecting
the need for new products and services
Organizations often perform a SWOT analysis to
aid in strategic planning (selecting project)
◦ Analyzing Strengths, Weaknesses, Opportunities, and
Threats
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As part of strategic planning, organizations:
◦ Identify potential projects
◦ Use realistic methods to select which projects to work on
◦ Formalize project initiation by issuing a project charter
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A group of four people want to start new business
in film industry
They create SWOT analysis as follows:
Strengths:
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We have numerous contact in the film industry
Two of us have strong sales and interpersonal skills
Two has strong technical skills and familiar with sw tools
We all have impressive samples of completed projects
Weakness
◦ No accounting/financial experience
◦ No clear marketing strategy for product and services
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◦ Little money to invest in new projects
◦ No company website and limited use of technology
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Opportunities
◦ Current client has mentioned a large project
◦ Film industry continues to grow
◦ Two major conferences this year where we could
promote our company
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Threats
◦ Other companies can provide services we can
◦ Customers prefer well established organization
◦ High risk in film business
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Identifying Potential Projects
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Find an external accountant to help run the business
Hire website developer
Develop a marketing plan
Develop a strong proposal to get the large project of the
client
◦ Plan to promote the company at two major conference
this year
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There are usually more projects than available
time and resources to implement them
Methods for selecting projects include:
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Focusing on broad organizational needs
Categorizing information technology projects
Performing net present value or other financial
analyses
Using a weighted scoring model
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Project that meet broad organization needs are more
likely to be successful
Broad organization needs such as
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Improve safety
Increase morale (emotional condition, cheerfulness)
Provide better communications
Improve customer services
Selection based on the following criteria:
◦ There is a need for the project
◦ There are funds available
◦ There’s a strong will to make the project succeed
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One categorization is whether the project addresses:
◦ A problem: is undesirable situations that prevents
organization from achieving its goals (example: slow IS
needs processor, memory, and storage upgrade)
◦ An opportunity: a chance to improve the organization (ex:
new project that can make the organization)
◦ A directive: new requirements imposed by management or
government (ex: medical tech must meet rigorous (rigid)
government requirements)
◦ It is often easier to get approval and fund for the projects that
address problems or directives to avoid hurting the
organization
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Another categorization is how long it will take to do
the project and when it is needed
◦ Quick project
◦ Project with specific time window
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Another is the overall priority of the project
◦ high priority project
◦ medium priority project
◦ low priority project
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Always complete high priority project first even
med. and low could be finished in less time
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Financial considerations are often an important
consideration in selecting projects
Three primary methods for determining the projected
financial value of projects:
◦ Net present value (NPV) analysis
◦ Return on investment (ROI)
◦ Payback analysis
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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
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Note: See the template called business_case_financials.xls
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1.
2.
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Determine estimated costs and benefits for the life
of the project and the products it produces
Determine discount rate r (capitalization rate): it
is the rate used in discounting future cash flow.
Calculate the discount factor, f, of year t as
follows:
1
ft 
t
(1  r )
At  cashflow  estimatedbenifit  estimated cos t
NPV 

t 0...n
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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
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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, r, that makes the NPV
equal to zero
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Another important financial consideration is
payback analysis
The payback period is the amount of time it will
take to recoup (reimburse), in the form of net
cash inflows, the total dollars invested in a project
Payback occurs when the net cumulative
discounted benefits equals the cummulative
costs
Many organizations want IT projects to have a
fairly short payback period
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A weighted scoring model is a tool that provides a
systematic process for selecting projects based on
many criteria
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Identify criteria important to the project selection process
Assign weights (percentages) to each criterion so they add
up to 100%
Assign scores to each criterion for each project
Multiply the scores by the weights and get the total
weighted scores
The higher the weighted score, the better
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Develop the project charter: working with
stakeholders to create the document that formally
authorizes a project—the charter
Develop the project management plan:
coordinating all planning efforts to create a
consistent document—the project management
plan
Direct and manage project execution: carrying
out the project management plan by performing
the activities included in it
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Monitor and control the project work:
overseeing project work to meet the
performance objectives of the project
Perform integrated change control:
coordinating changes that affect the project’s
deliverables
Close the project or phase: finalizing all project
activities to formally close the project or phase
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After deciding what project to work on, it is
important to let the rest of the organization know
A project charter is a document that formally
recognizes 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; a signed charter is a key
output of project integration management
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1.
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Project title and date of authorization
Project manager name and contact info
A summary schedule include the planned start date
and finish date
Project budget
Project objectives
Project success criteria
A planned approach for managing the project
Roles and responsibilities
Sign-off section
comments
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A project management plan is a document used to
coordinate all project planning documents and help
guide a project’s execution and control
Plans created in the other knowledge areas a
(scope plan, time plan, cost plan,…) are parts of the
overall project management plan
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Every project is unique
Every project has a unique project management
plan depends on its nature and size
There are common elements in most project
management plans
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Introduction or overview of the project
Description of how the project is organized
Management and technical processes used on
the project
Work to be done (WBS)
Schedule
Budget information
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6.
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Project name
A brief description of the project(needs, goals,
estimated time, and cost)
Sponsor name and contact information
Project manager, key team members, name and
contact information
Deliverables (sw, hw, technical reports, and
training materials)
A list of important reference materials (project
history and plans in other knowledge area)
A list of definition and acronyms
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1.
Organizational charts:
I. Company organizational chart
II. Customers organizational chart
III. Project organizational chart :authorities, communications,
and people
2.
3.
Project responsibilities: functions and activities,
people assigned to them
Other organizational information: processes and
major steps involved in them
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Management objectives: top management’s view,
priorities, major assumptions, and constraints
Project control: how to monitor project progress and
handle changes
Risk management: how to identify, manage, and
control risks
Project staffing: number and types of people required
for the project
Technical processes: specific methodologies a
project might used
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5.
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II.
Computer Aided Software Engineering (CASE) tools for
software development
Specific format for technical reports
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1.
2.
3.
Major work packages: use WBS to identify
different work packages, provide a scope statement
to describe them (refer to scope management plan)
Key deliverables: describe key products and their
expected quality
Other work-related information: for example
specific HW and SW used in the project
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1.
2.
3.
Summary schedule: planned completion dates
for key deliverables
Detailed schedule: provide more information on
project schedule and discuss the dependencies
that could affect the schedule (refer to schedule
management plan)
Other schedule-related information: discuss
assumptions in preparing project schedule
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Summary budget: total estimate of the overall
project’s budget
Detailed budget: more detailed information on the
budget (refer to cost management plan)
Other budget-related information: assumption,
other important information related to financial
aspects of the project
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Using software tools such as Microsoft Project 7
that provides templates and guidelines for
preparing project management plan
Using agencies guidelines
◦ DOD standard 2167, software project management plan
◦ IEEE standard 1058-1998
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Project execution involves managing and
performing the work described in the project
management plan
The majority of time and money is usually spent
on execution
The application area of the project directly affects
project execution because the products of the
project are produced during execution
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Project planning and execution are
intertwined and inseparable activities
 Project plan guides project execution
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◦ Good plan should help produce good products
◦ Plans should document what good work
results consist of
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Experience gained from completed project
is used to update plans
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Those who will do the work should help to plan the
work
Project team should develop skills in both planning
and execution
In IT projects, programmers who create the code
also write detailed specs (plans) of it
System analysts begin their career as programmers,
so they understand what type of analysis they need
to write a good code
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General management skills like leadership,
communication, and political skills
Technical and product, business, and application
area skills and knowledge
◦ In small project, project manager needs technical
knowledge because they may need to do part of the
work
◦ In large project, project manger needs business and
application knowledge more than technical knowledge
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Use of specialized tools and techniques
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Expert judgment: experts can help project
managers and their teams make many
decisions related to project execution
(methodology, training approach, programming
language, …)
Project management information systems:
there are hundreds of project management
software products available on the market today,
and many organizations are moving toward
powerful enterprise project management
systems that are accessible via the Internet
(Microsoft Project 2007 Appendix A) creates
Gant chart, network diagram, critical path analysis, …
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Monitoring project work includes collecting,
measuring, and disseminating performance
information in the form of performance report
A baseline (basis for judgment): is the approved
project management plan plus approved changes
performance metrics: work performed, key
deliverables, dates for completing deliverables,
cost
Work should be done as planned otherwise an
approved change request should be issued
Changes are inevitable on most projects
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Used to monitor project execution and control
changes
Alert project manager to the issues that are
causing problems and degrade performance
Project manager should decide if corrective or
preventive actions are needed
Corrective actions should result in improvement in
project performance
Preventive actions reduce the probability of
negative consequence associated with project risk
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Identifying, evaluating, and managing
changes throughout the project life cycle
Three main objectives are:
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Identifying the factors that create changes to ensure
that changes are beneficial
Determining that a change has occurred and
communicate significant changes to stakeholders
and top management
Managing actual changes as they occur
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Former view: the project team should strive to do
exactly what was planned on time and within
budget
Problem: stakeholders rarely agreed up-front on
the project scope, and time and cost estimates
were inaccurate
Modern view: project management is a process of
constant communication and negotiation
Solution: changes are often beneficial, and the
project team should plan for them
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A
formal, documented process that
describes when and how official
project documents and work may be
changed
 Describes who is authorized to make
changes and how to make them
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To close a project or phase, you must finalize all
activities and transfer the completed or cancelled
work to the appropriate people
Main outputs include:
◦ Final product, service, or result transition
◦ Final report, historical info, lesson learned
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Several types of software can be used to assist in
project integration management
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Documents can be created with word processing software
Presentations are created with presentation software
Tracking can be done with spreadsheets or databases
Communication software like e-mail and Web authoring
tools facilitate communications
◦ Project management software can pull everything together
and show detailed and summarized information
◦ Business Service Management (BSM) tools
 track the execution of business process flows
 alignment project with business goals
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Project integration management involves
coordinating all of the other knowledge areas
throughout a project’s life cycle
Main processes include:
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Develop project charter
Develop project management plan
Direct and manage project execution
Monitor and control project work
Perform integrated change control
Close the project or phase
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Management, Sixth Edition
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