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Software Project Management

Processes, Organization
1
Lecture Breakup
•
•
•
•
•
•
•

PMI Fundamentals
Project Organization
Project Selection
Project Portfolio Management
Procurement Management
Statement of Work (SOW)
Project Charter

2
Project Success Rates
•

The 2001 Standish Group Report Showed Decided Improvement in IT
Project Success Rates From the 1995

– Time overruns: decreased to 63% compared to
222%
– Cost overruns were down to 45% compared to
189%
– Required features were up to 67% compared to
61%
– 78,000 U.S. projects were successful vs. to 28,000
– 28% of IT projects succeeded compared to 16%

3
Project Success Rates
• Why the Improvements?
•
•
•
•

Avg. cost reduced by half
Better tools for monitoring and control
More skilled PM’s, more process, more user involvement
And “The fact that there are processes is significant in
itself.“

4
Why Do Projects Succeed?
• How to identify a projects success potential
– What metrics could you look at?
• Project size
• Project duration
• Project team size

5
Why Do Projects Succeed?
–
–
–
–
–
–
–
–
–

Executive support
User involvement
Experience project manager
Clear business objectives
Minimized scope
Standard software infrastructure
Firm basic requirements
Formal methodology
Reliable estimates
Standish Group “CHAOS 2001: A Recipe for Success”

6
Why Executive Support?
• Top management can help to:
– Secure adequate resources
– Get approval for unique project needs in a
timely manner
– Receive cooperation from people throughout
the organization
– Provide leadership guidance

7
Stakeholder Triad
• 1. Function Representative
• The ‘business person’
• Or SME: Subject Matter Expert

• 2. Executive Sponsor
• Project’s visionary & champion
• Also the ‘General’, ‘Fall Guy’, and ‘Minesweeper’
• Not the PM, ‘Santa Claus’, or the ‘Tech Guy’

• 3. Project Manager
• The ‘Linchpin’
• Must be ‘multi-lingual’

8
15 PM Job Functions
• Define scope of project
• Identify stakeholders,
decision-makers, and
escalation procedures
• Develop detailed task list
(work breakdown structures)
• Estimate time requirements
• Develop initial project
management flow chart
• Identify required resources
and budget

• Evaluate project requirements
• Identify and evaluate risks
Prepare contingency plan
• Identify interdependencies
• Identify and track critical
milestones
• Participate in project phase
review
• Secure needed resources
• Manage the change control
process
• Report project status

*Northwest Center for Emerging Technologies, "Building a Foundation for Tomorrow: Skills Standards for Info
Technology,"Belleview, WA, 1999

9
PMBOK
• Structures PM by
– A) Processes
– B) Knowledge Areas

• Processes. 2 types
– 1. PM processes: describing and organizing the work of
the project
– 2. Product-oriented processes: specifying and building
the project’s product

10
PMI Framework

Source: Project Management Institute
11
The 5 PMI Process Groups
•
•
•
•
•
•

1. Initiating
2. Planning
3. Executing
4. Controlling
5. Closing
Note: these can be repeated for each phase

• Each process is described by:
• Inputs
• Tools & Techniques
• Outputs
12
PMI Process Groups

Source: Project Management Institute
13
PMI: Process Links

14
PMI Phase Interactions
Design Phase
Initiating
Processes

Planning
Processes

Controlling
Processes

Closing
Processes

Implementation Phase
Executing
Processes

Initiating
Processes

Planning
Processes

Controlling
Processes

Executing
Processes

Closing
Processes

15
PMI: Initiating Process
• Inputs
– Product Description
– Strategic plan
– Project Selection
Criteria
– Historical Information

• Outputs
– Project charter
– Project Manager
assigned
– Constraints
– Assumptions

16
PMI: Planning Process
Devising and maintaining a workable scheme to accomplish the
business need that the project was undertaken to address

•
•
•
•
•

Scope Planning
Scope Definition
Activity Definition
Activity Sequencing
Activity Duration
Estimating
• Resource Planning
• Cost Estimating
• Cost Budgeting

•
•
•
•
•
•
•
•

Risk Planning
Schedule Development
Quality Planning
Communications
Planning
Organization Planning
Staff Acquisition
Procurement Planning
Project Plan Development
17
PMI: Executing Process
Coordinating people and other resources to carry out the plan

•
•
•
•

Project Plan Execution
Scope Verification
Quality Assurance
Team Development

• Information
Distribution
• Solicitation
• Source Selection
• Contract
Administration

18
PMI: Controlling Process
Ensuring that project objectives are met by monitoring and measuring
progress and taking corrective measures when necessary

• Overall Change
Control
• Scope Change Control
• Schedule Control
• Cost Control
• Quality Control

• Performance Reporting
• Risk Response Control

19
PMI: Closing Process
Formalizing acceptance of the project or phase
and bringing it to an orderly end

• Administrative Closure
• Contract Close-out

20
PMI Knowledge Areas

21
Importance of Phases
• Define your management review points
– “Phase exits” or “kill points”
– Ensure continued alignment with goals
– Form of Validation & Verification (V&V)
• More later in term

22
Understanding Organizations
Structural frame:
Focuses on roles and
responsibilities,
coordination and control.
Organization charts help
define this frame.

Human resources frame:
Focuses on providing
harmony between needs of
the organization and needs
of people.

Political frame:
Assumes organizations
are coalitions composed
of varied individuals and
interest groups. Conflict
and power are key issues.

Symbolic frame: Focuses
on symbols and meanings
related to events. Culture
is important.

23
Organizational Structures
• Functional
– Engineering, Marketing, Design, etc
– P&L from production

• Project
– Project A, Project B
– Income from projects
– PM has P&L responsibility

• Matrix
– Functional and Project based
– Program Mgmt. Model
– Shorter cycles, need for rapid development process

24
Functional Organization

• Pros
– Clear definition of authority
– Eliminates duplication
– Encourages specialization
– Clear career paths

• Cons
– “Walls”: can lack customer orientation
– “Silos” create longer decisions cycles
– Conflicts across functional areas
– Project leaders have little power
25
Project Organization

• Pros
– Unity of command
– Effective inter-project
communication

• Cons
– Duplication of facilities
– Career path

• Examples: defense avionics, construction
26
Matrix Organization

• Pros
– Project integration across
functional lines
–Efficient use of resources
–Retains functional teams

• Cons
– Two bosses for personnel
– Complexity
– Resource & priority conflicts
27
Matrix Forms
•
•
•
•

Weak, Strong, Balanced
Degree of relative power
Weak: functional-centric
Strong: project-centric

28
Organizational Structure Influences on
Projects
Organization Type
Project
Characteristics
Project Manager's
Authority
Percent of Performing
Organization's
Personnel Assigned Fulltime to Project Work
Project Manager's Role
Common Title for
Project Manager's Role
Project Management
Administrative Staff

Functional

Weak Matrix

Little or
None

Limited

Virtually
None

0-25%

Part-time
Project
Coordinator/
Project Leader
Part-time

Matrix
Balanced
Matrix
Low to
Moderate

Strong Matrix

Projectized

Moderate
To High

High to
Almost Total

15-60%

50-95%

85-100%

Part-time
Project
Coordinator/
Project Leader

Full-time
Project
Manager/
Project Officer

Full-time
Project
Manager/
Program Manager

Full-time
Project
Manager/
Program Manager

Part-time

Part-time

Full-time

Full-time

PMBOK Guide, 2000, p. 19

29
Organizational Impact
• Form can greatly impact your role
• Determine what skills you’ll need from
which functions
• The new “Project Office”
– A) As centralized project management
– B) As coach and info. office to project teams

• The “Enterprise PMO” (EMPO)
30
Why Firms Invest in IT

31
IT Planning Process

32
Methods for Selecting Projects
• There are usually (always?) more projects than available
time and resources to implement them
• Therefore: It is important to follow a logical process for selecting IT
projects to work on

• Methods include
–
–
–
–

Focusing on broad needs
Categorizing projects
Financial methods
Weighted scoring models
• (last 2 models covered later in term)

33
Broad Organizational Needs
• It is often difficult to provide strong justification
for many IT projects, but everyone agrees they
have a high value
• “It is better to measure gold roughly than to count pennies
precisely”

• Three important criteria for projects:
– There is a need for the project
– There are funds available
– There’s a strong will to make the project succeed
34
Categorizing IT Projects
• One categorization: whether project addresses
– a problem
– an opportunity
– a directive
• Another: how long it will take & when it is needed
• Another: overall priority of the project

35
Project Portfolio Management
• Portfolio: a group of IT project under a
coordinated management structure
• Different ‘portfolio models’ are available:
– Economic return model
– NPV, IRR, ROI

– Cost-benefit model
– Can include less tangible factors

– Market research model
– For new products

• Each considers relative value and resource/budget
interactions
• More details in Session 4
36
Portfolio Management
• A 5 level approach (from CIO magazine)
• 1. Create a Portfolio Database
• Project names & descriptions
• Estimated costs, timeframes, staffing

– Benefits
• Spotting redundancies
• Communication across orgs & teams
• Holistic view
37
Portfolio Management
• 2. Prioritize Projects
– Try quantifiable rankings
• Risk and return

– Still subjectivity and disagreements

• 3. Divide into budgets based on type
– To align with business needs
– Ex: utilities (‘keeping the lights on’),
incremental upgrades, strategic investments
38
Portfolio Management
• 4. Automate the repository
– Input of new data (new projects)
– Automated tracking (PM software integration)

• 5. Apply modern portfolio theory
– Ex: www.modporttheory.com
– More advanced than most of us need

39
Portfolio Management
• Products
– ProSight Portfolios (ex. 1) (ex. 2) (all)
– PlanView

40
Why Outsource?
• To reduce both fixed and recurrent costs
• To allow the client organization to focus on
its core business
• To access skills and technologies
• To provide flexibility
• To increase accountability

41
Procurement Management
• Procurement means acquiring goods and/or
services from an outside source
– a.k.a. purchasing or outsourcing

• Know how your project fits-into this model
– Are you building “in-house”? “for hire”?
• Thus are you the ‘outside source’?

– As a startup? (thus in-house but as basis for
the business itself)
42
Procurement Management
• Procurement planning: determining what to procure
and when
• Solicitation planning: documenting product
requirements and identifying potential sources
• Solicitation: obtaining quotations, bids, offers, or
proposals as appropriate
• Source selection: choosing from among potential
vendors
• Contract administration: managing the relationship
with the vendor
• Contract close-out: completion and settlement of the
43
contract
Project Procurement Management
Processes and Key Outputs

44
Procurement Tools & Techniques
• Make-or-buy analysis (build vs. buy)
• Determining whether a particular product or service
should be made or performed inside the organization
or purchased from someone else. Often involves
financial analysis

• Experts
• Both internal and external, can provide valuable
inputs in procurement decisions

45
Make-or Buy Example
• Assume you can lease an item you need for
a project for $150/day. To purchase the
item, the investment cost is $1,000, and the
daily cost would be another $50/day.
• How long will it take for the lease cost to
be the same as the purchase cost?
• If you need the item for 12 days, should
you lease it or purchase it?
46
Make-or Buy Solution
• Set up an equation so the “make” is equal to the “buy”
• In this example, use the following equation. Let d be the
number of days to use the item.
$150d = $1,000 + $50d

• Solve for d as follows:
– Subtract $50d from the right side of the equation to get
$100d = $1,000
– Divide both sides of the equation by $100
d = 10 days

• The lease cost is the same as the purchase cost at 10 days
• If you need the item for > 12 days, then purchase it
47
Types of Contracts
• Fixed price or lump sum: involve a fixed total
price for a well-defined product or service
• Cost reimbursable: involve payment to the seller
for direct and indirect costs
• Time and material contracts: hybrid of both fixed
price and cost reimbursable, often used by
consultants
• Unit price contracts: require the buyer to pay the
seller a predetermined amount per unit of service
48
Cost Reimbursable Contracts
• Cost plus incentive fee (CPIF)
– Buyer pays seller for allowable performance costs plus a
predetermined fee and an incentive bonus

• Cost plus fixed fee (CPFF)
– Buyer pays seller for allowable performance costs plus a
fixed fee payment usually based on a percentage of
estimated costs

• Cost plus percentage of costs (CPPC)
– Buyer pays seller for allowable performance costs plus a
predetermined percentage based on total costs

49
Contract Types Versus Risk

50
Statement of Work (SOW)
• A description of the work required for the
project
• Sets the “boundary conditions”
• SOW vs. CSOW (Contract SOW)
– Latter: uses legal language as part of a
competitive bidding scenario

• Can be used in the final contract – be
careful, be specific, be clear
51
SOW Continued
• Typically done after approval (after “Go”)
• Can be multiple versions
– 1. List of deliverables for an RFP
– 2. More detailed within final RFP
– 3. Binding version from contract

52
SOW Template
I.

Scope of Work: Describe the work to be done to detail. Specify the hardware and
software involved and the exact nature of the work.

II.

Location of Work: Describe where the work must be performed. Specify the
location of hardware and software and where the people must perform the work

III.

Period of Performance: Specify when the work is expected to start and end,
working hours, number of hours that can be billed per week, where the work must
be performed, and related schedule information. Optional “Compensation”
section.

IV.

Deliverables Schedule: List specific deliverables, describe them in detail, and
specify when they are due.

V.

Applicable Standards: Specify any company or industry-specific standards that
are relevant to performing the work. Often an Assumptions section as well.

VI.

Acceptance Criteria: Describe how the buyer organization will determine if the
work is acceptable.

VII.

Special Requirements: Specify any special requirements such as hardware or
software certifications, minimum degree or experience level of personnel, travel
requirements, documentation, testing, support, and so on.
53
Project Charter
• A high-level project description:
– Business need, product, assumptions

• Often precedes SOW
• Often 2-4 pages (can be longer)

54
Project Charter
• Typical outline
– Overview
• Business need
• Objectives
• Method or approach

–
–
–
–

General scope of work
Rough schedule & budget
Roles & responsibilities
Assumptions
55
Homework Reading
• McConnell: 7 “Lifecycle Planning”
• Schwalbe: 3 “Project Integration
Management” (62-67), 4 “Project Scope
Management”
• Review construx.com: “Project Plan
Template”

56
Homework Assignment
•
•
•
•

Write a Project Charter for your project
Combines elements of an SOW
2-3 pages
Use format of your choice (see links on
class site) but outlined as below
• Graded on content, not format

57
Assignment Details
• Include:
– Overview (2-4 paragraphs)
• What the system is (summary)
• Who will use it
• What problem is it solving (Objectives)

– Scope of Work (outline format or text)
• Deliverables
» What the system is (details)

• Rough time estimate (2 months or 2 yrs?)

– Out of scope items
– Assumptions
58
Charter Examples
• Assumptions
– We will reuse the architecture from the previous ordering system
– The system will be built using an ASP model
– Customer will provide necessary business experts as needed
during development
– System will run on existing networking and computer resources
– Customer will sign-off on interim deliverables within one week
of each delivery
– All import data will be available in XML format
– This will be a web-based application
– Our in-house development team will do the work
– The rendering engine will be licensed from a third party
– We will partner with an overseas development firm to create the
security systems
59
Charter Examples
• Primary Stakeholders (following examples
are not of one set)
•
•
•
•
•
•

Sponsor: VP of Marketing
Sponsor: Five Star Brokerage Consortium
Sponsor: Bill Smith, CEO
Users: Call center operators
Users: Our partner banks
Customers: Attorneys from small-to-mid size law
firms
• Customers: Males 30-45 earning $75K or more
60
Charter Examples
• Deliverables
– Retail Web Site
–
–
–
–

Full catalog
Shopping-cart system
Search engine
User registration system

– Trading System
–
–
–
–
–

Equities order entry system
Portfolio management
Order execution engine
Integration with X legacy systems
Security infrastructure

61
Charter Examples
• Deliverables
– Corporate Application
•
•
•
•
•

Network and hardware
Web-based HR portal
Connectivity for VPN
“Asset Management Viewport” application
Customized Reporting Engine
– Allowing users to Perseus data mart
– Delivery into HTML and Excel

• User manuals
62
Charter Examples
• Out of Scope
–
–
–
–
–
–
–

News feeds
Dynamic pricing
Jazzy color picker
Auction engine
EDI support
Legacy integration
Help system

• Schedule
– We anticipate an overall 12-14 month development timeframe
– The project is expected to start in Q1 2003 and complete in Q3
2004
– The initial release is expect within 10 months with the follow-on
delivery within 4-6 months
63
Questions?

64

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Software Project Management (lecture 2)

  • 2. Lecture Breakup • • • • • • • PMI Fundamentals Project Organization Project Selection Project Portfolio Management Procurement Management Statement of Work (SOW) Project Charter 2
  • 3. Project Success Rates • The 2001 Standish Group Report Showed Decided Improvement in IT Project Success Rates From the 1995 – Time overruns: decreased to 63% compared to 222% – Cost overruns were down to 45% compared to 189% – Required features were up to 67% compared to 61% – 78,000 U.S. projects were successful vs. to 28,000 – 28% of IT projects succeeded compared to 16% 3
  • 4. Project Success Rates • Why the Improvements? • • • • Avg. cost reduced by half Better tools for monitoring and control More skilled PM’s, more process, more user involvement And “The fact that there are processes is significant in itself.“ 4
  • 5. Why Do Projects Succeed? • How to identify a projects success potential – What metrics could you look at? • Project size • Project duration • Project team size 5
  • 6. Why Do Projects Succeed? – – – – – – – – – Executive support User involvement Experience project manager Clear business objectives Minimized scope Standard software infrastructure Firm basic requirements Formal methodology Reliable estimates Standish Group “CHAOS 2001: A Recipe for Success” 6
  • 7. Why Executive Support? • Top management can help to: – Secure adequate resources – Get approval for unique project needs in a timely manner – Receive cooperation from people throughout the organization – Provide leadership guidance 7
  • 8. Stakeholder Triad • 1. Function Representative • The ‘business person’ • Or SME: Subject Matter Expert • 2. Executive Sponsor • Project’s visionary & champion • Also the ‘General’, ‘Fall Guy’, and ‘Minesweeper’ • Not the PM, ‘Santa Claus’, or the ‘Tech Guy’ • 3. Project Manager • The ‘Linchpin’ • Must be ‘multi-lingual’ 8
  • 9. 15 PM Job Functions • Define scope of project • Identify stakeholders, decision-makers, and escalation procedures • Develop detailed task list (work breakdown structures) • Estimate time requirements • Develop initial project management flow chart • Identify required resources and budget • Evaluate project requirements • Identify and evaluate risks Prepare contingency plan • Identify interdependencies • Identify and track critical milestones • Participate in project phase review • Secure needed resources • Manage the change control process • Report project status *Northwest Center for Emerging Technologies, "Building a Foundation for Tomorrow: Skills Standards for Info Technology,"Belleview, WA, 1999 9
  • 10. PMBOK • Structures PM by – A) Processes – B) Knowledge Areas • Processes. 2 types – 1. PM processes: describing and organizing the work of the project – 2. Product-oriented processes: specifying and building the project’s product 10
  • 11. PMI Framework Source: Project Management Institute 11
  • 12. The 5 PMI Process Groups • • • • • • 1. Initiating 2. Planning 3. Executing 4. Controlling 5. Closing Note: these can be repeated for each phase • Each process is described by: • Inputs • Tools & Techniques • Outputs 12
  • 13. PMI Process Groups Source: Project Management Institute 13
  • 15. PMI Phase Interactions Design Phase Initiating Processes Planning Processes Controlling Processes Closing Processes Implementation Phase Executing Processes Initiating Processes Planning Processes Controlling Processes Executing Processes Closing Processes 15
  • 16. PMI: Initiating Process • Inputs – Product Description – Strategic plan – Project Selection Criteria – Historical Information • Outputs – Project charter – Project Manager assigned – Constraints – Assumptions 16
  • 17. PMI: Planning Process Devising and maintaining a workable scheme to accomplish the business need that the project was undertaken to address • • • • • Scope Planning Scope Definition Activity Definition Activity Sequencing Activity Duration Estimating • Resource Planning • Cost Estimating • Cost Budgeting • • • • • • • • Risk Planning Schedule Development Quality Planning Communications Planning Organization Planning Staff Acquisition Procurement Planning Project Plan Development 17
  • 18. PMI: Executing Process Coordinating people and other resources to carry out the plan • • • • Project Plan Execution Scope Verification Quality Assurance Team Development • Information Distribution • Solicitation • Source Selection • Contract Administration 18
  • 19. PMI: Controlling Process Ensuring that project objectives are met by monitoring and measuring progress and taking corrective measures when necessary • Overall Change Control • Scope Change Control • Schedule Control • Cost Control • Quality Control • Performance Reporting • Risk Response Control 19
  • 20. PMI: Closing Process Formalizing acceptance of the project or phase and bringing it to an orderly end • Administrative Closure • Contract Close-out 20
  • 22. Importance of Phases • Define your management review points – “Phase exits” or “kill points” – Ensure continued alignment with goals – Form of Validation & Verification (V&V) • More later in term 22
  • 23. Understanding Organizations Structural frame: Focuses on roles and responsibilities, coordination and control. Organization charts help define this frame. Human resources frame: Focuses on providing harmony between needs of the organization and needs of people. Political frame: Assumes organizations are coalitions composed of varied individuals and interest groups. Conflict and power are key issues. Symbolic frame: Focuses on symbols and meanings related to events. Culture is important. 23
  • 24. Organizational Structures • Functional – Engineering, Marketing, Design, etc – P&L from production • Project – Project A, Project B – Income from projects – PM has P&L responsibility • Matrix – Functional and Project based – Program Mgmt. Model – Shorter cycles, need for rapid development process 24
  • 25. Functional Organization • Pros – Clear definition of authority – Eliminates duplication – Encourages specialization – Clear career paths • Cons – “Walls”: can lack customer orientation – “Silos” create longer decisions cycles – Conflicts across functional areas – Project leaders have little power 25
  • 26. Project Organization • Pros – Unity of command – Effective inter-project communication • Cons – Duplication of facilities – Career path • Examples: defense avionics, construction 26
  • 27. Matrix Organization • Pros – Project integration across functional lines –Efficient use of resources –Retains functional teams • Cons – Two bosses for personnel – Complexity – Resource & priority conflicts 27
  • 28. Matrix Forms • • • • Weak, Strong, Balanced Degree of relative power Weak: functional-centric Strong: project-centric 28
  • 29. Organizational Structure Influences on Projects Organization Type Project Characteristics Project Manager's Authority Percent of Performing Organization's Personnel Assigned Fulltime to Project Work Project Manager's Role Common Title for Project Manager's Role Project Management Administrative Staff Functional Weak Matrix Little or None Limited Virtually None 0-25% Part-time Project Coordinator/ Project Leader Part-time Matrix Balanced Matrix Low to Moderate Strong Matrix Projectized Moderate To High High to Almost Total 15-60% 50-95% 85-100% Part-time Project Coordinator/ Project Leader Full-time Project Manager/ Project Officer Full-time Project Manager/ Program Manager Full-time Project Manager/ Program Manager Part-time Part-time Full-time Full-time PMBOK Guide, 2000, p. 19 29
  • 30. Organizational Impact • Form can greatly impact your role • Determine what skills you’ll need from which functions • The new “Project Office” – A) As centralized project management – B) As coach and info. office to project teams • The “Enterprise PMO” (EMPO) 30
  • 31. Why Firms Invest in IT 31
  • 33. Methods for Selecting Projects • There are usually (always?) more projects than available time and resources to implement them • Therefore: It is important to follow a logical process for selecting IT projects to work on • Methods include – – – – Focusing on broad needs Categorizing projects Financial methods Weighted scoring models • (last 2 models covered later in term) 33
  • 34. Broad Organizational Needs • It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value • “It is better to measure gold roughly than to count pennies precisely” • Three important criteria for projects: – There is a need for the project – There are funds available – There’s a strong will to make the project succeed 34
  • 35. Categorizing IT Projects • One categorization: whether project addresses – a problem – an opportunity – a directive • Another: how long it will take & when it is needed • Another: overall priority of the project 35
  • 36. Project Portfolio Management • Portfolio: a group of IT project under a coordinated management structure • Different ‘portfolio models’ are available: – Economic return model – NPV, IRR, ROI – Cost-benefit model – Can include less tangible factors – Market research model – For new products • Each considers relative value and resource/budget interactions • More details in Session 4 36
  • 37. Portfolio Management • A 5 level approach (from CIO magazine) • 1. Create a Portfolio Database • Project names & descriptions • Estimated costs, timeframes, staffing – Benefits • Spotting redundancies • Communication across orgs & teams • Holistic view 37
  • 38. Portfolio Management • 2. Prioritize Projects – Try quantifiable rankings • Risk and return – Still subjectivity and disagreements • 3. Divide into budgets based on type – To align with business needs – Ex: utilities (‘keeping the lights on’), incremental upgrades, strategic investments 38
  • 39. Portfolio Management • 4. Automate the repository – Input of new data (new projects) – Automated tracking (PM software integration) • 5. Apply modern portfolio theory – Ex: www.modporttheory.com – More advanced than most of us need 39
  • 40. Portfolio Management • Products – ProSight Portfolios (ex. 1) (ex. 2) (all) – PlanView 40
  • 41. Why Outsource? • To reduce both fixed and recurrent costs • To allow the client organization to focus on its core business • To access skills and technologies • To provide flexibility • To increase accountability 41
  • 42. Procurement Management • Procurement means acquiring goods and/or services from an outside source – a.k.a. purchasing or outsourcing • Know how your project fits-into this model – Are you building “in-house”? “for hire”? • Thus are you the ‘outside source’? – As a startup? (thus in-house but as basis for the business itself) 42
  • 43. Procurement Management • Procurement planning: determining what to procure and when • Solicitation planning: documenting product requirements and identifying potential sources • Solicitation: obtaining quotations, bids, offers, or proposals as appropriate • Source selection: choosing from among potential vendors • Contract administration: managing the relationship with the vendor • Contract close-out: completion and settlement of the 43 contract
  • 45. Procurement Tools & Techniques • Make-or-buy analysis (build vs. buy) • Determining whether a particular product or service should be made or performed inside the organization or purchased from someone else. Often involves financial analysis • Experts • Both internal and external, can provide valuable inputs in procurement decisions 45
  • 46. Make-or Buy Example • Assume you can lease an item you need for a project for $150/day. To purchase the item, the investment cost is $1,000, and the daily cost would be another $50/day. • How long will it take for the lease cost to be the same as the purchase cost? • If you need the item for 12 days, should you lease it or purchase it? 46
  • 47. Make-or Buy Solution • Set up an equation so the “make” is equal to the “buy” • In this example, use the following equation. Let d be the number of days to use the item. $150d = $1,000 + $50d • Solve for d as follows: – Subtract $50d from the right side of the equation to get $100d = $1,000 – Divide both sides of the equation by $100 d = 10 days • The lease cost is the same as the purchase cost at 10 days • If you need the item for > 12 days, then purchase it 47
  • 48. Types of Contracts • Fixed price or lump sum: involve a fixed total price for a well-defined product or service • Cost reimbursable: involve payment to the seller for direct and indirect costs • Time and material contracts: hybrid of both fixed price and cost reimbursable, often used by consultants • Unit price contracts: require the buyer to pay the seller a predetermined amount per unit of service 48
  • 49. Cost Reimbursable Contracts • Cost plus incentive fee (CPIF) – Buyer pays seller for allowable performance costs plus a predetermined fee and an incentive bonus • Cost plus fixed fee (CPFF) – Buyer pays seller for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs • Cost plus percentage of costs (CPPC) – Buyer pays seller for allowable performance costs plus a predetermined percentage based on total costs 49
  • 51. Statement of Work (SOW) • A description of the work required for the project • Sets the “boundary conditions” • SOW vs. CSOW (Contract SOW) – Latter: uses legal language as part of a competitive bidding scenario • Can be used in the final contract – be careful, be specific, be clear 51
  • 52. SOW Continued • Typically done after approval (after “Go”) • Can be multiple versions – 1. List of deliverables for an RFP – 2. More detailed within final RFP – 3. Binding version from contract 52
  • 53. SOW Template I. Scope of Work: Describe the work to be done to detail. Specify the hardware and software involved and the exact nature of the work. II. Location of Work: Describe where the work must be performed. Specify the location of hardware and software and where the people must perform the work III. Period of Performance: Specify when the work is expected to start and end, working hours, number of hours that can be billed per week, where the work must be performed, and related schedule information. Optional “Compensation” section. IV. Deliverables Schedule: List specific deliverables, describe them in detail, and specify when they are due. V. Applicable Standards: Specify any company or industry-specific standards that are relevant to performing the work. Often an Assumptions section as well. VI. Acceptance Criteria: Describe how the buyer organization will determine if the work is acceptable. VII. Special Requirements: Specify any special requirements such as hardware or software certifications, minimum degree or experience level of personnel, travel requirements, documentation, testing, support, and so on. 53
  • 54. Project Charter • A high-level project description: – Business need, product, assumptions • Often precedes SOW • Often 2-4 pages (can be longer) 54
  • 55. Project Charter • Typical outline – Overview • Business need • Objectives • Method or approach – – – – General scope of work Rough schedule & budget Roles & responsibilities Assumptions 55
  • 56. Homework Reading • McConnell: 7 “Lifecycle Planning” • Schwalbe: 3 “Project Integration Management” (62-67), 4 “Project Scope Management” • Review construx.com: “Project Plan Template” 56
  • 57. Homework Assignment • • • • Write a Project Charter for your project Combines elements of an SOW 2-3 pages Use format of your choice (see links on class site) but outlined as below • Graded on content, not format 57
  • 58. Assignment Details • Include: – Overview (2-4 paragraphs) • What the system is (summary) • Who will use it • What problem is it solving (Objectives) – Scope of Work (outline format or text) • Deliverables » What the system is (details) • Rough time estimate (2 months or 2 yrs?) – Out of scope items – Assumptions 58
  • 59. Charter Examples • Assumptions – We will reuse the architecture from the previous ordering system – The system will be built using an ASP model – Customer will provide necessary business experts as needed during development – System will run on existing networking and computer resources – Customer will sign-off on interim deliverables within one week of each delivery – All import data will be available in XML format – This will be a web-based application – Our in-house development team will do the work – The rendering engine will be licensed from a third party – We will partner with an overseas development firm to create the security systems 59
  • 60. Charter Examples • Primary Stakeholders (following examples are not of one set) • • • • • • Sponsor: VP of Marketing Sponsor: Five Star Brokerage Consortium Sponsor: Bill Smith, CEO Users: Call center operators Users: Our partner banks Customers: Attorneys from small-to-mid size law firms • Customers: Males 30-45 earning $75K or more 60
  • 61. Charter Examples • Deliverables – Retail Web Site – – – – Full catalog Shopping-cart system Search engine User registration system – Trading System – – – – – Equities order entry system Portfolio management Order execution engine Integration with X legacy systems Security infrastructure 61
  • 62. Charter Examples • Deliverables – Corporate Application • • • • • Network and hardware Web-based HR portal Connectivity for VPN “Asset Management Viewport” application Customized Reporting Engine – Allowing users to Perseus data mart – Delivery into HTML and Excel • User manuals 62
  • 63. Charter Examples • Out of Scope – – – – – – – News feeds Dynamic pricing Jazzy color picker Auction engine EDI support Legacy integration Help system • Schedule – We anticipate an overall 12-14 month development timeframe – The project is expected to start in Q1 2003 and complete in Q3 2004 – The initial release is expect within 10 months with the follow-on delivery within 4-6 months 63

Notas do Editor

  1. No lab today More lab in later term
  2. projects are composed of processes