planning the project
venkatesh2512
Chapter7-ProjectInitiation.pptxProject Initiation
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Project Management
Chapter 7: Project Initiation
1
Project Initiation
Purpose of initiation phase
Comparing project options
Total cost of ownership
The project charter
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Project Management
Chapter 7: Project Initiation
The Initiation Phase
Business problem or opportunity defined
Solution is defined
Project is formed
Business case created
Project team appointed
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Project Management
Chapter 7: Project Initiation
The Business Case
Problem or opportunity: Detailed description
Introduction
Problem/opportunity statement
Assumptions and Constraints
Alignment with organizational objectives
solutions
AnalyList of alternative sis of benefits, costs, and issues
Description of the preferred solution
Main project Requirements
Potential risks
Summarized plan for implementation
Schedule
Financial analysis
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Project Management
Chapter 7: Project Initiation
Comparing Options
Weighted Decision Matrix
| Criteria | Weight | SJS Enterprises | Game Access | DVD Link |
| Educational | 15% | 90 | 0 | 0 |
| Sports-related | 15% | 90 | 90 | 90 |
| Secure payment | 10% | 90 | 50 | 50 |
| (rows left out here—see textbook) | ||||
| Weighted Project Scores | 100% | 56 | 14.5 | 12.5 |
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Project Management
Chapter 7: Project Initiation
Financial Considerations
Can compare projects based on
Net present value
Internal Rate of Return (Return on Investment or ROI)
Payback Analysis
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Project Management
Chapter 7: Project Initiation
Net Present Value Analysis
Considers the time value of money
Costs for future years must be discounted to the present time
Tangible benefits also discounted to the present time
Must identify an appropriate discount rate
Take risk into consideration
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Project Management
Chapter 7: Project Initiation
NPV Calculation
t is the time of the cash flow
Rt is the cash flow at time t
i is the interest rate
Apply the above formula to each annual inflow and outflow of cash
Add all terms together to get the NPV
Rt
(1 + i)t
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Project Management
Chapter 7: Project Initiation
NPV Analysis
| If… | It means… | Then… |
| NPV > 0 | the investment would add value to the firm | the project may be accepted |
| NPV < 0 | the investment would subtract value from the firm | the project should be rejected |
| NPV = 0 | the investment would neither gain nor lose value for the firm | indifferent in the decision This project adds no monetary value. Decision should be based on other criteria, e.g., strategic positioning or other factors not explicitly included in the calculation. |
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Project Management
Chapter 7: Project Initiation
Rate of Return
Can be used to compare different options
Organization may have a minimum acceptable rate of return for projects
(Total benefits – Total costs) / Total costs
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Project Management
Chapter 7: Project Initiation
Payback Analysis
Compares cumulative costs to cumulative benefits
Easiest to see in graphical format
Time on horizontal axis, money on vertical
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Project Management
Chapter 7: Project Initiation
Payback Analysis
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Project Management
Chapter 7: Project Initiation
The Project Charter
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Project Management
Chapter 7: Project Initiation
13
Purpose of the Project Charter
When signed off, you have approval to proceed to detailed planning, followed by carrying out your project.
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Project Management
Chapter 7: Project Initiation
Organizational Process Assets
Is there a standard format for project charters?
Is there a standard process for developing and getting approval for a project charter?
What can the PMO do for you? What does the PMO require of you?
Are there applicable “lessons learned” available from other projects?
If you are inexperienced, is there a mentor available?
Etc.
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Project Management
Chapter 7: Project Initiation
Project Charter – Typical Contents
Identification section
Project purpose or justification
Measurable project objectives and related success criteria
High-level requirements
Assumptions and constraints
High-level project description and boundaries
High-level risks
Summary milestone schedule
Summary budget
Stakeholder list
Approvals
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Project Management
Chapter 7: Project Initiation
Identification
Name of the project—make it meaningful
Name, title, department of project sponsor
Name of project manager
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Project Management
Chapter 7: Project Initiation
Clear Objective
SMART
Specific
Measurable
Acceptable
Realistic
Time based
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Project Management
Chapter 7: Project Initiation
Business Need or Opportunity
A concise statement of how the project’s deliverables will contribute to organizational objectives
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Project Management
Chapter 7: Project Initiation
Scope
Clearly defines what is in and out of the project
Major Milestones
Identifiable points in time
Target dates will be added LATER
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Project Management
Chapter 7: Project Initiation
Major Deliverables
Break down the overall objective into smaller measurable units
Assumptions
Things you are not certain of but can proceed if you behave as if they are true
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Project Management
Chapter 7: Project Initiation
Constraints
Anything that limits your ability to deliver or the range of acceptable solutions
Preliminary Cost Estimates
How will the costs be defined and controlled
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Project Management
Chapter 7: Project Initiation
Risks
High-level statement about risks identified so far
Include the risk of NOT doing the project
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Project Management
Chapter 7: Project Initiation
Stakeholder List
The stakeholders identified so far, including their roles
Approval
A place for the project sponsor and the project manager to sign
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Project Management
Chapter 7: Project Initiation
Project Initiation: Summary
The first phase
Relationship of project to business objectives is key
Compare alternatives using weighted matrix
Financial analysis: NPV, ROI, payback
Project Charter is the primary output;
it includes the stakeholder list
Completion of Project Initiation is the signal that the project has approval to proceed to the project planning phase.
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Project Management
Chapter 7: Project Initiation
Questions?
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Project Management
Chapter 7: Project Initiation
26
