IT Project Management Individual Assignment
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Lesson4ProjectIntegrationMgmt11.pptxIT Project Management
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Diploma in Information Technology
Copyright © 2020 by Singapore Institute of Management Pte Ltd. All rights reserved.
Lesson 4: Project Integration Management – Part 1
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Lesson objectives
Describe the framework for project integration management.
Explain strategic planning process.
Apply different project selection methods.
Explain the important of creating a project charter.
Describe project management plan development.
Understand project management plan content.
Review approaches for project management plan.
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4.1 Project Integration Framework
| Initiating | Planning | Executing | Monitoring & Controlling | Closing |
| Scope | Scope | |||
| Schedule | Schedule | |||
| Cost | Cost | |||
| Quality | ||||
| Resource | ||||
| Risk | Risk | |||
| Communication | ||||
| Procurement | ||||
| Stakeholder | ||||
| Integration |
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4.1.1 Project integration management
It involves coordinating all the other project management knowledge areas throughout a project’s life cycle.
This integration ensures that all the elements of a project come together at the right times to complete a project successfully.
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Many new project managers have trouble looking at the “big picture” (helicopter view) and want to focus on too many details.
Project integration management is not the same thing as software integration
4.1.1 Project integration management
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4.1.2 Who manages the integration?
| Role | Responsibilities |
| Project Manager | Integrator for the project that executes processes |
| Team members | Concentrate on completing tasks, activities, & work packages |
| Project Sponsor | Protect project from changes and losing resources |
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4.2 Strategic Planning Process
Strategic planning lays the groundwork for successful project implementation
In the strategic view, plans are organised in a “hierarchy” as follow:
Game Plan
Project Plan
Detailed Plans
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4.2 Strategic Planning Process
The strategic planning activities are concentrated at the “Game Plan” level.
The “Game Plan” incorporates overall project management philosophy and covers how to deal with the major management issues identified in the PMI Project Management Body of Knowledge (PMBOK). These include scope, time, cost, quality, human resources, communications, procurement and risk.
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4.3 Project Selection Method
There can be several possible projects to initiate in an organisation. But are they the right ones?
Organisations need to evaluate different possible projects before project initiation.
Project managers need to know why their project was selected and how it fits into the organisation’s strategic plan.
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4.3 Project Selection Method
Two (2) common approaches:
Benefit Measurement Methods (Comparative Approach): It evaluates several projects based on their benefits, profits, revenue etc.
Constrained Optimisation Methods (Mathematical Approach): It takes many inputs about a project and they are modeled mathematically usually by the help of software programs. And these programs outline possible outputs of the project mathematically.
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4.3.1 Benefit Measurement Methods
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4.3.1 Benefit Measurement Methods
1. Benefit/Cost Ratio
It gives us whether the benefits of the project are higher than the costs. Projects that have a higher Benefit-Cost Ratio are generally chosen over others.
2. Economic Model
It is the performance metric that calculates the worth-creation of the organisation while defining the return on capital. It is also defined as the net profit after the deduction of taxes and capital expenditure.
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4.3.1 Benefit Measurement Methods
1. Benefit/Cost Ratio (BCR) Example
Company XYZ decides to expand and acquire new equipment. They need to run a benefit-cost ratio to determine whether it is wise to expand or not.
1) Equipment cost $80,000 2) Recruitment cost $4,000
3) Training cost $4,000 4) Workspace cost $3,000
5) Equipment license $4,000
Total: $95,000
Expected additional revenue $140,000
BCR= 140,000/95,000
=1.47
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4.3.1 Benefit Measurement Methods
3. Scoring Model
It is an objective technique: the project selection committee lists relevant criteria, weighs them according to their importance and their priorities, then adds the weighted values. Once the scoring of these projects is completed, the project with the highest score is chosen.
(See examples on the next 2 slides)
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Scoring Model
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Scoring Model
Which project to select?
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4.3.1 Benefit Measurement Methods
4. Payback Period
It is the duration that the project will recover the money invested with its revenues.
Project A: $1 million project investment with expected cost saving of $250,000 per year.
Payback period : $1 million/$250,000 = 4 years
Project B: Costs $200,000 to start, annual saving of $100,000 for the next 10 years.
Payback period : $200,000 / $100,000 = 2 years.
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4.3.1 Benefit Measurement Methods
5. Net Present Value (NPV)
This gives us the today’s value of the sum of all transactions (inbound and outbound) that will happen in future. When picking a project, one with a higher NPV is preferred. The advantage of considering the NPV over the Payback Period is that it takes into consideration the future value of money.
6. Discounted Cash Flow
It is well-known that the future value of money will not be the same as it is today. For example, $20,000 won’t have the same worth ten years from now. Therefore, during calculations of cost investment and ROI, be sure to consider the concept of discounted cash flow.
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4.3.1 Benefit Measurement Methods
7. Internal Rate Of Return (IRR)
The IRR indicates how many percent of the investment will turn back as revenue in future. It is used to select the project with the best profitability; when picking a project, the one with the highest IRR is chosen.
8. Opportunity Cost
It is the cost that is given up when selecting another project. During project selection, the project that has the lower opportunity cost is chosen.
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4.3.1 Benefit Measurement Methods
7. Internal Rate Of Return (IRR)
The cash flow (CF) patterns for a project are as follows:
Initial outlay = $5,000
Year one = $1,700
Year two = $1,900
Year three = $1,600
Year four = $1,500
Year five = $700
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4.3.1 Benefit Measurement Methods
7. Internal Rate Of Return (IRR)
The company must calculate the IRR for each project. Initial outlay (period = 0) will be negative. Solving for IRR is an iterative process using the following equation:
$0 = Σ CFt ÷ (1 + IRR)t
where:
CF = Net Cash flow
IRR = internal rate of return
t = period (from 0 to last period)
-or-
$0 = (initial outlay * -1) + CF1 ÷ (1 + IRR)1 + CF2 ÷ (1 + IRR)2 + ... + CFX ÷ (1 + IRR)X
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4.3.1 Benefit Measurement Methods
7. Internal Rate Of Return (IRR)
The company can calculate IRR for the project as:
$0 = (-$5,000) + $1,700 ÷ (1 + IRR)1 + $1,900 ÷ (1 + IRR)2 + $1,600 ÷ (1 + IRR)3 + $1,500 ÷ (1 + IRR)4 + $700 ÷ (1 + IRR)5
IRR Project A = 16.61 %
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Example
a
b
= b/a
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Year 1: DF = 1/(1+0.08) = 0.9259 = 0.93
Year 2: DF = 1/(1+0.08)2 = 0.8573 = 0.86
Year 3: DF = 1/(1+0.08)3 = 0.7938 = 0.79
Example
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4.3.2 Constrained Optimisation Methods
They are also known as the Mathematical Model of project selection, usually used for larger projects that require complex and comprehensive mathematical calculations.
Note: We will not dwell into these methods due to their complexities.
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4.4 Project charter
The project charter outlines the purpose and requirements of the project. It includes details, like business needs, key participants and stakeholders, scope, objectives, and overall goals.
The project charter provides a foundation for defining project decisions and ensuring they are in line with company goals.
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4.4 Project charter
Business Needs
Market Demand
Organisational Need
Customer Request
Technological Advance
Legal Requirement
Ecological Impacts
Social Need
PMBoK® Guide, 5th Edition, p.69
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4.4 Project charter
The project charter is the 1st formal project document and generally signed & approved by the project sponsor.
Provides a condensed, summary-level overview of the project.
Allows stakeholders to document the agreed upon scope and objectives, approach, and major deliverables of the project.
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The project cannot be started without a charter because the charter:
Formally recognises the existence of the project.
Gives the project manager the authority to spend money and commit resources.
Provides the high-level requirements and expectations.
Links the project to the organisation’s ongoing work.
4.4 Project charter
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A project charter is like a birth certificate!
It is 1-2 pages in length, it can be longer depending on the size, type, and complexity of the project.
4.4 Project charter
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4.4.1 Developing a project charter
Develop Project Charter
Business Case
Project Charter
Assumption Log
Benefits Management Plan
The process of developing a Project Charter document formally authorises a project documenting initial requirements that satisfy the stakeholders’ needs and expectation
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4.4.1 Developing a project charter
Typical items included in a project charter:
Title Brief Description
Background Goals/Deliverables
Scope Stakeholders
Impact on Other Business Systems and Units
Roles and Responsibilities
Milestones Budget
Constraints, Assumptions, Dependencies, and Risks
Success Measurements/ROI
Project Approval
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4.4.2 Assumption Log
Assumptions and constraints affecting the project are identified and recorded in the Assumption Log throughout the project life cycle.
New assumptions and constraints that are identified later on in the project will also be recorded in the Assumption Log and not just at project initiation.
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4.5 Develop Project Management Plan
Business Case
Needs Assessment
Benefits Management Plan
Project Charter
Project Management Plan
The business case is a document that is used to state the benefits of the project. The business case states the objectives and reasons to initiate the project.
A needs assessment often precedes the business case. The needs assessment involves understanding the business goals and objectives, issues and opportunities and recommending proposals to address them. The results of the needs assessment may be summarized in the business case document.
The project benefits management plan is the document that describes how and when the benefits of the project
will be delivered, and describes the mechanisms that should be in place to measure those benefits. A project benefit
is defined as an outcome of actions, behaviors, products, services, or results that provide value to the sponsoring
organization as well as to the project’s intended beneficiaries. Development of the benefits management plan begins
early in the project life cycle with the definition of the target benefits to be realized.
Developing the benefits management plan makes use of the data and information documented in the business case
and needs assessment. For example, the cost-benefit analyses recorded in the documents illustrate the estimate of
costs compared to the value of the benefits realized by the project.
The business case and the benefits management plan are used to develop the project charter which in turn will be used to produce the project management plan.
The project management plan is defined as the document that describes how the project will be executed, monitored,
and controlled.
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4.5 Develop Project Management Plan
Source: PMBOK, 6th Edition, pg 82.
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4.5 Develop Project Management Plan
It is the process of defining, preparing, and coordinating all plan components and consolidating them into an integrated project management plan.
It defines how the project is executed, monitored and controlled, and closed.
The key benefit of this process is the production of a comprehensive document that defines the basis of all project work and how the work will be performed.
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4.5 Develop Project Management Plan
It’s content* varies depending on the application area and complexity of the project. (*either summary level or detailed).
It should be robust enough to respond to an everchanging project environment. This agility may result in more accurate information as the project progresses.
The PM plan should be baselined (necessary to define at least the project references for scope, time, and cost), so that the project execution can be measured and compared to those references and performance can be managed.
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4.6 Project Management Plan Content
Scope management plan: How the scope will be defined, developed, monitored, controlled, and validated.
Requirements management plan: How the requirements will be analysed, documented, and managed.
Schedule management plan: Establishes the criteria and the activities for developing, monitoring, and controlling the schedule.
Cost management plan: How the costs will be planned, structured, and controlled.
Quality management plan: How an organisation’s quality policies, methodologies, and standards will be implemented in the project.
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4.6 Project Management Plan Content
Resource management plan: Provides guidance on how project resources should be categorised, allocated, managed, and released.
Communications management plan: How, when, and by whom information about the project will be administered and disseminated.
Risk management plan: How the risk management activities will be structured and performed.
Procurement management plan: How the project team will acquire goods and services from outside of the performing organisation.
Stakeholder engagement plan: How stakeholders will be engaged in project decisions and execution, according to their needs, interests, and impact.
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4.7 Approaches for Project Management Plan
Meetings are used to discuss the project approach, determine how work will be executed to accomplish the project objectives, and establish the way the project will be monitored and controlled.
The project kick-off meeting is usually associated with the end of planning and the start of executing. Its purpose is to communicate the objectives of the project, gain the commitment of the team for the project, and explain the roles and responsibilities of each stakeholder.
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4.7 Approaches for Project Management Plan
Data-gathering techniques:
Brainstorming: It is frequently used when developing the project management plan to gather ideas and solutions about the project approach. Attendees include the project team members although other subject matter experts or stakeholders may also participate.
Checklists: Many organisations have standardised checklists available based in their own experience or use checklists from the industry. A checklist may guide the project manager to develop the plan or may help to verify that all the required information is included in the project management plan.
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4.7 Approaches for Project Management Plan
Data-gathering techniques:
Focus groups: They bring together stakeholders to discuss the project management approach and the integration of the different components of the project management plan.
Interviews: They are used to obtain specific information from stakeholders to develop the project management plan or any component plan or project document.
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FactorWeightProject AProject BProject CProject D
Expected revenue40%60759065
Technical difficulties25%80707080
Manpower requirements20%75757065
Potential risks15%50606070
Scores (1 - 100)
Weighted Score Method
