Project Management Disscussions.

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PJM6000 Project Management Practices

Week Two

Deb Cote, MS, Professor Al Grusby, MBA, PMP®

Review

➢ PMI definitions: project, program, portfolio

➢ What is work effort if it’s NOT a project?

➢ Examples of each

➢ Progressive elaboration – new?

➢ Five process groups of PMI lifecycle

➢ Waterfall vs agile

➢ Framework vs methodology – new?

➢ Project management knowledge areas

➢ Organizational structures – functional, projectized, matrixed (weak, strong, balanced)

➢ PM knowledge/skills, characteristics, certifications

Agenda – Week 2

• Discuss the beginning phases of a project and how they link to the overall successful outcomes of the initiative.

• Analyze what a business case is and how it supports the sponsor’s decision making process

• Calculate Net Present Value (NPV)

• Apply Project Selection and Prioritization Techniques

• Review Organizational Structure and Culture

• Discuss the Concentrations within the Curriculum

• Discuss the PMI Talent Triangle 3

Birth of a Project

Projects start at initiation. But how do they get there?

Project Management Processes

Initiating Planning Executing Monitoring and Controlling Closing

Develop Project Charter Develop Project Management Plan Direct and Manage Project Work Manage Project Knowledge

Monitor and Control Project Work Perform Integrated Change Control

Close Project or Phase

Plan Scope Management Collect Requirements Define Scope Create WBS

Validate Scope Control Scope

Plan Schedule Mgmt. Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule

Control Schedule

Plan Cost Mgmt. Estimate Costs Determine Budget

Control Costs

Plan Quality Management Manage Quality Control Quality

Plan Resource Management Estimate Activity Resources

Acquire Resources Develop Project Team Manage Project Team

Control Resources

Plan Communications Manage Communications Monitor Communications

Plan Risk Management Implement Risk Responses Control Risks

ID Stakeholders Plan Procurement Conduct Procurements Control Procurements

Plan Stakeholder Mgmt. Manage Stakeholder Engagement Control Stakeholder Engagement

P ro

je c t S

e le

c ti o n

Project Lifecycle • Process Group I: Initiation

• Process Group II: Planning

• Process Group III: Execution

• Process Group IV: Monitoring and Controlling

• Process Group V: Closure

What happens BEFORE initiation?

How does the idea become a project?

6 6

PMI Initiation Planning Execution, Monitoring, & Controlling Closure

How do you justify a project?

• Do projects just begin in an ad hoc (random) fashion within the organization or should they be approved?

• If they should be approved, what types of information would you want to have in order to approve the project? – Return on Investment?

– How does it align with our strategy?

– What is the estimated cost, or budget, needed to support the project?

– What are the risks?

– What is the scope?

• Not an all inclusive list of questions, but need to justify the request to support a project

Business Case

• Answers to many of the questions on the previous slide would be content to be presented in what's known as the business case

• Generally results in a go/no-go decision for the project

• The business case is an input to the project charter and defines the expected outcomes the project will achieve, like a new product, along with the requested investment needed to support the project

Business Case Process

Business Case

A need has been identified perhaps for a new product

Investment Needed

Some sort of investment is

needed by the initiating

organization

Output

The output will generate some type of benefit for the organization

A business

case generates

key information

elements

Business Approval Gained or Denied

Business Case Structure

Business Problem: Describe problem the project will address

Strategic Case: How does proposed project align w/ strategy?

Project Overview: High-level description of the project

Expected Benefits: How will the business benefit?

Financial Aspects: Financial benefits of the project (cost/benefit analysis); Net Present Value (NPV)

Risks: Any risks of solution not addressing business problem?

Timeline: High-level timeline (milestones)

Recommendation(s): Next steps based on analysis

Net Present Value (NPV)

• NPV = sum of the present value of cash flows – Can calculate by hand or using Excel (Plug “NPV” into the Help function for tutorial). Be

careful! The initial investment is NOT part of the formula if using Excel)

– Formula:

NPV = “ Year N CF + Year N CF + Year N CF “

(1 + DR)N (1 + DR)N (1 + DR)N ………

CF = CASH FLOW

DR = DISCOUNT RATE

N = YEAR CF IS BEING DISCOUNTED

• What is generally the YEAR “0” CASH FLOW?

• What is a good value project?

– NPV > 0 &

– Project IRR > Expected IRR “Hurdle Rate”

– Project IRR = Solve NPV equal to zero (trial and error) 11

Class Exercise

• Work in teams to determine if the following is a good value project:

– Initial Investment = $70,000

– CF (year 1) = $16,000

– CF (year 2) = $18,000

– CF (year 3) = $22,000

– CF (year 4) = $28,000

– Discount Rate = 5%

– Expected IRR = 8%

• What is the NPV?

• Is this a good project? 12

Project Sources

Projects can start from:

• Operational needs

• Strategic initiatives (growth)

• Capability gaps

• Scalability requirements

• Mergers and acquisitions

Oversized Project Portfolios

Business Case and Project Selection

• Many organizations have formal teams to review the business case:

– Finance (labor rates/validate assumptions)

– EPMO

– Department PMO’s

– P&L Leaders

– Steering Committee’s

– Project & Portfolio Management Review Board (PPMRB)

Factors that influence Project Success

Government or Industry

Standards

Legal or Regulatory

Requirements

E n

v ir o

n m

e n

ta l F

a c to

Class Exercise

You are CEO of an organization that is implementing a more rigorous approach to approving projects. In the past, no formal process for approving projects was in place, leading to inconsistent outcomes and misuse of investment funds. A manager has approached you to approve a project that she believes will lead to a 6% revenue growth for the organization. The project involves developing a new prototype for a product that will revolutionize the drone market. The manager is not sure yet of all of the requirements, but has approached you to approve her moving forward with prototype development. This seems to be the perfect opportunity for you as CEO to implement your new process of approving projects.

• What guidance will you give her in terms of information you will need in order to approve the prototype?

• What validation process would you have once she submits the documents?

• Work on your own - 15 minutes

• Discuss in your groups – 15 minutes

Project Charter • Once the business case is approved, a project charter will be created.

Retaining your perspective as the business owner:

– Why would you want a project charter?

– How will the organization benefit from the creation of the project charter?

Creates a formal approval document

Process driven agreement

between requestor and sponsor.

Serves as a foundational

artifact for the project team

Project Charter

• The Project Charter is critical as it outlines the following:

– Provides alignment between the project outcomes and the strategic objectives of the organization

– Creates a formal artifact of the project goals

– Underscores the support by the organization for the project based upon the sponsors approval and engagement

– A charter can be a document between internal operating units or can be used between an internal performing organization and external customer.

Project Charter

• The business case is an important input to the charter

• Enterprise Environmental Factors must be considered and risk analysis conducted to ensure the charter is properly reflective of the desired outputs

• A sponsor will want absolute transparency in both the business case and charter document

Project Charter Structure • Project Purpose:

– Reason for the project – tied to the business case

• Project Objectives:

– Measurable (SMART)

• Project Scope:

– What are the deliverables?

• Milestone Schedule:

– High-level; points in time (dates); not a full schedule!

• Budget:

– High-level summary budget

• Requirements

– How do we know the project is successful?

• Project Manager

– Name, level of responsibility and authority

• Approval

– Authorizing names, titles and signatures 21

PM Warnings

Rough estimates can become

anchors

Business Cases and Charters can end

up in the drawer – they should be

referenced

As a PM you should completely

understand the ‘why…’

Each environment and its structure may require

additional customization of your stakeholder

Organizational Structures

Adaptive Projectized Functional Matrix

Project Managers As Change Agents

Project managers help shepherd

change through the organization

By nature of the projects you lead,

you are introducing change in some fashion to the organization

Change Initiatives often encounter

resistance

It is important to be a champion for

change

The Talent Triangle

Source: https://www.pmi.org/learning/training-development/talent-triangle

Do project managers need to be subject matter

experts of the product, service, or result they are

delivering?

Northeastern PJM Concentrations

For more information, talk with your advisor or go to: https://cps.northeastern.edu/academics/program/master-science-project-

management-online

https://cps.northeastern.edu/academics/program/master-science-project-management-online

Lecture Review

✓ Look at the beginning stages of a project and how they link to overall successful outcomes

✓ Analyze what a business case is and how it supports the sponsor’s decision-making process

✓ Calculate Net Present Value (NPV)

✓ The Project Charter

✓ Review organizational structures and culture

✓ Discuss the concentrations within the CPS curriculum

✓ Discuss the PMI Talent Triangle

What’s Next

• Reading

• Business Case articles (links) *Important!

• Net Present Value refresher (link)

• Instructor Perspective video

• Discussion Board question – responses due by Saturday, 11:59pm

• Individual Assignment Wk2: due by Sunday, 12:00pm (Noon)

– Preparing a Business Case