CIS7008 – Technology Project Management

Dr. (Eng.) Harshana De Silva

Agenda

 Organization concepts
 Role of a PM
 Project feasibly
 Project evaluation
 Stakeholder plan
 Scope plan
 Schedule plan
 Case study
 Exercises and questionnaire
Phases of a Project
 Initiate (Concept)

 Plan (Design) -PDCA

 Execute (Build, Implement )

 Monitor and Control (Transition)

 Closure (Evaluation)
 Representation of Project Constraints
Cost
 Cost (Budget) Cost
 Time (Schedule)
 Scope
 Quality
Scope Time
 Risk Scope Time
 Resources

Cost Cost
Cost

Scope Time Scope Time

Scope Time
Types of Projects

Volume
 Regular Projects (Runners)
 High volumes Regular

 Medium complexity as this could be BAU

 Repeater Projects (Repeaters)
Repeater
 Medium volumes
 Low complexity as previous experience
 Unique Project (Strangers)
Stranger
 Low volumes
 High complexity Complexity
 The Project Roles
Project Manger Sponsor Steering Committee
 Confidence Builder  Define business aims  Senior management,
 Change Manager  Expenditure approval sponsor, users and other
 Exceptional Planner  Appoint PM department (E.g. Finance,
 Outstanding Communicator
HR)
 Initiate project
 Risk Mitigator  Business strategy oriented
 Not a talking shop!
 Problem Solver  Owner of the project
Other
 Emotional Intelligence
User  User Group
 Business Acumen
 Technical Competency (Sri
 Define requirement  User champion
Lankan context can be  Acceptance criteria
different ??)
 Technical committer
 Testing
Tips for being a BETTER project Manager

 Be a “Why” person - inquisitive Challenges

 Be a “Can do” person - positive  Lack of corporation / split team
 Think about the big picture - perspective  Funds / resources issue
 Think in detail – thorough  Expectation mismatch
 Assume as a last resort – caution  Stakeholder pressure
 View people as allies, not adversaries – common goal  Unrealistic target dates
 Say what you mean and vise versa – communication  Motivation / give up
 Respect  Quality issues
 Acknowledgement – appreciation  Unplanned events - Covid / weathr
 Manager and a Leader
Functional Organization
 Common formation
 Specialized sub divisions
 Suitable for Runners
 Advantages
 Development of specialist skills
 Like minded managers / sub ordinates
 Flexibility is resource scheduling
 Disadvantages
 Shared responsibility in ‘silo’ mentality
 PM authority issues
 Coordination complexities
Proejctized Organization
 ‘Silo’ mentality is addressed
 Home or Bench resource pools
 Suitable for Strangers
 PM authority is highest
 Advantages
 Focus on project
 Single authority within the project
 Rapid response to changes
 Disadvantages
 Administration difficulties, specially for
appraisals
 Resource management (people) issues due
to bias
 Personal development challenges
 Turn around after project completion
 Bench costs
Matrix Organization

 Multiple bosses
 Higher resource efficiency
 PM Authority increases with strength
 Suitable for Runners/ Repeaters
 Advantages
 Better functional management that Proejctized
 Problem identification
 Better coordination
 Weak – Similar to functional with occasional
projects with coordinator  Disadvantages
 Balanced – Dedicated project managers to run  Ownership and accountability issues
projects  Multiple reporting lines
 Strong – Authoritative project managers with
budget and resource control
Business Case
 Introduction
Set the scene and explain what the business case is about
 Management Summary
Nature of the problem, options considered, recommended option with benefits
 Background
If required business background for the initiative and describe the problem and the opportunity
 Options
All the options in summary with preferred option in detail with justification
 Benefits
The benefits of the proposed solution both tangible and intangible
 Costs
Cost structures with financial feasibility for long and short term including profitability and
cash flows
 Impact and risks
Other factors needed to be considered (e.g. business value, culture etc)
 Conclusion and Recommendations
 Appendices
Additional details must be annexed and not in the body. E.g. technical details, cash flows
Cost and Benefits
Tangible Costs Intangible Costs
• Staff cost and development cost • Disruptions in implementation
• Hardware and software purchase • Loss if productivity
• Hardware/software maintenance • New staff recruitment
• Infrastructure costs • Reputational loss of failure
• Redundancy costs

Tangible Benefits Intangible Benefits

• Productivity savings • Job satisfaction increase

• Effort reduction • Customer satisfaction
• Faster response • Greater flexibility
• Inventory reduction • Improved market value and image
• TCO • Better communication
• Staff motivation
Feasibility of Projects

 Project Financing
 Project Costing
 Project Evaluation
 Qualitative
 The Sacred Cow (Comes from the top) or murder board (shooting down ideas)
 The Operating Necessity (To avoid disasters, meet compliance)
 The Competitive Necessity (Changing a product, improving a product, demand)
 Benefit / Priority Model (New product lines, automation, new technology)
 Environment factors (Legal, social , ecological)
 Quantitative
 Q-Sort model (Continuous sorting based on a selected criterion or relative merits)
 Breakeven or Payback
 Cost benefit ratio
 RoR (Rate of Return)
 NPV/Discounted Cash flow
 Constrained optimization models (Linear, integer, muti-objective)
Project Financing

 Equity financing
 Loan financing
 Subsidized financing
 Profit funded
 Budget funded or donor funded
Project Costing
Phases of a budget
Rough order of magnitude estimate > Detailed budget estimate >Approved budget

 ABC Factors should be considered

 Analogous estimation  Inflation
 Cost plus  Exchange rate
 Zero based or bottom up
 Interest rate
 Direct costs for WP
 Indirect costs for WP
 Risk
 Top down  Cash flow
 Resource costing  Profitability
 Parametric estimation  Economic conditions (G & L)
 Scenario based costing  PESTEL
 YoY Budget  Competition
Payback calculations
 Calculate the payback and break even for the below criterion
 The hardware will cost $500k
 Hardware maintenance will cost $50k per annum.
 The software will cost $180k
 Software support will cost $20k per annum.
 Expect to save 11 junior clerical posts which, with overhead costs included, are worth $20k each per annum
 Project duration 5 years
 Calculate the payback period and break even point assuming even cash flows
 What % increase is needed on the savings to achieve breakeven at 4th year
 Calculate the cost benefit ratio
 Advantage
 Straight forward view
 Disadvantage
 Time value of money not considered
 No control over other PESTEL factors
Discounted Cash Flows

 Time series based PV values

 Net present value is the cumulative PV
 Discount rate can is the rate of return that could be earned on and
investment in the financial markets with similar risk
 + NPV results in good investment
 Fixed or Sunk costs needs to be initially considered
 NPV = Future value / (1 + i)n
 FV = PV * (1+i)n
 Internal Rate of Return (IRR) is the value at which NPV=0 (i.e. a basic criteria
on time value of money)
Examples (PV)
 Evaluate the below project options and provide recommendations:
 Invest in upgrading the production facility with $500k with a return of 7% each year for 5 years
 Invest in a new product with $500k with 20% return in year 1 and 5% in year 2 and 3 and retired

 Evaluate the below scenario and provide recommendations:

 Your company provides project management consulting and outsourcing. The selection committee is
deciding whether to invest in a Project to update and upgrade your PMO information systems
infrastructure with all new software, cloud computing, collaboration sites, and real-time reporting
software. The new capabilities will not be available until Year 2. The enhanced infrastructure is
projected to increase business by $2,500,000 in Year 2; $5,250,000 in Year 3; and $6,000,000 in Years 4
and 5. After that, you expect to need a new upgrade to keep pace with changes in technology.

 The other viable project the selection committee is looking at is developing a new line of business by
creating a virtual project management training curriculum. The projected revenue is $1,500,000 in Year
1, and $3,500,000 in Years 2–5.

 If the money were invested, the assumed interest rate is 10%.

Examples (NPV)

 Evaluate the earlier project for payback calculation using NPV, assuming a
discount rate of 20% and cash flow at the of the year.
 What is the misalignment ?
 Evaluate IRR ?

Cash flow vs Discounted cash flow Cumulative

$200,000 $200,000

$100,000 $100,000 $70,000

$- $-
1 2 3 4 5 1 2 3 4
$(80,000) 5
$(100,000) (118,075)
$(100,000)
(178,356)
$(200,000) $(200,000) $(230,000)
(250,694)

$(300,000) $(300,000) (337,500)

$(380,000)
$(400,000) $(400,000) (441,667)

$(500,000) $(500,000) $(530,000)

$(600,000) $(600,000)
Project selection
 All indicators are higher the better, except pay back period
 Opportunity cost – i.e the value of the project not selected
The NPV of project is USD 50,000 and that of project B is USD 85,000. What is the
opportunity cost of project B ?
 Sunk cost – i.e. expended costs, not used in evaluations
 Law of diminishing returns
A single programmer can produce 1 module per hour, 2 may produce at 1.75 modules per
hour and 3 may produce 2.5 per hour. Interaction, management, physiological costs
 Depreciation
 Straight line
 Accelerated depreciation (double declining or sum of the year digits)

Project A Project B Selection ?

NPV 95K 75K
IRR 13% 17%
Payback 16 months 21 months
Cost benefit ratio 2.79 1.3
NPV example

A Company must decide whether to introduce a new product. The new product
will have startup costs, operational costs, and incoming cash flows over six years.
This project will have an immediate cash outflow of $100,000 (which includes
machinery, and employee training costs). Other cash outflows for years 1–6 are
expected to be $5,000 per year. Cash inflows are expected to be $30,000 each
for years 1–6. All cash flows are after-tax, and there are no cash flows expected
after year 6 and the product rights will be sold at $10,000 at that point. The
required rate of return is 10%. Calculate the present value (PV) for each year and
NPV. Should Co-X invest in the new product?
Contracts

 Rules, Risks, Relationships (3 R’s of contracts)

 Requirements in a contract law : Capacity (of the parties involved),Legality (purpose,
Certainty (of the terms), Considerations (Risk), Offer and acceptance
 In any commercial projects, where there is finance, time and quality involved, usually a
contract is executed.
• Offer & Acceptance
• Intension to create legal relationship
• Lawful consideration
• Capacity of parties of competencies
• Free and genuine consent
• Lawful object
• Agreement not declared void
• Certainty and possibility of performance
• Legal formalities
Contracts

 BOT, BTO, BRT, BOOT, BOO

 With other factors (D-design, F-Finance) FBOT, DBOT
 Turn-key, Lump sum, Cost+, Profit sharing, Lease, HP
 Termination of a contract
 Performance – completed contract
 Breach – failure to complete
 Frustration – due to unforeseen events such as disasters, bankruptcy
 Mutual
 Discharge – due to invalidity
 Dispute resolution
 Litigation, Arbitration, Alternate dispute resolution, Negotiation, Expert consultancy
 Other factors to be considered
 Ex-works – Cost & risk with owner to produce and have ready in warehouse
 FAS – Free along ship or FOB – Free on board i.e. risk upto loading at the source
 C&F – Cost and freight or CIF
Project Plan and execution
Project Plan Content
Plan Content
Scope management • WBS
• Project requirements and deliverables
• Controls, metrics
Schedule management • Scheduling tool and methodology
Cost management • Estimates and budget
• Controls and reporting
Quality management • Assurance, control and improvement
• Process matrices and targets for improvement
HR management • Roles and responsibility assignment
• Training, safety and other policies
• Recruitment, reward and recognition
Communication management • Type, frequency, content and responsibility
Risk management • Risk methodology
• Identify, assess and manage
• Roles, budgets and reporting formats
Procurement management • Authority, contract type and process
Stakeholder management • Identify, classify and asses based on power, interest etc
Identification of Stakeholders

Identify Stakeholders Classify Stakeholders Asses Support

• Sponsor
Sponsor,
• Senior Management SM
• Project Manager
• Functional Managers
• Team Staff PM,
Team
• HR department
• Legal department
• Facilities department
• Customer
• Users
• Vendors Resistors
Observers
• Supplier Supporter
• Regulators Drives

• Public
 Stakeholder register
Hierarchical Category Project Name Role Power Support Interest Strategy Remarks Involvement level
role (D, S, (H, M, (R, N, A) (L, H)
O, R) L)
Level Level Leve
1 2 3
Initiating Planning Monitor and Closing
project & control project
executing Project
project
Sponsor Manage Send
closely birthday
cake
PM Keep Invite to
satisfied year party

Keep
informed
No effort
Requirement
 Inputs : Project description, Product characteristics
 Output : Methodology, Requirements document (Product and Project)
 Requirement collection:
 Process flows
 Interviews
 Focus groups or Workshops
 Brainstorming and Nominal group technique
 Delphi technique – anonymous stakeholders compiling ranked lists of requirements
 Mind mapping
 Expert discussions Group decision criteria
• Unanimity
 Affinity diagrams
• Majority
 Mutli criteria decision analysis • Plurality
 Hybrid – Brainstorming + Affinity + Nomial groups • Dictatorship
 Questionnaires and surveys
 Prototypes, Benchmarking
 Resolution of competing requirement : Business case, Charter, constraints, clarifications
Child care center - Project
Scope
 Inputs : Project requirements, Product characteristics, Statement of Work (SOW)
 Techniques
 Product analysis
 Alternative generation
 Expert judgment
 Output – Scope Statement
 Product and project scope description
 Acceptance criteria
 Deliverables – Both product and project
 Project exclusions – Definition of NOT in scope
 Project constraints – Limits and restrictions
 Project assumptions – Factors considered true in the planning process without proof
Work Break down Structure (WBS)
 Activities that needs to be performed
 Can be sliced with Organizational or Resource Breakdown structures
 WBS construction
 Decomposition using expert judgment
 Bottom up (Starting from the use cases) or Top down (Starting from scope)
 Gives rise to “Work Packages” – i.e.
 Lowest level of a WBS where cost and duration can be correctly estimated
 Completed quickly
 No dependencies or interruptions
 Can be separately made responsible
 Establish a numeric code (based on level or department etc)
 Specific level for WP
 Based on level (SOP 1.0 > Database 1.2 > SQL 2.1 > Insert 2.1.1
 Based on department (Budget 2.0 > Finance F1.0)
 Establish control accounts / authority (shown in grey)
 Provide a WBS description (dictionary)
 A Baseline includes:
Scope statement + WBS + WBS descriptors
 Iterative process to improve quality of WBS
 - Ability to clearly identify deliverable

Why WBS ? - Ability to decompose work to manageable

levels
- WBS involves teams and expert judgment and
not one person
- Provides a dry run or a walk through of the
project helping to visualize the project
- Realistic view of the project with the ability to
uncover risks
- Deliverable dependencies and relations can be
established
- Piece wise view of the project for team
- Provides a basis for estimates of cost and time
- Prevent changes as a holistic view
- Buy in from the team
- Provides inputs to other areas
Work Packages
• PM can assign to
individuals or team
• Effort estimate
• Start date, duration and
date required
• Quality requirements
• Completion criteria
• Composition
Assignment of Work Packages
 RACI – Responsible (creating of WP), Accountable (Managing), Consult (Knowledge), Inform (Updates)
Case study – Build a WBS
Have you ever noticed that bosses aren’t happy when you respond to their question of “How long will it take?” with an answer of
“Between one and six months”? You figure that finishing any time before six months meets your promise, but your boss expects you to
be done in one month, given some (okay, a lot of) hard work. The truth is, though, you don’t have a clue how long the survey will take
because you have no idea how much work you have to do to complete it.
Developing a WBS encourages you to define exactly what you have to do and thereby improves your estimate of how long each step will
take. In this example, you decide to conduct three different surveys: personal interviews with people at your headquarters, phone
conference calls with people at the two regional activity centers, and a mail survey of a sample of your company’s clients. Realizing
you need to describe each survey in more detail, you begin by considering the mail survey and decide it includes five deliverables:
 A sample of clients to survey: You figure you need one week to select your sample of clients if the sales department has a current
record of all company clients. You check with that department, and, thankfully, it does.
 A survey questionnaire: As far as this deliverable is concerned, you get lucky. A colleague tells you she thinks that the company
conducted a similar survey of a different target population a year ago and that extra questionnaires from that effort may still be
around. You find that a local warehouse has 1,000 of these questionnaires and — yes! — they’re perfect for your survey. How much
time do you need to allow for designing and printing the questionnaires? Zero!
 Survey responses: You determine that you need a response rate of at least 70 percent for the results to be valid. You consult with
people who’ve done these types of surveys before and find out that you have to use the following three-phased approach to have an
acceptable chance of achieving a minimum response rate of 70 percent: 1. Initial mailing out and receiving of questionnaires
(estimated time = four weeks), 2. Second mailing out and receiving of questionnaires to non-respondents (estimated time = four
weeks), 3. Phone follow-ups with people who still haven’t responded, encouraging them to complete and return their surveys
(estimated time = two weeks)
 Data analyses: You figure you’ll need about two weeks to enter and analyze the data you expect to receive.
 A final report: You estimate you’ll need two weeks to prepare the final report.
Project Planning Tools
 PERT (Project Evaluation Review Technique)
 Probability based management of time
 Notation is Best / Nominal / Worst case
 Mean and standard deviation is calculated and assumed as a random variable of known distribution
 Expected completion = (Best + 4 * Nominal + Worst) /6 - PERT Estimation (Beta distribution)
 Expected completion = (Best + Nominal + Worst )/ 3 – (Triangular distribution)
 Beta standard deviation = (Worst – Best) /6

 Total expected completion time = 5.33 + 6 + 9.67 =21 Days

 Standard deviation is root of S2 for components = (12 + 1.332+1.332)1/2 = 2.13
 At a 90% confidence (1.6 standard deviations) = 2.13*1.6= 3.4 i.e 90% completion target = 21+3.4 = 25 Days
Project Planning Tools
 CPM (Critical Path Method)
 Directly calculates the project time
 Mostly used in project software's

 Total expected completion time = 5 + 5 + 9 =19 Days

 Representation on a node

(ES) Early Start Duration (EF) Early Finish Forward Pass

Activity Name
(LS) Late Start Slack/Float (LF) Late Finish Backward Pass

 Float – amount of time an activity can be delayed

 Pass – forward and backward (difference leads to float and 0 difference means critical path)
 Critical path – longest path in the project with dependencies, i.e. the shortest possible time
Estimating Techniques
 One point estimation (Bottom up method)
 Analogous estimation – Comparison of past projects and modified accordingly (Top down
method)

 Parametric estimation – unit rates (6000 Sqft paint by 100sqft/hr)

 Three point estimation – Beta or Triangular distributions
Activity Worst Nominal Best Beta Beta SD Range Triangular
(W+4N+B)/6 (W-B)/6 B +- SD (W+N+B)/3
A 47 27 14
B 89 60 41
C 48 44 39

 Reserve analysis – based on risks, supply constraints

Precedence Diagramming Method (PDM)
 Finish to Start (FS)
 Start to Start (SS)
 Finish to Finish (FF)
 Dependencies (Mandatory, Discretionary, External)
 Lag (-time or start before) and Lead (+time or start after)

 2 day led between A & C | 2 day lag between B & D | E & F are SS | G & H are FF
Activity on arrow network diagram
Activity on node network diagram
Project Planning with Cumulative Timing
Project Planning with Critical Vs Non-Critcal
Using Critical Path Method
Activity Preceding Duration