The Project Planning
Phase – Project Initiation
and Project Management
Lecture 2
Courtesy to
Dr. Dasgupta
1
Objectives
The Systems Development
Lifecycle (SDLC)
 SDLC Phases
 The Project Management Phase

Project schedule
 Project Feasibility

2
IS Development Phases
3
Project Management

People



Organizing
Directing
Planned result


Scheduling
Budgeting
4
Participants in Development Project
5
Project Management Body of
Knowledge

Scope
management

Human resource
management

Time management


Cost management
Communications
management

Risk management

Procurement
management

Quality
management
6
Project Initiation

Driving forces



Respond to opportunity
Resolve problem
Conform to directive
7
Project Initiation

Long-term IS strategic plan (top-down)

Weighted Scoring

Department managers or process
managers (bottom-up)

Response to outside forces
8
Activities of the Project Planning Phase
9
Producing Project Schedule

Develop work breakdown schedule



List of tasks required for project
Like an outline
Build a PERT/CPM chart



Assists in assigning tasks
Critical path method
Tracking GANTT chart
10
Figure
Graphical diagrams that depict project plans
(a) A Gantt Chart (b) A PERT chart
11
Comparison of Gantt and
PERT Charts

Gantt



Visually shows
duration of tasks
Visually shows time
overlap between
tasks
Visually shows
slack time

PERT



Visually shows
dependencies
between tasks
Visually shows
which tasks can be
done in parallel
Shows slack time
by data in
rectangles
12
PERT - Project
Representation Basics





AoA = Activity on Arc
AoN = Activity on Node
Event - An event marks the start or
completion of a particular task or activity.
Activity - An activity is a task or a subproject that occurs between two events.
Two methods: Critical Path Method
(CPM), PERT (Program Evaluation and
Review Technique
13
Critical Path Method





Step 1 - Draw the network of activities
Step 2 - List all possible paths from start
to end
Step 3 - Calculate the total time for each
path in Step 2
Step 4 - The path with the highest
duration is the critical path and its
duration is the project completion time.
Step 5 - Calculate slack times if needed
14
Calculation of Slack Times
Step 5
Earliest Start ( Forward Pass )
ES activity = max( ES predecessor + duration predecessor )
LS activity = min ( LS successor - duration activity )
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Project Management Example
Activity
Predecessor
Duration ( Weeks )
A
-
3
B
A
2
C
A
4
D
B, C
5
E
B, C
2
F
E
5
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PERT - Program Evaluation
and Review Technique



A PERT chart is a graphical representation
of project task activities and their interrelationships.
Allows stochastic activity completion
times.
More realistic than Critical Path Method in
which all durations are deterministic.
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PERT steps




Identify each activity to be completed in
the project
Determine time estimates and calculate
the expected completion time for each
activity.
Determine the sequence of activities and
precedence relationships among all
activities by constructing a Gantt and
PERT chart.
Determine the critical path.
18
Calculation of Time Estimates
and Completion Times
Three time estimates for each activity
 o = optimistic duration (reflects the minimum
amount of time needed for an activity to be
completed)
 p = pessimistic completion time for an activity
 r = realistic completion time for an activity
 ET = estimated time for the completion of an
activity
ET = (o+4r+p)/6
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Confirming Project Feasibility

Economic


Cost/benefit analysis
Cash flow analysis

Organizational and cultural

Technological

Schedule

Resource
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Economic Feasibility



Economic feasibility for tangible costs and
benefits uses the “Time Value of Money”
Time value of money refers to the
concept of comparing present cash
outlays to future expected returns.
Useful method to comparing competing
projects with different useful life
expectancy
21
Commonly Used Techniques

Net Present Value (NPV): uses a
discount rate determined from the
company’s cost of capital to
establish the present value of a
project. The discount rate is used to
determine the present value of both
cash receipts and outlays.
22
Present Value
If
i = discount rate or the company’s cost of
capital
Y = amount of money “n” years from now
PVn= present value of Y dollars “n” years
from now
then
PVn=Y [1/(1+i)n]
23
Example

If we calculate the present value of
$1000 received two years from now
with a discount rate of 10%. Then
the present value would be:
PV2 = 1000 [1/(1+0.10)2] = 1000 x 0.8264
= 826.40
24
Net Present Value
The Net Present Value is calculated
as the sum of all present values.
 Example: if we have to calculate
NPV of 3 payments received in the
next three years then,
NPV = PV1+PV2+PV3

25
Return on Investment (ROI)

ROI is the ratio of the net cash
receipts of the project divided by the
cash outlays of the project.
Selection of projects can be made
by comparing their representative
ROI ratios.
ROI = (Overall NPV / NPV of all
costs)
26
Break-even analysis
Break-even analysis finds the amount of
time required for the cumulative cash
flow from a project to equal its initial and
ongoing investment.
 For the first year the overall NPV cash
flow is non-negative,
Break-even ratio =
(Yearly NPV Cash Flow - Overall NPV Cash
Flow) / Yearly NPV Cash Flow

27
Intangibles in Economic Feasibility

Costs and benefits cannot always be
measured

Intangible Benefits





Increased levels of service
Customer satisfaction
Survival
Need to develop in-house expertise
Intangible Costs



Reduced employee moral
Lost productivity
Lost customers or sales
28
Organizational and Cultural
Feasibility

Each company has own culture

New system must fit into culture

Evaluate related issues for potential risks







Computer competency
Computer phobia
Perceived loss of control
Shift in power
Fear of job changes
Fear of employment loss
Reversal of longstanding procedures
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Technological Feasibility

Does system stretch state-of-the-art?

Does expertise exist in-house for
development?

Does a third party need to be involved?
30
Schedule Feasibility

Interim evaluations to reassess
completion dates

Realistic assumptions and estimates



Completion date flexibility
Involvement of experienced personnel
Proper allocation of resources
31
Resource Feasibility

Team member availability

Team skill levels

Equipment and supplies

Support staff

Physical facilities
32
Project Staffing

Develop resource plan for the project

Identify and request specific technical
staff

Identify and request specific user staff

Organize the project team into work
groups

Conduct preliminary training and team
building exercises
33
Launching Project

Oversight committee is finalized and
meets to give go-ahead

Formal announcement made
34