Chapter 5: Product
Conceptualization and Definition
James R. Burns
You have been assigned the
following HW
 Burns EX. 1-8,
1-10, 1-12, p. 28
 Schwalbe Ex 2-1, EX 2-3
 Burns EX. 2-19, 2-20, p. 27
 Burns EX 3-4, 3-5, 3-6
 Burns Ch. Five, do Ex. 5-5, 5-19, 5-20, at the
end of Chapter 5, pp. 34-39
 Requirements Scrubbing Spreadsheet
 Burns 6-10, 6-11, pg. 27-28
Homework:
 Due February 11, 2016
 One week from today
 Turn-in Hardcopy in class
Plan for Today
 Recitation
 THE FIVE PHASES OF THE PM LIFECYCLE
 REVIEW:
Functions/Tasks/Competencies/Skills of…
Project Manager
 Chapter 5—Burns
 Strategy & Portfolio Management
PMBOK’s five phases
1.
2.
Initiating
Planning
1. Part 1: Product Conceptualization and
Definition
2. Part 2: Project Planning and Budgeting
3.
4.
5.
Executing
Monitoring and Controlling
Closing
Product Conceptualization and
Definition is about…
 SCOPE
 As determined by..
• The requirements doc
• The WBS – Work Breakdown Structure
Functions, Tasks, Expectations of
the IT Project Manager
(coach, mentor, leader, negotiator, assessor,
informer, motivator, delegator)
 Selects Project leader, team leader, subordinates
 Works hardest during the initiating and planning
stages
 Assesses progress during execution and reports
on that
 Negotiates with line managers for required
human resources

3/11/2016
Texas Tech University -- J. R. Burns
7
Expectations of the IT Project
Manager
 Interfaces with customer, upper
management on behalf of team
 Negotiates with upper management and
customer
 Keeps everybody informed
3/11/2016
Texas Tech University -- J. R. Burns
8
More Expectations of the IT
Project Manager
 Is a positive leader, motivator, coach
 Knows how to use PM software
 Knows the technologies employed well
 Must re-plan the remainder of the project
after the completion of each deliverable,
each phase
3/11/2016
Texas Tech University -- J. R. Burns
9
Skills, Competencies of the PM
 Leadership—articulate the vision and hold everyone
accountable to it
 Delegation Competencies
An ability to develop people
 Communication competencies
 Interpersonal competencies
 Able to handle stress
 Problem solving skills
 Time management skills
 Negotiation skills

3/11/2016
Texas Tech University -- J. R. Burns
10
Recall the Large Project
Hierarchy
Project Manager
Project Leader
Team Leader 1
Team Leader 2
Developer 1
Developer 2
Developer 3
Developer 4
Developer 5
Developer 6
Developer 7
Developer 8
Developer N
3/11/2016
Texas Tech University -- J. R. Burns
11
Chapter 5 Outline
 Project Portfolio
Management
 The First Part
 Using a SOW
 Defining Project Boundaries/Scope
 Why getting this right is so important
 The use of surveys and interviews
 Definition of Deliverables and Due Dates
 Managing stakeholder expectations
Benefits of Project Portfolio Management

Builds discipline into the project selection process.

Links project selection to strategic metrics.

Prioritizes project proposals across a common set of
criteria, rather than on politics or emotion.

Allocates resources to projects that align with strategic
direction.

Balances risk across all projects.

Justifies killing projects that do not support strategy.

Improves communication and supports agreement on
project goals.
2–14
EXHIBIT 2.2
A Portfolio Management System
 Design of a project portfolio system:
• Classification of a project
• Selection criteria depending upon
classification
• Sources of proposals
• Evaluating proposals
• Managing the portfolio of projects.
2–15
Portfolio of Projects by Type
2–16
FIGURE 2.2
A Portfolio Management System
 Selection Criteria
• Financial: payback, net present value (NPV),
internal rate of return (IRR)
• Non-financial: projects of strategic
importance to the firm.
 Multi-Weighted Scoring Models
• Use several weighted selection criteria to
evaluate project proposals.
2–17
Financial Models
 The Payback Model
• Measures the time the project will take to
recover
the project investment.
• Uses more desirable shorter paybacks.
• Emphasizes cash flows, a key factor in business.
 Limitations of Payback:
• Ignores the time value of money.
• Assumes cash inflows for the investment period
(and not beyond).
2–18
• Does not consider profitability.
Financial Models (cont’d)
 The Net Present Value (NPV) model
• Uses management’s minimum desired rate-ofreturn (discount rate) to compute the present
value of all net cash inflows.
– Positive NPV: project meets minimum desired rate
of return and is eligible for further consideration.
– Negative NPV: project is rejected.
2–19
Example Comparing Two Projects
Using Payback Method
2–20
EXHIBIT 2.3a
Example Comparing Two Projects
Using Net Present Value Method
2–21
EXHIBIT 2.3b
Nonfinancial Strategic Criteria

To capture larger market share

To make it difficult for competitors to enter the market

To develop an enabler product, which by its introduction
will increase sales in more profitable products

To develop core technology that will be used in nextgeneration products

To reduce dependency on unreliable suppliers

To prevent government intervention and regulation
2–22
Multi-Criteria Selection Models
 Checklist Model
• Uses a list of questions to review potential
projects and to determine their acceptance or
rejection.
• Fails to answer the relative importance or value
of a potential project and doesn’t to allow for
comparison with other potential projects.
 Multi-Weighted Scoring Model
2–23
• Uses several weighted qualitative and/or
quantitative selection criteria to evaluate
Sample Selection Questions Used in Practice
Topic
Question
Strategy/alignment
What specific strategy does this project align with?
Driver
What business problem does the project solve?
Success metrics
How will we measure success?
Sponsorship
Who is the project sponsor?
Risk
What is the impact of not doing this project?
Risk
What is the project risk to our organization?
Risk
Where does the proposed project fit in our risk profile?
Benefits, value, ROI
What is the value of the project to this organization?
Benefits, value, ROI
When will the project show results?
Objectives
What are the project objectives?
2–24
EXHIBIT 2.4
Sample Selection Questions Used in Practice
Topic
Question
Organization culture
Is our organization culture right for this type of project?
Resources
Will internal resources be available for this project?
Approach
Will we build or buy?
Schedule
How long will this project take?
Schedule
Is the time line realistic?
Training/resources
Will staff training be required?
Finance/portfolio
What is the estimated cost of the project?
Portfolio
Is this a new initiative or part of an existing initiative?
Portfolio
How does this project interact with current projects?
Technology
Is the technology available or new?
2–25
EXHIBIT 2.4 cont’d
Project Screening Matrix
2–26
FIGURE 2.3
Applying a Selection Model
 Project Classification
• Deciding how well a strategic or operations
project fits the organization’s strategy.
 Selecting a Model
• Applying a weighted scoring model to bring
projects to closer with the organization’s
strategic goals.
– Reduces the number of wasteful projects
– Helps identify proper goals for projects
2–27
– Helps everyone involved understand how
and why a project is selected
Project Proposals
 Sources and Solicitation of Project
Proposals
• Within the organization
• Request for proposal (RFP) from external
sources (contractors and vendors)
 Ranking Proposals and Selection of Projects
• Prioritizing requires discipline, accountability,
responsibility, constraints, reduced flexibility,
and loss of power.
 Managing the Portfolio
2–28
• Senior management input
A Proposal Form for an
Automatic vehicular
tracking (AVL) Public
Transportation
Project
2–29
FIGURE 2.4A
The PLANNING Phase
 Analogous to a missile or rocket
 If the launch is “bad,” the project may have
to be killed
• Just as a rocket that misfires must be
detonated
Deliverables of this stage
 Project stakeholders --
 Project charter
 Project deliverables, what these will be
Requirements document (the
main deliverable)
 Project team members
Project stakeholders
 This group must be molded into one in
which there is a lot of cohesion
 If you can’t get cohesion, then you may
have to settle for a plurality or majority rule
 If is most important that everyone knows
up front what this project is about
 Stakeholders who don’t get what they want
from the project need to know this up front
Cohesion and Consensus
 You’ve got to have this prior to execution or
you’ll never get it later on
Requirements document
 What the problem is
 What functionality is needed
 What outputs
 What inputs
 What performance
 What reliability
What kind of meeting is appropriate
to begin discussions?
 A Joint Requirements Definition Session,
also known as a JAD Session
 To create a strongly held shared vision of
what the project is all about
 To hammer out a
DOCUMENT
REQUIREMENTS
JAD and JRD Sessions
They commit top executives to the software
planning process
 They shorten the requirements-specification
phase
 They eliminate features of questionable value
 They help to get requirements right the first time
 They help to get the user interface right the first
time
 They reduce organizational infighting

Project Charter
 Template appears in Chapter 5
 Advantage here is that the rules are made
explicit from the outset
 Helps remind the PM and team what the
goals/objectives are
 ANNOUNCES THE PROJECT
What does the Project Charter
announce?
 Project
 Project manager
 Project stakeholders
 Project scope
 Project deliverables
 Project assumptions
 Project rules/processes
 Project governance
Methodology for Facilitation of a
Requirements Planning Session
 How to determine requirements
 SWOT Analysis/Brainstorming/Brain-
writing
 Quality Function Deployment
• You should have seen this in your ISQS 3344
class.
 Goldratt Thinking Process
Importance
House of Quality
5
Trade-off matrix
3
Design
characteristics
1
4
2
Customer
requirements
Relationship
matrix
Competitive
assessment
6
Figure 3.7
Target values
House of Quality
Figure 3.8
Competitive Assessment
Easy and
safe to use
Irons
well
Customer Requirements
1
2
3
B A
4
Presses quickly
9
Removes wrinkles
8
AB
X
Doesn’t stick to fabric
6
X
BA
Provides enough steam
8
AB
Doesn’t spot fabric
6
X AB
Doesn’t scorch fabric
9
A XB
Heats quickly
6
Automatic shut-off
3
Quick cool-down
3
X
Doesn’t break when dropped
5
AB
Doesn’t burn when touched
5
AB X
Not too heavy
8
X
X
5
X
B
X
A
ABX
A B
X
A
B
Irons
well
Presses quickly
-
Removes wrinkles
+
Doesn’t stick to fabric
-
Provides enough steam
+
+
+ +
-
-
+ - +
+
-
Automatic shut-off
+
Quick cool-down
Doesn’t break when dropped
-
- +
+ + +
Doesn’t burn when touched
Not too heavy
Automatic shutoff
+ +
+ + +
+ -
Protective cover for soleplate
+ + +
+
Heats quickly
Time to go from 450º to 100º
-
+
Doesn’t scorch fabric
Time required to reach 450º F
Flow of water from holes
Size of holes
Number of holes
- + + +
Doesn’t spot fabric
Easy and
safe to use
Material used in soleplate
Thickness of soleplate
Size of soleplate
Customer Requirements
Weight of iron
Figure 3.9
Energy needed to press
House of Quality
+
+ -
-
- +
+
+
+ + +
-
Automatic shutoff
Protective cover for soleplate
Time to go from 450º to 100º
Time required to reach 450º
+
Flow of water from holes
-
Size of holes
-
Number of holes
Material used in soleplate
Thickness of soleplate
Size of soleplate
Weight of iron
Energy needed to press
House of Quality
Figure 3.10
+
+
in.
cm
ty
ea
3
1.4
8x4
2
SS
27
15
0.5
45
500
N
Y
4
1.2
8x4
1
MG
27
15
0.3
35
350
N
Y
2
1.7
9x5
4
T
35
15
0.7
50
600
N
Y
3
4
4
4
5
4
3
2
5
5
3
0
3
3
3
3
4
3
3
3
4
4
5
2
1.2
8x5
3
SS
30
30
500
*
*
*
*
*
*
*
Automatic shutoff
Number of holes
Protective cover for soleplate
Material used in soleplate
Time to go from 450º to 100º
Thickness of soleplate
lb
Flow of water from holes
Size of soleplate
ft-lb
Size of holes
Weight of iron
Objective
measures
Units of measure
Iron A
Iron B
Our Iron (X)
Estimated impact
Estimated cost
Targets
Design changes
Energy needed to press
Figure 3.11
Time required to reach 450º
House of Quality
mm oz/s sec sec Y/N Y/N
House of Quality
Figure 3.12
Goldratt Thinking Process—
three steps
 What to Change
 What to Change to
 How to Cause the Change
What to Change
Let’s talk about the problems with
mainframe/glass house architecture
 Data were isolated/non integrated

• Corporate visibility was impossible

Centralized MIS shop had long lead times
• Like 36 months for maintenance work on legacy apps
MIPS on mainframes were expensive and very
much in demand
 MIPS in PC were dirt cheap and idle most of the
time

We will build a tree
 Called a current reality tree
 Begin by identifying the UNDESIRABLE
EFFECTS the stakeholders are experiencing
 The basic tree relationship:
 IF {box a is true}, then {box b}.
Sales cannot see what is
happening in accounts
receivable
Sales cannot track customer
orders through the
manufacturing/distribution
process
Information visibility
across the enterprise is
impossible
Independent data
pools are created that
cannot be integrated
or accessed
Islands of automation are
created
End users develop their own
independent applications that
then run on departmental PC’s
Centralized mainframes are
computing bottlenecks
Centralized MIS shops
have lead times of 36
months or longer
Mainframes were
computational
bottlenecks
Centralized MIS shop backlogs
were extending out to 36 months
Only the centralized
MIS shop could do
maintenance and new
development work
Many new
applications were
being built
Each application
had to reside
entirely on the
mainframe
Budgets for
MIS shops were
stretched to
their limits
Change requests for
existing apps were
frequent and
increasing
Competitive and customer
environments are changing rapidly
What to change to
 An architecture in which the data are
totally integrated
 An architecture in which most of the
processing is not done on mainframes
 Decentralization of MIS
 What architecture was this???
How to cause the change
 ERP implementation
 Solves the problems identified above
Feasibility Assessment Process
 Identify Dependencies with other projects
 Assess overall risk
 Test alignment with/impact on strategies
and plans
 Test resource availability
 Submit Stage one deliverables for a quality
gate inspection
 MAKE GO/NO GO Decision
Making Decisions amongst Projects

_________________________________________________________________

efficiency
frontier







G
R
A
D
E
9
8
4
5

3


7


2


6
1



_________________________________________________________cost__________
Figure 5.8. Plot for Relating Proposal Cost to Grade
Multi-attribute Tree for Grading
Projects
Solution
Linear Programming
(optimization)
PROJECT NAME
ABBREVIATION
BENEFIT SCORE (0-100)
COST
Customer Relationship Management
CRM
85
1.5M
Data Warehouse Facility
DWF
95
1.3M
Scrubbing of Marketing Data
SMD
55
.5M
Supply Chain Management
SCM
80
1M
Supply chain data Prep
SCD
50
.4M
CAD/CAM System
CAD
75
.8M
Finite Capacity Scheduling System
FCS
30
.2M
Process Flow Analysis
PFA
35
.01M
Manufacturing Costing Analysis
MCA
30
.01M
Process Charting System
PCS
30
.01M
Value Stream Mapping
VSM
40
.01M
Collaborative Product Commerce
CPC
85
1M
MAX 85*CRM + 95*DWF + 55*SMD + 80*SCM +
50*SCD + 75*CAD + 30*FCS + 35*PFA + 30*PCS +
40*VSM + 85*CPC
 s.t.
 1.5*CRM + 1.3*DWF + .5*SMD + .1*SCM + .4*SCD +
.8*CAD + .2FCS + .01*PFA + .01*PCS + .01*VSM + 1*CPC
<= 6
 CRM – DWF >= 0
 DWF – SMD >= 0
 2SCM – DWF – SCD >= 0
 FCS – SCM >= 0
 CAD + PFA + MCA + PCS + VSM >= 2
 CPC – SCM >= 0

More process steps
 Obtain funding
 Review alternative approaches
 Obtain necessary signatures
 Move to next stage
A Caveat
If possible, avoid making quick and dirty
estimates of duration and cost in this stage
 If your superiors insist, make your estimates high
and insist that there could be 75% variability in
the estimate
 Educate your superiors to the effect that you
cannot give a definitive estimate until a welldefined product for the project emerges.

Summary
 The Planning phase is most important
 There is a lot of PM involvement
 PM must
•
•
•
•
Lead
communicate
Negotiate
Decide
 A most important focus:
• Build Consensus