Project management chapter 4 - project integration management-1

Learning Objectives
 Describe an overall framework for project
integration management as it relates to the other
project management knowledge areas and the
project life cycle.
 Explain the strategic planning process and apply
different project selection methods.
 Explain the importance of creating a project
charter to formally initiate projects.
 Discuss the process of creating a preliminary
project scope statement.

2

The Key to Overall Project Success: Good
Project Integration Management
 Project managers must coordinate all of the
other knowledge areas throughout a project’s
life cycle.

 Many new project managers have trouble
looking at the “big picture” and want to focus on
too many details. (See opening case for a real
example.)

 Project integration management is not the same
thing as software integration.

3

Figure 1-2. Project Management
Framework

4

Figure 3-1. Level of Activity and Overlap of
Process Groups Over Time

5

Processes
 Develop the project charter: Work with
stakeholders to create the document that formally
authorizes a project—the charter.
 Develop the preliminary project scope
statement: Work with stakeholders, especially users
of the project’s products, services, or results, to
develop the high-level scope requirements and
create a preliminary project scope statement.
 Develop the project management plan:
Coordinate all planning efforts to create a
consistent, coherent document—the project
management plan.

6

Processes (cont’d)
 Direct and manage project execution: Carry out
the project management plan by performing the
activities included in it.
 Monitor and control the project work: Oversee
project work to meet the performance objectives of
the project.
 Perform integrated change control: Coordinate
changes that affect the project’s deliverables and
organizational process assets.
 Close the project: Finalize all project activities to
formally close the project.

7

Summary

8

Strategic Planning and Project
Selection
 Strategic planning involves determining long-
term objectives, predicting future trends, and
projecting the need for new products and services.
 Organizations often perform a SWOT analysis:
 Strengths, Weaknesses, Opportunities, and Threats
 As part of strategic planning, organizations should:
 Identify potential projects.
 Use realistic methods to select which projects to
work on.
 Formalize project initiation by issuing a project
charter.

9

Identifying Potential Projects
 Many organizations follow a planning process for
selecting IT projects.
 It’s crucial to align IT projects with business strategy.
 Research shows that:
 Supporting explicit business objectives is the number one
reason cited for investing in IT projects.
 Companies with consolidated IT operations have a 24
percent lower operational cost per end user.
 The consistent use of IT standards lowers application
development costs by 41 percent per user.*

*Cosgrove Ware, Lorraine, “By the Numbers,” CIO Magazine (www.cio.com)
(September 1, 2002).

10

Figure 4-1. Information
Technology Planning Process

11

Methods for Selecting Projects
 There is usually not enough time or
resources to implement all projects.
 Methods for selecting projects include:
 Focusing on broad organizational needs.
 Categorizing information technology
projects.
 Performing net present value or other
financial analyses.
 Using a weighted scoring model.
 Implementing a balanced scorecard.

12

Focusing on Broad
Organizational Needs
 It is often difficult to provide strong justification
for many IT projects, but everyone agrees
they have a high value.
 “It is better to measure gold roughly than to
count pennies precisely.”
 Three important criteria for projects:
 There is a need for the project.
 There are funds available for the project.
 There is a strong will to make the project succeed.

13

Categorizing IT Projects
 One categorization assesses whether the project
provides a response to:
 A problem
 An opportunity
 A directive
 Another categorization is based on the time it will
take to complete a project or the date by which it
must be done.
 Another categorization is the overall priority of the
project.
 Time
 Overall priority (High, Medium, and low)

14

Financial Analysis of Projects
 Financial considerations are often an
important aspect of the project selection
process.

 Three primary methods for determining the
projected financial value of projects:
 Net present value (NPV) analysis

 Return on investment (ROI)

 Payback analysis

15

Net Present Value Analysis
 Net present value (NPV) analysis is a method
of calculating the expected net monetary gain
or loss from a project by discounting all
expected future cash inflows and outflows to
the present point in time.

 Projects with a positive NPV should be
considered if financial value is a key criterion.

 The higher the NPV, the better.

16

FIgure 4-2. Net Present Value
Example
NPV =∑t=1..n A/ (1+r)t

Note that
totals are
equal, but
NPVs are
not
because of
the time
value of
money.

17

Return on Investment
 Return on investment (ROI) is calculated by
subtracting the project costs from the benefits
and then dividing by the costs.
ROI = (total discounted benefits - total discounted
costs) / discounted costs
 The higher the ROI, the better.
 Many organizations have a required rate of return
or minimum acceptable rate of return on
investment for projects.
 Internal rate of return (IRR) can by calculated by
setting the NPV to zero.

18

Payback Analysis
 Another important financial consideration is
payback analysis.
 The payback period is the amount of time it
will take to recoup, in the form of net cash
inflows, the total dollars invested in a project.
 Payback occurs when the cumulative
discounted benefits and costs are greater than
zero.
 Many organizations want IT projects to have a
fairly short payback period.

19

Charting the Payback Period

Excel file

20

Weighted Scoring Model
 A weighted scoring model is a tool that provides a
systematic process for selecting projects based on
many criteria.
 Steps in identifying a weighted scoring model:
1. Identify criteria important to the project selection
process.
2. Assign weights (percentages) to each criterion so
they add up to 100 percent.
3. Assign scores to each criterion for each project.
4. Multiply the scores by the weights to get the total
weighted scores.
 The higher the weighted score, the better.

21

Sample Weighted Scoring Model for Project
Selection

22

Implementing a Balanced
Scorecard
 Drs. Robert Kaplan and David Norton
developed this approach to help select and
manage projects that align with business
strategy.

 A balanced scorecard is a methodology that
converts an organization’s value drivers, such
as customer service, innovation, operational
efficiency, and financial performance, to a
series of defined metrics.

23

Project Charters
 After deciding what project to work on, it is
important to let the rest of the organization
know.
 A project charter is a document that formally
recognizes the existence of a project and
provides direction on the project’s objectives
and management.
 Key project stakeholders should sign a project
charter to acknowledge agreement on the need
and intent of the project; a signed charter is a
key output of initiation process.

24

Figure 4-6. Project Integration
Management Overview

25

Preliminary Scope Statements
 A scope statement is a document used to develop
and confirm a common understanding of the project
scope.

 It is an important tool for preventing scope creep:
 The tendency for project scope to keep getting bigger.

 A good practice is to develop a preliminary or initial
scope statement during project initiation and a more
detailed scope statement as the project progresses.

26

Contents of a Preliminary Scope
Statement
 Project objectives  Initial list of defined risks
 Product or service  Summary of schedule
requirements and milestones
characteristics  Rough order of magnitude
 Project boundaries cost estimate
 Deliverables  Configuration
 Product acceptance management
criteria requirements
 Project assumptions and  Description of approval
constraints requirements
 Organizational structure
for the project
27

Project Management Plans
 A project management plan is a document
used to coordinate all project planning
documents and help guide a project’s
execution and control.

 Plans created in the other knowledge areas
are subsidiary parts of the overall project
management plan.

28

Attributes of Project Plans
 Just as projects are unique, so are project
plans.
 Plans should be:
 Dynamic
 Flexible
 Updated as changes occur

 Plans should first and foremost guide
project execution by helping the project
manager lead the project team and assess
project status.
29

Common Elements of a
Project Management Plan
 Introduction or overview of the project.

 Description of how the project is organized.

 Management and technical processes used
on the project.

 Work to be done, schedule, and budget
information.

30

Sample Contents for a Software Project
Management Plan (SPMP)

31

What the Winners Do
“The winners clearly spell out what needs to be done in a
project, by whom, when, and how. For this they use an
integrated toolbox, including PM tools, methods, and
techniques…If a scheduling template is developed and used
over and over, it becomes a repeatable action that leads to
higher productivity and lower uncertainty. Sure, using
scheduling templates is neither a breakthrough nor a feat.
But laggards exhibited almost no use of the templates.
Rather, in constructing schedules their project managers
started with a clean sheet, a clear waste of time.”*

*Milosevic, Dragan and And Ozbay, “Delivering Projects: What the Winners Do,”
Proceedings of the Project Management Institute Annual Seminars & Symposium
(November 2001).
32

Stakeholder Analysis
 A stakeholder analysis documents
important (often sensitive) information
about stakeholders such as:
 Stakeholders’ names and organizations.
 Their roles on the project.
 Unique facts about each stakeholder.
 Their level of influence on and interest in the
project.
 Suggestions for managing relationships with
each stakeholder.

33

Sample Stakeholder
Analysis

34

Project Execution
 Project execution involves managing and
performing the work described in the project
management plan.

 The majority of time and money is usually spent
on execution.

 The application area of the project directly
affects project execution because the products
of the project are produced during project
execution.

35

Coordinating Planning and
Execution
 Project planning and execution are intertwined
and inseparable activities.

 Those who will do the work should help to
plan the work.

 Project managers must solicit input from the
team to develop realistic plans.

36

Leadership and a
Supportive Culture
 Project managers must lead by example to
demonstrate the importance of creating and
then following good project plans.
 Organizational culture can help project
execution by:
 Providing guidelines and templates.
 Tracking performance based on plans.
 Project managers may still need to break the
rules to meet project goals, and senior
managers must support those actions.

37

What Went Wrong?
 Many people have a poor view of plans based on their
experiences. Top managers often require a project
management plan, but then no one follows up on whether
the plan was followed. For example, one project manager
said he would meet with each project team leader within
two months to review their project plans. The project
manager created a detailed schedule for these reviews.
He cancelled the first meeting due to another business
commitment. He rescheduled the next meeting for
unexplained personal reasons. Two months later, the
project manager had still not met with over half of the
project team leaders. Why should project members feel
obligated to follow their own plans when the project
manager obviously did not follow his?

38

Important Skills for Project Execution

 General management skills such as
leadership, communication, and political
skills.

 Product, business, and application area
skills and knowledge.

 Use of specialized tools and techniques.

39

Project Execution Tools and
Techniques
 Project management methodology: Many
experienced project managers believe the most
effective way to improve project management is to
follow a methodology that describes not only what to do
in managing a project, but how to do it.
 Project management information systems: Hundreds
of project management software products are available
on the market today, and many organizations are
moving toward powerful enterprise project management
systems that are accessible via the Internet.
 See the “What Went Right?” example of Kuala
Lumpur’s Integrated Transport Information System.

40

Monitoring and Controlling Project Work

 Changes are inevitable on most projects, so it’s
important to develop and follow a process to
monitor and control changes.
 Monitoring project work includes
collecting, measuring, and disseminating
performance information.
 Two important outputs of monitoring and
controlling project work include recommended
corrective and preventive actions.

41

Media Snapshot
The 2002 Olympic Winter Games and Paralympics took five years to plan
and cost more than $1.9 billion. PMI awarded the Salt Lake Organizing
Committee (SLOC) the Project of the Year award for delivering world-class
games.
Four years before the Games began, the SLOC used a Primavera software-
based system with a cascading color-coded WBS to integrate planning…The
SLOC also used an Executive Roadmap, a one-page list of the top 100 Games-
wide activities, to keep executives apprised of progress. Activities were tied to
detailed project information within each department’s schedule. A 90-day
highlighter showed which managers were accountable for each integrated
activity.
Fraser Bullock, SLOC Chief Operating Officer and Chief, said, “We knew
when we were on and off schedule and where we had to apply additional
resources. The interrelation of the functions meant they could not run in
isolation—it was a smoothly running machine.”*

*Foti, Ross, “The Best Winter Olympics, Period,” PM Network (January 2004), p. 23.
42

Integrated Change Control
 Three main objectives are:
 Influence the factors that create changes to
ensure that changes are beneficial.

 Determine that a change has occurred.

 Manage actual changes as they occur.

 A baseline is the approved project
management plan plus approved
changes.

43

Change Control on Information
Technology Projects
 Former view: The project team should strive to
do exactly what was planned on time and within
budget.
 Problem: Stakeholders rarely agreed beforehand
on the project scope, and time and cost estimates
were inaccurate.
 Modern view: Project management is a process
of constant communication and negotiation.
 Solution: Changes are often beneficial, and the
project team should plan for them.

44

Change Control System
 A formal, documented process that
describes when and how official project
documents and work may be changed.

 Describes who is authorized to make
changes and how to make them.

45

Change Control Boards
(CCBs)
 A formal group of people responsible for
approving or rejecting changes on a
project.

 CCBs provide guidelines for preparing
change requests, evaluate change
requests, and manage the implementation
of approved changes.

 CCBs include stakeholders from the entire
organization.
46

Making Timely Changes
 Some CCBs only meet occasionally, so it
may take too long for changes to occur.
 Some organizations have policies in place
for time-sensitive changes.
 A “48-hour policy” allows project team members
to make a decision and have 48 hours to seek
approval from top management. If the team
decision cannot be implemented, management
has 48 hours to reverse a decision;
otherwise, the team’s decision is approved.
 Another policy is to delegate changes to the
lowest level possible, but keep everyone
informed of changes.
47

Configuration Management
 Ensures that the descriptions of the project’s
products are correct and complete.
 Involves identifying and controlling the
functional and physical design characteristics of
products and their support documentation.
 Configuration management specialists identify
and document configuration
requirements, control changes, record and
report changes, and audit the products to verify
conformance to requirements.

48

Suggestions for Managing Integrated
Change Control
○ View project management as a process of constant
communication and negotiation.
○ Plan for change.
○ Establish a formal change control system, including
a change control board (CCB).
○ Use good configuration management.
○ Define procedures for making timely decisions on
smaller changes.
○ Use written and oral performance reports to help
identify and manage change.
○ Use project management and other software to help
manage and communicate changes.

49

Closing Projects
 To close a project, you must finalize all
activities and transfer the completed or
cancelled work to the appropriate
people.
 Main outputs include:
 Administrative closure procedures.
 Contract closure procedures.
 Final products, services, or results.
 Organizational process asset updates.

50

Using Software to Assist in Project
Integration Management
 Several types of software can be used to assist in
project integration management:
 Word processing software creates documents.
 Presentation software creates presentations.
 Spreadsheets or databases perform tracking.
 Communication software such as e-mail and Web
authoring tools facilitate communications.
 Project management software can pull everything
together and show detailed and summarized
information.

51

Chapter Summary
 Project integration management
includes:
 Developing a project charter.
 Developing a preliminary project scope
statement.
 Developing a project management plan.
 Directing and managing project execution.
 Monitoring and controlling project work.
 Performing integrated change control.
 Closing the project.
52

Project management chapter 4 - project integration management-1

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