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Project Management
Project Concept Formation Feasibility Studies & Reports
Skills of a Project Manager
Management skills Communication Leadership Political Negotiating Organisational Teamwork Coping
Technical Motivational Patient Flexible Creative Persistent
Understanding Organizations
Structural frame: Focuses on roles and responsibilities, coordination and control. Organization charts help define this frame.
Human resources frame: Focuses on providing harmony between needs of the organization and needs of people.
Political frame: Assumes organizations are coalitions composed of varied individuals and interest groups. Conflict and power are key issues.
Symbolic frame: Focuses on symbols and meanings related to events. Culture is important.
Project Phases and the Project Life Cycle
A project life cycle is a collection of project phases
Project phases vary by project or industry, but some general phases include concept development implementation support
4 Phases of Project Life Cycle
Concept high level summary plan/ feasibility reports. If OK then
Development more accurate WBS and estimates. If OK
Implementation definitive estimates, acquisition, development & delivery
Close-out Work complete, Customer sign off, evaluation report
Phases of the project life cycle
Feasibility
The purpose of a Feasibility Study is to assess the viability of a potential project.
A Feasibility Report, is developed from the Feasibility Study.
It is presented to senior management to determine whether the project has sufficient merit to continue into more detailed phases.
The results of this phase are used to support the development of the Business Case.
Feasibility Types
Economic Feasibility Will the cost of implementing this system be
within management’s expectations in terms of expenditure and cash flow?
Operational Feasibility Will the system operate as desired in this
organisation?Technical Feasibility Is the technology available to build this
system and is it appropriate for this organisation?
Feasibility types con’t
Schedule Feasibility Will the time frame fit with the project
deadline?Legal Feasibility Does the project contradict any legal
requirements?Political feasibility Will we upset anyone, will we incur
ramifications later?
Economic feasibility
Concerns returns from investments in a project.
determines whether it is worthwhile to invest the money in the project
Some organizations place great emphasis on economic analysis.
Economic feasibility study
place actual money values against any purchases or activities needed for project.
place money values against any benefits that will accrue from a new system created by the project. Such calculations are often described as
cost-benefit analysis.
Cost-Benefit Analysis
usually includes two steps: producing the estimates of costs and
benefits, and determining whether the project is
worthwhile once these costs are ascertained.
Producing costs and benefits
produce a list of what is required to implement the system and a list of the new system's benefits.
Cost-benefit analysis is clouded by both tangible and intangible items.
Tangible items are those to which direct values can be attached
Some tangible costs often associated with computer system development are: Equipment costs for the new system. Personnel costs. Material costs. Conversion costs.
Tangible costs
Tangible items are those to which direct values can be attached
Some tangible costs often associated with computer system development are: Equipment costs for the new system. Personnel costs. Material costs. Conversion costs Training costs Other costs.
Intangible costs
Values that cannot be precisely determined and are the result of subjective judgment.
For example, how much is saved by completing a project earlier or providing new information to decision makers?
Determining whether a project is worthwhile
The costs and benefits are used to determine whether a project is economically feasible. -There are two ways to do this: the payback method and the present value method.
The payback method
Defines the time required to recover the money spent on a project.
Determine the costs Determine the benefits The difference between the cost and the
benefit for each year will be the saving or net benefit for the year.
Table 4.1 A present value evaluation
Year Cost BenefitPresent Value of
benefitDiscount Factor
(10%)Discount Factor
(15%)
0 $110,000
1 $20,000 $18,180 .909 .866
2 $40,000 $33,040 .826 .756
3 $60,000 $45,060 .751 .658
4 $30,000 $20,490 .683 .571
5 $10,000 $6,210 .621 .497
Total amount $122,980
The present value method
Determines how much money it is worthwhile investing now in order to receive a given return in some years' time.
The answer depends on the interest rate used in the evaluation.
The table above shows samples using both 10% and 15% To some extent the present value method works
backwards. First, the project benefits are estimated for each year and
then the present-value of these savings. If the project cost exceeds the present value, then it is
not worthwhile. The formula is:
Present value x (1 + r/ 100)n = Benefit at Year n We call 1/1(1 + r/ 100)n the discount factor in Table 4. 1.
Present Value
The formula is:Present value x (1 + r/ 100)n = Benefit at Year
n We call 1/(1 + r/ 100)n the discount factor in
Table 4. 1. Example, the present value of the $40
000 benefit at Year 2 is computed as:Present value = 40,000/(1 + 10/100)2= 33,057
Note that the sum of the present values in Table 4.1 is $122, 980. As this exceeds $110 000, the project is worthwhile.
Return on Investment (ROI)
The result of subtracting the project costs from the benefits and then dividing by the costs.
Example: If you invest $100 today and next year it is work $110.00 your ROI is
($110 – 100)/100 = 0.10 (10%)
TEXT CASE D: Construction Company‑Defining the Problems
Read the handout: ’Concept and feasibility’ This text looks at the feasibility of an IT
project for a construction company 5 broad concepts or solutions are
considered for project feasibility This case is similar to many IT project
problems After much work solution five is considered
the appropriate alternative
Summary
Project Life Cycle Feasibility Feasibility types Cost Benefit Analysis Payback method Present Value method
Thanks for listening