The Impact of Cost Estimation and Analysis Software and Its Influence on i

8/3/2019 The Impact of Cost Estimation and Analysis Software and Its Influence on i

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THE IMPACT OF COST ESTIMATION AND ANALYSIS SOFTWARE

AND ITS INFLUENCE ON I.T PROJECT SUCCESS IN COMPUTER

PLANET LIMITED.

(CASE STUDY)

By

Ismail Amir Mkame.

A Research proposal presented in partial fulfillment for the award of

Bachelor of Business Information Technology from Kenya MethodistUniversity, for the month of August 2011.


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DECLARATION

I declare that this proposal is my original work and has not been presented to any other

institution or examination body for any other award.

SIGNATURE: DATE:

ISMAIL MKAME,

BIT-1-5982-2/2009.

SUPERVISORS:

SIGN ______________________ DATE _____________________

DR.

DEPARTMENT OF IT

SIGN _______________________ DATE______________________


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DEDICATION

I dedicate this proposal to my parents, Mr. and Mrs.Jahazi for their great influence in my life and

their never-ending support.


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ACKNOWLEDGEMENT

This paper would not have been possible to complete without the support of many individuals. It

is however difficult to mention names of all persons that were of great help but nonetheless:

First of all I would want to extend my gratitude to God for giving me the strength and heart to doit to completion.

Secondly to my dear loving family for providing support both financially and even through their

advice.

Third to all my friends who were there through the research study for their generosity in sharing

ideas.

Lastly thanks to Mr.Ombiri with whose guidance has enabled me to come up with this proposal

May God Bless you all.


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THE IMPACT OF COST ESTIMATION AND ANALYSIS SOFTWARE

AND ITS INFLUENCE ON I.T PROJECTS SUCCESS IN COMPUTER

PLANET LIMITED.

CHAPTER ONEINTRODUCTION

The chapter contains background of the study, statement of problem, objectives of

the study, the research questions and scope of the study, the significance,

assumptions and limitations of the study.

1.1BACKGROUND STUDY

Statistics over I.T projects failure rate show that 3 out of 10 projects fail due to poor and

unreliable estimates. Cost estimating and analysis software improve the processes required to

ensure that I.T projects are completed within the approved budget.

This study will be carried out on the senior management, clients, project manager, outside

interested parties and the project team in Kenyan I.T firms. The study aims at efficiently and

effectively allocating organizational resources to project activities focusing on the required

resources, quantities needed, when needed and costs. This is because doing so will help reduce

the chances of failure and thus increase success rates on I.T projects. The focus on cost

estimating and analysis software also help us to understand why some I.T firms produce

successful projects while others fail. Only few projects are successful many more are delivered

which fail on schedule or budget criteria and a substantial number are cancelled having failed

badly.

Both primary and secondary sources of data will be used during data collection. Primary data

will be collected by use of questionnaires and oral interviews. Secondary data will be obtained

from extensive library search, Internet search, journals, bulletins and other relevant from the

various I.T firms. The Data will be entered into excel spread sheets and imparted into statistical

packages for analysis. The Data will then be subjected to descriptive statistics and presented

inform of tables and graphs.


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The results are expected to help I.T firms understand how best to go about developing their

projects so as to attain expected objectives. This will lead to successful projects and better

planning processes that will save time and money along the way.

Failure of IT projects translates to billions of shillings lost by organizations annually, it is thus

necessary to ensure correct processes so as to achieve desired goals and objectives. A project

success or failure is viewed merely by its schedule and budget; projects delivered on time and

within planned cost are deemed to be successful.

IT projects have a terrible track record, a 1995 Standish Group study (CHAOS) found that only

16.2% of IT projects were successful and over 31% were canceled before completion, costing

over $81 B in the U.S. alone. The need for IT projects keeps increasing, in 2000, there were

300,000 new IT projects and in 2001, over 500,000 new IT projects were started.

A project is a temporary endeavor undertaken to create a unique product or service.(PMI

definition:A Guide to the Project Management Body of Knowledge PMBOK Guide, page)

4.Information Technology(I.T) projects must be new or add enhanced functionality to hardware

and software or I.T services, they must also have a start and end date. All this in the long-run is

aimed at creating a unique product or service. For many organizations it is deemed as a onetime

activity, performed by people. It is also constrained by limited resources (budget), planned,

executed and controlled.

I.T project management which is a sub-discipline of project management involves planning,

monitoring and controlling of information technology projects. Many project managers,regardless of their level of training face challenges in developing I.T projects, this may be

because of some pretty common mistakes that they make, they fall under schedule and

budgeting, if these mistakes are made, the project will likely fail.

Albert Einstein has been widely quoted as saying "There are two things that are infinite, the

universe, and human stupidity, and I'm not sure about the universe." Like most people, this is

usually written off as an amusing, sarcastic quip he made on a bad day. I mean, it can't possibly

be taken literally, right?Then there are those situations which make someone think whether he

was onto something.Inspite of common sense, again and again many companies repeatedly

tragically avoidable mistakes, hamstringing themselves with the same ludicrous errors their

competitors (fortunately) are also making. When dealing with IT projects, using specialized

project management techniques will be very beneficial to your ongoing progress leading to a


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much higher success rate in the long run. Planning and carrying out IT projects can be tricky for

a variety of reasons, making the ability to complete them successfully a very valuable asset to

any employer.

The software development process has undergone drastic changes over the years. Initially only

requiring a developer to write the code of the software, advances in the industry have expanded

development into a more complex process. Involving architects, analysts, programmers, testers

and users to develop code, it is now capable of delivering more advanced results. You can avoid

some of the most common problems that occur with software development by understanding the

three most common reasons for project failure.

Every IT project is driven by a business requirement. For an IT project manager, the hard part is

translating that business requirement into an end product that fully meets that business need. It's

easy for a project manager to sit in a meeting and listen to what the clients say they need their

new system to achieve. But what happens when what the client asks for and what you think they

mean are two different things? When your solution misses the mark, you're the one your client

will blame, leaving you wide open to a lawsuit.

The primary challenge of project management is to achieve all of the project goals and objectives

while honoring the preconceived project constraints. Typical constraints are scope, time, and

budget. The secondaryand more ambitiouschallenge is to optimize the allocation and

integration of inputs necessary to meet pre-defined objectives.

In todays budget-constrained and increasingly risk-averse world, its not enough to envision and

develop a critical or transformational program; you must also articulate its cost. From start to

finish, you must know the numbers and the design decisions and characteristics that drive

them. You must be confident in your cost analysis software and their capabilities. You need

software that suite the business and can work within the required engineering, logistics and

management so as to identify every cost and develop accurate results; you need proven cost

estimating and analysis software and cost models.

Government, leading strategy and technology consulting firms and other I.T firms like Computer

Planet depend on good cost estimating and analysis software, for cost analyses. The softwareswork with program managers to define and understand programmatic, technical and cost

baselines for critical programs at all stages, and then validates costs for completeness, accuracy,

consistency and sensitivity to ensure success of I.T projects. This leads to credible, auditable,

reasonable and realistic solution. We use cost estimating and analysis software as advanced cost
http://en.wikipedia.org/wiki/Scope_(project_management)http://en.wikipedia.org/wiki/Timehttp://en.wikipedia.org/wiki/Budgethttp://en.wikipedia.org/wiki/Operations_researchhttp://en.wikipedia.org/wiki/Resource_allocationhttp://en.wikipedia.org/wiki/Resource_allocationhttp://en.wikipedia.org/wiki/Operations_researchhttp://en.wikipedia.org/wiki/Budgethttp://en.wikipedia.org/wiki/Timehttp://en.wikipedia.org/wiki/Scope_(project_management)


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estimation and modeling technique to help decision makers identify cost drivers, mitigate risks,

meet funding objectives and ensure program affordability.

Incepted in 2004, Computer Planet firm has established itself as one of the most accredited and

leading supplier of computer and related products and services in the country; with the state of

the art facilities and fully qualified staff, the company offers top brands in computersystems,peripherals,accessories,software and I.T consultancy services. Computer planet has an

expanding satisfied customer base throughout the country including NGOs corporate and

individuals. The company has its branch in Mombasa and headquarters in Nairobi.

1.2PROBLEM STATEMENT

The firms current approach to management of costs when developing I.T projects is not

appropriate. This is mostly because there is no standard software infrastructure. There is no

formal methodology contributing poor and unreliable estimates thus impacting negatively on the

company.

The employees of Capital Software firm are not really involved wholly in the project

development life-cycle thus add little value. There is also little user involvement in the process

making it more difficult to get feedback that is reliable and complete. The issue of minimized

scope, made to speed up the schedule and complete project earlier than planned requires

assigning more resources, which will pull up the cost, this is exactly the current situation in

Capital Software firm. Their emphasis has been on cost such that contracts are awarded to the

lowest bidder which might not necessarily mean high quality work, this has led to failure of

many I.T projects there before such that even senior management is not motivated about taking

any projects they consider profitable.

As we can see the triple constraint of scope-cost-time constraints every project however the

senior management of the firm is more weary and struggling with the current cost management

system. It is conclusively not efficient and effective as they would like it to be.

Computer Planet Limited is located in Mombasa along Maungano road, opposite Kenya National

Library.

1.3OBJECTIVES OF STUDY

The specific objectives will be:-

To find out whether proper cost management influences I.T project success. To evaluate the types and variety of software packages.


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To find out if good cost estimating and analysis software motivate I.T firms to carry outmore projects.

1.4RESEARCH QUESTIONS

This study will be guided by the following research questions:

Does proper cost management influence IT project success? How are cost estimating and analysis software designed and used? Do good cost estimating and analysis software motivate IT firms to carry out more

projects?

1.5SIGNIFICANCE OF STUDY

This study clearly aims at saving a lot of resources in terms of time and money when developing

I.T projects and also increasing the success rates of I.T projects in the firm. The reasons for the

increase in successful projects vary. First, the average cost of a project has been more than cut in

half. Better tools have been created to monitor and control progress and better skilled project

managers with better management processes are being used. The fact that there are processes is

significant in itself. *The study will benefit different parties as explained below:-

(a)To the senior Management of Capital Software firmSuccess in developing any project depends on the effectively and efficiently handling

of organizational resources. This understanding will lead to management better

planning and allocation of resources so as to achieve desired goals.

(b)To the Employees of Capital Software firmThe employee is the most important asset in building the customer relationship chain.

When the management properly understands the role of the employee in this chain,

the employee will be motivated to work better. Increased involvement boosts

employee morale and commitment to give better services to the firm.


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(c)To the customers and clients of Capital Software firmA motivated workforce will always reflect to the companys customers and clients.

With increased productivity clients and consumer would enjoy quality service.

Customers are then more inclined to stay loyal to Capital Software Limited.

(d)To the project teamThe study will enable the project team to effectively understand and appreciate the

usage of cost estimating and analysis software in the development of I.T projects.

(e)To the project managerThis study will be used define scope of project, evaluate project requirement and

identify required resources and budget.

1.6SCOPE OF STUDY

The research study will be conducted at Computer Planet Limited. The aim of the study will be

to establish that truly the use of cost estimating and analysis software in the firm will increase

success rate of I.T projects. It also aimed at improving planning, scheduling and budgeting thus

enabling projects to be completed in time with efficient usage of resources. This will help firm

realize its desired goals and objectives. The study will take about three months, due to certain

foreseen difficulties that might be experienced during the study.

1.7LIMITATIONS OF STUDY

The researcher might face the following challenges:-

(i) Non-responseMost of the respondents may not be willing to give out the relevant information

for effective data analysis. The respondents being employees of Capital Software

Limited will not be willing to give out information for fear of being victimized.

The researcher will have to carry out a familiarization exercise and seek

permission from the respondents before carrying out any interviews.


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(ii) IgnoranceSome of the respondents might not be aware of the impact of cost estimating

and analysis software and its influence on I.T projects success. They might not

be able to give valuable information required to enable the researcher compile a

proper report and relevant report.

1.8Fig 1: CONCEPTUAL FRAMEWORK

Dependant Variable

Source: Author 2009

EXPLANATION

The dependant variable in the conceptual framework is profitability. It establishes that truly the

use of cost estimating and analysis software in the firm will increase success rate of I.T projects.

It also aimed at improving planning, scheduling and budgeting thus enabling projects to be

completed in time with efficient usage of resources. This will help firm realize its desired goals

and objectives.

Cost management

processes

Cost estimation software

I.T Project Success

Technologyi.e hardware

Reliable estimates

Standard s/w infrastructure


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However, there must be a dedicated and committed workforce to make it possible. The employee

must be committed to their work and must all think value-adding to be able to create a superior

value for the firm. The creation of superior value is the key driver of satisfaction and loyalty.

Therefore profitability loyalty, satisfaction, commitment and productivity are all related to each

other.


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CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTIONThis study will be carried out to establish that truly the use of cost estimating and analysis

software in the firm will increase success rate of I.T projects. In this chapter the researcher will

analyze the already existing literature information relevant to the area of study. This chapter

makes an explanation of the existing theories and analysis of the past established knowledge

which will help to outline the organized understanding of the major issues and past studies in the

related field of study. It also aimed at improving planning, scheduling and budgeting thus

enabling projects to be completed in time with efficient usage of resources. This will help firm

realize its desired goals and objectives.

2.2 Definition of terms and meanings

A project is a temporary endeavor undertaken to create a unique product or service. (PMI

definition:A Guide to the Project Management Body of Knowledge PMBOKGuide, page) IT

projects refers to projects involving hardware, software, and networks.

Project management is the application of knowledge, skills, tools, and techniques to project

activities in order to meet project requirements (PMI*, Project Management Body of

Knowledge (PMBOK Guide), 2000, p. 6).

Cost is a resource sacrificed or foregone to achieve a specific objective or something given up in

exchange (Macmillan dictionary definition 2005 version).

Profitability generally is the making of gain in business activity for the benefit of the owners of

the business. The word comes from Latin meaning "to make progress", Bobette Kyle (2005).

An employee - may be defined as: "A person in the service of another under any contract ofhire,

express or implied, oral or written, where the employer has the power or right to control and

direct the employee in the material details of how the work is to be performed, Black's Law

Dictionary page 471 (5th ed. 1979).

Project Cost Management includes the processes required to ensure that project is completed

within an approved budget.marselle biottelly (2007).
http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Hirehttp://en.wikipedia.org/wiki/Oral_contracthttp://en.wikipedia.org/wiki/Righthttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Materiality_(law)http://en.wikipedia.org/wiki/Wage_labourhttp://en.wikipedia.org/wiki/Black%27s_Law_Dictionaryhttp://en.wikipedia.org/wiki/Black%27s_Law_Dictionaryhttp://en.wikipedia.org/wiki/Black%27s_Law_Dictionaryhttp://en.wikipedia.org/wiki/Black%27s_Law_Dictionaryhttp://en.wikipedia.org/wiki/Wage_labourhttp://en.wikipedia.org/wiki/Materiality_(law)http://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Righthttp://en.wikipedia.org/wiki/Oral_contracthttp://en.wikipedia.org/wiki/Hirehttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Service_(economics)


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Quality iso defines quality totality of characteristics of an entity that bear on its ability to satisfy

specific needs.

Figure 2.1. The Triple Constraint of Project Management

The Triple constraint, Scope-Cost-Time, is a key aspect of project management because

each facet is critical and related to the other two.Infact changing one almost inevitably changes

one or both of the others.

If a decision is made to speed up the schedule and complete project earlier than planned,

this may require either reduction of project scope or assigning more resources, which will pull up

cost. If emphasis is on time then the completion date will be dominant factor. In high technology

projects quality requirements often have priority over time and cost.

Stakeholders are the people involved in or affected by project activities. Stakeholders include:

the project sponsor and project team, support staff, customers, users, suppliers, opponents to the

project just to name but a few.


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Fig 2.2 Project Management Framework

9 Project Management Knowledge Areas:

Knowledge areas describe the key competencies that project managers must develop

4 core knowledge areas lead to specific project objectives (scope, time, cost,and quality) 4 facilitating knowledge areas are the means through which the project

objectives are achieved (human resources, communication, risk, and

procurement management)

1 knowledge area (project integration management) affects and is affected byall of the other knowledge areas

Project Management Tools and Techniques

Project management tools and techniques assist project managers and their teams in

various aspects of project management


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Some specific ones include:

Project Charter, scope statement, and WBS (scope) Gantt charts, network diagrams, critical path analysis, critical chain

scheduling (time)

Cost estimates and earned value management (cost) Much of the knowledge needed to manage projects is unique to the discipline

of project management

Project managers must also have knowledge and experience ino general managemento the application area of the project

2.3HISTORY OF MANAGEMENT OF I.T PROJECTS

Some people argue that building the Egyptian pyramids was a project, as was building the Great

Wall of China. Most people consider the Manhattan Project to be the first project to use

modern project management. This three-year, $2 billion (in 1946 dollars) project had a

separate project manager and a technical manager


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Fig 2.3 Sample Gantt chart

The WBS is on the left, and each tasks start and finish date are shown on the right using a

calendar timescale. Early Gantt Charts, first used in 1917, were drawn by hand.


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Fig 2.4 Sample Network Diagram

Each box is a project task from the WBS. Arrows show dependencies between tasks. The bolded

tasks are on the critical path. If any tasks on the critical path take longer than planned, the whole

project will slip unless something is done. Network diagrams were first used in 1958 on the

Navy Polaris project, before project management software was available.

2.4 PROJECT MANAGEMENT SOFTWARE

By 2003, there were hundreds of different products to assist in performing project management

Three main categories of tools exist:

Low-end tools: Handle single or smaller projects well, cost under $200 peruser

Midrange tools: Handle multiple projects and users, cost $200-500 per user,Project 2000 most popular

High-end tools: Also called enterprise project management software, oftenlicensed on a per-user basis

Project 2002 now includes a separate version for enterprise project management (see Appendix

A for details on Project 2002)


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CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION

This section will discuss the methods that were used during data collection for the research in

order to attain the objectives of the study. The study will outline the research plan, that is, the

research site, design, population, sample size, sampling technique, source of information, data

collection instruments and procedures and data analysis method.

3.2 Research Design

This research study will be undertaken as a case study as the investigation will only cover

Computer Planet Limited, it is aimed at improving planning, scheduling and budgeting thus

enabling projects to be completed in time with efficient usage of resources.

3.3 Population of the study

The study area of the research will be Computer Planet Limited with the target population being

clients, employees, project team and the Senior Management. Computer Planet Limited,

Mombasa has a population of approximately 150 employees and six managers. The study will

target a population of 100 drawn from the three cadres; clients, employees and the senior

management.

3.4 Sample Size/Design

The sample size will be drawn from the target population. A sample size of 100 respondents will

be drawn and fairly distributed throughout the sections of the hotel fraternity. Below is a

representation of the sample size.

Table 1: Sample size in strata

Cadre Population Sample Size Percentage

Senior

Management

6 3 50

Employees 150 72 48


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Clients 50 25 50

TOTAL 206 100 148

3.5 Sampling Technique

For the purpose of time saving and to eliminate bias, random sampling technique will be used to

be sure of availability of respondents and to obtain accurate information required.

The respondents will be picked randomly and also the questionnaires will be randomly

distributed across the three cadres.

3.6 Data Collection Instruments/Methods

ThePrimary data will be collected by use of questionnaires and Personal Interviews.

a) Questionnaires

The researcher will prepare simple open ended and structured questions in line

with the research objectives which will be distributed to the respondents.

(b) Personal Interviews

This is a face to face conversation with the respondents where the researcher will

collect data from the responses given during the interviews.

Secondary data will be collected from text books, extensive library research, the Internet,newspapers, bulletins and Hotel magazines.

3.7 Data collection procedures

a) Questionnaires

The researcher will prepare 100 questionnaires that will help realize the

objectives.

In order to guarantee the soundness of this instrument, the researcher will give a

draft of the survey questionnaires to some of the managers for approval. After

approval of the questionnaires, the researcher will sought for permission from the

sections heads for the lists of targeted respondents and then distribute the

questionnaires. The respondents will be requested to complete the questionnaires

and hand over after three days.


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b) Personal Interviews

The researcher will carry out the interviews at the firm premises. There will be

pre-arranged appointments with the guests through the management made to

make it as convenient as possible to conduct the interviews. The researcher will

then record all responses as data. For those respondents who will be busy during

working hours, the researcher will schedule for interviews during lunch breaks.

3.8 Data analysis method and Presentation technique

Subsequent to the giving out of the survey questionnaires and conducting the personal

interviews, the researcher will then collect the data and reported the findings in terms ofrespondents sample size, cadres and respondents characteristics. The analysis will be given in

terms of percentages and in tabulations. The representation will then be done graphically.

REFERENCE

1. ^abcChatfield, Carl. "A short course in project management". Microsoft.http://office.microsoft.com/en-us/project/HA102354821033.aspx.
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2. ^*The Definitive Guide to Project Management. Nokes, Sebastian. 2nd Ed.n. London(Financial Times / Prentice Hall): 2007. ISBN 978 0 273 71097 4

3. ^Paul C. Dinsmore et al (2005) The right projects done right! John Wiley and Sons,2005. ISBN 0-7879-7113-8. p.35 and further.

4. ^Lewis R. Ireland (2006) Project Management. McGraw-Hill Professional, 2006. ISBN0-07-147160-X. p.110.

5. ^Joseph Phillips (2003). PMP Project Management Professional Study Guide. McGraw-Hill Professional, 2003. ISBN 0-07-223062-2 p.354.

6. ^Dennis Lock (2007) Project management(9e ed.) Gower Publishing, Ltd., 2007. ISBN0-566-08772-3

7. ^Young-Hoon Kwak (2005). "A brief history of Project Management". In: The story ofmanaging projects. Elias G. Carayannis et al. (9 eds), Greenwood Publishing Group,2005. ISBN 1-56720-506-2
http://en.wikipedia.org/wiki/Project_management#cite_ref-1http://en.wikipedia.org/wiki/Project_management#cite_ref-1http://en.wikipedia.org/wiki/Special:BookSources/9780273710974http://en.wikipedia.org/wiki/Project_management#cite_ref-2http://en.wikipedia.org/wiki/Project_management#cite_ref-2http://en.wikipedia.org/wiki/Special:BookSources/0787971138http://en.wikipedia.org/wiki/Project_management#cite_ref-3http://en.wikipedia.org/wiki/Project_management#cite_ref-3http://en.wikipedia.org/wiki/Special:BookSources/007147160Xhttp://en.wikipedia.org/wiki/Special:BookSources/007147160Xhttp://en.wikipedia.org/wiki/Project_management#cite_ref-4http://en.wikipedia.org/wiki/Project_management#cite_ref-4http://en.wikipedia.org/wiki/Special:BookSources/0072230622http://en.wikipedia.org/wiki/Project_management#cite_ref-5http://en.wikipedia.org/wiki/Project_management#cite_ref-5http://en.wikipedia.org/wiki/Special:BookSources/0566087723http://en.wikipedia.org/wiki/Special:BookSources/0566087723http://en.wikipedia.org/wiki/Project_management#cite_ref-YHK05_6-0http://en.wikipedia.org/wiki/Project_management#cite_ref-YHK05_6-0http://en.wikipedia.org/wiki/Special:BookSources/1567205062http://en.wikipedia.org/wiki/Special:BookSources/1567205062http://en.wikipedia.org/wiki/Project_management#cite_ref-YHK05_6-0http://en.wikipedia.org/wiki/Special:BookSources/0566087723http://en.wikipedia.org/wiki/Special:BookSources/0566087723http://en.wikipedia.org/wiki/Project_management#cite_ref-5http://en.wikipedia.org/wiki/Special:BookSources/0072230622http://en.wikipedia.org/wiki/Project_management#cite_ref-4http://en.wikipedia.org/wiki/Special:BookSources/007147160Xhttp://en.wikipedia.org/wiki/Special:BookSources/007147160Xhttp://en.wikipedia.org/wiki/Project_management#cite_ref-3http://en.wikipedia.org/wiki/Special:BookSources/0787971138http://en.wikipedia.org/wiki/Project_management#cite_ref-2http://en.wikipedia.org/wiki/Special:BookSources/9780273710974http://en.wikipedia.org/wiki/Project_management#cite_ref-1

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The Impact of Cost Estimation and Analysis Software and Its Influence on i