03_project scope management

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Chapter 4:Project ScopeManagement


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Importance of Good ProjectScope Management

1995 CHAOS study cited user involvement, a clear project mission, aclear statement of requirements, and

proper planning as being important for project successThe program manager of Keller

Graduate School of Management citesproper project definition and scope asthe main reasons projects fail


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What is Project Scope Management?Scope refers to all the work involved increating the products of the project and theprocesses used to create themProject scope management includes the

processes involved in defining and controllingwhat is or is not included in the projectThe project team and stakeholders must havethe same understanding of what products willbe produced as a result of a project and whatprocesses will be used in producing them


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Project Scope Management Processes

Initiation: beginning a project or continuing to the nextphaseScope planning: developing documents to provide thebasis for future project decisionsScope definition: subdividing the major project

deliverables into smaller, more manageable componentsScope verification: formalizing acceptance of the projectscopeScope change control: controlling changes to projectscope


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Project Initiation: StrategicPlanning and Project Selection

The first step in initiating projects is tolook at the big picture or strategic planof an organization

Strategic planning involvesdetermining long-term businessobjectives

IT projects should support strategicand financial business objectives


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Table 4-1. Why Firms Invest inInformation Technology

Reason for Investing in IT Projects Rank Based on Overall Value of ProjectsSupports explicit business objectives 1Has good Internal Rate of Return (IRR) 2Supports implicit business objectives 3Has good Net Present Value (NPV) 4Has reasonable payback period 5

Used in response to competitive systems 6Supports management decision making 7Meets budgetary constraints 8High probability of achieving benefits 9Good accounting rate of return 10High probability of completing project 11

Meets technical/system requirements 12Supports legal/government requirement 13Good profitability index 14Introduces new technology 15


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Identifying Potential Projects

Many organizations follow a planningprocess for selecting IT projectsFirst develop an IT strategic plan based

on the organizations overall strategicplanThen perform a business area analysis

Then define potential projectsThen select IT projects and assignresources


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Figure 4-1. InformationTechnology Planning Process


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Methods for Selecting Projects

There are usually more projects thanavailable time and resources to implementthemIt is important to follow a logical process for selecting IT projects to work onMethods include focusing on broad needs,categorizing projects, financial methods, and

weighted scoring models


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Focusing on BroadOrganizational Needs

It is often difficult to provide strong justification for many IT projects, but everyoneagrees they have a high valueIt is better to measure gold roughly than tocount pennies preciselyThree important criteria for projects: There is a need for the project

There are funds available Theres a strong will to make the project succeed


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Categorizing IT Projects

One categorization is whether the project addresses a problem an opportunity a directiveAnother categorization is how long it will take to doand when it is neededAnother is the overall priority of the project


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Financial Analysis of Projects

Financial considerations are often animportant consideration in selectingprojects

Three primary methods for determining theprojected financial value of projects: Net present value (NPV) analysis Return on investment (ROI) Payback analysis


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Net Present Value Analysis

Net present value (NPV) analysis is amethod of calculating the expected netmonetary gain or loss from a project bydiscounting all expected future cash

inflows and outflows to the present pointin timeProjects with a positive NPV should be

considered if financial value is a keycriterionThe higher the NPV, the better


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Figure 4-2. Net Present Value Example

Excel file


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Return on Investment

Return on investment (ROI) is incomedivided by investment

ROI = (total discounted benefits - total

discounted costs) / discounted costsThe higher the ROI, the better Many organizations have a required rate

of return or minimum acceptable rate of return on investment for projects


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Payback Analysis

Another important financial consideration ispayback analysisThe payback period is the amount of time itwill take to recoup, in the form of net cashinflows, the net dollars invested in a projectPayback occurs when the cumulativediscounted benefits and costs are greater

than zeroMany organizations want IT projects to havea fairly short payback period

d b k


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Figure 4-3. NPV, ROI, and Payback Analysis for Project 1

Excel file


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Figure 4-4. NPV, ROI, and Payback Analysis for Project 2

Excel file


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Weighted Scoring ModelA weighted scoring model is a tool that provides asystematic process for selecting projects based on manycriteria First identify criteria important to the project selection process Then assign weights (percentages) to each criterion so they add

up to 100% Then assign scores to each criterion for each project Multiply the scores by the weights and get the total weighted

scores

The higher the weighted score, the better

See What Went Right? on pg. 87 for a description of how a mortgage finance agency uses a weighted scoringmodel for IT projects


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Figure 4-5. Sample Weighted Scoring Modelfor Project Selection

Excel file


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Project ChartersAfter deciding what project to work on, itis important to formalize projectsA project charter is a document thatformally recognizes the existence of aproject and provides direction on theprojects objectives and managementKey project stakeholders should sign a

project charter to acknowledge agreementon the need and intent of the project


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Table 4-2. Sample Project CharterProject Title: Information Technology (IT) Upgrade Project

Project Start Date: March 4, 1999 Projected Finish Date: December 4, 1999Project Manager: Kim Nguyen, 691-2784, [email protected] Objectives: Upgrade hardware and software for all employees(approximately 2,000) within 9 months based on new corporate standards.

See attached sheet describing the new standards. Upgrades may affectservers and midrange computers as well as network hardware andsoftware. Budgeted $1,000,000 for hardware and software costs and$500,000 for labor costs.Approach:

Update the IT inventory database to determine upgrade needs Develop detailed cost estimate for project and report to CIO Issue a request for quotes to obtain hardware and software

Use internal staff as much as possible to do the planning, analysis, andinstallation
mailto:[email protected]:[email protected]


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Table 4-2. Sample Project Charter (continued)

Name Role ResponsibilityWalter Schmidt, CEO Project Sponsor Monitor projectMike Zwack CIO Monitor project, provide

staff Kim Nguyen Project Manager Plan and execute projectJeff Johnson Director of IT Operations Mentor Kim

Nancy Reynolds VP, Human Resources Provide staff, issue memoto all employees about

project

Steve McCann Director of Purchasing Assist in purchasinghardware and software

Sign-off: (Signatures of all above stakeholders)

Comments: (Handwritten comments from above stakeholders, if applicable)This project must be done within ten months at the absolute latest. Mike Zwack, CIOWe are assuming that adequate staff will be available and committed to supporting this

project. Some work must be done after hours to avoid work disruptions, and overtimewill be provided. Jeff Johnson and Kim Nguyen, Information Technology Department

Roles and Responsibilities:


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Scope Planning and the ScopeStatement

A scope statement is a document usedto develop and confirm a commonunderstanding of the project scope. It

should include a project justification a brief description of the projects products a summary of all project deliverables a statement of what determines project

success


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Scope Planning and the Work Breakdown Structure

After completing scope planning, thenext step is to further define the work bybreaking it into manageable pieces

Good scope definition helps improve the accuracy of time, cost,

and resource estimates defines a baseline for performance

measurement and project control aids in communicating clear work

responsibilities


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The Work Breakdown Structure

A work breakdown structure (WBS) isan outcome-oriented analysis of thework involved in a project that defines

the total scope of the projectIt is a foundation document in projectmanagement because it provides the

basis for planning and managingproject schedules, costs, and changes


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Figure 4-6a. Sample IntranetWBS Organized by Product


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Figure 4-6b. Sample IntranetWBS Organized by Phase


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Table 4-3. Intranet WBS in Tabular Form1.0 Concept

1.1 Evaluate current systems1.2 Define Requirements

1.2.1 Define user requirements1.2.2 Define content requirements1.2.3 Define system requirements

1.2.4 Define server owner requirements1.3 Define specific functionality1.4 Define risks and risk management approach1.5 Develop project plan

1.6 Brief web development team2.0 Web Site Design3.0 Web Site Development4.0 Roll Out5.0 Support

Fi 4 7 I WBS d G


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Figure 4-7. Intranet WBS and GanttChart in Project 98

WBS Gantt Chart

Project 98 file


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Approaches to Developing WBSsUsing guidelines: Some organizations, like the

U.S. Department of Defense, provide guidelinesfor preparing WBSsThe analogy approach: It often helps to reviewWBSs of similar projects

The top-down approach: Start with the largestitems of the project and keep breaking themdownThe bottoms-up approach: Start with thedetailed tasks and roll them up

B i P i i l f C i WBS


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Basic Principles for Creating WBSs1. A unit of work should appear at only one place in the WBS.2. The work content of a WBS item is the sum of the WBS items below it.3. A WBS item is the responsibility of only one individual, even though

many people may be working on it.4. The WBS must be consistent with the way in which work is actually

going to be performed; it should serve the project team first and other purposes only if practical.

5. Project team members should be involved in developing the WBS to

ensure consistency and buy-in.6. Each WBS item must be documented to ensure accurate understanding

of the scope of work included and not included in that item.7. The WBS must be a flexible tool to accommodate inevitable changes

while properly maintaining control of the work content in the projectaccording to the scope statement.

Cleland, David I. Project Management: Strategic Design and Implementation , 1994


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Scope Verification and ScopeChange Control

It is very difficult to create a good scopestatement and WBS for a projectIt is even more difficult to verify project

scope and minimize scope changesMany IT projects suffer from scope creepand poor scope verification FoxMeyer Drug filed for bankruptcy after

scope creep on a robotic warehouse Engineers at Grumman called a system

Naziware and refused to use it

bl


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Table 4-4. Factors Causing ITProject Problems

Factor Rank Lack of user input 1Incomplete requirements and specifications 2Changing requirements and specifications 3Lack of executive support 4Technology incompetence 5

Lack of resources 6Unrealistic expectations 7Unclear objectives 8Unrealistic time frames 9

New Technology 10

Johnson, Jim, "CHAOS: The Dollar Drain of IT Project Failures," Application Development Trends,January 1995, www.stadishgroup.com/chaos.html

f


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Suggestions for Improving UserInput

Insist that all projects have a sponsor from the user organizationHave users on the project team

Have regular meetingsDeliver something to project users andsponsor on a regular basisCo-locate users with the developers


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Suggestions for Reducing Incompleteand Changing Requirements

Develop and follow a requirements management processEmploy techniques such as prototyping, use case modeling,and Joint Application Design to thoroughly understand user requirementsPut all requirements in writing and keep them current

Create a requirements management databaseProvide adequate testingUse a process for reviewing requested changes from asystems perspectiveEmphasize completion dates


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Discussion QuestionsGive examples of IT projects and why they wereor were not selected for implementation. Whattype of project selection process did theorganization use?Discuss the theory and practice behind usingproject charters, scope statements, and WBSs.Describe a project that suffered from scopecreep. Could it have been avoided? How? Can

scope creep be a good thing? When?

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