Week5:

Project Scope Management

Dr Ahmed Sameh

Learning Objectives
Understand the elements that make good

project scope management important

Describe the strategic planning process,
apply different project selection methods,
such as a net present value analysis, a
weighted scoring model, and a balanced
scorecard, and understand the importance
of creating a project charter
Explain the scope planning process and
contents of a scope statement

Learning Objectives
Discuss the scope definition process and

construct a work breakdown structure using

the analogy, top-down, bottom-up, and
mind mapping approaches
Understand the importance of scope
verification and scope change control to
avoid scope creep on information
technology projects
Describe how software can assist in project
scope management

Quick Review

Project Managers
Responsibilities

Project Manager will define:

Goals and objectives
Major milestones
Requirements
Ground rules and assumptions
Time, cost, and performance
constraints
Operating procedures
Administrative policy
Reporting requirements

Quick Review
Senior Managements Responsibility
Senior management (project sponsor)

will:
Act as the negotiator for
disagreements between project and
line management
Provide clarification of critical issues
Provide communication link with
customers senior management

Perception Vs Reality

IS370 Project Management

Dr Pat Halloran

Quick Review
THE SEVEN PHASES OF A PROJECT
1.Wild enthusiasm
2.Planning
3.Disillusionment
4.Fear / Panic / Chaos
5.Search for the guilty
6.Punishment of the innocent
7.Praise and Honors for the Non-

Participants

Project Charters
After deciding what project to work on, it is

important to formalize projects

A project charter is a document that formally
recognizes the existence of a project and
provides direction on the projects objectives
and management
Key project stakeholders should sign a project
charter to acknowledge agreement on the
need and intent of the project

Sample Project Charter

Sample Project Charter

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What is Project Scope

Management?

Scope refers to all the work involved in

creating the products of the project and the
processes used to create them. It defines what
is or is not to be done
Deliverables are products produced as part of
a project, such as hardware or software,
planning documents, or meeting minutes
The project team and stakeholders must have
the same understanding of what products will
be produced as a result of a project and how
theyll be produced

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Project Scope Management

Processes
Initiation:
beginning a project or continuing to the next

phase
Scope planning: developing documents to provide the
basis for future project decisions
Scope definition: subdividing the major project
deliverables into smaller, more manageable components
Scope verification: formalizing acceptance of the project
scope
Scope change control: controlling changes to project
scope

What can we do to manage &

control scope changes??
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Project Initiation: Strategic

Planning and Project Selection
The first step in initiating projects is to look at

the big picture or strategic plan of an

organization
Strategic planning involves determining longterm business objectives
IT projects should support strategic and
financial business objectives
How can we link these
objectives to our project
explicitly??
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Why Firms Invest in Information

Technology

14

Identifying Potential Projects

Many organizations follow a planning

process for selecting IT projects

First develop an IT strategic plan based on
the organizations overall strategic plan
Then perform a business area analysis
Then define potential projects
Then select IT projects and assign resources
Why wouldnt the business just
accept all the work it can get??
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16

Information Technology Planning

Process

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Methods for Selecting

Projects

There are usually more projects than

available time and resources to

implement them
It is important to follow a logical process
for selecting IT projects to work on
Methods include:
focusing on broad needs
categorizing projects
performing financial analyses
using a weighted scoring model
implementing a balanced scorecard
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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
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 directive
Another categorization is how long it will take to
do and when it is needed
Another is the overall priority of the project

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Financial Analysis of Projects

Financial considerations are often an

important consideration in selecting projects

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

21

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

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Net Present Value Example

Uses
Excels
npv
function

23

Note
that
totals
are
equal,
but
NPVs
are
not.

JWD Consulting NPV Example

Multiply
by the
discount
rate each
year, then
take cum.
benefits
costs to
get NPV
24

an

NPV Calculations
Determine estimated costs and benefits for the

life of the project and the products it produces

Determine the discount rate (check with your
organization on what to use)
Calculate the NPV (see text for details)
Notes: Some organizations consider the
investment year as year 0, while others start in
year 1. Some people enter costs as negative
numbers, while others do not. Check with your
organization for their preferences.

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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

an investment
Internal rate of return (IRR) can by calculated
by settingWhat
the NPV
todo
zero
else
we need to be aware
of in calculating ROI???
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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 net 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

27

Charting the Payback Period

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Weighted Scoring Model

A weighted scoring model is a tool that

provides a systematic process for selecting

projects based on many criteria
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
What type of criteria would you
expect to see here??

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Sample Weighted Scoring Model for

Project Selection

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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 converts an
organizations value drivers, such as customer
service, innovation, operational efficiency, and
financial performance to a series of defined
metrics
See www.balancedscorecard.org for more
information
Using BSC identify one item

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from each perspective and its

potential measureable target
for teaching/learning at PSU

Balanced Scorecard

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IS370 Project Management

Dr Pat Halloran

Role of Performance
Measurement

Activities directing any number of pre-defined

activities or strategies in order to accomplish an

agreed outcome.
Performance Measurements are put in place to
find out if a predefined goal/strategy has been
achieved.
Without them: Do not know companys standing
in light of their strategic direction

Activity
Each group needs to fill in the BSC diagram with the

measurement characteristics of customer perspective, as well as

business perspective.
Google
Customer
Internal business
process
Learning and
growth
Financial

Yahoo

Emirates Air

BSC Performance Measure

Comparison
Google

Yahoo

Emirates Air

Customer

No. of visitors
Searches per day
Search-ad click ratio
Referral visitors

No. of visitors
Searches per day
Directory clicks
Service upgrades

No. of visitors
Visitor-purchase ratio

Internal business
process

Bandwidth usage
Downtime rate
Search processing
duration

Bandwidth Usage
Downtime rate
Search processing
duration

Bandwidth Usage
Downtime rate
Transaction
processing duration

Learning and growth

Server expansion
Search algorithm
update

Most visited pages

Partner relations

Most visited pages

Most preferred
payment method

Financial

Profit
Ad revenue
- Ad Words
- Ad Sense

Profit
Ad revenue
- Banner Ads
Service revenue
Mew members

Profit
Sales revenue
Returning customers

Problems with performance

measurement
Performance measures are meant to

support business strategies

Strategies are not planned to work around
performance measures limit creativity
and innovation
Too specific performance measures may
make it incomparable with other divisions
Theres a gap between customer purchase
criteria and performance measures

Conclusion
There is a need for different performance

measures to support unique business

models
Standardized performance measures
display business performance within the
industry
Performance measures assist the business
to assess performance, not to govern
business processes

Scope Planning and the

Scope Statement
A scope statement is a document used to

develop and confirm a common

understanding 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, the

next step is to further define the work by

breaking 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) is a

deliverable-oriented grouping of the work

involved in a project that defines the total
scope of the project
It is a foundation document in project
management because it provides the basis
for planning and managing project
schedules, costs, and changes

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Sample Intranet WBS

Organized by Product

41

Sample Intranet WBS

Organized by Phase

42

Intranet WBS in Tabular

1.0Form
Concept

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1.1 Evaluate current systems

1.2 Define Requirements
1.2.1 Define user requirements
1.2.2 Define content requirements
1.2.3 Define system requirements
1.2.4 Define server owner requirements
1.3 Define specific functionality
1.4 Define risks and risk management
approach
1.5 Develop project plan
1.6 Brief Web development team
2.0 Web Site Design
3.0 Web Site Development
4.0 Roll Out
5.0 Support

Intranet WBS and Gantt Chart in

Project 2000

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Intranet WBS and Gantt Chart Organized

by Project Management Process Groups

45

Executing Tasks for JWD

Consultings WBS

46

Approaches to Developing WBSs

Using guidelines: Some organizations, like the

DoD, provide guidelines for preparing WBSs

The analogy approach: Review WBSs of similar
projects and tailor to your project
The top-down approach: Start with the largest
items of the project and break them down
The bottom-up approach: Start with the
detailed tasks and roll them up
Mind-mapping approach: Write down tasks in a
non-linear format and then create the WBS
structure

47

Sample Mind-Mapping
Approach

What do you suggest would be

good principles for developing a
WBS??
48

Basic Principles for Creating

1. A unitWBSs*
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 project
according to the scope statement.
*Cleland, David I. Project Management: Strategic Design and Implementation, 1994

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Scope Verification and Scope Change Control

It is very difficult to create a good scope

statement and WBS for a project

It is even more difficult to verify project scope and
minimize scope changes
Many IT projects suffer from scope creep and poor
scope verification
FoxMeyer Drug filed for bankruptcy after scope creep on

a robotic warehouse
21st Century Insurance Group wasted a lot of time and
money on a project that could have used off-the-shelf
components

What factors might present

problems for a WBS and
consequently the Project??
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Factors Causing IT Project

Problems

51

Suggestions for Improving User

Input
Develop a good project selection process

and insist that sponsors are from the user

organization
Have users on the project team in
important roles
Have regular meetings
Deliver something to users and sponsors on
a regular basis
What do you suggest would be
Co-locate users with developers
good practice for developing
incomplete and changing
requirements??
52

Suggestions for Reducing

Incomplete and Changing
Requirements

Develop and follow a requirements management

process
Use techniques like prototyping, use case
modeling, and JAD to get more user involvement
Put requirements in writing and keep them current
Provide adequate testing and conduct testing
throughout the project life cycle
Review changes from a systems perspective
Emphasize completion dates to help focus on
whats most important
Allocate resources specifically for handling change
requests/enhancements
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Using Software to Assist in

Project Scope Management
Word-processing software helps create several

scope-related documents
Spreadsheets help to perform financial
calculations, create weighted scoring models,
and develop charts and graphs
Communication software like e-mail and the
Web help clarify and communicate scope
information
Project management software helps in creating
a WBS, the basis for tasks on a Gantt chart
Specialized software is available for applying
the balanced scorecard, creating mind maps,
managing requirements, and so on
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