Software Project Management

Processes, Organization

1
 Contents
• PMI Fundamentals
• Project Organization
• Project Selection
• Project Portfolio Management
• Procurement Management
• Statement of Work (SOW)
• Project Charter

2
 Project Success Rates
• The 2001 Standish Group Report Showed Decided Improvement in IT
Project Success Rates From the 1995
– Time overruns: decreased to 63% compared to 222%
– Cost overruns were down to 45% compared to 189%
– Required features were up to 67% compared to 61%
– 78,000 U.S. projects were successful vs. to 28,000
– 28% of IT projects succeeded compared to 16%

3
 Project Success Rates
• Why the Improvements?
• Avg. cost reduced by half
• Better tools for monitoring and control
• More skilled PM’s, more process, more user involvement
• And “The fact that there are processes is significant in itself.“

4
 Why Do Projects Succeed?
• How to identify a projects success potential
– What metrics could you look at?
• Project size
• Project duration
• Project team size

5
 Why Do Projects Succeed?
– Executive support
– User involvement
– Experience project manager
– Clear business objectives
– Minimized scope
– Standard software infrastructure
– Firm basic requirements
– Formal methodology
– Reliable estimates
Standish Group “CHAOS 2001: A Recipe for Success”

6
 Why Executive Support?
• Top management can help to:
– Secure adequate resources
– Get approval for unique project needs in a
timely manner
– Receive cooperation from people throughout
the organization
– Provide leadership guidance

7
 Stakeholder Triad
• 1. Function Representative
• The ‘business person’
• Or SME: Subject Matter Expert
• 2. Executive Sponsor
• Project’s visionary & champion
• Also the ‘General’, ‘Fall Guy’, and ‘Minesweeper’
• Not the PM, ‘Santa Claus’, or the ‘Tech Guy’
• 3. Project Manager
• The ‘Linchpin’
• Must be ‘multi-lingual’

8
 15 PM Job Functions
• Define scope of project • Evaluate project requirements
• Identify stakeholders, • Identify and evaluate risks
Prepare contingency plan
decision-makers, and
• Identify interdependencies
escalation procedures
• Identify and track critical
• Develop detailed task list
milestones
(work breakdown structures)
• Participate in project phase
• Estimate time requirements review
• Develop initial project • Secure needed resources
management flow chart • Manage the change control
• Identify required resources process
and budget • Report project status
*Northwest Center for Emerging Technologies, "Building a Foundation for Tomorrow: Skills Standards for
Information Technology,"Belleview, WA, 1999
9
 PMBOK
• Structures PM by
– A) Processes
– B) Knowledge Areas
• Processes. 2 types
– 1. PM processes: describing and organizing the work of
the project
– 2. Product-oriented processes: specifying and building
the project’s product

10
PMI Framework

Source: Project Management Institute

11
 The 5 PMI Process Groups
• 1. Initiating
• 2. Planning
• 3. Executing
• 4. Controlling
• 5. Closing
• Note: these can be repeated for each phase
• Each process is described by:
• Inputs
• Tools & Techniques
• Outputs

12
PMI Process Groups

Source: Project Management Institute

13
PMI: Process Links

14
 PMI Phase Interactions

Design Phase
Initiating Planning
Processes Processes
Implementation Phase
Initiating Planning
Controlling Executing Processes Processes
Processes Processes

Controlling Executing
Closing Processes Processes
Processes

Closing
Processes

15
 PMI: Initiating Process
• Inputs • Outputs
– Product Description – Project charter
– Strategic plan – Project Manager
– Project Selection assigned
Criteria – Constraints
– Historical Information – Assumptions

16
 PMI: Planning Process
Devising and maintaining a workable scheme to accomplish the
business need that the project was undertaken to address
• Scope Planning • Risk Planning
• Scope Definition • Schedule Development
• Activity Definition • Quality Planning
• • Communications
Activity Sequencing
Planning
• Activity Duration • Organization Planning
Estimating • Staff Acquisition
• Resource Planning • Procurement Planning
• Cost Estimating • Project Plan Development
• Cost Budgeting
17
 PMI: Executing Process
Coordinating people and other resources to carry out the plan

• Project Plan Execution • Information

• Scope Verification Distribution
• Quality Assurance • Solicitation
• Team Development • Source Selection
• Contract
Administration

18
 PMI: Controlling Process
Ensuring that project objectives are met by monitoring and measuring
progress and taking corrective measures when necessary

• Overall Change • Performance Reporting

Control • Risk Response Control
• Scope Change Control
• Schedule Control
• Cost Control
• Quality Control

19
 PMI: Closing Process
Formalizing acceptance of the project or phase
and bringing it to an orderly end

• Administrative Closure
• Contract Close-out

20
PMI Knowledge Areas

21
 Importance of Phases
• Define your management review points
– “Phase exits” or “kill points”
– Ensure continued alignment with goals
– Form of Validation & Verification (V&V)
• More later in term

22
 Understanding Organizations
Structural frame: Human resources frame:
Focuses on roles and Focuses on providing
responsibilities, harmony between needs of
coordination and control. the organization and needs
Organization charts help of people.
define this frame.

Political frame: Symbolic frame: Focuses

Assumes organizations on symbols and meanings
are coalitions composed related to events. Culture
of varied individuals and is important.
interest groups. Conflict
and power are key issues.
23
 Organizational Structures
• Functional
– Engineering, Marketing, Design, etc
– P&L from production
• Project
– Project A, Project B
– Income from projects
– PM has P&L responsibility
• Matrix
– Functional and Project based
– Program Mgmt. Model
– Shorter cycles, need for rapid development process
24
 Functional Organization

• Pros • Cons
– Clear definition of authority – “Walls”: can lack customer orientation
– Eliminates duplication – “Silos” create longer decisions cycles
– Encourages specialization – Conflicts across functional areas
– Clear career paths – Project leaders have little power

25
 Project Organization

• Pros • Cons
– Unity of command – Duplication of facilities
– Effective inter-project – Career path
communication

• Examples: defense avionics, construction

26
 Matrix Organization

• Pros • Cons
– Project integration across – Two bosses for personnel
functional lines – Complexity
–Efficient use of resources – Resource & priority conflicts
–Retains functional teams
27
 Matrix Forms
• Weak, Strong, Balanced
• Degree of relative power
• Weak: functional-centric
• Strong: project-centric

28
 Organizational Structure Influences on
Projects
Organization Type Matrix
Project Functional Weak Matrix Balanced Strong Matrix Projectized
Characteristics Matrix
Project Manager's Little or Limited Low to Moderate High to
Authority None Moderate To High Almost Total
Percent of Performing
Organization's Virtually 0-25% 15-60% 50-95% 85-100%
Personnel Assigned Full- None
time to Project Work
Project Manager's Role Part-time Part-time Full-time Full-time Full-time
Common Title for Project Project Project Project Project
Project Manager's Role Coordinator/ Coordinator/ Manager/ Manager/ Manager/
Project Leader Project Leader Project Officer Program Manager Program Manager
Project Management
Administrative Staff Part-time Part-time Part-time Full-time Full-time

PMBOK Guide, 2000, p. 19

29
 Organizational Impact
• Form can greatly impact your role
• Determine what skills you’ll need from
which functions
• The new “Project Office”
– A) As centralized project management
– B) As coach and info. office to project teams
• The “Enterprise PMO” (EMPO)

30
Why Firms Invest in IT

31
IT Planning Process

32
 Methods for Selecting Projects
• There are usually (always?) more projects than available
time and resources to implement them
• Therefore: It is important to follow a logical process for selecting IT
projects to work on
• Methods include
– Focusing on broad needs
– Categorizing projects
– Financial methods
– Weighted scoring models
• (last 2 models covered later in term)

33
 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
– There’s a strong will to make the project succeed

34
 Categorizing IT Projects
• One categorization: whether project addresses
– a problem
– an opportunity
– a directive
• Another: how long it will take & when it is needed
• Another: overall priority of the project

35
 Project Portfolio Management
• Portfolio: a group of IT project under a coordinated
management structure
• Different ‘portfolio models’ are available:
– Economic return model
– NPV, IRR, ROI
– Cost-benefit model
– Can include less tangible factors
– Market research model
– For new products
• Each considers relative value and resource/budget
interactions
• More details in Session 4

36
 Portfolio Management
• A 5 level approach (from CIO magazine)
• 1. Create a Portfolio Database
• Project names & descriptions
• Estimated costs, timeframes, staffing
– Benefits
• Spotting redundancies
• Communication across orgs & teams
• Holistic view

37
 Portfolio Management
• 2. Prioritize Projects
– Try quantifiable rankings
• Risk and return
– Still subjectivity and disagreements
• 3. Divide into budgets based on type
– To align with business needs
– Ex: utilities (‘keeping the lights on’),
incremental upgrades, strategic investments

38
 Portfolio Management
• 4. Automate the repository
– Input of new data (new projects)
– Automated tracking (PM software integration)
• 5. Apply modern portfolio theory
– Ex: www.modporttheory.com
– More advanced than most of us need

39
 Portfolio Management
• Products
– ProSight Portfolios (ex. 1) (ex. 2) (all)
– PlanView

40
 Why Outsource?
• To reduce both fixed and recurrent costs
• To allow the client organization to focus on
its core business
• To access skills and technologies
• To provide flexibility
• To increase accountability

41
 Procurement Management
• Procurement means acquiring goods and/or
services from an outside source
– a.k.a. purchasing or outsourcing
• Know how your project fits-into this model
– Are you building “in-house”? “for hire”?
• Thus are you the ‘outside source’?
– As a startup? (thus in-house but as basis for
the business itself)

42
 Procurement Management
• Procurement planning: determining what to procure and
when
• Solicitation planning: documenting product requirements
and identifying potential sources
• Solicitation: obtaining quotations, bids, offers, or
proposals as appropriate
• Source selection: choosing from among potential
vendors
• Contract administration: managing the relationship with
the vendor
• Contract close-out: completion and settlement of the
contract 43
Project Procurement Management
Processes and Key Outputs

44
Procurement Tools & Techniques
• Make-or-buy analysis (build vs. buy)
• Determining whether a particular product or service
should be made or performed inside the
organization or purchased from someone else.
Often involves financial analysis
• Experts
• Both internal and external, can provide valuable
inputs in procurement decisions

45
 Make-or Buy Example
• Assume you can lease an item you need for
a project for $150/day. To purchase the
item, the investment cost is $1,000, and the
daily cost would be another $50/day.
• How long will it take for the lease cost to
be the same as the purchase cost?
• If you need the item for 12 days, should
you lease it or purchase it?
46
 Make-or Buy Solution
• Set up an equation so the “make” is equal to the “buy”
• In this example, use the following equation. Let d be the number of days to use
the item.
$150d = $1,000 + $50d
• Solve for d as follows:
– Subtract $50d from the right side of the equation to get
$100d = $1,000
– Divide both sides of the equation by $100
d = 10 days
• The lease cost is the same as the purchase cost at 10 days
• If you need the item for > 12 days, then purchase it

47
 Types of Contracts
• Fixed price or lump sum: involve a fixed total
price for a well-defined product or service
• Cost reimbursable: involve payment to the seller
for direct and indirect costs
• Time and material contracts: hybrid of both fixed
price and cost reimbursable, often used by
consultants
• Unit price contracts: require the buyer to pay the
seller a predetermined amount per unit of service
48
 Cost Reimbursable Contracts
• Cost plus incentive fee (CPIF)
– Buyer pays seller for allowable performance costs plus a
predetermined fee and an incentive bonus
• Cost plus fixed fee (CPFF)
– Buyer pays seller for allowable performance costs plus a
fixed fee payment usually based on a percentage of
estimated costs
• Cost plus percentage of costs (CPPC)
– Buyer pays seller for allowable performance costs plus a
predetermined percentage based on total costs

49
Contract Types Versus Risk

50
 Statement of Work (SOW)
• A description of the work required for the
project
• Sets the “boundary conditions”
• SOW vs. CSOW (Contract SOW)
– Latter: uses legal language as part of a
competitive bidding scenario
• Can be used in the final contract – be
careful, be specific, be clear
51
 SOW Continued
• Typically done after approval (after “Go”)
• Can be multiple versions
– 1. List of deliverables for an RFP
– 2. More detailed within final RFP
– 3. Binding version from contract

52
 SOW Template
I. Scope of Work: Describe the work to be done to detail. Specify the hardware and
software involved and the exact nature of the work.
II. Location of Work: Describe where the work must be performed. Specify the
location of hardware and software and where the people must perform the work
III. Period of Performance: Specify when the work is expected to start and end,
working hours, number of hours that can be billed per week, where the work must
be performed, and related schedule information. Optional “Compensation”
section.
IV. Deliverables Schedule: List specific deliverables, describe them in detail, and
specify when they are due.
V. Applicable Standards: Specify any company or industry-specific standards that
are relevant to performing the work. Often an Assumptions section as well.
VI. Acceptance Criteria: Describe how the buyer organization will determine if the
work is acceptable.
VII. Special Requirements: Specify any special requirements such as hardware or
software certifications, minimum degree or experience level of personnel, travel
requirements, documentation, testing, support, and so on. 53
 Project Charter
• A high-level project description:
– Business need, product, assumptions
• Often precedes SOW
• Often 2-4 pages (can be longer)

54
 Project Charter
• Typical outline
– Overview
• Business need
• Objectives
• Method or approach
– General scope of work
– Rough schedule & budget
– Roles & responsibilities
– Assumptions

55
 Homework Assignment
• Write a Project Charter for your project
• Combines elements of an SOW
• 2-3 pages
• Use format of your choice (see links on
class site) but outlined as below
• Graded on content, not format

56
 Assignment Details
• Include:
– Overview (2-4 paragraphs)
• What the system is (summary)
• Who will use it
• What problem is it solving (Objectives)
– Scope of Work (outline format or text)
• Deliverables
» What the system is (details)
• Rough time estimate (2 months or 2 yrs?)
– Out of scope items
– Assumptions

57
 Charter Examples
• Assumptions
– We will reuse the architecture from the previous ordering system
– The system will be built using an ASP model
– Customer will provide necessary business experts as needed
during development
– System will run on existing networking and computer resources
– Customer will sign-off on interim deliverables within one week
of each delivery
– All import data will be available in XML format
– This will be a web-based application
– Our in-house development team will do the work
– The rendering engine will be licensed from a third party
– We will partner with an overseas development firm to create the
security systems

58
 Charter Examples
• Primary Stakeholders (following examples
are not of one set)
• Sponsor: VP of Marketing
• Sponsor: Five Star Brokerage Consortium
• Sponsor: Bill Smith, CEO
• Users: Call center operators
• Users: Our partner banks
• Customers: Attorneys from small-to-mid size law
firms
• Customers: Males 30-45 earning $75K or more

59
 Charter Examples
• Deliverables
– Retail Web Site
– Full catalog
– Shopping-cart system
– Search engine
– User registration system
– Trading System
– Equities order entry system
– Portfolio management
– Order execution engine
– Integration with X legacy systems
– Security infrastructure

60
 Charter Examples
• Deliverables
– Corporate Application
• Network and hardware
• Web-based HR portal
• Connectivity for VPN
• “Asset Management Viewport” application
• Customized Reporting Engine
– Allowing users to Perseus data mart
– Delivery into HTML and Excel
• User manuals

61
 Charter Examples
• Out of Scope
– News feeds
– Dynamic pricing
– Jazzy color picker
– Auction engine
– EDI support
– Legacy integration
– Help system
• Schedule
– We anticipate an overall 12-14 month development timeframe
– The project is expected to start in Q1 2003 and complete in Q3
2004
– The initial release is expect within 10 months with the follow-on
delivery within 4-6 months

62
Questions?

63