Project Initiation - BITP3223(Software Project Management...

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CHAPTER CHAPTER 4 4 : : PROJECT PROJECT INITIATION INITIATION 1 BITP3223 BITP3223 (Software Project Management) (Software Project Management)
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LEARNING OBJECTIVES Explain the strategic planning process and apply different project selection methods Explain the importance of creating a project charter to formally initiate projects Describe project management plan development, understand the content of these plans, and review approaches for creating them 2
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STRATEGIC PLANNING AND PROJECT SELECTION Strategic planning involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Organizations often perform a SWOT analysis Analyzing S trengths, W eaknesses, O pportunities, and T hreats As part of strategic planning, organizations: Identify potential projects Use realistic methods to select which projects to work on Formalize project initiation by issuing a project charter 3
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MIND MAP OF A SWOT ANALYSIS TO HELP IDENTIFY POTENTIAL PROJECTS 4
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INFORMATION TECHNOLOGY PLANNING PROCESS 5 START HERE
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METHODS FOR SELECTING PROJECTS There are usually more projects than available time and resources to implement them Methods for selecting projects include: Focusing on broad organizational needs Categorizing information technology projects Performing net present value or other financial analyses Using a weighted scoring model Implementing a balanced scorecard **Normal practice :Use combined approach 6
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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 There’s a strong will to make the project succeed 7
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CATEGORIZING IT PROJECTS One categorization is whether the project addresses: A problem (undesired situations that prevent from achieving goals) An opportunity (chances to improve the organization), or A directive (new requirements imposed by management, government, or some external influence) Another categorization is how long it will take to do and when it is needed Another is the overall priority of the project (high-medium- low) 8
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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 9
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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 +ve NPV = return from project > cost of capital The higher the NPV, the better 10
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NET PRESENT VALUE EXAMPLE 11
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JWD CONSULTING NPV EXAMPLE 12 Note: See the template called business_case_financials.xls
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