Learning Outcome 6 Flashcards
1
Q
6.1 Explain the importance of a business case throughout the project life cycle
A
- A business case provides justification for undertaking a project or programme, evaluating the benefits, costs, risks of different options
- It usually includes a strategic case (aligning with strategic objectives), economic case (best value for money), commercial case (commercial viability), financial (funding availability), management case (how and by whom will change be delivered)
- Business case often put together by the project sponsor (owner of business case), steering group, and project manager with other contributors
- Business cases are important because, if a case is ill-defined, the project will always have trouble being delivered and is unlikely to realise benefits
- It is vital in deciding options but should also be used throughout the project to monitor ongoing viability
- It is essentially a contract between the project and business so targeted benefits are clear
- Throughout the life cycle: Concept (launchpad, justification), Definition (most effective project management plan selected), used at gate review), Deployment (referenced to ensure ongoing viability) , Transition (reference to test whether benefits have been realised)
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2
Q
6.2 Explain what is meant by benefits management
A
- Projects are initiated in order to deliver change that will bring about benefits
- Benefits realization is the practice of ensuring that benefits are derived from outputs and outcomes
- As outputs are delivered, they need to be managed to ensure that they’re delivering benefits outlined in the business case (Which will detail additional considerations necessary to ensure benefits realisation)
- Benefits management is the identification, definition, planning, tracking and realisation of benefits
- It maintains a focus on benefits-driven change
- The elements are:
- Benefits Management Plan: explains how benefits will be managed. Sets out measurement, roles, responsibilities, priorities and KPIs
- Identification: Benefits outlined and recorded with justification and measurement criteria
- Definition: Benefits modeling and mapping used to understand how benefits will be realized when transitioned in operational use. Need to consider priority, interdependence, value, timescales, ownership.
- Planning: Capturing baseline measurements, agreeing targets, identifying timelines and milestones
- Tracking: Agreement between project manager and sponsor about which benefits will be tracked and how. Sponsor is accountable for ensuring this tracking is reported as part of good governance.
- Realisation: Ensure that benefits are realised, longterm actions and monitoring to ensure they continue to be, any opportunities for additional benefits
3
Q
6.3 Explain the investment appraisal techniques used by a project manager
A
- When making an investment decision, you need to understand what returns need to be achieved to make it worthwhile
- Private and public orgs will do this differently (purely financial vs value for money, public good)
- Two techniques that can be used for financial appraisal:
- Net present value: This examines the value of the benefits that are likely to be received as a result of the project outputs. Estimated for each year of feasible operational life. A simplistic form of analysis would be summing these and ensuring they’re more than the initial investment (although this doesn’t take account of interest or opportunity cost). NPV instead tries to calculate this taking into account time and opportunity cost (often referred to as the time value of money). This involves reducing the returns to what would have been gained by using the investment in a different way or in relation to borrowing costs. This is called discounting and the reduced returns are referred to as the discounted cash flow.
- Internal rate of return: This calculates the average per-period rate of return on the capital investment. This is useful for comparing investment options with equal timing and risk. Organizations will often have a target rate of return (or hurdle rate) that needs to be achieved before an option is pursued. This will take into account risk, margin, inflation, currency exchange, etc. The IRR is the interest rate at which the investment breaks even (the money you put in equals the money you get out). The higher this is, the better the investment because it implies that the investment generates more substantial profits more quickly.
4
Q
6.4 Explain an information management process
A
- Information management is the process that includes collection (meetings, reviews, consultation, different formats and media), storage (document management system, secure, compliant, legal), curation (management, eligible for destruction, structured), dissemination (timely, accurate info to stakeholders), archiving (audit trail, change control, cataloging and access) and destruction (legislative compliance, storage capacity) of documents and other sources of information
- Management required so it’s accurate, reliable and compliant
5
Q
6.5 Explain factors which would typically be reported on to help ensure successful project outcomes
A
Performance status: actual or forecast data about status
Schedule status: estimated time of completion for each task
Cost status: actual expenditure and the committed expenditure to date for each task
Status of quality progress: changes that might affect form or function of deliverables
Risk exposure: changes in the status of risks
Exception thresholds and variance: triggers that require the reporting of changes and varations (time and cost) + recovery actions
6
Q
6.6 Explain the relationship between the deployment baseline and the development of a project management plan in linear and iterative life cycles
A
- A project management plan is what is created during the definition phase of a project
- It includes scope, schedule, cost, risk, quality and resources (the fundamentals of these)
- Once these management components are planned and integrated this will form the deployment baseline which is approved, along with the PMP, at the decision gate associated with the approval of significant costs on the project
- The project then proceeds to the deployment phase where the deployment baseline will be used for progress monitoring and implementation of change control
- Depending on life cycle chosen, different approaches to planning time, resources and cost can be chosen
- Linear life cycle: the assumption is that all work can be defined, estimated, scheduled, risked, resourced and costed. Might be different levels of granularity sooner and later in the project. A baseline can be established from which deployment can be managed and controlled. Scope and quality as drivers and calculated required time and cost.
- Iterative life cycle: a baseline plan is still required but assumption is not that all elements are known (instead that flexibility and agility is needed). The baseline resources and schedule are determined but scope and quality might vary as teams have autonomy to reprioritise tasks themselves and act on new knowledge. Set resources with scope and quality defined over time.
7
Q
6.7 Explain the importance of producing a project management plan
A
- The PMP is the consolidated plan for the project and communicates details to stakeholders
- It is produced by a PM-facilitated exercise with engagement with all key stakeholders (project team members, users, resource managers)
- It is used as a reference source by all other stakeholders
- It is important to have as much continuity as possible throughout deployment (PMP is particularly important with high staff turnover)
- PMP is kind of like the ‘contract’ between the PM and the sponsor - the PM needs to fully understand what is expected of them prior to deployment (good for clarification)
- Once produced and approved, it will guide the project team and can be used in the analysis of vation and performance reviews
8
Q
6.8 Describe the typical contents of a project management plan
A
- The PMP should answer following questions (although the size of project will influence size of PMP)
- Why? (answered by business case)
- What? (description of scope , acceptance criteria, constraints)
- When? (timeline outlined with schedule)
- Who? (organisation breakdown structure with responsibilities, roles and reporting lines)
- How much? (budget presented as cost breakdown structure)
- Where? (logistics of project location and site conditions inc deliveries and security)
- How? (most comprehensive part of doc, outlines management strategy. process steps, template docs, comms requirements, roles and responsibilities, necessary details
This section might well also include specific management plans for: risk, quality, procurement, stakeholder comms, safety, scope, change control, cost, project controls, information and reporting requirements
9
Q
6.9 Explain approaches to producing estimates
A
- Estimating uses different methods to produce a prediction of the time and resources to complete the scope of a project (exactly what’s included depends on life cycle)
- There are different methods to estimate and the one you choose depends on the point in the life cycle where the estimate is carried out
- Parametric: This method uses a statistical relationship between historical data and other variables to calculate an estimate. Specifications and parameters of each deliverable are established. Then unit rates would be applied (such as price books). Provided the scope is accurate and conditions that inform the work and norms are similar, this can be a very accurate method. Take account of skill levels and weather etc. Good for deployment stage.
- Analogous: Comparative method dependent on data being available about a similar project to the one being estimated. If there is a project with a similar size, complexity, and method, you can use it as an estimate. You can take into account know variables by factoring it. For example, adding 10% to cover the known increases in material costs. Can be a basis for a decision regarding whether to proceed with project. Good for concept stage.
- Analytical: When the detailed scope has been defined (through WBS), detailed estimates can be produced for resources. This is a bottom-up method because the task of producing estimates will be delegated to those delivering work. This is then summed up through the WBS. The WBS needs to be accurate for this to be accurate. Because it’s summing things that will happen simultaneously, this is not applicable for duration estimates, just cost. Good for definition stage.
- Delphi: To avoid people influencing each other in their estimates, the Delphi method can be used. Here, individual people are asked to provide estimates in isolation. The facilitator then reviews and provides a summary report. Each person can then feed back additional data. The combined information produces an agreed effort and the exercise is closed by the facilitator. This can be used in a number of areas in business where there is uncertainty and a future decision is required. Can be used at any point in the life cycle as it’s more about consensus
10
Q
6.10 Explain the reasons for and benefits of re-estimating throughout the project life cycles
A
- An estimate is just an estimate and will become more accurate with more information
- As the project progresses, uncertainty will decline and a new, more appropriate estimating method can be used
- Increase in estimate accuracy throughout the project is called the estimating funnel
- Benefits of resestimating are:
- Reduced contingency reserves: at an early stage, assumptions and uncertainty so contingencies have to be reserved. This can reduce to match increased uncertainty.
- Greater involvement of the project team: as the project progresses, additional members will become part of the team. They can apply specific technical expertise. This increases accuracy.
- Opportunity to incorporate lessons learned: variances and trends can be incorporated into the next estimates to build on lessons learnt
- Increased likelihood of adhering to overall estimate: by estimating throughout the life cycle, targeted actions can be taken to respond to variances (more confidence for stakeholders)
- Minimising effect of estimating error: re-estimating enables opportunities for team members to get timely warning of errors and take neccessary action
11
Q
6.11 Explain the relationship between stakeholder analysis, influence and engagement
A
- To ensure success of project, we need to engage stakeholders
- To do this, we need to understand each stakeholder and their relationship to the project (different relationships need different activity). Ongoing throughout project.
- We need to understand the power and interest of the stakeholder (determines influence)
- Analysis - identifying and mapping, Influence - understanding the influence they have on the shape and success of project, Engagement - understanding how to engage with them based on these factors
- Analysis starts with the identification of the project’s key stakeholders and assessing their interests and how this affects project riskiness and viability. Identify goals and roles of stakeholder groups and how to appropriately engage with them.
- We should understand how the role of stakeholders can improve perception and reception of project, their behaviours and motivations, assessing how they may react to certain communication approaches, determining the key areas that will have most impact on successful reception.
- The objectives of stakeholders will rarely be aligned (e.g. sponsor will try to reduce cost while the contractor will try to increase profit). Political skill involved in assuring maximum satisfaction of stakeholders
- Having identified stakeholders, you may categorise them according to their ability to influence the project. This is associated with their level of power.
- Engagement can be then be prioritized and planned according to this. This gives the project the best chance of success. Stakeholder engagement plan may be created to assign responsibilities for different stakeholders to different members of project team.
12
Q
6.12 Explain the importance of managing stakeholder expectations to the success of the project
A
Managing stakeholder expectations is important to the success of a project for the following reasons:
- Enabling more effective risk management (negative perception of the project amongst stakeholders can be a big risk to project, stakeholders can help with other risk identification)
- Improved comms planning (defining key comms requirements, effective engagement and not giving too little or too much or irrelevant info, where info comes from and how it’s communicated)
- Ensuring a productive team is formed (knowing whether internal stakeholders need to be partnered, consulted, be involved or kept in the loop determines whether they need to be in the project team, most productive stakeholder relationships, Could be partners or on the steering group, may need to plan consultation.
- Enabling effective engagement actions to be initiated. Can create an engagement strategy. Has positive impact on stakeholders’ behaviour (use and sustain positive interest, remove or minimise negative interest) and therefore success of project. Understanding isues and building relationships.
- Increased likelihood of project being accepted. Stakeholders important at handover and whether output is accepted. Identifying these from outset and fulfilling and managing needs and expectations will be a big step in this.
13
Q
6.13 Explain why a project manager would use earned value management
A
- Earned value management is a project control process based on a structured approach to planning, cost collection and performance measurement
- There are three elements required for any performance measurement: a baseline to measure against, data on performance, and an assessment of the implications of the performance to date
- Progress monitoring enables meaningful reports to be presented so appropriate decisions can be made about performance
- Earned value is represented by the actual budgeted value of the work that has been completed at the point it is being measured
- For example, a project with a £1m budget that has had 21% of the work done on it has an earned value of £210,000
- Earned value analysis is the optimal way of tracking actual work achieved (rather than how much cost it has taken to deliver the work) and that shows current cost performance (i.e. underspent or overspent). This can also be done with time and schedule performance. Looks not just at time or spend but efficiency.
- Reasonably easy to produce, provides direction for project manager in terms of how to improve
14
Q
6.14 Interpret earned value data
A
- In order to create earned value data, the budget for the project would be shown on a graph (which is usually as s curve)
- At any time, the s-curve can be viewed and the planned budget for the work that has been scheduled can be plotted (the budgeted cost of the scheduled works, BCWS). The actual cost of the of the work that has been performed can also be plotted
- You can then see how much has been spent versus how much has been planned for for that time in the project. If more has been spent, this could cause cash flow issues. If less, there could be funding issues.
- You can then add in earned value data and use it to forecast future performance. This is the BCWP (budgeted cost of the work performed).
- You can do various calculations to assess performance. E.g. BCWP - ACWP = cost variance (over or underspending in relation to its earned value). BCWP - BCWS = schedule variance.
15
Q
6.15 Explain the benefits of using the interpretation of earned value data
A
- Interpreting earned value is useful but it’s only an indicator of project progress
- The main benefits are:
- enables objective measurement and reporting or project status
- establishes basis for estimating final cost by using earned value in cost performance index projections. BCWP/ACWP = CPI.
- enables prediction for when project with be complete using schedule performance index. BCWP/BCWS = SPI.
- supports effective management of resources, identifying areas that are impacting performance
- means of managing and controlling change (change can be assessed in advance using performance changes in cost and schedule performance
