Process Group 1 - Initiation Flashcards
Define initiating
Integration Mgt
1. Develop project charter
Stakeholder Mgt
2. Identify stakeholders
Why is selection important?
If selection is not done properly, it is unlikely that the project will be successful in meeting the business needs
What are the steps to building a business case?
- Analyse business needs and strategic direction of the organisation
- Determine the nature and scope of the proposed project
- Analyse the value of the project
a. Consider cost vs. business benefits
b. Develop a business case
Project Selection - wrong rpojects
- bias and errors in judgement
- failure to establish an effective framework for project portfolio management
- lack of right metrics for valuing projects
- inability to assess and value risk
- failure to ID project portfolio on efficient frontier (set of investments that create the greatest possible value for the least possible cost)
- selecting projects for non-financial reasons (SME judgement, sacred cows, mandates
List the quantitative financial models
- Return on Investment (ROI)
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Weighted scoring model
- Payback analysis
ROI
- Return on investment
- how much you get out vs how much you put in
- ROI = (Total discounted benefits - total discounted costs) / total discounted costs
The higher the ROI the better. Be wary of indirect costs such as the cost of ownership
NPV
- Net Present Value
- Compare investment in this project with putting money in the bank and getting interest
- Most commonly used
- It is the method of calculating all future costs and benefits to the present time. Projects with a positive NPV should be considered if financial value is a key criterion. Generally the higher the NPV the better
- NPV = Sum of t=0 to t=n for CF / (1+i)^n
where t = year of cashflow, n = last year of cashflow, CF = net cashflow, i = interest rate / discount rate
IRR
- Internal Rate of Return
- The interest rate you would get if you lent money to the project
- One of the most sophisticated, companies that use this typically have a minimum rate of return required. The IRR is the discount rate that you would have where NPV = 0
WSM
- Weighted Scoring Model
- Culmination f the other models. it is used to evaluate all projects on an equal a basis as possible. It attempts to remove human bias in the project selection process
Qualitative Methods to Determine Value
- Balanced scorecard and real options
Balance Scorecard Approach
- Help manage projects that align with business strategy
- It converts organisational value drivers such as customer service, innovation, operational efficiency and financial performance to a series of defined metrics
- orgs need to record and analyse these metrics to determine how well projects help them acheive strategic goals
Someone has raised the idea for a project proposal. What considerations might be raised by IT for the proposal?
- Why this project? Who selected it? What else is going on in the organisation?
1. PM needs to take a step back and ask whether the organisation should be working on the project rather than it being a matter of the squeaky wheel.
Name six systems development lifecycles
- The waterfall model
- The evolutionary prototyping model
- The spiral model
- The iterative and incremental model
- The scrum model
- The RUP model
What is the importance of developing a business case?
The primary purpose of a business case is to aid decision makes in selecting the best projects possible for the benefit of the organisation. Key parts of a business case include
- key objectives,
- methods and sources used to obtain information for the business case
- benefits to the organisation if the project is successful
- consequences if the project is not done
- full lifecycle costs
- qualitative models
- quantitative models
- risks
