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Introduction

What is project  Management?  It is the Application of Knowledge, Skills, tools and techniques to project activities to meet Project requirements

PMBOK Comprises of 10 knowledge areas, 47 processes, 5 Process groups (Initiation, Planning, Execution, Monitoring and Control, project Closure).  PMBOK  is defined as the Project Management Body of Knowledge which is a book referred by Project Managers while executing Projects or to get themselves certified.

Below table gives the relationship between knowledge areas and the activities done in each process group with respect to the knowledge area as per the latest edition of PMBOK 5.

The authority of the Project Manager is high in a Project sized Organization but low in a Functional IT Organization

Project Management Process Groups and Knowledge areas Mapping:-

Table 1.0

In this thesis we will be discussing the knowledge areas and the processes and apply the scenarios of IT Project Management.

1.1 Initiation

Project Initiation is the official launch of the project and it’s the real focus of this thesis. Initiation is based on identified business needs that justify the expense, risk and allotment of resources for the project to exist. It is important for IT project managers to keep the idea of business need in mind through ought the project. Companies don’t launch project because of cool technologies, fast gadgets and gizmos or to be on the bleeding edge of technology- there must be a financial reason behind the project initiation. The business need is linked to the organization strategies and tactics; goals and mission; and responsibility to their shareholders, owners and customers.

Why do so many projects fail from the start? Projects fail for many reasons: other projects take precedence, team memberslose sight of the purpose of the project and project managers try to do work rather than lead the team. At the root is the fundamental problem:vision , Vision in project management termsis the ability to clearly see the intangible and recognize the action to go there. One of our jobs is to develop nurse and transfer the vision to everyone of your team. The project manager cannot have a clear vision of the project if the project needs are never clearly established.

Once you have discovered your vision, create a goal. A goal should be clearly stated fact, for example “The new database will be installed and functional by November 6^th next year.

Creating the Project Charter

Once you have determined the business needs for the project, it’s time to create a project charter. A project charter is similar to the goal but more official, more detailed and in line with the company’s vision and goals.

Project Charter Elements

When you create the project charter you can include just about any information on the project you like. Consider the elements below

1. Official Project name
2. Project Sponsor and contact information
3. Project Manager and contact information.
4. Purpose of the project.
5. Business case of the project.
6. Key deliverables of the Project
7. General Statement about how the team will approach the work.
8. Milestones
9. Project resources budget staff and vendors.
10. Summary budget
11. High level assumptions an constraints
12. High level risks
    A Sample Project Charter is given below     Project Systems Upgrade:  work stations and servers 
     Project Sponsor:  AmitKhanna, Chief Information Officer
      Project Manager:  Suresh Menon
      Project Team: Archana, Rahul Shah, BhushanSinha, Jenson Fernandez
    Project Purpose:
    
    All desktops will be upgraded to windows vista by December 30^th. All servers will be upgraded to be moved to windows 2008 servers by January 15^th.
    
    Business Case    Windows NT has served our company for the past 5 years , it’s time to let go but embrace a far superior technology called windows vista. The servers of the company are growing slow and outdated we should replace the servers with six new multi processor servers loaded with ram and the operating system which we are going to use will be windows 2008
    Project Results
    
    Windows vista on every desktop and portable computer.
    Windows 2008 to be installed on six new servers
    All Implementation should be completed by January 15
    
    Basic Milestone timeline
    
    In this option we discuss the start and the end dates of implementation.
    
    Project Resources
    Budget $475,000 (Includes Vista, 2008 Servers, Client access licenses, Consultants, Training)
    
    Project Constraints
    The Project Must be completed by January 15.
    The Project must not exceed $500,000.
    The learning curve of the employee to learn vista could affect productivity and efficiency.
    
    2.1    Planning the Project.
    
     It is very surprising to note that many IT Managers, executives and professionals don’t know how to plan oh sure they think they  do but the reality is they don’t know to plan. In order to do good research you must know what you are researching for. This means you will need to understand the business opportunity or the problem the project will address-and you will do that thru stakeholder interviews.
    
    How do you plan? Here’s a sure fix, six step method that works:
    
    Define the purpose of research in writing. Writing a concise concept definition statement of the project helps for the research you are undertaking. The Concept definition statement defines the intent of the project based on the high level goals , problem to solve , or opportunity the project aims to capture . This document will help you develop the laser focus you’ll need for success.
    Determine what resources you will use during the research. Make a list of avenues of information you’ll utilize. This is not to rule out any possible source of information, but to list your sources and then organize them in priority . Sources can include :

• Organizational process assets such as historical information , files from past projects and documented experience with the related technology
• Expert Judgement such as consultants , subject matter experts and other people in the organization
• Quality internet sites.

1. Delegate if you have team members in mind for this project , use them to help in research
2. Get to work Begin reading , evaluating and taking notes on your discoveries.
3. Organize and document compile all the information you and your team have gathered.
4. Evaluate and do research Once your research has come together determine the data collected answers the research purpose
   
   Defining the Business need
   
   Projects aren’t done for fun there must be a driving business need behind the decision to invest capital into a project . IT projects are risky: they fail, come in late, run over budget and some times never completed at all.
   
    Determine the business goals and objectives
   
   A business goal defines the scenario the business wants to achieve. It paints a picture of what the organization should look like once the project is done. Common business goals and objectives of IT are

• Cut Costs
• Increase revenue
• Secure the organizations technology asset
• Improve Customer Satisfaction
• Improve employee satisfaction.
• Adhere to new or pending regulations
  
  Root Cause Analysis:  you will see thisapproach often in project management root cause analysis is the study of effect that’s being experienced and then determine the casual factors of the effect. This is one of the purest forms of analysis and the results are often graphed in a cause and effect diagram. These techniques aren’t solo activities you should include your project team, identifying stakeholders, management and maybe even subject matter experts.
  
  Writing the Project scope Statement

Now it’s time to create one of the most important documents in your planning process: the project scope statement. This document defines all the deliverables the project will create, the boundaries of the project, and the work that the project team will need to complete in order to create the project deliverables. This document is based on the project requirements, the feasibility study, the business goals and the objectives, the business case documents.

Considering the discounted cash flow Discounted cash flow accounts for the time value of money. If you were to borrow $500,000 from an investor for five years, you’d be paying interest on the money. If the $500,000 were invested for five years and managed to earn a whooping six percent interest per year, compounded annually, it’d be worth $669,112.79 at the end of 5 years. This is the future value of money in today’s term the magic formula for Future value is FV = PV (1+I) ^n where FV is future value and PV is present value, I is the rate of interest and n is the number of years.

Here’s the formula with the $500,000 in action:

FV = 500,000(1+0.06) ^ 5

FV = 500,000(1.338226)

FV = $ 669,112.79

$500,000 today is worth $ 669,112.79 in five years so how does this help? If your project is worth less than $669,112.79 when it’s complete, it’s not worth doing purely from a financial standpoint. When there are four or five projects up for selection management an review the future value of their investment to see which project is worth investing in today’s dollars.

While it is always easy to determine what needs to be invested in a project, management may also want to see what a project will actually earn the organization. Sure some of this is “blue sky” predictions but you should have some evidence of what a project will earn the organization for investing their capital into your project. The earnings a project promises can then be evaluated to determine what the future value of the project is in today’s dollars. In other words if your project  promises to be $750,000 in three years but it needs $420,000 to get started, management can examine what the $750,000 is worth in today’s dollars. Management is looking for the present value of the promised future cash: PV = FV / (1 + i) ^ n.

Let’s take the project that promises to be worth $750,000 in three years and determine its present value

1. PV = FV / (1+ i) ^n
2. PV = 750,000 / (1.191)
3. PV = $ 629,714.46

So $750,000 in three years is really worth $629,714.46 today , this project needed $420,000 to launch which is still considerably less than the present value of the project’s completion. This is a pretty good investment for the organization, now imagine if we had four different projects with various times to completion, costs and expected project cash inflows at completion , we should calculate the present value and choose the project with the best present value.

Calculating the Net Present Value

The net present value is (NPV) is a somewhat complicated formula but allows a more precise prediction of project value. NPV evaluates the monies returned on a project or each time period the project lasts.

Gathering Requirements through Communications

One of the most effective approaches to collect project requirements is to get out there and talk with your stakeholders. Communication is major part of the project management, and it really starts when you and the stakeholders discuss the desired future state of your organization-the future state that the project will create.

Defining the Work Break Down structure

Once the project scope statement is approved, you’re ready to move forward with project planning. An approved project scope statement is needed in order to begin creating the project’s work breakdown structure (WBS). A WBS is a deliverable oriented collection of project components. It is a categorization and decomposition of the project scope statement and yes it’s called decomposition because you’re breaking down the massive project scope statement into smaller more manageable components. Each component is subdivided again and again until you reach the smallest element of the WBS; the work package. A work package is a WBS element that you can schedule in your project, estimate the costs from and monitor and control.

A WBS is important in all projects as it is necessary because it serves as input to the following key project management activities.

• Cost Estimating
• Cost budgeting
• Resource planning
• Risk management planning
• Activity definition

Working with the WBS

There is no right or wrong way to create a WBS. You can draw an elaborate decomposition on a whiteboard or use MS Project.

Within the project there are phases. A phase is a portion of the project that typically must be completed before the next phase can begin. Phases make up the project life cycle and the completion of the phase usually creates a milestone that shows progress in the project. For Example a database could have four phases; creation of database; creation of the application; creation of the web interface, and troubleshooting and implementation. Typically phases do not overlap each other in execution but it is possible that phases could overlap to save time or if the nature of the project work allowed phases to happen in unison.

The work within each phase is linked to the work package of the WBS. The project’s activity list is derived from the work packages the decomposition of the project scope creates. For example a phase to create a database encompasses several work packages required for completion. A database administrator needs to create the database with application designer to ensure consistency, a system needs to be built to enter the different attributes of the database items for searching and there could be hooks between this database and existing database the production uses.

Over time the refinements you and the project team add to the WBS will help you plan the execution of the project, create more accurate and time and cost estimates will definitely help you close the project. One element you can use through the WBS is code of accounts to help keep things organized.

A code of accounts is a numbering system that shows the different level of WBS components and identifies which components belongs to which parts of the WBS.

For Example you could have a project named data center let’s say it has been assigned a code of 507 in your organization; within this project there are four major categories of deliverables: database, network, application, and hardware. Each of these categories would append the assigned project code and would have a look like this

• 507.1 Database
• 507.2 Network
• 507.3 Application
• 507.4 Hardware

Then when you and your project team decompose these elements, you’d continue to branch off the elements within the code of accounts. For example, I decomposed 507.2 Network a bit more and created this

• 507. Network
  • 507.2.1 Router
  • 507.2.2 Switches
  • 507.2.3 LAN
  • 507.2.4 WAN

You can see how each element can be decomposed again and again into related but separate variables. Each deliverable in this instance can be subdivided again and I’d continue to append to the code of accounts number.

Defining a WBS Approach

There are 2 methods used to create a WBS: top-down and bottom-up. The top-down approach uses deductive reasoning because it starts with the general and moves to the very specific. Bottom-up moves from very specific toward the general. Both methods have their advantages, the bottom up method is ideal for brainstorming a solution to a problem. Imagine that a project team is trying to find solution to connect a network in Chicago to a network in phoenix without having to spend much money. The bottom-up method would call for very specific solutions without delving into all of the details of each solution. The method would investigate the use of new software, new service provider, or practically any implementation that is still open for discussion on the actual work to be implemented.

You might also use bottom-up method when a stakeholder with much influence and power over the project is demanding a very specific feature in the project. With the bottom-up approach you could start at the specific deliverable the stakeholder is demanding and work backward to rest of the project scope.

The top-down approach requires more logic and structure, but it is generally the preferred method for creating a WBS. A WBS using a top-down approach would identify a solution first and then dissect the solution into the steps required to implement it. You probably use the top-down approach in your daily life. For example, when making a decision to purchase a car, you’d decide what kind of car to buy: SUV, sports car, sedan; and then what can you afford? The process of thinking begins with a broad approach and then narrows down to specifics.

Obtaining Stakeholder Approval

Once the WBS has been initially created, it must past through management final sign-off. In some instances, such as when the project manager and the project team are consultants or vendors integrating the technology into an existing enterprise, the project manager probably won’t have to pass every work unit within WBS through management for approval. Stakeholder will need to approve the WBS in most projects. They’ll need guidance from the project manager and often experts to guide them through the project.

Creating the Budget

Your Project needs a budget to determine just how much money, capital needs to be allotted and when it needs to be available, so you can reach the project goal. Your Project needs a plan to create estimates and predict the total cost the amount you say it will, input from vendors, quotes from suppliers and estimates on work hours committed to the project. And you quote needs a time-phased budget that rise the resources needed with the project schedule.

Phased gate estimating allows project managers to forecast the exact expenses for the pending phase of a project and provide more general estimates for phases downstream. Phased gate estimating is linked to step funding; where the project is funded in increments based on phases instead of the entire project being funded at once.

The table given below gives the PERT formula. PERT formula is “Pessimistic + optimistic, + 4 * Most Likely / 6 it is divided by 6 because of one count of pessimistic, One count for optimistic & 4 counts of Most likely.

Using TOP-Down Estimating

            A top-down estimate allows a project manager to take a very similar project’s budget and work some financial math magic, and arrive at a reasonable budget for the current project. Top-down budgets are often used by organizations that complete IT projects for other companies. Top-down estimates are not that reliable as bottom up estimates.

Using Analogous Estimating

 If you find that you’re launching projects that are similar to past accomplishments analogous estimating may be your best bet. Analogous estimating relies on historical information to predict the cost of the current project. It’s a type of top-down estimating.

Using Parametric Modeling

Another approach to top down estimating is parametric modeling. Parametric modeling uses a mathematical model based on known parameters to predict the cost of a project.

Project Planning

Building the Project Plan

Depending on the size of your project, your project plans will vary. The project plan is not one big plan, but rather a collection of plans that detail how different conditions, scenarios, and actions will be managed. It is a formal document that is reviewed and, hopefully approved by the management.

• Milestone and target dates for the milestones within your project, there should be easily identified milestones that signal you are moving toward project completion. Associated with these major milestones are some target dates that you and management agree upon. This allows you and management to plan on resource utilization, consider adjunct processes within your business and keep all stakeholders communicated of where the project should be heading and when.

• Resources Requirements resources are people, materials, tools, equipment, facilities and services that you’ll need to get your project done. There may be portions of your project plan that require procured resources or temporary specialized resources to complete portion of the project work. The required personnel, materials, and services should be identified their availability determined and their associated costs documented.

Project Execution

 In this phase we direct and execute the IT Project whether it is on ERP Implementation, Server Installation or Writing patches for Software.

Project Monitor & Control

  In this Phase we monitor and Control the Project using Earned Value Management formulas which tells us are we ahead or behind schedule? When is the project likely to be completed? Are we under or over budget? How efficiently are we using our resources? What is the remaining work likely to cost? What is the entire project likely to cost? How will be under or over budget at the end?

• PV-Planned Value(Budgeted Cost of work Scheduled-BCWS)
• EV-Earned Value(Budgeted Cost of work performed-BCWP)
• AC-Actual Cost(Actual Cost of Work Performed-ACWP)
• Schedule variance ->SV=EV-PV
• Schedule Performance-> SPI=EV/PV
• Cost Variance CV = EV –AC
• Cost performance Index CPI = EV/AC
• SV% = (SV/PV)*100
• To Complete Performance Index = Work Remaining/ Funds Remaining

Other activities in Monitor & Control are to perform quality control, report performance and control risks involved in the project.

Close Project/Phase

Here the key activities are close Project/ Phase & Contract closure.