Lakhasly

WHAT WENT RIGHT?AgenciaClick, an interactive advertising and online communications company based in Sao Paulo, Brazil, made PMI ' slistofoutstandingorganizationsinprojectmanagementin2007.AgenciaClick launched a PMO in 2002 and used the PMBOK (R) Guide as the basis for developing its meth- odology and project management training program.After the sys- tem verifies payment, the user should be able to access or download the desired information.The initial cost estimate also includes $10,000 for purchasing software and services from suppliers.Some of the information and features of the intranet site should prompt external users to pay for the information or service.Since 2002, the company saw revenues jump 132 percent, primarily due to its five-year emphasis on practicing good project management across the entire company.The company also developed a custom project tracking system to help calculate work progress e ach day and alert managers of any schedule or cost problems.Appropriate security to make the entire intranet site accessible to internal consultants and certain sections accessible to others.7.0 Budget Estimate and Financial Analysis Apreliminaryestimateofcostsfortheentireprojectis$140,000.Thisestimateisbasedontheproject manager working about 20 hours per week for six months and other internal staff working a total of about 60 hours per week for six months.Payment options should include a credit card option or similar online payment transactions.Other features suggested by users, if they add value to the business.The customer representatives would not be paid for their assistance.The hourly rate for the other project team members would be $70 per hour, because some hours normally billed to clients may be needed for this project.5.6.The ability to charge money for access to some information.7.A staff project manager would earn $50 per hour.

WHAT WENT RIGHT?
AgênciaClick, an interactive advertising and online communications company based in Sao
Paulo, Brazil, made PMI ’ slistofoutstandingorganizationsinprojectmanagementin2007.
Since 2002, the company saw revenues jump 132 percent, primarily due to its five-year emphasis on practicing good project management across the entire company. AgênciaClick launched a PMO in 2002 and used the PMBOK ®
Guide as the basis for developing its meth- odology and project management training program. The company also developed a custom project tracking system to help calculate work progress e ach day and alert managers of any schedule or cost problems. PMO Director Fabiano D ’ Agostinho said, “ We realized the only way to manage multiple dynamic projects and deliver great products is to focus on project management . . . By monitoring and controlling projects and programs more efficiently, senior managers can focus on issues within the portfolio that need more attention. ” 8
The following section describes an example of applying the project management process groups to a project at JWD Consulting. It uses some of the ideas from the PMBOK ®
Guide, Fifth
Edition ,someideasfromothermethodologies,andsomenewideastomeetuniqueproject needs. The first case study follows a more predictive or waterfall approach, while the second case study follows a more adaptive approach using Scrum. Both still use the project manage- ment process groups and several outputs or deliverables described in the PMBOK ®
Guide .
CASE STUDY 1: JWD CONSULTING ’ S
PROJECT MANAGEMENT INTRANET SITE PROJECT (PREDICTIVE APPROACH)
The following fictitious case provides an example of the elements involved in managing a project from start to finish. This example also uses Microsoft Project to demonstrate how project management software can assist in several aspects of managing a project. Several templates illustrate how project teams prepare various project management documents.
Files for these and other templates are available on the companion Web site for this text.
Details on creating many of the documents shown are provided in later chapters, so do not worry if you do not understand everything right now. You might want to read this section again later to enhance your learning.
Project Pre-Initiation and Initiation
In project management, initiating includes recognizing and starting a new project. An organi- zation should put considerable thought into project selection to ensure that it initiates the right kinds of projects for the right reasons. It is better to have a moderate or even small amount of success on an important project th an huge success on a project that is unim- portant .Theselectionofprojectsforinitiationisthereforecrucial,asistheselectionofproj- ect managers. Ideally, the project manager would be involved in initiating a project, but often the project manager is selected after many initiation decisions have already been made. You will learn more about project selection in Chapter 4, Project Integration Management. Orga- nizations must also understand and plan for the ongoing support that is often required after implementing a new system or other product or service resulting from a project. 91
The Project Management Process Groups: A Case Study
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
It is important to remember that strategic planning should serve as the foundation for deciding which projects to pursue. The organization ’ s strategic plan expresses the vision, mission, goals, objectives, and strategies of the organization. It also provides the basis for
IT project planning. IT is usually a support function in an organization, so the people who initiate IT projects must understand how those projects relate to current and future needs of the organization. For example, JWD Consulting ’ s main business is providing consulting services to other organizations, not developing its own intranet site applications. Informa- tion systems, therefore, must support the firm ’ s business goals, such as providing consult- ing services more effectively and efficiently.
An organization may initiate IT projects for several reasons, but the most important reason is to support business objectives. Providing a good return on investment at a reason- able level of risk is also important, especially in tough economic times. As mentioned in the chapter ’ s opening case, JWD Consulting wants to follow an exemplary process for managing its projects because its core business is helping other organizations manage projects. Devel- oping an intranet to share its project management knowledge could help JWD Consulting reduce internal costs by working more effectively, and by allowing existing and potential customers to access some of the firm ’ s information. JWD Consulting could also increase revenues by bringing in more business. Therefore, the firm will use these metrics — reducing internal costs and increasing revenues — to measure its performance on this project.
Pre-Initiation Tasks
It is good practice to lay the groundwork for a project before it officially starts. Senior managers often perform several tasks, sometimes called pre-initiation tasks, including the following: • Determine the scope, time, and cost constraints for the project • Identify the project sponsor • Select the project manager • Develop a business case for a project • Meet with the project manager to review the process and expectations for managing the project • Determine if the project should be divided into two or more smaller projects
As described in the opening case, the CEO of JWD Consulting, Joe Fleming, defined the high-level scope of the project. He wanted to sponsor the project himself because it was his idea and it was strategically important to the business. He wanted Erica Bell, the PMO Direc- tor, to manage the project after proving there was a strong business case for it. If there was a strong business case for pursuing the project, then Joe and Erica would meet to review the process and expectations for managing the project. If there was not a strong business case, the project would not continue. As for the necessity of the last pre-initiation task, many people know from experience that it is easier to successfully complete a small project than a large one, especially for IT projects. It often makes sense to break large projects down into two or more smaller ones to help increase the odds of success. In this case, however, Joe and Erica decided that the work could be done in one project that would last about six months. To jus- tify investing in this project, Erica drafted a business case for it, getting input and feedback from Joe, from one of her senior staff members in the PMO, and from a member of the
Finance department. She also used a corporate template and sample business cases from past projects as a guide. Table 3-2 provides the business case. (Note that this example and others 92
Chapter 3
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
TABLE 3-2 JWD Consulting ’ s business case 1.0 Introduction/Background
JWD Consulting ’ scorebusinessgoalistoprovideworld-classprojectmanagementconsultingservicesto various organizations. The CEO, Joe Fleming, believes the firm can streamline operations and increase business by providing information related to project management on its intranet site, making some information and services accessible to current and potential clients. 2.0 Business Objective
JWD Consulting ’ s strategic goals include continuing growth and profitability. The project management intranet site project will support these goals by increasing visibility of the firm ’ sexpertisetocurrentand potential clients by allowing client and public access to some sections of the intranet. The project will also improve profitability by reducing internal costs by p roviding standard tools, techniques, templates, and project management knowledge to all internal consultants. BecauseJWD Consulting focuses on identifying profitable projects and measuring their value after completion, this project must meet those criteria. 3.0 Current Situation and Problem/Opportunity Statement
JWD Consulting has a corporate Web site as well as an intranet. The firm currently uses the Web site for marketing information. The primary use of the intranet is for human resource information, such as where consultants enter their hours on various projects, change and view their benefits information, and access an online directory and Web-based e-mail system. The firm also uses an enterprise-wide project management system to track all project information, focusing on the status of deliverables and meeting scope, time, and cost goals. There is an opportunity to provide a new section on the intranet dedicated to sharing consultants ’ project management knowledge across the organization. JWD Consulting only hires experienced consultants and gives them freedom to manage projects as they see fit. However, as the business grows and projects become more complex, even experienced project managers are looking for suggestions on how to work more effectively. 4.0 Critical Assumptions and Constraints
The proposed intranet site must be a valuable asset for JWD Consulting. Current consultants and clients must actively support the project, and it must pay for itself within one year by reducing internal operating costs and generating new business. The Project Management Office manager must lead the effort, and the project team must include participants from several parts of the company, as well as from current client organizations. The new system must r un on existing hardware and software, and it should require minimal technical support. It must be easily accessible by consultants and clients and be secure from unauthorized users. 5.0 Analysis of Options and Recommendation
There are three options for addressing this opportunity: 1. Do nothing. The business is doing well, and we can continue to operate without this new project. 2. Purchase access to specialized software to support this new capability with little in-house development. 3. Design and implement the new intranet capabilities in-house, using mostly existing hardware and software.
Based on discussions with stakeholders, we believe that option 3 is the best option. 6.0 Preliminary Project Requirements
The main features of the project management intranet site include the following: 1. Access to several project management templates and tools. Users must be able to search for tem- plates and tools, read instructions for using these templates and tools, and see examples of how to ( continued ) 93
The Project Management Process Groups: A Case Study
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
TABLE 3-2 JWD Consulting ’ s business case ( continued ) apply them to real projects. Users must also be able to submit new templates and tools, which should first be screened or edited by the Project Management Office. 2. Access to relevant project management articles. Many consultants and clients sense an information overload when they research project management information. They often waste time they should be spending with their clients. The new intranet should include access to several important arti- cles on various project management topics, which are searchable by topic, and allow users to ask the Project Management Office staff to find additional articles to meet their needs. 3. Links to other, up-to-date Web sites, with brief descriptions of the main features of the external sites. 4. An “ Ask the Expert ” feature to help build relationships with current and future clients and share knowledge with internal consultants. 5. Appropriate security to make the entire intranet site accessible to internal consultants and certain sections accessible to others. 6. The ability to charge money for access to some information. Some of the information and features of the intranet site should prompt external users to pay for the information or service. Payment options should include a credit card option or similar online payment transactions. After the sys- tem verifies payment, the user should be able to access or download the desired information. 7. Other features suggested by users, if they add value to the business. 7.0 Budget Estimate and Financial Analysis
Apreliminaryestimateofcostsfortheentireprojectis$140,000.Thisestimateisbasedontheproject manager working about 20 hours per week for six months and other internal staff working a total of about 60 hours per week for six months. The customer representatives would not be paid for their assistance. A staff project manager would earn $50 per hour. The hourly rate for the other project team members would be $70 per hour, because some hours normally billed to clients may be needed for this project. The initial cost estimate also includes $10,000 for purchasing software and services from suppliers. After the project is completed, maintenance costs of $40,000 are included for each year, primarily to update the information and coordinate the “ Ask the Expert ” feature and online articles.
Projected benefits are based on a reduction in hours that consultants spend researching project management information, appropriate tools, and templates. Projected benefits are also based on a small increase in profits due to new business generated by this project. If each of 400 consultants saved just 40 hours each year (less than one hour per week) and could bill that time to other projects that generate a conservative estimate of $10 per hour in profits ,thentheprojectedbenefitwouldbe$160,000peryear.
If the new intranet increased business by just 1 percent, using past profit information, increased profits due to new business would be at least $40,000 each year. Total projected benefits, therefore, are about $200,000 per year. Exhibit A summarizes the projected costs and benefits and shows the estimated net present value (NPV), return on investment (ROI), and year in which payback occurs. It also lists assumptions made in performing this preliminary financial analysis. All of the financial estimates are very encouraging. The estimated payback is within one year, as requested by the sponsor. The NPV is $272,800, and the discounted ROI based on a three-year system life is excellent at 112 percent. 8.0 Schedule Estimate
The sponsor would like to see the project completed within six months, but there is some flexibility in the schedule. We also assume that the new system will have a useful life of at least three years. 9.0 Potential Risks
This project carries several risks. The foremost risk is a lack of interest in the new system by our internal consultants and external clients. User inputs are crucial for populating information into this system and realizing the potential benefits from using the system. There are some technical risks in choosing the type of software used to search the system, check security, process payments, and so on, but the features of this system all use proven technologi es. The main business risk is investing the time and money into this project and not realizing the projected benefits. 94
Chapter 3
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
are abbreviated. See the companion Web site for additional examples of project documents and to download a business case template and other templates.) Notice that the following information is included in this business case: • Introduction/background • Business objective • Current situation and problem/opportunity statement • Critical assumptions and constraints • Analysis of options and recommendation • Preliminary project requirements • Budget estimate and financial analysis • Schedule estimate • Potential risks • Exhibits
Because this project is relatively small and is for an internal sponsor, the business case is not as long as many other business cases. Erica reviewed the business case with Joe, and he agreed that the project was definitely worth pursuing. He was quite pleased to see that payback was estimated within a year, and that the return on investment was projected to be 112 percent. He told Erica to proceed with the formal initiation tasks for this project, as described in the next section.
TABLE 3-2 JWD Consulting ’ s business case ( continued ) 10.0 Exhibits
Exhibit A: Financial Analysis for Project Management Intranet Site Project
Discount rate 8%
Assume the project is done in about 6 months 0123Total
Costs
Discount factor
Discounted costs 243,084
Bene ! ts
Discount factor
Discounted bene ! ts 515,419
Discounted bene ! ts - costs
Cumulative bene ! ts - costs 40,000 0.93 37,037 200,000 0.93 186,185 148,148 8,148 40,000 0.86 34,294 200,000 0.86 171,468 137,174 145,322 40,000 0.79 31,753 200,000 0.79 158,766 127,013 272,336
NPV Payback in Year 1
Discounted life cycle ROI------------>
Assumptions
Costs
PM (500 hours, $50/hour)
Staff (1500 hours, $70/hour)
Outsourced software and services Total project costs (all applied in year 0)
Bene ! ts # consultants
Hours saved $/hour pro ! t Bene ! ts from saving time Bene ! ts from 1% increase in pro ! ts Total annual projected bene ! ts
Ye a r 140,000 1 140,000 (140,000) (140,000) 112% # hours 25,000 105,000 10,000 400 40 10 160,000 40,000 200,000 140,000 0 0 1 © Cengage Learning 2014 95
The Project Management Process Groups: A Case Study
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part