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CSU ITFN 2123 - Chapter 4 - Project Integration Management

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Chapter 4: Project Integration ManagementToday’s ScheduleLearning ObjectivesThe Key to Overall Project Success: Good Project Integration ManagementInformation Technology Planning ProcessMethods for Selecting ProjectsFinancial Analysis of ProjectsNet Present Value AnalysisNet Present Value ExampleFigure 4-3. JWD Consulting NPV ExampleNPV CalculationsReturn on InvestmentPayback AnalysisFigure 4-4. Charting the Payback PeriodWeighted Scoring ModelFigure 4-5. Sample Weighted Scoring Model for Project SelectionIntegrated Change ControlChange Control on Information Technology ProjectsChange Control SystemFor Thursday, February 1Chapter 4: Project Integration ManagementInformation Technology Project Management,Fourth EditionProject Selection: Financial PictureThursday, February 1Information Technology Project Management, Fourth Edition 2Today’s ScheduleCalendar updatesTest #1, Thursday, February 8Assignment #3 from Chapter 4Due Monday, February 5Project Deliverable #2, Project ContractDue Monday, February 12Chapter 4 Project Integration –Business Feasibility, Selecting ProjectInformation Technology Project Management, Fourth Edition 3Learning ObjectivesExplain the strategic planning process and apply different project selection methodsUnderstand the integrated change control process, planning for and managing changes on information technology projects, and developing and using a change control system.Information Technology Project Management, Fourth Edition 4The Key to Overall Project Success: Good Project Integration ManagementProject managers must coordinate all of the other knowledge areas throughout a project’s life cycle.Many new project managers have trouble looking at the “big picture” and want to focus on too many details. (See opening case for a real example.)Project integration management is not the same thing as software integration.Information Technology Project Management, Fourth Edition 5Information Technology Planning ProcessInformation Technology Project Management, Fourth Edition 6Methods for Selecting ProjectsThere is usually not enough time or resources to implement all projects.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.Information Technology Project Management, Fourth Edition 7Financial Analysis of ProjectsFinancial considerations are often an important aspect of the project selection process. Three primary methods for determining the projected financial value of projects:Net present value (NPV) analysisReturn on investment (ROI)Payback analysisInformation Technology Project Management, Fourth Edition 8Net 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.The higher the NPV, the better.Information Technology Project Management, Fourth Edition 9Net Present Value ExampleNote that totals are equal, butNPVs arenot because of the time value of money.Information Technology Project Management, Fourth Edition 10Figure 4-3. JWD Consulting NPV ExampleMultiplyby thediscountfactor eachyear, then subtract costs from cumulativebenefits toget NPV.Note: See the template called business_case_financials.xls.Information Technology Project Management, Fourth Edition 11NPV CalculationsDetermine estimated costs and benefits for the life of the project and the products it produces.Determine the discount rate (check with your organization on what to use).Calculate the NPV (see text for details).Some organizations consider the investment year as year 0, while others consider it year 1. Some people enter costs as negative numbers, while others do not. Make sure to identify your organization’s preferences.Information Technology Project Management, Fourth Edition 12Return on InvestmentReturn on investment (ROI) is calculated by subtracting the project costs from the benefits and then dividing by the costs. ROI = (total discounted benefits - total discounted costs) / discounted costsThe higher the ROI, the better.Many organizations have a required rate of return or minimum acceptable rate of return on investment for projects.Internal rate of return (IRR) can by calculated by setting the NPV to zero.Information Technology Project Management, Fourth Edition 13Payback AnalysisAnother important financial consideration is payback analysis.The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the total dollars invested in a project.Payback occurs when the cumulative discounted benefits and costs are greater than zero.Many organizations want IT projects to have a fairly short payback period.Information Technology Project Management, Fourth Edition 14Figure 4-4. Charting the Payback PeriodExcel fileInformation Technology Project Management, Fourth Edition 15Weighted Scoring ModelA weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria. Steps in identifying a weighted scoring model:1. Identify criteria important to the project selection process.2. Assign weights (percentages) to each criterion so they add up to 100 percent.3. Assign scores to each criterion for each project.4. Multiply the scores by the weights to get the total weighted scores.The higher the weighted score, the better.Information Technology Project Management, Fourth Edition 16Figure 4-5. Sample Weighted Scoring Model for Project SelectionInformation Technology Project Management, Fourth Edition 17Integrated Change ControlThree main objectives are:Influence the factors that create changes to ensure that changes are beneficial.Determine that a change has occurred.Manage actual changes as they occur.A baseline is the approved project management plan plus approved changes.Information Technology Project Management, Fourth Edition 18Change Control on Information Technology ProjectsFormer view: The project team should strive to do exactly what was planned on


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