SOFTWARE PROJECT MANAGEMENT

 Course Code : SWE2006

 Pre-requisites : SWE1001
 SWE1001: Software Engineering
 Objectives:
 To learn project management activities
SOFTWARE PROJECT MANAGEMENT  To learn cost benefit analysis for project evaluation
 To know network planning model for project scheduling
 To learn risk management techniques
 Expected Outcome
 Understand the fundamentals of software project management concepts and
contemporary issues.
 Design a component or a product applying all the relevant standards and with
realistic constraints.
Course Instructor  Use techniques, skills and modern Engineering tools necessary for engineering
Prof.R.Charanya,Assistant Professor,SITE, practices.
Prof. R. Charanya
VIT University
Saturday, March 6, 2021

SYLLABUS
SYLLABUS
Unit No.1 - Introduction to Software Project Management Unit No. 5 - Monitoring
 Project Definition – Contract Management– Activities covered By Software Project  Creating Framework – Collecting The Data –Visualizing Progress – Cost Monitoring –
Management –Overview of Project Planning – Stepwise Project Planning. Earned Value – Prioritizing Monitoring – Getting Project Back To Target
Unit No. 2 – Project Evaluation Unit No. 6 – Control
 Strategic Assessment – Technical Assessment – Cost Benefit Analysis –Cash Flow  Change Control – Managing Contracts – Introduction – Types Of Contract – Stages In
Forecasting – Cost Benefit Evaluation Techniques – Risk Evaluation Contract Placement – Typical Terms Of A Contract – Contract Management -Acceptance
Unit No. 3 – Activity Planning Unit No. 7 – Managing People and Organizing Teams
 Objectives – Project Schedule – Sequencing and Scheduling Activities –Network Planning  Introduction – Understanding Behavior – Organizational Behaviour: A Background –
Models – Forward Pass – Backward Pass – Activity Float shortening Project Duration – Selecting The Right Person For The Job – Instruction In The Best Methods – Motivation –
Activity on Arrow Networks The Oldham – Hackman Job Characteristics Model – Working In Groups – Becoming A Team
Unit No. 4 – Risk Management –Decision Making – Leadership – Organizational Structures – Stress –Health And Safety –
Case Studies
 Nature Of Risk – Types Of Risk – Managing Risk – Hazard Identification – Hazard
Analysis – Risk Planning And Control Unit No. 8 - Applications of software project management in industry
Software Project Management SOFTWARE PROJECT MANAGEMENT

TEXT BOOK REFERENCE BOOK 1

 Title : Software Project Management  Title : Managing Global Projects

 Author : Mike Cotterell, Bob Hughes, Rajib Mall  Author : Ramesh Gopalaswamy

 Publisher : Tata McGraw-Hill,  Publisher : Tata McGraw Hill –First Edition 2006

 Edition : Fifth Edition - 2011.  Edition : First Edition

SOFTWARE PROJECT MANAGEMENT Unit 1 Lecture Overview

REFERENCE BOOK 2 • Project Definition

 Title : Project Management Absolute Beginner's Guide,
• Contract Management
 Author : Greg Horine

 Publisher : Que Publishing 2012, • Activities covered By Software Project Management

• Overview of Project Planning
• Stepwise Project Planning
Introduction Introduction
• Software Project Management
• Software as the programs, routines, and
Software Project Management symbolic languages that control the functioning
of the hardware and direct its operation.

What is Software? (Contd.) Project

 Software can be of different types: • Project – planed activity
• a temporary endeavor undertaken to create a unique product, service, or
 System software result.”
 Application software • Sense of being intentional, planned events.
 Engg./Scientific software • Successful projects- need preparation and planning
 Embedded software • Constrain- time, Cost, Scope
• Project Attributes
 Product-line software
• project has a unique purpose-eg house,person
 Web-applications
• Project is temporary-eg house construction(start and end date)
 Artificial Intelligence software
• Project is developed using iterative fashion
 etc. • Project requires resources, often from various areas.
• A project should have a primary customer or sponsor.
• A project involes uncertainty
Example of a project What is Management?

 Creating a Youtube Project

 Start Date  It is a set of activities and tasks undertaken by one or
 End Date more persons for the purpose of planning &
 Work is temporary
controlling the activities of others in order to achieve
 Unique product
an objective or complete an activity that could not be
achieved by others acting independently.

Koontz, H., C. O’Donnell and H. Weihirch, Management, 7th ed., McGraw-Hill, New York,N. Y., 1980

What is Management? (Contd.) What is Management? (Contd.)

 Components of Management:
 Planning
 Planning
 Pre-determining course of action to achieve the objectives
 Organizing
 Organizing
 Staffing  Establishing relationship among work units and granting responsibility and
 Directing (Leading) authority to obtain the objectives
 Controlling  Staffing
 Selecting and training people
 Directing (Leading)
 Creating an atmosphere that will assist & motivate people to achieve the
desired end results
 Controlling
 Establishing, measuring, and evaluating performance of activities towards
planned objectives
 Characteristics of projects
Projects lie between two extremes
A task is more ‘project-like’ if it is:

Non-routine
Planning is required
Aiming at a specific target
Work carried out for a customer
Involving several specialisms
Made up of several different phases
‘Jobs’ – repetition of very well-defined and well understood Constrained by time and resources
tasks with very little uncertainty Large and/or complex

‘Exploration’ – e.g. finding a cure for cancer: the outcome is very

uncertain

‘Projects’ – in the middle! 17 18

Why SPM Important? SPM versus other projects

• In UK during financial year 2002-2003,central gov • SPM project is different from other projects.
spent more contracts for ICT projects than on • Planning, monitoring and control of software
contracts related to roads. projects.
• But projects not always successful. Third projects • Identify the project stakeholder and their
is successful , 82% of projects were late and 43% objectives.
exceeded their budget.
• Project failure identified ‘lack of skills and proven
approach to projects and risk management’.
 Are software projects really different Contract management and technical
from other projects? project management
Not really! …but… • In house project-user and developer of new software
work for the same organization.
Invisibility
• Contract- appoint a project manager to supervise the
Complexity contract who will delegate many technically oriented
Conformity decisions to the contractor.
Flexibility

make software more problematic to build than

other engineered artefacts.

21

Activities covered by project The software development life-cycle

management (ISO 12207)

Feasibility study
Is project technically feasible and worthwhile from a business point of
view?
Planning
Only done if project is feasible
Execution
Implement plan, but plan may be changed23as we go along 24
Activities covered by software project ISO 12207 life-cycle
management
• Requirements Analysis Requirements analysis
• Architecture Design-add some requirements to existing system
Requirements elicitation: what does the client need?
• Detailed design-each component made up of number of
software units. Analysis: converting ‘customer-facing’ requirements
into equivalents that developers can understand
• Code and test-initial test to debug individual software unit.
• Integration-overall requirements
Requirements will cover
Functions
• Qualification testing-ensue that requirements have been
Quality
fulfilled
Resource constraints i.e. costs
• Installation
• Acceptance support-correction of any errors
26

ISO 12207 life-cycle ISO12207 continued

Architecture design Qualification testing
Based on system requirements Testing the system (not just the software)
Defines components of system: hardware, software, Installation
organizational The process of making the system operational
Software requirements will come out of this Includes setting up standing data, setting system
Code and test parameters, installing on operational hardware
Of individual components platforms, user training etc
Integration Acceptance support
Putting the components together Including maintenance and enhancement

27 28
 Ways of categorizing software projects
Some ways of categorizing projects
 Information Systems Vs Embedded Systems
Information Systems – system interfces with the organization
Ex – stock control system , HR management system etc.
Distinguishing different types of project is
Embedded Systems
important as different types of task need system interfaces with the machine
different project approaches e.g. Ex – controlling AC in a building, controlling the temperature of a warehouse etc..
 Objectives Vs Products
Objectives based – a project may need to meet certain objectives (Ex :- a new
Information systems versus embedded systems system which improves some service to users inside or outside an org)
Product based – project's goal is to create a product according to client's
requirements.
Objective-based versus product-based

29

Plans, methods and methodologies Management??

Plan - based on some idea of a method of work.(
Ex- the following is a plan for testing a software
- analyse the requirements for the software  Planning – deciding what is to be done;
- devise and write test cases that will check that each requirement has been satisfied.  Organizing – making arrangements;
- create test scripts and expected results for each test case...etc..
Method – a type of activity in general.  Staffing – selecting right people for the right job;
A plan takes one or more methods and converts them into real activities,
identifying for each activity
 Directing – Giving instructions;
- start and end dates.  Monitoring – checking on progress;
- person resoponsible for carrying it out.
- tools and materials (documents ) to be used.
 Controlling – taking action to remedy hold-ups;
Methodology – group of methods or techniques. (Ex – object oriented design)  Innovating – coming up with new solutions;
 Representing – liaising with clients, users, developers
and other stakeholders
 Problems with software projects Problems with software projects ..
 following problems in manager
- poor estimates and plans; - Lack of standards;
- lack of quality standards and measures; - Lack of up-to-date documentation;
- lack of guidance about making organizational decisions; - preceding activties not completed on time – including late delivery of
- lack of techniques to make progress visible; equipment;
- poor role definition – who does what? - lack of communication between users and technicians;
- incorrect success criteria. - lack of communication leading to duplication of work;
 Following problems in developer - lack of commitment – especially when a project is tied to one person who then
- inadequate specification of work; moves;
- management ignorance of ICT; - narrow scope of technical expertise;changing statutory requirements;
- lack of knowledge of application area; - changing software environment;
- deadline pressure; lack of quality control;
- lack of training;

How do we overcome these problems and have a

Project Manager Skills successful software project?

 by setting objectives
 Both manager and team members must know what will constitute
success.
Project Management Fundamental  Many groups of people involved in development – need well defined
objectives acceptable by all these groups..
Business acumen
 >1 Group - Project authority (project steering comittee/project
Technical Knowledge board/project mgmt board) – responsible for setting monitoring and
Communication modifying objectives.
 Project Manager – running project on day-to-day basis – report to pro
Leadership authority.
 Setting objectives Objectives should be SMART
Answering the question ‘What do we have to do
to have a success?’ S– specific, that is, concrete and well-defined

M – measurable, that is, satisfaction of the objective can be

Need for a project authority objectively judged
Sets the project scope
Allocates/approves costs
A– achievable, that is, it is within the power of the
individual or group concerned to meet the target

Could be one person - or a group R– relevant, the objective must relevant to the true
Project Board purpose of the project
Project Management Board
Steering committee T– time constrained: there is defined point in time by which
37
the objective should be achieved 38

Goals/sub-objectives Setting objective

These are steps along the way to achieving the • Set the objective
objective. Informally, these can be defined by • Different stakeholder have different motivation
completing the sentence…
• Obj identify the shared intention of the project.
• It define what the project team must achieve for the project
Objective X will be achieved success.
IF the following goals are all achieved • Project authority needs overall authority of the project
A…………… • Authority is project steering committee with overall
B…………… responsibility for setting, monitoring and modifying objectives.
C…………… etc • Manager runs the project on a day to day basis, report to
steering committee.
39
 Sub objectives and goals Goals/sub-objectives continued
 Objectives defer from person to person based on their role in the project. Often a goal can be allocated to an individual.
 So the objectives need to be broken down into goals or sub objectives.
Individual may have the capability of achieving goal, but
 To achieve objectives (main objective) we need to achieve certain goals/sub
objectives first. not the objective on their own e.g.
Ex - objective – winning a football match
- sub-objective (goal) – score more goals
Objective – user satisfaction with software product

Analyst goal – accurate requirements

Developer goal – software that is reliable

42

Requirement Specification
Measures of effectiveness
Requirements Specification
How do we know that the goal or objective has been  Functional requirements – what the end product of the project is
achieved? to do – system analysis and design methods provide fuctional
requirements.
By a practical test, that can be objectively assessed.
 Quality requirements – user experience , response time, ease of
e.g. for user satisfaction with software product: using the system etc..attributes related to - how to implement –
Repeat business – they buy further products from us rather than what to implement
Number of complaints – if low  Resource requirements – record of how much organization is
e.g. reduce the customer complaints by 50% would be willing to spend on the system...trade offs occur
more satisfactory as an objective than “to improve cost – time; functionality – quality - cost;
customer relations

43
 Stakeholders The Business case
• People who have interest in the project. • Cost benefit analysis is part of project feasibility
– Internal to the project team-direct control of the study.
project leader • Quantify the Project cost and benefit.
– External of the project team but within the same
• Benefit will be affected by the completion date.
organization.
– External to both project team and organization- • Business model-
contractor will carry out work for the project. – Develop New web based application a allow customer
to order the product via internet,increase the
sales,profits etc.

The business case Management control

Benefits of delivered project
Benefits
must outweigh costs
Costs Costs include:
- Development
- Operation
£
£ Benefits
- Quantifiable
- Non-quantifiable

47 48
 Information and control in
organizations
• 1. Hierarchical information and control systems
• 2. Levels of decision making and information
• 3. Differences in types of information
• 4.Measurement

• 2.Levels of decision making and

• 3. Differences in types of information
information
• Decision can be grouped in three ways • Effectiveness is concerned with doing the right
• Strartegic-deciding objectives thing.
• Tactical-PL ensure that objectives will be fulfilled • Efficiency is carrying out a task making the best
• Operational-relate to the day-to-day work of possible us of the resources.
implementing the project
 4.Measurement Management control
• Leader of project Data – the raw details
• small project have direct contact with many aspects of e.g. ‘6,000 documents processed at location X’
the project.
• Large project would depend on information being Information – the data is processed to produce
supplied to them.
something that is meaningful and useful
• Software Measurement divided into
e.g. ‘productivity is 100 documents a day’
• Performance measure
• Measure the characteristic of a system
Comparison with objectives/goals
• Predictive measure
e.g. we will not meet target of processing all documents by
• It taken during development and indicate what the 31st March
performance of the final system is likely to be. 54
continued…..

Any project plan ensure the business

Management control - continued
case.
Modelling – working out the probable outcomes • Project cost not allowed to rise to a level
of various decisions • Features of the system are not reduced to a level
e.g. if we employ two more staff at location X how when expected benefits gets reduced.
quickly can we get the documents processed? • Delivery date is not delayed

Implementation – carrying out the remedial

actions that have been decided upon

55
 Project success and failure Project Agreement vs Problem Statement
Client Manager Project Team
• Project objective and business objective are (Sponsor)

different.
• Project objective(Team expected to achieve)
– Agreed functionility
– Required level of quality
– On time
Problem
– Within budget Statement Software Project
Management Plan
• Business objective Project
Agreement
• Eg:-Computer game

Project Control Cycle Conclusion

The Real Actions

World
 project success is having clear objectives.
Data  For objectives to be effective there must be practical
collection
ways of testing that the objectives have been met.
Data

Define Data
 When project involves many different people, effective
objectives processing
channels of information have to be established.Proper
Information
communcation channels have to be established.
Making
decisions/plans

Modelling Decisions

Implementation
 Software Project
Management
4th Edition Chapter 2

Why Plan?
Step Wise: An
approach to planning
software projects Project planning is the basic steps upon
which the following Phases build.
It Gives Outline for our project.

Planning Frameworks PRINCE 2

• PRINCE is an acronym for:
There are many planning and project frameworks – Projects IN Controlled Environments
Two examples are:
Step Wise
• PRINCE was conceived and developed by the
PRINCE 2
Central Computer and Telecommunication
Agency (CCTA).
 ‘Step Wise’ - aspirations Step Wise

• Practicality
– Tries to answer the question ‘what do I do now?’ • Step Wise has 10 defined steps ….
• Step 0 Select project
• Scalability – called step0 because it is outside main project
– Useful for small project as well as large planning process
• Step 1 Identify project scope and objectives
• Step 2 Identify project infrastructure
• Step 3 Analyse project characteristics
• Step 4 Identify project products and activities`

‘Step Wise’ - an overview

Step Wise 0.Select
2. Identify project
1. Identify project
project objectives infrastructure

• Step 5 Estimate effort for each activity 3. Analyse

• Step 6 Identify activity risk project
characteristics

• Step 7 Allocate resources Review 4. Identify products

•
and activities
Step 8 Review / publicise plan
5. Estimate effort
• Step 9 Execute plan Lower for activity For each
level
•
activity
Step 10 Lower levels of planning detail 6. Identify activity
risks
• Within each step are various sub-sections 10. Lower level
7. Allocate
planning
resources

8. Review/ publicize
9. Execute plan plan
 Step 1 establish project scope and
Step wise objectives
• Step 0:- • All the parties agree and set the objective
• 1.1 Identify objectives and measures of effectiveness
Feasibility study
– ‘how do we know if we have succeeded?’
It established before other projects also found.
Evaluation done in individual basis. • 1.2 Establish a project authority
– ‘who is the boss?
– Selected by all team members

• 1.3 Identify all stakeholders in the project and their interests

– ‘who will be affected/involved in the project?’

Step 1 continued Back to the scenario

• Project authority
• 1.4 Modify objectives in the light of stakeholder
analysis – should be a project manager rather than HR
– ‘do we need to do things to win over stakeholders?’ manager?
– Adding new features based on stakeholder ideas
• Stakeholders
– project team members to complete on-line
• 1.5 Establish methods of communication with all questionnaires: concern about results?
parties
– ‘how do we keep in contact?’ • Revision to objectives
– provide feedback to team members on results
 Step 2 Establish project infrastructure Step 3 Analysis of project
• 2.1 Establish link between project and any strategic plan
characteristics
– ‘why did they want the project?’
– In what order the project is carried out • 3.1 Distinguish the project as either objective
• 2.2 Identify installation standards and procedures or product-based.
– ‘what standards do we have to follow?’
–
–
Separate quality standards and procedure manual
Planning and control standards
• 3.2 Analyze other project characteristics
– Eg- SDLC (including quality based ones)
• 2.3. Identify project team organization
– ‘where do I fit in?’
– Team leader have control over the organization structure.

3.1.Identify Project as Either Objective –

3.2.Analyse other Project Characteristics
Driven or Product Driven
• Product driven • Is a data-oriented(information system) or process oriented
– It creates product system(embedded control system) to be implemented.
– Define before the start of the project. • Will the software that is to be produced be a general tool (excel) or
application (air line) specific?
• Objective driven • Are there specific tools available for implementing the particular
– It come first which define the general solution. type of application?
– PM dream reach objectives-freedom to reach objective. – Does it involve concurrent processing?(use of techniques appropriate to
analysis and design)
– Reliably, accurately and low admin cost. – Will the system to be created be knowledge-based?(expert system have rules
– People face problem-don’t know how to solve the problem. which result in some”expert advice”)specific methods and tools exist for
– ICT specialist provide help with some problem but assistance developing such systems.
from other specialist. – Will the system to be produced make heavy use of computer graphics?

75 76
 3.Identify High level project risks Step 3 continued
• Identify high level project risks
• Some manager-need elaborate explanation-beginning
– Ex-analyse the user requirement in detail ,we cannot estimate the effort. – ‘what could go wrong?’
• Uncertainity associated with: – ‘what can we do to stop it?’
– Product uncertainty-user themselves could be uncertain about what a
proposed information system is to do.(requirement not clear) • Take into account user requirements concerning
– Process uncertainty-project under consideration-use new application tool- implementation
uncertainty
– Resource uncertainty-inadequate staff or in experience staff. number of • Select general life cycle approach
resources for longer period-more risky.
– waterfall? Increments? Prototypes?
• Review overall resource estimates(major risk is
identified)
– ‘does all this increase the cost?’
77

Step 4 Identify project products

and activities Products
• 4.1 Identify and describe project products - ‘what do we • The result of an activity
have to produce?

Selection A product breakdown structure

• Could be (among other things)
Products (PBS)
– physical thing
List
– a document
Discuss With
Of Potential User
Requirements
Team – a person
Suppliers Member
– a new version of an old product
Existing System User Modified Test
Specification Requirement Examples
 Products
Product description (PD)
• The following are NOT normally products: • Product identity • Relevant standards
– activities (e.g. ‘training’) • Purpose - what is it? • Quality criteria
– events (e.g. ‘interviews completed’)
• Derivation - what is it
– resources and actors (e.g. ‘software developer’) -
based on?
may be exceptions to this
• Composition - what
does it contain?
• Format

Step 4.3 Recognize product instances(related to 4.4. Produce ideal activity network
more than one instance-general PF Diagram)
• The PBS and PFD will probably have identified • Identify the activities needed to create each
generic products e.g. ‘software modules’ product in the PFD
• It might be possible to identify specific instances • More than one activity might be needed to
e.g. ‘module A’, ‘module B’ … create a single product.
• Draw up activity network
• But in many cases this will have to be left to later,
more detailed, planning
 An ‘ideal’ activity PFD

Select Overall System Specification

subjects
Module Specification

Plan Design Conduct Analyse Draft change

testing questionnaire tests results requests Module Design

Book Coded Module Module Test Cases

machine

Tested Module

Step 4.5 Add check-points if needed

Step 5:Estimate effort for each
Design
module A
Code
module A
activity
Design Design Code
• 5.1 Carry out bottom-up estimates
system Test
module B module B system

– distinguish carefully between effort and elapsed

Design Code put in a
module C module C check point time
• 5.2. Revise plan to create controllable
Design Code
module A module A activities
Design Design Code – break up very long activities into a series of
system Check-point Test
module B module B system smaller ones
– bundle up very short activities (create check lists?)
Design Code
module C module C
 Step 6: Identify activity risks
• 6.3 Adjust overall plans and estimates to take
• 6.1.Identify and quantify risks for activities account of risks
– damage if risk occurs (measure in time lost or – e.g. add new activities which reduce risks
money) associated with other activities e.g. training, pilot
trials, information gathering
– likelihood if risk occurring

• 6.2. Plan risk reduction and contingency

measures
– risk reduction: activity to stop risk occurring
– contingency: action if risk does occur

Step 7: Allocate resources Gantt charts

Jan Feb March April May June July

• 7.1 Identify and allocate resources to activities Jane Write specification Create Test
Test
Plan Plan

fred Design Module A

• 7.2 Revise plans and estimates to take into Mary

Design Module B
account resource constraints
Write User Manual
– e.g. staff not being available until a later date Avril

– non-project activities
 Step 8: Review/publicise plan Chapter 2
• 8.1 Review quality aspects of project plan-earlier activity
not completed
• 8.2 Document plan and obtain agreement-plan be
carefully documented.

Step 9 and 10: Execute plan and

create lower level plans

Programme management and project

Project or programme ?
evaluation
 Grouping of individual projects into programmes.  Sometimes a single project is justifiable by managers if
 Managing implementation of programmes and projects. financial benefits exceed the costs of the
 Evaluation and selection of projects against strategic, implementation and operation of the new app.
technical and economic criteria. In other cases a single project may not be jusitfiable on its
own,but it fulfills the strategic objective when combined
 Using cost-benefit evaluation techniques for choosing
with outcomes of other projects.
among competing project proposals.
Ex :- A project to establish ITC infrastructure within an
 Evaluating the risk involved in a project and select
organization might not be able to deliver a direct
appropriate strategies for minimizing potential cost.
financial benefit, but could provide a platform which
allows subsequent project to deliver benefits.
 Programme management Forms of programmes...
 PROGRAMME :- ”a group of projects that are managed  b) Business cycle programmes
in a co-ordinated way to gain benefits that would not be collection of projects that an organization undertakes
possible were the projects to be managed within a particular planning cycle – portfolio.
independently” - D.C Ferns . Planners need to assess the comparitive value and urgency
 Programmes can exist in different forms or projects within a portfolio.
 a) Strategic Programmes – several projects  c) Infrastructure programmes –
implementing a single strategy. Setting up of networks, workstations and servers upon
Ex :- Merging of two organizations, it involves in : which distinct apps of an organization can run.

- creation of unified payroll and accounting  d) Research and development programmes

applications they are risky when compared with other programmes ,
but if research work leads to technological breakthrougs ,
- physical reorganization of offices they are the most profitable programmes.
- training
Managing allocation of resources
Forms of programmes...
within programmes
 e) Innovative partnerships – Companies come together  Many specialized resources are involved
Ex:- s/w developers, db designers,n/w support staff etc..These resources may participate in no of
to work collaboratively together on new technologies. projects which are going at same time..
Projects sharing resources
Programme managers vs project managers
PROJECT MANAGEME NT
Programme manager Project manager Project A Project B Project C Project D
P Resource W
- Many simultaneous projects. - One project at a time.
 R
x x
- Personal relationship with - Impersonal relationship with
skilled resources. resource type.  O M Resource X
 G G x
- Need to maximize utilization - Need to minimize demand for
of resources resources  R M Resource Y
 A T x x
- Projects tend to be similar. - Projects tend to be dissimilar.
 M Resource Z
 x x x
 Creating a programme Vision statement and blueprint
Sponsering group – those who have identified the need for a  The Vision statement – more detailed definition of the programme.
programme and have initiated its establishment. After creating a detailed vision statement a programme manager is appointed for
handling day-to-day responsibilities.
 programme mandate – a formal document describing  The Blueprint – describes how the improved capability is going to be achieved.
It should contain:
- new services and capabilities the programme should deliver.
- business models outlining the new processes required.
- how the organization will be improved by these new services and capability
- organizational structure - no of staff required, new systems and skills needed.
- how the programme fits with corporate goals and any other initiatives.
- information systems, equipment and other non-staff, resources needed.
 A programme director is appointed at this point.
- data and information requirements.
 Programme brief – feasibility study for the program - costs, performance and service level requirements.
- Preliminary Vision statement -describing the new capacity that the organization  Blueprint is supported by benefit profiles – estimates when the expected
seeks benefits will start to be realized following implementation of the enhanced
- benefits that the programme should create – when they are likely to be capability.
generated and how they will be measured.
- Risks and issues
- Estimated costs; timescales and effort.

Programme portfolio , stakeholder map,

communication strategy.
Aids to programme management
Dependency diagrams
Programme portfolio – list of the projects that  Ex – dependency diagram for a programme to merge two
the programme will need in order to achieve its organizations
G.Implement
B.Corporate
objectives. Image design
Corporate
interface
Stakeholder map – groups of people with an
interest in the following things A. System C. Build
F.Data
Study/ Common
- project design systems
migration

- outcomes of the project

Communication strategy and plan – shows the D. Relocate
E.Training
offices
information flows between stakeholders.
 Aids to programme management Benefits management
 Providing an organization with capability does not guarantee that the
Delivery planning diagram. capability will be used to deliver the benefits originally envisaged.
Tranches of projects are defined where a tranch is a group of projects that will  benefits management is an attempt to make sure that the envisaged benefits
deliver their product as one step in the programme. get materialized.
Tranche 1 Tranche 2 Tranche 3 It encompasses IDENTIFICATION, OPTIMIZATION AND TRACKING of the expected
Project A benefits from a business change.
Project C Project B
To do this we must
- define the expected benefits from the programme;
Project D - analyse the balance between costs and benefits;
- plan how the benefits will be achieved and measured;
Project E
- allocate resposibilities for successful delivery of benefits;
- monitor the realization of the benefits.
Project F
 Types of benefits :- Quality of service , productivity, motivated workforce,
Project G internal management benefits (better decision maiking), risk reduction,
Benefit Benefit Benefit economy (reduction of costs), revenue enhancement/acceleration etc.
delivery delivery delivery

Evaluation of individual projects &

Quantifying benefits
Technical assessment
 benefits can be  Feasibility study of individual projects is evaluated
• Quantified and valued  Three majar factors to be considered for evaluation of a
particular project :
• i.e direct financial benefit.
- technical feasibility;
• Quantified but not valued
- the balance of costs and benefits;
• a decrease in no of consumer complaints;
- degree of risk associated with the project;
• Identified but not easily quantified
 Technical Assessment – evaluating required
• public approval of the organization in the
functionality against the h/w and s/w available.
locality where it is based.
 Cost-benefit analysis Cost-benefit analysis
 Comparing the expected costs of development and  Categorizing the costs according to their origin in life of
operation of the system with the benefits of having it in the project
place. - Development costs (employee salaries etc)
 Assesment focuses on whether - Setup costs (new h/w, staff training etc)
estimated income + other benefits > estimated costs - Operational costs (post installation costs)
 It is the standard way of evaluating the economic
benefits of any project, it is comprised of two steps
 Identifying and estimating all of the costs and
benefits of carrying out the project and operating
the delivered application.
Expressing these costs and benefits in common
units (common unit is money $$).

Benefit analysis
 Categorizing the Benefits according to their origin in life
of the project
• Direct benefits-redution in salary bills through the
introduction of a new computerized system.
• Assessible indirect benefits-User friendly screen, Cost Benefit Evaluation techniques
accuracy improved,reduction in error
• Intangible benefits-very diffcult to
quantify.reduced staff turnover and lower
recruitment cost
Cost Benefit Evaluation techniques Cash flow forcasting
It consider  Cash flow forecasting indicates when expenditure and income will take place.
 the timing of the costs and benefits  Accurate cash flow forecasting is not easy as it is done early in project's life cycle.
 the benefits relative to the size of the investment

Common method for comparing projects on the basic of their cash flow forecasting.

 1) Net profit
 2) Payback Period
 3) Return on investment Time
 4) Net present Value
 5) Internal rate of return

Typical product life cycle cash flow

Cost-benifit evaluation techniques Net profit

 Net profit → net profit of a project is the difference between the total costs
and the total income over the life of the project.
Net profit = total income – total costs
Year Cash-flow ‘Year 0’ represents all the
 Payback period → time taken to break even or pay back the initial investment. 0 -100,000 costs before system is
Projects with shortest payback period are chosen. 1 10,000 operation
 Return on investment (ROI) or Accounting rate of return (ARR) → compares ‘Cash-flow’ is value of
net profitability to the investment required. 2 10,000
income less outgoing
3 10,000
ROI = average annual profit Net profit value of all the
X 100 4 20,000
total investment
cash-flows for the lifetime
5 100,000 of the application
Net profit 50,000

116
 Payback Period

• The payback period is the time taken to recover the initial investment.
 Calculate net profit.(-ive total cost or total investment)
Or
Year Project1 Project2 project3 • is the length of time required for cumulative incoming returns to equal the cumulative
0 -100000 -1,000,000 -120000 costs of an investment
Advantages
1 10,000 2,00000 30,000
• simple and easy to calculate.
2 10,000 2,00000 30,000
• It is also a seriously flawed method of evaluating investments
Disadvantages
3 10,000 2,00000 30,000
• It attaches no value to cashflows after the end of the payback period.
• It makes no adjustments for risk.
4 20,000 2,00000 30,000
• It is not directly related to wealth maximisation as NPV is.
• It ignores the time value of money.
5 100000 3,00000 75,000
• The "cut off" period is arbitrary.
Net profit 50,000 1,00,000 75,000

 Calculate Payback Period • Payback Period

Project1 =10,000+10,000+10,000+20,000+1,00,000=1,50,000
Year Project1 Project2 project3 Project 2= 2,00,000+2,00,000+2,00,000+2,00,000+3,00,000=11,000,00
0 -100000 -1,000,000 -120000
1 10,000 2,00000 30,000
2 10,000 2,00000 30,000
Project 3= 30,000+30,000+30,000+30,000 + 75,000 =1,95,000
3 10,000 2,00000 30,000
It ignores any benefits that occur after the payback
4 20,000 2,00000 30,000 period and, therefore, does not measure profitability.
5 100000 3,00000 75,000
It ignores the time value of money.
 RETURN ON INVESTMENT or ACCOUNTING RATE OF RETURN

• It provides a way of comparing the net profitability to the investment

required. • RETURN ON INVESTMENT
Or
• A performance measure used to evaluate the efficiency of
an investment or to compare the efficiency of a number of different • ROI = average annual profit * 100
investments
total investment
• Disadvantages
average annual profit = net profit
• It takes no account of the timing of the cash flows.
total no. of years
• Rate of returns bears no relationship to the interest rates offered or changed by
bank.

Cost-benifit evaluation techniques

 Internal rate of return → percentage of discount rate that would produce an
 Calculate ROI for project 1. NPV of zero.
 Provides profitability measure as a percentage return that is directly
Ans: Total investment =1,00,000
comprable with interest rates.
Net profit = 50,000  Ex – if a project shows an IRR of 10% would be worthwhile if the capital could
Total no. of year = 5 be borrowed for less than 10% or if the capital could not be invested
elsewhere for a return greater than 10%.
 It must be calculated by trial-and-error manually.
Average annual profit = 50,000 / 5 = 10,000rs
ROI= ( 10,000 / 1,00,000 ) * 100 = 10%
 Ex1 Ex2.

 Calculate the ROI for the following projects and comment, which  There are two projects x and y. each project requires an investment of rs 20,000.
you are required to rank these projects according to the pay back method from
is the most worthwhile.
the following information.

Investment Net profit Year Project x Project y

 Project1 1,50,000 50,000 1 1000 2000
 Project2 10,00,000 1,00000 2 2000 4000
 Project3 4,50,000 40,000 3 4000 6000
4 5000 8000
 The period of above project is 5 years. 5 8000

Net present value (NPV) Example...NPV,ROI etc..

 Discounted Cash Flow (DCF) is a cash flow summary adjusted to reflect the time value of
year 0 1 2 3 4 5
money. DCF can be an important factor when evaluating or comparing investments,
proposed actions, or purchases. Other things being equal, the action or investment with the
larger DCF is the better decision. When discounted cash flow events in a cash flow stream income 0 0 50 100 300 350
are added together, the result is called the Net Present Value (NPV). expenditure 50 100 20 10 10 10

 When the analysis concerns a series of cash inflows or outflows coming at different future cash flow -50 -100 30 90 290 340
times, the series is called a cash flow stream. Each future cash flow has its own value today net profit -50 -150 -120 -30 260 600
(its own present value). The sum of these present values is the Net Present Value for payback period 4 years
the cash flow stream. average annual profit 120
total investment 200
 The size of the discounting effect depends on two things: the amount of time between now ROI 60
and each future payment (the number of discounting periods) and an interest rate called NPV (10%) ₪ 220
the Discount Rate. IRR 30%
  The example shows that:
 As the number of discounting periods between now and the cash arrival increases, the
present value decreases.
 As the discount rate (interest rate) in the present value calculations increases, the present
value decreases.

Applying discount factors Example: Comparing Competing Investments with NPV.

131  Consider two competing investments in computer equipment. Each calls for an initial cash
Year Cash-flow Discount Discounted cash outlay of $100, and each returns a total a $200 over the next 5 years making net gain of
factor(discount rate flow $100. But the timing of the returns is different, as shown in the table below (Case A and
10%) Case B), and therefore the present value of each years return is different. The sum of each
0 -100,000 1.0000 -100,000 investments present values is called the Discounted Cash flow (DCF) or Net Present Value
(NPV). Using a 10% discount rate
1 10,000 0.9091 9,091
2 10,000 0.8264 8,264 Discount
CASE A CASE B
Timing Rate(10%)
3 10,000 0.7513 7,513 Net Cash Flow Present Value Net Cash Flow Present Value

Now 0 1 –$100.00 –$100.00 –$100.00 –$100.00

4 20,000 0.6830 13,660 Year 1 0.9091 $60.00 $54.54 $20.00 $18.18

5 100,000 0.6209 62,090 Year 2 0.8264 $60.00 $49.59 $20.00 $16.52

Year 3 0.7513 $40.00 $30.05 $40.00 $30.05
NPV 618 Year 4 0.6830 $20.00 $13.70 $60.00 $41.10
Click for
more info
The figure of RM618 means that RM618 more would be made than if the Year 5 0.6209 $20.00 $12.42 $60.00 $37.27
money were simply invested at 10%. An NPV of RM0 would be the same Total Net CFA = $100.00 NPVA = $60.30 Net CFB = $100.00 NPVB = $43.12
amount of profit would be generated as investing at 10%. 131
Ex :3 Solution

Ex:4 Ex:4
 Ex:4

Ex : 5
Consider the following fictitious scenario and some questions related to it. The table below Based on the above table, answer the following questions:
gives the estimated cash flow for three different projects

1 Calculate the net profit of each project.

2 Based on your answer to Question 1 above, which project would you select to develop?
3 Using the shortest payback method as discussed in Hughes and Cotterell, which
project would you now select for development and why?
4 Calculate the Return on Investment (ROI) of each of these projects.
5 Based on your calculation of the ROI of each project in Question 4 above, which
project would you select to develop?
6 Assume a discount rate of 12%. Calculate the Net Present Value (NPV) of each
project.
7 Based on your calculation of each project’s NPV, which project would you now select for
development? In general, what conclusion do you reach regarding the viability of these
projects? (Base your answer on the NPVs of each project.)
IRR (Internal Rate Return)

 The IRR compares returns to costs by asking: "What is the discount  IRR asks a different question of the same two cash flow streams. Instead of proposing a discount rate
and finding the NPV of each stream (as with NPV), IRR starts with the net cash flow streams and finds
rate that would give the cash flow stream a net present value of the interest rate (discount rate) that produces an NPV of zero for each. The easiest way to see how
0?" this solution is found is with a graphical summary:

CASE A CASE B
Discount
Timing Rate(10%)
Net Cash Flow Present Value Net Cash Flow Present Value

Now 0 1 –$100.00 –$100.00 –$100.00 –$100.00

Year 1 0.9091 $60.00 $54.54 $20.00 $18.18
Year 2 0.8264 $60.00 $49.59 $20.00 $16.52
Year 3 0.7513 $40.00 $30.05 $40.00 $30.05
Year 4 0.6830 $20.00 $13.70 $60.00 $41.10
Year 5 0.6209 $20.00 $12.42 $60.00 $37.27

Total Net CFA = $100.00 NPVA = $60.30 Net CFB = $100.00 NPVB = $43.12

 These curves are based on the Case A and Case B cash flow figures in the table
above. Here, however, we have used nine different interest rates, including 0.0 and 0.10,
on up through 0.80.
 As you would expect, as the interest rate used for calculating NPV of the cash flow stream
increases, the resulting NPV decreases.



For Case A, an interest rate of 0.38 produces NPV = 0, whereas
Case B NPV arrives at 0 with an interest rate of 0.22.
Risk Evaluation
 Case A therefore has an IRR of 38%, Case B an IRR of 22%.
 IRR as the decision criterion, the one with the higher IRR is the better choice.
 Risk Evaluation Risk evaluation
 Risk evaluation is meant to decide whether to proceed with the project or not, and
whether the project is meeting its objectives.
• - Identification and Ranking (importance, likelihood) Risk Occurs:

• - Risk and NPV ( add risk factor to the discount rate)

 When the project exceed its original specification

 Deviations from achieving it objectives and so on.

• - Risk Profile Analysis (change the risk factor and

recalculate the costs. Evaluate the sensitivity to the Risk Identification and ranking

change. Focus on highly sensitive risks) Risk and Net Present Value
• - Decision Trees – Evaluate alternatives by multiply the  For riskier projects could use higher discount rates
probability of occurrence by expected cost to evaluate  Ex: Can add 2% for a Safe project or 5 % for a fairly risky one.
expected value.
Cost benefit Analysis
Risk profile analysis
Decision trees

146

Risk Identification and ranking

Identify the risk and give priority.


Risk profile analysis
 Could draw up draw a project risk matrix for each project to assess risks
 Project risk matrix used to identify and rank the risk of the project  This make use of “risk profiles” using sensitivity analysis.

 It compares the sensitivity of each factor of project

 Example of a project risk matrix profiles by varying parameters which affect the project
cost benefits.
 Eg:

 Vary the original estimates of risk plus or minus 5% and

re-calculate the expected cost benefits.

147
 Decision trees
 Identify over risky projects
 Choose best from risk
 Take suitable course of action

Decision tree of analysis risks helps us to

 Extend the existing system

 increase sales
 improve the management information

 P1 depart far from p2,have large variation  Replace the existing system
 P3 have much profitable than expected  Not replacing system leads in loss
 Replace it immediately will be expensive.
 All three projects have the same expected profit

 Compare to p2 , p1 is less risky.

NPV (Rs)
Ex 1: -100,000
Decision trees Further extension
0.5
80,000
Extend
 The expected value of Extending 0.5
No extension
system=
D2
Further extension
(0.8*75,000)- 0.5 200,000
(0.2*100,000)=40,000 Rs. 0.1
Extend Replace

0.5
 The expected value of Replacing 0.9
No extension -30,000

system= D1 Further extension

Replace 0.1
-100,000
(0.2*250,000)-
(0.8*50,000)=10,000 Rs. 0.9
No extension 75,000
Replace

Therefore, organization should choose

0.2
the option of extending the existing Further extension
system. 250,000
0.8
No extension -50,000

151
 Introduction to Software Project
Management Why is SPM important?

 Objectives
- define the scope of 'software project management'; - lot of money is at stake with ICT projects.
Ex : - In UK govt spent about 2.3 billion pounds for ICT projects during year 2002-
- understand some problems and concerns of software project managers as
2003.
well as developers;
- projects are not always successful
- define the usual stages of a software project;
A survey by Standish Group in US – only a third of projects were successful , about
- explain the main elements of the role of management; 82% were late and 43% exceeding budget.
- appreciate the need for careful planning, monitoring and control; - lack of skills and proven approach to project management & risk management.
- identify the stakeholders of a project and their objectives;
- define the success criteria for a project.

What is a project? How does one project defer from another?

- a ”planned activity”.
 Characteristics
- planning : know what is to be done and thinking carefully before doing it.
- non – routine tasks are involved.
- routine projects – planning can be done easily.
- planning is required
- projects with exploratory nature – planning might be difficult.
- specific objectives / specific products
- Activities most likely to benifit from project management.
- predetermined time span
- work is carried out for others apart from ones own project
Uncertainity of
Routine
outcome - work involves several specialisms
- work carried out in serveral phases
- limited no of resources
- large or complex project
Jobs Projects Exploration
Software project vs other project

• Invisibility
• Complexity
• Flexibility

Activities covered by SPM The software development life-

cycle (ISO 12207)
Software project not only concerned with actual writing of software.
There are three successive processes that bring a new system into being:

How do we
Feasibility Study Do it?

Is it worth doing?
Plan Do it!

Project Execution

Refer ISO 12207 software development lify cycle (page – 6)

 ISO 12207 life-cycle ISO 12207 life-cycle
Requirements analysis Architecture design
Based on system requirements
Requirements elicitation: what does the client Defines components of system: hardware,
need? software, organizational
Analysis: converting ‘customer-facing’ Software requirements will come out of this
requirements into equivalents that developers
can understand Code and test
Requirements will cover Of individual components
Functions Integration
Quality
Putting the components together
Resource constraints i.e. costs

ISO12207 continued
Qualification testing
Testing the system (not just the software)
Installation
The process of making the system operational
Includes setting up standing data, setting system
parameters, installing on operational hardware
platforms, user training etc
Acceptance support
Including maintenance and enhancement
 Plans, methods and methodologies Ways of categorizing software projects
Plan - based on some idea of a method of work.  Information Systems Vs Embedded Systems
Ex- the following is a plan for testing a software Information Systems – system interfces with the organization
- analyse the requirements for the software Ex – stock control system , HR management system etc.
- devise and write test cases that will check that each requirement has been stisfied. Embedded Systems – system interfaces with the machine
- create test scripts and expected results for each test case...etc.. Ex – controlling AC in a building, controlling the temperature of a warehouse
etc..
Method – a type of activity in general.
Mix of both Embedded and Information systems
A plan takes one or more methods and converts them into real activities, identifying
for each activity Ex – stock control system might also control an automated warehouse.
- start and end dates.  Objectives Vs Products
- person resopnsible for carrying it out. Objectives based – a project may need to meet certain objectives (Ex :- a new
- tools and materials (documents ) to be used. system which improves some service to users inside or outside an org)

Methodology – group of methods or techniques. (Ex – object oriented design) Product based – project's goal is to create a product according to client's
requirements.

Management?? Problems with software projects

 Managers point of view
 Planning – deciding what is to be done; - poor estimates and plans;
 Organizing – making arrangements; - lack of quality standards and measures;
 Staffing – selecting right people for the right job; - lack of guidance about making organizational decisions;
 Directing – giving instructions; - lack of techniques to make progress visible;
 Monitoring – checking on progress; - poor role definition – who does what?
 Controlling – taking action to remedy hold-ups; - incorrect success criteria.
 Innovating – coming up with new solutions;  Developers point of view
 Representing – lialising with clients, users, developers, suppliers and - inadequate specification of work;
other stakeholders.
- management ignorance of ICT;
- lack of knowledge of application area;
 Problems with software projects .. problems...
- deadline pressure; lack of quality control;

- Lack of standards; - remote management; lack of training;

- Lack of up-to-date documentation; How do we overcome these problems and have a

- preceding activties not completed on time – including late delivery of successful software project? (by setting objectives)
equipment;  Both manager and team members must know what will constitute
- lack of communication between users and technicians; success.

- lack of communication leading to duplication of work;  Many groups of people involved in development – need well defined
objectives acceptable by all these groups..
- lack of commitment – especially when a project is tied to one person who
then moves;  >1 Group - Project authority (project steering comittee/project
board/project mgmt board – resposible for setting monitoring and
- narrow scope of technical expertise;changing statutory requrements; modifying objectives.
- changing software environment;  Project Manager – running project on day-to-day basis – report to pro
authority.

Sub objectives and goals SMART...contd..Stakeholders

 Objectives defer from person to person based on their role in the project.  Achievable – must be within the power of the individual or group to
 So the objectives need to be broken down into goals or sub objectives. achieve the objective.

 To achieve objectives (main objective) we need to achieve certain  Relevant – must be relevant to the true purpose of the project;
goals/sub objectives first.  Time constrained – there should be definite point of time by which the
Ex - objective – winning a football match objective should have been achieved.

- sub-objective (goal) – score more goals Stakeholders – who are they?

 How do we describe well- defined objectives? (SMART). - people who have a stake or interest in the project;

A well defined objective should have the following characteristics  Internal to the project team;

- Specific – correct and well defined.  External to the project team but within the same organization;

- Measurable – there should be a measue of effectiveness – how successful  External to both the project team and the organization.
the project has been.
 Business Case and Requrement
Specification Management control
 Business case – projects need to have a justification ;
 Business model – means by which benifits are quantified ( how the new
app can generate the claimed benifits)
Requirements Specification
 Functional requirements – what the end product of the project is to do –
system analysis and design methods provide fuctional requirements.
 Quality requirements – user experience , response time, ease of using the
system etc..attributes related to - how to implement – rather than what to
implement
 Resource requirements – record of how much organization is willing to
spend on the system...trade offs occur
cost – time; functionality – quality - cost;

Management control -
Management control
continued
Data – the raw details Modelling – working out the probable outcomes
e.g. ‘6,000 documents processed at location X’ of various decisions
e.g. if we employ two more staff at location X how
Information – the data is processed to produce quickly can we get the documents processed?
something that is meaningful and useful
e.g. ‘productivity is 100 documents a day’
Implementation – carrying out the remedial
actions that have been decided upon
Comparison with objectives/goals
e.g. we will not meet target of processing all documents
by 31st March
continued…..
 Project Management
Knowledge Areas

Conclusion
• Project Management
 Projects are by definition non-routine and therefore more uncertain than
normal undertakings. • Project Constraint
 Software projects are similar to other projects but have some attributes
that present particular difficulties, e.g the relative invisibility of many of
their products.
• Software Project Creeps
 A key factor in project success is having clear objectives. Different
stakeholders in a project are likely to have different objectives.
• Job Functions and Tasks for Project
 For objectives to be effective there must be practical ways of testing that Management
the objectives have been met.
 When project involves many different people, effective channels of • Contract Management
information have to be established.Proper communcation channels have
to be established.
1
 0.Select
1. Identify project 2. Identify project
project objectives infrastructure
 Practicality
3. Analyse
 tries to answer the question ‘what do I do now?’ project
characteristics
 Scalability Review
4. Identify products
 useful for small project as well as large and activities

5. Estimate effort
 Range of application Lower for activity For each
level activity
6. Identify activity
 Accepted techniques detail
risks
 e.g. borrowed from PRINCE etc 10. Lower level
7. Allocate
planning
resources

8. Review/ publicize
9. Execute plan plan
2 3

 Hardware/software engineering company (C++  Software package to be used to test staff

language of choice)
 Visual
basic suggested as a vehicle for
 teams are selected for individual projects - some implementation
friction has been found between team members
 usabilityis important - decision to carry out
 HR manager suggests psychometric testing to usability tests
select team

4 5
 1.1Identify objectives and measures of  1.4
Modify objectives in the light of stakeholder
effectiveness analysis
 ‘how do we know if we have succeeded?’  ‘do we need to do things to win over stakeholders?’

 1.2 Establish a project authority  1.5Establish methods of communication with all

 ‘who is the boss?’ parties
 ‘how do we keep in contact?’
 1.3Identify all stakeholders in the project and
their interests
 ‘who will be affected/involved in the project?’

6 7

 Project authority
 should be a project manager rather than HR  2.1 Establish link between project and any
manager? strategic plan
 ‘why did they want the project?’
 Stakeholders
 project team members to complete on-line  2.2 Identify installation standards and
questionnaires: concern about results? procedures
 ‘what standards do we have to follow?’
 Revision to objectives
 provide feedback to team members on results  2.3. Identify project team organization
 ‘where do I fit in?’

8 9
  Identify high level project risks
 3.1Distinguish the project as either objective or  ‘what could go wrong?’
product-based.  ‘what can we do to stop it?’
 Is there more than one way of achieving success?  Takeinto account user requirements concerning
implementation
 3.2 Analyse other project characteristics
 Select general life cycle approach
(including quality based ones)
 waterfall? Increments? Prototypes?
 what is different about this project?
 Review overall resource estimates
 ‘does all this increase the cost?’

10 11

 Objectives vs. products

 use paper questionnaire then input results of the 4.1 Identify and describe project products -
analysis? ‘what do we have to produce?’
 Some risks
 team members worried about implications and do no A product breakdown structure
Usability
co-operate testing (PBS)
 project managers unwilling to try out application
 Developer not familiar with features of VB
Selected Testing Change
Test results
 Answer? - evolutionary prototype? subjects arrangements requests

Booked Questionnaire Completed Analysis

PC design questionnaire report

12 13
  The following are NOT normally products:
 The result of an activity  activities (e.g. ‘training’)
 events (e.g. ‘interviews completed’)
 Could be (among other things)  resources and actors (e.g. ‘software developer’) -
may be exceptions to this
 physical thing (‘installed pc’),
 a document (‘logical data structure’)  Products CAN BE deliverable or intermediate
 a person (‘trained user’)
 a new version of an old product (‘updated software’)

14 15

Testing plan

 Product identity  Relevant standards

 Description - what  Quality criteria 4.2 document Selected Questionnaire Booked
subjects design
is it? Generic machine
product
 Derivation - what flows
is it based on? Create a PD for
Completed Test results
questionnaire
 Composition - ‘test data’
what does it
Analysis report
contain?
 Format
Change
requests
17
16
 The PBS and PFD will probably have  Identify the activities needed to create each
identified generic products e.g. ‘software product in the PFD
modules’  More than one activity might be needed to
create a single product
 Itmight be possible to identify specific
 Hint: Identify activities by verb + noun but
instances e.g. ‘module A’, ‘module B’ …
avoid ‘produce…’ (too vague)
 But in many cases this will have to be left to  Draw up activity network
later, more detailed, planning

18 19

Design Code
module A module A

Design Design Code

system Test
module B module B system
Select
subjects
Design Code put in a
module C module C check point
Plan Design Conduct Analyse Draft change
testing questionnaire tests results requests Design Code
module A module A

Book Design Design Code

machine system module B
Check-point
module B
Test
system

Design Code
module C module C
20 21
  6.1.Identify and quantify risks for activities
 5.1 Carry out bottom-up estimates  damage if risk occurs (measure in time lost or
 distinguish carefully between effort and elapsed money)
time  likelihood if risk occurring

 5.2. Revise plan to create controllable activities

 6.2. Plan risk reduction and contingency
 break up very long activities into a series of smaller
measures
ones
 risk reduction: activity to stop risk occurring
 bundle up very short activities (create check lists?)
 contingency: action if risk does occur

22 23

 6.3Adjust overall plans and estimates to take

account of risks
 e.g. add new activities which reduce risks associated  7.1Identify and allocate resources to
with other activities e.g. training, pilot trials, activities
information gathering
 7.2
Revise plans and estimates to take into
account resource constraints
 e.g. staff not being available until a later date
 non-project activities

24 25
 LT = lead tester
TA = testing assistant
Week
APRIL
commencing MARCH
5 12 19 26 2 9 16

Plan testing LT

Select subjects  8.1 Review quality aspects of project plan

TA
 8.2 Document plan and obtain agreement
Design
questionnaire LT

Book machine TA

Conduct tests
TA
Analyse results
LT Step 9 and 10: Execute plan
Draft changes
LT and create lower level plans
26 27

Motivation
The software cost estimation provides:
COCOMO Models • the vital link between the general concepts and
techniques of economic analysis and the
particular world of software engineering.
• Software cost estimation techniques also provides
an essential part of the foundation for good
software management.

1 2
 Cost of a project Effort
• The cost in a project is due to: • Effort Equation
– due the requirements for software, hardware and human – PM = C * (KDSI)n (person-months)
resources
• where PM = number of person-month (=152
– the cost of software development is due to the human working hours),
resources needed
• C = a constant,
– most cost estimates are measured in person-months
(PM) • KDSI = thousands of "delivered source instructions"
(DSI) and
• n = a constant.

3 4

Productivity Schedule
• Productivity equation • Schedule equation
– (DSI) / (PM) – TDEV = C * (PM)n (months)
• where PM = number of person-month (=152 • where TDEV = number of months estimated for
working hours), software development.

• DSI = "delivered source instructions"

5 6
 Average Staffing COCOMO Models
• Average Staffing Equation • COCOMO is defined in terms of three different
– (PM) / (TDEV) (FSP) models:
• where FSP means Full-time-equivalent Software – the Basic model,
Personnel. – the Intermediate model, and
– the Detailed model.
• The more complex models account for more
factors that influence software projects, and make
more accurate estimates.

7 8

The Development mode The Development mode

• the most important factors contributing to a • the most important factors contributing to a
project's duration and cost is the Development project's duration and cost is the Development
Mode Mode:
• Organic Mode: The project is developed in a • Embedded Mode: The project is characterized by
familiar, stable environment, and the product is tight, inflexible constraints and interface
similar to previously developed products. The requirements. An embedded mode project will
product is relatively small, and requires little require a great deal of innovation.
innovation.
• Semidetached Mode: The project's characteristics
are intermediate between Organic and Embedded.
9 10
 Effort Computation
• The Basic COCOMO model computes effort as a Mode Effort Schedule
function of program size. The Basic COCOMO equation Man-Month / Person-Month Month
is:
1.05 0.38
– E = aKLOC^b Organic E=2.4*(KDSI) TDEV=2.5*(E)
• Effort for three modes of Basic COCOMO.
1.12 0.35
Mode a b Semidetached E=3.0*(KDSI) TDEV=2.5*(E)
Organic 2.4 1.05
1.20 0.32
Semi- 3.0 1.12 Embedded E=3.6*(KDSI) TDEV=2.5*(E)
detached
Embedded 3.6 1.20
11 12

Size 2300 a b c d
Unit Organic Semi-detached Embedded Organic 2.4 1.05 2.5 0.38
Effort E= a*(Size^b) Person Month 8128.782 17468.53286 38938.2029 Semi-detached 3 1.12 2.5 0.35

Example
Productivity=Size/Effort 0.282945 0.131665322 0.05906795 Embedded 3.6 1.2 2.5 0.32
TDEV = c* (E^d) 76.51555 76.33606333 73.5970316
Avg. Staffing=E/TDEV 106.237 228.8372244 529.073009

KLOC 250 Organic Embedded a b c d

Effort equation E PM=a*(KLOC^b) 790.7665 2715.379351 Organic 2 1.05 2.5 0.38
Productivity eqn DSI/PM 316.149 92.06816715 Semi-detache 3 1.12 2.5 0.35
Schedule eqn (month) TDEV = c* (PM^d) 31.56446 31.38815382 Embedded 4 1.2 2.5 0.32
Average Staffing PM/TDEV 25.05243 86.50968665

13
 PROJECT EVALUATION

PROJECT EVALUATION

• Strategic Assessment • Project evaluation is normally carried out in step 0 of stepwise

• Technical Assessment
• Project evaluation is a step by step process of collecting, recording and
• Cost Benefit Analysis organizing information about

• Cashflow Forecasting – Project results

• Cost Benefit Evaluation techniques – short - term outputs (immediate results of activities or project deliverables)
– Long – term outputs (changes in behaviour , practice or policy resulting from
• Risk Evaluation the result.
 STRATEGIC ASSESSMENT

Why is project evaluation important: WHAT IS STRATEGIC PLANNING?

project evaluation is important for answering the following questions-
- what progress has been made? Strategic planning is defined as an organization’s process of defining its strategy ,
- were the desired outcomes achieved? Why? or direction and making decisions on allocating its resources to pursue this
- whether the project can be refined to achieve better outcomes? strategy, including its capital and people
- do the project results justify the project inputs?
- it deals with:
What are the challenges in monitoring and evaluation?
- getting the commitment to do it. - what do we do?
- establishing base lines at the beginning of the project.
- identifying realistic quantitative and qualitative indicator.
- finding the time to do it and stricking to it. - for whom do we do it?
- getting feedback from your stakeholders.
- reporting back to your stakeholders.
- how do we excel?

• STRATEGIC ASSESSMENT is the first criteria for project evaluation • Evaluating of project is depends on:
– For evaluating and managing the projects, the individual projects should be seen as
components of a programme. Hence need to do programme management. – How it contributes to programme goal.
– It is viability [ capability of developing or useful].
Programme management: – Timing.
• D.C. Ferns defined “a programme as a group of projects that are managed in a co-ordinated
– Resourcing.
way to gain benefits that would not be possible were the projects to be managed
independently”.
• For successful strategic assessment, there should be a
• A programme in this context is a “collection of projects that all contribute to the same overall
organization goals”. strategic plan which defines:
– Organization’s objectives.
• Effective programme management requires that there is a well defined programme goal and – Provides context for defining programme
that all the organization’s projects are selected and tuned to contribure to this goal”
– Provides context for defining programme goals.
– Provide context for accessing individual project.
• In large organization, programme management is taken care by programme • Typical issues and questions to be considered during strategic
director and programme executive , rather than, project manager, who will be
responsible for the strategic assessment of project. assessment
• Issue – 1: objectives:
• Any potential software system will form part of the user organization’s overall – How will the proposed system contribute to the organization’s stated
information system and must be evaluated within the context of existing objectives? How, for example, might it contribute to an increase in
information system and the organization’s information strategy. market share?

• If a well – defined information system does not exist then the system development
and the assessment of project proposals will be based on a more “piece meal • Issue – 2: is plan
approach”. – How does the proposed system fit in to the IS plan? Which existing
system (s) will it replace/interface with? How will it interact with
• Piece meal approach is one in which each project being individually early in its life systems proposed for the later development?
cycle.

Programmes may be
• Strategic – several projects together can implement a single strategy
– Merging of two organizations could involve the creation of unified payroll
and accounting applications
• Issue – 3: organization structure:
– What effect will the new system have on the existing departmental and • Business cycle programmes – collection so projects that an
organization structure? organization undertakes within a particular planning cycle is referred
– For example, a new sales order processing system overlap existing sales and to as a portfoilo
stock control functions? – Projects to implement within the budget within the accounting period
• Issue – 4: MIS:
– What information will the system provide and at what levels in the • Infrastructure programmes – sharing of application between
organization? In what ways will it complement or enhance existing departments
management information system?
• Issue – 5: personnel: • Research and development programmes-risk associated with an
– In what way will the system proposed system affect manning levels and the innovative projects fluctuate
existing employee skill base? What are the implications for the organization’s
overall policy on staff development.
• Issue – 6: image: • Innovative partnerships - www
– What, if any, will be the effect on customer’s attitudes towards the
organization? Will the adoption of, say, automated system conflict with the
objectives of providing a friendly service?

11
 Programme managers versus project
managers Projects sharing resources

Programme manager Project manager

– Many simultaneous – One project at a time
projects – Impersonal
– Personal relationship relationship with
with skilled resources resources
– Optimization of – Minimization of
resource use demand for resources
– Projects tend to be – Projects tend to be
seen as similar seen as unique

12 13

Strategic programmes
• Different form of programme management
is where a portfolio of projects all
contribute to a common objective.
• Business objective might be to present a consistent
and uniform front to the clients.

• Based on OGC guidelines

– PRINCE & PRINCE2 project management

14 Prince2 15
 Creating a programme - PPVB • The programme brief – equivalent of a
feasibility study for the programme
• Initial planning document is the
Programme Mandate describing
– Vision statement
– The new services/capabilities that the
programme should deliver – The benefits
– How an organization will be improved – Risks and issues
– Fit with existing organizational goals – Estimated costs, timescales and effort
• A programme director appointed a
champion for the scheme • The vision statement – explains the new
capability that programme will give the
organization
16 17

• The blueprint – explains the changes to be

Aids to programme management
made to obtain the new capability • Dependency diagrams
– Business models outlining the new processes
required
A. System study/design
– Organizational structure – including the
numbers of staff required in the new systems B. Corporate image design
and skills they will need C. Build common systems
– The information systems, equipment and D. Relocate offices
other, non staff resources – needed
E. Training
– Data and information requirement
F. Data migration
– Costs, performance and service level
requirements G. Implement corporate interface

18 19
 • Delivery planning
– Delivery dependency diagram – precursor to
programme planning
– Tranche is a group of projects that will deliver
their products as one step in the programme
– Tranches – deliverables – tangible benefits

20 21

• Portfolio management
– Strategic and operational assessment carried by an organization on
behalf of customer is called portfolio management [third party
developers]
– They make use of assessment of any proposed project themselves.
– They ensure for consistency with the proposed strategic plan.
– They proposed project will form part of a portfolio of ongoing and
planned projects

• Selection of projects must take account of possible effects on other

projects in the portfolio( example: competition of resource) and the
overall portfolio profile( example: specialization versus diversification).

22
 Economic Assessment
Technical assessment
COST BENEFIT ANALYSIS
– It is the second criteria for evaluating the project. • It is one of the important and common way of carrying “economic assessment” of
a proposed information system.
– Technical assessment of a proposed system evaluates functionality • This is done by comparing the expected costs of development and operation of the
against available: system with its benefits.
• Hardware • So it takes an account:
• Software • Expected cost of development of system
• Expected cost of operation of system
• Limitations • Benefits obtained
• Assessment is based on:
– Nature of solutions produced by strategic information systems plan
• Whether the estimated costs are executed by the estimated income.
– Cost of solution. Hence undergoes cost-benefit analysis. • And by other benefits
• For achieving benefit where there is scarce resources, projects will be prioritized
and resource are allocated effectively.
• The standard way of evaluating economic benefits of any project is done by “cost
benefit analysis”

• Cost benefit analysis comprises of two steps: • Step-2:

• Step-1: identifying and estimating all of the costs and benefits of carrying out the – Calculates net benefit.
project. – Net benefit = total benefit = total cost.
• Step-2: expressing these costs and benefits in common units. – (cost should be expressed in monetary terms).
• Step-1:
– It includes Three types of cost
• Development cost of system.
• Operating cost of system.
• Development costs: includes salary and other employment cost of staff
• Benefits obtained by system.
involved.
– When new system is developed by the proposed system, then new system should reflect
the above three as same as proposed system.
• Example: sales order processing system which gives benefit due to use of new • Setup costs: includes the cost of implementation of system such as hardware,
system. and also file conversion, recruitment and staff training.

Operational cost: cost require to operate system, after it is installed.

• Three categories of benefits: CASH FLOW FORCASTING
It estimate overall cost and benefits of a product with respect to time.
• Direct benefits: directly obtained benefit by making use of/operating the system. • -ive cashflow during development stage.
Example: reduction of salary bills, through the introduction of a new ,
computerized system. • +ive cashflow during operating life.

• Assessable indirect benefits: these benefits are obtained due to updation / During development stage
upgrading the performance of current system. It is also referred as “secondary • Staff wages
benefits”. • Borrowing money from bank
Example: “use of user – friendly screen”, which promotes reduction in errors, thus
increases the benefit. • Paying interest to bank
• Payment of salaries
• Intangible benefits: these benefits are longer term, difficult to quantify. It is also • Amount spent for installation, buying hw and sw
referred as “indirect benefits”. Income is expected by 2 ways.
Example: enhanced job interest leads reduction of staff turnover, inturn leads • Payment on completion
lower recruitment costs.
• Stage payment

Cost Benefit Evaluation techniques

It consider
• the timing of the costs and benefits
• the benefits relative to the size of the investment

Common method for comparing projects on the basic of their cash flow forecasting.

Cost Benefit Evaluation techniques • 1) Net profit

• 2) Payback Period
• 3) Return on investment
• 4) Net present Value
• 5) Internal rate of return
 Net profit

• Net profit • Calculate net profit.

Year Project1 Project2 project3
calculated by subtracting a company's total
0 -100000 -1,000,000 -120000
expenses from total income. 1 10,000 2,00000 30,000

showing what the company has earned (or lost) 2 10,000 2,00000 30,000

in a given period of time (usually one year). 3 10,000 2,00000 30,000

also called net income or net earnings. 4 20,000 2,00000 30,000

5 100000 3,00000 75,000

Net profit=total costs-total incomes

Payback Period

• The payback period is the time taken to recover the initial investment.
• Calculate net profit.(-ive total cost or total investment) Or
Year Project1 Project2 project3 • is the length of time required for cumulative incoming returns to equal the
0 -100000 -1,000,000 -120000 cumulative costs of an investment
1 10,000 2,00000 30,000 Advantages
2 10,000 2,00000 30,000 • simple and easy to calculate.
• It is also a seriously flawed method of evaluating investments
3 10,000 2,00000 30,000 Disadvantages
• It attaches no value to cashflows after the end of the payback period.
4 20,000 2,00000 30,000 • It makes no adjustments for risk.
• It is not directly related to wealth maximisation as NPV is.
5 100000 3,00000 75,000 • It ignores the time value of money.
• The "cut off" period is arbitrary.
Net profit 50,000 1,00,000 75,000
• Calculate Payback Period • Payback Period
Project1 =10,000+10,000+10,000+20,000+1,00,000=1,50,000
Year Project1 Project2 project3
Project 2= 2,00,000+2,00,000+2,00,000+2,00,000+3,00,000=11,000,00
0 -100000 -1,000,000 -120000
1 10,000 2,00000 30,000
2 10,000 2,00000 30,000
Project 3= 30,000+30,000+30,000+30,000 + 75,000 =1,95,000
3 10,000 2,00000 30,000
It ignores any benefits that occur after the payback
4 20,000 2,00000 30,000
period and, therefore, does not measure profitability.
5 100000 3,00000 75,000
It ignores the time value of money.

RETURN ON INVESTMENT or ACCOUNTING RATE OF RETURN

• It provides a way of comparing the net profitability to the • RETURN ON INVESTMENT

investment required.
Or
• A performance measure used to evaluate the efficiency of • ROI = average annual profit * 100
an investment or to compare the efficiency of a number of
total investment
different investments

• Disadvantages average annual profit = net profit

total no. of years
• It takes no account of the timing of the cash flows.
• Rate of returns bears no relationship to the interest rates offered or
changed by bank.
 Ex1
• Calculate ROI for project 1. • Calculate the ROI for the following projects
Ans: Total investment =1,00,000 and comment, which is the most worthwile.
Net profit = 50,000
Total no. of year = 5 • Investment Netprofit
• Project1 150000 50000
• Project2 1,000000 1,00000
Average annual profit=50,000/5=10,000rs • Project3 450000 40,000

ROI= (10,000/1,00,000) *100 = 10% • The period of above project is 5 years.

Ex2. Net present value (NPV)

• There are two projects x and y. each project requires an investment of rs • Discounted Cash Flow (DCF) is a cash flow summary adjusted to reflect the time
20,000. you are required to rank these projects according to the pay back value of money. DCF can be an important factor when evaluating or comparing
method from the following information. investments, proposed actions, or purchases. Other things being equal, the action
or investment with the larger DCF is the better decision. When discounted cash
flow events in a cash flow stream are added together, the result is called the Net
• Year projectx projecty Present Value (NPV).
• 1 1000 2000
• When the analysis concerns a series of cash inflows or outflows coming at
• 2 2000 4000
different future times, the series is called a cash flow stream. Each future cash
• 3 4000 6000 flow has its own value today (its own present value). The sum of these present
• 4 5000 8000 values is the Net Present Value for the cash flow stream.
• 5 8000
• The size of the discounting effect depends on two things: the amount of time
between now and each future payment (the number of discounting periods) and
an interest rate called the Discount Rate.
• The example shows that:
• As the number of discounting periods between now and the cash arrival increases,
the present value decreases.
• As the discount rate (interest rate) in the present value calculations increases, the
present value decreases.

Applying discount factors Example: Comparing Competing Investments with NPV.

• Consider two competing investments in computer equipment. Each calls for an
Year Cash-flow Discount Discounted cash initial cash outlay of $100, and each returns a total a $200 over the next 5 years
factor(discount flow making net gain of $100. But the timing of the returns is different, as shown in the
rate 10%) table below (Case A and Case B), and therefore the present value of each years
return is different. The sum of each investments present values is called the
0 -100,000 1.0000 -100,000 Discounted Cash flow (DCF) or Net Present Value (NPV). Using a 10% discount rate
1 10,000 0.9091 9,091
2 10,000 0.8264 8,264 Discount
CASE A CASE B
Timing Rate(10%)
3 10,000 0.7513 7,513 Net Cash Flow Present Value Net Cash Flow Present Value

Now 0 1 $100.00 $100.00 $100.00 $100.00

4 20,000 0.6830 13,660 Year 1 0.9091 $60.00 $54.54 $20.00 $18.18
5 100,000 0.6209 62,090 Year 2 0.8264 $60.00 $49.59 $20.00 $16.52
Year 3 0.7513 $40.00 $30.05 $40.00 $30.05
NPV 618 Year 4 0.6830 $20.00 $13.70 $60.00 $41.10
Click for
The figure of RM618 means that more
RM618 infomore would be made than if the Year 5 0.6209 $20.00 $12.42 $60.00 $37.27
money were simply invested at 10%. An NPV of RM0 would be the same Total Net CFA = $100.00
NPVA =
Net CFB = $100.00 NPVB = $43.12
$60.30
amount of profit would be generated as investing at 10%. 46 46
Ex :3 Solution

Ex:4
 Ex : 5
Consider the following fictitious scenario and some questions related to it. The table below Based on the above table, answer the following questions:
gives the estimated cash flow for three different projects

1 Calculate the net profit of each project.

2 Based on your answer to Question 1 above, which project would you select to
develop?
3 Using the shortest payback method as discussed in Hughes and Cotterell, which
project would you now select for development and why?
4 Calculate the Return on Investment (ROI) of each of these projects.
5 Based on your calculation of the ROI of each project in Question 4 above, which
project would you select to develop?
6 Assume a discount rate of 12%. Calculate the Net Present Value (NPV) of each
project.
7 Based on your calculation of each project’s NPV, which project would you now
select for development? In general, what conclusion do you reach regarding the
viability of these projects? (Base your answer on the NPVs of each project.)

Ans a16.pdf

IRR (Internal Rate Return)

• The IRR compares returns to costs by asking: "What is the • IRR asks a different question of the same two cash flow streams. Instead of proposing a
discount rate and finding the NPV of each stream (as with NPV), IRR starts with the net cash
discount rate that would give the cash flow stream a net flow streams and finds the interest rate (discount rate) that produces an NPV of zero for
present value of 0?" each. The easiest way to see how this solution is found is with a graphical summary:

CASE A CASE B
Discount
Timing Rate(10%)
Net Cash Flow Present Value Net Cash Flow Present Value

Now 0 1 $100.00 $100.00 $100.00 $100.00

Year 1 0.9091 $60.00 $54.54 $20.00 $18.18
Year 2 0.8264 $60.00 $49.59 $20.00 $16.52
Year 3 0.7513 $40.00 $30.05 $40.00 $30.05
Year 4 0.6830 $20.00 $13.70 $60.00 $41.10
Year 5 0.6209 $20.00 $12.42 $60.00 $37.27
NPVA =
Total Net CFA = $100.00 Net CFB = $100.00 NPVB = $43.12
$60.30
• These curves are based on the Case A and Case B cash flow figures in the table
above. Here, however, we have used nine different interest rates, including 0.0 and
0.10, on up through 0.80.
• As you would expect, as the interest rate used for calculating NPV of the cash flow
stream increases, the resulting NPV decreases.
• For Case A, an interest rate of 0.38 produces NPV = 0, whereas
• Case B NPV arrives at 0 with an interest rate of 0.22.
Risk Evaluation
• Case A therefore has an IRR of 38%, Case B an IRR of 22%.

• IRR as the decision criterion, the one with the higher IRR is the better
choice.

Risk evaluation Risk Identification and ranking

• Risk evaluation is meant to decide whether to proceed with the project or
not, and whether the project is meeting its objectives.
Risk Occurs: • Identify the risk and give priority.
• When the project exceed its original specification • Could draw up draw a project risk matrix for each project to assess risks
• Deviations from achieving it objectives and so on.
• Project risk matrix used to identify and rank the risk of the project
Risk Identification and ranking

Risk and Net Present Value • Example of a project risk matrix

• For riskier projects could use higher discount rates
• Ex: Can add 2% for a Safe project or 5 % for a fairly risky one.

Cost benefit Analysis

Risk profile analysis

Decision trees

58 59
Risk profile analysis
• This make use of “risk profiles” using sensitivity
analysis.
• It compares the sensitivity of each factor of project
profiles by varying parameters which affect the
project cost benefits.
• Eg:
• P1 depart far from p2,have large variation
• Vary the original estimates of risk plus or minus 5% • P3 have much profitable than expected
and re-calculate the expected cost benefits.
• All three projects have the same expected profit
• Compare to p2 , p1 is less risky.

Decision trees Decision trees

• The expected value of Extending
• Identify over risky projects system=
• Choose best from risk (0.8*75,000)-
• Take suitable course of action (0.2*100,000)=40,000 Rs.

Decision tree of analysis risks helps us to • The expected value of Replacing

system=
• Extend the existing system
(0.2*250,000)-
 increase sales
(0.8*50,000)=10,000 Rs.
 improve the management information

• Replace the existing system Therefore, organization should

 Not replacing system leads in loss choose the option of extending
 Replace it immediately will be expensive. the existing system.

63
 NPV (Rs)
Ex 1: Further extension
-100,000

0.5
80,000
Extend
0.5
No extension

D2
Further extension
0.5 200,000
0.1
Extend Replace

D1
0.9
0.5
No extension

Further extension
-30,000 FP
Replace 0.1
-100,000

0.9
No extension 75,000
Replace

0.2
Further extension
250,000
0.8
No extension -50,000

Unadjusted function point (UFP) Instance - 1

• A File consisting of employee information can be updated with user
input that create employee information, delete an employee, or
update employee information. A system permits display of current
employee information. A telephone listing produced monthly, with a
calculated total number of employees by site. The telephone listing
includes data retrieved from a personnel file maintained by another
application. Determine the adjusted function count of the
application.
Instance - 2 Instance - 3

Easy Moderat Comple

WF e WF x WF
Input 5 3 15 4 20 6 30
Output 5 4 20 5 25 7 35
Queries 3 3 9 4 12 6 18
EIF 3 5 15 7 21 10 30
ILF 2 7 14 10 20 15 30
73 98 143
Easy Moderat Complex
UFP e UFP UFP
VAF 1.07

Value adjusted factor (VAF) VAF

VAF VAF

Easy Moderate Complex

Count WF WF WF
Input 5 3 15 4 20 6 30
Output 5 4 20 5 25 7 35
Queries 3 3 9 4 12 6 18
EIF 3 5 15 7 21 10 30
ILF 2 7 14 10 20 15 30
73 98 143
Moderate Complex
Easy UFP UFP UFP
VAF 1.07
FP 78.11 104.86 153.01