Review Question Week Chapter 2 Project Management

Please Work in groups of 3-5 persons!!!

File id: nim_nama_COMP6115_WEEK01.docx

Submit by: Sunday, 10th Okt 2021 at 23.59 (Forum will be locked. By the time).

Group Id: ­9

Student Nim Student Name

1. 2301905543 Fiona Varencia Tendio

2. 2301915310 Maria Cecilia Anggraeni

3. 2301933755 Vincent

4. 2301942406 Febryan Stefanus Tandian

5. 2301920632 Andrew Wiseson Tanjaya

*) Group discussion for 3-5 students, decide your group id/no

Review Question 2 –

Please read Chapter 2-Project Management thoroughly, and please answer

elaboratively (may contains of paragraphs, diagrams, examples, references)

1. Why should the system request be created by a business person as opposed

to an IS professional?

Answer:

In an organization, system requests come from project sponsors. A business

person will have a better idea of understanding business needs, business
requirements, business values, and specific issues. So IS professionals who
are not directly involved will find it difficult to understand the business details.

2. What are the purposes of the system request and the feasibility analysis?
How are they used in the project selection process?

Answer:
 A system request is a document that explains why the business needs the
system and the value the system is expected to provide. Feasibility analysis
determines whether to continue project development or not. With this
analysis, the organization can find out a more detailed picture of the
advantages as well as what obstacles can arise.

When the system request has been made and submitted to the committee. If
the committee agrees, it will continue to check the feasibility analysis. Then it
will be submitted back to the committee. Project selection will be determined
by taking weighing risks.

3. Describe the three techniques for feasibility analysis.

Answer:

Technical Feasibility: “Can we build it?”

Technical analysis is a technical risk analysis that considers the extent to

which the system can be successfully designed, developed, and installed by
the IT group. Based on Functional Areas, Technology, Project Size, and
Compatibility.

Economic Feasibility: “Should we build it?”

Economic feasibility is determined by identifying costs and benefits

(Development costs, Annual operating costs, Annual benefits, Intangible costs
and benefits) associated with the system, assigning values to them, and then
calculating the cash flow and return on investment for the project.

Organizational Feasibility: “If we build it, will they come?”

Organizational Feasibility is to assess how well the system ultimately will be

accepted by its users and incorporated into the ongoing operations of the
organization.

4. Describe a risky project in terms of technical feasibility. Describe a project that

would not be considered risky.

Answer:

- Lack of familiarity of users and analysts with functional areas.

When the analyst is unfamiliar with the functional area of the business,
then the risk will increase.
 - Familiarity with the technology

When a system uses technology that has not been used before within
the organization, there is a greater chance that problems will occur and
delays will be incurred because of the need to learn how to use the
technology.

- Project Size

Larger projects will increase the amount of risk. Project size will be
measured by the number of people on the development team, the
length of time it will take to complete the project, or the number of
distinct features in the system.

- Complexity

Projects that have a lot of integration with other systems will increase
complexity, thereby increasing risk.

5. What are the steps for assessing economic feasibility? Describe each step.

Answer:

1. Identifying Costs and Benefits

The first step of preparation in project management is to identify the cost

needed to start the project and what benefit will the project achieve. There are
two types of costs:

- one-time costs, for example: initial purchases, supplies, materials, etc.

- recurring costs, for example: purchases for land or building, licenses,
employee wages, insurance, etc.

2. Assigning Values to Costs and Benefits

On this step, basically assign values that are given by business users and IT
professionals thus we could know which item to prioritize.

3. Determining Cash Flow

On this step, we are asked to identify the cost and benefits that we will get
over a period of time, usually three to five years, to show cash flow over time.
The amount of cost can be fixed or can be adjusted for inflation or business
improvements.
 4. Determining Net Present Value (NPV)

Net Present Value (NPV) is the difference between the present value of your
cash inflows and the present value of your cash outflows over a given period.
To calculate NPV actually is relatively straightforward, and it’s important to
remember that the formula may vary depends on number of the cash flow that
company deals with.

For the project which has only one cash flow, you can use this formula :

NPV = Cash flow / (1 + i)t - initial investment

* i = required return or discount rate, t = time periods

For a longer project that involves multiple cash flows, the formula will be :

NPV = today’s value of the expected cash flows - today’s value of

invested cash

5. Determining Return on Investment (ROI)

A well-developed budget should indicate a company’s anticipated return on

investment and overhead. The result of previous steps is to determine
whether the project is financially possible and make a projection on the rate
of return on invested capital.

ROI = (Net Income / Cost of Investment) x 100

6. Determining the Break-Even Point

This is the step that focused on understanding how time-consuming it will take
for the system to start produces real value for the organization. By finding the
first year in which the system has a higher benefits than cost and apply them
into break-even formula.

7. Graphing the Break-Even Point

Bring out each year costs and benefits milestone on a graph which depicts a
straight line and mark the coordinate where the lines are met

6. List two intangible benefits. Describe how these benefits can be quantified.
And list two tangible benefits and two operational costs for a system. How
would you determine the values that should be assigned to each item?
Answer:

Intangible costs or benefits should be quantified if at all possible. Otherwise, it

will be difficult to tell whether the expenses and benefits were realized.

Intangible benefits :

- Increased Customer Service Quality

Consider a system or training designed to enhance customer service.

This is intangible, but imagine that better customer service reduces the
amount of customer complaints by 20% each year for several years
and eliminates large spendings on phone charges and complaint call
operators. Suddenly, there are some very concrete metrics with which
we can assess the intangible benefits and assign them measurable
values, which is decreased customer complaint phone calls, and
therefore, phone charges.

- Increased Staff Morale and Motivation

Company staff often works long hours doing similar repetitive tasks that
can become mind-numbing and monotonous. The speed decreases
unconsciously, and the output quickly settles at a pace that is far less
efficient and effective than it could be. Also, when employees are bored
and only half-focus on the task at hand, mistakes begin to occur, which
can lead to product defects, health and safety issues, and so on. One
way is to reduce motion, such as walking off the production area to
fetch something for work. This will also reduce time spent on
unnecessary socialization or distraction, if there is 5 spent minutes of
these every 1 hour, removing them can boost staff productivity by 10%.

We can also use scoreboards to reach influenceable targets and get

genuine results. you'll need an individual score for each person or
small group, so that when they put in extra effort, the results show up
on the scoreboard right away. As the score rises and they see their
progress on the scoreboard, the pace quickens and the output rises.
It's also crucial that employees are participating in the goal-setting
process. They will take control and drive themselves if they set their
own goals. When production output is more accurate and less
time-consuming, it ensures lesser cost of production, and effective
utilisation of available resources.

Tangible Benefits : Revenue in sales, income stream

Operational cost : software licencing fees, equipment upgrade

 When it comes to evaluating values to benefits and cost, the best
technique is to rely on those who know them best. When mentioning
benefits or cost relating to the technology for the project/system itself
(software licencing fees, equipment upgrade), the company’s IT
department or consultant can provide an accurate projection for a
number. Alongside that, business users can produce the metrics
associated with the business (e.g., Revenue in sales, income stream).
Analysts can also look at previous projects, industry reports, and
vendor data, albeit these methods are likely to be less accurate. As the
project progresses, all of the estimates will most likely be changed.

7. Explain the net present value and return on investment for a cost–benefit
analysis. Why would these Question-calculations be used?

Answer: The net present value for a cost-benefit analysis is an important key
that identifies the financial risk associated and connected with the project.
because we will determined Economic Feasibility by identifying costs and
benefits belongs to the system, therefore calculating the cash flow and return
on investment for the project itself. the scale of cost-benefit analysis
complexity is directly proportional to the size of the project

On the other hand, The Return on Investment (ROI) for a cost-benefit analysis
is a calculation listed somewhere on the spreadsheet that measures the
amount of money an organization receives in return for the money it spends.