RD 565.

9 Program Project Planning

Monitoring and Evaluation
Rafael M. Soro May 7, 2022
Prof. Rose Anna Refuerzo, Phd.

Report Handout: (1) Decision

Masters in Rural Development (MRD- Eastern Visayas State University (EVSU),
Making Tools; (2) Project
B) Tacloban City
Management Process: Initiation

Decision Making Tools

“Problem solving and decision-making are important skills for business and life. Problem
solving often involves decision-making, and decision-making is especially important for
management and leadership. There are processes and techniques to improve decision
making and the quality of decisions.”

Rationale: Before you do anything on a matter, be sure to that you are well informed.
Decision making tools are tools for project managers to have in them an informed
decision.

The following are a few examples of decision-making models/tools:

1) Pareto Analysis (80/20 Rule)

2) Paired Comparison
3) Grid Analysis (Decision Matrix Analysis)
4) PMI (Plus/Minus/Interesting)
5) Cost Benefit Analysis
6) SWOT (Identifying: Strength, Weaknesses, Opportunities, and Threats)
 Tools for Effective Decision Making

Pareto Analysis

Choosing the Most Important Changes to Make, Pareto Analysis is a very simple
technique that helps you choose the most effective changes to make. It uses the Pareto
principle - the idea that by doing 20% of the work you can generate 80% of the
advantage of doing the entire job. Pareto analysis is a formal technique for finding the
changes that will give the biggest benefits. It is useful where many possible courses of
action are competing for your attention.

Pareto analysis is a formal technique useful where many possible courses of action are
competing for attention. In essence, the problem-solver estimates the benefit delivered by
each action, then selects a number of the most effective actions that deliver a total benefit
reasonably close to the maximal possible one.

Pareto analysis is a creative way of looking at causes of problems because it helps

stimulate thinking and organize thoughts. However, it can be limited by its exclusion of
possibly important problems which may be small initially but will grow with time. It
should be combined with other analytical tools such as failure mode and effects
analysis and fault tree analysis for example.

Failure Modes and Effects Analysis (FMEA) is a systematic, proactive

method for evaluating a process to identify where and how it might fail and
to assess the relative impact of different failures, in order to identify the parts
of the process that are most in need of change.
 Fault Tree Analysis (FTA) is a tool to analyze the potential for system or
machine failure by graphically and mathematically representing the system
itself. It is a top-down approach that reverse-engineers the root causes of a
potential failure through the root cause analysis process.

This technique helps to identify the top portion of causes that need to be addressed to
resolve the majority of problems. Once the predominant causes are identified, then tools
like the Ishikawa diagram or Fish-bone Analysis can be used to identify the root causes
of the problems. While it is common to refer to pareto as "80/20" rule, under the
assumption that, in all situations, 20% of causes determine 80% of problems, this ratio is
merely a convenient rule of thumb and is not, nor should it be considered, an immutable
law of nature.

The application of the Pareto analysis in risk management allows management to focus
on those risks that have the most impact on the project.

Steps to identify the important causes using 80/20 rule:

1. Form a frequency of occurrences as a percentage

2. Arrange the rows in decreasing order of importance of the causes (i.e., the
most important cause first)
3. Add a cumulative percentage column to the table, then plot the
information
4. Plot (#1) a curve with causes on x- and cumulative percentage on y-axis
5. Plot (#2) a bar graph with causes on x- and percent frequency on y-axis
6. Draw a horizontal dotted line at 80% from the y-axis to intersect the
curve. Then draw a vertical dotted line from the point of intersection to
the x-axis. The vertical dotted line separates the important causes (on the
left) and trivial causes (on the right)
7. Explicitly review the chart to ensure that causes for at least 80% of the
problems are captured

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Key points: Pareto Analysis is a simple technique that helps you to identify the most
important problem to solve.

To use it:

A. List the problems you face, or the options you have available
B. Group options where they are facets of the same larger problem
C. Apply an appropriate score to each group
D. Work on the group with the highest score
Pareto analysis not only shows you the most important problem to solve, but it also gives
you a score showing how severe the problem is.

Ishikawa diagram

Ishikawa diagrams (also called fishbone diagrams, herringbone diagrams, cause-

and-effect diagrams, or Fishikawa) are causal diagrams created by Kaoru Ishikawa that
show the potential causes of a specific event.

Common uses of the Ishikawa diagram are product design and quality defect prevention
to identify potential factors causing an overall effect. Each cause or reason for
imperfection is a source of variation. Causes are usually grouped into major categories to
identify and classify these sources of variation.

The defect is shown as the fish's head, facing to the right, with the causes extending to the
left as fishbones; the ribs branch off the backbone for major causes, with sub-branches
for root-causes, to as many levels as required.

Ishikawa diagrams were popularized in the 1960s by Kaoru Ishikawa, who pioneered
quality management processes in the Kawasaki shipyards, and in the process became one
of the founding fathers of modern management.

The basic concept was first used in the 1920s, and is considered one of the seven basic
tools of quality control. It is known as a fishbone diagram because of its shape, similar to
the side view of a fish skeleton.

Mazda Motors famously used an Ishikawa diagram in the development of

the Miata (MX5) sports car.

Root-cause analysis is intended to reveal key relationships among various variables, and
the possible causes provide additional insight into process behavior.

The causes emerge by analysis, often through brainstorming sessions, and are grouped
into categories on the main branches off the fishbone. To help structure the approach, the
categories are often selected from one of the common models shown below but may
emerge as something unique to the application in a specific case.
Each potential cause is traced back to find the root cause, often using the 5
Whys technique.

Typical categories include:

The 5 Ms (used in manufacturing)

Originating with lean manufacturing and the Toyota Production System, the 5 Ms is one
of the most common frameworks for root-cause analysis:

 Manpower / mind power (physical or knowledge work, includes: kaizens,

suggestions)
 Machine (equipment, technology)
 Material (includes raw material, consumables, and information)
 Method (process)
 Measurement / medium (inspection, environment)

These have been expanded by some to include an additional three, and are referred to as
the 8 Ms:
 Mission / mother nature (purpose, environment)
 Management / money power (leadership)
 Maintenance

9M model

In addition to following identified sources that can affect the desired outcome of a
process or preclude opportunities:

1. Method
2. Mother Nature
3. Man
4. Measurement
5. Machine
6. Materials, you could take into account also:
7. Mandatory matters: such as the rules which originate from laws,
standards, Body regulations or organization policies/ways of conduct
8. Matter-of-fact technology limitations: no way to reduce to zero failure
risk
 9. Misinterpretation of reality: science represents reality by means of models
but complete knowledge of reality is not attained.

The 8 Ps (used in product marketing)

This common model for identifying crucial attributes for planning in product marketing is
often also used in root-cause analysis as categories for the Ishikawa diagram:

 Product (or service)

 Price
 Place
 Promotion
 People (personnel)
 Process
 Physical evidence (proof)
 Performance

The 4 or 5 Ss (used in service industries)

An alternative used for service industries, uses four categories of possible cause:
 Surroundings
 Suppliers
 Systems
 Skill
 Often an important 5th S is added - Safety

Advantages
 Highly visual brainstorming tool which can spark further examples of root causes
 Quickly identify if the root cause is found multiple times in the same or different
causal tree
 Allows one to see all causes simultaneously
 Good visualization for presenting issues to stakeholders

Disadvantages
 Complex defects might yield a lot of causes which might become visually
cluttering
 Interrelationships between causes are not easily identifiable

Five whys

Five whys (or 5 whys) is an iterative interrogative technique used to explore the cause-

and-effect relationships underlying a particular problem. The primary goal of the
technique is to determine the root cause of a defect or problem by repeating the question
"Why?". Each answer forms the basis of the next question. The "five" in the name derives
from an anecdotal observation on the number of iterations needed to resolve the problem.
Not all problems have a single root cause. If one wishes to uncover multiple root causes,
the method must be repeated asking a different sequence of questions each time.

The method provides no hard and fast rules about what lines of questions to explore, or
how long to continue the search for additional root causes. Thus, even when the method
is closely followed, the outcome still depends upon the knowledge and persistence of the
people involved.

An example of a problem is: The vehicle will not start.

1. Why? – The battery is dead. (First why)

2. Why? – The alternator is not functioning. (Second why)
3. Why? – The alternator belt has broken. (Third why)
4. Why? – The alternator belt was well beyond its useful service life and not
replaced. (Fourth why)
5. Why? – The vehicle was not maintained according to the recommended
service schedule. (Fifth why, a root cause)

The questioning for this example could be taken further to a sixth, seventh, or higher
level, but five iterations of asking why is generally sufficient to get to a root cause. The
key is to encourage the trouble-shooter to avoid assumptions and logic traps and instead
trace the chain of causality in direct increments from the effect through any layers of
abstraction to a root cause that still has some connection to the original problem. Note
that, in this example, the fifth "why" suggests a broken process or an alterable behavior,
which is indicative of reaching the root-cause level.

The last answer points to a process. This is one of the most important aspects in the five
why approach – the real root cause should point toward a process that is not working well
or does not exist. Untrained facilitators will often observe that answers seem to point
towards classical answers such as not enough time, not enough investments, or not
enough resources. These answers may be true, but they are out of our control. Therefore,
instead of asking the question why?, ask why did the process fail?

The technique was originally developed by Sakichi Toyoda and was used within
the Toyota Motor Corporation during the evolution of its manufacturing methodologies.
It is a critical component of problem-solving training, delivered as part of the induction
into the Toyota Production System. The architect of the Toyota Production
System, Taiichi Ohno, described the five whys method as "the basis of Toyota's
scientific approach by repeating why five times the nature of the problem as well as
its solution becomes clear." The tool has seen widespread use beyond Toyota, and is
now used within Kaizen, lean manufacturing and Six Sigma. The five whys were initially
developed to understand why new product features or manufacturing techniques were
needed and was not developed for root cause analysis.

In other companies, it appears in other forms. Under Ricardo Semler, Semco practices

"three whys" and broadens the practice to cover goal setting and decision making.

Paired Comparison

Working Out the Relative Importance of Different Options Paired Comparison Analysis
helps you work out the importance of a number of options relative to each other. It is
particularly useful where you do not have objective data on which to base this decision.
This makes it easy to choose the most important problem to solve, or select the solution
that will give you the greatest advantage. Paired Comparison Analysis helps you set
priorities where there are conflicting demands on your resources.

It is also an ideal tool for comparing "apples with oranges" - completely different options
such as whether to invest in marketing, a new IT system or a new piece of machinery.
These decisions are usually much harder than comparing three possible new IT systems,
for example. How to use the Paired Comparison worksheet tool:

For each comparison, you will decide which of the two options is most important, and
then assign a score to show how much more important it is.

Follow these steps to use this technique:

1. List the options you will compare. Assign a letter to each option.
2. Mark the options as row and column headings on the worksheet.
3. Note that the cells on the table where you will be comparing an option with
itself have been blocked out - there will never be a difference in these cells!
4. The cells on the table where you will be duplicating a comparison are also
blocked out.
5. Within the remaining cells compare the option in the row with the one in the
column. For each cell, decide which of the two options is more important. Write
down the letter of the more important option in the cell, and score the difference
in importance from 0 (no difference) to 3 (major difference).
6. Finally, consolidate the results by adding up the total of all the values for each
of the options. You may want to convert these values into a percentage of the total
score.

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Example:

As a simple example, an entrepreneur is looking at ways in which she can expand her
business. She has limited resources, but also has the options she lists below:

1) Expand into overseas markets

2) Expand in home markets
3) Improve customer service
4) Improve quality

First she draws up the Paired Comparison Analysis table in Figure 1:

Figure 1: Example Paired Comparison Analysis Table (not filled in):

Then she compares options, writes down the letter of the most important option, and
scores their difference in importance. An example of how she might do this is shown in
figure 2:

Figure 2: Example Paired Comparison Analysis Table (filled in):

Finally she adds up the A, B, C and D values, and converts each into a percentage of the
total.

This gives these totals:

A = 3 (37.5%)
B = 1 (12.5%)
C = 4 (50%)
D = 0.

Here it is most important to improve customer service (C) and then to tackle export
markets (A).

Quality is not a high priority - perhaps it is good already.

Key points: Paired Comparison Analysis is a good way of weighing the relative
importance of different courses of action. It is useful where priorities are not clear or are
competing in importance. This tool provides a framework for comparing each course of
action against all others and helps to show the difference in importance between factors.

Grid Analysis Analysis (also known as Decision Matrix analysis)

Making a Choice Where Many Factors Must be Balanced Grid Analysis (also known as
Decision Matrix analysis) is most effective where you have a number of good alternatives
and many factors to take into account.

How to use the Grid Analysis worksheet tool:

The first step is to list your options and then the factors that are important for making the
decision. Lay the options out on the worksheet table, with options as the row labels, and
factors as the column headings.
Next, work out the relative importance of the factors in your decision. Show these as
numbers. We will use these to weight your preferences by the importance of the factor.
These values may be obvious. If they are not, then use a technique such as Paired
Comparison Analysis to estimate them.

The next step is to work your way across your table, scoring each option for each of the
important factors in your decision. Score each option from 0 (poor) to 3 (very good).
Note that you do not have to have a different score for each option - if none of them are
good for a particular factor in your decision, then all options should score 0.

Now multiply each of your scores by the values for your relative importance. This will
give them the correct overall weight in your decision.

Finally, add these weighted scores for your options. The option that scores the highest
wins!

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Example:

A windsurfing enthusiast is about to replace his car. He needs one that not only carries a
board
and sails, but also that will be good for business travel. He has always loved open-topped
sports cars. No car he can find is good for all three things.

His options are:

1) A four-wheel drive (4x4), hard topped vehicle

2) A comfortable 'family car'
3) An estate car
4) A sports car
5) Criteria that he wants to consider are:
6) Cost
7) Ability to carry a sail board at normal driving speed
8) Ability to store sails and equipment securely
9) Comfort over long distances
10) Fun!
11) Nice look and build

First, he draws up the table shown in Figure 1, and scores each option by how well it
satisfies each factor:

Figure 1: Example Grid Analysis Showing Unweighted Assessment of How Each Type
of Car Satisfies Each Factor.

Next he decides the relative weights for each of the factors. He multiplies these by the
scores already entered, and totals them. This is shown in Figure 2:
Figure 2: Example Grid Analysis Showing Weighted Assessment of How Each Type of
Car. This gives an interesting result: Despite its lack of fun, an estate car may be the
best choice.

This gives an interesting result: Despite its lack of fun, an estate car may be the best
choice.
If the wind-surfer still feels unhappy with the decision, maybe he has underestimated the
importance of one of the factors. Perhaps he should weight 'fun' by 7!

Key points: Grid Analysis helps you decide between several options, while taking many
different factors into account. To use this tool, lay out your options as rows on a table. Set
up the columns to show your factors. Allocate weights to show the importance of each of
these factors. Score each choice for each factor using numbers from 0 (poor) to 3 (very
good). Multiply each score by the weight of the factor, to show its contribution to the
overall selection. Finally add up the total scores for each option. Select the highest
scoring option.

PMI ('Plus/Minus/Interesting')

Weighing the Pros and Cons of a Decision

PMI stands for 'Plus/Minus/Interesting'. It is a valuable improvement to the 'weighing

pros and cons' technique used for centuries. PMI is particularly useful when used in
conjunction with other decision-making tools. Once you have arrived at a course of
action using a decision-making tool, you can then apply the PMI analysis to check that
the decision is actually going to improve the situation.

How to use the PMI worksheet tool:

First set up column headings for Plus, Minus and Interesting. In the column underneath
'Plus', write down all the positive results of taking the action. Underneath 'Minus' write
down all the negative effects. In the Interesting' column write down the implications and
possible outcomes of taking the action, whether positive, negative, or uncertain. By this
stage it may already be obvious whether or not you should implement the decision. If it is
not, consider each of the points you have written down and assign a positive or negative
score to it appropriately. The scores you assign may be quite subjective.

Once you have done this, add up the score. A strong positive score indicates that an
action should be taken while a strong negative score indicates it should be avoided.

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Example:
A young professional is deciding where to live. Her question is 'Should she move to the
big city?' She draws up the PMI table below:

She scores the table as 13 (Plus) - 18 (Minus) - 1 (Interesting) = - 6

For her, the comforts of a settled rural existence outweigh the call of the 'bright lights' - it
would be much better for her to live outside the city, but close enough to travel in if
necessary.
Key points:

PMI is a good way of weighing the pros, cons and implications of a decision. When you
have selected a course of action, PMI is a good technique to use to check that it is worth
taking. To use the technique, draw up a table with three columns headed Plus, Minus and
Interesting. Within the table write down all the positive points of following the course of
action, all the negatives, and all the interesting implications and possible outcomes. If the
decision is still not obvious, you can then score the table to show the importance of
individual items. The total score should show whether it is worth implementing the
decision.

Cost/Benefit Analysis
Evaluating Quantitatively Whether to Follow a Course of Action

You may have been intensely creative in generating solutions to a problem, and rigorous
in your selection of the best one available. However, this solution may still not be worth
implementing, as you may invest a lot of time and money in solving a problem that is not
worthy of this effort.

Cost Benefit Analysis is a relatively simple and widely used technique for deciding
whether to
make a change. As its name suggests, you simply add up the value of the benefits of a
course of action, and subtract the costs associated with it.

Costs are either one-off or may be ongoing. Benefits are most often received over time.
We build this effect of time into our analysis by calculating a payback period. This is the
time it takes for the benefits of a change to repay its costs. Many companies look for
payback over a specified period of time, e.g. three years.

How to use the Cost/Benefit Analysis tool:

In its simple form, cost-benefit analysis is carried out using only financial costs and
financial
benefits. For example, a simple cost benefit ration for a road scheme would measure the
cost of building the road, and subtract this from the economic benefit of improving
transport links.

It would not measure either the cost of environmental damage or the benefit of quicker
and easier travel to work.

A more sophisticated approach to building a cost benefit model is to try to put a financial
value on intangible costs and benefits. This can be highly subjective (for example: Is an
historic water meadow worth $25,000, or is it worth $500,000 because if its
environmental importance? What is the value of stress-free travel to work in the
morning?) These are all questions that people have to answer, and answers that people
have to defend. The version of the cost benefit approach we explain here is necessarily
simple.

Example:
A sales director is deciding whether to implement a new computer-based contact
management
and sales processing system. His department has only a few computers, and his
salespeople are not computer literate. He is aware that computerized sales forces are able
to contact more
customers and give a higher quality of reliability and service to those customers. They are
more
able to meet commitments, and can work more efficiently with fulfillment and delivery
staff.

His financial cost/benefit analysis is shown below:

Costs:

New computer equipment:

a) 10 network-ready PCs with supporting software @ $1,225 each
b) 1 server @ $1,750
c) 3 printers @ $600 each
d) Cabling & Installation @ $2300
e) Sales Support Software @ $7500

Training costs:
a) Computer introduction - 8 people @ $ 200 each
b) Keyboard skills - 8 people @ $ 200 each
c) Sales Support System - 12 people @ $350 each
d) Other costs:
e) Lost time: 40 man days @ $ 100 / day
f) Lost sales through disruption: estimate: $10,000
g) Lost sales through inefficiency during first months: estimate: $10,000
h) Total cost: $55,800

Benefits:
a) Tripling of mail shot capacity: estimate: $20,000 / year
b) Ability to sustain telesales campaigns: estimate: $10,000 / year
c) Improved efficiency and reliability of follow-up: estimate: $25,000 / year
 d) Improved customer service and retention: estimate: $15,000 / year
e) Improved accuracy of customer information: estimate: $5,000 / year
f) More ability to manage sales effort: $15,000 / year
g) Total Benefit: $90,000/year
h) Payback time: $55,800 / $90,000 = 0.62 of a year = approx. 8 months

Tip:

The payback time is often known as the break even point. Sometimes this is more
important than the overall benefit a project can deliver, for example because the
organization has had to borrow to fund a new piece of machinery. The break even point
can be found graphically by plotting costs and income on a graph of output quantity
against $. Break even occurs at the point the two lines cross.

Inevitably the estimates of the benefit given by the new system are quite subjective.
Despite this, the sales director is very likely to introduce it, given the short payback time.

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Key points:

Cost/Benefit Analysis is a powerful, widely used and relatively easy tool for deciding
whether to make a change.

To use the tool, first work out how much the change will cost to make. Then calculate the
benefit you will receive from it.

Where costs or benefits are paid or received over time, work out the time it will take for
the
benefits to repay the costs.

Cost/Benefit Analysis can be carried out using only financial costs and financial benefits.
You
may, however, decide to include intangible items within the analysis. As you must
estimate a
value for these, this inevitably brings an element of subjectivity into the process.

SWOT Analysis
Identifying Strengths, Weaknesses, Opportunities and Threats

The SWOT analysis is an extremely useful tool for understanding and decision-making
for all sorts of situations in business and organizations. SWOT is an acronym for
Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis headings
provide a good framework for reviewing strategy, position and direction of a company or
business proposition, or any other idea. Completing a SWOT analysis is very simple.
SWOT analysis also works well in brainstorming meetings. Use SWOT analysis for
business planning, strategic planning, competitor evaluation, marketing, business and
product development and research reports. You can also use SWOT analysis exercises for
team building games.

A SWOT analysis is a subjective assessment of data which is organized by the SWOT

format into a logical order that helps understanding, presentation, discussion and
decision-making. The four dimensions are a useful extension of a basic two heading list
of pro's and con's SWOT analysis can be used for all sorts of decision-making, and the
SWOT template enables proactive thinking, rather than relying on habitual or instinctive
reactions.

The SWOT analysis template is normally presented as a grid, comprising four sections,
one for each of the SWOT headings: Strengths, Weaknesses, Opportunities, and Threats.

The SWOT template includes sample questions, whose answers are inserted into the
relevant section of the SWOT grid. The questions are examples, or discussion points, and
obviously can be altered depending on the subject of the SWOT analysis. Note that many
of the SWOT questions are also talking points for other headings - use them as you find
most helpful and make up your own to suit the issue being analyzed. It is important to
clearly identify the subject of a SWOT analysis because a SWOT analysis is a
perspective of one thing, be it a company, a program, a proposition, an idea, a policy
method, option, etc.

Be sure to describe the subject for the SWOT analysis clearly so that people can
contribute to the analysis, and those seeing the finished SWOT analysis properly
understand the purpose of the SWOT assessment and implications.

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Strengths Weaknesses

 Advantages of proposition?  Disadvantages of proposition?

 Capabilities?  Gaps in capabilities?
 Competitive advantages?  Lack of competitive strength?
 USP's (unique selling points)?  Reputation, presence and reach?
 Resources, Assets, People?  Financials?
 Experience, knowledge, data?  Own known vulnerabilities?
 Financial reserves, likely returns?  Timescales, deadlines and
 Marketing - reach, distribution, pressures?
awareness?  Cash flow, start-up cash-drain?
 Innovative aspects?  Continuity, supply chain robustness?
 Location and geographical?  Effects on core activities,
 Price, value, quality? distraction?
 Accreditations, qualifications,  Reliability of data, plan
certifications? predictability?
 Processes, systems, IT,  Morale, commitment, leadership?
communications?  Accreditations, etc?
 Cultural, attitudinal, behavioral?  Processes and systems, etc?
 Management cover, succession?  Management cover, succession?

Opportunities Threats

 Market developments?  Political effects?

 Competitors' vulnerabilities?  Legislative effects?
 Industry or lifestyle trends?  Environmental effects?
 Technology development and  IT developments?
innovation?  Competitor intentions - various?
 Global influences?  Market demand?
 New markets, vertical, horizontal?  New technologies, services, ideas?
 Niche target markets?  Vital contracts and partners?
 Geographical, export, import?  Sustaining internal capabilities?
 New USP's?  Obstacles faced?
 Tactics - surprise, major contracts,  Insurmountable weaknesses?
etc?  Loss of key staff?
 Business and product  Sustainable financial backing?
development?  Economy - home, abroad?
 Information and research?  Seasonality, weather effects?
 Partnerships, agencies, distribution?
 Volumes, production, economies?
 Seasonal, weather, fashion
influences?
The following SWOT analysis example is based on a business-to-business manufacturing
company, who historically rely on distributors to take their products to the end user
market. The opportunity, and therefore the subject for the SWOT analysis, is for the
manufacturer to create a new company of its own to distribute its products direct to
certain end-user sectors, which are not being covered or developed by its normal
distributors.

Strengths Weaknesses
 End-user sales control and
direction.  Customer lists not tested.
 Right products, quality and  Some gaps in range for certain
reliability. sectors.
 Superior product performance vs.  We would be a small player.
competitors.  No direct marketing experience.
 Better product life and durability.  We cannot supply end-users abroad.
 Spare manufacturing capacity.  Need more sales people.
 Some staff has experience of end  Limited budget.
user sector.  No pilot or trial done yet.
 Have customer lists.  Don't have a detailed plan yet.
 Direct delivery capability.  Delivery-staff need training.
 Product innovations ongoing.  Customer service staff needs
 Can serve from existing sites. training.
 Products have required  Processes and systems, etc
accreditations.  Management cover insufficient.
 Processes and IT should cope.
 Management is committed and
Confident

Opportunities Threats
 Could develop new products.  Legislation could impact.
 Local competitors have poor  Environmental effects would favor
products. larger competitors.
 Profit margins will be good.  Existing core business distribution
 End-users respond to new ideas. risk.
 Could extend to overseas.  Market demand very seasonal.
 New specialist applications.  Retention of key staff critical.
 Can surprise competitors.  Could distract from core business.
 Support core business economies.  Possible negative publicity.
 Could seek better supplier deals.  Vulnerable to reactive attack by
major competitors.

Project Management Process: Initiation

(Reference: Heerkens, Gary R. (2002) Project management. McGraw-Hill;
Williams, Meri. (2008). The principles of project management. SitePoint Pty. Ltd.)
1. Initiation Phase/Identification, the need is identified.

(a) An appropriate response to the need is determined and described.

(b) The major deliverables and the participating work groups are
identified.
(c) The team begins to take shape.
(d) Issues of feasibility (can we do the project?) and justification (should
we do the project?) are addressed.

2. Planning Phase, where the project solution is further developed in as

much detail as possible.

(a) Intermediate work products (interim deliverables) are identified, along

with the
(b) strategy for producing them.
(c) Formulating this strategy begins with the definition of the required
elements of work (tasks) and the optimum sequence for executing
them (the schedule).
(d) Estimates are made regarding the amount of time and money needed to
perform the work and when the work is to be done.
(e) The question of feasibility and justification surfaces again, as formal
approval to proceed with the project is ordinarily sought before
continuing.

3. Execution Phase, the prescribed work is performed, and progress is

continuously monitored, and appropriate adjustments are made and
recorded as variances from the original plan.
 (a) Focuses on meeting the objectives developed and agreed upon at the
outset of the project.

4. Final Phase, or the Close-Out Phase, the emphasis is on verifying that

the project has satisfied or will satisfy the original need.

- Ideally, the project culminates with a smooth transition from

deliverable creation (the project) to deliverable utilization (the
post-project life cycle).

Initiating Your Project

The Purpose of Initiating

The purpose of the Initiating Phase is to set the project up for success. I often argue that
it is the most important phase of the project life cycle, since, if it’s neglected, the results
can be catastrophic. After all, the beginning of the project is the point at which you form
with the customer the contract (both formal and informal) that explains what will be
delivered, roughly how it will be done, and when it will be ready.

The formal contract will be the piece of paper you sign, but the informal contract is the
unspoken understanding between yourself and the other interested parties.

Often the informal contract is the more important of the two—people are more interested
in what they believe you’re going to deliver than the specifics written in the contract.
This is especially true if the contracts are drawn up by a lawyer or separate part of the
organization. If you’re working internally and there’s no formal contract, the informal
contract is all that matters!

Keeping the Project in Perspective

Unless this is agreed on, you and the customers can walk away with completely different
understandings of what you’re trying to accomplish. These differences of perspective will
only creep out of the woodwork to cause you trouble later on, unless you consciously
shine a light on them during the project’s initiation.

Initiating is also the best chance you’ll get to define success. At the very outset you can
agree on the project’s success criteria—key elements that need to be delivered for the
project to be successful. These criteria will then help guide you throughout the project. Of
course, if it’s obvious from your initial discussions that the success criteria aren’t clearly
linked to the business purpose of the project, again, you’ve uncovered a potential
stumbling block very early, before too much energy has been invested in the project.

The Process of Initiating

The process of project initiation is quite simple. Gather information about:

 ! why the project is happening

 ! what needs to be delivered and how this will be done
 ! who will be involved
 ! the timings to which the project will be delivered
Make sure to get input from all the key stakeholders:

 ! Summarize the why, what, how, who, and when of the project into a Project
 Initiation Document.
 ! Review the Project Initiation Document with the project board and key
stakeholders to get their agreement.
 ! Hold a kickoff meeting to herald the start of the project, share the success
criteria,
 and plan going forward with the project team, board members, and key
stakeholders.

KEY POINT: In “initiating process”, Start the project with everyone on the same page,
and move forward towards a common, agreed goal.

Initiation Tools and Best Practices

The project’s Initiation phase will be eased by the following key tools and practices.

The Project Initiation Document

The Project Initiation Document (PID) summarizes the what, how, when, and why of
the project. It represents the agreement between all parties on what the project is about
and, importantly, why the project is being undertaken. Although obviously some facets
will change during the course of the project (notably the details of how the project is
achieved, the project’s timings, and the resources available) the fundamentals of what the
project is and why it’ll make a difference to the organization should be pretty stable.

The Project Initiation Document needs to summarize:

 ! the project’s objective (what you’re trying to achieve)
 ! the key deliverables (how you’re going to achieve the objective)
 ! the overall rationale for the project (why you’re undertaking it)
  ! the initial timings (when it will be achieved)
 ! the project’s initial organization (who is involved)

Other elements that should be included in the initiation document are key assumptions
and constraints, and success criteria. You may also want to include high-level
information about the risk and quality management approaches you’ll use, although this
detail is often included in the project plan, rather than the PID.

It’s important that the PID be as concise as possible. The shorter the PID, the greater are
the chances that the stakeholders will actually read it at the outset, which can smooth the
project’s progress over time.

Once you’ve written your initiation document, don’t just stick it on a shelf and forget
about it! The document should be agreed upon up-front with your project’s key
stakeholders (including the project sponsor and board) and should be referred to
subsequently throughout the project. Whenever you’re making difficult decisions about
which changes to the project’s scope or design should be accepted, referring to the
project’s original objectives and success criteria will prove invaluable.

A PID Is Not a Contract!: The Project Initiation Document is not a legal contract. For a
start, it’s much shorter than any contract I’ve ever seen! The PID can’t replace the
contract, either. If you’re a freelancer or a business providing services to a client, you still
need to make sure that you have all your regular contracts in place. You probably want to
refer to the PID in the contract, but since it’s accepted that the actual execution of the
project will likely diverge from the descriptions in the PID, you can’t rely on it as you
would a contract.

WHAT IS A CONTRACT?

CIVIL CODE OF THE PHILIPPINES

Art. 1156. An obligation is a juridical necessity to give, to

do or not to do. (n)
 Art. 1159. Obligations arising from contracts have the force
of law between the contracting parties and should be
complied with in good faith. (1091a)

Art. 1305. A contract is a meeting of minds between two

persons whereby one binds himself, with respect to the
other, to give something or to render some service. (1254a)

Art. 1306. The contracting parties may establish such

stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy. (1255a)

Figure 2.2. The Business Need section of the PID

Then comes the project objective, as shown in Figure 2.3. You’ll notice that this part is
written to a particular format that includes:

 ! an overall description of what the project’s about

 ! a description of the key areas to be addressed
 ! a definition of the specific business benefit that the project will realize

This is a very useful format for describing objectives. You may find another standard
in use in your organization, though, and it’s often best to use the format that people
are familiar and comfortable with.

Figure 2.3. The Project Objective section of the PID

SMAC Your Objectives

Your objectives should be SMAC: specific, measurable, actionable, and consistent.

The key feature is that at the end of the project, you should be able to say “yes, we did
that” or “no, we failed.” There should be no gray areas. Throughout the project, you
should be able to track the team’s progress towards those objectives.

--- versus/or/and ---

The next section of the PID identifies the project deliverables, as shown in Figure 2.4; it
describes how you’re going to achieve the objective. This description must necessarily be
completed on a very high level because the project is just getting started—you haven’t
done any detailed planning yet. Here, you just need to give an idea of the biggest chunks
of work to be done. Try to make sure that no deliverable will take longer than a month to
complete, though—if you’re still looking at phases of three months or more, break those
phases into a little more detail.
 Figure 2.4. The Project Deliverables section of the PID

Next, we come to the project timeline. If the project is one that you’re familiar with, you
might already have a good idea of rough timelines for the various phases as well as the
project overall. If you can, list the major deliverables against the week or month in which
they’ll be delivered (there’s no fine detail here, of course—you’d really only use a
weekly breakdown if the project time was less than three months). In this case, the first
two pieces of work are going to define the rest of the timeline, so we’re only setting a
deadline for these two phases, as Figure 2.5 shows.

Figure 2.5. The Estimated Timeline section of the PID

Is it Feasible?
In some organizations, the initial analysis of the business processes and investigation of
whether to buy or build a system might form what’s known as a feasibility study or
feasibility project. Rather than starting the full project with such uncertainty, a separate
smaller project would be undertaken just to work out whether the main project is worth
undertaking, and what would be required if it was.

The last part of the PID outlines the project organization. For this project, we’ve just
pasted in the organization chart that we’d already prepared, as in Figure 2.6. Depending
on how much the organization values role descriptions, you might want to put in more
detail about what’s expected of each individual.
 Figure 2.6. The Project Organization section of the PID

Brief details of assumptions and constraints are often included in the Project Initiation
Document. If the feasibility study had been split into a separate project, we would have
listed all the assumptions we were making about buying the technical solution as
compared to building one. However, since this project is starting with an investigation,
these sections are not as important as they might be if we were going straight into the
Executing phase.

The Kickoff Meeting

The kickoff meeting is more of a best practice than a tool.

It’s essentially a meeting at which you bring together the key players in the project to
officially get the project started.

The key attendees of the kickoff meeting are the project team and the interested
stakeholders. The kickoff meeting is probably the first time that everyone involved will
have come together for the project, so it’s a great opportunity to get everyone enthused.

A typical kickoff meeting agenda might look like this:

 ! welcome and introduction

 ! highlights from PID (with a particular focus on the “why” of the project)
 ! project approach (sharing some of the details of how the project will be
managed)
 ! communication plan (so that everyone knows when they’ll hear more)
 ! plan for moving forward (that is, what will happen in the immediate future)

Hand Out the PID: The real focus of the kickoff meeting is to get everyone aligned on
the initiation of the project, so why not hand out a copy of the Project Initiation
Document to every attendee? This will make sure everyone has the same information
from which to form expectations of what the project will involve, and how it will work.

Seven Essential Steps for a Successful Initiation

Follow this advice, and you’ll drastically increase your chances of running a successful
project that makes a real difference!

1. Pick projects that are important to the organization and to its future.
2. Make sure that you have appropriate resources for your project—whether those
include people, equipment, or budget.
3. Include the people who are affected by, and interested in, your project in the
project itself—their inputs and opinions matter!
4. Set up a project board with the necessary members right at the beginning of the
project, not just when the difficult decisions need to be made.
5. Create a Project Initiation Document and review it with the project team, board
members, and key stakeholders.
6. Get your project started with a kickoff meeting, both to ensure the alignment of
stakeholder expectations and get everyone enthusiastic about the project!
7. Create a communications plan that outlines who needs to be kept informed
about
your project’s progress, and how you’re going to communicate with those people.

Summary

In this chapter, we firstly looked at the discovery phase—how projects are identified and
prioritized based on the business value they can deliver, and their relative importance to
the future of the organization as a whole. We then considered a discovery tool and a best
practice: project proposals and value creation, respectively. The former is a short
summary of the project, which can be compared to other project proposals in order to
evaluate its priority. Value creation is an important task because unless you know up-
front what business benefits you are trying to deliver, you won’t know whether or not the
project has been successful when you complete it! Next, we looked at all the people
involved in the project, ranging from stakeholders (essentially anyone who’s affected by
the project) to the project board (which makes the really big decisions) and the project
team (those that actually undertake the work). The key tools we discussed included the
project organization chart and communication plan.

Finally—and most importantly—we looked at actually getting your project off the
ground! The key tools we considered were the PID and kickoff meeting. The Project
Initiation Document (PID) summarizes the “5W and 1H” of the project, so that you can
share and agree on these details with the project’s stakeholders. The kickoff meeting
brings everyone involved together to start the project, helping the stakeholders feel
engaged in the project, and demonstrating the commitment of the project board.
Thank you for your Attention 😊