CP 212: Lecture 2

PLANNING
By Dr MURO
 Learning Objectives

 Describe the project identification and selection

process.
 Describe the project initiation and selection
planning.
 Perform cost-benefit analysis

CP 212
 Identifying and Selecting Systems
Development Projects

Systems development life cycle

with project identification and
selection highlighted

CP 212
 The Process of Identifying and
Selecting IS Development Projects
1. Identifying potential development
projects
• Identification from a stakeholder
group.
• Each stakeholder group brings their own perspective and
motivation to the IS decision.

CP 212
 The Process of Identifying and
Selecting IS Development Projects
• Top-down source are projects identified
by top management or by a diverse
steering committee.
• Bottom-up source are project initiatives
stemming from managers, business
units, or the development group.
• The process varies substantially
across organizations.

CP 212
 The Process of Identifying and
Selecting IS Development
Projects
• 2. Classifying and ranking IS development projects

CP 212
The Process of Identifying and Selecting
IS Development Projects (Cont.)

CP 212
The Process of Identifying and Selecting
IS Development Projects (Cont.)

3. Selecting IS development projects

• Based on various factors
• Both short- and long-term projects considered
• Most likely to achieve business objectives selected
• Is a very important and ongoing activity

CP 212
 Initiating and Planning Systems
Development Projects
• Project initiation focuses on
activities designed to assist in
organizing a team to conduct
project planning.
 Establishing the Project Initiation Team.
 Establishing a Relationship with the
Customer.
 Establishing the Project Initiation Plan.
 Establishing Management Procedures.
 Establishing the Project Management
Environment and Project Workbook.
 Developing the Project Charter.

CP 212
 Initiating and Planning Systems
Development Projects
• project charter.
• A short document that is prepared for both
internal and external stakeholders
• Provides a high-level overview of the project
• Useful communication tool that helps to assure
that the organizations and other stakeholders
understand the initiation of a project

CP 212
 Initiating and Planning Systems
Development Projects
• Project planning: defining clear, discrete
activities and the work needed to complete each
activity within a single project.
• Main deliverables: Baseline Project Plan (BPP), Business
Case, and the Project Scope Statement (PSS).

CP 212
 Project planning: Deliverables
and Outcomes
• Business Case
• Justification for an information system
• Presented in terms of the tangible and intangible
economic benefits and costs
• The technical and organizational feasibility of the
proposed system
• Breakdown of activities and the milestone

CP 212
Project planning : Deliverables
and Outcomes
• Baseline Project Plan (BPP)
• A major outcome and deliverable from the PIP phase
• The BPP becomes the foundation for the remainder of the
development project
• Contains the best estimate of a project’s scope, benefits,
costs, risks, and resource requirements and activities and
their milestone

CP 212
 Project planning :Deliverables
and Outcomes
• Project Scope Statement (PSS)
• A document prepared for the customer
• Describes what the project will deliver
• Outlines at a high level all work required to complete the
project

CP 212
 Project planning: Managing the
Information Systems Project
• Focus of project management
• To ensure that information system projects meet customer
expectations
• Delivered in a timely manner
• Meet time constraints and requirements
• Project is cost effective

3.15
 Project planning: Manage
Project Tasks
Divide the project into manageable tasks
• Step 1:Create a work breakdown
structure.
• Step 2: Identify task patterns.
• Step 3: Calculate the critical path.
3.16
 Step 1: Create a work breakdown
structure.
 A work breakdown structure (WBS) involves breaking
a project down into a series of smaller tasks
 Represent the structure using GHANTT and PERT
charts
 Gantt Charts
◦ Useful for depicting simple projects or parts of large projects
◦ Show start and completion dates for individual tasks
 PERT Charts
◦ Show order of activities
GHANTT CHART
PERT chart
 Step 1 :Create a work breakdown
structure.
 A work breakdown structure must clearly identify each
task and include an estimated duration.
 A task, or activity, is any work that has a beginning
and an end and requires the use of company resources
such as people, time, or money.
 Tasks are basic units of work that the project manager
plans, schedules, and monitors — so they should be
relatively small and manageable.
 LISTING THE TASKS
 ESTIMATING TASK DURATION
Step 1. Create a work breakdown
structure.
 Step 2. Identify Task Patterns

• Tasks in a work breakdown structure must be

arranged in a logical sequence called a task pattern
• Types of task pattern
 dependent tasks,
 multiple successor tasks,
 and multiple predecessor tasks.
Example of dependent tasks
Example of multiple successor
tasks
Example multiple predecessor
tasks
Step 3: Calculate The Critical Path

• A critical path is a series of tasks which, if

delayed, would affect the completion date of the
overall project(minimum time to complete
project )
• If any task on the critical path falls behind schedule,
the entire project will be delayed.
• Project managers always must be aware of the critical
path, so they can respond quickly to keep the project
on track
Step 3: Calculate The Critical Path
Step 3: Calculate The Critical Path
Example
Example
Draw a pert chart and determine
critical path for this project
 Managing the Information Systems
Project: Assessing Project Feasibility
• Six Categories
• Economic
• Technical
• Operational
• Schedule
• Legal and contractual
• Political

6.32
Assessing Economic Feasibility
 Assessing Economic Feasibility
• Cost – Benefit Analysis
• Determine Benefits
• Tangible Benefits
• Can be measured easily
• Examples
• Cost reduction and avoidance
• Error reduction
• Increased flexibility
• Increased speed of activity
• Improved management planning and control
• Opening new markets and increasing sales opportunities

6.34
 Assessing Economic Feasibility
• Intangible Benefits
• Cannot be measured easily
• Examples
• Increased employee morale
• Competitive necessity
• More timely information
• Promotion of organizational learning and understanding
• Determine Costs
• Tangible Costs
• Can easily be measured in dollars
• Example: Hardware

6.35
 Assessing Economic Feasibility

• Determine Costs (Continued)

• Intangible Costs
• Cannot be easily measured in dollars
• Examples:
• Loss of customer goodwill
• Loss of employee morale

6.36
 Assessing Economic Feasibility

• One-Time Costs
• Associated with project startup, initiation and development
• Includes
• System Development
• New hardware and software purchases
• User training
• Site preparation
• Data or system conversion

6.37
 Assessing Economic Feasibility

• Recurring Costs
• Associated with ongoing use of the system
• Includes:
• Application software maintenance
• Incremental data storage expense
• New software and hardware releases
• Consumable supplies
• Incremental communications

6.38
Assess economic project value
 Assess economic project value

• Having determine to cash flow of the projects, the

project worth can now be determined using the
following techniques:
• Return on Investment
The return on investment (ROI) is a calculation that
measures the average rate of return earned on the
money invested in the project. ROI is a simple
calculation that divides the project’s net benefits
(total benefits -total costs) by the total costs.
 Assess economic project value

• The ROI formula is:

A high ROI suggests that the

project’s benefits far
outweigh the project’s cost.
 Assess economic project value

• Break even analysis: The objective of the break-even

analysis is to discover at what point (if ever)
cumulative benefits equal costs (i.e., when break-even
occurs)
Assess economic project value
 Assess economic project value

The Time Value of Money:

• Most techniques used to determine economic
feasibility encompass the concept of the time value
of money (TVM).
• TVM refers to comparing present cash outlays to
future expected returns.
 Assess economic project value

• Discount rate :The interest rate used to compute

the present value of future cash flows.
• Present value The current value of a future cash
flow.
 Assess economic project value

• The basic formula to

convert a future cash
flow to its present value
is:
Assess economic project value
 Assess economic project value

 The NPV is simply the difference between the total

present value of the benefits and the total present
value of the costs.
 As long as the NPV is greater than zero, the project
is considered economically acceptable.
More examples on pv
The Time Value of Money-Workout

• Assuming monetary benefits of an information

system at $85,000 per year, one-time costs of
$75,000, recurring costs of $35,000 per year, a
discount rate of 12 percent, and a five-year time
horizon, calculate the net present value of these
costs and benefits of an information system.
Also calculate the overall return on investment
of the project and then present a break-even
analysis. At what point does breakeven occur?

CP 212
 Assessing Technical Feasibility

• Technical Feasibility
• Assessment of the development organization’s ability to
construct a proposed system
• Project risk can be assessed based upon:
• Project size
• Project structure
• Development group’s experience with the application
• User group’s experience with development projects and the
application area

6.51
 Assessing Other Project Feasibility
Concerns
• Operational Feasibility
• Assessment of how a proposed system solves business
problems or takes advantage of opportunities
• Schedule Feasibility
• Assessment of time frame and project completion dates
with respect to organization constraints for affecting
change
• Legal and Contractual Feasibility
• Assessment of legal and contractual ramifications of new
system

6.52
 Assessing Other Project Feasibility
Concerns
• Political Feasibility
• Assessment of key stakeholders in organization’s view
toward proposed system

6.53
 Closing Down the Project

• Termination
• Types of termination
• Natural
• Requirements have been met
• Unnatural
• Project stopped
• Documentation
• Personnel Appraisal

3.54
 Closing Down the Project

• Conduct post-project reviews

• Determine strengths and weaknesses of:
• Project deliverables
• Project management process
• Development process
• Close customer contract

3.55