Podcast
Questions and Answers
What is the main objective of the project initiation phase?
What is the main objective of the project initiation phase?
Which document is important to identify the need for projects and stakeholder engagement?
Which document is important to identify the need for projects and stakeholder engagement?
What is a key output of the project planning process?
What is a key output of the project planning process?
Why is project execution considered to take the most time and resources?
Why is project execution considered to take the most time and resources?
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What does a risk register include during the project planning phase?
What does a risk register include during the project planning phase?
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Which project management certification is awarded by the Project Management Institute (PMI)?
Which project management certification is awarded by the Project Management Institute (PMI)?
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During which phase is a team contract typically developed?
During which phase is a team contract typically developed?
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What serves as a tangible representation of project timelines and tasks?
What serves as a tangible representation of project timelines and tasks?
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Which process requires project managers to lead their teams effectively?
Which process requires project managers to lead their teams effectively?
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What is NOT a common output of the project initiation phase?
What is NOT a common output of the project initiation phase?
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What is a primary requirement for earning the Project Management Professional (PMP®) certification?
What is a primary requirement for earning the Project Management Professional (PMP®) certification?
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How often does PMI update the PMBOK® Guide?
How often does PMI update the PMBOK® Guide?
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Which ranking of PMI’s Project Management Professional (PMP®) credential reflects its global recognition?
Which ranking of PMI’s Project Management Professional (PMP®) credential reflects its global recognition?
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What aspect of project management is heavily influenced by ethics?
What aspect of project management is heavily influenced by ethics?
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What is primarily distilling the project management body of knowledge into a standardized format?
What is primarily distilling the project management body of knowledge into a standardized format?
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Which organization is central to providing resources and standards for project management?
Which organization is central to providing resources and standards for project management?
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What is NOT a key aspect of PMI's role in the project management profession?
What is NOT a key aspect of PMI's role in the project management profession?
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Which of the following is true regarding the growth of PMP certification?
Which of the following is true regarding the growth of PMP certification?
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Which type of project management tool is suitable for managing multiple projects and users within a budget of $200-600 per user?
Which type of project management tool is suitable for managing multiple projects and users within a budget of $200-600 per user?
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What is the primary focus of systems management in project management?
What is the primary focus of systems management in project management?
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In a project's life cycle, which phase is crucial for defining the project's purpose and its alignment with business goals?
In a project's life cycle, which phase is crucial for defining the project's purpose and its alignment with business goals?
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Which of the following is a common misunderstanding about project deliverables?
Which of the following is a common misunderstanding about project deliverables?
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Which aspect of project management certifications is often overlooked by professionals?
Which aspect of project management certifications is often overlooked by professionals?
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Which organizational standard should be prioritized to ensure consistency in project management practices?
Which organizational standard should be prioritized to ensure consistency in project management practices?
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When assessing risks in a project, which of the following should be the primary focus?
When assessing risks in a project, which of the following should be the primary focus?
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What is a typical reason projects fail according to a systems approach?
What is a typical reason projects fail according to a systems approach?
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Which phase in the project life cycle typically involves monitoring and controlling project deliverables against the initial plan?
Which phase in the project life cycle typically involves monitoring and controlling project deliverables against the initial plan?
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What is the main advantage of using a holistic view when managing projects?
What is the main advantage of using a holistic view when managing projects?
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Flashcards
PMI (Project Management Institute)
PMI (Project Management Institute)
The leading membership association for project managers, boasting over 260,000 members worldwide.
PMP Credential
PMP Credential
The Project Management Professional credential, the most recognized and only global certification in project management, offered by PMI.
PMP requirements
PMP requirements
PMP candidates must demonstrate relevant project experience, adhere to a code of ethics, and pass the PMP exam.
Project Management Ethics
Project Management Ethics
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PMBOK Guide
PMBOK Guide
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Project
Project
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PMBOK® Guide Updates
PMBOK® Guide Updates
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PMP Certification Growth
PMP Certification Growth
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Project Management Office (PMO)
Project Management Office (PMO)
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Project Management Software
Project Management Software
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Systems Thinking
Systems Thinking
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Systems Approach
Systems Approach
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Systems Philosophy
Systems Philosophy
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Systems Analysis
Systems Analysis
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Systems Management
Systems Management
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Structural Frame
Structural Frame
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Human Resources Frame
Human Resources Frame
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Stakeholders
Stakeholders
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Project Management Process Groups
Project Management Process Groups
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Initiating
Initiating
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Project Charter
Project Charter
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Planning
Planning
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Work Breakdown Structure (WBS)
Work Breakdown Structure (WBS)
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Executing
Executing
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Monitoring and Controlling
Monitoring and Controlling
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Closing
Closing
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What is the purpose of project planning?
What is the purpose of project planning?
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What are some key outputs of project planning?
What are some key outputs of project planning?
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Study Notes
Introduction to Project Management
- Project management is a growing field with global impact.
- Organizations spend trillions on projects yearly.
- Computer hardware, software, networks, and interdisciplinary teams have drastically changed the work environment.
- A 1995 Standish Group study (CHAOS) revealed a poor track record for IT projects.
- Fewer than 17% of IT projects meet scope, time, and cost goals.
Project Management Statistics
- Worldwide IT spending topped $1.8 trillion in 2005.
- Senior project manager compensation in the US was $99,183 in 2005.
- PMP certifications increased by over 70% from 2004 to 2005.
Motivation for Studying AI Project Management
- AI projects have a history of poor performance.
- Average cost for an IT application development project was over $2.3 billion for large companies.
- Only 16.2% of IT projects successfully meet scope, time, and cost goals.
- Over 31% of IT projects were canceled before completion.
Advantages of Using Formal Project Management
- Improved control of financial, physical, and human resources.
- Enhanced customer relations.
- Reduced development times and costs.
- Increased quality and reliability of projects.
- Improved profit margins and productivity.
- Better internal coordination and higher worker morale.
Project Management Institute (PMI)
- Founded in 1969 by five individuals.
- Leading professional membership association.
- More than 260,000 members in over 171 countries.
- Promotes career and professional development.
- Offers Project Management Professional (PMP®) credential.
Project Management Certification
- PMI provides certification as a Project Management Professional (PMP).
- PMPs have documented project experience, agreed to follow a code of ethics, and passed the PMP exam.
- PMP certification numbers are increasing rapidly.
- A graph shows the growth in PMP certifications from 1993 to 2006.
Ethics in Project Management
- Ethics are a set of principles guiding decision-making.
- Project managers often face ethical dilemmas.
- PMI's Code of Ethics and Professional Conduct is required for PMP certification.
- Some PMP exam questions relate to professional responsibility, including ethics.
PMBOKⓇ Guide
- Twenty years ago, PMI volunteers distilled project management knowledge into the PMBOK® Guide.
- The PMBOK® Guide is the global standard for project management.
- More than a million copies of the PMBOK® Guide are in use today.
- Updates occur every four years to improve the information.
What Is a Project?
- A project is a temporary endeavor to create a unique product, service, or result.
- Operations is work done to sustain the business.
- Projects conclude when objectives are reached or terminated.
- Projects vary in size and completion time.
Examples of IT Projects
- Help desk worker replaces ten laptops.
- Software development team adds a new feature.
- College upgrades technology infrastructure.
- Company selects a VoIP system.
Top 10 Technology Projects
- VoIP
- Outsourcing
- Data networking
- Customer relationship management
- Collaboration
- Supply chain management
- Desktop upgrades
- Application performance management
- Business analytics
- Compliance tracking
Media Snapshot: Where IT Matters
- In 2006, Baseline Magazine published an article on IT's impact on industries.
- VoIP transformed telecommunications and broadband access.
- Global positioning systems & business intelligence changed the farming industry.
- Digital supply chains changed the entertainment industry's distribution system.
Project Attributes
- Projects have a unique purpose and are temporary.
- Projects are developed using progressive elaboration.
- Projects require resources.
- Projects typically have a customer or sponsor.
- Projects involve uncertainty, making it difficult to estimate time and cost.
- Projects depend on external factors.
Project and Program Managers
- Project managers work with sponsors, teams and others to meet goals.
- A program is a group of related projects, managed to yield benefits not attainable otherwise.
- Program managers oversee programs and often supervise project managers.
The Triple Constraint of Project Management
- Successful project management requires meeting scope, time, and cost goals; satisfying the sponsor.
- Quality is also a significant constraint.
What is Project Management?
- Project management is the application of knowledge, skills, tools, and techniques to project activities.
- Project managers balance scope, time, and cost goals to meet the triple constraint.
Project Management Framework
- A framework that depicts knowledge areas, tools, techniques, project integration management, human resource, communications, facilitated functions, and risk management.
Project Stakeholders
- Stakeholders are people involved or affected by activities.
- Stakeholders include sponsors, managers, teams, support staff, customers, users, and even opponents.
9 Project Management Knowledge Areas
- Nine core areas used to develop project competency as a project manager.
- Four core knowledge areas lead to specific project objectives (scope, time, cost, and quality).
- Four facilitating knowledge areas are for the means through which the project objectives are achieved (human resources, communication, risk, and procurement management).
- One knowledge area (project integration) affects and is affected by all other knowledge areas.
Project Tools and Techniques
- Project management tools and techniques help managers and teams manage various aspects of project management.
- Tools and techniques include project selection methods, project methodologies, stakeholder analyses, project control board, project review meetings, lessons-learned reports, scope statements, requirements analyses, etc.
Super Tools
- Software for task scheduling is a key tool for project success.
- Scope statements, requirements analyses, and lessons-learned reports are important tools.
- Progress reports, kick-off meetings, Gantt charts, and change requests are also useful.
What Went Right?
- The study shows IT project success rates have improved.
- The average cost of IT projects has significantly decreased.
Why the Improvements?
- Improved tools, better management skills and processes contributed to a reduction of costs and time overruns.
Project Success
- Project success can have various meanings based on the stakeholders. Meeting scope, time, and cost goals represents one form of success. Satisfying the customer/sponsor, even if goals aren't met, represents another. Project results satisfying the objectives of the project and producing return on investment also demonstrates success.
What Helps Projects Succeed?
- Key areas include executive support, user involvement, experienced managers, clear business objectives, minimized scope, standard software infrastructure, firm basic requirements, reliable estimates, small milestones, proper planning, competent staff and ownership.
What the Winners Do
- Excellent project delivery capability results from using integrated project management tools (standard/advanced PM tools, templates), growing strong project leaders, streamlining the delivery process and using metrics for health measures such as customer satisfaction or return on investment.
Program and Project Portfolio Management
- A program is a group of projects managed in a coordinated way.
- A program manager is a leader and provides direction for managers of projects within the program.
- Infrastructure, developing corporate standards for IT and application development.
Al Project Portfolio Management
- Organizations group projects and programs as a portfolio of investments.
- Portfolio managers help make wise decisions by analyzing projects for strategic perspective.
Project Management Compared to Project Portfolio Management
- Project management focuses on tactical goals, while project portfolio management addresses strategic goals.
- Tactical goals address project execution and stakeholder knowledge, while strategic focus is on the right projects, investment areas, and a competitive advantage.
Best Practice
- A best practice is an optimal way to achieve objectives recognized within the industry.
- Visualizing and stretching to learn from the best practices in other industries can help ensure organizational success.
- Formal standards and measurable metrics should be in place for tracking best practices.
Best Practice in Managing Project
- IT governance is about authority and control for IT activities.
- Lack of governance negatively affects project delivery, as evidenced by significant failures in Australia.
Commitment into Team Organization
- Negative attitudes toward project teams can hinder achievement.
- A Chief Information Officer (CIO) at a high level helps IT team success.
- Assignment of non-IT people to IT projects encourages more involvement and commitment.
- Strong, visible organizational leadership (e.g., from CEOs) helps promote project success through use of IT.
Need for Organizational Standards
- Standards and guidelines enable more effective project management.
- Senior management can encourage using standard forms, software, writing guidelines for project plans, status information, project management office (PMO), and developing career paths.
Project Life Cycle & Project Phases
- The project life cycle defines the phases of a project - What work will be completed, who's involved in each phase and how work is managed and approved.
- Deliverables are products or services produced as part of a project.
More on Project Phases
- Early project phases often have the lowest resource needs and highest levels of uncertainty.
- Middle phases require more resources with an increasing likelihood of project success.
- The final phase focuses on ensuring required work has been met and receiving sponsor approval.
Phases of the Traditional Project Life Cycle
- Projects typically begin with a feasibility study that evaluates the feasibility of a project
- Projects move to the concept phase to outline the scope of the project - a high level view of the project
- The project then moves to the development phase where more accurate cost estimates and the WBS are created
- The project progresses to the implementation phase where the project deliverables are produced
- The final phase is the close-out (or termination) phase that evaluates success or failure of the project.
Phases of the Traditional Project Life Cycle (Concept Phase)
- Managers briefly describe the project.
- High-level plan outlining the project's need & basic concepts.
- Rough estimate of costs.
- Creating a work breakdown structure (WBS).
- A WBS represents the total scope of the project, organizing the project into smaller, more manageable tasks (called work packages).
- Creating project scope documents.
- Stakeholder analysis is crucial to identify those affected by the project.
- Develop a project management plan.
Phases of the Traditional Project Life Cycle (Development Phase)
- Create more detailed project management plans.
- Ensure the plans are consistent and create a more accurate cost estimate.
- Create a more thorough work breakdown structure (WBS).
- Further study is required if the concept phase identified a single method for improvement. Example - a method to increase use of campus technology via laptops. More research will be needed to find if purchasing laptops will increase technology use, what type, how to handle training, and pricing to students
- Cancel projects if needed based on feasibility findings, saving time and money.
Phases of the Traditional Project Life Cycle (Implementation Phase)
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Project team creates a more accurate cost estimate.
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Work is produced and performance reports are given to stakeholders.
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Hardware/software acquired and installed. Necessary network equipment installed along with a process for collecting fees and training. (Example - laptop policy and training for employees, process for upgrading software applications).
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Security preparation plan created for potential problems (e.g., technical support).
Phases of the Traditional Project Life Cycle (Close-Out Phase)
- Complete all work.
- Get customer acceptance of the project.
- Project team creates and documents their project experiences.
- Conduct surveys of stakeholders.
- Determine if a report & presentation to senior management is needed.
Product Life Cycles
- Information systems also have a life cycle.
- Systems Development Life Cycle (SDLC) describes the phases involved.
- Predictive life cycle forecasts scope, schedule, and cost.
- Adaptive life cycle is suitable for projects where requirements change.
Predictive Life Cycle Models
- Project spends large portion clarifying requirements & developing design.
- Users may not experience working software immediately.
- Models, such as waterfall, spiral, incremental build, and prototyping, describe different approaches to develop software products, from initial idea to completed product, testing and final implementation.
Adaptive Software Development (ASD) Life Cycle
- Requirements are challenging to express clearly.
- Projects are governed by mission, components, and time-based phases.
- Progressive development through iterations & component creation is the primary approach.
- Requirements are defined based on discovering business needs.
- Risk-driven development emphasizes addressing potential problems in the system and its components.
Large IT Projects
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Large projects often comprise multiple, smaller projects, especially where uncertainty is high.
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Project planning should consider the entire product life cycle (initial design through close-out).
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Hiring consultants is also a part of the product life cycle, for identifying business strategy and developing solutions to potential issues.
The Importance of Project Phases and Management Reviews
- Projects need to successfully complete each phase.
- Phase exits (or kill points) are management reviews that evaluate the project at each stage.
- Management must evaluate a project at each stage & determine if it is moving in the right direction toward completion.
- This helps to prevent a project from being a financial or time investment waste
What Went Right?
- Organizations can improve project success by knowing when to stop struggling over dead end approaches.
- Understanding when a project is not achievable will save time and resources and ultimately provide a higher success rate.
The Context of Al Projects
- Al projects are varied in size, complexity, use case/application area and resource requirements.
- Teams working on AI projects may possess diverse backgrounds and skillsets.
- New technologies evolve rapidly, requiring project teams to be highly specialized.
Case Wrap-up
- Based on the concerns raised, a technology committee recommended terminating the project.
- This served as a lesson for the project manager to include all stakeholders in planning and execution.
Chapter 3: Project Management Process
- A project is a series of actions directed toward a particular result; project management is a series of interlinked processes.
- Project initiation defines and authorizes a project/phase.
- Planning devises a workable scheme for satisfying organizational needs.
- Executing coordinates people/resources to carry out plans & produce results.
- Monitoring/controlling regularly tracks progress toward objectives and enables corrective actions.
- Closing formalizes acceptance and closes contracts/documents lessons learned.
Process Groups Outcomes
- Initiating processes recognize the existence of a new project & includes a business case & project charter.
- Planning processes complete a WBS, scope statement, project schedule and cost estimate.
- Executing processes perform required actions.
- Monitoring and controlling continuously measures progress & adjusts plans.
- Closing processes formally accept the work and create closing documents.
Project Management Process Groups
- Level of activity within each process group varies for different projects.
- Executing processes typically require 50-60% of resources.
- Planning processes require 15-25% of resources.
- Initiating & closing processes each require 5-10%.
- Monitoring & controlling processes generally take 5-15% of resources.
Applying Project Management Process Groups
- Process groups overlap and follow the cycle of "plan, do, check, act" until project closure.
- Changes require formal review & approval; project plans must be updated accordingly.
Developing an IT & AI Project Management Methodology
- Every project demands specific planning & execution methods.
- Some organizations create their own methodologies.
- Example - Blue Cross Blue Shield of Michigan implemented a SDLC for its project efforts but had PMs & development teams work on different IT projects & produce deliverables.
Mapping the Process Groups to the Knowledge Areas
- Key project activities can be mapped into knowledge areas.
- All initiating activities fall under integration.
- Planning and monitoring/controlling activities rely on the other knowledge areas.
Relationships Among Process Groups and Knowledge Areas
- Initiating, planning, executing, monitoring & controlling, and closing processes are interdependent and influence the different knowledge areas.
- These knowledge areas (integration, scope, time, cost, etc.) are influenced by the project activities and deliverables.
Stakeholder Management
- Project Managers should spend time identifying, understanding, and managing stakeholder relationships, especially for large projects.
- Utilize the four organizational frames (structural, human resource, political, and symbolic) to meet the needs of various stakeholders.
Opening Case Analysis
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The IT department led by Mr. Walters did not use a systems approach to consider all stakeholders.
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He failed to account for structural, HR, political, and symbolic (emotional/meaning) issues, and failed to anticipate stakeholder needs before presenting the plan.
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Mr. Walters focused on internal stakeholders, but did not involve the main customers or the senior administration, leading to misunderstandings & resistance.
The Importance of Top Management Commitment
- Senior management's commitment is crucial for project success.
- Management champions for a project need to ensure adequate resources, and address any unexpected problems or issues that arise.
- IT projects often require cooperation across departments and organizational units
- PMs are often not experienced managers, so senior managers also need to assist in leadership issues.
Best Practice in Managing Projects
- IT governance ensures authority & control for IT activities, infrastructure, and project management.
- Without effective governance, project failures can happen, as indicated by cases in Australia's industries.
- Management needs to ensure mechanisms are in place to monitor and ensure alignment with the overall business.
Commitment In To Team Organization
- Projects are unlikely to succeed if the organization has a negative attitude towards the project team.
- Leadership of high-level officers (e.g., CIO) can encourage success.
- Involvement of non-IT personnel in IT projects often enhances commitment.
- Strong CEO commitment toward IT adoption drives success.
Need for Organizational Standards
- Standards & guidelines improve project manager effectiveness.
- Senior managers can promote standard forms and software, guidelines for plans/status reports, project management offices, and career paths including PMP certification.
Project Life Cycle & Project Phases
- Projects have a well-defined life cycle; each phase has tasks/activities that need to be performed.
- Early phases require minimal resources and there's significant uncertainty regarding success.
- Middle phases require increasing resources and growing project certainty.
- The final phase focuses on acceptance and documenting lessons learned.
Phases of the Traditional Project Life Cycle (Concept Phase)
- Managers briefly describe the project.
- High-level plan outlining the project's need & basic concepts.
- Rough estimate of costs.
- Creating a work breakdown structure (WBS).
- Stakeholder analysis is crucial to identify those affected by the project.
- Develop a project management plan.
Phases of the Traditional Project Life Cycle (Development Phase)
-
Create more detailed project management plans, ensure consistency and create a more accurate cost estimate.
-
Create a more thorough work breakdown structure (WBS).
-
The concept phase may identify methods to improve use cases, such as increase technology use on campus through laptops. More research will be needed to determine if purchasing laptops will improve technology use. The research will also identify specific needs.
-
Cancel projects if needed based on feasibility findings, thus saving time & money.
Phases of the Traditional Project Life Cycle (Implementation Phase)
- Project team produces cost estimate, performs necessary work, and makes performance reports to stakeholders.
- Secure and install hardware & software along with network equipment & establish procedure to collect fees, provide training, etc.
- Prepare security plans & potential problems; incorporate this into recruiting brochures.
Phases of the Traditional Project Life Cycle (Close-Out Phase)
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Project team formally accepts the project conclusion.
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Document all project experiences
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Surveys stakeholders.
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Present a report to senior management.
Product Life Cycles
- Products and systems have a life cycle also described by development processes.
- Systems Development Life Cycle (SDLC) is a framework/standard for processes to develop and maintain information systems.
- Predictive & adaptive are different development lifecycle approaches.
Predictive Life Cycle Models
- Models such as waterfall, spiral, incremental build, and prototyping are used for different processes to develop software products/systems from initial idea, through tests, and project completion.
Adaptive Software Development (ASD) Life Cycle
- Adapt projects to change and discovering requirements progressively.
- Projects are built on a mission-driven and component-based method.
- Develop features in an iterative-style fashion rather than attempting to produce the complete system from basic components.
Large IT Projects
- Projects may comprise various smaller, more manageable projects to account for uncertainty.
- Project planning should follow the full product life cycle; this includes hiring consultants.
Project Integration Management
- Project managers are accountable for coordinating the necessary knowledge areas for overall project success, throughout all phases of the project lifecycle.
- Many initial project managers have difficulty focusing on the "big picture" and details.
- Integration is not simply software integration; it's about coordinating activities and integrating plans.
Project Integration Management Processes
- Develop the project charter: working with stakeholders to create the document that formally authorizes a project.
- Develop project scope statement: with stakeholders.
- Develop the project management plan: coordinate all planning efforts.
- Direct and manage project execution; execute the plan.
- Monitor and control project work: oversee the project to meet the objectives.
- Perform integrated change control: manage changes to project deliverables/organizational process assets.
- Close the project: finalize all project activities and formally close the project.
Project Integration Management Summary
- Project integration management includes initiating, planning, executing, monitoring & controlling, and closing processes.
Project Integration Management Processes (General Statements)
- Project managers must coordinate all people, plans, and work to complete a project.
- Concentrate on the big picture and the project team will be more likely to follow successful project completion.
- Project managers deal with conflicts about project goals & stakeholder needs.
- Communicate key project information to top management.
Project Integration Management Processes (Specific Details)
- Good project integration management is necessary for stakeholder satisfaction.
- Interface management is about identifying and managing points of interaction in a project.
- The number of interfaces increases exponentially as project complexity increases.
- Project managers need to communicate effectively with stakeholders, customers, their team, and other project managers to ensure good project processes.
Strategic Planning & Project Selection
- Strategic planning involves determining long-terms objectives, predicting trends and forecasting needs.
- SWOT analyses are used by organizations to determine project feasibility.
- External IT managers should participate in planning to better understand the strategic value of the organization & business needs that should be supported.
End of Life Vehicle (ELV) Remanufacturing & Recycling
- Strengths, Critical Enablers, Weaknesses, and Critical Inhibitors are considered to determine project success, based on SWOT analysis for an end of life (environmental) vehicle (ELV) remanufacturing project. This example includes all considerations (external & internal).
IT Planning Process
- Strategic planning is tied to mission and vision of the organization; crucial understanding of organization's needs is a part of this process.
- Business area analysis documents key business processes that benefit from IT.
- Project planning describes the scope, benefits, and constraints.
- Resource allocation includes selecting information technology projects and assigning resources.
Aligning Al with IT Business Strategy
- Aligning AI with business strategy should be a key concern for CIOs & CDOs.
- Explicit business objectives are a key reason for IT investment.
- A clear strategic plan should guide IT projects.
- IT systems improve or support key business strategies.
Methods for Selecting Projects
- There are often more projects than resource time, and funds available to implement them.
- Choosing projects involves focusing on organizational needs, classifying IT projects, performing financial analysis, using weighted scoring models, and implementing balanced scorecards.
Focusing on Broad Organizational Needs
- Projects aligning with broad organizational needs are more likely to offer substantial value.. In cases with many IT projects, justifying the value of each may be challenging; general statements of needing the project should be sufficient rationale to move forward; more detailed financial justifications are unnecessary.
- Assessing project needs (or problems that demand a solution) is a critical part of decision-making.
Categorizing IT & AI Projects
- One categorization method considers whether a project responds to a problem, opportunity, or a directive (a new requirement).
- Projects may require external considerations, such as governmental policies or other mandates/regulations.
Financial Analysis of Projects
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Financial factors are crucial for project selection.
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Projects should not only meet business needs but also provide a financial return.
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"Projects are a means to an end, not an end unto itself".
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NPV, IRR and payback analysis help organizations to determine the financial value of a project.
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PMs should be familiar with these financial terms and understand how to interpret & use them based on the situation and needs of the overall organization.
Net Present Value Analysis
- A dollar earned today is worth more than a dollar earned in the future.
- NPV analysis calculates the present value of future cash flows to determine monetary gain or loss.
- Projects are financially viable if their NPV is positive.
- NPV values are relative to project needs and the organization's value ( or rate of return of capital).
Net Present Value Analysis (Details)
- NPV is the difference between present values of cash inflows & outflows.
- NPV considers inflation & returns.
- A positive NPV implies potential financial return exceeds the project cost, creating value.
Conversely, a negative NPV (where cost exceeds return) indicates that the investment will be a net loss.
Net Present Value Analysis Formula
- The formula to calculate NPV involves discounting future cash flows..
- The formula varies slightly based on the information provided in the project. These calculations are typically performed in spreadsheet software (e.g., Excel).
Net Present Value Analysis Examples
- Examples demonstrate NPV calculations using different discount rates & cash flows to get NPV results.
Return on Investment (ROI)
- ROI measures the profitability of an investment.
- Calculated by subtracting project costs from benefits & dividing the difference by costs.
- (Total benefits - Total cost) / total cost
- A higher ROI signifies greater profitability..
- Some organizations have a required minimum rate of return, meaning that if the ROI does not reach a specific threshold, the project is not considered viable.
Internal Rate of Return (IRR)
- IRR calculates the discount rate making project NPV zero.
- It indicates an investment efficiency metric.
- A project with an IRR higher than the desired/minimum rate of return is generally considered to add value.
Internal Rate of Return (Calculations)
- IRR is calculated by finding the discount rate that produces a zero (or near-zero) NPV.
Payback Analysis
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Payback analysis calculates the time required to recoup the total project cost.
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Payback happens when the net cumulative benefits equal the net cumulative costs.
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The period is the amount of time it takes to recoup the original investment, based on the return cash flows (positive net cash flow).
Weighted Scoring Model
- A weighted scoring model systematically ranks projects based on pre-defined criteria.
- Each criterion has a predetermined score which is weighted based on the organization's needs and priorities.
Implementing a Balanced Scorecard
- A balanced scorecard uses metrics to convert organizational value to a numeric system for analysis.
- This method focuses on understanding factors such as customer service, innovation, operational efficiency & financial performance.
Balanced Scorecard Institute
- The Balanced Scorecard Institute suggests viewing organizational performance from four perspectives to establish metrics, collect data and analyze relative performance.
Balanced Scorecard Example
- A Defense Finance and Accounting Service (DFAS) example demonstrates how a balanced scorecard would identify and quantify goals tied to the business units & mission- such as customer satisfaction, financial performance, and employee competence (leadership/growth perspectives), internal processes (e.g., improving employee skill sets), & learning that addresses future needs.
Project Charters
- Project charters are documents that formally acknowledge the existence of a project and direct its management.
- Key stakeholders should sign to agree to the need, intent, and overall project scope/objectives.
- Charters are a key output of integration management
Project Charters (Inputs)
- Contracts, statements of work, enterprise environmental factors, & organizational process assets are inputs to developing a project charter.
Project Charters (Tools & Techniques)
- Project selection methods, project methodologies, project management information systems, and expert judgments are tools used to develop project charters
Project Charters (Outputs)
- The project charter is the output of the project charter process.
Project Execution
- Project execution involves managing and carrying out the work outlined in the project management plan.
- The majority of project time and resources are spent on execution.
- The project's application or industry directly impacts execution methods.
Coordinating Planning and Execution
- Project planning & execution are intertwined & inseparable.
- Those performing the work should participate & provide insight in the planning process.
- Experienced project managers solicit input from team members to develop realistic plans.
Providing Leadership & Supportive Culture
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Project managers should establish an exemplary leadership role that demonstrates the importance of plan creation and following.
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Provide organizational guidelines and templates.
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Track performance against the plan.
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Project Managers may need to break policies to achieve goals if senior management approves.
Important Skills for Project Execution
- General management skills (leadership, communication, & political awareness) are important for success.
- Knowledge of the specific product, business, and application areas help project managers in execution, especially if they are unfamiliar with the environment/industry.
Project Execution Tools and Techniques
- Methodologies are crucial tools to improve project management effectiveness. Methodologies provide detailed information for how to manage the project, not just what to do.
- Project management information systems (eg., databases or software) provide tools/resources for organizing, monitoring, and communicating effectively.
- Project managers should delegate tasks, while concentrating on providing leadership for the project.
Monitoring and Controlling Project Work
- Changes are inevitable in projects; processes to monitor & control change need to be developed.
- Communication & change management skills are important for project managers.
- Performance reports, forecasts, defect repairs, and change requests manage change in projects.
Integrated Change Control
- Project change management seeks to influence changes and determine when changes occur.
- Successful project management involves monitoring both change impact and the overall project's progression.
- A change control board/system formalizes project changes and clarifies acceptable method for changes & modifications.
Change Control on IT or Al Projects
- Project teams traditionally avoided change; modern view is that change is often beneficial.
- Changes are managed with a formal system & governance.
Change Control System
- Describes the process for changing project documents/work.
Change Control Board (CCB)
- CCBs are formal groups that approve/reject changes.
- CCBs provide guidelines for change requests, evaluate proposals, and manage the implementation of approved changes.
Making Timely Changes
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Some CCBs may meet infrequently which delays the change process.
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Time-sensitive changes might require policies such as 48-hour policy to quickly identify & process the change request.
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Other organizations may delegate to the lowest possible decision-making level to expedite change requests or make changes quickly & efficiently to ongoing projects.
Configuration Management
- Configuration management ensures project descriptions are accurate and complete.
- Involves managing functional & physical product descriptions & their related documentation (including potential changes)
- Configuration specialists use processes and systems to manage changes that help to track and ensure the final products fit the original plans and objectives.
Suggestions for Performing Integrated Change Control
- Project managers are responsible for the changes and integrating them to keep the project on track.
- Changes should be managed through communication & negotiation, including formal systems, documentation, & controls such as a CCB
- Configuration management ensures the accurate description & control of products.
- Decisions about project changes should balance the need to satisfy stakeholder expectations with the overall project constraints/needs.
• Use effective communication techniques to help manage change.
Closing Projects
- Closing projects involves finalizing all project activities..
- Completing all project tasks and activities.
- Transfer the project & associated products/services to appropriate personnel.
- Close out contracts, formal document & produce any needed reports as part of closing out the process.
Using Software to Assist in Project Integration Management
- Word processing, spreadsheets, communication software, and project management software (such as MS Project) assist in many different phases of project management (initiating, planning, executing, etc.).
Project Scope Management
- Defining & controlling scope is critical to project success.
What is Project Scope Management?
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Scope includes everything required to create the project products.
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Deliverables are results produced as part of a project.
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Scope management is a key area of focus for project planning & execution, including defining what the project scope includes & controlling what is included or excluded.
Project Scope Management Processes
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Scope planning - defines how scope will be controlled, defined and verified.
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Scope definition - reviews the project charter & preliminary statement and adds more info as needed..
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Creating the WBS - Divides major deliverables into smaller, more manageable components.
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Scope verification - Ensures scope by key stakeholders confirms deliverables.
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Scope control - Controlling changes to scope that may affect cost or time objectives.
Project Scope Management Summary
- Scope planning, scope definition, WBS, scope verification & scope control are the five processes used to manage scope.
Scope Planning & the Scope Management Plan
- The scope management plan is a key document that defines how the scope is prepared, the WBS is created, & deliverables are confirmed.
- The plan should have key project/stakeholder inputs and be frequently reviewed. This ensures that the plan will effectively align with stakeholder needs and corporate expectations.
What Should We Do? - The Seven Steps of Project Initiation
- Project initiation involves analyzing the project atmosphere, aligning scope, determining how to add value, evaluating workflow between business units, creating communication strategies, establishing a project approach, & aligning with other organization goals.
Sample Scope Management Plan
- Includes an introduction, providing scope statement details, WBS development, verifying project deliverables, and providing guidelines for making changes.
Preliminary Scope Statements
- These statements must be reviewed by stakeholders and the project sponsor.
- The statement must describe the product the project will produce.
- The statement is a way to determine a common understanding of what the project encompasses.
Project Management Plans
- Project management plans are documents that help coordinate project planning documents, facilitate communication, and define a baseline for monitoring progress.
- Plans should be flexible and adaptable to change as required.
Common Elements of a Project Management Plan
- A project management plan includes an introduction/overview of the project in question, a description of how the project is organized, management & technical processes, work to be done (along with schedule & budget information), and guidelines/standards that address specific organizational policies or needs.
Sample Contents for Al or Software Project Management Plan
- Section topics are categorized into major headings, including overview, project organization, managerial process plan, technical process plans, and supporting process plans.
- Topics include project purpose, scope, & objectives; assumptions/constraints; project deliverables; schedule & budget; plan evolution; external interfaces; roles & responsibilities; start up plans; work plans (activities, schedule, & resources); control plans; risk assessment; close-out plan; process model; infrastructure plan, product acceptance plans; verification & validation, documentation, etc.
Stakeholder Analysis
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Needed because project management's ultimate goal is to meet or exceed stakeholder needs/expectations.
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Information includes: stakeholder names/organizations, project roles, pertinent facts, level of influence and interest, and strategies for relationship management.
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Stakeholder information is often sensitive and is typically kept confidential.
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Effective stakeholder relationships are critical to project success.
Sample Stakeholder Analysis for Opening Case
- Example stakeholders, their roles, unique facts, level of interest, level of influence, & relationship management suggestions.
Project Execution
- Managing and performing project work per the project management plan is the main part of project execution.
- The majority of effort and resources are generally spent on execution itself.
- The type of product, the business/industry, and the project's application directly affect project execution.
Coordinating Planning and Execution
- Planning & execution are intertwined; those doing the work should help in the planning.
Providing Leadership & Supportive Culture
- Project managers must demonstrate value of planning & execution through leadership example.
- Organizational culture affects project execution; good supporting culture provides guidelines & tracking methods.
Important Skills for Project Execution
- General management skills (e.g., leadership, communication, & political awareness) are essential for projects.
- Knowledge of the product or application domain improves project success.
Project Execution Tools & Techniques
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Project management methodologies are important tools.
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Project management information systems can streamline efforts by providing a central location for information and tasks.
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Project managers should often delegate tasks, while concentrating their efforts on providing overall project leadership.
Monitoring & Controlling Project Work
- Changes in projects are inevitable; good monitoring and control processes need to be in place.
- Communication/change management skills are important, particularly for larger projects.
- Performance reports, forecasts, correction and/or preventative action plans, and defect/change requests are important outputs of monitoring and control activities.
Integrated Change Control
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Project change management is crucial to influencing the factors that cause changes and manage the impacts of occurring changes.
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Effective project management involves timely monitoring of changes & adjustment of the plan.
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A change control board or system should be developed to formalize processes in a standardized method.
Change Control on IT or AI Projects
- The scope & time/cost estimates were often inaccurate, because stakeholders frequently did not agree on initial project scope & time/cost estimates in the beginning.
- Project change management processes should be a constant, ongoing part of the project lifecycle.
- Change Control processes need to be clearly defined and communicated to all stakeholders.
Change Control System
- KChange is necessary, but needs to be properly managed/controlled.
- A formal change control system describes when/how official project documents & work are changed.
Change Control Board (CCB)
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