Project Initiation Phase

• This presentation covers the initiation phase of a project.
• The role of a project manager is discussed.
• The presentation was created for the 2024/25 session #3 on March 5, 2025, by assoc. prof. dr. Vesna Dolničar.

Contents of the Presentation

• Introduction to project initiation.
• Explanation of the business case.
• Details of the project charter.
• Definition of the project scope.

Introduction

• Discussion of the initiating process group.
• Reasons why project initiation is essential.
• Key components of project initiation.

Project Management Process Groups

• Includes Initiating, Planning, Executing, Monitoring and Controlling, and Closing.

Initiating Process Group

• Processes to define a new project or a new phase of an existing project.
• The initial scope and financial resources are defined and committed.
• Stakeholders who influence the project's outcome are identified.
• Alignment of stakeholder expectations and project purpose is a goal.
• The process aims to clarify scope and objectives for stakeholders.
• The process aims to fully engage all stakeholders.
• Information is captured in the project charter and stakeholder register.
• Initiating provides a point to verify the project charter, business documents, and success criteria with stakeholders.
• Involving sponsors, customers, and stakeholders during initiation leads to a common understanding, shared vision, success, and acceptance at completion.

Why Project Initiation Is Essential

• Initiation is the first phase of the project life cycle.
• Effective initiation builds a strong foundation for project success.
• Underestimating resources due to a lack of understanding of the project’s goals and objectives.
• Differing views on project success among stakeholders can be avoided.
• Clarity and alignment during initiation can save time and work.
• Proper initiation ensures project benefits outweigh the costs.

Determining Project Details: The "5 W's"

• What: Actual steps of the project.
• Why: The problem the project is trying to solve and how it will help.
• Who: Those who will benefit, like customers, stakeholders, and employees.
• When: The project's completion date.
• Where: The project's location (local, international, etc.).

Key Components of Project Initiation

• Business case
• Project charter
• Project scope
• Building a project team
• Stakeholders
• Kick-off meeting

Business Case

• Documented economic feasibility study establishes the validity of project benefits.
• Used to authorize further project management activities.
• Lists project objectives and reasons for initiation.
• Helps measure project success against objectives.
• Serves as a checklist item to ensure proper approvals and executive support.

Business Case Components

• The reasons for the project in context of corporate and program strategy.
• The options that have been considered and the reasons for the chosen option.
• The benefits that will be achieved by the project outcomes.
• It should set out the benefits in measurable terms to assess project success.
• A summary of project risks.
• An outline of project costs and milestones.
• An investment appraisal via cost analysis against expected benefits over time.

Creating a Business Case

• Explains how the project's objectives align with the company's long-term plans.
• Explains why the company spend resources on the project.
• Focuses on business aspects, not technical details.
• Convinces upper management to approve the project.
• Addresses financial and business-related risks.
• It tells the business "why" the project is being done.
• Justifies the budget and helps sell the project to senior leadership.

Example 1: A Good Business Case (CRM System)

• Project: New Customer Relationship Management (CRM) System.
• Objective: Consolidate customer information to improve sales and retention.
• Reason for initiation: Reduce inefficiencies and lost sales opportunities.
• Options considered: Do nothing, upgrade existing systems, implement a new CRM system.
• Chosen option: New CRM system based on cost-benefit analysis.
• Benefits: Increased sales, improved customer service, enhanced data analysis.
• Risks: Integration complexities, data migration, user adoption.
• Costs and milestones: $500,000 with milestones for system selection, implementation, and training.
• Investment appraisal: 2-year payback period, 15% IRR.

Example 2: An Ineffective Business Case (Office Relocation)

• Project: Office Relocation.
• Objective: Move to new office space.
• Reason for initiation: Current office is outdated.
• Options considered: Not clearly defined.
• Chosen option: Move to a high-cost downtown area without rationale.
• Benefits: Vague (modern office); no quantification or strategic link.
• Risks: Not thoroughly assessed or mentioned.
• Costs and milestones: Vaguely estimated; milestones not specified.
• Investment appraisal: Lacks cost-benefit analysis; no payback period or IRR.

Example 3: A Too-Detailed Business Case (Upgrade Company Laptops)

• Project: Upgrade Company Laptops.
• Objective: Replace laptops to improve performance and security.
• Detailed technical specifications: Includes processor speed, RAM, battery life, etc.
• Detailed implementation plan: A day-by-day, hour-by-hour rollout plan.
• Comprehensive risk analysis: Lists every minor risk.
• Why it's not effective: Technical and operational details are overwhelming and don't contribute strategic value.

Guidelines for a Good Business Case

• Strategic alignment: Aligns the project to organizational goals.
• Conciseness: Provides sufficient detail to understand project value without excessive technicalities.
• Clarity in options and decision-making: Outlines options and rationale.
• Quantifiable benefits: Defines benefits in measurable terms.
• Risk and cost awareness: Identifies key risks and outlines costs/financial analysis.

Project Charter

• Formally authorizes the project and provides the project manager with the authority to use resources.
• Defines the project and outlines necessary details.
• Provides a direct link between project and strategic objectives.
• Creates a formal record and shows organizational commitment.
• Should be performed once or at predefined points.
• Authored, owned, and signed by the sponsor.
• Co-developed by both the sponsor and the project manager.

Essential Elements of a Project Charter

• Project's purpose & vision.
• Key deliverables.
• What success looks like.
• Key players.
• Identified risks.
• High-level resource overview.
• Top-level summary schedule.

Project Vision

• A clear vision of the desired objectives is needed.
• Understand and appreciate how the vision aligns with strategic goals.
• You are the guide of the vision, and its up to the project manager to ensure its delivered.
• A vision statement might include:
• Product or Solution Description
• Intended users or consumers
• Key desired objectives
• Differentiators from competitive approaches
• Key features and benefits

Project Goals vs. Objectives

• Goals and objectives are similar, both explaining why the project is needed.
• Goal gives direction to the project.
• Objectives are the targets to achieve the goal.
• • Goal is the high-level vision, objectives are the well-thought-out plan.
• Project has one goal but multiple objectives.
• Goals are long-term, while objectives are time-bound in the short-term.
• Goals are general, while objectives are specific.
• Goals are difficult to measure, while objectives are specifically designed to be measured and evaluated.

Examples of Business Goals

• Maximizing profits
• Growing revenues
• Increasing efficiency
• Providing excellent customer service
• Becoming an industry leader
• Creating a brand
• Becoming carbon-neutral

Examples of Objectives

• Earn a minimum of 15% return on investment in a fiscal year
• Increase the company's market share to 7% by the end of next fiscal year
• Cut down the operating costs by 10% within two years
• Reduce the response time for sales inquiries to 12 hours by the end of this quarter

Project Objectives

• Desired outcome of the project.
• Roadmap to your destination.
• How well it's defined
• Helps you avoid risks and steer a course
• Helps your team stay on track.
• Can be one objective, many parallel, or achieved sequentially.

SMART Goals / Objectives

• Specific: Focus on a tangible outcome.
• Measurable: Have a clear definition of success.
• Attainable: Challenging, but reasonable to achieve.
• Relevant: Worthwhile and aligned to values.
• Time-Bound: Have a target date.

Project Deliverables

• Any unique and verifiable product, result, or capability to perform a service.
• Can be tangible or intangible
• Help quantify and realize and measure the impacts of the project
• Decided upfront
• Like well-defined goals

Essential Project Resources

• Who and what you depend on to complete a project.
• Must be separate entity, they all depend on one another.

Budget

• The approved estimate for the project or any work breakdown structure component or any schedule activity.
• budget will include:
  • The cost of the people performing thew work
  • Any outside vendors helping your project
  • Any tangible items purchased to complete the project

People

• Vital resource on a project
• Will need strong team
• Variety of skill sets and speacilites to get the job done

Materials

• What you need for project
  • Could include hard drives and computers
  • intangible (online storage, software programs, or employee training)

Project Scope

• The boundaries of a project.
• An agreed-upon understanding as to what is included or excluded from a project.
• Sets the stage for developing a project plan.
• Helps ensure the project is defined and mapped out.
• Includes the project timeline, budget, and resources.
• Describes what to deliver to the customer when the project is completed.
• Should be developed under the direction of the project manager, customer, and other significant stakeholders.
• Establishes a strong foundation for managing a project as it moves forward helps ensure resources are not diverted or wasted on out-of-scope elements
• First step in project planning
• Articulates what the project entails to where stakeholders can understand whats involved
• roadmap so Manager can use to assign task, schedule work and budge appropriate tasks
• Helps focus team members on common objectives and
• Prevents projects, particular complex ones, from the expansion beyond the established vision

Project Scope Statement

• A description of the project scope, major deliverables, assumptions, and constraints.
• Reference when scope development needs to be verified against the scope baseline, updated, or changed during the course of a project.
  • This includes what the project does or does not include
  • Define the Acceptance criteria
  • State the planned deliverables for the project
  • What is not included in the scope
• Provide any constraints, hard data, staff or equipment limitation, financial or budget constraints, or any technical limitations
  • Optional assumption

Key Steps for Defining Project Scope

• Collaborate with stakeholders to define and create a scope statement by identifying what is within and out of scope
• Identify, document, and communicate assumptions.
• Gain buy-in for the scope statement with the stakeholders to ensure everyone is on the same page.

Project Scope Statement vs. Project Charter

• Different in the level of detail contained in each
• High-level information vs, detailed components

Scope Creep

• Project's work starts to grow beyond what was originally agreed upon during project start.
• Effect can hinder every aspect of the project.
• Reduce by carefully writing your scope statement

Triple Constraint Model

• The three most significant restrictions of any project are scope, time and cost
• Time refers to the project schedule and deadline
• Costs include the budget also covers resources and people who will work on project
• All three have to be linked, one has an impact on the others
  • (for example) a decease in costs means a change in time or scope.
  • both time and budget have to manage alongside scope
• The three points link to the outcome of Quality