Supply Chain Management Fundamentals

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Questions and Answers

What is the first step in the supply chain management process for developing a production plan?

Detailed scheduling

Sales forecasting (correct)

Sales ordering

Purchasing

Which element is NOT part of the sales and operations plan (S&OP)?

Financial accounting (correct)

Demand management

Materials requirement planning (MRP)

Production

What is typically included with production quality data?

Transportation schedules

Supplier information

Batch identification number (correct)

Sales forecasting figures

What does ERP stand for in supply chain contexts?

Enterprise Resource Planning Signup and view all the answers

How do ERP systems interact with production machines?

They do not work directly with the machines. Signup and view all the answers

Which process follows demand management in developing a production plan?

Detailed scheduling Signup and view all the answers

What role does the purchasing function play within the supply chain management processes?

It ensures supply of materials needed for production. Signup and view all the answers

What is a common reason for adding quality data to ERP systems?

To maintain accurate finished product inventory. Signup and view all the answers

What is a critical factor in managing an enterprise system implementation?

Assigning a full-time executive as a sponsor Signup and view all the answers

Which aspect should be prioritized for a successful transition to a new system?

Allocating sufficient time for adaptation Signup and view all the answers

What is an important metric to define for assessing project progress?

SMART requirements Signup and view all the answers

What is the primary purpose of predictive analytics?

To predict future probabilities and trends Signup and view all the answers

Which technique is specifically used to analyze time series data?

Time series analysis Signup and view all the answers

What strategy is crucial for keeping an implementation project focused?

Keeping the project scope well defined Signup and view all the answers

What role does data mining play in business intelligence?

It predicts future trends and behaviors from large data sets. Signup and view all the answers

What is essential for ensuring effective training during an implementation?

Allocating sufficient time and budget for training Signup and view all the answers

Which of the following should NOT be a focus when implementing an enterprise system?

Ignoring the importance of oversight Signup and view all the answers

How does optimization benefit resource allocation?

By maximizing profits or minimizing costs. Signup and view all the answers

What should be done to manage project-related risks effectively?

Develop metrics that align with SMART principles Signup and view all the answers

Which of the following best describes the function of predictive analytics techniques?

It analyzes current data for future predictions. Signup and view all the answers

During the implementation of an enterprise system, which approach is considered beneficial?

Encouraging independent program oversight Signup and view all the answers

What statistical methods does time series analysis employ?

Various statistical methods for meaningful statistics extraction Signup and view all the answers

Data mining primarily explores data for what purpose?

To find hidden patterns and predict trends Signup and view all the answers

What is a key characteristic of optimization in data analysis?

Minimizing costs or maximizing profits with finite resources. Signup and view all the answers

What is a primary characteristic of a data warehouse?

Holds business information from various sources Signup and view all the answers

Which statement accurately describes a data mart?

It serves specific departments or smaller organizations. Signup and view all the answers

What best defines a data lake?

A repository that saves all data in its raw form without ETL Signup and view all the answers

What is one of the main purposes of a data warehouse?

To support complex analytical queries across the enterprise Signup and view all the answers

What is a distinct feature that differentiates a data lake from a data warehouse?

Data lakes accommodate various data formats without transformation. Signup and view all the answers

Why might a small business choose to use a data mart instead of a data warehouse?

Data marts are more cost-effective for targeted data needs. Signup and view all the answers

Which process is notably absent in a data lake compared to traditional databases?

Data transformation via ETL Signup and view all the answers

What is a common misconception about data warehouses?

They can only contain structured data. Signup and view all the answers

What is one of the primary goals of corporate social responsibility (CSR)?

Gaining the goodwill of the community Signup and view all the answers

Which of the following is NOT a component of creating a consistent organization?

Providing inconsistent company behavior Signup and view all the answers

In the context of CSR, performing socially responsible activities is essential for what purpose?

To build positive community relationships Signup and view all the answers

What does a consistent company behavior help to achieve?

Trust and reliability among stakeholders Signup and view all the answers

Which aspect is a benefit of defining employee expectations?

It promotes clarity in roles and responsibilities Signup and view all the answers

An organization that operates inconsistently is likely to experience which of the following issues?

Decreased customer loyalty Signup and view all the answers

The first step in a five-step ethical decision-making process usually involves what?

Identifying the ethical dilemma Signup and view all the answers

Which of the following statements about employee expectations is true?

They must align with corporate values Signup and view all the answers

What is a primary reason for organizations to choose outsourcing?

To cut costs Signup and view all the answers

What is a key feature of core business processes?

They provide valuable customer benefits. Signup and view all the answers

Which of the following is commonly outsourced?

Data center management Signup and view all the answers

What does outsourcing primarily allow an organization to do?

Focus on its most important priorities. Signup and view all the answers

What is matrix management in the context of outsourcing?

A system with shared control over outsourced functions. Signup and view all the answers

What can outsourcing do in terms of capabilities and services?

Enhance capabilities by partnering with world-class providers. Signup and view all the answers

Which statement best captures the essence of cloud computing?

It involves networked services accessed via the Internet. Signup and view all the answers

How does outsourcing help in accelerating time to market?

By providing high-level expertise not possessed in-house. Signup and view all the answers

Study Notes

Exam Review - ISDS 351

The final exam is scheduled for Tuesday, Dec 17 (online) and Thursday, Dec 19 (in-person).
The exam is open from 5:05 PM to 6:50 PM.
The exam is closed book and no notes are permitted.
The honor system is in effect. Written answers will be reviewed for plagiarism and other academic dishonesty.
Students may not discuss the final exam with anyone who has not yet taken it.

Exam Format

The exam will consist of 50 multiple choice questions (worth 1 point each).
There are two short answer questions (worth 15 points each). Pay attention to length requirements.
There is one essay question (worth 20 points). The essay needs to be at least 5 paragraphs. Minimal points are awarded for simply answering the question. Adding examples earns more points. Supporting your answer with evidence and further explaining earns more points. Answering it all correctly earns full points.

Topics Covered

Five Component Model
IS Chapter 3 (Ethics)
IS Chapter 5 (Business Intelligence)
IS Chapter 8 (Cloud Computing)
IS Chapter 10 (Enterprise Systems)
IS Chapter 11 (Artificial Intelligence)
IS Chapter 12 (Strategic Planning)
Databases
Networks
Cryptography
Information Security
Project Management (PM) Chapter 3 (Project Methodologies)
Project Management (PM) Chapter 4 (Project Integration Management)
Project Management (PM) Chapter 5 (Project Scope Management)
Project Management (PM) Chapter 6 (Project Time Management)
Project Management (PM) Chapter 7 (Project Cost Management)
Project Management (PM) Chapter 10 (Project Communication Management)

Information Systems

An information system is hardware and software that allows people to follow a process. (Kroenke, 2011)
Information systems move work away from people to technology. This increases the difficulty of introducing change.
Five component model: People, Process, Data, Software, and Hardware.
For a functioning system, you need all these components together and they need to be able to communicate with each other smoothly.

Ethics

Ethics is a set of principles about right and wrong to guide decisions and choices.
Ethical behavior conforms to generally accepted norms.
Factors affecting ethical behavior include age, culture, ethnic background, religion, life experiences, education, and gender.
Morals include personal guidelines on right vs. wrong.
Law vs. Ethics: Legal acts conform to rules, but doing something legally doesn't mean it's ethical.
Ethical vs. Legal: This shows the different scenarios and situations that can exist between ethical and legal choices.

Gaining the goodwill of the community.
Performing socially responsible activities.
Creating an organization that operates consistently, defines employee expectations, and provides consistent company behavior

Ethical Decision Making

Process for making ethical decisions, including steps for evaluation and consideration of external and internal factors that can affect the final outcome.

Professional Code of Ethics

States the principles and core values of an organization
Primary intent is to define desired behavior, which includes improving ethical decision-making.
Four key benefits: ethical decision making, high standards of practice and ethical behavior, engendering trust and respect, and providing an evaluation benchmark.

Information Use

Information system use requires balancing the needs of those who collect the data with the rights and desires of those whose information is being used.
Information about people is gathered to help make decisions, target marketing efforts, and serve customers better.

Information Collection

Systems collect and store key data on every customer interaction.
Data collection by governments and businesses can be a crucial element, but can raise concerns, such as the privacy of individuals.
Individuals have no power to control their own personal information.
Must balance the need for data collection with the rights of individuals.
Using new laws, technical solutions, and privacy policies can help strike the balance.

Protecting Personal Data

Fair information practices are guidelines that govern the collection and use of personal data.
General Data Protection Regulation (GDPR) is a set of data privacy requirements across the European Union. This also applies to non-EU organizations that process data about EU citizens
GDPR applies to organizations that process the data of individuals within the EU.

Protecting Financial Data

Inadvertent loss of financial data can cause high risks of loss of privacy
The Fair Credit Reporting Act regulates credit reporting bureaus.
The Right to Financial Privacy Act protects financial records from scrutiny.
The Fair and Accurate Credit Transactions Act allows consumers to request and obtain free credit reports.

Protecting Children's Data

Family Educational Rights and Privacy Act (FERPA) and Children's Online Privacy Protection Act (COPPA) are crucial in protecting children's personal data.
FERPA involves the right of children’s educational records.
COPPA governs the rules for children’s websites that collect personal information from children under 13 years of age. These websites must provide comprehensive privacy policies and notify parents about data collection practices.
Websites must also receive parental consent before collecting any information from children.

Web Site Privacy Policy

Elements of a privacy notice include:
Notice: Description of collected information
Choice: Customer options
Access: How to see and change/correct collected data
Security: Information about how the collected data is stored and protected
Redress: What customers can do if the policy is not met.

Individual Efforts to Protect Privacy

Laws don't offer complete privacy protection, so people must protect themselves by not revealing sensitive information without sufficient care.
Look at what information about yourself is stored in databases and control sharing personal information.
People should be proactive in safeguarding their privacy.
When making purchases from sites, people must take special care to avoid revealing unwanted information.

Internet and Government Surveillance

Privacy is protected by the Bill of Rights (specifically, the Fourth Amendment which protects individuals from unreasonable searches and seizures.)
Widespread electronic surveillance raises concerns about our basic rights of free expression and association.
The U.S. government is expected to do all it can to protect its citizens.

Federal Statutes

Foreign Intelligence Surveillance Act (FISA)
USA PATRIOT Act
USA Freedom Act

California Consumer Protection Act (CCPA)

California Consumer Protection Act (CCPA) went into effect in Jan 1, 2020.
Individuals can know what data is being collected and shared and to whom.
Individuals can block the sale of personal data.
Individuals can access their personal data and request deletion of personal data
No penalty for invoking privacy rights.
New CPRA law doesn't take effect until 2023.

Freedom of Expression

The Internet is a crucial tool for global news, ideas, opinions, rumors, and information exchange.
Promotes anonymity and discussion freedom.
Ethical considerations regarding Internet's freedom and power are vital.

Freedom of Speech

The First Amendment protects the freedom of religion, freedom of press, freedom of expression, and freedom to assemble peaceably in the United States.
Some types of speech are not protected or forbidden by the First Amendment.
Anonymity on the Internet allows people to express opinions without revealing their identity, which can empower and protect them in some settings.

Internet Censorship

Internet censorship is the control or suppression of the publishing and accessing of information online.
Censorship efforts can focus on Domain Name System (DNS) servers.
Officials can deregister a domain hosting inappropriate or illegal content.
Freedom of speech is still complicated online. Children's easy Internet access is a major factor, as well.

Internet Censorship (CDA & CIPA)

The Communications Decency Act (CDA) protects children from pornography.
The law had problems with the definition of indecency and was ruled unconstitutional in 1997 by the Supreme Court.
Section 230 of the CDA provides immunity for Internet service providers (ISPs) that publish user-generated content

Big Data

Enormous volumes of complex data (e.g., terabytes or more).
Traditional data processing systems may be incapable of dealing with big data volumes.
Key characteristics of Big Data include: Volume, Velocity, Variety, Veracity, and Value.
Sources of big data for organizations span multiple sources. Sources can include archives, public data, social media posts, machine log data, and media.
Technologies used to manage and process big data: ETL process, Data Warehouses, Data Marts, and Data Lakes

Benefits Achieved from Business Intelligence and Analytics

Determine Trends & Patterns
Detect fraud
Improve forecasting
Increase sales
Optimize operations
Reduce costs

Components Required for Effective Business Intelligence and Analytics

Solid data management program (including data governance.)
Creative data scientists
Strong commitment to data-driven decision making

Data Governance

Ensures data reliability and supports informed business decisions.
Includes managing availability, usability, integrity, and security of data.
Establishes a data governance body to meet required regulatory compliance.
Data governance includes defining roles, processes, standards, measures, and controls for managing organizational data effectively.

Descriptive Analysis

Preliminary data processing stage that identifies recurring data patterns to answer questions regarding "who" "what" "where" "when" and "to what extent."
Two types: Visual Analytics, Regression Analysis

Visual Analytics

Presents data pictorially or graphically
Often used in word clouds and conversion funnels.
Summarizes steps consumers take to purchase products.

Regression Analysis

Determines the relationship between a dependent variable and one or more independent variables.
Produces a regression equation whose coefficients represent the relationship, which can be used to make predictions.

Predictive Analytics

Analyses current data to identify probable future trends and possibilities.
Creates actionable predictions.

Time Series Analysis

Statistical methods for analyzing time-series data.
Helps extract meaningful statistics and characteristics based on historical trends.

Data Mining & Optimization

An analytical tool for discovering patterns in large amounts of data to predict trends and behaviors for effective decision making.
Optimizes allocation of scarce resources to minimize costs or maximize profits

Simulation

Emulates real-world system responses to various inputs.
Includes scenario analysis to predict future values.
Monte Carlo simulation utilizes potential outcomes to consider variables.

Text and Video Analysis

Collects insights and data from text and video content for decision-making
Text analysis extracts value from unstructured text.
Video analysis gathers information and insights from video.

Self-Service Analytics

Empowerment of end-users to work independently
Gaining access from approved data sources
Using an endorsed range of analytical tools and processes
Providing valuable data to end-users
Encouraging data-driven decision making
Accelerating decision-making with quicker information access
Addressing the shortage of data scientists

Big Data Challenges

Selecting data, location of storage, and methods for storage.
Privacy concerns due to huge data collections and potential sharing.
Security concerns associated with big datasets and how to keep them safe.

Outsourcing

Outsourcing is a contractual relationship between two companies in which one company hires the other to perform some work that would otherwise be completed by internal employees.
This can be advantageous for cost savings (e.g. offshoring) or improving focus.
Outsourcing enables businesses to partner with specialized service providers for specific tasks.
Specific business functions, such as IT/IS, accounting, and legal functions are commonly outsourced.

Core Business Process

Core business processes provide valuable customer benefits that competitors find difficult to imitate.
They are widely leveraged across many products and markets, directly impacting the organization's customers, and are essential for providing services.
They tie to the organization's vision and mission.

Reasons to Outsource (1 and 2)

Outsourcing providers have a lower cost structure than employing internal teams for routine tasks due to economies of scale, expertise, and specialization.
Outsourcing can enable focus on organizational priorities as external teams handle tasks deemed less important or require specializations.
Outsourcing can enhance capabilities and services, move logistics operations to third-party providers, and manage complex global supply chains.
Accelerate time to market by relying on external providers with high-level expertise.

What is commonly Outsourced?

IT/IS: Hardware/Software management, data center management, network services, cybersecurity
Legal
Facilities
Finance & Accounting
HR

Cloud Computing

A computing environment where services are delivered via the Internet.
Can be deployed in various ways including: public, private, and hybrid cloud.
Public cloud: Service provider owns and manages infrastructure, allowing cloud users shared resources via the Internet.
Businesses can deliver more, increased on demand computing, network, and storage services on a cloud environment.
No capital investment by cloud users is involved
Public cloud benefits: Reduced costs, scalable resources, disaster recovery, and broader geographic footprint.

Pizza As a Service

Traditional, Infrastructure (IaaS), Platform (PaaS), and Software (SaaS) service delivery models
Describes the different responsibilities involved for running products.
Different elements can be handled internally or outsourced

XaaS

An umbrella term for various cloud services
Offers different cloud provider choices in service provision, with different levels of responsibility held by the vendor or the client

Public Cloud Computing Issues

Complex pricing arrangements.
Variations in performance.
Inadequate data security.
Vendor lock-in.
Outages.
Multi-cloud avoids vendor lock-in and outages but increases cost and complexity.

Private Cloud Computing

A single tenant environment for which organizations may use because they have concerns about their data's security.

Hybrid Cloud Computing

Integrates both private and public cloud components.
Offers a flexible deployment model for organizations.

Internet of Things (IoT)

Network of physical objects with embedded sensors, processors, software, and network connectivity.
Allows for data exchange among devices, manufacturers, operators, and other connected devices.

IoT Risks

Difficulties in updating and patching devices.
Little to no access security, especially with widely known credentials.
Gathering of a lot of private data.

Three Webs (types)

Surface Web.
Deep Web.
Dark Web.

Strategic Planning (1, 2, and 3)

Managerial process identifying initiatives and securing organizational objectives
Organization recognized as in a state of flux due to continuous change and external factors
Benefits include framework/direction for decision-making, use of resources effectively, enables proactive actions, and helps adapt to opportunities and trends
Enables participation across organizational units, communication improvements to judgment performance, and improved communication between management teams and stakeholders

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Matrix

Used in analyzing an organization for internal assessment and studying external factors

Michael Porter's Five Forces Model

Most frequently used model for evaluating competition
Includes five factors that influence industry competition

Better Strategic Planning Pyramid

Outline of project management structure from fundamental elements (e.g. mission, vision, values) to more detailed sub-elements (e.g. projects, programs)

Setting the Information System Organizational Strategy

Different aspects of organizational strategy based on the perspective of the organization: (e.g., cost center, partner, peer, game changer).
Includes inward-looking (e.g., cost reductions), outward-looking (e.g., new product strategy), and business-focused aspects (e.g., controlling IS costs)

Project Classification Example (1 and 2)

Projects categorized by characteristics such as strategic impact, cost, risk, and the need for changes, offering various categorizations (e.g., breakthrough advantage, growth, innovation).

Organizational Culture and Change

Understanding organizational culture in relation to the "soft side" of implementing information systems and changes. Describes common terms, such as culture, organizational change, soft side of implementing change, and change model

Project Management Process Groups

Initiating: Starting the project by formally recognizing its existence
Planning: Defining activities, milestones, responsibilities and strategies
Executing: Carrying out the work described in the project plan
Controlling: Measuring performance and making changes to the plan
Closing: Completing all project activities

Importance of Project Schedules

Time is a limited resource, so effectively managing schedules is vital for timely project completion.
Schedule conflicts often result from schedule issues, often during the latter half of project implementation.
Several factors can affect conflicts on project schedules such as individual work styles and differences in cultural values, which can cause delays and conflicts

Project Time Management Processes

Planning schedule management: Establishing policies, procedures, and documentation for handling the project timeline.
Defining activities: Identifying specific tasks and duties needed to successfully complete the entire project.
Sequencing activities: Identifying interrelationships between tasks.
Estimating activity resources: Estimating the required resources for task completion.
Estimating activity durations: Estimating the time needed for specific tasks.
Developing the schedule: Combining information from previous steps to develop the complete project schedule.
Controlling the schedule: Managing schedule changes and maintaining performance

Reality Checks on Scheduling

Reviewing the draft schedule and estimated completion dates.
Creating more detailed schedules with the team.
Ensuring realistic schedules for alignment and follow-up.
Informing top management of potential schedule problems.

Gantt Charts

Standard format for displaying project activities and their start/finish dates, useful for visualizing the schedule.
Includes key elements like milestones, summary tasks, task durations, and task interdependencies.

Buffers and Critical Chain

Buffers are additional time allocated for unforeseen issues or delays.
Murphy's Law addresses that if something can go wrong, it will, highlighting potential delays.
Parkinson's Law explains how work can expand to fill the time allowed.
Cole's Law, an analogy to scheduling, explains that often seemingly important tasks or work, when broken down into tiny pieces might be less significant in achieving the overall goal.
Traditional estimates often include buffer time, which might not always be necessary

Program Evaluation and Review Technique (PERT)

Network analysis to estimate project duration with high uncertainty.
Uses probabilistic time estimates using optimistic, most likely, and pessimistic duration estimates or three-point estimates for task estimates

Agile and Time Management

Agile development values collaboration, responding to change, and a time-based development strategy.
The product owner leads work prioritization within sprint timeframes, leading to strong customer input and collaboration in time management.
Projects don't need detailed work definition before scheduling project tasks.

Financial Analysis of Projects

Financial aspects are crucial for selecting projects for which costs are often not correctly communicated.
NPV analysis considers future cash flows, ROI analysis determines benefit-to-cost ratios, and payback analysis seeks a project's recovery period of investment.

Developing a Project Charter

A document that formally authorizes a project.
Project charter acknowledges existence of a project, provides direction, and ensures agreement from key stakeholder approvals

Inputs for Developing a Project Charter

This includes a project statement of work, business case, agreements, enterprise environmental factors, and organizational process assets.

Developing a Project Management Plan

A document that coordinates all project planning documents.
This plan guides and controls a project's implementation.

Common Elements of a Project Management Plan

Introduction and overview of the entire project details
Description of organizational structure with a clear project organization view
All management and technical processes used, and procedures
Schedule requirements and details (e.g. timetables, resources) and budget summary

Directing and Managing Project Work

Managing and executing duties listed in the project management plan
Much of the required time and resources are dedicated to project execution

Coordinating Planning and Execution

Project planning and execution are tightly linked.
Working team members should contribute to developing the overall project plan structure.
Solicit input to ensure realistic planning and scheduling

Providing Leadership and a Supportive Culture

Project managers must lead by example, demonstrating the importance and commitment to creating and following a process.
Organizational culture plays a vital role in ensuring that projects are delivered to specifications. This includes developing guidelines and templates, and measuring and recording performance based on these plans.
In some situations, the project manager may encounter situations where rules need to be bent for successfully executing the project and achieving strategic objectives. Senior management support is needed in those situations.

Capitalizing on Product, Business, and Application Area Knowledge

Prior expertise in the business and application area is helpful for successful project management,
Important for small to medium projects, where the project manager needs to manage and direct technical tasks.
Expertise is crucial for properly directing larger projects, enabling a greater understanding of business and application requirements

Project Execution Tools and Techniques

Utilize expert judgment to help with many project execution decisions.
Include meetings to foster interpersonal relationships and improve communication. Encourage information sharing of important details, tasks and procedures during these meetings to manage issues quickly
Utilize project management software packages that are accessible over the Internet
Examine the example given on the integration of the Kuala Lumpur's Integrated Transport Information System (p169) to see how these processes are implemented.

Monitoring and Controlling Project Work

Changes to project plans (and even scope) are inevitable, so a process must be developed to monitor and control any changes.
This includes collecting, measuring, and reporting on performance;
The baseline (approved project plan + approved changes) are the standards to measure performance against to identify any deviations and make appropriate adjustments as needed

Performing Integrated Change Control

Objectives: Influencing, determining, and managing changes to ensure they meet goals.
Involves constant communication and negotiation to ensure successful outcomes.

Change Control System

A formal documented process to describe when and how project documents and work can be changed.
Defines and explains authorized changes and implementation protocols.

Change Control Board (CCB)

A formal group responsible for evaluating and approving changes to a project.
Provides guidelines for developing change requests.
Includes representatives from across the organization to ensure complete understanding and alignment with organizational strategies.
Occasionally occurring meetings may lead to delays in the implementation process.

Configuration Management

Ensures correctness and completeness of project descriptions and controlled functional/physical characteristics of products and their supporting documentation.
Specialists identify configuration requirements, control changes, record and report them, and conduct audits to verify conformance to the scope management requirements.

Closing Projects or Phases

To formalize the completion of a project or phase, finalize all activities and transfer the completed or cancelled work to the appropriate stakeholders.
Includes creating a product/service completion transition process that formally concludes the project stage/project.

Cost-Benefit Analysis

Cost of mitigation must be lower than the value of the asset or service to be protected;
Cost of mitigation must be lower than the associated benefits/outcomes.

Risk Assessment

Determining the best investments of time/resource for minimizing threats to your organization
Identifying all project assets and associated vulnerabilities to ensure accurate monitoring and management.
Recognizing loss events can help avoid or minimize negative impacts on the organization.

Steps in a Risk Assessment

Identify all assets
Identify loss events or possible risks and threats
Assess the frequency of events and probability of identified threats.
Determine the impact of each threat
Research mitigations for each threat
Perform a comprehensive cost-benefit analysis on each mitigation

Project Cost Management Processes

Planning cost management: Determining policies, procedures, and documentation needed for cost planning, execution, and control.
Estimating costs: Developing cost estimates for resources needed to complete the project phases.
Budget determination: Allocation of overall cost estimates to individual work items creating a baseline for ongoing performance measurements
Controlling costs: Controlling changes to the project budget

Learning Curve Theory and Reserves

Learning curve theory addresses the cost reduction impact of repetitive task completion
Contingency reserves account for unexpected cost overruns for which a plan is available
Management reserves account for unpredictable cost overruns requiring substantial adjustment

Planning Cost Management

The project team's use of expert judgment, analysis techniques, and meetings can help establish a cost management plan
The cost management plan should include factors such as accuracy and measurement units, procedure links, control thresholds, measurement rules, reporting formats, and descriptions of processes

Estimating Costs

Project managers must be serious about cost estimates because completing projects within budget constraints is crucial to achieving the overall goal
Know various types of cost estimates, preparation methods, and potential problems associated with estimating IT costs to implement better project management

Cost Estimation Tools and Techniques

Analogous estimates/top-down estimates: utilize similar projects for establishing cost estimates.
Bottom-up estimates: individually estimate costs associated with work items and projects.
Parametric modeling: use project characteristics to predict cost details such as cost estimation for project tasks.

Typical Problems with IT Cost Estimates

Estimating costs too quickly.
Insufficient experience in estimating costs among project members
Inherent human bias that often leads to underestimation of project cost variables
Desire for higher accuracy in project cost estimates without fully accounting for all required resources needed for the overall completion process

Sample Cost Estimate

Project costs and project assumptions are identified and thoroughly analyzed for the overall project implementation.
Organize and document project costs and assumptions by each WBS category for more accurate modeling and improved measurement of cost changes.
Employ cost estimation models that allow the estimation to be easily modified.
Document all the cost estimates to track deviations or project variances as project execution continues

Best Practice

Function points are a useful method to define and measure software size.
User stories are a good way to concisely gather requirements.

Determining the Budget

Distribute cost estimate across different work items over time
Utilize the WBS to define and manage individual work items
Create a cost baseline to use as a reference for monitoring

Controlling Costs

Project cost control ensures that only authorized changes to the original plan are included in the updated and revised cost baseline
Project managers/teams inform all project stakeholders of authorized changes to costs.
Many organizations deal with problems during cost control phases

Earned Value Management (EVM)

Integrates scope, time, and cost data using a baseline (original plan plus changes), helping project managers measure and monitor project performance with a defined standard.
Actual values must be reported regularly for proper EVM function.
Many organizations use EVM as a key method of cost control

Earned Value Management Terms

Planned value (PV): Budgeted cost of work scheduled (identifies planned costs), representing the portion of the approved total cost planned for a specific activity in a given period.
Actual cost (AC): Actual work performed costs (identifies performed costs), including both direct and indirect costs in a specific task period
Earned value (EV): Estimated value of the work performed, based on budgeted cost of work performed (identifies work completed), which helps estimate the value of the actual work completed in a specific period.

Rate of Performance (RP)

The rate of performance (RP) compares actual work performed to the amount of work expected to be done at a specified project time.
Calculating RP can help measure whether the project is behind or ahead of schedule.

Rules of Thumb for Earned Value Numbers

Negative variance numbers for cost or schedule indicate project problems.
CPI (Cost Performance Index) and SPI (Schedule Performance Index) values under 100% usually denote issues.
A projected (estimate) at completion (EAC) shows a projection of the remaining cost based on prior performance. The original budget at completion (BAC) forms the reference for calculating EAC.

Project Quality Management

Quality management ensures that project deliverables meet expected requirements.
Processes include planning, assurance, and control.
Establish quality leadership, understand the cost of errors, focus on organizational factors, and consider using maturity models for improved quality

Planning Quality

Enables anticipating issues and having a plan for dealing with them.
Selecting materials and personnel who can handle project quality aspects properly.
Develop a process that ensures appropriate outcomes are achieved for the project.

Scope Aspects of IT Projects

Functionality: system's ability to perform targeted/intended duties
Features: System's specific characteristics for better appeal to the user
Outputs: Reports and screens generated by the system
Performance: Effectiveness of the project to perform specified tasks as per the requirement.
Reliability: Product performance under expected conditions.
Maintainability: How easy it is to uphold the product/system's functions or to perform maintenance.

Who's Responsible for Quality?

Project managers are ultimately in charge of quality management during a project.
Many professional sources (e.g., ISO, IEEE) provide important guidance and information for quality processes

Performing Quality Assurance

Identifies quality standards for the project.
Continuous quality improvement is a critical quality element and process.
Kaizen is the use of evaluating processes to maximize customer value.
Benchmarking compares project practices or product characteristics to other projects, inside or outside the organization, as a method for quality improvement.
Quality audits are useful for identifying lessons learned that can improve performance on future projects.

Controlling Quality

Crucial aspects of outputs from quality control include acceptance decisions, rework, and process adjustments
Numerous quality-related tools are available for improving performance in project quality control activities

Cause-and-Effect Diagrams

Charts tracing complaints related to quality issues to the responsible operational processes.
Useful for finding the root causes of quality problems.
Can incorporate “5 Whys” to determine the specific underlying causes of a problem

Quality Control Charts

Graphic displays of data about how a process evolves over time.
The main function for quality control charts is to identify and predict potential issues with a process prior to defect or error occurrences.
The charts can distinguish between random variations and non-random variations. Processes can be adjusted as needed.

Pareto Charts

A histogram that helps identify the most frequent problems and prioritize problem areas based on the 80-20 principle (Pareto analysis), so that 80% of the problems can be resolved with 20% of the causes.

Flowcharts

Graphic depictions of the steps in a process for understanding how processes function. Includes activities, decision-points, and the flow and order in which the information is processed.

Six Sigma

A system for achieving business success with detailed attention, facts, data, and analyses to drive process improvements.

DMAIC

A systematic, closed-loop process to improve processes and quality. Includes the steps for defining the problem, measuring, analyzing, improving processes, and controlling the improvements.

Types of Tests

Unit Testing: Individual components/programs
Integration Testing: Functionally grouped components
System Testing: The entire system as one unit
User Acceptance Testing: End-user testing of the finished system

ISO Standards

A three-part continuous cycle for planning, controlling, and documenting quality.
Quality certification standards to be met by organizations to ensure high quality.

Improving Information Technology Project Quality

Leadership that promotes quality principles
Understand the cost of quality aspects
Evaluate organizational and workplace factors impacting quality
Employ effective maturity models for managing quality improvement

The Cost of Quality

Sum of the cost of quality and nonconformance cost of a delivered product or project
Includes conformance (delivering a product that meets expected requirements and fitness for use) and nonconformance costs (responsibility for quality failures)
There are different types of costs related to quality, prevention cost, appraisal cost, internal failure cost, and external failure cost

Prevention costs: prevent defects to reduce overall project cost
Appraisal costs: evaluate processes and outputs to ensure quality
Internal failure costs: costs incurred to correct defects before delivery to customer.
External failure costs: costs that result from project/product defects detected once the item is delivered to the customer.
Measurement and test equipment costs: equipment costs for prevention and appraisal activities, which can be substantial

Maturity Models

Frameworks for process and system improvement
The Software Quality Function Deployment Model is often used to define user requirements and plan software projects.
The Software Engineering Institute’s Capability Maturity Model Integration (CMMI) is a process improvement that provides essential elements of effective processes

CMMI Levels

The CMMI framework describes levels of improved processes. From lowest to highest, these include Incomplete, Performed, Managed, Defined, Quantitatively Managed and Optimizing.
Higher CMMI levels often lead to increased bidding efficiency on government projects