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Lecture 02

Initiation of Projects Project Life Cycle Project Management Processes


Project Initiation and Selection Models Project life cycle Project Management Processes Initiation Process Planning Process Execution Process Monitoring and Control Process Closing Process

Initiation of Projects:
Projects are typically authorized as a result of one or more of the following strategic considerations:

Market demand Organizational need Customer request Technological advancement Legal requirements Ecological Impacts Social Needs

Project Selection
The selection of the right project for future investment is a crucial decision for the long term survival of the company. Project selection is making commitment for the future. Selection methods help organizations decide among alternative projects and determine the tangible/nontangible benefits to the company of choosing or not choosing the project. Project selection methods will vary depending on the company, the people serving on the selection committee, the criteria used, and the project.

Most organizations have a formal, or at least semiformal, process for selecting and prioritizing projects.

Project Selection Methods:

Generally Two categories of selection Methods:

Mathematical Models (Calculation Methods)

Provide a way to calculate the value of project.

Decision Models (Benefit Measurement Methods)

Examine different criteria used in making decisions regarding project selection.

Calculation Methods
Use Mathematical Models compromising of complex mathematical techniques. Mostly used on projects of enormous complexity. (such as Research projects) Requires strong engineering, statistical and mathematical background to be used.

Benefit Measurement Methods

Benefit measurement methods employ various forms of analysis and comparative approaches to make project decisions.These methods include comparative approaches such as cost-benefit analysis, scoring models, and benefit contribution methods that include various cash flow techniques and economic models.

Cost Benefit Analysis Scoring Models Economic Models

Payback Period Return on Investment Present Value (Discounted Cash Flow) Net Present Value Internal Rate of Return

Uses multiple criteria to evaluate the project selection Number of factors Select Factors in relation to project Weigh the selected factors accordingly Encourage objectivity in decision making

According to PMBOK Projects are unique and involve a certain degree of risk, company performing projects will generally subdivide their projects into several project phases to provide better management control. Collectively these project phases are called Project life Cycle.

A project life cycle is a collection of generally sequential and sometimes overlapping project phases whose name and number are determined by the management and control needs of the organization involved in the project, the nature of the project itself, and its area of application. While every project has a definite start and a definite end, the specific deliverables and activities that take place in between will vary widely with the project. The life cycle provides the basic framework for managing the project, regardless of the specific work involved.

Projects vary in size and complexity.

No matter how large or small, simple or complex, all projects can be mapped to the following life cycle structure: Concept and Initiation Phase (Starting a project) Design and Development Phase (Organizing and preparing) Implementation Phase (Carrying out the project work) Commissioning and Handover Phase (Closing the project)

Need Establishment

Specificatio ns

Impleme ntation
Build Status reports Changes Quality

Confirmation Close out Train customer Transfer documents

Stakeholders Goals

Build methods Plans Schedules Budgets Resources Risks Staffing Project Manageme nt Plan

Proposals acceptance

Accepted deliverabl es

Release resources
Release staff Lessons learned

Project Charter

The generic life cycle structure generally displays following characteristics: Cost and staffing levels low at the start, peak as the work is carried out, and drop rapidly as the project draws to a close. Stakeholder influences, risk, and uncertainty , are greatest at the start of the project. These factors decrease over the life of the project. Ability to influence the final characteristics of the projects product, without significantly impacting cost, is highest at the start of the project and decreases as the project progresses towards completion. Cost of changes and correcting errors typically increases substantially as the project approaches completion.

Project phases are divisions within a project where extra control is needed to effectively manage the completion of a major deliverable. Project phases are typically completed sequentially, but can overlap in some project situations. The high level nature of project phases makes them an element of the project life cycle. A project phase is NOT a Project Management Process Group.

Phase Structure allows the project to be segmented into logical subsets for ease of management, planning and control. The number of phases, the need for phases, and the degree of control applied depend on the size, complexity, and potential impact of the project.

Regardless of the number of phases comprising a project, all phases have similar characteristics: When phases are sequential the close of a phase ends with some form of transfer or handoff of the work product produced as the phase deliverable. This phase end represents a natural point to reassess the effort underway and to change or terminate the project if necessary. Each phase can be treated as mini project. All the project processes are performed for each phase of the project.

Phase Names and Deliverables Project phases take their name from the deliverables of the phase e.g. initiate ,design, construct or handover. Many projects may have similar phase names with similar deliverables, but only few are identical. Some will have only one phase, and others may have many phases. Different phases typically have a different duration or length.

Ideal structure for a project No single way to define the ideal structure for a project. Standardized - single life cycle for all projects Preferred structure industry common practices. Most Appropriate structure to suite individual project

When projects are multi-phased, The phases are part of a generally sequential process designed to ensure proper control of the project and attain the desired product, service, or result. However, there are situations when a project might benefit from overlapping or concurrent phases.

There are three basic types of phase-to-phase


1. A sequential relationship where a phase can only start once previous phase is complete. Step-by-step nature of this approach reduces uncertainty, but may eliminate options for reducing the schedule.

Example Project Life Cycle: House Project

2. An overlapping relationship Where the phases start prior to completion of the previous one. This can sometimes be called fast tracking. Overlapping phases may increase risk and can result in rework if a subsequent phase progresses before accurate information is available from the previous phase.

Example Project Life Cycle: Computer Installation

3. An iterative relationship Where only one phase is planned at any given time and the planning for the next is carried out as work progresses on the current phase and deliverables. Approach useful in largely undefined, uncertain, or rapid changing environments such as research. Can reduce the ability to provide long term planning. Scope is managed by continuously delivering increments of the product. Prioritizing requirements to minimize project risks and maximize product business value. Can also require having all of the project team members available throughout the project or, at a minimum, for two consecutive phases.

Project Life Cycle Vs Project Management Process Dont confuse project phases and life cycles with the project management process groups. Project phases and life cycles describe how the work associated with the product of the project will be completed. For example, a construction project might have phases such as feasibility study, design, build, inspection, and turnover. The five project management process groups (Initiating, Planning, Executing, Monitoring and Controlling, and Closing) organize and describe how the project activities will be conducted in order to meet the project requirements. These processes are generally performed for each phase of a large project.

Level of Effort Executing Planning Defining






Project Life Cycle

Project Management Process
To summarise this confusing but important concept: Project life cycles describes what you need to do to complete the work. The phases differs with the type of industry. For example, a construction project might have phases such as feasibility study, design, build, inspection, and turnover, IT may have different phases as given and so on. Project management process describes how the project activities will be conducted in order to meet the project requirements or in other words what you need to do to manage the project. These processes are generally performed for each phase of a large project.

No of Phases

Life Cycle Example

A Process is a set of interrelated actions and activities performed to achieve a pre-specified product, result, or service. Each process is characterized by its inputs, the tools and techniques, and resulting outputs.

Project Management Processes

Initiating the project (Start) Planning the project (Plan) Executing the project (Do)

Monitoring and Controlling the project (Check and Act)

Closing Process (End)

Project Management Process

Schematic View of Project Process:

Project Management Process

Project Management Processes:

Table on the next slide shows detailed project processes under various process groups with relation to different areas of Project Management.

Project Management Areas Project Integration Management

Project Management Process Groups

Develop Project Charter

Develop Project Management Plan

Direct and Manage Project Execution

Monitoring & Controlling

Monitor and Control Project work, Perform Integrated Change Control Verify Scope, Control Scope

Close Project or Phase

Project Scope Management Project Time Management

Collect Requirements, Define Scope, Create WBS

Project Cost Management Project Quality Management Project Human Resource Management

Define Activities, Sequence Activities, Define Activity Resources, Define Activity Durations, Develop Schedule Estimate Costs, Determine Budget
Plan Quality Develop Human Resource Plan Perform Quality Assurance Acquire Project Team, Develop Project Team, Manage Project Team Distribute Information, Manage Stakeholder expectations

Control Schedule

Control Costs Perform Quality Control

Project Communication Management Project Risk Management

Identify Stakeholders

Plan Communications

Report Performance

Plan Risk Management, Identify Risks, Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Plan Risk Responses Plan Procurement Conduct Procurement

Monitor and Control Risk Responses

Project Procurement Management

Administer Procurement

Close Procurement

Project Management Process Groups with respect to Project Management Key Disciplines

Initiating Process
The Initiating Process consists of those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase.

Initiating Process

Inputs to Initiating Process

Business Case Project objectives (What is the project being asked to do?) How the project fits into company's strategic plan Who the likely stakeholders are? Organisational Process Assets Collection Determine Enterprise Environmental Factors Industry standards and contract types

Actions required to complete the Initiating Process

Select Project Select Project Manager and determine his authority Divide large projects into phases Identify high level stakeholders, their influences and their risk tolerances Turn high level stakeholder needs, wants and expectations into requirements Coordinate project initiating efforts with stakeholders and the customer Identify and develop Stakeholder Management Strategy Understand the Business Case and document the relevant selection criteria of the project

Actions required to complete the Initiating Process

Ensure the project scope is as final as practical Determine project acceptance criteria and what is and is not in the project Determine how scope will be controlled Organisational Process Assets Collection Determine Enterprise Environmental Factors High level project planning (High level WBS, order of magnitude estimating) High level risk and requirement assessment Create Measurable Objectives and determine what specifically will constitute project success Finalize the project Charter Obtain formal approval of the project charter

Outputs of Initiating Process

Develop Project Charter Identify all project Stakeholders Develop Stakeholder Management Strategy

Planning Process
Planning Process Group consists of those processes required to establish the total scope of the project, define and refine the objectives, and define the course of action required to attain the objectives that the project was undertaken to achieve.

Planning Process

Actions required to complete the Planning Process Group

Develop Project Management Plan Collect and Finalize Requirements Create project Scope statement Use the project scope statement to gain approval of the final scope from the stakeholders before further planning is done Determine what to purchase Determine Team Create WBS and WBS Dictionary Create activity list Create Network diagram

Actions required to complete the Planning Process Group

Estimate Resource Requirements Meet with managers to gain resource commitments Estimate Time and Cost Determine Critical path Develop preliminary schedule and Budget models ignoring the schedule and cost contained in the project charter, and reconcile the two to come up with a final budget for the project management plan

Actions required to complete the Planning Process Group

Plan Project Quality

Determine quality standards and what metrics will be used to measure quality performance Determine what processes should be followed on the project to reduce the need to supervise work, to improve quality and to make use of standards Determine how you will improve the processes in use on the project

Actions required to complete the Planning Process Group

Develop Human Resource Plan

Determine all roles and responsibilities so the team members and stakeholders know what their roles are on the project and what work they will need to do

Plan Communications
Determine what information you will need from other projects and what information you can send to other projects Plan what will be communicated on the project, to whom, by whom, when and how.

Actions required to complete the Planning Process Group

Plan Risk Management

Risk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk response Planning

Go back- Iterations

Actions required to complete the Planning Process Group

Plan and finalize Procurement process Prepare procurement documents Plan ways to measure project performance, the measurements to be used, and how they will be interpreted Determine what meetings,, reports, and other activities you will use to control the project to the project management plan Develop final and realistic project management plan, project documents and a performance measurement baseline that are realistic Gain formal approval of the project management plan from sponsor, team, and managers of resources Hold Kickoff meeting

Output of Planning Process Group

Project Management Plan Project Documents

Project Management Plan

Develop Project Management Plan is the process of documenting the actions necessary to define, prepare, integrate, and coordinate all subsidiary plans. The project management plan becomes the primary source of information for how the project will be planned, executed, monitored and controlled, and closed.

Factors related to initiation of projects Selection of Projects Project Life Cycle Concepts Project Process Vs Project Cycle Project Management Processes Initiation of Project Planning of Project