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Reflection and Discussion Forum Week 3 Reflection and Discussion Forum Week 3Assigned Readings:Chapter 7: Project InitiationChapter 8: Overview of Project PlanningInitial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion. Also, provide a graduate-level response to each of the following questions:  Your manager recently gave you the responsibility of selecting the next project, which you will manage as the project manager.  There are currently 3 projects on hold to choose from.  Using the weighted scoring models method, you determine that Project A has a weighted score of 16, Project B has a weighted score of 14, and Project C has a weighted score of 17.  Which project do you choose and why?   Problem Set #3 Software project decision point. You need to determine an interest rate to use—select an interest rate and explain why you think this number should be used. Use it in your calculations in item 1.2. Given the information below on options 1 and 2, carry out three forms of analysis: breakeven, ROI, and NPV. Make a recommendation on which way to proceed, based on the TCO for each option. Option 1: Purchase the FunSoft package: Cost $200,000 for software and $85,000 for hardware in year one; with $50,000 to customize it and a $40,000 annual licensing fee for the life of the contract. There will be an annual saving of $61,000 due to the layoff of a clerk. Option 2: Purchase the SoftComm package, which will operate on the vendor’s hardware: Cost $250,000 for a five-year license, payable half up front and half during the first year of implementation. The maintenance contract, at $75,000 a year, includes all currently identified modifications to the software for the first three years. The clerk’s hours will be cut by half, for a saving of $25,000 a year. In both cases, sales are expected to increase from the current $1 million a year, by 10% per year each year (over each year’s previous year’s sales) after full implementation. Assume a five-year life for the software.  subject 2 Project management processes   Reflection and Discussion Forum Week 3 Reflection and Discussion Forum Week 3Assigned Readings:Chapter 4. Life-Cycle CostingInitial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.Also, provide a graduate-level response to each of the following questions: Discuss the effect of taxes on the life-cycle costing (LCC) of passenger cars. Compare domestic and imported cars. Discuss the effect of LCC on the decision to locate a new warehouse. Respond to the post of at least two peers, using 100 words minimum each. [Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student's own words - do not provide quotes!]    Activity 3 Maurice Micklewhite has decided to replant his garden. Show him what the cost is of making an erroneous decision at various stages of the project, starting with conceptual design and ending with the ongoing maintenance of the garden. Project Initiation This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation 1 Project Initiation Purpose of initiation phase Comparing project options Total cost of ownership The project charter This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation The Initiation Phase Business problem or opportunity defined Solution is defined Project is formed Business case created Project team appointed This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation The Business Case Problem or opportunity: Detailed description Introduction Problem/opportunity statement Assumptions and Constraints Alignment with organizational objectives solutions AnalyList of alternative sis of benefits, costs, and issues Description of the preferred solution Main project Requirements Potential risks Summarized plan for implementation Schedule Financial analysis This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Comparing Options Weighted Decision Matrix Criteria Weight SJS Enterprises Game Access DVD Link Educational 15% 90 0 0 Sports-related 15% 90 90 90 Secure payment 10% 90 50 50 (rows left out here—see textbook) Weighted Project Scores 100% 56 14.5 12.5 This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Financial Considerations Can compare projects based on Net present value Internal Rate of Return (Return on Investment or ROI) Payback Analysis This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Net Present Value Analysis Considers the time value of money Costs for future years must be discounted to the present time Tangible benefits also discounted to the present time Must identify an appropriate discount rate Take risk into consideration This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation NPV Calculation t is the time of the cash flow Rt is the cash flow at time t i is the interest rate Apply the above formula to each annual inflow and outflow of cash Add all terms together to get the NPV Rt (1 + i)t This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation NPV Analysis If… It means… Then… NPV > 0 the investment would add value to the firm the project may be accepted NPV < 0 the investment would subtract value from the firm the project should be rejected NPV = 0 the investment would neither gain nor lose value for the firm indifferent in the decision This project adds no monetary value. Decision should be based on other criteria, e.g., strategic positioning or other factors not explicitly included in the calculation. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Rate of Return Can be used to compare different options Organization may have a minimum acceptable rate of return for projects (Total benefits – Total costs) / Total costs This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Payback Analysis Compares cumulative costs to cumulative benefits Easiest to see in graphical format Time on horizontal axis, money on vertical This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Payback Analysis This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation The Project Charter This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation 13 Purpose of the Project Charter When signed off, you have approval to proceed to detailed planning, followed by carrying out your project. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Organizational Process Assets Is there a standard format for project charters? Is there a standard process for developing and getting approval for a project charter? What can the PMO do for you? What does the PMO require of you? Are there applicable “lessons learned” available from other projects? If you are inexperienced, is there a mentor available? Etc. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Project Charter – Typical Contents Identification section Project purpose or justification Measurable project objectives and related success criteria High-level requirements Assumptions and constraints High-level project description and boundaries High-level risks Summary milestone schedule Summary budget Stakeholder list Approvals This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Identification Name of the project—make it meaningful Name, title, department of project sponsor Name of project manager This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Clear Objective SMART Specific Measurable Acceptable Realistic Time based This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Business Need or Opportunity A concise statement of how the project’s deliverables will contribute to organizational objectives This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Scope Clearly defines what is in and out of the project Major Milestones Identifiable points in time Target dates will be added LATER This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Major Deliverables Break down the overall objective into smaller measurable units Assumptions Things you are not certain of but can proceed if you behave as if they are true This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Constraints Anything that limits your ability to deliver or the range of acceptable solutions Preliminary Cost Estimates How will the costs be defined and controlled This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Risks High-level statement about risks identified so far Include the risk of NOT doing the project This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Stakeholder List The stakeholders identified so far, including their roles Approval A place for the project sponsor and the project manager to sign This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Project Initiation: Summary The first phase Relationship of project to business objectives is key Compare alternatives using weighted matrix Financial analysis: NPV, ROI, payback Project Charter is the primary output; it includes the stakeholder list Completion of Project Initiation is the signal that the project has approval to proceed to the project planning phase. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation Questions? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 7: Project Initiation 26 Overview of Project Planning This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning 1 Project Planning After the project charter is approved, the Project Initiation phase is complete and you are ready to proceed to the Project Planning phase. When the Project Planning phase is complete, you are ready to proceed to Project Implementation This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Project Planning Project planning is the second major project phase, and the second of the five process groups identified in PMBOK. After the project charter is approved, the Project Initiation phase is complete and you are ready to proceed to the Project Planning phase. When the Project Planning phase is complete, you are ready to proceed to Project Implementation This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Purpose of the project planning phase Establishing business requirements. Establishing cost, schedule, list of deliverables, and delivery dates. Establishing resources plan. Getting management approval and proceeding to the next phase. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Basic processes of project planning Scope planning Preparing the Work Breakdown Structure Project schedule development Resource planning Budget planning Procurement planning Risk management Quality planning Communication planning Stakeholder management planning This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Scope planning Determining the scope is a key piece of being able to prepare a plan. What is in? What is out? Make it Specific Measurable This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Preparing the WBS Work breakdown structure: List of all tasks and subtasks required to achieve the scope (produce the deliverables) This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Project Schedule development How long will each task on the WBS take? What are the relationships between the tasks? Independent Direct Precedence More complex relationships This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Resource Planning What resources are required to carry out each task on the WBS? Human Budget Specialized equipment Etc. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Budget Planning What is the required budget? When during the project will the amounts be needed? Is an external source of funding required? Etc. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Procurement Planning Will equipment/supplies/software/etc. be purchased from another organization in order to carry out the project? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Risk Management What can you anticipate in the way of unknowns that might impact the project? Can you eliminate/reduce/mitigate the impacts of these risks? How? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Quality Planning What is the required quality? How will it be measured? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Communication Planning What kinds of communication will be required throughout the project? With the team With the sponsor With other stakeholders What forms of communication will you use? Formal, informal, written, oral What is the planned frequency of communication? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Stakeholder Management Planning The project initiation phase identified the stakeholders During the planning phase Additional stakeholders may be identified Detailed plans are made about the format and frequency of communications with each stakeholder group Tools are identified which can be used to track and control the relationships between the stakeholders and the project This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Summary Project Planning phase includes Scope planning, Work Breakdown Structure, Project schedule development, Resource planning, Budget planning, Procurement planning, Risk management, Quality planning, Communication planning and Stakeholder Management Planning When the project plan is approved by the sponsor, you are ready to proceed to implementation This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning Questions? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 8: Overview of Project Planning 17 Project Management: Process, Methodologies, and Economics Third Edition Chapter 4 Life-Cycle Costing Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved If this PowerPoint presentation contains mathematical equations, you may need to check that your computer has the following installed: 1) MathType Plugin 2) Math Player (free versions available) 3) NVDA Reader (free versions available) Table 4-1 L C C Estimates for Appliances Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-1 Learning Curves for Two Technologies Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-2 Percentage of Budget Affected by Decision Made is Life-Cycle Phase of a System Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-3 Cost Estimate Errors Over Time Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-4 Cost Comparison of Two Projects by Life-Cycle Phase Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-5 Cost Classification for Manufacturing Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-6 L C C as a Function of Time Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Table 4-2 Example of an LCC Model ($1,000) Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-7 Total L C C of the System Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-8 L C C by Phase Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Figure 4-9 Cost Breakdown by Labor and Material Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Table 4-4 Partial C B S for Residential Building Example Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved Copyright Copyright © 2017, 2005, 1994 Pearson Education, Inc. All Rights Reserved 14 Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Table 4.1 LCC Estimates for Appliances Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.1 Learning curves for two technologies. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.2 Percentage of budget affected by decision made is life-cycle phase of a system. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.3 Cost estimate errors over time. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.4 Cost comparison of two projects by life-cycle phase. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.5 Cost classification for manufacturing. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.6 LCC as a function of time. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Table 4.2 Example of an LCC Model ($1,000) Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.7 Total LCC of the system. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.8 LCC by phase. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Figure 4.9 Cost breakdown by labor and material. Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Table 4.3 Coding and Classification Scheme for LCC Copyright © 2017, 2005, and 1994 by Pearson Education, Inc. All Rights Reserved Project Management: Processes, Methodologies, and Economics, 3e Avraham Shtub, Moshe Rosenwein Table 4.4 Partial CBS for Residential Building Example