Project Management
Techniques
CHAPTER C
Learning Objectives
After reading this chapter, you should be able to:
Calculate net present value, payback period,
and return on investment
Develop a PERT/CPM chart
Chapter Outline
Be able to set up a project in Microsoft Project
Calculating Net Present Value, Payback Period,
and Return on Investment
Explain how Microsoft Project can be used to
track an existing project
Understanding PERT/CPM Charts
Explain the ten areas of the Project
Management Body of Knowledge
Building the Project Schedule with
Microsoft Project
Project Management Body of Knowledge
(PMBOK)
OL-54 PART 4 ■ System Development and Project Management
Opening Case S
ucceeding as a
First Time Project Manager
“But how do you make sure you have covered all your
bases?” Mary asked Bill.
Mary had recently been promoted to project leader
in the systems department of her company. She was a
high performer and had done very well as a developer
and then as a team leader. Just two weeks ago, she had
been given responsibility for the development of a new
smartphone application to complement the other applications provided by her company. It wasn’t a large project, but she was still a little concerned that she might
forget something.
She had done well as team leader in coordinating
the work of her fellow developers on the teams she had
led. Not only was she a good developer, but she was
an excellent resource to the other team members to
answer their questions and provide help. In fact, the reason she was promoted to project leader was because
of her success as a technical developer and as a team
coordinator. However, this promotion was a pretty big
jump and her responsibilities were much broader. Not
only was she responsible for the development of the
software, but now she had to worry about coordination
with a steering committee, training for her workers, the
overall schedule of the project, and many other areas in
which she had little experience.
She had cornered her previous project manager,
Bill Harris. He had always been a good mentor for her,
so she asked him how she should approach her new
assignment. Her biggest worry was how to know
everything she should be keeping track of. She knew
that if she knew what to do that she could do it well.
The problem was how to know everything she needed
to address.
“Well, Mary,” Bill answered, “one good way to know
if you have covered all your bases is to build a checklist
of project management areas that are important. One of
the things that I did when I was a new project manager
was to go through each of the nine knowledge areas of
the Project Management Body of Knowledge (PMBOK)
and then build myself a list of what I needed to focus
on in each area. I also set myself some goals of what I
wanted to achieve in each area.”
“I think I understand,” she replied. “But I’m not sure
I have enough experience to know how to do that. Can
you give me an example?”
“Sure,” he said. “Let me take one of the key knowledge areas: communication management.
For communication management, I focused on
three primary goals. First, I wanted to ensure that I had
current and accurate information available. Second, I
established some personal objectives about how to
keep my project sponsors informed about project progress. As you know, project sponsors don’t like surprises.
Third, I want to make sure that all team members knew
what was going on and had all the information that was
needed to do their jobs. In each of those three focus
areas, I set up procedures and processes to make sure
that my objectives were being met.”
“Wow, that sounds great. And so you did that for
each of the nine PMBOK knowledge areas?” she asked.
“Yes, and it worked out quite well. I felt like I was
on top of all the issues related to my project. Over the
years, I have kept expanding and enhancing my list.
I don’t do it quite as formally now because I know what I
need to have successful projects. But at the time, it was
a great help to organize myself as a project manager.”
■■ Overview
Many project management concepts were presented within the chapters of the
sixth edition of Systems Analysis and Design in a Changing World. In particular, Chapter 11 focused on project management principles, which are a major
portion of each of the first two core processes: Identify the problem and obtain
approval, and Plan and monitor the project. This online chapter will extend the
coverage of project management principles and will provide additional explanations on several of the important project management techniques.
One important task within the first core process is a cost/benefit analysis.
In Chapter 11, a brief explanation of the calculation of the net present value was
provided. This chapter will explain that process in more depth as well as explain
two other financial measures: breakeven point and return on investment.
An important task within the second core process is the development of a
project schedule. As we learned in Chapter 11, an overall project iteration schedule
can be developed that only provides general timeframes with approximate dates.
Chapter C ■ Project Management Techniques OL-55
However, within each iteration, it is often helpful to develop a more detailed
schedule so the project team is able to perform and coordinate the individual
tasks of the iteration. In Chapter 11, we illustrated a Gantt chart by using Microsoft Project. In this online chapter, we will explain in more detail how to develop
a Gantt chart with Microsoft Project. We will also explain the basic principles of
a PERT/CPM chart, which Microsoft Project refers to as a network diagram.
Chapter 11 briefly introduced the ten knowledge areas of the PMBOK. The
final portion of this online chapter is a more in-depth explanation of the each
area of the PMBOK.
■■ Calculating
Net Present Value, Payback Period,
and Return on Investment
A capital investment is an expenditure by an organization in equipment, land, or
other assets that is used to carry out the objectives of the organization. Because
money—including money available for capital investment—is a scarce resource,
one important responsibility of senior-level management in any organization
is to decide which investments to choose. Organizations use several different
methods to determine which investment is best. The three methods this online
chapter discusses are net present value (NPV), payback period, and return on
investment (ROI). Definitions and brief explanations of these terms are given
in Chapter 11. This online chapter explains these measures in more detail and
shows how to calculate them by using spreadsheet tools. In addition, financial
calculators have built-in function keys to calculate these measures.
■■ Net Present Value Calculations
discount rate the annual percentage rate
that an amount of money is discounted to
bring it to a present value
The two basic concepts of net present value are (1) that all benefits and costs
are calculated in terms of today’s dollars (that is, present value) and (2) that
b enefits and costs are combined to give a net value—hence, the name net
present value.
The first step in calculating the NPV is to decide on the discount rate to
use. Most organizations have a policy, determined by the chief financial officer,
that states the standard discount rate used for investments. This rate may vary
by type of investment; normally, there is a particular discount rate for software
development. The discount rate is the means to equate future values to current
values. For example, $100 received one year in the future is only worth $94.34
today with a discount rate of .06 (6 percent). The equation that represents this is:
present value 5 amount received in future / (1 1 discount interest rate)number of years
discount factor the accumulation of yearly
discounts based on the discount rate
For dollar amounts received more than one year in the future—for example,in
three years—the discount rate is applied three times to give a discount factor.
Let us use PV for present value, FV for future value, i for discount interest rate,
F for discount factor, and n for the number of years in the future. The equations
that apply to find a present value for a future value across multiple years are:
Fn 5 1/(1 1 i)n and PV 5 FV * Fn
For example, $100 received three years hence at a discount rate of 6 percent is:
Fn 5 1/[(1 1 .06) * (1 1 .06) * (1 1 .06)] 5 .8396
PV 5 $100.00 * .8396 5 $83.96
Finance books provide tables of discount factors by discount rate for multiple
years, so you don’t have to calculate them. Financial calculators have the preceding equations built in, so you simply enter the future value, the discount rate,
and the number of years to get the present value.
OL-56 PART 4 ■ System Development and Project Management
Source: Microsoft Corporation
FIGURE C-1 Five-year cost/benefit analysis for CSMS
Figure C-1, which is the same as Figure 11-11, shows the NPV calculations for Ridgeline Mountain Outfitters. In this instance, the NPV calculation
was done for a period of five years. The time period used is usually a matter of
organization policy, and standards are established for each type of investment.
S oftware expenditures usually use a fairly short time period, such as three to
five years.
Year zero is considered the time period during which the asset is being developed and while no benefit is being derived by the organization. In reality, year
zero can cover a period of more than one year. For very long asset development
periods, more complex NPV calculations are done and may include such things
as opportunity costs, which attempts to measure the costs associated with the
development expenditures that are tied up during project development. In our
less complex example, all the development costs are assigned to year zero even if
the project spans multiple years. Figure 11-8 presents the standard types of costs
that are allocated to the project as capital expenditures for software development,
which in this example totals $1,581,000, and is show in Column C, Row 2.
The anticipated benefits are also associated with the year in which they
accrue. Row 1 in Figure C-1 shows the annual benefits of the new system.
Notice that these benefits begin in year 1—in other words, after the new system
is placed in production. The beginning amount is estimated to be $1,046,000.
RMO anticipates that these benefits will increase over time with increased usage
and utility from the system, as discussed in Chapter 11. Row 3 shows the annual
costs of operations. In this simple example, the costs of operation are kept constant during the five-year period. In reality, operating costs normally increase
over time because as the system gets older, it frequently requires more maintenance. Either more detailed estimates may be generated or a simple rate of
increase can be applied to the initial value.
You can apply the next two steps in either order: You can either combine
the benefits and costs (net them together) and then apply the discount factor or
you can apply the discount factor to the benefits and costs individually and then
combine the two discounted amounts. The example in Figure C-1 uses the first
approach with the benefits and costs combined to give a net value for each year,
as show on Row 4. Notice that in Year 0, the net value is simply the development
costs because there are no benefits. In subsequent years, the net value is a positive value. Row 5 show the discount factors for each year at a 6 percent discount
rate. These values can either be calculated by using the equations given earlier
or extracted from a table of values. In this example, we also use an annual discount factor. Slightly different values are obtained if monthly discount factors
are used. However, because these numbers are estimated values anyway, discounting precision isn’t required.
The values for each column on Row 6 are simply the product of the amount
in Row 4 multiplied by the discount factor. The values in Row 7 are the cumulative values and are a little more involved to calculate. The approach requires that
Chapter C ■ Project Management Techniques OL-57
each year be calculated individually because it depends on the value in the previous year. The process to calculate the cumulative NPV for any year is to take the
previous year’s cumulative NPV and combine it with the current year’s annual
NPV. So, for Year 1, Column D, Row 7, the value of –$897,035 is derived by
taking the cumulative value in Year 0, Column C, Row 7, of –$1,581,000 and
combining it with the annual net present value of Year 1, Column C, Row 6, of
$683,965. As shown in Figure C-1, the cumulative NPV at the end of five years
is expected to be $1,713,097.
■■ Payback Period Calculations
Payback is a method to determine the point in time at which the initial investment
is paid off. Various methods are used to calculate payback. You can calculate the
payback period by using either present value amounts or cash flow amounts.
Cash flow amounts don’t take the time value of money into consideration and
calculate payback based on nondiscounted dollar amounts. Another approach is
to consider only the initial investment and not include annual operating costs in
the calculations. In the example in Figure C-1, we use the time value of money
(that is, the discount rate) and use net benefits (that is, benefits minus operating
costs). The year when the cumulative value becomes positive is the year in which
payback occurs. In the RMO example, this happens within the third year.
You can obtain a more precise answer by determining the fraction of a year
when payback actually occurs. The approach to calculate this time period is to
calculate the ratio of the negative value at the beginning of the year to the total
amount of benefit derived during the year and then to apply this ratio to the
number of days in a year to determine the number of days until breakeven. In our
example, the negative value at the beginning of the year is –$226,865 and the
total benefit for the year is $657,608, giving a ratio of 0.35. Applying this factor
to 365 days yields 128 days in the third year as the breakeven point in time.
■■ Return on Investment
While the objective of the NPV, as explained earlier, is to determine a specific
value based on a predetermined discount rate, the objective of the return on
investment is to calculate a percentage return (like an interest rate) on the initial
investment. There are various methods to calculate ROI. Sometimes, ROI calculations are done by using values that include the discount factor, as we have
done in Figure C-1, while at other times, ROI is done on purely a cash basis
without considering the organization’s assigned discount rate. The time period
for ROI calculations also critically affects the result. Depending on the type of
investment, organizations will calculate a five-year ROI, an eight-year ROI, or
a 10-year ROI.
In our example, Figure C-2 expands Figure C-1 to show the ROI calculations. We can calculate an ROI with discounted amounts and one using purely
Source: Microsoft Corporation
FIGURE C-2 Five-year ROI calculation for CSMS
OL-58 PART 4 ■ System Development and Project Management
cash values without considering the time value of money. To calculate the fiveyear ROI with the discount, we take the sum of the five years of Row 6 and
divide it by the initial investment. The result is 3,294,097 / 1,581,000 * 100 5
208 percent. Using cash values without the discount rate, the ROI is 3,298,210 /
1,581,000 * 100 5 248 percent.
The time period can be the expected life of the investment (that is, the productive life of the system) or it can be an arbitrary time period. This example
simply calculates the ROI for the five-year period. In another situation, RMO
might want to consider a 10-year ROI, assuming the system will be functional
for at least 10 years.
■■ Understanding
PERT/CPM Charts
In Chapter 11 of Systems Analysis and Design in a Changing World, you learned
that there are two types of charts that are used for project scheduling: Gantt
charts and PERT/CPM charts. In addition, you learned a little bit about using
Microsoft Project to produce a Gantt chart. In this section, we will introduce
the concepts related to PERT/CPM charts. Then, in the next section, we will
learn more about how to use Microsoft Project to produce both Gantt charts
and PERT/CPM charts.
A PERT/CPM chart is a network diagram with boxes that represent the
tasks or activities of the project and with connecting arrows that represent
the sequence and dependencies between tasks. The strength of a PERT/CPM
chart is that, as a network, it provides a visual representation of the relationships between tasks of a project. During the development of the project schedule and especially while trying to determine task dependencies, a PERT/CPM
chart can be an effective tool. PERT, which stands for Project Evaluation and
Review Technique, was first developed in the 1950s and was used by the U.S.
Department of Defense to organize, monitor, and control very large, complex
defense projects. CPM, which stands for Critical Path Method, was developed
independently, also in the 1950s. As its name implies, its primary objective was
to determine not only the dependencies between tasks but which tasks were on
the critical path. These two methods have much in common, and in recent years,
most scheduling tools have taken the best attributes of each one and combined
them into a single technique—thus, the name PERT/CPM.
The first step in creating a schedule is always to develop a work breakdown
structure. Let us use the same project that was discussed in Chapter 11 for the
CSMS system. As explained in Chapter 11, for iterative Agile projects, we frequently don’t build an overall project schedule because the project is frequently
changing as it progresses. However, within each iteration, the project team does
freeze the identified objectives for that iteration and thus can build a meaningful schedule. Figure 11-16 identified the use cases for the first iteration, and
Figure 11-17 presented a work breakdown structure for this iteration. We will
begin with those figures and enhance them with more detail to give a more indepth explanation of how to develop the schedule.
Figure C-3 is an expanded version of Figure 11-17. In this figure, the durations have been changed from days to hours, with the assumption that each
day is equivalent to an eight-hour workday. Two additional columns have been
added—for predecessors and for resources. Remember that these tasks are being
performed by the Tiger Team, which consists of two subteams of two persons
each. The estimated resources have been added with some comments about subteam assignments.
The next step is to assign task dependencies, which lay the foundation for
the development of the PERT/CPM chart. There are three types of dependencies
between tasks: (1) project mandatory, (2) external mandatory, and (3) discretionary. Predecessors are usually easily assigned to project mandatory dependencies.
Chapter C ■ Project Management Techniques OL-59
ID Description
Predecessor
Duration Resources
Analysis tasks
1
Meet with sales department
8 hrs
4 people
2
Meet with marketing department
8 hrs
4 people
3
Define required information and data
elements
8 hrs
4 people
4
Model user activities
16 hrs
4 people
Design tasks
5
Design database schema
32 hrs
1 person (all 4 team
members assigned
quarter time)
6
Design screen layouts and cross links
32 hrs
7
Identify program classes and methods
32 hrs
2 people (all 4 team
members assigned
half time)
1 person (all 4 team
members assigned
quarter time)
Build tasks
8
Build database
8 hrs
2 people
9
Write program code
32 hrs
4 people
10
Set up user simulated live environment
8 hrs
2 people
11
Integrate 3-D imaging code
16 hrs
2 people
12
Build test data
32 hrs
4 people
(quarter time)
13
Perform acceptance test with users
16 hrs
4 people
14
Release accepted version
4 hrs
4 people
15
Perform team introspection
4 hrs
4 people
One task depends on the completion or output of another task and thus is dependent on it. For example, user acceptance testing can’t begin until the programs
to be tested have been written and the necessary test cases have been identified.
External mandatory dependencies are caused by other, nonproject occurrences,
such as the arrival of new hardware or the completion of an interface definition
from another project. The most troublesome dependencies are the discretionary
ones. They provide the most flexibility for building the schedule, but they also
add the most complexity. For example, developers must determine which should
be done first: designing input screens or output reports. Either will probably
work. Complexity is added when the project manager tries to balance the scheduling of these tasks with the available resources (that is, the team members).
Often, several tentative schedules must be built with different dependencies to
determine a sequence that best utilizes team members. This activity is often
best completed with a whiteboard and sticky notes. The individual tasks can
be placed on the board, with positions based on an approximate dependency.
Arrows can then be drawn to identify the best combination of dependencies to
balance workloads.
For now, let us assume that the juggling and rearranging has been done
and that the information from the whiteboard has been captured in a computer
format. Figure C-4 is a sample PERT/CPM chart that could have been drawn
with sticky notes on a whiteboard or with any computer drawing tool, such as
Microsoft Visio. In this instance, we use rectangles with five compartments to
document each task. The legend shows the meaning of each compartment. An
ending “dummy” tasks has been added for ease of understanding.
The format shown in Figure C-4 is just one of many possible formats. The
Microsoft Project format shown later is slightly different. The top compartment
within the rectangle is the task name. The left-middle compartment is the task
ID, and the right-middle compartment is the duration. The bottom-left corner is
© CengageLearning ®
FIGURE C-3 Work breakdown
structure for the first iteration
of CSMS
OL-60 PART 4 ■ System Development and Project Management
FIGURE C-4 First cut PERT/CPM chart for the first iteration of CSMS
From cougar team
Design database
Model user activities
Meet sales dept
Meet marketing dept
1
8 hrs
2
8 hrs
0 hrs
0 hrs
8 hrs
8 hrs
4
16 hrs
16 hrs
16 hrs
3
8 hrs
32 hrs
32 hrs
32 hrs
Design screens
Define data elements
16 hrs
5
32 hrs
Build database
6
32 hrs
8
8 hrs
32 hrs
40 hrs
64 hrs
64 hrs
Write programs
Identify classes
7
32 hrs
32 hrs
40 hrs
9
32 hrs
72 hrs
72 hrs
Task name
Duration
Legend
Set up user env
Integrate 3-D code
Do acceptance test
Release version
Do team introspection
10
8 hrs
11
16 hrs
13
16 hrs
14
4 hrs
15
4 hrs
32 hrs
80 hrs
104 hrs
104 hrs
120 hrs
120 hrs
136 hrs
136 hrs
140 hrs
140 hrs
End
Build test data
early start time the earliest time that a
task can begin due to predecessor durations
12
32 hrs
16
0
40 hrs
88 hrs
144 hrs
144 hrs
© CengageLearning ®
ID
Early start Late start
the early start time for each task, and the bottom-right corner is the late start for
each task. To keep this example simple, the duration numbers represent hours
and the start time for each task is the number of hours from the beginning of the
project. Optionally, the early start and late start can also be shown as actual calendar dates with an automated tool such as MS Project. Next, we explain and
calculate the early and late start times.
We call this the first-cut PERT/CPM chart because although the dependencies are correct, we will have resource conflicts. For example, task number 3
and task number 4 have early start times of 16 hours into the project and run
concurrently. Obviously, the team members can’t work full time on each task at
the same time. The final version of the PERT/CPM chart will have to be adjusted
to take this into consideration. We will wait and let Microsoft Project solve this
dilemma for us. For now, let us go ahead and enter the dependency information
into the work breakdown structure. Let us also learn how to calculate the early
start time and the late start times. Figure C-5 shows the updated work breakdown structure with the predecessor information entered. One quick check of
your work is to make sure that every task, except the last one, is identified as a
predecessor task in the table. Leaving one out causes a dangling task that isn’t
required by any other task in the project. Really, the only time that this occurs
is when a milestone or delivery is completed, such as at the end of an iteration.
The bottom-left compartment contains a number that is called the early
start time for the task. The early start time represents the earliest time that a
task can begin. In other words, based on all the predecessor tasks, the given task
can’t begin until the time indicated. This field is calculated by taking the early
start time of the predecessor task and adding to it the duration of the predecessor task. Here is the formula:
ESn11 5 ESn 1 durationn 1 lag time
This formula indicates that the early start time of a successor task (for example,
n11) is equal to the early start of the nth task plus the duration of the nth task
Chapter C ■ Project Management Techniques OL-61
FIGURE C-5 Work breakdown
structure with predecessor
information
Predecessor Duration Resources
ID Description
Analysis tasks
1
Meet with sales department
—
8 hrs
4 people
2
Meet with marketing department
1
8 hrs
4 people
3
Define required information and data
elements
2
8 hrs
4 people
4
Model user activities
2
16 hrs
4 people
Design tasks
5
Design database schema
3, 4
32 hrs
1 person (all 4 team
members assigned
quarter time)
6
Design screen layouts and cross links
3, 4
32 hrs
7
Identify program classes and methods
3, 4
32 hrs
2 people (all 4 team
members assigned
half time)
1 person (all 4 team
members assigned
quarter time)
8
Build database
5
8 hrs
2 people
9
Write program code
6, 7, 8
32 hrs
4 people
10
Set up user simulated live environment 4
8 hrs
2 people
11
Integrate 3-D imaging code
9
16 hrs
2 people
12
Build test data
10
32 hrs
13
Perform acceptance test with users
11, 12
16 hrs
4 people
(quarter time)
4 people
14
Release accepted version
13
4 hrs
4 people
15
Perform team introspection
14
4 hrs
4 people
plus any lag time if it is specified. To calculate early start times, we begin with
the first detailed task: number 1. In this case, ES n 5 0, duration n 5 8 hours,
and, consequently ES n11 5 8 hours. The rest of the early start times are calculated one at a time, moving from beginning to end and following the arrows
through the chart. Lag time is simply some time delay that occurs between a
task and its predecessor. Lag time is associated with the relationship (the arrow)
between the two tasks. For example, if we wanted to wait eight hours before
beginning task number 10, the early start time would be E10 5 E9 1 16 hours 1
8 hours 5 40 hours.
One complexity occurs when there are multiple predecessor tasks with
different values for the task to be calculated. Obviously, the identified task
can’t begin until the latest predecessor task is completed. Hence, the equation
becomes:
ES n11 5 {ESn 1 durationn}latest 1 lag time
late start time the latest time that a task
can start to maintain the schedule
The curly braces indicate the set of all predecessor tasks, and the subscript
latest means to choose the one with the latest calculated value. An example from
the figure is task number 5. It has predecessors of task number 3, which yields a
start time of 16 hours 1 8 hours 5 24 hours, and task number 4, which yields
a start time of 16 hours 1 16 hours 5 32 hours. We choose the latest one.
The bottom-right compartments contain the times for the late start time.
Not all formats of PERT/CPM diagrams show the late start time, but this concept will help us understand some other concepts. The late start time is the latest
time that a given task can start and still keep the project on schedule. Late start
times are calculated by starting at the end of the project and moving backward
through the diagram. We start by noting that the final task, or end task, has an
early start (and finish because it has 0 duration) of 144 hours. Move that same
value into the lower-right compartment, which denotes that the late start time
© CengageLearning ®
Build tasks
OL-62 PART 4 ■ System Development and Project Management
is the same as the early start time. To calculate other late start times, we simply
move backward through the diagram by using the following equation:
LSn21 1 durationn21 5 LSn or (equivalently) LSn21 5 LSn 2 durationn21
This equation shows that the late start of a predecessor task is equal to the late start
of a successor task minus the duration of the predecessor task. It is similar to the
early start calculation, except that we are moving backward through the diagram.
Two special situations must be handled—just as in our previous examples:
concurrent tasks and lag times. Let us make the preceding equation more general:
LSn21 5 {LSn 2 durationn21}earliest 2 lag time
slack time the amount of time a task or leg
of sequential tasks can be delayed without
impacting the project schedule
As before, we calculate the late start for each leg and then choose the earliest time (the smallest number) as the correct one. The lag time associated with
the arrow is also subtracted because it is time that must be removed from the
successor times to arrive at the predecessor late start time.
In Chapter 11, we defined the critical path as the sequence of tasks that can’t
be delayed without causing the project to be delayed. Notice on Figure C-4 that
some tasks have the same early start time and late start time. That means they
must start on the indicated time or else the project is delayed—in other words,
that there is no slack time in those tasks. In Figure C-4, we have highlighted those
tasks in red. Those are the tasks that are on the critical path. Other tasks—those
highlighted in blue—have a late start time that is higher than the early start time.
They can be delayed somewhat before starting and not have a negative impact
on the schedule. The time difference between the early start time and the late
start time is called the slack time. It represents the amount of time a task can be
delayed with delaying the project. For example, the early start for task number 6
is 32 hours into the project. However, it could wait until 40 hours before starting
and still be ready for task number 9 to start on time. However, notice that when
several tasks aren’t on the critical path but are in sequence that the slack time
represents the total slack time for that leg of the chart. For example, tasks 10 and
12 have a total slack time of 48 hours. If task 10 uses the 48 hours, there is no
slack left for task 12 to use. It then becomes a critical path task.
■■ Building
the Project Schedule with
Microsoft Project
Chapter 11 of Systems Analysis and Design in a Changing World explains the
techniques and steps required to build a project schedule by using the Gantt
chart view in Microsoft Project. In this online Chapter C, we will explain more
in depth about how to use Microsoft Project to develop a project schedule. We
will illustrate a Gantt chart view and a PERT/CPM view. A Gantt chart and a
PERT/CPM chart provide essentially the same information about project activities and tasks. Each chart has unique strengths and weaknesses.
A Gantt chart is a type of bar chart that is superimposed on a calendar. The
primary strength of a Gantt chart is that the bars show the duration and project
progress as compared to the days and weeks of the calendar. The other advantage
of a Gantt chart view is that it provides an effective visual representation of the
project timeline and helps you track project progress. A tracking Gantt chart shows
what should have been accomplished by a specific date and what has actually been
completed on that date. We will also illustrate a tracking Gantt in this chapter.
■■ Gantt Chart View
Developing a schedule by using either a Gantt chart or a PERT chart requires
a work breakdown structure with the information provided on Figure C-5.
M icrosoft Project uses the concept of the amount of effort required to complete
Chapter C ■ Project Management Techniques OL-63
a task. The effort required for a task is defined as the duration of the task times
the number of resources assigned to the task. So, an eight-hour task with four
people working requires an effort of 32 person hours.
Developers frequently think that by using a tool such as Microsoft Project
that it will be easy to build a schedule. However, as we have learned from building Figure C-5, there is considerable work and preparation required even before
the tool can be used. The advantage of a project tool is twofold. First, it is much
easier to make changes to the schedule when it is necessary to add, delete, or
update tasks. Second, it is easier to track progress by using a project-tracking
Gantt chart, which we shall see later.
Microsoft Project is a rich application with many features and capabilities.
In our example, we will stick to the basic features. It is suggested that you use
the example as it is explained in this chapter and enter the same information
into MS Project. This will give you a good foundation for how to use it. There
will also be homework problems that will enable you to practice using the program with more elaborate requirements. In this example, we will identify and
describe each required step.
❚❚ Step One: Set Up a New Project
When you open MS Project, it opens to a new blank project or you can use the
File menu option to select a new project. For a simple project, there are only two
pieces of information that need to be set: the project name and the project start
date. The project name is determined by the name you use to save the file by
using the File | Save As option. The start date can be set with the Project tab and
the Project Information toolbar icon. Use the popup window to set the start date
and then save your file with your project name. For this first project, we will call
it LearningMSProject-RMO and give it a start date of January 2, 2012.
❚❚ Step Two: Enter Information About the Resources
Before we begin entering the project tasks, we will enter the information about the
resources. In Chapter 11, we identified the resources as two teams of two people
each. When we enter the information into Microsoft Project, we can either maintain
resources as teams or as individual persons. Individual persons will provide a closer
control over the schedule. For this example, we will identify individual persons.
Even though this may not appear to be the next logical step, it makes entering the tasks much easier. If the resources available to the project have already
been entered into Microsoft Project, then we can enter the tasks and assign the
resources all at the same time. To enter the resources, go to the View | Resource
Sheet menu item. Figure C-6 is a snapshot of that screen with the information
already entered. You can identify the menu and submenu item on the figure.
FIGURE c-6 Resource information for the project
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As mentioned earlier, in this instance, we have identified each individual programmer by name. Because each programmer is identified individually, the maximum usage is 100 percent. Had we identified “programmers” as a resource, we
would have had a maximum usage of 400 percent, indicating that there were
four of that type of resource. Because we aren’t using MS Project to estimate a
cost for the project, we won’t use the rate fields.
❚❚ Step Three: Enter Information About the Tasks
This step is where we actually enter all the information from the work breakdown structure. There are several ways that this can be done. It would be a good
idea to experiment with the various methods to find which you prefer. From the
top menu, select Tasks and then click the Gantt Chart icon in the left corner.
The drop-down menu displays many different pages associated with a Gantt
chart. The ones that are most useful for entering task information are Gantt
Chart | Gantt Chart, Gantt Chart | Task Form, and Gantt Chart | Task Sheet.
Each screen has a slightly different view and facilitates slightly different data
entry. We will use a split screen that shows us the Task Sheet and the Task Form
together. To get to the split screen click on the Details icon, either in the Task
tab or the View tab. Figure C-7 is a snapshot of the Task Sheet and Task Form
screen that we will use to enter data. Notice that we have already entered the
first five tasks, including a summary task called Analysis Tasks.
This screen allows you to enter detailed information about the task directly
from the work breakdown structure. In the bottom part of the screen, we enter
the task name and the duration from the work breakdown structure. We can
also enter the resources (i.e., the team members) that will work on this task.
There are two other important fields on the bottom form that are often
misunderstood. They are the Effort Driven field and the Task Type field.
FIGURE C-7 Entering task information with a split screen
Chapter C ■ Project Management Techniques OL-65
The number of resources, the amount of work, and the duration of the task
are often related by this formula: duration 5 amount of work multiplied by the
number of resources. When entering data for a task, you enter the duration and
the resources. MS Project calculates the amount of work or the effort. When you
mark a task as Effort Driven, MS Project forces this equation to be held constant.
So, if you make a change, such as adding more resources later, then MS Project
automatically changes the task duration. For tasks such as a staff meeting, where
the duration is constant no matter who participates, the task should be marked
as not effort driven. Related to the Effort Driven checkbox is the selection of
Task Type. This field indicates what you want to remain constant even though
other things may change in the task: fixed units (i.e., number of resources), fixed
duration (i.e., the time), or fixed effort (i.e., the amount of work). After entering
all the fields, click the OK button to accept the information.
After you have entered the basic information for the task, you can enter
the predecessor number in the appropriate column. Normally, dependencies are
finish-start, or FS, which means the predecessor task finishes before the subsequent task starts. Other dependencies supported by Microsoft Project include
start-start (SS), which means they both start at the same time; finish-finish (FF),
which means they both finish at the same time; and start-finish (SF), which is
basically the opposite of FS and not often used.
Any of these dependencies can be adjusted by adding lag time as required.
The following points should be noted about the information already entered
and as shown in Figure C-6.
1. As tasks are entered, MS Project automatically assigns each one a task
number, as shown on the far left column. You have no control over this
assignment. Usually, this isn’t the same number that we used on the work
breakdown structure.
2. The information column, as noted by the “i” icon, is for warnings and
notices. In Figure C-7, there are two red warning messages because tasks
4 and 5 are in conflict in that they are scheduled for the same time by using
the same resources. We will have to fix this later.
3. Each new task has a default setting to be automatically scheduled by MS
Project. Automatic scheduling or manual scheduling can be set in the toolbar. Microsoft Project automatically calculates the task start date and task
end date based on automatic scheduling. If you schedule a task manually,
then you can enter those dates.
4. A summary task called Analysis Tasks has been entered. A summary task
can be inserted by clicking the Summary task icon on the toolbar. Another
way to create a summary task is by “demoting” the tasks directly below a
particular task. Tasks are demoted and promoted by using the green arrow
icons on the toolbar. Tasks can be summary tasks, regular tasks, or milestone tasks. A task can also be made inactive, which essentially causes that
task to be only documentation.
5. Each cell on a task row has a drop-down option that allows you to enter or
select appropriate values.
Placing the cursor on a row and right-clicking opens up a menu list that
allows you to insert new tasks, delete tasks, move tasks around, and other task
related options. The “assign resources” option displays a pop-up that allows you
to assign staff with less than full-time assignment. For example, a task may have
a duration of four days but with a person assigned half the time. Figure C-8
illustrates both of these options.
Figure C-9 is the completed schedule with all the tasks entered, resources
assigned, and predecessors defined. According to this first-cut diagram, there
are four days scheduled for analysis tasks, four days for design tasks, 11 days
for build tasks, and 13 days for testing and deployment tasks. However, much of
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FIGURE C-8 Split screen view with resource allocation pop-up
FIGURE C-9 First-cut Gantt Chart
the work runs concurrently, so the schedule, as calculated by Microsoft Project,
is January 4th through January 28th. This view also has the resources listed
next to the bars in the bar chart. You can turn this feature off in the Format
tab. In order to illustrate the features of this screen, we had to cover up several
columns on the left. When you use Microsoft Project, you can expand the left
Chapter C ■ Project Management Techniques OL-67
or right half to display the areas that are important for you. As we look at this
screen, we can also see that there are quite a few resource conflicts in the schedule. The project will need to be adjusted before it can really be considered a
workable schedule.
One of the benefits of using a tool such as Microsoft Project is that it indicates when there are conflicts in the project schedule. Let us look at those conflicts
from another view. Microsoft Project provides several other screens to view the
resources, their workloads, and their conflicts. Figure C-10 is a snapshot of the
Resource Usage screen. In this screen, each resource is listed along the left column,
with all his or her task assignments listed and how many hours he or she is assigned
to each task. The right half of this screen displays a calendar of workdays for each
resource. As can be seen, those resources who are overallocated are highlighted
in red. We can also see which days and which tasks are causing the overload.
Frequently, multiple resources will be overloaded due to the same task schedules.
In this figure, we have adjusted the column widths to show the entire project. The
figure shows the work schedule for Mary Smith and Jack Rogers. Note that some
days these two resources are scheduled to work more than 8 hours in a day. Also
note that Jack has two days with nothing to do. One side comment is appropriate
here. Microsoft Project allows you to determine the number of hours in a workday.
The default is eight, but in reality, it is very unusual for a developer to be able to
work a full eight hours a day. Meetings, questions from colleagues, and other interruptions usually mean that a more realistic workday is only five or six hours.
There are several methods that can be used to resolve these conflicts. One
method, of course, is to manually adjust the schedule to reschedule those tasks
that are causing a conflict. The advantage of manually changing the schedule
is that the team leader can think through the assignments and dependencies
again to make sure that it will work. Microsoft Project also has a tool to help
FIGURE C-10 Resource usage chart
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reschedule the project to remove the conflicts. Under the Resource tab, as seen
in Figure C-10, there is an icon called Leveling. Leveling can either be done
resource by resource or by all resources at once. In our case, we will go ahead
and let Microsoft Project level all the resources at once.
Leveling all the resources causes Microsoft Project to move tasks around
so each resource works only the allowable number of hours per day. In most
cases, the length of the project is increased due to leveling. One effective technique is to allow Microsoft Project to level the resources and then you can
make any final refinements manually. For our example, we first leveled all the
resources, which lengthened the project to February 4th. However, reviewing
the Resource Usage screen, we noted that there were many days when some
resources were either not working or only working for two hours. In particular,
we discovered that we could shorten task 16 to 16 hours by having the team
work 1/2 time instead of 1/4 time. Figure C-11 is the final Gantt chart of the
schedule after it was leveled and manually adjusted. The final completion date
is February 2nd, which is three working days later than the original schedule
that had conflicts.
In Figure C-11, we have also turned on critical path highlighting and slack
highlighting. In Chapter 11, the critical path was defined as that sequence of
tasks that must not be delayed. If any task on the critical path is delayed,
the entire project will be delayed. As before, the tasks on the critical path are
highlighted in red. The tasks in blue aren’t on the critical path. The amount of
time that each of these takes is its slack time. In Figure C-11, the slack time
is shown by a heavy black line following each of the blue tasks. Of course, if
a noncritical path task is delayed up to its slack time, it could suddenly find
itself on the critical path.
Figure C-11 also illustrates the two other types of tasks: summary tasks and
milestone tasks. Summary tasks are simply a convenient way to group detail
tasks. No resources or work is ever assigned to summary tasks. Milestone tasks,
FIGURE C-11 Final Gantt chart with critical path and slack
Chapter C ■ Project Management Techniques OL-69
as shown by task number 19, always have a duration of zero and are used to
indicate some important delivery or completion.
■■ Tracking Gantt Chart
One major advantage of using a tool such as Microsoft Project is the ability
to track the project as work is completed. Because a Gantt chart is projected
onto a calendar, it is straightforward to see if the completion of the tasks corresponds to the projected completion dates. Figure C-12 is an example of a tracking Gantt chart in Microsoft Project.
Referring back to Figure C-7, you will note that the Task Form screen has
a text box to enter the percent completion of each task. Using that form, we
entered 100 percent for tasks 1 through 5. Checkmarks have been placed in
the information column to indicate that they are complete. In addition, the
bars are changed to remove critical path colors and to add a completion line
in the middle of the bar. On tasks 7, 8, and 9, we entered partial completion
percentages. The completion line within each of those tasks only goes partway in accordance with the percentage completion indicated. Also on this
chart, the current date is indicated by a vertical red line. In this example, the
current date is January 15th. You will notice that it appears that tasks 7 and 9
are a little behind schedule and that task 8 is a little ahead of schedule. Obviously, the team leader will pay close attention to tasks 7 and 9 to see that they
complete on time.
■■ PERT/CPM and Network Diagrams
Earlier in this section, we developed a PERT/CPM chart by using Visio as an
aid to understanding dependencies and assigning predecessors. As mentioned,
a project team normally doesn’t use a drawing tool to develop the PERT/
CPM chart. More commonly, a preliminary PERT/CPM layout is done on a
FIGURE C-12 Tracking Gantt chart
OL-70 PART 4 ■ System Development and Project Management
FIGURE C-13 Network diagram
whiteboard with sticky notes. The objective is to understand the work and the
tasks so dependencies can be identified. Once the data has been entered into
Microsoft Project, then a Network Diagram screen can be displayed to show
the project in a PERT/CPM format. Figure C-13 is an example of Microsoft
Project’s Network diagram.
Microsoft Project automatically lays out the tasks and connecting arrows
when this screen is opened. However, the layout is often so spread out that it
is difficult to view in a meaningful way. It isn’t uncommon for projects to have
50 or 100 tasks or more. For schedules of a single iteration, there will be fewer
tasks, but 20 or 30 isn’t uncommon. You can rearrange the boxes to make them
easier to view by choosing the layout menu item under the Format tab or when
right-clicking on the network screen. Once the layout pop-up window is opened,
choose Allow manual box positioning. To move boxes around, you must grab
the edge with the mouse cursor. Hovering over a box causes it to expand for
easier viewing, as illustrated in Figure C-13.
■■ Project
Management Body of Knowledge
(PMBOK)
People often think of project management only as a set of skills that one acquires
through inherent capabilities or on-the-job practice. While good project managers do possess skills to successfully execute projects, project management is
also a complex topic with its own body of knowledge. This body of knowledge
Chapter C ■ Project Management Techniques OL-71
consists of principles and practices that form the foundation for understanding
and developing effective project management skills.
There are two primary approaches to teaching project management. One
method is to focus on and teach the specific tasks that are required to manage
a project. These types of courses are usually organized around the sequence of
activities for a typical project. The first topics of such courses teach how to initiate
and plan a project. Next, they explain how to build a schedule. The specific skills,
techniques, and processes are taught in the context of a typical project. Systems
Analysis and Design in a Changing World takes this approach. We discuss specific tasks and skills associated with the various phases and activities of a project.
Another approach to learning about project management is to concentrate
on its principles and practices apart from the processes of a project. This section
focuses on fundamental principles that underlie specific project management
tasks. In other words, it teaches project management from the principles and
concepts viewpoints. Both approaches have strengths and weaknesses for learning project management. We have included this second approach in this online
chapter so you could have the advantage of learning the strengths of each.
This section is based on the Project Management Body of Knowledge
(PMBOK) that has been developed by the Project Management Institute (PMI).
PMI is a nonprofit professional organization with members from every industry
and large organization in the United States as well as major international organizations. It is the largest project management organization in the world, with more
than 500,000 members. It sponsors various conferences and workshops around
the globe on project management. It also offers various training courses, extensive
project management books and materials, and various certification programs.
One of PMI’s major contributions is the development of a comprehensive set
of principles for project management, called the Project Management Body of
Knowledge (PMBOK). The PMBOK is divided into ten major categories, which
we briefly discuss in this section:
■■
■■
■■
■■
■■
■■
■■
■■
■■
■■
Project scope management
Project time management
Project cost management
Project quality management
Project human resources management
Project communications management
Project risk management
Project procurement management
Project stakeholder management
Project integration management
■■ Project Scope Management
❚❚ Objectives
Scope management is a key project management activity for predictive and
adaptive projects. The objectives of project scope management are:
■■
■■
■■
To precisely define the functions and capabilities to be included in the new
system
To verify that the identified capabilities are necessary and are important
priorities for the project at hand
To control the set of functions so it doesn’t grow inappropriately
Scope management includes managing the original definition of the system requirements so they can be accomplished within the allotted time and
budget of the project. Obviously, the requirements must be comprehensive
OL-72 PART 4 ■ System Development and Project Management
to include the needed functions; however, they must also be realistic in not
including unnecessary functions. Project managers must verify that the
selected functions are indeed essential for the intended use of the new system.
Finally, they must control additional requests to avoid the problems associated with scope creep.
❚❚ Techniques
There are three main categories of scope management techniques: (1) defining
the scope, (2) verifying the scope, and (3) controlling the scope. Within those
categories are supporting techniques.
Defining the Scope Generally, every project has two levels of scope definition. The overall scope of the new system is delineated when the project
begins. A high-level document will provide information about expected business benefits and system capabilities. The second level entails the details
of the project scope, which are further defined as the system specifications
are developed. For predictive projects, this occurs during the analysis and
requirements activities. For adaptive projects, each iteration includes detailed
scope definition tasks.
Verifying the Scope A universal truth is always that more system functionality
is requested than can be included within the allowable time and budget. Hence,
user requirements should be approved before they are included in the system
scope. The project team should analyze the impact of each requirement and its
cost to the project build, testing, and deployment activities.
Controlling the Scope As indicated earlier, controlling the project’s scope is just
as important as initially defining it. A formal mechanism should be established
to review additional requests for new system functions that appear during the
construction phase. One effective way to track and control these changes is to
set up a change control log and change control committee.
■■ Project Time Management
❚❚ Objectives
The objectives of project time management are multifaceted:
■■
■■
■■
To ensure that the project schedule accurately accommodates the work to
be done
To effectively use resources and techniques to accelerate the overall time to
completion
To accurately measure completed work to correctly assess the percentage
completed
Basically, these objectives mean that the project manager must build an
accurate schedule, use it to allocate the work to get maximum productivity, and
then monitor and control progress based on scheduled tasks and milestones.
❚❚ Techniques
The core element in project time management is the schedule, and developing the schedule is one of the most important tasks of the project manager.
Time management techniques include building the project schedule, making
changes to it, monitoring progress based on the scheduled dates, and shortening the project schedule by using optimization techniques. Overall project
time for adaptive projects is especially difficult to estimate, so it is hard to build
a schedule.
Chapter C ■ Project Management Techniques OL-73
Building the schedule involves considering many aspects of the project.
S ystem functionality (scope), available resources, cost, and system quality all
affect the details of the schedule. Schedules may need to be modified for three
main reasons: (1) additional activities are added to the project, (2) the time estimates of activities are expanded because of complexity, and (3) resources aren’t
available at the expected time.
■■ Project Cost Management
❚❚ Objectives
The specific objectives associated with project cost management are:
■■
■■
■■
■■
To accurately estimate the anticipated project costs
To accurately predict the cash flow and timing of expenditures
To confine actual project expenditures to those that are included within
the plan
To capture and record actual project expenditures correctly
❚❚ Techniques
Project cost management techniques are based on fundamental accounting
principles, which you learn in your cost accounting and managerial accounting classes. This section limits the discussion to identifying some of these basic
techniques.
Estimating Costs Every company has its own set of rules to determine which costs
should be included in project costs. Direct costs are those that can be directly
attributed to the project, such as salaries of project team members, costs of software licenses, and fees paid to contract personnel such as programmers. Other
costs may be partly or fully allocated to the project based on company rules.
Controlling Expenditures Effective project managers try to achieve a balance
between stinginess and overly wasteful procedures. Such techniques as monitoring overtime, using standard off-the-shelf components, and careful pricing
of vendor contracts are standard cost-control procedures that effective managers use. A project manager should be concerned if spending exceeds what was
planned. She should also be concerned if the spending is substantially lower
than planned because it may indicate that work isn’t being done and that the
schedule could be delayed.
■■ Project Quality Management
❚❚ Objective
The single objective of project quality management is to produce a system that is:
■■
■■
■■
■■
■■
■■
■■
Easy to use
Fit for its intended purpose
Robust
Reliable
Efficient
Secure
Maintainable
One problem with project quality management is that these characteristics
are difficult to measure. How do you measure “ease of use”? Even though a
precise metric may not exist, project managers must still attempt to provide
high-quality software.
FIGURE C-14 Quality-control
dependencies of intermediate
development steps
Automated
system
System
design
System
specifications
User
requirements
❚❚ Techniques
All too frequently, project managers focus exclusively on program testing to
ensure a high-quality system. But quality control should be planned from the
beginning, and procedures should be integrated throughout all activities of the
project. Every milestone and intermediate delivery should contain specific reviews
and measurements to test for quality. As shown in Figure C-14, the automated
system depends on the design; the design depends on the specifications; the specifications depend on the requirements. Errors and problems anywhere along the
chain will reduce the quality of the final system. So, quality control needs to
begin with the user requirements and continue with every activity.
The specific techniques to ensure quality in each of these intermediate
steps are well documented and widely described. The real problem for a project manager is to integrate quality reviews into the schedule and ensure that
they are done.
■■ Project Human Resources Management
❚❚ Objectives
There are six primary objectives for project human resources management:
■■
■■
■■
■■
■■
■■
To ensure that the project team is staffed at the right time with people who
have adequate skills in the right mix
To provide appropriate training and development opportunities for
members of the team
To organize the project team and subteams for effective work
To encourage work teams to become effective working units
To provide the leadership and vision necessary to encourage and motivate
members of the team
To ensure that the working environment, including facilities, tools, and
support, is conducive to accomplishing work
❚❚ Techniques
Human resources management is a broad and well-developed area. It is outside the scope of this chapter to extensively explain the multitude of theories
and techniques for team management. Numerous courses, books, and other
resources that thoroughly discuss this topic are available. Project managers
should always remember that their primary responsibility is to enable and allow
the team members to do their best work.
■■ Project Communications Management
❚❚ Objectives
Project communication management can also be organized to accomplish the
following objectives:
■■
■■
To ensure that the necessary information is gathered in a timely manner
and is complete and accurate
To ensure that project information is disseminated frequently and is an
accurate representation of the project
© CengageLearning ®
OL-74 PART 4 ■ System Development and Project Management
Chapter C ■ Project Management Techniques OL-75
■■
■■
To ensure that members of the project team have current information
To capture and record important project information in a central information repository
❚❚ Techniques
Often, project managers outline an early plan for communications to ensure
a smooth flow of information throughout the project. The four objectives just
listed provide a starting point.
The plan for gathering information should address such questions as:
■■
■■
■■
■■
■■
What information is to be gathered?
Who should gather the information?
What methods should they use?
How should information be recorded?
How is it verified for accuracy?
The plan for internal communications should answer these questions:
■■
■■
■■
■■
■■
What internal information must be maintained and tracked?
Who needs to be included in which types of internal information?
What internal procedures are needed to ensure that information is disseminated accurately and in a timely fashion?
What methods should be used to capture and record internal information?
What kinds of meetings are necessary (and unnecessary)?
Planning for the dissemination of project information should include these
questions:
■■
■■
■■
■■
How is status and progress information collected?
How is it reported—how frequently and in what format?
Who needs to receive progress information?
What types of information should be disseminated?
■■ Project Risk Management
❚❚ Objectives
Risk management is unique because it varies tremendously with the type of project undertaken. We identify three primary objectives of risk management:
■■
■■
■■
To determine the potential areas of high risk for the project
To develop strategies and plans of actions to reduce the identified risks
To carry out the plans of action to monitor and control the project risks
❚❚ Techniques
Risk management techniques vary from project to project. Probably the toughest part of risk management is to be realistic in assessing the risks and potential
problems of a given project. People tend not to see problems in projects with
which they are integrally involved, so one technique of risk assessment is to
put an outsider on the risk assessment team. A common technique for identifying project risks is to have an open session on risk identification and tracking
that includes senior project members, outsiders, and even team members. Team
members can often observe risks that senior management may not see.
■■ Project Procurement Management
❚❚ Objectives
Specific objectives of project procurement management are:
■■
■■
To plan the procurement process
To ensure that solicitation documents are complete and accurate
OL-76 PART 4 ■ System Development and Project Management
■■
■■
■■
To evaluate and select alternative providers
To ensure that contracts are adequate, with sufficient performance controls
and metrics
To monitor and control deliverables
❚❚ Techniques
Project procurement management is a complex and wide-ranging area—from
the development of a request for proposal (RFP), to contract negotiations, to
performance assessment, to daily work relationships and chains of authority,
and even to arbitration and litigation. Unfortunately, little training is available
to strengthen these skills. In addition, each company has its own procedures
for working with providers, and this knowledge is often disseminated through
many levels and departments within the organization. Project managers need to
seek out this information wherever it is. Some of the primary activities in procurement planning are:
■■
■■
■■
■■
■■
Planning procurement requirements
Development of solicitation documents
Evaluating providers and alternatives
Developing contracts
Monitoring and controlling deliveries
■■ Project Stakeholder Management
❚❚ Objectives
Project Stakeholder Management is a new PMBOK area that was recently added
in the fifth edition of the PMBOK Guide. There are several major categories of
stakeholders, including
■■
■■
■■
■■
■■
Project Team
Clients or sponsors
Users
Functional managers (bosses of users)
Technical staff
The primary objectives of Stakeholder Management are to
■■
■■
■■
■■
Identify all the relevant stakeholders and understand their interest or role
Understand and manage the expectations of stakeholders
Manage and control stakeholder communications
Manage and control stakeholder involvement
❚❚ Techniques
Because the objectives of Stakeholder Management are quite diverse, a wide
range of techniques are required. Each objective will require different techniques.
The identification of all relevant stakeholders is a research oriented
activity. It begins by identifying the obvious stakeholders such as the client,
the users, the project team, and the technical staff. These people can then be
interviewed to understand their interest in the project and their expectations
about communication and involvement. They can also help to identify other
stakeholders.
Managing and controlling the stakeholder communications uses the same
techniques as explained in the Communications Management PMBOK area.
Managing and controlling stakeholder involvement varies extensively
depending on the stakeholder and his or her interest. Primarily it requires an
understanding by the project manager of what the needs are and creating a plan
and program to satisfy those needs.
Chapter C ■ Project Management Techniques OL-77
■■ Project Integration Management
❚❚ Objectives
The primary objective of integration management is to see that the work of the
project is completed successfully. Project integration management focuses on the
specific tasks that ensure the project is coordinated, executed, and controlled
properly. This knowledge area is described through the processes that occur
during the life of a project. The skills from all the other knowledge areas are
included in the project processes of integration management.
Chapter Summary
This online chapter supplements and enhances the
printed chapters on project management. It covers
four major themes. First, it explained in detail the underlying concepts related to calculating the net present value and other financial measurement techniques.
The second theme explained the foundation concepts
of PERT/CPM charts and how they are developed. The
third theme was more of a tutorial explanation about
how to use Microsoft Project to build a project schedule. The final theme presented additional explanations
of the nine areas of the PMBOK.
Net present value is an approach to evaluate the
potential benefit to an organization of an investment
in a software development project. The key concept of
net present value is the time value of money. In other
words, because money today can be invested and will
provide added value in the future, then today’s dollars are worth more than future dollars. Hence, future
revenues—and expenses—are made equivalent to today’s money by using a discount factor. This is a similar concept to taking today’s dollars and calculating
a future value based on an interest rate. The objective
of the net present value calculations is to determine a
value benefit to the organization in today’s dollars.
Two other techniques or measurements to evaluate potential benefit are payback period and return on
investment. Payback period is that point in time when
the original investment has been recouped from the increased future revenue stream. Another term used to
define payback period is breakeven point.
Finally, the return on investment is a measurement—based on a particular time period—of the percent increase of an original investment. For example,
to say that a five-year return on investment is 200 percent means that an original investment of $100 returns
$200 over a five-year period.
PERT/CPM charting is a technique that documents relationships between the tasks of a project.
A PERT/CPM chart is a graphical layout of all the
project tasks and provides a visual method of observing the dependencies between the tasks of a
project. It also demonstrates in a graphical manner
those tasks that comprise the critical path and which
must be closely tracked to avoid project delays.
Tasks that aren’t on the critical path always have a
certain amount of slack time, which is a measurement of the time a task can slip without causing a
negative impact on the project.
The Project Management Body of Knowledge
(PMBOK) includes nine specific knowledge areas that
are important to project management. In Chapter 11,
those knowledge areas were introduced but weren’t
elaborated on. In this chapter, each knowledge
area is discussed, with an explanation given for the
primary objectives of each knowledge area. In order
for a person to be successful as a project manager, he
or she should have a firm grasp of the principles associated with each knowledge area. He or she should
also develop skills and expertise in each of these
areas.
Key Terms
discount rate
discount factor
early start time
late start time
slack time
OL-78 PART 4 ■ System Development and Project Management
Review Questions
1. What is the difference between the following two
procedures?
a. D
iscount benefits and discount costs first
and then net these values together to get a net
present value.
b. Net benefits and costs together first and then
discount the combined figure to get a net
present value.
2. Explain the difference between the discount rate
and the discount factor.
3. How do you determine the time period for NPV?
For ROI?
4. What is meant by payback period?
5. Why is it important to develop a detailed list of
tasks when preparing to build a project schedule?
6. Explain in your own words the process of calculating the late start times on a PERT/CPM chart.
7. Discuss the difference between a PERT/CPM chart
and a Gantt chart. List comparative advantages
and disadvantages of each.
8. Can a project have two paths that are critical paths?
Explain why or why not. Give an example if possible.
9. What is the difference between effort and duration
in Microsoft Project?
10. What problem does the Microsoft Process of leveling attempt to solve? How does the process work?
11. When would a project manager use a tracking
Gantt chart? How does it help him or her manage
the project?
12. What is a network diagram?
13. What is the difference between lag time and slack
time?
14. What are the nine knowledge areas in the Project
Management Body of Knowledge (PMBOK)?
15. What are the specific objectives of project scope
management?
16. What are the specific objectives of project time
management?
17. What are the specific objectives of project cost
management?
18. What are the characteristics of quality in a new
system?
19. What are the objectives of project human
resources management?
20. What is the difference between internal communications and external communications?
21. Discuss the importance of risk management in
information systems development.
22. What are the objectives of project procurement
management?
23. What is the objective of project integration
management?
Problems and Exercises
1. Using the information in Figure C-15, calculate
the net present value, the payback period, and
the return on investment by using a discount
rate of 8 percent for the following systems development project. The development costs for the
system were $225,000. Do a five-year and an
eight-year ROI.
2. Build a Gantt chart by using Microsoft
Project based on the list of tasks as shown in
Figure C-16. This mini-project is to build part
of the user interface for a new system.
a. How many days does this project take? Can
you shorten it any? (Note: One easy way
to view the total project length is to make a
single highest-level task, with all other tasks
demoted beneath it.)
b. Does it contain resource conflicts?
c. What does leveling do to the length of the
project?
d. Can you readjust the project manually to keep
it as short as the original schedule but without
resource conflicts?
e. Can you make other reassignments of work
between Bryce and Tammy that will shorten
the project?
3. The work breakdown structure shown in
Figure C-17 is for a final iteration to deploy a
new application in a new datacenter. The ABC
company has a contract with Super ISP to host the
system, and the ISP will set up the computing environment. ABC will then configure the system software, install the new application, conduct stress
tests and tune the system, run beta tests, and then
deploy the system into a beta-production status.
FIGURE C-16 Work breakdown
structure for user interface
mini-project
Year
Anticipated Annual
Benefits
Expected Annual
Operating Costs
Discount Factor at
8 Percent
1
$55,000.00
$5,000.00
0.9259
2
$60,000.00
$5,000.00
0.8573
3
$70,000.00
$5,500.00
0.7938
4
$75,000.00
$5,500.00
0.7349
5
$80,000.00
$7,000.00
0.6805
6
$80,000.00
$7,000.00
0.6301
7
$80,000.00
$7,000.00
0.5833
8
$80,000.00
$7,000.00
0.5401
ID
Description
Predecessor
Duration
Resources
0
Start
—
0
None
1
Meet with users
0
2 days
Bryce, Tammy
2
Review existing forms
0
1 day
Bryce, Tammy
3
Specify required data fields
1, 2
3 days
Bryce, Tammy
4
Build initial prototype
3
3 days
Bryce
5
Develop test cases
3
4 days
Tammy
6
Develop error test cases
5
2 days
Bryce, Tammy [50%]
7
Run acceptance test
4, 5, 6
3 days
Bryce [50%], Tammy
8
Make refinements
7 SS (start-start)
3 days
Bryce [50%]
Using Microsoft Project, create a schedule for
this deployment activity. Allow Microsoft Project
to automatically schedule the tasks. (Note: One
easy way to view the total project length is to make
a single highest-level task, with all other tasks
demoted beneath it.) Answer these questions:
a. Note the resource conflicts. Which resources
are overallocated? Which tasks show resource
conflicts? Does Microsoft Project schedule the
tasks correctly or are there resource conflicts
that are unnecessary? Please explain.
b. Show critical path tasks and slack time. Which
tasks aren’t on the critical path and how much
slack time does each have?
c. How many days does the project take? Can
you shorten the project by manually scheduling the tasks?
d. Level all the resources. How many days does
the project take now? Can you improve it by
adjusting resources or rescheduling activities?
4. Are there other areas of project management you
would include besides the nine knowledge areas
listed, particularly in relationship to technology
projects? What are they and why would you
include them?
5. Discuss ways you might measure the quality of a
system. What specific metrics would you use?
6. Discuss the importance of team-building exercises
to strengthen team performance. Find an article
on team building and summarize it in one page.
Describe some examples of your own experiences
working in teams.
7. This online chapter focuses on the responsibilities
of a project manager in managing the team and
the project. What other responsibilities might a
project manager have, particularly concerning the
relationship of the project with the sponsoring
organization?
© CengageLearning ®
FIGURE C-15 Values for NPV,
payback, and ROI calculations
© CengageLearning ®
Chapter C ■ Project Management Techniques OL-79
OL-80 PART 4 ■ System Development and Project Management
ID Description
Predecessor Duration Resources
1
Set up equipment and system software
2
Set up servers, communication links,
and balancers
0
12 hours
1 ISP person
3
Configure O/S
2
8 hours
1 tech person
4
Install misc system software
3
4 hours
1 tech person
5
Configure Web server
3
3 hours
1 tech person
6
Configure database server
5
5 hours
1 tech person
7
Configure email server
6
2 hours
1 tech person
8
Configure traffic/load monitors
7
8 hours
1 tech person
9
Set up/configure backup system
4, 8
2 hours
1 tech person
10 Establish procedures
11
Define bug tracking procedures
0
3 hours
1 team leader
12
Define bug correction procedures
11
4 hours
1 team leader
13
Define release procedures
12
4 hours
1 team leader
14 Deploy application software
15
Configure production libraries
9
8 hours
1 developer
16
Export production system
15
8 hours
1 developer
17
Create database and tables
16
8 hours
1 developer
18 Design and conduct stress test
19
Design volume test cases
13
24 hours
2 developers
20
Build test files
16, 17, 19
40 hours
2 developers
21
Load database
20
16 hours
2 developers
22
Test/modify configuration/modify code
21
40 hours
2 developers
23 Deploy beta-production
24
Stabilize production libraries
22
8 hours
2 developers
25
Stabilize production database
24
16 hours
2 developers
26
Load production data
25
16 hours
2 developers
27
Define beta test cases
24
32 hours
2 developers, 2 users
28
Run beta test cases
27
40 hours
2 developers, 2 users
29
Correct and upgrade production system 28
40 hours
2 developers
30
Clean database
26, 29
32 hours
2 developers
31
Begin beta-production use
30
0 hours
© CengageLearning ®
FIGURE C-17 Work breakdown
structure for application deployment
Chapter C ■ Project Management Techniques OL-81
CASE STUDY
Custom Apps Now
The case description at the beginning of this chapter presented the situation of a new project leader, Mary Hendricks.
Her company, Custom Apps Now, had just promoted her to
be a project leader, which was an interim step to becoming
a full-fledged project manager. The policies at Custom Apps
Now were to give very broad management authority to their
project managers. Being a project leader was the first step
of a major promotion to project manager. Usually, a project
leader worked closely with a project manager, who would
coach and mentor the project leader through one or two
projects before the final promotion. Mary’s previous project manager and mentor suggested she build a checklist of
steps she would follow to accomplish the objectives in each
of the nine PMBOK knowledge areas.
Custom Apps Now uses Agile techniques extensively
in all its development projects. As such, every project was
based on iterations with deliverables defined for each
iteration. Project scope and project objectives were defined for the overall project, but detailed schedules were
used only within each iteration.
Assuming you have been promoted to project leader
at Custom Apps Now, your assignment is to prepare your
own checklist of processes and procedures to manage your
project. Take each PMBOK area separately to create specific processes, procedures, and guidelines for that knowledge area. One good way to start is to review the specific
objectives of each knowledge area and identify some procedures to accomplish that objective. Processes and procedures should be consistent with Agile techniques.
For example, one objective of project scope control is
to control the project scope so it doesn’t grow inappropriately (i.e., doesn’t suffer from scope creep). One project
guideline might be to not allow new scope changes within
an iteration. Across iterations, new functions or use cases
may be added but with the requirement that any new use
case must be approved by a user steering committee.
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