Project Initiation - School of Engineering and Information Technology
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Transcript Project Initiation - School of Engineering and Information Technology
ZEIT2301
Design of Information Systems
Project Initiation
School of Engineering and Information Technology
UNSW@ADFA
Dr Kathryn Merrick
Topic 02: Project Initiation
Objectives
To appreciate the importance of linking the information system to
business needs
To describe project initiation
To describe the elements of a feasibility analysis (aka Advisability
report)
Reference: Text Ch 2
2
The Goal: Successful Projects
Cost
At project completion, no more money has been spent than was
originally allocated
Schedule
The project is delivered no later than the original delivery date
Performance
When delivered, the project has all features and functionality that
were originally required of it
3
Project Identification
Projects are driven by business needs
Identified by business people
Identified by IT people
(better yet) identified jointly by business and IT
The project sponsor believes in the system and wants to
see it succeed
Normally this is a business person
Should have the authority to move the project forward
4
Reasons for Project Initiation
Respond to opportunity
Resolve problem
Conform to directive (Eg: government legislation)
Implementing long-term IS strategic plan
Responding to issues from department managers or
process managers
Response to outside forces (Eg: competitors)
5
A System Request
A system request lists the key elements of the proposed
project:
Project sponsor
Business need
Business capabilities the system will need to have
Business value
Reason prompting the project (a key criterion for success)
Business requirements
Primary point of contact for the project
Benefits the organization can expect from the project
Special issues
Anything else that should be considered
6
Planning Phase of SDLC
Planning begins once a project has been approved.
Define problem (more precisely)
Confirm project feasibility
Produce project schedule
Staff the project
Launch the project
7
Project Feasibility (aka Advisability)
Feasibility analysis is used to aid in the decision of
whether or not to proceed with the IS project.
Helps identify potential risks that must be addressed
Aspects of project feasibility
1.
2.
3.
4.
Technical
Economic
Organizational and cultural
Schedule and resource
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1. Technical Feasibility
Bleeding edge technology?
Do we have the appropriate expertise within the
company?
Project size?
Familiarity with the particular application
Familiarity with the overall technology
Compatibility with other systems
Can we
build it?
9
2. Economic Feasibility
Development costs
Annual operating costs
Recurring costs
Annual benefits
One-off costs
recurring cost savings and revenues
Intangible costs and benefits
Should we
build it? 10
3(a) Organizational Feasibility
Stakeholders
Project champion(s)
Senior management
Users
Others
Is the project strategically aligned with the business?
Sessin 2, 2010
If we build
it, will they
come? 11
3(b) Cultural Feasibility
Each organizations has its own culture
New system must fit into culture or have a determined “champion”
who is able to drive change
Project failure is often more a result of organizational
issues
(personnel, management style/support, etc)
than the technical issues
(development methodologies, h/w and s/w, etc)
12
Stakeholder Analysis
Considers:
Organizational management
Are they committed to the project?
System users
Who are they and what is their attitude to the project?
Do we have a project champion capable of supporting the project
through the rough times?
13
Organizational and Cultural Risks
Computer competency
Computer phobia
Perceived loss of control by some staff
Shifts in organizational power
Fear of changing job responsibilities
Fear of employment loss
Reversal of longstanding procedures
14
4. Schedule and Resource Feasibility
Developing a project schedule inevitably involves some
assumptions and therefore risk
Requirements, and therefore scope, of the system might be
unclear
A fixed deadline increases risk (eg must be ready for Christmas
shopping period)
Need for sufficient skilled staff
Need for adequate resources for systems development and for
testing
Can we
build it? 15
Economic Measures
Cost-Benefit Analysis
1.
Shows costs and benefits over a particular time
Net Present Value (NPV)
2.
Return on Investment (ROI)
3.
Takes into account the future value of money over the life
of the system
The difference between benefits and costs
Break-even point
The time point where the costs of the project equal the
value of the benefits received
16
Simple Cash Flow Method for
Cost Benefit Analysis
17
1. Net Present Value
Present Value
$amount / (1 + interest rate)n
where “n” is the number of time periods
Considers the time value of money
$1 today does not have the same value as $1 in 5 years time
Net Present Value
The present value of benefits less the present value of costs
18
2. Return on Investment (ROI)
The amount of money an organization receives in return
for what it spends
Total (benefits – costs) / total costs
As a percentage
High ROI means benefits far outweigh costs
19
3. Break-Even Point
Break-even point is the time at which
benefits exceed costs
20
3. Break-Even Point
Examines the cash flow over time
Identifies the year in which the benefits are larger than the costs
The longer it takes to break even, the higher the project’s
risk.
Often represented graphically
Plot the cumulative present value of the costs and of the benefits
21
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Intangible benefits / costs
But costs and benefits cannot always be measured in
economic terms
Intangible Benefits
May be intangible but still an important criteria of project success
Increased levels of service
Customer satisfaction
Business survival
Need to develop in-house expertise
Intangible Costs
Reduced employee moral
Lost productivity
Lost customers or sales
23
CBA Formulae Summary
24
Project Selection
Project portfolio management
A process that optimizes project selection and sequencing in order
to best support business goals
Business goals are expressed in terms of
Quantitative economic measures
Business strategy goals
IT strategy goals
Once selected, projects enter the project management
process
25
Ranking and Classifying Projects
26
How Not to Select a Project
First in, first out
Political clout of project inventor/proposer
Squeaky wheel getting the grease
Any other method that does not involve a deliberate
analysis
A recent analysis found that between 2% and
15% of projects taken on by IT departments
are not strategic to the business.
27
Classic Risks in IS development
Unclear objectives
Limited user involvement
Lack of executive support
Poor planning
Overly optimistic schedule
Incomplete or changing requirements
Failing to monitor or update schedule
Adding people to a late project
Lack of required resources
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Summary
A new IS project may be initiated when an opportunity or a
problem is identified.
A System Request highlights the business value of the
proposed new information system.
The feasibility study (aka advisability study) considers
aspects such as the technical, economic and
organizational feasibility.
The overall portfolio of proposed projects is evaluated
before a particular project is selected for development.
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