2/9/2023
Project Integration Management
• Project integration management involves coordinating all of
the other project management knowledge areas throughout a
Project Initiation project s life cycle.
• Project Integration Management Summary:
& Integration
Topic # 3
Chapter 4 – Schwalbe
Financial Considerations for
Methods for Selecting Projects
Selecting Projects
• Focusing on broad organizational needs • Three primary methods for determining the
• Categorizing IT projects (Problems, projected financial value of projects include
Opportunities and directives) – Net Present Value (NPV),
• Performing net present value or other – Return on investment (ROI) and
financial analysis – Payback period.
• Using a weighted scoring model
• Implementing a balanced scorecard
Net Present Value (NPV) Payback Analysis
• NPV is a method of calculating the expected • Payback analysis – a technique for
net monetary gain or loss from a project by determining if and when an investment will
discounting all expected future cash inflows pay for itself.
and outflows to the present point in time. • Payback period – the period of time that will
• The time value of money recognizes that a lapse before accrued benefits overtake
dollar today is worth more than a dollar one accrued and continuing costs.
year from now.
1
2/9/2023
Present Value Formula Payback Analysis for a Project
Present value – the current value of a dollar
at any time in the future.
PVn = 1/(1 + i)n
Where n is the number of years and i is the discount rate.
Discount rate – a percentage similar to interest rates that
you earn on your savings.
In most cases the discount rate for a business is the opportunity cost
of being able to invest money in other projects or investments
Return-on-Investment Analysis Weighted Score Model – Selecting
(ROI) Projects
• A weighted scoring model is a tool that provides a
Return-on-Investment (ROA) analysis – a systematic process for selecting projects based on
technique that compares the lifetime many criteria.
profitability of alternative solutions. • These criteria can include factors such as meeting
broad organizational needs; addressing problems,
The ROI for a solution or project is a percentage rate that measures opportunities, or directives; the amount of time it
the relationship between the amount the business gets back from an
investment and the amount invested.
will take to complete the project; the overall priority
of the project; and projected financial performance
Of the project.
Lifetime ROI = (estimated lifetime benefits –
estimated lifetime costs) / estimated
lifetime costs
Annual ROI = lifetime ROI / lifetime of the
system
Example- Weighted Score Model Business Drivers
• Business Driver: The root cause(s) for the project
development.
• Business drivers are the crucial forces behind the successful
development of a project.
• As the result one can define the business case for sustainable
project development.
2
2/9/2023
Feasibility Study or Project
Critical Success Factors
Justification – Business Case
• Critical success factors (CSFs), also known as Key Results Areas • Introduction & Background to the proposal
(KRAs), refer to the activities that must be completed to a high • The market
standard of quality in order to achieve the goals of your project.
• Organization & Operational Infrastructure
• CSFs are a way to prioritize certain tasks as the project plan is being
executed. • Benefits
• Having clear CSFs helps the project team clarify what needs to be • Outline implementation Plan
worked on first or needs special attention, allowing people to work • Costs
together to achieve the project’s main objectives.
• The financial case
• Risks
END OF TOPIC 3
-COMING UP!!!!!!
-Organization Structures
-Project Scope Management
-WBS
15