UNIT-1 SPM

Project Evaluation and Project Planning

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Importance of Software Project Management
Software Project Management is a sub-discipline of project management in which software
projects are planned, implemented, monitored and controlled

• Project management is the practice of initiating, planning, executing, controlling, and

closing the work of a team to achieve specific goals and meet specific success criteria at the
specified time.

• The primary challenge of project management is to achieve all of the project goals within
the given constraints.

Why is it important to become familiar with project management?

– First there is a question of money. A lot of money is at stake with ICT projects.

– Secondly, the projects are not always successful, studies show that only one third of
software projects were proved to be successful.

• The reason for these project shortcomings is most often the management of software
projects.

Activities covered by SPM:

1)The Feasibility Study

– Assesses whether a project is worth starting.

– Information is gathered about the requirements of the proposed application and this process
can be complex and difficult.

– Developmental and operational costs are estimated.

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– Benefits of new systems will be estimated.

2)Planning

– If a feasibility study indicates the project as worthy, planning starts .

– Normally a complete detailed plan is created for smaller projects.

– For larger projects, an outline plan for the whole project and a detailed one for the first
stage will be created.

3)Project Execution

– Execution often contains design and implementation sub phases.

– Design is making decisions about the form of the products to be created.

– External appearance of the software, UI.

– Plan details the activities to be carried out to create the products.

Stakeholders

• People who have a stake or interest in the project.

• Their early identification is important as adequate communication channels need to be set

up with them.

• Stakeholders can be categorised as:

– Internal to the project team

– External to the project team but internal to the organization

– External to both the project team and organization

Methodologies
Waterfall
Just as the name suggests this is a sequential model. You work your way from one step to the
next and can’t start a step until you’ve finished the preceding one. Waterfall is used
practically everywhere. It’s great to use if your project is very complicated or needs to follow
a specific step by step process. On the negative side, it can be a very rigid methodology and
in all honesty it’s not really suitable for fast moving or iterative projects.
Agile
Agile is the antithesis of waterfall methodology. Its whole premise is to be flexible and light
touch. It emphasises team collaboration and the idea that everything is iterative. At the end of
every cycle or sprint the product is evaluated so it’s really easy to adapt to changes and it can
even be that the final product bears no resemblance to the one that was originally planned.

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Agile is great for companies that are releasing products quickly and regularly. It’s one of the
reasons why it’s so popular in software development. It’s also got strong support in
manufacturing and creative industries. It’s not great for projects that don’t need or want a lot
of stakeholder input or if the project is really complicated.
PRINCE2
PRINCE2 stands for Projects in Controlled Environments2 and it's a structured project
management methodology. It came out of the UK government and has spread around the
world. It consists of 6 tolerances, 7 principles, 7 themes and 7 processes. It also prescribes 26
management products that should be created.
This is a great methodology for accidental and incidental project managers as it hand holds
you through the entire end to end process of managing a project as well as giving you
templates for each of the key project documents. It’s used extensively in public sector
projects, particularly in the UK, Australia and New Zealand.
Given its complexity, it is advised not to use it on smaller projects and its very prescriptive
nature means it’s unlikely to work well in fast moving project environments.
Hybrid Project Management
A combination of methodologies. It means you get the best of both worlds without the
downside of either.
This won’t work if you work in an organisation that’s wedded to a particular methodology or
if the team is unfamiliar with one or other of the methodologies being hybridised. Of course,
using more than one methodology at the same time is risky so it is advised to use it with
caution!
Critical Path
The critical path, or golden thread is a way of visualising your project. Its premise is that
there are some tasks that can’t be started until something else is completed. When you string
them all together you get the critical path of your project. If you focus all of your effort and
resources on achieving this critical path then you get the most important work done and can
reprioritise the non-critical path tasks. It’s great for working out exactly what resources you’ll
need and when, but that very positive also means it’s less suited to projects that change
quickly. To make it work effectively you need to have an extremely detailed work breakdown
structure so it’s less effective on bigger projects where getting that level of detail can be
difficult.
Critical Chain Management
Focuses on the resources that you’ll need to complete a project. It encompasses equipment,
people and space. The aim is to keep everything balanced and be flexible with start dates, it
builds buffer time around those activities and it’s been credited with delivering projects 10 –
50% faster than traditional methods.
As it’s a less technical methodology it can be used pretty much anywhere that runs projects.
Extreme Project Management
It’s related to Extreme Programming and is used on projects where there is a high level of
unpredictability, when there needs to be huge amounts of flexibility or when a lot of
stakeholder engagement is required. One of the main differences between this and other

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project management methodologies is that it demands huge commitment from the project
sponsor, who needs to be actively involved at all steps of the project
Categorization of Software Projects
Ways of Categorizing Software Projects
• Different characteristics of a project could affect the way in which it should be planned and
managed.
Some of these are:
– Compulsory vs voluntary users
– Information systems vs embedded systems
– Software products vs software services
– Objective driven development vs product driven development.

Setting objectives
Effective objectives in project management are specific. A specific objective increases the
chances of leading to a specific outcome. Therefore, objectives shouldn't be vague, such as
"to improve customer relations," because they are not measurable. Objectives should show
how successful a project has been.
While there may be one major project objective, in pursuing it there may be interim project
objectives. In lots of instances, project teams are tasked with achieving a series of objectives
in pursuit of the final objective. In many cases, teams can only proceed in a stair step fashion
to achieve the desired outcome. If they were to proceed in any other manner, they may not be
able to develop the skills or insights along the way that will enable them to progress in a
productive manner.

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Objectives can often be set under three
headings:
1. Performance and Quality
The end result of a project must fit the purpose for which it was intended. At one time,
quality was seen as the responsibility of the quality control department. In more recent years
the concept of total quality management has come to the fore, with the responsibility for
quality shared by all staff from top management downwards.
2. Budget
The project must be completed without exceeding the authorised expenditure. Financial
sources are not always inexhaustible and a project might be abandoned altogether if funds run
out before completion. If that was to happen, the money and effort invested in the project
would be forfeited and written off. In extreme cases the project contractor could face ruin.
There are many projects where there is no direct profit motive, however it is still important to
pay proper attention to the cost budgets, and financial management remains essential.
3. Time to Completion
Actual progress has to match or beat planned progress. All significant stages of the project
must take place no later than their specified dates, to result in total completion on or before
the planned finish date. The timescale objective is extremely important because late
completion of a project is not very likely to please the project purchaser or the sponsor.
Management Principles

1. Vision and Mission

Every project or initiative should begin with the end in mind. This is effectively
accomplished by articulating the Vision and Mission of the project so it is crystal-clear to
everyone. Creating a vision and mission for the project helps clarify the expected outcome or
desired state, and how it will be accomplished.

1. Business Objectives

The next step is to establish two to three goals or objectives for the project. Is it being
implemented to increase sales and profit, customer loyalty, employee productivity and
morale, or product/service quality? Also, it's important to specifically quantify the amount of
improvement that is expected, instead of being vague.

1. Standards of Engagement

It means establishing who will be part of the project team? What will be the frequency of
meetings? What are the meeting ground rules? Who is the project owner? Who is designated
to take notes, and distribute project meeting minutes and action steps? This goes along with
any other meeting protocol that needs to be clarified.

1. Intervention and Execution Strategy

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This is the meat of the project and includes using a gap analysis process to determine the
most suited intervention (solution) to resolve the issue you are working on. There are many
quality management concepts that can be applied ranging from a comprehensive "root cause
analysis" to simply "asking why five times." Once the best possible intervention has been
identified to resolve the issue, then we must map out our execution strategy for implementing
the intervention. This includes identifying who will do what, when, how, and why?

1. Organisational Alignment

To ensure the success and sustainability of the new initiative or process brought on by this
project, everyone it will directly impact must be onboard. To achieve organisational
alignment (or buy-in), ongoing communication must be employed in-person during team
meetings, electronically via email and e-learning (if applicable), and through training.

1. Measurement and Accountability

And last, how will we determine success? Well, a simple project scorecard that is visually
interesting is a great way to keep everyone updated and engaged. A scorecard is an excellent
resource for holding employees, teams, and leaders accountable for the implementation,
refinement, and sustainability of the new initiative or project. Accountability means that
consistently, top performers will be rewarded and recognised

Project portfolio Management

What Is a Project Portfolio?

A project portfolio is a collection of projects, programs and processes that are managed
together and optimized for the financial and strategic goals of an organization. A portfolio
can be managed at either the functional or the organizational level.
Project portfolio management (PPM) is the analysis and optimization of the costs,
resources, technologies and processes for all the projects and programs within a portfolio.
Project portfolio management is typically carried out by portfolio managers or a project
management office (PMO).
This helps the organization to categorize the projects and align the projects with their
organizational goals.
Project Portfolio Management (PPM) is a management process with the help of methods
aimed at helping the organization to acquire information and sort out projects according to a
set of criteria.

Objectives:
The need to create a descriptive document, which contains vital information
such as name of project, estimated timeframe, cost and business objectives.
Evaluation of the project on a regular basis to ensure that the project is meeting
its target and stays in its course.

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Selection of the team players, who will work towards achieving the project's
objectives.
Advantages:

● Helps to concentrate on the strategies, which will help to achieve the targets rather
than focusing on the project itself.
● The responsibilities of IT are focused on part of the business rather than scattering
across several.
● Greater adaptability towards change.

Estimation for a Better Project:

There are different areas of a project that benefit from the use of project
estimating:

1. Cost is one of the three main constraints in project management. If you

don’t have enough money to complete the project, it will fail.
2. Time is another of the three main project constraints. Being able to
estimate both the overall project duration and when individual tasks will
take place is vital to project planning.
3. Scope is the third key project constraint. Project scope is all the work that
must be done to finish the project or deliver a product. By estimating how
much work is involved and exactly what tasks need to occur, you can
ensure that you have the right materials and expertise on the project
4. By estimating what risks could impact your project and how they will
affect it, you are better able to plan for potential issues and create risk
management plans.
5. Resource management helps you ensure you have all the resources you
need and are using them as efficiently as possible.
6. Products that have to meet demanding quality regulations, such as
environmental restrictions, may require more money, time, and other
resources than a product with lower-level requirements.

Project Portfolio Management vs Project Management

Project management is, quite simply, the management of a project. A project is
a temporary endeavour that results in a product or service. It has a beginning
and an end. Project goals are defined, and tasks are broken down into a

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schedule. Cost and budgets are set; resources are assigned, and stakeholders are
reported to.
Project portfolio management, on the other hand, is a higher-level approach
that orchestrates, prioritizes and analyses the potential value of many projects
and programs in a portfolio to manage them simultaneously and optimize
resource management.
The goal of the portfolio management process is to manage and leverage the life
cycle of investments, initiatives, programs, projects and outcomes to best reach
the overall goals and objectives of an organization.
Therefore, project management is a subset of project portfolio management. It
leads to the ultimate objective, which is meeting the strategic goals of the
organization.
The Project Portfolio Management Process
There are five basic project portfolio management steps:
1. Define Business Objectives
Before you start thinking about portfolio management, you’ll need to
understand your organization’s business objectives and strategic goals. The idea
is that your project portfolio aligns with the strategic planning of your
organization, so you’ll need to check if its financial objectives and customer
value are good enough for your organization.
2. Collect Project Ideas for Your Portfolio
Once you’ve defined your portfolio’s strategic goals it’s time to start building it.
To do so, you’ll need to start collecting projects. Those could be in-progress
projects or project ideas that are similar enough to be managed simultaneously.
Gather project management data and prepare the valuation criteria to choose the
best.
3. Select the Best Projects for Your Portfolio
To determine which are your best projects for your portfolio, you’ll need to do
a cost benefit analysis and use your valuation criteria. This valuation criteria
will measure the amount of value that each project brings into the portfolio.
There are a variety of aspects that can go into the project selection scoring
criteria, such as the payback period, net present value, or risk level.
4. Validate Project Portfolio Feasibility

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Now that you’ve chosen the projects that are the best fit for your portfolio, it’s
time to do a feasibility study that takes into account all the financial
risks, capacity planning and resource management constraints.
5. Execute and Manage your Project Portfolio
Now you’ll need to coordinate the execution of the projects and programs in
your portfolio simultaneously by working with project and program managers.

Cost-benefit evaluation technology

● It is one of the important and common ways of carrying out an “economic
assessment” of a proposed information system.
● This is done by comparing the expected costs of development and operation of the
system with its benefits.
● So it takes an account:
o Expected cost of development of system
o Expected cost of operation of system
o Benefits obtained
● Assessment is based on: Whether the estimated costs are executed by the estimated
income. And by other benefits.
● For achieving benefits where there are scarce resources, projects will be prioritized
and resources are allocated effectively.
● The standard way of evaluating economic benefits of any project is done by Cost
Benefit Analysis
● It comprises of two steps:
o Identifying and estimating all of the costs and benefits of carrying out the
project.
o Expressing these costs and benefits in common units.
● It includes
o Development cost of the system.
o Operating cost of system.
o Benefits obtained by system.
● When new system is developed by the proposed system, then new system should
reflect the above three as same as proposed system
● Example: sales order processing system which gives benefit due to use of new
systems.

A cost benefit analysis is used to compare what you expect to pay for a project
against what benefits or opportunities it will provide.

Who Should Use the Cost Benefit Analysis Template?

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● The cost benefit analysis template should be used by anyone who is trying to figure out
whether an investment or any decision is worth making. They will also get to see how much
the benefits potentially outweigh the cost.
● Certainly, any decision-maker at an organization or the project manager of a project will use
a cost benefit analysis to determine if a proposal is worth pursuing. But the cost benefit
analysis can be used for any decision.

How to Use Project Manager’s Cost Benefit Analysis Template

Cost benefit analysis template is set up to serve businesses, projects and personal matters
alike and makes replicating the process quick and easy. Just download the template and start
using it. Add your company logo and customize it any way you want. It’s a powerful and
flexible tool.

● Project Information: The top of the template is dedicated to identifying the project
you’re doing the cost benefit analysis on. The project name, project manager and date
compiled or revised are laid out for you to fill in. If you’re working on something other
than a project, simply change the heading to reflect what you’re analyzing.
● Quantitative Costs: On top are your quantitative costs. There are three types listed:
indirect, intangible and opportunity. Then there are columns for the costs associated
with each year. We go six years into the future, but you can go as far as you want. Each
column is added up automatically at the bottom, as well as a total cost for that particular
type of cost.
● Types of Costs: The three types of cost are defined as follows: indirect costs are
usually your fixed expenses, such as rent; intangible costs are those that are difficult to
measure, such as reduced customer satisfaction due to some change in customer service;
and opportunity costs are lost benefits when a business proceeds with one strategy over
another. After you list all your costs, there is a row that automatically adds up the overall
costs for each column.
● Quantitative Benefits: The next section collects your quantitative benefits. These are
broken into four sections: direct benefits, indirect benefits, intangible benefits and
competitive benefits. Again, there are columns to automatically add up the benefits over a
six-year period.
● Types of Benefits: These benefits are defined as follows: direct benefits are those that
increase your sales or revenue because you’ve launched a new product or service; indirect
benefits are measured by customer interest in your brand; intangible benefits are again
those difficult to measure, such as a boost in team morale; and competitive benefits place
you at an advantage with other companies in your business space.
● Cost Benefit Analysis: Just as the three cost sections are added up column by column,
so are the four benefits sections. Now you have a total cost to compare to a total benefit.
This will guide you in your decision-making.

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Technologies involved are:

Net profit

The net profit of a project is the difference between the total costs and the total income over
the life of the project. Having to wait for a return has the disadvantage that the investment
must be funded for longer. Add to that the fact that, other things being equal, estimates in the
more distant future are less reliable that short-term estimates and we can see that the two
projects are not equally preferable.
Return on investment
The return on investment (ROI), also known as the accounting rate of return (ARR), provides
a way of comparing the net profitability to the investment required. There are some variations
on the formula used to calculate the return on investment but a straightforward common
version is the main difficulty with NPV for deciding between projects is selecting an
appropriate discount rate.
Internal rate of return
One disadvantage of NPV as a measure of profitability is that, although it may be used to
compare projects, it might not be directly comparable with earnings from other investments
or the costs of borrowing capital. Such costs are usually quoted

Risk evaluation
Risk evaluation is meant to decide whether to proceed with the project or not, and whether
the project is meeting its objectives.
Risk Occurs: When the project exceeds its original specification Deviations from achieving
its objectives and so on.
Risk Identification and ranking Risk and Net Present Value For riskier projects could use
higher discount rates.
Ex: Can add 2% for a Safe project or 5 % for a fairly risky one.
Strategic program Management
Strategic Project Management (SPM) defines the big picture of how the project may
benefit the company's efficiency and as a whole. This process combines business strategy
and project management methodologies and techniques to deliver organizational
breakthroughs.
Program management is the centralized coordinated management of a program to achieve
the program's strategic benefits and objectives. This strengthens the alignment to
organizational strategy and ensures better control and focus on benefits realization.
Project management involves the initiation, planning and control of a range of tasks
required to deliver the end product (which could be a physical product, it could be new
software, or just a new way of working).
There are five essential tasks of strategic management.

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They include developing a strategic vision and mission, setting objectives, crafting tactics to
achieve those objectives, implementing and executing the tactics, and evaluating and
measuring performance.

Stepwise Project Planning

Steps in Project Planning:

● Step 0: Select project.

● Step 1: Identify project scope and objectives.
● Step 2: Identify project infrastructure.
● Step 3: Analyze project characteristics.
● Step 4: Identify project products and activities.
● Step 5: Estimate effort for each activity.
● Step 6: Identify activity risks.

Step 1: Identify Project Scope and Objectives

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1.1. Identify objectives and practical measures of effectiveness in meeting those objectives.
How do we know we are successful?

1.2: Establish a project authority Who is the boss?

1.3. Stakeholder analysis – identify all stakeholders in the project and their interests. Who
does what?

1.4. Modify objectives in the light of stakeholder analysis. What shall we do for the
commitment of stakeholders to the project?

1.5. Establish methods of communication with all parties. How do we stay in touch and
informed?

Step 2: Identify Project Infrastructure

2.1. Identify relationship between the project and strategic planning

2.2. Identify installation standards and procedures

2.3. Identify project team organization

Step 3: Analyze Project Characteristics

3.1. Distinguish the project as either objective- or product-driven

3.2. Analyze other project characteristics (including quality-based ones)

3.3. Identify high-level project risks

3.4. Take into account user requirements concerning implementation

3.5. Select development methodology and life- cycle approach

3.6. Review overall resource estimates

Step 4: Identify Project Products & Activities

4.1. Identify and describe project products (or deliverables)

4.2. Document generic product flows

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