Purpose of initiation phase Comparing project options Total cost of ownership The project charter The Initiation Phase Business problem or opportunity defined Solution is defined Project is formed ID: 1001608
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1. Project Initiation
2. Project InitiationPurpose of initiation phaseComparing project optionsTotal cost of ownershipThe project charter
3. The Initiation PhaseBusiness problem or opportunity definedSolution is definedProject is formedBusiness case createdProject team appointed
4. The Business CaseProblem or opportunity: Detailed descriptionIntroductionProblem/opportunity statementAssumptions and ConstraintsAlignment with organizational objectivessolutionsAnalyList of alternative sis of benefits, costs, and issuesDescription of the preferred solutionMain project RequirementsPotential risksSummarized plan for implementationScheduleFinancial analysis
5. Comparing OptionsWeighted Decision MatrixCriteriaWeightSJS EnterprisesGame AccessDVD LinkEducational15%9000Sports-related15%909090Secure payment10%905050(rows left out here—see textbook) Weighted Project Scores100%5614.512.5
6. Financial ConsiderationsCan compare projects based onNet present valueInternal Rate of Return (Return on Investment or ROI)Payback Analysis
7. Net Present Value AnalysisConsiders the time value of moneyCosts for future years must be discounted to the present timeTangible benefits also discounted to the present timeMust identify an appropriate discount rateTake risk into consideration
8. NPV Calculationt is the time of the cash flowRt is the cash flow at time ti is the interest rateApply the above formula to each annual inflow and outflow of cashAdd all terms together to get the NPV Rt (1 + i)t
9. NPV AnalysisIf…It means…Then…NPV > 0the investment would add value to the firmthe project may be acceptedNPV < 0the investment would subtract value from the firmthe project should be rejectedNPV = 0the investment would neither gain nor lose value for the firmindifferent in the decision This project adds no monetary value. Decision should be based on other criteria, e.g., strategic positioning or other factors not explicitly included in the calculation.
10. Rate of ReturnCan be used to compare different optionsOrganization may have a minimum acceptable rate of return for projects(Total benefits – Total costs) / Total costs
11. Payback AnalysisCompares cumulative costs to cumulative benefitsEasiest to see in graphical formatTime on horizontal axis, money on vertical
12. Payback Analysis
13. The Project Charter
14. Purpose of the Project CharterWhen signed off, you have approval to proceed to detailed planning, followed by carrying out your project.
15. Organizational Process AssetsIs there a standard format for project charters?Is there a standard process for developing and getting approval for a project charter?What can the PMO do for you?What does the PMO require of you?Are there applicable “lessons learned” available from other projects?If you are inexperienced, is there a mentor available?Etc.
16. Project Charter – Typical ContentsIdentification sectionProject purpose or justificationMeasurable project objectives and related success criteriaHigh-level requirementsAssumptions and constraintsHigh-level project description and boundariesHigh-level risksSummary milestone scheduleSummary budgetStakeholder listApprovals
17. IdentificationName of the project—make it meaningfulName, title, department of project sponsorName of project manager
18. Clear ObjectiveSMARTSpecificMeasurableAcceptableRealisticTime based
19. Business Need or OpportunityA concise statement of how the project’s deliverables will contribute to organizational objectives
20. ScopeClearly defines what is in and out of the projectMajor MilestonesIdentifiable points in timeTarget dates will be added LATER
21. Major DeliverablesBreak down the overall objective into smaller measurable unitsAssumptionsThings you are not certain of but can proceed if you behave as if they are true
22. ConstraintsAnything that limits your ability to deliver or the range of acceptable solutionsPreliminary Cost EstimatesHow will the costs be defined and controlled
23. RisksHigh-level statement about risks identified so farInclude the risk of NOT doing the project
24. Stakeholder ListThe stakeholders identified so far, including their rolesApprovalA place for the project sponsor and the project manager to sign
25. Project Initiation: SummaryThe first phaseRelationship of project to business objectives is keyCompare alternatives using weighted matrixFinancial analysis: NPV, ROI, paybackProject Charter is the primary output; it includes the stakeholder listCompletion of Project Initiation is the signal that the project has approval to proceed to the project planning phase.
26. Questions?