Chapter 4: Project Scope Management

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Chapter 4Project Scope Management

• adopted from PMIs PMBOK 2000 and
• Textbook Information Technology Project
  Management
• (author Dr. Kathy Schwalbe)

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Contents

• Importance of scope management
• Project Scope Management Processes (Initiation,
  Scope planning, Scope definition, Scope
  verification, Scope change control)
• Initiation (init phase)
• key tools selecting project based on financial
  methods (NPV, ROI and Payback analysis)
• Scope Planning (planning phase)
• Scope definition (planning phase)
• Scope verification (control phase)
• Scope change control (control phase)
• methods to improve

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Screening a project
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What is Project Scope Management?

• Scope refers to all the work involved in creating
  the products of the project and the processes
  used to create them
• Project scope management includes the processes
  involved in defining and controlling what is or
  is not included in the project
• The project team and stakeholders must have the
  same understanding of what products will be
  produces as a result of a project and what
  processes will be used in producing them

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Project Scope Management Processes

• Initiation beginning a project or continuing to
  the next phase
• Scope planning developing documents to provide
  the basis for future project decisions
• Scope definition subdividing the major project
  deliverables into smaller, more manageable
  components
• Scope verification formalizing acceptance of the
  project scope
• Scope change control controlling changes to
  project scope

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Project Initiation Strategic Planning and
Project Selection

• 1st initiation phase process
• Initiation is the process of formally authorizing
  a project or that an existing project should
  continue on the next phase.
• The first step in initiating projects is to look
  at the big picture or strategic plan of an
  organization
• Strategic planning involves determining long-term
  business objectives
• IT projects should support strategic and
  financial business objectives

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Inputs to Project Initiation

• Product description
• documents the characteristics of the products or
  service that the project was undertaken to solve.
  It also documents the business need that created
  the project.
• Strategic plan
• describes the originations mission, vision, and
  goals for the future. Everything in projects
  management supports the strategic business plan
  of the origination.
• Project selection criteria
• defined in terms of the product, this covers the
  full range of management concerns. They are
  typically defined in terms of specific benefits
  of the project to the business.
• Historical information
• results of previous decisions and performance.
• For example a) relevant lessons learned from
  past projects b) the history with a particular
  customer c) the history with similar projects.

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Identifying Potential Projects

• Many organizations follow a planning process for
  selecting IT projects
• First develop an IT strategic plan based on the
  organizations overall strategic plan
• Then perform a business area analysis
• Then define potential projects
• Then select IT projects and assign resources

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Tools techniques

• Project selection methods
• they are techniques, practices or procedures for
  selecting a project that best supports the
  organizations objectives.
• Project selection methods generally fall into two
  broad categories
• a) benefit measurement methods corporative
  approaches, scoring models, and
  benefit-contribution and entomic models
• b) constrained optimization methods
  mathematical models using linear, dynamic,
  integer, and multi-objective programming
  algorithms.
• Expert judgment
• Subject experts with specialized knowledge or
  training assess the inputs to this process.
  Results of this analysis are a documented opinion
  or recommendation.

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Methods for Selecting IT Projects

• There are usually more projects than available
  time and resources to implement them
• It is important to follow a logical process for
  selecting IT projects to work on
• It is often difficult to provide strong
  justification for many IT projects, but everyone
  agrees they have a high value
• It is better to measure gold roughly than to
  count pennies precisely
• Three important criteria for projects
• There is a need for the project
• There are funds available
• Theres a strong will to make the project succeed

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Categorizing IT Projects

• One categorization is whether the project
  addresses
• a problem
• an opportunity, or
• a directive
• Another categorization is how long it will take
  to do and when it is needed
• Another is the overall priority of the project

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Financial Analysis of Projects

• Financial considerations are often an important
  consideration in selecting projects
• Three primary methods for determining the
  projected financial value of projects
• Net present value (NPV) analysis
• Return on investment (ROI)
• Payback analysis

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Net Present Value Analysis

• Net present value (NPV) analysis
• a method of calculating the expected net monetary
  gain or loss from a project by discounting all
  expected future cash inflows and outflows to the
  present point in time
• If financial value is a key criterion
• projects with a positive NPV should be considered
  
• the higher the NPV, the better

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Figure 4-2. Net Present Value Example
Excel file
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Return on Investment

• Return on investment (ROI) is income divided by
  investment
• ROI (total discounted benefits - total
  discounted costs) / discounted costs
• The higher the ROI, the better
• Many organizations have a required rate of return
  or minimum acceptable rate of return on
  investment for projects

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Payback Analysis

• payback analysis
• is another important financial consideration
• Payback occurs when the cumulative discounted
  benefits and costs are greater than zero
• Payback period is the amount of time it will take
  to recoup, in the form of net cash inflows, the
  net dollars invested in a project
• Many organizations want IT projects to have a
  fairly short payback period

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Figure 4-3. NPV, ROI, and Payback Analysis for
Project 1
Excel file
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Figure 4-4. NPV, ROI, and Payback Analysis for
Project 2
Excel file
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Weighted Scoring Model

• No single methods is the best for all, a holistic
  evaluation of previous methods can be combined!
• A weighted scoring model is a tool that provides
  a systematic process for selecting projects based
  on many criteria
• First identify criteria important to the project
  selection process
• Then assign weights (percentages) to each
  criterion so they add up to 100
• Then assign scores to each criterion for each
  project
• Multiply the scores by the weights and get the
  total weighted scores
• The higher the weighted score, the better

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Figure 4-5. Sample Weighted Scoring Model for
Project Selection
Excel file
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Project Charters

• After deciding what project to work on, it is
  important to formalize projects
• A project charter
• a document that formally recognizes the existence
  of a project and provides direction on the
  projects objectives and management
• Key project stakeholders should sign a project
  charter to acknowledge agreement on the need and
  intent of the project

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Sample Project Charter

• Project Title Information Technology (IT)
  Upgrade Project
• Project Start Date March 4, 200
• Projected Finish Date December 4, 2002
• Project Manager Kim Nguyen, 691-2784,
  knguyen_at_abc.com
• Project Objectives Upgrade hardware and
  software for all employees (approximately 2,000)
  within 9 months based on new corporate standards.
  See attached sheet describing the new standards.
  Upgrades may affect servers and midrange
  computers as well as network hardware and
  software. Budgeted 1,000,000 for hardware and
  software costs and 500,000 for labor costs.
• Approach
•        Update the IT inventory database to
  determine upgrade needs
•        Develop detailed cost estimate for
  project and report to CIO
•        Issue a request for quotes to obtain
  hardware and software
•        Use internal staff as much as possible to
  do the planning, analysis, and installation

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Table 4-2. Sample Project Charter (continued)
Roles and Responsibilities
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Scope Planning

• 2nd of 21 planning phase process
• Score refers to the boundaries of the project.
• two approaches in scope planning Top-down
  approach Bottom-up approach.
• In top-down approach, planning start with largest
  items, or most-generalized description, of the
  project and break them down to the finest level
  of detail.
• In bottom-up approach, planning start with the
  detailed tasks and roll them up to higher levels
  of detail

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Input to Scope Planning

• Product description
• Documents the characteristics of the project or
  service that the project will create. It is less
  detailed in the early phases.
• Project Charter
• The document that formally recognizes the
  existence of a project. It is issued by a manager
  who is external to the project and at a level
  appropriate to the needs of the project.
• Constraints
• factors that limit the project management teams
  options
• Assumption
• factors that, for planning purposes, will be
  considered to be true, real, or certain.

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Tools for Scope Planning

• Product analysis
• involves developing a better understanding of the
  product of the project. It includes techniques
  such as system engineering, value engineering,
  value analysis, function analysis, and quality
  function deployment.
• Benefit/cost analysis
• estimating tangible and intangible costs and
  benefits or various alternatives and using
  financial measures to assess the relative
  desirability of their alternatives.
• Alternative identification
• any technique used to general different
  approaches to the project (e.g. brainstorming or
  lateral thinking)
• Expert judgment
• may be provided by subject experts with
  specialized knowledge or training.

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Output from Scope Planning

• Scope statement
• provides a documented basis for making future
  project decisions and for confirming or
  developing common understanding of project scope.
  The scope statement is an agreement made between
  the client and project manager.
• Major sections of the scope statement include a)
  Project justification b) Project product c)
  Project deliverables d) Project objectives.
• Supporting details
• include all identified assumptions and
  constraints. The specifications define the
  expected performance of a deliverable.
• Scope Management Plan
• describe how the project scope will be managed
  and how scope changes will be integrated into the
  project. It may be formal or informal.

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Scope definition

• 3rd of 21 planning phase process
• After completing scope planning, the next step is
  to further define the work by breaking it into
  manageable pieces
• Scope definition divides major project
  deliverables into manageable components. It
  provides a baseline and assigns responsibilities.
  A scope baseline is the original plan, plus or
  minus approved changes.
• Good scope definition
• helps improve the accuracy of time, cost, and
  resource estimates
• defines a baseline for performance measurement
  and project control
• aids in communicating clear work responsibilities

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Inputs to Scope definition

• Scope statement
• The scope statement is an agreement made between
  the client and project manager. It is an output
  from Scope Planning Process.
• Constraints
• factors that limits other options
• Assumptions
• factors that are considered to be true, real, or
  certain.
• Other planning output
• Outputs from processes in other knowledge areas
  should be reviewed for possible impact on project
  scope definition.
• Historic information
• information from similar or previous projects.

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Tools techniques for Scope definition

• WBS template
• use templates from previous project for a new
  project.
• Decomposition
• subdividing the major project deliverables into
  smaller, more manageable components.

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Outputs of Scope definition

• WBS
• A fundamental project document that has a great
  emphasis in project management methodology. It
  provides the basis for planning and management
  the project. It is a deliverable-oriented
  grouping of project elements that organizes and
  defines the total scope of the project. Work not
  contained in the WBS is outside the scope of the
  project.
• Scope statement update
• refinements of the scope statement.

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Figure 4-6a. Sample Intranet WBS Organized by
Product
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Figure 4-6b. Sample Intranet WBS Organized by
Phase
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Table 4-3. Intranet WBS in Tabular Form
1.0 Concept 1.1 Evaluate current systems 1.2
Define Requirements 1.2.1 Define user
requirements 1.2.2 Define content
requirements 1.2.3 Define system
requirements 1.2.4 Define server owner
requirements 1.3 Define specific
functionality 1.4 Define risks and risk
management approach 1.5 Develop project
plan 1.6 Brief web development team 2.0 Web Site
Design 3.0 Web Site Development 4.0 Roll Out 5.0
Support
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Figure 4-7. Intranet WBS and Gantt Chart in
Project 2000
Project 98 file
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Figure 4-8. Intranet WBS and Gantt Chart
Organized by Project Management Process Groups
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Approaches to Developing WBSs

• Using guidelines
• Some organizations, like the DOD, provide
  guidelines for preparing WBSs
• The analogy approach
• It often helps to review WBSs of similar projects
• The top-down approach
• Start with the largest items of the project and
  keep breaking them down
• The bottoms-up approach
• Start with the detailed tasks and roll them up

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Scope verification Scope change control

• It is very difficult to create a good scope
  statement and WBS for a project
• It is even more difficult to verify project scope
  and minimize scope changes
• Many IT projects suffer from scope creep and poor
  scope verification

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Scope Verification

• 2nd of 8 controlling phase process
• Scope verification is the process of formalizing
  acceptance of the project scope by key
  stakeholders, especially the customer and sponsor
• It requires reviewing work products and results
  to ensure that all product or service features
  and functions are complete, correct and
  satisfactory.

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Inputs to Scope Verification

• Work results
• deliverables have been fully or partially
  completed, as well as what costs have been
  incurred or committed. They are the outcome of
  activities performed and are fed into the
  performance reporting process.
• Product documentation
• any paperwork describing the projects products
  must be available for review.

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Tools techniques for Scope Verification

• Inspection
• activities such as measuring, examining, and
  testing undertaken to determine if results
  conform to requirements.
• The purpose is to identify any particular on
  variances, omissions, deficiencies, gaps, and
  errors.

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Outputs from Scope Verification

• Formal acceptance
• documentation of approving the project of the
  project, or phase, needs to be prepared. Often
  the client or sponsor needs to sign off on formal
  documents as a part of wrapping up the project.

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Scope Change Control

• 3rd of 8 controlling phase process
• Change control procedures enable project manager
  to understand and manage change requests.
• Project manager need to control the scope of both
  the product and the project.
• The big change requests are easy to spot because
  they happen all at once.
• When there are small multiple change requests,
  these are known as scope creep and it can be a
  difficult to detect.

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Inputs to Scope Change Control

• WBS
• a scope definition tool that organizes the work
  and provides a basis for project estimates.
• Performance reports
• alert the project team. Status reports describe
  the projects current standing. Progress report
  describes the teams accomplishment.
• Change requests
• the result of external events such as government
  regulations, error or omissions in scope
  definition, and value-added changes.
• Scope management plan
• part of the Project Plan. It describes how the
  project scope will be managed, how changes will
  be identified and classified, how changes will be
  integrated into the project, and what the
  required procedures are form making changes.

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Tools techniquesfor Scope Change Control

• Scope change control system
• defines the procedures by which the scope of the
  project may be changed. It includes the
  paperwork, tracking systems, and approval levels
  necessary for authorizing changes. (e.g. change
  request form)
• Performance measurement
• techniques to assess the magnitude of any
  variations that occur in the performance of the
  project.
• Additional planning
• activities that may be necessary to the project
  plan or subsidiary plan in order to adjust to
  changes.

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Outputs from Scope Change Control

• Scope changes
• any modifications to the authorized project scope
  as defined by the approved WBS. It often requires
  adjustments to cost, time, quality, or other
  project objectives.
• Corrective action
• anything that bring the performance back in line
  with the project plan.
• Lessons learned
• assessments that include the causes of variances,
  reasoning behind corrective actions, and other
  types of lessons learned as a result of scope
  change.

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Table 4-4. Factors Causing IT Project Problems
Johnson, Jim, "CHAOS The Dollar Drain of IT
Project Failures," Application Development
Trends, January 1995, www.stadishgroup.com/chaos.h
tml
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Suggestions for Improving User Input

• Insist that all projects have a sponsor from the
  user organization
• Have users on the project team
• Have regular meetings
• Deliver something to project users and sponsor on
  a regular basis
• Co-locate users with the developers

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Suggestions for Reducing Incomplete and Changing
Requirements

• Develop and follow a requirements management
  process
• Employ techniques such as prototyping, use case
  modeling, and Joint Application Design to
  thoroughly understand user requirements
• Put all requirements in writing and current
• Create a requirements management database
• Provide adequate testing
• Use a process for reviewing requested changes
  from a systems perspective
• Emphasize completion dates

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Summary

• Importance of scope management
• Project Scope Management Processes
• Initiation
• Scope planning
• Scope definition
• Scope verification
• Scope change control
• Initiation selecting project
• needs, category, financial (NPV, ROI and Payback
  analysis) and weight score

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Summary (2)

• Scope planning
• Charter to define objective
• key project stakeholders should agree and sign
  the charter
• Scope definition
• Scope statement, WBS is a tool to define scope
• Scope verification and change control
• very difficult, common problem in IT
• scope creep and change of user requirement
• methods to improve
• prototyping, case modeling, put requirement in
  writing, provide adequate testing, incorporate
  change request review, emphasis on completion
  dates

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Quiz 1

• The Scope Statement incorporates all of the
  following except
• A. Project justification
• B. The basis for future project decisions
• C. A list of significant project risks
• D. Project objectives and deliverables
• see note page for answer

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Quiz 2

• Scope definition is important to the success of
  the project except
• A. Subdividing the project into smaller
  components improves the accuracy of cost, time
  and resource estimates.
• B. When there is poor scope definition, final
  project costs can be expected to be higher
  because of the inevitable changes.
• C. It serves as the basis for future project
  decisions.
• D. It defines a baseline for performance
  measurement and control.
• see note page for answer

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Quiz 3

• Which is true about a work breakdown structure?
• A. It is a deliverable oriented grouping of
  project elements
• B. It shows work elements that have been assigned
  to various organizational units
• C. It is the same as a code of accounts
• D. It is developed after the baseline schedules
  and budgets have been developed
• see note page for answer

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Quiz 4

• List the top two factors Causing IT Project
  Problems
• see note page for answer