Project Scope Management

Methods for Selecting Projects

Four common techniques

includes the processes involved in defining and controlling what is or is not included in a project ensures that the project team and stakeholders have the same understanding of what products will be produced as a result of the project and what processes will be used in producing them Scope

1.

Focusing on broad organizational needs One method for selecting project based on broad organizational needs is to determine whether they first meet three important criteria: need, funding and will.

2.

Categorizing information technology projects Problems are undesirable situations that prevent an organization from achieving its goals. Opportunities are chances to improve the organization. Directives are new requirements imposed by management, government, or some external influence.

refers to all the work involved in creating the products of the project and the processes used to create them involves the following processes: Initiation involves committing the organization to begin a project or continue to the next phase of a project Scope planning involves developing documents to provide the basis for future project decisions, including the criteria for determining if a project or phase has been completed successfully Scope definition involves subdividing the major project deliverables into smaller, more manageable components Scope verification involves formalizing acceptance of the project scope Scope change control involves controlling changes to project scope

3.

Performing net present value or other financial analyses Includes net present value analysis; return on investment, and payback analysis.

How do you Identify Potential Projects?

Strategic Planning

4.

Using a weighted scoring model A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria.

involves determining long-term objectives by analyzing the strengths and weaknesses of an organization, studying opportunities and threats in the business environment, predicting future trends, and projecting the need for new products and services SWOT analysis analyzing Strengths, Weaknesses, Opportunities, and Threats used to aid in strategic planning

Net Present Value Analysis

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 only projects with a positive net present value should be considered if financial value is a key criterion for project selection

Steps in determining NPV: 1. 2. Determine the cash inflows and outflows for the project. Determine the discount rate. A discount rate is the minimum acceptable rate of return on an investment. It is also the required rate of return, hurdle rate, or opportunity cost of capital. Calculate the net present value. NPV = _t=1n A /(1+r)t where:

Example of Weighted Scoring Model

3.

t equals the year of the cash flows A is the amount of cash flow each year r is the discount rate

Return on Investment

its first step is to identify criteria important to the project selection process possible criteria includes the following: supports key business objectives has strong customer support has strong internal sponsor uses realistic level of technology can be implemented in one year or less provides positive net present value has low risk in meeting scope, time, and cost goals assign a weight to each criterion establish weights by assigning points determine minimum scores or thresholds for specific criteria in a weighted scoring model

income divided by investment Required Rate of Return

the minimum acceptable rate of return on an investment, and it is based on the return that the organization could expect to receive elsewhere for an investment of comparable risk

Payback Analysis

determines how much time will lapse before accrued benefits overtake accrued and continuing costs occurs when the cumulative discounted benefits and costs are greater than zero Payback period

the amount of time it will take to recoup, in the form of net cash inflows, the net amount invested in a project