Project Initiation Document

At the beginning of a project, the project manager should produce a document (PID) that

defines the project
records the project justification, and
sets out the expenditure and time-table plans

The PID should also include the following:

organisation and responsibilities
risk management policy
quality control standards

We shall look at each in turn

Project definition

What the project includes

the scope of the application to be produced
whether management will be able to choose from a range of options
desk instructions, user training, data set up?

What the project does not include

known exceptions
links to associated systems
staffing changes, accommodation, redundancy, careers advice

How everyone will know when the project is completed, e.g.

hardware and software meet acceptance criteria and installed
procedures agreed and tested
desk instructions and user training delivered
system running smoothly for a month

Decision making

Question: How do we decide whether to proceed with a project?

Question: If there are several ways of running a project, how do we decide which option to choose?

Financial appraisal

Non-financial benefits

Risk

technical feasibility
political feasibility

(management support)
(user support)

Project justification

(Also known as financial appraisal)

Payback period

Choose the approach that recovers the initial outlay most quickly

Cash flow

Choose the approach that gives the most benefit (in the long run)

Discounted cash flow

Choose the approach that gives the most benefit

(but discount benefits in the future, as they aren't as valuable as current benefits)

Discounted cash flow

Add up all the costs and benefits in each year for the duration of the system's likely use (eg. 5 or 7 years)

Apply a "discount factor" to each year's cost or benefit

Add up the discounted costs and benefits

Choose the option with the greatest benefit

Discounted cash flow

Cost Benefit Analysis (Ł000's)

Year	0	1	2	3	4
Costs
Project costs	-1200
Maintenance		-50	-50	-50	-50
Benefits
Savings		450	450	450	450
Cash Flow	-1200	400	400	400	400
Discount factor	6%
Discount rate	1	.94	.88	.83	.79
Discounted Cash Flow	-1200	377	355	335	316
Net Present Value	186

If this ^ is positive, project will save money

Victoria University of Wellington, NZ have some detailed notes on discounted cash flows.

Follow these for discussions about investment appraisal:

How to demonstrate ROI feature in Computer Weekly by Bruce Ackland, 17 Oct 2001
Making a business case for technology spend feature in Computer Weekly, 17 Oct 2001

Project time-table

Gantt chart

Gantt chart

Stage plan for second stage

First stage is project initiation
At end of first stage, managers will want to see details of the second stage before giving go ahead to rest of project

Task list for rest of project, with dates where possible

Organisation and responsibilities

Organisation of project

who is in charge
who is project manager
who should ensure project quality

Responsibilities

who is expected to do what

Why?

To avoid omissions
To prevent subsequent recriminations
To give leadership and direction

Risk management

Risk is a function of

how likely an undesirable event will happen
how likely that event will cause loss; and
how serious is that loss

Risk management tackles these by

reducing the likelihood of the event happening
reducing the likelihood of an accident or loss occurring and/or
reducing the amount of loss

Procedure

Identify the risks

Devise a list of possible precautions

Select from list those that you consider cost effective

"Danger makes men devout" W.Baldwin (in "Beware the cat"), 1584

Link to lecture notes specifically on Risk Management

Quality control

This will be discussed in more detail in other notes, however...

It is important to state at the beginning of the project how you will ensure the products will be assessed

adherence to standards (whose? which version?)
adherence to written procedures
internal checks, peer reviews
independent technical checks and tests
integration test
user test