What Is the Review Process That Allow a Project to Transition From One Phase to the Next Called

Master Trunk

7. Project Initiation

The projection initiation phase is the first phase inside the project management life bicycle, every bit it involves starting up a new projection. Within the initiation phase, the business problem or opportunity is identified, a solution is divers, a project is formed, and a project team is appointed to build and deliver the solution to the client. A concern instance is created to define the problem or opportunity in detail and identify a preferred solution for implementation. The business case includes:

• A detailed description of the trouble or opportunity with headings such as Introduction, Business Objectives, Problem/Opportunity Argument, Assumptions, and Constraints
• A list of the alternative solutions available
• An analysis of the business concern benefits, costs, risks, and bug
• A description of the preferred solution
• Main project requirements
• A summarized plan for implementation that includes a schedule and financial analysis

The project sponsor and then approves the business example, and the required funding is allocated to go along with a feasibility report. It is upwards to the projection sponsor to determine if the projection is worth undertaking and whether the project volition be profitable to the organization. The completion and approving of the feasibility study triggers the get-go of the planning stage. The feasibility study may also show that the project is not worth pursuing and the project is terminated; thus the adjacent stage never begins.

All projects are created for a reason. Someone identifies a need or an opportunity and devises a projection to address that need. How well the project ultimately addresses that need defines the project's success or failure.

The success of your project depends on the clarity and accuracy of your business concern case and whether people believe they can achieve it. Whenever you consider by experience, your business concern instance is more than realistic; and whenever you involve other people in the business example's development, you encourage their commitment to achieving information technology.

Often the pressure to get results encourages people to go right into identifying possible solutions without fully understanding the need or what the projection is trying to accomplish. This strategy can create a lot of immediate activity, but it also creates pregnant chances for waste and mistakes if the wrong need is addressed. I of the all-time ways to proceeds approval for a project is to clearly identify the projection's objectives and describe the demand or opportunity for which the project volition provide a solution. For well-nigh of us, being misunderstood is a common occurrence, something that happens on a daily ground. At the restaurant, the waiter brings us our dinner and nosotros note that the baked potato is filled with sour cream, fifty-fifty though we expressly requested "no sour cream." Projects are filled with misunderstandings between customers and project staff. What the customer ordered (or more accurately what they recall they ordered) is frequently not what they get. The cliche is "I know that's what I said, but it'southward non what I meant." Figure 7.1 demonstrates the importance of establishing clear objectives.

The need for establishing articulate project objectives cannot be overstated. An objective or goal lacks clarity if, when shown to five people, it is interpreted in multiple ways. Ideally, if an objective is clear, you lot can show information technology to five people who, after reviewing information technology, concord a single view well-nigh its meaning. The best way to make an objective clear is to state it in such a way that it can exist verified. Edifice in ways to mensurate achievement can practise this. Information technology is of import to provide quantifiable definitions to qualitative terms.

Figure 7.1 Project Management.

For instance, an objective of the team principle (project director) of a Formula one racing squad may exist that their star driver, "terminate the lap equally fast equally possible." That objective is filled with ambivalence.

How fast is "fast as possible?" Does that mean the fastest lap fourth dimension (the time to complete one lap) or does it mean the fastest speed every bit the automobile crosses the beginning/terminate line (that is at the finish of the lap)?

By when should the driver exist able to achieve the objective? It is no use having the fastest lap after the race has finished, and equally the fastest lap does not count for qualifying and therefore starting position, if it is performed during a practice session.

The ambivalence of this objective can be seen from the post-obit case. Ferrari'south Michael Schumacher accomplished the race lap record at the Excursion de Monaco of 1 min 14.439 sec in 2004 (Figure vii.ii). However, he achieved this on lap 23 of the race, but crashed on lap 44 of a 77-lap race. So while he achieved a fastest lap and therefore met the specific project goal of "finish the lap as fast as possible," information technology did not result in winning the race, conspicuously a different project goal. In contrast, the fastest qualifying time at the aforementioned event was by Renault's Jarno Trulli (one min 13.985 sec), which gained him pole position for the race, which he went on to win (Figure 7.two). In his example, he achieved the specific project goal of "end the lap as fast as possible," merely also the larger goal of winning the race.

The objective can be strengthened considerably if information technology is stated as follows: "To exist able to stop the iii.340 km lap at the Excursion de Monaco at the Monaco Thousand Prix in one min 14.902 sec or less, during qualifying on May 23, 2009." This was the project objective accomplished past Brawn GP'due south Jenson Button (Figure 7.2).

Figure 7.2: Despite achieving the project goal of the "finish the lap as fast equally possible," Ferrari's Michael Schumacher crashed 21 laps subsequently and did not cease the race (meridian); Renault's Jarno Trulli celebrating his win at the 2004 Monaco Grand Prix (middle); Jenson Button took his Brawn GP car to pole position at the Monaco Grand Prix with a lap time of one min 14.902 sec. He also went on to win the race, even though he did not achieve that lap time during the race (bottom).

There is still some ambiguity in this objective; for example, information technology assumes the star driver will be driving the team'south race automobile and not a rental car from Hertz. However, it clarifies the team main's intent quite nicely. Information technology should be noted that a articulate goal is non enough. Information technology must besides exist achievable. The team principal'due south goal becomes unachievable, for case, if he changes it to require his star driver to finish the three.340 km lap in thirty sec or less.

To ensure the projection's objectives are achievable and realistic, they must exist determined jointly by managers and those who perform the piece of work. Realism is introduced because the people who volition do the work have a expert sense of what it takes to achieve a detail chore. In addition, this process assures some level of delivery on all sides: management expresses its commitment to support the work endeavour and workers demonstrate their willingness to do the work.

Imagine an role manager has contracted a painter to paint his part. His goal or objective is to have the role painted a pleasing bluish colour. Consider the conversation that occurs in Figure 7.three afterwards the job was finished.

Effigy 7.3: The event of non making your objective articulate. [Image Clarification]

This conversation captures in a nutshell the essence of a major source of misunderstandings on projects: the importance of setting clear objectives. The function director's clarification of how he wanted the room painted meant i thing to him and another to the painter. Equally a consequence, the room was not painted to the office manager's satisfaction. Had his objective been more than clearly defined, he probably would accept had what he wanted.

Comparison Options Using a Weighted Decision Matrix

Sometimes we have multiple options to cull from when determining requirements and deciding which projection to work on. To select the best option, nosotros can use tools such as a weighted decision matrix.

A bones decision matrix consists of establishing a set of criteria for options that are scored and summed to gain a full score that tin so be ranked. Importantly, it is not weighted to allow a quick selection process.

A weighted conclusion matrix operates in the same manner as the basic determination matrix just introduces the concept of weighting the criteria in social club of importance. The resultant scores better reflect the importance to the decision maker of the criteria involved. The more of import a criterion, the higher the weighting it should be given. Each of the potential options is scored and so multiplied past the weighting given to each of the criteria to produce a result.

The advantage of the weighted determination matrix is that subjective opinions about ane alternative versus another tin can exist made more objective. Another reward of this method is that sensitivity studies can be performed. An example of this might be to run into how much your opinion would have to modify in social club for a lower-ranked alternative to outrank a competing alternative.

A weighted decision matrix therefore allows determination makers to construction and solve their trouble by:

1. Specifying and prioritizing their needs with a list a criteria; and then
2. Evaluating, rating, and comparing the different solutions; and
3. Selecting the best matching solution.

A weighted conclusion matrix is a decision tool used past determination makers.

A decision matrix is basically an array presenting on 1 centrality a list of alternatives, likewise chosen options or solutions, that are evaluated regarding, on the other axis, a list of criteria, which are weighted depending on their respective importance in the last determination to be taken.

Weighted Conclusion Matrix Sample

The example in Figure 7.4 shows a weighted decision matrix that compared three options for a spider web development project (SJS Enterprises). This method is peculiarly useful when choosing purchase alternatives and comparing them against specific desirable system requirements.

Figure vii.four: Weighted Decision Matrix for Game Commitment Project. [Image description]

Financial Considerations

In many new project endeavors, we need to discover out if our project is financially viable.  Nosotros do that by using internet nowadays value (NPV), rate of return (ROI), and payback analysis.

NPV

A dollar earned today is worth more than than a dollar earned one or more years from now. The NPV of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the individual cash flows of the aforementioned entity.

In the example when all future cash flows are incoming and the just outflow of cash is the purchase cost, the NPV is but the PV of hereafter cash flows minus the buy price (which is its own PV). NPV is a standard method for using the time value of money to appraise long-term projects. Used for capital letter budgeting and widely used throughout economics, finance, and accounting, it measures the excess or shortfall of cash flows, in present value terms, one time financing charges are met.

NPV can be described as the "departure corporeality" between the sums of discounted cash inflows and cash outflows. It compares the present value of money today to the present value of money in the time to come, taking inflation and returns into business relationship.

The NPV of a sequence of cash flows takes equally input the cash flows and a discount rate or discount curve and outputs a price.

Each cash inflow/outflow is discounted back to its present value (PV). And then they are summed. Therefore NPV is the sum of all terms.

where

• t  is the time of the greenbacks period
• i is the discount charge per unit (the rate of render that could be earned on an investment in the fiscal markets with similar take chances; the opportunity cost of capital)
• R_t  is the net greenbacks flow (i.e., cash arrival − cash outflow, at time t).

NPV is an indicator of how much value an investment or project adds to the house. With a item project, if NPV is a positive value, the project is in the status of positive cash inflow in the timet. If NPV is a negative value, the project is in the status of discounted cash outflow in the time t. Sometimes risky projects with a positive NPV could be accepted. This does not necessarily mean that they should exist undertaken since NPV at the cost of capital may not business relationship for opportunity cost (i.due east., comparison with other available investments). In financial theory, if at that place is a choice betwixt two mutually exclusive alternatives, the one yielding the higher NPV should be selected.

Table 7.1 Net Present Value

If…	It means…	Then…
NPV > 0	The investment would add value to the house.	The project may be accepted.
NPV < 0	The investment would decrease value from the firm.	The project should be rejected.
NPV = 0	The investment would neither gain nor lose value for the business firm.	We should be indifferent in the decision whether to accept or decline the project. This project adds no monetary value. Decision should exist based on other criteria (due east.g., strategic positioning or other factors not explicitly included in the adding).

Table vii.ii: Present Value Table
(Have note of the decreasing value of money as the period increases from 1 to ten years.)

Periods (years)	vi%	8%	x%	12%	14%
one	0.943	0.926	0.909	0.893	0.877
2	0.890	0.857	0.826	0.797	0.769
3	0.840	0.794	0.751	0.712	0.675
4	0.792	0.735	0.683	0.636	0.592
5	0.747	0.681	0.621	0.567	0.519
6	0.705	0.630	0.564	0.507	0.456
vii	0.665	0.583	0.513	0.452	0.400
8	0.627	0.540	0.467	0.404	0.351
9	0.592	0.500	0.424	0.361	0.308
ten	0.558	0.463	0.386	0.322	0.270

NPV Example

The post-obit example is computing the NPV of a projection at a discount rate of 12%. The project takes five years to complete with given benefits and costs for each year. In Year 0, there is no benefit to the organization, just an initial cost of $75,000 with no discount charge per unit. In Year 1, the discount rate is 89%. This means that at 12% causeless interest, the time value of coin says that the $ane today is worth $0.89 in one year, $0.lxxx in two years, etc. By calculating the NPV for the benefits and the costs, you subtract the NPV of all costs from the NPV of all benefits. The last outcome is a positive value of $105,175.

Table vii.3: Tabular array of NPV of costs and benefits.

ROI

Return on investment (ROI) is a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of dissimilar investments. It is one fashion of considering profits in relation to majuscule invested.

This is calculated by subtracting the project's costs from the benefits and then dividing by the costs. For example, if you invest $100 and your investment is worth $110 adjacent yr, the ROI is (110 − 100) ÷ 100 = 0.1 or a 10% render.

In our example: (306,425 − 201,175) ÷ 201,175 = 0.52, or a 52% return. That'south considered a nice return on investment.

Payback Analysis

Payback assay is important in determining the corporeality of time it will take for a projection to recoup its investments. This is the signal at which the benefits showtime to outweigh the costs. The best way to see that is by charting the cumulative benefits and costs. As y'all tin see in the example in Effigy vii.5, the cumulative benefits outweigh the cumulative costs in the second yr.

Effigy 7.5: Payback Analysis Chart

Projection Lease

A project lease, projection definition, or projection statement is a argument of the scope, objectives, and participants in a project. It provides a preliminary delineation of roles and responsibilities, outlines the project objectives, identifies the chief stakeholders, and defines the authority of the project manager. It serves as a reference of say-so for the future of the project.

The purpose of a project lease is to:

• Provide an agreement of the project, the reason it is being conducted, and its justification
• Found early on in the project the general telescopic
• Constitute the project manager and his or her dominance level. A note of who will review and approve the projection charter must be included.

Instance of a Projection Charter

Identification Section

Listing the project name, the date of the current version of the project charter, the sponsor's name and authorization, and the project managing director'southward name.

Example:

Project Proper name: Rice University Computer Store Creation

Project Sponsor: Jane Ungam, Facilities Manager

Date: January 12, 2010

Revision: 1

Project Manager: Fred Rubens

Overview of the Project

Provide a simple merely precise statement of the project.

Example: Rice Academy is planning to create a shop to sell computer supplies.

Objective

Land the objectives of the project clearly and ensure they comprise a measure of how to assess whether they have been achieved. The argument should be realistic and should follow the SMART protocol:

• Specific (get into the details)
• Measurable (apply quantitative language and then that yous know when you lot are finished)
• Acceptable (to stakeholders)
• Realistic (given project constraints)
• Time based (deadlines, not durations)

Example: The objective of this project is to implement a campus store that is prepare to sell estimator supplies such as memory sticks, mouse pads, and cables, when class starts in August 2010, with enough inventory to terminal through the first two weeks of classes.

Telescopic

Specify the scope of the project by identifying the domain or range of requirements.

Example: The scope of Rice's school supplies store project includes the activities listed below:

1. Determine what supplies volition be sold in the shop.
2. Establish competitive prices for the computer supplies.
3. Source and secure supply vendors.
4. Establish marketing, procurement, operations, and any other necessary departments, schools, centres, and institutes.

It is equally important to include in the scope what is not included in the project.

Instance: The scope of the project does not include:

• Evolution of any other school store departments
• Store design or structure

Major Milestones

Listing all major milestones needed to ensure successful project completion.

Case:

• All vendors selected
• Contracts or orders completed with all vendors
• Supplies delivered to the store
• Pricing determined

Major Deliverables

List and describe the major deliverables that will upshot from the project.

Example:

• Supplies procured
• Operations, procurement, marketing, and other teams established
• Shop supplies stocked and displayed
• Shop staffing completed, including work schedules
• Shop operations policies, including hours of operation, established

Assumptions

Outline the assumptions made in creating the project. An assumption is a fact you are unsure of simply can either confirm at a afterward fourth dimension or are but stating then that the project can proceed equally if the statement were truthful.

Example:

• Only estimator supplies volition be sold in the store.
• Customers will be the Rice University student body and faculty.
• Rice Academy students volition manage the project and exist responsible for ongoing operations.
• A store sponsor from the university faculty or staff will be assigned to mentor students and provide oversight.
• Store hours of functioning will be approved by the Rice Academy students or shop sponsor.
• Supplier deliveries will be arranged or the store sponsor will option them upwards with students.
• Students will exist empowered to contact vendors for order placement and inquiries via telephone.

Constraints

Define whatsoever and all constraints on the project or those working on the project. This is an important part of the projection charter. A constraint is anything that limits the range of solutions or approaches.

Example:

• Student availability to meet for project planning is limited to school hours.
• Software is not available for project planning and command.

Business Demand or Opportunity (Benefits)

Provide a curtailed statement of the business demand or opportunity that led to the creation of the project. Why was it created?  What are the benefits? How does the project contribute to organizational objectives?

Example: The goal of this project is to provide income for the Rice Student Centre while supplying necessary items to students and kinesthesia at competitive prices. The school store volition be a convenience to students since necessary supplies will be available on campus. This will help students learn to manage their personal supplies.

Preliminary Price for the Projection

Provide a statement indicating how the cost of the project will be divers and controlled.

Example: The procurement squad volition assemble a proposal based on expected costs for review by the Dean of Undergraduate Studies.

Projection Risks

A risk is anything uncertain that may occur that will reduce or subtract the chances of project success.

Instance:

1. There is a land election coming and the new government may change the tax rules for private university retail outlets.
2. The cloud is changing student demand for media such every bit flash drives in somewhat unpredictable ways. If this happens faster than we forecast, we may exist edifice a store that students don't demand.
3. Deliveries of store shelves, etc. will be delayed if a major hurricane occurs.

Projection Lease Acceptance

Provide the names, titles, and signature lines of the individuals who will sign off on the project lease.

Projection Stakeholders

Provide the fundamental stakeholders and squad members past office, name, and role.

Role	Name	Part
Projection Director	Monica Styles	Leads the project
Sponsor	Adrienne Watt	Project sponsor
etc.

Prototype Descriptions

Figure 7.3 epitome description: A chat between an office manager and a contractor.

Office manager: Not only did you pigment my office walls blueish, just you painted the ceiling blue as well.

Contractor: You asked me to paint the room blue, and at present you've got a blue room.

Part manager: But the ceiling is oppressive! Ceilings should never exist the same colour equally the walls. They should always be a lighter colour.

Contractor: You asked for a blue room. You're lucky I didn't paint the floor blueish equally well.

[Return to Figure 7.3]

Figure seven.4 image description:

Weighted Decision Matrix for Game Delivery Organization

Criteria	Weight	SJS Enterprises	Game Access	DVD Link
Educational	15%	90	0	0
Sports-related	15%	xc	90	xc
Secure payment area with the ability to employ Payplay, banking concern payments, cheques, and school payment systems equally a payment source.	10%	ninety	50	50
Live Support	15%	ninety	0	0
Search Option	5%	50	50	xxx
Games bachelor for all platforms currently on the market including school learning systems.	ten%	60	30	xxx
Longer rental periods (1 to 2 weeks)	5%	40	20	40
Sidebar with categories, such as most popular, multiplayer, and just released.	5%	fifty	50	20
Registered customers must be able to order the videos, track delivery, return videos, and exist able to provide reviews of views.	x%	l	30	30
Age/form appropriate section (can isolate sure games to certain ages or grade levels)	10%	70	5	0
Weighted project scores:	100%	75.4	31	29

[Return to Figure seven.four]

Text Attributions

This chapter of Project Direction is a derivative of the post-obit works:

• Project Management by Merrie Barron and Andrew Barron. © CC Past (Attribution).
• Decision Matrix Method, Projection Charter, and Cyberspace Present Value by Wikipedia. © CC By-SA (Attribution-ShareAlike).

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Source: https://opentextbc.ca/projectmanagement/chapter/chapter-7-project-initiation-project-management/

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