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Topic3 FSPMS23

The document summarizes key aspects of project integration management and financial considerations for selecting projects. It discusses methods for evaluating potential projects, including net present value analysis, return on investment, and payback period. It also covers developing a weighted scoring model to systematically evaluate projects based on criteria like organizational needs, costs, and financial benefits. Critical success factors and developing a feasibility study/business case are also summarized as important parts of project selection and integration management.

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k191292 Hassan Jamil
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58 views

Topic3 FSPMS23

The document summarizes key aspects of project integration management and financial considerations for selecting projects. It discusses methods for evaluating potential projects, including net present value analysis, return on investment, and payback period. It also covers developing a weighted scoring model to systematically evaluate projects based on criteria like organizational needs, costs, and financial benefits. Critical success factors and developing a feasibility study/business case are also summarized as important parts of project selection and integration management.

Uploaded by

k191292 Hassan Jamil
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

2/9/2023

Project Integration Management


• Project integration management involves coordinating all of
the other project management knowledge areas throughout a
Project Initiation project s life cycle.
• Project Integration Management Summary:
& Integration
Topic # 3
Chapter 4 – Schwalbe

Financial Considerations for


Methods for Selecting Projects
Selecting Projects
• Focusing on broad organizational needs • Three primary methods for determining the
• Categorizing IT projects (Problems, projected financial value of projects include
Opportunities and directives) – Net Present Value (NPV),
• Performing net present value or other – Return on investment (ROI) and
financial analysis – Payback period.
• Using a weighted scoring model
• Implementing a balanced scorecard

Net Present Value (NPV) Payback Analysis


• NPV is a method of calculating the expected • Payback analysis – a technique for
net monetary gain or loss from a project by determining if and when an investment will
discounting all expected future cash inflows pay for itself.
and outflows to the present point in time. • Payback period – the period of time that will
• The time value of money recognizes that a lapse before accrued benefits overtake
dollar today is worth more than a dollar one accrued and continuing costs.
year from now.

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2/9/2023

Present Value Formula Payback Analysis for a Project


Present value – the current value of a dollar
at any time in the future.

PVn = 1/(1 + i)n


Where n is the number of years and i is the discount rate.

Discount rate – a percentage similar to interest rates that


you earn on your savings.
In most cases the discount rate for a business is the opportunity cost
of being able to invest money in other projects or investments

Return-on-Investment Analysis Weighted Score Model – Selecting


(ROI) Projects
• A weighted scoring model is a tool that provides a
Return-on-Investment (ROA) analysis – a systematic process for selecting projects based on
technique that compares the lifetime many criteria.
profitability of alternative solutions. • These criteria can include factors such as meeting
broad organizational needs; addressing problems,
The ROI for a solution or project is a percentage rate that measures opportunities, or directives; the amount of time it
the relationship between the amount the business gets back from an
investment and the amount invested.
will take to complete the project; the overall priority
of the project; and projected financial performance
Of the project.
Lifetime ROI = (estimated lifetime benefits –
estimated lifetime costs) / estimated
lifetime costs

Annual ROI = lifetime ROI / lifetime of the


system

Example- Weighted Score Model Business Drivers


• Business Driver: The root cause(s) for the project
development.
• Business drivers are the crucial forces behind the successful
development of a project.
• As the result one can define the business case for sustainable
project development.

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2/9/2023

Feasibility Study or Project


Critical Success Factors
Justification – Business Case
• Critical success factors (CSFs), also known as Key Results Areas • Introduction & Background to the proposal
(KRAs), refer to the activities that must be completed to a high • The market
standard of quality in order to achieve the goals of your project.
• Organization & Operational Infrastructure
• CSFs are a way to prioritize certain tasks as the project plan is being
executed. • Benefits
• Having clear CSFs helps the project team clarify what needs to be • Outline implementation Plan
worked on first or needs special attention, allowing people to work • Costs
together to achieve the project’s main objectives.
• The financial case
• Risks

END OF TOPIC 3

-COMING UP!!!!!!
-Organization Structures
-Project Scope Management
-WBS

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