CHAPTER 2:

PROJECT INITIATION
 Structure

2.1. Project Identification

2.2. Project Selection
2.3. Project Organizational Structure and Personnel
 PROJECT IDENTIFICATION
Identify the scope of the project (the objectives, tasks
and outcomes of a project)
 Info needed?
- Situation
- Objectives/Goals (SMART rule)

3
 Define (Identify) the project
What? - What are we working on? What are the major deliverables and goals?
Why? - Why are we starting this project? What is the problem that this project will
address or solve?
Who? - Who will be involved in the project and what will be their responsibilities?
When? - When should the project start and end? What are the milestones?
Where? Where should the project run?
How? How to do?

4
5W1H-5M

6
 Practice 2.1
Present a project idea by using 5W1H tool in 1 minute (related to Group
Assignment 1)

7
 PROJECT SELECTION
1. Definitions
2. Project Selecting Models
3. Project Proposal vs. Project Charter
 Project selection - Definition
Project selection is the process of evaluating
proposed projects or groups of projects and then
choosing to implement some sets of them that
best meets the strategic goals of the
organization.
 Project Selection Models
To prepare for project selection
The nature of project selection models
Types of project selection models
 To prepare for
project selection
 To prepare for project selection
Finalize a detailed list of firm’s goals (SMART
rule)
Evaluate the importance of each goal in the
relationship with other goals (weighted)
Identify the expected contribution of each project
to each goal.
A project is selected or rejected because it is
predicted to have certain outcomes, if implemented,
which contribute to goal achievement.
 Objective
“ Our company should aim to become bigger in the future and dominate the
market we sell our products in”
 Is this a clear and effective company objective?
 The relationship btw the corporate goal and
the project

CORPORATE GOALS PROJECTS

Maintain market share in some markets. Product advertising project

Improve the image of your business with a New product research and
group of customers or competitors. development project
Add new product lines or add new lines of Production expansion project
business.
Equipment renovation project
Limit the seasonal impact of business
activities. Training project to improve the
qualifications of employees
Maintain jobs for certain groups of workers.
Market research project
Maintain system operation at or above a
certain capacity level. Project to recruit key leadership
positions
 The Nature of Project Selection Models
We seek a model to help us in making project selection
decisions.
Models turn inputs into outputs
Managers decide on the values for the inputs and
evaluate the outputs
The inputs never fully describe the situation
The outputs never fully describe the expected results
Models are tools
Managers are the decision makers

2-35
 Types of Project Selection
Models
Nonnumeric models
◦ No numeric values

Numeric models
◦ a numeric value for a project (that can be easily compared with other projects)

2-38
 Nonnumeric Models
Models that do not return a numeric value for a project to be compared
with other projects
These are really not “models” but rather justifications for projects
Just because they are not true models does not make them all “bad”

2-39
 Types of Nonnumeric Models
Sacred Cow
◦ A project, often suggested by the top management
Operating Necessity
◦ A project that is required in order to protect lives or property or
to keep the company in operation
Competitive Necessity
◦ A project that is required in order to maintain the company’s
position in the marketplace
Comparative Benefit
◦ Projects are subjectively rank ordered based on their
perceived benefit to the company

2-40
 Q-Sort Method
Projects to be divided in to three groups: good, fair,
poor (according to their relative merits).
If any group has more than eight members, it is
subdivided into two categories, such as fair-plus and
fair-minus.
When all categories have eight or fewer members, the
projects within each category are ordered from best to
worst. Again, the order is determined on the basis of
relative merit.

2-41
 Q-Sort Method Practice
1. All suggested ideas will be assembled on the deck.
2. Divide the deck into 2 piles: one represents High priority,
one represents Low priority (for the chance of undertaking this
idea)
3. Take sticky notes from these two piles to make a third pile
representing the Medium level.
4 Divide High priority to Very high and High piles. Do the same
to Low level.
5. Select the most suitable project.
6. Each member speaks out their choice and persuade the
others about the choice.
7. The whole team makes discussion and picks 1 best project.

2-42
 Numeric Models
Models that return a numeric value for a project that can be easily
compared with other projects
Major types
◦ Profit/profitability
◦ Scoring

2-43
 Numeric Models:
Profit/Profitability
Models that look at costs and revenues
◦ Payback period (PP)
◦ Net present value (NPV)
◦ Internal rate of return (IRR)
◦ Profitability index (PI)
◦ Discounted payback period (DPP)

NPV and PP are the more common methods

2-44
 Payback Period
The length of time until the original investment has been recouped by
the project
A shorter payback period is better

2-45
 Payback Period Example
• If annual cash is equal:
Project Cost
Payback Period 
Annual Cash Flow

$100,000
Payback Period  4
$25,000
2-47
 • If annual cash flow are not the same, using the formula:

t
|  CFi |
PP  t  i 0
CFt 1
t: year nearly full recovery
 How to use PP?

• How long it will take for the investment to pay back the initial
cost?
• In project selection
- PP < target payback  accept
- PP > target payback  reject
• In alternative-projects selection
Choose the shortest PP
 Exercise 3 (PP)
Assume NEM company is deciding between two machines
(Machine A and Machine B) in order to add capacity to its garment
plant. The company estimates the cash flows for each machine to
be as follows:
Table3: Expected after-tax cash flows for the new machines
Year 0 1 2 3 4 5
Machine A -5000 500 1000 1000 1500 2500
Machine B -2000 500 1350 1500 1500 1500

Calculate the PP of the two machines using the above cash flows
and decide which new machine NEM should accept. Assume the
target payback period the company establishes is 5 years.
 Answer 3 (PP)
PP of Machine A = 4 + 1000/2500 = 4.4 years
PP of Machine B = 2 + 150/1500 = 2.1 years
t
|  CFi |
PP  t  i 0

t: year nearly full recovery

CFt 1
 Exercise 2 (PP)
Year 0 1 2 3 4

Machine C -100 90 90

Machine D -150 70 72 70 70

CALCULATE THE PP OF THE TWO MACHINES USING THE

ABOVE CASH FLOWS AND DECIDE WHICH NEW MACHINE THE
COMPANY SHOULD ACCEPT;
 Payback Period Drawbacks
Does not consider time value of money
More difficult to use when cash flows change over time
Less meaningful for longer periods of time (due to time value of
money)

NOTE: Discounted pay back period

2-53
 Discounted Cash Flow
The value of a stream of cash inflows and outflows in today’s dollars
Also known as discounted cash flow or just discounting
Widely used to evaluate projects
Includes the time value of money
Includes all inflows and outflows, not just the ones through payback
point

2-54
 Discounted Cash Flow (2)
Requires a percentage to use to reduce future cash flows
◦ This is known as the discount rate

There will usually be one overall discount rate for the company

2-55
 NPV Formula

𝑛
𝐶𝐹𝑡
NPV (project) = 𝐴0 + ෍ 𝑡
1+𝑘
𝑡=1

2-56
 Net present value
”The difference between the
present value of total revenue and
that of total investment; or the
present value of total cash flow
of the project".
 n n
1 1
NPV   TRi   TC
(1  r ) i 0 (1  r )
i i i
i 0

n
1
NPV   CFi
i 0 (1  r ) i
 NPV
CF1 CF2 CFn
NPV  CF0    ... 
(1  r ) (1  r ) 2
(1  r ) n

CF 0 : T HE I N I T IAL I N V ESTMENT
CF 1 , CF 2 . .,CF N: CA S H I N F LOW
R : WACC
 How to use NPV?
• IS PROJECT PROFITABLE?
• IN PROJECT SELECTION
- NPV>0  accept
- NPV<0  reject
• IN ALTERNATIVE -PROJECTS SELECTION
CHOOSE THE BIGGEST NPV
 Exercise 1 (NPV)
ASSUME NEM COMPANY IS DECIDING BETWEEN TWO
MACHINES (MACHINE A AND MACHINE B) IN ORDER TO
ADD CAPACITY TO ITS GARMENT PLANT. THE COMPANY
ESTIMATES THE CASH FLOWS FOR EACH MACHINE TO BE
AS FOLLOWS:
TABLE3: EXPECTED AFTER -TAX CASH FLOWS FOR THE NEW
MACHINES

Year 0 1 2 3 4 5
Machine A -5000 500 1000 1000 1500 2500
Machine B -2000 500 1350 1500 1500 1500
CALCULATE THE NPV OF THE TWO MACHINES USING THE
ABOVE CASH FLOWS AND DECIDE WHICH NEW MACHINE
NEM SHOULD ACCEPT; R=8%
 CF1 CF2 CFn
NPV  CF0    ... 
(1  r ) (1  r ) 2
(1  r ) n

NPV(A) = -81.8 < 0

NPV(B) = 2934 > 0
NPV: Pros and cons
• Use time value of money
• Use the timing of cash flows
• Target of profit

• Useless to compare with different

scale of projects
 Exercise 2 (NPV)
Year 0 1 2 3 4

Machine C -100 90 90

Machine D -150 70 70 70 70

CALCULATE THE NPV OF THE TWO MACHINES USING THE

ABOVE CASH FLOWS AND DECIDE WHICH NEW MACHINE THE
COMPANY SHOULD ACCEPT; R=8%
 ANSWER 2 (NPV)
NPV(C) = 60.5
NPV(D) = 81.8
 Profitability index (PI)

Vu, T. K. O. & Nguyen T. V. H.,

”the ratio between the present
value of total revenue and that of
total investment”.
 Profitability index
n
1
 TRi
(1  r ) i
NPV
PI  n
i 0
 1 n
1 1
i 0
TCi
(1  r ) i i 0
TC i
(1  r ) i
 How to use PI?
• IS PROJECT PROFITABLE?
• IN PROJECT SELECTION
- PI>1  accept
- PI<1  reject
• IN ALTERNATIVE -PROJECTS SELECTION
CHOOSE THE BIGGEST PI
 Exercise 1 (PI)
Year 0 1 2 3 4

Machine C -100 90 90

Machine D -150 70 70 70 70

CALCULATE THE PI OF THE TWO MACHINES USING THE

ABOVE CASH FLOWS AND DECIDE WHICH NEW MACHINE THE
COMPANY SHOULD ACCEPT; R=8%
PI: Pros and cons
• Use time value of money
• Use the timing of cash flows
• Useful to compare with different
scale of projects

• Not determine the profit of project.

 Internal rate of return (IRR)

Vu, T. K. O. & Nguyen T. V. H.,

”the rate of return at which total
revenue is equal to total
investment”.
 Internal Rate of Return

IRR

NPV Interest Rate

 IRR is the interest rate at which the project has NPV

 Select the project with highest NPV
 Internal rate of return
n n
1 1
NPV   TRi   TCi 0
i 0 (1  IRR ) i 0
i
(1  IRR ) i

CF1 CF2 CFn

CF0    ...  0
(1  IRR) (1  IRR) 2
(1  IRR) n
 How to use IRR?
• IS PROJECT PROFITABLE?
• IN PROJECT SELECTION
- IRR>r  accept
- IRR<r  reject
• IN ALTERNATIVE -PROJECTS SELECTION
CHOOSE THE BIGGEST IRR
 Exercise 1 (IRR)
Year 0 1 2 3 4

Machine C -100 90 90

Machine D -150 70 70 70 70

CALCULATE THE IRR OF THE TWO MACHINES USING THE

ABOVE CASH FLOWS AND DECIDE WHICH NEW MACHINE THE
COMPANY SHOULD ACCEPT
IRR: Pros and cons
• Use time value of money
• Use the timing of cash flows
• Without r

• Useless to compare with different

scale and period of projects.
 Advantages of Profitability
Models
Easy to use and understand
Based on accounting data and forecasts
Familiar and well understood
Gives a go/no-go indication
Can be modified to include risk

2-79
 Disadvantages of Profitability
Models
Ignore nonmonetary factors
Some ignore time-value of money
Biased toward the short-term
Payback ignores cash flow after payback
IRR can have multiple solutions
All are sensitive to errors
Nonlinear
Dependent on determination of cash flows

2-80
 Numeric Models: Scoring
Unweighted 0–1 factor model
Unweighted factor model
Weighted factor model

2-82
 Unweighted 0-1 Factor Model
Factors selected
◦ Listed on a preprinted form

Raters score the project on each factor

Each project gets a total score

2-83
Unweighted 0-1 Factor
Model Example

2-84
 Unweighted 0-1 Factor Model
Adv and Disadv?
Main advantage is that the model uses multiple criteria
Major disadvantages are that it assumes all criteria are of equal
importance

85
 Unweighted Factor Scoring
Model
Replaces X’s with factor score
◦ Typically a 1-5 scale (or 0-5 scale)

Column of scores is summed

Projects with high scores are selected

2-86
 Project selection - Exercise
The following are competing alternative projects with corresponding cash flows (unit: USD
1,000)
Question:
1. Please calculate the corresponding PP, NPV, PI, IRR of the three.
2. Please advise the investors which project should be invested in, and why? Provided the
expected rate of return is r=10%.

Year 0 1 2 3 4 5 6 7 8 9 10
Project A - 1,000.00 505.00 505.00 505.00
Project B - 10,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 12,000.00
Project C - 11,000.00 2,650.00 2,650.00 2,650.00 2,650.00 2,650.00 2,650.00 2,650.00 2,650.00 2,650.00 2,650.00

87
Project Selection – Exercise
Unweighted Scoring

Total
PP NPV PI IRR Ranking
Score
A

88
 Project Selection – Exercise
NPV
IRR PI DPP (year) C (USD1000) n (year)
(USD1000 )
A 255.86 24.04% 1.26 2.33 1,000.00 3

B 5,334.93 20.00% 1.53 7.05 10,000.00 8

C 3,137.55 17.43% 1.29 5.64 11,000.00 8

89
 Scale for each factor
Scale for NPV?
Scale for IRR?
Scale for cho PI?
Scale for cho T?
 Unweighted Factor Model
Adv and Disadv
Each factor has a scale to rank the important level.
Each factor is weighted the same
Less important factors are weighted the same as important ones
Easy to compute

2-91
 Weighted Factor Scoring
Model
1. A set of criteria on which to judge the value of any
project;

2. A numeric estimate of the relative importance (i.e.,the “weight”) of each

criterion in the set;

3. Scales by which to measure or score the performance or contribution–to–

value of each criterion.

2-92
 Weighted Factor Scoring
Model
Each factor is weighted relative to its importance
◦ Weighting allows important factors to stand out
A good way to include nonnumeric data in the
analysis
All weights must be set up, so higher values mean
more desirable

2-93
 The weighted factor scoring model
When numeric weights reflecting the relative importance of each
individual factor are added, we have a weighted factor scoring model. In
general, it takes the form

where
Si the total score of the ith project,
Sij the score of the ith project on the jth criterion, and
Wj the weight of the jth criterion.
Weighted Factor Model
Example
To choose an automobile

2-98
Weighted Factor Model Example
Choice of an automobile

2-99
 Weighted Factor Model
Example
To choose an automobile

Criteria Weights Points of car 1 Points of car 2

Appearance 0.1 4 3
Braking 0.07 3 2
Comfort 0.18 4 4
Cost, operating 0.12 2 2
Cost, original 0.24 3 2
Handling 0.17 5 2
Reliability 0.12 3 3
Total 1 ? ?

2-101
 Project Selection – Exercise
NPV
IRR PI DPP (year) C (USD1000) n (year)
(USD1000 )
A 255.86 24.04% 1.26 2.33 1,000.00 3

B 5,334.93 20.00% 1.53 7.05 10,000.00 8

C 3,137.55 17.43% 1.29 5.64 11,000.00 8

102
Factor Scores (weighted)
NPV IRR PI DPP Total Ranking

103
Analytic Hierarchy Process (AHP)
method

104
AHP Example

105
• Decision scenario
• The company, founded in 1960, makes specialized industrial equipment. Its future success will depend
on maintaining the strength of its older product lines and on generating a constant flow of new ones.
The company's founder is retiring soon, and a consulting firm has developed a detailed plan for
continuing its success in his absence. The plan will take five years to implement, and will replace the
founder's highly subjective "seat of the pants" style with a more carefully thought out way of doing
business.

• The board of directors needs to choose someone to lead the company through the change and
upheaval that implementing the consultant's plan will involve. In doing this work, the new leader will
be required to make many unpopular decisions and take many unpopular actions. He or she will be
expected to “clear the air” by stepping aside after the plan is fully implemented.

• Six months ago, the board said:

• After much thought and discussion, we have identified four criteria to be used in choosing the person
to guide us through the upcoming period of change: experience, education, charisma and age.
Experience is important because the job requires skills and knowledge that can only be developed
through practical application. And though our beloved founder was a self-made man who didn’t finish
high school, the times demand that our new leader have an appropriate university education. Since
the new leader will have to keep us all motivated during a difficult period of change, we prefer
someone with an active, charismatic leadership style. Finally, the new leader's Age is important
because he or she will need to have an appropriate career path after stepping down five years from
now. — Board of directors, letter to employees and shareholders

• Last week, they said:

• After an extensive search, we have selected three candidates for this very challenging position. All are
presently executives with the company. Choosing among them will be difficult, but we plan to
announce our decision shortly. — Board of directors, followup letter to employees and shareholders

106
AHP example
3 candidates
Decision hierarchy
Pairwise comparison
 AHP- Example
1. Candidate’s comparisons on each criterion
Experience
Here is the Board's thinking about experience:

The leader will implement a wide-ranging plan that involves major changes to a
successful business. This work requires skills, knowledge, wisdom, and judgment
that are usually present only in seasoned executives. Furthermore, the company is
so complex and specialized that only direct experience inside it can equip a
prospective leader for his job. Outside experience is also important, since it
provides perspective and a view of the larger picture. — Board of Directors, Internal
Memorandum
AHP Priorities calculation:
https://bpmsg.com/ahp/ahp-calc1.php?t=AHP+priorities&n=3&new=Go
 AHP – Example
Education

Now the Board needs to evaluate the candidates with respect to Education. Here is
their thinking on the subject:

The leader needs to have a good education, preferably with a recent MBA or
engineering degree. Our founder is a self-made man who didn’t finish high school.
He created a successful company that relies strongly on his personal insights and
“seat-of-the pants” judgment. But when he retires and we move into a more complex
future, we need to become more thoughtfully run. Having an educated leader is
vitally important to this. Education is also important because our employees,
particularly the technical staff, are hungry to have it in their leader. Though they love
and respect “the Old Man,” they have often been frustrated by his lack of
appreciation for today's tools of business, engineering, and manufacturing. — Board
of Directors, Internal Memorandum
AHP – Example
Education
 • Charisma:

The Board's next step is to pairwise compare the Alternatives

(candidates) with respect to Charisma. Here's what they have to say
about it:

As implementation of the plan proceeds, the leader will need to

overcome people’s natural resistance to change. We think he will
often need to wield influence on the basis of his personal charm and
appeal, rather than on talk, logic, or authority alone. We have called
this charm and appeal “charisma”. It will be an important factor in
the leader’s ability to implement the plan. — Board of Directors,
Internal Memorandum
• Charisma:
Age
The Board has said this about Age:

The leader will be expected to step down five years from now. For his benefit
and ours, we need to consider how old he will be at that time. If he is at or
near retirement age, he can just retire, possibly remaining with us in a
consulting capacity. If he is younger, he will have more years to work, but
there will likely be no place for him in our company. Based on his success as
our leader, he might or might not be easily employable elsewhere. He could
possibly join a competitor and take key people with him, in spite of any non-
compete agreements we might negotiate. The leader's age also affects his
ability to interact with our workforce. Many of the people involved with our
important legacy products are over age 55. Most of those connected with our
newer products are in their 20s and 30s. It is important that the leader is able
to relate to both these age groups, and that they are able to accept his
leadership. — Board of Directors, Internal Memorandum
• Age: Tom 50, Dick 60, Harry 30
2. Compare Criteria to the Goal
3. Synthesizing final priorities
4. Find the most suitable candidate
 Practice
A student wants to buy a laptop. Make research and give him the advice to
choose the most suitable one.
 Case study scenario
Goal: Buy a laptop
Detailed scenario: ?
 Criteria
What criteria to use?
How to measure or make assessment on each criterion?
Criteria

Laptop
purchase
Cretiria measurement
Suggested laptops (Alternatives)
 AHP
Goal

Criteria

Laptops
Pairwise comparisons
Priorities calculation
 Final priorities
Laptop Tổng

Total 1.0000
 Group Assignments
No. Topics Groups Note

1 Select a Korean actor for a romantic movie

2 Select a birthday gift for your crush
3 Select a restaurant for “1 year in love” anniversary
4 Select a cell phone
5 Select a part-time job
6 Select a plan after graduating
7 Select an IELTS/TOEFL centre
8 Select a singer to attend 20/11 music show in FTU

9 Select a lecturer instructor for graduation thesis

 Yêu cầu
Yêu cầu Kết quả cần đạt được Điểm (/10)
Thảo luận theo nhóm để đưa ra tình huống Mô tả tình huống và xác định 1,5
cụ thể, từ đó xác định mục tiêu của dự án. Mục tiêu của dự án

Thảo luận theo nhóm để xác định các tiêu Bảng Các tiêu chí đánh giá dự 1
chí đánh giá dự án cho phù hợp với mục tiêu án kèm giải thích lý do chọn
Thảo luận nhóm để xác định các chỉ tiêu cụ Bảng các chỉ tiêu cụ thể, giải 0,5
thể để đo lường mỗi tiêu chí, nguồn để tìm thích tại sao chọn và vai trò của
kiếm thông tin cho từng chỉ tiêu mỗi chỉ tiêu, nguồn thông tin
của từng chỉ tiêu
Thảo luận nhóm về các phương án Bảng danh mục các phương án 1
(alternatives) đề xuất để lựa chọn, thu thập cần xem xét và các thông tin
thông tin có liên quan đến các chỉ tiêu đánh liên quan đến từng chỉ tiêu của
giá của từng phương án (ít nhất 3 phương mỗi phương án
án)
Thảo luận nhóm về thang đo cho các chỉ Thang đo giải thích rõ từng 0,5
tiêu/tiêu chí (tham khảo thang đo của AHP) mức hoặc khoảng điểm
 Yêu cầu (tiếp)
Yêu cầu Kết quả cần đạt được Điểm (/10)
Thảo luận nhóm về việc tính điểm của Bảng tổng kết điểm của các cặp đôi phương án 1,5
từng tiêu chí cho từng phương án theo từng tiêu chí kèm giải thích tại sao cho điểm
theo phương pháp so sánh cặp đôi như vậy.
các phương án, tính toán điểm cho Ma trận điểm của các phương án theo từng tiêu
các phương án. chí.
Bảng tổng kết điểm của từng phương án theo
từng tiêu chí (kèm file excel tính toán trọng số)
Thảo luận nhóm về việc tính trọng số Bảng tổng kết điểm của các cặp đôi tiêu chí theo 1
của từng tiêu chí trong việc thực hiện mục tiêu kèm giải thích tại sao cho điểm như vậy.
mục tiêu theo phương pháp so sánh Ma trận điểm của các phương án theo từng tiêu
cặp đôi các tiêu chí, tính toán điểm chí.
cho các phương án. Bảng tổng kết điểm của các tiêu chí cho từng
phương án. (kèm file excel tính trọng số)
Tính điểm có trọng số của từng tiêu Bảng tổng kết điểm có trọng số của từng phương 0,5
chí cho từng phương án và tổng kết án theo từng tiêu chí và tổng điểm
điểm có trọng số của từng phương án
Thảo luận nhóm đưa ra kết luận về Kết luận chọn phương án nào, giải thích tại sao 0,5
việc lựa chọn phương án nào
Tổng hợp sơ đồ AHP Sơ đồ AHP 0,5

Thảo luận để xây dựng đề xuất dự án Đề xuất dự án 1,5

Điểm thưởng cho việc tuân thủ đúng các yêu cầu về nội dung và hình thức 0,5
 2.4. Project Proposal
… is a set of documents submitted for evaluation.
… may be brief or extensive, formal or informal.
 2.4. Project Proposal
(1) the technical approach;
(2) the implementation plan;
(3) the plan for logistic support and administration;
(4) past experience.
 Project Proposal
OVERVIEW
OBJECTIVES
ACTIVITIES + indicative time frame
OUTPUTS
BUDGET
Beneficiaries
 Project Proposal example
ATIMS Project Submission Form

April, 2002

UNESCO

Support to Education Sector in Afghanistan

Project Proposal

Project Title: Promoting Literacy, Youth and Adult Education

Region: South Asia

Sector: Education Sector

Country: Afghanistan

Estimated start date: 01/05/ 2002

Estimated end date: 30/04/2003 (Year One), 30/04/2004 (Year Two)

Executing Agency: UNESCO

National implementing

agency: Non-Formal Education Department, Ministry of Education

Sector: Education

Sub-sectors: Capacity-building, drug control, environment, gender, HIV/AIDS, human rights, governance, peace-building

Estimated budget Year One: $700,000; Year Two: $700,000; Total:$1,400,000

 Project charter
A project charter is a formal, typically short document that describes your
project in its entirety — including what the objectives are, how it will be
carried out, and who the stakeholders are. It is a crucial ingredient in planning
the project because it is used throughout the project lifecycle.

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 Project charter
Purposes
Objectives
Overview
Schedule
Resources
Personnel
Risk management Plan
Evaluation Methods
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Project charter
Website Redesign
 Project Charter
Part 2: Project details
◦ Project Description
◦ Project Purpose
◦ Project Goals & outcomes
◦ Project Scope
◦ Project Deliverables
◦ Benefits
◦ Stakeholders
◦ Constraints / Risks
◦ Assumptions
◦ Project Team
◦ Budget Requirements
◦ Key Dependencies
◦ Communication Plan
◦ Project Timeline
2.3. Project Organizational
Structure and Personnel
 Traditional Forms of
Organization
1. Functional
2. Projectized
3. Matrix
4. Composite

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 Projects in a Functional Organization

CEO

Customer
Production Marketing Sales
Service
Department Department Department
Department

Project A Project B
 Projects in a Functional Organization

Make it a part of one of the functional divisions

◦ More than one choice may exist
◦ if the project needs resources from some of the other functional areas, they
are expected to
help support the project.
◦ Another way is to assign the work to all divisions with the top management
overseeing the effort

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Advantages
Maximum flexibility in the use of staff
Experts can be utilized by many different projects
Specialists can be grouped to share knowledge and experience
Functional division serves as a base of technological continuity
Functional division contains the normal path of advancement

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Disadvantages
Client is not the focus of the activity
Functional units tend to be oriented toward the
activities of that particular function
No individual is given full responsibility
Response to client needs is slow and arduous
Tendency to suboptimize the project
Motivation tends to be weak
A holistic approach to the project is not facilitated

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Projects in a Projectized Organization

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Advantages
Project manager has full authority
All members report to the project manager
Short lines of communication
When there are similar projects, expertise can be
retained
Strong and separate identity
Swift decisions
Unity of command
Structurally simple and flexible
Supports a holistic approach

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Disadvantages
Duplication in staffing
Stockpiling
Workers tend to fall behind in other areas of their technical
expertise
Inconsistency in policies and procedures
A project takes on a life of its own
Worry about life after the project is over

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 Projects in a Matrixed
Organization
Matrixed project organization
◦ Keeps desirable features of both standalone and functional projects
◦ Avoids some of the disadvantages of each type

It is a combination of standalone projectized and functional organization

structures
Can take on a variety of specific forms

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Strong Matrix

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Advantages
The project is the point of emphasis
The project has access to the entire organization for labor and
technology
Less anxiety about what happens when the project is completed
Response to client needs is rapid
Access to administrative units of firm
Better balance of resources
Great deal of organizational flexibility

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Disadvantages
Power balance is delicate
Projects compete for resources
Projectitis is still a serious disease
Division of authority and responsibility is complex
Matrix management violates the management principle of unity of
command

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Projects in Composite Organizational Systems

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Selecting a Project Form
Firms typically do not set out to pick an organizational form
Rather, the structure evolves over time
The structure is not static
Rather, it changes as the organization, its goals, and its environment
changes

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Functional Form Best for…
In-depth application of a technology
Large capital investment, especially when that investment is
concentrated in one functional area

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Project Form Best for…
Handling a large number of similar projects
Handling a one-time project that requires much control, but is not
focused on one functional area

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Matrix Form Best for…
Projects that require inputs from several functional areas
Projects that use technology from several functional areas

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The Project Management Office
No project has ever been completed precisely
as it was planned
Successful execution of a project is a complex
managerial task
◦ Requires the use of planning, budgeting, scheduling,
and control tools
◦ Contractual, administrative, and reporting duties
must be performed in accord with the law

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Purposes of the Project Management Office
Establish project administrative procedures
Ensures the firm’s project portfolio supports its overall goals and
strategies
Gradual assimilation of project management practices into the entire
firm
Facilitator of projects, not the doer of projects

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Forms of Project Management Office
Information center
Establish procedures and practices
Establish a resource database and monitor inter-project dependencies

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Tasks of the Project Management Office
Establish and enforce good practices
Improve maturity
Improve project management systems
Offer training
Help with administrative details
Establish a process for dealing with risk
Determine if a project is a good fit
Identify impact of changes on projects

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Tasks of the Project Management Office (2)
Conduct project reviews and audits
Maintain and store project archives
Serve as a champion to pursue project management
Serve as a home for project managers
Collect and disseminate lessons learned
Assist in project termination

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Five Steps for PMO Success
1. Identify quantifiable measures to prove accomplishments
2. Set a realistic time frame for results
3. Have resources needed to achieve goals
4. Establish credibility throughout the organization
5. Get the best people for the PMO

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 Project Manager and Project Team
Project Manager: Meredith and Mantel, “Project
management A managerial approach,” p. 118-184
Project Team
Team Requirements
Skills needed ?
Individuals identified ?
When are they needed ?
Where are they ?
Training needed ?
Interpersonal compatibility ?
The Project Team
Systems architect
Development engineer
Test engineer
Contract administrator
Project controller
Support services manager

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The Project Manager
The project manager can be chosen and installed
as soon as the project is selected for funding
◦ This simplifies several start up activities
The project manager can be chosen later
◦ This makes things difficult
Senior management briefs the project manager
Project manager begins with a budget and
schedule
◦ As people are added these are refined

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 Discussion
What make a good project manager?

(Write down three attributes of a good Project Manager)

Pros and cons of being a PM?

Responsibilities of a PM?

Skills of a PM?
Leadership Research
Conducted by PMI
Six skills identified for a project manager to become a leader:
◦ 29% - communication
◦ 26% - understanding people
◦ 16% - strategic
◦ 12% - requirements gathering
◦ 12% - leadership
◦ 5% - time management

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Unofficial Job duties for a PM
B…
S….
T…
F…

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 Conclusion – 8 key tips
1. Care about everything; dwell on nothing.
2. Don’t wait to be told to do something.
3. Develop a keen understanding of human nature.
4. Learn the who, when, and how of relying on others.
5. Consider technology, people, and business when making decisions.
6. Learn how to make decisions with ambiguous, imperfect, or incomplete
information.
7. Never stop developing your social skills.
8.Appreciate the value of being politically savvy.

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 Project Management Career
Paths
Might work on several projects simultaneously
Small short-term projects train new project managers
Start on small projects and work up to large projects
Experience as a project manager is often seen as a desirable step on
the corporate ladder

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Leadership Competencies

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