Arab Open University

Faculty of Computer Studies

Prepared by: Nabil Rahal.

[email protected]

Change, Strategy and Projects at Work

Chapter 4: Project initiation and definition
Introduction

Project initiation and definition is the first phase of any
project.

During this stage the project idea will be processed into
something feasible and clearly specified.

The Terms of Reference (ToR) document provides this
focus and will indicate to all the involved parties the
size, scope and complexity of the work to be
performed.

The ToR needs to be agreed to with project
stakeholders, particularly the customer and the project
sponsor.
Introduction

An impact analysis can be performed to
analyze any potential resistance to change
and the problems of obstructive behavior
that can be anticipated.

Appropriate strategies can be adopted to
minimize their effect.
Project stakeholders

A project’s stakeholders are all those people and
groups who have an interest in and are affected by the
project and its outcomes.

Stakeholders must be identifies early on so that the
reason for their involvement and their likely perceptions
an priorities can be taken into account when planning
how a project is to be implemented.

Some stakeholders will be active participants while
others are more passive observers.

Stakeholders will have different levels of power and
influence depending on their interests and perceptions.
Project stakeholders
Table 4.1 Key stakeholders and roles
Project stakeholders

The formation of an effective project team is an
important aspect of implementing a project.

During the project initiation stage a few people
may form a small core team working on the project
definition.

At a later stage, the project team is likely to be built
up as the project continues through planning
stages towards implementation.

As the project team increases in size, the number
and diversity of stakeholders is likely to increase.
 Measuring support and opposition
• A project’s stakeholders are likely to include potential supporters
and opponents.
• Opponents may pose significant threat if they are not persuaded of
the need for the change or, alternatively, if their influence is not
neutralized.
• An assessment of the perceptions of the project stakeholders
should be carried out. The project leader can anticipate where
obstructive behavior may surface and how best to manage it.
Determining support and opposition
 Driving and opposing forces
There can be many reasons why a good idea fails to make a
viable project. For example:

it hasn’t been thought through carefully enough: it may
require a lot of resources for a limited benefit

someone else has had a similar idea and is already
undertaking a similar project

there may be too much demand for internal resources from
other competing projects

despite being a good idea, the timing is inappropriate

the commitment of key internal stakeholders is inadequate.
Driving and opposing forces

Any project must be able to demonstrate real
benefits for the organization and be consistent with
its strategic objectives.

There may also be opposing forces acting to resist
a successful conclusion. Examples include:

outdated or inadequate technology,

the complexity of key systems,

insufficient people with the right skills

or lack of solid commitment by management or a
key stakeholder.
 Forcefield analysis

Simple and powerful technique first introduced in the
area of social science

It provides a framework for estimating the effect of
factors that influence a situation

Factors are identified and represented as forces that
either drive progress towards a goal or as forces that
block progress towards its achievement.

It indicates whether the project has a good overall
chance of success, or whether the combined effect of
the opposing forces is likely to be too strong.

It requires strict objectivity and judgement.
Forcefield analysis
Forcefield analysis

Figure 4.1 shows how driving forces can be
represented on one side of the center line and
opposing forces on the other.

Drivers are represented in terms of their relative
strength with +5 representing a major force supporting
the project,

+1 indicates a minor supportive force,

On the opposing side, -1 represents a minor opposing
force that can be dealt with,

-5 represents a strong opposing force against the
project with a real chance of preventing it reaching a
Project vision statement

The vision statement is a clear statement that
summarizes the project’s benefits to the stakeholders as
well as to the project’s team.

A good project vision statement should be a motivator for
the stakeholders and team members.

Figure 4.2 shows a process that can be used to produce a
project vision statement.
Project vision statement (Figure 4.2)
Setting objectives

The objectives identify the detailed means for
reaching the successful conclusion of the project.

There may be several key objectives to complete the
project

Objectives may coincide with the completion of
certain phases of a project. In this case, they are
referred to as “milestones”.

All stakeholders need to understand, accept and
support a project’s objectives.

They provide a focus on the achievement of results
and a way of checking that the project is on target.
 Setting objectives
o
To be effective, objectives should be SMART; that is they
should be:

Specific

Measurable
SMART

Achievable

Results-oriented

Time-related
Setting objectives
Suppose an example of an objective is to:

Improve the response time for handling of

customer complaints.

A suitable modified objective could be to:

Improve the response time for the handling of

customer complaints to a maximum of 48
hours by the 31st December (this year).
 Setting objectives
The project team will need to agree:
- on appropriate SMART objectives based on a clear
understanding of what needs to be achieved,
- how progress towards objectives will be measured and
- what indicators will be used for this purpose.
Key milestones
A project milestone is an objective that signifies the
completion of a phase of a project and for which there
is tangible evidence that this has happened – a
project ‘deliverable’.

In work setting some examples of project milestone

deliverables are:
 The minutes of a review meeting
 an interim report
 acceptance sign-off of some newly commissioned
equipment.
Project scope and framework
• The project vision, objectives and milestones must
be set within a defining framework.
• The scope of the project defines the boundaries
that apply.
• First and foremost scope specifies clearly what is to
be included in the final outcome and what is not.
• A failure to define and agree on a scope is a
common reason why projects run into difficulties.
Project scope and framework
Project scope includes:

 A clear understanding of a project’s business

rationale and its strategic fit
 An understanding of the expectations of all the
different stakeholders
 Detailed agreement about what the project involves
and the activities required to complete the project
 The resource implications associated with the work
to be carried out (finance, time and materials,
human skills and commitment)
 The detailed product outcomes
Constraints

The specification of time, cost and quality (or
performance) are central criteria to the successful
outcome of a project.

These elements will always have some tension
between them. Reduce cost and the timing may slip or
quality suffer, stress on quality and costs can escalate.

The time constraints of a project are not always within a
project team’s control.

In some cases slippage of several weeks might not
matter; in others this could be critical and cause a
project’s customer to seek compensation or activate
penalty clauses in the project agreement.
 Constraints - Budget
 Defining the scope and establishing the project
framework should enable the required project budget to
be estimated.
 Estimating a project budget is usually achieved in
several iterations.
 During the very early stages the cost implications are
usually referred to as “approximate” estimates.
 As project definition progresses and the resources and
activity implications are specified more clearly,
subsequent project cost estimates will be based more
on facts, and should therefore attract greater
confidence.
 The eventual approval of a project will depend upon a
detailed project budget being agreed with the project
sponsor and customer.
Constraints - Budget
Project risk analysis
• Routine tasks are familiar to us
• The outcomes of routine tasks are therefore
usually highly predictable
• Project work by contrast includes elements of
risk and uncertainty associated with the
uniqueness and unfamiliarity of some of the
activities.
• Advanced risk assessment is needed.
Sources of risk

All the likely risks in project need to be identified,
assessed and managed to maximize the overall
likelihood of project success.

For most projects there will be many sources of
risk.

Assumptions that seem quite reasonable at the
start of a project may be proven otherwise if and
when internal or external conditions change during
the project duration.
Sources of risk
Some common areas where risk arise are:

Timing: Project implementation will require the
completion of many different activities and their durations
are individually estimated. Sometimes it will not be
possible to start an activity until previous ones have been
completed. Activities involving external suppliers or
contractors may be difficult to manage.

Technology: Projects relying on newly emerging
technologies are likely to be high risk. The newer the
technology, the greater is the risk.
Sources of risk
 People-related: Human behavior, for example as
a result of misunderstandings or conflicting views,
may cause progress to slow down or stop.

 Finance: Cost over-runs are a major risk. Costs

are not only determined by internal factors; for
example, external suppliers may change their
prices and the cost of project finance may change if
interest rates change.
Sources of risk
 Customer: There is always the risk of producing a
‘successful’ project outcome that the customer
decides they no longer want.
Identifying and responding to risk
• A detailed survey should be carried out to identify
all significant sources of risk associated with a
particular project.
• Identifying, evaluating and responding to risks
should be performed in a team environment.
• Risk assessment of each aspect can then be
performed by querying the following:

 What could possibly go wrong?

 How likely or unlikely is it that things will go
wrong?
 What impact would it have on the project?
 What can be done to avoid or mitigate the risks?
Calculating the probability of success
• Uncertainty is expressed by a probability value.

• Each phase has a probability value associated

with it that expresses the likelihood of that phase
being completed successfully.
Calculating the probability of success
• Figure 4.3 is concerned with the project to build a
house extension.
Calculating the probability of success
 In Figure 4.3 each phase is linked in a ‘series’
fashion.
 This is appropriate when all the phases must
be completed successfully to reach the
required end result.
 The calculation of the overall probability simply
involves multiplying the probabilities together.
 If anyone of the phases is given a probability of
zero, this would suggest that the project itself is
very likely to fail.
Calculating the probability of success
Analyses of this sort:

- Can be carried out at different levels

- Need to be interpreted carefully.

The interpretation of the situation represented in Figure

4.3 is not that an extension would be unlikely to be built,
but that some significant deviations from the project plan
would be needed.
Calculating the probability of success
Note: In addition to risks associated with going ahead
with a project, there may be risks associated with not
going ahead with it. For example, if a competitive
organization had a similar project idea and was
implementing it. Not carrying out a project in this case
could result in a competitive disadvantage, involving for
example, the loss of market share.
 Contingency planning
• Contingency planning involves identifying and preparing
alternative ways to complete a particular activity or phase.
• This similar to a standby arrangement for emergency use in a
situation where it is critical to maintain service.
• It can be represented by a parallel configuration as shown in
Figure 4.4 (below).
Contingency planning
 In this case the outcome of the probability calculation is a value
greater than either of the individual values.
 Therefore, by creating an alternative or contingency activity, the
likelihood of success is strengthened.
 The analyses are based on an assumption that activities are
independent of each other.
Strategies for managing risk
 The uniqueness of any activities in project
work and the pressure to keep to project
schedules could lead to levels of risk to people
that are not acceptable from either an ethical
or health and safety viewpoint.
 Project teams must ensure that health and
safety guidelines and regulations are followed
in spirit and substance.
Strategies for managing risk
 In some projects approval of a project
proposal depends upon evidence that a full
risk assessment process has been completed.
 During a project’s life cycle, risk factors may
change significantly.
 A risk register should be maintained and
regularly reviewed to identify any changes in
the level of specified risk factors or any newly
identified ones.
 Specific risks may be associated with each
key activity or project phase.
Strategies for managing risk
Table 4.2 (below) indicates how a list of project-
specific risks might be prepared relating to key
activities or phases in a project:
Strategies for managing risk
 Even though a probability of success may not
be quantified, there should be some
agreement over whether each risk should be
categorized as high, medium or low.
 Where ‘high’ means that the risk is likely to
materialize and has a serious threat to a
successful project outcome.
Strategies for managing risk
When probability values are quantified, we might
consider that a probability of success:
 between 1 and 0.9 corresponds to low risk,
 between 0.7 and 0.9 corresponds to medium,
 below 0.7 represents a relatively high
probability of the risk occurring.
 Strategies for managing risk
 There may be “general risks”, for example
arising from factors relating to the external
context in which the organization operates.
 The potential impact of these also needs to be
evaluated.
 Table 4.3 (below) identifies some categories that
may be considered (list not exclusive).
Strategies for managing risk
Strategies for managing risk
 The next stage in developing a project risk
management strategy is to gather all the risk
factors onto the matrix of Table 4.4 (below).
 This helps focus attention on those risks which
pose the greatest threat to a successful project
outcome and which must therefore be managed
effectively.
 A risk in the top left cell must be managed with
great care since it has the potential for severe
consequences.
Strategies for managing risk
 Strategies for managing risk
 After identifying the risks and their corresponding
priorities, the options for managing them should be
established as shown in Figure 4.5.
 Strategies for managing risk
Below are some risk management strategies (not
exclusive):