Chapter Review 7- 12

Chapter 7:

The Importance of Project Cost Management

It project have a poor track record for meeting budget goals. The CHAOS studies found the average cost overrun (the additional percentage or dollar amount by which actual osts exceed estimates) ranged from 180% in 1994 to 43% in 2002.


What is Costs?
Costs - a resource sacrificed or foregone to achieve a specific objective or something given up in exchange.
          - usually measured in monetary units like dollars


Project Cost management:
includes the processes required to ensure that the project is completed within an approved budget


Costs Estimating:
Devloping an approximation/ estimate of the costs of the resourcs needed to complete a project


Cost budgeting:
allocating the overall cost estimate to individual work items to establish a baseline for measuring performance


Cost control:
the changes (project budget) in control


Basic principles of cost management
Excecutive board basically managing the financial part than IT part, so IT Managers must deal with them. the principles are:
1) Profits
2) Profits margin
3) life cycle costing
4) cash flow analysis
5) Tangible cost/benefits
6) Intangible costs/benefits
7) direct costs
8)indirect costs
9) sunk cost
10) Learning curve theory
11) Reserves:
       * Contingency reserves
       * Management Reserves


Cost Estimating:
Roles to Project Manager to maintain and ensure the budget within budget constraints. Need to know the types of cost estimates, how to prepare cost estimates and typical problems associated with IT cost estimates.


Cost Management Plan
a doc that describes how the organization will manage cost variance on the project
a large percentage of total projectcosts are often labor costs, so project managers must develop and track estimates for labor


Cost estimation tools & techniques
1) analogous/top down estimates
2) bottom-up estimates
3) Parametric modeling


Typical problem (IT cost estimates)
@ too quickly (estimates are done)
@ the experience of estimating is lack
@ the human biased (underestimation)
@ management desires accuracy


Cost Budgeting
involves allocating the project cost estimate to individual works over time
WBS is required
To produce a cost baseline (time-phased budget in controlling and monitoring cost performance)


Cost Control
Includes:
* Monitorin' cost perform.
* Ensuring that only appropriate project changes are included in a revised cost baseline
* Informing project stakeholders of authorized changes to the project that will affect costs
Many Organization have problem with the cost control


EVM (earned value management)
~ a project performance measurement technique (intergarates scope, time, and cost data)
~ given a baseline (origin plan + approved changes) can determine how well the project is meeting the goals
~ actual information in order to use EVM
    * planned value (PV)/ (BCWS): that portion of the approved total cost estimates planned to be spent on an activity during the given period
    *actual cost (AC)/(ACWP): total of direct and indirect costs incured in accomplishing work on an activity during a given period
    *EV/BCWP: estimates of the value of the physical work actually completed

Rate of Performance
RP= ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the activity

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Chapter 8
Project Quality Management

The importance of Project Quality Managemnt?


* People joke about the poor quality of IT products
* People seem to accepts system being down ocassionally/needing to reboot


What is project quality?
International Organization for Standardization (ISO)
Other experts:
* conformance to requirements
* Fitness for use


What is project quality management?
* ensures the projectwill satisfy the needs for which it was undertaken
* processes includes:
  ~ Quality Planning
  ~ Quality Assurance
  ~ Quality Control


Quality Planning
- implies the ability (anticipate situatrion & prepare actions to bring about the desired outcome
-Important to prevent defects by:
  * select proper materials
  * training and indoctrinating people in quality
  * Plan a process taht ensures the appropriate outcome


Design of experiments
* quality planning technique-identify which variables have the most influence on the overall outcome of a process
* also applies to project managemnt issues
* involves documenting important factors taht directly contribute to meeting customer requirements


Scope aspects of IT Projects
@ functionality
@ features
@ system outputs
@ Performance
@ Reliablity
@ maintainability


or i put in acronim "Fun Fair Siti Penuh Ramai Manusia"


The one who responsible for Quality of Projects?
@ Projects Managers
@ Several organizations & references & teams undersand quality
      ~ ISO
      ~ IEEE


Quality assurance
- includes all activities related to satisfying the relevant quality standards for a project
- another goal of quality assurances is cont. quality improvement
- BENCHMARKING generates ideas for quality improvements by comparing specific projects practices
-quality audit (structured review of specific quality management activities taht help identify lessons learned


Quality control- the main outputs of quality control are:
* acceptance decisions
* Rework
* Process adjustments


7 basic tools of quality that help in performing quality control
1) cause & effect diagrams
    - trace complaints about quality problems back to the responsible production operatios
    - find the rooot cause of a problem
    - known as fishbone/ ishikawa diagrams
    - can use 5 whys techique


2) quality control charts
    - graphic display
    - prevent defects, rather tahn to detect/reject them
    - allow in determining wheter a process is in control or not:
       @ control: any variations in the results of the process are created by random events; in control no need  
            to be adjusted
       @ out control: variations caused by non random events; need to identify the causes of those nonrandom 
            events and adjust the process to correct or eliminate them


3) Run Chart
   - displays the history/pattern of variation
   - line chart (shows data points plotted in the order in which they occur)
   - used to perform trend analysis to forecast future outcomes based on historical patterns


4) Scatter Diagram
   - shows relationship between two variebles
   - closer data points are to a diagonal line, the more closely the two variables are related


5) histograms
   - bar graph of distribution of variables
   - each bar represents an attribute or characteristics, & the heght= frequency


6) pareto charts
   - histogram that help in identifyng and prioritize problem areas
   - pareto analysis (80-20 rule= 80% problems are often due to 20% of the causes


7) flowcharts
   - graphic displays of the logic and the flow help us analyze how problems occur & how process can be  
      improved
   - show activities, decision points, & the order of how imformation is processed


Staistical sampling
- involves choosing parts of a population of interest for inspection
- the size of a sample depends on how representative you want the sample to be:
         sample size = .25 x (certainty factor/acceptable error)
- be sure to consult with expert


Six Sigma:
* comprehensive & flexible
* uniquely driven
* close understanding of customer needs

             ------> target for perfection is the achievement of no more than 3.4 defects per million opportunities
             ------> the principles can apply to a wide variety of process
             ------> six sigma projects normally follow a five pkhase improvement process called DMAIC


DMAIC
- systematic, closed loop process for contnued improvement that is scientific & fact based
- stands for: DEFINE | MEASURE | ANALYZE | IMPROVE | CONTROL


Testing
- stage that near the end of product development
- shoul be done during almost every phase of the IT product development life cycle


Types of tests:
- Unit testing
- Integration testing
- System testing
- User acceptance testing


Modern Quality Management:
@ requires cust. satisfaction
@ Prefers prevention to inspection
@ Recognizes management responsiblelity for quality


ISO standards
# ISO 9000:
   * three part, cont. cycle of planning, controlling, & documenting quality in an orgazation
   * provide minimun requirement needed for an organization to meets its quality certiciication standards
   * helps organization around the world reduce costs and improve customer satisfaction



5 cost categories:
> Prevention Cost
> appraisal cost
> internal failure cost
> external failure cost
> measurement and test equipment costs


Maturity Models:
= frameworks for helping organizations improve their processes and systems


CMMI levels:
from lowest to highest:
* incomplete
* performed
* managed
* defined
" quantitatively managed
* optimizing

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Chapter 9

Project Human Resource management

Implications for the future of IT Human Resource Managemnt:

- Proactive organizations are addressing workforce needs by:

    * improving benefits

    * redefining work hours and incentives

    * finding future workers

What is PHRM?

- making the most effective use of the people involved with a project

- process includes:

  @ human resource planning

  @ acquiring the project team

  @ developing the project team

  @ managing the project team

Keys to managing people:

* important areas:

   - motivation theories

   - influence and power

   - effectiveness

Intrinstic Motivation:

# causes people to participate in an activity for their own enjoynment

Extrinsic motivation:

# causes people to do something for a reward or to avoid a penalty

Power:

* the potential ability to influence behaviour to get people to do things they would not otherwise do

* types of power:

  @ coercive

  @ legitimate

  @ experts

 @ reward

  @ referent

Covey and improving effectiveness

* 7 habits:

   - proactive

   - begin with the end in mind

   - put first things first

   - think win/win

   - seek first to understand/ then to be understood

   - synergize

   - sharpen the saw

Good project managers are good listeners, have relationshp of harmony, comformity, and mirroring.

RAM ( responsibility assignmen matrix):

- maps the work

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Chapter 10

Project Communication Management

In this chapter, I’ve learnt the importance of good communications in project. It also explains the elements of project communication planning including how to create a communication management plan and perform a stakeholder communication analysis. Also, this chapter has elaborated various method for distributing project information and the advantages and disadvantages of each, as well as discuss the importance of addressing individual communication needs and calculate the number of communication channels in project.
            I’ve also learnt the main output of performance reporting help stakeholder stay informed about project resource. Moreover, this chapter includes various methods for improving project communications such as managing conflict, running effective meeting, using e-mail and other technologies effectively.

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Chapter 11

Project Risk Management

Under this chapter, I’ve learnt the understanding what risk is all about and the importance of good project risk management. It also discusses the elements involved in risk management planning and the content of a risk management plan. In project risk management, there are two types of risk which is good risk (give the great impact to the project) and the other one is bad or negative risk. Moreover, this chapter elaborated the qualitative risk analysis process and how to calculate risk factor, probability/impact matrix and the top ten risk item tracking technique to rank risk. This chapter also explains the quantitative risk analysis process and how to apply decision tree, simulation, and sensitivity analysis to quantify risks. There are several methods or identification in order to identify the risks for example brainstorming, Delphi technique, interviewing and S.W.O.T analysis. A risk register is a document that contains the results of various risk management processes and that is often displayed in a table or spreadsheet format.

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Chapter 12
Project Procurement Management

Procurement means acquiring goods and or services from an outside source. Other terms include purchasing and outsourcing

Many companies prefer to do outsourcing while some other companies not prefer outsourcing. Some company so outsourcing because:

 To reduce both fixed and recurrent costs
 To allow the client organization to focus on its core business
 To access skills and technologies
 To provide flexibility
 To increase accountability
 

A contract is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them. Contracts can clarify responsibilities and sharpen focus on key deliverables of a project. Because contracts are legally binding, there is more accountability for delivering the work as stated in the contract. Project procurement management: acquiring goods and services for a project from outside the performing organization
 

Processes include:
Planning purchases and acquisitions: determining what to procure, when, and how
Planning contracting: describing requirements for the products or services desired from the procurement and identifying potential sources or sellers (contractors, suppliers, or providers who provide goods and services to other organizations)
 

Requesting seller responses: obtaining information, quotes, bids, offers, or proposals from sellers, as appropriate
 

Selecting sellers: choosing from among potential suppliers through a process of evaluating potential sellers and negotiating the contract
 

Administering the contract: managing the relationship with the selected seller
 

Closing the contract: completing and settling each contract, including resolving any open items 

 

A statement of work is a description of the work required for the procurement
 

If a SOW is used as part of a contract to describe only the work required for that particular contract, it is called a contract statement of work.