chapter 11&12

Chapter 11: Project Risk Management

~ Learning Objectives:~
 Understand what risk is and the importance of good project risk management
 Discuss the elements involved in risk management planning and the contents of a risk management plan
 List common sources of risks in information technology projects

~ The Importance of Project Risk Management ~
• Project risk management is the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives
• Risk management is often overlooked in projects, but it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates

~ Risk Utility ~
 Risk utility or risk tolerance is the amount of satisfaction or pleasure received from a potential payoff
 Utility rises at a decreasing rate for people who are risk-averse
 Those who are risk-seeking have a higher tolerance for risk and their satisfaction increases when more payoff is at stake
 The risk-neutral approach achieves a balance between risk and payoff

Project Risk Management Processes
 Risk management planning: deciding how to approach and plan the risk management activities for the project
 Risk identification: determining which risks are likely to affect a project and documenting the characteristics of each
 Qualitative risk analysis: prioritizing risks based on their probability and impact of occurrence
 Quantitative risk analysis: numerically estimating the effects of risks on project objectives
 Risk response planning: taking steps to enhance opportunities and reduce threats to meeting project objectives
 Risk monitoring and control: monitoring identified and residual risks, identifying new risks, carrying out risk response plans, and evaluating the effectiveness of risk strategies throughout the life of the project

Risk Management Planning
 The main output of risk management planning is a risk management plan—a plan that documents the procedures for managing risk throughout a project
 The project team should review project documents and understand the organization’s and the sponsor’s approaches to risk
 The level of detail will vary with the needs of the project

Contingency and Fallback Plans, Contingency Reserves
 Contingency plans are predefined actions that the project team will take if an identified risk event occurs
 Fallback plans are developed for risks that have a high impact on meeting project objectives, and are put into effect if attempts to reduce the risk are not effective
 Contingency reserves or allowances are provisions held by the project sponsor or organization to reduce the risk of cost or schedule overruns to an acceptable level

Risk Breakdown Structure
 A risk breakdown structure is a hierarchy of potential risk categories for a project
 Similar to a work breakdown structure but used to identify and categorize risks

Risk Identification
 Risk identification is the process of understanding what potential events might hurt or enhance a particular project
 Risk identification tools and techniques include:
 Brainstorming
 The Delphi Technique
 Interviewing
 SWOT analysis

 Brainstorming is a technique by which a group attempts to generate ideas or find a solution for a specific problem by amassing ideas spontaneously and without judgment

 The Delphi Technique is used to derive a consensus among a panel of experts who make predictions about future developments

 Interviewing is a fact-finding technique for collecting information in face-to-face, phone, e-mail, or instant-messaging discussions

 SWOT analysis (strengths, weaknesses, opportunities, and threats) can also be used during risk identification and helps identify the broad negative and positive risks that apply to a project

Risk Register
 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 and a tool for documenting potential risk events and related information
 Risk events refer to specific, uncertain events that may occur to the detriment or enhancement of the project

Probability/Impact Matrix
 A probability/impact matrix or chart lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other
 List the risks and then label each one as high, medium, or low in terms of its probability of occurrence and its impact if it did occur
 Can also calculate risk factors

Decision Trees and Expected Monetary Value (EMV)
 A decision tree is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain
 Estimated monetary value (EMV) is the product of a risk event probability and the risk event’s monetary value

What Went Right?
 A large aerospace company used Monte Carlo simulation to help quantify risks on several advanced-design engineering projects, such as the National Aerospace Plan (NASP)
 The results of the simulation were used to determine how the company would invest its internal research and development funds
 Although the NASP project was terminated, the resulting research has helped develop more advanced materials and propulsion systems used on many modern aircraft

Sensitivity Analysis
 Sensitivity analysis is a technique used to show the effects of changing one or more variables on an outcome
 For example, many people use it to determine what the monthly payments for a loan will be given different interest rates or periods of the loan, or for determining break-even points based on different assumptions
 Spreadsheet software, such as Excel, is a common tool for performing sensitivity analysis

Risk Response Planning
 After identifying and quantifying risks, you must decide how to respond to them
 Four main response strategies for negative risks:
 Risk avoidance
 Risk acceptance
 Risk transference
 Risk mitigation

Response Strategies for Positive Risks
 Risk exploitation
 Risk sharing
 Risk enhancement
 Risk acceptance

Residual and Secondary Risks
 It’s also important to identify residual and secondary risks
 Residual risks are risks that remain after all of the response strategies have been implemented
 Secondary risks are a direct result of implementing a risk response Media Snapshot
 A highly publicized example of a risk response to corporate financial scandals, such as those affecting Enron, Arthur Andersen, and WorldCom, was legal action
 The Sarbanes-Oxley Act is considered the most significant change to federal securities laws in the United States since the New Deal
 This Act has caused many organizations to initiate projects and other actions to avoid litigation

Risk Monitoring and Control
 Involves executing the risk management process to respond to risk events
 Workarounds are unplanned responses to risk events that must be done when there are no contingency plans
 Main outputs of risk monitoring and control are: Requested changes, Recommended corrective and preventive actions and Updates to the risk register, project management plan, and organizational process assets

Results of Good Project Risk Management
 Unlike crisis management, good project risk management often goes unnoticed
 Well-run projects appear to be almost effortless, but a lot of work goes into running a project well
 Project managers should strive to make their jobs look easy to reflect the results of well-run projects

Chapter12: Project Procurement Management

Learning Objectives
 Understand the importance of project procurement management and the increasing use of outsourcing for information technology projects
 Describe the work involved in planning purchases and acquisitions for projects, the contents of a procurement management plan and contract statement of work, and calculations involved in a make-or-buy analysis
 Discuss what is involved in planning contracting, including the creation of various procurement documents and evaluation criteria for sellers

Importance of Project Procurement Management
 Procurement means acquiring goods and/or services from an outside source
 Experts predict that global spending on computer software and services will continue to grow
 People continue to debate whether offshore outsourcing helps their own country or not

Contracts
 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 Processes
 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

Types of Contracts
 Different types of contracts can be used in different situations
 Fixed price or lump sum contracts: involve a fixed total price for a well-defined product or service
 Cost reimbursable contracts: involve payment to the seller for direct and indirect costs
 Time and material contracts: hybrid of both fixed price and cost reimbursable contracts, often used by consultants
 Unit price contracts: require the buyer to pay the seller a predetermined amount per unit of service
 A single contract can actually include all four of these categories, if it makes sense for that particular procurement

Procurement Management Plan
 Describes how the procurement processes will be managed, from developing documentation for making outside purchases or acquisitions to contract closure
 Content varies based on project needs


Contract Statement of Work (SOW)
 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
 A SOW is a type of scope statement
 A good SOW gives bidders a better understanding of the buyer’s expectations

Planning Contracting
 Involves preparing several documents needed for potential sellers to prepare their responses and determining the evaluation criteria for the contract award
 Request for Proposals: used to solicit proposals from prospective sellers
 A proposal is a document prepared by a seller when there are different approaches for meeting buyer needs
 Requests for Quotes: used to solicit quotes or bids from prospective suppliers
 A bid, also called a tender or quote (short for quotation), is a document prepared by sellers providing pricing for standard items that have been clearly defined by the buyer

Selecting Sellers and also called source selection
 Involves: Evaluating proposals or bids from sellers, Choosing the best one, Negotiating the contract, Awarding the contract

Administering the Contract
 Ensures that the seller’s performance meets contractual requirements
 Contracts are legal relationships, so it is important that legal and contracting professionals be involved in writing and administering contracts
 It is critical that project managers and team members watch for constructive change orders, which are oral or written acts or omissions by someone with actual or apparent authority that can be construed to have the same effect as a written change order

Suggestions for Change Control in Contracts
 Changes to any part of the project need to be reviewed, approved, and documented by the same people in the same way that the original part of the plan was approved
 Evaluation of any change should include an impact analysis; how will the change affect the scope, time, cost, and quality of the goods or services being provided?
 Changes must be documented in writing; project team members should also document all important meetings and telephone phone calls

Tools to Assist in Contract Closure
 Procurement audits identify lessons learned in the procurement process
 A records management system provides the ability to easily organize, find, and archive procurement-related documents

chapter 9&10

Chapter 9: Project Human Resource Management
Learning Objectives
 Explain the importance of good human resource management on projects, including the current state and future implications of the global IT workforce
 Define project human resource management and understand its processes
 Summarize key concepts for managing people by understanding the theories of Abraham Maslow, Frederick Herzberg, David McClelland, and Douglas McGregor on motivation, H. J. Thamhain and D. L. Wilemon on influencing workers, and Stephen

The Importance of Human Resource Management
 Many corporate executives have said, “People are our most important asset”
 People determine the success and failure of organizations and projects

What is Project Human Resource Management?
 Making the most effective use of the people involved with a project
 Processes include:
 Human resource planning: identifying and documenting project roles, responsibilities, and reporting relationships
 Acquiring the project team: getting the needed personnel assigned to and working on the project
 Developing the project team: building individual and group skills to enhance project performance
 Managing the project team: tracking team member performance, motivating team members, providing timely feedback, resolving issues and conflicts, and coordinating changes to help enhance project performance

Intrinsic and Extrinsic Motivation
 Intrinsic motivation causes people to participate in an activity for their own enjoyment
 Extrinsic motivation causes people to do something for a reward or to avoid a penalty
 For example, some children take piano lessons for intrinsic motivation (they enjoy it) while others take them for extrinsic motivation (to get a reward or avoid punishment)
 Motivational factors: achievement, recognition, the work itself, responsibility, advancement, and growth, which produce job satisfaction
 Hygiene factors: cause dissatisfaction if not present, but do not motivate workers to do more; examples include larger salaries, more supervision, and a more attractive work environment

Ways to Influence that Help and Hurt Projects
 Projects are more likely to succeed when project managers exert influence with:
 Expertise, and Work challenge
 Projects are more likely to fail when project managers rely too heavily on:
 Authority, Money and Penalty

Power
 Power is the potential ability to influence behavior to get people to do things they would not otherwise do
 Types of power include: Coercive, Legitimate, Expert, Reward and Referent

Human Resource Planning
 Involves identifying and documenting project roles, responsibilities, and reporting relationships
 Outputs include:
 Project organizational charts, Staffing management plan, Responsibility assignment matrixes and Resource histograms

Responsibility Assignment Matrices
 A responsibility assignment matrix (RAM) is a matrix that maps the work of the project as described in the WBS to the people responsible for performing the work as described in the OBS
 Can be created in different ways to meet unique project needs

Staffing Management Plans and Resource Histograms
 A staffing management plan describes when and how people will be added to and taken off the project team
 A resource histogram is a column chart that shows the number of resources assigned to a project over time

Acquiring the Project Team
 Acquiring qualified people for teams is crucial
 The project manager who is the smartest person on the team has done a poor job of recruiting!
 It’s important to assign the appropriate type and number of people to work on projects at the appropriate times

Resource Loading
 Resource loading refers to the amount of individual resources an existing schedule requires during specific time periods
 Helps project managers develop a general understanding of the demands a project will make on the organization’s resources and individual people’s schedules
 Overallocation means more resources than are available are assigned to perform work at a given time

Resource Leveling
 Resource leveling is a technique for resolving resource conflicts by delaying tasks
 The main purpose of resource leveling is to create a smoother distribution of resource usage and reduce overallocation

Benefits of Resource Leveling
 When resources are used on a more constant basis, they require less management
 It may enable project managers to use a just-in-time inventory type of policy for using subcontractors or other expensive resources
 It results in fewer problems for project personnel and accounting department
 It often improves morale

Developing the Project Team
 The main goal of team development is to help people work together more effectively to improve project performance
 It takes teamwork to successfully complete most projects Tuckman Model of Team Development
 Forming
 Storming
 Norming
 Performing
 Adjourning

Training
 Training can help people understand themselves, each other, and how to work better in teams
 Team building activities include:
 Physical challenges
 Psychological preference indicator tools

Social Styles Profile
 People are perceived as behaving primarily in one of four zones, based on their assertiveness and responsiveness:
 Drivers
 Expressives
 Analyticals
 Amiables
 People on opposite corners (drivers and amiables, analyticals and expressives) may have difficulties getting along

Reward and Recognition Systems
 Team-based reward and recognition systems can promote teamwork
 Focus on rewarding teams for achieving specific goals
 Allow time for team members to mentor and help each other to meet project goals and develop human resources

Managing the Project Team
 Project managers must lead their teams in performing various project activities
 After assessing team performance and related information, the project manager must decide:
 If changes should be requested to the project
 If corrective or preventive actions should be recommended
 If updates are needed to the project management plan or organizational process assets

Tools and Techniques for Managing Project Teams
 Observation and conversation
 Project performance appraisals
 Conflict management
 Issue logs

General Advice on Teams
 Be patient and kind with your team
 Fix the problem instead of blaming people
 Establish regular, effective meetings
 Allow time for teams to go through the basic team-building stages
 Limit the size of work teams to three to seven members

Five Dysfunctions of a Team
 Plan some social activities to help project team members and other stakeholders get to know each other better
 Stress team identity
 Nurture team members and encourage them to help each other
 Take additional actions to work with virtual team members

Using Software to Assist in Human Resource Management
 Software can help in producing RAMS and resource histograms
 Project management software includes several features related to human resource management such as:
 Assigning resources
 Identifying potential resource shortages or underutilization
 Leveling resources

Project Resource Management Involves Much More Than Using Software
 Project managers must:
 Treat people with consideration and respect
 Understand what motivates them
 Communicate carefully with them
 Focus on your goal of enabling project team members to deliver their best work


Chapter 10: Project Communications Management

Learning Objectives
 Understand the importance of good communications in projects
 Explain the elements of project communications planning, including how to create a communications management plan and perform a stakeholder communications analysis
 Describe various methods for distributing project information and the advantages and disadvantages of each, discuss the importance of addressing individual communication needs, and calculate the number of communications channels in a project

Project Communications Management Processes
 Communications planning: determining the information and communications needs of the stakeholders
 Information distribution: making needed information available to project stakeholders in a timely manner
 Performance reporting: collecting and disseminating performance information, including status reports, progress measurement, and forecasting
 Managing stakeholders: managing communications to satisfy the needs and expectations of project stakeholders and to resolve issues

Communications Planning
 Every project should include some type of communications management plan, a document that guides project communications
 Creating a stakeholder analysis for project communications also aids in communications planning
Communications Management

Plan Contents
 Stakeholder communications requirements
 Information to be communicated, including format, content, and level of detail
 The people who will receive the information and who will produce it
 Suggested methods or technologies for conveying the information

Information Distribution
 Getting the right information to the right people at the right time and in a useful format is just as important as developing the information in the first place
 Important considerations include:
 Using technology to enhance information distribution
 Formal and informal methods for distributing information

Understanding Group and Individual Communication Needs
 People are not interchangeable parts
 As illustrated in Brooks’ book The Mythical Man-Month, you cannot assume that a task originally scheduled to take two months of one person’s time can be done in one month by two people
 Nine women cannot produce a baby in one month!
Personal Preferences Affect Communication Needs
 Introverts like more private communications, while extroverts like to discuss things in public
 Intuitive people like to understand the big picture, while sensing people need step-by-step details
 Thinkers want to know the logic behind decisions, while feeling people want to know how something affects them personally
 Judging people are driven to meet deadlines, while perceiving people need more help in developing and following plans
Other Communication Considerations
 Rarely does the receiver interpret a message exactly as the sender intended
 Geographic location and cultural background affect the complexity of project communications
 Different working hours
 Language barriers
 Different cultural norms

Setting the Stage for Communicating Bad News
Determining the Number of Communications Channels
 As the number of people involved increases, the complexity of communications increases because there are more communications channels or pathways through which people can communicate

 Number of communications channels = n(n-1)
2
where n is the number of people involved

Performance Reporting
 Performance reporting keeps stakeholders informed about how resources are being used to achieve project objectives
 Status reports describe where the project stands at a specific point in time
 Progress reports describe what the project team has accomplished during a certain period of time
 Forecasts predict future project status and progress based on past information and trends
Managing Stakeholders
 Project managers must understand and work with various stakeholders
 Need to devise a way to identify and resolve issues
 Two important tools include:
 Expectations management matrix
 Issue log

Suggestions for Improving Project Communications
 Manage conflicts effectively
 Develop better communication skills
 Run effective meetings
 Use e-mail and other technologies effectively
 Use templates for project communications

Conflict Handling Modes
 Confrontation: directly face a conflict using a problem-solving approach
 Compromise: use a give-and-take approach
 Smoothing: de-emphasize areas of difference and emphasize areas of agreement
 Forcing: the win-lose approach
 Withdrawal: retreat or withdraw from an actual or potential disagreement

Conflict Can Be Good
 Conflict often produces important results, such as new ideas, better alternatives, and motivation to work harder and more collaboratively
 Groupthink: conformance to the values or ethical standards of a group; groupthink can develop if there are no conflicting viewpoints
 Research suggests that task-related conflict often improves team performance, but emotional conflict often depresses team performance

Developing Better Communication Skills
 Companies and formal degree programs for IT professionals often neglect the importance of speaking, writing, and listening skills
 As organizations become more global, they realize they must invest in ways to improve communication with people from different countries and cultures
 It takes leadership to improve communication

Running Effective Meetings
 Determine if a meeting can be avoided
 Define the purpose and intended outcome of the meeting
 Determine who should attend the meeting
 Provide an agenda to participants before the meeting
 Prepare handouts and visual aids, and make logistical arrangements ahead of time
 Run the meeting professionally
 Build relationships

Using E-Mail, Instant Messaging, and Collaborative Tools Effectively
 Make sure that e-mail, instant messaging, or collaborative tools are an appropriate medium for what you want to communicate
 Be sure to send information to the right people
 Use meaningful subject lines and limit the content of emails to one main subject, and be as clear and concise as possible
 Be sure to authorize the right people to share and edit your collaborative documents


Lessons Learned Reports
 The project manager and project team members should each prepare a lessons-learned report
 A reflective statement that documents important things an individual learned from working on the project
 The project manager often combines information from all of the lessons-learned reports into a project summary report

chapter 7&8

Chapter 7: Project Cost Management

Learning Objectives
 Understand the importance of project cost management
 Explain basic project cost management principles, concepts, and terms
 Discuss different types of cost estimates and methods for preparing them
 Understand the processes involved in cost budgeting and preparing a cost estimate, and budget for an information technology project
 Understand the benefits of earned value management and project portfolio management to assist in cost control

What is Cost and Project Cost Management?
 Cost is a resource sacrificed or foregone to achieve a specific objective or something given up in exchange
 Costs are 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

Project Cost Management Processes
 Cost estimating: developing an approximation or estimate of the costs of the resources 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: controlling changes to the project budget

Basic Principles of Cost Management
 Most members of an executive board better understand and are more interested in financial terms than IT terms, so IT project managers must speak their language
 Profits are revenues minus expenditures
 Profit margin is the ratio of revenues to profits
 Life cycle costing considers the total cost of ownership, or development plus support costs, for a project
 Cash flow analysis determines the estimated annual costs and benefits for a project and the resulting annual cash flow

Basic Principles of Cost Management
 Tangible costs or benefits are those costs or benefits that an organization can easily measure in dollars
 Intangible costs or benefits are costs or benefits that are difficult to measure in monetary terms
 Direct costs are costs that can be directly related to producing the products and services of the project
 Indirect costs are costs that are not directly related to the products or services of the project, but are indirectly related to performing the project
 Sunk cost is money that has been spent in the past; when deciding what projects to invest in or continue, you should not include sunk costs

 Learning curve theory states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced
 Reserves are dollars included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict
 Contingency reserves allow for future situations that may be partially planned for (sometimes called known unknowns) and are included in the project cost baseline
 Management reserves allow for future situations that are unpredictable (sometimes called unknown unknowns)

Cost Estimating
 Project managers must take cost estimates seriously if they want to complete projects within budget constraints
 It’s important to know the types of cost estimates, how to prepare cost estimates, and typical problems associated with IT cost estimates
Table 7-2: Types of Cost Estimates
Cost Management Plan
 A cost management plan is a document that describes how the organization will manage cost variance on the project
 A large percentage of total project costs are often labor costs, so project managers must develop and track estimates for labor

Cost Estimation Tools and Techniques
 Basic tools and techniques for cost estimates
 Analogous or top-down estimates: use the actual cost of a previous, similar project as the basis for estimating the cost of the current project
 Bottom-up estimates: involve estimating individual work items or activities and summing them to get a project total
 Parametric modeling: uses project characteristics (parameters) in a mathematical model to estimate project costs

Typical Problems with IT Cost Estimates
 Estimates are done too quickly
 Lack of estimating experience
 Human beings are biased toward underestimation
 Management desires accuracy

Cost Budgeting
 Cost budgeting involves allocating the project cost estimate to individual work items over time
 The WBS is a required input to the cost budgeting process since it defines the work items
 An important goal is to produce a cost baseline
 A time-phased budget that project managers use to measure and monitor cost performance

Cost Control
 Project cost control includes:
 Monitoring cost performance
 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 organizations around the globe have problems with cost control

Earned Value Management (EVM)
 EVM is a project performance measurement technique that integrates scope, time, and cost data
 Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals
 More and more organizations around the world are using EVM to help control project costs

Earned Value Management Terms
 The planned value (PV), formerly called the budgeted cost of work scheduled (BCWS), also called the budget, is that portion of the approved total cost estimate planned to be spent on an activity during a given period
 Actual cost (AC), formerly called actual cost of work performed (ACWP), is the total of direct and indirect costs incurred in accomplishing work on an activity during a given period
 The earned value (EV), formerly called the budgeted cost of work performed (BCWP), is an estimate of the value of the physical work actually completed
 EV is based on the original planned costs for the project or activity and the rate at which the team is completing work on the project or activity to date

Rate of Performance
 Rate of performance (RP) is the ratio of actual work completed to the percentage of work planned to have been completed at any given time during the life of the project or activity
 Brenda Taylor, Senior Project Manager in South Africa, suggests this term and approach for estimating earned value
 For example, suppose the server installation was halfway completed by the end of week 1; the rate of performance would be 50% because by the end of week 1, the planned schedule reflects that the task should be 100% complete and only 50% of that work has been completed

Rules of Thumb for Earned Value Numbers
 Negative numbers for cost and schedule variance indicate problems in those areas
 CPI and SPI less than 100% indicate problems
 Problems mean the project is costing more than planned (over budget) or taking longer than planned (behind schedule)
 The CPI can be used to calculate the estimate at completion (EAC)—an estimate of what it will cost to complete the project based on performance to date; the budget at completion (BAC) is the original total budget for the project
Project Portfolio Management
 Many organizations collect and control an entire suite of projects or investments as one set of interrelated activities in a portfolio
Benefits of Portfolio Management
 Schlumberger saved $3 million in one year by organizing 120 information technology projects into a portfolio
 META Group research shows that:
 Organizations that evaluate information technology projects by what their business impacts are and what their potential business values will be implement projects that result in 25 percent more improvement to the bottom line


Chapter 8: Project Quality Management

Learning Objectives
 Understand the importance of project quality management for information technology products and services
 Define project quality management and understand how quality relates to various aspects of information technology projects
 Describe quality planning and its relationship to project scope management
 Discuss the importance of quality assurance
 Explain the main outputs of the quality control process

The Importance of Project Quality Management
 Many people joke about the poor quality of IT products to accept systems being down occasionally or needing to reboot their PCs
 But quality is very important in many IT projects

What Is Project Quality?
 The International Organization for Standardization (ISO) defines quality as “the degree to which a set of inherent characteristics fulfills requirements” (ISO9000:2000)
 Other experts define quality based on:
 Conformance to requirements: the project’s processes and products meet written specifications
 Fitness for use: a product can be used as it was intended

What Is Project Quality Management?
 Project quality management ensures that the project will satisfy the needs for which it was undertaken
 Processes include:
 Quality planning: identifying which quality standards are relevant to the project and how to satisfy them
 Quality assurance: periodically evaluating overall project performance to ensure the project will satisfy the relevant quality standards
 Quality control: monitoring specific project results to ensure that they comply with the relevant quality standards

Quality Planning
 Implies the ability to anticipate situations and prepare actions to bring about the desired outcome
 Important to prevent defects by:
 Selecting proper materials, Training and indoctrinating people in quality, and Planning a process that ensures the appropriate outcome

Design of Experiments
 Design of experiments is a quality planning technique that helps identify which variables have the most influence on the overall outcome of a process
 Also applies to project management issues, such as cost and schedule trade-offs
 Involves documenting important factors that directly contribute to meeting customer requirements

Scope Aspects of IT Projects:
 Functionality is the degree to which a system performs its intended function
 Features are the system’s special characteristics that appeal to users
 System outputs are the screens and reports the system generates
 Performance addresses how well a product or service performs the customer’s intended use
 Reliability is the ability of a product or service to perform as expected under normal conditions
 Maintainability addresses the ease of performing maintenance on a product

Who’s Responsible for the Quality of Projects?
 Project managers are ultimately responsible for quality management on their projects
 Several organizations and references can help project managers and their teams understand quality
 International Organization for Standardization (www.iso.org)
 IEEE (www.ieee.org)

Quality Assurance
 Quality assurance includes all the activities related to satisfying the relevant quality standards for a project
 Another goal of quality assurance is continuous quality improvement
 Benchmarking generates ideas for quality improvements by comparing specific project practices or product characteristics to those of other projects or products within or outside the performing organization
 A quality audit is a structured review of specific quality management activities that help identify lessons learned that could improve performance on current or future projects

Quality Control
 The main outputs of quality control are: Acceptance decisions, Rework and Process adjustments

Quality Control Charts
 A control chart is a graphic display of data that illustrates the results of a process over time
 The main use of control charts is to prevent defects, rather than to detect or reject them
 Quality control charts allow you to determine whether a process is in control or out of control
 When a process is in control, any variations in the results of the process are created by random events; processes that are in control do not need to be adjusted

The Seven Run Rule
 You can use quality control charts and the seven run rule to look for patterns in data
 The seven run rule states that if seven data points in a row are all below the mean, above the mean, or are all increasing or decreasing, then the process needs to be examined for nonrandom problems: Quality, Control Chart, Run Chart, Scatter Diagram, Histograms, Flowcharts and Pareto Charts.
 A Pareto chart is a histogram that can help you identify and prioritize problem areas
 Pareto analysis is also called the 80-20 rule, meaning that 80 percent of problems are often due to 20 percent of the causes

Statistical Sampling
 Statistical sampling involves choosing part of a population of interest for inspection
 The size of a sample depends on how representative you want the sample to be
 Sample size formula: Sample size = .25 X (certainty factor/acceptable error)2
 Be sure to consult with an expert when using statistical analysis

 Six Sigma is “a comprehensive and flexible system for achieving, sustaining, and maximizing business success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving, and reinventing business processes.”*

Basic Information on Six Sigma:
 The 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 processes
 Six Sigma projects normally follow a five-phase improvement process called DMAIC

DMAIC
 DMAIC is a systematic, closed-loop process for continued improvement that is scientific and fact based
 DMAIC stands for:
 Define: Define the problem/opportunity, process, and customer requirements
 Measure: Define measures, then collect, compile, and display data
 Analyze: Scrutinize process details to find improvement opportunities
 Improve: Generate solutions and ideas for improving the problem
 Control: Track and verify the stability of the improvements and the predictability of the solution

How Is Six Sigma Quality Control Unique?
 It requires an organization-wide commitment and Training follows the “Belt” system
 Six Sigma organizations have the ability and willingness to adopt contrary objectives, such as reducing errors and getting things done faster
 It is an operating philosophy that is customer-focused and strives to drive out waste, raise levels of quality, and improve financial performance at breakthrough levels

Six Sigma Projects Use Project Management
 The training for Six Sigma includes many project management concepts, tools, and techniques
 For example, Six Sigma projects often use business cases, project charters, schedules, budgets, and so on
 Six Sigma projects are done in teams; the project manager is often called the team leader, and the sponsor is called the champion

Six Sigma and Statistics
 The term sigma means standard deviation
 Standard deviation measures how much variation exists in a distribution of data
 Standard deviation is a key factor in determining the acceptable number of defective units found in a population
 Six Sigma projects strive for no more than 3.4 defects per million opportunities, yet this number is confusing to many statisticians
 Six Sigma Uses a Conversion Table
 Using a normal curve, if a process is at six sigma, there would be no more than two defective units per billion produced
 Six Sigma uses a scoring system that accounts for time, an important factor in determining process variations
 Yield represents the number of units handled correctly through the process steps
 A defect is any instance where the product or service fails to meet customer requirements

Six 9s of Quality
 Six 9s of quality is a measure of quality control equal to 1 fault in 1 million opportunities
 In the telecommunications industry, it means 99.9999 percent service availability or 30 seconds of down time a year
 This level of quality has also been stated as the target goal for the number of errors in a communications circuit, system failures, or errors in lines of code

Testing
 Many IT professionals think of testing as a stage that comes near the end of IT product development
 Testing should be done during almost every phase of the IT product development life cycle

Types of Tests
 Unit testing tests each individual component (often a program) to ensure it is as defect-free as possible
 Integration testing occurs between unit and system testing to test functionally grouped components
 System testing tests the entire system as one entity
 User acceptance testing is an independent test performed by end users prior to accepting the delivered system

ISO Standards
 ISO 9000 is a quality system standard that:
 Is a three-part, continuous cycle of planning, controlling, and documenting quality in an organization
 Provides minimum requirements needed for an organization to meet its quality certification standards
 Helps organizations around the world reduce costs and improve customer satisfaction
 See www.iso.org for more information

The Cost of Quality
 The cost of quality is the cost of conformance plus the cost of nonconformance
 Conformance means delivering products that meet requirements and fitness for use
 Cost of nonconformance means taking responsibility for failures or not meeting quality expectations
 A 2002 study reported that software bugs cost the U.S. economy $59.6 billion each year and that one-third of the bugs could be eliminated by an improved testing infrastructure

Five Cost Categories Related to Quality
 Prevention cost: cost of planning and executing a project so it is error-free or within an acceptable error range
 Appraisal cost: cost of evaluating processes and their outputs to ensure quality
 Internal failure cost: cost incurred to correct an identified defect before the customer receives the product
 External failure cost: cost that relates to all errors not detected and corrected before delivery to the customer
 Measurement and test equipment costs: capital cost of equipment used to perform prevention and appraisal activities

Maturity Models
 Maturity models are frameworks for helping organizations improve their processes and systems
 The Software Quality Function Deployment Model focuses on defining user requirements and planning software projects
 The Software Engineering Institute’s Capability Maturity Model Integration is a process improvement approach that provides organizations with the essential elements of effective processes

Reflection on the course

 What do you like best about the course?
 This course is requirement for my minor in order for me to grade from this university. There are many benefits that I got from this course which are how to manage a project, meet new friends and others. Then, I think the most that I like about this course is in doing group project. It is because I learn how to start the project and what should my team I and do in that project. Even, there are several constraints like having difficult time to meet and discuss the project as well as to finish it, but we managed and succeed at the ends. I also like my team members because we can co-operate and assist to each in order until the end of the project.

 What do you dislike most about the course?
 Actually, I do not really sure what I dislike about the course, but maybe the course or the subtopic of this course because I need to understand and remember many term as well as the chapters.

 What are your proposed suggestions to improve the course delivery and content?
 I think in order to improve the course delivery and content, I will suggest that, do more several activities in class like what madam done a game before with us in class.
 Then, I think madam may more ask question towards the students.

 If you had more time, what do you wish you had done differently for the course?
 I think, If I have more time, I wish to ask my lecture to show me the succeeds project which I can see and look.