Unit 1 SPM
Unit 1 SPM
IT8075
Software Project Management
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Are software projects really different Contract management and technical project
from other projects?
management
Not really with all the characteristics ! …but…differ in terms of • In house projects
• Invisibility • Client (users) and developers work for the same organization
• Progress is visible for a physical artefact (something made by human being; eg : bridge construction) • Contract projects
• Progress in software is invisible
• SPM helps to make invisible visible • Developer from outside the organization
• Complexity • Project managers
• Complexity is more in software projects • Client organization
• Conformity • to supervise the contract
• Software developers have to conform to the requirements of human clients • delegate many technically oriented decisions to the contractors
• Flexibility • will not be concerned about estimating the effort(budget and time)
• Software is easy to change • Supplier organization
• Otherwise called ‘technical project managers’
• Concerned with the more technical management issues
Activities covered by software project management Activities covered by software project management (Cont…)
• Feasibility study
• Whether the project is worth starting
• Information is gathered about the requirement of the project
• Developmental and operational costs with the benefits are estimated
• Could be part of a strategic planning exercise examining
• Prioritizing a range of potential software developments
• Planning
• If it is viable from feasibility study , planning will start
• Detailed planning is not done for large project at the beginning
• Outline plan for the whole project and a detailed one for the first stage will be created
• More detailed planning of the later stages would be done as they approach
Feasibility study • Project execution
Is project technically feasible and worthwhile from a business point of view? • Contains design and implementation sub-phases
• Design and planning are not the same
Planning • Design is making decisions about the form of the products
Only done if project is feasible • Planning details the activities to be carried out
Execution
Implement plan, but plan may be changed as we go along
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The software development life-cycle (ISO 12207) (Cont…) The software development life-cycle (ISO 12207) (Cont…)
• Requirement analysis
• Starts with requirement elicitation or requirements gathering • Detailed design
• Requirements are gathered from potential users • Each software component is made up of a number of software units.
• It could be • Each unit is separately coded and tested
• Function- the system should do something • Detailed design of these units is carried out separately
• Quality requirement- how well the functions must work • Code and test
• System requirement- Training to ensure that the operators use the system efficiently • Refers to writing code for each software unit
• Software requirement- specification for development
• Initial testing to debug the individual software units
• Resource requirement-application development cost
• Integration
• Architecture design • The components are tested together to see if they meet the overall requirement
• Identification of components for each requirement
• Qualification testing
• Not only software but could be new hardware or work processes • All the system components have to be tested carefully
• The design of system architecture is an input to the software requirements • To ensure that all the requirements have been fulfilled
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Setting objectives
Stakeholders
• Objective
• Should define what the project team must achieve for project success
• Stakeholders- people who have interest(stake) in the project • All stake holders are involved for setting the objectives
• Informally, the objective of a project can be defined by completing the statement:
• Categories
• Internal to the project team The project will be regarded as a success if………………………………..
• Direct managerial control of the project leader
• External to the project team but within the same organization • Focus on what will be put in place, rather than how activities will be carried out
• Ex : ‘Customers can order our products online’ rather than
• External project managers might need assistance from the internal users ‘to build an e-commerce website’
• External to both the project team and the organization • Project authority is a project steering committee( project board or project management
• External users may be customers board)
• Over all responsibility on objectives
• External developers may be contractors • Setting
• Monitoring
• modifying
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Management control
• Data – the raw details
• e.g. ‘6,000 documents processed at location X’
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A business case
PROJECT EVALUATION
• A business case can be otherwise referred as feasibility study or project
justification
Why is project evaluation important: • A business case document may contain
Project evaluation is important for answering the following questions • Introduction and background to the proposal
- what progress has been made? • The proposed project
• The market
- were the desired outcomes achieved? • Organizational and Operational infrastructure
- whether the project can be refined to achieve better outcomes? • The benefits
• Outline implementation plan
- do the project results justify the project inputs? • Costs
• The financial case
• Risks
• Management plan
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Net profit
Cost Benefit Evaluation techniques • Net profit
• Difference between the total cost(investment) and the total income over the
It considers life of the project
• the timing of the costs and benefits Net profit=total cost - total income
• the benefits relative to the size of the investment
Ye Project1 Project2 project3
ar
Common methods for comparing projects on the basis of their cash flow forecasting. 0 -100000 -10,00,000 -1,20,000
• 1) Net profit (NP) 1 10,000 2,00000 30,000
• 2) Payback Period (PBP) 2 10,000 2,00000 30,000
• 3) Return on investment(ROI) 3 10,000 2,00000 30,000
• 4) Net present Value(NPV) 4 20,000 2,00000 30,000
• 5) Internal rate of return(IRR) 5 100000 3,00000 75,000
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Net profit
• Net profit Payback Period
• Difference between the total cost and the total income over the life of the
project
• The payback period is the time taken to recover the initial
Net profit=total cost - total income investment.
Ye
ar
Project1 Project2 project3 Year Project1 Project2 project3
Advantages
0 -100000 -1,000,000 -120000 0 -100000 -1,000,000 -120000 • simple and easy to calculate.
1 10,000 2,00000 30,000 1 10,000 2,00000 30,000
• Not sensitive to small forecasting errors
2 10,000 2,00000 30,000 2 10,000 2,00000 30,000
3 10,000 2,00000 30,000 3 10,000 2,00000 30,000 Disadvantages
4 20,000 2,00000 30,000 4 20,000 2,00000 30,000 • Ignores the overall profitability of the project
5 100000 3,00000 75,000 5 100000 3,00000 75,000
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Year project x project y • Alternatively present value of the cash flow can be calculated by multiplying the cash flow by the
appropriate discount factor
• 1 1000 2000
• NPV for a project is obtained by discounting each cash flow and summing the discounted values
• 2 2000 4000
• It is normally assumed that any initial investment takes place immediately(indicated as year 0) and is not
• 3 4000 6000 discounted.
• 4 5000 8000 • Later cash flows are normally assumed to take place at the end of each year and are discounted by the
appropriate amount.
• 5 8000
• Disadvantage
• Selecting an appropriate discount rate for the project is difficult
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0 -100,000
1 10,000
2 10,000
3 10,000
4 20,000
5 100,000
Net profit 50,000
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Ex :3 Solution
Ex:4
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Ex : 5
Consider the following fictitious scenario and some questions related to it. The table below Based on the above table, answer the following questions:
gives the estimated cash flow for three different projects
Ans a16.pdf
For Case A, an interest rate of 0.38 produces NPV = 0, whereas Case B NPV arrives at 0 with an interest rate of 0.22.
Case A therefore has an IRR of 38%, Case B an IRR of 22%.
IRR as the decision criterion, the one with the higher IRR is the better choice.
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Step 4.4. Produce ideal activity network Step 4.5 modify the ideal to take into account for
• Identify the activities stages and check points
needed to create each
product in the PFD
• Sequencing activities( activity network) minimizes the overall duration
• More than one activity or elapsed time for the project.
might be needed to create a
single product • Project is modified by dividing into stages and introducing check point
activities to check the compatibility of the preceding activity
• By identifying these • These check point may introduce some delay
activities create a activity • These checkpoint activities are milestones which represent the completion of
network which shows the important stages of projects
task and the order in which
they have to be executed
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