Software Project Management: Project Evaluation and Programme Management

Vocabulary flashcards covering business cases, project portfolio management, cost-benefit evaluation methods, risk evaluation, and programme management.

Business Case

A feasibility study providing justification for starting a project by demonstrating that benefits will exceed development, implementation, and operational costs while taking business risks into account.

Project Risk

A category of risk that relates directly to threats to the successful execution of a project.

Business Risk

A category of risk that relates to factors threatening the delivery or realization of expected benefits from a completed project.

Project Portfolio Management (PPM)

An organizational approach that provides an overview of all projects, prioritizes resource allocation, and determines which proposed projects to accept and which existing ones to drop.

Project Portfolio Optimization

An element of PPM that uses gathered cost and performance information to achieve an optimal balance across projects (e.g., balancing risky, high-value projects with safer, lower-value ones).

Technical Assessment

An evaluation conducted to establish whether the required system functionality can be accomplished using current, affordable technologies.

Cash-Flow Forecast

A projection indicating the precise timing of when project expenditures and incomes will take place across the life cycle.

Product/System Life Cycle Cash Flows

A cash-flow pattern characterized by initial net expenditures during development followed by positive cash inflows after release that pay off costs, ending in decommissioning expenditure.

Opportunity Cost

A category of cost or benefit forgone by selecting one project or course of action over an alternative option.

Tangible Cost

An outlay of cash for a specific item or activity whose financial measurement is straightforward, such as hardware purchases, employee salaries, and training.

Intangible Cost

A cost that is known to exist but whose financial value cannot be accurately measured, such as decreased employee morale or damage to company image.

Direct Cost

A project expense that can be directly associated with a specific monetary outlay or activity, such as purchasing supplies or development labor.

Indirect Cost

An overhead operating cost resulting from activities not directly attributable to a single system or project, such as facility insurance, air conditioning, and lighting.

Fixed Cost

A constant expense that does not change regardless of how well or extensively a system is used and does not recur once incurred.

Variable Cost

An operational expense incurred on a regular basis (weekly or monthly) that varies proportionally with work volume or system usage.

Net Profit

The difference between total costs and total income over the entire life of a project, calculated without considering the timing of cash flows.

Payback Period

The duration required for a project to break even or pay back its initial investment by generating an accumulated surplus of income over expenditure.

Return on Investment (ROI)

A simple profitability measure calculated as $\text{ROI} = \frac{\text{Average annual profit}}{\text{Total investment}} \times 100$.

Discount Rate

The annual percentage rate applied to discount future project earnings, reflecting the time value of money and opportunity cost.

Discount Factor (DF)

The multiplier used to determine the present value of a future cash flow, computed as $\text{DF} = \frac{1}{(1 + r)^t}$, where $r$ is the discount rate and $t$ is the number of years.

Net Present Value (NPV)

A project evaluation metric calculated by discounting each future incoming and outgoing cash flow using a chosen discount rate and summing the discounted values.

Internal Rate of Return (IRR)

The specific discount rate that produces an NPV of exactly $0$ for a project's cash flows, providing a percentage return comparable to market interest rates.

Break-Even Analysis

A comparative evaluation method that identifies the operational processing volume where the total costs of a candidate system equal the total costs of the current system.

Risk Premium

An addition to the baseline discount rate (e.g., $2\%$ for safe projects, $5\%$ for risky projects) used during NPV calculations to account for project uncertainty.

Decision Tree

A graphical evaluation tool used to map out decision points and subsequent probabilistic outcomes to calculate the expected monetary value of each branch.

Programme

A group of projects managed in a coordinated way to gain benefits that would not be achievable if the projects were managed independently (as defined by D. C. Ferns).

Programme Mandate

The initial planning document for a strategic programme describing the capabilities to deliver, organizational improvements, and alignment with existing goals.

Benefits Management

A programme-level process dedicated to defining expected benefits, planning their realization, allocating responsibilities, and monitoring their achievement post-project completion.