Systems Analysis, Project Management, and Feasibility Analysis

Foundations of Project Management

• Management definition:

  • All activities and tasks undertaken by one or more persons for the purpose of planning and controlling the activities of others.

  • Executed to achieve objectives or complete an activity that could not be achieved by individuals acting independently.

• Five core management functions:

  • Planning

  • Organizing

  • Staffing

  • Directing

  • Controlling

• Project definition and characteristics:

  • Broadest definition: a specific, finite task to be accomplished; any activity that results in a deliverable or a product.

  • Problem origin: projects always begin with a problem, and the project is executed to provide the solution to that problem.

  • Evaluation criteria: upon completion, the project must be evaluated to determine whether it satisfies its defined goals and objectives.

  • One clear objective: possesses a well-defined set of end results, is goal-oriented, and must yield a specific end product or service.

  • Finite: governed by a fixed timeline, an explicit start date, end date, and milestone dates.

  • Limited: bounded by strict constraints on budget, resources, and time.

  • Life cycle: progresses through a recognizable sequence of phases.

• Project management definition and components:

  • The application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements.

  • Integrated system comprising:

  • Management procedures

  • Practices

  • Technologies

  • Skills

  • Experience necessary to successfully manage a project.

• Software project management:

  • Specifically concerned with activities ensuring that software is delivered:

  • On time

  • On schedule

  • In accordance with the requirements of the organization developing and procuring the software.

• Integrated Project Management Process:

  • Step 1: Choose a project that will add value to the company and create a plan/application containing basic information about the proposed scheme.

  • Step 2: Analysts conduct analysis to determine program performance, economic performance, and organizational performance; if deemed appropriate, the plan is selected and development proceeds.

  • Step 3: The project manager determines project performance parameters and the specific tasks to be completed.

  • Step 4: Assignment of management oversight (project managers are established).

  • Step 5: The manager determines the tools, standards, and procedures to be used, identifies opportunities for reuse, assesses how the current project fits into the portfolio of developing projects, and evaluates the likelihood of reviving the entire structure of the company's existing systems portfolio.

Project Identification, Initiation, and Stakeholder Governance

• Project identification drivers:

  • Projects are fundamentally driven by business needs.

  • Identification sources:

  • Identified by business people

  • Identified by IT people

  • Identified jointly by business and IT personnel (the optimal approach).

• Project sponsor:

  • The individual who believes in the system and wants to see it succeed.

  • Normally a business person.

  • Must possess the organizational authority to move the project forward.

  • Serves as the primary point of contact for the initiative.

• Project stakeholders:

  • Defined as all individuals involved in or affected by project activities.

  • Core stakeholder groups:

  • The project sponsor and project team

  • Support staff

  • Customers

  • Users

  • Suppliers

  • Opponents to the project

• Stakeholder roles and management techniques:

  • Champion:

  • Role: initiates the project, promotes the project, allocates personal time to the project, and provides necessary resources.

  • Techniques for improvement: make presentations regarding project objectives and proposed benefits directly to executives who benefit from the system; create a prototype of the system to demonstrate potential value.

  • Organizational Management:

  • Role: maintains awareness of the project, budgets sufficient funding, and encourages users to accept and adopt the system.

  • Techniques for improvement: deliver presentations to management outlining objectives and benefits; market system benefits via internal memos and newsletters; encourage the champion to actively advocate the project among executive peers.

  • System Users:

  • Role: make decisions that influence project outcomes, perform hands-on activities during development, and ultimately determine project success through system usage or non-usage.

  • Techniques for improvement: assign official roles to users on the project team; delegate specific tasks with clear completion deadlines; solicit continuous feedback through recurring forums such as weekly meetings.

• Elements of a System Request:

  • Project sponsor: primary point of contact for the project.

  • Business need: specific business rationale or operational problem prompting the project.

  • Business requirements: functional capabilities and capacities the system must possess.

  • Business value: tangible and intangible benefits the organization anticipates realizing.

  • Special issues: constraints, corporate policies, external pressures, or other unique considerations.

• Business value classifications:

  • Tangible value: quantifiable and easily measured benefits (e.g., a $2\%$ reduction in operating costs).

  • Intangible value: benefits grounded in an intuitive belief that the system provides vital but hard-to-measure organizational improvements (e.g., improved customer service).

Feasibility Analysis

• Core definition and function:

  • A comprehensive study that guides the organization in determining whether to proceed with a proposed project.

  • Identifies project-related risks that must be actively managed if the project is approved.

• Major components of feasibility analysis:

  • Technical Feasibility ("Can we build it?"):

  • Familiarity with application: lower familiarity generates higher project risk.

  • Familiarity with technology: working with new hardware, software, or platforms generates higher risk.

  • Project size: larger projects with larger teams, broader scopes, or extended durations present higher risk.

  • Compatibility: difficult integration with existing legacy systems, software environments, or databases increases risk.

  • Economic Feasibility ("Should we build it?"):

  • Evaluates development costs.

  • Evaluates annual operating costs.

  • Evaluates annual benefits (cost savings and revenues).

  • Evaluates intangible costs and benefits.

  • Organizational Feasibility ("If we build it, will they come?"):

  • Determines whether the project is strategically aligned with corporate business goals.

  • Assesses alignment and buy-in across key stakeholders, including champions, senior management, and end users.

Economic Feasibility and Cost-Benefit Analysis

• Seven steps for conducting economic feasibility:

  • Step 1: Identifying Costs and Benefits — list all tangible costs and benefits associated with the project, accounting for both one-time expenditures and recurring expenses along the left-hand column of a financial model.

  • Step 2: Assigning Values to Costs and Benefits — collaborate with business users and IT professionals to attach concrete dollar values to each identified cost and benefit, valuing intangible items whenever feasible.

  • Step 3: Determining Cash Flow — project costs and benefits across a multi-year time horizon (typically three to five years), applying growth rates to future figures as appropriate.

  • Step 4: Determining Net Present Value (NPV) — discount future cash flows to quantify future costs and benefits in present-day dollar terms using an established discount rate.

  • Step 5: Determining Return on Investment (ROI) — calculate the ratio of monetary return received relative to the capital invested.

  • Step 6: Determining the Break-Even Point — determine the exact point in time when cumulative benefits equal or exceed cumulative costs.

  • Step 7: Graphing the Break-Even Point — plot annual costs and benefits on a line graph to identify the intersection point representing financial breakeven.

• Cost and benefit categorization:

  • Development Costs (one-time investments):

  • Development team salaries

  • Consultant fees

  • Development training

  • Hardware and software purchases

  • Vendor installation expenses

  • Office space and equipment

  • Data conversion costs

  • Operational Costs (recurring expenses):

  • Software upgrades

  • Software licensing fees

  • Hardware repairs

  • Hardware upgrades

  • Operational team salaries

  • Communications charges

  • User training

  • Tangible Benefits:

  • Increased sales

  • Reductions in staff

  • Reductions in inventory

  • Reductions in IT costs

  • Better supplier prices

  • Intangible Benefits:

  • Increased market share

  • Increased brand recognition

  • Higher quality products

  • Improved customer service

  • Better supplier relations

• Financial formulas for economic evaluation:

  • Present Value (PV):     $\text{PV} = \frac{\text{Cash flow amount}}{(1 + \text{interest rate})^n}$

  • Where $n$ is the number of years in the future.

  • Definition: the current worth of an investment cash flow compared to that same nominal value in the future, adjusting for inflation and the time value of money.

  • Net Present Value (NPV):     $\text{NPV} = \sum \text{PV Benefits} - \sum \text{PV Costs}$

  • Definition: total present value of benefits less total present value of costs.

  • Return on Investment (ROI):     $\text{ROI} = \frac{\text{Total benefits} - \text{Total costs}}{\text{Total costs}}$

  • Alternative discounted cumulative formula:     $\text{ROI} = \frac{\text{Cumulative NPV}}{\text{PV of All Costs}}$

  • Definition: the total revenues or cost savings realized from a given investment.

  • Break-Even Point formula:     $\text{Break-Even Fraction} = \frac{\text{Yearly Net Cash Flow} - \text{Cumulative Net Cash Flow}}{\text{Yearly Net Cash Flow}}$

  • When applied to discounted cash flow figures:     $\text{Break-Even Fraction} = \frac{\text{Yearly NPV}^* - \text{Cumulative NPV}}{\text{Yearly NPV}^*}$

  • Where $\text{Yearly NPV}^*$ represents the Yearly NPV from the first year where cumulative cash flow becomes positive.

  • Add this calculated fraction to the index year ($n - 1$) preceding positive cumulative cash flow.

  • Definition: the point in time at which the cumulative costs of the project equal the cumulative value it has delivered.

• Comprehensive economic feasibility case study:

  • Initial Year Cost and Benefit Assignment:

  • Tangible Benefits:

    • Increased sales: $500{,}000$

    • Improved customer service (quantified through reduced costs of handling customer complaint phone calls): $70{,}000$

    • Reduced inventory costs: $68{,}000$

    • Total Benefits: $638{,}000$

  • Intangible Benefits:

    • Ability to offer services currently provided by market competitors

    • Improved customer satisfaction

  • Development Costs:

    • 2 servers at $\$125{,}000$ each: $250{,}000$

    • Printer: $100{,}000$

    • Software licenses: $34{,}825$

    • Server software: $10{,}945$

    • Development labor: $1{,}236{,}525$

    • Total Development Costs: $1{,}632{,}295$

  • Operational Costs:

    • Hardware: $54{,}000$

    • Software: $20{,}000$

    • Operational labor: $111{,}788$

    • Total Operational Costs: $185{,}788$

  • Total Initial Costs:       $1{,}632{,}295 + 185{,}788 = 1{,}818{,}083$

  • Five-Year Cash Flow Projection ($2015$–$2019$):

  • Increased sales: $500{,}000$ ($2015$); $530{,}000$ ($2016$); $561{,}800$ ($2017$); $595{,}508$ ($2018$); $631{,}238$ ($2019$)

  • Reduction in customer complaint calls: $70{,}000$ annually from $2015$ through $2019$

  • Reduced inventory costs: $68{,}000$ annually from $2015$ through $2019$

  • Total Benefits: $638{,}000$ ($2015$); $668{,}000$ ($2016$); $699{,}800$ ($2017$); $733{,}508$ ($2018$); $769{,}238$ ($2019$)

  • PV of Benefits: $619{,}417$ ($2015$); $629{,}654$ ($2016$); $640{,}416$ ($2017$); $651{,}712$ ($2018$); $663{,}552$ ($2019$)

  • PV of All Benefits (Cumulative): $619{,}417$ ($2015$); $1{,}249{,}072$ ($2016$); $1{,}889{,}488$ ($2017$); $2{,}541{,}200$ ($2018$); $3{,}204{,}752$ ($2019$)

  • Total Development Costs: $1{,}632{,}295$ ($2015$); $0$ in $2016$–$2019$

  • Hardware operational costs: $54{,}000$ ($2015$); $81{,}261$ each year ($2016$–$2019$)

  • Software operational costs: $20{,}000$ each year ($2015$–$2019$)

  • Operational labor: $111{,}788$ ($2015$); $116{,}260$ ($2016$); $120{,}910$ ($2017$); $125{,}746$ ($2018$); $130{,}776$ ($2019$)

  • Total Operational Costs: $185{,}788$ ($2015$); $217{,}521$ ($2016$); $222{,}171$ ($2017$); $227{,}007$ ($2018$); $232{,}037$ ($2019$)

  • Total Costs: $1{,}818{,}083$ ($2015$); $217{,}521$ ($2016$); $222{,}171$ ($2017$); $227{,}007$ ($2018$); $232{,}037$ ($2019$)

  • PV of Costs: $1{,}765{,}129$ ($2015$); $205{,}034$ ($2016$); $203{,}318$ ($2017$); $201{,}693$ ($2018$); $200{,}157$ ($2019$)

  • PV of All Costs (Cumulative): $1{,}765{,}129$ ($2015$); $1{,}970{,}163$ ($2016$); $2{,}173{,}481$ ($2017$); $2{,}375{,}174$ ($2018$); $2{,}575{,}331$ ($2019$)

  • Total Project Benefits Less Costs (Undiscounted): $-1{,}180{,}083$ ($2015$); $450{,}479$ ($2016$); $477{,}629$ ($2017$); $506{,}501$ ($2018$); $537{,}201$ ($2019$)

  • Yearly NPV: $-1{,}145{,}712$ ($2015$); $424{,}620$ ($2016$); $437{,}098$ ($2017$); $450{,}019$ ($2018$); $463{,}395$ ($2019$)

  • Cumulative NPV: $-1{,}145{,}712$ ($2015$); $-721{,}091$ ($2016$); $-283{,}993$ ($2017$); $166{,}026$ ($2018$); $629{,}421$ ($2019$)

  • Return on Investment Output:       $\text{ROI} = \frac{629{,}421}{2{,}575{,}331} = 24.44\%$

  • Break-Even Point Determination:

    • Break-even occurs in Year $4$ ($2018$), the first year where Cumulative NPV turns positive.       $\text{Fraction} = \frac{450{,}019 - 166{,}026}{450{,}019} = 0.63$       $\text{Break-Even Point} = 3 + 0.63 = 3.63\,\text{years}$

Project Selection and Portfolio Management

• Project portfolio management (PPM):

  • A management process that optimizes project selection and task sequencing to maximize support for overarching business goals.

  • Evaluates potential projects against:

  • Quantitative economic measures

  • Business strategy goals

  • IT strategy goals

  • Once projects are approved through PPM, they formally enter the project management execution pipeline.

• Project classification parameters:

  • Size: total project size and the number of people required to work on it.

  • Cost: total monetary expenditure required from the organization.

  • Purpose: specific driver behind project execution (improving technical infrastructure, supporting a current business strategy, improving operations, or demonstrating a new innovation).

  • Length: expected duration to complete the project and how much time will elapse before value is delivered to the business.

  • Risk: assessment of how likely the project is to succeed or fail.

  • Scope: breadth of the organization affected (single department, entire division, or the complete corporation).

  • Return on investment: the expected return of revenue or savings compared against overall project costs.

Traditional Project Management and Scheduling Tools

• Primary project scheduling and control tools:

  • Work-breakdown structure (WBS)

  • Gantt chart

  • Network diagram

• Task definition and workplan information attributes:

  • A task is a basic unit of work performed by one or more members of the development team (e.g., performing a feasibility analysis).

  • Standard information elements tracking each task:

  • Name of the task (e.g., Perform economic feasibility)

  • Start date (e.g., Jan 05, 2015)

  • Completion date (e.g., Jan 19, 2015)

  • Person assigned to the task (e.g., Project sponsor: Mary Smith)

  • Deliverable(s) (e.g., Cost-benefit analysis)

  • Completion status (e.g., Open)

  • Priority (e.g., High)

  • Resources that are needed (e.g., Spreadsheet software)

  • Estimated time (e.g., $16\,\text{hours}$)

  • Actual time (e.g., $14.5\,\text{hours}$)

• Work Breakdown Structure (WBS):

  • A structured, top-down hierarchy where high-level phases or goals are defined first and iteratively broken down into discrete subtasks.

  • Two structural organizational methods:

  • Organized by development phase

  • Organized by product or deliverable

• Gantt Chart:

  • A horizontal bar chart that graphically represents the task information documented in the project WBS.

  • Displays task durations, start and finish dates, assigned personnel, dependencies, and milestone checkpoints.

  • Illustrative task plan sequence:

  • Task 1: Identify vendors — Duration: $2\,\text{weeks}$; Predecessor: None; Status: Complete; Assigned: Alan (Start: Wed 1/1/15, Finish: Tue 1/14/15)

  • Task 2: Review training materials — Duration: $6\,\text{weeks}$; Predecessor: Task 1; Status: Complete; Assigned: Barbara (Start: Wed 1/1/15, Finish: Tue 2/11/15)

  • Task 3: Compare vendors — Duration: $2\,\text{weeks}$; Predecessor: Task 2; Status: In Progress; Assigned: Barbara (Start: Wed 2/12/15, Finish: Tue 2/25/15)

  • Task 4: Negotiate with vendors — Duration: $3\,\text{weeks}$; Predecessor: Task 3; Status: Open; Assigned: Barbara (Start: Wed 2/26/15, Finish: Tue 3/8/15)

  • Task 5: Develop communications information — Duration: $4\,\text{weeks}$; Predecessor: Task 1; Status: In Progress; Assigned: Alan (Start: Wed 1/15/15, Finish: Tue 2/11/15)

  • Task 6: Disseminate information — Duration: $2\,\text{weeks}$; Predecessor: Task 5; Status: Open; Assigned: Alan (Start: Wed 2/12/15, Finish: Tue 2/25/15)

  • Task 7: Create and administer survey — Duration: $4\,\text{weeks}$; Predecessor: Task 6; Status: Open; Assigned: Alan (Start: Wed 2/26/15, Finish: Tue 3/25/15)

    • Subtask 7.1: Create initial survey — Duration: $1\,\text{week}$; Predecessor: None; Status: Open

    • Subtask 7.2: Review initial survey — Duration: $1\,\text{week}$; Predecessor: 7.1; Status: Open

    • 7.2.1: Review by Director of IT Training — Duration: $1\,\text{week}$; Status: Open

    • 7.2.2: Review by Project Sponsor — Duration: $1\,\text{week}$; Status: Open

    • 7.2.3: Review by Representative Trainee — Duration: $1\,\text{week}$; Status: Open

    • Subtask 7.3: Pilot test initial survey — Duration: $1\,\text{week}$; Predecessor: 7.1; Status: Open

    • Subtask 7.4: Incorporate survey changes — Duration: $1\,\text{week}$; Predecessors: 7.2, 7.3; Status: Open

    • Subtask 7.5: Create distribution list — Duration: $0.5\,\text{weeks}$; Predecessor: None; Status: Open

    • Subtask 7.6: Send survey to distribution list — Duration: $0.5\,\text{weeks}$; Predecessors: 7.4, 7.5; Status: Open

    • Subtask 7.7: Send follow-up message — Duration: $0.5\,\text{weeks}$; Predecessor: 7.6; Status: Open

    • Subtask 7.8: Collect completed surveys — Duration: $1\,\text{week}$; Predecessor: 7.6; Status: Open

  • Task 8: Analyze results and choose vendor — Duration: $2\,\text{weeks}$; Predecessors: Tasks 4, 7; Status: Open; Assigned: Alan (Start: Wed 3/26/15, Finish: Tue 4/8/15)

  • Task 9: Build new classroom — Duration: $11\,\text{weeks}$; Predecessor: Task 1; Status: In Progress; Assigned: David (Start: Wed 1/15/15, Finish: Tue 4/1/15)

  • Task 10: Develop course options — Duration: $3\,\text{weeks}$; Predecessors: Tasks 8, 9; Status: Open; Assigned: David (Start: Wed 4/9/15, Finish: Tue 4/29/15)

  • Milestone 11: Budget Meeting — Duration: $1\,\text{day}$; Date: Wed 1/15/15

  • Milestone 12: Software Installation — Duration: $1\,\text{day}$; Date: Tue 4/1/15

• Network Diagram:

  • A graphical flowchart displaying tasks laid out in a node-and-arc graph format.

  • Graph anatomy:

  • Nodes: represent individual tasks and show internal time duration estimates.

  • Arcs: connecting arrows/lines showing task dependencies and sequence.

  • Task progress symbols:

  • A diagonal line across the node represents a partially completed task.

  • Crossed lines (an "X") across the node denote a completed task.

• Critical Path Method (CPM):

  • Network analysis technique used to identify the critical path.

  • The critical path is defined as the longest path of dependent tasks from project inception to project completion.

  • Dictates overall project duration: tasks lying on the critical path have zero slack time and must be finished on schedule to prevent project delivery delay.

• Program Evaluation and Review Technique (PERT):

  • Network analysis method utilized when individual task duration estimates are uncertain.

  • Uses three distinct duration estimates per task rather than a single point estimate:

  • Optimistic estimate

  • Most likely estimate

  • Pessimistic estimate

  • Weighted average calculation formula:     $\text{PERT weighted average} = \frac{\text{optimistic estimate} + (4 \times \text{most likely estimate}) + \text{pessimistic estimate}}{6}$

• Project estimation properties:

  • The formal process of assigning projected values for time and effort across project activities.

  • Uncertainty curve: initial estimates are ranges that narrow over time; the variance of estimates during the inception phase is significantly wider than during the transition phase.

Environment, Infrastructure, Standards, and Documentation

• Environment and infrastructure workflows:

  • Continuous development workflows supporting the project team throughout all phases.

  • Primary focus of the environment workflow:

  • Selecting the proper development tools.

  • Defining and enforcing standards to be observed by the development team.

• Computer-Aided Software Engineering (CASE) tools:

  • Software packages designed to automate part or all of the software development lifecycle.

  • Analysis workflow support: enables the creation of integrated system diagrams and manages a central repository of system component specifications.

  • Design workflow support: automates the generation of database table schemas and system programming code.

• Organizational standards:

  • Ensures all team members perform tasks consistently, maintain quality, and adhere to uniform procedural guidelines.

  • Categories and examples of project standards:

  • Documentation standards:

    • The date and project name must appear as a header on all documentation.

    • All margins must be set to $1\,\text{inch}$.

    • All deliverables must be cataloged in the project binder and registered in its table of contents.

  • Coding standards:

    • All code modules must include an introductory header detailing programmer name, last update date, and a description of program purpose.

    • Indentation must consistently signify loops, if-then-else conditions, and case statements.

    • Code comments must maintain an average frequency of one comment line for every five lines of code.

  • Procedural standards:

    • Actual task progress must be logged in the project workplan every Monday by $10\,\text{AM}$.

    • Team members must attend weekly project update meetings every Friday at $3{:}30\,\text{PM}$.

    • Any change to system requirements documents requires formal authorization from the project manager.

  • Specification requirement standards:

    • Explicit program name.

    • Detailed description of program purpose.

    • Mathematical definitions of special computations required.

    • Clear documentation of business rules incorporated.

    • Structured pseudocode.

    • Hard due dates.

  • User interface design standards:

    • UI labels must be left-justified, styled in boldface text, and followed by a colon.

    • Screen tab sequence must strictly progress from top-left to bottom-right.

    • Accelerator shortcut keys must be mapped to all editable fields.

• Project documentation management:

  • Essential deliverables included in project documentation:

  • System request

  • Feasibility analysis

  • Original and updated effort estimations

  • Evolving workplan

  • Unified Modeling Language (UML) functional, structural, and behavioral diagrams

  • Critical project risk: postponing documentation compilation until the final phases is recognized as a major project management failure.