Project Integration

PROJECT CHARTER

A project charter describes what your project is and how you will approach it, and it lists the names of all stakeholders. It's a critical component of the project management initiation and planning phases, and you'll refer to it throughout the life of the project.

PROJECT SELECTION

The projects needs to be selected from the list of projects in the queue. The following methods are the most common way to determine the priority of a project:

• Present Value 

       The present value of the project is the current projected value as of today based on the future predicted benefit value of the project. 
       For example, if a project is supposed to fetch $500,000 in three years , the present value will be $275,000 based on a 10% interest rate.

• PNV ( Present Net Value )

       PNV = Present Value - Costs incurred for the project.   

• IIR ( Internal Rate of Return )

       Calculate rate of interest based on the projected revenue of a project. The project with higher IIR needs to be selected.

• Payback Period

       This is actually the break even period, when the project actually starts generating profit.

• Benefit Cost Ration

       = Revenue / Cost ( Imp: It is not Profit / Cost )

• EVA ( Economic Value Added )

       It is the amount of added value the project produces for the company's shareholder above the cost of financing the project.

• Opportunity Cost

       This is actually the opportunity given up by selecting another project.
       Example ,
                            Project A - PNV = $50,000
                            Project B - PNV = $80,000
        The opportunity cost for selecting Project B is $50,000.

• Sunk Cost

       Sunk costs are the extended costs of a project.
       A project had initial budget of $50,000 and it has already spent $80,000, the $30,000 is sunk cost. 

• Law of Diminishing Returns

       This law states rate of return on investment is not directly proportional to the output. For example adding another developer to a single developer project will not double the output , but may be just 75 % as lots of time will be spent in coordination of the developers. 

• Working Capital

       = Assets - Liability. The capital that a company is able to invest on projects.

• Depreciation

       There are deprecating costs on assets. These can be linear and accelerated.  Linear can be $1000 for a ten months lifetime for $100 per month, and accelerated can be first month $130, next $110 , next $105 etc ...

DEVELOP PROJECT MANAGEMENT PLAN

       All the information above can be consolidated with the following diagram:

Quality Management

PLANNING QUALITY

It is important to note that most important baseline document is required as an input to plan quality. 

We need to be acquainted with the following in the planning quality phase -

• Gold Plating - Providing Extras to the customer to make then happy. This is not allowed.
• Prevention over Inspection -  Its always better to prevent defect than holding inspection to catch them. 
• Continuous Improvement - In Japanese companies progress is made with very small steps instead of a huge leap. And this approach is very successful. 
• Just In Time ( JIT ) - Most companies do not hold the inventories for long time and get them when required. This makes quality more significant.
• Marginal Analysis - The point where added quality doesn't add any additional value. This point one should stop. 
• Cost of quality - The Cost of Conformance should be less that Cost of Non Conformance.

The planning includes determining how to measure the quality -

• Flow Charting -  Most common way to measure quality.

• Bench Marking - Using previous projects to use as a Bench Mark for the current project.
• Design Of Experiments  ( DOE ) - DOE is a statical method that allows you to systematically change all of the important factors in a process and see which combination has a lower impact on the project.  This is faster and more accurate than chnaging one at time. 
• Statistical Sampling - Just to use samples to test the quality.
• Flow-charting - A flowcharting shows a process end to end and  hence provides visibility to the pottential quality issues.

PERFORM QUALITY ASSURANCE

This process is to answer the questions like "Are we using the standards ?" "Can we improve the standards ?"

The following ways we can control quality assurance -

• QUALITY AUDIT -   Team inspects if the project is complying with the company policies , standards and procedures. 

• PROCESS ANALYSIS - Many work / activities get repeated in a project. When few times the activity is done with the lesson learned a process  analysis is done to improve the next time when the activity is done.

PERFORM QUALITY CONTROL

There are some basic terms to aware about :

• Mutually Exclusive - Cannot happen together. Flip a coin and it can be either be head or tails.
• Normal Distribution - Most common standard deviation chart like a bell curve.
• Statistical Independence - Probability of one event occuring doesnot impact another event.
• Standard Deviation ( SIGMA ) - A measure of standard deviation. Measure of how far you can be from mean. [ ( P - O ) / 6 ]

                   +/- 1 Sigma = 68.26 % fall within control limit.

                            +/- 2 Sigma = 95.46 %

                            +/- 3 Sigma = 99.73 %

The following are the ways to control quality:

Cause And Effect Diagram

          The cause and effect diagram gives a way to understand the  route cause of an issue. Helps to solve the issue and provide better decisions.

Flow-charting

A flow-charting shows a process end to end and  hence provides visibility to the pottential quality issues.

Histograms

Data in form of bars. 

Pareto Chart 

Data in form of bars but to indicatr higher priority first. 

Run Chart

Historical data in form of chart.

Scatter Diagram

Compares two variables.

Control Chart

Explained  in Quality Planning

Procurement Management

Time and Material ( T&M ) or Unit Price Contracts

• Buyer buys per-hour or per-item basic
• Frequently used for service efforts in which level of efforts cannot be calculated.

Cost Reimbursable ( CR )

• Buyer pays seller the cost incurred for the product or service to the extent prescribed in the contract.
• This of contract is used where scope of work is not clear.

Types of Cost Reimbursable Contracts

Risk and Contract Types

The most important factor in the contract is where the risk is shifted. Who needs to be more careful and why. The figure below displays the Risk shift: