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: