Hi Paul, I‘ve now got answers to submit for the rest of the chapters which I‘ll post over the next couple of days – thanks for your help and comments! Where I’m not sure what an appropriate answer would be I’ve put a comment in italics. Thanks, Sarah
List five roles that may have an interaction with the development of a project business case and describe the contribution of each of those roles.
Five roles that may have an interaction with the development of the business case are:
1. Steering group
5. Subject matter expert
The steering group is the body within the organisation who will ultimately be approve the business case and give the project the green light to proceed. They will also work with the project sponsor in the creation of the business case and are critically important in gaining support for the project within the organisation.
Users are key to the development of a business plan. As they will ultimately use the outputs of the project and realise its benefits must be consulted early on to define their needs and requirements. As the business case is used to balance the costs, benefits and risks of various options to ultimately arrived at the most suitable option the users requirements are key from an early stage.
Suppliers are also involved in the development of the business plan. Through their knowledge and expertise of their own particular area they can advise the sponsor and project manager on certain aspect of the project and its business case.
The project sponsor owns the Business Case. While they may not physically write the entire document they are ultimately responsible for its content and development. They must also work with the project manager throughout a project’s life cycle to ensure the business case and project management plan remain in line with each other.
Subject Matter Experts are those people who are expert in their field who the sponsor should consult when relevant. For example, this may include procurement specialists, marketing personnel or IT personnel. As distinct from suppliers they will generally be internal to the organisation and may be seconded to the project for its lifetime. They will help to develop the business case by bringing their expertise to bear.
Explain the primary purpose of a business case.
List and describe four components of a business case.
A business case is the ‘why’ of a project. It takes the problems or opportunities an organisation is seeking to address and examine the options available in terms of their relevant costs, benefits and risks. By funnelling these options and reducing them following analysis the business case will ultimately arrive at the optimal option and provide justification for this option.
Four components of a business case are:
The strategic case for a project within the business case provides detail on why the project is going to be carried out. It details the problem or opportunity the project is seeking to address and also how the project will do so.
The business case also details the benefits the project will result in. This is distinct from the actual products produced by the project; rather it is the benefits the users and the organisation will realise once they begin using the projects output. It is important that these are defined early on as this will help determine the actual work the project will carry out to realise these benefits. It also provides the sponsor with something to check against when the project reaches the benefits realisation phase.
A business case should also involve an investment appraisal. The sponsor must show that they have appraised the cost of the project versus the potential benefits. Generally, a project will only proceed where the benefits outweight the costs, although this isn’t always the case. The investment appraisal should take into account the future value of money to provide the steering group with as much information as possible.
A business case will also highlight any constraints on a project. These are external to the project and are generally outside the control of the sponsor. However, their early identification in the business case means that they can be factored into future planning and, where possible, their potential effects mitigated to impact on the project as little as possible.
State a definition of the term ‘success criteria’.
State a definition of the term ‘benefits’.
List and describe four steps in a typical benefits management process.
Success Criteria are the measure by which the success of a project is judged. They will be set out in the project management plan and will be factors such as whether the project was completed on time and to budget. They are primarily the project managers concern and responsibility.
Benefits are the quantifiable improvement resulting from the implementation of the projects outputs. For example, an increase in income following a new product launch, or a reduction in waiting times following the opening of a new call centre. Benefits are the project sponsors concern and responsibility.
Four steps in a typical benefits management process are:
Monitoring and management
???FOURTH – Not sure what the fourth would be – the creation of a plan as with in other areas?
The first step in managing benefits is to identify them. They must be identified in terms of what they are, what they are worth and when it is expected that they will be realised. It is also important to identify what needs to happen for them to be realised.
Once identified and agreed benefits should be monitored. This involves taking the agreed benefits and writing a more formal plan on when and how they will be realised. This will also define when and how progress towards these benefits, for example in the guise of key performance indicators will be reviewed, to ensure the project is still on target to realise them. A project which is not on target to realise the planned benefits should arguably be stopped.
Once the project has finished and the outputs handed over to the users the benefits will be realised. The sponsor should review the benefits in relation to the business case to check that what was originally envisaged has been achieved. This will take the form of a benefits realisation reivew.
List and describe three investment appraisal techniques.
Explain two benefits of undertaking investment appraisals.
Three investment appraisal techniques are:
Net Present Value (NPV)
Internal Rate of Return (IRR)
The payback investment appraisal technique involves working out when the income generated by a project will equal the investment made, or payback. For example, if a project costs £20,000 to implement and brings returns of £5,000 a year from year one onwards, the payback point would be four years after the project. It is a simple technique which is quick and easy to calculate but it does not take into account income beyond the point of payback or the value of money in the future as opposed to at the time of investment.
The Net Present Value (NPV) technique looks at the income generated by a project but applies a discount rate to this future income. This discount rate is generally set by an organisations’ accountant. This method adjusts the perception of future income to make the current view of it more meaningful. Although more complicated than the payback method, the NPV does take the future value of money into account; however it is very dependent on the discount rate chosen which can have a profound effect on the resulting NPV.
The Internal Rate of Return (IRR) technique works by taking different NPV’s calculated at different rates and plotting them to find out the maximum discount rate a project could take before ceasing to make a profit. In effect, this is done by plotting two NPV’s on a graph of discount rate against NPV with the IRR being the point where the line between the two crosses the 0 monetary value. AS with the NPV this is quite complex to calculate but takes into account the future value of money and also tries to compensate for variances caused by the change of discount rate.
A key benefit in carrying out investment appraisal is to make sure the project will be profitable and is therefore viable. Generally, organisations will not instigate projects which lose money and so it is important that a project’s financial viability is appraised early on. Note, however that in some cases the business case may override this, meaning projects which may not be carried out are still carried out.
?? 2nd benefit – not sure what to put as second benefit, as just different facets of the above benefit?
List and describe five components of an information management process.
Five components of an information management process are:
The gathering and collating of information throughout the project is vital to its success. Gathering information helps keep the project on track by ensuring everyone knows what they need to. There are many different types of information which can be collected, such as written, videos or audio files for example. The project manager must ensure they have a process for gathering and scheduling the information received. This should also include for unsolicited information, outside the scope of that which the project manager thought they would collect.
Information storage can take many forms, from electronic storage on a server to physical storage in a filing cabinet. How and where the gathered information is stored is something which the project manager should highlight in the information management process. This should also include security protocols in terms of who can see the information and how they access it.
Through Information dissemination the project manager can ensure that those people who need to see a given piece of information have access to it. Information is of value when it is analysed, understood and assimilated into the running of the project. As part of this the project manager must decide who needs informing if a document is changed, how they are informed and what security protocols are in place.
As a project evolves through its life cycle old pieces of information will be superseded and can therefore be archived. Not all information is needed to be archived and the project manager should decide what is archived and where and how. Consideration must be given to actual physical archiving restraints and costs, such as offsite storage. Often what is to be archived and for how long will be dictated by legislation (such as the 12 year professional indemnity insurance requirements relevant to building contracts) or an organisations’ policy.
In much the same what that some information must be archived, some must also be destroyed. Legislation, such as the Data Protection Act, means that certain information, for example team members personal information, can no longer be stored once not required. The project manager should be aware of the restrictions that apply to their project and ensure they are complied with.
List and describe five components of a project management plan.
Five components of a project management plan are;
In detailing who will be working on a project the Project Management Plan should contain an Organisational Breakdown Structure, showing the roles and reporting lines relevant to the project. In addition to this, a Responsibility Assignment Matrix should be included showing who is responsible for which Work Packages.
The how of the project includes the policies and plans which the project will work to as it proceeds. This includes various plans such as the Health & Safety Plan, Risk Management Plan, and Stakeholder Management Plan to name but a few. These can be reproduced within the Project Management Plan, or referenced as separate documents. It is important to note that where an organisation has standard policies to be used these should be listed rather than inventing entirely new policies provided they are relevant.
When the project will run means including the project schedule, often in the form of a Gantt chart. This can also include precedence diagrams and resource histograms but makes sure everyone is aware of what is expected to happen when.
The cost of the project should also be included. This will involve including a budget for the project, together with the forecasted cash flow and ways to deal with any changes.
Perhaps most importantly is the what of a project – the work that the project manager and project team will actually carry out. The project manager should include here the Work Breakdown Structure or Product Breakdown Structure as well as details of the Work Packages. This section should also include any product specifications and the acceptance criteria the users will be applying.
Explain why accurate estimates are important.
List and describe four reasons why estimates may be inaccurate.
Accurate estimates are important because the sponsor and steering group on any given project will want as much certainty in the project costs and timescales as possible. It is very difficult to provide accurate estimates especially early on in a project but the project manager must work to ensure they are as accurate as possible so that those further up the line do not get any nasty surprises.
Estimates, however, are often inaccurate. Four reasons for this are as follows:
Estimates are subjective
Estimates are based on assumptions
Lack of clarity on who will be doing work
Lack of previous data
All estimates are subjective; they are all dependent on an individual’s knowledge and previous experiences. Therefore, what one person says will take a day and cost £100, someone else may provide an entirely different estimate. The project manager must be aware of these potential biases and minimise their potential affect by challenging them or obtaining multiple estimates.
Estimates are often based on assumptions. Clearly, where these assumptions are wrong the estimate may be wrong. The project manager must challenge these assumptions as they relate to the estimate.
Quite often when providing an estimate it is not apparent who will be doing the work. Therefore an estimate made on the basis of person A doing the work could be entirely wrong if person B ends up doing it. Obtaining different views and compensating for this helps the project manager avoid this issue.
A lack of previous data can also lead to inaccurate estimates. Where previous data from similar projects is available this should be utilised to increase the accuracy of the estimate. However, where it is not available alternative estimating techniques, such as bottom-up, must be used which is more time consuming and can lead to a more inaccurate estimate.
List and describe five steps in a stakeholder management process.
Five steps in a stakeholder management process are:
Engage and influence
??? – not sure what the fifth would be?
The first step in a stakeholder management process is to identify them. This can be done in a variety of ways, by talking to other people, brainstorming or interviewing people. It is important to identify anyone with a vested interest, i.e. a stakeholder, early on, so that they can be effectively communicated with throughout the project.
Once identified the stakeholders should be analysed in terms of their relative power and interest, and their feelings towards the project. It is important to do this so that those with high power can be engaged early on and, if necessary, any negative views they hold be encouraged to become positive. It may be necessary to plot them like this repeatedly to see if their positions change.
Once you have identified and assessed your stakeholders, you must plan how you will manage them. Clearly they can play an important role in the success, or otherwise, of your project so effective engagement is key. The plan should detail how and when you will communicate with them and what information will be provided.
Finally, once the plan has been made it must be implemented and active engagement with the stakeholder must begin. Repeated plotting of their power and interest will enable the project manager to see how successful their stakeholder management plan is. It will also mean that the plan can be changed if it is not being effective.