Managing Information Technology

6th Edition
CHAPTER 12
IT PROJECT MANAGEMENT

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 IT Projects are Difficult
• Although reports vary considerably, IT projects
fail frequently
– According to the Standish Group, the failure rate may
approach 2/3 of IT projects
– Sauer, Gemino, and Reich (2007) report much lower
IT project failure rate with over 2/3 of projects
delivered close to on-time and on-budget
• Organizational IT project management greatly
affects the success of IT projects

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 Goal of IT Project Management
• Overall goal of project management is to
deliver a quality system on schedule and on
budget that meets the needs of the business
IT Project Management Goal
Scope
Time
Cost

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 Triple Constraint
• Time, cost, and scope are called the triple
constraint
– A change in one automatically changes at least
one of the others

Scope

Time Cost

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 Project Management Basics
Project

●
● A project is a temporary endeavor undertaken to create a unique product or service. It typically is a one-time initiative
that can be divided into multiple tasks, which require coordination and control, with a definite beginning and ending

Project Management

●
● The application of knowledge, skills, tools, and techniques to a broad range of activities in
order to meet the requirements of a particular project (PMBOK Guide, 3rd ed.)

Program

●
● A group of projects managed in a coordinated way to obtain benefits not available
from managing them individually (PMI, 1996)

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 Project Management Institute
• The Project Management Institute (PMI) is an
international organization that provides
resources and certifications to help project
managers reach their project goals
– Among their resources are the Project
Management Body of Knowledge (PMBOK) Guide
which details and attempts to standardize project
management practices

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 Project Management Institute
• The PMBOK Guide contains nine areas of competency
1. Project Scope
2. Project Time
3. Project Cost
4. Human Resources
5. Quality Management
6. Risk Management
7. Project Communications
8. Procurement
9. Project Integration

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 Strategic Management of IT
• IT Portfolio Management
– Senior business and IT leaders manage how the
entire IT portfolio fits with the organization’s
strategic vision
• Decisions are made about the approval and
prioritization of IT projects based on financial and
strategic assessments
• Individual projects and programs are undertaken only
after the assessing their fit with the overall IT portfolio

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 Strategic Management of IT
IT portfolio management

Program management

Project management

Project A

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 Strategic Management of IT
• New projects are typically submitted using a
template to assist with prioritization

Figure 12.2
(Vavre and Lane 2004)

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 Strategic Management of IT
• IT project prioritization scheme
– During the evaluation of IT projects, a
categorization scheme is usually used to assist
managers in their decision making
– The Denis et al. (2004) scheme:

Highly
Absolut Desired / Want Nice to
e Must Business-
Critical ed Have
Includes short-term projects with good financial returns and portions of very large projects already
●
●
●A
A mandate
mandate due
due to
to security,
security, legal,
legal, regulatory,
regulatory, or
or end-of-life-cycle
end-of-life-cycle IT
IT issues
issues
Includes short-term projects with good financial returns and portions of very large projects already
●

in progress
Valuable, but with longer time periods for returns on investment (more than a 12-month period)
●

Valuable, but with longer time periods for returns on investment (more than a 12-month period)
● Projects
Projects with
●
●
with good
good returns,
returns, but
but with
with lower
lower potential
potential business
business
in progress

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 Project Management Roles
• All IT projects should have a project manager
and a project sponsor
• Additionally, some projects will require a
project champion for success
• Each of these roles is important to project
success, especially in complex projects

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 Project Management Roles
• Project Manager (PM)
– Typically systems projects are lead by IT project
managers who possess technical knowledge and project
management skills
– A project manager’s main responsibility is to plan and
execute the project
– The following non-technical skills are important for
successful project management:

Figure 12.3

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Project Management Roles

Knowledge
Skills

Project
Manageme
nt Skills

Effective IT project management

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 Project Management Roles
• Project Sponsor
– Typically a business manager who “owns” the
project (the sponsor is paying for the project)
– The sponsor has several responsibilities to the
project:
• Fights for project approval
• Ensures project resources
– Funding
– Project team members
– It is critical for the project manager to have a
strong relationship with the sponsor
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 Project Management Roles
• Project Sponsor

Tasks to Engage
Sponsor
●
●Schedule regular meetings with the sponsor to ensure the project is on track, according to current business
priorities
●Create a list of expectations with the sponsor to clarify the project manager role and the sponsor’s role
●

●Agree on how handoffs between the project manager and sponsor will occur
●

●Discuss the sponsor’s preferences for when and how project issues will be brought up with the sponsor
●

●Learn how the sponsor will communicate the status of the project to peers and the company’s top management
●

●Determine what metrics the sponsor will use to judge the completion of the project
●

●Agree on how the sponsor will participate in the post-project review

●

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 Project Management Roles
• Project Champion
– A role played by a business manager with high
credibility
– Requires enthusiasm and excellent communication
– Can be the same as the project sponsor, but often
more effective if the champion is a lower-level
business manager who is highly impacted by the
project

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 The Project Life Cycle
• All successful projects pass through four
generic phases along the path to completion
• We will discuss all four of the project phases
because all are crucial to project success

Project Project Project

Executio Project
Initiati Planni n and Closing
on ng Control
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 Project Initiation
• The first step in the project life cycle is project
initiation
• The main deliverable for this phase is the
project charter

Project Charter

●
● A document that describes a project’s objectives, scope, assumptions, and
estimated benefits

Project Project Project Execution Project

Initiation Planning and Control Closing

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 Project Initiation
• Many dimensions of project feasibility are likely to be assessed in this
phase
– Economic
• Does this project give a positive financial return?
– Operational
• How will the project impact the organization’s operations?
– Technical
• Does the organization have the technology and expertise required?
– Schedule
• Is it possible to finish the project in the required schedule? How is the project’s schedule
impacted by other timelines?
– Legal or contractual
• Does the project have any legal conflicts?
– Political
• Is there support for the project from the relevant stakeholders?

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 Project Planning
• The second phase of the project life cycle is
project planning
• The primary deliverables for this phase of the
project are the statement of work and project
plan
• There are three major components of this phase
1. Scheduling
2. Budgeting
3. Staffing
Project Project Project Execution Project
Initiation Planning and Control Closing

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 Project Planning
1. Scheduling
– The first step of scheduling is generally a work breakdown analysis

Work Breakdown Analysis

●
● A basic management technique that systematically subdivides blocks of work
down to the level of detail at which the project will be controlled

– Once the work is broken into tasks, time estimates are assigned to
each task based on past experience
– It is important to consider task dependencies when creating the
master schedule with project milestones

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 Project Planning
2. Budgeting
– Approaches to estimating
• Bottom-up
– Based on work-breakdown
• Top-down (parametric estimating)
– Used with not enough is known about the project to create a work-
breakdown
– Inexperienced cost estimators often make the following
mistakes:
• Too optimistic in their assessments
• Leave components out that should be estimated
• Do not use a consistent methodology

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 Project Planning
2. Budgeting
– Purposeful inaccurate estimations of the budget
can have adverse effects
– Highballing (or budget padding)
• Overestimation of project costs
• Projects may not be approved because of higher costs
– Lowballing
• Underestimating project costs
• Used to gain approval of questionable projects
• Often lead to project failures when overbudget

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 Project Planning
3. Staffing
– To succeed, a project must contain the right IT skills mix of the
professionals assigned to the project
– An effective project manager must have the ability to estimate the skill
type, proficiency level, quantity, and time required for personal to
complete project tasks
– Some staff may require training for the project
• Some organizations have created Centers of Excellence where employees can
learn additional skills that may be required for future projects
– Outside contractors
• Important to transfer knowledge from contractors to employees to remove
dependency
– Teambuilding
– Incentives

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 Project Planning
3. Staffing
– One method of obtaining skilled professionals is
to utilize outside contractors
• It is important for organizations to transfer knowledge
from contractors to employees to remove future
dependency on the contractors
• This can increase project risk because of uncertainty
in the contractor’s expertise and behavior

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 Project Planning
• Primary deliverables from the planning phase
– Statement of Work
– Project Plan
Statement of Work

●
● A high-level document for the customer that describes what the project will
deliver and when

Project plan

●
● A formal document that includes the project’s schedule, budget, and assigned resources
that is used by the project manager to guide the execution and control of the project

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 Project Planning
• Primary deliverables from the planning phase
– Statement of Work
– Project Plan
• Additionally, two types of charts commonly
accompany these documents
– PERT (or CPM)
– Gantt

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 Project Planning
• Program Evaluation and Review Technique
(PERT) or Critical Path Method (CPM)
Figure 12.5

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 Project Planning
• Gantt Chart Figure 12.6
(Valacich, George, and Hoffer 2001)

Figure 12.5

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 Project Execution and Control
• The third phase of the project life cycle
• The deliverable for this phase is the completed
project
• Most projects exhibit the following characteristics
1. Risk and uncertainty are highest at the start of the project
2. The ability of the project stakeholders to influence the
outcome is highest at the start of the project
3. Cost and staffing levels are lower at the start of the
project and higher toward the end
Project Project Project Execution Project
Initiation Planning and Control Closing

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 Project Execution and Control
• Communication with stakeholders is critical
• Status reporting should be simple and clear

Figure 12.7
(Roman 1986)

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 Project Execution and Control
• Managing Project Risk
– All projects carry risk and some IT projects (e.g.,
enterprise projects) involve considerable risk of
failure
– Early warning signs of project failure

Figure 12.8
(Kappelman et al. 2006)

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 Project Execution and Control
• Managing Project Risk
– The risk exposure profile changes over time
• Risk decreases over time as the organization’s stake
increases

Figure 12.11
(Frame 1994)

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 Project Execution and Control
• Managing Project Risk
– Project managers go through several phases
when managing risk
Figure 12.9
(Mohtashami et al. 2006)

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 Project Execution and Control
• Managing Project Risk
– Three overall strategies are utilized for managing
risk

Reductio Avoidanc
Exchange
n e
Strategy
Strategy Strategy
An unknown risk or known critical risk is
●
● By allocating to the
●
●

exchanged for a more acceptable level

●
●An alternative technical
project the best human
of risk. For example, the risk can be approach to a problem
shifted to a third party by resources available, a
subcontracting with another may be chosen in order
organization
organization under
under aa fixed-cost
fixed-cost contract
contract specific project risk can
for a specific project deliverable be reduced to avoid risk exposure

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 Project Execution and Control
• Managing Business Change
– New systems can lead to major changes in
business processes
– Due to these changes, IT projects often require
change management to overcome resistance to
the new system

Change Management

●
● The ability to successfully introduce change to individuals and organizational units

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 Project Execution and Control
• Multistage change models
– As change management has become a more
important component of IT projects, several
change models have been proposed to help
managers think about change
– Two important change models we will consider:
• Lewin/Schein Change Model
• Kotter Change Model

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 Project Execution and Control
• Multistage change models
• Lewin/Schein Change Model
Figure 12.12

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 Project Execution and Control
• Multistage change models
• Kotter Change Model
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate the vision
5. Empower others to act on the vision
6. Plan for and create short-term wins
7. Consolidate improvements and produce still more change
8. Institutionalize new approaches

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 Project Execution and Control
• Managing conflict
– Project managers may have conflict on their teams or
with other stakeholders
– Strategies may vary depending on situation, but overall
there are five modes of conflict resolution (Kerzner 2006)
1. Confronting – a collaborative, problem-solving approach where
both parties try for a win-win
2. Compromising – each party gives something up
3. Smoothing – minimizing the differences between the parties
4. Forcing – competing or dominant; one party goes all out to win
5. Avoiding – removal of one party from the conflict

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 Project Closing
• Even when the project deliverables are
complete, successful organizations include a final
closing stage to review project success
• A post-project review is used to share lessons-
learned during the project
– Typical questions during this phase may include:
• What went right on this project?
• What went wrong on this project?
• What would you do differently on the next project, based
on
Project your
Initiation
experience
Project with this project?
Planning
Project Execution
and Control
Project
Closing
Initiation Planning Closing

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Special Issue ●
`
Managing Complex IT Projects

• To overcome this complexity, many organizations use consulting firms to

take advantage of their expertise performing similar projects in other firms
• Three critical success factors have been identified in large, complex projects:
1. The business vision was an integral part of the project
2. A testing approach was used at the program level (not just at the individual
application level)
3. The projects used a phased-release approach (rather than a single-release rollout
strategy)

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Special Issue ●
Managing Complex IT Projects

• Complexity increases with resources are off-

site and offshore

Figure 12.15
(Poria 2004)

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 Special Issue ●
Managing Virtual Teams

Virtual Team

●
● Project teams that are geographically dispersed and communication through
information technology

• These teams can bring together individuals with

expertise that cannot meet face-to-face
• These teams introduces additional project risks
– Differences in communication norms
– Unfamiliarity with a different culture
– Lack of trusting relationships across team members

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Special Issue ●
Managing Virtual Teams

• Kostner (1996) identified six strategies for

managing virtual teams

Six Leadership Secrets for

Managing Remote Workers
●
●Aim to build trust through every interaction
●
●Create symbols and structures that unify the dispersed work group
●Establish ongoing opportunities for the team to learn more about each other, both professionally and personally
●

●Develop a daily alignment tool to focus the effort of the team

●

●Be scrupulously fair in treating all team members

●

●Be crystal clear about project objectives

●

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