Modern Systems Analysis and Design Ch5

Chapter 5

Initiating and PlanningSystems Development Projects

Modern Systems Analysisand DesignFourth Edition Jeffrey A. HofferJoey F. GeorgeJoseph S. Valacich

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Learning Objectives

Describe steps involved in project initiation and planning.

Explain the need for and contents of Statement of Workand Baseline Project Plan.

List and describe methods for assessing projectfeasibility.

Describe tangible vs. intangible costs and benefits, andone-time vs. recurring costs and benefits.

Perform cost-benefit analysis, and understand time valueof money, present value, discount rate, return oninvestment, and break-even analysis.

Describe rules for evaluating technical risk of systemsdevelopment projects.

Describe activities and roles of structured walkthroughs.

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Project Initiation and Planning

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Project Initiation Tasks

Establish:

Initiation team

Relationship with customer

Project initiation plan

Management procedures

Project management environment

Project workbook

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Project Planning Tasks

Describe project scope, alternatives, feasibility.

Divide project into tasks.

Estimate resource requirements and create resourceplan.

Develop preliminary schedule.

Develop communication plan.

Determine standards and procedures.

Identify and assess risk.

Create preliminary budget.

Develop a statement of work.

Set baseline project plan.

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Deliverables and Outcomes

Business Case

Justification for an information system,expressed as tangible and intangible costsand benefits (preliminary budget), andtechnical/organizational feasibility

Baseline Project Plan (BPP)

Statement of Work (SOW)

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Statement of Work(SOW) is a “contract”between the IS staffand the customerregardingdeliverables and timeestimates for asystem developmentproject.

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System ServiceRequest (SSR) is aform requestingdevelopment ormaintenance of aninformation system. Itincludes the contactperson, a problemstatement, a servicerequest statement, andliaison contactinformation.

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Assessing Project Feasibility

Economic feasibility

Technical feasibility

Operational feasibility

Schedule feasibility

Legal and contractual feasibility

Political feasibility

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Economic Feasibility

Cost-benefit analysis: identify all thefinancial benefits and costs associatedwith a project

Tangible vs. intangible benefits

Tangible vs. intangible costs

One-time vs. recurring costs

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Tangible Benefits

Benefitsthat can bemeasuredin dollarsand withcertainty

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Benefits that cannot easily be measured in dollars or with certainty

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Types of Costs

Tangible: can be measured in dollars andwith certainty

Intangible: cannot easily be measured indollars or with certainty

One-time: a cost associated with project start-up and development or systems start-up

Recurring: a cost associated with ongoingevolution and use of a system

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Possible IS Project Costs

Procurement

Consulting, equipment, site preparation, capital,management time

Start-up

Operating systems, communications installation,personnel hiring, organizational disruption

Project-related

Application software, software modification,personnel overhead, training, data analysis,documentation

Operating

System maintenance, rental, asset depreciation,operation and planning

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One-time Costs

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Recurring Costs

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Three Financial Measurementsfor Economic Feasibility

Net Present Value (NPV)

Use discount rate to determine presentvalue of cash outlays and receipts

Return on Investment (ROI)

Ratio of cash receipts to cash outlays

Break-Even Analysis (BEA)

Amount of time required for cumulativecash flow to equal initial and ongoinginvestment

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Definitions of Terms

Present value: current value of a futurecash flow

Discount rate: rate of return used tocalculate the present value of futurecash flows

Time value of money (TVM): comparingpresent cash outlays to future expectedreturns

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Net Present Value

PVn = present value of Y dollars n years fromnow based on a discount rate of i.

NPV = sum of PVs across years.

Calculates time value of money.

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Break-Even Analysis

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Technical Feasibility

Assessing the organization’s ability toconstruct the proposed system

Takes into account various project riskfactors

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Project Risk Factors

Project size

Team size, organizational departments, project duration,programming effort

Project structure

New vs. renovated system, resulting organizational changes,management commitment, user perceptions

Development group

Familiarity with platform, software, development method,application area, development of similar systems

User group

Familiarity with IS development process, application area, useof similar systems

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High technical familiarity mitigates risk due to project sizeand structure. Low familiarity increases risk.

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Other Feasibility Concerns

Operational

Does the proposed system solve problems or take advantage ofopportunities?

Did it come from ISP?

Large impact on organization’s structure and procedures -- riskier

Schedule

Can the project time frame and completion dates meet organizationaldeadlines?

Government deadline, business cycle, competitor deadline

Vacations and holidays

“Rough cut” during this phase

Trade-offs – development environments, personnel

Legal and Contractual

What are legal and contractual ramifications of the proposed systemdevelopment project?

Software licensing, copyrights, ownership of software, etc.

Political

How do key stakeholders view the proposed system?

Impacts distribution of power?

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Baseline Project Plan(BPP) is adocument intendedprimarily to guidethe developmentteam.

Sections:

1)Introduction

2)System description

3)Feasibilityassessment

4)Managementissues

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Project Scopestatement is partof the BPPintroduction.

Sections:

1)Problem statement

2)Project objectives

3)Project description

4)Business benefits

5)Deliverables

6)Expected duration

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Factors in Determining Scope

Organizational units affected by newsystem

Current systems that will interact with orchange because of new system

People who are affected by new system

Range of potential system capabilities

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Diagram Depiction of Project Scope

Context level is a top level data flow diagram. Data flow diagramsare covered in Chapter 7.

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Structured Walkthroughs

A peer-group review of any product createdduring the system development process

Roles: coordinator, presenter, user,secretary, standard-bearer, maintenanceoracle

Can be applied to BPP, systemspecifications, logical and physical designs,program code, test procedures, manuals anddocumentation

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Structuredwalkthroughform

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Summary

In this chapter you learned how to:

Describe steps involved in project initiation and planning.

Explain the need for and contents of Statement of Work andBaseline Project Plan.

List and describe methods for assessing project feasibility.

Describe tangible vs. intangible costs and benefits, and one-time vs. recurring costs and benefits.

Perform cost-benefit analysis, and understand time value ofmoney, present value, discount rate, return on investment,and break-even analysis.

Describe rules for evaluating technical risk of systemsdevelopment projects.

Describe activities and roles of structured walkthroughs.