Class Slides for M4 Organization+ Culture + Project Selection+ Project Initiation.pptx

project selection

1. Module 4 organizational culture project initiation Mgmt 6084 project management

2. Review M3 Lets Play Kahoot!

3. Module agenda Module 3 Homework Exercise Organizational Culture Organizational Structure Project Initiation Strategic Management Project Selection Project Charter Homework and evaluations Will be covered in the In Class quiz. M6

4. From last week – stakeholder management A “take-away” about stakeholder management that we had not already discussed last week. Click Here , What You Must Know About Stakeholder Management http://www.corpedgroup.com/resources/pm/WhatMustKnowStakeholder.asp Importance of governance….approach to decision making Assess how key stakeholders may react to certain situations Creating an a tmosphere of enablement

5. Group Assignment #1 Project description /10 Identify stakeholders - context diagram /20 Stakeholder analysis – 10 stakeholders /20 Power/interest grid /5 Stakeholder management plan – 1 stakeholder /20 Most interesting thing learned /5 Overall quality of submission – professionalism, grammar, spelling, syntax, format, etc. /10 Total /90 References Up to -5 Team participation record Up to -5

6. Templates EtC MGMT 6084 – Group Assignment 1 – Stakeholder Management Group : # Project Description – include detail on the scope, schedule, performance and costs.   Identify Stakeholders (insert context diagram; minimum 10 point font) Stakeholder Analysis (simplified version of matrix without contact information) Power/Interest Grid ( template) Stakeholder Management Plan ( create your own template based on details on the slide from Module 3) Most interesting thing learned – can be group or notes from each person References Participation Record

7. Contract Review Sample Contract on FOL

8. Organizational culture The “personality” of the organization that sets it apart from other organizations: Provides a sense of identify to its members. Helps legitimize the management system of the organization. Clarifies and reinforces standards of behaviour.

9. organizational behaviour Layers and levels of organizational culture

10. Project manager’s understanding of the organizations It is critically important to understand the corporate culture in which you work as a project manager Decision-making: Who makes the decisions? What processes are followed? Communication: consider level of formality, preferred medium and complexity Use company/industry vocabulary/jargon and document/submission formats Applies to: Parent organization (where your paycheck comes from) Client/customer organizations Other organizations connected to project

11. Organizational structure Organizational structure is dictated by: type of business business model technology (fast, agile) rate of change complexity competition etc. Division of labour, and patterns of coordination, communication, workflow, and formal power that direct organizational activities More than just an organizational chart Relates to job design, team dynamics, power relationships, etc.

12. Organizational structure related to project delivery Three main organizational structures related to project delivery: Functional/traditional/classical Projectized Matrix

13. 1. Functional/traditional/classical Characteristics: Absolute control Direct lines of reports (each employee has clearly identified manager/supervisor) Grouped by specialty (e.g., production, marketing) Each department performs its own project management “Silos”

14. 1. Functional/traditional/classical Project is managed with the existing functional hierarchy.

15. 2. Projectized structure Characteristics: The project manager has authority Team members are often co-located Project team reports to the project manager

16. 2. Projectized structure

17. 3. Matrix structure Characteristics: Combination of functional and projectized organizational structures Three types of matrix structure: weak, balanced, strong

18. 3. Matrix structure Weak matrix: Similar to functional structure Project manager considered a coordinator with little authority Functional manager controls the budget

19. 3. Matrix structure Balanced matrix: Fulltime project manager Project manager has low to moderate authority Functional manager and project manager controls the budget

20. 3. Matrix structure Strong matrix: Project manager has strong authority and is a fulltime position Project manager controls the budget

21. 3. Matrix structure – distribution of power Strong Matrix Balanced Matrix Weak Matrix   Power Project Manager Power Functional Manager Power High Power Low Power Weak matrix is closer to functional structure Strong matrix is closer to project-based structure

22. Organizational structure related to project delivery Overview:

23. Multiple choice fun! In which organizational structure is the worker in the greatest jeopardy of losing his/her job if the project is cancelled? Functional Projectized Strong matrix Weak matrix

24. Multiple choice fun! In which organizational structure does the project manager have the most challenge in accessing required resources for a project? Functional Projectized Strong matrix Weak matrix

25. What is strategic management? Strategic management is the process of assessing “what we are” and deciding and implementing “what we intend to be and how we are going to get there”. Strategy describes how an organization intends to compete with the (limited) resources available in the existing and perceived future environment.

26. The path from corporate mission statement to selection of projects. In other words, corporate strategy and change is implemented through projects. Project Selection

27. About saying “no” to projects Project selection Why go through process of project selection? Organizations end up doing too many projects….that are “all” considered “high” priority Taking on too many projects often results in project running late, over budget, and not delivering the promised goods or services Resources, funding, people’s energy, and executive attention are finite .

28. Project selection – comparing options Project Selection Comparing Project Options Non-financial analysis Start with “must”(required) objectives Then evaluate “want” objectives using weighted criteria Project that do not satisfy “must” objectives do not move on to “want” objective evaluation

29. Project selection A second example of a weighted decision matrix without “must” objectives: Criteria Weight SJS Enterprises Game Access DVD Link Educational 15% 90 Sports-related 15% 90 90 90 Secure payment 10% 90 50 50 (rows left out here—see textbook) Weighted Project Scores 100% 56 14.5 12.5 Three projects being considered. - there are more criteria)

30. Project selection Financial analysis Financial analysis of projects using three methods: Payback (period) analysis Net present value (NPV) analysis Return on investment (ROI)

31. Payback (Period) analysis Payback (period) analysis determines the amount of time it will take for a project to recover its investments. The point after which the benefits start to outweigh the costs

32. 1. Payback Period analysis This five-year project is expected to take four years to pay back the original investment using cash inflows.

33. 1. Payback Period analysis Example: Project A has an initial investment of $600,000 and expected project cash inflows of $240,000 for 4 years. Project B has an initial investment of $375,000 and expected project cash inflows of $120,000 for 5 years. What is the payback period for Project A? What is the payback period for Project B? Considering only payback period analysis, which project is preferred, and why?

34. 1. Payback Period analysis Example: Project A has an initial investment of $600,000 and expected project cash inflows of $240,000 for 4 years. Project B has an initial investment of $375,000 and expected project cash inflows of $120,000 for 5 years. What is the payback period for Project A? What is the payback period for Project B? Considering only payback period analysis, which project is preferred, and why? 1 2 240 Outflow - ve Inflow + ve 3 4 A 600 240 240 240 3 1 2 120 Outflow - ve Inflow + ve 4 B 375 120 120 120 5 120 PP A = 600/240 = 2.5y PP B = 375/120 = 3.1y

35. Net present value (NPV) aNALYSIS Benefits of NPV: It is a much more useful calculation than payback period . Uses the ‘time value of money’ to standardize project outcomes (next slide). Allows for the application of risk measures directly to the calculation. Projects can be compared (ranked) directly, even with differing investment patterns and project length.

36. Net present value Time value of money An important concept related to NPV is time value of money: https://www.youtube.com/watch?v=MdK-A1VQJls

37. Net present value r Where: PV = Present Value r = interest/discount rate NPV = Net Present Value If… It means… Then… NPV > 0 …the investment would add value to the organization (achieving return of more than the discount rate) …the project may be accepted. NPV < 0 …the investment would subtract value from the organization (achieving return of less than discount rate) …the project should be rejected. NPV = 0 …the investment would neither gain nor lose value for the organization …decision should be based on other criteria (e.g., strategic positioning or other factors not explicitly included in the calculation). NPV = r

38. Time Value of Money https://youtu.be/733mgqrzNKs?si=eI_oV_GL2QlEiuht

39. Net present value example Let’s assess two projects with net present value (assume 15% discount/interest rate). Project A has an initial investment of $700,000 and project cash inflows of $225,000 for 5 years Project B an initial investment of $400,000 and project cash inflows of $110,000 for 5 years n = ? r = ?

40. Net present value example Let’s assess two projects with net present value (assume 15% discount/interest rate). Project A has an initial investment of $700,000 and project cash inflows of $225,000 for 5 years Project B an initial investment of $400,000 and project cash inflows of $110,000 for 5 years     What do the NPV calculations tell us about these two projects?

41. Excel Sample:

42. Net present value example What do the NPV calculations tell us about these two projects? If… It means… Then… NPV > 0 …the investment would add value to the organization (achieving return of more than the discount rate) …the project may be accepted. NPV < 0 …the investment would subtract value from the organization (achieving return of less than discount rate) …the project should be rejected. NPV = 0 …the investment would neither gain nor lose value for the organization …decision should be based on other criteria (e.g., strategic positioning or other factors not explicitly included in the calculation).

43. Net present value Discount/interest rate The value of r (discount/interest rate) has a big impact on the NPV calculation. How do we determine r ? The weighted average cost of capital (WACC) r NPV = r ? FYI Only:

44. Net present value video – detailed example Available in Module 4 on FOL

45. Return on investment (ROI) You are asked to assess a potential (external) project to provide consulting services to the City of London for design of a new library website. Your company requires a minimum 15% return on investment (ROI). The expected consulting fees that your firm would earn from the City on the project $150,000 Estimate of your internal cost to deliver the project including staff, expenses, overhead $135,000 Return on investment (ROI) 150,000-135,000 135,000 = 0.111=11.1% <15% Based on ROI only, you would recommend NOT taking the project

46. “Go/no go” decision Projects are analyzed based on feasibility (non-financial) analysis and financial analysis The “go/no go” decision is made. The project fits our corporate strategy and satisfies financial requirements.

47. A project has been selected. Now what? We prepare the project charter: The document issued by the project sponsor (or project initiator) that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. Remember this from an earlier module?

48. Project charter – typical contents Identification section Project purpose or justification Measurable project objectives and related success criteria High-level requirements Assumptions and constraints High-level project description and boundaries High-level risks Summary milestone schedule Summary budget Stakeholder list Approvals

49. Homework and evaluations Readings (and other material) for next module as listed in Course content , Course Overview, Module 4 – Start Here + checklist Module 3 Group Assignment # 1 – Stakeholder Management due next week In Class quiz is on FOL Module #4 + Text book chapters 6 & 7 , quiz is scheduled for Module 6 Prepare for Project Selection Quiz - Review questions are on FOL Module 4 – these can be reviewed as a homework exercise. In class time does not allow us to go through these in detail so bring your questions to class Answers to the quiz will be released on Module 5 Browser is required for the quiz on Module 6 Check the Respondus Browser , ensure you have the correct updated software for the browser. Respondus Browser: there is a practice quiz with 2 questions under quizzes, The browser is required for the practice as well

50. references Watts, A. (2014). Project Management. Victoria, B.C.: BCcampus . Retrieved from https://opentextbc.ca/projectmanagement/ . Project Management Institute (2017). A Guide to the Project Management Body of Knowledge (Sixth Edition). Kerzner, Harold (2017). Project Management, Twelfth Edition. Rose, Kenneth H. (2005). Project Quality Management: Why, What and How Larson, Eric W., Gray, Clifford F. (2018). Project Management, The Managerial Process (Seventh Edition).