Chapter 5 Initiating and Planning Systems Development Projects

Learning Objectives 7. Explain the role of an analyst in feasibility and requirement analysis.

Learning Objectives Describe the differences between tangible and intangible benefits and costs and between

Learning Objectives Ø Describe the activities and participant roles within a structured walkthrough. ©

Project Initiation and Planning © 2006 ITT Educational Services Inc. SE 350 System Analysis

Project Initiation Tasks • Establish: Ø Ø Ø Initiation team Relationship with customer Project

Project Planning Tasks • • • Describe project scope, alternatives, feasibility. Divide project into

Deliverables and Outcomes • Business Case Ø Justification for an information system, expressed as

Statement of Work (SOW) is a “contract” between the IS staff and the customer

System Service Request (SSR) is a form requesting development or maintenance of an information

Assessing Project Feasibility • • • Economic feasibility Technical feasibility Operational feasibility Schedule feasibility

Economic Feasibility • Cost-benefit analysis: helps to identify all the financial benefits and costs

Tangible Benefits that can be measured in dollars and with certainty © 2006 ITT

Benefits that cannot easily be measured in dollars or with certainty © 2006 ITT

Types of Costs • Tangible cost: can be measured in dollars and with certainty

Possible IS Project Costs • Procurement Ø Consulting, equipment, site preparation, capital, management time

One-time Costs © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software

Recurring Costs © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software

Three Financial Measurements for Economic Feasibility • Net Present Value (NPV) Ø Use discount

Definitions of Terms • Present value: current value of a future cash flow •

Net Present Value PVn = present value of Y dollars n years from now

Break-Even Analysis © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software

Technical Feasibility • Assesses the organization’s ability to construct the proposed system • Takes

Project Risk Factors • Project size Ø Team size, organizational departments, project duration, programming

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

Other Feasibility Concerns • Operational Ø Does the proposed system solve problems or take

Baseline Project Plan (BPP) is a document intended primarily to guide the development team.

Project Scope statement is part of the BPP introduction. Sections: 1) Problem statement 2)

Factors in Determining Scope • Organizational units affected by new system • Current systems

Diagram Depiction of Project Scope Context level is a top level data flow diagram.

Structured Walkthroughs • A peer-group review of any product created during the system development

Structured walkthrough form © 2006 ITT Educational Services Inc. SE 350 System Analysis for

Summary In this chapter you learned how to: 7. Explain the role of an

Summary Describe the differences between tangible and intangible benefits and costs and between one-time

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Learning Objectives 7. Explain the role of an analyst in feasibility and requirement analysis. Ø Ø Ø Describe the steps involved in the project initiation and planning process. Explain the need for and the contents of the Statement of Work and Baseline Project Plan. List and describe various methods for assessing project feasibility. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 2

Learning Objectives Describe the differences between tangible and intangible benefits and costs and between one-time and recurring benefits and costs. Ø Perform const-benefit analysis and describe what is meant by the time value of money, present value, discount rate, net present value, return on investment (ROI), and break-even analysis. Ø Describe the general rules for evaluating the technical risks associated with a systems development project. Ø Describe the activities and participant roles within a structured walkthrough. Ø © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 3

Project Initiation Tasks • Establish: Ø Ø Ø Initiation team Relationship with customer Project initiation plan Management procedures Project management environment Project workbook © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 6

Project Planning Tasks • • • Describe project scope, alternatives, feasibility. Divide project into tasks. Estimate resource requirements and create resource plan. 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. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 7

Deliverables and Outcomes • Business Case Ø Justification for an information system, expressed as tangible and intangible costs and benefits, and technical/organizational feasibility • Baseline Project Plan (BPP) • Statement of Work (SOW) © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 8

Statement of Work (SOW) is a “contract” between the IS staff and the customer regarding deliverables and time estimates for a system development project. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 9

System Service Request (SSR) is a form requesting development or maintenance of an information system. It includes the contact person, a problem statement, a service request statement, and liaison contact information. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 10

Assessing Project Feasibility • • • Economic feasibility Technical feasibility Operational feasibility Schedule feasibility Legal and contractual feasibility Political feasibility © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 11

Economic Feasibility • Cost-benefit analysis: helps to identify all the financial benefits and costs associated with a project • Tangible vs. intangible benefits • Tangible vs. intangible costs • One-time vs. recurring costs © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 12

Types of Costs • Tangible cost: can be measured in dollars and with certainty • Intangible cost: cannot easily be measured in dollars or with certainty • One-time cost: a cost associated with project start-up and development or systems start-up • Recurring cost: a cost associated with ongoing evolution and use of a system © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 15

Possible IS Project Costs • Procurement Ø Consulting, equipment, site preparation, capital, management time • Start-up Ø Operating systems, communications installation, personnel hiring, organizational disruption • Project-related Ø Application software, software modification, personnel overhead, training, data analysis, documentation • Operating Ø System maintenance, rental, asset depreciation, operation and planning © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 16

Three Financial Measurements for Economic Feasibility • Net Present Value (NPV) Ø Use discount rate to determine present value of cash outlays and receipts • Return on Investment (ROI) Ø Ratio of cash receipts to cash outlays • Break-Even Analysis (BEA) Ø Amount of time required for cumulative cash flow to equal initial and ongoing investment © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 19

Definitions of Terms • Present value: current value of a future cash flow • Discount rate: rate of return used to calculate the present value of future cash flows • Time value of money (TVM): comparing present cash outlays to future expected returns © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 20

Net Present Value PVn = present value of Y dollars n years from now based on a discount rate of i. NPV = sum of PVs across years. Calculates time value of money. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 21

Technical Feasibility • Assesses the organization’s ability to construct the proposed system • Takes into account various project risk factors © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 23

Project Risk Factors • Project size Ø Team size, organizational departments, project duration, programming effort • Project structure Ø New vs. renovated system, resulting organizational changes, management commitment, user perceptions • Development group Ø Familiarity with platform, software, development method, application area, development of similar systems • User group Ø Familiarity with IS development process, application area, use of similar systems © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 24

High technical familiarity mitigates risk due to project size and structure. Low familiarity increases risk. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 25

Other Feasibility Concerns • Operational Ø Does the proposed system solve problems or take advantage of opportunities? • Schedule Ø Can the project time frame and completion dates meet organizational deadlines? • Legal and Contractual Ø What are legal and contractual ramifications of the proposed system development project? • Political Ø How do key stakeholders view the proposed system? © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 26

Baseline Project Plan (BPP) is a document intended primarily to guide the development team. Sections: 1) Introduction 2) System description 3) Feasibility assessment 4) Management issues © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 27

Project Scope statement is part of the BPP introduction. Sections: 1) Problem statement 2) Project objectives 3) Project description 4) Business benefits 5) Deliverables 6) Expected duration © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 28

Factors in Determining Scope • Organizational units affected by new system • Current systems that will interact with or change because of new system • People who are affected by new system • Range of potential system capabilities © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 29

Diagram Depiction of Project Scope Context level is a top level data flow diagram. Data flow diagrams are covered in Chapter 7. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 30

Structured Walkthroughs • A peer-group review of any product created during the system development process • Roles: coordinator, presenter, user, secretary, standard-bearer, maintenance oracle • Can be applied to BPP, system specifications, logical and physical designs, program code, test procedures, manuals and documentation © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 31

Summary In this chapter you learned how to: 7. Explain the role of an analyst in feasibility and requirement analysis. Ø Ø Ø Describe the steps involved in the project initiation and planning process. Explain the need for and the contents of the Statement of Work and Baseline Project Plan. List and describe various methods for assessing project feasibility. © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 33

Summary Describe the differences between tangible and intangible benefits and costs and between one-time and recurring benefits and costs. Ø Perform const-benefit analysis and describe what is meant by the time value of money, present value, discount rate, net present value, return on investment (ROI), and break-even analysis. Ø © 2006 ITT Educational Services Inc. SE 350 System Analysis for Software Engineers: Unit 6 Slide 34