Project Integration Management

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 Project Integration Management involves
coordinating all of the other project management
knowledge areas throughout a project’s life cycle
 Project Integration Management processes:
◦ Develop the project charter
◦ Develop the project management plan
◦ Direct and manage project execution
◦ Monitor and control the project work
◦ Perform integrated change control
◦ Close the project or phase

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Project Inputs Tools & Techniques
Statement of
Work ❑ Project Selection Methods

Enterprise ❑ Project Management

Methodology Outputs
Environmental
Factors Project Charter
❑ Project Management
Information System
Contract
❑ Expert Judgment
Organizational
Process Assets

Project Direct & Monitor & Integrated Close

Project
Management Manage Control Change Project or
Charter
Plan Execution Project Work Control
Phase

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 Strategic planning involves determining long-term
objectives, predicting future trends, and projecting
the need for new products and services

 As part of strategic planning, organizations:

◦ Identify potential projects
◦ Use realistic methods to select which projects to work on
◦ Formalize project initiation by issuing a project charter

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 Analyzing Strengths, Weaknesses,
Opportunities, and Threats
 It is the culmination of internal
analysis and external research.
 It is the extent to which a firm’s
current strategy, strengths and
weaknesses are relevant to the
business environment that the
company is operating in.
• Strengths and weaknesses are internal aspects (attributes of
the firm), they cover marketing, financial, manufacturing and
organisational areas.
• Opportunities and threats are external aspects (attributes of
the environment), they look at the main environmental issues
such as the economic situation, social changes such as the
population getting older and technological developments
including the internet
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 The selected projects should be aligned with
business strategy
 Methods for selecting projects include:
◦ Focusing on broad organizational needs
 Such projects will more likely be successful
◦ Categorizing information technology projects
 e.g. A categorization based on whether the project responds
to: problems, opportunities or directives
◦ Using a weighted scoring model
 Selection based on many criteria

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 A weighted scoring model is a tool that provides
a systematic process for selecting projects based
on many criteria
 Calculation:
 Identify criteria important to the project selection process
 Assign weights (percentages) to each criterion so they
add up to 100%
 Assign scores to each criterion for each project (on a
scale 0 to 100)
 Multiply the scores by the weights and get the total
weighted scores
 The higher the weighted score, the better

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•Weighted score
for Project 1:
25%*90
+ 15%*70
+ 15%*50
+ 10%*25
+ 5%*20
+ 20%*50
+ 10%*20 = 56

•Perform what-if
analysis

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 The selected projects should be aligned with
business strategy
 Methods for selecting projects include:
◦ Focusing on broad organizational needs
 Such projects will more likely be successful
◦ Categorizing information technology projects
 e.g. A categorization based on whether the project responds
to: problems, opportunities or directives
◦ Using a weighted scoring model
 Selection based on many criteria
◦ Implementing a balanced scorecard
 Based on the tracking of defined metrics

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 A balanced scorecard:
◦ Is a methodology that converts an organization’s value
drivers, such as customer service, innovation, operational
efficiency, and financial performance, to a series of defined
metrics
◦ Helps select and manage projects that align with business
strategy

 See www.balancedscorecard.org for more

information

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 The selected projects should be aligned with
business strategy
 Methods for selecting projects include:
◦ Focusing on broad organizational needs
 Such projects will more likely be successful
◦ Categorizing information technology projects
 e.g. A categorization based on whether the project responds to:
problems, opportunities or directives
◦ Using a weighted scoring model
 Selection based on many criteria
◦ Implementing a balanced scorecard
 Based on the tracking of defined metrics
◦ Performing financial analyses
 Net Present Value, Return On Investment, Payback Period

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 Time value of money: Money has a time value because of the
opportunity to earn interest or the cost of paying interest on
borrowed capital.
 Net present value (NPV) analysis is a method of calculating the
expected net monetary gain or loss from a project by discounting
all expected future cash inflows and outflows to the present point
in time
 Projects with a positive NPV should be considered if financial
value is a key criterion
 The higher the NPV, the better
◦ If all other factors are equal then the projects with higher NPV are
preferred
◦ However, usually the NPV analysis is not used to select projects, it is used
to decide whether to invest in a project or not
 ROI is better suited for the project selection

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 Calculation:
◦ Determine estimated costs and benefits - cash flow - for the
life of the project and the products it produces
◦ Determine the discount rate (opportunity cost of capital)
◦ Calculate the NPV:
t…the year of the cash flow
n…last year of the cash flow
At…cash flow in year t
r….discount rate

Discount factor Example: r=8%

- multiplier for each 1 1
=1
year cash flow based
(1 + r )
Year 0 :
t (1 + 0.08)0
on the discount rate 1
and year Year1 :
(1 + 0.08)1
= 0.93

1
Year 2 : = 0.86
(1 + 0.08)2
1
Year 3 : = 0.79
(1 + 0.08)3 17
 A preliminary estimate of entire project is $140,000. For the period of 3
years after the completion, maintenance cost are expected to be $40,000
per year and total projected benefits are about $200,000 per year.
Consider discount rate of 8%.
➢ NPV?

( )
Discounted benefits – discounted costs!!!
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 Two projects below have the same total cash flow ($5,000).
➢ Which one is better?

The same
total cash
flow

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 Return on investment (ROI) is calculated by
subtracting the project costs from the benefits
and then dividing by the costs

Total .Dicounted .Benefits − Total .Discounted .Costs

ROI =
Total .Discounted .Costs
 ROI is a percentage
 ROI is sometimes used without discounting (simple
ROI)
 The higher the ROI, the better
 Used for the project selection
 Many organizations have a required rate of return,
i.e. minimum acceptable rate of return on
investment for projects

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( )
( )

516000 − 243200
ROI = = 1.1217 = 112 %
243200
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 The payback period is the amount of time it will
take to recoup, in the form of net cash inflows, the
total dollars invested in a project
 Payback occurs when the net cumulative
discounted benefits equal the costs
 Many organizations want IT projects to have a fairly
short payback period
 Payback period can be the main decision criterion
for the project selection
 Calculation:
◦ Calculate for each year the cumulative value of discounted
benefits minus discounted costs
◦ The first year when the value becomes positive indicates
the payback period

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( )
( )

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 A firm considers investing in a project. In Year 0 it needs to make an
investment indicated below. Based on the information for 3 years
regarding expected revenues and expenses decide whether the firm
should make the investment. Consider the discount rate of 8 %. What
is the project’s NPV and ROI?

Up-front investment 50,000

Year 1 Year 2 Year 3
Revenues 50,000 60,000 70,000
Expenses 25,000 25,000 25,000

25000 35000 45000

𝑁𝑃𝑉 𝐴 = −50000 + + + = 387746
1.08 1.082 1.083

25000 25000 25000

𝐷𝑖𝑠𝑐𝑐𝑜𝑠𝑡𝑠 𝐴 = 50000 + + + = 114427
1.08 1.082 1.083

387746
𝑅𝑂𝐼 𝐴 = = 0.3397
114427
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 After deciding what project to work on, it is important to
let the rest of the organization know
 A project charter is a document that formally
recognizes the existence of a project and provides
direction on the project’s objectives and management
 Key project stakeholders should sign a project charter to
acknowledge agreement on the need and the intent of
the project
 A signed charter is a key output of the initiation process
 Some projects do not have charters (e.g. internal)
 Charter can play an important role later (when referring
back to the requirements, or when a project managers
has a difficulty in getting support from stakeholders)

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 Inputs Tools & Techniques
Preliminary Project
Scope Statement ❑ Project Management
Methodology
Project Management ❑ Project Management Outputs
Processes Project
Information System Management
Enterprise ❑ Expert Judgment Plan
Environmental
Factors
Organizational
Process Assets

Project Direct & Monitor & Integrated Close

Project
Management Manage Control Change Project or
Charter
Plan Execution Project Work Control
Phase

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 A project management plan is a document used
to coordinate all project planning documents and
help guide a project’s execution and control
◦ Plans created in the other knowledge areas are
subsidiary parts of the overall project management plan
◦ Should be flexible and tailored to the needs of the firm
 Common elements:
◦ Introduction or overview of the project
◦ Description of how the project is organized
◦ Management and technical processes used on the
project
◦ Work to be done, schedule, and budget information

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 Inputs Outputs
Tools & Techniques
Project Management Plan Deliverables
❑ Project
Approved Corrective Actions Management Requested Changes
Methodology
Approved Preventive Actions Implemented Change Requests
❑ Project
Approved Change Requests Management Implemented Corrective Actions
Information
Approved Defect Repair System Implemented Preventive Actions

Validated Defect Repair Implemented Defect Repair

Administrative Closure Work Performance Information

Procedure

Project Direct & Monitor & Integrated Close

Project
Management Manage Control Change Project or
Charter
Plan Execution Project Work Control
Phase

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 Project execution involves managing and performing the
work described in the project management plan
 The majority of time and money is usually spent on
execution
 Coordinating planning and execution
◦ Project planning and execution are intertwined and inseparable
activities

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 Tools & Techniques Outputs Recommended
Inputs ❑ Project Management Corrective Actions
Project Methodology
Recommended
Management Plan
❑ Project Management Preventive Actions
Information System
Work Performance Forecasts
Information ❑ Earned Value Management
Recommended
Rejected Change ❑ Expert Judgment Defect Repair
Requests
Requested
Changes

Project Direct & Monitor & Integrated Close

Project
Management Manage Control Change Project or
Charter
Plan Execution Project Work Control
Phase

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 Changes are inevitable on most projects, so it’s
important to develop and follow a process to
monitor and control changes
◦ In large projects, 90% of project manager time is spent
on communicating and managing changes
 Monitoring project work includes collecting,
measuring, and disseminating performance
information
 A baseline is the approved project management
plan plus approved changes
◦ Baseline is used to assess the health of the project and
to suggest improvements

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 Tools & Techniques Outputs
❑ Project Approved Change Requests
Inputs Management
Project Management Plan Methodology Rejected Change Requests

Requested Changes ❑ Project Project Management Plan Updates

Management
Work Performance Information Information Project Scope Statement Updates
System
Recommended Preventive Actions Approved Corrective Actions
❑ Expert Judgment
Recommended Corrective Actions Approved Preventive Actions

Recommended Defect Repair Approved Defect Repair

Deliverables Validated Defect Repair

Deliverables

Project Direct & Monitor & Integrated Close

Project
Management Manage Control Change Project or
Charter
Plan Execution Project Work Control
Phase

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 Project management involves constant communication and
negotiation due to changes
 Integrated change control involves identifying, evaluating and
managing changes throughout the project life cycle.
 Three main objectives are:
◦ Influencing the factors that create changes to ensure that changes
are beneficial
◦ Determining that a change has occurred
◦ Managing actual changes as they occur
 Change control system is a formal, documented process that
describes when and how official project documents and work may
be changed
◦ Describes who is authorized to make changes and how to make them

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 Outputs
Tools & Techniques Administrative Closure
Inputs
Procedure
Project Management Plan ❑ Project Management
Methodology Contract Closure Procedure
Contract Documentation
❑ Project Management Final Product, Service, or Result
Enterprise Environmental Factors Information System
❑ Expert Judgment Organizational Process assets
Organizational Process Assets Updates
Work Performance Information

Deliverables

Project Direct & Monitor & Integrated Close

Project
Management Manage Control Change Project or
Charter
Plan Execution Project Work Control
Phase

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 To close a project or a phase, you must finalize all
activities and transfer the completed or cancelled
work to the appropriate people
 Main outputs include:
◦ Final product, service, or result
◦ Organizational process asset updates

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 Project integration management involves
coordinating all of the other knowledge areas
throughout a project’s life cycle
 Main processes include:
◦ Develop project charter
◦ Develop project management plan
◦ Direct and manage project execution
◦ Monitor and control project work
◦ Perform integrated change control
◦ Close the project or phase

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