Project Initiation

Initiation is the time to build a firm foundation for your project

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Project Initiation

Module 2

Project Initiation

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Project Initiation

S no.
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Topic
Introduction Project charter Contents of a project charter Sample Project Charter Table of Contents Inputs to develop project charter Project selection criteria Create a Project Charter Guidelines Project Charter Example Points to ponder

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Lesson Objectives
In this lesson, you will learn to Select a project which will give the organization the maximum benefit. Determine high level deliverables and estimate . Determine high level constraints and assumptions . Determine business need . Develop product description . Define responsibilities of a project manager . Define responsibilities of a project sponsor . Define high level resource requirements . Finalize project charter and get approval .

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Project Initiation

Introduction
Initiation
Initiation is the time to build a firm foundation for your project. The purpose of initiation is to formally launch and authorize a new project or to authorize an existing project to continue into its next phase. To be successful, the project must link to the ongoing work of the organization and it must match its goals and capabilities. Companies consider undertaking new projects in response to opportunities, threats, or business requirements, such as: Customer need or request. Increase or decrease in market demand (or anticipation of an increase or decrease). Requirement to adhere to a law or regulation. Opportunity to gain a technological or other competitive advantage. Identification of an organizational problem that is interfering with business success. Social need.

The following are the key steps of project initiation; Document the business case of the project Define the high level scope of the project Define the high level estimates of the project Define the key milestones Identify the project manager Define the roles and responsibilities of the project manager Define the roles and responsibilities of the project sponsor Identify and document all assumptions, dependencies and constraints Document the project charter Get the approval of the project charter by the senior management (sponsor)

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Project charter
The project charter is a document that makes the project official and authorizes the project manager to lead the project and draw on organizational resources as needed. Responsibility for the creation of a project charter lies with the project sponsor (senior management representative). It is issued by the senior management and gives the project manager authority to assign organizational resources to the work of the project. Any changes to the project charter needs re approval by the sponsor (senior management representative). Why Create a Project Charter? The Project Charter provides a consolidated and summary level overview of the project. It allows all parties involved in the project (stakeholders) to document the agreed upon scope and objectives, approach and deliverables of the project. It also, at the outset of the project, documents the agreed upon communications plans, control mechanisms, and responsibilities of team members. In other words, the Project Charter is a fundamental communications tool within the project environment. Having a project charter will provide the following benefits: Improved client partnerships; Improved project management processes; Improved headquarter/regional communications; Better project sponsorship; Recognition of Senior Managements role Better teamwork involving the project manager, team members and the sponsor Better risk management

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Contents of a project charter

At a minimum, the project charter contains the following; An overview of the project Project goals and objectives Project deliverables Business case or need for the project Product description Resource and cost estimates Human resources needed and any special skills required Roles and responsibilities of key team members and resources List of key stakeholders Name of the project manager The project charter also can have the following; Purpose of the project A brief description of the project should be provided. This should describe in business terms the reason for the project and the overall timing and expectations. Some background information about how and why the project was initiated should also be included. Describe who (in terms of individual roles and/or organizational areas) will use the final outcome of the project and identify any other stakeholders who will be impacted by the results of the project. The Business Case document may already contain the information to be included in this section and should be referenced as appropriate. Project Scope Identify the project scope and the product/service scope. The product scope defines the spectrum of features and functionality that will be delivered and the limits that have been imposed in order to control the release or delivery of the product or service (what the project will accomplish). The product scope description within the Project Charter will not constitute the requirements specification for the product. Rather, it is expected to provide a general description of the product and the initial understanding and agreement about the scope of that product. The project scope defines the work that is required to deliver the project product or service to meet

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the project objectives (how the project will be accomplished). Although the product scope and project scope are tightly related, the remaining sections of the Project Charter cover the project scope and the processes required to deliver the project. The focus within the Charter should remain on project processes. Project Objectives Identify the overall objectives for the project. Identify what the project is intended to achieve, in business and technical terms. Can refer to the triple constraints. Refer to the Investment Decision, the Business Case and the Logical Framework Analysis. Outstanding Issues Identify any outstanding issues that need to be resolved within the scope of the Project. These are issues that have been identified during the Business Case creation and approval process and/or through the project initiation process. Approvals This section identifies the names and roles of the project stakeholders and their approval of the Project Charter. Signatures are often included in this section, though in some organizations a listing of the Project Sponsor and Project Manager is all that is required. References Identify any other documents that relate to the project at the time of development of the Project Charter. Include the current revision number, issue date, author, location of the document and method of access for each document or reference. It is not necessary to repeat the detailed content of these related documents. Rather, enough information should be provided in this section to explain how the document relates to the project, what it contains that is pertinent to the project, and how it can be located.

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Sample Project Charter Table of Contents

Project Overview
Project Purpose Project Scope Project Objectives Outstanding Issues Approvals References Terminology

Project Approach
Project Deliverables and Quality Objectives Organization and Responsibilities Dependencies Plans for Support Activities Project Facilities and Resources Risk Management Process Options and Deviations Stages Project Control Quality Control Activities Project Schedule Project Effort Estimate Project Cost Estimate

Project charter sign off

Project charter is not complete until the project sponsor; senior management and key stakeholders sign it off. It involves the major stakeholders from the beginning of the project.

Project charter is the first officially approved document, which identifies the project manager and his/ her roles and responsibilities. Hence, the project charter gives authority to the project manager

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Inputs to develop project charter

Contract
A contract is a mutually binding agreement that obligates the seller to provide the specified product or service or result and obligates the buyer to pay for it. Contracts can be of the following types;

Fixed price
Cost plus fixed price Cost plus percentage of cost Time and material Project statement of work A statement of work (SOW) is a narrative description of products or services to be supplied by the project. For internal projects, the project initiator or sponsor provides the statement of work based on the business needs, product or service requirements. For external projects, the statement of work is received from the customer. The statement of work indicates a business need, product scope description and how the project supports the strategic plan of the organization.

Develop preliminary scope statement

A preliminary scope statement provides a birds view of the work to be performed. The key sources of information to develop the preliminary scope statement are; Project statement of work, provides information about the work to be performed Enterprise environmental factors, provides information of the environment in which the project team has to perform and the environment in which the projects product has to operate. Organizational process assets, refers to the captured knowledge and learning from the past similar projects. What is a preliminary scope statement and what are the advantages of documenting it?

The scope of a project is the high level description of the deliverables of the project. Includes assumptions and a description of what is not included in the scope also, for clarity sake. There is a difference between product scope and project scope. Product scope talks about the functions the

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product will do and will not do, when completed. Project scope describes about the deliverables of the project. Preliminary scope statement is the building block for further scope for further planning and elaboration. PMBOK perspective - Please note that, as per PMBOK, there is a preliminary scope definition, leading to the preliminary scope statement during the very early stages of the project (initiation). Once the finer details are available to the team (continuous elaboration), a detailed scope statement is prepared and maintained (planning phase).

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Project selection criteria

Project selection criteria are the standards and measurements that the organization uses to select and prioritize projects. The organizations strategic goals provide a source for at least one dimension of selection criteria. Any project selected should be clearly linked to one or more strategic goals. Other selection criteria may be qualitative or quantitative. Qualitative criteria deal with the projects fit with the organizations capabilities. Quantitative criteria may specify financial targets that the project must meet. The project selection process happens before the initiation stage (only the selected projects gets initiated). Knowledge of the selection criteria applied to the project for selection makes the life easier while drafting the project charter, especially the business justification for executing the project.

Accuracy of estimates
When one estimate for a project, the estimate should come from within an indication of the range of possible results, especially at the project detail level. The three levels of estimating accuracy are ;

Order of magnitude of estimate

This type of estimate is usually made during the initiating phase and is in the range of -25% to +75% from actual.

Budget estimate
This type of estimate is usually made during the planning phase and is in the range of -10% to +25% from the actual.

Definitive estimate
This type of estimate is also made during the planning phase and is in the range of -5% to +10% from actual

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Create a Project Charter Guidelines

Once a project has been selected, it is important to let the rest of the organization know about the project and its importance to the organization. The project charter is the most common way for management to communicate the launch of a new project. Definition The project charter is a document that makes the project official and authorizes the project manager to lead the project and draw on organizational resources as needed. Responsibility for the creation of a project charter varies widely from organization to organization. In many companies, the project manager is responsible for its creation. An effective project charter clearly communicates the projects importance to the organization and includes the following elements: The project and authority identification information. Title of the project and date of authorization. Name and contact information of the project manager. Name, title, and contact information of the initiating authority (usually the customer or spon sor). A clear, concise description of the business need, opportunity, or threat that the project is intended to address. - What are the circumstances that generated the need or the project? A summary description of the product or service of the project (refer to the product description which is an input to initiation). - What is the required outcome of the project? - What are the critical characteristics of the product or service? A description of the projects relationship to the business need it is intended to address. - Why is it important to do the project now? - How will this project address the business need, opportunity, or threat for which is intend ed? Any known constraints and/or assumptions.

- Are there any known time, cost, scope, quality, or resource issues or factors that will limit the way you and your project team can approach the project?

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- Are there any factors or issues that you and your project team will presume to be true, real, or certain in order to begin planning your project? Make sure the person with the required knowledge and authority signs the project charter. Distribute the signed charter to the appropriate project stakeholders. Remember to consider the following stakeholders: - Project team members - Customer - Relevant functional managers - Finance and/or Accounting departments

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Project Charter Example

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Points to ponder
During the initiation phase of a project, the team comes out with an estimate of -10% to +25% accuracy. What is type of estimate is this? Are there reasons for the team not doing a definitive estimate at this stage? Discuss When the project progresses, more and more finer details will be available to the team about the project. To which characteristic of projects, can this be assigned?

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About Author
Abrachan Pudusserry is a highly acclaimed Speaker, Advisor and Author of project management, quality management and software engineering. During his 20 years of professional work, he served organizations such as Novell, HCL, FEC and Prologic. Abrachan has coached around 1000 + project managers from leading organizations. The PMdistilled (www. pmdistilled.com) project management workshops architected by him is being delivered successfully (103 workshops completed as on April 22, 2008) in multiple countries. Organizations such as AMDOCS, LG, SG, Zerone Consulting, Blue Star, Sasken, Alcatel, Broadcom, BirlaSoft, KPMG are among the organizations benefited from his customized Agile project management using SCRUM and PMdistilled in-house workshops.Apart from these workshops, he delivers customized programs and consulting services catering to the specific needs of the organizations and works along with project teams in implementing project management and quality management best practices covering Predictive Project management (PMBOK, PRINCE2), Adaptive project management (Agile methodologies with emphasis on SCRUM), Software estimation, ISO and CMM. He is a CSM (Certified Scrum Master), PRINCE2 practitioner, PMP certified, certified quality analyst. He holds Masters degree in quality management, Bachelors degree in Electrical Engineering, and currently pursuing Masters degree in Applied Psychology. blog : www.abrachan.org

Contact details
E: abrachan@pmrinstitute.com T : +91 484 2516458 M :+91 9895372115 Orkut : abrachan Gtalk : abrachan

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Trademarks
PMP, PMI, CAPM, PMBOK Guide and PgMP are all registered trademarks of Project Management Institute, Inc. PRICE2 is a registered trade mark of OGC ( The Office of Government Commerce ) SCRUM and CSM are registered trade marks of SCRUM alliance.

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