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Project Management
Project Initiation
Project Initiation Fundamentals

Project Initiation Fundamentals

- Key components
	- Goals
    - Scope
	- Deliverables
	- Success criteria
	- Stakeholders
	- Resources
- Cost-benefit analysis

Why is Project Initiation Essential?

  • As the first phase of the project, a well-planned initiation results in a strong foundation for your project, and sets it up for success.
  • The initiation phase is a crucial time for asking stakeholders the right questions, performing research, determining resources, and clearly documenting the key components of a project.
  • Proper initiation also helps ensure that the benefits of the project outcomes will outweigh the costs of the project.
    • This could be determined by a cost benefit analysis, which is the process of adding up the expected value of a project (the benefits) and comparing them to the dollar costs.

Project manager’s responsibilities: help identify the project goals, resources, and other details based on initial discussions with the project stakeholders.

Key Components

Goals
  • What you’ve been asked to do and what you’re trying to achieve
  • All projects should have clear goals and often those will be determined by senior company leaders, with your help.
Scope
  • Define the work that needs to happen to complete the project
Deliverables

  • Products and services that you will create for your customer, client or project sponsor.

  • Deliverables can be anything from product features and functionalities to documentation, processes and more, anything that enables the goal of your project to be achieved.

  • Deliverables are submitted to help you reach your project goals

  • Can be tangible or intangible

    • Tangible: Submitting a chapter of a manuscript
    • Intangible: Scheduling staff training sessions
Success criteria
  • Standards by which you measure how successful a project was in reaching its goals
Stakeholders

  • Stakeholders are key to making informed decisions at every step of the project, including the initiation phase.

  • Stakeholders are the people who both have an interest in and are affected by the completion and success of a project.

    • As a result, they’re often instrumental in determining the goals, objectives, deliverables and success criteria of the project, from coming up with the idea to outlining the expectations of its results.

  • It’s project manage’s job to ensure that the needs of the project stakeholders are understood early on, and all stakeholders are in agreement on the goals and overall mission of the project before moving on to the next phase

Resources
  • People, materials, and other items that you will have at your disposal

Once you’ve established your goals, scope, deliverables, success criteria, stakeholders, and resources, it’s time to create a project charter, a document that contains all the details of the project

  • Clearly define the project and its goals and outline what is needed to accomplish them.
  • .Allows you to get organized, set up a framework for what needs to be done and communicate those details to others

Once you’ve drafted the charter, you would then review the document with key stakeholders to get their approval to move into the planning stage.

Performing a Cost-benefit Analysis

Cost-benefit analysis is the process of adding up the expected value of a project—the benefits—and comparing them to the dollar costs

benefits of a cost-benefit analysis

  • Minimize risks and maximize gains for projects and organizations
  • Help you communicate clearly with stakeholders and executives and keep your project on track
  • It can help reduce biases and keep stakeholder self-interest from influencing decisions because this type of analysis uses objective data

Guiding questions for a cost-benefit analysis

To determine the benefits of a project, you might ask:

  • What value will this project create?
  • How much money could this project save our organization?
  • How much money will it bring in from existing customers?
  • How much time will it save?
  • How will it improve the customer experience?

And to determine the costs of a project, consider questions such as:

  • How much time will people have to spend on this project?
  • What are the one-time costs?
  • Are there any ongoing costs?
  • What about long-term costs?

Intangible benefits, gains that are not quantifiable, such as:

  • Customer satisfaction. Will the project increase customer retention, causing them to spend more on the company’s products or services?
  • Employee satisfaction. Is the project likely to improve employee morale, reducing turnover?
  • Employee productivity. Will the project reduce employee’s overtime hours, saving the company money?
  • Brand perception. Is the project likely to improve the company’s brand perception and recognition, attracting more customers or providing a competitive advantage?

Calculating costs and benefits

The process of calculating costs and benefits is also called calculating return on investment (ROI).

$$ ROI = (G - C) / C $$

where

  • $G$: the financial gains you expect from the project
  • $C$: the upfront and ongoing costs of your investment in the project
Example

For example, imagine your project costs $6,000 up front plus $25 per month for 12 months, meaning your total cost is

$$ 6000 + 25 * 12 = 6300 $$

. You estimate that the project will bring in $10,000 in revenue over the course of that year. That leaves you with:

  • G = $10,000
  • C = $6,300

Compute the ROI

$$ (10000 - 6300) / 6300 \approx 0.587 $$

Given a strong ROI tends to be anything above 10%, you find 58.7% to be a strong ROI, so you decide to pursue the project.