Welcome

CVEN 9731 – Project Management Framework

Dr Ali Kashani
ali.kashani@unsw.edu.au

Lecture Week 8
 Lecture 8 – Project closing and Project Selection Part 1

Learning Objectives
 Learn the procedure for closing a project
 Understand the factors that can contribute to project failure
 Understand the fundamentals of Project Selection tools
 Learn SWOT analysis
 Learn Total Cost of Ownership (TCO)

© Dr Ali Kashani
Closing a project

1. Hold the final meeting with the customer and stakeholders

2. Get the customer formal approval confirming (preferably via signature) that the project
is completed successfully.
3. Document lesson learnt during the project. What worked well and what didn’t? Any
example?
4. Produce and disseminate the final report to stakeholder.
5. Close contracts and transition team to next project (if any)
6. Archive project information
7. Maybe celebrate completion of a successful project!
Project Closeout Categories
Obtaining Customer Acceptance

 Design an Acceptance Test (Were the

deliverables and success criteria achieved?
 What to include?
- Testing of the final product
- Demonstrate to customer how it works
- Feedback from users
- Comparison against a benchmark product
- Test results satisfying standards
Lessons learned

It is important to document:
1. What strategy/management practice worked to repeat it in the future projects
2. What strategy/management practice did not work to avoid it in the future projects
Tips
 Don’t wait until the project closes. Instead gather lesson learnt from the team as
project is progressing.
 Keep the environment positive and productive (No blaming) so everyone can
share their bad experience as well as good experience
 Let team to talk about themselves and not others! No judgment!
- What saves time? Any difficult challenge solved? How would you do it differently
next time?
Lessons learned (continued)

Tips
 Get the managers out so team members
can share the experience honestly!
 Allow anonymous feedback such as
suggestion box
 Make lesson learnt available to every
team members and managers but
anonymously!
 Final report
 Executive Summary (no more than 2 pages!)
- Did the project achieve the deliverables on time and within budget
- Important test results and benchmark comparison
- Any highlights of the project (completed much faster or with significantly less costs)
- Any additional features (out of scope)
- What else?
 Final schedule and costs
- Delivery dates and variances with reasons
- Total cost and proportion of cost for each major Milestones/tasks
- Cost variances and reasons behind it
- Return on investment and other financial measures (if applicable)
Final report (continued)

 Other information
- Significant risks and how was mitigated
- Significant changes to the project scope
- Lesson learnt
 Conclusions
- A summary of what has been delivered, its advantages and disadvantages
(extended version of Executive Summary)
 Appendices include of the final project schedule, financial statements,
etc.
 Closing and Transition

 Close any contracts

- Singed ‘project completion acceptance’ means the contract is closed.
- However some other tasks maybe required after the contract closed such as providing
customer/user support, customer surveys or follow ups.
- Vendor contracts must be closed and all the invoices should be paid.
 Give advanced notice to the employer about a near completion of the project so team
members can be easily transitioned to new projects or find another jobs (external
contractors).
 Archive all project information and make sure to give access to the future user/owner of
the project.
 Financial accounts may need to be open for a few months after the project is complete
for follow on expenses.
Project Failure closeout

A project can also be closed because of following

reasons without a success:
 Work on the project has ceased or slowed to the
point that further progress on the project is no longer
possible.
 When the project has been indefinitely delayed.
 When its resources have been deployed to other
projects.
Questions to be asked for terminating a project

 Is the project still consistent with organizational goals?

 Is it practical? Useful?
 Is management sufficiently enthusiastic about the project to support its
implementation?
 Is the scope of the project consistent with the organization’s financial strength? Any
scope creep which cannot be addressed?
 Does this project represent too great an advance over the benchmark?
 Any Marco-Economic events e.g. COVID-19 affecting the project?
 What else?
Main reasons of project failure

 The project plan and scope was inappropriate for the goal (expected outcome)
 Lack of identifying and engaging the stakeholders at the start and throughout the
project
 Insufficient financial and non-financial support from senior management and
stakeholders
 Weak managerial and interpersonal skills as well as poor planning and lack of
effective control and problem solving of Project Manager
 Selecting inexperienced team members for the assigned jobs
 Work culture issues
 Marco-Economic events, redundancies, and bankruptcy
 What else?
Project Selection

 Some projects are completely unrelated to the strategy and goals of the organization.
 Some projects require funding levels that are excessive relative to their expected benefits.
 Should we be undertaking all potential projects in an organization?
 Of those we should implement, what should be our priorities?
Problems with Multiple Projects

 Delays in one project delays other

projects if resources are from the same
pool
 Inefficient use of resources
(management problem)
 Bottlenecks in resource availability (One
essential resource for different projects
at the same time)
Selecting and Prioritising of Projects

Challenges
 Making sure projects are closely tied to goals and strategy
 How to handle the growing number of projects?
 How to make these projects successful?

Project selection is the process of evaluating individual

projects or groups of projects and then choosing to implement
a set of projects so that the objectives of the parent
organization will be achieved.
Project Identification

 Receptive to new ideas (brainstorming, networking, visiting other places)

 Vision of future growth (know the market, macro-economy and opportunities)
 Short and long term objectives (priorities)
 Shortlist project opportunities
 SWOT analysis
 Determine selection criteria
 Preliminary project analysis
 Prioritise projects suitable for organisation
Objectives Examples

 To increase profits
 To minimize threats of losses
 To become more competitive
 To train people in a new area
 Non-for-profit (humanitarians) goal
 Environmental goals
 Sustainability goals
SWOT analysis

Strength examples
 Experience and expertise
 Financial position (strong cash flow and
low debt)
 Capital raising capability (manageable
interest rate)
 Strong network and collaboration
 Loyal customers
 Low cost of running business
 Any other examples of strength?
SWOT analysis

Weakness examples
 New to that particular market
 Inability to raise money for investment
 Lack of experience
 Lack of trained personnel
 Inability to forecast market trends
 High risks of projects and operation
 Low return on investment versus risks taken
 Any other examples of weakness?
SWOT analysis

Opportunities examples
 Emerging technologies
 New products with new markets
 New processes with better features
 Be a market leader
 Special financing schemes
 Operational cost savings
 Government and other incentives such as
tax relief
 Any other examples of opportunities?
SWOT analysis

Threats examples
 Competitors (e.g. competing with Google)
 Poor state of the economy (recession)
 Trade wars exchange rate and other
macroeconomic effects
 Out‐dated technology
 Wars, terrorist attacks, pandemic
(COVID-19)
 Any other examples of threats?
Criteria for Project Selection Model

Different models may be used in screening and selection of projects. When choosing a
model, the following should be taken into account:
 Realistic
 Capability
 Flexibility
 Ease of use
 Cost
 Preferably software-based
Project Selection Models

 Project selection can be numeric models (quantitative)

or non-numeric (qualitative)
 Models turn inputs into outputs
 Managers decide on the values for the inputs and
evaluate the outputs
 The inputs never fully describe the situation
 The outputs never fully describe the expected results
 Models are tools but managers are the decision
makers
 Non-numeric Project Selection

Models that do not return a numeric value for a project to be compared with other projects
Examples:
 Sacred Cow: A project, often suggested by the top management, that has taken on a life
of its own
 Operating Necessity: A project that is required in order to protect lives or property or to
keep the company in operation
 Competitive Necessity: A project that is required in order to maintain the company’s
position in the marketplace
 Product Line Extension: A project to expand a product line which is evaluated on how
well the new product meshes with the existing product line rather than on overall benefits
 Comparative Benefit: Projects are subjectively rank ordered based on their perceived
benefit to the company
Numerical Project Selection Models

Models that return a numeric value for a project that

can be easily compared with other projects
Main calculation methodologies
 Net Saving (NS)
 Savings to Investment Ratio (SIR)
 Discounted Cash Flow (DCF)
 Net Present Value (NPV)
 Internal Return Rate (IRR)
 Discounted Payback Period (DPP)
Cost vs time of a project/product
 Revenue vs. Income

Gross Revenue is the money generated from sale of

goods or services associated with the main operations
of an organisation before any costs or expenses are
deducted.
Gross Income is Gross Revenue less cost of goods sold
Net Income is equal to net earnings (profit) calculated as
Gross Revenue less costs of selling, administrative
and operating expenses, depreciation, interest, taxes
and other expenses

*Depreciation: Price of asset decreases over time due to use, wear and tear or obsolescence
© Dr Ali Kashani
Cost of ownership
Can it be designed to reuse/recycle
to achieve higher remaining value?
End of Lecture 8