Software

Project
Management
A S S I G N M E N T U N I T- 2
VIKAS SHUKLA
 • Project Evaluation & Estimation

• Activity planning
Overview • Risk Management
Project Evaluation and Estimation – Cost Benefit Analysis
The most common way of carrying out an economic assessment of a proposed information system, or other development, is by
comparing the expected costs of development and operation of the system with the benefits of having it in place.
The standard way of evaluating the economic benefits of any project is to carry out a cost-benefit analysis, which consists of two
steps:-
1) Identifying and estimating all of the costs and benefits of carrying out the project
2) Expressing these costs and benefits in common units
Momentary terms are:-
• Development costs - include the salaries and other employment costs of the staff involved in the development project and all
associated costs.
• Setup costs - include the costs of putting the system into place. These consist mainly of the costs of any new hardware and
ancillary equipment but will also include costs of file conversion, recruitment and staff training.
• Operational costs - consist of the costs of operating the system once it has been installed.
Benefits, on the other hand, are often quite difficult to quantify in monetary terms even once they have been identified such as
direct benefits, Assessable indirect benefits and intangible benefits.
 Project Evaluation and Estimation – Cost Flow Forecasting

Cash Flow is the movement of money in and out of an organization. It involves the expenditure and income of an organization.

Cash flow forecasting is the estimation of the cash flow over a period of time. It is important to do cash flow forecasting in order to ensure that the
project has sufficient funds to survive.

Steps for Cash flow forecasting:-

1. Identify different sources of cash inflow and outflows

2. Evaluate the about of cash inflow and outflow for each sources

3. Create cash flow statement

4. Analyze the cash flow statement

5. Make adjustment of the cashflow

Cost Benefit Evaluation Techniques
• Net profit - the net profit of the project is the difference between the total costs and the total income over the life of the project
Net Profit = total income – total costs
• Payback period – it is the amount of time it takes for a project to generate enough cash flow to recover its initial investments.
• Return of investment – it is also known as the accounting rate of return(ARR). It provides the way of comparing the net
profitability of the investment required.
ROI =
• Net present value – it is the sum of all the present values of all future amount. Present value is the value which a future
amount is worth at present. It takes into account the profitability of a project and the timing of the cash flows. Discount rate is
the annual rate by which we discount future earning.
Net Present Value = n = number of year r = discount rate
• Internal rate of return (IRR) – it is the discount rate that makes the net present value of a project equal to zero. A project is
considered to be financially viable if its IRR is greater than the project’s cost.
Risk Evaluation
Risk evaluation is the process of identifying, accessing and prioritizing risks
associated with the project. It is an important part of evaluation and
estimation and it canhelp to identify potential problems and make informed
decisions about the project.
• Risk identification and ranking
• Risk and net present value
• Cost benefit analysis
• Risk profit analysis
Risk Evaluation
• Using decision tree – the analysis of a decision tree consists of evaluating the expected benefit of taking each path from the decision point. The expected value of
each path is the sum of the value of each possible outcome multiplied by its probability of occurrence.
Selection of an appropriate project
The development of the software in house suggests that the project has certain characteristics :-
 The project team and the user belongs to the same organization.
 The project being considered slot into a portfolio of existing computer based systems.
 The methodologies and technologies to be used are not selected by the project manager, but are dictated by local standards.
Choosing technologies
 Identify high level project risks

- Product uncertainty

- Process uncertainty

- resource uncertainty
 Take user account the user requirements concerning implementation
 Select general lifecycle approach

- control system

- information system

- general tools

- hardware environment

- safety-critical system

- specialized techniques
Rapid Application Development (RAD)
 Another striking feature of this model is a short time span i.e. the time frame for delivery(time-box) is generally 60-90 days.
 This model consists of 4 basic phases:

1. Requirements Planning – It involves the use of various techniques used in requirements elicitation like brainstorming, task analysis, form analysis, user
scenarios, FAST (Facilitated Application Development Technique), etc. It also consists of the entire structured plan describing the critical data, methods to obtain
it, and then processing it to form a final refined model.

2. User Description – This phase consists of taking user feedback and building the prototype using developer tools. In other words, it includes re-examination and
validation of the data collected in the first phase. The dataset attributes are also identified and elucidated in this phase.

3. Construction – In this phase, refinement of the prototype and delivery takes place. It includes the actual use of powerful automated tools to transform processes
and data models into the final working product. All the required modifications and enhancements are too done in this phase.

4. Cutover – All the interfaces between the independent modules developed by separate teams have to be tested properly. The use of powerfully automated tools and
subparts makes testing easier. This is followed by acceptance testing by the user.
 The process involves building a rapid prototype, delivering it to the customer, and taking feedback. After validation by the customer, the SRS document is developed and the
design is finalized.
Waterfall model
 This is the 'classical' model of system development. An alternative name for this model is the one-shot approach.
 The diagram below shows some arrows pointing upwards and backwards. This indicates that a later stage might reveal the
need for some extra work at an earlier stage, but this should definitely be the exception rather the rule.
 The waterfall model consists of following stages:-
- Feasibility study
- User requirements
- Analysis
- System design
- Program design
- Coding
- Testing
- Operation
 V-process model
 This is the 'classical' model of system development. An alternative name for this model
is the one-shot approach.
 The V-process model can be seen as expanding the testing activity in the waterfall
model. Each step has a matching validation process that can, where defects are found,
cause a loop back to the corresponding development stage and a reworking of the
succeeding steps.
 This model is also called verification and validation model.
 Verification: It involves static analysis technique (review) done without executing code. It is the process of evaluation of the product development phase to find whether
specified requirements meet.
 Validation: It involves dynamic analysis technique (functional, non-functional), testing done by

executing code. Validation is the process to evaluate the software after the completion of the

development phase to determine whether software meets the customer expectations and

requirements.
The spiral model
 Spiral model is risk driven process model.
 It is the combination of prototype and waterfall model and incremental model.
 The radius of spiral in spiral model defines the costs of the project.
 Angular dimension represents progress of the project.
 Spiral model is also known as meta model / risk-driven model / risk-avoidance model.
 Spiral model consists of following phases :-
- Objectives determination and identify alternative solutions
- Identify and resolve Risks
- Develop the next version of the Product
- Review and plan for the next Phase
Prototyping
 The prototype model requires that before carrying out the development of actual software, a
working prototype of the system should be build.
 If the user accepts the prototype than we dive into the designing phase otherwise we make
changes in our prototype and again show this to the customer.
 Types of Prototyping Models :-

- Rapid Throwaway Prototyping

- Evolutionary Prototyping

- Incremental Prototyping
Prototyping
• Rapid Throwaway Prototyping - This technique offers a useful method of exploring ideas and getting
customer feedback for each of them. In this method, a developed prototype need not necessarily be a part of
the ultimately accepted prototype. Customer feedback helps in preventing unnecessary design faults and
hence, the final prototype developed is of better quality.
• Evolutionary Prototyping - In this method, the prototype developed initially is incrementally refined on the
basis of customer feedback till it finally gets accepted. In comparison to Rapid Throwaway Prototyping, it
offers a better approach that saves time as well as effort. This is because developing a prototype from scratch
for every iteration of the process can sometimes be very frustrating for the developers.
• Incremental Prototyping - In this type of incremental Prototyping, the final expected product is broken into
different small pieces of prototypes and developed individually. In the end, when all individual pieces are
properly developed, then the different prototypes are collectively merged into a single final product in their
predefined order. It’s a very efficient approach that reduces the complexity of the development process, where
the goal is divided into sub-parts and each sub-part is developed individually. The time interval between the
project’s beginning and final delivery is substantially reduced because all parts of the system are prototyped
and tested simultaneously. Of course, there might be the possibility that the pieces just do not fit together due
to some lack of ness in the development phase – this can only be fixed by careful and complete plotting of the
entire system before prototyping starts.
Activity planning & Risk Management
Objectives of Activity planning
Activity planning is the process of defining the activities that need to be carried out to achieve a specific goal. It
is an important part of project management as it helps to ensure that the project is completed on time, within
budget, and to required quality standard.
The objectives are :-
• Feasible assessment
• Resource allocation
• Detailed costing / examination of costs
• Motivation
• Coordination
Risk Management
• Risk – An uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.
Risk Identification

1) Project size
2) Business impact
3) Process definition
4) Customer characteristics
5) Development environment
6) Technology

7) Staff size and experience

Risk Analysis
Risk analysis is the second step in the risk management process. It involves assessing the likelihood and impact
of each risk that has been identified.
Or in the other words we can say that it is the process that helps to identify and manage potential problems of
undergoing project.
Types of risk analysis:-
1) Quantitative risk analysis : it is the numeric estimate of the overall effect of risk on the project objectives such as
cost and schedule objectives. Eg inexperienced staff, cost overrun, schedule delay etc.
2) Qualitative risk analysis : this involves assessing the likelihood and impact of risks using a qualitative scale
such as high, medium or low. The probability of the risk occurring is known as risk likelihood, and the effect of is
risk is known as risk impact and the importance of the risk is known as risk value/risk exposure.
The risk value is calculated as :-
risk value / risk exposure (RE) = risk likelihood * risk impact
Risk Analysis
Risk impacts are divided into 4 categories : -
1) Catastrophic
2) Critical
3) Marginal
4) Negligible

It helps in prioritizing the risk on the basis of their

occurrence and impact. The catastrophic risks needed
to look after immediately as compared to other risks
and negligible risks can be neglected.
Reducing the Risk
Broadly, there are five strategies for risk reduction.
Hazard prevention : Some hazards can be prevented from occurring or their likelihood reduced to insignificant levels. Eg the risk
of key staff being unavailable for meetings can be minimized by early scheduling.
Likelihood reduction : Some risks, while they cannot be prevented, can have their likelihoods reduced by prior planning. The risk
of late changes to a requirements specification can, for example, be reduced by prototyping. Prototyping will not eliminate the risk
of late changes and will need to be supplemented by contingency planning.
Risk avoidance : A project can, for example, be protected from the risk of overrunning the schedule by increasing duration
estimates or reducing functionality.
Risk transfer : The impact of some risks can be transferred away from the project by, for example, contracting out or taking out
insurance.
Contingency planning : Some risks are not preventable and contingency plans will need to be drawn up to reduce the impact
should the hazard occur. A project manager should draw up contingency plans for using agency programmers to minimize the
impact of any unplanned absence of programming staff.
Thank You