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    Unit Ii Project Evaluation 9

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    This document discusses various techniques for evaluating software project management including strategic assessment, technical assessment, cost-benefit analysis, cash flow forecasting, and risk evaluation. It provides details on each technique as follows: Strategic assessment ensures a project contributes to overall program goals while technical assessment evaluates required functionality. Cost-benefit analysis compares development and operation costs to benefits. Cash flow forecasting predicts when expenses and income will occur. Risk evaluation identifies uncertainties and their effects, often through a risk matrix ranking risks.

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    Unit Ii Project Evaluation 9

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    bhuvi2312
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    This document discusses various techniques for evaluating software project management including strategic assessment, technical assessment, cost-benefit analysis, cash flow forecasting, and risk evaluation. It provides details on each technique as follows: Strategic assessment ensures a project contributes to overall program goals while technical assessment evaluates required functionality. Cost-benefit analysis compares development and operation costs to benefits. Cash flow forecasting predicts when expenses and income will occur. Risk evaluation identifies uncertainties and their effects, often through a risk matrix ranking risks.

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    IT 2403unit II

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    This document discusses various techniques for evaluating software project management including strategic assessment, technical assessment, cost-benefit analysis, cash flow forecasting, and risk evaluation. It provides details on each technique as follows: Strategic assessment ensures a project contributes to overall program goals while technical assessment evaluates required functionality. Cost-benefit analysis compares development and operation costs to benefits. Cash flow forecasting predicts when expenses and income will occur. Risk evaluation identifies uncertainties and their effects, often through a risk matrix ranking risks.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    51 views6 pages

    Unit Ii Project Evaluation 9

    Uploaded by

    bhuvi2312
    This document discusses various techniques for evaluating software project management including strategic assessment, technical assessment, cost-benefit analysis, cash flow forecasting, and risk evaluation. It provides details on each technique as follows: Strategic assessment ensures a project contributes to overall program goals while technical assessment evaluates required functionality. Cost-benefit analysis compares development and operation costs to benefits. Cash flow forecasting predicts when expenses and income will occur. Risk evaluation identifies uncertainties and their effects, often through a risk matrix ranking risks.

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    of 6

    IT 2403- SOFTWARE PROJECT MANAGEMENT

    UNIT II PROJECT EVALUATION 9


    Strategic Assessment Tec!nica" Assessment C#st $ene%it Ana"&sis Cas! F"#' F#recasting
    C#st $ene%it E(a")ati#n Tec!ni*)es Ris+ E(a")ati#n,
    STRATEGIC ASSESSMENT
    Programme Management
    - In.i(i.)a" /r#0ects seen as c#m/#nents #% /r#gramme an. s!#)". 1e e(a")ate. an.
    manage. as s)c!,
    - Pr#gramme c#""ecti#n #% /r#0ects c#ntri1)te t# same #(ea"" #rgani2ati#na" g#a"s,
    - E%%ecti(e Pr#gramme management re*)ire 'e"" .eine. /r#gramme g#a" an. a"" /r#0ects
    t)ne. t# c#ntri1)te t# t!is g#a",
    - A /r#gramme m)st 1e e(a")ate. !#' it c#ntri1)tes t# t!e /r#gramme g#a" an. its
    (ia1i"it&3timing3res#)rcing3an. %ina" '#rt! can 1e a%%ecte. 1& t!e /r#gramme as a '!#"e,
    - F#r s)ccess%)" strategic assessment strategic /"an c"ear"& .e%ine t!e #rgani2ati#na"4s
    #10ecti(e,
    - Pr#gramme .irect#r an. /r#gramme e5ec)ti(e res/#nsi1"e %#r strategic assessment,
    P#rt%#"i# Management
    - S#%t'are s&stem .e(e"#/e. carr& #)t a strategic an. #/erati#na" assessment #n 1e!a"%
    #% t!e c)st#mer,
    - Nee. t# ens)re s&stem is c#nsistent 'it! t!ier strategic /"an,
    - T!e /r#/#se. /r#0ect 'i"" %#rm a /#rt%#"i# #% #ng#ing an. /"anne. /r#0ects an. t!e
    se"ecti#n #% /r#0ects ta+en int# acc#)nt t!e /#ssi1"e e%%ects #n #t!er /r#0ects in t!e
    /#rt%#"i#,
    TECHNICAL ASSESSMENT
    - C#nsist #% e(a")ating t!e re*)ire. %)ncti#na"it& against t!e !ar.'are an. s#%t'are
    a(ai"a1"e,
    - Organi2ati#n !a(ing a strategic in%#rmati#n s&stem4s /"an t!is is "i+e"& t# /"ace
    "imitati#ns #n t!e nat)re #% s#")ti#ns,
    COST BENEFIT ANALYSIS
    - Ec#n#mic assessment #% a s&stem Carrie. #)t 1& c#m/aring t!e e5/ecte. c#st
    #% .e(e"#/ment an. #/erati#n #% t!e s&stem 'it! t!e 1ene%its #% !a(ing it in /"ace,
    - Assessment 1ase. #n '!et!er t!e t!e estimate. c#st are e5cee.e. 1& t!e
    estimate. inc#me an. #t!er 1ene%its,
    - Stan.ar. 'a& #% e(a")ating t!e ec#n#mic 1ene%its #% an& /r#0ect is t# carr& #)t a
    o!t" #ene$%t ana&'!%! ()%) on!%!t o$ t(o !te*!+
    6, I.enti%&ing an. estimating a"" #% t!e c#sts an. 1ene%its #% carr&ing #)t t!e /r#0ect an.
    #/erating t!e s&stem,
    - Inc").es .e(e"#/menta" c#sts #% t!e s&stem3t!e #/erating c#sts3an. t!e
    1ene%its t!at are e5/ecte. t# accr)e %r#m t!e #/erati#n #% t!e ne' s&stem,
    - W!ere /r#/#se. re/"aces e5isting s&stem t!ese estimates s!#)". re%"ect t!e
    c!ange in c#sts an. 1ene%its .)e t# t!e s&stem,
    2,E5/ressing t!e c#sts an. 1ene%its in terms #% c#mm#n )nits
    - Nee. t# e(a")ate t!e net 1ene%it t!at is3 t!e .i%%erence 1et'een t!e t#ta" 1ene%it
    ar,%ng $rom t)e !'!tem+
    CATEGORY OF COST-
    6, 7E8E9OPMENT COST
    - Inc").e sa"aries an. #t!er em/"#&ment c#st #% t!e sta%% in(#"(e. in t!e
    .e(e"#/ment /r#0ect an. a"" ass#ciate. c#sts,
    2, SET:P COSTS
    - Inc").e t!e c#st #% /)tting t!e s&stem int# /"ace,
    - C#nsist #% ne' !ar.'are an. anci""ar& e*)i/ment
    - Inc").e c#st #% %i"e c#n(ersi#n 3recr)itment an. sta%% training,
    3, OPERATIONA9 COSTS
    C#sts #% #/erating t!e s&stem #nce it !as 1een insta""e.,
    CATEGORY OF BENEFITS
    6, 7IRECT $ENEFITS
    T!ese accr)e .irect"& %r#m t!e #erati#n #% t!e /r#/#se. s&stem,
    Inc").e t!e re.)cti#n in sa"ar& 1i""s t!r#)g! t!e intr#.)cti#n #% ne' c#m/)teri2e.
    s&stem,
    2, ASSESSA$9E IN7IRECT $ENEFITS
    T!ese are sec#n.ar& 1ene%itss)c! as increase. acc)rac& t!r#)g! t!e intr#.)cti#n #% a
    m#re )ser %rien."& screen,
    3, INTANGI$9E $ENEFITS
    T!ese are "#nger term #r 1ene%its t!at are c#nsi.ere. (er& .i%%ic)"t t# *)anti%&,
    CASH FLO. FORECASTING
    7)ring a /r#0ect4s .e(e"#/ment3 m#ne& is s/ent %#r sta%% 'ages3 !ar.'are c#sts etc,
    We nee. t# +n#' t!at 'e can %)n. t!is .e(e"#/ment e5/en.it)re,
    A %#recast is nee.e. #% '!en e5/en.it)re an. inc#me are t# 1e e5/ecte.,
    W!en estimating %)t)re cas! %"#'s3 it is )s)a" t# ign#re t!e e%%ects #% in%"ati#n,
    F#recasts #% in%"ati#n rates ten. t# 1e )ncertain,
    I% e5/en.it)re is increase. .)e t# in%"ati#n3 it is "i+e"& t!at inc#me 'i"" increase /r#/#rti#na""&,
    Cas! F"#' F#recasting
    T&/ica" /r#.)ct "i%e c&c"e cas! %"#',
    Time
    A cas! %"#' %#recast 'i"" in.icate '!en e5/en.it)re an. inc#me 'i"" ta+e /"ace,
    W!en estimating %)t)re cas! %"#'s ign#re t!e e%%ects #% in%"ati#n,
    Cas! %"#' %#recasts %#r 4 /r#0ects
    ;ear Pr#0ect 6 Pr#0ect 2 Pr#0ect 3 Pr#0ect 4
    0 - 600,000 - 600,000 - 600,000 - 620,000
    6 603000 200000 30000 30000
    2 603000 200000 30000 30000
    3 603000 200000 30000 30000
    4 20000 200000 30000 30000
    < 600000 300000 30000 =<000
    Net Pr#%it <0000 600000 <0000 =<000
    A1#(e ta1"e i"")strates t!e cas! %"#' %#recasts %#r %#)r /r#0ects,
    Cas! %"#'s ta+es /"ace at t!e en. #% eac! &ear,
    COST BENEFIT EVALUATION TECHNI/UES
    $ene%its #)t'eig! t!e c#st,
    T# c!##se am#ng t!e /r#0ects ta+e int# acc#)nt
    Timing #% t!e c#sts, An. 1ene%its
    $ene%its re"ati(e t# t!e si2e #% t!e in(estment
    Net Pro$%t
    7i%%erence 1et'een t!e t#ta" c#sts an. t!e t#ta" inc#me #(er t!e "i%e #% t!e /r#0ect,
    Pa'#a0 Per%o1
    Time ta+en t# 1rea+ e(en #r /a&1ac+ t!e initia" in(estment,
    T!e /r#0ect 'it! t!e s!#rtest /a&1ac+ /eri#. 'i"" 1e c!#sen #n t!e 1asis t!at an
    #rgani2ati#n 'i"" 'is! t# minimi2e t!e time t!at a /r#0ect is >in .e1t4
    Ret,rn On In2e!tment 3ROI4
    ROI ? @A(erage ann)a" /r#%itAt#ta" in(estmentBC600
    A"s# +n#'n as acc#)nting rate #% ret)rn
    Pr#(i.es a 'a& #% c#m/aring t!e net /r#%ita1i"it& t# t!e in(estment re*)ire.
    5%!a12antage! o$ ROI
    6, Ta+es n# acc#)nting #% t!e cas! %"#'s,
    2, C#m/are t!e rate #% ret)rn 'it! c)rrent interest rates,
    Ca"c)"ati#n #% ROI %#r Pr#0ect 6
    Net Pr#%it ? D<03000
    T#ta" In(estment ? D6003000
    :sing t!e cas! %"#' ta1"e3 'e can ca"c)"ate ROIs #% #t!er /r#0ectsE
    ROI #% Pr#0ect 2 ? 2F
    ROI #% Pr#0ect 3 ? 60F
    ROI #% Pr#0ect 4 ? 62,<F
    ROI /r#(i.es a sim/"e3 eas&-t#-ca"c)"ate meas)re #% ret)rn #n ca/ita",
    $)t3 it s)%%ers %r#m t'# se(ere .isa.(antagesE
    9i+e t!e net /r#%it3 it ta+es n# acc#)nt #% t!e timing #% t!e cas! %"#'s,
    It !as n# re"ati#ns!i/ t# t!e interest rates #%%ere. #r c!arge. 1& 1an+s3 s# it is (er&
    mis"ea.ing,
    Net Pre!ent Va&,e 3NPV4
    NP8 ? s)m@P8B
    T!e /resent (a")e #% an& %)t)re cas! %"#'
    P8@tB ? (a")e in &ear tA@6GrB e5/@tB
    Ta+es int# acc#)nt t!e /r#%ita1i"it& #% t!e /r#0ect an. timing #% cas! %"#'s t!at are
    /r#.)ce.,
    7#es s# 1& .isc#)nting t!e cas! %"#'s 1& a /ercentage +n#'n as .isc#)nt rate,
    T!e /resent (a")e #% a cas! %"#' ca"c)"ate. 1& m)"ti/"&ing t!e cas! %"#' 1& a//r#/riate
    .isc#)nt %act#r,
    Interna& Rate o$ Ret,rn 3IRR4
    - Attem/ts t# /r#(i.e a /r#%ita1i"it& meas)re as a /ercentage ret)rn t!at is .irect"&
    c#m/ara1"e 'it! interest rates,
    - Ca"c)"ate. as t!at /ercentage .isc#)nt rate t!at '#)". /r#.)ce an NP8 #% 2er#,
    RIS6 EVALUATION
    E(er& /r#0ect in(#"(es ris+,
    Pr#0ects are /"anne. 'it! estimati#ns H %#recasts3 an. t!ese estimati#ns a"'a&s !a(e
    )ncertainties,
    $asis #% t!e ris+s are t!e )ncertainties,
    $)siness Ris+s are t!e ris+s t!at t!reaten t!e 1ene%its #% t!e .e"i(ere. /r#0ect ,
    R%!0 I1ent%$%at%on 7 Ran0%ng
    In an& /r#0ect e(a")ati#n3 'e s!#)".
    I.enti%& t!e ris+s
    I)anti%& t!eir e%%ects
    One /#ssi1"e a//r#ac! is t# c#nstr)ct a /r#0ect ris+ matri5 1&
    :ti"i2ing a c!ec+"ist #% /#ssi1"e ris+s
    C"assi%&ing ris+s acc#r.ing t# t!eir re"ati(e im/#rtance H "i+e"i!##.
    Im/#rtance H "i+e"i!##. nee. t# 1e assesses se/arate"&
    Pr#0ect ris+ matri5 can 1e )se. as a 'a& #%
    e(a")ating /r#0ects
    i.enti%&ing an. ran+ing t!e ris+s %#r a s/eci%ic /r#0ect
    Pro8et R%!0 Matr%9
    T!e ta1"e 1e"#' s!#'s a 1asic /r#0ect ris+ matri5 "isting s#me #% t!e 1)siness ris+s %#r a
    /r#0ect @an e-c#mmerce a//"icati#nB,
    T!eir im/#rtance an. "i+e"i!##. are c"assi%ie. as !ig! @JB3 me.i)m @MB3 "#' @9B3 #r
    e5cee.ing"& )n"i+e"& @B,

    R%!0 an1 Net Pre!ent Va&,e


    W!ere a /r#0ect is re"ati(e"& ris+&3 it is c#mm#n t# )se a !ig!er .isc#)nt rate t# ca"c)"ate
    NP8,
    F#r a reas#na1"& sa%e /r#0ect3 ris+ /remi)m mig!t 1e an a..iti#na" 2F
    F#r a %air"& ris+& #ne3 it mig!t 1e <F Pr#0ects can 1e categ#ri2e. as !ig!3 me.i)m3 #r
    "#' ris+ )sing a sc#ring met!#. an. ris+ /remi)ms .esignate. %#r eac! categ#r&,
    U!%ng 5e%!%on Tree!
    7ecisi#n trees s!#' /#ssi1"e .ecisi#n #/ti#ns an. t!e estimate. "i+e"i!##.s #% t!ese #/ti#ns,

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