Modern Systems Analysis

and Design
Week 3
Initiating and Planning Systems
Development

Lecturer: Hamid Milton Mansaray

Phone#: +23276563575
Email: hmmansaray@ccmtsl.com
 Systems Analysis
& Design

V. Implementation
I. Foundations II. Planning III. Analysis IV. Design
& Maintenance

4. Identify & Select 6. Determine 13. System

1. SD Environment 9. Design DB
SD Projects Systems Req’s Implementation

7. Structure
2. Origins of 5. Initiate & Plan 10. Design Forms
Systems Process 14. Maintaining IS
Software SD Projects & Reports
Req’s

8. Structure 11. Design

3. Manage IS
Systems Data Interfaces &
Project
Req’s Dialogues

12. Design Dist &

Internet Systems
 Learning Objectives
• Describe the steps involved in the project initiation
and planning process.
• Explain the need for and the contents of a Project
Scope Statement and Baseline Project Plan.
• List and describe various methods for assessing
project feasibility.
• Describe the differences between tangible and
intangible benefits and costs, and between one-time
vs. recurring benefits and costs.

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 Learning Objectives
• Perform cost-benefit analysis and describe what is
meant by the time value of money, present value,
discount rate, net present value, return on
investment, and break-even analysis.
• Describe the general rules for evaluating technical
risks associated with a systems development project.
• Describe the activities and participant roles within a
structured walkthrough.

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 Initiating and Planning Systems
Development Projects
• What must be considered when making the decision
on the division between project initiation and
planning (PIP) and analysis?
• How much effort should be expended on the PIP
process?
• Who is responsible for performing the PIP process?
• Why is PIP such a challenging activity?

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Process of Initiating and Planning IS
Development Projects

FIGURE 5-1
Systems development life cycle
with project initiation and
planning highlighted

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 Process of Initiating and Planning IS
Development Projects
• Project initiation focuses on activities designed to
assist in organizing a team to conduct project
planning.

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 Process of Initiating and Planning IS
Development Projects
• Establishing the Project Initiation Team
• Establishing a Relationship with the Customer
• Establishing the Project Initiation Plan
• Establishing Management Procedures
• Establishing the Project Management Environment
and Project Workbook
• Developing the Project Charter (see Ch 3)

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 Process of Initiating and Planning IS
Development Projects
• The key activity of project planning is the process of
defining clear, discrete activities and the work
needed to complete each activity within a single
project.
• The objective of the project planning process is the
development of a Baseline Project Plan (BPP) and the
Project Scope Statement (PSS).

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 Process of Initiating and Planning IS
Development Projects
• Business Case
– Justification for an information system
– Presented in terms of the tangible and intangible
economic benefits and costs
– The technical and organizational feasibility of the proposed
system

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 Elements of Project Planning
• Describe project scope, alternatives, feasibility.
• Divide project into tasks.
• Estimate resource requirements and create resource
plan.
• Develop preliminary schedule.
• Develop communication plan.
• Determine standards and procedures.
• Identify and assess risk.
• Create preliminary budget.
• Develop a statement of work.
• Set baseline project plan.

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 Deliverables and Outcomes
• Baseline Project Plan (BPP)
– A major outcome and deliverable from the PIP phase
– Contains the best estimate of a project’s scope, benefits,
costs, risks, and resource requirements

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 Deliverables and Outcomes
• Project Scope Statement (PSS)
– A document prepared for the customer
– Describes what the project will deliver
– Outlines at a high level all work required to complete the
project

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 Assessing Project Feasibility
• Economic
• Technical
• Operational
• Scheduling
• Legal and contractual
• Political

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Assessing Project Feasibility

FIGURE 5-2
System Service Request for Customer
Tracking System (Pine Valley Furniture)
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 Assessing Project Feasibility
• Economic feasibility: a process of identifying the
financial benefits and costs associated with a
development project
– Often referred to as a cost-benefit analysis
– Project is reviewed after each SDLC phase in order to
decide whether to continue, redirect, or kill a project

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 Determining Project Benefits
• Tangible benefits refer to items that can be
measured in dollars and with certainty.
• Examples include:
– reduced personnel expenses
– lower transaction costs, or
– higher profit margins.

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 Determining Project Benefits
• Most tangible benefits will fit within the following
categories:
– Cost reduction and avoidance
– Error reduction
– Increased flexibility
– Increased speed of activity
– Improvement of management planning and control
– Opening new markets and increasing sales opportunities

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Determining Project Benefits

Figure 5-3
Tangible benefits for Customer Tracking
System (Pine Valley Furniture)

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 Determining Project Benefits
• Intangible benefits are benefits derived from the
creation of an information system that cannot be
easily measured in dollars or with certainty.
– May have direct organizational benefits, such as the
improvement of employee morale
– May have broader societal implications, such as the
reduction of waste creation or resource consumption

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Determining Project Benefits

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 Determining Project Costs
• Tangible cost: a cost associated with an information
system that can be measured in dollars and with
certainty
• IS development tangible costs include:
– Hardware costs
– Labor costs, or
– Operational costs, including employee training and
building renovations.

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 Determining Project Costs
• Intangible cost: a cost associated with an
information system that cannot be easily measured
in terms of dollars or with certainty
• Intangible costs can include:
– Loss of customer goodwill,
– Employee morale, or
– Operational inefficiency.

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 Determining Project Costs
• One-time cost: a cost associated with project start-
up and development or system start-up
• These costs encompass activities such as:
– Systems development,
– New hardware and software purchases,
– User training,
– Site preparation, and
– Data or system conversion.

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 Determining Project Costs
• Recurring cost: a cost resulting from the ongoing
evolution and use of a system
• Examples of these costs include:
– Application software maintenance
– Incremental data storage expenses
– Incremental communications
– New software and hardware leases, and
– Supplies and other expenses (i.e., paper, forms, data
center personnel).

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 Determining Project Costs

Figure 5-4
One-time costs for Customer Tracking System (Pine Valley Furniture)

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 Determining Project Costs

Figure 5-5
Recurring costs for Customer Tracking System (Pine Valley Furniture)

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 Determining Project Costs
• Both one-time and recurring costs can consist of
items that are fixed or variable in nature.
• Fixed costs are billed or incurred at a regular interval
and usually at a fixed rate.
– Example: facility lease payment
• Variable costs are items that vary in relation to
usage.
– Example: long-distance charges

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Determining Project Costs

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Determining Project Costs

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 The Time Value of Money
• Time value of money (TVM): the concept that
money available today is worth more than the same
amount tomorrow
• Discount rate: the rate of return used to compute
the present value of future cash flows (the cost of
capital)
• Present value: the current value of a future cash flow

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 The Time Value of Money
• Net Present Value (NPV)
– Use discount rate to determine present value of cash
outlays and receipts
• Return on Investment (ROI)
– Ratio of cash receipts to cash outlays
• Break-Even Analysis (BEA)
– Amount of time required for cumulative cash flow to equal
initial and ongoing investment

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 The Time Value of Money
• Net Present Value
– PVn = present value of Y dollars n years from now based on
a discount rate of i.
– NPV = sum of PVs across years.
– Calculates time value of money

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 The Time Value of Money
• Break-even analysis: a type of cost-benefit analysis to
identify at what point (if ever) benefits equal costs

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Calculations for the Break Analysis

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 The Time Value of Money

Figure 5-7
Break-even analysis for Customer Tracking System (Pine Valley Furniture)

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 Assessing Technical Feasibility
• Technical feasibility: a process of assessing the
development organization’s ability to construct a
proposed system

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 Assessing Technical Feasibility
• The potential consequences of not assessing and
managing risks can include:
– Failure to attain expected benefits from the project
– Inaccurate project cost estimates.
– Inaccurate project duration estimates.
– Failure to achieve adequate system performance levels.
– Failure to adequately integrate the new system with
existing hardware, software, or organizational procedures.

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 Project Risk Factors
• Project size
– Team size, organizational departments, project duration,
programming effort
• Project structure
– New vs. renovated system, resulting organizational
changes, management commitment, user perceptions
• Development group
– Familiarity with platform, software, development method,
application area, development of similar systems
• User group
– Familiarity with IS development process, application area,
use of similar systems

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 Assessing Technical Feasibility
• Four general rules emerged as technical risk
assessments:
– Larger projects are riskier than smaller projects.
– A system in which the requirements are easily obtained
and highly structured will be less risky than one in which
requirements are messy, ill structured, ill defined, or
subject to the judgment of an individual.
– The development of a system employing commonly used
or standard technology will be less risky than one
employing novel or nonstandard technology.
– A project is less risky when the user group is familiar with
the systems development process and application area
than if unfamiliar.

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 Assessing Technical Feasibility

FIGURE 5-8
Effects of degree of project structure, project size, and familiarity with
application area on project implementation risk (Source: Based on 7th Applegate, Austin,
and McFarlan. 2007; Tech Republic, 2005.)

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 Assessing Other Feasibility Concerns
• Operational
– Does the proposed system solve problems or take
advantage of opportunities?
• Scheduling
– Can the project time frame and completion dates meet
organizational deadlines?
• Legal and Contractual
– What are the legal and contractual ramifications of the
proposed system development project?
• Political
– How do key stakeholders view the proposed system?

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 Building the Baseline Project Plan
• A Baseline Project Plan (BPP) is a document
intended primarily to guide the development team.
• Sections:
– Introduction
– System description
– Feasibility assessment
– Management issues

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 Building the Baseline Project Plan
• Project Scope statement is part of the BPP
introduction.
• Sections:
– Problem statement
– Project objectives
– Project description
– Business benefits
– Deliverables
– Expected duration

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 Factors in Determining Scope
• Organizational units affected by new system
• Current systems that will interact with or change
because of new system
• People who are affected by new system
• Range of potential system capabilities

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Diagram Depiction of Project Scope

FIGURE 5-11
Context-level data flow diagram showing project scope for Purchasing Fulfillment
System (Pine Valley Furniture)

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 Building the Baseline Project Plan
• System description section outlines possible
alternative solutions.
• Feasibility assessment section outlines issues related
to project costs and benefits, technical difficulties,
and other such concerns.
• Management issues section outlines a number of
managerial concerns related to the project.

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 Reviewing the Baseline Project Plan
• Structured Walkthroughs: a peer-group review of any
product created during the system development
process
• Roles: coordinator, presenter, user, secretary,
standard-bearer, maintenance oracle
• Can be applied to BPP, system specifications, logical
and physical designs, program code, test procedures,
manuals and documentation

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 Summary
• In this chapter you learned how to:
– Describe steps involved in project initiation and planning.
– Explain the need for and contents of Statement of Work and
Baseline Project Plan.
– List and describe methods for assessing project feasibility.
– Describe tangible vs. intangible costs and benefits, and one-time
vs. recurring costs and benefits.
– Perform cost-benefit analysis, and understand time value of
money, present value, discount rate, return on investment, and
break-even analysis.
– Describe rules for evaluating technical risk of systems
development projects.
– Describe activities and roles of structured walkthroughs.

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