This chapter started with a discussion of the nine Knowledge Areas. The Knowledge Areas bring together processes that have characteristics in common. And they help you understand what types of skills and resources are needed to complete the processes within them.

Next I detailed how projects are initiated. Projects come about as a result of one of seven needs or demands: market demands, organizational needs, customer requests, technological advances, legal requirements, ecological impacts, or social needs.

Project selection methods include decision models in the form of benefit measurement methods and mathematical models (also called constrained optimization methods). The mathematical methods utilize mathematical models. Benefit measurement methods come in the form of cost-benefit analyses, scoring models, and economic analyses. These are primarily comparative approaches. Besides cost-benefit analysis, the most commonly used form of benefit measurement methods is cash flow analysis.

Analysis of cash flows includes payback period, discounted cash flows, net present value (NPV), and internal rate of return (IRR). These last three methods are concerned with the time value of money—or, in other words, converting future dollars into today's value. Generally, projects with a shorter payback period are desired over those with longer payback periods. Projects that have an NPV greater than zero should be accepted. Projects with the highest IRR value are considered a better benefit to the organization than projects with lower IRR values.

The Develop the Project Charter process is the first process within the Initiating process group. The project statement of work is an input to this process that describes the product, service, or result the project was undertaken to complete. The SOW should include the business needs of the organization and a product scope description and should map to the organization's strategic plan.

Enterprise environmental factors are factors outside the project that might have significant influence on the success of the project. Organizational process assets refer to policies, guidelines, and procedures for conducting the project work.

Expert judgment is the only tool and technique of this process. Experts usually have specialized knowledge or skills and can include staff from other departments in the company, external or internal consultants, and members of professional and technical associations or industry groups.

The output of this process is the project charter, which is the formal recognition that a project, or the next project phase, should begin. The charter authorizes the project to begin, it authorizes the project manager to assign resources to the project, it documents the business need and justification, it describes the customer's requirements, and it ties the project to the ongoing work of the organization.

The Identify Stakeholders process concerns identifying, assessing, and classifying stakeholders in a stakeholder register and developing a stakeholder management strategy. Stakeholder involvement is critical to the success of the project. The more the project manager understands stakeholder influences, expectations, and impacts, the easier it is to prepare a strategy plan to deal with the impacts or issues, sometimes before they occur.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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