The first phase, the conceptual phase, includes the preliminary evaluation of an idea. Most important in this phase is a preliminary analysis of risk and the resulting impact on the time, cost, and performance requirements, together with the potential impact on company resources. The conceptual phase also includes a "first cut" at the feasibility of the effort.

The second phase is the planning phase. It is mainly a refinement of the elements in the conceptual phase and requires a firm identification of the resources required and the establishment of realistic time, cost, and performance parameters. This phase also includes the initial preparation of documentation necessary to support the system. For a project based on competitive bidding, the conceptual phase would include the decision of whether to bid, and the planning phase would include the development of the total bid package (i.e., time, schedule, cost, and performance).

Because of the amount of estimating involved, analyzing system costs during the conceptual and planning phases is not an easy task. As shown in Figure 2-19, most project or system costs can be broken down into operating (recurring) and implementation (nonrecurring) categories. Implementation costs include one-time expenses such as construction of a new facility, purchasing computer hardware, or detailed planning. Operating costs include recurring expenses such as manpower. The operating costs may be reduced as shown

FIGURE 2-19. System costs.

in Figure 2-19 if personnel perform at a higher position on the learning curve. The identification of a learning curve position is vitally important during the planning phase when firm cost positions must be established. Of course, it is not always possible to know what individuals will be available or how soon they will perform at a higher learning curve position.

Once the approximate total cost of the project is determined, a cost-benefit analysis should be conducted (see Figure 2-20) to determine if the estimated value of the information obtained from the system exceeds the cost of obtaining the information. This analysis is often included as part of a feasibility study. There are several situations, such as in competitive bidding, where the feasibility study is actually the conceptual and definition phases. Because of the costs that can be incurred during these two phases, top-management approval is almost always necessary before the initiation of such a feasibility study.

The third phase—testing—is predominantly a testing and final standardization effort so that operations can begin. Almost all documentation must be completed in this phase.

The fourth phase is the implementation phase, which integrates the project's product or services into the existing organization. If the project was developed for establishment of a marketable product, then this phase could include the product life-cycle phases of market introduction, growth, maturity, and a portion of deterioration.

The final phase is closure and includes the reallocation of resources. Consider a company that sells products to consumers. As one product begins the deterioration and death phases of its life cycle (i.e., the divestment phase of a system), new products or projects must be established. Such a company would, therefore, require a continuous stream of projects to survive, as shown in Figure 2-21. As projects A and B begin their decline, new

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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