Today, there is no agreement among industries, or even companies within the same industry, about the life-cycle phases of a project. This is understandable because of the complex nature and diversity of projects.

Figure 2-13. Maturity path.

The theoretical definitions of the life-cycle phases of a system can be applied to a project. These phases include:

• Conceptual

• Implementation

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 described under the conceptual phase. The planning phase requires a firm identification of the resources to be required together with the establishment of realistic time, cost, and performance parameters. This phase also includes the initial preparation of all 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 2-14, most project or system costs can be broken down into operating (recurring) and implementation (nonrecurring) categories. The implementation costs include one-time expenses such as construction of a new facility, purchasing computer hardware, or detailed planning. Operating costs, on the other hand, include recurring expenses such as manpower. The operating costs may be reduced as shown in Figure 2-14 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 can perform at a higher learning curve position.

Figure 2-14. System costs.
Figure 2-15. Cost-benefit analysis.

Once the approximate total cost of the project is determined, a cost-benefit analysis should be conducted (see Figure 2-15) 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. The question to be answered is, "Where should the resources be reassigned?" Consider a company that sells products on the open consumer market. As one product begins the deterioration and death phases of its life cycle (i.e., the divestment phase of a system), then new products or projects must be established. Such a company would, therefore, require a continuous stream of projects as a ne-

Figure 2-16. A stream of projects.

cessity for survival, as shown in Figure 2-16. As projects A and B begin their decline, new efforts (project C) must be developed for resource reallocation. In the ideal situation these new projects will be established at such a rate that total revenue will increase and company growth will be clearly visible.

The closure phase evaluates the efforts on the total system and serves as input to the conceptual phases for new projects and systems. This final phase also has an impact on other ongoing projects with regard to priority identification.

Thus far no attempt has been made to identify the size of a project or system. Large projects generally require full-time staffs, whereas small projects, although they undergo the same system life-cycle phases, may require only part-time people. This implies that an individual can be responsible for multiple projects, possibly with each project existing in a different life-cycle phase. The following questions must be considered in multiproject management:

• Are the project objectives the same?

• Is there a distinction between large and small projects?

• How do we handle conflicting priorities?

• Critical versus critical projects

• Critical versus noncritical projects

• Noncritical versus noncritical projects

Later chapters discuss methods of resolving conflicts and establishing priorities.

The phases of a project and those of a product are compared in Figure 2-17. Notice that the life-cycle phases of a product generally do not overlap, whereas the phases of a project can and often do overlap.

Table 2-5 identifies the various life-cycle phases that are commonly used. Even in mature project management industries such as construction, one could survey ten different construction companies and find ten different definitions for the life-cycle phases.

The life-cycle phases for computer programming, as listed in Table 2-5, are also shown in Figure 218 which illustrates how manpower resources can build up and decline during a project. In Figure 218, PMO stands for the present method of operations, and PMO' will be the "new" present method of operations after conversion. This life cycle would probably be representative of a twelve-month activity. Most executives prefer short data processing life cycles because computer technology changes at a very rapid rate. An executive of a major utility commented that his company was having trouble determining how to terminate a computer programming project to improve customer service because by the time a package is ready for full implementation, an updated version appears on the scene. Should the original project be canceled and a new project begun? The solution appears to lie in establishing short data processing project life-cycle phases, perhaps through segmented implementation. In any case, we can conclude that:

Top management is responsible for the periodic review of major projects. This should be accomplished, at a minimum, at the completion of each life-cycle phase.

More and more companies are preparing procedural manuals for project management and for structuring work using life-cycle phases. There are several reasons for this trend:

• Clear delineation of the work to be accomplished in each phase may be possible.

• Pricing and estimating may be easier if well-structured work definitions exist.

• There exist key decision points at the end of each life-cycle phase so that incremental funding is possible.

As a final note, the reader should be aware that not all projects can be simply transposed into life-cycle phases (e.g., R&D). In such a case it might be possible (even in the same company) for different definitions of life-cycle phases to exist because of schedule length, complexity, or just the difficulty of managing the phases.

Figure 2-17. System/product life cycles.



• Definition

• Termination

Manufacturing Computer Programming Construction

■ Production

■ Conceptual

■ Definition and design

■ Implementation

■ Conversion

• Planning, data gathering and procedures

• Studies and basic engineering

• Detail engineering

• Detail engineering/ construction overlap

• Construction

• Testing and commissioning

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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