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System Development Phase :Project Management and CostProject managementProject management is the ongoing process of directingand coordinating all the steps in the development of aninformation system. Effective project management isnecessary throughout the entire systems development lifecycle, not just during the systems development phase; byplacing project management at this point in the text, wedo not mean to imply that project management isrelevant only during systems development.

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• Project management overviewThe goal of project management is to produce aninformation system that is acceptable to its end users andthat is developed within the specified time frame andbudget. The acceptability, deadline, and budget criteriamust all be met for a project to be considered completelysuccessful. Failing to meet any one of these three criteriausually indicates a failure, at least in part, in projectmanagement. Even though outside factors mightcontribute significantly to project failure, the role ofproject management is to recognize such factors and toeliminate or minimize their negative effects.

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The job of a project manager is to manage a project todevelop an information system. The project manager isusually a member of the information systemsdepartment, typically a senior systems analyst. The project manager might also be called the project leader orWhen appropriate, the lead analyst or the chiefprogrammer. Most IS projects also have a project coordinator. Theproject coordinator handles the administrative andprocedural responsibilities for the developing IS. Thisperson also negotiates between end users when they haveconflicting requirements and makes the final ruling on all

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requests for change to the system requirements documentafter the requirements have been frozen.

General management functionsIn business today, the generally recognized managementfunctions are planning, staffing, organizing, directing,and controlling. These five functions apply to all types ofmanagers in all kinds of situations; an informationsystem project manager is no exception.

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Project planningProject planning takes place at both the beginning andend of every SDLC phase. End-of-phase planning isnecessary for formulating estimates of costs, manpowerrequirements, and schedules for all subsequent phases;these estimates, which are included in the documentsprepared at the end of each phase, are used bymanagement to decide on future action.

Planning is necessary at the beginning of eachphase to determine all the specific activities to beaccomplished during that phase. An activity, or task, isany project-related work requiring the use of project

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resources (personnel, time, or money) or any externaleffort that impacts the project. Examples of internalactivities are conducting an interview, designing a reportlayout, and selecting equipment for purchase, whereasawaiting the delivery of purchase d equipment is anexample of an external activity. An activity is the smallest unit of work over which the project managerdesire control.

An event is a project milestone representing thebeginning or end of an activity. Each activity has tworelated events: one event represents the activity’sbeginning, and the other event represents the activity’s

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completion. Some events signal the end of one activityand the start of another activity.Project estimatingDetermining realistic time estimates for project activitiesis one of the most difficult of a project manager’s duties.The project manager must consider many factors that canaffect time requirements.

One of the most important of these factors is thesize of the project, because the relationship between aproject’s size and its required development resources isnot proportional.

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The attributes of individual project team membersalso affect time requirements. A team member with lessexperience, knowledge, education, maturity, andimagination requires more time to complete a projectactivity than does a more knowledgeable andexperienced team member.

Other examples of factors that can affect projecttime requirements include the attitudes and availabilityof end users, the level of upper managementcommitment, and the priority of the project compared tothe priority of other projects in progress within theorganization.

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Most of the research done on estimatingtechniques concerns programming activities during thesystems development phase. Project managers typicallyuse one of three methods (or combination of thesemethods) to estimate programming times. These methodsare the quantitative method, the experience method, andthe constraint method.Project schedulingThe project scheduling functions of the project managerinclude determining the order in which activities will beperformed, setting start and end times for each activity,and assigning specific tasks to team members.

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The first step in determining the order forperforming activities is to identify all activitydependencies. To say that an activity is dependent means that the activity cannot be started until one ormore of the other activities have been completed.Scheduling toolsSeveral graphical planning aids can assist a projectmanager in the scheduling process. We will examine twoof these tools: Gantt charts and PERT/CPM.

• Gantt charts

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Plan and Schedule -

Await Hardware delivery -

Programming -

Install Hardware -

Convert Files -

Write User Manual -Program Testing -

User Training -

System Test -User Test -

20 40 60 80 100 120 140 160 Elapsed Time (in days)

A Gantt chart

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• PERT/CPMThe Program Evaluation Review Technique (PERT)

Is a network model that allows for randomness in activitycompletion times. PERT was developed by the NavySpecial Projects Office in the 1950s to control thedevelopment of the Polaris submarine missile program.At approximately the same time, the Critical PathMethod (CPM) was developed by private industry tomeet similar project management needs. The importantdistinctions between the two methods have disappearedover time, so today the technique is generally calledPERT/CPM.

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EVENT 1 ACTIVITY EVENT 2

Activity Description

Activity Duration

1 2

3 4EVENT 3 DUMMY ACTIVITY EVENT 4

PERT/CPM

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• PERT/CPM

1

2

3

4

5

7

8

6

9

10

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Programming Program Testing System Test70 30 25

2520

25

2510

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5Plan andSchedule5

AwaitHardwareDelivery

Install Hardware

Write UserManual

Convertfiles

User Training User Test

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Activity duration Traditional PERT techniques use a formula for

calculating estimated activity duration. The projectmanager first determines three time estimates for eachactivity: • Optimistic time (O) – generally the shortest time in which the activity can be completed.• Most likely time (M) – the completion time having the highest probability.• Pessimistic estimate (P) – the longest time that an activity might require.The expected activity duration is then calculated as :

expected time = (O + 4M + P) / 6

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For example, the project manager might estimatethat a file-conversion activity could be completed in asfew as twenty days or could take as many as thirty-fourdays, but is most likely to require twenty-four days.Using the formula, the expected activity duration is 25days from the calculation:

(20 + 4 x 24 + 34) / 6 = 25

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Critical pathThe critical path has been defined as the path with

the most time required from the start to the finish of theproject. The critical path can be derived by tracing thetotal duration time for all tasks for every path from thestart to the end of the project. The path with the longestduration time is the critical path.From example:The critical path is : 1-2-4-8-10-9-11

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Cost considerationsThroughout the entire systems development life cycle, project managers and system analysts must be concernedwith costs. Estimates of projected costs and benefits mustbe determined at the end of each SDLC phase as input tothe end-of-phase management decision.

• Cost classificationsCosts can be classified as tangible or intangible, direct

or indirect, and fixed or variable.Benefit considerationsRecognizing and understanding the variousclassifications of benefits is helpful when you want toidentify all the benefits of an IS project. Like costs,

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benefits can be classified as tangible or intangible, fixedor variable, and direct or indirect. Another useful benefitclassification relates to the source of the benefit: positivebenefits versus cost-avoidance benefits. Positive benefitsare those that increase revenues, improve services tocustomers or employees, or otherwise contribute to theorganization or its image as a direct result of theperformance of the IS. Examples of positive benefitsinclude improved information availability, greaterflexibility, faster service to customers, support for newproducts or capabilities, and better inventorymanagement.

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Frequently, an information systems project isinitiated in order to eliminate the high costs of a currentoperation. The new system is expected to providesignificant cost-avoidance benefits. Examples of cost-avoidance benefits include reduced clerical cost andreduced overtime wages. In general, a new informationsystem will achieve cost-avoidance benefits equal to allthe operating costs of the system that it replaces.

Cost-avoidance benefits are as important and asreal as positive benefits. You must consider both types ofbenefits when you perform cost-benefit analyses.

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Cost-benefit analysisAf ter the costs and benefits ha ve been identified and

quantified, the next step is a co st/benefit analysis, in which each cost or benefit is evaluate d in relation to each

alternative. Numerous method s are used to accomplish this task. The following are some co st/benefit analysis

methods: • - Pay back analysis• - Break Even analysis• Present value analysis• Net Present Value analysis• Depreciation model

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• - Pay back analysisPay-back analysis determines the time it takes for

the benefits to equal the initial investment. With thismethod the analyst calculates how long it takes for thebenefits to pay back the costs incurred during developmentand usage. The simplest form of this determination is :

Pay-back = Investment After-tax yearly savings

For example, assume that a project requires an initialinvestment of $1,000,000 with a yearly after-tax savings of$250,000 resulting from completion of the project. Theformula now becomes

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Pay-back = 1,000,000 250,000

= 4 yearsExample of simple payback, consider the lighting retrofitof a 10,000-square-foot commercial office building.relamping with T-8 lamps and electronic, high-efficiencyballasts may cost around $13,300 ($50 each for 266fixtures ) and produce annual savings of around $4,800 peryear (80,000 kWh at $0.06/kWh ). The simple paybacktime for this improvement would be $13,000/$4,800annually = 2.8 years . That is, the improvement would payfor itself in 2.8 years

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- Break Even analysis

Costs in $

$20,000

0 1,000

Units

Currentsystem Proposed

system

Investment

Return oninvestment

Fix costs

• Break-Even analysis

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• Present value analysis and N et Present Value analysisThe cost/benefit formulas that consider present and

future values of money.Future value formulaF = P(1 + i)n

Present value formulaP = F

(1 + i)n

Where P = principal sum or present value F = future value, compounded amount of the

principal sum i = nominal rate of interest n = number of interest periods

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Programming, Testing, and DocumentationDuring the system development phase, programmers

code, test, and document individual programs; the systemsanalyst oversees these activities.Program development• Review the program documentation• Design the program• Code the program• Test the program• Document the programDocumentationDocumentation is the written material that explains what

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the information system does and how people interact withthe system.• Program documentation• System documentation• Operations documentation• End user documentationTestingProgrammers are responsible for unit testing the individualprograms they develop. After the programmers have testedeach program, then the programs within the system thatdepend on one another must be tested together, and finallythe entire system must be tested.

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System Implementation and EvaluationPhase :

When the systems implementation and evaluationphase begins, all the software and hardware for the newinformation system is complete and available. As thefirst step in this phase, you prepare a productionenvironment and transfer the programs and proceduresfor the new information system into that environment. Inthe second activity of this phase, you are involved in thetraining of the end users, operations personnel, and otherpeople who will interact with the new informationsystem. After all the training has been completed , you

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perform the actual conversion effort, which includes fileconversion and system changeover. The last twoactivities of the system implementation and evaluationphase are the post-implementation evaluation and thefinal report to management.• Operational and test environment• Training• Equipment conversion

• install computer & periphe ral equipment• File conversion• System conversion• Auditing• Evaluation

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Old System

Old System

Old System

Old System

New System

New System

New System

New System

DIRECT CHANGEOVER

PARALLEL OPERATION

PILOT OPERATION

PHASED CHANGEOVER

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System conversionChangeover method

Risk CostDirect changeover

High LowParallel Operation

Low HighPilot Operation

Medium MediumPhased Changeover

Medium Medium

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Maintenance• Factors in Maintenance

The information needs of businesses constantlychange in response to external and internal factors.External factors that may require system changes includethe general business climate, a competitor’s introductionof new products and services, and imposition of newrules and regulations by governments. Internal factorsinclude changes in user requirements and responses tomethodological and technological changes. In addition,all systems contain inadequacies and errors overlooked

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during system development. Existing system—whetherthey are newly developed and installed systems or oldersystems that are still in service—require the followingmodification:• Correcting errors• Improving and enhancing th e system• Interfacing systems with oth er applications, systems, and technology

The implementation of these changes is the reasonwhy maintenance consumes more time, effort, andmoney than do new system development activities for thebusiness.

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Types of Maintenance• Ongoing Maintenance

The firm has ongoing maintenance needs, whichare usually taken care of by programs that perform sometype of maintenance on a regular basis. They update files,update records and data items within files, updatebusiness accounts, reset totals, modify table entries, andperform a host of other activities. Files and databases arebacked up and copied. The number of files within a firmis reduced as a result of purging inactive files andrecords. Storages space for data is reduced by

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reorganizing files, indexes, and directories. Filesundergo conversions involving formats, media, andphysical locations. New versions of vendor software andhardware may replace older version. • Maintenance Categories

• Corrective maintenance• Perfective maintenance• Adaptive maintenanceCorrective maintenance entails action to eliminate

errors and failures. Perfective maintenance representsactions to improve or maintain system performance.

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Adaptive maintenance embodies actions to adapt systemto new methodologies, functions, or technologies.

Maintenance Tools and MethodsTools that support maintenance design and developmentactivities are :• Prototyping• Modeling methods and tools supporting them• Structured methods and tools supporting them• Design/development dictionaries• Design/developer CASE workbenches• Computer-aided tools and methods such as CASE utility software

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Maintenance Activities The major influences on maint enance include:

• Type of application• Age of the system• Size of the system and programs• Complexity of the system and programs• Dependence within and betwee n systems• Quality and completeness of de velopment documentation• Level of user understanding of t he system• Level of user involvement in theproject

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• Maintenance RoleThe team that develops a system is not always used tomaintain the system once it is operational . Often, aseparate maintenance team is employed to ensure that thesystem runs properly . The new team may be moreobjective than the original developers . A separate teammay find it easier to distinguish how a system shouldwork from how it does work. 

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The maintenance team involved in many activities suchas:• understanding the system • locating information in syste m documentation• keeping system documentation up to date • extending existing functions to accommodate new or changing requirements• adding new functions to the system • finding the source of system failures or problems• locating and correcting faults • answering questions about t he way the system works

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• restructuring design and code components • rewriting design and code c omponents• deleting design and code components that are no longer useful • managing changes to the sy stem as they are made

In addition, maintenance team members work with users,operator, and customers .First, they try to understand theproblem as expressed in the user's language . Then, theproblem is transformed into a request for modification.

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The change request includes a description of how thesystem works now, how the user wants the system towork, and what modifications are needed to produce thechanges . Once design or code is modified and tested, themaintenance team retrains the user, if necessary.