Sunday, July 15, 2012

Six Methods for Prioritising Projects

Six methods for prioritising projects

Net Present Value (NPV): Much favoured by the public sector to compare the discounted value of a stream of future costs or benefits, this defines the difference between the present value of a stream of costs (NPC) and a stream of benefits. A positive NPV would indicate that a project should be profitable and pursued whilst a negative value would indicate that the project should be abandoned.

Payback Period: By using this fairly straightforward method, managers can calculate how long it will take for project benefits to match cost, that is, recoup the initial cost. Projects with a quick payback period are naturally more appealing than those with a longer payback period during which more can go wrong; all the time bearing in mind that a fast payback period does not guarantee a higher rate of return. It is worth noting that whilst payback’s simplicity is its strength, some might consider it over-simplistic to be used alone.

Internal Rate of Return (IRR): This calculates the estimated rate of return of a project, with a higher rate of return making investment more probable. Organisations will generally set a minimum rate of return below which they will not normally consider a project.

Earned Value Analysis (EVA): Viewed with caution by some because it is associated with large projects and requires, amongst other things, a culture of reporting within a company, this can be a helpful technique. Organisations can manage and measure a project to get an integrated view of its cost, spend and progress so allowing them to estimate resources that will have been used at completion. Managers can use EVA to help them keep an eye on project performance and correct variances, put a project on ice or ditch it if necessary.

Balanced Scorecard (BSC): Organisations employ this to align vision with business activities by viewing the company from four perspectives. For a financial perspective companies might look at everything from return on investment to cash flow. To gain a perspective on internal business processes managers might assess factors such as process automation or alignment. To realize high customer satisfaction levels factors like customer retention rate might be examined. Through the learning and growth angle firms can focus on areas such as employee expertise and job satisfaction.

Business Case: The Business Case provides a programme or project with its raison detre and is an important component of both PRINCE2 and Managing Successful Programmes. It outlines reasons for investing in a project, furnishes a framework for bringing about business change and runs for the life of the project to ensure that it stays on track. A detailed Business Case has five main parts. Strategic fit considers issues such as business need and strategic benefits; options appraisal focuses on benefits and risk quantification and sensitivity analysis, and similar; evaluating a project’s commercial aspects would involve scrutinizing the financial case and looking at areas such as implementation timescales; an assessment of affordability centres on the financial aspect too this time focussing on things like budget based on whole life costs; decisions about the final ingredient, achievability of a project, would require an in-depth look at, for example, similar projects, project roles, procurement and, in short, the project management case.

Wednesday, June 13, 2012

Prince2:2009 - Glossary of Terms

Prince2:2009 - Glossary of Terms

accept (risk response)
A risk response to a threat where a conscious and deliberate

decision is taken to retain the threat, having discerned that it is

more economical to do so than to attempt a risk response action.

The threat should continue to be monitored to ensure that it

remains tolerable.

The formal act of acknowledging that the project has met agreed

acceptance criteria and thereby met the requirements of its


acceptance criteria
A prioritized list of criteria that the project product must meet before

the customer will accept it, i.e. measurable definitions of the

attributes required for the set of products to be acceptable to key


A process, function or task that occurs over time, has recognizable

results and is managed. It is usually defined as part of a process or


agile methods
Principally, software development methods that apply the project

approach of using short time-boxed iterations where products are

incrementally developed. PRINCE2 is compatible with agile


The formal confirmation that a product is complete and meets its

requirements (less any concessions) as defined by its Product


The person or group (e.g. a Project Board) who is identified as

qualified and authorized to approve a (management or specialist)

product as being complete and fit for purpose.

A statement that is taken as being true for the purposes of

planning, but which could change later. An assumption is made

where some facts are not yet known or decided, and is usually

reserved for matters of such significance that, if they change or turn

out not to be true, there will need to be considerable replanning.

All the systematic actions necessary to provide confidence that the

target (system, process, organization, programme, project,

outcome, benefit, capability, product output, deliverable) is

appropriate. Appropriateness might be defined subjectively or

objectively in different circumstances. The implication is that

assurance will have a level of independence from that which is

being assured. See also ‘Project Assurance’ and ‘quality



ITIL - Glossary and Abbreviations - Link

ITIL - Glossary and Abbreviations

Glossary terms and definitions



Formal agreement that an IT service,

process, plan or other deliverable is

complete, accurate, reliable and meets its

specified requirements. Acceptance is

usually preceded by change evaluation or

testing and is often required before

proceeding to the next stage of a project or

process. See also service acceptance


access management
(ITIL Service Operation) The process

responsible for allowing users to make use of

IT services, data or other assets. Access

management helps to protect the

confidentiality, integrity and availability of

assets by ensuring that only authorized users

are able to access or modify them. Access

management implements the policies of

information security management and is

sometimes referred to as rights management

or identity management.

account manager
(ITIL Service Strategy) A role that is very

similar to that of the business relationship

manager, but includes more commercial

aspects. Most commonly used by Type III

service providers when dealing with external


(ITIL Service Strategy) The process

responsible for identifying the actual costs of

delivering IT services, comparing these with

budgeted costs, and managing variance from

the budget.

accounting period
(ITIL Service Strategy) A period of time

(usually one year) for which budgets,

charges, depreciation and other financial

calculations are made. See also financial


Officially authorized to carry out a role. For

example, an accredited body may be

authorized to provide training or to conduct