Project Charter
theportfolio of projects in the Queensland Food Corp case and prepare a project charter using the template provided.
As you learned in Unit 2, there are a variety of projects (efficiency, market extension, new product, compliance, and new markets). Choose one that resonates with most members of your group.
For charter content information not available in the case study, your group (using brainstorming and research by the support group members), develop your best ideas of what the paragraph would include so that it addresses all of the required content contained in the template.
Content: (90 points) The charter should be at least 2, but not more than 3 pages (excluding the key stakeholder list). Each of the 13 sections will be evaluated for completeness and quality (i.e., realistic content) as it relates to the project selected. Your group can make some assumptions about content in each paragraph where information is not available in the case.
At least 5 key stakeholders must be identified.
Your Instructor will use Turn-it-in to ensure your paper is authentic work.
To avoid plagiarism, see the
course home page
for more information and use the
Purdue Online Writing Lab (Links to an external site.)
to learn how to paraphrase, summarize and cite the references you use in all academic writing assignments.
Mechanics (10 points) It is expected that the charter will have excellent mechanics (presentation, grammar and spelling) exhibit the quality of work capable of a group of graduate students and working professionals. All sections of the charter must be readable at 100% magnification.
Submit your charter to link below.
A strategy for completing this assignment
Read the project description and meet as a group to discuss gaps in information. After discussion, assign each person to research missing information for each section. Some sections of the charter, such as “overall project risk” will require you to read up on the topic.
The PMBOK 6e is the primary reference recommended for completing this assignment.
Each group member should write a draft of each section using a collaborative document (e.g., Office365 cloud-based MS Word). Don’t overweight one paragraph at the expense of other paragraphs with respect to how much content each contains. Two to 3 pages will require you to think critically about what content to include versus what is not high- or summary-level.
After drafts of all questions are complete, everyone should meet to walk through and discuss the results before finalizing the charter.
CASE: Queensland Food Corp
In early January 2003, the senior-management committee of Queensland Food Corp was to meet to draw up the firm’s capital budget for the new year. Up for consideration were 11 major projects that totaled over $20.8 million. Unfortunately, the board of directors had imposed a spending limit of only $8.0 million; even so, investment at that rate would represent a major increase in the firm’s asset base of $65.6 million. Thus the challenge for the senior managers of Queensland Food Corp was to allocate funds among a range of compelling projects nominated for consideration.
The Company
Queensland Food Corp, headquartered in Brisbane, Australia, was a producer of high-quality ice cream, yogurt, bottled water, and fruit juices. Its products were sold throughout two states (Queensland, New South Wales) and two territories (ACT and Northern Territory). (See Exhibit 1 for map of the company’s marketing region.)
Exhibit 1 – Queensland Food Corp, located in Australia
Queensland Food Corp sales had been static since 2000 (see Exhibit 2), which management attributed to low population growth in Northern Territory and market saturation in some areas. Outside observers, however, faulted recent failures in new-product introductions.
Exhibit 2 – Summary of Financial Results (millions AUD except per share amounts)
End of Fiscal Year
2000
2001
2002
Gross Sales
$100.8
$100.7
$100.8
Net Income
5.1
4.9
3.7
Dividends
2.0
2.0
2.0
Earnings Per Share
0.85
0.82
0.66
Shareholders’ Equity (Book Value)
18.2
20.6
23.5
Shareholders’ Equity (Market value)
45.3
39.0
22.9
Total Assets
47.7
58.0
65.6
Most members of management wanted to expand the company’s market presence and introduce more new products to boost sales.
Resource Allocation
The capital budget at Queensland Food Corp was prepared annually by a committee of senior managers who then presented it for approval by the board of directors. The committee consisted of five managing directors, the president Chief Executive (CEO), and the chief finance officer (CFO). Typically, the CEO solicited investment proposals from the managing directors. The proposals included a brief project description, a financial analysis, and a discussion of strategic or other qualitative consideration.
As a matter of company policy, investment proposals at Queensland Food Corp were subjected to two financial tests, payback and internal rate of return (IRR). Financial tests were considered hurdles and had been established in 2001 by the management committee and varied according to the type of project:
Exhibit 3 -Company Policy for Project Approval
Project Type
Minimum Acceptable IRR
Maximum Acceptable Payback (Years)
1. Market/Product Extension
12%
6
2. New Product/Markets
10%
5
3. Efficiency Improvements
8%
4
4. Environmental/Safety
Not required
Not Applicable
In January 2003, the estimated weighted-average cost of capital (WACC) for Queensland Food Corp was 10.5 percent. In describing the capital-budgeting process, the CFO, Tony Austin, said, “We use the sliding scale of IRR tests as a way of recognizing differences in risk among the various types of projects. Where the company takes more risk, we should earn more return. The payback test signals that we are not prepared to wait for long to achieve that return.”
At the conclusion of the most recent meeting of the directors, the board voted unanimously to limit capital spending in 2003 to $8.0 million.
Exhibit 4 – Project Proposals
Project ID
Project Description
Cost (Millions)
Project Type
1
Distribution Truck Fleet Replacement/Expansion
2.2
Efficiency (or Expansion)
2
New Plant Construction
3.0
Market Extension
3
Existing Plant Expansion
1.0
Market Extension
4
Fat Free(!) Greek Yogurt/Ice Cream Development/Introduction
1.5
New Product
5
Plant Automation and Conveyor System
1.4
Efficiency
6
Wastewater Treatment (4 plants)
0.4
Environmental Compliance
7
Market Expansion West (Western Territory)
2.0
New Market
8
Market Expansion South (Victoria)
2.0
New Market
9
Snack Food Development/Introduction
1.8
New Product
10
Computer-based Inventory Control System
1.5
Efficiency
11
Bundaberg Rum Acquisition
4.0
New Product
1. Distribution Truck Fleet Replacement/Expansion. Wayne Ramsey proposed to purchase 100 new refrigerated tractor trailer trucks, 50 each in 2003 and 2004. By doing so, the company could sell 60 old, fully depreciated trucks over the two years for a total of $120,000. The purchase would expand the fleet by 40 trucks within two years. Each of the new trailers would be larger than the old trailers and afford a 15 percent increase in cubic meters of goods hauled on each trip. The new tractors would also be more fuel and maintenance efficient. The increase in number of tucks would permit more flexible scheduling and more efficient routing and servicing of the fleet than at present and would cut delivery times and, therefore, possibly inventories. It would also allow more frequent deliveries to the company’s major markets, which would reduce loss of sales cause by stock-outs. Finally, expanding the fleet would support geographical expansion over the long term. As shown in Exhibit 3, the total net investment in trucks of $2.2 million and the increase in working capital to support added maintenance, fuel, pay-roll, and inventories of $200,000 was expected to yield total cost savings and added sales potential of $770,000 over the next seven years. The resulting IRR was estimated to be 7.8 percent, marginally below the minimum 8 percent required return on efficiency projects. Some of the managers wondered if this project would be more properly classified as “efficiency” than “expansion.”
2. New Plant Construction. Ian Gardner noted that Queensland Food Corp’s yogurt and ice-cream sales in the southeastern region of the company’s market were about to exceed the capacity of its Sydney manufacturing and packaging plant. At present, some of the demand was being met by shipments from the company’s newest most efficient facility, located in Darwin, Australia. Shipping costs over that distance were high however, and some sales were undoubtedly being lost when marketing effort could not be supported by delivery. Gardner proposed that a new manufacturing and packaging plant be built in ACT, Australia, just at the current southern edge of Queensland Food Corp’s marketing region, to take the burden off the Sydney and Darwin plants.
The cost of this plant would be $2.5 million and would entail $500,000 for working capital. The $1.4 million worth of equipment would be amortized over seven years, and the plant over ten years. Through an increase in sales and depreciation, and decrease in delivery costs, the plant was expected to yield after-tax cash flows totaling $2.4 million and an IRR of 11.3 percent over the next ten years. This project would be classified as a market extension.
3. Existing Plant Expansion. In addition to the need for greater production capacity in Queensland Food Corp’s southeastern region, its Cairns’ plant had reached full capacity. This situation made the scheduling of routine equipment maintenance difficult, which, in turn, created production-scheduling and deadline problems. This plant was one of two highly automated facilities that produced Queensland Food Corp’s entire line of bottled water, mineral water, and fruit juices. The Cairn’s plant supplied Northern Territory and Queensland (the major market).
The Cairn’s plants capacity could be expanded by 20 percent for $1.0 million. The equipment ($700,000) would be deprecated over seven years, and the plant over ten years. The increased capacity was expected to result in additional production of up to $150,000 per year, yielding an IRR of 11.2 percent. This project would be classified as a market extension.
4. Fat Free(!) Greek Yogurt/Ice Cream Development/Introduction. David D. Jones noted that recent developments in the European market showing promise of significant cost savings to food producers as well as stimulating growing demand for low-calorie products. The challenge was to create the right flavor to complement or enhance the other ingredients. For ice-cream manufacturers, the difficulty lay in creating a balance that would result in the same flavor as was obtained when using traditional yogurt/ice cream.
$1.5 million would be needed to commercialize a yogurt line that had received promising results in consumer and production tests. This cost included acquiring specialized production facilities, working capital, and the cost of the initial product introduction. The overall IRR was estimated to be 17.3 percent.
Jones stressed that the proposal, although highly uncertain in terms of actual results, could be viewed as a means of protecting present market share, because other high-quality ice-cream producers carrying out the same research might introduce these products; if the HooRoo Cakes brand did not carry a fat free line and its competitors did, the HooRoo Cakes brand might suffer. This project would be classed in the new-product category of investments.
5. Plant Automation. Ian Gardner also requested $1.4 million to increase automation of the production lines at six of the company’s older plants. The result would be improved throughout speed and reduced accidents, spillage, and production tie-ups. The last two plants the company had built included conveyer systems that eliminated the need for any heavy lifting by employees. The systems reduced the chance of injury to employees; at the six older plants, the company had sustained on average of 75 missed worker-days per year per plant in the last two years because of muscle injuries sustained in heavy lifting. At an average hourly wage of $14.00 per hour, over $150,000 per year was thus lost, and the possibility always existed of more serious injuries and lawsuits. Overall cost savings and depreciation totaling $275,000 per year for the project were expected to yield an IRR of 8.7 percent. This project would be classed in the efficiency category.
6. Water Treatment (4 plants). Queensland Food Corp preprocessed a variety of fresh fruits at its Brisbane and Darwin plants. One of the first stages of processing involved cleaning the fruit to remove dirt and pesticides. The dirty water was simply sent down the drain and into the like-named rivers. Recent legislation from the Department of Sustainability, Environment, Water, Population and Communities (Australian Government) called for any waste water containing even the slight traces of poisonous chemicals to be treated at the sources and gave companies four years to comply. As and environmentally oriented project, this proposal fell outside the normal financial tests of project attractiveness. Gardner noted, however, that the wastewater treatment equipment could be purchased today for $400,000; he speculated that the same equipment would cost $1.0 million in four years when immediate conversion became mandatory. In the intervening time, the company would run the risks that Australian Government and local regulators would shorten the compliance time or that the company’s pollution record would become public and impair the image of the company in the eyes of the consumer. This project would be classed in the environmental category.
7. Market Expansion West (Western Territory) and 8. Market Expansion South (Victoria). Mick Dell’Orco recommend that the company expand its market westward to include the Western Territory and to the south (Victoria, South Australia and Tasmania). He believed it was time to expand sales of ice cream, and possibly yogurt, geographically. It was his theory that the company could sustain expansions in both directions simultaneously, but practically speaking, Dell’Orco doubted that the sales and distribution organizations could sustain both expansions at once.
Each alternative geographical expansion had its benefits and risks. If the company expanded southward, it could reach a large population with a great appetite for frozen dairy products, but it would also face more competition from local and state ice cream manufacturers. The southward expansion would have to be supplied by facilities in ACT and New South Wales, at least initially.
Looking to the west, consumers in Western Territory have substantial purchasing power due to the explosion in the mining industry, but the population is significantly less than in the southward expansion geographical area. Expansion to the west would require building consumer demand and planning for future plants to produce products in Western Territory. Expansion to the west would need to be supplied by rail from Darwin facilities and further redistribution truck fleet.
The initial cost for each proposal was $2 million in working capital. The bulk of the costs were expected to involve the financing of distributorships, but over the ten-year forecast period, the distributors would gradually take over the burden of carrying receivables and inventory. Both expansion proposals assumed the rental of suitable warehouse and distribution facilities. The after-tax cash flow was expected to be $3.75 million for southward expansion and $2.75 million for westward expansion. Dell’Orco pointed out that southward expansion meant a higher possible IRR but that moving westward was a less risky proposition. The projected IRRs were 21.4 percent and 18.8 percent for southward and westward expansion, respectively. These projects would be classed in the new market category.
9. Snack Food Development/Introduction. David D. Jones suggested that the company use the excess capacity in its Darwin facility to produce a line of snack foods of dried fruits to be test-marketed in Northern Territory. He noted the strength of the HooRoo brand in that area and the success of other food and beverage companies that had expanded into snack food production. He also argued that the company’s reputation for wholesome, quality products would be enhanced by a line of dried fruits and that name association with the new product would probably even lead to increased sales of the company’s other products among health-conscious consumers.
Equipment and working capital invests were expected to total $1.5million and $300,000, respectively, for this project. The equipment would be depreciated over seven
able to support further plant expansions in other strategic locations. The IRR expected to be 20.5 percent, well above the IRR required for new product projects (12 percent).
10. Computer-based Inventory Control System. Wayne Ramsey had pressed for three years unsuccessfully for a state-of-the-art computer-based inventory-control system that would link field sales reps, distributors, drivers, warehouses, and possibly retailers. The benefits of such a system would be shortening delays in ordering and order processing, better control of inventory, reduction of spoilage, and faster recognition of changes in demand at the customer level. Ramsey was reluctant to quantify these benefits, because they could range between modest and quite large amounts. This year he presented a cash-flow forecast as part of a business case for the project. An initial outlay of $1.2 million for the system, followed by $300,000 next year for ancillary equipment. The inflows reflected depreciation tax shields, tax credits, cost reductions in warehousing, and reduced inventory. He forecasted these benefits to last for only three years. Even so, the project’s IRR was estimated to be 16.2 percent. This project would be classed in the efficiency category.
11. Bundaberg Rum Acquisition. Anthony Mitchel had advocated making diversifying acquisitions in an effort to move beyond the company’s mature core business but doing so in a way that exploited the company’s skills in brand management. He had explored six possible related industries, in the general field of consumer packaged goods, and determined that a promising small liquor manufacturer, Bundaberg Rum, offered unusual opportunities for real growth and, at the same time, market protection through branding. He had identified Bundaberg Rum as a well-established brand of liquor as the leading private Australian manufacturer of rum, located in Bundaberg, Queensland.
The proposal was expensive: $1.5 million to buy the company and $2.5 million to renovate the company’s facilities completely while simultaneously expanding distribution to new geographical markets. The expected returns were high: after-tax cash flows were projected to be $13.4 million, yielding an IRR of 28.7 percent. This project would be classed in the new-product category of proposals.
Conclusion
Each member of the management committee was expected to come to the meeting prepared to present and defend a proposal for the allocation of Queensland Food Corp’s capital budget of $8.0 million. Exhibit 3 summarizes the various projects in terms of their free cash flows and the investment-performance criteria.
Exhibit 5 – Free Cash Flow and Analysis of Proposed Projects (Note 1) ($ millions AUD)
Project
1.
Distribution Truck Fleet Replacement/ Expansion
(Note 3)
2.
New Plant Construction
3.
Existing Plant Expansion
4.
Yogurt/ Ice Cream Development/ Introduction
5.
Plant Automation
7.
Market Expansion (Western Territory)
8
Market Expansion South (Victoria)
9
Snack Food Development/ Introduction
10
Computer-based Inventory Control System
11
Bundaberg Rum Acquisition (Note 5)
Investment
Property
2.0
2.5
1
1.5
1.4
0
0
1.5
1.5
3.0
Working Capital
0.20
0.50
0
0
0
2.0
2.0
0.30
0
1.0
Year
Expected Free Cash Flow (Note 4)
0
-1.14
-3.0
-1.0
-0.50
-1.4
-2.0
-2.0
-1.8
-1.2
-1.5
1
-0.79
0.20
0.125
-0.50
0.275
0.35
0.3
0.3
0.55
-2.0
2
0.30
0.50
0.150
-0.50
0.275
0.4
0.35
0.4
0.55
0.50
3
0.35
0.55
0.175
0.3
0.275
0.45
0.4
0.45
0.50
0.90
4
0.40
0.60
0.20
0.3
0.275
0.5
0.45
0.50
1.1
5
0.45
0.63
0.225
0.4
0.275
0.55
0.5
0.50
1.3
6
0.50
0.65
0.25
0.45
0.275
0.6
0.55
0.50
1.5
7
0.70
0.675
0.15
0.5
0.275
0.65
0.6
0.50
1.7
8
0.50
0.15
0.55
0.7
0.65
0.50
1.9
9
0.53
0.15
0.6
0.75
0.7
0.50
2.1
10
0.55
0.15
0.65
0.8
0.75
0.50
5.9
Undiscounted Sum
0.77
2.375
0.725
2.25
0.525
3.75
3.25
2.85
0.4
13.4
Payback (Years)
6
6
6
7
6
5
6
5
3
5
Max Payback Accepted
4
6
5
5
4
6
6
6
4
6
IRR
7.8%
11.3%
11.2%
17.3%
8.7%
21.4%
18.8%
20.5%
16.2%
28.7%
Min Accepted ROR
8.0%
10.0%
10.0%
12.0%
8.0%
12.0%
12.0%
12.0%
8.0%
12.0%
NPV at Corp WAAC (10.5%)
-0.192
0.099
0.028
0.521
-0.087
1.199
0.900
0.895
0.116
4.79
NPV at Min ROR
-0.013
0.187
0.055
0.388
0.032
0.990
0.071
0.731
0.178
4.143
Equivalent Annuity (Note 2)
-0.002
0.030
0.009
0.069
0.006
0.175
0.125
0.129
0.069
0.733
1Project Number 6 not included
2Equivalent Annuity is that level of equal payments over 10 years that yields a NPV at the minimum required rate of return for that project. It corrects for differences in duration among various projects. In ranking projects based on EA, larger annuities create more investor wealth than smaller annuities.
3Reflects $1.1 million spent initially and at end of year 1
4Free cash flow = incremental profit or cost savings after taxes + depreciation – investment in fixed assets
5$1.5 million would be spent in year one, $2.0 million in year two, and 0.5 million in year 3.
Case Study Questions (100 points)
1. Financial Analysis:(25 points)
a. Which NPV of those shown in Exhibit 5 should be used? Why?
b. Using all NPV forms presented in Exhibit 5, rank the projects.
c. Since the wastewater treatment project is a cost of doing business, it does not have a NPV. Suggest a way to evaluate the effluent project.
d. List the projects that would be funded or unfunded using the financial analysis (include Project 6 in your list)
2. Weighted Scoring Model Analysis (60 points)
Based on the paper by Englund and Graham (1999), Chapter 2 (Kloppenborg (2017)) and the case information,
a. Use a scoring model to evaluate and select projects (pp. 45-47, Kloppenborg):
i. List and define potential criteria
ii. List and define those criteria that are mandatory (i.e., screening) criteria
iii. Weight the remaining criteria using an AHP process
b. Which projects were screened from further consideration in part 2a, ii?
c. Rank order the remaining projects based on the group analysis.
3. Were the results different between the financial analysis (Question 1) and the weighted scoring model (Question 2) approach? If yes, why? (5 points)
TheProject Charter
The Project Charter gives a clear picture of the project and the rationale behind it. It fully explains the intended path of the project from conception to desired outcome. The Charter answers the question:
“Is there a compelling business need for the project”?
The purpose of the Project Charter is to provide the approval/funding authority enough information to decide if the project should proceed to the next step—Project Feasibility Analysis.
Why?
To collect information needed to evaluate whether or not a project should be funded—it is a GO/NO GO/GO BACK test that must take place before a project starts.
Who?
Created by the project sponsor’s program staff and the project manager, with assistance from other managers and technical staff—the core team members.
When?
Development time depends on the size of the project—a general rule of thumb is that development of the Project Charter should be less than 2 weeks.
What?
An initial statement of the project scope and objectives, the problem it addresses, who benefits, successful completion criteria, and a brief alternatives analysis.
Project Charter Review Questions
· Is the Project Background described completely and clearly?
· Do the Business Objectives address the problem described in the Problem/Opportunity Statement?
· Do the Functional Requirements (if the project includes information technology) relate to the Business Objectives?
· Does the project sponsor clearly receive benefit from the completed project?
· Are the Successful Completion Criteria clear and measurable?
· Is the Project Scope stated so that it is clear what the project is to provide and what it will not provide?
· Is the Project Objective Statement clear and concise?
· Are all Assumptions and Constraints identified?
· Are the Alternatives reasonable?
· Do the Project Milestones relate to project deliverables?
3
1.
PROJECT NAME
2.
OVERVIEW
3
2.1
Project Background
3
2.2
Problem/Opportunity Statement(s)
3
2.3
Project Objective Statement
4
2.4
Project Scope
5
2.5
Project Sponsor
6
2.6
Project Priority and Strategic Fit
6
2.7
Project Organization
7
3.
PERFORMANCE OBJECTIVES
10
3.1
Business Objectives
10
3.2
Functional Requirements
11
3.3
Successful Completion Criteria
12
4.
PROJECT CHARACTERISTICS
12
4.1
Assumptions
12
4.2
Constraints
12
4.3
Issues/Concerns/Risks
12
4.4
Impact Assessment
12
5.
PROJECT RECOMMENDATIONS
13
5.1
Existing System
13
5.2
Alternative Analysis
14
5.3
Recommended Alternative
14
5.4
Project Milestones
14
5.5
Cost Analysis
14
5.6
Source of Funding
15
1.
PROJECT NAME
Choose a short, energizing name or acronym that describes your project. Be specific and make sure you’re not duplicating another project’s name.
2.
OVERVIEW
2.1
Project Background
This section describes the context surrounding the project, and presents the primary motivation for the project. It includes a high-level description of the business area, the current situation, the desired situation, and the gaps that exist.
The following list identifies potential items that could be included in the project background:
· A general description of the business functions, the specific services, and the customers
· The sequence of events or conditions that contributed to the current problem or opportunity
· Contributing historical data
· Relevant features of the program areas involved
· The manner and extent to which information technology is currently applied
· A definition of the affected units of work and estimates of the quantity of work processed
2.2
Problem/Opportunity Statement(s)
This section includes a concise statement of the problem(s) that negatively impacts current business operations or the specific opportunity(s) that would make the business, or program operations more effective.
Avoid describing the symptoms of the problem instead of the problem itself. Symptoms, which may seem to be the problem include:
· Processes which are old, confusing, convoluted, redundant, labor intensive, undocumented, or nonstandard
· Data which is incorrect or incomplete
· Data which requires excessive effort expended in collection, multiple collection points, or different versions of the truth
· Too many manual processes
The symptoms of a problem are important in that they help lead to a solution. However, symptoms alone are not enough to justify a project. To make sure that you have reached the real problem, ask yourself “So what?” for each item you have included as a problem. If you have identified a business problem or opportunity, your answers should fall into one or more of the following categories:
Problems
· Excessive costs incurred in operating an existing program
· Generation of additional program costs
· Services at an unsatisfactory level according to a specified policy
· Workload / staff increases
· Quality or timeliness of information
· Additional requirements mandated by law or Federal regulations
· Limitations on the capability or capacity of current resources
The following are example problem statements
Statistics of UI claims filed on Fridays are not available until the following Friday.
The current process requires 3.6
PYs
of overtime to process travel claims.
The current error rate with travel expense claims averages 60%.
Opportunities
· Avoidance of future operating costs
· Improving mission critical customer services
· Workload / staff reductions
· Ability to add capacity to current resources
The following are example opportunity statements:
Provide the capability for state employees to access and calculate retirement payments while reducing the number of phone calls into the customer support unit.
Call center processing allows the department to continue with the current staffing level, and improve service, even as the number of calls increases.
Since revised Federal law allows state access to Social Security Administration information, this information can be used to reduce the workload required to maintain current addresses on all individuals.
2.3
Project Objective Statement
The Project Objective Statement (POS) is a high-level, written summary of the project. The POS states what the project must accomplish in order to be successful. It reflects the current understanding of the project and is used to focus the team members, the sponsor, and other key stakeholders on the primary objective of the project. The POS should be concise, 25 words or less, and avoid jargon as much as possible.
A word of caution—Make sure that the POS is measurable and achievable. The project’s success will be determined by how well it achieved the POS. The following are example POS’ for different projects:
Apollo 11 Mission: …”I believe this nation should commit itself to achieving the goal before this decade is out, of landing a man on the moon and returning him safely to earth.”
For an advanced military aircraft: Design a plane that can fly over the Soviet Union at more than 70,000 feet, preferably without being detected, and take surveillance photos that are unprecedented in their clarity.
For a Training Information System project: Develop a central database by Q3FY13, which will be the sole source of scheduling and registration activities and information for the department.
For a Procurement Reengineering project: Streamline and automate the procurement process to provide computer hardware and software to all department employees in a timely fashion at best-cost value and in compliance with department and statewide Work Group Computing Policy.
For a software quality initiative: Create and implement a corporate-wide “no rework” program to reduce software development costs by 50% within the next 12 months.
2.4
Project Scope
Clearly defining the project’s scope goes hand-in-hand with the POS. The scope sets the boundaries on the project so it can be done successfully. The project boundaries are defined by specific customer business areas to be supported, functionality to be included, and/or technologies to be addressed. If the project needs to be accomplished in phases, the specific boundaries for each phase should be stated here.
The project scope must be consistent with the Business Objectives and the Functional Requirements stated in Section 3, “Performance Objectives,” of this Project Charter. For example, the scope statement for the implementation of a new automated system could include business process re-design, physical office alteration, new office procedures, legal issues, financial management, and even administrative support such as travel arrangements.
It is often beneficial to clearly state what the project does NOT include to help identify the project boundaries. For example, the following table shows the scope of an Operating System Upgrade project. Listed under the “Provides” column to signify that when the project is completed, this is what the project results will provide. Listed under the “Does Not Provide” column signifies those things that will not be included in the intended project results.
|
OS Upgrade Project Scope |
|
|
Provides |
Does Not Provide |
|
Upgrades all central office workstations to CyberOS |
Workstations at sites outside the central office |
|
Ensures that current user applications continue to function |
Replacement or upgrades to user applications |
|
Training to central office users on the new CyberOS interface |
End user training on user applications under the new interface |
2.5
Project Sponsor
Identify the project sponsor by name and organization. This individual is the one whose department has the greatest stake in the project’s success and is responsible for the project’s costs and benefits. Typically, the sponsor comes from the client organization. Ask the following questions to help identify the project sponsor:
· Who cares so much about the successful completion of the project that they are willing to fund the project and ensure that adequate resources are assigned to it?
· Who will make the final decision if the team cannot resolve a problem on its own?
· Who will make the final decision to add resources, cut features, and slip the schedule for the project?
The project sponsor has the ultimate responsibility for the project’s costs and benefits and should be of a high enough level to have the necessary leverage, authority and the ultimate responsibility. If it’s a small, local project, a division or section manager could be the sponsor. If it’s a large, multi-departmental project, a senior executive should be the sponsor.
2.6
Project Priority and Strategic Fit
Identify how this project fits into the business unit and the organization’s tactical plan. Determine the priority for this project relative to other projects that the project sponsor is responsible for. Then determine the project priority across the organization as well. Refer to specific goals and/or objectives in the strategic or tactical plan and identify how the project helps meet these goals.
The following steps may be helpful in clarifying the strategic fit.
· Identify how the project fits with the organization’s strategic/tactical vision(s). Determine which set of visions/plans the project must satisfy or be tested against. Then describe the project’s alignment and/or variance from the existing vision/plan.
· Identify the fit with organizational strategies. Sometimes the project may affect one or more local department strategies or business plans. Identify which one(s) and describe the project’s alignment and/or variance.
· Identify the fit with legal/regulatory direction, if appropriate for this project. Describe how the project complies with the organization’s legal mandates.
2.7
Project Organization
Project Org Chart
To better assess this project’s impact on the organization, provide an organization chart that includes the project team, including number and classification of team members and the impacted program organization(s).
Project Stakeholder Roles and Responsibilities
A formal project structure provides participants with a clear understanding of the authority and responsibility necessary for successful accomplishment of project activities, and enables project team members to be held accountable for effective performance of their assignments.
Briefly describe the roles and responsibilities of the major participants in the project. These will probably include, at a minimum, the project manager, executive management, program management and staff, and core team members. In particular, if outside vendor resources will be used to assist with the project, clearly differentiate between the roles and responsibilities of State staff versus those of vendor staff. Include tasks such as data conversion, training, project management and oversight, and ongoing maintenance, as appropriate.
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Project Stakeholder Roles and Responsibilities |
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Role |
Responsibilities |
| Project Sponsor |
· Authorize project · Articulate program requirements · Ensure that requirements are met · Define sponsor needs · Assign sponsorship personnel as project points of contact · Approve funding · Review and approve project plan · Participate in planning session · Make go-no go decisions project if critical issues arise · Mediate approval issues which cannot be resolved between core team members and the project manager · Attend executive requirements reviews · Help resolve requirements problems · Provide written agreement to requirements and qualifying criteria · Monitor milestones, activities, timelines, resources, budgets and critical path · Monitor contracts · Communicate and coordinate with project stakeholders |
|
Project Manager |
· Implement project policies and procedures · Review and refine project request documents · Define project success criteria · Document project tradeoffs · Conduct cost/benefit analysis · Acquire reserves required to perform work · Maintain staff proficiency and productivity, and provide training where required · Establish and maintain project quality · Identify and procure tools to be used on the project · Develop detailed project plan, tailoring methodology to reflect project needs · Ensure that project plan is approved and baselined · Assign resources to project and assign work packages · Approve project quality and configuration management plans · Ensure that management, users, and contractors agree to project commitments · Regularly review project status, comparing budgeted to actual values · Identify risks and track issues · Manage change request process throughout the life of the project · Ensure that project plan is updated regularly · Review the results of quality assurance reviews · Obtain management and user approval of design, test, and approaches · Review project risks and establish mitigation procedures · Develop an action plan for any product that does not pass acceptance test · Obtain user and management approval of tested solution · Close-out open action items · Assist in contract close-out · Develop post-implementation report · Conduct project retrospective |
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Core Team Members |
· Represent business needs/requirements for Identify project alternatives · Implement solution within budgeted cost and schedule · Support project planning and tracking · Provide task estimates. · Ensure that requirements are feasible and appropriate for available resources · Analyze requirements for completeness, consistency, and ambiguity · Ensure that all team members understand the project plan · Identify staff training needs and provide qualified staff · Establish the project’s facilities and environments · Ensure that the project team staff fully understands requirements. · Review technical approach · Assign tasks · Assist in development of estimates and schedules · Track the work effort and submit status reports · Conduct internal and external work product reviews · Coordinate with quality assurance, review quality assurance results, and correct any deviations · Establish testing plan and coordinate test activities · Accept problems and schedule fixes · Identify risks as they are found · Participate in change request reviews · Participate in issue management · Participate in risk assessment and mitigation activities · Identify ways to improve project processes · Participate in the project retrospective |
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End User Representatives |
· Define user needs · Review current business practice and the impact the new system will have on it · Ensure that requirements are met · Ensure that staff are trained and ready to accept the new system · Be proponents of new system to other remote users · Assign user personnel as project points of contact · Review and approve project plan · Review project status reports · Attend requirements reviews · Help resolve requirements problems · Assist in user testing · Approve delivery and installation procedures · Develop procedures, policies, and systems to support the new system · Participate in the project retrospective |
3.
PERFORMANCE OBJECTIVES
3.1
Business Objectives
Briefly state the business objectives that effectively respond to the problems and/or opportunities. Include at least one objective for each problem/opportunity mentioned in Section 2.2, “Problem/Opportunity Statement.” Objectives define the significant results that must be achieved by this project. When writing the objectives remember to focus on “What” the system or product will do, not “How.” Each objective should:
· Directly relate to a problem/opportunity item
· Be realistically achievable
· Be measurable (this means that progress on the objective can be tracked, measured and compared)
· Indicate the direction of expected change (more, less, same as etc.)
· Indicate the degree of expected change (percentage, prior year level, numbers of)
Business objectives usually fall into one of the following four categories: increasing revenues for the organization, avoiding costs, improving customer service, or complying with federal and state governmental regulations. For example:
Provide statistical data of all UI claims filed on Fridays as required by state mandate.
Eliminate 3.5 PYs for processing travel claims, reducing the cost per travel claim.
Verify current address for 75% of new claims filed, reducing errors and rework per claim.
3.2
Functional Requirements (if information technology is required)
Identify the essential characteristics that the proposed automated solution must have if it is to satisfy the objectives. Functional requirements describe “how” the project result will function and provide a list of the minimum technical features that must be in place when the project is complete. Each functional requirement should track back to a business objective, and should be specific enough to be used to measure the successful completion of the project. The primary functional requirements appear on the Project Data Sheet as “Ability To” statements or “Performance Objectives” depending on the nature of the requirement.
Depending on the project, the functional requirements are written in terms of:
· Types of data, in terms of groups, size, retention period etc.
· Database characteristics
· Processing procedures
· Processing functions needed to support the program process
· Types of output, in terms of groups, volume, timing, location, quality, media etc.
· Types of input in terms of groups, volume, timing, location, quality, media etc.
· Software constraints
· Equipment/hardware constraints
· Staffing constraints
· Security or confidentiality risks
· Hardware/software interfaces
· Development scheduling constraints
· Data constraints
· Organizational constraints
· Legislative constraints
Functional requirements usually describe very high-level, but specific features of the resulting system. For example:
The system must have on-line access to SCDB U1 claim records.
The system must print credit card numbers on travel vouchers.
The system must be able to access the SSA UNIX-based database.
3.3
Successful Completion Criteria
Describe how the success of the project will be determined from the customer’s perspective. The completion criteria should be in quantifiable/measurable terms so that there is no doubt as to the project’s success. If the business objectives have been sufficiently quantified, meeting them constitutes the successful completion criteria. Quantifiable measures of customer use and/or satisfaction with the final product also measure the successful completion of the project.
4.
PROJECT CHARACTERISTICS
4.1
Assumptions
List any assumptions that were made in defining the project. Assumptions can affect any area of the project including scope, the stakeholders, the business objectives, and the functional requirements. A basic assumption behind most projects is that the problem should be solved. If any assumptions have been made regarding staffing, e.g. specific technical or business skill sets and/or individuals necessary to complete the project, list these assumptions here.
4.2
Constraints
Identify known or suspected constraints to the execution of the project. These constraints describe boundaries within which the project must operate and which also may be obstacles to the project’s successful completion. For example, constraints could include any of the following:
· Limited head count
· Lack of or limited knowledge
· Short window of opportunity
· Staffing constraints
· Delivering the product within a specific time frame
· Delivering the product within a limited cost
Be as specific as possible and describe the constraints in the context of the project.
4.3
Issues/Concerns/Risks
Identify major items that could cause the project to fail. Concentrate on those items, which are outside the jurisdiction of the project and could be “show-stoppers” to the success of the project. Include what mitigating steps can be taken to reduce each of the risks.
4.4
Impact Assessment
The Impact Assessment identifies any systems, processes, or projects that will impact, or be impacted by, the proposed project. The nature of the impact, the owner, and action required should be addressed. For example:
· A new software system may increase the number of calls (transactions) to the call center.
· Deployment of a new software package may require all PCs to be upgraded to the latest version of the operating system.
· Introduction of a new product into the market may render certain current products obsolete, and they may need to be retired (e.g., existing warehouse stock may need to be liquidated).
· The implementation of a project may impact the redesign of the database structure used by another project currently under development.
In the case of related projects, it is helpful to describe the nature of the dependency. The project being planned may be dependent on another project, be interdependent with another project, or have projects that depend on it. The nature of the dependency can include:
Data:
The project shares data with another project.
Function:
The project shares common functionality with another project.
Staff:
The project shares staff with another project.
Technology:
One project installs the technology that another requires.
Funding:
The projects share funding arrangements.
Include any dependent or interdependent projects on the Project Data Sheet under “Dependencies.”
5.
PROJECT RECOMMENDATIONS
5.1
Existing System
Briefly describe the current method of operation. If an automated solution currently exists, include a general description of the system procedures, inputs, outputs, overall costs, PY numbers and PY costs. In addition, include pertinent information from the following topics as necessary:
· Current system objectives
· Shortfalls of current operations
· Current workload requirements
· Backlogs
· Data entry methods, both manual and automated
· Data characteristics, contents, structure, size, languages, volatility, accuracy
· Data integrity, security, privacy, confidentiality; Existing equipment, peripherals, processors
· Software, software languages
· Documentation, accuracy
· User satisfaction, system drawbacks, failures
· System successes, things that work well
· Support costs, future costs, overruns
5.2
Alternative Analysis
Identify the potential alternatives for accomplishing this project. For example, one alternative could be to build a solution in-house. Another alternative could be to buy the software from a vendor, and tailor it to support the organizations business. Still another alternative might be to accomplish only part of the desired solution in a phased approach to the project. Include specific technologies in this section only if they are required by organizational constraints or architectural standards. Include enough detail to thoroughly describe the potential alternatives, and differentiate between them.
Include the following general information for each alternative:
· General description including what the alternative is, how it would be implemented, and how it would work after implementation. Include additional details such as specific interfaces, tools required, architecture requirements, support, etc.
· Estimated time frame
· Specific assumptions and constraints
· Advantages
· Disadvantages
5.3
Recommended Alternative
Select one of the alternatives to be carried forward. Provide justification for why you chose this alternative. Provide preliminary costs to develop and maintain the proposed solution.
5.4
Project Milestones
List the major events by which you intend to measure your progress on the project. The major milestones should coincide with the deliverables. It is not necessary to identify a separate milestone for each deliverable. However, it should be clear from the milestone description which deliverables are completed by that milestone.
Events that must be reported include: project start date, development completion date, operational date and post-implementation evaluation date. Any other important deadlines or key management checkpoints critical to project success, such as procurement dates, budget deadlines, legislation enactment dates, or partial implementation dates, should also be included. Project management milestones should be identified at no less than three-month intervals during the life of the project.
Most milestone completion dates are represented by elapsed days/months from the project approval date. However, if the project includes dates mandated by legislation, show these specific dates as the milestone.
| Project Milestones |
Completion Date |
5.5
Cost Analysis
Estimate the costs and income of your selected alternative for three to five fiscal years from the beginning of the project, depending on the project duration and size.. Present these high level estimates in the following “Cost Analysis Table.” Remember that this is only a preliminary estimate.
It will be used as a guide to allocate resources, not to measure the success or failure of the project. A more accurate estimate of both schedule and resources will be derived during the Plan phase, if the project is approved.
Cost reductions or personnel-year reductions should be reported as negative numbers, while cost increases or personnel-year increases should be reported as positive numbers. If the proposal modifies or replaces an existing operation, savings and cost avoidance should be based upon comparison with the current method of program operation. If the proposal recommends a new system, provide estimated costs for the proposed information technology capability. If the proposed solution will increase program income (i.e. tax revenues, collectable audit exceptions, accounts receivable, etc.) such increase should be reported as negative numbers under “
Program Income
.”
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FY <1> |
FY <2> |
FY <3> |
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Costs |
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One-time Costs |
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Continuing Costs |
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Impacted Program Costs |
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Net Program Costs |
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Cost Savings |
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Cost Avoidance |
5.6
Source of Funding
Indicate the source of funding anticipated for the proposed project. If the project is to be funded from multiple sources, list each source. Examples include the State General Fund, special funds, Federal grants, interagency reimbursements, redirection from existing baseline funds, and contracts. Also, state if the funds have been budgeted for this purpose.
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