Project description

Running Case
Note: Additional running cases are provided in Appendix C and on the companion Web site.
Template files are also available on the companion Web s~e.
Manage Your HeaHh, 11lC. (MYH) isa Fortune 500 company that provides a variety of heaHh
care services across the globe. MYH has more than 20,000 full-time employees and more than
5,000 part-time employees.MYH recently updated ~s strategic plan, and key goals include reducing
internal costs, increasing cross-selling of products, and exploiting new Web-based technologies
to help employees, customers, and suppliers work together to improve the development
and delivery of ~s heaHh care products and services. Below are some ideas the Information Technology
department has developed for supporting these strategic goals:
1. Recreation and WeI/ness Intranet Project Provide an application on the current intranet to
helpelTllloyeesilTllrove their health. A recent study found that MYH, Inc. pays 20 percent
more than the industry average for employee health care premiums, primarily due to the poor
health of ~s employees. You believe that this application will help improve elTllloyeehealth
within one year of its rollout so that you can negotiate lower heaHh insurance premiums, providing
net savings of at least $3Ofemployeefyear for full-time employees overthe next four
years. This application would include the following capabil~ies:
Allow employees to register for company-sponsored recreational programs, such as
soccer, softball, bowling, jogging, walking, and other sports
• Allow employees to register for company-sponsored classes and programs to help them
manage their weight, reduce stress, stop smoking, and manage other health-related
issues.
• Track data on employee involvement in these recreational and health-management
programs
• Offer illCentives for people to join the programs and do well in them (e.g., incentives for
achieving weight goals, winning sports team compet~ions, etc. ).
2. Health Coverage Costs Business Modet. Develop an application to track employee health
care expenses and company health care costs. Health care premiums continue to increase,
and the company has changed insurance carriers several times in the past ten years. This
application should allow business modeling of various scenarios as well as tracking and analyzing
current and past employee health care expenses and company heaHh care costs. This
application must be secure and run on the current intranet so several managers and analysts
could access ~ and download selective data for further analysis. The new application must
also import data from the current systems that track employee expenses submitted to the
company and the colTllany’s costs to the insurance provider. You believe that having this
data will help you revise policies concerning elTllloyee contributions to heaHh care premiums
and help you negotiate for lower premiums with insurance companies. You estimate that this
application would save your colTllany about $2O/employeefyear for full-time employees over
the next four years and cost about $100,OOOto develop

171
Project Integration Management
3. Cross-Selling System: Develop an application to ill1lrove cross-selling to current customers.
The current sales management system has separate sections for major product/service categories
and different sales reps based on those products and services. You see great opportun~
iesto increase sales to current customers by providing them discounts when they
purchase multiple products/services. You estimate that this system would increase proms
172 by $1 million each year lorthe next three years and cost about $800,000 each year for development
and maintenance.
Chapler 4
4. Web-Enhanced Communications System: Develop a Web-based application to improve
development and delivery of products and services. There are currently several incompatible
systems related to the development and delivery of products and services to customers.
This application would allow customers and suppliers to provide suggestions, enter orders,
view the status and history of orders, and use electronic commerce capabilities to
purchase and sell their products. You estimate that this system would save your coll1lany
about $2 million each year for three years after implementation. You estimate it will take one
year and $3 million to develop and require 20 percent of development costs each year to
maintain.
Tasks
1. Summarize each of the above-proposed projects in a simple table fOmlat suitable lor presentation
to top management. Include the name for each project, identify how each one supports
business strategies, assess the potential finandal benefits and other benef~sof each project,
and provide your initial assessment of the value 01 each project. Write your resuHs in aoneto
two-page memo to top management, including appropriate back-up infomlation and
calculations.
2. Prepare a weighted scoring model using the template provided on the companion Web site
for this text to evaluate these four projects. Develop at least four criteria, assign weights to
each criterion, assign scores, and then calculate the weighted scores. Print the spreadsheet
and bar chart with the results. Also write a one-page paper describing this weighted scoring
model and what the resuHs show.
3. Prepare a business case forthe Recreation and Wellness Intranet Project. Assume the project
will take six months to complete and cost about $200,000. Use the business case template
provided on the companion Web site for this text .
4 .Prepare a project charter for the Recreation and Wellness Intranet Project. Assume the project
will take six months to complete and cost about $200,000. Use the project charter template
provided in this text and the sall1lle project charter provided in Table4-1 as a guide.
5. Prepare a change request for this project, using the template provided on the coll1lanion
Web s~efor this text.Be creative in making up infOmlation.
Companion Web Site
Visit the companion Web site for this text at www,cengage.comfmisfschwa/betoaccess:
References c~edin the text and add~ionalsuggested readings for each chapter
Template files
Lecture notes
Interactive quizzes
Podcasts
Links to general project management Web sites
• And more
See the Preface of this text for more information on accessing the companion Web s~e
Key Terms
balancedscorecard -a methodology that converts anoryanization’s value drivers to a series
01 defined metrics
baseline- the approved project management plan plus approved changes
business service management (BSM) tools -tools that help track the execution of business
process flows and expose how the state of supporting IT systems and resources is
impactingend•to-end business process performance in real time
capitalizationrate – the rate used in discounting future cash flow; also called the discount rate
oropportun~ycost of capital
cash flow – benefits minus costs or income minus expenses
change control board (CCB) – a formal group of people responsible for approving or rejecting
changes on a project
change control system – a formal, documented process that describes when and how off icial
project documents may be changed
configurationmanagement – a process that ensures that the descriptions of the projecfs
products are correct and complete
cost of capital – the return available by investir.g the cap~alelsewhere
directives – new requirements imposed by management, govemment, or some extemal
influence
discountfactor – a muHiplierfor each year based on the discount rate and year
discountrate – the rate used in discounting future cash flow; also called the capitalization rate
oropportun~ycost of capital
integratedchange conlrol- identifying, evaluating, and managing changes throughout the
project life cyde
interfacemanagement – identifying and managing the points of interaction between various
elements of a project
internalrate of return (IRA) -the discount rate that resuHsinanNPVofzero for a project
mind mapping – a technique that uses branches radiating out from a core idea to structure
thoughts and ideas
Project Integration Management
netpresent value (NPV) analysis -a method of calculating the expected net monetary gain
or loss from a project by discounting all expected future cash inflows and outflows to the
present point in time
opportunities – chances to improve the organization
opportunitycost of capital-the rate used in discounting future cash flow; also called the

t74cap~alizationrate or discount rate

Chapler 4
organizationalprocess assets -formal and informal plans, policies, procedures, guidelines,
information systems, financial systems, management systems, lessons leamed, and
historical information that can be used to influence a project’s success
payback period -the amount of time it will take to recoup, in the form of net cash inflows, the
total dollars invested in a project
problems – undesirable situations that prevent the organization from achieving ~s goals
projectcharter – a document that formally recognizes the existence of a project and provides
directionon the project’s objectives and management
projectintegration management – processes thatcooroinate all project management
knowledge areas throughout a project’s life, including developing the project charter,
developing the preliminary project scope statement, developing the project management
plan, directing and managing the project, monitoring and controlling the project, providing
integrated change control, and closing the project
project management plan – adocument used to coordinate all project planningdocuments
and guide project execution and control
required rate of return -the minimum acceptable rate of return on an investment
return on investment (ROI) – (benefits minus costs) divided by costs
strategic planning – determining long-term objectives by analyzing the strengths and
weaknesses of an organization, studying opportunities and threats in the business
environment, predicting luture trends, and projecting the need for new products and
services
SWOT analysis – analyzing Strengths, Weaknesses, Opportunities, and Threats; used to aid in
strategic planning
weighted scoring model-a technique that provides a systematic process for basing project
selection on numerous criteria
End Notes
Carol Matlack, “First, Blame the Software,” BusinessWeek Online (October 5, 2006).
2 James Bacon, “The Use of Decision Criteria in Selecting Information SystemsITechnology
Investments,” MIS Quarterly, Vol. 16, No.3 (September 1992) .
.’.lRobert G. Cooper, ‘Winning at New Products: Pathways to Profitable Intervention,” PMI
Research Conference Proceedings (July 2006).
4 Dennis J. Cohen and Robert J. Graham, The Pro;ect Manager’s MBA, San Francisco,
Jossey-Bass (2001), p. 31 .
.’; CIO View Corp., “White Papers: Business Benefits of Utilizing ROI Analysis,” Information Week
(2007).
6 Jake Widman, “Big IT to small biz: Usten up, lillie dudes!” ComputerWorid (January 24,
20(8).
7 Eric Ber1<man, “How to Use the Balanced Scorecard,” CIO Magazine (May 15, 2002).
8 FraganMilosellicand A. Ozbay. “Delivering Projects: Whal the Winners Do: Proceedings of
the Project Management Institute Annual Seminars & Symposium (November 2(01).
II Sarah Par1<es, •Crosslown Traf1ic,” PM Network (August 20(4).
10 Ross Foti, “The Best Winter Olympics, Period,” PM Network (January 2004) p. 23.
II Ibid,23.
12 Mary Johnson Tumer, Beyond 1Tll: Process-Aware BSM Connects IT to Business Priorities,
Summit Strategies, (July 2005),
13 Michael Biddick, ‘Jncertain Future,” Information week Research &Reports (May 12, 20(8),