PowerPoint Presentation
Information Technology
FIT2002
IT Project Management
Lecture 8
Project Quality and Procurement
Management
Video 1: Project Quality Management
Learning Objectives
Define project quality management and understand how
quality relates to various aspects of IT projects
Describe quality management planning and how quality and
scope management are related
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 2
What Is Project Quality?
The International Organisation for Standardization (ISO) defines
quality as “the degree to which a set of inherent characteristics
fulfils requirements” (ISO9000:2000)
Other experts define quality based on:
– Conformance to requirements: The project’s processes
and products meet written specifications
– Fitness for use: A product can be used as it was intended
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 3
What Is Project Quality Management?
Project quality management ensures that the project will satisfy
the needs for which it was undertaken
Processes include:
– Planning quality management: Identifying which quality
standards are relevant to the project and how to satisfy
them; a metric is a standard of measurement
– Performing quality assurance: Periodically evaluating
overall project performance to ensure the project will satisfy
the relevant quality standards
– Performing quality control: Monitoring specific project
results to ensure that they comply with the relevant quality
standards
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 4
Project Quality Management Summary
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 5
Planning Quality
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 6
Implies the ability to anticipate situations and prepare actions
to bring about the desired outcome
Important to prevent defects by:
– Selecting proper materials
– Training and indoctrinating people in quality
– Planning a process that ensures the appropriate outcome
Design of experiments – a technique that helps identify which
variables have the most influence on the overall outcome of a
process
Scope Aspects of IT Projects
Functionality is the degree to which a system performs its
intended function
Features are the system’s special characteristics that appeal to
users
System outputs are the screens and reports the system
generates
Performance addresses how well a product or service performs
the customer’s intended use
Reliability is the ability of a product or service to perform as
expected under normal conditions
Maintainability addresses the ease of performing maintenance
on a product
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 7
Video 2: Project Quality Management
Learning Objectives
Discuss the importance of quality assurance
Summarise the contributions of noteworthy
quality experts to modern quality
management
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 8
Performing Quality Assurance
Quality assurance includes all the activities related to satisfying the
relevant quality standards for a project
Another goal of quality assurance is continuous quality improvement.
Kaizen is the Japanese word for improvement or change for the better
Lean involves evaluating processes to maximize customer value while
minimizing waste
Benchmarking generates ideas for quality improvements by comparing
specific project practices or product characteristics to those of other
projects or products within or outside the performing organisation
A quality audit is a structured review of specific quality management
activities that help identify lessons learned that could improve
performance on current or future projects
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 9
Modern Quality Management
Modern quality management:
– Requires customer satisfaction
– Prefers prevention to inspection
– Recognizes management responsibility for quality
Noteworthy quality experts include Deming, Juran, Crosby,
Ishikawa, Taguchi, and Feigenbaum
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 10
Quality Experts
Deming was famous for his work in rebuilding Japan and his 14
Points for Management
Juran wrote the Quality Control Handbook and ten steps to
quality improvement
Crosby wrote Quality is Free and suggested that organisations
strive for zero defects
Ishikawa developed the concepts of quality circles and fishbone
diagrams
Taguchi developed methods for optimizing the process of
engineering experimentation
Feigenbaum developed the concept of total quality control
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 11
ISO Standards
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 12
ISO 9000 is a quality system standard that:
– Is a three-part, continuous cycle of planning, controlling,
and documenting quality in an organisation
– Provides minimum requirements needed for an organisation
to meet its quality certification standards
– Helps organisations around the world reduce costs and
improve customer satisfaction
ISO offer standards to provide a framework for the assessment
of software processes
See www.iso.org for more information
Improving Information Technology Project
Quality
Several suggestions for improving quality for IT projects include:
– Establish leadership that promotes quality
– Understand the cost of quality
– Focus on organisational influences and workplace
factors that affect quality
– Follow maturity models
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 13
Leadership
As Joseph M. Juran said in 1945, “It is most important that top
management be quality-minded. In the absence of sincere
manifestation of interest at the top, little will happen below”*
A large percentage of quality problems are associated with
management, not technical issues.
*American Society for Quality (ASQ), (www.asqc.org/about/history/juran.html).
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 14
The Cost of Quality
The cost of quality is the cost of conformance plus the cost of
nonconformance
– Conformance means delivering products that meet
requirements and fitness for use
– Cost of nonconformance means taking responsibility for
failures or not meeting quality expectations
A study reported that software bugs cost the U.S. economy
$59.6 billion each year and that one third of the bugs could be
eliminated by an improved testing infrastructure
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 15
Five Cost Categories Related to Quality
Prevention cost: Cost of planning and executing a project so it
is error-free or within an acceptable error range
Appraisal cost: Cost of evaluating processes and their outputs
to ensure quality
Internal failure cost: Cost incurred to correct an identified defect
before the customer receives the product
External failure cost: Cost that relates to all errors not detected
and corrected before delivery to the customer
Measurement and test equipment costs: Capital cost of
equipment used to perform prevention and appraisal activities
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 16
Organisational Influences, Workplace Factors,
and Quality
Study by DeMarco and Lister showed that organizational issues
had a much greater influence on programmer productivity than
the technical environment or programming languages
Study found no correlation between productivity and
programming language, years of experience, or salary.
A dedicated workspace and a quiet work environment were key
factors to improving programmer productivity
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 17
Maturity Models
Maturity models are frameworks for helping organisations
improve their processes and systems
– The Software Quality Function Deployment Model
focuses on defining user requirements and planning
software projects
– The Software Engineering Institute’s Capability Maturity
Model Integration is a process improvement approach that
provides organisations with the essential elements of
effective processes
– CMMI levels, from lowest to highest, are:
Incomplete Performed Managed Defined
Quantitatively Managed Optimizing
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 18
PMI’s Maturity Model
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 19
PMI released the Organisational Project Management Maturity
Model (OPM3) in December 2003
Help organizations assess and improve their project
management capabilities
Addresses standards for excellence in project, program, and
portfolio management best practices and explains the
capabilities necessary to achieve those best practices
Video 3: Project Quality Management
Learning Objectives
Understand the tools and techniques for quality control,
such as the Seven Basic Tools of Quality, statistical
sampling, Six Sigma, and testing
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 20
Controlling Quality
The main outputs of quality control are:
– Acceptance decisions
– Rework
– Process adjustments
There are Seven Basic Tools of Quality that help in performing
quality control
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 21
Cause-and-Effect Diagrams
Cause-and-effect diagrams trace complaints about quality
problems back to the responsible production operations
They help you find the root cause of a problem
Also known as fishbone or Ishikawa diagrams
Can also use the 5 whys technique where you repeated ask the
question “Why” (five is a good rule of thumb) to peel away the
layers of symptoms that can lead to the root cause
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 22
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 23
Sample Cause-and-Effect Diagram
Quality Control Charts
A control chart is a graphic display of data that illustrates the
results of a process over time
The main use of control charts is to prevent defects, rather than
to detect or reject them
Quality control charts allow you to determine whether a process
is in control or out of control
– When a process is in control, any variations in the results of
the process are created by random events; processes that
are in control do not need to be adjusted
– When a process is out of control, variations in the results of
the process are caused by non-random events; you need to
identify the causes of these events and adjust the process to
correct or eliminate them
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 24
Sample Quality Control Chart
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 25
seven run rule: If seven data points in a row are all below
the mean, above the mean, or are all increasing or
decreasing, then the process needs to be examined for
non-random problems
Check sheet
A check sheet is used to collect and analyse data
It is sometimes called a tally sheet or checklist, depending on its
format
This information might be useful in improving the process for
handling complaints
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 26
In this example, most complaints
arrive via text message, and there are
more complaints on Monday and
Tuesday than on other days of the
week
Scatter diagram
A scatter diagram helps to show if there is a relationship
between two variables
The closer data points are to the ‘line of best fit’, the more closely
the two variables are related
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 27
Histograms
A histogram is a bar graph of a distribution of variables
Each bar represents an attribute or characteristic of a problem or
situation, and the height of the bar represents its frequency
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 28
Pareto Charts
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 29
A Pareto chart is a histogram that can help you identify and
prioritize problem areas
Pareto analysis is also called the 80-20 rule, meaning that 80
percent of problems are often due to 20 percent of the causes
Flowcharts
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 30
Flowcharts are graphic displays of the logic and flow of
processes that help you analyse how problems occur and how
processes can be improved
They show
activities,
decision points
and the order
of how information
is processed
Run Charts
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 31
In addition to flowcharts, run charts are also used for
stratification, a technique that shows data from a variety of
sources to see if a pattern emerges
A run chart displays the history and pattern of variation of a
process over time.
To perform trend analysis and forecast future outcomes based
on historical results
Statistical Sampling
Statistical sampling involves choosing part of a population of
interest for inspection
The size of a sample depends on how representative you want
the sample to be
Sample size formula:
Sample size = .25 X (certainty factor/acceptable error)2
Be sure to consult with an expert when using statistical analysis
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 32
Six Sigma
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 33
*Pande, Peter S., Robert P. Neuman, and Roland R. Cavanagh, The
Six Sigma Way, New York: McGraw-Hill, 2000, p. xi.
Six Sigma is “a comprehensive and flexible system for
achieving, sustaining, and maximizing business success. Six
Sigma is uniquely driven by close understanding of customer
needs, disciplined use of facts, data, and statistical analysis, and
diligent attention to managing, improving, and reinventing
business processes”*
The target for perfection is the achievement of no more than 3.4
defects per million opportunities (DPMO)
The principles can apply to a wide variety of processes
Six Sigma projects normally follow a five-phase improvement
process called DMAIC
DMAIC
DMAIC is a systematic, closed-loop process for continued
improvement that is scientific and fact based
DMAIC stands for:
– Define: Define the problem/opportunity, process, and
customer requirements
– Measure: Define measures, then collect, compile, and
display data
– Analyse: Scrutinise process details to find improvement
opportunities
– Improve: Generate solutions and ideas for improving the
problem
– Control: Track and verify the stability of the improvements
and the predictability of the solution
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 34
Six 9s of Quality
Six 9s of quality is a measure of quality control equal to 1 fault
in 1 million opportunities
In the telecommunications industry, it means 99.9999 percent
service availability or 30 seconds of down time a year
This level of quality has also been stated as the target goal for
the number of errors in a communications circuit, system failures,
or errors in lines of code
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 35
Testing
Many IT professionals think of
testing as a stage that comes
near the end of IT product
development
Testing should be done
during almost every phase of
the IT product development
life cycle
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 36
Testing Tasks in the Software
Development Life Cycle
Types of Tests
Unit testing tests each individual component (often a program)
to ensure it is as defect-free as possible
Integration testing occurs between unit and system testing to
test functionally grouped components
System testing tests the entire system as one entity
User acceptance testing is an independent test performed by
end users prior to accepting the delivered system
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 37
Testing Alone Is Not Enough
Watts S. Humphrey, a renowned expert on software quality,
defines a software defect as anything that must be changed
before delivery of the program
Testing does not sufficiently prevent software defects because:
– The number of ways to test a complex system is huge
– Users will continue to invent new ways to use a system that
its developers never considered
Humphrey suggests that people rethink the software
development process to provide no potential defects when you
enter system testing; developers must be responsible for
providing error-free code at each stage of testing
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 38
Video 4: Project Procurement Management
Learning Objectives
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 39
Understand the importance of project procurement
management and the increasing use of outsourcing for
information technology (IT) projects
Describe the work involved in planning procurements for
projects, including determining the proper type of contract
to use and preparing a procurement management plan
Importance of Project Procurement
Management
Procurement means acquiring goods and/or services from an
outside source
Other terms include purchasing and outsourcing
Experts predict that global spending on computer software and
services will continue to grow
People continue to debate whether offshore outsourcing helps
their own country or not
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 40
IT Outsourcing Market Continues to Grow
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 41
Australian companies are transferring a lot of work abroad,
especially in the areas of IT infrastructure, application
development and maintenance, and innovation processes
India, China, and the Philippines are the preferred locations for
outsourcing
Besides cost savings, a shortage of qualified personnel are
reasons for global outsourcing of IT services
Why Outsource?
To access skills and technologies
To reduce both fixed and recurrent costs
To allow the client organisation to focus on its core business
To provide flexibility
To increase accountability
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 42
Project Procurement Management Processes
Project procurement management: Acquiring goods and
services for a project from outside the performing organisation
Processes include:
– Planning procurement management: Determining what
to procure and when and how to do it
– Conducting procurements: Obtaining seller responses,
selecting sellers, and awarding contracts
– Controlling procurements: Managing relationships with sellers,
monitoring contract performance, and making changes as
needed
– Closing procurements: Completing and settling each contract
or agreement, including resolving of any open items
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 43
Project Procurement Management Summary
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 44
Planning Procurement Management
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 45
Identifying which project needs can best be met by using
products or services outside the organisation
Important decision – Make-or-buy decision
If there is no need to buy any products or services from outside
the organisation, then there is no need to perform any of the
other procurement management processes
Procurement Management Plan:
– Describes how the procurement processes will be
managed, from developing documentation for making
outside purchases or acquisitions to contract closure
– Contents varies based on project needs
Contracts
A contract is a mutually binding agreement that obligates the
seller to provide the specified products or services and obligates
the buyer to pay for them
Contracts can clarify responsibilities and sharpen focus on key
deliverables of a project
Because contracts are legally binding, there is more
accountability for delivering the work as stated in the contract
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 46
Types of Contracts
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 47
Different types of contracts can be used in different situations:
– Fixed price or lump sum contracts: Involve a fixed total price for
a well-defined product or service
• Firm-fixed-price (FFP), fixed-price incentive fee (FPI), Fixed-
price with economic price adjustment (FP-EPA)
– Cost reimbursable contracts: Involve payment to the seller for
direct and indirect costs
– Time and material contracts: Hybrid of both fixed price and cost
reimbursable contracts, often used by consultants
– Unit price contracts: Require the buyer to pay the seller a
predetermined amount per unit of service
A single contract can actually include all four of these categories, if it
makes sense for that particular procurement
Point of Total Assumption
The Point of Total Assumption (PTA) is the cost at which the
contractor assumes total responsibility for each additional dollar
of contract cost
Contractors do not want to reach the point of total assumption,
because it hurts them financially, so they have an incentive to
prevent cost overruns
The PTA is calculated with the following formula:
PTA = (ceiling price – target price)/government share + target cost
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 48
Ceiling price = $1,250
Target price = $1,100
Target cost = $1,000
Government share: 75%
PTA = ($1,250 – $1,100)/0.75 + $1,000 = $1,200
Cost Reimbursable Contracts
Cost plus incentive fee (CPIF): The buyer pays the supplier
for allowable performance costs plus a predetermined fee and
an incentive bonus
Cost plus fixed fee (CPFF): The buyer pays the supplier for
allowable performance costs plus a fixed fee payment usually
based on a percentage of estimated costs
Cost plus percentage of costs (CPPC): The buyer pays the
supplier for allowable performance costs plus a predetermined
percentage based on total costs. This is the least desirable type
of contract from the buyer’s perspective.
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 49
Contract Types Versus Risk
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Contract Clauses
Contracts should include specific clauses to take into account
issues unique to the project
Can require various educational or work experience for different
pay rights
A termination clause is a contract clause that allows the buyer
or supplier to end the contract
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 51
Video 5: Project Procurement Management
Learning Objectives
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 52
Discuss statement of work, source selection criteria, and
make-or-buy analysis
Discuss how to conduct procurements and strategies for
obtaining seller responses, selecting sellers, and awarding
contracts
Understand the process of controlling procurements by
managing procurement relationships and monitoring
contract performance
Tools and Techniques for Planning Purchases
and Acquisitions
Expert judgment
Market research
Make-or-buy analysis: General management technique used to
determine whether an organisation should make or perform a
particular product or service inside the organisation or buy from
someone else
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 53
Make-or-Buy Example
Assume you can lease an item you need for a project for
$800/day. To purchase the item, the cost is $12,000 plus a
daily operational cost of $400/day
How long will it take for the purchase cost to be the same as
the lease cost?
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 54
Solution:
Let d = the number of days you need the piece of equipment
800d = $12,000 + 400d
400d = 12,000 d = 30
=> If you need the item for more than 30 days, it is more
economical to purchase
Contract Statement of Work (SOW)
A statement of work is a description of the work required for the
procurement
If a SOW is used as part of a contract to describe only the work
required for that particular contract, it is called a contract
statement of work
A SOW is a type of scope statement
A good SOW gives bidders a better understanding of the buyer’s
expectations
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 55
Statement of Work (SOW) Template
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 56
Procurement Documents
Request for Proposals: Used to solicit proposals from
prospective sellers
– A proposal is a document prepared by a seller when
there are different approaches for meeting buyer
needs
Requests for Quotes: Used to solicit quotes or bids from
prospective suppliers
– A bid, also called a tender or quote (short for
quotation), is a document prepared by sellers
providing pricing for standard items that have been
clearly defined by the buyer
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 57
Source Selection Criteria
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Source selection – evaluating proposals or bids from sellers,
choosing the best one, negotiating the contract, and awarding
the contract
It’s important to prepare some form of evaluation criteria,
preferably before issuing a formal RFP or RFQ
Beware of proposals that look good on paper; be sure to
evaluate factors, such as past performance and management
approach
Can require a technical presentation as part of a proposal
Conducting Procurements
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 59
Organisations can advertise to procure goods and services in
several ways:
– Approaching the preferred vendor
– Approaching several potential vendors
– Advertising to anyone interested
Sending appropriate documentation to potential sellers
Obtaining proposals or bids
A bidders’ conference can help clarify the buyer’s expectations
Shortlisted sellers may be asked to prepare a best and final offer
(BAFO).
Selecting a seller
Awarding a contract
Controlling Procurements
Ensures that the seller’s performance meets contractual
requirements
Contracts are legal relationships, so it is important that legal and
contracting professionals be involved in writing and administering
contracts
It is critical that project managers and team members watch for
constructive change orders, which are oral or written acts or
omissions by someone with actual or apparent authority that can
be construed to have the same effect as a written change order
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 60
Change Control in Contracts
Changes to any part of the project need to be reviewed,
approved, and documented by the same people in the same way
that the original part of the plan was approved
Evaluation of any change should include an impact analysis.
Changes must be documented in writing.
Project managers and teams should stay closely involved to
make sure the new system will meet business needs
Have backup plans
Use tools and techniques, such as a contract change control
system, buyer-conducted performance reviews, inspections and
audits
Schwalbe, K.. (2015). Information Technology Project Management. (8e) Cengage Learning 61
Closing Procurements
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Contract closure involves completing and settling contracts and
resolving any open items
The project team should:
Determine if all work was completed correctly and
satisfactorily
Update records to reflect final results
Archive information for future use – using records
management system
Procurement audits identify lessons learned
The contract itself should include requirements for formal
acceptance and closure