Estimating Costs Using Activity Durations

By establishing the forecasted time it will take to complete various tasks in the work breakdown structure for your project, you will have prepared another important input to cost estimating: activity duration estimates. Activity duration estimates are primarily an input to schedule development, but they are used in project cost estimating as well.

An activity duration estimate is a quantitative assessment of the likely number of work periods that will be required to complete an activity. An activity's duration is important when you are estimating labor costs, for example, or when estimating the costs of financing over the total project duration.

To estimate an activity's total cost, multiply the rates for the activity by the estimated duration. When you estimate activity duration for each project activity and then sum the results, you can determine a cost estimate for the entire project. Knowing the time it will take to complete all project activities makes estimating total project time and costs easier.

There are three things to remember when using activity durations to calculate cost estimates.

• Include range of results. One is that activity duration estimates often include a range of possible results. They are, after all, just estimates.
• Convert units for time. Sometimes you have to convert months or weeks into "working days" or "working hours" to calculate costs. Your company or industry likely has conventions for figuring out how many production hours are in a week, month, or year.
• Allow for down time. Finally, remember to consider down time in your calculations. Remember that people do not work "24/7." Include weekends and holidays in your calculations.

Your activity duration estimates will include a range of possible results. Naturally, when activity durations have a range, your cost estimates will have a range, too. The points below illustrate the steps in estimating costs using activity duration estimates, indicating how a pharmaceutical company would estimate costs for clinical trials of a new drug.

• Establish the activity duration estimate. The duration of the clinical trials is estimated to be six months, plus or minus two weeks, assuming that three laboratory technicians are working on the testing.
• Check the resource rates that apply to this activity. Labor rates for this project are $18 per hour for each technician. If the company did not own the laboratory and equipment that will be used during the trials, it also would need to know the rental rates for these resources.
• If necessary, convert units of time. One year has 52 weeks, so six months has 26 weeks. To find the working hours in six months plus or minus two weeks, assume that technicians work a 40-hour week: 26 x 40 = 1,040 hours. Then, 2 x 40 = 80 hours. You could say there are 1,040 hours plus or minus 80, or that there are 960 to 1,120 hours in this time frame.
• Multiply the estimated duration by the rate for the activity. Multiply the labor rate ($18 per hour) by each end of the spectrum, and you get an estimated cost of between $17,280 and $20,160 per technician, or $18,720 plus or minus $1,440. Multiply again by three for each worker, and you get a total estimate of $56,160 plus or minus $4,320.

Activity duration estimates are estimates of how long it will take to complete each activity in the work breakdown structure. Without this vital information, you cannot accurately estimate project costs.

Estimating Project Activity Durations

Have you ever worked on a project where a critical resource was not available when you needed it? Has a project activity been shorter or longer than you expected? How do project managers plan resources for these activities?

Activity duration estimates are an important input to project resource planning. Activity duration estimates are quantitative assessments of the likely number of work periods required to complete an activity. The estimates should include the range of possible results. Project managers use activity duration estimates as a basis for scheduling time and resources for a project.

The project manager uses the WBS to determine which activities are involved in completing the project. Then using the tools and techniques of activity duration estimating, he prepares estimates for activity duration.

The estimates include an "optimistic," "most likely," and "pessimistic estimate," listed in that order. For example, activity 1 could take 10 days to complete, will most likely take 12 days, but could take as long as 16 days.

Only the optimistic and pessimistic estimates are used by project managers to create a range of possible results. These results become your activity duration estimates. In the example given earlier, the duration estimate would be two weeks, plus or minus two days, to indicate that the activity will take between 12 and 16 days.

Project managers also calculate the probability of the estimates being correct. For example, a project manager might estimate that there is a 15 percent probability that an activity duration will exceed 3 weeks, and an 85 percent probability that it will be less than 3 weeks.

John, a project manager for Quick-as-a-Wink computer consultants, has determined the activities involved in a software development project. One of those activities is scripting the content. John determines that the scripting activity should take 240 working hours to complete. He will use these hours to calculate his activity duration estimates.

John's activity duration estimates include the duration and the probability of the estimate being correct. John estimates that the scripting activity will take six weeks ± three days. There is a 75 percent probability that the scripting activity will take more than six weeks, and a 25 percent probability that it will take less than six weeks.

Activity duration estimates form the backbone of the project schedule. A properly prepared schedule will lead to better resource planning. And better resource planning will lead to a more successful project.

Estimating Activity Duration

One thing you can't afford on a project is wasted time. Time wasted on a project will affect both the budget and the schedule. Fortunately, proper planning and accurate activity duration estimates can be used to keep your project on time and within budget.

Project managers use activity attributes to select and sort the activities that comprise a project. They look at all aspects of a project before determining the project schedule knowing that a "missed" or inaccurately estimated activity can drastically alter the project schedule.

Activity lists, which describe all the activities to be performed on a project, are used in estimating the duration of project activities. Resource requirements that detail the people, equipment, and materials needed for a project are also used as inputs in this process.

Activity duration estimates are quantitative assessments of the likely number of work periods that will be required to complete an activity. Activity duration estimates give project managers a range of possible results.

Project managers can determine a timeline for a project from the range of possible results. This range can be an indication of the number of work periods or the probability that the activity will take as long or longer than expected.

Sam is a project manager for an aerospace company. He is using activity duration estimates as an input to project schedule development. Sam has estimated that assembling the wing will take at least 8 days, but no more than 12.

There is a 15 percent probability that the assembly will take more than 12 days, and an 85 percent probability that it will take less than 12 days.

Since there is a high probability that assembly will take less than 12 days, the project manager will schedule 10 days for this activity.

While activity duration estimates help project managers determine how long activities will take, activity attributes also play an important part in selecting and sorting the given project activities.

Activity attributes are important because they enable project managers to select activities and sort them into convenient groupings. Project managers use these groupings to find out information about a given project. Activities exhibit three types of attributes: responsibility, geographic area, or building, and activity type.

The responsibility attribute refers to who will perform the work. The geographic area or building attribute refers to where the work will take place.

The activity type attribute refers to whether an activity is grounded in specific details or is based on a summary of events.

Activity duration estimates help project managers determine the likely number of work periods an activity will take to complete while activity attributes are important for sorting and selecting project activities. Both inputs are essential in planning a project so that it remains on time and within budget.

Project Outputs: Activity List Updates

Project activity lists, which are elements of the project management process, may sometimes have to be updated after activity duration estimating is completed. In some cases, after activity duration estimating, an activity may be divided, or otherwise redefined, in order to show the correct logical relationships. Dividing or redefining an activity might cause it to take longer to complete. In other cases, the change will cause the activity to take less time than originally estimated.

The activity list must be updated to reflect these changes, since the duration of the activity will be affected. These activity list updates are important outputs of activity duration estimating.

For example, an activity list included writing code for a software project as one activity required to complete a project. Upon completion of the activity duration estimating process, it was found that the coding activity should be split up into three separate activities—developing interfaces, scripting, and testing. The activity list needed to be updated to reflect the change in the original activity.

The estimated duration for the original activity, writing code, also needed to be updated. The project manager used the tools and techniques of activity duration estimating to obtain estimates for the three new activities.

Updating the activity list is an important process for a project manager because it:

• helps the project manager create a more accurate schedule
• ensures that all team members are informed.

Remember, activity list updates are valuable outputs of the project activity duration estimating process, since they help project managers create more accurate schedules and keep team members informed.

Project Outputs: Activity Duration Estimates

As a project manager, you can help ensure the success of your project by recognizing and understanding the various outputs of activity duration estimating. One of those outputs are the activity duration estimates themselves.

Activity duration estimates are quantitative assessments of the likely number of work periods (usually days) required to complete an activity. Project managers use activity duration estimates as a basis for scheduling time and resources for a project.

Activity duration estimates are derived from the Work Breakdown Structure (WBS). Use the WBS to determine which activities are involved in completing the project. Then, using the tools and techniques of activity duration estimating, prepare estimates for activity duration.

The estimates should include optimistic, most likely, and pessimistic estimates, listed in that order. For example, an activity that could be completed in as few as 10 days (an optimistic estimate), will most likely take 12 days to complete (the most likely estimate), but could take as long as 16 days (a pessimistic estimate).

Only the optimistic and pessimistic estimates are used by project managers to create a range of possible results. These results become your activity duration estimates, or valid durations. Valid durations are estimates arrived at using the tools and techniques of activity duration estimating.

You also should calculate the probability of the estimates being correct. Since you're working with estimates and not actual outcomes, you won't be able to use formulas for calculating probability. Instead, you should use other techniques, such as expert judgment or analogous estimating.

For example, using expert judgment, a project manager estimated that there is a 15 percent probability of an activity exceeding three weeks and an 85 percent probability of it taking less than three weeks.

Activity duration estimates form the backbone of the project schedule. Properly prepared estimates will lead to a better schedule—and a better schedule will help lead to a successful project.

Project Activity Duration Reserve Time

You've probably heard of the Army Reserves. The Reserves are made up of citizens who are trained as soldiers and who can be called upon in situations that demand extra resources.

Similarly, reserve time is added to project activity durations to provide the extra time that may be needed based on identified risks. Risks can affect the project schedule and cause delays. Reserve time helps offset such delays.

Reserve time should be documented along with other data and assumptions relating to the project. Reserve time, like other assumptions, is contingent on project results and subject to change as the project progresses. Two methods you can use to determine reserve time are discussed below.

1. As a percentage of activity duration
Reserve time is normally calculated as a percentage of the estimated activity duration. Using this method, reserve time can be calculated by simply adding an extra percentage to each activity duration estimate.

Reserve time can be reduced or eliminated as specific project information becomes available. Its use is at the discretion of the project team and is normally guided by expert judgment or historical information.

Consider this example. You are managing a road construction project and you have estimated that it will take you 50 days to build an overpass. After consulting with one of your lead engineers, an expert on highway construction, you decide to add an additional 20 percent to the duration estimate as reserve time.

To calculate the reserve time as a percentage of the estimated activity duration, you simply multiply your duration of 50 days by 20 percent. The reserve time for this activity is 10 days.

2. As a fixed number of work periods
Another approach to creating reserve time involves simply tacking on an additional fixed number of work periods to the current estimates for each activity. Work periods are often measured in days, but may vary by project.

Let's say you're managing a similar road construction project and you have estimated once again that it will take you 50 days to build an overpass. This time, though, after reviewing historical information on similar projects, you decide to calculate the reserve time by adding five additional work periods, or days, to your estimate.

If you take into account your reserve time of five work periods, your adjusted activity duration estimate for building the overpass would be 55 days.

Whether you decide to determine reserve time as a percentage of the estimated activity duration or as a fixed number of work periods, make sure you consult with a team member who is familiar with the given activity. This will help ensure that the reserve time you decide upon is as accurate as possible.

When performing activity duration estimates for your project, remember to allow for reserve time to accommodate circumstances that could interrupt or delay the progress of your project activities.

Project Risk and Activity Duration Estimating

It has been said that "sometimes the greatest risk is not taking one." Whether this is true or not depends on how much of a risk-taker you are as a project manager. If you are aware of your project's identified risks, you will be better able to perform your project activity duration estimates.

Identified risks can affect activity durations considerably. You should take the impact of identified risks into account when performing activity duration estimates to improve the accuracy of the project schedule. There are two main factors to consider when assessing the identified risks. These two factors are discussed below.

1. Is the risk a threat or an opportunity?
Risks are generally perceived in one of two ways—as threats or opportunities. Threats are risks that may have adverse effects on project activities. Opportunities are risks that may have favorable effects on project activities.

Deciding whether a risk represents a threat or an opportunity can help you perform activity duration estimates. Activity durations will not necessarily change based on whether you perceive risks as threats or as opportunities. However, your perception will likely impact your willingness to put up with the effects the risks may have on your activity durations.

2. Does the risk have a high or a low probability of occurring?
The relationship between a risk's probability and its potential impact on activity duration estimates is directly proportional. This means:

• high probability = high potential impact
• low probability = low potential impact.

One of the most effective ways to assess the probability of identified risks is to examine historical information. Information from previous projects can help project managers gauge the probability of risks occurring on current projects.
The project team must decide the extent to which the effect of risk should be considered in the baseline estimates for each activity. If the effect of identified risks is not taken into account, activity durations could take longer than expected. Be aware of the effects of a project's identified risks, and help keep the project's schedule on track.

A project's identified risks can have significant impact on activity durations, so remember to consider risks when formulating your activity duration estimates.

Using Activity Lists for Project Management

Are you the type of person who makes a list so you don't forget anything? Lists are great: They help you to remember any items that you consider important.

Managers can use lists when planning a project. Lists help managers remember any items that are important for the completion of a project. One such list, used by project managers, is the activity list.

An activity list is a description of all the activities that will be performed during a project. It is a helpful input to activity duration estimating for a project.

As a project manager, you can use an activity list to provide your project team members with a detailed description of all activities they will perform on a project. This description helps project team members understand how the work is to be done.

The activity list is actually an extension of the work breakdown structure (WBS). The WBS is a hierarchical list of what must be done to complete the project. Like the activity list, it includes a description of each of the project deliverables and activities, so that the project team members will understand how the work is to be done. The layout of the WBS includes details about the following elements:

• the overall program
• the specific project
• the project's deliverables
• the activities involved in completing the deliverables.
  

Project managers use the WBS when creating their activity lists to ensure that the list is complete, and that all necessary activities are identified for each deliverable. The WBS also ensures that any activities that are not required as part of the project scope are excluded.
The activity list, like the WBS, should include descriptions of each activity. This ensures that the project team members understand their jobs and do them as required.

Remember, an activity list is a great way of remembering all of the activities that must be performed during a project. In addition, project managers can use this input to determine which activities are involved in the project when estimating activity duration.

Project Activity Sequencing Outputs

Project activity sequencing consists of the methods and tools used to set the stage for the most efficient and trouble-free project plan. Project activity sequencing has several outputs, including the project network diagram and activity lists.

The project network diagram
One output that results from activity sequencing is the project network diagram. This diagram may be produced manually or on a computer.

The project network diagram includes full project details, including clear, concise, self-explanatory names for all project activities.

Full project details include "hammock activities" as well. For example, an auto parts manufacturer inspects all the parts it produces. Rather than repeat the inspect activity in the project network diagram, the manufacturing company rolls all inspection into a single summary or hammock activity.

Overall start and finish dates are then associated with the single hammock activity. One or more summary or hammock activities often make up part of full project details.

The project network diagram includes a summary narrative. The summary narrative outlines the basic activity sequencing approach used in the network. The summary narrative provides details about the use of dependencies, sequencing assumptions and leads and lags.

The summary narrative outlines how dependencies are included in the project, how outside dependencies will be handled, and which dependencies are mandatory or optional.

The summary narrative also includes assumptions about sequencing. It may be assumed, for example, that testing can start after 25 percent of development has taken place.

In addition to assumption, the summary narrative outlines how leads and lags will be handled. In a finish-to-start relationship, an activity with a lead of five days may start five days before its predecessor has finished. An activity with a lag of five days cannot start until five days after its predecessor activity has finished.

Finally, the project network diagram contains a description of unusual sequencing. Unusual sequences occur in a network to allow for things like client preferences or specific resource availability. For example, in setting up a computer network, it may seem logical to configure the servers before configuring the workstations. The customer, however, may stipulate that employees are to begin training and work on their workstations immediately. As a result, the configure workstations activity takes place in the project network diagram before the configure servers activity.

Activity list updates
The second output from activity sequencing is activity list updates. Network diagram preparation may reveal instances where an activity must be divided or redefined in order to diagram the correct relationships.

As an example, consider the initial activity list for installing a computer network. Attempts to construct a network for this project reveal that there is overlap between the build and test activities. Computer tower components must be tested at intermediary intervals.

If the build and test activities have been defined at too high a level, the sequencing diagram may not show this overlap. The solution is to break the build and test activities down into their component parts, and indicate their dependencies on other activities. Based on this, a new project network diagram can be constructed.

The outputs from activity sequencing are the project network diagram and the activity list. These two outputs are important components in the creation of the project schedule. The project network diagram reflects project activities and their dependencies. After initially diagramming the network, the activity list may remain the same or change based on the diagram.

The Inputs of Project Activity Sequencing

To successfully plan a project, you have to arrive at an appropriate sequence for the project activities. This process, called "activity sequencing" requires that you identify the inputs of project activity sequencing.

There are a number of inputs that influence project activity sequencing, including: the activity list, product description, mandatory dependencies, discretionary dependencies, external dependencies, and milestones.

• the activity list
  The activity list is a complete list of all project activities. These activities need to be analyzed and organized into a workable sequence so that the project can be completed in an optimal time frame.
  
  If, for example, a computer and data services company is building a network, the deliverables might be decomposed into the following activities:
  
  - configure mail server
  - configure application server
  - configure file server
  - configure print server
  - configure work stations
  - configure the router
  - connect hub
  - run cabling
  - test network
  
  This activity list must now be analyzed for dependencies and organized for completion.
  

• product description
  The second factor that influences activity sequencing is the product description. The product description documents the characteristics of the product or service that the project was undertaken to create. Product characteristics affect activity sequencing. These effects are apparent in the activity list. A review of the product description helps ensure project accuracy.
  
  Consider the example of the computer and data services company that is building a network. Suppose that a review of the product description indicates that the client only requested the configured servers, a configured router, and cabling. The client plans to have in-house technical support connect the hub, run the cabling, and test the network once it is in place.
  
  As a result of reviewing the product description, the computer and data services company supplying the network identifies an inaccuracy in its activity list. A revision of the list and resequencing of activities are necessary.
  

• mandatory dependencies
  The third, fourth, and fifth factors that affect activity sequencing fall under the heading of dependencies. The three types of dependencies that affect activity sequencing are mandatory, discretionary, and external.
  
  A mandatory dependency is one that is inherent in the nature of the work being done. Also known as hard logic, this dependency involves physical limitations.
  
  Take a look at a mandatory dependency in the context of building a computer network. The activities include configuring the network components, running cabling, and testing the network. One mandatory dependency that exists is between the test network activity and the rest of the project activities.
  
  The test network activity can't be done until the network is in place. This means that all other activities must be completed first. There is a mandatory dependency between the test network activity and all other activities associated with this project.
  

• discretionary dependencies
  Also known as preferred, preferential, or soft logic, this dependency is defined by the project management team based on established practices in an application area or a specific desired sequence.
  
  In the example of building a computer network, a discretionary dependency may exist. The client company wants its employees to begin working as soon as possible. To meet with this requirement, the project management team decides that configuring the workstations should be the first activity in the sequence.
  
  Other activities could replace this activity as the first in the project. In this case, however, the project management team decides that configuring the workstations is the preferred starting point.
  

• external dependencies
  An external dependency is one that involves a relationship between project and non-project activities. To understand this type of dependency, consider again, the example of building a network. The computer and data services company purchases some of its network components from a supplier. This creates an external dependency. The computer and data services company can't provide its service until it has all the parts it requires. Purchasing components from a supplier is an example of an external dependency.
  

• milestones
  Milestones are the final input of activity sequencing. Milestones are significant events or stages in the development of a project. Some examples of common project milestones are:
  
  - initial research
  - concept development
  - design completion
  - prototype development
  - quality testing
  - final acceptance
  
  Milestones act as control points in long projects that have several work packages and smaller tasks. For example, the computer and data services company grouped the project deliverables to identify major project milestones. The milestones for the network project are: finalizing the product description; installing and configuring network hardware components; and testing network capabilities.
  
  Milestones need to be an input to activity sequencing to assure that the project meets all of the necessary requirements. It is important to identify milestones so that you can effectively measure the progress of your project.
  

Optimizing the sequence of project activities can help you to avoid costly delays and rework. When sequencing, you need to consider your activity list, product description, dependencies and milestones. By factoring these inputs into the sequencing equation, you will arrive at a more logical sequence, one that will allow you to sail through project development and implementation with fewer surprises and mistakes.

The Outputs of Project Activity Definition

Taking the time to clearly define project activities reduces the chance for costly project delays. The process of defining project activities results in new or revised project documents or documentable items. These are the outputs of the activity definition phase of the project.

In any given project, there are three main outputs of activity definition: the activity list; supporting detail and WBS updates.

• the activity list
  The first and most obvious output of activity definition is the activity list. The activity list results from using the WBS to decompose the project into a series of activities to be performed. To ensure completeness and adherence to project scope, the activity list should be developed and organized as an extension of the Work Breakdown Schedule (WBS).
  

• supporting detail
  The second output of activity definition is supporting detail. Once an activity is defined, the next step is to clarify how it should be performed. To do this, you need to take into account project assumptions and constraints.
  
  Consider the example of Telecom Corporation's VPN project. The development of a new corporate web site is going on at the same time as the VPN project. The assumption that the web site development project uses standard technologies compatible with the VPN project must be documented in the supporting detail.
  
  The constraints imposed by the existing client infrastructure affect project activities and must be included in the supporting detail.
  

• Work Breakdown Schedule (WBS) updates
  The third and final output of project activity definition are WBS updates. The WBS helps identify which activities to include in a project. If a missing deliverable is identified during the activity definition process, you must update the WBS to include that deliverable. You should also update the scope statement since it is a related document that includes a list of the project deliverables. Any changes in the deliverables must be reflected in the WBS and related documentation.
  

The outputs from activity definition include the activity list, supporting detail, and WBS updates. These outputs serve as important inputs to the next task required of a project management team—activity sequencing.

The Inputs to Project Activity Definition

When a project reaches the activity definition phase, certain documents or documentable items have already been established. These "inputs to activity definition" include the Work Breakdown Schedule (WBS), scope statement, historical informaiton, constraints, assumptions, and expert judgment.

• Work Breakdown Schedule (WBS)
  One of the principle inputs to activity definition is the WBS. This document defines project tasks and deliverables.
  

• scope statement
  The scope statement refers directly to project justification, project objectives, project deliverables, and project product description.
  

• historical information
  Historical information is another important input to activity definition. Consider activities required on previous, similar projects in defining current project activities. After all, if something works, why not repeat it?
  

• constraints
  Constraints are also an input to project activity definition. A constraint is anything that can limit the project management team's options.
  

• assumptions
  Assumptions are the fourth input to activity definition. For planning purposes, assumptions are factors that are considered to be true. Over the course of the project, these factors may turn out to be true or false.
  
  Assumptions always carry a degree of risk. For example, if assumptions about materials or costs are false, a project may be delayed or exceed its budget.
  

• expert judgment
  The final input to activity definition is expert judgment. Expert judgment is advice from people with specialized knowledge or training that directly relates to your project. Some sources of expert judgment are:
  

experienced employees in the organization
outside consultants
professional associations
industry watch groups.

The inputs to activity definition are an important part of any project. These documents and documentable items help the project manager and team to determine project deliverables and the tools and techniques needed to achieve the deliverables.

Key Activities of an IT Project

During the planning phase of the IT project life cycle, the project manager must complete three key activities, which will provide the foundation for the entire project. To complete these activities, the project manager will have to use a number of tools, such as word processing and spreadsheet software.

The three key activities project managers must complete during the planning phase are described below. As you review these activities, note that there are associated subactivities that will help the project manager successfully complete each key activity.

1. Project initiation and organization
The first key activity, project initiation and organization, involves identifying the work required to obtain management approval for the project and the subsequent planning of the work effort. The subactivities of initiating and organizing the project involve identifying the items listed below.

• The scope of the project identifies the key system objectives and describes the overall system function. It enables the development team to understand what the customer wants the system to do and what the team has to do to reach its goal.
• Applicable standards are any rules the development team must follow during the life of the project. These standards must be met in order for the customer to be satisfied with the project.
• The organization and training needs of the project team are identified and implemented in the planning phase so that the development of the product is not held up.
  

2. Project definition and planning
The second key activity, project definition and planning, is the largest of the three key activities, and will take the longest. It involves developing the project definition, and conducting the planning and estimation involved in the system's design.

The project definition is used as a major input to the detailed planning and resourcing that takes place as each phase of work is planned, initiated, and put into practice. Upon completion of this key activity, the project team will have a work plan that contains all the necessary information to move on to the next phase of the life cycle if management approves the project. The subattributes for conducting project definition and planning are shown below.

• Review present status. If any type of software is to be used in the development of the new system, the project manager should look at what is available on the market to see if it meets any of the project's needs.
• Identify business objectives and information strategy. The project manager should review the business and information plan to identify any requirements, guidelines, or strategies that the team should follow.
• Survey information needs. The information needs are acquired by assessing the needs of the end users. By assessing the functional and technical needs, the project team has a better idea of what the new system should be capable of doing.
• Identify hardware and software environment. To develop the conceptual design, the project team needs to know the software and hardware environments of the new system. If no environment has been selected by the client, the project team will select one.
• Develop conceptual design. The project team develops a conceptual design in order to communicate the basic functionality and behaviors of the new system. The conceptual design can be developed using drawings, flowcharts, or storyboards.
• Investigate packaged systems alternatives and evaluate development alternatives. Check to see if there is an existing system. If there is, it can be a valuable tool for the development team. The members of the team can rate the packaged system's strengths and weaknesses and determine what improvements need to be made.
• Prepare project impact analysis. The members of the project team prepare a report on the costs and benefits of the proposed system. They determine any risks and organizational impacts on the project.
• Finalize project work plan. The project team prepares a final report for management that covers the work that needs to be completed to create the project, and details the cost involved in creating the product.
  

3. Management review and approval
The last key activity, management review and approval, involves presenting the project definition and planning outputs for authorization to commence the project. Once management has granted approval, a sign-off is given, and the project can move on to the next phase.

During the planning phase, make sure that you conduct each of the three key activities described above. By doing so, you can help ensure the success of your project.