The internal rate of return (IRR) of a project is the expected growth rate of a project investment. It can be compared to the rate of return obtained by investing the money in the stock market or in other projects. Organizations typically calculate IRR to make decisions between several investment alternatives. It is the discount that results in a net present … [Read more...]
Payback period is the length of time required for an investment to recover its capital. It is the amount of time required until the investment is in a break even position. It is generally used for investments that involve a large up front capital outlay, such as the construction of an industrial facility, or development of a software product. The shorter the … [Read more...]
The Project Initiation Document (PID) is the most important document in the PRINCE2 project management method. It defines the project scope and identifies how the project will achieve its objectives. It puts the project on a solid foundation, a baseline that provides a place from which the project manager and project board can assess progress. The PID is a … [Read more...]
The Terms of Reference (TOR) is a description of the technical work involved in a project, or part of a project. Specifically, it is used to specify the work required by an external consultant, contractor, or supplier. It is the technical part of the bidding documents. Typically, a project manager develops a Terms of Reference which is included within the … [Read more...]
The purpose of the project brief is to provide the foundation upon which the project rests. It establishes the parameters under which the project is initiated, as well as the stakeholder inputs into the initiation phase. It is prepared by the project manager, reviewed by the senior users and suppliers, and approved by the executive. The contents of the … [Read more...]
Many projects and organizations purchase external goods, services, consultants, contractors and suppliers in a process called procurement. Although it's a very efficient and capable way to deliver project work, it has its own limitations that must be recognized in order for the procurements to go smoothly. A procurement strategy establishes the methods and … [Read more...]
Selecting a contractor is one of the most difficult aspects of project management. It's why most large organizations have an entire department devoted to project procurement. Contractors all want the work, but how do you know they aren't too busy and will get to your project later than you'd like them to? How do you know they're really as capable as they … [Read more...]
The procurement side of project management can be daunting. Contractual issues are routinely some of the biggest and most expensive problems that require solving, and the parties are often very passionate about their case. Almost without fail, the common theme is that the issue could have been addressed at the origin with a better contract. But alas, this is … [Read more...]
A procurement management plan documents how a project will conduct its procurement (purchasing). In the Project Management Body of Knowledge (PMBOK Guide), it is the component of the overall Project Management Plan that deals with external purchasing for the project. It is separate from the statement of work (SOW), also known as the terms of reference (TOR) which … [Read more...]
The Quality Management Approach specifies the methods the project will use to ensure quality in its end product. This includes specifying the quality standards the project will aim for, measurements to determine whether or not that standard has been achieved, and quality audits to find areas for process improvement. Composition The Quality management approach … [Read more...]
