4/100 - Everything You Need to Know about Project Initiation Phase

In the previous blog we looked at Web3 Stakeholders, Layers and Common Web3 Projects. In this blog, we will deep dive into project initiation phase by understanding the below items:

1. How projects are linked to strategic objectives

2. Differences between portfolio, program, project and operations

3. Why projects are initiated

4. How projects are selected

5. What is a business case

6. Project initiation activities

7. What is a project charter

8. Project initiation for web3 projects

Organizational Context for Projects

A company's vision and strategic objectives serve as a guiding light for the projects it undertakes. These goals inform the development of a portfolio of projects, which may include a mix of initiatives aimed at improving operations, expanding the business, and driving innovation. To select the most promising projects and start with Project Initiation phase, organizations use project selection techniques to prioritize initiatives and utilize company resources effectively.

Once a project has been selected, a business case is developed to provide a detailed analysis of the costs, benefits, and risks associated with the project. If the business case is approved, a project charter is created to outline the key information about the project, including its purpose, scope, objectives, timelines etc. which is the key output of the Project Initiation Phase.

Before answering the question on why project, lets step back and understand organization context in which projects are implemented. This will help to get a holistic understanding of the bigger picture on how and why projects are executed.

Definitions: Portfolio, Program, Project and Operations

Portfolio

A portfolio is a collection of projects, programs, and operations that are aligned with a company's strategic objectives. It helps companies prioritize and allocate resources to ensure that the most valuable projects are given the necessary support.

Program

A program is a group of related projects that are managed as a single entity in order to achieve specific benefits and control that are not available from managing the projects individually. Programs are often used to achieve a strategic objective that requires coordination across multiple projects.

Project

A project is a temporary endeavor with a specific objective that has a beginning and an end. It is undertaken to create a unique product, service, or result, and is typically defined by its scope, deliverables, and resources.

Operations

Operations are the ongoing activities and processes that are necessary to run a business. They are not temporary like projects, but rather are a fundamental part of the company's operations. Operations focus on the day-to-day activities that keep the business running smoothly.

Why do companies take up projects?

Projects fulfill the strategic objectives of a company by building and delivering a product or service that aligns with the company's goals or by enabling the company to operate more efficiently or effectively.

There are many reasons why companies take on projects. Some companies take on projects to improve their operations, such as implementing a new software system to streamline their processes. Other companies may take on projects to expand their business, such as building a new facility or entering a new market.

How Projects are Selected?

In practice a combination of methods would be used to select projects in an organization. Some of the project selection techniques are given below.

1. Cost-benefit analysis

This technique involves comparing the costs of a project to the expected benefits it will provide. Projects with a positive cost-benefit ratio are more likely to be selected.

2. Other financial methods for project selection

1. Payback period: This model calculates the amount of time it will take for a project to pay for itself through the generation of cash flows. Projects with a shorter payback period are generally considered more attractive because they return the investment more quickly.

2. Net present value (NPV): This model calculates the present value of the expected cash flows from a project, taking into account the time value of money. Projects with a positive NPV are expected to generate more value for the organization than the initial investment.

3. Internal rate of return (IRR): This model calculates the rate at which the NPV of a project is equal to zero. Projects with a higher IRR are generally considered more attractive because they generate a higher return on investment.

4. Discounted cash flow (DCF): This model calculates the present value of the expected cash flows from a project, using a discount rate to account for the time value of money. Projects with a positive DCF are expected to generate more value for the organization than the initial investment.

3. Weighted scoring model

This technique involves assigning weights to various criteria that are important to the organization, such as alignment with strategic goals, return on investment, and risk. Projects are then scored based on how well they meet these criteria, and the highest-scoring projects are selected.

4. Decision matrix

This technique involves creating a matrix that compares the pros and cons of different projects. Projects with a high number of pros and a low number of cons are more likely to be selected.

5. Portfolio management:

This technique involves grouping projects into categories based on their strategic alignment, risk level, and other factors. Projects are then prioritized within each category, and the highest-priority projects are selected for further consideration.

Ultimately, the choice of project selection technique will depend on the specific needs and goals of the organization. It is important to choose a technique that aligns with the organization's strategic objectives and is appropriate for the size and complexity of the project.

Business Case Explained

A business case is a document that outlines the financial and strategic justification for a project or investment. It typically includes a detailed analysis of the costs, benefits, and risks associated with the project, as well as a recommendation on whether or not to proceed. The business case is used to help decision-makers determine whether the project is worth pursuing based on its potential impact on the organization. Next blog will present the business case in detail.

Project Initiation Phase

The project initiation phase is the first phase in the project management lifecycle. It is the phase where the project is defined and a plan is developed to guide the project through to completion. During this phase, the project team will define the scope of the project, develop a project plan, and establish a budget and timeline for the project. The output of the project initiation phase is the ‘Project Charter’

Activities of Project Initiation Phase

During the project initiation phase of a web3 project, the following activities may be undertaken:

• Define the scope of the project: This includes identifying the specific goals and objectives of the project, as well as the stakeholders who will be impacted by it.

• Develop a project plan: This includes creating a timeline for the project, identifying the resources needed to complete it, and establishing a budget.

• Identify and assess risks: This includes identifying potential risks to the project, such as technical challenges or regulatory issues, and developing strategies to mitigate or manage these risks.

• Establish a project team: This includes identifying the individuals who will be responsible for completing the project and assigning specific roles and responsibilities.

Specific Activities of Project Initiation Phase for Agile Teams

• Define the project vision: This includes identifying the long-term goals and objectives of the project and how it aligns with the organization's strategic vision.

• Create an initial backlog: This includes identifying the initial set of user stories or features that will be delivered as part of the project.

• Define the sprint schedule: This includes establishing the frequency and duration of sprints, as well as the specific goals and deliverables for each sprint. (If using scrum framework)

Output of Project Initiation Phase - Project Charter

‘A project charter is a document that outlines the key information about a project, including its purpose, scope, objectives, and stakeholders. It is typically created at the beginning of a project and serves as a reference point throughout the project lifecycle.’

A project charter typically includes the following sections:

1. Project purpose: This section outlines the reason for the project and how it aligns with the organization's strategic objectives.

2. Project scope: This section defines the boundaries of the project, including what is included and what is not included.

3. Objectives: This section outlines the specific goals and outcomes that the project is expected to achieve.

4. Deliverables: This section lists the specific products or services that will be produced as part of the project.

5. Stakeholders: This section identifies the individuals or groups who will be impacted by the project, including customers, employees, and other stakeholders.

6. Roles and responsibilities: This section outlines the specific roles and responsibilities of the project team and other stakeholders.

7. Budget: This section outlines the budget allocated for the project and how it will be used.

8. Schedule: This section outlines the timeline for the project, including key milestones and deadlines.

9. Risk management: This section outlines the potential risks to the project and the strategies in place to mitigate or manage these risks.

10. Approval: This section outlines the process for obtaining approval for the project, including any necessary sign-offs from stakeholders.

Other Outputs of Project Initiation Phase

1. High level product backlog / requirement list

2. Selection of Project Tools

3. Gantt charts or roadmaps draft

4. Stakeholder list

5. RACI matrix draft

6. Risk Register draft

7. Project team details

8. Project governance details etc.

Understanding the project initiation phase is crucial for every project manager who wants to increase its chance of success. By taking the time to set up a business case and thoroughly assessing each potential project, companies can narrow down their options and start a project to have the best likelihood of achieving objectives.

The development of a project charter during this phase is also key, as it provides a roadmap for the entire project team and ensures that everyone is on the same page from the start.

Project Initiation in Web3 Projects

When the number of teams are increasing and offerings in a company are increasing, it gets challenging to decide on which projects to take up and how to utilize company resources.

It is to be noted that since most of the companies in web3 space are startups, following all the above processes can be overhead and counterproductive. These are the standard project management practices which are detailed and are required where there are more teams and various initiatives are to be taken up by the company.

Tailoring for the project initiation phase needs to done as per company, context and team needs. For more information on how to refine organization's project management processes, be sure to follow Program Strategy HQ.

Recommended Readings:

• How to create a project charter: https://www.lucidchart.com/blog/how-to-make-a-project-charter

• This video from Google Career Certificates explains the Key Parts of Project Initiation in simple terms.

Coming up in the next blog - 'Business Case explained | Example Template for Software Projects.

Note 1: This blog is part of a 100 Days of Learning Series on Web3 Project Management frameworks and best practices published on Program Strategy HQ. For more details on the 100 days of blogging campaign check out Blog 0.

Note 2: Reach out to info@programstrategyhq for any queries.

Note 3: Program Strategy HQ Disclaimer for Reference.

References

• Association for Project Management. (2019, September 13). What is business case? | APM. Www.apm.org.uk. https://www.apm.org.uk/resources/what-is-project-management/what-is-a-business-case/

• MacNeil, C. (2021, October 6). Project Initiation: the First Step to Successful Project Management • Asana. Asana. https://asana.com/resources/project-initiation

• MBA, J. S. -, & PMP. (2020, July 15). Project Initiation Process: 6 Key Activities. ProjectPractical.com. https://www.projectpractical.com/project-initiation-process-6-key-activities/

• Project Initiation: How to Start Your Project Off Right. (2019, October). Project Initiation: How to Start Off a Project Right. ProjectManager.com. https://www.projectmanager.com/blog/project-initiation

• Project Management for Startups & Entrepreneurs: A Quick Reference Guide. (2019, June 12). ProofHub. https://www.proofhub.com/articles/project-management-startups

• Project Management Institute. (2021). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Seventh Edition and The Standard for Project Management. Project Management Institute.