Chapter 3. Understand Project Initiating

The first process group you will encounter in the project life cycle is the initiating process group. Although initiating is a relatively small topic that represents only 13% of the questions on the PMP exam, it is an important topic. In addition to being a small topic, it is also one with which most project managers have little experience. In spite of clear PMI definitions of activities that should be carried out during initiating, many organizations approach the initial steps of projects differently. As a result, your firsthand experience might differ from the PMI recommendations in this process group. Don’t trivialize the material in this chapter. Ensure that you understand initiating before moving on to tackle some of the larger topics.

The initiating process group is the first step in the project life cycle. In fact, much of the work performed in this process group is actually outside the scope of the project. The main purpose of initiating is to authorize a project to begin or continue. Notice that the initiating process group serves two potential roles. It generally occurs at the beginning of a project but can also occur several more times throughout the life of a project. Some larger projects define specific milestones that require revisiting the initiating processes to continue the project. Invoking the initiating processes at the start of each phase helps keep the project focused on the business need the project was undertaken to address.

It is not uncommon for large projects to call for initiating processes several times throughout the project life cycle. Any time you need to assess the progress of a project, reevaluate its merit, and request approval to continue, initiating processes are executed.

In all cases, initiating processes require input from preceding activities. The entities charged with deciding whether to proceed require substantiating information on which to base a decision. When initiating occurs at the beginning of a project, at least some of the input must be created in tasks that are not part of the project. This work predates the project initiation date and can make the project start point fuzzy. The points in time at which a project begins and ends are referred to as the project boundaries. Because a substantial amount of the inputs to the initiating processes is created outside the scope of the project, the starting boundary can be unclear. A project always starts as a result of a business need, and the business need develops before the project commences. Likewise, any documentation of the need for the project is developed before the actual project starts.

Subsequent initiating iterations (within the project life cycle) use inputs from preceding activities. It is important to understand that the activities in the initiating process group always result in a critical project decision. The end of the initiating process group is represented by a decision to continue the project, go back and redo some of the work, or terminate the project altogether.

In most projects, you should include any customers and other stakeholders in many of the activities in the initiating process group. Including as many stakeholders as possible in the early project activities fosters a sense of pride and shared ownership of the project. Any stakeholder who feels a sense of ownership is apt to be more diligent about ensuring that the project succeeds. Stakeholder participation increases the success of setting the project scope, gathering project requirements, and defining the overall criteria for project success.

It is the responsibility of the project initiator, or project sponsor, to officially assign the project manager. After the project managers are assigned, the project charter identifies the project managers and provides them the authority to carry out project management tasks.

Authorization from the project sponsor, the project management office (PMO), or portfolio steering committee is necessary for the project manager to allocate resources and actually perform the work of the project. Even before bestowing authorization, the stakeholders must assign the project manager to the project. The project charter provides the framework for carrying out these actions. It is also the first deliverable of the project and sets the stage for the whole project.

There is no standard format for a project charter, but each project charter should address these areas:

Purpose or justification

Project objectives

High-level requirements

Project description

Risks

Summary milestone schedule

Summary budget

Approval requirements

Project manager

Authorizing party

After a decision is made to initiate a project, the collection of input information begins. This is where the project boundaries can be a little unclear, but it is generally accepted that activities starting with the collection of inputs for initiating are part of the project. Remember that the project has not yet been authorized, so all resources required for the initiating processes must be funded explicitly by the project initiator. In other words, someone has to pay for the time required to produce the project charter.

It is entirely possible that the organization will decide not to pursue a project after it sees the project charter. The project charter might show that the project will not be worth the resource expenditures. In such a case, the resources already expended to produce the project charter have actually saved the organization from wasting many more resources. Therein lies part of the value of the initiating processes.

The specific project management process that results in the project charter is the develop project charter process. Remembering the output of this process is easy because the only output is the project charter document. The inputs are more numerous, however. Table 3.1 lists the inputs, the tools and techniques, and the output for the develop project charter process.

As you study for the PMP exam, don’t just memorize each of the inputs, tools and techniques, and outputs for each process. Really think about why PMI put them where they are. In the case of the develop project charter process, ask yourself what you need before you start. Each piece of information you need to start the process of creating the project charter is represented in the input section. You need some sort of document that specifies the need for the project (agreement, or statement of work). You also need to understand the policies and procedures governing projects for your organization. Once you have all the information needed to begin, you can start the process of developing the project charter.

During the project charter development, you use your own expert judgment—as well as the expert judgment of subject matter experts in various areas—to create the output or deliverable. Expert judgment involves using all the project selection techniques in your project manager bag of tricks. You will also employ various facilitation techniques to ensure that you have the best available input from the beginning of the project. (We discuss some of the project selection and related accounting topics later in this chapter.)

In the case of the project charter, the only output is the project charter itself. The main point of listing each of the inputs, tools and techniques, and outputs for each process is to understand each component of each process. Don’t just memorize the tables! Really think through why each element is included.

Because the development of the project charter is the first project activity, much of the work to produce the input for this process occurs either before project initiation or within the scope of another project. Most of the input for this process serves to define the project and the environment in which it exists.

After the input information has been collected, the project initiator compiles and issues the project charter. The initiator must be someone who holds the authority to fund the project. Although it is desirable to assign a project manager early in the process, the project manager is not absolutely necessary to issue the project charter. It is important that the stakeholders have a material role in the creation of the project charter. The project manager, if one has been assigned at this point, can be the one to actually do the work of compiling the stakeholders’ needs, but the actual input for the project charter and the authority to issue it comes from the project initiator. The main reason so much emphasis is put on the project charter is that it provides the first and best opportunity for the stakeholders to really think through a project before the work begins, and it gives everyone a chance to consider the project before committing to it.

Internal organization assets with specific expertise

External consultants

Stakeholders, including customers

Professional or trade associations

Industry or user groups

The only other process in the initiating process group is the identify stakeholders process. Although you might have a preliminary list of interested parties during the development of the project charter, the official identification of stakeholders does not occur until after the project charter is complete. You are prepared to identify all of the parties affected by the project only after reviewing a complete project charter.

Identifying stakeholders is a crucial part of any project. As a project manager, you spend much of your time during a project communicating with stakeholders. It is important that you include every necessary stakeholder and no one else. The identify stakeholders process results in an effective list of stakeholders and a description of how each one is involved in your project. Table 3.2 lists the inputs, the tools and techniques, and the output for the identify stakeholders process.

There is a lot of duplication in the process requirements. The important point is that you understand what each process does and how its inputs and outputs connect with other processes.

The most noteworthy point for the identify stakeholders process is the stakeholder analysis. This process is far more than just writing down a list of names. In addition to creating a list of stakeholders, you also need to know how much each stakeholder is involved in the project and how much influence each stakeholder can, and will, assert on the project.

A stakeholder who is very interested in the project and has a lot of influence is apt to demand substantial attention. A stakeholder with little interest or influence should not require as much of your time. You always want to provide full disclosure of project activities to all of the stakeholders, but knowing who’s who among your stakeholders allows you to manage the project more efficiently.

The project manager is responsible for all activity that takes place during the project life cycle. In addition, the project manager is responsible for properly managing all the resources associated with the project. These resources can include people, equipment, money, supplies, and even influence. An important aspect of project manager responsibilities is the ability to measure the effectiveness and impact of project decisions and compare various options. Project managers need to be able to assess the potential impact of various options and select the option that makes the most sense for the project and the organization. Let’s look at a general management approach and a few specific techniques to measure and assess decisions.

The initiating process group is really a set of activities that directly support MBO techniques. The main purpose of initiating a project is to ensure that the project is understood, provides value to the organization, and is fully authorized by the organization.

MBO is closely related to solid project management practices for several reasons:

MBO implements goal setting and recurring reviews and suggests activities similar to the project control process.

MBO is concerned with ensuring that goals are consistent across an organization, and one task of the project charter is to state how the project supports an organization’s overall goals.

Both MBO and sound project management work only if management supports them at a high level.

Implementing MBO is relatively simple. Here are the basic MBO process steps:

1. Establish clear and achievable objectives.

2. Periodically check whether objectives are being met.

3. Take corrective actions on any discovered discrepancies.

For the PMP exam, you need to understand several cost accounting concepts that are frequently used during the project selection process. Of the two main project selection methods, benefit measurement methods requires more cost calculations. You are not expected to be an expert at cost methods for the PMP exam. However, you need to understand all these accounting concepts and know how to use them during the project selection activity. Table 3.3 lists the main accounting concepts you need to know and how they relate to project selection.

PMI also expects a project manager to understand other accounting concepts. Table 3.4 lists some of the most common accounting concepts you need to know for the PMP exam.