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Chapter 14
Managing Projects
Student Learning Objectives
1. What are the objectives of project management and why is it so essential in
developing information systems?
2. What methods can be used for selecting and evaluating information systems
projects and aligning them with the firm’s business goals?
3. How can firms assess the business value of information systems projects?
4. What are the principal risk factors in information systems projects and how can
they be managed?
Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The
page number for each key term is provided.
Capital budgeting, 554
Organizational impact analysis, 564
Change agent, 558
PERT chart, 561
Change management, 558
Portfolio analysis, 552
Counterimplementation, 563
Project, 546
Ergonomics, 564
Project management, 546
External integration tools, 561
Project portfolio management software, 565
Formal control tools, 561
Real options pricing models (ROPMs), 556
Formal planning tools, 561
Scope, 546
Gantt chart, 561
Scoring model, 552
Implementation, 558
Sociotechnical design, 564
Information systems plan, 550
Tangible benefits, 553
Intangible benefits, 553
User-designer communications gap, 558
Internal integration tools, 560
User interface, 544
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Teaching Suggestions
The opening case, “Harrah’s Cherokee Casino Wins with Sound Project Management,”
illustrates the importance of understanding the importance of involving users in
designing, building, and implementing system changes.
When Harrah’s Cherokee Casino required an upgrade to its existing system, management
understood the importance of maintaining existing levels of operational support while
providing casino employees with new capabilities. The project was completed on time
Section 14.1, “What are the objectives of project management and why is it so essential
in developing information systems?” Spend some time discussing why so many
information system projects fail. Is it because the system wasn’t built correctly or was it
really how the project was managed or mismanaged that caused the failure? You should
Interactive Session: Management: New York’s CityTime: An IS Project Goes Awry
Case Study Questions
1. How important was the CityTime project for New York City? What were its
objectives and anticipated business benefits?
CityTime was created to automate payroll timekeeping for 80 mayoral and other city
agencies and in the process to curb undeserved overtime payments to city workers and
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2. Evaluate the key risk factors in this project.
The key risk factors in the project were out-of-control time and costs, lower quality of
project outputs, systematically inflated costs, overbilling for consultants’ time, and
artificially extending the completion date. Again, the biggest reason for the project’s
3. Classify and describe the problems encountered the CityTime system was being
implemented. What management, organization, and technology factors were
responsible for these problems?
Management: A lack of qualified and responsible oversight, a lack of management, and
a lack of leadership led to the failure of both projects. The CityTime project was managed
Organizational: The City Comptroller never audited the project despite numerous
warnings about the project from staffers. An aide for the mayor did suggest that the
Technology: The technology requirements, on the surface, were sound: automate manual
systems, provide ways to audit input and output, reduce cheating and fraud through better
technology, and replace outdated legacy systems with newer technologies.
4. What was the business impact of CityTime’s botched implementation? Explain
your answer.
Ideally, new systems improve efficiencies, reduce costs, reduce fraud and waste, and
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5. Describe the steps that should have been taken to prevent a negative outcome in
this project.
The first step in managing project risk involves identifying the nature and level of risk
confronting the project. Implementers can then handle each project with the tools and
risk-management approaches geared to its level of risk.
Managing technical complexity: Project leaders need both heavy technical and
administrative experience. They must be able to anticipate problems and develop smooth
working relationships among a predominantly technical team.
Formal Planning and Control Tools: Formal planning tools and formal control tools for
documenting and monitoring project plans are an absolute must. Gantt charts and PERT
Increasing User Involvement and Overcoming User Resistance: External integration
tools consist of ways to link the work of the implementation team to users at all
Interactive Session: Organizations: Britain’s National Health Service Jettisons
Choose and Book System
Case Study Questions
1. Clarify and describe the problems of the NHS Choose and Book System. What
management, organization, and technology factors were responsible for those
problems?
Management: The goals were threefold: to speed up the referral process, eliminate
costly paperwork, and encourage patient participation so as to stem losses of up to
£225million annually from 1.6 million patient no-shows. The objective to book 90
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Technology: Implementation was sluggish and plagued with glitches. One early problem
2. To what extent was Choose and Book a failure? Explain your answer.
Although many doctors were fans, system misfires created a significant population of
disgruntled caregivers who refused to use Choose and Book. Glitches included
3. What was the economic and social impact of Choose and Book?
By 2014, Choose and Book’s cost had ballooned to £356 million. Still, out of a total
public investment of £12.7 billion for the National Programme for IT (NPfIT), it was
considered to be one of its few successes, providing reliable, secure, and certain referrals
for more than half of first-time outpatients and used—at least to some degree—by more
4. Describe the steps that should have been taken to make Choose and Book more
successful.
More emphasis should have been placed on the user interface for both patients and
doctors. If the interface is confusing then chances are much greater that the system will
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Section 14.2, “What methods can be used for selecting and evaluating information
systems projects and aligning them with the firm’s business goals?” Throughout the
textbook, the Laudons’ have stressed that information systems are sociotechnical and part
of the organization. This is an important point to reiterate to your students. A new
information system changes the way the organization operates. Successful organizations
choose to change their structure and operations over time. They choose information
systems designed to mirror organizational changes. New systems can change
organizational political arrangements and power relationships. The information systems
plan is the first step to link the business plan to information systems. The information
systems plan helps an organization answer the following questions: What do we need to
do? Who needs the information? Who creates it? How can we create a system that will
change our strategy or even the business we are in?
Section 14.3, “How can firms assess the business value of information systems
projects?” This section focuses heavily on mathematical models to evaluate the costs and
benefits of information system projects. The Learning Tracks for this chapter may help
you present the payback method, the accounting rate of return on investment, net present
Section 14.4, “What are the principal risk factors in information systems projects and
how can they be managed?” This section begins by describing three dimensions of
project risk: size, structure, and experience with technology. It goes on to explain how
change management can diminish the potential failure rate of projects regardless of these
dimensions. Many organizations’ projects have failed mostly because they didn’t
understand the behavioral changes the new system would cause. The user-designer
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Review Questions
14-1 What are the objectives of project management and why is it so essential in
developing information systems?
Describe information system problems resulting from poor project management.
When an information system fails to work properly or costs too much to develop,
companies may not realize any benefit from their information system investment, and
Define project management. List and describe the project management activities
and variables addressed by project management.
Project management refers to the application of knowledge, skills, tools, and
techniques to achieve specific targets within specified budget and time constraints.
Project management activities include planning the work, assessing the risk,
estimating and acquiring resources required to accomplish the work, organizing the
work, directing execution, and analyzing the results. Project management must deal
with five major variables:
• Scope: Defines what work is or is not included in a project.
• Time: The amount of time required to complete the project.
14-2 What methods can be used for selecting and evaluating information systems
projects and aligning them with the firm’s business goals?
Name and describe the groups responsible for the management of information
systems projects.
Large corporations will have a management structure to ensure the most important
systems projects receive priority.
• Corporate strategic planning group: Responsible for developing the firm’s
strategic plan, which may require the development of new systems.
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• Information systems steering committee: The senior management group
with responsibility for systems development and operations. It’s composed of
Describe the purpose of an information systems plan and list the major
categories in the plan.
An information systems plan helps executives, managers, and users identify
information systems projects that will deliver the most business value. The
information systems plan must support the overall business plan. It serves as a road
map indicating the following principles:
• Purpose of the plan
The major categories of an information systems plan are further broken down in
Explain how key performance indicators, portfolio analysis, and scoring models
can be used to select information systems projects.
Key performance indicators (KPIs) help an organization clearly understand both its
long- and short-term information requirements. KPIs are shaped by the industry, the
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Scoring models are useful when many criteria must be considered. It assigns weights
to various system features and then calculates the weighted totals. The scoring model
requires experts who understand the issues and the technology. Often the most
14-3 How can firms assess the business value of information systems projects?
List and describe the major costs and benefits of information systems.
Table 14.3 lists all of the major costs and benefits of information systems. It divides
the costs among five system components: hardware, software, telecommunications,
personnel, and services. Some of the tangible benefits include increased productivity,
Distinguish between tangible and intangible benefits.
Students can use Table 14.3 to answer this question.
Tangible benefits can be quantified and assigned a monetary value. They include:
increased productivity, lower operational costs, reduced workforce, lower computer
expenses, lower outside vendor costs, lower clerical and professional costs, reduced
rate of growth in expenses, reduced facility costs, and increased sales.
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Explain how real options pricing models can help managers evaluate
information technology investments.
Appropriate strategies, such as real options pricing models (ROPM), can be applied to
evaluate and value the information system when the benefits cannot be established in
advance. Real options pricing models apply the same techniques for valuing financial
options to systems investments and can be useful to help managers think about the
14-4 What are the principal risk factors in information systems projects and how
can they be managed?
Identify and describe each of the principal risk factors in information systems
projects.
Project size: The larger the project (dollars spent, the size of the implementation
staff, the time allocated, and the number of organizational units affected), the greater
Project structure: Highly structured projects usually have clear and straightforward
Experience with technology: The less experience the project team has with
hardware, system software, application software, or database management system, the
Explain why builders of new information systems need to address
implementation and change management.
An information system is a sociotechnical entity, an arrangement of both technical
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and social elements. Information systems change involves hardware and software, but
in addition, it involves changes in jobs, skills, management, and organization. When
we design a new information system, we are redesigning the organization, reordering
Explain why eliciting support of management and end users is so essential for
successful implementation of information systems projects.
The user-designer communication gap deals with the relationship that exists between
end users and information systems specialists. These two groups have different
backgrounds, interests, and priorities and has traditionally been a problem for
Explain why there is such a high failure rate for implementations involving
enterprise applications, business process reengineering, and mergers and
acquisitions.
These projects are very challenging, partly because they usually require extensive
organizational change. They also often replace deeply entrenched old technologies
and legacy systems. Many are undermined by poor implementation and change
management practices. The project must address employee concerns about the
change, their fears and anxieties, resistance by key managers, changes in job
functions, career paths, and recruitment practices.
Identify and describe the strategies for controlling project risk.
Strategies you can follow to increase the chances of a successful system include:
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• New systems that involve challenging and complex technology can be helped
by recruiting project leaders with strong technical and administrative
experience.
• If the firm does not have staff with the required technical skills or expertise,
outsourcing or using external consultants are options that may be pursued.
Identify the organizational considerations that should be addressed by project
planning and implementation.
The term implementation refers to the entire process of organizational change
surrounding the introduction of a new information system. Information systems
design and the entire implementation process should be managed as planned
organizational change using an organizational impact analysis. A very large
Explain how project management software tools contribute to successful project
management.
You can use special tools to help you manage the implementation of a new
information system (internal integration tools). The software features these
capabilities:
• Define and order tasks.
• Assign resources to tasks.
• Establish starting and ending dates to tasks.
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Discussion Questions
14-5 How much does project management impact the success of a new information
system?
Student answers to this question will vary.
14-6 It has been said that most systems fail because system builders ignore
organizational behavior problems. Why might this be so?
Student answers to this question will vary.
14-7 What is the role of end users in information systems project management?
Student answers to this question will vary.
Hands-On MIS Projects
Management Decision Problems
14-8 U.S. Census Bureau: Signed a $600 million contract with Harris corporation in
2006 to build 500,000 devices, but still weren’t sure which features they wanted
included in the units. Census officials did not specify the testing process to measure
the performance of the handheld devices. Four hundred change requests were added
to the project requirements. Two years and hundreds of millions of taxpayer dollars
later, the handhelds were far too slow and unreliable to be used for the 2010 U.S.
census. What could Census Bureau management and the Harris Corporation have
done to prevent this outcome?
Both organizations could have done a much better job of defining project objectives
at the very beginning including the scope, time, cost, quality, and risk of the project.
Simply defining the scope of the project could have drastically reduced the number of
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14-9 Caterpillar: The company wants to end its support for its Dealer Business System
(DBS), which it licenses to its dealers to help them run their businesses. The software
is becoming out of date and senior management wants to turn support over to
Accenture Consultants. The dealers were never required to use the system but it had
become a de facto standard for business processes. Approximately 150 dealers
worldwide use some version of the system. Before Caterpillar turns the product over
to Accenture, what factors and issues should it consider? What questions should it
ask? What questions should its dealers ask?
Using an information systems plan, senior managers can analyze the idea of turning
the system over to outside consultants and determine strategies for doing so. Step 2,
Strategic Business Plan Rationale, requires managers to evaluate the current situation
and business organization against changing environments. Using Step 3, Current
Systems, Caterpillar executives, Accenture consultants, and a select number of
Improving Decision Making: Using Spreadsheet Software for Capital Budgeting for
a New CAD System
Software skills: Spreadsheet formulas and functions
Business skills: Capital budgeting
14-10 Your company would like to invest in a new computer-aided design (CAD) system
that requires purchasing hardware, software, and networking technology, as well as
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Improving Decision Making: Using Web Tools for Buying and Financing a Home
Software skills: Internet-based software
Business skills: Financial planning
14-11 You would like to purchase a home in Fort Collins, Colorado. Ideally, it should be
a single-family house with at least three bedrooms and one bathroom that costs between
$150,000 and $225,000 and finance it with a 30-year fixed rate mortgage. You can afford
a down payment that is 20 percent of the value of the house. Before you purchase a
house, you would like to find out what homes are available in your price range, find a
mortgage, and determine the amount of your monthly payment. Use the Yahoo! Homes
site to help you with the following tasks:
• Locate homes in Fort Collins, Colorado, that meet your specifications.
When you are finished, evaluate the whole process. For example, assess the ease of use of
the site and your ability to find information about houses and mortgages, the accuracy of
the information you found, and the breadth of choice of homes and mortgages.
Naturally, students will select different properties in the Fort Collins area. Some of the
common features of the sites they visit will have them complete an application and e-mail
it to the lender. Phone numbers are available to talk to representatives. Payment
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Collaboration and Teamwork Project
14-12 In MyMISLab, you will find a Collaboration and Teamwork Project dealing
with the concepts in this chapter. You will be able to use Google Drive, Google Docs,
Google Sites, Google +, or other open source collaboration tools to complete the
assignment.
Case Study: A Shaky Start for Healthcare.Gov
Case Study Questions
14-13 Why was the Healthcare.gov project so important?
The administration of President Barack Obama has made Patient Protection and
Affordable Care Act, often called “Obamacare” its chief domestic accomplishment and
the centerpiece of Obama’s legacy. Essential to Obama’s health care reform plan is
Healthcare.gov, a health insurance exchange Web site that facilitates the sale of private
health insurance plans to U.S. residents, assists people eligible to sign up for Medicaid,
14-14 Evaluate the key risk factors in this project.
Without proper management, a systems development project takes longer to complete
and most often exceeds the allocated budget. The resulting information system most
likely is technically inferior and may not be able to demonstrate any benefits to the
organization.
14-15 Classify and describe the problems encountered by this project. What
management, organization, and technology factors were responsible for these
problems?
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Management: There was no single leader overseeing the Healthcare.gov
implementation. The U.S. Centers for Medicare and Medicaid Services (CMS)
Organization: A major contributor to these problems was the part of the system’s design
that requires users to create individual accounts before shopping for health insurance.
CMS set deadlines for the contractors, who were expected to attend meetings to hammer
CGI believed that a full-function Healthcare.gov with all the anticipated bells and
whistles was an unrealistic target. Given the time required to complete and test the
Technology: Healthcare.gov was launched on October 1, 2013 as promised, but visitors
quickly encountered numerous technical problems. Software that assigned digital
identities to enrollees and ensured that they saw only their own personal data was
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14-16 What was the economic, political, and social impact of Healthcare.gov’s
botched implementation?
Work on fixing the Web site continued through October and November 2013, and the
Web site appeared to be working more smoothly. For the vast majority of users,
Healthcare.gov was working more than 90 percent of the time. Response time (the time
14-17 Describe the steps that should have been taken to prevent a negative outcome
in this project.
More support directly from the White House would have helped managers make
decisions faster and more reliably. If an information systems project has the backing and
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14-18 Identify and describe three methods for helping managers select information
systems projects.
Visit MyMISLab for suggested answers.
14-19 Compare the two major types of planning and control tools.
Visit MyMISLab for suggested answers.
For an example illustrating the concepts found in this chapter, view the
videos in mymislab.com.