Sample Material - Not for Reprint. Workbook with Exams FOR TRAINER FOUNDATION. Version 5.6

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1 PRINCE 2 FOUNDATION Workbook with Exams FOR TRAINER PRINCE2 is a Registered Trade Mark of the Offi ce of Government Commerce in the United Kingdom and other countries. Copyright 2011, ITpreneurs Nederland B. V. All rights reserved. CC Learning

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3 PRINCE foundation workbook with exams PRINCE2 Foundation workbook PRINCE2 foundation workbook with exams This book is sold subject to the condition that it, or any part of it, shall not by way of trade or otherwise, be sold, lent, re-sold, displayed, advertised or otherwise circulated, without the publisher s prior written consent, in any form of binding, cover or title other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser(s). Copyright 2011 by ITpreneurs Nederland B.V. All rights reserved. PRINCE2 is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 1

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5 PRINCE foundation workbook with exams Table of Contents Table of contents Introduction...7 Business Case...27 Organisation...47 Quality...73 Plans...97 Risk Change Progress Starting up a Project Directing a Project Initiating a Project Controlling a Stage Managing Product Delivery Managing a Stage Boundary Closing a Project Self assessment answer key Themes crossword answer key Processes crossword answer key Foundation examination tips Foundation Exam Design Foundation sample examination Foundation sample examination Syllabus Notes Feedback Form Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 3

6 PRINCE foundation workbook with exams Key Icon Explanation Exercise demonstrating a specific concept in a real-world environment A tip to help you understand or use this concept correctly Warning to ensure that you don't make a common mistake taken from our Lessons Reports! Information box include a definition or information item useful for that part of the topic Page reference within the PRINCE2 manual: Managing Successful Projects with PRINCE2 (2009) Page reference within this workbook: PRINCE2 Foundation workbook with exams Project Management Team role involved in the mentioned activity The process(es) wherein the mentioned activity takes place What management products are created or updated in the mentioned activity TN: Introduce self, course, each other, course materials, schedule Exam papers used in this workbook: PRINCE2:2009-ExamPaper-200-GBP29FExam SamplePaper1 PRINCE2:2009-ExamPaper-201-GBP29FExam SamplePaper2 4 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

7 PRINCE foundation workbook with exams Schedule Schedule Starting daily at 9:00am and 2 hours of homework each night, finishing daily at 17:00. Day 1 9:00 Introductions Homework (night before): Read and do exercises indicated as Homework for processes, organisation, business case 10:00 Principles, themes and processes 12:30 Lunch 13:30 Business Case 15:00 Organisation Day 2 Homework: Read and do exercises indicated as Homework for: quality, plans, risk, change, and progress 9:00 Quality and homework review 10:00 Plans 12:30 Lunch 13:30 Risk 15:00 Change 16:00 Progress and Foundation exam tips Day 3 9:00 Review exam #1 10:00 Review exam #2 Homework: Sample Foundation exams #1 and #2 and read forward about processes. 11:00 Review of themes using processes 12:00 Lunch 13:00 Continue review of themes using processes 15:00 Seated for foundation exam paper (75 questions, 60 minutes, closed book) 16:30 Practitioner exam tips (for those continuing to do the Practitioner exam) Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 5

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9 PRINCE foundation workbook with exams INTRODUCTION Introduction Projects are an essential part of every organisation, large or small. Projects in many organisations are delivered in a random, ad hoc way without consistency nor clear objectives. If, when you ask yourself 'why am I doing this project', you cannot clearly articulate the purpose and hoped for outcomes it is likely that your project has not been run using sound business practises. Some of these projects are successful, often driven by hero project managers who manage to make a project successful through determination or luck. PRINCE2 offers a structured method to deliver projects, it cannot guarantee success but can at least give a standard against which to measure all projects within a given organisation. As you attempt to embed PRINCE2 into your organisation consider that project management is an overhead and should be balanced against the cost of not using it. If you are running a small effort with a subject matter expert it is likely you will not require PRINCE2. If you are running a large effort, and interfacing with other people and organisations it may be appropriate to apply PRINCE2. Be careful not to do more management than project and weigh up the effort taken to create and maintain plans, registers, reporting etc. for the value that it brings to the project. PRINCE2 is not the same as business as usual nor programmes, in fact the business as usual interface to projects is often fraught with tension and challenges, the interface to programmes has its own challenges. The performance of a project can be measured in many ways, PRINCE2 proposes 6 performance measures (time, cost, scope, quality, risk and benefit) but other performance measures may be appropriate to your project. Some examples include carbon emissions, health outcomes, customer perception, essential systems/services, moral conduct. PRINCE2 is flexible to allow you to incorporate these into your own project, for that reason tailoring is a key principle of PRINCE2. The PRINCE2 method comprises of four integrated elements, these are the principles, themes, processes and tailoring of the method to match the project environment. The principles are constants to be found in every PRINCE2 project, and can be applied to each theme and process. Consider them to be the rules to live by for a project to use PRINCE2. The processes are the steps to be taken to run a project. The themes are the main aspects of project management that must be addressed in every project. While the themes and the processes can be scaled and tailored depending on the project, the principles remain constant. Every time PRINCE2 is used it should be tailored to the context of the project. Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 7

10 PRINCE foundation workbook with exams INTRODUCTION Why use PRINCE2? There are many reasons why implementing PRINCE2 as your structured method of undertaking projects is a good idea. Here are a few benefits: embodies established and proven best practice and governance for project management can be applied to any type of project is widely recognised and understood, providing a common vocabulary defines explicit responsibilities to understand each other's roles has a defined structure of accountability, delegation and authority has a product focus that clarifies what a project will deliver, by whom and for whom allows plans to be carefully designed to meet the needs of the different levels of management is based on management by exception, providing for the efficient use of management time ensures that participants focus on the viability of the project ensures stakeholders are represented in planning and decision making promotes learning improvement within organisations promotes consistency of work and ability to reuse project assets is an invaluable diagnostic tool facilitating assurance and assessment of project work. What is a project? A project is a temporary organisation that is created for the purpose of delivering one or more business products according to an agreed Business Case. Quoted from PRINCE2 Crown copyright 2009, reproduced under licence from OGC. Projects differ from business as usual and programmes Projects differ from business as usual in that they: instigate change are temporary involve cross-functional teams are unique have a degree of uncertainty Projects differ from Programmes in the following ways: Projects Programmes Driven by deliverables Driven by vision of end state 8 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

11 PRINCE foundation workbook with exams INTRODUCTION Finite No pre-defined path Bounded and scoped deliverables Delivery of product Benefits usually realised after project closure Shorter timescale Performance measures Changes to the business capability Coordinated outputs delivery, includes projects not directly delivering benefits Benefits realised during the programme and afterwards Longer timescale These are the aspects of project performance to be managed by the Project Manager. The performance measures defined in PRINCE2 are: Cost, the project must remain affordable as measured against the other performance measures Timescale, including when the project will start, finish and ultimately deliver benefits Quality, focused on products this is about ensuring those products are fit for purpose Scope, changes to plans, deliverables must be controlled to avoid affecting the other performance measures Risk, uncertainty or threats and opportunities to the project should be managed Benefits, defined in the Business Case this is the reason for the project, this is the ultimate goal of the project and is balanced against the other performance measures of time, cost and risk. These performance measures are used in the following ways: A risk is described in terms of what performance measures are expected to be affected Reports should include details of how performance of the project are progressing There are tolerances expected for each to enable management by exception Assessing changes should consider the effect of each change on the performance measures. Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 9

12 PRINCE foundation workbook with exams INTRODUCTION Management products Management products are those items created as part of managing the project. They are not necessarily documents, they are information sets that are used so that certain roles can take action and/or make decisions. There are three types of management products: Baseline management products are those that define aspects of the project and, once approved, are subject to change control, eg, Benefits Review Plan Records are dynamic management products that maintain information regarding project progress, eg, Daily Log Reports are management products providing a snapshot of the status of certain aspects of the project, eg, Checkpoint Reports. List of Management Products Featured management product Document type Example within this PRINCE2 Foundation Workbook Benefits Review Plan Baseline p 33 p 235 Business Case Baseline p 31 p 237 Checkpoint Report Report p 187 p 238 Communication Management Strategy Baseline p 52 p 239 Configuration Item Record Record p 162 p 240 Configuration Management Strategy Baseline p 160 p 241 Daily Log Record p 106 p 242 End Project Report Report p 197 p 243 End Stage Report Report p 194 p 244 Exception Report Report p 196 p 245 Highlight Report Report p 189 p 245 Issue Register Record p 164 p 246 Issue Report Report p 165 p 247 Lessons Log Record p 191 p 248 Lessons Report Report p 192 p 249 Plan Baseline p 104 p 250 Product Description Baseline p 83 p 251 Product Status Account Report p 163 p 253 Product Description Managing Successful Projects with PRINCE2 10 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

13 PRINCE foundation workbook with exams INTRODUCTION Featured management product Document type Example within this PRINCE2 Foundation Workbook Project Brief Baseline p 101 p 253 Project Initiation Documentation Baseline p 101 p 254 Project Product Description Baseline p 80 p 256 Quality Management Strategy Baseline p 78 p 257 Quality Register Record p 82 p 258 Risk Management Strategy Baseline p 133 p 259 Risk Register Record p 135 p 260 Work Package Baseline p 184 p 261 Principles Product Description Managing Successful Projects with PRINCE2 Continued business justification A requirement for a PRINCE2 project is that: there is a justifiable reason to start it, the justification remains valid throughout the life of the project and the justification is documented and approved. This documented justification is the Business Case. Learn from experience PRINCE2 project teams learn from previous experience: lessons are sought, recorded and acted upon throughout the life of the project. Defined roles and responsibilities A PRINCE2 project has defined and agreed roles and responsibilities within an organisation structure that engages the business, user and supplier stakeholder interests. Manage by stages A PRINCE2 project is planned, monitored and controlled on a stage-by-stage basis. Manage by exception A PRINCE2 project has defined tolerances for each project objective to establish limits of delegated authority. Focus on products A PRINCE2 project focuses on the definition and delivery of products, in particular their quality requirements. Tailor to suit the project environment PRINCE2 is tailored to suit the project s environment, size, complexity, importance, capability and risk. Refer to table 19.2 on p222 of the PRINCE2 manual for more information about scaling Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 11

14 PRINCE foundation workbook with exams INTRODUCTION Themes These are the seven main aspects of project management that must be addressed in every project. Like the processes, the themes should be tailored to each project. Business Case A project must remain justified to ensure continued investment; the Business Case management product should demonstrate that the project is desirable, achievable and viable. The outline Business Case is developed in the process Starting up a Project, and then refined in Initiating a Project. The Business Case is reviewed in Managing a Stage Boundary. The project's benefits are reviewed according to the Benefits Review Plan both during and after the project. Organisation The roles and responsibilities defined in the project make up the organisational structure, and are created in Starting up a Project. Role descriptions, not job descriptions, are defined to enable flexibility in the number of individuals required to fulfil a role. The roles include the Project Board as the decisionmaking authority tasked with directing the project and looking after the three interests of the project: Business (Executive), User (Senior User) and Supplier (Senior Supplier). Those on the Project Board have the option to delegate some of their responsibilities to other roles: Project Assurance to evaluate performance and products, and Change Authority to authorise requests for change or off-specifications. The role tasked with managing the project is the Project Manager, who must manage the project on a day-to-day basis using the Stage Plan as the baseline for progress control. The Team Managers deliver the products; this role may or may not have been appointed to one or more individuals, if not then the Team Manager role defaults to the Project Manager. The other role assigned by default to the Project Manager is Project Support which is an administration function to assist the project team. Quality The project is expected to deliver products which are in turn expected to meet certain levels of quality. There are two main aspects of quality management: planning and control. As part of planning, quality for the project is described in the customer's quality expectations and defined in the acceptance criteria. The quality standards that must be met are outlined in the quality management strategy, which is created in Initiating a Project, and the quality for each product is specified in the Product Descriptions. Controlling the quality of the products means implementing a quality method and allocating quality activities, tracked formally in the Quality Register. Quality Assurance is an independent check on behalf of corporate or programme management that the project is adhering to the appropriate standards. Plans There are three levels of plans, which match the three levels of management. These levels are project, stage and team. Project and Stage Plans are replaced with an Exception Plan when requested by the Project Board. The planning procedure follows steps that use product-based planning as a core aspect of constructing the plan. For this reason product descriptions, product breakdown structures and product flow diagrams need to be created, in addition to identifying activities, estimates and a schedule. Risk Risks include both opportunities and threats, with associated responses that affect either the impact or likelihood of the risk. The approach the project takes to risk, including prioritisation and severity scales, is documented in the Risk Management Strategy created in Initiating a Project. Any risk management procedure is expected to follow the steps a) identify the context and the risk, b) assess the impact and evaluate the risk, c) plan the response, d) implement it, all while e) communicating with relevant stakeholders. 12 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

15 PRINCE foundation workbook with exams INTRODUCTION Change Change management includes dealing with issues that could change baselines and configuration management of products. The procedures to implement change and configuration management are found in the Configuration Management Strategy. Each issue is dealt with, in the Issue Log or Daily Log, as either a request for change, off-specification or problem/concern. Progress Progress is about comparing what has happened with what was expected to happen. The Project Plan and Stage Plan are used as the baseline of what was expected to happen, and the current reports and registers are used to measure the current situation. Tolerances are used to implement management by exception so escalations are made when necessary, allowing work to be done without micromanagement. The levels of authority define who assesses what progress at what level. The levels are corporate or programme management, Project Board (who measure project progress using the Project Plan and Highlight Reports), Project Manager (who measures team progress using the Stage Plan and Checkpoint Reports) and Team Manager. Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 13

16 PRINCE foundation workbook with exams INTRODUCTION Themes crossword See page 286 for answer key Across 3. Where quality tolerances will be found 6. Report produced by the Team Manager for the Project Manager 8. The missing risk management step: identify, assess, plan, and communicate 13. The missing Business Case development procedure step: Develop,, confirm, verify 17. The document that outlines how to measure the project's benefits 18. The tolerance area found in Product Descriptions 20. The levels of plan are project, and team 21. The role made up of three roles 24. Opportunity risk response 14 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

17 PRINCE foundation workbook with exams INTRODUCTION 26. The process in which the Project Initiation Documentation is created 27. Planning procedure step 28. The two types of risk: threat and Down 1. Quality method that assesses that the finished products are complete and fit for purpose 2. Report produced by the Project Manager for the Project Board 4. The missing issue and change control procedure step: capture, examine, propose, and implement 5. The missing level: Delivering, Directing and 7. The missing role: Senior User, Senior Supplier and 9. Which role is responsible for specifying the Business Case benefits? 10. The Executive must justify the project by checking that it is Desirable, and viable 11. Who delivers the work? 12. Records that the product has been verified by a quality review 14. The configuration management procedure step that follows planning 15. The principle supported mainly by the plans theme 16. When a product is forecast not to meet a requirement 19. Where the details about the request for work is documented 22. Characteristic of Project Board members 23. Threat risk response 25. The other interest: Business, Supplier and Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 15

18 PRINCE foundation workbook with exams INTRODUCTION Processes Like a recipe for a cake, PRINCE2 can be broken down into ingredients and steps. The ingredients are represented by the themes and the steps are represented by processes. There are 7 processes in PRINCE2 and within each are activities to carry out the work for each process. Within each process the activity names are a good descriptor of the main work to be carried out and indicate in many cases the management product to be created or updated. Starting up a Project Corporate or programme management appoint the Executive, who in turn appoints the Project Manager. These two roles work together to create the Project Brief and Initiation Stage Plan. This work is done prior to the project starting, hence it is called pre project preparation. The customer's quality expectations, the Project Product Description and the acceptance criteria, all created in this process, should be sufficient to justify commitment of further resources by the appointed Project Board. Directing a Project This is the work performed by the Project Board, who direct the Project Manager in an ad hoc and formal manner. Their first activity is to authorise initiation, meaning that they commit resources to plan the project. Each Stage Plan is approved, as are any Exception Plans where tolerances are threatened and a new plan is requested. The project is authorised after initiation, based on the Business Case justifying the project as desirable, achievable and viable. The final activity by the Project Board is approving the closure of the project, performed after the last stage. Initiating a Project For large projects, the Initiating a Project process could use Managing Product Delivery and Controlling a Stage. Once the Project Board authorises initiation, the Project Manager creates the management strategies for the project: quality, risk, configuration and communication. These describe how corporate or programme management standards will be applied in the project, the formality of their application, tailoring, and relevant procedures to be followed. Using the strategies the project is planned, controls are specified, and the Business Case is refined. All management products are assembled to constitute the Project Initiation Documentation, which is required to justify the commitment of resources for the project and to provide the baseline for the Project Board to measure the project's progress. The next stage is planned using Managing a Stage Boundary and authorisation for both the project and stage is sought from the Project Board. 16 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

19 PRINCE foundation workbook with exams INTRODUCTION The process cog diagram Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 17

20 PRINCE foundation workbook with exams INTRODUCTION Controlling a Stage This is where the Project Manager focuses attention once the Project Board has given approval to commence the stage. This process is about three main things: dealing with issues and risks, reporting and reviewing, and driving the work performed by the Team Manager(s). Issues and risks are captured and analysed; if within tolerances then corrective action is taken, if not they are escalated. Monitoring the stage status ensures that any threats to tolerances are forecast rather than realised. Work to be performed by the Team Manager(s) is authorised, reviewed and received through Work Packages, which contain the required Product Descriptions. Managing Product Delivery This is the work performed by Team Managers, if there are Team Managers on the project. It involves accepting, executing and delivering a Work Package's products, and may not use PRINCE2. Although managed by the Project Manager, it might not be overseen by the Project Manager. Managing a Stage Boundary Each stage requires a Stage Plan to be planned by the Project Manager in Managing a Stage Boundary. Within a stage boundary the previous stage is reviewed and the next stage is planned. The Business Case and Project Plan are updated. If the Project or Stage Plan is in exception then the plan to be created is called an Exception Plan, replacing the stage or project in exception from the point of the exception to the original plan's completion. Closing a Project If the Project Board decides to prematurely close the project, or the Project Manager recognises the project is nearing its planned closure, then the Project Manager hands over any remaining products, the project is evaluated and it is recommended for closure. The Project Board activity following this process is authorise project closure. Process Role(s) responsible Directing Directing a Project Project Board Managing Starting up a Project Project Board / Project Manager / Corporate / Programme Management Initiating a Project Controlling a Stage Managing a Stage Boundary Closing a Project Project Manager Project Manager Project Manager Project Manager Delivering Managing Product Delivery Team Manager 18 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

21 PRINCE foundation workbook with exams INTRODUCTION PRINCE2 process chart Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 19

22 PRINCE foundation workbook with exams INTRODUCTION Process activities and management products The following table provides a summary of the 7 processes, their activities and some of the management products relevant to that process. Process Activities Management Products Starting up a Project Directing a Project Initiating a Project Appoint the Executive and the Project Manager Capture previous lessons Prepare the outline Business Case Design and appoint the project management team Select the project approach and assemble the Project Brief Plan the initiation stage Authorise initiation Authorise the project Authorise a Stage or Exception Plan Give ad hoc direction Authorise project closure Prepare the Risk Management Strategy Prepare the Quality Management Strategy Prepare the Configuration Management Strategy Prepare the Communication Strategy Set up the project controls Create the Project Plan Refine the Business Case Assemble the Project Initiation Documentation Lessons Log Outline Business Case Project Brief Project management team role descriptions Project Product Description Stage Plan Daily Log Benefits Review Plan Business Case Communication Management Strategy Configuration Item Record Configuration Management Strategy Issue Register Product Description(s) Project Initiation Documentation Project Plan Quality Management Strategy Quality Register Risk Management Strategy Managing a Stage Boundary Plan the next stage Update the Project Plan Risk Register Stage Plan Exception Plan Update the Business Case Configuration Item Record 20 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

23 PRINCE foundation workbook with exams INTRODUCTION Process Activities Management Products Report stage end Produce an Exception Plan Controlling a Stage Authorise a Work Package Review Work Package status Receive completed Work Packages Review stage status Report Highlights Capture and examine issues and risks Escalate issues and risks Take corrective action Managing Product Delivery Closing a Project Accept a Work Package Execute a Work Package Deliver a Work Package Prepare planned closure Prepare premature closure Hand over products Evaluate the project Recommend project closure Product Status Account End Stage Report Lessons Report Highlight Report Work Package Checkpoint Report Configuration Item Record Issue Report Product Description Quality Register Work Package Team Plan Benefits Review Plan End Project Report Lessons Report Follow-on action recommendations Product Status Account Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 21

24 PRINCE foundation workbook with exams INTRODUCTION Processes crossword See page 287 for answer key Across 1. If tolerances are threatened, which document is reviewed by the Project Board before authorising work? 3. What can trigger the Starting up a Project process? 6. How many activities are in the Managing Product Delivery process? 7. What is the missing strategy: Risk, Quality, Communication and 9. Which process follows Initiating a Project? 10. Which plan is updated in Closing a Project? 13. Which role is responsible for the Directing a Project process? 15. How many activities are in the Directing a Project process? 16. What optional management product is created in the accept a Work Package activity? 22 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

25 PRINCE foundation workbook with exams INTRODUCTION 18. What is the final deliverable for the Initiating a Project process? 19. What are captured, examined and escalated in Controlling a Stage? 23. Which plan is created in Starting up a Project? 25. The next Stage Plan or what other plan might be created in Managing a Stage Boundary? 26. What is refined in Initiating a Project? 27. Which role is responsible for the Initiating a Project process? 28. Which management product other than the Business Case is updated? Down 1. How many activities are in the Controlling a Stage process? 2. Which records are updated during execute a Work Package? 4. There are two closure scenarios in a project: planned and 5. In Managing Product Delivery, a Work Package is accepted, executed and 8. What is used to justify the project? 11. In which management product would you expect to find a request for work to the Team Manager? 12. In which activity would the Project Board expect to receive the Highlight Report? 14. A report that is created in Managing a Stage Boundary is 17. Which role is responsible for the Managing Product Delivery process? 20. How many activities are there in Starting up a Project? 21. After Starting up a Project comes the Directing a Project activity authorise 22. Which report is received from the Team Manager? 24. Which role can appoint the Project Manager? Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 23

26 PRINCE foundation workbook with exams INTRODUCTION Embedding and tailoring Embedding PRINCE2 is about the adoption of PRINCE2 across an organisation. Tailoring is performed by the project management team to adapt the method to the context of a specific project. It does not consist of omitting elements of PRINCE2. Tailoring is about adapting the method to external factors such as the scale of the project. Things to consider when: Embedding: process responsibilities, scaling rules, standards, training & development, tools and process assurance Tailoring: adapting the themes, incorporating specific themes, incorporating specific terms, revising product descriptions of management products. See Managing Successful Projects with PRINCE2, page 215, for more information about tailoring. 24 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

27 PRINCE foundation workbook with exams INTRODUCTION Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 25

28 PRINCE foundation workbook with exams INTRODUCTION Follow-up after your course After the training course we will you a questionnaire to help us improve our courses. We will ask your opinion on the trainer s ability to get PRINCE2 concepts across and on the course materials/content. In addition you will be supplied with a post course summary of PRINCE2 to present (if you wish) to your senior managers (or we can deliver an executive briefing on your behalf). The aim of this post course summary of PRINCE2 is to save you time by providing you with a ready-made summary that you can tailor to match your thoughts about your training course and PRINCE2 in general. The document outlines the basic PRINCE2 concepts and will hopefully remind you to think of ITpreneurs when you wish to train staff and implement PRINCE2! 26 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

29 PRINCE foundation workbook with exams Business Case Business Case Key concepts The project should There is continual approval of the project's Business Case by the Project Board by remain desirable, asking: Is the project: achievable and viable desirable is there a balance between meeting corporate objectives, benefit, cost and risk? (Executive) achievable can the project's products provide the benefits? (Senior User) viable can the project deliver the outputs? (Senior Supplier) The Senior User is The Senior User: responsible for specifying the benefits is held to account by corporate or programme management for realisation of benefits upon which the ensures that the desired outcomes of the project are specified Business Case is approved ensures that the products deliver the desired outcomes ensures that the expected benefits are realised provides actual versus forecast benefits statements. The development path In PRINCE2: is develop, maintain, verify and confirm. the Business Case is developed at the beginning of the project, the Business Case is maintained throughout the life of the project, the Business Case is verified by the Project Board at each key decision point and benefits are confirmed throughout the period that the benefits accrue. Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 27

30 PRINCE foundation workbook with exams Business Case Introduction What is a Business Case? The Business Case presents information used to judge whether the project is (and remains) desirable, achievable and viable, and therefore worthwhile investing in. Since these questions are ongoing, the Business Case is reviewed and updated regularly. Beware! Not just initial funding The Business Case should not only be used to gain initial funding for a project. It should be actively maintained throughout the life of the project and be continually updated with actual and forecast costs, risks and benefits. To ensure investment is allocated to the best projects, it is important to ascertain: the benefits to be gained (and when) the degree of risk the level of investment required. Projects should be evaluated on how well they will contribute to corporate objectives. Such analysis enables one project to be compared with another so that the organisation can choose to invest in the best set of projects. The purpose of the Business Case theme is to establish mechanisms to judge whether the project is (and remains) desirable, achievable and viable as a means to support decision-making in its (continued) investment. Quoted from PRINCE2 Crown copyright 2009, reproduced under licence from OGC. What is a benefit? A measurable improvement resulting from an outcome perceived as an advantage by one or more stakeholders. Quoted from PRINCE2 Crown copyright 2009, reproduced under licence from OGC. Homework: Identify the reason, expected benefit, major risks and level of investment in the following scenario you would include in the outline Business Case. Over the past 5 years, 3 fatalities have been recorded at the intersection (reason). Research shows that modifications to traffic flow could have prevented 2 fatalities in the last 5 years (reduction is benefit). Potentially there could be an increase in congestion (minor risk) causing unforeseen issues on surrounding roadways, endangering pedestrians (major risk) and light traffic such as bicycles. The cost for this type of modification is approximately $2 million, taking 6 months (investment) not counting planning permission (major risk)and town planning work. Recently a public consultation cautiously welcomed the modifications recommended with possible legal action from local businesses (major risk)about a decrease in business during the project and expected noise pollution (disbenefit). 28 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

31 PRINCE foundation workbook with exams Business Case Continued business justification It is a PRINCE2 principle that a project must have continued business justification. This business justification is the reason for the project and is documented in the Business Case. DAVe - three pillars of justifying a project The Project Board should be asking: Desirable: is there a net benefit, acceptable risk and a fit with strategy - Executive Is this a decent return on investment Achievable: can the products deliver the benefits? - Senior User Will it help me meet my KPIs/make my life easier? Viable: can the project deliver the products? - Senior Supplier Bob the builder: "Can we do it?" Tip: Ask DAVe! You can use the name "DAVe" to remember what the Project Board uses to ensure a project is justified not sure if a project is worthwhile? Just ask DAVe! Desirable, Achievable and Viable (executive). Are the following projects likely to pass a DAVe evaluation? If not is it because they are undesirable, not achievable or not viable? New software system to increase income by speeding up data entry: The project is on track to delivering on time, there are no new risks and existing risks have not changed, however we cannot deliver the acceptance criteria outcome '30% reduction in input time', which will have to be changed as a result. All the products that have been delivered so far are on time, with one that should be completed in just a little while. The next stage should be easier than this stage, and if the tolerances are carried over we will have plenty of money. This project is not achievable; as it cannot deliver an acceptance criteria outcome and therefore it is unlikely to deliver the benefits. Despite the project being viable (all products outputs can be delivered), this project is not achievable. New warehouse to store large shipment of ice cream: With little more than four weeks to go for the ice cream delivery date, the warehouse still needs its roof to be put on and the concrete poured. This was meant to have been done about eight weeks ago, but due to the weather (a recent heat wave) it has been delayed. The storage capacity will be sufficient for all the ice cream but there are doubts that the work scheduled for eight weeks ago can be carried out in the next four weeks. This project is not viable: it has not managed to deliver its outputs, and is unlikely to complete eight weeks of work in four weeks. Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 29

32 PRINCE foundation workbook with exams Business Case Management products Benefits Review Plan A Benefits Review Plan is used to define how and when the achievement of the project's benefits, expected by the Senior User, can be measured, both during and after the project. It is used to define any post-project benefits reviews. Benefits are mostly measured after the project, but can also be measured during the project. It is also possible for the forecast of benefits to change over time. The measurement of benefits during and after the project are kept separate, as post-project measurement is not under the Project Manager's control. Programme or corporate management may undertake postproject benefits reviews. Business Case See Managing Successful Projects with PRINCE2, Appendix A, page 235, for the Product Description of a Benefits Review Plan. See page 33 for an example of a Benefits Review Plan. The Business Case describes the business justification for the project based on expected benefits, costs and risks. See Managing Successful Projects using PRINCE2, Appendix A, page 237, for the Product Description of a Business Case. See page 31 for an example of a Business Case. 30 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

33 PRINCE foundation workbook with exams Business Case Business Case Highlights key points, includes important benefits and return on investment. EarthMovingRUS Executive summary Business Case The return on investment from the procurement of 2 new earth movers would be between 5% and 24%; completed in 6 months; would involve training new staff; financed by a loan. Defines reasons for the project and explains how it will enable the achievement of corporate strategies and objectives. Reasons Existing machinery has 95% capacity usage and each machine is 80% operational due to the recommended 500 hours between servicing and any required maintenance. We are aware of 3 tenders about to be released, including business that means we are two full time earth movers short. These tenders are expected to coincide with a housing boom in the next ten years, forecast by the government. These tenders will therefore ensure that EarthMoversRUS will maintain the corporate targets of a 10% per annum increase in business. Analysis and reasoned recommendation for: do nothing do the minimal do something. should be set for each benefit and for the aggregated benefit. Business options Benefits expressed in measurable Expected benefits terms. Benefits should be both qualitative and quantitative. They should be aligned to corporate or programme benefits. Tolerances Outcomes perceived as negative by one or more stakeholders. Timescale of the project will run and when benefits will be realised. Summary of: project costs ongoing operations and maintenance costs funding arrangements. Compares overall benefits & disbenefits to costs. Expected disbenefits Timescale Do something Purchase two new earth movers chosen option Hire earth movers as required from local hire firms Do minimum Subcontract the work to other earthmoving firms Do nothing Do not reply to large tenders to avoid demand, gain business from other areas or act as subcontractor with existing capacity Reply to tenders as expected and hope that capacity will be available at the time Capacity will be available to meet increasing business: The past five years have seen an 11.4% increase in business, each signed contract must yield an EBIT of 8%; the minimum acceptable increase in business is 10% pa as defined in the corporate strategy. Take advantage of the forecast boom: A recent government report says: due to increased immigration and movement from provincial towns to cities there is an expected housing shortage of 23,000 homes per month peaking in five years and decreasing to the historical average of 10,000 by year ten. The Operations Manager will incur a wage cost increase, by $150,000 due to requiring more operators and maintenance staff All equipment should be available for use within 6 months. Benefits will be realised over 10 years. Costs Cost Value (NZD) Investment appraisal 2 x earth movers $ 2,000,000 6 x trained staff (includes cost of staff and loss of work during training) Project management, planning and procurement activities $ 200,000 $ 100,000 Total $ 2,300,000 The return on investment over 10 years will range between 24% and 5% (best and worst case scenarios). Best case scenario: 95% capacity usage and 80% operational Worst case scenario: 65% capacity usage and 80% operational Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 31

34 PRINCE foundation workbook with exams Business Case Summary of key risks with likely impact and plans should they occur. EarthMovingRUS Major risks (threats and opportunities) Business Case Because there is competition in the market place there is a threat that our proposal to the tender might not be accepted, which would burden us with costs while reducing the business we deliver. Because the government report is a prediction of the future there is a threat that the report is wrong, which would mean that the expected increase in business may not eventuate. Because EarthMovingRUS has existing loans there is a threat that the loan required will not be looked on favourably by the bank, which could increase the financing costs for all outstanding loans. Because the new earth movers have larger scoop blades and can deliver the work in 50% less time there is an opportunity that customers may request we do more work on the basis that the budgets have already been allocated, which could mean greater than expected revenue immediately following the purchase. See Managing Successful Projects with PRINCE2, Appendix A, page 237, for the Product Description of a Benefits Review Plan. Within which section of the Business Case would you find the following? A rare and endangered bird is on the brink of extinction, poaching has reduced numbers significantly, the plight of these birds has been taken up by a nature conservation organisation, that is planning a project to save the species by reducing poaching. As a consequence of completion of the product "United Nations protected status application" there will be an increase in poaching. Expected dis-benefits, it is shown that the threat of scarcity means poaches work harder before the approvals Do nothing. Business options From 1200 mating pairs 5 years ago there are now just 200 mating pairs, prices have increased on the black market as scarcity has increased. Without protection this species does not get included under the various international agreements and treaties that could reduce the poaching and international trading. Reasons 32 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

35 PRINCE foundation workbook with exams Business Case Benefits Review Plan What benefits are to be measured. EarthMovingRUS Scope Benefits Review Plan This Benefits Review Plan is to assess if, after 6 months of operation, the earth movers are maintaining the capacity usage and operational percentage above the minimum expected of 65% and 80% respectively, and that the required 10% increase in business is being achieved. Who is accountable for benefits. Who is accountable The Operations Director is responsible for ensuring the benefits are met in this project. How and when to measure expected benefits. What resources are needed. Baseline measures from which improvements will be calculated. How performance of project's product will be reviewed. How to measure the benefits Resources required to fulfil the work Baseline measurements How performance measured Capacity will be available to meet increasing business: Check that demand in capacity of the equipment is being met by the availability. Take advantage of the forecast boom: Use market statistics to verify that the boom claimed in the report has transpired and that the new earth movers are being used for these residential jobs. One business analyst part time for two weeks or full time for one week, managed by the Operations Director. Use the financial reports published on the website, gain detailed analysis from the finance system. Analyse service and maintenance reports and logs to verify lengths of time spent in the workshop, correspond that with the billable time spent at clients' sites and use these figures to verify the capacity usage and operational percentages. See Managing Successful Projects with PRINCE2, Appendix A, page 235, for the Product Description of a Benefits Review Plan. Within which section of the Benefits Review Plan would you find the following? A rare and endangered bird is on the brink of extinction, poaching has reduced numbers significantly, the plight of these birds has been taken up by a nature conservation organisation, that is planning a project to save the species by reducing poaching. At project start, 20 birds were confiscated in 2009 at the airport, 200 mating pairs have been identified in the wild. Baseline measurements The Honourable Wayne Lawson, Minister for the Environment. Who is accountable Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 33

36 PRINCE foundation workbook with exams Business Case Business Case development path In PRINCE2, the Business Case is developed at the beginning of the project, maintained throughout the life of the project, formally verified by the Project Board at each key decision point and benefits are confirmed throughout the period that the benefits accrue. Develop the Business Case This is the means of getting the right information upon which decisions can be made. The development of the Business Case is performed by the Executive or someone nominated by the Executive, eg, the Project Manager or a business analyst. The Executive remains responsible for the drafting, completion and approval of the Business Case. When the Business Case comes from programme management it is refined rather than created. During Starting Up a Project the Business Case is in outline, during Initiating a Project it is refined. Tip: Impact analysis? The Business Case is at the centre of any impact assessment of risks, issues and changes by asking the question: how will this risk, issue or change affect the Business Case and the business objectives and benefits being sought? Develop Senior User Executive and Project Manager Starting up a Project Initiating a Project Directing a Project Project mandate Project Plan Risk Register See Managing Successful Projects with PRINCE2, page 23, figure 4.2 The development path for the Business Case. 34 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

37 PRINCE foundation workbook with exams Business Case Maintain the Business Case To ensure decision-making is well informed, the Business Case should be updated with actuals and current forecasts for costs and benefits. Benefits should be maintained by the Project Manager: when carrying out an impact assessment of any new or revised issues or risks at the end of each stage to determine what costs, timescales, risks and benefits need to be updated during the final stage as part of assessing the project s performance against its requirements and the likelihood that the outcomes will provide the expected benefits. Verify the Business Case The Business Case drives all decision-making by supplying information to verify that the business objectives and benefits being sought can be realised and therefore the project remains justified. It is the responsibility of the Executive to assure the project s stakeholders that the project remains desirable, achievable and viable at all times. The Executive should not rely on end stage assessments alone to verify the Business Case; Project Assurance should be used to assist this verification. The Business Case should be verified by the Project Board: at the end of the Starting up a Project process to authorise project initiation Maintain Verify at the end of the Initiating a Project process in order to authorise the project Project Manager with an Exception Plan to authorise the revised stage and project continuation at the end of each stage to authorise the next stage and project continuation. Controlling a Stage Managing a Stage Boundary Issue Register Risk Register Issue Report Stage Plan Project Plan Executive, Project Board & Project Assurance Directing a Project Stage Plan Project Plan The investment appraisal in the Business Case verifies to the Project Board that the Business Case justifies the authorisation or continuation of the project. During the following activities should the Business Case be developed, maintained, verified or confirmed? 1. Assessing a new risk that has now become an issue. Maintained 2. Receiving notification from the Project Manager that the project is in exception. Verified 3. Executing the Benefits Review Plan after the project. Confirmed 4. Creating the Project Initiation Documentation. Developed Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 35

38 PRINCE foundation workbook with exams Business Case Confirm benefits The Business Case is used to verify a project's desirability through the benefit, cost and risk exposure, whereas the Benefits Review Plan confirms the Business Case's benefits are realised by scheduling a series of reviews both during and after the project. In particular the Benefits Review Plan covers: who is accountable for the expected benefits how to measure achievement of expected benefits, and when they can be measured, eg, to measure popularity of a movie, measure gross sales at the box office what resources are needed to carry out the review work baseline measures from which the improvements will be calculated how performance of the project product will be reviewed. Efforts to ensure the successful execution of the Benefits Review Plan include performing project and post-project benefits reviews (possibly performed by corporate or programme management) to identify that the benefits have been achieved. Benefit reviews during and after the project Confirm Executive, Senior User, Project Manager, Corporate or Programme Management Managing a Stage Boundary After the project Benefits Review Plan Stage Plan Project Plan Although the Executive is usually responsible for ensuring benefits reviews are planned and executed, this may not always be the case. For projects in a programme environment, the project s Benefits Review Plan may be produced and executed by the programme. A centre of excellence or some form of performance monitoring unit may measure benefits. Post-project measurement activity responsibilities transfer to corporate or programme management after the project closes. During the project, realised benefits should be reported by the Project Manager in the End Stage Report. Further benefits should be forecast as part of the Managing a Stage Boundary process. Reviews after the project involve corporate or programme management asking the Senior User to provide evidence of realised benefits. Benefits reviews that have occurred after product handover will also review the operational performance of the project s products and identify any risks that went unidentified that may provide useful lessons for other projects. Provide at least two ways to measure (confirm) the benefits from the following benefit statements: 1. Reduced costs of six department stores. per store (average), costs per sq m. or per $ earned 2. Increased profitability in a rental management company. per property yield, rental rates, cost savings 3. Improved patient well-being in a hospital. revisit, no. of days per visit, complaints 4. Customers will feel more positive towards our brand. Buy again (repeat), referrals, survey of 5 questions 36 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

39 PRINCE foundation workbook with exams Business Case Benefits Review Plan The Benefits Review Plan, if not produced and executed by programme management, is: created by the Project Manager in the initiation stage submitted to the Project Board (which may refer to corporate or programme management) when seeking project authorisation updated towards the end of each stage with actual benefits achieved and to include remaining reviews. Tip: Keep it separate As the Benefits Review Plan may be managed by the project, corporate or programme management, PRINCE2 recommends that it is kept separate from the Project Plan and Stage Plans. Business Case development within the processes The outline Business Case is developed in Starting up a Project and further developed to become the refined Business Case by the end of Initiating a Project. After it has been approved in the Directing a Project activity authorise the project, all future modifications are considered to be part of maintaining the Business Case. The Business Case is also maintained when reviewing issues and risks and when the Project Manager updates it with actual and forecast costs and benefits. Every time the Business Case undergoes maintenance it should be verified to ensure it remains valid; this is where the desirability of the project is assessed. The Business Case is confirmed with the execution of the Benefits Review Plan, which usually occurs after the project has been closed. Homework: In the following process activities is the Business Case being developed, maintained, verified or are benefits being confirmed? 1. Select the project approach and assemble the Project Brief Developed 2. Authorise the project Verified 3. Authorise project closure Verified 4. Update the Business Case Maintained 5. Hand over products Verified 6. Review stage status Confirmed When should the following project's benefits be confirmed - during the project, after the project, or both during and after the project? a. A programme has appointed Benefit Managers who create the Business Case for each project and then define the Benefit Review Plans for each. These are managed centrally. The project is due to develop a new customer management system; the project does not cover the roll-out of the system to the business. After b. There is a two year project to implement PRINCE2 in an organisation that manages the customer service enquiries for large banks. The implementation will be delivered on a department by department basis, the last round of training and mentoring occurring in the last stage. It is hoped that the project will result in improved customer satisfaction and more measurable results from projects. During and after c. The refurbishment of a small office block will be undertaken to improve profitability and rental yield. It is not expected to be completed for 6 months and will remain vacant until that time. After d. Training in anger management will be delivered to 300 staff to deal with a higher level of violent workplace incidents over the past 3 years. The training will be in small groups and focused on a regional office basis. During and after Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 37

40 PRINCE foundation workbook with exams Business Case Business Case contents The reasons in the Business Case explain why the project is required. The business options provide sufficient information to judge which option presents value for money and which is more desirable, achievable and viable. Expected benefits of the chosen option are aligned with objectives and strategy, mapped to outputs, quantified, expressed in tangible ways and assigned to individuals. Expected disbenefits and the timescale for the chosen option are included. Costs should be derived from the Project Plan and the investment appraisal calculated over the useful life of the project's products. Finally, major risks should be identified and analysed. 38 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

41 PRINCE foundation workbook with exams Business Case Business options When considering business options consider the following three starting points: Do nothing This is the baseline starting point to evaluate all other options (may have negative net effect). Do the minimum This is the amount of resources to commit to achieve a result that is satisfactory (minimal benefits). Do something more This is more than just the minimum and is determined by the benefits that are possible and achievable. Tip: Keep an eye on the business options The Business Case for the chosen business option should be continually assessed for desirability, achievability and viability as any changes and/or new risks may make one of the other options more justifiable. Three starting points for developing business options The resource commitment line in the figure is meant to show (roughly) that few net benefits are gained, doing 'something more' will usually lead to more net benefit: this really is the minimum. The usefulness of minimum is not suffering from the 'do nothing' option Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 39

42 PRINCE foundation workbook with exams Business Case Expected benefits Whether benefits are financial or non-financial, each benefit claimed should include: the indicators (outcomes) that will be used to confirm realisation the baseline values of the indicators details of how to measure the indicators estimated dates for when the indicators should be measured alignment to corporate objectives and strategy mapping from the project's outputs and outcomes to the benefits (and therefore indicators) measurements to confirm the realisation of benefits (with tolerance) assignment of the benefits to specific individuals (individuals in the Senior User role are responsible for the set of benefits within their respective areas). The project should not include any products that do not directly or indirectly enable the benefits that are being sought. Once the benefits are defined, the activities to establish and collect the measures should be defined in the Benefits Review Plan. Tip: products -> outcomes -> measurements -> benefits Mapping products to outcomes and subsequently to benefits aids decision-making in the planning and control of the project. Such mapping enables decisions to be made based on the impact of the realisation of the expected benefits, ie, the justification for undertaking the project. Tip: Tangible benefits Wherever possible, benefits should be expressed in tangible ways. The Senior User or Executive may define many benefits as intangible. It is worth making the effort to think carefully about intangible benefits to see if they can be expressed in more tangible ways. Outputs, outcomes and benefits An output is any of the project s specialist products (whether tangible or intangible). An outcome is the result of the change derived from using the outputs. A benefit is the measurable improvement resulting from an outcome that is perceived as an advantage by one or more stakeholders. What is an outcome? The result of change, normally affecting realworld behaviour and/or circumstances. What is an output? A specialist product handed over to a user(s) Quoted from PRINCE2 Crown copyright 2009, reproduced under licence from OGC. The link from the project s outputs to outcomes and benefits should be clearly identified and made visible to those involved, otherwise the original purpose of the project can get lost. 40 Copyright 2011, ITpreneurs Nederland B.V. All rights reserved.

43 PRINCE foundation workbook with exams Business Case An output results in an outcome which leads to a benefit Beware! There is plenty in a name Projects are often named after the output. This leads to the wrong impression that the output is the sole purpose of the project's existence. In fact the benefits should be the main focus. You may wish to consider naming your projects after the main benefit of the project rather than an output or outcome. Beware! Results, results, results... Often people ask to see results, but be sure to find out what this means: outputs, outcomes or benefits. A supplier's view of a result is a product that the customer "signs off" whereas the customer's result might be the benefits derived from the output's outcome. Which of the following are outputs, outcomes or benefits? Marketing project Attracted plenty of media and public attention Outcome A marketing campaign Output Surge in sales for the product Benefit New product development project New product Output Improved product range Outcome Additional sales and an increase in profitability Benefit Education project Training course Output 12 accredited fishers Outcome Fishers with improved methods of catching to avoid those fish that help clean the lakes Outcome Increases in biodiversity and increased fish supplies Benefit Copyright 2011, ITpreneurs Nederland B.V. All rights reserved. 41