1. Initiating
Process Group
Project Management
Processes PMBOK 5th edition
Hossam Maghrabi,PMP

2. Initiating Process Group
Project Boundaries

3. Initiating Process Group
 The key purposes of this Process Group is define a new project or a new phase of
an existing project by obtaining authorization to start the project or phase through
the following steps,
1. Select a project to be initiated (Outside Project Boundaries).
2. The initial scope is defined and initial financial resources are committed.
3. Internal and external stakeholders who will interact and influence the overall. outcome
of the project are identified.
4. If not already assigned, the project manager will be selected.
5. This information is captured in the project charter and stakeholder register.
6. When the project charter is approved, the project becomes officially authorized.
– Initiating processes may be performed at the organizational, program, or portfolio level
and therefore, would be outside of the project’s level of control.

4. Initiating Process Group
Project Selection Methods
Current situation
The organization have an internal business needs or external influences.
So the organization have to create a needs analysis, feasibility study,
business case or description of the situation to take a go/no-go
decision regarding the project initiation.
 Selection Methods (Profitability Measures)
– Comparative Approach (Decision models) such as:
 B/C Ratio,
 PV, NPV,IRR and
 payback period.
– Mathematical Approach (Calculation methods) such as:
 Linear programming
 Non linear programming

5. Project Selection Methods
Comparative Approach
 Benefit Cost Ratio (BCR)
The ratio of financial benefits to costs to produce the
product of the project.
 BCR = (PV of Revenues)/(PV of Costs)
 BCR > 1 means the revenues (benefits) outweigh the
costs.
 BCR < 1 means the revenues (benefits) are less than the
costs.
The higher the BCR the better.

6. Project Selection Methods
Comparative Approach
 Cash Flow Analysis Techniques,
– Discounted Cash flows: The concept here is money in
the future is worth less than money received today.
– Present Value is based on the “time value of money”, it
is a way to take time out of the equation and evaluate
how much a project is worth right now.
– Example : If a project is expected to produce 3 annual payments of
$100,000 then PV (how much those payments are worth right now) is
going to be less then 300,000

7. Project Selection Methods
Comparative Approach
 Present Value Calculation,
– You don’t need to remember the formula, but you need to understand the
concept.
 Present Value = Future Value / (1+i)ⁿ
i = Interest Rate
n = Number of Periods
– The higher the Present Value, the better.
– e.g. Present value of receiving $300,000 in three years considering an interest
rate of 10%
PV = 300,000 / (1+0.1)³ = $230,769,23

8. Project Selection Methods
Comparative Approach
 Internal Rate of Return,
– It’s a finance term used to express the project returns as an
interest rate
– If you “invest” in the project, what is your equivalent rate (IRR) ?
Conceptually an organization has a choice whether to invest in a project, or
put that same money in a bank account.
– Obviously, the higher the IRR, the better.
– Again, you will not be asked to calculate this measure, but you need
to understand the concept.

9. Project Selection Methods
Comparative Approach
 Payback Period,
– Length of time it takes to recoup funds invested in the project.
– This method compares the initial investment to the cash inflows expected over
the life of the product, service or results
– Obviously with all other things being equal, shorter payback periods are
generally better for an organization.

10. Project Selection Methods
Comparative Approach
 Opportunity Cost,
– The cost of selecting a project over another project. i.e. the lost
opportunity cost.
– Opportunity cost asks: What is the cost of the other
opportunities we missed by investing our money in this
project?
– Example
– Project A – NPV : $100,000
– Project B – NPV : $250,000
– Opportunity Cost of selecting Project B is $ 100,000

11. Project Selection Methods
Comparative Approach
 (Example),
– Make one value in each column that shows the most
desirable value , given the information provided:

12. Project Selection Methods
Mathematical Approach
 It provides a way to calculate the value of the projects
 also called constraint optimization methods such as:
– Linear programming
– Non linear programming
 For the exam all you need to understand about mathematical
models is that they use linear, dynamic, integer, multi-
objective programming in the form of algorithms to solve a
particular problem

13. Initiating Process Group
& Knowledge Areas

14. Initiating Process Group
& Integration Management Knowledge Area
 Integration Management Knowledge Area
 Project Integration Management includes the processes and activities to
identify, define, combine, unify, and coordinate the various processes and
project management activities within the Project Management Process
Groups.
 It includes making choices about resource allocation, making trade-offs among
competing objectives and alternatives, and managing the interdependencies
among the project management Knowledge Areas.
 It’s necessary in situations where individual processes interact.
 For example,
 A cost estimate needed for a contingency plan involves integrating the processes in the
Project Cost, Time, and Risk Management Knowledge Areas.
 The integrative nature of projects and project management can be understood by
thinking of other types of activities performed while completing a project.
 For Example Develop, review, analyze, and understand the scope. This includes the project and
product requirements, criteria, assumptions, constraints, and other influences related to a
project, and how each will be managed or addressed within the project;

15. Initiating Process Group
Develop Project Charter
Current situation
 Project statement of work, Business case or Agreements have been
developed outside the project.
 An entity external to the project such as a sponsor, program or project
management office (PMO) staff person, or a portfolio governing body
chairperson or authorized representative decided to go with the new
project and will sponsor it.
 The organization need to validates the alignment of the project with the
strategy and ongoing work of the organization. Also, it must be have
 A well-defined project and project boundaries,
 A way for senior management to formally accept and commit to the project,
 A formal record of the project.

16. Develop Project Charter
Data Flow Diagram
It is recommended that the
project manager participate
in the development of the
project charter to obtain a
foundational understanding
of the project requirements.
This understanding will better
allow for efficient resources
allocation to project
activities.

17. Develop Project Charter: Inputs
1. Project Statement of Work(SOW)
Is a narrative description of products, services, or results to be delivered by a
roject.
 The SOW references the following,
 Business need, based on a market demand, technological advance, legal requirement,
government regulation, or environmental consideration. (Typically, the business need
and the cost-benefit analysis are contained in the business case to justify the project.)
 Product scope description. It also document the relationship between the products,
services, or results being created and the business need that the project will address.
 Strategic plan. The strategic plan documents the organization’s strategic vision, goals,
and objectives and may contain a high-level mission statement (All projects should be
aligned with their organization’s strategic plan).
 For internal projects, the project initiator or sponsor provides SOW based on business needs,
product, or service requirements. For external projects, the SOW be received from the customer as
part of a bid document, (e.g., a request for proposal, request for information, or request for bid) or
as part of a contract.

18. Develop Project Charter: Inputs
2. Business Case
 It used for decision making by managers or executives above the project level to
determine whether or not the project is worth the required investment.
 The project manager is responsible for ensuring that the project effectively and
efficiently meets the goals of the organization and those requirements of a broad
set of stakeholders, as defined in the business case.
 Periodic review of the business case by the sponsoring organization confirm that
the project is still aligned with the business case.
3. Agreements are used to define initial intentions for a project.
 Agreements may take the form of contracts, memorandums of understanding
(MOUs), service level agreements (SLA), letter of agreements, letters of intent,
verbal agreements, email, or other written agreements.
4. Enterprise Environmental Factors (EEF).
5. Organizational Process Assets (OPA).

19. Develop Project Charter:
Tools & Techniques (T&T)
1. Expert Judgment, To assess the inputs used to develop the
project charter
2. Facilitation Techniques, Like Brainstorming, conflict resolution,
problem solving, and meeting management to used by facilitators to
help teams and individuals accomplish project activities.
General Notes:
1. A project manager is identified and assigned as early in the project as is
feasible, preferably while the project charter is being developed and always
prior to the start of planning.
2. The two techniques above have broad application within project
management processes.

20. Develop Project Charter: Outputs
Project Charter
 It is the document issued by the project initiator or sponsor.
 It formally authorizes the existence of a project.
 It provides the project manager with the authority to apply
organizational resources to project activities.
Notes,
 A project charter establish internal agreements within an
organization to assure proper delivery under the contract.
 A project charter is not considered to be a contract, because there
is no consideration or money promised or exchanged in its
creation.

21. Develop Project Charter: Outputs
Project Charter documents the following project’s information ,
– Project purpose or justification(business needs),
– Measurable project objectives and related success criteria,
– High-level requirements,
– Assumptions and constraints,
– High-level project description and boundaries,
– High-level risks,
– Summary milestone schedule,
– Summary budget,
– Stakeholder list,
– Project approval requirements
 (i.e., what constitutes project success, who decides the project is successful, and who signs off
on the project),
– Assigned project manager, responsibility, and authority level,
– Name and authority of the sponsor or other person(s) authorizing the project charter.

22. Initiating Process Group
& Stakeholder Management Knowledge Area
 Project stakeholders are individuals, groups, or organizations who may affect,
be affected by, or perceive themselves to be affected by a decision, activity, or
outcome of a project.
 Project Stakeholder Management includes the processes required to
1. Identify the people, groups, or organizations that could impact or be impacted by the
project,
2. Analyze stakeholder expectations and their impact on the project,
3. Develop appropriate management strategies for effectively engaging stakeholders in
project decisions and execution.

23. Initiating Process Group
Identify Stakeholders
Current situation
 Project charter have been developed, the project aurhorized and the
project manager identfied.
 Every project will have stakeholders who are impacted by or can impact
the project in a positive or negative way. While some stakeholders may
have a limited ability to influence the project, others may have
significant influence on the project and its expected outcomes.
 The ability of the project manager to correctly identify and manage
these stakeholders in an appropriate manner can mean the difference
between success and failure.
General Notes:
1. Stakeholder satisfaction should be managed as a key project objective.

24. Identify Stakeholders
It is critical for project success to
identify the stakeholders early in
the project or phase and to
analyze their levels of interest,
their individual expectations, as
well as their importance and
influence.
The initial assessment of the
stakeholders should be reviewed
and updated regularly.

25. Identify Stakeholders: Inputs
1. Project Charter, It provide information about internal and external
parties related with the project and affected by the result or the
execution of the project
2. Procurement Documents, If a project is the result of a procurement
activity or is based on an established contract, the parties in that
contract are key project stakeholders.
3. Enterprise Environmental Factors (EEF).
4. Organizational Process Assets (OPA).
The buyer structures procurement documents to facilitate an accurate
and complete response from each prospective seller and to facilitate
easy evaluation of the responses.

26. 1. Stakeholder Analysis
1. Identify all potential project stakeholders and
relevant information
2. Analyze the potential impact or support each
stakeholder could generate, and classify them
using one of the following models,
 Power/interest grid, (Authority & Concern)
 Power/influence, (Authority & their active
involvement )
 Influence/impact, (Involvement & ability to effect
changes)
 Salience model, (power, urgency &
legitimacy)
3. Prioritize the stakeholders to ensure the efficient
use of effort to communicate and manage their
expectations.
4. Assess how key stakeholders are likely to react
or respond in various situations.
Identify Stakeholders:
Tools & Techniques (T&T)

27. Identify Stakeholders:
Tools & Techniques (T&T)
2. Expert Judgment
 Expert judgment can be obtained through individual consultations (one-on-one
meetings, interviews, etc.) or through a panel format (focus groups, surveys,
etc.). Example of expert,
 Identified key stakeholders;
 Project managers who have worked on projects in the same area (directly or through
lessons learned);
 Subject matter experts (SMEs) in the business or project area;
 Industry groups and consultants; and
3. Meetings, Profile analysis meetings are project meetings designed to develop
an understanding of major project stakeholders, and they can be used to exchange
and analyze information about roles, interests, knowledge, and the overall position of
each stakeholder facing the project.

28. Identify Stakeholders: Outputs
1. Stakeholder Register,
The stakeholder register should be consulted and updated on a regular basis, as
stakeholders may change—or new ones identified—throughout the life cycle of the project.