Project Initiation Phase: How to Start a Project?

How to Start a Project?

The business might drive the need for a project; customers might demand changes to products, or legal requirements might create the need for a new project. According to the PMBOK® Guide, projects result from one of seven needs or demands. Once those needs and demands are identified, the next logical step might include performing a feasibility study to determine the project’s viability.

Needs and Demands for Project Initiation

Before understanding how to start a project, it is important to know the needs and demands required for project initiation. Needs and demands represent opportunities, business requirements, or problems that need to be solved. Management must decide how to respond to these needs and demands, which will more often than not initiate new projects. According to the PMBOK® Guide, projects come about as a result of one of the following seven needs or demands:

1. Market Demand.
2. Strategic Opportunity/Business Need.
3. Customer Request.
4. Technological Advance.
5. Legal Requirement.
6. Ecological Impact.
7. Social Need.

All these needs and demands represent opportunities, business requirements, or problems that must be solved. Management must decide how to respond to these needs and demands, which will more often than not new project initiation.

1. Market Demand

The demands of the marketplace can drive the need for a project. For example, the project initiation phase in a bank offers customers the ability to apply for mortgage loans over the Internet because of a drop in interest rates and an increase in demand for refinancing and new home loans.

2. Strategic Opportunity/Business Need

An organization may respond to an internal need that could eventually affect the bottom line. For example, this may include addressing company growth or even the need to downsize.

3. Customer Request

Customer requests run the gamut. Generally speaking, most companies have customers, and their requests can drive new projects. Customers can be internal or external to the organization.

4. Technological Advance

New technology often requires companies to revamp their products to take advantage of the latest technology. The introduction of satellite communications is an example of a technological advance. Because of this introduction, cell phone manufacturers revamped their products to take advantage of this new technology.

5. Legal Requirement

Both private industry and government agencies generate new projects as a result of laws passed during every legislative season.

6. Ecological Impacts

Many organizations today are undergoing a “greening” effort to reduce energy consumption, save fuel, reduce their carbon footprint, and so on. These are examples of ecological impacts that result in projects.

7. Social Need

The last need is a result of social demands. For example, manufacturing or processing plants that voluntarily remove their waste products from water prior to putting the water back into a local river or stream to prevent contamination.

Important Considerations When You Start a Project?

Some organizations require that a feasibility study take place prior to making a final decision about starting a project. Feasibility studies may be conducted as separate projects, subprojects, or as the first project initiation phase.

Importance of Feasibility Study in Project Initiation Phase

Feasibility studies might be conducted as separate projects, as subprojects, or as the project initiation phase. When you don’t know the outcome of the study, it’s best to treat it as a separate project. The group of people conducting the feasibility study should not be the same people who will work on the project. Project team members might have built-in biases toward the project and will tend to influence the feasibility outcome toward those biases.

Project Selection Methods in Project Initiation

There are a variety of selection methods an organization may choose to utilize. Selection methods help organizations decide among alternative projects and determine the tangible benefits to the company of choosing or not choosing a project. Project selection methods are also used to evaluate and choose between alternative ways to implement the project. It primarily depends on the project management organizational structure or the upper management if PMO is active.

There are generally two categories of selection methods:

• Mathematical Models (also known as constrained optimization methods).
• Benefit Measurement Methods (also known as decision models).

Decision models examine different criteria used in making decisions regarding project selection, while calculation methods provide a way to calculate the value of the project, which is then used in project selection decision making.

1. Mathematical Models

Mathematical models, also known as constrained optimization methods, use linear, dynamic, integer, nonlinear, and/or multi-objective programming in the form of algorithms—or, in other words, a specific set of steps to solve a particular problem. These are complicated mathematical formulas and algorithms that are beyond the scope of this course and require an engineering, statistical, or mathematical background to understand fully. Organizations considering undertaking projects of enormous complexity might use mathematical modeling techniques to make decisions regarding these projects. The vast majority of project selection techniques will use the benefit measurement methods to make project selection decisions.

2. Benefit Measurement Methods

Benefit measurement methods employ various analysis and comparative approaches to make project decisions. These methods in the project initiation phase include comparative approaches such as cost-benefit analysis, scoring models, and benefit contribution methods that include various cash flow techniques and economic models.

Tools for Project Initiation

1. Cost-Benefit Analysis

One common benefit measurement method is the cost-benefit analysis. The name of this method implies what it does—it compares the cost to produce the product, service, or result of the project to the benefit (usually financial in the form of savings or revenue generation) that the organization will receive as a result of executing the project. Obviously, a sound project choice is one where the costs to implement or produce the product of the project are less than the financial benefits. How much less is the organization’s decision? Some companies are comfortable with a small margin, while others are comfortable with a much larger margin between the two figures.

2. Scoring Models (Weighted Scoring Model)

Another project selection technique in the benefits measurement category is a scoring model or weighted scoring model. Many organizations use weighted scoring models not only to choose between projects but also as a method to choose between competing bids on outsourced projects.

Weighted scoring models are quite simple. The project selection committee decides on the criteria that will be used on the scoring model—for example, profit potential, marketability of the product or service, ability of the company to quickly and easily produce the product or service, and so on. Each of these criteria is assigned a weight depending on its importance to the project committee. More important criteria should carry a higher weight than less important criteria.

• Then each project is rated on a scale from 1 to 5 (or some such assignment), with the higher number being the more desirable outcome to the company and the lower number having the opposite effect.
• This rating is then multiplied by the weight of the criteria factor and added to other weighted criteria scores for a total weighted score.
• The project with the highest overall weighted score is the best choice.

7 Key Steps in the Project Initiation Phase

Here are the seven steps to be followed during the project management initiation phase:

Step-1. Define the Project

• Identify the Project Objective and Scope.
• Conduct a Feasibility Study.
• Define Project Deliverables and Success Criteria.

Step-2. Assemble the Project Team

• Identify Key Stakeholders.
• Assign Roles and Responsibilities.
• Establish Communication Channels.

Step-3. Develop the Project Charter

• Document Project Objectives, Project Scope, and Constraints.
• Define Project Timeline and Budget.
• Obtain Approval from Stakeholders.

Step-4. Conduct Stakeholder Analysis

• Identify and Prioritize Project Stakeholders.
• Assess Their Interests, Needs, and Influence.
• Develop Strategies for Managing Stakeholder Expectations.

Step-5. Create the Project Plan

• Develop a Work Breakdown Structure (WBS).
• Identify Project Tasks, Dependencies, and Milestones.
• Estimate Resource Requirements and Create a Project Schedule.

Step-6. Perform Risk Assessment

• Identify Potential Risks and Uncertainties.
• Assess Impact and Likelihood.
• Develop a Risk Response Plan.

Step-7. Obtain Project Approval

• Present the Project Plan to Stakeholders.
• Address Any Concerns or Questions.
• Obtain Formal Approval to Proceed.

Outputs of the Project Initiation Phase

Below are the outputs of the Project Initiation phase, which serve as inputs for the subsequent project stages.

1. Project Charter.
2. Stakeholder Register.
3. Preliminary Project Scope Statement.
4. Project Management Plan.
5. Feasibility Study.

Example of Project Initiation

Consider the project initiation of a renewable energy project. Here are the key steps for starting the project:

1. Identifying the need for sustainable power sources.
2. Develop project charter.
3. Conduct an initial stakeholder meeting.
4. Consult with experts for technical and environmental knowledge.
5. Draft a more detailed project plan, which should include: budget estimates, resource allocation, and milestones.
6. Submit the project plan for approval.

Conclusion: Initiating for Success

Having a strong project initiation phase is critical to project success, and it elevates capabilities and responsibilite of project manager.

• The Project Management PhD can provide research expertise to manage complex project challenges.
• Professionals seeking flexibility, a Diploma of Project Management online offers skills and knowledge that can be immediately applied in the workplace.
• PMP course equips project managers with the methodologies and best practices.
• Project managers committed to ongoing project management education, position themselves at the forefront of the field.