Project Initiation Document

At the beginning of a project, the project manager should produce a document (PID) that

The PID should also include the following:

We shall look at each in turn

Project definition

What the project includes

What the project does not include

How everyone will know when the project is completed, e.g.

Decision making

Question: How do we decide whether to proceed with a project?



Question: If there are several ways of running a project, how do we decide which option to choose?



Financial appraisal

Non-financial benefits


Project justification

(Also known as financial appraisal)

Payback period

  • Choose the approach that recovers the initial outlay most quickly
  • Cash flow

  • Choose the approach that gives the most benefit (in the long run)
  • Discounted cash flow

  • Choose the approach that gives the most benefit
  • (but discount benefits in the future, as they aren't as valuable as current benefits)

  • Discounted cash flow

    Add up all the costs and benefits in each year for the duration of the system's likely use (eg. 5 or 7 years)

    Apply a "discount factor" to each year's cost or benefit

    Add up the discounted costs and benefits

    Choose the option with the greatest benefit

    Discounted cash flow

    Cost Benefit Analysis (000's)

    Year 0 1 2 3 4
    Project costs -1200        
    Maintenance   -50 -50 -50 -50
    Savings   450 450 450 450
    Cash Flow -1200 400 400 400 400
    Discount factor 6%
    Discount rate 1 .94 .88 .83 .79
    Discounted Cash Flow -1200 377 355 335 316
    Net Present Value 186

    If this ^ is positive, project will save money

    Victoria University of Wellington, NZ have some detailed notes on discounted cash flows.

    Follow these for discussions about investment appraisal:

    Project time-table

    1. Gantt chart
    2. Gantt chart

    3. Stage plan for second stage
    4. Task list for rest of project, with dates where possible

    Organisation and responsibilities

    Organisation of project



    Risk management

    Risk is a function of

    Risk management tackles these by


    Identify the risks

    Devise a list of possible precautions

    Select from list those that you consider cost effective

    "Danger makes men devout" W.Baldwin (in "Beware the cat"), 1584

    Link to lecture notes specifically on Risk Management

    Quality control

    This will be discussed in more detail in other notes, however...

    It is important to state at the beginning of the project how you will ensure the products will be assessed

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