strategic Appli in project management
- Access UC’s library and conduct a search for the journal with DOI: 10.1109/52.765782, and titled “Critical success factors in software projects”.
Out of the sixteen (16) chapters in your text, select any FIVE (5) components (or chapters) of the text that are applicable to the journal, hence relating to the critical success factors identified in the journal. Critique the journal based on those FIVE (5) components, using your text and any other resource as a reference.
For each selected component, specify whether you agree with the author or not, and provide your rationale accordingly.
The assignment should be within 950 – 1000 words, and in APA format (including Times New Roman with font size 12 and double spaced, in-text citation, reference list, etc), and attached as a WORD file].
Chapter One
Modern Project Management
1–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
1–2
An Overview of Project Management 7th ed
.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-2
Learning Objectives
Understand why project management is crucial in today’s world
Distinguish a project from routine operations
Identify the different stages of project life cycle
Understand the importance of projects in implementing organization strategy
Understand that managing projects involves balancing the technical and sociocultural dimensions of the project
1–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
1.1 What Is a Project?
1.2 Current Drivers of Project Management
1.3 Project Governance
1.4 Project Management Today—A Socio-
Technical Approach
1–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
1–5
What Is a Project?
Project Defined (according to PMI)
A temporary endeavor undertaken to create a unique product, service, or result
Major Characteristics of a Project
Has an established objective
Has a defined life span with a beginning and an end
Requires across-the-organizational participation
Involves doing something never been done before
Has specific time, cost, and performance requirements
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-2
1–6
Program versus Project
Program Defined
A group of related projects designed to accomplish a common goal over an extended period of time
Program Management
A process of managing a group of ongoing, interdependent, related projects in a coordinated way to achieve strategic objectives
Examples:
Project: completion of a required course
in project management.
Program: completion of all courses required
for a business major.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-6
Comparison of Routine Work with Projects
1–7
TABLE 1.1
Routine, Repetitive Work
Taking class notes
Daily entering sales receipts into the accounting ledger
Responding to a supply-chain request
Practicing scales on the piano
Routine manufacture of an Apple iPod
Attaching tags on a manufactured product
Projects
Writing a term paper
Setting up a sales kiosk for a professional accounting meeting
Developing a supply-chain information system
Writing a new piano piece
Designing an iPod that is approximately 2 X 4 inches, interfaces with PC, and
stores 10,000 songs
Wire-tag projects for GE and
Wal-Mart
.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-7
Project Life Cycle
1–8
FIGURE 1.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-8
1–9
The Challenge of Project Management
The Project Manager
Manages temporary, non-repetitive activities and frequently acts independently of the formal organization.
Marshals resources for the project.
Is linked directly to the customer interface.
Provides direction, coordination, and integration
to the project team.
Is responsible for performance and success of the project.
Must induce the right people at the right time to address the right issues and make the right decisions.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-9
1–10
Current Drivers of Project Management
Factors leading to the increased use of project management:
Compression of the product life cycle
Knowledge explosion
Triple bottom line (planet, people, profit)
Increased customer focus
Small projects represent big problems
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-10
1–11
Project Governance
Integration (or centralization) of project management provides senior management with:
An overview of all project management activities
A big picture of how organizational resources are used
A risk assessment of their portfolio of projects
A rough metric of the firm’s improvement in managing projects relative to others in the industry
Linkages of senior management with actual project execution management
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-11
Integrated Management of Projects
1–12
FIGURE 1.2
.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-12
Alignment of Projects with
Organizational Strategy
Problems resulting from the uncoordinated project management systems include:
Projects that do not support the organization’s overall strategic plan and goals.
Independent managerial decisions that create internal imbalances, conflicts and confusion resulting in dissatisfied customers.
Failure to prioritize projects results in the waste of resources on non-value-added activities/projects.
1–13
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-13
A Project Management Today:
A Socio-Technical Approach
The Technical Dimension (The “Science”)
Consists of the formal, disciplined, purely logical parts of the process.
Includes planning, scheduling, and controlling projects.
The Sociocultural Dimension (The “Art”)
Involves contradictory and paradoxical world of implementation.
Centers on creating a temporary social system within a larger organizational environment that combines the talents of a divergent set of professionals working to complete the project.
1–14
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-14
1–15
A Socio-Technical Approach to Project Management
FIGURE 1.3
.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-15
1–16
Key Terms
Program
Project
Project life cycle
Project Management Professional (PMP)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
1-16
Chapter Two
Organization Strategy and Project Selection
2–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Where We Are Now
2–2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Learning Objectives
Explain why it is important for project managers to understand their organization’s strategy
Identify the significant role projects contribute to the strategic direction of the organization
Understand the need for a project priority system
Apply financial and nonfinancial criteria to assess the value of projects
Understand how multi-criteria models can be used to select projects
Apply an objective priority system to project selection
Understand the need to manage the project portfolio
2–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
2.1 The Strategic Management Process: An
Overview
2.2 The Need for a Project Priority System
2.3 A Portfolio Management System
2.4 Selection Criteria
2.5 Applying a Selection Model
2.6 Managing the Portfolio System
2–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
2–5
Why Project Managers Need
to Understand Strategy
Changes in the organization’s mission and strategy
Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects.
Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–5
2–6
The Strategic Management Process:
An Overview
Strategic Management
Requires every project to be clearly linked to strategy.
Provides theme and focus of firm’s future direction.
Responding to changes in the external environment—environmental scanning
Allocating scarce resources of the firm to improve its competitive position—internal responses to new programs
Requires strong links among mission, goals, objectives, strategy, and implementation.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–6
Four Activities of the Strategic
Management Process
Review and define the organizational mission
Set long-range goals and objectives
Analyze and formulate strategies to reach objectives
Implement strategies through projects
2–7
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–7
2–8
Strategic Management Process
FIGURE 2.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–8
2–9
Characteristics of Objectives
EXHIBIT 2.1
S Specific Be specific in targeting an objective
M Measurable Establish a measurable indicator(s) of progress
A Assignable Make the objective assignable to one person
for completion
R Realistic State what can realistically be done with
available resources
T Time related State when the objective can be achieved,
that is, duration
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–9
The Need for a Project Priority System
The Implementation Gap
The lack of understanding and consensus on strategy among top management and middle-level (functional) managers who independently implement the strategy.
Organization Politics
Project selection is based on the persuasiveness and power of people advocating the projects.
Resource Conflicts and Multitasking
Multiproject environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects.
2–10
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–10
2–11
Benefits of Project Portfolio Management
Builds discipline into the project selection process
Links project selection to strategic metrics
Prioritizes project proposals across a common set of criteria, rather than on politics or emotion
Allocates resources to projects that align with strategic direction
Balances risk across all projects
Justifies killing projects that do not support strategy
Improves communication and supports agreement on project goals
EXHIBIT 2.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–11
2–12
A Portfolio Management System
Design of a project portfolio system:
Classification of a project
Selection criteria depending upon classification
Sources of proposals
Evaluating proposals
Managing the portfolio of projects.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–12
2–13
Portfolio of Projects by Type
FIGURE 2.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–13
2–14
A Portfolio Management System
Selection Criteria
Financial models: payback, net present value (NPV)
Non-financial models: projects of strategic importance to the firm
Multi-Criteria Selection Models
Use several weighted selection criteria to evaluate project proposals.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–14
2–15
Financial Models
The Payback Model
Measures the time the project will take to recover
the project investment.
Uses more desirable shorter paybacks.
Emphasizes cash flows, a key factor in business.
Limitations of Payback:
Ignores the time value of money.
Assumes cash inflows for the investment period
(and not beyond).
Does not consider profitability.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–15
2–16
Financial Models (cont’d)
The Net Present Value (NPV) Model
Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows.
Positive NPV: project meets minimum desired rate
of return and is eligible for further consideration.
Negative NPV: project is rejected.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–16
2–17
Example Comparing Two Projects
Using Payback Method
EXHIBIT 2.3A
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–17
2–18
Example Comparing Two Projects
Using Net Present Value Method
EXHIBIT 2.3b
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–18
2–19
Nonfinancial Strategic Criteria
To capture larger market share
To make it difficult for competitors to enter the market
To develop an enabler product, which by its introduction will increase sales in more profitable products
To develop core technology that will be used in next-generation products
To reduce dependency on unreliable suppliers
To prevent government intervention and regulation
To restore corporate image or enhance brand recognition
To demonstrate its commitment to corporate citizenship and support for community development
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–19
2–20
Multi-Criteria Selection Models
Checklist Model
Uses a list of questions to review potential projects and to determine their acceptance or rejection.
Fails to answer the relative importance or value of a potential project and doesn’t to allow for comparison with other potential projects.
Multi-Weighted Scoring Model
Uses several weighted qualitative and/or quantitative selection criteria to evaluate project proposals.
Allows for comparison of projects with other potential projects.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–20
2–21
Sample Selection Questions Used in Practice
EXHIBIT 2.4
Topic | Question |
Strategy/alignment | What specific strategy does this project align with? |
Driver | What business problem does the project solve? |
Success metrics | How will we measure success? |
Sponsorship | Who is the project sponsor? |
Risk | What is the impact of not doing this project? |
Risk | What is the project risk to our organization? |
Risk | Where does the proposed project fit in our risk profile? |
Benefits, value, ROI | What is the value of the project to this organization? |
Benefits, value, ROI | When will the project show results? |
Objectives | What are the project objectives? |
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–21
2–22
Sample Selection Questions Used in Practice
EXHIBIT 2.4 cont’d
Topic | Question |
Organization culture | Is our organization culture right for this type of project? |
Resources | Will internal resources be available for this project? |
Approach | Will we build or buy? |
Schedule | How long will this project take? |
Schedule | Is the time line realistic? |
Training/resources | Will staff training be required? |
Finance/portfolio | What is the estimated cost of the project? |
Portfolio | Is this a new initiative or part of an existing initiative? |
Portfolio | How does this project interact with current projects? |
Technology | Is the technology available or new? |
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–22
2–23
Project Screening Matrix
FIGURE 2.3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–23
2–24
Applying a Selection Model
Project Classification
Deciding how well a strategic or operations project fits the organization’s strategy
Selecting a Model
Applying a weighted scoring model to align projects closer with the organization’s strategic goals
Reduces the number of wasteful projects
Helps identify proper goals for projects
Helps everyone involved understand how
and why a project is selected
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–24
2–25
Sources and Solicitation of Project Proposals
Within the organization
Request for proposal (RFP) from external sources (contractors and vendors)
Ranking Proposals and Selection of Projects
Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility,
and loss of power
Managing the Portfolio
Senior management input
The governance team (project office) responsibilities
Applying a Selection Model (cont’d)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–25
2–26
A Proposal Form for an Automatic Vehicular Tracking (AVL) Public
Transportation Project
FIGURE 2.4A
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–26
2–27
Risk Analysis for
500-Acre Wind Farm
FIGURE 2.4B
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–27
2–28
Project
Screening Process
FIGURE 2.5
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–28
2–29
Priority Screening
Analysis
FIGURE 2.6
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Project Management 6e
2–29
2–30
Managing the Portfolio System
Senior Management Input
Provide guidance in selecting criteria that are aligned with the organization’s strategic goals.
Decide how to balance available resources among current projects.
The Governance Team Responsibilities
Publish the priority of every project.
Ensure that the project selection process is open and free of power politics.
Reassess the organization’s goals and priorities.
Evaluate the progress of current projects.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–30
Balancing the Portfolio for
Risks and Types of Projects
Bread-and-butter Projects
Involve evolutionary improvements
to current products and services.
Pearls
Represent revolutionary commercial opportunities using proven technical advances.
Oysters
Involve technological breakthroughs
with high commercial payoffs.
White Elephants
Showed promise at one time
but are no longer viable.
2–31
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–31
2–32
Key Terms
Implementation gap
Net present value
Organizational politics
Payback
Priority system
Priority team
Project portfolio
Project screening matrix
Project sponsor
Sacred cow
Strategic management process
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e
2–32
Chapter Three
Organization: Structure and Culture
3–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
3–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
3-2
Learning Objectives
Identify different project management structures and understand their strengths and weaknesses
Distinguish three different types of matrix structures and understand their strengths and weaknesses
Understand organizational and project considerations that should be considered in choosing an appropriate project management structure
Appreciate the significant role that organizational culture plays in managing projects
Interpret the culture of an organization
Understand the interaction between project management structure and the culture of an organization
3–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
3.1 Project Management Structures
3.2 What Is the Right Project Management
Structure?
3.3 Organizational Culture
3.4 Implications of Organizational Culture for
Organizing Projects
3–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
3–5
Project Management Structures
Challenges to Organizing Projects
The uniqueness and short duration of projects relative to ongoing longer-term organizational activities
The multidisciplinary and cross-functional nature of projects creates authority and responsibility dilemmas.
Choosing an Appropriate Project Management Structure
A good system balances
the needs of the project
with the needs of the
organization.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
3-5
3–6
Project Management Structures (cont’d)
Organizing Projects: Functional Organization
Different segments of the project are delegated
to respective functional units.
Coordination is maintained through normal management channels.
It is used when the interest of one functional area dominates the project or one functional area has
a dominant interest in the project’s success.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
3-6
3–7
Functional Organizations
FIGURE 3.1
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Project Management 6e.
3-7
3–8
Functional Organization
Advantages
No structural change
Flexibility
In-depth expertise
Easy post-project transition
Disadvantages
Lack of focus
Poor integration
Slow
Lack of ownership
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Project Management 6e.
3-8
3–9
Project Management Structures (cont’d)
Organizing Projects: Dedicated Project Teams
Teams operate as separate units under the leadership of a full-time project manager.
In a projectized organization where projects are the dominant form of business, functional departments are responsible for providing support for its teams.
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Project Management 6e.
3-9
3–10
Dedicated Project Team
FIGURE 3.2
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Project Management 6e.
3-10
3–11
Project Organization: Dedicated Team
Advantages
Simple
Fast
Cohesive
Cross-functional integration
Disadvantages
Expensive
Internal strife
Limited technological expertise
Difficult post-project transition
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Project Management 6e.
3-11
3–12
Projectized Organization Structure
FIGURE 3.3
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Project Management 6e.
3-12
3–13
Project Management Structures (cont’d)
Organizing Projects: Matrix Structure
Hybrid organizational structure (matrix) is overlaid on the normal functional structure.
Two chains of command (functional and project)
Project participants report simultaneously to both functional and project managers.
Matrix structure optimizes the use of resources.
Allows for participation on multiple projects while performing normal functional duties
Achieves a greater integration of expertise and project requirements
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Project Management 6e.
3-13
3–14
Matrix Organization Structure
FIGURE 3.4
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Project Management 6e.
3-14
3–15
Division of Project Manager and Functional Manager Responsibilities in a Matrix Structure
TABLE 3.1
Project Manager Negotiated Issues Functional Manager
What has to be done? Who will do the task? How will it be done?
When should the task be done? Where will the task be done?
How much money is available Why will the task be done? How will the project involvement
to do the task? impact normal functional activities?
How well has the total project Is the task satisfactorily How well has the functional
been done? completed? input been integrated?
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Project Management 6e.
3-15
3–16
Different Matrix Forms
Weak Form
The authority of the functional manager predominates and the project manager has indirect authority.
Balanced Form
The project manager sets the overall plan and the functional manager determines how work to be done.
Strong Form
The project manager has broader control and functional departments act as subcontractors
to the project.
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Project Management 6e.
3-16
3–17
Project Organization: Matrix Structure
Advantages
Efficient
Strong project focus
Easier post-project transition
Flexible
Disadvantages
Dysfunctional conflict
Infighting
Stressful
Slow
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Project Management 6e.
3-17
3–18
What Is the Right Project
Management Structure?
Organization Considerations
How important is the project to the firm’s success?
What percentage of core work involves projects?
What level of resources (human and physical)
are available?
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Project Management 6e.
3-18
3–19
What Is the Right Project
Management Structure? (cont’d)
Project Considerations
Size of project
Strategic importance
Novelty and need for innovation
Need for integration (number of departments involved)
Environmental complexity (number of external interfaces)
Budget and time constraints
Stability of resource requirements
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Project Management 6e.
3-19
3–20
Organizational Culture
Organizational Culture Defined
A system of shared norms, beliefs, values, and assumptions which binds people together, thereby creating shared meanings.
The “personality” of the organization that sets it
apart from other organizations.
Provides a sense of identity to its members
Helps legitimize the management system of the organization
Clarifies and reinforces standards of behavior
Helps create social order
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Project Management 6e.
3-20
3–21
Key Dimensions Defining an Organization’s Culture
FIGURE 3.5
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Project Management 6e.
3-21
3–22
Identifying Cultural Characteristics
Study the physical characteristics
of an organization
Read about the organization
Observe how people interact
within the organization
Interpret stories and folklore
surrounding the organization
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Project Management 6e.
3-22
3–23
Organizational Culture Diagnosis Worksheet
FIGURE 3.6
Power Corp.
I. Physical Characteristics:
Architecture, office layout, décor, attire
Corporate HQ is 20 Story modern building—president on top floor. Offices are bigger in the top floors than lower floors. Formal business attire (white shirts, ties, power suits, . . . ) Power appears to increase the higher up you are.
II. Public Documents:
Annual reports, internal newsletters, vision statements
At the heart of the Power Corp. Way is our vision . . . to be the global energy company most admired for its people, partnership and performance. Integrity. We are honest with others and ourselves. We meet the highest ethical standards in all business dealings. We do what we say we will do.
III. Behavior:
Pace, language, meetings, issues discussed, decision-making style, communication patterns, rituals
Hierarchical decision-making, pace brisk but orderly, meetings start on time and end on time, subordinates choose their words very carefully when talking to superiors, people rarely work past 6:00 P.M., president takes top performing unit on a boat cruise each year . . .
IV. Folklore:
Stories, anecdotes, heroines, heroes, villains
Young project manager was fired after going over his boss’s head to ask for additional funds.
Stephanie C. considered a hero for taking complete responsibility for a technical error.
Jack S. was labeled a traitor for joining chief competitor after working for Power Corp. for 15 years.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
3-23
3–24
Implications of Organizational Culture
for Organizing Projects
Challenges for Project Managers
in Navigating Organizational Cultures
Interacting with the culture and subcultures
of the parent organization
Interacting with the project’s clients
or customer organizations
Interacting with other organizations
connected to the project
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Project Management 6e.
3-24
3–25
Cultural Dimensions of an Organization Supportive
of Project Management
FIGURE 3.7
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Project Management 6e.
3-25
3–26
Key Terms
Balanced matrix
Dedicated project team
Matrix
Organizational culture
Projectized organization
Project Office (PO)
Strong matrix
Weak matrix
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Project Management 6e.
3-26
Chapter Four
Defining the Project
4–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
4–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-2
Learning Objectives
Identify key elements of a project scope statement and understand why a complete scope statement is crucial to project success
Understand why it is important to establish project priorities in terms of cost, time, and performance
Demonstrate the importance of a work breakdown structure (WBS) to the management of projects and how it serves as a data base for planning and control
Demonstrate how the organization breakdown structure (OBS) establishes accountability to organizational units
Describe a process breakdown structure (PBS) and when to use it
Create responsibility matrices for small projects
Create a communication plan for a project
4–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
4.1 Step 1: Defining the Project Scope
4.2 Step 2: Establishing Project Priorities
4.3 Step 3: Creating the Work Breakdown
Structure
4.4 Step 4: Integrating the WBS with the
Organization
4.5 Step 5: Coding the WBS for the Information
System
4.6 Process Breakdown Structure
4.7 Responsibility Matrices
4.8 Project Communication Plan
4–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
4–5
Defining the Project
Step 1: Defining the Project Scope
Step 2: Establishing Project Priorities
Step 3: Creating the Work Breakdown Structure
Step 4: Integrating the WBS with the Organization
Step 5: Coding the WBS for the Information System
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-5
4–6
Step 1: Defining the Project Scope
Project Scope
A definition of the end result or mission of the project—a product or service for the client/customer
Purposes of the Project Scope Statement
To clearly define the deliverable(s) for the end user.
To focus the project on successful completion
of its goals.
To be used by the project owner and participants
as a planning tool and for measuring project success
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-6
4–7
Project Scope Checklist
Project objective
Deliverables
Milestones
Technical requirements
Limits and exclusions
Reviews with customer
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Project Management 6e.
4-7
4–8
Project Scope: Terms and Definitions
Scope Statements
Also called statements of work (SOW)
Project Charter
Can contain an expanded version of scope statement.
A document authorizing the project manager to initiate and lead the project
Scope Creep
The tendency for the project scope to expand over time due to changing requirements, specifications, and priorities
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-8
4–9
Step 2: Establishing Project Priorities
Causes of Project Trade-offs
Shifts in the relative importance of criterions related
to cost, time, and performance parameters
Budget–Cost
Schedule–Time
Performance–Scope
Managing the Priorities of Project Trade-offs
Constrain: original parameter is a fixed requirement.
Enhance: optimizing a criterion over others
Accept: reducing (or not meeting) a criterion requirement
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Project Management 6e.
4-9
4–10
FIGURE 4.1
Project Management Trade-offs
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-10
4–11
Project Priority Matrix
FIGURE 4.2
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Project Management 6e.
4-11
4–12
Step 3: Creating the Work Breakdown Structure
Work Breakdown Structure (WBS)
A hierarchical outline (map) that identifies the products and work elements involved in a project
Defines the relationship of the final deliverable
(the project) to its subdeliverables, and in turn,
their relationships to work packages.
Best suited for design and build projects that have tangible outcomes rather than process-oriented projects
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Project Management 6e.
4-12
4–13
Hierarchical Breakdown of the WBS
FIGURE 4.3
* This breakdown groups work packages by type of work within a deliverable and allows assignment of responsibility to an organizational unit. This extra step facilitates a system for monitoring project progress (discussed in Chapter 13).
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-13
4–14
How WBS Helps the Project Manager
WBS
Facilitates evaluation of cost, time, and technical performance of the organization on a project.
Provides management with information appropriate
to each organizational level.
Helps in the development of the organization breakdown structure (OBS), which assigns project responsibilities to organizational units and individuals
Helps manage plan, schedule, and budget.
Defines communication channels and assists
in coordinating the various project elements.
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Project Management 6e.
4-14
4–15
Work Breakdown Structure
FIGURE 4.4
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Project Management 6e.
4-15
4–16
Work Packages
A work package is the lowest level of the WBS.
It is output-oriented in that it:
Defines work (what).
Identifies time to complete a work package (how long).
Identifies a time-phased budget to complete
a work package (cost).
Identifies resources needed to complete
a work package (how much).
Identifies a person responsible for units of work (who).
Identifies monitoring points for measuring success (how well).
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Project Management 6e.
4-16
4–17
Step 4: Integrating the WBS
with the Organization
Organizational Breakdown Structure (OBS)
Depicts how the firm is organized to discharge its work responsibility for a project.
Provides a framework to summarize
organization unit work performance.
Identifies organization units responsible
for work packages.
Ties organizational units to cost control accounts.
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Project Management 6e.
4-17
4–18
Integration of
WBS and OBS
FIGURE 4.5
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Project Management 6e.
4-18
4–19
Step 5: Coding the WBS for
the Information System
WBS Coding System
Defines:
Levels and elements of the WBS
Organization elements
Work packages
Budget and cost information
Allows reports to be consolidated at any level in the organization structure
WBS Dictionary
Provides detailed information about each element in the WBS.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-19
4–20
Coding
the WBS
EXHIBIT 4.1
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Project Management 6e.
4-20
4–21
Process Breakdown Structure (PBS) for
Software Development Project
FIGURE 4.6
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Project Management 6e.
4-21
4–22
Responsibility Matrices
Responsibility Matrix (RM)
Also called a linear responsibility chart
Summarizes the tasks to be accomplished and who is responsible for what on the project.
Lists project activities and participants responsible for each activity.
Clarifies critical interfaces between units
and individuals that need coordination.
Provide a means for all participants to view their responsibilities and agree on their assignments.
Clarifies the extent or type of authority that
can be exercised by each participant.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-22
4–23
Responsibility Matrix for a Market Research Project
FIGURE 4.7
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Project Management 6e.
4-23
4–24
Responsibility Matrix for the Conveyor Belt Project
FIGURE 4.8
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-24
4–25
Project Communication Plan
What information needs to be collected
and when?
Who will receive the information?
What methods will be used to gather
and store information?
What are the limits, if any, on who has access to certain kinds of information?
When will the information be communicated?
How will it be communicated?
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-25
4–26
Developing a Communication Plan
Stakeholder analysis
Information needs
Sources of information
Dissemination modes
Responsibility and timing
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Project Management 6e.
4-26
4–27
Stakeholder Communications
FIGURE 4.9
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-27
4–28
Information Needs
Project status reports
Deliverable issues
Changes in scope
Team status meetings
Gating decisions
Accepted request changes
Action items
Milestone reports
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Project Management 6e.
4-28
4–29
Shale Oil Research Project Communication Plan
FIGURE 4.10
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-29
4–30
Key Terms
Cost account
Milestone
Organization breakdown structure (OBS)
Priority matrix
Process breakdown structure (PBS)
Project charter
Responsibility matrix
Scope creep
Scope statement
WBS dictionary
Work breakdown structure (WBS)
Work package
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
4-30
Chapter Five
Estimating Project Times and Costs
5–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
5–2
Where We Are Now
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Project Management 6e.
5-2
Learning Objectives
Understand estimating project times and costs are the foundation for project planning and control
Describe guidelines for estimating time, cost, and resources
Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimating methods
Distinguish different kinds of costs associated with a project
Suggest a scheme for developing an estimating database for future projects
Understand the challenge of estimating mega projects and describe steps that lead to better informed decisions
Define a “white elephant” in project management and provide examples
5–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
5.1 Factors Influencing the Quality of Estimates
5.2 Estimating Guidelines for Times, Costs, and
Resources
5.3 Top-Down versus Bottom-Up Estimating
5.4 Methods for Estimating Project Times and
Costs
5.5 Level of Detail
5.6 Types of Costs
5.7 Refining Estimates
5.8 Creating a Database for Estimating
5.9 Mega Projects: A Special Case
5–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
5–5
Estimating Projects
Estimating
The process of forecasting or approximating the time and cost of completing project deliverables
The task of balancing expectations of stakeholders and need for control while the project is implemented
Types of Estimates
Top-down (macro) estimates: analogy, group consensus, or mathematical relationships
Bottom-up (micro) estimates: estimates of elements
of the work breakdown structure
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Project Management 6e.
5-5
5–6
EXHIBIT 5.1
To support good decisions
To schedule work
To determine how long the project should take and its cost
To determine whether the project is worth doing
To develop cash flow needs
To determine how well the project is progressing
Why Estimating Time and Cost Is Important
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
5-6
5–7
Factors Influencing the Quality of Estimates
Quality of Estimates
Project
Complexity
People
Project Structure and Organization
Padding
Estimates
Organization
Culture
Other (Nonproject)
Factors
Planning Horizon
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
5-7
5–8
Estimating Guidelines for Times,
Costs, and Resources
Have people familiar with the tasks make the estimate
Use several people to make estimates
Base estimates on normal conditions, efficient methods, and a normal level of resources
Use consistent time units in estimating task times
Treat each task as independent, don’t aggregate
Do not make allowances for contingencies.
Add a risk assessment to avoid surprises to stakeholders
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
5-8
5–9
Developing Work Package Estimates
Preparing Initial Estimates
Use several people to make estimates
Assume normal conditions
Use consistent time units
Assume tasks are independent
Make no allowance for contingencies
Include a risk assessment
Use people familiar with
the tasks
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Project Management 6e.
5-9
5–10
Top-Down versus Bottom-Up Estimating
Top-Down Estimates
Are usually derived from someone who uses experience and/or information to determine the project duration and total cost.
Are sometimes made by top managers who have little knowledge of the processes used to complete the project.
Bottom-Up Approach
Can serve as a check on cost elements in the WBS
by rolling up the work packages and associated cost accounts to major deliverables at the work package level.
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Project Management 6e.
5-10
5–11
Top-Down versus Bottom-Up Estimating
TABLE 5.1
Conditions for Preferring Top-Down or
Bottom-up Time and Cost Estimates
Top-down Bottom-up
Condition Estimates Estimates
– Strategic decision making X
– Cost and time important X
– High uncertainty X
– Internal, small project X
– Fixed-price contract X
– Customer wants details X
– Unstable scope X
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Project Management 6e.
5-11
5–12
Estimating Projects: Preferred Approach
Make rough top-down estimates
Develop the WBS/OBS
Make bottom-up estimates
Develop schedules and budgets
Reconcile differences between top-down
and bottom-up estimates
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Project Management 6e.
5-12
5–13
Top-Down Approaches for Estimating Project Times and Costs
Consensus methods
Ratio methods (sometimes called parametric)
Apportion method
Function point methods for software and system projects
Learning curves
Project Estimate
Times
Costs
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Project Management 6e.
5-13
5–14
Apportion Method of Allocating Project Costs Using the Work Breakdown Structure
FIGURE 5.1
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Project Management 6e.
5-14
5–15
Simplified Basic Function Point Count Process
for a Prospective Project or Deliverable
TABLE 5.2
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Project Management 6e.
5-15
5–16
Example: Function Point Count Method
TABLE 5.3
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Project Management 6e.
5-16
5–17
Bottom-Up Approaches for Estimating Project Times and Costs
Template methods
Parametric procedures applied to specific tasks
Range estimates for
the WBS work packages
Phase estimating: A hybrid
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Project Management 6e.
5-17
5–18
Range Estimating Template
FIGURE 5.2
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Project Management 6e.
5-18
5–19
Phase Estimating over Product Life Cycle
FIGURE 5.3
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Project Management 6e.
5-19
5–20
Top-Down and Bottom-Up Estimates
FIGURE 5.4
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Project Management 6e.
5-20
5–21
Level of Detail
Level of detail in the WBS varies with the complexity of the project, the need for control, the project size, cost, duration, and other factors.
Excessive detail is costly.
Fosters a focus on departmental outcomes rather than on deliverable outcomes
Creates unproductive paperwork
Insufficient detail is costly.
Lack of focus on goals
Wasted effort on nonessential activities
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Project Management 6e.
5-21
5–22
Types of Costs
Direct Costs
Costs that are clearly chargeable to a specific work package.
Labor, materials, equipment, and other
Direct (Project) Overhead Costs
Costs incurred that are directly tied to project deliverables or work packages.
Salary, rents, supplies, specialized machinery
General and Administrative Overhead Costs
Organization costs indirectly linked to a specific package that are apportioned to the project.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
5-22
5–23
Contract Bid Summary Costs
FIGURE 5.5
Direct costs | $80,000 |
Direct overhead | $20,000 |
Total direct costs | $100,000 |
G&A overhead (20%) | $20,000 |
Total costs | $120,000 |
Profit (20%) | $24,000 |
Total bid | $144,000 |
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Project Management 6e.
5-23
5–24
Three Views of Cost
FIGURE 5.6
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Project Management 6e.
5-24
5–25
Refining Estimates
Reasons for Adjusting Estimates
Interaction costs are hidden in estimates.
Normal conditions do not apply.
Things go wrong on projects.
Changes in project scope and plans
Overly optimistic
Strategic misrepresentation
Adjusting Estimates
Time and cost estimates of specific activities are adjusted as the risks, resources, and situation particulars become more clearly defined.
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Project Management 6e.
5-25
5–26
Estimating Database Templates
FIGURE 5.7
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Project Management 6e.
5-26
Mega Projects: A Special Case
Mega Projects
Are large-scale, complex ventures that typically cost $1 billion or more, take many years to complete, and involve multiple private and public stakeholders.
High-speed rail lines, airports, healthcare reform, the Olympics, development of new aircraft
Often involve a double whammy.
Cost much more than expected but underdelivered on benefits they were to provide.
Are sometimes called “White Elephants”
Over budget, under value, high cost of maintaining (exceeds the benefits received)
5–27
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Three Steps of the Reference Class Forecasting (RCF) Process
Select a reference class of projects similar to your potential projects.
Collect and arrange outcome data as a distribution. Create a distribution of cost overruns as a percentage of the original project estimate.
Use the distribution data to arrive at a realistic forecast. Compare the original cost estimate for the project with the reference class projects.
5–28
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
5–29
Key Terms
Apportionment
Bottom-up estimates
Delphi method
Direct costs
Function points
Learning curves
Overhead costs
Padding estimates
Phase estimating
Range estimating
Ratio methods
Reference class forecasting (RCF)
Template method
Time and cost databases
Top-down estimates
White elephant
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Project Management 6e.
5-29
5–30
WBS Figure
Exercise Figure 5.1
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Project Management 6e.
5-30
5–31
Learning Curves Unit Values
TABLE A5.1
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Project Management 6e.
5-31
5–32
Learning Curves Cumulative Values
TABLE A5.2
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Project Management 6e.
5-32
Chapter Six
Developing a Project Plan
6-1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
6–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
6-2
Learning Objectives
Understand the linkage between WBS and the project network
Diagram a project network using AON methods
Calculate early, late, and slack activities times
Identify and understand the importance of managing the critical path
Distinguish free slack from total slack
Demonstrate understanding and application of lags in compressing projects or constraining the start or finish of an activity
6–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
6.1 Developing the Project Network
6.2 From Work Package to Network
6.3 Constructing a Project Network
6.4 Activity-on-Node (AON) Fundamentals
6.5 Network Computation Process
6.6 Using the Forward and Backward Pass
Information
6.7 Level of Detail for Activities
6.8 Practical Considerations
6.9 Extended Network Techniques to Come
Closer to Reality
6–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
6–5
Developing the Project Network
The Project Network
A flow chart that graphically depicts the logical sequences, interdependencies, and start and finish times of the project activities along with the longest path(s) through the network—the critical path
Provides the basis for scheduling labor and equipment.
Enhances communication among project participants.
Provides an estimate of the project’s duration.
Provides a basis for budgeting cash flow.
Identifies activities that are critical.
Highlights activities that are “critical” and should not be delayed.
Help managers get and stay on plan.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
6-5
6–6
From WBS/Work Package to Network
FIGURE 6.1
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Project Management 6e.
6-6
6–7
Constructing a Project Network
Terminology
Activity: an element of the project that requires time but may not require resources
Merge Activity: an activity that has two or more preceding activities on which it depends (more than one dependency arrow flowing into it)
Parallel Activities: Activities that can occur independently and, if desired, not at the same time
A
C
D
B
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Project Management 6e.
6-7
6–8
Constructing a Project Network (cont’d)
Terminology
Path: a sequence of connected, dependent activities
Critical Path:
The longest path through the activity network that allows for the completion of all project-related activities
The shortest expected time in which the entire project can be completed.
Delays on the critical path will delay completion of the entire project.
A
B
D
(Assumes that minimum of A + B > minimum of C in length of times to complete activities.)
C
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Project Management 6e.
6-8
6–9
Constructing a Project Network (cont’d)
Terminology
Burst Activity: an activity that has more than one activity immediately following it (more than one dependency arrow flowing from it)
Two Approaches
Activity-on-Node (AON)
Uses a node to depict an activity.
Activity-on-Arrow (AOA)
Uses an arrow to depict an activity.
B
D
A
C
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Project Management 6e.
6-9
6–10
Basic Rules to Follow in Developing
Project Networks
Networks typically flow from left to right.
An activity cannot begin until all preceding connected activities are complete.
Arrows indicate precedence and flow and can cross over each other.
Each activity must have a unique identify number.
An activity identification number must be greater than that of any predecessor activities.
Looping is not allowed.
Conditional statements are not allowed.
Use common start and stop nodes.
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Project Management 6e.
6-10
6–11
Activity-on-Node Fundamentals
FIGURE 6.2
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Project Management 6e.
6-11
6–12
Activity-on-Node Fundamentals (cont’d)
FIGURE 6.2 (cont’d)
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Project Management 6e.
6-12
6–13
Network Information
TABLE 6.1
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Project Management 6e.
6-13
6–14
Automated Warehouse—Partial Network
FIGURE 6.3
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Project Management 6e.
6-14
6–15
Automated Warehouse—Complete Network
FIGURE 6.4
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Project Management 6e.
6-15
6–16
Network Computation Process
Forward Pass—Earliest Times
How soon can the activity start? (early start—ES)
How soon can the activity finish? (early finish—EF)
How soon can the project finish? (expected time—TE)
Backward Pass—Latest Times
How late can the activity start? (late start—LS)
How late can the activity finish? (late finish—LF)
Which activities represent the critical path?
How long can the activity be delayed? (slack or float—SL)
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Project Management 6e.
6-16
6–17
Network Information
TABLE 6.2
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Project Management 6e.
6-17
6–18
Activity-on-Node Network
FIGURE 6.5
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Project Management 6e.
6-18
6–19
Activity-on-Node Network Forward Pass
FIGURE 6.6
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Project Management 6e.
6-19
6–20
Forward Pass Computation
Add activity times along each path in the network (ES + Duration = EF).
Carry the early finish (EF) to the next activity where it becomes its early start (ES) unless…
The next succeeding activity is a merge activity, in which case the largest early finish (EF) number of all its immediate predecessor activities is selected.
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Project Management 6e.
6-20
6–21
Activity-on-Node Network Backward Pass
FIGURE 6.7
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Project Management 6e.
6-21
6–22
Backward Pass Computation
Subtract activity times along each path starting with the project end activity (LF – Duration = LS).
Carry the late start (LS) to the next preceding activity where it becomes its late finish (LF) unless…
The next succeeding activity is a burst activity, in which case the smallest late start (LS) number of all its immediate successor activities is selected.
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Project Management 6e.
6-22
6–23
Forward and Backward Passes Completed with Slack Times
FIGURE 6.8
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Project Management 6e.
6-23
6–24
Determining Total Slack (TS)
Total Slack (or Float)
Tells us the amount of time an activity can be delayed and not delayed the project.
Is how long an activity can exceed its early finish date without affecting the project end date or an imposed completion date.
Is simply the difference between the LS and ES (LS – ES = SL) or between LF and EF (LF – EF = SL).
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Project Management 6e.
6-24
6–25
Determining Free Slack (FS)
Free Slack (or Float)
Is the amount of time an activity can be delayed after the start of a longer parallel activity or activities.
Is how long an activity can exceed its early finish date without affecting early start dates of any successor(s).
Allows flexibility in scheduling scarce resources.
Only activities that occur at the end of a chain of activities, where you have a merge activity, can have free slack.
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Project Management 6e.
6-25
6–26
The Critical Path
Is the network path(s) that has (have) the least slack in common.
Is the longest path through the activity network.
Is the shortest expected time in which the entire project can be completed.
Is important because it impacts completion time.
Is where you put best people on.
Is where you pay extra extension when doing risk assessment.
Is where you look when other managers asking to ‘borrow’ people or equipment.
Is where you look when you don’t have time to monitor all activities.
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Project Management 6e.
6-26
6–27
Network Sensitivity
The likelihood the original critical path(s) will change once the project is initiated.
A network schedule that has only one critical path and noncritical activities that enjoy significant slack would be labeled ‘insensitive’.
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Project Management 6e.
6-27
6–28
Practical Considerations
Network Logic Errors
Activity Numbering
Use of Computers to Develop Networks (and Gantt Chart)
Calendar Dates
Multiple Starts and Multiple Projects
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Project Management 6e.
6-28
6–29
Network Logic Errors: Illogical Loop
FIGURE 6.9
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Project Management 6e.
6-29
6–30
Automated Warehouse Order Picking System Network
FIGURE 6.10
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Project Management 6e.
6-30
6–31
Automated Order Warehouse Picking System Bar Chart
FIGURE 6.11
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Project Management 6e.
6-31
6–32
Extended Network Techniques
to Come Close to Reality
Laddering
Activities are broken into segments so the following activity can begin sooner and not delay the work.
Lags
The minimum amount of time a dependent activity must be delayed to begin or end.
Lengthy activities are broken down to reduce the delay
in the start of successor activities.
Lags can be used to constrain finish-to-start, start-to-start, finish-to-finish, start-to-finish, or combination relationships.
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Project Management 6e.
6-32
6–33
Example of Laddering Using
Finish-to-Start Relationship
FIGURE 6.12
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Project Management 6e.
6-33
6–34
Use of Lags
FIGURE 6.13
FIGURE 6.14
Finish-to-Start Relationship
Start-to-Start Relationship
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Project Management 6e.
6-34
6–35
Use of Lags (cont’d)
FIGURE 6.15
Use of Lags to Reduce Schedule Detail and Project Duration
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Project Management 6e.
6-35
6–36
New Product Development Process
FIGURE 6.16
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Project Management 6e.
6-36
6–37
Use of Lags (cont’d)
FIGURE 6.17
FIGURE 6.18
FIGURE 6.19
Finish-to-Finish
Relationship
Start-to-Finish
Relationship
Combination
Relationships
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Project Management 6e.
6-37
6–38
Network Using Lags
FIGURE 6.20
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Project Management 6e.
6-38
6–39
Hammock Activities
Hammock Activity
Spans over a segment of a project.
Has a duration that is determined after the network plan is drawn.
Is very useful in assigning and controlling indirect project costs.
Is used to aggregate sections of the project to facilitate getting the right level of detail for specific sections of a project.
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Project Management 6e.
6-39
6–40
Hammock Activity Example
FIGURE 6.21
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Project Management 6e.
6-40
6–41
Key Terms
Activity
Activity-on-arrow (AOA)
Activity-on-node (AON)
Burst activity
Concurrent engineering
Critical path
Early time
Free slack
Gantt chart
Hammock activity
Lag relationship
Late time
Merge activity
Parallel activity
Sensitivity
Total slack
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Project Management 6e.
6-41
6–42
Shoreline Stadium Case
TABLE 6.3
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Project Management 6e.
6-42
Chapter Seven
Managing Risk
7–1
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7–2
Where We Are Now
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2
Learning Objectives
Describe the risk management process
Understand how to identify project risks
Assess the significance of different project risks
Describe the four different responses to managing risks
Understand the role contingency plans play in risk management process
Understand opportunity management and describe the four different approaches to responding to opportunities in a project
Understand how contingency funds and time buffers are used to manage risks on a project
Recognize the need for risk management being an ongoing activity
Describe the change control process
7–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
7.1 Risk Management Process
7.2 Step 1: Risk Identification
7.3 Step 2: Risk Assessment
7.4 Step 3: Risk Response Development
7.5 Contingency Planning
7.6 Opportunity Management
7.7 Contingency Funding and Time Buffers
7.8 Step 4: Risk Response Control
7.9 Change Control Management
7–4
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7–5
Risk Management Process
Risk
Uncertain or chance events that planning cannot overcome or control
Risk Management
An attempt to recognize and manage potential and unforeseen trouble spots that may occur when the project is implemented
What can go wrong (risk event)
How to minimize the risk event’s impact (consequences)
What can be done before an event occurs (anticipation)
What to do when an event occurs (contingency plans)
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5
7–6
The Risk Event Graph
FIGURE 7.1
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6
7–7
Risk Management’s Benefits
A proactive rather than reactive approach
Reduces surprises and negative consequences
Prepares the project manager to take advantage
of appropriate risks
Provides better control over the future
Improves chances of reaching project performance objectives within budget and on time
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7
7–8
The Risk Management Process
FIGURE 7.2
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8
7–9
Managing Risk
Step 1: Risk Identification
Generate a list of possible risks through brainstorming, problem identification and risk profiling
Use risk breakdown structure (RBS) in conjunction with work breakdown structure (WBS) to identify and analyze risks
Macro risks first, then specific events
Risk profile is a list of questions addressing additional areas of uncertainty on a project.
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9
7–10
The Risk Breakdown Structure (RBS)
FIGURE 7.3
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10
7–11
Partial Risk Profile for Product Development Project
FIGURE 7.4
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11
7–12
Managing Risk
Step 2: Risk Assessment
Scenario analysis for event probability and impact
Risk assessment form
Risk severity matrix
Failure Mode and Effects Analysis (FMEA)
Risk Value = Impact x Probability x Detection
Probability analysis
Decision trees, NPV, and PERT
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12
7–13
Defined Conditions for Impact Scales of a Risk on Major Project Objectives (Examples for negative impacts only)
FIGURE 7.5
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13
7–14
Risk Assessment Form
FIGURE 7.6
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14
7–15
Risk Severity Matrix
FIGURE 7.7
Failure Mode and Effects Analysis (FMEA)
Impact × Probability × Detection = Risk Value
User Backlash | Interface problems | |||
System freezing | ||||
Hardware malfunc-tioning |
Likelihood
Impact
Red zone (major risk)
Yellow zone (moderate risk)
Green zone (minor risk)
5
5
4
4
3
3
2
2
1
1
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15
7–16
Managing Risk (cont’d)
Step 3: Risk Response Development
Mitigating Risk
Reducing the likelihood an adverse event will occur
Reducing the impact of an adverse event
Avoiding Risk
Changing the project plan to eliminate the risk or condition
Transferring Risk
Paying a premium to pass the risk to another party
Requiring Build-Own-Operate-Transfer (BOOT) provisions
Accepting Risk
Making a conscious decision to accept the risk
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16
7–17
Contingency Planning
Contingency Plan
An alternative plan that will be used if a possible foreseen risk event actually occurs
A plan of actions that will reduce or mitigate the negative impact (consequences) of a risk event
Risks of Not Having a Contingency Plan
Having no plan may slow managerial response
Decisions made under pressure can be potentially dangerous and costly
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17
7–18
Risk Response Matrix
FIGURE 7.8
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18
7–19
Risk and Contingency Planning
Technical Risks
Backup strategies if chosen technology fails
Assessing whether technical uncertainties can be resolved
Schedule Risks
Use of slack increases the risk of a late project finish
Imposed duration dates (absolute project finish date)
Compression of project schedules due to a shortened project duration date
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19
7–20
Risk and Contingency Planning (cont’d)
Cost Risks
Time/cost dependency links: costs increase when problems take longer to solve than expected.
Price protection risks (a rise in input costs) increase if the duration of a project is increased.
Funding Risks
Changes in the supply of funds for the project can dramatically affect the likelihood of implementation or successful completion of a project.
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20
7–21
Opportunity Management
Exploit
Seeking to eliminate the uncertainty associated with an opportunity to ensure that it definitely happens
Share
Allocating some or all of the ownership of an opportunity to another party who is best able to capture the opportunity for the benefit of the project
Enhance
Taking action to increase the probability and/or the positive impact of an opportunity
Accept
Being willing to take advantage of an opportunity if it occurs, but not taking action to pursue it
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21
7–22
Contingency Funding and Time Buffers
Contingency Funds
Funds to cover project risks—identified and unknown
Size of funds reflects overall risk of a project.
Budget reserves
Are linked to the identified risks of specific work packages.
Management reserves
Are large funds to be used to cover major unforeseen risks (e.g., change in project scope) of the total project.
Time Buffers
Amounts of time used to compensate for unplanned delays in the project schedule
Severe risk, merge, noncritical, and scarce resource activities
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22
7–23
Contingency Fund Estimate
TABLE 7.1
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23
7–24
Managing Risk (cont’d)
Step 4: Risk Response Control
Risk control
Execution of the risk response strategy
Monitoring of triggering events
Initiating contingency plans
Watching for new risks
Establishing a Change Management System
Monitoring, tracking, and reporting risk
Fostering an open organization environment
Repeating risk identification/assessment exercises
Assigning and documenting responsibility for managing risk
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24
7–25
Change Control Management
Sources of Change
Project scope changes
Implementation of contingency plans
Improvement changes
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25
7–26
Change Management Systems
Identify proposed changes
List expected effects of proposed changes on schedule and budget
Review, evaluate, and approve or disapprove of changes formally
Negotiate and resolve conflicts of change, condition, and cost
Communicate changes to parties affected
Assign responsibility for implementing change
Adjust master schedule and budget
Track all changes that are to be implemented
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26
7–27
The Change
Control Process
FIGURE 7.9
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27
7–28
Benefits of a Change Control System
Inconsequential changes are discouraged by the formal process.
Costs of changes are maintained in a log.
Integrity of the WBS and performance measures is maintained.
Allocation and use of budget and management reserve funds are tracked.
Responsibility for implementation is clarified.
Effect of changes is visible to all parties involved.
Implementation of change is monitored.
Scope changes will be quickly reflected in baseline and performance measures.
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28
7–29
Sample Change Request
FIGURE 7.10
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29
7–30
Change Request Log
FIGURE 7.11
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30
7–31
Key Terms
Accept risk
Avoiding risk
Budget reserve
Change management system
Contingency plan
Management reserve
Mitigating risk
Opportunity
Risk
Risk breakdown structure (RBS)
Risk profile
Risk register
Risk severity matrix
Scenario analysis
Time buffer
Transferring risk
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31
Appendix 7.1
PERT and PERT Simulation
7–32
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32
7–33
PERT—Program Evaluation Review Technique
Assumes each activity duration has a range that statistically follows a beta distribution.
Uses three time estimates for each activity: optimistic, pessimistic, and a weighted average to represent activity durations.
Knowing the weighted average and variances for each activity allows the project planner to compute the probability of meeting different project durations.
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33
7–34
Activity and Project Frequency Distributions
FIGURE A7.1
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34
7–35
Activity Time Calculations
The weighted average activity time is computed by the following formula:
(7.1)
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35
7–36
Activity Time Calculations (cont’d)
The variability in the activity time estimates is approximated by the following equations:
The standard deviation for the activity:
The standard deviation for the project:
Note the standard deviation of the activity is squared in this equation; this is also called variance. This sum includes only activities on the critical path(s) or path being reviewed.
(7.2)
(7.3)
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36
7–37
Activity Times and Variances
TABLE A7.1
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37
7–38
Probability of Completing the Project
The equation below is used to compute the “Z” value found in statistical tables (Z = number of standard deviations from the mean), which, in turn, tells the probability of completing the project in the time specified.
(7.4)
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38
7–39
Hypothetical Network
FIGURE A7.2
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39
7–40
Hypothetical Network (cont’d)
FIGURE A7.2 (cont’d)
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40
7–41
Possible Project Duration
Probability project is completed before scheduled time (TS) of 67 units
Probability project is completed by the 60th unit time period (TS)
FIGURE A7.3
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41
7–42
Z Values and Probabilities
TABLE A7.2
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42
Chapter Eight
Scheduling Resources and Costs
8–1
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8–2
Where We Are Now
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8-2
Project Management 6e.
Learning Objectives
Understand the differences between time-constrained and resource-constrained schedules
Identify different types of resource constraints
Describe how the smoothing approach is used on time-constrained projects
Describe how leveling approach is used for resource-constrained projects
Understand how project management software creates resource-constrained schedules
Understand when and why splitting tasks should be avoided
Identify general guidelines for assigning people to specific tasks
Identify common problems with multiproject resource scheduling
Explain why a time-phased budget baseline is needed
Create a time-phased project budget baseline
8–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
8.1 Overview of the Resource Scheduling Problem
8.2 Types of Resource Constraints
8.3 Classification of a Scheduling Problem
8.4 Resource Allocation Methods
8.5 Computer Demonstration of Resource-Constrained
Scheduling
8.6 Splitting Activities
8.7 Benefits of Scheduling Resources
8.8 Assigning Project Work
8.9 Multiproject Resource Schedules
8.10 Using the Resource Schedule to Develop a Project
Cost Baseline
8–4
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Overview of the Resource
Scheduling Problem
Resources and Priorities
Project network times are not a schedule until resources have been assigned.
The implicit assumption is that resources will be available in the required amounts when needed.
Adding new projects requires making realistic judgments of resource availability and project durations.
Cost estimates are not a budget until they have been time-phased.
8–5
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8-5
Project Management 6e.
8–6
Project Planning Process
FIGURE 8.1
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8-6
Project Management 6e.
8–7
The Resource Scheduling Problem (cont’d)
Resource Smoothing (or Leveling)
Involves attempting to even out varying demands
on resources by using slack (delaying noncritical activities) to manage resource utilization when resources are adequate over the life of the project.
Resource-Constrained Scheduling
The duration of a project may be increased by delaying the late start of some of its activities if resources are not adequate to meet peak demands.
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8-7
Project Management 6e.
8–8
Types of Project Constraints
Technical or Logic Constraints
Constraints related to the networked sequence in which project activities must occur
Physical Constraints
Activities that cannot occur in parallel or are affected by contractual or environmental conditions
Resource Constraints
The absence, shortage, or unique interrelationship and interaction characteristics of resources that require a particular sequencing of project activities
People, materials, equipment
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8-8
Project Management 6e.
8–9
Constraint Examples
FIGURE 8.2
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8-9
Project Management 6e.
8–10
Classification of a Scheduling Problem
Classification of Problem
Using a priority matrix will help determine if the project is time or resource constrained.
Time-Constrained Project
Must be completed by an imposed date.
Time is fixed, resources are flexible: additional resources are required to ensure project meets schedule.
Resource-Constrained Project
Is one in which the level of resources available cannot be exceeded.
Resources are fixed, time is flexible: inadequate resources
will delay the project.
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8-10
Project Management 6e.
8–11
Resource Allocation Methods
Limiting Assumptions
Splitting activities is not allowed—once an activity is start, it is carried to completion.
Level of resources used for an activity cannot be changed.
Risk Assumptions
Activities with the most slack pose the least risk.
Reduction of flexibility does not increase risk.
The nature of an activity (easy, complex) doesn’t increase risk.
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8-11
Project Management 6e.
8–12
Resource Allocation Methods (cont’d)
Time-Constrained Projects
Must be completed by an imposed date.
Require use of leveling techniques that focus
on balancing or smoothing resource demands.
Use positive slack (delaying noncritical activities) to manage resource utilization over the duration
of the project.
Peak resource demands are reduced.
Resources over the life of the project are reduced.
Fluctuation in resource demand is minimized.
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8-12
Project Management 6e.
8–13
Botanical Garden
FIGURE 8.3
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8-13
Project Management 6e.
8–14
Resource Allocation Methods (cont’d)
Resource Demand Leveling Techniques
for Time-Constrained Projects
Advantages
Peak resource demands are reduced.
Resources over the life of the project are reduced.
Fluctuation in resource demand is minimized.
Disadvantages
Loss of flexibility that occurs from reducing slack
Increases in the criticality of all activities
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-14
Project Management 6e.
8–15
Resource Allocation Methods (cont’d)
Resource-Constrained Projects
Resources are limited in quantity or availability.
Activities are scheduled using heuristics
(rules-of-thumb) that focus on:
Minimum slack
Smallest (least) duration
Lowest activity identification number
The parallel method is used to apply heuristics
An iterative process starting at the first time period
of the project and scheduling period-by-period the start of any activities using the three priority rules.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-15
Project Management 6e.
8–16
Resource-Constrained Schedule through Period 2–3
FIGURE 8.4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-16
Project Management 6e.
8–17
Resource-Constrained Schedule through Period 2–3
FIGURE 8.4 (cont’d)
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8-17
Project Management 6e.
8–18
Resource-Constrained Schedule through Period 2–3
FIGURE 8.4 (cont’d)
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8-18
Project Management 6e.
8–19
Resource-Constrained Schedule through Period 5–6
FIGURE 8.5
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-19
Project Management 6e.
8–20
Resource-Constrained Schedule through Period 5–6
FIGURE 8.5 (cont’d)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-20
Project Management 6e.
8–21
Resource-Constrained Schedule through Period 5–6
FIGURE 8.5 (cont’d)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-21
Project Management 6e.
8–22
Computer Demonstration of Resource-Constrained Scheduling
EMR Project
The development of a handheld electronic medical reference guide to be used by emergency medical technicians and paramedics
Problem
There are only eight design engineers who can be assigned to the project due to a shortage of design engineers and commitments to other projects.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-22
Project Management 6e.
8–23
EMR Project: Network View Schedule before Resources Leveled
FIGURE 8.6
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8-23
Project Management 6e.
8–24
EMR Project before Resources Added
FIGURE 8.7
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-24
Project Management 6e.
8–25
EMR Project—Time Constrained Resource Usage View, January 15–23
FIGURE 8.8A
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-25
Project Management 6e.
8–26
Resource Loading Chart for EMR Project, January 15–23
FIGURE 8.8B
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-26
Project Management 6e.
8–27
EMR Project Network View Schedule
after Resources Leveled
FIGURE 8.9
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8-27
Project Management 6e.
8–28
EMR Project Resources Leveled
FIGURE 8.10
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-28
Project Management 6e.
8–29
The Impacts of Resource-Constrained Scheduling
Reduces slack; reduces flexibility
Increases criticality of events
Increases scheduling complexity
May make the traditional critical path no longer meaningful
Can break sequence of events
May cause parallel activities to become sequential
Activities with slack may become critical
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-29
Project Management 6e.
8–30
Splitting
Splitting
A scheduling technique for creating a better project schedule and/or increase resource utilization
Involves interrupting work on an activity to employ the resource on another activity, then returning the resource to finish the interrupted work.
Is feasible when startup and shutdown costs are low.
Is considered the major reason why projects fail to meet schedule.
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8-30
Project Management 6e.
8–31
Splitting Activities
FIGURE 8.11
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8-31
Project Management 6e.
8–32
Benefits of Scheduling Resources
Leaves time for consideration of reasonable alternatives:
Cost-time tradeoffs
Changes in priorities
Provides information for time-phased work package budgets to assess:
Impact of unforeseen events
Amount of flexibility in available resources
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-32
Project Management 6e.
Assigning Project Work
Reasons why we should not always assign the best people the most difficult tasks
Best people: resent to the fact that they are always given the toughest assignments
Less experienced participants: resent to the fact that they are never given the opportunity to expand their skill/knowledge base
Factors to be considered in deciding who should work together
Minimize unnecessary tension; complement each other
Experience: veterans team up with new hires
8–33
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8–34
Multiproject Resource Schedules
Multiproject Scheduling Problems
Overall project slippage
Delay on one project create delays for other projects.
Inefficient resource application
The peaks and valleys of resource demands create scheduling problems and delays for projects.
Resource bottlenecks
Shortages of critical resources required for multiple projects cause delays and schedule extensions.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-34
Project Management 6e.
8–35
Multiproject Resource Schedules (cont’d)
Managing Multiproject Scheduling:
Create project offices or departments to oversee the scheduling of resources across projects
Use a project priority queuing system: first come, first served for resources
Centralize project management: treat all projects as a part of a “megaproject”
Outsource projects to reduce the number of projects handled internally
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-35
Project Management 6e.
Using the Resource Schedule to Develop
a Project Cost Baseline
Why a Time-Phased Budget Baseline Is Needed
To determine if the project is on, ahead, or behind schedule and over or under its budgeted costs?
To know how much work has been accomplished for the allocated money spent—the project cost baseline (planned value, PV)
Creating a Time-Phased Budget
Assign each work package to one responsible person or department and deliverable
Compare planned schedule and costs using an integrative system called earned value
8–36
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-36
Project Management 6e.
8–37
Direct Labor Budget Rollup ($000)
FIGURE 8.12
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8-37
Project Management 6e.
8–38
Time-Phased Work Package Budget (Labor Cost Only)
FIGURE 8.13
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8-38
Project Management 6e.
8–39
Two Time-Phased Work Packages (Labor Cost Only)
FIGURE 8.14
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8-39
Project Management 6e.
8–40
Patient Entry Project Network
FIGURE 8.15
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8-40
Project Management 6e.
8–41
Patient Entry Time-Phased Work Packages Assigned
FIGURE 8.16
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
8-41
Project Management 6e.
8–42
CEBOO Project Monthly Cash Flow Statement
FIGURE 8.17
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8-42
Project Management 6e.
8–43
CEBOO Project Weekly Resource Usage Schedule
FIGURE 8.18
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8-43
Project Management 6e.
8–44
Key Terms
Heuristics
Leveling
Planned value (PV)
Resource-constrained projects
Resource smoothing
Splitting
Time-constrained projects
Time-phased budget baseline
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8-44
Project Management 6e.
Chapter Nine
Reducing Project Duration
9–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
9–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–2
Learning Objectives
Understand the different reasons for crashing a project
Identify the different options for crashing an activity when resources are not constrained
Identify the different options for crashing an activity when resources are constrained
Determine the optimum cost-time point in a project network
Understand the risks associated with compressing or crashing a project
Identify different options for reducing the costs of a project
9–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
9.1 Rationale for Reducing Project Duration
9.2 Options for Accelerating Project Completion
9.3 Project Cost-Duration Graph
9.4 Constructing a Project Cost-Duration Graph
9.5 Practical Considerations
9.6 What If Cost, Not Time, Is the Issue?
9–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
9–5
Rationale for Reducing Project Duration
Time Is Money: Cost-Time Tradeoffs
Reducing the time of a critical activity usually incurs additional direct costs.
Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project.
Reasons for imposed project duration dates:
Time-to-market pressures
Unforeseen delays
Incentive contracts (bonuses for early completion)
Imposed deadlines and contract commitments
Overhead and public goodwill costs
Pressure to move resources to other projects
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–5
9–6
Options for Accelerating Project Completion
Resources Not Constrained
Adding resources
Outsourcing project work
Scheduling overtime
Establishing a core project team
Do it twice—fast and then correctly
Resources Constrained
Improving project team efficiency
Fast-tracking
Critical-chain
Reducing project scope
Compromise quality
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–6
9–7
Reducing Project Duration
to Reduce Project Cost
Compute total costs for specific durations and compare to benefits of reducing project time
Search critical activities for lowest direct-cost activities to shorten project duration
Identifying direct costs to reduce project time
Gather information about direct and indirect costs of specific project durations
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–7
9–8
Explanation of Project Costs
Project Indirect Costs
Costs that cannot be associated with any particular work package or project activity
Supervision, administration, consultants, and interest
Costs that vary (increase) with time
Reducing project time directly reduces indirect costs
Project Direct Costs
Normal costs that can be assigned directly to a specific work package or project activity
Labor, materials, equipment, and subcontractors
Crashing activities increases direct costs.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–8
9–9
Project Cost–Duration Graph
FIGURE 9.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–9
9–10
Constructing a Project Cost–Duration Graph
Find total direct costs for
selected project durations
Find total indirect costs for
selected project durations
Sum direct and indirect costs for these selected project durations
Compare additional cost
alternatives for benefits
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–10
9–11
Constructing a Project Cost–Duration Graph
Determining Activities to Shorten
Shorten the activities with the smallest increase in cost per unit of time
Assumptions:
The cost-time relationship is linear.
Normal time assumes low-cost, efficient methods to complete the activity.
Crash time represents a limit—the greatest time reduction possible under realistic conditions.
Slope represents a constant cost per unit of time.
All accelerations must occur within the normal and crash times.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–11
9–12
Activity Graph
FIGURE 9.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–12
9–13
Cost–Duration Trade-off Example
FIGURE 9.3
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Project Management 6e.
9–13
9–14
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.3 (cont’d)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–14
9–15
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.4
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Project Management 6e.
9–15
9–16
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.4 (cont’d)
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Project Management 6e.
9–16
9–17
Summary Costs by Duration
FIGURE 9.5
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Project Management 6e.
9–17
9–18
Project Cost–Duration Graph
FIGURE 9.6
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–18
9–19
Practical Considerations
Using the Project Cost–Duration Graph
Crash Times
Linearity Assumption
Choice of Activities to Crash Revisited
Time Reduction Decisions and Sensitivity
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–19
9–20
What if Cost, Not Time Is the Issue?
Commonly Used Options for Cutting Costs
Reducing project scope
Having owner take on more responsibility
Outsourcing project activities or even the entire project
Brainstorming cost savings options
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–20
9–21
Key Terms
Crashing
Crash point
Crash time
Direct costs
Fast-tracking
Indirect costs
Outsourcing
Project cost–duration graph
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–21
9–22
Project Priority Matrix: Whitbread Project
FIGURE C9.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–22
Chapter Ten
Being an Effective Project Manager
10-1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
10–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–2
Learning Objectives
Understand the difference between leading and managing a project
Understand the need to manage project stakeholders
Identify and apply different “influence currencies” to build positive relations with others
Create a stakeholder map and develop strategies for managing project dependencies
Understand the need for a highly interactive management style on projects
More effectively manage project expectations
Develop strategies for managing upward relations
Understand the importance of building trust and acting in an ethical manner while working on a project
Identify the qualities of an effective project manager
10–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
10.1 Managing versus Leading a Project
10.2 Managing Project Stakeholders
10.3 Influence as Exchange
10.4 Social Network Building
10.5 Ethics and Project Management
10.6 Building Trust: The Key to Exercising
Influence
10.7 Qualities of an Effective Project Manager
10–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
10–5
Managing versus Leading a Project
Managing—coping with complexity
Formulate plans and objectives
Monitor results
Take corrective action
Expedite activities
Solve technical problems
Serve as peacemaker
Make tradeoffs among time, costs, and project scope
Leading—coping with change
Recognize the need to change to keep the project on track
Initiate change
Provide direction and motivation
Innovate and adapt as necessary
Integrate assigned resources
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Project Management 6e.
10–5
10–6
Managing Project Stakeholders
Project Management Maxims:
You can’t do it all and get it all done.
Projects usually involve a vast web of relationships.
Hands-on work is not the same as leading.
More pressure and more involvement can reduce
your effectiveness as a leader.
What’s important to you likely isn’t as important
to someone else.
Different groups have different stakes (responsibilities, agendas, and priorities) in the outcome of a project.
Remember: project management is tough, exciting, and rewarding—endeavor to persevere.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–6
10–7
Network of Stakeholders
FIGURE 10.1
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Project Management 6e.
10–7
10–8
Influence as Exchange
The Law of Reciprocity
One good deed deserves another, and likewise, one bad deed deserves another.
Quid pro Quo
Mutual exchanges of resources and services
(“back-scratching”) build relationships.
Influence “Currencies” (Cohen and Bradford)
Cooperative relationships are built on the exchange
of organizational “currencies” (favors).
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–8
10–9
Commonly Traded Organizational Currencies
TABLE 10.1
Task-related currencies
Resources Lending or giving money, budget increases, personnel, etc.
Assistance Helping with existing projects or undertaking unwanted tasks.
Cooperation Giving task support, providing quicker response time, or aiding implementation.
Information Providing organizational as well as technical knowledge.
Position-related currencies
Advancement Giving a task or assignment that can result in promotion.
Recognition Acknowledging effort, accomplishments, or abilities.
Visibility Providing a chance to be known by higher-ups or significant others in the organization.
Network/ Providing opportunities for linking with others.
contacts
Source: Adapted from A. R. Cohen and David L. Bradford, Influence without Authority (New York: John Wiley & Sons, 1990). Reprinted by permission of John Wiley & Sons, Inc.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–9
10–10
Organizational Currencies (cont’d)
TABLE 10.1 (cont’d)
Inspiration-related currencies
Vision Being involved in a task that has larger significance for the unit, organization, customer, or society.
Excellence Having a chance to do important things really well.
Ethical correctness Doing what is “right” by a higher standard than efficiency.
Relationship-related currencies
Acceptance Providing closeness and friendship.
Personal support Giving personal and emotional backing.
Understanding Listening to others’ concerns and issues.
Personal-related currencies
Challenge/learning Sharing tasks that increase skills and abilities.
Ownership/involvement Letting others have ownership and influence.
Gratitude Expressing appreciation.
Source: Adapted from A. R. Cohen and David L. Bradford, Influence without Authority (New York: John Wiley & Sons, 1990). Reprinted by permission of John Wiley & Sons, Inc.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–10
10–11
Social Network Building
Mapping Stakeholder Dependencies
Project team perspective:
Whose cooperation will we need?
Whose agreement or approval will we need?
Whose opposition would keep us from accomplishing the project?
Stakeholders’ perspective:
What differences exist between the team and those on whom the team will depend?
How do the stakeholders view the project?
What is the status of our relationships with the stakeholders?
What sources of influence does the team have relative
to the stakeholders?
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–11
10–12
Stakeholder Map for Financial Software Installation Project
FIGURE 10.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–12
10–13
Management by Wandering Around
Management by Wandering Around (MBWA)
Involves managers spending the majority of their time in face-to-face interactions with employees building cooperative relationships.
Characteristics of Effective Project Managers
Initiate contact with key stakeholders
Anticipate potential problems
Provide encouragement
Reinforce the objectives and vision of the project
Intervene to resolve conflicts and prevent stalemates
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–13
10–14
Managing Upward Relations
Project Success = Top Management Support
Appropriate budget
Responsiveness to unexpected needs
A clear signal to the organization of the importance of cooperation
Motivating the Project Team
Influence top management in favor of the team:
Rescind unreasonable demands
Provide additional resources
Recognize the accomplishments of team members
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Project Management 6e.
10–14
10–15
The Significance of a Project Sponsor
FIGURE 10.3
Upper management
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Project Management 6e.
10–15
10–16
Leading by Example
FIGURE 10.4
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Project Management 6e.
10–16
10–17
Ethics and Project Management
Ethical Dilemmas
Situations where it is difficult to determine whether conduct is right or wrong:
Padding of cost and time estimations
Exaggerating pay-offs of project proposals
Falsely assuring customers that everything is on track
Being pressured to alter status reports
Falsifying cost accounts
Compromising safety standards to accelerate progress
Approving shoddy work
Code of conduct
Professional standards and personal integrity
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Project Management 6e.
10–17
Building Trust: The Key to Exercising Influence
Trust
An elusive concept
See it as a function of character and competence
Character focuses on personal motives.
Competence focuses on skills necessary to realize motives.
The core of highly effective people is a character ethic (Stephen Covey in Seven Habits of Highly Effective People).
Consistency—more predictable
Openness—more receptive to others
A sense of purpose—what is best for the organization and the project
10–18
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
10–19
Contradictions of Project Management
Innovate and maintain stability
See the big picture while getting your hands dirty
Encourage individuals but stress the team
Hands-off/Hands-on
Flexible but firm
Team versus organizational loyalties
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–19
10–20
Traits of an Effective Project Manager
Systems thinker
Personal integrity
Proactive
High emotional intelligence (EQ)
General business perspective
Effective time management
Skillful politician
Optimist
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Project Management 6e.
10–20
10–21
Suggestions for Project Managers
Build relationships before you need them.
Trust is sustained through frequent
face-to-face contact.
Realize that “what goes around comes around.”
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–21
10–22
Key Terms
Emotional intelligence (EQ)
Inspiration-related currencies
Law of reciprocity
Leading by example
Management by wandering around (MBWA)
Personal-related currencies
Position-related currencies
Proactive
Relationship-related currencies
Social network building
Stakeholder
Systems thinking
Task-related currencies
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
10–22
Chapter Eleven
Managing Project Teams
11–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–2
Project Management 6e.
Learning Objectives
Identify key characteristics of a high-performance project team
Distinguish the different stages of team development
Understand the impact situational factors have on project team development
Identify strategies for developing a high-performance project team
Distinguish functional conflict from dysfunctional conflict and describe strategies for encouraging functional conflict and discouraging dysfunctional conflict
Understand the challenges of managing virtual project teams
Recognize the different pitfalls that can occur in a project team
11–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
11.1 The Five-Stage Team Development Model
11.2 Situational Factors Affecting Team
Development
11.3 Building High-Performance Project Teams
11.4 Managing Virtual Project Teams
11.5 Project Team Pitfalls
11–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–5
High-Performing Teams
Synergy
1 + 1 + 1 = 10 (positive synergy)
1 + 1 + 1 = 2 (negative synergy)
Characteristics of High-performing Teams
Share a sense of common purpose
Make effective use of individual talents and expertise
Have balanced and shared roles
Maintain a problem solving focus
Accept differences of opinion and expression
Encourage risk taking and creativity
Set high personal performance standards
Identify with the team
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–5
Project Management 6e.
11–6
The Five-Stage Team Development Model
FIGURE 11.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–6
Project Management 6e.
11–7
Conditions Favoring Development of
High Performance Project Teams
Ten or fewer team members
Voluntary team membership
Continuous service on the team
Full-time assignment to the team
An organization culture of cooperation and trust
Members report solely to the project manager
All relevant functional areas are represented on the team
The project involves a compelling objective
Members are in close communication with each other
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–7
Project Management 6e.
11–8
The Punctuated Equilibrium Model
of Group Development
FIGURE 11.2
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11–8
Project Management 6e.
11–9
Creating a High-Performance Project Team
FIGURE 11.3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–9
Project Management 6e.
11–10
Building High-Performance Project Teams
Recruiting Project Members
Factors affecting recruiting
Importance of the project
Management structure used to complete the project
How to recruit?
Ask for volunteers
Who to recruit?
Problem-solving ability
Availability
Technological expertise
Credibility
Political connections
Ambition, initiative, and energy
Familiarity
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–10
Project Management 6e.
11–11
Project Team Meetings
Conducting Project Meetings
Establishing Ground Rules
Planning Decisions
Tracking Decisions
Managing Change Decisions
Relationship Decisions
Establishing Team Norms
Managing
Subsequent Meetings
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–11
Project Management 6e.
Norms of High-performance Teams
Confidentiality is maintained; no information is shared outside the team unless all agree to it.
It is acceptable to be in trouble, but it is not acceptable to surprise others. Tell others immediately when deadlines or milestones will not be reached.
There is zero tolerance for bulling a way through a problem or an issue.
Agree to disagree, but when a decision has been made, regardless of personal feelings, move forward.
Respect outsiders, and do not flaunt one’s position on the project team.
Hard work does not get in the way of having fun.
11–12
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
11–12
11–13
Establishing a Team Identity
Effective Use
of Meetings
Co-location of
team members
Creation of project
team name
Team rituals
Get the team to do
something together
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11–13
Project Management 6e.
11–14
Requirements for an Effective Project Vision
FIGURE 11.4
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11–14
Project Management 6e.
11–15
Managing Project Reward Systems
Group Rewards
Who gets what as an individual reward?
How to make the reward have lasting significance?
How to recognize individual performance?
Letters of commendation
Public recognition for outstanding work
Desirable job assignments
Increased personal flexibility
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11–15
Project Management 6e.
11–16
Orchestrating the Decision-Making Process
Problem Identification
Generating Alternatives
Reaching a Decision
Follow-up
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11–16
Project Management 6e.
11–17
Managing Conflict within the Project Team
Encouraging Functional Conflict
Encourage dissent by asking tough questions
Bring in people with different points of view
Designate someone to be a devil’s advocate
Ask the team to consider an unthinkable alternative
Managing Dysfunctional Conflict
Mediate the conflict
Arbitrate the conflict
Control the conflict
Accept the conflict
Eliminate the conflict
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–17
Project Management 6e.
11–18
Sources of Conflict over the Project Life Cycle
FIGURE 11.5
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11–18
Project Management 6e.
11–19
Rejuvenating the Project Team
Informal Techniques
Institute new rituals
Take an off-site break as a team from the project
View an inspiration message or movie
Have the project sponsor give a pep talk
Formal Techniques
Hold a team building session facilitated by an outsider to clarify ownership issues affecting performance
Engage in an outside activity that provides an intense common experience to promote social development of the team
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–19
Project Management 6e.
11–20
Managing Virtual Project Teams
Challenges:
Developing trust
Exchange of social information
Set clear roles for each team member
Developing effective patterns of communication
Don’t let team members vanish
Establish a code of conduct to avoid delays
Establish clear norms and protocols for surfacing assumptions and conflicts
Use electronic video technology to verify work
Share the pain
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–20
Project Management 6e.
11–21
24-Hour Global Clock
FIGURE 11.6
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–21
Project Management 6e.
11–22
Project Team Pitfalls
Groupthink
Bureaucratic
Bypass Syndrome
Team Spirit Becomes
Team Infatuation
Going Native
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
11–22
Project Management 6e.
11–23
Key Terms
Brainstorming
Dysfunctional conflict
Functional conflict
Groupthink
Nominal group technique (NGT)
Positive synergy
Project kickoff meeting
Project vision
Team building
Team rituals
Virtual project team
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11–23
Project Management 6e.
11–24
Celebration Task Force Agenda
FIGURE C11.1
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11–24
Project Management 6e.
Chapter Twelve
Outsourcing: Managing Interorganizational Relations
12–1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–2
Project Management 6e.
Learning Objectives
Understand the advantages and disadvantages of outsourcing project work
Describe the basic elements of a Request for Proposal (RFP)
Identify best practices for outsourcing project work
Practice principled negotiation
Describe the met-expectations model of customer satisfaction and its implications for working with customers on projects
12–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
12.1 Outsourcing Project Work
12.2 Request for Proposal (RFP)
12.3 Best Practices in Outsourcing Project Work
12.4 The Art of Negotiating
12.5 A Note on Managing Customer Relations
12–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Outsourcing Project Work
Outsourcing
The process of transferring of business functions or processes (e.g., customer support, IT, accounting) to other, often foreign companies
Being applied to contracting significant chunks of project work
Being applied to the creation of new products and services
12–5
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–5
Project Management 6e.
12–6
Reclining Chair Project
FIGURE 12.1
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12–6
Project Management 6e.
12–7
Outsourcing Project Work
Advantages
Cost reduction
Faster project completion
High level of expertise
Flexibility
Disadvantages
Coordination breakdowns
Loss of control
Conflict
Security issues
Political hot potato
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–7
Project Management 6e.
Request for Proposal (RFP)
Be announced to external contractors/vendors with adequate experience to implement the project
Development steps:
12–8
FIGURE 12.2
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Contractor Evaluation Template
12–9
FIGURE 12.3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–10
Best Practices in Outsourcing Project Work
FIGURE 12.2
Well-defined requirements and procedures
Extensive training and team-building activities
Well-established conflict management processes in place
Frequent review and status updates
Co-location when needed
Fair and incentive-laden contracts
Long-term outsourcing relationships
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–10
Project Management 6e.
12–11
Key Differences Between Partnering and Traditional Approaches to Managing Contracted Relationships
TABLE 12.1
Partnering Approach
Mutual trust forms the basis for strong working relationships.
Shared goals and objectives ensure common direction.
Joint project team exists with
high level of interaction.
Open communications avoid misdirection and bolster effective working relationships.
Long-term commitment provides the opportunity to attain continuous improvement.
Traditional Approach
Suspicion and distrust; each party is wary of the motives of the other.
Each party’s goals and objectives, while similar, are geared to what is best for them.
Independent project teams; teams are spatially separated with managed interactions.
Communications are structured
and guarded.
Single project contracting is normal.
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12–11
Project Management 6e.
12–12
Key Differences Between Partnering and
Traditional Approaches …(cont’d)
TABLE 12.1 (cont’d)
Partnering Approach
Objective critique is geared to candid assessment of performance.
Access to each other’s organization resources is available.
Total company involvement requires commitment from CEO to team members.
Integration of administrative systems equipment takes place.
Risk is shared jointly among the partners, encouraging innovation and continuous improvement.
Traditional Approach
Objectivity is limited due to fear of reprisal and lack of continuous improvement opportunity.
Access is limited with structured procedures and self-preservation
taking priority over total optimization.
Involvement is normally limited to project-level personnel.
Duplication and/or translation takes place with attendant costs and delays.
Risk is transferred to the other party.
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12–12
Project Management 6e.
12–13
Strategies for Communicating
with Outsourcers
STRATEGY 1: Recognize cultural differences
STRATEGY 2: Choose the right words
STRATEGY 3: Confirm your requirements
STRATEGY 4: Set deadlines
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12–13
Project Management 6e.
12–14
Project Partnering Charter
FIGURE 12.2
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12–14
Project Management 6e.
12–15
Preproject Activities—Setting the Stage
for Successful Partnering
Selecting a Partner(s)
Voluntary, experienced, willing, with committed top management
Team Building: The Project Managers
Build a collaborative relationship among the project managers
Team Building: The Stakeholders
Expand the partnership commitment to include other key managers and specialists
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12–15
Project Management 6e.
12–16
Project Implementation—Sustaining Collaborative Relationships
Establish a “we” as opposed to “us and them” attitude toward the project
Co-location: employees from different organizations work together at the same location
Establish mechanisms that will ensure the relationship withstands problems and setbacks
Problem resolution
Continuous improvement
Joint evaluation
Persistent leadership
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12–16
Project Management 6e.
12–17
Project Completion—Celebrating Success
Conduct a joint review of accomplishments
and disappointments
Hold a celebration for all project participants
Recognize special contributions
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12–17
Project Management 6e.
12–18
FIGURE 12.6
Sample Online Partnering Survey
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–18
Project Management 6e.
12–19
Advantages of Long-term Partnerships
Reduced administrative costs
More efficient utilization of resources
Improved communication
Improved innovation
Improved performance
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–19
Project Management 6e.
12–20
The Art of Negotiating
Project management is NOT a contest.
Everyone is on the same side—OURS.
Everyone is bound by the success of the project.
Everyone has to continue to work together.
Principled Negotiations
TABLE 12.2
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12–20
Project Management 6e.
12–21
The Art of Negotiating (cont’d)
Dealing with Unreasonable People
If pushed, don’t push back.
Ask questions instead of making statements
Use silence as a response to unreasonable demands
Ask for advice and encourage others to criticize your ideas and positions
Use Fisher and Ury’s best alternative to a negotiated agreement (BATNA) concept to work toward a win/win scenario
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–21
Project Management 6e.
12–22
Managing Customer Relations
Customer Satisfaction
The negative effect of dissatisfied customers on a firm’s reputation is far greater than the positive effect of satisfied customers.
Every customer has a unique set of performance expectations and met-performance perceptions.
Satisfaction is a perceptual relationship:
Perceived performance
Expected performance
Project managers must be skilled at managing both customer expectations and perceptions.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–22
Project Management 6e.
12–23
The Met-Expectations Model
of Customer Satisfaction
FIGURE 12.7
0.90 | = | Perceived performance | = | 1.10 |
Dissatisfied | Expected performance | Very satisfied |
If performance falls short of expectations (ratio < 1), the customer is dissatisfied.
If the performance matches expectations (ratio = 1), the customer is satisfied.
If the performance exceeds expectations (ratio > 1), the customer is very satisfied or even delighted.
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12–23
Project Management 6e.
12–24
Managing Customer Relations (cont’d)
Managing Customer Expectations
Don’t oversell the project; better to undersell.
Develop a well-defined project scope statement
Share significant problems and risks
Keep everyone informed about the project’s progress
Involve customers early in decisions about project development changes
Handle customer relationships and problems in an expeditious, competent, and professional manner
Speak with one voice
Speak the language of the customer
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12–24
Project Management 6e.
12–25
Project Roles, Challenges, and Strategies
TABLE 12.3
Project Manager Roles | Challenges | Strategies |
Entrepreneur | Navigate unfamiliar surroundings | Use persuasion to influence others |
Politician | Understand two diverse cultures (parent and client organization) | Align with the powerful individuals |
Friend | Determine the important relationships to build and sustain outside the team itself | Identify common interests and experiences to bridge a friendship with the client |
Marketer | Understand the strategic objectives of the client organization | Align new ideas/proposals with the strategic objectives of the client organization |
Coach | Motivate client team members without formal authority | Provide challenging tasks to build the skills of the team members |
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12–25
Project Management 6e.
12–26
Key Terms
Best alternative to a negotiated agreement (BATNA)
Co-location
Escalation
Met-expectations model
Outsourcing
Partnering charter
Principled negotiation
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12–26
Project Management 6e.
Contract Management
12–27
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–27
Project Management 6e.
12–28
Procurement Management Process
Planning purchases and acquisitions
Planning contracting
Requesting seller responses
Selecting sellers
Administering the contract
Closing the contract
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12–28
Project Management 6e.
12–29
Contract
A formal agreement between two parties wherein the contractor obligates itself to perform a service and the client obligates itself to do something in return.
Defines the responsibilities of the parties, spells out the conditions of its operations
Defines the rights of the parties to each other
Grants remedies to a party if the other party breaches its transactional obligations
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12–29
Project Management 6e.
12–30
Types of Contracts
Fixed-Price (FP) Contract or Lump-sum Agreement
The contractor with the lowest bid agrees to perform all work specified in the contract at a fixed price
The disadvantage for owners is that it is more difficult and more costly to prepare.
The primary disadvantage for contractors is the risk of underestimating project costs.
Contract adjustments:
Redetermination provisions
Performance incentives
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12–30
Project Management 6e.
12–31
Types of Contracts (cont’d)
Cost-Plus Contracts
The contractor is reimbursed for all direct allowable costs (materials, labor, travel) plus an additional prior-negotiated fee (set as a percentage of the total costs) to cover overhead and profit.
Risk to client is in relying on the contractor’s best efforts to contain costs.
Controls on contractors:
Performance and schedule incentives
Costs-sharing clauses
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12–31
Project Management 6e.
12–32
Contract Type versus Risk
FIGURE A12.1
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12–32
Project Management 6e.
12–33
Contract Changes
Contract Change Control System
Defines the process by which a contract’s authorized scope (costs and activities) may be modified:
Paperwork
Tracking systems
Dispute resolution procedures
Approval levels necessary for authorizing changes
Best practice is the inclusion of change control system provisions in the original contract.
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12–33
Project Management 6e.
Chapter Thirteen
Progress and Performance Measurement and Evaluation
13–1
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13–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13–2
Project Management 6e.
Learning Objectives
Identify the four steps for controlling a project
Utilize a tracking Gantt to monitor time performance
Understand and appreciate the significance of earned value
Calculate and interpret cost and schedule variance
Calculate and interpret performance and percent indexes
Forecast final project cost
Identify and manage scope creep
13–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
13.1 Structure of a Project Monitoring Information
System
13.2 The Project Control Process
13.3 Monitoring Time Performance
13.4 Development of an Earned Value
Cost/Schedule System
13.5 Developing a Status Report: A Hypothetical
Example
13.6 Indexes to Monitor Progress
13.7 Forecasting Final Project Cost
13.8 Other Control Issues
13–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13–5
Structure of a Project Monitoring Information System
Creating a project monitoring system involves determining:
What data to collect
How, when, and who will collect the data
How to analyze the data
How to report current progress to management
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13–5
Project Management 6e.
13–6
Project Monitoring Information System
Information System Structure
What Data Are Collected?
Current status of project (schedule and cost)
Remaining cost to compete project
Date that project will be complete
Potential problems to be addressed now
Cost and/or schedule overruns and the reasons for them
Forecast of overruns at time of project completion
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13–6
Project Management 6e.
13–7
Project Monitoring Info. System (cont’d)
Information System Structure (cont’d)
Collecting Data and Analysis
Who will collect project data?
How will data be collected?
When will the data be collected?
Who will compile and analyze the data?
Reports and Reporting
Who will receive the reports?
How will the reports be transmitted?
When will the reports be distributed?
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13–7
Project Management 6e.
13–8
Project Progress Report Format
Progress since last report
Current status of project
Schedule
Cost
Scope
Cumulative trends
Problems and issues since last report
Actions and resolution of earlier problems
New variances and problems identified
Corrective action planned
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13–8
Project Management 6e.
13–9
The Project Control Process
Control
The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action
Project Control Steps
Setting a baseline plan
Measuring progress and performance
Comparing plan against actual
Taking action
Tools for Monitoring Time Performance
Tracking Gantt chart
Control chart
Milestone schedules
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13–9
Project Management 6e.
13–10
Baseline and Tracking Gantt Charts
FIGURE 13.1
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13–10
Project Management 6e.
13–11
Project Schedule Control Chart
FIGURE 13.2
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13–11
Project Management 6e.
Development of an Earned Value Cost/Schedule System
Time-Phase Baseline Plan
Corrects the failure of most monitoring systems to connect a project’s actual performance to its schedule and forecast budget.
Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule.
Earned Value Cost/Schedule System
An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs
13–12
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13–12
Project Management 6e.
13–13
Glossary of Terms
TABLE 13.1
EV | Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is the percent of the original budget that has been earned by actual work completed. [BCWP—budgeted cost of the work performed]. |
PV | The planned time-phased baseline of the value of the work scheduled. An approved cost estimate of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled]. |
AC | Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP—actual cost of the work performed]. |
CV | Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV = EV – AC. |
SV | Schedule variance is the difference between the earned value and the baseline line to date where SV = EV – PV. |
BAC | Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts. |
EAC | Estimated cost at completion. |
ETC | Estimated cost to complete remaining work. |
VAC | Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion. |
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13–13
Project Management 6e.
13–14
Developing an Integrated Cost/Schedule System
Define the work using a WBS.
Scope
Work packages
Deliverables
Organization units
Resources
Budgets
Develop work and
resource schedules.
Schedule resources
to activities
Time-phase work packages into a network
Develop a time-phased budget using work packages included in an activity. Accumulate budgets (PV).
At the work package level, collect the actual costs for the work performed (AC). Multiply percent complete times original budget (EV).`
Compute the schedule variance (EV-PV) and the cost variance (EV-AC).
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13–14
Project Management 6e.
13–15
Project Management Information System Overview
FIGURE 13.3
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13–15
Project Management 6e.
13–16
Development of Project Baselines (cont’d)
Rules for Placing Costs in Baselines
Costs are placed exactly as they are expected to be “earned” in order to track them to their point of origin.
Percent Complete Rule
Costs are periodically assigned to a baseline as units of work are completed over the duration of a work package.
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13–16
Project Management 6e.
13–17
Development of Project Baselines (cont’d)
Purposes of a Baseline (PV)
An anchor point for measuring performance
A planned cost and expected schedule against which actual cost and schedule are measured
A basis for cash flows and awarding progress payments
A summation of time-phased budgets (cost accounts as summed work packages) along a project timeline
What Costs Are Included in Baselines?
Project direct overhead costs: labor, equipment, materials
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13–17
Project Management 6e.
13–18
Methods of Variance Analysis
Comparing Earned Value with:
The expected schedule value
The actual costs
Assessing Status of a Project
Required three data elements
Planned cost of the work scheduled (PV)
Budgeted cost of the work completed (EV)
Actual cost of the work completed (AC)
Calculate schedule and cost variances
A positive variance indicates a desirable condition, while a negative variance suggests problems or changes that have taken place.
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13–18
Project Management 6e.
13–19
Methods of Variance Analysis
Cost Variance (CV)
Indicates if the work accomplished costs more or less than was planned at any point in the project.
Schedule Variance (SV)
Presents an overall assessment in dollar terms of the progress of all work packages in the project scheduled to date.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13–19
Project Management 6e.
13–20
Cost/Schedule Graph
FIGURE 13.4
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13–20
Project Management 6e.
13–21
Earned-Value Review Exercise
FIGURE 13.5
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13–21
Project Management 6e.
13–22
Developing A Status Report:
A Hypothetical Example
Assumptions
Each cost account has only one work package, and each cost account will be represented as an activity on the network.
The project network early start times will serve as the basis for assigning the baseline values.
From the moment work an activity begins, some actual costs will be incurred each period until the activity is completed.
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13–22
Project Management 6e.
13–23
Work Breakdown Structure with Cost Accounts
FIGURE 13.6
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13–23
Project Management 6e.
13–24
Digital Camera Prototype Project Baseline Gantt Chart
FIGURE 13.7
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13–24
Project Management 6e.
13–25
Digital Camera Prototype Project Baseline Budget ($000)
FIGURE 13.8
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13–25
Project Management 6e.
13–26
Digital Camera Prototype Status Reports: Periods 1–3
TABLE 13.2
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13–26
Project Management 6e.
13–27
Digital Camera Prototype Status Reports: Periods 4 & 5
TABLE 13.2 (cont’d)
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13–27
Project Management 6e.
13–28
Digital Camera Prototype Status Reports: Periods 6 & 7
TABLE 13.2 (cont’d)
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13–28
Project Management 6e.
13–29
Digital Camera Prototype Summary Graph ($000)
FIGURE 13.9
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13–29
Project Management 6e.
13–30
Digital Camera Project-Tracking Gantt Chart
Showing Status—Through Period 7
FIGURE 13.10
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13–30
Project Management 6e.
13–31
Project Rollup End Period 7 ($000)
FIGURE 13.11
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13–31
Project Management 6e.
13–32
Indexes to Monitor Progress
Performance Indexes
Cost Performance Index (CPI) = EV/AC
Measures the cost efficiency of work accomplished to date.
Scheduling Performance Index (SPI) = EV/PV
Measures scheduling efficiency to date.
Percent Complete Indexes
Indicate how much of the work accomplished represents of the total budgeted (BAC) and actual (AC) dollars to date.
Percent Complete Index Budgeted Costs (PCIB) = EV/BAC
Percent Complete Index Actual Costs (PCIC) = AC/EAC
Management Reserve Index (MRI) = CV/MR
Reflects the amount of Management Reserve (MR) that has been absorbed by cost over-runs.
Is popular in the construction industry.
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13–32
Project Management 6e.
13–33
Interpretation of Indexes
TABLE 13.3
Index | Cost (CPI) | Schedule (SPI) |
>1.00 | Under cost | Ahead of schedule |
=1.00 | On cost | On schedule |
<1.00 | Over cost | Behind schedule |
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13–33
Project Management 6e.
13–34
Indexes
Periods 1–7
FIGURE 13.12
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13–34
Project Management 6e.
13–35
Additional Earned Value Rules
Rules applied to short-duration activities and/or small-cost activities
0/100 percent rule
Assumes 100% of budget credit is earned at once and only when the work is completed.
50/50 rule
Allows for 50% of the value of the work package budget to be earned when it is started and 50% to be earned when the package is completed.
Ruled used gates before the total budgeted value of an activity can be claimed
Percent complete with weighted monitoring gates
Uses subjective estimated percent complete in combination with hard, tangible monitoring points.
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13–35
Project Management 6e.
13–36
Forecasting Final Project Cost
Methods used to revise estimates of future project costs:
Revised estimated cost at completion (EACre)
Allows experts in the field to change original baseline durations and costs because new information tells them
the original estimates are not accurate.
Forecasting cost at completion (EACf)
Uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable.
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13–36
Project Management 6e.
13–37
Forecasting Models: EACre and EACf
The equation for
The equation for
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13–37
Project Management 6e.
13–38
Forecasting Final Project Cost (cont’d)
Method supplemented to the estimate at completion (EACf) computation:
To Complete Performance Index (TCPI)
Measures the amount of value each remaining dollar in the budget must earn to stay within the budget.
A ratio less than 1.00 indicates an ability to complete the project without using all of the remaining budget.
The equation for
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13–38
Project Management 6e.
13–39
Monthly Status Report
EXHIBIT 13.1
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13–39
Project Management 6e.
13–40
Trojan Nuclear Plant Decommissioning Earned Value Status Report
EXHIBIT 13.2
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13–40
Project Management 6e.
13–41
Other Control Issues
Issues In Maintaining Control of Projects
Scope Creep
Baseline Changes
Technical Performance Measurement
Data Acquisition Costs and Problems
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13–41
Project Management 6e.
13–42
Scope Changes to a Baseline
FIGURE 13.13
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13–42
Project Management 6e.
13–43
Conference Center WiFi Project
Communication Plan
FIGURE 13.14
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13–43
Project Management 6e.
13–44
Key Terms
Baseline budget
Budget at completion (BAC)
Control chart
Cost performance index (CPI)
Cost variance (CV)
Earned value (EV)
Estimated Cost at Completion—Forecasted (EACf)
Estimated Cost at Completion—Revised Estimates (EACre)
Percent complete index—budget costs (PCIB)
Percent complete index—actual costs (PCIC)
Schedule performance index (SPI)
Schedule variance (SV)
Scope creep
To complete performance index (TCPI)
Tracking Gantt chart
Variance at completion (VAC)
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13–44
Project Management 6e.
Chapter Fourteen
Project Closure
14–1
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14–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
14–2
Project Management 6e.
Learning Objectives
Identify different types of project closure
Understand the challenges of closing out a project
Explain the importance of a project audit
Know ho to use project retrospectives to obtain lessons learned
Assess level of project management maturity
Provide useful advice for conducting team performance reviews
Provide useful advice for conducting performance reviews of project members
14–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
14.1 Types of Project Closure
14.2 Wrap-up Closure Activities
14.3 Project Audits
14.4 Post-Implementation Evaluation
14–4
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14–5
Project Closure and Review Deliverables
FIGURE 14.1
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14–5
Project Management 6e.
14–6
Project Closure
Types of Project Closure
Normal
Premature
Perpetual
Failed Project
Changed Priority
Close-out Plan: Questions to be Asked
What tasks are required to close the project?
Who will be responsible for these tasks?
When will closure begin and end?
How will the project be delivered?
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
14–6
Project Management 6e.
14–7
Wrap-up Closure Checklist
TABLE 14.1
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14–7
Project Management 6e.
14–8
Implementing Project Closedown
Getting delivery acceptance from the customer
Shutting down resources and releasing them to new uses
Reassigning project team members
Closing accounts and seeing all bills are paid
Delivering the project to the customer
Creating a final report
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
14–8
Project Management 6e.
Project Audits
Examine project success and review why the project was selected.
Include a reassessment of the project’s role in the organization’s priorities.
Include a check on the organizational culture and external factors.
When to perform the project audits:
In-process project audits
Concentrate on project progress and performance.
Perform early in projects to allow corrective changes.
Post-project audits
Emphasize on improving the management of future projects.
Include more detail and depth than in-process project audits.
14–9
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Guidelines for Conducting a Project Audit
The philosophy must be that the project audit is not a witch hunt.
Comments about individuals or groups participating in the project should be minimized.
Audit activities should be sensitive to human emotions and reactions.
Accuracy of data should be verifiable.
Senior management should announce support for the project audit.
The objective of project audits is not to prosecute but to learn and conserve valuable organization resources where mistakes have been made.
The audit should be completed as quickly as is reasonable.
14–10
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The Project Audit Process
Initiating and Staffing
Depends primarily on organization and project size
The outcome must represent an independent, outside view of the project.
Data Collection and Analysis
Gather information and data to answer questions from:
Organization view
Project team view
Reporting
The report attempts to capture needed changes and lessons learned from a current or finished project.
14–11
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
A Common Outline for Project Audit Reports
Classification
Project type
Size
Number of staff
Technical level
Strategic or support
Analysis
Project mission and objectives
Procedures and systems used
Organization resources used
Outcomes achieved
14–12
Recommendations
Technical improvements
Corrective actions
Lessons Learned
Reminders
Retrospectives
Appendix
Backup data
Critical information
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Project Retrospectives
Retrospectives
Denote specific efforts at identifying lessons learned on projects.
An Independent Facilitator
Guides the project team through the analysis project activities.
Uses several questionnaires focusing on project operations and on how the organization’s culture impacted project success and failures.
Visits one-on-one with project participants to dive deeper into cause-effect impacts.
Leads a team retrospective session.
Works with the team to develop a system that prioritize information for different recipients.
14–13
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14–14
TABLE 14.2
Were the project objectives and strategic intent of the project clearly and explicitly communicated?
Were the objectives and strategy in alignment?
Were the stakeholders identified and included in the planning?
Were project resources adequate for this project?
Were people with the right skill sets assigned to this project?
Were time estimates reasonable and achievable?
Were the risks for the project appropriately identified and assessed before the project started?
Were the processes and practices appropriate for this type of project? Should projects of similar size and type use these systems? Why/why not?
Did outside contractors perform as expected? Explain.
Were communication methods appropriate and adequate among all stakeholders? Explain.
Is the customer satisfied with the project product?
Are the customers using the project deliverables as intended? Are they satisfied?
Were the project objectives met?
Are the stakeholders satisfied their strategic intents have been met?
Has the customer or sponsor accepted a formal statement that the terms of the project charter and scope have been met?
Were schedule, budget, and scope standards met?
Is there any one important area that needs to be reviewed and improved upon? Can you identify the cause?
Project Process Review Questionnaire
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14–14
Project Management 6e.
14–15
Organizational Culture Review Questionnaire
TABLE 14.3
Was the organizational culture supportive for this type of project?
Was senior management support adequate?
Were people with the right skills assigned to this project?
Did the project office help or hinder management of the project? Explain.
Did the team have access to organizational resources (people, funds, equipment)?
Was training for this project adequate? Explain.
Were lessons learned from earlier projects useful? Why? Where?
Did the project have a clear link to organizational objectives? Explain.
Was project staff properly reassigned?
Was the Human Resources Office helpful in finding new assignments? Comment.
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14–15
Project Management 6e.
Project Management Maturity Model
14–16
FIGURE 14.2
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14–17
Post-Implementation Evaluation
Reasons for Poor-Quality Project Performance Evaluations:
Evaluations of individuals are left to supervisors of the team member’s home department.
Typical measures of team performance center on time, cost, and specifications.
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14–17
Project Management 6e.
14–18
Pre-Implementation Conditions: Team
Do standards for measuring performance exist? (You can’t manage what you can’t measure.) Are the goals clear for the team and individuals? Challenging? Attainable? Lead to positive consequences?
Are individual and team responsibilities and performance standards known by all team members?
Are team rewards adequate? Do they send a clear signal that senior management believes that the synergy of teams is important?
Is a clear career path for successful project managers in place?
Is the team empowered to manage short-term difficulties?
Is there a relatively high level of trust emanating from the organization culture?
Are there criteria beyond time, cost, and specifications?
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14–18
Project Management 6e.
14–19
Sample Team Evaluation and Feedback Survey
TABLE 14.4
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14–19
Project Management 6e.
14–20
Project Performance Evaluation: Individual
Performance Assessment Responsibilities:
Functional organization or functional matrix: the individual’s area manager.
The area manager may solicit the project manager’s opinion of the individual’s performance on a specific project.
Balanced matrix: the project manager and the area manager jointly evaluate an individual’s performance.
Project matrix and project organizations: the project manager is responsible for appraising individual performance.
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14–20
Project Management 6e.
14–21
Conducting Performance Reviews
Begin by asking the individual to evaluate his or her own performance.
Avoid drawing comparisons with other team members; rather, assess the individual in terms of established standards and expectations.
Focus criticism on specific examples of behavior rather than on the individual personally.
Be consistent and fair in treatment of all team members.
Treat the review as one point in an ongoing process.
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14–21
Project Management 6e.
14–22
Individual Performance Assessment
Multiple rater appraisal (360-degree feedback)
The objective is to identify areas for individual improvement.
Involves soliciting feedback concerning team members’ performance from all of the people that their work affects.
Project managers, area managers, peers, subordinates, and customers
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14–22
Project Management 6e.
14–23
Key Terms
Lessons learned
Performance review
Project closure
Project evaluation
Project facilitator
Retrospective
Team evaluation
360-degree review
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14–23
Project Management 6e.
Project Closeout Checklist
14–24
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14–24
Project Management 6e.
14–25
Project Closeout Checklist
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14–25
Project Management 6e.
14–26
Project Closeout Checklist (cont’d)
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14–26
Project Management 6e.
Euro Conversion—Project Closure Checklist
14–27
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14–27
Project Management 6e.
14–28
Euro Conversion—Project Closure Checklist
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14–28
Project Management 6e.
Chapter Fifteen
International Projects
15–1
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15–2
Where We Are Now
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
15–2
Learning Objectives
Describe environmental factors that affect project management in different countries
Identify factors that typically are considered in selecting a foreign location for a project
Understand cross-cultural issues that impact working on international projects
Describe culture shock and strategies for coping with it
Understand how organizations select and prepare people to work on international projects
15–3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter Outline
15-1 Environmental Factors
15-2 Project Site Selection
15-3 Cross-Cultural Considerations: A Closer Look
15-4 Selection and Training for International
Projects
15–4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
15–5
International Projects
Issues in Managing International Projects
Environmental factors affecting projects
Global expansion considerations
Challenges of working in foreign cultures
Selection and training of overseas managers
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
15–5
15–6
International Assignments
Positives
Increased income
Increased responsibilities
Career opportunities
Foreign travel
New lifetime friends
Negatives
Absence from home and friends, and family
Personal risks
Missed career opportunities
Difficulties with foreign language, culture, and laws
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
15–6
15–7
FIGURE 15.1
Environmental Factors Affecting
International Projects
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Project Management 6e.
15–7
15–8
Environmental Factors
Legal/Political
Political stability
National and local laws and regulations
Federal, state and local bureaucracies
Government interference or support
Government corruption
Security
International terrorism
National and local security
Local crime and kidnapping
Risk management
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Project Management 6e.
15–8
15–9
Environmental Factors (cont’d)
Geography
Climate and seasonal differences
Natural geographical obstacles
Economic
Gross domestic product (GDP)
Protectionist strategies and policies
Balance of payments
Local labor force: supply, educational and skill levels
Currency convertibility and exchange rates
Inflation rates
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Project Management 6e.
15–9
15–10
Environmental Factors (cont’d)
Infrastructure
Telecommunication networks
Transportation systems
Power distribution grids
Unique local technologies
Educational systems
Culture
Customs and social standards
Values and philosophies
Language
Multicultural environments
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Project Management 6e.
15–10
15–11
Assessment Matrix Project Site Selection
FIGURE 15.2
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Project Management 6e.
15–11
15–12
Evaluation Matrix Breakdown for Infrastructure
FIGURE 15.3
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Project Management 6e.
15–12
15–13
Cross-Cultural Considerations:
A Closer Look
Culture
A system of shared norms, beliefs, values, and customs that bind people together, creating shared meaning and a unique identity.
Cultural Differences:
Geographic regions
Ethnic or religious groups
Language
Economic
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Project Management 6e.
15–13
15–14
Cross-Cultural Considerations… (cont’d)
Ethnocentric Perspective
The tendency to believe that one’s cultural values and ways of doing things are superior to all others
Wanting to conduct business only on your terms and stereotyping other countries
Ignoring the “people factor” in other cultures by putting work ahead of building relationships
Adjustments Required:
Relativity of time and punctuality
Culture-related ethical differences
Personal and professional relationships
Attitudes toward work and life
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Project Management 6e.
15–14
15–15
Cross-Cultural Considerations (cont’d)
Working in
Mexico
Working in
Saudi Arabia
Working in
France
Working in
China
Working in the United States
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Project Management 6e.
15–15
15–16
Cross-Cultural Orientations
Relation to Nature
How people relate to the natural world around them and to the supernatural
Time Orientation
The culture focus on the past, present, or future.
Activity Orientation
How to live: “being” or living in the moment, doing, or controlling
Basic Nature of People
Whether people viewed as good, evil, or some mix of these two
Relationships among People
The degree of responsibility one has for others
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Project Management 6e.
15–16
15–17
Kluckhohn-Strodtbeck’s Cross-Cultural Framework
FIGURE 15.4
Note: The line indicates where the United States tends to fall along these issues.
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Project Management 6e.
15–17
15–18
The Hofstede Cultural Dimensions Framework
Individualism versus Collectivism
Identifies whether a culture holds individuals or the group responsible for each member’s welfare.
Power Distance
Describes degree to which a culture accepts status and power differences among its members.
Uncertainty Avoidance
Identifies a culture’s willingness to accept uncertainty and ambiguity about the future.
Masculinity-Femininity
Describes the degree to which the culture emphasizes competitive and achievement-oriented behavior or displays concerns for relationships.
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Project Management 6e.
15–18
15–19
Sample Country Clusters on Hofstede’s Dimensions
of Individualism-Collectivism and Power Distance
FIGURE 15.5
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Project Management 6e.
15–19
15–20
Working in Different Cultures
Relying on Local Intermediaries
Translators
Social connections
Expeditors
Cultural advisors and guides
Culture Shock
The natural psychological disorientation that most people suffer when they move into a different culture.
A breakdown in a person’s selective perception and effective interpretation system induced by foreign stimuli and the inability to function effectively in a strange land
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Project Management 6e.
15–20
15–21
Culture Shock Cycle
FIGURE 15.6
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Project Management 6e.
15–21
15–22
Working in Different Cultures (cont’d)
Coping with Culture Shock
Engage in regular physical exercise programs, practice meditation and relaxation exercises,
and keep a journal
Create “stability zones” that closely re-creates home
Modify expectations and behavior
Redefine priorities and develop realistic expectations
Focus on most important tasks and relish small accomplishments
Use project work as a bridge until adjusted to the new environment
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Project Management 6e.
15–22
15–23
Selection and Training for
International Projects
Selection Factors
Work experience with cultures other than one’s own
Previous overseas travel
Good physical and emotional health
Knowledge of a host nation’s language
Recent immigration background or heritage
Ability to adapt and function in the new culture
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Project Management 6e.
15–23
15–24
Selection and Training for
International Projects (cont’d)
Areas for Training to Increase Understanding of a Foreign Culture:
Religion
Dress codes
Education system
Holidays—national and religious
Daily eating patterns
Family life
Business protocols
Social etiquette
Equal opportunity
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Project Management 6e.
15–24
15–25
Selection and Training for
International Projects (cont’d)
Learning Approaches to Cultural Fluency
The “information-giving” approach—the learning of information or skills from a lecture-type orientation
The “affective approach”—the learning of information/skills that raise the affective responses on the part of the trainee and result in cultural insights
The “behavioral/experiential” approach—a variant of the affective approach technique that provides the trainee with realistic simulations or scenarios
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Project Management 6e.
15–25
15–26
Relationship between Length and Rigor of Training
and Cultural Fluency Required
FIGURE 15.7
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Project Management 6e.
15–26
15–27
Key Terms
Cross-cultural orientations
Culture
Culture shock
Infrastructure
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Project Management 6e.
15–27
Chapter Sixteen
An Introduction to Agile Project Management
16-1
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16–2
Where We Are Now
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17–2
Project Management 6e.
Learning Objectives
Recognize the conditions in which traditional project management versus agile project management should be used
Understand the value of incremental, iterative development for creating new products
Identify core Agile principles
Understand the basic methodology used in Scrum
Recognize the limitations of Agile project management
16–3
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Chapter Outline
16-1 Traditional versus Agile Methods
16-2 Agile PM
16-3 Agile PM in Action: Scrum
16-4 Applying Agile PM to Large Projects
16-5 Limitations and Concerns
16–4
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16–5
Traditional versus Agile Methods
Traditional Project Management Approach
Concentrates on thorough, upfront planning of the entire project.
Requires a high degree of predictability to be effective.
Agile Project Management (Agile PM)
Relies on incremental, iterative development cycles
to complete projects.
Is ideal for exploratory projects in which requirements need to be discovered and new technology tested.
Focuses on active collaboration between the project team and customer representatives.
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17–5
Project Management 6e.
16–6
Agile Project Management
Agile PM
Is related to the rolling wave planning and scheduling project methodology.
Uses iterations (“time boxes”) to develop a workable product that satisfies the customer and other key stakeholders.
Allows stakeholders and customers review progress and re-evaluate priorities to ensure alignment with customer needs and company goals.
Is cyclical in that adjustments are made and a different iterative cycle begins that subsumes the work of the previous iterations and adds new capabilities to the evolving product.
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17–6
Project Management 6e.
16–7
Project Uncertainty
FIGURE 16.1
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17–7
Project Management 6e.
16–8
The Waterfall Approach to Software Development
FIGURE 16.2
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17–8
Project Management 6e.
16–9
Traditional Project Management versus
Agile Project Management
TABLE 16.1
Traditional | Agile |
Design up front | Continuous design |
Fixed scope | Flexible |
Deliverables | Features/requirements |
Freeze design as early as possible | Freeze design as late as possible |
Low uncertainty | High uncertainty |
Avoid change | Embrace change |
Low customer interaction | High customer interaction |
Conventional project teams | Self-organized project teams |
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17–9
Project Management 6e.
16–10
Iterative, Incremental Product Development
FIGURE 16.3
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17–10
Project Management 6e.
16–11
Agile Project Management (cont’d)
Advantages of Agile PM
Useful in developing critical breakthrough technology or defining essential features
Continuous integration, verification, and validation of the evolving product
Frequent demonstration of progress to increase the likelihood that the end product will satisfy customer needs
Early detection of defects and problems
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17–11
Project Management 6e.
16–12
Agile PM Principles
Focus on customer value
Iterative and incremental delivery
Experimentation and adaptation
Self-organization
Continuous improvement
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17–12
Project Management 6e.
16–13
Popular Agile PM Methods
Agile PM Methods
Crystal Clear
RUP (Rational Unified Process)
Dynamic Systems Development Method (DSDM)
Scrum
Extreme
Programming
Agile Modeling
Rapid Product Development (PRD)
Lean Development
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17–13
Project Management 6e.
16–14
Agile PM in Action: Scrum
Scrum Methodology
Is a holistic approach for use by a cross-functional team collaborating to develop a new product.
Defines product features as deliverables and prioritizes them by their perceived highest value to the customer.
Re-evaluates priorities after each iteration (sprint) to produce fully functional features.
Has four phases: analysis, design, build, test.
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17–14
Project Management 6e.
16–15
Scrum Development Process
FIGURE 16.4
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17–15
Project Management 6e.
16–16
Key Roles and Responsibilities
in the Scrum Process
Product Owner
Acts on behalf of customers/end users to represent their interests.
Development Team
Is a team of five to nine people with cross-functional skill sets responsible for delivering the product.
Scrum Master (aka Project Manager)
Facilitates scrum process and resolves impediments at the team and organization level by acting as a buffer between the team and outside interference.
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17–16
Project Management 6e.
16–17
Scrum Meetings
FIGURE 16.5
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17–17
Project Management 6e.
16–18
Partial Product Backlog
FIGURE 16.6
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17–18
Project Management 6e.
16–19
Partial Sprint Backlog
FIGURE 16.7
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17–19
Project Management 6e.
16–20
Sprint Burndown Chart
FIGURE 16.8
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17–20
Project Management 6e.
16–21
Release Burndown Chart After Six Sprints
FIGURE 16.9
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17–21
Project Management 6e.
16–22
Applying Agile PM to Large Projects
Scaling
Uses several teams to work on different features of a large scale project at the same time.
Staging
Requires significant up-front planning to manage the interdependences of different features to be developed.
Involves developing protocols and defining roles to coordinate efforts and assure compatibility and harmony.
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17–22
Project Management 6e.
16–23
Hub Project Management Structure
FIGURE 16.10
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17–23
Project Management 6e.
16–24
Limitations and Concerns of Agile PM
It does not satisfy top management’s need for budget, scope, and schedule control.
Its principles of self-organization and close collaboration can be incompatible with corporate cultures.
Its methods appear to work best on small projects that require only five to nine dedicated team members to complete the work.
It requires active customer involvement and cooperation.
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17–24
Project Management 6e.
16–25
Key Terms
Agile PM
Feature
Iterative incremental development (IID)
Product backlog
Product owner
Release burndown chart
Scaling
Self-organizing team
Sprint backlog
Sprint burndown chart
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17–25
Project Management 6e.
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