strategic Appli in project management

 

  1. 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

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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

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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

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Project Management 6e

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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.

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Project Management 6e

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Comparison of Routine Work with Projects

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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

.

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Project Management 6e

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Project Life Cycle

1–8

FIGURE 1.1

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Project Management 6e

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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.

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Project Management 6e

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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

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Project Management 6e

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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

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Project Management 6e

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Integrated Management of Projects

1–12

FIGURE 1.2

.

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Project Management 6e

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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

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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

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Project Management 6e

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A Socio-Technical Approach to Project Management

FIGURE 1.3

.

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Project Management 6e

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Key Terms

Program

Project

Project life cycle

Project Management Professional (PMP)

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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

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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

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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.

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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

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Project Management 6e

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Strategic Management Process

FIGURE 2.1

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Project Management 6e

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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

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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

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Project Management 6e

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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

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Project Management 6e

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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.

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Project Management 6e

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Portfolio of Projects by Type

FIGURE 2.2

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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.

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Project Management 6e

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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.

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Project Management 6e

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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

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Example Comparing Two Projects
Using Payback Method

EXHIBIT 2.3A

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Project Management 6e

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Example Comparing Two Projects
Using Net Present Value Method

EXHIBIT 2.3b

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Project Management 6e

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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

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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

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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

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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?

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Project Management 6e

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Project Screening Matrix

FIGURE 2.3

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Project Management 6e

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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

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Project Management 6e

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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)

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Project Management 6e

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A Proposal Form for an Automatic Vehicular Tracking (AVL) Public
Transportation Project

FIGURE 2.4A

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Project Management 6e

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Risk Analysis for
500-Acre Wind Farm

FIGURE 2.4B

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Project Management 6e

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Project
Screening Process

FIGURE 2.5

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Project Management 6e

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Priority Screening
Analysis

FIGURE 2.6

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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.

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Project Management 6e

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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

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Project Management 6e

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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

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Project Management 6e

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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

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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.

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Project Management 6e.

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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.

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Project Management 6e.

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Functional Organizations

FIGURE 3.1

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Project Management 6e.

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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.

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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.

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Dedicated Project Team

FIGURE 3.2

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Project Management 6e.

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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.

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Projectized Organization Structure

FIGURE 3.3

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Project Management 6e.

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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.

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Matrix Organization Structure

FIGURE 3.4

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Project Management 6e.

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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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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.

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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.

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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.

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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.

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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.

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Key Dimensions Defining an Organization’s Culture

FIGURE 3.5

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Project Management 6e.

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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.

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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.

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Project Management 6e.

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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

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4–2

Where We Are Now

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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

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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

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Project Management 6e.

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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

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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.

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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

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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

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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.

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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).

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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.

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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.

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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.

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4–18

Integration of
WBS and OBS

FIGURE 4.5

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Project Management 6e.

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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.

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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.

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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.

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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

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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?

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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

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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

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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

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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

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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

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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

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Project Management 6e.

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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

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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.

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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.

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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.

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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

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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

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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

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6–2

Where We Are Now

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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

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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.

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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

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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

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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.

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8-15

Project Management 6e.

8–16

Resource-Constrained Schedule through Period 2–3

FIGURE 8.4

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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

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8-19

Project Management 6e.

8–20

Resource-Constrained Schedule through Period 5–6

FIGURE 8.5 (cont’d)

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8-20

Project Management 6e.

8–21

Resource-Constrained Schedule through Period 5–6

FIGURE 8.5 (cont’d)

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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

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8-24

Project Management 6e.

8–25

EMR Project—Time Constrained Resource Usage View, January 15–23

FIGURE 8.8A

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8-25

Project Management 6e.

8–26

Resource Loading Chart for EMR Project, January 15–23

FIGURE 8.8B

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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.

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Project Management 6e.

9–8

9–9

Project Cost–Duration Graph

FIGURE 9.1

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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

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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.

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Project Management 6e.

9–11

9–12

Activity Graph

FIGURE 9.2

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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)

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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

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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

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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

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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

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Project Management 6e.

9–21

9–22

Project Priority Matrix: Whitbread Project

FIGURE C9.1

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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

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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.

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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).

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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.

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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.

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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?

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Project Management 6e.

10–11

10–12

Stakeholder Map for Financial Software Installation Project

FIGURE 10.2

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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

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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

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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

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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.”

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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

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Project Management 6e.

10–22

Chapter Eleven

Managing Project Teams

11–1

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11–2

Where We Are Now

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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

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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

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11–5

Project Management 6e.

11–6

The Five-Stage Team Development Model

FIGURE 11.1

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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

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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

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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

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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

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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

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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

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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

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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

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11–20

Project Management 6e.

11–21

24-Hour Global Clock

FIGURE 11.6

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11–21

Project Management 6e.

11–22

Project Team Pitfalls

Groupthink

Bureaucratic
Bypass Syndrome

Team Spirit Becomes
Team Infatuation

Going Native

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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

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12–2

Where We Are Now

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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.

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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.

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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

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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

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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?

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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

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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

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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

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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

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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

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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

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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

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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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Where We Are Now

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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

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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

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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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Project Management 6e.

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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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Project Management 6e.

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Project Uncertainty

FIGURE 16.1

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Project Management 6e.

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The Waterfall Approach to Software Development

FIGURE 16.2

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Project Management 6e.

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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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Project Management 6e.

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Iterative, Incremental Product Development

FIGURE 16.3

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Project Management 6e.

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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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Project Management 6e.

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Agile PM Principles

Focus on customer value

Iterative and incremental delivery

Experimentation and adaptation

Self-organization

Continuous improvement

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Project Management 6e.

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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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Project Management 6e.

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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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Project Management 6e.

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Scrum Development Process

FIGURE 16.4

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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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Scrum Meetings

FIGURE 16.5

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Partial Product Backlog

FIGURE 16.6

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Partial Sprint Backlog

FIGURE 16.7

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Project Management 6e.

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Sprint Burndown Chart

FIGURE 16.8

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Release Burndown Chart After Six Sprints

FIGURE 16.9

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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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Hub Project Management Structure

FIGURE 16.10

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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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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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Project Management 6e.

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