PM HandBook

Project Management Now!
by DR. PETER C. WRIGHT,

University of Melbourne
Chapter ONE - Introduction to Project Management.........................................................7
In the Beginning....................................................................................................................7
The Right Stuff?.................................................................................................................... 8
Definitions of Project............................................................................................................8
SMART Project Goal..............................................................................................................9
Classic Projects..................................................................................................................... 9
Fuzzy Projects..................................................................................................................... 10
A. Sarah and George rebuild a period English home.......................................................10
B. Gallery decides buys a Michelangelo at auction at Christies in New York..................11
C. Laboratory plans to release a new wonder drug on world markets............................11
D. Computer game ‘Julie Bravo’......................................................................................12
Mission Impossible projects............................................................................................... 12
Private Funding Initiative projects......................................................................................12
Choosing a Project..............................................................................................................13
Business Case......................................................................................................................14
Student Questions.............................................................................................................. 14
1. Fuzzy........................................................................................................................ 14
2. Wortbuch.................................................................................................................14
3. NPV’s........................................................................................................................15
4. Missions Impossible.................................................................................................15
5. Big Bank................................................................................................................... 15
6. CTP Motors.............................................................................................................. 16
7. Oops Business Case!................................................................................................ 16
8. Airports Canada.......................................................................................................16
Chapter TWO – Scope of the Project................................................................................17
SCOPE................................................................................................................................. 17
SCOPE CREEP...................................................................................................................... 19
1. The Istanbul to Mecca Railroad...............................................................................19
2. Opera France........................................................................................................... 20
3. Iinsure Call Centres..................................................................................................21
4. Back Of Beyond Mine...............................................................................................21
5. Scope Creep.............................................................................................................22
6. Opo.......................................................................................................................... 23
Chapter THREE – meet the sponsor of the Project...........................................................23
The Project Review Board...................................................................................................23
1. Critical Stakeholders?.............................................................................................. 26
2. Camping in Zambia.................................................................................................. 26
Chapter FOUR – Work Breakdown of the Project.............................................................27
The Work Breakdown Structure.........................................................................................27
MILESTONES....................................................................................................................... 28
NUMBERS AND NAMES...................................................................................................... 29
ACTIVITIES AND PHASES..................................................................................................... 29
THE CLASSIC PROJECT PLAN................................................................................................30
BOTTOM UP?...................................................................................................................... 31
PROTOTYPING OR TIME BOXING........................................................................................31
1. Wind and Tide..........................................................................................................33
2. Remona....................................................................................................................33
3. CXC Privacy Project..................................................................................................34
4. CEM Super Tax project.............................................................................................34
Chapter FIVE – Risks of the Project...................................................................................35
TYPES OF RISKS................................................................................................................... 35
RISK CONTROLS.................................................................................................................. 35
PERCEPTION OF RISK.......................................................................................................... 36
RISK SEVERITY MATRIX....................................................................................................... 36
CASE STUDY: PROJECT RISK ANALYSIS................................................................................37
RISK ONGOING....................................................................................................................40
1. Holy Smoke!.............................................................................................................40
2. Rwanda.................................................................................................................... 41
3. PFI projects.............................................................................................................. 41
Chapter SIX – Building the Project Network.....................................................................41
ACTIVITY ON NODE PLANNING...........................................................................................41
CRITICAL PATH.....................................................................................................................42
PLANNING TOOLS............................................................................................................... 43
GANTT CHART.....................................................................................................................43
STRUCTURING THE PLAN....................................................................................................43
1. Fast Builders.............................................................................................................44
2. Retake the North..................................................................................................... 44
3. Ho............................................................................................................................ 45
Chapter SEVEN – Resourcing and Scheduling...................................................................45
SCHEDULING RESOURCES...................................................................................................46
RESOURCE LEVELLING.........................................................................................................46
SPLITTING........................................................................................................................... 47
BOTTLENECK....................................................................................................................... 47
HAMMOCKING....................................................................................................................47
1. Voyage to Brasil...........................................................................................................47
2. Posh Tosh.................................................................................................................... 48
3. SteelO..........................................................................................................................49
4. Ooki............................................................................................................................. 50
4. Tiffin............................................................................................................................ 50
Chapter EIGHT – Understanding & Using the Schedule....................................................51
PROJECT BASELINE..............................................................................................................51
CRITICAL PATH & SENSITIVE NETWORK..............................................................................52
REDUCING PROJECT DURATION..........................................................................................52
KEEPING THE SCHEDULE UP-TO-DATE.................................................................................53
APPROACHES to ESTIMATING.............................................................................................53
UNCOMMON ESTIMATING................................................................................................. 54
PRACTICAL ESTIMATING......................................................................................................54
WHERE DOES ESTIMATING MATTER MOST?.......................................................................54
ESTIMATING AND THE ORGANISATION...............................................................................54
1. CAD!.........................................................................................................................55
2. Ball Park................................................................................................................... 55
Chapter NINE – Creating the Project Budget....................................................................56
BUDGET BASICS.................................................................................................................. 56
CAPEX AND OPEX BUDGETS................................................................................................57
ACCRUALS........................................................................................................................... 57
BUDGETING AND THE ORGANISATION...............................................................................58
1. Montebano Sono.....................................................................................................58
2. Rotterdam................................................................................................................59
3. Mercury................................................................................................................... 60
Chapter TEN – Understanding and Tracking the Budget..................................................61
EARNED VALUE ANALYSIS - BASICS.....................................................................................61
1. Seattle Terminal 91 Build.........................................................................................63
2. Build, Operate, Transfer project..............................................................................63
3. Blyth Street..............................................................................................................64
Chapter ELEVEN – Project Change....................................................................................64
CHANGE REQUEST.............................................................................................................. 64
CHANGE MANAGEMENT FORUM.......................................................................................65
BUDGET CUT-BACK............................................................................................................. 65
1. The first cut..............................................................................................................66
Chapter TWELVE – Project Audit and Closure..................................................................67
PROJECT AUDIT...................................................................................................................67
AUDIT AIMS & AGENDA..................................................................................................67
CASE STUDY – HOME CARE ONTARIO.................................................................................68
THE SIGNS, PROBLEMS AND CAUSES..............................................................................69
OTHER FACTORS?............................................................................................................ 71
PROJECT CLOSURE.............................................................................................................. 71
1. Home Care............................................................................................................... 72
2. Julie Bravo................................................................................................................72
Chapter THIRTEEN – The Organisation.............................................................................72
TYPES of PROJECT ORGANISATION......................................................................................73
PROJECT REPORTING LINES................................................................................................ 73
BUREAUCRACY!...................................................................................................................74
GOVERNANCE..................................................................................................................... 74
TRAINING............................................................................................................................ 75
1. Business versus Project Culture...............................................................................75
2. Sentry Insurance Hong Kong....................................................................................75
Chapter FOURTEEN – Project and People.........................................................................76
Characteristics of Teams.....................................................................................................76
Are we a Project Team or Work Group?.............................................................................77
Dysfunctional Teams...........................................................................................................77
‘Magic Tool’ syndrome....................................................................................................77
‘On Schedule’ syndrome.................................................................................................78
Honesty & Ethics.................................................................................................................78
The Effective Project Manager............................................................................................78
1. Ethics....................................................................................................................... 78
2. What is an Effective Project Manager?....................................................................79
Chapter FifTEEN – International Projects.........................................................................79
Case Studies - International Projects..................................................................................79
Regal Insurance Group, UK..............................................................................................80
Chemonix Saone Basle Group, Switzerland.....................................................................80
Siam Insurance, Thailand................................................................................................81
Observations on International Projects..............................................................................81
Other factors...................................................................................................................... 81
Culture Matters.................................................................................................................. 82
The American Way?........................................................................................................ 82
Unionised Spain & France?............................................................................................. 82
1. Thailand.......................................................................................................................83
2. Turkey......................................................................................................................... 83
Appendix 1 – The Right Stuff for Project Manager...........................................................84
Appendix 2 – Use of the title Project Manager................................................................86
Appendix 3 – Royal Liverpool Hospital, a PFI Case Study.................................................87
Appendix 4 – MONICA PARK, aN EVA Case study.............................................................89
Appendix 5 – Julie Bravo, a Project Closure Case study....................................................91
Appendix 6 – PENNSYLVANIA STATE WATER PLAN, a PM Case study..............................93
Appendix 7 – resource scheduling rules & example.........................................................93
Appendix 8 – PM has Heroes & Heroines too...................................................................95
Answers............................................................................................................................ 97
Chapter 1............................................................................................................................ 97
Chapter 2.......................................................................................................................... 100
Chapter 3.......................................................................................................................... 104
Chapter 4.......................................................................................................................... 105
Chapter 5.......................................................................................................................... 108
Chapter 6.......................................................................................................................... 110
Chapter 7.......................................................................................................................... 111
Chapter 8.......................................................................................................................... 114
Chapter 9.......................................................................................................................... 115
Chapter 10........................................................................................................................ 116
Chapter 11........................................................................................................................ 118
Chapter 12........................................................................................................................ 118
Chapter Thirteen...............................................................................................................119
Chapter Fourteen............................................................................................................. 120
Chapter Fifteen.................................................................................................................121
1. Thailand.....................................................................................................................121
2. Turkey....................................................................................................................... 121
CHAPTER ONE - INTRODUCTION TO PROJECT MANAGEMENT
For many of us today, working on a project is a dual role that we perform, above and
beyond our day-to-day speciality. There is usually some compulsion and nervousness
about performing our project role. We know many projects fail. So what exactly should
we do, and how does a project really work? This book tries to answer these questions.
Beyond that, this book seeks to offer you some challenges in project management. It
also questions some practices. We address much that is new today that you may be
working on tomorrow.
In the Beginning
Long ago, projectere in Latin meant to throw or carry something forward. Later, the
meaning became to plan or carry a plan forward. Today, that is basically what we mean
by project: the act of devising and executing a plan.
You may well ask: what sort of plan? A project plan is one that will clearly achieve some
specific objective or goal. That may be a business or commercial goal, a military goal or a
personal goal, say of fitness or finance. In this book, we focus on business or commercial
goals and projects to accomplish them.
Note it is the goal that matters. Building an aqueduct with the goal to deliver water from
a remote dam to the city is a worthwhile project, provided that it does deliver water in
the quantity and quality required. It is the delivery of water that counts, not the building
of the aqueduct. The aqueduct is merely the means to the end.
Next, we examine the definition of project and project goal in more detail. Then, we
examine the processes used to achieve projects. Before that, we first look at the people
side of project management.
The Right Stuff?
Who is best suited to be a project manager? Research by R. Max Wideman [1] answers
that question, and is given in Appendix 1.
In fact, few people fit the ideal characteristics to manage a project. Equally, if we
checked who is best suited to drive a motor car in our busy and chaotic streets, we
might also find few people are best suited to do that too. Be that as it may, many of us
have to drive cars and manage projects. Both skills can be learnt well.
Project Manager is a prestigious job title, both fittingly used and misused. We look at
some misuses of this title in Appendix 2.
Definitions of Project
The Project Management Institute Body of Knowledge [2] states –
 A Project is a series of tasks, arranged in a defined sequence or relationship

that produces a pre-defined output or effect.
Other definitions include –
 Project Management is the discipline of defining and achieving objectives

while optimising the use of limited resources e.g. time, money, people, space,
etc.
 Project management is the ensemble of activities concerned with

successfully achieving a set of goals – this includes planning, scheduling and
maintaining progress of the activities that comprise the project – with
minimum risk.
Some organisations define a project as a set of tasks that takes over 20 days estimated
labour to complete; a work request takes under 20 days to complete.
Non-project work is routine work. That is largely the same, day in and day out. An
example is to prepare and update a TV news program, taking inputs from various
sources and centres. The same process and scope apply every day, although the news
content differs.
SMART Project Goal
Project goals must be SMART. That is –
 Specific
 Measurable
 Achievable
 Realistic
 Timely
If not SMART, the project is fuzzy and unlikely to succeed. Consider the water project
above. We need to know –
 Specific – what volume of water, network of water supply and construction

budget is needed?
 Measurable – how much water will flow?
 Achievable – what resources, skills and experience have we?
 Realistic – what engineering, distances and water capacity is there?
 Timely – what timeframe is needed?
So, a nine month project to build an aqueduct to a nearby lake that will supply ample
water year round is SMART, provided the resources, budget and skills needed are on
hand and the engineering challenges are average. And there are some other sources of
water in the city.
However, if some or all of these conditions are not met, then the project is not SMART.
For example, if the lake is too small or far away or if the need for water is urgent, then
this project does not compute.
We consider some interesting projects in the Student Questions following. Often, we

seek to make goals SMARTer.
Classic Projects
Classic projects usually are one of the following types –
 Operational or Upgrade
 Compliance
 Strategic
Operational projects dominate by far. They give us service upgrades, rate changes,
product enhancements and new-look documentation across banking, insurance, telco
and other industries. The enhancement from 3G to 4G mobile phones was one such
project. The usual goal of operational projects is to cut costs.
Next most common are compliance projects, more properly programs. Compliance
programs are typically groups of projects to achieve or comply with the goals and
timetable set by the Tax Office, Federal Legislation, Industry Regulator or other
authority. They are ‘must do’ works.
Compliance projects also include projects that restore public health and safety e.g.
proper water supply or safe lift services.
Occasionally, we deliver a strategic project. Such a project clearly enables the business
strategy of the firm. Suppose the strategy of a bank is now to offer a mobile mortgage
service (where the mortgage officer comes to you and completes the home mortgage
contract on the spot), Then projects that enable this business - building a mortgage
lending tablet, laptop or mobile app say - are strategic.
As well as classic projects, we observe some other common types of projects –
 Fuzzy projects
 Mission Impossible projects
 Private Funding Initiative projects
All are worth consideration.
Fuzzy Projects
Some fuzzy (unclear, blurred, vague) projects are –
A. Sarah and George rebuild a period English home
Sarah and George have bought an old house. It is run-down, if not crumbling. They plan,
rather dream, to restore it.
Building work must be replanned and budgeted once problems (unknown, unseen and
unsuspected) are discovered, be it leaning structure, rotting support beams, sinking
foundations, etc. There often are several iterations of the discovery-replan-budget-
rework cycle. Each trashes the original project plan, budget and WBS (work breakdown
structure or work plan).
In addition, planning authorities may dispute, modify or refuse building permission as

and when they see fit. That drives a permission-replan-budget-rework cycle, and trashes
the original plan too.
Lastly, the owners/builders may change their goals as the project progresses, because of
problems, permissions, lack of funds or just change of mind.
If the restoration and rebuild project does eventually finish, it is usually way behind the
original schedule and way over the original budget. Some do not finish.
B. Gallery decides buys a Michelangelo at auction at Christies in New York
The auction date is fixed and a substantial deposit is required in order to bid.
The art work requires validation by experts in its ownership, dating and style. However,
the few experts are always busy and may not be able to work on this project at all.
Failing some or all checks indicates the painting is either in the school/following of the
artist or a fraudulent, modern copy. If so, its value is much reduced.
It is likely that the Gallery will have to decide to bid or not with only some information
on hand. Also, bidding for a genuine work usually goes way over the initial estimate. So
State and Federal government funding is urgently needed too. But there is very limited
data to support grants applications, and funding may be refused.
Lastly, the original funding may come from a bequest or will that requires money to be
used only to buy a genuine work. Going ahead risks legal challenge and wide public
embarrassment. The Gallery’s own internal risk assessment may be ignored too. To
complete the project with a winning bid is possible but risky with many limitations.
C. Laboratory plans to release a new wonder drug on world markets
Having completed in-house and peer trials with flying colours, the drug now requires US
Federal Drug Authority approval. FDA approval is granted only if and after all three
approval testing stages (each lasting 6-12 months) are completed to its satisfaction.
However, drugs often fail a stage. The commercial question is: is it worthwhile to repeat
a stage? Some drugs are abandoned, some are sold and some are retested.
If and when US FDA approval is finally granted, local market approval is now also
required, be it Australian, French, Chinese or any other. That too has its approval testing
stages to complete.
The project to gain approval and release a wonder drug is a wonder.
D. Computer game ‘Julie Bravo’
The animated game Julie is a sci-fi thriller [3]. It was completed and released. However,
there was little or no project management throughout the long project. The animators,
designers and artists were exhausted by ongoing technology upgrades to games,
animation and drawing systems and unplanned rework. A finished task was never
finished. Never again was the motto. Like many other games, Julie has not been updated
to today’s game platforms.
Common features of fuzzy projects are –
 Objective is only partly SMART - S specific, M measurable, A achievable, R

realistic, T timely
 Objective may be redefined
 WBS (work plan) is only partly defined
 WBS may be redefined, much extended or reiterated
 Risks may be high but ignored
 The project may be partly completed or abandoned rather than completed
Mission Impossible projects
Many projects are demanding. That is normal. You would not want it any other way. A
Mission Impossible project is not feasible, not doable.
Private Funding Initiative projects
In the 1990’s, PFI projects became popular in the UK. Now they are found worldwide.
They typically undertake very large infrastructure projects e.g. airports, highways,
hospitals, prisons, schools and waste facilities, sharing the project finance, risks and
return between parties. The $8bn East West tunnel project in Melbourne and the £4bn
Channel rail link project between England and France are two prominent examples.
Private Finance Initiatives use private money for major public sector capital projects. The
private company, a consortium of builders and investors, builds and owns the facility.
Over 20-60 years, this is leased back to the state, in exchange for regular repayments.
The attraction for the state is to stretch the public purse further, funding say 15-50% of
the project; the attraction for investors is a long stream of repayments.
Some such projects are controversial. Read the case study of the Royal Liverpool
Hospital in Appendix 7.
Research suggests that hospitals are among the most challenging of PFI works . Also,
that PFI public works projects are delivered about 3% ahead of schedule compared with
Traditional public works projects which are delivered about 24% behind schedule [4].
Working on a PFI project might be your next role, right?
Choosing a Project
Most businesses have many, many projects to choose from, when it comes to approving,
funding and supporting a particular project. So how can we pick a ‘good’ project? There
are several ways.
In principle, we can use a rating scheme based on a number of criteria and their weights.
The project with the highest weighed rating wins. In practice, this is uncommon. The
data needed for the various criteria is seldom available.
Instead we use one or more financial measures of the project, namely–
 Net Present Value
 Payback period
 Internal Rate of Return
Net Present Value or NPV is the net investment return of the project (revenue generated
minus build costs), with revenues discounted from the year they occur to the present.
The discount rate is the firm’s desired rate of return, or hurdle rate. That reflects the
firm’s cost of capital and expected earning rates. When evaluated at present value,
projects of very different durations, say 1 year, 3 years and 5 years, can be compared
fairly.
Also, if a project is seen as riskier than others, it can be discounted with the hurdle rate
plus a risk premium of say 3% or more. So, riskiness of project revenues can be taken
into account. An example of the calculation is the Student Questions below.
Note the NPV of a compliance project is not calculated.
The Payback Period is the time in years and months that the project revenues will take
to equal the build costs. Figures are undiscounted. Payback Period is of interest to small
to medium enterprises which are concerned with cash flow. When will we get our
money, i.e. build costs, back?
By the way, NPV and other calculations are done easily and quickly using Excel
spreadsheet functions.
One practical tip is this. Projects rarely continue beyond 3 years, however long their
planned duration. Projects then are usually wound up, and resources are re-allocated.
So also evaluate the project NPV at 3 years.
To complete, the Internal Rate of Return is that discount rate which give a NPV of zero.
Business Case
The business justification, scope, financial measures above, outline of project work plan
and schedule, risks, etc are included in the Business Case. This is the mandatory starting
point for most projects. Projects, operational or strategic, must compete for budget
funds. Some firms call this step Strategy into Action, and so it is.
There are many good examples of Business Case.
Note it is usual to sweep in to the project some related and necessary sub-project(s). For
example, a major health insurer was rebuilding its communications networks across the
nation. It had no backup or redundancy capacity in place for its communications lines or
call centres! Backup means that if a line from A to B fails, there should be an alternate
line from A to C to B as spare. So if a bulldozer accidentally cut a cable, you guessed it …
The rebuilding project thus included backup.
To produce a persuasive business case is essential. Some investigations, discussions and

planning are required, and some iteration as well. A lesser business case may be much
revised and iterated. It is better to recast or cancel such a project than to limp on.
In the next chapter, we discuss the first basic building block of the business case. That is
project scope.
Student Questions
1. Fuzzy
How can fuzzy projects A and B be made less fuzzy? Common sense steps will do the
trick.
2. Wortbuch
The year is 1960. The German Government has now allocated funds for researchers
to complete the German Dictionary (deutsche Wortbuch). This was started in the
1830’s by the Brothers Grimm. The Brothers built the Dictionary up to the letter G.
Question is – what type of project is this?
Today, Microsoft and Domino’s are collaborating to produce an app for Xbox gamers
to order pizzas without interruption. What type of project is that for Domino’s?
3. NPV’s
Project NPV’s are C -$50k, D +$15k. Which project(s) should you invest in? Why?
4. Missions Impossible
Find two examples of Mission Impossible projects. Why so?
5. Big Bank
You are Project Manager at Big Bank with a budget of $1,400k this year and a wide
choice of projects. Decide which types of projects you have, which projects you will
invest in and how much unallocated budget you will retain, if any.
Project Cost NPV Rating 1-5 Payback

$k $k top 5 Period years
Implement new tax 300
laws
Replace faulty lifts in 50
tower 5
Update savings 80 10 2 0.5
account products
Build new mobile 500 90 4 3.5
banking services
Add new Facebook & 40 -50 3
Twitter links
Retire & replace old 600 2000 5 2
systems, phase 1
Relaunch customer 150 800 4 0.5
service
Tint level 5-7 windows 30
in building 3
Add new mobile 250 300
mortgage services
Automate document 100 20 3 3
production, phase 2
Launch ad campaign 300 -170 3.5
at airports
Total 2400
6. CTP Motors
Your job as Project Manager is to choose and install the new computer system for
CTP motor insurance. The system is expected to pay for itself in five years.
For CTP, the profit margin on premiums is an enviable 15%. Estimates of premiums
are $400k in year 1, $1000k in years 2-3, $1500k in year 4 and say $700k in year 5.
The state government changes insurance laws every five years so premiums in that
year are risky. Premiums are invested conservatively, earning about 6% interest.
Today, the bank bill rate is 6% and inflation is running at 2%. A risk premium of 3%
may be added, as you see fit.
A good investment has an NPV that is zero at minimum or positive. So then, what
can you spend?
Hint: Find the expected future earnings in each year from premiums and
investments. Then find the present value of earnings in each year by discounting, as
follows. The discount factor for future earnings in year n is 1/(1+D)^n where D is the
discount rate. Use Excel to calculate.
So then, what investment would just equal the sum of present values?
7. Oops Business Case!
Rebecca has drafted a Project Initiation document. Her project concerns data
collection and needs analysis for child care in Chelsea, London. Problem is – the
business case section of the document is vague [5].
So, draft an accompanying Business Case that justifies this project, if you can. Use
the data in Rebecca’s draft and the format for business case given here [6].
The Do Nothing option is a standard feature of all business cases, but what happens
here? Should this project be done?
8. Airports Canada
It is the year 2050. There is a boom in world travel. Problem is – the airports of
Canada have maxed out. There is little or no nearby land available at reasonable cost
to enlarge airports. Landing slots and takeoff rules limit arrivals and departures too.
Airlines are already flying their biggest aircraft. What to do?
Option A is to build a new, central airport at Ottawa with bullet train connections to
Canadian and US cities. Distances Ottawa to Montreal, Quebec, Toronto and New
York are 200 km, 440 km, 450 km and 440 km respectively. The average speed of a
bullet train is 250 km per hour.
The new airport will make extensive use of underground facilities to store and
service both planes and passengers. That is a new design. Bangkok and Dubai
airports have underground trains.
Option B is more simply to build a new airport at Quebec with bullet train access to
Montreal. Distance Quebec to Montreal is 200 km. Again, the new airport will
develop and use underground facilities. Option C is the Do Nothing case.
There is an extensive rail network in place. It is 3 times slower than bullet train.
Draft a business case here. Focus only on the Benefits and Disadvantages of each
option. What do you recommend? What are sensible Next Steps?
CHAPTER TWO – SCOPE OF THE PROJECT
You are going down in the lift at lunch time to the cafeteria. It is busy and bustling. There
are many people who know you as Project Manager in this project. They all want to talk.
What do you think will be the subject most asked about in the project –
 Budget
 Benefits
 Duration
 Scope
 Process
 People?
Usually, the most asked subject is the scope. People assume the rest will follow. And
what is Scope?
SCOPE
Scope means the agreed range, contents or inclusions of the work, with a strict and clear
boundary that separates in from out of scope. Project Scope goes hand-in-glove with
 Project Goal
 Assumptions Made
 Constraints
A simple example may help. Suppose your project is to repaint and redecorate a room.
Imagine how different the project will be if the goal is –
 To make the room ready for a quick rental, or

 To make the room ready for a new baby, or
 To make the room ready for a teenager?
And imagine how different it will be if the assumption is –
 Strictly limited, minimal budget, or

 Money-is-no-object, work-of-love budget?
Lastly, imagine the result if the constraints are –
 Finish within two weeks max

 Make the room noise-proof
 Meet ‘Vogue Living’ standard of decor?
How do we work out or define the scope? Some investigations, discussions and planning
are required, and some iteration as well. There are often some reference documents
that bear on and inform the result.
As well, we use a Checklist to build the scope wherever possible. For example, Telstra
uses a checklist of work usually required to bring new telco products, routers and hubs
into service. National Mutual uses a checklist of work usually required to bring new
insurance or investment products into service.
Best Practice in project scoping is to –
 Use a scope checklist

 Split scope into appropriate sections e.g. location, technology, process…
 Prioritise scope by business importance
 What in particular is ‘core’ or critical scope?
 Or desirable scope?
 Or nice to-have scope?
 Give discussion of why particular scope is excluded
 Resolve any undecided or borderline scope work
 Be realistic and clear.
What can go wrong with scoping? Sometimes, a project manager is pressured into giving
a quick-and-dirty scope. The result is you guessed it … The next project manager must
redo the scope properly.
What happens if the scope costs over the desired budget? Here we redo the scope with
a careful prioritisation of project inclusions, their benefits and costs. Also, we often split
the project into prioritised versions or releases.
By the way, research is telling here.
 Gobeli and Larson found that planning problems were cited as the most
frequent barrier to project success. Within this category, unclear definition of
goals, objectives, scope, plans, or design was the predominant planning
problem [7].
 In examining the reasons why cost and schedule overruns are experienced on
software development projects, Genest et al. identify the failure to manage
scope as a probable cause [8].
SCOPE CREEP
Is that all to project scoping? No. Scope Creep refers to uncontrolled changes in a
project's scope.
Sometimes, the scope increases by adding both new products and new features of
already approved products. As a result, the project drifts away from its original purpose.
Scope creep also results in a project overrunning its original budget and schedule, as
more is to be done at the same cost and in the same time. This is usually unrealistic.
Scope creep can be a result of –
 Confusion of what products and features are properly required to bring about
the achievement of project objectives in the first place
 Over-promising and being easy to please
 Divergent views as project sponsors change
 Unplanned but necessary work generated by planned tasks
 Poor change control.
We discuss Change Control later. That process addresses proposed changes to scope
later in the project. These are investigated, prioritised and agreed or rejected on their
merits.
In the next chapter, we discuss the third basic building block of the business case. That is
the project work plan.
Student Questions
1. The Istanbul to Mecca Railroad
The year is 1890. The Turkish Government is considering a new project, the
Instanbul to Mecca railroad. There is much public support for the project.
The route will be very long. There will be a railway from Istanbul along the Turkish
coast to Damascus Syria, then to Port Said Egypt and along the Red Sea coast of
Saudi Arabia. Finally, the line will head inland to Mecca. The cost of construction and
upkeep will be very high, and the duration of the project will be long. Railway makers
and engineers are delighted.
So, how would you –

 Advise the Turkish Government to make the project goal S.M.A.R.T.er
 Structure the project scope
 Address the major risks (potential problems)?
You will certainly earn your fee as project advisor here.
2. Opera France
The French Minister of Culture has announced a new project. There will be a
thorough review of the funding and performance of opera in France, The report will
be tabled in five months time, before the new financial year. The Minister has invited
experts to join the review. Congratulations! You have been named as Chairperson.
In France, there are four competing national opera companies. Many cities host
opera/music festivals too. Opera often uses joint works. The Opera National, for
example, works with Radio France and the Chamber Orchestra of Paris. Opera is
distributed by many media. A live performance may also be televised and digitised.
There are specialist opera companies also.
All forms of opera, music and the arts are partly subsidised by the national
budget, along with various other budgets. The management and marketing of
opera is local, at company or festival level.
For whom is this good? Can more be done for less? Those are some of the
social, economic and other dimensions of your review.
So, how would you –

 Advise the Minister to make the project goal S.M.A.R.T.er
 Structure the project scope
 Address the major risks (potential problems)?
Allez y! Go to it.
3. Iinsure Call Centres
Iinsure wants a call centre built double-quick. It will handle all motor claims
from across South Africa, and maybe house & contents claims later. A
residential complex has been purchased in the downtown Durban area.
This will need refit and commissioning. Fire safety and other standards
must be met. About 150 managers and staff will use the new centre. All office
infrastructure needs to be provided: cabling, desktops, networks, systems,
printers, etc. Electricity, lighting, lifts, ventilation and parking may or may
not be sufficient for the new centre.
In anticipation, Iinsure has built call centre claims systems. But, these use old
model HP PCs and HP will soon to cease making them. A suite of call
centre technologies needs to be purchased, integrated and installed from
Telsa and other vendors.
Iinsure has just reorganised after losing some major contracts: so who will be
the managers, the supervisors and the call agents in the new centre is
unclear. Personnel are upset. Things are going slowly.
It may be useful to link this call centre to other Iinsure call centres in Cape
Town and Johannesburg. Iinsure has discussed the project with ISI
Corporation, but no contract has been drafted or signed. Budget likewise has
not been set. Questions from ISI to Iinsure are usually met with an
impatient now!
Telsa is slow to deliver. When pre-ordered, Telsa goods and services

however are installed more quickly. ISI executives have not told Iinsure of
their slow, review-based processes.
By the way, call centres that sell policies are profit centres. Call centres that
administer claims are cost centres.
You are the manager of this fuzzy project. So, consider –
 Is there a strategy issue here that should be addressed?

 What is the project goal? Is it S.M.A.R.T.? Assume the default goal of
operational projects applies.
 What needs to be swept into the scope?
 How can the scope be split up? Think critical, desirable and nice to have.
4. Back Of Beyond Mine
It is time to mine right now. The drill samples, the geology and the
geochemistry results are excellent and coincide. Even the old timers agree.
Nevada Prospecting has been exploring tenements outback for the last two
summers. The nearest pub is at Malbon, 90 miles away.
The nearest major rail junction and town is at Concurry, 250 miles away.
Roads are just bush tracks, difficult enough for a jeep. There are two
rivers en route, prone to occasional flooding.
Nevada will process copper, silver, lead and zinc on site in a new mine.
Copper is the dominant metal. Ore concentrate will be transported by
road to Concurry, and by rail to depots in Gladstone, 1300 miles away.
There it will be shipped overseas.
Ample finance has been arranged. Congratulations! Your project is to set up

the mine. Do that in nine months maximum, ready for next summer.
Budget is $30 million.
So, heavy mining equipment must be brought in. New processing facilities,
camps and infrastructure (water, electricity, sewerage, food & supplies)
must be set up. AJ Lucus is one mining services company that may help.
Williams & Co is another. It sets up and services remote mine
accommodation. Queensland Rail and Gladstone Port Operators are
also likely major partners. Apart from some caravans, generators and
jeeps, Nevada has no equipment. You are beginning from the beginning.
By the way, no one has considered the environmental or legal issues. The
mine will need long-term waste storage, a by-product of ore processing. No
one has mentioned traditional land owners or protected fauna on site, if any.
Recruiting numbers of skilled miners will take some effort too.
Also, commodity prices are high today but volatile. Who knows what they will
be in nine months time?
You are project manager. So, consider –
 What is the project goal? Is it S.M.A.R.T.?

 What needs to be swept into the scope?
 How can the scope be split up?
 Write out the scope.
5. Scope Creep
In the Iinsure case above, what would constitute Scope Creep?
A. Decision to move 50 personnel from Cape Town to the new call centre
B. Omission to obtain Development Approval from the Durban Town Planning
council
C. Discovery of asbestos walls that must be removed and replaced
D. Decision to exclude house & contents claims
E. Late decision to link in on-the-road claims agents.
6. Opo
It is the year 2001. The world is abuzz with the opportunities of eCommerce. That is
Internet-based trade, commerce and applications. Every man and his dog have a
scheme or two.
Opo is a telco. It envisions new services and revenues when a telco underpins this
eCommerce world. Problem is – Opo has no capacity or facilities of this kind. It offers
satellite, mobile and other traditional telco services.
So, Opo plans a new project. It will build a set of Internet-based data centres
nationwide to serve this new business. In the west, south and north, there will be
regional data centres. In the centre, there will be a national data centre. All centres
are brand new except for the south; that will be a re-equipment of the existing Rose
Bay data centre.
This looks like a 5 year building plan. And capital expenditure will easily exceed $500
million. Holy Cow! That is a large chunk of Opo’s annual revenue or net assets.
The eCommerce market is changing quickly. Opo marketing people are worried. If
our eCommerce facilities and services are not in place very soon, the opportunities
will be gone!
So, what advice would you give to make this project SMARTer? What alternatives
would you suggest?
CHAPTER THREE – MEET THE SPONSOR OF THE PROJECT
The Project Review Board
The divisional manager who is initiating, supporting and funding the project is the
Sponsor. Usually, there is a single sponsor. But, in more complex projects, you will find
two sponsors, hopefully with a common voice. The Sponsor often envisions the project
goals and outcomes in a compelling way.
Your early project discussions are with the Sponsor. But who else is needed on and
around the project team?
The project team needs personnel–
Analysts, designers, engineers

Developers, engineers, builders
Business specialists, subject matter experts
Testers
Consultants perhaps
It also needs suppliers and materials –
Suppliers of all kinds

Plant & equipment usually
Plus, it needs the services and support of –
Operational managers & staff for deployment

Accountants for budgeting & accruals
Project Management Office for reporting
Auditors perhaps
Mentors sometimes
And, it has stakeholders too –
 Those who champion the project

 Those who will be impacted by project outcomes
 Those who wish/need to be informed of project outcomes
 Those who oppose the project
 The broad project team, etc
Are all stakeholders equal? No. Critical stakeholders may grant or block permission and
cooperation for the project, as they see fit. Harmony among stakeholders enables
success whereas conflict typically leads to failure.
In fact, shifting alliances among stakeholders may reshape the direction and content of a
conflicted project. This is commonplace. D’Herbemont and César consider the strength
of alliances for and against a project. [9]
Some of these people are assigned; others need to be identified and engaged in the
project, if available. Go for it! Every project is different. Who was appropriate and
available for the last project may not be now.
All the project and support personnel will need engagement and briefing from you, the
project manager. A number of these will be new to their role. So, a glossary of Project
Roles and Responsibilities is necessary. A large and complex project will need a
Communications Plan too.
A common addition is the Business User Co-ordinator, also known as the Buck. In the
case of joint project development, the Buck and the Project Manager work together to
prioritise and steer project work.
We assume that the Strong Matrix or Project Organisation is the usual and normal
project organisation for the enterprise. Here, everyone has both a project role and a
specialist, day-to-day role. Some alternatives forms of organisation are discussed in
Chapter.
The processes the project will follow are also usually part and parcel of the enterprise,
whether Classical (waterfall), Agile Scrum (prototyping) or Rapid (timeboxed) project
development. Some tailoring of processes is allowed, especially for smaller projects.
Does following processes mean no disagreements? No. People naturally disagree. Some
may even have a better way. As Manager, you need to listen, guide and follow-up. As
Leader, you need to show and clear the way forward.
All these meetings and discussions come together in –
 The Project Initiation Report

 The Project Kick-off Meeting.
Make it good! These check that all of us have the one-and-the same understanding and
expectations of the project, its goals, deliverables, duration and costs.
Note that in practice the Sponsor may be reviewing multiple projects, rather than a
single project, by the Project Review Board structure.
Student Questions
1. Critical Stakeholders?
Our project was to draft, review and gain acceptance of a strategic plan for the
sustainable development of an entire river catchment, in a rapidly developing
section of coastal Guangzhou, China. To do this, we planned and conducted a
process of wide community consultation.
A river catchment is a web of human and biological communities. Stakeholders

ranged from farmers, foresters, commercial and recreational fishermen, rural
residential landholders, urban residents, conservationists to concerned residents,
government ministries, tourist operators and real estate developers.
All were involved in a process of public meetings, networking, focus groups and
workshops. Promotional work included newspaper columns and media interviews.
High level negotiations were conducted with national and provincial governments.
The outcome was a comprehensive catchment strategy. This belonged to all

stakeholders in the catchment, addressed a wide range of critical issues, provided a
planned direction for future actions, and, importantly, achieved acceptance by
government.
Who were the critical stakeholders here? Is that only government departments?
2. Camping in Zambia
Camps need to be built quickly in Zambia to shelter refugees from Rwanda. The UN
and other international bodies will help. Zambians will do most of the work. Consider
the stakeholders in this project –
A. Those who champion the project

B. Those who will be impacted by project outcomes
C. Those who wish/need to be informed of project outcomes
D. Those who oppose the project
E. The broad project team, etc
Make a list of stakeholders of each kind A-E.
CHAPTER FOUR – WORK BREAKDOWN OF THE PROJECT
The Work Breakdown Structure
The work plan or Work Breakdown Structure (WBS) answers the question – how, step
by step, will the project goal and scope be realized?
Work breakdown structure is an exhaustive, hierarchical tree structure of tasks,
milestones and deliverables that will complete the project. Thus, the WBS serves as the
basis for much of project planning.
We have used an example project of repainting and redecorating a room.
Here is part of the WBS for that project. We will –
Plan the work

What goal – update or resale?
Who’s taste – mine, yours, kid’s or market?
Which room most needs painting?
Which walls, ceilings, windows, doors, fittings?
Who paints what, when?
Plan the Decor

Ceilings red
Walls orange
Doors green
MS – got the plan
Get the materials

Buy paints
Buy ladders
Buy brushes or rollers
Buy wallpaper remover
MS –got the materials
Prepare the room

Remove old wallpaper
Clean surfaces
Plaster holes and scratches
Remove detachable decorations
Cover floor with old newspapers
Cover electrical outlets or switches with tape
Cover furniture with sheets
MS – ready to paint
Paint the room

Ceiling first
Walls next
The rest last
Close the room when finished
Let the paint dry
MS – coat 1 done
Inspect
Apply a second coat? Paint again
MS – finished painting
Clean up the room when finished

Dispose or store left over paint
Clean brushes or rollers
Dispose of old newspapers
Remove covers
MS – clean up and job done.
MILESTONES
Above, we show some Milestones or key progress points as MS. These serve to navigate
or measure our progress through the project just like the way points through an airline
flight path. Usually, milestones are show as diamonds. A project with flag-style
milestones is -
This makes the project timeline very clear.
NUMBERS AND NAMES
The WBS should generally not exceed 100 tasks, preferably less. The WBS should be of
limited depth and breadth in tasks. How many tasks are listed in the painting project
above? It is just about readable.
If many more tasks are required, use Sub-project(s). If a number of small, related tasks
are involved, sweep them into Work Package(s).
The clear naming of phases, activities and tasks is also important. What does this
name/task mean? If readers cannot tell or you cannot remember, then go back and
clarify.
ACTIVITIES AND PHASES
Notice how in the painting WBS above we have a number of activities like Prepare the
Room, which contain a number of tasks. This Activity-Task tree structure is typical.
It is also typical to find a Phase-Activity tree structure. So we could show the above WBS
in phases –
Preparation Phase
Plan the Work
Plan the Decor
Get the Materials
Prepare the Room
Coat 1 Phase
Paint the Room coat 1
Inspect and Decide
Coat 2 Phase
Paint the Room coat 2
Inspect and Decide
Finish Up Phase
Clean Up
Hand over painted Room.
THE CLASSIC PROJECT PLAN
That brings us to the structure of the classic project plan. It has these phases –
Plan & Initiate
Design or Requirements
Develop or Build
Deploy or Deliver & Close.
You will see and use this structure often. It is also known as a Waterfall plan.
Note also that project scope and requirements align closely. The requirements phase
details further the exact work needed.
By the way, research is telling here.
 Tuzcu and Esatoølu found that completed and accurate requirements at the
beginning of a project and allocation of sufficient time to determine
requirements were factors that influenced project success [10].
Is the style of project management needed in each phase one and the same? No. We
need to vary our approach –
Explorer in conceptual work
Coordinator in definition work
Driver in build work
Finisher or Closer in delivery work.
Don’t worry – project managers can and do vary their management styles as above. So
can you.
BOTTOM UP?
Our discussion implies that projects are planned and worked from the task, bottom up.
That is overwhelmingly so. But it is not the only way. Alternatives are –
PROTOTYPING OR TIME BOXING
Prototyping means to work iteratively through the design, build and test of the product
or service from first impression to final version. We work shoulder-to-shoulder with the
stakeholders. They can steer the path and improve the deliverables as we go. At least
four, at most six iterations are applied.
Simpler projects lend themselves to prototyping. A simple, online system, say for
housing rentals, would perhaps be a suitable project here. A multilane highway or a
patrol boat project would not.
Prototyping is a core technique of the Agile Scrum method of software project

development. A sprint (or iteration) is the basic unit of development; it is a timeboxed
effort. [11-12]
Time boxing means that all phases of the project have a strictly fixed duration. Time
boxing gives a project certainty of duration, flexibility of prioritised content and
efficiency of delivery that otherwise it would not have. These are advantages indeed.
Work activities and deliverables are prioritised to fit into, that is to be conducted within,
the fixed duration of the time box. We work shoulder-to-shoulder to achieve this. Board
approval for major purchases, if needed for the project, is not time boxed. That is the
only exception.
Woolworths and British Petroleum use time boxing for Rapid Project Delivery [13]. We
will consider time-boxing further.
Are there other approaches? Yes, for example, Critical Chain Project Management [14].
But, does Rapid Project Delivery achieve the same goals more simply and easily? Indeed.
Of course, there are challenges too. Sometimes, there is too little time available, too
great a scope and too few resources for a classic project approach. What can we do? Let
your inspiration and ingenuity loose on the cases below.
In the next chapter, we discuss the fourth basic building block of the business case. That
is the project risks.
Student Questions
1. Wind and Tide
Wind and tide rule sailors. Refugees bound for Italy can find themselves in Malta.
Problem is – numbers are overflowing. Malta needs two camps for 5000 refugees,
built right now. Only rural areas have the space available at reasonable cost.
Refugees stay two years or more before moving on.
You are the project manager for this work. What are –?
A. SMART goal
B. Critical scope
C. WBS
for this project.
2. Remona
Remona makes beautiful ceramic tiles, wanted the world over. It needs to diversify
beyond the European and American markets. Remona will build a new plant in China
to serve the Asia Pacific region. It is your project. What are -?
A. WBS
B. Key Milestones
By the way, Remona has learned the hard way that it must register and protect its
trademarks and patents.
You are beginning from the beginning. Do as you think best.

3. CXC Privacy Project
CXC is an empire. It has over 3500 staff, 15 divisions, and a great many products and
services. Like IBM, it is a billion pound IT company. Most British business giants
count among its clients.
Watch out! There is a five month deadline for compliance with new UK privacy
legislation! Privacy concerns the proper keeping and use of your personal
information – names addresses, medical records, PINs, telephone numbers, etc. The
legislation sets out ten principles of privacy. This is radical. Business tends to collect
data galore.
CXC does not have the time or resources to execute a privacy compliance project
across this vast scope, using the classic design-development-deploy process. No way.
Another way must be found, pronto.
Over to you, project manager. How will you structure the project?
Hint. Consider how opinion polls work. They offer two lessons.
4. CEM Super Tax project
There is a new superannuation (pension) tax levy, due in only six months! The
Australian Tax Office is supervising its collection. There are three steps: identify,
calculate and collect. The ATO often revises the rulings that determine eligible
policies and products, just as it revises other taxation rulings. The process is urgent
but volatile.
CEM is a titan of financial services; the extent of its policies and data is vast. So,
chances of complying with this new law on time seem low. CEM is justly proud of its
fine reputation. No bad news ever occurs here. If CEM failed to comply on time, that
would hit the headlines.
Some facts that help are –

 CEM has a big operating budget; to find another $1 million or so can be done
 Some technology is very flexible, and may be used as a central calculator pad
 CEM and ATO are on good terms.
Over to you, project manager. How will you structure the project?
CHAPTER FIVE – RISKS OF THE PROJECT
TYPES OF RISKS
Risks are potential problems that may derail, delay or damage the project. Risks can be
of any kind –
 Organisation resistance
 People & skills gap
 Process flaws
 Technology inadequate
 Funding gaps
 Obsolescence
 Market turmoil
 Purchasing costs & delays
 New laws apply, etcetera.
RISK CONTROLS
When we encounter risks, we apply a risk control. We may seek to –
 Mitigate the risk – reduce the likelihood or the impact of the risk
 Transfer the risk – contract other parties to do project work for a price
 Avoid the risk – use another approach, or
 Accept the risk – too few resources to do otherwise.
Each risk control usually comprises several actions that fit the bill. These are devised by
common sense and experience. For example, to reduce the risk of fighting at amateur
sports matches, we may - name and shame the offenders, fine or expel the offenders,
call the police, cancel the match, fine or expel the clubs, etcetera.
Reduction of risk increases the likelihood of project success. Mitigation or reduction of

risk ceases only when the project ceases.
PERCEPTION OF RISK
In spite of its importance, risk is often unrecognised, under-stated or ignored. Risk, like
beauty, is in the eye of the beholder.
Abank Hong Kong process calls for multi-country projects over US$10 million in budget
or one year in duration to be subject to Executive Team review. However, such projects
are split up so that no Executive review is ever held.
Insurer IMF management called for a ‘big bang’ implementation of uncommon

technology Australia-wide; the project team called for a staged implementation to limit
and manage risk. When this was refused, the team quit. Loch and others talk of novelty
risk [15].
You may ask – are billion dollar projects and their risks managed better? There is good,
bad and ugly. In the British Airport Terminal 5 project, the known critical risks were not
addressed decisively. You may be interested to read more [16-17]. Flyvbjerg et al see
risk and ambition in transportation mega-projects [18]. They talk of the ‘mega-project
paradox’ – more succeeds less.
Research now is turning to see how organisations can better develop the imagination of
risks. The better imagination of strategy or ethics poses similar challenges. Is the
problem simply solved by hiring more capable, imaginative personnel?
Meanwhile, as project managers, how should we handle blasé, risk-tolerant

stakeholders?
RISK SEVERITY MATRIX
Present the Risk Severity Matrix. From that, focus only the highest priority risks, their
risk management responses and their contingency (fall back) plans. Let an appendix
contain all other risk discussions.
A simple risk matrix is below, followed by a risk response guide.

CASE STUDY: PROJECT RISK ANALYSIS
Let us work through a project together. The project brief is as follows.
The year is 1994. There is murder and massacre in Rwanda. That is well known. But the
UN is over-stretched, too busy to respond. Except that is for Dieter. He has studied the
maps of Central Africa and the former Belgian Congo. There was/is a railway in the
Congo that runs over 500 miles to neighbouring Zambia. So, Dieter’s project is to restore
the railway, transport refugees to Zambia, and settle them in camps there. This needs to
be done most urgently, within a four month period.
Assumptions are that –
 The UN will obtain permission and co-operation from Rwandan and Zambian
governments
 The UN will provide a minimal budget and armed force
 The railway lines, locomotives, carriages and engineers are working to some
degree
 Camps for 10 – 20 thousand people will be built quickly in Zambia
 Resources will be found in sufficient quantity for the journeys
 The coming rainy season will have minor effect on rail transport
Risks are many! They include –
A. The railway needs some rebuilding before it can be used

B. The railway breaks down in use but there is no backup train or route
C. Panic and disorder in boarding overturns carriages and derails the train
D. Murderers attack the train when boarding or en route, killing more
E. Mercenaries demand millions as ‘safe passage’ fees, but there is no money
F. Army and police demand millions as ‘protection’ fees, but there is no money
G. Rape, murder and theft occur among refugees
H. Illness and starvation occur are suffered by refugees
I. Contagious illness is transported to the camps, producing an epidemic
J. Camps are not built quickly or large enough. Newcomers have nowhere to go
K. Zambia grants one year visas for refugees, but strife long continues
L. Funds for resources are held over by UN sub-committees, halting the project.
Dieter made this project happen. He won medals from the UN and the German
government, deservedly.
Let us analyse some of these. For example, take risk I. We can say –
Likelihood – low, assuming people and conditions are reasonably healthy

Impact – medium to high, project would be halted temporarily for quarantine
Risk response – accept the risk, since we have too few medical resources to mitigate
and no means to avoid or transfer the risk
Contingency plan – quarantine any epidemic, build new camps and update
conditions.
Take also risk D –
Likelihood – high
Impact – high, project is halted with long, difficult and violent delays
Risk response – transfer the risk to UN & Gov. Armed Forces accompanying the train
Contingency plan – escalate any long blocked train to UN Security Council and World
Press for help.
Finally, take risk A –
Likelihood – medium, assuming some occasional train traffic

Impact – medium, project is halted temporarily until essential repairs are made
Risk response – mitigate the risk by ascertaining the current status. Use NASA
satellite photos, local and Belgian experts, and information sources. Then make an
essential repairs sub-project.
Contingency plan – replan. Check airlift/aerodrome possibilities. Consider stop.
You may well want to add some other, better responses here. From this work, we then
build the Risk Severity Matrix, like so –
Rwanda Railway Project
Event
Likelihood
High D
Mediu
m A
Low I
Event
Mediu Impac
Low m High t
RISK ONGOING
Project risk needs to be assessed at Project Initiation and Ongoing. Risk can change as
the project progresses. A project initially assessed as low risk can quickly escalate into a
high-risk project; a key person may suddenly leave for a new job, for example, taking
away scarce skills, vision and commitment.
Any emerging risk factors should be subject to the ‘Signpost of Danger’ control
mechanism. This has three simple steps – identify, escalate and apply. Any member of
the project team who identifies a risk shall escalate this risk and some options for its
management to the project manager, who then decides the best risk control. This
mechanism is both proactive and successful.
What can go wrong? Sometimes, the risk response does not match the situation. Or, the
persons expected to make the risk response disown the responsibility; it is not us. Or, it
is proposed simply to file (lose) the risks in a risk register. The risk response must be
thought out anew. Try again.
Next, we build the project network. This depicts the WBS, and leads to the project
schedule.
Student Questions
1. Holy Smoke!
PIA is an Italian business icon. It has many businesses. Fire is one major risk.
What kind of risk management controls does PIA use in each of these areas?
A. For investment services, PIA has a back-up trading centre outside Milan. New
traders are trained here on an ongoing basis. So, the back-up systems and
facilities are kept in use and are reasonably up-to-date.
B. For insurance services, PIA has contingency plans and rehearses them every
twelve months. Such plans specify how services would be recovered and
restarted, and in what priority order.
C. For data-centres, PIA has contracts with other data-centres to continue these
services in the event of fire or smoke damage. It also has anti-fire systems,
audits and rehearsals.
D. For property services, PIA also uses contingency plans. Each major property
complex or shopping mall has anti-fire systems and fire insurance cover.
Electricity failures are one source of fire. PIA seeks to have its facilities connected to
different electricity grids so that failure (and fire) affects some sites, but not all.
2. Rwanda
Work through risks B, C and K listed above. Develop their risk profiles as done for
risks A, D and I.
3. PFI projects
PFI projects are risk transfers from government to private enterprise. Read the fine
review paper now by Takim and others [19].
A. What are the three main difficulties in making PFI projects work?
B. What types of risks are being transferred?
CHAPTER SIX – BUILDING THE PROJECT NETWORK
Given the WBS, we can now build the Project Network. A picture is worth a thousand
words, so it is said. The Project Network depicts the sequence of tasks and
milestones found in the WBS. To build the Network, we need some terminology and
tools.
ACTIVITY ON NODE PLANNING
Tasks of the WBS are linked to one another in logical order and usually from finish of
one task to start of the next task. There may be a lag (delay) to start the next task
because other inputs like approvals or purchasing need to be completed first. Tasks
lead to completing or achieving milestones. These mark that a deliverable has been
built or a state of readiness has been reached. Tasks are linked in this way from the
start to the end of project.
This is called Activity-on Node planning, arguably the industry standard worldwide.
Tasks e.g. credit requirement are grouped into activities, activities e.g. analysis into
phases and phases e.g. design into project. Sub-projects can be linked into a master
project. Thank you, Mr Gantt.
CRITICAL PATH
Tasks on the critical path of a project have no scheduling ‘slack’. That is, any delay or
lengthening of these tasks immediately delays the project as a whole. The critical
path points to the project duration.
A house project with critical path in red is the following –

Notation is task 2 is dependent finish-to-start on task 1, and so forth. Here, tasks 5 to
9 have some extra time available for completion if necessary. This extra time is called
float or slack.
Thanks go to F John Reh for this example [20]. And Tim Tyler gives a fine discussion
of the critical path in cooking breakfast [21]. Check it out!
Often, projects need to be planned from the final deadline ‘backwards’; that is, we
must achieve the deadline and so schedule the start and phases to match.
The Project Network is the first step towards creating the Project Schedule. These are
NOT one and the same. The two differ in that the Project Network has simple task
durations only, while the Project Schedule has realistic task durations after personnel,
equipment and other resources have been allocated to each task and to the project.
PLANNING TOOLS
Microsoft Project and Primavera are the industry standard project planning tools.
Primavera is the tool for engineering, architecture and manufacturing projects. Both are
remarkably similar in look and feel.
MS Project in particular is very widely used; it has many features, including reporting,
resourcing and critical path. It also highlights over- and under-assignment of resources.
It does not support Apple Macintosh however. Occasionally, you will encounter PM
Workbench in place of MS Project.
There are excellent training videos on the use of MS Project. These are well worth
viewing.
GANTT CHART
MS Project gives both a Network Chart and a Gantt chart. The Gantt chart is by far the
more widely used. It is named after one of the Heroes of Project Management [22]. See
Appendix 8. Every project team expects to see a Gantt chart. This is a must, included in
every major project document.
There is strong commercial-legal use for Gantt charts, as Project Smart notes [23]. Check
out the case in point. That is well worth while.
STRUCTURING THE PLAN

Before sitting down to make the project network, let us consider the type of project and
its plan. We may distinguish the following types of plan –
 Simple – like Painting & Decorating the Room – plan from start to end –
continuous activity
 Reverse – like Meeting the Deadline – plan from end to start – continuous
activity
 Event – like Annual Gala Ball in six months time – plan in phases –
discontinuous activity
Simple and reverse plans are fine to depict in one network diagram. Event plans are not.
An event plan is best structured and depicted in separate phases, e.g. the planning and
preparation before the event, the big event itself and the follow-up after the event.
Each of these phases usually has very different time scales, say six months, 8 hours and
two days.
As noted earlier, plans may be created by task, by time box or even by prototype.
We will revisit these ideas and address resourcing in the next chapter. Stay tuned.
Student Questions
1. Fast Builders
Review the diagram of the house build project above. What is the project duration?
2. Retake the North
The Emperor has commanded General Strong to retake the Northern Province. You
as project manager will assist. General Strong is thinking –
I will need at least two armies and the navy in place in order to succeed. Our armies
must be moved accordingly. But no army can move in the northern winter. Our
attack must start and finish in the summer. That is from May to July. Our enemies in
the west are powerful. We must take care.
My commanders advise the following times to bring their forces into position –
Force Days March / Sail

Army of the North 20
Army of the Centre 50
Army of the West 70
Army of the South 150
Army of the South 40 to the West station
Navy 20
Special Forces 10
Project Manager, draw up a plan –
 What moves are on the critical path? Why?

 How best to manage the risks in the west?
 When can we attack? When does our campaign start?
What kind of links are there between tasks – start to start, start to finish or finish to
finish?
3. Ho
Trials of the new wonder drug Ho have almost finished. Results are very positive. We
should prepare to release the drug. When will the drug finally be available? Draw up
a ‘best case’ plan. Use the following data –
Activity Duration
Finish clinical trials 2 months
Peer group review 3 months
Australian regulatory Ok 6 months
US regulatory Ok 18 months
Auction patent rights to drug 4 months
Production ready 4 months
Media launch 2 weeks
Medical marketing campaign 3 months
Tasks are not in any particular order. Use your business sense.
US Federal Drug Authority approval is very important. It has three stages. Often, a
drug is required to continue clinical trials over a year, and then resubmit for approval
of that stage. If required to resubmit a second time, the drug that is usually
withdrawn.
Build a ‘worst case’ plan for Ho.
CHAPTER SEVEN – RESOURCING AND SCHEDULING

In our domestic and study lives, outcomes often depend on our solo efforts. In our work
and project lives, the reverse applies. Outcomes usually depend on the efforts of many.
So, as a warm-up exercise, tackle Student Question 1 now. That concerns Captain Cook’s
famous voyage to Brasil, the tasks to get there and the resources needed. Soccer,
Surfing, Samba …
SCHEDULING RESOURCES
Project task network times are not a schedule or plan until resources (personnel,
facilities, etc) are assigned or allocated. It is common to find that project duration
increases once resources are assigned. Check out Appendix 7 now. That shows how a
simple project changes duration as more resources are made available.
Some resources may also be constrained. For example, some personnel may only work 3
days a week; some laboratory facilities may be available after hours on a shared basis
only.
What is the normal way of allocating resources to tasks? MS Project uses the Parallel
Resource Scheduling algorithm. Its rules are given on Appendix 9 along with an example.
RESOURCE LEVELLING
Very large organizations may have numbers of personnel/human resources of similar

rank, experience and skill level. Such organizations may then –
 Pool resources and project plans across the organization

 Allocate resources to ‘best effect’
 Smooth or level the demand for resources over projects over time.
‘Best effect’ means –

 Least delay for high priority projects
 Tackle shorter, high priority tasks where project slack permits
In reality, most organizations have barely sufficient project resources. These are
dedicated to separate, isolated teams. Also, process, technology and business skills are
usually barriers between teams, as are ownership and budget. So, resource levelling
seldom occurs.
SPLITTING
‘Divide and conquer’ has been a guide for managers since ancient times. It remains just
as relevant and practical today. The project manager is always looking to see how each
project and each task can be split up to better meet the requirements of scope,
resources, budget and timeframe.
BOTTLENECK
Sooner or later, most projects require specialist input, review and guidance. However,
most organizations employ as few specialists as possible. So, there is a queue or bottle
neck until such time as the specialist your project needs becomes available.
HAMMOCKING
A hammock is a canvas sheet stretched between two poles. In the project world,
hamocking means to stretch the labour of the project manager between the start and
the end of the project. That is, the project manager works and is allocated across the
whole project.
Often, we also hammock executive management across the project, but count say 1-3%
of management time on each project. This way, management time is also counted in our
project time and costs.
Student Questions
1. Voyage to Brasil
For the voyage from Plymouth UK to Rio Brasil in 1770, which resources are needed for
each task?
Task
a Sponsor voyage
b Fund voyage
c Assign Captain & Ship
d Stock ship
e Crew Ship
Sail from Plymouth thru English Channel to
f the Atlantic
x Fight off pirates
g Sail across Atlantic to Rio
h Dock in Rio
j Repair & refit Ship
Resourc
es
1 King George III

2 Sir Joseph Banks
3 Admiralty
4 Royal Navy
5 Royal Marines
6 Quartermaster
7 Harbour Master
8 Pilot
9 Sextant, compass & clock
10 Charts of English Channel
11 Charts of Atlantic
12 Charts of Brasil
13 Crew
14 Marines
15 Supplies
16 Ship
17 Shipyards
2. Posh Tosh
Lucinda is project manager for her family firm Posh. That owns and rents top class
houses, apartments and studios in central London. When a rental lease ends, the
property is cleaned and refurbished. That takes from 2 to 5 days, depending on size and
condition. Posh has a small maintenance project team to do this.
Today, Lucinda bought a run-down block of four apartments in Chelsea. These need a
complete refit, taking an estimated 30 days intensive work. Also, legal permissions and
documents must be signed and exchanged before work can begin. That can take 30-40
days too.
Just now, the maintenance team is finishing the refit of 7 Lenster Street, with an
estimated 2 days to go. Bad News! The water heater burst and flooded the studio at
45B Baker Street, and overnight vandals trashed the house at 3 Cliveden Lane. After
police and insurance inspections over 1-2 days, each will need least 5-10 days work to
repair.
Oh, a fax has come in! The resident at 12 Half Moon Crescent has terminated his lease
today.
So, when can Lucinda put her block on the market? Draw up a schedule. What are your
project assumptions?
Hint. Work out the expected maintenance work load per week, given the data above.
That is the weighed average of the best case, normal and worst case maintenance loads,
as follows – Expected = (best*1 + normal*4 + worst*1)/6. What then is the available
capacity for refit work and so Lucinda’s best plan?
3. SteelO
SteelO is a large manufacturing group. It is a conglomeration of firms, small and large,

across the Eastern United States. Its goal is to become automated, integrated and
efficient. That is, its goal is to reinvent itself.
Schedule this change project using time boxes as follows –
 Allocate a one month time box to gather and define the requirements for
each core business, namely manufacturing, logistics and finance
 Allocate a six months time box to build, issue and accept tenders for new
systems
 Allocate a twelve months time box to install and train in new systems across
the group
 Allocate a six months time box to collect and review performance data
 Allocate a one month time box to audit the project.
Before each time box, allow one week for selection, training, tooling and administration.
Assume Board approval for capital expenditure (on new systems) takes four months to
win. That is the best case.
When will the new SteelO emerge? What are your project assumptions? When should
the Chairperson issue a glowing media release about this business change to the New
York Stock Exchange?
4. Ooki
Ooki is a boat building firm in Finland. The good news is that Ooki has won two
contracts.
The first contract calls for 15 patrol boats for the Gulf States. That is on the same
standard model of keel and engine as the most recent build, but is 5 boats more. The
second calls for 10 standard patrol boats for the Italian coast guard.
The bad news is that Ooki is resource-constrained.
The keel building yard can only fit three keels at a time. The assembly line can fit only six
boats at a time. There is a warehouse that can hold ten boats and ten engines. On the
nearby lake, there is a testing and trials facility for two boats at a time.
Once trials are passed, boats are stored in a hangar ready for delivery; that holds 10
boats. Keel, assembly and trials are expected to take 3, 2 and 3 weeks respectively.
When can the contracts be finished? The Gulf order is done first.
To do this, build up a timeline week-by-week, showing which ships are where.

What new facilities must be arranged by when?
Ooki decides to outsource the second contract to Raiko, a firm with capacity
available right now. It takes 3 weeks to devise, negotiate and agree the outsourcing
deal. Now, when the contracts be finished?
A new contract has been opened for 4 patrol boats for Papua New Guinea. Boats
must be ready to deliver in 20 weeks or less. Should Ooki bid for this contract?
4. Tiffin
Batman Butter is a listed firm on the stock exchange. It has missed the accounts
reporting deadline twice. So, either it tables a complete set of audited accounts to the
exchange by September 1, or it is delisted. Today is January 1.
To present the accounts in the format required will take 1-2 weeks. An audit of accounts
usually takes 2-3 months. Tiffin, an accounting firm in Chennai, will consolidate and
prepare the accounts, given paper or electronic records. That will take 6-8 weeks per
company set. A reconciliation of the accounts, once consolidated, will be essential. That
needs 2-3 months.
Batman has four ultra-modern factories and two antiquated factories, A and B say.
Records are held on the SAP accounting system in the former, but not in the latter.
Mercy! To find all the relevant records could take 2-6 weeks per site.
A. What data is in scope? Where will this be found?
B. Draw up a plan to make sure Batman Butter meets its deadline. Allocate task
times as necessary, not as desired or as usual. Do as you think best.
CHAPTER EIGHT – UNDERSTANDING & USING THE SCHEDULE
Now that we have assigned resources (and costs) to all tasks in the Gantt chart / Project
Network, we have finally got the Project Schedule. So, we see now the Project Duration
and the Critical Path. Everybody on the project wants to know this key data. Let us
understand more. But first, let us take a Baseline.
PROJECT BASELINE
Project Baseline is an (initial) cut of project schedule, budget, scope and yardstick for the
rest of the project. Progress and variance is measured against the baseline. If later a
change request for say added scope is approved, the project is re-baselined.
In practice, baseline is not often used.

CRITICAL PATH & SENSITIVE NETWORK
Often, non-critical tasks are far off the critical path so that they are unlikely to reach the
critical path, if delayed. Sometimes however, some non-critical tasks are close enough to
reach the critical path, if delayed. In such a case, a second or third path through the
project network may become critical instead. This type of project network is called
sensitive. Don’t be caught unaware of this on your project.
Take the Project Duration. The usual reaction is Oh! That’s too long! How can we
address this?
REDUCING PROJECT DURATION
To reduce project duration is a common imperative. For many reasons –
 Expectations are not met

 Budget is cut
 Deadline is brought forward
 First to market advantage is wanted, etc.
How can duration be reduced? Avenues include –
 Reduce or scale back project scope

 Defer some scope to the next or future version of the project
 Add extra resources
 Work overtime
 Outsource to cheaper/quicker supplier
 Contract with incentive payments for early completion
 Transfer some scope to the project sponsor and his/her resources
 Freeze the project scope
 Pre-order purchased goods and services
A must is to rethink and replan the remaining work, hand-in-hand with the project
sponsor.
Cost crashing seeks to find the least cost route through the project network to reduce
project duration [24]. In principle, that is a fine idea. In practice, we do not know project
costs accurately or finely enough to use this approach. Also, crashing larger networks
soon becomes unwieldy.
KEEPING THE SCHEDULE UP-TO-DATE
How can we keep the schedule up-to-date each week as the project progresses? We
need to do four things –
 Enter the actual times spent on our tasks over the week past,
 Estimate the time yet to spend on our tasks over the next week,
 Update and review the Gantt Chart accordingly, and
 Use MS Project to report any missed milestones and other exceptions.
Entering the actuals is a simple matter of data entry in MS Project. No further

explanation is necessary. What can go wrong here? Late data entry by project team
members frustrates project reporting and communication.
Let us consider estimating.
APPROACHES to ESTIMATING
A number of approaches to estimating apply, each of varying success and popularity. In

brief, these are –
 By Experience? – many projects appear unique, and offer little learning

 By Software Engineering Limits – rare and debated
 By Industry Data and Benchmarks – less rare, but costly or little comparable
data
 By Function Point Analysis – rare, demands technical expertise and debated
 By Time Boxing – less rare but successful; used in rapid development projects
 By Desire or Dictate – common

 By working back from delivery dates and then forward – common.
 By ‘To Go’ or Rolling Estimate – common and essential

 By Team Review or Bottom Up Estimate – common and essential
Some project tools, including Primavera, include task estimates. That helps civil
engineering and building construction greatly, provided new projects are truly similar to
old ones.
UNCOMMON ESTIMATING
Statistical Analysis/PERT – In reality, projects tend not to fit into neat statistical profiles.
There is significant variation from project to project in the length of each phase. This
dates from the 1950s and now is all but unknown [25].
Software Engineering Limits – There are engineering limits to the performance of

project teams, but these date from the 1980s and are now all but unknown.
Function Point Analysis – This IT technique counts the inputs, outputs, reads, edits,
writes and complexity of a screen, system or report, giving the function point count. It
then derives the likely work time, knowing the standard time to deliver one function
point in various computer languages. This is difficult and uncommon.
Time Box – As we know, this uses a fixed duration or time box for each major phase of a
project. The end date of the time box never moves. Tasks are managed to fit in the box.
Time boxes offer convenient Top-Down estimating. They are also easy to understand
[26].
PRACTICAL ESTIMATING
To Go or Rolling Estimate – Simply the estimated work period that is still required to be
completed as of now, no matter what the project schedule says or what the project
manager would like. Re-estimate each week. The estimate becomes more accurate as
time passes. It is 100% accurate at task completion!
Team Review or Bottom-Up Estimate – Those doing the project work are asked to
review and revise work estimates or any other part of the project plan or definition.
Informed consent is essential to work the plan.
WHERE DOES ESTIMATING MATTER MOST?
In Fixed Price contracts, estimates of the project work required are most telling. Under-
estimates mean unprofitable contracts. Over-estimates mean failure to win contracts.
ESTIMATING AND THE ORGANISATION
By the way, estimates for the very same project differ dramatically with the estimating
environment or organisation. A small software house will estimate the work as a fraction
of the time that a large bank or insurer requires. Both parties are amazed at each other’s
estimates.
Student Questions
1. CAD!
Toai is a small New Zealand firm specializing in Computer Assisted Drawings (CAD) for
property developments. Toai has decided to expand into Hong Kong.
With amazing luck, it wins a contract to supply drawings for housing estate projects on
Lantau. Great Fortune Properties is the owner of the estates. Today is February 1st.
Drawings for the Discovery Bay estate project must be ready on June 1st, and for the
Silvermine Bay estate on October 1st.
Progress is fine. Toai has one partner and one draftsman in Hong Kong hard at work;
double those numbers at home.
Great Fortune decides to bring forward the opening date of both estates by two months.
After all, rumour has it that competitor Noble House is planning to open its estates on
the same dates too. All the building subcontractors are impacted including Toai.
A. How much extra work is required of Toai?
B. How can Toai adjust? To quit will ruin its reputation. To recruit new staff will
usually take one month.
2. Ball Park
It is possible to consider a range of estimates –
Case All goes Risk & Discovery/Plan

Complexity Effort
Best Better than Low 20%
expected
Likely Just as Medium 25%
expected
Worst Worse than High 35%
expected
So, if the Discover / Plan phase comprises 20% (best case), 25% (likely) and 35%
(worst case) of project effort, we can estimate Project Duration based on our
estimates of the Discover phase, plus say 20% contingency or buffer.
Make a rough profile estimate for the Iinsure call centre project. It has the following
sub-projects –
 Building Refit ordinary, everyday project 1 week to plan

 Infrastructure Refit medium, many details 2 weeks to plan
 Call Centre Technology as complex as it gets 4 weeks to plan
 Desktop Build medium, intercity work too 2 weeks to plan
 Training ordinary, everyday project 1 week to plan
Supplier ISI performs the technology and desktop projects. Its slow, review-based
process adds one week to every four weeks work.
If all these sub-projects were done in order, when would the call centre open?
When must Board approval for technology purchases be done, in order not to delay
the project? Assume purchases are ordered as soon as approved with a three week
wait for delivery.
CHAPTER NINE – CREATING THE PROJECT BUDGET
BUDGET BASICS
In its simplest terms, the project budget arises from –
 the cost of project resources used – labour, equipment, licences, facilities,

fees, etc
 the cost of hammocked resources – project manager and management
 budget contingency reserves, if any – a prudent reserve of 15% say for extra
costs
 Income, if any – rental, sales, fees, credits, etc
Sadly, those who authorise project budgets often allow no reserves whatsoever. Instead,
a business case must be made, presented and approved for any extra project funds. That
means delay. Is the project delay worth the extra control of spending?
Extra costs may arise innocently from changes of licence versions and costs, exchange
rate changes, new work or licences now realised necessary, etc.
We focus first on committed costs, then on discretionary costs.

CAPEX AND OPEX BUDGETS
Often, the (master) budget is also split into –
 Capital expenditure
 Operating expenditure
Suppose our project is to build, equip and commission a new data centre on land
purchased for that purpose.
Then the Capex includes –
 Land and fittings e.g. roads, fences

 Building and fittings e.g. lifts, lights
 Hardware e.g. servers, PCs
 Software licences
And the Opex includes –
 Labour e.g. fees, salaries, consulting, training

 Power
 Materials
 Maintenance.
However, the definitions of Capex and Opex vary from organisation to organisation. It is
common to find that labour costs in the first three (build) years of a project are
capitalised, while labour costs in the later (maintenance) years are not. Check with your
CFO. Find and follow the convention here.
The simple budget, the capex budget and the opex budget all will show the spread of
project spending over time. As well, it is desirable, no make that necessary, to show the
spread of project spending by asset in a pie graph chart.
Have we finished with project budget? No.
ACCRUALS
Funds for planned expenses must often be accrued until the expenses are in fact
recognized (invoiced), whether paid or not. How does this work?
For example, employers know that they have to pay employees at the end of the month
before they actually credit salary payment accounts. This expense is entered into an
accrued expenses account as a liability; when the company later makes the salary
credits, this accrued expense is zeroed and cash assets are debited.
Check out the mechanics of accrual in your organisation. There are end of period rules to
consider too.
And any funds unspent at end of financial year are often withdrawn. You wouldn’t want
it to be easy, would you?
BUDGETING AND THE ORGANISATION
Many in the organisation are uncomfortable with project finance and budgeting. They
are specialists in other disciplines. You may have to help them.
Student Questions
1. Montebano Sono
The Italian Students Association (ISA) is planning a Dance to raise money for refugees
from North Africa. The theme will be Salvo Montebano, the famous detective chief.
Angela is capo or chief; she is planning the project.
The ISA has about 400 members. Assume 50% will buy a ticket, and 25% of attendees
will buy a ticket for a friend or partner.
There are options with varying costs –
A. Harbour Cruise
A harbour ferry has capacity for 300 guests and costs $2000 to hire for the evening from
8pm to 8 am. Cleaning must be done by professionals, ready for the next cruise. That
costs $500. Use of big screen video and karaoke is free. DJ and bar can be arranged.
B. National Gallery Foyer
The Foyer has capacity for 250 guests and costs $1500 to hire for the evening. Cleaning
must be arranged by the hirer, ready for the next day. The Gallery is cool and
interesting. It has many facilities. Hire of big screen video costs $250 for the evening.
C. Princessa Dance Hall
The Princessa has capacity for 500 guests and costs $1000 to hire for the evening.
Cleaning must be arranged by the hirer, ready for the next day. It is not so cool. Use of
big screen video is free.
As always, there are add-on costs –

DJ – say 1-2 earning $500 each
Bar staff - say 4 earning $400 each
Insurance - $600
Prizes – to be decided
Promotion – posters, etcetera.
Angela assumes that the Master of Ceremonies, Medical Aides and Cleaners will be
volunteers. It will be fun also to have a karaoke contest and prizes –
 Best & Worst Karaoke teams

 Best & Worst Dancers
 Best Montebano character look-alike
 Longest Talker
Another option is to invite the African and Drama Students Associations to join in. These
have about 100 members each.
So, how should Angela decide the best option and what are the –
Ticket cost – say $15 or $20 max

Prize value – say $50 max
Refugee fund – say $1000
Va bene.
2. Rotterdam
The Dutch government plans a new highway between Rotterdam and Amsterdam. That
will be a dual two-lane highway. The distance point to point is about 80 km. The cost of
highway construction is $30-40 million per kilometre.
About 50% of traffic will be heavy trucks: that requires two reinforced lanes each way.
PFI Partners have won the contract; that runs for 15 years. PFI earns an annual toll fee,
adjusted every five years for inflation at 4%. It expects to operate and maintain the
highway at 7% of costs, with costs rising slowly by 1% every 10 years.
The Dutch government sets down service performance standards. It may deduct
penalties from the toll fee if performance is below standard, or even award the contract
to another party.
If traffic usage changes significantly, the government may also invoke a contractual
adjustment clause requiring PFI Partners to bring the highway up to new standards. PFI
will be paid for any contract variation.
A. Draw up a table categorising the various costs as Capex or Opex.
B. PFI want the Payback Period to be 10 years. What is the Toll Fee?
C. PFI want a satisfactory or better investment. What is the Toll Fee?
The cost of capital for PFI is 8%.
3. Mercury
Rocky is a new PM at Mercury, which uses accruals accounting. His project has a number
of scheduled payment milestones to Hermes, Diana and other suppliers. Some delivery
milestones are met right on schedule; some are not.
All these firms are giants; it takes one-two weeks to raise an invoice or make a payment
through the right channels. Invoices and payments initiated in the second half of the
month usually fall into the next month.
Nervous, Rocky makes the following payments and accruals for project expenses –
Timeline Hermes Hector Diana Aries

Delivery On time On time Early Late
Schedule May May April July

Actual May May March October
Invoice June May May November
Payment June May May November
Accrue in May N/A April July - October
A. Has Rocky been outfoxed – are his accruals correct?
B. What should happen if the November payment to Aries falls into December?
CHAPTER TEN – UNDERSTANDING AND TRACKING THE BUDGET
Meet EVA, Earned Value Analysis. EVA is typically used in mega-projects, especially
where there is a high political profile and a need to be seen convincingly on track. Lesser
projects typically do not yet use EVA.
Read now the Case Study EVA at Monica Park by Valle and Pereira Soares [27]. This is an
instructive example. See Appendix 7. We reproduce the Basics below.
EARNED VALUE ANALYSIS - BASICS
EVA originated in the US Department of Defence. The EVA technique is widely used to
get better cost and schedule control.
The main EVA variables (indicators) are:
 PV (Planned Value) or BCWS (Budgeted Cost of Work Scheduled)

 EV (Earned Value) or BCWP (Budgeted Cost of Work Performed)
 AC (Actual Cost) or ACWP (Actual Cost of Work Performed)
 SV (Schedule Variance) : VP = EV – PV; CV (Cost Variance): VC = EV – AC
 SPI (Schedule Performed Index): SPI= PV / EV; SPI = 1 (project on time)

 SPI <1 (performing less than planned); SPI > 1 (performing more than
planned)
 CPI (Cost Performed Index): CPI = EV / AC; CPI = 1 (project on budget)

 CPI < 1 (spending more than planned); CPI > 1 (spending less than planned)
Bhosekar and Vyas also give an instructive case of EVA [28]. Their graph is reproduced
below.
Standard Earned Value Analysis Graph
As well as the Basic indicators above, we also need Percentage Completion Indicators
too –
 PCIB = 100* EV / BAC, percentage completion in terms of budget
 PCIC = 100* AC/ EAC, percentage completion in terms of cost
Lastly, how do you tell in the EVA framework that –
 A task has not yet started – its actual cost AC is zero

 A task has been completed – its percentage completion is 100, or AC = EAC
Note EVA indicators can often be guessed by their first letter –
A – Actual
C – Cost
E – Earned
P – Planned or progress
S – Schedule
V – Value
Student Questions
1. Seattle Terminal 91 Build
This $70 million project built a large, two storey cruise terminal [29]. It was complex
with-
 Tight schedule constraints

 Significant structural changes and delays
 High visibility of stakeholders
 Multiple construction contracts
 Coordination of tenant moves
The project manager felt that it was insufficient to monitor the critical path alone.
So, this project used –
 EVA
 A data model of every level, floor, facility and room, and their fittings
 Inspections to check and confirm some EVA / data model results.
The data model is large and complex. The inspections are selective and do not cover
every facet. What problems if any do you see here? What do you recommend?
2. Build, Operate, Transfer project
Le Bin is bidding for the concession to build and operate 4 supermarkets with Carrefour
in Vietnam. Supermarkets are his family business. An average supermarket should yield
about 6% of costs in the first year, 12% in the next three years and 8% in the fifth year.
At the end of 5 years, Carrefour will buy out the concession; it will pay $250k per
supermarket.
What maximum bid should Le Bin make per supermarket to make this a good
investment project? Today, the bank benchmark interest rate is 3% and inflation is
running at 5%.
3. Blyth Street
The Gas & Fuel Corporation has decided to modernise its services. It will replace gas pipe
connections street by street and has hired BIC to do this. BIC will update 10 connections
each day, each worth $250. Such is the plan.
There are 1000 houses, units or businesses in Blyth Street. So this is a 100 days pilot
project.
Finding and changing the connections proves difficult, however. After ten days, BIC has
updated 73 connections only. The cost per connection with extra labour is $350.
A. Calculate PV, EV and AC

B. Then use EVA metrics to diagnose this project
C. What action should BIC take?
D. What is the percentage completion?
CHAPTER ELEVEN – PROJECT CHANGE
There are two common types of project change –
 A change request
 A budget cut-back.
We shall consider both.
CHANGE REQUEST
Three months into the new project, the Sponsor notices that four requirements have
been omitted. As PM, what will you do–?
A. Ignore the items. Fifty of more requirements are now under development.
B. Include the items. They’ll have to be addressed, right?
C. Schedule the items for the next version. That tidies matters up.
D. Convene a Change Management forum. Another meeting, alas.
E. Investigate why the omission occurred.
What will be the consequences of each approach?

In fact, the only right answers are D and E. Why then do we have omissions or changes?
Reasons include –
 Incomplete requirements analysis

 Learning, reflection and visualisation as the project progresses
 Consequent change resulting from other work
Change, especially over a long project, is only to be expected. It is normal. Omission

reflects carelessness that may be avoided.
Note that the time boxing approach is designed to cope with and include some chosen
change, because work is prioritised to fit into the timebox. It is flexible.
CHANGE MANAGEMENT FORUM
What does the Change Management Forum do? First, it prioritises the changes from
must-have through to nice-to-have. Next, it assesses the costs and the benefits of the
changes, and their impacts on the project schedule. So then, it decides to accept or
reject the proposed changes on merit.
A must-have change may be accepted and included in the project, delaying the
schedule. In this event, a new project baseline is made straight away.
Note that in the weeks of the Change Management Forum, the project is usually on
hold/frozen.
What can go wrong with this process? It can be difficult to find new funds for the
accepted changes. Can this slow process be streamlined too?
BUDGET CUT-BACK
Executive Management has announced a budget reduction of 20% across all projects, to
be applied by the PMO without fear or favour. That may mean your project.
Which projects are cut? They include –
 Duplicate projects, if any

 Projects that are delayed/blocked and unlikely to deliver
 Projects with doubtful investment return – done as promises or favours
 Projects that can be deferred in part or whole
 High budget projects
 Projects that are not of topmost priority
We leave a Student Question here for you.
Student Questions
1. The first cut
Texas Bell is a large telco. Now, the economy is in recession. Azziz orders a $15 million
cut in project budgets with immediate effect. Some projects are listed below.
How and where will you save the $15m or more?
What advice will you give to Azziz in each case?
Projects Costs to run Status Benefits Budget Cut?
Engineering $5m Testing $25m
Mobile $1m Various ?
Assurance $3m Various Operational

Must
Infrastructure $3.5m Stuck Operational
Must
Traffic $3m Various ?
Products $10m Starting $8-9m

Reporting $2m Stuck Minor but
promised to a
VIP client
Background is as follows –
A. Julie and Bai are updating engineering networks for the release for 4G mobile and
high speed broadband services. The benefits are convincing. The remaining project tasks
are largely testing for operational readiness. Ideally, Bai needs six more engineers for 3
months. Contract rate is about $600 per day.
B. The mobiles area has many minor projects like the ones above. The benefits are hard
to discern. Updates of mobile security will come, but are 12 months or more away.
C. There is an unending stream of services to assure from all over the business.
Assurance is a must, but is slow and costly across projects, technologies and suppliers.
Could this area be outsourced for a better result?
D. Kevin has been unable to progress this project beyond the planning stage, despite
much help.
E. Like the mobiles area, the traffic area offers little convincing benefit. What happens
with or without traffic analysis?
F. This project was justified by Sam. His quick-and-dirty estimate was just that. The
scope was insufficient to deliver the goods. Now fully scoped, the costs are too high.
G. These reporting enhancements were promised to Mega, our VIP client. Projects are
stuck again. The reporting tools cannot deliver.
CHAPTER TWELVE – PROJECT AUDIT AND CLOSURE
PROJECT AUDIT
AUDIT AIMS & AGENDA
Let us perform a Project Audit of the Home Care case below. A Project Audit aims to
discover and define what are the –
 Benefits planned and realized
 Costs planned and realized
 Lessons learned
 Follow-up actions required?
To get to these points, we shall first ask ourselves –

 What were signs that things were going wrong (right)
 What were the things that did go wrong (right)
 What most likely caused things to go wrong (right)?
Let’s go.
CASE STUDY – HOME CARE ONTARIO
Home Care is part of the social fabric of Ontario. It has over 1,000 offices large and small.
Every town or suburb has one.
Home Care serves a wide clientele: the abandoned elderly, First Nation people, children
in care, the disabled, HIV patients, nursing mothers, patients newly released from
hospital, refugees and many others. Dedicated specialists, nurses, social workers,
paramedical staff and volunteers provide the care. Behind the scenes, bookkeepers
schedule and reschedule appointments, and record the fees for services incurred.
Reporting and accounting are centralized in the Toronto office. Home Care falls under
the responsibilities of the Minister of Health.
At the heart is the reporting of service performance, for each interest group has vocal
demands. Interest group politics is played hard. A biting expose will be in the press
tomorrow if demands are not met today. Rottweilers are gentler.
Phillipa, the new CEO, proposes a radical scheme. She will cut costs by dispensing with
all the bookkeepers and combine the two carer-bookkeeper jobs into one. She will
require each staffer to schedule appointments and to book fees incurred. With the funds
saved, she will automate performance reporting and accounting across the state. The
result should be a more flexible, need-focussed and timely service for all.
To achieve this, new systems and infrastructure are required. Costs are expected to be
$3-4 million. Tenders are called. The automation of Home Care begins.
Armano, a blue-chip management consulting firm, wins the tender. It plans to use
software called Flexi to provide the new flexible scheduling. That is the key component.
Armano outsources the evaluation of infrastructure to contractors.
Things begin to go wrong. Soon, Armano finds that Flexi cannot do or be modified to do
what is required. Very few people are notified of this. Work continues. The tender is not
recalled. Armano decides to use its staff to program the new scheduling, raising costs.
Worse, the programmers cannot obtain any guidance on these complex scheduling
requirements, and so program the new exactly as the old. There is no review and
improvement, and no added flexibility. The old is concreted in.
The evaluation of infrastructure passes quickly, almost unnoticed. The contractors
depart. The data for current capacity, expected growth of services and future capacity of
infrastructure barely fills one page. The evaluation is almost as brief.
The bookkeepers are dismissed. The new role is announced. Staffers are dismayed and
upset; most are career-long carers, and cannot or will not become clerks and
bookkeepers as well. A change management team is set up, but is promptly axed.
Meantime, systems work has fallen way behind schedule. It is much more complex and
costly than imagined. Early plans called for numbers of staff to assemble in Toronto to
perform testing in August. They start to arrive. This is premature. Project Manager Joe
calls a halt to this. He is promptly dismissed.
The Minister hears of discontent. He advises Phillipa to commission a project quality

assessment. Greenhand, a leading consulting firm, makes the report. However, Home
Care has no quality manager, and Phillipa expects quality and other work to be done for
her. The report lies untouched in the archives.
Eventually, Home Care is automated. The results are not pretty. Costs were $12 million,
excluding outstanding long service and termination payments to bookkeepers (say $10
million). Reporting is much slower, more frustrating and incomplete. The infrastructure
is already overloaded. Another $5 million is needed to fix this. And say another $7
million on top to obtain flexible scheduling.
Jack of Bright Hope is engaged to do the project audit. Cooperation is minimal;

managers are most afraid of Phillipa. Key files go missing. Both Phillipa and Armano
claim the project had to be this way. They had no choice.
The Minister wants to see you, Jack is told. The Minister and his staff are angry; they
know what could have been achieved, and what has been achieved elsewhere. Like
sandcastles, hopes of a better service are swept away.
Yet, the project audit requires sign-off from Phillipa, Amano and others. There is a limit
to what people will admit, when it reflects badly on them and threatens their future. The
audit is fair but qualified or compromised. A Ministerial Inquiry or Royal Commission
would audit more freely.
The Ontario Treasury wants to see you too, Jack hears. Officers of Treasury cannot
understand what could have gone wrong with the tender and the infrastructure
evaluation. We have a clear, well-established framework for such work, they say. Jack
explains that is an administrative framework only. The officers do not see.
At last, Bright Hope is paid for the audit. Interest groups are on the attack. Watch out!
THE SIGNS, PROBLEMS AND CAUSES
So, what were signs that things were going wrong? These include –
The Minister of Health is involved (early) in the project. The Minister’s budget
responsibility is billions of dollars; this project is millions of dollar.
The infrastructure assessment report is too short to believe or use
People started to arrive on schedule for testing but were turned away
People are fired early / often e.g. PM Joe and the Change Management team
People are afraid and files go missing
A Quality Assessment of the project is done but ignored.
And, what were things that went wrong? Some are –
The key system Flexi fails immediately
The key change of job is unacceptable to almost all carers, but that is ignored.
Changes are made anyway.
No personnel are on hand to define better, streamlined workflow. The old workflow
is reused without any improvement or flexibility.
The new reporting and infrastructure are worse than before
Significant money is still needed to fix systems.
So, what were causes of things went wrong? These are –
1. Nobody from Home Care, the Ministry or Treasury is actually managing the
tender, the infrastructure assessment or the project
2. Nobody is aware of changes / events that made the project much more
expensive than planned. These are not tabled and discussed, but passed
over.
3. There is no brake on unacceptable changes. Phillipa gets her way
4. The key system Flexi is chosen without testing its ability to schedule work like
Home Care
5. The tender should have been halted and restarted when the key system
failed at the very beginning
6. No expertise is made available to build better workflow or better services,
guaranteeing wasted effort.
We leave the Costs and Benefits as a Student Question for you. What then are lessons
learned and follow-up steps needed? These include –
 Active management of all works is a must
 Tender framework needs a mandatory stop-and-restart step
 Superficial work should be rejected and redone
 Resources and commitment are needed to yield worthwhile outcomes
OTHER FACTORS?
What about a brake on rash and unworkable changes? Would a mandatory feasibility
study, at least in big projects, help? Yes, but that omits smaller projects like this.
The carers triggered the Minister’s early involvement in this project. But ultimately, that
led nowhere. Would matters have been different in a strongly unionized country like
France or Spain? Perhaps
PROJECT CLOSURE
Project Audit and Project Closure are similar processes. Project Audit is more focused on
commercial outcomes, and is best conducted by independent auditors from outside the
company. Project Closure is more focused on completeness and lessons learned.
Project Closure aims to discover and define what are the –

 Lessons learned
 Follow-up actions required?
Project Closure reporting can be applied to –

 Every ‘significant’ project
 Every ‘troubled’ project
 Every project
A large corporation may choose only ‘troubled’ projects where project directors want
participants to reflect and learn. A blue chip consultancy may choose every project in
order to build up a database of experience.
Project closure reports are usually done, if at all, within 3 months of end of project.
As before, we first ask ourselves – signs, problems and causes?
Student Questions
1. Home Care
What are, as best you can estimate, the
A. Planned and Actual Costs

B. Planned and Actual Benefits, if any, in this project?
2. Julie Bravo
Make a Project Closure Report for the ‘Julie Bravo’ game project in Appendix 10.
CHAPTER THIRTEEN – THE ORGANISATION
We have left broad organisational matters as one of the later chapters of the book,
simply because as employees we have to accept, fit in with and use the organisational
structure, its project processes and peculiarities. Like the marriage contract.
TYPES of PROJECT ORGANISATION
On rare occasions, we need to set up an appropriate form of organisation for our

project.
The usual form is the so-called Strong Matrix Organisation (also known as Matrix
Organisation and Project Organisation), where we all have at least two reporting lines
and responsibilities. The advantage is to spread scarce expertise across many projects.
The disadvantage is sometimes conflict of responsibilities and demands.
Alternatives are –
 The Functional Project Team
 The Dedicated Project Team
Some examples will help. Sentry Insurance Hong Kong realized that in fact insuring high-
value motor cars would be much more profitable than insuring any and all motor cars,
especially if theft could be reduced. So, it started a project to bring on new high-value
motors onto the books and to shift other motors off the books. The project required
deep expertise in a traditional functional area, motor insurance.
The areas of the business all took part without any change. The project worked well. In
the first year, the gross profitability of the new book was the reverse of the usual loss.
This was a functional project team at its best.
For its top priority transformation project, Telstra set up dedicated project teams. These
remained in place for about two years. The advantage was to allocate the most able
resources to the work. The disadvantages were several.
 Lack of communication or visibility for a period

 No clear re-entry point or strategy for personnel
 Out of touch with processes and systems now in use
 Suspicion of different salary and bonus conditions, them and us.
PROJECT REPORTING LINES
So, as Project Manager, to whom do you report?
 A Project Sponsor, that is a senior business executive
 A Program Manager, coordinating many projects and reporting to a divisional

manager or director
 A Project Management Office (PMO).

In this author’s experience, although the idea of PMO sounds efficient, the practice of
PMO is not. Objectives are achieved by engineers and project managers, not scribes and
accountants. Also, there is dialogue and give-and-take with a Sponsor or Program
Manager, but often little or none with a PMO. Beware.
BUREAUCRACY!
Air France, Amazon, Boeing, Cisco, Citibank, DHL, Ebay, iTunes, Orange… all support
millions of products. So, project delivery in these businesses must be ultra-reliable. New
projects must not disrupt existing products and services. New products and services
must perform superbly and long term.
How is that achieved? Holding reviews throughout the project lifecycle from
requirements to deployment. That means a lot of reviews and documents to review. So,
the process here is naturally bureaucratic. For new hires, this often spells culture shock.
OMG!
Is there a quick-and-dirty process too? Usually there is not.
Other businesses, say a Woolworths, focus on rapid project delivery to capture the
moving consumer market. For these, such bureaucratic process would be inappropriate.
GOVERNANCE
How are projects best governed or controlled? One of the simplest and best ways is to
use PRINCE2. That stands for Projects in a Controlled Environment version 2 [30].
Here, controls are applied at stages or gates. The first stage is called say Initial
Investigation. To enter this stage requires an approved business case. During the initial
investigation, costs and benefits estimated in the initial business case are refined. If the
new figures are within a tolerance limit of the old, then the project is allowed to enter
the next stage, development say. The business case is updated. And so on. If the
tolerance limit is exceeded, the project ends at this point.
Within each stage, the project may be worked by whatever process is deemed fit, be it
classical project development, time boxing or prototyping.
This method of governance suits a great many organisations, in particular –
 Banks, insurers and telcos with many product choices
 Government agencies and Universities with limited public funds that must be
spent to best effect
To govern a work program of 50-60 projects, we use program governance. That herds
projects in priority order through Prince2 stages and/or development phases to
completion.
TRAINING
Employers are reluctant to train, refresh or retrain personnel in project management. Do

It Yourself is their expectation, whether realistic or not. And the employer’s preferred
project management training may be less than optimal.
In this author’s view, PMBOK (Project Management Book ok Knowledge) [31] is a fine
qualification for those who want to know about projects e.g. sales and support staff. It is
arguably not the qualification for those who want to deliver projects i.e. project
managers.
Alas, training in industry standard applications is often a matter of luck. Your firm has
chosen SAP, say, so now you will be trained at company expense in its use. Lucky are
you!
By the way, some common training courses need restructure. HR chooses candidates
only with the highest qualification e.g. PRINCE2 Practitioner, as a matter of policy. That is
whether the highest qualification is necessary or not. So then, other suitable
qualifications e.g. PRINCE2 Foundation are ignored, null and void.
Arguably, project management training is in need of reform. Other professions are

leading the way with relevant and ongoing training.
Student Questions
1. Business versus Project Culture
Why is it important to assess the culture of the organization before deciding what
project team structure to use?
2. Sentry Insurance Hong Kong
The Managing Director has another project in mind. That is, to transform Sentry as a
customer service-driven insurer, and so to capture new market share. This project
will need work, change and co-ordination across every area of the business. Is the
Functional Project Organisation right for this project? What do you recommend?
CHAPTER FOURTEEN – PROJECT AND PEOPLE
Characteristics of Teams
Think of a good soccer team like Arsenal or Barcelona. Consider how it plays. A team in
sport, business or the armed services has –
 Common goals – not the captain’s only

 Sharing of tasks and problems – not ‘Do It Yourself ‘
 Shared leadership and responsibility – little gap between captain and crew
 Shared success or failure – we won.
 Active support and help

 Open discussion and debate
 Some mutual learning and teaching
 ‘Pet’ names for the team and team members

 Team jokes, in-words and in-places.
A group of people is not a team, unless first they have stormed, normed and formed a
team. If so, then they will perform as a team. A group cannot be arbitrarily called, or told
to be, a team.
Two types of teams that concern us are –

 The project team
 The virtual project team.
A virtual team is one that is spread around the globe and that is in contact only by
conference call, email and fax. This is more and more common, bringing together say
outsourcing from India, technology from the USA, resources from Africa and local
interests.
Are we a Project Team or Work Group?
Typically, the so-called project team is simply a group working under the direction of the
Project Manager. It is not a team. But, you will have to accept being called a team many
times. That is part of the price of employment.
As a result, a number of problems occur –
 Limited communications
 Limited discussion and debate
 Limited sharing of goals and responsibility
 Goal dissonance or dissent.
To solve these problems, force is usually applied. The team and its tasks are micro-
managed (and unempowered). This often completes some tasks, but suppresses
communication and makes team work even more unlikely. Where can this lead,
especially when combined with a lack of honesty?
Dysfunctional Teams
Teams can be dysfunctional in a number of ways e.g. –
‘Magic Tool’ syndrome
To say that ‘All we need is a good tool. That will solve all our problems’ is common. This
shuts the mind to real needs e.g. proper management, processes, prioritisation,
openness, etc. Our heads are stuck in the sand like emus.
What attitudes led to this? Some are –
 Technical people want the job, the world and the project to be technical.
Non-technical, organisational issues are inconvenient and not the right stuff.
 We are all reluctant to admit we are wrong sometimes.

‘On Schedule’ syndrome
To say that ‘We are on schedule’ is common too until suddenly we announce failure at
the very last moment. This ignores the fact that failure set in much earlier, but was not
admitted or addressed. Sponsors and stakeholders are angry, embarrassed. The team
excuses itself and is fired.
What attitudes led to this? Some are –
 Project teams, airline pilots and others have a strong achievement drive.
They are also persistent, used to difficulties and used to macho effort. They
are from the technical professions, where communication and openness are
traditionally weak.
 Signals of failure are misread or ignored as just problems.
 In the circumstances of the project or flight, there is often ‘must do’ pressure
and expectation to perform. The above people do not expect to fail – ever.
So…
Honesty & Ethics
These days, major corporations are training their personnel in Ethics. That is the study of
good, moral conduct So, are any of these actions Ok –
A. Suppressing news of project delays or problems to sponsors – we will work it

out
B. Offering help for a promotion in return for extra project effort
C. Giving a friend details of a job opportunity – this has not been made public
yet
The Effective Project Manager
There are many lists of criteria for an effective or good project manager. Rather than
revisit these, we accent the positive. There is a fine case study, the Pennsylvania State
Water Plan; note the care taken to get the people skills and the processes right across
this large and complex project. Bravo!
We thank Harrisburg University of Science & Technology [32]. Refer to Appendix 6.
Student Questions
1. Ethics
Why are the actions A, B and C above unethical?
2. What is an Effective Project Manager?
A. Find and compare three or more lists of criteria for an Effective or Good
project manager. Is there a core of common criteria/which?
B. Is the ace technical guru the best candidate for project manager?
C. Is the most experienced PM the best candidate for project manager?
D. How should the criteria differ with the project organisation, be it large or
small?
CHAPTER FIFTEEN – INTERNATIONAL PROJECTS
Let us study some real international projects, below.
Case Studies - International Projects

Regal Insurance Group, UK
Based in the UK, Regal is a major general insurance house. It has subsidiaries and joint-
venture companies scattered throughout the globe. Insurance processes and, to a lesser
degree, products are more or less uniform globally. Regal sees that the key difference is
size of business or population.
So, its approach is to –
 Govern systems use centrally from the UK
 Choose systems by size of business or population
 Use uniform systems within size e.g.-

USA and UK - over 60M in population
Canada, South Africa and Australia - about 20M
Ireland, Hong Kong, New Zealand and Singapore - under 6M
 Discourage more than minimum localisation.
This approach is popular and effective. Most businesses are happy to follow central
policy in systems. As a result, the Regal Group achieves economies of scale and skill.
In joint-venture companies where Regal does not have a majority shareholding,

however, central policy is no more than a recommendation. That is the exception.
From time to time, Regal will replace or renew systems within each size category. That
generates projects of international scale. Project teams report both to the UK and
locally, but funding is local.
On occasion, mismatch of central and local goals can spark conflict. But that is
uncommon.
Chemonix Saone Basle Group, Switzerland
Chemonix Saone Basle (CSB) has major banking interests in the UK, North America and
Japan. It also has subsidiaries and joint-venture companies scattered throughout the
globe.
CSB tends to run systems projects on a global scale often. Examples include year 2000,
desktop refresh and BASEL compliance programs, among others.
Central policy best reflects the interests of the largest and most sophisticated businesses
within the group, namely the UK and US operations. However, policy is a
recommendation only.
Projects are funded locally, with both local and global reporting lines. On the ground, the
local project manager has great responsibility but little authority.
Mismatch between global and local goals is common and difficult to resolve. The norm is
naturally that projects exist to achieve local business goals, operations and products. So,
support for any global project is often debated, disputed and tardy.
Siam Insurance, Thailand
Siam Insurance Thailand (SIT) decided to renew its systems with the Sherwood general
insurance system, originating from the UK. At SIT, systems were managed by an Indian
subsidiary Kali. The firm itself is part Thai-, part Indian-owned.
In the renewal project, the UK partner proposed a joint development-style management

to achieve the tight project schedule required. Best practices and experience favoured
this approach too.
However, Kali rejected this approach, wishing to retain its role as principal and sole
manager of the project. In the end, the project was completed in the traditional way.
Observations on International Projects
The following issues often need to be addressed –
 Conflict between central policy and local goals

 Management and co-ordination of diverse stakeholders
 Localisation to what degree?
 Traditional or advanced project processes?
 Common regional core system / product?
In global military projects, one also encounters –
 Collision of quality standards.
Other factors
Are there other important issues to consider? Yes indeed.
 Just Do It!
 Finances
 Coffee Break!
 Tact
 Perfection
There is a tendency to leave all our project management experience at home and just
buckle down to get it done. That usually fails. The basics of project management, like
Scope, SMART, WBS, Budget and the rest are basics for very good reasons.
What may be an average salary for a US, UK or Canadian project manager may equal or
exceed the salary of an Indian Managing Director. What is normal rental and cost of
living expenses in Hong Kong and Japan are unsupportable on a US, UK or Australian
salary. Without appropriate change, such personnel arrangements and projects will not
begin or work.
Normal office behaviour to take a coffee break at home may appear erratic and
undisciplined abroad. Check first.
No doubt, practices differ. But everybody believes they are just as capable and advanced
as anyone else. Comparisons are tactless and counter-productive.
Are you working in a tolerant or perfectionist milieu? New Zealanders might reject a
project that delivers only 85% of outcomes planned, saying this does not work.
Australians might accept the delivery, imperfect though it is, and prioritise defects for
later releases.
Culture Matters
How does the old Irish song go? –
‘The strangers came across the shores to teach us their ways. And they blamed us
too for bein’ what we are …’
The American Way?
Phillip was working for a large American company that supplies auto parts around the
world. His area was purchasing. Managers were expected to obtain orders, sign-offs and
payments from clients on time, or else. Like clockwork. After several years in Malaysia
and Singapore, Phillip was sent to Thailand. His project was to train and lead Thais to
follow US practices. As we know, Thailand is an important auto and motorbike
manufacturer.
Energetically, Phillip explained and insisted on the new purchasing procedures. And he
hired Thai account managers with great connections to swing things too. But to no avail.
It was clear that procedures were not being followed. Even head office in Hong Kong
noticed. Thais listened to but politely ignored Phillip. Orders and payments rolled in
anyway, sooner or later.
Sanuk is the Thai word for fun. Phillip did not have time or patience for that. After
another year, he was fired.
Unionised Spain & France?

Suppose your international project involves a strongly unionised country like Spain,
France, Italy or Germany. Then read Managing Sensitive Projects – a Lateral Approach by
D’Herbemont and César [9]. Is your project likely to fire? Viva!
Student Questions
1. Thailand
Congratulations! You are to replace Phillip. Before you take up the job, do some
research. Can you -?
 Find a case study of successful Foreign-Thai project. Why did this succeed?
 Find Top Ten Do’s for working in Thailand.
2. Turkey
Turkey is booming, so they say. It is building perhaps the world’s largest airline hub, and
is rebuilding hospitals throughout the Middle East. There are property development
projects and oil & gas pipeline projects too. Can you -?
 Find a case study of successful Foreign-Turkish project. Why did this succeed?
 Find Top Ten Do’s for working in Turkey.

APPENDIX 1 – THE RIGHT STUFF FOR PROJECT MANAGER
APPENDIX 2 – USE OF THE TITLE PROJECT MANAGER
You will find all of the following –
 Title confusion
 Title inflation
 Title deflation.
The title Technical Project Manager is confusing. Where do the responsibilities of the
Project Manager and the Technical Project Manager begin and end? Who exactly is
responsible when things go wrong? Forget it. This title should be Technical Consultant.
The title Project Manager is sometimes given to Assistants in the Public Service or
Education industries. This is purely nominal; no Project Management duties are
performed. High status title is given perhaps in lieu of salary. The title should be
Executive Assistant.
The title Project Leader is sometimes given instead of Project Manager, the title Project
Manager instead of Program Manager and so on. This is a ploy by employers to save on
salary.
APPENDIX 3 – ROYAL LIVERPOOL HOSPITAL, A PFI CASE STUDY
Denis Campbell
The Guardian, Friday 6 July 2012
It sounds like the sort of hospital every patient wants to stay in. All inpatients have their
own room, all 643 of which are en-suite, and there is a large, tree-filled green area
outside to admire from the window. This is what the Royal Liverpool hospital will look
like under plans for a £455m development – with £242m of that coming from a PFI deal
– which has almost been finalised. Work is due to start in 2013.
No one doubts that the existing hospital – due for demolition and once likened to "a
little bit of eastern Europe" – needs to go. One member of staff says: "This building isn't
fit for purpose. Its systems – heating, water, ventilation and electricity – are failing.
Everything is failing. The systems are expensive to maintain and are very disruptive
when they do fail."
The current hospital was only built in 1974, much more recently than a lot of other
National Health Service (NHS) stock. But a wrangle over health and safety meant it was
not fully occupied until four years later.
Its replacement is taking time to move from concept to reality. In March 2010, just
before the last election, the Labour health secretary Andy Burnham approved the plan.
Two months later, the newly elected coalition called a halt to all pending PFI deals, while
ministers examined the state of the public finances they had inherited. Weeks later, the
new health secretary Andrew Lansley gave the scheme his blessing.
The team behind the planned new Royal Liverpool hospital had learned lessons from
other PFI projects, and their plan would deliver value for money, he said.
The use of PFI is back in the headlines after last week's announcement that South
London Healthcare NHS Trust became overwhelmed by debt. It has to pay £61m a year
in PFI repayments, a massive 14.4% of its income.
It is usually 6% to 10% elsewhere, said Prof John Appleby, chief economist at the King's
Fund health think tank. "To focus on PFI as a cost which could break a hospital seems to
me not right, when you consider that pay is a far bigger cost – usually 70%," he says.
APPENDIX 4 – MONICA PARK, AN EVA CASE STUDY
THE USE OF EARNED VALUE ANALYSIS (EVA) IN THE COST
MANAGEMENT OF CONSTRUCTION PROJECTS
Jose Angelo Valle, Carlos Alberto Pereira Soares
Federal University Fluminense, Brazil

Brazilian Cost Engineering Institute, Brazil
ABSTRACT
The objective of this article is to present and discuss the main factors involved in the use
Earned Value Analysis (EVA) in the cost management of civil construction projects. These
factors include advantages and disadvantages, difficulties and benefits, problems and
solutions and criteria and results based on the experience of a real case study in Brazil.
EVA was applied in the civil construction of an indoors amusement park, named Monica
Park. It is inside the Citta America Shopping Centre, in Rio de Janeiro, Brazil. The park has
30
attractions, covers an area of 10,000 square meters and was built in 10 months from
January to October 2000 for US$ 5 million.
EVA APPLIED TO MONICA AMUSEMENT PARK PROJECT
The Monica Park is an indoor amusement park based on the concept of a Family
Entertainment Centre located at the Citta America Shopping Centre, in Rio de Janeiro
City, Brazil. The park has 30 attractions with an instantaneous capacity for 1,300 people, a
daily capacity of 4,000 people and an annual capacity of 300,000 people.
The park has an area of 10,000 square meters, including areas for fast food, special partie
and a shop related to the theme of Monica, a child book character famous in Brazil.
The construction work took 10 months and was completed in 2000.
The construction works were contracted to several suppliers:

• Architecture, Engineering and Construction Consultants;
• Civil construction contractors, erection, assembly and industrial facilities;
• Electronic and electro-mechanics equipment manufacturers;
• Construction materials manufactures and resellers;
• Urban equipment manufacturers, including garden equipment;
Thematization is the complex services related to provide the park with thematic elements
related to the theme of the park: Monica Park. One of the main suppliers was the compan
which provided the thematization of the park. The operation of the park was largely
implemented through contracts for fast food operators, thematic shops, cleaning services
APPENDIX 5 – JULIE BRAVO, A PROJECT CLOSURE CASE STUDY
Post mortem: Julie Bravo
By Scott Alden
December 2000
(edited version)
Background
The decision to create a game started back in the summer of 1997. Ritual Entertainment
was in full-blown production of SIN at the time. Kevin Eastman was looking to make a
videogame based on a new animated movie called Heavy Metal: JULIE BRAVO
Kevin told us that the name of the movie was based on the name of the lead character
in the movie and that character was based on the image of his wife, Julie. The name of
the movie was later changed to Heavy Metal 2000, but we decided to keep the
name.
Kevin is the owner of the Heavy Metal magazine and co-creator of the Teenage Mutant
Ninja Turtles. When we discussed the possibilities of the game, we came up with idea of
the game being a sequel to the movie instead of doing the standard movie-to-game
conversion. Kevin was thrilled to hear this, and fully supported our decision to make the
game a sequel to the movie.
Very early in the production, we received a crate full of Heavy Metal magazines. We
spent days poring over the issues to see what kinds of styles Heavy Metal is known for,
and to get inspiration for designing the characters.
Kevin also gave us complete control over the story and provided us with some
inspirational concept sketches, which influenced the design of the game. Working with
Kevin has been a blast and he's supported us completely with our decisions on what to
put in the game.
APPENDIX 6 – PENNSYLVANIA STATE WATER PLAN, A PM CASE STUDY
Courtesy of Harrisburg University of Science and Technology 2005
APPENDIX 7 – RESOURCE SCHEDULING RULES & EXAMPLE

The resource scheduling rules run as follows –
Work though the Project Network from start to end. Examine each group of tasks.
Resource the task of the group with the least slack first. Resource the task with the
least duration second. Use least task id as tie breaker to decide between two equal
ranking tasks. Resources are not idle if possible.
We take a simple group of six tasks as an example. We apply the Parallel

Resourcing Rules above, to derive the planned resourcing order shown. This is our
starting point.
Group Rule Task Resources Duration Network

ID Needed Slack
Tasks 1,2,3 Least 2 1 3 0

Slack
Least 1 2 4 1
Duration
The 3 1 5 1
rest
Tasks 4,5 Least 4 1 6 0
Slack
The 5 2 4 1
rest
Task 6 6 2 3 0
We can allocate two or more resources to the tasks of this network. Let us begin
with two resources A and B.
First, task 2 is allocated one free resource A as planned. We leave task 1 for the
moment because only one resource B is free. Rather than do nothing, task 3 is
resourced next and allocated one free resource B. Once two resources A and B are
free, task 1 is then allocated its resources. That is after 4 days. Thus, its earliest
start date is shifted 4 days later, and the schedule slack becomes -3. A task with
zero or negative slack lies on the critical path. So, that includes tasks 1 and 2. We
can continue in this manner. With two resources, the duration is 21 days.
In summary, the shift in Earliest Start date, after waiting for resources, changes the
Network slack to the Schedule slack.
Day Resources Task Duration Network ES Schedule

Slack Shift Slack
APPENDIX 8 – PM HAS HEROES & HEROINES TOO
Some of our heroes and heroines are as follows –
 Egyptian and Roman engineers
For the fine aqueducts, amphitheatres, canals, lighthouses, roads, temples… we salute
you.
 Gustav Eiffel
He gave France and the world the Eiffel Tower. He also invented new methods of
construction and safety. Everybody said that he could not do it, it would be a disgrace
and it would be a waste of money. He proved his critics wrong.
 Henry Gantt
He gave us the Gantt Chart for project planning and scheduling. This is used everyday
around the world. He was an engineer and consultant working about 1910.
 General George Marshall
He led the Marshall Plan for rebuilding the bombed-out cities and infrastructure of
Europe after 1945. That took some compassion, leadership and political ability.
 Sir William Hudson
He led and delivered the Snowy Mountains Hydroelectricity scheme in 1949. His
workforce was largely migrants.
 Vice-Admiral Grace Hooper
The war years proved an opportunity for women to move into the information and data
processing world. Grace rose to the rank of Vice-Admiral in the US Navy IT&T Service.
That pioneered PERT and other innovations in project management in the 1950s.
 General Sam Phillips
He set up NASA and the Apollo space programs in the 1960s.
 Steve McConnell
He led the invention of Rapid Project Delivery and Agile methods in the 1990s, in
response to the failure of many projects.
 You
There is room for your achievement right here.

ANSWERS
Chapter 1
1. Fuzzy
Answer – Use checklists of likely work and costs for project A, house restoration. Set
down policy guidelines for project B, art purchase.
2. Wortbuch
Answer – These are evidently not strategy or compliance projects. So they are
operational or upgrade projects.
3. NPV’s
Answer – Invest in project D with positive NPV. Positive NPV means project revenue
exceeds projects costs; negative NPV means the reverse.
4. Missions Impossible
Examples of Mission Impossible projects may be scarce. Are we reluctant to admit

something is impossible? One example of a Mission Impossible project is as follows –
Hypo is a titan of investment, banking and property services. Three years ago, it
outsourced all information, technology and telecommunications to Mina. The
performance of Mina is disappointing and costly. Relations are sour.
Roberta of Hypo complains that the length of phone calls is assumed not measured,
and so Hypo may be overcharged. Mina technicians investigate, concluding that call
lengths cannot be measured accurately. Gary, head of operations at Mina, offers a
commercial discount. That seems to settle the matter.
Roberta is not satisfied. She contacts Brent, head of consulting at Mina, who
authorises a project with the latest technology to measure call lengths.
This project is impossible because experts have already confirmed it cannot be done.
It rests on a politically correct promise and no more. The PM soon quit, frustrated.
5. Big Bank
A solution for budget allocation to projects is as follows –
Project Type Do? Priority? Justification

Implement new tax Compliance Yes 1 Compliance
laws
Replace faulty lifts in Upgrade/
tower 5 Compliance
Update savings Upgrade
account products
Build new mobile Upgrade
banking services
Add new Facebook & Strategy/upgrade No Negative
Twitter links NPV
Retire & replace old Upgrade Yes 3
systems, phase 1
Relaunch customer Strategy Yes 2 Best on NPV,
service Payback and
Rating
Tint level 5-7 windows Upgrade
in building 3
Add new mobile Strategy Yes 4
mortgage services
Automate document Upgrade
production, phase 2
Launch ad campaign Strategy No Negative
at airports NPV
Spend 1300
Contingency 100
6. CTP Motors
Year Premiums Profit @ 15% Interest @ 6%

1 400 60 24
2 1000 150 60
3 1000 150 60
4 1500 225 90
5 700 105 42
The discount rate is 8% in years 1-4 but 11% in risky year 5.
Year Future Discount Present Value

Earnings Factor
1 84 0.925926 77.77778
2 210 0.857339 180.0412
3 210 0.793832 166.7048
4 315 0.73503 231.5344
5 147 0.662189 97.34179
Total 753.3999
On these figures, the maximum budget for the new system is $753k only. Any higher
figure gives a negative NPV. Better to take a ten year view.
7. Oops Business Case!
There is no clear, compelling justification for the project because –
 No legislative imperative is mentioned

 No gap or flaw in data collection and needs analysis is mentioned
 The wording is very vague.
So, what happens if it is not done at all or done only in part? No comment.
So, there no need to draft an accompanying business case because the heart of the
case, the business justification, is lacking or obscure. Save your effort.
8. Airports Canada
Option C, Do Nothing
Benefits –
 Costs nothing
Disadvantages –
 Accepts no growth of tourism to Canada
Option B, New Quebec Airport design with bullet train connections
Benefits –
 Allows growth of tourism to Quebec and Montreal
Disadvantages –
 Costly, novel and untried airport design
 Costly change to existing rail network over a small sector
 Irrelevant for tourism to Canada’s west / snow fields
Option A, New Ottawa Airport design with bullet train connections

Benefits –
 Allows growth of tourism to Canada’s centre
 Modernises core of rail network
Disadvantages –
 More costly, novel and untried airport design
 More costly change to existing rail network over core sector
 Irrelevant for tourism to Canada’s west / snow fields
Next steps –
1. Get data of tourism arrival & departure points in Canada
2. Hold international competition for best new airport design
3. Assess cost-benefit of modernising rail network
Recommendations –
 Do Next Steps 1-3 within nine months
 Review and replan options in twelve months time.
Chapter 2
1. Istanbul to Mecca Railroad
The SMART test fails at A achievable, R realistic and T timely.
Some advice for scoping might be –
 Consider, as an alternative, contracts or competition for the fastest sea

services from Istanbul to Cairo. Then the only railroad needed is the final leg
to Mecca.
 Check if Saudi Arabia prepared to co-finance this leg.
If the railroad is going ahead, then –

 Break up the work into 5 year plans, with specific, realistic goals and
budget/tax funding to match
 Can railroad also serve general transport needs in Turkey, over part of route?
Better investment if so. Check best route.
 Appoint independent auditors to measure and report progress.
 End the project if substantial progress is not made after 10 years.
Some advice for risk management might be –
 Finance Risk - Set tax/subscription-funded budget limits, seek co-funding and

issue Railway Bonds
 Natural Risk – Set route to avoid earthquake-prone and mountainous zones.
PS. The project went ahead, but bankrupted the Turkish Government.
2. Opera France
This is a project in search of both its goal and its scope. You need to –
1. Shape and agree with the Minister what will be a useful and doable goal
2. Start a large data collection/mining exercise for opera sales, costs and subsidies –
what are the facts?
3. Check what previous reports, research and criticism addressed here – what are
the gaps and future directions?
4. Set up focus groups of consumers of opera – what is their view?
5. Set up working committees across most of the opera organisations
6. Decide on scope, say –
 Critical scope – the major opera companies, the obvious

 Desirable scope – multimedia opera
 Nice to have scope – regional arts/opera
 Out of scope – experimental opera
7. Address the obvious –
 European opera takes a long break between mid-year and new-year. The
economics of opera must improve if performances are held year round.
 Are there opportunities for Opera France abroad, say in Beijing and Sydney,
which have not been tapped?
 Are there opportunities for a partial privatisation of Opera France companies

or for a pan European opera? Both would save state subsidies.
 How cost-efficient are opera management, marketing and purchasing? Is

some unification or streamlining useful?
Let us look at the SMART test; that is most vulnerable at T, timely. This project looks
like a busy 12-month work. So, we will –
 Produce an Interim Report, as per the Minister’s timetable

 Produce a Final Report at the end of approximately twelve months
 Split the scope to match.
You have much to do. Allez y!
8. Iinsure Call Centres
Is there a strategy issue here that should be addressed? Yes indeed.
Iinsure is adding a call centre to serve claims only; that cost centre generates no
revenue. It would be better to absorb the claims work in other Iinsure call centres, or
to change the function of the new call centre to serve both new business and claims,
if indeed there is a market justification for another call centre. The
strategic/commercial view is lacking but necessary.
What is the project goal? Is it S.M.A.R.T.? Assume the default goal of operational
projects applies.
Heavens to Betsy! There is no stated business/commercial goal, beyond just build it

now! This is not S.M.A.R.T. We are being generous to assume cost cutting is the goal
(somehow). No wonder Iinsure is losing contracts.
What needs to be swept into the scope?
At a minimum, these works need to be in scope –
 Build contract formation, with ISI

 Budget formation & approval
 Role allocations confirmed
How can the scope be split up? Think critical, desirable and nice to have.
Critical scope is –
 Sweep in’s
 Building Refit
 Infrastructure Refit
 Desktop Fit Out
 Call Centre Technology Purchase & Installation
 Motor claims capacity
 Operator Training
Desirable scope is –
 Home & Contents claims capacity (may defer to later)
Nice-to-have scope is –
 Link with other call centres (useful in an emergency to share work load)
9. Back of Beyond Mine
Road access clearly needs to be swept into the project. Assume a simple level dirt
road wide enough for two large container trucks to pass safely.
Now, the SMART test fails at T timely.
The timetable of 9 months is depends on building the road access into the mine. If
say that takes 3 months to survey, clear and grade, then only 6 months remains for
the rest of the project with much to do. That seems too short a time.
Better to plan a longer timetable of say 12 months or even 18 months.
In scope are mine operations, that is –
 physical design and build of the mine, its infrastructure and treatment plant
 contracts with Queensland Rail for transportation of ore
 contracts with Gladstone Ports for storage of ore
 leasing of plant and equipment
Out of scope are –

 flood engineering– accept this minor, occasional risk at first
 finance / commodity prices – job of the CFO
 environmental / legal – job of the CLO
 recruitment – job of the HR Director
10. Scope Creep
In the Iinsure case above, what would constitute Scope Creep? All except d –
 Decision to exclude house & contents claims
11. Opo
The SMART test fails at A achievable, R realistic and T timely. It is unlikely that the
high capital demands for the project can be met. Some advice is as follows –
 Down size the project

 Outsource Opo eCommerce products and services to new partners (plenty)
 Continue the update of Rose Bay data centre as springboard
 Can the update also automate the data centre operations? Great if so
 Halt all other data centre works
If the eCommerce market blooms, then Opo will have some capacity and a
springboard for further expansion in the updated Rose Bay site. If the eCommerce
market fades, then no further capital is wasted. Meantime, learn the market
together with new partners.
Chapter 3
1. Critical Stakeholders?
Critical stakeholders go beyond provincial and national Government to include –
 Major real estate developers

 Landowners co-operatives / communes
 Fishing co-operatives / communes
All these parties could and would use their influence (guanxi) with Government to
change or block the project if they perceived that it ran against their best interests.
2. Camping in Zambia
A list of stakeholders might include –
E – The project team – Zambian Army, UN, Red Cross, M.S.F., suppliers
D – The opponents – some Zambian publics, media
C – The informed – Presidents, UN, media
B – The impacted – Refugees, Zambian government and services
A – The champions – UN High Commission for Refugees, media, churches
You may decide that a different or larger list applies.
Chapter 4
1. Wind and Tide
A. Goal statement is for example –
Build two large camps with accommodation, facilities, infrastructure and access
to provide a healthy, safe and normal life for refugees in transit. Each camp will
flexibly accommodate 5000-7000 people, be built within 9 months or less, and
cost 5m euros or less.
B. Critical scope includes -
Accommodation will be flexible dormitory style, separate for men and for
women and children. Camps will include simple communal facilities for
education, food, health and recreation. Camps will have the normal
Infrastructure of water, power, sewerage and gas services. Access means a
layout of streets and connections with transport links. Fire, hygiene and
safety standards will be met.
Project assumptions are –
Community services say banking, education, health, police and religion, will
stretch to serve and support the camps. Entrepreneurs will step in offer other
services in demand e.g. Internet access. Refugees will be employed to
provide some services e.g. cleaning, waste, security. Each camp will in time
elect a major.
C. WBS by phase and activity is –
Survey Grounds
Engage Architects
Design Camps
Alert Community Services
MS Ready to tender
Call Tenders for Build

Award Tenders
MS Ready to build
Build Key Access Roads

Store Materials
Layout Dormitory Foundations
Layout Facility Foundations
MS Foundations Ok
Connect Infrastructure
Test Infrastructure
Update per Test
Liaise with Community Services
MS Infrastructure Ok
Fit out Dormitories

Fit out Facilities
Inspect
Update per Inspections
MS Standards Ok
Complete Access
Engage Suppliers
Store Supplies
Engage Community Services
MS Ready to Open.
MS denotes a milestone or checkpoint.
2. Remona
A solution for new plant WBS / Schedule lies below. We thank

www.timelinemaker.com for this fine work. You may want to add more
milestones here.
3. CXC Privacy Project
Opinion polls use small samples of the population to gauge the general view; they
also focus in on the important question or the swinging voter.
With this in mind, the project can be structured by sample of clients/data and by
‘radar’ view of the ten privacy principles. Then, we can assess which sources clash
with which privacy principles, if any. We will advise the project outcomes to the
Chief Legal Officer, the project sponsor, to address as required.
The CXC Privacy project was indeed completed on time and budget in this way.
4. CEM Super Tax project
A better approach is to calculate the tax and pay it early to the ATO, with an
agreement that data to identify taxable policies will follow in good time.
Next, we use common and plentiful desktop technology to download policy data
from a range of platforms to calculate and upload the tax payable. If the tax rules
change, we repeat the process.
Of course, we convince our Executive Sponsors to adopt this approach, to find the
extra $1-2 millions in tax and to agree matters with the ATO.
Chapter 5
1. Holy Smoke!
PIA is an Italian business icon. It has many businesses. Fire is one major risk.
What kind of risk management controls does PIA use in each of these areas?
 Avoidance – Financial services
 Mitigation – Insurance services
 Transfer and Mitigation – Data Centres
 Mitigation – Property services
 Mitigation – Electricity Grids.
2. Rwanda
Take risk B, railway breaks down in use but there is no backup train or route
Likelihood – medium
Impact – high, project is halted or stopped
Risk response – avoid - maintain and repair railway stock in good order before
starting off, seek engineers and artisans, retrace route to start if necessary
Contingency plan – escalate case to UN Security Council and World Press for help.
Take risk C, Panic and disorder in boarding refugees overturns carriages and derails
the train
Likelihood – medium
Impact –high, confidence and railway stock are destroyed. project is halted or
stopped
Risk response – transfer and mitigate – use UN Force to maintain order while
boarding, and use series of barriers to limit numbers boarding
Contingency plan – allow only limited number with tickets to queue for boarding,
keep the nature of tickets secret, and vary ticket with each trip. Also use UN Force to
supervise boarding.
Take risk K, Zambian government grants one year visas, but strife long continues
Likelihood – low to medium

Impact – low to medium, project is confused or halted while newcomers arrive but
those in camps are forced out
Risk response – transfer – UN to seek longer term visas or neighbouring countries
prepared to resettle refugees
Contingency plan – escalate case to UN Security Council and World Press for help.
You may have alternative answers here. An updated Risk Severity Matrix follows.
Rwanda Railway Project
Event
Likelihood
High B, C D
Medium A
Low I
Lo Mediu Event
w m High Impact
3. PFI projects
According to Takim et al, difficulties in making PFI projects work include –

 Defining and measuring Value for Money
That is defined as the ‘optimum combination of whole-life costs, benefit,

risks, and quality (fitness for purpose) to meet the user requirement and
getting the best possible outcome at the lowest possible price’ (HM Treasury,
2003)
 Lack of transparency and public accountability in the processes.
Risks transferred in PFI projects include –
 Construction Risk – e.g. unforeseen construction costs
 Operation Risk – e.g. unforeseen costs in operating the facility, penalties for
non-performance, obsolescence of the facility in the long term
 Demand Risk – demand for services may vary greatly over the long PFI lease
In the case of hospitals, demand is sensitive to many factors: variation in the

catchment area population of the hospital, change of government policy and
funding, new medical technology, standards and costs, wait-listed services, etc.
Chapter 6
1. Fast Builders
Add the times of the tasks on the critical path. Tasks 1-4 require 68 hours, and tasks 10-
13 require 32 hours. So the project duration is 100 hours, about 13 days. Such fast
builders! Have you got their number?
2. Retake the North
Plan is first to –
 Move Army of the Centre on day 1, in place on day 50

 Move Army of the North and Navy on day 30, in place on day 50
 Move Special Forces on day 40, in place on day 50
These moves are on the critical path. Any delay of one move delays the others and
makes our readiness milestone later. We are ready to attack on day 50.
Plan is second to –
 Rotate Army of the South to the West on day 1, in place on day 40

 Move Army of the West on day 40, in place on day 110.
This preserves our strength in the West and adds an extra force, 60 days after the battle
has begun, as reserve or occupation force. If all goes well, we may reverse these moves.
Risk lies in our South.
The Centre, North, Navy and Special Forces moves are linked finish-to-finish. The North
and Navy moves are also linked start-to-start. The South and West moves are linked
finish-to-start.
Day 50 should coincide with May 1, the beginning of our summer. Moves of our forces in
spring are feasible; we should announce routine manoeuvres in spring. Day 1 is March
10-11. Our campaign starts then.
3. Ho
The best case is for Ho to complete all regulatory trials without fail or repeat. So, the
best timeline is 27 months. Here, the media and marketing tasks are done in parallel
with the production ready task.
There is no auction of a successful drug patent; it is too valuable. An auction may apply
in some other circumstances e.g. to fund development of an even more effective drug.
The worst case is for Ho to require three extended 12-months trials for US approval, and
then fail or be withdrawn at the end of the last trial. So, this worst timeline is 41 months.
There is no auction of a failed drug patent; it has little or no value.
Chapter 7
1. Voyage to Brasil
For a sponsor voyage, use resources – 1 King George III, 2 Sir Joseph Banks
For d stock ship, use resources – 6 Quartermaster, 13 Crew, 15 Supplies, 16 Ship , 17

Shipyard and 18 Captain
For h dock in Rio, use – 7 Harbour Master, 8 Pilot, 13 Crew, 16 Ship, 17 Shipyard and 18
Captain
2. Posh Tosh
Lucinda has at least 60-70 days before going to market, allowing for legal then refit
work. Does the volume of maintenance work affect that timing?
 In best case, say 2 days maintenance is added per week

 In normal case, say 5 days maintenance is added per week
 In worst case, say 10 +2+2 or 14 days maintenance is added per week
Then, the expected maintenance load is (2 + 4*5 + 14)/6 or 6 days. That is a fulltime load
for the small maintenance team, and leaves 0-1 day per week spare.
So, if Lucinda uses only the Posh maintenance team, the 30 day refit will span 30 weeks
or more! That is unacceptable.
Thus, assume –
 Lucinda hires a refit team for her block of apartments. Then the timeline is
70 days, about 10 weeks.
 The property market is rising; the shorter timeline fits that.
3. SteelO
By laying the time boxes out, we find –
 The project duration is 30 months plus 5 weeks, say 32 months.
Note that the use of time boxes to shape, prioritise and schedule has given this project a
very precise, certain timeline that otherwise it would not have.
The Chairman may advise the NYSE of changes at SteelO after Installation & Training are
complete, in month 23.
4. Ooki
In the case of Ooki and Raiko working together, we find –
 In week 18, Ooki ships ten boats to the Gulf. In week 19 or later, Ooki ships
the remaining 5 boats.
 In week 20, Raiko ships all ten boats to Italy.
There should be no bid for the PNG boats, since there is no capacity to build in 20
weeks.
5. Tiffin
A. What data is in scope? Where will this be found?
Data in scope is that needed to report balance sheet, profit & loss, sources of
funds and notes on accounts. It should be found in the General Ledger or
equivalents.
B. Draw up a plan to make sure Batman Butter meets its deadline.
A solution is below. In order to make the deadline, we need –
 Two Tiffin firms to work in parallel, not one

 An audit of two months, not three.
It is likely that a sister firm of Tiffin can be found and engaged.
Activity Start Duration Resource

Submit 1-Sep 1 day CFO
Format 15-Aug 2 weeks CFO
Audit 15-Jun 2 months Auditor
Reconcile 15-Apr 2 months CFO
Consolidate A 15-Jan 2 months Tiffin
Consolidate B 15-Jan 2 months Tiffin 2
Discover A & B 1-Jan 2 weeks Accountants
Time is tight. One high impact risk is that some discrepancy or defect in the data
threatens the deadline. Batman can request an extension of time if necessary.
Chapter 8
1. CAD!
Projects are brought forward by two months, an extra load of 4 months work.
 Discovery Bay has 4 months work now in 2 months to do.
 Silvermine Bay has 6 months work now in 4 months to do.

Alas, the projects have become potential Mission Impossible’s.
Options may be –
 Share Discovery Bay work with NZ office if possible, and
 Hire an experienced CAD worker to continue Silvermine Bay work or
 Outsource the Silvermine Bay work to another firm, making a loss.
Either way, one or both projects may run late. That will mean penalty payments and loss
of reputation for Toai.
2. Ballpark
Project Plan Case Factor Project Buffer ISI Duration

weeks weeks weeks weeks weeks
Building 1 best 20% 5 1 6
Refit
Infra 2 likely 25% 8 1.6 9.6
Refit
Call 4 worst 35% 11.4 2.3 3 16.7
Centre
Systems
Desktop 2 likely 25% 8 1.6 2 11.6
Fit out
Training 1 best 20% 5 1 6
total 49.9
Call Centre Technology is ready to build, starting at week 15.6 say week 16.
Order must be placed in week 13.
So, Board approval is needed by week 13 at latest.
We may add a project Motor Claims to improve plan.
Chapter 9
1. Montebano Sono
Angela finds that the Harbour Cruise and National Galley Foyer are too costly given the
expected number of ISA tickets and revenue. If other Student Associations join in,
matters may be different. But that is uncertain. She decides to focus on the Princessa
Dance Hall option.
With a $20 ticket and 250 participants, revenue will be $5000.
Costs will be $3950, with 5 prizes of $50 and 1 DJ. Assume volunteers clean up after the
dance.
So, the fund for refugees is $1050. Better still to invite other Student Associations along.
The Hall has ample capacity.
2. Rotterdam
A. Capex / Opex costs are –
Capex Opex
Construction Cost Toll Fee
Contractual Variation Cost, if any Operations & Maintenance Cost
Penalties, if any
B. Toll Fee for 10 year Payback
Construction Cost C is $80*30 m or $2400 m.
Let the initial Toll Fee be F. Then Opex is –
Years Toll Fee O & M Cost

1 -– 5 F 0.07C
6 -– 10 1.04F 0.075*C
11 -– 15 1.04*1.04F 0.080*C
After 10 years, Net Revenue is 5*(F - 0.07C) + 5*(1.04F - 0.075C) or 10.4F – 0.725C. At
Payback, Investment equals Revenue, that is C = 10.4F – 0.725C. So, F = 1.725C / 10.4 or
F = 398k.
C. Toll Fee for Good investment
Years Sum of Discount Factors @8%

1-5 3.99271
6 – 10 2.71737
11 - 15 1.84940
The Present Value of Revenue is 3.99271*(F – 0.07C) +2.71737*(1.04F – 0.075C) +
1.84940*(1.0816F – 0.080C) or 8.81908F – 0.65147C.
The NPV is then C – (8.81908F – 0.65147C) or 1.65147C – 8.81908F.
A good investment has zero or positive NPV. So, we find F < 1.64147C/8.81908 or 449k.
3. Mercury
A. Rock’s accruals are correct.
B. Also accrue payment in November, if delayed to December.
Chapter 10
1. Seattle Terminal 91 Build
Potential problems include –
 A large, complex data model may be innocently and misleadingly in error, but
errors may be very hard to detect.
 Inspections raise costs, may not address key works and may not be
statistically significant or useful.
Some advice is –
 Verify the accuracy of the data model before going ahead.
 Structure inspections as a well-planned audit of the build
2. Build, Operate, Transfer project
Let the bid per supermarket be S.
In Year 1, Years 2-4 and Year 5, expected revenue is 0.06S, 0.12S, and 0.08S + 250.
Discount rate is 3% interest +5% inflation or 8%.
Discount factors in years 1-5 are then 0.9259, 0.8573, 0.7938, 0.7350 and 0.6806. These
bring future revenues to present values.
Good investment criterion is that the NPV is zero at minimum or positive. That is, the
present value of revenue should be equal to or greater than the investment.
That gives 170.1458 + 0.3963S >= S, or S < 281.86.
So, Le Bin’s maximum bid is 281k.
3. Blyth Street
A. PV, EV and AC are –
 Planned Value PV = 100*$250 or $25,000
 Earned Value EV = 73*$250 or $18,250
 Actual Cost AC = 73*$350 or $25,550
B. Other EVA metrics are –
 Cost Variance CV = EV – AC = -$7,300 (over budget)
 Schedule Variance SV = EV – PV = -$6,750 (behind schedule)
 Cost Performance Index CPI = EV/AC = 18250/25550 = 0.71
 Schedule Performance Index SPI = EV/PV = 18250/25000 = 0.73
The project is over budget and behind schedule. Work is underperforming, giving
71-73 cents per dollar only.
C. Action
Can BIC change the process, use new tools and offer incentives to speed up the
work?
D. We find –
 Budget at Completion BAC = 1000*$250 or $250,000
 % Completion = 100*EV/BAC = 7.3%

Chapter 11
1. Texas Bell Cut Backs
One cut back scheme for $19.5 m is as follows –
Projects Costs to run Status Budget Justification

Cut
Engineering $5m Testing 0 Convincing
benefits
Mobile $1m Various $1m No visible
benefits
Assurance $3m Various 0 Operational
Must
Infrastructure $3.5m Stuck $3.5m Stuck
Traffic $3m Various $3m No visible
benefits
Products $10m Starting $10m Negative NPV
Reporting $2m Stuck $2m Stuck
You may apply cuts more or less generously as you see fit. Expect disagreements and
lobbying aplenty!
Chapter 12
1. Home Care
Estimates are –
 Planned costs are $4 million
 Actual Costs are $12 + $10 + $5 + $7 million, or $32 million (plan x 8)
 Planned benefits are a more flexible, needs-focused and timely service
 Actual benefits are none.
2. Julie Bravo
A Project Closure Report for this game project runs as follows -

Lessons Learned are –
 A Project Manager is a must from start to end of project.
 A planned WBS is also a must. Here that spans storyline, features, effects and
tasks.
 Games engines/tools need to be wisely chosen, and any new versions need
to be introduced carefully to avoid disruption of schedule and relearning of
use.
 Marketing goals and actions to achieve them need to be planned from the
start; Julie Bravo needed a multi-user version of the game and early
availability to gamers.
Follow-up Actions are –
 Publish a Project Closure Report for Julie Bravo.
You may include other points of relevance here.
Chapter Thirteen
1. Business versus Project Culture
Why is it important to assess the culture of the organization before deciding what
project team structure to use?
This is because the project structure needs to match the organisation culture. If not,
there will be conflict, lack of approval, lack of participation, delay and more problems.
2. Sentry Insurance Hong Kong
No, the Functional Project Organisation is not right for this cross-business project.
Instead, we recommend a Strong Matrix (Project) Organisation. We do not recommend
a Dedicated Project Organisation because we want the whole Sentry organisation to
own and participate in the project.
Chapter Fourteen
1. Ethics
Why are the actions A, B and C above unethical?

A. Suppressing news of project delays or problems to sponsors – we will work it
out.
Dishonesty is unethical and counter-productive. The sponsors are sure to

hear the news anyway on the grapevine.
B. Offering help for a promotion in return for extra project effort.
Project managers rarely have any say on promotions. This behaviour is

dishonest, exploitative and counter-productive.
C. Giving a friend details of a job opportunity – this has not been made public
yet.
The information belongs to the company and is not yours to give. This
behaviour is also unfair and favouritism. Wait until the job is released to
notify your friend.
2. What is an Effective Project Manager?
A. Find and compare three or more lists of criteria for an Effective or Good
project manager. Is there a core of common criteria/which?
Yes, there are some common criteria. Check this out yourself.
B. Is the ace technical guru the best candidate for project manager?
No, technical prowess is rarely listed among criteria for good or effective
project manager. Yet, this continues to be an important criterion for
recruiting project managers!
C. Is the most experienced PM the best candidate for project manager?
Possibly. Most research suggests that depth of experience as project

manager relates to project success.
D. How should the criteria differ with the project organisation, be it large or
small?
We may reasonably expect that –
In a small organisation, the PM needs a wider range of process skills. But, in a

large organisation, the PM needs deeper finance and political skills.
Chapter Fifteen
1. Thailand
Find a case study of successful Foreign-Thai project. Why did this succeed?
See the NED Project [33], a solar energy project with Thai and Hong Kong
participants under the sponsorship of the Asian Development Bank. Support of the
nearby communities was the key to success.
Top Ten Do’s for working in Thailand.
One is – remember that, when working in Thailand, relationships are often more
valuable than extra profit [34].
2. Turkey
Find a case study of successful Foreign-Turkish project. Why did this succeed?
See the Pipeline project [35], an engineering project with Turkish and German
participants. Close working relations between the parties was the key to success.
Top Ten Do’s for working in Turkey.

REFERENCES
1. Wideman, M.R, Dominant Personality Types suited to running a successful

project and what type are you?, (AWE Services: Vancouver, 1996)
2. www.pmi.org, the Project Management Institute
3. Alden, S, Post-Mortem Julie Bravo, (CPI Publishing Inc, 2003)
4. Infrastructure Partnerships Australia, 2007. Performance of PPPs and

Traditional Procurement in Australia. [Online] Available at:
www.infrastructure.org.au/Content/MajorReports.aspx
5. Brown, R 2008. Joint Strategic Needs Assessment Project Initiation Docume

[Online] Available at: www.rbkc.gov.uk/pdf/jsna_pid.pdf
6. Project Management Docs. 2009. Business Case Template. [Online] Availab

at:
www.projectmanagementdoc.com/project-initiation-templates/business
case.html.
7. Gobeli, D.H., and Larson, E.W. The Barriers Affecting Project Success
Proceedings of the 1986 Seminar Symposium Drexel Hill, PA: The Project
Management Institute, 1986, p25.
8. Genest, B.A., Nguyen, T.H., Paradis, J., and Smith, J. Measuring Success in
Software Development Projects. Proceedings of the 1986
Seminar/Symposium Drexel Hill, PA: The Project Management Institute, 19
p 177.
9. D’Herbemont, O and B.César, Managing Sensitive Projects – A Lateral

Approach, (New York: Routledge, 1998)
10. Tuzcu, A, Esatoølu, N, 2011. Factors of Success in IT Projects, Problems and

Perspectives in Management, [Online]. vol 9, no 2, 71. Available at:
www.businessperspectives.org/journals-free
11. Clark, J. 2009. Requirements Prototyping in an Agile World. [Online] Availa

at: www.softwareprototyping.net/requirements-prototyping-agile-

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Project Management Now!

by DR. PETER C. WRIGHT,

CHAPTER ONE - INTRODUCTION TO PROJECT MANAGEMENT

The Right Stuff?

The Project Management Institute Body of Knowledge [2] states –

 A Project is a series of tasks, arranged in a defined sequence or relationship

Other definitions include –

 Project Management is the discipline of defining and achieving objectives

 Project management is the ensemble of activities concerned with

SMART Project Goal

Project goals must be SMART. That is –

 Specific – what volume of water, network of water supply and construction

We consider some interesting projects in the Student Questions following. Often, we

Classic projects usually are one of the following types –

As well as classic projects, we observe some other common types of projects –

 Mission Impossible projects

 Private Funding Initiative projects

All are worth consideration.

Some fuzzy (unclear, blurred, vague) projects are –

A. Sarah and George rebuild a period English home

In addition, planning authorities may dispute, modify or refuse building permission as

B. Gallery decides buys a Michelangelo at auction at Christies in New York

C. Laboratory plans to release a new wonder drug on world markets

D. Computer game ‘Julie Bravo’

Common features of fuzzy projects are –

 Objective is only partly SMART - S specific, M measurable, A achievable, R

Mission Impossible projects

Private Funding Initiative projects

Working on a PFI project might be your next role, right?

Instead we use one or more financial measures of the project, namely–

 Net Present Value

 Internal Rate of Return

Note the NPV of a compliance project is not calculated.

There are many good examples of Business Case.

To produce a persuasive business case is essential. Some investigations, discussions and

Find two examples of Mission Impossible projects. Why so?

Project Cost NPV Rating 1-5 Payback

7. Oops Business Case!

CHAPTER TWO – SCOPE OF THE PROJECT

 To make the room ready for a quick rental, or

And imagine how different it will be if the assumption is –

 Strictly limited, minimal budget, or

Lastly, imagine the result if the constraints are –

 Finish within two weeks max

Best Practice in project scoping is to –

 Use a scope checklist

By the way, research is telling here.

Scope creep can be a result of –

1. The Istanbul to Mecca Railroad

So, how would you –

You will certainly earn your fee as project advisor here.

So, how would you –

3. Iinsure Call Centres

Telsa is slow to deliver. When pre-ordered, Telsa goods and services

You are the manager of this fuzzy project. So, consider –

 Is there a strategy issue here that should be addressed?

4. Back Of Beyond Mine

Ample finance has been arranged. Congratulations! Your project is to set up

You are project manager. So, consider –

 What is the project goal? Is it S.M.A.R.T.?

In the Iinsure case above, what would constitute Scope Creep?

CHAPTER THREE – MEET THE SPONSOR OF THE PROJECT

The Project Review Board