Modern Project Management

What is a Project?
• Project Defined
–A complex, nonroutine, one-time effort limited by
time, budget, resources, and performance
specifications designed to meet customer needs.
• Major Characteristics of a Project
–Has an established objective.
–Has a defined life span with a beginning and an end.
–Requires across-the-organizational participation.
–Involves doing something never been done before.
–Has specific time, cost, and performance
requirements.
The PMI defines a project as, ‘a temporary endeavour
undertaken to create a unique product or service’ 1–2
 Program versus Project

• Program Defined
–A series of coordinated, related, multiple projects that
continue over an extended time and are intended to
achieve a goal.
–A higher level group of projects targeted
at a common goal.
–Examples:
• Project: completion of a required course in project management.
• Program: completion of all courses required for a business major.
The following attributes characterise projects:
• Purpose
• Life cycle
• Uniqueness 1–3
 Comparison of Routine Work with Projects
Routine, Repetitive Work
Taking class notes
Daily entering sales receipts into
the accounting ledger
Responding to a supply-chain
request
Practicing scales on the piano
Routine manufacture of an Apple
iPod
Attaching tags on a manufactured
product
Projects
Writing a term paper
Setting up a sales kiosk for a
professional accounting meeting
Developing a supply-chain
information system
Writing a new piano piece
Designing an iPod that is
approximately 2 X 4 inches,
interfaces with PC, and
stores 10,000 songs
Wire-tag projects for GE and
Wal-Mart
TABLE 1.1
1–4
 The Challenge of Project Management
• The Project Manager
–Manages temporary, non-repetitive activities and
frequently acts independently of the formal
organization.
• Marshals resources for the project.
• Is linked directly to the customer interface.
• Provides direction, coordination, and integration
to the project team.
• Is responsible for performance and success of the project.
–Must induce the right people at the right time to
address the right issues and make the right decisions.

1–5
 Work Breakdown Structure
An illustration from a construction project
 A matrix Organisation Structure

CEO

VP Projects VP Engineering VP Materials VP Manufacturing VP Logistics VP Finance

Project Mgr. 1

Project Mgr. 2

Project Mgr. 3

Project Mgr. 4
 WBS – OBS – CBS
A three dimensional perspective

WBS Project

Design Mechanical Electrical Integration

Finance

Works
A typical
Company
work package CBS
Procurement
Material

OBS Design
Labour

Total cost
Adopted from: Harrison, F.L., (1992), Equipment
Advanced Project Management, Gower
Publishing company, 3rd Edition.
 Attributes of a Project Manager
• The project manager should be a generalist
• Mature people are generally chosen
• The project manager should be able to
command respect
• People skills are very important.
• The project manager should be tough when he
needs to be.
• People with technical backgrounds are preferred
• The project manager should be able to cope
with stress.
• The project manager should do the job
 Responsibilities of a Project Manager
• Acquiring resources
• Staffing a project
• Dealing with obstacles
• Communication
• Negotiations
 Current Drivers of Project Management
• Factors leading to the increased use
of project management:
–Compression of the product life cycle
–Knowledge explosion
–Triple bottom line (planet, people, profit)
–Corporate downsizing
–Increased customer focus
–Small projects represent big problems

1–11
 Project Governance:
An Integrative Approach

• Integration (or centralization) of project

management provides senior management with:
–An overview of all project management activities
–A big picture of how organizational resources are used
–A risk assessment of their portfolio of projects
–A rough metric of the firm’s improvement in managing
projects relative to others in the industry
–Linkages of senior management with actual project
execution management

1–12
 Alignment of Projects with
Organizational Strategy
• Problems resulting from the uncoordinated
project management systems include:
–Projects that do not support the organization’s overall
strategic plan and goals.
–Independent managerial decisions that create internal
imbalances, conflicts and confusion resulting in
dissatisfied customers.
–Failure to prioritize projects results in the waste of
resources on non-value-added activities/projects.

1–13
 Project Selection
Criteria to be used in selecting projects:
• Profitability
• Competitive necessity
• Operating necessity
• Scoring
 Project Planning
Elements of project planning:
• Overview
• Background
• Objectives
• Approach
• Schedule
• Resources
• Staffing
• Monitoring
• Risks
 Major Functions of Portfolio Management:
The “Science” and “Art” of Project Management

• Oversee project selection.

• Monitor aggregate resource levels and skills.
• Encourage use of best practices.
• Balance projects in the portfolio in order to represent a
risk level appropriate to the organization.
• Improve communication among all stakeholders.
• Create a total organization perspective that goes beyond
silo thinking.
• Improve overall management of projects over time.

1–16
 Problems in a Project
• Insufficient physical resources when needed.
• Project might need redefining because of a
change in organizational objectives.
• Initial time estimates were very optimistic and
would need reworking
• Unanticipated regulatory blocks.
• For external projects, the client may change
specifications.
 Problems in a Project
• Inadequate budgeting
• Changes in prices of inputs.
• Non-availability of labour, especially specialized
labour.
• Incorrect sequencing of tasks
• Labour unrest because of trying working
conditions.
• Unrest because of delayed payment or non-
payment of wages and bonuses.
 Project Controls
Project controls focus on:
• Performance
• Cost
• Time
 Best Practices
• The project manager should visit everyone on the
project team at least once
• Initial planning is a very vital part of the project
• If the work is not progressing rightly, stop the work
and review it
• The project manager should be involved in the daily
progress of the project
• Try to keep things simple
• Before taking a decision, keep an eye on the
consequences
• Do paperwork in time
 Best Practices
• Foul mouthed, ill-mannered, vicious projects
managers are not as much of a problem as weak
project managers
• A comfortable project manager is not normal
• The project manager is not just the boss. Very often
he has to play the role of a coach.
• The biggest motivator is to give control over one’s
own work, but a cash bonus or verbal commendation
can also effectively motivate a team member.
• A person reluctant to show his progress is likely to be
doing a bad job or a slow job
• Keep communicating frequently
 Best Practices
• A working meeting should not have more than six
people
• There are going to be time and cost overruns. Make
sure that you are not going to be badly effected by
either.
• Do not generously budget time and money to avoid
overruns
• Wrong decisions made early can be corrected but
right decisions made late are not the right answer to
them.
• Never assume that a team member has a skill or
knowledge
• Things that go wrong are lessons for the future
• Do not focus on the excuses people make
 Key Terms

Program
Project
Project life cycle
Project Management Professional (PMP)

1–23
 Defining the Project

Step 1: Defining the Project Scope

Step 2: Establishing Project Priorities
Step 3: Creating the Work Breakdown Structure
Step 4: Integrating the WBS with the Organization
Step 5: Coding the WBS for the Information
System
 Step 1: Defining the Project Scope
• Project Scope
–A definition of the end result or mission of the
project—a product or service for the client/customer—
in specific, tangible, and measurable terms.
• Purpose of the Scope Statement
–To clearly define the deliverable(s) for the end user.
–To focus the project on successful completion
of its goals.
–To be used by the project owner and participants
as a planning tool and for measuring project success.
 Project Scope: Terms and Definitions
• Scope Statements
–Also called statements of work (SOW)
• Project Charter
–Can contain an expanded version of scope statement
–A document authorizing the project manager to initiate
and lead the project.
• Scope Creep
–The tendency for the project scope to expand over
time due to changing requirements, specifications,
and priorities.
 Step 2: Establishing Project Priorities
• Causes of Project Trade-offs
–Shifts in the relative importance of criterions related
to cost, time, and performance parameters
• Budget–Cost
• Schedule–Time
• Performance–Scope
• Managing the Priorities of Project Trade-offs
–Constrain: a parameter is a fixed requirement.
–Enhance: optimizing a criterion over others.
–Accept: reducing (or not meeting) a criterion
requirement.
 Step 3: Creating the Work
Breakdown Structure

• Work Breakdown Structure (WBS)

–An hierarchical outline (map) that identifies the
products and work elements involved in a project.
–Defines the relationship of the final deliverable
(the project) to its subdeliverables, and in turn,
their relationships to work packages.
–Best suited for design and build projects that have
tangible outcomes rather than process-oriented
projects.
 Levels in Work Breakdown
Structure (WBS)

LEVEL ELEMENT DESCRIPTION

1 Project
2 Sub-project
3 Activity
4 Work Package
A Typical Work Breakdown
Structure (WBS)
 Work Packages
• A work package is the lowest level of the WBS.
– It is output-oriented in that it:
1. Defines work (what).
2. Identifies time to complete a work package (how long).
3. Identifies a time-phased budget to complete
a work package (cost).
4. Identifies resources needed to complete
a work package (how much).
5. Identifies a person responsible for units of work (who).
6. Identifies monitoring points (milestones)
for measuring success.
 Work Packages
• A work package is the lowest level of the WBS.
– It is output-oriented in that it:
1. Defines work (what).
2. Identifies time to complete a work package (how long).
3. Identifies a time-phased budget to complete
a work package (cost).
4. Identifies resources needed to complete
a work package (how much).
5. Identifies a person responsible for units of work (who).
6. Identifies monitoring points (milestones)
for measuring success.
Example of WBS for building a house
Example of WBS for building a house
Example of WBS for spaceship project
Activities, time, cost, and labour requirements
(result of WBS)
 How WBS Helps the Project Manager
• WBS
–Facilitates evaluation of cost, time, and technical
performance of the organization on a project.
–Provides management with information appropriate
to each organizational level.
–Helps in the development of the organization
breakdown structure (OBS). which assigns project
responsibilities to organizational units and individuals
–Helps manage plan, schedule, and budget.
–Defines communication channels and assists
in coordinating the various project elements.
 Step 4: Integrating the WBS
with the Organization

• Organizational Breakdown Structure (OBS)

–Depicts how the firm is organized to discharge its
work responsibility for a project.
• Provides a framework to summarize
organization work unit performance.
• Identifies organization units responsible
for work packages.
• Ties organizational units to cost control
accounts.
 Step 5: Coding the WBS for
the Information System

• WBS Coding System

–Defines:
• Levels and elements of the WBS
• Organization elements
• Work packages
• Budget and cost information
–Allows reports to be consolidated at
any level in the organization structure
 Responsibility Matrices
• Responsibility Matrix (RM)
–Also called a linear responsibility chart.
–Summarizes the tasks to be accomplished and
who is responsible for what on the project.
• Lists project activities and participants.
• Clarifies critical interfaces between units
and individuals that need coordination.
• Provide an means for all participants to view their
responsibilities and agree on their assignments.
• Clarifies the extent or type of authority that
can be exercised by each participant.
 Project Communication Plan

• What information needs to be collected

and when?
• Who will receive the information?
• What methods will be used to gather
and store information?
• What are the limits, if any, on who has access
to certain kinds of information?
• When will the information be communicated?
• How will it be communicated?
 Information Needs

• Project status reports

• Deliverable issues
• Changes in scope
• Team status meetings
• Gating decisions
• Accepted request changes
• Action items
• Milestone reports
 Key Terms
Cost account
Milestone
Organization breakdown structure (OBS)
Priority matrix
Process breakdown structure (PBS)
Project charter
Responsibility matrix
Scope creep
Scope statement
WBS dictionary
Work breakdown structure (WBS)
Work package
 Project Management Structures
• Challenges to Organizing Projects
–The uniqueness and short duration of projects relative
to ongoing longer-term organizational activities
–The multidisciplinary and cross-functional nature of
projects creates authority and responsibility dilemmas.
• Choosing an Appropriate Project Management
Structure
–The best system balances
the needs of the project
with the needs of the
organization.
 Project Management Structures (cont’d)
• Organizing Projects: Functional organization
–Different segments of the project are delegated
to respective functional units.
–Coordination is maintained through normal
management channels.
–Used when the interest of one functional area
dominates the project or one functional area has
a dominant interest in the project’s success.
NASA Organisation Structure 2006
Project Management Structures- Functional
Differentiation
Project Management Structures- Project
Expeditor within a single functional
department
Multifunctional Project Teams
 Functional Organization of Projects
• Advantages • Disadvantages
1. No structural 1. Lack of focus
change
2. Poor integration
2. Flexibility
3. Slow
3. In-depth expertise
4. Lack of ownership
4. Easy post-project
transition
 Project Management Structures (cont’d)
• Organizing Projects: Dedicated Teams
–Teams operate as separate units under the leadership
of a full-time project manager.
–In a projectized organization where projects are the
dominant form of business, functional departments are
responsible for providing support for its teams.
Pure Projects as ‘arms’ to the functional
organisation
 Project Organization: Dedicated Team
• Advantages • Disadvantages
1. Simple 1. Expensive
2. Fast 2. Internal Strife
3. Cohesive 3. Limited Technological
Expertise
4. Cross-Functional
Integration 4. Difficult Post-Project
Transition
 Project Management Structures (cont’d)
• Organizing Projects: Matrix Structure
–Hybrid organizational structure (matrix) is overlaid on
the normal functional structure.
• Two chains of command (functional and project)
• Project participants report simultaneously to both functional
and project managers.
–Matrix structure optimizes the use of resources.
• Allows for participation on multiple projects while performing
normal functional duties.
• Achieves a greater integration of expertise and project
requirements.
Matrix Form of Project Organisation
Matrix Forms
 Different Matrix Forms
• Weak Form
–The authority of the functional manager predominates
and the project manager has indirect authority.
• Balanced Form
–The project manager sets the overall plan and the
functional manager determines how work to be done.
• Strong Form
–The project manager has broader control and
functional departments act as subcontractors
to the project.
 Project Organization: Matrix Form
• Advantages • Disadvantages
1. Efficient 1. Dysfunctional Conflict
2. Strong Project 2. Infighting
Focus
3. Stressful
3. Easier Post-Project
4. Slow
Transition
4. Flexible
 What Is the Right Project
Management Structure?

• Organization (Form) Considerations

–How important is the project to the firm’s success?
–What percentage of core work involves projects?
–What level of resources (human and physical)
are available?
Criteria for selecting the appropriate project
organizational form
 What Is the Right Project
Management Structure? (cont’d)

• Project Considerations
–Size of project
–Strategic importance
–Novelty and need for innovation
–Need for integration (number of departments involved)
–Environmental complexity (number of external
interfaces)
–Budget and time constraints
–Stability of resource requirements
 Organizational Culture
• Organizational Culture Defined
–A system of shared norms, beliefs, values, and
assumptions which bind people together, thereby
creating shared meanings.
–The “personality” of the organization that sets it
apart from other organizations.
• Provides a sense of identify to its members.
• Helps legitimize the management system of the organization.
• Clarifies and reinforces standards of behavior.
 Identifying Cultural Characteristics

• Study the physical characteristics

of an organization.
• Read about the organization.
• Observe how people interact
within the organization.
• Interpret stories and folklore
surrounding the organization.
 Key Terms

Balanced matrix
Dedicated project team
Matrix
Organizational culture
Projectized organization
Project Office (PO)
Strong matrix
Weak matrix