Project
A temporary endeavor undertaken to create a unique product, service, or result
Characteristics of a project
•Has an established objective
•Has a defined life span with a beginning and an end
•Involves several departments and professionals
•Involves doing something never been done before
•Has specific time, cost, and performance requirements
Program
A group of related projects designed to accomplish a common goal over an extended period
Project Life Cycle
recognizes the lifespan of a project and the changes in level of effort and focus that occur throughout the cycle
Challenges of Project Manager
•Manages temporary, non-repetitive activities and frequently acts independently of the formal organization.
•Organizes resources for the project.
•Is the direct link to the customer.
•Works with a diverse troupe of characters.
•Provides direction, coordination, and integration to the project team.
•Is responsible for performance and success of the project.
Sociotechnical Approach: Technical Dimension
The “Science”: Consists of the formal, disciplined, purely logical parts of the process; Includes planning, scheduling, and controlling projects.
Sociotechnical Approach: Sociocultural Dimension
The “Art”: Involves the contradictory and paradoxical world of implementation; Centers on creating a temporary social system within a larger organizational environment that combines the talents of everyone to complete the project.
Agile Project Management
Methodology emerged out of frustration with using traditional project management processes to develop software, also referred to as “rolling wave” approach; used across industries in defining phase to manage projects with high levels of uncertainty, and combines active collaboration within small teams to complete project
Rolling Wave Development
Iterations typically last from one to four weeks, and focus on making tangible processes; once one iteration ends, it is reviewed and edited before a new iteration begins
Strategy
Deciding how the organization will compete
Strategic Management
Is the process of assessing “what we are” and deciding and implementing “what we intend to be and how we are going to get there.”
Four Activities of the Strategic Management Process
Review and define the organizational mission
Analyze and formulate strategies
Set objectives to achieve strategies
Implement strategies through projects
SMART Characteristics of Objectives
Specific, Measurable, Assignable, Realistic, Time related
Implementation Gap
The lack of understanding and consensus of organization strategy among top and middle-level managers
Organization Politics
Project selection may be based not so much on facts and sound reasoning as on the persuasiveness and power of people advocating projects; The term sacred cow is often used to denote a project that a powerful, high-ranking official is advocating
Resource Conflicts and Multitasking
A multi-project environment creates the problems of project interdependency and the need to share resources. Resource sharing leads to multitasking—involves starting and stopping work on one task to go and work on another project, then returning to the work on the original task.
Types of Selection Criteria
Financial Criteria, Non-Financial Criteria, Multi-Criteria Selection Models
Payback Model
Type of financial criteria that measures the time the project will take to recover the project investment; simplest and most widely used, and emphasizes cash flows.
Payback Model Formula
Payback period (yrs)= (Estimated project cost)/(Annual Savings)
Net Present Value (NPV)
Uses management’s minimum desired rate of return (discount rate) to compute the present value of all net cash inflows; is more realistic because it considers the time value of money, cash flows, and profitability
Net Present Value Formula
Non-Financial Criteria
Strategic Objectives:
To capture larger market share.
To make it difficult for competitors to enter the market.
To develop an enabler product, which by its introduction will increase sales in more profitable products.
To develop core technology that will be used in next-generation products.
To reduce dependency on unreliable suppliers.
To prevent government intervention and regulation.
Multi-Criteria Selection: Checklist Models
Use a list of questions to review potential projects and to determine their acceptance or rejection.
Allow greater flexibility in selecting among many different types of projects and are easily used across different divisions and locations.
Fail to answer the relative importance or value of a potential project to the organization and does not allow for comparison with other potential projects.
Multi-Criteria Selection: Multi-Weighted Scoring Models
Use several weighted selection criteria to evaluate project proposals
Include qualitative and/or quantitative criteria
Allow for comparison with other potential projects
Project Portfolio Matrix
Bread-and-butter Projects
projects involve evolutionary improvements to current products and services.
Oyster Projects
involve technological breakthroughs with tremendous commercial potential.
White elephant Projects
showed promise at one time but are no longer viable.
Pearl Projects
represent revolutionary commercial advances using proven technology.
Defining the Project Stages
Defining project scope
establishing project priorities
creating the work breakdown structure
integrating the WBS with the organization
coding the WBS for information system
Project Scope
Is a definition of the end result or mission of your project—a product or service for your client/customer; Defines the results to be achieved in specific, tangible, and measurable terms.
Establishing Project Priorities
Project management trade-offs
Three major criteria (trade-offs) that a project manager has to manage are:
Cost (budget)
Time (schedule)
Performance (scope)
Project Priority Matrix
A project manager can manage the project trade-offs by completing a priority matrix for the project and identifying which criterion is:
Constrain—original parameter is fixed.
Enhance—a criterion should be optimized.
Accept—a criterion is tolerable not to meet the original parameter.
Work Breakdown Structure (WBS)
Is a hierarchical outline of the project with different levels of detail.
Identifies the products and work elements involved in a project.
Defines the relationship of the final deliverable (the project) to its sub-deliverables, and, in turn, their relationships to work packages.
Serves as a framework for tracking cost and work performance.
Is best suited for design and build projects that have tangible outcomes rather than process-oriented projects.
Work Package
Lowest level of the WBS:
Defines work (what).
Identifies time to complete a work package (how long).
Identifies a time-phased budget to complete a work package (cost).
Identifies resources needed to complete a work package (how much).
Identifies a single person responsible for units of work (who).
Identifies monitoring points for measuring progress (how well).
Organization Breakdown Structure (OBS)
Depicts how the firm has organized to discharge work responsibility.
Provides a framework to summarize organization unit work performance.
Identifies the organization units responsible for work packages.
Ties the organizational unit to cost control accounts.
WBS Coding System
Defines:
Levels and elements in the WBS
Organization elements
Work packages
Budget and cost information
Allows reports to be consolidated at any level in the structure
Process Breakdown Structure (PBS)
Is used for process-oriented projects.
Is often referred to as the “waterfall method” in the software industry.
Process-oriented Project
Is a project that the final outcome is a product of a series of steps and phases.
Is a project that evolves over time with each phase affecting the next phase.
Is a project that is driven by performance requirements, not by plans/blueprints.
Responsibility Matrix
Is also called a linear responsibility chart.
Summarizes the tasks to be accomplished and who is responsible for what on the project.
Lists all the project activities and the participants responsible for each activity.
Clarifies interfaces between units and individuals that require coordination.
Provides a mean for all participants in a project to view their responsibilities and agree on their assignments.
Clarifies the extent or type of authority exercised by each participant.
Project Communication Plan
Answers the “Who, What, When, Where, Why, How” of the project
Stakeholder Communications
Steps for Developing a Communication Plan
Stakeholder analysis—identify the target groups.
Information needs—project status reports, deliverable issues, changes in scope, team status meetings, gating decisions, accepted request changes, action items, milestone reports, etc.
Sources of information—where does the information reside?
Dissemination modes—hardcopy, e-mail, teleconferencing, SharePoint, and a variety of database sharing programs.
Responsibility and timing—determine who will send out the information and when.
Project Network
Provides the basis for scheduling labor and equipment.
Enhances communication among project stakeholders.
Provides an estimate of project duration.
Provides the basis for budgeting the cash flow.
Identifies which activities are “critical” and should not be delayed.
Highlights which activities to consider for compressing the project duration.
Helps managers get and stay on the project plan.
Project Network Critical Path
The path with the longest duration through the network:
The longest path through the activity network that allows for the completion of all project-related activities
The shortest expected time in which the entire project can be completed.
Delays on the critical path will delay completion of the entire project.
Project Network Early Start (ES)
Indicates how soon the activity can start; calculated by adding the Durations together
Project Network Early Finish (EF)
Indicates how early the activity can finish; calculated by adding the Early Start and Duration together
Project Network Late Finish (LF)
Indicates how late the activity can finish; the late finish on the last activity is the same as its early finish
Project Network Late Start (LS)
Indicates how late the activity can start; calculated by subtracting the Duration from the Late Finish
Project Network Slack
Tells the amount of time an activity can be delayed and not delayed the project; Calculated by either doing LS-ES or LF-EF
Network Sensitivity
The likelihood the original critical path(s) will change once the project is initiated; A network schedule that has only one critical path and noncritical activities that enjoy significant slack would be labeled ‘insensitive’.
Finish-to-Finish Relationship
Type of relationship where two or more activities can only be considered completed when both are completed.
Finish-to-Start Relationship
Type of relationship where one activity—the predecessor—must be fully complete before any following—successor—activities may begin.
Combination Relationship
Type of Relationship where multiple types of relationships are used at the same time, i.e. start-to-start and finish-to-finish.
Project Schedule Management
Types of Project Resources
People
Materials
Equipment
Facilities
Time
Money
Types of Project Constraints
Technical
Logical
Resource
Skills
Time
Resource Smoothing (Resource Loading)
Attempts to even out varying demands on resources by delaying non-critical activities (using slack).
Objectives:
To lower peak resource demand and, thus, increase resource utilization when resources are adequate over the life of the project
To determine the resource requirements so that they will be available at the right time
To allow each activity to be scheduled with the smoothest possible transition across resource usage levels
Resource Constrained Scheduling
Occurs when resources are not adequate to meet peak demands.
Consequences:
The late start of some activities must be delayed, and the duration of the project may be increased.
Splitting Tasks Technique
Is a scheduling technique used to get a better project schedule and/or to increase resource utilization.
Involves interrupting the work and sending the resource to another activity for a period of time and then having the resource resume work on the original activity.
Can be useful if the work involved does not include large start-up or shut-down costs.
Is considered a major reason why projects fail to meet schedule.
Common Sources of Project Cost
Labor
Materials
Equipment and facilities
Subcontractors
Travel
Top-Down Estimates
Are usually derived from someone who uses experience and/or information to determine the project duration and total cost.
Are sometimes made by top managers who have very little knowledge of the component activities used to complete the project.
Bottom-Up Estimates
Can take place after the project has been defined in detail.
Comes from the people most knowledgeable about the estimate.
Can serve as a check on cost elements in the WBS by rolling up the work packages and associated cost accounts to major deliverables.
Conditions for Top-Down Estimates
Strategic Decision Making
High Uncertainty
Internal, small project
Unstable Scope
Conditions for Bottom-Up Estimates
Cost and Time Important
Fixed-price Contract
Customer wants details
Methods for Estimating Top-Down Time and Costs
Consensus Method
Ratio Method
Apportion Method
Function Point Methods for Software and System Projects
Learning Curves
Methods for Estimating Bottom-Up Time and Costs
Template Method
Parametric Procedures Applied to Specific Tasks
Range Estimating
Consensus Method
(Top-Down) Uses pooled experience of senior and/or middle managers to estimate the total project duration and cost; Typically used during the conceptual stage of the project
Ratio Method
(Top-Down) Uses ratios to estimate project times or costs; Used in the conceptual phase to get an initial duration and cost estimate
Apportion Method
(Top-Down) Used when projects closely follow past projects in features and costs; Common in projects that are relatively standard but have some small variation or customization
Function Point Method
(Top-Down) Used for software and system projects; Assumes adequate historical data by type of software using function points
Function Point
Major parameters such as number of inputs, number of outputs, number of inquiries, number of data files, and number of interfaces
Learning Curves
Each time the output quantity doubles, the unit labor hours are reduced at a constant rate
Template Method
(Bottom-Up) Used when projects are similar to past projects; Differences in the new project can be noted and past times and costs adjusted to reflect these differences; Ready in a very short time span
Parametric Procedures Applied to Specific Tasks
(Bottom-Up) Parametric techniques are applied to specific tasks
Range Estimating
(Bottom-Up) Works best when work packages have significant uncertainty associated with the time or cost to complete; Group estimation to determine the low, average, and high cost or duration
Phase Estimating
Hybrid Approach:
Begins with a top-down estimate for the project and then refines estimates for phases of the project as it is implemented.
A detailed estimate is developed for the immediate phase and a macro estimate is made for the remaining phases of the project.
Used for projects where the final product is not known, and the uncertainty is very large
Factors Influencing the Quality of Estimates
Planning Horizon
Project Complexity
People
Project Structure and Organization
Padding Estimates
Organizational Culture
Other Factors
Estimating Guidelines for Time, Costs and Resources
Responsibility
The use of several people to estimate
Normal Conditions
Time Units
Independence
Contingencies
Risk assessment added to avoid surprises to stakeholders
Level of Detail for WBS
Varies with:
The complexity of the project
The need for control
The project size, cost, and duration
Other factors
Types of Costs
Direct Costs
Project Overhead Costs
General and Administrative (G&A) Overhead Costs
Direct Costs
Are clearly chargeable to a specific work package, ex. Labor, materials, equipment, etc.
Project Overhead Costs
Identifies which organization resources are being used in the project; Can be tied to project deliverables or work packages, Ex: Salary of the project manager, temporary rental space for the project team, supplies, specialized machinery
General and Administrative (G&A) Overhead Costs
Are not directly linked to a specific project; Usually allocate as a percentage of the total direct costs, Ex: Advertising, accounting, salary of senior management above the project level
Project Price Breakdown
Other Types of Costs
Recurring costs, such as labor and materials, are repeatedly incurred throughout the project life cycle.
Nonrecurring costs, on the other hand, are one-time costs that are typically incurred at the beginning or at the end of the project, such as market research and labor training.
Fixed costs do not vary with usage. For example, costs incurred in the purchase of capital equipment remain fixed, regardless of the extent of equipment use.
Variable costs vary directly with usage. They are typically associated with labor and materials.
Normal costs are incurred when project tasks are completed according to the original planned duration.
Expedited costs or crash costs are unplanned costs incurred as a result of steps taken to accelerate project completion.
Reasons for Adjusting Estimates
Interaction costs are hidden in estimates.
Normal conditions do not apply.
Things go wrong on projects.
Project scope and plans change.
People are overly optimistic.
People engage in strategic misrepresentation.
Risk
An uncertain event or condition that if it occurs, has a positive or negative effect on project objectives, such as scope, schedule, or cost
Risk Management
The art and science of identifying, analyzing, and responding to risk factors throughout the life of a project and in the best interest of its objectives.
Risk Management Process
Risk Event Graph
Benefits of Risk Management
A proactive rather than reactive approach
Reduces surprises and negative consequences
Prepares the project manager to take appropriate action
Provides better control over the future
Improves chances of reaching project objectives on time, within budget, and of meeting required performance.
Risk Identification
Risk Breakdown Structure (RBS)
Used in conjunction with work breakdown structure that helps to identify the risks and analyze them.
Scenario Analysis
Risk Assessment; assesses the significance of each risk event in terms of probability and impact.
Risk Assessment Form
Risk Assessment; evaluates the severity, probability of risk events and its detection difficulty.
Risk Severity Matrix
Prioritizes which risks to address; Failure Mode and Effects Analysis (FMEA) extends the risk severity matrix by including ease of detection in the equation:
Risk Value = Impact x Probability x Detection
Risk Response Development
Mitigating Risk: Reducing Likelihood and Impact
Avoiding Risk: Changing project plan
Transferring Risk: Passing risk to another party
Escalating Risk: Notifying appropriate people
Retaining Risk: Making conscious decision to accept risk
Contingency Plan
An alternative plan that will be used if a possible foreseen risk event becomes a reality; A plan of action that will reduce or mitigate the negative impact of the risk event.
Risk Response Matrix