Management Question - Test (2023)

management case study and i need support to help me learn.

The Assignment must be submitted in Blackboard (in WORD format only) via the assigned folder.
Documents sent by email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling in your details on the cover.
Students must clearly state the question number in their answer.
Late submissions will NOT be accepted. Peer-reviewed journals are required as references.
Avoid plagiarism, work must be in your own words, copying from students or other resources without proper attribution will result in a ZERO grade. No exceptions.
All answers must be typed in Times New Roman font (size 12, double spaced). No images containing text will be accepted and will be considered plagiarism).
Submissions without this cover will NOT be accepted.
Job Workload:
This assignment consists of case study questions.
The assignment must be submitted by each student individually.
Work Objectives/Learning Outcomes:
By completing Task 2, students will be able to understand the
Learning results:
1. Define project management concepts, theories and approaches. (LO-1.1)
2. Recognize the stages of the planning process in project management. (LO-1.2)
3.Analysis to work effectively and efficiently as a team member on project related matters. (LO-3.1)
4. Evaluation for project monitoring and control. (LO-3.2)
Assignment-2: Case Study
Work Case Study Question: (Mark 15)
Read Case-5.1 “Sharp Printing, AG”. from Chapter 5 “Estimating Project Times and Costs” provided in their book – Project Management: The Managerial Process 8th Edition by Larson and Gray, page #: 163, also mention specific concepts learned in the chapter to support your answers . Answer the following questions.
Case Study Questions:
1. At this point, what would you do if you were the project manager? (5 marks)
2. Did senior management do the right thing in developing an estimate? (5 marks)
3. What estimation techniques should be used for a mission-critical project like this? (5 marks)
Answers
1. Answer-500
2. Answer-500
3. Answer- 500
Requirements: Case study
School of Administrative and Economic Sciences
task 2
Project Management (MGT 323)
Closing date: 06/03/2023 at 23:59
For instructor use only
General Instructions – PLEASE READ CAREFULLY
The Assignment must be submitted in Blackboard (in WORD format only) via the assigned folder.
Documents sent by email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling in your details on the cover.
Students must clearly state the question number in their answer.
Late submissions will NOT be accepted. Peer-reviewed journals are required as references.
Avoid plagiarism, work must be in your own words, copying from students or other resources without proper attribution will result in a ZERO grade. No exceptions.
All answers must be typed in Times New Roman font (size 12, double spaced). No images containing text will be accepted and will be considered plagiarism).
Submissions without this cover will NOT be accepted.
Job Workload:
This assignment consists of case study questions.
The assignment must be submitted by each student individually.
Work Objectives/Learning Outcomes:
By completing Task 2, students will be able to understand the
Learning results:
Define project management concepts, theories and approaches. (LO-1.1)
To recognize the stages of the planning process in project management. (LO-1.2)
Analyze to work effectively and efficiently as a team member on project related matters. (LO-3.1)
Evaluation for project monitoring and control. (LO-3.2)
Assignment-2: Case Study
Work Case Study Question: (Mark 15)
Read Case-5.1 “Sharp Printing, AG”. from Chapter 5 “Estimating Project Times and Costs” provided in their book – Project Management: The Managerial Process 8th Edition by Larson and Gray, page #: 163, also mention specific concepts learned in the chapter to support your answers . Answer the following questions.
Case Study Questions:
At this point, what would you do if you were a project manager? (5 marks)
Did top management do the right thing in developing an estimate? (5 marks)
What estimation techniques should be used for a mission-critical project like this? (5 marks)
Answers
Answer-500
Answer-500
Answer - 500

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vProject ManagementThe ManagerialProcess Eighth Edition page ErikW.LarsonCliffordF.GrayOregon
State University
page viPROJECT MANAGEMENT: THE MANAGERIAL PROCESS, EIGHTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2014 and 2011. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including , but not limited to any network or other electronic storage or transmission or transmission for distance education. Some accessories, including electronic and printed parts, may not be available to customers outside the United States. This book is printed on acid-free paper.1 2 3 4 5 6 7 8 9 LWI 24 23 22 21 20 19ISBN 978-1-260-23886-0 (issue given) MHID 1-260-23886-5 (issue given ) ISBN 13-261 - (loose edition) sheet edition)MHID 1-260-73615-6 (loose sheet edition)Portfolio Manager: Noelle Bathurst Product Development Manager: Michele Janicek Marketing Executive: Harper ChristopherLead Content Project Manager: Sandy WilleSenior Lead Angel Continuity: Sandy LudovissyDesign: Egzon Shaqiri Content Licensing Specialist: Beth Cray Cover Image: Gina Pricope/Getty Images Credit: SPi Global All titles as they appear on the page or at the bottom of the book are considered an extension of the copyright page. F., author. | Larson, Erik W., 1952- author. Title: Project Management: The Management Process / Erik W. Larson,
Clifford F. Gray, Oregon State University. Description: Eighth Edition. | New York, NY: McGraw-Hill Education, [2021] | Clifford F. Gray appears as the first named author in earlier editions. | Contains bibliographic references and an index. | Abstract: “Our motivation for writing this text remains to provide a pragmatic and sociotechnical view of project management. In the past, project management books focused almost exclusively on the tools and processes used to manage projects rather than the human dimension'– Provided by publisher. Identifiers: LCCN 2019028390 (form) | LCCN 2019028391 (ebook) | ISBN 9781260238860 (paperback) | ISBN 1260238865 (paperback) | ISBN 9781260242379 (ebook)Specialties: LCSH: Project Management. | Time management. | Danger management. Rating: LCC HD69.P75 G72 2021 (print) | LCC HD69.P75 (ebook) | DDC 658.4/04–dc23LC record available at https://lccn.loc.gov/2019028390LC ebook record available at https://lccn.loc.gov/2019028391 Internet addresses listed in the text were accurate at the time of the publication. The inclusion of a site does not imply endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented on those sites. mheducation.com/highered
page vii About the Authors Erik W. Larson W. LARSON is Professor Emeritus of Project Management in the College of Business, Oregon State University. He teaches executive, graduate and undergraduate courses in project management and leadership. His research and consulting activities focus on project management. He has published numerous articles on matrix management, product development and project collaboration. He has been honored with teaching awards from the Oregon State University MBA program and the University of Oregon Executive MBA program. He has been a member of the Project Management Institute since 1984. In 1995 he worked as a Fulbright Scholar with professors at the Krakow Academy of Economics to modernize Polish business education. He was visiting professor at Chulalongkorn University in Bangkok, Thailand and at the Cooperative State University of Baden-Wuerttemberg in Bad Mergentheim, Germany. He received a B.A. in psychology from Claremont McKenna College and a Ph.D. in management from the State University of New York at Buffalo. He is a certified Project Management Professional (PMP) and Scrum master. He has personally taught over 100 executive development seminars and workshops. Cliff has been a member of the Project Management Institute since 1976 and was one of the founders of the Portland, Oregon chapter. He was a visiting professor at Kasetsart University in Bangkok, Thailand in 2005. He was president of Project Management International, Inc. (training and consulting firm specializing in project management) from 1977 to 2005. He received his B.A. in economics and management from Millikin University, M.B.A. from Indiana
University and PhD in operations management from the College of Business, University of Oregon. He is a certified Scrum master.
page viii "The mind of man, once enlarged by a new idea, never recovers its original dimensions." Oliver Wendell Holmes, Jr. To my family, who have always surrounded me with love and encouragement - my parents (Samuel and Charlotte), my wife (Mary), my children and their wives (Kevin and Dawn, Robert and Sally) and their children ( Ryan, Carly, Connor and Lauren). C.F.G. "The rational man adapts to the world. the irrational persists in trying to adapt the world to himself. Therefore all progress depends on the irrational man.' Bernard Shaw, Man and Superman To Ann, whose love and support brought out the best in me. To our girls Mary, Rachel and Tor-Tor for making me so happy and proud. And for our grandchildren, Mr. B, Livvy, Jasper
Jones!, Baby Ya Ya, Juniper Berry and Callie, whose future depends on effective project management. Finally, to my muse, Neil—walkon!E.W.L
page ixPreface Our motivation for writing this text remains to provide a realistic socio-technical view of project management. In the past, project management manuals focused almost exclusively on the tools and processes used to manage projects rather than the human dimension. This confused us, as people, not tools, completed projects! While we strongly believe that knowledge of tools and processes is essential to successful project management, we also believe that the effectiveness of these tools and methods is shaped and determined by the prevailing culture of the organization and the interpersonal dynamics of the individuals involved. Thus, we try to provide a holistic view that focuses on the technical and social dimensions and how they interact to determine the fate of projects. Audience This text is written for a general audience. It covers concepts and skills used by managers to propose, plan, secure resources, budget, and lead project teams to the successful completion of their projects. The text should be useful for students and future project managers to help them understand why organizations have developed a formal project management process to gain a competitive advantage. Readers will find the concepts and techniques discussed in sufficient detail to be immediately useful in new design situations. Practicing project managers will find the text a valuable guide and reference when dealing with typical problems that arise during a project. Managers will also find the text useful in understanding the role of projects in their organizations' missions. Analysts will find the text useful in explaining the data they need
xproject page, as well as features of legacy or acquired software. Members of the Project Management Institute will find the text well structured to meet the needs of those wishing to prepare for the PMP (Project Management Professional) or CAPM (Certified Associate in Project Management) certification exams. . The text covers in depth the most critical topics found in PMI's Project Management Body of Knowledge (PMBOK). People at all levels of the organization assigned to work on projects will find the text useful not only because it provides a rationale for using project management processes, but also because of the insights they will gain about how to improve their contribution to the success of the project. We emphasize not only how the management process works, but also, and more importantly, why it works. The concepts, principles and techniques are universally applicable. That is, the text is not specialized by type of field or project object. Rather, the text is written for the individual who will need to manage a variety of projects in a variety of organizational settings. For some small projects, some of the technical steps can be omitted, but the conceptual framework applies to all organizations where projects are important to survival. The approach can be used in purely design organizations such as construction, research organizations and engineering consultancies. At the same time, this approach will benefit organizations that manage many small projects while continuing the day-to-day effort to deliver products or services. used in the real world. We were guided by feedback from reviewers, professionals, faculty and students. Some changes are small and incremental, designed to clarify and reduce confusion. Other changes are significant. They represent new developments in the field or better ways
to teach project management principles. Below are the main changes from the eighth edition. All material has been reviewed and revised based on the latest version of the Project Management Body of Knowledge (PMBOK), Sixth Edition, 2017. Case studies have been expanded to more fully cover the examples. Agile Project Management is introduced in Chapter 1 and discussed where appropriate in subsequent chapters, with Chapter 15 providing more complete coverage of the methodology. A new set of exercises has been developed for Chapter 5. New exercises and student cases have been added to the chapters. The Practice Boxes snapshot includes several new examples of project management in action. The Instructor's Manual contains a list of current YouTube videos corresponding to key concepts and Practice Clips. The text addresses key issues and challenges the authors have faced during their combined 60 years of teaching project management and consulting with practicing project managers both at home and abroad. These questions include the following: How should projects be prioritized? What factors contribute to project failure or success? How do project managers orchestrate the complex web of relationships involving suppliers, subcontractors, project team members, senior management, functional managers, and customers that influence project success? What project management system can be created to gain some measure of control? How do they manage projects when clients aren't sure what they want? How do project managers work with people from foreign cultures? Project managers must address all of these concerns to be effective. All these issues and problems represent links to a socio-technical perspective of project management. The content of the text chapter is placed in an overall context that integrates these themes holistically. Included are cases and snapshots of his experiences
xipracticing managers page. The future for project managers is exciting. Careers will be based on successful project management. Student Learning Resources Student resources include study outlines, online quizzes, PowerPoint slides, videos, Microsoft Project video tutorials, and web links. They can be found on Connect. Acknowledgments We would like to thank Scott Bailey for creating the end-of-chapter exercises for Connect. Pinyarat Sirisomboonsuk for reviewing the PowerPoint slides. Ronny Richardson for updating the Instructor's Manual; Angelo Serra for updating the Test Bank. and Pinyarat Sirisomboonsuk for providing new instances of practice topics. Next, it is important to note that the text includes contributions from various students, colleagues, friends and managers drawn from professional conversations. We want you to know that we sincerely appreciate your advice and suggestions. Almost all exercises, cases, and examples in the text come from a real-world project. Special thanks to the administrators who kindly shared their current work as ideas for exercises, case topics and examples for the text. John A. Drexler, Jim Moran, John Sloan, Pat Taylor, and John Wold, whose work is in print, are gratefully acknowledged. Special thanks to Robert Breitbarth of InteractManagement for sharing valuable information about project prioritization. College students and administrators deserve special praise for spotting problems with earlier drafts of the text and exercises. project management guidelines. Thank you for your many thoughtful suggestions and for improving our book. Of course, we accept responsibility for the final version of the text.
Paul S. Allen, Rice UniversityVictor Allen, Lawrence Technological UniversityGregory Anderson, Weber State UniversityMark Angolia, East Carolina UniversityBrian M. Ashford, North Carolina State UniversityDana Bachman, Colorado Christian College of Southern Bagent IdahoScott Bailey , Economist Nabil Bedewi, Economics GeorgetownAnandhi Bharadwaj, Economics EmoryJames Blair, Economics Picture of St. Petersburg – St. Petersburg. LouisMary Jean Blink, Mount St. Louis County. JosephS. Narayan Bodapati, University of Southern Illinois at EdwardsvilleWarren J. Boe, University of IowaThomas Calderon, University of AkronAlan Cannon, University of Texas–ArlingtonSusan Cholette, San Francisco StateDenis F. Cioffi, George Washington UniversityRobert Cope, Southeastern Louisiana UniversityR, Clinnell University, Darark Amberton UniversityBurton Dean, San Jose State UniversityJoseph D. DeVoss, DeVry UniversityDavid Duby, Liberty UniversityMichael Ensby, Clarkson UniversityCharles Franz, University of Missouri, ColumbiaLarry Frazier, City University of SeattleRaouf Ghattas, DeVry UniversityEdward J.Penschaelt OshkoshJay Goldberg, Marquette College
page xiiRobert Groff, Westwood CollegeRaffael Guidone, New York City College of TechnologyBrian Gurney, Montana State University–BillingsOwen P. Hall, Pepperdine UniversityChaodong Han, Towson UniversityBruce C. Hartman, University of ArizonaMark Huber, University of GeorgiaRichard UniversityMarshallsen, UniversityRobert T. Jones, DePaul UniversitySusan Kendall, Arapahoe Community CollegeGeorge Kenyon, Lamar UniversityRobert Key, University of PhoenixElias Konwufine, Keizer UniversityDennis Krumwiede, Idaho State UniversityRafael Landaeta, Old Dominion UniversityEldon Larsenric UniversityEldon Larsenric, T. –Park UniversityCharles Lesko, East Carolina UniversityRichard L. Luebbe, Miami University of OhioLinh Luong, Seattle City UniversitySteve Machon, DeVry–Tinley Park UniversityAndrew Manikas, University of LouisvilleWilliam Matthews, William Patterson University Lacey McNeely, Oregon State UniversityOregon State University Moylan, Lawrence Technological College of Business Ravi Narayanaswamy, University of South Carolina–AikenMuhammad Obeidat, Southern Polytechnic State University
Edward Pascal, University of OttawaJames H. Patterson, Indiana UniversitySteve Peng, California State University–East BayNicholas C. Petruzzi, University of Illinois–Urbana/ChampaignAbirami Radhakrishnan, Morgan State UniversityEmad Rahim, Bellevue UniversityTom Robbins, East Carolina UniversityArt UniversityLi Rondagers , Westwood CollegePauline Schilpzand, Oregon State UniversityTeresa Shaft, University of OklahomaRussell T. Shaver, Kennesaw State UniversityWilliam R. Sherrard, San Diego State UniversityErin Sims, DeVry University–PomonaDonald Smith, Texas A&M UniversityKenneth Solheim, U. Force AcademyPeter Sutanto, Prairie View A&M UniversityJon Tomlinson, University of Northwestern OhioOya Tukel, Cleveland State UniversityDavid A. Vaughan, City UniversityMahmoud Watad, William Paterson UniversityFen Wang, Central Washington UniversityCynthia Wessel, Lindenwood UniversityLarry R. White, Eastern WIllilli UniversityRonaldno. Keller Graduate School of ManagementG. Peter Zhang, Georgia State University Além disso, gostaríamos de agradecer aos nossos colegas do College of Business da Oregon State University por seu apoio e ajuda na conclusão deste projeto. Ειδικότερα, οι Reconhecemos Lacey McNeely, PremMathew και Jeewon Chou por seus conselhos e sugestões úteis. Gostaríamos também de agradecer aos muitos alunos que nos ajudaram em diferentes fases do
this project, notably Neil Young, Saajan Patel, Katherine Knox, DatNguyen and David Dempsey. Mary Gray deserves special credit for editing and working to tight deadlines on previous editions. Special thanks to Pinyarat (“Minkster”) Sirisomboonsuk for his help in preparing the last five issues. Finally, we want to thank everyone at McGraw-Hill Education for their efforts and support. Firstly, we would like to thank Noelle Bathurst and Sarah Wood for their editorial direction, guidance and book development management for the eighth edition. And we would also like to thank Sandy Wille, Sandy Ludovissy, Egzon Shaqiri, Beth Cray, and Angela Norris for managing the final production, design, supplement, and media phases of the eighth edition. Erik W. Larson Clifford F. Gray
page xiii Guided Tour Established Learning Objectives Learning objectives are listed at the beginning of each chapter and highlighted as marginal items throughout each chapter's narrative. mappable to Connect.SmartBook The SmartBook has been updated with new highlights and quizzes to optimize student learning. Screenshots
The Snapshot from Practice boxes have been updated to include a number of new examples of project management in action. New discussion questions based on snapshots have been added to the end-of-chapter material and can be assigned in Connect. comes into play in the real world. The cases have been revised and updated in the eighth edition. Instructor and Student Resources Instructors and students can access all eighth edition supplemental resources on Connect or directly at www.mhhe.com/larson8e.
page xiv Note for Students You will find the content of this text extremely practical, relevant and timely. The concepts discussed are relatively simple and intuitive. As you study each chapter, we suggest you try to understand not only how things work, but why they work. You are encouraged to use the text as a manual as you progress through the three skill levels: I know. I can do. I can adapt to new situations. The field of project management is growing in importance and at an exponential rate. It is almost impossible to imagine a future management career that does not involve project management. Director CVs will soon be a description of their involvement and contribution to projects. Good luck on your text journey and your future projects. 2019.New footage: London Calling: Seattle Seahawks vs. OaklandRaiders. New case: A Day in the Life—2019.
page xvNew section on flexible project management. Chapter 2: Organizational Strategy and Project Selection Specialized and simplified chapter text. New section describing the phase gate model for project selection. Chapter 3: Organization: structure and culture New section for Project Managers Offices (PMOs). New snapshot: 2018 PMO of the year. Chapter 4: Defining the Project According to the 6th edition PMBOK, the scope checklist includes a description of the product scope, business justification/case, and acceptance criteria.Discussion of scope expansion. New case: Celebration of Color 5K.Chapter 5: Project Time and Cost Estimating Practice snapshot to reduce estimation errors embedded in text. Practice Snapshot: London 2012 Olympics Extension. A new set of six exercises. New Case: Ventura Baseball Stadium.Chapter 7: Managing RiskNew Snapshot: Terminal Five—London Heathrow Airport.According to PMBOK 6e, "escalation" was added to the risk and opportunity responses, and "budget" reservations were replaced with "contingency."
page xviChapter 8 Resource and Cost Planning Two new exercises. New case: Tham Luang Cave Rescue. Chapter 9: Reducing Project Duration Screenshot 9.1: Updated Smartphone Wars. New case: Ventura Baseball Stadium (B). Chapter 10: How to be Effective Communicator has replaced political skills as one of the 8 traits associated with being an effective project manager.Research Spotlight 10.1: Extensive Give and Take Chapter 11: Managing Project Teams A new review question and added exercises . Updated Defense Engineering Award. Added new exercise. Chapter 13 Measuring and Evaluating Progress and Performance Expanded discussion of the need for earned value management. New case: Ventura stage status report. Chapter 14: Project Closure New Case: Halo for Heroes II. Chapter 15: Agile Project Management
Revised chapter to include discussions of edge scheduling, Kanban, and hybrid models. New screenshot: League of Legends. New case: Graham Nash. Chapter 16: International Projects Practice Snapshots: Filming Apocalypse Now and Expanded River of Doubt. New Case: Mr. Wui goes to America. MCGRAW-HILL CUSTOMER SERVICE CONTACT INFORMATION At McGraw-Hill, we understand that getting the most out of new technology can be challenging. That's why our services don't stop after you buy our products. You can email our product experts 24/7 for online product training. Or you can search our FAQ database on our support site. For customer support, call 800-331-5094 or visit www.mhhe.com/support. One of our technical support analysts will be able to help you in a timely manner.
page xvii 1. 2. 3. 4. 5. 6. 7. 8. 9.10.11.12.13.14.15.16.Contents in briefPreface ixE Modern project management 2Project organization and project selection strategy 28O culture and project selection strategy 28O 134Development a Project schedule 168Management risks 212 Resource and cost planning 258 Reducing project duration 318 Effective project manager 354 Project team management 390 Outsourcing: Managing inter-organizational relationships Agile Project Management 562 International Projects 590
OneTwo Appendices to Selected Exercises 626 Computer Design Exercises 639 GLOSSARY 656 Acronyms 663 PROJECT MANAGEMENT EQUATIONS 664 PROJECT MANAGEMENT CROSS-REFERENCE 665 SOCIAL TECHNICAL PROJECT 665 SOCIAL TECHNICAL PROJECT 665 S 667
1.11.21.31.42.12.2page xviiiContentsPreface ixChapter 1Modern project management 2What is a project? 6 What a Project is not 7 Program vs. Project 7 The Project Lifecycle 9 The Project Manager 10 Project Team Participation 11 Agile Project Management 12 Current Project Management Drivers 15 Product Lifecycle Compression 15 Knowledge Explosion 15 Triple Prescription5, Custom Prescription5, Scheduling5, Personal Prescription5 ,P ll Projects Are Big Problems 16Project Management Today: A Socio-Technical Approach 17 Summary 18Chapter 2 Organizational Strategy and Project Selection 28Why Project Managers Need to Understand Strategy 30The Strategic Management Process: An Overview 31
2.32.42.52.62.72.83.13.23.3 Four Activities of the Strategic Management Process 31 The Need for a Project Prioritization System 36 Issue 1: The Implementation Gap 36 Issue 2: Organizational Policy 37 Issue 3: Resource Conflicts and Multitasking Criterion 38 Multitasking Attention Financial Criteria 41 Non-Financial Criteria 43 Models two multiple criteria selection 43 Applying a selection model 46 Project ranking 46 Project proposal sourcing and solicitation 47 Proposal ranking and project selection 49 Portfolio system management 52 Input from senior management 52 Governance 22 Job proposals5 54 Chapter 3 Organization: Structure and Culture 68 Project management structures 70 Project organization within the functional organization 70Organization of projects as exclusive groups 73Organization of projects within a matrix layout 77Different forms of matrix 78Project management project management (PMO) 81W what is the right project management structure? 83 Organizational Considerations 83 Design Considerations 83
3.43.54.14.24.34.44.54.64.74.85.1page xixOrganizational culture 84What is organizational culture? 85Identifying Cultural Characteristics 87Implications of Organizational Culture for Project Organization 89Summary 92Chapter 4 Defining the Project 104Step 1: Defining the Project Scope 106Using a Project Scope Checklist 107Step 2: Creating a Project Structure Work 113Major Groupings in a WBS 113 How a WBS Helps the Project Manager 113A Simple WBS Development 114 Step 4: Integrate the WBS with the Organization 118 Step 5: Codify the WBS for the Information System 118 Process Analysis Framework 121 Responsibility Charts 122 Communication Plan Factors Affecting the Quality of Estimates 136 Planning Horizon 136 Project Complexity 136 People 136 Project Structure and Organization 137
5.25.35.45.55.65.75.85.96.16.26.36.46.5 Completing Estimates 137 Organizational Culture 137 Other Factors 137 Time, Cost, and Resource Estimation Guidelines 138 Time, Cost, and Resource Estimation 138 Top-Down vs. Top-Down Time Estimation and Bottom-up Estimating 139 Approaches to Estimating Project Time and Cost 142 Bottom-Up Approaches to Estimating Project Time and Cost 146A Hybrid: Phase Estimating 147 Level of Detail 149 Cost Types 150 Direct Cost 151Direct Management Costs15 1 Cooling Estimates 152Establishing a Database for Estimation 154Mega Projects: A Special Case 155 -Appendix 5.1: Learning Curves for Estimation 164Chapter 6Developing a Project Schedule 168Developing a Project Network 169The Network Work Package 170Structure of a Project Network 172No. ) Fundamentals 173 Network Computing Process 176 Forward Pass — Early Times 177
6.66.76.86.97.17.27.37.47.5 Backtracking - Last Times 179 Identifying Slack (or Float) 180 Using Back and Back Information 183 Level of Detail for Activities 184 Practical Considerations 184 Activities 184 Networks Logic8 E4 185 Calendar Date s 185 Multistart and Multiple Projects 185 Extended Network Techniques to Get Closer to Reality 188 Scale 188 Using Delays to Reduce Schedule Details and Project Duration 188 An Example Using Delay Relations - The Way Forward 192 Hammock Activities 193 Summary1 7 Risk Management 212 Risk Management Process 214 Step 1: Risk Identification 216 Step 2: Risk Assessment 219 Probability Analysis 222 Step 3: Develop a Risk Response 223 Risk Mitigation 223 Risk Avoidance 225 Risk Transfer Plan 225 Risk Reset 225 6 Technical Risks 227 Risk Timeline 229
7.67.77.87.98.18.28.38.48.58.68.78.88.9page xxCost Risks 229Financing Risks 229Opportunity Management 230Contingency Funding and Temporary Time Reserves 4: Risk Response Control 233 Change Management Control 234Summary 237Appendix 7.1: Commitment PERT and PERT simulation 248Chapter 8 Resource and cost planning 258Overview of the Resource Scheduling Problem 260 Types of Resource Constraints 262 Classifying a Scheduling Problem 263 Resource Allocation Methods 263 Assumptions 263 Time-Constrained Projects4 Time-Constrained Projects5: Demamondoth6 Tense Scheduling Demonstration 270 The Implications of Resource-Constrained Scheduling 27 4 Splitting Activities 277 Benefits of Resource Scheduling 278 Project Work Assignment 27 9 multi-project resource schedules 280
8.109.19.29.39.49.59.6 Using Resource Planning to Develop a Project Cost Baseline 281 Why a Time-Phase Budget Baseline is Necessary 18 Rationale for Reducing Project Duration 320 Options for Accelerating Project Completion 321 Options When Resources Are Not Constrained 322 Choices When Resources Are Limited 324 Project Cost-Time Graphing 327 Explaining Project Costs 327 Creating a Cost-Time Graph Project Duration 328 Identifying Activities to Reduce 328A Simplified Example 330 Practical Failures 3332 Practical Failures Linearity Assumption 333 Selecting Activities to Stop Review 333 Ans time reduction and sensitivity options 334What if the is cost a problem and not time? 335 Reduce the scope of the project 336 Give the owner more responsibility 336 Outsource project activities or even the entire project 336 Cost-saving options 336 Summary 337 Chapter 10
10,110,210,310,410,510,610,711,111,211.3 Being an effective project manager 354Managing versus leading a project 356Committing project participants 357Influence as an exchange 361Tasks6On exchange rates361Tasks6Influence-R re Related currencies tion 363 Relationship Coins Related to Ships 363 Coins Related to People 364 Social Networking 364 Mapping Stakeholder Dependencies 364 Tramp Management (MBWA) 366 Managing Upward Relationships 367 Leading by Example 369 Leadership and Project Management 372 Building Trust: The Key to Influencing 373 Qualities of an Effective Project Manager 375 Summary 378 Chapter 11 Managing Project Teams 390 The Five-Stage Team Development Model 393 Influencing Situation team development 395 Creating high-performing project teams 397 recruiting project members 397 Conducting project meetings 399 Establishing team standards 401 Establishing team identity 403 Creating a shared vision 404 Iterative decision-making process 404 Project transfer 8Managing conflict within the project 410
11.411.512.112.212.312.412.5page xxi Revitalizing the Project Team 413Managing Virtual Project Teams 415Project Team Pitfalls 419Teamthink 419Bureaucratic Diversion Syndrome 419Team Chapter 12 Outsourcing: Managing Inter-Organizational Relationships 4 3 4Outsourcing employee work 436 Request for proposal (RFP) 440 Selecting a Contractor from Bids 441 Best Practices in Project Work Outsourcing 442 Well-Defined Requirements and Procedures 442 Extensive Training and Team Building Activities 444 Established Incentive Conflict Management Procedures 449 Long-Term Supply Relationships 449 The Art of Negotiation 4501. Separate the People from the Problem 4512. Focus on interests, not positions 4523. Invent options for mutual gain 4534. Whenever possible, use Objective Criteria 4554 Mark people Customer relationship management 455 Summary 458 Appendix 12.1: Contract management 467
13,113,213,313,413,513,613,713.8Chapter 13Measuring and evaluating progress and performance 474Structure of a project monitoring information system 476What data is collected? 476 Data Collection and Analysis 476 Reporting and Reporting 476 The Project Control Process 477 Step 1: Define a Baseline Plan 477 Step 2: Measure Progress and Performance 477 Step 3: Compare the Plan with Actuals 477 Step 4: Take Action 478 Monitor Performance 478 Monitor the Gantt Chart 478 Control Chart 479 Milestone Schedules 479 Earned Value Management (EVM) 480 The Need for Earned Value Management 480% Full Rule 484 What Costs Are Included in Baselines? 484 Analysis of Variance Methods 485 Status Report: A Hypothetical Example 487 Assumptions 487 Baseline Development 487 Status Development 488 Indicators for Monitoring Progress 492 Performance Indicators 493 Project Percent Complete Indicators 494 Software Rules 495 Final Project Cost Forecast 496 Other Control Issues 498 Technical Performance Measurement 498
14.114.214.314.414.515.115.215.3Scope Creep 500Baseline Changes 500The Costs and Issues of Data Acquisition 502Summary 503Parendix 13.1: Applying Additional Project 500Appeline. Information from MSProject 2010 or 20 16 528 Chapter 14 Closing the Project 532 Types of Project Closure 534 Closing Activities 536 Project Controls 539 The Project Control Process 540 Retrospective Projects 543 Project Controls: The Big Picture 543 Level 1: Ad Hoc Project Management 546Level 2: Formal implementation of Project Management Level Management 546 System Management Level 547 Level 5 : Project Management System Optimization 548 Post Implementation Evaluation 548 Team Evaluation 548 Individual, Team Member and Project Manager Performance Reviews 550 Summary 552 Appendix 14.1: Project Closeout Checklist 555 Chapter 15 Agditile Project Management 156 Agditional. PM 566 Agile PM in Action: Scrum 569
15,415,515,615,716,116,216,316.4page xxiiRoles and Responsibilities 570Scrum Meetings 572Product Shipments and Sprints 573Sprint and Release Burndown Charts 575Excellence Planning7K7PMppanbaning. 578 Limitations and Concerns 58 0 Hybrid Models 580 Summary 581 Chapter 16 International Projects 590 Environmental Factors 592 Legal/Political Factors 593 Security . 611Cultural Shock 611Selection and Training for International Projects 614
Appendix One:Appendix Two:Summary 617Solutions to Selected Exercises 626Computer Design Exercises 639Glossary 656Acronyms 663Project Management Equations 664Project Management Cross Reference 665Sociotechnical Approach to Project Management 666
page xxiiiProject ManagementThe Management Process
1-11-21-31-41-51.11.21.31.4page 2CHAPTER 1 Modern Project Management LEARNING OBJECTIVES After reading this chapter, you will be able to: Understand why project management (PM) is vital in today's world. Distinguish the common functions of a project Identify the various stages of a project's life cycle. Describe how agile project management differs from traditional project management. Understand that project management involves balancing the technical and socio-cultural dimensions of the project. DESCRIPTION What is a project? Summary of technical approach
page 3 Text Overview All of humanity's greatest achievements—from building the Great Pyramids to finding a cure for polio and putting a man on the moon—began as work. LO 1-1 Understand why project management (PM) is vital in today's world. good time to read a book on project management. Business leaders and experts have recognized that project management is critical to sustainable economic growth. New jobs and competitive advantage are achieved through continuous innovation, the development of new products and services, and improved productivity and work quality. This is the world of project management. Project management provides people with a powerful set of tools that improve their ability to plan, implement,
page 4 and manage activities to achieve specific goals. But project management is more than just a set of tools. It is a results-oriented management style that values ​​building collaborative relationships among a diverse cast of characters. Exciting opportunities await individuals who are skilled in project management. The design approach was the way of doing business in the construction industry, in US Department of Defense contracts and in Hollywood, as well as in large consulting firms. Now project management has spread to all areas of work. Today, project teams carry out everything from port expansions to hospital restructuring to information systems modernization. They create cutting-edge fuel-efficient vehicles, develop sustainable energy sources and explore the far reaches of space. The impact of project management is most pronounced in high-tech industries, where the new folk heroes are young professionals whose Herculean efforts lead to a steady stream of new hardware and software products. Project management is not limited to the private sector. Project management is also a vehicle to do good deeds and solve social problems. Efforts such as providing emergency aid to areas affected by natural disasters, devising a strategy to reduce crime and drug use in a city, or organizing a community effort to renovate a public playground will benefit and benefit from the implementation of modern project management techniques. Perhaps the best indicator of the demand for project management can be seen in the rapidly growing Project Management Institute (PMI), a professional organization for project managers. PMI membership has grown from 93,000 in 2002 to over 565,000 in 2019. See Practice Snapshot 1.1: The Project Management Institute for information on professional certification in project management. This is no surprise! About $2.5 trillion (about 25 percent of the U.S. gross national product) is spent on projects each year in the United States alone. Other countries are spending more and more on projects. Millions of people around the world consider project management to be the main task of their profession.
page 5 PRACTICAL MOMENT 1.1 The Project Management Institute* The Project Management Institute (PMI) was founded in 1969 as an international association for project managers. Today PMI has members from more than 180 countries and more than 565,000 members. PMI professionals come from nearly every major industry, including aerospace, automotive, business management, construction, engineering, financial services, information technology, pharmaceuticals, healthcare, and telecommunications. PMI provides certification as a Project Management Professional (PMP) - someone who has documented sufficient project experience, has agreed to follow PMI's professional code of ethics, and has demonstrated knowledge of the project management field by passing a comprehensive examination based on the Project Management Body of Knowledge (PMBOK), which is in its 6th edition. The number of people gaining PMP status has increased dramatically in recent years. In 1996, there were fewer than 3,000 certified project management professionals. In 2019, there were over 910,000 PMPs. Just as the CPA exam is a standard for accountants, passing the PMP exam could become the standard for project managers. Some companies require all their project managers to be PMP certified. Additionally, many job listings are limited to PMPs. Job seekers, in general, consider the PMP certification to be an advantage in the marketplace. PMI has added a certification as Certified Associate in Project Management (CAPM). CAPM is designed for project team members and entry-level project managers, as well as qualified undergraduate and graduate students who want a certificate to recognize their mastery of the project management body of knowledge. CAPM does not require the extensive project management experience associated with PMP. In fact, students often qualify to sit for the CAPM exam by taking a project management course. For more details on PMP and CAPM, Google PMI to find the current Project Management Institute website. This text provides a solid foundation for passing any of the exams. However, we personally find it necessary to study a good PMP/CAPM exam "prep book" to pass the exam. This is recommended given the format and nature of the exam. *PMI Today, March 2019, pg 4. Most people who excel at project management have never held the title of project manager. They include accountants, lawyers, administrators, scientists, contractors, trainers, public health officials, educators and
page 6 community supporters whose success depends on their ability to lead and manage project work. For some, the very nature of their work is project-oriented. Projects can be cases for lawyers, audits for accountants, events for artists and renovations for contractors. For others, projects may be a small but critical part of their job. For example, a high school teacher who teaches four classes a day is responsible for training a group of students to compete in a national debate competition. A store manager who oversees day-to-day operations is tasked with developing an employee retention program. A sales account executive is given the additional task of guiding the team to launch daily deals in a new city. A public health worker who runs a clinic is also responsible for organizing a Youth Connection event for the homeless. For them and others, project management is not a title but a critical job requirement. It's hard to think of a profession or career that doesn't benefit from being good at project management. Not only is project management critical to most careers, but the skill set is transferable to most companies and professions. The basic principles of project management are universal. The same project management methodology used to develop a new product can be adapted to create new services, organize events, revamp old features, etc. In a world where it is estimated that each person may go through three to four career changes, project management is a talent worth developing. The importance of project management can also be seen in the classroom. Twenty years ago, major universities offered a project management course or two, mostly for engineers. Today, most universities offer multiple modules of project management courses, with the core engineering group supplemented by business students majoring in marketing, management information systems (MIS) and finance, as well as students from other disciplines such as oceanography, health sciences, computer sciences and liberal arts. These students find that their exposure to project management gives them distinct advantages when it comes time to look for work. More and more employers are looking for graduates with project management skills. See Practice Scenario 1.2: Twelve Sample Projects Given to New Graduates for examples of projects given to recent graduates. The logical starting point for developing these skills is an understanding of the uniqueness of a project and project managers.
PRACTICAL MOMENT 1.2 Twelve sample projects given to recent graduates1. Business Insights: Join a project team tasked with installing a new data security system.2. Physical Education: Design and develop a new fitness program for seniors that combines yoga and aerobic principles.3. Marketing: Execute a sales program for a new home air purifier.4. Industrial Engineering: Manage a team to create a value chain report on all aspects of a key product, from design to customer delivery.5. Chemistry: Develop a quality control program for an organization's drug manufacturing facilities.6. Management: Implementation of new store layout design.7. Neurology Student: Join a project team linking mind mapping to an integrated prosthesis that will allow blind people to function almost normally.8. Sports Communication: Join the Montana State University track and field team to promote women's basketball. Systems Engineer: Join a project team to develop data mining of medical articles and studies related to drug efficacy.10. Accounting: I work on auditing for a large client.11. Public Health: Research and Curriculum Design on Medical Marijuana.12. English: Create an online user manual for a new electronic product. John Fedele/Blend Images LLC
1.1 What is a project? LO 1-2 Distinguish a project from routine operations. What do the following titles have in common? Millions Watch World Cup Finals Citywide Wi-Fi Goes Live Hospitals Respond to New Healthcare Renovations Apple's New iPhone Market Visits City Receives Stimulus Funds for Expand Light Rail System All These Events Are Projects .
page 7 The Project Management Institute provides the following definition of a project: A project is a temporary effort undertaken to create a unique product, service, or result. In addition to this fundamental similarity, the characteristics of a project help differentiate it from other businesses in the organization. The main characteristics of a project are the following: 1. A defined objective.2. A defined lifetime with a beginning and end.3. Typically, the involvement of many departments and professionals.4. He usually does something that has never been done before.5. Specific time, cost and performance requirements.
First, the projects have a specific goal - whether it's building a 12-story apartment complex by January 1 or releasing version 2.0 of a certain software package as soon as possible. This singular purpose is often absent in everyday organizational life, where employees perform repetitive functions every day. Second, because there is a defined goal, projects have a defined end point, which is contrary to the ongoing tasks and responsibilities of traditional jobs. Rather than staying in one job, individuals often move from project to project, working with different groups of people. For example, after helping install a security system, an IT engineer may be assigned to develop a database for a different client. Third, unlike many organizational tasks that are distributed according to functional expertise, projects often require the combined efforts of many specialists. Instead of working in separate offices under separate managers, project participants, whether they are engineers, financial analysts, marketing professionals, or quality control specialists, work together under the guidance of a project manager to complete a project. The fourth characteristic of a project is that it is not routine and has some unique elements. This is not a matter of either/or, but a matter of degree. Obviously, achieving something that has never been done before, such as building an electric car or landing two mechanical rovers on Mars, requires solving previously unsolved problems and using innovative technology. On the other hand, even basic construction projects that involve established sets of routines and procedures require some degree of customization that makes them unique. Check out Practice Snapshot 1.3: London Call: Seattle Seahawks vs. Oakland Raiders for an unusual change in routine. Finally, specific time, cost and performance requirements link the projects. a greater degree of responsibility than is usually found in most jobs. These three also highlight one of the key roles of project management, which is to balance trade-offs between time, cost and performance while ultimately satisfying the customer. What is not a project
page 8 Projects should not be confused with daily work. A project is not a routine and repetitive job! Ordinary day-to-day work often requires the same or similar work over and over again, while a project is performed only once. a new product or service exists when the project is completed. Consider the list in Table 1.1 that compares routine tasks, repetitive tasks, and projects. Recognizing the difference is important because resources can often be used in day-to-day operations that may not contribute to broader organizational strategies that require innovative new products. TABLE 1.1 Routine Comparison Work with Projects Routine and Repetitive Tasks Notes for Courses Writing a Term Paper Entering Daily Sales Receipts into the Ledger Creating a Sales Booth for a Professional Accounting Meeting Responding to a Request from a Supply Chain System Practicing Scales on the Piano Write a New Piano Piece Typical build of an AppleiPod Design an iPod that is about 2 × 4 inches, interfaces with the computer, and stores 10,000 songs Attach tags to a manufactured product Wire-tag projects for GE and Walmart Program vs. Project In practice, the terms project and program are confusing . They are often used interchangeably. A program is a group of related projects designed to achieve a common goal over an extended period of time. Each project in a program has a project manager. The main differences are in scale and time frame. PRACTICE 1.3 London Calling: Seattle Seahawks vs. OaklandRaiders*
Στις 7 Οκτωβρίου 2018, οι Seattle Seahawks του National Football League (NFL) αποχώρησαν από το γήπεδο αφού έπαιξαν το καλύτερο τους παιχνίδι της σεζόν, μόνο για να υπολείπονται του αήττητου Los Angeles Rams, 33–31. Επόμενο στο πρόγραμμα ήταν ένα εκτός έδρας παιχνίδι με τους Oakland Raiders. Ωστόσο, αντί να κατευθυνθούν περίπου 670 μίλια νότια προς το Όκλαντ της Καλιφόρνια, οι Seahawks πέταξαν σχεδόν 5.000 μίλια στο Λονδίνο, στην Αγγλία, οκτώ ζώνες ώρας μακριά, για να διαδώσουν το ευαγγέλιο του NFL. Το να στείλεις μια ομάδα NFL στο εξωτερικό για τη σεζόν δεν είναι κάτι κακό. Ο προηγμένος σχεδιασμός είναι κρίσιμος. Οι παίκτες χρειάζονται διαβατήρια. Πρέπει να βρεθούν καταλύματα και να κανονιστεί η μεταφορά. Η ομάδα εξοπλισμού αποστέλλει προμήθειες μήνες νωρίτερα. Συνολικά, οι Seahawks κατέληξαν να αποστέλλουν 21.000 λίβρες εξοπλισμό και προϊόντα, συμπεριλαμβανομένων 1.150 κυλίνδρων αθλητικής ταινίας, 2 τόνους ιατρικών προμηθειών, 350 μετασχηματιστές ρεύματος και 500 ζευγάρια παπούτσια! Δύο από τις μεγαλύτερες προκλήσεις που αντιμετώπισαν τα "Hawks" ήταν το jet lag και οι περισπασμοί. Πολλοί από τους παίκτες και το προσωπικό δεν έχουν πάει ποτέ στο εξωτερικό. Το Λονδίνο θα ήταν μια περίεργη και συναρπαστική εμπειρία. Έχοντας αυτό κατά νου, ο διευθυντής Pete Carroll αποφάσισε να πετάξει στο Λονδίνο νωρίς την Τετάρτη 10 Οκτωβρίου. Αυτό θα επέτρεπε στους παίκτες να προσαρμόσουν καλύτερα τον ύπνο τους, δίνοντάς τους λίγο ελεύθερο χρόνο για να εξερευνήσουν το Λονδίνο. Πρώτης τάξεως λοβούς ύπνου για βετεράνους παίκτες. Ο προπονητής Κάρολ και η ομάδα του κάθονταν στην πρώτη σειρά της business class. Οι πρωτάρηδες και τα μέλη της προπονητικής ομάδας κάθισαν πίσω τους. Ανεξάρτητα από την τάξη, όλοι έχουν το ίδιο μενού: μοσχαρίσιο φιλέτο, κοτόπουλο Cajun ή σολομό ψητό με βότανα. Συνήθως στις πτήσεις με προορισμό τα ανατολικά, ο Sam Ramsden, ο διευθυντής υγείας και απόδοσης των παικτών της ομάδας, λέει στους παίκτες να μείνουν ξύπνιοι, ώστε να είναι κουρασμένοι και να κοιμούνται καλά όταν φτάσουν. Για το ταξίδι στο Λονδίνο, ωστόσο, ο Ramsden αντέστρεψε το πρόγραμμα: είπε στους παίκτες να κοιμούνται όσο το δυνατόν περισσότερο στην πτήση, ώστε όταν φτάσουν στο Λονδίνο το απόγευμα της Πέμπτης, να έχουν αρκετή ενέργεια για να μείνουν ξύπνιοι μέχρι τις 9 ή 10 το βράδυ. . και μετά ξεκουραστείτε για μια πλήρη νύχτα. «Προσπαθούμε να προστατεύσουμε τους κιρκάδιους ρυθμούς τους όσο το δυνατόν περισσότερο», είπε ο Ramsden. Ο κιρκάδιος ρυθμός (γνωστός και ως σωματικό ρολόι) είναι ένα φυσικό εσωτερικό σύστημα που έχει σχεδιαστεί για να ρυθμίζει τα συναισθήματα υπνηλίας και εγρήγορσης σε μια περίοδο 24 ωρών. Η ομάδα Ramsden έδωσε σε κάθε παίκτη ειδικά κιτ ύπνου που περιλάμβαναν μάσκες ματιών. Μερικοί παίκτες έπαιρναν μελατονίνη ή Ambien, ενώ άλλοι φορούσαν ακουστικά που έπαιζαν τους ήχους του ανέμου και του τρεχούμενου νερού για να προκαλέσουν ύπνο. ΠΕΜΠΤΗ 11 ΟΚΤΩΒΡΙΟΥ Οι Seahawks προσγειώθηκαν την Πέμπτη περίπου στη 1:30 μ.μ. (5:30 π.μ. ώρα Σιάτλ). Λεωφορεία τους μετέφεραν σε ένα γήπεδο γκολφ βόρεια του Λονδίνου. Το βράδυ, οι παίκτες αφήνουν ατμό σε μια εγκατάσταση Topgolf. Εδώ, οργανωμένοι σε ομάδες των τεσσάρων, προσπαθούσαν να χτυπήσουν μπάλες του γκολφ σε γιγάντιες τρύπες για να κερδίσουν πόντους. Οι κοροϊδίες αντηχούσαν όποτε έχασαν το σημάδι. ΠΑΡΑΣΚΕΥΗ 12 ΟΚΤΩΒΡΙΟΥ Μετά από αρκετές ώρες συναντήσεων και προπονήσεων, οι παίκτες ήταν ελεύθεροι να εξερευνήσουν το Λονδίνο. Σκορπίστηκαν στις διάφορες γωνιές του Λονδίνου. Κατά την επιστροφή στο θέρετρο πριν από τις 23:00. απαγόρευση κυκλοφορίας, ορισμένοι παίκτες παραπονέθηκαν για ζεστή μπύρα. Οι Oakland Raiders έφτασαν στο Λονδίνο στη 13:00, 53 ώρες πριν τον αγώνα.
page 9 SATURDAY OCTOBER 13 Coach Carroll likes to take his players to the field the day before an away game so they can preview the conditions beforehand. At 1.30 p.m. the Seahawks drove to Wembley where they saw the fully equipped Seahawk locker room and stadium, the most famous football stadium in England. The field looked flat, so the equipment manager had longer cleats available for the players. The Hawks returned to the resort for their regular nightly pregame routine.GAME DAY, OCTOBER 14 During the game, the TV announcers commented several times that the Raiders looked sluggish while the Seahawks were sharp and focused. The Seahawks dominated the game, winning 27–3. David Lee/Shutterstock*Bell, G., “Seahawks Arrive in London. Why Twins Shaquill and Shaquem Griffin Didn't Travel Here Equally," thenewstribune.com, 11 Oct. 2018. Belson, K., "Four Thousand Miles for the W," nytimes.com, 20 Oct. 2018; Accessed 10/22/18. Program management is the process of managing a group of ongoing, interdependent, and related projects in a coordinated manner to achieve strategic goals. For example, a pharmaceutical company may have a program to treat cancer. The cancer program includes and coordinates all ongoing cancer projects over an extended time horizon (Gray, 2011). This cancer group also oversees the selection and prioritization of the cancer projects included in its dedicated cancer portfolio. While each project maintains its own goals and scope, so does the project manager and team
motivated by the broader goal of the program. The objectives of the program are closely related to the overall strategic objectives of the organization. The Project Life Cycle LO 1-3 Identify the different stages of the project life cycle. Another way to illustrate the unique nature of project work is in terms of the project life cycle. The life cycle recognizes that projects have a limited lifespan and that there are predictable changes in the level of effort and focus during the life of the project. There are many different life cycle models in the project management literature. Many are unique to a particular industry or type of project. For example, a new software development project might consist of five phases: define, design, code, integrate/test, and maintain. A general cycle is represented in Figure 1.1. FIGURE 1.1 Project life cycle
page 10 The project life cycle usually passes sequentially through four stages: definition, planning, execution and closure. The starting point starts the moment the project is approved. Project effort starts slowly, peaks, and then tapers off until the project is delivered to the customer.1. Determination step. Project specifications are defined. project objectives are defined. groups are formed. main areas of assigned responsibilities.2. Planning phase. The level of effort increases and plans are developed to determine what the project will include, when it will be scheduled, who will benefit, what level of quality must be maintained, and what the budget will be.3. Execution step. Most of the work in the project takes place - both physical and mental. The physical product (eg a bridge, report, software program) is produced. Time, cost and specification measures are used for control. Is the project on schedule, on budget, and on schedule? What are the predictions for each of these measures? What revisions/changes are needed?4. Closing phase. Closing involves three activities: delivering the project product to the customer, reallocating project resources, and conducting a post-project review. Project delivery may include customer training and document transfer. Realignment usually involves releasing project equipment/materials to other projects and finding new assignments for team members. Post-project reviews include not only performance evaluation but also lessons learned. For example, the design team might plan a large commitment of resources in the definition stage, while the quality team would expect their greater effort to increase towards the later stages of the project life cycle. Since most organizations have a portfolio of projects occurring simultaneously, each at a different stage of each project's lifecycle, careful planning and management at both the organizational and project levels is imperative. The Project Manager
page 11 At first glance, project managers perform the same roles as other managers. That is, they plan, plan, motivate and control. However, what makes them unique is that they manage temporary and non-recurring activities to complete a stable life's work. Unlike functional managers, who take over existing functions, project managers create a project team and organization where none existed before. They must decide what and how things will be done, rather than simply managing set processes. They must face the challenges of each phase of the project life cycle and even oversee the dissolution of their operation once the project is complete. Project managers must work with a diverse group of characters to complete projects. They are usually the direct link to the customer and must manage the tension between customer expectations and what is feasible and reasonable. Project managers provide direction, coordination and integration to the project team, which is usually made up of part-time people loyal to their functional departments. their faith in the work. Project managers are ultimately responsible for performance (often with very little authority). They must ensure that appropriate trade-offs are made between the time, cost and performance requirements of the project. At the same time, unlike their functional counterparts, project managers often have only rudimentary technical knowledge to make such decisions. Instead, they must orchestrate project completion by getting the right people, at the right time, to address the right issues and make the right decisions. Although project management is not for the faint of heart, working on projects can be an extremely rewarding experience. Project life is rarely boring. every day is different from the last. Because most projects aim to solve some tangible problem or pursue some useful opportunity, project managers find their work personally meaningful and satisfying. They enjoy the act of creating something new and innovative. Project managers and team members can take immense pride in their accomplishments, whether it's a new bridge, a new product, or a needed service. Project managers are often leaders in their organization and well paid. Good project managers are always in demand. Every industry is looking for efficient people who can do the right things on time. See Practice Snapshot 1.4: Ron Parker for an example of someone doing leverage
your ability to manage projects to build a successful career in the glass industry. Clearly, project management is a demanding and exciting profession. This text is intended to provide the knowledge, perspective, and tools necessary to enable students to meet the challenge.
page 12 Being part of a project team Most people's first brush with project management comes when they work as part of a team assigned to complete a specific project. Sometimes this work is full-time, but in most cases people work part-time on one or more projects. They must learn to combine their daily duties with additional project responsibilities. They can join a team with a long history of working together, so roles and rules are firmly established. Alternatively, your team may consist of strangers from different departments and organizations. As such, they endure the growing pains of a team growing into a team. They must be a positive force to help the team coalesce into an effective project team. Not only are there personal issues, but project members are also expected to use project management tools and concepts. They develop or obtain a map or scope statement that defines the goals and parameters of the project. They work with others to create a project schedule and budget that will guide project execution. They need to understand project priorities so they can make independent decisions. They need to know how to track and report project progress. Although much of this book is written from the perspective of a project manager, the tools, concepts, and methods are essential for anyone working on a project. Project members must know how to avoid the risks of scope creep, manage the critical path, engage in early risk management, negotiate, and use virtual tools to communicate. product manufacturing
1994 – Τρέχουσα Κατασκευή Γυαλικών Με την ολοκλήρωση του πτυχίου μου στο Πανεπιστήμιο του Όρεγκον, προσλήφθηκα από μια εταιρεία προϊόντων διατροφής Fortune 100 για μια θέση επόπτη παραγωγής κορυφαίας γραμμής. Σε αυτόν τον ρόλο, προέκυψε η ευκαιρία να διαχειριστούμε ένα έργο που περιελάμβανε την ανάπτυξη ενός νέου στατιστικού προγράμματος ελέγχου βάρους συσκευασίας σε ολόκληρη την εγκατάσταση. Η επιτυχής ολοκλήρωση αυτού του έργου ήταν καθοριστική για την επιτάχυνση της καριέρας μου στην εταιρεία, μεταβαίνοντας από επόπτης σε διευθυντή προϊόντος σε λιγότερο από τρία χρόνια. Μετά από τέσσερα χρόνια σε προϊόντα διατροφής, δέχτηκα μια πρόταση να γίνω μέλος σε μια εταιρεία κατασκευής προϊόντων ξύλου. Αρχικά, ο ρόλος μου σε αυτή την εταιρεία ήταν ως διευθυντής ανθρώπινου δυναμικού. Οι ευθύνες μου για το ανθρώπινο δυναμικό περιελάμβαναν τη διαχείριση πολλών έργων για τη βελτίωση της ασφάλειας και της διατήρησης των εργαζομένων. Η επιτυχής ολοκλήρωση αυτών των έργων οδήγησε σε προαγωγή σε διευθυντή εργοστασίου. Ως διευθυντής εργοστασίου, μου ανατέθηκε η κατασκευή και η διαχείριση ενός νέου εργοστασίου ξύλινων πορτών. Αφού έφερα με επιτυχία το εργοστάσιο σε πλήρη παραγωγή, προήχθηκα ξανά σε εταιρικό διευθυντή συνεχούς βελτίωσης. Αυτό το έργο «αλλαγής κουλτούρας» περιλάμβανε την εφαρμογή διαχείρισης ολικής ποιότητας σε 13 διαφορετικά εργοστάσια, καθώς και όλες τις έμμεσες και υποστηρικτικές λειτουργίες εντός της εταιρείας. Λίγο αφότου ριζώσαμε με επιτυχία αυτή τη νέα κουλτούρα στην εταιρεία, ο ιδιοκτήτης πέθανε, ωθώντας με να αναζητήσω άλλη δουλειά. Μπόρεσα να αξιοποιήσω την προηγούμενη εμπειρία και την επιτυχία μου για να πείσω τον ιδιοκτήτη μιας προβληματικής επιχείρησης κατασκευής γυαλιού να με προσλάβει. Σε αυτόν τον νέο ρόλο του γενικού διευθυντή, μου ανατέθηκε η μεταμόρφωση της εταιρείας. Αυτό ήταν το μεγαλύτερο έργο μου μέχρι τώρα. Η αναστροφή μιας εταιρείας περιλαμβάνει μια μυριάδα μικρότερων έργων βελτίωσης, που κυμαίνονται από εγκαταστάσεις και αναβαθμίσεις εξοπλισμού έως προσθήκες και διαγραφές σειράς προϊόντων, στρατηγικές πωλήσεων και μάρκετινγκ και οτιδήποτε ενδιάμεσα. Σε τέσσερα χρόνια, μεταμορφώσαμε με επιτυχία την επιχείρηση στο βαθμό που ο ιδιοκτήτης ήταν σε θέση να πουλήσει την επιχείρηση και να συνταξιοδοτηθεί άνετα. Η επιτυχημένη ανάκαμψη αυτής της εταιρείας γυαλιού τράβηξε την προσοχή ενός πολύ μεγαλύτερου ανταγωνιστή μας, με αποτέλεσμα μια προσφορά εργασίας. Αυτή η νέα προσφορά περιελάμβανε την έναρξη μιας μονάδας κατασκευής γυαλιού υψηλής τεχνολογίας 30 εκατομμυρίων δολαρίων σε άλλη πολιτεία. Καταφέραμε να μεταφέρουμε αυτήν την εγκατάσταση από ένα γήινο πεδίο στη μεγαλύτερη μονάδα παραγωγής όγκου του είδους της στον κόσμο μέσα σε μόλις τρία χρόνια. Μετά την κατασκευή και λειτουργία αυτής της εγκατάστασης σε επίπεδο αναφοράς παγκόσμιας κλάσης για οκτώ χρόνια, βρήκα μια συναρπαστική νέα ευκαιρία να βοηθήσω στην ανάπτυξη μιας ισχυρής εταιρείας κατασκευής γυαλιού στον Καναδά. Πέρασα τέσσερα χρόνια επιτυχώς στη μετάβαση αυτής της καναδικής εταιρείας από μια μεσαίου μεγέθους μονάδα παραγωγής γυαλιού σε μια από τις μεγαλύτερες και πιο επιτυχημένες του είδους της στη Βόρεια Αμερική. το επαγγελματικό μου σχέδιο. Αυτήν τη στιγμή είμαι αντιπρόεδρος λειτουργιών μιας startup υψηλής τεχνολογίας που υποστηρίζεται από εγχειρήματα. Σε αυτόν τον ρόλο, επιβλέπω την κατασκευή και την έναρξη λειτουργίας του πρώτου εργοστασίου παραγωγής ηλεκτροχρωμικού γυαλιού πλήρους κλίμακας στον κόσμο. Αυτό το νέο έργο περιλαμβάνει την οικοδόμηση μιας εταιρείας από την αρχή και τη συναρπαστική νέα τεχνολογία από το εργαστήριο στην εμπορευματοποίηση πλήρους κλίμακας. Η επιτυχία σε αυτόν τον ρόλο, αν και απέχει πολύ από το να είναι εγγυημένη, θα φέρει τελικά την επανάσταση στη βιομηχανία γυαλιού μέσω της εισαγωγής ενός προϊόντος που βελτιώνει δραματικά την ενεργειακή απόδοση και την άνεση των ενοίκων του κτιρίου σε όλο τον κόσμο. ήταν σε μεγάλο βαθμό το αποτέλεσμα της επιτυχούς ανάληψης και επιτυχούς ολοκλήρωσης διαδοχικών μεγαλύτερων και ολοένα και πιο σημαντικών έργων.
There is a saying that has always resonated with me: "If your only tool is a hammer, all your problems look like nails." Good tools are hard to find and heavy to carry. I like my tool bag full of general tools: things like communication skills, leadership, common sense, judgment, reasoning, logic, and a strong sense of urgency. I often wonder how much more I could have accomplished if I had actually studied project management and had more of these tools in my bag. With a bag full of powerful general tools, you can tackle any problem in any business. Project management is clearly one of those skills where the better you are, the more likely you are to succeed in any business environment. However, having the tools is only part of the equation. To succeed, you must also be willing to face problems/opportunities when everyone else is running away from them. forward. Planning requires predictability. For plans to be effective, managers must have a good understanding of what needs to be accomplished and how to accomplish it. For example, when it comes to building a bridge, engineers can take refuge
page 13 Proven technology and design principles for bridge design and construction. Not all projects enjoy this predictability. Figure 1.2 addresses this issue. FIGURE 1.2 Design uncertainty Design uncertainty varies with the extent to which the scope of the project is known and fixed and the technology to be used is known and proven. -established fields and use of proven technology, which provides the predictability for efficient planning. However, when the scope of the project and/or the technology is not fully known, things become much less predictable and design-based methods suffer. This was the case for software development projects, where it was estimated that in 1995 US companies and agencies spent $81 billion on canceled software projects (The Standish Group, 1995). Enter agile project management (PM Agile). Agile methodologies developed out of frustration with using traditional project management processes for software development. Software projects are notorious for having unstable scopes in which end-user requirements are discovered and not defined.
page 14 on the front. Agile PM is now used across industries to manage projects with high levels of uncertainty. Examples of people who face high-uncertainty jobs include software systems engineers, product designers, explorers, doctors, lawyers, and many problem-solving engineers. projects (see Figure 1.3). Instead of trying to plan everything in advance, the scope of the project evolves. That is, the final design/outcome of the project is not known in great detail and is continuously developed through a series of incremental iterations (wave). Repeats usually last from one to four weeks. The goal of each iteration is to make progress tangible, such as defining a key requirement, solving a technical issue, or creating desired features to demonstrate to the customer. At the end of each iteration, progress is reviewed, adjustments are made, and a different iteration cycle begins. Each new iteration builds on the work from previous iterations until the project is complete and the client is satisfied. it's not just a matter of either/or. Agile methods are often used early in the definition phase to define specifications and requirements, and then traditional methods are used to plan, execute, and close out the project. managed in the traditional way. The internal dynamics in agile projects are quite different from the traditional PM approach. Agile works best in small teams of four to eight members. Instead of directing and incorporating the work of others, the project
page 15 the manager acts as a facilitator and coach. The team manages itself, deciding who should do what and how it should be done. Agile project management will be discussed in depth in Chapter 15 and, where appropriate, throughout the text. 1.3 Current Project Management Drivers Project management is no longer special needs management. It is quickly becoming a standard way of doing business. See Case Study 1.5: Project Management in Action: 2019. An increasing percentage of a typical company's effort is devoted to projects. The future promises an increase in the importance and role of projects in contributing to the strategic direction of organizations. Several reasons for this are briefly discussed in this section. Product Lifecycle Compression One of the most important drivers behind the demand for project management is the shortening of the product life cycle. For example, today, in high-tech industries, the product life cycle ranges from 6 months to 3 years on average. Just 30 years ago, life cycles of 10 to 15 years were not uncommon. Time to market for new products with short life cycles has become increasingly important. A common rule of thumb in the world of high-tech product development is that a 6-month project delay can result in a 33% loss in product revenue share. Therefore, speed becomes a competitive advantage. More and more organizations rely on cross-functional project teams to bring new products and services to market as quickly as possible. Knowledge explosion The development of new knowledge has increased the complexity of projects because projects include the latest developments. For example, building a road 30 years ago was a fairly simple process. Today, every field has grown in complexity, including materials, specifications, codes,
page 16 necessary aesthetics, equipment and specialists. Similarly, in today's digital and electronic age, it is becoming difficult to find a new product that does not contain at least one microchip. The same is likely to happen soon with artificial intelligence (AI). Product complexity has increased the need to integrate different technologies. Project management has emerged as the key discipline to accomplish this task. Triple Bottom Line (Planet, People, Profit) The threat of global warming has brought sustainable business practices to the fore. Companies can no longer simply focus on maximizing profit at the expense of the environment and society. Efforts to reduce carbon footprint and use renewable resources are achieved through effective project management. The impact of this move towards sustainability can be seen in changes in project objectives and execution techniques. For example, obtaining a high LEED certification award is often a goal in construction projects. 2 Increased focus on customers Increased competition has greatly placed customer satisfaction. Customers are no longer satisfied only with generic products and services. They want personalized products and services that meet their specific needs. This mandate requires a much closer cooperative relationship between provider and recipient. Account executives and sales representatives are taking on more of a project manager role as they work with their organizations to meet unique customer needs and requests. CASE STUDY 1.5 Project Management in Action: 2019*Businesses and nonprofits thrive and survive based on their ability to manage projects that produce products and services that meet market needs. Here is a small sample of important projects for the future of their companies.
INTUITIVE SURGICAL INC.: PROJECT MONARCH The Monarch platform is a two-armed robot with artificial intelligence and a long blue tube attached that allows the doctor to direct a camera and other surgical tools deep into the body. Intuitives hope to one day use robots not only to diagnose, but also to treat lung cancer. WALT DISNEY/MARVEL STUDIOS: CAPTAIN MARVELC Captain Marvel is a superhero film based on the Marvel Comics character Carol Danvers/Captain Marvel. The film stars Oscar winner Brie Larson in the title role. It is Marvel's first female-led superhero film and is seen by many as an answer to the popular D.C. film. Wonder Woman. in developing countries. Each 40-foot container delivers an average of $4 million worth of medical supplies and equipment. SIKORSKY-BOEING: CHALLENGING PROJECT Boeing and Sikorsky have teamed up to develop a prototype for the next generation of military helicopters. The SB-1 Defiant is built to travel faster, farther and quieter than other models. At stake is a contract worth more than a billion dollars with the US Department of Defense. AUDI: The E-TRON SUVE-tron is Audi's first entry into the pure electric vehicle market. It is a fully equipped luxury SUV with a range of 220 miles. With a starting price of $74,800, it is intended to compete with Tesla's electric SUV and Jaguar's I-Pace, as well as establish Audi as a major player in the growing all-electric market. results in areas dominated by colonizing ferns. The Dominican restoration project includes manual feather removal and planting of native trees and shrubs.*Chafkin, M., "This Robot Can Detect Lung Cancer," BusinessWeek, April 2, 2018; Coggan, D., "Production underway in Marvel Studios" "Captain Marvel," Marvel.com, 3 Mar. 2018. "CURA. Cargo," projectcure.org. Accessed 02/15/19; Rockwood, K., “The Next Wave,” PM Network, June 2018, pp. 6–7; Society for Ecological Restoration, "Dominican Republic : Restoring Rainforest in Sites Dominated by Anthropogenic Feather Forests," ser-rrc.org. Accessed 2/25/19, "The Audi e-tron SUV Is an Electric Shotat Tesla", techcrunch.com, September 9, 2018. Accessed 2/22/19 Increased customer focus has also spurred the development of personalized products and services. For example, 25 years ago, buying a set of golf clubs was a relatively simple process: you chose a set based on price and feel. Today there are golf clubs for tall and short golfers,
page 17 putters for players who tend to cut the ball and putters for those who throw the ball, high-tech putters with the latest metallurgical breakthrough that guarantees increased distance and so on. Project management is vital to both developing customized products and services and maintaining profitable customer relationships. Small Projects Are Big Problems The speed of change required to stay competitive or simply keep up has created an organizational climate in which hundreds of projects are being implemented simultaneously. This climate has created a multi-project environment and a plethora of new problems. Sharing and prioritizing resources across a project portfolio is a major challenge for senior management. Many companies have no idea of ​​the problems associated with ineffective small project management. Small projects usually involve as much or more risk as large projects. Small projects are considered to have little impact on results because they do not require large amounts of scarce resources and/or money. Because many small projects are done simultaneously and because the impact of inefficiency is small, measurement of inefficiency is often non-existent. Unfortunately, many small projects soon add up to large sums of money. Many customers and millions of dollars are lost each year on small projects in product and service organizations. Small projects may represent hidden costs that are not measured in the accounting system. Organizations with many small projects running simultaneously face the most difficult project management problems. A key question is how to create an organizational environment that supports managing multiple projects. A process is needed to prioritize and develop a portfolio of small projects that support the organization's mission. Project Management Today: A Social-Technical Approach
page 18LO 1-5 Understand that project management involves balancing the technical and socio-cultural dimensions of the project Managing a project is a multidimensional process (see Figure 1.4). The first dimension is the technical side of the management process, which consists of the formal, disciplined and purely logical parts of the process. This technical dimension includes project planning, scheduling and control. Clear project scope statements are written to link the project to the client and facilitate planning and control. Creating deliverables and work breakdown structures makes it easier to plan and track project progress. The work breakdown structure serves as a database that connects all levels of the organization, key deliverables, and all tasks—even the tasks in a work package. The results of design changes are documented and traceable. Thus, any change in a part of the design can be traced back to the source through the system's built-in connections. This comprehensive information approach can provide all project managers and the client with decision information appropriate to their level and needs. A successful project manager will be well trained in the technical side of project management. FIGURE 1.4A Socio-Technical Approach to Project Management
The second contrasting dimension is the socio-cultural side of project management. In contrast to the organized world of project planning, this dimension includes the much messier, often contradictory and paradoxical world of implementation. It focuses on creating a temporary social system within a larger organizational environment that combines the talents of a diverse set of professionals working to complete the project. Project managers must foster a project culture that encourages teamwork and high levels of personal motivation, as well as the ability to quickly identify and resolve issues that threaten project work. Things rarely go as planned, and project managers need to be able to get the project back on track or change directions when necessary. The socio-cultural dimension also includes managing the interface between the project and the external environment. Project managers have to meet and shape client expectations, garner political support from senior management, negotiate with functional colleagues, monitor subcontractors, and so on. Overall, the manager must build a cooperative social network among a diverse set of allies with different standards, commitments, and perspectives. Some suggest that the technical dimension represents the "science" of project management, while the sociocultural dimension represents the "art" of managing a project. To be successful, a manager must be a master
page 19 both. Unfortunately, some project managers worry about the planning and technical side of project management. Often their first real exposure to project management is through project management software and they fall in love with network charts, Gantt charts and performance variances. trying to manage a project remotely. On the other hand, there are other managers who manage projects by the seat of their pants, relying heavily on charisma and organizational politics to get a project done. Good project managers work with others to balance their attention to the technical and sociocultural aspects of project management. Summary Project management is a critical skill in today's world. A project is defined as a one-time, non-routine effort, limited by time, resources and performance specifications, designed to meet customer needs. One of the distinguishing features of project management is that it has a beginning and an end and generally consists of four phases: definition, planning, execution and closure. Successful implementation requires technical and soft skills. Project managers must plan and budget projects, as well as orchestrate the contributions of others. Text Overview This text was written to provide the reader with a comprehensive socio-technical understanding of project management. The text focuses on the science and art of project management. Following this introductory chapter, Chapter 2 focuses on how organizations evaluate and select projects. Particular attention is paid to the importance of aligning project selection with the company's mission and strategy. the culture of an organization affects the implementation of projects. The next six chapters focus on developing a plan for the project. After all, project success starts with a good plan. Chapter 4 deals with defining the scope of the project and developing a work breakdown structure (WBS).
The challenge of formulating cost and time estimates is the subject of Chapter 5. Chapter 6 focuses on using the information from the WBS to create a project plan in the form of a web of timed and sequenced activities. 7 Consider how organizations and managers identify and manage risks associated with project work. Resource allocation is added to the plan in Chapter 8, with particular attention to how resource constraints affect the project schedule. After a resource schedule is established, a staged project budget is developed. Finally, Chapter 9 examines strategies for reducing (“locking in”) project time before starting or in response to problems or new requirements placed on the project. In all these technical discussions, socio-cultural aspects are highlighted. Chapters 10 to 12 focus on project implementation and the socio-cultural side of project management. Chapter 10 focuses on the role of the project manager as a leader and emphasizes the importance of managing project stakeholders within the organization. Chapter 11 focuses on the core project team. combines the latest information on team dynamics with leadership skills/techniques to develop a high performing project team. Chapter 12 continues the topic of project stakeholder management, discussing how to outsource project work and negotiate with contractors, clients, and suppliers. The project life cycle concludes with Chapter 14, which covers project closure and important performance and lessons learned evaluation. Agile project management, a much more flexible approach to managing projects with a high degree of uncertainty, is the subject of Chapter 15. Finally, many projects today are global. Chapter 16 focuses on cross-cultural project work. Throughout this text, you will be exposed to the main aspects of the project management system. However, a true understanding of project management does not come from knowing the scope statement or the critical path or working with contractors, but from understanding how the various elements of the project management system interact to determine the destination of a project. project. If by the end of this text you understand and begin to master both the technical and the sociocultural
Page 20dimensions of project management, you should have a clear competitive advantage over other candidates working in the field of project management. Key TermsAgile Project Management (PM Agile), 13Program, 7Project, 6Project Lifecycle, 9Project Management Professional (PMP), 4Review Questions1 . Here is a project. What are five characteristics that help differentiate projects from other functions performed in the day-to-day operations of the organization?2. What are some of the key environmental forces that have changed the way projects are managed? What was the effect of these forces on project management?3. Describe the four phases of the traditional project life cycle. Which level do you think would be the hardest to complete?4. What types of projects is Agile PM best suited for and why? The technical and sociocultural dimensions of project management are two sides of the same coin. Explain.SNAPSHOT Questions for discussion1.1 The Project Management Institute
1. If you were a student interested in pursuing a career in project management, how important would it be to be a CAPM?2. What value do you think it is to be certified as a PMP? 1.3 London Calling: Seattle Seahawks v Oakland Raiders1. Why was it important to give the players and staff a chance to explore London overnight?2. What are one or two lessons you learned from this Snapshot?1.4 Ron Parker1. Do you agree with Ron Parker's statement "To be successful, you must also be willing to face problems/opportunities when everyone else is running away from them"? Exercises 1. Scan the front page of your local newspaper and try to identify all the projects in the articles. How many did you manage to find? 2. Identify individually what you consider to be humanity's greatest achievements of the past five decades. Now share your list with three to five other students in the class and create an expanded list. Consider these great achievements in defining a project. What does your analysis suggest about the importance of project management?3. Identify individual projects assigned to previous periods. Were the socio-cultural and technical elements factors of success or difficulties in the projects?4. Check out the Project Management Institute home page at www.pmi.org.a. Review general information about PMI as well as member information.b. See if there is a local PMI chapter. If not, where is the nearest?
page 21c. Use the search function on the PMI home page to find information about the Project Management Body of Knowledge (PMBOK). What are the main cognitive areas of PMBOK? d. Explore other links offered by PMI. What do these links say about the nature and future of project management? -Bass, 2001) Darnell, R., “The Emerging Role of the Project Manager”, PMNetwork, 1997. Derby, C., and O. Zwikael, “The Secret of (Defining) Success”, PMNetwork, August 2012, p 20–22. Gray, Clifford, "Program Management, a Primer," PM World Today, Aug. 2011, pp. 1–7. Jonas, D., "Empowering project portfolio managers: How management involvement affects project performance", International Journal of Project Management, vol. 28, no. 8 (2010), pp. 818–31. Mortensen, M. and H.K. Gardner, “The OvercommittedOrganization,” Harvard Business Review, September/October 2017, pp. 58–65. Peters, T., PM Network, January 2004, p. 19. PMI/Agile Alliance, Agile Practice Guide (Chicago: Independent Publishers Group, 2017). Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK) (Newton Square, PA: PMI Publishing, 2017).
page 22 Project Management Institute, Leadership in Project Management Annual (Newton Square, PA: PMI Publishing, 2006). Schwaber, K., Agile Project Management with Scrum (Redmond, WA: Microsoft Press, 2004). The Standish Group, CHAOS Summary 1995 (Dennis, MA: Standish, 1995). The Standish Group, CHAOS Summary 2009 (Dennis, MA: Standish, 2009). Stewart, T.A., “The Corporate Jungle Spawns a New Species: The Project Manager,” Fortune, September 1996, pp. 14–15. Case 1.1A Day in the Life—2019 Troy, the manager of a large information systems project, arrives at another office early to take care of work before her colleagues and the project team arrive. However, as she enters the office, she meets Neil, one of her fellow project managers, who also wants to start his day early. Neil has just completed a project abroad. They spend 10 minutes socializing and catching up on personal news. Troy goes to her desk and opens her laptop. She was at her client's place the previous day until 19:30. and has not checked her email or voicemail since 4:30 p.m. the previous day. She has 2 voicemails, 16 emails, and 10 posts in her team's Slack channel. 1 She spends 15 minutes going over her schedule and "to-do" lists for the day before answering messages that require immediate attention.
Troi spends the next 25 minutes going over project reports and preparing for the weekly meeting. Her manager, who has just arrived at the office, interrupts her. They spend 20 minutes discussing the project. He shares a rumor about a potential acquisition he heard about. She tells him that she hasn't heard anything, but she'll let him know if she does. The 9:00 project status meeting starts 15 minutes late because two team members need to complete work for a client. Several people go to the cafeteria for coffee and donuts, while others discuss last night's baseball game. Team members arrive and the remaining 45 minutes of the progress review meeting raise project issues that need to be addressed and set for action. After the meeting, Troy walks down the hall to meet Victoria, another IS project manager. They spend 30 minutes going over project assignments as the two share staff. Victoria's project is behind schedule and she needs help. Troi offers to free up some of the team's time to help them get back on track. Troy returns to the office, makes several phone calls and returns several emails before heading downstairs to visit with her project team members. Your intent is to follow up on an issue raised in the status report meeting. However, it's simple: "Hey guys, how's it going?" elicits a stream of disgruntled responses. After listening patiently for more than 20 minutes, he notices that, among other things, several of the client's managers are starting to request features that were not included in the original project scope statement. She tells her folks she'll deal with it right away. Back at the office, she tries to call her colleague, John, at the client company, but is told he won't be back from lunch for an hour. Just then, Eddie shows up and says, "How about lunch?" Eddie works in the finance office and they spend the next half hour in the company cafeteria gossiping about internal politics. He is surprised to learn that Jonah Johnson, the systems project manager, may be joining another company. Jonah has always been a powerful ally. He goes back to the office, answers a few more emails, updates Slack, and finally gets John. They spend 30 minutes to deal with the problem. The conversation ends with John promising to do some research and get back to her as soon as possible.
page 23 Troy walks out onto the company patio, where he sits by a stream, meditating for 30 minutes. Troy then takes the elevator to the third floor and talks to the purchasing agent assigned to her project. They spend the next 30 minutes exploring ways to get the necessary equipment to the project site ahead of schedule. It takes 15 minutes to get everyone online due to technological issues. During this time, Troi updates some emails. She spends the next hour exchanging information about the technical requirements associated with a new version of a software package they use on systems projects like hers. Troi decides to stretch her legs and walks down the hall, where she makes small talk with several of her co-workers. He goes out of his way to thank Chandra for her careful assessment at the status report meeting. She returns to find that John has left a message for her to call him back as soon as possible. She contacts John, who informs her that, according to his people, the company's marketing representative made certain promises about certain features that his system would provide. He doesn't know how this miscommunication came about, but his folks are very upset about the situation. Troi thanks John for the information and immediately heads upstairs where the marketing team resides. She asks to see Mary, a senior marketing manager. She catches Slack updates on her phone while waiting 10 minutes before being invited to her office. After a heated argument, he leaves 40 minutes later with Mary agreeing to talk to her folks about what was and wasn't promised. She goes to talk to her people to let them know what's going on. They spend 30 minutes looking at the impact customer requests can have on the project schedule. She also shares with them the time changes she and Victoria agreed upon. After saying goodbye to the team, he goes upstairs to the manager's office and spends 20 minutes briefing him on the main events of the day. He returns to the office and spends 30 minutes going through emails, the team's Slack channel, and project documents. She logs into her project's MS Project timeline and spends the next 30 minutes working on what-if scenarios. she reviews
schedule tomorrow and write some personal reminders before you start your 30 minute drive home.1. How effectively do you think Troi spent the day?2. What does the hypothesis say about what it's like to be a project manager?1 Slack is a communication program designed to manage the flow of information in a project. See slack.com.Case 1.2The Hokies Lunch Group1PART AFatma prepared for lunch at Yank Sing Chinese Restaurant. She arrived early and took the time to catch up on her emails. He will soon join Jasper and Viktoria, two fellow 2014 graduates of Virginia Tech in Blacksburg, Virginia. Jasper worked as a software engineer for a start-up that wanted to push the boundaries of the sharing economy. Viktoria was an electrical engineer working for a German healthcare company in San Francisco. They met at a Silicon Valley alumni reception hosted by Virginia Tech. They each felt a bit like fish out of water on the West Coast, so they decided to have lunch together every month. The luncheon evolved into a professional support group. Most of their jobs were project management and they found it useful to share problems and ask each other for advice. Fatma worked for a very successful internet company whose founders believed that everyone in the company should spend three days a year doing community service projects. The company worked with many companies in the construction industry to renovate abandoned buildings
page 24 low-income families. The next project was the renovation of an empty warehouse into eight two-bedroom apartments. Fatma was part of the core team tasked with planning and managing assignments. Victoria and Jasper entered the restaurant together. Viktoria was the first to move to the Bay Area. He was currently working on the Next Generation Neuronal Stimulator ("PAX 2"). Neural stimulators are electronic devices that doctors implant in patients with wires connected to pain sources in the patient's spine. In the past, patients needed surgery to change the stimulator battery every 10 years. PAX 2 was designed to take advantage of new battery technologies and use a rechargeable battery. Initially, this battery system will eliminate the need for replacement surgery and allow the implanted battery to be recharged externally. Viktoria's team had just completed the second prototype and were entering a critical testing phase. It was difficult to try to predict the life of the new rechargeable battery without testing it in real time. He couldn't wait to start seeing the test results. Jasper was working at a start-up company after doing a contract job during his first nine months in San Francisco. He was sworn to secrecy about the project and all Fatma and Viktoria knew was that the project had something to do with the sharing economy. He was working with a small development team that included colleagues from Bangalore, India and Malmö, Sweden. After ordering and chatting for a while, Fatma started the conversation. "I'll be happy when this week is over," she said. "We found it difficult to define the scope of the project. At first glance, our project seems relatively simple, building eight two-bedroom apartments in an old warehouse. But there are many unanswered questions. What kind of community space do we want to have? How efficient should the electricity system be? What kind of furniture? Everyone wants to do a good job, but when does low-income housing become middle-income housing?'' Viktoria commented, “Scoping is one of the things my company does very well. Before a project goes live, a detailed scope statement is developed that clearly defines the project's goals, priorities, budget, requirements, limits, and exceptions. All the main stakeholders agree on this. It is very important to determine priorities in advance. I know that in the PAX 2 project this field is the number one priority. I know that however long it takes, it is imperative that my work be done well."
page 25 Fatma replied, “This is exactly what my project manager is preparing for Friday's meeting. I think one of the things you have to do as a project manager is have close conversations. He'll make the tough decisions and finalize the scope of the project so we can start planning." Jasper said, “You are very lucky. for the most part, its scope remains the same. In my work, the scope is constantly changing. You show the founders a feature they wanted and they say, well, if you can do this, you can do that? You know it's going to happen, but you can't really plan for it." Jasper continued, “We know what our number one priority is: time. they work. We have to show that we're ahead if we're going to continue to get venture capital funding.”2 Jasper said that despite the pressure, his project was a lot of fun. He particularly enjoyed working with his Swedish and Indian counterparts, Axeland Raja. They worked as a global tag team on their part of the project. Jasper would code and pass his work to Raja, who would work on it and deliver it to Axel, who would ultimately deliver it to Jasper. Because of the time zones, they could have at least one person working on the code 24 hours a day. Jasper said at first it was difficult to work with someone he didn't know personally, except on a video screen. Trust was an issue. Everyone was trying to prove themselves. Eventually, a friendly competition between the group emerged. Developers exchanged funny cartoons and videos on YouTube. He showed Fatma and Victoria a YouTube video about demarcation that made everyone laugh. They made plans to meet at the next Peruvian restaurant on SE 8th Street. Viktoria opened the conversation by stating, “I have good news and bad news. The bad news is that our first prototype failed miserably in its tests. The good news is that I have a smart project manager. He knew this could happen, so
we mitigated the risk by forcing us to work on two alternative battery technologies. Alternative technology passes all tests. Instead of being months behind, we're just days behind." This prompted a discussion about risk management. Fatma mentioned that there was a two-day session on risk management for the renovation project. They spent the first day discussing what could go wrong and the second day strategizing to deal with the risks. A great help was the risk report created after the last project. The report details all the problems encountered in the last renovation project, as well as recommendations. Fatma said, "I couldn't believe how much time and attention had been given to safety, but as my project manager said, 'it only takes one serious accident to shut down a project for weeks, even months.'" Jasper reported this on its website. spent very little time on risk management. Its design was driven by a build-test mentality. "Everyone assumes that day-to-day testing irons out problems, but when it's time to integrate different features, that's when the real bugs show up," he said Jasper continued. Things weren't going well at work. They had missed their second milestone in a row and everyone was feeling pressure to deliver. "I even slept in my cabin three nights ago," Jasper confessed. Fatma he asked: "How many hours do you work?" "I don't know, at least 70, maybe 80 hours,” Jasper replied. He went on to say, “This is a high risk project with a BIG payoff if it works. I'm doing some of my best planning and we'll have to see what happens." Jasper showed them a cartoon that was circulating in his group. Yesterday." Fatma turned to her friends and said, “I need some advice. As you know, I am responsible for scheduling the work. Well, some of my colleagues are lobbying very aggressively for select assignments. Everyone wants to work next to Bruno or Ryan. Suddenly I'm everyone's friend and some go out of their way to do me a favor. I'm sure they think it will influence my decisions. It's getting weird and I'm not sure what to do." “Quid pro quo,” Jasper replied, “that's how the business world works. Of course, I haven't.
page 26 problem with someone who takes advantage of their position to gain favor and build relationships'. Viktoria said, “I disagree. You don't want to be seen as someone whose influence can be bought. You have to think about what is best for the company. You have to wonder what Bruno and Ryan would like you to do. And if you don't know, ask them." Jasper canceled the last meeting due to work, so Viktoria and Fatma watched a movie together. Jasper was the last person to arrive and it was clear from the look on his face that things were not going well. He sat down, avoiding eye contact, before blurting out, "I'm unemployed." "What do you mean?" Fatma and Victoria cried. Jasper explained that after months and months of work, they were unable to demonstrate a working product. Jasper continued, “Despite our best efforts, we couldn't deliver them. The founders couldn't get an ounce of second funding, so they decided to cut their losses and shut down the project. I spent the best six months of my life planning for nothing." Fatma and Viktoria tried to comfort their friend. Fatma asked Jasper how the others were taking the news. Jasper said that Swedish developer Axel took the news very badly. He went on to say, “I think he was burning too many bridges at home with the long hours at work and now he has nothing to show for it. He started accusing us of mistakes we never made." Raja, his Indian counterpart, was a different story. "The Raja seemed to shrug." Jasper added, "He said, 'I know I'm a good programmer. There are many opportunities here in Bangalore.” Fatma broke the silence that followed by telling Jasper, “Send me your resume. My company is always looking for top developers and it really is a great company. Can you believe it, the two founders, Bruno and Ryan, are working side by side with everyone to renovate the
page 27 warehouse? In fact, people were amazed at how good Bruno was with the cast. A big part of my job now is to schedule their time so they can work with as many different people as possible. They really want to use the project to get to know their employees. This was not easy. I had to juggle their schedules, their skills and their job opportunities.” Viktoria interjected, "Are you using Microsoft Project to do this?" "Actually, no," Fatma replied. “At first, I tried to schedule their work in Microsoft Project, but it was too tedious and time-consuming. Now I just use the project's master schedule and each of its calendars to schedule its tasks. This seems to work better." Viktoria added, “Yes, Microsoft Project is a great program, but you can get lost trying to get it to do everything. Sometimes all you need is an Excel sheet and common sense.” Victoria felt strange given what had happened to Jasper. She was just finishing the successful project PAX 2. She was also preparing for a vacation in Vietnam that she deserved to be paid for from the project bonus. "I hate finishing a project," Victoria said. "It's so boring. Document, document, document! I keep kicking myself for not keeping track of things when they happened. I spend most of my time searching my computer for files. I can't wait to leave for Vietnam." Viktoria went on to say, "The only thing I enjoyed doing was the project retrospective." Jasper asked, "What is a retrospective study?" Viktoria replied, "It's when the project team comes together and analyzes what worked and what didn't and identifies lessons learned that we can apply to future projects. For example, one of the things we learned was that we had to bring people from integrated manufacturing much earlier in the design process. We focused on designing the best possible product, regardless of cost. We discovered later that there were ways to reduce production costs without compromising quality." Fatma added, "We also do this at the end of our projects, but we call it control. 'No,' he replied, 'I'll probably go back to my department and make up
some tests. I do not worry. I did a good job. I'm sure someone will want me for their project." Jasper said, "I hope someone wants me for their next project." Fatma and Viktoria immediately jumped into action, trying to cheer up their friend. A little while later they came out of the restaurant and hugged. Fatma reminded Jasper to send her his latest resume.1. For each part (A, B, C), what stage of the project life cycle is each project in? Explain.2. What are two important things you learned about working on case projects? Why are they important?1 Hokies is the name associated with Virginia Tech's sports teams.2 Funding new venture capital. Design Elements: Snapshot from Practice, Highlight Box, Case Icon: ©SkyDesigns/Shutterstock1 It should be noted that the PMBOK also includes Incremental and Iterative as two additional approaches, which are beyond the scope of this text. Search pmi.org for more details.2 LEED certification was developed by Leadership in Energy and Environmental Design (LEED) and is one of the most popular green building certification programs used around the world.
2-12-22-32-42-52-62-72-82-9page 28CHAPTER TWO 2The Organization Project Strategy and Selection LEARNING OBJECTIVES After reading this chapter, you should be able to: Explain why it is important for project managers to understand the strategy of their organization. Identify the important role that projects contribute to the strategic direction of the organization. Understand the need for a project prioritization system. Distinguish between three types of projects. Describe how the phase gate model applies to project management. Application of financial and non-financial criteria to evaluate the value of projects. Understand how multi-criteria models can be used to select projects. Apply an objective priority system for project selection. Understand the need to manage the project portfolio.
2.12.22.32.42.52.62.72.8page 29 SUMMARY Why project managers need to understand strategy The Strategic Management Process: An Overview The need for a project priority system Schedule Phase ranking Gate Model selection criteria Applying a strategic model selection Managing a system.
page 30 — Lee Bolman, professor of leadership, University of Missouri – Kansas City. Strategy is essentially deciding how the organization will compete. Organizations use blueprints to translate strategy into the new products, services, and processes needed for success. For example, Intel's main strategy is differentiation. Intel has projects to create specialty chips for products other than computers, such as automobiles, security, cell phones, and air traffic control. Another strategy is to reduce project cycle times. Procter and Gamble, NEC, General Electric and AT&T reduced their cycle times by 20% to 50%. Toyota and other automakers are now able to design and develop new cars in two to three years instead of five to seven. Projects and project management play a key role in supporting strategic objectives. It is vital for project managers to think and act strategically. Aligning projects with the organization's strategic goals is critical to business success. The current economic climate is unprecedented due to rapid changes in technology, global competition and financial uncertainty. These conditions make strategy/project alignment even more essential to success. The larger and more diverse an organization is, the more difficult it is to create and maintain a strong link between strategy and projects. How can an organization secure this bond? The answer requires integrating the projects with the strategic plan. Inclusion presupposes the existence of a strategic plan and a process for prioritizing projects according to their contribution to the plan. A key factor in ensuring the successful integration of the plan with the projects is an open and transparent selection process for evaluation by all participants. This chapter provides an overview of the importance of strategic planning and the process of developing a strategic plan. Typical problems that occur when strategy and projects are not linked are noted. It then discusses a general methodology that ensures integration by creating strong project selection links and prioritizing the strategic plan. The intended results are clear organizational focus, better use of the organization's scarce resources (people, equipment, capital), and improved communication between projects and departments.
2.1 Why Project Managers Need to Understand Strategy LO 2-1 Explain why it is important for project managers to understand their organization's strategy. Historically, project management was only concerned with planning and executing projects. The strategy was reviewed under the purview of top management. This is old school thinking. New school thinking recognizes that project management sits at the top of strategy and operations. Shenhar addresses this issue when he says, “It's time to expand the traditional role of the project manager from an operational perspective to a more strategic perspective. In the modern, evolving organization, project managers will focus on the business aspects and their role will expand from working to achieving business results and winning the market.”1 There are two main reasons why project managers need to understand mission. and organization strategy. The first reason is so that they can make appropriate decisions and adjustments. For example, how a project manager would respond to a proposal to modify a product's design to improve performance varies depending on whether your company is trying to be a product leader through innovation or achieve operational excellence through low cost . Similarly, how a project manager would react to delays may vary depending on strategic concerns. A project manager will authorize overtime if your company offers a premium to get to market first. Another project manager will accept delay if speed is not necessary. The second reason project managers need to understand their organization's strategy is so they can be effective project advocates. Project managers must be able to demonstrate to senior management how their project contributes to their company's mission in order to gain their continued support. Project managers must be able to explain to stakeholders why
page 31 Certain project goals and priorities are crucial to ensure participation in controversial exchange decisions. Finally, project managers need to explain why the project is important to motivate and empower the project team (Brown, Hyer, & Ettenson, 2013). are discussed below.2.2 The Strategic Management Process: An Overview LO 2-2Identify the important role that projects contribute to the strategic direction of the organization. Strategic management is the process of assessing 'what we are' and deciding and implementing 'what we intend to become and how we intend to get there'. Strategy describes how an organization intends to compete with available resources in the current and perceived future environment. Two main dimensions of strategic management are responding to changes in the external environment and allocating the company's scarce resources to improve its competitive position. Constantly monitoring the external environment for changes is an important condition for survival in a dynamic competitive environment. The second dimension is the internal responses to new action programs aimed at improving the company's competitive position. The nature of the responses depends on the type of business, the volatility of the environment, the competition and the organizational culture. Strategic management provides the theme and focus of the organization's future direction. Supports consistency of action at all levels of the organization. It encourages integration because efforts and resources are committed to common goals and strategies. Check out the practice shot
2.1: Does IBM Watson's Jeopardy Project Represent a Change in Strategy? Strategic management is an ongoing, iterative process aimed at developing an integrated and coordinated long-term plan of action. It positions the organization to meet the long-term needs and demands of its customers. By identifying the long-term position, goals are defined and strategies are developed to achieve the goals and then translated into action through project implementation. Strategy can decide the survival of an organization. Most organizations can formulate strategies for the lessons to be followed. However, the problem in many organizations is implementing strategies - that is, making them happen. Integration of strategy formulation and implementation is often missing. The elements of strategic management are closely related and all are directed towards the future success of the organization. Strategic management requires strong links between mission, goals, objectives, strategy and implementation. The mission gives the overall purpose of the organization. Objectives provide general objectives within the mission. Goals provide specific goals for goals. Goals lead to the formulation of strategies to achieve the goals. Finally, strategies require actions and tasks to be implemented. In most cases, actions to be taken represent projects. Figure 2.1 shows a summary of the strategic management process and the key activities involved. FIGURE 2.1 Strategic management process
page 32 Four Activities of the Strategic Management Process The typical sequence of activities in the strategic management process is described here. a description of each activity follows.1. Review and definition of the organizational mission.2. Analyze and formulate strategies.3. Set goals to achieve strategies.4. Implementation of strategies through projects.
PRACTICAL MOMENT 2.1 Does IBM's Watson's Jeopardy project represent a change in strategy?*IBM's investment in artificial intelligence has paid off. In February 2010, millions of people were glued to their TVs to watch IBM's Watson best two former Jeopardy quiz champions. Watson performed at human expert levels in terms of accuracy, confidence and speed during the program. strategic direction for IBM? In fact. The Watson project is just one manifestation of the shift from computing hardware to a services strategy a decade ago. WATSON PROJECT DESCRIPTION Artificial intelligence has come a long way in recent years. Watson surpasses IBM's chess supercomputer of the late 1990s. Chess is finite, logical, and easily reducible to mathematics. Watson's work is ambiguous and involves dealing with the abstraction and casual nature of language. Since Watson's system can understand natural language, it can extend the way humans interact with computers. The IBM Watson project took three years of intensive research and development by a core team of about 20 people. over 200 million pages of structured and unstructured data and a program capable of performing trillions of operations per second. With this backup of information, attack a risk question by breaking the question down into small pieces. With the query resolved, the program searches for the relevant data. Using hundreds of decision rules, the program generates possible answers. These answers are given a degree of confidence to decide whether Watson should risk offering an answer and how much to bet. Watson's AI work is versatile and suggests a wide range of opportunities in fields such as finance, medicine, law enforcement and defense. Other mobile app extensions that connect to Watson servers also have great potential. IBM focused on providing healthcare solutions and started planning this program.
page 33 SeanGallup/Getty Images To create a "dispensary" program you would probably follow a Watson-like design platform. For example, it could extract data from current medical documents to create a knowledge base. Integration of individual patient information. Use advanced system analyzes to select relevant data. Use decision rules to provide physicians with diagnostic options. every choice. Building a medical consulting solution will not replace doctors. While the system has immense potential, it is human-made and relies on database, data analysis and decision rules to select options. With the input of the medical consultant, a trained physician makes the final diagnosis of the patient to complement the physical examination and experience. The Watson project provides IBM with a flexible component to continue its decade-long strategy of moving IBM from computer hardware to service products.*D. Ferrucci, E. Brown, J. Chu-Carroll, J. Fan, D. Gondek, A. Kaylanp, A. Lally, J. Murdock, E. Nyborg, J. Prager, N. Schaefer, and C. Wetty, “ Building Watson," AImagazine, Fall 2010, pp. 59–79. Review and Definition of Organizational Mission Mission defines "what we want to be" or why we exist Mission statements define the organization's scope in terms of its product or service. A written mission statement provides focus for decision-making when it is shared by the organization's managers and employees. Everyone in the organization must be fully aware of the organization's mission. For example, in a large consulting firm, partners who cannot recite the shipping statement to order they are asked to pay for lunch.The shipment
page 34statement communicates and defines the purpose of the organization to all interested parties. Mission statements can be used to evaluate the organization's performance. Traditional elements found in mission statements are core products and services, customers and target markets, and geographic area. In addition, statements often include organizational philosophy, core technologies, public image, and contribution to society. Including these factors in mission statements is directly related to business success. Shipping statements rarely change. However, when the nature of the business changes or changes, it may be necessary to revise the mission and strategy statements. More specific mission statements tend to yield better results because of the tighter focus. Mission statements reduce the possibility of false instructions from interested parties. For example, compare the wording of the following mission statements: To provide hospital design services. Provision of data mining and analysis services. Provision of IT services. We provide high value products to our customer. Clearly, the first two statements leave less room for misinterpretation than the others. A practical test of a mission statement is that if the statement can be anyone's mission statement, it will not provide the intended direction and focus. Mission sets the parameters for goal development. Analyze and formulate strategies Strategizing answers the question of what needs to be done to achieve goals. Strategy formulation involves defining and evaluating alternatives that support the organization's goals and selecting the best alternative. The first step is a realistic assessment of the company's past and current position. This step usually involves an analysis of “who are the customers” and “what are their needs as they (customers) see them.
page 35 The next step is to assess the internal and external environment. What are the company's internal strengths and weaknesses? Examples of internal strengths or weaknesses are core competencies such as technology, product quality, management talent, low debt, and dealer networks. Managers can change internal strengths and weaknesses. Opportunities and threats often represent external forces for change, such as technology, industry structure, and competition. Competitive benchmarking tools are sometimes used to assess current and future directions. Opportunities and threats are the other side of each other. That is, a threat can be perceived as an opportunity or vice versa. Examples of perceived external threats are economic slowdowns, life cycle maturation, exchange rates, and government regulation. Typical opportunities are growing demand, emerging markets and demographics. Managers or individual firms have limited opportunities to influence such external environmental factors. However, notable exceptions have been new technologies such as Apple using the iPod to create a marketplace for selling music. The key is to try to anticipate fundamental changes in the industry and stay in a proactive rather than a reactive mode. This assessment of the external and internal environment is known as a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. From this analysis, critical issues and strategic alternatives are identified. Critical analysis of strategies involves asking questions: Does the strategy take advantage of our core competencies? Does the strategy exploit our competitive advantage? Does the strategy maximize the satisfaction of customer needs? Does the strategy fit our acceptable risk range? These strategic alternatives boil down to a few critical points that support the core mission. Strategy formulation ends with sequential goals or projects assigned to subordinate departments, divisions, or individuals. Formulating strategy can account for about 20% of management effort, while determining how to implement strategy can consume 80%. Organizational goals set goals for all its levels
organization. Goals indicate the direction managers believe the organization should take. Goals detail where a company is going and when it will get there. Organizational objectives typically cover markets, products, innovation, productivity, quality, finance, profitability, employees, and consumers. In all cases, goals should be as functional as possible. That is, goals must include a time frame, be measurable, be an identifiable state, and be realistic. Doran (1981) created the memory device shown in Figure 2.1, which is useful when writing goals. A person for completion R Realistic situation of what can realistically be done with available resources T Time-related situation when the goal can be achieved, e.g. this is often called a goal cascade. For example, if a company that manufactures leather bags sets a goal of achieving a 40% increase in sales through a research and development strategy, this charge is passed on to the Marketing, Production and Research and Development departments. The R&D Department accepts the company's strategy as its goal, and its strategy becomes the design and development of a new "hidden and folding wheeled traction luggage". At that point, the goal becomes a project to accomplish—to bring the rollaway luggage to market in six months on a budget of $200,000. In short, organizational goals drive projects. , given the available resources. The conceptual framework for strategy implementation lacks the structure and discipline present in strategy formulation. The app requires action and task completion. The latter often means mission-critical projects. Therefore, the application must include attention to several key areas.
page 36 First, task completion requires resources. Resources typically represent capital, people, managerial talent, technological skills, and equipment. Too often, project implementation is treated as an "add-on" rather than an integral part of the strategic management process. However, multiple goals place conflicting demands on organizational resources. Second, implementation requires a formal and informal organization that complements and supports the strategy and projects. Authority, responsibility and performance depend on the organization's structure and culture. Third, planning and control systems must be in place to require certain project activities to ensure that strategies are executed effectively. Fourth, the motivation of the project partners will be an important factor in the success of the project. Finally, the areas that have received the most attention in recent years are portfolio management and project prioritization. Although the strategy implementation process is not as straightforward as strategy formulation, all managers realize that without implementation, success is impossible. has changed radically in the last two decades. Global competition and rapid innovation require it to be highly adaptable to short-term changes while being consistent over the long term. problems. Three of the most obvious problems are discussed in this section. A priority-driven project portfolio system can go a long way in reducing or even eliminating the impact of these issues. Problem 1: The implementation gap
In many organizations, top management formulates strategy and leaves the implementation of the strategy to functional executives. Within these general constraints, more detailed strategies and objectives are developed by functional managers. The fact that these goals and strategies are made independently at different levels by functional groups within the organizational hierarchy causes several problems. The following are some symptoms of organizations struggling with strategic disconnection and unclear priorities. to establish or renegotiate priorities. People often switch from one project to another depending on their current priority. Employees are confused about which projects are important. People work on multiple projects and feel ineffective. Resources are not enough. As there are no clear links between strategy and action, the organizational environment becomes dysfunctional, confusing and conducive to inefficient implementation of strategy and, therefore, the organization of projects. The implementation gap is the lack of understanding and consensus of the organization's strategy among senior and middle management. Here's a scenario that writers have seen play out many times. Top management selects its top 20 projects for the next planning period, without prioritization. Each functional department—Marketing, Finance, Operations, Engineering, Information Technology, and Human Resources—selects projects from the list. Unfortunately, the priorities of the independent departments in the projects are not homogeneous. A project that is ranked #1 in the IT Department may be ranked #10 in the Finance Department. Project implementation represents a conflict of interest, with the development of hostilities for organizational resources. If this condition exists, how is it possible to implement the strategy effectively? The problem is serious. One study found that only about 25% of Fortune 500 executives believe there is a strong connection, consistency, and/or alignment between the strategies they formulate and implement. In a study by Deloitte Consulting, MacIntyre states,
page 37 "Only 23 percent of some 150 global executives felt that their project portfolios were aligned with the core business." This is especially true when the project selection criteria and process are not well defined and do not align with the company's mission. Project selection may be based not so much on facts and sound reasoning, but on the persuasiveness and strength of the people who defend the projects. The term sacred cow is often used to denote a project championed by a powerful, high-ranking official. In this case, a marketing consultant confided that he was once hired by the marketing director of a large company to conduct an external, independent market analysis of a new product the company was interested in developing. Their extensive research showed that there was not enough demand to justify funding this new product. The marketing director chose to bury the report and made the consultant promise never to share this information with anyone again. The manager explained that this new product was a "pet idea" of the new CEO, who saw it as his legacy to the company. The director went on to describe the CEO's irrational obsession with the project and how he referred to it as his "new baby". The marketing manager believed he would lose his job if this critical information became known, like an overprotective parent. Project sponsors play an important role in the successful selection and implementation of product innovation projects. Project sponsors are usually senior executives who support and provide political support for the completion of a particular project. It is vital for project approval and securing the project during the critical development stage. The importance of project sponsors should not be underestimated. For example, a global PMI survey of more than 1,000 project professionals and leaders across all industries found that organizations with active sponsors on at least 80% of their projects/programs have a 75% success rate, 11 percentage points above the average of the survey 64%. . Many promising projects failed due to lack of strong sponsorship.3
page 38 The importance of corporate politics can be seen in Xerox's ill-fated ALTO computer project in the mid-1970s.4 The project was a huge technological success. developed the first viable mouse, the first laser printer, the first user-friendly software, and the first local area network. All these developments were five years ahead of their nearest competitor. Over the next five years, this opportunity to dominate the nascent personal computer market was lost due to infighting within Xerox and the absence of a strong project sponsor. (Apple's Macintosh computer was inspired by many of these developments.) Politics can play a role not only in the selection of projects but also in the ambitions behind the projects. Individuals can increase their power within an organization by managing exceptional and critical projects. Power and prestige naturally go to successful innovators and risk-takers rather than consistent producers. Many ambitious managers pursue high-profile projects as a means of quickly climbing the corporate ladder. Many would argue that politics and project management should not be mixed. A more proactive answer is that projects and politics always interact and that effective project managers recognize that any important project has political implications. Similarly, senior management must develop a system for identifying and selecting projects that reduces the impact of internal politics and promotes the selection of the best projects for the company. Problem 3: Resource Conflicts and Multitasking Most projects operate in a multi-project environment. This environment creates the problems of project interdependence and the need to share resources. For example, what would be the impact on a construction company's labor pool if it won a contract it wanted to bid on? Will the existing workforce be adequate to handle the new project - given the completion date? Will current projects be postponed? Will subcontracting help? Which projects will be prioritized? Competition between project managers can be contentious. All project managers seek to have the best people for their projects. Resource sharing and resource scheduling issues between projects grow exponentially as the number of projects increases. In multi-project environments, the stakes are higher and the rewards or
Penalties for good or bad resource planning become even more significant than in most individual projects (Mortensen & Gardner, 2017). Resource sharing also leads to multitasking. Multitasking involves starting and stopping work on one task to switch to work on another task and then return to work on the original task. People who work on multiple tasks at the same time are much less efficient, especially when conceptual or physical stopping and starting is important. Multitasking increases delays and costs. Changing priorities further exacerbates multitasking problems. Similarly, multitasking is more evident in organizations that have too many projects for their resources. The number of small and large projects in a portfolio almost always exceeds the available resources. This capacity overload inevitably leads to confusion and inefficient use of scarce organizational resources. The presence of an application, the political power and the multitasking gap add to the problem of which projects get funding first. Employee morale and confidence suffer because an ambiguous system is difficult to understand. A multi-project organizational environment faces major problems without a prioritization system clearly linked to the strategic plan. See Appendix 2.2, which lists some of the key benefits of Project Portfolio Management. the list could easily be extended. APPENDIX 2-2 Advantages of Project Portfolio Management It builds discipline into the project selection process. Connects project selection to strategic metrics. It prioritizes project proposals on a common set of criteria rather than politics or sentiment. Allocates resources to projects that align with strategic direction. Balances risk across projects. It justifies the removal of projects that do not support the organization's strategy. Improves communication and supports agreement on project goals. 2.4 Project Classification
page 39 LO 2-4 Distinguish between three types of projects. Many organizations find that they have three main types of projects in their portfolio: compliance (emergency-mandatory), operational, and strategic projects. (See Figure 2.2.) Compliance projects are typically those required to meet the regulatory requirements required to operate in an area. Therefore, they are called "mandatory" projects. Emergency projects, such as rebuilding an auto parts factory destroyed by a tsunami or restoring a damaged network, are examples of mandatory projects. Compliance and contingency projects often have penalties if they are not implemented. FIGURE 2.2 Project Classification Business projects are those required to support current operations. These projects are designed to improve the efficiency of delivery systems, reduce product costs and improve performance. Some of these projects, due to their limited scope and cost, require only immediate administrator approval, while larger, more expensive projects require extensive review. Choosing to install new equipment is an example of the latter, while modifying a production process is an example of the former. Total quality management (TQM) projects are examples of operational projects. Strategic projects are those that directly support the organization's long-term mission. They often aim to increase revenue or
page 40 market share. Examples of strategic projects are new products, new technologies, and research and development.5 Often these three classifications are broken down by product type, organizational units, and functions that require different criteria for project selection. For example, the same criteria for the Finance or Law Department will not apply to the IT Department. This often requires different project selection criteria within the three main classifications of strategic, operational and compliance projects. 2.5 Phase Gate Model LO 2-5 Describe how the phase gate model is applied to project management. this process in perspective. The selection process is the first part of the management system that covers the life of the project. This system has been described as a series of gates that a project must pass through in order to be completed.6 The goal is to ensure that the organization invests time and resources in valuable projects that contribute to its mission and strategy. Each gate is associated with a project phase and represents a decision point. A gate can lead to three possible outcomes: go (continue), kill (cancel), or recycle (revise and resubmit). Figure 2.3 depicts the phase gate model.FIGURE 2.3 Phase Gate Process Diagram
The first gate is invisible. It takes place inside the head of someone who has an idea for a project and must decide if it's worth the time and effort to present a formal proposal. This decision may be a gut reaction or involve informal research. Such research may include brainstorming with colleagues or participating in online surveys. It helps if the organization has a transparent project selection process where the objectives and requirements for approval are well known. If the individual believes their idea has merit, then a project proposal is submitted according to the company's selection guidelines. Project proposals, as you'll see, include things like project goals,
page 41, estimated costs, return on investment, risks and resource requirements. Beyond the basic question of whether the proposal makes sense, management evaluates how the project's results will contribute to the company's mission and strategy. For example, what strategic goals does the project address? A second key question is "How well does the project fit with other projects?" Will this affect other more important projects? Here, the final question is whether this project deserves further planning. If the preliminary proposal is approved, a project manager and team will be assigned to develop a more comprehensive implementation plan. The preliminary proposal is revised and expanded. The plan now includes detailed information about schedule, cost, resource requirements, risk management, and so on. Not only is the proposal reassessed for its strategic importance, but the implementation plan is also scrutinized. Does the design make sense? Do the numbers add up? Is it worth the risk? How much confidence is there in the plan? If so, the green light is given to start the project. Once the project is complete, there will likely be one or more progress reviews. The main purpose of the progress review is to assess performance and determine what adjustments, if any, need to be made. In some cases, a decision is made to cancel or "kill" a project due to poor performance or lack of relevance. The last gate is the finish line. Here, the necessary customer acceptance has been achieved and management has approved the fulfillment of project requirements. This step includes a project audit to assess the success of the project as well as identify key lessons learned. It should be noted that this is the basic phase gate model. For many companies, projects will go through a series of tiered internal reviews before receiving final approval. This is especially true for projects that have high risks, high costs, and/or require scarce resources. Similarly, the number of progress gates will vary depending on the duration and importance of the projects. For example, a three-year US Department of Defense project will have progress reviews every six months. The remainder of this chapter focuses on gates 2 and 3, which lead to a project being given the go-ahead. Performance data for evaluating progress is the subject of Chapter 13, while the final gateway is covered in Chapter 14.
page 422.6 Selection Criteria LO 2-6 Apply financial and nonfinancial criteria to evaluate the value of projects. Selection criteria are usually specified as financial and non-financial. A brief description of each is provided below, followed by a discussion of their use in practice. Economic Criteria For most managers, economic criteria are the preferred method for evaluating projects. These models are appropriate when there is a high level of confidence associated with estimates of future cash flows. This section presents two models and examples - return and net present value (NPV). Project A has an initial investment of $700,000 and projected cash flows of $225,000 in 5 years. Project B has an initial investment of $400,000 and projected cash flows of $110,000 over 5 years.1. The payback model measures the time it will take to recover the investment of the project. Shorter returns are more desirable. Payback is the simplest and most widely used model. Performance emphasizes cash flow, a key factor in business. Some managers use the payback model to eliminate unusually risky projects (those with long payback periods). The main limitations of amortization are that it ignores the time value of money, assumes cash inflows for the investment period (rather than after), and does not take into account profitability. The payback formula is Exhibit 2.3A compares the payback of project A and project B. The payback of project A is 3.1 years and that of project B is 3.6 years. Using the amortization method both plans are acceptable as they both return the original value
page 43 investments in less than five years and have ROIs of 32.1 and 27.5 percent. Payback provides particularly useful information for companies concerned with liquidity and sufficient resources to manage their financial obligations. APPENDIX 2.3 Example of a comparison of two projects using the Microsoft Excel payback method2. The net present value (NPV) model uses management's desired minimum rate of return (a discount rate of, say, 15%) to calculate the present value of all net cash inflows. If the result is positive (the project achieves the minimum desired rate of return), it is eligible for further consideration. If the result is negative, the project is rejected. Thus, higher positive NPVs are desirable. Excel uses this formula: whereI0=Initial investment (since this is an outflow, the number will be negative) Ft=Net cash inflow for the period tk=Required rate of return n=number of years
Appendix 2.3B presents the NPV model using Microsoft Excel software. The NPV model accepts project A, which has a positive NPV of $54,235. Project B is rejected because the NPV is negative $31,263. Compare NPV results with performance results. The NPV model is more realistic because it takes into account the time value of money, cash flows and profitability. APPENDIX 2.3 Example of Comparing Two Projects Using the Microsoft Excel Net Present Value Method In the NPV model, the discount rate (minimum rate of return on investment [ROI]) may differ for different projects. For example, the expected return on investment (ROI) on strategic projects is often defined as higher than on operational projects. Similarly, ROI can differ between riskier and safer projects. The criteria for determining the ROI percentage must be clear and applied consistently. Unfortunately, purely economic models fail to include many projects where economic performance is impossible to measure and/or other factors are critical to the accept or reject decision. Research by Fotis (2003) showed that companies using primarily financial models to prioritize projects created unbalanced portfolios and projects that were not strategically oriented. Non-financial criteria Financial performance, although important, does not always reflect strategic importance. In the past, companies overworked by over-diversifying
page 44 very. Now, the prevailing thinking is that long-term survival depends on developing and maintaining core competencies. Companies must be disciplined to say no to potentially profitable projects that fall outside the scope of their core mission. This requires consideration of criteria other than immediate financial return. For example, a company may support projects that do not have high profit margins for other strategic reasons, including to capture a larger market share, to make it difficult for competitors to enter the market, to develop a favorable product, which upon its introduction will increase sales in more profitable products. Develop core technology to be used in next-generation products. Reduce dependence on unreliable suppliers. Prevent government intervention and regulation. Less tangible criteria can also be applied. Organizations can support projects to restore corporate image or increase brand awareness. Many organizations are committed to corporate citizenship and support community development projects. Two multi-criteria control models Because no single criterion can reflect strategic importance, portfolio management requires multi-criteria control models. Two models, the checklist and multiple rating weight models, are described below. LO 2-7 Understand how multicriteria models can be used to select projects. Checklist Templates The most commonly used project selection method is the checklist. This approach basically uses a list of questions to screen potential projects and determine acceptance or rejection. Several of the typical questions answered in practice are listed in Appendix 2.4.
APPENDIX 2.4 Examples of choice questions used in practice TopicQuestionStrategy/alignment What specific organizational strategy does this project align with?DriverWhat business problem does the project solve?SponsorshipWho sponsors the project?Risk What is the impact of not undertaking this project?RiskHow risky is the project?Benefits, value, ROIWhat is the value of the project to this organization?Benefits, value, ROIWhen will the project show results?GoalsWhat are the project goals?Organizational culture Is our organizational culture appropriate for this type of project ; ResourcesWill internal resources be available for this project?ScheduleHow long will this project take?Financial/PortfolioWhat is the estimated cost of the project?PortfolioHow does this project interact with current projects? flexibility to choose from many different project types, designs and are easily used in different departments and locations. Although many projects are audited using some variation of the checklist approach, this approach has serious shortcomings. Its main disadvantages are that it fails to address the relative importance or value of a potential project to the organization and does not allow for comparison with other potential projects. Each potential project will have a different set of positive and negative responses. How do you compare? Ranking and prioritizing works based on their importance is difficult, if not impossible. This approach also leaves the door open to the potential opportunity for power games, politics and other forms of manipulation. To overcome these serious shortcomings, experts recommend the use of a multi-weighted rating model for project selection, which will be discussed below. Multiweight Scoring Models A weighted scoring model typically uses multiple weighted selection criteria to evaluate project proposals. Weighted scoring models often include qualitative and/or quantitative criteria. Each selection criterion is assigned a weight. Scores are assigned to each criterion for the project, based on this
page 45 significance for the project being evaluated. The weights and scores are multiplied to obtain an overall weighted score for the project. Using these multiple screening criteria, projects can be compared using the weighted score. Projects with a higher weighted score are considered better. Selection criteria should reflect an organization's critical success factors. For example, 3M has set a target of 25% of the company's sales coming from products less than four years old, up from the old target of 20%. Its priority system for selecting projects strongly reflects this new goal. On the other hand, failure to select the right factors will render the screening process useless in no time. See Practice Case 2.2: IT crisis. CASE STUDY 2.2 IT Crisis*In May 2007, Frontier Airlines Holdings hired Gerry Coady as Chief Information Officer (CIO). Nearly a year later, the airline filed for Chapter 11 bankruptcy. In an interview, Coady describes how he managed IT projects during the 2008–2009 bankruptcy and recession crisis. Basically, Coady faced a situation with too many projects and too few resources. strategy to focus on reducing the number of projects in the portfolio. He assembled a top management steering committee that reviewed several hundred projects. The end result was a reduction to less than 30 projects remaining in the portfolio. Delays increase over time. Sacred Cow projects are included in the selection system. Projects suggested by people who have left the airline are still in the project portfolio. Projects with no added value somehow end up in the project portfolio. Soon the queue grows. With everyone in IT working on multiple projects at the same time, project completion and productivity are slow. WHICH WORKS REMAIN? and customer service. The weighting scheme easily eliminated the fluff. Coady observed that "as you get into your 20s, the margin for differentiation gets narrower and narrower."
Of the remaining projects, project sponsors had to have a solid justification of why their project was important. Reducing the number of projects with an emphasis on high-value projects kasto/123RF WHAT COADY HAS ADVICE FOR CRISIS MANAGEMENT In times of crisis, it's easier to take bold steps to make changes. But you need to have a clear vision of what to focus on with the available resources. Coady suggests, "You need to have a good idea of ​​what the initial business case for a project is and what resources it consumes, both from people and from other areas."*B. Worthen, “Crisis IT,” Wall Street Journal, April 20, 2009, p. 6. Figure 2.4 represents a project scoring table using some of the factors encountered in practice. Selected screening criteria appear at the top of the table (eg staying within core competencies...18 percent higher return on investment). Management weights each criterion (a value from 0 to a maximum of, say, 3) based on its relative importance to the organization's goals and strategic plan. Project proposals are then submitted to a project priority group or project office.
page 46 Each project proposal is then assessed for its relative contribution/added value to the selected criteria. Each criterion for each project is assigned values ​​from 0 to a maximum of 10. This value represents the appropriateness of the project to that criterion. For example, project 1 seems to fit well with the organization's strategy, as it receives a value of 8. On the other hand, project 1 does not support defect reduction (its value is 0). Finally, this model applies management weights to each criterion by importance using a value from 1 to 3. For example, return on investment and strategic fit are weighted 3, while urgency and core competencies are weighted 2. Applying a weight to each criterion, the group's priority is derived the weighted total of points for each project. For example, project 5 has the highest value of 102 [(2 × 1) + (3 × 10) + (2 × 5) + (2.5 × 10) + (1 × 0) + (1 × 8 )+ (3 × 9) = 102] and project 2 has a low value of 27. If available resources create a cutoff of 50 points, the priority group will eliminate projects 2 and 4. Project 5 will receive first priority, project no. two and soon. In rare cases where resources are very limited and project proposals are similar in the weighted ranking, it is prudent to choose the project that requires the fewest resources. Weighted multicriteria models like this are quickly becoming the dominant choice for project prioritization. At this point in the discussion, it is wise to stop and put things in perspective. Although choice models like the one in this section can perform
page 47 numerical solutions for design selection decisions, the models should not make the final decisions — the people using the models should. No model, no matter how sophisticated, can capture the full reality it purports to represent. Standards are tools that guide the evaluation process so that decision-makers consider relevant issues and reach consensus on which projects should be supported. This is a much more subjective process than calculations suggest.2.7 Apply a Selection Model LO 2-8 Apply an objective prioritization system to project selection. functions). However, experience shows that most organizations use similar criteria across all project types, perhaps with one or two criteria specific to the project type—for example, strategic versus operational innovation. Regardless of the differences in criteria between different project types, the most important selection criterion is the fit of the project with the organization's strategy. Therefore, this criterion should be consistent across all project types and take high priority over other criteria. This uniformity across all priority models used can prevent departments from sub-optimizing the use of organizational resources. Project proposals should be classified by type so that appropriate criteria can be used to evaluate them. Model selection In the past, economic criteria were used almost to the exclusion of other criteria. However, the last two decades have witnessed a dramatic
change to include multiple criteria in project selection. In short, profitability alone is not simply an adequate measure of contribution. However, it is still an important criterion, especially for projects that increase revenue and market share, such as innovative R&D projects. produce the best possible use of human resources and capital to maximize long-term return on investment. Factors such as research into new technologies, public image, ethical standing, environmental protection, core competencies and strategic fit can be important criteria for project selection. Weighted scoring criteria appear to be the best alternative to meet this need. Weighted scoring models result in projects being more aligned with strategic goals. If the grading model is published and available to everyone in the organization, project selection will have some discipline and credibility. The number of resource-wasting projects is reduced. The politics and works of the sacred cow are exposed. Project objectives are more easily identified and communicated using selection criteria as support. Finally, using a weighted scoring approach helps project managers understand how their project was selected, how their project contributes to the organization's goals, and how it compares to other projects. Project selection is one of the most important decisions for the future success of an organization. Project selection criteria is where the power of a portfolio begins to manifest. New projects are aligned with the organization's strategic goals. With a clear project selection method, project proposals can be requested. Sourcing and Request for Project Proposals As you can imagine, projects should come from anyone who believes their work will add value to the organization. However, many organizations restrict proposals from specific levels or groups within the organization. This may be a missed opportunity. Good ideas are not limited to specific types or categories of stakeholders in the organization. Figure 2.5A provides a sample proposal form for a public transport vehicle automatic tracking project (Automatic Vehicle Location). Figure 2.5B presents a preliminary risk analysis for 500-acre wind
farm. Many organizations use risk analysis templates to get a quick picture of the risks inherent in a project. Risk factors depend on the organization and type of projects. This information is useful for balancing the project portfolio and identifying key risks during project execution. Project risk analysis is the subject of Chapter 7. FIGURE 2-5 AA proposal form for Automated Vehicle Monitoring (AVL) Public Transport Project
FIGURE 2.5 BARIsk analysis for a 500-acre wind farm
page 48 page 49 In some cases, organizations will solicit project ideas when the knowledge requirements for the project are not available within the organization. Typically, the agency will issue a Request for Proposal (RFP) to contractors/suppliers with sufficient experience to carry out the project. In one example, a hospital published an RFP requesting a bid for the design and construction of a new operating room that uses the latest technology. Several architectural firms submitted proposals to the hospital. Project proposals were internally evaluated against other potential projects. When the project was immediately accepted, other criteria were used to select the most suitable bidder.
Ranking Proposals and Project Selection Selecting so many proposals to determine which ones add the most value requires a structured process. Figure 2.6 shows a flowchart of a screening process that begins with the submission of a formal project proposal.7 A senior priority team evaluates each proposal for feasibility, potential contribution to strategic goals, and fit with a current project portfolio. Given the selection criteria and the current portfolio, the priority group rejects or accepts the project. FIGURE 2.6 Project Screening Process If the project is approved, a project manager and team are assigned to develop a detailed implementation plan. Once completed, the proposal with an implementation plan is reviewed a second time. Veteran Project Managers
page 50 are assigned to the priority group. They rely on their experience to spot potential flaws in the design. Strategic value is again assessed, but in the context of a more detailed plan. Variations between what was estimated in the original proposal and final estimates based on more thorough research/design are reviewed. If significant negative differences are found (for example, the original total cost estimate was $10 million, but the final estimate was $12 million, or the final product will no longer include a key feature), the proposal will likely be deferred to higher management. to decide whether the project should be approved. Otherwise, the project is approved and prioritized. Management issues a letter authorizing the project manager to form a project team and secure resources to begin project work. Figure 2.7 is a partial example of an evaluation form used by a large company to prioritize and select new projects. The form distinguishes between mandatory and desirable targets. If a project does not meet its specified "mandatory" goals, it will not be considered and will be removed from consideration. The organization's (or department's) goals were ranked and weighted based on their relative importance - for example, "Improve external customer service" has a relative weight of 83 compared to other desired goals. The desired goals are directly linked to the goals found in the strategic plan. FIGURE 2.7 Priority Sorting Analysis
page 51 Impact definitions represent a further refinement of the classification system. They were developed to assess the expected impact that a particular project would have on achieving a particular objective. A numerical scheme is created and established by defining criteria. To illustrate how this works, let's look at the new sales goal of $5 million. A "0" is assigned if the project has no sales impact or is less than $100,000, a "1" is assigned if projected sales are greater than $100,000 but less than $500,000, a "2" if greater than $500,000 . These impact assessments are combined with the relative importance of each objective to be determined
page 52a the expected overall contribution of the project to the strategic objectives. For example, project 26 creates an opportunity to fix field issues, has no impact on sales, and will have a significant impact on customer service. For these three objectives, project 26 will receive a score of 265 [99 + 0 + (2 × 83)]. The individual weighted scores are summed for each project and used to prioritize projects. Prioritization Responsibility Senior management should be responsible for prioritizing projects. It requires more than a blessing. Management should rank and weigh, in specific terms, the goals and strategies it believes are most critical to the organization. This public statement of commitment can be risky if the goals listed later turn out to be poor choices, but setting the course for the organization is the job of top management. The good news is that if management is truly trying to move the organization to a strong future position, a good project prioritization system supports their efforts and develops a culture in which everyone contributes to the organization's goals.2.8 Project Management System Portfolio LO 2- 9 Understanding the need for project portfolio management Portfolio management takes the selection system to a higher level, as the merits of a particular project are evaluated against existing projects. At the same time, it involves monitoring and adjusting selection criteria to reflect the organization's strategic focus. This requires constant effort. The priority system can be managed by a small group of key employees in a small organization. Or, in larger organizations, the priority system may be managed by the project office or a senior governance group.
Managing a portfolio system requires two key inputs from senior management. First, senior management should provide guidance in establishing selection criteria that are closely aligned with the organization's current strategies. Second, senior management must decide annually how they want to balance available organizational resources (people and capital) across different types of projects. A preliminary balance decision should be made by senior management (eg 20% ​​compliance, 50% strategic, 30% operational) prior to project selection, although the balance may change when submitted plans are reviewed . Given this input, the priority group or project office can carry out its many responsibilities, which include supporting project sponsors and representing the interests of the entire organization. Responsibilities of the Governance Team The governance team, or project office, is responsible for publicizing the priority of each project and for ensuring an open and free from political power process. For example, most organizations that use a governance group or project office use an electronic bulletin board to post their current portfolio of projects, the current status of each project, and current issues. Such open communication discourages power plays. Over time, the governance team assesses the progress of the projects in the portfolio. If this entire process is managed properly, it can have a profound impact on the success of an organization. See Practice Case 2.3: Project Code Names for the rationale behind the titles given to projects. Continuous monitoring of the external environment to determine whether organizational focus and/or selection criteria need to change is imperative. Periodic review and changes in priorities must keep pace with the changing environment and maintain a unified view of the organization's focus. If projects are classified according to must-do, operational and strategic, then each project in its category must be evaluated by the same criteria. Implementation of the project priority system is critical. Keeping the entire system open and honest is important to maintaining the integrity of the system and preventing new recruits from bypassing the system. Balancing risk portfolio and project types
page 53 One of the priority team's primary responsibilities is balancing projects by type, risk, and resource demand. This requires a holistic perspective of the organization. Therefore, a proposed project that ranks high on most criteria may not be selected because the organization's portfolio already includes many projects with the same characteristics—for example, project risk level, use of key resources, high cost, unproductive income, and long duration. Project portfolio balancing is just as important as project selection. Organizations must evaluate each new project in terms of what it adds to the project mix. Short-term needs must be balanced against long-term possibilities. Resource utilization must be optimized across all projects, not just the most important project. PRACTICAL MOMENT 2.3 Project codenames* What do Yangtze, Operation Iceberg and Get Blue have in common? They are all code names given to projects. Project codenames are used for several reasons: To uniquely identify the project within the organization. Apple Corporation used to name major versions of MAC OS X after big cats like Jaguar, Tiger, Panther, and Leopard, but now names them after national parks (eg Yosemite). To help maintain project confidentiality against competing concerns. The Oxcart was used by the US Department of Defense at the height of the Cold War for the secret development of a supersonic fighter. As a public relations tool to rally support for the project's goals, Operation Just Cause was the name given by the US government to the 1989 invasion of Panama that overthrew corrupt leader Manual Noriega. To inspire and elevate performance. Revolution was used by Nintendo for the revolutionary Wii video game console. playful sense of humor. For example, a set of interrelated software projects are named after Smurf characters (Papa Smurf, Handy Smurf, Dreamy Smurf, and so on). Other times, the project name reflects an inside joke—for example, a software project was called ALINA, which was an acronym for At Least It Is Not Access.
McGraw-Hill Education/Jill Braaten, photographer*G. C. Sieminski, "The Art of Naming Operations," Parameters, Fall 1995, pp. 81–98; "Operation Know-It-All: The Essential Guide to Choosing Good Project Names," articulatemarketing.com. Accessed 12/20/15. Two types of risk are associated with projects. First are the risks associated with the overall project portfolio, which should reflect the organization's risk profile. Second are project-related risks that can prevent a project from being carried out. In this chapter, we seek only to balance the organizational risks inherent in the project portfolio, such as market risk, execution capability, time to market, and technological developments. Project-related risks will be covered in detail in Chapter 7. David and Jim Matheson studied R&D organizations and developed a classification system that could be used to evaluate a portfolio of projects (see Figure 2.8).8 They separated the projects based on degree of difficulty and commercial value and created four main types of projects: FIGURE 2.8 Project Portfolio Table
page 54 Core projects are relatively easy to complete and generate moderate business value. They usually include evolutionary improvements to current products and services. Examples include software upgrades and efforts to reduce production costs. Pearls are low-risk development projects with high commercial returns. They represent revolutionary business advances using proven technology. Examples include state-of-the-art integrated circuit chips and subsurface imaging for oil and gas exploration. Oysters are high-risk, high-value projects. These projects involve technological advances with huge commercial potential. Examples include fetal DNA treatments and new types of metal alloys. White elephants are projects that once looked promising but are no longer viable. Examples include products for a saturated market and a powerful energy source with toxic side effects. The Mathesons report that organizations often have too many white elephants and too few pearls and oysters. To maintain strategic advantage, they recommend that organizations leverage pearls, eliminate or reposition white elephants, and balance resources devoted to bread and oyster projects to achieve alignment with overall strategy.
page 55 Although their research focuses on R&D organizations, their observations appear to apply to all types of project organizations.emergence of project portfolio management that provides the infrastructure for managing multiple projects and linking business strategy to project selection. The most important element of this system is the creation of a ranking system that uses multiple, weighted criteria that reflect the company's mission and strategy. It is important to communicate the priority criteria to all stakeholders in the organization so that the criteria can inspire new project ideas. Each major project selected must be classified and the results published. Senior management should take an active role in setting priorities and supporting the priority system. Ignoring the priority system will destroy its effectiveness. Project review boards must include experienced managers who can ask tough questions and distinguish fact from fiction. Resources (people, equipment, and capital) for major projects must be clearly allocated and not conflict with day-to-day operations or become overwhelming tasks. The governance team must consider important projects in terms of not only their strategic value, but also their fit with the portfolio of projects currently being implemented. High-scoring projects can be delayed or even rejected if they disrupt the current balance between risk, resources, and strategic initiatives. Project selection should be based not only on the merits of the particular project, but also on what it contributes to the current project portfolio mix. This requires a holistic approach to align projects with the organization's strategy and resources. Basic Terms
Implementation Gap, 36 Net Present Value (NPV), 41 Organization Policy, 37 Depreciation, Gate Model 41 Stages, 40 Priority System, 36 Priority Group, 45 Project Portfolio, 36 Project Sponsor, 37 Sacred Cow, Issuesview 37Strate, 37Sacred Cow, 37Review . Describe the main components of the strategic management process.2. Explain the role that projects play in the strategic management process.3. How do the projects relate to the strategic plan?4. The project portfolio is typically represented by compliance, strategic and operational projects. What impact might this ranking have on project selection?5. Why does the priority system described in this chapter require it to be open and published? Does the process encourage bottom-up project initiation? Discourage some projects? Why; 6. Why should an organization not rely solely on ROI for project selection?7. Discuss the advantages and disadvantages of the checklist versus the weighted factor method of project selection. PRACTICAL MOMENT Discussion questions
page 562.1 Does IBM's Watson's Jeopardy Project Represent a Change in Strategy?1. Why does IBM want to move from computer hardware to service products?2. What will be the impact of artificial intelligence (AI) on the field of project management?2.2 Crisis IT1. How does Frontier Airlines benefit from using a weighted scoring system to evaluate the value of projects? 2.3 Project codenames1. Can you think of a project code name that is not mentioned in the snapshot? What function did it serve?Exercises1. You manage a hotel resort located in South Beach on the island of Kauai, Hawaii. You are shifting the focus of your resort from a traditional fun-in-the-sun destination to ecotourism. (Ecotourism focuses on environmental awareness and education.) How would you rate the following projects in terms of compliance, strategy, and functionality? O. Conversion of a swimming pool heating system from electric to solar.b. Create a six-kilometer nature trail. w. Renovate the barn.d. Start a new promotional campaign with Hawaii Airlines.e. Convert 12 adjacent acres into a wildlife refuge.f. Update all bathrooms in apartments that are 10 years old or older. G. Modify hotel brochures to reflect the image of ecotourism.h. Test and revise your disaster response plan based on new requirements. How easy was it to sort these projects? What made some projects more difficult than others? Now you know what you think
page 57 would be useful for hotel project management?2. Two new software projects are proposed to a new start-up.* Project Alpha will cost $150,000 to develop and is expected to have an annual net cash flow of $40,000. Project Beta will cost $200,000 to develop and is expected to have an annual net cash flow of $50,000. The company is very concerned about its cash flow. Using the payback period, which project is better in terms of cash flows? Why; 3. A five-year project has projected net cash flows of $15,000, $25,000, $30,000, $20,000, and $15,000 over the next five years. The implementation of the project will cost US$ 50,000. If the required rate of return is 20%, perform a discounted cash flow calculation to determine the NPV.4. You work for the 3T company, which expects to earn at least 18% of your investments. You have to choose between two similar projects. The diagram below shows the framework information for each project. Which of the two projects would you finance if the decision was based solely on financials? Why; 5. You are the head of the project selection team at SIMSOX.* Your team is considering three different projects. Based on history, SIMSOX expects a rate of return of at least 20%. Given the following information for each project, what should be SIMSOX's first priority? Should SIMSOX fund any of the other projects? If so, what should be the order of priority based on return on investment?
Project: Dust DevilsYear Investment Revenue Stream0 $500,000 $   01  50,0002 250,0003 350,000 Project: OspreyYear Investment Revenue Stream0 $250,000 5,000 50,000 $75,0004 50,000 0 0 Project: VoyagersYear Investment Revenue Stream0 $75,000 1 15.0002 25.0003 50, 0004 50 .0005 150.0006. You are the head of the project selection team at Broken ArrowRecords. Your team is considering three different recording projects. Based on history, Broken Arrow expects a return rate of at least 20%. Given the following information for each project, what should be Broken Arrow's first priority? If Broken Arrow funds any of the
page 58 the other works? If so, what should be the order of priority based on return on investment? Record Project: Time Disappears Year Investment Income Stream0 $600,000 $    01 600,0002  75,0003  20,0004  15,0005  10,000  10,000  10,000  10,000 $4000 Record Project on the Beach:  01 400.0002 100.0003  25.0004  20.0005  10.000 Record project: Tonight's the NightYear Investment Investment flow0 $200.000   01 200.0002 125.0003  75.0004  20 . 0005  10,000
page 597. Custom Bike Company created a weighted scoreboard to evaluate potential projects. Here are five projects under consideration.a. Using the scoreboard in the chart below, which project would you rank highest? Lower? SI. If the weight of "Strong Sponsor" changes from 2.0 to 5.0, will the project selection change? What are the three highest weighted project scores with this new weight? w. Why is it important that the weights reflect critical strategic factors?*The solution to these exercises can be found in Appendix 1. Project Screening MatrixReferencesAdler, P. S., et al., “Getting the most out of Your Product Development Process,” Harvard Business Review , vol. 74, no. 2, 2003, pp. 134–52.
Benko, C., and F. W. McFarlan, Connecting the Dots: AligningProjects with Objectives in Unpredictable Times (Boston: Harvard Business School Press, 2003). Boyer, C., “Make Profit Your Priority”, PM Network, October 2003, σελ. 37–42.Brown, K., N. Hyer and R. Ettenson, “The Question Every ProjectTeam Should Answer,” Sloan Management Review , τόµ. 55, όχι. 1(2013), p. 49–57. Cohen, D., and R. Graham, The Project Manager's MBA (Jossey-Bass, 2001), p. 58–59. Descamps, J.P., «Mastering the Dance of Change: Innovation as a Way of Life», Prism, Second Quarter, 1999, σελ. 61–67. Floyd, S. W. and B. Woolridge, “Managing Strategic Consensus: The Foundation of Implementation Effectiveness,” Academy of Management Executives, τομ. 6, όχι. 4 (1992), σ. 27–39.Foti, R., “Louder Than Words,” PM Network, December 2002, σσ. 22–29.Foti, R., “Make Your Case, Not All Projects Are the Same, ” PM Network, July 2003, σελ. 35–43. Friedman, Thomas L., Hot, Flat, and Crowded (New York: Farrar, Straus and Giroux, 2008). Helm, J. and K. Remington, “ Effective Project Sponsorship: An Evaluation of the Executive Sponsor in Complex Infrastructure Projects by Senior Project Managers,” Project Management Journal, vol. 36, αρ. 1 (September 2005), σσ. 51–61. Hutchens, G., “Doing the Numbers,” PM Network, March 2002, σελ. 20. “To IBM Want to Put or Watson in Its Purse,” Bloomberg Businessweek, September 17 to 23, 2012, σελ. 41 to
σελίδα 60 Johnson, R. E., “Scrap Capital Project Evaluations”, Chief Financial Officer, maio de 1998, p. 14. Kaplan, R. S., e D. P. Norton, «The Balanced Scorecard — Measures That Drive Performance», Harvard Business Review, janeiro/fevereiro de 1992, σελ. 73–79. Kenny, J., “Effective Project Management for Strategic Innovation and Change in a Organizational Contexto”, Project Management Journal, vol. 34, αρ. 1 (2003), σσ. 45–53. Kharbanda, O. P. e J. K. Pinto, What Made Gertie Gallop: Learning from Project Failures (Nova York: Van Nostrand Reinhold, 1996), σελ. 106–11, 263–83. Korte, R. F. e T. J. Chermack, «Changing Organisational Culture with Scenario Planning», Futures, vol. 39, αρ. 6 (agosto de 2007), σελ. Press, 2000). Magretta, Joan, Understanding Michael Porter: The Essential Guideto Competition and Strategy (Boston: Harvard Business Press, 2011).Milosevic, D. Z., and S. Srivannaboon, «A Theoretical Framework for Aligning Project Management with Business Strategy», ProjectManagement Journal, vol. 37, αρ. 3 (agosto de 2006), σελ. 98–110. Morris, P. W. e A. Jamieson, «Moving from Corporate Strategy to Project Strategy», Project Management Journal, vol. 36, αρ. 4 (dezembro de 2005), σσ. 5–18. Mortensen, M., e H. K. Gardner, «The OvercommittedOrganization», Harvard Business Review, setembro/outubro de 2017, σελ. 58–65. Motta, Silva e Rogério Hermida Quintella, «Avaliação de Critérios Não Financeiros na Seleção de Projetos de Investimento para Financiamento de Capital Semente: A Contribuição da Cientometria e
Patentometrics, Journal of Technology Management Innovation, vol.7, no. 3 (2012). Raskin, P., et al., Great Transitions: The Promise and Lure of the Times Ahead, www.gtinitiative.org/documents/Great_Transitions.pdf Accessed 6/3/08 Schwartz, Peter, and Doug Randall, "An Abrupt Climate Change Scenario and its Implications for United States National Security, Global Business Network, Inc., October 2003. Shenhar, A., "Strategic Project Leadership: Focusing Your Project on Business Success", Proceedings of the Project Management Institute Annual Seminars and Symposium , San Antonio, Texas, October 3-10, 2002, CD Swanson, S., “All Things Considered,” PM Network, February 2011, pp. 36– 40. Case 2.1 Hector Gaming Company Hector Gaming Company (HGC) is a educational gaming company specializing in educational games for young children. HGC has just completed its fourth year of operation. This year has been a landmark year for HGC. The company received a large inflow of growth capital by issuing shares privately through an investment bank. It looks like the return on investment last year will be just over 25% with zero debt! The growth rate in the last two years has been around 80% per year. Parents and grandparents of young children buy HGC products almost as soon as they grow up. All members of the 56 person company are excited and eager to help the company grow and become the biggest and best educational game company in the world. Company founder Sally Peters joined Young
page 61 Entrepreneurs as 'the new entrepreneur to watch'. He succeeded in developing an organizational culture in which all stakeholders are committed to innovation, continuous improvement and organizational learning. Last year, 10 senior HGC executives worked with McKinley Consulting to develop the organization's strategic plan. This year, the same 10 managers had a retreat in Aruba to formulate next year's strategic plan using the same process suggested by McKinley Consulting. Most executives seem to have a consensus on where the company should go in the medium and long term. But there is little consensus on how this should be done. Peters, now president of HGC, feels he may be losing control. The frequency of conflicts seems to be increasing. Some people are always requested for every new project created. When resource conflicts occur between projects, each project manager believes that their project is the most important. More projects are missing deadlines and over budget. Yesterday's management meeting revealed that some of HGC's top talent is working on an international business game for students. This project does not fit the organization's vision or market position. Sometimes it feels like everyone marches to the beat of their own drum. Somehow more focus is needed to ensure that everyone agrees on how to implement the strategy given the resources the organization has. Yesterday's meeting worried Peters. These emerging issues come at a bad time. Next week, HGC will increase the size of the organization, the number of new products per year and marketing efforts. Fifteen new people will be joining the HGC next month. Peters is concerned about adopting policies that ensure new people are used more productively. An additional potential problem looms on the horizon. Other gaming companies have noted the success that HGC has in its niche market. a company sought to hire a key product development employee at HGC. Peters wants HGC to be ready to face any potential competition and discourage new entrants into its market. Peters knows that HGC is task-oriented. However, she's not so sure she knows how to manage such an organization - especially with such a rapid growth rate and potential competition closer to becoming a reality. The magnitude of the emerging problems demands rapid attention and resolution.
page 62 Peters hired you as a consultant. Suggest the following format for your consulting engagement. You can use another format if it improves the efficiency of the consulting work. What is our main problem? Identify some symptoms of the problem. What is the root cause of the problem? Provide a detailed action plan that attacks the problem. Be specific and give examples related to HGC. Case 2.2 Prioritizing Films The purpose of this case is to provide you with experience using a project prioritization system that ranks proposed projects according to their contribution to the organization's goals and strategic plan. COMPANY PROFILE The company is the film division of a major entertainment conglomerate. The main office is located in Anaheim, California. In addition to the feature film division, the group includes theme parks, home video, channel television, interactive games and theatrical productions. The company has experienced steady growth over the past 10 years. Last year, total revenue rose 12% to $21.2 billion. The company is in talks to expand its theme park empire in mainland China and Poland. The film division generated revenue of $274 million, which represented an increase of 7% year over year. The profit margin fell from 3% to 16% due to poor response in three of the top five movie releases of the year.
COMPANY MISSION The company's mission statement is as follows: Our primary goal is to create shareholder value by continuing to be the world's leading entertainment company from a creative, strategic and financial perspective. -quality family entertainment movies for mass distribution every year. In recent years, the company's CEO has argued that the company will take a leadership position in advocating for environmental concerns. COMPANY "MUST" OBJECTIVES Every project must meet mandatory objectives set by executive management. It is important that the selected film projects do not infringe on such high strategic priority objectives. There are three mandatory objectives: 1. All designs meet applicable legal, safety and environmental standards.2. All motion pictures must be rated PG or lower.3. All projects must not adversely affect current or planned operations within the larger company. OBJECTIVES "WISHES" OF THE COMPANY Desired objectives are weighted by their relative importance. Top management is responsible for formulating, ranking and weighting objectives to ensure that projects support the company's strategy and mission. Here is a list of the company's desired goals: 1. Be nominated and win an Oscar for Best Picture or Best Picture of the Year.2. Generate additional revenue from merchandise (action figures, dolls, interactive toys, music CDs).3. Increase public awareness of environmental issues and concerns.4. Generate profit greater than 18 percent.5. Promote the latest technology in motion picture animation and maintain the reputation of the company.6. Provide the foundation for the development of a new attraction at a company-owned theme park.
page 63 REPORT You are part of the priority team tasked with evaluating and selecting film proposals. Use the provided evaluation form to formally rate and rank each proposal. Be prepared to report your assessments and justify your decisions. Assume all projects have exceeded the estimated ROI hurdle rate of 14%. In addition to a brief synopsis of the film, the proposals include the following financial projections for theatrical and video sales: 80% ROI probability, 50% ROI probability, and 20% ROI probability. For example, for proposition #1 (Dalai Lama), there is an 80% chance that at least an 8% ROI will be achieved, a 50/50 chance that the ROI is 18%, and a 20% chance that the ROI is 24%. DALAI LAMA This project is an animated biographical account of the Dalai Lama's childhood in Tibet based on the popular children's book Stories from Nepal. The Lama's life is told through the eyes of "Guoda", a field snake and other local animals who befriend the Dalai Lama and help him understand the principles of Buddhism. Probability 80% 50% 20% ROI  8% 18% 24% PROJECT PROPOSAL 2: HEIDI The project is a remake of the classic children's story with music written by award-winning composers Syskle and Obert. The big-budget film will feature famous stars and stunning backdrops of the Swiss Alps. Probability 80% 50% 20% ROI  2%  2% 30%
page 64 PROJECT PROPOSAL 3: THE YEAR OF ECHO This project is a low-budget documentary celebrating the career of one of the most influential bands in rock and roll history. The film will be directed by new wave filmmaker Elliot Cznerzy and will combine concert footage and behind-the-scenes interviews spanning the 25-year history of rock band The Echos. In addition to the great music, the film will focus on the death of one of the founding members from a heroin overdose and will reveal the underworld of sex, lies and drugs in the music industry. Probability 80% 50% 20% ROI 12% 14% 18 %PROJECT PROPOSAL 4: JAPUNI RIVER ESCAPE This project is an animated film set in the Amazon rainforest. The story revolves around Pablo, a young jaguar who tries to convince the warring jungle animals that they should unite and escape the destruction of the local clearing. Probability 80% 50% 20% ROI 15% 20% 24% PROJECT PROPOSAL 5: NÁDIA! The story of Nadia Comaneci, the famous Romanian gymnast who won three gold medals at the 1976 Summer Olympics. The low-budget film will chronicle her life as a young child in Romania and how she was selected by the Romanian authorities to join the elite program the state track and field. The film will highlight how Nadia maintained her independent spirit and love for gymnastics despite a strict and rigid training schedule. Probability 80% 50% 20% ROI  8% 15% 20% Project Prioritization Assessment Form
PROJECT PROPOSAL 6: KEIKO – A STORY OF A WHALE The story of Keiko, a famous killer whale, will be told by a fictional daughter, Seiko, who in the distant future tells her children about her famous grandfather. The big-budget film will incorporate real footage of the whale into a realistic animation environment using state-of-the-art footage.
page 65 computer images. The story will reveal how Keiko responded to her human treatment. Probability 80% 50% 20% ROI  6% 18% 25% PROJECT PROPOSAL 7: GRAND ISLAND This project is the true story of a group of elementary school biology students who discover that a fertilizer plant is dumping toxic waste into a nearby river. The modest-budget film depicts how students organize a grassroots campaign to fight the local bureaucracy and eventually force the fertilizer plant to restore the local ecosystem. Probability 80% 50% 20% ROI  9% 15% 20% Case 2.3 Fundraising Project Selection The purpose of this “case exercise” is to give you experience using a project selection process that ranks proposed projects for their contribution to the mission of a organization and strategy. . Each student will join a team of five to seven students who will be responsible for creating, planning and executing a fundraising project for a designated charity. The fundraising project has two objectives: (1) to raise money for a
page 66 and (2) provides an opportunity for all team members to practice project management skills and techniques. These traditions include a. Project proposal b. Implementation Plan Risk Management Plan. Status report Presenting project concernsf. Retrospective/Project Audit Approved projects will receive an initial capital of $250 that will be repaid upon project completion. "MANDATORY" OBJECTIVES Each project must meet the "mandatory" objectives specified by the instructor. There are four mandatory goals: 1. All projects must be safe, legal, and conform to university policies. 2. All projects must be able to earn at least $500.3. All projects must be able to be completed in nine weeks.4. All projects should provide an opportunity for each project team member to experience and learn about project management. the extent to which the team will need to work with external stakeholders and the complexity of the project. "WANT" GOALS In addition to mandatory goals, there are also "WANT" goals that the trainer would like to achieve. 1. Win more than $500 for a charity.2. Increase public awareness of charity.3. Provide students with an experience worthy of the curriculum.
4. Appear on local TV news.5. Be entertaining. ASSIGNMENT You are part of the class priority team responsible for evaluating and approving fundraising projects. Use the proposal evaluation form provided to formally evaluate and rank each proposal. Be prepared to state your rating and justify your decision. You may assume that these projects will be done at your university or college. FUNDRAISING PROPOSALS PROJECT PROPOSAL 1: STRIKES FOR HOPE The project is a three-on-three basketball tournament to raise money for the Down Syndrome Association. The tournament will consist of three groups: mixed, men's and women's. There will be an entry fee of $40 per team and additional funds will come from the sale of commemorative t-shirts ($10). Winning teams will receive gift baskets made up of donations from local businesses and restaurants. The event will take place at the university's recreation center. PROJECT PROPOSAL 2: SINGING FOR SMILE The project will hold a celebrity-judged karaoke contest at a popular night club on campus. Funds will be raised with $5 admission at the door and a raffle for prizes donated by local businesses. The money will go to Smile Train, an international organization that performs cleft lip surgery at a cost of $250 per child. The event will feature photos of children born with cleft lips, and for every $50 earned, a puzzle piece will be added until the original photo is covered with a smiley face. PROJECT PROPOSAL 3: HALO FOR HEROES The project will be a Halo video game competition held over the weekend using the college's large screen online classrooms. Teams of four players will compete in an elimination tournament, with the grand prize being a Sony Play Station 4 donated by a local video game store. Entry fee is $24 per team and individual players will be eligible to play
page 67 in the bracket of a loser for $5. All proceeds will go to the National Military Family Association PROJECT PROPOSAL 4: RAFFLE FOR LIFE Organize a raffle contest. Raffle tickets will be sold for $3 each, with the winning ticket worth $300. Each of the six team members will be responsible for selling 50 raffle tickets. All proceeds will go to the American Cancer Society. PROJECT PROPOSAL 5: HOLD'EM FOR HUNGER Host a Texas Hold'em poker tournament in a campus cafeteria. It will cost $20 to enter the tournament with a $15 buy-in. Prizes include $300, $150 and $50 gift certificates to a major department store. 50% of the gift vouchers will be paid for from entry tickets, with the remaining 50% awarded by the store. All players will be eligible to win two tickets to the men's and women's basketball games. The money raised will go to the local food shelter. PROJECT PROPOSAL 6: BUILD YOUR OWN BOX The aim of this project is to raise awareness of the plight of homelessness. Students will donate $10 to participate in building and housing a paper city in the university yard for one night. Building materials will be provided by local recycling centers and hardware stores. Hot soup will be provided by the team at midnight to all participants. Proceeds go to the local homeless shelter. Project Priority Assessment Form
Design elements: practice snapshot, highlight box, case icon: ©SkyDesigns/Shutterstock1 Shenhar, A. and Dov Dvie, Reinventing Project Management (Boston: Harvard BusinessSchool Press, 2007), p. 5.2 MacIntyre, J., “Stroke of Strategy” , PM Network, November 2006, pp. 32–35.
3 PMI, “PMI’s Pulse of the Profession”, Project Management Institute, março de 2012, σελ. 7.4 Smith, D. K. e R. C. Alexander, Fumbling the Future: How Xerox Invented, then Ignored the First Personal Computer (Nova York: Macmillan, 1988). ., B. Hobbs και J. R. Turner, “Aligning Capability with Strategy: Categorizing ofProjects to Do the Right Projects and Do Them Right”, Project Management Journal, vol.37, αρ. 2 (junho de 2006), σελ. 38–50.6 O modelo original stage-gate teve como pioneiro R. G. Cooper em Product Leadership: Creating and Launching Superior New Products (Cambridge, MA: Perseus, 2000).7 Συμβουλευτείτε την εικόνα 123. um modelo para avaliando empreiteiros.8 Matheson, D. e J. Matheson, The Smart Organization (Boston: Harvard BusinessSchool Press, 1998), σελ. 203–09.
3-13-23-33-43-53-63-7page 68CHAPTER THREE 3Organization: Structure and Culture LEARNING OBJECTIVES After reading this chapter, you should be able to: Identify different project management structures and understand their strengths and weaknesses their points. matrix structures and understand their strengths and weaknesses. Describe how project management offices (PMOs) can support and improve project execution. Understanding of organizational and project considerations when selecting an appropriate project management structure. .Understand the interaction between project management structure and an organization's culture.
All Matrix managers must maintain their health and take Stress-Tabs.—A Project Manager After management approves a project, the question is: How will the project be implemented? This chapter examines three different projects
page 70Management structures that companies use to implement projects: functional organization, dedicated project teams and matrix structure. Although not exhaustive, these structures and their variant forms represent the main approaches to project organization. The advantages and disadvantages of each of these structures are discussed, as well as some of the critical factors that may lead a company to choose one format over another. The History. Anyone who has worked for more than one organization realizes that there are often significant differences in how projects are managed in some companies, even with similar structures. Working in a matrix system at AT&T is different from working in a matrix environment at Hewlett Packard. Many researchers attribute these differences to the organizational culture of AT&T and Hewlett Packard. A simple explanation of organizational culture is that it reflects the "personality" of an organization. Just as every person has a unique personality, every organization also has a unique culture. At the end of this chapter, we take a closer look at what organizational culture is and the impact that parent organization culture has on project organization and management. implemented.1 It is important for project managers and project participants to know the “lay of the land” so that they can avoid obstacles and leverage paths to completing their projects. strengths and weaknesses A project management system provides a framework for initiating and implementing project activities within a parent organization. good system
Page 71 appropriately balances the needs of the parent organization and the project by defining the interface between the project and the parent organization in terms of authority, resource allocation, and eventual integration of project results into core functions. With this in mind, we will begin the discussion of project management frameworks. Organizing projects within the functional organization One approach to organizing projects is simply to manage them within the existing functional hierarchy of the organization. Once management decides to implement a project, the different parts of the project are assigned to the respective functional units, with each unit responsible for completing its part of the project (see Figure 3.1). Coordination is maintained through normal management channels. For example, a tool manufacturing company decides to diversify its product line by offering a line of tools specifically designed for left-handers. The top management decides to implement the project and different parts of the project are assigned to the appropriate areas. The Industrial Design Department is responsible for modifying the specifications to meet the needs of left-handed users. The Production Department is responsible for devising the means to produce new tools to these new design specifications. The Marketing Department is responsible for measuring demand and price, as well as determining distribution points. The overall project will be managed within the normal hierarchy, with the project forming part of the senior management work agenda. FIGURE 3.1 Functional Organizations The functional organization is also commonly used when, given the nature of the project, a functional area plays a dominant role in the project.
page 72 completion of the project or has a legitimate interest in the success of the project. In these circumstances, a senior area manager has responsibility for coordinating the project. For example, equipment and personnel in a new office will be managed by a senior manager in the company's Facilities Department. Similarly, a project to modernize the management information system will be managed by the Information Systems Directorate. In both cases, most of the project work will be performed within the designated department and coordination with other departments will be through normal channels. There are advantages and disadvantages to using the existing functional organization to manage and complete projects (Larson, 2004). The main advantages are as follows: 1. No changes. Projects are completed within the core operational structure of the parent organization. There is no radical change in the design and operation of the parent organization.2. Flexibility. There is maximum flexibility in the use of staff. Appropriate specialists in different functional units can be temporarily assigned to work on the project and then return to their regular work. With a broad base of technical staff available in each functional department, people can move between different projects with relative ease.3. Expertise in depth. If the scope of the project is limited and the appropriate functional unit has primary responsibility, then in-depth knowledge may be called upon to handle the most critical aspects of the project.4. Easy transition after the project. Normal careers in a functional department are preserved. While specialists can make significant contributions to projects, their functional area is their professional home and the focus of their professional development and advancement. Just as there are advantages to organizing projects within the existing functional organization, there are also disadvantages. These disadvantages are particularly acute when the scope of the project is broad and one functional department does not take dominant technological and managerial leadership on the project:
page 731. Lack of focus. Each module has its own basic routine work to do. Sometimes project responsibilities are pushed aside to fulfill primary obligations. This difficulty is compounded when the project has different priorities for different units. For example, the Marketing Department may view the project as urgent, but business managers see it as secondary. Imagine the pressure if marketing people have to wait for business people to finish their part of the project before moving on.2. Bad integration. There may be poor integration between modules. Functional specialists tend to only care about their part of the project and not what is best for the overall project.3. Slow. It usually takes longer to complete projects through this operational setup. This can be attributed, in part, to the slow turnaround time - project information and decisions must flow through regular management channels. In addition, the lack of direct, horizontal communication between functional groups contributes to rethinking as specialists realize the consequences of others' actions after the fact.4. Lack of ownership. The motivation of the people assigned to the task may be weak. The work can be seen as an additional burden that is not directly linked to their professional development or advancement. Furthermore, because they only work on one part of the project, professionals do not identify with the project. of the structural spectrum is the creation of a special design team. These groups operate as separate units from the rest of the main organization. Typically, a full-time project manager is assigned to assemble a core team of experts who work full-time on the project. The project manager hires the necessary staff inside and outside the parent company. The next group is physically separate from the main organization and is called upon to complete the task (see Figure 3.2). FIGURE 3.2 Special project team
page 74 The interface between the parent organization and the project teams varies. In some cases, the parent organization maintains tight control through financial controls. In other cases, companies give the project manager as much freedom to do the project as they see fit. Lockheed Martin used this approach to develop state-of-the-art jet aircraft. See hands-on 3.1: Skunk Works at Lockheed Martin. PRACTICE 3.1 Skunk Works at Lockheed Martin*In project management lore, skunk works is code for a small task force assigned to an innovative project. The first working skunk was created more than half a century ago by Clarence L. "Kelly" Johnson at the Lockheed Aerospace Corporation. Kelly's project had two goals: (1) to create a fighter aircraft, the Shooting Star, and (2) to make it as fast as possible. Kelly and a small team of technical engineers worked as a dedicated team, free of the red tape and bureaucratic delays of the normal R&D process. The name was coined by crew member Irvin Culver after the moonlight brewery deep in the woods in the popular animated movie Lil'Abner. The homemade whiskey was euphemistically called kickapoo joy juice. The project was a spectacular success. In just 43 days, Johnson's team of 23 engineers and support crews assembled the first American fighter to fly at over 500 miles per hour. Lockheed, like others, discovered that the management systems required to run a large manufacturing operation were not conducive to innovation. Instead, they choose to use flexible dedicated teams that operate like a well-funded start-up.
Lockheed continued to use skunk work to develop a range of high-speed jet aircraft, including the F117 Nighthawk Stealth Fighter, as well as prototype jet drones. LockheedMartin has an official Skunk Works division. Its charter is that Skunk Works is a gathering of a few good people who solve problems far ahead - and at a fraction of the cost - by applying the simplest, most straightforward methods possible to the development and production of new products. Monty Rakusen/Getty Images* “Lockheed Martin Skunk Works,” www.lockheedmartin.com/us/aeronautics/skunkworks.html, accessed 1/22/2015. J. Miller, Lockheed Martin's Skunk Works (New York: Specialty Publications, 1996). . Instead of one or two dedicated projects, the organization consists of sets of nearly independent teams working on specific projects. The primary responsibility of traditional functional departments is to assist and support these project teams. For example, the Marketing Department is geared towards generating new business which leads to more projects, while the Human Resources Department is responsible for managing various personnel matters as well as recruiting and training new employees. This type of organization is referred to in the literature as a projected organization and is shown graphically in Figure 3.3. It is important to note that not all projects are dedicated project teams. staff may work part-time on multiple projects.FIGURE 3.3 Projected Organizational Structure
page 75 As with the functional organization, the dedicated project team approach has strengths and weaknesses (Larson, 2004). The following are recognized as strong points: 1. Simple. Apart from the withdrawal of resources in the form of experts assigned to the project, the functional organization remains intact with the project team operating independently.2. Quickly. Projects tend to be completed faster when participants give their full attention to the project and are not distracted by other obligations and tasks. Also, response time tends to be faster with this setup because most decisions are made within the team and not deferred to the hierarchy.3. Cohesive. A high level of motivation and cohesion is often seen in the project team. Participants share a common goal and personal responsibility towards the project and the team.4. Cross functional integration. Specialists from different fields collaborate and, with proper guidance, commit to optimizing the project rather than their respective areas of expertise.
page 76 In many cases, the project team approach is the ideal approach to completing a project when you look at it only from the perspective of the best to complete the project. Its weaknesses become more apparent when the needs of the parent organization are considered: 1. Dear. Not only have you created a new management position (project manager), but resources are also allocated full-time. This can lead to duplication of effort between projects and loss of economies of scale.2. Internal conflict. Sometimes dedicated project teams become an independent entity and conflicts arise between the team and the rest of the organization (see Case Study 3.2: The Birth of the Mac). This division can prevent not only the integration of project deliverables into core functions, but also the assimilation of project team members back into their functional units once the project is complete.3. Limited technological know-how. The creation of self-sufficient teams prevents the maximum use of technological expertise to solve problems. Technical knowledge is somewhat limited to the talents and experience of the experts assigned to the project. Although nothing prevents experts from consulting others in the operational department, the us-them syndrome and the fact that such assistance is not officially sanctioned by the organization discourages this from happening. project teams is that project participants from different functional areas can develop into a highly cohesive work group that is strongly committed to project completion. literature as projectite. An us-them attitude can arise between project team members and the rest of the organization. The project team succumbs to arrogance and develops a superior attitude that rivals the organization it controls. People not assigned to the project
they envy the attention and prestige given to the project team, especially when they believe that their hard work is what funds the venture. Besides giving them special privileges, it tends to intensify the distance between the project team and the rest of the organization. This seems to have been the case with Apple's successful Macintosh development team. Steve Jobs, who was then Apple's president and the Mac team's project manager, treated his team to perks like in-office massages, fresh-squeezed orange juice coolers, a Bosendorfer grand piano, and first-come, first-served tickets. class airplane. No other Apple employees were required to travel first class. Jobs considered his team Apple's elite and tended to refer to everyone else as "Bozos" who "don't get it." Engineers in the Apple II division, who were the bread and butter of Apple's sales, were furious at the special treatment their colleagues received. Mac's team in another overflowed. Aaron Goldberg, a longtime industry consultant, watched from his stool as the battle escalated. "The Mac kids were yelling, 'We're the future!' The Apple II guys screamed, "We're the money!" Then there was a brawl with nerds. Pocket protectors and pens flew. I was waiting for a notebook to fall, for them to stop and collect the papers." John Sculley, who replaced Steve Jobs as Apple's chairman, noted that Apple evolved into two
page 77 "companies at war" and referred to the road between the Apple II and Macintosh buildings as the "DMZ" (demilitarized zone).*J. Carlton, Apple: The Inside Story of Intrigue, Egomania, and Business Blunders (New York: Random House, 1997), pp. 13–14; J. Sculley, Odyssey: Pepsi to Apple. . .journey of adventure, ideas and the future (New York: Harper & Row, 1987), pp.270–79.4. Difficult transition after the project. Assigning full-time staff to a project creates the dilemma of what to do with them after the project is complete. If no other project work is available, transitioning back to your original functional departments may be difficult due to your extended absence and the need to keep up with recent developments in your functional area. for the last 40 years it has been the matrix organization. Matrix management is a hybrid organizational form in which a horizontal project management structure is "overlaid" on the normal functional hierarchy. In a matrix system, there are usually two chains of command, one along functional lines and one along project lines. Instead of assigning parts of a project to different units or creating a self-contained team, project participants report simultaneously to project operators and managers. Companies implement this matrix arrangement in a number of ways. Some organizations create temporary matrix systems to manage specific projects, while the "matrix" may be a permanent basis in other organizations. Let us first consider its general application and then proceed to a more detailed discussion of the finer points. Consider Figure 3.4. There are three projects in progress: A, B, and C. All three project managers (PM A–C) report to a project management manager, who oversees all projects. Each project has an administrative assistant, although project C is only part-time. FIGURE 3.4 Parent organization structure
Project A involves the design and expansion of an existing production line to accommodate new metal alloys. To achieve this goal, project A assigned 3.5 people from Manufacturing and 6 people from Engineering to it. These individuals are assigned to the project on a part-time or full-time basis, depending on the needs of the project at various phases of the project. Project B involves developing a new product that requires strong representation from Engineering, Manufacturing and Marketing. Project C involves anticipating the changing needs of an existing customer base. While these three projects, as well as others, are being completed, the operating divisions continue to perform their core core activities. The matrix structure is designed to use resources optimally by having people work on multiple projects in addition to being able to perform normal operational tasks. At the same time, the matrix approach tries to achieve greater integration by creating and legitimizing the authority of a project manager. In theory, the matrix approach provides a dual focus between functional/technical expertise and project requirements that is missing from the project team or functional approach to project management. This focus can most easily be seen in the relative input of functional managers and project managers to major project decisions (see Table 3.1). ? Who will do the task? How will it be done?
page 78 When is the work due? Where will the work be performed? How much money is available to carry out the work? Why will the work be done? How will project participation affect normal operational activities? How well was the overall project done? Were the tasks completed satisfactorily? How well was functional input integrated? Different Forms of Matrix OA 3-2 Distinguish between three different types of matrix structures and understand their strengths and weaknesses. In practice, there are actually different types of matrix systems, depending on the relative authority of the project and functional managers (Bowen et al., 1987). Here is a thumbnail of the three types of matrices: Weak matrix. This form is very similar to a functional approach, except that there is a formally designated project manager responsible for coordinating project activities. Functional managers are responsible for managing their part of the project. The project manager basically acts as a team facilitator who prepares schedules and checklists, gathers information about the status of work, and facilitates project completion. The project manager has implicit authority to streamline and monitor the project. Functional managers call the shots and decide who does what and when the work will be done. Balanced array. This is the classic matrix, in which the project manager is responsible for determining what needs to be done, while functional managers are concerned with how it will be done. More specifically, the project manager draws up the overall plan to complete the project, integrates input from different disciplines, sets schedules, and monitors progress. THE
page 79page 80 Functional managers are responsible for staffing and executing their part of the project according to the standards and schedules set by the project manager. Merging the "what and how" requires both parties to collaborate and jointly approve technical and operational decisions. Strong uterus. This form attempts to create the "feel" of a project team within a matrix environment. The project manager controls most aspects of the project, including scope offsets and operational staff assignments. The project manager controls when and what experts do and has the final say on important project decisions. The functional manager has authority over his people and is consulted when needed. In some cases, a functional manager's department may serve as a "subcontractor" for the project, so they have more control over the specialized work. For example, developing a new line of notebook computers may require a team of experts from different disciplines working on key design and performance requirements within a design board layout. Once the specifications are established, the final design and production of certain components (eg power source) can be assigned to the respective functional groups for completion. Matrix management, both in general and in its specific forms, has unique strengths and weaknesses (Larson & Gobeli, 1987). The advantages and disadvantages of matrix organizations are generally highlighted in the following list, which only briefly highlights the specifics of the different forms.1. Effective. Resources can be shared across multiple projects as well as across functional departments. Individuals can divide their energy between multiple projects as needed. This reduces the duplication required in a mechanical build.2. Strong focus on design. A stronger project focus is provided by having a formally appointed project manager, who is responsible for coordinating and integrating contributions from different units. This helps maintain a holistic approach to problem solving that is often missing from the functional organization.3. Easier transition after the project. Because the project organization overlaps between functional departments, specialists maintain links with them
functional team so they have a port of call to return to once the project is complete.4. Flexible. Matrix arrangements allow flexible use of resources and expertise within the company. In some cases, functional units provide people who are managed by the project manager. In other cases, contributions are monitored by the operational manager. The advantages of the matrix structure are significant. Unfortunately, so are potential weaknesses. This is largely due to the fact that a matrix structure is more complex, and the creation of multiple bosses represents a radical break with the traditional system of hierarchical authority. Furthermore, a matrix structure is not established overnight. Experts say it takes three to five years for a uterine system to fully mature, many of the following issues represent growing pains.1. Dysfunctional conflict. The matrix approach is based on the tension between functional managers and project managers who bring critical knowledge and perspectives to the project. This tension is seen as a necessary mechanism for achieving an appropriate balance between complex technical issues and unique design requirements. While the intention is noble, the result is sometimes akin to opening Pandora's box. Legitimate conflict can extend to a more personal level as a result of conflicting agendas and responsibilities. Dignified discussions can degenerate into heated arguments that create animosity between the managers involved.2. Indoor games. Any situation where equipment, resources, and people are shared across operational projects and activities lends itself to conflict and competition for limited resources. Infighting can arise between project managers, who are primarily concerned with what is best for their project. Stressful. Matrix management violates the management principle of the management module. Project participants have at least two supervisors - the functional boss and one or more project managers. Working in a matrix environment can be extremely stressful. Imagine working in an environment where three different managers tell you to do three conflicting things.
page 814. Slow. In theory, the presence of a project manager to coordinate the project should speed up its completion. In practice, however, decision-making can become bogged down as agreements need to be made between various functional groups. This is especially true for the balanced matrix. When considering the three variations of the matrix approach, we can see that the advantages and disadvantages do not necessarily apply to all three matrix forms. A strong matrix will likely increase project completion, reduce internal power struggles, and ultimately improve control over project activities and costs. On the other hand, technical quality can suffer because functional areas have less control over their contributions. Finally, projectite may emerge as members develop a strong group identity. The weak matrix will likely improve technical quality as well as provide a better system for managing conflicts between projects because the functional manager assigns staff to different projects. The problem is that functional control is often maintained at the expense of poor design integration. The balanced panel can achieve a better balance between technical and design requirements, but is a very sensitive system to manage and is more likely to succumb to many of the problems associated with the panel approach. offices (PMOs) can support and improve project execution. A project management office (PMO)2 is a central unit in an organization or department that oversees and supports project execution. PMOs emerged in response to the poor track record many companies had of completing projects on time, on budget, and
According to the plan. Organizations began dedicating staff to support and improve project implementation. PMOs often play a critical role in helping matrix systems mature into more effective project delivery platforms. A 2011 survey of more than 1,100 project professionals reported that three out of five organizations surveyed had a PMO (PMI, 2011). The majority of respondents believe that their PMO has a positive impact on their organization. PMOs come in many different forms. In a small organization with few projects, the PMO may consist of a single person assigned to support project efforts. In large multinational companies, PMOs can involve hundreds, even thousands, of professionals operating at different levels and in different parts of the organization. The Project Management Institute has been presenting PMO of the Year awards since 2013. Practice Slide 3.3: Year 2018 PMO details the 2018 recipient. An interesting way to characterize different types of PMOs is presented by Casey and Peck (2001), who describe some PMO as (1) a weather station, (2) a control tower or (3) a resource pool. We added a fourth type, a command and control center that reflects recent developments. Each of these models plays a very different role within an organization. WEATHER STATION. The primary function of the PMO weather station is to monitor and track project performance. It is usually created to satisfy senior management's need to stay on top of the company's portfolio of projects in progress. The team provides an independent forecast of project performance. Questions answered for specific projects include: How are our projects progressing? Which ones are on track? Which ones aren't? How are we doing cost-wise? Which projects are over or off budget? What are the main problems facing the projects? Are there contingency plans? What can the organization do to help the project? Control tower. The main role of the control tower PMO is to improve project execution. He sees project management as a profession to be protected and promoted. The PMO team identifies best practices and standards for excellence in project management. They work as consultants and trainers to support project managers and their teams.
page 82 Resource tank. The purpose of the PMO resource pool is to provide the organization with a pool of project managers and trained professionals. It acts like an academy to continuously update the skills of a company's design professionals. In addition to training, this type of PMO also raises the stature of project management within the organization. Command and control center. Unlike the support role played by other types of PMOs, this type has direct authority over projects. Acts as a key decision maker throughout the life of a project, ensuring the project is aligned with business goals and conforms to accepted practices. These PMOs make recommendations, approve major changes, and even close projects. PRACTICAL MOMENT 3.32 2018 PMO of the Year: Telstra—Capital Planning and Delivery PMO, Melbourne, Australia* From mobile networks to home internet and pay TV, Telstra, Australia's largest telco, invests heavily in projects. In 2012, Telstra commissioned an assessment of how well the company managed major strategic projects. The results were not good: about 30% of its investment programs and projects did not achieve their goals. The PMO's overall goal was to instill discipline around strategic capital planning and improve the overall effectiveness of the company's capital investment management. The PMO now includes 24 full-time staff overseeing a portfolio of 1,265 projects worldwide with an annual value of over AU$3.77 billion. At the start of each major project, the PMO works with the responsible managers to develop key performance indicators (KPIs) that describe how the project will contribute to Telstra's strategic mission. These KPIs are used on a monthly basis to monitor project performance and raise flags when slippage begins to occur. The PMO has the authority to terminate underperforming projects. The PMO also provides sponsors and managers with the necessary training to support successful project management. These efforts paid off. In 2017, more than 75% of projects scored above schedule, budget and quality standards. The PMO also helped Telstra save over AU$220 million over three years thanks to a strict go/no-gostage-gate process.
page 83 “We were able to ensure that the best, highest performing projects were prioritized and executed with the right people,” says Rob Loader, one of the PMO staff. "This allows us to be the first to advance specific initiatives in a very competitive environment."* Project Management Institute press release, November 15, 2018. Today, most PMOs fill more than one of these roles. For example, the aPMO can monitor projects, provide training and institutionalize lessons learned. In recent years, PMOs have played a key role in helping organizations adapt agile methods to their projects (Patel, 2018). PMOs will continue to evolve and adapt. It is important to remember that the primary role of a PMO is to facilitate/enable projects, not to execute projects. Senior management should not allow a PMO to usurp the technical aspects (schedule, planning, budget, etc.) of completing a project. These are the responsibilities of the project manager. must be considered when selecting the appropriate project management structure. There is empirical evidence that project success is directly related to the amount of autonomy and authority project managers have over their projects (Gray et al., 1990; Larson & Gobeli, 1987, 1988). However, most of this research is based on what is best for managing specific projects. It is important to remember what was said at the beginning of the chapter - the best system balances the needs of the project with those of the parent organization. So which project framework should an organization use? This is a complex question with no precise answers. A number of organizational and project-level issues must be considered.
Organizational Issues At the organizational level, the first question to ask is: how important is project management to the company's success? That is, what percentage of your main job involves projects? If more than 75 percent of the work involves projects, then an organization should consider a fully designed organization. If an organization has standardized products and projects, then a matrix layout seems appropriate. If an organization has very few projects, a less formal arrangement is probably all that is needed. Special teams can be created as needed and the organization can outsource project work. A second important issue concerns the availability of resources. Remember, the matrix evolved from the need to share resources across multiple projects and functional areas while creating legitimate project leadership. For organizations that cannot keep critical staff on individual projects, a matrix system seems to be appropriate. An alternative would be to create a task force but outsource project work when resources are not available internally. Under the first two questions, an organization must assess current practices and the changes needed to manage projects more effectively. A strong project matrix doesn't happen overnight. The shift to a greater emphasis on projects has a number of policy implications that need to be worked out, requiring time and strong leadership. For example, we have observed that many companies making the transition from a functional organization to a matrix organization start with a weak functional matrix. This is partly due to the resistance of operations and department managers to transfer authority to project managers. Over time, these matrix structures eventually evolve into a project matrix. came to the conclusion. Hobbs and Ménard (1993) identify seven factors that should influence the choice of project management structure: Project size; Strategic importance.
page 84 Innovation and the need for innovation. Need for integration (number of departments involved). Environmental complexity (number of external interfaces). Budget and time constraints. Stability of resource requirements. The higher the levels of these seven factors, the more autonomy and authority the project manager and project team need to be successful.3 This translates into using a dedicated project team or a matrix project structure. For example, these structures should be used for large projects that are strategically critical and new to the company, requiring a lot of innovation. These structures are also suitable for complex, interdisciplinary projects that require input from multiple departments, as well as for projects that require constant contact with clients to assess their expectations. Special project teams should also be used for urgent projects where the nature of the work requires people to work continuously from start to finish. Many companies actively engaged in project management have created an agile management system that organizes projects according to project requirements. For example, Chaparral Steel, a minimill that produces steel bars and beams from scrap metal, classifies projects into three categories: advanced development, platform and staged. Advanced development projects are high-risk endeavors that involve the creation of an innovative product or process. Platform projects are medium-risk projects that involve system upgrades that create new products and processes. Incremental projects are low-risk, short-term projects that involve minor adjustments to existing products and processes. At any given time, Chaparral may have 40-50 projects in progress, of which only 1 or 2 are advanced, 3-5 are platform projects, and the rest are small, incremental projects. Incremental projects are almost all done within a weak board with the project manager coordinating the work of functional subgroups. A strong headquarters is used to complete platform projects, while dedicated project teams are typically created to complete advanced development projects. More and more companies are using this “mix and match” approach to project management.
page 853.4 Organizational Culture LO 3-5 Appreciate the important role organizational culture plays in project management. for a mid-sized IT company. The managers developed a new operating platform that would be critical to the future success of their company. When they tried to describe how this project was organized, a manager started drawing on a napkin a complex structure involving 52 different teams, each with a project manager and a technical lead! In response to our further inquiry to understand how this system worked, the manager paused and stated, “The key to making this structure work is our company culture. This approach would never work at Company Y, where I worked before. But because of our culture here, we can do it." within the traditional functional organization because the culture encouraged cross-functional integration. On the other hand, we saw matrix structures break down because the culture of the organization did not support the division of authority between project managers and functional managers. We've also seen companies that rely on independent project teams because the dominant culture doesn't support the innovation and speed needed to succeed. LO 3-6 Interpret the culture of an organization.
What is organizational culture? Organizational culture refers to a system of shared norms, beliefs, values, and assumptions that unites people, thereby creating shared meanings (Deal & Kennedy, 1982). This system is manifested in customs and habits that exemplify the organization's values ​​and beliefs. For example, equality can be expressed in casual clothes worn in a high-tech company. On the other hand, mandatory uniforms in a department store reinforce respect for hierarchy. Culture reflects the personality of the organization and, like an individual's personality, can allow us to predict the attitudes and behaviors of organizational members. Culture is also one of the defining aspects of an organization that sets it apart from other organizations even in the same industry. Research shows that there are 10 key characteristics that, taken together, capture the essence of an organization's culture:51. Membership identity - the extent to which employees identify with the organization as a whole rather than with their type of work or area of ​​professional experience.2. Team emphasis—the extent to which work activities are organized around teams rather than individuals.3. Managerial focus - the extent to which managerial decisions take into account the effect of results on people within the organization.4. Unit integration - the degree to which units within the organization are encouraged to operate in a coordinated or interdependent manner.5. Control - the extent to which rules, policies, and direct supervision are used to supervise and control employee behavior.6. Risk tolerance - the degree to which employees are encouraged to be aggressive, innovative and risk-seeking.7. Reward Criteria - The extent to which rewards, such as promotions and salary increases, are distributed according to employee performance rather than seniority, favoritism, or other non-performance factors.8. Tolerance of Conflict - The extent to which employees are encouraged to express conflict and criticism openly.
page 869. Means versus ends orientation—the extent to which management focuses on results rather than the techniques and processes used to achieve those results. Open systems focus - the degree to which the organization monitors and responds to changes in the external environment. As shown in Figure 3.5, each of these dimensions exists on a continuum. . This image becomes the basis for the feelings of shared understanding that members have about the organization, how things are done, and how members should behave. An organization's culture provides a sense of identity to its members. The more clearly an organization's perceptions and shared values ​​are stated, the more strongly people can identify with their organization and feel a vital part of it. Identity creates commitment to the organization and incentives for members to devote energy and loyalty to the organization.
page 87 A second important function is that culture helps legitimize the organization's management system. Culture helps clarify power relations. It provides reasons why people are in positions of authority and why their authority should be respected. Most importantly, organizational culture clarifies and reinforces behavioral patterns. Culture helps define what is acceptable and what is inappropriate behavior. These standards cover a wide range of behaviour, from dress code and working hours to challenging the judgment of superiors and working with other departments. Ultimately, culture helps create social order within an organization. Imagine what it would be like if members didn't share similar beliefs, values ​​and assumptions - chaos! The morals, norms, and ideals conveyed by an organization's culture provide stability and predictability in behavior necessary for an effective organization. See Practice Snapshot 3.4: Google-y for an example of this. While our discussion of organizational culture may seem to suggest that one culture dominates the entire organization, in reality this is rarely the case. Strong and thick are adjectives used to denote a culture in which the organization's core values ​​and customs are widely shared throughout the organization. On the other hand, a weak or weak culture is one that is not widely shared or implemented in a company. Even within a strong organizational culture, subcultures are likely to exist, often aligned with specific departments or areas of expertise. As noted earlier in our discussion of project management frameworks, it is not uncommon for norms, values, and customs to develop within a particular field or profession, such as marketing, finance, or operations. People working in Marketing may have a different set of norms and values ​​than those working in Finance. Countercultures sometimes occur within organizations that embody a different set of values, beliefs, and customs—often in direct opposition to the culture espoused by top management. The pervasiveness of these subcultures and countercultures affects the strength of the organization's culture and the extent to which the culture influences members' actions and reactions. PRACTICE 3.4 INSTANTNESS
Google-y*As you enter the 24-hour Googleplex located in Mountain View, California, you'll feel like you're walking through a new-age campus instead of the corporate office of a billion-dollar company. The low-rise buildings connected by colorful, glass offices feature luxury amenities -- free gourmet meals three times a day, free use of an outdoor wave pool, an indoor fitness center and large daycare center, private transportation to and from San Francisco, and more residential areas.— the envy of workers throughout the Bay Area. These perks and more reflect Google's culture of keeping people happy and thinking outside the box. The importance of corporate culture is nowhere more evident than the fact that Head of Human Resources, Stacy Savides Sullivan also holds the title of Chief Culture Officer. Your task is to try to maintain the innovative culture of a startup as Google rapidly transforms into a giant international company. Sullivan describes Google's culture as "team-oriented, very collaborative, and encourages people to think outside of the traditional way they've worked before—working with integrity and for the good of the company and the world, which is connected to our overall mission to make information accessible to the world." Google goes to great lengths to select new employees to ensure that they not only have great technical skills, but also fit the Google culture. Sullivan continues to appoint an employee of Google as someone who is "flexible, adaptable, and not focused on titles and hierarchy and just gets things done." Google's culture is rich with customs and traditions that don't exist in corporate America. Teams typically have daily stand-ups meetings seven minutes past the hour. Why seven minutes past the hour? Because Google co-founder Sergey Brinonce has estimated that it takes seven minutes to cross the Google campus. Everyone is trying to make sure that no one gets too comfortable and that no time is wasted during the quick briefing. As one manager noted, "The whole idea of ​​stand-up is to talk about what everyone else is doing, so if someone else is working on what you're working on, you can discover and collaborate, not copy." Jade/Blend Images
Another custom is "dogfooding". It's when a design team releases a working prototype of a future product for Googlers to test. There is a strong norm within Google for testing new products and providing feedback to developers. The project team receives feedback from thousands of Google users. The internal focus group can submit bugs or simply comment on design or functionality. Fellow Google-ys don't hold back their comments and are quick to point out things they don't like. This often leads to significant product improvements.* S.K. Goo, "Building a 'Googley' Workforce," Washington Post, October 21, 2006; E.Mills, "Meet Google's Culture Czar," CNET News.com, April 27, 2007; H. Walters, "How Google Got Its New Look," Business Week, May 10, 2010. Identifying Cultural Characteristics Deciphering an organization's culture is a highly interpretive and subjective process that requires an assessment of current and past history. The student of culture cannot simply rely on what people report about their culture. The physical environment in which people work, as well as how people act and respond to different events that occur, must be considered. Figure 3.6 contains a worksheet for diagnosing an organization's culture. Although not exhaustive, the checklist often provides clues about an organization's norms, customs, and values. FIGURE 3.6 Diagnostic Organizational Culture Worksheet Power Corp.I. Physical Features: Architecture, Office Layout, Decoration, Dresses Corporate HQ is a modern 20 floor building - President on the top floor. Offices are larger on the upper floors than on the lower floors. Formal business attire (white shirts, ties, overalls,...). The power seems to increase the higher you are.II. Public Documents: Annual Reports, Internal Bulletins, Vision Statements At the heart of Power Corp's style. it is our vision. . . to be the world's most admired energy company for its people, collaboration and performance. Integrity. We are honest with others and with ourselves. We uphold the highest ethical standards in all business dealings. We do what we say we will do. III. Behaviour: pace, language, meetings, topics discussed, decision-making style, communication patterns, rituals
page 88 Hierarchical decision making, fast but orderly pace, meetings start and end on time, subordinates choose their words very carefully when talking to superiors, people rarely work after 6pm, the president gets a high performance unit in cruise every year… . 4. Folklore: Stories, Anecdotes, Heroines, Heroes, Villains The young project manager was fired after going to his boss to ask for additional funds. Stephanie K. was hailed as a hero for taking full responsibility for a technical error. Jack S. was named a traitor for joining the main competitor after working for Power Corp. for 15 years.1. Study the physical characteristics of an organism. What is the exterior architecture like? What image does it convey? It's unique; Are the buildings and offices of the same quality for all workers? Or are the most sophisticated modern buildings and offices reserved for senior executives or department heads? What are the customs regarding clothing? What symbols does the organization use to signal authority and status within the organization? These physical characteristics can shed light on who has real power within the organization, the extent to which the organization is internally differentiated, and how formal the organization is in its operations.2. Read about the organization. Review annual reports, mission statements, press releases and internal newsletters. What do they describe? What principles are upheld in these documents? Do the reports emphasize the people who work for the organization and what they do, or the company's financial performance? Each emphasis reflects a different culture. The first shows interest in the people who make up the company. The second may indicate concern about results and bottom line.3. Observe how people interact within the organization. What is your pace - is it slow and methodical or urgent and spontaneous? What rituals are there within the organization? What values ​​do they express? Meetings can often produce insightful information. Who are the people in the meetings? Who talks; Who are they talking to? How honest is the conversation? People talk about the organization or the
page 89 single section? What is the focus of the meetings? How much time is spent on different subjects? Topics that are discussed repeatedly and extensively are indications of the values ​​of the organization's culture. 4. Interpret stories and folklore surrounding the organization. Look for similarities between stories told by different people. The issues highlighted in recurring stories often reflect what is important to an organization's culture. For example, many of the recurring stories at Versatec, a Xerox subsidiary that makes computer graphic designers, involve its flamboyant co-founder, Ren Zafiropoulos. According to company tradition, one of the first things Ren did when the company was founded was to gather the top management team in his house. They then spent the weekend creating a beautiful teak table around which all future decisions would be made. This board has come to symbolize the importance of teamwork and maintaining high standards of performance, two key qualities of the Versatec culture. We should also try to identify who the heroes and villains are in the company's history. What do they suggest about the ideals of civilization? Going back to the history of Versatec, when the company was finally bought by Xerox, many employees expressed concern that Versatec's informal culture of hard work and hard work was being dominated by the Xerox bureaucracy. Renn pushed workers to higher levels of performance, arguing that if they exceeded Xerox's expectations, they would be left alone. Autonomy has remained an element of Versatec's culture long after Renn's retirement. It is also important to pay close attention to the base of offers and rewards. What do people see as the key to advancement within the organization? What contributes to falls? These last two questions can provide important insights into the qualities and behaviors the organization values, as well as cultural taboos and behavioral landmines that can derail a career. For example, a project manager confided that a former colleague was sent to project management purgatory shortly after he publicly questioned the validity of a marketing report. From then on, the project manager made sure to consult the Marketing Department whenever she had doubts about her data.
page 90 With practice, an observer can assess how strong an organization's dominant culture is and the importance of subcultures and countercultures. In addition, students can discern and identify where an organization's culture falls on the 10 cultural dimensions presented above and, in effect, begin to build a cultural profile for a company. Based on this profile, conclusions can be drawn about specific customs and rules that must be followed, as well as behaviors and actions that violate a company's rules. and an organization's culture. Project managers must be able to operate in many potentially different organizational cultures. First, in internal projects, they must interact with the culture of their parent organization, as well as with the subcultures of various departments (eg Marketing, Accounting). On external projects, they must also interact with the client or client organizations of the project. Finally, they often have to interact to varying degrees with a number of other organizations associated with the project. These organizations include vendors and suppliers, subcontractors, consulting firms, government and regulatory agencies, and in many cases, community groups. Many of these organizations likely have very different cultures. Project managers must be able to read and speak about the culture in which they work to develop strategies, plans and responses that can be understood and accepted. However, the emphasis in this chapter is on the relationship between organizational culture and project management structure, and further discussion of these implications must be deferred until Chapters 10–12, which focus on leadership, team building, and outsourcing .
Earlier, we stated that we believe there are strong relationships between project management structure, organizational culture, and successful project management. To explore these relationships further, let's return to the dimensions that can be used to characterize an organization's culture. with effective management. Figure 3.7 attempts to identify which cultural characteristics create a favorable environment for the completion of more complex projects involving people from different disciplines. For example, a fruitful project culture would likely be one in which management balances its focus on the needs of both work and people. An optimal culture would balance concern with output (ends) and the processes to achieve those results (means). In other cases, the ideal culture would be at one end of a dimension. For example, since most projects require cross-disciplinary collaboration, it would be desirable for the organization's culture to emphasize teamwork and identification with the organization, not just the professional domain. Likewise, this is important
page 91 the culture supports a certain degree of risk-taking and tolerance for constructive conflict. One organization that seems to fit this ideal profile is 3M. 3M has been recognized for creating an entrepreneurial culture within a larger corporate structure. The essence of their culture is captured in a phrase that has been sung frequently by 3M people throughout its history: "Encourage experimental doodles." "Hire good people and leave them alone." “If you put fences around people, you'll have sheep. Give people the space they need." Freedom and autonomy in experimentation is reflected in the "15% rule", which encourages technicians to spend up to 15% of their time on projects of their own choosing and initiative. This fertile culture helped 3M branch out into more than 60,000 products and 35 separate business units (Collins & Porras, 1994). The metaphor we have chosen to describe the relationship between organizational culture and project management is that of a boat trip. river and the project is the boat. Organizing and completing projects within an organization where the culture favors project management is like rowing down a river: it takes much less effort. In many cases, the current can be so strong that steering is all that is needed. This is true for projects that operate in a project-friendly environment where teamwork and cross-functional collaboration are the rules, where there is a deep commitment to excellence, and where healthy conflicts are expressed and dealt with quickly and effectively. On the other hand, trying to complete a project in a toxic culture is like rowing against the current: it takes much more time, effort and attention to get to the destination. This would be the case in cultures that discourage teamwork and cooperation, that have a low tolerance for conflict, and where advancement is based less on performance and more on cultivating favorable relationships with superiors. In these cases, the project manager and his people must overcome not only the physical obstacles of the project, but also the dominant negative forces inherent in the organization's culture. The implications of this metaphor are significant. More authority and project time is required to complete projects that face a strong, negative cultural current. On the other hand, less formal authority and fewer dedicated resources are required to complete projects where the
page 92 Cultural currents create behavior and cooperation necessary for project success. The key issue is the degree of interdependence between the parent organization and the project team. In cases where the prevailing organizational culture supports the core behaviors for project completion, a leaner, more flexible project management framework may be effective. For example, one of the main reasons Chaparral Steel is able to use a functional matrix to successfully complete phased projects is that its culture contains strong norms of cooperation (Bowen et al., 1994). See Research Spotlight 3.1: The Key to Success for another example of how culture supports successful project management. When the dominant organizational culture inhibits collaboration and innovation, it is wise to isolate the project team from the dominant culture. This is where it becomes necessary to create a self-sufficient project team. If a dedicated project team is impossible due to resource constraints, at least one project board should be used where the project manager has dominant control over the project. In any case, the management strategy is to create a distinct group subculture in which a new set of norms, customs, and values ​​evolves that will lead to project completion. In extreme circumstances, this project culture may even represent a counterculture in which many of the norms and values ​​are the opposite of the dominant parent culture. This was the case when IBM decided to rapidly develop its personal computer in 1980 (Smith & Reinertsen, 1995). They knew that the project could be stalled due to excessive computer skills and bureaucracy in the company. IBM also realized that it would have to work closely with suppliers and use many non-IBM parts if it wanted to get to market quickly. This was not the IBM way at the time, so IBM based the PC design team in a warehouse in Boca Raton, Florida, away from the company's headquarters and other corporate development facilities that existed in the organization.
The Secret of Success* In The Secret of Success: The Double Helix of Formal and Informal Structures in an R&D Lab, Polly Rizova reveals the results of a year-long investigation into the inner workings of a Fortune 500 R&D lab. Through interviews with key participants and social media data analysis, Rizova evaluated the effectiveness of six high-tech development projects. Four critical success factors emerged from their research. A critical element for success is a heavy reliance on open and unrestricted communication standards, along with a low degree of formal reporting. In other words, team members interact freely with each other, regardless of title, experience, or discipline. A second key is to have people on the project who are highly respected throughout the lab for their exceptional technical skills and experience. Likewise, it is also vital that people who are highly respected for their organizational knowledge and expertise join the project. Having "technical stars" and "organizational stars" in the project team is essential for success. Furthermore, his analysis revealed the interactive nature of the four conditions, meaning that no one condition was likely to produce successful results on its own, but only when combined in a mutually reinforcing manner. Here, laboratory cultivation was seen as the main catalyst. Rizova describes a matrix system where people work on multiple projects simultaneously, but with a different twist. Individuals occupy different positions and play different roles depending on the project. For example, it is common for a senior engineer to be the manager of one project and the researcher of another run by his subordinate. Essentially you have to 'boss' your own boss. At first glance, this formal structure should create destructive tensions. However, Rizova argues that the lab's organizational culture is the glue that keeps things running smoothly. It describes a culture in which social norms of cooperation, respect and courtesy are maintained and reproduced. It is a culture characterized by trust and a strong drive for higher individual and organizational learning and achievement. The culture is reflected in the researchers' comments: That's one of the coolest things here. Your opinions are heard. The superiors take our advice into consideration. You'll find that most projects here are a team effort. What I like most is the positive thinking and "whatever it takes" attitude. Personality clashes can be devastating. Here everyone helps and supports you. There is no "I" in the word team. Very friendly environment…. I met new people and learned a lot from them. They don't mind sharing their knowledge.* Polly S. Rizova, The Secret of Success: The Double Helix of Formal and InformalStructures in an R&D Laboratory (Stanford, CA: Stanford University Press, 2007).
page 93 Summary This chapter examined two key characteristics of the parent organization that affect the implementation and completion of projects. The first is the formal structure of the organization and how it chooses to organize and manage projects. While the individual project manager may have very little say in how the company chooses to manage projects, they must be able to recognize the options available as well as the inherent strengths and weaknesses of different approaches. Three main project management frameworks were described and evaluated in terms of their strengths and weaknesses. Only in unique cases can the case be made for managing a project within the normal functional hierarchy. When you only think about what is best for the project, creating an independent project team is clearly favored. However, the most effective project management system properly balances the needs of the project with those of the parent organization. Matrix structures arose out of the parent organization's need to share staff and resources across multiple projects and functions, creating a legitimate project focus. The matrix approach is a hybrid organizational form that combines elements of the functional form and the project team in an effort to leverage both. The second main characteristic of the parent organization discussed in this chapter is the concept of organizational culture. It is the pattern of beliefs and expectations shared by members of an organization. Culture includes the rules of conduct, customs, shared values ​​and "rules of the game" for getting along and progressing within the organization. It is important for project managers to be "culturally sensitive" so that they can develop appropriate strategies and responses and avoid breaking ground rules that could jeopardize their effectiveness within the organization. The interaction between project management structure and organizational culture is complex. We suggest that in some organizations, the culture encourages project implementation. In this environment, the project management structure used plays a less decisive role in the success of the project. Conversely, for other organizations in which the culture emphasizes internal competition and differentiation, the exact opposite may occur. The current regulations,
customs and attitudes hinder effective project management and the project management structure plays a more decisive role in the successful implementation of projects. At the very least, under adverse cultural conditions, the project manager must have significant authority over the project team. under more extreme circumstances, companies must reallocate material teams of special projects to complete critical projects. In any case, the management strategy should be to isolate the project work from the dominant culture so that a more positive subculture can emerge among the project participants. . The following chapters will examine how project managers and professionals work in this environment to successfully complete projects. What are the relative advantages and disadvantages of functional, matrix, and dedicated team approaches to project management?2. What distinguishes a weak matrix from a strong matrix?3. Under what circumstances would it be appropriate to use a power table instead of a dedicated project team?
page 944. How can project management offices (PMOs) support effective project management? Why is it important to assess an organization's culture before deciding which project management framework to use to complete a project? Besides culture, what other organizational factors should be used to determine which project management framework to use? What do you think is more important to the successful completion of a project—the formal project management structure or the culture of the parent organization? Do you agree that real innovation can only come from a small group of dedicated professionals?3.2 The birth of the Mac1. Is Projectite the price you pay for truly innovative projects?2. What similarities and differences do you see between Lockheed's Skunk Works and Apple's Mac team? Which of the four types of PMOs described in the chapter is Telstra's PMO similar to?3.4 Google-y1. In your opinion, how important are the perks that Google employees receive to maintaining Google's culture?
2. How does the custom of "testing" contribute to Google's culture? Exercises 1. The transition to college is analogous to working in a matrix environment where most students take more than one class and must split their time between multiple classes. What problems does this situation cause you? How does this affect your performance? How could the system be better managed to make your life less difficult and more productive?2. You work for the LL company, which manufactures high quality scopes for hunting rifles. LL Company has been the market leader for 20 years and decided to differentiate itself by applying its technology to develop high-quality diopters. What kind of project management structure would you recommend they use for this project? What information would you like to have to make this recommendation and why?3. You work for Barbata Eletrônica. The R&D folks believe they've created an affordable technology that will double the capacity of existing MP3 players and use a superior audio format to MP3. The project is codenamed KYSO (Knock YourSocks Off). What kind of project management structure would you recommend they use for the KYSO project? What information would you like to have to make this recommendation and why?4. This chapter discussed the role of values ​​and beliefs in shaping an organization's culture. The issue of organizational culture is big business on the Internet. Many companies use their websites to describe their mission, vision, and corporate values ​​and beliefs. There are also many consulting firms that advertise how they help organizations change their culture. The purpose of this exercise is to gain insight into the organizational culture of two different companies. You can complete this task by simply searching for the keywords organizational culture or corporate vision and values. This search will locate many companies for you.
page 95 use to answer the following questions. You can choose companies you would like to work for in the future.a. What are the values ​​and beliefs that the companies stand for? SI. Use the worksheet in Figure 3.6 to evaluate the website. What does the website reveal about the culture of this organization? Would such a culture be conducive to effective project management?5. Use the cultural dimensions listed in Figure 3.5 to assess your school's culture. Instead of staff, think students, and instead of administration, use faculty. For example, membership identity refers to the extent to which students identify with the school as a whole rather than with their subject or elective. Individually or in small groups, rate your school culture on the 10 dimensions.a. Which dimensions were easy to assess and which were not? SI. How strong is your school culture? w. What functions does culture serve for your school? Hey. Do you think your school culture is best suited to maximizing your learning? Why or why not? Is. What types of projects would be easy to implement in your school and what types of projects would be difficult given the structure and culture of your school? Explain your answer.6. You work as an analyst in the Marketing Department at Springfield International (SI). SI uses a weak matrix to develop new services. Management has created a highly competitive organizational culture that emphasizes achieving results above all else. One of the project managers you've been assigned to help pushes you to make his project your first priority. He also wants you to expand the scope of your work on his project beyond what the marketing manager thinks is necessary or appropriate. The project manager is widely regarded as a rising star in SI. So far, you've resisted pressure from the project manager and followed the direction of the marketing manager.
page 96 that I get from you and I will remember it when I become VP of Marketing." How would you answer and why? References Block, T. R. and J. D. Frame, The Project Office—a Key to Managing Projects Effectively (Menlo Park, CA: Crisp Publications, 1998 ). Block, T.R. and J.D. Frame, "Today's Project Office: GaugingAttitudes," PM Network, Aug. 2001, pp. 13–16. Bowen, H.K., K.B. Clark, C.A. Holloway, and S.C. Wheelwright, The Perpetual Enterprise Machine (New York: Oxford University Press, 1994). Brown, S. and K. R. Eisenhardt, "Product Development: Past Research, Current Findings, and Future Directions," Academy of Management Review, vol. 20, no. 2 (1995), pp. 343–78. Cameron, K.S., and R.E. Quinn, Diagnosing and Changing Organizational Culture: Based on the Competing Values ​​Framework (Upper Saddle River, NJ: Prentice Hall, 2011). Casey, W., and W Peck, “Choosing the Right PMO Setup”, PMNetwork, August 2001, pp. 150–58. Deal, T.E., and A.A. Kennedy, Corporate Cultures: The Rites and Rituals of Corporate Life (Reading, MA: Addison-Wesley, 1982). De Laat, P.B., "Matrix Management of Projects and Power Struggles: A Case Study of an R&D Laboratory", IEEE Engineering Management Review, Winter 1995. Filipczak, B., "Beyond the Gates of Microsoft", Training, September 1992, p .. The search for project management management (San
Francis: Jossey-Bass, 1997). Gray, C., S. Dworatschek, D. H. Gobeli, H. Knoepfel, and E. W. Larson, "International Comparison of Project Organization Structures: Use and Effectiveness," International Journal of Project Management, vol. 8, no. 1 (February 1990), pp. 26–32. Hobbs, B. and P. Ménard, "Organizational Choices for Project Management," in Paul Dinsmore (ed.), The AMA Handbook of Project Management (New York: AMACOM, 1993). Hobday, M., "The Project-Based Organization: an ideal way to manage complex products and systems?" Research Policy, vol. 29, no. 17 (2000), p. 15, no. 3 (2002), pp. 42– 54. Johnson, C.L., M. Smith, and L.K. Geary, More Than My Share in All (Washington, D.C.: Smithsonian Institute Publications, 1990).Kerzner, H., “Strategic Planning for the Project Office,” ProjectManagement Journal, vol. 34, No. 2 (2003), pp. 13–25. Larson, E. W., “Project Management Structures,” in P. Morris and J. Pinto (eds.), The Wiley Handbook for Managing Projects (New York: Wiley , 2004), pp. 48–66. Larson, E.W. and D.H. Gobeli, “Matrix Management: Contradictions and Insights,” California Management Review, Vol. 29, No. 4 (Summer 1987), pp. 137–149. E.W. and D.H. Gobeli, “Organizing for Product Development Projects”, Journal of Product Innovation Management, vol. 5 (1988), pp. 180–90. Larsson, U. (ed.), Cultures of Creativity: The Centennial Exhibition of the Nobel Prize (Canton, MA: Science History Publications, 2001). Laslo, Z., and A. I. Goldberg, "Matrix Structures and Performance: The Search for Optimal Fits to Organizational Goals?"
page 97 IEEE Transactions in Engineering Management, vol. 48, no. 12 (2001), pp. 144–156. Lawrence, P. R., and J. W. Lorsch, Organization and Environment (Homewood, IL: Irwin, 1969). Majchrzak, A., and Q. Wang, “Breaking the Functional Mind-Set in Process Organizations,” Harvard Business Review, setembro–outubro de 1996, pp. 93–99. Olson, E. M., O. C. Walker, Jr. vol. 59 (janeiro de 1995), pp. 48–62. Patel, B., The many benefits of an agile PMO: What you need to know. www.forbes.com/…/the-many-benefits-of-an-agile-pmo-what-you-need-to-know. Accessed on 28/08/2018. Pettegrew, A. M., "On Studying Organizational Culture", Administrative Science Quarterly, vol. 24, no. 4 (1979), pp. 570–81. Powell, M. and J. Young, “The Project Management Support Office” in P. Morris and J. Pinto (eds.), The Wiley Handbook for Managing Projects (Nova York: Wiley, 2004), pp. 937–69.Project Management Institute (PMI), “Surveys How Organizations Succeed,” PMI Today, February 2011, pp. 1–2. Rebello, K., "Inside Microsoft", Business Weekly, 15 de Julho de 1996, p. 41, nº. 1 (1998), pp. 33–48. Shenhar, A. J., D. Dvir, T. Lechler, and M. Poli, “One Size Does Not Fit All—True for Projects, True for Frameworks,” Frontiers of Project Management Research and Application, Proceedings of PMI Research Conference, Seattle, 2002 , pp. 99–106.
page 98 Smith, P. G. and D. G. Reinertsen, Developing Products in Half the Time (New York: Van Nostrand Reinhold, 1995). Stuckenbruck, L.C., Implementing Project Management (UpperDarby, PA: Project Management Institute, 1981). Youker, R., “Organizational Alternatives to Project Management”, Project Management Quarterly, vol. 8 (March 1977), pp. 24–33. Case 3.1 Accountancy firm Moss and McAdams Bruce Palmer has worked for Moss and McAdams (M&M) for six years and has just been promoted to account manager. His first assignment was to lead an audit of Johnsonville Trucks. He was quite pleased with the five accountants assigned to his team, especially Zeke Olds. Olds was an Army veteran who had returned to school to double major in accounting and computer science. He was on top of the latest developments in financial information systems and had a reputation for finding innovative solutions to problems. M&M was an established regional accounting firm with 160 employees in six offices in Minnesota and Wisconsin. The main office where Palmer worked was in Green Bay, Wisconsin. In fact, one of the founding members, Seth Moss, played briefly for the hometown NFL Packers in the late 1950s. M&M's primary services were corporate audits and tax preparation. Over the past two years, the partners have decided to move more aggressively into the consulting business. M&M predicted that consulting would account for 40% of its growth over the next five years. M&M's operated within a matrix structure. As new clients were taken on, an account manager was appointed. An administrator can be assigned to multiple accounts, depending on the size and scope of the work.
This was especially true in the case of tax preparation plans, where it was not unusual for a manager to be assigned to 8-12 clients. Similarly, senior accountants and staff have been placed in multi-account teams. RubySands was the office manager responsible for assigning employees to different accounts in the Green Bay office. He did his best to staff multiple projects under one manager. This was not always possible, and sometimes accountants had to work on projects led by different managers. M&M, like most accounting firms, had a tiered promotion system. New CPAs are registered as junior accountants or staff accountants. Within two years, their performance was reviewed and they were asked to either leave or be promoted to senior accountants. Sometime during their fifth or sixth year, the decision was made to promote them to account manager. Finally, after 10 to 12 years with the firm, the manager was considered for promotion to partner. This was a very competitive position. In the past 5 years, only 20% of M&M's account managers have been promoted to partner. However, once married, they were practically guaranteed for life and enjoyed significant increases in pay, benefits and prestige. M&M had a reputation as a results-oriented organization. affiliate promotions were based on meeting deadlines, customer retention and revenue generation. The promotion team based its decision on the account manager's relative performance compared to peers. A week after the Johnsonville inspection, Palmer received a call from Sands to visit his office. There he met Ken Crosby, who had recently joined M&M after nine years working for a Big 5 accounting firm. Crosby was hired to manage special consulting projects. Sands reported that Crosby had just secured a major consulting project with Springfield Metals. This was a huge blow to the company: M&M had competed with two of the Big 5 accounting firms for the project. Sands went on to explain that he was working with Crosby to assemble his team. Crosby insisted that Zeke Olds be assigned to his team. Sands told him that would be impossible because Olds was already assigned to work on the Johnsonville audit. Crosby persisted, arguing that Olds' experience was essential to the Springfield project. Sands decided to compromise and had Olds split time between the two projects. At that point, Crosby turned to Palmer and said, “I believe in keeping things simple. Why can't we agree that Olds works for me in the morning
page 99 and you in the afternoon? I'm sure we can resolve any issues that arise. After all, we both work for the same company." SIX WEEKS LATER Palmer could scream whenever he remembered Crosby's words "After all, we both work for the same company." The first sign of trouble came in the first week of the new deal, when Crosby called, begging Olds to work all Thursday on his project. They were conducting an extensive customer visit and Olds was instrumental in the evaluation. After Palmer reluctantly agreed, Crosby said he owed him one. The following week, when Palmer called Crosby to ask him to return the favor, Crosby flatly refused and said any other time but not this week. Palmer tried again a week later and got the same answer. At first, Olds showed up promptly at 1 p.m. to Palmer's office to work on the audit. It soon became a habit to arrive 30 to 60 minutes late. There was always a good reason. He was in a meeting in Springfield and couldn't just leave, or an urgent task took longer than planned. Once it was because Crosby took his entire team to lunch at the new Thai restaurant — Olds was delayed more than an hour due to slow service. At first, Olds usually made up his time by working after hours, but Palmer could tell from the conversations he overheard that this was creating tension at home. when he should be working for Palmer. Sometimes Palmer could swear that Olds was working on Crosby's project in his (Palmer's) office. Palmer met with Crosby to address the issue and air his grievances. Crosby acted surprised and even a little hurt. He promised that things would change, but the pattern continued. Palmer had become paranoid about Crosby. He knew Crosby played golf with the Olds on the weekends, and he could picture him trashing Johnsonville's work and pointing out how boring the checking job was. The sad fact was that there was probably some truth to what he said.
said page 100. The Johnsonville project had bogged down and the team was behind schedule. One of the contributing factors was Olds performance. His work was not up to his usual standards. Palmer approached Olds about it, and Olds became defensive. Olds later apologized and confided that he had trouble shifting his thinking from counseling to testing and then back to counseling. He promised to do better and there was a slight improvement in his performance. Crosby his corporate tickets and decided to gift his team boxes right behind the Brewers dugout. Palmer hated to do this, but he had to deny the request. He felt guilty when he heard Olds explain to his son over the phone why they couldn't come to the game. Palmer eventually decided to request an emergency meeting with Sands to resolve the issue. He plucked up enough courage and called back only to be told that Sands wouldn't be back in the office until next week. As she hung up the phone, she thought that maybe things would get better. TWO WEEKS LATER, Sands showed up unexpectedly in Palmer's office and said he needed to talk about Olds. Palmer was glad, thinking he could now tell her what was going on. But before he could speak, Sands told him that Olds had gone to see her yesterday. He told him that Olds confessed that he had a hard time working on the Crosby and Palmer projects. He had difficulty concentrating on his audit work in the afternoon because he was thinking about some of the consulting issues that had arisen in the morning. He was working overtime to try to meet deadlines on both projects, and this was causing problems at home. The fact is that he was stressed and could not handle the situation. He asked to be assigned full-time to the Crosby project. Sands went on to say that Olds did not accuse Palmer. in fact, she had a lot of good things to say about him. He just liked consulting work better and found it more difficult. Sands concluded by saying, “I told him I understood and I would talk to you about the situation and see what could be done. Honestly, I think it should
take him off his project and make him work full time on Crosby's project. What do you think?"1. If you were Palmer at the end of the case, how would you react?2. What, if anything, could Palmer have done to prevent Olds' loss?3. What advantages and disadvantages of a matrix organization are evident in this case? 4. What could M&M management do to more effectively manage situations like this? Case 3.2 Horizon Consulting Patti Smith looked up at the blue Carolina sky before entering the offices of Horizon Consulting. It was Friday, which meant he had to get ready for the weekly status report meeting. Horizon Consulting is a custom software development company offering fully integrated mobile application services for the iPhone™, Android™, Windows Mobile® and BlackBerry® platforms. Horizon was founded by James Thrasher, a former marketing executive who quickly saw the potential of smartphone digital marketing. Horizon had initial success in sports marketing, but quickly expanded into other industries. Key to its success was the falling cost of smartphone app development, which expanded its customer base. The drop in cost was mainly due to the learning curve and the ability to build custom solutions on established platforms. Patti Smith was a latecomer and returned to college after nine years working in the restaurant business. She and her ex-husband tried unsuccessfully to run a vegetarian restaurant in Golden, Colorado. Although he enjoyed the marketing classes much more than she did
page 101 MIS courses, she felt that the IT expertise she acquired would give her an edge in the job market. This proved to be true, as Horizon hired her to be an account manager right after she graduated. Patti Smith was hired to replace Stephen Stills, who had started the restaurant business at Horizon. Stephen was “let go,” according to an account manager, because she was a diva and amassing funds. He helped develop smartphone apps that allow users to make reservations, browse menus, receive notifications of daily specials, provide customer feedback, pick up orders and, in some cases, deliver orders. As an account manager, he worked with clients to assess their needs, develop a plan and build custom smartphone apps. Horizon seemed to be a good fit for Patti. He had enough technical training to be able to work with software engineers and help them produce products ready for customers. At the same time, she networked with restaurateurs and enjoyed working with them on web design and digital marketing. Horizon was organized into three divisions: Sales, Software Development, and Graphics, with account managers acting as project managers. Account managers usually came from sales and split their time between projects and sales presentations to potential new clients. Horizon employed a core team of software engineers and designers, supplemented by contract developers when needed. The first step in developing a smartphone app involved the account manager meeting with the client to define the requirements and vision for the app. The account manager then worked with a graphical user interface (GUI) designer to create a preliminary storyboard of how the app would work and look. After the initial idea and requirements were approved, two pairs of software engineers were assigned to the account manager. The first pair (app engineers) worked on the smartphone side of the app, while the second pair worked on the client side. Horizon preferred software engineers to work together so they could review each other's work. The two application engineers typically worked full-time on the application until it was complete, while the other engineers worked on multiple projects as needed. Likewise, GUI designers worked on the project at certain key stages of the product development cycle when their expertise was needed.
page 102 The head of graphics managed the GUI designers program, while the software manager managed the software engineering tasks. At the end of each project, account managers presented performance reviews of their team. The sales manager was responsible for performance evaluations of account managers based on customer satisfaction, sales generation and project performance. Horizon believed in iterative development, and account managers were expected to demonstrate the latest version of applications to customers every two to three weeks. This led to useful feedback and, in many cases, re-scoping of the project. Customers often wanted to add more functionality to the application once they saw what the software could do. Depending on the complexity of the application and the changes introduced while the project was in progress, Horizon typically took two to four months to deliver a final product to a customer. Patti was currently working on three projects. One was for ShanghaiWok, a busy mom-and-pop Chinese restaurant in downtown Charlotte, North Carolina. The owners of Shanghai Wok wanted Horizon to create a smartphone app that would allow customers to order and prepay for takeout meals at an open window. The second project was for Taste of India, which operated out of Kannapolis, North Carolina. They wanted Horizon to create a phone app that would allow employees of nearby biotech companies to order food to be delivered to their location during lunch and dinner. The last project was for Nearly Normal, a vegetarian restaurant that wanted to send email alerts to subscribers detailing their daily fresh specials. James Thrasher was a fan of Google and fostered a playful yet work-focused environment. Workers could decorate their workspaces, bring pets to work, and play ping pong or pool when they needed a break. Horizon paid its employees well, but the big reward was the annual Christmas bonus. This bonus was based on the company's total earnings, which were prorated based on pay grade and performance reviews. It was not unusual for workers to receive a 10% to 15% pay raise at the end of the year. STATUS REPORT MEETING
As was her habit, Patti entered the conference room early for the status report. David Briggs was in the middle of describing John Lores' victory in the softball game the night before. Horizon sponsored a county softball team, on which most of the account managers played. Patti was persuaded to play to ensure that the required number of "females" were on the court. He balked at the idea at first. Softball wasn't really her sport, but she was happy about it. Not only was it fun, but it gave her a chance to meet the other managers. James Thrasher entered the room and everyone got to work. He began as he always did, asking if anyone had important news to bring to everyone's attention. Jackson Browne slowly raised his hand and said, “I'm scared. I just received a notification from Apple iOS that they have rejected the TAT app.” TAT was a phone app, for which Jackson was the project lead, that allowed subscribers to book and see in real time which swimming lanes were available at a famous sports club. This announcement was followed by a collective groan. Before an Apple app could be released, it had to be submitted and approved by Apple. Normally this wouldn't be a problem, but lately Apple has been rejecting apps for a variety of reasons. Jackson went on to release the list of changes that needed to be made before Apple would approve the app. The group studied the list and, in some cases, scoffed at the new requirements. application for approval. Jackson felt it would probably take two to three weeks at most. Thrasher asked who the engineers were working on this project. Patty's heart dropped. One of the application engineers who developed the TAT application was working on the ShanghaiWok project. He knew what was going to happen next. Thrasher announced, “Okay guys, it stands to reason that these engineers are the best to finish what they started, so they should all be reassigned to the TAT project. Those affected should come together after this meeting and figure out how to replace them. The meeting proceeded as planned, with all account managers reporting on the status of their projects and sharing relevant topics with the team. AFTER MEETING
page 103 As everyone left, Patty looked around to see who else was in the same boat. There were three other account managers besides Jackson Brown. Resource assignment was a recurring problem at Horizon given the nature of its work. Horizon developed a policy where decisions were made based on project priority. Each project was assigned a green, blue or purple designation based on the company's priority. Priority status was based on the extent to which the project contributed to the company's mission. The Shanghai Wok project, due to its limited size and scope, was a Purple project, which received the lowest score. The list of available software engineers appeared on the big screen. Patti only knew some of the names. Leigh Taylor, who had the sole Green project, immediately selected Jason Wheeler from the list. She had used it before and was confident in its work. Tom Watson and Samantha Stewart had Blue Projects and needed to replace a mobile app engineer. Both immediately jumped on Prem Mathew's name, claiming that he was the best man for the job. After a friendly race, Tom said, “Okay, Sam, you can take him. I remember when you helped me with the Argos project. Besides, my project is just getting started. I will take Xin Chen. Everyone looked at Patti. he began by saying, “You know, I only know some of these names. I think I'll go with Mike Thu. Jackson said: “Hey guys, I'm really sorry what happened and I'm sure Mike is a good developer, but I recommend you work with AxelGerthoff. I've used it before, and it's a very quick study and a joy to work with. This came as a relief to Patti and she quickly followed his advice. They proceeded to send Thrasher a report detailing the decisions each made and the impact on their projects.1. What was her success after the meeting?2. What factors contributed to the success or failure of this meeting?3. What kind of project management structure does Horizon use? Is it the right structure? Explain.
Design Elements: Practice Snapshot, Highlight Box, Case Icon: ©SkyDesigns/Shutterstock1 In addition to culture and structure, environmental factors also include geographic distribution, resource availability, IT resources, and more.2 projects are also called project offices , program offices project support offices and the like.3 For a more complex discussion of contingency factors related to the management of specific projects, see: Shenhar, A. J. and D. Dvir, Reinventing Project Management: The Diamond Approach to Success Growth and Innovation (Boston: Harvard Press, 2007).4 See, for example: Gu, V. C., J. J. Hoffman, Q. Cao, and M. J. Schniederjans, “The Effects of Organizational Culture and Environmental Pressures on IT Project Performance: AModeration Perspective”, International Journal of Project Management, vol. . 32, no. 7 (2014), pp. 1170–81; Kerzner, H., In Search of Excellence in Project Management (New York: Von Nostrand Reinhold, 1997); Yazici, H., "The Role of Project Management Maturity and Organizational Culture in Perceived Performance", Project Management Journal, September 2009, p. Prentice Hall, 1993). O'Reilly, C. A., J. Chatman, and D. F. Caldwell, "People and Organizational Culture: A Profile Matching Approach to Assessing Person-Organization Fit," Academy of Management Journal, vol. 34, no. 3 (September 1991), pp. 487–516; Schein, E., Organizational Culture and Leadership: A Dynamic View (San Francisco, CA: Jossey-Bass, 2010).
4-14-24-34-44-54-64-74-8page 104CHAPTER FOUR4Defining the Project LEARNING OBJECTIVESAfter reading this chapter, you will be able to: Identify the main elements of a project object statement and understand why a statement of the complete scope is critical to project success. Describe the causes of scope creep and how to manage it. Understand why it is important to prioritize the project in terms of cost, time and performance. Show the importance of a work breakdown structure (WBS) for project management and how it functions as a database for planning and control. Show how the job breakdown structure (OBS) establishes accountability across organizational units. Describe a process breakdown structure (PBS) and When to use it Create responsibility charts for small projects Create a communication plan for a project. CONTOUR
Step 1: Define Project Scope Step 2: Define Project Priorities Choose a Dream Use your dream to set a goal
page 106Create a plan Explore resources Improve skills and abilities Spend time wisely Get started! Get organized and go. . . it's one of those things, Pooh said. —Roger E. Allen and Stephen D. Allen, Winnie-the-Pooh on Success (New York: Penguin, 1997), p. 10. Project managers responsible for a single small project can plan and schedule project tasks without much planning and formal information. However, when the project manager has to manage many small projects or a large complex project, a limit is quickly reached where the project manager can no longer handle the details. This chapter describes a structured and disciplined method for selectively collecting information for use in all phases of the project life cycle, for meeting the needs of all stakeholders (e.g. client, project manager) and for measuring performance in relation to the organization's strategic plan. The proposed method is a selective design scheme called a work breakdown structure. The early stages of blueprint development ensure that all tasks are identified and that project participants understand what needs to be done. Once the outline and details are established, an integrated information system can be developed for scheduling work and allocating budgets. This basic information is later used for tracking. In addition, the chapter introduces a variation of the task breakdown structure called the task breakdown structure, as well as responsibility tables used for smaller, less complex projects. With the project work defined through the task breakdown structure, the chapter ends with the process of creating a communication plan that is used to help coordinate project activities and monitor progress. The five general steps outlined provide a structured approach to gathering the project information needed to develop a work breakdown structure. These steps and the development of design networks that you will find in later chapters occur simultaneously and through multiple iterations.
usually required to develop dates and budgets that can be used to manage the project. The old adage "We can only control what we plan" is true. Therefore, defining the project is the first step.4.1 Step 1: Define the Project ScopeLO 4-1 Identify the key elements of a scope statement and understand why a complete scope statement is critical to project success. Define the scope of the project sets the stage for developing a detailed project plan. Project scope is a definition of the end result or mission of your project - a product or service for your customer/consumer. The main objective is to define as clearly as possible the product(s) for the end user and to focus the project plans. Research clearly shows that an incorrectly defined scope or mission is the most commonly cited barrier to project success. In a study of more than 1,400 project managers in the United States and Canada, Gobeli and Larson (1990) found that approximately 50% of planning problems were related to unclear definition of scope and objectives. This and other studies suggest a strong correlation between project success and clear scope definition (Ashley et al., 1987; Pinto & Slevin, 1988; Standish Group, 2009). The scope document focuses the purpose of the project throughout the project for the client and project stakeholders. The scope should be developed under the guidance of the project manager, the client and other key stakeholders. The project manager is responsible for ensuring that there is agreement with the owner on project objectives, deliverables at each stage of the project, technical requirements, etc. For example, an early stage delivery may be specified. for the second stage, three prototypes for production. for the third, quantity sufficient to introduce into the market; and finally, marketing promotion and training. Your project scope definition is a document that will be published and used by the project owner and project stakeholders for planning and
page 107 measuring project success. The scope describes what you expect to deliver to the client when the project is complete. The project scope should define the results to be achieved in specific, tangible and measurable terms. Using a Project Scope Checklist Obviously, the project scope is the cornerstone that ties all the elements of a project plan together. To ensure that scoping is complete, you can use the following checklist: Project Scope Checklist1. Purpose of the project 2. Product Scope Description 3. Justification 4. Deliverables 5. Brand 6. Technical Requirements 7. Limits and Exceptions 8. Acceptance Criteria 1. Objective of the project. The first step in defining the scope of the project is to define the overall goal of meeting your client's needs. For example, as a result of extensive market research, a computer software company decides to develop a program that automatically translates English verb phrases into Russian. The project is expected to be completed in three years at a cost of no more than US$1.5 million. Another example is the design and construction of a portable heat treatment system for hazardous waste in 13 months at a cost not exceeding $13 million. The project objective answers the questions of what, when, how much and when.2. Product range description. This step is a detailed description of the features of the product, service or project outcome. The description is gradually elaborated throughout the project. Product scope answers the question "What end result is desired?" For example, if the product is a mobile phone, the product scope will be screen size, battery, processor, camera type, memory, etc.3. Justification. It is important that project team members and stakeholders know why management approved the project. What is the problem or
page 108 What opportunity is the project aimed at? This is sometimes called the business case for the project, as it often includes cost/benefit analysis and strategic importance. For example, in a recently started project, the justification might be an expected return on investment of 30% and an improved reputation in the market.4. Deliverable. The next step is to define key deliverables - the results that are expected and measurable over the life of the project. For example, deliverables in the early design phase of a project might be a list of specifications. In the second phase, the products can be software coding and technical manual. The next phase could be prototyping. The final phase may be final software testing and approval. Note: Deliverables and requirements are often used interchangeably.5. Accomplishments. A milestone is an important event in a project that occurs at a point in time. The milestone schedule shows only important parts of the work. It mainly represents rough estimates of time, cost and resources for the project. The milestone schedule is created using the deliverables as a platform to identify key pieces of work and a due date - for example, testing completed and completed by July 1st of that year. Milestones should be natural and important control points in the project. Milestones must be easily recognized by all project participants. PRACTICE MOMENT 4.1Big Bertha ERC II vs. USGA COLOR Requirement* In 1991, Callaway Golf Equipment introduced the Big Bertha driver and revolutionized the golf equipment business. The Big Bertha - named after the German long-range cannon of World War I - was much larger than conventional woods and did not have a "socket" (the slot in the head of the bar into which the stem is fitted) because the weight could be better distributed over the head. This innovative design gave the clubhead a larger sweet spot, which allowed the player to hit the golf ball off-center and not suffer much loss in distance or accuracy. In 2000, Callaway introduced the Big Bertha ERC II forged titanium driver. "Designing the ERC II was a dream experience," said Richard C. Helmstetter, senior executive vice president of research and development and head of new products. "We did not have
limitations, so we were able to think outside the box to achieve our goal of making the transfer of energy from the bat to the ball as efficient as possible. This allows golfers to generate more ball speed without swinging harder, which results in more distance. We use a combination of new advanced computer design technology and hands-on research with golfers around the world. As a result, we've created some design elements that go beyond any previous driver design. Feedback from players who have tested this driver indicates that our efforts have dramatically improved the performance that all golfers can expect from these drivers.”1 However, there was one big problem. The new version of Bertha did not meet the coefficient of restitution (COR) requirement set by the United States Golf Association (USGA). As a result, its use was banned by golfers in North America who intended to play under the USGA Rules of Golf. The USGA felt that the integrity of the game was being threatened by technological advances. Players were hitting balls so much farther and straighter that golf courses around the world were being redesigned to be longer and harder. This was expensive. Ufulum/Shutterstock Then in 1998, the USGA established performance limits for all new golf equipment. To prevent manufacturers from developing more powerful clubs, the USGA has limited the COR of new golf equipment to 0.83. COR was calculated by shooting a golf ball into a driver from a cannon-like machine at 109 miles per hour. The speed at which the ball returned to the cannon could not exceed 83 percent of its original speed (90.47 mph). The USGA called the ratio of input to output velocity the coefficient of restitution (COR). Studies have shown that a 0.01 increase in COR resulted in an additional 2 carry yards. Big Bertha ERC II's COR was 0.86. Great Big Bertha II, which complied with the USGA's 0.83 COR restriction. They also continued to produce the ERC II.
page 1091 Callaway Press Release. Callaway Golf introduces the ERC II Forged Titanium Driver - the warmest and most forgiving driver ever. Accessed January 3, 2019, ir.callawaygolf.com.6. Technical requirements. Often, a product or service will have technical requirements to ensure proper performance. Technical requirements usually specify deliverables or set performance specifications. For example, a technical requirement for a personal computer might be the ability to accept either 120 volts AC or 240 volts DC without adapters or user switches. Another well-known example is the ability of 911 emergency systems to recognize the caller's phone number and the phone's location. Examples of information systems designs include the speed and capacity of database systems and connectivity to alternative systems. To understand the importance of the basic requirements, see Practice Slide 4.1: Big Bertha ERC II vs. USGA's CORR Requirement. PRACTICE 4.2 Scope Statement PROJECT OBJECTIVE Construct a high quality custom house in five months at a cost of no more than $700,000 on Lot 42A in Greendale, Oregon rooms, finished home. DELIVERY Finished, insulated plastered garage. Cookware with oven, oven, microwave and dishwasher. High performance gas oven with programmable thermostat. Aluminum cover. HIGHLIGHTS 1. Permits approved — March 5.2. Application Poured - March 14th.
3. Gypsum board inside. Construction, cladding, plumbing, electrical and mechanical inspections passed - May 25.4. Final Inspection — June 7 TECHNICAL REQUIREMENTS1. The home must meet local building codes.2. All windows and doors must have NFRC 40.3 energy class ratings. Exterior wall insulation must meet an "R" factor of 21.4. Roof insulation must meet an "R" factor of 38.5. Floor insulation must meet an "R" factor of 25.6. The garage will accommodate two large cars and a 20-foot Winnebago.7. Construction must pass seismic codes.Ufulum/Shutterstock LIMITATIONS AND EXCLUSIONS1. The house will be built according to the specifications and design of the original plans provided by the customer.2. Landlord is responsible for landscaping.3. The refrigerator is not included in the kitchen appliances.4. Air conditioning is not included, but pre-wiring is included.5. The Contractor reserves the right to outsource the services.
page 1106. The contractor is responsible for subcontracting work.7. Limited work Monday to Friday 8am. to 6 p.m. CLIENT NOTICE Linda and Dave Smith.7. Limits and Exclusions. The boundaries of the scope must be defined. Failure to do so can lead to false expectations and spending resources and time on the wrong problem. The following are examples of boundaries: work on site is permitted only between 8:00 p.m. and 8:00 p.m. and 5:00 a.m. Maintenance and repair of the system will only be done up to one month after the final inspection; and the customer will be billed for additional training beyond what is specified in the contract. Exclusions further define the boundaries of the project by stating what is not included. Examples include: the data will be collected by the customer and not by the contractor. a house will be built, but no landscaping or security devices will be added. software will be installed but no training provided.8. Acceptance criteria. Acceptance criteria are a set of conditions that must be met before deliverables are accepted. The following examples are: all tasks and milestones completed, new service procedures initiated with less than 1% defect rate, third party certification required, and customer site inspection required. Scope declarations are duplicated. There is a brief one- to two-page summary of the key elements of the scope, followed by extensive documentation for each element (for example, a detailed timeline of milestones or a risk analysis report). See Practice Example 4.2: Field Declaration for an example summary page. The project scope checklist in Step 1 is general. Different industries and companies will develop unique checklists and templates that suit their specific needs and project types. Some companies involved in contract work refer to their scope statements as "statements of work (SOWs)." Other organizations use the term project charter. However, the term project map has emerged to have a special meaning in the world of project management. A project charter is a document that authorizes the project manager to initiate and lead the project. This document is issued by senior management and provides the project manager with written authorization to use organizational resources for project activities. Often the letter will include
page 111a brief description of the scope, as well as things like risk limits, business case, spending limits, and even team composition. LO 4-2 Describe the causes of scope creep and ways to manage it Many projects experience scope creep, which is the tendency for the scope of the project to expand over time—often changing requirements, specifications, and priorities. Scope creep can have a positive or negative effect on the project, but in most cases scope creep means additional costs and potential project delays. Changes in requirements, specifications and priorities often lead to cost overruns and delays. Examples abound - the Denver airport baggage handling system, Boston's new freeway system ("The Big Dig"), the Sochi Winter Olympics, and the list goes on. In software development projects, scope creep manifests itself in bloated products where additional functionality reduces ease of use. Five of the most common causes of scope creep are poor requirements analysis. Customers often don't really know what they want. The "I'll know it when I see it" syndrome contributes to wasted effort and ambiguity. It doesn't engage users early enough. Often, project teams think they know what the end user needs in advance, only to find out later that they were wrong. Underestimate the complexity of the project. The complexity and associated uncertainty naturally lead to changes in scope, as there are still many unknowns to be discovered. Lack of change control. A robust change control process is required to ensure that only appropriate changes are made within the project object. Gilding refers to adding extra value to the project beyond the scope of the project. This is common in software projects where developers add features they think the end user will like.
Figure 1.2!). Instead of trying to make plans in advance, Agile project management should be applied to understand what needs to be done. In agile projects, the scope is seen as evolving rather than being prescribed. Scopecreep manages and reflects progress. If the scope of the project must change, it is important to have a solid change control process that captures the change and maintains a record of all project changes. Change control is one of the topics of Chapter 7. Project managers in the field often suggest that dealing with changing requirements is one of their most difficult problems. cost, time and performance. The quality and ultimate success of a project is traditionally defined as meeting and/or exceeding the expectations of clients and/or senior management in terms of cost (budget), time (schedule), and performance (scope) of the project ( see Figure 4.1). The interdependence between these criteria varies. For example, sometimes it is necessary to compromise on performance and project scope in order to complete the project quickly or at a lower cost. Often, the longer a project takes, the more expensive it becomes. However, a positive correlation between cost and schedule may not always be true. Other times, project costs can be reduced by using cheaper, less efficient labor or equipment that extends the life of the project. Similarly, as will be seen in Chapter 9, project managers are often forced to speed up or "slow down" certain key activities by adding additional manpower, thereby increasing the initial cost of the project.
page 112 One of the main tasks of a project manager is to manage the trade-offs between time, cost and performance. To do this, project managers must define and understand the nature of project priorities. They must have an honest discussion with the project client and senior management to determine the relative importance of each criterion. For example, what happens when the customer keeps adding requirements? Or if in the middle of the project a trade-off between cost and agility has to be made, which criterion takes precedence? may be admitted: Limitation. The initial parameter is fixed. The project must meet the completion date, specifications and scope of the project or budget. To be improved. Given the scope of the project, which criteria should be optimized? In the case of time and cost, this often means taking opportunities to reduce costs or shorten the schedule. On the other hand, in terms of performance, improvement means adding value to the project. To accept. For what criteria is it acceptable not to meet the initial parameters? When compromises are needed, is it acceptable to allow the schedule to be delayed, the scope and performance of the project to be reduced, or the budget to be exceeded? Figure 4.2 shows the priority matrix for developing a new wireless router. Since time to market is important to sales, the project manager is instructed to take every opportunity to reduce
page 113 completion time. In this way, going over budget is acceptable, although not desirable. At the same time, the router's original performance specifications as well as reliability standards cannot be violated. FIGURE 4.2 Project Priorities Chart Priorities vary from project to project. For example, for many software projects, time to market is critical, and companies like Microsoft may defer initial scope requirements to later releases in order to get to market first. Alternatively, for special event projects (conferences, parades, tournaments), time is limited once the date is announced, and if the budget is tight, the project manager will compromise the scope of the project to complete it on time. Some argue that all three criteria are always limited and good project managers should aim to optimize each criterion. If everything is going well on a project and there are no major problems or setbacks, your argument may be valid. However, this situation is rare and project managers are often forced to make difficult decisions that benefit one criterion and compromise the other two. The purpose of this exercise is to define and agree what the project's priorities and constraints are so that when push comes to shove, the right decisions can be made. There are likely to be natural limits to the extent to which managers can narrow, refine or accept any criteria. It may be acceptable for the project to be delayed by a month but not more or to exceed the planned budget by up to $20,000. Also,
it may be desirable to complete a project a month early, but after that cost savings should be the main goal. Some project managers document these limits as part of creating the priority table. In summary, developing a priority table for a project before starting the project is a useful exercise. Provides a forum for clearly setting priorities with customers and senior management to establish shared expectations and avoid misunderstandings. Priority information is essential to the planning process, where adjustments can be made to scope, schedule, and budget allocation. Finally, the board is useful in the middle of the project to address a problem that needs to be solved. A caveat must be mentioned. during the course of a project, priorities may change. The client may suddenly need the project completed a month early, or new directives from senior management may emphasize cost-cutting initiatives. The project manager must be vigilant in anticipating and acknowledging changes in priorities and making appropriate adjustments. database for programming and control. Important Groupings in a WBS Once the scope and deliverables are identified, the project work can be successively subdivided into smaller and smaller work items. The result of this hierarchical process is called a work breakdown structure (WBS). Using a WBS helps project managers ensure that all deliverables and work items are identified, integrate the project into the current organization, and establish a baseline of control.
Basically, WBS is a project outline with different levels of detail. Figure 4.3 shows the main groupings commonly used in the field to develop a hierarchical WBS. The WBS starts with the project as the final deliverable. The main project deliverables/systems are identified first. Next, the sub-deliverables required to complete the larger deliverables are defined. The process is repeated until the details of the sub-delivery are small enough to be manageable and one person can be responsible. This sub-deliverable is divided into work packages. Since the lower secondary deliverable often includes multiple work packages, the work packages are grouped by work type, for example, design and test. These groupings into a subdelivery are called cost accounts. This grouping facilitates a system for tracking project progress by task, cost and responsibility. FIGURE 4.3 Hierarchical division of the EAP
page 114 How a WBS Helps the Project Manager A WBS defines all the project elements in a hierarchical structure and defines their relationships to the final project elements. Think of the project as a large work package that is sequentially broken down into smaller work packages. the total project is the sum of all sub-work packages. This hierarchical structure facilitates the evaluation of cost, time and technical performance at all levels of the organization throughout the life of the project. The WBS also provides management with the appropriate information at each level. For example, senior management primarily handles major deliverables, while front-line supervisors handle secondary deliverables and smaller work packages.
page 115 Each item in the WBS needs a time and cost estimate. With this information project planning, scheduling and budgeting is possible. The WBS also serves as a framework for tracking work costs and performance. As the WBS is developed, organizational units and individuals are designated as responsible for executing the work packages. This combines work and organization. In practice, this process is sometimes referred to as an organization breakdown structure (OBS), which is discussed later in this chapter. elements of work so that performance can be measured by units of work organization and completion. The WBS can also be used to define communication channels and help understand and coordinate the many parts of the project. The structure shows the work and responsible organizational units and suggests where written communication should be directed. Issues can be resolved and coordinated quickly because the structure incorporates work and responsibility. A Simple Development WBS Figure 4.4 shows a simplified WBS for the development of a new prototype tablet computer. At the top of the chart (level 1) is the final item of the project - the E-Slim Tablet x-13 Prototype. Sub-deliverable levels (2–5) below level 1 represent further breakdown of work. Structure levels can also represent information for different management levels. For example, Level 1 information represents the overall goal of the project and is useful to senior management. Levels 2, 3 and 4 are suitable for middle management. and level 5 is for front-line managers. FIGURE 4.4 Work Analysis Framework
page 116 In Figure 4.4, level 2 shows that there are two main deliverables – Hardware and CPU, or central processing unit. (There will likely be other core products, such as software, but for illustrative purposes we limit our focus to just two core products.) At Level 3, the CPU is connected to three end products - Power Supply, Flash ROM, and E /MICRO Controller. The I/O controller has three secondary deliveries at level 4 - USB, Internet and touch screen ports. The many secondary renditions for USB and Internet sockets did not decay. The touch screen (shaded) is decomposed to level 5 and the work package level. Note that Level 2, Material, bypasses Levels 3 and 4 because finished products can be pushed down to the lower manageable Level 5. Omitting Levels 3 and 4 indicates that minimal coordination is required and skilled team members are already familiar with the work required to complete the level 5 sub-deliverables. For example, the hardware requires four sub-deliverables at level 5 - Structure, Cameras, Speakers and Antenna. Each subdeliverable includes work packages to be completed by a designated business unit. Note that the camera sub-delivery includes four working packages - WP-C1, 2, 3 and 4. Back Light, a
The touch screen sub-delivery includes three work packages - WP-L 1, 2 and 3. The lowest level of the WBS is called a work package. Work packages are short-term tasks that have a defined start and end point, consume resources, and represent costs. Each work package is a checkpoint. A work package manager is responsible for ensuring that the package is completed on time, within budget, and according to technical specifications. Practice suggests that a work package should not exceed 10 working days or a reference period. If a work package has a duration of more than 10 days, checkpoints or monitoring should be established within the duration - say every three to five days - so that progress and problems can be identified before too much time has passed. Each WBS work package should be as independent as possible from other work packages in the project. No work package is described in more than one sub-deliverable of the WBS. There is a significant end-to-end difference between the last subdeliverable of the work breakdown and a work package. Typically, a work analysis subdeliverable includes the results of more than one work package from two or three departments. Therefore, secondary delivery has no duration of its own and does not directly consume resources or cost money. (In one sense, of course, a duration for a given project detail item can be derived from determining which work package should start first [earliest] and which work package will finish last; the difference from start to finish makes ( the duration the subdeliverable.) Top items are used to identify deliverables in different phases of the project and to develop status reports during the execution phase of the project life cycle.Thus, the work package is the basic unit used for planning , project planning and control. In summary, each work package in the WBS1. Defines the work (what). 2. Determines the time to complete a work package (how long). 3. Determines a time-phased budget for completing a of work package (cost).4.Identifies the resources required to complete a work package (how much).5.Identifies a single person responsible for work units (who).6. Identifies monitoring points to measure progress (how well).
page 117 PRACTICE BREAK MOMENT 4.3 Creating a WBS Figure 4.4 represents the classic WBS in which the project is broken down into smaller manageable deliverables and subsequent work packages. Many situations do not require this level of detail. This raises the question of how far you should divide the work. There is no clear answer to this question. However, here are some tips provided by project managers: Break the work down until you can make an estimate that is accurate enough for your purposes. If you're doing a rough estimate to see if the project is worth serious consideration, you probably won't need to analyze it beyond the main deliverables. On the other hand, if you're pricing a project to come up with a competitive bid, you're likely going down to the work package level. The WBS should conform to how you will schedule your work. For example, if tasks are done in terms of days, tasks should be limited as best as possible to one or more days to complete. On the other hand, if hours are the smallest scheduling unit, the work can be divided into one-hour increments. Ending activities should have clearly defined start/end events. Avoid open-ended tasks such as "research" or "market analysis." Move to the next level where deliverables/outcomes are more clearly defined. Instead of ending with market analysis, include things like "determine market share," "record user requirements," or "write a problem statement." to work For example, instead of stopping at product design, take it to the next level and identify specific design elements (eg electrical schematics or power source) that will be responsible for creating different individuals. The bottom line is that the WBS should provide the level of detail required to successfully manage the specific project. Creating a WBS from scratch can be a daunting task. Project managers should draw on relevant examples from previous projects to start the process. EAPs are products of group efforts. If the project is small, the entire project team can participate in breaking the project down into its components. For large and complex projects, those responsible for key deliverables are likely to come together to create the first two levels of deliverables. In turn, more details will be assigned to humans
page 118 responsible for this task. Collectively, this information will be compiled and integrated into a formal WBS by a project support person. The final version will be reviewed internally within the project team. Relevant stakeholders (mainly customers) will be consulted to confirm the agreement and revise where necessary. Early efforts usually result in a WBS that follows the structure of the organization - planning, marketing, production, finance. If a WBS follows the structure of the organization, the focus will be on the operation and processes of the organization, rather than the outcome of the project or deliverables. Furthermore, a process-focused WBS will become an accounting tool that captures costs per function, rather than a tool for managing "results." Every effort should be made to develop a results-oriented WBS in order to focus on specific deliverables. See Practice Scenario 4.3: Create a WBS.4.4 Step 4: Integrate the WBS with the Organization LO 4-5 Show how the organization's work breakdown structure (OBS) defines responsibilities for organizational units. The WBS is used to link the organizational units responsible for performing the work. In practice, the result of this process is the organizational analysis structure (OBS). OBS describes how the company is organized to fulfill the job responsibility. The objectives of OBS are to provide a framework for summarizing organizational unit work performance, identify organizational units responsible for work packages, and link organizational unit to cost control accounts. Remember that cost accounts group similar work packages (usually under the responsibility of a department). OBS defines the organization's subdeliverables in a hierarchical pattern sequentially
smaller and smaller units. Often, the traditional organizational structure can be used. Even if the project is performed entirely by a team, it is necessary to break down the team structure to assign responsibility for budgets, time, and technical performance. . This is where the great power of using WBS and OBS lies. can be integrated as shown in figure 4.5. The intersection of work packages and the organizational unit creates a project control point (cost account) that integrates work and responsibility. For example, at level 5, Touch Sensors has three work packages assigned to the Design, Quality Control, and Production Departments. The WBS and OBS intersection represents the set of work packages required to complete the sub-deliverable directly above and the organizational unit to the left that is responsible for executing the packages at the intersection. Note that the Design Department is responsible for five different work packages between hardware and touch screen deliverables. Later, we will use the intersection as a cost account for project management tracking. For example, the Cameras component requires the completion of work packages whose primary responsibility will include the Design, QC Testing, Manufacturing and Outsourcing Departments. Auditing can be audited in two directions - results and accountability. In the execution phase of the project, progress can be tracked vertically across deliverables (customer interest) and tracked horizontally across the accountability organization (owner interest). . Codes are used to define levels and elements in the WBS, organizational elements, work packages, and budget and cost information. Codes allow reports to be consolidated at any level of the structure. The most commonly used scheme in practice is the numerical scheme.
page 119page 120 retreat. A part of the E-Slim Tablet x-13 Prototype project is presented in Appendix 4.1. Note that the project ID is 1.0. Each successive indentation represents a lower component or work package. Finally, the numerical scheme descends to the work package level, and all tasks and structure elements have an identification code. The "cost account" is the focal point because all budgets, work assignments, time, costs, and technical performance are concentrated at this point. This coding system can be extended to cover large projects. Additional figures may be added for special reports. For example, adding a "23" after the code could indicate the location of land, an elevation, or a special account such as labor. Certain letters can be used as special identifiers, such as "M" for materials or "E" for engineers. FIGURE 4.5 Integrating WBS and OBS
APPENDIX 4.1 WBSS Source Coding: Microsoft Excel You are not limited to just 10 subdivisions (0–9). you can expand each subdivision to large numbers — for example, 0.1–0.99 or 0.1–0.9999. If the project is small, you can use whole numbers. The following example is of a large and complex project: 3R-237A-P2-33.6
page 121, where 3R identifies the facility, 237A represents the elevation and area, P2 represents the 2-inch-wide pipe, and 33.6 the work package number. In practice, most organizations are creative in combining letters and numbers to minimize the size of WBS codes. In larger projects, the WBS is further supported by a WBS dictionary that provides detailed information about each WBS element. The dictionary typically includes the work package level (code), name, and functional description. In some cases, the description is supported by specifications. The availability of detailed descriptions has an added benefit of buffering creep. WBS is best suited for design and construction projects with tangible results, such as an offshore mining facility or a new concept car. The project can be decomposed or divided into main deliverables, sub-deliverables, other sub-deliverables and finally work packages. It is more difficult to apply the WBS to less tangible, process-oriented projects where the end result is the product of a series of steps or phases. Here, the big difference is that the project evolves over time with each phase influencing the next phase. Information systems projects usually fall into this category - for example, building an extranet website or an internal software database system. Process designs are driven by performance requirements rather than designs/blueprints. Some professionals choose to use a process breakdown structure (PBS) instead of the classic WBS. Figure 4.6 provides an example PBS for a software development project. Instead of being organized around deliverables, the project is organized into phases. Each of the five main phases can be broken down into more specific activities until sufficient detail is achieved.
page 122 managed to communicate what needs to be done to complete this phase. People can be assigned to specific activities and a supplementary OBS can be created, just as it is for the WBS. Deliverables are not ignored, but defined as required results to move to the next phase. The software industry often refers to a PBS as a "waterfall method" as progress flows down through each phase. These checklists provide the means to support stages and stage reviews. Checklists vary depending on the project and the activities involved, but generally include the following details: Deliverables required to exit a phase and start a new one.
page 123 Quality control points to ensure deliveries are complete and accurate. Approvals from all relevant stakeholders to indicate that the phase has been successfully completed and that the project should proceed to the next phase. Provided that the output requirements are firmly defined and the deliverables for each phase are well defined, the PBS provides a suitable alternative to the standard WBS for projects involving extensive development work.4.7 Responsibility Charts LO 4-7Create responsibility charts for small projects . . A tool widely used by project managers and small project workgroup leaders is the responsibility matrix (RM). The RM (sometimes called a line chart of accountability) summarizes the tasks that need to be done and who is responsible for what on a project. In its simplest form, an RM consists of a chart that includes all project activities and the stakeholders responsible for each activity. For example, Figure 4.7 illustrates an RM for a market research study. In this table, R is used to identify the committee member who is responsible for coordinating the efforts of other team members assigned to the task and ensuring that the task is completed. S is used to identify members of the five-person team who will support and/or assist the person in charge. Simple RMs like this are useful not only for organizing and assigning responsibility for small projects, but also for sub-projects of larger, more complex projects. More complex RMs not only identify individual responsibilities, but also specify critical interfaces between units and individuals that require coordination. For example, Figure 4.8 is an RM for a larger, more complex project to develop a new piece of automated equipment. Note that a numeric encoding scheme is used within each cell
page 124 to define the nature of participation in this particular project. Such an RM extends the WBS/OBS and provides a clear and concise method for representing responsibility, authority and communication channels. FIGURE 4.7 Responsibility Chart for Market Research ProjectFIGURE 4.8 Responsibility Chart for Conveyor Belt Design
Responsibility boards provide a way for all project participants to see their responsibilities and agree on their tasks. They also help to clarify the extent or type of authority exercised by each participant in carrying out an activity in which two or more parties have overlapping participation. By using an RM and defining authority, responsibility, and communications within your structure, the relationship between different organizational units and project work content is clear.4.8 Project Communication Plan LO 4-8 Create a Project Communication Plan . and tasks are clearly defined, creating an internal communication plan is vital. There are many stories of miscommunication as a major contributing factor to project failure. Having a strong communication plan can go a long way in mitigating project issues and can ensure that clients, team members, and other stakeholders have the information to complete their tasks. The communication plan is usually created by the project manager and/or the project team at an early stage of project planning. Communication is a key component in coordinating and tracking project schedules, issues, and action items. The plan maps the flow of information to different stakeholders and becomes an integral part of the overall project plan. The purpose of a project communication plan is to articulate what, who, how, and when information will be shared with project stakeholders so that schedules, issues, and action items can be tracked. Project communication plans address the following key questions: What information should be collected and when? Who will receive the information? What methods will be used to collect and store the information?
page 125 What are the limits, if any, on who has access to certain types of information? When will the information be shared? Stakeholder analysis. Identify target groups. Typical groups might be the client, sponsor, project team, project office, or anyone else who needs project information to make decisions and/or contribute to project progress. A common tool found in practice for initially identifying and analyzing the key communication needs of project stakeholders is shown in Figure 4.9.2 What is communicated and how it is affected by stakeholder interest and power. Some of these stakeholders may have the power to block or improve your project. By identifying stakeholders and prioritizing them on the Power/Interest map, you can plan the type and frequency of communications needed. (More details about stakeholders are discussed in Chapter 10.) For example, in a typical project, you want to closely manage the professionals doing the work, while also satisfying senior management and the project sponsor with periodic updates. Trade unions and business managers interested in the capacity should be informed, while you only need to provide general information to legal, public relations and other departments. FIGURE 4.9 Stakeholder Communications
2. Information needs. What information is appropriate for the stakeholders who contribute to the progress of the project? The simplest answer to this question can be obtained by asking different people what information they need and when they need it. For example, senior management needs to know how the project is progressing, whether it is addressing critical issues, and the extent to which project goals are being met. This information is essential for strategic decision making and project portfolio management. Project team members need to see schedules, to-do lists, specifications, and the like so they know what needs to be done next. External teams need to be aware of any changes in the schedule and performance requirements of the components they provide. Common information needs found in communication plans are project status reports Delivery issues Scope changes Team status meetings Control decisions Accepted change requests Action items Milestone reports3. Sources of information. When information needs are identified, the next step is to identify information sources. So where is the information? How will it be collected? For example, reporting relevant information about milestones, team meetings and projects
page 126 status meetings you will find in the minutes and reports of various groups.4. Disclosure functions. In today's world, traditional status reporting meetings are supplemented by email, video conferencing, SharePoint, and a variety of database sharing programs to circulate information. In particular, many companies are using the Web to create a "virtual design office" to store design information. Project management software feeds information directly to the website so that different people have immediate access to relevant project information. In some cases, appropriate information is automatically forwarded to key stakeholders. Back-up hard copy for specific stakeholders is still critical for many project changes and action items. FIGURE 4.10 Shale oil research project communication plan
page 1275. Responsibility and time. Determine who will submit the information. For example, it is common practice for meeting secretaries to forward minutes or specific information to appropriate stakeholders. In some cases, the responsibility rests with the project manager or the project office. It is necessary to determine the appropriate time and frequency of information distribution. The benefit of creating a communication plan is that instead of responding to requests for information, you control the flow of information. This reduces confusion and unnecessary interruptions and can give project managers more autonomy. Why; By regularly reporting on how things are going and what's going on, you allow senior management to feel more comfortable letting the team get the job done without interference. See Figure 4.10 for an example of a shale oil exploration project communication plan. The importance of creating an initial plan to communicate important project information cannot be overstated. Many of the problems that plague a project can be attributed to not spending enough time creating a sound internal communications plan. Summary Defining project scope, priorities, and a work breakdown structure are the keys to almost every aspect of project management. Scoping provides focus and emphasis on project end item(s). Establishing project priorities allows managers to make appropriate trade-off decisions. The WBS framework helps ensure that all project tasks are identified and provides two views of the project - one for the deliverables and one for the organization's responsibility. The WBS prevents the project from being driven by the organization's operation or a financial system. The framework draws attention to realistic staff, material and budget requirements. Using the framework provides a powerful framework for project control that identifies deviations from plan, identifies responsibilities, and identifies areas for performance improvement. No project plan or well-developed control system is possible without a disciplined and structured approach. WBS, OBS, and cost account codes provide this discipline. The WBS serves as a database for project development
network, which determines labor time, people, equipment and costs. PBS is often used for process-based projects with poorly defined deliverables. On small projects, responsibility tables can be used to clarify individual responsibility. Clearly defining your project is the first and most important step in planning. The absence of a clearly defined project plan consistently appears as the leading cause of project failures. Whether you use a WBS, PBS, or responsibility board will depend primarily on the size and nature of your project. Whichever method you use, your project definition should be sufficient to allow good control over project implementation. Following a clear communication plan to coordinate and monitor project progress will help you keep important stakeholders informed and avoid some potential issues. Key Terms Acceptance Criteria, 110 Cost Accounting, 118 Gold Plated, 111 Milestone, 107 Organization Analysis Framework (OBS), 118 Priority Table, 112 Process Analysis Framework (PBS), 121 Process Analysis Framework (PBS), 121 Product Analysis Framework 2 Scope creep, 110Scope Statement, 110WBS Dictionary, 120Division of Work Structure (WBS), 113Work Package, 116
page 128 Review Questions1. What are the eight elements of a typical scope statement?2. What questions does a project objective answer? What would be an example of a good design goal?3. What does it mean if a project's priorities include time constraints, scope acceptance, and cost overruns?4. What kinds of information are included in a work package?5. When would it be appropriate to create a responsibility chart instead of a full WBS?6. How does a communication plan benefit project management? PRACTICAL MOMENT Discussion Questions 4.1 Big Bertha ERC II vs. USGA's COR requirement1. How did Helmstetter's vision clash with USGA rules?2. How could this error have been avoided? 4.3 Creating a WBS1. Why is it important that the final activities are not open-ended? Exercises 1. You are responsible for organizing a dinner dance for a local charity. You have booked a 30 couple capacity lounge and hired a jazz combo.a. Develop a scope statement for this project that contains examples of all the elements. Let's say the event will take place in four weeks.
Give your best estimate of milestone dates.b. What would be the likely priorities for this project? In small groups, identify real-life examples of a project that would fit each of the following priority scenarios: a. Time constraint, scope increase, cost acceptance b. Time acceptance, scope limitation, cost acceptance. Time constraint, scope acceptance, cost increase3. Develop a WBS for a project where you will build a bicycle. Try to identify all the main elements and provide three levels of detail.4. You are the parent of a family of four (ages 13 and 15) who are planning a weekend camping trip. Develop an accountability matrix for the tasks that need to be done before you start your journey.5. Develop a WBS for a local theater production. Be sure to identify the deliverables and organizational units (people) responsible. How would you code your system? Give an example of work packages in one of your cost accounts. Develop a corresponding OBS that identifies who is responsible for what.6. Use an example of a project you know or are interested in. Identify the deliverables and organizational units (people) responsible. How would you code your system? Give an example of work packages in one of your cost accounts.7. Develop a communication plan for an airport security project. The project involves installing the hardware and software system that (1) scans a passenger's eyes, (2) takes the passenger's fingerprints, and (3) transmits the information to a central location for evaluation.8. Go to an internet search engine (eg Google) and type in "project communication plan". Check three or four results that have ".gov" as their source. How are they similar or different? What would be your conclusion about the importance of an internal communication plan?9. Your roommate is about to submit a scope statement for a spring concert sponsored by the Western Evergreen State University (WESU) entertainment committee. WESU is a residential university with more than 22,000 students. This will be the first time in six years that WESU
page 129 sponsored a spring concert. The entertainment committee budgets $40,000 for the project. The event will take place on June 5. Because your roommate knows you are taking a project management course, she has asked you to review her scope statement and make suggestions for improvements. He considers the show a resume-building experience and wants to be as professional as possible. Below is a draft of your scope statement. What suggestions would you make and why? WESU Spring Music ConcertProject PurposeOrganize and deliver a 6-hour music concertProduct DescriptionAn outdoor rock concert for all agesRationale To provide entertainment to the WESU community and enhance WESU's reputation as a destination universityProductsConcert securityContact local newspapers and radio stationsContact local newspapers and radio stationsContact local newspapers and radio stations radio stations Contact local newspapers and radio stations. cal sponsors Dining venues Event insurance Safe environment Regular1. Secure all licenses and approvals2. Subscribe to Big Name Artist3. Contact minor artists4. Secure vendor contracts 5. Advertising campaign 6. Installation plan 7. Concert 8. Technical cleaning requirements 1. Professional sound stage and system 2. At least five plays3. bathrooms
page 1304. Parking5. Compliance with WESU and City Requirements/Regulations Limits and Exclusions Capacity 8,000 students Artists are responsible for arranging travel to and from WESU Artists must provide liability insurance Artists and security staff will have lunch and dinner the day of the show Vendors contribute 25 percent of sales to the show fund Concert must end by 12:15 p.m. Client Review: WESUReferencesAshley, D.B., et al., “Determinants of Construction Project Success,” Project Management Journal, vol. 18, no. 2 (June 1987), p. 72. Chilmeran, A.H., “Keeping Costs on Track”, PM Network, 2004 pp. 45–51. Gary, L., "Will Project Scope Cost You or Create Value?" Harvard Management Update, January 2005. Gobeli, D. H. and E. W. Larson, “Project Management Problems”, Engineering Management Journal, vol. 2 (1990), pp. 31–36. Ingebretsen, M., “Taming the Beast,” PM Network, July 2003, pp. 30–35.Katz, D.M., “Case Study: Beware 'Scope Creep' on ERP Projects,” CFO.com, March 27, 2001. Kerzner , H., Project Management: A Systems Approach to Planning, 8th ed.(New York: Van Nostrand Reinhold, 2003). Luby, R.E., D. Peel, and W. Swahl, “Component-Based WorkBreakdown Structure,” Project Management Journal, vol. 26, no. 2 (December 1995), pp. 38–44. Murch, R., Project Management: Best Practices for IT Professionals (Upper Darby, NJ: Prentice Hall, 2001).
Pinto, J. K., e D. P. Slevin, «Critical Success Factors through the Project Life Cycle», Project Management Journal, vol. 19, όχι. 3 (junho de 1988), σελ. 72. Pitagorsky, G., «Realistic Project Planning Promotes Success», Engineer's Digest, τομ. 29, όχι. 1 (2001). Comitê de Padrões do PMI, Guide to the Project Management Body of Knowledge (Newton Square, PA: Project Management Institute, 2017). Posner, B. Z., «What It Takes to Be a Good Project Manager», Project Management Journal, τομ. 18, όχι. 1 (março de 1987), σελ. 52. Raz, T. e S. Globerson, “Effective Sizing and Content Definition of Work Packages”, Project Management Journal, vol. 29, όχι. 4 (1998), σελ. 17–23. The Standish Group, CHAOS Summary 2009, σελ. 1–4. Tate, K., and K. Hendrix, “Chartering IT Projects,” Proceedings, 30thAnnual, Project Management Institute (Philadelphia : ProjectManagement Institute, 1999), CD.Caso 4.1Celebration of Colors 5KBrandon estava tomando uma cerveja com sua namorada, Sierra, quando surgiu o assunto do projeto Omega Theta Pi 5K-run. Brandon foi escolhido para presidir a corrida de caridade 5K para sua fraternidade. Na época, Brandon achou que ficaria bem em seu currículo e não seria muito difícil de realizar. Este seria o primeiro evento de corrida organizado pela Omega Theta Pi. No passado, Delta Tau Chi semper organizou o evento de corrida de primavera. Χωρίς entanto, ένα Delta Tau foi dissolvida após um escândalo de trote altamente divulgado. Brandon e seus irmãos da Omega Theta Pi pensaram que organizar uma corrida de 5 km seria muito mais divertido e lucrativo do que a primavera normal
page 131 cleaning service they offered to the local community. At the beginning of the discussions, everyone agreed that working with a brother would be an advantage. Not only would they help run the event, but they would also have useful contacts for recruiting sponsors and participants. Brandon pitched the fundraising idea to the sisters in Delta Nu and they agreed to co-host the event. Olivia Pomerleau volunteered and was named Co-President of Delta Nu. Brandon told Sierra about the first task force meeting, which took place last night and included five members from each team live. Olivia and Brandon tried, but failed, to meet beforehand due to scheduling conflicts. The meeting started with the participants introducing themselves and sharing their running experience. Only one person had not competed in previous events, but no one had been involved in running an event other than volunteering as crossing flags. Olivia then said that she thought the first thing they should decide on was the theme for the 5K race. Brandon hadn't thought much of it, but everyone agreed that the match had to have a theme. People started suggesting themes and ideas based on other tribes they knew. The group looked puzzled when Olivia said, “Did you know that the last Friday in March is a full moon? In India, Holi, the festival of colors, takes place on the last full moon of March. You may have seen pictures of this before, but this is where people go crazy throwing paint and water balloons at each other. I did some research and the Holi festival signifies the victory of good over evil, the arrival of spring and the end of winter. It is a day to meet other people, play, laugh, forgive and forget. I think it would be cool if we organized our 5K run as a Holi festival. At different points in the race, we would have people throwing paint runners. The race would end with a giant water balloon fight. We could even see if Evergreen [the local Indian restaurant] would cater the event!” Brandon and the other boys looked at each other, the girls immediately seconding the idea. The deal came about after Olivia showed a YouTube video of a similar event last year at a university in Canada that had more than 700 attendees and raised more than $14,000. Once the topic was decided, the discussion turned into a free-for-all of ideas and suggestions. One member said he might know an artist who could
page 132 create really cool t-shirts for the event. Others wonder where you get the dye and if it is safe. Another talked about the importance of a website and creating a digital account for registration. Others began debating whether the race should be held on campus or on the streets of their small college town. One by one the students apologized for other commitments. With only a few members left, Brandon and Olivia wrapped up the meeting. As Brandon took a sip of his IPA, Sierra pulled a book out of her backpack. "It looks like what you need to do is create what my project management professor calls a WBS for your project." She pointed to a page in her project management book that showed a diagram of a WBS.1. Create a list of the major deliverables of the 5K color project and use them to develop a rough work breakdown structure containing, where appropriate, at least three levels of detail.2. How would developing a WBS alleviate some of the issues that arose during the first meeting and how would it help Brandon organize and plan the project? they decided it was time to make some modest improvements. One area they both agreed needed updating was the bathtub. Their current home had a standard shower/tub combo. Lucas was six feet tall and could barely squeeze it. In fact, he had only taken one shower since they had moved in. He and Anna missed bathing in the deep, antique bathtubs they enjoyed when they lived back east. Fortunately, the previous owners, who built the house, plumbed the corner of a large basement exercise room for a hot tub. They contacted a reputable remodeling contractor who assured
it would be relatively easy to install a new tub and shouldn't cost more than $1,500. They decided to go ahead with the project. First, the Nelsons went to their local plumbing dealer to pick out a tub. They soon realized that for a few hundred dollars more they could buy a large jetted tub (jacuzzi). With old age on the horizon, a hot tub seemed like a luxury worth the extra money. Originally the plan was to install the tub using the simple plastic frame that came with the tub and install a splash guard around the tub. As soon as Anna saw the tub, frame and bedroom protector, she refused. She didn't like the look of the cedar paneling in the gym. After considerable discussion, Anne prevailed, and the Nelsons agreed to pay more to build a cedar frame for the tub and use attractive tile instead of the plastic splash guard. Lucas figured the changes would pay for themselves when they tried to sell the house. The next problem came when it came time to fix the floor problem. The exercise room was carpeted, which wasn't ideal for getting out of the tub. The original idea was to install relatively inexpensive laminate flooring in the drying and undressing area next to the tub. However, the Nelsons could not agree on which template to use. One of Anne's friends said it would be a shame to put such cheap flooring in such a beautiful room. He felt they should consider using tiles. The contractor agreed and said he knew a tile installer who needed work and would make a good deal. Lucas reluctantly agreed that the laminate options just didn't match the style or quality of the gym. Unlike the laminate floor discussion, both Anne and Lukas immediately liked a tile pattern that matched the tile used around the tub. Anxious not to delay the project, they agreed to pay for the tile floor. Once the tub was installed and the structure almost complete, Anne realized that something had to be done about the lighting. One of her favorite things to do was read while soaking in the tub. The existing lights did not provide enough illumination for this. Lucas knew this was a "non-negotiable" and hired an electrician to install additional lighting above the tub. As the lighting was installed and the tile was installed, another problem arose. The original plan was to tile only the exercise room and use leftover carpeting to cover the area away from the tub where the Nelsons did their workouts. The Nelsons were very pleased with the way the tile turned out
page 133 looked and fit the general environment. However, it clashed with the laminate flooring in the adjoining bathroom. Lucas agreed with Anna that it did make the bathroom next door look cheap and ugly. He also thought the bathroom was so small that it wouldn't cost much more. After a week, the work was completed. Both Lucas and Anna were quite happy with the result. It cost a lot more than they planned, but they planned to live in the house until the girls graduated from college, so they thought it was a good long-term investment. Anna used the bathtub for the first time, followed by her three daughters. I loved the jacuzzi. It was 22:00. when Lucas started running water for his first bath. At first, the water was boiling hot, but when he was about to get in, it was lukewarm at best. Lucas grumbled, "After paying so much money, I still can't enjoy the shower." The Nelsons took care of the bathroom for a few weeks until they decided to figure out what could be done about the hot water problem. They had a reputable heating contractor assess the situation. The contractor reported that the hot water tank was insufficient for a family of five. This was not discovered before because the baths were rarely held in the past. The contractor said it would cost $2,200 to replace the existing water heater with a larger one that would meet his needs. The heating contractor also said that if they want to do it right, they should replace their existing furnace with a more energy efficient one. A new furnace will not only heat the house, but also indirectly heat the water tank. Such a furnace would cost $7,500, but with improved efficiency and savings on the gas bill, the furnace would pay for itself in 10 years. Also, the Nelsons will likely get tax credits for the more fuel-efficient furnace. the new furnace was installed, Lucas was installed in the new bathtub. He looked around the room at all the changes that had been made and muttered to himself, "To think all I wanted to do was soak in a nice hot shower."1. What factors and forces contributed to the increase in scope in this case?2. Is this an example of good or bad scope creep? Explain.3. How could the increased range be better handled by the Nelsons?
Design Elements: Practice Snapshot, Highlight Box, Case Icon: ©SkyDesigns/Shutterstock1 See: Bourne, L. Stakeholder Relationship Management (Farnham, UK: Gower, 2009).
5-15-25-35-45-55-65-7A5-1page 134CHAPTER FIVE5 Project Time and Cost Estimating LEARNING OBJECTIVES After reading this chapter, you should be able to: Understand that project time and cost estimation is the basis for the planning and control project. Outline guidelines for estimating time, cost, and resources. Describe the methods, uses, and advantages and disadvantages of top-down and bottom-up estimation methods. Distinguish between different types of costs associated with a project. Suggest a plan to develop a database of estimates for future projects. Understand the challenge of estimating large projects and describe the steps that lead to more informed decisions. Define a "white elephant" in project management and give examples. Use learning curves to improve task estimates. CONTOUR
5.15.25.35.45.55.65.75.85.9 Appendix 5.1: page 135 Factors affecting the quality of estimates Time, cost and resource estimation guidelines Top-down versus bottom-up estimation: A special case summary learning
page 136 Plans are of little importance, but planning is essential. — Winston Churchill, former British Prime Minister LO 5-1 Understand that estimating project time and cost is the basis for project planning and control. Estimating is the process of predicting or approximating the time and cost of completing project deliverables. Estimation processes are often classified as top-down and bottom-up. Top-down estimates are usually made by senior management. Often, management derives estimates from ratio, group consensus, or mathematical relationships. Bottom-up estimates are usually performed by the people doing the work. Their estimates are based on estimates of elements found in the detailed structure of the project. Annex 5.1 summarizes some of the main reasons for making estimates. APPENDIX 5.1 Why time and cost estimation is important Estimates are needed to support good decisions. Estimates are required for work planning. Estimates are needed to determine how long the project will take and how much it will cost. required to determine whether the project is worth doing. Estimates are needed to develop cash flow needs. Assessments are needed to determine how well the project is progressing. All project stakeholders prefer accurate cost and time estimates, but they also understand the uncertainty inherent in all projects. Inaccurate estimates lead to false expectations and consumer dissatisfaction. Accuracy improves with more effort, but is it worth the time and expense? Appraisal costs money! Project estimation becomes a trade-off, balancing the benefits of better accuracy against the costs of ensuring greater accuracy.
Cost, time and budget estimates are the lifeline you need to control. serve as a benchmark for comparing actuals and plans over the life of the project. Project status reports rely on reliable estimates as the primary element for measuring deviations and taking corrective action. Ideally, the project manager, and in most cases the client, would prefer to have a database of detailed schedule and cost estimates for each project work package. Unfortunately, such detailed data collection is not always possible or practical, and other methods are used to develop project estimates. Past experience is a good starting point for developing time and cost estimates. But estimates from past experience almost always need to be improved by other estimates to reach the 95% probability level. Factors related to the uniqueness of the project will have a strong effect on the accuracy of the estimates. Project, people, and external factors must be considered to improve the quality of project time and cost estimates. Planning horizon The quality of the estimate depends on the planning horizon. Estimates for current events are nearly 100% accurate, but decrease for more distant events. For example, cost estimates for a party you're throwing this weekend should be much more accurate than estimates for a party six months away. Now imagine how difficult it would be to calculate the total cost of a four-year transportation project. The accuracy of time and cost estimates should improve as you move from the conceptual phase to the point where individual work packages are defined. Project Complexity The time to implement a new technology has a habit of expanding in an incremental and non-linear fashion. Range is sometimes misspelled
page 137 Specifications for new technologies result in errors in time and cost estimation. People The people factor can affect quality time and cost estimates. For example, the accuracy of estimates depends on the skills of the people making the estimates. How familiar are they with the work they value? Project Structure and Organization The project structure chosen for project management will affect time and cost estimates. One of the main advantages of a dedicated design team is the speed gained from focused focus and localized design decisions. between projects, but may take longer to complete as attention is divided and coordination requirements are greater. For example, if you are asked how long it takes to get to the airport, you might give an average time of 30 minutes, assuming a 50/50 chance of getting there in 30 minutes. If you were asked how fast you could get there, you could cut your driving time down to 20 minutes. Finally, if you were asked how long the trip would take if you had to be there to meet the president, chances are you'd increase the estimate to, say, 50 minutes to make sure we weren't late. time and cost estimates, most of us tend to add a little investment to reduce the risk of delays. If everyone at every level of the project adds a little investment to reduce risk, the duration and cost of the project are seriously overestimated. This phenomenon causes some managers or owners to request a 10% to 15% reduction in project time and/or cost. Of course, the next time the game is played, the person estimating cost and/or time will increase the estimate by 20% or more.
page 138 Clearly, these games negate the possibilities for realistic estimates, which is needed to be competitive Organizational Culture Organizational culture can significantly affect project estimates. In some organizations, completing estimates is privately tolerated and even encouraged. Other organizations value accuracy and strongly discourage game estimation. Organizations vary in the importance they place on assessments. The prevailing belief in some organizations is that detailed estimates are time-consuming and not worth the effort, or that it is impossible to predict the future. Other organizations support the belief that accurate estimates are the foundation of effective project management. Organizational culture shapes all dimensions of project management. Assessment is not immune to this influence. Other Factors Finally, factors outside the project can affect time and cost estimates. For example, equipment downtime can change time estimates. National holidays, vacations and legal limits can affect project estimates. Project priority can affect resource allocation and affect time and cost. Project estimation is a complex process. Time quality and cost estimates can be improved when these variables are taken into account during estimation. Time and cost estimates together allow the manager to develop a phased budget, which is imperative for project control. Before discussing the macro and micro methods of time and cost estimation, a review of the estimation guidelines will remind us of some of the important "rules of the game" that can improve estimation. 5.2 Time, cost and resource estimation guidelines
LO 5-2 Describe guidelines for estimating time, cost, and resources. Managers recognize that time, cost, and resource estimates must be accurate for effective project planning, scheduling, and control. However, there is substantial evidence to suggest that poor estimates are a significant contributor to failed projects. Therefore, every effort should be made to ensure that initial estimates are as accurate as possible, as the no-estimate option leaves much to chance and is not pleasant for serious project managers. Even if a project has never been done before, a manager can follow seven guidelines to develop useful work package estimates. Responsibility. At the work package level, estimates should be made by the person or persons most familiar with the work. Rely on your expertise! Except for super-technical tasks, those responsible for getting the job done on schedule and on budget are usually supervisors or front-line technicians who are experienced and familiar with the type of work. These people will not have in mind a pre-planned and imposed duration for a birth. They will give an estimate based on experience and best judgment. A secondary benefit of using exponents is the hope that they will 'buy into' that the assessment will take place when they implement the work package. If stakeholders are not consulted, it will be difficult to hold them accountable for not meeting the estimated deadline. Finally, leveraging the expertise of the team members who will be in charge helps establish communication channels in advance. The use of many people for estimation. It is well known that a cost or time estimate is generally more likely to be reasonable and realistic when many people with relevant experience and/or knowledge of the work are used (sometimes called "crowd sourcing"). It is true that people bring different biases based on their experience. But discussion of individual differences in their estimates leads to consensus and tends to eliminate extreme errors of estimation.
page 1393. Normal conditions. When working time, cost and resource estimates are established, they are based on certain assumptions. Estimates must be based on normal conditions, effective methods and normal level of resources. Normal conditions are sometimes difficult to discern, but there must be consensus across the organization about what normal conditions mean in this project. If the typical workday is eight hours, the time estimate should be based on an eight-hour day. Likewise, if the normal workday is two shifts, the time estimate should be based on a two-shift workday. Any time estimates must reflect efficient methods for commonly available resources. The time estimate should represent the normal level of resources - people or equipment. For example, if three developers are available for coding or two graders for road construction, time and cost estimates should be based on these normal resource levels, unless the project is expected to change what is currently considered "normal ". Additionally, potential resource demand conflicts in parallel or concurrent activities should not be considered at this stage. The need to add resources will be considered when resource scheduling is discussed in a later chapter.4. Units of time. The specific time units to be used should be chosen early in the network development phase of the project. All work time estimates need consistent time units. Time estimates should consider whether standard time is represented by calendar days, work days, work weeks, personal days, one shift, hours, minutes, etc. In practice, the use of working days is the dominant choice for expressing working hours. However, in projects such as a heart transplant operation, minutes would probably be more appropriate as a unit of time. One such project that used minutes as a unit of time was transferring patients from an old hospital to a fancy new one in the city. Since there were many life-threatening movements, minutes were used to ensure the patient's safety so that the appropriate emergency life support systems were available if needed. The point is that network analysis requires a standard unit of time. When computer programs allow more than one option, some note should be made of any variation of the standard time unit. If the standard unit of time is a five-day workweek and the estimated activity duration is calendar days, it should be converted to the standard workweek.5. Independence. Estimators must treat each task as independent of other tasks that may be incorporated by the WBS. Use of front line managers
often leads to independent examination of tasks. That's good. Top managers tend to lump many tasks into one time estimate and then add individual task time estimates to the total. the sequence once to avoid the tendency of a designer or supervisor to look to the end and try to adjust the times of individual tasks in the sequence to meet an arbitrary imposed schedule or some rough "estimate" of the total time for the whole route or section of the project. This bias does not reflect the uncertainties of individual activities and generally leads to optimistic work time estimates. In summary, each work time estimate must be considered independently of other activities.6. Unforeseen. Work package estimates should not include provisions for contingencies. The estimate should assume normal or average conditions, even if not all work packages are implemented as planned. For this reason, top management should create an additional contingency fund that can be used to cover unforeseen circumstances.7. Added risk assessment to avoid surprises for stakeholders. Obviously, some tasks involve more time and cost risks than others. For example, a new technology often carries more time and cost risks than a proven process. Simply determining the degree of risk allows stakeholders to consider alternative methods and change process decisions. A simple breakdown by optimistic, likely, and pessimistic of labor time can provide valuable time and cost information. See Chapter 7 for a more in-depth discussion of project risk. Where applicable, these guidelines will go a long way in avoiding many of the pitfalls so often encountered in practice. top-down and bottom-up estimation methods.
page 140 Because appraisal efforts cost money, the time and detail devoted to appraisal are important decisions. However, when estimation is considered, you as the project manager may hear statements like these: A rough order of magnitude is good enough. Spending time on detailed estimates wastes money. Is timing everything? our survival depends on getting there first! Time and cost accuracy is not a problem. The project is internal. We don't need to worry about the cost. The project is so small that we don't have to worry about estimates. Just do it. However, there are good reasons to use either top-down or bottom-up estimation. Table 5.1 describes conditions that indicate when one approach is preferred over another. TABLE 5.1 ​​Prerequisites for Top-down or Bottom-up Time and Cost Estimates Later estimates usually come from someone who uses experience and/or information to determine the duration and total cost of the project. However, these estimates are sometimes made by senior managers who have very little knowledge of the component activities used to complete the project. For example, a mayor of a large city giving a speech noted that a new law building would be constructed at a cost of $23 million and would be ready for use in two and a half years. although the mayor
page 141 probably asked someone for an estimate, the estimate may have come from dining with a local contractor who wrote an estimate (estimate) on a napkin. This is an extreme example, but in a relevant sense this scenario often occurs in practice. See Exercise 5.1 Screenshot: Portland Aerial Tram for another example of this. The question, in fact, is: do these estimates represent effective and low-cost methods? Rarely. The fact that the estimate came from the top can influence those in charge to "do whatever it takes to make the estimate." cost-effective methods. This process can be carried out after the project has been defined in detail. Common sense suggests that project estimates should come from the people best informed about the estimate required. Using multiple people with relevant experience on the job can improve time and cost estimates. The bottom-up approach at the work package level can serve as a control of cost elements in the WBS, rolling work packages, and cost accounts related to key deliverables. Likewise, resource requirements can be controlled. Later, time, resource, and cost estimates of work packages can be aggregated into networks with time phases, resource schedules, and budgets used for tracking. effective methodological approach with any imposed limitations. For example, if the project completion time is imposed at two years and your bottom-up analysis indicates that the project will take two and a half years, the client may now consider trading off the low-cost method against compressing the project in two years . years - or, in rare cases, cancellation of the project. Similar trade-offs can be compared for different feature levels or increases in technical performance. The assumption is that any change from the low-cost efficient method will increase costs - for example, overtime. The preferred approach to project definition is to make top-down estimates, develop the WBS/OBS, make bottom-up estimates, develop schedules and budgets, and reconcile differences between top-down estimates and bottom up. These steps should be taken before the final negotiation with an internal or external customer. In conclusion, the ideal approach is for the project manager to allow enough time for top-down and bottom-up estimates to be worked out so that a complete plan is based on reliable data.
Estimates can be offered to the customer. In this way, false expectations are minimized for all concerned and negotiation is reduced. CASE STUDY 5.1 Portland Aerial Tram* The Portland Tram is an aerial tram in Portland, Oregon. The trolley transports passengers between the city's south waterfront and the main campus of Oregon Health & Science University (OHSU), which sits high on a bluff overlooking the waterfront. The trolley ride takes four minutes and is over 500 feet. The streetcar was jointly funded by OHSU, the City of Portland and the owners of the Southwaterfront. OHSU was the driving force behind the project. OHSU argued that the streetcar was necessary to enable it to expand its operations on the south waterfront, where there were plans to build several large facilities. The trolley would also reduce traffic congestion and make it easier for OHSU employees to commute to work. OHSU is a major player in Oregon's economy, with an estimated annual economic impact of more than $4 billion and more than 35,000 jobs. an icon for the city, such as the Seattle Space Needle. OHSU's political influence helped secure Portland City Council approval for the project in 2003. The original cost estimate was $15 million, with the city directly responsible for $2 million. A public review in 2004 revealed a new cost estimate of $18.5 million. A second review in 2005 resulted in a $40 million cost adjustment with a six-month construction delay. In 2006, a change in city leadership led to an independent audit of the streetcar project. The audit revealed that OSHU administrators knew as early as 2003 that the cost of the streetcar would exceed US$15.5 million, but withheld the information from municipal authorities. The public reaction was immediate and harsh. City Commissioner Randy Leonard accused OHSU leadership of an “outrageous game. . . all at the expense of the taxpayers." The city of Portland threatened to pull out of the project. OHSU protested strongly, threatening to sue if the streetcar was canceled. Negotiations ensued.
page 142Rigucci/Shutterstock A revised financing plan and budget were agreed upon in April 2006, with a 3–2 vote of the city council. This plan required concessions from all parties involved and required a final budget of $57 million, with direct city contributions of $8.5 million, or nearly 15% of the total budget. This final budget was met and the streetcar opened to the public on January 27, 2007. Budget concerns were not the only issue facing the streetcar project. Many residents in the neighborhood below the streetcar feared that the streetcar would be an invasion of privacy and lead to lower property values. Residents were promised that the overhead power lines would be buried, but as a cost-saving measure, the plans were scrapped. An exasperated homeowner who lives down the strip has put a sign on his backyard fence that reads “F%&! The tram. The sign was not visible from the road, only from the air. Lawsuits followed. The city eventually negotiated with every resident who lived under the streetcar and offered a fair market value for their homes.* R. Gragg and A. Scott, “From Controversy to Icon: Portland's Aerial Tram Turns 10,” Oregon Broadcasting Network, 12 Feb. 2017, www.opb.org/radio/. Accessed 02/14/19; S. Moore, “Audit: Tram Costs Shoot Skyward—Again,” Portland Mercury, www.portlandmercury.com, February 2, 2006. Accessed 2/20/19; E. Njus, "Portland Aerial Tram Marks Its 10th Anniversary," Oregonian, www.oregon live.com. Access 2/2/19.5.4 Project Time and Cost Estimating Methods Top-Down Approaches to Project Time and Cost Estimating
At the strategic level, top-down estimation methods are used to evaluate the project proposal. Sometimes, much of the information needed to obtain accurate time and cost estimates is not available at the beginning of the project—for example, the design has not been finalized. In these cases, top-down estimation is used until the tasks in the WBS are clearly defined. Consensus Method This method simply uses the combined experience of senior and/or middle management to estimate the duration and total cost of the project. It usually involves a meeting where the experts discuss and discuss and finally come to a decision based on their best estimate. Firms seeking greater rigor will use the Delphi method to make these macroeconomic estimates. See Practice Slide 5.2: The Delphi Method. PRACTICAL MOMENT 5.2 The Delphi Method Originally developed by the RAND Corporation in 1969 for technology forecasting, the Delphi Method is a group decision process about the probability of certain events occurring. The Delphi Method relies on a panel of experts who are familiar with the type of project in question. The idea is that knowledgeable people, based on their knowledge and experience, are better equipped to estimate project costs/times than theoretical approaches or statistical methods. Their answers to the evaluation questionnaires are anonymous and they receive a summary of the views. Experts are encouraged to review and, if necessary, modify their previous estimates in light of the responses of other experts. After two or three rounds, it is believed that the team will converge on the "best" answer through this consensus process. The mean of the responses is statistically categorized with the median score. With each successive round of questionnaires, the range of panelists' responses is likely to narrow and the median will move toward what is considered the "correct" estimate. film, as Gunga Din.1 He is concerned that both the writer and the director insist on shooting the film in Rajasthan, India. Here he hires five experts who have worked on film projects abroad, two of them recently in India. He provides each of them with a detailed brief outlining the requirements as well as the 75-day shooting schedule. It asks them to fill in an estimation questionnaire about the cost of certain products (eg accommodation, sets) as well as the total running costs, ignoring the key players' contracts. It surprises me
page 143 the difference between those who worked in India and others. After several rounds of exchanging opinions and ideas, he has a good idea of ​​the total cost, as well as the risks involved. Combining this information with market research, he concludes that the project is not worth the investment. A distinct advantage of the Delphi method is that experts never need to physically come together. The process also does not require full agreement from all participants, as the majority opinion is represented by the median. Since the responses are anonymous, ego traps, dominant personalities, and movement or response haloing are avoided.1 Gunga Din is a 1939 adventure film that tells the story of three British officers in Rajasthan, India, who , thanks to a water boy (Gunga Din), survives a rebel uprising. It's important to recognize that these first top-down estimates are just a rough cut and usually occur at the "conceptual" stage of the project. Top-down estimates are useful in the initial development of a complete design. However, these estimates are sometimes significantly flawed because little detailed information is collected. At this level, individual work items are not identified. Or, in some cases, top-down estimates are unrealistic because top management "wants the project." However, initial top-down estimates are useful in determining whether the project warrants more formal planning that will include more detailed estimates. Be careful that macroeconomic estimates made by senior management are not dictated to lower-level managers, who may feel compelled to accept the estimates, even if they believe that resources are insufficient. or cost. Top-down rationing methods are often used in the concept or "needs" phase of a project to get an initial estimate of duration and cost for the project. For example, contractors often use square feet to estimate the cost and time to build a home. That is, a 2700 square foot house might cost $160 per square foot (2700 feet × $160 per square foot equals $432,000). Likewise, knowing square feet and dollars per square foot, experience suggests it will take about 100 days to complete. Two other common examples of toppers
Low-cost estimates are the cost of a new plant estimated based on capacity size and a software product estimated based on features and complexity. Distribution Method This method is an extension of the ratio method. Allocation is used when projects closely follow previous projects in features and costs. Given good historical data, estimates can be made quickly with little effort and reasonable accuracy. This method is very common in relatively standard projects, but with some minor variations or adaptations. Anyone who has borrowed money from a bank to build a house has been exposed to this process. Given an estimated total cost for the home, banks and the FHA (Federal Housing Authority) authorize payment to the contractor to complete specific parts of the home. For example, the foundation might be 3% of the total loan, the structure 25%, plumbing and heating 15%, etc. Payments are made upon completion of these details. A similar process is used by some companies that allocate costs to deliverables in the WBS - given average percentages of previous project costs. Figure 5.1 presents an example similar to what we encounter in practice. Assuming that the total cost of the project is estimated, using a top-down estimate, at $500,000, the cost is calculated as a percentage of the total cost. For example, the costs attributable to the delivery of the "Document" are 5% of the total or $25,000. Sub-deliverables "Doc-1 and Doc-2" are allocated 2 and 3 percent of the total - $10,000 and $15,000, respectively.
page 144 Function Point Methods for Software and System Designs In the software industry, software development projects are often estimated using weighted macro variables called function points or key parameters such as number of inputs, number of outputs, number of queries, number of data files, and number of interfaces. These weighted variables are adjusted for a complexity factor and summed. The adjusted total count provides the basis for estimating the labor effort and cost of a project (typically using a regression formula derived from past project data). This last method assumes appropriate historical data per type of software project for the industry - for example, MIS systems. In the US software industry, one person per month has an average of five operating points. A person working a month can create on average (across all types of software projects) about five operating points. Of course, each organization must develop its own average for its specific type of work. This historical data provides a basis for estimating project duration. Variations of this top-down approach are used by companies such as IBM, Bank of America, Sears Roebuck, HP, AT&T, Ford Motors, GE, DuPont, and many others. See Table 5.2 and Table 5.3 for a simplified example of a function point measurement methodology. TABLE 5.2 Simplified basic scoring process for a future project or final product
page 145 From historical data, the agency developed the weighting scheme for complexity found in Table 5.2. Function points are derived by multiplying the number of component types by the weighted complexity. Table 5.3 shows the data collected for a specific task or delivery: Patient admission and billing - the number of inputs, outputs, queries, records and interfaces along with the expected complexity score. Finally, the item count application is applied and the total number of function points is 660. Given this number and the fact that 1 person-month historically equaled 5 function points, the task will require 132 person-months ( 660/5 = 132 ) . Assuming you have 10 developers who can work on this task, the duration will be around 13 months. The cost is easily obtained by multiplying the labor rate per month by 132 person-months. For example, if the monthly developer fee is $8,000, the estimated cost would be $1,056,000 (132 × 8,000). While function point metrics are useful, their accuracy depends on sufficient historical data, timeliness of the data, and relevance of the project/deliverable to past averages. TABLE 5.3 Example: Method of measuring function points
Learning Curves Some projects require the same task, group of tasks, or product to be repeated many times. Managers know intuitively that the time to complete a task improves with repetition. This phenomenon is especially true for labor-intensive tasks. Under these conditions, the standard enhancement effect can be used to predict the reduction in time to perform the task. Based on empirical evidence in all fields, the pattern of this improvement has been quantified in the learning curve (also known as the improvement curve, experience curve, and industrial progress curve), which is described by the following relationship: output doubles, unit hours labor are decreasing at a steady rate. In practice, the improvement rate can range from 60%, which represents a very large improvement, to 100%, which represents no improvement. In general, as the difficulty of the task decreases, the expected improvement decreases and the improvement rate used becomes higher. An important factor to consider is the ratio of on-the-job work to machine-paced work. Obviously, a smaller rate of improvement can only occur in tasks with high work content. Appendix 5.1 at the end of the chapter provides a detailed example of how the improvement effect can be used to estimate the time and cost of repetitive tasks.
page 146 The main disadvantage of top-down estimating approaches is simply that they do not take into account the time and cost of a particular task. Grouping many tasks into a common basket encourages errors of omission and the use of imposed time and cost. Bottom-up estimation methods are generally more accurate than macro-methods. then the template methods can be used as a starting point for the new project. The models are created based on the cost of previous similar projects. Differences in the new design can be noted and previous hours and costs adjusted to reflect these differences. For example, a dry dock ship repair company has a set of standard repair projects (ie standards for overhaul, electrical, mechanical) that are used as starting points for estimating the cost and duration of any new project. Differences from the appropriate standard design (for times, costs and resources) are noted and changes are made. This approach allows the company to develop a potential schedule, estimate costs and develop a budget in a very short period of time. Deploying such models to a database can rapidly reduce estimation errors. part of an MS Office conversion project, 36 different workstations had to be converted. Based on previous conversion projects, the project manager determined that, on average, one person could convert three workstations per day. Therefore, the task of converting 36 workstations would take three technicians four days [(36/3)/3]. Similarly, to estimate the cost of wallpaper in a home renovation, the contractor estimated a cost of $5 per square foot of wallpaper and $2 per foot to install it, for a total cost of $7. By measuring the length and height of everything on the walls, he was able to calculate the total area in square feet and multiply that by $7.
page 147 Range Estimation When do you use range estimation? Range estimation works best when work packages have significant uncertainty associated with completion time or cost. If the work package is routine and carries little uncertainty, using a person more familiar with the work package is usually the best approach. He is likely to know better how to estimate the duration and cost of work packages. However, when work packages have significant uncertainty associated with completion time or cost, it is a prudent policy to require three time estimates - low, medium and high (borrowed from the PERT methodology which uses probability distributions). Low to high provides a range within which the average estimate will fall. Determining low and high estimates for the activity is influenced by factors such as complexity, technology, novelty and familiarity. How do you get the estimates? Because range estimation works best for work packages that have significant uncertainty, having a team specify low, medium, and high cost or duration gives the best results. Group assessment tends to refine the edges, bringing more value judgments to the assessment and potential risks. The judgment of others in a group helps limit perceived extreme risks associated with a time or cost estimate. a cross-functional team or groups of project stakeholders. Team estimates show the low, medium and high for each work package. The Risk Level column is the group's independent assessment of how certain it is that the actual time will be very close to the estimate. In a sense, this number represents the team's estimate of many factors (eg, complexity, technology) that can affect the average time estimate. In our example, the team believes that work packages 104, 108, 110, 111, and 114 have a high chance that the average time will be different than expected. Similarly, the trust team believes that the risk that work packages 102, 105 and 112 will not be implemented as expected is low. FIGURE 5.2 Field estimation model
Source: Microsoft Excel How do you use estimation? Team scope estimation gives the project manager and owner an opportunity to assess confidence related to project times (and/or costs). For example, a contractor responsible for building an apartment building may tell the owner that the project will cost $3.5 million to $4.1 million and take six to nine months to complete. The approach helps reduce surprises as the project progresses. The scoping method also provides a basis for assessing risks, managing resources and determining project contingency capital. (See Chapter 7 for a discussion of emergency funds.) well known. Group interval estimation is often used with phase estimation, which is discussed next. A hybrid: phase estimation This approach starts with a top-down estimate of the project and then refines the estimates for the phases of the project as it is implemented. Some projects, by their very nature, cannot be strictly defined due to the uncertainty of the design or final product. These designs are often found in aerospace projects, IT projects, new technology projects, and construction projects where the design is imperfect. In these projects, phase or life cycle assessment is often used.
page 148 Phase estimation is used when an unusual amount of uncertainty surrounds a project and it is impractical to estimate times and costs for the entire project. Phase estimation uses a system of two estimates for the life of the project. A detailed estimate is developed for the immediate phase and a macro-economic estimate for the remaining phases of the project. Figure 5.3 illustrates the phases of a project and the evolution of estimates during its lifetime. FIGURE 5.3 Project Life Cycle Phase Estimation For example, when the need for the project is identified, a macro-economic estimate of the cost and duration of the project is made so that analysis and decisions can be made. At the same time, a detailed estimate is made to derive the project specifications and a macro-economic estimate for the remainder of the project. As the project progresses and specifications are consolidated, a detailed estimate is made for the project and a macro estimate is calculated for the remainder of the project. Clearly, as the project progresses through its life cycle and more information becomes available, the reliability of the estimates should improve. See Practice Scenario 5.3: Accuracy Estimation. Phase estimation is preferred by those working on projects where the final product is not known and the uncertainty is very large - for example, the development of reusable rockets or household robots. Commitment to cost and schedule is only necessary in the next phase of the project, avoiding commitment to unrealistic future schedules and costs based on insufficient information. This progressive macro/micro method provides a
page 149a stronger basis for using schedule and cost estimates to manage progress during the next phase. PRACTICAL IMMEDIATENESS 5.3 Estimate Accuracy The smaller the element of a work package, the more accurate the overall estimate. The extent of this improvement varies by project type. The table below has been developed to reflect this observation. For example, information technology projects that define time and cost estimates at the conceptual stage can expect their "actuals" to be up to 200% off cost and duration, and perhaps as much as 30% off estimates. On the other hand, estimates for buildings, roads, and so on, made after clearly defining the work packages, have a smaller error in actual costs and times of 15% over estimate and 5% under estimate. While these estimates will vary by project, they can serve as rough numbers for project stakeholders to choose from which project time and cost estimates will be derived. Time and Cost Estimate Accuracy by Project Type Bricks and Mortar Information Technology Concept Phase+60% to −30%+200% to −30% Defined Deliverables+30% to −15%+100% to −15% Defined Workload Packages+ 15% to −5%+  50% to −5%Unfortunately, your client - internal or external - will want an accurate schedule and cost estimate at the time the decision is made to implement the project. Additionally, the client paying for the project often perceives the phase estimate as a blank check because costs and schedules are not fixed for most of the project's life cycle. Even if the reasons for phasing are solid and legitimate, most customers need to believe in their legitimacy. A great advantage for the client is the ability to change functions, reassess the project or even cancel it at each new phase. In conclusion, phase estimation is very useful in projects
that have large uncertainties about the final nature (shape, size, characteristics) of the project. See Figure 5.4 for a summary of the differences between top-down and bottom-up estimates. FIGURE 5.4 Top-down and bottom-up estimates Obtaining accurate estimates is a challenge. Engaged organizations accept the challenge of providing meaningful assessments and invest heavily in developing their ability to do so. Accurate estimates reduce uncertainty and support a discipline for effective project management. 5.5 Level of detail The level of detail is different for different management levels. At any level, detail should be no more than necessary and sufficient. Top management's interests are usually focused on the overall project and major events that mark significant achievements - for example, "North Sea rig" or "Complete prototype". middle management
Page 150 can focus on a project segment or a milestone. Front-line managers' interests may be limited to a task or work package. One of the beauties of the WBS is its ability to aggregate network information so that each level of management has the type of information it needs to make decisions. . See Screenshot from Exercise 5.4: Level of Detail. The level of detail in the WBS varies depending on the complexity of the project. the need for control; the size, cost and duration of the project; and other factors. If the structure reflects too much detail, there is a tendency to divide the work effort into departmental assignments. This tendency can become an obstacle to success, as the emphasis will be on the results of the department rather than the results that will be delivered. Too much detail also means more counterproductive bureaucracy. Note that if the WBS level increases by one, the number of cost accounts can increase geometrically. On the other hand, if the level of detail is not sufficient, an organizational unit may find that the structure does not meet its needs. Fortunately, the WBS was built with rigidity. Participating organizational units can extend part of their structure to meet their special needs. For example, the Engineering Department may want to further divide their work into a smaller deliverable package of electrical, civil and mechanical. Similarly, the Marketing Department may want to divide new product promotion into television, radio, magazines, and newspapers. PRACTICAL MOMENT 5.4 Level of Detail—Rule of Practice Practical project managers advocate keeping the level of detail to a minimum. But there are limits to this proposition. One of the most common mistakes new project managers make is forgetting that the time estimate will be used to track schedule and cost performance. A common rule of thumb used by working project managers is that the duration of a task should not exceed 5 working days, or a maximum of 10 working days if working days are the time units used for the project. This rule will likely result in a more detailed network, but the additional detail pays off in controlling schedule and cost as the project progresses.
page 151 Suppose the job is “build a prototype computer-controlled conveyor belt,” the estimate time is 40 working days, and the budget is $300,000. It may be best to break the task into seven or eight smaller tasks for tracking purposes. If one of the smaller tasks is delayed due to problems or poor timing, you can quickly take corrective action and avoid delays in downstream tasks and the project. If the 40-day one-off is used, it is likely that no corrective action will be taken until 40, as many people tend to 'wait and see' or avoid admitting that they are late or delivering bad news. the result can mean much more than 5 days delay. The general rule of thumb of 5-10 days applies to both cost and performance goals. If using the rule suggested in the previous paragraph leads to too many network tasks, there is an alternative, but with conditions. Run time can be extended beyond the 5-10 day rule only if control tracking checkpoints can be established for sections of work so that clear measures of progress from a specific percentage of completion can be identified. This information is invaluable for the schedule control and performance measurement process – for example, contract labor payments are made on a "percentage complete" basis. Defining a task with clearly defined start and end points and intermediate points increases the chances of early problem identification, corrective action and timely project completion. clear and detailed cost estimates can be made. Following are typical types of costs found in a project:1. Direct cost. Laborb. Materials c. Equipment d. Others 2. Direct indirect costs of the project3. General and administrative overhead (G&A).
The total project cost estimate is divided in this way to improve the control process and improve decision making. Direct costs These costs are clearly attributable to a specific work package. Direct costs can be affected by the project manager, the project team, and the people implementing the work package. These costs represent actual cash outflows and must be paid as the project progresses. Therefore, direct costs are usually separated from indirect costs. Lower-level project assemblies often include only direct costs. Direct project overheads can be linked to project deliverables or work packages. Examples include the salary of the project manager and the temporary lease of space for the project team. Although overhead is not an immediate expense, it is real and must be covered in the long run for the business to remain viable. These fees are usually a percentage of the dollar value of the resources used - e.g. direct labor, materials, equipment. For example, a direct labor rate of 20 percent will add a direct overhead of 20 percent to the direct labor cost estimate. A direct billing rate of 50 percent for materials will result in a 50 percent surcharge on the estimated material cost. Selective direct overheads provide a more accurate project (job or work package) cost than using a general overhead rate for the entire project. General and Administrative (G&A) Indirect Costs Represents the organization's costs that are not directly linked to a specific project. They are charged for the duration of the project. Examples include organizational costs for products and projects, such as advertising, accounting, and senior management above the project level. The allocation of G&A costs varies from organization to organization. However, general and administrative costs are usually allocated as a percentage of total direct costs or as a percentage of the total for a specific direct cost, such as labor, materials, or equipment.
page 152 By considering direct and indirect cost totals for individual work packages, you can aggregate costs for any deliverable or the entire project. A percentage can be added to the profit if you are a contractor. The breakdown of costs for a proposed contract proposal is shown in Figure 5.5. LINK 5.5 Summary of contract proposal costs Direct costs $80,000 Direct indirect costs $20,000 Total direct costs $100,000 General and administrative costs (20%) $20,000 Total costs $120,000 profit (20%) $24,000 Total supply $144,000 Perceptions of the costs and budgets vary depending on your users. The project manager must be very aware of these differences when preparing the project budget and communicating them to others. Figure 5.6 illustrates these different perceptions. The project manager can commit the cost months before the resource is used. This information is useful for the organization's CFO to forecast future cash flows. The project manager is interested in knowing when budgeted costs are expected to be incurred and when budgeted costs are actually incurred (earned). The respective time frames of these two cost elements are used to measure project schedule and cost variances. FIGURE 5.6 Three cost views
5.7 Refinement of Estimates As described in Chapter 4, the detailed work package estimates are aggregated and 'aggregated' by deliverable to estimate the total direct cost of the project. Similarly, estimated durations are entered into the project network to determine the project schedule and determine the overall project duration. Our experience tells us that for many projects, the overall estimates are not realized and the actual cost and schedule for some projects significantly exceed the estimates based on the original work package. To compensate for the problem of actual cost and schedule exceeding estimates, some project managers adjust the total cost by some multiplier (for example, estimated total cost × 1.20). After investing so much time and energy into detailed estimates, the numbers can be way off. There are several reasons for this, most of which can be attributed to the estimation process and the inherent uncertainty of predicting the future. Below are some of those reasons.
page 153 Interaction costs are hidden in estimates. According to the guidelines, each work estimate must be done independently. However, tasks are rarely completed in a vacuum. Work on a task depends on previous tasks, and transitions between tasks require time and attention. the original plan. Likewise, the time required to coordinate activities is usually not reflected in independent estimates. Coordination is reflected in meetings and briefings, as well as the time required to resolve disconnects between tasks. The time and therefore cost spent on managing interactions increases exponentially as the number of people and different disciplines involved in a project increases. Normal conditions do not apply. Estimates should be based on normal conditions. While this is a good starting point, it rarely applies in real life, especially when it comes to resource availability. Lack of resources, whether in the form of people, equipment, or materials, can stretch initial estimates. For example, under normal conditions, four tractors are normally used to clear a given size site in five days, but having only three tractors will extend the duration of the job to eight days. Likewise, the decision to outsource certain tasks can increase costs, as well as lengthen the duration of tasks, as it adds time for outsiders to acclimatize to the specifics of the project and the culture of the organization. Things go wrong on the projects. Design flaws are discovered after the fact, extreme weather occurs, accidents occur, and so on. Although you should not plan for these risks to occur when evaluating a particular job, the likelihood and impact of such events should be considered. Project scope and plans change. As the project progresses, the manager gains a better understanding of what needs to be done to complete the project. This can lead to significant changes in project plans and costs. Likewise, if the project is a commercial project, changes often need to be made midway to meet new customer and/or competitive requirements. Unstable project fields are a major source of cost overruns. While every effort must be made in advance to
page 154 to define the scope of the project, it is becoming increasingly difficult to do so in our rapidly changing world. People are overly optimistic. There is consistent research showing that people tend to overestimate how quickly they can complete things (Buehler, Griffin, & Ross, 1994; Lovallo & Kahneman, 2003). People engage in strategic falsification. There is growing evidence that some project promoters underestimate project costs and overestimate project benefits in order to get approval. This seems to be especially true for large-scale public works projects, which have a notorious habit of going over budget (recall Practice Snapshot 5.1: Portland Aerial Tram). The reality is that, for many projects, not all the information needed to make accurate estimates is available and it is impossible to predict the future. The challenge is further compounded by the human nature and political dynamics associated with obtaining project approval. The dilemma is that without solid estimates, the credibility of the project plan is eroded. Deadlines become meaningless, budgets become flexible, and accountability becomes problematic. Such challenges will affect the final time and cost estimates. Even with the best estimation efforts, it may be necessary to revise estimates based on relevant information before establishing a baseline schedule and budget. that the cumulative estimates produced by a detailed estimate based on the WBS are only the starting point. As they move deeper into the project planning process, they make appropriate revisions to both the schedule and cost of specific activities. They include the final allocation of resources in the project budget and schedule. For example, when they realize that only three shovels instead of four are available to clear a site, they adjust the time and cost of that activity. They adjust the estimates to take into account specific actions to mitigate potential risks in the project. For example, to reduce the chances of design code errors, they add the cost of independent testers to the schedule and budget. Finally, organizations adjust estimates to account for this
abnormal conditions. For example, if soil samples reveal excess groundwater, they will adjust foundation costs and times. There will always be some errors, omissions, and adjustments that will require additional changes to estimates. Fortunately, every project should have a change management system in place to cover these situations and any impacts to the project's baseline. Change management and contingency funds will be discussed in Chapter 7.5.8 Create a Database for Estimates LO 5-5 Propose a plan for developing an estimate database for future projects. Storing historical data—estimates and actuals—provides a knowledge base to improve project time and cost estimation. Database creation of estimates is a "best practice" among leading project management organizations. Some organizations, such as Boeing and IBM, have large estimating departments of professional estimators who have developed large time and cost databases. Others collect this data through the project office. This database approach allows the project estimator to select a specific work package item from the database for inclusion. The estimator then makes the necessary adjustments regarding materials, labor, and equipment. Of course, all items not in the database can be added to the project - and eventually to the database if desired. Again, the quality of the database estimates depends on the experience of the estimators, but over time the quality of the data should improve. These structured databases serve as feedback to estimators and cost and time reports for each project. In addition, the comparison between estimate and actual for different projects can indicate the degree of risk inherent in the estimates. See Figure 5.7 for a database structure similar to those encountered in practice.
page 155 FIGURE 5.7 Estimating Database Models 5.9 Mega Projects: A Special CaseLO 5-6Understand the challenge of estimating large projects and describe the steps that lead to more informed decisions. many years to complete and involves many private and public agencies. They often transform and influence millions of people (Flyvbjerg, 2014). Examples include high-speed rail, airports, health care reform, the Olympics, the development of new aircraft, and so on. What do these projects have in common beyond scope and complexity? Everyone tends to go over budget and fall behind
to schedule. For example, the new Denver airport, which opened in 1995, was 200% cost overrun and completed two years behind schedule. These are just two examples of many public works and other large-scale projects where costs have exceeded plan. In a study of government infrastructure projects, Flyvbjerg found that the costs of bridges and tunnels, roads and railways were underestimated by 34%, 20% and 45%, respectively, from baseline estimates (Flyvbjerg, Bruzelius and Rothengatter, 2003). ! entail a double conflict. Not only did they cost much more than expected, but they also failed to deliver the benefits they were supposed to provide. Denver Airport handled just 55% of expected traffic in its first year of operation. Chunnel's circulation revenue was half of what was predicted with an internal rate of return of -14.5 percent! the metro of Calcutta (Calcutta) in India! So why does there seem to be a consistent pattern of overestimating benefits and underestimating costs? Many argue that the sheer complexity and long time horizon make it impossible to accurately estimate the costs and benefits. While this is certainly true, the research by Flyvbjerg and his colleagues suggests that other factors play a role as well. They concluded that, in most cases, project promoters use deception to promote projects not for the public good, but for personal, political or financial gain. Deception can be intentional or it can be a product of overzealousness, optimism and ignorance (Flyvbjerg et al., 2003). In some cases, proponents rationalize that nothing great would ever be built if people knew in advance what the real costs and challenges involved were (Hirschman, 1967). In some large works, there is a triple confusion. Not only are they over budget and worth, but the cost of maintaining them exceeds the benefits received. These types of projects are called white elephants. LO 5-7 Define a “white elephant” in project management and give examples.
page 156 A "white elephant" denotes a valuable but burdensome possession, which its owner cannot easily part with and whose cost (especially in maintenance) is disproportionate to its usefulness. The term comes from the story that the kings of Siam (present-day Thailand) used to present a white elephant to courtiers who had fallen out of favor with the king. At first glance, it was a great honor to receive such a revered beast from the king. However, the real intent was to ruin the recipient by forcing them to bear the cost of caring for the animal. Examples of white elephants abound. While traveling in southern China, one of the authors was struck by the palatial stature of the TradeExpo buildings in each city. It was as if each city was trying to surpass its neighbor in grandeur. When asked how often they were used, city officials said once or twice a year. The 2015 FIFA scandal drew attention to the hidden costs of hosting the World Cup. South Africa built six new world-class stadiums for the 2010 tournament. None of the post-World Cup revenue generated by these stadiums exceeds their maintenance costs (Molloy & Chetty, 2015). White elephants are not limited to buildings and stadiums. Air France was forced to shut down Concorde, the world's fastest commercial airliner, because maintenance costs and noise restrictions did not justify a three-flight-a-week schedule. It is not uncommon in our personal lives to acquire white elephants such as vacation homes or unused yachts. Flyvbjerg and others argue that exorbitant costs are not the price to pay for doing great things, and that we are able to make better informed decisions about big projects. The first step is to assume that there is optimism bias and even pessimism on the part of supporters. Proposals must require full review by impartial observers disinterested in the project. Some, if not all, of the financial risks must be borne by the implementers and those who benefit financially from the project. Sustainable business practices should be used and maintenance costs should be incorporated into the expected cost/benefit analysis of the project. Watch Practice Slide 5.5: Avoiding the white elephant curse to see how the British organizer tried to avoid the white elephant curse at the 2012 Olympics.
page 157 In particular, Flyvbjerg supports an external view based on the results of similar projects completed in the past. It is called reference class prediction (RCF) and involves three main steps: 1. Select a project reference class similar to your potential project, for example, cargo ships or bridges.2. Collect and organize outcome data as a distribution. Create a breakdown of cost overruns as a percentage of the original project estimate (low to high).3. Use distribution data to arrive at a realistic forecast. Compare the project's initial cost estimate with reference category projects. Take, for example, a three-mile rail tunnel project. Supporters of the tunnel estimate it will cost $100 million. Reviews of similar tunnel projects in the region show that, on average, they are 34% over budget. If bidders can't provide a reasonable explanation for why this project will be different, decision makers will have to assume the tunnel will cost at least $134 million. The benefits of RCF are compelling: External empirical data mitigate human bias. find it difficult to ignore external information from the RCF. The RCF serves as a reality check for major project funding. RCF helps executives avoid unhealthy optimism. RCF leads to better accountability. The RCF provides the basis for the project's contingency funds. The use of RCF is increasing as governments and organizations demand that this method be used to limit estimates of project sponsors and reduce cost/benefit inaccuracies. PRACTICE 5.5 INSTANTNESS
Αποφυγή της κατάρας του Λευκού Ελέφαντα* Παλιά, η φιλοξενία των Ολυμπιακών Αγώνων θεωρούνταν το έπαθλο του στέμματος και μια τεράστια πηγή εθνικής υπερηφάνειας. Επτά πόλεις διαγωνίστηκαν για τη φιλοξενία των Χειμερινών Ολυμπιακών Αγώνων του 1992. Για τους Χειμερινούς Ολυμπιακούς Αγώνες του 2022, μόνο το Πεκίνο και το Αλμάτι (Καζακστάν) υπέβαλαν προσφορές. Το Όσλο (Νορβηγία), το φαβορί, αποχώρησε από την υποψηφιότητα λόγω έλλειψης υποστήριξης του κοινού. Ομοίως, η Βοστώνη απέσυρε την εγγραφή της για τους Θερινούς Ολυμπιακούς Αγώνες του 2024 ενόψει της δημόσιας κατακραυγής. Γιατί η κατακραυγή; Λόγω της κληρονομιάς των υπέρογκων υπερβάσεων κόστους και του μειωμένου κόστους συντήρησης. Οι Ολυμπιακοί Αγώνες έχουν μακρά ιστορία ακριβών λευκών ελεφάντων. Για παράδειγμα, το Εθνικό Στάδιο του Πεκίνου, με το παρατσούκλι Bird's Nest, που κατασκευάστηκε με κόστος 480 εκατομμυρίων δολαρίων για τους Θερινούς Ολυμπιακούς Αγώνες του 2008, απαιτεί πάνω από 10 εκατομμύρια δολάρια ετησίως για τη συντήρηση και δεν έχει κανονικό μισθωτή. Κάποιοι απέδωσαν την ελληνική οικονομική κατάρρευση στο υπέρογκο χρέος που συσσωρεύτηκε από τη φιλοξενία των καλοκαιρινών αγώνων του 2004 (Flyvbjerg, 2014). «Ήταν καλό εκείνη την εποχή γιατί ήμασταν το κέντρο του κόσμου και μπορούσαμε να δείξουμε τη χώρα μας», λέει ο αθλητής Χρήστος Λιμπάνοβνος, από την Ελληνική Γυμναστική Ομοσπονδία. «Μα πόσο κόστισε; Τόσα χρήματα - δισεκατομμύρια ευρώ. Και τώρα είμαστε σπασμένοι, και όλα γίνονται όλο και χειρότερα κάθε μέρα. Είναι δύσκολο να μην δεις μια σύνδεση. Είναι δύσκολο να μην σκεφτείς ότι ίσως δεν άξιζε τον κόπο.»1 Ίσως το πιο διαβόητο παράδειγμα λευκού ελέφαντα των Ολυμπιακών Αγώνων είναι το Ολυμπιακό Στάδιο του Μόντρεαλ του 1976. Αρχικά με το παρατσούκλι Big O λόγω του μοναδικού του σχεδιασμού ντόνατ, το στάδιο έγινε σύντομα γνωστό Ο Καναδάς ως το μεγάλο χρέος. Υπολογιζόμενο σε 134 εκατομμύρια δολάρια, χρειάστηκαν οι Καναδοί φορολογούμενοι 30 χρόνια για να εξοφλήσουν το τελικό χρέος 1,1 δισεκατομμυρίων δολαρίων. Για να γίνουν τα πράγματα χειρότερα, το στάδιο δεν είχε τελειώσει εντελώς όταν άνοιξαν οι Ολυμπιακοί Αγώνες. Το στάδιο δεν είχε κύριο ενοικιαστή από το 2004, όταν το επιτυχημένο Montreal Expos μετακόμισε στην Ουάσιγκτον, D.C. Οι διοργανωτές των Ολυμπιακών Αγώνων του Λονδίνου 2012 ήθελαν να απαλύνουν το οικονομικό hangover των Ολυμπιακών Αγώνων. Συγκεκριμένα, γνώριζαν καλά το κρυφό κόστος της μεταολυμπιακής συντήρησης κτιρίων που δεν είχαν πλέον ζήτηση. Ένα πλεονέκτημα που είχαν σε σχέση με τις λιγότερο ανεπτυγμένες χώρες είναι ότι η υποδομή και πολλές από τις αρένες ήταν ήδη στη θέση τους και οι Ολυμπιακοί Αγώνες παρείχαν μια πολύ αναγκαία αναβάθμιση. Έφτιαξαν προσωρινές αρένες για λιγότερο δημοφιλή αθλήματα. Για παράδειγμα, μετά τους αγώνες, η αρένα της υδατοσφαίρισης αποδομήθηκε και τα υλικά ανακυκλώθηκαν. Η αρένα μπάσκετ των 12.000 θέσεων σχεδιάστηκε για να είναι φορητή ώστε να μπορεί να χρησιμοποιηθεί σε μελλοντικούς Ολυμπιακούς Αγώνες. Η επεκτασιμότητα ήταν ένα άλλο σημαντικό στοιχείο. Για παράδειγμα, κατά τη διάρκεια των Ολυμπιακών Αγώνων, περισσότερα από 17.000 άτομα παρακολούθησαν εκδηλώσεις κολύμβησης στο νεόκτιστο υδάτινο κέντρο. Το υδάτινο κέντρο μειώθηκε σε χωρητικότητα 2.500 μετά τους Ολυμπιακούς Αγώνες και είναι πλέον ανοιχτό για το κοινό.
page 158© Sophie Vigneault /123RF In recognition of its achievements, the London 2012 Olympic Games won gold in the Environment and Sustainability category of the 6th International Sports Events Awards. times," says David Stubbs, Director of Sustainability London 2012. "Seven years, nine million visitors and 2,484 medals later, that's exactly what we've achieved."1 Sanborn, J., "Was it worth it? Indebted Greeks question cost of 2004 Olympics,” Time, July 9, 2012, p. 33.* “London 2012’s Sustainability Legacy Lives On,” Olympic.org. Accessed 10/10/15. Summary Time and cost quality estimates form the basis of project control. Past experience is the best starting point for these estimates. The quality of estimates is affected by other factors such as people, technology and downtime. Excellent companies record past experience and create a database of estimates that provide quick and accurate information on the cost of specific work packages. Using top-down estimates is good for making initial strategic decisions or in situations where the cost associated with developing better estimates has little benefit. However, in most cases, the bottom-up estimation approach is preferable and more reliable because it evaluates each work package rather than the entire project, section, or deliverable of a project. Time and cost estimation for each work package facilitates the development of a project schedule and budget in phases, which are
it is necessary to control the project during its implementation. Using the Estimating Guidelines will help eliminate many common mistakes made by those unfamiliar with estimating time and cost for project control. The level of detail of time and cost should follow the old phrase "no more than necessary and sufficient". Managers must remember to differentiate between committed costs, actual and planned costs. Early efforts to clearly define project objectives, scope, and specifications are known to greatly improve the accuracy of time and cost estimates. Culture plays an important role in assessments. If the focus is on what went wrong rather than who is to blame, people should be more direct in sharing their experiences and knowledge. However, if you work in a punitive organizational culture that only cares about results, you are likely to be much more careful about what you share and may even speculate in self-protection. suffer from underestimated costs and overestimated benefits. They can also become white elephants whose maintenance costs outweigh the benefits. Steps should be taken to remove bias and compare estimates of large projects with similar projects done in the past. Key terms distribution, 143 Bottom-up estimation, 140 Delphi method, 142 direct costs, 151 function points, 143 learning curve, 145 indirect costs, 151 phase estimation, 147 Range estimation, 147 Range estimation, 146 Procast, 146 Procast 157
page 159 Model method, 146 Time and cost databases, 154 Top-down estimates, 140 White elephant, 155 Review questions1. Why are accurate estimates necessary for effective project management? 2. How does the culture of an organization affect the quality of assessments?3. What are the differences between bottom-up and top-down estimation approaches? Under what circumstances would you prefer one over the other?4. What are the main types of costs? What costs can the project manager control?5. Why is it difficult to estimate the costs and benefits of large projects (eg airport, stadium)? Define a white elephant in project management. Give a real example. PRACTICE MOMENT Discussion Questions 5.1   Portland Aerial Tram1. Can you think of a local public project that had significant cost overruns, such as the Portland streetcar project?2. Do you agree with the statement that "nothing great would ever be built if people knew in advance what the real costs and challenges are"?
5.2   The Delphi Method1. What types of estimates are best suited for this method? 5.3   Accuracy of assessment1. Why is the gap so much wider for IT projects than for construction projects? 5.5   Avoiding the Curse of the White Elephant1. Can you identify personal examples of white elephants?2. What else do you think the Olympic organizers could do to make the event more sustainable? Exercises 1. Calculate the direct labor cost for a project team member using the following data: Hourly rate: $50/hr Hours required: 120 Overhead rate: 40%2. Calculate the direct and total labor costs for a project team member using the following data: Hourly rate: $50/hour Hours required: 100 Overhead charge: 30%3. The Munsters were saving up to buy a house. They estimate that, given today's interest rates, they could buy a $400,000 home. Before looking at houses on the market, they decide to explore the possibility of building a new home. The Munsters believe they could purchase a suitable lot for $70,000-$75,000. At the very least, they want to build a 2,400 square meter house. The cost of a home of the quality they want is $160 per square foot. Given this information, should the Munsters pursue the option of building a new house?4. Lady. Publinski and her husband, Xander, are designing their dream home. The house is located high on a hill with a beautiful view of the White Mountains. The plans show the size of the house it should be
page 1602,900 sq.ft. The average price for a lot and a house similar to this one is $150 per square foot. Fortunately, Xander is a retired plumber and thinks he can save money by installing the plumbing himself. Lady. Publinsky feels he can handle interior design. Both feel they can complete the exterior painting with the help of their two children. The following average cost information is available from a local bank that makes loans to local contractors and distributes progress payments to contractors when certain jobs are verified to have been completed. 25% Excavation & Framing Complete 8% Roof & Fireplace Complete 3% Raw Wiring Up 6% Plumbing Rough Up 5% Sheathing Up 17% Windows, Insulation, Walkways, Drywall & Garage Complete Installed Hardware 6% Carpet & Trim Installation 4% Interior Decorating 4% Flooring & floor finishes. What is the estimated cost for the Publinskys' house if they use contractors to complete the entire house? SI. Estimate how much the house would cost if the Publinskys used their talents to do some of the work themselves.5. Exercise Figure 5.1 is a project WBS with costs broken down by percentage. If the total cost of the project is estimated to be $800,000, what is the estimated cost for the following deliverables? Projectb. Programming c. internal testing
What weaknesses are inherent in this estimation approach? FIGURE 5.1 ​​WBS EXERCISE Figure 6. Suppose you are the project manager for the Tidal 2 software project. You have been asked to estimate the expected cost of the project. Your company's database indicates that developers can handle eight operating points per month and that the cost per developer in your company is $5,000 per month. You and your team of five developers have created the following requirements: ElementsCountComplexityInputs10LowOutputs4LowInquiries4HighFiles28MediumInterfaces18High Using the “complexity weighting” plot shown in Table 5.2 and the information provided, estimate the total number of functions
page 161 points, the estimated cost and estimated duration of the Tidal 2.7 project. Project Omega 2. Using the complexity weighting scheme shown in Table 5.2 and the following function point complexity weighting table, calculate the total number of function points. Assume that historical data suggests that five operating points equal one staff month and six people are assigned to work on the project. Complexity weight tableNumber of inputs15Low score ComplexityNumber of outputs20Medium score complexityNumber of queries10Medium score ComplexityNumber of files30Medium score ComplexityNumber of interfaces50High score complexity. What is the estimated duration of the project? SI. If 20 people are allocated to the project, what is the estimated duration of the project? w. If the project is to be completed in six months, how many people will be needed for the project? Journal of Personality and Social Psychology, vol. 67, no. 3 (1994), pp. 366–81. Dalkey, N.C., D.L. Rourke, R. Lewis, and D. Snyder, Studies in the Quality of Life: Delphi and Decision Making (Lexington, MA: Lexington Books, 1972). Flyvbjerg, B., 'Curbing Optimism Bias and Strategic Misrepresentationin Planning: Reference Class Forecasting in Practice', EuropeanPlanning Studies, vol. 16, no. 1 (January 2008), pp. 3–21.
σελίδα 162Flyvbjerg, B., “From Nobel Prize to Project Management: Getting Risks Right”, Project Management Journal, August 2006, σελ. 5–15. Flyvbjerg, B., “What You Should Know about Megaprojects and Why: An Overview”, Journal of Project Management, vol. 45, όχι. 2 (April/May 2014), σελ. 6–19. Flyvbjerg, B., N. Bruzelius and W. Rothengatter, Mega Projects and Risk: An Anatomy of Ambition (United Kingdom: Cambridge University Press, 2003). Gray, N. S., “ Sacred to breed elusive 'precise estimate'”, PMNetwork, August 2001, σελ. 56.Hirschman. A. O., “The Principle of the Hiding Hand,” The Public Interest, Winter 1967, σσ. , vol.19, αρ. 5 (1993), p. 529–32. Jones, C., Applied Software Measurement (New York: McGraw-Hill, 1991). Jones, C., The Story of the Revolution (New York: McGraw-Hill, 1998). Kharbanda, O. P. and J. K. Pinto, What Made Gertie Gallop: Learning from Project Failures (New York: Von Nostrand Reinhold, 1996). Lovallo, D. and D. Kahneman, "Delusions of Success: How Optimism Undermines Executives' Decisions," Harvard Business Review, July 2003, σελ. 56–63. Magne, E., K. Emhjellenm and P. Osmundsen, “Cost Estimation Overruns in the North Sea”, Project Management Journal, vol. 34, αρ. 1 (2003), p. 23–29.
McLeod, G. and D. Smith, Managing Information Technology Projects (Cambridge, MA: Course Technology, 1996). Molloy, E. and T. Chetty, 'The Rocky Road to Legacy: Lessons from the 2010 FIFA World Cup South Africa Stadium Programme', ProjectManagement Journal, vol. 46, no. 3 (June/July 2015), pp. 88–107. Symons, C.R., “Function Point Analysis: Difficulties and Improvements”, IEEE Transactions on Software Engineering, vol. 14, no. 1 (1988), pp. 2–11. Walters, D.J., P. Fernbach, C. Fox, and S. Sloman, “Known Unknowns: A Critical Determinant of Confidence and Calibration,” ManagementScience, vol. 63, no. 12 (2017), pp. 3999–4446. Case 5.1Sharp Printing, AG Three years ago, Sharp Printing's (SP) strategic management group set a goal of bringing a color laser printer to the consumer and small business market for less than $200.A few months later, senior management met offsite to discuss the new product. The results of this meeting were a set of general technical specifications along with key deliverables, a product release date and a cost estimate based on past experience. Shortly thereafter, a middle management meeting was scheduled to explain the project goals, key responsibilities, project start date, and the importance of meeting the product release date within the cost estimate. The meeting was attended by members of all involved departments. The excitement was great. While everyone considered the stakes high, the promised rewards for the company and staff were etched in their minds. A little bit
page 163, participants questioned the legitimacy of the project's duration and cost estimates. Some R&D people were concerned about the technology needed to produce the high-quality product for less than $200. But given the excitement of the moment, everyone agreed that the task was worthwhile and doable. The color laser printer project should have the highest project priority in the company. Lauren was selected as project manager. He had 15 years of experience in printer design and manufacturing, which included successfully managing several printer-related projects for commercial markets. deliveries were his first concern. He quickly had a meeting with key stakeholders to create a WBS that would identify the work packages and the organizational unit responsible for implementing the work packages. Lauren emphasized that she wanted time and cost estimates from those who would be doing the work or who have the most expertise, if possible. Obtaining estimates from more than one source was encouraged. Estimates were due in two weeks. Aggregated estimates were published in the WBS/OBS. The corresponding cost estimate appeared to be incorrect. The cost estimate was $1,250,000 above senior management's top-down estimate. this represented about a 20% overrun! In addition, the bottom-to-top time estimate based on the project network was four months longer than the top management time estimate. Another meeting was planned with important stakeholders to verify the estimates and discuss solutions. At that meeting, everyone agreed that the bottom-up cost and time estimates appeared accurate. Here are some of the suggestions from the brainstorming session. Change of scope. Technology design outsourcing. Use the priority chart (found in Chapter 4) to ask top management to clarify their priorities. new technology and production methods. Cancellation of the project.
Order a laser printer balance study. Very little concrete savings were identified, although there was agreement that time to market could be reduced, but at additional cost. Lauren met with the marketing (Connor), production (Kim), and design (Gage) managers, who gave a few ideas to cut costs, but nothing significant enough to make a big impact. Gage commented, “I wouldn't want to be the one to deliver the message to upper management that your cost estimate is $1,250,000! Good luck, Lauren.”1. At this point, what would you do if you were the project manager? 2. Did top management do the right thing in developing an estimate?3. What estimation techniques should be used for a mission-critical project like this? Case 5.2 Graduate Adventure Josh and Mike met as roommates during their freshman year at Macalester College in St. Louis. Paul, Minnesota. Despite the rough start, they became the best of friends. They are planning a two-week adventure together to celebrate their graduation in June. Josh has never been to Europe and wants to visit France or Spain. Mike spent a semester abroad in Aarhus, Denmark and traveled extensively in Northern Europe. Although Mike has never been to France or Spain, he wants to go somewhere more exotic, like South Africa or Vietnam. Last week they were arguing about where they should go. Josh argues that it will cost too much to fly to South Africa or Vietnam, while Mike replies that it will be much cheaper to fly to Vietnam or South Africa when they are there. They agree that they can spend no more than $3,500 each on the trip and can only be gone for two weeks.
F5-1 page 164 One night, when they were chatting with friends over beer, Sarah said, "Why don't you use what you learned in project management class to decide what to do?" Josh and Mike looked at each other and agreed that this made perfect sense.1. Let's say you are Mike or Josh. how would you make a decision using project management methodology?2. Looking at cost first, what decision would you make?3. After cost, what other factors should be considered before making a decision? Estimating the time required to complete a work package or task is a basic need for project planning. In some cases, the manager simply uses judgment and past experience to estimate the work package time, or uses historical records of similar work.
Most managers and workers intuitively know that improving the time it takes to complete a task or group of tasks occurs with repetition. A worker can perform a task better/faster the second time and every time (without any technological change). This pattern of improvement is important to both the project manager and the project developer. This repeatability improvement often results in reduced man-hours to complete tasks and results in lower project costs. Based on empirical evidence in all fields, the pattern of this improvement has been quantified in the learning curve (also known as the improvement curve, experience curve, and industrial progress curve), which is described by the following relationship: output doubles, unit hours labor are decreasing at a steady rate. For example, suppose a manufacturer has a new contract for 16 prototype units and a total of 800 man-hours are required for the first unit. Past experience has shown that in similar types of units the improvement rate has been 80 percent. This labor hours improvement ratio is shown below: Unit labor hours 1 800 2800 × 0.80 =640 4640 × 0.80 =512 8512 × 0.80 =41016410 × 0.80 labor hours can be similar 1 unit T = 325 units. is determined. Looking at the 16 point level and moving down the 80% column, we find a ratio of 0.4096. Multiplying this ratio by the labor hours for the first unit, we get the price per unit:
page 165 That is, module 16 should require about 328 hours of work, assuming an 80 percent improvement rate. Obviously, a project manager may need more than one unit value to estimate time for some work packages. The cumulative values ​​in Table A5.2 provide factors for calculating the cumulative total of working hours for all units. In the previous example, for the first 16 units, the total hours of work required would be TABLE A5.1 Learning Curves Unit Prices

page 166 TABLE A5.2 Cumulative values ​​of learning curves

page 167 By dividing the total cumulative hours (7,136) by the units, the average labor hours per unit can be obtained: Notice how the labor hours of the 16th unit (328) differ from the average of all 16 units (446). The project manager, knowing the average labor cost and processing cost, could calculate the total cost of the prototype. 2nd ed.(New York: McGraw-Hill, 1983.) SAMPLE CONTRACT MONITORING Assume that the project manager receives a monitoring order for 74 units. how should he calculate labor hours and costs? the 80 percent ratio and the cutoff of 90 units total - a ratio of 30.35. 800 × 30.35 = 24,280 labor hours for 90 units Minus 16 previous units = 7,136 Total next order = 17,144 labor hours 17,144/74 equals 232 average labor hours per unit Labor hours for the 90th unit can be obtained 1.4 labor hours for the 90th unit. × 800 = 187.9 hours of work. (For the ratios between the given prices, just calculate.) a contract to produce eight satellites to support a global telephone system (for Alaska Telecom, Inc.) that allows people to use a single portable telephone anywhere on Earth to make and receive calls. NSDC
will develop and produce the eight units. NSDC estimated the R&D cost at NOK 12,000,000. The material cost is estimated at NOK 6,000,000. They estimated that the design and production of the first satellite would require 100,000 man-hours and an 80% improvement curve was expected. The cost of skilled labor is NOK 300 per hour. The desired profit for all projects is 25% of total cost.A. How many labor hours should the eighth satellite require? B. How many labor hours for the entire eight-satellite project? C. What price would you ask for the project? Why; D. Midway through the project, your design and production people realize that a 75% improvement curve is more appropriate. What impact does this have on the project? Q. Towards the end of the project, Deutsch Telefon AG requests a cost estimate for four satellites identical to the ones you have already built. What price will you quote them? Justify your price. Design Elements: Desktop Snapshot, Label Box, Case Icon: ©SkyDesigns/Shutterstock
6-16-26-36-46-56-66.16.26.36.4page 168CHAPTER 6Developing a Project Schedule LEARNING OBJECTIVESAfter reading this chapter, you will be able to: Understand the connection between the WBS and the project network. Diagram of a network project using AON methods. Calculate early, late and non-working times. Identify and understand the importance of critical path management. Distinguish between free float and total float. Demonstrate an understanding and application of delays in compressing projects or limiting the start or completion of an activity. DESCRIPTION Develop the Project Network from the Network Work PackageEstablishing Activity Basics on the Project Node (AON)
6.56.66.76.86.9page 169 Network Computing Process Using Forward and Backward Information Level of Detail for Activities Practical Considerations Advanced Networking Techniques to Get Closer to Reality Summary I maintain six honest servers (they taught me everything I know). their names are What, Why, and When and How and Where and Who.—Rudyard Kipling6.1 Developing the Project Network
page 170 The project network is the tool used to plan, schedule and monitor project progress. The network is developed from the information gathered for the WBS and is a graphical flow chart of the project work plan. The network describes the project activities to be completed, the logical sequences, the interdependencies of the activities to be completed and, in most cases, the start and completion times of the activities along with the longest path(s) the network – the critical route. The network is the framework for the project information system that will be used by project managers to make decisions about project time, cost, and performance. Developing project networks takes time for someone or a team to develop. therefore they cost money! Are networks really worth it? The answer is definitely yes, except when the project is considered trivial or of very short duration.1 The network is easily understood by others because the network presents a graphical representation of the flow and sequence of work throughout the project. Once the network is developed, it is very easy to modify it when unexpected events occur during the project. For example, if materials for an activity are delayed, the impact can be quickly assessed and the entire project revised within minutes on the computer. These revisions can be quickly shared with all project participants (e.g. via email or project website). The project network provides other valuable information and insights. It provides the basis for planning work and equipment. It enhances communication that brings all managers and teams together to achieve project time, cost and performance goals. It provides an estimate of project duration rather than picking a random project completion date or someone's preferred date. The network provides the times when activities can start and end and when they can be postponed. It provides the basis for project cash flow budgeting. It identifies which activities are "critical" and therefore must not be delayed in order for the project to be completed as planned. It highlights which activities must be considered if the project needs to be compressed to meet a deadline. A statement commonly heard by professionals is that the network of the project represents three quarters of it
design process. Perhaps an exaggeration, but it signals the perceived importance of the network to project managers in the field.6.2 From Work Package to Network LO 6-1Understand the connection between the WBS and the project network. The project network is a visual flowchart of the sequence, interactions, and dependencies of all the activities that must be performed to complete the project. An activity is a time-consuming element of the project - for example, working or waiting. WBS work packages are used to create the activities that are in the project network. An activity can include one or more work packages. The activities are placed in a sequence that allows for the smooth completion of the project. Networks are constructed using nodes (boxes) and arrows (lines). The integration of work packages and the network represents a point where the management process often fails in practice. The main explanations for this failure are that (1) different groups (individuals) are used to define work packages and activities, and (2) the WBS is poorly constructed and not delivery/output oriented. The integration of the WBS and the project network is crucial for effective project management. The project manager must be careful to ensure continuity by having some of the same people who defined the WBS and work packages develop the network activities. .The main inputs to developing a project network plan are work packages. Remember that a work package is defined independently of other work packages, has defined start and end points, requires specific resources, includes technical specifications, and has cost estimates for the package. However, the dependency, sequence and timing of each
page 171 Factors are not included in the work package. A network activity can include one or more work packages. Figure 6.1 shows a portion of the WBS example and how the information is used to develop a project network. The lowest level deliverable in Figure 6.1 is the "circuit board". Cost accounts (design, production, test, software) indicate project tasks, responsible organizational unit, and time-staged budgets for work packages. Each cost account represents one or more work packages. For example, the project cost account has two work packages (D-1-1 and D-1-2) — specifications and documentation. Software and production accounts also have two work packages. Creating a network requires the task sequencing of all work packages that have measurable work. FIGURE 6.1WBS/Work Packages for the Network
page 172 Figure 6.1 shows how work packages are used to develop a network of projects. You can track the usage of work packages with the coding scheme. For example, activity A uses work packages D-1-1 and D-1-2 (specifications and documentation), while activity C uses work package S-22-1. This methodology for selecting work packages for describing activities is used to develop the project network, which separates and schedules project activities. Care must be taken to include all work packages. THE
the manager derives uptime estimates from the task times in the work package. For example, activity B (first 1) takes five weeks to complete. Activity K (trial) takes three weeks to complete. After calculating the activity's start and end times, the manager can schedule time-phased resources and budgets (with dates). others about the techniques they use. Project managers are no exception. Here are some terms used in building project networks: Activity. For project managers, an activity is a project element that takes time. It may or may not require resources. Usually, an activity consumes time – either while people are working or while people are waiting. Activities typically represent one or more tasks in a work package. Activity descriptions should use a verb/noun form – for example, developing product specifications. Parallel activities. These are activities that can occur simultaneously if the manager wishes. However, the administrator can choose not to run parallel activities at the same time. Burst activity. This activity has more than one activity immediately after it (more than one dependency arrows coming from it). Merger activity. This is an activity that has more than one activity immediately before it (more than one dependency arrow is running
page 173it).Path. This is a sequence of linked dependent activities. Critical Path. When this term is used, it means the longest path(s) in the network. If an activity in the path is delayed, the project is delayed by the same amount of time. Basic Rules to Follow When Developing Project Networks The following eight rules generally apply when developing a project network: 1. Networks flow normally from left to right.2. An activity cannot be started until all previous linked activities have been completed.3. Arrows in networks indicate priority and flow. Arrows can cross each other.4. Each activity must have a unique identification number.5. An activity ID number must be greater than any preceding activity.6. Rollback is not allowed (in other words, recycling through a set of activities cannot occur).7. Conditional statements are not allowed (that is, this type of statement should not appear: if successful, do something, if not, do nothing).8. Experience suggests that when there are multiple starts, a common start node can be used to indicate a clear project start in the network. Similarly, an end design node can be used to indicate a clean edge. 6.1 PRACTICAL IMMEDIATENESS The yellow sticky approach (to build a network project)
In practice, networks of small projects (from 25 to 100 activities) are often developed using yellow Post-it® stickers. The following are the requirements for such a project: 1. Project team members and a coordinator.2. A yellow sticker (3 × 4 inches or larger) for each activity with the activity description printed on the sticker.3. Erasable board with a marker (a long piece of brown paper 4 feet wide can be used in place of the white board). All yellow stickers are easy to place for all team members. The team begins by identifying sticky activities that have no predecessors. Each of these activity stickers is attached to the board. An initial node is drawn and a dependency arrow is attached to each activity. Given the initial starting activities of the network, each activity is examined for immediate successor activities. These activities are attached to the table and dependency arrows are drawn. This process continues until all the yellow stickers are pasted on the dependency arrow board. (Note: The process can be reversed, starting with activities that have no successor activities and connecting them to a final project node. Previous activities are selected for each activity and attached to the table with the dependency arrows marked.) When Once the process is complete, dependencies are recorded in the project software, which develops a project network along with critical paths and start, lag, and delay times. This methodology sensitizes team members early on to the interdependencies between project activities. But more importantly, the methodology empowers team members by providing information for important decisions to be implemented later.
page 1746.4 Activity-on-node (AON) Basics Historically, two methods have been used to develop design networks: Activity-on-node (AON) and Activity-on-arrow (AOA). Over time, the availability of advanced computer graphics has improved the clarity and visual appeal of the AON method. Today, the activity-on-node method has dominated almost all network design schemes. For this reason, we limit our discussion to AON methods. Figure 6.2 shows some typical uses of building blocks to build the AON network. An activity is represented by a node (frame). The knot can take many forms, but in recent years the knot depicted as a rectangle (box) has dominated. Dependencies between activities are represented by arrows between the rectangles (boxes) in the AON network. Arrows indicate how activities are connected and the order in which things should be done. The length and slope of the arrow are arbitrary and are set for ease of drawing the network. The letters in the boxes are here to identify the activities as you learn the basics of network construction and analysis. In practice, activities have identification numbers and descriptions. FIGURE 6.2 Node Activity Network Basics
There are three basic relationships that must be established for activities included in a project network. Relationships can be found by answering the following three questions for each activity.1. What activities must be completed immediately before this activity? These activities are called upstream activities.2. What activities should immediately follow this activity? These activities are called successor activities.3. What activities can occur during this activity? This is known as a concurrent or parallel relationship. Sometimes a manager can simply use questions 1 and 3 to build relationships. This information allows the network analyst to create a
page 175 graphical flow diagram of the sequence and logical interdependencies of the project activities. Figure 6.2A is analogous to a to-do list where you complete the task at the top of the list first, then move on to the second task, and so on. manager that activity A must be completed before activity B can begin and that activity B must be completed before activity C can begin. Figure 6.2B tells the project manager that activities Y and Z cannot begin until activity is completed X. This figure also indicates that activities Y and Z can be performed concurrently or concurrently if the project manager so desires. however it is not a necessary condition. For example, pouring a road (Activity Y) can occur during landscape planting (Activity G), but cleaning (Activity X) must be completed before Activities Y and Z begin. Activities Y and Z are considered parallel activities. Parallel paths allow simultaneous effort, which can shorten the time it takes to complete a series of activities. Activity X is sometimes referred to as a burst activity because more than one arrow bursts from the node. The number of arrows indicates how many activities immediately follow activity X. Figure 6.2C shows the project manager that activities J, K, and L can occur simultaneously if desired, and that activity M cannot begin until to complete all activities J, K and L . Activities J, K and L are parallel activities. Activity M is called a merging activity because more than one activity must be completed to start M. Activity M can also be called a milestone—an important achievement. In Figure 6.2D, activities X and Y are parallel activities that can occur simultaneously. Activities Z and AA are also parallel activities. But activities Z and AA cannot start until activities X and Y are completed. Given these basic principles of AON, we can practice building a simple network. Remember that arrows can cross (eg, Figure 6.2D), bend, or have any length or angle. Organization is not a criterion for a valid and useful network - only the accurate inclusion of all project activities, their dependencies, and their time estimates. Information on a simplified design network is provided in Table 6.1. This project represents a new automated warehouse system for receiving orders for frozen food packages and transporting them to a staging area for delivery to stores.
TABLE 6.1 Network information AUTO STORAGE Selection system Activity Description Previous activity A Define requirements  None BAAssign staff AC Design hardware AD Code Software BE Create and test hardware CF Develop patent application CG Test software DHI Integrate systems     Integrate systems     In the first project in the building, F6, F. 6.1. We see that activity A (DefineRequirements) has nothing before it. Therefore, it is the first node to be drawn. Next, we notice that activities B (Assigned Personnel) and C (Design Materials) precede activity A. We draw two arrows and connect them to activities B and C. This section shows the project manager that activity A must completed before activities B and C can begin. After A is completed, B and C can occur simultaneously if desired. Figure 6.4 shows the complete network with all activity sequences and dependencies. FIGURE 6.3 Automated warehouse - Partial network
page 176 FIGURE 6.4 Automated Warehouse—Full Network The information in Figure 6.4 is extremely valuable to those managing the project. However, estimating the duration of each activity will further increase the value of the network. A realistic project plan and schedule requires reliable time estimates for project activities. Adding time to the grid allows us to estimate how long the project will take. . Obtaining an uptime estimate requires a timely assessment of resource needs in terms of materials, equipment and people. In essence, the
page 177 the project network with runtime estimates links project planning, scheduling, and control. moments of activity. Running time estimates are taken from the task times in the work package and added to the network (overview Figure 6.1). Performing a few simple calculations allows the project manager to complete a process known as back and forth. Completing the forward and backward pass will answer the following questions. Skip Forward - First Times1. How soon can the activity start (early start—ES)?2. How soon can the activity be completed (early termination — EF)?3. How long can the project be completed (expected time — TE)? Flashback — End Times1. How late can the activity start (delayed start—LS)?2. How late can the activity finish (from late to late - LF)?3. What activities represent the critical path (CP)? This is the longest path in the network which, when delayed, will delay the project.4. How long can the activity be delayed (slack or float - SL)? Terms in parentheses represent acronyms used in most texts and computer programs and by project managers. the front and the back
The approval process is shown below. Forward Pass — Start Times The forward pass starts with the first activity(ies) of the project and traces each path (chain of sequential activities) through the network to the last activity(ies) of the project. When tracing the route, you add activity times. The longest path indicates the project completion time for the plan and is called the critical path (CP). Table 6.2 lists the uptimes in business days for the example Automated Warehouse project we used to design a network. TABLE 6.2 Network Information AUTOSAVESelect System OrderActivityDescriptionPreviousTimeSpecifyRequirementsNo 10-day workBAAsign StaffA 5Design CHARDwareA25DCode SoftwareB20EBuild and Test HardwareC50FDevelopPatentGTexteApplication1 .5 shows the network with the estimated uptime found in node (see 'DUR' for duration in legend). For example, Activity A (Define Requirements) has an activity duration of 10 business days and Activity E (Build and test hardware) has an activity duration of 50 days. The forward transition starts at the project start time, which is usually zero hour. (Note: Calendar times can be calculated for the project later in the planning phase.) FIGURE 6.5 Activity network at node
page 178 In the Automated Warehouse example, the early start time for the first activity (activity A) is zero. This time is in the upper left corner of the node of activity A in Figure 6.6. The early termination for activity A is 10 days (EF = ES + DUR or 0 + 10 = 10). Next, we see that activity A is the predecessor of activities B (Assigned Personnel) and C (Design Material). Therefore, the earliest activities B and C can start is when activity A is completed. This time is 10 days. Now you can see in Figure 6.6 that activities B and C have an early start (ES) of 10 days. Using the formula EF = ES + DUR, the Early Finish (EF) times for activities B and C are 15 and 35 days. Following the same movement process along each network path, the early start and end times for the selected activities are shown here: FIGURE 6.6 Activity at the forwarding network access node
page 179Activity D: ES = 15EF = 15 + 20 = 35Activity F: ES = 35EF = 35 + 15 = 50Activity E: ES = 35EF = 35 + 50 = 85Activity G: ES = 35EF 35EF = 35 ) is a merge activity because they precede more than one activity. The early start (ES) of a merge activity depends on the early termination (EF) of all activities merged with it. In this project, activity H precedes activities E, F, and G. Which activity controls the ES of activity H? The answer is activity E. In Figure 6.6, the EF times are 85, 50, and 70. Because 85 days is the longest EF time, activity E controls the ES for activity H, which is 85. If activity E delay, activity H will be delayed. The early finish for activity H or the project is 100 days (EF = ES + DUR or 85 + 15 = 100). Forwarding requires you to remember only three things when calculating activity start times: 1. You add activity times to each path in the network (ES + DUR = EF).2. Move the early termination (EF) to the next activity where the early start (ES) occurs or
3. If the next succeeding activity is a merge activity, you select the highest early termination (EF) number from all immediate preceding activities. The three questions that arose from the forward pass have been answered. That is, early start (ES), early finish (EF) and expected project duration (TE) times were calculated. Backward is the next process to learn Backward - Last Times Backward starts with the last project activity(s) in the network. (LF) times for each activity. Before backtracking is calculated, the late completion of the last project activity must be selected. In the early stages of planning, this time is usually set equal to the early termination (EF) of the last project activity (or in the case of multiple termination activities, the activity with the highest EF). In some cases, there is an imposed project duration deadline and this date will be used. Let's assume for planning purposes that we can accept a project duration EF (TE) of 100 business days. The LF for activity H becomes 100 days (EF = LF) (see Figure 6.7). FIGURE 6.7 Inverse step of the activity network at the node
page 180 The back pass is similar to the forward pass. you need to remember three things: 1. You subtract the activity times on each path starting from the final activity of the project (LF − DUR = LS).2. Transfer the LS to the previous activity to create your LF, or3. If the next previous activity is a burst activity. In this case, you choose the smallest LS from all your immediate successive activities to create your LF. Let's apply these rules to the Automated Warehouse example. Starting with activity H (Integrated Systems) and an LF of 100 working days, the LS for activity H is 85 days (LF − DUR = LS, or 100 − 15 = 85). The LS for activity H becomes the LF for activities E, F, and G. Moving back through the network, the late starts for E, F, and G appear here (LS = LF − DUR): Activity E: LS = 85 − 50 = 35 Activity G: 85 − 35 = 50 Activity F: LS = 85 − 15 = 70
At this point, we see that activity C is a burst activity that is connected to (precedes) activities E and F. The late termination of activity C is controlled by the LS of activities E and F. The smaller LS of activities E and F ( LS = 35 and 70) is activity E. This establishes the LF for activity C. The LS for activity C becomes 10. Returning to the first activity of the project, we notice that it is also an explosive activity connected to the activities B and C The LF of activity A is controlled by activity C, which has the smallest LS of 10 days. Given a LF of 10 days, the LS for the activity is time period zero (LS = 10 − 10 = 0). The back pass is complete and the latest uptimes are known. Figure 6.8 shows the complete network with all start, delay, and shutdown times. Slack can be important for your project management. FIGURE 6.8 Back-and-forth transition completed with slack times Determining Slack (or Float) OA 6-4 Identify and understand the importance of critical path management.
page 181 Total Slack After the forward and backward pitch is calculated, you can determine which activities can be slacked by calculating slack or float. Put another way, total variance is the amount of time an activity can exceed its expected finish date without affecting the project finish date or the mandated finish date. The total slack, or slack, for an activity is simply the difference between LS and ES (LS − ES = SL) or between LF and EF (LF − EF = SL). For example, in Figure 6.8, the total variance for activity D is 15 working days, for activity F it is 35 days, and for activity E it is zero. If the total slack of an activity in a path is used, the ES for all activities further down the chain will be delayed and their slack will be reduced. The use of total relaxation must be coordinated with all participants in the activities that follow in the chain. After the slack is calculated for each activity, the critical path(s) are easily identified. When LF = EF for the final project activity, the critical path can be determined as those activities that also have LF = EF or zero float (LF − EF = 0 or LS − ES = 0). The critical path is the network path(s) that have the least common attribute. This awkward wording is necessary because a problem arises when the project completion activity has an LF that differs from the EF found in the forward pass—for example, an enforced due date. If this is the case, the relaxation on the critical path will not be zero. will be the difference between the EF of the project and the imposed LF of the last activity of the project. For example, if the EF for the project is 100 days, but the imposed LF or target date is set to 95 days, all activities on the critical path will be late minus 5 days. Of course, this would result in a 5 day delay for the first project activity - a good trick if the project is going to start now. Negative slack occurs in practice when the critical path is delayed. In Figure 6.8, the critical path is marked with dashed arrows—activities A, C, E, and H. Delaying any of these activities will delay the overall project by the same number of days. As ongoing projects can have many critical activities with many prior dependencies, coordination among those responsible for critical activities is crucial. Critical activities typically make up about 10 percent of project activities. Therefore, project managers pay close attention to critical path activities to ensure they are not delayed. See Screenshot of Exercise 6.2: The Critical Path.
page 182 PRACTICE MOMENT 6.2 The Critical Path The Critical Path Method (CPM) has long been considered the "holy grail" of project management. Here are the comments made by veteran project managers when asked about the importance of the critical path in project management: Whenever possible, I try to put my best people in critical activities or those activities that are most likely to become critical. special attention during the risk assessment to identify the hazards that can affect the critical path, directly or indirectly, making a single non-critical activity become critical. When I have money to spend on risk reduction, it's usually spent on critical tasks. I don't have time to track all the activities in a big project, but I make sure to keep in touch with people working on critical activities. When I have time, I visit them to find out firsthand how things are going. It's amazing how much more I can learn by talking to employees doing the work and reading people's facial expressions - far more than I can get from a numbers-based status report. When I get calls from other managers asking me to "borrow" people or equipment, I'm much more generous in committing labor resources to non-critical activities. For example, if another project manager needs an electrical engineer assigned to a job with five days off, I'm willing to share that engineer with another project manager for two to three days. The most obvious reason why the critical path is important is because these are the activities that affect completion time. If I suddenly get a call from above saying they need my project completed two weeks ahead of schedule, the critical path is where I schedule overtime and add additional resources to complete the project faster. slide, are the critical activities I focus on to get back on schedule. We use the term sensitivity to reflect the possibility of the original critical path changing after the project has started. Sensitivity is a function of the number of critical or near-critical paths. A network schedule that has only one critical path and non-critical activities that enjoy significant slack
page 183 would be characterized as insensitive. On the other hand, a sensitive network would be one with more than one critical path and/or non-critical activities with very little slack. Under these circumstances, it is much more likely that the original critical path will change once work on the project begins. What is the sensitivity of the Automated Warehouse program? Not much, as there is only one critical path and the other two non-critical paths have 15 and 35 days off, which suggests considerable flexibility. Project managers evaluate the sensitivity of their network schedules to determine how much attention they should devote to managing critical paths. Free Play (Floating) LO 6-5 Distinguish free play from total play. Free slack (FS) is unique. It is the time that an activity can delay without delaying any immediately following (successive) activity. Free variance is the time that an activity can exceed its early end date without affecting the early start date of any successor. Free relaxation can never be negative. Only activities that appear at the end of an activity chain where you have a merge activity can have free movement. See Figure 6.8, the Automated Warehouse project. In Figure 6.8, activity G has 15 days off, while activities B and D do not. In this case, activity G is the last activity in the top path and merges with activity H. Therefore, delaying activity G by up to 15 days does not delay any of the following activities and does not require coordination with managers of other activities. On the other hand, if activity B or activity D is delayed, the managers of the following activities must be notified that the slack has been used so that they can adjust their start schedules. For example, if activity Bi is delayed by 5 days, the manager of activity B must notify the managers of the following activities (D and G) that their slack has been reduced to 10 time units and their early start will be delayed by 5 days. In this example, activity D cannot start until the 20th, which reduces the variance of activity D to 10 days (LS - ES = SL or 30 - 20 = 10). The free license for activity Z is also reduced to 10 days.
Free dispersion occurs in the last activity in a chain of activities. In some cases, the "chain" has only one link. Activity F in Figure 6.8 is an example. It has a free break of 35 days. Note that no coordination with other activities is needed - unless the delay exceeds the 35 day free time. Total float at first glance seems insignificant, but in fact it is very important. When you are responsible for a late activity that has zero free variance, you affect the schedules of subsequent activities. You must inform the managers of the other activities in the chain that you will be late. Again, notice that the overall relaxation is shared all the way through. Alternatively, if you are responsible for an activity that is slack when it starts, you don't need to notify anyone as long as your work doesn't absorb all the slack! , what does a 35-day break for activity F (Patient Request Development) mean for the project manager? In this particular case it means that activity F can be delayed by 35 days. In a broader sense, the project manager soon learns that free float is important because it allows flexibility in scheduling scarce project resources—personnel and equipment—that are used in more than one side activity or on another project. Knowledge of the four activity times of ES, LS, EF and LF is valuable for the design, planning and control phases of the project. ES and LF inform the project manager of the time frame in which the activity must be completed. For example, activity G (Test Software) must be completed in the 35 and 85 day time range. the activity can start at 35 or finish at 85. On the other hand, activity C (Material Design) must start at 10 or the project will be delayed. When the critical path is known, it is possible to tightly manage the resources of the activities on the critical path so that mistakes are not made that will lead to delays. Also, if for some reason the project needs to be
page 184 to meet an earlier date, you can choose those activities or a combination of activities that will cost less to shorten the project. activities on the critical path to compensate for any negative slack, you can identify the activities on the critical path that cost the least to shorten. If there are other trails with very little slack, you may need to shorten activities on those trails as well. Typically, an activity represents one or more tasks in a work package. How many tasks you include in each activity determines the level of detail. In some cases, you may end up with too much information to manage and this can lead to higher overhead costs. Small project managers were able to minimize the level of detail by eliminating some of the preliminary steps for network design. Larger companies also recognize the cost of information overload and are working to reduce the level of detail in their networks. , if redesign fails' are not allowed. The network is not a decision tree. is a project plan that we assume will be implemented. If conditional statements were allowed, passing back and forth would be pointless. While in reality a plan rarely materializes as we expect in every detail, it is a reasonable starting point. You will see that once a network
page 185, it is easy to make revisions to accommodate the changes. Another rule that invalidates the design network and calculation process is looping. Looping is an attempt by the programmer to return to a previous activity. Remember that activity ID numbers should always be larger for activities that follow a given activity. this rule helps avoid illogical priority relationships between activities. The activity should only appear once. If repeated, the activity must have a new name and identification number and must be placed in the correct order in the network. Figure 6.9 shows an irrational loop. If such a loop could exist, this path would repeat itself continuously. Many computer programs detect this type of logic error. FIGURE 6.9 Irrational loop activity numbering Each activity needs a unique identifier—either a letter or a number. In practice there are very elegant designs. Most diagrams number activities in ascending order—that is, each successive activity has a larger number so that the flow of project activities is directed toward project completion. It is customary to leave spaces between numbers (1, 5, 10, 15, . . . ). Blanks are desirable so you can add new or missing activities later. As it is almost impossible to design a project network perfectly, network numbering is usually not done until the network is complete. In practice, you will find computer programs that accept numeric, alphabetical, or combinations of activity designations. Combination designations are often used to identify cost, job skills, department, and location. As a general rule, activity numbering systems should be ascending and as simple as possible. THE
the goal is to make it as easy as possible for project participants to monitor work across the network and identify specific activities. Using Computers to Develop Networks All of the tools and techniques discussed in this chapter can be used with currently available computer software. Two examples are shown in Figures 6.10 and 6.11. Figure 6.10 shows a generic AON computer output for the Automated Warehouse Picking System project. Note that these computer outputs use numbers to identify activities. The critical path is identified by nodes (activities) 2, 4, 6, and 9. The activity description appears in the top row of the activity node. The activity start time and ID are on the second line. The end time and duration are on the third line of the node. The project begins on January 1st and is scheduled to be completed on May 20th. Note that this computer network example includes non-working holidays and weekends. they present a clear, understandable picture over a time horizon. They are used during planning, resource planning and status reporting. The format is a two-dimensional representation of the project schedule, with activities on the rows and time on the horizontal axis. In this computer output, the shaded lines represent activity durations. The extended bar lines represent the gap. For example, "Trial Software" (ID #8) has a duration of 35 days (shaded area of ​​the line) and 15 days off (represented by the extended line). The slash also indicates that TestSoftware started early on February 19th and would end on April 8th, but could
page 186page 187 is due by April 29 because you have 15 days off. When calendar dates are used on the time axis, Gantt charts provide a clear overview of the project schedule and can often be found hanging on walls in project offices. Unfortunately, when projects have many dependencies, the dependency lines quickly become overwhelming and destroy the simplicity of the Gantt chart. However, there is nothing more dangerous than someone using the software with little or no knowledge of how the software produces its results. Input errors are very common and it takes someone who is experienced in the concepts, tools and information system to recognize what errors exist so that false actions can be avoided. not used, dates are assigned manually. Draw a calendar of working days (excluding non-working days) and number them. Next, match the business days in the calendar to the business days in your project's network. Most computer programs automatically assign calendar dates after you specify start dates, time units, non-working days, and other information. Multiple Starts and Multiple Projects Some computer programs require a common start and end event in the form of a node—usually a circle or rectangle—for a project network. Although this is not a requirement, it is a good idea as it avoids "hanging" paths. The wobbly paths give the impression that the work has no clear beginning or end. If a project has more than one activity that can be started at project start, each path is a pending path. The same is true if a project network ends with more than one activity. these disjoint paths are also called biters. Shocks can be avoided by connecting the shaker activities to a common project start or end node. FIGURE 6.11 Gantt chart of an automated receiving system
page 188 When multiple projects are linked together in an organization, using a common start and end node helps determine the overall planning period for all projects. Using shared activities pseudo or virtual start node wait allows different start dates for each project. Showing relationships between activities in previous units is called a finish-start relationship because it assumes that all immediately preceding linked activities must be completed before the next activity can begin. In an effort to get closer to the reality of the projects, some useful extensions have been added. The use of a ladder was the first obvious extension that extension professionals found very useful. Ladder The assumption that all immediately preceding activities must be 100 percent complete is too restrictive for some situations encountered in practice. This limitation occurs most often when one activity overlaps with the start of another and has a long duration. In the typical finish-to-start relationship, when an activity has a long duration and delays the start of an activity immediately following it, the activity can be divided into segments and the network designed using a scaling approach so that the
page 189 the next activity can start earlier and not delay the work. This segmentation of larger activity gives the appearance of rungs on a ladder in the network, hence the name. The classic example used in many texts and articles is pipe laying, as it is easy to visualize. The trench must be dug, the piping installed, and the trench backfilled. If the pipeline is a mile long, it is not necessary to dig a mile of trench before pipe laying begins or to lay a mile of pipe before backfilling begins. Figure 6.12 shows how these overlapping activities might appear in an AON network using the typical end-to-end approach. flexibility in network construction. Delay is the minimum amount of time a dependent activity must delay to start or finish. The use of delays in project networks mainly occurs for two reasons: 1. When long-running activities delay the start or finish of sequential activities, the network designer usually divides the activity into smaller activities to avoid long delay of the sequential activity. Using delays can avoid such delays and reduce network detail.2. Delays can be used to limit the start and end of an activity. The most commonly used relation extensions are end-to-end, end-to-end, and combinations of the two. These relationship patterns are discussed in this section.
page 190 Termination-Start Relationship The termination-start relationship represents the typical general network style (used at the beginning of the chapter). However, there are cases where the next activity in a sequence must be postponed even after the previous activity has completed. For example, removal of concrete forms cannot begin until the poured cement has cured for two time units. Figure 6.13 shows this delay relationship for AON networks. Finish-to-start delays are often used when ordering materials. For example, it may take 1 day to place orders but 19 days to receive the goods. Using finish to start allows the duration of the activity to be only 1 day and the delay to 19 days. This approach ensures that the cost of the activity is only associated with the order, rather than charging the activity for 20 days of work. This same end-to-end delay relationship is useful for describing transportation, legal, and postal delays. FIGURE 6.13 Termination-start relationship The use of termination-start delays should be carefully checked to ensure their validity. Conservative project managers and completionists are known to use delays as a means of creating a "wash" factor to reduce the risk of delays. A simple rule of thumb to follow is that the use of delays from start to finish should be justified and approved by someone responsible for a large part of the project. The legitimacy of delays is usually not difficult to discern. Legal use of the additional relationship shown can significantly improve the network by more closely representing the reality of the project. Start-to-Start Relationship An alternative to partitioning activities as we did earlier is to use a start-to-start relationship. Typical start-to-start relationships are shown in Figure 6.14. Figure 6.14A shows the zero-delay start-to-start ratio where, in a movie set, you want to start recording and audio recording at the same time. Figure 6.14B shows the same relationship with a delay of five time units. It is important to note that the
The relationship can be used with or without delay. If time has been allocated, it is usually shown in the dependency arrow of an AON network. This type of relationship generally describes a situation in which you can perform one part of an activity and start the next activity before completing the first. This relationship can be used in pipe laying design. Figure 6.15 shows the design using an AON network. The start-start relationship reduces network details and project delays by using lagrelationships.FIGURE 6.15 Using lags to reduce project duration
page 191 You can find compression opportunities by changing end-to-end relationships to end-to-end relationships. A start-to-finish review of critical activities can indicate opportunities that can be revised to be parallel using start-finish relationships. For example, instead of a "design the house, then build the foundation" activity, a start-start relationship could be used, where the foundation can start, say, five days (lag) after the project starts. design - assuming that foundation design is the first part of the overall design activity. This low-latency startup relationship allows parallel processing of a sequential activity and compresses the duration of the critical path. This same concept is often found in projects where concurrent engineering is used to speed up project completion. Parallel engineering, highlighted in Practice Case 6.3: Concurrent engineering, basically breaks activities into smaller parts so that work can be done in parallel and the project can be sped up (Turtle, 1994). The relationships between them can depict concurrent engineering conditions and reduce network detail. Of course, the same effect can be achieved by breaking an activity into small packages that can be implemented in parallel, but this latter approach greatly increases the network and monitoring details. CASE STUDY 6.3 Concurrent Engineering (Fast Tracking)*In the past, when a new product development project was started by a company, it started its sequential journey in the Research and Development Department. The ideas and concepts were processed and the results were passed on to the Engineering Department, which sometimes reworked the entire product. This result would be passed to Manufacturing, where it could be reworked to ensure that the product could be manufactured using existing machinery and operations. Quality improvements were initiated retrospectively as defects and opportunities for improvement were discovered during production. This sequential approach to product development was time-consuming and it was not uncommon for the final product to be completely unrecognizable compared to the original specifications.
page 192 Given the emphasis on speed to market, companies have abandoned the sequential approach to product development and adopted a more holistic approach called parallel engineering. In short, concurrent engineering involves the active participation of all relevant disciplines throughout the design and development process. The traditional end-to-end relationship chain sequence is replaced by an end-to-end delayed relationship sequence once important work for the next phase begins. Figure 6.16 summarizes the dramatic gains from this approach. General Motors used this approach to design the first American hybrid car, the Chevy Volt. From the beginning, all stages of the project involved specialists from Marketing, Engineering, Design, Manufacturing, Quality Assurance and other relevant departments. Not only did the project meet all of its goals, it was completed ahead of schedule.*“Chevrolet Volt Hits Road, Ahead of Schedule,” The New York Times, June 25, 2009.
End-to-End Relationship This relationship is shown in Figure 6.17. The completion of one activity depends on the completion of another activity. For example, testing cannot be completed earlier than four days after the prototype is completed. Note that this is not an end-to-end relationship because testing of subcomponents can begin before the prototype is complete, but four days of "system" testing is required after the prototype is complete. FIGURE 6.17 End-to-End Relationship Start-End Relationship This relationship represents situations where the completion of one activity depends on the start of another activity. For example, system documentation may not be completed until three days after the start of testing (see Figure 6.18). All relevant information to complete the system documentation is produced after the first three days of testing. FIGURE 6.18 Start-End Delay Relationship Combinations of Delay Relationships More than one delay relationship can be attached to an activity. These relationships are usually end-to-end and end-to-end combinations associated with two activities. For example, debugging cannot start before two time units after
Coding on page 193 has begun. Coding must be completed four days before debugging is complete (see Figure 6.19). The modification technique is to check each new relationship to see if it changes the start or end time of another activity. An example of the back-and-forth transition effect is shown in Figure 6.20. Ordering material depends on system design (start-to-start). After three days of planning the system (activity A), it is possible to order the necessary hardware (activity B). It takes four days after ordering (activity B) for the hardware to arrive to begin installation (activity C). After two days of installing the software system (activity D), testing the system (activity E) can begin. System testing (activity E) can be completed one day after software installation (activity D). The preparation of the system documentation (Activity F) can begin as soon as the project is completed (Activity A), but cannot be completed before two days after the completion of the system test (Activity E). This final relationship is an example of end-to-end delay. Notice how an activity can have a critical end and/or start. Activities E and F have critical endings (zero slack), but starting activities have 3 and 11 days of slack. Only the endings of activities E and F are critical. On the other hand, activity A has zero tardiness to start but 5 days tardiness to finish. So, for example, the project team realizes that it has some flexibility in scheduling a portion of the test work (activity E) through to software installation (activity D), when
they know they are ready to complete the test within a day of installation. The critical path follows the activity start and end constraints that arise due to the use of available additional relationships and imposed delays. You can determine the critical path in Figure 6.20 by following the dotted line across the network. For example, in the forward pass, the EF of activity E (test system) (17) is controlled by the completion of activity D (software installation) and the delay of one time unit (16 + delay 1 = 17). Finally, in the backward pass, the LS of activity A (design system) is controlled by activity B (ordering hardware) and the lag relationship with activity A (3 − 3 = 0). This type of activity gets its name because it includes a portion of a project. The duration of network activity is determined after the network plan is designed.
page 194 Hammock activities are often used to determine the usage or cost of fixed resources in a project segment. Typical examples of networking activities are inspection services, consultants and construction management services. A network activity derives its duration from the time interval between other activities. For example, a special color copier is required for a portion of a trade show editorial project. A network activity can be used to indicate the need for that resource and apply costs to that part of the project. This network is connected from the beginning of the department's first activity that uses the color copier to the end of the last activity that uses it. Network duration is simply the difference between the EF of the last activity and the ES of the first activity. The duration is calculated after the forward pass and therefore does not affect other activity times. Figure 6.21 provides an example of a network activity used in a network. The activity duration in the network results from the early start of activity B and the early termination of activity F - that is, the difference between 13 and 5, or 8 time units. The duration of the network will change if any ES or EF in the chain sequence changes. Network activities are very useful for delegating and tracking project overheads.
page 195 Another important use of networking activities is to bring together parts of a project. This is similar to deploying a subnet, but still maintains priority. This approach is sometimes used to present a "macro network" at higher levels of management. Using a network activity to group activities can make it easier to get the right level of detail for specific sections of a project. Project networks track and divide project work, resources, and budgets. The work package tasks are used to develop activities for networks. Every project manager should be comfortable working in an AON environment. The AON method uses nodes (boxes) for activities and arrows for dependencies. Passing back and forth establishes start and end times for activities as well as relaxation. The critical path is the longest path(s) of activity through the network. Any delay in an activity on the critical path will delay the completion of the project, provided everything else goes according to plan. In urgent projects, project managers closely monitor the critical path, often assigning their best people to these activities. Several extensions and modifications have been added to the original AON method. Delays allow the project designer to better reproduce the conditions encountered in practice. Using delays can make the start or end of an activity critical. Some computer software simply calls the entire activity critical, rather than identifying the beginning or end as critical. Care must be taken to ensure that delays are not used as a buffer for possible errors in time estimation. Finally, networking activities are useful for tracking the cost of resources used for a specific portion of a project. Hammock activities can also be used to reduce the size of a project network by grouping activities together for simplicity and clarity. All of the improvements discussed in the original AON methodology contribute to better project planning and control.
Key terms Activity, 172 Activity on arrow (AOA), 173 Activity on node (AON), 173 Burst activity, 172 Concurrent engineering, 190 critical path, 172 initial time, 172 free time (FS), 182 Hammock Gantt chart, 18 , 193 Lag Ratio, 189 Late Time, 172 Merge Activity, 172 Parallel Activity, 172 Path, 172 Sensitivity, 182 Total Slack, 180 Review Questions1. How does the WBS differ from the project network?2. How are the WBS and project networks connected?3. Why bother creating a WBS? Why not go straight to a project network and forget about the WBS?4. Why is slack important to the project manager?5. What is the difference between free float and total float?6. Why are delays used in project network development?7. What is a network activity and when is it used?
page 196 practice snapshot Discussion questions6.2 The critical path1. Why is it important to identify the critical path before starting a project?2. In what kind of projects would the critical path be irrelevant?6.3 Fast Track1. What are the disadvantages of simultaneous engineering (fasttracking)?2. What types of projects should be avoided using concurrent engineering?ExercisesBuilding a project network1. Here is a partial work breakdown structure for a wedding. Use the method described in Practice Case 6.1: The Yellow Sticky Approach to create a network for this project. Note: Do not include summary tasks in the network (eg 1.3, Ceremony, is a summary task, 1.2, Marriage License, is not a summary task). Don't think about who would do the work of building the network. For example, don't plan to "hire a band" after "florist" because the same person is responsible for both jobs. Focus only on technical dependencies between tasks. Tip: Start with the last activity (wedding reception) and go back to the beginning of the project. Create the logical sequence of tasks by asking the following question: in order to do this or do that, what must be done immediately before that? Once completed, check ahead
time by asking the following question: Is this task the only thing that is needed immediately before starting the next task? Detailed work structure1. Wedding Project 1.1 Decide Date 1.2 Marriage License 1.3 Ceremony 1.3.1 Church Rental 1.3.2 Florist 1.3.3 Create/Print Programs 1.3.4 Hire Photographer 1.3.5 Wedding Ceremony 1.4 Guests 1.4.1 Develop Guest List 1.4.1114 1.4 .3 Address and Send Invitations1.4.4 Track RSVP1.5 Reception1.5.1 Reserve Reception Hall1.5.2 Food and Drink1.5.2.1 Select Buffet1.5.2.2 Decide on Menu1.5.2.3 Final Order1.5.15 Hire a DJ Decorate the Hall reception1. 5.5 Wedding Reception Planning by AON Networks2. Design a project network from the following information. Which activities are (are) burst activity? Which activities are (are) merger activity?
page 197IDDescriptionPreecessorASResearch site  NoneBEExcavate siteACInstall power linesBDinstall drainageBEPO foundation  C, D3. Design a project network from the following information.*Which activity(s) is a burst activity? Which activities is (are) a merging activity?IDDescriptionPredecessorIdentify Topic  NoBRTopicResearchDesignBDEPaper EditingCECCCreating ChartsCFReferencesCGProof Paper   D, E, FHSend PaperG4. Design a project network from the following information. Which activities are (are) burst activity? Which activities is (are) a merger activity?
page 1985. Design a project network from the following information. Which activities are (are) burst activity? Which activities is (are) a merging activity?IDDescriptionPredecessorA Order Review NoneBorder Standard PartsACProduction of standard partsADDesign of custom partsAESoftware developmentAFFManufacture of custom parts  C, DGAssemble  B, FHTest  Networks E, 6. From the following information, develop an AON project network. Complete the forward and backward pass, calculate the activity delay and determine the critical path. How many days will the project last? Design information for the Air Control Company custom order design is presented here. Design a project network for this project. Calculate early and late activity times and relaxation times. Determine the critical path.IDDescriptionPredecessorTimeAROorder review  None 2Border standard partsA 3CCreate standard partsA10
DDesign Custom PartsA13EDevelop SoftwareA18FFBuild Custom Hardware  C, D15GAssemble  B, F10HTest  E, G 58 You have signed a contract to build a garage for the Simpsons. You will receive a $500 bonus for completing the project within 17 business days. The contract also contains a penalty clause where you will lose $100 for every day the project takes more than 17 business days. Design a project network, with the following information. Complete the forward and backward pass, calculate the activity delay and determine the critical path. Do you expect to receive a bonus or penalty on this project?IDDescriptionPredecessorTime (days)APPrepare site  Gone2BPour foundationA3CErect frameB4DRoofC4EWindowsC1FDoorsC1GElectricalC3HRough-in-frame  IP In-frame   P2Bor,F H, I2KCleanup J19. You are creating a customer database for the Hillsboro Hops minor league baseball team. Draw a design network, taking into account the information in the table below. Complete the forward and backward pass, calculate the activity delay and determine the critical path. How long will this project take? How sensitive is the network program? Calculate the free variance and total variance for all
page 199activities.IDDescriptionPredecessorTime (days)ASSystems design  None2BSubsystem A designA1Csubsystem designA1DSubsystem C designA1EProgram AB2FProgram BC2GProgram CD2HSubsystem A testE1ISsubsystem test CYntegHubsystem friction test K110. K. Nelson, project manager for Print Software, Inc., wants you to prepare a project network. Calculate early, late, and idle activity times. determine the planned duration of the project; and identify the critical path. Your assistant has collected the following information about the color printer drivers software project:IDDescriptionPredecessorTimeAExternal specifications  None 8BRDesign feature overviewA 2CDNew feature documentationA 3Software descriptionA60EProgram and testingB40FEManual editing and publicationHalPha 20GRe 0J Beta site  H, I 10KManufactureJ12LRelease and missionK 3
11. A large city in the Southeast is applying for federal funding for a park-and-ride project.* One of the application requirements is a network plan for the design phase of the project. Sophie Kim, the lead engineer, wants you to develop a project network plan to meet this requirement. Collect the runtime estimates and their dependencies shown here. Show your project network with activity start, delay and downtime. Note the critical path.IDDescriptionPredecessorTimeASurvey  None 5BSoils reportA20CTtraffic planningA30DLylotA 5EAplanning approval   B, C, D80FIlluminationE15GDrenageE35HBoignePosignE , G, H, I1 0 12. You are creating a customer database for the Lehigh Valley IronPigsminor baseball team. Design a project network, with the following information. Complete the forward and backward pass, calculate the activity delay and determine the critical path. How long will this project take? How sensitive is the network program? Calculate free variance and total variance for all non-critical activities.IDDescriptionPredecessorTime (days)ASSystem design  None 2BSSubsystem designA 1CSubsystem design BA 2DSSubsystem design ΓA 1EPprogram AB 2
page 200FProgram BC10GProgram CD 3HSubsystem A testE 1ISSubsystem B testF 1JSubsystem C testG 1KIIntegration  H, I, J 3LITegration testK 113. , calculate the critical activity inertia. Use this information to create a Gantt chart for the project. Be sure to show time for non-critical activities.14. You manage a product update project for Bangkokagogo. Given the following project network, complete the round trip, calculate the activity delay, and determine the critical path. Use this information to create a Gantt chart for the project. Be sure to show the lack of non-critical activities.
page 201 Product Update Project Gantt Chart15. You are creating a database for the Oklahoma City Thunder NBA basketball team. Given the following project network, complete the round trip, calculate the activity delay, and determine the critical path. Use this information to create a Gantt chart for the project.
page 202 Computer Exercises 16. The Design Department of an electronics company has started development and production activities for a new MP3 player. Given the following information, develop a project network using Microsoft Project. Assume a five-day work week and the project starts on January 4, 2017. Activity ID Description Previous Activity Activity Time (weeks)1 Team  None  22Market Development Program1  33Select Channels from1  8
Distribution4Patent1 125Pilot Production1  46Test Market5  47Ad Promotion2  48Configuration for Production4, 616The project team has asked you to network the project and determine whether the project can be completed in 45 weeks.17. Using Microsoft Project, design the network and determine the critical path for Phase 1 of the Whistler Ski Resort project. The project work week will be five days (M–F). Whistler Ski Resort Project Given the fact that skier visitors to Whistler, B.C., Canada, have grown at an exciting rate thanks to the 2010 Winter Olympics, the Whistler Ski Association is considering building another ski and ski complex. The results of an economic feasibility study just completed by team members indicate that a winter resort complex near the base of Whistler Mountain could be a very profitable venture. The area is accessible by car, bus, train and plane. The board voted to build the $10 million complex proposed in the study. Unfortunately, due to the short summer season, the complex will have to be built gradually. The first stage (year 1) will include a day lodge, cable car, rope tow, generator house (for electricity) and a parking lot designed to accommodate 400 cars and 30 buses. The second and third stages will include a hotel, an ice rink, a swimming pool, shops, two additional cable cars and other attractions. The council decided the first leg should start no later than April 1 and be completed by October 1, in time for the next ski season. You have been assigned the task of project manager and it is your job to coordinate the ordering of materials and construction activities to ensure the completion of the project on the required date. After considering possible sources of materials, you are faced with the following time estimates. Cable car and rope tow materials will take 30 days and 12 days respectively to arrive once
page 203 the request is sent. Lumber for the day shelter, generator hut and foundation will take 9 days to arrive. Electrical and plumbing materials for the inn take 12 days to arrive. The generator will take 12 days to arrive. Before actual construction can begin on the various facilities, a road must be built to the site. this will take 6 days. Once the road is ready, cleaning can begin simultaneously at the day lodge, generator, cable car and rope tow sites. It is estimated that the cleanup work at each location will take 6 days, 3 days, 36 days and 6 days respectively. Cleaning of the main ski slopes can begin after the lift area is cleaned. this will take 84 days. The day lodge establishment will take 12 days to complete. The construction of the main structure will take an additional 18 days. After construction is complete, electrical wiring and plumbing can be installed at the same time. These should last 24 and 30 days respectively. Finally, the final construction of the day accommodation can begin. this will take 36 days. The installation of the rope towers (67 days) can begin after the site has been cleared, the wood delivered and the foundation completed (6 days). Also, once the cable car site is cleared, construction of a permanent road to the upper towers can begin. this will take 24 days. While the towers are being installed, the electric motor to drive the chair lift can be installed. the engine can be installed in 24 days. Once the towers are complete and the engine installed, it will take 3 days to install the cable and another 12 days to install the chairs. It takes 4 days to build the foundation, pour the concrete and let it harden and 20 days to install the towers for the rope tow. While the towers are being erected, installation of the electric motor to drive the tow cable can begin. this activity will last 24 days. After the towers and engine are installed, the trailer can be tied up in 1 day. The parking lot can be released once the rope tow is completed. this work will take 18 days. The foundation of the generator house can be started at the same time as the foundation of the casing. this will take 6 days. The main structure of the generator house can begin once the foundation is complete. the structure will last 12 days. After the house is framed, the diesel generator
can be installed in 18 days. Final construction of the generator house can now begin and will take another 12 days. Task 1. Determine the critical path in your network.2. Can the project be completed by October 1st? Optical disc preinstallation project18. The optical disk project team began collecting the information needed to develop the project's network—previous activities and activity times in weeks. The results of your meeting are in the table below.ActivityDescriptionDurationPrevious 1Define Scope 6None 2Define Customer Issues 31 3Define Data Files and Relationships 51 4Mass Storage Requirements25.35 Mass Storage Requirements25.35 6Prepare Facility Network 34.5 7Estimated Cost and budget 24.5 8Unit design points system 14.5 9Write a solicitation proposal 54.510Compile a list of suppliers 34.511Prepare a management control system 56.712Prepare a comparison report 59.1013Compare a system 191.18.34.511 59.1013 31.1111 ,8. 20
page 20422 Order system 121The project team has asked you to create a network for the project and determine whether the project can be completed in 45 weeks. Delay exercises19. From the following information, calculate the start, delay, and float times for each activity. Determine the critical path.20. Given the following information, calculate the start, delay, and delay times for the project network. Which activities on the critical path have only the start or end of the activity on the critical path?
page 20521. Given the information in the delay exercises below, calculate the start, delay, and delay times for the project network.* Which activities on the critical path have only the start or end of the activity on the critical path?22. Given the following network, calculate the start, delay, and idle time for each activity. Clearly identify the critical path.
page 206CyClon Project23. The CyClon project team began collecting the information needed to develop a project network - past activities and uptime in days. The results of their meeting are in the table below.ActivityDescriptionDurationPredecessor 1CyClon Project  2Design10  3Browse Prototype Parts10  2 4Manufacture Parts 8  2 Lto5As 7  5 7Field Test1 0  6 8Customize Design 6  7 9Order Stock Parts10  810 Order Custom Parts15  8 11 Assembly test production unit 109, 1012 Test unit 5 11
13Paper Results 3 12Part A. Create a network based on the information in the table. How long will the project take? What is the critical path? Part B. Upon further review, the team recognizes that they missed three delays from start to finish. The purchase of original parts will involve only 2 working days, but it will take 8 days for the parts to be delivered. Similarly, stock order parts will take 2 working days and 8 days to be delivered and custom order parts will take 2 working days and 13 days to be delivered. What impact did these delays have on the original schedule? About the amount of work required to complete the project? Part C. Management is still not satisfied with the schedule and wants the project completed as soon as possible. Unfortunately, they are not willing to approve additional features. A team member pointed out that the network contained only end-to-end relationships and that it might be possible to reduce the duration of the project by introducing end-to-end delays. After much discussion, the team concluded that the following relationships could be translated into start-to-start delays: Prototyping component procurement could start 6 days after the project started. Parts manufacturing could start 9 days after project start. The laboratory test could start 1 day after the start of the assembly of the prototype. The field test can start 5 days after the start of the laboratory test. Design coordination can begin 7 days after field testing begins. Order stock and custom order items can start within 5 days of design customization. The test drive can start 9 days after the start of production of the Assemble test drive. The results of the document can start 3 days after the start of the test drive. Reset the CyClon program by entering all nine start-to-start delays. What impact did these delays have on the original program (part A)? How long will the project take? Is there a change in the critical path? Is there a change in network sensitivity? Why does management want this solution?
page 207*The solution to this exercise can be found in Appendix 1.*The solution to this exercise can be found in Appendix 1.*The solution to this exercise can be found in Appendix 1.*The solution to this exercise can be found in Appendix One. References Gantt, H. L., Work, Wages and Profit, published by The Engineering Magazine, New York, 1910; republished as Work, Wages and Profits (Easton, PA: Hive, 1974). Gray, C.F., Essentials of Project Management (Princeton, NJ: PBI, 1981). Kelly, J.E., “Critical Path Planning and Scheduling: MathematicalBasis”, Operations Research, vol. 9, no. 3 (May/June 1961), pp. 296–321. Levy, F.K., G.L. Thompson, and J.D. West, “The ABCs of the Critical Path Method,” Harvard Business Review, vol. 41, no. 5 (1963), pp. 98–108. Rosenblatt, A., and G. Watson, “Concurrent Engineering,” IEEESpectrum, July 1991, p. Case 6.1
page 208Advantage Energy Technology Data CenterMigration*—Part A Brian Smith, network administrator for Advanced Energy Technology (AET), took responsibility for implementing the migration of a large data center to a new office location. Careful planning is required because AET operates in the highly competitive oil industry. AET is one of five national software companies that provide an accounting and business management package for oil brokers and gasoline distributors. A few years ago, AET entered the world of "application service providers". Traditionally, one of AET's key competitive advantages has been the reliability of the company's IT brand. Due to the complexity of this project, Brian will need to use a parallel implementation method. Although this increases the cost of the project, a parallel approach is necessary so that reliability is not compromised. AET's data center is currently located on the second floor of a converted former bank building in downtown Corvallis, Oregon. The company is moving to a new one-story building in the newly built industrial complex at Corvallis International Airport. On February 1, Brian is officially given the assignment by VP of Operations Dan Whitmore with the following instructions: From start to finish, the entire project is expected to take three to four months to complete. It is important that AET's 235 customers have no downtime. Whitmore advises Brian to return to the Executive Committee on February 15 with a presentation on the scope of the project including cost, "first cuts" schedule, and proposed project team members. Brian had some preliminary discussions with some of the AET managers and directors of each functional division and then hosted a full day scoping meeting on February 4th with some of the managers and technical representatives from Operations, Systems, Facilities and Applications. The scoping team determined the following:
Three to four months is a viable project timeline, and the initial cost estimate is $80,000 to $90,000 (this includes upgrading the new site's infrastructure). Fundamental to the “no downtime” requirement is the need to fully rely on “hot” AET Remote Disaster Recovery for full functionality. , after some modifications and recommendations, he was officially given responsibility for the project. Brian recruited his team and scheduled the first team meeting (March 1st) as a kick-off to their project planning process. After the kick-off meeting, Brian can hire the contractors to renovate the new data center. During this time, Brian will understand how to design the network. Brian estimates that selecting and hiring a contractor will take about a week and network planning will take about two weeks. The new center requires a new ventilation system. Manufacturer requirements include an ambient temperature of 67 degrees to keep all data servers running at optimal speeds. The ventilation system has a delivery time of three weeks. Brian will also need to order new racks to house the servers, switches, and other network devices. The shelves have a two week delivery time. The data center supervisor asked Brian to replace all the old power supplies and data cables. Brian should also place the order. As Brian has a great relationship with the seller, they guarantee that it will only take a week for the power supplies and data cables. Once the new ventilation system and grills arrive, Brian can begin installing them. It will take a week to install the ventilation system and three weeks to install the shelves. Renovation of the new data center can begin once the third-party companies are hired. The contractors tell Brian that construction will take 20 days. Once construction begins and Brian installs the ventilation system and shelving, the city inspector must approve the construction of the raised floor.
page 209 The city inspector will need two days to approve the infrastructure. After the city's inspection and the new power supplies and cables arrive, Brian can install the power supplies and run the cables. Brian estimates it will take five days to install the power supplies and a week to run all the data cables. Before Brian can set an actual date to shut down the network and move to the active remote site, he must obtain approval from each of the functional units ("exchange approval"). Meetings with each of the functional units will last one week. During this time, a power check can be initiated to ensure that each of the racks has sufficient voltage. This will only take one day. After the power check is complete, it may take a week to install your test servers. The test servers will test all the main functions of the network and act as a safeguard before the network is shut down. Batteries must be charged, ventilation installed and test servers up and running before management can be sure the new infrastructure is secure, which will take two days. They will then sign off on the main systems audit, having a day of intense meetings. They will also set an official date for the network move. Brian is happy that everything has gone well so far and is confident that the move will go smoothly. Now that an official date has been set, the network will be closed for one day. Brian needs to move all network assets to the new data center. Brian will do the switch over the weekend — two days — when user traffic is low. TASK 1. Create a priority matrix for AET system traffic.2. Develop a WBS for Brian's project. Include duration (days) and predecessors.3. Using a project planning tool, create a network diagram for this project. Note: Base your plan on the following guidelines: eight-hour days, five-day weeks, except when Brian moves network components for a weekend, no holidays, and January 1, 2010 is the project start date.
Ordering the ventilation system, new racks and power supplies/cables only takes one actual business day. The remaining days is the time it takes the sellers to complete and ship the order to Brian. So use end-to-start delays here. Assume that five days after the start of the data center renovation the raised floor is ready for inspection (a period from start to start).* Prepared by James Moran, instructor of project management in the College of Business, Oregon State University. Case 6.2 Ventura Baseball Stadium—Part A G&E Company is preparing a bid for construction of the new 47,000-seat Shoreline baseball stadium. Construction is expected to begin on June 10, 2019 and be completed in time for the start of the 2022 season. A penalty clause of $500,000 per day delayed beyond April 3 is written into the contract. Percival Young, the company's chairman, expressed optimism about winning the contract and revealed that the company could raise up to $5 million for the project. He also said that if they were successful, the prospects for future projects would be bright, as a renaissance in the construction of classic stadiums with modern, luxury boxes is foreseen. TASK Using the information provided in Table 6.3, construct a grid schedule for the stadium project and answer the following questions:1. Can the project be completed by the April 3rd deadline? How long will it take? 2. What is the critical path of the project?
page 2103. Based on the timeline, would you recommend that G&E continue this contact? Why; Include a one-page Gantt chart for the stadium schedule. TABLE 6.3 Ventura Baseball Field CaseActivityDuration Predecessor(s) 1Baseball Stadium 2Stadium Site Cleanup 60 days— 3Building Demolition 30 days2 4Work Site Setup 30 days 2 50 days 2 50 days Under Concrete 60 days 7 Pour Main Lobby 120 days 4, 6 8Field installation 90 days4,6 9Steel upper bowl construction120 days4,610Seating installation140 days7,911Luxury box construction 90 days7,912Jumbotron installation 30 days7,913Stadium infrastructure120 days7,914Steel roof construction 75 days Roof construction75 days1 0 14L roof construction day75 days 180 days1618Installation of roof rails 90 days1619Roof installation 90 days17, 1820Inspection 20 days8, 11, 13, 15, 19Case attachment
page 211 Ventura Baseball Stadium Technical Details The baseball stadium is an outdoor structure with a retractable roof. The project begins with cleaning the site, an activity that takes 60 days. Once the site is clear, work can begin simultaneously on the structure itself and the demolition of an adjacent construction site. This demolition is necessary to create a construction stage for the storage of materials and equipment. There will be 30 days to demolish the buildings and another 30 days to assemble the site. Work on the stadium begins with the driving of 160 support piles, which will take 120 days. Next comes the lower concrete pour bowl (120 days). After this is done and the site is set up, the concreting of the main hall (120 days), the laying of the playground (90 days) and the construction of the upper steel bin (120 days) can take place. Once the lobby and upper bowl are complete, construction work on the booths (90 days), seating installation (140 days), Jumbotron installation (30 days) and stadium infrastructure installation (120 days) can begin simultaneously ), which includes bathrooms, closets, restaurants, etc. Once the seats are in place, the steel roof can be built (75 days), followed by the installation of the lights (30 days). The retractable roof represents the most significant technical challenge for the project. Construction of roof rail supports (90 days) can begin after construction of the lower concrete bowl. At this time, the dimensions of the roof can be finalized and the construction of the roof can begin in a separate area (180 days). After roof supports are completed, roof rails can be installed (90 days). Once the runways and roof are complete, the roof can be installed and put into operation (90 days). Once all activities are completed, it will take 20 days to inspect the field. For purposes of this case, consider the following: 1. The following holidays are observed: January 1, Martin Luther King Day (third Monday in January), Memorial Day (last Monday in May), July 4, Labor Day (first Monday in September), Thanksgiving (Wednesday in November), December 25th and 26.2. If the holiday falls on a Saturday, Friday will be given as an additional day off and if it is a Sunday, Monday will be given as a day off.
3. The construction team works from Monday to Friday. Design elements: snapshot practice, highlight box, case icon: ©SkyDesigns/Shutterstock1 This process can be clarified and improved using a simple responsibility chart (see Chapter 4).2 Gantt charts were introduced a decade ago, 100 years from by Henry Gantt. 3 To set G as a network activity in MS Project 2012, you need to copy and paste into activity G the start date of activity B and the end date of activity F (http://support.microsoft.com/kb/141733 ).
7-17-27-37-47-57-67-77-87-9A7-1page 212CHAPTER SEVEN7 Risk Management LEARNING OBJECTIVES After reading this chapter, you should be able to: Describe the risk management process. Understand how to identify project risks. Assess the importance of different project risks. Describe the five responses to risk management. Understand the role contingency plans play in the risk management process. Understand opportunity management and describe the five approaches to responding to opportunities in a project. on a project Recognize the need for risk management to be an ongoing activity Describe the change control process Calculate key simulation views PERT.DRAFT
7.17.27.37.47.57.67.77.87.9page 213Risk Management Process Step 1: Identify Risk Step 2: Assess Risk Step 3: Develop Risk Response Contingency Planning Opportunity Management Opportunity Management Funding and Response Time appendix 7.1: PERT and PERT Simulation
page 214 Sometimes you have to take risks because that's where the rewards are.—Will Rogers Every project manager understands that risks are inherent in projects, deliveries are late, accidents happen, people get sick, etc. No amount of planning can overcome the risk or inability to control random events. In the context of projects, risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives. A risk has a cause and, if it occurs, a consequence. For example, a cause could be a flu virus or a change in scope requirements. The fact is that team members have the flu or the product needs to be redesigned. The occurrence of any of these uncertain events will affect the cost, schedule and quality of the project. Some potential risk events can be identified before the project starts, such as equipment malfunction or a change in technical requirements. Risks can be expected consequences, such as schedule delays or cost overruns. risk management process. PRACTICAL MOMENT 7.1Giant Popsicle Gone Wrong*An attempt to set up the world's largest Popsicle in New York City ended in a scene straight out of a disaster movie, but much more tacky. The frozen juice melted faster than expected, flooding Union Square in midtown Manhattan with strawberry-flavored liquid. Cyclists died in the current. Pedestrians slipped. Traffic was, therefore, frozen. Firefighters closed several roads and used hoses to wash away the thick, sweet mud.
The Snapple Company, a leading soft drink maker, was trying to promote a new line of frozen treats by setting a record for the world's largest glass, but the stunt was called off before the frozen behemoth was carried all the way by a construction crane. . they were afraid that the two and a half story Popsicle would collapse. © Brian Smith/Zuma Press, Inc. Organizers weren't sure why it melted so quickly. “We designed this. We just didn't expect it to happen so quickly," said Snapple spokeswoman Lauren Radcliffe. He said the company would offer to pay the city for the cleanup costs.* Associated Press, June 23, 2005 Risk management tries to identify and manage potential and unforeseen pain points that may arise during project implementation. potential risk events (what could go wrong), minimize their impact (what can be done about the event before the project starts), manage responses to events that are implemented (contingency plans) and provide contingency funds for the coverage of risk events that actually materialize. For a humorous but ultimately disturbing example of poor risk management, see Practice Slide 7.1: Giant Popsicle Gone Wrong. 7.1 LO 7-1 Risk management process
page 215 Describe the risk management process. Figure 7.1 presents a graphical model of the risk management challenge. The chances of a risk event occurring (for example, an error in time estimates, cost estimates, or design technology) are greatest during the early stages of a project. This is when uncertainty is greatest and many questions remain unanswered. As the project moves toward completion, risk decreases as answers to critical questions (Will the technology work? Is the schedule feasible?) are resolved. The cost impact of a risk event, however, increases over the life of the project. For example, the risk event of a design failure occurring after a prototype has been created has a greater cost or time impact than if the failure was discovered during the design phase of the project. FIGURE 7.1 Risk event diagram The project is exemplified by the fatal 1999 NASA Mars Climate Orbiter Investigations revealed that Lockheed Martin had failed the critical navigation software project. While flight computers on the ground made calculations based on pounds of thrust per second, spacecraft software used metric units called newtons. No checking was ever done to see if the values ​​match. "Us
Page 216 checks and balances procedures did not detect such an error that should have been detected," said Ed Weiler, NASA's space science associate. "That's the bottom line" (Orlando Sentinel, 1999). Had the fault been caught early, the fix would have been relatively simple and cheap. Instead, the error was never discovered, and after the nine-month journey to the red planet, the $125 million probe approached Mars at a very low altitude and burned up in the planet's atmosphere. After the 1999 disaster, NASA instituted a more robust risk management system, which produced a number of successful missions to Mars, including the dramatic landing of the Curiosity rover in August 2012.1 Risk management is a proactive, rather than reactive, approach. It is a preventive process aimed at reducing surprises and minimizing the negative consequences associated with adverse events. It also prepares the project manager to act when there may be a time, cost and/or technical advantage. Successful project risk management gives the project manager better control over the future and can significantly improve the chances of meeting project objectives on time and within budget and achieving the required technical (operational) performance. The sources of project risks are limitless. There are external sources such as inflation, market acceptance, exchange rates and government regulations. In practice, these risk events are often referred to as "threats" to differentiate them from those outside the project manager's or team's area of ​​responsibility. (We will see later that budgets for such risk events are placed in a "management reserve" contingency budget.) External risks are extremely important and must be addressed. The main elements of the risk management process are described in Figure 7.2. Each step will be covered in more detail in the rest of the chapter. FIGURE 7.2 The risk management process
7.2 Step 1: Risk Identification LO 7-2 Understand how to identify project risks. The risk management process begins by trying to create a list of all the potential risks that could affect the project. Typically, the project manager assembles, during the planning phase, a risk management team consisting of key team members and other relevant stakeholders. Research has shown that groups make more accurate judgments of risk than individuals (Snizek & Henry, 1989). The team uses brainstorming and other troubleshooting techniques to identify potential problems.
page 217 Participants are encouraged to keep an open mind and create as many potential hazards as possible. More than one project has been derailed by an event that members thought was absurd at first. Later, during the assessment phase, participants will have the opportunity to analyze and filter out irrational risks. A common mistake made at the beginning of the risk identification process is to focus on the objectives rather than the events that may have consequences. For example, team members may recognize that losing the program is a significant risk. What they should focus on are the events that could cause it (eg poor estimates, adverse weather, shipping delays). Only by focusing on real events can possible solutions be found. Figure 7.3 provides a general example of an RBS. The focus early on should be on risks that could affect the entire project, as opposed to a specific part of the project or network. For example, the funding discussion may lead the team to identify the possibility of a project budget cut after the project has started as a major risk event. Similarly, when discussing the market, the team may identify response to new product launches by competitors as a risk event. FIGURE 7.3 The Risk Analysis Framework (RBS)
After macroeconomic risks are identified, specific areas can be controlled. An effective tool for identifying specific risks is the risk segmentation framework. Using RBS reduces the chance of missing a risk event. In large projects, multiple risk teams are organized around specific deliverables and submit risk management reports to the project manager. See Practice Scenario 7.2: Terminal 5 — London Heathrow Airport* for an example of a design that would have benefited from a more robust RBS. A risk profile is another useful tool. A risk profile is a list of questions that address traditional areas of uncertainty in a project. These questions have been developed and refined from previous similar projects. Figure 7.4 provides a partial example of a risk profile. FIGURE 7.4 Partial risk profile for a product development project Technical requirements Are the requirements stable? Planning Is planning based on unrealistic or optimistic assumptions?
page 218 Testing Will test equipment be available when needed? Development Is the development process supported by a compatible set of processes, methods and tools? Timeline Does the schedule depend on the completion of other projects? Budgeting How reliable are cost estimates? ?ManagementDo people know who has authority for what?Work environmentDo people work collaboratively across functional boundaries?PersonnelIs the team inexperienced or understaffed?ClientDoes the client understand what will be required to complete the project?ContractorsAre there ambiguities in contractor job definitions? ; Good Risk profiles, like RBSs, are tailored to the type of project in question. For example, building an information system is different from building a new car. They are special organizations. Risk profiles identify a company's unique strengths and weaknesses. Finally, risk profiles address technical and managerial risks. For example, the profile shown in Figure 7.4 asks design questions such as "Is the design based on unrealistic assumptions?" The questions can lead the team to recognize that the technology will not work under conditions of extreme risk. Similarly, questions about the work environment ("Do people collaborate across functional boundaries?") can lead to identifying potential miscommunications between Marketing and R&D as a risk. Risk profiles are generally created and maintained by project office staff. They are updated and improved during the post-project review (see Chapter 14). These profiles, when updated, can be a powerful asset in the risk management process.
Η συλλογική εμπειρία των προηγούμενων έργων της εταιρείας βρίσκεται στις ερωτήσεις σας. ΠΡΑΚΤΙΚΟ ΣΤΙΓΜΙΟ 7.2 Terminal 5—London Heathrow Airport* Η βασίλισσα ανακοίνωσε σε ένα επιλεγμένο κοινό στην τελετή έναρξης του Terminal 5 στο αεροδρόμιο Heathrow του Λονδίνου: «Είναι μεγάλη χαρά να ανοίγουμε τον τερματικό σταθμό 5 — την πύλη του 21ου αιώνα στο Λονδίνο, Μεγάλη Βρετανία και, για εμάς, τον υπόλοιπο κόσμο». Με κόστος άνω των 5 δισεκατομμυρίων δολαρίων, η British Airways (BA) χρησιμοποίησε τον τερματικό σταθμό 5 εξαλείφοντας αυτό που ονομαζόταν «ακαταστασία του Χίθροου». Την τελευταία δεκαετία, το Χίθροου έχει αποκτήσει φήμη για τις καθυστερήσεις αποσκευών, τις μεγάλες ουρές και τις χαμένες αποσκευές, τόσο πολύ που οι επιβάτες premium απέφευγαν να προσγειωθούν εκεί και πλήρωσαν επιπλέον για να προσγειωθούν σε υπερσύγχρονους κόμβους όπως το Άμστερνταμ και η Φρανκφούρτη. Ο τερματικός σταθμός 5 σχεδιάστηκε από έναν παγκοσμίου φήμης αρχιτέκτονα και προσφέρει εκπληκτική θέα στο Λονδίνο. ευρύχωροι χώροι? και σειρές πολυτελών καταστημάτων, όπως το Tiffany's και ένα εστιατόριο GordonRamsey. Σχεδιάστηκε για να εξυπηρετεί 30 εκατομμύρια πελάτες ετησίως με υπερσύγχρονα σαλόνια αναχωρήσεων. Περιλάμβανε μια εξελιγμένη διαμόρφωση αποσκευών σχεδιασμένη να μετακινεί 12.000 αποσκευές την ώρα και να εξαλείφει την ταλαιπωρία του Χίθροου. Η 28η Μαρτίου, ημέρα των εγκαινίων του τερματικού σταθμού, ξεκίνησε δυσοίωνα. Ο πρώτος συναγερμός ήρθε στις 4 τα ξημερώματα, όταν πολλοί υπάλληλοι και επιβάτες άρχισαν να φτάνουν καθυστερημένα επειδή δεν μπορούσαν να παρκάρουν. Οι οδικές πινακίδες έξω από τον τερματικό σταθμό δεν ήταν σαφείς και οι άνθρωποι είπαν ότι τους δόθηκαν λάθος πληροφορίες όταν μπήκαν. Μόλις έφτασε το προσωπικό στη δουλειά, πολλοί δεν μπόρεσαν να συνδεθούν στο σύστημα υπολογιστών λόγω ανεπαρκούς εκπαίδευσης. Ως αποτέλεσμα, η επεξεργασία των επιβατών άρχισε να βουλιάζει και οι αποσκευές άρχισαν να συσσωρεύονται. Εμφανίστηκαν τεχνικές βλάβες στο σύστημα αποσκευών. Ένα υπόγειο σύστημα μεταφορών ήταν βουλωμένο. Μέχρι το μεσημέρι, η ΒΑ χρειάστηκε να ακυρώσει 20 πτήσεις. Μέχρι τις 5 μ.μ., η ΒΑ είχε αναστείλει την αποστολή όλων των αποσκευών. Αυτό σήμαινε ότι οι επιβάτες στο αεροδρόμιο είχαν τη δυνατότητα να πετάξουν μόνο με χειραποσκευή, να λάβουν εναλλακτική πτήση ή να ζητήσουν επιστροφή χρημάτων. Από όλα τα αεροπλάνα που έφυγαν εκείνη την ημέρα, ένα στα τρία δεν είχε αποσκευές! Ήταν μόλις η πρώτη μέρα. Οι πτήσεις ακυρώθηκαν όλη την εβδομάδα και η ΒΑ έφερε εκατοντάδες εθελοντές για να αντιμετωπίσουν το βουνό των αποσκευών. Στο τέλος, πάνω από 28.000 τσάντες στάλθηκαν στο Μιλάνο, όπου χωρίστηκαν από τη φασαρία του Λονδίνου. Το άνοιγμα του Terminal 5 ήταν ντροπή, με εκατοντάδες πτήσεις που ακυρώθηκαν και χιλιάδες αποσκευές χάθηκαν. Στοίχισε στη ΒΑ πάνω από 32 εκατομμύρια δολάρια και την απασχόληση δύο ανώτερων στελεχών. Η BA παραδέχτηκε αργότερα ότι οι πελάτες αποστάτησαν μετά το φιάσκο του Terminal 5, με μείωση 7% στον αριθμό των επιβατών. Ποια είναι τα μαθήματα που πρέπει να αντληθούν; Υπάρχουν πολλά. Το πρώτο είναι ότι σε πολύπλοκα έργα υπάρχει η τάση να επικεντρώνονται σε τεχνικές προκλήσεις και να υποβαθμίζεται η ανθρώπινη πλευρά του έργου. Θυμηθείτε, τα έργα είναι κοινωνικοτεχνικά συστήματα! Ένα πιο στιβαρό RBS μπορεί να αποκάλυψε την ανάγκη για περισσότερη εκπαίδευση και ένα περπάτημα πριν από το
page 219 the terminal is up and running. One must also question the wisdom of being fully operational on day 1. Going from zero flights a day to 380 is a formidable task. A more prudent approach might have been to limit flights in the first week to fix the problems and ensure success.*“Terminal 5 Fiasco: The New 'Heathrow Hassle'”, The Independent, March 28, 2008; Terminal 5; news.bbc.co.uk, 30 March 2008. Accessed 25/09/18. Historical records can supplement or be used when formal risk profiles are not available. Project teams can investigate what has happened on similar projects in the past to identify potential risks. For example, a project manager can review the on-time performance of selected suppliers to assess the threat of shipment delays. IT project managers can access "best practice" documents that detail other companies' experiences with converting software systems. Queries should not be limited to recorded data. Experienced project managers tap into the wisdom of others by seeking advice from veteran project managers. The risk identification process should not be limited to the core group only. Feedback should be sought from customers, sponsors, subcontractors, suppliers and other interested parties. Relevant stakeholders can be formally interviewed or included in the risk management team. These stakeholders not only gain a valuable perspective, but by participating in the risk management process, they also become more committed to the success of the project.2 One of the keys to successful risk identification is attitude. While a "cando" attitude is necessary during implementation, project managers must encourage critical thinking when it comes to risk identification. The goal is to find potential problems before they happen. RBS and risk profiles are useful tools to ensure that no stone is left unturned. At the same time, when done well, the number of identified risks can be overwhelming and a little scary. Initial optimism can be replaced by complaints and cries of "What are we doing?" It is important for project managers to set the right tone and complete the risk management process so that members regain confidence in themselves and the project.
page 2207.3 Step 2: Risk Assessment LO 7-3 Assess the significance of different project risks. Step 1 creates a list of potential risks. However, not all of these risks deserve attention. Some are trivial and can be ignored, while others pose serious threats to the well-being of the project. Managers must develop methods to filter the list of risks, eliminating the trivial or unnecessary and stratifying those worthy of importance and need for attention. Scenario analysis is the easiest and most commonly used technique for risk analysis. Team members assess the significance of each risk event relative to the probability of the event. Impact of event. Simply put, risks must be assessed in terms of the likelihood of the event occurring and the impact or consequences of its occurrence. A project manager being struck by lightning on a construction site would have a large negative impact on the project, but the probability of such an event is so low that the risk is not worth considering. On the other hand, people change jobs, so an event like losing key project staff would not only have a negative impact, but also a high probability of happening in some organizations. In this case, it would be wise for this organization to be proactive and mitigate this risk by developing incentive programs to retain specialists and/or engage in cross-training to reduce the impact of turnover. The quality and reliability of the risk analysis process requires the determination of different levels of risk probabilities and impacts. These definitions vary and must be adapted to its nature and special needs
page 221 the project. For example, a relatively simple scale ranging from "very unlikely" to "almost certain" may be sufficient for one project, while another project may use more precise numerical probabilities (e.g. 0.1, 0.3 , 0.5, . . . ). Impact scales can be a bit more problematic, as adverse risks affect project objectives differently. For example, a component failure may cause only a small delay in the project schedule, but a large increase in the project cost. If cost control is a high priority, the impact will be severe. If, on the other hand, time is more critical than cost, the impact will be less. As impact needs to be assessed based on project priorities, different types of impact scales are used. Some scales may simply use rank order descriptions such as 'low', 'moderate', 'high' and 'very high', while others use numerical weights (eg 1–10). Some may focus on the overall project, while others may focus on specific project goals. The risk management team must determine in advance what distinguishes a 1 impact from a 3 impact, or a "moderate" impact from a "severe" impact. Figure 7.5 provides an example of how impact scales can be defined, given the project's cost, time, scope, and quality objectives. negative effects)
Documentation of scenario analyzes can be seen in various forms of risk assessment used by companies. Figure 7.6 is a partial example of a risk assessment form used in an information systems project involving an operating system (OS) upgrade. difficulty in detecting it. Detection difficulty is a measure of how easy it would be to detect that the event would occur in time to take mitigation measures, i.e. how much notice there would be. So in the OS upgrade example, the detection scale goes from 5 = no warning to 1 = too long to react. Organizations often find it useful to categorize the severity of different risks in some form of risk assessment matrix. The table is usually structured around the impact and probability of the risk event. For example, the hazard matrix shown in Figure 7.7 consists of a 5 × 5 array of elements with each element representing a different set of impact and probability values. FIGURE 7.7 Risk Severity Matrix
page 222 The table is divided into red, yellow and green zones, representing major, moderate and minor risks, respectively. The red zone is centered in the upper right corner of the matrix (high impact/high probability), while the green zone is centered in the lower left corner (low impact/low probability). The yellow zone of moderate risk extends to the middle of the uterus. Because impact is generally considered more important than probability (a 10% chance of losing $1,000,000 is generally considered a more serious risk than a 90% chance of losing $1,000), the red band (greater risk ) extends further down the high-impact column. The OS upgrade project, again as an example, interface issues and system freezes would be placed in the red zone (highest risk), while user reaction and hardware malfunction would be placed in the yellow zone (moderate risk). The risk severity matrix provides a basis for prioritizing the risks to be addressed. Hazards in the red zone take priority, followed by hazards in the yellow zone. Green belt hazards are usually considered irrelevant and ignored unless their status changes.
Failure mode and effects analysis (fmea) extends the hazard severity matrix by including ease of detection into the equation: Each of the three dimensions is rated according to a 5-point scale. For example, detection is defined as the ability of the project team to discern that the risk event is imminent. A score of 1 will be given if even a chimpanzee could detect the approaching danger. The highest detection score of 5 will be given to events that could only be discovered after it was too late (eg system freeze). Similar anchored scales would apply for crash severity and likelihood of the event occurring. The risk weighting is then based on your overall score. For example, a hazard with an impact in zone "1" with a very low probability and easy detection score can be scored as 1 (1 × 1 × 1 = 1). Conversely, a high impact risk that is highly probable and impossible to detect will be scored 125 (5 × 5 × 5 = 125). This wide range of numerical scores allows easy risk stratification according to overall importance. For example, the weakness of the FMEA approach is that a risk event with a score of Impact = 1, Probability = 5 and Detection = 5 will receive the same weighted score as an event with a score of Impact = 5, Probability = 5 and Detection = 1! This highlights the importance of not treating risk assessment simply as a mathematical exercise. There is no substitute for careful discussion of important risk facts. Probability Analysis There are many statistical techniques available to the project manager that can help estimate project risk. Decision trees have been used to evaluate alternative courses of action using expected values. Statistical changes in net present value (NPV) have been used to assess cash flow risks in projects. Correlations between cash flows from past projects and S-curves (cumulative project cost curve - baseline - over the life of the project) were used to assess cash flow risks. PERT (program evaluation and review technique) and PERT simulation can be used to review project activity and risk. PERT and related techniques take a more macro perspective, looking at total cost and schedule risks.
page 223 Here, the focus is not on individual events, but on the likelihood that the project will be completed on time and within budget. These methods are useful for assessing the overall risk of the project and the need for items such as contingency funds, resources and time. The use of PERT simulation is increasing because it uses the same data required for PERT and the software to run the simulation is readily available. Basically, PERT simulation assumes a statistical distribution (range between optimistic and pessimistic) for each activity duration. then simulates the network (perhaps 1000+ simulations) using a random number generator. The result is the relative probability, called the criticality index, of an activity becoming critical under the various possible activity durations for each activity. The PERT simulation also provides a list of possible critical paths and their corresponding probabilities of occurrence. The availability of this information can facilitate the identification and assessment of schedule risks. (See Appendix 7.1 at the end of this chapter for a more detailed description and discussion). the answer is appropriate for the particular event. Risk responses can be classified as mitigation, prevention, transfer, escalation or conservation. Risk Mitigation Risk reduction is usually the first alternative considered. There are basically two strategies for mitigating risk: (1) reducing the likelihood of the event occurring and/or (2) reducing the impact that the adverse event would have
In the project. Most risk teams focus first on reducing the likelihood of risk events, as if successful this can eliminate the need to consider the potentially costly second strategy. Testing and prototyping are often used to avoid problems later in a project. An example of testing can be found in an information systems project. The project team was responsible for installing a new operating system at its parent company. Before implementing the project, the team tested the new system on a smaller, isolated network. In this way, they uncovered a variety of issues and were able to find solutions before implementation. The team still experienced problems with the installation, but the number and severity decreased significantly. It is often useful to identify the root causes of an incident. For example, the fear that a supplier will not be able to deliver the custom parts on time can be attributed to (1) a poor relationship with the supplier, (2) poor project communication, and (3) a lack of motivation. As a result of this review, the project manager may decide to take his counterpart to lunch to clarify doubts, invite the vendor to attend project meetings, and restructure the contract to include incentives for on-time delivery. . Other examples of reducing the likelihood of hazards include scheduling outdoor work during the summer months, investing in initial safety training, and choosing high-quality materials and equipment. When there are concerns that duration and cost have been underestimated, managers will increase estimates to compensate for the uncertainties. It is common to use a relationship between old and new projects to adjust time or cost. The ratio usually serves as a constant. For example, if the previous projects took 10 minutes per line of computer code, a constant of 1.10 (representing a 10 percent increase) would be used for the proposed project time estimates because the new project is more difficult than the previous projects. An alternative mitigation strategy is to reduce the impact of the risk should it occur. For example, a bridge construction project illustrates risk reduction. A new bridge project for a coastal port was to use an innovative continuous cement pouring process developed by an Australian company to save large amounts of money and time. The biggest risk was that the continuous pouring process for each large section of the bridge could not be stopped. Any interruption would require the demolition and restart of the entire concrete section (hundreds of cubic meters). Assessment of potential risks
page 224 focused on the delivery of cement from the cement plant. Trucks may be delayed or the plant may break down. Such risks would lead to huge rework costs and delays. The risk was reduced by building two additional portable cement plants nearby, on different roads within 20 miles of the bridge project, in case supplies to the main plant were interrupted. These two portable plants carried raw materials for an entire bridge section, and additional trucks were on hand whenever continuous pouring was required. Similar risk mitigation scenarios are evident in systems and software development projects where parallel innovation processes are used in case one of them fails. Practice Slide 7.3: From Dome to Dust details the steps Controlled Demolition took to minimize damage when the Seattle Kingdome collapsed. PRACTICAL MOMENT 7.3 From Dome to Dust* On March 26, 2000, the world's largest concrete dome structure was reduced to a pile of rubble in a dramatic explosion that lasted less than 20 seconds. According to Mark Loizeaux, whose ControlledDemolition Inc. Maryland-based was hired to destroy the 24-year-old Seattle Kingdome, “We don't blow things up. We use explosives as the engine, but gravity is the catalyst that will bring it down. The destruction of the Vassiliou was the most complex of the 7,000 demolitions carried out by Loizeaux's company. It took nearly three months to prepare for the collapse of the dome, at a total cost of $9 million. The Kingdome was considered one of the strongest structures in the world, containing over 25,000 tons of concrete, with each of its 40 vaulted ribs incorporating seven lengths of 2¼-inch steel reinforcing bar. Wires of orange explosive cord—basically dynamite on a string that explodes at 24,000 feet per second—connected six crooked sections of the Kingdom to a nearby control center. In each section, Controlled Demolition workers drilled nearly 1,000 holes and filled them with high-velocity gelatin explosives the size of hot dogs. Heavy loads were placed about a third of each side on the dome. Smaller loads were placed higher on the ribs. When the detonation button was pressed, the detonators set off a chain reaction of explosions in each section, reducing the stadium to rubble. While the actual collapse was a technical tour de force, risk management was a critical part of the project's success. To minimize damage to surrounding buildings, the
page 225 Explosive charges were encased in a layer of wire fencing covered with thick sheets of polypropylene geotextile to contain flying concrete. Nearby buildings were protected in various ways, depending on the structure and proximity to the Dome. Measures included sealing air handling units, sealing doors and windows, covering floors and windows with plywood, and exterior cladding with reinforced polyethylene sheets. © Tim Matsui/Getty Images To absorb the impact, air conditioning units removed from the interior were stacked with other material to create a barrier around the perimeter of the work area. Hundreds of police and security personnel were deployed to cordon off an area stretching about 1,000 feet from the Dome from excessive spectators. Traffic is closed in a larger area. Accommodations were provided for people and pets living within the restricted zone. Eight water vehicles, eight sweep units and more than 100 workers were mobilized immediately after the explosion to control the dust and begin cleanup. As a side note, one-third of the concrete was crushed and used in the foundation of a new $430 million outdoor soccer field, which was built in its place. The remaining concrete was taken and used in pavements and foundations throughout the Seattle area.* New York Times Sunday Magazine, March 19, 2000; wwwseattletimes.com March 27, 2000 Risk Avoidance Risk avoidance is changing the project plan to eliminate the risk or situation. Although it is impossible to eliminate all risk events, some specific risks can be avoided before the project starts. For example, adopting proven technology over experimental technology can eliminate technical imperfections. Choosing an Australian supplier instead of
an Indonesian supplier would virtually eliminate the possibility of political unrest disrupting the supply of critical materials. Likewise, you can eliminate the risk of choosing the wrong software by developing web applications using ASAP.NET and PHP. Opting to move a concert indoors will eliminate the threat of inclement weather. Transfer of risk Transferring risk to another party is common. this transfer does not change the risk. Transferring the risk to another party almost always results in a premium being paid for this relinquishment. Fixed price contracts are the classic example of a transfer of risk from an owner to a contractor. The contractor understands that his company will pay for any risk event that occurs. Therefore, a currency risk factor is added to the bid price of the contract. Before deciding to transfer the risk, the owner must decide which party can best control the activities that would lead to the occurrence of the risk. Also, is the contractor able to absorb the risk? It is imperative to clearly define and document responsibility for risk absorption. Another, more obvious way of transferring risk is insurance. However, in most cases, this is not practical because determining the risk event of the project and the conditions for an insurance broker who is not familiar with the project is difficult and often expensive. Of course, low-probability, high-consequence risk events, such as acts of God, are more easily defined and insured. Performance bonds, warrants and warrants are other financial instruments used to transfer risk. In large international construction projects, such as petrochemical plants and oil refineries, host countries insist on contracts that impose build-own-operate-transfer (BOOT) provisions. Here, the project lead organization is expected not only to build the facility, but also to take ownership until its functionality is proven and all debugging is done before the final transfer of ownership to the customer. In these cases, the host country has transferred the financial risk of ownership until the project is completed and capabilities are demonstrated. Escalating Risk Escalating Risk occurs when the project faces a threat that is outside the scope of the project or the authority of the project manager. in such
page 226, the response should be to notify the appropriate people within the organization of the threat. For example, while working on a high-tech product, an engineer finds out through informal channels that a competitor is developing an alternative energy source. While this will not affect the current design, it could have significant implications for future products. The project manager will pass this information on to the product manager and the head of R&D. In another example, informal discussions with team members reveal widespread dissatisfaction with pay and benefits among employees throughout the company. This threat will be escalated to the HR Department. Escalated risks are no longer monitored by the project team. Risk retention Risk retention occurs when a conscious decision is made to accept the risk of an event occurring. Some hazards are so great that it is not feasible to consider moving or mitigating the event (eg earthquake). The project owner assumes the risk because the probability of such an event occurring is small. In other cases, risks identified in the budget reserve can simply be absorbed if they materialize. Risk is mitigated by developing a contingency plan that will be implemented if the risk materializes. In some cases, a risk event may be ignored and an excessive cost accepted if the risk event occurs. People differ in their tolerance for risk. Before deciding how to respond to a risk, you should consider the risk appetite of your key stakeholders as well as your team. In project management lexicon, mitigating a risk refers to a very specific strategy to reduce the likelihood and/or impact of the threat. In any everyday language, mitigation refers to any action that reduces or reduces a risk, which may include the other responses.
A contingency plan is an alternative plan that will be used if a predicted potential hazard event occurs. The contingency plan represents actions that will reduce or mitigate the negative impact of the risk event. A key distinction between a risk response and a contingency plan is that a response is part of the actual implementation plan and action is taken before the risk materializes, whereas a contingency plan is not part of the original implementation plan and only takes effect after As all plans, the contingency plan answers the questions of what, where, when, and how much action will take place. The absence of a contingency plan when a risk event occurs can cause a manager to delay or postpone the decision to implement a solution. This delay can lead to panic and acceptance of the first suggested treatment. This decision making after the stress event can be dangerous and costly. Contingency planning evaluates alternatives for possible expected events before the hazard event occurs and selects the best plan among the alternatives. This advance contingency planning facilitates a smooth transition to the solution or solution plan. Having a contingency plan in place can greatly increase the chances of project success. The conditions for triggering the implementation of the contingency plan must be clearly decided and documented. The plan must include a cost estimate and identify the source of funding. All affected parties must agree on the contingency plan and have the authority to make commitments. As implementing a contingency plan involves interrupting work flow, all contingency plans should be communicated to team members to minimize surprise and resistance. Here's an example: A specialized high-tech computer company plans to release a new "platform" product by a very specific target date. The 47 project teams agree that delays will not be acceptable. Its contingency plans for two major component suppliers demonstrate the seriousness with which it takes risk management. A supplier's factory is located on the San Andreas Fault, which is prone to earthquakes. The contingency plan has an alternate supplier, which is constantly updated, producing a copy of the part in another unit. Another major supplier in Toronto, Canada faces on-time delivery risk due to possible bad weather. This contingency plan provides for a chartered plane (already agreed to be on hand) if ground transportation has a delay problem. For
page 227 to third parties, these plans may seem a bit far-fetched, but in high-tech industries where time to market is critical, risks from localized events are taken seriously. management of identified risks. Again, the OS upgrade project is used to illustrate this type of matrix. The first step is to determine whether the risk needs to be mitigated, avoided, transferred, escalated or maintained. The team decides to reduce the chances of the system freezing by testing a prototype of the system. Prototype testing not only allows them to identify and fix conversion “bugs” before actual installation, but also yields insights that can help improve end-user uptake. The project team is then able to identify and document changes between the old and new systems that will be incorporated into the training users receive. The risk of equipment malfunction is transferred by choosing a reliable supplier with a strong warranty program. FIGURE 7.8 Hazard Response Matrix The next step is to determine contingency plans if the hazard still exists. For example, if interface issues are insurmountable, the team will try to resolve the issue until vendor specialists arrive to help resolve the issue. If the system freezes after installation, the team will try to reinstall the software first. If user dissatisfaction is high, the Information Systems (IS) Department will provide further staff support. If the team cannot obtain reliable equipment from the original supplier, they will order a different brand from a second dealer. The team should also discuss and agree on what will "trigger" the implementation of the contingency plan. In the event of a system crash, the trigger cannot unfreeze the system within an hour or, in case of user reaction, an angry call from
page 228 senior management. Finally, the person responsible for monitoring the potential hazard and initiating the emergency plan must be designated. Smart project managers create protocols for emergency responses before they are needed. For an example of the importance of creating protocols, see Practice Case 7.4: Risk Management at Top of the World. Some of the more common methods for dealing with risk are discussed in the following sections. Technical Risks Technical risks are problematic. can often be the type that causes the project to be terminated. What if the system or process doesn't work? Contingency plans are made for anticipated contingencies. For example, Carrier Transicold was involved in the development of a new Phoenix cooling unit for trailer truck applications. This new unit would use rounded panels of welded metals, which at the time was new technology for Transicold. In addition, one of its competitors tried unsuccessfully to incorporate similar metal alloys into its products. The project team was eager to get the new technology working, but it wasn't until the end of the project that they were able to get the new adhesives to stick properly to complete the project. Throughout the project, the team maintained a welded panel construction approach in case it was unsuccessful. Had this emergency approach been necessary, it would have increased production costs, but the project would have been completed on time. CASE STUDY 7.4 Risk Management at the Top of the World The attempt to climb Mount Everest, in which six climbers lost their lives, is a testament to the dangers of extreme climbing. First, most climbers spend more than three weeks acclimatizing their bodies.
for high altitude conditions. The native Sherpas are used extensively to carry supplies and set up each of the four base camps that will be used during the final stages of the climb. To reduce the impact of hypoxia, dizziness and disorientation caused by lack of oxygen, most climbers use masks and oxygen cylinders during their final ascent. If you are lucky enough not to be one of the first expeditions of the season, the route to the summit must be traced and tied by previous climbers. Climbing guides receive last-minute weather reports over the radio to confirm that the weather conditions justify the risk. Finally, for added safety, most climbers join their Sherpas in an elaborate ritual pujari designed to invoke the divine support of the gods before beginning their ascent. at the summit. This is what climbers call the "death zone," because beyond 26,000 feet, the mind and body begin to wear out rapidly despite supplemental oxygen. Under favorable conditions, it takes about 18 hours to make the round trip to the summit and back to base camp. Climbers leave at 1am to return before night falls and complete exhaustion sets in. The biggest danger in climbing Everest is not reaching the summit, but returning to base camp. One in five climbers who reach the summit die on the way down. The key is to have a contingency plan in place in case climbers run into difficulties or the weather changes. Guides set a predetermined return time (eg 14:00) to ensure a safe return no matter how close the climbers are to the summit. Many lives were lost by not meeting the renovation time and progressing to the top. As one mountaineer said, “With determination, any idiot can reach the top of the hill. The trick is to come back alive.
page 229Daniel Prudek/123RFA climber who tackled the test at 2:00 p.m. tenure was Goran Krupp. After cycling 13,000 kilometers from Stockholm to Kathmandu, he turned back 300 meters from the summit. *Broughton Coburn, Everest: Mountain without Mercy (New York: National Geographic Society, 1997); Jon Krakauer, Into Thin Air (New York: Doubleday, 1997), p. 190. In addition to backup strategies, project managers must develop methods to quickly assess whether technical uncertainties can be resolved. The use of sophisticated computer-aided design (CAD) software has greatly helped in solving design problems. At the same time, Smith and Reinertsen (1995), in their book Developing Products in Half the Time, argue that there is no substitute for doing something and seeing how it works, feels or looks. They suggest that one should first identify technical areas of high risk and then create models or design experiments to address the risk as quickly as possible. The technology offers many methods for initial testing and validation, ranging from 3D printing and holographic imaging for model building to focus groups and initial design usability testing for market trials (Thamhain, 2013). By isolating and testing key technical issues early in a project, project feasibility can be quickly determined and necessary adjustments made, such as reworking the processor in some cases terminating the project. . Here, contingency funds are available to speed up or “slow down” the project to get it back on track. Locking or shortening project duration is achieved by shortening (compressing) one or more activities on the critical path. This entails additional costs and risks. Techniques for managing this situation are discussed in Chapter 9. Some contingency plans can avoid costly procedures. For example, schedules can be changed with activities running in parallel or using start-to-start delay relationships. Also, using the best people for high-risk jobs can mitigate or reduce the likelihood of certain risk events occurring.
page 230 Long-term projects need some contingency for price changes – which are usually upward. The important point to remember when reviewing pricing is to avoid the trap of using a lump sum to cover pricing risk. For example, if inflation is around 3%, some managers add 3% for all resources used in the project. This lump sum approach does not address precisely where price protection is required and does not provide monitoring and control. In cost-sensitive projects, price risks must be assessed on an item-by-item basis. Some purchases and contracts will not change during the life of the project. Those that can change must be identified and estimates of the magnitude of change made. This approach ensures control of contingency funds as the project is implemented. What are the chances that the project will be canceled before completion? Experienced project managers recognize that a complete risk assessment must include an evaluation of the funding offer. This is especially true for publicly funded projects. A case in point was the ill-fated ARH-70 Arapaho helicopter being developed for the US military by Bell Aircraft. More than $300 million had been invested in the development of a new combat and reconnaissance helicopter when in October 2008 the Ministry of Defense proposed canceling the project. The cancellation reflected the need to cut costs and a shift to using drones for surveillance and strike missions. Just as government projects are subject to changes in strategy and political agenda, companies often face changes in priorities and top management. The new CEO's pet projects replace the former CEO's pet projects. Resources are scarce and one way to fund new projects is to cancel other projects. Severe budget cuts or lack of adequate funding can have devastating effects on a project. Usually, when such a fate occurs, there is a need to reduce the scope of the project to the extent possible. All-or-nothing projects are ripe targets for budget cuts. This happened with the Arapaho helicopter, as the decision was made to move away from manned reconnaissance aircraft. Here, the "hashing ability" of the plan can be a
advantage. For example, highway projects may fall short of original intentions but add value with each completed mile. On a much smaller scale, similar funding risks may exist for more routine projects. For example, a contractor may find that, due to a sudden stock market crash, homeowners can no longer build their dream home. Or an IS consulting firm may be left empty-handed when a client files for bankruptcy. In the first case, the contractor may have the option of selling the house on the open market, while, unfortunately, the consulting firm will have to join the long queue of creditors. work. For the sake of brevity, this chapter has focused on downside risks—what can go wrong with a project. There is another side - what can work in a project. This is commonly referred to as upside risk or opportunity. An opportunity is an event that can have a positive impact on project goals. For example, exceptionally favorable weather can speed up construction work, or falling fuel prices can lead to savings that can be used to add value to a project. Essentially, the same process used to manage negative risks is applied to positive risks. Opportunities are identified, assessed for likelihood and impact, responses are identified, and even contingency plans and funds can be created to take advantage of the opportunity should it occur. The main exception between managing downside risks and opportunities is responses. The project management profession has identified five types of response to an opportunity: 4 Explore. This tactic aims to eliminate the uncertainty associated with the opportunity to ensure that it will definitely happen. Examples include;
page 231 assign your best people to a critical burst activity to reduce turnaround time and revise a design to allow a component to be purchased rather than developed in-house. Common use. This strategy involves allocating part or all of the ownership of an opportunity to another party that is better able to exploit the opportunity to the benefit of the project. Examples include continuous improvement incentives for external contractors and joint ventures. To be improved. Enhancement is the opposite of mitigation in that steps are taken to increase the likelihood and/or positive impact of an opportunity. Examples include selecting a location based on favorable weather patterns and selecting raw materials that are likely to decrease in price. Climb. Sometimes projects encounter opportunities that are outside the scope of the project or beyond the project manager's authority. In these cases, the project manager must inform the appropriate people within the organization about the opportunity. For example, a customer tells the project manager that they are considering customizing the product for a different market and wonders if you would be interested in bidding on the job. The opportunity passes to the project sponsor. Or, during project iterations, the project manager discovers an alternative supplier for a key component. This information will be forwarded to the Procurement Department. Accept. Accepting an opportunity is being willing to take advantage of it if it occurs, but not acting to pursue it. While it is natural to focus on downside risks, it is good practice to also engage in active opportunity management.7.7 Contingency Funding and Contingency Reserves LO 7-7 Understand how contingency funds and contingencies are used to manage risk in a play.
Contingency funds are established to cover project risks – identified and unknown. When, where and how much money will be spent is not known until the risk event occurs. Project "owners" are often reluctant to set up project contingency funds which seem to suggest that the project plan may be bad. Some perceive the emergency fund as additional capital. Others say they will face the risk when it materializes. Usually, this reluctance to build reserve funds can be overcome with documented risk identification, assessment, contingency plans, and plans for when and how the funds will be disbursed. The size and value of contingency funds depends on the inherent uncertainty of the project. Uncertainty is reflected in the "newness" of the project, inaccurate time and cost estimates, technical unknowns, unstable scope and unforeseen problems. In practice, contingencies vary from 1% to 10% on projects similar to previous projects. However, in proprietary and high-tech projects, it is not uncommon to find contingencies in the 20 to 60 percent range. The use and rate of consumption of stocks must be closely monitored and controlled. Simply picking a base rate - say, 5% - and calling it an emergency reserve is not the right approach. Furthermore, adding up all identified emergency allocations and dumping them into one pot does not result in a stable control of the reserve fund. In practice, the emergency fund is usually divided into emergency reserves and management reserves for control purposes. Contingency reserves are created to cover identified risks. These reserves are allocated to specific sections or project deliverables. Management reserves are created to cover unrecognized risks and are allocated to risks related to the project as a whole. Risks are separated because their use requires approval from different levels of project authority. As all risks are potential, reserves are not included in the baseline for each work package or activity. they are only activated when there is danger. If an identified risk does not occur and the probability of its occurrence has passed, the resource allocated to the risk must be deducted from the contingency provisions. (This eliminates the temptation to use emergency reserves for other issues or problems.) Of course, if the risk occurs, funds are taken from the reserve and added to the cost baseline. These subsidies must be clear
page 232 to avoid time and budget interaction Contingency Reservations These reservations are identified for specific work packages or portions of a project that are in the base budget or work breakdown structure. For example, a reserve amount could be added to "computer coding" to cover the risk of "testing" showing a coding problem. The amount of the reserve is determined by the cost of the accepted emergency or recovery plan. Contingency reserves must be shared with the project team. This transparency conveys trust and encourages good cost performance. However, the allocation of emergency stocks should be the responsibility of both the project manager and the team members responsible for implementing that part of the project. If the risk does not materialize, funds are drawn from contingency reserves, so contingency reserves are reduced as the project progresses Management Reserves These reserves are required to cover major unforeseen risks and are therefore applied throughout the project. For example, a major change of scope may seem necessary in the middle of the project. As this change was not expected, it is covered by management reserves. Management reserves are created after contingency reserves are determined and funds are established. These reserves are independent of the contingency reserves and are controlled by the project manager and the project 'owner'. The "owner" may be internal (top management) or external to the project organization. Most management reserves are defined using historical data and judgments about the uniqueness and complexity of the project. Placing technical contingencies in management reserves is a special case. The identification of potential technical (operational) risks is usually associated with a new, unprecedented and innovative process or product. As there is a possibility that the innovation will not work, an alternative plan is needed. This type of risk is beyond the project manager's control. Therefore, technical reserves are held in management reserves and controlled by the owner or senior management. The owner and project manager decide when the contingency plan will be implemented and when the reserve funds will be used. It is assumed that there is a high probability that these funds will never be used.
page 233 Table 7.1 shows the development of a budget estimate for a hypothetical project. Notice how emergency and management reserves are kept separate. the control is easily located using this format. 20,000 2,000  22,000 Subtotal $1,420,000 $97,000 $1,517,000 Reserve Management    —   —  $2000 $1,000,000 to $50,000. 7.0 00Time Reserves Since contingency funds are created to absorb unplanned expenses, managers use time reserves to limit potential project delays. And just like emergency funds, timing depends on the inherent uncertainty of the project. The more uncertain the project, the more time should be spent on the schedule. The strategy is to allocate extra time at critical moments of the project. For example, buffers are added to A. Activities with serious risks.B. Merger of activities prone to delays due to the delay of one or more previous activities.C. Non-critical activities to reduce the possibility of creating another critical path.D. Activities that require limited resources to ensure that resources are available when needed. In view of the general uncertainty of the schedule, temporary stocks are sometimes added late in the project. For example, a 300-day project might have a 30-day project buffer. Although the extra 30 days do not appear in the
schedule, are available if needed. Like management reserves, this buffer usually requires senior management authorization. A more systematic approach to buffer management is discussed in Chapter 8, Appendix on Critical Chain Project Management. management process summarized in a formal document often referred to as a risk register. A risk register details all identified risks, including descriptions, category, likelihood of occurrence, impacts, responses, contingency plans, owners and current status. The register is the backbone of the final stage of the risk management process: risk control. Risk control includes executing the risk response strategy, monitoring trigger events, initiating contingency plans and observing new risks. Establishing a change management system to handle incidents that require formal changes to project scope, budget, and/or schedule is an essential element of risk control. Project managers need to monitor risks in the same way they monitor project progress. Risk assessment and debriefing should be part of every status meeting and progress reporting system. The project team must be constantly on the lookout for new and unpredictable risks. Thamhain (2013) studied 35 major product development efforts and found that more than half of the contingencies that occurred were not expected! Being prepared to respond to the unexpected is a critical element of risk management. Management must be aware that others are not forthcoming in recognizing new risks and issues. Admitting that there might be a bug in the design code or that different components are incompatible does not reflect poorly on individual performance. If the prevailing organizational culture is one in which mistakes are severely punished, then it is human nature to protect yourself. Likewise, if bad news is received harshly and there is a
If there is a tendency to "kill the messenger", participants will be reluctant to speak freely. The tendency to withhold bad news is exacerbated when individual accountability is unclear and the project team is under extreme pressure from senior management to complete the project quickly. Project managers must create an environment in which participants feel comfortable expressing concerns and admitting mistakes (Browning & Ramasesh, 2015). The rule should be that mistakes are acceptable and hiding mistakes is unacceptable. Problems should be accepted, not denied. Participants should be encouraged to identify problems and new risks. A project manager's positive attitude towards risk is critical. On large and complex projects, it may be prudent to repeat the risk identification/assessment exercise with new information. Risk profiles should be reviewed to check if the initial responses are true. Relevant stakeholders should be considered in the discussion and the risk register should be updated. Although this may not be practical on an ongoing basis, project managers should contact them regularly or hold special meetings with stakeholders to review the status of risks in the project. A second key to controlling the cost of risk is documenting accountability. This can be problematic on projects involving multiple agencies and contractors. Responsibility for the risk is often transferred to others with the statement "None of my business". This mindset is dangerous. Any identified risk should be mutually assigned (or shared) by the owner, the project manager and the contractor or person who has line responsibility for the work package or project section. It is best for the responsible line person to approve the use of emergency stocks and monitor their utilization rate. If management reserves are required, the line person should take an active role in estimating the additional costs and funds required to complete the project. Involving line people in the process focuses attention on inventory management, controlling their utilization rate and early warning of potential risk events. If risk management is not formalized, accountability and responses to risk are bypassed. The bottom line is that project managers and team members must be vigilant in monitoring potential hazards and must identify new landmines.
which could derail a project. Risk assessment should be part of the working agenda of status meetings and, when new risks arise, they should be analyzed and integrated into the risk management process. is change management. Not all details of a project plan will materialize as expected. Dealing with and controlling project change is a formidable challenge for most project managers. Changes come from many sources, including the project customer, the owner, the project manager, team members, and risk events. Most changes fall easily into three categories: 1. Design form scope changes or additions represent significant changes—for example, customer requests for a new feature or a new design that will improve the product.2. Implementation of contingency plans when risk events occur represents changes in baseline costs and schedules.3. Improvement changes suggested by project team members represent another category. Because change is inevitable, a well-defined change review and control process should be established early in the project planning cycle. (Note: Some organizations consider change control systems to be part of configuration management.) In practice, most change management systems are designed to accomplish the following.1. Identify proposed changes.2. List the expected effects of the proposed changes on schedule and budget.
page 2353. Review, evaluate, and formally approve or reject changes.4. Negotiating and resolving change, condition and cost conflicts.5. Communicate changes to affected parties.6. Assign responsibility for implementing the change.7. Adjust master schedule and budget.8. Track all the changes that will be implemented. As part of the project's communication plan, stakeholders define in advance the communication and decision-making process that will be used to evaluate and accept changes. The process can be depicted in a flowchart like the one in Figure 7.9. In small projects, this process may simply involve approval by a small group of stakeholders. In larger projects, more complex decision-making processes are established, with different processes used for different types of changes. For example, changes in performance requirements may require multiple approvals, including the project sponsor and the client, while changing suppliers may be authorized by the project manager. Regardless of the nature of the project, the goal is to establish the process for introducing necessary changes to the project in a timely and efficient manner. FIGURE 7.9 Change control process
Of particular importance is the assessment of the impact of the change on the project. Often, solutions to immediate problems have negative consequences for other aspects of a project. For example, by overcoming a problem with the exhaust system of a hybrid car, the design engineers helped the prototype exceed the weight parameters. It is important that the effects of the changes are assessed by people with the appropriate experience and perspective. In construction projects, this is typically the responsibility of the architectural firm, while "software architects" play a similar role in software development efforts. Organizations use change request forms and logs to track proposed changes. An example of a simplified change request form is shown in Figure 7.10. Typically, change request forms include a description of the change, the impact of not approving the change, the impact of the change
on project scope/schedule/cost and defined signature paths for review, as well as a tracking file number. FIGURE 7.10 Sample Change Request An abbreviated version of a change request record for a construction project is shown in Figure 7.11. These logs are used to track change requests.
They typically summarize the status of all pending change requests and include useful information such as the source and date of the change, document codes for related information, cost estimates, and the current status of the request. incorporated into the capture plan through changes to the project WBS and master schedule. The draft plan is the current official plan for the project in terms of scope, budget and schedule. The capture plan serves as a change management reference for future change requests, as well as a basis for evaluating project progress. If the change control system is not built into the WBS and baseline, project plans and control will soon self-destruct. So, one of
page 236page 237keys to a successful change control process is document, document, document! The benefits derived from change control systems are the following.1. Trivial changes are discouraged by standard procedure.2. The switching cost is kept in the log.3. WBS integrity and performance measures are maintained.4. The allocation and use of emergency and management reserves is monitored.5. Implementation responsibility is specified. 6. The effect of the changes is visible to all parties involved.7. The implementation of the change is monitored.8. Field changes will be quickly reflected in the baseline and performance measures. Clearly, change control is important and requires someone or a group to be responsible for approving changes, keeping the process up to date, and communicating changes to the project team and relevant stakeholders. Project control relies heavily on maintaining the current change control process. This historical record can be used to answer customer inquiries, identify issues in post-project audits, and estimate future project costs. Summary To put the processes discussed in this chapter in proper perspective, it must be recognized that the essence of project management is risk management. Every technique in this book is a risk management technique. Everyone, in their own way, tries to prevent something bad from happening. Project selection systems attempt to reduce the likelihood that projects will not contribute to the company's mission. Project scope statements, among other things, are designed to avoid costly misunderstandings and reduce scope creep. Work breakdown structures reduce the chance that a vital part of the project will be missed or that budget estimates will be unrealistic. Team building reduces the potential for dysfunctional conflict and
page 238 coordination failures. All techniques attempt to increase stakeholder satisfaction and the likelihood of project success. In this regard, managers engage in risk management activities to compensate for the uncertainty inherent in project management and that things never go as planned. Risk management is proactive, not reactive. It reduces the number of surprises and prepares people for the unexpected. While many managers believe that ultimately assessing risk and contingency is based on subjective judgment, some standard method for identifying, evaluating and responding to risk should be built into every project. The process of identifying project risks itself imposes some discipline at all levels of project management and improves project performance. Contingency plans increase the likelihood that the project will be completed on time and on budget. Contingency plans can be simple solutions or complex, detailed plans. Responsibility for risks must be clearly defined and documented. It is desirable and prudent to maintain a reserve as a hedge against project risks. Contingency reserves are linked to the WBS and must be communicated to the project team. Control of management stocks should remain with the owner, project manager and immediate supervisor. The use of contingency stocks should be closely monitored, controlled and reviewed throughout the project life cycle. Experience clearly shows that using a formal, structured process to deal with expected and unforeseen potential project risk events minimizes surprises, costs, delays, stress and misunderstandings. Risk management is an iterative process that takes place throughout the life of the project. When risk events occur or changes are required, using an effective change control process to quickly approve and record changes will make it easier to measure performance against schedule and cost. Ultimately, successful risk management requires a culture in which threats are accepted, not dismissed, and problems are identified, not hidden.
Key terms Risk avoidance, 225 Change management system, 234 contingency plan, 226 contingency reserves, 231 risk escalation, 225 management reserves, 231 risk mitigation, 223 opportunity, 230 risk retention2255Risk, ), 216 Risk Profile, 217 Risk Register, 233 Risk Severity Matrix, 222 Scenario Analysis, 219 Time Buffer, 232 Risk Transfer, 225 Review Questions1. Project risks can/cannot be eliminated if the project is carefully planned. Explain.2. The probabilities of occurrence of risk events and their corresponding cost increases change throughout the life cycle of the project. How important is this phenomenon to a project manager?3. What is the difference between avoiding a risk and maintaining a risk?4. What is the difference between risk mitigation and emergency planning?5. Explain the difference between emergency reserves and management reserves.
page 2396. How are work breakdown structure and change control related? What are the possible outcomes if a change control process is not used? Why; 8. What are the main differences between negative risk management and positive (opportunity) risk management? PRACTICE MOMENT Discussion Questions 7.1 Giant Popsicle Gone Wrong1. Does the risk event graph (Figure 7.1) support this example? Explain.7.2 Terminal 5—London Heathrow Airport1. Why do you think British Airways decided to go fully operational on the 1st? 2nd. How could an RBS like the one shown in Figure 7.3 prevent disaster? 7.3 From Dome to Dust1. What do you think was the biggest risk you faced in this project?2. As Controlled Demolition Inc. responded to the risk?7.4 Risk management at the top of the world1. How important is it for mountaineers to join their Sherpas in sparring? 2. Why do climbers not return at the designated return time?
Exercises 1. Gather a small group of students. Think of a project that most students would understand. The types of work involved should also be known. Identify and assess the major and minor risks inherent in the project. Decide on the type of answer. Develop a contingency plan for two to four identified hazards. Cost estimate. Allocate emergency reserves. What would be your team's reserve estimate for the entire project? Justify your choices and assessments. 2. You have been assigned to a five-member project risk team. As this is the first time your organization has formally established a risk team for a project, it is expected that your team will develop a process that can be used for all future projects. Your first team meeting is next Monday morning. Each team member should prepare for the meeting by developing, in as much detail as possible, an outline that describes how you think the team should go about addressing project risks. Each of the team members will distribute the proposed outline at the beginning of the meeting. Your outline should include, but not be limited to, the following information: a. The goals of the group.b. Procedure for dealing with risk events.c. Group activities.d. Group departures.3. Search the web using the keywords "best practices, project management". What did you think? How can this information be useful to a project manager? References Atkinson, W., “Beyond the Basics,” PM Network, May 2003, pp. J. Ross Publishing, 2016).
σελίδα 240Baker, B., e R. Menon, “Politics and Project Performance: The Fourth Dimension of Project Management”, PM Network, Νοέμβριος 1995, σελ. 16–21. Browning, T., and R. V. Ramasesh, «Reducing Unwelcome Surprisesin Project Management», Sloan Management Review, primavera de 2015, σελ. 6, Software Engineering Institute, Carnegie Mellon University, Pittsburgh, 1993. Ford, E. C., J. Duncan, Bedeian, P. M. Ginter, M. D. Rousculp e A. M. Adams, “Mitigating Risks, Visible Hands, Inevitable Disasters, and Soft Variables: Management Research That Matters to Managers”, Academy of Management Executive, vol. 19, όχι. 4 (novembro de 2005), σσ. 24–38. Gray, C. F. e R. Reinman, «PERT Simulation: A Dynamic Approach to the PERT Technique», 'Journal of Systems Management, março de 1969, σελ. 18–23. Hamburger, D. H. , «O gerente de projeto: tomador de riscos e planejador de contingência», Project Management Journal, vol. 21, όχι. 4 (1990), σσ. 11–16. Hillson, D., "Risk Escalation", project management.com, Νοεμβρίου 1,2016. Acessado em 20/9/18. Hulett, D. T., «Project Schedule Risk Assessment», ProjectManagement Journal, vol. 26, όχι. 1 (1995), σελ. 21–31. Meyer, A.D., C. H. Loch e M. T. Pich, «Managing Project Uncertainty: From Variation to Chaos», MIT Sloan Management Review, Winter 2002, σελ. 60–67. Orlando Sentinel, «Math Mistake Proved Fatal to Mars Orbiter», 23 Νοεμβρίου 1999.
σελίδα 241Pavlik, A., «Project Troubleshooting: Tiger Teams for Reactive RiskManagement», Project Management Journal, vol. 35, όχι. 4 (December 2004), σσ. 5–14. Pinto, J. K., Project Management: Achieving Competitive Advantage (Upper Saddle River, NJ: Pearson, 2007). Knowledge Set in Project Management (Newton Square, PA: ProjectManagement Institute, 2017). Schuler, J. R., “Decision Analysis in Projects: Monte Carlo Simulation”, PM Network, Ιανουάριος 1994, σελ. 30–36. Skelton, T., and H. Thamhain, «Managing Risk in New Product Development Projects: Beyond Analytical Methods», ProjectPerspectives, vol. 27, όχι. 1 (2006), p. 12–20. Skelton, T. and H. Thamhain, “Event Factors for Effective P&DRisk Management”, International Journal of Technology Intelligence and Planning, τομ. 3, όχι. 4 (2007), p. 376–386. Smith, P. G., and D. G. Reinertsen, Developing Products in Half the Time (Νέα Υόρκη: Van Nostrand Reinhold, 1995). Snizek, J. A., and R. A. Henry, “Accuracy and Confidence in Group Judgment,” Organizational Behavior and Human Decision Processes, vol. 4, όχι. 3 ( 1989 ), p. 1–28.Thamhain, H., «Managing Risks in Complex Projects», ProjectManagement Journal, vol. 44, αρ. 20 ( 2013 ), p. 20–35. Case 7.1 Fly fishing expedition in Alaska*
You're sitting around a campfire in a cabin in Dillingham, Alaska, discussing a fishing trip you're planning with your colleagues at Great Alaska Adventures (GAA). Earlier in the day you received a fax from the president of BlueNote, Inc. The president wants to reward his management team by taking them on an all-expenses-paid fly-fishing adventure to Alaska. He would like the GAA to organize and lead the mission. You have just completed a preliminary scope statement for the project (below). You are now considering the potential risks associated with the project.1. Brainstorm potential risks associated with this project. Try to imagine at least five different risks.2. Use a risk assessment form similar to Figure 7.6 to review identified risks.3. Develop a risk response matrix similar to Figure 7.8 to describe how you would address each of the risks. PROJECT SCOPE STATEMENT PROJECT OBJECTIVE Organize and lead a five-day fly-fishing expedition in the Tikchik River system in Alaska from June 21-25 at a cost not to exceed $45,000. DELIVERIES Provides air transportation from Dillingham, Alaska to Base I and from Base II back to Dillingham. It provides river transportation consisting of two drift boats for eight people without engines on board. It provides three meals a day for the five days you spend on the river. Provide four hours of fly fishing instruction. Overnight accommodation provided at Dillingham Lodge, plus three four-man tents with cots, bedding and lanterns. You provide four experienced river guides who are also fly fishermen. Provision of fishing licenses to all visitors.
page 242MARCOS1. The contract was signed on 22/2/Jan. Visitors arrive in Dillingham on June 20. Departure by plane for Base Camp I June 21.4. Depart by plane from Base Camp II for Dillingham on June 25. TECHNICAL REQUIREMENTS 1. Air transportation to and from base camps.2. Boat transfer on Tikchik river system.3. Digital cellular communication devices.4. Camping and fishing comply with Alaska state requirements. LIMITATIONS AND EXCLUSIONS 1. Guests are responsible for making travel arrangements to and from Dillingham, Alaska.2. Guests are responsible for their own fishing gear and clothing.3. Local air transportation to and from base camps will be outsourced.4. Guides are not responsible for the number of salmon caught by guests. ACCEPTANCE CRITERIA The President of BlueNote, Inc. reviews.*This case was prepared with the assistance of Stuart Morigeau. Case 7.2
page 243Silver Fiddle Construction You are the President of Silver Fiddle Construction (SFC), which specializes in building high quality homes in Grand Junction, Colorado. You've just been hired by Czopeks to build your dream home. You operate as a general contractor and only employ a part-time accountant. Subcontract work to local trade professionals. Home building in Grand Junction is booming. You are tentatively scheduled to complete 11 houses this year. You promised the Czopeks that the final cost would be $450,000 to $500,000 and that it would take five months to complete the house once construction began. The Czopeks are willing to delay the project to save costs. You have just completed a preliminary scope statement for the project (below). You are now considering the potential risks associated with the project.1. Identify potential hazards associated with this project. Try to imagine at least five different risks.2. Use a risk assessment form similar to Figure 7.6 to review identified risks.3. Develop a risk response matrix similar to Figure 7.8 to describe how you would address each of the risks. - bathroom, 3 bedrooms, finished house. A finished garage, insulated and plastered. Kitchen appliances such as stove, oven, microwave and dishwasher. High performance gas oven with programmable thermostat.
HIGHLIGHTS 1. Permits approved July 5.2. The foundation was poured on July 12. "Dry in" - construction, cladding, plumbing, electrical and mechanical inspections - passed on 25 September. Final inspection November 7th. TECHNICAL REQUIREMENTS 1. The home must meet local building codes.2. All windows and doors must have NFRC 40.3 energy class ratings. Exterior wall insulation must meet an "R" factor of 21.4. Roof insulation must meet an "R" factor of 38.5. Floor insulation must meet an "R" factor of 25.6. The garage will accommodate two cars and a 28-foot Winnebago.7. The structure must pass seismic codes. LIMITATIONS AND EXCLUSIONS 1. The house will be built according to the specifications and design of the original plans provided by the customer.2. Landlord is responsible for landscaping.3. The refrigerator is not included in the kitchen appliances.4. Air conditioning is not included, but the house is pre-wired for it.5. The SFC reserves the right to contract for services.
page 244Trans LAN ProjectTrans Systems is a small information systems consulting firm located in Meridian, Louisiana. Trans has just been hired to design and install a local area network (LAN) for the city of Meridian's social welfare agency. You are the project manager, which includes a transgender professional and two interns from a local university. You have just completed a preliminary project scope statement (below). Now you discuss the potential risks associated with the project.1. Identify potential hazards associated with this project. Try to imagine at least five different risks.2. Use a risk assessment form similar to Figure 7.6 to review identified risks.3. Develop a risk response matrix similar to Figure 7.8 to describe how you would address each risk. minimal disruption to current operations. DELIVERY twenty workstations and 20 laptops. Two servers with quad-core processors. Print server with two color laser printers. Barracuda Firewall. ​​Windows R2 server and workstation operating system (Windows 11). Migration of existing databases and programs to the new system. Four hours of introductory training for customer staff. Sixteen hours of training for the customer's network administrator.
page 245 Fully functional LAN.MILESTONES1. Material January 22.2. Prioritization and authorization of users January 26.3. Completed network-wide internal testing on February 1.4. Customer site testing completed on February 2.5. Training ended on February 16. TECHNICAL REQUIREMENTS 1. Workstations with 17-inch flat screens, dual-core processors, 8GB RAM, 8X DVD+RW, wireless card, Ethernet card, 500GB SSD.2. Laptops with a 12-inch screen, dual-core processors, 4GB of RAM, a wireless card, an Ethernet card, a 500GB SSD, and weighing less than 4½ pounds.3. Wireless network interface cards and Ethernet connections.4. The system must support Windows 11.5 platforms. The system must provide secure external access for field workers.LIMITATIONS AND EXCLUSIONS1. On-site work will be done after 20:00. and before 7:00 a.m. Monday through Saturday.2. System maintenance and repair only within one month of final inspection.3. Warranties transferred to the customer.4. Only responsible for installing the software specified by the client two weeks before the start of the project.5. The customer will be billed for additional training beyond what is specified in the contract. ACCEPTANCE CRITERIA Reviews by the Director of the Meridian City Social Services Agency.
Case 7.4XSU Spring Concert You are a member of the student entertainment committee at X State University (XSU). His committee agreed to sponsor a spring concert. The reason for this concert is to provide a safe alternative to Hasta Weekend. Hasta Weekend is a spring event where XSU students rent houseboats and party hard. Traditionally, this takes place on the last weekend of May. Unfortunately, the party has a long history of getting out of control, sometimes leading to fatal accidents. year. You have just completed a preliminary scope statement for the project (below). You are now considering the potential risks associated with the project.1. Identify potential hazards associated with this project. Try to imagine at least five different risks.2. Use a risk assessment form similar to Figure 7.6 to review identified risks.3. Develop a risk response matrix similar to Figure 7.8 to describe how you would address each risk. PROJECT STATEMENT PROJECT OBJECTIVE Organize and perform an eight-hour concert at Wahoo Stadium at a cost of no more than $50,000 on the last Saturday in May. DELIVERIES
page 246Local advertising.Display security.Separate beer garden.Eight hours of music and entertainment.Food venues.Souvenir concert t-shirts. Secure all permits and approvals. Safe sponsors. MILESTONES1. Secure all permits and approvals by January 15.2. Sign a top artist by February 15th. Full list of artists from April 1.4. Secure vendor contracts by April 15th. The installation was completed on May 27. Concert on May 28. The cleanup was completed by May 31. TECHNICAL REQUIREMENTS 1. Professional soundstage and system.2. At least one famous artist.3. At least seven theatrical acts.4. Sanitation facilities for 10,000 people.5. Parking space for 1,000 cars is available.6. Compliance with XSU and City requirements/ordinances. LIMITATIONS AND EXCLUSIONS 1. Artists are responsible for travel arrangements to and from XSU.2. Suppliers contribute a set percentage of sales.3. The concert should end at 23:30.
ADMISSION CRITERIA Reviews of the XSU Student Body President. Case 7.5 Maintaining Project Risk Management During Implementation BACKGROUND Bill (Senior VP of Product Development): Carlos [Project Manager], we need to talk. I am concerned about how we manage project risk here at Futureonics. I just returned from an international "Future Mote Devices" meeting at UC Berkeley. [Note: A mote is a very small wireless sensor (eg, 2 to 3 mm square) that can be placed on land or in water to measure and communicate data.] The project management sessions that received the most attention dealt with risk in product development projects. They described our project risk management literally - failure to maintain risk management after project execution. It seems someone has to get burned before risk management is taken seriously. To my surprise, almost all project managers admitted that their companies have trouble keeping team members interested in risk management after the project has started. The old adage "If you don't manage the risk, you pay the price later" has produced horror stories of some who paid the price. We spent some time thinking about ways to address the issue at the project level, but there were very few concrete suggestions. The meeting gave me a wake-up call. Carlos, we need to solve this problem or some new or known risk event could put us out of business. The similarities between their horror stories and some of the mistakes of our past are amazing. Because here at Futuronics we only develop new products that are at least seven years ahead of anything on the market, the level of "known risk events and unknown risks" is much higher than in most other organizations.
page 247 Project risk management is important for all projects, but here at Futuronic every new product project is laden with risk. Carlos, I am willing to work with you to improve the risk management of our project at Futuronics. Carlos: Bill, I know the problem. The PMI Roundtables I participate in also talk about the difficulty of keeping teams and other stakeholders willing to review risk when the project is underway. [PMI Roundtables are monthly meetings of PM practitioners across industries designed to address project management issues.] I also heard war stories at a recent project management roundtable. I have some notes from the meeting here. It all started with the leader's question: "How many project managers actually manage risk throughout the project lifecycle?" PM 1: We all worked on the risk management process long before the project started. We have the process model to detect, assess, respond, control, register risks and contingencies in progress. We just didn't move forward after the project started. I think the interest is dying. Have you tried getting project stakeholders to attend a risk meeting when the project is going relatively well? PM 2: A recent email from one of the stakeholders said: "We'll deal with it [risk] when it happens." MM 3: I agree. Interest seems to be shifting from the future to the reactive. Furthermore, risk management seems to degenerate into managing issues (concerns and problems) versus managing actual risks. PM 4: I ask team members, "What is the risk of not managing risk during the life of the project?" This question sometimes leads some to answer positively, especially if the risks have changed or new ones are perceived. I use a failed project where a solid risk management process would have prevented the project from failing. I explain all the risk management processes that would help improve the risk elements - risk identification, triggers, accountability, transfer, acceptance, etc. MM 5: Risk is not a line item in the budget or schedule. Perhaps it is in the management's reserve to cover "unknowns of unknowns". i have to watch
page 248 that management is not trying to push the budget for something else. Carlos went on to share with his boss that there was a lot more feedback, but very little provided much guidance. Carlos then shared his idea: Carlos: Colette is our best coach, especially in transition management, and she would be a great choice to continue this theme. Their initial risk management training courses are excellent. Should we ask him to present a session? Bill: You're right, Carlos. Colette is perfect. She is smart and a great motivator for the team. Ask her, but give her some kind of guidance to focus on. A few days later, Carlos sent a note: Colette, this is to continue our discussion at lunch yesterday, discussing sustainable risk management once the project starts. Given the nature of our futuristic company, we must emphasize that our product development projects carry significantly more inherent risk than traditional projects. I suggest that training courses delve into specific actions and policies that will stimulate the interest of team members and other project stakeholders in maintaining risk management practices during project execution. Colette, thank you for accepting this project. When you develop your workout, send me a copy so I can plan and support your efforts. Sincerely, Carlos CHALLENGE Divide the class into groups of three or more participants. Colette needs your help to develop her educational program. You might want to consider the following questions to get ideas started. Why do project stakeholders lose interest in project risk after project initiation? What are the risks of not controlling risk management during implementation? What kind of business is Futuronics in?
A7-1 Brainstorm specific actions that will encourage project stakeholders to continue scanning and monitoring the project environment for risk events. Suggest three specific actions or scenarios that will encourage project stakeholders to change their behavior and effectively support risk management during project implementation. The following project headings may be useful in developing possible actions that would strengthen/enhance stakeholder support. REVIEWTECHNIQUELO A7-1 Calculate basic PERT simulation views. In 1958, the Navy Special Bureau and the consulting firm Booze, Allen and Hamilton developed PERT (Program Evaluation and Review Technique) to schedule the more than 3,300 contractors on the Polaris submarine project and to accommodate the uncertainty of project time estimates.
page 249 PERT is almost identical to the critical path method (CPM) technique, except that it assumes that the duration of each activity has a range that follows a statistical distribution. PERT uses three time estimates for each activity. Basically, this means that the duration of each activity can vary from an optimistic hour to a pessimistic hour, and a weighted average can be calculated for each activity. the beta distribution to represent activity durations. This distribution is known to be flexible and can accommodate empirical data that do not follow a normal distribution. Activity durations may be more skewed toward the higher or lower end of the data range. Figure A7.1A represents a beta distribution for activity durations that is skewed to the right and is representative of work that tends to be late when it is late. The distribution for project duration is represented by a normal (symmetric) distribution shown in Figure A7. 1B. The project distribution represents the sum of the weighted averages of the activities on the critical paths. FIGURE A7.1 Project activity and frequency distributions Knowing the weighted mean and variances for each activity allows the project planner to estimate the probability that they will respond to different project durations. Follow the steps outlined in the hypothetical example given below. (The terminology is difficult for those unfamiliar with statistics, but the process is relatively straightforward after working through a few examples.) The weighted average activity time is calculated by the following formula: (7.1)
page 250wheree=weighted average activity timea=optimistic activity time (1 in 100 chance of completing the activity earlier under normal conditions)b=pessimistic activity time (1 in 100 chance of completing the activity later under normal conditions)m =most likely activity time When they have Once all three time estimates are determined, this equation is used to calculate the weighted average duration for each activity. The mean (deterministic) value is placed on the project network as in the CPM method, and the project start, delay, slack, and completion times are calculated as in the CPM method. The variability in the uptime estimates is approximated by the following equations: Equation 7.2 represents the standard deviation for the activity. Equation 7.3 represents the standard deviation for the project. Note that the standard deviation of activity is squared in this equation. this is also called variance. This sum includes only activities on the critical path or path under consideration.(7.2)(7.3) Finally, the average project duration (TE) is the sum of all average activity times relative to the critical path (sum te. ), and follows a normal distribution. Knowing the average project duration and activity fluctuations allows the probability of completing the project (or project section) to be calculated in a given time, using standard statistical tables. The following equation (Equation 7.4) is used to calculate the "Z" value found in the statistical tables (Z = number of standard deviations from the mean), which in turn tells you the probability of completing the project in the specified time.
(7.4) where TE=critical path duration TS=scheduled project duration Z=probability (of reaching the scheduled duration) (see statistical table A7.2) A HYPOTHETICAL EXAMPLE USING THE PERT TECHNIQUE Activity times and variances are given in Table A7 1. The project network is shown in Figure A7.2. This figure shows the project network as AOA and AON. The AON network is shown as a reminder that PERT can use AON as well as AOA networks. FIGURE A7.2 Hypothetical Network
TABLE A7.1 Activity Times and Variations The expected duration of the project (TE) is 64 time units. the critical path is 1-2-3-5-6. In AON the path is A-B-D-F. With this information, the probability of completing the project by a certain date can easily be calculated using standard statistical methods. For example, what is the probability that the project will be completed before a scheduled time (TS) of 67? The normal curve for the design will appear as shown in Figure A7.3.
FIGURE A7.3 Possible project durations Using the formula for the Z value, the probability can be calculated as follows: Reading from Table A7.2, a Z value of +0.5 gives a probability of 0.69, which is interpreted to mean that there is a 69 percent probability of completing the project in or before 67 time units. TABLE A7.2Z Values ​​and ProbabilitiesZ ValueProbabilityZ ValueProbability− 3.0.001+ 0.0.500− 2.8.003+ 0.2.579− 2.6.005+ 0.4.655− 2.4.008+ 0.6. 726− 2.2.014+ 0.8.788− 2.0.023+ 1.0.841
page 251 page 252− 1,8,036+ 1,2,885− 1,6,055+ 1,4,919− 1,4,081+ 1,6,945− 1,2,115+ 1,8,964− 1,0,159+ 7,2,159+ 7,2,2 ,0+ 2.0. . . −0.67 gives an approximate probability of 0.26, which is interpreted to mean that there is about a 26% chance of completing the project in or before 60 time units. Note that this same type of calculation can be done for any path or path segment in the network. When these probabilities are available to management, trade-off decisions can be made to accept or reduce the risk associated with a given project duration. For example, if the project manager wants to increase the probability of project completion by 64 time units, at least two options are available. First, management can spend money up front to change conditions that will shorten the duration of one or more activities on the critical path. A second, more prudent alternative would be to put money into an emergency fund and wait and see how the project progresses as it is implemented.
page 253 EXERCISES1. Given the project information in the table below, what is the probability that the National Holiday Games project will be completed in 93 time units?2. Global tea and organic juice companies merged. The following information was collected for the "Unification Project".1. Calculate the expected time for each activity.2. Calculate the variance for each activity.3. Calculate the expected duration of the project.4. What is the probability of completing the project on day 112? Within 116 days?5. What is the probability that the "Union Bargaining" will be completed on the 90th day?
page 2543. The following are the expected times and variances for the project activities. What is the probability of completing the project in 25 periods? Case A7.1 International Capital, Inc.—Part A International Capital, Inc. (IC) is a small investment bank specializing in securing capital for small and medium-sized enterprises. The IC is able to use a standardized project format for each engagement. Only busy times and unusual circumstances change the default network. Beth Brown was assigned to this client as a project management associate and gathered the network information and uptimes for the most recent client as follows: Activity Description Immediate Predecessor Start Story Draft Using Template—BSearch Client Company— CCCreate Due Diligence Draft A , BD Coordinate the proposal of needs with the client EC Estimate future demand and cash flow CF Develop future plans for the client company E Create and approve legal documents C
Incorporate all drafts into first proposal   D, F, GILLlineline potential sources of capital G, FJVerify, approve and print final legal proposalHSign contracts and transfer capital I, JTime in business daysActivityOptimisticPossibly OptimisticA 4 4  710 8D16 1 928E 6 924F 1 71 3G 41028H 2 514I 5 817J 2 5 8K172945REPORT MANAGEMENT Beth and other brokerage partners have a policy of having your plan passed by a peer review committee. This committee traditionally checks that all details are covered, deadlines are realistic and resources are available. Beth wants you to create a report that shows a planned schedule and the expected completion time of the project in business days. Include a project network in your report. The average duration of a capital procurement project is 70 working days. IC partners agreed that it is good to create projects with a 95% chance of achieving the plan. How does this project compare to the average project? What should the average be to guarantee a 95% chance of completing the project in 70 business days? Case A7.2
page 255Advantage Energy Technology Data CenterMigration—Part BIn Chapter 6, Brian Smith, network administrator at Advanced EnergyTechnology (AET), was tasked with implementing the migration of a large data center to a new office. the highly competitive oil industry. AET is one of the five national software
page 256 companies providing accounting and business management package to petroleum intermediaries and gasoline distributors. A few years ago, AET entered the world of "application service providers". Its large data center provides customers with remote access to AET's full suite of application software systems. Traditionally, one of AET's key competitive advantages has been the reliability of the company's IT brand. Due to the complexity of this project, the Executive Committee insisted on a preliminary review of the expected completion date. Brian has gathered the following information in preparation for some PERT analysis:1. Based on these estimates and the resulting expected project duration of 69 days, the Executive Committee wants to know the probability of completing the project before a scheduled time (TS) of 68 days.2. The importance of this work is of great concern to the Executive Committee. The committee decided that more analysis of the duration of each activity was needed. Before undertaking this effort, they asked Brian to estimate what the expected duration of the project would be to guarantee a 93% chance of completion in 68 days. ADVANTAGE ENERGY TECHNOLOGY (AET) - BILLS PAYABLE SYSTEM -upcompany about to start a bill payable system. Research shows that this new package will provide features that will seriously compete with AET's Current Accounts Payable system and, in some cases, exceed what AET offers. Tom Wright, Senior Application Developer at AET, took responsibility for the review, design, development and delivery of a new Accounts Payable (A/P) system for AET clients. The problem is compounded by the Sales Department's concern about AET's recent failure to meet promised delivery dates. They convinced the CEO (Larry Martin) that a significant marketing effort would need to be made to convince customers to expect the AET product.
page 257 instead of switching to a package provided by a new entry in the oil software business. This effort comes with the importance of software development team performance. Consequently, Tom decided to take the following steps: increase his developers' estimation effort, incorporate some new estimation procedures, and use some PERT techniques to create probabilities related to delivery dates. Tom's design team made a first cut on the set of activities and their associated durations: SS = start-to-start interval.3. Based on these estimates and the critical path, the project duration is estimated at 149 days. However, an AET salesperson in the Southeast Region discovered that the competing A/P package (with significant improvements) is scheduled for delivery in approximately 145 days. THE
the sales force is very eager to exceed this deadline. The Executive Committee asks Tom for an estimated probability of reducing the expected duration of his project by 2 days.4. The Executive Committee is informed by Tom that, after all assessments have been completed, he has decided that one of his two critical systems analysts may need to leave the area for family reasons. Tom is still very confident that with some staff reshuffles, help from a subcontractor, and some "hands on" activities on his part, he will be able to meet the original delivery date based on 149 days. This news is of great concern to the committee and the sales team. At this point, the committee decides that, based on AET's most recent delivery performance, AET's customers should be notified of an amended comfortable delivery date - a date that Tom and your team are likely to meet. Consequently, Tom is asked to estimate what the expected duration of the project should be to guarantee a 98% probability of completion in 160 days - a "start and publish date" that can be communicated to clients. Design Elements: Practice Snapshot, Label Box, Case Icon: ©SkyDesigns/Shutterstock1 Landau, E., "Mars Landing Went 'Flawless,' Scientists Say," CNN.com. Accessed 8/14/12.2 The Delphi method (see Practice Slide 5.2) is a popular technique for engaging stakeholders.3 This is a fundamental principle of Agile project management, which is discussed in Chapter 15.
4 PMBOK Guide, 6th ed. (Newton Square, PA: PMI, 2017), σελ. 444.
8-18-28-38-48-58-68-78-88-98-10page 258CHAPTER 88 Resource and Cost Scheduling LEARNING OBJECTIVES After reading this chapter, you will be able to: Understand the differences between time-constrained schedules and resource-constrained schedules . Identify different types of resource constraints. Describe how the smoothing approach is used in time-constrained projects. Describe how the smoothing approach is used for resource-constrained projects. Understand how resource management software projects create resource-constrained schedules. Understand when and why split tasks should be avoided. Set general guidelines for assigning people to specific tasks. Identify common problems with multi-project resource planning. Explain why a time base budget is necessary. Create a time-phased project budget baseline.
A8-1A8-2A8-3A8-48.18.28.38.48.58.68.78.88.98.10Appendix 8.1: page 259 Define the term critical chain. Identify why projects are delayed even when estimates are met. Describe the basic methodology of the critical chain. differences between critical chain scheduling and the traditional scheduling approach. DESCRIPTION Resource Scheduling Problem Overview Types of Resource Constraints Classifying a Scheduling Problem Resource Allocation Methods Calculator Demonstration of Constrained Resources Scheduling Division of Activities Resource Scheduling Resource Scheduling Resource Scheduling Using the Resource Schedule to Develop a Project Cost Base Summary The Critical Chain Approach
Project network schedules are not a schedule until resources are allocated. Cost estimates are not a budget until they are phased in. — Clifford F. Gray We consistently emphasize that early planning yields big returns on predictable projects. For those of you who have worked diligently through the previous chapters on design processes, you are almost ready to begin your project. This chapter completes the last two planning tasks that become the master plan of your project—resource and cost planning. (See Figure 8.1.) This process uses the resource schedule to define time-phased costs that provide the project's budget baseline. Given this time base, comparisons can be made with actual and planned schedule and cost. This chapter first reviews the process of developing a project resource schedule. This resource schedule will be used to assign budgeted amounts to time phases to create a project budget baseline. FIGURE 8.1 Project Planning Process
page 260 There are always more project proposals than available resources. The priority system should select projects that best contribute to the organization's goals, within the constraints of available resources. If all projects and their associated resources are computer-planned, the feasibility and impact of adding a new project to an ongoing one can be quickly assessed. With this information, the Project Prioritization Team will only add a new project if resources are available. This chapter examines resource planning methods so that the team can make realistic judgments about resource availability and project duration. The project manager uses the same schedule to implement the project. If changes are made during project implementation, the computer schedule is easily updated and results are easily evaluated. a project manager listed the following questions that still needed to be addressed: Will the manpower and/or equipment assigned be adequate and available to handle my project? Should they be outsourced?
page 261 Are there unexpected feature dependencies? Is there a new critical path? How much flexibility do we have in the use of resources? Is the initial deadline realistic? It is clear that this project manager has a good understanding of the problems he is dealing with. Any project planning system should make it easy to find quick and easy answers to these questions. The planned network project duration and activity times found in previous chapters did not take into account resource usage and availability. Time estimates for work packages and network times were made independently with the implicit assumption that resources would be available. This may or may not be. If resources are sufficient but demand varies widely over the life of the project, it may be desirable to balance resource demand by delaying non-critical activities (using slack) to reduce peak demand and thereby increase resource utilization. This process is called feature smoothing. On the other hand, if the resources are not sufficient to meet the peak demands, the late start of some activities should be postponed and the duration of the project could be increased. This process is called resource-constrained scheduling. The consequences of not planning limited resources are costly, and project delays often occur mid-project when quick corrective action is difficult. An additional consequence of not scheduling resources is missing the peaks and valleys of resource usage throughout the project. Because project resources are often overallocated and resources are rarely aligned based on availability and need, procedures are needed to address these issues. This chapter examines the methods available to project managers to address resource utilization and availability through resource leveling and resource-constrained scheduling. Until now, the initiation and sequencing of activities has been based solely on technical or logical considerations. For example, suppose you are planning a wedding reception that involves four activities: (1) planning, (2) hiring a band, (3) decorating the room, and (4) buying drinks. Each activity lasts one day. Activities 2, 3 and 4 can be done in parallel by different people. There is no technical reason or dependence of one on the other (see Figure 8.2A). However, if one person has to perform all the activities, the resource limitation
requires activities to be performed in a sequence or series. Clearly, the consequence is a delay in these activities and a very different set of network relationships (see Figure 8.2B). Note that resource dependency takes precedence over technology dependency, but does not override technology dependency. That is, renting, decorating, and buying may now have to happen sequentially rather than simultaneously, but all must be completed before pick-up takes place. the original network?' First, resource availability may not be known until the original schedule is completed. Second, even if the resources are known, one cannot assess the impact of the resources unless a resource-neutral schedule is created. For example, one would never know that the wedding could be scheduled in three days instead of five, if there were three people instead of the supposed one. When the principle behind this simple example is applied to other, more elaborate designs, the implications can be significant. The interactions and interactions between time and resource constraints are complex even for small project networks. Some effort to consider these interactions before the project begins often reveals surprising problems. Project managers who do not consider resource availability in projects of moderate complexity often hear about the problem
page 262 when it is too late to correct. A resource shortfall can significantly change project dependencies, completion dates, and project costs. Project managers must take care to schedule resources to ensure they are available in the right quantities at the right time. Fortunately, there are computer software programs that can identify resource problems during the initial planning phase of the project, when corrective changes can be considered. These schedules require only activity resource needs and free/busy information for resource scheduling. 8.1 Working in confined spaces On rare occasions, physical factors cause the limitation of activities that would normally occur in parallel by contractual or environmental conditions. For example, in theory, renovating a sailboat apartment could involve four or five tasks that could be done independently. However, as the space only allows one person to work at a time, all tasks must be performed sequentially. Likewise, in a mining project, it may only be physically possible for two miners to work a pit at a time. Another example is the construction of a communication tower and earthworks nearby. For safety reasons, the contract prohibits ground work within 2,000 feet of the tower's construction. iStockphoto/Getty Images
The procedures for dealing with physical factors are similar to those used for resource constraints. See Practice Case 8.1: Working in tight quarters for a third constraint that interferes with project schedules.8.2 Types of Resource Constraints LO 8-2 Identify different types of resource constraints. Resources are people, equipment and materials that can be used to achieve something. In projects, the availability or unavailability of resources often affects how projects are managed.1. People. This is the most obvious and important design feature. Human resources are usually classified by the skills they bring to the project - for example, programmer, mechanical engineer, welder, inspector, marketing manager, supervisor. In rare cases, some skills are interchangeable, but usually at a loss of productivity. The many different skills of human resources add to the complexity of project planning.2. Materials. Project materials cover a wide range - for example, chemicals for a science project, concrete for a road project, research data for a marketing project. Material availability and scarcity have been blamed for delaying many projects. When material unavailability is known to be significant and likely, materials should be included in the project network plan and schedule. For example, the delivery and installation of an oil rig in a Siberian oil field takes a very short time during a summer month. Any delay in delivery means an exact one year delay. Another example in which material is the main resource provided was the renovation and replacement of some structures on the Golden Gate Bridge in San Francisco. Work on the project was restricted to the hours of midnight to 5am, with a fine of $1,000 per minute for any work carried out after 5am.
page 263 replacement structures were an extremely important part of managing the project's five-hour work window. Materials planning has also become important in product development where time to market can lead to loss of market share.3. Equipment. Equipment is usually listed by type, size and quantity. In some cases, equipment may be changed to improve schedules, but this is not common. Equipment is often overlooked as a limitation. The most common oversight is to assume that the resource pool is more than adequate for the project. For example, if a project needs a bulldozer six months from now and the organization has four, it is common to assume that the resource will not delay the pending project. the pool can be used for other projects. In multi-project environments, it is wise to use a common resource pool for all projects. This approach enforces resource availability control across projects and reserves equipment for project-specific needs in the future. Recognizing equipment limitations before the project begins can avoid high lock-in or delay costs. the project manager should classify the project as time or resource constrained. Project managers should consult their priority table (see Figure 4.2) to determine which case fits their project. A simple test is to ask, "If the critical path is delayed, will resources be added to get back on schedule?" If the answer is yes, assume that the project is time bound. If not, assume the project is resource constrained. A time-bound project is one that must be completed by an imposed date. If necessary, resources can be added to ensure that the project is completed by a certain date. While time is the critical factor, the use of resources should be no more than necessary and sufficient. A resource-constrained project is one that assumes that the level of available resources cannot be exceeded. If resources are insufficient, it is acceptable to delay the project, but as little as possible.
page 264 In terms of scheduling, time-constrained means that time (project duration) is fixed and resources are flexible, while resource-constrained means that resources are fixed and time is flexible. Methods for scheduling these projects are presented in the next section. 8.4 Assumptions of Resource Allocation Methods The ease of demonstration of the available allocation methods requires some restrictive assumptions to maintain attention to the heart of the problem. The rest of the chapter depends entirely on the assumptions noted here. First, division activities will not be allowed. Splitting refers to stopping work on one task and assigning resources to work on a different task for a period of time and then reassigning them to work on the original task. Nosplitting means that once an activity is placed on the schedule, it is assumed to work continuously until it is completed. Second, the level of resources used for an activity cannot be changed. These limiting assumptions do not hold in practice, but they simplify learning. It is easy for new project managers to deal with the realities of separating activities and changing resource levels when they encounter them on the job. Time-bound projects focus on resource usage. When demand for a particular type of resource is volatile, it is difficult to manage and utilization can be very poor. Practitioners have attacked the utilization problem by using resource leveling techniques that balance the demand for a resource. Basically, all leveling techniques delay non-critical activities
page 265 using positive relaxation to reduce peak demand and fill valleys for resources. An example will show the basic process for a time-limited project. See Figure 8.3.FIGURE 8.3  Botanical Garden For demonstration purposes, the Botanical Garden project uses only one resource (excavations). all backhoe loaders are interchangeable. The top line chart shows the activities on a time scale. Dependencies are shown with connecting vertical arrows. the horizontal arrows
the following activities represent the float activity (for example, irrigation takes six days to complete and has six days off). The number of backhoe loaders required for each job is shown in the shaded activity duration block (rectangle). After the land has been drained and the plan drawn up, work can begin simultaneously on walkways, irrigation, fencing and retaining walls. The middle graphic shows the feature profile for backhoe loaders. For periods 4 through 10, four backhoe loaders are required. As this project is declared time-bound, the objective will be to reduce the peak demand on the resource and thus increase resource utilization. A quick look at the ES (early start) resource load chart suggests that only two activities have slack that can be used to reduce spikes - fences and walls provide the best option for smoothing out resource needs. Another option could be irrigation, but this would result in an upward resource profile. The selection will likely focus on the activity deemed to have the lowest risk of delay. The resource load smoothing graph shows the effects of delay activity for fences and walls. Note the differences in resource profiles. The important point is that the resources required during the life of the project have been reduced from four to three (25 percent). Also, the profile has been smoothed, which should be easier to manage. The Jardim Botânico project schedule achieved all three smoothing objectives: Peak demand for the resource was reduced. The number of resources during the project's lifetime has been reduced. Fluctuations in resource demand have been minimized. Smoothing improves resource utilization. Backhoe loaders are not easily moved from one location to another. There are costs associated with changing the level of required resources. The same analogy applies to moving people between projects. It is well known that people are more efficient if they can focus their efforts on one task instead of multitasking, for example, three projects. The downside to leveling is the loss of flexibility that occurs due to reduced distance. The risk of activities delaying the project also increases, as reducing slack can create more critical and/or closed activities.
page 266 critical activities. Going too flat for a perfectly flat feature profile is dangerous. Every activity then becomes critical. The Botanic Garden example gives a sense of the time constraint problem and the smoothing approach. However, in practice the size of the problem is too complex even for small projects. Manual solutions are impractical. Fortunately, software packages available today have very good routines for leveling project resources. Typically, they use activities that have slower project resources. The logic is that the activities with the most relaxation represent the least risk. While this is generally true, other risk factors such as reduced flexibility in using reallocated resources to other activities and the nature of the activity (easy, complex) are not addressed using such simple logic. It is easy to test several alternatives to find the one that best suits your project and minimizes the risk of delay. Resource-Constrained Projects LO 8-4 Describe how the leveling approach is used for resource-constrained projects. or the equipment is not sufficient to meet peak demands and it is impossible to acquire more, the project manager faces a resource constraint problem. Something has to give. The trick is to prioritize and allocate resources to minimize project delay without exceeding the resource limit or changing the technical relationships of the network. The resource scheduling problem is a large combinatorial problem. This means that even a moderately sized network of projects with a few types of operations can have several thousand viable solutions. Some researchers have demonstrated optimal mathematical solutions to the resource allocation problem, but only for small networks and few resource types (Arrow & Hurowicz, 2006; Talbot & Patterson, 1979; Woodworth & Shanahan, 1988).
solutions (eg linear programming) impractical. An alternative approach to the problem was to use heuristics (rules of thumb) to solve large combinatorial problems. These practical decisions or priority rules have been in place for many years. Heuristics do not always produce an optimal schedule, but they are very capable of producing a "good" schedule for very complex networks with many types of resources. The effectiveness of different rules and combinations of rules has been well documented (Davis & Patterson, 1975; Fendly, 1968). However, since each project is unique, it is advisable to test multiple sets of heuristics on a network to determine priority allocation rules that minimize project delay. Computer software available today makes it easy for the project manager to create a good resource schedule for the project. A simple example of the heuristic approach is presented here. The heuristic allocates resources to activities to minimize project delay. That is, the heuristics prioritize which activities receive allocated resources and which activities are deferred when resources are insufficient. The parallel method is an iterative process that starts at the beginning of the project time and when the required resources exceed the available resources, it keeps the activities first based on priority rules:1. Minimum distance.2. Shorter duration.3. Lowest activity ID number. Those that cannot be scheduled without delaying others are pushed further back in time. However, do not try to move activities that have already started. When considering the activities that should not be delayed, consider the resources that each activity uses. In any period where two or more activities require the same resource, priority rules apply. For example, if in period 5 three activities are eligible to start (ie have the same SE) and require the same resource, the first activity placed on the schedule will be the activity with the least slack (rule 1). However, if all activities had the same variance, the next rule would be invoked (rule 2) and the activity with the shortest duration would be placed first on the schedule. very rarely
In cases where all eligible activities have the same slack and duration, the tie is broken with the lowest activity ID number (rule 3), as each activity has a unique ID number. ) for sequential activities that are not yet on schedule will be delayed (and all sequential activities that do not have free slack) and their slack will be reduced. In subsequent periods the process is repeated until the project is scheduled. The process is shown below. see Figure 8.4. The shaded areas in the resource load graph represent the "scheduling range" of the time-constrained schedule (ES to LF). You can schedule the resource anywhere within the range and not delay the project. Scheduling activity beyond the LF will delay the project. FIGURE 8.4  Resource-constrained schedule to period 2–3

page 267 The parallel method:PeriodAction See Figure 8.4.0–1 Only activity 1 is appropriate. 2 developers required. Load activity 1 into the schedule.1–2No activities can be scheduled.2–3Activities 2, 3, and 4 can be scheduled. Activity 3 has the least slack (0) — apply rule 1. Load activity 3 into the program. Activity 2 is next with slack 2. However, activity 2 requires 2 developers and only 1 is available. Delay Activity 2. Update: ES=3, Slack=1. The next appropriate activity is Activity 4, as it only requires 1 developer. Load activity 4 into the program. See Figure 8.5.3–4Activity 2 is appropriate, but exceeds the limit of 3 developers in the pool. Activity 2 slack. Update: ES = 4, slack = 0.4–5 Activity 2 is eligible, but exceeds the limit of 3 developers in the pool. Delay Activity 2. Update: ES = 5, LF = 11, slack = −1. Delay Activity 7. Update: ES = 11, LF = 13, Slack = −1.5–6 Activity 2 is appropriate, but exceeds the limit of 3 developers in the pool. Delay activity 2. Update: ES = 6, LF = 12, slack = −2. Delay activity 7. Update: ES = 12, LF = 14, slack = −2.6–7 Activities 2, 5, and 6 are suitable with slack −2, 2, and 0, respectively. Load activity 2 into the schedule (rule 1). Since activity 6 has 0 slack, it is the next eligible activity. Load activity 6 into the schedule (rule 1). Scheduler limit of 3 reached. Delay Activity 5. Update: ES = 7, Slack = 1.7–8 Limit reached. No developer available. Delay Activity 5. Update: ES = 8, Slack = 0.8–9 Threshold met. No developer available.
page 268 page 269 Delay Activity 5. Update: ES = 9, LF = 11, Slack = −1.9–10 Limit met. No developer available. Delay Activity 5. Update: ES = 10, LF = 12, Slack = −2.10–11 Activity 5 is appropriate. Load activity 5 into the program. (Note: Activity 6 is not relaxed because there are no developers available—maximum 3).11–12No activity qualifies.12–13Activity 7 qualifies. Load activity 7 into the program. Developers are limited to three. Follow the steps described in Figures 8.4 and 8.5. Notice how the three developer limit starts to slow down the project. Notice how you need to update each period to reflect changes in early start and late activity so that the heuristics reflect the changing priorities. When the parallel scheduling method is used, the network in Figure 8.5 reflects the new schedule date of 14 time units instead of the time-bound project duration of 12 time units. The grid has also been revised to reflect the new start, end and swing times for each activity. Note that activity 6 is still critical and has a delay of 0 units of time because no resources are available (used in activities 2 and 5). Compare the slack for each activity found in Figures 8.4 and 8.5. The reaction has been significantly reduced. Notice that activity 4 only has 2 units of slack instead of what looks like 6 units of slack. This is because only three developers are available and needed to meet the resource requirements for activities 2 and 5. Note that the number of critical activities (1, 2, 3, 5, 6, 7) has increased from four to six. FIGURE 8.5 Schedule with resource constraints in period 5-6
page 270 This small example shows the resource scheduling scenario in real projects and the resulting increased risk of delays. In practice, this is not a trivial problem! Managers who fail to plan
Resources often face this scheduling risk when it is too late to resolve the issue, resulting in project delays. Because manual use of the parallel method is impractical in real-world projects due to size, project managers will rely on software programs to schedule project resources.8.5 Computational Demonstration of Resource Constrained Scheduling LO 8-5 Understand how project management software creates resource constrained schedules. Fortunately, project management software is capable of evaluating and solving complex resource-constrained schedules using heuristics similar to those described in the previous section. We will use EMRproject to show how this is done using MS Project. It is important to note that the software does not "manage" the project. Software is simply a tool that the project manager uses to view the project from different perspectives and circumstances. See Practice Case 8.2: Evaluating Resource Allocation for more tips on evaluating resource issues. PRACTICE 8.2 Evaluating Resource Allocation One of the strengths of project management software is its ability to identify and provide options for solving resource allocation problems. A project manager using MS Project shared the following checklist for handling resource conflicts after pre-allocation of resources.1. Assess if you have overcommitment issues (see Red in resource sheet view).
page 2712. Identify where and when conflicts occur by looking at the resource usage view.3. Solve the problem with. Replace overallocated resources with available appropriate resources. Then ask if that solves the problem. If not: b. Use the slack tool and select the layer in the slack.i option. Does this solve the problem? (Are resources still over-allocated?) ii. Check the network sensitivity and ask if this is acceptable. If not: c. Consider the division of labour.i. Be sure to readjust the task durations to account for the additional startup and shutdown time.4. If 3 doesn't work, then listen. Use the tier tool's standard option and ask if you can live with the new end date. If not: b. Negotiate additional resources to complete the project. If not possible: c. Consider reducing the scope of the project to meet the deadline. While this checklist makes specific reference to MS Project, the same steps can be used with most project management software. EMR is the name given to a portable electronic medical reference guide developed for use by emergency medical technicians and paramedics. Figure 8.6 contains a time-constrained network for the design phase of the project. For the purposes of this example, we assume that only design engineers are required for jobs and that design engineers are interchangeable. The number of engineers required to perform each task is noted on the grid, where 500 percent means five design engineers are needed for the activity. For example, activity 5, feature specifications, requires four design engineers (400 percent). The project starts on January 1st and ends on February 14th, lasting 45 working days. The project log is set to run seven days a week so the reader can more easily track and see results and resource impacts—similar to the manual solutions presented in the chapter exercises. The limited (constrained) time bar chart for the project is shown in Figure 8.7.
This bar graph incorporates the same information used to develop the project network, but presents the project in the form of a bar graph along a timeline. Finally, a resource usage graph for a portion of the project - January 15th to January 23rd - is presented. see Figure 8.8A. Note that the time-limited project requires 21 engineer engineers on January 18 and 19 (168 hours / 8 hours per engineer = 21 engineers). This segment represents the peak requirement for design engineers for the project. However, due to lack of design engineers and other project commitments, only 8 engineers can be assigned to the project. This creates overcommitment problems, which are more clearly described in Figure 8.8B, which is a resource loading chart for design engineers. Note that the peak is 21 mechanics and the limit of 8 mechanics is shown by the gray shaded area. This solution will keep the original expiration date. However, as expected, this does not solve all allocation issues. The next option is to let the software apply programming heuristics and relax. The new schedule is contained in the revised resource-constrained network graph shown in Figure 8.9. The resource constrained project network shows that the project duration has now been extended to 2/26 or 57 business days (instead of the limited time of 45 days). The critical path is now 2, 3, 9, 13. Figure 8.10 shows the bar graph of the project and the results of smoothing the project schedule to reflect the availability of only eight design engineers. Application of the heuristic can be seen in internal project planning activities, external specifications and resources. All three activities were originally planned to begin immediately after Activity 1, Architectural Decisions. This is impossible as the three activities collectively require 14 engineers. The software chooses to schedule activity 5 first because this activity is on the original critical path and has zero slack (heuristic rule #1). ) the internal specifications, activity 3, are behind due to the limitation of 8 design engineers. Note that the original critical path is no longer valid due to resource dependencies created by having only eight design engineers. See Figure 8.9 for the original planned critical path.
page 272page 273Compare the bar chart in Figure 8.10 with the time-bound bar chart in Figure 8.7. For example, notice the different start dates for activity 8 (screen). ) is 02/16, almost a month later!FIGURE 8.6  EMR Project Network View Timeline Before Resource LevelingFIGURE 8.7  EMR Project Before Features
page 274FIGURE 8.8A  EMR Project — Time-Bound Resource Usage View, January 15-23 FIGURE 8.8BR Resource Load Chart for EMR Project, January 15-23
page 275 Although resource bar graphs are commonly used to illustrate allocation issues, we prefer to display resource utilization tables like the one shown in Figure 8.8A. This table tells you when you have an overcommit problem and identifies the activities that cause the overcommitment. and near-critical activities. Programming complexity increases because resource constraints are added to technical constraints. Start times can now have two constraints. The traditional concept of the critical path of sequential activities from the beginning to the end of the project no longer makes sense. Resource constraints can break the sequence and leave the network with a disconnected set of critical activities.1 On the other hand, parallel activities can become sequential. Activities with slack in a time-constrained network can change from critical to non-critical.
page 276page 277FIGURE 8.10  Flattened EMR design features
8.6 Division of ActivitiesLO 8-6Understand when and why division of duties should be avoided. Task segregation is a scheduling technique used to achieve better project scheduling and/or to increase resource utilization. A scheduler analyzes the ongoing work involved in an activity by stopping 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. Unbundling can be a useful tool if the work required does not involve large start-up or shutdown costs - for example, moving equipment from one job site to another. operating and decommissioning costs. For example, having a bridge designer take time off to work on another project's design problem can cost those individual four days to switch the conceptual tool in and out of two activities. The cost may be hidden, but it is real. Figure 8.11 illustrates the nature of the division problem. The original activity has been split into three separate activities: A, B, and C. The shutdown and startup times extend the time of the original activity. One study reported that switching tasks can cost 20% to 40% in lost efficiency (Rubinstein, Meyer, and Evans, 2001). FIGURE 8.11 Division of activities
page 278 Some have argued that the tendency to deal with resource scarcity through division is one of the main reasons why projects do not meet schedule (see Goldratt, 1997; Newbold, 1997). We agree. Planners should avoid the use of segregation as much as possible, except in cases where the cost of segregation is small or when there is no alternative to solve the resource problem. The computer software offers the split option for each activity. use them sparingly.8.7 Benefits of Scheduling Resources It is important to remember that if resources are truly constrained and activity time estimates are accurate, the resource-constrained schedule will materialize as the project is implemented - not the project itself. Therefore, failure to schedule limited resources can lead to serious problems for a project manager. The benefit of creating this schedule before the project starts is allowing time to consider reasonable alternatives. If the planned delay is unacceptable or the risk of delay is too high, the resource constraint assumption may
reassessed. Time-cost trade-offs may be considered. In some cases, priorities may change. See Practice Case 8.3: US Forest Service Resource Shortage. Resource schedules provide the information you need to budget work packages in time phase with dates. Once established, they provide a quick means for a project manager to assess the impact of contingencies such as turnover, equipment breakdowns, or relocation of project personnel. Resource schedules also allow project managers to assess how much flexibility they have in certain resources. This is useful when receiving requests from other administrators to borrow or share resources. Responding to such requests creates goodwill and an "IOU" that can be redeemed in a time of need. PRACTICE 8.3 US Scenario Scarcity of Forest Service Resources An important part of the forest management work for the US Forest Service (USFS) is the sale of mature wood to logging companies that export the wood under contract terms monitored by the service. The funds are returned to the federal government. The budget allocated to each forest depends on the two-year plan submitted to the US Department of Agriculture. Olympia Forest headquarters in Olympia, Washington developed a two-year plan as a basis for funding. All forest districts submitted their timber sales projects (over 50) to headquarters, where they were compiled and consolidated into a forest-wide project plan. The first computer run was reviewed by a small group of senior executives to determine if the design was logical and "doable." Management noted with satisfaction and relief that all projects appeared to be viable within two years until a computer printing issue arose. "Why are all the columns in these projects labeled 'RESOURCES' in white?" An engineer's response was "We don't use this part of the program". The new production was amazing. The two-year program turned into a three-and-a-half-year program due to the lack of skilled manpower, such as a road engineer and an environmental impact specialist. The analysis showed that adding just three qualified people would allow the two-year program to be completed on time. In addition, further analysis showed that hiring a few more qualified people in addition to the three would allow an additional year of projects to be squeezed into the two-year schedule. This would result in additional revenue of over $3 million. The Department of Agriculture quickly approved the requested additional dollars for additional staff to generate additional revenue.
page 279 Darinburt/Getty Images 8.8 Assigning Project Work OO 8-7 Identify general guidelines for assigning people to specific tasks. . In this way, there is a natural tendency to assign the best people the most difficult tasks. Project managers must be careful not to overdo it. Over time, these people may resent the fact that they are always assigned the most difficult tasks. At the same time, less experienced participants may resent the fact that they never have the opportunity to broaden their skills/base. performance with the need to develop the talents of the individuals assigned to the project. Project managers must decide not only who does what, but also who works with whom. Several factors must be considered in deciding who to work with. First, to minimize unnecessary strain, managers should select individuals with compatible but complementary work habits and personalities (ie, one person's weakness is another's).
power of the atom). For example, a person may be smart at solving complex problems but sloppy at documenting their progress. It would be wise to pair this person with someone who is good at paying attention to detail. Experience is another factor. Veterans should join new hires—not only so they can share their experience, but also to help socialize newcomers to the organization's mores and norms. Finally, future needs must be considered. If managers have some people who have never worked together before but need to do so later in the project, it might be wise to take opportunities for these people to work together early on so they can get to know each other. Finally, check out Practice Snapshot 8.4: Managing Geeks for some interesting insights from the former Google CEO on how to build teams. CASE STUDY 8.4 Managing Geeks* Eric Schmidt, after a successful career at Sun Microsystems, took on Novell, Inc. and helped overthrow it in two years. Four years later, he became the CEO of Google. One of the keys to his success is his ability to manage the technical assistants who build the sophisticated systems, hardware and software that form the backbone of electronically driven businesses. He uses the term "geek" (and he can, since he is one, with a PhD in computer science) to describe this group of technologists who rule the cyber world. Schmidt has some interesting ideas about assigning geeks to projects. He believes that putting geeks together in project teams with other geeks creates productive peer pressure. Geeks care a lot about how other geeks perceive them. They are good at judging the quality of technical work and are quick to praise and criticize each other's work. Some geeks can be insufferably arrogant, but Schmidt argues that getting them to work together on projects is the best way to control them — to let them control each other. At the same time, Schmidt argues that many geeks spoil the soup. By this he means that when there are a lot of geeks on a development team, there is a tendency for navel-gazing. Members overlook deadlines and delays are inevitable. To combat this tendency, he recommends using geeks only in small groups. He insists on breaking big projects into smaller, more manageable projects so they can be assigned to small teams of geeks. This keeps the project on schedule and keeps teams accountable to each other.
page 280*Russ Mitchel, “How to Manage Geeks,” Fast Company, May 31, 1999, pp. as part of a single project. In fact, resource allocation usually occurs in a multi-project environment, where the requirements of one project must be reconciled with the needs of other projects. Organizations must develop and manage systems to effectively allocate and schedule resources across multiple projects with different priorities, resource requirements, activity sets, and risks. The system must be dynamic and capable of accepting new projects as well as reallocating resources once project work is completed. While the same principles and resource considerations that apply to a single project apply to this multi-project environment, the applications and solutions are more complex given the interdependencies between projects. The following are three of the most common problems encountered in managing multi-project resource schedules. Note that these are macro-manifestations of single-project themes that are now scaled to a multi-project environment.1. General schedule delay. Because projects often share resources, delays in one project can have a ripple effect and delay other projects. project.2. Inefficient use of resources. Because projects have different timelines and requirements, there are peaks and valleys in the overall resource requirements. For example, a company may have a team of 10 people
page 281 electricians to meet peak demand when, under normal conditions, only 5 electricians are needed.3. Resource congestion. Delays and schedules are stretched as a result of shortages of critical resources required by various projects. For example, at one Lattice Semiconductor facility, project schedules were delayed by competition for access to test equipment needed to debug programs. Similarly, many projects in a US forest district were extended because there was only one forester on staff. To address these issues, more and more companies are creating project offices or departments to oversee the scheduling of resources across projects. One approach to scheduling resources for multiple projects is to use a first-come, first-served rule. A project queue system is created in which current projects override new projects. New project schedules are based on projected resource availability. afternoon. The disadvantages of this deceptively simple approach are that it does not use resources optimally or take project priority into account. See Practice Case 8.5: Multi-Project Resource Scheduling. Many companies use more complex processes to schedule resources to increase the organization's ability to initiate projects. Most of these methods address the problem by treating individual projects as part of a larger project and adapting previously introduced scheduling heuristics for that “mega-project”. Project planners monitor resource usage and provide updated schedules based on progress and resource availability across projects. A huge improvement in project management software in recent years is the ability to prioritize the allocation of resources to specific projects. Projects can be prioritized in ascending order (eg 1, 2, 3, 4,...) (Note: This enhancement is a perfect fit for organizations using project prioritization models similar to those described in Chapter 2.) Centralized project scheduling also makes it easier to identify resource bottlenecks that prevent projects from moving forward. Once bottlenecks are identified, their impact can be documented and used to justify purchasing additional resources.
equipment, hire critical personnel, or delay the project. 8.5 Scheduling multiple project resources The case of a central source overseeing the scheduling of project resources is well known to practitioners. Here is a summary of a conversation with a middle manager. Interviewer: Congratulations on accepting the multi-project scheduling proposal. Everyone tells me you were very persuasive. Middle Manager: Thank you. Gaining acceptance was easy this time. The board quickly recognized that we have no choice if we want to stay ahead of the competition by allocating our resources to the right projects. Interviewer: Have you presented this to the board before? Middle Manager: Yes, but not in this company. I presented the same speech at the company I worked for two years ago. For the annual review meeting, I was tasked with presenting a proposal suggesting the need and benefits of central competency resource planning for the company's project management. critical projects. I explained how benefits like resource requirements will be aligned with mission-critical projects, proactive resource planning, and a tool to detect resource bottlenecks and resolve conflicts. Almost everyone agreed that the idea was good. I felt good about the performance and confident that something was going to happen. But the idea never got off the ground. just disappeared into the sunset. In hindsight, managers didn't really trust colleagues in other departments, so they half-heartedly supported central resource planning. The rulers wanted to protect their territory and ensure that they would not have to give up power. The culture there was simply too rigid for the world we live in today. They still struggle with constant conflicts between projects. I'm glad he switched to this company. The culture here is much more team-oriented. Management is committed to improving performance. Finally, many companies use outsourcing as a means of dealing with their resource allocation problems. In some cases, a company will reduce the number of projects it needs to manage internally to core projects and outsource non-critical projects to contractors and consulting firms. In other cases, specific parts of the project are outsourced
page 282 overcoming feature deficiencies and programming issues. Companies can hire temporary workers to expedite some delayed activities or hire project work during peak periods when there are not enough internal resources to meet the demands of all projects. The ability to more effectively manage project ebbs and flows is one of the main drivers behind outsourcing today. Using the project schedule, you can divide work packages into phases and assign them to their respective planned activities to develop a budget schedule for the life of the project. It is very important to understand why you are gradually adjusting your budget. Without a time-phased budget, good project planning and cost control is impossible. the following scenario. New product development is to be completed in 10 weeks at an estimated cost of $400,000 per week, for a total cost of $4 million. Management wants a status report at the end of 5 weeks. The following information was collected: The planned cost for the first 5 weeks is $2,000,000. The actual cost for the first 5 weeks is $2,400,000. HOW ARE WE GOING? It would be easy to conclude that there is a $400,000 cost overrun. But we really have no way of knowing. THE
$400,000 may represent money spent to move the project forward. Assume another set of data at the end of 5 weeks: Planned costs for the first 5 weeks are $2,000,000. The actual cost for the first 5 weeks is $1,700,000. Is the project costing $300,000 less than expected? Maybe. But the $300,000 may represent the fact that the project has been delayed and work has not begun. Is the project late and costly? We can't tell from this data. The many systems that exist in the real world that use only planned funds (fixed burn rate) and actual costs can provide false and misleading information. There is no way to be sure how much of the physical work has been done. These systems do not measure how much work was done for the money spent! Therefore, without the cost of timesharing to match the project schedule, it is impossible to have reliable information for audit purposes. you can create a time base of costs. Recall from the WBS for PCProject in Chapters 4 and 5 that we incorporated the WBS and OBS separation framework so that work packages could be tracked by deliverable and responsible for the organization. See Figure 8.12 for an example of a PC Prototype Project organized by a deliverable and responsible organizational unit. For each intersection of the WBS/OBS table, you see the work package budgets and total costs. The total cost at each intersection is called a cost or control account. For example, at the intersection of the read/write head delivery and the Production Department, we see that there are three work packages with a total budget of $200,000. The sum of all cost accounts in a column should represent the total cost for the delivery. On the other hand, the sum of the cost accounts in the series should represent the cost or budget of the organizational unit responsible for
performing the task. You can continue to raise costs in the WBS/OBS to the total project cost. This WBS provides information that you can use to divide work packages into phases and map them to their respective planned activities throughout the project. the following information needs to be developed: 1. Define the task (what).2. Determine the time to complete a work package (how much time).3. Determine a time-phased budget to complete a work package (cost).4. Determine the resources required to complete a work package (how much).5. Designate a single person responsible for the work units (who).6. Identify monitoring points to measure progress (how well).
page 283page 284Number three, phasing in the work package, is critical to the final step of creating your budget baseline. The time-phased job packaging process, which is illustrated below, is shown in Figure 8.13. The work package lasts three weeks. Assuming that labor, materials, and equipment are tracked separately, the labor package costs for the job are spread over the three weeks as expected—$40,000, $30,000, and $30,000. 50,000 for each week respectively. When the three-week work package is placed on the network schedule, the cost is allocated to the cycle budget for the same scheduled three weeks. Fortunately, most individual WPs become an activity and the cost allocation process is relatively simple. That is, the relationship is one to one. This budget planning is directly from the work package to the activity. FIGURE 8.13 Time-Phase Work Package Budgeting (Job Costs Only) In some cases, an activity will include more than one work package, where the packages are assigned to a responsible person or department and delivered. In this case, the work packages are consolidated into a single activity. As shown in Figure 8.14, this activity involves two WPs. The first, WP-1.1.3.2.4.1 (Code), is distributed in the first three weeks. The second, WP-1.1.3.2.4.2 (Integration), is classified in weeks 3 and 4. The duration of the activity is four weeks. When the activity is placed on the schedule, the cost
distributed from the beginning of the program - $20,000, $15,000, $75,000 and $70,000, respectively. schedule as they are expected to occur during the project. The result of these budget allocations is the project cost baseline (also called planned value - PV), which is used to determine cost and schedule variances as the project is implemented. basic work package budgets. Figure 8.16 shows the incremental project budget for the Patient Admission project and the cumulative graph of the project budget baseline. In this figure, you can see how the time-phased work package costs were networked and how the cumulative project budget diagram for a project is developed. Note that costs do not need to be distributed linearly, but costs should be placed as you expect them to occur. FIGURE 8.15  Patient Entry Project Network
page 285 FIGURE 8.16 Assigned work packages at the time of patient entry
page 286 You have now developed complete time and cost plans for your project. These project baselines will be used to compare planned schedule and cost using an integrated system called earned value. The implementation and use of project baselines to measure performance is discussed in detail in Chapter 13. By establishing the project budget baseline, you can also create cash flow statements for the project, such as the one shown below in Figure 8.17 . Such statements prepare the company to cover the costs during the life of the project. Finally, by finalizing resource assignments, you can create resource usage schedules for your project (see Figure 8.18). These schedules map out the full deployment of personnel and equipment and can be used to create individual work schedules.
FIGURE 8.18 Weekly project resource usage schedule
page 287SummaryA project schedule is not a schedule until resources are allocated. If resources are insufficient, work sequences are likely to be affected and the schedule extended. If resources are sufficient, it may be beneficial to "soften" the resources to improve their use. The results after resource scheduling are often significantly different from the results of the standard CPM method. With rapid changes in technology and an emphasis on time-to-market, identifying resource utilization and availability issues before the project begins can save the cost of disrupting project activities later. Any resource deviations from plan and schedule that occur during project implementation can be quickly recorded and the effect observed. Without this immediate update capability, the true negative impact of a change may not be known until it occurs. Link resource availability to a multiple project, multiple
The resource system supports a project prioritization process that selects projects for their contribution to the organization's goals and strategic plan. Assigning people to projects may not mesh well with those assigned by computer software routines. In these cases, substituting the computer solution to accommodate individual differences and abilities is almost always the best option. The resource schedule serves as the basis for developing the time-phased project cost budget baseline. The baseline (planned value, PV) is the sum of the cost accounts, and each cost account is the sum of the work packages in the cost account. Remember, if your budget costs are not timed, you won't have a reliable way to measure performance. While there are many types of project costs, the cost baseline is generally limited to direct costs (such as labor, materials, equipment) that are controlled by the project manager. other overheads may be added to the project cost separately. Key Terms Heuristic, 266 Leveling, 264 Scheduled Value (PV), 284 Resource Constrained Project, 263 Resource Constrained Scheduling, 260 Resource Smoothing, 260 Allocation, 263 Time Constrained Project, 263 Questions Budget Base 1 Base 2 with timeline. How does resource planning relate to project prioritization?
page 2882. How does resource scheduling reduce flexibility in project management?3. Give six reasons why resource planning is an important task.4. How can outsourcing project work mitigate the three most common issues associated with multi-project resource planning? Explain the risks associated with resource leveling, project squeeze or stoppage, and imposed durations or “catch-up” during project implementation.6. Why is it critical to develop a time-phased baseline? PRACTICE DISCUSSION QUESTION MOMENT8.1 Working in tight quarters1. Can you think of other examples where the physical environment limits the work of the project? What do you think would have happened if the Washington Forest Service had not assessed resource impact in its biennial plan?8.4 Managing Geeks1. Do you agree that geeks are different from other workers? Why would people resist a multi-project resource planning system?
page 2891. Review a project with an accompanying Gantt chart. Stella is their only electrical engineer and is responsible for activities 3 and 4, which overlap. Level the project so that Stella works at most 8 hours per day. What would the new Gantt chart look like? What will be the new project completion date? Consider a project with the following Gantt chart to answer Exercises 2 and 3.2. Bjorn and Thor are plumbers scheduled to work on the construction of a new school building. Shortly before the start of the project, Bjorn broke his arm and was unable to work on the project. NowThor must attend to his own business as well as Bjorn's. Horizontalize the project Gantt chart so that Thor is responsible for activities 3, 4, 6, and 7. What is the project's new estimated completion date? Let's say that instead of assigning Bjorn's work to Thor, you were given the opportunity to hire two new plumbers to do Bjorn's work (shortening it by 50%). What would be the estimated completion date of the new project? Show your work.4. Given the following network design, calculate the start, delay, and idle times. What is the duration of the project? Using whatever approach you like (for example, trial and error), develop a load chart for Resources, Electrical Engineers (EE) and Resources, Mechanical Engineers (ME). Assume that there is only one of each feature. Given your resource schedule, calculate your project's start times, delays, and delays.
page 290 What activities are now critical? How long is the project now? Could this happen in real projects?5. Given the following network design, calculate the start, delay, and idle times. What is the duration of the project? Using whatever approach you like (for example, trial and error), develop a load chart for carpenters (C) and electricians (E) resources. Suppose only one carpenter is available and two electricians. Given your resource schedule, calculate the start, delay, and end times
for your project. What activities are now critical? How long is the project now? 6. Calculate the start, delay, and delay times for activities in the next network, assuming a time-constrained network. Which activities are critical? What is the duration of the time-limited project? Note: Remember that in the schedule resource load chart the time-bound scheduling range (ES to LF) is shaded. Any resources scheduled beyond the shaded area will delay the project. Let's say you only have three resources and you're using software that schedules projects in parallel and using heuristics. Schedule only one session at a time!
page 291 Minimum Clearing Shorter Duration Shorter ID Keep a record of each activity change and update you make each period—for example, period 0–1, 1–2, 2–3, etc. (Use a format similar to the one on page 267.) The record must include any changes or updates to ES, LF, and off times for each period, scheduled activities, and delayed activities. (Hint: Remember to keep technical network dependencies in mind.) Use the resource loading chart to help with planning (see Figures 8.4 and 8.5). Record the order in which you planned the project activities. critical? Recalculate your slack for each activity, taking into account your new schedule. What is the slack for activity 1? 4? 5?
page 292 page 2937. You have prepared the following schedule for a project where the primary resource is a tractor.* There are three tractors available for the project. Activities A and D require one tractor to complete, while activities B, C, E and F require two tractors. Develop a resource-constrained schedule in the loading diagram below. Use the provided parallel method and heuristics. Be sure to update each period as your computer would. Record Early Start (ES), Late Finish (LF) and Slack (SL) for the new schedule.8. Deploy a resource program in the loading diagram below. Use the provided parallel method and heuristics. Be sure to update each period as your computer would. Note: Activities 2, 3, 5 and 6 use two of the resource skills. Three of the resource skills are available. How has slack changed for each activity? Has the risk of being late changed? As?
page 2949. You have prepared the following schedule for a project where the primary resource is an excavator. This program is based on three backhoe loaders. You get a call from your partner, Brooker, who is in desperate need of one of your backhoe loaders. You tell Brooker that you are willing to let him have the digger if he can still complete his project in 11 months. Develop a resource schedule on the loading chart below to see if you can complete the project in 11 months with only two backhoe loaders. Be sure to record the order in which you schedule the activities using the scheduling heuristics. Activities 5 and 6 require two
page 295 backhoe loaders, while activities 1, 2, 3 and 4 require a backhoe loader. Non-allocation of activities is possible. Can you say yes to Brooker's request? 10. You are one of three carpenters assigned to complete a small construction project.* Just before the project is to begin, one of your fellow carpenters is hospitalized and will not be available to work on the project. Develop a resource-constrained schedule in the loading chart below to see how long the project will take with just two carpenters. Be sure to record the order in which you schedule the activities using the scheduling heuristics. Activities A, B, C, D, E, Z and H require two Masters to complete. Activity F requires only one carpenter. It is not possible to separate the activities.
page 296 You will receive a bonus if the project is completed within 15 days. Should you start planning how you will spend your bonus?11. Considering the phased work packages, complete the basic budget form for the project.
12. Given the work packages and time phase network, complete the basic budget form for the project.
page 29713. Considering the work packages and the time phase network, complete the basic budget form for the project.*
page 29814. Considering the work packages and time phase network, complete the basic budget form for the project.

page 29915. The National Oceanic Institute is planning a global warming research study in Antarctica. The 16-month network schedule is presented below. It is followed by budgets for each activity. Create a phased budget for the research project in the format provided.
page 300*The solution to this exercise is in Appendix 1.*The solution to this exercise is in Appendix 1.*The solution to this exercise is in Appendix 1. ReferencesArrow, K. J. and L. Hurowicz, Studies in the Resource Allocation Process (New York: Cambridge University Press, 2006). and Methods”, European Journal of Operational Research, vol. 112 (1999), pp. 3–42. Burgess, A. R., and J. B. Kellebrew, “Variations in Activity Level on Cyclical Arrow Diagrams”, Journal of Industrial Engineering, vol. 13
(março/abril de 1962), pp. 76–83. Charnes, A., and W.W. Cooper, "A Network Interpretation and DirectSub Dual Algorithm for Critical Path Scheduling", Journal of Industrial Engineering (julho/agosto de 1962). Davis, E.W., and J. Patterson, "A Comparison of Heuristic and Optimum Solutions in Resource-Constraining Projects ,”Management Science, April 1975, pp. Kluwer Academic Publishers, 2002). Fendly, L. G., “Towards the Development of a Complete Multi Project Scheduling System”, Journal of Industrial Engineering, vol. 19 (1968), pp. 505–15. Goldratt, E., Critical Chain (Great Barrington, MA: North River Press, 1997). Kurtulus, I., and E. W. Davis, “Multiple Project Scheduling: Categorizing the Performance of Heuristic Rules,” Management Science (fevereiro de 1982), pp. 161–72. Reinersten, D., "Is it always a bad idea to add resources to a LateProject?" Electric Design, 30 de outubro de 2000, pp. 17–18. Rubinstein, J., D. Meyer and J. Evans, "Controle executivo de procesos cognitivos na alternância de tasks", Journal of Experimental Psychology: Human Perception and Performance, vol. 27, no. 4 (2001), pp. 763–97. Talbot, B. F., and J. H. Patterson, “Optimal Methods for Scheduling under Resource Constraints”, Project Management Journal (December 1979). Wiest, J. D., "A Heuristic Model for Scheduling Large Projects with Unlimited Resources", Ciência da Administração, vol. 18 (fevereiro de 1967), pp. 359–77. Woodworth, B. M., and C. J. Willie, "A Heuristic Algorithm for Resource Leveling in Multiproject, Multiresource Scheduling,"
page 301 Decision Sciences, vol. 6 (July 1975), pp. 525–40. Woodworth, B.M. and S. Shanahan, "Identifying the Critical Sequence in a Resource Constraint Project," International Journal of Project Management, vol. 6 (1988), pp. 89–96. Case 8.1 Blue Mountain CabinJack and Jill Smith have just retired and want to build a small basic cabin in the Blue Mountains of Vermont. They hired Darryl Hanna as the general contractor for the project. He assembled a team of three workers to complete the task: Tom, Dick, and Harry. Daryl has negotiated a cost-plus contract with the Smiths under which she will receive 15 percent on top of labor and material costs. Before signing the contract, the Smiths want an estimate of how much the project is likely to cost and how long it will take. Darryl has calculated that the cost of materials, permits, etc. will total $40,000. He wants to determine the labor cost and how long the project will take. This is one of the many projects Daryl manages, and aside from helping out occasionally, his role is strictly limited to supervision. He ended up with the following general plan and tasks. Note that Dick is the only skilled plumber in the group, while Harry is the only qualified electrician. Tom is a general carpenter and can help them with their work. Dick and Harry are paid $300 per day, while Tom is paid $200 per day. Darryl negotiated a 10% management reserve to deal with unexpected issues. Unused funds will be returned to the Smiths.
page 302 Prepare a brief proposal for the Smiths that includes a Gantt chart with assigned resources and cost estimates if the project starts on 8/1/16. Did resource constraints affect the final schedule? If so, how? What financial risks does this project face? What can the Smiths do to protect themselves from these dangers? Case 8.2 Power Train, Ltd. Note: Engine Management Team We have excellent information systems for reporting, tracking and controlling costs on design projects. Our project design is better than any I have seen from other companies. Our schedule seemed to serve us well when we were small and only had a few projects. Now that we have many more projects and schedules using multi-project software, there are many times when the right people are not assigned to projects that are considered important to our success. This situation is costing us a lot of money, headaches and stress! Claude Jones, Vice President of Operations Planning and HISTORY
Power Train (PT), Ltd., was founded in 1970 by Daniel Gage, a mechanical engineer and qualified train driver. Before founding PT, he worked for three years as a design engineer in a company that designed and manufactured transmissions for tanks and military trucks. It was a natural transition for Dan to start a business designing and building power trains for agricultural tractor companies. Today Dan is no longer on the board of PT, but is still revered as its founder. He and his family still own 25 percent of the company, which went public in 1998. PT has grown at a rate of 6 percent over the past five years, but expects industry growth to stabilize as supply exceeds demand. Today, PT continues its proud tradition of designing and manufacturing the finest quality powertrains for tractor and farm equipment manufacturers. The company employs 178 design engineers and has approximately 1,800 production and support staff. Contract design projects for tractor manufacturers account for a significant portion of PT's revenue. At any given time, approximately 45 to 60 design projects are taking place simultaneously. A small part of his design work is for military vehicles. PT only accepts military contracts that include very advanced new technologies and have increased costs. A new phenomenon attracted PT management to consider a wider market. Last year, a major Swedish truck manufacturer approached PT to consider designing engines for its trucks. As the industry consolidates, opportunities for PT are expected to increase as these large companies move towards more outsourcing to reduce infrastructure costs and remain highly flexible. Last week, a PT design engineer spoke with a German truck manufacturing manager at a conference. The German manager was already exploring transmission outsourcing for Porsche and was only too happy to remember PT's expertise in the field. A meeting is scheduled for next month. CLAUDE JONES Claude Jones joined PT in 1999 as a new MBA from the University of Edinburgh. He worked as a mechanical engineer for UK Hydraulics for five years before returning to school for his MBA. "I just wanted to be part of the management team and where the action is." Claude moved quickly through the ranks. Today he is vice president of planning and operations. Sitting in his office, Claude contemplates the conflicts and confusions that exist
The 303 page seems to be increasing in scheduling people for projects. He is really excited about the idea of ​​designing engines for big trucks. However, considering the current schedule problems of their projects, a huge increase in work would add to their problems. Somehow, these programming conflicts must be resolved before extending powertrain design to truck manufacturers is seriously considered. Claude reflects on the problems PT had last year. The MF project is the first that comes to mind. The project wasn't terribly complicated and didn't require his best design engineers. Unfortunately, the programming software assigned one of the most creative and expensive engineers to the MF project. A similar but reversed situation occurred in the Deer project. This project involved a large customer and a new hydrostatic technology for small tractors. In this project, the programming software assigned engineers unfamiliar with small tractor transmissions. Somehow, Claude believes, the right people must be kept for the right projects. If you think about it, this problem with scheduling has increased since PT moved to multi-project scheduling. Maybe a project office is needed to handle these issues. A meeting with the information technology group and software vendors was positive, but not very helpful because these people are not very interested in detailed programming problems. Suppliers have provided all kinds of evidence to suggest that the heuristics used—lowest slack, lowest duration, and ID number—are entirely effective in scheduling people and minimizing project delays. A project software vendor, Lauren, went on to say that his software would allow PT to customize the project and people schedule for almost any selected variant. Lauren kept repeating, "If the default heuristic doesn't meet your requirements, create your own heuristic." Lauren even offered to help set up the system. But she is unwilling to waste time on the problem until the PT can describe to her exactly what criteria will be used (and in what order) to select and assign people to projects. in the project schedule is resolved or significantly reduced. Claude is ready to tackle this problem, but he doesn't know where to start.
What criteria should he take into account? What should be the order for selecting and assigning people to projects? The old assistant coach entered the Tham Luang cave. Tham Luang is a large cave complex in northern Thailand, along the border with Myanmar. The cave was popular with the locals and the boys had visited Tham Luang before. ThamLuang Cave is isolated - no GPS, Wi-Fi or cell service. The last known survey was carried out in the 1980s by a French cave society, but many of the deeper recesses remain uncharted. They didn't expect to come back no problem. Monsoon rains were expected until next week, and last year, the cave began to flood by mid-July. The group did not take food with them as it was going to be a short excursion. They planned to stay maybe an hour and then go home to their parents. However, nature had different plans. Heavy monsoon rain began to fall. The wild boars at first did not know about the rain. There were three hundred feet of rock above them and they were over a mile into open forest. Heavy rain collected in rivulets that disappeared into sinkholes, running through the limestone into the cave. The water rose suddenly and rapidly, forcing the group to retreat further and further into the cave. The inside of the cave is not flat, but rises and falls as it burrows into the mountain. The group ran to higher ground as the water continued to rise. Eventually they settled on a muddy slope and waited to see if the water would continue to rise. That didn't happen.
page 304 The mother of one of the boys contacted the police when her son did not come home. A teammate who missed practice that day told People the team planned to visit the cave after practice. The parents rushed into the cave, only to find their children's bikes and cleats at the entrance and the cave flooded. This was no easy task. The Thai frogmen were used to tropical open water, not the dark, cold streams that flowed through the cave. They didn't have the equipment, let alone the experience, required for caves, where divers can't just surface if something goes wrong. The plight of the wild boars attracted international attention overnight. , and the United States, volunteered their services. At first, the foreign divers were not welcomed with open arms by the Thai military in charge of the rescue. Many of the SEAL divers thought they would need foreign help. Divers were not allowed to enter the cave. After much political negotiation, Thailand's Foreign Ministry told military chiefs to let the foreign divers go. Even experienced divers found the conditions extremely difficult. "It was like stepping into a rushing waterfall and feeling the water rushing towards you," said one diver. "It was a horizontal ascent in the water with every move." The divers entered the cave meticulously, ensuring that the necessary safety instructions were in place. Visibility was negligible at times. "If you put your hand in front of you, it just disappeared," said one diver. "I couldn't see anything." Meanwhile, on the surface, police with sniffer dogs were searching for shaft openings that might provide an alternate entrance to the cave system. caps, looking for hidden cracks in the limestone that might reveal an opening to the cave. Drones were also used, but the technology didn't exist to scan people deep underground. The local saints created a shrine at the entrance of the cave, where they chanted and communed with the cave spirit, 'Jao Mae Tham'. Searches had to be stopped several times due to heavy rains.
page 305 After the group spent 10 days in captivity without real food or water, there was little hope among the rescuers that they would discover the boys alive. First they smelled it and then they saw 13 emaciated people climbing in the dark. The wild boars were left without food and light, but survived by drinking the condensation from the cave walls. It was later reported that the assistant coach, a Buddhist, had led the boys in meditation to relax and conserve energy. The ledge where they were found was about 2.5 miles from the mouth of the cave. The next day, the Thai seals carried food, water and blankets to the wild boars. Four divers, including a doctor, would stay with them until the rescue. Thai authorities said rescuers were performing health checks, entertaining the boys, and none of them were in serious condition. Thai authorities released a video taken by rescuers and shared with the world. The video showed all 12 boys and their coach introducing themselves and giving their ages. Wrapped in emergency blankets and looking frail, each boy said hello to the outside world, "Sawasdee khrap," with palms clasped together in wai, the traditional Thai greeting. The video went viral. Soon every major news outlet in the world was covering the story. The big question then became, now that the boys had been found, how could they make it out alive? A rescue camp was set up at the entrance of the cave, where volunteers and journalists are accommodated, in addition to rescue crews. The camp was divided into zones: no-go areas for Thai Navy SEALs, other military and civilian rescuers. a place for family members to wait in privacy. and areas for the press and the general public. An estimated 10,000 people contributed to the rescue effort, including over 100 divers, 900 police officers, 2,000 soldiers and several volunteers. The equipment included 10 police helicopters, seven ambulances and over 700 diving cylinders, of which over 500 were in the cave at any one time, while another 200 were in the queue to be refilled. Tesla and Space X fame. He commissioned the engineers to build a children's submarine that
could be used to transport the boys out of the cave. Within days, a real submarine was sent to Tham Luang. Thai authorities praised the effort but concluded it was impractical given the cave's narrow passages. The trip through the cave took the team six hours against the current and five hours out with the current. The course had many boggy sections, some with strong currents and zero visibility, and other extremely narrow sections, the smallest measuring just 15 inches by 28 inches. The boys were perched on a ledge 400 meters from the beach in Pattaya, named after an above-ground beach in Thailand. Chamber 3, which was dry, will be used as a rescue base. They brought pumps to draw water from the cave. Although not a solution, efforts to drain the cave are beginning to yield results. Rocks and ledges emerged from the darkness. The most difficult passage, which previously took five hours to navigate, could now be traversed in two hours with the help of guide ropes. As the crisis unfolded, rescuers considered several different methods to save the group. The main options included waiting until the end of the monsoon season, with divers providing food and water. .Waiting until the monsoons ended in November and the water drained was the simplest solution. The boys could go out on their own. However, the logistics didn't make sense. Feeding 13 people three times a day for up to 60 days is more than 2,750 meals. Each meal had to be carried by a team of divers, who flirted with death every time they went down. This was a growing concern. Four days after finding the boys, retired Navy SEAL diver Saman Kunan was passed out when he returned after dropping three air tanks. His diving buddy unsuccessfully attempted CPR. Coonan had left his airport security job to volunteer for the rescue mission. Before this fatality, three divers had been trapped for more than three hours in the dark cave and rescue efforts had to be redirected to find them.
page 306 From the beginning, hundreds of volunteers climbed the slope in search of hidden openings. People knew the chances were slim, given the depth of the cave, but it was worth a try. Drilling through a few thousand feet of rock would require extensive infrastructure work and take a long time. In addition, there was considerable uncertainty about where the drilling would take place. The fourth option remained. None of the boys or the coach knew how to dive. Even if they could master the basics, cave diving isn't the same as an internship at a resort pool. A weakened child in the dark and breathing unnaturally through a regulator is likely to panic. However, in large stretches of the cave, he would not be able to emerge and regain his composure - he would be in a flooded tunnel. the boys would survive the trip. But pulling it off 13 times in a row would require a miracle. As the plans were drawn up, two disturbing events occurred. First, oxygen levels in the cave began to drop faster than expected. This raised fears that the boys could develop hypoxia if left for too long. On July 7, the oxygen level was measured at 15 percent. The level required to maintain normal human function is between 19.5 percent and 23.5 percent. Attempts by Thai engineers to install an air supply line for the boys failed. The second development was weather forecasting. Monsoon rains were forecast later in the week, which could flood the cave until November. basic diving skills to be able to make the trip. Organizers even built a model narrow walkway out of chairs and had divers practice with local boys in a nearby school pool. Eventually it was decided that the boys were too weak to swim and the plan was revised to have divers pull the boys out. On July 8, the rescue effort began. For the first part of the mission, 18 divers were sent into the caves to rescue the boys, with 1 diver accompanying each boy on the dive. The boys were dressed in a jumpsuit, a float jacket and a harness. Instead of shoving a regulator into each boy's mouth, they were given a face mask that allowed them to breathe naturally. An oxygen cylinder was strapped to her front, a handle was
strapped to their back and strapped to a diver in case they get lost in poor visibility. Panic was the main concern. The SEAL doctor anesthetized the boys before the trip, leaving them unconscious so they wouldn't panic during their escape and risk the lives of their rescuers.1 The anesthesia lasted about 50 minutes, requiring the divers, trained by Dr. , drug them again. their bodies during the journey of more than three hours. There was a debate about which boy should go first - the weakest, the smallest, the strongest - but in the end it ended up being a boy who volunteered. The boys maneuvered from the divers holding their rear orchestra, with each boy on the left or right, as directed. In very tight spots, the divers had to push the boys from behind. The divers held their heads higher than the boys, so that in poor visibility the diver would hit the rocks first. After a short dive in a dry part of the cave, the divers and the boys encountered three divers and the boys' diving gear was removed. A drag stretcher was used to transport the boys over a 200 meter stretch of rocks and sand hills. Diving equipment was changed before entering the next submerged section. . The boys took turns being carried, slid and pulled down a zipline over an intricate network of pulleys installed by climbers. The exit from the chamber contained many areas still partially submerged and the boys had to be carried over slippery rocks and through muddy water. The trip out of chamber 3 took about four to five hours initially, less later due to drainage. Just after 7pm. Local authorities announced that two boys were rescued. Shortly after, two more boys came out of the cave. On July 9, four more boys were rescued. On July 10, the last four boys and their coach were rescued. The four Thai Navy SEALs, including the doctor who stayed with the boys the entire time, were the last to dive. When they reached chamber 3, a water pipe burst and the main pump stopped working. Suddenly, the water began to rise rapidly. This forced the SEALs and 100 of the rescuers still a mile into the cave to abandon their rescue equipment and run out of the cave.
page 307 Upon reaching the surface, the boys were quarantined while medical professionals determined whether they had contracted any infectious diseases. The boys were given a steady diet of rice porridge for the first 10 days. Parents initially visited their children by looking out the window, but once the lab results were negative, they were allowed to visit in person wearing a medical gown, face mask and hair cap. After the rescue, the boys' families, staff and thousands of volunteers gathered at the cave entrance. The team thanked the lives saved and asked forgiveness from the cave goddess, 'Jao Mae Tham', for the intrusion of bombs, ropes and people during the rescue. People rejoiced at the news of the successful rescue. The head of the rescue mission said the cave system would eventually be turned into a living museum to show how the operation evolved. As a result of the incident, Thai Navy SEALs will include cave diving in their training programs. His Majesty the King awarded a Royal Medal, the Most Admirable Medal of Direkgunabhorn, to those involved in the rescue of the football team - 114 foreigners and 74 Thai nationals. The order is awarded to those who render loyal service to the Kingdom of Thailand. The title Direkgunabhorn roughly translates to "Noble Order of Abundance and Quality". Speaking through a translator, the team revealed that four of the boys had birthdays while trapped in the cave. The team and manager were surprised when their football hero Zlatan Ibrahimovic, who now plays for LA Galaxy, made a surprise appearance on the show to meet them. The Swedish star greets each member. "These guys, this team is braver than me and they showed their collective teamwork and they had patience, faith," Ibrahimović said. "This is probably the best team in the world."1. How did the natural environment of the cave affect the rescue plan?2. How did the rescue team react to the hazards of the project?
page 3083. Some consider the rescue a miracle and luck was the deciding factor. Do you agree? SourcesABC News, "It Utter Chaos: Inside the Thai Cave Rescue That Nearly Didn't Happen," 1 Dec. 2018. www.abc.net.au. Accessed 2/8/19.ABC News, "Thai Cave Rescue: Elon Musk Hits Out at Mission Chief Who Turned Down Mini-submarine Offer," 11 July 2018.www.abc.net.au. Accessed 8/2/19. Beech, H., R. C. Paddock and M. Suhartono, "Still Can't Believe It Worked: The Story of the Thailand Cave Rescue," New York Times, July 12, 2018. www.nytimes.com. Accessed 9/2/2019. Ellis-Petersen, H., "Thai Cave Rescue Boys Meet Hero Zlatan during Ellen Interview," The Guardian, 17 Oct. 2018. www.theguardian.com. Accessed 2/12/19. Flynn, S., “Miracle at Tham Luang,” GQ, 3 Dec. 2018. www.gq.com. Accessed 2/10/19.1 The Thai government has granted the SEAL doctor diplomatic immunity if something goes wrong.
A8-1A8-2A8-3A8-4Define critical chain. Identify why projects are delayed even when estimates are met. Describe the basic critical chain methodology. Describe the differences between critical chain scheduling and the traditional approach In practice, project managers carefully manage delays in sensitive projects with limited resources. If possible, they will add slack to the end of the project by committing to a completion date that exceeds the planned date. For example, the plans say the project must be completed by April 1st, even though the official completion date is May 1st. Other managers are taking a more aggressive approach to managing slack in the program. They use an early start schedule and prohibit the use of time off in any activity or work package unless authorized by the project manager. Percentage progress is complete and time remaining is being carefully monitored. Activities that exceed estimated completion times are reported so that successive activities can start ahead of schedule. This ensures that the time gained is used to start a next activity sooner and that time is not wasted. The general intent is to create and save latency as a buffer to complete the project sooner or to cover latency issues that may arise in critical activities or paths. LO A8-1 Define the term critical chain. Eliyahu Goldratt, who advocated the "theory of constraints" in his popular book The Goal, advocates an alternative approach to slack management.1 He coined the term critical chain to recognize that the project network can be constrained by technical resources and dependencies. Each constraint type can create task dependencies, and in the case of constraint resources, new task dependencies can be created! Remember how resource constraints changed the critical path? If not, revisit Figure 8.5. The critical chain is the longest sequence of dependencies that exist in the project. String is used instead of path as the latter tends to be
page 309 only relates to technical dependencies, not feature dependencies. Goldratt uses the concept of the critical chain to develop strategies to accelerate project completion. These strategies are based on your observations of individual activity time estimates. TIME ESTIMATES A8-2 Identify the reasons why projects are delayed even when estimates have been completed. Goldratt argues that there is a natural tendency for people to add case-by-case safety time to their estimates. Those who estimate activity times are believed to provide an estimate that has about an 80 to 90 percent chance of completion before or on the estimated time. Therefore, the average time (50/50 probability) is overestimated by about 30 to 40 percent. For example, a programmer might estimate that there is a 50/50 chance of completing an activity in six days. However, to ensure success and guard against potential problems, she adds three days of safety time and informs him that it will take nine days to complete the job. In this case, the average time (50/50) is overestimated by about 50%. He now has a 50% chance of completing the project three days ahead of schedule. If this hidden contingency is pervasive throughout the project, most activities should, in theory, be completed ahead of schedule. will add one month to a nine-month project to cover any delays or risks that may arise. This situation raises an interesting paradox: Why, if there is a tendency to overestimate the duration of activities and add security at the end of a project, do so many projects fall behind schedule? Critical chain project management (CCPM) offers several explanations: Parkinson's Law. Work fills available time. Why rush to complete a task today that is due tomorrow? Not just his pace
Work will be dictated by the deadline, but workers will use the perceived free time to catch up on other things. This is especially true in matrix environments, where employees will use this time to clear the backlog of other projects and tasks. Self protection. Participants fail to report early terminations for fear that management will adjust their future standards and demand more next time. For example, if a team member estimates that a task will take seven days and deliver in five, the next time they are asked to estimate, the project manager may want to trim the estimate based on past performance. Peer pressure may also be a factor here: to avoid being labeled a "rate buster," members may not report early terminations. Goldratt uses the metaphor of the project as a relay race to show the impact of poor coordination. Just as a runner's time is wasted if the next runner isn't ready to take over, time gained by completing a task on time is wasted if the next group of people isn't ready to take on the project's work. Poor communication and inflexible resource schedules hinder progress. Excessive multitasking. The norm in most organizations is for project staff to work on multiple projects, activities, or tasks at the same time. This leads to costly downtime and excessive division of labor. As pointed out in our discussion of segregation of duties, this increases the time for each activity. When considered individually, the time lost may seem minimal, but when considered as a whole, the switching costs can be staggering. Resource congestion. In multi-project organizations, projects are often delayed because test equipment or other necessary resources are tied up in other project tasks. they have more than enough time to complete the task. The problem with delaying the start of a task is that obstacles are often not identified until the task is in progress. When the start of work is delayed, the opportunity to overcome these obstacles and complete the work on time is compromised. Critical current in action
page 310LO A8-3 Describe the basic critical chain methodology. CCPM's solution to reducing project overtime is to insist that people use "true 50/50" uptime estimates (instead of estimates that have an 80 to 90 percent chance of being completed ahead of schedule). 50/50 estimates result in a project duration that is about half as risky as 80 to 90 percent estimates. This requires a company culture that values ​​accurate estimates and avoids blaming people for missed deadlines. According to the CCPM, using 50/50 estimates will discourage Parkinson's Law, Pupil Syndrome, and self-protection from kicking in because there is less "free time" available. Productivity will increase as individuals strive to meet tighter deadlines. The compressed program reduces the possibility of the drop stick effect. CCPM recommends inserting time buffers into the schedule to act as “shock absorbers” to protect the project completion date from task durations that take longer than the 50/50 estimate. The rationale is that by using 50/50 estimates you essentially eliminate any "safety" in individual jobs. CCPM also recommends the strategic use of parts of this collective security, introducing time buffers where potential problems are likely to arise. There are three types of buffers in CCPM:Project buffer. First, since all activities along the critical chain have inherent uncertainty that is difficult to predict, project duration is uncertain. Therefore, a project time buffer is added to the expected project duration. CCPM recommends using about 50 percent of total security. For example, if the modified schedule reduces the project duration by 20 days from 50 to 30, a 10-day project buffer is used. Supply storage areas. Buffers are added to the network where non-critical paths merge with the critical chain. These buffers protect the critical chain from delay. Temporary resource stocks. Time buffers are introduced where scarce resources are needed for an activity. Resource time buffers come in at least two forms. A schema is a cache that is associated with a critical resource to ensure that the
The resource is on call and available when needed. This keeps the relay going. The second form of temporal buffering is added to activities that precede work on a scarce resource. This type of buffer protects against resource bottlenecks by increasing the probability that the previous activity will complete when the resource becomes available. All buffers reduce the risk of project duration delay and increase the probability of early project completion.2 See Practice Scenario A8.1 Critical chain applied to the arrival of airplane parts. Critical Chain Approach vs. Traditional Programming LO A8-4 Describe the differences between critical chain programming and the traditional programming approach. To illustrate how CCPM affects scheduling, let's compare it to the traditional approach to project scheduling. We will first solve resource problems as described in Chapter 8 and then use the CCPM method. Figure A8.1A shows the planned network of the Air Controls project without any resource concerns. That is, activities are considered independent and resources will be available and/or interchangeable. FIGURE A8.1A  Air Control Project: Time Plan without Resources
page 311 Figure A8.1B shows the bar graph for the project. Dark blue lines represent the duration of critical activities. Blue bars represent the duration of non-critical activities. gray bars represent gap. Note that the duration is 45 days and the critical path is represented by activities 1, 4, 6, 7, and 8. FIGURE A8.1B Air Control Project: Out-of-Resource Time Plan Parallel activities have the potential for resource conflicts. This is true for this project. Ryan is the resource for activities 3 and 6. If you plug Ryan into the bar graph in Figure A8.1B for activities 3 and 6, you will see that activity 3 overlaps activity 6 by five days—an impossible situation. Because Ryan cannot work on two activities at once and no one else can take his place, there is a resource dependency. The result is that two activities (3 and 6) that were considered independent now become dependent. Something has to give! Figure A8.2A shows the AirControl project network with the additional features. A pseudo-arrow with dashed addition has been added to the network to indicate resource dependency. The bar graph in Figure A8.2B reflects the revised schedule that resolves Ryan's overallocation. With the new schedule, the day off for some activities has changed. More importantly, the critical path has changed. It is now 1, 3, 6, 7, 8. The resource schedule shows that the new project duration is 50 days instead of 45 days. FIGURE A8.2A  Air Control Project: Timeline with limited resources
FIGURE A8.2BA Air Control Project: A Resource-Constrained Schedule PRACTICE A8.1 Criticism Chain Applied to the Arrival of Airplane Parts* In the past, aircraft parts manufacturer Spirit Aero Systems has been forced to delay product development projects due to a shortage of parts for assemblies. Spirit management has gone through various approaches such as lean, value chain, cycle time reduction and knowledge based.
page 312 engineering, to reduce the problem. Although each produced small improvements, the effects were not substantial. Supplier rework, overtime, delay costs and shipping costs continued to have a significant impact on cost, fulfillment and reputation. Spirit turned to the critical chain management methodology in a pilot project. Joseph Zenisek, Critical Chain's director, said the choice of Critical Chain was "a game changer for us." Spirit applied the critical chain approach to the assembly of newly designed pylons (supports) used for shell failure damage tests for jet engine design. Zenisek credited her success to three main factors: Establishing a rule to never start a work package until all parts and personnel are available; Ensure buffers to cover work packages by closely monitoring assembly parts that use a large number of parts or where the rate or number of uses is high. Develop a small team of engineers to manage suppliers and buffers to ensure delivery of 300+ parts arrives on time. The critical chain program has led to impressive results. The parts and staffing rule reduces late deliveries and rework on partially completed work packages caused by missing parts. The result was a 50% reduction in overtime. Reducing delays reduced assembly cycle time by 18 percent. Work in process and work packages were also reduced as the availability of intermediate components prevented delays. The critical chain method led to better resource management and reduced stress. Given the success of the critical chain program, Spirit intends to expand the application of the critical chain method to new product development projects for its customers.*Peter Fretty, "E Is in the Air," PM Network, February 2012, p. 50–56. Now let's apply the CCPM approach to the Air Control project. Figure A8.3 details many of the changes. First, notice that the task estimates now represent approximations of the 50/50 rule. Second, note that not all critical chain activities are technically connected. Custom component manufacturing is included due to predefined resource dependency. Third, a project time buffer is added to the end of the schedule. Finally, intermediate feeder regulators are introduced at each point where a non-critical activity merges with the critical chain. FIGURE A8.3  Air Control Design: CCPM Network
page 313 The impact that the CCPM approach has on the project schedule can be best illustrated in the Gantt chart shown in Figure A8.4. First note the late start times for each of the three non-critical activities. For example, in the critical path method, development of software and components from the order supplier will be scheduled to begin immediately after the order is reviewed. Instead, they are scheduled later in the project. Each of these activities has three days power buffers added to absorb any delays that may occur in these activities. Finally, instead of taking 50 days, the project is now estimated to take just 27 days with a 10-day project buffer! FIGURE A8.4 Air Control Project Gantt Chart: CCPM Network
page 314 This example provides an opportunity to explain the differences between buffer and slack. Slack is the free time inherent in the schedule of non-critical activities and can be determined by the differences between early starts and late starts for a particular activity. Buffers, on the other hand, are dedicated blocks of time set aside to cover the most likely contingencies and closely monitored so that, if not needed, subsequent activities can proceed on schedule. Partial buffers are required because the estimates are based on 50/50 approximations and therefore about half of the activities will take longer than planned. To protect against these extended activity durations, buffers are introduced to minimize the impact on the schedule. Buffers are not part of the project schedule and are used only when good management requires it. Although not shown in the figures, an example of resource buffering would be adding six days to Ryan's schedule (remember, it is the critical resource that caused the schedule to be extended). This would ensure that he could continue to work on the project beyond the 18th day, should the production of standard parts or the manufacture of custom parts take longer than planned. Progress on these two tasks will be closely monitored and your schedule adjusted accordingly. CCPM and segregation of duties Buffers do not address the insidious effects of pervasive segregation of duties, especially in a multi-project environment where workers are juggling different project assignments. The CCPM has three recommendations that will help reduce the impact of segregation activities: 1. Reduce the number of projects so that people are not assigned to so many projects at once.2. Review project start dates to address resource shortfalls. Do not start projects until enough resources are available to work full-time on the project.3. Contract (lock in) resources before the project starts. Project performance monitoring
page 315 The CCPM method uses buffers to monitor project time performance. Recall that, as shown in Figure A8.3, a design buffer is used to insulate the design against delays along the critical chain. For monitoring purposes, this buffer is usually divided into three zones - OK, Watch & Plan and Act respectively (see Figure A8.5). As the buffer begins to decrease and moves into the second zone, alarms are triggered to seek corrective action. To be truly effective, buffer management requires comparing buffer usage with actual project progress. For example, if the project is 75% complete and you have only used 50% of the project buffer, the project is in very good shape. On the other hand, if the project is only 25% complete and 50% of the buffer is already used, you will have problems and corrective action will be required. Chapter 13 describes a method for estimating the completion rate. Although strong in theory, support on this point is limited but growing. For example, Harris Semiconductor was able to build a new automated wafer manufacturing facility in 13 months using CCPM methods when the industry standard for such a facility was 26 to 36 months. The Israeli aircraft industry has used CCPM techniques to reduce average maintenance work on aircraft from two months to two weeks. The USA. The Air Force and Navy, as well as Boeing, Lucent Technologies, Intel, GM, and 3M apply critical chain principles to their many project environments.3
page 316CCPM is not without criticism. First, the CCPM does not address the biggest cause of project delays, which is an ill-defined and unstable project scope. Second, some critics question Goldratt's assumptions about human behavior. They question the tendency of experts to inflate estimates and the fact that employees deliberately act against the organization for their own interest and benefit (see Button, 2011; Pinto, 1999). Critics also object to the suggestion that trained professionals exhibit learner syndrome habits (Zalmanson, 2001). Third, evidence of success is almost exclusively anecdotal and based on individual case studies or computer modeling. The lack of systematic evidence raises questions about the generalizability of the application. CCPM may only work best for certain types of projects (Raz, Barnes, and Dvir, 2003). One of the keys to implementing CCPM is the culture of the organization. If the organization honors noble efforts that fail to meet expectations as much as it honors efforts that meet expectations, then there will be greater acceptance. On the other hand, if management treats honest failure differently than success, resistance will be high. Organizations that adopt the CCPM approach must invest considerable energy in winning over all participants to its basic principles and allaying the fears that this system may create. Resource dependency comes to the fore, highlighting the modern woes of multitasking and forcing us to rethink conventional project scheduling methods. Appendix Review Questions 1. Explain how time is wasted in project management.2. Distinguish between the project buffers and the feeder.3. Buffers are not the same as slack. Explain. Appendix Exercises
1. Check the Goldratt Institute home page at http://www.goldratt.com for current information on applying critical chain techniques to project management.2. Apply critical chain programming principles to Print Software, Inc. (Exercise 10) presented in Chapter 6. Check the estimated durations by 50%, except for unnecessary durations (eg 3 becomes 4). Draw a CCPM network diagram similar to Figure A8.3 for the printing software project, as well as a Gantt chart similar to Figure A8.4. How do these diagrams differ from those created with the traditional programming technique? 24, no. 1 (2005), pp. 67–81.Button, S., “A Critical Look at Critical Chain,” Research Paper EM 540, March 2011. Goldratt, E., The Goal (Great Barrington, MA: North River Press, 1997).Herroelen, W. ., R. Leus and E. Demeulemeester, “Critical Chain Project Scheduling: Do Not Oversimplify”, Project Management Journal, vol.33, no. 4 (2002), pp. 48–60. Leach, L.P., “Critical Chain Project Management,” Proceedings of 29th Annual Project Management Institute, 1998, Seminars and Symposium (Newtown, PA: Project Management Institute, 1998), pp. 1239–44. Levine, H.A., “Shared Contingency: Exploring the Critical Chain,” PM Network, October 1999, pp. 35–38. Newbold, R.C., Project Management in the Fast Lane: Applying the Theory of Constraints (Boca Raton, FL: St. Lucie Press, 1998). Noreen, E., D. Smith, and J. Mackey, The Theory of Constraints and Its Implications for Management Accounting (Great Barrington, MA: NorthRiver Press, 1995). Pinto, J., “Some Constraints on the Theory of Constraints: Take a Critical Look at Critical Chain”, PM Network, 1999, pp. 49–51.
page 317 Raz, T., R. Barnes, and D. Dvir, “A Critical Look at Critical Chain Project Management,” Project Management Journal (December 2003), p. 317. 24–32.Sood, S., “Taming Uncertainty: Critical-Chain Buffer Management Helps Minimize Risk in the Project Equation,” PM Network, March 2003, pp. 57–59. Steyn, H., "An Investigation into the Fundamentals of Critical ChainScheduling", International Journal of Project Management, vol. 19 (2000), pp. 363–69. Zalmanson, E., 'Readers Feedback', PM Network, 2001, p. 4.1 Goldratt, E., The Goal (Great Barrington, MA: North River Press, 1997). Case A8-1 CCPM's Dilemma Pinyarat worked in the IT department of a diversified IT company. She was describing the company's first encounters with critical chain programming to a friend at another IT company. One thought was that people were just working too hard and needed some relief. This approach did not work! The works were still slow. Management then decided to eliminate the extra time for activities and add 10% to the project estimates to ensure that the project durations were met. Again, nothing improved and projects continued to arrive late. The company recently hired a consultant who promoted the critical chain schedule, which was implemented for all projects in its industry. Almost everyone did not comply.
Pinyarat explained: “The estimates were basically impossible. Activity durations have decreased to less than the 50% guideline. We were behind on almost every project. Also, a large enough project buffer was not allowed to be placed, which only delayed the projects. A colleague who was working on six projects quit and resigned. he said he was suicidal and saw no hope that things would get better. My projects are not the only ones with big problems. Some people had no idea why anyone would use CCPM programming. To quote one of my best developers: "They ask for an estimate and then cut it by 50% or more." What kind of game is this? Obviously, they don't trust us." A week later, to Pinyarat's surprise, she was called into the IT manager's office. Piniarat imagined several bad scenarios for how the meeting would go - even the remote possibility of being fired! The manager wanted the department to fix its project management practices and stop delaying almost all IT projects. There were rumors of cleaning house or outsourcing IT work. The manager believed that Pinyarat, who had passed the PMP exam, had the best chance of turning things around. He said: “Piniarat, I am reaching the level of despair. Senior management is reaching the end of their rope with our department. We need to change this for our own good. Give me a plan that I can grant within a week.'' Piniarat explained to her friend some of her ideas - how to make the estimates very strict. But he said he would take whatever ideas he could get from anyone. Give Pinyarat a report that identifies the main issues and an action plan that she can present to her sponsor. Limit your report to 800 words or less. Design Credits: Practice Snapshot, Highlight Box, Case Icon: ©SkyDesigns/Shutterstock
1 See the appendix at the end of this chapter to learn more about how resource constraints affect the project schedule. 30, no. 2 (1999), pp. 39–51.3 Cited in material developed by the Eliyahu Goldratt Institute (New Haven, CT) for a workshop attended by one of the authors entitled “Project Management the TOC Way,” 1998.
9-19-29-39-49-59-69,19,29 .Identify the different options for stopping an activity when resources are limited. Project Duration Options to Accelerate Project Completion Project Cost-Duration Graph
9.49.59.6page 319Creating a Project Cost-Time Chart Practical ConsiderationsWhat if cost is the issue, not time? Summary When we skate on thin ice, our safety lies in our speed.—Ralph Waldo Emerson Imagine the following scenarios:—After completing the project schedule, you realize that the estimated completion date is two months beyond what has publicly promise your boss to an important client. — Five months into the project, you realize you are already three weeks behind the project due date.
page 320 — Four months into the project, top management changes their priorities and now tells you that money is not an issue. Complete the task as soon as possible! What are you doing? This chapter discusses strategies for reducing project duration before starting the project or in the middle of project execution. The choice of options is based on the constraints surrounding the project. This is where the project priority table introduced in Chapter 4 comes into play. For example, there are many more options available to reduce project time if you have limited resources than if you cannot spend more than your original budget. We'll start by looking at the reasons for reducing project duration, followed by a discussion of different options for speeding up project completion. The chapter will conclude with the classic time cost structure for selecting activities to be “stopped”. Crash is a term that has appeared in the project management lexicon to shorten the duration of an activity or project beyond what can normally be done. for trying to reduce the duration of a project. One of the most important reasons today is time to market. Intense global competition and rapid technological developments have made speed a competitive advantage. To succeed, companies must identify new opportunities, launch project teams, and quickly bring new products or services to market. Perhaps in no other industry does speed matter as much as in high-tech industries. For example, a rule of thumb for mid- to high-tech companies is that a six-month delay in bringing a product to market can result in a market share loss of about 35%. Saving time and preventing lost profits are worth any additional cost to reduce time
without any formal analysis. See Practice Snapshot 9.1: SmartphoneWars to learn more about it. PRACTICAL IMMEDIATENESS 9.1 Smartphone Wars* Speed ​​has been critical in business since the California Gold Age. The smartphone industry is a good example of a fiercely competitive business that values ​​speed and innovation. Analysts predict that more than 15 different new smartphones will hit the market in 2020, with artificial intelligence playing a key role. “By 2020, artificial intelligence (AI) capabilities in smartphones will bring a smarter digital personality to the device. Machine learning, biometrics and user behavior will improve ease of use, self-service and frictionless authentication. This will allow smartphones to be more trusted than other credentials such as credit cards, passports, ID cards or keys,” said Anshul Gupta, research director at Gartner, a high-tech research firm.rawpixel/123RFTo Survive, RIM, Huawei, Samsung , Apple and other smartphone manufacturers have mastered project management. They could
page 321reduce lead time for new phones from 12 to 18 months to 6 to 9 months. More than $1 billion in projected new smartphone sales are at stake.* Business Tech, “What You Can Expect from Your Smartphone by 2020,” April 6, 2018. but also about adaptability. The global recession and energy crises have shaken the business world, and the companies that survive will be those that can quickly adapt to new challenges. This requires fast project management! For example, the fate of the US auto industry depends in part on how quickly it shifts its efforts to developing fuel-efficient alternative forms of transportation. and equipment failure - cause significant delays in the middle of the project. Getting back on schedule often requires reducing time on some of the other critical activities. The additional cost of returning to the program must be weighed against the consequences of delay. This is especially true when time is of the utmost importance. Incentive contracts can make reducing project time rewarding — often for both the contractor and the owner. For example, one contractor completed a lake bridge 18 months early and received over $6 million for early completion. Making the bridge available to the surrounding community 18 months in advance to reduce traffic congestion made the cost of the community incentive seem small to users. In another example, in a continuous improvement setting, the joint effort of the owner and contractor resulted in early completion of the river lock and a 50/50 split of the savings to the owner and contractor. See Practice Case 9.2: Northridge Earthquake Response for a classic example of a contractor struggling to quickly complete a high-yield project. "Pressed deadlines" are another reason to speed up project completion. For example, a politician makes a public statement that a new building will be available in two years. Or the president of a software company mentions in a speech that advanced new software will be available on January 22. Such statements often become project goals without
page 322 any consideration of the problems or costs of meeting this date. The project duration time is defined while the project is in its "conceptual" phase before or without any detailed schedule of all project activities. This phenomenon often happens in practice! Unfortunately, this practice almost always results in a project costing more than what was planned with low cost and detailed planning. In addition, quality is sometimes compromised to meet deadlines. Sometimes very high overheads are recognized before the project starts. For example, it can cost $80,000 a day just to house and feed a construction crew in the wilds of northern Alaska. In these cases, it is prudent to consider the direct cost of shortening the critical path against the overhead savings. Typically, there are opportunities to shorten some critical activities to less than the daily overhead rate. Finally, there are times when it is important to reassign key equipment and/or people to new projects. Under these circumstances, the cost of compressing the project can be compared to the opportunity cost of not releasing important equipment or people. Several of these are summarized in this section. CASE STUDY 9.2 Northridge Earthquake Response* On January 17, 1994, a magnitude 6.8 earthquake struck the Los Angeles Basin near the suburb of Northridge, causing 60 deaths, thousands of injuries, and billions of dollars
material damage. Nowhere was the destructive power of nature more evident than in the damaged sections of the freeway system, disrupting the daily commute of about 1 million Los Angeles residents. The Northridge earthquake was one of the biggest challenges for the California Department of Transportation (CalTrans) in its nearly 100-year history. To speed up the recovery process, Governor Pete Wilson signed an emergency declaration that allows CalTrans to streamline hiring processes and offer attractive incentives for completing work ahead of schedule. For each day of exceeding the schedule, a sizable bonus was to be awarded. Instead, for each day beyond the deadline, the contractor would be penalized with the same amount. The amount ($50,000 to $200,000) varied depending on the importance of the work. The incentive system proved to be a strong incentive for highway reconstruction contractors. C. C. Myers, Inc., of Rancho Cordova, California, won the contract to rebuild Interstate 10 bridges. Myers made every effort to complete the project in 66 days—an impressive 74 days ahead of schedule—and won 14.8 million dollars! Myers took every opportunity to save time and improve operations. They greatly expanded the workforce. For example, 134 blacksmiths were employed instead of the normal 15. Special lighting equipment was created so that the work could be done around the clock. In the same way, the construction sites were prepared and special materials were used to continue the work despite the bad weather that would normally paralyze the construction. Work was scheduled like an assembly line, so critical activities were followed by the next critical activity. A generous incentive program has been created to reward teamwork and achieve goals earlier. Carpenters and blacksmiths competed as teams against each other to see who finished first. Source: Robert A. Eplett/FEMA Although C. C. Myers received a substantial early termination bonus, he spent a lot of money on overtime, bonuses, special equipment and other awards to keep the job. CalTrans supported Myers' efforts. With reconstruction work going on around the clock, including boats and pilings, CalTrans temporarily housed many families in local motels. CalTrans even erected a temporary plastic sound wall to help reduce construction noise traveling to a nearby apartment complex. The double-layer curtain, 130 meters long and 6 meters high, is designed to reduce construction noise by 10 decibels. governor's office
Page 323 of Planning and Research published a report concluding that for every day the Santa Monica Freeway was closed, it cost the local economy over $1 million. *Jerry B. Baxter, “Responding to the Northridge Earthquake,” PM Network, November 1994, pp. 13–22. Options When Resources Are Not Constrained Adding ResourcesLO 9-2 Identify the different options for stopping an activity when resources are not constrained. The most common method of reducing project time is to assign additional personnel and equipment to activities. However, there are limits to the speed that can be achieved by adding workers. Doubling the size of the workforce will not necessarily cut the completion time in half. The relationship is only correct when tasks can be distributed so that minimal communication is required between workers, as in hand harvesting or paving a highway. Most projects aren't set up this way. additional workers increase communication requirements to coordinate their efforts. For example, doubling a team by adding two employees requires six times more intercommunication in pairs than the original two-person team. Not only does it take more time to coordinate and manage a larger team, but there is also an additional delay in training new people and getting them up to speed on the project. The bottom line is captured in Brooks' Law: adding human resources to a late software project makes it later. Panos Kalaritis, its Vice President
Operations at Irix Pharmaceuticals, says outsourcing process development can speed up a drug's development, allowing a pharmaceutical company to continue research while a contractor works to optimize the process. Susan Dexter of Lonza Biologics identified different types of outsourcing contracts, including agreements for product development, clinical trial procurement, commercial or off-the-shelf procurement, and technology transfer. Often, he said, a given project may span more than one of the above stages over the course of several years. Using a contractor, said Paul Henricks, director of operations for Patheon Inc., gives the client company access to specialized knowledge and infrastructure, as well as flexible resources and capability. The sponsoring company can also manage risk by sharing responsibilities through outsourcing. both must work together to maintain, track and document project completion. There must be a concerted effort on the part of both parties to work as partners to complete the project.”* Mathew Lerner, “Outsourcing in Bio-Technology Picks Up Speed,” Chemical Market Reporter, vol. 251, no. 14 (2002), p. 17. Frederick Brooks formulated this principle based on his experience as a project manager for IBM's System/360 software program in the early 1960s. While subsequent research has confirmed Brooks's prediction, also found that adding more people to a delayed project does not always cause the project to become late. the members were fully assimilated. Outsourcing Project Work A common method of reducing project time is to subcontract an activity. The subcontractor may have access to superior technology or experience that will speed up the completion of the activity. For example, hiring a backhoe loader can accomplish in two hours what a team of workers can do in two days. Likewise, by hiring a consulting firm that specializes in Active Directory Service Interfaces (ADSI) programming, a company can cut in half the time it would take for less experienced in-house developers to do the job. Subcontracting also frees up resources that can be assigned to a critical activity and ideally will result in a shorter project duration. See Practice Case 9.3: Biotechnology Outsourcing Increases Speed. Outsourcing is covered in more detail in Chapter 12.
page 324 Scheduling Overtime The easiest way to add more manpower to a project is not to add more people, but to schedule overtime. If a team works 50 hours a week instead of 40, they can achieve 20% more. By scheduling overtime, you avoid the additional coordination and communication costs that arise when new people are added. If the people involved are employees, there may not be an additional charge for the extra work. Another advantage is that there are fewer distractions when people work outside of normal hours. Overtime has its drawbacks. First, hourly workers are typically paid an hour and a half for overtime and double that on weekends and holidays. Prolonged employee work can result in intangible costs such as divorce, burnout, and turnover. Turnover is a key organizational concern when there is a shortage of workers. Moreover, it is an oversimplification to assume that over a long period of time a person is just as productive during his eleventh hour of work as during his third hour of work. There are natural limits to what is humanly possible, and prolonged overtime may actually lead to a general decrease in productivity when fatigue sets in (DeMarco, 2002). Overtime and longer working hours are the preferred option to speed up project completion, especially when the project team is an employee. The key is to use overtime wisely. Remember, a project is a marathon, not a sprint! You don't want to run out of energy before the finish line. Create a Core Project Team As discussed in Chapter 3, one of the advantages of creating a core team dedicated to completing a project is speed. Assigning full-time professionals to a project avoids the hidden costs of multitasking, where people are forced to deal with the demands of multiple projects. Professionals can devote all their attention to a specific project. This singular focus creates a common purpose that can unite a diverse set of professionals into a highly cohesive team capable of accelerating project completion. The factors that contribute to the emergence of high-performing project teams will be discussed in detail in Chapter 11. Do it twice—Fast and right
page 325 If you're in a hurry, try creating a short-term "quick and dirty" solution. then go back and do it right. For example, floating bridges are used as temporary solutions for bridges damaged in battle. In business, software companies are notorious for releasing version 1.0 products that are not finished and tested. Next versions 1.1. . . x Fix bugs and add intended functionality to the product. The added cost of doing it twice is often outweighed by the benefits of meeting the deadline. Options when resources are limited LO 9-3 Identify the different options for locking an activity when resources are limited. no resources are available or the budget is severely limited. This is especially true after the schedule is set. This section examines some of these options, which are also available when resources are not limited. Improving Project Team Efficiency The project team can improve productivity by implementing more efficient ways of doing their work. This can be achieved by improving project planning and organization or by removing barriers to productivity such as excessive bureaucratic interference and red tape. Fast Track It is sometimes possible to reorganize the project network logic so that critical activities are performed in parallel (simultaneous) rather than sequentially This alternative is usually called fast track and is a good option if the project status is correct. When this alternative gets serious attention, it's amazing to see how creative project team members can be in finding ways to restructure sequential activities in parallel. As noted in Chapter 6, one of the most common methods for restructuring activities is to change a finish-start relationship to a start-start relationship. For example, instead of waiting for final project approval,
Production engineers can start building the production line once the basic specifications are established. However, moving activities from sequential to parallel is not without risk. Delayed design changes can lead to wasted effort and rework. Fast tracking requires close coordination between those responsible for the affected activities and confidence in the completed work. Using Critical Chain Management Critical Chain Project Management (CCPM) is designed to accelerate project completion. As discussed in Appendix 8.1, it would be difficult to implement CCPM in the middle of a project. CCPM requires significant training and a change in habits and perspectives that takes time to adopt. While there have been reports of immediate gains, especially in terms of time to completion, long-term management commitment is likely to be required to reap the full benefits. See Practice Scenario 9.4: The World's Fastest House for an extreme example of CCPM implementation. Reduce the Project Scope Probably the most common response to meeting impossible deadlines is to reduce the project scope. This always leads to a decrease in the functionality of the project. For example, a new car will average only 25 mpg instead of 30, or a software product will have fewer features than originally intended. While reducing the scope of the project can result in huge savings in time and money, it can come at the cost of reducing the value of the project. If the car reduces fuel consumption, will it hold up to competing models? Will customers still want the software without the features? The key to reducing project scope without reducing value is to reassess the actual project specifications. Often requirements are added to blue sky scenarios at best and represent desirables but not necessary. This is where it's important to talk to the client and/or project sponsors and explain the situation - 'you can do it your way, but not until February. “That might force them to accept an extension or raise money to speed up the project. If not, there should be a healthy discussion about what the key requirements are and what elements can be compromised to meet the deadline. A deeper review of the requirements can really increase the value of the project by getting it done faster and at a lower cost.
page 326 Quality compromise Reducing quality is always an option, but it is rarely accepted or used. Sacrificing quality can reduce the time of an activity on the critical path. PRACTICAL INSTANTNESS 9.4 World's Fastest House* December 17, 2002—after speeding up its power tools To line up volunteers, Shelby County Habitat for Humanity broke the world record for the fastest house ever built, clocking in at 3 hours, 26 minutes and 34 seconds. The former record holder, Habitat Affiliate Mannakau of New Zealand, held the record for three years in 3 hours, 44 minutes and 59 seconds. Alabama's feat beat New Zealand's record by 18 minutes. "This was unlike any construction project I've ever been involved in," said Project Manager Chad Calhoun. “The minute by minute planning, the planning of every precise move, the organization of all the crews and materials could not have gone more smoothly on the day of the build. All the long hours of planning definitely paid off." In preparation for construction, Habitat volunteers laid the foundation and built prefabricated wall panels. As soon as the whistle blew at 11:00 am. on December 17, the exterior wall panels were installed, followed by the interior paneling, which took just 16 minutes. Special teams of color-coded workers connected wiring and plumbing, installed insulation, installed appliances, installed carpet and tile, installed light fixtures, painted the house inside, applied vinyl siding to the outside, and assembled front and back porches. roof was built on the plot next to the house. Once the roof was complete—about 1.5 hours later—a Steel City crane lifted the 14,000-pound roof assembly into place. Crews fixed the roof while others completed interior work. There was still time to lay grass, plant bushes and decorate a Christmas tree in the front yard - all within the official build time of 3 hours, 26 minutes and 34 seconds.
page 327Blend Images/Ariel Skelley/Getty Images The recipient of this wonderful holiday gift was Bonnie Faye, a single mother and nurse practitioner who applied to Habitat for Humanity three times before being selected to receive the three-bedroom, two-bathroom . "It's amazing," Lily said. “Who am I to have this happen to me? A world record, hundreds of people coming together to build my house - I still can't believe it. families in need.* Erin Drummond, “The House That Love Built, Too Fast—and Just In Time for Christmas: Habitat for Humanity Breaks World Record Set by New Zealand,” www.csre.com; "Shelby County, Alabama. Builds Fastest Habitat Home in Three and a Half Hours," www.habitat.org/newsroom/2002archive. In practice, the most commonly used methods to lock in projects are overtime scheduling, outsourcing, and resourcing. Each of them retains the essence of the original design. Options that deviate from the original project plan include do it double and fast tracking. Reviewing project scope, customer needs, and schedule become important elements of these techniques. 9.3 Project Cost-Time Diagram
Nothing on the horizon suggests that the need to reduce project time will change. Indeed, the pressure to complete projects faster and earlier is likely to increase in importance. The challenge for the project manager is to use a quick and logical method to compare the benefits of reducing project time with the associated costs. Without consistent, logical methods, it is difficult to isolate the activities that will have the greatest impact on reducing project time at the lowest cost. This section describes a process for determining the costs of reducing project time so that comparisons can be made with the benefits of completing the project sooner. The method requires the collection of direct and indirect costs for specific project durations. Critical activities are searched to find the lowest direct cost activities that will shorten the project duration. Total costs for specific project durations are calculated and then compared to the benefits of reducing project time - before the project starts or while it's underway. Project costs are illustrated in Figure 9.1, which shows a project cost-time graph. The total cost for each duration is the sum of the indirect and direct costs. Overhead costs continue for the life of the project. Thus, any reduction in project duration means a reduction in overhead. The direct costs on the graph increase at an increasing rate as the project duration decreases from the originally planned duration. With the information from a chart like this for a project, managers can quickly judge any alternatives, such as meeting a time-to-market deadline. Further discussion of indirect and direct costs is needed before demonstrating a process for developing the information for a graph similar to Figure 9.1. FIGURE 9.1 Project cost-time graph
page 328 Project Overheads Overheads typically represent overhead costs such as supervision, administration, consultants, and interest. Overhead cannot be associated with any specific work package or activity, hence the term. Indirect costs vary directly over time. That is, any reduction in time must result in a reduction in indirect costs. For example, if the daily cost of supervision, administration and consultants is $2000, any reduction in project duration would save $2000 per day. If overhead is a significant percentage of the total project cost, reductions in project time can represent very real savings (assuming the indirect resources can be used elsewhere). Direct costs are directly attributable to a package of work and activity, hence the term. The ideal assumption is that direct uptime costs represent normal costs, which typically means efficient, low-cost methods for normal uptime. When project durations are imposed, direct costs can no longer represent efficient and low-cost methods. The cost for the imposed duration date will be greater than for a project duration developed from ideal normal times for activities. because immediately
Costs are assumed to be derived from normal methods and time, any reduction in activity time must increase activity costs. The sum of the costs of all work packages or activities represents the total direct cost for the project. each project duration, as project time is compressed. the process requires selecting the critical activities that cost the least to shorten. (Note: The graph shows that there is always an optimal time value. This is true only if shortening a schedule has incremental overhead savings that exceed the additional direct costs incurred. However, in practice, there are almost always many activities in which the direct cost of the shortcut is less than the indirect cost.)9.4 Constructing a Project Time-Cost Graph Three main steps are required to construct a project time-cost graph:1. Find the total direct costs for the selected project durations.2. Find the total overhead costs for the selected project durations.3. Add up the direct and indirect costs for these selected durations. The chart is then used to compare cost-benefit alternatives. Details of these steps are presented here. Identifying Activities to Reduce The most difficult task in constructing a cost-duration graph is finding the total cost for specific project durations within a relevant range. The central task is to decide which activities to reduce and how far to take the reduction process. Basically, managers must look for critical activities that can be reduced with the least increase in cost per unit time. The rationale for selecting critical activities depends on determining the normal and conflict times of the activity and the corresponding costs. Regular time for a
Page 329activity represents efficient, realistic and low-cost methods of completing the activity under normal conditions. The shortest possible time in which an activity can realistically be completed is called the failure time. The direct cost of completing an activity at the time of failure is called failure cost. Normal collision times and costs are collected by personnel most familiar with completing the activity. Figure 9.2 shows a hypothetical cost-duration graph for an activity. FIGURE 9.2 Activity graph The normal time for the activity in Figure 9.2 is 10 time units and the corresponding cost is $400. The failure time for the activity is five time units and $800 of normal time and cost represents the original early start, low - cost schedule. The lock point represents the maximum time an activity can be zipped. The thick line connecting the normal and the collision point represents the slope, which assumes that the cost of reducing activity time is constant per unit time. The assumptions underlying the use of this chart are as follows:1. The cost-time relationship is linear.2. Standard time requires efficient and low-cost methods to complete the activity.
page 3303. Collision time represents a limit—the largest possible time reduction under realistic conditions.4. The slope represents the cost per unit time.5. All accelerations must occur within normal and crash times. Knowing the slope of activities allows managers to compare which critical activities should be shortened. The less steep the cost slope of an activity, the less it costs to shorten a time period. a steeper slope means it will cost more to shorten a unit of time. The cost per unit time or slope for any activity is calculated from the following equation: In Figure 9.2, elevation is the y-axis (cost) and function is the x-axis (duration). The slope of the cost line is $80 for each unit of time that the activity is reduced. the activity time reduction limit is five time units. Comparing the slopes of all critical activities allows us to determine which activities to shorten to minimize total direct costs. Given the preliminary project schedule (or an ongoing one) with all activities set for early start times, the process of searching for critical activities as candidates for reduction can begin. The total direct cost for each compressed project duration must be found. A Simplified Example Figure 9.3A shows the normal times and conflict costs for each activity, the calculated slope and time reduction limit, the total direct costs, and the project network with a duration of 25 unit hours. Note that the total direct cost over the 25 periods is $450. This is an anchor point to start the process of shortening the critical path and finding the total direct cost for any specific duration less than 25 time units. The maximum time reduction of an activity is simply the difference between the normal and the failure time for an activity. For example, activity D can be reduced by one
page 331 normal time from 11 time units to error time of 7 time units or maximum 4 time units. The positive slope for activity D is calculated as follows: FIGURE 9.3 Example of cost-duration trade-off
The network shows that the critical path is activities A, D, F, G. As it is impossible to shorten activity G ("x" is used to indicate this), activity A is cycled because it is the candidate with the lowest cost. that is, its slope ($20) is less than the slopes of activities D and F ($25 and $30). Activity reduction The one-time unit reduces project duration to 24 time units, but increases total direct costs to $470 ($450 + $20 = $470). Figure 9.3B reflects these changes. The duration of activity A has been reduced to 2 time units. "x" indicates that the activity cannot be reduced further. Activity D is circled because it costs less ($25) to shorten the project to 23 times
page 332 units. Compare the costs of activity F. The total direct cost for a project duration of 23 time units is $495 (see Figure 9.4A). , C, F, G and A, D, F, G. Reducing the project to 22 time units will require reducing activity F. so it cycles. This change is reflected
in Figure 9.4B. The total direct cost for 22 time units is $525. This reduction created a third critical path - A, B, E, G. all activities are critical. The lowest-cost method of reducing project duration to 21 time units is to combine cycled activities C, D, E—costing $30, $25, $30, respectively—and increasing total direct costs to $610. The results of these changes are illustrated in Figure 9.4C. While some activities can still be shortened (those without an "x" next to the activity time), no activity or combination of activities will result in a reduction in project duration. The step is to collect the overhead for the same duration. These costs are usually a fee per day and are easily obtained from the Accounting Office. Figure 9.5 presents the total direct costs, total indirect costs, and total costs of the project. The same cost is illustrated in Figure 9.6. This graph shows that the ideal time-cost duration is 22 units of time and $775. Assuming the project goes ahead as planned, any movement outside of this time frame will increase the cost of the project. The transition from 25 to 22 time units occurs because, in this range, the absolute slopes of indirect costs are greater than the slopes of direct costs.
page 3339.5 Practical Issues Using the Project Time-Cost Chart The project cost-time chart, as shown in Figures 9.1 and 9.6, is valuable in comparing any proposed alternative or change to the optimal cost and time. Most importantly, creating such a chart keeps the importance of overhead at the forefront of decision making. Indirect costs are often overlooked in the field when the pressure to act is intense. Finally, such a chart can be used before the start of the project or while the project is in progress. Creating the chart in the planning phase before the project without an imposed duration is the first choice because the normal time is more important. Enforced duration is less desirable because normal time is adjusted to the imposed date and is unlikely to be cost-effective. Creating the graph after the project has started is the least desirable, because some alternatives may be discarded in the decision-making process. Managers can choose not to use the proven formal process. However, regardless of the method used, the principles and
The concepts inherent in the formal process are largely applied in practice and must be considered in any cost-duration trade-off decision. Lockdown Times Collecting crash times for even a modest-sized project can be difficult. The meaning of lock time is difficult to communicate. What does it mean when you define downtime as "the shortest possible time to realistically complete an activity"? The time of failure is open to different interpretations and judgments. Some estimators are very uncomfortable giving failure times. Regardless of comfort level, the accuracy of accident times and costs is at best approximate compared to normal time and cost. Linearity Assumption As the accuracy of times and costs of compressed activities is questionable, the concern of some theorists is that the relationship between costs and time is not linear but curvilinear—this is rarely a concern of incumbent managers. Reasonable and quick comparisons can be made using linear approximation.3 The simple approach is sufficient for most projects. There are rare cases where activities cannot be broken by individual time units. In contrast, the crash is all or nothing. For example, activity A will take 10 days (for example, $1,000) or 7 days (for example, $1,500), but there are no options where activity A will take 8 or 9 days to complete. In some rare cases of very large, complex and long-term projects, present value techniques may be useful. such techniques are beyond the scope of this text. LO 9-5 Understand the risks associated with compressing or collapsing a project. The cost-time lock-in method is based on choosing the cheapest method to reduce the duration of the project. There are other factors to evaluate besides cost. First, the inherent risks involved in conflicting specific activities must be considered. Some activities are more dangerous than others. For example, speeding up software integration
Designing code may not make sense if it increases the chance of errors occurring downstream. On the other hand, stopping a more costly activity may make sense if it carries less inherent risk. Second, the timing of the activities must be considered. Discontinuing a previous activity may be prudent if there is concern that subsequent activities may delay and absorb the time gained. Afterwards, the manager will still have the option to lock out the final activities to get back on schedule. Third, errors often result in overcommitment of resources. The resources needed to accelerate a cheaper activity may suddenly become unavailable. Resource availability, not cost, may dictate which activities are discontinued. PRACTICAL INSTANTNESS 9.5 Bet with you. . The focus of this chapter has been on how project managers disrupt activities by assigning additional manpower and equipment to significantly reduce scheduled work. Project managers often face situations where they need to motivate people to speed up the completion of a particular critical task. Imagine the following scenario: Bruce Young has just received a priority assignment from corporate headquarters. Preliminary technical sketches to be announced tomorrow must be emailed to the West Coast by 4pm. today, so that the model shop can begin building a prototype to present to senior management. Bruce approaches Danny Whitten, the editor in charge of the assignment, whose initial response is "That's impossible!" While Bruce agrees that it would be very difficult, he doesn't think it's as impossible as Danny suggests, or that Danny really believes it. What should he do? He tells Danny that he knows this will be a rush job, but he's sure he can do it. When Danny hesitates, he replies, “I'll tell you, I'll make you a bet. If you manage to complete the task by 4 PM Danny accepts the challenge, works hard to complete the mission and can take his daughter to her first professional basketball game. Conversations with project managers reveal that many use stakes like this to motivate excellent performance. These bets range from tickets to sporting and entertainment events, gift certificates to high-end restaurants to
afternoon off. For bets to work, they must adhere to the principles of the expectancy theory of motivation.* Simply put, expectancy theory is based on three basic questions: 1. Can I do it (is it possible to rise to the challenge)? I'll make it; Is it worth it (is the personal value reward enough to justify the extra risk and effort)? If in the participant's mind the answer to any of these three questions is no, the person is unlikely to accept the challenge. However, when the answers are yes, the person is likely to accept the challenge. Stakes can be effective motivational tools and add an element of excitement and fun to project work. But you should follow the following practical tips:1. The bet has more meaning if it also benefits family members or significant others. Being able to take a son or daughter to a professional basketball game allows that person to "earn points" at home through work. These stakes also recognize and reward the support project members receive from their families and reinforce the importance of their work to their loved ones.2. Stakes should be used sparingly. otherwise everything is negotiable. They should only be used in special cases that require extraordinary effort.3. Individual bets must involve clearly identifiable individual effort. Otherwise, others may become jealous and discord may arise. As long as others see you as requiring truly remarkable effort, "beyond the call of duty," they will see you as righteous and justified. New York: John Wiley & Sons, 1964). Finally, the impact the conflict would have on the morale and motivation of the project team must be assessed. If the low-cost method repeatedly signals to a subgroup to speed up progress, fatigue and resentment can set in. On the other hand, if it is overtime pay, other team members may resent not having access to this allowance. This situation can strain the entire project team. Good project managers assess the response that conflict activities will have on the entire project team. See the screenshot of Practice 9.5: I bet . . . for a new approach to motivating employees to work faster. Decisions to reduce time and sensitivity
page 335 Should the project owner or project manager choose the optimal cost time? The answer is "It depends". Risk must be considered. Recall from our example that the project's optimal time point represented a reduced project cost and was less than the original project's normal time (overview Figure 9.6). The project's direct cost line near the normal point is usually relatively flat. Since project overheads are generally higher in the same range, the optimal cost time is less than the normal time. The logic of the cost-time process suggests that managers should reduce project duration to the lowest point of total cost and duration. How much the design time will be reduced from the normal to the optimal time depends on the sensitivity of the design network. A network is sensitive if it has multiple critical or near-critical paths. In our example, moving the project toward optimal time requires spending money to reduce critical activities, resulting in reduced slack and/or more critical paths and activities. Reducing delay in a project with multiple near-critical paths increases the risk of delay. The practical result can be a higher total project cost if some near-critical activities are delayed and become critical. Money spent on reducing activities in the initial critical path will be wasted. Sensitive networks require careful analysis. The bottom line is that compressing projects with multiple near-critical paths reduces schedule flexibility and increases the risk of project delay. The result of such an analysis is likely to indicate only a partial movement from the normal time to the ideal time. where moving towards the optimal time can result in large savings - then the network is unresponsive. A design network is insensitive if it has a dominant critical path, i.e. non-critical paths. In this planning circumstance, moving from the normal time point to the optimal time point will not create new or near-critical activities. The key point here is that limiting the relaxation of non-critical activities increases the risk of them becoming critical only slightly compared to the effect on a sensitive network. Non-sensitive networks have the greatest potential for real, sometimes large, savings in total project cost with minimal risk of non-critical activities becoming critical. Insensitive networks are not rare in practice. they occur in perhaps 25 percent of all projects. For example, he observed a light rail project team
page 336 of your network a dominant critical path and relatively high overhead. It soon became apparent that by spending a few dollars on a few critical activities, large overhead savings could be realized. Several million dollars were saved to extend the rail line and add another station. The logic found in this example is applicable to both small and large projects. Insensitive networks with high overhead can yield big savings. Ultimately, deciding whether and which activities to stop is a decision that requires careful consideration of the options available, the costs and risks involved, and the importance of meeting a deadline. 9.6 And if it's cost, not time, what's the problem? LO 9-6 Identify different options for reducing the cost of a project In today's fast-paced world, there seems to be an increased emphasis on getting things done quickly. However, organizations are always looking for ways to do things cheaply. This is especially true for fixed-bid projects, where the profit margin is derived from the difference between the bid and the actual cost of the project. Every dollar you save is a dollar in your pocket. Bidding is sometimes strict to secure a contract, which increases the pressure to contain costs. In other cases, there are financial incentives associated with cost containment. Even in cases where costs are passed on to customers, there is pressure to reduce costs. Excessive costs make customers unhappy and can harm future business opportunities. Budgets can be adjusted or cut, and when contingency funds are depleted, cost overruns must be offset against other activities.
expensive equipment and/or materials. On the other hand, sometimes cost savings can be achieved by extending the duration of a project. This can allow for a smaller workforce, less skilled (expensive) labor and even cheaper equipment and materials to use. This section discusses some of the more commonly used cost reduction options. Reduce Project Scope Just as reducing project scope can save time, delivering less than originally planned also yields significant savings. Again, calculating the economics of a reduced project scope begins with the work breakdown structure. However, since it is not the time, you do not need to focus on critical activities. For example, on big-budget film projects, it's not uncommon for location shots to be replaced with archival footage to cut costs. Making the owner take more responsibility One way to reduce project costs is to identify tasks that customers can do themselves. Homeowners often use this method to cut costs on home improvement projects. For example, to reduce the cost of renovating a bathroom, the owner may agree to paint the room instead of paying the contractor to do it. In IS projects, a customer may agree to take part of the responsibility for testing equipment or providing in-house training. Of course, such an agreement is best negotiated before the project begins. An advantage of this method is that, although the cost is reduced, the original scope is maintained. Clearly, this option is limited to areas where the customer has experience and ability to undertake the work. Outsourcing project activities or even the entire project to complete the project. Perhaps, rather than relying on internal resources, it would be more cost-effective to outsource parts or even the entire project, opening up the work to external price competition. Specialized subcontractors often enjoy unique perks, such as discounts on bulk materials, as well as equipment that gets the job done not only faster, but also at a lower cost. They may have lower overhead and labor costs. For example,
page 337 To reduce the cost of software projects, many US companies outsource the work to foreign companies, where a software engineer's salary is one-third that of a US software engineer. However, outsourcing means you have less control over the project and should have clearly defined deliverables. Brainstorming Cost-Saving Options Just as project team members can be a rich source of ideas to speed up project activities, they can offer tangible ways to reduce project costs. For example, one project manager reported that his team was able to come up with more than $75,000 in cost savings proposals without compromising project scope. Project managers should not underestimate the value of simply asking if there is a better, cheaper way. Summary The need to reduce project duration arises for many reasons, such as imposed deadlines, time-to-market estimates, incentive contracts, key resource requirements, high overhead costs, or simply unforeseen delays. These situations are very common in practice and are known as cost-time trade-off decisions. This chapter presented a logical and formal process for assessing the impact of situations that entail a reduction in project duration. Locking in the duration of the project increases the risk of delay. How much the project duration will be reduced from the normal to the optimal time depends on the sensitivity of the project network. A sensitive network is one that has many critical or near-critical paths. Great care must be taken when shorting sensitive networks to avoid increasing project risks. Insensitive networks, on the other hand, represent opportunities for potentially large design cost savings by eliminating some overhead with little downside risk. limited by resources. Speeding up the project usually comes at the cost of spending money on more features or compromising the scope of the project. If this is the case, then it is important to consult all relevant stakeholders so that everyone agrees on the changes that need to be made. Another important point is the difference between implementing time reduction activities in the middle of project execution and incorporating them into the project plan. You
they often have far fewer options when the project is underway than they did before it began. This is especially true if you want to take advantage of new scaling methodologies such as fast tracking and critical chaining. Time spent up front considering alternatives and developing contingency plans will save time in the end. What are the five common reasons for a project to stop?2. What are the pros and cons of reducing project scope to speed it up? What can be done to reduce the disadvantages?3. Why is overtime scheduling a popular option for getting projects back on schedule? What are the potential problems of based on this option?4. Identify four overheads that you might encounter in a moderately complex project. Why are these costs classified as indirect?5. How can a cost-duration chart be used by the project manager? Explain.6. Reducing the duration of the project increases the risk of delay.Explain.7. It is possible to shorten the critical path and save money. Explain how.
page 338 practice snapshot Discussion Questions9.1 Smartphone Wars1. Can you think of another product like smartphones that has fast new product launches?2. What do you think would have happened if, for some reason, Samsung took three years to release its next-generation smartphone? 9.2 Northridge Earthquake Response1. What speed-up options did C. C. Myers use on the Northridge Earthquake project? If you were Governor Pete Wilson, how would you respond to the criticism that C. C. Meyers profited too much from the project? 9.3 Biotechnology outsourcing accelerates1. What benefits do small pharmaceutical companies gain from outsourcing project work?2. What do you think Dan Gold is referring to when he argues that all parties must make a concerted effort to work as partners? watch?v=AwEcW6hH-B81. What options did Habitat for Humanity (H4H) use to complete the house so quickly?2. How has H4H reduced the chances of human error in design? 9.5 I bet . . .
page 3391. Have you ever used gambling to motivate someone? How effective was it?2. Have you ever answered a bet? How effective was it?Exercises1. Use the information below to compress one unit of time per move using the least cost method. Reduce the schedule until you reach the point of network failure. For each move, identify which activity or activities were discontinued and the adjusted total cost. Note: The correct normal project duration, critical path and total direct cost are provided.2. Use the following information to compress one unit of time per move using the least-cost method.* Reduce the schedule until you reach the point of network failure. For each move, identify which activity or activities were discontinued and the adjusted total cost. Note: Choose B over C and E (equal cost) because it is generally smarter to lock an activity early than late E instead
page 340 two activities3. Use the information below to compress one unit of time per move using the least cost method. Reduce the schedule until you reach the point of network failure. For each move, identify which activity or activities were discontinued and the adjusted total cost.
page 3414. Given the following data and information, calculate the total direct costs for each project duration. If the overhead costs for each project duration are $90 (15 time units), $70 (14), $50 (13), $40 (12), and $30 (11), calculate the total project cost for each duration . What is the optimal cost-time schedule for the project? What is this cost?5. Use the information below to compress one unit of time per move using the least cost method. Let's say the total cost of the project is $700 and there is a savings of $50 per
reduced time unit. Record the total direct, indirect and project costs for each duration. What is the optimal cost-time schedule for the project? What is the cost? Note: The correct normal project duration and total direct costs are provided. If the overhead costs for each duration are $300 for 27 days, $240 for 26 days, $180 for 25 days, $120 for 24 days, $60 for 23 days, and $50 for 22 days, calculate the direct, indirect costs and the totals for each duration. What is the optimal cost-time schedule? The client offers you $10 for every day you shorten your original network design. would you accept If so, for how many days?
page 3427. Use the following information to compress one unit of time per move using the method of least cost. Assume that the total overhead cost of the project is $2000 and that there is a savings of $100 per unit of time reduced. Calculate total direct, indirect and project costs for each duration. Plot these costs on a graph. What is the optimal cost-time schedule for the project? Note: The correct normal project duration and total direct costs are provided.8. Use the information below to compress one unit of time per move using the least-cost method.* Reduce the schedule until you reach
page 343 network collision point. For each move, identify which activity or activities were discontinued and the adjusted total cost, and explain your choice if you must choose between activities that cost the same. 15 weeks, $1350 for 14 weeks, $1300 for 13 weeks, $1250 for 12 weeks, $1200 for 11 weeks, and $1150 for 10 weeks, what is the optimal cost schedule for the project? What is the cost?*The solution to this exercise is in Appendix 1.*The solution to this exercise is in Appendix 1. ReferencesAbdel-Hamid, T. and S. Madnick, Software Project Dynamics: AnIntegrated Approach (Englewood Cliffs, NJ: Prentice Hall, 1991).
σελίδα 344Baker, B. M., «Cost/Time Trade-off Analysis for the Critical PathMethod», Journal of the Operational Research Society, vol. 48, αρ. 12 (1997), σελ. DeMarco, T., Slack: Getting Past Burnout, Busywork, and the Myth ofTotal Efficiency (Nova York: Broadway, 2002). Gordon, R. I., και J. C. Lamb, «A Closer Look at Brooks's Law», Datamation, junho de 1977, σελ. 81–86. Ibbs, C. W., S. A. Lee e M. I. Li, «Fast-Tracking's Impact on Project Change», Project Management Journal, τομ. 29, όχι. 4 (1998), σσ. 35–42. Khang, D. B. e M. Yin, «Time, Cost, and Quality Trade-off in Project Management», International Journal of Project Management, τομ. 17, όχι. 4 (1999), σελ. 249–56. Perrow, L. A., Finding Time: How Corporations, Individuals, and Families Can Benefit from New Work Practices (Ithaca, NY: Cornell University Press, 1997). Roemer, T. R., R. Ahmadi, and R. Wang, «Compensações de tempo e custo no desenvolvimento de produtos sobrepostos», Pesquisa de operações, τόμ. 48, αρ. 6 (2000), σελ. (Νέα Υόρκη: Van Nostrand Reinhold, 1997). Verzuh, E., The Fast Forward MBA in Project Management, 4th ed. (Νέα Υόρκη: John Wiley, 2015). Vroom, V. H., Work and Motivation (Νέα Υόρκη: John Wiley & Filhos, 1964). Caso 9.1
International Capital, Inc.—Part B Given the project network derived from Part A of Case Chapter 7, Appendix 7.1, Beth also wants to be prepared to answer any questions related to compressing the project duration. This matter will almost always be considered by the Accounting Department, the audit committee and the client. To be prepared for the compression issue, Beth has prepared the following data in case it becomes necessary to stop the project. (Use the time-weighted averages [te] calculated in Part A of the International Capital case found in Chapter 7.) Cost/dayA$3.0003$500B 5.00021,000C 6.0000—D 20.00033,000E 10,000 ,000F 7.00011.000G 20.000 23.000H 8.00012. 000I 5, 00012,000J 7 ,00011,000 K 12,00060 Normal  3,000 total data provided activity stop decisions and project duration with best cost time. Given the information you have developed, what suggestions would you give Beth to ensure she is well prepared for the project review committee? Assume that the overhead for this project is $700 per labor day. Will this change your suggestions?
page 345 Case 9.2 Ventura Baseball Stadium—Part B This case is based on a design presented in Chapter 6 (p. 209). You will need to use the project plan created in the Ventura Baseball Stadium case to complete this task. Ventura Baseball Stadium is a 47,000-seat professional baseball stadium. G&E began construction on June 10, 2019 and will complete it on February 21, 2022. The stadium is expected to be ready for the opening of the 2022 regular season. Deadline April 3, 2022. The project started on time and was progressing well until a accident during the lower bowl leak. Two workers were seriously injured and the activity was suspended for four weeks while the cause of the accident was investigated and the site was cleared to proceed. The president of the G&E company, Percival Young, expresses concern about the delay in the work. The project began with approximately six weeks remaining between the projected completion date and the mandated deadline of April 3 (start day). Now, there is only a two-week cushion with over a year's worth of work to complete. He has asked you to consider the following options to reduce the duration of the project and recover some of the lost buffer time.A. Allocate overtime to complete seat installation in 120 days, not 140 days.B. Allocate overtime to complete infrastructure in 100 days, not 120 days.C. Enter a start-start interval where roof construction begins 70 days after construction of roof supports begins.D. Enter a start-to-start interval where scoreboard installation can begin 100 days after construction of the upper steel bin begins.
E. Introduce a start-to-start window where seating installation can begin 100 days after the start of the main pitch spill and construction of the upper steel bowl. Write a short note to Young detailing your recommendation and rationale. countries participate with their sailboats in the Round theWorld Whitbread sailing race, which lasts for nine months. In recent years, around 14 countries have participated with sailboats in the race. The sailing ships imported each year represent the latest technologies and human skills that each country can muster. Bjorn Ericksen was chosen as project manager because of his previous experience as a master helmsman and because of his new reputation as "the best racing yacht designer in the world". Bjorn is delighted and proud to have the opportunity to design, build, test and train the team for next year's Whitbread entry into his country. Bjorn has chosen Karin Knutsen (Lead Design Engineer) and Trygve Wallvik (As Master Helmsman) to be the team leaders responsible for preparing next year's entry for the traditional all-entry parade on the River Thames in the UK Kingdom, which marks the start of the race. When Bjorn starts thinking about a project plan, he sees two parallel paths through the project - design, construction and crew training. Last year's boat will be used for training until the new entry has crew on board to learn maintenance work. Bjorn calls Karin and Trygve together to develop a project plan. All three agree that the main goal is to have a winning boat and crew ready to compete in next year's US$3.2 million competition. A check of Bjorn's calendar shows he has 45 weeks before next year's ship leaves port for the UK to start the race.
σελίδα 346Η ΑΡΧΙΚΗ ΣΥΝΑΝΤΗΣΗ Ο Bjorn ζητά από την Karin να ξεκινήσει περιγράφοντας τις κύριες δραστηριότητες και τη σειρά που απαιτούνται για το σχεδιασμό, την κατασκευή και τη δοκιμή του σκάφους. Η Karin ξεκινά σημειώνοντας ότι ο σχεδιασμός της γάστρας, του καταστρώματος, του ιστού και των αξεσουάρ πρέπει να διαρκέσει μόλις 6 εβδομάδες - λαμβάνοντας υπόψη τις εκτυπώσεις σχεδιασμού από συμμετοχές από προηγούμενους αγώνες και ορισμένες εκτυπώσεις από συμμετοχές από άλλες χώρες. Με την ολοκλήρωση του έργου, μπορεί να κατασκευαστεί η γάστρα, να παραγγελθεί ο ιστός, να παραγγελθούν πανιά και να παραγγελθούν αξεσουάρ. Το κύτος θα χρειαστεί 12 εβδομάδες για να ολοκληρωθεί. Το κοντάρι μπορεί να παραγγελθεί και θα χρειαστεί χρόνος παράδοσης 8 εβδομάδων. Μπορείτε να παραγγείλετε τα επτά κεριά και θα χρειαστούν 6 εβδομάδες για να φτάσουν. Τα αξεσουάρ μπορούν να παραγγελθούν και θα χρειαστούν 15 εβδομάδες για την παραλαβή τους. Μόλις η γάστρα είναι έτοιμη, μπορούν να τοποθετηθούν οι δεξαμενές έρματος, κάτι που διαρκεί 2 εβδομάδες. Στη συνέχεια μπορεί να κατασκευαστεί το κατάστρωμα που θα απαιτήσει 5 εβδομάδες. Ταυτόχρονα, η γάστρα μπορεί να υποβληθεί σε επεξεργασία με ειδικό στεγανωτικό και ανθεκτικό στην τριβή επίστρωση, διαρκώντας 3 εβδομάδες. Μόλις τελειώσει το κατάστρωμα και παραληφθούν ο ιστός και τα αξεσουάρ, ο ιστός και τα πανιά μπορούν να τοποθετηθούν, χρειάζονται 2 εβδομάδες. μπορούν να τοποθετηθούν αξεσουάρ, η οποία θα διαρκέσει 6 εβδομάδες. Όταν ολοκληρωθούν όλες αυτές οι δραστηριότητες, το πλοίο μπορεί να δοκιμαστεί στη θάλασσα, κάτι που θα διαρκέσει 5 εβδομάδες. Η Karin πιστεύει ότι μπορεί να έχει σταθερές εκτιμήσεις κόστους για το σκάφος σε περίπου 2 εβδομάδες. Ο Τρίγκβε πιστεύει ότι μπορεί να αρχίσει να επιλέγει το πλήρωμα των 12 ανδρών ή γυναικών και να εξασφαλίσει αμέσως τη διαμονή τους. Πιστεύει ότι θα χρειαστούν 6 εβδομάδες για να βρεθεί μια αφοσιωμένη ομάδα στο χώρο και 3 εβδομάδες για να εξασφαλίσει στέγη για το πλήρωμα. Ο Trygve υπενθυμίζει στον Bjorn ότι το περσινό σκάφος θα πρέπει να είναι έτοιμο για χρήση για εκπαίδευση από τη στιγμή που το πλήρωμα είναι στο χώρο μέχρι το νέο σκάφος να είναι έτοιμο για δοκιμή. Η διατήρηση του παλιού πλοίου σε λειτουργία θα κοστίζει 4.000 δολάρια την εβδομάδα για όσο διάστημα χρησιμοποιείται. Μόλις το πλήρωμα βρεθεί στο χώρο και στεγαστεί, μπορούν να αναπτύξουν και να εφαρμόσουν ένα πρόγραμμα εκπαίδευσης ρουτίνας συντήρησης και πλοήγησης, το οποίο θα διαρκέσει 15 εβδομάδες (χρησιμοποιώντας το παλιό σκάφος). Επιπλέον, μόλις επιλεγεί το πλήρωμα και στη θέση του, μπορεί να επιλεγεί ο εξοπλισμός του πληρώματος, που χρειάζονται μόλις 2 εβδομάδες. Στη συνέχεια μπορεί να παραγγελθεί ο εξοπλισμός του πληρώματος. θα χρειαστούν 5 εβδομάδες για να φτάσει. Μόλις ολοκληρωθεί το πρόγραμμα συντήρησης του πληρώματος και εκπαίδευσης εξοπλισμού, μπορεί να ξεκινήσει η συντήρηση του πληρώματος στο νέο σκάφος. αυτό πρέπει να διαρκέσει 10 εβδομάδες. Αλλά η συντήρηση του πληρώματος στο νέο σκάφος δεν μπορεί να ξεκινήσει μέχρι να ολοκληρωθεί το κατάστρωμα και να φτάσουν το κατάρτι, τα πανιά και τα εξαρτήματα. Μόλις ξεκινήσει η συντήρηση του πληρώματος στο νέο σκάφος, το νέο σκάφος θα κοστίζει 6.000 $ την εβδομάδα μέχρι να ολοκληρωθεί η θαλάσσια εκπαίδευση. Με την ολοκλήρωση της συντήρησης στο νέο πλοίο και ενώ
page 347 the boat is tested, initial sailing training can be applied. The training should last 7 weeks. Finally, after testing the boat and completing initial training, regular offshore training can be implemented - weather permitting. regular training at sea requires 8 weeks. Trygve thinks he can calculate the cost in a week given last year's expenses. Bjorn is pleased with the experience shown by his team leaders. But he believes they need someone to develop one of these critical trail networks to see if they can safely meet the launch deadline for the race. Karinand Trygve agrees. Karin suggests that cost estimates also include collision costs for any activities that may be compressed and resulting accident costs. Karin also suggests that the team complete the priority table shown in Figure C9.1 for making decisions about the project. FIGURE C9.1 Project priority table: Whitbread project TWO WEEKS LATER Karin and Trygve submit the following cost estimates for each activity and the corresponding conflict costs for Bjorn (costs are in thousands of dollars):
Bjorn examines the materials and wonders if the project will be completed within the $3.2 million budget and in 45 weeks. Please inform the Whitbread team of the situation. Case 9.4 Project Nightingale — Part A You are Rassy Brown's assistant project manager in charge of the Nightingale project. Nightingale was the code name given to the development of a portable electronic medical reference guide. Nightingale
Page 348 will be designed for emergency medical technicians and paramedics who need a quick reference guide for use in emergency situations. Rassy and his design team developed a design plan with the goal of producing 30 working models in time for MedCON, the largest medical equipment trade show of the year. Meeting the October 25 MedCON deadline was critical to success. All major medical device manufacturers presented and took orders for new products at MedCON. Rassy had also heard rumors that competitors were considering developing a similar product and knew that being first to market would provide a significant sales advantage. Additionally, senior management made funding conditional on developing a viable plan to meet the MedCON deadline. The project team spent the morning working on Nightingale's program. They started with the WBS and developed the information into a network, adding activities as needed. The team then aggregated the time estimates collected for each activity. The following is preliminary information on timed activities and predecessors. Activity Description Duration Previous 1 Architectural Decisions10 None 2 Internal Specifications201 3 External Specifications181 4 Feature Specifications151 5 Voice Recognition152, 3 6Box aS a23 47Dis or s 22, 3 9Me Movie channel 22, 310 Database40411Microphone/Audio table 5412Pager 4413barcode reader 3414Alarm clock 44
Page 34915 Computer I/O 5416Revision design105, 6, 7, 8, 9, 10, 11, 12, 13, 14, 1517 Value items 55, 6, 7, 8, 9, 10, 12,15,11,3 , 1719Document Design351620Browse Prototype Components201821Assemble Prototypes102022Lab Test Prototypes202123Field Test Prototypes2019, 2224Tweak Design202325Order Prototype Parts1524 025, FS—8 time units 26, FS—13 time units 28 time unit Test 102729 Production 30 Units 152830 Train Sales Agents 1029 Use any available project network computer program to develop the schedule for the activities (see the case appendix after Case 9.5 for further guidance) — noting the early and late times, the critical path, and the estimated completion of the project. Prepare a short note addressing the following questions:1. Will the project meet the October 25 deadline as planned? 2. What activities are on the critical path?3. How sensitive is this network? Case 9.5
page 350Nightingale Project—Part Brassy and the team were worried about the results of their analysis. They spent the afternoon discussing alternative ways to shorten the duration of the project. They rejected outsourcing activities because most of the work was developmental in nature and could only be done in-house. They considered changing the scope of the project by removing some of the proposed product features. After much discussion, they felt that they could not compromise on any important feature and be successful in the market. They then turned their attention to speeding up the completion of activities through overtime and adding additional technical manpower. Rassy included a $200,000 discretionary fund in his proposal. She was willing to invest up to half of that capital to speed up the project, but she wanted to keep at least $100,000 to deal with unexpected problems. After a long discussion, his team concluded that the following activities could be reduced at the specified cost: The development of the voice recognition system could be reduced from 15 days to 10 days at a cost of $15,000. Database creation could be reduced from 40 days to 35 days at a cost of $35,000. Document design can be shortened from 35 days to 30 days at a cost of $25,000. External specifications can be reduced from 18 days to 12 days at a cost of $20,000. cost $30,000. Parts orders could be reduced from 15 to 10 days at a cost of $20,000. duration that creates delays from start to start. He said, for example, that his people shouldn't wait until all the field tests are done to start making final tweaks to the design. They could start making adjustments after the first 15 days of the trial. The project team spent the rest of the day analyzing how
they could introduce network delays to shorten the project. They concluded that the following end-to-end relationships can translate into delays: Document design can begin 5 days after the review project begins. The coordination project can start 15 days after the start of the field test prototypes. Ordering parts can start 5 days after the start of the tuning project. Ordering of custom parts can begin 5 days after the start of the tuning project. Training of sales representatives can begin 5 days after the trial begins and be completed 5 days after the production of 30 units. As the meeting closes, Rassy turns to you and tells you to evaluate the options presented and try to develop a schedule that meets the October 25th deadline. You need to prepare a report to present to the project team that answers the following questions:1. Is it possible to meet the deadline?2. If so, how would you recommend changing the original program (Part A) and why? Evaluate the relative impact of stopping activities versus introducing delays to shorten project duration.3. What would the new program look like?4. What other factors should be considered before finalizing the schedule? CASE APPENDIX: TECHNICAL DETAILS Create your project schedule and evaluate your options based on the following information:1. The project will start on the first working day of January 2017.2. The following holidays are observed: January 1st, Memorial Day (last Monday in May), July 4th, Labor Day (first Monday in September), Thanksgiving (fourth Thursday in November), December 25th and 3/26. If a public holiday falls on a Saturday, Friday will be given as an additional day off. if it falls on a Sunday, Monday will be given as a day off. 4. The project team works from Monday to Friday, 8 hours a day.5. If you choose to reduce the duration of any of the aforementioned activities, they must be at the specified time and cost (for example, you cannot
page 351 choose to reduce the database to 37 days at a reduced cost. you can only reduce it to 35 days at a cost of $35,000).6. You can only spend up to $100,000 to reduce project activities. Delays have no extra cost. Case 9.6 The 'Now' Wedding – Part A* On December 31st of last year, Lauren walked into the family living room and announced that she and Connor (her college boyfriend) were getting married. After recovering from the shock, her mother hugged her and asked, "When?" The following conversation resulted: Lauren: January 21 Mother: What? Father: Now Wedding will be the social hit of the year. Wait a minute. Why so early? Lauren: Because on January 30th, Connor, who is in the National Guard, is going overseas. We want a week for honeymoon. Mother: But dear, we can't finish all the things that need to be done by then. Do you remember all the details related to your sister's wedding? Even if we start tomorrow, it takes a day to close the church and banquet hall and at least 14 days notice is needed. This must be done before we start decorating, which takes 3 days. However, an additional $200 on Sunday would reduce the 14 day notice to 7 days.
page 352 Dad: Wow! Lauren: I want Jane Summers to be my maid of honor. Dad: But he's in the Peace Corps in Guatemala, isn't he? It would take 10 days to get ready and get here. Lauren: But we could get her in 2 days and it would only cost $1,000. It takes 2 days to choose the cake and decorations, and Jack's Catering wants at least 5 days notice. Also, we should have these things before we start decorating. , we would have to substitute some lace, but you could use it, yes. We could order the lace from New York when we order the material for the bridesmaids dresses. It takes 8 days to order and receive the material. The pattern must be selected first and this will take 3 days. Dad: We could get the stuff here in 5 days if we paid an extra $20 for air freight. Lauren: I want Ms. Jacks works on the dresses Mother: But he charges $48 a day Father: Ouch! Mother: If we did all the sewing we could finish the dresses in 11 days. Jacks helped us get it down to 6 days at a cost of $48 for each day less than 11 days. She is very good too. Lauren: I don't want anyone but her. Mom: It would take 2 more days to do the final fitting and 2 more days to clean and iron the dresses. They should be ready the night of the rehearsal. We have to have a rehearsal the night before the wedding.
Dad: Everything must be ready for rehearsal night. Mother: We forgot something. The invitations! Father: We have to order the invitations from Bob's printer, and that usually takes 7 days. I bet he would do it in 6 days if we paid him $20 more! This will be classy. Mom: Invitations must go out at least 10 days before the wedding. If we let them go later, some of the relatives would take too long to come and that would make them angry. I bet if we didn't take them out 8 days before the wedding Aunt Ethel wouldn't be able to come and she would cut the wedding gift by $200. Dad: Oh boy!! Mom: We'll have to get it for the Post Office to send to them and that takes a day. Shipping would take 3 days unless we hired some part time girls and couldn't start until the printer was finished. If we hired the girls we would probably save 2 days spending $40 for every day we saved. Lauren: We have to buy gifts for the bridesmaids. I could spend a day doing this. Mom: Before we even start writing the invitations, we need a guest list. Goodness, it will take 4 days to complete and only I can understand our address file. Lauren: Oh mom, I'm so excited. We can put each of the relatives in a different job. Mother: Honey, I don't see how we can do that. Well, I have to pick out the invitations and templates and book the church and. . .Dad: Why don't you take $3,000 and run? Your sisters
page 353my wedding cost $2,400 and he didn't have to bring people from guatemala, hire extra girls and mrs. Valets, use air transport or anything like that.1. Using the yellow sticky approach shown in Practice Scenario 6.1, develop a project network for the "Now" wedding.2. Create a wedding plan using MS Project. Can you meet the January 21st wedding "Now" deadline? If you can't, how much would it cost to meet the January 21st deadline and what activities would you change? Wedding - Part B Several complications arose in trying to meet the January 20th deadline for the "Now" wedding rehearsal. Since Lauren had her wedding on January 21st (as did Connor for obvious reasons), the implications of each of these complications had to be assessed.1. On January 1, the chairman of the church's Guardian Committee was not impressed with the additional donation and said he would not reduce the notice period from 14 to 7 days.2. Mom came down with a 3 day flu when she started working on the guest list on January 2.3. Bob's Printing Shop printer was down for 1 day on January 5th to replace faulty brushes in the motor.
4. The lace and material of the dress were lost in transit. The loss notification was received on January 10th. Could the wedding still take place on January 21st? If not, what options were available? Design Elements: Practice Snapshot, Highlight Box, Case Icon: ©SkyDesigns/Shutterstock1 Brooks' Mythical Man-Month (Reading, MA: Addison-Wesley, 1994) is considered a classic in software project management.2 Gordon, R.L. and J.C. Lamb, “A Close Look at Brooks' Law,” Datamation, June 1977, pp. 81–86.3 Linearity assumes that each day's lock-in cost is constant.
10-110-210-310-410-510-610-710-810-9page 354CHAPTER TEN10Being an Effective Project Manager LEARNING OBJECTIVES After reading this chapter, you will be able to: Understand the difference between managing and leading a project. project stakeholders Identify and apply different “currencies of influence” to create positive relationships with others. Create a stakeholder map and develop strategies for managing project dependencies. Understand the need for a highly iterative project management style. .Understand the importance of building trust and behaving ethically while working on a project. Identify the qualities of an effective project manager. DESCRIPTION
10.110.210.310.410.510.610.7page 355 Managing vs. Leading a Project Engaging Project StakeholdersInfluence as ExchangeSocial Network BuildingEthics and Project ManagementBuilding Trust: The Key to InfluenceQuality of a Manager to Do My ProjectI could be effective on the project it is as I thought it should be. Boy, I had a lot to learn!—Startup Project Manager
page 356 This chapter is based on the premise that one of the keys to being an effective project manager is building collaborative relationships between diverse groups of people to complete projects. Project success does not depend only on the performance of the project team. Success or failure often depends on contributions from senior management, operational staff, customers, suppliers, contractors and others. The chapter begins with a brief discussion of the differences between managing and leading a project. The importance of stakeholder involvement in the project is then presented. Managers need a broad base of influence to be effective in this area. Different sources of influence are discussed and used to describe how project managers build social capital. This style of management requires constant interaction with different groups of people on whom project managers depend. Particular attention is paid to managing the critical relationship with senior management and the importance of leading by example. The importance of gaining cooperation in building and maintaining the trust of others is emphasized. The chapter ends by identifying the personal characteristics associated with being an effective project manager. Subsequent chapters will expand these ideas into a discussion of project team management and working with people outside the organization. It should be noted that the material presented in this chapter is from the perspective of a project manager assigned to a traditional project-based project, although many of the ideas apply to agile project leaders. Applications will be covered in Chapter 15.10.1 Managing versus Directing a Project LO 10-1 Understand the difference between managing and directing a project. In a perfect world, the project manager would simply implement the project plan and the project would be completed. The project manager would work with others to formulate a schedule, organize a project team, track progress, and announce what needed to be done next, and then everyone would move on. Of course, nobody lives in a perfect world and rarely does everything go according to plan. Project participants get irritated. they fail to get along with each other. other departments do not fulfill their commitments. technical
σελίδα 357 εμφανίζονται αποτυχίες. η εργασία διαρκεί περισσότερο από το αναμενόμενο. Η δουλειά του διαχειριστή έργου είναι να επαναφέρει το έργο σε τροχιά. Ένας διευθυντής επιταχύνει ορισμένες δραστηριότητες. ανακαλύπτει τρόπους επίλυσης τεχνικών προβλημάτων. χρησιμεύει ως ειρηνοποιός όταν αυξάνονται οι εντάσεις. και κάνει τους κατάλληλους συμβιβασμούς μεταξύ χρόνου, κόστους και εμβέλειας του έργου. Ωστόσο, οι διαχειριστές έργων συχνά κάνουν περισσότερα από την κατάσβεση των πυρκαγιών και κρατούν το έργο σε καλό δρόμο. Καινοτομούν επίσης και προσαρμόζονται στις μεταβαλλόμενες συνθήκες. Μερικές φορές χρειάζεται να παρεκκλίνουν από το σχέδιο και να εισαγάγουν σημαντικές αλλαγές στο εύρος και το χρονοδιάγραμμα του έργου για να ανταποκριθούν σε απρόβλεπτες απειλές ή ευκαιρίες. Για παράδειγμα, οι ανάγκες των πελατών μπορεί να αλλάξουν, απαιτώντας σημαντικές αλλαγές σχεδιασμού στα μέσα του έργου. Οι ανταγωνιστές ενδέχεται να εισάγουν νέα προϊόντα που επιβάλλουν ολοένα και πιο αυστηρές προθεσμίες έργων. Οι εργασιακές σχέσεις μεταξύ των συμμετεχόντων στο έργο μπορεί να καταρρεύσουν, απαιτώντας ανασχηματισμό της ομάδας του έργου. Τελικά, αυτό που σχεδιάστηκε ή αναμενόταν στην αρχή μπορεί να είναι πολύ διαφορετικό από αυτό που υλοποιήθηκε στο τέλος του έργου. Οι διαχειριστές έργων είναι υπεύθυνοι για την ενσωμάτωση πόρων που έχουν ανατεθεί για την ολοκλήρωση του έργου σύμφωνα με το σχέδιο. Ταυτόχρονα, πρέπει να ξεκινήσουν αλλαγές σε σχέδια και χρονοδιαγράμματα καθώς τα επίμονα προβλήματα καθιστούν τα σχέδια μη πρακτικά. Με άλλα λόγια, οι διαχειριστές θέλουν να διατηρήσουν το έργο σε λειτουργία ενώ παράλληλα κάνουν τις απαραίτητες προσαρμογές στην πορεία. Σύμφωνα με τον Kotter (1990), αυτές οι δύο διαφορετικές δραστηριότητες αντιπροσωπεύουν τη διάκριση μεταξύ διαχείρισης και ηγεσίας. Η διοίκηση αντιμετωπίζει την πολυπλοκότητα, ενώ η ηγεσία την αλλαγή. Η καλή διαχείριση φέρνει τάξη και σταθερότητα με τη διαμόρφωση σχεδίων και στόχων, το σχεδιασμό δομών και διαδικασιών, την παρακολούθηση των αποτελεσμάτων έναντι των σχεδίων και τη λήψη διορθωτικών μέτρων όταν χρειάζεται. Η ηγεσία περιλαμβάνει την αναγνώριση και τη άρθρωση της ανάγκης να αλλάξει σημαντικά η κατεύθυνση και η λειτουργία του έργου, ευθυγραμμίζοντας τους ανθρώπους με τη νέα κατεύθυνση και παρακινώντας τους να συνεργαστούν για να ξεπεράσουν τα εμπόδια που δημιουργούνται από την αλλαγή και να επιτύχουν νέους στόχους. Η ισχυρή ηγεσία, αν και γενικά επιθυμητή, δεν είναι πάντα απαραίτητη για την επιτυχή ολοκλήρωση ενός έργου. Τα καλά καθορισμένα έργα που δεν συναντούν σημαντικές εκπλήξεις απαιτούν λίγη ηγεσία, όπως μπορεί να συμβαίνει με τη συμβατική κατασκευή πολυκατοικιών όπου ο διαχειριστής του έργου απλώς διαχειρίζεται το σχέδιο του έργου. Από την άλλη πλευρά, όσο μεγαλύτερος είναι ο βαθμός αβεβαιότητας που εντοπίζεται σε ένα έργο - είτε όσον αφορά τις αλλαγές στο πεδίο εφαρμογής του έργου, τα τεχνολογικά αδιέξοδα ή τις αποτυχίες στον συντονισμό μεταξύ των ανθρώπων - τόσο περισσότερη ηγεσία απαιτείται. Για παράδειγμα, θα χρειαζόταν ισχυρή ηγεσία για ένα έργο ανάπτυξης λογισμικού όπου οι παράμετροι αλλάζουν πάντα για να ανταποκριθούν στις εξελίξεις του κλάδου.
It takes a special person to do both jobs well. Some people are great visionaries who are good at encouraging people to change. Often, however, these people lack the discipline or patience to handle the hard work of day-to-day management. Likewise, there are people who are very well organized and methodical, but lack the ability to inspire others. Strong leaders can compensate for their managerial weaknesses by having trusted assistants oversee and manage the details of the project. On the other hand, a weak leader can complement his strengths with assistants who are good at seeing the need for change and mobilizing project stakeholders. However, one of the things that makes good project managers so valuable to an organization is that they have the ability to manage and lead a project. In this way, they recognize the need to create a social network that allows them to discover what needs to be done and gain the necessary cooperation to achieve it. eager to implement your own ideas and manage your people to complete your project successfully. What they soon discover is that the success of the project depends on the cooperation of a wide range of people, many of whom do not report directly to them. For example, during a system integration project, a project manager was amazed at how much time he spent negotiating and working with vendors, consultants, technical experts, and other functional managers: Instead of working with my people to complete the project, I found myself constantly being pulled and pulled by demands from different groups of people who were not directly involved in the project but had an interest in the outcome. Often, when new project managers find time to work directly on the project, they take a hands-on approach to project management. They choose this style not because they are power-hungry egomaniacs, but because they are eager to achieve results. They quickly become frustrated with how slow things work, the number of people they need to get on board, and the difficulty of working together. Unfortunately, as this frustration builds, the natural temptation is to apply more pressure and become more involved in the task.
page 358 These project managers quickly gain a reputation for "micromanaging" and begin to lose sight of the real role they play in leading a project. Some new managers never break out of this vicious cycle. Others quickly realize that power does not equal influence and that being an effective project manager involves managing a much more complex set of stakeholders than they expected. They encounter a web of relationships that requires a much wider range of influence than they thought necessary or even possible. For example, a major project, whether it is renovating a bridge, creating a new product, or installing a new information system, is likely to involve, in one way or another, working with many different stakeholder groups. First, there is the core team of experts assigned to complete the project. It is likely that this team will be filled at different times by professionals working on specific parts of the project. Second, there are groups of people within the organization performing the project who are directly or indirectly involved with the project. The most notable is senior management, to whom the project manager is accountable. There are also other managers, who provide resources and/or may be responsible for specific parts of the project, as well as administrative support services such as HR, Finance, etc. Depending on the nature of the project, various groups outside the organization influence the success of the project. What matters most is the client for whom the project is designed (see Figure 10.1). FIGURE 10.1 Stakeholder Network
Each of these stakeholder groups brings different expertise, standards, priorities and agendas to the project. Stakeholders are people and organizations who are actively involved in the project or whose interests may be positively or negatively affected by the project (Project Management Institute, 2017). The breadth and complexity of stakeholder relationships distinguish project management from routine management. To be effective, a project manager must understand how stakeholders can influence the project and develop methods for managing dependency. The nature of these dependencies is specified here: The project team manages and completes the project work. Most participants want to do a good job, but are also concerned about their other obligations and how their involvement in the project will contribute to their personal goals and aspirations. Project managers naturally compete with each other for resources and top management support. At the same time, they often need to share resources and exchange information. Administrative support groups such as human resources, information systems, purchasing agents, and maintenance provide valuable support services. At the same time, they impose limitations and requirements on the project, such as e.g
page 359 expense documentation and timely and accurate delivery of information. Functional managers, depending on how the project is organized, may play a minor or major role in the success of the project. In matrix settings, they may be responsible for assigning project personnel, resolving technical issues, and overseeing the completion of significant portions of project work. Even in dedicated project teams, technical input from functional managers can be helpful, and acceptance of completed project work can be critical for internal projects. Functional managers want to collaborate to a degree, but only to a certain degree. They are also interested in maintaining their status within the organization and minimizing the disruption the project may cause to their own operations. Senior management approves project funding and sets priorities within the organization. They define success and judge rewards for achievement. Major adjustments to budget, scope, and schedule usually need your approval. They have a vested interest in the success of the project, but at the same time, they must be responsive to what is best for the entire organization. Project sponsors advocate for the project and use their influence to win project approval. Their reputation is tied to the success of the project and they need to be informed of any important developments. They defend the project when it is attacked and are an important ally of the project. Contractors can do all the actual work - in some cases, with the project team simply coordinating their contributions. In other cases, they are responsible for ancillary parts of the project object. Poor work and schedule delays can affect the work of the core project team. Although contractors' reputations depend on good work, they must balance their contributions with their own profit margins and commitments to other clients. Government agencies place restrictions on project work. Permits must be secured. Construction work must be built to code. New drugs must go through a series of rigorous tests by the US Food and Drug Administration. Other products must meet safety standards, for example, Occupational Safety and Health Administration standards. Vendors/suppliers provide the necessary resources to complete the project work. Delays, shortages and poor quality can delay a project. Other organizations, depending on the nature of the project, may directly or indirectly affect it. For example, environmental groups can challenge
page 360 ​​or even block the work of the project. Public interest groups can put pressure on government agencies. Clients often hire consultants and auditors to protect their interest in a project. The clients define the scope of the project and the ultimate success of the project depends on their satisfaction. Project managers must respond to the changing needs and demands of clients and meet their expectations. Clients are primarily interested in getting a good deal, and as will be explained in Chapter 11, this naturally creates tension with the project team. For example, functional managers are likely to be less cooperative if they perceive that senior management's commitment to the project is waning. On the other hand, the project manager's ability to protect the team from excessive interference from a customer is likely to improve his position on the project team. The project management framework used will affect the number and degree of external dependencies to be involved. One advantage of creating a dedicated project team is that it reduces dependencies, especially within the organization, because most of the resources are assigned to the project. On the other hand, a functional board structure increases dependencies, making the project manager much more reliant on functional colleagues for work and teamwork. PRACTICAL IMMEDIATENESS 10.1 The Project Manager as Guide Metaphors convey meaning beyond words. For example, an encounter may be described as difficult or "like walking through molasses." A popular metaphor for the role of the project manager is that of the conductor. The conductor of an orchestra integrates the different sounds of different instruments to perform a given composition and create beautiful music. Similarly, the project manager integrates the talents and contributions of different experts to complete the project. Many consider coordinating and integrating the work of others to be the primary role of project managers (Project Management Institute, 2017). Both a driver and a project manager must be good at understanding how the different players contribute to the performance of the whole. Both depend almost entirely on the experience and expertise of the players. The conductor does not own all the musical instruments. Similarly, the project manager often has only a small percentage of the technical knowledge to make decisions. As such, the conductor and project manager facilitate each other's performance rather than actually performing.
page 361 Conductors use hands, baton, and other nonverbal gestures to influence tempo, volume, and participation of different musicians. Similarly, project managers orchestrate project completion by managing the commitment and attention of project members. with one move. Each controls the pace and intensity of the work by managing the time and participation of the musicians. JGI/Jamie Grill/Blend Images LLC Finally, each has a vision that goes beyond the soundtrack or project design. To be successful, both must earn the trust, respect and confidence of their players. The old-fashioned view of project management emphasized planning and directing the project team. the new perspective emphasizes stakeholder involvement in projects and the anticipation of change as the most important jobs. Project managers must be able to alleviate client concerns, support the project at the highest levels of the organization, and quickly identify issues that threaten the project's work, while supporting the integrity of the project and the interests of its stakeholders project. In this network of relationships, the project manager must understand what needs to be done to achieve the project's goals and build a collaborative network to achieve it. Project managers must do this without the authority to expect or demand cooperation. Doing so requires good communication skills, political knowledge and a broad base of influence. See Practice Slide 10.1: The Project Manager as a Guide to learn more about what makes project managers special. See Research Spotlight 10.1: Give and Take for an interesting insight into this concept. Research Spotlight 10.1
Give and Take* Adam Grant of the University of Pennsylvania identifies three fundamental styles of social interaction in relation to the law of reciprocity: Takers - like to get more than they give and put their own interests above others. Givers - they prefer to give more than they receive and pay more attention to what others need. Matching - they try to maintain an equal balance between give and take and operate on the principle of fairness. While Grant admits that people will switch from one style to another, he cites research that shows that most people develop a primary interaction style. Continues to review research on the relationship between interaction style and career success. Not surprisingly, he found that donors tended to fall to the bottom of the success ladder. They make others better, but sacrifice their own success in the process. Guess who is at the top of the ladder of success? It's the Giver again! Grant goes on to explain this paradox by arguing that while it is true that many Givers are very cautious and shy, there are other Givers who are willing to give more than they receive and still have their best interests in mind, using them as a guide in their selection. when, how and to whom to donate. These types of donors are able to build much larger and more powerful social networks than users and matchers. The goodwill they can generate is an important factor behind the success of this type of Donor. Grant claims that Abraham Lincoln is a perfect example of a Donor who made it to the top. he had previously won to join his management team (Cabinet) in key positions. Grant predicts that a Taker would have protected his ego and invited only "yes men" and a Matcher would have offered nominations for allies. Lincoln stated that he needed the best possible men to run the country, and by always focusing on what was best for the country, he was able to assemble an effective management team. Effective project managers like Lincoln make decisions based on what is best for the project. organization, not personal interests. They try to help others and build social capital. They are not shy, but proactive in building connections with key people inside and outside their organization. *Grant, Adam, Give and Take: A Revolutionary Approach to Success (New York: Viking Press, 2013). 10.3 Influence as Exchange
page 362LO 10-3Identify and apply different “currencies of influence” to create positive relationships with others. To successfully manage a project, a manager must skillfully build a network of cooperation between different allies. Networks are mutually beneficial alliances that are generally governed by the law of reciprocity (Grant, 2013; Kaplan, 1984). The basic principle is that "one good deed deserves another and likewise one bad deed deserves another". The primary way to obtain cooperation is to provide resources and services to others in exchange for future resources and services. Cohen and Bradford (1990) described the exchange view of influence as 'coins'. If you want to do business in a particular country, you must be prepared to use the appropriate currency, and exchange rates can change over time as conditions change. Similarly, what is valued by a marketing manager may be different than what is valued by a veteran design engineer, and you will likely need to use different currencies of influence to gain each person's cooperation. While this analogy is a bit of an oversimplification, the basic premise is true: In the long run, the "debit" and "credit" accounts must balance for cooperative relationships to work. Table 10.1 presents the traded organization currencies identified by Cohen and Bradford. are discussed in more detail in the following sections. TABLE 10-1 Commonly Negotiable Organizational Currencies Task-Related Currencies Resources Borrowing or donating money, budget increases, staffing, etc. or assistance in implementation.InformationProviding organizational and technical knowledge.Position-related currenciesPromotionProviding a task or assignment that can lead to promotion.RecognitionRecognizing effort, accomplishments, or skills.VisibilityProviding an opportunity to be recognized by superiors or other important people in the organization.
page 363 Networking/Contacting Providing opportunities to network with others. Coins related to inspirationVision Engage in work that has greater meaning for the unit, organization, customer or society. Excellence You have the opportunity to do important things very well. Moral rectitude Doing what is "Right" at a higher level than efficiency. Relationship Currencies Acceptance Providing closeness and friendship.Personal Support Providing personal and emotional support.Understanding Listening to others' concerns and problems.Relational Currencies Challenge/Learning Sharing Tasks that increase abilities/assets in others. GratitudeExpressing appreciation Source: Adapted from A. R. Cohen and David L. Bradford, Influence without Authority (New York: John Wiley & Sons, 1990) Task currencies Task currencies come in various forms and are based on the project manager's ability to help others by their work. Probably the most important form of this currency is the ability to respond to requests from subordinates for more manpower, money, or time to complete a part of a project. This kind of currency is also evident in sharing resources with another project manager in need. On a more personal level, it can simply mean providing immediate assistance to a colleague in solving a technical problem. Giving a good word for a colleague's suggestion or recommendation is another form of this coin. Since the most important work is likely to generate some form of opposition, the person trying to get approval for a plan or proposal can be greatly helped by having a "friend in court." Another form of this coin involves extraordinary effort. For example, responding to an emergency request to complete a design document in two days instead of the normal four days is likely to elicit gratitude. Finally, sharing valuable information that would be useful to other managers is another form of this currency.
Position-related currencies come from a manager's ability to enhance other people's positions in their organization. A project manager can do this by giving someone a challenging project that can help them move forward by building their skills and abilities. Having the opportunity to prove yourself naturally evokes a strong feeling of gratitude. Sharing the glory and drawing the attention of superiors to the efforts and achievements of others creates goodwill. Project managers believe that a useful strategy for gaining the cooperation of professionals in other departments/organizations is to discover how to make those people look good to their bosses. For example, a project manager worked with a subcontractor whose organization was strongly committed to total quality management (TQM). The project manager wanted to highlight in high-level briefings how the quality improvement processes initiated by the contractor helped control costs and avoid problems. Another variation of recognition is improving the reputation of others within the company. The "good guy" can open the door to many opportunities, while the "bad guy" can quickly alienate a person and hinder performance. This currency is also evident in helping to maintain one's reputation by defending someone who is unfairly accused of project setbacks. Finally, one of the most powerful forms of this currency is sharing contacts with others. Helping people expand their own networks by introducing them to key people naturally creates gratitude. For example, suggesting to a functional manager that he needs to contact Sally X if he wants to know what is really going on in that department or to receive an urgent request is likely to create a sense of indebtedness. the most powerful form of influence. Most sources of inspiration come from people's burning desire to make a difference and add meaning to their lives. Creating a compelling and bold vision for a project can create extraordinary engagement. For example, many of the technological advances associated with the introduction of the original Macintosh computer were attributed to the sense that project members had an opportunity to change the way people approached computers. A variant form of vision offers the opportunity to do something very well. Being able to take pride in your work often motivates many people. Often, the very nature of the work provides a source of inspiration. Discovering a cure for a devastating disease, introducing a new social program to help those in need, or simply building a bridge that will reduce a huge
page 364, traffic congestion can provide opportunities for people to feel good about what they are doing and to feel that they are making a difference. Inspiration works like a magnet—it draws people instead of pushing them to do something. Relationship Coins Relationship Coins are more about strengthening your relationship with someone rather than immediately completing project tasks. The essence of this form of influence is to form a relationship that transcends normal professional boundaries and extends into the realm of friendship. Such relationships are developed by providing personal and emotional support. Picking people up when they're feeling down, boosting their confidence and providing encouragement naturally builds goodwill. Sharing a sense of humor and making difficult times fun is another form of this coin. Likewise, participating in non-work related activities such as sports and family outings is another way to improve your relationships naturally. Perhaps the most basic form of this currency is simply listening to other people. Psychologists suggest that most people have a strong desire to be understood and that relationships break down because the parties stop listening to each other. Sharing personal secrets/aspirations and being a wise confidant also creates a special bond between individuals. Coins associated with people Coins associated with people deal with individual needs and the prevailing sense of self-worth. Some argue that self-esteem is a primary psychological need. the degree to which you can help others to have a sense of self-importance and worth will naturally generate goodwill. A project manager can increase a colleague's sense of worth by asking for help and input, delegating authority over work, and allowing individuals to feel free to expand their skills. This form of currency can also be seen in heartfelt expressions of gratitude for the contributions of others. One must, however, be careful when expressing gratitude, as it is easily devalued when overused. That is, the first thank you will probably be appreciated more than the fiftieth. The bottom line is that a project manager will only be influential to the extent that he can deliver something that others value. Additionally, given the diverse cast of people a project manager depends on, it's important to be able to acquire
and wield different currencies of influence. The ability to do this will be limited in part by the nature of the project and how it is organised. For example, a project manager who is responsible for a task force has much more to offer to team members than a manager who is given the responsibility of coordinating the activities of different professionals in different departments and organizations. In these cases, this manager will likely have to rely more on personal and relational bases of influence to gain the cooperation of others. Networking identifies the stakeholders on whom the success of the project depends. The project manager and his key assistants should ask the following questions: Who will we need to work with? Who do we need agreement or approval from? Whose opposition will prevent us from accomplishing the work? . For example, Figure 10.2 contains the dependencies identified by a project manager responsible for installing a new financial software system in his company. FIGURE 10.2 Stakeholder Map for the Financial Software Installation Project
page 365 It is always better to overestimate than to underestimate dependencies. All too often, talented and successful project managers have been disadvantaged by being blindsided by someone whose position or strength they had not anticipated. Once you have identified the stakeholders relevant to your project, it is important to assess their importance. Here, the power/interest matrix presented in Chapter 3 is useful. The people with the most power and interest in the project are the most important stakeholders and deserve the most attention. In particular, you need to "put yourself in their shoes" and see the project from their perspective, asking the following questions: What are the differences between me and the people I rely on (goals, values, pressures, styles work, risks) ? Do these different people see the project (supporters, indifferent, competitors)? What is the current state of my relationship with the people I depend on? What sources of influence do I have with those I depend on? analysis, you can begin to appreciate what others value and what currencies you can offer as a basis for building a working relationship. You begin to see where the potential problems lie - within the relationships
page 366 where you have current debt or no convertible currency. In addition, diagnosing the opinions of others, as well as the basis for their positions, will help you anticipate their reactions and feelings about your decisions and actions. This information is crucial for choosing the right strategic and tactical influence and for producing win/win solutions. Receipts Department, which would be one of the main users of the software. He had no previous history of working with this person, but had heard that the manager was upset with the software choice and that he considered this project another unnecessary disruption to his department's operations. Before the project started, the project manager arranged a lunch with the manager, where he sat patiently and listened to his concerns. He invested more time and attention to educate himself and his team on the benefits of the new software. She tried to minimize the disruption the move would cause to her department. She changed the implementation schedule to accommodate her preferences for when the software would be installed and the subsequent training would take place. In turn, the Download Manager and his people were much more accepting of the change and the transition to the new software was smoother than expected. Management by Wandering Around (MBWA)LO 10-5 Understand the need for a highly interactive management style in projects. The previous example illustrates a key point: project management is a "contact sport". Once you establish who the key players are, you initiate contact and start building a relationship with those players. Building this relationship requires an iterative management style. Employees at Hewlett-Packard, known as management walking around (MBWA), believe that managers spend most of their time away from their desks. MBWA is a misnomer as there is a purpose/pattern behind "wandering". Through face-to-face interactions, project managers can stay
to be in touch with what is really happening on the project and to build cooperation that is necessary for the success of the project. Effective project managers initiate contact with key stakeholders to stay informed, anticipate potential issues, provide encouragement, and reinforce project goals and vision. They are able to intervene to resolve conflicts and prevent impasses from occurring. They essentially "manage" the project. Keeping in touch with various aspects of the project, they become the focus of information. Attendees are looking for the latest and most comprehensive project information, which reinforces your central role as a project manager. We also see less effective project managers eschewing MBWA and trying to manage projects from their desks and computer terminals. These managers proudly advertise an open door policy and encourage others to see them when a problem or issue arises. For them, no news is good news. This allows your contacts to be determined by the relative aggressiveness of others. Those who take the initiative and go to the project manager get a very large percentage of the project manager's attention. Less readily available (naturally removed) or more passive individuals are ignored. This behavior contributes to the saying "Only a squeaky wheel gets oil", which causes resentment among the project team. Effective project managers also find time to regularly interact with more distant stakeholders. They liaise with vendors, vendors, senior management and other functional staff. In this way, they maintain familiarity with different places, maintain friendships, discover opportunities to do favors, and understand the motivations and needs of others. They remind people of commitments and champion the cause of your project. They also shape people's expectations (see Practice Case 10.2: Managing expectations). Through frequent communication, they allay people's concerns about the project, dispel rumors, alert people to potential issues, and lay the groundwork for dealing with failures more effectively. Unless project managers take the initiative to build a support network early on, they are likely to see a manager (or other stakeholder) only when there is bad news or when they need a favor (e.g. they don't have the data they promised or the project was delayed). Without prior, frequent, and easy give-and-take interactions around non-decisive issues, problem solving is likely to cause excessive tension. Parties are more likely to act defensively, interrupt each other, and lose sight of the common goal.
page 367LO 10-6 Manage project expectations more effectively. Experienced project managers recognize the need to build relationships before they are needed. They initiate contact with key stakeholders at times when there are no pending issues or issues and therefore no concerns and suspicions. In these social situations, they naturally indulge in small talk and responsive banter. They respond to others' requests for help, provide supportive advice and share information. By doing this, they create good feelings that will allow them to face more serious problems in the future. When one person sees the other as likeable, trustworthy, and helpful based on previous contact, they are much more likely to respond to requests for help and are less confrontational when problems arise. 2 PRACTICE 10.2 Managing expectations with Mynd's Financial Solutions Group offers several interesting insights into the art of managing stakeholder expectations:. . . expectations are difficult. All they need to root for is the absence of evidence to the contrary. Once rooted, the unspoken word encourages growth. They can grow and thrive without being grounded in reality. Because of this, project managers struggle with unrealistic expectations every day. He offers several tips for managing expectations: How you present information can clarify or confuse expectations. For example, if you estimate that a task will take 317 hours, you set high expectations with its accuracy. The interested party is likely to be unhappy if it takes 323 hours. The prospect will not be unhappy with 323 hours if you give an estimate of 300 to 325 hours. Recognize that it's just human nature to interpret a situation in your best interest. For example, if you tell someone that it will be done in January, you will tend to interpret that in your favor and assume that you have until the end of January, while the other person thinks that it will be done on January 1st. Take every opportunity to align expectations with reality. We often avoid opportunities to adjust our expectations because we cling to a false hope that things will work out. Don't ask stakeholders for suggestions for improvements if you don't intend to act on their input. Asking their opinion creates expectations.
page 368 State the obvious. What is obvious to you may be unclear to others. Don't shy away from giving bad news. Communicate openly and personally. Expect some anger and frustration. Don't get defensive in return. Be prepared to explain the impact of the issues. For example, never say the project will be delayed without being able to give a new date. Explain what you are doing to ensure this does not continue to happen. All stakeholders have expectations about the project's schedule, costs, and benefits. Project managers must listen, understand and manage these expectations.*D. Kirk, “Managing Expectations,” PM Network, Aug. 2000, pp. adequate budget, response to unexpected needs and a clear message to others in the organization of the importance of the project and the need for cooperation. LO 10-7 Develop strategies for managing senior relationships. Visible support from senior management is not only critical to securing the buy-in of other managers in an organization, but is also critical to the project manager's ability to motivate the project team. Nothing establishes a manager's right to lead more than his ability to advocate. To earn the trust of team members, project managers must be effective advocates for their projects. They must be able to convince top management to waive unreasonable demands, provide additional resources, and recognize the achievements of team members. This is easier said than done. Working relationships with senior management are a common source of concern. Regrets like the following are often made by project managers about senior management: They don't know how much it slows us down to lose Neil to another project. I would like to see you complete this project with the budget you have given us. they would decide what is really important.
While it may seem counterintuitive for a subordinate to "manage" a superior, smart project managers devote considerable time and attention to influencing and gaining support from senior management. Project managers must accept profound differences in perspective and acquire skills in the art of persuading superiors. Many of the tensions that arise between senior management and project managers are the result of differences in perspective. Project managers are naturally absorbed in what is best for their project. For them, the most important thing in the world is their work. Senior management must have a different set of priorities. They are concerned with what is best for the whole organization. It is natural that these two interests collide at times. For example, a project manager may push hard for additional staff but be rebuffed because senior management believes that other departments cannot afford to cut staff. While frequent communication can minimize differences, the project manager must accept the fact that senior management will inevitably see the world differently. art of persuading top management. But before they can convince superiors, they must first prove their loyalty (Sayles, 1989). Loyalty, in this context, simply means that, for the most part, project managers consistently respond to requests and adhere to the parameters set by senior management without much grumbling or fuss. Once managers have demonstrated their loyalty to top management, top management is much more receptive to their challenges and requests. Project managers must cultivate strong relationships with the senior executives who fund the project. As noted earlier, these are high-ranking officials who supported the approval and funding of the project. Thus, their reputation aligns with the work. Sponsors are also the ones who defend the project when it is attacked in senior management circles. They protect the design from excessive interference (see Figure 10.3). Project managers should always inform these people of any issues that may cause embarrassment or frustration. For example, if costs start to exceed budget or a technical glitch threatens to delay project completion, managers should make sure sponsors are the first to know. FIGURE 10.3 Project sponsor concept
page 369 Timing is everything. Asking for an additional offer the day after the release of disappointing third-quarter results will be much more difficult than making a similar request four weeks later. Good project managers choose the perfect moment to reach out to senior management. They enlist their project sponsors to lobby on their behalf. They also realize that there are limits to senior management accommodation. Here, the Lone Ranger analogy is apt — you have a limited number of silver bullets, so use them wisely. Project managers need to adapt their communication style to that of the senior team. For example, one project manager recognized that senior executives tended to use sports metaphors to describe business situations, so he framed a recent schedule slip by admitting that “we're down five yards, but we've still got two games to go to make a first down. ."". Smart project managers learn the language of senior management and use it to their advantage. Finally, some project managers admit to ignoring chains of command. If they are confident that senior management will reject an important request and that what they want to do will benefit the project, they do it without asking permission. Although they recognize that this is very risky, they say that bosses usually do not argue with success. Example A highly visible and interactive management style is not only necessary for building and maintaining collaborative relationships, but also allows project managers to use their most powerful leadership tool—their own behavior (Kouzes & Posner, 2012; Peters, 1988). Often, when faced with uncertainty, people look to others for cues about how to respond and show a tendency to imitate the behavior of people they respect. A project manager's behavior symbolizes how other people should work on the project. Through his behavior, project manager
Page 370 can influence how others act and respond to a variety of work-related issues. (See Practice Slide 10.3: Leading at the Edge for a dramatic example of this.) To be effective, project managers must “walk the talk” (see Figure 10.4). Six aspects of leading by example are discussed below. FIGURE 10.4 Leading by Example Priorities Actions speak louder than words. Subordinates and others discern project managers' priorities from how they spend their time. If a project manager claims that this project is critical and is then found to be spending more time on other projects, then all your verbal assurances are likely to fall on deaf ears. a report mentions the importance of testers and their work. Similarly, the types of questions project managers ask communicate priorities. By repeatedly asking how specific questions relate to customer satisfaction, a project manager can reinforce the importance of customer satisfaction. PRACTICE 10.3 INSTANTNESS
Leading from the Edge* In 1914, intrepid explorer Ernest Shackleton embarked on the Endurance with his crew of sailors and scientists to cross the unexplored continent of Antarctica. What happened in the two years between her departure and her final, incredible rescue has rarely been compared in the annals of survival: a ship crushed by the expanding ice. a crew trapped in the ice sheets of the frozen Weddell Sea. Two perilous voyages in open boats in a raging Southern Ocean. and an abandoned group on wild and abandoned elephant island, stretched to the limits of human endurance. of how Shackleton's personal example influenced the behavior of his beleaguered crew. For example, from the beginning of the transatlantic expedition to the end, Shackleton always encouraged behavior that emphasized care and respect: After the voyage to South Georgia Island, when the exhausted crew went ashore, Shackleton took the first shift, which lasted for three hours instead of normal. Crew members emulated the caring behaviors Shackleton created. A good example of this happened during one of the most dramatic moments in the Endurance saga. The food supply had dwindled to dangerously low levels. Less than a week remained and the small portion of seal steak usually served at breakfast was abolished. Meat scraps commonly used to feed dogs were inspected for edible scraps. In these miserable conditions, and after a sleepless, rainy night, a fight broke out between some of the group members. Caught in the middle, a crew member (Greenstreet) spilled the small portion of powdered milk and yelled at the biologist (Clark). Alfred Lansing described what happened next:
page 371 Source: Library of Congress, Division of Prints and Photographs, LC-USZ62-17180. Greenstreet paused to catch his breath and at that moment, his anger faded and he suddenly became silent. Everyone else in the scene fell silent and looked at Greenstreet, shaggy-haired, bearded, and smeared with soot from grease, holding his empty mug in his hand and looking helplessly at the snow that was thirsting to soak up his precious milk. The loss was so tragic that she seemed almost on the verge of tears. Without speaking, Clark reached over and poured some milk into Greenstreet's mug. They finished in silence. * Adapted from Dennis N. T. Perkins, Leading at the Edge: Leadership Lessons from the Extraordinary Saga of Shackleton’s Antarctica Expedition (New York: AMACOM Press, 2000), pp. 94–95; Alfred Lansing, Endurance: Shackleton's Incredible Voyage (New York: Carroll & Graf, 1998), p. 127. Urgency Through their actions, project managers can convey a sense of urgency, which can permeate project activities. This urgency, in part, can be conveyed through tight deadlines, frequent status reporting meetings, and aggressive solutions to speed up the project. The project manager uses these tools like a metronome to get the pace of the project. At the same time, such devices will be ineffective if there is not also a corresponding change in the behavior of the project manager. If project managers want others to work faster and solve problems faster, they need to work faster. They need to pick up the pace of their own behavior. They need to speed up the frequency of their interactions, talk and walk faster, start and leave work earlier
page 372 later. By simply increasing the pace of their daily interaction patterns, project managers can enhance the sense of urgency in others. If bad news is met with verbal attacks, then others will be reluctant to speak up. blame elsewhere. If, on the other hand, project managers focus more on how they can turn a problem into an opportunity or what can be learned from a mistake, others are more likely to take a more proactive approach to problem solving. group members interact with strangers. If a project manager makes disparaging comments about the "idiots" in the Marketing Department, that often becomes the shared opinion of the entire team. If project managers establish the norm of treating outsiders with respect and responding to their needs, others are more likely to follow. director. They set high standards for project performance through the quality of their daily interactions. They respond quickly to the needs of others, carefully prepare and conduct targeted meetings, follow up on all critical issues, facilitate effective problem solving, and stand firm on important issues. influenced by how the project manager responded to similar dilemmas. In many cases, team members base their actions on how they think the project manager would respond. If project managers intentionally misrepresent or withhold vital information from clients or senior management, they signal to others that this type of behavior is acceptable. Project management always creates a variety of ethical dilemmas. it would be a good time to delve into this topic in more detail.
10.5 Ethics and Project Management LO 10-8 Understand the importance of building trust and behaving ethically when working on a project. soon. Ethical dilemmas involve situations in which it is difficult to determine whether behavior is right or wrong. In a survey of project managers, 81 percent reported facing ethical issues in their work. to speed up progress and approve bad work. More recent work by Müller and colleagues suggests that the most common dilemma facing project managers involves transparency issues related to project performance (Müller et al., 2013, 2014). For example, is it acceptable to falsely reassure customers that everything is fine when in fact you are doing so to prevent them from panicking and worse? . For example, it is difficult to distinguish deliberate falsification of estimates from genuine errors, or deliberate exaggeration of project results from genuine optimism. It becomes problematic to determine whether the broken promises were a deliberate mistake or an appropriate response to changing circumstances. To provide greater clarity on business ethics, many companies and professional groups publish a code of ethics. Cynics see these documents as window dressing, while supporters argue they are important, if limited, first steps. In practice, personal ethics are not found in a formal statute, but at the intersection of work, family, education, profession, religious beliefs, and everyday interactions. Most project managers report relying on their own particular sense of right and wrong—what one project manager called their "internal compass." A common rule of thumb for testing whether a response is ethical is to ask, “Imagine that everything you did was published on the front page of the local newspaper. How would you like it? Would you be comfortable?
page 373 Unfortunately, the scandals at Wells Fargo, Enron, Worldcom, and Arthur Andersen showed the willingness of highly trained professionals to abdicate personal responsibility for wrongdoing and obey the instructions of superiors (see Practice Slide 10.4: The Collapse of Arthur Andersen ). and an organization's culture play a key role in shaping members' beliefs about what is right and wrong. Many organizations encourage ethical violations by creating a "win at all costs" mentality. Pressures to succeed cloud thinking about whether the ends justify the means. Other organizations value "fair play" and dominate the market place by virtue of being reliable and trustworthy.6 Many project managers claim that ethical behavior is their own reward. By following your own inner compass, your behavior expresses your personal values. Others suggest that ethical behavior is doubly rewarding. Not only do you manage to fall asleep at night, but you also develop a solid and admirable reputation. As will be explored in the next section, this reputation is necessary to build the trust needed to exert influence effectively. *“Think straight and talk straight” was the principle on which Arthur E. Andersen built his accounting firm in the early 20th century. It was a phrase his mother taught him and became the company's motto. A commitment to integrity and a systematic, planned approach to work have been instrumental in making Arthur Andersen one of the largest and best-known accounting firms in the world. According to the book Inside Arthur Anderson by Susan Squires and colleagues, working for Arthur Andersen was not for everyone. It can be a difficult culture. It was very hierarchical and top down for the most free. Many people left after less than two years, believing that the rewards did not justify the demands placed on them. Others learned to play by the rules, and some even thrived. To stay with the company, employees had to work hard, respect the authority of the position, and maintain a high level of compliance. In return, they were rewarded with support, promotion and the opportunity to become partners. People who made careers at the company grew up together, professionally and personally, and most had never worked elsewhere. For these survivors, Andersen was their second family, and they developed a strong loyalty to the company and its culture. (p. 133) On October 23, 2001, David Duncan told the Enron project team based in Houston that they had to begin complying with Andersen's new policy for handling audit documents. the politics
it had been instituted to ensure that strange company documents could not be used in legal proceedings. While the document retention policy required the retention of documents supporting the company's audit and views, it permitted the destruction of a wide range of secondary documents. The group reacted with stunned silence to Duncan's instruction. Then they all got up and started running to do as they were told. No one asked Duncan to explain further. No one asked if what they were doing was wrong. No one questioned whether what he was doing might have been illegal. Andersen's team in Houston just reacted, following orders without question. Ingram Publishing On November 9, 2001, the day after the Securities and Exchange Commission (SEC) issued a subpoena to Andersen, the shredding stopped. Over a ton of documents were destroyed and 30,000 emails and computer files related to Enron were deleted. According to Andersen's legal defense team, the disaster was normal. Lawyers claimed the shredding was standard practice to get rid of redundant files. For the SEC, it appeared to be the beginning of a deep cover-up operation. Then one of the most respected accounting firms in the world closed its doors. Hall, 2004). 10.6 Building trust: the key to influence The importance of trust can be distinguished from its absence. Imagine how different a working relationship is when you don't trust the other party instead of trusting them. Here's what one line manager had to say about how he reacted to a project manager he didn't trust: Whenever Jim approached me about something, I found myself reading between the lines to understand what was really going on. When he placed an order, my initial reaction was "no" until he tasted it.
σελίδα 374 Από την άλλη πλευρά, η εμπιστοσύνη είναι το «λιπαντικό» που διατηρεί τις αλληλεπιδράσεις ομαλές και αποτελεσματικές. Για παράδειγμα, ορίστε τι είχε να πει ένας λειτουργικός διευθυντής σχετικά με τον τρόπο με τον οποίο χειρίστηκε έναν διαχειριστή έργου που εμπιστευόταν: Αν η Sally έλεγε ότι χρειαζόταν κάτι, δεν θα γίνονταν ερωτήσεις. Ήξερα ότι ήταν σημαντικό, αλλιώς δεν θα ρωτούσε. Ομοίως, αν χρειαζόμουν κάτι, ήξερα ότι θα με βοηθούσε αν μπορούσε. Η εμπιστοσύνη είναι μια άπιαστη έννοια. Είναι δύσκολο να ορίσουμε με ακρίβεια γιατί ορισμένοι διαχειριστές έργων είναι αξιόπιστοι και άλλοι όχι. Ένας δημοφιλής τρόπος για να κατανοήσουμε την εμπιστοσύνη είναι να τη δούμε ως συνάρτηση χαρακτήρα και ικανότητας. Ο χαρακτήρας εστιάζει σε προσωπικά κίνητρα (π.χ. θέλει να κάνει το σωστό;), ενώ η ικανότητα εστιάζει στις δεξιότητες που απαιτούνται για την υλοποίηση των κινήτρων (π.χ. γνωρίζει τα σωστά πράγματα που πρέπει να κάνει;). Ο Stephen Covey ανέστησε την έννοια του χαρακτήρα στη λογοτεχνία ηγεσίας στο μπεστ σέλερ του Seven Habits of Highly Effective People. Ο Covey επέκρινε τη δημοφιλή βιβλιογραφία διαχείρισης για την υπερβολική εστίαση στις επιφανειακές δεξιότητες ανθρώπινων σχέσεων και στις τεχνικές χειραγώγησης, τις οποίες ονόμασε ηθική της προσωπικότητας. Υποστηρίζει ότι στον πυρήνα των εξαιρετικά αποτελεσματικών ανθρώπων βρίσκεται μια ηθική χαρακτήρα που είναι βαθιά ριζωμένη σε προσωπικές αξίες και αρχές όπως η αξιοπρέπεια, η υπηρεσία, η δικαιοσύνη, η αναζήτηση της αλήθειας και ο σεβασμός. Ένα από τα χαρακτηριστικά γνωρίσματα του χαρακτήρα είναι η συνέπεια. Όταν οι άνθρωποι καθοδηγούνται από ένα βασικό σύνολο αρχών, είναι φυσικά πιο προβλέψιμοι επειδή οι ενέργειές τους είναι συνεπείς με αυτές τις αρχές. Ένα άλλο χαρακτηριστικό του χαρακτήρα είναι η ανοιχτότητα. Όταν οι άνθρωποι έχουν ξεκάθαρη αίσθηση του ποιοι είναι και τι εκτιμούν, είναι πιο δεκτικοί στους άλλους. Αυτό το χαρακτηριστικό τους δίνει την ικανότητα να συμπάσχουν και το ταλέντο να χτίζουν συναίνεση μεταξύ διαφορετικών ανθρώπων. Τέλος, μια άλλη ποιότητα χαρακτήρα είναι η αίσθηση του σκοπού. Οι διευθυντές με χαρακτήρα δεν οδηγούνται μόνο από προσωπικές φιλοδοξίες, αλλά και από το κοινό καλό. Το πρωταρχικό τους μέλημα είναι τι είναι καλύτερο για τον οργανισμό και το έργο, όχι τι είναι καλύτερο για αυτούς. Αυτή η προθυμία να υποταχθούν τα προσωπικά συμφέροντα σε έναν μεγαλύτερο σκοπό κερδίζει τον σεβασμό, την πίστη και την εμπιστοσύνη των άλλων. Η σημασία του χαρακτήρα συνοψίζεται από σχόλια που έγιναν από δύο μέλη της ομάδας σχετικά με δύο πολύ διαφορετικούς διαχειριστές έργου: το έργο. Αλλά μετά από λίγο, οι άνθρωποι άρχισαν να υποψιάζονται τα κίνητρά του. Είχε την τάση να λέει διαφορετικά πράγματα σε διαφορετικούς ανθρώπους. Οι άνθρωποι άρχισαν να αισθάνονται χειραγωγημένοι. Πέρασε πολύ χρόνο με τα ανώτερα στελέχη. Οι άνθρωποι άρχισαν να πιστεύουν ότι απλώς πρόσεχε τον εαυτό του. Ήταν το έργο ΤΟΥ. Όταν το έργο άρχισε να γλιστράει, πήδηξε το πλοίο και μας άφησε να κρατάμε την τσάντα. Δεν θα δουλέψω ποτέ ξανά για αυτόν τον τύπο. Η πρώτη μου εντύπωση για τον Τζακ δεν ήταν κάτι το ιδιαίτερο. Είχε ένα χαλαρό, ανεπιτήδευτο στυλ διαχείρισης. Με τον καιρό, έμαθα να σέβομαι την κρίση του και την ικανότητά του να κάνει τους ανθρώπους να συνεργάζονται. Όταν πήγαινες σε αυτόν με κάποιο πρόβλημα ή αίτημα, πάντα τον άκουγε προσεκτικά. Αν δεν μπορούσε να κάνει αυτό που εσύ
page 375 did, he would take the trouble to explain why. When disagreements arose, he always considered what was best for the project. He treated everyone with the same rules. no one received special treatment. I would have the opportunity to work with him again on a project. Character alone does not create confidence. We also need to have confidence in the ability of individuals before we can truly trust them (Kanter, 1979). We all know well-meaning managers who we like but don't trust because they have a history of breaking their promises. While we may make friends with the managers of the week, we don't like working with or for them. Ability is reflected on many different levels. First, there are job-related knowledge and skills that are reflected in the ability to answer questions, solve technical problems, and excel at certain types of work. Second, there is competence at the interpersonal level which is demonstrated in the ability to listen effectively, communicate clearly, resolve arguments, encourage, etc. Finally, there is organizational skill. This includes being able to run effective meetings, set meaningful goals, reduce inefficiency and build a social network. Often, young engineers and other professionals tend to place too much value on work or technical ability. They underestimate the importance of organizational skills. Senior professionals, on the other hand, recognize the importance of management and value organizational and interpersonal skills more. One problem new project managers face is that it takes time to establish a sense of character and competence. Character and ability are usually proven when tested, such as when a difficult decision must be made or difficult problems must be solved. Veteran project managers have the advantage of reputation and an established track record of success. While endorsements from trusted sponsors can help a young project manager create a favorable first impression, ultimately his behavior will determine whether he is trustworthy. Recent research shows that the first step in building trust is connecting. Instead of starting by emphasizing your abilities, focus on showing warmth and concern.7 By doing this, you show others that you listen to them, understand them, and can be trusted (Cuddy, Kohu, & Neffinger, 2013). examined the importance of building a network of relationships to implement a project based on trust and reciprocity. The next section examines the nature of project management work and the personal qualities required to excel in it. 10.7 Qualities of an effective project manager
page 376LO 10-9Identify the qualities of an effective project manager. At first glance, project management is a deceptive discipline, as there is an inherent logic to the process. There is a natural progression from formulating a project scope statement to creating a WBS, developing a network, adding resources, finalizing a plan, and achieving milestones. However, when it comes to actually implementing and completing projects, this logic can quickly disappear. Project managers often find a world much more confusing, full of coherence and paradoxes. Effective project managers must be able to deal with the adversarial nature of their work. Some of these contradictions are listed here: Innovate and maintain stability. Project managers must put out fires, restore order, and get the project back on track. At the same time, they need to be innovative and develop new and better ways of doing things. Innovations disrupt the routine and can cause new disturbances that need to be addressed. See the big picture while getting your hands dirty. Project managers need to see the big picture and how their project fits into their company's broader strategy. There are also times when they need to be deeply involved in the work and technology of the project. If they don't care about the details, who will? Encourage individuals but emphasize the team. Project managers must motivate, persuade, and seduce individual performers while maintaining teamwork. They must be careful to be seen as fair and consistent in their treatment of team members, while treating each member as an individual. Project managers must step in, resolve impasses, resolve technical issues, and insist on different approaches. At the same time, they must recognize when it is appropriate to stand on the sidelines and let others decide what to do. Be flexible but firm. Project managers must be adaptable and responsive to the events and outcomes that occur in the project. At the same time, they have to hold the line at times and resist when everyone else wants to give up. Manage staff versus organizational loyalty. Project managers must create a unified project team whose members push each other to excel. But at the same time they have to fight it
excessive group cohesion and resistance to outside ideas. They must cultivate loyalty to both the team and the parent organization. Managing these and other contradictions requires finesse and balance. Finesse involves skillfully moving back and forth between opposing patterns of behavior (Sayles, 1989). For example, more often than not, project managers actively involve others, move escalations, and seek consensus. There are other times when project managers must act like an authoritarian and take decisive, unilateral action. Balance involves recognizing the risk of extremes and that too much of a good thing always turns out to be harmful. For example, many managers tend to always assign the most stressful and difficult tasks to the best team members. This habit often causes resentment among the chosen ("Why am I always the one who does the hard work?") and never allows the weaker members to further develop their talents. There is no one management style or formula for being an effective project manager. The world of project management is too complicated for guys. Successful project managers have the ability to adapt styles to specific circumstances. So what to look for in an effective project manager? Many authors have addressed this issue and created list after list of skills and attributes associated with being an effective manager (Posner, 1987; Shenhar & Nofziner, 1997; Turner & Müller, 2005). As we look through these lists, we sometimes get the impression that being a successful project manager requires someone with superhuman powers. While not everyone has what it takes to be an effective project manager, there are some key traits and skills that can be developed to do the job successfully. The following are eight of these characteristics.1. Effective communication skills. Communication is critical to project success. Project managers must speak the language of diverse stakeholders and be empathetic listeners.2. Systems thinking. Project managers must be able to take a holistic rather than reductionist approach to projects. Rather than dividing a project into individual parts (scheduling, budget) and managing it by understanding each part, a systems perspective focuses on trying to understand how related project actors interact collectively to produce project outcomes. The key to success is managing the interaction between different parties, not the parties themselves.83. Personal integrity. Before you can lead and manage others, you must be able to lead and manage yourself (Bennis, 1989). Start by getting a solid sense of who you are, what you stand for, and how you should behave. That
page 377page 378internal strength provides the resilience to face the ups and downs of the project life cycle and the reliability necessary to maintain the trust of others.4. Proactiveness. Good project managers act before they are needed to prevent small concerns from turning into big problems. They spend most of their time working within their sphere of influence to solve problems and not thinking about things over which they have little control. Project managers can't whine.95. High emotional intelligence (EQ). Project management is not for the faint of heart. Project managers need to master their emotions and be able to respond constructively to others when things get a little out of hand. See Research Spotlight 10.2: Emotional Intelligence to read more about this quality.6. General business perspective. As the primary role of the project manager is to integrate contributions from different technical and business disciplines, it is important for the manager to have a general understanding of business fundamentals and how different functional disciplines interact to contribute to a successful business . Effective time management. Time is a manager's scarcest resource. Project managers must be able to budget their time wisely and adjust their priorities quickly. They need to balance their interactions so that no one feels left out.8. Optimism. Project managers must demonstrate a positive attitude. They must be able to find the rays of the sun in a gloomy day and keep people's attention positive. A good sense of humor and a fun attitude are often a project manager's greatest strengths. Research Spotlight 10.2 Emotional Intelligence* Emotional intelligence (EQ) is the ability or capacity to perceive, assess and manage the emotions of oneself and others. Although the concept of EQ appeared in the 1920s, it wasn't until Daniel Goleman published his book Emotional Intelligence that the concept came to the attention of business people and the public. Recognize emotions as they arise and understand the relationship between your emotions and your behavior. self-awareness is
αντικατοπτρίζεται στην αυτοπεποίθηση, μια ρεαλιστική αξιολόγηση των προσωπικών δυνατοτήτων/αδυναμιών και στην ικανότητα να αυτοσαρκάζεται. Αυτορρύθμιση - να είναι σε θέση να ελέγξει τις ενοχλητικές παρορμήσεις και διαθέσεις και να ανταποκριθεί κατάλληλα σε καταστάσεις. Η αυτορρύθμιση αντανακλάται στην αξιοπιστία και το άνοιγμα στην αλλαγή. Αυτοκίνητρο — να είστε σε θέση να συγκεντρώσετε τα συναισθήματά σας και να επιδιώξετε στόχους με ενέργεια, πάθος και επιμονή. Τα χαρακτηριστικά γνωρίσματα της αυτοκίνησης περιλαμβάνουν την έντονη επιθυμία για επιτεύγματα και την εσωτερική αισιοδοξία. Ενσυναίσθηση - να είναι σε θέση να αναγνωρίζει τα συναισθήματα των άλλων και να συντονιστεί με τις λεκτικές και μη λεκτικές ενδείξεις τους. Η ενσυναίσθηση αντανακλάται στην ικανότητα διατήρησης σχέσεων και διαπολιτισμικής ευαισθησίας. Κοινωνικές δεξιότητες—το να μπορείς να χτίζεις κοινωνικά δίκτυα και να συναναστρέφεσαι με διαφορετικούς τύπους ανθρώπων. Οι κοινωνικές δεξιότητες περιλαμβάνουν τη δυνατότητα να καθοδηγείς την αλλαγή, να επιλύεις συγκρούσεις και να δημιουργείς αποτελεσματικές ομάδες. Δεν χρειάζεται πολλή φαντασία για να δείτε πώς το EQ θα συνέβαλε στο να είστε ένας αποτελεσματικός διαχειριστής έργου. Κατά την άποψη του Goleman, αυτές οι ικανότητες αλληλοσυμπληρώνονται σε μια ιεραρχία. Στο κάτω μέρος της ιεραρχίας τους βρίσκεται η αυτογνωσία. Χρειάζεται κάποιο επίπεδο αυτογνωσίας για να προχωρήσουμε στην αυτορρύθμιση. Τελικά, οι μαλακές δεξιότητες απαιτούν και τις τέσσερις άλλες ικανότητες για να αρχίσουν να είναι ικανοί στο να καθοδηγούν άλλους. Οι ειδικοί πιστεύουν ότι οι περισσότεροι άνθρωποι μπορούν να μάθουν να αυξάνουν σημαντικά το EQ τους. Διάφορα προγράμματα και εκπαιδευτικό υλικό έχουν προκύψει για να βοηθήσουν τα άτομα να συνειδητοποιήσουν τις δυνατότητές τους στο EQ. *Bradberry, T. and J. Graves, The Emotional Intelligence Quick Book: How to Put Your EQ to Work (Νέα Υόρκη: Simon & Schuster, 2005); Maqbool., R., Y. Sudong, N. Manzoor, and Y. Rashid, «The Impact of Emotional Intelligence, Project Manager’s Competencies, and Transformational Leadership on Project Success», Project Management Journal, vol. 48, αρ. 3, 2017, σελ. 58–75. Πώς λοιπόν αναπτύσσει κανείς αυτά τα χαρακτηριστικά; Τα εργαστήρια, η αυτοδιδασκαλία και τα μαθήματα μπορούν να ανανεώσουν τη γενική επιχειρηματική προοπτική και την ικανότητα σκέψης συστημάτων. Τα προγράμματα κατάρτισης μπορούν να βελτιώσουν τη συναισθηματική νοημοσύνη και τις επικοινωνιακές δεξιότητες. Οι άνθρωποι μπορούν επίσης να μάθουν τεχνικές διαχείρισης του άγχους και του χρόνου. Ωστόσο, δεν γνωρίζουμε κανένα μαγικό εργαστήριο ή φίλτρο που να μπορεί να μετατρέψει έναν απαισιόδοξο σε αισιόδοξο ή να προσφέρει μια αίσθηση σκοπού όταν δεν υπάρχει κανένα. Αυτές οι ιδιότητες φτάνουν μέχρι την ίδια την ψυχή ή την ύπαρξη ενός ατόμου. Η αισιοδοξία, η ακεραιότητα, ακόμη και η προορατικότητα δεν αναπτύσσονται εύκολα, αν δεν υπάρχει ήδη η προδιάθεση να τα επιδείξουμε. Περίληψη Για να είναι επιτυχείς, οι διαχειριστές έργων πρέπει να οικοδομήσουν ένα δίκτυο συνεργασίας μεταξύ ενός διαφορετικού συνόλου συμμάχων. Ξεκινούν με τον εντοπισμό των βασικών ενδιαφερομένων σε ένα έργο και στη συνέχεια διαγιγνώσκουν τη φύση των σχέσεων και τη βάση για την άσκηση επιρροής. Οι αποτελεσματικοί διαχειριστές έργων είναι ικανοί να αποκτούν και να ασκούν ένα ευρύ φάσμα επιρροής. Χρησιμοποιούν αυτήν την επιρροή και ένα εξαιρετικά επαναληπτικό στυλ διαχείρισης για να παρακολουθούν την απόδοση του έργου και να ξεκινούν
page 379 changes in project plans and direction. They do this in a way that builds self-confidence, which is ultimately based on others' perception of their character and abilities. Project managers are encouraged to keep the following suggestions in mind. Relationships must be built before they are needed. Identify key players and what you can do to help them before they need your help. It is always easier to receive a favor after it has been given. This requires the project manager to view the project in systems terms and appreciate how it affects other activities and schedules within and outside the organization. In this regard, they can identify opportunities to do good deeds and gain support from others. Trust is maintained through frequent face-to-face contact. Trust withers from neglect. This is especially true in conditions of rapid change and uncertainty that naturally breed doubts, suspicions and even momentary bouts of paranoia. Project managers must maintain frequent contact with key stakeholders to update them on developments, assuage concerns, conduct reality checks, and focus attention on the project. Frequent face-to-face interactions, either directly or via video conference, confirm mutual respect and trust in each other. Ultimately, effective and ethical influencing begins and ends with how you see other parties. Do you see them as potential partners or obstacles to your goals? If there are obstacles, then you use your influence to manipulate and gain obedience and cooperation. If you are a partner, you exert influence to gain his commitment and support. People who see social networking as building partnerships see each interaction with two goals: solving the immediate problem/concern and improving the working relationship so that it will be even more effective next time. Experienced project managers realize that "what goes around comes around" and make every effort to avoid player competition in order to achieve quick success. Key Terms Emotional Intelligence (EQ), 377 Coins Related to Inspiration, 363 Law of Reciprocity, 361
Management Wandering Around (MBWA), 366 people-related currencies, 364 position-related currencies, 363 relationship-related currencies, 363 building social networks, 364 stakeholders, 358 systems thinking, 376 currencies related to 12 reviews. What is the difference between managing and leading a project?2. What does the influence exchange model suggest you do to build collaborative relationships to complete a project?3. What differences would you expect to see between the types of currencies of influence a project manager would use in a functional matrix and the influence a project manager would use in a dedicated project team?4. Why is it important to build a relationship before you need it? Why is it important to inform the project sponsor? 6. Why is trust a function of both character and ability?7. Which of the eight characteristics/skills associated with being an effective project manager is most important? The least important? Why; Snapshot of PracticeQuestions for Discussion10.1 The project manager as guide1. Why is an orchestra conductor an appropriate metaphor for a project manager?2. What aspects of being a project manager are not reflected in this metaphor?3. Can you think of other metaphors that would be appropriate? 10.3 Predecessors aside
page 3801. What is the importance of leading by example in a project?2. What do you think would have happened to the crew of the Endurance if Shackleton had not set the example? 10.4 The Collapse of Arthur Andersen1. It seems that every 5 to 10 years a scandal damages, if not destroys, a well-known business. Is this inevitable given the competitive nature of the business? 2. What aspects of Arthur Andersen's culture contributed to the scandal? Exercises 1. Do an Internet search for the Keirsey Temperament Sorter Questionnaire and find a website that appears to have a reliable self-assessment questionnaire. Answer the questionnaire to determine your temperament type. Read the supporting documents related to your type. What does this material suggest about the types of projects that suit you best? What does it indicate about your strengths and weaknesses as a project manager? How can you compensate for your weaknesses?2. Go to the Project Management Institute website and review the standards contained in the PMI Member Standards of Ethical Conduct section. How useful is the information in helping someone decide what behavior is appropriate and inappropriate?3. You are organizing a benefit concert in your hometown, featuring local heavy rock bands and guest speakers. Draw a dependency map that identifies the key groups of people who may affect the success of this project. Who do you think will be more cooperative? Who do you think will be the least cooperative? Why; 4. You are the project manager responsible for the overall construction of a new international airport. Draw a dependency map that identifies the key groups of people who might affect the success of this project. Who do you think will be more cooperative? Who do you think will be the least cooperative? Why; 5. Identify a key relationship (coworker, boss, friend) where you have problems working together. Evaluate this relationship based on the currency of influence model. What kind of currency of influence have you exchanged in this relationship? That's what the "bank account" is for.
relation to "red" or "black"? What types of influence would be appropriate to build a stronger relationship with this person?6. The following seven short cases involve ethical dilemmas related to project management. How would you react to each situation and why? Despite your best efforts, you failed to convince the director of project management to promote one of his best assistants, Jack Nietzsche, to the position of project manager. You feel a little guilty for coming up with this promotion to motivate Jack. Jack responded by working overtime to ensure that parts of his project were completed on time. You wonder how Jack will react to this disappointment. More importantly, you wonder how his reaction might affect your work. You have five days to meet a critical deadline for a very important client. Although it is not easy, you believed that you will be able to complete the task on time. Now you're not so sure. Jack is halfway through the documentation phase, which is the last critical activity. Jack can get very emotional at times and you fear he will explode when he finds out he didn't get the promotion. As you return to your office, you wonder what to do. Should you tell Jack he won't be promoted? What if he asks if the new assignments have been made? Seaburst Construction Project You are the project manager for the Seaburst construction project. So far, the project is moving ahead of schedule and on budget. You attribute this in part to the good working relationships you have with the carpenters, plumbers, electricians and machine operators who work for your organization. Many times you have asked them to give 110 percent and they have responded. pass the place and show it to your son. As you point out various parts of the project to your son, you discover that several pieces of valuable equipment are missing from the storage shed. the lost gear is back in the hangar. What you have to do? Why;
page 381 The Project Status Review Meeting Go to a project status review meeting with your client. You encountered a major technical problem in the project that delayed your project. This is not good news because completion time is the project's number one priority. You are confident that your team can solve the problem if they are free to give it their full attention and that with hard work you can get back on schedule. You also believe that if you tell the customer about the problem, they will require a meeting with your team to discuss the implications of the problem. You can also expect her to send some of her employees to oversee the resolution of the problem. These disruptions are likely to further delay the project. What should you tell your client about the current status of the project? Gold Star LAN Project You work for a large consulting firm and have been assigned the Gold Star LAN project. Work on the project is almost complete and its customers at Gold Star seem to be satisfied with its performance. As the project progressed, changes had to be made to the original scope to meet the specific needs of Gold Star administrators. The costs of these changes were documented as well as overheads and submitted to Central Accounting. They have processed the information and sent you a change order invoice for your subscription. You are surprised to see that the invoice is 10% higher than what you submitted. You contact Jim Messina in the accounting department and ask if there were any mistakes. He curtly replies that no mistakes were made and that management has adjusted the bill. He recommends that you sign the document. You talk to another project manager about this and he tells you, off the record, that overcharging customers for change orders is common practice at his company. Would you sign the document? Why; Why not? Cape Town Bio-Tech You are responsible for the installation of the new Double E production line. Your team has gathered estimates and used the WBS to create a project schedule. You have confidence in the program and the work your team has done. Report to upper management that you believe the project will take 110 days to complete by March 5. The news is received positively. In fact, the project sponsor confides that orders do not need to be submitted until April 1st. Do you leave the meeting wondering whether or not to share this information with the project team? Ryman Pharmaceuticals
page 382 You are a test engineer on the Bridge project at Ryman Pharmaceuticals. You have just completed the conductivity test of a new electrochemical compound. The results exceeded expectations. This new association is expected to revolutionize the industry. Wondering if you should call your broker and ask him to buy $20,000 worth of Ryman stock before everyone knows about the results. What would you do and why? Princeton Landing You are managing the renovation of the Old Princeton Landing Bar and Grill. The project is on schedule despite the delayed ink shipment. The paint was supposed to arrive on 30/01 but it arrived on 01/02. The assistant store manager apologizes for the delay and asks if you would like to sign the acceptance form and return it by 1/30. He says he won't be eligible for a bonus he worked hard for last month if the shipment is delayed. He promises to compensate you for future projects. What would you do and why? 19, no. 4 (2005), pp. 9–23. Ancona, D.G. and D. Caldwell, “Improving the Performance of New-Product Teams,” Research Technology Management, vol. 33, no. 2 (March/April 1990), pp. 25–29. Badaracco, J.L., Jr. and A. P. Webb, “Business Ethics: A View from the Trenches,” California Management Review, vol. 37, no. 2 (Winter 1995), pp. 8–28. Baker, W. E., Network Smart: How to Build Relationships for Personal and Organizational Success (New York: McGraw-Hill, 1994). Bennis, W., On Becoming a Leader (Reading, MA: Addison-Wesley, 1989) Bertsche, R., "Seven Steps to Stronger Relationships between Project Managers and Sponsors," PM Network, September 2014, pp. 50–55. Bourne, L., Stakeholder Relationship Management (Farnham, England: Gower Publishing Ltd., 2009).
Page 383Cabanis-Brewin, J., "The Human Task of a Project Leader: Daniel Golemanon the Value of High EQ", PM Network, New York 1999, New York. 38–42. Cohen , A. R. και D. L. Bradford , Influence Without Authority ( New York : John Wiley & Sons , 1990 ). Cuddy, J. A., M. Kohu και J. Neffinger, “Connect then Lead,” Harvard Business Review, τομ. 91, αρ. 7/8 (July/Aug. 2013), σελ. 54–61. Dinsmore, P. C., “Effects of Effectiveness on Equipment;” PMNetwork, December 1995, σελ. 9–10. Einsiedel, A. A., “Profiles of Effective Project Managers”, ProjectManagement Journal, vol. 31, αρ. 3 (1987), p. 51–56. Ferrazzi, K., Never Eat Alone and Other Secrets to Success One Relationship at a Time (New York: Crown Publishers, 2005). Gabarro , S. J. , The Dynamics of Charge Taking ( Boston : Harvard Business School Press , 1987 ). Hill, L.A., Becoming a Manager: Mastery of a New Identity (Boston:Harvard Business School Press, 1992).Kanter, R.M., «Power Failures in Management Circuits», Harvard BusinessReview (July/August 1979), σελ. 65–79. Kaplan, R. E., "Trade Routes: The Manager's Network of Relationships," Organizational Dynamics, vol. 12, όχι. 4 (Spring 1984), σσ. 37–52. Kotter, J. P., “What Leaders Really Do,” Harvard Business Review, τομ. 68, não. 3 (May/June 1990), σσ. 103–11. Kouzes , J.M. , and B.Z. Posner, Credibility: How Leaders Gain and Lose It; Kouzes, J.M., and B.Z. Posner, The Leadership Challenge, 5th ed. (Publication: Jossey-Bass, 2012). Lewis, M. W., M. A. Welsh, G. E. Dehler και S. G. Green, «ProductDevelopment Tensions: Exploring Contrasting Styles of Project Management», Academy of Management Journal, vol. 45, όχι. 3 (2002), σσ.546–64.
page 384 Müller, R. and R. Turner, “Leadership Competency Profiles of Successful Project Managers”, International Journal of Project Management, vol. 28, no. 5 (July 2010), pp. 437–48. Müller R., Erling S. Andersen, Ø. Kvalnes, J. Shao, S. Sankaran, J. R. Turner, C. Biesenthal, D. Walker, and S. Gudergan, “The Interrelation of Governance, Trust, and Ethics in Temporary Organizations,” Journal of Project Management, vol. 44, no. 4 (August 2013), pp. 26–44. Müller, R., R. Turner, E. Andersen, J. Shao, and O. Kvalnes, “Ethics, Trust, and Governance in Temporary Organizations,” Journal of Project Management, vol. 45, no. 4 (August/September 2014), pp. 39–54. Peters, L. H., "A Good Man in a Storm: An Interview with Tom West", Academy of Management Executive, vol. 16, no. 4 (2002), pp. 53–63. Peters, L. H., "Soulful Ramblings: An Interview with Tracy Kidder," Academy of Management Executive, vol. 16, no. 4 (2002), pp. 45–52. Peters, T., Thriving on Chaos: Handbook for a Management Revolution (New York: Alfred A. Knopf, 1988). Pinto, J.K. and D.P. Slevin, “Critical Success Factors in Successful Project Implementation,” IEEE Transactions in Engineering Management, vol. 34, no. 1 (1987), pp. 22–27. Posner, B.Z., “What It Takes to Be an Effective Project Manager,” ProjectManagement Journal (March 1987), pp. 51–55. Project Management Institute, PMBOK Guide, 6th ed. (Newtown Square, PA: Project Management Institute, 2017). Robb, D.J., “Ethics in Project Management: Issues, Practice, and Motive,” PM Network, December 1996, pp. 13–18. Shenhar, A.J. and B. Nofziner, "A New Model for Training Project Managers," Proceedings of the 28th Annual Project Management Institute Symposium, 1997, pp. 301–6. Turner, J. R. and R. Müller, "The Project Manager Leadership Style as a Success Factor on Projects: A Literature Review", Project Management Journal, vol. 36, no. 2 (2005), pp. 49–61. Case 10.1
Project Blue Sky*Garth Hudson was 29 years old and a graduate of Eastern State University (ESU) with a degree in management information systems. After graduation, he worked for seven years at Bluegrass Systems in Louisville, Kentucky. While at ESU, he worked part-time for an oceanography professor, Ahmet Green, creating a custom database for a research project he was conducting. Green had recently been appointed director of the Eastern Oceanographic Institute (EOI), and Garth was convinced that this previous experience was instrumental in obtaining the position of director of intelligence services (IS) at the institute. Although he took a significant pay cut, he took the opportunity to return to his alma mater. His job at Bluegrass Systems was very demanding. The long hours and long trips put a strain on their marriage. He was looking forward to a regular job with reasonable hours. Also, Jenna, his wife, would be busy with her MBA at Eastern State University. While at Bluegrass, Garth worked on a wide range of IS projects. He was confident that he had the technical knowledge to excel in his new job. The Institute of Eastern Oceanography was an independently funded research unit aligned with Eastern State University. About 50 full-time and part-time employees worked at the institute. They have worked on research grants funded by the National Science Foundation (NSF) and the United Nations (UN), as well as research funded by private industry. Typically, there were 7-9 major research projects underway at any given time, as well as 20-25 smaller projects. A third of the institute's scientists had part-time jobs at ESU and used the institute to conduct their own basic research. FIRST TIME AT EOI Garth spoke to introduce himself to the various groups of people upon his arrival at the institute. However, his contact with the team was limited. He spent most of his time familiarizing himself with the EOI information system, training his staff, responding to unexpected issues and working on various projects. Garth suffered from food allergies and avoided informal employee meals at nearby restaurants. He stopped regularly attending staff meetings every two weeks
page 385 spend more time on your work. He attended meetings only when there was a specific item on the agenda regarding his operation. EOI's SI team consisted of two full-time assistants, Tom Jackson and Grant Hill. They were supported by five part-time student assistants from the Department of Computer Science. Grant Hill has been assigned full-time to a major five-year NSF grant to create a virtual oceanographic research library. Grant worked out of the project manager's office and had little interaction with Garth or Tom. Garth's relationship with Tom was awkward from the start. He found out, after the fact, that Tom thought he was going to get the director's job. They never talked about it, but she felt the tension in her first few months on the job. One of the problems was that he and Tom had completely different personalities. Tom was sociable and very talkative. He had a habit of walking around the institute after lunch, talking to various scientists and researchers. Often this led to useful information. Garth, on the other hand, preferred to stay in his office, working on various missions, and only ventured out when called upon. Although Garth felt that Tom was not suited to the latest developments as they were, he respected Tom's work. Last month, the system was destroyed by a virus imported from the Internet. Garth spent an entire weekend getting the system back up and running. A recurring headache was one of the servers, codenamed "Poncho," who would occasionally crash for no apparent reason. Instead of replacing him, he decided to take care of Poncho until he could be replaced. His work was often interrupted by frantic calls from staff researchers needing immediate help with a variety of computer-related problems. He was shocked to see how illiterate some of the researchers were and how he had to guide them through some of the basics of email management and database setup. He found time to help assistant professor Amanda Johnson with a project. Amanda was the only researcher who responded to Garth's email announcing that the SI team was available to help with the projects. Garth set up a virtual project office on the Internet so that Amanda could work with colleagues from institutes in Italy and Thailand on a UN research grant. He looked forward to the day when he could spend more time on fun projects like this. THE BLUE SKY CONVERSION PROJECT The 'Blue Sky' conversion project started gradually four months ago. AhmetGreen is back from Washington, DC with some bad news. The financial crisis would lead to a drastic reduction in funding. He predicted a cut of up to 25% in the annual budget over the next three to five years. That
θα οδηγούσε σε μειώσεις προσωπικού και μείωση του λειτουργικού κόστους. Ένα μέτρο μείωσης του κόστους ήταν η μεταφορά των λειτουργιών πληροφορικής στο «σύννεφο». Ο Αχμέτ πρότεινε για πρώτη φορά την ιδέα στον Γκαρθ αφού συμμετείχε σε μια συνάντηση με αρκετούς διευθυντές από άλλα ινστιτούτα που αντιμετωπίζουν παρόμοιες οικονομικές προκλήσεις. Η βασική στρατηγική ήταν να μετακινηθούν όλες οι βάσεις δεδομένων, το λογισμικό, ακόμη και το υλικό του ινστιτούτου σε ένα «ιδιωτικό σύννεφο». Η ομάδα θα χρησιμοποιούσε τους τρέχοντες υπολογιστές της για να έχει απλώς πρόσβαση σε πιο ισχυρά μηχανήματα μέσω του Διαδικτύου. Αυτά τα ισχυρά μηχανήματα μπορούν να χωριστούν και να ρυθμιστούν διαφορετικά ανάλογα με τις ανάγκες της ερευνητικής ομάδας, δίνοντας σε κάθε μέλος της ομάδας τη δική του εικονική μηχανή (VM). Το προσωπικό μπορεί επίσης να έχει πρόσβαση, να χρησιμοποιεί και να μοιράζεται εικονικούς διακομιστές μέσω του Διαδικτύου, όπως απαιτείται. Ο Garth συνεργάστηκε με τον λογιστή του ινστιτούτου σε μια ανάλυση κόστους/οφέλους. Από τη σκοπιά τους, ήταν απολύτως λογικό. Πρώτον, το ινστιτούτο δεν θα έπρεπε να αντικαταστήσει ή να αναβαθμίσει παλιούς υπολογιστές και διακομιστές. Δεύτερον, το ινστιτούτο θα απολάμβανε σημαντική εξοικονόμηση πληροφορικής καθώς θα πλήρωνε μόνο για τους πόρους πληροφορικής που χρησιμοποιήθηκαν στην πραγματικότητα. Δεν θα χρειαζόταν να κάνουν μεγάλες κεφαλαιουχικές δαπάνες πληροφορικής. Τρίτον, το cloud computing θα παρείχε στους επιστήμονες μεγαλύτερη ευελιξία στην πρόσβαση σε επιθυμητούς πόρους ή λογισμικό από οπουδήποτε και ανά πάσα στιγμή. Και τέλος, από τη στιγμή που το σύστημα ήταν σε λειτουργία, το ινστιτούτο δεν θα χρειαζόταν πλέον τις υπηρεσίες τουλάχιστον ενός υπαλλήλου πληροφορικής πλήρους απασχόλησης. Ο Ahmet αποφάσισε να ονομάσει το έργο "Blue Sky" για να δώσει μια θετική στροφή στη μετατροπή. Στην αρχή, οι αναπληρωτές διευθυντές διέκοψαν την ιδέα. Κάποιοι είχαν δυσκολία να κατανοήσουν τι σημαίνει το cloud computing. Άλλοι ανησυχούσαν για την ασφάλεια και την αξιοπιστία. Στο τέλος, υπέγραψαν απρόθυμα το έργο όταν τους δόθηκαν εναλλακτικές πρωτοβουλίες μείωσης του κόστους. Ο Garth τους διαβεβαίωσε ότι το cloud computing ήταν το κύμα του μέλλοντος και η εγκατάσταση ή η πρόσβαση σε εικονικές μηχανές στο «σύννεφο» ήταν τόσο απλή όσο η ρύθμιση ή η πρόσβαση στον λογαριασμό σας στο g-mail. Το έργο μετατροπής θα ολοκληρωθεί σταδιακά. Το πρώτο βήμα ήταν να επιλέξετε έναν πάροχο. Το επόμενο βήμα ήταν η μεταφορά μη κρίσιμων πληροφοριών στο cloud. Τα επόμενα βήματα θα περιλαμβάνουν τη μεταφορά καθενός από τα έξι μεγάλα έργα παραχώρησης κατά κύματα στο cloud. Το τελικό βήμα θα επικεντρωθεί στα υπόλοιπα μικρότερα έργα. Η εκπαίδευση θα ήταν αναπόσπαστο μέρος κάθε πρακτικής άσκησης. Το ινστιτούτο θα διατηρεί ένα αντίγραφο ασφαλείας όλων των δεδομένων για έως και έξι μήνες μετά την πλήρη μετατροπή. Μετά από αυτό, ο πάροχος υπηρεσιών cloud θα είναι υπεύθυνος για τη δημιουργία αντιγράφων ασφαλείας των δεδομένων. Στην αρχή, ο Τομ ήταν ενθουσιασμένος με το έργο. Ήταν αρκετά έξυπνος ώστε να συνειδητοποιήσει ότι αυτό ήταν το μέλλον των υπολογιστών και τον κίνησε το ενδιαφέρον πώς θα λειτουργούσε ολόκληρο το σύστημα. Τα συναισθήματά του άλλαξαν σύντομα καθώς άρχισε να σκέφτεται τις πιθανές συνέπειες της δουλειάς του. Ρώτησε τον Γκαρθ περισσότερες από μία φορές τι
the 386section page will take care of the conversion. Garth vaguely replied that they would find out once the system was up and running. A task force, led by Garth, was formed to select a cloud service provider. Garth was surprised at how many options there were. Designs and cost structures varied significantly. After much discussion, the committee narrowed the choices down to three. The first two were among the largest providers in the industry, VMWARE and Microsoft. The third option was a relatively new company, OpenRange, which offered a less expensive solution. Tomar argued that while larger providers cost more, they are a much safer bet. Garth replied that he had confidence in OpenRange and cost reduction was the main goal behind the project. In the end, Garth convinced the committee to choose OpenRange. Not only would the cost be significantly cheaper, but OpenRange would help train staff. Garth liked the idea. Education was not his strong suit and he was unwilling to shake hands with senior scientists during the process. It took Garth and Tom six weeks to identify non-critical data. Garth worked in the back while Tom met with the team to track down non-critical information. The motto was, when in doubt, leave it out. The actual migration lasted only a few days. Training proved more problematic. The team sent by OpenRange looked like they had graduated from college. While they were enthusiastic, they were new to the art of getting older employees to accept and use new technology. Many trainers had a habit of doing simple things for people instead of showing them how to do it themselves. It all came to a head when a power outage in the OpenRange storage system shut down and shut down the institute for 36 hours. Ahmed held an emergency meeting. Garth reported that the power outage occurred in northeast India and that OpenRange is expanding its backup systems. Several members argued that the institute should switch to one of the larger providers. When this was done Garth glanced at Tom and was relieved when he remained silent. In the end, Ahmet announced that it would be too expensive to switch providers and Garth and his team would have to make the conversion work. Tom stepped forward and offered to lead the training. All agreed that the institute needed to hire three more part-time assistants to help the team with the transition. Garth worked behind the scenes, coordinating with his colleagues at OpenRange and planning the conversion for the next part of the project. Tom worked closely with the OpenRange instructors and refocused his attention on teaching. The resistance was quite high at first. Tom used his personal contacts within the institute to advocate for change. He convinced Garth to change
page 387 the conversion timeline to start with the projects where leaders were most supportive of the change. The training has been improved and Tom has created some useful training materials, including short videos on how to access the virtual machines. One problem early in the process involved a senior research assistant who accidentally entered the wrong commands and shut down his virtual machine instead of logging off. This resulted in a complete loss of that machine's data in the cloud. Fortunately, the institute had support and Tom was able to get his job back. Working with some OpenRange developers, Tom wrote a program that triggered a pop-up message on the screen, warning users not to shut down their virtual machines when they log off. After the difficult start things went relatively well. The uptake was slow, but Tom and his team worked with the team to demonstrate how the new system would make their jobs easier. Two student assistants were always on hand to solve any problems or queries. Garth spent most of his time interacting with his colleagues at OpenRange and rarely left his office. He had his student assistants gather information from the team so he could configure the new virtual machines to exactly match the team's needs. He spent many hours making the custom databases work in the new environment. This proved to be a very difficult task and he was quite satisfied with his work. Twice, OpenRange experienced momentary power outages at its server facilities, which caused business interruption at the institute. Garth was happy to report that OpenRange was breaking new ground in an alternative server system in Ukraine. the staff makes the transition. Despite criticism of OpenRange's choice, Garth felt good about the project. The system was up and running and the team began to like the flexibility it offered. In addition, the institute will achieve real savings with the new system. Right after the flashback, Garth was surprised when Ahmed walked into his office and closed the door. Ahmet began by thanking Garth for his work on the project. He then cleared his throat and said, “You know, Garth, one of the consequences of Blue Sky is reducing our IT staff. Grant Hill is required for the data library project. Then it comes to you or Tom. Frankly, there is general agreement among the deputy directors that Tom is indispensable to the institute. I
I know this may surprise you, and before you make a decision, I want to give you a chance to change your mind.”1. If in Garth's position, how would you respond to the director?2. What mistakes did Garth make?3. What are the lessons to be learned from this case?* Prepared by Erik Larson and V. T. Raja, Senior Instructor, College of Business, Oregon State University. It was the second official day of the Pegasus project and now the real work was about to begin. Pegasus was a two-month renovation project for AtlantiCorp, a major financial institution based in Boston, Massachusetts. Tom's team was responsible for installing furniture and equipment for the newly renovated Accounts Receivable Department on the third floor. Project Pegasus was a special project team formed by AtlantiCorp's Facilities Department, led by Tom. Tom was excited because this was his first major league project and he was looking forward to practicing a new style of management - management on the fly (MBWA). He had been exposed to MBWA in a college business class, but it wasn't until he attended an AtlantiCorp leadership training course that he decided to change the way he managed people. The instructor was a staunch supporter of MBWA ("You can't manage people from a computer!"). Additionally, testimonials from their peers reinforced the difference MBWA can make when it comes to working on projects. Tom joined AtlantiCorp's facilities group five years earlier after working for six years at Electronic Data Systems. He quickly demonstrated technical skills and good work habits. He was encouraged to attend all internal project management workshops offered by AtlantiCorp. In your last two
page 388, served as assistant project manager responsible for procurement and contract management. He had read books on the soft side of project management, and MBWA made sense—after all, people, not tools, get projects done. His boss had told him he needed to improve his people skills and work on developing relationships with team members. MBWA seemed like a perfect solution. Tom looked over the list of team members' names. some of the foreign names were real lingophiles. For example, one of their best employees was from Thailand and her name was Pinyarat Sirisomboonsuk. Practiced saying "Pin-ya-răt See-rē-som-boon-sook". He got up, tucked his shirt into his pants, left the office and went down to the floor where his team was busy unloading equipment. Tom said "hello" to the first employees he met until he found Jack and three other employees. Jack was busy taking material out of a box while his teammates chatted. Tom blurted, "Come on guys, we've got work to do." They quickly separated and began to unload the boxes. The rest of the visit seemed to go well. She helped Steve unload a heavy box and managed to elicit a grateful smile from Piniarat when she almost got her name right. Satisfied, Tom went back to his office, thinking that MBWA wouldn't be that hard to do. When he got there, the floor was eerily silent. People were busy doing their jobs, and their attempts to generate discussion drew harsh responses. He came away thinking that MBWA is harder than he thought.1. What do you think happens at the end of this case?2. What should Tom do next and why?3. What can we learn from this case? Case 10.3Cerberus Corporation*
page 389Cerberus is a successful producer of specialty chemicals. It operates nine major campuses across the United States, with several different business units at each location. These business units operate independently, reporting directly to corporate headquarters. Site functions such as security, environment, and facilities management report to a host organization—usually the business unit that has been the largest user of its services over the past two years. Facilities Manager Tom Stern reports to the General Manager of the largest local business unit, the highly profitable Adhesives and Sealants division. Susan started at Cerberus after earning a business degree from Awsum University. She was excited about her new assignment — leading a project for the first time. He remembered Tom saying: "We have office furniture that dates back to the 1980s. There are those ugly desks with green tops that look like they came from military surplus! I am particularly concerned about the ergonomics of computer workstations - it is an important issue to address! I want you to lead a project to transition our office furniture to the new corporate standards.” Susan assembled her project team: Jeff, the site safety/ergonomics engineer; Gretchen, the space designer. Cindy, the traffic coordinator. and Kari, who is responsible for the Facilities accounting. At the first meeting, everyone agreed that ergonomics was the most pressing concern. All five business units responded to a workstation survey that identified injury-causing ergonomics. The team developed a plan to replace the old desks with new, factory-set furniture by the end of the year. Susan asked Curry about the budget, and Curry replied, “Facilities shouldn't be paying for this. We want individual business units to pay for the costs to show where they came from." Gretchen said, “You know, we have a lot of department changes going on all the time. Everyone is always clamoring for space and location as their business needs change. Ergonomics aside, could we say that only corporate furniture moves? It would force some of the things that are just plain bad to change. Everyone agreed it was a great idea. Susan presented the project plan to Tom and he was given the green light to go ahead. JON WOOD Jon Wood is a design director with 22 years experience at Cerberus. Its business unit, the Photochemical Division (PCD), is losing money. Digital
Photography continues to shrink the market and PCD is struggling to keep up with the competition's relentless price-cutting. Jon was recently transferred from the company's headquarters in Richmond, where he led the financial forecasting group. He is considered a new broom and is determined to sweep. One of Jon's first actions was to negotiate with his general manager to change departments. Money was tight and the site facilities were charging an arm and a leg for the moves (covering all their fixed overheads, the jobs people complained about). However, Jon felt it was important to move from Building 4, where he was next to Production, to Building 6, where they could be close to Marketing, Forecasting and Accounting. His general manager agreed and his team was very excited about the upcoming change. John assigned one of his designers, Richard, to work with the facilities team on the team's layout and movement plan. Things seemed to be going well - John saw Richard sitting with the traffic coordinator and it looked like he was on the right track. The day before the move, Jon got on the phone from a particularly tense conference call with a Canadian subcontractor. Production was not going well and product availability would be limited for the remainder of the quarter. Gathered around his desk were Richard, Cindy, and someone he hadn't met yet, Susan. After hurried introductions, Susan told John that his files could not be moved. The cabinets are large side file cabinets, 5 feet wide by 2 feet deep, a combination of filing cabinets and shelves. Jon brought them over from the Guild because he thought they looked good with their dark gray steel sides and wood veneer. Susan told him he would have to replace them with new corporate-spec cabinets that were about the same size. John said, “You mean you want me to throw away the perfect records and spend another $2,000 on new ones just to match them? I won't do that!" Susan replied, "Then I won't allow the old cabinets to be moved." Jon said, "You're kidding – those cabinets are gray, the new ones are gray – the only difference is the wood paneling! You're going to throw away $2,000 for nothing?' Susan replied stiffly, "Sorry, that's the policy. If I have to move them myself, those cabinets don't go to waste. My department is losing money, and I'm not throwing money away. If you don't like it, you'll have to ask your general manager to convince my general manager to make me do it. Now please leave so I can do some work." 1. If you were Susan, what would you do? 2. What could Susan have done differently for to avoid this problem?
3. What could Cerberus management do to more effectively manage situations like this?* Courtesy of John Sloan, Oregon State University. Design elements: Practice Snapshot, Highlight Box, Case Icon: © Sky Designs/Shutterstock1 engagement, see: Bourne, Linda, Stakeholder Relationship Management (Farnham, England: Gower Publishing Ltd., 2009).2 This discussion is based on Sayles, Leonard R., Leadership: Managing in Real Organizations (New York: McGraw-Hill, 1989), pp. 70–78.3 See, for example: Pinto, J. L., and S. K. Mantel, “The Causes of Project Failure,” IEEE Transactions in Engineering Management , vol. 37, no. 4 (1990), pp. 269–76.4 This is the classic “kill the messenger” syndrome. This and other forces contributing to information distortion can be found in Larson, Erik and Jon King, "The Systemic Distortion of Information: An On-going Management Challenge," Organizational Dynamics, Winter 1996, pp. A little old, our conversations with project managers suggest that the results apply today: (Cabanis, J., “A Question of Ethics: The Issues Project Managers Face and HowThey Resolve Them,” PM Network, Dec. pp. 8–28 ).6 For a more in-depth discussion of ethics, see: Trevino, L. and K. Nelson, Managing BusinessEthics: Straight Talk about How to Do It Right, 5th ed. (Hoboken, NJ: John Wiley & Sons, 2011) .7 Warmth is reflected non-verbally in smiling, appropriate eye contact and gestures, as well as verbally in questions and empathic listening. It must be genuine, rooted in the character of the individual.8 For a practical treatment of what it means to be a systems thinker, see: Senge, Peter M., The Fifth Discipline (New York: Doubleday, 1990).9 For for an overview of extensive discussion of the habit of being proactive, see: Covey, Stephen, The Seven Habits of Highly Effective People (New York: Simon & Schuster, 1989), pp. 65–94.
11-111-211-311-411-511-611-711.111.2page 390CHAPTER ELEVEN11Project Team Management LEARNING OBJECTIVES After reading this chapter, you will be able to: Identify the key characteristics of a diverse, high-performing project team. team development Understand the impact that situational factors have on project team development. Identify strategies for developing a high performing project team. Distinguish functional conflict from dysfunctional conflict and describe strategies for encouraging functional conflict and discouraging dysfunctional conflict. Understand the challenges of managing virtual project teams. Recognize the various pitfalls that can occur in a project team. COMPONENTS The Five-Stage Model of Team Development Situational Factors Affecting Team Development
11.311.411.5page 391Building High-Performance Project TeamsManaging Virtual Project TeamsProject Team Pitfalls Summary Consensus is a start. Restraint is progress. Collaboration is success.—Henry FordLO 11-1Identify the key characteristics of a high-performing project team. The magic and power of groups is captured in the term synergy, which comes from the Greek word sunergos: "we work together". There is positive and negative synergy. The essence of positive synergy is found in the statement "The whole is greater than the sum of the parts."
page 392 On the other hand, negative synergy occurs when the whole is less than the sum of the parts. Mathematically, these two situations can be symbolized by the following equations: Synergy is perhaps best seen on a basketball court, soccer field, or soccer field where teammates play as one to defeat a superior opponent (see Rescue Team). Dream Team to Olympic gold in Barcelona, ​​the USA basketball team, made up of NBA stars, has lost not once, but three times in international competition. For the first time in Olympic history, the United States settled for a bronze medal in men's basketball. Basketball was no longer America's game. The autopsy of the Athens disaster revealed a serious case of negative synergy. The reasons were many. The team finished just three from the group they qualified for last summer. Seven of the original guests dropped out. In the end, 14 players turned down Uncle Sam, citing excuses ranging from family obligations to lingering injuries to the security situation in Greece. With that, coach Larry Brown took over a team with an average age of 23 and it worked. Behind-the-scenes, dressing and punctuality issues flared up and on the eve of the games, Brown wanted to send several players home. The million dollar players were overconfident and assumed their individual brilliance would prevail. Their over-reliance on individual basketball and poor team defense doomed them as they lost games to Puerto Rico, Lithuania and Argentina. Enter Jerry Colangelo, 68, former coach, player and president of the Phoenix Suns. “The way they behaved. left a lot to be desired," he says of the 2004 team. "Seeing and hearing how people were reacting to our players, I knew we had hit rock bottom." Colangelo told NBA commissioner David Stern that he would only take over as CEO if he had complete control. As a measure of how dire the situation was, he immediately got what he asked for.
In 2005, Colangelo met face-to-face with all potential national players to hear in their own words why they wanted to represent their country. The few good men to put things in place wouldn't get paid or guaranteed playing time, much less a starting point. One of the top recruits was superstar LeBron James, who had been nicknamed "LeBronze" after his performance on the disappointing 2004 team. Colangelo says, "I got the buy-in. In the middle of my conversation with him, LeBron he said, I'm in. Kobe Bryant soon followed, and only 2 of the NBA's top 30 stars took Colangelo up on their offer. Mike Kryzewski, the college coach at Duke, was hired with one project goal - to win the gold medal. For that, he had to change Team USA's attitude. They had to subdue their superstar egos and embrace the concept of team ball. A blessing in disguise was kicked out of the 2006 world championship by a Greek team. The players came out of that team. frustrated with the ball as extra passes became the norm in practice. The change in attitude was evident in more subtle ways. The USA on the uniforms was bright red, while the players' names were blue. Players were no longer referred to in hoops as " our game' and they were talking about how the world's game had become. Even the team's official slogan (United We Rise) and unofficial nickname (The Redeem Team) showed room for improvement. Dusan Vranic/AP Images The group bought into a common goal. Team USA went into the final gold medal game defeating opponents by an average margin of more than 30 points. Pundits admired not so much the margin of victory as how well they played as a team. "Our goal is to win a gold medal and be humble about it," said Jason Kidd, a six-time All-Pro point guard, "and if we make it for 50, make sure it's because we're playing it right." Nothing pointed in the right direction more than a moment in the finals, when a flawless 16-second, off-the-dribble run by the Redeemers culminated in Dwight Howard picking off a perfect pass for an uncontested dunk. not dominating the gold medal game. Spain proved to be an inspired opponent. They just called it a game, and for the first time since NBA players went to the Olympics, the USA played as a team instead of individual showmanship. *Alexander Wolff, “The Redeem Team: New Nickname, New Outlook for U.S. atOlympics,” http://sportsillustrated.cnn.com/2008/writers/alexander_wolff/07/22/redeem.team0728/index.html; Greg Varkonyi, “The Redeem team played like a dream at the Olympics
page 393Basketball Final', http://www.sportingo.com/olympic-games/basketball/a10072_redeem-team-played-like-dream-olympic-basketball-final. Although less visible than in team sports, positive and negative synergies can also be observed and felt in the daily operations of project teams. Here's a description of a team member: Instead of working as one big team, we break it up into a number of sub-teams. The marketing people were involved, as were the systems people. A lot of time was wasted gossiping and complaining about each other. When the project started falling behind, everyone started covering their tracks and trying to shift the blame. After a while, we avoided face-to-face conversations and resorted to email. Management eventually hung up and brought in another team to save the project. It was one of the worst project management experiences of my life. Fortunately, the same person was also able to report a more positive experience: There was an infectious enthusiasm within the group. Sure, we had our share of problems and setbacks, but we faced them head on and sometimes managed to do the impossible. Wel cared about the project and they cared about each other. At the same time, we challenge ourselves to do better. It was one of the most emotional moments of my life. Here is a set of characteristics commonly associated with high-performing teams that exhibit positive synergy:11. The team shares a common sense of purpose and each member is willing to work toward the project goals.2. The team identifies individual talents and expertise and utilizes them according to project needs at any given time. At such times, the team welcomes influence and leadership from members whose skills are relevant to the immediate work.3. Roles are balanced and shared to facilitate both task completion and feelings of team cohesion and morale.4. The team devotes energy to solving problems rather than being consumed by interpersonal issues or competitive struggles.5. Differences of opinion are encouraged and freely expressed.6. To encourage risk-taking and creativity, mistakes are treated as learning opportunities rather than punishment.
page 3947. Members set high personal performance standards and encourage one another to achieve project goals.8. Members identify with the group and consider it an important source of professional and personal development. High-performing teams become champions, create innovative products, exceed customer expectations, and deliver projects ahead of schedule and on budget. They are linked by mutual interdependence and a common goal or vision. They trust each other and demonstrate a high level of cooperation. predictable way. One of the most popular models identifies five stages (see Figure 11.1) through which teams develop into effective teams (Tuchman, 1965; Tuchman & Jensen, 1977):1. Graduate. In this initial phase, members get to know each other and understand the scope of the project. They begin to establish ground rules by trying to understand what behaviors are acceptable regarding the task (what role they will play, what the performance expectations are) and interpersonal relationships (who is really in charge). This step is completed when members begin to see themselves as part of a group.2. Storm. As the name suggests, this phase is characterized by a high degree of internal conflict. Members accept that they are part of a project team, but resist the constraints that the project and team impose on their individuality.
There is conflict over who will control the team and how decisions will be made. As these conflicts are resolved, the project manager's leadership is accepted and the team moves on to the next step.3. Formulation of rules. The third stage is where close relationships develop and the team demonstrates cohesion. Feelings of camaraderie and shared responsibility for the project are strengthened. The normalization phase is complete when the group structure is solidified and the group has established a common set of expectations about how members should work together.4. Run. The team's operational structure at this point is fully operational and acceptable. The team's energy shifted from getting to know each other and how the team will work together to achieve the project's goals.5. Postponement. For conventional workgroups, performance is the final stage of their development. However, for project teams, there is a completion phase. In this phase, the group prepares for its own breakup. High performance is no longer a priority. Instead, attention is paid to completing the project. Member responses vary at this stage. Some members are optimistic, enjoying the achievements of the project team. Others may be depressed by the loss of camaraderie and friendships gained during the life of the project. FIGURE 11.1 The five-stage team development model
page 395 This model has many implications for those working in project teams. The first is that the model provides a framework for the team to understand its own development. Project managers have found it useful to share the template with their teams. It helps members accept the pressures of the turbulent phase and directs their focus to the more productive phases. Another consequence is that it highlights the importance of the standardization phase, which contributes significantly to the level of productivity observed during the execution phase. Project managers, as we shall see, must take an active role in shaping group norms that will contribute to the ultimate success of the project. For an alternative model of group development, see Research Feature 11.1: The Punctuated Equilibrium Model of Group Development. 11.2 Situational factors affecting team development
LO 11-3 Understand the impact that situational factors have on project team development. Experience and research show that high-performing project teams are much more likely to thrive under the following conditions. 2 There are 10 or fewer members per group. Members volunteer to serve on the project team. Members work on the project from start to finish. Members are appointed to the project on a full-time basis. Members are part of an organizational culture that promotes collaboration and trust. Members report exclusively to the project manager. All relevant functional areas are represented on the team. The project includes a compelling goal. Members are within speaking distance of each other. conditions. For example, many project requirements require the active participation of more than 10 members and may consist of a complex set of interconnected teams that include more than 100 professionals. In many organizations, functional managers or headquarters assign project members with minimal input from the project manager. To optimize the use of resources, team member participation may be on a part-time basis and/or participants may join and leave the project team as needed. In the case of ad hoc mutirões, no team member works full-time on the project. In many companies, an NIH culture (not invented here) discourages collaboration across functional boundaries. Team members often report to different managers, and in some cases, the project manager has no direct influence on team members' performance evaluations and advancement opportunities. Key functional areas cannot be represented for the entire duration of the project, but can only be involved sequentially. Not all projects have a compelling purpose. It can be difficult to get members excited about small-scale projects like a simple product extension or a conventional apartment complex.
page 396 Finally, team members are often distributed across different offices and corporate buildings or, in the case of a virtual project, across the globe. sequence of stages, as suggested by the five-phase model. Their research, which is based on the systemic concept of punctuated equilibrium, found that the timing of teams forming and fundamentally changing the way they work is remarkably consistent. What makes this research fascinating is that it is based on the studies of more than a dozen field and laboratory workgroups assigned to complete a specific project. Gersick's research reveals that each team begins with a unique approach to doing their work, which is defined at their first meeting and includes the behaviors and roles that dominate Phase I. Phase I continues until half the time is spent for the completion of the project has expired (regardless of the actual time). At this intermediate point, an important transition occurs that involves the abandonment of old norms and patterns of team behavior and the emergence of new behaviors and working relationships that contribute to greater progress toward project completion. The last meeting is characterized by accelerated activity to complete the project. These findings are summarized in Figure 11.2. The notable finding in these studies was that each group experienced their transition at the same point in their calendar—about halfway between the first meeting and the completion deadline—despite the fact that some groups only spent an hour on their project, while another six months. It was like all the teams were having a mid-life crisis at this point. The midpoint seemed to act like an alarm clock, increasing members' awareness that time was limited and that they needed to move. Within the five-stage model, he suggests that teams begin by combining the shaping and setting stages, then go through a period of low performance, followed by storming, then a period of high performance, and finally procrastination. FIGURE 11.2 Equilibrium Model of Graded Group Development
page 397 Gersick's findings suggest that there are natural transition points during the life of teams where the team is receptive to change, and that such a moment naturally occurs in the middle of a project. However, a manager does not want to have to wait 6 months into a complex 12 month project for a team to agree! Here it is important to note that Gersick's teams worked on relatively small-scale projects, such as a 4-person banking team tasked with designing a new bank account in 1 month and a 12-person medical task team tasked with reorganizing two units of a treatment unit. In most cases, no formal project plan has been drawn up. The results show the importance of good project management and the need to set deadlines and milestones. By imposing a series of deadlines linked to important milestones, it is possible to create multiple transition points for the natural development of the team. For example, a 12-month construction project can be broken down into six to eight major milestones with the challenge of meeting each deadline creating the necessary tension to lift team performance. *Connie J. Gersick, "Time and Transition in Work Teams: Toward a New Model of Group Development," Academy of Management Journal, vol. 31, no. 1 (March 1988), pp. 9–41; Connie J. Gersick, “Making Time Predictable Transitions in Task Groups,” Academy of Management Journal, vol. 32, no. 2 (June 1989), pp. 274–309. It is important for project managers and team members to recognize the constraints of the situation under which they operate and do the best they can. It is naive to believe that every project team has the same potential to develop into a high performing team. Under less than ideal conditions, it can be a struggle just to meet project goals. Resourcefulness, discipline, and sensitivity to team dynamics are essential to maximizing the performance of a project team.
11.3 Building High-Performance Project Teams LO 11-4 Identify strategies for developing a high-performance project team. Project managers play a key role in developing high-performing project teams. They recruit members, conduct meetings, establish a team identity, create a shared sense of purpose or shared vision, administer a reward system that encourages teamwork, orchestrate decision making, resolve conflicts that arise within the team, and revitalize the team when energy is low (see Figure 11.3). Project managers exploit situational factors that naturally contribute to team development, while improvising around factors that hinder team development. In doing so, they demonstrate a highly interactive management style that exemplifies teamwork and, as discussed in Chapter 10, manages the interface between the team and the rest of the organization.
page 398 The process of selecting and hiring project members varies by organization. Two important factors affecting recruitment are the importance of the project and the management structure used to complete the project. Often, for high-priority projects that are critical to the future of the organization, the project manager will be given virtual carte blanche to choose whomever she deems necessary. For less important projects, staff will simply be assigned to the project. In many matrix structures, the functional manager controls who is assigned to the project. the project manager should work with the operational manager to get the necessary staff. Even in a project team where members are selected and assigned full-time to the project, the project manager must be sensitive to the needs of others. There is no better way to create enemies within an organization than to be seen as needlessly poaching key staff from other departments. Experienced project managers stress the importance of attracting volunteers. However, this desirable step is often beyond the manager's control. However, the value of having team members volunteer for the project rather than being assigned cannot be overlooked. Agreeing to work on the project is the first step in building a personal commitment to the project. This commitment will be essential to maintain motivation when the project hits hard times and extra effort is required. When selecting and hiring team members, project managers naturally look for individuals with the necessary experience and technical knowledge/skills critical to project completion. At the same time, there are less obvious factors to consider in the hiring process: Problem-solving skills. If the project is complex and ambiguous, then a manager wants people who are good at working under uncertainty and have strong problem-identification and problem-solving skills. These people are likely to get bored and less productive working on simple by-the-book projects. Availability. Sometimes, the most available people are not the ones the team wants. On the other hand, if members are already recruited
page 399 are too committed, they may not be able to offer much.Technological expertise. Managers should be wary of people who know a lot about a particular technology. They may be tech savvy who love to study but have trouble doing their work. Reliability. The credibility of the project is enhanced by the reputation of the people involved in it. Hiring enough "winners" builds confidence in the project. Political connections. Managers are wise to hire people who already have good working relationships with key stakeholders. This is especially true for projects operating in a matrix environment where a significant portion of the work will be the domain of a specific functional department rather than the core project team. Ambition, initiative and energy. These qualities can make up for many deficiencies in other areas and should not be underestimated. Familiarity. Research shows that repetitive collaboration stifles creativity and innovation. In challenging and innovative projects, it is appropriate to intersperse the team with experts who have little previous experience working with others (Skilton & Dooley, 2010). and who might want to work on the project. Some organizations may allow face-to-face interviews. Often, a manager will have to spend political capital to get high-value people assigned to the project. The following documents should be available at these discussions: a general project scope statement, senior management approvals, and a description of the tasks and overall schedule belonging to people in their departments. Managers need to be specific about what attributes they are looking for and why they are important.
Research on team development confirms what project managers have stated: the kick-off project meeting is critical to the initial functioning of the project team. According to one veteran project manager, the first team meeting sets the tone for how the team will work together. If it's disorganized or bogged down with little sense of closure, this can become a self-fulfilling prophecy for subsequent teamwork. On the other hand, if it is executed clearly, focusing on real issues and concerns in an honest and direct manner, members will be excited to be part of the project team. Typically, there are three goals that project managers try to achieve during the first project meeting. club. The first is to provide an overview of the project, including scope and objectives, overall schedule, method and processes. The second is to begin to address some of the interpersonal concerns captured in the team development model: Who are the other team members? How will I fit in? Will I be able to work with these people? The third and most important goal is to begin modeling how the team will work together to complete the project. The project manager must recognize that first impressions are important. Their behavior will be carefully monitored and interpreted by team members. This meeting should serve as an exemplary model for subsequent meetings and reflect the leader's style. The meeting itself takes a variety of forms. It is not uncommon on large projects for the kickoff meeting to last a day or two, often in a remote location away from vacations. This retreat provides enough time to complete a preliminary introduction, begin establishing ground rules, and define the structure of the project. An advantage of offsite kickoff meetings is that they provide ample opportunity for informal interaction among members during breaks, meals, and evening activities. These informal interactions are essential to building relationships. However, many organizations cannot afford to perform complex retreats. In other cases, the scope of a project does not justify such an investment of time. In these cases, the basic operating principle should be KISS (keep it simple, stupid!). Often, when limited by time, project managers try to accomplish too much in the first meeting. in these cases, issues are not fully resolved and members are left with an information headache. a productive meeting and the goals should be realistic given the time
400 pages available. If the meeting is only one hour long, the project manager should simply review the scope of the project, discuss how the team was formed, and give members an opportunity to introduce themselves to the team. Establish Ground Rules Whether as part of a complicated first meeting or during subsequent meetings, the project manager should quickly begin establishing ground rules for how the team will work together. These ground rules include not only organizational and procedural issues, but also normative issues about how the group will interact with each other. While the specific processes vary between organizations and projects, some of the key questions to address include the following: Planning Decisions How will the project plan be developed? Will a specific project management software package be used? If so, which one? What are the specific roles and responsibilities of all participants? Who should be informed of the decisions? How will they be informed? What is the relative importance of cost, time and performance? What are the deliverables of the project planning process? will progress be assessed? At what level of detail will the project be tracked? How will team members receive data from each other? How often will they receive this data? and how will they be informed?
page 401 What content/format is appropriate for each audience? Meetings – Where will the meetings be held?– What types of meetings will be held?– Who will conduct these meetings?– How will agendas be produced?– How will information be recorded? changeHow will the changes be implemented? Who will have the authority to approve changes? How will planned changes be documented and evaluated? Relationship Decisions With which department or organizations will the team need to interact during the project? What are the roles and responsibilities of each organization (reviewer, approver, creator, user)? How will all parties involved be informed of deliverables, scheduled dates, expectations, etc.? How will team members communicate with each other? What information will be shared and what will not? guide; items should be added or deleted as required. Many of these procedures will already be established by precedent and should only be briefly reviewed. For example, Microsoft Project or Primavera may be the default software for planning and tracking. Similarly, a company is likely to have an established format for reporting status information. How to deal with other issues should be determined by the project team. When needed, the project manager should actively seek input from project team members and leverage their experience and preferred work habits. This process also contributes to adherence to business decisions. Decisions should be recorded and distributed to all members Establish Group Rules
In establishing these operating procedures, the project manager, through word and deed, should begin working with team members to establish rules for team interaction. The following are examples of some of the rules that researchers have found to be associated with high-performing teams.3 Confidentiality maintained. no information is shared outside the group unless everyone agrees. trouble or trouble. Agree to disagree, but when a decision is made, regardless of personal feelings, move on. Respect outsiders and don't flaunt your position on the project team. One way to make these rules more tangible is to create a team charter that goes beyond the project scope statement and states in no-nonsense terms the team's rules and values. This map should be a collaborative effort on the part of the core team. Project managers can lead by suggesting certain principles, but must be open to input from the team. Once there is general agreement on the rules of conduct, each member signs the final document to symbolize commitment to the principles contained therein. Unfortunately, in some cases, creating a map becomes a meaningless ritual because the map is signed and filed away, never to be discussed again. To have a lasting effect, the letter must be a legal part of the project tracking system. As the team reviews progress against project goals, it assesses the extent to which members adhere to the principles of the charter. Project managers play an important role in establishing team norms through personal example. If they freely admit their mistakes and share what they learn from them, other team members will do the same. At the same time, project managers must intervene when they believe these rules are being violated. They should speak to offenders privately and clearly state their expectations. The amazing thing about groups is that once they are a group
page 402 coherently, with established norms, members will be policed ​​so that the admin does not have to be the heavy. For example, one project manager confided that his team had a custom of having a bean present at every meeting. If a member thought a colleague was hiding the truth, they had to throw the bean bag at the speaker. See Practice Slide 11.2: Putting Ford on the Fast Forward for examples of patterns that encourage innovation. PRACTICAL MOMENTUM 11.2 Putting Ford into Fast Forward* Adam Gryglak had an impossible mission: deliver an all-new Ford diesel engine in less than 36 months. The challenge was all the more daunting because, in the past, Ford had outsourced the design and manufacture of diesel engines to Navistar. Not only did he have to meet a ridiculous deadline, but he also had to build an in-house engine from scratch. Griglak, the chief diesel engineer, knew that success depended on a short circuit in Ford's design process. So he assembled a team of hungry engineers, moved to another location, and shielded the team from senior management stress. He named the project Scorpion after the heavy metal band theScorpions. Progress was immediate. Specialists who were used to working only with their own species became familiar with what other engineers were doing. "We saved months by knowing hour by hour what the other guys were thinking and what their problems were," says Pat Morgan, a veteran Ford engineer. "The result was that the engine fit the truck perfectly the first time, and that almost never happens." Gryglak also realized that engineers work harder and smarter when they are having fun. To relieve the pressure, the engineers played practical jokes on each other, building life-size snowmen decorated with machine parts on each other's desks. Griglak encouraged friendly competition. After reaching a critical design milestone, the team hosted a Pinewood Derby competition. The Pinewood Derby is a famous Boy Scout event where boys carve wooden toy cars and race them down a ramp. They were engineers, not Boy Scouts, so instead of wooden cars, the engineers made aluminum cars. Some of the cars even had remote controls and motors. The entertainment culture paid off. Ford's new diesel engine was completed on time and was panned by critics. The engine was the first of its kind to use state-of-the-art antipollution technology that met the new federal standards. It also had best-in-class fuel economy and wouldn't need major maintenance for 300,000 miles. The engine appeared in the best-selling F-150 truck line and was considered one of the keys to Ford's comeback.
page 403*“Putting Ford on Fast Forward”, BusinessWeek, October 26, 2009, p Others are status report meetings, problem-solving meetings, and review meetings. Issues unique to these meetings will be discussed in subsequent chapters. For now, here are some general guidelines for running effective meetings. they speak directly to the person chairing the meeting. Start meetings on time, regardless of whether everyone is present. Prepare and distribute an agenda before the meeting. Set a snooze time. Periodically set aside time to review the effectiveness of previous meetings. Ask for recommendations and implement changes. Delegate good record keeping. Check the agenda before you start and temporarily allocate time for each topic. Prioritize issues so adjustments can be made within given time constraints. Encourage active participation by all members by asking questions rather than making statements. Summarize decisions and review tasks for the next meeting. Prepare and distribute a summary of the meeting to the appropriate people. Recognize achievements and positive behavior. The most common complaint is that meetings take too long. Establishing an agenda and adjournment time helps participants budget for discussion time and provides a basis for streamlining procedures. Record keeping can be an unwanted and tedious task. Using laptops to capture real-time decisions and information can make it easier
communication process. Careful preparation and consistent application of these guidelines can make meetings a vital part of projects. Establishing Team Identity One of the challenges project managers often face when building a team is the lack of full-time involvement from team members. Specialists work in different phases of the project and spend most of their time and energy elsewhere. They are often members of several groups, each competing for their time and loyalty. Project specialist J. D. Frame (1995) points out that, for many of these specialists, a particular project is an abstraction. As a result, their motivation level suffers. Project managers need to make the project team as tangible as possible to participants by developing a unique team identity that participants can emotionally connect with. Group meetings, co-housing of group members, group naming and group rituals are common means of this. Effective use of meetings. Periodic team meetings provide an important forum for communicating project information. A less obvious function of project meetings is to help create a specific team identity. During project meetings, members realize that they are not working alone. They are part of a larger project team and the success of the project depends on the collective efforts of all team members. Timely meetings of all project stakeholders help define team members and strengthen collective identity. Team member housing. The most obvious way to make the project team tangible is for members to work together in a common space. This is not always possible in matrix environments where participation is part-time and members work on other projects and activities. A valuable substitute for co-housing is to create a project office, sometimes called a war room or project club. These rooms are the common meeting place and contain the most important design documentation. Often, your walls are covered with Gantt charts, cost charts, and other results related to project planning and control. These rooms serve as a tangible sign of the project's effort. Create the project team name. Developing a team name such as "A-Team" or "Casey's Crusaders" is a common feature
page 404 the most tangible group. An associated team logo is often created as well. Again, the project manager must rely on the team's collective ingenuity to find the appropriate name and logo. These symbols can be affixed to stationery, t-shirts, mugs and so on to signify membership in the group. Get the team to build or do something together early on. Nothing fosters a sense of teamwork more than working together on something. In the case of an international project, the manager simply organized a dinner where members brought dishes that their countries were famous for. Group rituals. Just as corporate rituals help create a company's unique identity, similar project-level symbolic actions can contribute to a unique team subculture. For example, in one project, members were given ribbons with stripes corresponding to the number of project milestones. After reaching each milestone, members would gather and cut the next strip of their ties to mark progress.4 Ralph Katz (2004) reports that it was common practice for DigitalEquipment's alpha chip design team to recognize people who found a bug in design giving them a cheap fluorescent toy. The bigger the bug discovered, the bigger the cockroach got. Such rituals help separate project work from primary functions and reinforce a special status. Creating a Shared Vision Unlike project scope statements, which include specific costs, completion dates, and performance requirements, a project vision includes the less tangible aspects of project performance. The project vision is a shared vision project team members have about what the project will look like after completion, how they will work together, and/or how customers will embrace the project. At its simplest level, a shared vision is the answer to the question "What do we want to create?" Not everyone will have the same opinion, but the images should be similar. Visions come in many forms. they can be captured in a slogan or symbol, or they can be written as a formal vision statement. What a vision is is not as important as what it does. A vision inspires members to be their best. (See Practice Scenario 11.3: The
Good Man in a Storm.) Furthermore, a shared vision unites professionals with different backgrounds and agendas towards a common aspiration. It helps motivate members to subordinate their individual agendas and do their best for the project. As psychologist Robert Fritz says, “In the presence of greatness, evil disappears.”5 Visions also provide focus and help communicate less tangible priorities, helping members make appropriate judgments. Finally, a shared vision for a project promotes long-term commitment and discourages quick responses that collectively reduce project quality. Visions can be surprisingly simple. For example, the vision of a new car can be expressed as a "pocket rocket". Contrast this view with the more traditional product description - "a sports car in the middle price range". The design engineers would immediately understand that the car was going to be small and fast, and that the car had to be fast off the road, nimble in corners and very fast in the straights (Bowen et al., 1994). Alternatively, the visions can be more specific: "HASS Automated Help Site (HASS) version 4.5 will address the top 10 customer complaints across the university without negatively impacting average system-wide performance, reliability, or response time."6 There appear to be four key properties of effective vision (see Figure 11.4). First, its essential properties must be communicable. A vision is worthless if it resides only in one's head. The use of specific imagery-based language, such as “pocket rocket,” is fundamental (Murphy & Clark, 2016). Second, visions must be challenging but also realistic. For example, a task force aiming to overhaul the curriculum at a state university's business school is likely to roll its eyes collectively if the dean announces that his vision is to rival Harvard Business School. On the other hand, developing the best business degree program in this state may be a realistic vision for this task force. Third, the project manager must believe in the vision. Passion for vision is a key element of effective vision. Finally, it must be a source of inspiration for others. FIGURE 11.4 Requirements for an effective design vision
page 405 CASE STUDY 11.3 A Good Man in a Storm* Once upon a time in 1976, Data General (DG) Corporation needed to quickly build a fast and reasonably priced 32-bit minicomputer to compete with Digital's VAX Equipment Corporation. General Data CEO Edson de Castro initiated the Fountainhead project and provided the best people and extensive resources to complete the 32-bit initiative. In support of the Fountainhead project, DG created the Eagle project within the Eclipse group under the leadership of Tom West. Work on both designs began in 1978. In 1980, Data General announced its new computer, with simplicity, power, and low cost. This computer was not the well-funded source of the DG group, but the underfunded Eclipse group of Eagle of Tom West. Tracy Kidder saw it all and told the story in The Soul of a New Machine, which won the Pulitzer Prize in 1982. This book, which Kidder thought would interest a handful of computer scientists, has become a management classic. projects. off the coast of New England. Kidder's title for the prologue was "A Good Man in a Storm". Twenty years after Kidder's book was published, Tom West interviewed Lawrence Peters for the Academia of Management Executive. Following are excerpts that capture West's views on innovative project management. On choosing team members: You explain to a guy what the challenge was and then you see if his eyes light up.
page 406 On motivating team members: Challenge was everything. People, especially creative technicians who really want to make a difference, will do whatever is possible or necessary. I have done this more than once and repeated it several times. It seems to be working. On the importance of having a vision: You have to find a rallying cry. You have to have something that can be described very simply and be true to an engineer that says "yeah, this is what you need to do now". Otherwise, you'll be constantly rolling rocks uphill. About the project manager role: You have to act like a cheerleader. You have to act like the instructor. You have to constantly remember what the goal is and what's moving the ball towards the post, and what's running to the side, and you have to fight a lot for those. I mean, you really don't want your design engineer arguing with the guy in the shop about why he has to do it the designer's way. I can do that, and I can also rise through the ranks, and sometimes I have done just that.* Tracy Kidder, The Soul of a New Machine (New York: Avon Books, 1981); Lawrence H. Peters, "'A Good Man in a Storm': An Interview with Tom West," Academy of Management Executive, vol. 16, no. 4 (2002), pp. 42–43. Once a project manager accepts the importance of building a shared vision, the next question is how to achieve a vision for a specific project. First, project managers don't have visions. They act as catalysts and midwives for the formation of a shared vision of a project team (Smith, 1994). In many cases, visions are inherent to the scope and goals of the project. People are naturally excited to be the first to bring a new technology to market or solve a problem that threatens their organization. Even with mundane projects, there are often many opportunities to create a compelling vision. One way is to talk to several people involved in the project and find out immediately what makes them excited about the project. For some it may be doing a better job than the last project or the satisfaction in the eyes of the clients when the project is completed. Many visions evolve reactively in response to competition—for example, Samsung engineers are trying to develop a next-generation smartphone that critics will declare superior to the iPhone.
Some experts advocate attending formal vision-building meetings. These meetings often involve several steps, starting with members identifying different aspects of the project and creating ideal scenarios for each aspect. For example, in a construction project, scenarios might include "no accidents," "no lawsuits," "winning an award," or "how we will spend our bonus for completing the project ahead of schedule." scenarios that are most compelling and translate them into vision statements for the project. The next step is to identify strategies to achieve the vision statements. For example, if one of the vision statements is that there will be no lawsuits, members will identify how they should work with the owner and subcontractors to avoid litigation. Members then volunteer to account for each statement. The vision, strategies and the name of the responsible team member are published and distributed to relevant stakeholders. In most cases, shared visions emerge informally. Project managers gather information about what excites participants about the project. They test parts of their work vision in their conversations with team members to gauge the level of excitement the early ideas generate in others. To some extent, they engage in basic market research. Opportunities are seized to mobilize the team, such as an executive's disparaging remark that the project will never be completed on time, or a competitor's threat to start a similar project. Consent in principle is not necessary. What is essential is a core group of at least 1/3 of the project team who are truly committed to the vision. They will provide the critical mass to get others on board. Once the language to communicate the vision is established, the statement should be an important part of any work agenda, and the project manager should be ready to deliver a "snippet" speech at any time. When problems or disagreements arise, all responses must be consistent with the vision. Much has been written about visions and leadership. Critics argue that vision is a glorified substitute for shared goals. Others argue that it is one of the things that separates leaders from managers. The key is to discover what excites people about a project, be able to articulate that source of excitement in a compelling way, and protect and nurture that source of excitement throughout the project.
page 407 Project managers are responsible for managing the reward system that encourages performance and extra effort from the team. One advantage they have is that often project work is intrinsically rewarding, whether it manifests itself in an inspired vision or a simple sense of accomplishment. Projects provide participants with a change of scenery, a chance to learn new skills and a chance to break out of the cocoon of their department. Another intrinsic reward is what is called “pinball” – project success often gives team members the option to play another exciting game.7 However, many projects are undervalued and boring. it interferes with other more important priorities; and they are considered an additional burden. In some of these cases, the greatest reward is the completion of the project so that team members can get back to what they really love to do and what will bring the greatest personal returns. Unfortunately, when this attitude is the main motivation, the quality of the work is likely to suffer. Under these conditions, extrinsic rewards play a more important role in motivating team performance. Most project managers we spoke with supported the use of group rewards. Recognizing individual members, regardless of their achievements, can distract from the unity of the group. Project work is highly interdependent, so it can become problematic to distinguish who really deserves additional credit. Bonuses and monetary incentives should be linked to project priorities. There's no point in rewarding a team for getting their work done early if cost control is their number one priority. One of the limitations of cash bonuses is that they often eat into the household budget to pay the dentist or mechanic. greater value, rewards must have lasting meaning (Smith & Reinertsen, 1997). Many companies convert money into vacation rewards, sometimes with matching vacation time. For example, one company rewarded a project team for getting work done ahead of schedule with a four-day, all-expenses-paid trip to Walt Disney World for the members' entire family. This holiday will not only be remembered for years to come, but it also recognizes the spouses and children, who, in some way, also contributed to the success of the project. Likewise, other companies have been known to provide members with home computers and entertainment centers. Wise project managers negotiate a
page 408 discretionary budget so they can reward milestone teams with gift cards to popular restaurants or tickets to sporting events. For example, Ritti and Levy tell the story of a project manager tasked with building a new state-of-the-art factory. His design team worked with many different contracting companies. The project was delayed, mainly due to a lack of cooperation between the various actors. The project manager did not have direct authority over many key people, especially contractors from other companies. He was, however, at liberty to call meetings whenever he pleased. Thus, the project manager established daily "coordination meetings" required of all involved managers at 6:00 A.M. The meetings continued for about two weeks until the project was back on schedule. At that time, the project manager announced that the next meeting was canceled and no more kick-off meetings were scheduled.8 Although project managers tend to focus on group rewards, there are times when they need to reward individual performance. This is not only to reward outstanding effort, but also to show others what exemplary behavior is. Examples of this type of reward include letters of recommendation. Although project managers may not be responsible for the performance evaluations of their team members, they can write letters praising the performance of their projects. These letters can be sent to the employees' supervisors to place in their personnel files. Public recognition for outstanding work. Superlative workers should be publicly recognized for their efforts. Some project managers begin each status review meeting with a brief report of project workers who exceeded their project goals. Work assignments. Good project managers recognize that while they don't have much fiscal authority, they do have substantial control over who does what, with whom, when, and where. A good job it must be
rewarded with desirable tasks. Managers should be aware of member preferences and, where necessary, accommodate them. Flexibility. Being willing to make exceptions to the rules, if done wisely, can be powerfully rewarding. Allowing members to work from home when a child is sick or justifying a little indiscretion can build lasting loyalty. Individual rewards should be used judiciously and under exceptional circumstances. Nothing hurts the cohesion of a group more than members who begin to feel that others are getting special treatment or that they are being treated unfairly. Camaraderie and cooperation can quickly fade, only to be replaced by bickering and obsessing over group politics. These distractions can absorb energy that would otherwise be directed toward completing the task. Individual rewards should normally only be used when everyone in the group recognizes that a member deserves special recognition. Orchestrating the Decision-Making Process Most decisions about a project do not require a formal meeting to discuss alternatives and determine solutions. Instead, decisions are made in real time as part of daily interactions between project managers, stakeholders, and team members. For example, as a result of a routine “How are you?” question, a project manager discovers that a female mechanical engineer is stuck trying to meet performance criteria for a prototype she is responsible for building. The project manager and engineer walk down the hall to talk to the designers, explain the problem and ask what, if anything, can be done. Designers distinguish which criteria are necessary and which they believe can be violated. The project manager then checks with the marketing team that the changes are acceptable. They agree with all but two amendments. The project manager goes back to the mechanical engineer and asks if the proposed changes would help solve the problem. The engineer agrees. Before approving the changes, he calls the project sponsor, reviews the incidents, and asks the sponsor to sign off on the changes. This is an example of how, by practicing MBWA (management by drift), project managers consult with team members, solicit ideas, determine optimal solutions, and create a sense of ownership that builds trust and commitment to decisions.
page 409 However, projects face issues and decisions that require the collective wisdom of team members as well as relevant stakeholders. Group decision making should be used when improving the quality of important decisions (Vroom & Jago, 1988). This often happens in complex problems that require the input of many experts. Group decision making should also be used when a strong commitment to the decision is required and there is little chance of acceptance if only one person makes the decision. Participation is used to reduce resistance and ensure support for decisions. Guidelines for managing group decision making are provided in the next section. Facilitating team decision-making Project managers play a key role in guiding the team's decision-making process. They must remember that their job is not to make a decision, but to facilitate discussion within the group so that the group can reach consensus on the best possible solution. Consensus in this context does not mean that everyone supports the decision 100 percent, but that everyone agrees on what is the best solution under the circumstances. Facilitating group decision making essentially involves four main steps.91. Troubleshoot. The project manager must be careful not to frame the problem in terms of options (eg, "Should we do X or Y?"). Instead, the project manager must identify the underlying problem for which these alternatives and possibly others are possible solutions. This allows team members to generate alternatives, not just choose between them. A useful way to define problems is to consider the gap between where a project is (the current state) and where it needs to be (the desired state). For example, the project could be four days late, or the prototype could weigh a kilogram more than the specification. Whether the gap is small or large, the goal is to close it. The group must find one or more courses of action that will change the existing situation to the desired one. If defensiveness is detected during the problem identification discussion, it may be wise to delay the problem-solving step if possible. This allows emotions to subside and members to gain a new perspective on the issues involved.
page 4102. Creating alternatives. Once there is general agreement on the nature of the problem(s), the next step is to generate alternative solutions. If the problem requires creativity, brainstorming is usually recommended. Here, the team creates a list of possible solutions on a flipchart or blackboard. During this time, the project manager establishes a moratorium on criticizing or evaluating ideas.