Project management
- 2. Definitions • A Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform • Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project • Organization: Pure project, Functional Project, Matrix Project
- 3. Pure Project • Self-contained team works full time on the project • Advantages: – PM has full authority over the project – Team members report to one boss – Lines of communication are short – Fast decision making – Team pride, motivation and commitment are high • Disadvantages: – Duplication of resources – Organizational goals and policies are ignored – Organization falls behind in its knowledge of new technologies due to weakened functional divisions
- 4. Functional Project • The project is housed within a functional division • Advantages: – Team members can work on several projects – Technical expertise is maintained within the functional area – Functional area is a home after the project is completed – Critical mass of specialized functional area experts creates synergistic solutions to a project’s technical problems • Disadvantages: – Aspects of project that are not directly related to the functional area get short changed – Motivation of team members is often weak – Needs of the client are secondary and are responded to slowly
- 5. Functional Organization President Research and Development Engineering Manufacturing Project A Project B Project C Project D Project E Project F Project G Project H Project I
- 6. Matrix Project • Blends properties of pure and functional project structures • Each project utilizes people from different functional areas • PM decides what tasks and when they will be performed • Functional managers control which people and technologies are used • Can be weak, balanced or strong
- 7. Matrix Organization President Research and Development Engineering Manufacturing Marketing Manager Project A Manager Project B Manager Project C 3-7
- 8. Matrix Project Pros/Cons • Advantages: – Communication between functional divisions is enhanced – PM is held responsible for successful completion of project – Duplication of resources is minimized – Team members have a functional home to return to after project completion – Policies of parent organization are followed • Disadvantages: – There are two bosses for team members – Doomed to failure unless PM has strong negotiation skills – Sub-optimization may occur due to hoarding of resources for project
- 9. Project Selection – No Numeric • Sacred cow – project suggested by a senior and powerful official • Operating necessity – project is required for the organization to continue operating • Competitive necessity – project is required to enable the company to maintain its competitive position • Product line extension – project to develop and distribute new products • Comparative benefits model – portfolio of projects that best fits the organization’s aims is constructed
- 10. Profit/Profitability Models • Payback period – Initial fixed investment in the project divided by the estimated annual net cash inflows from the project • Average Rate of Return – Ratio of average annual profit to the initial or average investment in the project • Discounted cash Flow (Net present value) – determines the net present of all cash flows by discounting them. • Profitability index – also known as benefit-cost ratio is the NPV of all future expected cash flows divided by the initial cash investment
- 11. Scoring Models • Unweighted scoring models – a set of relevant factors are selected by management and scored for each project. • Weighted scoring models – Numeric weights reflecting the relative importance of each individual factor are added
- 12. Work Breakdown Structure • Project starts out as a statement of work • The project is then broken down to tasks • Tasks may be further subdivided into more meaningful pieces known as sub-tasks • The sub-tasks are further subdivided into work packages • WBS defines the hierarchy of project tasks, sub-tasks and work packages
- 13. WBS Diagram Program Project 1 Project 2 Task 1.1 Subtask 1.1.1 Work Package 1.1.1.1 Level 1 2 3 4 Task 1.2 Subtask 1.1.2 Work Package 1.1.1.2
- 14. Network-Planning Models • A project is made up of a sequence of activities that form a network representing a project • The path taking longest time through this network of activities is called the “critical path” • The critical path provides a wide range of scheduling information useful in managing a project • Critical Path Method (CPM) helps to identify the critical path(s) in the project networks
- 15. Gantt Chart Activity 1 Activity 2 Activity 3 Activity 4 Activity 5 Activity 6 Time Vertical Axis: Always Activities or Jobs Horizontal Axis: Always Time Horizontal bars used to denote length of time for each activity or job.