Open Textbook Basics of Project Management

© Adrienne Watt
This work is licensed under a Creative Commons-ShareAlike 4.0 International License
Original source: The Saylor Foundation
http://open.bccampus.ca/find-open-textbooks/?uuid=8678fbae-6724-454c-a796-3c666
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Contents
Introduction ...................................................................................................................1
Preface ............................................................................................................................2
About the Book ..............................................................................................................3
Chapter 1 Project Management: Past and Present ....................................................5
1.1 Careers Using Project Management Skills ......................................................................5
1.2 Business Owners ...............................................................................................................5
Example: Restaurant Owner/Manager ..........................................................................6
1.2.1 Outsourcing Services ..............................................................................................7
Example: Construction Managers ..........................................................................8
1.3 Creative Services ................................................................................................................9
Example: Graphic Artists ...............................................................................................10
1.4 Educators ..........................................................................................................................10
Example: Teachers .........................................................................................................11
1.5 Engineers ..........................................................................................................................11
1.6 Health Care........................................................................................................................12
Example: Radiology Technologists ..............................................................................13
Example: Nurses ............................................................................................................14
1.7 Paralegal ...........................................................................................................................14
1.8 Software developer .........................................................................................................15
1.9 Science Technicians .........................................................................................................15
1.10 History..............................................................................................................................16
1.11 Attribution ......................................................................................................................19
Chapter 2 Project Management Overview ................................................................20
2.1 Project Attributes .............................................................................................................20
2.2 Definition of a Project .....................................................................................................21
2.3 Project Characteristics ....................................................................................................21
2.4 The Process of Project Management .............................................................................22
2.5 Project Management Expertise.......................................................................................28
2.6 Application knowledge.....................................................................................................28
2.7 Understanding the Project Environment.......................................................................29
2.8 Management Knowledge and Skills ..............................................................................31
2.9 Interpersonal Skills...........................................................................................................32
2.9.1 Communication .....................................................................................................32
2.9.2 Influence ................................................................................................................33
2.9.3 Leadership .............................................................................................................33
2.9.4 Motivation .............................................................................................................34
2.9.5 Negotiation ............................................................................................................34
2.9.6 Problem Solving ....................................................................................................34
2.10 Attribution ......................................................................................................................35
Chapter 3 The Project Life Cycle (Phases) .................................................................36
3.1 Initiation Phase ................................................................................................................36
3.2 Planning Phase ................................................................................................................36
3.3 Implementation (Execution) Phase ...............................................................................37
3.4 Closing Phase ...................................................................................................................38

Example: Project Phases on a Large Multinational Project ......................................39
3.5 Attribution ........................................................................................................................40
Chapter 4 Framework for Project Management ......................................................41
4.1 Project Management Institute Overview ......................................................................41
4.2 So what is PMBOK?...........................................................................................................42
4.3 Introduction to the Project Management Knowledge Areas ......................................44
4.3.1 Project Start-Up and Integration ........................................................................45
4.3.2 Project Scope ........................................................................................................45
4.3.3 Project Schedule and Time Management .........................................................47
4.3.4 Project Costs .........................................................................................................48
4.3.5 Project Quality ......................................................................................................49
4.3.6 Project Team: Human Resources and Communications .................................50
4.3.7 Communications ..................................................................................................51
4.3.8 Project Risk ............................................................................................................52
4.3.9 Project Procurement ............................................................................................53
4.3.10 Project Stakeholder Management ....................................................................54
4.3.11 Scrum Development Overview .........................................................................54
4.3.12 The Project Management Office .......................................................................56
4.4 Attribution ........................................................................................................................57
Chapter 5 Stakeholder Management .........................................................................58
5.1 Project Stakeholders .......................................................................................................59
5.1.1 Top Management ..................................................................................................59
5.1.2 The Project Team ..................................................................................................60
5.1.3 Your Manager .......................................................................................................60
5.1.4 Peers ......................................................................................................................61
5.1.5 Resource Managers .............................................................................................61
5.1.6 Internal Customers ..............................................................................................62
5.1.7 External customer ................................................................................................62
5.1.8 Government ..........................................................................................................62
5.1.9 Contractors, subcontractors, and suppliers ......................................................63
5.2 Politics of Projects ...........................................................................................................63
5.3 Assess the environment .................................................................................................64
5.3.1 Identify goals .........................................................................................................64
5.3.2 Define the problem ..............................................................................................64
5.3.3 Culture of Stakeholders........................................................................................64
Example: Culture Affects Communication in Mumbai ......................................65
Example: Cultural Differences between American Regions .............................65
5.3.4 Managing Stakeholders........................................................................................65
Example: Tire Plant in India ..................................................................................66
Example: Stakeholders and a Bridge Project .....................................................67
5.4 Relationship Building Tips ..............................................................................................67
5.5 How to Relate to Different Types of Stakeholders ......................................................68
5.6 Supportive Stakeholders are Essential to Project Success .........................................69
5.7 Tools to Help Stakeholder Management.......................................................................69
5.8 Attribution ........................................................................................................................71

Chapter 6 Culture and Project Management ............................................................72
6.1 What Is Organizational Culture? ....................................................................................72
6.2 Project Manager’s Checklist ...........................................................................................72
6.3 Project Team Challenges ................................................................................................73
6.4 Dealing with Conflict .......................................................................................................74
6.5 References ........................................................................................................................74
6.6 Attribution ........................................................................................................................75
Chapter 7 Project Initiation.........................................................................................76
7.1 Comparing Options Using a Weighted Decision Matrix .............................................82
7.2 Weighted Decision Matrix Sample .................................................................................82
7.3 Financial Considerations..................................................................................................83
7.4 NPV.....................................................................................................................................84
7.5 NPV Example ....................................................................................................................86
7.6 ROI .....................................................................................................................................87
7.7 Payback Period .................................................................................................................87
7.8 Project Charter .................................................................................................................88
7.8.1 Purpose of the Project Charter ...........................................................................88
7.8.2 Simple example of project charter......................................................................89
7.8.2.1 Identification Section .................................................................................89
Example: .........................................................................................................89
7.8.2.2 Overview of the Project .............................................................................89
Example ..........................................................................................................89
7.8.2.3 Objective .....................................................................................................89
Example ..........................................................................................................90
7.8.2.4 Scope ...........................................................................................................90
Example ..........................................................................................................90
Example ..........................................................................................................90
7.8.2.5 Major Milestones........................................................................................90
Example ..........................................................................................................90
7.8.2.6 Major Deliverables .....................................................................................91
Example ..........................................................................................................91
7.8.2.7 Assumptions ...............................................................................................91
Example ..........................................................................................................91
7.8.2.8 Constraints..................................................................................................91
Example: .........................................................................................................92
7.8.2.9 Business Need or Opportunity (Benefits) ...............................................92
Example: .........................................................................................................92
7.8.2.10 Preliminary Cost for the Project.............................................................92
Example: .........................................................................................................92
7.8.2.11 Project Risks..............................................................................................92
Example: .........................................................................................................93
7.8.2.12 Project Charter Acceptance ...................................................................93
7.8.2.13 Project Stakeholders................................................................................93
7.9 Attribution ........................................................................................................................93

Chapter 8 Overview of Project Planning ....................................................................94
Example 1 ...............................................................................................................................95
Example 2 ...............................................................................................................................95
8.1 Attribution ........................................................................................................................96
Chapter 9 Scope Planning ...........................................................................................97
9.1 Defining the Scope ..........................................................................................................97
9.2 Project Requirements .....................................................................................................98
9.3 Functional Requirements ................................................................................................98
Vehicle Example .............................................................................................................98
Computer System Example ..........................................................................................99
9.4 Non-Functional Requirements .......................................................................................99
9.5 Technical Requirements .............................................................................................. 100
9.6 Business Requirements ............................................................................................... 100
9.7 User Requirements ...................................................................................................... 100
9.8 Regulatory requirements ............................................................................................. 101
9.9 An Example of Requirements ...................................................................................... 101
9.10 Software Requirements Fundamentals ................................................................... 102
9.11 Measuring Requirements........................................................................................... 103
9.12 Scope Inputs ................................................................................................................ 104
9.13 Techniques .................................................................................................................. 105
9.14 Requirements Traceability Matrix ............................................................................ 105
9.15 Matrix Fields ................................................................................................................ 106
9.16 Work Breakdown Structure ....................................................................................... 107
9.17 Overview ...................................................................................................................... 107
9.18 Example of a WBS........................................................................................................ 108
9.19 Scope Statement ........................................................................................................ 111
9.20 Attribution ................................................................................................................... 112
Chapter 10 Project Schedule Planning ....................................................................113
10.1 Defining Activities ....................................................................................................... 113
10.2 A Case Study ................................................................................................................ 113
10.2.1 WBS Exercise (Solution follows)...................................................................... 115
10.2.2 Activity List ........................................................................................................ 116
10.2.3 External Predecessors .................................................................................... 119
10.2.4 Discretionary Predecessors ........................................................................... 119
10.2.5 Mandatory Predecessors ............................................................................... 119
10.2.6 Leads and Lags ................................................................................................. 119
10.2.7 Milestones......................................................................................................... 121
10.2.8 The Activity Sequencing Process .................................................................... 122
10.3 Creating the Gantt Chart ............................................................................................ 123
10.4 Creating the Network Diagram.................................................................................. 124
10.5 The Critical Path........................................................................................................... 127
10.6 Attribution ................................................................................................................... 129
Chapter 11 Resource Planning .................................................................................130
11.1 Estimating the Resources .......................................................................................... 130
11.2 Estimating Activity Durations .................................................................................... 131
11.3 Project Schedule and Critical Path ............................................................................ 133
11.4 Resource Management .............................................................................................. 136

11.5 HR Planning ................................................................................................................. 137
11.6 Managing the Team ................................................................................................... 137
11.7 Techniques for Managing Resources ....................................................................... 138
11.8 Resource Leveling ....................................................................................................... 138
11.9 Working with Individuals ........................................................................................... 139
11.10 Emotional Intelligence ............................................................................................. 139
11.11 Personality Types ..................................................................................................... 139
11.12 Leadership Styles ..................................................................................................... 141
Example: Multinational Textbook Publishing Project ............................................. 143
11.13 Leadership Skills ....................................................................................................... 143
11.14 Listening ..................................................................................................................... 144
Example: Client’s Body Language ............................................................................. 145
11.15 Negotiation ............................................................................................................... 146
11.16 Conflict Resolution .................................................................................................... 147
Example: Resolving an Office Space Conflict ........................................................... 148
Example: Conflict Over a Change Order .................................................................. 149
11.17 Delegation ................................................................................................................. 149
Example: Learning Project in Peru ............................................................................ 151
11.18 Adjusting Leadership Styles .................................................................................... 151
11.19 Working with Groups and Teams ........................................................................... 152
11.19.1 Trust ................................................................................................................ 152
11.19.2 Contracts and Trust Relationships .............................................................. 152
11.19.3 Types of Trust ................................................................................................ 153
11.19.4 Creating Trust ................................................................................................ 153
Example: High Cost of Lying in a Charleston Project ..................................... 154
11.19.5 Managing Team Meetings ............................................................................ 154
11.20 Action Item Meetings ............................................................................................... 155
11.21 Management Meetings ............................................................................................ 155
11.22 Leadership Meetings ............................................................................................... 157
11.23 Types of Teams ......................................................................................................... 158
11.23.1 Functional Teams .......................................................................................... 158
11.23.2 Cross-Functional Teams ............................................................................... 159
Example: Cross-Functional Teamwork ............................................................. 159
11.23.3 Problem-Solving Teams ................................................................................ 159
11.24 Qualitative Assessment of Project Performance .................................................. 159
Example: Humm Survey Uncovers Concerns .......................................................... 161
11.25 Creating a Project Culture ....................................................................................... 162
11.25.1 Characteristics of Project Culture ................................................................ 162
Example: Operational Rules on a Multi-site Project ....................................... 163
Example: Creating a Culture of Collaboration ................................................. 163
11.26 Innovation on Projects ............................................................................................. 164
Example: Stress Managed on a Website Design Project ........................................ 164
11.27 References ................................................................................................................. 165
11.28 Attribution ................................................................................................................. 165
Chapter 12 Budget Planning .....................................................................................166
12.1 Estimating Costs to Compare and Select Projects ................................................. 167

12.2 Analogous Estimate .................................................................................................... 167
Example: Analogous Estimate for John’s Move ....................................................... 168
12.3 Parametric Estimate.................................................................................................... 168
Example: Parametric Estimate for John’s Move ...................................................... 168
12.4 Bottom-Up Estimating ................................................................................................ 169
Example: Bottom-Up Estimate for John’s Move ...................................................... 169
12.5 Activity-Based Estimates............................................................................................. 170
12.6 Managing the Budget ................................................................................................. 172
12.6.1 Managing Cash Flow ....................................................................................... 172
12.6.2 Contingency Reserves ..................................................................................... 172
12.6.3 Management Reserves ................................................................................... 173
12.6.4 Evaluating the Budget During the Project .................................................... 173
Example: Reporting Budget Progress on John’s Move ................................... 173
12.6.5 Earned Value Analysis...................................................................................... 174
Example: Planned Value on Day Six of John’s Move ....................................... 174
Example: Comparing PV, EV, and AC in John’s Move on Day Six ................... 175
12.6.6 Schedule Variance............................................................................................ 175
Example: Schedule Variance on John’s Move .................................................. 177
Example: Cost Variance on John’s Move .......................................................... 178
Example: Cost Performance Index of John’s Move ......................................... 178
12.6.7 Estimated Cost to Complete the Project ...................................................... 179
Example: Estimate to Complete John’s Move .................................................. 180
12.6.8 Estimate Final Project Cost.............................................................................. 180
Example: Estimate at Completion for John’s Move ......................................... 180
12.6.9 Establishing a Budget ..................................................................................... 182
12.6.10 Budget Timeline ............................................................................................. 182
12.7 Attribution ................................................................................................................... 183
Chapter 13 Procurement Management ..................................................................184
13.1 Make-or-Buy Analysis ................................................................................................. 185
13.2 Contract Types............................................................................................................. 185
13.2.1 Fixed-Price Contracts....................................................................................... 185
13.2.2 Cost-Reimbursable Contracts......................................................................... 187
13.3 Progress Payments and Change Management ...................................................... 190
13.4 Procurement Process ................................................................................................. 191
13.4.1 Procurement Plan ........................................................................................... 191
13.4.2 Selecting the Contract Approach ................................................................... 192
13.4.3 Soliciting Bids ................................................................................................... 192
13.4.4 Qualifying Bidders ........................................................................................... 192
13.4.5 Request for Quote ........................................................................................... 193
13.4.6 Request for Proposal ...................................................................................... 193
13.4.7 Evaluating Bids ................................................................................................ 194
13.4.8 Awarding the Contract .................................................................................... 194
13.4.9 Managing the Contracts .................................................................................. 194
13.4.10 Logistics and Expediting ............................................................................... 195
13.5 Attribution ................................................................................................................... 196

Chapter 14 Quality Planning .....................................................................................197
14.1 Quality and Grade ....................................................................................................... 198
Example: Quality of Gasoline Grades ....................................................................... 198
Example: Quality of Furniture Packing ..................................................................... 199
14.2 Statistics........................................................................................................................ 199
Example: Setting Control Limits ................................................................................ 200
Example: Normal Distribution ................................................................................... 201
Example: Standard Deviation of Gasoline Samples ............................................... 202
Example: Gasoline Within Three Standard Deviations .......................................... 203
Example: A Step Project Improves Quality of Gasoline .......................................... 204
14.3 Quality planning tools ................................................................................................ 205
Example: Tolerance in Gasoline Production ............................................................ 205
14.4 Defining and Meeting Client Expectations .............................................................. 205
14.5 Sources of Planning Information .............................................................................. 206
14.6 Techniques................................................................................................................... 206
Example: Diagramming Quality Problems ............................................................... 207
14.7 Quality Assurance ....................................................................................................... 209
14.8 Process Analysis ......................................................................................................... 209
Example: Analyzing Quality Processes in Safety Training ...................................... 210
14.9 Attribution ................................................................................................................... 210
Chapter 15 Communication Planning .....................................................................211
15.1 Types of Communication ........................................................................................... 212
15.2 Synchronous Communications ................................................................................. 212
15.3 Remember Time Zones .............................................................................................. 213
Example: Conference Call between Toronto and Paris .......................................... 213
15.4 Asynchronous Communications .............................................................................. 214
15.4.1 Mail and Package Delivery ............................................................................. 214
15.4.2 Fax ..................................................................................................................... 214
15.4.3 Email ................................................................................................................. 215
15.4.4 Project Blog ...................................................................................................... 215
15.4.5 Really Simple Syndication (RSS) ..................................................................... 215
15.5 Assessing New Communication Technologies ....................................................... 216
15.6 Communication Plan Template ................................................................................. 216
15.7 Attribution ................................................................................................................... 217
Chapter 16 Risk Management Planning...................................................................218
16.1 Risk Management Process ........................................................................................ 219
16.2 Risk Identification ........................................................................................................ 220
Example: Risks in John’s Move ................................................................................... 220
16.3 Risk Evaluation............................................................................................................. 221
Example: Risk Analysis of Equipment Delivery ....................................................... 223
16.4 Risk Mitigation ............................................................................................................ 224
16.5 Contingency Plan ........................................................................................................ 225
16.6 Project Risk by Phases ............................................................................................... 226
16.6.1 Initiation ............................................................................................................ 226
Example: Risks by Phase in John’s Move .......................................................... 227
16.6.2 Planning Phase ................................................................................................. 228

Example: Risk Breakdown Structure for John’s Move .................................... 228
16.6.3 Implementation Phase ................................................................................... 229
16.6.4 Closeout Phase................................................................................................. 229
Example: Risk Closeout on John’s Move ........................................................... 230
16.7 References ................................................................................................................... 230
16.8 Attribution ................................................................................................................... 230
Chapter 17 Project Implementation Overview ......................................................232
17.1 Change Control ........................................................................................................... 233
17.2 Attribution ................................................................................................................... 234
Chapter 18 Project Completion ................................................................................235
18.1 Contract Closure ......................................................................................................... 235
18.2 Releasing the Project Team ....................................................................................... 236
18.3 Final Payments ............................................................................................................ 237
18.4 Post-Project Evaluations ............................................................................................ 237
18.5 Trust and Alignment Effectiveness ........................................................................... 238
18.6 Schedule and Budget Management ......................................................................... 238
18.7 Risk Mitigation ............................................................................................................ 238
18.8 Procurement Contracts ............................................................................................. 238
18.9 Customer Satisfaction ................................................................................................ 239
18.10 Senior Management ................................................................................................ 239
18.11 Archiving of Document ............................................................................................ 239
18.12 Attribution ................................................................................................................. 240
Chapter 19 Celebrate!.................................................................................................241
19.1 Attribution ................................................................................................................... 242
Appendix 1: Project Management PowerPoints......................................................243
Appendix 2: Chapter Questions ................................................................................245
Chapter 5: Project Management Overview....................................................................... 245
Chapter 6: The Project Life Cycle (Phases)........................................................................ 245
Chapter 8: Stakeholder Management ............................................................................... 246
Chapter 10: Project Initiation ............................................................................................. 246
Chapter 12: Scope Planning ............................................................................................... 247
Chapter 13: Project Schedule Planning............................................................................. 247
Chapter 15: Budget Planning ............................................................................................. 249
Chapter 16: Procurement Management........................................................................... 250
Chapter 17: Quality Planning.............................................................................................. 251
Chapter 19: Risk Management Planning........................................................................... 251
Appendix 3: Chapter Audio Files ...............................................................................253
About the Author .......................................................................................................255

Introduction
Available under Creative Commons-ShareAlike 4.0 International License (http://creativecommon
s.org/licenses/by-sa/4.0/).
People have been undertaking projects since the earliest days of organized human
activity. The hunting parties of our prehistoric ancestors were projects. Large complex
projects such as the pyramids and the Great Wall of China were also projects. Even
something as simple as creating a dinner is considered a project. We use the term
“project” frequently in our daily conversations. This book covers the basics of project
management. This includes the process of initiation, planning, execution, control, and
closeout that all projects share.
1

Preface
The primary purpose of this text is to provide an open source textbook that covers
most project management courses. The material in the textbook was obtained from a
variety of sources. All the sources are found in the reference section at the end of
each chapter. I expect, with time, the book will grow with more information and more
examples.
I welcome any feedback that would improve the book. If you would like to add a
section to the book, please let me know.
2

About the Book
Project Management is a remix and adaptation. The adaptation is a part of the
BCcampus Open Textbook project .
The B.C. Open Textbook Project began in 2012 with the goal of making post-secondary
education in British Columbia more accessible by reducing student cost through the
use of openly licensed textbooks. The BC Open Textbook Project is administered by
BCcampus and funded by the British Columbia Ministry of Advanced Education.
Open textbooks are open educational resources (OER); they are instructional
resources created and shared in ways so that more people have access to them. This
is a different model than traditionally copyrighted materials. OER are defined as
teaching, learning, and research resources that reside in the public domain or have
been released under an intellectual property license that permits their free use and
re-purposing by others (Hewlett Foundation). Our open textbooks are openly licensed
using a Creative Commons license, and are offered in various e-book formats free of
charge, or as printed books that are available at cost. For more information about this
project, please contact opentext@bccampus.ca. If you are an instructor who is using
this book for a course, please let us know.
Project Management by Adrienne Watt is a remix of the following works:
100 Percent Rule by Pabipedia licensed under Creative Commons Attribution-
ShareAlike 3.0 License
Communication Plans by Inte6160 Wiki licensed under Creative Commons Attribution
3.0 Unported.
Decision Matrix Method and Project Charter by Wikipedia the Free Encyclopedia
licensed under Creative Commons Alike Attribution 3.0 Unported.
Gantt chart by Wikipedia licensed under Creative Commons Attribution-ShareAlike 3.0
Unported
How to Build Relationships with Stakeholders By Erin Palmer licensed under Creative
Commons Attribution 3.0 Unported
Planning a Project by OpenLearn Labspace under Creative Commons Attribution 3.0
Unported.
Project Decelerators – Lack of Stakeholder Support By Jose Solera licensed under
Creative Commons Attribution
3.0 Unported Project Management by Merrie Barron and Andrew Barron licensed
under Creative Commons Attribution 3.0 Unported
Project Management for Instructional Designers by Amado, M., Ashton, K., Ashton, S.,
Bostwick, J., Clements, G., Drysdale, J., Francis, J., Harrison, B., Nan, V., Nisse, A.,
Randall, D., Rino, J., Robinson, J., Snyder, A., Wiley, D., & Anonymous. (DATE). Project
3

Management for Instructional Designers. Retrieved from http://pm4id.org/ under
Creative Commons Attribution 3.0 Unported.
Project Management for Skills for All Careers by Project Management Open Resources
and TAP-a-PM licensed under Creative Commons Attribution 3.0 Unported.
Project Management from Simple to Complex by Russel Darnall, John Preston, Eastern
Michigan University licensed under Creative Commons Attribution 3.0 Unported.
Project Management/PMBOK/Human Resources Management and Development
Cooperation Handbook/How do we manage the human resources of programmes
and projects?/Manage the Project Team by Wikibooks licensed under Creative
Commons Attribution-Share Alike 3.0,
Project Management/PMBOK/Scope Management and Development Cooperation
Handbook/Designing and Executing Projects/Detailed Planning or design stage by
Wikibooks licensed under Creative Commons Attribution 3.0 Unported.
Resource Management and Resource Leveling by Wikipedia licensed under Creative
Commons Attribution-Share Alike 3.0 License. Work Breakdown Structure by
Wikipedia licensed under Creative Commons Attribution-ShareAlike 3.0 License
4

Chapter 1 Project Management: Past
and Present
Adrienne Watt
1.1 Careers Using Project Management Skills
Skills learned by your exposure to studying project management can be used in most
careers as well as in your daily life. Strong planning skills, good communication, ability
to implement a project to deliver the product or service while also monitoring for risks
and managing the resources will provide an edge toward your success. Project
managers can be seen in many industry sectors including agriculture and natural
resources; arts, media, and entertainment; building trades and construction; energy
and utilities; engineering and design; fashion and interiors; finance and business;
health and human services; hospitality, tourism, and recreation; manufacturing and
product development; public and private education services; public services; retail and
wholesale trade; transportation; and information technology.
Below we explore various careers and some of the ways in which project management
knowledge can be leveraged.
1.2 Business Owners
Business owners definitely need to have some project management skills. With all
successful businesses, the product or service being delivered to the customer meets
their needs in many ways. The product or service is of the quality desired, the costs
are aligned with what the consumer expected, and the timeliness of the product or
service meets the deadline for the buyer of that item.
The pillars of project management are delivering a product/service within schedule,
cost, scope, and quality requirements. Business owners need planning, organizing,
and scoping skills and the ability to analyze, communicate, budget, staff, equip,
implement, and deliver.
Understanding the finances, operations, and expenses of the business are among the
skills that project managers learn and practice. Some businesses may focus more on
accounting, providing financial advice, sales, training, public relations, and actuary or
logistician roles. Business owners may own a travel agency or provide hospitality.
5

Business owners could be managing a storefront or a location in their town’s
marketplace.
Example: Restaurant Owner/Manager
Restaurant managers are responsible for the daily operations of a
restaurant that prepares and serves meals and beverages to
customers. Strong planning skills, especially coordinating with the
various departments (kitchen, dining room, banquet operations, food
service managers, vendors providing the supplies) ensure that
customers are satisfied with their dining experience. Managers’
abilities to recruit and retain employees, and monitor employee
performance and training ensure quality with cost containment.
Scheduling in many aspects, not only the staff but also the timing of
the food service deliveries, is critical in meeting customer
expectations.
Risk management is essential to ensure food safety and quality.
Managers monitor orders in the kitchen to determine where delays
may occur, and they work with the chef to prevent these delays. Legal
compliance is essential in order for the restaurant to stay open, so
restaurant managers direct the cleaning of the dining areas and the
washing of tableware, kitchen utensils, and equipment. They ensure
the safety standards and legality, especially in serving alcohol.
Sensitivity and strong communication skills are needed when
customers have complaints or employees feel pressured because
more customers arrive than predicted.
Financial knowledge is needed for the soundness of running the
restaurant, especially tracking special projects, events, and costs for
the various menu selections. Catering events smoothly can be an
outcome of using project plans and the philosophy of project
management. The restaurant manager or the executive chef analyzes
the recipes to determine food, labor, and overhead costs; determines
the portion size and nutritional content of each serving; and assigns
prices to various menu items, so that supplies can be ordered and
received in time.
Planning is the key for successful implementation. Managers or
executive chefs need to estimate food needs, place orders with
distributors, and schedule the delivery of fresh food and supplies.
They also plan for routine services (equipment maintenance, pest
control, waste removal) and deliveries, including linen services or the
heavy cleaning of dining rooms or kitchen equipment, to occur
during slow times or when the dining room is closed. A successful
restaurant relies on many skills that the project management
profession emphasizes.
6

1.2.1 Outsourcing Services
Figure 1.1 Sample status chart, which is typical with the use of a red-yellow-green, by Maura Irene
Jones in Project Management Skills for All Careers
Sample status chart, which is typical with the use of a red-yellow-green, by Maura
Irene Jones in Project Management Skills for All Careers ( http://textbookequity.org/ oc
t/Textbooks/ProjectManagementforAllCareersEdition2.pdf, https://creativecommons.o
rg/licenses/by/3.0/ ) .
Many businesses explore outsourcing for certain services. Below is a sample status
and project plan that reflects the various tasks needed for a project. A review of
finances, the importance of communicating to stakeholders, and the importance of
time, cost, schedule, scope, and quality are reflected. Many companies may use these
steps in their business. These plans show the need for the entire team to review the
various proposals to choose the best plan. Figure 1.1 Sample status chart, which is typi
cal with the use of a red-yellow-green, by Maura Irene Jones in Project Management Sk
ills for All Careers represents a sample project status report.
7

Example: Construction Managers
Construction managers plan, direct, coordinate, and budget a wide
variety of residential, commercial, and industrial construction
projects including homes, stores, offices, roads, bridges, wastewater
treatment plants, schools, and hospitals. Strong scheduling skills are
essential for this role. Communication skills are often used in
coordinating design and construction processes, teams executing the
work, and governance of special trades (carpentry, plumbing,
electrical wiring) as well as government representatives for the
permit processes. A construction manager may be called a project
manager or project engineer. The construction manager ensures that
the project is completed on time and within budget while meeting
quality specifications and codes and maintaining a safe work
environment. These managers create project plans in which they
divide all required construction site activi-ties into logical steps,
estimating and budgeting the time required to meet established
deadlines, usually utilizing sophisticated scheduling and cost-
estimating software. Many use software packages such as Microsoft
Project® or Procure® or online tools like BaseCamp®. Most
construction projects rely on spreadsheets for project management.
Procurement skills used in this field include acquiring the bills for
material, lumber for the house being built, and more. Construction
managers also coordinate labor, determining the needs and
overseeing their performance, ensuring that all work is completed on
schedule.
Values including sustainability, reuse, LEED-certified building, use of
green energy, and various energy efficiencies are being incorporated
into today’s projects with an eye to the future. Jennifer Russell, spoke
about project management and global sustainability” at the 2011
Silicon Valley Project Management Institute (PMI) conference. She
informed the attendees of the financial, environmental, and social
areas in expanding the vision of project management with the slide
in Figure 1.2 Project Management by Jennifer Russell . These values
are part of the PMI’s code of ethics and professionalism. By adhering
to this code, project managers include in their decisions the best
interests of society, the safety of the public, and enhancement of the
environment.
8

Figure 1.2 Project Management by Jennifer Russell
Project Management by Jennifer Russell ( http://www.tharpo.com/, https://c
reativecommons.org/licenses/by/3.0/ ) . Creative Commons 4.0 International License
(http://creativecommons.org/licenses/by/4.0/)
1.3 Creative Services
Creative service careers include graphic artists, curators, video editors, gaming
managers, multimedia artists, media producers, technical writers, interpreters, and
translators. These positions use project management skills, especially in handling the
delivery channel and meeting clients’ requirements.
Let us look at one example, graphic artists, to understand and identify some of the
project management skills that aid in this career.
9

Example: Graphic Artists
Graphic artists plan, analyze, and create visual solutions to
communication problems. They use many skills found in project
management, especially communications. They work to achieve the
most effective way to get messages across in print and electronic
media. They emphasize their messages using color, type, illustration,
photography, animation, and various print and layout techniques.
Results can be seen in magazines, newspapers, journals, corporate
reports, and other publications. Other deliverables from graphic
artists using project management skills include promotional
displays, packaging, and marketing brochures supporting products
and services, logos, and signage. In addition to print media, graphic
artists create materials for the web, TV, movies, and mobile device
apps.
Initiation in project management can be seen in developing a new
design: determining the needs of the client, the message the design
should portray, and its appeal to customers or users. Graphic
designers consider cognitive, cultural, physical, and social factors in
planning and executing designs for the target audience, very similar
to some of the dynamics a project manager considers in
communicating with various project stakeholders. Designers may
gather relevant information by meeting with clients, creative staff, or
art directors; brainstorming with others within their firm or
professional association; and performing their own research to
ensure that their results have high quality and they can manage
risks.
Graphic designers may supervise assistants who follow instructions
to complete parts of the design process. Therefore scheduling,
resource planning, and cost monitoring are pillars of project
management seen in this industry. These artists use computer and
communications equipment to meet their clients’ needs and business
requirements in a timely and cost-efficient manner.
1.4 Educators
“Educator” is a broad term that can describe a career in teaching, maybe being a
lecturer, a professor, a tutor, or a homeschooler. Other educators include gurus,
mullahs, pastors, rabbis, and priests. Instructors also provide vocational training or
teach skills like learning how to drive a car or use a computer. Educators provide
motivation to learn a new language or showcase new products and services.
Educators use project management skills including planning and communication.
10

Let us look at teachers, since we all have had teachers, and see if we can recognize the
project management skills that are demonstrated in this profession.
Example: Teachers
Some teachers foster the intellectual and social development of
children during their formative years; other teachers provide
knowledge, career skill sets, and guidance to adults. Project
management skills that teachers exhibit include acting as facilitators
or coaches and communicating in the classroom and in individual
instruction. Project managers plan and evaluate various aspects of a
project; teachers plan, evaluate, and assign lessons; implement these
plans; and monitor each student’s progress similar to the way a
project manager monitors and delivers goods or services. Teachers
use their people skills to manage students, parents, and
administrators. The soft skills that project managers exercise can be
seen in teachers who encourage collaboration in solving problems by
having students work in groups to discuss and solve problems as a
team.
Project managers may work in a variety of fields with a broad
assortment of people, similar to teachers who work with students
from varied ethnic, racial, and religious backgrounds. These teachers
must have awareness and understanding of different cultures.
Teachers in some schools may be involved in making decisions
regarding the budget, personnel, textbooks, curriculum design, and
teaching methods, demonstrating skills that a project manager would
possess such as financial management and decision making.
1.5 Engineers
Engineers apply the principles of science and mathematics to develop economical
solutions to technical problems. As a project cycles from an idea in the project charter
to the implementation and delivery of a product or service, engineers link scientific
discoveries to commercial applications that meet societal and consumer needs.
Engineers use many project management skills, especially when they must specify
functional requirements. They demonstrate attention to quality as they evaluate a
design’s overall effectiveness, cost, reliability, and safety similar to the project
manager reviewing the criteria for the customer’s acceptance of delivery of the
product or service.
Estimation skills in project management are used in engineering. Engineers are asked
many times to provide an estimate of time and cost required to complete projects.
11

1.6 Health Care
There are many jobs and careers in health care that use project management skills.
Occupations in the field of health care vary widely, such as athletic trainer, dental
hygienist, massage therapist, occupational therapist, optometrist, nurse, physician,
physician assistant, and X-ray technician. These individuals actively apply risk
management in providing health care delivery of service to their clients, ensuring that
they do not injure the person they are caring for. Note: There is a section on nursing
later in this chapter.
Many of you may have had a fall while you were growing up, and needed an X-ray to
determine if you had a fracture or merely a sprain. Let us look at this career as an
example of a health care professional using project management skills.
12

Example: Radiology Technologists
Radiology technologists and technicians perform diagnostic imaging
examinations like X-rays, computed tomography (CT), magnetic
resonance imaging (MRI), and mammography. They could also be
called radiographers, because they produce X-ray films (radiographs)
of parts of the human body for use in diagnosing medical problems.
Project management skills, especially people skills and strong
communication, are demonstrated when they prepare patients for
radiologic examinations by explaining the procedure and what
position the patient needs to be in, so that the parts of the body can
be appropriately radio graphed. Risk management is demonstrated
when these professionals work to prevent unnecessary exposure to
radiation by surrounding the exposed area with radiation protection
devices, such as lead shields, or limiting the size of the X-ray beam.
To ensure quality results, the health technician monitors the
radiograph and sets controls on the X-ray machine to produce
radiographs of the appropriate density, detail, and contrast.
Safety and regulations concerning the use of radiation to protect
themselves, their patients, and their coworkers from unnecessary
exposure is tracked in an efficient manner and reported as a control
to ensure compliance. Project management skills are also used in
preparing work schedules, evaluating equipment for purchase, or
managing a radiology department.
Some radiological technologists specialize in CT scans; as CT
technologists they too use project management skills. CT uses
ionizing radiation to produce a substantial number of cross-sectional
X-rays of an area of the body. Therefore, it requires the same
precautionary measures that are used with X-rays, hence the need for
risk management and monitoring for exposure.
Teamwork, not only with the patient that the radiological
technologist supports and the doctor who ordered the request, but
also with other health care providers, relies on strong
communication, quality, work done in a timely manner, and wise use
of hospital resources. This all boils down to ensuring that the three
elements of the project management triangle of cost, schedule, and
scope with quality delivered remain the essentials that provide a
cornerstone to project management and the skills needed to obtain
the objective.
13

Example: Nurses
Nurses treat and educate patients and their families and the public
about various medical conditions and provide advice and emotional
support. Nurses establish a care plan for their patients that include
activities like scheduling the administration and discontinuation of
medications (e.g., intravenous (IV) lines for fluid, medication, blood,
and blood products) and application of therapies and treatments.
Communication with the patient, their family, physicians and other
health care clinicians may be done in person or via technology.
Telehealth allows nurses to provide care and advice through
electronic communications media including videoconferencing, the
Internet, or telephone.
Risk management is very important for a nurse, with some cases
having a life or death consequence. Nurses monitor pain
management and vital signs and provide status reports to physicians
to help in responding to the health care needs of the patient.
The nursing field varies. Some nurses work in infection control. They
identify, track, and control infectious outbreaks in health care
facilities and create programs for outbreak prevention and response
to biological terrorism. Others are educators who plan, develop,
execute, and evaluate educational programs and curricula for the
professional development of students and graduate nurses. Nurses
may use project management skills while conducting health care
consultations, advising on public policy, researching in the field, or
providing sales support of a product or service.
1.7 Paralegal
Attorneys assume the ultimate responsibility for legal work but they often obtain
assistance. Paralegals assume this role in law firms and perform many tasks to aid the
legal profession. However, they are explicitly prohibited from carrying out duties
considered to be the practice of law (e.g., giving legal advice, setting legal fees,
presenting court cases).
Project management skills such as planning are used in helping lawyers prepare for
closings, hearings, trials, and corporate meetings. Communication skills are used in
preparing written reports that help attorneys determine how cases should be handled
or drafts for actions such as pleading, filing motions, and obtaining affidavits.
Monitoring skills aid paralegals who may track files of important case documents,
working on risk containment related to filing dates and responses to the court.
Procurement skills, which a project manager uses, can also be seen from a paralegal
14

perspective in negotiating terms of hiring expert witnesses as well as other services
such as acquiring services from process servers.
Financial skills may be used as well, such as assisting in preparing tax returns,
establishing trust funds, and planning estates or maintaining financial office records at
the law firm.
Government, litigation, personal injury, corporate law, criminal law, employee
benefits, intellectual property, labor law, bankruptcy, immigration, family law, and real
estate are some of the many different law practices where a paralegal professional
may use project management skills.
1.8 Software developer
Computer software developers and computer programmers design and develop
software. They apply the principles of computer science and mathematics to create,
test, and evaluate software applications and systems that make computers come
alive. Software is developed in many kinds of projects: computer games, business
applications, operating systems, network control systems, and more. Software
developers us project management skills to develop the requirements for the
software, identify and track the product development tasks, communicate within the
development team and with clients, test cases, and manage quality, the schedule, and
resources (staff, equipment, labs, and more).
1.9 Science Technicians
Science technicians use principles and theories of science and mathematics to assist in
research and development and help invent and improve products and processes. In
their jobs, they are more practically oriented than scientists. Planning skills project
managers use can be seen as science technicians set up, operate, and maintain
laboratory instruments; monitor experiments; and observe, calculate, and record
results. Quality is a factor here as it is in project management; science technicians
must ensure that processes are performed correctly, with proper proportions of
ingredients, for purity or for strength and durability.
There are different fields in which science technicians can apply project management
skills. Agricultural and food science technicians test food and other agricultural
products and are involved in food, fiber, and animal research, production, and
processing. Control and risk management are important here in executing the tests
and experiments, for example, to improve the yield and quality of crops, or the
resistance of plants and animals to disease, insects, or other hazards. Quality factors
are paramount when food science technicians conduct tests on food additives and
preservatives to ensure compliance with government regulations regarding color,
texture, and nutrients.
15

Biological technicians work with biologists studying living organisms. Many assist
scientists who conduct medical research or who work in pharmaceutical companies to
help develop and manufacture medicines. Skills in scheduling, especially in incubation
periods for the study of the impact on cells, could impact projects, such as exploring
and isolating variables for research in living organisms and infectious agents.
Biotechnology technicians apply knowledge and execution skills and techniques
gained from basic research, including gene splicing and recombinant DNA, to product
development. Project management skills are used in collaboration and
communication among team members to record and understand the results and
progress toward a cure or product.
Other kinds of technicians are chemical technicians who may work in laboratories or
factories, using monitoring and control skills in the way they collect and analyze
samples. Again, quality assurance is an important factor for most process technicians’
work in manufacturing, testing packaging for design, ensuring integrity of materials,
and verifying environmental acceptability.
Technicians use a project management skill set to assist in their initiation, planning,
and executing tasks, while managing risks with some measure of reporting to
determine if their objectives satisfy the constraints of cost, schedule, resource, and
quality standards set.
1.10 History
Could the Great Wall of China, the pyramids, or Stonehenge have been built without
project management? It is possible to say that the concept of project management has
been around since the beginning of history. It has enabled leaders to plan bold and
massive projects and manage funding, materials, and labor within a designated time
frame.
In late 19th century, in the United States, large-scale government projects were the
impetus for making important decisions that became the basis for project
management methodology such as the transcontinental railroad, which began
construction in the 1860s. Suddenly, business leaders found themselves faced with
the daunting task of organizing the manual labor of thousands of workers and the
processing and assembly of unprecedented quantities of raw material.
16

Figure 1.3 MindView Gantt Chart, by Matchware Inc (MindView)
MindView Gantt Chart, by Matchware Inc (MindView) ( http://commons.wikimedia.org/
wiki/File%3AMindView-Gantt_Chart.png, https://creativecommons.org/licenses/by-sa/
3.0/ ) .
Henry Gantt, studied in great detail the order of operations in work and is most
famous for developing the Gantt chart in the 1910s. A Gantt chart (Figure 1.3 MindVie
w Gantt Chart, by Matchware Inc (MindView) ) is a popular type of bar chart that
illustrates a project schedule and has become a common technique for representing
the phases and activities of a project so they can be understood by a wide audience.
Although now a common charting technique, Gantt charts were considered
revolutionary at the time they were introduced. Gantt charts were employed on major
infrastructure projects in the United States including the Hoover Dam and the
interstate highway system and are still accepted today as important tools in project
management.
By the mid-20th century, projects were managed on an ad hoc basis using mostly
Gantt charts and informal techniques and tools. During that time, the Manhattan
Project was initiated and its complexity was only possible because of project
management methods. The Manhattan Project was the code name given to the Allied
effort to develop the first nuclear weapons during World War II. It involved over 30
different project sites in the United States and Canada, and thousands of personnel
from the United States, Canada, and the U.K. Born out of a small research program
that began in 1939, the Manhattan Project would eventually employ 130,000 people,
cost a total of nearly US$2 billion, and result in the creation of multiple production and
research sites operated in secret. The project succeeded in developing and detonating
three nuclear weapons in 1945.
The 1950s marked the beginning of the modern project management era. Two
mathematical project-scheduling models were developed.
17

The program evaluation and review technique (PERT) was developed by Booz-Allen
and Hamilton as part of the United States Navy’s Polaris missile submarine program.
PERT is basically a method for analyzing the tasks involved in completing a project,
especially the time needed to complete each task, the dependencies among tasks, and
the minimum time needed to complete the total project (Figure 1.4 Pert Chart by Jere
mykemp derivative work: Hazmat2 from Wikimedia Commons ).
The critical path method (CPM) was developed in a joint venture by DuPont
Corporation and Remington Rand Corporation for managing plant maintenance
projects. The critical path determines the float, or schedule flexibility, for each activity
by calculating the earliest start date, earliest finish date, latest start date, and latest
finish date for each activity. The critical path is generally the longest full path on the
project. Any activity with a float time that equals zero is considered a critical path task.
CPM can help you figure out how long your complex project will take to complete and
which activities are critical, meaning they have to be done on time or else the whole
project will take longer. These mathematical techniques quickly spread into many
private enterprises.
Figure 1.4 Pert Chart by Jeremykemp derivative work: Hazmat2 from Wikimedia Commons
Pert Chart by Jeremykemp derivative work: Hazmat2 from Wikimedia Commons ( htt
p://commons.wikimedia.org/wiki/File:Pert_chart_colored.svg, http://en.wikipedia.org/w
iki/Public_domain ) .
Project management in its present form began to take root a few decades ago. In the
early 1960s, industrial and business organizations began to understand the benefits of
organizing work around projects. They understood the critical need to communicate
and integrate work across multiple departments and professions.
18

1.11 Attribution
This chapter of Project Management is a derivative copy of Project Management by
Merrie Barron and Andrew Barron licensed under Creative Commons Attribution 3.0
Unported and Project Management for Skills for All Careers by Project Management
Open Resources and TAP-a-PM licensed under Creative Commons Attribution 3.0
Unported.
19

Chapter 2 Project Management
Overview
Adrienne Watt
The starting point in discussing how projects should be properly managed is to first
understand what a project is and, just as importantly, what it is not.
People have been undertaking projects since the earliest days of organized human
activity. The hunting parties of our prehistoric ancestors were projects, for example;
they were temporary undertakings directed at the goal of obtaining meat for the
community. Large complex projects have also been with us for a long time. The
pyramids and the Great Wall of China were in their day of roughly the same
dimensions as the Apollo project to send men to the moon. We use the term “project”
frequently in our daily conversations. A husband, for example may tell his wife, “My
main project for this weekend is to straighten out the garage.” Going hunting, building
pyramids, and fixing faucets all share certain fea tures that make them projects.
2.1 Project Attributes
A project has distinctive attributes that distinguish it from ongoing work or business
operations. Projects are temporary in nature. They are not an everyday business
process and have definitive start dates and end dates. This characteristic is important
because a large part of the project effort is dedicated to ensuring that the project is
completed at the appointed time. To do this, schedules are created showing when
tasks should begin and end. Projects can last minutes, hours, days, weeks, months, or
years.
Projects exist to bring about a product or service that hasn’t existed before. In this
sense, a project is unique. Unique means that this is new; this has never been done
before. Maybe it’s been done in a very similar fashion before but never exactly in this
way. For example, Ford Motor Company is in the business of designing and
assembling cars. Each model that Ford designs and produces can be considered a
project. The models differ from each other in their features and are marketed to
people with various needs. An SUV serves a different purpose and clientele than a
luxury car. The design and marketing of these two models are unique projects.
However, the actual assembly of the cars is considered an operation (i.e., a repetitive
process that is followed for most makes and models).
In contrast with projects, operations are ongoing and repetitive. They involve work
that is continuous without an ending date and with the same processes repeated to
produce the same results. The purpose of operations is to keep the organization
20

functioning while the purpose of a project is to meet its goals and conclude.
Therefore, operations are ongoing while projects are unique and temporary.
A project is completed when its goals and objectives are accomplished. It is these
goals that drive the project, and all the planning and implementation efforts
undertaken to achieve them. Sometimes projects end when it is determined that the
goals and objectives cannot be accomplished or when the product or service of the
project is no longer needed and the project is cancelled.
2.2 Definition of a Project
There are many written definitions of a project. All of them contain the key elements
described above. For those looking for a formal definition of a project, the Project
Management Institute (PMI) defines a project as a temporary endeavor undertaken to
create a unique product, service, or result. The temporary nature of projects indicates
a definite beginning and end. The end is reached when the project’s objectives have
been achieved or when the project is terminated because its objectives will not or
cannot be met, or when the need for the project no longer exists.
2.3 Project Characteristics
When considering whether or not you have a project on your hands, there are some
things to keep in mind. First, is it a project or an ongoing operation? Second, if it is a
project, who are the stakeholders? And third, what characteristics distinguish this
endeavor as a project?
Projects have several characteristics:
• Projects are unique.
• Projects are temporary in nature and have a definite beginning and ending date.
• Projects are completed when the project goals are achieved or it’s determined the
project is no longer viable.
A successful project is one that meets or exceeds the expectations of the
stakeholders.
Consider the following scenario: The vice-president (VP) of marketing approaches you
with a fabulous idea. (Obviously it must be “fabulous” because he thought of it.) He
wants to set up kiosks in local grocery stores as mini-offices. These offices will offer
customers the ability to sign up for car and home insurance services as well as make
their bill payments. He believes that the exposure in grocery stores will increase
awareness of the company’s offerings. He told you that senior management has
already cleared the project, and he’ll dedicate as many resources to this as he can. He
wants the new kiosks in place in 12 selected stores in a major city by the end of the
year. Finally, he has assigned you to head up this project.
21

Your first question should be, “Is it a project?” This may seem elementary, but
confusing projects with ongoing operations happens often. Projects are temporary in
nature, have definite start and end dates, result in the creation of a unique product or
service, and are completed when their goals and objectives have been met and signed
off by the stakeholders.
Using these criteria, let’s examine the assignment from the VP of marketing to
determine if it is a project:
• Is it unique? Yes, because the kiosks don’t exist in the local grocery stores. This is
a new way of offering the company’s services to its customer base. While the
service the company is offering isn’t new, the way it is presenting its services is.
• Does the product have a limited timeframe? Yes, the start date of this project is
today, and the end date is the end of next year. It is a temporary endeavor.
• Is there a way to determine when the project is completed? Yes, the kiosks will be
installed and the services will be offered from them. Once all the kiosks are
installed and operating, the project will come to a close.
• Is there a way to determine stakeholder satisfaction? Yes, the expectations of the
stakeholders will be documented in the form of requirements during the planning
processes. These requirements will be compared to the finished product to
determine if it meets the expectations of the stakeholder.
If the answer is yes to all these questions, then we have a project.
2.4 The Process of Project Management
You’ve determined that you have a project. What now? The notes you scribbled down
on the back of the napkin at lunch are a start, but not exactly good project
management practice. Too often, organizations follow Nike’s advice when it comes to
managing projects when they “just do it.” An assignment is made, and the project
team members jump directly into the development of the product or service
requested. In the end, the delivered product doesn’t meet the expectations of the
customer. Unfortunately, many projects follow this poorly constructed path, and that
is a primary contributor to a large percentage of projects not meeting their original
objectives, as defined by performance, schedule, and budget.
In the United States, more than $250 billion is spent each year on information
technology (IT) application development in approximately 175,000 projects. The
Standish Group (a Boston-based leader in project and value performance research)
released the summary version of their 2009 CHAOS Report that tracks project failure
rates across a broad range of companies and industries (Figure 2.1 Summary of 2009
Standish Group CHAOS report. Chaosreport2009 by Merrie Barron & Andrew R. Barro
n).
22

Figure 2.1 Summary of 2009 Standish Group CHAOS report. Chaosreport2009 by Merrie Barron &
Andrew R. Barron
( http://commons.wikimedia.org/wiki/File:Chaosreport2009.jpg, https://creativecommo
ns.org/licenses/by/3.0/ ) .
Jim Johnson, chairman of the Standish Group, has stated that “this year’s results show
a marked decrease in project success rates, with 32% of all projects succeeding which
are delivered on time, on budget, with required features and functions, 44% were
challenged-which are late, over budget, and/or with less than the required features
and functions and 24% failed which are cancelled prior to completion or delivered and
never used.”
When are companies going to stop wasting billions of dollars on failed projects? The
vast majority of this waste is completely avoidable: simply get the right business needs
(requirements) understood early in the process and ensure that project management
techniques are applied and followed, and the project activities are monitored.
Applying good project management discipline is the way to help reduce the risks.
Having good project management skills does not completely eliminate problems, risks,
or surprises. The value of good project management is that you have standard
processes in place to deal with all contingencies.
Project management is the application of knowledge, skills, tools, and techniques
applied to project activities in order to meet the project requirements. Project
management is a process that includes planning, putting the project plan into action,
and measuring progress and performance.
Managing a project includes identifying your project’s requirements and writing down
what everyone needs from the project. What are the objectives for your project? When
everyone understands the goal, it’s much easier to keep them all on the right path.
Make sure you set goals that everyone agrees on to avoid team conflicts later on.
Understanding and addressing the needs of everyone affected by the project means
the end result of your project is far more likely to satisfy your stakeholders. Last but
not least, as project manager, you will also be balancing the many competing project
constraints.
On any project, you will have a number of project constraints that are competing for
your attention. They are cost, scope, quality, risk, resources, and time.
23

• Cost is the budget approved for the project including all necessary expenses
needed to deliver the project. Within organizations, project managers have to
balance between not running out of money and not under spending because
many projects receive funds or grants that have contract clauses with a “use it or
lose it” approach to project funds. Poorly executed budget plans can result in a
last-minute rush to spend the allocated funds. For virtually all projects, cost is
ultimately a limiting constraint; few projects can go over budget without
eventually requiring a corrective action.
• Scope is what the project is trying to achieve. It entails all the work involved in
delivering the project outcomes and the processes used to produce them. It is the
reason and the purpose of the project.
• Quality is a combination of the standards and criteria to which the project’s
products must be delivered for them to perform effectively. The product must
perform to provide the functionality expected, solve the identified problem, and
deliver the benefit and value expected. It must also meet other performance
requirements, or service levels, such as availability, reliability, and maintainability,
and have acceptable finish and polish. Quality on a project is controlled through
quality assurance (QA), which is the process of evaluating overall project
performance on a regular basis to provide confidence that the project will satisfy
the relevant quality standards.
• Risk is defined by potential external events that will have a negative impact on
your project if they occur. Risk refers to the combination of the probability the
event will occur and the impact on the project if the event occurs. If the
combination of the probability of the occurrence and the impact on the project is
too high, you should identify the potential event as a risk and put a proactive plan
in place to manage the risk.
• Resources are required to carry out the project tasks. They can be people,
equipment, facilities, funding, or anything else capable of definition (usually other
than labor) required for the completion of a project activity.
• Time is defined as the time to complete the project. Time is often the most
frequent project oversight in developing projects. This is reflected in missed
deadlines and incomplete deliverables. Proper control of the schedule requires
the careful identification of tasks to be performed and accurate estimations of
their durations, the sequence in which they are going to be done, and how people
and other resources are to be allocated. Any schedule should take into account
vacations and holidays.
You may have heard of the term “triple constraint,” which traditionally consisted of
only time, cost, and scope. These are the primary competing project constraints that
you have to be most aware of. The triple constraint is illustrated in the form of a
triangle to visualize the project work and see the relationship between the scope/
quality, schedule/time, and cost/resource (Figure 2.2 A schematic of the triple constrai
nt triangle. The triad constraints by John M. Kennedy T. ).
Your project may have additional constraints that you must face, and as the project
manager, you have to balance the needs of these constraints against the needs of the
stakeholders and your project goals. For instance, if your sponsor wants to add
functionality to the original scope, you will very likely need more money to finish the
24

project, or if they cut the budget, you will have to reduce the quality of your scope,
and if you don’t get the appropriate resources to work on your project tasks, you will
have to extend your schedule because the resources you have take much longer to
finish the work.
You get the idea; the constraints are all dependent on each other. Think of all of these
constraints as the classic carnival game of Whac-a-mole (Figure 2.3 Whac-a-mole. ).
Each time you try to push one mole back in the hole, another one pops out. The best
advice is to rely on your project team to keep these moles in place.
Here is an example of a project that cut quality because the project costs were fixed.
The P-36 oil platform (Figure 2.4 The Petrobras P-36 oil platform. P36 No 010 by Richar
d Collinson ) was the largest footing production platform in the world capable of
processing 180,000 barrels of oil per day and 5.2 million cubic meters of gas per day.
Located in the Roncador Field, Campos Basin, Brazil, the P-36 was operated by
Petrobras.
In March 2001, the P-36 was producing around 84,000 barrels of oil and 1.3 million
cubic meters of gas per day when it became destabilized by two explosions and
subsequently sank in 3,900 feet of water with 1,650 short tons of crude oil remaining
on board, killing 11 people. The sinking is attributed to a complete failure in quality
assurance, and pressure for increased production led to corners being cut on safety
procedures. It is listed as one of the most expensive accidents with a price tag of
$515,000,000.
Figure 2.2 A schematic of the triple constraint triangle. The triad constraints by John M. Kennedy T.
IIn this triangle, each side represents one of the constraints (or related constraints) wherein any changes to
any one side cause a change in the other sides. The best projects have a perfectly balanced triangle.
Maintaining this balance is difficult because projects are prone to change. For example, if scope increases,
cost and time may increase disproportionately. Alternatively, if the amount of money you have for your
project decreases, you may be able to do as much, but your time may increase.
25

( http://commons.wikimedia.org/wiki/ File:The_triad_constraints.jpg, https://creativeco
mmons.org/ licenses/by-sa/3.0/ ) .
Figure 2.3 Whac-a-mole. Go to www.dorneypark.com/public/online fun/mole.cfm to play Whac-a-mole.
whack-a-mole by sakura
( https://www.flickr.com/photos/sa_ku_ra/18984918/sizes/o/, https://creativecommon
s.org/licenses/by-sa/2.0/ ) .
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Figure 2.4 The Petrobras P-36 oil platform. P36 No 010 by Richard Collinson
( https://www.flickr.com/photos/richard_collinson/ 2083526793/sizes/o/, https://creati
vecommons.org/licenses/ by-nd/2.0/ ) .
The following quotes are from a Petrobras executive, citing the benefits of cutting
quality assurance and inspection costs on the project, while the accompanying
pictures are the result of this proud achievement in project management by
Petrobras. The quotation is provided one sentence at a time and compared with
pictures of the actual outcome.
“Petrobras has established new global benchmarks for the generation of exceptional
shareholder wealth through an aggressive and innovative program of cost cutting on
its P36 production facility.” “Conventional constraints have been successfully
challenged and replaced with new paradigms appro priate to the globalized corporate
market place.”
“Elimination of these unnecessary straitjackets has empowered the project’s suppliers
and contractors to propose highly economical solutions, with the win-win bonus of
enhanced profitability margins for themselves.”
“The P36 platform shows the shape of things to come in the unregulated global
market economy of the 21st century.”
The dynamic trade-offs between the project constraint values have been humorously
and accurately described in Figure 2.5 A sign seen at an automotive repair shop. .
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2.5 Project Management Expertise
In order for you, as the project manager, to manage the competing project constraints
and the project as a whole, there are some areas of expertise you should bring to the
project team (Figure 2.6 Areas of expertise that a project manager should bring to the
project team. ). They are knowledge of the application area and the standards and
regulations in your industry, understanding of the project environment, general
management knowledge and skills, and interpersonal skills. It should be noted that
industry expertise is not in a certain field but the expertise to run the project. So while
knowledge of the type of industry is important, you will have a project team
supporting you in this endeavor. For example, if you are managing a project that is
building an oil platform, you would not be expected to have a detailed understanding
of the engineering since your team will have mechanical and civil engineers who will
provide the appropriate expertise; however, it would definitely help if you understood
this type of work.
Let’s take a look at each of these areas in more detail.
Figure 2.5 A sign seen at an automotive repair shop. Illustration from Barron & Barron Project
Management for Scientists and Engineers.
( http://cnx.org/content/m31508/latest/?collection=col11120/1.4 ) .
2.6 Application knowledge
By standards, we mean guidelines or preferred approaches that are not necessarily
mandatory. In contrast, when referring to regulations we mean mandatory rules that
must be followed, such as government-imposed requirements through laws. It should
go without saying that as a professional, you’re required to follow all applicable laws
and rules that apply to your industry, organization, or project. Every industry has
standards and regulations. Knowing which ones affect your project before you begin
28

work will not only help the project to unfold smoothly, but will also allow for effective
risk analysis.
Figure 2.6 Areas of expertise that a project manager should bring to the project team. Table from
Barron & Barron Project Management for Scientists and Engineers
( http://cnx.org/content/col11120/1.4/ ) .
Some projects require specific skills in certain application areas. Application areas are
made up of categories of projects that have common elements. They can be defined
by industry group (pharmaceutical, financial, etc.), department (accounting, marketing,
legal, etc.), technology (software development, engineering, etc), or management
specialties (procurement, research and development, etc.). These application areas
are usually concerned with disciplines, regulations, and the specific needs of the
project, the customer, or the industry. For example, most government agencies have
specific procurement rules that apply to their projects that wouldn’t be applicable in
the construction industry. The pharmaceutical industry is interested in regulations set
forth by government regulators, whereas the automotive industry has little or no
concern for either of these types of regulations. You need to stay up-to-date regarding
your industry so that you can apply your knowledge effectively. Today’s fast-paced
advances can leave you behind fairly quickly if you don’t stay abreast of current
trends.
Having some level of experience in the application area you’re working in will give you
an advantage when it comes to project management. While you can call in experts
who have the application area knowledge, it doesn’t hurt for you to understand the
specific aspects of the application areas of your project.
2.7 Understanding the Project Environment
There are many factors that need to be understood within your project environment
(Figure 2.7 The important factors to consider within the project environment. ). At one
level, you need to think in terms of the cultural and social environments (i.e., people,
demographics, and education). The international and political environment is where
you need to understand about different countries’ cultural influences. Then we move
29

to the physical environment; here we think about time zones. Think about different
countries and how differently your project will be executed whether it is just in your
country or if it involves an international project team that is distributed throughout
the world in five different countries.
Figure 2.7 The important factors to consider within the project environment. Table from Barron &
Barron Project Management for Scientists and Engineers
Of all the factors, the physical ones are the easiest to understand, and it is the cultural
and international factors that are often misunderstood or ignored. How we deal with
clients, customers, or project members from other countries can be critical to the
success of the project. For example, the culture of the United States values
accomplishments and individualism. Americans tend to be informal and call each
other by first names, even if having just met. Europeans tend to be more formal, using
surnames instead of first names in a business setting, even if they know each other
well. In addition, their communication style is more formal than in the United States,
and while they tend to value individualism, they also value history, hierarchy, and
loyalty. The Japanese, on the other hand, tend to communicate indirectly and consider
themselves part of a group, not as individuals. The Japanese value hard work and
success, as most of us do.
How a product is received can be very dependent on the international cultural
differences. For example, in the 1990s, when many large American and European
telecommunications companies were cultivating new markets in Asia, their customer’s
cultural differences often produced unexpected situations. Western companies
planned their telephone systems to work the same way in Asia as they did in Europe
and the United States. But the protocol of conversation was different. Call-waiting, a
popular feature in the West, is considered impolite in some parts of Asia. This cultural
blunder could have been avoided had the team captured the project environment
requirements and involved the customer.
It is often the simplest things that can cause trouble since, unsurprisingly, in different
countries, people do things differently. One of the most notorious examples of this is
also one of the most simple: date formats. What day and month is 2/8/2009? Of
course it depends where you come from; in North America it is February 8th while in
Europe (and much of the rest of the world) it is 2nd August. Clearly, when schedules
and deadlines are being defined it is important that everyone is clear on the format
used.
30

The diversity of practices and cultures and its impact on products in general and on
software in particular goes well beyond the date issue. You may be managing a project
to create a new website for a company that sells products worldwide. There are
language and presentation style issues to take into consideration; converting the site
into different languages isn’t enough. It is obvious that you need to ensure the
translation is correct; however, the presentation layer will have its own set of
requirements for different cultures. The left side of a website may be the first focus of
attention for a Canadian; the right side would be the initial focus for anyone from the
Middle East, as both Arabic and Hebrew are written from right to left. Colors also have
different meanings in different cultures. White, which is a sign of purity in North
America (e.g., a bride’s wedding dress), and thus would be a favored background color
in North America, signifies death in Japan (e.g., a burial shroud). Figure 2.8 The meanin
g of colors in various cultures. summarizes different meanings of common colors.
Figure 2.8 The meaning of colors in various cultures. Adapted from P. Russo and S. Boor, How Fluent is
Your Interface? Designing for International Users, Proceedings of the INTERACT’93 and CHI’93, Association
for Computing Machinery, Inc. (1993). Table from Barron & Barron Project Management for Scientists and
Engineers
Project managers in multicultural projects must appreciate the culture dimensions
and try to learn relevant customs, courtesies, and business protocols before taking
responsibility for managing an international project. A project manager must take into
consideration these various cultural influences and how they may affect the project’s
completion, schedule, scope, and cost.
2.8 Management Knowledge and Skills
As the project manager, you have to rely on your project management knowledge and
your general management skills. Here, we are thinking of items like your ability to plan
the project, execute it properly, and of course control it and bring it to a successful
31

conclusion, along with your ability to guide the project team to achieve project
objectives and balance project constraints.
There is more to project management than just getting the work done. Inherent in the
process of project management are the general management skills that allow the
project manager to complete the project with some level of efficiency and control. In
some respects, managing a project is similar to running a business: there are risk and
rewards, finance and accounting activities, human resource issues, time management,
stress management, and a purpose for the project to exist. General management skills
are needed in every project.
2.9 Interpersonal Skills
Last but not least you also have to bring the ability into the project to manage
personal relationships and deal with personnel issues as they arise. Here were talking
about your interpersonal skills as shown in Figure 2.9 Interpersonal skills required of
a project manager. .
2.9.1 Communication
Project managers spend 90% of their time communicating. Therefore they must be
good communicators, promoting clear, unambiguous exchange of information. As a
project manager, it is your job to keep a number of people well informed. It is
essential that your project staff know what is expected of them: what they have to do,
when they have to do it, and what budget and time constraints and quality
specifications they are working toward. If project staff members do not know what
their tasks are, or how to accomplish them, then the entire project will grind to a halt.
If you do not know what the project staff is (or often is not) doing, then you will be
unable to monitor project progress. Finally, if you are uncertain of what the customer
expects of you, then the project will not even get off the ground. Project
communication can thus be summed up as knowing “who needs what information
and when” and making sure they have it.
32

Figure 2.9 Interpersonal skills required of a project manager. Table from Barron & Barron Project
Management for Scientists and Engineers
All projects require sound communication plans, but not all projects will have the
same types of communication or the same methods for distributing the information.
For example, will information be distributed via mail or email, is there a shared
website, or are face-to-face meetings required? The communication management plan
documents how the communication needs of the stakeholders will be met, including
the types of information that will be communicated, who will communicate them, and
who will receive them; the methods used to communicate; the timing and frequency
of communication; the method for updating the plan as the project progresses,
including the escalation process; and a glossary of common terms.
2.9.2 Influence
Project management is about getting things done. Every organization is different in its
policies, modes of operations, and underlying culture. There are political alliances,
differing motivations, conflicting interests, and power struggles. A project manager
must understand all of the unspoken influences at work within an organization.
2.9.3 Leadership
Leadership is the ability to motivate and inspire individuals to work toward expected
results. Leaders inspire vision and rally people around common goals. A good project
manager can motivate and inspire the project team to see the vision and value of the
project. The project manager as a leader can inspire the project team to find a
solution to overcome perceived obstacles to get the work done.
33

2.9.4 Motivation
Motivation helps people work more efficiently and produce better results. Motivation
is a constant process that the project manager must guide to help the team move
toward completion with passion and a profound reason to complete the work.
Motivating the team is accomplished by using a variety of team-building techniques
and exercises. Team building is simply getting a diverse group of people to work
together in the most efficient and effective manner possible. This may involve
management events as well as individual actions designed to improve team
performance.
Recognition and rewards are an important part of team motivations. They are formal
ways of recognizing and promoting desirable behavior and are most effective when
carried out by the management team and the project manager. Consider individual
preferences and cultural differences when using rewards and recognition. Some
people don’t like to be recognized in front of a group; others thrive on it.
2.9.5 Negotiation
Project managers must negotiate for the good of the project. In any project, the
project manager, the project sponsor, and the project team will have to negotiate with
stakeholders, vendors, and customers to reach a level of agreement acceptable to all
parties involved in the negotiation process.
2.9.6 Problem Solving
Problem solving is the ability to understand the heart of a problem, look for a viable
solution, and then make a decision to implement that solution. The starting point for
problem solving is problem definition. Problem definition is the ability to understand
the cause and effect of the problem; this centers on root-cause analysis. If a project
manager treats only the symptoms of a problem rather than its cause, the symptoms
will perpetuate and continue through the project life. Even worse, treating a symptom
may result in a greater problem. For example, increasing the ampere rating of a fuse
in your car because the old one keeps blowing does not solve the problem of an
electrical short that could result in a fire. Root-cause analysis looks beyond the
immediate symptoms to the cause of the symptoms, which then affords opportunities
for solutions. Once the root of a problem has been identified, a decision must be
made to effectively address the problem.
34

Solutions can be presented from vendors, the project team, the project manager, or
various stakeholders. A viable solution focuses on more than just the problem; it looks
at the cause and effect of the solution itself. In addition, a timely decision is needed or
the window of opportunity may pass and then a new decision will be needed to
address the problem. As in most cases, the worst thing you can do is nothing.
All of these interpersonal skills will be used in all areas of project management. Start
practicing now because it’s guaranteed that you’ll need these skills on your next
project.
2.10 Attribution
Merrie Barron and Andrew Barron licensed under and Creative Commons Attribution
3.0 Unported
35

Chapter 3 The Project Life Cycle
(Phases)
Adrienne Watt
The project manager and project team have one shared goal: to carry out the work of
the project for the purpose of meeting the project’s objectives. Every project has a
beginning, a middle period during which activities move the project toward
completion, and an ending (either successful or unsuccessful). A standard project
typically has the following four major phases (each with its own agenda of tasks and
issues): initiation, planning, implementation, and closure. Taken together, these
phases represent the path a project takes from the beginning to its end and are
generally referred to as the project “life cycle.”
3.1 Initiation Phase
During the first of these phases, the initiation phase, the project objective or need is
identified; this can be a business problem or opportunity. An appropriate response to
the need is documented in a business case with recommended solution options. A
feasibility study is conducted to investigate whether each option addresses the project
objective and a final recommended solution is determined. Issues of feasibility (“can
we do the project?”) and justification (“should we do the project?”) are addressed.
Once the recommended solution is approved, a project is initiated to deliver the
approved solution and a project manager is appointed. The major deliverables and
the participating work groups are identified, and the project team begins to take
shape. Approval is then sought by the project manager to move onto the detailed
planning phase.
3.2 Planning Phase
The next phase, the planning phase, is where the project solution is further developed
in as much detail as possible and the steps necessary to meet the project’s objective
are planned. In this step, the team identifies all of the work to be done. The project’s
tasks and resource requirements are identified, along with the strategy for producing
them. This is also referred to as “scope management.” A project plan is created
outlining the activities, tasks, dependencies, and time-frames. The project manager
coordinates the preparation of a project budget by providing cost estimates for the
36

labor, equipment, and materials costs. The budget is used to monitor and control cost
expenditures during project implementation.
Once the project team has identified the work, prepared the schedule, and estimated
the costs, the three fundamental components of the planning process are complete.
This is an excellent time to identify and try to deal with anything that might pose a
threat to the successful completion of the project. This is called risk management. In
risk management, “high-threat” potential problems are identified along with the action
that is to be taken on each high-threat potential problem, either to reduce the
probability that the problem will occur or to reduce the impact on the project if it does
occur. This is also a good time to identify all project stakeholders and establish a
communication plan describing the information needed and the delivery method to
be used to keep the stakeholders informed.
Finally, you will want to document a quality plan, providing quality targets, assurance,
and control measures, along with an acceptance plan, listing the criteria to be met to
gain customer acceptance. At this point, the project would have been planned in detail
and is ready to be executed.
3.3 Implementation (Execution) Phase
During the third phase, the implementation phase, the project plan is put into motion
and the work of the project is performed. It is important to maintain control and
communicate as needed during implementation. Progress is continuously monitored
and appropriate adjustments are made and recorded as variances from the original
plan. In any project, a project manager spends most of the time in this step. During
project implementation, people are carrying out the tasks, and progress information is
being reported through regular team meetings. The project manager uses this
information to maintain control over the direction of the project by comparing the
progress reports with the project plan to measure the performance of the project
activities and take corrective action as needed. The first course of action should
always be to bring the project back on course (i.e., to return it to the original plan). If
that cannot happen, the team should record variations from the original plan and
record and publish modifications to the plan. Throughout this step, project sponsors
and other key stakeholders should be kept informed of the project’s status according
to the agreed-on frequency and format of communication. The plan should be
updated and published on a regular basis.
Status reports should always emphasize the anticipated end point in terms of cost,
schedule, and quality of deliverables. Each project deliverable produced should be
reviewed for quality and measured against the acceptance criteria. Once all of the
deliverables have been produced and the customer has accepted the final solution,
the project is ready for closure.
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3.4 Closing Phase
During the final closure, or completion phase, the emphasis is on releasing the final
deliverables to the customer, handing over project documentation to the business,
terminating supplier contracts, releasing project resources, and communicating the
closure of the project to all stakeholders. The last remaining step is to conduct
lessons-learned studies to examine what went well and what didn’t. Through this type
of analysis, the wisdom of experience is transferred back to the project organization,
which will help future project teams.
38

Example: Project Phases on a Large
Multinational Project
A U.S. construction company won a contract to design and build the
first copper mine in northern Argentina. There was no existing
infrastructure for either the mining industry or large construction
projects in this part of South America. During the initiation phase of
the project, the project manager focused on defining and finding a
project leadership team with the knowledge, skills, and experience to
manage a large complex project in a remote area of the globe. The
project team set up three offices. One was in Chile, where large
mining construction project infrastructure existed. The other two
were in Argentina. One was in Buenos Aries to establish relationships
and Argentinian expertise, and the second was in Catamarca—the
largest town close to the mine site. With offices in place, the project
start-up team began devel oping procedures for getting work done,
acquiring the appropriate permits, and developing relationships with
Chilean and Argentine partners.
During the planning phase, the project team developed an integrated
project schedule that coordinated the activities of the design,
procurement, and construction teams. The project controls team also
developed a detailed budget that enabled the project team to track
project expenditures against the expected expenses. The project
design team built on the conceptual design and developed detailed
drawings for use by the procurement team. The procurement team
used the drawings to begin ordering equipment and materials for the
construction team; develop labor projections; refine the construction
schedule; and set up the construction site. Although planning is a
never-ending process on a project, the planning phase focused on
developing sufficient details to allow various parts of the project
team to coordinate their work and allow the project management
team to make priority decisions.
The implementation phase represents the work done to meet the
requirements of the scope of work and fulfill the charter. During the
implementation phase, the project team accomplished the work
defined in the plan and made adjustments when the project factors
changed. Equipment and materials were delivered to the work site,
labor was hired and trained, a construction site was built, and all the
construction activities, from the arrival of the first dozer to the
installation of the final light switch, were accomplished.
The closeout phase included turning over the newly constructed plant
to the operations team of the client. A punch list of a few remaining
construction items was developed and those items completed. The
office in Catamarca was closed, the office in Buenos Aries archived all
the project documents, and the Chilean office was already working on
39

the next project. The accounting books were reconciled and closed,
final reports written and distributed, and the project manager started
on a new project.
3.5 Attribution
Unported and Project Management From Simple to Complex by Russel Darnall, John
Preston, Eastern Michigan University licensed under Creative Commons Attribution
3.0 Unported.
40

Chapter 4 Framework for Project
Management
Adrienne Watt
Many different professions contribute to the theory and practice of project
management. Engineers and architects have been managing major projects since pre-
history. Since approximately the 1960s, there have been efforts to professionalize the
practice of project management as a specialization of its own. There are many active
debates around this: Should project management be a profession in the same way as
engineering, accounting, and medicine? These have professional associations that
certify who is legally allowed to use the job title, and who can legally practice the
profession. They also provide a level of assurance of quality and discipline members
who behave inappropriately. Another ongoing debate is: How much industry
knowledge is required of a seasoned project manager? How easily can a project
manager from one industry, say, IT, transition to another industry such as hospitality?
There are two major organizations with worldwide impact on the practice of project
management: the Project Management Institute (PMI), with world headquarters in the
United States, and the International Project Management Association (IPMA), with
world headquarters in Switzerland. This textbook takes an approach that is closer to
the PMI approach (http://www.pmi.org). More details are included in this chapter,
along with a section on the project management office.
4.1 Project Management Institute Overview
Five volunteers founded the Project Management Institute (PMI) in 1969. Their initial
goal was to establish an organization where members could share their experiences in
project management and discuss issues. Today, PMI is a non-profit project
management professional association and the most widely recognized organization in
terms of promoting project management best practices. PMI was formed to serve the
interests of the project management industry. The premise of PMI is that the tools and
techniques of project management are common even among the widespread
application of projects from the software to the construction industry. PMI first began
offering the Project Management Professional (PMP) certification exam in 1984.
Although it took a while for people to take notice, now more than 590,000 individuals
around the world hold the PMP designation.
To help keep project management terms and concepts clear and consistent, PMI
introduced the book A Guide to the Project Management Body of Knowledge (PMBOK
Guide) in 1987. It was updated it in 1996, 2000, 2004, 2009, and most recently in 2013
41

as the fifth edition. At present, there are more than one million copies of the PMBOK
Guide in circulation. The highly regarded Institute of Electrical and Electronics
Engineers (IEEE) has adopted it as their project management standard. In 1999 PMI
was accredited as an American National Standards Institute (ANSI) standards
developer and also has the distinction of being the first organization to have its
certification program attain International Organization for Standardization (ISO) 9001
recognition. In 2008, the organization reported more than 260,000 members in over
171 countries. PMI has its headquarters in Pennsylvania, United States, and also has
offices in Washington, DC, and in Canada, Mexico, and China, as well as having
regional service centers in Singapore, Brussels (Belgium), and New Delhi (India).
Recently, an office was opened in Mumbai (India).
Because of the importance of projects, the discipline of project management has
evolved into a working body of knowledge known as PMBOK – Project Management
Body of Knowledge. The PMI is responsible for developing and promoting PMBOK.
PMI also administers a professional certification program for project managers, the
PMP. So if you want to get grounded in project management, PMBOK is the place to
start, and if you want to make project management your profession, then you should
consider becoming a PMP.
4.2 So what is PMBOK?
PMBOK is the fundamental knowledge you need for managing a project, categorized
into 10 knowledge areas:
1. Managing integration: Projects have all types of activities going on and there is a
need to keep the “whole” thing moving collectively – integrating all of the
dynamics that take place. Managing integration is about developing the project
charter, scope statement, and plan to direct, manage, monitor, and control
project change.
2. Managing scope: Projects need to have a defined parameter or scope, and this
must be broken down and managed through a work breakdown structure or
WBS. Managing scope is about planning, definition, WBS creation, verification,
and control.
3. Managing time/schedule: Projects have a definite beginning and a definite ending
date. Therefore, there is a need to manage the budgeted time according to a
project schedule. Managing time/schedule is about definition, sequencing,
resource and duration estimating, schedule development, and schedule control.
4. Managing costs: Projects consume resources, and therefore, there is a need to
manage the investment with the realization of creating value (i.e., the benefits
derived exceed the amount spent). Managing costs is about resource planning,
cost estimating, budgeting, and control.
5. Managing quality: Projects involve specific deliverables or work products. These
deliverables need to meet project objectives and performance standards.
Managing quality is about quality planning, quality assurance, and quality control.
42

6. Managing human resources: Projects consist of teams and you need to manage
project team(s) during the life cycle of the project. Finding the right people,
managing their outputs, and keeping them on schedule is a big part of managing
a project. Managing human resources is about human resources planning, hiring,
and developing and managing a project team.
7. Managing communication: Projects invariably touch lots of people, not just the
end users (customers) who benefit directly from the project outcomes. This can
include project participants, managers who oversee the project, and external
stakeholders who have an interest in the success of the project. Managing
communication is about communications planning, information distribution,
performance reporting, and stakeholder management.
8. Managing risk: Projects are a discovery-driven process, often uncovering new
customer needs and identifying critical issues not previously disclosed. Projects
also encounter unexpected events, such as project team members resigning,
budgeted resources suddenly changing, the organization becoming unstable, and
newer technologies being introduced. There is a real need to properly identify
various risks and manage these risks. Managing risk is about risk planning and
identification, risk analysis (qualitative and quantitative), risk response (action)
planning, and risk monitoring and control.
9. Managing procurement: Projects procure the services of outside vendors and
contractors, including the purchase of equipment. There is a need to manage
how vendors are selected and managed within the project life cycle. Managing
procurement is about acquisition and contracting plans, sellers’ responses and
selections, contract administration, and contract closure.
10. Managing stakeholders: Every project impacts people and organizations and is
impacted by people and organizations. Identifying these stakeholders early, and
as they arise and change throughout the project, is a key success factor.
Managing stakeholders is about identifying stakeholders, their interest level, and
their potential to influence the project; and managing and controlling the
relationships and communications between stakeholders and the project.
This is the big framework for managing projects and if you want to be effective in
managing projects, then you need to be effective in managing each of the 10
knowledge areas that make up PMBOK (see Figure 4.1 PM Star Model suggested by Ge
ekDisplaced )
43

Figure 4.1 PM Star Model suggested by GeekDisplaced
Certification in project management is available from the PMI, PRINCE2, ITIL, Critical
Chain, and others. Agile project management methodologies (Scrum, extreme
programming, Lean Six Sigma, others) also have certifications.
4.3 Introduction to the Project Management Knowledge
Areas
As discussed above, projects are divided into components, and a project manager
must be knowledgeable in each area. Each of these areas of knowledge will be
44

explored in more depth in subsequent chapters. For now, let’s look at them in a little
more detail to prepare you for the chapters that follow.
4.3.1 Project Start-Up and Integration
The start-up of a project is similar to the start-up of a new organization. The project
leader develops the project infrastructure used to design and execute the project. The
project management team must develop alignment among the major
stakeholders—those who have a share or interest—on the project during the early
phases or definition phases of the project. The project manager will conduct one or
more kickoff meetings or alignment sessions to bring the various parties of the project
together and begin the project team building required to operate efficiently during the
project.
During project start-up, the project management team refines the scope of work and
develops a preliminary schedule and conceptual budget. The project team builds a
plan for executing the project based on the project profile. The plan for developing
and tracking the detailed schedule, the procurement plan, and the plan for building
the budget and estimating and tracking costs are developed during the start-up. The
plans for information technology, communication, and tracking client satisfaction are
also all developed during the start-up phase of the project.
Flowcharts, diagrams, and responsibility matrices are tools to capture the work
processes associated with executing the project plan. The first draft of the project
procedures manual captures the historic and intuitional knowledge that team
members bring to the project. The development and review of these procedures and
work processes contribute to the development of the organizational structure of the
project.
This is typically an exciting time on a project where all things are possible. The project
management team is working many hours developing the initial plan, staffing the
project, and building relationships with the client. The project manager sets the tone
of the project and sets expectations for each of the project team members. The
project start-up phase on complex projects can be chaotic, and until plans are
developed, the project manager becomes the source of information and direction. The
project manager creates an environment that encourages team members to fully
engage in the project and encourages innovative approaches to developing the
project plan.
4.3.2 Project Scope
The project scope is a document that defines the parameters—factors that define a
system and determine its behavior—of the project, what work is done within the
boundaries of the project, and the work that is outside the project boundaries. The
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scope of work (SOW) is typically a written document that defines what work will be
accomplished by the end of the project—the deliverables of the project. The project
scope defines what will be done, and the project execution plan defines how the work
will be accomplished.
No template works for all projects. Some projects have a very detailed scope of work,
and some have a short summary document. The quality of the scope is measured by
the ability of the project manager and project stakeholders to develop and maintain a
common understanding of what products or services the project will deliver. The size
and detail of the project scope is related to the complexity profile of the project. A
more complex project often requires a more detailed and comprehensive scope
document.
According to the PMI, the scope statement should include the following:
• Description of the scope
• Product acceptance criteria
• Project deliverables
• Project exclusions
• Project constraints
• Project assumptions
The scope document is the basis for agreement by all parties. A clear project scope
document is also critical to managing change on a project. Since the project scope
reflects what work will be accomplished on the project, any change in expectations
that is not captured and documented creates the opportunity for confusion. One of
the most common trends on projects is the incremental expansion in the project
scope. This trend is labeled “scope creep.” Scope creep threatens the success of a
project because the small increases in scope require additional resources that were
not in the plan. Increasing the scope of the project is a common occurrence, and
adjustments are made to the project budget and schedule to account for these
changes. Scope creep occurs when these changes are not recognized or not managed.
The ability of a project manager to identify potential changes is often related to the
quality of the scope documents.
Events do occur that require the scope of the project to change. Changes in the
marketplace may require change in a product design or the timing of the product
delivery. Changes in the client’s management team or the financial health of the client
may also result in changes in the project scope. Changes in the project schedule,
budget, or product quality will have an effect on the project plan. Generally, the later
in the project the change occurs, the greater the increase to the project costs.
Establishing a change management system for the project that captures changes to
the project scope and assures that these changes are authorized by the appropriate
level of management in the client’s organization is the responsibility of the project
manager. The project manager also analyzes the cost and schedule impact of these
changes and adjusts the project plan to reflect the changes authorized by the client.
Changes to the scope can cause costs to increase or decrease.
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4.3.3 Project Schedule and Time Management
The definition of project success often includes completing the project on time. The
development and management of a project schedule that will complete the project on
time is a primary responsibility of the project manager, and completing the project on
time requires the development of a realistic plan and the effective management of the
plan. On smaller projects, project managers may lead the development of the project
plan and build a schedule to meet that plan. On larger and more complex projects, a
project controls team that focuses on both costs and schedule planning and
controlling functions will assist the project management team in developing the plan
and tracking progress against the plan.
To develop the project schedule, the project team does an analysis of the project
scope, contract, and other information that helps the team define the project
deliverables. Based on this information, the project team develops a milestone
schedule. The milestone schedule establishes key dates throughout the life of a
project that must be met for the project to finish on time. The key dates are often
established to meet contractual obligations or established intervals that will reflect
appropriate progress for the project. For less complex projects, a milestone schedule
may be sufficient for tracking the progress of the project. For more complex projects,
a more detailed schedule is required.
To develop a more detailed schedule, the project team first develops a work
breakdown structure (WBS)—a description of tasks arranged in layers of detail.
Although the project scope is the primary document for developing the WBS, the WBS
incorporates all project deliverables and reflects any documents or information that
clarifies the project deliverables. From the WBS, a project plan is developed. The
project plan lists the activities that are needed to accomplish the work identified in the
WBS. The more detailed the WBS, the more activities that are identified to accomplish
the work.
After the project team identifies the activities, the team sequences the activities
according to the order in which the activities are to be accomplished. An outcome
from the work process is the project logic diagram. The logic diagram represents the
logical sequence of the activities needed to complete the project. The next step in the
planning process is to develop an estimation of the time it will take to accomplish each
activity or the activity duration. Some activities must be done sequentially, and some
activities can be done concurrently. The planning process creates a project schedule
by scheduling activities in a way that effectively and efficiently uses project resources
and completes the project in the shortest time.
On larger projects, several paths are created that represent a sequence of activities
from the beginning to the end of the project. The longest path to the completion of
the project is the critical path. If the critical path takes less time than is allowed by the
client to complete the project, the project has a positive total float or project slack. If
the client’s project completion date precedes the calculated critical path end date, the
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project has a negative float. Understanding and managing activities on the critical path
is an important project management skill.
To successfully manage a project, the project manager must also know how to
accelerate a schedule to compensate for unanticipated events that delay critical
activities. Compressing—crashing—the schedule is a term used to describe the
techniques used to shorten the project schedule. During the life of the project,
scheduling conflicts often occur, and the project manager is responsible for reducing
these conflicts while maintaining project quality and meeting cost goals.
4.3.4 Project Costs
The definition of project success often includes completing the project within budget.
Developing and controlling a project budget that will accomplish the project objectives
is a critical project management skill. Although clients expect the project to be
executed efficiently, cost pressures vary on projects. On some projects, the project
completion or end date is the largest contributor to the project complexity. The
development of a new drug to address a critical health issue, the production of a new
product that will generate critical cash flow for a company and the competitive
advantage for a company to be first in the marketplace with a new technology are
examples of projects with schedule pressures that override project costs.
The accuracy of the project budget is related to the amount of information known by
the project team. In the early stages of the project, the amount of information needed
to develop a detailed budget is often missing. To address the lack of information, the
project team develops different levels of project budget estimates. The conceptual
estimate (or “ballpark estimate”) is developed with the least amount of knowledge.
The major input into the conceptual estimate is expert knowledge or past experience.
A project manager who has executed a similar project in the past can use those costs
to estimate the costs of the current project.
When more information is known, the project team can develop a rough order of
magnitude (ROM) estimate. Additional information such as the approximate square
feet of a building, the production capacity of a plant, and the approximate number of
hours needed to develop a software program can provide a basis for providing a ROM
estimate. After a project design is more complete, a project detailed estimate can be
developed. For example, when the project team knows the number of rooms, the type
of materials, and the building location of a home, they can provide a detailed
estimate. A detailed estimate is not a bid.
The cost of the project is tracked relative to the progress of the work and the estimate
for accomplishing that work. Based on the cost estimate, the cost of the work
performed is compared against the cost budgeted for that work. If the cost is
significantly higher or lower, the project team explores reasons for the difference
between expected costs and actual costs.
Project costs may deviate from the budget because the prices in the marketplace were
different from what was expected. For example, the estimated costs for lumber on a
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housing project may be higher than budgeted or the hourly cost for labor may be
lower than budgeted. Project costs may also deviate based on project performance.
For example, a project team estimated that the steel design for a bridge over a river
would take 800 labor hours, but 846 hours were actually expended. The project team
captures the deviation between costs budgeted for work and the actual cost for work,
revises the estimate as needed, and takes corrective action if the deviation appears to
reflect a trend.
The project manager is responsible for assuring that the project team develops cost
estimates based on the best information available and revises those estimates as new
or better information becomes available. The project manager is also responsible for
tracking costs against the budget and conducting an analysis when project costs
deviate significantly from the project estimate. The project manager then takes
appropriate corrective action to ensure that project performance matches the revised
project plan.
4.3.5 Project Quality
Project quality focuses on the end product or service deliverables that reflect the
purpose of the project. The project manager is responsible for developing a project
execution approach that provides for a clear understanding of the expected project
deliverables and the quality specifications. The project manager of a housing
construction project not only needs to understand which rooms in the house will be
carpeted but also what grade of carpet is needed. A room with a high volume of traffic
will need a high-grade carpet.
The project manager is responsible for developing a project quality plan that defines
the quality expectations and ensures that the specifications and expectations are met.
Developing a good understanding of the project deliverables through documenting
specifications and expectations is critical to a good quality plan. The processes for
ensuring that the specifications and expectations are met are integrated into the
project execution plan. Just as the project budget and completion dates may change
over the life of a project, the project specifications may also change. Changes in
quality specifications are typically managed in the same process as cost or schedule
changes. The impact of the changes is analyzed for impact on cost and schedule, and
with appropriate approvals, changes are made to the project execution plan.
The PMI’s A Guide to the Project Management Body of Knowledge (PMBOK Guide) has an
extensive chapter on project quality management. The material found in this chapter
would be similar to material found in a good operational management text.
Although any of the quality management techniques designed to make incremental
improvement to work processes can be applied to a project work process, the
character of a project (unique and relatively short in duration) makes small
improvements less attractive on projects. Rework on projects, as with manufacturing
operations, increases the cost of the product or service and often increases the time
needed to complete the reworked activities. Because of the duration constraints of a
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project, the development of the appropriate skills, materials, and work processes early
in the project is critical to project success. On more complex projects, time is allocated
to developing a plan to understand and develop the appropriate levels of skills and
work processes.
Project management organizations that execute several similar types of projects may
find process improvement tools useful in identifying and improving the baseline
processes used on their projects. Process improvement tools may also be helpful in
identifying cost and schedule improvement opportunities. Opportunities for
improvement must be found quickly to influence project performance. The
investment in time and resources to find improvements is greatest during the early
stages of the project, when the project is in the planning stages. During later project
stages, as pressures to meet project schedule goals increase, the culture of the project
is less conducive to making changes in work processes.
Another opportunity for applying process improvement tools is on projects that have
repetitive processes. A housing contractor that is building several identical houses
may benefit from evaluating work processes in the first few houses to explore the
opportunities available to improve the work processes. The investment of $1,000 in a
work process that saves $200 per house is a good investment as long as the
contractor is building more than five houses.
4.3.6 Project Team: Human Resources and Communications
Staffing the project with the right skills, at the right place, and at the right time is an
important responsibility of the project management team. The project usually has two
types of team members: functional managers and process managers. The functional
managers and team focus on the technology of the project. On a construction project,
the functional managers would include the engineering manager and construction
superintendents. On a training project, the functional manager would include the
professional trainers; on an information technology project, the software
development managers would be functional managers. The project management
team also includes project process managers. The project controls team would include
process managers who have expertise in estimating, cost tracking, planning, and
scheduling. The project manager needs functional and process expertise to plan and
execute a successful project.
Because projects are temporary, the staffing plan for a project typically reflects both
the long-term goals of skilled team members needed for the project and short-term
commitment that reflects the nature of the project. Exact start and end dates for team
members are often negotiated to best meet the needs of individuals and the project.
The staffing plan is also determined by the different phases of the project. Team
members needed in the early or conceptual phases of the project are often not
needed during the later phases or project closeout phases. Team members needed
during the implementation phase are often not needed during the conceptual or
closeout phases. Each phase has staffing requirements, and the staffing of a complex
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project requires detailed planning to have the right skills, at the right place, at the right
time.
Typically a core project management team is dedicated to the project from start-up to
closeout. This core team would include members of the project management team:
project manager, project controls, project procurement, and key members of the
function management or experts in the technology of the project. Although longer
projects may experience more team turnover than shorter projects, it is important on
all projects to have team members who can provide continuity through the project
phases.
For example, on a large commercial building project, the civil engineering team that
designs the site work where the building will be constructed would make their largest
contribution during the early phases of the design. The civil engineering lead would
bring on different civil engineering specialties as they were needed. As the civil
engineering work is completed and the structural engineering is well underway, a
large portion of the civil engineers would be released from the project. The functional
managers, the engineering manager, and civil engineering lead would provide
expertise during the entire length of the project, addressing technical questions that
may arise and addressing change requests.
Project team members can be assigned to the project from a number of different
sources. The organization that charters the project can assign talented managers and
staff from functional units within the organization, contract with individuals or
agencies to staff positions on the project, temporarily hire staff for the project, or use
any combination of these staffing options. This staffing approach allows the project
manager to create the project organizational culture. Some project cultures are more
structured and detail oriented, and some are less structured with less formal roles
and communication requirements. The type of culture the project manager creates
depends greatly on the type of project.
4.3.7 Communications
Completing a complex project successfully requires teamwork, and teamwork requires
good communication among team members. If those team members work in the
same building, they can arrange regular meetings, simply stop by each other’s office
space to get a quick answer, or even discuss a project informally at other office
functions. Many complex projects in today’s global economy involve team members
from widely separated locations, and the types of meetings that work within the same
building are not possible. Teams that use electronic methods of communicating
without face-to-face meetings are called virtual teams.
Communicating can be divided into two categories: synchronous and asynchronous. If
all the parties to the communication are taking part in the exchange at the same time,
the communication is synchronous. A telephone conference call is an example of
synchronous communication. When the participants are not interacting at the same
time, the communication is asynchronous. (The letter a at the beginning of the word
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means not.) Communications technologies require a variety of compatible devices,
software, and service providers, and communication with a global virtual team can
involve many different time zones. Establishing effective communications requires a
communications plan.
4.3.8 Project Risk
Risk exists on all projects. The role of the project management team is to understand
the kinds and levels of risks on the project and then to develop and implement plans
to mitigate these risks. Risk represents the likelihood that an event will happen during
the life of the project that will negatively affect the achievement of project goals. The
type and amount of risk varies by industry type, complexity, and phase of the project.
The project risk plan will also reflect the risk profile of the project manager and key
stakeholders. People have different comfort levels with risk, and some members of
the project team will be more risk averse than others.
The first step in developing a risk management plan involves identifying potential
project risks. Some risks are easy to identify, such as the potential for a damaging
storm in the Caribbean, and some are less obvious. Many industries or companies
have risk checklists developed from past experience. The Construction Industry
Institute published a 100-item risk checklist that provides examples and areas of
project risks. No risk checklist will include all potential risks. The value of a checklist is
the stimulation of discussion and thought about the potential risks on a project.
The project team analyzes the identified risks and estimates the likelihood of the risks
occurring. The team then estimates the potential impact on project goals if the event
does occur. The outcome from this process is a prioritized list of estimated project
risks with a value that represents the likelihood of occurrence and the potential
impact on the project.
The project team then develops a risk mitigation plan that reduces the likelihood of an
event occurring or reduces the impact on the project if the event does occur. The risk
management plan is integrated into the project execution plan, and mitigation
activities are assigned to the appropriate project team member. The likelihood that all
the potential events identified in the risk analysis would occur is extremely rare. The
likelihood that one or more events will happen is high.
The project risk plan reflects the risk profile of the project and balances the
investment of the mitigation against the benefit for the project. One of the more
common risk mitigation approaches is the use of contingency. Contingency is funds
set aside by the project team to address unforeseen events. Projects with a high-risk
profile will typically have a large contingency budget. If the team knows which
activities have the highest risk, contingency can be allocated to activities with the
highest risk. When risks are less identifiable to specific activities, contingency is
identified in a separate line item. The plan includes periodic risk-plan reviews during
the life of the project. The risk review evaluates the effectiveness of the current plan
and explores possible risks not identified in earlier sessions.
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4.3.9 Project Procurement
The procurement effort on projects varies widely and depends on the type of project.
Often the client organization will provide procurement services on less complex
projects. In this case, the project team identifies the materials, equipment, and
supplies needed by the project and provides product specifications and a detailed
delivery schedule. When the procurement department of the parent organization
provides procurement services, a liaison from the project can help the procurement
team better understand the unique requirements of the project and the time-sensitive
or critical items of the project schedule.
On larger, more complex projects, personnel are dedicated to procuring and
managing the equipment, supplies, and materials needed by the project. Because of
the temporary nature of projects, equipment, supplies, and materials are procured as
part of the product of the project or for the execution of the project. For example, the
bricks procured for a construction project would be procured for the product of the
project, and the mortar mixer would be equipment procured for the execution of the
project work. At the end of the project, equipment bought or rented for the execution
of the work of the project are sold, returned to rental organizations, or disposed of
some other way.
More complex projects will typically procure through different procurement and
management methods. Commodities are common products that are purchased based
on the lowest bid. Commodities include items like concrete for building projects, office
supplies, or even lab equipment for a research project. The second type of
procurement includes products that are specified for the project. Vendors who can
produce these products bid for a contract. The awarding of a contract can include
price, ability to meet the project schedule, the fit for purpose of the product, and other
considerations important to the project. Manufacturing a furnace for a new steel mill
would be provided by a project vendor. Equipment especially designed and built for a
research project is another example. These vendors’ performances become important
parts of the project, and the project manager assigns resources to coordinate the
work and schedule of the vendor. The third procurement approach is the
development of one or more partners. A design firm that is awarded the design
contract for a major part of the steel mill and a research firm that is conducting critical
subparts of the research are examples of potential project partners. A partner
contributes to and is integrated into the execution plan. Partners perform best when
they share the project vision of success and are emotionally invested in the project.
The project management team builds and implements a project procurement plan
that recognizes the most efficient and effective procurement approach to support the
project schedule and goals.
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4.3.10 Project Stakeholder Management
People and organizations can have many different relationships to the project. Most
commonly, these relationships can be grouped into those who will be impacted by the
project and those who can impact the project.
A successful project manager will identify stakeholders early in the project. For each
stakeholder, it is important to identify what they want or need and what influence or
power they have over the project. Based on this information, the need to
communicate with the stakeholder or stakeholder group can be identified, followed by
the creation of a stakeholder management plan. A stakeholder register is used to
identify and track the interactions between the project and each stakeholder. This
register must be updated on a regular basis, as new stakeholders can arise at any
time, and the needs and interest levels of a particular stakeholder may change
through the course of the project.
Figure 4.2 Stakeholder Register
. Source: A. Watt.
4.3.11 Scrum Development Overview
“Scrum” is another formal project management/product development methodology
and part of agile project management. Scrum is a term from rugby (scrimmage) that
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means a way of restarting a game. It’s like restarting the project efforts every X weeks.
It’s based on the idea that you do not really know how to plan the whole project up
front, so you start and build empirical data, and then re-plan and iterate from there.
Scrum uses sequential sprints for development. Sprints are like small project phases
(ideally two to four weeks). The idea is to take one day to plan for what can be done
now, then develop what was planned for, and demonstrate it at the end of the sprint.
Scrum uses a short daily meeting of the development team to check what was done
yesterday, what is planned for the next day, and what if anything is impeding the team
members from accomplishing what they have committed to. At the end of the sprint,
what has been demonstrated can then be tested, and the next sprint cycle starts.
Scrum methodology defines several major roles. They are:
• Product owners: essentially the business owner of the project who knows the
industry, the market, the customers, and the business goals of the project. The
product owner must be intimately involved with the Scrum process, especially
the planning and the demonstration parts of the sprint.
• Scrum Master: somewhat like a project manager, but not exactly. The Scrum
Master’s duties are essentially to remove barriers that impede the progress of the
development team, teach the product owner how to maximize return on
investment (ROI) in terms of development effort, facilitate creativity and
empowerment of the team, improve the productivity of the team, improve
engineering practices and tools, run daily standup meetings, track progress, and
ensure the health of the team.
• Development team: self-organizing (light-touch leadership), empowered group;
they participate in planning and estimating for each sprint, do the development,
and demonstrate the results at the end of the sprint. It has been shown that the
ideal size for a development team is 7 +/- 2. The development team can be
broken into “teamlets” that “swarm” on user stories, which are created in the
sprint planning session.
Typically, the way a product is developed is that there is a “front burner” (which has
stories/tasks for the current sprint), a “back burner” (which has stories for the next
sprint), and a “fridge” (which has stories for later, as well as process changes). One can
look at a product as having been broken down like this: product -> features -> stories -
> tasks.
Often effort estimations are done using “story points” (tiny = 1 SP, small = 2 SP,
medium = 4 SP, large = 8 SP, big = 16+ SP, unknown = ? SP) Stories can be of various
types. User stories are very common and are descriptions of what the user can do and
what happens as a result of different actions from a given starting point. Other types
of stories are from these areas: analysis, development, QA, documentation,
installation, localization, and training.
Planning meetings for each sprint require participation by the product owner, the
Scrum Master, and the development team. In the planning meeting, they set the goals
for the upcoming sprint and select a subset of the product backlog (proposed stories)
to work on. The development team decomposes stories to tasks and estimates them.
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The development team and product owner do final negotiations to determine the
backlog for the following sprint.
The Scrum methodology uses metrics to help with future planning and tracking of
progress; for example, “burn down” – the number of hours remaining in the sprint
versus the time in days; “velocity” – essentially, the amount of effort the team
expends. (After approximately three sprints with the same team, one can get a feel for
what the team can do going forward.)
Some caveats about using Scrum methodology: 1) You need committed, mature
developers; 2) You still need to do major requirements definition, some analysis,
architecture definition, and definition of roles and terms up front or early; 3) You need
commitment from the company and the product owner; and 4) It is best for products
that require frequent new releases or updates, and less effective for large, totally new
products that will not allow for frequent upgrades once they are released.
4.3.12 The Project Management Office
Many large and even medium-sized organizations have created a department to
oversee and support projects throughout the organization. This is an attempt to
reduce the high numbers of failed projects (see the Project Management Overview
chapter.) These offices are usually called the project management office or PMO.
The PMO may be the home of all the project managers in an organization, or it may
simply be a resource for all project managers, who report to their line areas.
Typical objectives of a PMO are:
• Help ensure that projects are aligned with organizational objectives
• Provide templates and procedures for use by project managers
• Provide training and mentorship
• Provide facilitation
• Stay abreast of the latest trends in project management
• Serve as a repository for project reports and lessons learned
The existence and role of PMOs tends to be somewhat fluid. If a PMO is created, and
greater success is not experienced in organizational projects, the PMO is at risk of
being disbanded as a cost-saving measure. If an organization in which you are a
project manager or a project team member has a PMO, try to make good use of the
resources available. If you are employed as a resource person in a PMO, remember
that your role is not to get in the way and create red tape, but to enable and enhance
the success of project managers and projects within the organization.
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4.4 Attribution
Unported and Project Management From Simple to Complex by Russel Darnall, John
Preston, Eastern Michigan University licensed under Creative Commons Attribution
3.0 Unported.
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Chapter 5 Stakeholder Management
Adrienne Watt
A project is successful when it achieves its objectives and meets or exceeds the
expectations of the stakeholders. But who are the stakeholders? Stakeholders are
individuals who either care about or have a vested interest in your project. They are
the people who are actively involved with the work of the project or have something to
either gain or lose as a result of the project. When you manage a project to add lanes
to a highway, motorists are stakeholders who are positively affected. However, you
negatively affect residents who live near the highway during your project (with
construction noise) and after your project with far-reaching implications (increased
traffic noise and pollution).
The project sponsor, generally an executive in the organization with the authority to
assign resources and enforce decisions regarding the project, is a stakeholder. The
customer, subcontractors, suppliers, and sometimes even the government are
stakeholders. The project manager, project team members, and the managers from
other departments in the organization are stakeholders as well. It’s important to
identify all the stakeholders in your project upfront. Leaving out important
stakeholders or their department’s function and not discovering the error until well
into the project could be a project killer.
Figure 5.1 Project stakeholders. Illustration from Barron & Barron Project Managemen
t for Scientists and Engineers shows a sample of the project environment featuring the
different kinds of stakeholders involved on a typical project. A study of this diagram
confronts us with a couple of interesting facts.
First, the number of stakeholders that project managers must deal with ensures that
they will have a complex job guiding their project through the lifecycle. Problems with
any of these members can derail the project.
Second, the diagram shows that project managers have to deal with people external
to the organization as well as the internal environment, certainly more complex than
what a manager in an internal environment faces. For example, suppliers who are late
in delivering crucial parts may blow the project schedule. To compound the problem,
project managers generally have little or no direct control over any of these
individuals.
NOTE: Key stakeholders can make or break success of a project. Even if all the
deliverables are met and the objectives are satisfied, if your key stake-holders aren’t
happy, nobody’s happy.
Let’s take a look at these stakeholders and their relationships to the project manager.
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5.1 Project Stakeholders
5.1.1 Top Management
Top management may include the president of the company, vice-presidents,
directors, division managers, the corporate operating committee, and others. These
people direct the strategy and development of the organization.
On the plus side, you are likely to have top management support, which means it will
be easier to recruit the best staff to carry out the project, and acquire needed material
and resources; also visibility can enhance a project manager’s professional standing in
the company.
On the minus side, failure can be quite dramatic and visible to all, and if the project is
large and expensive (most are), the cost of failure will be more substantial than for a
smaller, less visible project.
Some suggestions in dealing with top management are:
,
Figure 5.1 Project stakeholders. Illustration from Barron & Barron Project Management for Scientists
and Engineers
• Develop in-depth plans and major milestones that must be approved by top
management during the planning and design phases of the project.
• Ask top management associated with your project for their information reporting
needs and frequency.
• Develop a status reporting methodology to be distributed on a scheduled basis.
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• Keep them informed of project risks and potential impacts at all times.
5.1.2 The Project Team
The project team is made up of those people dedicated to the project or borrowed on
a part-time basis. As project manager, you need to provide leadership, direction, and
above all, the support to team members as they go about accomplishing their tasks.
Working closely with the team to solve problems can help you learn from the team
and build rapport. Showing your support for the project team and for each member
will help you get their support and cooperation.
Here are some difficulties you may encounter in dealing with project team members:
• Because project team members are borrowed and they don’t report to you, their
priorities may be elsewhere.
• They may be juggling many projects as well as their full-time job and have
difficulty meeting deadlines.
• Personality conflicts may arise. These may be caused by differences in social style
or values or they may be the result of some bad experience when people worked
together in the past.
• You may find out about missed deadlines when it is too late to recover.
Managing project team members requires interpersonal skills. Here are some
suggestions that can help:
• Involve team members in project planning.
• Arrange to meet privately and informally with each team member at several
points in the project, perhaps for lunch or coffee.
• Be available to hear team members’ concerns at any time.
• Encourage team members to pitch in and help others when needed.
• Complete a project performance review for team members.
5.1.3 Your Manager
Typically the boss decides what the assignment is and who can work with the project
manager on projects. Keeping your manager informed will help ensure that you get
the necessary resources to complete your project.
If things go wrong on a project, it is nice to have an understanding and supportive
boss to go to bat for you if necessary. By supporting your manager, you will find your
manager will support you more often.
• Find out exactly how your performance will be measured.
• When unclear about directions, ask for clarification.
• Develop a reporting schedule that is acceptable to your boss.
• Communicate frequently.
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5.1.4 Peers
Peers are people who are at the same level in the organization as you and may or may
not be on the project team. These people will also have a vested interest in the
product. However, they will have neither the leadership responsibilities nor the
accountability for the success or failure of the project that you have.
Your relationship with peers can be impeded by:
• Inadequate control over peers
• Political maneuvering or sabotage
• Personality conflicts or technical conflicts
• Envy because your peer may have wanted to lead the project
• Conflicting instructions from your manager and your peer’s manager
Peer support is essential. Because most of us serve our self-interest first, use some
investigating, selling, influencing, and politicking skills here. To ensure you have
cooperation and support from your peers:
Get the support of your project sponsor or top management to empower you as the
project manager with as much authority as possible. It’s important that the sponsor
makes it clear to the other team members that their cooperation on project activities
is expected.
Confront your peer if you notice a behavior that seems dysfunctional, such as bad-
mouthing the project.
Be explicit in asking for full support from your peers. Arrange for frequent review
meetings.
Establish goals and standards of performance for all team members.
5.1.5 Resource Managers
Because project managers are in the position of borrowing resources, other managers
control their resources. So their relationships with people are especially important. If
their relationship is good, they may be able to consistently acquire the best staff and
the best equipment for their projects. If relationships aren’t good, they may find
themselves not able to get good people or equipment needed on the project.
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5.1.6 Internal Customers
Internal customers are individuals within the organization who are customers for
projects that meet the needs of internal demands. The customer holds the power to
accept or reject your work. Early in the relationship, the project manager will need to
negotiate, clarify, and document project specifications and deliverables. After the
project begins, the project manager must stay tuned in to the customer’s concerns
and issues and keep the customer informed.
Common stumbling blocks when dealing with internal customers include:
• A lack of clarity about precisely what the customer wants
• A lack of documentation for what is wanted
• A lack of knowledge of the customer’s organization and operating characteristics
• Unrealistic deadlines, budgets, or specifications requested by the customer
• Hesitancy of the customer to sign off on the project or accept responsibility for
decisions
• Changes in project scope
To meet the needs of the customer, client, or owner, be sure to do the following:
• Learn the client organization’s buzzwords, culture, and business.
• Clarify all project requirements and specifications in a written agreement.
• Specify a change procedure.
• Establish the project manager as the focal point of communications in the project
organization.
5.1.7 External customer
External customers are the customers when projects could be marketed to outside
customers. In the case of Ford Motor Company, for example, the external customers
would be the buyers of the automobiles. Also if you are managing a project at your
company for Ford Motor Company, they will be your external customer.
5.1.8 Government
Project managers working in certain heavily regulated environments (e.g.,
pharmaceutical, banking, or military industries) will have to deal with government
regulators and departments. These can include all or some levels of government from
municipal, provincial, federal, to international.
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5.1.9 Contractors, subcontractors, and suppliers
There are times when organizations don’t have the expertise or resources available in-
house, and work is farmed out to contractors or subcontractors. This can be a
construction management foreman, network consultant, electrician, carpenter,
architect, or anyone who is not an employee. Managing contractors or suppliers
requires many of the skills needed to manage full-time project team members.
Any number of problems can arise with contractors or subcontractors:
• Quality of the work
• Cost overruns
• Schedule slippage
Many projects depend on goods provided by outside suppliers. This is true for
example of construction projects where lumber, nails, bricks, and mortar come from
outside suppliers. If the supplied goods are delivered late or are in short supply or of
poor quality or if the price is greater than originally quoted, the project may suffer.
Depending on the project, managing contractor and supplier relationships can
consume more than half of the project manager’s time. It is not purely intuitive; it
involves a sophisticated skill set that includes managing conflicts, negotiating, and
other interpersonal skills.
5.2 Politics of Projects
Many times, project stakeholders have conflicting interests. It’s the project manager’s
responsibility to understand these conflicts and try to resolve them. It’s also the
project manger’s responsibility to manage stakeholder expectations. Be certain to
identify and meet with all key stakeholders early in the project to understand all their
needs and constraints.
Project managers are somewhat like politicians. Typically, they are not inherently
powerful or capable of imposing their will directly on coworkers, subcontractors, and
suppliers. Like politicians, if they are to get their way, they have to exercise influence
effectively over others. On projects, project managers have direct control over very
few things; therefore their ability to influence others – to be a good politician – may be
very important
Here are a few steps a good project politician should follow. However, a good rule is
that when in doubt, stakeholder conflicts should always be resolved in favor of the
customer.
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5.3 Assess the environment
Identify all the relevant stakeholders. Because any of these stakeholders could derail
the project, you need to consider their particular interest in the project.
• Once all relevant stakeholders are identified, try to determine where the power
lies.
• In the vast cast of characters, who counts most?
• Whose actions will have the greatest impact?
5.3.1 Identify goals
After determining who the stakeholders are, identify their goals.
• What is it that drives them?
• What is each after?
• Are there any hidden agendas or goals that are not openly articulated?
• What are the goals of the stakeholders who hold the power? These deserve
special attention.
5.3.2 Define the problem
• The facts that constitute the problem should be isolated and closely examined.
• The question “What is the real situation?” should be raised over and over.
5.3.3 Culture of Stakeholders
When project stakeholders do not share a common culture, project management
must adapt its organizations and work processes to cope with cultural differences. The
following are three major aspects of cultural difference that can affect a project:
1. Communications
2. Negotiations
3. Decision making
Communication is perhaps the most visible manifestation of culture. Project managers
encounter cultural differences in communication in language, context, and candor.
Language is clearly the greatest barrier to communication. When project stakeholders
do not share the same language, communication slows down and is often filtered to
share only information that is deemed critical.
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The barrier to communication can influence project execution where quick and
accurate exchange of ideas and information is critical.
The interpretation of information reflects the extent that context and candor influence
cultural expressions of ideas and understanding of information. In some cultures, an
affirmative answer to a question does not always mean yes. The cultural influence can
create confusion on a project where project stakeholders represent more than one
culture.
Example: Culture Affects
Communication in Mumbai
A project management consultant from the United States was asked
to evaluate the effectiveness of a U.S. project management team
executing a project in Mumbai, India. The project team reported that
the project was on schedule and within budget. After a project review
meeting where each of the engineering leads reported that the design
of the project was on schedule, the consultant began informal
discussions with individual engineers and began to discover that
several critical aspects of the project were behind schedule. Without a
mitigating strategy, the project would miss a critical window in the
weather between monsoon seasons. The information on the project
flowed through a cultural expectation to provide positive
information. The project was eventually canceled by the U.S.
corporation when the market and politi cal risks increased.
Not all cultural differences are related to international projects.
Corporate cultures and even regional differences can create cultural
confusion on a project.
Example: Cultural Differences between
American Regions
On a major project in South America that included project team
leaders from seven different countries, the greatest cultural
difference that affected the project communication was between two
project leaders from the United States. Two team members, one from
New Orleans and one from Brooklyn, had more difficulty
communicating than team members from Lebanon and Australia.
5.3.4 Managing Stakeholders
Often there is more than one major stakeholder in the project. An increase in the
number of stakeholders adds stress to the project and influences the project’s
complexity level. The business or emotional investment of the stakeholder in the
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project and the ability of the stakeholder to influence the project outcomes or
execution approach will also influence the stakeholder complexity of the project. In
addition to the number of stakeholders and their level of investment, the degree to
which the project stakeholders agree or disagree influences the project’s complexity.
A small commercial construction project will typically have several stakeholders. All
the building permitting agencies, environmental agencies, and labor and safety
agencies have an interest in the project and can influence the execution plan of the
project. The neighbors will have an interest in the architectural appeal, the noise, and
the purpose of the building.
Example: Tire Plant in India
A U.S. chemical company chartered a project team to design and
build a plant to produce the raw materials for building truck tires
designed for unpaved roads. The plant was to be built in India a few
years after an accident that killed several Indians and involved a
different U.S. chemical company. When the company announced the
new project and began to break ground, the community backlash was
so strong that the project was shut down. A highly involved
stakeholder can significantly influence your project.
A small college in South Carolina won a competitive grant to erect
and operate a wind turbine on campus. The engineering department
submitted the grant as a demonstration project for engineering
students to expose students to wind technology. The campus
facilities department found only one location for the wind turbine
that would not disrupt the flow of traffic on campus. The engineering
department found that location unacceptable for students who had to
maintain the wind turbine. The county construction permitting
department had no policies for permitting a wind turbine and would
not provide a building permit. The college had to go to the county
council and get an exception to county rules. The marketing
department wanted the wind turbine placed in a highly visible
location to promote the innovative approach of the college.
Each of the college’s stakeholders had a legitimate interest in the
location of the wind turbine. The number of stakeholders on the
project, multiplied by their passion for the subject and the lack of
agreement on the location, increased the complexity of the project.
Significant time and resources of a project will be dedicated to
identifying, understanding, and managing client expectations.
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Example: Stakeholders and a Bridge
Project
The Department of Highways chartered a project to upgrade a
number of bridges that crossed the interstate in one of the larger
cities in South Carolina. The closing of these bridges severely
impacted traffic congestion, including a large shopping mall. The
contract included provisions for minimizing the impact on the traffic
and communities near the construction areas. This provision allowed
businesses or interested parties to review the project schedule and
make suggestions that would lessen the impact of the construction.
The project leadership invested significant time and resources in
developing alignment among the various political stakeholders on
the project approach and schedule.
5.4 Relationship Building Tips
Take the time to identify all stakeholders before starting a new project. Include those
who are impacted by the project, as well as groups with the ability to impact the
project. Then, begin the process of building strong relationships with each one using
the following method.
• Analyze stakeholders: Conduct a stakeholder analysis, or an assessment of a
project’s key participants, and how the project will affect their problems and
needs. Identify their individual characteristics and interests. Find out what
motivates them, as well as what provokes them. Define roles and level of
participation, and determine if there are conflicts of interest among groups of
stakeholders.
• Assess influence: Measure the degree to which stakeholders can influence the
project. The more influential a stakeholder is, the more a project manager will
need their support. Think about the question, “What’s in it for them?” when
considering stakeholders. Knowing what each stakeholder needs or wants from
the project will enable the project manager to gauge his or her level of support.
And remember to balance support against influence. Is it more important to have
strong support from a stakeholder with little influence, or lukewarm support from
one with a high level of influence?
• Understand their expectations: Nail down stakeholders’ specific expectations.
Ask for clarification when needed to be sure they are completely understood.
• Define “success”: Every stakeholder may have a different idea of what project
success looks like. Discovering this at the end of the project is a formula for
failure. Gather definitions up front and include them in the objectives to help
ensure that all stakeholders will be supportive of the final outcomes.
• Keep stakeholders involved: Don’t just report to stakeholders. Ask for their
input. Get to know them better by scheduling time for coffee, lunch, or quick
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meetings. Measure each stakeholder’s capacity to participate and honor time
constraints.
• Keep stakeholders informed: Send regular status updates. Daily may be too
much; monthly is not enough. One update per week is usually about right. Hold
project meetings as required, but don’t let too much time pass between meetings.
Be sure to answer stakeholders’ questions and emails promptly. Regular
communication is always appreciated – and may even soften the blow when you
have bad news to share.
These are the basics of building strong stakeholder relationships. But as in any
relationship, there are subtleties that every successful project manager understands –
such as learning the differences between and relating well to different types
stakeholders.
5.5 How to Relate to Different Types of Stakeholders
By conducting a stakeholder analysis, project managers can gather enough
information on which to build strong relationships – regardless of the differences
between them. For example, the needs and wants of a director of marketing will be
different from those of a chief information officer. Therefore, the project manager’s
engagement with each will need to be different as well.
Stakeholders with financial concerns will need to know the potential return of the
project’s outcomes. Others will support projects if there is sound evidence of their
value to improving operations, boosting market share, increasing production, or
meeting other company objectives.
Keep each stakeholder’s expectations and needs in mind throughout each
conversation, report or email, no matter how casual or formal the communication
may be. Remember that the company’s interests are more important than any
individual’s – yours or a stakeholder’s. When forced to choose between them, put the
company’s needs first.
No matter what their needs or wants, all stakeholders will respect the project
manager who:
• Is always honest, even when telling them something they don’t want to hear
• Takes ownership of the project
• Is predictable and reliable
• Stands by his or her decisions
• Takes accountability for mistakes
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5.6 Supportive Stakeholders are Essential to Project
Success
Achieving a project’s objectives takes a focused, well-organized project manager who
can engage with a committed team and gain the support of all stakeholders. Building
strong, trusting relationships with interested parties from the start can make the
difference between project success and failure.
5.7 Tools to Help Stakeholder Management
There are many project decelerators, among them lack of stakeholder support.
Whether the stakeholders support your project or not, if they are important to your
project, you must secure their support. How do you do that?
First, you must identify who your stakeholders are. Just because they are important in
the organization does not necessarily mean they are important to your project. Just
because they think they are important does not mean they are. Just because they
don’t think they need to be involved does not mean they do not have to be. The typical
suspects: your manager, your manager’s manager, your client, your client’s manager,
any SME (subject matter expert) whose involvement you need, and the board
reviewing and approving your project. Note that in some situations there are people
who think they are stakeholders. From your perspective they may not be, but be
careful how you handle them. They could be influential with those who have the
power to impact your project. Do not dismiss them out of hand.
Second, you need to determine what power they have and what their intentions
toward your project are. Do they have the power to have an impact on your project?
Do they support or oppose you? What strategies do you follow with them?
Third, what’s the relationship among stakeholders? Can you improve your project’s
chances by working with those who support you to improve the views of those who
oppose you? Figure 5.2 Stakeholder Analysis summarizes the options based on an
assessment of your stakeholders’ potential for cooperation and potential for threat.
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Figure 5.2 Stakeholder Analysis
( http://svprojectmanagement.com/project-decelerators-%E2%80%93-lack-ofstakehold
er-support ) .
Now that you have this information, you can complete a stakeholder analysis template
(Table 5.1) that will help you define your strategies to improve their support:Table 5.1
Stakeholder Analysis Template
Stakeholder
Names and
Roles
How
important?
(Low-
Med-
High)
Current
level of
support?
(Low-
Med-
High)
What do you
want from
stakeholders?
What is
important to
stakeholders?
How could
stakeholde
block your
efforts?
Table 5.1 Stakeholder Analysis Template
( http://svprojectmanagement.com/project-decelerators-%E2%80%93-lack-of-stakehol
der-support ) .
Finally, a key piece of your stakeholder management efforts is constant
communication to your stakeholders. Using the information developed above, you
should develop a communications plan that secures your stakeholders’ support. The
template in Table 5.2 Stakeholder Analysis Template can be used.
• Project Scope:
• Key Message:
• Communication Goals:
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• Communication Team:
• Project Team:
• Other stakeholders:
Communication
Date
Deliverable Audience Message
Action
Item or
FYI(Info?)
Plans Sta
Table 5.2 Stakeholder Analysis Template
5.8 Attribution
Unported And Project Decelerators – Lack of Stakeholder Support By Jose Solera
licensed under Creative Commons Attribution 3.0 Unported And How to Build
Relationships with Stakeholders By Erin Palmer licensed under Creative Commons
Attribution 3.0 Unported And Project Management From Simple to Complex by Russel
Darnall, John Preston, Eastern Michigan University licensed under Creative Commons
Attribution 3.0 Unported
71

Chapter 6 Culture and Project
Management
Adrienne Watt
6.1 What Is Organizational Culture?
When working with internal and external customers on a project, it is essential to pay
close attention to relationships, context, history, and the corporate culture. Corporate
culture refers to the beliefs, attitudes, and values that the organization’s members
share and the behaviors consistent with them (which they give rise to). Corporate
culture sets one organization apart from another, and dictates how members of the
organization will see you, interact with you, and sometimes judge you. Often, projects
too have a specific culture, work norms, and social conventions.
Some aspects of corporate culture are easily observed; others are more difficult to
discern. You can easily observe the office environment and how people dress and
speak. In one company, individuals work separately in closed offices; in another,
teams may work in a shared environment. The more subtle components of corporate
culture, such as the values and overarching business philosophy, may not be readily
apparent, but they are reflected in member behaviors, symbols, and conventions
used.
6.2 Project Manager’s Checklist
Once the corporate culture has been identified, members should try to adapt to the
frequency, formality, and type of communication customary in that culture. This
adaptation will strongly affect project members’ productivity and satisfaction
internally, as well as with the client organization.
• Which stakeholders will make the decision in this organization on this issue? Will
your project decisions and documentation have to go up through several layers
to get approval? If so, what are the criteria and values that may affect acceptance
there? For example, is being on schedule the most important consideration?
Cost? Quality?
• What type of communication among and between stakeholders is preferred? Do
they want lengthy documents? Is “short and sweet” the typical standard?
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• What medium of communication is preferred? What kind of medium is usually
chosen for this type of situation? Check the files to see what others have done.
Ask others in the organization.
• What vocabulary and format are used? What colors and designs are used (e.g., at
Hewlett-Packard, all rectangles have curved corners)?
6.3 Project Team Challenges
Today’s globally distributed organizations (and projects) consist of people who have
differing “worldviews.” Worldview is a looking glass through which people see the
world as Bob Shebib describes: “[It is] a belief system about the nature of the universe,
its perceived effect on human behavior, and one’s place in the universe. Worldview is
a fundamental core set of assumptions explaining cultural forces, the nature of
humankind, the nature of good and evil, luck, fate, spirits, the power of significant
others, the role of time, and the nature of our physical and natural resources” (Shebib,
2003, p. 296).
If, for example, a Canadian manager is sent to India to manage an R&D team or a joint
venture, they are likely to have to “[cope] with eco-shock or the physiological,
psychological, and social reaction to a new assignment ecology.” Hanging a shingle in a
fluid and culturally diverse organization, project team, and work culture, a project
manager may find new working relationships and hidden challenges have significant
implications for performance and knowledge exchange – for the manager and
colleagues at home and in the host country.
In most situations, there is simply no substitute for having a well-placed person from
the host culture to guide the new person through the cultural nuances of getting
things done. In fact, if this “intervention” isn’t present, it is likely to affect the person’s
motivation or desire to continue trying to break through the cultural (and other)
barriers. Indeed, optimal effectiveness in such situations requires learning of cultures
in developing countries or international micro-cultures and sharing perceptions
among the culturally diverse task participants on how to get things done. Project
leaders require sensitivity and awareness of multicultural preferences. The following
broad areas should be considered:
• Individual identity and role within the project versus family of origin and
community
• Verbal and emotional expressiveness
• Relationship expectations
• Style of communication
• Language
• Personal priorities, values, and beliefs
• Time orientation
There are many interpersonal dynamics and intra-project challenges faced by a
globally distributed team. Individual members and the team itself requires important
social supports to mitigate uncertainty, conflict, motivational challenges, culture shock,
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and the more-encompassing eco-shock that comes from facing head-on the
unfamiliar and diverse situations consistent with a different cultural and
geographically distributed context.
Diverse and globally distributed project teams (i.e., different ethnic cultures, genders,
ages, and functional capabilities), often working on complex projects spanning
multiple time zones, geography, and history, and operating with tight deadlines in
cost-conscious organizations, need to make time and resources available to physically
meet each other, and connect (at the very least) at a formal “kick-off” meeting.
Especially when working with team members from high-context cultures, it is essential
to meet face-to-face, discover member’s individual identities and cultural preferences,
share professional knowledge and personal stories, and observe critical verbal and
non-verbal cues (that may not easily be observed online, or on the telephone). This is
key to establishing a safer climate and building trust for stronger relation ships among
both team members and management.
6.4 Dealing with Conflict
The question isn’t whether, when, or with what frequency conflict will occur among
intercultural team members — or what will create the conflict. If a team wants to
overcome (or harness) conflict for effectiveness and productivity, the question is how
to navigate and resolve the conflicts. Conflict that springs from diversity can actually
assist the team in completing complex problem solving. However, if not navigated
successfully, it can create relationship strain and derail achievement due to increased
difficulties in communication and coordination.
As the global marketplace continues its rapid expansion, researchers are increasingly
turning their attention to the issue of conflict management. Differing social and
cultural values don’t necessarily increase the number of conflicts a team will
experience, but they can have an impact on how conflicts are managed and resolved.
Cultural awareness is needed for understanding and appreciating others’ values and
behavioral norms. Without that, foreign assignments will become an overwhelming
challenge. Self-awareness and skill development can aid in resolving the problematic
conflict arising from cultural differences to help a team maintain good relations and
remain productive.
6.5 References
Shebib, B. (2003). Choices: Interviewing and Counselling Skills for Canadians, 2nd
edition, Pearson Education Canada Inc.
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6.6 Attribution
This chapter of Project Management is a derivative copy of Project Management for
Skills for All Careers by Project Management Open Resources and TAP-a-PM licensed
under Creative Commons Attribution 3.0 Unported.
75

Chapter 7 Project Initiation
Adrienne Watt
The project initiation phase is the first phase within the project management life cycle,
as it involves starting up a new project. Within the initiation phase, the business
problem or opportunity is identified, a solution is defined, a project is formed, and a
project team is appointed to build and deliver the solution to the customer. A business
case is created to define the problem or opportunity in detail and identify a preferred
solution for implementation. The business case includes:
• A detailed description of the problem or opportunity with headings such as
Introduction, Business Objectives, Problem/Opportunity Statement, Assumptions,
and Constraints
• A list of the alternative solutions available
• An analysis of the business benefits, costs, risks, and issues
• A description of the preferred solution
• Main project requirements
• A summarized plan for implementation that includes a schedule and financial analysis
The project sponsor then approves the business case, and the required funding is
allocated to proceed with a feasibility study. It is up to the project sponsor to
determine if the project is worth undertaking and whether the project will be
profitable to the organization. The completion and approval of the feasibility study
triggers the beginning of the planning phase. The feasibility study may also show that
the project is not worth pursuing and the project is terminated; thus the next phase
never begins.
All projects are created for a reason. Someone identifies a need or an opportunity and
devises a project to address that need. How well the project ultimately addresses that
need defines the project’s success or failure.
The success of your project depends on the clarity and accuracy of your business case
and whether people believe they can achieve it. Whenever you consider past
experience, your business case is more realistic; and whenever you involve other
people in the business case’s development, you encourage their commitment to
achieving it.
Often the pressure to get results encourages people to go right into identifying
possible solutions without fully understanding the need or what the project is trying to
accomplish. This strategy can create a lot of immediate activity, but it also creates
significant chances for waste and mistakes if the wrong need is addressed. One of the
best ways to gain approval for a project is to clearly identify the project’s objectives
and describe the need or opportunity for which the project will provide a solution. For
most of us, being misunderstood is a common occurrence, something that happens
on a daily basis. At the restaurant, the waiter brings us our dinner and we note that
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the baked potato is filled with sour cream, even though we expressly requested “no
sour cream.” Projects are filled with misunderstandings between customers and
project staff. What the customer ordered (or more accurately what they think they
ordered) is often not what they get. The cliché is “I know that’s what I said, but it’s not
what I meant.” Figure 7.1 Project Management by Andreas Cappell demonstrates the
importance of establishing clear objectives.
The need for establishing clear project objectives cannot be overstated. An objective
or goal lacks clarity if, when shown to five people, it is interpreted in multiple ways.
Ideally, if an objective is clear, you can show it to five people who, after reviewing it,
hold a single view about its meaning. The best way to make an objective clear is to
state it in such a way that it can be verified. Building in ways to measure achievement
can do this. It is important to provide quantifiable definitions to qualitative terms.
Figure 7.1 Project Management by Andreas Cappell
( https://www.flickr.com/photos/cappellmeister/5921913/, https://creativecommons.or
g/licenses/bync-sa/2.0/ ) .
For example, an objective of the team principle (project manager) of a Formula 1
racing team may be that their star driver, “finish the lap as fast as possible.” That
objective is filled with ambiguity.
How fast is “fast as possible?” Does that mean the fastest lap time (the time to
complete one lap) or does it mean the fastest speed as the car crosses the start/finish
line (that is at the finish of the lap)?
By when should the driver be able to achieve the objective? It is no use having the
fastest lap after the race has finished, and equally the fastest lap does not count for
qualifying and therefore starting position, if it is performed during a practice session.
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The ambiguity of this objective can be seen from the following example. Ferrari’s
Michael Schumacher achieved the race lap record at the Circuit de Monaco of 1 min
14.439 sec in 2004 (Figure 7.2 Despite achieving the project goal of the “finish the lap a
s fast as possible,” Ferrari’s Michael Schumacher crashed 21 laps later and did not finis
h the race (top); Renault’s Jarno Trulli celebrating his win at the 2004 Monaco Grand Pr
ix (middle); Jenson Button took his Brawn GP car to pole position at the Monaco Grand
Prix with a lap time of 1 min 14.902 sec. He also went on to win the race, even though
he did not achieve that lap time during the race (bottom). ). However, he
achieved this on lap 23 of the race, but crashed on lap 44 of a 77-lap race. So while he
achieved a fastest lap and therefore met the specific project goal of “finish the lap as
fast as possible,” it did not result in winning the race, clearly a different project goal. In
contrast, the fastest qualifying time at the same event was by Renault’s Jarno Trulli (1
min 13.985 sec), which gained him pole position for the race, which he went on to win
(Figure 7.2 Despite achieving the project goal of the “finish the lap as fast as possible,”
Ferrari’s Michael Schumacher crashed 21 laps later and did not finish the race (top); Re
nault’s Jarno Trulli celebrating his win at the 2004 Monaco Grand Prix (middle); Jenson
Button took his Brawn GP car to pole position at the Monaco Grand Prix with a lap tim
e of 1 min 14.902 sec. He also went on to win the race, even though he did not achieve
that lap time during the race (bottom). ). In his case, he achieved the specific
project goal of “finish the lap as fast as possible,” but also the larger goal of winning
the race.
The objective can be strengthened considerably if it is stated as follows: “To be able to
finish the 3.340 km lap at the Circuit de Monaco at the Monaco Grand Prix in 1 min
14.902 sec or less, during qualifying on May 23, 2009.” This was the project objective
achieved by Brawn GP’s Jenson Button (Figure 7.2 Despite achieving the project goal of
the “finish the lap as fast as possible,” Ferrari’s Michael Schumacher crashed 21 laps la
ter and did not finish the race (top); Renault’s Jarno Trulli celebrating his win at the 200
4 Monaco Grand Prix (middle); Jenson Button took his Brawn GP car to pole position at
the Monaco Grand Prix with a lap time of 1 min 14.902 sec. He also went on to win the
race, even though he did not achieve that lap time during the race (bottom). ).
There is still some ambiguity in this objective; for example, it assumes the star driver
will be driving the team’s race car and not a rental car from Hertz. However, it clarifies
the team principal’s intent quite nicely. It should be noted that a clear goal is not
enough. It must also be achievable. The team principal’s goal becomes unachievable,
for example, if he changes it to require his star driver to finish the 3.340 km lap in 30
sec or less.
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Figure 7.2 Despite achieving the project goal of the “finish the lap as fast as possible,” Ferrari’s
Michael Schumacher crashed 21 laps later and did not finish the race (top); Renault’s Jarno Trulli
celebrating his win at the 2004 Monaco Grand Prix (middle); Jenson Button took his Brawn GP car to
pole position at the Monaco Grand Prix with a lap time of 1 min 14.902 sec. He also went on to win
the race, even though he did not achieve that lap time during the race (bottom).
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. Monaco 2004 by Cord Rodefeld (https://www.flickr.com/photos/rodefeld/
386917280/) used under CC-BY license (https://creativecommons.org/licenses/by/2.0/)
(top); Jarno Trulli by ph-stop (https://www.flickr.com/photos/ph-stop/4698634584/)
used under CC-BY-SA license (https://creativecommons.org/licenses/by-sa/2.0/)
(middle); Jenson Button by Evoflash (https://www.flickr.com/photos/evoflash/
7614681230/) used under CC-BY license (https://creativecommons.org/licenses/by/
2.0/) (bottom).
To ensure the project’s objectives are achievable and realistic, they must be
determined jointly by managers and those who perform the work. Realism is
introduced because the people who will do the work have a good sense of what it
takes to accomplish a particular task. In addition, this process assures some level of
commitment on all sides: management expresses its commitment to support the work
effort and workers demonstrate their willingness to do the work.
Imagine an office manager has contracted a painter to paint his office. His goal or
objective is to have the office painted a pleasing blue color. Consider the conversation
that occurs in Figure 7.3 The consequence of not making your objective clear. after
the job was finished.
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Figure 7.3 The consequence of not making your objective clear. Illustration from Barron & Barron
Project Management for Scientists and Engineers
This conversation captures in a nutshell the essence of a major source of
misunderstandings on projects: the importance of setting clear objectives. The office
manager’s description of how he wanted the room painted meant one thing to him
and another to the painter. As a consequence, the room was not painted to the office
manager’s satisfaction. Had his objective been more clearly defined, he probably
would have had what he wanted.
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7.1 Comparing Options Using a Weighted Decision
Matrix
Sometimes we have multiple options to choose from when determining requirements
and deciding which project to work on. To select the best option, we can use tools
such as a weighted decision matrix.
A basic decision matrix consists of establishing a set of criteria for options that are
scored and summed to gain a total score that can then be ranked. Importantly, it is
not weighted to allow a quick selection process.
A weighted decision matrix operates in the same way as the basic decision matrix but
introduces the concept of weighting the criteria in order of importance. The resultant
scores better reflect the importance to the decision maker of the criteria involved. The
more important a criterion, the higher the weighting it should be given. Each of the
potential options is scored and then multiplied by the weighting given to each of the
criteria to produce a result.
The advantage of the weighted decision matrix is that subjective opinions about one
alternative versus another can be made more objective. Another advantage of this
method is that sensitivity studies can be performed. An example of this might be to
see how much your opinion would have to change in order for a lower-ranked
alternative to outrank a competing alternative.
A weighted decision matrix therefore allows decision makers to structure and solve
their problem by:
1. Specifying and prioritizing their needs with a list a criteria; then
2. Evaluating, rating, and comparing the different solutions; and
3. Selecting the best matching solution.
A weighted decision matrix is a decision tool used by decision makers.
A decision matrix is basically an array presenting on one axis a list of alternatives, also
called options or solutions, that are evaluated regarding, on the other axis, a list of
criteria, which are weighted depending on their respective importance in the final
decision to be taken.
7.2 Weighted Decision Matrix Sample
The example in Figure 7.4 Weighted Decision Matrix for Game Delivery Project shows
a weighted decision matrix that compared three options for a web development
project (SJS Enterprises). This method is especially useful when choosing purchase
alternatives and comparing them against specific desirable system requirements.
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7.3 Financial Considerations
In many new project endeavors, we need to find out if our project is financially
feasible. We do that by using net present value (NPV), rate of return (ROI), and
payback analysis.
Figure 7.4 Weighted Decision Matrix for Game Delivery Project
. Source: A. Watt.
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7.4 NPV
A dollar earned today is worth more than a dollar earned one or more years from
now. The NPV of a time series of cash flows, both incoming and outgoing, is defined as
the sum of the present values (PVs) of the individual cash flows of the same entity.
In the case when all future cash flows are incoming and the only outflow of cash is the
purchase price, the NPV is simply the PV of future cash flows minus the purchase price
(which is its own PV). NPV is a standard method for using the time value of money to
appraise long-term projects. Used for capital budgeting and widely used throughout
economics, finance, and accounting, it measures the excess or shortfall of cash flows,
in present value terms, once financing charges are met.
NPV can be described as the “difference amount” between the sums of discounted
cash inflows and cash outflows. It compares the present value of money today to the
present value of money in the future, taking inflation and returns into account.
The NPV of a sequence of cash flows takes as input the cash flows and a discount rate
or discount curve and outputs a price.
Each cash inflow/outflow is discounted back to its present value (PV). Then they are
summed. Therefore NPV is the sum of all terms.
Figure 7.5
where
tis the time of the cash flow
iis the discount rate (the rate of return that could be earned on an investment in the
financial markets with similar risk; the opportunity cost of capital)
Rtis the net cash flow (i.e., cash inflow – cash outflow, at time t).
NPV is an indicator of how much value an investment or project adds to the firm. With
a particular project, if NPV is a positive value, the project is in the status of positive
cash inflow in the time t. If NPV is a negative value, the project is in the status of
discounted cash outflow in the time t. Sometimes risky projects with a positive NPV
could be accepted. This does not necessarily mean that they should be undertaken
since NPV at the cost of capital may not account for opportunity cost (i.e., comparison
with other available investments). In financial theory, if there is a choice between two
mutually exclusive alternatives, the one yielding the higher NPV should be selected.
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If… It means… Then…
NPV>0
The
investment
would add
value to
the firm
The project may be accepted
NPV<0
The
investment
would
subtract
value from
the firm
The project should be rejected
NPV=0
The
investment
would
neither
gain nor
lose value
for the
firm
We should be indifferent in the
decision whether to accept or reject
the project. This project adds no
monetary value. Decision should be
based on other criteria (e.g, strategic
positioning or other factors not
explicitly included in the calculation).
Table 7.1 Net Present Value
( http://en.wikipedia.org/wiki/Net_present_value ) .
Present Value Table
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Periods 6% 8% 10% 12% 14%
1 0.943 0.926 0.909 0.893 0.877
2 0.890 0.857 0.826 0.797 0.769
3 0.840 0.794 0.751 0.712 0.675
4 0.792 0.735 0.683 0.636 0.592
5 0.747 0.681 0.621 0.567 0.519
6 0.705 0.630 0.564 0.507 0.456
7 0.665 0.583 0.513 0.452 0.400
8 0.627 0.540 0.467 0.404 0.351
9 0.592 0.500 0.424 0.361 0.308
10 0.558 0.436 0.386 0.322 0.270
Table 7.2 Take note of the decreasing value of money as the period
increases from 1 to 10 years.
. Source: A. Watt.
7.5 NPV Example
The following example is calculating the NPV of a project at a discount rate of 12%.
The project takes five years to complete with given benefits and costs for each year. In
Year 0, there is no benefit to the organization, just an initial cost of $75,000 with no
discount rate. In Year 1, the discount rate is 89%. This means that at 12% assumed
interest, the time value of money says that the $1 today is worth $0.89 in one year,
$0.80 in two years, etc. By calculating the NPV for the benefits and the costs, you
subtract the NPV of all costs from the NPV of all benefits. The final result is a positive
value of $105,175.
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7.6 ROI
Return on investment (ROI) is a performance measure used to evaluate the
efficiency of an investment or to compare the efficiency of a number of different
investments. It is one way of considering profits in relation to capital invested.
This is calculated by subtracting the project’s costs from the benefits and then dividing
by the costs. For example, if you invest $100 and your investment is worth $110 next
year, the ROI is (110-100)/100 = 0.1 or a 10% return.
In our example: (306,425-201,175)/ 306,425 = .52 = 52% return. That’s considered a
nice return on investment.
7.7 Payback Period
Payback analysis is important in determining the amount of time it will take for a
project to recoup its investments. This is the point at which the benefits start to
outweigh the costs. The best way to see that is by charting the cumulative benefits and
costs. As you can see in the example in Figure 7.7 Payback Analysis Chart. , the
cumulative benefits outweigh the cumulative costs in the second year.
Figure 7.6 Table of NPV of costs and benefits.
87

. Source: A. Watt.
Figure 7.7 Payback Analysis Chart.
. Source: A. Watt.
7.8 Project Charter
A project charter, project definition, or project statement is a statement of the scope,
objectives, and participants in a project. It provides a preliminary delineation of roles
and responsibilities, outlines the project objectives, identifies the main stakeholders,
and defines the authority of the project manager. It serves as a reference of authority
for the future of the project.
7.8.1 Purpose of the Project Charter
The purpose of a project charter is to:
• Provide an understanding of the project, the reason it is being conducted, and its
justification
• Establish early on in the project the general scope
• Establish the project manager and his or her authority level. A note of who will
review and approve the project charter must be included.
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7.8.2 Simple example of project charter
7.8.2.1 Identification Section
Identification Section
List the project name, the date of the current version of the project charter, the
sponsor’s name and authority, and the project manager’s name.
Example:
Project Name: Rice University Computer Store Creation
Project Sponsor: Jane Ungam, Facilities Manager
Date: Jan 12, 2010
Revision: 1
Project Manager: Fred Rubens
7.8.2.2 Overview of the Project
Provide a simple but precise statement of the project.
Example
Rice University is planning to create a store to sell computer supplies.
7.8.2.3 Objective
State the objectives of the project clearly and ensure they contain a measure of how
to assess whether they have been achieved. The statement should be realistic and
should follow the SMART protocol:
• Specific (get into the details)
• Measurable (use quantitative language so that you know when you are finished)
• Acceptable (to stakeholders)
• Realistic (given project constraints)
• Time based (deadlines, not durations)
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Example
The objective of this project is to implement a campus store that is
ready to sell computer supplies such as memory sticks, mouse pads,
and cables, when class starts in August 2010, with enough inventory
to last through the first two weeks of classes.
7.8.2.4 Scope
Specify the scope of the project by identifying the domain or range of requirements.
Example
The scope of the Rice’s school supplies store project includes the
activities listed below:
• Determine what supplies will be sold in the store.
• Establish competitive prices for the computer supplies.
• Source and secure supply vendors.
• Establish marketing, procurement, operations, and any other
necessary departments, schools, centers, and institutes.
It is equally important to include in the scope what is not included in the project.
Example
The scope of the project does not include:
• Development of any other school store departments
• Store design or construction
7.8.2.5 Major Milestones
List all major milestones needed to ensure project completion successfully.
Example
• All vendors selected
• Contracts or orders completed with all vendors
• Supplies delivered to the store
• Pricing determined
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7.8.2.6 Major Deliverables
List and describe the major deliverables that will result from the project.
Example
• Supplies procured
• Operations, procurement, marketing, and other teams established
• Store supplies stocked and displayed
• Store staffing completed, including work schedules
• Store operations policies, including hours of operation, established
7.8.2.7 Assumptions
Outline the assumptions made in creating the project. An assumption is a fact you are
unsure of but can either confirm at a later time or are simply stating so that the
project can proceed as if the statement were true.
Example
• Only computer supplies will be sold in the store.
• Customers will be the Rice University student body and faculty.
• Rice University students will manage the project and be responsible
for ongoing operations.
• A store sponsor from the university faculty or staff will be assigned
to mentor students and provide oversight.
• Store hours of operation will be approved by the Rice University
students or store sponsor.
• Supplier deliveries will be arranged or the store sponsor will pick
them up with students.
• Students will be empowered to contact vendors for order placement
and inquiries via telephone.
7.8.2.8 Constraints
Define any and all constraints on the project or those working on the project. This is
an important part of the project charter. A constraint is anything that limits the range
of solutions or approaches.
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Example:
• Student availability to meet for project planning is limited to school hours.
• Software is not available for project planning and control.
7.8.2.9 Business Need or Opportunity (Benefits)
Provide a concise statement of the business need or opportunity that led to the
creation of the project. Why was it created? What are the benefits? How does the
project contribute to organizational objectives?
Example:
The goal of this project is to provide income for the Rice Student
Center while supplying necessary items to students and faculty at
competitive prices. The school store will be a convenience to students
since necessary supplies will be available on campus. This will help
students learn to manage their personal supplies.
7.8.2.10 Preliminary Cost for the Project
Provide a statement indicating how the cost of the project will be defined and
controlled.
Example:
The procurement team will assemble a proposal based on expected
costs for review by the Dean of Undergraduate Studies.
7.8.2.11 Project Risks
A risk is anything uncertain that may occur that will reduce or decrease the chances of
project success.
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Example:
1. There is a state election coming and the new government may
change the taxation rules for private university retail outlets.
2. The cloud is changing student demand for media such as flash
drives in somewhat unpredictable ways. If this happens faster than
we forecast, we may be building a store that students don’t need.
3. Deliveries of store shelves, etc. will be delayed if a major hurricane
occurs.
7.8.2.12 Project Charter Acceptance
Provide the names, titles, and signature lines of the individuals who will sign off on the
project charter.
7.8.2.13 Project Stakeholders
Provide the key stakeholders and team members by function, name , and role.
Function Name Role
Project Manager Monica Styles Leads the project
Sponsor Adrienne Watt Project sponsor
Etc.
7.9 Attribution
Merrie Barron and Andrew Barron licensed under and Creative Commons Attribution
3.0 Unported and Decision Matrix Method and Project Charter by Wikipedia the Free
Encyclopedia licensed under Creative Commons Share Alike Attribution 3.0 Unported.
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Chapter 8 Overview of Project
Planning
Adrienne Watt
After the project has been defined and the project team has been appointed, you are
ready to enter the second phase in the project management life cycle: the detailed
project planning phase.
Project planning is at the heart of the project life cycle, and tells everyone involved
where you’re going and how you’re going to get there. The planning phase is when the
project plans are documented, the project deliverables and requirements are defined,
and the project schedule is created. It involves creating a set of plans to help guide
your team through the implementation and closure phases of the project. The plans
created during this phase will help you manage time, cost, quality, changes, risk, and
related issues. They will also help you control staff and external suppliers to ensure
that you deliver the project on time, within budget, and within schedule.
The project planning phase is often the most challenging phase for a project manager,
as you need to make an educated guess about the staff, resources, and equipment
needed to complete your project. You may also need to plan your communications
and procurement activities, as well as contract any third-party suppliers.
The purpose of the project planning phase is to:
• Establish business requirements
• Establish cost, schedule, list of deliverables, and delivery dates
• Establish resources plans
• Obtain management approval and proceed to the next phase
The basic processes of project planning are:
• Scope planning – specifying the in-scope requirements for the project to facilitate
creating the work breakdown structure
• Preparation of the work breakdown structure – spelling out the breakdown of the
project into tasks and sub-tasks
• Project schedule development – listing the entire schedule of the activities and
detailing their sequence of implementation
• Resource planning – indicating who will do what work, at which time, and if any
special skills are needed to accomplish the project tasks
• Budget planning – specifying the budgeted cost to be incurred at the completion
of the project
• Procurement planning – focusing on vendors outside your company and
subcontracting
• Risk management – planning for possible risks and considering optional
contingency plans and mitigation strategies
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• Quality planning – assessing quality criteria to be used for the project
• Communication planning – designing the communication strategy with all project
stakeholders
The planning phase refines the project’s objectives, which were gathered during the
initiation phase. It includes planning the steps necessary to meet those objectives by
further identifying the specific activities and resources required to complete the
project. Now that these objectives have been recognized, they must be clearly
articulated, detailing an in-depth scrutiny of each recognized objective. With such
scrutiny, our understanding of the objective may change. Often the very act of trying
to describe something precisely gives us a better understanding of what we are
looking at. This articulation serves as the basis for the development of requirements.
What this means is that after an objective has been clearly articulated, we can
describe it in concrete (measurable) terms and identify what we have to do to achieve
it. Obviously, if we do a poor job of articulating the objective, our requirements will be
misdirected and the resulting project will not represent the true need.
Users will often begin describing their objectives in qualitative language. The project
manager must work with the user to provide quantifiable definitions to those
qualitative terms. These quantifiable criteria include schedule, cost, and quality
measures. In the case of project objectives, these elements are used as
measurements to determine project satisfaction and successful completion.
Subjective evaluations are replaced by actual numeric attributes.
Example 1
A web user may ask for a fast system. The quantitative requirement
should be all screens must load in under three seconds. Describing
the time limit during which the screen must load is specific and
tangible. For that reason, you’ll know that the requirement has been
successfully completed when the objective has been met.
Example 2
Let’s say that your company is going to produce a holiday batch of
eggnog. Your objective statement might be stated this way:
Christmas Cheer, Inc. will produce two million cases of holiday
eggnog, to be shipped to our distributors by October 30, at a total cost
of $1.5 million or less. The objective criteria in this statement are
clearly stated and successful fulfillment can easily be measured.
Stakeholders will know that the objectives are met when the two
million cases are produced and shipped by the due date within the
budget stated.
When articulating the project objectives you should follow the SMART rule:
• Specific – get into the details. Objectives should be specific and written in clear,
concise, and understandable terms.
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• Measurable – use quantitative language. You need to know when you have
successfully completed the task.
• Acceptable – agreed with the stakeholders.
• Realistic – in terms of achievement. Objectives that are impossible to accomplish
are not realistic and not attainable. Objectives must be centered in reality.
• Time based – deadlines not durations. Objectives should have a time frame with
an end date assigned to them.
If you follow these principles, you’ll be certain that your objectives meet the
quantifiable criteria needed to measure success.
8.1 Attribution
Unported
96

Chapter 9 Scope Planning
Adrienne Watt
You always want to know exactly what work has to be done before you start it. You
have a collection of team members, and you need to know exactly what they’re going
to do to meet the project’s objectives. The scope planning process is the very first
thing you do to manage your scope. Project scope planning is concerned with the
definition of all the work needed to successfully meet the project objectives. The
whole idea here is that when you start the project, you need to have a clear picture of
all the work that needs to happen on your project, and as the project progresses, you
need to keep that scope up to date and written down in the project’s scope
management plan.
9.1 Defining the Scope
You already have a head start on refining the project’s objectives in quantifiable terms,
but now you need to plan further and write down all the intermediate and final
deliverables that you and your team will produce over the course of the project.
Deliverables include everything that you and your team produce for the project (i.e.,
anything that your project will deliver). The deliverables for your project include all of
the products or services that you and your team are performing for the client,
customer, or sponsor. They include every intermediate document, plan, schedule,
budget, blueprint, and anything else that will be made along the way, including all of
the project management documents you put together. Project deliverables are
tangible outcomes, measurable results, or specific items that must be produced to
consider either the project or the project phase completed. Intermediate deliverables,
like the objectives, must be specific and verifiable.
All deliverables must be described in a sufficient level of detail so that they can be
differentiated from related deliverables. For example:
• A twin engine plane versus a single engine plane
• A red marker versus a green marker
• A daily report versus a weekly report
• A departmental solution versus an enterprise solution
One of the project manager’s primary functions is to accurately document the
deliverables of the project and then manage the project so that they are produced
according to the agreed-on criteria. Deliverables are the output of each development
phase, described in a quantifiable way.
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9.2 Project Requirements
After all the deliverables are identified, the project manager needs to document all the
requirements of the project. Requirements describe the characteristics of the final
deliverable, whether it is a product or a service. They describe the required
functionality that the final deliverable must have or specific conditions the final
deliverable must meet in order to satisfy the objectives of the project. A requirement
is an objective that must be met. The project’s requirements, defined in the scope
plan, describe what a project is supposed to accomplish and how the project is
supposed to be created and implemented. Requirements answer the following
questions regarding the as-is and to-be states of the business: who, what, where,
when, how much, and how does a business process work?
Requirements may include attributes like dimensions, ease of use, color, specific
ingredients, and so on. If we go back to the example of the company producing
holiday eggnog, one of the major deliverables is the cartons that hold the eggnog. The
requirements for that deliverable may include carton design, photographs that will
appear on the carton, color choices, etc.
Requirements specify what the final project deliverable should look like and what it
should do. Requirements must be measurable, testable, related to identified business
needs or opportunities, and defined to a level of detail sufficient for system design.
They can be divided into six basic categories: functional, non-functional, technical,
business, user, and regulatory requirements.
9.3 Functional Requirements
Functional requirements describe the characteristics of the final deliverable in
ordinary non-technical language. They should be understandable to the customers,
and the customers should play a direct role in their development. Functional
requirements are what you want the deliverable to do.
Vehicle Example
If you were buying vehicles for a business, your functional
requirement might be: “The vehicles should be able to take up to a
one ton load from a warehouse to a shop.”
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Computer System Example
For a computer system you may define what the system is to do: “The
system should store all details of a customer’s order.”
The important point to note is that what is wanted is specified and
not how it will be delivered.
9.4 Non-Functional Requirements
Non-functional requirements specify criteria that can be used to judge the final
product or service that your project delivers. They are restrictions or constraints to be
placed on the deliverable and how to build it. Their purpose is to restrict the number
of solutions that will meet a set of requirements. Using the vehicle example, the
functional requirement is for a vehicle to take a load from a warehouse to a shop.
Without any constraints, the solutions being offered might result in anything from a
small to a large truck. Non-functional requirements can be split into two types:
performance and development.
To restrict the types of solutions, you might include these performance constraints:
• The purchased trucks should be American-made trucks due to government
incentives.
• The load area must be covered.
• The load area must have a height of at least 10 feet.
Similarly, for the computer system example, you might specify values for the generic
types of performance constraints:
• The response time for information is displayed on the screen for the user.
• The number of hours a system should be available.
• The number of records a system should be able to hold.
• The capacity for growth of the system should be built in.
• The length of time a record should be held for auditing purposes.
For the customer records example, the constraints might be:
• The system should be available from 9 a.m. to 5 p.m.Monday to Friday.
• The system should be able to hold 100,000 customer records initially.
• The system should be able to add 10,000 records a year for 10 years.
• A record should be fully available on the system for at least seven years.
One important point with these examples is that they restrict the number of solution
options that are offered to you by the developer. In addition to the performance
constraints, you may include some development constraints.
There are three general types of non-functional development constraints:
• Time: When a deliverable should be delivered
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• Resource: How much money is available to develop the deliverable
• Quality: Any standards that are used to develop the deliverable, development
methods, etc.
9.5 Technical Requirements
Technical requirements emerge from the functional requirements to answer the
questions: how will the problem be solved this time and will it be solved
technologically and/or procedurally? They specify how the system needs to be
designed and implemented to provide required functionality and fulfill required
operational characteristics.
For example, in a software project, the functional requirements may stipulate that a
database system will be developed to allow access to financial data through a remote
terminal. The corresponding technical requirements would spell out the required data
elements, the language in which the database management system will be written
(due to existing knowledge in-house), the hardware on which the system will run (due
to existing infrastructure), telecommunication protocols that should be used, and so
forth.
9.6 Business Requirements
Business requirements are the needs of the sponsoring organization, always from a
management perspective. Business requirements are statements of the business
rationale for the project. They are usually expressed in broad outcomes, satisfying the
business needs, rather than specific functions the system must perform. These
requirements grow out of the vision for the product that, in turn, is driven by mission
(or business) goals and objectives.
9.7 User Requirements
User requirements describe what the users need to do with the system or product.
The focus is on the user experience with the system under all scenarios. These
requirements are the input for the next development phases: user-interface design
and system test cases design.
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9.8 Regulatory requirements
Regulatory requirements can be internal or external and are usually non-negotiable.
They are the restrictions, licenses, and laws applicable to a product or business that
are imposed by the government.
9.9 An Example of Requirements
Automated teller machines (ATMs) can be used to illustrate a wide range of
requirements (Figure 9.1 Automated Teller Machine. ATM ). What are some of the
physical features of these machines, and what kinds of functions do they perform for
the bank’s customers? Why did banks put these systems in place? What are the high-
level business requirements?
Figure 9.1 Automated Teller Machine. ATM
( https://flic.kr/p/6bHE21) by megawatts86 (https://www.flickr.com/photos/3231792
7@N07/, https://creativecommons.org/licenses/by-sa/2.0/ ) .
The following represents one possible example of each type of requirement as they
would be applied to a bank’s external ATM.
• ATM functional requirement: The system will enable the user to select whether or
not to produce a hardcopy transaction receipt before completing a transaction.
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• ATM non-functional requirement: All displays will be in white, 14-point Arial text
on black background.
• ATM technical requirement: The ATM system will connect seamlessly to the
existing customer’s database.
• ATM user requirement: The system will complete a standard withdrawal from a
personal account, from login to cash, in less than two minutes.
• ATM business requirement: By providing superior service to our retail customers,
Monumental Bank’s ATM network will allow us to increase associated service fee
revenue by 10% annually on an ongoing basis.
• ATM regulatory requirement: All ATMs will connect to standard utility power
sources within their civic jurisdiction, and be supplied with an uninterrupted
power source approved by the company.
The effective specification of requirements is one of the most challenging
undertakings project managers face. Inadequately specified requirements will
guarantee poor project results.
Documenting requirements is much more than just the process of writing down the
requirements as the user sees them; it should cover not only what decisions have
been made, but why they have been made, as well. Understanding the reasoning that
was used to arrive at a decision is critical in avoiding repetition. For example, the fact
that a particular feature has been excluded, because it is simply not feasible, needs to
be recorded. If it is not, then the project risks wasted work and repetition, when a
stakeholder requests the feature be reinstated during development or testing.
Once the requirements are documented, have the stakeholders sign off on their
requirements as a confirmation of what they desire. While the project manager is
responsible for making certain the requirements are documented, it does not mean
that the project manager performs this task. The project manager enlists the help of
all the stakeholders (business analysts, requirement analysts, business process
owners, customers and other team members) to conduct the discussions, brain-
storming, and interviews, and to document and sign off the requirements. The project
manager is responsible only for enabling the process and facilitating it. If the project
manager feels that the quality of the document is questionable, his or her duty is to
stop the development process.
The project manager reviews the requirements, incorporates them into the project
documentation library, and uses them as an input for the project plan.
9.10 Software Requirements Fundamentals
This section refers to requirements of “software” because it is concerned with
problems to be addressed by software. A software requirement is a property that
must be exhibited by software developed or adapted to solve a particular problem.
The problem may be to automate part of a task of someone who will use the software,
to support the business processes of the organization that has commissioned the
software, to correct shortcomings of existing software, to control a device, etc. The
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functioning of users, business processes, and devices is typically complex. Therefore,
the requirements on particular software are typically a complex combination of
requirements from different people at different levels of an organization and from the
environment in which the software will operate.
An essential property of all software requirements is that they be verifiable. It may be
difficult or costly to verify certain software requirements. For example, verification of
the throughput requirement on a call center may necessitate the development of
simulation software. Both the software requirements and software quality personnel
must ensure that the requirements can be verified within the available resource
constraints.
Requirements have other attributes in addition to the behavioral properties that they
express. Common examples include a priority rating to enable trade-offs in the face of
finite resources and a status value to enable project progress to be monitored.
Typically, software requirements are uniquely identified so that they can be monitored
over the entire software life cycle.
9.11 Measuring Requirements
As a practical matter, it is typically useful to have some concept of the volume of the
requirements for a particular software product. This number is useful in evaluating
the size of a change in requirements, in estimating the cost of a development or
maintenance task, or simply in using it as the denominator in other measurements
(see Table 9.1 Table of Measuring Requirements).
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Property Measure
Speed Processed transactions/ second
User/ Event response time
Screen refresh time
Size K Bytes
Number of RAM chips
Ease of use Training time
Number of help frames
Reliability Mean time to failure
Probability of unavailability
Rate of failure occurrence
Availability
Robustness Time to restart after failure
Percentage of events causing failure
Probability of data corruption on failure
Portability Percentage of target dependent statements
Number of target systems
Table 9.1 Table of Measuring Requirements
. A Watt.
9.12 Scope Inputs
The project manager gathers initial project facts from the project charter. In addition,
background information on the stakeholder’s workplace, existing business model and
rules, etc. assist in creating the vision of the final product/service, and consequently,
the project scope (see Figure 9.2 Scope input-output by Flaming Sevens).
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Figure 9.2 Scope input-output by Flaming Sevens
( (http://en.wikibooks.org/wiki/File:ScopeIO.JPG) in the Public Domain (http://en.wikipe
dia.org/wiki/Public_domain). ) .
9.13 Techniques
Certainly being a seasoned project manager broadens the repertoire of one’s scope
planning techniques. An experienced project manager can draw on past experiences
with like projects to determine the work that is realistically doable, given time and cost
constraints, for a current project. Communication and negotiation skills are a “must-
have” as well. Project managers need to educate stakeholders about the project
impacts of some requirements. Adding complexity to a project may require more staff,
time, and/or money. It may also have an impact on project quality. Some aspects of
the project may be unfeasible – stakeholders need to know this so they can adjust
their vision or prepare for future challenges.
Gathering requirements is part of scope definition, and it can be done using one or
more of following techniques:
• Interviews
• Focus groups
• Facilitated groups such as JAD (joint application development)
• Group creativity techniques: brainstorming, nominal groups, delphi, mind map,
affinity diagnostics
• Prototyping
• Observation
• Questions and surveys
• Group decision-making techniques: unanimity, majority, plurality, dictatorship
9.14 Requirements Traceability Matrix
The requirements traceability matrix is a table that links requirements to their origin
and traces them throughout the project life cycle. The implementation of a
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requirements traceability matrix helps ensure that each requirement adds business
value by linking it to the business and project objectives. It provides a means to track
requirements throughout the project life cycle, helping to ensure that requirements
approved in the requirements documentation are delivered at the end of the project.
Finally, it provides a structure for managing changes to the product scope. This
process includes, but is not limited to, tracking:
• Requirements to business needs, opportunities, goals, and objectives
• Requirements to project objectives
• Requirements to project scope/work breakdown structure deliverables
• Requirements to product design
• Requirements to product development
• Requirements to test strategy and test scenarios
• High-level requirements to more detailed requirements
Attributes associated with each requirement can be recorded in the requirements
traceability matrix. These attributes help to define key information about the
requirement. Typical attributes used in the requirements traceability matrix may
include a unique identifier, a textual description of the requirement, the rationale for
inclusion, owner, source, priority, version, current status (such as active, cancelled,
deferred, added, approved), and date completed. Additional attributes to ensure that
the requirement has met stakeholders’ satisfaction may include stability, complexity,
and acceptance criteria.
9.15 Matrix Fields
These are suggestions only and will vary based on organizational and project
requirements.
• A unique identification number containing the general category of the
requirement (e.g., SYSADM) and a number assigned in ascending order (e.g., 1.0,
1.1, 1.2)
• Requirement statement
• Requirement source (conference, configuration control board, task assignment,
etc.)
• Software requirements specification/functional requirements document
paragraph number containing the requirement
• Design specification paragraph number containing the requirement
• Program module containing the requirement
• Test specification containing the requirement test
• Test case number(s) where requirement is to be tested (optional)
• Verification of successful testing of requirements
• Modification field (If a requirement was changed, eliminated, or replaced, indicate
disposition and authority for modification.)
• Remarks
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Requirements Traceability Matrix by DHWiki licensed under Creative Commons
Attribution-Noncommercial-No Derivative Works 3.0 United States License.
9.16 Work Breakdown Structure
Now that we have the deliverables and requirements well defined, the process of
breaking down the work of the project via a work breakdown structure (WBS) begins.
The WBS defines the scope of the project and breaks the work down into components
that can be scheduled, estimated, and easily monitored and controlled. The idea
behind the WBS is simple: you subdivide a complicated task into smaller tasks, until
you reach a level that cannot be further subdivided. Anyone familiar with the
arrangements of folders and files in a computer memory or who has researched their
ancestral family tree should be familiar with this idea. You stop breaking down the
work when you reach a low enough level to perform an estimate of the desired
accuracy. At that point, it is usually easier to estimate how long the small task will take
and how much it will cost to perform than it would have been to estimate these
factors at the higher levels. Each descending level of the WBS represents an increased
level of detailed definition of the project work.
WBS describes the products or services to be delivered by the project and how they
are decomposed and related. It is a deliverable-oriented decomposition of a project
into smaller components. It defines and groups a project’s discrete work elements in a
way that helps organize and define the total work scope of the project.
A WBS also provides the necessary framework for detailed cost estimating and
control, along with providing guidance for schedule development and control.
9.17 Overview
WBS is a hierarchical decomposition of the project into phases, deliverables, and work
packages. It is a tree structure, which shows a subdivision of effort required to achieve
an objective (e.g., a program, project, and contract). In a project or contract, the WBS is
developed by starting with the end objective and successively subdividing it into
manageable components in terms of size, duration, and responsibility (e.g., systems,
subsystems, components, tasks, subtasks, and work packages), which include all steps
necessary to achieve the objective.
The WBS creation involves:
• Listing all the project outputs (deliverables and other direct results)
• Identifying all the activities required to deliver the outputs
• Subdividing these activities into sub activities and tasks
• Identifying the deliverable and milestone(s) of each task
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• Identifying the time usage of all the resources (personnel and material) required
to complete each task
The purpose of developing a WBS is to:
• Allow easier management of each component
• Allow accurate estimation of time, cost, and resource requirements
• Allow easier assignment of human resources
• Allow easier assignment of responsibility for activities
9.18 Example of a WBS
If I want to clean a room, I might begin by picking up clothes, toys, and other things
that have been dropped on the floor. I could use a vacuum cleaner to get dirt out of
the carpet. I might take down the curtains and take them to the cleaners, and then
dust the furniture. All of these tasks are subtasks performed to clean the room. As for
vacuuming the room, I might have to get the vacuum cleaner out of the closet,
connect the hose, empty the bag, and put the machine back in the closet. These are
smaller tasks to be performed in accomplishing the subtask called vacuuming. Figure
9.3 A WBS for cleaning a room shows how this might be portrayed in WBS format.
It is very important to note that we do not worry about the sequence in which the
work is performed or any dependencies between the tasks when we do a WBS. That
will be worked out when we develop the schedule. For example, under
3.0 Vacuum, it would be obvious that 3.3 Vacuum carpet would be performed after 3.4
Connect hose and plug! However, you will probably find yourself thinking sequentially,
as it seems to be human nature to do so. The main idea of creating a WBS is to
capture all of the tasks, irrespective of their order. So if you find yourself and other
members of your team thinking sequentially, don’t be too concerned, but don’t get
hung up on trying to diagram the sequence or you will slow down the process of task
identification. A WBS can be structured any way it makes sense to you and your
project. In practice, the chart structure is used quite often but it can be composed in
outline form as well (Figure 9.5 Clean Room in an outline view. ).
Figure 9.3 A WBS for cleaning a room
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. Source: Project Management Skills for All Careers.
You’ll notice that each element at each level of the WBS in both figures is assigned a
unique identifier. This unique identifier is typically a number, and it’s used to sum and
track costs, schedules, and resources associated with WBS elements. These numbers
are usually associated with the corporation’s chart of accounts, which is used to track
costs by category. Collectively, these numeric identifiers are known as the code of
accounts.
There are also many ways you can organize the WBS. For example, it can be organized
by either deliverable or phase. The major deliverables of the project are used as the
first level in the WBS. For example, if you are doing a multimedia project the
deliverables might include producing a book, CD, and a DVD (Figure 9.4 A WBS for a m
ultimedia project ).
Figure 9.4 A WBS for a multimedia project
Many projects are structured or organized by project phases (Figure 9.6 WBS Project P
hases ). Each phase would represent the first level of the WBS and their deliverables
would be the next level and so on.
The project manager is free to determine the number of levels in the WBS based on
the complexity of the project. You need to include enough levels to accurately
estimate project time and costs but not so many levels that are difficult to distinguish
between components. Regardless of the number of levels in a WBS, the lowest level is
called a work package.
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Figure 9.5 Clean Room in an outline view.
Work packages are the components that can be easily assigned to one person or a
team of people, with clear accountability and responsibility for completing the
assignment. The work-package level is where time estimates, cost estimates, and
resource estimates are determined.
100 Percent Rule The 100 percent rule is the most important criterion in developing
and evaluating the WBS. The rule states that each decomposed level (child) must
represent 100 percent of the work applicable to the next higher (parent) element. In
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other words, if each level of the WBS follows the 100 percent rule down to the
activities, then we are confident that 100 per-cent of the activities will have been
identified when we develop the project schedule. When we create the budget for our
project, 100 percent of the costs or resources required will be identified.
Figure 9.6 WBS Project Phases
9.19 Scope Statement
Scope statements may take many forms depending on the type of project being
implemented and the nature of the organization. The scope statement details the
project deliverables and describes the major objectives. The objectives should include
measurable success criteria for the project.
A scope statement captures, in very broad terms, the product of the project: for
example, “development of a software-based system to capture and track orders for
software.” A scope statement should also include the list of users using the product, as
well as the features in the resulting product.
As a baseline scope statements should contain:
• The project name
• The project charter
• The project owner, sponsors, and stakeholders
• The problem statement
• The project goals and objectives
• The project requirements
• The project deliverables
• The project non-goals (what is out of scope)
• Milestones
• Cost estimates
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In more project-oriented organizations, the scope statement may also contain these
and other sections:
• Project scope management plan
• Approved change requests
• Project assumptions and risks
• Project acceptance criteria
9.20 Attribution
Unported, Project Management/PMBOK/Scope Management and Development
Cooperation Handbook/Designing and Executing Projects/Detailed Planning or design
stage by Wikibooks licensed under Creative Commons Attribution-ShareAlike 3.0
License, Work Breakdown Structure by Wikipedia licensed under Creative Commons
Attribution-ShareAlike 3.0 License., and 100 Percent Rule by Pabipedia licensed under
Creative Commons Attribution-ShareAlike 3.0 License.
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Chapter 10 Project Schedule Planning
Adrienne Watt
In order to develop our schedule, we first need to define the activities, sequence them
in the right order, estimate the resources needed, and estimate the time it will take to
complete the tasks.
10.1 Defining Activities
The activity definition process is a further breakdown of the work package elements of
the WBS. It documents the specific activities needed to fulfill the deliverables detailed
in the WBS. These activities are not the deliverables themselves but the individual
units of work that must be completed to fulfill the deliverables. Activity definition uses
everything we already know about the project to divide the work into activities that
can be estimated. You might want to look at all the lessons learned from similar
projects your company has done to get a good idea of what you need to do on the
current one.
Expert judgment in the form of project team members with prior experience
developing project scope statements and WBS can help you define activities. If you are
asked to manage a project in a new domain, you might also use experts in that
particular field to help define tasks so you can understand what activities are going to
be involved. You may want to create an activity list and then have the expert review it
and suggest changes. Alternatively, you could involve the expert from the very
beginning and ask to have an activity definition conversation with him or her before
even making your first draft of the list.
Sometimes you start a project without knowing a lot about the work that you’ll be
doing later. Rolling-wave planning lets you plan and schedule only the portion that you
know enough about to plan well. When you don’t know enough about a project, you
can use placeholders for the unknown portions until you know more. These are extra
items that are put at high levels in the WBS to allow you to plan for the unknown.
10.2 A Case Study
Susan and Steve have decided to tie the knot, but they don’t have much time to plan
their wedding. They want the big day to be unforgettable. They want to invite many
people and provide a great time. They’ve always dreamed of a June wedding, but it’s
already January. Just thinking about all of the details involved is overwhelming. Susan
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has been dreaming of the big day since she was 12, but it seems that there’s so little
time for all the tasks to be completed. When they were choosing the paper for the
invitations, the couple realized that they needed help.
Susan Steve, we need some help.
Steve
Don’t worry. My sister’s wedding planner was
great. Let me give her a call. [Steve calls the
wedding planner Sally.
Wedding
Planner
Hello Susan and Steve.
Steve We want everything to be perfect.
Susan
There is so much to do! Invitations, food, guests,
and music.
Steve Oh no, we haven’t even booked a place!
Susan
And it has to be done right. We can’t print the
invitations until we have the menu planned. We
can’t do the seating arrangements until we have
the RSVPs. We aren’t sure what kind of band to
get for the reception, or should it be a DJ? We’re
just overwhelmed.
Steve
My sister said toy really saved her wedding. I
know she gave you over a year to plan.
Steve
But I’ve always dreamed of a June wedding, and
I’m not willing to give that up. I know it’s late,
but Sally can you help us?
Wedding
Planner
Take it easy, guys. I’ve got it under control. We’ve
a lot of people and activities to get under control.
You guys really should have called six months
ago, but we’ll still make this wedding happen on
time.
Much work has to be done before June. First, Sally figures out what work needs to be
done. She starts to put together a to-do list:
• Invitations
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• Flowers
• Wedding cake
• Dinner menu
• Band
Since many different people are involved in the making of the wedding, it takes much
planning to coordinate all the work in the right order by the right people at the right
time. Initially, Sally was worried that she didn’t have enough time to make sure that
everything would be done properly. However, she knew that she had some powerful
time management tools on her side when she took the job, and these tools would
help her to synchronize all the required tasks. To get started, Sally arranged all the
activities in a work breakdown structure. The next exercise presents part of the WBS
Sally made for the wedding.
10.2.1 WBS Exercise (Solution follows)
Arrange the following activities into the WBS (Figure 10.1 Work breakdown structure
(WBS) based on project phase. ) to show how the work items decompose into
activities.
• Shop for shoes
• Create guest list
• Have the tailoring and fitting done
• Shop for dress
• Find caterer
• Cater the wedding
• Wait for RSVPs
• Mail the invitations
• Finalize the menu
• Print the invitations
• Choose the bouquet
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Figure 10.1 Work breakdown structure (WBS) based on project phase. Illustration from Barron &
Solution to Exercise: Figure 10.2 Work breakdown structure (WBS) based on project ph
ase – solution
10.2.2 Activity List
Now that the activity definitions for the work packages have been completed, the next
task is to complete the activity list. The project activity list is a list of everything that
needs to be done to complete your project, including all the activities that must be
accomplished to deliver each work package. Next you want to define the activity
attributes. Here’s where the description of each activity is kept. It includes all the
information you need to figure out plus the order of the work. Any predecessor
activities, successor activities, or constraints should be listed in the attributes along
with descriptions and any other information about resources or time that you need
for planning. The three main kinds of predecessors are finish-to-start (FS), start-to-
start (SS), and finish-to-finish (FF). The most common kind of predecessor is the finish-
to-start. It means that one task needs to be completed before another one can start.
When you think of predecessors, this is what you usually think of; one thing needs to
end before the next can begin. It’s called finish-to-start because the first activity’s
finish leads into the second activity’s start (Figure 10.3 An example of a finish-to-start
(FS) predecessor. ).
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Figure 10.2 Work breakdown structure (WBS) based on project phase – solution . Illustration from
Figure 10.3 An example of a finish-to-start (FS) predecessor. Illustration from Barron & Barron Project
The start-to-start predecessor is a little less common, but sometimes you need to
coordinate activities so they begin at the same time (Figure 10.4 An example of a start-
to-start (SS) predecessor. ).
The finish-to-finish predecessor shows activities that finish at the same time (Figure 1
0.5 An example of a finish-to-finish (FF) predecessor. ).
It is possible to have start-to-finish (SF) predecessors. This happens when activities
require that another task be started before the successor task can finish. An example
might be that the musicians cannot finish playing until the guests have started leaving
the ceremony. In addition, there are some particular types of predecessors that must
be considered.
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Figure 10.4 An example of a start-to-start (SS) predecessor. Illustration from Barron & Barron Project
Figure 10.5 An example of a finish-to-finish (FF) predecessor. Illustration from Barron & Barron Project
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10.2.3 External Predecessors
Sometimes your project will depend on things outside the work you’re doing. For the
wedding, we are depending on the wedding party before us to be out of the reception
hall in time for us to decorate. The decoration of the reception hall then depends on
that as an external predecessor.
10.2.4 Discretionary Predecessors
These are usually process-or procedure-driven or best-practice techniques based on
past experience. In the wedding example, Steve and Susan want the bridesmaids to
arrive at the reception before the couple arrives. There’s no necessity; it is just a
matter of preference.
10.2.5 Mandatory Predecessors
You can’t address an invitation that hasn’t been printed yet. So printing invitations is a
mandatory predecessor for addressing them. Mandatory predecessors are the kinds
that have to exist just because of the nature of the work.
10.2.6 Leads and Lags
Sometimes you need to give some extra time between activities. Lag time is when you
purposefully put a delay between the predecessor task and the successor. For
example, when the bride and her father dance, the others wait awhile before they join
them (Figure 10.6 A lag means making sure that one task waits a while before it gets s
tarted. ).
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Figure 10.6 A lag means making sure that one task waits a while before it gets started. Illustration
from Barron & Barron Project Management for Scientists and Engineers
Lead time is when you give a successor task some time to get started before the
predecessor finishes (Figure 10.7 A lead is when you let a task get started before its pr
edecessor is done. ). So you might want the caterer preparing dessert an hour before
everybody is eating dinner.
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Figure 10.7 A lead is when you let a task get started before its predecessor is done. Illustration from
10.2.7 Milestones
All of the important checkpoints of your project are tracked as milestones. Some of
them could be listed in your contract as requirements of successful completion; some
could just be significant points in the project that you want to keep track of. The
milestone list needs to let everyone know which milestones are required and which
are not.
Some milestones for Susan and Steve’s wedding might be:
• Invitations sent
• Menu finalized
• Location booked
• Bridesmaids’ dresses fitted
As you figure out which activities will need to be done, you may realize that the scope
needs to change. When that happens, you need to create a change request and send
it through the change control system.
Some things that could go wrong:
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Wedding
Planner
We just got the programs back from the printer
and they’re all wrong.
Steve
The quartet cancelled. They had another wedding
that day.
Susan
Aunt Jane is supposed to sing at the service, but
after what happened at her uncle’s funeral, I
think I want someone else to do it.
Steve
Should we really have a pan flute player? I’m
beginning to think it might be overkill.
Susan
Apparently! Maybe we should hold off on printing
the invitations until these things are worked out.
Wedding
Planner
OK, let’s think about exactly how we want to do
this. I think we need to be sure about how we
want the service to go before we do any more
printing.
10.2.8 The Activity Sequencing Process
Now that we know what we have to do to make the wedding a success, we need to
focus on the order of the work. Sally sat down with all of the activities she had defined
for the wedding and decided to figure out exactly how they needed to happen. That’s
where she used the activity sequencing process.
The activity attribute list Sally created had most of the predecessors and successors
necessary written in it. This is where she thought of what comes first, second, third,
etc. Sally’s milestone list had major pieces of work written down, and there were a
couple of changes to the scope she had discovered along the way that were approved
and ready to go.
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Example milestone list: Steve and Susan had asked that the
invitations be printed at least three months in advance to be
sure that everyone had time to RSVP. That’s a milestone on
Sally’s list.
Example change request: When Sally realized that Steve and
Susan were going to need another limo to take the bridesmaids
to reception hall, she put that change through change control,
including running everything by Susan’s mother, and it was
approved.
10.3 Creating the Gantt Chart
A Gantt chart is a type of bar chart, developed by Henry Gantt, that illustrates a project
schedule. Gantt charts are easy to read and are commonly used to display schedule
activities. These charts display the start and finish dates of the terminal elements and
summary elements of a project. Terminal elements and summary elements comprise
the work breakdown structure of the project. Some Gantt charts also show the
dependency relationships (i.e., precedence network) between activities.
Gantt charts show all the key stages of a project and their duration as a bar chart, with
the time scale across the top. The key stages are placed on the bar chart in sequence,
starting in the top left corner and ending in the bottom right corner (Figure 10.8 Gantt
chart for directory production ). A Gantt chart can be drawn quickly and easily and is
often the first tool a project manager uses to provide a rough estimate of the time
that it will take to complete the key tasks. Sometimes it is useful to start with the
target deadline for completion of the whole project, because it is soon apparent if the
time scale is too short or unnecessarily long. The detailed Gantt chart is usually
constructed after the main objectives have been determined.
In this example inFigure 10.8 Gantt chart for directory production , key stage K
(Organize distribution) starts at week 23 so that its end point coincides with key stage
L (Distribute directory). However, K could begin as early as week 17, as soon as key
stage J is completed. Key stage K is therefore said to have “slack.” Key stage H (Agree
print contract) has been placed to end at week 12. However, it could end as late as
week 22, because key stage I (Print directory) does not begin until week 23. Key stage
H is therefore said to have “float.” Float time can be indicated on the chart by adding a
line ahead of the bar to the latest possible end point. Slack and float show you where
there is flexibility in the schedule, and this can be useful when you need to gain time
once the project is up and running.
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–
Figure 10.8 Gantt chart for directory production
( http://labspace.open.ac.uk/mod/resource/ view.php?id=451673 ) .
You can add other information to a Gantt chart, for example:
• Milestones could be indicated by using a symbol such as a diamond or triangle.
• Project meetings could be indicated by another symbol such as a circle.
• Reviews of progress could be indicated by a square.
For a complex project, you may decide to produce a separate Gantt chart for each of
the key stages. If you do this shortly before each key stage begins, you will be able to
take any last-minute eventualities into account. These charts provide a useful tool for
monitoring and control as the project progresses.
Gantt charts are relatively easy to draw by hand, but this doesn’t offer the same level
of flexibility during monitoring that you would get from a software package. Various
programs are available to assist project managers in scheduling and control. Once the
data have been entered, a program helps you to work on “what if” scenarios, showing
what might happen if a key stage is delayed or speeded up. This is more difficult if you
are working manually.
10.4 Creating the Network Diagram
Many project managers use network diagrams when scheduling a project. The
network diagram is a way to visualize the interrelationships of project activities.
Network diagrams provide a graphical view of the tasks and how they relate to one
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another. The tasks in the network are the work packages of the WBS. All of the WBS
tasks must be included in the network because they have to be accounted for in the
schedule. Leaving even one task out of the network could change the overall schedule
duration, estimated costs, and resource allocation commitments.
The first step is to arrange the tasks from your WBS into a sequence. Some tasks can
be accomplished at any time throughout the project where other tasks depend on
input from another task or are constrained by time or resources.
Figure 10.9 The relationship between the work breakdown structure (WBS) and the network
diagram. Illustration from Barron & Barron Project Management for Scientists and Engineers
The WBS is not a schedule, but it is the basis for it. The network diagram is a schedule
but is used primarily to identify key scheduling information that ultimately goes into
user-friendly schedule formats, such as milestone and Gantt charts.
The network diagram provides important information to the project team. It provides
information about how the tasks are related (Figure 10.9 The relationship between the
work breakdown structure (WBS) and the network diagram. ), where the risk points
are in the schedule, how long it will take as currently planned to finish the project, and
when each task needs to begin and end.
In our wedding planner example, Sally would look for relationships between tasks and
determine what can be done in parallel and what activities need to wait for others to
complete. As an example, Figure 10.10 An example of an activity on node (AON) diagra
m. shows how the activities involved in producing the invitations depend on one
another. Showing the activities in rectangles and their relationships as arrows is called
a precedence diagramming method (PDM). This kind of diagram is also called an
activity-on-node (AON) diagram.
Another way to show how tasks relate is with the activity-on-arrow (AOA) diagram.
Although AON is more commonly used and is supported by all project management
programs, PERT is the best-known AOA-type diagram and is the historical basis of all
network diagramming. The main difference is the AOA diagram is traditionally drawn
using circles as the nodes, with nodes representing the beginning and ending points
of the arrows or tasks. In the AOA network, the arrows represent the activities or tasks
(Figure 10.11 An example of an activity arrow (AOA) network diagram. ).
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All network diagrams have the advantages of showing task interdependencies, start
and end times, and the critical path (the longest path through the network) but the
AOA network diagram has some disadvantages that limit the use of the method.
The three major disadvantages of the AOA method are:
• The AOA network can only show finish-to-start relationships. It is not possible to
show lead and lag except by adding or subtracting time, which makes project
tracking difficult.
• There are instances when dummy activities can occur in an AOA network. Dummy
activities are activities that show the dependency of one task on other tasks but
for other than technical reasons. For example, one task may depend on another
because it would be more cost effective to use the same resources for the two;
otherwise the two tasks could be accomplished in parallel. Dummy activities do
not have durations associated with them. They simply show that a task has some
kind of dependence on another task.
Figure 10.10 An example of an activity on node (AON) diagram. Illustration from Barron & Barron
Project Management for Scientists and Engineers
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Figure 10.11 An example of an activity arrow (AOA) network diagram. Illustration from Barron &
• AOA diagrams are not as widely used as AON diagrams simply because the latter
are somewhat simpler to use, and all project management software programs
can accommodate AON networks, whereas not all can accommodate AOA
networks.
10.5 The Critical Path
The critical path describes the sequence of tasks that would enable the project to be
completed in the shortest possible time. It is based on the idea that some tasks must
be completed before others can begin. A critical path diagram is a useful tool for
scheduling dependencies and controlling a project. In order to identify the critical
path, the length of time that each task will take must be calculated.
Let’s take a look at an example. The length of time in weeks for each key stage is
estimated:
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Key stage Estimated time in weeks
A Secure funds 0
B Negotiate with other agencies 4
C Form advisory group 4
D Establish data collection plan 6
E Collect data 4
F Write directory text 4
G Identify printer 2
H Agree print contract 2
I Print directory 4
J Agree distribution plan 12
K Organize distribution 4
L Distribute directory 2
Table 10.1 Stages of Critical Path
( http://labspace.open.ac.uk/mod/resource/view.php?id=451674 ) .
We have given the key stage “Secure funds” an estimated time of zero weeks because
the project cannot start without the availability of some funding, although estimates
would provide detail at a later stage. The stages can now be lined up to produce a
network diagram that shows that there are three paths from start to finish and that
the lines making up each path have a minimum duration (Figure 10.12 Critical Path Dia
gram ).
If we now trace each of the possible paths to “Distribute directory” (the finishing
point), taking dependencies into account, the route that has the longest duration is
known as the critical path. This is the minimum time in which it will be possible to
complete the project.
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Figure 10.12 Critical Path Diagram
In this example, the critical path is A–B–C–D–E–F–I–L, and the earliest completion date
for the project is the sum of the estimated times for all the stages on the critical path –
28 weeks – from the point of securing the funding. All the key stages on the critical
path must be completed on time if the project is to be finished on schedule.
If the projected total time is much longer than the project sponsor’s expectations, you
will need to renegotiate the time scale. Mapping the critical path helps to identify the
activities that need to be monitored most closely.
10.6 Attribution
Unported, Gantt Chart by Wikipedia licensed under Creative Commons Attribution-
ShareAlike 3.0 Unported and Planning a Project by OpenLearn Labspace under
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Chapter 11 Resource Planning
Adrienne Watt
In the previous wedding case study, it is clear that Steve and Susan have resource
problems. Getting a handle on all of the tasks that have to be done is a great start, but
it’s not enough to know the tasks and the order they come in. Before you can put the
final schedule together, you need to know who is going to do each job, and the things
they need so they can do it.
“We’ve got so much to do! Invitations, catering, music… and I’ve got no idea who’s
going to do it all. I’m totally overwhelmed.” From this statement it is clear that Susan is
worried about human resources. In comparison, Steve realizes that not all resources
are people: “And it’s not just people. We need food, flowers, a cake, a sound system,
and a venue. How do we get a handle on this?”
Resources are people, equipment, place, money, or anything else that you need in
order to do all of the activities that you planned for. Every activity in your activity list
needs to have resources assigned to it. Before you can assign resources to your
project, you need to know their availability. Resource availability includes information
about what resources you can use on your project, when they’re available to you, and
the conditions of their availability. Don’t forget that some resources, like consultants
or training rooms, have to be scheduled in advance, and they might only be available
at certain times. You’ll need to know this before you can finish planning your project. If
you are starting to plan in January, a June wedding is harder to plan than one in
December, because the wedding halls are all booked up in advance. That is clearly a
resource constraint. You’ll also need the activity list that you created earlier, and you’ll
need to know how your organization typically handles resources. Once you’ve got a
handle on these things, you’re set for resource estimation.
11.1 Estimating the Resources
The goal of activity resource estimating is to assign resources to each activity in the
activity list. There are five tools and techniques for estimating activity resources.
Expert judgment means bringing in experts who have done this sort of work before
and getting their opinions on what resources are needed.
Alternative analysis means considering several different options for how you assign
resources. This includes varying the number of resources as well as the kind of
resources you use. Many times, there’s more than one way to accomplish an activity
and alternative analysis helps decide among the possibilities.
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Published estimating data is something that project managers in a lot of industries
use to help them figure out how many resources they need. They rely on articles,
books, journals, and periodicals that collect, analyze, and publish data from other
people’s projects.
Project management software such as Microsoft Project will often have features
designed to help project managers estimate resource needs and constraints and find
the best combination of assignments for the project.
Bottom-up estimating means breaking down complex activities into pieces and
working out the resource assignments for each piece. It is a process of estimating
individual activity resource need or cost and then adding these up together to come
up with a total estimate. Bottom-up estimating is a very accurate means of estimating,
provided the estimates at the schedule activity level are accurate. However, it takes a
considerable amount of time to perform bottom-up estimating because every activity
must be assessed and estimated accurately to be included in the bottom-up calcu
lation. The smaller and more detailed the activity, the greater the accuracy and cost of
this technique.
11.2 Estimating Activity Durations
Once you’re done with activity resource estimating, you’ve got everything you need to
figure out how long each activity will take. That’s done in a process called activity
duration estimating. This is where you look at each activity in the activity list, consider
its scope and resources, and estimate how long it will take to perform.
Estimating the duration of an activity means starting with the information you have
about that activity and the resources that are assigned to it, and then working with the
project team to come up with an estimate. Most of the time you’ll start with a rough
estimate and then refine it to make it more accurate. You’ll use these five tools and
techniques to create the most accurate estimates:
Expert judgment will come from your project team members who are familiar with the
work that has to be done. If you don’t get their opinion, there’s a huge risk that your
estimates will be wrong.
Analogous estimating is when you look at similar activities from previous projects and
how long they took. This only works if the activities and resources are similar.
Parametric estimating means plugging data about your project into a formula,
spreadsheet, database, or computer program that comes up with an estimate. The
software or formula that you use for parametric estimating is based on a database of
actual durations from past projects.
Three-point estimating is when you come up with three numbers: a realistic estimate
that’s most likely to occur, an optimistic one that represents the best-case scenario,
and a pessimistic one that represents the worst-case scenario. The final estimate is
the weighted average of the three.
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Reserve analysis means adding extra time to the schedule (called a contingency reserve
or a buffer) to account for extra risk.
In each of the following scenarios of planning Steve and Susan’s wedding, determine
which of the five activity resource estimation tools and techniques is being used.
(Solutions follow.)
Figure 11.1
Figure 11.2
The activity duration estimates are an estimate of how long each activity in the activity
list will take. This is a quantitative measure usually expressed in hours, weeks, days, or
months. Any work period is fine, and you’ll use different work periods for different
jobs. A small job (like booking a DJ) may take just a few hours; a bigger job (like
catering, including deciding on a menu, ordering ingredients, cooking food, and
serving guests on the big day) could take days.
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Another thing to keep in mind when estimating the duration of activities is
determining the effort involved. Duration is the amount of the time that an activity
takes, while effort is the total number of person-hours that are expended. If it takes
two people six hours to carve the ice sculpture for the centerpiece of a wedding, the
duration is six hours. But if two people worked on it for the whole time, it took 12
person-hours of effort to create.
You’ll also learn more about the specific activities while you’re estimating them. That’s
something that always happens. You have to really think through all of the aspects of
a task in order to estimate it. As you learn more about the specific activities remember
to update the activity attributes.
If we go back to our case study of the wedding, we can see that while Sally has a
handle on how long things are going to take, she still has some work to do before she
has the whole project under control. Steve and Susan know where they want to get
married, and they have the place booked now. But, what about the caterer? They have
no idea who’s going to be providing food. And what about the band they want? Will
the timing with their schedule work out? “If the caterers come too early, the food will
sit around under heat lamps. But if they come too late, the band won’t have time to
play. I just don’t see how we’ll ever work this out.”
It’s not easy to plan for a lot of resources when they have tight time restrictions and
overlapping constraints. How do you figure out a schedule that makes everything fit
together? You’re never going to have the complete resource picture until you have
finished building the schedule. And the same goes for your activity list and duration
estimates! It’s only when you lay out the schedule that you’ll figure out that some of
your activities and durations didn’t quite work.
11.3 Project Schedule and Critical Path
The project schedule should be approved and signed off by stakeholders and
functional managers. This ensures they have read the schedule, understand the dates
and resource commitments, and will cooperate. You’ll also need to obtain
confirmation that resources will be available as outlined in the schedule. The schedule
cannot be finalized until you receive approval and commitment for the resource
assignments outlined in it. Once the schedule is approved, it will become your
baseline for the remainder of the project. Project progress and task completion will be
monitored and tracked against the project schedule to determine if the project is on
course as planned.
The schedule can be displayed in a variety of ways, some of which are variations of
what you have already seen. Project schedule network diagrams will work as schedule
diagrams when you add the start and finish dates to each activity. These diagrams
usually show the activity dependencies and critical path.
The critical path method is an important tool for keeping your projects on track. Every
network diagram has something that is called the critical path. It’s the string of
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activities that, if you add up all of the durations, is longer than any other path through
the network. It usually starts with the first activity in the network and usually ends with
the last one.
Steve
Aunt Jane is a vegetarian. That won’t be a problem, right?
Susan
Well, let’s see. What menu did we give the caterers?
Steve
We didn’t give it to them yet; because we won’t have the final menu until everyone
RSVPs and lets we know which entrée they want.
Susan
But they can’t RSVP because we haven’t sent out the invitations! What’s holding that
up?
Steve
We’re still waiting to get them back from the printer. We can’t send them out if we
don’t have them yet!
Susan
Oh no! I still have to tell the printer what to print on the invitations and what paper to
use.
Steve
But you were waiting on that until we finished the guest list.
Susan
What a mess!
Steve thought Aunt Jane being a vegetarian was just a little problem. But it turns out to
be a lot bigger than either Steve or Susan realized at first. How did a question about
one guest’s meal lead to such a huge mess? The reason that the critical path is critical
is that every single activity on the path must finish on time in order for the project to
come in on time. A delay in any one of the critical path activities will cause the entire
project to be delayed (Figure 11.3 An example of problems that can be caused within t
he critical path. ).
Figure 11.3 An example of problems that can be caused within the critical path. Illustration from
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Knowing where your critical path is can give you a lot of freedom. If you know an
activity is not on the critical path, then you know a delay in that activity may not
necessarily delay the project. This can really help you handle emergency situations.
Even better, it means that if you need to bring your project in earlier than was
originally planned, you know that adding resources to the critical path will be much
more effective than adding them elsewhere.
It’s easy to find the critical path in any project. Of course, on a large project with
dozens or hundreds of tasks, you’ll probably use software like Microsoft Project to find
the critical path for you. But when it does, it’s following the same exact steps that are
followed here (Figure 11.4 Step 1 Network Diagram ).
Step 1.Start with a network diagram.
Figure 11.4 Step 1 Network Diagram Illustration from Barron & Barron Project Management for
Scientists and Engineers
Step 2.Find all the paths in the diagram. A path is any string of activities that goes
from the start of the project to the end.
Figure 11.5
Step 3.Find the duration of each path by adding up the durations of each of the
activities on the path.
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Figure 11.6
Step 4.The first path has a duration of 11, which is longer than the other paths, so it’s
the critical path. The schedule can also be displayed using a Gantt chart (Figure 11.7 A
n example of a Gantt chart. ).
Figure 11.7 An example of a Gantt chart. Illustration from Barron & Barron Project Management for
11.4 Resource Management
Resource management is the efficient and effective deployment of an organization’s
resources when they are needed. Such resources may include financial resources,
inventory, human skills, production resources, or information technology (IT). In the
realm of project management, processes, techniques, and philosophies for the best
approach for allocating resources have been developed. These include discussions on
functional versus cross-functional resource allocation as well as processes espoused
by organizations like the Project Management Institute (PMI) through the
methodology of project management outlined in their publication A Guide to the
Project Management Body of Knowledge (PMBOK). Resource management is a key
element to activity resource estimating and project human resource management. As
is the case with the larger discipline of project management, there are resource
management software tools available that automate and assist the process of
resource allocation to projects.
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11.5 HR Planning
The most important resource to a project is its people—the project team. Projects
require specific expertise at specific moments in the schedule, depending on the
milestones being delivered or the given phase of the project. An organization can host
several strategic projects concurrently over the course of a budget year, which means
that its employees can be working on more than one project at a time. Alternatively,
an employee may be seconded away from his or her role within an organization to
become part of a project team because of a particular expertise. Moreover, projects
often require talent and resources that can only be acquired via contract work and
third party vendors. Procuring and coordinating these human resources, in tandem
with managing the time aspect of the project, is critical to overall success.
11.6 Managing the Team
In order to successfully meet the needs of a project, it is important to have a high-
performing project team made up of individuals who are both technically skilled and
motivated to contribute to the project’s outcome. One of the many responsibilities of
a project manager is to enhance the ability of each project team member to contribute
to the project, while also fostering individual growth and accomplishment. At the same
time, each individual must be encouraged to share ideas and work with others toward
a common goal.
Through performance evaluation, the manager will get the information needed to
ensure that the team has adequate knowledge, to establish a positive team
environment and a healthy communication climate, to work properly, and to ensure
accountability.
Managing the project team includes appraisal of employee performance and project
performance. The performance reports provide the basis for managerial decisions on
how to manage the project team.
Employee performance includes the employee’s work results such as:
• Quality and quantity of outputs
• Work behavior (such as punctuality)
• Job-related attributes (such as cooperation and initiative)
After conducting employee performance reviews, project managers should:
• Provide feedback to employees about how well they have performed on
established goals
• Provide feedback to employees about areas in which they are weak or could do
better
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• Take corrective action to address problems with employees performing at or
below minimum expectations
• Reward superior performers to encourage their continued excellence
11.7 Techniques for Managing Resources
One resource management technique is resource leveling. It aims at smoothing the
stock of resources on hand, reducing both excess inventories and shortages.
The required data are the demands for various resources, forecast by time period into
the future as far as is reasonable; the resources’ configurations required in those
demands; and the supply of the resources, again forecast by time period into the
future as far as is reasonable.
The goal is to achieve 100% utilization. However that is very unlikely, when weighted
by important metrics and subject to constraints; for example: meeting a minimum
quality level, but otherwise minimizing cost.
11.8 Resource Leveling
Resource leveling is used to examine unbalanced use of resources (usually people or
equipment) over time and for resolving over-allocations or conflicts.
When performing project planning activities, the manager will attempt to schedule
certain tasks simultaneously. When more resources such as machines or people are
needed than are available, or perhaps a specific person is needed in both tasks, the
tasks will have to be rescheduled sequentially to manage the constraint. Resource
leveling during project planning is the process of resolving these conflicts. It can also
be used to balance the workload of primary resources over the course of the project,
usually at the expense of one of the traditional triple constraints (time, cost, scope).
When using specially designed project software, leveling typically means resolving
conflicts or over-allocations in the project plan by allowing the software to calculate
delays and update tasks automatically. Project management software leveling
requires delaying tasks until resources are available. In more complex environments,
resources could be allocated across multiple, concurrent projects thus requiring the
process of resource leveling to be performed at company level.
In either definition, leveling could result in a later project finish date if the tasks
affected are in the critical path.
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11.9 Working with Individuals
Working with other people involves dealing with them both logically and emotionally.
A successful working relationship between individuals begins with appreciating the
importance of emotions and how they relate to personality types, leadership styles,
negotiations, and setting goals.
11.10 Emotional Intelligence
Emotions are both a mental and physiological response to environmental and internal
stimuli. Leaders need to understand and value their emotions to appropriately
respond to the client, project team, and project environment.
Emotional intelligence includes the following:
• Self-awareness
• Self-regulation
• Empathy
• Relationship management
Emotions are important to generating energy around a concept, building commitment
to goals, and developing high-performing teams. Emotional intelligence is an
important part of the project manager’s ability to build trust among the team
members and with the client. It is an important factor in establishing credibility and an
open dialogue with project stakeholders. Emotional intelligence is critical for project
managers, and the more complex the project profile, the more important the project
manager’s emotional intelligence becomes to project success.
11.11 Personality Types
Personality types refer to the differences among people in such matters as what
motivates them, how they process information, how they handle conflict, etc.
Understanding people’s personality types is acknowledged as an asset in interacting
and communicating with them more effectively. Understanding your personality type
as a project manager will assist you in evaluating your tendencies and strengths in
different situations. Understanding others’ personality types can also help you
coordinate the skills of your individual team members and address the various needs
of your client.
The Myers-Briggs Type Indicator (MBTI) is one of most widely used tools for exploring
personal preference, with more than two million people taking the MBTI each year.
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The MBTI is often referred to as simply the Myers-Briggs. It is a tool that can be used
in project management training to develop awareness of preferences for processing
information and relationships with other people.
Based on the theories of psychologist Carl Jung, the Myers-Briggs uses a questionnaire
to gather information on the ways individuals prefer to use their perception and
judgment. Perception represents the way people become aware of people and their
environment. Judgment represents the evaluation of what is perceived. People
perceive things differently and reach different conclusions based on the same
environmental input. Understanding and accounting for these differences is critical to
successful project leadership.
The Myers-Briggs identifies 16 personality types based on four preferences derived
from the questionnaire. The preferences are between pairs of opposite characteristics
and include the following:
Extroversion (E)-Introversion (I) Sensing (S)-Intuition (N) Thinking (T)-Feeling (F) Judging
( J)-Perceiving (P)
Sixteen Myers-Briggs types can be derived from the four dichotomies. Each of the 16
types describes a preference: for focusing on the inner or outer world (E-I), for
approaching and internalizing information (S-I), for making decisions
(T-F), and for planning ( J-P). For example, an ISTJ is a Myers-Briggs type who prefers to
focus on the inner world and basic information, prefers logic, and likes to decide
quickly.
It is important to note that there is no best type and that effective interpretation of the
Myers-Briggs requires training. The purpose of the Myers-Briggs is to understand and
appreciate the differences among people. This understanding can be helpful in
building the project team, developing common goals, and communicating with project
stakeholders. For example, different people process information differently.
Extroverts prefer face-to-face meetings as the primary means of communicating, while
introverts prefer written communication. Sensing types focus on facts, and intuitive
types want the big picture.
On larger, more complex projects, some project managers will use the Myers-Briggs as
a team-building tool during project start-up. This is typically a facilitated work session
where team members take the Myers-Briggs and share with the team how they
process information, what communication approaches they prefer, and what decision-
making preferences they have. This allows the team to identify potential areas of
conflict, develop communication strategies, and build an appreciation for the diversity
of the team.
Another theory of personality typing is the DISC method, which rates people’s
personalities by testing a person’s preferences in word associations in the following
four areas:
Dominance/Drive—relates to control, power, and assertiveness Inducement/
Influence—relates to social situations and communication Submission/
Steadiness—relates to patience, persistence, and thoughtfulness Compliance/
Conscientiousness—relates to structure and organization
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Understanding the differences among people is a critical leadership skill. This includes
understanding how people process information, how different experiences influence
the way people perceive the environment, and how people develop filters that allow
certain information to be incorporated while other information is excluded. The more
complex the project, the more important the understanding of how people process
information, make decisions, and deal with conflict. There are many personality-type
tests that have been developed and explore different aspects of people’s
personalities. It might be prudent to explore the different tests available and utilize
those that are most beneficial for your team.
11.12 Leadership Styles
Leadership style is a function of both the personal characteristics of the leader and
the environment in which the leadership must occur, and a topic that several
researchers have attempted to understand. Robert Tannenbaum and Warren Schmidt
described leaders as either autocratic or democratic (1958). Harold Leavitt described
leaders as pathfinders (visionaries), problem solvers (analytical), or implementers
(team oriented) (1986). James MacGregor Burns conceived leaders as either
transactional (focused on actions and decisions) or transformational (focused on the
long-term needs of the group and organization) (1978).
Fred Fiedler introduced his contingency theory, which is the ability of leaders to adapt
their leadership approach to the environment (1971). Most leaders have a dominant
leadership style that is most comfortable for them. For example, most engineers
spend years training in analytical problem solving and often develop an analytical
approach to leadership.
A leadership style reflects personal characteristics and life experiences. Although a
project manager’s leadership style may be predominantly a pathfinder (using Leavitt’s
taxonomy), most project managers become problem solvers or implementers when
they perceive the need for these leadership approaches. The leadership approach
incorporates the dominant leadership style and Fiedler’s contingency focus on
adapting to the project environment.
No particular leadership approach is specifically appropriate for managing a project.
Due to the unique circumstances inherent in each project, the leadership approach
and the management skills required to be successful vary depending on the
complexity profile of the project. However, the Project Management Institute
published Shi and Chen’s research that studied project management leadership traits
and concluded that good communication skills and the ability to build harmonious
relationships and motivate others are essential (2006). Beyond this broad set of
leadership skills, the successful leadership approach will depend on the profile of the
project. For example, a transactional project manager with a strong command-and-
control leadership approach may be very successful on a small software development
project or a construction project, where tasks are clear, roles are well understood, and
the project environment is cohesive. This same project manager is less likely to be
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successful on a larger, more complex project with a diverse project team and
complicated work processes.
Matching the appropriate leadership style and approach to the complexity profile of
the project is a critical element of project success. Even experienced project managers
are less likely to be successful if their leadership approach does not match the
complexity profile of the project.
Each project phase may also require a different leadership approach. During the start-
up phase of a project, when new team members are first assigned to the project, the
project may require a command-and-control leadership approach. Later, as the
project moves into the conceptual phase, creativity becomes important, and the
project management takes on a more transformational leadership approach. Most
experienced project managers are able to adjust their leadership approach to the
needs of the project phase. Occasionally, on very large and complex projects, some
companies will bring in different project managers for various phases of a project.
Changing project managers may bring the right level of experience and the
appropriate leadership approach, but is also disruptive to a project. Senior
management must balance the benefit of matching the right leadership approach with
the cost of disrupting established relationships.
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Example: Multinational Textbook
Publishing Project
On a project to publish a new textbook at a major publisher, a project
manager led a team that included members from partners that were
included in a joint venture. The editorial manager was Greek, the
business manager was German, and other members of the team were
from various locations in the United States and Europe. In addition to
the traditional potential for conflict that arises from team members
from different cultures, the editorial manager and business manager
were responsible for protecting the interest of their company in the
joint venture.
The project manager held two alignment or team-building meetings.
The first was a two-day meeting held at a local resort and included
only the members of the project leadership team. An outside
facilitator was hired to facilitate discussion, and the topic of cultural
conflict and organizational goal conflict quickly emerged. The team
discussed several methods for developing understanding and
addressing conflicts that would increase the likelihood of finding
mutual agreement.
The second team-building session was a one-day meeting that
included the executive sponsors from the various partners in the
joint venture. With the project team aligned, the project manager was
able to develop support for the publication project’s strategy and
commitment from the executives of the joint venture. In addition to
building processes that would enable the team to address difficult
cultural differences, the project manager focused on building trust
with each of the team members. The project manager knew that
building trust with the team was as critical to the success of the
project as the technical project management skills and devoted
significant management time to building and maintaining this trust.
11.13 Leadership Skills
The project manager must be perceived to be credible by the project team and key
stakeholders. A successful project manager can solve problems and has a high degree
of tolerance for ambiguity. On projects, the environment changes frequently, and the
project manager must apply the appropriate leadership approach for each situation.
The successful project manager must have good communication skills. All project
problems are connected to skills needed by the project manager:
• Breakdown in communication represents the lack of communication skills
• Uncommitted team members represents the lack of team-building skills
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• Role confusion represents the lack of organizational skill
Project managers need a large numbers of skills. These skills include administrative
skills, organizational skills, and technical skills associated with the technology of the
project. The types of skills and the depth of the skills needed are closely connected to
the complexity profile of the project. Typically on smaller, less complex projects,
project managers need a greater degree of technical skill. On larger, more complex
projects, project managers need more organizational skills to deal with the
complexity. On smaller projects, the project manager is intimately involved in
developing the project schedule, cost estimates, and quality standards. On larger
projects, functional managers are typically responsible for managing these aspects of
the project, and the project manager provides the organizational framework for the
work to be successful.
11.14 Listening
One of the most important communication skills of the project manager is the ability
to actively listen. Active listening is placing oneself in the speaker’s position as much as
possible, understanding the communication from the point of view of the speaker,
listening to the body language and other environmental cues, and striving not just to
hear, but to understand. Active listening takes focus and practice to become effective.
It enables a project manager to go beyond the basic information that is being shared
and to develop a more complete understanding of the information.
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Example: Client’s Body Language
A client just returned from a trip to Australia where he reviewed the
progress of the project with his company’s board of directors. The
project manager listened and took notes on the five concerns
expressed by the board of directors to the client.
The project manager observed that the client’s body language showed
more tension than usual. This was a cue to listen very carefully. The
project manager nodded occasionally and clearly demonstrated he
was listening through his posture, small agreeable sounds, and body
language. The project manager then began to provide feedback on
what was said using phrases like “What I hear you say is…” or “It
sounds like.…” The project manager was clarifying the message that
was communicated by the client.
The project manager then asked more probing questions and
reflected on what was said. “It sounds as if it was a very tough board
meeting.” “Is there something going on beyond the events of the
project?” From these observations and questions, the project
manager discovered that the board of directors meeting did not go
well. The company had experienced losses on other projects, and
budget cuts meant fewer resources for the project and an expectation
that the project would finish earlier than planned. The project
manager also discovered that the client’s future with the company
would depend on the success of the project. The project manager
asked, “Do you think we will need to do things differently?” They
began to develop a plan to address the board of directors’ concerns.
Through active listening, the project manager was able to develop an
understanding of the issues that emerged from the board meeting
and participate in developing solutions. Active listening and the
trusting environment established by the project manager enabled the
client to safely share information he had not planned on sharing and
to participate in creating a workable plan that resulted in a successful
project.
In the example above, the project manager used the following
techniques:
• Listening intently to the words of the client and observing the
client’s body language
• Nodding and expressing interest in the client without forming
rebuttals
• Providing feedback and asking for clarity while repeating a
summary of the information back to the client
• Expressing understanding and empathy for the client
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Active listening was important in establishing a common
understanding from which an effective project plan could be
developed.
11.15 Negotiation
When multiple people are involved in an endeavor, differences in opinions and
desired outcomes naturally occur. Negotiation is a process for developing a mutually
acceptable outcome when the desired outcome for each party conflicts. A project
manager will often negotiate with a client, team members, vendors, and other project
stakeholders. Negotiation is an important skill in developing support for the project
and preventing frustration among all parties involved, which could delay or cause
project failure.
Negotiations involve four principles:
1. Separate people from the problem. Framing the discussions in terms of desired
outcomes enables the negotiations to focus on finding new outcomes.
2. Focus on common interests. By avoiding the focus on differences, both parties
are more open to finding solutions that are acceptable.
3. Generate options that advance shared interests. Once the common interests are
understood, solutions that do not match with either party’s interests can be
discarded, and solutions that may serve both parties’ interests can be more
deeply explored.
4. Develop results based on standard criteria. The standard criterion is the success
of the project. This implies that the parties develop a common definition of
project success.
For the project manager to successfully negotiate issues on the project, he or she
should first seek to understand the position of the other party. If negotiating with a
client, what is the concern or desired outcome of the client? What are the business
drivers and personal drivers that are important to the client? Without this
understanding, it is difficult to find a solution that will satisfy the client. The project
manager should also seek to understand what outcomes are desirable to the project.
Typically, more than one outcome is acceptable. Without knowing what outcomes are
acceptable, it is difficult to find a solution that will produce that outcome.
One of the most common issues in formal negotiations is finding a mutually
acceptable price for a service or product. Understanding the market value for a
product or service will provide a range for developing a negotiating strategy. The price
paid on the last project or similar projects provides information on the market value.
Seeking expert opinions from sources who would know the market is another source
of information. Based on this information, the project manager can then develop an
expected range within the current market from the lowest price to the highest price.
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Additional factors will also affect the negotiated price. The project manager may be
willing to pay a higher price to assure an expedited delivery or a lower price if delivery
can be made at the convenience of the supplier or if payment is made before the
product is delivered. Developing as many options as possible provides a broader
range of choices and increases the possibility of developing a mutually beneficial
outcome.
The goal of negotiations is not to achieve the lowest costs, although that is a major
consideration, but to achieve the greatest value for the project. If the supplier believes
that the negotiations process is fair and the price is fair, the project is more likely to
receive higher value from the supplier. The relationship with the supplier can be
greatly influenced by the negotiation process and a project manager who attempts to
drive the price unreasonably low or below the market value will create an element of
distrust in the relationship that may have negative consequences for the project. A
positive negotiation experience may create a positive relationship that may be
beneficial, especially if the project begins to fall behind schedule and the supplier is in
a position to help keep the project on schedule.
11.16 Conflict Resolution
Conflict on a project is to be expected because of the level of stress, lack of
information during early phases of the project, personal differences, role conflicts, and
limited resources. Although good planning, communication, and team building can
reduce the amount of conflict, conflict will still emerge. How the project manager deals
with the conflict results in the conflict being destructive or an opportunity to build
energy, creativity, and innovation.
David Whetton and Kim Cameron developed a response-to-conflict model that
reflected the importance of the issue balanced against the importance of the
relationship (2005). The model presented five responses to conflict:
• Avoiding
• Forcing
• Collaborating
• Compromising
• Accommodating
Each of these approaches can be effective and useful depending on the situation.
Project managers will use each of these conflict resolution approaches depending on
the project manager’s personal approach and an assessment of the situation.
Most project managers have a default approach that has emerged over time and is
comfortable. For example, some project managers find the use of the project
manager’s power the easiest and quickest way to resolve problems. “Do it because I
said to” is the mantra for project managers who use forcing as the default approach to
resolve conflict. Some project managers find accommodating with the client the most
effective approach to dealing with client conflict.
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The effectiveness of a conflict resolution approach will depend on the situation. The
forcing approach often succeeds in a situation where a quick resolution is needed, and
the investment in the decision by the parties involved is low.
Example: Resolving an Office Space
Conflict
Two senior managers both want the office with the window. The
project manager intercedes with little discussion and assigns the
window office to the manager with the most seniority. The situation
was a low-level conflict with no long-range consequences for the
project and a solution all parties could accept.
Sometimes office size and location is culturally important, and this
situation would take more investment to resolve.
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Example: Conflict Over a Change Order
In another example, the client rejected a request for a change order
because she thought the change should have been foreseen by the
project team and incorporated into the original scope of work. The
project controls manager believed the client was using her power to
avoid an expensive change order and suggested the project team
refuse to do the work without a change order from the client.
This is a more complex situation, with personal commitments to
each side of the conflict and consequences for the project. The project
manager needs a conflict resolution approach that increases the
likelihood of a mutually acceptable solution for the project. One
conflict resolution approach involves evaluating the situation,
developing a common understanding of the problem, developing
alternative solutions, and mutually selecting a solution. Evaluating
the situation typically includes gathering data. In our example of a
change order conflict, gathering data would include a review of the
original scope of work and possibly of people’s understandings,
which might go beyond the written scope. The second step in
developing a resolution to the conflict is to restate, paraphrase, and
reframe the problem behind the conflict to develop a common
understanding of the problem. In our example, the common
understanding may explore the change management process and
determine that the current change management process may not
achieve the client’s goal of minimizing project changes. This phase is
often the most difficult and may take an investment of time and
energy to develop a common understanding of the problem.
After the problem has been restated and agreed on, alternative
approaches are developed. This is a creative process that often means
developing a new approach or changing the project plan. The result is
a resolution to the conflict that is mutually agreeable to all team
members. If all team members believe every effort was made to find a
solution that achieved the project charter and met as many of the
team member’s goals as possible, there will be a greater commitment
to the agreed-on solution.
11.17 Delegation
Delegating responsibility and work to others is a critical project management skill. The
responsibility for executing the project belongs to the project manager. Often other
team members on the project will have a functional responsibility on the project and
report to a functional manager in the parent organization. For example, the
procurement leader for a major project may also report to the organization’s vice-
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president for procurement. Although the procurement plan for the project must meet
the organization’s procurement policies, the procurement leader on the project will
take day-to-day direction from the project manager. The amount of direction given to
the procurement leader, or others on the project, is the decision of the project
manager.
If the project manager delegates too little authority to others to make decisions and
take action, the lack of a timely decision or lack of action will cause delays on the
project. Delegating too much authority to others who do not have the knowledge,
skills, or information will typically cause problems that result in delay or increased cost
to the project. Finding the right balance of delegation is a critical project management
skill.
When developing the project team, the project manager selects team members with
the knowledge, skills, and abilities to accomplish the work required for the project to
be successful. Typically, the more knowledge, skills, abilities, and experience a project
team member brings to the project, the more that team member will be paid. To keep
the project personnel costs lower, the project manager will develop a project team
with the level of experience and the knowledge, skills, and abilities to accomplish the
work.
On smaller, less complex projects, the project manager can provide daily guidance to
project team members and be consulted on all major decisions. On larger, more
complex projects, there are too many important decisions made every day for the
project manager to be involved at the same level, and project team leaders are
delegated decision-making authority. Larger projects, with a more complex profile will
typically pay more because of the need for the knowledge and experience. On larger,
more complex projects, the project manager will develop a more experienced and
knowledgeable team that will enable the project manager to delegate more
responsibility to these team members.
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Example: Learning Project in Peru
An instructional design project in Peru was falling behind schedule,
and a new manager was assigned to the design team, which was the
one most behind schedule. He was an experienced project manager
from the United States with a reputation for meeting aggressive
schedules. However, he failed to see that as a culture, Peruvians do a
great deal more socializing than teams in the U.S. The project
manager’s communication with the team was then limited because
he did not go out and spend time with them, and his team did not
develop trust or respect for him. Due to these cultural differences,
the project fell further behind, and another personnel change had to
be made at a significant cost of time, trust, and money.
The project manager must have the skills to evaluate the knowledge,
skills, and abilities of project team members and evaluate the
complexity and difficulty of the project assignment. Often project
managers want project team members they have worked with in the
past. Because the project manager knows the skill level of the team
member, project assignments can be made quickly with less
supervision than with a new team member with whom the project
manager has little or no experience.
Delegation is the art of creating a project organizational structure
with the work organized into units that can be managed. Delegation
is the process of understanding the knowledge, skills, and abilities
needed to manage that work and then matching the team members
with the right skills to do that work. Good project managers are good
delegators.
11.18 Adjusting Leadership Styles
Remember that personality traits reflect an individual’s preferences, not their
limitations. It is important to understand that individuals can still function in situations
for which they are not best suited. It is also important to realize that you can change
your leadership style according to the needs of your team and the particular project’s
attributes and scope.
For example, a project leader who is more thinking (T) than feeling (F) (according to
the Myers-Briggs model) would need to work harder to be considerate of how team
members who are more feeling (F) might react if they were singled out in a meeting
because they were behind schedule. If individuals know their own preferences and
which personality types are most successful in each type of project or project phase,
they can set goals for improvement in their ability to perform in those areas that are
not their natural preference.
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Another individual goal is to examine which conflict resolution styles you are least
comfortable and work to improve those styles so that they can be used when they are
more appropriate than your default style.
11.19 Working with Groups and Teams
A team is a collaboration of people with different personalities that is led by a person
with a favored leadership style. Managing the interactions of these personalities and
styles as a group is an important aspect of project management.
11.19.1 Trust
Trust is the foundation for all relationships within a project. Without a minimum level
of trust, communication breaks down, and eventually the project suffers in the form of
costs increasing and schedules slipping. Often, when reviewing a project where the
performance problems have captured the attention of upper management, the
evidence of problems is the increase in project costs and the slippage in the project
schedule. The underlying cause is usually blamed on communication breakdown. With
deeper investigation, the communication breakdown is associated with a breakdown
in trust.
On projects, trust is the filter through which we screen information that is shared and
the filter we use to screen information we receive. The more trust that exists, the
easier it is for information to flow through the filters. As trust diminishes, the filters
become stronger and information has a harder time getting through, and projects that
are highly dependent on an information-rich environment will suffer from information
deprivation.
11.19.2 Contracts and Trust Relationships
A project typically begins with a charter or contract. A contract is a legal agreement
that includes penalties for any behavior or results not achieved. Contracts are based
on an adversarial paradigm and do not lend themselves to creating an environment of
trust. Contracts and charters are necessary to clearly establish the scope of the
project, among other things, but they are not conducive to establishing a trusting
project culture.
A relationship of mutual trust is less formal but vitally important. When a person or
team enters into a relationship of mutual trust, each person’s reputation and self-
respect are the drivers in meeting the intent of the relationship. A relationship of
mutual trust within the context of a project is a commitment to an open and honest
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relationship. There is nothing that enforces the commitments in the relationship
except the integrity of the people involved. Smaller, less complex projects can operate
within the boundaries of a legal contract, but larger, more complex projects must
develop a relationship of mutual trust to be successful.
11.19.3 Types of Trust
Svenn Lindskold describes four kinds of trust (1978):
• Objective credibility.A personal characteristic that reflects the truthfulness of an
individual that can be checked against observable facts.
• Attribution of benevolence. A form of trust that is built on the examination of the
person’s motives and the conclusion that they are not hostile.
• Non-manipulative trust. A form of trust that correlates to a person’s self-interest
and the predictability of a person’s behavior in acting consistent in that self-
interest.
• High cost of lying. The type of trust that emerges when persons in authority raise
the cost of lying so high that people will not lie because the penalty will be too
high.
11.19.4 Creating Trust
Building trust on a project begins with the project manager. On complex projects, the
assignment of a project manager with a high trust reputation can help establish the
trust level needed. The project manager can also establish the cost of lying in a way
that communicates an expectation and a value for trust on the project. Project
managers can also assure that the official goals (stated goals) and operational goals
(goals that are reinforced) are aligned. The project manager can create an atmosphere
where informal communication is expected and reinforced.
The informal communication is important to establishing personal trust among team
members and with the client. Allotting time during project start-up meetings to allow
team members to develop a personal relationship is important to establishing the
team trust. The informal discussion allows for a deeper understanding of the whole
person and creates an atmosphere where trust can emerge.
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Example: High Cost of Lying in a
Charleston Project
On a project in Charleston, South Carolina, the client was asking for
more and more backup to information from the project. The project
manager visited the client to better understand the reporting
requirements and discovered the client did not trust the reports
coming from the project and wanted validating material for each
report. After some candid discussion, the project manager discovered
that one of the project team members had provided information to
the client that was inaccurate. The team member had made a mistake
but had not corrected it with the client, hoping that the information
would get lost in the stream of information from the project. The
project manager removed the team member from the project for two
main reasons. The project manager established that the cost of lying
was high. The removal communicated to the project team an
expectation of honesty. The project manager also reinforced a
covenant with the client that reinforced the trust in the information
the project provided. The requests for additional information
declined, and the trust relationship between project personnel and
the client remained high.
Small events that reduce trust often take place on a project without
anyone remembering what happened to create the environment of
distrust. Taking fast and decisive action to establish a high cost of
lying, communicating the expectation of honesty, and creating an
atmosphere of trust are critical steps a project manager can take to
ensure the success of complex projects.
Project managers can also establish expectations of team members to
respect individual differences and skills, look and react to the
positives, recognize each other’s accomplishments, and value
people’s self-esteem to increase a sense of the benevolent intent.
11.19.5 Managing Team Meetings
Team meetings are conducted differently depending on the purpose of the meeting,
the leadership style that is appropriate for the meeting, and the personality types of
the members of the team.
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11.20 Action Item Meetings
Action item meetings are short meetings to develop a common understanding of what
the short-term priorities are for the project, individual roles, and expectations for
specific activities. This type of meeting is for sharing, not problem solving. Any
problems that emerge from the discussion are assigned to a person, and another
meeting is established to address the issue. Action item meetings focus on short-term
activities, usually less than a week in duration.
The action item meeting is fact based and information oriented. It is a left-brain-type
focus. The action item meeting has very little dialogue except to ask clarification
questions. If discussion is needed or disagreement is not easily resolved, another
problem-solving meeting is established to deal with that issue. On smaller topics, that
meeting might take place immediately after the action item meeting and only include
those people with an interest in the outcome of the discussion.
The project manager keeps the successful action item meeting short in duration and
focused on only those items of information needed for the short-term project plan.
The project manager will restate the common understandings of what activities are
priorities and who will be responsible for the activities. Often these meetings can
include a review of safety procedures or security procedures when these issues are
important to the project. The leadership approach to action item meetings focuses on
data, actions, and commitments. Although the project manager may observe stresses
between project team members or other issues, they are not addressed in this
meeting. These are fact-based meetings. If issues begin to arise between people, the
project manager will develop other opportunities to address these issues in another
forum. Using the Myers-Briggs descriptions, team members who favor thinking more
than feeling and judging more than perceiving are more comfortable with this type of
meeting.
11.21 Management Meetings
Management meetings are longer in duration and are focused on planning. They are
oriented toward developing plans, tracking progress of existing plans, and making
adjustments to plans in response to new information.
These meetings include focused discussion on generating a common understanding
of the progress of the existing plan. This discussion is based on quantitative
information provided on the progress of the schedule and other data, but the
discussion is qualitative in evaluating the data to develop a more complete
understanding of the data. The experience and opinions of the project leaders are
solicited, and disagreement about meaning of the data is even encouraged to develop
a deeper understanding of the data. Through this discussion, a common
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understanding of the status of the project should emerge, and the project manager
invites discussion, invites people to offer their thoughts, and assures that
disagreements are positive discussions about interpretation of the information and
that disagreements do not become personal.
Management meetings also focus on developing mid-term goals. For larger, more
complex projects, the goals may be monthly or even quarterly. For smaller or less
complex projects, weekly goals will provide the focus. The project manager focuses
the discussion on the broad priorities for the next period and includes all the
functional leaders in the discussion. The goals that emerge from the discussion should
represent a common understanding of the priorities of the project for the next term.
For example, during the early phases of a project, the team is focused on developing a
conceptual understanding of the project. A major milestone on complex projects is
typically the completion of the conceptual plan. The project manager would lead a
discussion on what needs to be accomplished to meet the project milestone and asks
what potential barriers exist and what key resources are needed. From the discussion,
the project team develops a few key goals that integrate the various functions of the
project team and focus the team on priorities.
The following are some examples of goals during the conceptual phase:
• Developing a list of the procurement long-lead items and defining critical dates
• Developing a human resources plan that identifies critical positions
• Developing and building agreement with the client on the project scope of work
Each of these goals is measurable and has a time frame specified. They can be
developed as positive motivators and will take the project leaders and most of the
project team to accomplish. They develop a general understanding of the priorities
and are easy to remember.
Management meetings are a combination of left-brain thinking, which is fact based,
and right-brain thinking, which is creative and innovative. Using the Myers-Briggs
terminology, team members who prefer feeling over thinking and perceiving over
judging can contribute ideas and perspectives on the project that the more fact-
oriented members might miss.
The project manager allows and encourages conversation in developing and
evaluating the goals but focuses the discussion on the goals and obstacles.
Management meetings take on a different focus during the month. Meetings at the
beginning of the month spend time addressing the progress and potential barriers to
the goals developed the previous month. During the middle of the month, the project
manager leads the team to develop next month’s goals as the team also works on the
current month’s goals. Toward the end of the month as the goals for the month are
accomplished, the meeting focuses more on the next month, enabling the team to
remain goal focused during the life of the project.
Management meetings are also an opportunity to discover obstacles to goal
achievement. The project team reallocates resources or develops alternative methods
for accomplishing the goals. As the project team discusses the progress of project
goals, the project manager explores possible obstacles and encourages exposing
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potential problems in achieving goals. The project manager focuses the team on
finding solutions and avoids searching for blame.
The project manager uses a facilitative leadership approach, encouraging the
management team to contribute their ideas, and builds consensus on what goals will
bring the appropriate focus. The project manager keeps the focus on developing the
goals, tracking progress, identifying barriers, and making adjustments to accomplish
the management goals. Although there are typically meetings for scheduling and
procurement and other meetings where goals are established and problems solved,
the management meeting and the goal development process create alignment among
the project leadership on the items critical to the project’s success.
11.22 Leadership Meetings
Leadership meetings are held less frequently and are longer in length. These meetings
are used by the project manager to reflect on the project, explore the larger issues of
the project, and back away from the day-to-day problem solving. The project manager
will create a safe environment for sharing thoughts and evaluations of issues that are
less data oriented. This is a right-brained, creative meeting that focuses on the people
issues of the project: the relationship with the client, vendors, and project team. Team
members who favor feeling, perceiving, and intuition often contribute valuable
insights in this type of meeting. The team might also share perceptions by upper
management and perceptions of the community in which the project is being
executed. Where the time frame for action item meetings is in weeks and
management meetings is in months, the time frame for leadership meetings is longer
and takes in the entire length and impact of the project.
The project manager’s meeting management skill includes creating the right meeting
atmosphere for the team discussion that is needed. For discussions based on data
and facts, the project manager creates the action item type meeting. The conversation
is focused on sharing information and clarification. The conversation for leadership
meetings is the opposite. Discussion is more open ended and focused on creativity
and innovation. Because each type of meeting requires a different meeting
atmosphere, mixing the purposes of a meeting will make it difficult for the project
manager to develop and maintain the appropriate kind of conversation.
Skilled project managers know what type of meeting is needed and how to develop an
atmosphere to support the meeting type. Meetings of the action item type are
focused on information sharing with little discussion. They require efficient
communication of plans, progress, and other information team members need to plan
and execute daily work. Management type meetings are focused on developing and
progressing goals. Leadership meetings are more reflective and focused on the
project mission and culture.
These three types of meetings do not cover all the types of project meetings. Specific
problem-solving, vendor evaluation, and scheduling meetings are examples of typical
project meetings. Understanding what kinds of meetings are needed on the project
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and creating the right focus for each meeting type is a critical project management
skill.
11.23 Types of Teams
Teams can outperform individual team members in several situations. The effort and
time invested in developing a team and the work of the team are large investments of
project resources, and the payback is critical to project success. Determining when a
team is needed and then chartering and supporting the development and work of the
team are other critical project management abilities.
Teams are effective in several project situations:
• When no one person has the knowledge, skills, and abilities to either understand
or solve the problem
• When a commitment to the solution is needed by large portions of the project
team
• When the problem and solution cross project functions
• When innovation is required
Individuals can outperform teams on some occasions. An individual tackling a
problem consumes fewer resources than a team and can operate more efficiently—as
long as the solution meets the project’s needs. A person is most appropriate in the
following situations:
• When speed is important
• When one person has the knowledge, skills, and resources to solve the problem
• When the activities involved in solving the problem are very detailed
• When the actual document needs to be written (Teams can provide input, but
writing is a solitary task.)
In addition to knowing when a team is appropriate, the project manager must also
understand what type of team will function best.
11.23.1 Functional Teams
A functional team refers to the team approach related to the project functions. The
engineering team, the procurement team, and the project controls team are examples
of functional teams within the project. On a project with a low complexity profile that
includes low technological challenges, good team member experience, and a clear
scope of work, the project manager can utilize well-defined functional teams with clear
expectations, direction, and strong vertical communication.
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11.23.2 Cross-Functional Teams
Cross-functional teams address issues and work processes that include two or more
of the functional teams. The team members are selected to bring their functional
expertise to addressing project opportunities.
Example: Cross-Functional Teamwork
A cross-functional project team in Tennessee was assigned to
develop a project approach to drafting, shooting, and editing
educational videos without storing the videos on the school server.
Although the complexity of this goal is primarily related to creating
the videos and procuring editing equipment, the planning involved
coordination of the script drafting, procurement of equipment and
talent, and establishment of project controls. Team members from
each of these functions developed and tracked a plan to meet the
project goal. Because they communicated so frequently and clearly,
the cross-functional team was successful in designing a process and
executing the plan in a way that saved three weeks on the video
schedule and several thousand dollars in cost by hosting off-site.
11.23.3 Problem-Solving Teams
Problem-solving teams are assigned to address specific issues that arise during the life
of the project. The project leadership includes members that have the expertise to
address the problem. The team is chartered to address that problem and then
disband.
11.24 Qualitative Assessment of Project Performance
Project managers should provide an opportunity to ask such questions as “What is
your gut feeling about how the project going?” and “How do you think our client
perceives the project?” This creates the opportunity for reflection and dialogue around
larger issues on the project. The project manager creates an atmosphere for the team
to go beyond the data and search for meaning. This type of discussion and reflection
is very difficult in the stress of day-to-day problem solving.
The project manager has several tools for developing good quantitative
information—based on numbers and measurements—such as the project schedules,
budgets and budget reports, risk analysis, and goal tracking. This quantitative
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information is essential to understanding the current status and trends on the project.
Just as important is the development of qualitative information—comparisons of
qualities—such as judgments made by expert team members that go beyond the
quantitative data provided in a report. Some would label this the “gut feeling” or
intuition of experienced project managers.
The Humm Factor is a survey tool developed by Russ Darnall to capture the thoughts
of project participants. It derived its name from a project manager who always
claimed he could tell you more by listening to the hum of the pro ject than reading all
the project reports. “Do you feel the project is doing the things it needs to do to stay
on schedule?” and “Is the project team focused on project goals?” are the types of
questions that can be included in the Humm Factor. It is distributed on a weekly or
less frequent basis depending on the complexity profile of the project. A project with a
high level of complexity due to team-based and cultural issues will be surveyed more
frequently.
The qualitative responses are converted to a quantitative value as a score from 1 to
10. Responses are tracked by individuals and the total project, resulting in qualitative
comparisons over time. The project team reviews the ratings regularly, looking for
trends that indicate an issue may be emerging on the project that might need
exploring.
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Example: Humm Survey Uncovers
Concerns
On a project in South Carolina, the project surveyed the project
leadership with a Humm Survey each week. The Humm Factor
indicated an increasing worry about the schedule beginning to slip
when the schedule reports indicated that everything was according to
plan. When the project manager began trying to understand why the
Humm Factor was showing concerns about the schedule, he
discovered an apprehension about the performance of a critical
project sup plier. When he asked team members, they responded, “It
was the way they answered the phone or the hesitation when
providing information—something didn’t feel right.”
The procurement manager visited the supplier and discovered the
company was experiencing financial problems and had serious cash
flow problems. The project manager was able to develop a plan to
help the supplier through the period, and the supplier eventually
recovered. The project was able to meet performance goals. The
Humm Factor sur vey provided a tool for members of the project
team to express concerns that were based on very soft data, and the
project team was able to discover a potential problem.
Another project team used the Humm Factor to survey the client
monthly. The completed surveys went to a person who was not on
the project team to provide anonymity to the responses. The
responses were discussed at the month ly project review meetings,
and the project manager summarized the results and addressed all
the concerns expressed in the report. “I don’t feel my concerns are
being heard” was one response that began increasing during the
project, and the project manager spent a significant portion of the
next project review meeting attempting to understand what this
meant. The team discovered that as the project progressed toward
major milestones, the project team became more focused on solving
daily problems, spent more time in meetings, and their workday was
becoming longer. The result was fewer contacts with the clients,
slower responses in returning phone calls, and much fewer coffee
breaks where team members could casually discuss the project with
the client.
The result of the conversation led to better understanding by both
the project team and client team of the change in behavior based on
the current phase of the project and the commitment to developing
more frequent informal discussion about the project.
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11.25 Creating a Project Culture
Project managers have a unique opportunity during the start-up of a project. They
create a project culture, something organizational managers seldom have a chance to
do. In most organizations, the corporate or organizational culture has developed over
the life of the organization, and people associated with the organization understand
what is valued, what has status, and what behaviors are expected. Edgar Schein
identified three distinct levels in organizational culture.
1. Artifacts and behaviours
2. Espoused values
3. Assumptions
Artifacts are the visible elements in a culture and they can be recognized by people
not part of the culture. Espoused values are the organization’s stated values and rules
of behavior. Shared basic assumptions are the deeply embedded, taken-for-granted
behaviors that are usually unconscious, but constitute the essence of culture.
11.25.1 Characteristics of Project Culture
A project culture represents the shared norms, beliefs, values, and assumptions of the
project team. Understanding the unique aspects of a project culture and developing
an appropriate culture to match the complexity profile of the project are important
project management abilities.
Culture is developed through the communication of:
• The priority
• The given status
• The alignment of official and operational rules
Official rules are the rules that are stated, and operational rules are the rules that are
enforced. Project managers who align official and operational rules are more effective
in developing a clear and strong project culture because the project rules are among
the first aspects of the project culture to which team members are exposed when
assigned to the project.
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Example: Operational Rules on a Multi-
site Project
During an instructional design project that required individuals to
collaborate remotely, an official rule had been established that
individuals would back up their work in a location other than the
shared folders they were using every week. It did not take long,
however, for everyone involved to see that one member was actively
backing up all work. Believing that was sufficient, the operational
rule became simply leaving the backing up to a single individual.
They assumed that official rules could be ignored if they were difficult
to obey.
When this individual fell ill, however, no one picked up the slack and
followed the official rule. When some files were corrupted, the team
found that their most recent backups were weeks old, resulting in
redoing a lot of work. The difference between the official rules and
the operational rules of the project created a culture that made
communication of the priorities more difficult.
In addition to official and operational rules, the project leadership
communicates what is important by the use of symbols, storytelling,
rituals, rewards or punishments, and taboos.
Example: Creating a Culture of
Collaboration
A project manager met with his team prior to the beginning of an
instructional design project. The team was excited about the
prestigious project and the potential for career advancement
involved. With this increased competitive aspect came the danger of
selfishness and backstabbing. The project leadership team told
stories of previous projects where people were fired for breaking
down the team efforts and often shared inspirational examples of
how teamwork created unprecedented successes—an example of
storytelling. Every project meeting started with teambuilding
exercises—a ritual—and any display of hostility or separatism was
forbidden—taboo—and was quickly and strongly cut off by the
project leadership if it occurred.
Culture guides behavior and communicates what is important and is
useful for establishing priorities. On projects that have a strong
culture of trust, team members feel free to challenge anyone who
breaks a confidence, even managers. The culture of integrity is
stronger than the cultural aspects of the power of management.
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11.26 Innovation on Projects
The requirement of innovation on projects is influenced by the nature of the project.
Some projects are chartered to develop a solution to a problem, and innovation is a
central ingredient of project success. The lack of availability of education to the world
at large prompted the open education movement, a highly innovative endeavor, which
resulted in the textbook you are now reading. Innovation is also important to
developing methods of lowering costs or shortening the schedule. Traditional project
management thinking provides a trade-off between cost, quality, and schedule. A
project sponsor can typically shorten the project schedule with an investment of more
money or a lowering of quality. Finding innovative solutions can sometimes lower
costs while also saving time and maintaining the quality.
Innovation is a creative process that requires both fun and focus. Stress is a biological
reaction to perceived threats. Stress, at appropriate levels, can make the work
environment interesting and even challenging. Many people working on projects enjoy
a high-stress, exciting environment. When the stress level is too high, the biological
reaction increases blood flow to the emotional parts of the brain and decreases the
blood flow to the creative parts of the brain, making creative problem solving more
difficult. Fun reduces the amount of stress on the project. Project managers recognize
the benefits of balancing the stress level on the project with the need to create an
atmosphere that enables creative thought.
Example: Stress Managed on a Website
Design Project
When a project manager visited the team tasked with designing the
website for a project, she found that most of the members were
feeling a great deal of stress. As she probed to find the reason behind
the stress, she found that in addition to designing, the team was
increasingly facing the need to build the website as well. As few of
them had the necessary skills, they were wasting time that could be
spent designing trying to learn building skills. Once the project
manager was able to identify the stress as well as its cause, she was
able to provide the team with the support it needed to be successful.
Exploring opportunities to create savings takes an investment of
time and energy, and on a time-sensitive project, the project
manager must create the motivation and the opportunity for creative
thinking.
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11.27 References
Burns, J.M. (1978). Leadership.New York: Harper & Row.
Fiedler, F.E. (1971). Validation and Extension of the Contingency Model of Leadership
Effectiveness. Psychological Bulletin, 76(2), 128–48.
Leavitt, H. (1986). Corporate Pathfinders.New York: Dow-Jones-Irwin and Penguin
Books.
Lindskold, S. (1978). Trust Development, the GRIT Proposal, and the Effects of
Conciliatory Acts on Conflict and Corporation. Psychological Bulletin 85(4), 772–93.
Shi, Q., & Chen, J. (2006). The Human Side of Project Management: Leadership Skills.
Newtown Square, PA: Project Management Institute, Inc.
Tannenbaum, R., & Schmidt, W. (1958). How to Choose a Leadership Pattern. Harvard
Business Review 36, 95–101.
Whetton, D., & Cameron, K. (2005). Developing Management Skills.Upper Saddle River,
NJ: Pearson Education.
11.28 Attribution
Unported, Project Management/PMBOK/Human Resources Management and
Development Cooperation Handbook/How do we manage the human resources of
programmes and projects?/Manage the Project Team by Wikibooks licensed under
Creative Commons Attribution-Share Alike 3.0, Resource Management and Resource
Leveling by Wikipedia licensed under Creative Commons Attribution-Share Alike 3.0,
Resource Management, and Project Management for Instructional Designers by
Amado, M., Ashton, K., Ashton, S., Bostwick, J., Clements, G., Drysdale, J., Francis, J.,
Harrison, B., Nan, V., Nisse, A., Randall, D., Rino, J., Robinson, J., Snyder, A., Wiley, D., &
Anonymous. (DATE). Project Management for Instructional Designers. Retrieved from
http://pm4id.org/ under Creative Commons Attribution 3.0 Unported and
http://en.wikipedia.org/wiki/ Edgar_Schein.
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Chapter 12 Budget Planning
Adrienne Watt
Every project boils down to money. If you had a bigger budget, you could probably get
more people to do your project more quickly and deliver more. That’s why no project
plan is complete until you come up with a budget. But no matter whether your project
is big or small, and no matter how many resources and activities are in it, the process
for figuring out the bottom line is always the same.
It is important to come up with detailed estimates for all the project costs. Once this is
compiled, you add up the cost estimates into a budget plan. It is now possible to track
the project according to that budget while the work is ongoing.
Often, when you come into a project, there is already an expectation of how much it
will cost or how much time it will take. When you make an estimate early in the project
without knowing much about it, that estimate is called a rough order-of-magnitude
estimate (or a ballpark estimate). This estimate will become more refined as time goes
on and you learn more about the project. Here are some tools and techniques for
estimating cost:
• Determination of resource cost rates: People who will be working on the
project all work at a specific rate. Any materials you use to build the project (e.g.,
wood or wiring) will be charged at a rate too. Determining resource costs means
figuring out what the rate for labor and materials will be.
• Vendor bid analysis: Sometimes you will need to work with an external
contractor to get your project done. You might even have more than one
contractor bid on the job. This tool is about evaluating those bids and choosing
the one you will accept.
• Reserve analysis: You need to set aside some money for cost overruns. If you
know that your project has a risk of something expensive happening, it is better
to have some cash available to deal with it. Reserve analysis means putting some
cash away in case of overruns.
• Cost of quality: You will need to figure the cost of all your quality-related
activities into the overall budget. Since it’s cheaper to find bugs earlier in the
project than later, there are always quality costs associated with everything your
project produces. Cost of quality is just a way of tracking the cost of those
activities. It is the amount of money it takes to do the project right.
Once you apply all the tools in this process, you will arrive at an estimate for how
much your project will cost. It’s important to keep all of your supporting estimate
information. That way, you know the assumptions made when you were coming up
with the numbers. Now you are ready to build your budget plan.
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12.1 Estimating Costs to Compare and Select Projects
During the conceptual phase when project selection occurs, economic factors are an
important consideration in choosing between competing projects. To compare the
simple paybacks or internal rates of return between projects, an estimate of the cost
of each project is made. The estimates must be accurate enough so that the
comparisons are meaningful, but the amount of time and resources used to make the
estimates should be appropriate to the size and complexity of the project. The
methods used to estimate the cost of the project during the selection phase are
generally faster and consume fewer resources than those used to create detailed
estimates in later phases. They rely more on the expert judgment of experienced
managers who can make accurate estimates with less detailed information. Estimates
in the earliest stages of project selection are usually based on information from
previous projects that can be adjusted—scaled—to match the size and complexity of
the current project or developed using standardized formulas.
12.2 Analogous Estimate
An estimate that is based on other project estimates is an analogous estimate. If a
similar project cost a certain amount, then it is reasonable to assume that the current
project will cost about the same. Few projects are exactly the same size and
complexity, so the estimate must be adjusted upward or downward to account for the
differences. The selection of projects that are similar and the amount of adjustment
needed is up to the judgment of the person who makes the estimate. Normally, this
judgment is based on many years of experience estimating projects, including
incorrect estimates that were learning experiences for the expert.
Less-experienced managers who are required to make analogous estimates can look
through the documentation that is available from previous projects. If projects were
evaluated using the Darnall-Preston Complexity Index (DPCI), the manager can quickly
identify projects that have profiles similar to the project under consideration, even if
those projects were managed by other people.
The DPCI assesses project attributes, enabling better-informed decisions in creating
the project profile. This index assesses the complexity level of key components of a
project and produces a unique project profile. The profile indicates the project
complexity level, which provides a benchmark for comparing projects and information
about the characteristics of a project that can then be addressed in the project
execution plan. It achieves this objective by grouping 11 attributes into four broad
categories: internal, external, technological complexity, and environmental.
Comparing the original estimates with the final project costs on several previous
projects with the same DPCI ratings gives a less-experienced manager the perspective
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that it would take many years to acquire by trial and error. It also provides references
the manager can use to justify the estimate.
Example: Analogous Estimate for John’s
Move
John sold his apartment and purchased another one. It is now time to
plan for the move. John asked a friend for advice about the cost of his
move. His friend replied, “I moved from an apartment a little smaller
than yours last year and the distance was about the same. I did it with
a 14-foot truck. It cost about $575 for the truck rental, pads, hand
truck, rope, boxes, and gas.” Because of the similarity of the projects,
John’s initial estimate of the cost of the move was less than $700 so
he decided that the cost would be affordable and the project could go
forward.
12.3 Parametric Estimate
If the project consists of activities that are common to many other projects, average
costs are available per unit. For example, if you ask a construction company how
much it would cost to build a standard office building, the estimator will ask for the
size of the building in square feet and the city in which the building will be built. From
these two factors—size and location—the company’s estimator can predict the cost of
the building. Factors like size and location are parameters—measurable factors that
can be used in an equation to calculate a result. The estimator knows the average cost
per square foot of a typical office building and adjustments for local labor costs. Other
parameters such as quality of finishes are used to further refine the estimate.
Estimates that are calculated by multiplying measured parameters by cost-per-unit
values are parametric estimates.
Example: Parametric Estimate for John’s
Move
To estimate the size of the truck needed for John’s move, the
parameter used by a truck rental company is the number of bedrooms
(Figure 12.1 Parametric Cost ). The company assumes that the
number of bedrooms is the important parameter in determining how
big a truck is needed for a move. John has a one-bedroom apartment,
so he chooses the 14-foot truck. Once the size is determined, other
parameters, such as distance and days, are used to estimate the cost
of the truck rental.
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Figure 12.1 Parametric Cost
( http://pm4id.org/9/1/ ) .
12.4 Bottom-Up Estimating
The most accurate and time-consuming estimating method is to identify the cost of
each item in each activity of the schedule, including labor and materials. If you view
the project schedule as a hierarchy where the general descriptions of tasks are at the
top and the lower levels become more detailed, finding the price of each item at the
lowest level and then summing them to determine the cost of higher levels is called
bottom-up estimating.
Example: Bottom-Up Estimate for
John’s Move
After evaluating the bids by the moving companies, John decides the
savings are worth his time if he can get the packing done with the
help of his friends. He decides to prepare a detailed estimate of costs
(Figure 12.3 Detailed Cost Estimate ) for packing materials and use of
a rental truck. He looks up the prices for packing materials and truck
rental costs on company websites and prepares a detailed list of
items, quantities, and costs.
This type of estimate is typically more accurate than an analogous or
parametric estimate. In this example, the sum of packing materials
and truck expenses is estimated to be $661.25.
The estimate can be rolled up—subtotaled—to display less detail.
This process is made easier using computer software. On projects
with low complexity, the cost estimates can be done on spreadsheet
software. On larger projects, software that manages schedules can
also manage costs and display them by activity and category. For
example, the subtotal feature could be used in Excel and collapsed to
show the subtotals for the two categories of costs (Figure 12.2 Sum of
Detailed Costs by Type ).
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Figure 12.2 Sum of Detailed Costs by Type
Figure 12.3 Detailed Cost Estimate
12.5 Activity-Based Estimates
An activity can have costs from multiple vendors in addition to internal costs for labor
and materials. Detailed estimates from all sources can be reorganized so those costs
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associated with a particular activity can be grouped by adding the activity code to the
detailed estimate (Figure 12.4 Detailed Costs Associated with Activities ).
Figure 12.4 Detailed Costs Associated with Activities
The detailed cost estimates can be sorted and then subtotaled by activity to determine
the cost for each activity.
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12.6 Managing the Budget
Projects seldom go according to plan in every detail. It is necessary for the project
manager to be able to identify when costs are varying from the budget and manage
those variations.
12.6.1 Managing Cash Flow
If the total amount spent on a project is equal to or less than the amount budgeted,
the project can still be in trouble if the funding for the project is not available when it
is needed. There is a natural tension between the financial people in an organization,
who do not want to pay for the use of money that is just sitting in a checking account,
and the project manager, who wants to be sure that there is enough money available
to pay for project expenses. The financial people prefer to keep the company’s money
working in other investments until the last moment before transferring it to the
project account. The contractors and vendors have similar concerns, and they want to
get paid as soon as possible so they can put the money to work in their own
organizations. The project manager would like to have as much cash available as
possible to use if activities exceed budget expectations.
12.6.2 Contingency Reserves
Most projects have something unexpected occur that increases costs above the
original estimates. If estimates are rarely exceeded, the estimating method should be
reviewed because the estimates are too high. It is impossible to predict which
activities will cost more than expected, but it is reasonable to assume that some of
them will. Estimating the likelihood of such events is part of risk analysis, which is
discussed in more detail in a later chapter.
Instead of overestimating each cost, money is budgeted for dealing with unplanned
but statistically predictable cost increases. Funds allocated for this purpose are called
contingency reserves. Because it is likely that this money will be spent, it is part of
the total budget for the project. If this fund is adequate to meet the unplanned
expenses, then the project will complete within the budget.
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12.6.3 Management Reserves
If something occurs during the project that requires a change in the project scope,
money may be needed to deal with the situation before a change in scope can be
negotiated with the project sponsor or client. It could be an opportunity as well as a
challenge. For example, if a new technology were invented that would greatly enhance
your completed project, there would be additional cost and a change to the scope, but
it would be worth it. Money can be made available at the manager’s discretion to meet
needs that would change the scope of the project. These funds are called
management reserves. Unlike contingency reserves, they are not likely to be spent
and are not part of the project’s budget baseline, but they can be included in the total
project budget.
12.6.4 Evaluating the Budget During the Project
A project manager must regularly compare the amount of money spent with the
budgeted amount and report this information to managers and stakeholders. It is
necessary to establish an understanding of how this progress will be measured and
reported.
Example: Reporting Budget Progress on
John’s Move
In the John’s move example, he estimated that the move would cost
about $1,500 and take about 16 days. Eight days into the project, John
has spent $300. John tells his friends that the project is going well
because he is halfway through the project but has only spent a fifth of
his budget. John’s friend Carlita points out that his report is not
sufficient because he did not compare the amount spent to the
budgeted amount for the activities that should be done by the eighth
day.
As John’s friend pointed out, a budget report must compare the
amount spent with the amount that is expected to be spent by that
point in the project. Basic measures such as percentage of activities
completed, percentage of measurement units completed, and
percentage of budget spent are adequate for less complex projects,
but more sophisticated techniques are used for projects with higher
complexity.
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12.6.5 Earned Value Analysis
A method that is widely used for medium-and high-complexity projects is the earned
value management (EVM) method. EVM is a method of periodically comparing the
budgeted costs with the actual costs during the project. It combines the scheduled
activities with detailed cost estimates of each activity. It allows for partial completion
of an activity if some of the detailed costs associated with the activity have been paid
but others have not.
The budgeted cost of work scheduled (BCWS) comprises the detailed cost estimates
for each activity in the project. The amount of work that should have been done by a
particular date is the planned value (PV). These terms are used interchangeably by
some sources, but the planned value term is used in formulas to refer to the sum of
the budgeted cost of work up to a particular point in the project, so we will make that
distinction in the definitions in this text for clarity.
Example: Planned Value on Day Six of
John’s Move
On day six of the project, John should have taken his friends to lunch
and purchased the packing materials. The portion of the BCWS that
should have been done by that date (the planned value) is shown in Fi
gure 12.5 Planned Value for Lunch and Packing Materials . This is the
planned value for day six of the project.
The budgeted cost of work performed (BCWP) is the budgeted cost
of work scheduled that has been done. If you sum the BCWP values
up to that point in the project schedule, you have the earned value
(EV). The amount spent on an item is often more or less than the
estimated amount that was budgeted for that item. The actual cost
(AC) is the sum of the amounts actually spent on the items.
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Example: Comparing PV, EV, and AC in
John’s Move on Day Six
Dion and Carlita were both trying to lose weight and just wanted a
nice salad. Consequently, the lunch cost less than expected. John
makes a stop at a store that sells moving supplies at discount rates.
They do not have all the items he needs, but the prices are lower than
those quoted by the moving company. They have a very good price on
lifting straps so he decides to buy an extra pair. He returns with some
of the items on his list, but this phase of the job is not complete by
the end of day six. John bought half of the small boxes, all of five
other items, twice as many lifting straps, and none of four other
items. John is only six days into his project, and his costs and
performance are starting to vary from the plan. Earned value analysis
gives us a method for reporting that progress (Figure 12.6 Planned Va
lue, Earned Value, and Actual Cost ).
The original schedule called for spending $261.65 (PV) by day six. The
amount of work done was worth $162.10 (EV) according to the
estimates, but the actual cost was only $154.50 (AC).
12.6.6 Schedule Variance
The project manager must know if the project is on schedule and within the budget.
The difference between planned and actual progress is the variance. The schedule
variance (SV) is the difference between the earned value (EV) and the planned value
(PV). Expressed as a formula, SV = EV − PV. If less value has been earned than was
planned, the sched ule variance is negative, which means the project is behind
schedule.
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Figure 12.5 Planned Value for Lunch and Packing Materials
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Figure 12.6 Planned Value, Earned Value, and Actual Cost
Example: Schedule Variance on John’s
Move
Planning for John’s move calls for spending $261.65 by day six, which
is the planned value (PV). The difference between the planned value
and the earned value is the scheduled variance (SV). The formula is
SV = EV − PV. In this example, SV = $162.10 − $261.65 = ($99.55) A
negative SV indicates the project is behind schedule.
The difference between the earned value (EV) and the actual cost (AC)
is the cost variance (CV). Expressed as a formula, CV = EV – AC. A
positive CV indicates the project is under budget.
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Example: Cost Variance on John’s Move
The difference between the earned value of $162.10 and the actual
cost of $154.50 is the cost variance (CV). The formula is CV = EV − AC.
In this example, CV = $162.10 − $154.50 = $7.60.
Variance Indexes for Schedule and Cost
The schedule variance and the cost variance provide the amount by
which the spending is behind (or ahead of) schedule and the amount
by which a project is exceeding (or not fully using) its budget. They do
not give an idea of how these amounts compare with the total budget.
The ratio of earned value to planned value gives an indication of how
much of the project is completed. This ratio is the schedule
performance index (SPI). The formula is SPI = EV/PV. In the John’s
move example, the SPI equals 0.62 (SPI = $162.10/$261.65 = 0.62) An
SPI value less than 1 indicates the project is behind schedule.
The ratio of the earned value to the actual cost is the cost
performance index (CPI). The formula is CPI = EV/ AC.
Example: Cost Performance Index of
John’s Move
In the John’s move example, CPI = $162.10/$154.50 = 1.05. A value
greater than 1 indicates that the project is under budget.
Figure 12.7 Schedule Variance and Cost Variance
The cost variance of positive $7.60 and the CPI value of 1.05 tell John that he is getting
more value for his money than planned for the tasks scheduled by day six. The
schedule variance (SV) of negative $99.55 and the schedule performance index (SPI) of
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0.62 tell him that he is behind schedule in adding value to the project (Figure 12.7 Sche
dule Variance and Cost Variance ).
During the project, the manager can evaluate the schedule using the schedule
variance (SV) and the schedule performance index (SPI), and the budget using the cost
variance (CV) and the cost performance index (CPI).
12.6.7 Estimated Cost to Complete the Project
Part way through the project, the manager evaluates the accuracy of the cost
estimates for the activities that have taken place and uses that experience to predict
how much money it will take to complete the unfinished activities—the estimate to
complete (ETC).
To calculate the ETC, the manager must decide if the cost variance observed in the
estimates to that point are representative of the future. For example, if unusually bad
weather causes increased cost during the first part of the project, it is not likely to
have the same effect on the rest of the project. If the manager decides that the cost
variance up to this point in the project is atypical—not typical—then the estimate to
complete is the difference between the original budget for the entire project—the
budget at completion (BAC)—and the earned value (EV) up to that point. Expressed
as a formula, ETC = BAC − EV.
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Example: Estimate to Complete John’s
Move
For his move, John was able to buy most of the items at a discount
house that did not have a complete inventory, and he chose to buy an
extra pair of lift straps. He knows that the planned values for packing
materials were obtained from the price list at the moving company
where he will have to buy the rest of the items, so those two factors
are not likely to be typical of the remaining purchases. The reduced
cost of lunch is unrelated to the future costs of packing materials,
truck rentals, and hotel fees. John decides that the factors that
caused the variances are atypical. He calculates that the estimate to
complete (ETC) is the budget at completion ($1,534) minus the earned
value at that point ($162.10), which equals $1,371.90. Expressed as a
formula, ETC = $1,534 − $162.10 = $1,371.90.
If the manager decides that the cost variance is caused by factors that
will affect the remaining activities, such as higher labor and material
costs, then the estimate to complete (ETC) needs to be adjusted by
dividing it by the cost performance index (CPI). For example, if labor
costs on the first part of a project are estimated at $80,000 (EV) and
they actually cost $85,000 (AC), the cost performance (CPI) will be
0.94. (Recall that the CPI = EV/AC.)
To calculate the estimate to complete (ETC), assuming the cost
variance on known activities is typical of future cost, the formula is
ETC = (BAC – EV)/CPI. If the budget at completion (BAC) of the
project is $800,000, the estimate to complete is ($800,000 –
$80,000)/0.94 = $766,000.
12.6.8 Estimate Final Project Cost
If the costs of the activities up to the present vary from the original estimates, this will
affect the total estimate of the project cost. The new estimate of the project cost is the
estimate at completion (EAC). To calculate the EAC, the estimate to complete (ETC) is
added to the actual cost (AC) of the activities already performed. Expressed as a
formula, EAC = AC + ETC.
Example: Estimate at Completion for
John’s Move
The revised estimate at completion (EAC) for John’s move at this
point in the process is EAC = $154.50 + $1,371.90 = $1,526.40.
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Figure 12.8 Summary of Terms and Formulas for Earned Value Analysis
( Source: http://pm4id.org/9/2/ ) .
To summarize (Figure 12.8 Summary of Terms and Formulas for Earned Value Analysi
s ):
• Extra money is allocated in a contingency fund to deal with activities where costs
exceed estimates. Funds are allocated in a management reserve in case a
significant opportunity or challenge occurs that requires change of scope but
funds are needed immediately before a scope change can typically be negotiated.
• Schedule variance is the difference between the part of the budget that has been
spent so far (EV) versus the part that was planned to be spent by now (PV).
Similarly, the cost variance is the difference between the EV and the actual cost
(AC).
• The schedule performance index (SPI) is the ratio of the earned value and the
planned value. The cost performance index (CPI) is the ratio of the earned value
(EV) to the actual cost (AC).
• The formula used to calculate the amount of money needed to complete the
project (ETC) depends on whether or not the cost variance to this point is
expected to continue (typical) or not (atypical). If the cost variance is atypical, the
ETC is simply the original total budget (BAC) minus the earned value (EV). If they
are typical of future cost variances, the ETC is adjusted by dividing the difference
between BAC and EV by the CPI.
• The final budget is the actual cost (AC) to this point plus the estimate to complete
(ETC).
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12.6.9 Establishing a Budget
Once you have broken your project down into activities, you will be able to calculate
your overall project costs by estimating and totaling the individual activity costs.
This process of subtotaling costs by category or activity is called cost aggregation.
12.6.10 Budget Timeline
Costs are associated with activities, and since each activity has a start date and a
duration period, it is possible to calculate how much money will be spent by any
particular date during the project. The money needed to pay for a project is usually
transferred to the project account shortly before it is needed. These transfers must be
timed so that the money is there to pay for each activity without causing a delay in the
start of the activity. If the money is transferred too far in advance, the organization will
lose the opportunity to use the money somewhere else, or they will have to pay
unnecessary interest charges if the money is borrowed. A schedule of money
transfers is created that should match the need to pay for the activities. The process
of matching the schedule of transfers with the schedule of activity payments is called
reconciliation. Refer to Figure 12.9 Fund Transfers and Expenditures , which shows
the costs of 10 major activities in a project. Funds are transferred into the project
account four times. Notice that during most of the project, there were more funds
available than were spent except at activity 6 when all the available funds were spent.
In the project budget profile shown in Figure 12.9 Fund Transfers and Expenditures ,
there is no margin for error if the total of the first six activities exceeds the amount of
funding at that point in the project.
Contractual agreements with vendors often require partial payment of their costs
during the project. Those contracts can be managed more conveniently if the unit of
measure for partial completion is the same as that used for cost budgeting. For
example, if a graphic designer is putting together several pieces of artwork for a
textbook, their contract may call for partial payment after 25% of their total number of
drawings is complete.
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Figure 12.9 Fund Transfers and Expenditures
12.7 Attribution
Instructional Designers by Amado, M., Ashton, K., Ashton, S., Bostwick, J., Clements, G.,
Drysdale, J., Francis, J., Harrison, B., Nan, V., Nisse, A., Randall, D., Rino, J., Robinson, J.,
Snyder, A., Wiley, D., & Anonymous. (DATE). Project Management for Instructional
Designers. Retrieved from http://pm4id.org/ under Creative Commons Attribution 3.0
Unported.
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Chapter 13 Procurement
Management
Adrienne Watt
Procurement management follows a logical order. First, you plan what you need to
contract; then you plan how you’ll do it. Next, you send out your contract
requirements to sellers. They bid for the chance to work with you. You pick the best
one, and then you sign the contract with them. Once the work begins, you monitor it
to make sure that the contract is being followed. When the work is done, you close out
the contract and fill out all the paperwork.
You need to start with a plan for the whole project. Before doing anything else, you
need to think about all of the work that you will contract out for your project. You will
want to plan for any purchases and acquisitions. Here’s where you take a close look at
your needs to be sure that contracting is necessary. You figure out what kinds of
contracts make sense for your project, and you try to define all of the parts of the
project that will be contracted out.
Contract planning is where you plan out each individual contract for the project work.
You work out how you’ll manage the contract, what metrics it will need to meet to be
considered successful, how you’ll pick a seller, and how you’ll administer the contract
once the work is happening.
The procurement management plan details how the procurement process will be
managed. It includes the following information:
• The types of contracts you plan to use and any metrics that will be used to
measure the contractors’ performance
• The planned delivery dates for the work or products you are contracting
• The company’s standard documents you will use
• The number of vendors or contractors involved and how they will be managed
• How purchasing may impact the constraints and assumptions of the project plan
• The coordination of purchasing lead times with the development of the project
schedule
• The identification of prequalified sellers (if known)
The procurement management plan, like all other management plans, becomes a
subsidiary of the project management plan. Some tools and techniques you may use
during the procurement planning stage include make-or-buy analysis and definition of
the contract type.
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13.1 Make-or-Buy Analysis
This means figuring out whether or not you should be contracting the work or doing it
yourself. It could also mean deciding whether to build a solution to your problem or
buy one that is already available. Most of the same factors that help you make every
other major project decision will help you with this one. How much does it cost to
build it as opposed to buying it? How will this decision affect the scope of your project?
How will it affect the project schedule? Do you have time to do the work and still meet
your commitments? As you plan out what you will and won’t contract, you need to
think through your reasoning very carefully.
There are some resources (like heavy equipment) that your company can buy, rent, or
lease depending on the situation. You’ll need to examine leasing-versus-buying costs
and determine the best way to go forward.
13.2 Contract Types
You should know a little bit about the major kinds of contracts available to you (the
client) so that you choose the one that creates the most fair and workable deal for you
and the contractor. Some contracts are fixed price: no matter how much time or effort
goes into them, the client always pay the same.Figure 13.1 A fixed-price contract the c
ost to the client is constant regardless of effort applied or delivery date. the cost to
the client stays the same, but as more effort is exerted the profit to the contractor
goes down. Some are cost reimbursable also called cost plus. This is where the seller
charges you for the cost of doing the work plus some fee or rate. Figure 13.3 In a cost-
reimbursable or cost-plus contract, the contractor is guaranteed a fee, but the client’s
costs can increase based on effort illustrates this by showing that as efforts increase,
costs to the client go up but the contractor’s profits stay the same. The third major
kind of contract is time and materials. That’s where the client pays a rate for the time
spent working on the project and also pays for all the materials used to do the work. Fi
gure 13.4 In a time-and-materials contract the profit to the contractor increases with i
ncreased effort, as does the costs to the client. shows that as costs to the client go up,
so does the profit for the contractor.
13.2.1 Fixed-Price Contracts
The fixed-price contract is a legal agreement between the project organization and
an entity (person or company) to provide goods or services to the project at an
agreed-on price. The contract usually details the quality of the goods or services, the
timing needed to support the project, and the price for delivering goods or services.
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There are several variations of the fixed-price contract. For commodities and goods
and services where the scope of work is very clear and not likely to change, the fixed-
price contract offers a predictable cost. The responsibility for managing the work to
meet the needs of the project is focused on the contractor. The project team tracks
the quality and schedule progress to ensure the contractors will meet the project
needs. The risks associated with fixed-price contracts are the costs associated with
project change. If a change occurs on the project that requires a change order from
the contractor, the price of the change is typically very high. Even when the price for
changes is included in the original contract, changes on a fixed-price contract will
create higher total project costs than other forms of contracts because the majority of
the cost risk is transferred to the contractor, and most contractors will add a
contingency to the contract to cover their addition al risk.
Figure 13.1 A fixed-price contract the cost to the client is constant regardless of effort applied or
delivery date. Illustration from Barron & Barron Project Management for Scientists and Engineers
Fixed-price contracts require the availability of at least two or more suppliers that
have the qualifications and performance histories that ensure the needs of the project
can be met. The other requirement is a scope of work that is most likely not going to
change. Developing a clear scope of work based on good information, creating a list of
highly qualified bidders, and developing a clear contract that reflects that scope of
work are critical aspects of a good fixed-priced contract.
If the service provider is responsible for incorporating all costs, including profit, into
the agreed-on price, it is a fixed-total-cost contract. The contractor assumes the
risks for unexpected increases in labor and materials that are needed to provide the
service or materials and in the materials and timeliness needed.
The fixed-price contract with price adjustment is used for unusually long projects
that span years. The most common use of this type of contract is the inflation-
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adjusted price. In some countries, the value of its local currency can vary greatly in a
few months, which affects the cost of local materials and labor. In periods of high
inflation, the client assumes the risk of higher costs due to inflation, and the contract
price is adjusted based on an inflation index. The volatility of certain commodities can
also be accounted for in a price-adjustment contract. For example, if the price of oil
significantly affects the costs of the project, the client can accept the oil price volatility
risk and include a provision in the contract that would allow the contract price
adjustment based on a change in the price of oil.
The fixed-price contract with incentive fee provides an incentive for performing on
the project above the established baseline in the contract. The contract might include
an incentive for completing the work on an important milestone for the project. Often
contracts have a penalty clause if the work is not performed according to the contract.
For example, if the new software is not completed in time to support the
implementation of the training, the contract might penalize the software company a
daily amount of money for every day the software is late. This type of penalty is often
used when the software is critical to the project and the delay will cost the project
significant money.
If the service or materials can be measured in standard units, but the amount needed
is not known accurately, the price per unit can be fixed—a fixed-unit-price contract.
The project team assumes the responsibility of estimating the number of units used. If
the estimate is not accurate, the contract does not need to be changed, but the
project will exceed the budgeted cost.
Figure 13.2 Table of Fixed Price Contracts and Characteristics
13.2.2 Cost-Reimbursable Contracts
In a cost-reimbursable contract, the organization agrees to pay the contractor for
the cost of performing the service or providing the goods. Cost-reimbursable
contracts are also known as cost-plus contracts. Cost-reimbursable contracts are
most often used when the scope of work or the costs for performing the work are not
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well known. The project uses a cost-reimbursable contract to pay the contractor for
allowable expenses related to performing the work. Since the cost of the project is
reimbursable, the contractor has much less risk associated with cost increases. When
the costs of the work are not well known, a cost-reimbursable contract reduces the
amount of money the bidders place in the bid to account for the risk associated with
potential increases in costs. The contractor is also less motivated to find ways to
reduce the cost of the project unless there are incentives for supporting the
accomplishment of project goals.
Figure 13.3 In a cost-reimbursable or cost-plus contract, the contractor is guaranteed a fee, but the
client’s costs can increase based on effort Illustration from Barron & Barron Project Management for
Cost-reimbursable contracts require good documentation of the costs that occurred
on the project to ensure that the contractor gets paid for all the work performed and
to ensure that the organization is not paying for something that was not completed.
The contractor is also paid an additional amount above the costs. There are several
ways to compensate the contractor.
• A cost-reimbursable contract with a fixed fee provides the contractor with a
fee, or profit amount, that is determined at the beginning of the contract and
does not change.
• A cost-reimbursable contract with a percentage fee pays the contractor for
costs plus a percentage of the costs, such as 5% of total allowable costs. The
contractor is reimbursed for allowable costs and is paid a fee.
• A cost-reimbursable contract with an incentive fee is used to encourage
performance in areas critical to the project. Often the contract attempts to
motivate contractors to save or reduce project costs. The use of the cost
reimbursable contract with an incentive fee is one way to motivate cost-reduction
behaviors.
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• A cost-reimbursable contract with award fee reimburses the contractor for all
allowable costs plus a fee that is based on performance criteria. The fee is
typically based on goals or objectives that are more subjective. An amount of
money is set aside for the contractor to earn through excellent performance, and
the decision on how much to pay the contractor is left to the judgment of the
project team. The amount is sufficient to motivate excellent performance.
On small activities that have a high uncertainty, the contractor might charge an hourly
rate for labor, plus the cost of materials, plus a percentage of the total costs. This type
of contract is called time and materials (T&M). Time is usually contracted on an
hourly rate basis and the contractor usually submits time sheets and receipts for
items purchased on the project. The project reimburses the contractor for the time
spent based on the agreed-on rate and the actual cost of the materials. The fee is
typically a percentage of the total cost.
Figure 13.4 In a time-and-materials contract the profit to the contractor increases with increased
effort, as does the costs to the client. Illustration from Barron & Barron Project Management for
T&M contracts are used on projects for work that is smaller in scope and has
uncertainty or risk. The project, rather than the contractor, assumes the risk. Since the
contractor will most likely include contingency in the price of other types of contracts
to cover the high risk, T&M contracts provide lower total cost to the project.
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Figure 13.5 Table of cost-reimbursable contracts
To minimize the risk to the project, the contractor typically includes a not-to-exceed
amount, which means the contract can only charge up to the agreed amount. The
T&M contract allows the project to make adjustments as more information is
available. The final cost of the work is not known until sufficient information is
available to complete a more accurate estimate.
13.3 Progress Payments and Change Management
Vendors and suppliers usually require payments during the life of the contract. On
contracts that last several months, the contractor will incur significant cost and will
want the project to pay for these costs as early as possible. Rather than wait until the
end of the contract, a schedule of payments is typically developed as part of the
contract and is connected to the completion of a defined amount of work or project
milestones. These payments made before the end of the project and based on the
progress of the work are called progress payments. For example, the contract might
develop a payment schedule that pays for the design of the curriculum, then the
development of the curriculum, and then a final payment is made when the
curriculum is completed and accepted. In this case there would be three payments
made. There is a defined amount of work to be accomplished, a time frame for
accomplishing that work, and a quality standard the work must achieve before the
contractor is paid for the work.
Just as the project has a scope of work that defines what is included in the project and
what work is outside the project, vendors and suppliers have a scope of work that
defines what they will produce or supply to the company. (Partners typically share the
project scope of work and may not have a separate scope of work.) Often changes
occur on the project that require changes in the contractor’s scope of work. How these
changes will be managed during the life of the project is typically documented in the
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contract. Capturing these changes early, documenting what changed and how the
change impacted the contract, and developing a change order (a change to the
contract) are important to maintaining the progress of the project. Conflict among
team members may arise when changes are not documented or when the team
cannot agree on the change. Developing and implementing an effective change
management process for contrac tors and key suppliers will minimize this conflict and
the potential negative effect on the project.
Source: http://pm4id.org/9/5/
13.4 Procurement Process
The project procurement cycle reflects the procurement activities from the decision to
purchase the material or service through to the payment of bills and closing of
procurement contracts.
13.4.1 Procurement Plan
After the decision has been made to purchase goods or outsource services, the
procurement team develops a plan that includes the following:
• Selecting the appropriate relationships and contract approaches for each type of
purchased goods or outsourced service
• Preparing requests for quotes (RFQs) and requests for proposals (RFPs) and
evaluating partnership opportunities
• Evaluating RFQs, RFPs, and partnerships
• Awarding and signing contracts
• Managing quality and timely performance
• Managing contract changes
• Closing contracts
Depending on the complexity level of the project, each of these steps can take either
hours or sometimes weeks of work to complete. Each of these steps is also included in
the project master schedule. The time involved in the procurement cycle can influence
the scheduling of critical activities, including the decision to self-perform the work or
contract the work to others. The delivery dates for equipment and materials and the
work completion dates for contracted works are placed on the project schedule. Any
procurement activities that create a project delay or fall on the project critical path
may require special attention.
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13.4.2 Selecting the Contract Approach
The technical teams typically develop a description of the work that will be
outsourced. From this information, the project management team answers the
following questions:
• Is the required work or materials a commodity, customized product or service, or
unique skill or relationship?
• What type of relationship is needed: supplier, vendor, or partnership?
• How should the supplier, vendor, or potential partner be approached: RFQ, RFP,
or personal contact?
• How well known is the scope of work?
• What are the risks and which party should assume which types of risk?
• Does the procurement of the service or goods affect activities on the project
schedule’s critical path and how much float is there on those activities?
• How important is it to be sure of the cost in advance?
The procurement team uses the answers to the first three questions listed above to
determine the approach to obtaining the goods or services and the remaining
questions to determine what type of contract is most appropriate.
A key factor in selecting the contract approach is determining which party will take the
most risk. The team determines the level of risk that will be managed by the project
and what risks will be transferred to the contractor. Typically, the project management
team wants to manage the project risk, but in some cases, contractors have more
expertise or control that enable them to better manage the risk associated with the
contracted work.
13.4.3 Soliciting Bids
A solicitation is the process of requesting a price and supporting information from
bidders. The solicitation usually takes the form of either an RFQ or an RFP.
Partnerships are pursued and established differently on a case-by-case basis by senior
management.
13.4.4 Qualifying Bidders
Potential bidders are people or organizations capable of providing the materials or
performing the work required for the project. On smaller, less complex projects, the
parent company typically has a list of suppliers and vendors that have successfully
provided goods and services in the past, and the project has access to the
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performance record of companies on that list. On unique projects, where no supplier
lists exist, the project team develops a list of potential suppliers and then qualifies
them to become eligible to bid on project work. Eligible bidders are placed on the
bidders list and provided with a schedule of when work on the project will be put out
for bid.
The eligibility of a supplier is determined by the ability to perform the work in a way
that meets project requirements and demonstrates financial stability. Ability to
perform the work includes the ability to meet quality specifications and the project
schedule. During times when economic activity is high in a region, many suppliers
become busy and stretch their resources. The project team investigates the potential
suppliers, before they are included on the bidder’s list, to ensure that they have the
capacity and track record to meet deadlines.
The potential supplier must also be financially stable to be included on the bidders list.
A credit check or a financial report from Dun and Bradstreet (D&B)—a well-known
provider of financial information about individual companies—will provide the project
with information about the potential bidder’s financial status. D&B services include the
following:
• D&B proprietary rankings and predictive creditworthiness scores
• Public filings, including suits, liens, judgments, and UCC (uniform commercial
code) filings—standardized financial disclosure documents that conform to the
uniform commercial code
• Company financial statements and history
13.4.5 Request for Quote
An RFQ focuses on price. The type of materials or service is well defined and can be
obtained from several sources. The bidder that can meet the project quality and
schedule requirements usually wins the contract by quoting the lowest price.
13.4.6 Request for Proposal
An RFP accounts for price but focuses on meeting the project quality or schedule
requirements. The process of developing a proposal in response to an RFP can be very
expensive for the bidder, and the project team should not issue an RFP to a company
that is not eligible to win the bid.
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13.4.7 Evaluating Bids
Evaluation of bids in response to RFQs for commodity items and services is heavily
graded for price. In most cases, the lowest total price will win the contract. The total
price will include the costs of the goods or services, any shipping or delivery costs, the
value of any warranties, and any additional service that adds value to the project.
The evaluation of bids based on RFPs is more complex. The evaluation of proposals
includes the price and also an evaluation of the technical approach chosen by the
bidder. The project team evaluating the proposal must include people with the
expertise to understand the technical aspects of the various proposal options and the
value of each proposal to the project. On more complex projects, the administrative
part of the proposal is evaluated and scored by one team, and the technical aspect of
the proposal is evaluated by another team. The project team combines the two scores
to determine the best proposal for the project.
13.4.8 Awarding the Contract
After the project team has selected the bidder that provides the best value for the
project, a project representative validates all conditions of the bid and the contract
with the potential contractor. Less complex awards, like contracts for printed
materials, require a reading and signing of the contract to ensure that the supplier
understands the contract terms and requirements of the project schedule. More
complex projects require a detailed discussion of the goals, the potential barriers to
accomplishing those goals, the project schedule and critical dates, and the processes
for resolving conflicts and improving work processes.
13.4.9 Managing the Contracts
The contract type determines the level of effort and the skills needed to manage the
contract. The manager of supplier contracts develops detailed specifications and
ensures compliance with these specifications. The manager of vendor contracts
ensures that the contractors bidding on the work have the skills and capacity to
accomplish the work according to the project schedule and tracks the vendor’s
performance against the project needs, supplying support and direction when
needed. The manager of partnering arrangements develops alignment around
common goals and work processes. Each of these approaches requires different skills
and various degrees of effort.
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Items that take a long time to acquire—long-lead items—receive early attention by
the project leadership. Examples of long-lead items are equipment that is designed
and built specifically for the project, curriculum that is created for training a new
workforce, and a customized bioreactor for a biotech project. These items might
require weeks, months, or years to develop and complete. The project team identifies
long-lead items early to begin the procurement activities as soon as possible because
those procured through the normal procurement cycle may cause delays in the
project.
After the contract is awarded, the project team tracks the performance of the
contractor against performance criteria in the contract and his or her contribution to
the performance of the project. Usually, contractors deliver the product or service that
meets the quality expectations and supports the project schedule. Typically, there are
also one or two contractors that do not perform to project expectations. Some project
managers will refer to the contract and use it to attempt to persuade the contractor to
improve performance or be penalized. Other project managers will explore with the
contractor creative ways to improve performance and meet project requirements. The
contract management allows for both approaches to deal with non-performing
contractors, and the project team must assess what method is most likely to work in
each situation.
Managing contractor performance on a project is as important to the overall project
outcomes as the work performed by the project team.
13.4.10 Logistics and Expediting
Equipment and materials that are purchased for use on the project must be
transported, inventoried, warehoused, and often secured. This area of expertise is
called logistics. The logistics for the project can be managed by the project team or can
be included in the RFP or RFQ. On international projects, materials may be imported,
and the procurement team manages the customs process. On smaller projects, the
logistical function is often provided by the parent company. On larger projects, these
activities are typically contracted to companies that specialize in logistical services. On
larger, more complex projects, the procurement team will include logistical expertise.
The project work often depends on materials procured for the project. The delivery of
these materials influences the scheduling of the project, and often some materials are
needed earlier than normal procurement practices would deliver. On long-lead items,
the project schedule is included in the contracting plans and contractors must explain
how they will support the project schedule.
On large, complex projects, critical items might be scheduled for delivery after they
are needed on the project. The procurement team then explores ideas with the
contractor to expedite the manufacturing or transportation of the equipment or
materials. The contract can often place a priority on the fabrication of the equipment
and delivery of the equipment to meet the project schedule. The project logistics team
can also explore ways of shortening the transportation time. For example, a project in
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Argentina flew some critical equipment from Sweden rather than transport the
equipment by ship to save several weeks in transit. The logistics costs were higher, but
the overall value to the project was greater.
13.5 Attribution
Unported.
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Chapter 14 Quality Planning
Adrienne Watt
It’s not enough to make sure you get a project done on time and under budget. You
need to be sure you make the right product to suit your stakeholders’ needs. Quality
means making sure that you build what you said you would and that you do it as
efficiently as you can. And that means trying not to make too many mistakes and
always keeping your project working toward the goal of creating the right product.
Everybody “knows” what quality is. But the way the word is used in everyday life is a
little different from how it is used in project management. Just like the triple constraint
(scope, cost, and schedule), you manage quality on a project by setting goals and
taking measurements. That’s why you must understand the quality levels your
stakeholders believe are acceptable, and ensure that your project meets those targets,
just like it needs to meet their budget and schedule goals.
Customer satisfaction is about making sure that the people who are paying for the
end product are happy with what they get. When the team gathers requirements for
the specification, they try to write down all of the things that the customers want in
the product so that you know how to make them happy. Some requirements can be
left unstated. Those are the ones that are implied by the customer’s explicit needs. For
example, some requirements are just common sense (e.g., a product that people hold
can’t be made from toxic chemicals that may kill them). It might not be stated, but it’s
definitely a requirement.
“Fitness to use” is about making sure that the product you build has the best design
possible to fit the customer’s needs. Which would you choose: a product that’s
beautifully designed, well constructed, solidly built, and all around pleasant to look at
but does not do what you need, or a product that does what you want despite being
ugly and hard to use? You’ll always choose the product that fits your needs, even if it’s
seriously limited. That’s why it’s important that the product both does what it is
supposed to do and does it well. For example, you could pound in a nail with a
screwdriver, but a hammer is a better fit for the job.
Conformance to requirements is the core of both customer satisfaction and fitness to
use, and is a measure of how well your product does what you intend. Above all, your
product needs to do what you wrote down in your requirements document. Your
requirements should take into account what will satisfy your customer and the best
design possible for the job. That means conforming to both stated and implied
requirements.
In the end, your product’s quality is judged by whether you built what you said you
would build.
Quality planning focuses on taking all of the information available to you at the
beginning of the project and figuring out how you will measure quality and prevent
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defects. Your company should have a quality policy that states how it measures
quality across the organization. You should make sure your project follows the
company policy and any government rules or regulations on how to plan quality for
your project.
You need to plan which activities you will use to measure the quality of the project’s
product. And you’ll need to think about the cost of all the quality-related activities you
want to do. Then you’ll need to set some guidelines for what you will measure against.
Finally, you’ll need to design the tests you will run when the product is ready to be
tested.
14.1 Quality and Grade
According to the International Organization for Standardization (ISO), quality is “the
degree to which a set of inherent characteristics fulfill requirements.” The
requirements of a product or process can be categorized or given a grade that will
provide a basis for comparison. The quality is determined by how well something
meets the requirements of its grade.
For most people, the term quality also implies good value—getting your money’s
worth. For example, even low-grade products should still work as expected, be safe to
use, and last a reasonable amount of time. Consider the following examples.
Example: Quality of Gasoline Grades
Petroleum refiners provide gasoline in several different grades based
on the octane rating because higher octane ratings are suitable for
higher compression engines. Gasoline must not be contaminated
with dirt or water, and the actual performance of the fuel must be
close to its octane rating. A shipment of low-grade gasoline graded as
87 octane that is free of water or other contaminants would be of
high quality, while a shipment of high-grade 93 octane gas that is
contami nated with dirt would be of low quality.
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Example: Quality of Furniture Packing
John has antique furniture in excellent condition that was left to him
by his grandmother. The pieces are important to John for sentimental
reasons, and they are valuable. John decides to hire movers (high-
grade professionals) to load his furniture into the truck using
appropriate padding and restraints to prevent dents and scratches
during the move. John’s standard for high quality is that no
observable damage occurs to his large pieces of furniture, especially
the antiques. If the furniture arrives in his new apartment without a
single dent, scratch, or other damage, the activity will be of high
quality. John’s standard for packing his kitchen is lower. His dishes
are old and cheap, so he decides to trust his inexperienced friends
(low-grade amateurs) to help him pack his kitchen. If a few of the
dishes or glassware are chipped or broken in the process, the savings
in labor cost will more than make up for the loss and will be a good
value.
14.2 Statistics
Determining how well products meet grade requirements is done by taking
measurements and then interpreting those measurements. Statistics—the
mathematical interpretation of numerical data—are useful when interpreting large
numbers of measurements and are used to determine how well the product meets a
specification when the same product is made repeatedly. Measurements made on
samples of the product must be within control limits—the upper and lower extremes
of allowable variation—and it is up to management to design a process that will
consistently produce products between those limits.
Instructional designers often use statistics to determine the quality of their course
designs. Student assessments are one way in which instructional designers are able to
tell whether learning occurs within the control limits.
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Example: Setting Control Limits
A petroleum refinery produces large quantities of fuel in several
grades. Samples of the fuels are extracted and measured at regular
intervals. If a fuel is supposed to have an 87 octane performance,
samples of the fuel should produce test results that are close to that
value. Many of the samples will have scores that are different from
87. The differences are due to random factors that are difficult or
expensive to control. Most of the samples should be close to the 87
rating and none of them should be too far off. The manufacturer has
grades of 85 and 89, so they decide that none of the samples of the 87
octane fuel should be less than 86 or higher than 88.
If a process is designed to produce a product of a certain size or other
measured characteristic, it is impossible to control all the small
factors that can cause the product to differ slightly from the desired
measurement. Some of these factors will produce products that have
measurements that are larger than desired and some will have the
opposite effect. If several random factors are affecting the process,
they tend to offset each other, and the most common results are near
the middle of the range; this phenomenon is called the central limit
theorem.
If the range of possible measurement values is divided equally into
subdivisions called bins, the measurements can be sorted, and the
number of measurements that fall into each bin can be counted. The
result is a frequency distribution that shows how many
measurements fall into each bin. If the effects that are causing the
differences are random and tend to offset each other, the frequency
distribution is called a normal distribution, which resembles the
shape of a bell with edges that flare out. The edges of a theoretical
normal distribution curve get very close to zero but do not reach zero.
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Example: Normal Distribution
A refinery’s quality control manager measures many samples of 87
octane gasoline, sorts the measurements by their octane rating into
bins that are 0.1 octane wide, and then counts the number of
measurements in each bin. Then she creates a frequency distribution
chart of the data, as shown in Figure 14.1 Normal Distribution of Meas
urements .
It is common to take samples—randomly selected subsets from the
total population—and measure and compare their qualities, since
measuring the entire population would be cumbersome, if not
impossible. If the sample measurements are distributed equally
above and below the center of the distribution as they are in Figure 1
4.1 Normal Distribution of Measurements , the average of those
measurements is also the center value that is called the mean, and is
represented in formulas by the lowercase Greek letter µ (pronounced
mu). The amount of difference of the measurements from the central
value is called the sample standard deviation or just the standard
deviation.
The first step in calculating the standard deviation is subtracting
each measurement from the central value (mean) and then squaring
that difference. (Recall from your mathematics courses that squaring
a number is multiplying it by itself and that the result is always
positive.) The next step is to sum these squared values and divide by
the number of values minus one. The last step is to take the square
root. The result can be thought of as an average difference. (If you
had used the usual method of taking an average, the positive and
negative numbers would have summed to zero.) Mathematicians
represent the standard deviation with the lowercase Greek letter σ
(pronounced sigma). If all the elements of a group are measured,
instead of just a sample, it is called the standard deviation of the
population and in the second step, the sum of the squared values is
divided by the total number of values.
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Figure 14.1 Normal Distribution of Measurements
Figure 14.1 Normal Distribution of Measurements shows that the most common
measurements of octane rating are close to 87 and that the other measurements are
distributed equally above and below 87. The shape of the distribution chart supports
the central limit theorem’s assumption that the factors that are affecting the octane
rating are random and tend to offset each other, which is indicated by the symmetric
shape. This distribution is a classic example of a normal distribution. The quality
control manager notices that none of the measurements are above 88 or below 86 so
they are within control limits, and she concludes that the process is working
satisfactorily.
Example: Standard Deviation of
Gasoline Samples
The refinery’s quality control manager uses the standard deviation
function in her spreadsheet program to find the standard deviation of
the sample measurements and finds that for her data, the standard
deviation is 0.3 octane. She marks the range on the frequency
distribution chart to show the values that fall within one sigma
(standard deviation) on either side of the mean (Figure 14.2 One Sig
ma Range Most of the measurements are within 0.3 octane of 87. ).
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Figure 14.2 One Sigma Range Most of the measurements are within 0.3 octane of 87.
For normal distributions, about 68.3% of the measurements fall within one standard
deviation on either side of the mean. This is a useful rule of thumb for analyzing some
types of data. If the variation between measurements is caused by random factors
that result in a normal distribution, and someone tells you the mean and the standard
deviation, you know that a little over two-thirds of the measurements are within a
standard deviation on either side of the mean. Because of the shape of the curve, the
number of measurements within two standard deviations is 95.4%, and the number of
measurements within three standard deviations is 99.7%. For example, if someone
said the average (mean) height for adult men in the United States is 178 cm (70 inches)
and the standard deviation is about 8 cm (3 inches), you would know that 68% of the
men in the United States are between 170 cm (67 inches) and 186 cm (73 inches) in
height. You would also know that about 95% of the adult men in the United States
were between 162 cm (64 inches) and 194 cm (76 inches) tall, and that almost all of
them (99.7%) are between 154 cm (61 inches) and 202 cm (79 inches) tall. These
figures are referred to as the 68-95-99.7 rule.
Example: Gasoline Within Three
Standard Deviations
The refinery’s quality control manager marks the ranges included
within two and three standard deviations, as shown in Figure 14.3 Th
e 68-95-99.7 Rule . Some products must have less variability than
others to meet their purpose. For example, if training designed to
operate highly specialized and potentially dangerous machinery was
assessed for quality, most participants would be expected to exceed
the acceptable pass rate. Three standard deviations from the control
limits might be fine for some products but not for others. In general,
if the mean is six standard deviations from both control limits, the
like lihood of a part exceeding the control limits from random
variation is practically zero (2 in 1,000,000,000).
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Example: A Step Project Improves
Quality of Gasoline
A new refinery process is installed that produces fuels with less
variability. The refinery’s quality control manager takes a new set of
samples and charts a new frequency distribution diagram, as shown
in Figure 14.4 Smaller Standard Deviation .The refinery’s quality
control manager calculates that the new standard deviation is 0.2
octane. From this, she can use the 68-95-99.7 rule to estimate that
68.3% of the fuel produced will be between 86.8 and 87.2 and that
99.7% will be between 86.4 and 87.6 octane. A shorthand way of
describing this amount of control is to say that it is a five-sigma
production system, which refers to the five standard deviations
between the mean and the control limit on each side.
Figure 14.3 The 68-95-99.7 Rule
Figure 14.4 Smaller Standard Deviation
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14.3 Quality planning tools
High quality is achieved by planning for it rather than by reacting to problems after
they are identified. Standards are chosen and processes are put in place to achieve
those standards.
Measurement Terminology During the execution phase of the project, services and
products are sampled and measured to determine if the quality is within control limits
for the requirements and to analyze causes for variations. This evaluation is often
done by a sepa-rate quality control group, and knowledge of a few process
measurement terms is necessary to understand their reports. Several of these terms
are similar, and it is valuable to know the distinction between them.
The quality plan specifies the control limits of the product or process; the size of the
range between those limits is the tolerance. Tolerances are often written as the mean
value, plus or minus the tolerance. The plus and minus signs are written together, ±.
Example: Tolerance in Gasoline
Production
The petroleum refinery chose to set its control limits for 87 octane
gasoline at 86 and 88 octane. The tolerance is 87 ± 1.
Tools are selected that can measure the samples closely enough to
determine if the measurements are within control limits and if they
are showing a trend. Each measurement tool has its own tolerances.
The choice of tolerance directly affects the cost of quality (COQ). In
general, it costs more to produce and measure products that have
small tolerances. The costs associated with making products with
small tolerances for variation can be very high and not proportional
to the gains. For example, if the cost of evaluating each screen as it is
created in an online tutorial is greater than delivering the product
and fixing any issues after the fact, then the COQ may be too high
and the instructional designer will tolerate more defects in the
design.
14.4 Defining and Meeting Client Expectations
Clients provide specifications for the project that must be met for the project to be
successful. Recall that meeting project specifications is one definition of project
success. Clients often have expectations that are more difficult to capture in a written
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specification. For example, one client will want to be invited to every meeting of the
project and will then select the ones that seem most relevant. Another client will want
to be invited only to project meetings that need client input. Inviting this client to every
meeting will cause unnecessary frustration. Listening to the client and developing an
understanding of the expectations that are not easily captured in specifications is
important to meeting those expectations.
Project surveys can capture how the client perceives the project performance and
provide the project team with data that are useful in meeting client expectations. If
the results of the surveys indicate that the client is not pleased with some aspect of
the project, the project team has the opportunity to explore the reasons for this
perception with the client and develop recovery plans. The survey can also help define
what is going well and what needs improvement.
14.5 Sources of Planning Information
Planning for quality is part of the initial planning process. The early scope, budget, and
schedule estimates are used to identify processes, services, or products where the
expected grade and quality should be specified. Risk analysis is used to determine
which of the risks to the project could affect quality.
14.6 Techniques
Several different tools and techniques are available for planning and controlling the
quality of a project. The extent to which these tools are used is determined by the
project complexity and the quality management program in use by the client.
The following represents the quality planning tools available to the project manager.
Cost-benefit analysis is looking at how much your quality activities will cost versus
how much you will gain from doing them. The costs are easy to measure; the effort
and resources it takes to do them are just like any other task on your schedule. Since
quality activities don’t actually produce a product, it is sometimes harder for people to
measure the benefit. The main benefits are less reworking, higher productivity and
efficiency, and more satisfaction from both the team and the customer.
Benchmarking means using the results of quality planning on other projects to set
goals for your own. You might find that the last project in your company had 20%
fewer defects than the one before it. You should want to learn from a project like that
and put in practice any of the ideas they used to make such a great improvement.
Benchmarks can give you some reference points for judging your own project before
you even start the work.
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Design of experiments is the list of all the kinds of tests you are going to run on your
product. It might list all the kinds of test procedures you’ll do, the approaches you’ll
take, and even the tests themselves. (In the software world, this is called test planning.)
Cost of quality is what you get when you add up the cost of all the prevention and
inspection activities you are going to do on your project. It doesn’t just include the
testing. It includes any time spent writing standards, reviewing documents, meeting to
analyze the root causes of defects, reworking to fix the defects once they’re found by
the team: in other words, absolutely everything you do to ensure quality on the
project. Cost of quality can be a good number to check to determine whether your
project is doing well or having trouble. Say your company tracks the cost of quality on
all of its projects; then you could tell if you are spending more or less than has been
spent on other projects to get your project up to quality standards.
Control charts can be used to define acceptable limits. If some of the functions of a
project are repetitive, statistical process controls can be used to identify trends and
keep the processes within control limits. Part of the planning for controlling the quality
of repetitive processes is to determine what the control limits are and how the
process will be sampled.
Cause-and-effect diagrams can help in discovering problems. When control charts
indicate an assignable cause for a variation, it is not always easy to identify the cause
of a problem. Discussions that are intended to discover the cause can be facilitated
using a cause-and-effect or fishbone diagram where participants are encouraged to
identify possible causes of a defect.
Example: Diagramming Quality
Problems
A small manufacturing firm tries to identify the assignable causes to
variations in its manufacturing line. They assemble a team that
identifies six possibilities, as shown in the fishbone diagram in Figur
e 14.5 Cause-and-Effect (Fishbone) Diagram .
Figure 14.5 Cause-and-Effect (Fishbone) Diagram
Each branch of the diagram can be expanded to break down a category into more
specific items. An engineer and an electrician work on one of the branches to consider
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possible causes of power fluctuation and add detail to their part of the fishbone
diagram, as shown in Figure 14.6 Possible Causes of Power Fluctuation . Check
sheets, histograms, and Pareto charts are used to solve several quality problems.
When a quality-control issue occurs, a project manager must choose which problem to
address first. One way to prioritize quality problems is to determine which ones occur
most frequently. These data can be collected using a check sheet, which is a basic
form on which the user can make a check in the appropriate box each time a problem
occurs or by automating the data collection process using the appropriate technology.
Once the data are collected, they can be analyzed by creating a type of frequency
distribution chart called a histogram. A true histogram is a column chart where the
widths of the columns fill the available space on the x-axis axis and are proportional to
the category values displayed on that axis, while the height of the columns is
proportional to the frequency of occurrences. Most histograms use one width of
column to represent a category, while the vertical axis represents the frequency of
occurrences.
Figure 14.6 Possible Causes of Power Fluctuation
A variation on the histogram is a frequency distribution chart invented by economist
Vilfredo Pareto known as a Pareto chart, in which the columns are arranged in
decreasing order with the most common on the left and a line added that shows the
cumulative total. The combination of columns and a line allows the user to tell at a
glance which problems are most frequent and what fraction of the total they
represent.
Once you have your quality plan, you know your guidelines for managing quality on
the project. Your strategies for monitoring project quality should be included in the
plan, as well as the reasons for all the steps you are taking. It’s important that
everyone on the team understand the rationale behind the metrics being used to
judge success or failure of the project.
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14.7 Quality Assurance
The purpose of quality assurance is to create confidence that the quality plan and
controls are working properly. Time must be allocated to review the original quality
plan and compare that plan to how quality is being ensured during the
implementation of the project.
14.8 Process Analysis
The flowcharts of quality processes are compared to the processes followed during
actual operations. If the plan was not followed, the process is analyzed and corrective
action taken. The corrective action could be to educate the people involved on how to
follow the quality plan, or it could be to revise the plan.
The experiments that sample products and processes and collect data are examined
to see if they are following statistically valid sampling techniques and that the
measurement methods have small enough tolerances to detect variation within
control limits.
Because projects are temporary, there are fewer opportunities to learn and improve
within a project, especially if it has a short duration. But even in short projects, the
quality manager should have a way to learn from experience and change the process
for the next project of a similar complexity profile.
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Example: Analyzing Quality Processes in
Safety Training
A technical college responsible for training employees in safe plant
practices evaluates its instructor selection process at the end of the
training to see if it had the best criteria for selection. For example, it
required the instructors to have master’s degrees in manufacturing
to qualify as college instructors. The college used an exit survey of the
students to ask what they thought would improve the instruction of
future classes on this topic. Some students felt that it would be more
important to require that the instructors have more years of training
experience, while others recommended that instructors seek
certification at a training center. The college considered these
suggestions and decided to retain its requirement of a master’s
degree but add a requirement that instructors be certified in plant
safety.
The purpose of quality assurance is to build confidence in the client
that quality standards and procedures are being followed. This is
done by an internal review of the plan, testing, and revisions policies
or by an audit of the same items performed by an external group or
agency.
14.9 Attribution
Unported.
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Chapter 15 Communication Planning
Adrienne Watt
Communications management is about keeping everybody in the loop. The
communications planning process concerns defining the types of information you will
deliver, who will receive it, the format for communicating it, and the timing of its
release and distribution. It turns out that 90% of a project manager’s job is spent on
communication so it’s important to make sure everybody gets the right message at
the right time.
The first step in defining your communication plan is figuring out what kind of
communication your stakeholders need from the project so they can make good
decisions. This is called the communications requirements analysis. Your project will
produce a lot of information; you don’t want to overwhelm your stakeholders with all
of it. Your job is to figure out what they feel is valuable. Communicating valuable
information doesn’t mean you always paint a rosy picture. Communications to
stakeholders may consist of either good news or bad news. The point is that you don’t
want to bury stakeholders in too much information but you do want to give them
enough so that they’re informed and can make appropriate decisions.
Communications technology has a major impact on how you keep people in the loop.
Methods of communicating can take many forms, such as written reports,
conversations, email, formal status reports, meetings, online databases, online
schedules, and project websites. You should consider several factors before deciding
what methods you’ll choose to transfer information. The timing of the information
exchange or need for updates is the first factor. Do you need to procure new
technology or systems, or are there systems already in place that will work? The
technologies available to you should figure into your plan of how you will keep
everyone notified of project status and issues. Staff experience with the technology is
another factor. Are there project team members and stakeholders experienced at
using this technology, or will you need to train them? Finally, consider the duration of
the project and the project environment. Will the technology you’re choosing work
throughout the life of the project or will it have to be upgraded or updated at some
point? And how does the project team function? Are they located together or spread
out across several campuses or locations?
The answers to these questions should be documented in the communication plan.
All projects require a sound communication plan, but not all projects will have the
same types of communication or the same methods for distributing the information.
The communication plan documents the types of information needs the stakeholders
have, when the information should be distributed, and how the information will be
delivered.
The types of information you will communicate typically include project status, project
scope statements and updates, project baseline information, risks, action items,
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performance measures, project acceptance, and so on. It’s important that the
information needs of the stakeholders be determined as early in the planning phase
of the project management life cycle as possible so that as you and your team develop
project planning documents, you already know who should receive copies of them
and how they should be delivered.
15.1 Types of Communication
Completing a complex project successfully requires good communication among team
members. If those team members work in the same building, they can arrange regular
meetings, simply stop by each other’s office space to get a quick answer, or even
discuss a project informally at other office functions. Many projects are performed by
teams that interact primarily through electronic communication and are, therefore,
called virtual teams. To avoid miscommunication that can harm trust and to include
team members in a project culture, the project team needs a plan for communicating
reliably and in a timely manner. This planning begins with understanding two major
categories of communication.
15.2 Synchronous Communications
If all the parties to the communication are taking part in the exchange at the same
time, the communication is synchronous. A telephone or Skype conference call is an
example of synchronous communication. The following are examples of synchronous
communications:
• Live meeting: Gathering of team members at the same location
• Conference call: A telephone call in which several people participate
• Audio conference: Like a conference call, but conducted online using software like
Skype
• Computer-assisted conference: Audio conference with a connection between
computers that can display a document or spreadsheet that can be edited by
both parties
• Video conference: Similar to an audio conference but with live video of the
participants. Some laptop computers have built-in cameras to facilitate video
conferencing
• IM (instant messaging): Exchange of text or voice messages using pop-up windows
on the participants’ computer screens
• Texting: Exchange of text messages between mobile phones, pagers, or personal
digital assistants (PDAs)—devices that hold a calendar, a contact list, a task list,
and other support programs
Modern communication technologies make it possible to assemble project teams
from anywhere in the world. Most people work during daylight hours, which can make
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synchronous meetings difficult if the participants are in different time zones. However,
it can be an advantage in some circumstances; for example, if something must be
done by the start of business tomorrow, team members in Asia can work on the
problem during their normal work hours while team members in North America get
some sleep.
15.3 Remember Time Zones
It is important to remember time zones and calculate the difference between yours
and your associates’ zones correctly so as not to miss important meetings or
deadlines. Cities and countries to the north or south of each other all observe the
same local time. Be aware that many well-educated people in the United States and
Canada think of South America as directly south of North America. As you can see,
South American countries can be up to five time zones east of North America. A
helpful site to convert local time to another time zone is
http://www.timezoneconverter.com/cgibin/tzc.tzc
Time zones are calculated in reference to the time zone of the Royal Observatory in
Greenwich, England. The time at that location is Greenwich Mean Time (GMT). More
recent references designate it as Coordinated Universal Time (UTC) instead of GMT.
The time zones advance from Greenwich in an easterly direction (Figure 15.1 World Ti
me Zones. Standard time zones of the world by TimeZonesBoy ). However, at the
international dateline (about the midpoint around the world from Greenwich), you
subtract the time zone from GMT. To prevent confusion between a.m. and p.m., times
are often given using a 24-hour clock. For example, midnight is indicated as 00:00,
noon is 12:00 and 1 p.m. is 13:00.
Example: Conference Call between
Toronto and Paris
A project manager for a software development project in Toronto is
five time zones west of the reference zone, so the time is given as
UTC–5 (or GMT–5). If it is noon in the reference zone, it is 7 a.m. (five
hours earlier) in Toronto. The manager would like to contact a project
team member in Paris, France. Paris is one time zone east of the
reference zone (UTC+1 or GMT+1). If it is noon (12:00) in the reference
zone, it is 1 p.m. (13:00) in Paris. This means that there is a six-hour
difference between Toronto and Paris. If the project manager waits
until after lunch to place the call (1 p.m. in Toronto), it will be too late
in the day in Paris (7 p.m.) to reach someone.
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Figure 15.1 World Time Zones. Standard time zones of the world by TimeZonesBoy
( (http://commons.wikimedia.org/wiki/ File:Standard_time_zones_of_the_world.png) un
der the Public Domain ) .
15.4 Asynchronous Communications
Getting a team together at the same time can be a challenge—especially if they are
spread out across time zones. Many types of communication do not require that the
parties are present at the same time. This type of communication is asynchronous.
There are several choices of asynchronous communications.
15.4.1 Mail and Package Delivery
Many companies prefer that final contracts are personally signed by an authorized
representative of each party to the agreement. If several signatures are required, this
can take weeks to get all the signatures if the contracts are transferred by a postal
service. If this process is holding up the start of the project, you can use an overnight
delivery service to minimize the time spent transferring the documents.
15.4.2 Fax
Fax machines have been around a long time and enjoy a high level of trust for
transmitting documents accurately. Although it might seem archaic to still use fax
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transmissions, in many countries a fax of a signed contract is legal, but a computer-
scanned image is not.
15.4.3 Email
Electronic mail (email) is widely used to coordinate projects and to communicate
between team members. It has several valuable characteristics for project
management:
• Information can be sent to a list of team members.
• Messages can be saved to document the process in case of a misunderstanding
or miscommunication.
• Files can be attached and distributed.
15.4.4 Project Blog
A blog is an online journal that can be private, shared by invitation, or made available
to the world. Some project managers keep a journal in which they summarize the
day’s challenges and triumphs and the decisions they made. They return to this
journal at a later date to review their decision-making process after the results of
those decisions are known to see if they can learn from their mistakes. Many decisions
in project management are made with incomplete knowledge, and reflecting on
previous decisions to develop this decision-making skill is important to growth as a
project manager.
15.4.5 Really Simple Syndication (RSS)
Some projects are directly affected by external factors such as political elections,
economic trends, corporate mergers, technological or scientific breakthroughs, or
weather. To keep informed about these factors, you can subscribe to online news
sources. A technology that facilitates this process is Really Simple Syndication (RSS).
Web pages with RSS news feeds have labeled links.
If the user clicks on the RSS feed, news from the website is automatically sent to the
user’s news reader, such as Google Reader. The news reader can be set to filter the
news for key words to limit the stories to those that are relevant to the project.
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15.5 Assessing New Communication Technologies
New technologies for communicating electronically appear with increasing frequency.
Using a new technology that is unfamiliar to the team increases the technology
complexity, which can cause delays and increase costs. To decide if a new technology
should be included in a communications plan, seek answers to the following questions
(Business Dictionary):
• Does the new communication technology provide a competitive advantage for
the project by reducing cost, saving time, or preventing mistakes?
• Does the project team have the expertise to learn the new technology quickly?
• Does the company offer support such as a help desk and equipment service for
new communication technology?
• What is the cost of training and implementation in terms of time as well as money
15.6 Communication Plan Template
So how do you create a communication plan?
1. Identify your stakeholders (to whom)
2. Identify stakeholder expectations (why)
3. Identify communication necessary to satisfy stakeholder expectations and keep
them informed (what)
4. Identify time-frame and/or frequency of communication messages (when)
5. Identify how the message will be communicated (the stakeholder’s preferred
method) (how)
6. Identify who will communication each message (who)
7. Document items – templates, formats, or documents the project must use for
communicating.
Figure 15.2 Communications Plan Template shows a communication plan template.
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Figure 15.2 Communications Plan Template
( http://inte5160.wikispaces.com/Communication+Plans) used under CC-BY-SA license
(http://creativecommons.org/licenses/by-sa/3.0/) ) .
15.7 Attribution
Designers. Retrieved from http://pm4id.org/ licensed under Creative Commons
Attribution 3.0 Unported and Communication Plans by Inte6160 Wiki licensed under
217

Chapter 16 Risk Management
Planning
Adrienne Watt
Even the most carefully planned project can run into trouble. No matter how well you
plan, your project can always encounter unexpected problems. Team members get
sick or quit, resources that you were depending on turn out to be unavailable, even
the weather can throw you for a loop (e.g., a snowstorm). So does that mean that
you’re helpless against unknown problems? No! You can use risk planning to identify
potential problems that could cause trouble for your project, analyze how likely they
are to occur, take action to prevent the risks you can avoid, and minimize the ones
that you can’t.
A risk is any uncertain event or condition that might affect your project. Not all risks
are negative. Some events (like finding an easier way to do an activity) or conditions
(like lower prices for certain materials) can help your project. When this happens, we
call it an opportunity; but it’s still handled just like a risk.
There are no guarantees on any project. Even the simplest activity can turn into
unexpected problems. Anything that might occur to change the outcome of a project
activity, we call that a risk. A risk can be an event (like a snowstorm) or it can be a
condition (like an important part being unavailable). Either way, it’s something that
may or may not happen …but if it does, then it will force you to change the way you
and your team work on the project.
If your project requires that you stand on the edge of a cliff, then there’s a risk that
you could fall. If it’s very windy out or if the ground is slippery and uneven, then falling
is more likely (Figure 16.1 Risk Management Options ).
Figure 16.1 Risk Management Options Illustration from Barron & Barron Project Management for
Scientists and Engineers,
( llustration from Barron & Barron Project Management for Scientists and Engineers, h
ttp://cnx.org/content/col11120/1.4/ ) .
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When you’re planning your project, risks are still uncertain: they haven’t happened yet.
But eventually, some of the risks that you plan for do happen, and that’s when you
have to deal with them. There are four basic ways to handle a risk.
1. Avoid: The best thing you can do with a risk is avoid it. If you can prevent it from
happening, it definitely won’t hurt your project. The easiest way to avoid this risk
is to walk away from the cliff, but that may not be an option on this project.
2. Mitigate: If you can’t avoid the risk, you can mitigate it. This means taking some
sort of action that will cause it to do as little damage to your project as possible.
3. Transfer: One effective way to deal with a risk is to pay someone else to accept it
for you. The most common way to do this is to buy insurance.
4. Accept: When you can’t avoid, mitigate, or transfer a risk, then you have to accept
it. But even when you accept a risk, at least you’ve looked at the alternatives and
you know what will happen if it occurs. If you can’t avoid the risk, and there’s
nothing you can do to reduce its impact, then accepting it is your only choice.
By the time a risk actually occurs on your project, it’s too late to do anything about it.
That’s why you need to plan for risks from the beginning and keep coming back to do
more planning throughout the project.
The risk management plan tells you how you’re going to handle risk in your project. It
documents how you’ll assess risk, who is responsible for doing it, and how often you’ll
do risk planning (since you’ll have to meet about risk planning with your team
throughout the project).
Some risks are technical, like a component that might turn out to be difficult to use.
Others are external, like changes in the market or even problems with the weather.
It’s important to come up with guidelines to help you figure out how big a risk’s
potential impact could be. The impact tells you how much damage the risk would
cause to your project. Many projects classify impact on a scale from minimal to severe,
or from very low to very high. Your risk management plan should give you a scale to
help figure out the probability of the risk. Some risks are very likely; others aren’t.
16.1 Risk Management Process
Managing risks on projects is a process that includes risk assessment and a mitigation
strategy for those risks. Risk assessment includes both the identification of potential
risk and the evaluation of the potential impact of the risk. A risk mitigation plan is
designed to eliminate or minimize the impact of the risk events—occurrences that
have a negative impact on the project. Identifying risk is both a creative and a
disciplined process. The creative process includes brainstorming sessions where the
team is asked to create a list of everything that could go wrong. All ideas are welcome
at this stage with the evaluation of the ideas coming later.
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16.2 Risk Identification
A more disciplined process involves using checklists of potential risks and evaluating
the likelihood that those events might happen on the project. Some companies and
industries develop risk checklists based on experience from past projects. These
checklists can be helpful to the project manager and project team in identifying both
specific risks on the checklist and expanding the thinking of the team. The past
experience of the project team, project experience within the company, and experts in
the industry can be valuable resources for identifying potential risk on a project.
Identifying the sources of risk by category is another method for exploring potential
risk on a project. Some examples of categories for potential risks include the
following:
• Technical
• Cost
• Schedule
• Client
• Contractual
• Weather
• Financial
• Political
• Environmental
• People
You can use the same framework as the work breakdown structure (WBS) for
developing a risk breakdown structure (RBS). A risk breakdown structure organizes
the risks that have been identified into categories using a table with increasing levels
of detail to the right. The people category can be subdivided into different types of
risks associated with the people. Examples of people risks include the risk of not
finding people with the skills needed to execute the project or the sudden
unavailability of key people on the project.
Example: Risks in John’s Move
In John’s move, John makes a list of things that might go wrong with
his project and uses his work breakdown structure as a guide. A
partial list for the planning portion of the RBS is shown in Figure 16.2
Risk Breakdown Structure (RBS) .
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Source: http://pm4id.org/11/2/
Figure 16.2 Risk Breakdown Structure (RBS)
The result is a clearer understanding of where risks are most concentrated. This
approach helps the project team identify known risks, but can be restrictive and less
creative in identifying unknown risks and risks not easily found inside the WBS.
16.3 Risk Evaluation
After the potential risks have been identified, the project team then evaluates each
risk based on the probability that a risk event will occur and the potential loss
associated with it. Not all risks are equal. Some risk events are more likely to happen
than others, and the cost of a risk can vary greatly. Evaluating the risk for probability
of occurrence and the severity or the potential loss to the project is the next step in
the risk management process. Having criteria to determine high-impact risks can help
narrow the focus on a few critical risks that require mitigation. For example, suppose
high-impact risks are those that could increase the project costs by 5% of the
conceptual budget or 2% of the detailed budget. Only a few potential risk events meet
these criteria. These are the critical few potential risk events that the project
management team should focus on when developing a project risk mitigation or
management plan. Risk evaluation is about developing an understanding of which
potential risks have the greatest pos-sibility of occurring and can have the greatest
negative impact on the project (Figure 16.3 Risk and Impact ). These become the
critical few.
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Figure 16.3 Risk and Impact
There is a positive correlation—both increase or decrease together—between project
risk and project complexity. A project with new and emerging technology will have a
high-complexity rating and a correspondingly high risk. The project management team
will assign the appropriate resources to the technology managers to ensure the
accomplishment of project goals. The more complex the technology, the more
resources the technology manager typically needs to meet project goals, and each of
those resources could face unexpected problems.
Risk evaluation often occurs in a workshop setting. Building on the identification of the
risks, each risk event is analyzed to determine the likelihood of occurrence and the
potential cost if it did occur. The likelihood and impact are both rated as high,
medium, or low. A risk mitigation plan addresses the items that have high ratings on
both factors—likelihood and impact.
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Example: Risk Analysis of Equipment
Delivery
A project team analyzed the risk of some important equipment not
arriving at the project on time. The team identified three pieces of
equipment that were critical to the project and would significantly
increase costs if they were late in arriving. One of the vendors, who
was selected to deliver an important piece of equipment, had a
history of being late on other projects. The vendor was good and
often took on more work than it could deliver on time. This risk event
(the identified equipment arriving late) was rated as high likelihood
with a high impact. The other two pieces of equipment were
potentially a high impact on the project but with a low probability of
occurring.
Not all project managers conduct a formal risk assessment on a
project. One reason, as found by David Parker and Alison Mobey in
their phenomenological study of project managers, was a low
understanding of the tools and bene fits of a structured analysis of
project risks (2004). The lack of formal risk management tools was
also seen as a barrier to implementing a risk management program.
Additionally, the project manager’s personality and management
style play into risk preparation levels. Some project managers are
more proactive and develop elaborate risk management programs for
their projects. Other managers are reactive and are more confident in
their ability to handle unexpected events when they occur. Yet others
are risk averse, and prefer to be optimistic and not consider risks or
avoid taking risks whenever possible.
On projects with a low-complexity profile, the project manager may
informally track items that may be considered risk items. On more
complex projects, the project management team may develop a list of
items perceived to be higher risk and track them during project
reviews. On projects of even greater complexity, the process for
evaluating risk is more formal with a risk assessment meeting or
series of meetings during the life of the project to assess risks at
different phases of the project. On highly complex projects, an
outside expert may be included in the risk assessment process, and
the risk assessment plan may take a more prominent place in the
project implementation plan.
On complex projects, statistical models are sometimes used to
evaluate risk because there are too many different possible
combinations of risks to calculate them one at a time. One example of
the statistical model used on projects is the Monte Carlo simulation,
which simulates a possible range of outcomes by trying many
different combinations of risks based on their likelihood. The output
from a Monte Carlo simulation provides the project team with the
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probability of an event occurring within a range and for combinations
of events. For example, the typical output from a Monte Carlo
simulation may indicate a 10% chance that one of the three
important pieces of equipment will be late and that the weather will
also be unusually bad after the equipment arrives.
16.4 Risk Mitigation
After the risk has been identified and evaluated, the project team develops a risk
mitigation plan, which is a plan to reduce the impact of an unexpected event. The
project team mitigates risks in various ways:
• Risk avoidance
• Risk sharing
• Risk reduction
• Risk transfer
Each of these mitigation techniques can be an effective tool in reducing individual
risks and the risk profile of the project. The risk mitigation plan captures the risk
mitigation approach for each identified risk event and the actions the project
management team will take to reduce or eliminate the risk.
Risk avoidance usually involves developing an alternative strategy that has a higher
probability of success but usually at a higher cost associated with accomplishing a
project task. A common risk avoidance technique is to use proven and existing
technologies rather than adopt new techniques, even though the new techniques may
show promise of better performance or lower costs. A project team may choose a
vendor with a proven track record over a new vendor that is providing significant price
incentives to avoid the risk of working with a new vendor. The project team that
requires drug testing for team members is practicing risk avoidance by avoiding
damage done by someone under the influence of drugs.
Risk sharing involves partnering with others to share responsibility for the risky
activities. Many organizations that work on international projects will reduce political,
legal, labor, and others risk types associated with international projects by developing
a joint venture with a company located in that country. Partnering with another
company to share the risk associated with a portion of the project is advantageous
when the other company has expertise and experience the project team does not
have. If a risk event does occur, then the partnering company absorbs some or all of
the negative impact of the event. The company will also derive some of the profit or
benefit gained by a successful project.
Risk reduction is an investment of funds to reduce the risk on a project. On
international projects, companies will often purchase the guarantee of a currency rate
to reduce the risk associated with fluctuations in the currency exchange rate. A project
manager may hire an expert to review the technical plans or the cost estimate on a
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project to increase the confidence in that plan and reduce the project risk. Assigning
highly skilled project personnel to manage the high-risk activities is another risk-
reduction method. Experts managing a high-risk activity can often predict problems
and find solutions that prevent the activities from having a negative impact on the
project. Some companies reduce risk by forbidding key executives or technology
experts to ride on the same airplane.
Risk transfer is a risk reduction method that shifts the risk from the project to
another party. The purchase of insurance on certain items is a risk-transfer method.
The risk is transferred from the project to the insurance company. A construction
project in the Caribbean may purchase hurricane insurance that would cover the cost
of a hurricane damaging the construction site. The purchase of insurance is usually in
areas outside the control of the project team. Weather, political unrest, and labor
strikes are examples of events that can significantly impact the project and that are
outside the control of the project team.
16.5 Contingency Plan
The project risk plan balances the investment of the mitigation against the benefit for
the project. The project team often develops an alternative method for accomplishing
a project goal when a risk event has been identified that may frustrate the
accomplishment of that goal. These plans are called contingency plans. The risk of a
truck drivers’ strike may be mitigated with a contingency plan that uses a train to
transport the needed equipment for the project. If a critical piece of equipment is late,
the impact on the schedule can be mitigated by making changes to the schedule to
accommodate a late equipment delivery.
Contingency funds are funds set aside by the project team to address unforeseen
events that cause the project costs to increase. Projects with a high-risk profile will
typically have a large contingency budget. Although the amount of contingency
allocated in the project budget is a function of the risks identified in the risk analysis
process, contingency is typically managed as one line item in the project budget.
Some project managers allocate the contingency budget to the items in the budget
that have high risk rather than developing one line item in the budget for
contingencies. This approach allows the project team to track the use of contingency
against the risk plan. This approach also allocates the responsibility to manage the risk
budget to the managers responsible for those line items. The availability of
contingency funds in the line item budget may also increase the use of contingency
funds to solve problems rather than finding alternative, less costly solutions. Most
project managers, especially on more complex projects, manage contingency funds at
the project level, with approval of the project man ager required before contingency
funds can be used.
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16.6 Project Risk by Phases
Project risk is dealt with in different ways depending on the phase of the project.
16.6.1 Initiation
Risk is associated with things that are unknown. More things are unknown at the
beginning of a project, but risk must be considered in the initiation phase and
weighed against the potential benefit of the project’s success in order to decide if the
project should be chosen.
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Example: Risks by Phase in John’s Move
In the initiation phase of his move, John considers the risk of events
that could affect the whole project. Lets assume that John’s move is
not just about changing jobs, but also a change of cities. This would
certainly incur more risks for the project. He identifies the following
risks during the initiation phase that might have a high impact and
rates the likeli hood of their happening from low to high.
1. His new employer might change his mind and take back the job
offer after he’s given notice at his old job: Low.
2. The current tenants of his apartment might not move out in time
for him to move in by the first day of work at the new job: Medium.
3. The movers might lose his furniture: Low.
4. The movers might be more than a week late delivering his furniture:
Medium.
5. He might get in an accident driving from Chicago to Atlanta and
miss starting his job: Low.
John considers how to mitigate each of the risks.
1. During his job hunt, John had more than one offer, and he is
confident that he could get another job, but he might lose deposit
money on the apartment and the mover. He would also lose wages
during the time it took to find the other job. To mitigate the risk of
his new employer changing his mind, John makes sure that he
keeps his relationships with his alternate employers cordial and
writes to each of them thanking for their consideration in his recent
interviews.
2. John checks the market in Atlanta to determine the weekly cost and
availability of extended-stay motels.
3. John checks the mover’s contract to confirm that they carry
insurance against lost items, but they require the owner to provide a
detailed list with value estimates and they limit the maximum total
value. John decides to go through his apartment with his digital
camera and take pictures of all of his possessions that will be
shipped by truck and to keep the camera with him during the move
so he has a visual record and won’t have to rely on his memory to
make a list. He seals and numbers the boxes so he can tell if a box is
missing.
4. If the movers are late, John can use his research on extended-stay
motels to calculate how much it would cost. He checks the moving
company’s contract to see if they compensate the owner for late
delivery, and he finds that they do not.
5. John checks the estimated driving time from Chicago to Atlanta
using an Internet mapping service and gets an estimate of 11 hours
of driving time. He decides that it would be too risky to attempt to
make the drive by himself in one day, especially if he didn’t leave
until after the truck was packed. John plans to spend one night on
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the road in a motel to reduce the risk of an accident caused by
driving while too tired.
John concludes that the medium-risks can be mitigated and the costs
from the mitigation would be acceptable in order to get a new job.
16.6.2 Planning Phase
Once the project is approved and it moves into the planning stage, risks are identified
with each major group of activities. A risk breakdown structure (RBS) can be used to
identify increasing levels of detailed risk analysis.
Example: Risk Breakdown Structure for
John’s Move
John decides to ask Dion and Carlita for their help during their first
planning meeting to identify risks, rate their impact and likelihood,
and suggest mitigation plans. They concentrate on the packing phase
of the move. They fill out a table of risks, as shown in Figure 16.4 Risk
Breakdown Structure (RBS) for Packing John’s Apartment .
Figure 16.4 Risk Breakdown Structure (RBS) for Packing John’s Apartment
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16.6.3 Implementation Phase
As the project progresses and more information becomes available to the project
team, the total risk on the project typically reduces, as activities are performed
without loss. The risk plan needs to be updated with new information and risks
checked off that are related to activities that have been performed.
Understanding where the risks occur on the project is important information for
managing the contingency budget and managing cash reserves. Most organizations
develop a plan for financing the project from existing organizational resources,
including financing the project through a variety of financial instruments. In most
cases, there is a cost to the organization to keep these funds available to the project,
including the contingency budget. As the risks decrease over the length of the project,
if the contingency is not used, then the funds set aside by the organization can be
used for other purposes.
To determine the amount of contingency that can be released, the project team will
conduct another risk evaluation and determine the amount of risk remaining on the
project. If the risk profile is lower, the project team may release contingency funds
back to the parent organization. If additional risks are uncovered, a new mitigation
plan is developed including the possible addition of contingency funds.
16.6.4 Closeout Phase
During the closeout phase, agreements for risk sharing and risk transfer need to be
concluded and the risk breakdown structure examined to be sure all the risk events
have been avoided or mitigated. The final estimate of loss due to risk can be made
and recorded as part of the project documentation. If a Monte Carlo simulation was
done, the result can be compared to the predicted result.
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Example: Risk Closeout on John’s Move
To close out the risk mitigation plan for his move, John examines the
risk breakdown structure and risk mitigation plan for items that need
to be finalized. He makes a checklist to be sure all the risk mitigation
plans are completed, as shown in Figure 16.5 Closeout of Risk Mitigati
on Plan for John’s Move . Risk is not allocated evenly over the life of
the project. On projects with a high degree of new technology, the
majority of the risks may be in the early phases of the project. On
projects with a large equipment budget, the largest amount of risk
may be during the procurement of the equipment. On global projects
with a large amount of political risk, the highest portion of risk may
be toward the end of the project.
Figure 16.5 Closeout of Risk Mitigation Plan for John’s Move
16.7 References
Parker, D., & Mobey, A. (2004). Action Research to Explore Perceptions of Risk in
Project Management. International Journal of Productivity and Performance Management
53(1), 18–32.
16.8 Attribution
230

Designers. Retrieved from http://pm4id.org/. licensed under Creative Commons
Attribution 3.0 Unported.
231

Chapter 17 Project Implementation
Overview
Adrienne Watt
After you have carefully planned your project, you will be ready to start the project
implementation phase, the third phase of the project management life cycle. The
implementation phase involves putting the project plan into action. It’s here that the
project manager will coordinate and direct project resources to meet the objectives of
the project plan. As the project unfolds, it’s the project manager’s job to direct and
manage each activity, every step of the way. That’s what happens in the
implementation phase of the project life cycle: you follow the plan you’ve put together
and handle any problems that come up.
The implementation phase is where you and your project team actually do the project
work to produce the deliverables. The word “deliverable” means anything your project
delivers. The deliverables for your project include all of the products or services that
you and your team are performing for the client, customer, or sponsor, including all
the project management documents that you put together.
The steps undertaken to build each deliverable will vary depending on the type of
project you are undertaking, and cannot therefore be described here in any real
detail. For instance engineering and telecommunications projects will focus on using
equipment, resources, and materials to construct each project deliverable, whereas
computer software projects may require the development and implementation of
software code routines to produce each project deliverable. The activities required to
build each deliverable will be clearly specified within the project requirements
document and project plan.
Your job as project manager is to direct the work, but you need to do more than
deliver the results. You also need to keep track of how well your team performs. The
implementation phase keeps the project plan on track with careful monitoring and
control processes to ensure the final deliverable meets the acceptance criteria set by
the customer. This phase is typically where approved changes are implemented.
Most often, changes are identified by looking at performance and quality control data.
Routine performance and quality control measurements should be evaluated on a
regular basis throughout the implementation phase. Gathering reports on those
measurements will help you determine where the problem is and recommend
changes to fix it.
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17.1 Change Control
When you find a problem, you can’t just make a change, because it may be too
expensive or take too long to do. You will need to look at how it affects the triple
constraint (time, cost, scope) and how it impacts project quality. You will then have to
figure out if it is worth making the change. If you evaluate the impact of the change
and find that it won’t have an impact on the project triple constraint, then you can
make the change without going through change control. Change control is a set of
procedures that lets you make changes in an organized way.
Any time you need to make a change to your plan, you must start with a change
request. This is a document that either you or the person making the request must
complete. Any change to your project must be documented so you can figure out what
needs to be done, by when, and by whom.
Once the change request is documented, it is submitted to a change control board. A
change control board is a group of people who consider changes for approval. Not
every change control system has a board but most do. The change request could also
be submitted to the project sponsor or management for review and approval. Putting
the recommended changes through change control will help you evaluate the impact
and update all the necessary documents. Not all changes are approved, but if the
changes are approved, you send them back to the team to put them in place.
The implementation phase uses the most project time and resources, and as a result,
costs are usually the highest during this phase. Project managers also experience the
greatest conflicts over schedules in this phase. You may find as you are monitoring
your project that the actual time it is taking to do the scheduled work is longer than
the amount of time planned.
When you absolutely have to meet the date and you are running behind, you can
sometimes find ways to do activities more quickly by adding more resources to critical
path tasks. That’s called crashing. Crashing the schedule means adding resources or
moving them around to bring the project back into line with the schedule. Crashing
always costs more and doesn’t always work. There’s no way to crash a schedule
without raising the overall cost of the project. So, if the budget is fixed and you don’t
have any extra money to spend, you can’t use this technique.
Sometimes you’ve got two activities planned to occur in sequence, but you can
actually do them at the same time. This is called fast tracking the project. On a
software project, you might do both your user acceptance testing (UAT) and your
functional testing at the same time, for example. This is pretty risky. There’s a good
chance you might need to redo some of the work you have done concurrently.
Crashing and fast tracking are schedule compression tools. Managing a schedule
change means keeping all of your schedule documents up to date. That way, you will
always be comparing your results to the correct plan.
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After the deliverables have been physically constructed and accepted by the customer,
a phase review is carried out to determine whether the project is complete and ready
for closure.
17.2 Attribution
Unported.
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Chapter 18 Project Completion
Adrienne Watt
Every project needs to end and that’s what project completion is all about in the last
phase of the project life cycle. The whole point of the project is to deliver what you
promised. By delivering everything you said you would, you make sure that all
stakeholders are satisfied and all acceptance criteria have been met. Once that
happens, your project can end.
Project completion is often the most neglected phase of the project life cycle. Once the
project is over, it’s easy to pack things up, throw some files in a drawer, and start
moving right into the initiation phase of the next project. Hold on. You’re not done yet.
The key activities in project completion are gathering project records; disseminating
information to formalize acceptance of the product, service, or project; and
performing project closure. As the project manager, you will need to review project
documents to make certain they are up-to-date. For example, perhaps some scope
change requests were implemented that changed some of the characteristics of the
final product. The project information you are collecting during this phase should
reflect the characteristics and specifications of the final product. Don’t forget to
update your resource assignments as well. Some team members will have come and
gone over the course of the project. You need to double-check that all the resources
and their roles and responsibilities are noted.
Once the project outcomes are documented, you’ll request formal acceptance from
the stakeholders or customer. They’re interested in knowing if the product or service
of the project meets the objectives the project set out to accomplish. If your
documentation is up-to-date, you’ll have the project results at hand to share with
them.
18.1 Contract Closure
Contracts come to a close just as projects come to a close. Contract closure is
concerned with completing and settling the terms of the contracts let for the project. It
supports the project completion process because the contract closure process
determines if the work described in the contracts was completed accurately and
satisfactorily. Keep in mind that not all projects are performed under contract so not
all projects require the contract closure process. Obviously, this process applies only
to those phases, deliverables, or portions of the project that were performed under
contract.
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Contract closure updates the project records, detailing the final results of the work on
the project. Contracts may have specific terms or conditions for completion. You
should be aware of these terms or conditions so that project completion isn’t held up
because you missed an important detail. If you are administering the contract
yourself, be sure to ask your procurement department if there are any special
conditions that you should be aware of so that your project team doesn’t
inadvertently delay contract project closure.
One of the purposes of the contract closure process is to provide formal notice to the
seller, usually in written form, that the deliverables are acceptable and satisfactory or
have been rejected. If the product or service does not meet the expectations, the
vendor will need to correct the problems before you issue a formal acceptance notice.
Before the contract is closed, any minor items that need to be repaired or completed
are placed on a punch list, which is a list of all the items found by the client or team or
manager that still remain to be done. Hopefully, quality audits have been performed
during the course of the project, and the vendor was given the opportunity to make
corrections earlier in the process than the closing phase. It’s not a good idea to wait
until the very end of the project and then spring all the problems and issues on the
vendor at once. It’s much more efficient to discuss problems with your vendor as the
project progresses because it provides the opportunity for correction when the
problems occur.
The project team will then work on all of the items on the punch list, building a small
schedule to complete the remaining work. If the number of items on the punch list is
too large or the amount of work is significant, the project team continues to work on
the project. Once the punch list becomes smaller, the project manager begins closing
down the project, maintaining only enough staff and equipment to support the team
that is working on the punch list.
If the product or service does meet the project’s expectations and is acceptable,
formal written notice to the seller is required, indicating that the contract is complete.
This is the formal acceptance and closure of the contract. It’s your responsibility as the
project manager to document the formal acceptance of the contract. Many times the
provisions for formalizing acceptance and closing the contract are spelled out in the
contract itself.
If you have a procurement department handling the contract administration, they will
expect you to inform them when the contract is complete and will in turn follow the
formal procedures to let the seller know the contract is complete. However, you will
still note the contract completion in your copy of the project records.
18.2 Releasing the Project Team
Releasing project team members is not an official process. However, it should be
noted that at the conclusion of the project, you will release your project team
members, and they will go back to their functional managers or get assigned to a new
project. You will want to keep their managers, or other project managers, informed as
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you get closer to project completion, so that they have time to adequately plan for the
return of their employees. Let them know a few months ahead of time what the
schedule looks like and how soon they can plan on using their employees on new
projects. This gives the other managers the ability to start planning activities and
scheduling activity dates.
18.3 Final Payments
The final payment is usually more than a simple percentage of the work that remains
to be completed. Completing the project might involve fixing the most difficult
problems that are disproportionately expensive to solve, so the final payment should
be large enough to motivate the vendor to give the project a high priority so that the
project can be completed on time.
If the supplier has met all the contractual obligations, including fixing problems and
making repairs as noted on a punch list, the project team signs off on the contract and
submits it to the accounting department for final payment. The supplier is notified
that the last payment is final and completes the contractual agreement with the
project.
18.4 Post-Project Evaluations
Before the team is dissolved and begins to focus on the next project, a review is
conducted to capture the lessons that can be learned from this project, often called a
lessons-learned meeting or document. The team explores what went well and
captures the processes to understand why they went well. The team asks if the
process is transferable to other projects. The team also explores what did not go well
and what people learned from the experience. The process is not to find blame, but to
learn.
Quality management is a process of continual improvement that includes learning
from past projects and making changes to improve the next project. This process is
documented as evidence that quality management practices are in use. Some
organizations have formal processes for changing work processes and integrating the
lessons learned from the project so other projects can benefit. Some organizations
are less formal in the approach and expect individuals to learn from the experience
and take the experience to their next project and share what they learned with others
in an informal way. Whatever type of approach is used, the following elements should
be evaluated and the results summarized in reports for external and internal use.
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18.5 Trust and Alignment Effectiveness
The project leadership reviews the effect of trust—or lack of trust—on the project and
the effectiveness of alignment meetings at building trust. The team determines which
problems might have been foreseen and mitigated and which ones could not have
been reasonably predicted. What were the cues that were missed by the team that
indicated a problem was emerging? What could the team have done to better predict
and prevent trust issues?
18.6 Schedule and Budget Management
The original schedule of activities and the network diagram are compared to the
actual schedule of events. Events that caused changes to the schedule are reviewed to
see how the use of contingency reserves and float mitigated the disruption caused by
those events. The original estimates of contingency time are reviewed to determine if
they were adequate and if the estimates of duration and float were accurate. These
activities are necessary for the project team to develop expertise in estimating
schedule elements in future projects—they are not used to place blame.
A review of budget estimates for the cost of work scheduled is compared to the actual
costs. If the estimates are frequently different from the actual costs, the choice of
estimating method is reviewed.
18.7 Risk Mitigation
After the project is finished, the estimates of risk can be reviewed and compared to
the events that actually took place. Did events occur that were unforeseen? What cues
existed that may have allowed the team to predict these events? Was the project
contingency sufficient to cover unforeseen risks? Even if nothing went wrong on this
project, it is not proof that risk mitigation was a waste of money, but it is useful to
compare the cost of avoiding risk versus the cost of unexpected events to understand
how much it cost to avoid risk.
18.8 Procurement Contracts
The performance of suppliers and vendors is reviewed to determine if they should still
be included in the list of qualified suppliers or vendors. The choice of contract for each
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is reviewed to determine if the decision to share risk was justified and if the choice of
incentives worked.
18.9 Customer Satisfaction
Relationships with the client are reviewed and decisions about including the client in
project decisions and alignment meetings are discussed. The client is given the
opportunity to express satisfaction and identify areas in which project communication
and other factors could be improved. Often a senior manager from the organization
interviews the client to develop feedback on the project team performance.
A general report that provides an overview of the project is created to provide
stakeholders with a summary of the project. The report includes the original goals and
objectives and statements that show how the project met those goals and objectives.
Performance on the schedule and budget are summarized and an assessment of
client satisfaction is provided. A version of this report can be provided to the client as
a stakeholder and as another means for deriving feedback.
18.10 Senior Management
The report to senior management contains all the information provided to the
stakeholders in a short executive summary. The report identifies practices and
processes that could be improved or lessons that were learned that could be useful
on future projects.
18.11 Archiving of Document
The documents associated with the project must be stored in a safe location where
they can be retrieved for future reference. Signed contracts or other documents that
might be used in tax reviews or lawsuits must be stored. Organizations will have legal
document storage and retrieval policies that apply to project documents and must be
followed. Some project documents can be stored electronically.
Care should be taken to store documents in a form that can be recovered easily. If the
documents are stored electronically, standard naming conventions should be used so
documents can be sorted and grouped by name. If documents are stored in paper
form, the expiration date of the documents should be determined so they can be
destroyed at some point in the future. The following are documents that are typically
archived:
• Charter documents
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• Scope statement
• Original budget
• Change documents
• DPCI ratings
• Manager’s summary—lessons learned
• Final DPCI rating
18.12 Attribution
Unported and Project Management for Instructional Designers by Amado, M., Ashton,
K., Ashton, S., Bostwick, J., Clements, G., Drysdale, J., Francis, J., Harrison, B., Nan, V.,
Nisse, A., Randall, D., Rino, J., Robinson, J., Snyder, A., Wiley, D., & Anonymous. (DATE).
Project Management for Instructional Designers. Retrieved from http://pm4id.org/.
Licensed under a Creative Commons Attribution NonCommercial Share-Alike (BY-NC-
SA) license.
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Chapter 19 Celebrate!
Adrienne Watt
The project team should celebrate their accomplishments, and the project manager
should officially recognize their efforts, thank them for their participation, and
officially close the project. A celebration helps team members formally recognize the
project’s end and brings closure to the work they’ve done. It also encourages them to
remember what they’ve learned and start thinking about how their experiences will
benefit them and the organization during the next project.
Figure 19.1 Celebrate! Your project is over… at least until the next one.
( Photo from Barron & Barron Project Management for Scientists and Engineers, htt
p://cnx.org/content/col11120/1.4/ ) .
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19.1 Attribution
Unported.
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Appendix 1: Project Management
PowerPoints
Chapter 4 (http://opentextbc.ca/projectmanagement/wp-content/uploads/sites/3/201
4/07/Chapter-1.pptx)
Chapter 10 (http://opentextbc.ca/projectmanagement/wp-content/uploads/sites/3/
Chpater 14 (http://opentextbc.ca/projectmanagement/wp-content/uploads/sites/3/20
243

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Appendix 2: Chapter Questions
Chapter 5: Project Management Overview
1. Everyone has been involved in projects. What is the largest project you have been
involved in? (You do not have to have been the project manager, but could have
played another role.)
1. Write one sentence that describes the objective of the project.
2. Describe specifically how this project meets the definition of a project used in
this textbook. (How is it unique? What were the time constraints? If it is over,
how did you know it was over? If it is ongoing, how will you know when it is
over?
3. What was your role? Were you the project manager, a volunteer, some other
role? If you were not the project manager, who was?
4. Was the project part of a larger portfolio or program of projects?
5. Who else was involved?
6. What was the budget?
7. Did you anticipate any risks at the outset? Did the project experience any
outside forces that caused a change in either the objectives or the approach
to achieving those objectives?
2. In what ways can the following activities be seen as projects? In what ways do
they resemble ongoing, routine business activities? Feel free to add assumptions
and details to describe how the activity might be a project in one context and
routine in another.
1. Reading the chapter before attending a university lecture.
2. Taking the bus to work each day.
3. Piloting an aircraft between Vancouver and Fiji.
4. Teaching a course for the first time; teaching the same course every
semester.
Chapter 6: The Project Life Cycle (Phases)
1. Go online and search for project life cycle models. Identify at least two that are
different from the PMI model, and compare and contrast the phases. Be sure to
cite your sources.
2. How does the application of a phased approach to project management vary in
different industries? Do you think that the phases work the same in construction
as they do in event management ors oftware development? (which has already
been broken down into pre-event publicity and post-event publicity.) Prepare a
WBS for any single major deliverable on the list. Remember the 100 percent rule,
and number your objectives.
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Chapter 8: Stakeholder Management
1. Identify a major public infrastructure project that is either underway, complete, or
proposed in your region. This could be a bridge, road, building, or something of
that nature. For the project youhave identified, think of as many stakeholders and
stakeholder groups as you can. Create a three column table. In column 1, list the
stakeholders. In column 2, list what each stakeholder wants to get from the
project. In column 3, list the influence each stakeholder has over the project.
2. How can the stakeholders change over the course of a project? Give examples of
changes in who the stakeholders are, and also in how their interests or influence
over the project might change throughout the term of the project.
Chapter 10: Project Initiation
1. Software project decision point.
1. You need to determine an interest rate to use—select an interest rate and
explain why you think this number should be used. Use it in your calculations
in item 1.2.
2. Given the information below on options 1 and 2, carry out three forms of
analysis: breakeven, ROI, and NPV.
3. Make a recommendation on which way to proceed, based on the TCO for
each option.
• Option 1: Purchase the FunSoft package: Cost $200,000 for software and $85,000
for hardware in year one; with $50,000 to customize it and a $40,000 annual
licensing fee for the life of the contract.
• There will be an annual saving of $61,000 due to the layoff of a clerk.
• Option 2: Purchase the SoftComm package, which will operate on the vendor’s
hardware: Cost $250,000 for a five-year license, payable half up front and half
during the first year of implementation. The maintenance contract, at $75,000
a year, includes all currently identified modifications to the software for the first
three years. The clerk’s hours will be cut by half, for a saving of $25,000 a year.
In both cases, sales are expected to increase from the current $1 million a year, by
10% per year each year (over each year’s previous year’s sales) after full
implementation.
Assume a five-year life for the software.
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Chapter 12: Scope Planning
1. A project to put on a major international sporting competition has the following
major deliverables: Sports Venues, Athlete Accommodation, Volunteer
Organization, Security, Events, and Publicity (which has already been broken
down into pre-event publicity and post-event publicity.) Prepare a WBS for any
single major deliverable on the list. Remember the 100 percent rule, and number
your objectives.
Chapter 13: Project Schedule Planning
Your team has been asked to test and document enhancements to a web application
that allows buyers to purchase custom-printed canvas shoes. The tasks and
dependencies are as follows:
• Create a testing plan
Once the testing plan is ready, your team can:
• Test the user interfaces
• Test the database
• Test the network
• Write the documentation first draft
When the user interface tests are complete, you can:
• Perform user testing—enlist some users to test the user interface
When the database and network testing are complete, you can:
• Perform integration testing—network with the database
When the user testing of the user interface and the database testing are complete,
you can:
• Perform integration testing—database, network, and user interface
When all integration testing and user testing are complete, you can:
• Perform system testing
Then you can:
• Review and revise documentation
After all other tasks are complete, you can:
• Obtain management approval
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Duration estimates for the tasks:
a. 3 days
b. 10 days
c. 6 days
d. 7 days
e. 20 days
f. 5 days
g. 3 days
h. 2 days
i. 8 days
j. 4 days
k. 5 days
1. Create a network diagram and a Gantt chart for the project tasks. Ask your
instructor if you are permitted to use software such as Microsoft Project to help
you prepare your diagrams.
1. What is the planned duration for the testing project?
2. What is the critical path for the testing project?
3. For each task NOT on the critical path, calculate the amount of slack
available.
4. If the user testing of the user interface takes 15 days, what will the impact be
on the project duration?
2. Go online and find at least two sites with definitions of fast tracking and crashing
a project schedule.
1. Prepare proper reference citations for the sites you located, using APA style.
2. In your own words, write definitions for project fast tracking and project
crashing.
3. Consider the plan you prepared for the software system testing project in
question 1 above. If you were informed by management that you must
reduce the planned duration of the project by five days, describe how you, as
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a project manager, could crash or fast track this project. Be specific in
identifying exactly what could be changed in the project plan for each option.
4. (continuation of question 2.3) If the request to speed up the project occurs
after day 25 of the original schedule, what is the only option available?
3. Go online and research the difference between total slack and free slack.
1. Prepare proper reference citations for the sites you located, using APA style.
2. Write definitions of total slack and free slack in your own words.
3. Why would the distinction between different forms of slack be important to a
project manager?
Chapter 15: Budget Planning
1. Wedding cost estimation: Given the following information, calculate the estimated
costs for a wedding with 250 guests and a bridal party of six, using the methods
indicated. Show your work. Note that members of the bridal party are already
counted as guests, you don’t need to add them twice.
1. Parametric estimate
2. Bottom-up estimate
3. Analogous cost estimate
4. You will probably notice some differences in the estimated values. Are these
differences significant? What might cause the differences? If you were
estimating a significant project in the future, which method(s) would you use
and why?
5. Your mother points out you should probably have valet parking, which will
cost $500. Which estimate(s) will change?
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Wedding Cost Estimates
Item Dollars
Groom's brother's wedding, last year, 175 guests,
similar venue and style
$20,300
Catering $65 per person
Photographer $1,500
Rental of hall $500
Clothing, bride $2,000
Clothing, groom $750
Flowers $800
Other decor items $500
Cake $500
Gifts for bridal party $80 each
Wedding planner $2,000
Wedding planner's estimate of typical cost of
this kind of wedding
$10,000 plus $75
per guest
2. Earned-value analysis. A project budget calls for the following expenditures:
Task Date Budgeted Amount
Build forms April 1 $10,000
Pour foundation April 1 $50,000
May 1 $100,000
Frame walls May 1 $30,000
June 1 $30,000
Remaining tasks July 1 and beyond $500,000
Define each term in your own words, calculate these values for the above project, and
show your work:
Chapter 16: Procurement Management
1. In addition to cost, what factors should be considered in selecting a building
contractor? What can go wrong if the lowest bid is selected and nothing else is
considered? (Answer in your own words, maximum 70 words.)
250

2. What is the difference between an RFP and an RFQ? Give two specific examples
where an RFQ could be used and two specific examples where it is more likely
that the organization will go with an RFP. (Use examples NOT from your
textbook.)
3. Cost reimbursable contract calculation.
1. A contract calls for a total payment of $800,000 with a guarantee. Essentially
the contractor is guaranteed to make at least $200,000 above his costs. If the
contractor can demonstrate his costs exceed $600,000, the project will pay
the difference, with a $50,000 ceiling on the overage. The contractor
demonstrates he spent $623,000. How much (gross) must the project remit
to the contractor?
2. Another option for the same contract has the contractor guaranteed to be
paid his costs plus 20%, for costs that exceed $600,000. With the same initial
assumption—guarantee of $800,000 gross payment (no requirement to
itemize costs), but if the contractor can show that costs exceed $600,000, the
project will pay $800,000 plus the costs that exceed $600,000, plus 20% of
those excess costs, with a ceiling of $900,000 gross. The contractor
demonstrates he spent $623,000. How much (gross) must the project remit
to the contractor?
3. Under option 3.2, at what dollar amount of total costs would the contractor
be assuming all of the excess costs beyond that point?
4. In which option did the project assume more of the risk of a cost overrun?
Explain.
Chapter 17: Quality Planning
1. Prepare a Pareto chart of the possible causes for a student to fail a final
examination in a university course.
2. Vehicles are identified by RFID tags in order to collect bridge tolls. The project
manager is considering two different technologies for RFID readers. By sampling
two different options, the following data are collected about the accuracy of the
readers:
Option 1: 99, 98, 99, 94, 92, 99, 98, 99, 94, 90 Option 2: 98, 97, 97, 97, 98, 98,
97, 97, 98
Calculate the mean, mode, and standard deviation of the two options.
Chapter 19: Risk Management Planning
1. Describe the general processes that should be followed in managing risks
throughout a project. Be sure to include the general sequence in which these
processes are carried out.
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2. Prepare a sample risk register for a project to put humans on Mars (four or five
risks).
3. Prepare a probability versus impact matrix for your school’s Winter Club ski trip
(at least four identifiable risks).
4. For one of the risks you have identified in question 2 or 3, describe how it could
be avoided, transferred, mitigated, or accepted.
5. What is the difference between qualitative and quantitative risk analysis? Which
one is always done? Why is the other one not always done for every project?
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Appendix 3: Chapter Audio Files
Chapter (https://admin.video.ubc.ca/index.php/kmc/preview/partner_id/122/uiconf_i
d/11170395/entry_id/0_jd385v6o/delivery/http) 4 (http://admin.video.ubc.ca/index.p
hp/kmc/preview/partner_id/122/uiconf_id/11170395/entry_id/0_jd385v6o/delivery/htt
p)
Chapter 5 (http://admin.video.ubc.ca/index.php/kmc/preview/partner_id/122/uiconf_i
d/11170395/entry_id/0_raidib55/delivery/http)
Chapter 6 (https://admin.video.ubc.ca/index.php/kmc/preview/partner_id/122/uiconf_i
d/11170395/entry_id/0_cq6yxpi8/delivery/http)
d/11170395/entry_id/0_an2k7a0a/delivery/http)
d/11170395/entry_id/0_q628azrk/delivery/http)
d/11170395/entry_id/0_vlpggqhr/delivery/http)
Chapter 10 (http://admin.video.ubc.ca/index.php/kmc/preview/partner_id/122/uicon
f_id/11170395/entry_id/0_oapqp1ni/delivery/http)
f_id/11170395/entry_id/0_gcsy009p/delivery/http)
f_id/11170395/entry_id/0_yhv1g4yz/delivery/http)
f_id/11170395/entry_id/0_tij3wt51/delivery/http)
Chapter 14 (Part1) (http://admin.video.ubc.ca/index.php/kmc/preview/partner_id/122/
uiconf_id/11170395/entry_id/0_wdo2k9h7/delivery/http)
Chapter 14 (Part2) (http://admin.video.ubc.ca/index.php/kmc/preview/partner_id/122/
uiconf_id/11170395/entry_id/0_h7qxm64v/delivery/http)
f_id/11170395/entry_id/0_6r7j7bxb/delivery/http)
f_id/11170395/entry_id/0_rtdfkbna/delivery/http)
f_id/11170395/entry_id/0_4egc0mdr/delivery/http)
f_id/11170395/entry_id/0_kv0bemzq/delivery/http)
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f_id/11170395/entry_id/0_k53yrr86/delivery/http)
f_id/11170395/entry_id/0_6mg3flze/delivery/http)
f_id/11170395/entry_id/0_5ng7hngp/delivery/http)
f_id/11170395/entry_id/0_j9hr9xhx/delivery/http)
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About the Author
Adrienne Watt holds a Computer Systems Diploma (BCIT), a Bachelors in Technology
(BCIT) and a Master’s in Business Administration (City University).
Since 1989, Adrienne has worked as an educator and gained extensive experience
developing and delivering business and technology curriculum to post-secondary
students. During that time she ran a successful software development business. In the
business she worked as an IT Professional in a variety of senior positions including
Project Manager, Database Designer, Administrator and Business Analyst. Recently
she has been exploring a wide range of technology related tools and processes to
improve delivery methods and enhance learning for her students.
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