Ohio Academy a Paul Mitchell Partner School Project Management Case Study

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Ohio Academy A Paul Mitchell

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There are couple of responses posted below . Please read both of them and give your opinion on them separately.

Read Response-1 and Response-2 below and give your opinion on both responses separately. your answer should be supported with research unless the question is opinion oriented.. Responses to discussions below should not be "I agree” or "I like the way you stated that.” These responses should again be insightful, offering an opinion or facts based on your research and experiences. The opinion to both responses should be a minimum of 200 words each . See APA criteria for citing resources.

The below responses are of individuals who did case study "To Bid or Not to Bid" on page 1011 and then answer the questions on page 1012.

"text book attached "

Response-1

1. What other factors should Marvin and his team consider?

In order to make the bid/no-bid decision, Marvin and his team should consider the following factors:

- Capability- From the case study, we know that if Marvin bids, then there will be higher overall profits and earnings per share because of the more extensive business base. This means that he can make some money on the project. After determining the profitability factor, Marvin and team should consider the capability, which means that if their company is capable of doing work. They should review there a current backlog of any upcoming project. They should consider human resources, equipment, staff, and other resources so they would be able to complete the project within the required timeline. Additionally, Marvin and his team should consider about their company’s financial capability. They should consider if they have bonding capacity and adequate cash flow to perform the work.

2. Should they bid on the job?

- In order to determine whether to bid or no-bid, one should undertake a formal and rational process. After looking at the pros and cons, my recommendations would be that Marvin and his team should not bid because bidding will release the company’s cost structure which can keep the company in higher risk in front of its competitors. The threat of losing talented employees would cost them more than the long-term profit. More importantly, the risk of exposing the entire cost structure may cause them to lose in future bids. If Marvin and its team are afraid to say NO or to be removed from bidders list for future, they should be aware of the damages. I would instead suggest the team to opt-out of the contract by making a well- written no-bid letter rather than submitting a proposal which will bring the company internal secrets to public and thus jeopardizing the company’s reputation.

References:

Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. John Wiley & Sons.

Jones, K. (2019, February 08). Key Factors to Consider in Bid/No-Bid Decision Making. Retrieved July 8, 2019, from https://www.constructconnect.com/blog/operating-in...

Response-2

1) What are the other factors should Marvin and his team consider?

Alternate elements Marvin and his group ought to consider are as below

Financial capacity of the organization

Effect on survival of the organization

Will it be a development way for the organization?

Vital arrangement of the choice for the organization

Reliance and need of the offer for the organization

Circumstances and end results for the offer.

Long haul effects to the organization?

Can organization oversee without this venture?

Will organization have the capacity to deal with its effect later?

Essentially this elements takes right choice for the organization to offer or not offer. This choice will be founded on investigation of all the key elements, which can have critical effect on the organization. In light of the examination and result of effects on the organization, the correct choice will be taken.

2) Should They Bid The Job?

Yes, They should offer at work.

The purposes behind this are as below

The offer is exceptionally alluring and can assist the organization with surviving for a long span around 10years of time. This is such an extraordinary day and age for which the organization will be secure for income age.

This undertaking will give a stage to the organization to accomplish higher development in future.

This task will have the capacity to build up the positive picture of the organization in the market.

Great choice for future improvement by getting extra comparable activities.

Organization to investigate the approaches to deal with the effects because of offer of key informations.

References:

Enshassi, A., Mohamed, S., & Karriri, A. a. E. (2010). Factors affecting the bid/no bid decision in the Palestinian construction industry Journal of Financial Management of Property and Construction, 15 (2 ), 118 - 142

El-Mashaleh, M. S. (2010). Decision to bid or not to bid: a data envelopment analysis approach. [Article]. Canadian Journal of Civil Engineering, 37(1), 37-44.


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ffirs.qxd 1/3/13 3:48 PM Page i ffirs.qxd 1/3/13 3:48 PM Page i PROJECT MANAGEMENT ffirs.qxd 1/3/13 3:48 PM Page ii Dr. Kerzner’s 16 Points to Project Management Maturity 1. Adopt a project management methodology and use it consistently. 2. Implement a philosophy that drives the company toward project management maturity and communicate it to everyone. 3. Commit to developing effective plans at the beginning of each project. 4. Minimize scope changes by committing to realistic objectives. 5. Recognize that cost and schedule management are inseparable. 6. Select the right person as the project manager. 7. Provide executives with project sponsor information, not project management information. 8. Strengthen involvement and support of line management. 9. Focus on deliverables rather than resources. 10. Cultivate effective communication, cooperation, and trust to achieve rapid project management maturity. 11. Share recognition for project success with the entire project team and line management. 12. Eliminate nonproductive meetings. 13. Focus on identifying and solving problems early, quickly, and cost effectively. 14. Measure progress periodically. 15. Use project management software as a tool—not as a substitute for effective planning or interpersonal skills. 16. Institute an all-employee training program with periodic updates based upon documented lessons learned. ffirs.qxd 1/3/13 3:48 PM Page iii PROJECT MANAGEMENT A Systems Approach to Planning, Scheduling, and Controlling ELEVENTH EDITION HAROLD KERZNER, Ph.D. Senior Executive Director for Project Management The International Institute for Learning New York, New York ffirs.qxd 1/3/13 3:48 PM Page iv Cover illustration: xiaoke ma/iStockphoto This book is printed on acid-free paper. Copyright © 2013 by John Wiley & Sons, Inc. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom. For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data: Kerzner, Harold. Project management : a systems approach to planning, scheduling, and controlling / Harold Kerzner, Ph. D. Senior Executive Director for Project Management, the International Institute for Learning, New York, New York. — Eleventh edition. pages cm Includes bibliographical references and index. ISBN 978-1-118-02227-6 (cloth); ISBN 978-1-118-41585-6 (ebk); ISBN 978-1-118-41855-0 (ebk); ISBN 978-1-118-43357-7 (ebk); ISBN 978-1-118-48322-0 (ebk); ISBN 978-1-118-48323-7 (ebk) 1. Project management. 2. Project management—Case studies. I. Title. HD69.P75K47 2013 658.4’04 —dc23 2012026239 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 ffirs.qxd 1/3/13 3:48 PM Page v To Dr. Herman Krier, my Friend and Guru, who taught me well the meaning of the word “persistence” ffirs.qxd 1/3/13 3:48 PM Page vi ftoc.qxd 1/3/13 3:50 PM Page vii Contents Preface 1 xxiii OVERVIEW 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1 Introduction 1 Understanding Project Management 2 Defining Project Success 7 Success, Trade-Offs, and Competing Constraints 8 The Project Manager–Line Manager Interface 9 Defining the Project Manager’s Role 14 Defining the Functional Manager’s Role 15 Defining the Functional Employee’s Role 18 Defining the Executive’s Role 19 Working with Executives 19 Committee Sponsorship/Governance 20 The Project Manager as the Planning Agent 23 Project Champions 24 The Downside of Project Management 25 Project-Driven versus Non–Project-Driven Organizations 25 Marketing in the Project-Driven Organization 28 Classification of Projects 30 Location of the Project Manager 30 Differing Views of Project Management 32 Public-Sector Project Management 34 International Project Management 38 Concurrent Engineering: A Project Management Approach 38 Added Value 39 Studying Tips for the PMI® Project Management Certification Exam Problems 40 42 Case Study Williams Machine Tool Company 44 vii ftoc.qxd 1/3/13 3:50 PM Page viii viii CONTENTS 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS 47 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 Introduction 47 General Systems Management 48 Project Management: 1945–1960 48 Project Management: 1960–1985 49 Project Management: 1985–2012 55 Resistance to Change 59 Systems, Programs, and Projects: A Definition 64 Product versus Project Management: A Definition 66 Maturity and Excellence: A Definition 68 Informal Project Management: A Definition 69 The Many Faces of Success 70 The Many Faces of Failure 73 The Stage-Gate Process 76 Project Life Cycles 78 Gate Review Meetings (Project Closure) 83 Engagement Project Management 84 Project Management Methodologies: A Definition 85 Enterprise Project Management Methodologies 87 Methodologies Can Fail 91 Organizational Change Management and Corporate Cultures 94 Project Management Intellectual Property 100 Systems Thinking 101 Studying Tips for the PMI® Project Management Certification Exam Problems 107 Case Study Creating a Methodology 108 3 ORGANIZATIONAL STRUCTURES 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 111 Introduction 111 Organizational Work Flow 113 Traditional (Classical) Organization 114 Developing Work Integration Positions 117 Line-Staff Organization (Project Coordinator) 121 Pure Product (Projectized) Organization 122 Matrix Organizational Form 125 Modification of Matrix Structures 132 The Strong, Weak, or Balanced Matrix 136 Center for Project Management Expertise 136 Matrix Layering 137 104 ftoc.qxd 1/3/13 3:50 PM Page ix ix Contents 3.11 3.12 3.13 3.14 3.15 3.16 3.17 Selecting the Organizational Form 138 Structuring the Small Company 143 Strategic Business Unit (SBU) Project Management 146 Transitional Management 147 Barriers to Implementing Project Management in Emerging Markets 149 Seven Fallacies that Delay Project Management Maturity 156 Studying Tips for the PMI® Project Management Certification Exam 159 Problems 161 Case Studies Jones and Shephard Accountants, Inc. Coronado Communications 168 4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 171 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 Introduction 171 The Staffing Environment 172 Selecting the Project Manager: An Executive Decision 174 Skill Requirements for Project and Program Managers 178 Special Cases in Project Manager Selection 184 Selecting the Wrong Project Manager 184 Next Generation Project Managers 188 Duties and Job Descriptions 189 The Organizational Staffing Process 193 The Project Office 199 The Functional Team 204 The Project Organizational Chart 205 Special Problems 208 Selecting the Project Management Implementation Team 210 Mistakes Made by Inexperienced Project Managers 213 Studying Tips for the PMI® Project Management Certification Exam Problems 5 166 216 MANAGEMENT FUNCTIONS 5.0 5.1 5.2 5.3 5.4 5.5 5.6 223 Introduction 223 Controlling 225 Directing 225 Project Authority 230 Interpersonal Influences 237 Barriers to Project Team Development 240 Suggestions for Handling the Newly Formed Team 243 214 ftoc.qxd 1/3/13 3:50 PM Page x x CONTENTS 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 Team Building as an Ongoing Process 246 Dysfunctions of a Team 247 Leadership in a Project Environment 250 Life-Cycle Leadership 252 Value-Based Project Leadership 255 Organizational Impact 257 Employee–Manager Problems 259 Management Pitfalls 262 Communications 265 Project Review Meetings 274 Project Management Bottlenecks 275 Cross-Cutting Skills 276 Active Listening 277 Project Problem-Solving 278 Brainstorming 288 Project Decision-Making 293 Predicting the Outcome of a Decision 301 Facilitation 303 Handling Negative Team Dynamics 306 Communication Traps 307 Proverbs and Laws 309 Human Behavior Education 311 Management Policies and Procedures 312 Studying Tips for the PMI® Project Management Certification Exam 313 Problems 318 Case Studies The Trophy Project 327 Communication Failures 329 McRoy Aerospace 332 The Poor Worker 333 The Prima Donna 334 The Team Meeting 335 Leadership Effectiveness (A) 337 Leadership Effectiveness (B) 341 Motivational Questionnaire 347 6 MANAGEMENT OF YOUR TIME AND STRESS 6.0 6.1 6.2 6.3 Introduction 355 Understanding Time Management 356 Time Robbers 356 Time Management Forms 358 355 ftoc.qxd 1/3/13 3:50 PM Page xi xi Contents 6.4 6.5 6.6 Effective Time Management 359 Stress and Burnout 360 Studying Tips for the PMI® Project Management Certification Exam 362 Problems 363 Case Study The Reluctant Workers 7 CONFLICTS 7.0 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 364 365 Introduction 365 Objectives 366 The Conflict Environment 367 Types of Conflicts 368 Conflict Resolution 371 Understanding Superior, Subordinate, and Functional Conflicts 372 The Management of Conflicts 374 Conflict Resolution Modes 375 Studying Tips for the PMI® Project Management Certification Exam 377 Problems 379 Case Studies Facilities Scheduling at Mayer Manufacturing 382 Telestar International 383 Handling Conflict in Project Management 384 8 SPECIAL TOPICS 8.0 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 391 Introduction 392 Performance Measurement 392 Financial Compensation and Rewards 399 Critical Issues with Rewarding Project Teams 405 Effective Project Management in the Small Business Organization 408 Mega Projects 410 Morality, Ethics, and the Corporate Culture 411 Professional Responsibilities 414 Internal Partnerships 417 External Partnerships 418 Training and Education 420 Integrated Product/Project Teams 422 Virtual Project Teams 424 Breakthrough Projects 427 ftoc.qxd 1/3/13 3:50 PM Page xii xii CONTENTS 8.14 Managing Innovation Projects 427 8.15 Agile Project Management 430 8.16 Studying Tips for the PMI® Project Management Certification Exam 431 Problems 437 Case Study Is It Fraud? 440 9 THE VARIABLES FOR SUCCESS 9.0 9.1 9.2 9.3 9.4 9.5 9.6 9.7 443 Introduction 443 Predicting Project Success 444 Project Management Effectiveness 448 Expectations 449 Lessons Learned 450 Understanding Best Practices 451 Best Practices versus Proven Practices 458 Studying Tips for the PMI® Project Management Certification Exam Problems 459 460 Case Study Radiance International 460 10 WORKING WITH EXECUTIVES 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 463 Introduction 463 The Project Sponsor 464 Handling Disagreements with the Sponsor 474 The Collective Belief 475 The Exit Champion 476 The In-House Representatives 477 Stakeholder Relations Management 478 Politics 486 Studying Tips for the PMI® Project Management Certification Exam 487 Problems 488 Case Studies Corwin Corporation 491 The Prioritization of Projects 499 The Irresponsible Sponsors 500 Selling Executives on Project Management 502 ftoc.qxd 1/3/13 3:50 PM Page xiii xiii Contents 11 PLANNING 11.0 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.17 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 11.31 11.32 11.33 11.34 11.35 11.36 Introduction 505 Validating the Assumptions 508 Validating the Objectives 509 General Planning 510 Life-Cycle Phases 513 Proposal Preparation 516 Kickoff Meetings 516 Understanding Participants’ Roles 519 Project Planning 519 The Statement of Work 521 Project Specifications 526 Milestone Schedules 528 Work Breakdown Structure 529 WBS Decomposition Problems 536 Work Breakdown Structure Dictionary 540 Role of the Executive in Project Selection 541 Role of the Executive in Planning 546 The Planning Cycle 546 Work Planning Authorization 547 Why Do Plans Fail? 548 Stopping Projects 549 Handling Project Phaseouts and Transfers 550 Detailed Schedules and Charts 551 Master Production Scheduling 554 Project Plan 556 Total Project Planning 561 The Project Charter 565 Project Baselines 566 Verification and Validation 570 Requirements Traceability Matrix 571 Management Control 572 The Project Manager–Line Manager Interface 575 Fast-Tracking 577 Configuration Management 578 Enterprise Project Management Methodologies 579 Project Audits 582 Studying Tips for the PMI® Project Management Certification Exam 583 Problems 12 505 586 NETWORK SCHEDULING TECHNIQUES 12.0 Introduction 597 12.1 Network Fundamentals 600 597 ftoc.qxd 1/3/13 3:50 PM Page xiv xiv CONTENTS 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 12.16 12.17 12.18 12.19 12.20 12.21 Graphical Evaluation and Review Technique (GERT) 604 Dependencies 605 Slack Time 606 Network Replanning 612 Estimating Activity Time 616 Estimating Total Project Time 617 Total PERT/CPM Planning 618 Crash Times 620 PERT/CPM Problem Areas 623 Alternative PERT/CPM Models 626 Precedence Networks 627 Lag 630 Scheduling Problems 632 The Myths of Schedule Compression 632 Understanding Project Management Software 634 Software Features Offered 634 Software Classification 636 Implementation Problems 637 Critical Chain 638 Studying Tips for the PMI® Project Management Certification Exam Problems 640 643 Case Studies Crosby Manufacturing Corporation The Invisible Sponsor 658 13 PROJECT GRAPHICS 13.0 13.1 13.2 13.3 13.4 13.5 661 Introduction 661 Customer Reporting 662 Bar (Gantt) Chart 663 Other Conventional Presentation Techniques 670 Logic Diagrams/Networks 673 Studying Tips for the PMI® Project Management Certification Exam Problems 14 675 PRICING AND ESTIMATING 14.0 14.1 14.2 14.3 14.4 14.5 656 677 Introduction 677 Global Pricing Strategies 678 Types of Estimates 679 Pricing Process 682 Organizational Input Requirements Labor Distributions 686 684 674 ftoc.qxd 1/3/13 3:50 PM Page xv xv Contents 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 Overhead Rates 690 Materials/Support Costs 692 Pricing Out the Work 695 Smoothing Out Department Man-Hours 696 The Pricing Review Procedure 698 Systems Pricing 700 Developing the Supporting/Backup Costs 701 The Low-Bidder Dilemma 705 Special Problems 705 Estimating Pitfalls 706 Estimating High-Risk Projects 707 Project Risks 708 The Disaster of Applying the 10 Percent Solution to Project Estimates Life-Cycle Costing (LCC) 714 Logistics Support 719 Economic Project Selection Criteria: Capital Budgeting 720 Payback Period 720 The Time Value of Money 721 Net Present Value (NPV) 722 Internal Rate of Return (IRR) 723 Comparing IRR, NPV, and Payback 724 Risk Analysis 724 Capital Rationing 725 Project Financing 726 Studying Tips for the PMI® Project Management Certification Exam Problems 730 Case Study The Estimating Problem 15 COST CONTROL 15.0 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 734 737 Introduction 737 Understanding Control 741 The Operating Cycle 744 Cost Account Codes 745 Budgets 750 The Earned Value Measurement System (EVMS) 752 Variance and Earned Value 754 The Cost Baseline 773 Justifying the Costs 775 The Cost Overrun Dilemma 778 Recording Material Costs Using Earned Value Measurement 779 The Material Accounting Criterion 782 712 728 ftoc.qxd 1/3/13 3:50 PM Page xvi xvi CONTENTS 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20 15.21 15.22 15.23 15.24 Material Variances: Price and Usage 783 Summary Variances 784 Status Reporting 785 Cost Control Problems 792 Project Management Information Systems 793 Enterprise Resource Planning 793 Project Metrics 794 Key Performance Indicators 800 Value-Based Metrics 806 Dashboards and Scorecards 812 Business Intelligence 815 Infographics 816 Studying Tips for the PMI® Project Management Certification Exam 816 Problems 820 Case Studies The Bathtub Period 838 Franklin Electronics 839 Trouble in Paradise 841 16 TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT 16.0 16.1 16.2 16.3 16.4 16.5 17 Introduction 845 Methodology for Trade-Off Analysis 848 Contracts: Their Influence on Projects 865 Industry Trade-Off Preferences 866 Conclusion 869 Studying Tips for the PMI® Project Management Certification Exam 869 RISK MANAGEMENT 17.0 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11 17.12 845 871 Introduction 872 Definition of Risk 873 Tolerance for Risk 875 Definition of Risk Management 876 Certainty, Risk, and Uncertainty 877 Risk Management Process 883 Plan Risk Management (11.1) 884 Risk Identification (11.2) 885 Risk Analysis (11.3, 11.4) 892 Qualitative Risk Analysis (11.3) 897 Quantitative Risk Analysis (11.4) 903 Probability Distributions and the Monte Carlo Process 904 Plan Risk Response (11.5) 913 ftoc.qxd 1/3/13 3:50 PM Page xvii xvii Contents 17.13 17.14 17.15 17.16 17.17 17.18 17.19 Monitor and Control Risks (11.6) 919 Some Implementation Considerations 920 The Use of Lessons Learned 921 Dependencies Between Risks 925 The Impact of Risk Handling Measures 930 Risk and Concurrent Engineering 933 Studying Tips for the PMI® Project Management Certification Exam 936 Problems 940 Case Studies Teloxy Engineering (A) 948 Teloxy Engineering (B) 948 The Risk Management Department 949 18 LEARNING CURVES 18.0 18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12 18.13 18.14 18.15 953 Introduction 953 General Theory 954 The Learning Curve Concept 954 Graphic Representation 956 Key Words Associated with Learning Curves 958 The Cumulative Average Curve 958 Sources of Experience 960 Developing Slope Measures 963 Unit Costs and Use of Midpoints 964 Selection of Learning Curves 965 Follow-On Orders 966 Manufacturing Breaks 966 Learning Curve Limitations 968 Prices and Experience 968 Competitive Weapon 970 Studying Tips for the PMI® Project Management Certification Exam 971 Problems 972 19 CONTRACT MANAGEMENT 19.0 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 975 Introduction 975 Procurement 976 Plan Procurements 978 Conducting the Procurements 981 Conduct Procurements: Request Seller Responses 983 Conduct Procurements: Select Sellers 983 Types of Contracts 987 Incentive Contracts 991 Contract Type versus Risk 994 ftoc.qxd 1/3/13 3:50 PM Page xviii xviii CONTENTS 19.9 19.10 19.11 19.12 19.13 19.14 Contract Administration 995 Contract Closure 998 Using a Checklist 999 Proposal-Contractual Interaction 1000 Summary 1003 Studying Tips for the PMI® Project Management Certification Exam 1004 Case Studies The Scheduling Dilemma 1009 To Bid or Not to Bid 1011 The Management Reserve 1012 20 QUALITY MANAGEMENT 20.0 20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11 20.12 20.13 20.14 20.15 20.16 20.17 20.18 20.19 21 1015 Introduction 1016 Definition of Quality 1017 The Quality Movement 1019 Comparison of the Quality Pioneers 1022 The Taguchi Approach 1023 The Malcolm Baldrige National Quality Award 1026 ISO 9000 1027 Quality Management Concepts 1029 The Cost of Quality 1032 The Seven Quality Control Tools 1035 Process Capability (CP) 1052 Acceptance Sampling 1054 Implementing Six Sigma 1054 Lean Six Sigma and DMAIC 1056 Quality Leadership 1057 Responsibility for Quality 1058 Quality Circles 1058 Just-In-Time Manufacturing (JIT) 1059 Total Quality Management (TQM) 1061 Studying Tips for the PMI® Project Management Certification Exam 1065 MODERN DEVELOPMENTS IN PROJECT MANAGEMENT 21.0 21.1 21.2 21.3 21.4 21.5 21.6 21.7 21.8 1069 Introduction 1069 The Project Management Maturity Model (PMMM) 1070 Developing Effective Procedural Documentation 1074 Project Management Methodologies 1078 Continuous Improvement 1079 Capacity Planning 1080 Competency Models 1082 Managing Multiple Projects 1084 End-of-Phase Review Meetings 1085 ftoc.qxd 1/3/13 3:50 PM Page xix xix Contents Case Study Honicker Corporation 22 1086 THE BUSINESS OF SCOPE CHANGES 22.0 22.1 22.2 22.3 22.4 1089 Introduction 1089 Need for Business Knowledge 1091 Timing of Scope Changes 1092 Business Need for a Scope Change 1093 Rationale for Not Approving a Scope Change 1094 Case Study Kemko Manufacturing 1094 23 THE PROJECT OFFICE 23.0 23.1 23.2 23.3 23.4 23.5 23.6 23.7 23.8 23.9 23.10 23.11 23.12 23.13 23.14 23.15 23.16 1097 Introduction 1097 Present-Day Project Office 1098 Implementation Risks 1099 Types of Project Offices 1100 Networking Project Management Offices 1101 Project Management Information Systems 1101 Dissemination of Information 1103 Mentoring 1104 Development of Standards and Templates 1105 Project Management Benchmarking 1105 Business Case Development 1106 Customized Training (Related to Project Management) Managing Stakeholder Relations 1108 Continuous Improvement 1109 Capacity Planning 1109 Risks of Using a Project Office 1110 Project Portfolio Management 1111 Case Study The Project Management Lawsuit 24 1116 MANAGING CRISIS PROJECTS 1119 24.0 24.1 24.2 24.3 24.4 24.5 24.6 Introduction 1119 Understanding Crisis Management 1119 Ford versus Firestone 1121 The Air France Concorde Crash 1122 Intel and the Pentium Chip 1123 The Russian Submarine Kursk 1123 The Tylenol Poisonings 1124 1107 ftoc.qxd 1/3/13 3:50 PM Page xx xx CONTENTS 24.7 24.8 24.9 24.10 24.11 24.12 25 FUTURE OF PROJECT MANAGEMENT 1135 25.0 25.1 25.2 25.3 25.4 25.5 26 Nestlé’s Marketing of Infant Formula 1127 The Space Shuttle Challenger Disaster 1129 The Space Shuttle Columbia Disaster 1130 Victims Versus Villains 1131 Life-Cycle Phases 1132 Project Management Implications 1133 Changing Times 1135 Complex Projects 1139 Complexity Theory 1144 Scope Creep 1145 Project Health Checks 1151 Managing Troubled Projects 1155 THE RISE, FALL, AND RESURRECTION OF IRIDIUM: A PROJECT MANAGEMENT PERSPECTIVE 1167 26.0 26.1 26.2 26.3 26.4 26.5 26.6 26.7 26.8 26.9 26.10 26.11 26.12 26.13 26.14 26.15 26.16 26.17 26.18 26.19 26.20 26.21 26.22 26.23 26.24 26.25 Introduction 1167 Naming the Project “Iridium” 1169 Obtaining Executive Support 1170 Launching the Venture 1170 The Iridium System 1172 The Terrestrial and Space-Based Network 1172 Project Initiation: Developing the Business Case 1173 The “Hidden” Business Case 1175 Risk Management 1175 The Collective Belief 1177 The Exit Champion 1177 Iridium’s Infancy Years 1178 Debt Financing 1181 The M-Star Project 1182 A New CEO 1183 Satellite Launches 1183 An Initial Public Offering (IPO) 1184 Signing Up Customers 1184 Iridium’s Rapid Ascent 1185 Iridium’s Rapid Descent 1187 The Iridium “Flu” 1191 Searching for a White Knight 1192 The Definition of Failure (October, 1999) 1192 The Satellite Deorbiting Plan 1193 Iridium is Rescued for $25 Million 1194 Iridium Begins to Grow 1194 ftoc.qxd 1/3/13 3:50 PM Page xxi xxi Contents 26.26 26.27 26.28 26.29 26.30 26.31 26.32 Shareholder Lawsuits 1195 The Bankruptcy Court Ruling 1195 Autopsy 1196 Financial Impact of the Bankruptcy 1197 What Really Went Wrong? 1198 Lessons Learned 1200 Conclusion 1202 Appendix A. Solutions to the Project Management Conflict Exercise Appendix B. Solution to Leadership Exercise 1211 Appendix C. Dorale Products Case Studies 1217 Appendix D. Solutions to the Dorale Products Case Studies 1229 Appendix E. Alignment of the PMBOK® Guide to the Text 1235 Author Index 1241 Subject Index 1243 1205 ftoc.qxd 1/3/13 3:50 PM Page xxii fpref.qxd 1/3/13 3:49 PM Page xxiii Preface Project management has evolved from a management philosophy restricted to a few functional areas and regarded as something nice to have to an enterprise project management system affecting every functional unit of the company. Simply stated, project management has evolved into a business process rather than merely a project management process. More and more companies are now regarding project management as being mandatory for the survival of the firm. Organizations that were opponents of project management are now advocates. Management educators of the past, who preached that project management could not work and would be just another fad, are now staunch supporters. Project management is here to stay. Colleges and universities are now offering graduate degrees in project management. The text discusses the principles of project management. Students who are interested in advanced topics, such as some of the material in Chapters 21 to 25 of this text, may wish to read one of my other texts, Advanced Project Management: Best Practices in Implementation (New York: Wiley, 2004) and Project Management Best Practices: Achieving Global Excellence, 2nd edition (Hoboken, NJ: Wiley and IIL Publishers, 2010). John Wiley & Sons and the International Institute for Learning also introduced a four-book series on project management best practices, authored by Frank Saladis, Carl Belack, and Harold Kerzner. This book is addressed not only to those undergraduate and graduate students who wish to improve upon their project management skills but also to those functional managers and upper-level executives who serve as project sponsors and must provide continuous support for projects. During the past several years, xxiii fpref.qxd 1/3/13 3:49 PM Page xxiv xxiv PREFACE management’s knowledge and understanding of project management has matured to the point where almost every company is using project management in one form or another. These companies have come to the realization that project management and productivity are related and that we are now managing our business as though it is a series of projects. Project management coursework is now consuming more of training budgets than ever before. General reference is provided in the text to engineers. However, the reader should not consider project management as strictly engineering-related. The engineering examples are the result of the fact that project management first appeared in the engineering disciplines, and we should be willing to learn from their mistakes. Project management now resides in every profession, including information systems, health care, consulting, pharmaceutical, banks, and government agencies. The text can be used for both undergraduate and graduate courses in business, information systems, and engineering. The structure of the text is based upon my belief that project management is much more behavioral than quantitative since projects are managed by people rather than tools. The first five chapters are part of the basic core of knowledge necessary to understand project management. Chapters 6 through 8 deal with the support functions of managing your time effectively, conflicts, and other special topics. Chapters 9 and 10 describe factors for predicting success and management support. It may seem strange that ten chapters on organizational behavior and structuring are needed prior to the “hard-core” chapters of planning, scheduling, and controlling. These first ten chapters are needed to understand the cultural environment for all projects and systems. These chapters are necessary for the reader to understand the difficulties in achieving cross-functional cooperation on projects where team members are working on multiple projects concurrently and why the people involved, all of whom may have different backgrounds, cannot simply be forged into a cohesive work unit without friction. Chapters 11 through 20 are more of the quantitative chapters on planning, scheduling, cost control, estimating, contracting (and procurement), and quality. The next five chapters are advanced topics and future trends. Chapter 26 is a capstone case study that can be related to almost all of the chapters in the text. The changes that were made in the eleventh edition include: ● ● ● ● ● ● ● ● ● ● ● A new section on success, trade-offs, and competing constraints A new section on added value A new section on business intelligence A new section on project governance An updated section on processes supporting project management An updated section on the types of project closure A new section on engagement project management A new section on barriers to implementing project management in emerging markets A new section on fallacies in implementing project management A new section on enterprise project management systems A new section on How Project Management Methodologies Can Fail fpref.qxd 1/3/13 3:49 PM Page xxv xxv Preface ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● A new section on the future of project management A new section on managing complex projects A new section on managing scope creep A new section on project health checks A new section on how to recover a troubled project A new section on managing public projects A new section on managing international projects A new section on project politics A new section on twenty common mistakes in project management A new section on managing innovation projects A new section on the differences between best practices and proven practices An updated section on project sponsorship An updated section on culture, teamwork, and trust A New Section on stakeholder relations management A new section on value-based leadership An updated section on validating project assumptions A new section on validating project objectives A new section on the WBS dictionary A new section on validation and verification A new section on project management baselines A new section on the traceability matrix An expansion on WBS core attributes An expansion on using the WBS and WBS dictionary for verification A new section on project management metrics A new section on key performance indicators A new section on value metrics A new section on project management dashboards A new section on portfolio management A new section on complexity theory A new section on project management information systems A new section on enterprise resource planning A new section on project problem solving A new section on brainstorming A new section on project decision-making A new section on determining the impact of a decision A new section on active listening A new section on agile project management A capstone case study which can be used as a review of the entire PMBOK® Guide, 5th edition, domain areas The text contains more than 25 case studies, more than 125 multiple-choice questions, and nearly 400 discussion questions. There is also a separate book of cases (Project Management Case Studies, fourth edition) that provides additional real-world examples. fpref.qxd 1/3/13 xxvi 3:49 PM Page xxvi PREFACE This text, the PMBOK® Guide, and the book of cases are ideal as self-study tools for the Project Management Institute’s PMP® Certification exam. Because of this, there are tables of cross references on each chapter’s opening page in the textbook detailing the sections from the book of cases and the Guide to the Project Management Body of Knowledge (PMBOK® Guide) that apply to that chapter’s content. The left-hand margin of the pages in the text has side bars that identify the cross-listing of the material on that page to the appropriate section(s) of the PMBOK® Guide. At the end of most of the chapters is a section on study tips for the PMP® exam, including more than 125 multiple-choice questions. This textbook is currently used in the college market, in the reference market, and for studying for the PMP® Certification exam. Therefore, to satisfy the needs of all markets, a compromise had to be reached on how much of the text would be aligned to the PMBOK® Guide and how much new material would be included without doubling the size of the text. Some colleges and universities use the textbook to teach project management fundamentals without reference to the PMBOK® Guide. The text does not contain all of the material necessary to support each section of the PMBOK® Guide. Therefore, to study for the PMP® Certification exam, the PMBOK® Guide must also be used together with this text. The text covers material for almost all of the PMBOK® Guide knowledge areas but not necessarily in the depth that appears in the PMBOK® Guide. An instructor’s manual is available only to college and university faculty members by contacting your local Wiley sales representative or by visiting the Wiley website at www.wiley.com/kerzner. This website includes not only the instructor’s manual but also 500 PowerPoint slides that follow the content of the book and help organize and execute classroom instruction and group learning. Access to the instructor’s material can be provided only through John Wiley & Sons, not the author. One-, two-, and three-day seminars on project management and the PMP® Certification Training using the text are offered by contacting Lori MIlhaven, Executive Vice President, the International Institute for Learning, at 800-3251533, extension 5121 (email address: lori.milhaven@iil.com). The problems and case studies at the ends of the chapters cover a variety of industries. Almost all of the case studies are real-world situations taken from my consulting practice. Feedback from my colleagues who are using the text has provided me with fruitful criticism, most of which has been incorporated into the tenth edition. The majority of the articles on project management that have become classics have been referenced in the textbook throughout the first eleven chapters. These articles were the basis for many of the modern developments in project management and are therefore identified throughout the text. Many colleagues provided valuable criticism. In particular, I am indebted to those industrial/government training managers whose dedication and commitment to quality project management education and training have led to valuable changes in this and previous editions. In particular, I wish to thank Frank Saladis, PMP®, Senior Consultant and Trainer with the International Institute for fpref.qxd 1/3/13 Preface 3:49 PM Page xxvii xxvii Learning, for his constructive comments, recommendations, and assistance with the mapping of the text to the PMBOK® Guide as well as recommended changes to many of the chapters. I am indebted to Dr. Edmund Conrow, PMP®, for a decade of assistance with the preparation of the risk management chapters in all of my texts. I am also indebted to Dr. Rene Rendon for his review and recommendations for changes to the chapter on contract management. To the management team and employees of the International Institute for Learning, thank you all for 20 years of never-ending encouragement, support, and assistance with all of my project management research and writings. Harold Kerzner The International Institute for Learning fpref.qxd 1/3/13 3:49 PM Page xxviii flast.qxd 1/3/13 3:49 PM Page xxix PROJECT MANAGEMENT flast.qxd 1/3/13 3:49 PM Page xxx c01.qxd 1/3/13 4:03 PM Page 1 1 Related Case Studies (from Kerzner/Project Management Case Studies, 4th Edition) • Kombs Engineering • Williams Machine Tool Company* • Hyten Corporation • Macon, Inc. • Continental Computer Corporation • Jackson Industries Overview Related Workbook Exercises (from Kerzner/Project Management Workbook and PMP ®/CAPM ® Exam Study Guide, 11th Edition) • Multiple Choice Exam PMBOK® Guide, 5th Edition, Reference Section for the PMP® Certification Exam • Integration Management • Scope Management • Human Resource Management 1.0 INTRODUCTION Executives will be facing increasingly complex challenges during the next decade. These challenges will be the result of high escalation factors for salaries and raw materials, increased union demands, pressure from stockholders, and the possibility of long-term high inflation accompanied by a mild recession and a lack of borrowing power with financial institutions. These environmental conditions have existed before, but not to the degree that they do today. *Case Study also appears at end of chapter. 1 c01.qxd 1/3/13 4:03 PM Page 2 2 OVERVIEW In the past, executives have attempted to ease the impact of these environmental conditions by embarking on massive cost-reduction programs. The usual results of these programs have been early retirement, layoffs, and a reduction in manpower through attrition. As jobs become vacant, executives pressure line managers to accomplish the same amount of work with fewer resources, either by improving efficiency or by upgrading performance requirements to a higher position on the learning curve. Because people costs are more inflationary than the cost of equipment or facilities, executives are funding more and more capital equipment projects in an attempt to increase or improve productivity without increasing labor. Unfortunately, executives are somewhat limited in how far they can go to reduce manpower without running a high risk to corporate profitability. Capital equipment projects are not always the answer. Thus, executives have been forced to look elsewhere for the solutions to their problems. Almost all of today’s executives are in agreement that the solution to the majority of corporate problems involves obtaining better control and use of existing corporate resources, looking internally rather than externally for the solution. As part of the attempt to achieve an internal solution, executives are taking a hard look at the ways corporate activities are managed. Project management is one of the techniques under consideration. The project management approach is relatively modern. It is characterized by methods of restructuring management and adapting special management techniques, with the purpose of obtaining better control and use of existing resources. Forty years ago project management was confined to U.S. Department of Defense contractors and construction companies. Today, the concept behind project management is being applied in such diverse industries and organizations as defense, construction, pharmaceuticals, chemicals, banking, hospitals, accounting, advertising, law, state and local governments, and the United Nations. The rapid rate of change in both technology and the marketplace has created enormous strains on existing organizational forms. The traditional structure is highly bureaucratic, and experience has shown that it cannot respond rapidly enough to a changing environment. Thus, the traditional structure must be replaced by project management, or other temporary management structures that are highly organic and can respond very rapidly as situations develop inside and outside the company. Project management has long been discussed by corporate executives and academics as one of several workable possibilities for organizational forms of the future that could integrate complex efforts and reduce bureaucracy. The acceptance of project management has not been easy, however. Many executives are not willing to accept change and are inflexible when it comes to adapting to a different environment. The project management approach requires a departure from the traditional business organizational form, which is basically vertical and which emphasizes a strong superior–subordinate relationship. 1.1 UNDERSTANDING PROJECT MANAGEMENT PMBOK® Guide, 5th Edition 1.2 What Is a Project? 1.3 What Is Project Management? ● ● ● ● ● In order to understand project management, one must begin with the definition of a project. A project can be considered to be any series of activities and tasks that: Have a specific objective to be completed within certain specifications Have defined start and end dates Have funding limits (if applicable) Consume human and nonhuman resources (i.e., money, people, equipment) Are multifunctional (i.e., cut across several functional lines) c01.qxd 1/3/13 4:03 PM Page 3 Understanding Project Management 3 Project management, on the other hand, involves five process groups as identified in the PMBOK® Guide, namely: ● ● ● ● ● Project initiation ● Selection of the best project given resource limits ● Recognizing the benefits of the project ● Preparation of the documents to sanction the project ● Assigning of the project manager Project planning ● Definition of the work requirements ● Definition of the quality and quantity of work ● Definition of the resources needed ● Scheduling the activities ● Evaluation of the various risks Project execution ● Negotiating for the project team members ● Directing and managing the work ● Working with the team members to help them improve Project monitoring and control ● Tracking progress ● Comparing actual outcome to predicted outcome ● Analyzing variances and impacts ● Making adjustments Project closure ● Verifying that all of the work has been accomplished ● Contractual closure of the contract ● Financial closure of the charge numbers ● Administrative closure of the papework Successful project management can then be defined as having achieved the project objectives: ● ● ● ● ● Within time Within cost At the desired performance/technology level While utilizing the assigned resources effectively and efficiently Accepted by the customer The potential benefits from project management are: ● ● ● ● ● Identification of functional responsibilities to ensure that all activities are accounted for, regardless of personnel turnover Minimizing the need for continuous reporting Identification of time limits for scheduling Identification of a methodology for trade-off analysis Measurement of accomplishment against plans c01.qxd 1/3/13 4:03 PM Page 4 4 OVERVIEW ● ● ● Early identification of problems so that corrective action may follow Improved estimating capability for future planning Knowing when objectives cannot be met or will be exceeded Unfortunately, the benefits cannot be achieved without overcoming obstacles such as: ● ● ● ● ● ● Project complexity Customer’s special requirements and scope changes Organizational restructuring Project risks Changes in technology Forward planning and pricing Project management can mean different things to different people. Quite often, people misunderstand the concept because they have ongoing projects within their company and feel that they are using project management to control these activities. In such a case, the following might be considered an appropriate definition: Project management is the art of creating the illusion that any outcome is the result of a series of predetermined, deliberate acts when, in fact, it was dumb luck. Although this might be the way that some companies are running their projects, this is not project management. Project management is designed to make better use of existing resources by getting work to flow horizontally as well as vertically within the company. This approach does not really destroy the vertical, bureaucratic flow of work but simply requires that line organizations talk to one another horizontally so work will be accomplished more smoothly throughout the organization. The vertical flow of work is still the responsibility of the line managers. The horizontal flow of work is the responsibility of the project managers, and their primary effort is to communicate and coordinate activities horizontally between the line organizations. Figure 1–1 shows how many companies are structured. There are PMBOK® Guide, 5th Edition always “class or prestige” gaps between various levels of management. 1.7.2 Project Management Skills There are also functional gaps between working units of the organization. If we superimpose the management gaps on top of the functional gaps, we find that companies are made up of small operational islands that refuse to communicate with one another for fear that giving up information may strengthen their opponents. The project manager’s responsibility is to get these islands to communicate cross-functionally toward common goals and objectives. The following would be an overview definition of project management: Project management is the planning, organizing, directing, and controlling of company resources for a relatively short-term objective that has been established to complete specific goals and objectives. Furthermore, project management utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy). c01.qxd 1/3/13 4:03 PM Page 5 Understanding Project Management PMBOK® Guide, 5th Edition 5 TOP MANAGEMENT: POLICY 2.1.3 Organizational Structures MIDDLE MANAGEMENT: PLANNING + = SUPERVISORS: SCHEDULING LABORERS: OPERATIONS MANAGEMENT GAPS FIGURE 1–1. FUNCTIONAL GAPS: DEPARTMENTIZATION OPERATIONAL ISLANDS Why are systems necessary? The above definition requires further comment. Classical management is usually considered to have five functions or principles: ● ● ● ● ● Planning Organizing Staffing Controlling Directing You will notice that, in the above definition, the staffing function has been omitted. This was intentional because the project manager does not staff the project. Staffing is a line responsibility. The project manager has the right to request specific resources, but the final decision of what resources will be committed rests with the line managers. We should also comment on what is meant by a “relatively” short-term project. Not all industries have the same definition for a short-term project. In engineering, the project might be for six months or two years; in construction, three to five years; in nuclear components, ten years; and in insurance, two weeks. Long-term projects, which consume resources full-time, are usually set up as a separate division (if large enough) or simply as a line organization. Figure 1–2 is a pictorial representation of project management. The objective of the figure is to show that project management is designed to manage or control company resources on a given activity, within time, within cost, and within performance. Time, cost, and performance are the constraints on the project. If the project is to be accomplished for an outside customer, then the project has a fourth constraint: good customer relations. The reader should immediately realize that it is possible to manage a project internally within time, cost, and performance and then alienate the customer to such a degree that no further business will be forthcoming. Executives often select project managers based on who the customer is and what kind of customer relations will be necessary. Projects exist to produce deliverables. The person ultimately assigned as the project manager may very well be assigned based upon the size, nature, and scope of the deliverables. Deliverables are outputs, or the end result of either the completion of the project or the end of a life-cycle phase of the project. Deliverables are measurable, tangible outputs and can take such form as: ● Hardware Deliverables: These are hardware items, such as a table, a prototype, or a piece of equipment. 1/3/13 4:03 PM Page 6 6 OVERVIEW CUSTOMER RE OD LAT GO IO IN NS H IT TIM ST CO E W c01.qxd RESOURCES PERFORMANCE/TECHNOLOGY FIGURE 1–2. Overview of project management. ● ● Software Deliverables: These items are similar to hardware deliverables but are usually paper products, such as reports, studies, handouts, or documentation. Some companies do not differentiate between hardware and software deliverables. Interim Deliverables: These items can be either hardware or software deliverables and progressively evolve as the project proceeds. An example might be a series of interim reports leading up to the final report. Another factor influencing the selection of the project manager would be the stakeholders. Stakeholders are individuals or organizations that can be favorably or unfavorably impacted by the project. As such, project managers must interface with these stakeholders, and many of the stakeholders can exert their influence or pressure over the direction of the project. Some stakeholders are referred to as “active” or “key” stakeholders that can possess decision-making authority during the execution of the project. Each stakeholder can have his or her own set of objectives, and this could place the project manager in a position of having to balance a variety of stakeholder interests without creating a conflict-of-interest situation for the project manager. Each company has its own categorization system for identifying stakeholders. A typical system might be: ● Organizational stakeholders Executive officers Line managers ● Employees ● Unions ● ● c01.qxd 1/3/13 4:03 PM Page 7 Defining Project Success ● 7 Product/market stakeholders Customers Suppliers Local committees Governments (local, state, and federal) General public Capital market stakeholders ● Shareholders ● Creditors ● Banks ● ● ● ● ● ● 1.2 DEFINING PROJECT SUCCESS In the previous section, we defined project success as the completion of an activity within the constraints of time, cost, and performance. This was the 2.2.3 Project Success definition used for the past twenty years or so. Today, the definition of project success has been modified to include completion: PMBOK® Guide, 5th Edition ● ● ● ● ● ● ● Within the allocated time period Within the budgeted cost At the proper performance or specification level With acceptance by the customer/user With minimum or mutually agreed upon scope changes Without disturbing the main work flow of the organization Without changing the corporate culture The last three elements require further explanation. Very few projects are completed within the original scope of the project. Scope changes are inevitable and have the potential to destroy not only the morale on a project, but the entire project. Scope changes must be held to a minimum and those that are required must be approved by both the project manager and the customer/user. Project managers must be willing to manage (and make concessions/trade-offs, if necessary) such that the company’s main work flow is not altered. Most project managers view themselves as self-employed entrepreneurs after project go-ahead, and would like to divorce their project from the operations of the parent organization. This is not always possible. The project manager must be willing to manage within the guidelines, policies, procedures, rules, and directives of the parent organization. All corporations have corporate cultures, and even though each project may be inherently different, the project manager should not expect his assigned personnel to deviate from cultural norms. If the company has a cultural standard of openness and honesty when dealing with customers, then this cultural value should remain in place for all projects, regardless of who the customer/user is or how strong the project manager’s desire for success is. As a final note, it should be understood that simply because a project is a success does not mean that the company as a whole is successful in its project management endeavors. Excellence in project management is defined as a continuous stream of successfully c01.qxd 1/3/13 4:03 PM Page 8 8 OVERVIEW managed projects. Any project can be driven to success through formal authority and strong executive meddling. But in order for a continuous stream of successful projects to occur, there must exist a strong corporate commitment to project management, and this commitment must be visible. 1.3 SUCCESS, TRADE-OFFS, AND COMPETING CONSTRAINTS Although many projects are completed successfully, at least in the eyes of the stakeholders, the final criteria from which success is measured may be different than the initial criteria because of trade-offs. As an example, the triangle shown in Figure 1–2 is referred to as the triple constraints on a project, namely time, cost, and performance, where performance can be scope, quality, or technology. These are considered to be the primary constraints and are often considered to be the criteria for a project against which success is measured. Today, we realize that there can be multiple constraints on a project and, rather than use the terminology of the triple constraints, we focus our attention on competing constraints. Sometimes the constraints are referred to as primary and secondary constraints. There may be secondary factors such as risk, customer relations, image, and reputation that may cause us to deviate from our original success criteria of time, cost, and performance. This will be covered later in Section 2.10. These changes can occur any time during the life of a project and can then cause trade-offs in the triple constraints, thus requiring that changes be made to the success criteria. In an ideal situation, we would perform trade-offs on any or all of the competing constraints such that acceptable success criteria would still be met. As an example, let’s assume that a project was initiated using the success criteria of the triple constraints as shown in Figure 1–3. Part way through the project, the environment changes, a new senior management team is brought in with their own agenda, or a corporate crisis occurs such that the credibility of the corporation is at stake. In such a case, the competing constraints shown in Figure 1–3 can be more important than the original triple constraints. For simplicity’s sake, a triangle was used for the competing constraints in Figure 1–3. However, there can be significantly more than three competing constraints in which some geometric shape other than a triangle might work best. Secondary factors are also considered to be constraints and may be more important than the primary constraints. For example, years ago, in Disneyland and Disneyworld, the project managers designing and building the attractions at the theme parks had six constraints: ● ● ● ● ● ● Time Cost Scope Safety Aesthetic value Quality 1/3/13 4:03 PM Page 9 The Project Manager–Line Manager Interface Va Risk Risk Quality Scope lity lue 9 a Qu Image/ Reputation st Co Tim e c01.qxd Value Scope Cost Time Image/Reputation Traditional Projects Complex Projects (The Triple Constraints) (Competing Constraints) FIGURE 1–3. Competing constraints. At Disney, the last three constraints of safety, aesthetic value, and quality were considered locked-in constraints that could not be altered during trade-offs. All trade-offs were made on time, cost, and scope. Some constraints simply cannot change while others may have flexibility. Not all constraints are equal in importance. For example, in the initiation phase of a project, scope may be the critical factor and all trade-offs are made on time and cost. During the execution phase of the project, time and cost may become more important and then trade-offs will be made on scope. A more detailed discussion of trade-offs can be found in Chapter 16. 1.4 THE PROJECT MANAGER–LINE MANAGER INTERFACE PMBOK® Guide, 5th Edition 1.7.2 Project Management Skills ● ● ● ● ● ● We have stated that the project manager must control company resources within time, cost, and performance. Most companies have six resources: Money Manpower Equipment Facilities Materials Information/technology Actually, the project manager does not control any of these resources directly, except perhaps money (i.e., the project budget).1 Resources are controlled by the line managers, functional managers, or, as they are often called, resources managers. Project managers 1. Here we are assuming that the line manager and project manager are not the same individual. However, the terms line manager and functional manager are used interchangeably throughout the text. c01.qxd 1/3/13 4:03 PM Page 10 10 OVERVIEW must, therefore, negotiate with line managers for all project resources. When we say that project managers control project resources, we really mean that they control those resources (which are temporarily loaned to them) through line managers. Today, we have a new breed of project manager. Years ago, virtually all project managers were engineers with advanced degrees. These people had a command of technology rather than merely an understanding of technology. If the line manager believed that the project manager did in fact possess a command of technology, then the line manager would allow the assigned functional employees to take direction from the project manager. The result was that project managers were expected to manage people. Most project managers today have an understanding of technology rather than a command of technology. As a result, the accountability for the success of the project is now viewed as shared accountability between the project manager and all affected line managers. With shared accountability, the line managers must now have a good understanding of project management, which is why more line managers are now becoming PMP®S. Project managers are now expected to focus more so on managing the project’s deliverables rather than providing technical direction to the project team. Management of the assigned resources is more often than not a line function. Another important fact is that project managers are treated as though they are managing part of a business rather than simply a project, and as such are expected to make sound business decisions as well as project decisions. Project managers must understand business principles. In the future, project managers may be expected to become externally certified by PMI® and internally certified by their company on the organization’s business processes. In recent years, the rapid acceleration of technology has forced the project manager to become more business oriented. According to Hans Thamhain, The new breed of business leaders must deal effectively with a broad spectrum of contemporary challenges that focus on time-to-market pressures, accelerating technologies, innovation, resource limitations, technical complexities, social and ethical issues, operational dynamics, cost, risks, and technology itself as summarized below: ● ● ● ● ● ● ● ● ● ● ● ● High task complexities, risks and uncertainties Fast-changing markets, technology, regulations Intense competition, open global markets Resource constraint, tough performance requirements Tight, end-date-driven schedules Total project life-cycle considerations Complex organizations and cross-functional linkages Joint ventures, alliances and partnerships, need for dealing with different organizational cultures and values Complex business processes and stakeholder communities Need for continuous improvements, upgrades and enhancements Need for sophisticated people skills, ability to deal with organizational conflict, power, and politics Increasing impact of IT and e-business2 2. H. J. Thamhain, Management of Technology (Hoboken, NJ: Wiley, 2005), pp. 3–4. c01.qxd 1/3/13 4:03 PM Page 11 The Project Manager–Line Manager Interface 11 Dr. Thamhain further believes that there are paradigm shifts in technology-oriented business environments that will affect the business leaders of the future, including project managers. According to Dr. Thamhain, we are shifting from… ● ● ● ● ● ● … mostly linear work processes to highly dynamic, organic and integrated management systems …efficiency toward effectiveness …executing projects to enterprise-wide project management …managing information to fully utilizing information technology …managerial control to self-direction and accountability …managing technology as part of a functional speciality to management of technology as a distinct skill set and professional status3 Another example of the need for the project manager to become more actively involved in business aspects has been identified by Gary Heerkens. Heerkens provides several revelations of why business knowledge has become important, a few of which are4: ● ● ● ● ● It really doesn’t matter how well you execute a project, if you’re working on the wrong project! There are times when spending more money on a project could be smart business— even if you exceed the original budget! There are times when spending more money on a project could be smart business— even if the project is delivered after the original deadline! Forcing the project team to agree to an unrealistic deadline may not be very smart, from a business standpoint. A portfolio of projects that all generate a positive cash flow may not represent an organization’s best opportunity for investment. It should become obvious at this point that successful project management is strongly dependent on: ● ● A good daily working relationship between the project manager and those line managers who directly assign resources to projects The ability of functional employees to report vertically to line managers at the same time that they report horizontally to one or more project managers These two items become critical. In the first item, functional employees who are assigned to a project manager still take technical direction from their line managers. Second, employees who report to multiple managers will always favor the manager who controls their purse strings. Thus, most project managers appear always to be at the mercy of the line managers. 3. See note 2; Thamhain; p. 28. 4. G. Heerkens, The Business-Savvy Project Manager (New York: McGraw-Hill, 2006), pp. 4–8. c01.qxd 1/3/13 4:03 PM Page 12 12 OVERVIEW Classical management has often been defined as a process in which the manager does not necessarily perform things for himself, but accomplishes objectives through others in a group situation. This basic definition also applies to the project manager. In addition, a project manager must help himself. There is nobody else to help him. If we take a close look at project management, we will see that the project manager actually works for the line managers, not vice versa. Many executives do not realize this. They have a tendency to put a halo around the head of the project manager and give him a bonus at project completion when, in fact, the credit should be shared with the line managers, who are continually pressured to make better use of their resources. The project manager is simply the agent through whom this is accomplished. So why do some companies glorify the project management position? To illustrate the role of the project manager, consider the time, cost, and performance constraints shown in Figure 1–2. Many functional managers, if left alone, would recognize only the performance constraint: “Just give me another $50,000 and two more months, and I’ll give you the ideal technology.” The project manager, as part of these communicating, coordinating, and integrating responsibilities, reminds the line managers that there are also time and cost constraints on the project. This is the starting point for better resource control. Project managers depend on line managers. When the project manager gets in trouble, the only place he can go is to the line manager because additional resources are almost always required to alleviate the problems. When a line manager gets in trouble, he usually goes first to the project manager and requests either additional funding or some type of authorization for scope changes. To illustrate this working relationship between the project and line managers, consider the following situation: Project Manager (addressing the line manager): “I have a serious problem. I’m looking at a $150,000 cost overrun on my project and I need your help. I’d like you to do the same amount of work that you are currently scheduled for but in 3,000 fewer man-hours. Since your organization is burdened at $60/hour, this would more than compensate for the cost overrun.” Line Manager: “Even if I could, why should I? You know that good line managers can always make work expand to meet budget. I’ll look over my manpower curves and let you know tomorrow.” The following day . . . Line Manager: “I’ve looked over my manpower curves and I have enough work to keep my people employed. I’ll give you back the 3,000 hours you need, but remember, you owe me one!” Several months later . . . Line Manager: “I’ve just seen the planning for your new project that’s supposed to start two months from now. You’ll need two people from my department. There are two c01.qxd 1/3/13 4:03 PM Page 13 The Project Manager–Line Manager Interface 13 employees that I’d like to use on your project. Unfortunately, these two people are available now. If I don’t pick these people up on your charge number right now, some other project might pick them up in the interim period, and they won’t be available when your project starts.” Project Manager: “What you’re saying is that you want me to let you sandbag against one of my charge numbers, knowing that I really don’t need them.” Line Manager: “That’s right. I’ll try to find other jobs (and charge numbers) for them to work on temporarily so that your project won’t be completely burdened. Remember, you owe me one.” Project Manager: “O.K. I know that I owe you one, so I’ll do this for you. Does this make us even?” Line Manager: “Not at all! But you’re going in the right direction.” When the project management–line management relationship begins to deteriorate, the project almost always suffers. Executives must promote a good working relationship between line and project management. One of the most common ways of destroying this relationship is by asking, “Who contributes to profits—the line or project manager?” Project managers feel that they control all project profits because they control the budget. The line managers, on the other hand, argue that they must staff with appropriately budgeted-for personnel, supply the resources at the desired time, and supervise performance. Actually, both the vertical and horizontal lines contribute to profits. These types of conflicts can destroy the entire project management system. The previous examples should indicate that project management is more behavioral than quantitative. Effective project management requires an understanding of: ● ● ● Quantitative tools and techniques Organizational structures Organizational behavior Most people understand the quantitative tools for planning, scheduling, and controlling work. It is imperative that project managers understand totally the operations of each line organization. In addition, project managers must understand their own job description, especially where their authority begins and ends. During an in-house seminar on engineering project management, the author asked one of the project engineers to provide a description of his job as a project engineer. During the discussion that followed, several project managers and line managers said that there was a great deal of overlap between their job descriptions and that of the project engineer. Organizational behavior is important because the functional employees at the interface position find themselves reporting to more than one boss—a line manager and one project manager for each project they are assigned to. Executives must provide proper training so functional employees can report effectively to multiple managers. c01.qxd 1/3/13 4:03 PM Page 14 14 OVERVIEW 1.5 DEFINING THE PROJECT MANAGER’S ROLE PMBOK® Guide, 5th Edition 2.2.1 Stakeholders Chapter 4 Project Integration Management The project manager is responsible for coordinating and integrating activities across multiple, functional lines. The integration activities performed by the project manager include: ● ● ● Integrating the activities necessary to develop a project plan Integrating the activities necessary to execute the plan Integrating the activities necessary to make changes to the plan These integrative responsibilities are shown in Figure 1–4 where the project manager must convert the inputs (i.e., resources) into outputs of products, services, and ultimately profits. In order to do this, the project manager needs strong communicative and interpersonal skills, must become familiar with the operations of each line organization, and must have knowledge of the technology being used. An executive with a computer manufacturer stated that his company was looking externally for project managers. When asked if he expected candidates to have a command of computer technology, the executive remarked: “You give me an individual who has good communicative skills and interpersonal skills, and I’ll give that individual a job. I can teach people the technology and give them technical experts to assist them in decision making. But I cannot teach somebody how to work with people.” The project manager’s job is not an easy one. Project managers may have increasing responsibility, but very little authority. This lack of authority can force them to “negotiate” with upper-level management as well as functional management for control of company resources. They may often be treated as outsiders by the formal organization. In the project environment, everything seems to revolve about the project manager. Although the project organization is a specialized, task-oriented entity, it cannot exist apart from the traditional structure of the organization. The project manager, therefore, must PMBOK® Guide, 5th Edition Chapter 4 Integration Management Resources S Capital Integration Management S Materials Inputs S Equipment S Facilities S Information S Personnel FIGURE 1–4. Integration management. Products Integrated Processes Services Profits Outputs c01.qxd 1/3/13 4:03 PM Page 15 Defining the Functional Manager’s Role 15 walk the fence between the two organizations. The term interface management is often used for this role, which can be described as managing relationships: ● ● ● ● Within the project team Between the project team and the functional organizations Between the project team and senior management Between the project team and the customer’s organization, whether an internal or external organization To be effective as a project manager, an individual must have management as well as technical skills. Because engineers often consider their careers limited in the functional disciplines, they look toward project management and project engineering as career path opportunities. But becoming a manager entails learning about psychology, human behavior, organizational behavior, interpersonal relations, and communications. MBA programs have come to the rescue of individuals desiring the background to be effective project managers. In the past, executives motivated and retained qualified personnel primarily with financial incentives. Today other ways are being used, such as a change in title or the promise of more challenging work. Perhaps the lowest turnover rates of any professions in the world are in project management and project engineering. In a project environment, the project managers and project engineers get to see their project through from “birth to death.” Being able to see the fruits of one’s efforts is highly rewarding. A senior project manager in a construction company commented on why he never accepted a vice presidency that had been offered to him: “I can take my children and grandchildren into ten countries in the world and show them facilities that I have built as the project manager. What do I show my kids as an executive? The size of my office? My bank account? A stockholder’s report?” The project manager is actually a general manager and gets to know the total operation of the company. In fact, project managers get to know more about the total operation of a company than most executives. That is why project management is often used as a training ground to prepare future general managers who will be capable of filling top management positions. 1.6 DEFINING THE FUNCTIONAL MANAGER’S ROLE PMBOK® Guide, 5th Edition Chapter 9 Human Resources Management 9.1.2 HR Planning: Tools and Techniques Assuming that the project and functional managers are not the same person, we can identify a specific role for the functional manager. There are three elements to this role: ● The functional manager has the responsibility to define how the task will be done and where the task will be done (i.e., the technical criteria). c01.qxd 1/3/13 4:03 PM Page 16 16 OVERVIEW ● ● The functional manager has the responsibility to provide sufficient resources to accomplish the objective within the project’s constraints (i.e., who will get the job done). The functional manager has the responsibility for the deliverable. In other words, once the project manager identifies the requirements for the project (i.e., what work has to be done and the constraints), it becomes the line manager’s responsibility to identify the technical criteria. Except perhaps in R&D efforts, the line manager should be the recognized technical expert. If the line manager believes that certain technical portions of the project manager’s requirements are unsound, then the line manager has the right, by virtue of his expertise, to take exception and plead his case to a higher authority. In Section 1.1 we stated that all resources (including personnel) are controlled by the line manager. The project manager has the right to request specific staff, but the final appointments rest with line managers. It helps if project managers understand the line manager’s problems: ● ● ● ● ● ● ● ● ● ● ● Unlimited work requests (especially during competitive bidding) Predetermined deadlines All requests having a high priority Limited number of resources Limited availability of resources Unscheduled changes in the project plan Unpredicted lack of progress Unplanned absence of resources Unplanned breakdown of resources Unplanned loss of resources Unplanned turnover of personnel Only in a very few industries will the line manager be able to identify to the project manager in advance exactly what resources will be available when the project is scheduled to begin. It is not important for the project manager to have the best available resources. Functional managers should not commit to certain people’s availability. Rather, the functional manager should commit to achieving his portion of the deliverables within time, cost, and performance even if he has to use average or below-average personnel. If the project manager is unhappy with the assigned functional resources, then the project manager should closely track that portion of the project. Only if and when the project manager is convinced by the evidence that the assigned resources are unacceptable should he confront the line manager and demand better resources. The fact that a project manager is assigned does not relieve the line manager of his functional responsibility to perform. If a functional manager assigns resources such that the constraints are not met, then both the project and functional managers will be blamed. One company is even considering evaluating line managers for merit increases and promotion based on how often they have lived up to their commitments to the project managers. c01.qxd 1/3/13 4:03 PM Page 17 Defining the Functional Manager’s Role 17 Therefore, it is extremely valuable to everyone concerned to have all project commitments made visible to all. Some companies carry the concept of commitments to extremes. An aircraft components manufacturer has a Commitment Department headed by a second-level manager. The function of the Commitment Department is to track how well the line managers keep their promises to the project managers. The department manager reports directly to the vice president of the division. In this company, line managers are extremely careful and cautious in making commitments, but do everything possible to meet deliverables. This same company has gone so far as to tell both project and line personnel that they run the risk of being discharged from the company for burying a problem rather than bringing the problem to the surface immediately. In one automotive company, the tension between the project and line managers became so combative that it was having a serious impact on the performance and constraints of the project. The project managers argued that the line managers were not fulfilling their promises whereas the line managers were arguing that the project managers’ requirements were poorly defined. To alleviate the problem, a new form was created which served as a contractual agreement between the project and the line managers who had to commit to the deliverables. This resulted in “shared accountability” for the project’s deliverables. Project management is designed to have shared authority and responsibility between the project and line managers. Project managers plan, monitor, and control the project, whereas functional managers perform the work. Table 1–1 shows this shared responsibility. The one exception to Table 1–1 occurs when the project and line managers are the same person. This situation, which happens more often than not, creates a conflict of interest. If a line manager has to assign resources to six projects, one of which is under his direct control, he might save the best resources for his project. In this case, his project will be a success at the expense of all of the other projects. The exact relationship between project and line managers is of paramount importance in project management where multiple-boss reporting prevails. Table 1–2 shows that the relationship between project and line managers is not always in balance and thus, of course, has a bearing on who exerts more influence over the assigned functional employees. PMBOK® Guide, 5th Edition TABLE 1–1. DUAL RESPONSIBILITY 2.1.3 Organizational Structure Responsibility Topic Project Manager Line Manager Rewards Direction Evaluation Measurement Control Give recommendation: Informal Milestone (summary) Summary Summary Summary Provide rewards: Formal Detailed Detailed Detailed Detailed c01.qxd 1/3/13 4:03 PM Page 18 18 OVERVIEW PMBOK® Guide, 5th Edition 2.1.3 Organizational Structure TABLE 1–2. REPORTING RELATIONSHIPS Project Manager (PM)/Line Manager (LM)/Employee Relationship PM Receives Functional Progress From Employee Performance Evaluations Made By Type of Project Manager Type of Matrix Structure* PM Negotiates For Employees Take Technical Direction From Lightweight Weak Deliverables LMs Primarily LMs LMs only with no input from PM Heavyweight Strong People who report informally to PM but formally to LMs PM and LMs Assigned employees who report to LMs LMs with input from PM Tiger teams Very strong People who report entirely to PM full-time for duration of project PM only Assigned employees who now report directly to PM PM only *The types of organizational structures are discussed in Chapter 3. 1.7 DEFINING THE FUNCTIONAL EMPLOYEE’S ROLE Once the line managers commit to the deliverables, it is the responsibility of the assigned functional employees to achieve the functional deliverables. For years the functional employees were called subordinates. Although this term still exists in textbooks, industry prefers to regard the assigned employees as “associates” rather than subordinates. The reason for this is that in project management the associates can be a higher pay grade than the project manager. The associates can even be a higher pay grade than their functional manager. In most organizations, the assigned employees report on a “solid” line to their functional manager, even though they may be working on several projects simultaneously. The employees are usually a “dotted” line to the project but solid to their function. This places the employees in the often awkward position of reporting to multiple individuals. This situation is further complicated when the project manager has more technical knowledge than the line manager. This occurs during R&D projects. The functional employee is expected to accomplish the following activities when assigned to projects: ● ● ● ● ● Accept responsibility for accomplishing the assigned deliverables within the project’s constraints Complete the work at the earliest possible time Periodically inform both the project and line manager of the project’s status Bring problems to the surface quickly for resolution Share information with the rest of the project team c01.qxd 1/3/13 4:03 PM Page 19 Working with Executives 19 1.8 DEFINING THE EXECUTIVE’S ROLE In a project environment there are new expectations of and for the executives, as well as a new interfacing role.5 Executives are expected to interface a project as follows: ● ● ● ● In project planning and objective-setting In conflict resolution In priority-setting As project sponsor6 Executives are expected to interface with projects very closely at project initiation and planning, but to remain at a distance during execution unless needed for priority-setting and conflict resolution. One reason why executives “meddle” during project execution is that they are not getting accurate information from the project manager as to project status. If project managers provide executives with meaningful status reports, then the so-called meddling may be reduced or even eliminated. 1.9 WORKING WITH EXECUTIVES Success in project management is like a three-legged stool. The first leg is the project manager, the second leg is the line manager, and the third leg is senior management. If any of the three legs fail, then even delicate balancing may not prevent the stool from toppling. The critical node in project management is the project manager–line manager interface. At this interface, the project and line managers must view each other as equals and be willing to share authority, responsibility, and accountability. In excellently managed companies, project managers do not negotiate for resources but simply ask for the line manager’s commitment to executing his portion of the work within time, cost, and performance. Therefore, in excellent companies, it should not matter who the line manager assigns as long as the line manager lives up to his commitments. Since the project and line managers are “equals,” senior management involvement is necessary to provide advice and guidance to the project manager, as well as to provide encouragement to the line managers to keep their promises. When executives act in this capacity, they assume the role of project sponsors, as shown in Figure 1–5,7 which also shows that sponsorship need not always be at the executive levels. The exact person appointed as the project sponsor is based on the dollar value of the project, the priority of the project, and who the customer is. The ultimate objective of the project sponsor is to provide behind-the-scenes assistance to project personnel for projects both “internal” to the company, as well as “external,” as shown in Figure 1–5. Projects can still be successful without this commitment and support, as long as all work flows smoothly. But in time of crisis, having a “big brother” available as a possible sounding board will surely help. 5. The expectations are discussed in Section 9.3. 6. The role of the project sponsor is discussed in Section 10.1. 7. Section 10.1 describes the role of the project sponsor in more depth. c01.qxd 1/3/13 4:03 PM Page 20 20 OVERVIEW PMBOK® Guide, 5th Edition 2.2.1 Project Stakeholders PRIORITY PROJECTS PROJECT SPONSOR: SENIOR MANAGEMENT MAINTENANCE PROJECTS PROJECT SPONSOR: LOWER/MIDDLE MANAGEMENT RELATIONSHIP: PROJECT SPONSOR PROJECT MANAGER PROJECT TEAM FIGURE 1–5. • OBJECTIVE SETTING • UP-FRONT PLANNING • PROJECT ORGANIZATION • KEY STAFFING • MASTER PLAN • POLICIES • MONITORING EXECUTION • PRIORITY SETTING • CONFLICT RESOLUTION • EXECUTIVE-CLIENT CONTACT PROJECT MANAGER The project sponsor interface. When an executive is required to act as a project sponsor, then the executive has the responsibility to make effective and timely project decisions. To accomplish this, the executive needs timely, accurate, and complete data for such decisions. Keeping management informed serves this purpose, while the all-too-common practice of “stonewalling” prevents an executive from making effective project decisions. It is not necessary for project sponsorship to remain exclusively at the executive levels. As companies mature in their understanding and implementation of project management, project sponsorship may be pushed down to middle-level management. Committee sponsorship is also possible. 1.10 COMMITTEE SPONSORSHIP/GOVERNANCE All projects have the potential of getting into trouble but, in general, project management can work well as long as the project’s requirements do not impose severe pressure upon the project manager and a project sponsor exists as an ally to assist the project manager when trouble does appear. Unfortunately, in today’s chaotic environment, this pressure appears to be increasing because: ● ● Companies are accepting high-risk and highly complex projects as a necessity for survival Customers are demanding low-volume, high-quality products with some degree of customization c01.qxd 1/3/13 4:03 PM Page 21 Committee Sponsorship/Governance ● ● ● ● ● 21 Project life cycles and new product development times are being compressed Enterprise environmental factors are having a greater impact on project execution Customers and stakeholders want to be more actively involved in the execution of projects Companies are developing strategic partnerships with suppliers, and each supplier can be at a different level of project management maturity Global competition has forced companies to accept projects from customers that are all at a different level of project management maturity and with different reporting requirements These pressures tend to slow down the decision-making processes at a time when stakeholders want the projects and processes to be accelerated. One person, while acting as the project sponsor, may have neither the time nor capability to address all of these additional issues. The result will be a project slowdown and can occur because of: ● ● ● ● ● The project manager being expected to make decisions in areas where he or she has limited knowledge The project manager hesitating to accept full accountability and ownership for the projects Excessive layers of management being superimposed on top of the project management organization Risk management being pushed up to higher levels in the organization hierarchy resulting in delayed decisions The project manager demonstrating questionable leadership ability on some of the nontraditional projects The problems resulting from these pressures may not be able to be resolved, at least easily and in a timely manner, by a single project sponsor. These problems can be resolved using effective project governance. Project governance is actually a framework by which decisions are made. Governance relates to decisions that define expectations, accountability, responsibility, the granting of power, or verifying performance. Governance relates to consistent management, cohesive policies, and processes and decision-making rights for a given area of responsibility. Governance enables efficient and effective decision-making to take place. Every project can have different governance even if each project uses the same enterprise project management methodology. The governance function can operate as a separate process or as part of project management leadership. Governance is designed not to replace project decision-making but to prevent undesirable decisions from being made. Historically, governance was provided by a single project sponsor. Today, governance is a committee and can include representatives from each stakeholder’s organization. Table 1-3 shows various governance approaches based upon the type of project team. The membership of the committee can change from project to project and industry to industry. The membership may also vary based upon the number of stakeholders and whether the project is for an internal or external client. On long-term projects, membership can change throughout the project. c01.qxd 1/3/13 4:03 PM Page 22 22 OVERVIEW TABLE 1–3. TYPES OF PROJECT GOVERNANCE Structure Description Governance Dispersed locally Team members can be full- or part-time. They are still attached administratively to their functional area. Usually a single person is acting as the sponsor but may be an internal committee based upon the project’s complexity. Dispersed geographically This is a virtual team. The project manager may never see some of the team members. Team members can be full- or part-time. Usually governance by committee and can include stakeholder membership. Colocated All of the team members are physically located in close proximity to the project manager. The project manager does not have any responsibility for wage and salary administration. Usually a single person acting as the sponsor. Projectized This is similar to a colocated team but the project manager generally functions as a line manager and may have wage and salary responsibilities. May be governance by committee based upon the size of the project and the number of strategic partners. Governance on projects and programs sometimes fails because people confuse project governance with corporate governance. The result is that members of the committee are not sure what their role should be. Some of the major differences include: ● ● ● ● Alignment: Corporate governance focuses on how well the portfolio of projects is aligned to and satisfies overall business objectives. Project governance focuses on ways to keep a project on track. Direction: Corporate governance provides strategic direction with a focus on how project success will satisfy corporate objectives. Project governance is more operation direction with decisions based upon the predefined parameters on project scope, time, cost, and functionality. Dashboards: Corporate governance dashboards are based upon financial, marketing, and sales metrics. Project governance dashboards have operations metrics on time, cost, scope, quality, action items, risks, and deliverables. Membership: Corporate governance committees are composed of the seniormost levels of management. Project government membership may include some membership from middle management. Another reason why failure may occur is when members of the project or program governance group do not understand project or program management. This can lead to micromanagement by the governance committee. There is always the question of what decisions must be made by the governance committee and what decisions the project manager can make. In general, the project manager should have the authority for decisions related to actions necessary to maintain the baselines. Governance committees must have the authority to approve scope changes above a certain dollar value and to make decisions necessary to align the project to corporate objectives and strategy. c01.qxd 1/3/13 4:03 PM Page 23 The Project Manager as the Planning Agent 23 1.11 THE PROJECT MANAGER AS THE PLANNING AGENT The major responsibility of the project manager is planning. If project planning is performed correctly, then it is conceivable that the project manChapter 9 Project Human ager will work himself out of a job because the project can run itself. This Resources Management rarely happens, however. Few projects are ever completed without some conflict or trade-offs for the project manager to resolve. In most cases, the project manager provides overall or summary definitions of the work to be accomplished, but the line managers (the true experts) do the detailed planning. Although project managers cannot control or assign line resources, they must make sure that the resources are adequate and scheduled to satisfy the needs of the project, not vice versa. As the architect of the project plan, the project manager must provide: PMBOK® Guide, 5th Edition ● ● ● ● ● ● Complete task definitions Resource requirement definitions (possibly skill levels) Major timetable milestones Definition of end-item quality and reliability requirements The basis for performance measurement Definition of project success These factors, if properly established, result in: ● ● ● Assurance that functional units will understand their total responsibilities toward achieving project needs. Assurance that problems resulting from scheduling and allocation of critical resources are known beforehand. Early identification of problems that may jeopardize successful project completion so that effective corrective action and replanning can be taken to prevent or resolve the problems. Project managers are responsible for project administration and, therefore, must have the right to establish their own policies, procedures, rules, guidelines, and directives— provided these policies, guidelines, and so on, conform to overall company policy. Companies with mature project management structures usually have rather loose company guidelines, so project managers have some degree of flexibility in how to control their projects. However, project managers cannot make any promises to a functional employee concerning: ● ● ● ● ● ● ● Promotion Grade Salary Bonus Overtime Responsibility Future work assignments c01.qxd 1/3/13 4:03 PM Page 24 24 OVERVIEW These seven items can be administered by line managers only, but the project manager can have indirect involvement by telling the line manager how well an employee is doing (and putting it in writing), requesting overtime because the project budget will permit it, and offering individuals the opportunity to perform work above their current pay grade. However, such work above pay grade can cause severe managerial headaches if not coordinated with the line manager, because the individual will expect immediate rewards if he performs well. Establishing project administrative requirements is part of project planning. Executives must either work with the project managers at project initiation or act as resources later. Improper project administrative planning can create a situation that requires: ● ● ● A continuous revision and/or establishment of company and/or project policies, procedures, and directives A continuous shifting in organizational responsibility and possible unnecessary restructuring A need for staff to acquire new knowledge and skills If these situations occur simultaneously on several projects, there can be confusion throughout the organization. 1.12 PROJECT CHAMPIONS Corporations encourage employees to think up new ideas that, if approved by the corporation, will generate monetary and nonmonetary rewards for the idea generator. One such reward is naming the individual the “project champion.” Unfortunately, the project champion often becomes the project manager, and, although the idea was technically sound, the project fails. Table 1–4 provides a comparison between project managers and project champions. It shows that the project champions may become so attached to the technical side of the project that they become derelict in their administrative responsibilities. Perhaps the project champion might function best as a project engineer rather than the project manager. TABLE 1–4. PROJECT MANAGERS VERSUS PROJECT CHAMPIONS Project Managers Project Champions • • • • Prefer working individually Committed to technology • • • • • • • Committed to the profession Seek to exceed the objective Are unwilling to take risks; try to test everything Seek perfection Think in terms of long time spans Manage things Are committed to and pursue intellectual values • • • • • • • Prefer to work in groups Committed to their managerial and technical responsibilities Committed to the corporation Seek to achieve the objective Are willing to take risks Seek what is possible Think in terms of short time spans Manage people Are committed to and pursue material values c01.qxd 1/3/13 4:03 PM Page 25 Project-Driven versus Non–Project-Driven Organizations 25 This comparison does not mean that technically oriented project managers-champions will fail. Rather, it implies that the selection of the “proper” project manager should be based on all facets of the project. 1.13 THE DOWNSIDE OF PROJECT MANAGEMENT Project management is often recognized only as a high-salaried, highly challenging position whereby the project manager receives excellent training in general management. For projects that are done for external sources, the project manager is first viewed as starting out with a pot of gold and then as having to manage the project so that sufficient profits will be made for the stockholders. If the project manager performs well, the project will be successful. But the personal cost may be high for the project manager. There are severe risks that are not always evident. Some project management positions may ...
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Hello, the two factors that you have presented are very important in making a bid/or nobid decision. It is undeniable that the capability, which can be broadly divided into resource
capability and financial capability is a critical factor that dictate a bid/or no-bid decision.
Capability helps is measuring whether or not the company is going to accomplish the work.
Doing so is very important in anticipating financial needs of the company to accomplish the job...


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Just the thing I needed, saved me a lot of time.

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