Discussion and responses (Initiating the project)

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Contemporary Project Management

Timothy J. Kloppenborg •

Vittal Anantatmula •

Kathryn N. Wells

F O U R T H E D I T I O N

MS Project 2016 Instructions in Contemporary Project Management 4e

Chapter MS Project

3 MS Project 2016 Introduction

Ribbon, Quick Access Toolbar, view panes, Zoom Slider, Shortcuts, Scheduling Mode Selector

Setting Up Your First Project

Auto schedule, start date, identifying information, summary row

Create Milestone Schedule

Key milestones, zero duration, must finish on, information

7 Set Up a Work Breakdown Structure (WBS)

Understand the WBS definitions and displays

Enter WBS Elements (tasks), Create the outline,

Insert WBS Code Identifier column, Hide or show subtasks detail

8 Using MS Project for Critical Path Schedules

Set Up the Project Schedule

Set or update the project start date, Define organization’s working and nonworking time

Build the Network Diagram and Identify the Critical Path

Enter tasks and milestones, edit the timescale, understand and define task dependencies, assign task duration estimates, identify the critical path, understand the network diagram view

Display and Print Schedules

9 Define Resources

Resource views, max units, resource calendars

Assigning Resources

Basic assignment, modify an assignment

Identify Overallocated Resources

Resource usage and Detailed Gantt views together

Overallocated Resources

Finding overallocated resources, dealing with overallocations

Crashing a Critical Path Activity

10 Develop Bottom-up Project Budget

Assignment costs, task costs, various cost perspectives

Develop Summary Project Budget

12 Baseline the Project Plan

First time baseline, subsequent baselines, viewing variances

14 Using MS Project to Monitor and Control Projects

What Makes a Schedule Useful?

How MS Project recalculates based on reported actuals, current and future impacts of variances, define the performance update process (who, what, when)

Steps to Update the Project Schedule

Acquire performance data, set and display status date, Enter duration-based performance data, reschedule remaining work, revise future estimates

15 Close Project

Creating project progress reports, sharing reports, export a report to MS Excel, archive project work, capture and publish lessons learned

Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

PMBOK® Guide 6e Coverage in Contemporary Project Management 4e The numbers refer to the text page where the process is defined. Project management (PM) processes and knowledge areas 10–11 Project life cycle 7–10, 62–64 Projects and strategic planning 33–37 Organizational influences 102–110 Portfolio and program management 37–42

PMBOK® Guide, 6th ed. Coverage

Knowledge Areas

Initiating Process Group Planning Process Group

Executing Process Group

Monitoring & Controlling Process Group

Closing Process Group

Project Integration Management

Develop Project Charter 60–79

Develop Project Management Plan 409–410

Direct and Manage Project Work 459–460 Manage Project Knowledge 192–193, 504–508

Monitor and Control Project Work 460–462 Perform Integrated Change Control 229–232, 462–463

Close Project or Phase 503, 508–511

Project Scope Management

Plan Scope Management 211–212 Collect Requirements 212–216 Define Scope 216–220 Create WBS 220–229

Validate Scope 500–501 Control Scope 475–476

Project Schedule Management

Plan Schedule Management 246 Define Activities 249–253 Sequence Activities 253–255 Estimate Activity Durations 255–258 Develop Schedule 259–267

Control Schedule 476–480

Project Cost Management

Plan Cost Management 329–330 Estimate Costs 330–341 Determine Budget 342–344

Control Costs 345, 476–480

Project Quality Management

Plan Quality Management 401–404 Manage Quality 404–406, 469–474

Control Quality 406–409, 469–474

Project Resources Management

Plan Resource Management 290–295 Estimate Activity Resources 290

Aquire Resources 138–141 Develop Team 141–157 Manage Team 157–161

Control Resources 476

Project Com- munications Management

Plan Communications Management 188–192

Manage Communications 193–199, 465–467

Monitor Communications 467–468

Project Risk Management

Plan Risk Management 360–366 Identify Risks 75, 366–368 Perform Qualitative Risk Analysis 75, 368–372 Perform Quantitative Risk Analysis 372–373 Plan Risk Responses 75, 373–377

Implement Risk Responses 464–465

Monitor Risks 463–464

Project Procurement Management

Plan Procurement Management 431–433, 438–441

Conduct Procurements 434–438

Control Procurments 441

Project Stake- holder Management

Identify Stakehold- ers 75–77, 178–184

Plan Stakeholder Engagement 184–186 Manage Stakeholder Engagement 187–188

Monitor Stakeholder Engagement 188

Source: Adapted from A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management Institute, Inc., 2017): 31.

Contemporary Project Management ORGANIZE LEAD PLAN PERFORM

FOURTH EDITION

TIMOTHY J. KLOPPENBORG Xavier University

VITTAL ANANTATMULA Western Carolina University

KATHRYN N. WELLS Keller Williams Real Estate

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it. For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for materials in your areas of interest.

Important Notice: Media content referenced within the product description or the product text may not be available in the eBook version.

Contemporary Project Management, Fourth Edition

Timothy J. Kloppenborg

2019 2015

Cengage Learning Customer & Sales Support, 1-800-354-9706

www.cengage.com/permissions

[email protected]

2017947974

978 1 337 40645 1

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40 125

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www.cengage.com

www.cengagebrain.com

Printed in the United States of America Print Number: 01 Print Year: 2017

MS Project 2016 Instructions in Contemporary Project Management 4e

Chapter MS Project

3 MS Project 2016 Introduction

Ribbon, Quick Access Toolbar, view panes, Zoom Slider, Shortcuts, Scheduling Mode Selector

Setting Up Your First Project

Auto schedule, start date, identifying information, summary row

Create Milestone Schedule

Key milestones, zero duration, must finish on, information

7 Set Up a Work Breakdown Structure (WBS)

Understand the WBS definitions and displays

Enter WBS Elements (tasks), Create the outline,

Insert WBS Code Identifier column, Hide or show subtasks detail

8 Using MS Project for Critical Path Schedules

Set Up the Project Schedule

Set or update the project start date, Define organization’s working and nonworking time

Build the Network Diagram and Identify the Critical Path

Enter tasks and milestones, edit the timescale, understand and define task dependencies, assign task duration estimates, identify the critical path, understand the network diagram view

Display and Print Schedules

9 Define Resources

Resource views, max units, resource calendars

Assigning Resources

Basic assignment, modify an assignment

Identify Overallocated Resources

Resource usage and Detailed Gantt views together

Overallocated Resources

Finding overallocated resources, dealing with overallocations

Crashing a Critical Path Activity

10 Develop Bottom-up Project Budget

Assignment costs, task costs, various cost perspectives

Develop Summary Project Budget

12 Baseline the Project Plan

First time baseline, subsequent baselines, viewing variances

14 Using MS Project to Monitor and Control Projects

What Makes a Schedule Useful?

How MS Project recalculates based on reported actuals, current and future impacts of variances, define the performance update process (who, what, when)

Steps to Update the Project Schedule

Acquire performance data, set and display status date, Enter duration-based performance data, reschedule remaining work, revise future estimates

15 Close Project

Creating project progress reports, sharing reports, export a report to MS Excel, archive project work, capture and publish lessons learned

PMBOK® Guide, 6th ed. Coverage

Knowledge Areas

Initiating Process Group Planning Process Group

Executing Process Group

Monitoring & Controlling Process Group

Closing Process Group

Project Integration Management

Develop Project Charter 60–79

Develop Project Management Plan 409–410

Direct and Manage Project Work 459–460 Manage Project Knowledge 192–193, 504–508

Monitor and Control Project Work 460–462 Perform Integrated Change Control 229–232, 462–463

Close Project or Phase 503, 508–511

Project Scope Management

Plan Scope Management 211–212 Collect Requirements 212–216 Define Scope 216–220 Create WBS 220–229

Validate Scope 500–501 Control Scope 475–476

Project Schedule Management

Plan Schedule Management 246 Define Activities 249–253 Sequence Activities 253–255 Estimate Activity Durations 255–258 Develop Schedule 259–267

Control Schedule 476–480

Project Cost Management

Plan Cost Management 329–330 Estimate Costs 330–341 Determine Budget 342–344

Control Costs 345, 476–480

Project Quality Management

Plan Quality Management 401–404 Manage Quality 404–406, 469–474

Control Quality 406–409, 469–474

Project Resources Management

Plan Resource Management 290–295 Estimate Activity Resources 290

Aquire Resources 138–141 Develop Team 141–157 Manage Team 157–161

Control Resources 476

Project Com- munications Management

Plan Communications Management 188–192

Manage Communications 193–199, 465–467

Monitor Communications 467–468

Project Risk Management

Plan Risk Management 360–366 Identify Risks 75, 366–368 Perform Qualitative Risk Analysis 75, 368–372 Perform Quantitative Risk Analysis 372–373 Plan Risk Responses 75, 373–377

Implement Risk Responses 464–465

Monitor Risks 463–464

Project Procurement Management

Plan Procurement Management 431–433, 438–441

Conduct Procurements 434–438

Control Procurments 441

Project Stake- holder Management

Identify Stakehold- ers 75–77, 178–184

Plan Stakeholder Engagement 184–186 Manage Stakeholder Engagement 187–188

Monitor Stakeholder Engagement 188

Source: Adapted from A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management Institute, Inc., 2017): 31.

Brief Contents

Preface xx About the Authors xxix

PART 1 Organizing Projects 1 Introduction to Project Management 2

2 Project Selection and Prioritization 32

3 Chartering Projects 60

PART 2 Leading Projects 4 Organizational Capability: Structure, Culture, and Roles 100

5 Leading and Managing Project Teams 136

6 Stakeholder Analysis and Communication Planning 176

PART 3 Planning Projects 7 Scope Planning 210

8 Scheduling Projects 244

9 Resourcing Projects 286

10 Budgeting Projects 328

11 Project Risk Planning 358

12 Project Quality Planning and Project Kickoff 386

PART 4 Performing Projects 13 Project Supply Chain Management 426

14 Determining Project Progress and Results 456

15 Finishing the Project and Realizing the Benefits 498

Appendix A PMP and CAPM Exam Prep Suggestions 522 Appendix B Agile Differences Covered 527 Appendix C Answers to Selected Exercises 532 Appendix D Project Deliverables 537 Appendix E Strengths Themes As Used in Project Management [Available Online]

Index 539

v Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Requirements Documents

13.1 Identify Stakeholders

Stakeholder

Assessment Matrix

Integration

Scope

Schedule

Cost

Quality

Resources

Communication

Risk

Procurement

Stakeholders

12.1 Plan Procurement Management

11.1 Plan Risk

Management

10.1 Plan Communications

Management

9.1 Plan Resource

Management

8.1 Plan Quality

Management

7.1 Plan Cost

Management

6.1 Plan Schedule

Management

5.1 Plan Scope

Management

Duration

Estimates

Scope Statement

Activity List

Milestone List

Network

4.1 Develop Project Charter

Charter

Assumptions Log

Cost Baseline

Resource Requirements

RACI Team

Charter

Quality Mgt. Plan

Communications Matrix

Risk Register

Bid Documents Make or Buy

Analysis

6.5 Develop Schedule

Schedule Baseline

5.2 Collect Requirements

5.4 Create WBS

Scope

4.2 Develop Project Management Plan

Activities

9.2 Estimate Activity

Resources

11.2 Identify Risks

11.3 Perform Qualitative

Risk Analysis

11.4 Perform Quantitative Risk Analysis

11.5 Plan Risk

Responses

13.2 Plan Stakeholders Engagement

6.4 Estimate activity

Durations

7.3 Determine Budget

7.2 Estimate Costs

6.3 Sequence Activities

1.2 Foundational Elements

2.4 Organizational Systems

3.4 Project Manager Competencies Selecting Projects

Project Customer Tradeoff Matrix

Life Cycle and Development Approach Elevator Pitch

Leader Roles and Responsibilities Project Selection and Prioritization Matrix Project Resource Assignment Matrix

11.6 Implement Risk Responses

13.3 Manage Stakeholder Engagement

13.4 Monitor Stakeholder Engagement

4.3 Direct and Manage Project Work

4.4 Manage Project Knowledge

Scope Baseline with WBS

Resource Histogram Project Crashing

Retrospectives

Closure Documents Customer Feedback Transition Plan

Scope Backlog

Burn Down/Up

Charts

Quality Reports

s Analysis

Realizing s

PM Plan Baselines Life Cycle and Development Approach 4.7 Close Project

or Phase

6.6 Control Schedule

Earned Value Analysis

7.4 Control Costs

5.6 Control Scope

5.5 Validate Scope

8.2 Manage Quality

9.3 Acquire Resources

9.4 Develop Team

9.6 Control Resources

9.5 Manage Team

8.3 Control Quality

Change Requests

10.2 Manage Communications

11.7 Monitor Risks

10.3 Monitor Communications

Team Assignments

Team Assessments

Agendas Minutes

Issues Log Meeting Evaluation Progress Report

12.2 Conduct Procurements

12.3 Control Procurements

Source Selection

Matrix

Lessons Learned Register

Quality Measurements

4.6 Perform Integrated

Change Control

4.5 Monitor and Control

Project Work

Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxix

PART 1 Organizing Projects

CHAPTER 1 Introduction to Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 What Is a Project? 3

1.2 History of Project Management 5

1.3 How Can Project Work Be Described? 6 1.3a Projects versus Operations 6 / 1.3b Soft Skills and Hard Skills 7 / 1.3c Authority

and Responsibility 7 / 1.3d Project Life Cycle 7

1.4 Understanding Projects 10 1.4a Project Management Institute 10 / 1.4b Project Management Body of Knowledge

(PMBOK®) 10 / 1.4c The PMI Talent Triangle 11 / 1.4d Selecting and Prioritizing Projects 14 / 1.4e Project Goals and Constraints 14 / 1.4f Defining Project Success and Failure 15 / 1.4g Using Microsoft Project to Help Plan and Measure Projects 16 / 1.4h Types of Projects 16 / 1.4i Scalability of Project Tools 17

1.5 Project Roles 17 1.5a Project Executive-Level Roles 18 / 1.5b Project Management-Level Roles 19 /

1.5c Project Associate-Level Roles 20

1.6 Overview of the Book 20 1.6a Part 1: Organizing and Initiating Projects 20 / 1.6b Part 2: Leading Projects 21 /

1.6c Part 3: Planning Projects 21 / 1.6d Part 4: Performing Projects 23

PMP/CAPM Study Ideas 23

Summary 24

Key Terms Consistent with PMI Standards and Guides 24

Chapter Review Questions 25

Discussion Questions 25

PMBOK® Guide Questions 26 Integrated Example Projects 27

Suburban Homes Construction Project 27

Casa DE PAZ Development Project 28

Semester Project Instructions 28

Project Management in Action 29

References 30

Endnotes 31

viii Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

CHAPTER 2 Project Selection and Prioritization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2.1 Strategic Planning Process 33

2.1a Strategic Analysis 33 / 2.1b Guiding Principles 34 / 2.1c Strategic Objectives 36 / 2.1d Flow-Down Objectives 37

2.2 Portfolio Management 37 2.2a Portfolios 38 / 2.2b Programs 39 / 2.2c Projects and Subprojects 39 /

2.2d Assessing an Organization’s Ability to Perform Projects 42 / 2.2e Identifying Potential Projects 42 / 2.2f Using a Cost-Benefit Analysis Model to Select Projects 43 / 2.2g Using a Scoring Model to Select Projects 45 / 2.2h Prioritizing Projects 48 / 2.2i Resourcing Projects 48

2.3 Securing Projects 49 2.3a Identify Potential Project Opportunities 50 / 2.3b Determine Which Opportunities to

Pursue 50 / 2.3c Prepare and Submit a Project Proposal 51 / 2.3d Negotiate to Secure the Project 51

PMP/CAPM Study Ideas 52

Summary 52

Key Terms Consistent with PMI Standards and Guides 52

Chapter Review Questions 53

Discussion Questions 53

PMBOK® Guide Questions 53 Exercises 54

Integrated Example Projects 55

Casa DE PAZ Development Project 56

Semester Project Instructions 56

Project Management in Action 57

References 58

Endnotes 59

CHAPTER 3 Chartering Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 3.1 What Is a Project Charter? 62

3.2 Why Is a Project Charter Used? 63

3.3 When Is a Charter Needed? 64

3.4 Typical Elements in a Project Charter 65 3.4a Title 65 / 3.4b Scope Overview 65 / 3.4c Business Case 66 /

3.4d Background 66 / 3.4e Milestone Schedule with Acceptance Criteria 66 / 3.4f Risks, Assumptions, and Constraints 67 / 3.4g Resource Estimates 69 / 3.4h Stakeholder List 69 / 3.4i Team Operating Principles 69 / 3.4j Lessons Learned 70 / 3.4k Signatures and Commitment 70

3.5 Constructing a Project Charter 70 3.5a Scope Overview and Business Case Instructions 70 / 3.5b Background

Instructions 71 / 3.5c Milestone Schedule with Acceptance Criteria Instructions 72 / 3.5d Risks, Assumptions, and Constraints Instructions 75 / 3.5e Resources Needed Instructions 75 / 3.5f Stakeholder List Instructions 75 /

Contents ix

3.5g Team Operating Principles Instructions 77 / 3.5h Lessons Learned Instructions 77 / 3.5i Signatures and Commitment Instructions 78

3.6 Ratifying the Project Charter 79

3.7 Starting a Project Using Microsoft Project 79 3.7a MS Project 2016 Introduction 80 / 3.7b Setting up Your First Project 81 /

3.7c Define Your Project 82 / 3.7d Create a Milestone Schedule 83

PMP/CAPM Study Ideas 88

Summary 88

Key Terms Consistent with PMI Standards and Guides 88

Chapter Review Questions 89

Discussion Questions 89

PMBOK® Guide Questions 89 Exercises 90

Integrated Example Projects 91

Casa DE PAZ Development Project 93

Semester Project Instructions 93

Project Management in Action 93

References 96

Endnotes 97

PART 2 Leading Projects

CHAPTER 4 Organizational Capability: Structure, Culture, and Roles . . . . . . . . . . . . . . . . . . . . . 100 4.1 Types of Organizational Structures 103

4.1a Functional 103 / 4.1b Projectized 104 / 4.1c Matrix 105

4.2 Organizational Culture and Its Impact on Projects 109 4.2a Culture of the Parent Organization 110 / 4.2b Project Cultural Norms 111

4.3 Project Life Cycles 111 4.3a Define-Measure-Analyze-Improve-Control (DMAIC) Model 112 / 4.3b Research and

Development (R&D) Project Life Cycle Model 113 / 4.3c Construction Project Life Cycle Model 113 / 4.3d Agile Project Life Cycle Model 113

4.4 Agile Project Management 114 4.4a What Is Agile? 114 / 4.4b Why Use Agile? 114 / 4.4c What Is an Agile

Mindset? 114 / 4.4d What Are the Key Roles in Agile Projects? 115 / 4.4e How Do You Start an Agile Project? 115 / 4.4f How Do You Continue an Agile Project? 115 / 4.4g What Is Needed for Agile to Be Successful? 116

4.5 Traditional Project Executive Roles 116 4.5a Steering Team 116 / 4.5b Sponsor 117 / 4.5c Customer 119 / 4.5d Chief

Projects Officer/Project Management Office 121

4.6 Traditional Project Management Roles 121 4.6a Functional Manager 121 / 4.6b Project Manager 122 / 4.6c Facilitator 124

4.7 Traditional Project Team Roles 126 4.7a Core Team Members 126 / 4.7b Subject Matter Experts 126

x Contents

4.8 Role Differences on Agile Projects 126

PMP/CAPM Study Ideas 128

Summary 128

Key Terms Consistent with PMI Standards and Guides 128

Chapter Review Questions 129

Discussion Questions 129

PMBOK® Guide Questions 129 Exercises 130

Integrated Example Projects 130

Casa DE PAZ Development Project 131

Semester Project Instructions 131

Project Management in Action 132

References 134

Endnotes 135

CHAPTER 5 Leading and Managing Project Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 5.1 Acquire Project Team 138

5.1a Preassignment of Project Team Members 139 / 5.1b Negotiation for Project Team Members 139 / 5.1c On-Boarding Project Team Members 140

5.2 Develop Project Team 141 5.2a Stages of Project Team Development 142 / 5.2b Characteristics of High-Performing

Project Teams 144 / 5.2c Assessing Individual Member Capability 147 / 5.2d Assessing Project Team Capability 148 / 5.2e Building Individual and Project Team Capability 150 / 5.2f Establishing Project Team Ground Rules 153

5.3 Manage Project Team 157 5.3a Project Manager Power and Leadership 157 / 5.3b Assessing Performance of

Individuals and Project Teams 159 / 5.3c Project Team Management Outcomes 159

5.4 Relationship Building Within the Core Team 160

5.5 Managing Project Conflicts 161 5.5a Sources of Project Conflict 162 / 5.5b Conflict-Resolution Process and

Styles 163 / 5.5c Negotiation 164

5.6 Communication Needs of Global and Virtual Teams 166 5.6a Virtual Teams 166 / 5.6b Cultural Differences 166 / 5.6c Countries and Project

Communication Preferences 167

PMP/CAPM Study Ideas 167

Summary 168

Key Terms Consistent with PMI Standards and Guides 168

Chapter Review Questions 168

Discussion Questions 169

PMBOK® Guide Questions 170 Integrated Example Projects 170

Casa DE PAZ Development Project 171

Semester Project Instructions 171

Contents xi

Project Management in Action 172

References 174

Endnotes 175

CHAPTER 6 Stakeholder Analysis and Communication Planning . . . . . . . . . . . . . . . . . . . . . . . . . 176 6.1 Identify Stakeholders 178

6.1a Find Stakeholders 179 / 6.1b Analyze Stakeholders 180 / 6.1c Document Stakeholders 183

6.2 Plan Stakeholder Engagement 184 6.2a Creating a Stakeholder Engagement Assessment Matrix 184 / 6.2b Planning to Build

Relationships with Stakeholders 185

6.3 Manage Stakeholder Engagement 187

6.4 Monitor Stakeholder Engagement 188

6.5 Plan Communications Management 188 6.5a Purposes of a Project Communications Plan 188 / 6.5b Communications Plan

Considerations 189 / 6.5c Communications Matrix 191 / 6.5d Manage Project Knowledge 192

6.6 Manage Communications 193 6.6a Determine Project Information Needs 193 / 6.6b Establish Information Retrieval and

Distribution System 193 / 6.6c Project Meeting Management 194 / 6.6d Issues Management 197

PMP/CAPM Study Ideas 199

Summary 199

Key Terms Consistent with PMI Standards and Guides 200

Chapter Review Questions 200

Discussion Questions 200

PMBOK® Guide Questions 201 Integrated Example Projects 202

Casa DE PAZ Development Project 202

Semester Project Instructions 203

Project Management in Action 204

References 206

Endnotes 207

PART 3 Planning Projects

CHAPTER 7 Scope Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 7.1 Plan Scope Management 211

7.2 Collect Requirements 212 7.2a Gather Stakeholder Input and Needs 213

7.3 Define Scope 217 7.3a Reasons to Define Scope 217 / 7.3b How to Define Scope 217 / 7.3c Defining

Scope in Agile Projects 218

xii Contents

7.4 Work Breakdown Structure (WBS) 220 7.4a What Is the WBS? 220 / 7.4b Why Use a WBS? 221 / 7.4c WBS

Formats 222 / 7.4d Work Packages 224 / 7.4e How to Construct a WBS 226

7.5 Establish Change Control 229

7.6 Using MS Project for Work Breakdown Structures (WBS) 232 7.6a Set Up a WBS in MS Project 232

PMP/CAPM Study Ideas 237

Summary 239

Key Terms Consistent with PMI Standards and Guides 239

Chapter Review Questions 239

Discussion Questions 239

PMBOK® Guide Questions 240 Exercises 241

Integrated Example Projects 241

Casa DE PAZ Development Project 242

Semester Project Instructions 242

Project Management in Action 242

References 243

CHAPTER 8 Scheduling Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 8.1 Plan Schedule Management 246

8.2 Purposes of a Project Schedule 247

8.3 Historical Development of Project Schedules 247

8.4 How Project Schedules Are Limited and Created 248

8.5 Define Activities 249

8.6 Sequence Activities 253 8.6a Leads and Lags 254 / 8.6b Alternative Dependencies 255

8.7 Estimate Activity Duration 255 8.7a Problems and Remedies in Duration Estimating 256 / 8.7b Learning Curves 258

8.8 Develop Project Schedules 259 8.8a Two-Pass Method 259 / 8.8b Enumeration Method 263

8.9 Uncertainty in Project Schedules 264 8.9a Program Evaluation and Review Technique 265 / 8.9b Monte Carlo Simulation 266

8.10 Show the Project Schedule on a Gantt Chart 268

8.11 Using Microsoft Project for Critical Path Schedules 268 8.11a Set up the Project Schedule 269 / 8.11b Build the Network Diagram and Identify

the Critical Path 270

PMP/CAPM Study Ideas 275

Summary 276

Key Terms Consistent with PMI Standards and Guides 276

Chapter Review Questions 277

Discussion Questions 277

Contents xiii

Exercises 278

PMBOK® Guide Questions 280 Integrated Example Projects 281

Casa DE PAZ Development Project 281

Semester Project Instructions 283

Project Management in Action 283

References 284

Endnotes 285

CHAPTER 9 Resourcing Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 9.1 Abilities Needed When Resourcing Projects 288

9.1a The Science and Art of Resourcing Projects 288 / 9.1b Considerations When Resourcing Projects 288 / 9.1c Activity- versus Resource-Dominated Schedules 289

9.2 Estimate Resource Needs 290

9.3 Plan Resource Management 290 9.3a Identify Potential Resources 291 / 9.3b Determine Resource Availability 293 /

9.3c Decide Timing Issues When Resourcing Projects 294

9.4 Project Team Composition Issues 295 9.4a Cross-Functional Teams 295 / 9.4b Co-Located Teams 295 / 9.4c Virtual

Teams 295 / 9.4d Outsourcing 295

9.5 Assign a Resource to Each Activity 296 9.5a Show Resource Responsibilities on RACI Chart 297 / 9.5b Show Resource

Assignments on Gantt Chart 297 / 9.5c Summarize Resource Responsibilities by Time Period with Histogram 297

9.6 Dealing with Resource Overloads 300 9.6a Methods of Resolving Resource Overloads 300

9.7 Compress the Project Schedule 303 9.7a Actions to Reduce the Critical Path 303 / 9.7b Crashing 304 / 9.7c Fast

Tracking 307

9.8 Alternative Scheduling Methods 309 9.8a Critical Chain Project Management (CCPM) 309 / 9.8b Reverse Phase

Schedules 310 / 9.8c Rolling Wave Planning 310 / 9.8d Agile Project Planning 310 / 9.8e Auto/Manual Scheduling 310

9.9 Using MS Project for Resource Allocation 311 9.9a Step 1: Defining Resources 311 / 9.9b Step 2: Set Up a Resource Calendar 312 /

9.9c Step 3: Assigning Resources 312 / 9.9d Step 4: Finding Overallocated Resources 315 / 9.9e Step 5: Dealing with Overallocations 316 / 9.9f Crashing a Critical Path Activity 317

PMP/CAPM Study Ideas 319

Summary 319

Key Terms Consistent with PMI Standards and Guides 320

Chapter Review Questions 320

Discussion Questions 320

PMBOK® Guide Questions 321 Exercises 322

xiv Contents

Integrated Example Projects 324

Casa DE PAZ Development Project 324

Semester Project Instructions 325

Project Management in Action 325

References 327

Endnote 327

CHAPTER 10 Budgeting Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 10.1 Plan Cost Management 329

10.2 Estimate Cost 330 10.2a Types of Cost 331 / 10.2b Accuracy and Timing of Cost Estimates 334 /

10.2c Methods of Estimating Costs 335 / 10.2d Project Cost Estimating Issues 338

10.3 Determine Budget 342 10.3a Aggregating Costs 342 / 10.3b Analyzing Reserve Needs 342 /

10.3c Determining Cash Flow 344

10.4 Establishing Cost Control 345

10.5 Using MS Project for Project Budgets 345 10.5a Developing a Bottom-Up Project Budget Estimate 345 / 10.5b Develop Summary

Project Budget 347

PMP/CAPM Study Ideas 349

Summary 349

Key Terms Consistent with PMI Standards and Guides 350

Chapter Review Questions 350

Discussion Questions 350

PMBOK® Guide Questions 351 Exercises 352

Integrated Example Projects 353

Casa DE PAZ Development Project 354

Semester Project Instructions 354

Project Management in Action 354

References 356

Endnotes 356

CHAPTER 11 Project Risk Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358 11.1 Plan Risk Management 360

11.1a Roles and Responsibilities 362 / 11.1b Categories and Definitions 362

11.2 Identify Risks 366 11.2a Information Gathering 366 / 11.2b Reviews 367 / 11.2c Understanding

Relationships 368 / 11.2d Risk Register 368

11.3 Risk Analysis 368 11.3a Perform Qualitative Risk Analysis 368 / 11.3b Perform Quantitative Risk

Analysis 372 / 11.3c Risk Register Updates 373

Contents xv

11.4 Plan Risk Responses 373 11.4a Strategies for Responding to Risks 373 / 11.4b Risk Register Updates 377

PMP/CAPM Study Ideas 377

Summary 378

Key Terms Consistent with PMI Standards and Guides 378

Chapter Review Questions 379

Discussion Questions 379

PMBOK® Guide Questions 379 Exercises 380

Integrated Example Projects 381

Casa DE PAZ Development Project 381

Semester Project Instructions 382

Project Management in Action 382

References 384

Endnotes 384

CHAPTER 12 Project Quality Planning and Project Kickoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 12.1 Development of Contemporary Quality Concepts 388

12.1a Quality Gurus 388 / 12.1b Total Quality Management/Malcolm Baldrige 389 / 12.1c ISO 9001:2008 390 / 12.1d Lean Six Sigma 390

12.2 Core Project Quality Concepts 392 12.2a Stakeholder Satisfaction 393 / 12.2b Process Management 394 / 12.2c Fact-

Based Management 396 / 12.2d Fact-Based Project Management Example 398 / 12.2e Empowered Performance 399 / 12.2f Summary of Core Concepts 400

12.3 Plan Quality Management 401 12.3a Quality Policy 401 / 12.3b Quality Management Plan Contents 403 /

12.3c Quality Baseline 404 / 12.3d Process Improvement Plan 404

12.4 Manage Quality 404

12.5 Control Quality 406

12.6 Cost of Quality 409

12.7 Develop Project Management Plan 409 12.7a Resolve Conflicts 409 / 12.7b Establish Configuration Management 410 /

12.7c Apply Sanity Tests to All Project Plans 410

12.8 Kickoff Project 410 12.8a Preconditions to Meeting Success 411 / 12.8b Meeting Activities 411

12.9 Baseline and Communicate Project Management Plan 413

12.10 Using MS Project for Project Baselines 413 12.10a Baseline the Project Plan 413 / 12.10b Create the First Time Baseline 414 /

12.10c Subsequent Baselines 414 / 12.10d Viewing Baselines and Variances 415

PMP/CAPM Study Ideas 416

Summary 417

Key Terms Consistent with PMI Standards and Guides 417

Chapter Review Questions 418

xvi Contents

Discussion Questions 418

PMBOK® Guide Questions 418 Exercises 419

Integrated Example Projects 420

Casa DE PAZ Development Project 420

Semester Project Instructions 420

Project Management in Action 421

References 423

Endnotes 424

PART 4 Performing Projects

CHAPTER 13 Project Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 13.1 Introduction to Project Supply Chain Management 428

13.1a SCM Components 430 / 13.1b SCM Factors 430 / 13.1c SCM Decisions 430 / 13.1d Project Procurement Management Processes 431

13.2 Plan Procurement Management 431 13.2a Outputs of Planning 431 / 13.2b Make-or-Buy Decisions 432

13.3 Conduct Procurements 434 13.3a Sources for Potential Suppliers 434 / 13.3b Approaches Used When Evaluating

Prospective Suppliers 435 / 13.3c Supplier Selection 436

13.4 Contract Types 438 13.4a Fixed-Price Contracts 439 / 13.4b Cost-Reimbursable Contracts 440 /

13.4c Time and Material (T&M) Contracts 440

13.5 Control Procurements 441

13.6 Improving Project Supply Chains 441 13.6a Project Partnering and Collaboration 442 / 13.6b Third Parties 447 / 13.6c Lean

Purchasing 447 / 13.6d Sourcing 447 / 13.6e Logistics 447 / 13.6f Information 448

PMP/CAPM Study Ideas 448

Summary 448

Key Terms Consistent with PMI Standards and Guides 449

Chapter Review Questions 449

Discussion Questions 449

PMBOK® Guide Questions 450 Exercises 451

Integrated Example Projects 451

Casa DE PAZ Development Project 452

Semester Project Instructions 452

Project Management in Action 452

References 453

Endnotes 454

Contents xvii

CHAPTER 14 Determining Project Progress and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 14.1 Project Balanced Scorecard Approach 458

14.2 Internal Project Issues 459 14.2a Direct and Manage Project Work 459 / 14.2b Monitor and Control Project

Work 460 / 14.2c Monitoring Project Risk 463 / 14.2d Implement Risk Responses 464 / 14.2e Manage Communications 465 / 14.2f Monitor Communications 467

14.3 Customer Issues 469 14.3a Manage and Control Quality 469 / 14.3b Control Scope 475

14.4 Financial Issues 476 14.4a Control Resources 476 / 14.4b Control Schedule and Costs 476 / 14.4c Earned

Value Management for Controlling Schedule and Costs 476

14.5 Using MS Project to Monitor and Control Projects 480 14.5a What Makes a Schedule Useful? 480 / 14.5b How MS Project Recalculates the

Schedule Based on Reported Actuals 481 / 14.5c Current and Future Impacts of Time and Cost Variance 481 / 14.5d Define the Performance Update Process 481 / 14.5e Steps to Update the Project Schedule 482

14.6 Replanning If Necessary 487

PMP/CAPM Study Ideas 488

Summary 488

Key Terms Consistent with PMI Standards and Guides 488

Chapter Review Questions 489

Discussion Questions 489

PMBOK® Guide Questions 490 Exercises 491

Integrated Example Projects 492

Casa DE PAZ Development Project 493

Semester Project Instructions 493

Project Management in Action 494

References 496

Endnotes 497

CHAPTER 15 Finishing the Project and Realizing the Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 15.1 Validate Scope 500

15.2 Terminate Projects Early 501

15.3 Close Project 503 15.3a Write Transition Plan 503 / 15.3b Knowledge Management 504 / 15.3c Create

the Closeout Report 508

15.4 Post-Project Activities 509 15.4a Reassign Workers 509 / 15.4b Celebrate Success and Reward Participants 509 /

15.4c Provide Ongoing Support 510 / 15.4d Ensure Project Benefits Are Realized 510

xviii Contents

15.5 Using MS Project for Project Closure 511 15.5a Creating Project Progress Reports 511 / 15.5b Archiving Project Work 512

PMP/CAPM Study Ideas 515

Summary 515

Key Terms Consistent with PMI Standards and Guides 515

Chapter Review Questions 515

Discussion Questions 516

PMBOK® Guide Questions 516 Exercise 517

Integrated Example Projects 517

Casa DE PAZ Development Project 518

Semester Project Instructions 518

Project Management in Action 518

References 520

Endnotes 521

Appendix A PMP and CAPM Exam Prep Suggestions . . . . . . . . . . . . . . . . . . . . . . . . . . 522 Appendix B Agile Differences Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 Appendix C Answers to Selected Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 Appendix D Project Deliverables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537 Appendix E Strengths Themes As Used in Project Management . . . . [Available Online] Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539

Contents xix

Preface

While project managers today still need to use many techniques that have stood the test of several decades, they increasingly also must recognize the business need for a project, sort through multiple conflicting stakeholder demands. They must know how to deal with rapid change, a myriad of communication issues, global and virtual project teams, modern approaches to quality improvement, when to tailor their project management approach to include methods and behaviors from Agile, and many other issues that are more challenging than those in projects of the past.

Contemporary project management utilizes the tried-and-true project management techniques along with modern improvements such as the most current versions of Micro- soft® Project Professional 2016, the sixth edition of the Guide to the Project Management Body of Knowledge (PMBOK® Guide), and many approaches derived from adaptive (Agile) project management. Contemporary project management also uses many tools and understandings that come from modern approaches to quality and communications, expanded role definitions, leadership principles, human strengths, and many other sources. Contemporary project management is scalable, using simple versions of impor- tant techniques on small projects and more involved versions on more complex projects.

Distinctive Approach This book covers contemporary project management topics using contemporary project management methods. For example, when considering the topic of dealing with multiple stakeholders, every chapter was reviewed by students, practitioners, and academics. This allowed simultaneous consideration of student learning, practitioner realism, and aca- demic research and teaching perspectives.

The practical examples and practitioner reviewers came from a variety of industries, dif- ferent parts of the world, and from many sizes and types of projects in order to emphasize the scalability and universality of contemporary project management techniques.

New to This Edition Core, behavioral, and technical learning objectives. We have expanded the number of learning objectives and classified them as core, behavioral, or technical. About half of the objectives are core: what we believe every student of project management should learn. A professor could teach a solid project management introductory class by deeply using only the core objectives. On the other hand, there are measurable student objectives for either a behavioral or a technical approach. All suggested stu- dent assignments and questions are tied specifically to one of the learning objectives. A professor could use this text for a two-semester sequence that emphasizes both in- depth behavioral and technical approaches. Videos. Exclusively available to those using the MindTap product for this book, we have created dozens of short (average time, five minutes) videos to show the art of many of the techniques. These demonstrate the use of many of the techniques in a by-hand or spreadsheet fashion as well as using Microsoft Project 2016. Several questions that can be assigned to students are included with the videos that

xx Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

demonstrate how to use Microsoft Project to complement learning. Answers (some- times definitive, sometimes representative, depending on the nature of the tech- nique) are included in the instructor’s manual (IM). Extensive flowchart to help the sixth edition of the PMBOK® Guide come to life. All sixth edition PMBOK® Guide knowledge areas, processes, and process groups, plus major deliverables from each process and the primary workflows between them, are specifically included in an interactive, color-coded flowchart that is included in full inside the back cover of the text. We also start each chapter by showing the portion of the flowchart that is covered in that chapter. We now use definitions both from the PMBOK® Guide, Sixth Edition and also from more than a dozen Project Management Institute specialized Practice Guides and Standards. The end of each chapter contains specific suggestions for PMP® and CAPM® test preparation pertaining to the chapter’s topics plus ten PMBOK® Guide-type ques- tions that are typical of what would be seen on PMP® and CAPM® exams. Appendix A gives general study suggestions for the CAPM® and PMP® exams. Project deliverables. A list of 38 project deliverables that can be used as assignments for students and in-class exercises are included in Appendix D. Each deliverable is specifically tied to a student learning objective and shown on the PMBOK® Guide flowchart. About half of these are core, while the others are behavioral or technical. Examples of completed deliverables are included in the text. Teaching suggestions and grading rubrics are included in the IM. Appendix D identifies the type of objec- tive, chapter covered, and PMBOK® Guide process, knowledge area, and process group in which the deliverable is typically created on a real project. Substantial increase in Agile coverage. Agile techniques and methods are consid- ered much more often than even three years ago. As such, many experienced project managers who have also become Agile proponents have contributed to the increased Agile coverage in this book. At multiple points in most chapters, if Agile methods or suggested behaviors are different from traditional project management, these varia- tions are noted. We use an Agile icon to draw attention to these. We also have cre- ated Appendix B, which is a bulleted list of the approximately 180 differences between Agile and traditional project management that are discussed in the book. This extensive coverage allows a professor to teach project management emphasizing an Agile approach, if desired. It also allows a professor to develop an Agile project management course. Two new continuing project examples. We have created two project examples that are included in all 15 chapters of the text. One project is a construction project by a for-profit company that is planned and managed in a traditional fashion. The other is a development project at a nonprofit that is planned and managed in a more (but not exclusively) Agile fashion. In Chapter 1, we introduce both these case studies. After that, we alternate chapters, with each chapter showing what one project did using the concepts and techniques of a chapter and posing questions for the stu- dents to answer about the other project. Answers to the questions are in the IM. This can be another useful vehicle for students to practice their skills and to generate class discussion.

Distinctive Features PMBOK® Guide, Sixth Edition approach. This consistency with the current stan- dard gives students a significant leg up if they decide to become certified Project Management Professionals (PMPs®) or Certified Associates in Project Management

Preface xxi

(CAPMs®). This text includes an color-coded PMBOK® Guide, Sixth Edition flow- chart, all definitions consistent with PMI guides and standards, CAPM and PMP test preparation suggestions, and test practice questions. Actual project as learning vehicle. A section at the end of each chapter lists deliver- ables for students to create (in teams or individually) for a real project. These assign- ments have been refined over the last two decades while working with the local PMI® chapter, which provided a panel of PMP® judges to evaluate projects from a practical point of view. Included in the IM are extensive tools and suggestions devel- oped over the last 20 years for instructors, guiding them as they have students learn in the best possible way—with real projects. Students are encouraged to keep clean copies of all deliverables so they can demonstrate their project skills in job inter- views. A listing of these deliverables is included in Appendix D. Student-oriented, measurable learning objectives. Each chapter begins with a list of the core objectives for the chapter along with more in-depth behavioral and/or tech- nical objectives for most chapters. The chapter also starts with showing the PMBOK® topics covered in the chapter. The chapter material, end-of-chapter ques- tions and problems, PowerPoint® slides, all deliverables, and test questions have all been updated to correlate to specific objectives. Microsoft® Project Professional 2016 fully integrated into the fabric of eight chap- ters. Microsoft® Project Professional 2016 is shown in a step-by-step manner with numerous screen captures. On all screen captures, critical path activities are shown in contrasting color for emphasis. We have created videos to demonstrate these techniques and developed questions tied to specific learning objectives that can be assigned to the videos to test student learning. Blend of traditional and modern methods. Proven methods developed over the past half century are combined with exciting new methods, including Agile, that are emerging from both industry and research. This book covers the responsibilities of many individuals who can have an impact on projects both as they are practiced in traditional and in Agile environments, so aspiring project managers can understand not only their own roles, but also those of people with whom they need to interact. Integrated example projects. A variety of experienced project leaders from around the world have contributed examples to demonstrate many of the techniques and concepts throughout the book. These highly experienced and credentialed managers have worked closely with the authors to ensure that the examples demonstrate ideas discussed in the chapter. The variety of industries, locations, and sizes of the projects help the students to visualize both how universal project management is and how to appropriately scale the planning and management activities.

Organization of Topics The book is divided into four major parts. Part 1, Organizing Projects, deals with get- ting a project officially approved.

Chapter 1 introduces contemporary project management by first tracing the history of project management and then discussing what makes a project different from an ongoing operation. Various frameworks that help one understand projects— such as the PMBOK® Guide and Agile—are introduced, as well as the executive-, managerial-, and associate-level roles in managing projects. Chapter 2 discusses how projects support and are an outgrowth of strategic plan- ning, how a portfolio of projects is selected and prioritized, how a client company

xxii Preface

selects a contractor company to conduct a project, and how a contractor company secures project opportunities from client companies. Chapter 3 presents project charters in a step-by-step fashion. Short, powerful charters help all key participants to develop a common understanding of key project issues and components at a high level and then to formally commit to the project. Charters have become nearly universal in initiating projects in recent years. Microsoft® Project Pro- fessional 2016 is utilized to show milestone schedules within charters.

Part 2, Leading Projects, deals with understanding the project environment and roles and dealing effectively with team members and stakeholders.

Chapter 4 deals with organizational capability issues of structure, life cycle, culture, and roles. The choices parent organizations make in each of these provide both opportunities and limitations to how projects can be conducted. Chapter 5 deals with leading and managing the project team. It includes acquiring and developing the project team, assessing both potential and actual performance of team members and the team as a whole, various types of power a project manager can use, and how to deal productively with project conflict. Chapter 6 introduces methods for understanding and prioritizing various stake- holder demands and for building constructive relationships with stakeholders. Since many projects are less successful due to poor communications, detailed communica- tion planning techniques are introduced along with suggestions for managing meet- ings, an important channel of communication.

Part 3, Planning Projects, deals with all aspects of project planning as defined in thePMBOK® Guide. It proceeds in the most logical order possible to maximize effective- ness and stress continuity, so that each chapter builds on the previous ones, and students can appreciate the interplay between the various knowledge areas and processes.

Chapter 7 helps students understand how to determine the amount of work the project entails. Specifically covered are methods for determining the scope of both the project work and outputs, the work breakdown structure (WBS) that is used to ensure nothing is left out, and how the WBS is portrayed using Microsoft® Project Professional 2016. Chapter 8 is the first scheduling chapter. It shows how to schedule project activities by identifying, sequencing, and estimating the durations for each activity. Then, crit- ical path project schedules are developed, and methods are shown for dealing with uncertainty in time estimates, Gantt charts are introduced for easier communica- tions, and Microsoft® Project Professional 2016 is used to automate the schedule development and communications. Chapter 9 is the second scheduling chapter. Once the critical path schedule is deter- mined, staff management plans are developed, project team composition issues are considered, resources are assigned to activities, and resource overloads are identified and handled. Schedule compression techniques of crashing and fast tracking are demonstrated, and multiple alternative scheduling techniques including Agile are introduced. Resource scheduling is demonstrated with Microsoft® Project Profes- sional 2016. Chapter 10 deals with project budgeting. Estimating cost, budgeting cost, and estab- lishing cost controls are demonstrated. Microsoft® Project Professional 2016 is used for developing both bottom-up and summary project budgets. Chapter 11 demonstrates project risk planning. It includes risk management plan- ning methods for identifying risks, establishing a risk register, qualitatively analyzing

Preface xxiii

risks for probability and impact, quantitatively analyzing risks if needed, and decid- ing how to respond to each risk with contingency plans for major risks and aware- ness for minor risks. Chapter 12 starts by covering project quality planning. This includes explaining the development of modern quality concepts and how they distill into core project qual- ity demands. Next, the chapter covers how to develop a project quality plan. It then ties all of the planning chapters together with discussions of a project kickoff meet- ing, a baselined project plan, and the ways Microsoft® Project Professional 2016 can be used to establish and maintain the baseline.

Part 4, Performing Projects, discusses the various aspects that must be managed simultaneously while the project is being conducted.

Chapter 13 deals with project supply chain management issues. Some of these issues, such as developing the procurement management plan, qualifying and selecting ven- dors, and determining the type of contract to use are planning issues, but for sim- plicity, they are covered in one chapter with sections on how to conduct and control procurements and to improve the project supply chain. Chapter 14 is concerned with determining project results. This chapter starts with a balanced scorecard approach to controlling projects. Internal project issues covered include risk, change, and communication. Quality is also covered, with an emphasis on achieving client satisfaction. Financial issues discussed are scope, cost, and sched- ule, including how to use Microsoft® Project Professional 2016 for control. Chapter 15 deals with how to end a project—either early or on time. This includes validating to ensure all scope is complete, formally closing procurements and the project, knowledge management, and ensuring the project participants are rewarded and the clients have the support they need to realize intended benefits when using the project deliverables.

MindTap MindTap is a complete digital solution for your project management course. It has enhancements that take students from learning basic concepts to actively engaging in critical thinking applications, while learning Project 2016 skills for their future careers.

The MindTap product for this book features videos from the authors that explain tricky concepts, videos that explain the finer points of what you can do with Project 2016, and quizzes and homework assignments with detailed feedback so that students will have a better understanding of why an answer is right or wrong.

Instructor Resources To access the instructor resources, go to www.cengage.com/login, log in with your SSO account username and password, and search this book’s ISBN (9781337406451) to add instructor resources to your account. Key support materials—instructor’s manual with solutions, test bank in Word and Blackboard formats, data set solutions, and PowerPoint® presentations—provide instructors with a comprehensive capability for customizing their classroom experience. All student resources are also available on the instructor companion site.

Instructor s Manual with Solutions. Prepared by Tim Kloppenborg and updated by Kate Wells, based on their years of experience facilitating the student learning expe- rience in their own project management classes (undergraduate, MBA, Masters in

xxiv Preface

Health Informatics, and continuing education on six continents), with teaching in classroom, hybrid, and online formats, each chapter of the instructor’s manual includes an overview of core, behavioral, and technical learning objectives, detailed chapter outlines, teaching recommendations for both classroom and online, and many specific suggestions for implementing community-based projects into your project management class. Solutions are also provided for all of the end-of-chapter content. Microsoft® Word Test Bank. Prepared for this edition by Joyce D. Brown, PMP® and Thomas F. McCabe, PMP® of the University of Connecticut, this comprehen- sive test bank builds upon the original test bank created by Kevin Grant of the Uni- versity of Texas at San Antonio. The test bank is organized around each chapter’s learning objectives. All test questions are consistent with the PMBOK®. Every test item is labeled according to its difficulty level, the learning objective within the text- book to which it relates, and its Blooms Taxonomy level, allowing instructors to quickly construct effective tests that emphasize the concepts most significant for their courses. The test bank includes true/false, multiple choice, essay, and quantita- tive problems for each chapter. Cognero Test Bank. Cengage Learning Testing Powered by Cognero is a flexible, online system that allows you to author, edit, and manage test bank content from multiple Cengage Learning solutions; create multiple test versions in an instant; and deliver tests from your LMS, your classroom, or wherever you want. The Cog- nero test bank contains the same questions that are in the Microsoft® Word test bank. PowerPoint Presentations. Prepared by Kate Wells, the PowerPoint presentations provide comprehensive coverage of each chapter’s essential concepts in a clean, con- cise format. Instructors can easily customize the PowerPoint presentations to better fit the needs of their classroom. Templates. Electronic templates for many of the techniques (student deliverables) are available on the textbook companion website. These Microsoft® Word and Excel documents can be downloaded and filled in for ease of student learning and for consistency of instructor grading.

Student Resources Students can access the following resources by going to www.cengagebrain.com and searching 9781337406451. The companion website for this book has Excel and Word Project templates, data sets for selected chapters, and instructions for how to get access to a trial version of Microsoft Online Professional Trial. (Note that while we are happy to provide instructions for accessing this trial, Microsoft controls that access and we are not responsible for it being removed in the future.)

Acknowledgments A book-writing project depends on many people. Through the last three decades of proj- ect work, we have been privileged to learn from thousands of people, including students, faculty members, co-trainers, co-consultants, co-judges, clients, research partners, trade book authors, and others. Hundreds of individuals who have provided help in research and developing teaching methods are co-members of the following:

PMI’s undergraduate curriculum guidelines development team, PMI’s Global Accreditation Center,

Preface xxv

Multiple chapters of the Project Management Institute, The Cincinnati and Louisville sections of the Center for Quality of Management, Project Management Executive Forum, and Agile Cincinnati.

We also want to acknowledge the wonderful help of various professionals at Cengage Learning, including Aaron Arnsparger (Sr. Product Manager) and Conor Allen (Content Developer). We also want to thank Charles McCormick, Jr., retired Senior Acquisitions Editor, for his extensive help and guidance on the first and second editions of Contem- porary Project Management.

Other individuals who have provided significant content are Nathan Johnson of Western Carolina University, who provided the Microsoft® Project 2016 material, Joyce D. Brown, PMP® and Thomas F. McCabe, PMP® of University of Connecticut, who revised the test bank and provided additional PMBOK® questions to each chapter, Jim King, who professionally taped and edited videos, and Kathryn N. Wells, Independent Consultant, PMP®, CAPM®, who provided the PowerPoint presentations.

Special thanks are also due to all the people whose feedback and suggestions have shaped this edition of Contemporary Project Management as well as the previous two editions:

Carol Abbott, Fusion Alliance, Inc.

Stephen Allen, Truman State University

Siti Arshad-Snyder, Clarkson College

Loretta Beavers, Southwest Virginia Community College

Shari Bleure, Skyline Chili

Neil Burgess, Albertus Magnus College

Reynold Byers, Arizona State University

John Cain, Viox Services

Robert Clarkson, Davenport University

Nancy Cornell, Northeastern University

Steve Creason, Metropolitan State University

Jacob J. Dell, University of Texas at San Antonio

Scott Dellana, East Carolina University

Maling Ebrahimpour, Roger Williams University

Jeff Flynn, ILSCO Corporation

Jim Ford, University of Delaware

Lynn Frock, Lynn Frock & Company

Lei Fu, Hefei University of Technology

Patricia Galdeen, Lourdes University

Kathleen Gallon, Christ Hospital

Paul Gentine, Bethany College

Kevin P. Grant, University of Texas–San Antonio

Joseph Griffin, Northeastern University

Raye Guye, ILSCO Corporation

William M. Hayden Jr., State University of New York at Buffalo

Sarai Hedges, University of Cincinnati

Marco Hernandez, Dantes Canadian

Stephen Holoviak, Pennsylvania State University

Bill Holt, North Seattle Community College

Morris Hsi, Lawrence Tech University

xxvi Preface

Sonya Hsu, University of Louisiana Lafayette

Paul Hudec, Milwaukee School of Engineering

Anil B. Jambekar, Michigan Technological University

Dana Johnson, Michigan Technological University

Robert Judge, San Diego State University

David L. Keeney, Stevens Institute of Technology

George Kenyon, Lamar University

Naomi Kinney, MultiLingual Learning Services

Paul Kling, Duke Energy

Matthew Korpusik, Six Sigma Black Belt

Sal Kukalis, California State University–Long Beach

Young Hoon Kwak, George Washington University

Laurence J. Laning, Procter & Gamble

Dick Larkin, Central Washington University

Lydia Lavigne, Ball Aerospace

Jon Lazarus, Willamette University

James Leaman, Eastern Mennonite University

Linda LeSage, Davenport University

Claudia Levi, Edmonds Community College

Marvette Limon, University of Houston Downtown

John S. Loucks, St. Edward’s University

Diane Lucas, Penn State University– DuBois Campus

Clayton Maas, Davenport University

S. G. Marlow, California State Polytechnic University

Daniel S. Marrone, SUNY Farmingdale State College

Chris McCale, Regis University

Abe Meilich, Walden University

Bruce Miller, Xavier Leadership Center

Ali Mir, William Paterson University

William Moylan, Eastern Michigan University

Merlin Nuss, MidAmerica Nazarene University

Warren Opfer, Life Science Services International

Peerasit Patanakul, Stevens Institute of Technology

Joseph Petrick, Wright State University

Kenneth R. Pflieger, Potomac College

Charles K. Pickar, Johns Hopkins University

Connie Plowman, Portland Community College

Mark Poore, Roanoke College

Antonios Printezis, Arizona State University

Joshua Ramirez, PMP, MSM-PM, Columbia Basin College

Chris Rawlings, Bob Jones University

Natalee Regal, Procter & Gamble

Pedro Reyes, Baylor University

Linda Ridlon, Center for Quality of Management, Division of GOAL/QPC

Kim Roberts, Athens State University

David Schmitz, Milwaukee School of Engineering

Sheryl R. Schoenacher, SUNY Farmingdale State College

Jan Sepate, Kimberly Clark

Patrick Sepate, Summitqwest Inc.

Preface xxvii

William R. Sherrard, San Diego State University

Brian M. Smith, Eastern University

Kimberlee D. Snyder, Winona State University

Tony Taylor, MidAmerica Nazarene University

Rachana Thariani, Atos-Origin

Dawn Tolonen, Xavier University

Nate Tucker, Lee University

Guy Turner, Castellini Company

Jayashree Venkatraman, Microsoft Corporation

Nathan Washington, Southwest Tennessee Community College

Scott Wright, University of Wisconsin– Platteville

And we especially want to thank our family members for their love and support: Bet, Nick, Jill, Andy, Cadence, and Ellie

—Timothy J. Kloppenborg

xxviii Preface

About the Authors Timothy J. Kloppenborg is an Emeritus Professor of Management at Williams Col- lege of Business, Xavier University. He previously held faculty positions at University of North Carolina Charlotte and Air Force Institute of Technology and has worked temporarily at Southern Cross University and Tecnológico de Monterrey. He has authored over 100 publications, including 10 books, such as Strategic Leadership of Portfolio and Project Management, Project Leadership, and Managing Project Quality. His articles have appeared in MIT Sloan Management Review, Project Management Journal, Journal of Management Education, Journal of General Management, SAM Advanced Management Journal, Information Systems Education Journal, Journal of Managerial Issues, Quality Progress, Management Research News, and Journal of Small Business Strategy. In his capacity as the founding collection editor of portfolio and project management books for Business Expert Press, he has edited 14 books with more in the pipeline. Tim has been active with the Project Management Institute for over 30 years and a PMP® since 1991. He is a retired U.S. Air Force Reserve officer who served in transportation, procurement, and quality assurance. Dr. Kloppenborg has worked with over 150 volunteer organizations, many directly and others through supervising student projects. He has hands-on and consulting project management experience on six continents in construction, information systems, research and devel- opment, and quality improvement projects with organizations such Duke Energy, Ernst and Young LLP, Greater Cincinnati Water Works, Kroger, Procter & Gamble, Tri- Health, and Texas Children’s Hospital. Dr. Kloppenborg has developed and delivered innovative corporate training, undergraduate, MBA, and Executive MBA classes in project management, leadership, teamwork, and quality improvement and he teaches PMP Prep classes. He holds a BS in business administration from Benedictine College, an MBA from Western Illinois University, and a PhD in Operations Management from University of Cincinnati.

Dr. Vittal Anantatmula is a professor in the College of Business, Western Carolina University and a campus of University of North Carolina. He is also the Director of Graduate Programs in Project Management and was a recipient of excellence in teaching and research awards. Dr. Anantatmula is a Global Guest Professor at Keio University, Yokohama, Japan. He is a director and board member of the Project Management Insti- tute Global Accreditation Center (PMI-GAC). He serves on the editorial board of several scholarly journals. At Western Carolina University, he was recognized with the Univer- sity Scholar Award in 2017. He has won several other awards for excellence in both research and teaching.

Prior to joining Western Carolina University, he taught at The George Washington University. He worked in the petroleum and power industries for several years as an electrical engineer and project manager and as a consultant in several international orga- nizations, including the World Bank. Dr. Anantatmula has authored more than 60 pub- lications, five books, and about 50 conference papers. Two of his conference papers received the best paper award. His work has been published in scholarly journals, includ- ing Project Management Journal, Journal of Knowledge Management, Journal of Manage- ment in Engineering, Journal of Information and Knowledge Management Systems, and

xxix Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Engineering Management Journal. He received his PhD from The George Washington University and is a certified project management professional.

Kathryn N. Wells holds a master’s degree in Education, as well as degrees in Organi- zational Communication and Spanish. Kate has a passion for teaching, in both academic and corporate settings. In addition to over a decade’s experience in project management education, Kate is a top-producing real estate agent with Keller Williams. Her blend of experience in real estate—including working with many investors—and classroom teach- ing gives her a unique perspective and insights into many components of project man- agement, including Planning, Communication, Stakeholder Management, and Project Control.

In addition to her work on Contemporary Project Management, Kate is the lead author of Project Management Essentials (2015) and co-author of Project Management for Archaeology (2017), both published by Business Expert Press. She has trained and consulted with several organizations around the world and has occasionally been con- tracted to provide translations of project management educational materials (Spanish to English). Some of her clients include the University of Cincinnati, Children’s Hospital of Cincinnati, Givaudan International, and Tec de Monterrey University—where Kate has repeatedly served as visiting faculty at multiple campuses in Mexico. Kate is a certified project management professional (PMP).

xxx About the Authors

ORGANIZE LEAD PERFORMPLAN

P A R T 1

ORGANIZING PROJECTS

Chapter 1 Introduction to Project Management

Chapter 2 Project Selection and Prioritization

Chapter 3 Chartering Projects

Organizing for success in project management includes

several basic frameworks for understanding projects and

tools to select, prioritize, resource, and initiate projects.

Basic frameworks described in Chapter 1 include how

the work of project management can be categorized by

knowledge area and process group, how project success

is determined, and how both plan-driven and adaptive

approaches are frequently used. Chapter 2 describes

how projects are investments meant to help achieve

organizational goals. Tools are demonstrated to select,

prioritize, and resource projects. Chapter 3 describes

how charters are essential to initiating projects and then

demonstrates how to construct each portion of a charter.

1 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

C H A P T E R 1

Introduction to Project Management

I have returned from a successful climb of Mount Aconcagua in Argentina; at 22,841 feet, it is the highest peak in the world outside of the Himalayas. While there, seven other climbers died; we not only survived, but our experience was so positive that we have partnered to climb together again.

During the three decades that I ve been climbing mountains, I ve also been managing projects. An element has emerged as essential for success in both of these activities: the element of discipline. By discipline, I am referring to doing what I already know needs to be done. Without this attribute, even the most knowledgeable and experienced will have difficulty avoiding failure.

The deaths on Aconcagua are an extreme example of the consequences asso- ciated with a lack of discipline. The unfortunate climbers, who knew that the pre- dicted storms would produce very hazardous conditions, decided to attempt the summit instead of waiting. They did not have the discipline that we demonstrated to act on our earlier decision to curtail summit attempts after the agreed-to turn- around time or in severe weather.

CHAPTER OBJECTIVES

After completing this chapter, you should be able to:

CORE OBJECTIVES: Define a project and project management in your own words, using characteristics that are common to most projects, and describe reasons why more organizations are using project management. Describe major activ- ities and deliverables at each project life cycle stage. List and define the ten knowledge areas and five process groups of the project manage- ment body of knowl- edge (PMBOK ®). Delineate measures of project success and failure, and reasons for both. Contrast predictive or plan-driven and adaptive or change- driven project life cycle approaches.

BEHAVIORAL OBJECTIVES: Identify project roles and distinguish key responsibilities for project team members. Describe the impor- tance of collaborative effort during the project life cycle.

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I ve experienced similar circumstances in project management. Often I have found myself under pressure to cast aside or shortcut project management prac- tices that I have come to rely on. For me, these practices have become the pillars of my own project management discipline. One of these pillars, planning, seems to be particularly susceptible to challenge. Managing projects at the Central Intelli- gence Agency for three decades, I adjusted to the annual cycle for obtaining fund- ing. This cycle occasionally involved being given relatively short notice near the end of the year that funds unspent by some other department were up for grabs to whoever could quickly make a convincing business case. While some may inter- pret this as a circumstance requiring shortcutting the necessary amount of plan- ning in order to capture some of the briefly available funds, I understood that my discipline required me to find a way to do the needed planning and to act quickly. I understood that to do otherwise would likely propel me toward becoming one of the two-thirds of the projects identified by the Standish Group in their 2009 CHAOS report as not successful. I understood that the top 2 percent of project managers, referred to as Alpha Project Managers in a 2006 book of the same name, spend twice as much time planning as the other 98 percent of project man- agers. The approach that I took allowed me to maintain the discipline for my plan- ning pillar. I preplanned a couple of projects and had them ready at the end of the year to be submitted should a momentary funding opportunity arise.

A key to success in project management, as well as in mountain climbing, is to identify the pillars that will be practiced with discipline. This book offers an excel- lent set of project management methods from which we can identify those pillars that we will decide to practice with the required levels of discipline. I believe that project management is about applying common sense with uncommon discipline.

Michael O Brochta, PMP, founder of Zozer Inc. and previously senior project manager at the Central Intelligence Agency

1-1 What Is a Project? Frequently, a business is faced with making a change, such as improving an existing work process, constructing a building, installing a new computer system, merging with another company, moving to a new location, developing a new product, entering a new market, and so on. These changes are best planned and managed as projects.

Often, these changes are initiated due to operational necessity or to meet strategic goals, such as the following:

Market demand Customer request

PMBOK ® 6E COVERAGE

PMBOK ® 6E OUTPUTS

1.2 Foundational Elements Project Customer Trade-off Matrix

2.4 Organizational Systems Project Success Definition

3.3 The Project Manager s Sphere of Influence

3.4 Project Manager Competencies

3.5 Performing Integration

PMBOK® GUIDE Topics:

Project management introduction Project life cycle Stakeholders Project management process Project integration management

CHAPTER OUTPUTS Customer Trade-off Matrix Project Success Definition

3 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Technological advance Legal requirements or regulatory compliance Replace obsolete equipment, technology, system, or physical facility Crisis situation Social need

So, what is a project? A project is a new, time-bound effort that has a definite beginning and a definite

ending with several related and/or interdependent tasks to create a unique product or service. The word temporary is used to denote project duration; however, it does not mean that project duration is short; in fact, it can range from a few weeks to several years. Temporary also does not apply to the project deliverable, although project teams are certainly temporary.

A project requires an organized set of work efforts that are planned with a level of detail that is progressively elaborated on as more information is discovered. Projects are subject to limitations of time and resources such as money and people. Projects should follow a planned and organized approach with a defined beginning and ending. Project plans and goals become more specific as early work is completed. The project output often is a collection of a primary deliverable along with supporting deliverables such as a house as the primary deliverable and warrantees and instructions for use as supporting deliverables.

Taking all these issues into consideration, a project can be defined as a time-bound effort constrained by performance specifications, resources, and budget to create a unique product or service.

Each project typically has a unique combination of stakeholders. Stakeholders are people and groups who can impact the project or might be impacted by either the work or results of the project. Projects often require a variety of people to work together for a limited time, and all participants need to understand that completing the project will require effort in addition to their other assigned work. These people become members of the project team and usually represent diverse functions and disciplines.

Project management is the art and science of using knowledge, skills, tools, and tech- niques efficiently and effectively to meet stakeholder needs and expectations. This includes work processes that initiate, plan, execute, control, and close work. During these processes, trade-offs must be made among the following factors:

Scope (size and features) Quality (acceptability of the results) Cost Schedule Resources Risks

When project managers successfully make these trade-offs, the project results meet the agreed-upon requirements, are useful to the customers, and promote the organiza- tion. Project management includes both administrative tasks for planning, documenting, and controlling work and leadership tasks for visioning, motivating, and promoting work associates. The underlying principle of project management discipline is to make effec- tive and efficient use of all resources and it is this principle that influences some of these trade-off decisions. Project management knowledge, skills, and methods can be applied and modified for most projects regardless of size or application.

4 Part 1 Organizing Projects

1-2 History of Project Management Projects of all sizes have been undertaken throughout history. Early construction pro- jects included the ancient pyramids, medieval cathedrals, Indian cities, and Native American pueblos. Other large early projects involved waging wars and building empires. In the development of the United States, projects included laying railroads, developing farms, and building cities. Many smaller projects consisted of building houses and starting businesses. Projects were conducted throughout most of the world s history, but there was very little documentation. Therefore, there is no evidence of systematic planning and control. It is known that some early projects were accom- plished at great human and financial cost and that others took exceedingly long peri- ods of time to complete. For example, the Panama Canal was started in 1881 and completed in 1914.

Project management eventually emerged as a formal discipline to be studied and practiced. In the 1950s and 1960s, techniques for planning and controlling schedules and costs were developed, primarily on huge aerospace and construction projects. Dur- ing this time, project management was primarily involved in determining project sche- dules based on understanding the order in which work activities had to be completed. Many large manufacturing, research and development, government, and construction projects used and refined management techniques. In the 1980s and 1990s, several software companies offered ever more powerful and easier ways to plan and control project costs and schedules. Risk management techniques that were originally devel- oped on complex projects have increasingly been applied in a simplified form to less complex projects.

In the last few years, people have realized more and more that communication and leadership play major roles in project success. Rapid growth and changes in the information technology and telecommunications industries especially have fueled massive growth in the use of project management in the 1990s and early 2000s. Simultaneously, systems and processes were developed for electronic documentation of the historical data of projects using information systems (IS) and knowledge man- agement tools.

People who are engaged in a wide variety of industries, including banking, insurance, retailing, hospital administration, healthcare, and many other service industries, are now turning to project management to help them plan and manage efforts to meet their unique demands. Project planning and management techniques that were originally developed for large, complex projects can be modified and used to better plan and man- age even smaller projects. Now, project management is commonly used on projects of many sizes and types in a wide variety of manufacturing, government, service, and non- profit organizations.

Further, in today s global economy, geographically dispersed virtual project teams are becoming a familiar entity in many organizations. Managing a project is challenging in the current global economy due to the exponential growth of information technology and ever-increasing market demand that organizations offer products and services effi- ciently and quickly. Understanding the characteristics of global projects for improving global project performance is of critical importance.

The use of project management has grown quite rapidly and is likely to continue growing. With increased international competition and a borderless global economy, customers want their products and services developed and delivered better, faster, and cheaper. Because project management techniques are designed to manage scope, quality, cost, and schedule, they are ideally suited to this purpose.

Chapter 1 Introduction to Project Management 5

AGILE Throughout this book, we will present concepts and techniques that are either unique to Agile projects or are emphasized more on Agile projects. Many of these ideas can be used to improve practice on traditional projects.

In 2001, a group of thought leaders became frustrated with the use of traditional, plan-driven project management for software projects and as a result, they wrote a doc- ument called The Agile Manifesto.1 The four core values of Agile as shown below are completely consistent with our approach to Contemporary Project Management. Agile will be defined in Chapter 3, but throughout the book, a margin icon will indicate ideas from Agile, and the text will be in color.

Value individuals more than processes. Value working software more than documentation. Value customer collaboration more than negotiation. Value response to change over following a plan.

1-3 How Can Project Work Be Described? Project work can be described in the following ways:

Projects are temporary and unique, while other work, commonly called operations, is more continuous. Project managers need certain soft skills and hard skills to be effective. Project managers frequently have more responsibility than authority. Projects go through predictable stages called a life cycle.

Managing a project requires identifying requirements, establishing clear and achiev- able objectives, balancing competing demands of quality, scope, cost, and time, and meeting customer expectations by making adjustments to all aspects of the project. Due to uniqueness, projects are often associated with uncertainties and unknowns that pres- ent many challenges to managing project work.

1-3a Projects versus Operations All work can be described as fitting into one of two types: projects or operations. Projects as stated above are temporary, and no two are identical. Some projects may be extremely different from any other work an organization has performed up to that time, such as planning a merger with another company. Other projects may have both routine and unique aspects, for example, building a house; such projects can be termed process ori- ented. These projects are associated with fewer unknowns and uncertainties.

Operations, on the other hand, consist of the ongoing work needed to ensure that an organization continues to function effectively. Operations managers can often use check- lists to guide much of their work. Project managers can use project management methods to help determine what to do, but they rarely have checklists that identify all the activities they need to accomplish. Some work may be difficult to classify as totally project or totally operations. However, if project management methods and concepts help one to better plan and manage work, it does not really matter how the work is classified.

Both the projects and the operations are associated with processes. A process is described as a series of actions designed to bring about the consistent and similar result or service. A process is usually designed to improve productivity. Thus, processes are repetitive and pro- duce consistent and similar results, whereas projects are unique: each project delivers results that are distinct from other projects. However, one must remember that project manage- ment discipline includes various processes (planning, risk management, communication

6 Part 1 Organizing Projects

management, etc.) that facilitate managing projects and product- or service-oriented processes such as scope definition, scope management, and quality management.

1-3b Soft Skills and Hard Skills To effectively manage and lead in a project environment, a person needs to develop both soft and hard skills. Soft skills include the ability to work in teams, interpersonal

skills, communication, conflict resolution, negotiation, and leadership activities. Hard skills can include risk analysis, quality control, scheduling, budgeting, change control, planning other related activities, and project execution. Soft and hard skills go hand in hand. Some people have a stronger natural ability and a better comfort level in one or the other, but to be successful as a project manager, a person needs to develop both, along with the judgment about when each is needed. A wise project manager may pur- posefully recruit an assistant who excels in his area of weakness. Training, experience, and mentoring can also be instrumental in developing necessary skills.

Soft skills such as interpersonal relations, conflict resolution, and communication are of critical importance in managing people. As such, of all the resources, managing human resources presents more challenges. Managing and leading people are the most challenging aspects of a managing a project and the project team. These challenges underline the importance of soft skills.

1-3c Authority and Responsibility A project manager will frequently be held accountable for work that she cannot order people to perform. Projects are most effectively managed with one person being assigned accountability. However, that person often needs to negotiate with a functional man- ager, who is someone with management authority over an organizational unit. 2 Func- tional managers negotiate for workers to perform the project work in a timely fashion. Since the workers know their regular manager often has other tasks for them and will be their primary rater, they are tempted to concentrate first on the work that will earn rewards. Hence, a project manager needs to develop strong communication and leader- ship skills to extract cooperation from functional managers and to persuade project team members to focus on the project when other work also beckons. Often, it is the project manager s responsibility that the work be performed, but at the same time, he or she has no formal authority over the project team members.

1-3d Project Life Cycle All projects go through predictable stages called a project life cycle. A project life cycle is the series of phases that a project goes through from its initiation to its closure. 3 An

organization needs the assurance that the work of the project is proceeding in a satisfac- tory manner, that the results are aligned with the original plan, and they are likely to serve the customer s intended purpose. The project customer is the person or organization that will use the project s product, service, or result. Customers can be internal to the organiza- tion (that is, part of the company performing the project) or external to the organization.

Many different project life cycle models are used for different types of projects, such as information systems, improvement, research and development, and construction. The variations these pose will be explored in Chapter 4. In this book, we will use the follow- ing project stages:

Selecting and initiating starts when an idea for a project first emerges and the proj- ect is selected and planned at a high level, and ends when key participants commit to it in broad terms.

Chapter 1 Introduction to Project Management 7

AGILE

Planning starts after the initial commitment, includes detailed planning, and ends when all stakeholders accept the entire detailed plan. Executing starts when the plan is accepted, and includes authorizing, executing, monitoring, and controlling work until the customer accepts the project deliverables. Closing and realizing includes all activities after customer acceptance to ensure the project is completed, lessons are learned, resources are reassigned, contributions are recognized, and benefits are realized.

The pace of work and amount of money spent may vary considerably from one life cycle stage to another. Often, the selecting is performed periodically for all projects at a division or corporate level, and then initiating is rather quick just enough to ensure that a project makes sense and key participants will commit to it. The plan- ning stage can become rather detailed and will normally require quite a bit more work. The execution stage or stages are the time when the majority of the hands-on project tasks are accomplished. This tends to be a time of considerable work. Closing is a time when loose ends are tied up and the work level decreases significantly, but realizing benefits from the project occurs over time, may be measured months after project completion, and may be done by people other than those who performed the project. Occasionally, some of these phases overlap with each other, depending on the project complexity, urgency of the deliverable, and ambiguity associated with the project scope.

See Exhibit 1.1 for a predictive or plan-driven project life cycle and Exhibit 1.2 for an adaptive or change-driven project life cycle. The primary difference is that in the first, the product is well understood and all planning precedes all executing, while in the second, early results lead into planning later work. The extreme of pre- dictive is sometimes called waterfall and the extreme of adaptive is sometimes called Agile.

EXHIBIT 1.1

PREDICTIVE OR PLAN-DRIVEN PROJECT LIFE CYCLE WITH MEASUREMENT POINTS

Other Approvals

Closing & Realizing

Administrative Closure

Benefits Measures

Level of Effort

Stage

Stage Ending Gates

Selecting & Initiating

Charter

Selection

Planning

Kickoff

Executing

Project Result

Progress Reports

8 Part 1 Organizing Projects

Three other points should be made concerning the project life cycle. First, most com- panies with well-developed project management systems insist that a project must pass an approval of some kind to move from one stage to the next.4 In both exhibits, the approval to move from selecting and initiating to planning, for instance, is the approval of a charter. Second, in some industries, the project life cycle is highly formalized and very specific. For example, in the construction industry, the executing stage is often described as the three stages of design, erection, and finishing. Third, many companies even have their own project life cycle model, such as the one Midland Insurance Com- pany has developed for quality improvement projects, as shown in Exhibit 1.3.

EXHIBIT 1.3

MIDLAND INSURANCE COMPANY PROJECT LIFE CYCLE FOR QUALITY IMPROVEMENT PROJECTS

Initiation Planning Execution Close Out

1) De ne Problem

2) Factually Describe Situation

3) Analyze Causes

4) Solution Planning and Implementation

5) Evaluation of Effects

6) Sustain Results

7) Share Results

Source: Martin J. Novakov, American Modern Insurance Group.

EXHIBIT 1.2

ADAPTIVE OR CHANGE-DRIVEN PROJECT LIFE CYCLE WITH MEASUREMENT POINTS

Other Approvals

Closing & Realizing

Administrative Closure

Benefits Measures

Level of Effort

Stage

Stage Ending Gates

Selecting & Initiating

Charter

Selection

Planning Executing

· · ·

Interim Result

Project Result

Chapter 1 Introduction to Project Management 9

This book will present examples of company-specific life cycle models, but for clarity will use the predictive or plan-driven model shown in Exhibit 1.1 when describing con- cepts, except when we discuss Agile with the adaptive or change-driven model. In addi- tion to stage-ending approvals, frequently projects are measured at additional points such as selection, progress reporting, and benefits realization, as shown in Exhibit 1.1.

1-4 Understanding Projects Several frameworks that can help a person better understand project management are described below: the Project Management Institute (PMI); the Project Management Body of Knowledge (PMBOK® Guide); methods of selecting and prioritizing projects, project goals and constraints; project success and failure; use of Microsoft Project to help plan and measure projects, and various ways to classify projects.

1-4a Project Management Institute Project management has professional organizations just as do many other professions and industry groups. The biggest of these by far is the Project Management Institute.

The Project Management Institute was founded in 1969, grew at a modest pace until the early 1990s, and has grown quite rapidly since then. As of February 2017, PMI had well over 475,000 members. PMI publishes and regularly updates over a dozen exten- sions, guides, and standards. The best known is A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Definitions in this book that have specific nuances come from the most current edition of PMI standards and guides. Those definitions that are common knowledge are defined in typical terms. PMI has established eight profes- sional certifications, with the most popular being Project Management Professional (PMP)®. Currently, over 650,000 people hold the PMP® certification. To be certified as a PMP®, a person needs to have the required experience and education, pass an exami- nation on the PMBOK® Guide, and sign and be bound by a code of professional con- duct. PMI has also established a second certification Certified Associate in Project Management (CAPM) that is geared toward junior people working on projects before they are eligible to become PMPs. PMI also has established six additional credentials plus multiple practice standards and extensions to the PMBOK® Guide in areas such as pro- gram management, Agile, risk, scheduling, resource estimating, work breakdown struc- tures, earned value management, construction, and government.5

1-4b Project Management Body of Knowledge (PMBOK®) A Guide to the Project Management Body of Knowledge®, known as PMBOK®, consists of three introductory chapters covered collectively in Chapters 1, 2, and 3 of this book; five process groups; 10 knowledge areas; and 49 processes. A project management process group is a logical grouping of the project management processes to achieve specific project objectives. 6 The five process groups, paraphrased from the PMBOK® Guide, are as follows: 1. Initiating define a project or a new phase by obtaining authorization 2. Planning establish the project scope, refine objectives, and define plans and actions

to attain objectives 3. Executing complete the work defined to satisfy project specifications 4. Monitoring and controlling track, review, and regulate progress and performance,

identify changes required, and initiate changes 5. Closing formally complete or close project or phase 7

10 Part 1 Organizing Projects

The 10 knowledge areas, paraphrased from the PMBOK® Guide, are as follows: 1. Integration management processes and activities to identify, define, combine,

unify, and coordinate the various processes and project management activities 2. Scope management processes to ensure that the project includes all the work

required, and only the work required, to complete the project successfully 3. Schedule management processes to manage timely completion of the project 4. Cost management processes involved in planning, estimating, budgeting, financ-

ing, funding, managing, and controlling costs so that the project can be completed within the approved budget

5. Quality management processes to incorporate the organization s quality policy regarding planning, managing, and controlling quality requirements to meet stake- holder expectations

6. Resource management processes to identify, acquire, and manage resources needed to successfully complete the project

7. Communications management processes to ensure timely and appropriate plan- ning, collection, creation, distribution, storage, retrieval, management, control, mon- itoring, and ultimate disposition of project information

8. Risk management processes of conducting risk management planning, identifica- tion, analysis, response planning, response implementation, and monitoring risk on a project

9. Procurement management processes to purchase or acquire products, services, or results from outside the project team

10. Stakeholder management processes to identify the people, groups, or organizations, that could impact or be impacted by the project, analyze their expectations and impact, and develop strategies for engaging them in project decisions and execution 8

Project Processes There are 49 individual project work processes that are each in a process group and a knowledge area. Exhibit 1.4 shows the general flow of when each process occurs during a project if one reads the chart from left to right. For example, the first two processes are to develop the project charter and identify stakeholders. Both occur during project initiation. The charter development is part of integration manage- ment, while stakeholder identification is part of stakeholder management. These pro- cesses flow from one into another, as shown in the more complete flowchart in the inside back cover of the text. These processes use inputs and create outputs. Many of the outputs are project charts and tools that are used to plan and control the project, as also shown on that complete flowchart. Other outputs are deliverables. A deliverable is any unique and verifiable product, result, or capability to perform a service that is produced to complete a process, phase, or project.9

One should remember that all these processes might not be required for all projects. These PMBOK processes are designed to be all-inclusive and are meant for large and complex projects.

1-4c The PMI Talent Triangle PMI research shows that to be a successful project manager, a person needs to develop knowledge and skills in technical areas, leadership, and strategic business management. The objectives in this book are grouped first with those core skills and knowledge that all project management classes would typically cover. Core objectives are those the authors firmly believe anyone who takes a course in project management should master. The core objectives include those that the Talent Triangle classifies as technical,

Chapter 1 Introduction to Project Management 11

EXHIBIT 1.4

FLOWCHART OF PMBOK PROCESSES AND MAJOR OUTPUTS

13.1 Identify Stakeholders

INITIATINGKNOWLEDGE AREAS

Integration

Scope

Schedule

Cost

Quality

Resources

Communication

Risk

Procurement

Stakeholders

12.1 Plan Procurement Management

11.1 Plan Risk

Management

10.1 Plan Communications

Management

9.1 Plan Resource

Management

8.1 Plan Quality

Management

7.1 Plan Cost

Management

6.1 Plan Schedule

Management

5.1 Plan Scope

Management

Flowchart of PMBOK Processes and Major Deliverables

4.1 Develop Project Charter

6.5 Develop Schedule

5.2 Collect Requirements

5.4 Create WBS

5.3 Define Scope

PLANNING

4.2 Develop Project Management Plan

6.2 Define Activities

9.2 Estimate Activity

Resources

11.2 Identify Risks

11.3 Perform Qualitative

Risk Analysis

11.4 Perform Quantitative Risk Analysis

11.5 Plan Risk

Responses

13.2 Plan Stakeholders Engagement

6.4 Estimate activity

Durations

7.3 Determine Budget

7.2 Estimate Costs

6.3 Sequence Activities

Section 1.2 Foundational Elements

2.4 Organizational Systems 3.3 The Project Manager’s Sphere of Influence 3.4 Project Manager Competencies Selecting Projects

12 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

11.6 Implement Risk Responses

13.3 Manage Stakeholder Engagement

13.4 Monitor Stakeholder Engagement

EXECUTING MONITORING & CONTROLLING CLOSING

4.3 Direct and Manage Project Work

4.4 Manage Project Knowledge

4.7 Close Project or Phase

6.6 Control Schedule

7.4 Control Costs

5.6 Control Scope

5.5 Validate Scope

8.2 Manage Quality

9.3 Acquire Resources

9.4 Develop Team

9.6 Control Resources

9.5 Manage Team

8.3 Control Quality

10.2 Manage Communications

11.7 Monitor Risks

10.3 Monitor Communications

12.2 Conduct Procurements

12.3 Control Procurements

4.6 Perform Integrated

Change Control

4.5 Monitor and Control

Project Work

KNOWLEDGE AREAS

Integration

Scope

Schedule

Cost

Quality

Resources

Communication

Risk

Procurement

Stakeholders

Benefits Analysis

Realizing Benefits

13 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

behavioral, and strategic. More advanced technical objectives appear in some chapters for professors who wish to teach with a technical approach. More advanced behavioral objectives are also included in some chapters for professors who wish to emphasize the behavioral/leadership aspects of project management.

1-4d Selecting and Prioritizing Projects During the selecting and initiating stage of a project, one of the first tasks leaders must do is to identify potential projects. Ideally, this is accomplished in a systematic manner not just by chance. Some opportunities will present themselves. Other good opportunities need to be dis- covered. All parts of the organization should be involved. For example, salespeople can uncover opportunities through open discussions with existing and potential customers. Opera- tions staff members may identify potential productivity-enhancing projects. Everyone in the firm should be aware of industry trends and use this knowledge to identify potential projects.

Potential projects are identified based on business needs such as capability enhance- ment, new business opportunities, contractual obligations, changes in strategic direction, innovative business ideas, replacing obsolete equipment, or adopting new technology.

Once identified, organizations need to prioritize among the potential projects. The best way to do this is to determine which projects align best with the major goals of the firm. The executives in charge of selecting projects need to ensure overall organizational priori- ties are understood, communicated, and accepted. Once this common understanding is in place, it is easier to prioritize among the potential projects. The degree of formality used in selecting projects varies widely. Regardless of the company s size and the level of formality used, the prioritization efforts should include asking the following questions:

What value does each potential project bring to the organization? Are the demands of performing each project understood? Are the resources needed to perform the project available? Is there enthusiastic support both from the external customers and from one or more internal champions? Which projects will best help the organization achieve its goals?

One of the popular decision tools used to select projects is an evaluation model based on selection criteria; these selection criteria, in turn, are based on project attributes, orga- nizational indices, financial performance attributes, and strategic goals. More sophisticated tools like decision trees, analytical hierarchical process (AHP), expected net present value, and other economic evaluation models are sometimes used for project selection.

1-4e Project Goals and Constraints All projects should be undertaken to accomplish specific goals. Those goals can be described both by scope and by quality. Scope is a combination of product scope and project scope. Product scope is the entirety of what will be present in the actual project deliverables. Project scope is the entirety of what will and will not be done to meet the specified require- ments. Quality is the characteristics of a product or service that bear on its ability to satisfy stated or implied needs. 10 Taken together, scope and quality are often called performance and should result in outputs that customers can be satisfied with as they use them to effectively do their job. From a client perspective, projects generally have time and cost constraints. Thus, a project manager needs to be concerned with achieving desired scope and quality, subject to constraints of time and cost. If the project were to proceed exactly according to plan, it would be on time, on budget, and with the agreed-upon scope and the agreed-upon quality.

14 Part 1 Organizing Projects

AGILE

However, many things can happen as a project is conducted. Obstacles or challenges that may limit the ability to perform often arise, as do opportunities to exceed original expecta- tions. A project manager needs to understand which of these four goals and constraints (scope, quality, time, budget) should take precedence and which can be sacrificed. The proj- ect manager needs to help the customer articulate how much he wants to enhance achieve- ment of one of these four dimensions. The customer must also state which dimension he is willing to sacrifice, by how much, and under what circumstances to receive better achieve- ment of the other one. For example, on a research and development (R&D) project, a cus- tomer may be willing to pay an extra $5,000 to finish the project 10 days early. On a church construction project, a customer may be willing to give up five extra light switches in exchange for greater confidence that the light system will work properly. Understanding the customer s desires in this manner enables a project manager to make good project deci- sions. A project manager can use a project customer trade-off matrix such as the one in Exhibit 1.5 to reflect the research and development project trade-offs discussed above.

In addition, project plans undergo changes due to uncertainties and unknowns asso- ciated with the project. These changes must be assessed for their impact on cost and duration of the project before implementing them.

From an internal perspective, a project manager also needs to consider two more constraints: the amount of resources available and the decision maker s risk tolerance.

From an Agile perspective, in a given iteration, resources (including cost) and schedule are considered fixed and what can vary is value to the customer.

1-4f Defining Project Success and Failure Project success is creating deliverables that include all of the agreed-upon features (meet scope goals). The outputs should satisfy all specifications and please the project s custo- mers. The customers need to be able to use the outputs effectively as they do their work (meet quality goals). The project should be completed on schedule and on budget (meet time and cost constraints).

Project success also includes other considerations. A successful project is one that is completed without heroics that is, people should not burn themselves out to complete the project. Those people who work on the project should learn new skills and/or refine existing skills. Organizational learning should take place and be captured for future projects. Finally, the performing organization should reap business-level benefits such as development of

EXHIBIT 1.5

PROJECT CUSTOMER TRADE-OFF MATRIX

ENHANCE MEET SACRIFICE

Cost Pay up to $5,000 extra if it saves 10 days

Schedule Save up to 10 days

Quality Must meet

Scope Must meet

Source: Adapted from Timothy J. Kloppenborg and Joseph A. Petrick, Managing Project Qualify (Vienna, VA: Management Concepts, 2002): 46.

Chapter 1 Introduction to Project Management 15

new products, increased market share, increased profitability, decreased cost, and so on. A contemporary and complete view of project success is shown in Exhibit 1.6.

Project failure can be described as not meeting the success criteria listed in Exhibit 1.6. Many projects are fully successful in some ways but less successful in other aspects. The goal of excellent project management is to reach high levels of success on all mea- sures on all projects. Serious project failure when some of the success criteria are missed by a large amount and/or when several of the success criteria are missed can be attributed to numerous causes. In each chapter of this textbook, more specific possible failure causes will be covered, along with how to avoid them, but some basic causes of failure are as follows:

Incomplete or unclear requirements Inadequate user involvement Inadequate resources Unrealistic time demands Unclear or unrealistic expectations Inadequate executive support Changing requirements Inadequate planning

1-4g Using Microsoft Project to Help Plan and Measure Projects A useful tool to capture and conveniently display a variety of important project data is Microsoft® (MS) Project. MS Project is demonstrated in a step-by-step fashion using screen shots from a single integrated project throughout the book. If you re using the MindTap prod- uct for this book, you have access to short videos demonstrating how to use the software.

1-4h Types of Projects Four ways to classify projects that help people understand the unique needs of each are by industry, size, understanding of project scope, and application.

CLASSIFYING BY INDUSTRY Projects can be classified in a variety of ways. One method is by industry, which is useful in that projects in different industries often have unique requirements. Several industry-specific project life cycle models are in use, and various trade groups and special interest groups can provide guidance.

EXHIBIT 1.6

PROJECT SUCCESS

Meeting Agreements Cost, schedule, and specifications met

Customer s Success Needs met, deliverables used, customer satisfied

Performing Organization s Success Market share, new products, new technology

Project Team s Success Loyalty, development, satisfaction

Source: Adapted from Timothy J. Kloppenborg, Debbie Tesch, and Ravi Chinta, 21st Century Project Success Mea- sures: Evolution, Interpretation, and Direction, Proceedings, PMI Research and Education Conference 2012 (Limer- ick, Ireland, July 2012).

16 Part 1 Organizing Projects

AGILE

CLASSIFYING BY SIZE Another method of classifying projects is by size. Large pro- jects often require more detailed planning and control. Typically, most of the processes outlined in PMBOK are relevant and applicable for large projects that require a few years and hundreds of project team members for execution. However, even the smallest pro- jects still need to use planning and control just in a more simplified manner. For exam- ple, construction of a multistory building in China would require a highly detailed construction schedule, but even a much simpler construction project of building a one- car garage also needs to follow a schedule.

CLASSIFYING BY TIMING OF PROJECT SCOPE CLARITY A third method of classi- fying projects deals with how early in the project the project manager and team are likely to be able to determine with a high degree of certainty what the project scope will be. For example, it may be rather simple to calculate the cubic feet of concrete that are required to pour a parking lot and, therefore, how much work is involved. At the opposite end of the spectrum, when developing a new pharmaceutical or developing a new technology, very little may be determined in the project until the results of some early experiments are reported. Only after analyzing these early experiment results is it possible to begin estimat- ing cost and determining the schedule with confidence. For such projects, change is con- stant and is caused by uncertainty and unknowns associated with these projects. Consequently, it is important to manage project risks. The planning becomes iterative, with more detail as it becomes available. In the first case, predictive or plan-driven project techniques may work well. In the second case, adaptive or change-driven methods to iter- atively determine the scope and plan for risks may be more important.

Agile methods are increasingly being used when scope clarity emerges slowly.

CLASSIFYING BY APPLICATION For the purpose of this book, we will discuss many types of projects, such as those dealing with organizational change, quality and produc- tivity improvement, research and development, information systems, and construction. Many of these projects include extensive cross-functional work, which contributes to the challenges associated with managing project teams and the triple constraints of scope, duration, and cost. Remember, all projects require planning and control. Part of the art of project management is determining when to use certain techniques, how much detail to use, and how to tailor the techniques to the needs of a specific project.

1-4i Scalability of Project Tools Projects range tremendously in size and complexity. In considering construction projects, think of the range from building a simple carport to building an office tower. In both cases, one would need to determine the wants and needs of the customer(s), understand the amount of work involved, determine a budget and schedule, decide what workers are available and who will do which tasks, and then manage the construction until the owner accepts the project results. It should be easy to see that while both projects require planning and control, the level of detail for the carport is a tiny fraction of that for the office tower. In this book, we first demonstrate concepts and techniques at a middle level and then use a variety of project exam- ples to demonstrate how to scale the complexity of the techniques up or down.

1-5 Project Roles To successfully initiate, plan, and execute projects, a variety of executive, management, and associate roles must be accomplished. Traditional project roles are shown in Exhibit 1.7.

Chapter 1 Introduction to Project Management 17

In a large organization, a person often fills only one of these roles; sometimes, more than one person fills a particular role. In small organizations, the same person may fill more than one role. The names of the roles also vary by organization. The work of each role must be accomplished by someone. Project managers are successful when they build strong working relationships with the individuals who execute each of these roles.

1-5a Project Executive-Level Roles The four traditional project executive-level roles are the sponsor, customer, steering team, and the project management office. The first executive-level project role is that of sponsor. A modern definition of executive sponsor is a senior manager serving in a formal role given authority and responsibility for successful completion of a project deemed strategic to an organization s success. 11 This textbook expands the sponsor s role to include taking an active role in chartering the project, reviewing progress reports, playing a behind-the-scenes role in mentoring, and assisting the project man- ager throughout the project life, specifically in making critical decisions and supporting the project team.

The second executive-level project role is that of the customer. The customer needs to ensure that a good contractor for external projects or project manager for internal pro- jects is selected, make sure requirements are clear, and maintain communications throughout the project. In many traditional projects, the sponsor carries out the role of customer. On many Agile projects, the customer role is quite significant.

The third executive role is the steering or leadership team for an organization. This is often the top leader (CEO or other officer) and his or her direct reports. From a proj- ect standpoint, the important role for this team is to select, prioritize, and resource pro- jects in accordance with the organization s strategic planning and to ensure that accurate progress is reported and necessary adjustments are made. Another important function of this executive role is midstream evaluation of projects and portfolios to ensure that they stay on track and produce expected results.

The fourth executive-level project role is that of project management office (PMO), which is defined as a management structure that standardizes the project-related gov- ernance processes and facilitates the sharing of resources, methodologies, tools and techniques. 12 The PMO work can range from supporting project managers to control- ling them by requiring compliance to directives in actually managing projects. The PMO supports projects by mentoring, training, and assisting project teams and pro- motes enterprise functions such as developing and augmenting processes, creating and maintaining historical information, and advocating for project management discipline.

EXHIBIT 1.7

TRADITIONAL PROJECT ROLES

EXECUTIVE ROLES MANAGERIAL ROLES ASSOCIATE ROLES

Sponsor Project Manager Core Team Member

Customer Functional Manager Subject Matter Expert (SME)

Steering Team Facilitator

Project Management Office

18 Part 1 Organizing Projects

AGILE Agile project management roles are shown in Exhibit 1.8. Most of the same work still needs to be accomplished in organizations using Agile methods. Some of the work is performed by different people because of the emphasis on empowering teams, and some is performed at different times as requirements and scope emerge gradually instead of just at the project start. Collaborative effort and communication, specifically with the client, are common features of Agile project teams.

On Agile projects, arguably the most essential role is the customer representative sometimes called the product owner. This person ensures that the needs and wants of the various constituents in the customer s organization are identified and prioritized and that project progress and decisions continually support the customer s desires.

In Agile projects, the customer representative role is so continuous and active that we show it as both an executive- and managerial-level role. The customer representative does much of what a sponsor might in traditional projects, but there also may be a des- ignated sponsor (sometimes known as a product manager) who controls the budget. A portfolio team often performs much of the work of a traditional steering team, and a similar office that may be titled differently such as Scrum office performs much of the work of a project office.

1-5b Project Management-Level Roles The most obvious management-level role is the project manager. The project manager is the person assigned by the performing organization to lead the team that is responsible

for achieving the project objectives. 13 The project manager is normally directly account- able for the project results, schedule, and budget. This person is the main communicator, is responsible for the planning and execution of the project, and works on the project from start to finish. The project manager often must get things done through the power of influ- ence since his or her formal power may be limited. The contemporary approach to project management is to lead in a facilitating manner to the extent possible.

Another key management role is the functional manager (sometimes called a resource manager). Functional managers are the department or division heads the ongoing man- agers of the organization. They normally determine how the work of the project is to be accomplished, often supervise that work, and often negotiate with the project manager regarding which workers are assigned to the project.

The third managerial role is that of facilitator. If the project is complex and/or con- troversial, it sometimes makes sense to have another person help the project manager with the process of running meetings and making decisions.

EXHIBIT 1.8

AGILE PROJECT ROLES

EXECUTIVE ROLES MANAGERIAL ROLES ASSOCIATE ROLES

Customer (product owner) Customer (product owner) Team Member

Sponsor (product manager) Scrum Master

Portfolio Team Functional Manager

Project Management/Scrum Office Coach

Chapter 1 Introduction to Project Management 19

AGILE

On Agile projects, the customer representative or product owner works with the team on a continuous basis, often performing some of the work a project manager might on a traditional project. The Scrum Master serves and leads in a facilitating and collaborative manner. This is a more limited, yet more empowering role than the traditional project manager. The functional manager has a similar, but sometimes more limited, role than the traditional department head. Many organizations using Agile also have a coach who acts as a facilitator and trainer.

1-5c Project Associate-Level Roles The project team is composed of a selected group of individuals with complimentary skills and disciplines who are required to work together on interdependent and interrelated tasks for a predetermined period to meet a specific purpose or goal. 14 In this book, these individuals are called core team members. The core team, with the project manager, does most of the planning and makes most of the project-level decisions.

The temporary members who are brought on board as needed are called subject mat- ter experts.

The team members in Agile projects are assigned fulltime as much as possible, so there are few subject matter experts. The teams are self-governing, so they perform many of the plan- ning and coordinating activities that a project manager would typically perform. Small and co-located teams often characterize Agile projects, and they work closely together.

1-6 Overview of the Book Contemporary project management blends traditional, plan-driven, and contemporary Agile approaches. It is integrative, iterative, and collaborative. Project management is integrative since it consists of the 10 knowledge areas and the 5 process groups described in the PMBOK® Guide, and one must integrate all of them into one coherent and ethical whole. Project management is iterative in that one starts by planning at a high level and then repeats the planning in greater detail as more information becomes available and the date for the work performance approaches. Project managers need to balance planning, control, and agility. Project management is collaborative since there are many stakeholders to be satisfied and a team of workers with various skills and ideas who need to work together to plan and complete the project. With these thoughts of integration, iteration, and collaboration in mind, this book has four major parts: Organizing and Initiating Projects, Leading Projects, Planning Projects, and Perform- ing Projects.

1-6a Part 1: Organizing and Initiating Projects Part 1 consists of three chapters that deal with organizing for and initiating projects.

CHAPTER 2 Chapter 2 covers project selection and prioritization. This includes both internal projects, which should be selected in a manner consistent with the strategic planning of the organization, and external projects. It also explains how to respond to requests for proposals.

CHAPTER 3 Chapter 3 discusses chartering projects. The project charter is a docu- ment issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational

20 Part 1 Organizing Projects

resources to project activities. 15 The charter can further be considered an agreement by which the project sponsor and project manager (and often the project core team) agree at a high level what the project is, why it is important, key milestone points in the sched- ule, major risks, and possibly a few other items. It allows the project manager and core team to understand and agree to what is expected of them.

Finally, Microsoft Project, a tool that facilitates effective project planning, controlling, and communicating, is introduced. Microsoft Project is utilized in eight chapters to dem- onstrate how to automate various project planning and control techniques. The examples and illustrations in this book use Microsoft Project 2016. If a person is using an earlier version of Microsoft Project, there are slight differences. If a person is using a competing project scheduling package, the intent remains the same, but the mechanics of how to create certain documents may differ.

1-6b Part 2: Leading Projects Part 2 consists of three chapters on leadership aspects of projects.

CHAPTER 4 Chapter 4 focuses on organizational structure, organizational culture, project life cycle, and project management roles of the parent organization. The orga- nizational structure section describes ways an organization can be configured and the advantages and disadvantages of each in regard to managing projects. Next covered is the culture of the parent organization and the impact it has on the ability to effectively plan and manage projects. The industry and type of project often encourage managers to select or customize a project life cycle model. The roles covered include executive-, managerial-, and associate-level responsibilities that must be performed. The demands of each role are explained, along with suggestions for how to select and develop people to effectively fill each role, considering both the role and the unique abilities and inter- ests of each person.

CHAPTER 5 Chapter 5 describes how to carry out the project work with a project team in order to accomplish the project objectives. The project manager needs to simultaneously champion the needs of the project, the team, and the parent organization. The project manager manages the people side of the project by effectively using the stages of project team development, assessing and building the team members capability, supervising their work, managing and improving their decision making, and helping them maintain enthu- siasm and effective time management. Project managers guide their team in managing and controlling stakeholder engagement.

CHAPTER 6 Chapter 6 begins by identifying the various project stakeholders, their wants and needs, and how to prioritize decisions among them. Chapter 5 also includes communications planning for the project because poor communication can doom an otherwise well-planned and well-managed project. The information needs of each stake- holder group should be included in the communications plan.

1-6c Part 3: Planning Projects Part 3 includes six chapters dealing with various aspects of project planning.

CHAPTER 7 Chapter 7 shows how to determine the project scope and outline it in the work breakdown structure (WBS). The WBS is deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. 16

Chapter 1 Introduction to Project Management 21

The WBS is a document that progressively breaks the project down into its compo- nents so that each piece can be described as a deliverable for which one person can plan, estimate the costs, estimate the time, assign resources, manage, and be held accountable for the results. This is a critical document since it is the foundation for most of the other planning and control activities. The chapter ends with instructions on putting a WBS into Microsoft Project.

CHAPTER 8 Chapter 8 deals with scheduling projects. The project schedule is an output of a schedule model instance that presents the time-based information required by the communication plan, including activities with planned dates, durations, mile- stone dates, and resource allocation.17 This chapter starts with background information on project scheduling and then covers construction of schedules by defining activities, determining the order in which they need to be accomplished, estimating the duration for each, and then calculating the schedule. Chapter 8 also includes instructions on how to interpret a project schedule; clearly communicate it using a bar chart called a Gantt chart; and use Microsoft Project to construct, interpret, and communicate proj- ect schedules.

CHAPTER 9 Chapter 9 demonstrates how to schedule resources on projects: determin- ing the need for workers, understanding who is available, and assigning people. All of the techniques of resourcing projects are integrated with the behavioral aspects of how to deal effectively and ethically with the people involved. Resource needs are shown on a Gantt chart developed in Chapter 8, the responsibilities are shown as they change over time, conflicts and overloads are identified, and methods for resolving conflicts are intro- duced. Alternative approaches for creating and compressing schedules are shown. Many of the techniques in this chapter are also shown with MS Project.

CHAPTER 10 Chapter 10 discusses the project budget, which is dependent on both the schedule and the resource needs developed in the previous two chapters. The project budget is The sum of work package cost estimates, contingency reserve, and manage- ment reserve.18 Cost planning, estimating, budgeting, establishing cost control, and using MS Project for project budgets are all included.

CHAPTER 11 Chapter 11 starts with establishing a risk management plan. It covers methods for identifying potential risks and for determining which risks are big enough to justify specific plans for either preventing the risk event from happening or dealing effectively with risk events that do happen. Finally, in risk response planning, strategies for dealing with both positive risks (opportunities) and negative risks (threats) are discussed.

CHAPTER 12 Chapter 12 begins with a discussion of how modern project quality con- cepts have evolved. Then it deals with core project quality demands of stakeholder satis- faction, empowered performance, fact-based management, and process management. The third topic of this chapter is developing the project quality plan. Next, the chapter describes various quality improvement tools for projects.

Since Chapter 12 is the last planning chapter, it concludes with a method of integrating the various sections developed in the previous chapters into a single, coherent project plan. Conflicts that are discovered should be resolved, judgment needs to be applied to ensure that the overall plan really makes sense, and one or more kickoff meetings are normally held to inform all of the project stakeholders and to solicit their enthusiastic acceptance of the plan. At this point, the project schedule and budget can be baselined in MS Project.

22 Part 1 Organizing Projects

While bits of the project that might have caused delays if they were not started early may already be in progress, the formal kickoff is the signal that the project is under way!

1-6d Part 4: Performing Projects Part 3 includes three chapters that deal with performing the project.

CHAPTER 13 Chapter 13 begins by introducing relevant supply chain concepts such as a supply chain view of projects, the components that form a supply chain, factors to con- sider when dealing with a supply chain, and methods of improving the performance of a supply chain. Make-or-buy analysis and contract types lead the reader through procure- ment planning. Identifying and selecting sellers lead into managing contracts to assure receipt of promised supplies and services according to contractual terms. The chapter ends with advantages and requirements of effective project partnering.

CHAPTER 14 While the project work is being performed, the project manager needs to determine that the desired results are achieved the subject of Chapter 14. Monitor and control project work is defined as the process of tracking, reviewing, and report- ing the progress to meet the performance objectives defined in the project management plan. 19 This starts with gathering performance data already identified during project initiating and planning. The actual performance data are then compared to the desired performance data so that both corrective and preventive actions can be used to ensure that the amount and quality of the project work meet expectations. MS Project can be used for this progress reporting and for making adjustments. Earned value analysis is used to determine exactly how actual cost and schedule progress are compared with planned progress. Overcoming obstacles, managing changes, resolving conflicts, repri- oritizing work, and creating a transition plan all lead up to customer acceptance of the project deliverables.

CHAPTER 15 Chapter 15 deals with finishing projects and realizing benefits. Close project or phase is defined as all the work needed to formally close a project or phase. This chapter includes a section on terminating projects early, in case either the project is not doing well or conditions have changed and the project results are no longer needed, and a section on timely termination of successful projects. Topics include how to secure customer feedback and use it along with the team s experiences to create lessons learned for the organization; reassign workers and reward those participants who deserve recog- nition; celebrate success; perform a variety of closure activities; and provide ongoing sup- port for the organization that is using the results of the project. Finally, after the project deliverables have been used for some time, an assessment should determine if the prom- ised benefits are being realized.

PMP/CAPM Study Ideas Everything in this book is designed to mirror and explain the content in the latest edition the sixth of the Guide to the Project Management Body of Knowledge (PMBOK), the international standard produced by the Project Management Institute (PMI). Not only will the content and questions in this book help you learn the best prac- tices for managing and executing projects, but they will also help you prepare for one of the licensing exams if you choose to pursue a project management credential such as the CAPM or PMP. More information on these and other PMI certifications can be found at www.pmi.org/certifications/types.

Chapter 1 Introduction to Project Management 23

While either of these credentials can open doors for you professionally, the effort needed to acquire them should not be underestimated. In addition to work and educa- tion requirements (specified at the website noted above), you will need to pass an online test consisting of 150 (CAPM) or 200 (PMP) questions, respectively. PMI does not pub- lish the exact pass rates of either of these tests, but they are designed to be difficult. It will not be enough for you to just memorize knowledge areas, process groups, and inputs and outputs; rather, you will need a solid understanding of each of these in order to answer higher-level thinking questions of a wide variety. In this book, we will provide dozens of questions in each chapter for you to use as a guide.

Summary A project is an organized set of work efforts undertaken to produce a unique output subject to limitations of time and resources such as materials, equipment, tools, and people. Since the world is changing more rapidly than in the past, many people spend an increas- ing amount of their working time on projects. Project management includes work processes that initiate, plan, execute, monitor, control, and close project work. During these processes, trade-offs must be made among the scope, quality, cost, and schedule, so that the project results meet the agreed-upon require- ments, are useful to the customers, and promote the organization.

All projects, regardless of size, complexity, or appli- cation, need to be planned and managed. While the level of detail and specific methods vary widely, all pro- jects need to follow generally accepted methods. PMI is a large professional organization devoted to promoting and standardizing project management understanding and methods. One of PMI s standards, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), is composed of five process groups: initiating,

planning, executing, monitoring and controlling, and closing; along with ten knowledge areas: integration, scope, schedule, cost, quality, resources, communica- tions, risk, procurement, and stakeholders.

To successfully initiate, plan, and execute projects, two more things are needed. One is to understand what project success is and what drives it, along with what project failure is and its major causes. The other is an understanding of the various executive-, managerial-, and associate-level roles in project management. This book is organized to be useful to students who will enter a variety of industries and be assigned to projects of all sizes and levels of complexity. Students will learn how to understand and effectively manage each of these process groups and knowledge areas. Microsoft Project 2016 is used in eight chapters to illustrate how to automate various planning, scheduling, resour- cing, budgeting, and controlling activities. All defini- tions used are from the PMBOK Guide, sixth edition. This book follows a chronological approach through- out a project s life cycle, emphasizing knowledge and skills that lead to project success.

Key Terms Consistent with PMI Standards and Guides The glossary in this book uses terms as defined in various Project Management Institute guides and standards where they are distinct. The glossary also uses commonly understood definitions where terms are standard.

project, 4 stakeholders, 4 project management, 4 soft skills, 7 hard skills, 7 functional manager, 7 project life cycle, 7 project management process group, 10 initiating processes, 10 planning processes, 10

executing processes, 10 monitoring and controlling processes, 10 closing processes, 10 integration management, 11 scope management, 11 schedule management, 11 cost management, 11 quality management, 11 resources management, 11 communications management, 11

24 Part 1 Organizing Projects

risk management, 11 procurement management, 11 stakeholder management, 11 deliverable, 12 scope, 13 product scope, 13 project scope, 13 quality, 13 sponsor, 16 project management office (PMO), 17

customer, 17 steering or leadership team, 17 project manager, 18 project team, 18 project charter, 19 work breakdown structure (WBS), 20 project schedule, 20 project budget, 20 monitor and control project work, 21 close project or phase, 21

Chapter Review Questions 1. What is a project? 2. What is project management? 3. How are projects different from ongoing

operations? 4. What types of constraints are common to most

projects? 5. What are the three components of the Talent

Triangle? 6. At what stage of a project life cycle are the major-

ity of the hands-on tasks completed? 7. During which stage of the project life cycle are

loose ends tied up? 8. What are the five process groups of project

management? 9. Which process group defines a new project or

phase by obtaining authorization?

10. What are the 10 project management knowledge areas?

11. What two project dimensions are components of project performance?

12. How do you define project success? 13. How do you define project failure? 14. List four common causes of project failure. 15. What are three common ways of classifying

projects? 16. What is predictive or plan-driven planning, and

when should it be used? 17. What is adaptive or change-driven planning, and

when should it be used? 18. What makes someone a project stakeholder? 19. What are the three project executive-level roles? 20. List and describe each of the managerial and

associate project roles.

Discussion Questions 1. Using an example of your own, describe a project

in terms that are common to most projects. 2. Why are more organizations using project man-

agement? If you were an executive, how would you justify your decision to use project manage- ment to the board of trustees?

3. Explain how to scale up or down the complexity of project planning and management tools and what effect, if any, this might have on the project life cycle.

4. List and describe several issues that pertain to each stage of the project life cycle.

5. Put the five project management process groups in order from the one that generally requires the least work to the one that requires the most.

6. Name the 10 project management knowledge areas, and briefly summarize each.

7. Discuss how a project could be successful in terms of some measures yet unsuccessful by others.

8. What does project failure mean? What are some examples?

9. Compare and contrast advantages and disadvan- tages of predictive/plan-driven and adaptive/ change-driven project life cycle approaches.

10. You are given a project to manage. How do you decide whether to use a predictive or adaptive approach?

11. Contrast project managers and functional managers. 12. List as many project roles as you can, and iden-

tify what each one is responsible for in terms of the project.

Chapter 1 Introduction to Project Management 25

PMBOK ® Guide Questions The purpose of these questions is to help visualize the type of questions on PMP and CAPM exams.

1. Which project role provides resources or support for the project, promotes and protects the project at higher levels of management, and takes an active role in the project from the chartering stage through project closure? a. functional manager b. project manager c. project team member d. project sponsor

2. Which PMBOK® Guide Knowledge Area includes those processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully? a. cost management b. scope management c. risk management d. quality management

3. In order to be successful, the project team must be able to assess the needs of stakeholders and manage their expectations through effective communications. At the same time, they must balance competing demands among project scope, schedule, budget, risk, quality, and resources, which are also known as project

. a. plan elements b. deliverables c. constraints d. targets

4. Projects pass through a series of phases as they move from initiation to project closure. The names and number of these phases can vary sig- nificantly depending on the organization, the type of application, industry, or technology employed. These phases create the framework for the project, and are referred to collectively as the . a. project life cycle b. project management information system

(PMIS) c. product life cycle d. Talent Triangle

5. Based on PMI s definition, which of these is a good example of a project?

a. manufacturing a standard commodity b. following policies and procedures for procur-

ing an item c. designing and launching a new website d. using a checklist to perform quality control

6. When would a predictive project life cycle be the preferred approach? a. when the high-level vision has been devel-

oped, but the product scope is not well defined

b. when the environment is changing rapidly c. when the product to be delivered is well

understood d. when the product will be created through a

series of repeated cycles 7. To be effective, a project manager needs to pos-

sess all of the following competencies except .

a. personal effectiveness attitudes, core per- sonality traits, leadership

b. authority power or right granted by the organization

c. performance what project managers can accomplish while applying their project man- agement knowledge

d. knowledge of project management understanding of project management tools and techniques

8. In Adaptive Life Cycles (change-driven or Agile methods), . a. the overall scope of the project is fixed, and

the time and cost are developed incrementally

b. the overall cost is fixed, and the project scope and schedule are developed iteratively

c. the time and cost are fixed, but the scope is developed iteratively

d. change control is very important 9. The two traditional project management

associate-level roles are different in each of the following ways except . a. duration of time spent on project b. ability to work within project constraints c. degree of input contributed to project planning d. skill set

26 Part 1 Organizing Projects

10. A freelance project manager is brought in by Company X to lead a large, expensive project. This project manager has excellent leadership skills and a strong technical understanding of the project. In order for her to optimize every component of the Talent Triangle, what might be a good activity for the project manager at the start of her time with Company X?

a. familiarize herself with the long-term objec- tives of Company X

b. host an icebreaker for all team members c. attend a seminar on advanced leadership

techniques d. send an email including her résumé to all

SMEs to ensure they are aware of her techni- cal background

I N T E G R A T E D E X A M P L E P R O J E C T S

We will use two example projects throughout all 15 chapters of this book. One will be a construction project suited to mostly traditional project planning and management. The other will be a development project suited more toward Agile project planning and management. In this chapter, we

will introduce both of them. In subsequent chapters, we will choose one to demonstrate techniques and concepts from the chapter and ask leading questions of the other one. We will alternate chapters so professors can choose to use the questions as assignments if they wish.

SUBURBAN HOMES CONSTRUCTION PROJECT

Purchasing a new home is the single largest investment most of us will make in our lifetime. You can either purchase the home from a reputed real estate building company or manage the construction of your home using project management principles that you have mastered. The latter approach can save significant amounts of money over the life of a typical 30-year mortgage. Additionally, it is likely to provide you with one of the most satisfying experiences in your life because you will get an opportunity to see the results of choices you made in building your home.1 However, on the downside, if you manage the project poorly, it also has the potential on many levels to be a disaster.

The experience of managing the construction of a single-family home provides a coherent account of costs, benefits, other considerations related to construction, risks, hazards, and critical decisions. The experience also has the potential for joy if the project is a successful endeavor.

Suburban Homes is a medium-sized, fast-growing con- struction company in the Midwest region of the United States. Due to its significant growth and good reputation for building quality single-family homes and townhomes, the

company decided to expand its business to several Southern states in the United States. However, Suburban Homes rec- ognized the scope for managing resources effectively and efficiently to increase profits. It has decided to formalize proj- ect management practices by developing and implementing standard and promising processes, tools, and techniques. For this purpose, the company was looking for a competent project manager to manage its projects. They hired Adam Smith as their new project manager.

Adam Smith had worked for several years in the construc- tion industry and supplemented his experience with project management education. Consequently, he gained considerable experience and developed expertise in managing construction projects. Adam believes in managing projects by adhering to various project management processes, tools, and techniques. In his new position as the project manager, Adam s primary task is to improve the performance of project management and increase the project success rate.

What advice would you offer to Adam Smith?

1Suprick J. and Anantatmula V. (2010).

Chapter 1 Introduction to Project Management 27

Semester Project Instructions This book is designed to give your professors the option to have you practice the concepts and techniques from each chapter on a real project. Often, the project chosen will be for a nonprofit group of some kind such as a United Way agency, a church, or a school. The project could, however, be for a company or a part of the uni- versity. The semester project can often be one that sev- eral students will be assigned to work on as a team.

Each chapter provides suggested assignments to practice project management skills on the real or potential project you are using. Depending on the emphasis your professor chooses, you may need to per- form some, most, or all of these assignments. At a min- imum, your professor will probably assign the charter, work breakdown structure, and schedule.

In any case, each of the following chapters prompts you to perform various activities to plan and execute the project. At some point in the first couple of weeks, your professor will probably invite at least one repre- sentative from each organization to your class to intro- duce their project and to meet you. We will call these

persons sponsors and define their role more fully in Chapter 3. Since this first chapter is a broad introduc- tion to project management, your task for the Chapter 1 sample project may be just to familiarize yourself with your new student team, your sponsor, your sponsor s organization, and the overall direction of your project. If you have enough input from your sponsor, your professor may also ask you to create a customer trade-off matrix, as shown in Exhibit 1.6 and/or a definition of success for your project, as in Exhibit 1.7. Your professor also may ask you to answer certain specific and/or open-ended questions concern- ing your newly assigned project.

Subsequent chapters give you more in-depth tools to acclimate you to your project, the organization you will be working for, and the various stakeholders who have an interest in the project. For example, in the next chap- ter, you learn how project selection flows from an orga- nization s strategic planning, and you should seek to learn why this project was chosen and how it supports the strategic goals of the organization.

CASA DE PAZ DEVELOPMENT PROJECT

Casa de Paz is an intentional community supporting the trans- formative journey of recovery for Latina women and their chil- dren. It is a 501(c)(3) nonprofit organization that is just starting. The vision is to create a communal living space for multiple Latina women and their children. The women and their chil- dren also would have access to a variety of service providers in the form of graduate students living in the same building. Two possible buildings have been identified. Some of the many things that need to take place for this vision to become a reality are board and working group structuring, fundraising, accountancy, promotion, website development, community relations development, building purchase and renovation, pro- gram development, legal services, educational advocacy, and English as a Second Language (ESL) tutoring, among others. While every project has trade-offs, success on this project will be measured more on the creation of a safe environment with needed services than on cost and schedule.

Casadepazcinci.org

Why Is This Project So Important? Hundreds of thousands of people are fleeing violence in their home countries. In the United States, many of them

come from Latin America. Often, they lack communities for support and integration as they transition from their countries of origin. In addition, many face many obsta- cles to stability and flourishing. How would you put your life back together if you were a mother fleeing vio- lence in your country of origin, and once in a new coun- try, that same violence continues in your new home? Few spaces offer stability and encouragement in such circumstances, much less cultural sensitivities and pro- fessional services to facilitate the transformation to self- sufficiency and success. Casa de Paz/House of Peace is an intentional community that encourages and draws out women s resilience both by meeting them where they are and providing time and space to heal, recover, and grow. Most shelters for women and children are tempo- rary; the average stay is seven to twelve days. Casa de Paz provides up to six months of stability, community, and professional services to support women s growth along a continuum of self-sufficiency matrixes. It is a community that recognizes women s dignity and cele- brates each step toward the realization of their gifts as human beings.

28 Part 1 Organizing Projects

PROJECT M ANAGEM ENT IN ACTION

Using Appreciative Inquiry to Understand Project Management

Each project creates a unique product, service, or result that certain stakeholders desire. Project success requires understanding stakeholder require- ments, clarifying project expectations, and agreeing upon project scope. As such, it is imperative to iden- tify relevant stakeholders and to have a constructive engagement with them. One tool that is helpful for allowing such engagement and for navigating through complexities is appreciative inquiry (Al).

What Is Appreciative Inquiry? The principles: Appreciative inquiry (AI) is a positive philosophy for change, wherein whole systems convene to inquire for change (Cooperrider, 2003). AI recognizes the power of the whole and builds on conversational learning that emerges out of the whole. It operates on the belief that human systems move in the direction of their shared image and idea of the future, and that change is based on intentional and positive inquiry into what has worked best in the past. In this sense, AI suggests that human organizing and change are a relational process of inquiry that is grounded in affirmation and appreciation. Typically, the process works its way through the four phases of Dis- covery, Dream, Design, and Delivery (Conklin, 2009).

Implications of AI on Defining Project Scope Project success partially depends upon identifying key stakeholders: eliciting their true wants and needs to

determine project scope; and keeping them appropri- ately engaged throughout the entire project. The early involvement is critical because it lays out clear goals and boundaries of project scope. However, eliciting accurate responses may be difficult, especially since many projects may be planned and conducted in an atmosphere of uncertainty. The ongoing involvement helps to ensure stakeholders know what they will get from the project and will be pleased.

Appreciative inquiry is a tool that may assist proj- ect stakeholders to navigate through their inquiries via positive conversations. For example, a typical process may look like this:

Discovery (What has been?): This phase inquires into and discovers the positive capacity of a group, organization, or community. People are encouraged to use stories to describe their strengths, assets, peak experiences, and successes to understand the unique conditions that made their moments of excellence possible. In this step, stakeholders reflect on the past to recollect instances when they believed they could clearly articulate their true needs and wants; and when their needs and wants were folded into the project scope. Through storytelling, they collectively discover the process of project selection and prioriti- zation and articulate a gauge of project success. As they discuss, they start generating a dense web of understanding an understanding and an apprecia- tion of all their capacities that make moments of excellence possible. Agile projects use a similar method of storytelling to understand user require- ments and ultimately define project scope.

Dreaming (What could be?): Building on the moments of excellence of the participants, this phase encourages the participants to imagine what would happen if their moments of excellence were to become a norm. Participants dream for the ideal con- ditions and build hope and possibility of an ideal future. As people share their stories, the focus of the process now shifts to dreaming of a perfect, desirable state for the stakeholders. Through this journey, the goal should be to enable the participants to build positive energy around their strengths and also to dream about the direction in which they feel comfort- able moving.

Delivery: What will

be?

Discovery: What has

been?

Design: What

should be?

Dream: What

could be?

Chapter 1 Introduction to Project Management 29

References A Guide to the Project Management Body of Knowledge

(PMBOK® Guide), 6th ed. Exposure Draft (Newtown Square, PA: Project Management Institute, 2017).

Anantatmula, Vittal S., Project Teams: A Structured Developmental Approach, 2016, New York: Business Expert Press.

Chandler, Dawne E., and Payson Hall, Improving Executive Sponsorship of Projects: A Holistic Approach, 2017, New York: Business Expert Press.

Cooper, Robert G., Winning at New Products: Path- ways to Profitable Innovation, Proceedings, PMI Research Conference 2006 (Montreal, July 2006).

Crowe, Andy, Alpha Project Managers: What the Top 2% Know That Everyone Else Does Not (Atlanta: Velociteach, 2006).

Kloppenborg, Timothy J., and Warren A. Opfer, The Current State of Project Management Research: Trends, Interpretations, and Predictions, Project Management Journal 33 (2) (June 2002): 5 18.

Kloppenborg, Timothy J., Debbie Tesch, and Broderick King, 21st Century Project Success Measures: Evo- lution, Interpretation, and Direction, Proceedings,

PMI Research and Education Conference 2012 (Dublin, Ireland, July 2012).

Muller, R., and R. Turner, The Influence of Project Managers on Project Success Criteria by Type of Project, European Management Journal 25 (4) (2007): 298 309.

PMI Lexicon of Project Management Terms Version 3.0, 2015 (Newtown Square, PA).

Project Management Institute, Business Analysis for Practitioners: A Practice Guide, 2015 (Newtown Square, PA).

Project Management Institute, Practice Standard for Scheduling 2nd ed., 2011 Newtown Square, PA).

Project Management Institute, Practice Standard for Work Breakdown Structures 2nd ed., 2006 (New- town Square, PA).

Shenhar, A. J., and D. Dvir, Reinventing Project Management (Boston: Harvard Business School Press, 2007).

https://asq.org/quality-resources/quality-glossary/q, accessed February 6, 2017.

Designing (What should be?): This phase creates design principles that will help the participants real- ize their dream. Participants are encouraged to stretch their imagination to move the system from where it currently is to where the participants want it to be. At this stage, the participants should be encouraged to imagine a perfect world without any constraints. Therefore, if there were no resource constraints, what would the scope of the project look like?

Delivery (What will be?): In this phase, participants are encouraged to think of the various subsystems that should take the responsibility of the design phase to sustain the design from the dream that it discov- ered (Cooperrider et al., 2003, p. 182). In this phase, various stakeholders are encouraged to decide what they will be committing themselves to.

Key Outcome Going through this entire process allows stakeholders to elicit and articulate their expectations from the project. Stakeholders also have a better understand- ing of how their needs and wants link to and lead them to a desirable future state. Finally, in order to sustain their dream, their commitment is clearly artic- ulated. As stakeholders commit themselves to specific endeavors on the project, they will implicitly revisit the opportunities and cost that lay ahead of them, which allows stakeholders to draw a realistic boundary around their commitment to the project.

Projects are temporary and unique and may have shifting boundaries over time. The process of engag- ing stakeholders via appreciative inquiry (AI) is an effective way to address the ambiguity and uncer- tainty in project management.

Source: Rashmi Assudani, Associate Professor and Chair, Department of Management and Entrepreneurship, Williams College of Business, Xavier Uni- versity. Adapted from Conklin, T. A., Creating Classrooms of Preference: An Exercise in Appreciative Inquiry. Journal of Management Education 33 (6) (2009): 772 792. Cooperrider, D. L., D. Whitney, and J. M. Stavros, Appreciative Inquiry Handbook (Bedford Heights, OH: Lakeshore, 2003).

30 Part 1 Organizing Projects

Endnotes 1. https://www.smartsheet.com/comprehensive-guide

-values-principles-agile-manifesto, accessed Decem- ber 1, 2016.

2. Wikipedia https://en.wikipedia.org/wiki/Functional_ manager, accessed February 6, 2017.

3. PMI Lexicon of Project Management Terms Version 3.0, 2015 (Newtown Square, PA): 9.

4. Robert G. Cooper, Winning at New Products: Pathways to Profitable Innovation, Proceedings (2006).

5. http://www.pmi.org/pmbok-guide-standards/ foundational, accessed February 6, 2017.

6. Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 6th ed. Exposure Draft. (Newtown Square, PA: Project Management Institute, 2017): 15.

7. Ibid. 8. PMI Lexicon of Project Management Terms

Version 3.0, 2015 (Newtown Square, PA): 7. 9. PMI Lexicon of Project Management Terms

Version 3.0, 2015 (Newtown Square, PA): 7. 10. https://asq.org/quality-resources/quality-glossary/q,

accessed February 6, 2017.

11. Dawne E. Chandler and Payson Hall, Improving Executive Sponsorship of Projects: A Holistic Approach, 2017 (New York: Business Expert Press): 1.

12. PMI Lexicon of Project Management Terms Version 3.0, 2015 (Newtown Square, PA): 13.

13. Ibid. 14. Vittal S. Anantatmula, Project Teams: A Structured

Developmental Approach, 2016, New York: Business Expert Press, 9.

15. PMI Lexicon of Project Management Terms Version 3.0, 2015 (Newtown Square, PA): 5.

16. Project Management Institute, Practice Standard for Work Breakdown Structures 2nd ed., 2006 (Newtown Square, PA): 121.

17. Project Management Institute, Practice Standard for Scheduling 2nd ed., 2011 (Newtown Square, PA): 138.

18. PMI Lexicon of Project Management Terms Version 3.0, 2015 (Newtown Square, PA): 8.

19. Project Management Institute, A Guide to the Proj- ect Management Body of Knowledge (PMBOK® Guide), 6th ed. Exposure Draft. (Newtown Square, PA: Project Management Institute, 2017): 15.

Chapter 1 Introduction to Project Management 31

C H A P T E R 2

Project Selection and Prioritization

With the development of a new five-year strategic plan, significant financial growth, and a major reorganization, Living Arrangements for the Developmentally Disabled (LADD) found itself overwhelmed with tasks and at a point that required the thought- ful selection and prioritization of projects. Prior strategic plans were largely dictated by the former executive director, created in a silo of sorts. It was through the intro- duction of a new executive director to LADD and complete new leadership at the management level that an opportunity presented itself for new, cross-department collaboration, innovative methods to carry out established practices, and the ability to identify and draw on the strengths of the individual members of the team.

LADD is a medium-sized nonprofit corporation that is mission focused and considered a leader in the field of supporting individuals with developmental dis- abilities. Its efforts reach beyond day-to-day functions and extend in large part to awareness, advocacy, and action. With the sponsorship of a national film festival focused on disabilities and its work in the civic and government sectors at local and national levels, LADD has been able to influence positive change in legisla- tion and the inclusion of people with disabilities at all levels of society.

CHAPTER OBJECTIVES

After completing this chapter, you should be able to:

CORE OBJECTIVES: Explain in your own words the strategic planning and portfolio management processes. Describe how to select, prioritize, and resource projects as an outgrowth of strategic planning. From a contractor s viewpoint, describe how to secure projects.

TECHNICAL OBJECTIVES: Compare the strengths and weak- nesses of using financial and scoring models to select projects. Given organizational priorities and several projects, demonstrate how to select and prioritize projects using a scoring model.

BEHAVIORAL OBJECTIVES: Explain the strengths an organization might possess that could improve its ability to perform projects.

M on

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Bu si

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32 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Project selection and prioritization were exactly what LADD needed because they were trying to maintain pace with a large program and revenue growth curve, new leadership at the helm, and federal changes in the way services were to be delivered to those with developmental disabilities. Projects from the strategic plan were scored based on established value sets that included criteria such as if the project met the mission, was financially feasible, or strengthened personal or community relationships.

LADD s strategic plan contains 32 primary goals and many more objectives. The project selection and prioritization process was a key tool to build a frame- work that would inspire agency success over the next five years. It is also anticipated to be a method to reduce program competition and increase under- standing within the management team as occasions for team development and departmental collaboration occur. In the end, each step of the process will lead the agency to achieve its vision of propelling the inclusion and suc- cess of people with disabilities forward with a positive impact throughout the community.

Amy Harpenau, Vice President, Living Arrangements for the Developmentally Disabled.

2-1 Strategic Planning Process One of the tasks of a company s senior leadership is to set the firm s strategic direction. Some of this direction setting occurs when an organization is young or is being revamped, but some needs to occur repeatedly. Exhibit 2.1 depicts the steps in strategic planning and how portfolio management should be an integral part.

2-1a Strategic Analysis The first part of setting strategic direction is to analyze both the external and internal environments and determine how they will enhance or limit the organization s ability to perform. This strategic analysis is often called strengths, weaknesses, opportunities, and threats (SWOT). The internal analysis (elements within the project team s control) consists of asking what strengths and weaknesses the organization possesses. The exter- nal analysis (elements over which the project team has little or no control) consists of asking what opportunities and threats are posed by competitors, suppliers, customers, regulatory agencies, technologies, and so on. The leaders of an organization often need to be humble and open to ideas that are unpleasant and contradictory to their beliefs when conducting this analysis. Performed correctly, a strategic analysis can be very illu- minating and can suggest direction for an organization. An example of SWOT analysis

PMBOK ® 6E COVERAGE

PMBOK ® 6E OUTPUTS

1.2 Foundational Elements Elevator Pitch

Selecting Projects Project Selection and Prioritization Matrix

Project Resource Assignment Matrix

PMBOK® GUIDE Topics:

1.2 Foundational Elements Selecting Projects

CHAPTER OUTPUTS Elevator Pitch Project Selection and Prioritization Matrix Project Resource Assignment Matrix

33 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

for the Built Green Home at Suncadia is shown in Exhibit 2.2. The Built Green Home at Suncadia, Washington, was developed using advanced sustainability concepts and a large degree of stakeholder involvement.

2-1b Guiding Principles Once the SWOT analysis is complete, the organization s leadership should establish guiding principles such as the vision and mission. Some organizations break this step into more parts by adding separate statements concerning purpose and/or values. Often, these sections are included in the mission. For simplicity s sake, they will be trea- ted as part of the mission in this book. It is more important to understand the intent of each portion and achieve it rather than worry about the exact format or names of indi- vidual portions.

VISION The vision is a one-sentence statement describing the clear and inspirational long-term, desired change resulting from an organization or program s work.1 A clear and compelling vision will help all members and all stakeholders of an organization understand and desire to achieve it. Visions often require extra effort to achieve but are considered to be worth the effort. Visions are often multiyear goals that, once achieved, suggest the need for a new vision.

One of the visions most often cited, because it was so clear and compelling, was Pres- ident John F. Kennedy s goal of placing a man on the moon before the end of the 1960s. Kennedy set this goal after Russia launched Sputnik and the United States found itself behind in the space race. His vision was very effective in mobilizing people to achieve it; further, it rapidly transformed a huge suburban area near Houston into a developed and sustainable economic and technology zone.

EXHIBIT 2.1

STRATEGIC PLANNING AND PORTFOLIO ALIGNMENT

34 Part 1 Organizing Projects

A more recent example was in 2009 when hundreds of community leaders in Cleve- land, Ohio, decided to use a systems approach to guide many interrelated social and eco- nomic efforts in their region. The vision they stated is, Cleveland and other cities throughout Northeast Ohio should be green cities on a blue lake. 2 They continue to use this vision to guide regional leaders as they choose where to invest their time and resources in bettering the region and life for its residents. They also are currently plan- ning their 2019 Sustainable Cleveland Summit.3

Increasingly, companies are incorporating the triple bottom line into their vision statements. This approach emphasizes the social, environmental, and economic health of the company s stakeholders rather than a narrow emphasis only on the economic return for shareholders. This stated desire to be a good corporate citizen with a long- term view of the world can motivate efforts that achieve both economic return for share- holders and other positive benefits for many other stakeholders.

MISSION STATEMENT The vision should lead into the mission statement, which is a way to accomplish the vision. The mission statement includes the organization s core purpose, core values, beliefs, culture, primary business, and primary customers. 3 Several of these sections may flow together in the mission statement and, sometimes, an overall statement is formed with expanded definitions of portions for illustration. The rationale for including each section (either as one unified statement or as separate statements) is as follows:

By including the organization s purpose, the mission statement communicates why the organization exists. By including the organization s core values, a mission statement communicates how decisions will be made and the way people will be treated. True organizational

EXHIBIT 2.2

SWOT ANALYSIS FOR THE BUILT GREEN HOME AT SUNCADIA

STRENGTHS WEAKNESSES

Green building has a buzz

Seattle has a strong green building community support

Strong community support

Growth in green building projects that demon- strate value

Need to provide numbers on green building value

Committed developer and builder

Green building has not reached mainstream

Limited project resources community Distance away from Seattle Green building is perceived to be costly

High cost of green projects

OPPORTUNITIES THREATS

Uniqueness of product

Location

Existing thinking on green building and its niche focus

Community surrounding house Building schedule

Lack of data on green building (wealth) value Community (location)

Rumors

Source: Brenda Nunes, developer, Built Green Home at Suncadia.

Chapter 2 Project Selection and Prioritization 35

values describe deeply held views concerning how everyone should act especially when adhering to those values is difficult. By including beliefs, a mission statement communicates the ideals for which its lea- ders and members are expected to stand. Beliefs are deeply held and slow to change, so it is quite useful to recognize them, as they can either help or hinder an organiza- tion s attempt to achieve its vision. By including the organization s culture, the mission statement instructs and expects members to act in the desired manner. By including the primary business areas, everyone will know in what business the organization wishes to engage. By identifying the primary customers, everyone will understand which groups of people need to be satisfied and who is counting on the organization. The mission needs to be specific enough in describing the business areas and customers to set direction, but not so specific that the organization lacks imagination.

An example of a vision and mission statement from Cincinnati Children s Hospital Medical Center is shown in Exhibit 2.3.

2-1c Strategic Objectives With the strategic analysis, mission, and vision in place, leaders turn to setting strategic objectives, which should be the means of achieving the mission and vision. For most organizations, this strategic alignment of objective setting occurs annually, but some organizations may review objectives and make minor revisions at three- or six-month intervals. While the planning is normally performed annually, many of the strategic objectives identified will take well over one year to achieve. The objectives describe both short- and long-term results that are desired, along with measures to determine achieve- ment. Organizations that embrace a triple bottom line in their guiding values will have objectives promoting each bottom line, and projects that are selected will contribute toward each. These objectives should provide focus on decisions regarding which

EXHIBIT 2.3

CINCINNATI CHILDREN S HOSPITAL MEDICAL CENTER VISION AND MISSION

Cincinnati Children’s Hospital Medical Center will be the leader in improving child health.

Cincinnati Children’s will improve child health and transform delivery of care through fully integrated, globally recognized research, education, and innovation. For patients from our community, the nation and the world, the care we provide will achieve the best: • Medical and quality of life • Patient and family and • today and in the future.

Source: Cincinnati Children s Hospital Medical Center, http://www.cincinnatichildrens.org/about/mission/, accessed January 9, 2017.

36 Part 1 Organizing Projects

projects to select and how to prioritize them, since they are an expression of the organi- zational focus. Many writers have stated that for objectives to be effective, they should be SMART that is, specific, measurable, achievable, results based, and time specific. 4 An

example of strategic objectives from The Internet Society is shown in Exhibit 2.4.

2-1d Flow-Down Objectives Once an organization s strategic objectives are identified, they must be enforced. Some objectives may be implemented by work in ongoing operations. However, projects tend to be the primary method for implementing many objectives. If the organization is rela- tively small, leaders may proceed directly to selecting projects at this point. Larger orga- nizations may elect a different route. If the organization is so large that it is impractical for the overall leaders to make all project selection decisions, they might delegate those decisions to various divisions or functions with the stipulation that the decisions should be aligned with the organization s strategic planning that has taken place to this point. Regardless of whether the organization is small and the top leaders make all project selection decisions or whether the organization is large and some of the decisions are cascaded one or more levels down, several methods of project selection may be used.

2-2 Portfolio Management Companies that use a strategic project selection process to carefully align projects with their organizational goals will find they tend to be more successful at completing their pro- jects and deriving the expected benefits from them. Portfolio management is the central- ized management of one or more portfolios to achieve strategic objectives.5 The goal of portfolio management is to achieve the maximum benefit toward the strategic goals of the company. To accomplish this, executives need to identify, select, prioritize, resource, and govern an appropriate portfolio of projects and other work. 6 Governing will be cov- ered in Chapter 14, and all other portfolio management topics will be covered here. Project success at these companies is measured by how much the project contributes to the orga- nization s objectives (business needs) as well as the traditional measures of staying within budget and schedule and achieving the specific technical goals promised at the start of the project to obtain a desired return on investment.

For ease of understanding how various work is related, many organizations utilize an approach of classifying portfolios, programs, projects, and subprojects. Not all companies use all four classifications, but understanding how they are related helps one see where any particular portion of work fits in the organization.

PORTFOLIO EXAMPLE We are a major national health insurance company. Our planning approach starts with creating an inventory of project initiatives, which has been identified by the key business areas. We separate the projects into foundational pillars

EXHIBIT 2.4

INTERNET SOCIETY STRATEGIC OBJECTIVES FOR 2012 2014 PLANNING CYCLE

1. Facilitate and promote policy environments that enable the continued evolution of an open and trusted Internet. 2. Increase the global relevance of collaborative, bottom-up, technical, consensus-based, open standards development. 3. Strengthen Internet Society leadership in Internet Development. 4. Build the visibility and influence of the Internet Society as the trusted source on global Internet issues.

Source: http://www.internetsociety.org/who-we-are/organization-reports-and-policies/internet-society-2015-action-plan, accessed February 7, 2017.

Chapter 2 Project Selection and Prioritization 37

(operation functions) and develop roadmaps of activities going out six quarters (18 months) as can be seen in Exhibit 2.5. Priority and timing of business need determine which quarter(s) the project initiatives are developed and implemented. The roadmaps also include smaller activities called capabilities that are integrated with the project activi- ties. Each of these foundational pillars aligns with the supporting agile sprint teams and the backlog of activities gets translated into stories within the sprints. A key role is the Product Owner who represents the business area and determines which activities (stories) go into each sprint. There is one Product Owner for each pillar and they are at a Director level within the organization. The product owner must have a complete understanding of the organizations strategy and short-term goals of their respective business area.

2-2a Portfolios Organizations require many work activities to be performed, including both ongoing operational work and temporary project work. Large organizations often have many pro- jects underway at the same time. A portfolio is projects, programs, subportfolios, and operations managed as a group to achieve strategic business objectives. 7 Project portfo- lios are similar to financial portfolios. In a financial portfolio, efforts are made to diver- sify investments as a means of limiting risk. However, every investment is selected with the hope that it will yield a positive return. The returns on each investment are evaluated individually, and the entire portfolio is evaluated as a whole.

Each project in the portfolio should have a direct impact on the organization. Put another way, an organization s leaders should identify the organization s future direction through strategic planning. Then multiple possible initiatives (or projects) can be identi- fied that might help further the organization s goals. The leaders need to sort through the various possible projects and prioritize them. Projects with the highest priority

EXHIBIT 2.5

2017 PROJECT & ROADMAP PLANNING

Carry Over – 121 Projects New Business Care4U Claims Consumer Exp. Finance, Billing and Enroll. Provider Reg/Complince

23 64

9 6 3

10 6

Backlog – 75 Projects New Business Care4U Claims Consumer Exp. Finance, Billing and Enroll. Provider Reg/Complince

n/a 37

9 3

11 13

Dashboard Initial Draft Complete

Dashboard In Progress

Dashboard Not Started

Source: Mark Heitkamp, PMP, MBA and appear after the words business area

38 Part 1 Organizing Projects

should be undertaken first. Organizations typically try to have a sense of balance in their portfolios; that is, an organization includes in its portfolio:

Some large and some small projects Some high-risk, high-reward projects, and some low-risk projects Some projects that can be completed quickly and some that take substantial time to finish Some projects that serve as efforts to enter new markets and new products or services and some to improve current products

2-2b Programs A program is a group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually. 8

This group of related projects or the program often shares the same goal and requires similar resources.

Program management is defined as applying knowledge, skills, tools, and techniques to meet requirements and to obtain predetermined benefits. It is a systematic approach of aligning multiple components of the program to achieve the program goals while optimizing the integrated cost, schedule, and effort required to execute the program. Programs and program management are of great importance, specifically for the govern- ment and large and multinational corporations.

Programs often last as long as the organization lasts, even though specific projects within a program are of limited duration. For example, the U.S. Air Force has an engine procurement program. As long as the Air Force intends to fly aircraft, it will need to acquire engines. Within the engine program are many individual projects. Some of these projects are for basic research, some are for development of engines, some are for purchasing engines, and a few others are for maintaining and improving the perfor- mance of engines in use. Each project has a project manager, and the entire program has a program manager. While the project managers are primarily concerned with the trade-offs associated with cost, schedule, scope, and quality on their individual projects, the program manager is concerned with making trade-offs between projects for the max- imum benefit of the entire program. To avoid confusion, programs deal with a specific group of related projects, while a portfolio deals with all of an organization s projects. A portfolio can include multiple programs as well as multiple projects.

A program may include components such as portfolios, projects, and subprograms. It is important to understand comparative analysis of projects, programs, and portfolios.

While the leadership group of a company may make portfolio decisions and delegate the program management decisions to a program manager, both portfolios and programs are managed at a level above the typical project manager. For practical purposes, project managers should attempt to understand how both portfolio and program decisions impact their projects and then spend most of their efforts focused on their project.

Some of the unique responsibilities of a program manager are leading program activi- ties in a coordinated way, communicating with internal and external stakeholders, resolv- ing cost, scope, schedule, risk, and quality across all projects with shared governance, and managing external and internal factors such as culture and socioeconomic issues. See Exhibit 2.6 for a comparison of projects, programs and portfolios.

2-2c Projects and Subprojects Just as a program is made up of multiple projects, a large project may be composed of multiple subprojects. A subproject is a part of a larger project organized as a project

Chapter 2 Project Selection and Prioritization 39

itself to make it easier to plan and manage. If the project is quite large, individuals may be assigned as subproject managers and asked to manage their subproject as a project. Some of those subproject managers may even work for another company. The project manager needs to coordinate the various subprojects and make decisions that are best for the overall project. Sometimes this may require that a particular subproject be sacri- ficed for the greater good of the project. The relationships among a portfolio, programs, projects, and subprojects are illustrated in Exhibit 2.7.

EXHIBIT 2.6

COMPARISON OF PROJECTS, PROGRAMS, AND PORTFOLIOS

PROJECTS PROGRAMS PORTFOLIOS

Scope Defined scope Progressive elaboration

Larger scope Significant benefits

Organizational scope Changes with strategic goals

Change Change is norm Change management

Internal and external changes

Changes due to external and internal environment

Plan Detailed plans High-level program plan Detailed component plan

Create processes Maintain processes

Monitor Project deliverables Progress of program components

Strategic changes, risk Resource allocation

Success Scope quality, cost, time Customer satisfaction

Needs and benefits of the program

Investment performance Benefit realization

Manage Project deliverables Project team

Program staff and PM Vision and leadership

Portfolio staff

Adopted from PMI, Standard for Program Management, 3rd ed. (2013): p. 8.

EXHIBIT 2.7

PORTFOLIO, PROGRAM, PROJECT, AND SUBPROJECT RELATIONSHIPS

Company Portfolio

Program Alpha Program Beta

Project A1

Project A2

Project 3

Subproject 3.1

Subproject 3.2

40 Part 1 Organizing Projects

Because projects are frequently performed in a fast-paced environment, it is helpful if they can be guided by organizational priorities.

The first step is to carefully align potential projects with the parent organization s goals. While many companies are motivated to align projects with organizational goals for these benefits, an additional reason for companies that sell to the government is that the Federal CIO Roadmap states, CIOs are responsible for maintaining and facilitating the imple- mentation of a sound and integrated IT architecture; monitoring performance of IT pro- grams; using metrics to evaluate the performance of those programs; and modifying or terminating programs or projects. 9 This was introduced in the Sarbanes-Oxley require- ments. All publicly traded companies must now follow certain guidelines that require some sort of financial decision model for selecting projects for execution.

When managers assess the organization s ability to perform projects and then iden- tify, select, prioritize, resource, and govern a portfolio of projects and other work that they believe will help the organization achieve its strategic goals, they are performing portfolio management. While a team of senior executives may conduct many of the port- folio management activities, project managers should understand how their specific pro- jects are aligned with the organization s objectives since they will need to either make or provide input on many decisions.

When organizations consider their entire portfolio of work, they sometimes envision pro- jects as means of developing knowledge that can be capitalized upon in ongoing work pro- cesses to provide profit, as shown in Exhibit 2.8. Furthermore, new knowledge encourages organizations to be creative and develop new project ideas and knowledge-building projects.

In times when the economy is poor, many companies struggle to get enough business. In such an environment, some firms might accept almost any work they can get. Even during bleak economic times, however, one should be careful how internal projects are selected, since selecting one project limits resources (money, people, etc.) available to other projects.

EXHIBIT 2.8

PORTFOLIO OF PROJECTS AND OPERATIONAL WORK PROCESSES

Little Kn Reliable Kn Knowledge ContinuumKnowledge Continuum

Examples: Basic R&D; Customer Research; M&A Due Diligence

Examples: Competitive Strategy; Product Development; Market Entry; Channel Strategy

Inbound Logistics

Operations

Outbound Logistics

Sales and Marketing

Customer Service

Manufacturing

Procurement

Human Resources

Both projects and processes are intertwined to create sustainable value.

Source: Chinta, Ravi, and Timothy J. Kloppenborg, Projects and Processes for Sustainable Organizational Growth, SAM Advanced Management Journal 75 (3) (Spring 2010): 24.

Chapter 2 Project Selection and Prioritization 41

During good or bad economic times, people should take the same care and prudence with external projects and ensure that they are consistent with the organization s goals.

2-2d Assessing an Organization s Ability to Perform Projects Assessing an organization s strengths and weaknesses is an essential part of aligning projects with the organization. If an organization does not have the right capabilities, a project that may otherwise support organizational goals may be too difficult to successfully complete. Some questions to ask regarding a firm s ability to support projects are as follows:

Do we have the right skills, capabilities, technical knowledge, and resources that are required for potential projects? If we do not have them, can we acquire them easily? Do we have a teamwork attitude, free and open communication, creativity, and empowered decision making? Do we have a clearly defined project management process? Do our associates have the right attitudes, skills, and competencies to use the project management process? Are our leaders at each level willing to take appropriate personal risk? Does senior leadership establish a strong leadership foundation? Do individuals and teams exhibit leadership at their respective levels? Do we monitor and understand our external environment?

2-2e Identifying Potential Projects The second part of aligning projects with the firm s goals is to identify potential projects. In general, some potential projects can be to capitalize upon a strategic opportunity or techno- logical advance. Others may serve a social need, an environmental consideration, a customer request, or a legal requirement. Ideally, this is accomplished in a systematic manner not just by chance. Some opportunities will present themselves to the organization. Other good opportunities will need to be discovered. All divisions of the organization should be involved. This means people at all levels, from frontline workers to senior executives and people from all functional areas need to help identify potential projects. For example, salespeople can uncover many opportunities by maintaining open discussions with existing and potential customers, and operations staff may identify potential productivity-enhancing opportunities as projects. Everyone in the firm should be aware of industry trends. Many industries have trade journals such as Elevator World or Aviation Week and Space Technology that can be reviewed regularly for potential project ideas. One reasonable goal is to identify approxi- mately twice as many potential projects as the organization has time and resources to per- form. The reason is simple: under close examination, some potential projects may not be a good fit. Any company that accepts practically every potential project will probably waste some of its resources on projects that do not support its organizational goals.

Once potential projects are identified, the next step is to develop a brief description of each. The leadership team that will select and prioritize projects needs to understand the nature of the projects they are considering. While the level of documentation different firms require varies greatly, a bare minimum can be called the elevator pitch. This is when a person meets another waiting for an elevator and asks, I hear you are on XYZ Project. What is it all about? The responder may have only a brief time to give a reply before the elevator arrives and must be prepared to answer quickly with simple state- ments about the project work and why it is important to the organization.

The work is often summarized in a brief statement of work, which is a narrative description of products, services, or results to be supplied. 10 Why the project is important

42 Part 1 Organizing Projects

is often summarized as a business case, which is the benefits of a selected component used as a basis for the authorization of further project management activities. 11

The business case generally includes both why the project is needed and, if the firm uses financial justification as part of project selection, an estimate of costs and benefits. Armed with this elevator pitch, the series of processes that collectively are used to select, prioritize, and initiate projects begins. Selecting and prioritizing are covered next, and chartering is covered in Chapter 3.

METHODS FOR SELECTING PROJECTS The people in charge of selecting projects need to ensure overall organizational priorities are understood, agreed upon, and com- municated. Once this common understanding is in place, it is much easier to prioritize potential projects. The degree of formality used in selecting projects varies widely. In a smaller organization, it can be straightforward. The prioritization should consider criteria derived from project management, finance, and strategic aspects and should include ask- ing questions such as these:

What value does each potential project bring to the organization? Are the demands of performing each project understood? Are the resources needed to perform the project available? Is it feasible to complete the project within the expected time and at the projected cost while managing associated risks? Is the project financially beneficial and compatible with other investment decisions? Is there enthusiastic support both from external customers and from one or more internal champions? Which projects will best help the organization achieve its strategic goals?

There are several different methods of systematically selecting projects. The methods include both financial and scoring models. The primary reason for including financial analysis either to make the project selection decisions directly or to at least assist in the decision making is that, from management s perspective, projects are investments. Therefore, proper selection should yield a portfolio of projects that collectively contribute to organizational success.

Three different approaches are commonly used to ensure both financial and nonfi- nancial factors are considered when selecting projects. First, some organizations use financial analysis as the primary means of determining which projects are selected, and management merely tempers this with informal inclusion of nonfinancial factors. Sec- ond, some organizations use financial models as screening devices to qualify projects or even just to offer perspective; qualified projects then go through a selection process using a scoring model. Third, at still other organizations, financial justification is one factor used in a multifactor scoring model. The common thread in all three of these approaches is that both financial and nonfinancial factors are considered when selecting projects. Let us consider both financial and scoring models. Financial models will be covered in con- cept, but the calculations will not be shown since they are explained in depth in most required finance courses. Scoring models will be covered in both concept and calculation since many students might not have them in another course.

2-2f Using a Cost-Benefit Analysis Model to Select Projects Cost-benefit analysis is a financial analysis tool used to determine the benefits provided by a project against its costs. 12 These models compare expected project costs to expected project benefits. Several models can be used in making project selection decisions.

Chapter 2 Project Selection and Prioritization 43

NET PRESENT VALUE (NPV) Net present value (NPV) is the most widely accepted model and will be covered first. When using net present value, the analyst first discounts the expected future value of both the project costs and benefits, recognizing that a dollar in the future is worth less than a dollar today. Then the analyst subtracts the stream of discounted project costs from the stream of discounted project benefits. The result is the net present value of the potential project. If the net present value is positive, then the organization can expect to make money from the project. Higher net present values pre- dict higher profits. See the summary in Exhibit 2.9.

BENEFIT-COST RATIO (BCR) A second financial model sometimes used is benefit- cost ratio (BCR). The ratio is obtained by dividing the cash flow by the initial cash out- lay. A ratio above 1.0 means the project expects to make a profit, and a higher ratio than 1.0 is better. The cash flow can be determined for the life of the project using net present or discounted value principles.

INTERNAL RATE OF RETURN (IRR) The third financial model is internal rate of return (IRR). In this model, the analyst calculates the percentage return expected on the project investment. A ratio above the current cost of capital is considered positive, and a higher expected return is more favorable.

PAYBACK PERIOD (PP) The fourth financial model that is sometimes used is the payback period (PP). In this analysis, a person calculates how many years would be required to pay back or recover the initial project investment. The organization would normally have a stated period that projects should be paid back within, and shorter pay- back periods are more desirable.

ADVANTAGES AND DISADVANTAGES OF EACH METHOD Financial models are useful in ensuring that selected projects make sense from both cost and return- on-investment perspectives. These models have weaknesses that need to be understood before they are used. For example, payback period models do not consider the amount of profit that may be generated after the costs are paid. Thus, two projects with a similar pay- back period could look equal, but if one has substantially higher revenue after the payback period, it would clearly be superior. BCR would not be acceptable unless all costs and bene- fits were calculated in present dollars (in which case it is similar to NPV except it is a ratio of benefits to cost instead of the difference between revenue and cost). However, there

EXHIBIT 2.9

FINANCIAL MODELS FOR PROJECT SELECTION

NET PRESENT VALUE (NPV)

BENEFIT-COST RATIO (BCR)

INTERNAL RATE OF RETURN (IRR)

PAYBACK PERIOD (PP)

Calculation PV revenue PV cost Cash flow/Project investment

Percentage return on project investment

Project costs/Annual cash flows

Neutral Result NPV $0 Ratio 1 0 IRR Cost of capital Payback period Accepted length

If used to screen projects or to select projects outright

NPV > Acceptable amount

Ratio > Acceptable amount

IRR > Acceptable amount

Payback period < Acceptable length

If used to compare projects Higher NPV better Higher ratio better Higher IRR better Shorter payback period better

44 Part 1 Organizing Projects

are benefits and costs that are intangible and cannot be determined in financial terms. IRR and BCRs have problems if used for choosing between mutually exclusive projects because they can favor smaller projects that create less total value for the firm but have high percentage returns. For example, a huge project with a medium rate of return would create a lot of value for a firm but might not be chosen over a smaller project with a higher return if only one can be chosen. Additionally, it is sometimes quite dif- ficult to calculate an IRR if a project has nonconventional cash flows. For the most part, the finance discipline recommends using net present value. The other measures can be calculated to provide perspective on whether a project meets a minimum financial return threshold or to communicate with people who might not understand NPV.

However, none of the financial models ensure alignment with an organization s stra- tegic goals. Therefore, financial analysis, while very useful, is normally not enough.

2-2g Using a Scoring Model to Select Projects In addition to ensuring that selected projects make sense financially, other criteria often need to be considered. A tool called a scoring model helps to select and prioritize poten- tial projects. It is useful whenever there are multiple projects and several criteria to be considered. A few organizations use more complex models such as analytical hierarchy process (AHP) to compare projects, but since many more organizations keep things sim- ple with variations of scoring models, that is what we will cover.

IDENTIFYING POTENTIAL CRITERIA These criteria should include how well each potential project fits with the organization s strategic planning. The criteria may also include such items as risk, timing, resources needed, and so on. A normal practice is for the company s leadership team to jointly determine what criteria will be used to select projects. A list of questions executives may use to develop their list of criteria is shown in Exhibit 2.10.

DETERMINING MANDATORY CRITERIA Once the leadership team agrees on a list of criteria that are important, the next step is to determine whether any of the criteria are man- datory. That is, are there any situations that dictate a project must be chosen regardless of any other considerations? Examples of this include government mandates and clear safety or

EXHIBIT 2.10

EXAMPLES OF PROJECT SELECTION CRITERIA

How well does this project fit with at least one organizational objective?

How many customers are there for the expected results?

How competitively can the company price the project results?

What unique advantages will this project provide?

Does the company have the resources needed?

What is the probability of success?

Are the data needed to perform the project available or easily collected?

Do the key stakeholders agree that the project is needed?

What is the expected return on investment?

How sustainable will the project results be?

How does this project promote (or hinder) our corporate social responsibility?

What risks are there if we do not perform this project?

Chapter 2 Project Selection and Prioritization 45

security situations. This list of must-do projects should be kept as small as possible since these projects automatically get selected and can crowd out other worthwhile projects.

WEIGHTING CRITERIA Next, the leadership team determines the relative importance or weight of each decision criteria. While more complex methods of determining criteria weights and project evaluations have been used in the past, many firms now use the sim- ple methods described here for determining criteria weights. See Exhibit 2.11 for an example of project evaluations. First, executives determine which criterion is most important and give that a weight of 10. Then they ask how important in comparison each of the other criteria is. For example, if the executives in a consumer products com- pany thought development of new products was most important, it would be assigned a weight of 10. If the customer relations factor was deemed almost as important as new product development, maybe it would be assigned 8. If the factors of supplier relations and probability of project success were each deemed to be half as important as new product development, each would be assigned 5. Perhaps other criteria such as cost reduction, safely, and so forth were also considered but determined to not be as impor- tant. The resulting criteria with weights are shown in Exhibit 2.11 in the top row of the selection and prioritization matrix. Most organizations will decide to use about three to five criteria. Lesser-rated criteria can be used as tiebreakers if needed.

EVALUATING PROJECTS BASED ON CRITERIA Now the leadership team evaluates each project on each criterion. The most efficient and accurate method is to concentrate on one criterion at a time, going down each column in turn. An easy method for this is to rate each project on that specific criterion, with scores ranging from 1 (potential proj- ect has very little or even negative impact on this criterion) to 5 (project has excellent impact on this criterion). The upper-left portion of each cell in the matrix can display the rating, representing how well that project satisfies that criterion.

Once a project has been rated on a specific criterion, that rating should be multiplied by the weight assigned to that criterion and displayed as the weighted score in the main body of each cell. The total for each project should be added across the row. The highest- scoring projects would ordinarily be selected. If several projects have close scores (virtual ties), other criteria or discussion can be used to break the tie. For example, in Exhibit 2.12, there is a virtual tie between Projects A and B.

EXHIBIT 2.11

PROJECT SELECTION AND PRIORITIZATION MATRIX

Project A

Project B

Project C

Project D

55810

46 Part 1 Organizing Projects

SENSITIVITY ANALYSES Scoring models allow leadership teams to perform sensitiv- ity analyses that is, to examine what would happen to the decision if factors affecting it were to change. Selection criteria may be added or altered. Participants may decide that some criteria are more important than others and weight them accordingly. Missing cri- teria or new alternatives can be added and the decision revisited. For example, if the executive team evaluating the projects in Exhibit 2.12 had a bad experience with an unsuccessful project and decided to reevaluate their decisions with success probability now weighted a 9 for very important, the new project selection and priority matrix would be calculated as shown in Exhibit 2.14.

Decision makers can ensure that they use very solid ratings for each potential project. For example, if one criterion was the number of customers, the marketing department could interview some potential customers to gauge their level of interest.

A company might want to select several projects. If so, the scores from the selection matrix could serve as one method of prioritizing the projects.

EXHIBIT 2.12

COMPLETED PROJECT SELECTION AND PRIORITIZATION MATRIX

Project A

Project B

Project C

Project D

55810

10252450

25151650

15154010

1053220

109

106

EXHIBIT 2.13

REVISED PROJECT SELECTION AND PRIORITIZATION MATRIX

Project B

Project A

Project C

Project D

95810

45151650

18252450

27154010

1853220

126

117

Source: Chris Bridges.

Chapter 2 Project Selection and Prioritization 47

Selection of projects based on certain criteria is a decision-making process that varies geographically as priorities and thinking styles tend to be different.

Due to cultural differences, learning, and education principles, people think and approach a problem differently; therefore, they also adopt different decision-making styles. This aspect assumes importance due to increased diversity in workplaces that provides an opportunity to work with people from different cultures and countries. Due to these factors, someone might rely more on inductive, deductive, or a combination of these approaches in making decisions. This diversity would influence how people look at a scor- ing model or any other decision-making tool in selecting projects and making project port- folio management decisions. These issues are discussed further in Chapter 15.

2-2h Prioritizing Projects Once all projects have been selected, they will need to be prioritized that is, the deci- sion makers will need to determine which ones will get assigned resources and be sched- uled to begin first. If a company selects several projects for a year (or even for a fiscal quarter), it cannot expect to start all of them at the same time. The scoring models are useful in providing input into the starting order of projects. Most leadership teams will consider the weighted scores of each project as a starting point in assigning resources to projects and determining their start dates. The leadership team members, however, also generally discuss other issues, such as:

The urgency of each project The cost of delaying the expected benefits from various projects Practical details concerning the timing Opportunity costs associated with the project

For example, an important process improvement project may be far less disruptive to perform when the factory is shut down for routine maintenance. One more discus- sion frequently occurs in the prioritizing process if there is a conflict between resource needs for two projects, which one gets the needed resources first? Often, this is left to the project sponsors to iron out; especially for important projects, it may be formally decided by the leadership team. In that way, the probability of the critical project being held up by a misunderstanding is greatly decreased.

Exhibit 2.14 shows how the Alternative Breaks (AB) planning committee at a university ranked spring break projects. This exhibit shows four of the twenty-six projects that were selected for trips. This book will include multiple examples of the AB project to illustrate how various project-planning tools work together. Each trip is a small or subproject, while the combination of all twenty-six trips forms the overall project.

2-2i Resourcing Projects Once all projects have been prioritized, it is time to assign resources to each. Resources can include key personnel such as sponsors, project managers, core team members, and subject matter experts. Resources can also include space, materials, equipment that may be in short supply, and the funds necessary to acquire these resources. The easiest way is to use a resource assignment matrix and begin by assigning resources to the highest-priority projects. Once an individual resource is no longer available, the organization is limited in the number of projects that it can take on during a particular time.

Assigning resources like this requires a prioritized project list such as shown in Exhibit 2.13, a list of resources and how much of each is available, and an estimate of how much of each key resource each project will need. For simplicity s sake, organizations often plan for a fiscal quarter. Exhibit 2.15 shows the same four projects and choices of project

48 Part 1 Organizing Projects

managers, team members, and the budget for each. Note that while there is enough project manager time to start all four projects, there is neither enough team member time nor enough cash. Therefore, only three projects can be started.

2-3 Securing Projects The discussion above pertains to projects that are internal to an organization. This section deals with projects a company (called the client) wants performed, but for which it may hire external resources (called contractors) to execute significant parts or all of the work. External projects can be viewed either from the perspective of the client company that wants the project to be executed or from the perspective of the contractor company that wants to perform the

EXHIBIT 2.14

ALTERNATIVE BREAKS PROJECT SELECTION AND PRIORITIZATION MATRIX

PROJECT/SELECTION CRITERIA

ACTIVE SERVICE OPPORTUNITY ISSUE ITSELF

ORGANIZATION TO WORK WITH COST

9 10 6 5 Total

New York Vegan Farm 5 45

4 40

3 18

4 20

123

West Virginia Sustainability 4 36

3 30

4 24

5 25

115

Chicago Halfway House 2 18

4 40

4 24

4 20

102

El Salvador Cultural Immersion

1 9

5 50

5 30

1 5

EXHIBIT 2.15

RESOURCE ASSIGNMENT MATRIX

PROJECT/RESOURCE PM/DEJI PM/BUD PM/CORY TEAM/ BRADLEY

TEAM/ RAJEEV

TEAM/ LARRY MONEY

Maximum Availability 200 400 300 300 150 150 $30 million

Project List

Project B: PM 240, Team 200, $5M

240 200 $5M

Project A: PM 200, Team 150, $10M

200 150 $10M

Project C: PM 300, Team 150, $14M

300 150 $14M

Project D: PM 150, Team 180, $4M

Remaining Availability 0 160 0 100 0 0 $1M

Chapter 2 Project Selection and Prioritization 49

work. Client companies may first put prospective external projects through a selection and prioritization process as described above and, if selected, then decide whether to perform the work internally (make) or hire the project to be performed by others (buy). If the decision is to buy, then the client company needs to plan and conduct the procurement.

Contractor companies need to identify potential project opportunities, determine which they will pursue, submit proposals, and be prepared to either bid or negotiate to secure the work. We consider the client company s perspective in Chapter 12, Project Supply Chain Management. We consider the contractor s perspective next.

2-3a Identify Potential Project Opportunities Contractors seeking external projects to perform should pursue this in a fashion similar to that of any company considering internal projects, as described earlier in this chapter in the portfolio alignment section on identifying potential projects. Additionally, since they need to look for projects externally, contractor companies should have representatives at trade shows, professional conferences, and anywhere information on the intentions of potential customers and competitors may surface. Contractor companies should also actively practice customer relationship management by establishing and nurturing per- sonal contacts at various levels and functions. Contractor companies can also practice cus- tomer relationship management by linking information systems to the extent practical so as to identify any useful information concerning potential future projects and improve management of current projects.

2-3b Determine Which Opportunities to Pursue Just as all companies should decide which internal projects to select, as previously described in the methods for selecting projects, most contractor companies are best served by targeting the projects they wish to pursue. Some companies have a policy that they will bid on every potential project, knowing that if they do not bid, they will not be awarded the project. More companies find that if they target their opportunities, their hit rate or probability of securing the work on any given proposal increases. It takes time and resources to put together a good proposal, so it makes sense to increase the acceptance rate by developing a bid/no-bid decision strategy.

Each company has strengths and weaknesses compared to its competitors. Hence, a quick SWOT analysis could be used to decide whether to pursue a potential project,

N ap

pi ne

ss /p

ix ab

ay .c

50 Part 1 Organizing Projects

just as a more involved version of SWOT analysis was described earlier and depicted in Exhibit 2.2. Decision makers can also ask how well a potential project will help achieve their objectives. If they determine a project will help achieve their objectives, the next considerations are the cost to pursue the work and the probability of successfully secur- ing the project given the likely competition. A company frequently considers risks both of pursuing and not pursuing a potential project13 Finally, does the company have the capability to perform the work if it is awarded?

2-3c Prepare and Submit a Project Proposal When a firm prepares to submit a proposal, it is really conducting a small project with the primary deliverable of the project being a compelling and complete proposal. The contrac- tor should understand the project s source selection criteria, the basic minimum criteria the sellers have to be fulfilled to get shortlisted. 14 While criteria will vary extensively from one project to another, generally a client will likely want to be convinced that the potential contractor is technically, managerially, financially, and operationally competent. Successful project managers try hard to convince potential clients that they are capable on all four dimensions. A short list of these factors is shown in Exhibit 2.16.

2-3d Negotiate to Secure the Project Negotiation is an approach to redefine an old relationship that is not working effectively or to establish a new relationship. Negotiations should aim at a win-win solution, and the outcome must benefit both the parties involved in negotiations.

Once all proposals have been delivered and evaluated, the client company may elect to either award the project or enter into negotiations with one or more potential contrac- tors. On more routine projects, the contract may be awarded at this point. Further clar- ifications and negotiations may follow for complex projects.

A client company and a contractor company may negotiate the amount of money to be paid for a project. They may also negotiate the contractual terms, schedule, specific personnel to be assigned to work on the contract, quality standards, reporting mechan- isms, and various other items. A project manager may need to make arrangements with potential suppliers to secure the products and services needed to perform the project. All these considerations will be covered in subsequent chapters.

Successful project managers understand that they need to prepare well for negotiations. This starts with a clear understanding of what is most important to their management. Often, it includes fact finding with the client company to understand its needs and abili- ties. Armed with an understanding of both perspectives, a project manager attempts to find a solution that allows the organization to secure the project work with enough profit potential and with the start of a good working relationship with the client. In the end, the client company will select the contractor(s) and award the contract(s).

EXHIBIT 2.16

TYPICAL SOURCE SELECTION CRITERIA

TECHNICAL MANAGEMENT FINANCIAL OPERATIONAL

Technical experience Management experience Financial capacity Production capacity

Needs understanding Project charter Life cycle cost Business size and type

Technical approach Planning and scheduling Cost basis and assumptions Past performance

Risk mitigation Project control Warranties References

Chapter 2 Project Selection and Prioritization 51

PMP/CAPM Study Ideas You won t see a whole lot of questions on either of these tests pertaining to portfolio or pro- gram management, since these happen at an executive level, beyond the purview of individual projects or project managers. At the same time, it is imperative that you understand the inter- relationship of portfolio and project management, as well as how they relate to an organiza- tion s mission: the mission leads to strategic objectives, and projects are the primary vehicle through which these objectives are achieved.

As with other chapters, make sure you are familiar with the PMBOK terms especially statement of work and business case and be prepared to put them into context with real projects. You will ultimately need to know how to calculate net present value. Finally, be familiar with the common causes of project failure and how to prevent them.

Summary Project selection does not occur in isolation. Ideally, it begins with the organization s strategic planning. This planning begins with a strategic analysis of the organi- zation s internal strengths and weaknesses as well as the external threats and opportunities it faces. The organization should then develop its guiding principles such as mission and vision statements. Most companies will have an annual planning session in which strategic objectives are developed. Larger organizations will con- tinue this effort with one or more levels of planning in which the overall objectives are flowed down to deter- mine objectives that are appropriate for each organiza- tional level.

Once the strategic planning is accomplished, the organization s leadership team engages in portfolio management. The first part is an open and honest assessment of the organization s ability to perform projects. The decision makers need to understand how many resources are available, the organization s overall capabilities, and the capabilities of the indivi- duals who will be assigned to projects. An ongoing portfolio management activity is for everyone in the firm to identify possible opportunities that they feel might help the organization achieve its goals. Each potential project should be described at least by stat- ing in a sentence or two what work is involved and

how it would help the organization achieve one or more of its goals.

Once potential projects are identified and briefly described with statements of work and business cases, they should be put through a process to determine which will be selected and what their relative priorities are. Both financial and scoring models are frequently used to evalu- ate potential projects. Net present value is the preferred financial method, although others are sometimes used. Financial analysis tells the leadership team how much each potential project is worth from a benefits- versus-cost comparison, but it does not tell how each potential project may help to achieve the organization s goals. Scoring models can incorporate various goals and should also be used. Once a project list is selected, the projects need to be prioritized so some can start right away and others can start later.

Contractor companies need to be constantly on the lookout for potential project opportunities. Once potential projects are identified, companies need to decide which ones they pursue. Just as for internal pro- jects, some external projects will be better at helping an organization reach its goals because they are a better fit. The contractor needs to prepare and submit proposals for desired projects and be prepared to follow up and often negotiate in order to secure them.

Key Terms Consistent with PMI Standards and Guides portfolio management, 38 portfolio, 38 program, 38 vision, 38 mission statement, 38 strategic objectives, 38

program management, 38 cost benefit analysis, 38 subproject, 39 statement of work, 42 business case, 42 source selection criteria, 50

52 Part 1 Organizing Projects

Chapter Review Questions 1. List and describe each step in the strategic plan-

ning process. 2. Name at least four things that a mission state-

ment should include. 3. What does the strategic analysis acronym SWOT

stand for? 4. What is the most widely accepted financial model

for selecting projects? 5. What are some advantages and disadvantages

of using a financial model for selecting projects?

6. What are some advantages and disadvantages of using a scoring model for selecting projects?

7. What are some common reasons for project failure?

8. Who should be involved in identifying potential projects?

9. If there is a conflict between resource needs for two projects, who decides which one gets the needed resources first?

10. In a project scoring model, why is each decision criteria given a weight?

11. What purpose do sensitivity analyses serve in using scoring models to choose projects?

12. If several projects have close scores as the result of a scoring model, what can be done to break the vir- tual tie?

13. Why might a contractor company perform a SWOT analysis prior to bidding on a potential project?

14. Why is it important for a contractor to under- stand the source selection criteria a client uses to decide to whom they will award a project?

15. Name five things that may be negotiated between a client company and a contractor company.

Discussion Questions 1. How might the internal and external parts of a

SWOT analysis affect one another? 2. Describe the interaction between vision and

mission statements. 3. How is a company s portfolio similar to and

different from a financial portfolio? 4. What is the best way for an organization to

prioritize among selected projects? Does it vary among organizations?

5. Why is aligning potential projects with the parent organization s goals the first step in avoiding project failure?

6. Why is it a good practice for organizations to identify twice as many potential projects as they plan to implement?

7. Suppose you are purchasing a new car, and you decide to use a scoring model to decide among four options. What would be your top three criteria, and what would be each criterion s relative weight?

8. Under what circumstances should a selected project take precedence over other selected projects?

9. If you are a contractor looking for project work, why might you decide not to pursue a particular project opportunity?

10. What are the four main areas of competency a client company is looking for in a project man- ager? How can you best demonstrate these com- petencies to a potential client?

PMBOK ® Guide Questions 1. A collection of projects, programs, and opera-

tions managed as a group to achieve strategic objectives is called a: a. process b. portfolio c. subprogram d. life cycle

2. Projects may be undertaken as a result of any of the following strategic reasons except: a. social need b. market demand

c. need to keep workers busy during slow times d. environmental considerations

3. A narrative description of products, services, or results to be delivered by the project is a/an: a. request for information b. business case c. project statement of work d. elevator pitch

4. All of the following statements are true except: a. A portfolio may contain multiple programs

and projects.

Chapter 2 Project Selection and Prioritization 53

b. A project manager has the discretion to make trade-offs in regard to which programs to pursue.

c. A program manager has the discretion to make trade-offs in regard to which projects to pursue.

d. Projects have a finite timeline, while programs may exist as long as the parent organization does.

5. Which of the following is a financial analysis tool that an organization may use to determine the cost-value of potential projects? a. Payback period (PP) b. Internal rate of return (IRR) c. Net present value (NPV) d. All of the above

6. All projects should be aligned with their organi- zation s strategic plan, which includes the organi- zation s vision, goals, and objectives. Which of these describes an organization s vision? a. Conveys a larger sense of organizational pur-

pose, and is both inspiring and guiding b. Describes short- and long-term results along

with measures to determine if they have been achieved

c. Includes the organization s core purpose, core values, beliefs, culture, primary business, and primary customers

d. Is SMART: specific, measurable, achievable, results-based, and time-specific

7. The best describe(s) why a project is being undertaken. a. statement of work b. business case c. subprojects d. source selection criteria

8. The document that includes the necessary information to determine whether a project is worth the required investment, and is used for decision making by upper management, is called the: a. project scope statement b. project charter c. business case d. case study

9. An organization s vision often includes reference to its social, environmental, and economic health, collectively referred to as the: a. triple bottom line b. business case c. statement of work (SOW) d. net present value (NPV)

10. A business case typically contains information regarding the business need and a financial anal- ysis. Which model divides the cash flow by the initial cash outlay? a. Benefit-cost ratio (BCR) b. Internal rate of return (IRR) c. Net present value (NPV) d. Payback period (PP)

Exercises 1. Complete the following scoring model. Show all

your work. Tell which project you would pick first, second, third, and last. How confident are you with each choice? If you lack confidence regarding any of your choices, what would you prefer to do about it?

2. Complete the following scoring model. Show all your work. Tell which project you would pick first, second, third, and last. How confident are you with each choice? If you lack confidence regarding any of your choices, what would you prefer to do about it?

Project A

Project B

Project C

Project D

4610

Project A

Project B

Project C

Project D

3710

54 Part 1 Organizing Projects

3. Pretend you are on the leadership team for a phar- maceutical company that is in a difficult financial situation due to patents that have expired on two of your most profitable drugs. Brainstorm a list of criteria by which you would select and prioritize projects. Weight the criteria.

4. Pretend you are on the leadership team of a manufacturing company that is currently chal- lenged by low-cost competition. Brainstorm a list of criteria by which you would select and pri- oritize projects. Weight the criteria.

I N T E G R A T E D E X A M P L E P R O J E C T S

SUBURBAN HOMES CONSTRUCTION PROJECT

Suburban Homes, like any other real estate company, has many strategic directions to pursue to expand the company operation and increase revenue and profits. To explore and pursue various investment opportunities that would eventually translate into projects, the company developed strategic directions to suc- cessfully invest in real estate. It identified six options for portfolio project management. They are investments in purchasing land for future development, communities for single-family homes, multifamily properties, small-scale apartment buildings, large- scale apartment complexes, and commercial investments.

1. Purchasing land in areas that have potential for future growth makes sense, as the cost of land tends to be sub- stantially cheaper 10 20 years before it is turned into a developed suburban area. At an appropriate opportunity, the land can be improved to add value, or it can be leased or rented to create cash flow. Further, the land can be divided and parts of it can be sold for a profit. However, this option requires a vision for future growth and devel- opment and consequently, risks are also associated with this strategic direction.

2. Building single-family homes in suburban areas is one of the best and most popular strategic directions for growth for companies like Suburban Homes. Most of the clients who are interested in a quality life and view their home as an investment prefer buying single-family homes. Clients realize that it is easy to rent, sell, and finance.

3. Small multifamily properties usually consist of two to four units. They also present similar advantages that are asso- ciated with a single-family home such as easy financing and being a wise investment option for clients while pro- viding a good residence for their family.

4. Small apartment buildings usually consist of 5 to 50 units for clients to reside in. They are more popular among those who prefer urban areas and a busy social life.

Clients are usually unmarried or married with no children. These properties can be more difficult to finance because they rely on commercial lending standards. For this invest- ment option, Suburban Homes must look for investment opportunities closer to densely populated areas, and the investor must provide parking areas.

5. Large apartment complexes require that you include pools, a gym, tennis courts, and parking facilities, in addition to other attractions that lure people to choose the complex as a residence. Such a complex requires full-time staff to manage the property, provide safety and security, and pro- vide good customer service. These properties can be very expensive to purchase. However, this investment option provides steady revenue flow.

6. Commercial investment, in its truest sense, is an invest- ment for growth and diversity in a portfolio. The aim of this investment is to lease the property for business. Size, style, and purpose also vary. Clients could range from small business owners to large malls and mega office complexes. This investment option offers a consis- tent cash flow. However, occupancy would depend largely on the local economy and could prove to be risky. Further, investments are of higher magnitude and Suburban Homes is seriously considering this option after establish- ing steady growth in the residential market and improving their financial stability and growth.

Given these six options, Suburban Homes has approached you to develop a project selection model to maintain a balanced portfolio.

Reference https://www.biggerpockets.com/real-estate-investing/strate- gies-niches

Chapter 2 Project Selection and Prioritization 55

Semester Project Instructions Your instructor may bring example projects to class and facilitate the assignment of students to the vari- ous project teams. Alternatively, your instructor may ask you to identify potential projects. Therefore, you may or may not be involved in project selection. If your instructor has each student bring in a project idea, you will first need to create your elevator pitch to describe tersely what work is involved in your project and why it is important. Then you and a small team will likely need to select one of the potential projects using a scoring model. Unlike the criteria for selecting among projects in a typical organization, for your class, you may use criteria that will help you learn. You may want to include size and complexity criteria so the project is involved enough for you to benefit by using many of the

techniques in this book, but small enough so you can do the work in a reasonable amount of time. Finally, you may need to identify resources to accom- plish the project using a resource matrix.

Regardless of whether your project is student or fac- ulty generated, one of the first things you should do when assigned to a project is to learn about the company or other organization that wants the project to be com- pleted. Why did they select this project? Is it a must- do project or did it get chosen over other competing projects? By understanding what makes the project so important, you will make better decisions and will be more motivated through the term. If your project is a must-do project, explain why. If it is not a must-do

project, explain how it was selected. Explain where it fits in priority with other work of the organization.

CASA DE PAZ DEVELOPMENT PROJECT

Casa de Paz is an ambitious project with several dimensions to it. There is a shelter that provides six-month housing for families, along with professional services to support a process of healing and transformation. There is a support group for women that serves residents and nonresidents alike.

The early meetings for Casa de Paz include seeking volun- teers to serve on the board and the three main working groups. Then a facilitated meeting is being held to determine the minimal viable product (MVP) to build. This is an open and operating facility. Some of the features that are needed include a director, staff, a building, remodeling the building, funding, a website, programming, and volunteers. Organiza- tional responsibilities also must be defined. An important question is: What can Casa de Paz do quickly without waiting for other things to happen? What are some of the things they need to do concurrently? How many projects can each of the groups (the board and the three working groups) realistically begin right away?

Armed with the answers to these questions, each of the probable projects should have an elevator pitch:

What is included and why is it important? Then the most critical few projects can be selected, resourced, and chartered.

An example of an elevator pitch is: There is a need to acquire a building and there is competition for both buildings under consideration. One building is more attractive than the other as the cost is considerably less although the number of families served would be less.

Another elevator pitch is the need for website develop- ment. A fledgling website exists, but there are so many communication, fundraising, volunteer soliciting, and other possible uses of the website that early development is attractive. The elevator pitch could answer the following questions:

Why is enhancing the website so important? How can the website help us do other work we desire to perform? Where are we now? What do we want?

56 Part 1 Organizing Projects

PROJECT M ANAGEM ENT IN ACTION

Prioritizing Projects at LADD LADD s project prioritization process introduced at the start of this chapter brought along a few sur- prises. It was not a clean and quick process. With a staff of seven directors in the room, all with varying levels of experience and understanding, many con- versations transpired requesting clarification and explanation on why peers used criteria to rank pro- jects higher or lower than the overall average. The wall of the board room was covered with paper that contained projects, numbers, and many markings that could be deciphered only by those involved in the process. Some directors provided unsolicited advice as to why their program s project deserved higher marks. Such requests were generally met with equal banter, advocacy for one s own project, and

ultimately ended in a fruitful discussion that resolved any discord.

As projects were scored and then ranked, the outcomes were not always predictable. A project such as the film festival emerged as the top priority because it was so closely linked with the scored cri- teria of generating revenue and having a large com- munity impact. Creating an infrastructure for IT needs was last because it would cost a significant amount of money and have no direct return for the individuals LADD supports. From the process, it was evident that a small handful of projects were nonne- gotiable and would require completion in order to establish a base for other larger, more impactful projects.

Ultimately, the leadership team was able to create a plan of action that is scheduled to accomplish all of the objectives outlined in the strategic plan in a delib- erate, organized manner within the five-year timeline. LADD s leadership team members assumed the title of project manager for the majority of projects. They will work across departments, employing the strengths of many and be held accountable to their peers weekly when the prioritization plan is reviewed at the direc- tor s meeting.

Although in its infancy, LADD has taken the top- ranked 12 projects and broken down quarterly expected outcomes for each. The outcomes may be revenue based and focused on generating income for the organization or task based with a method of planning and implementation. Whatever the method, program managers are held responsible for the project being supervised, and project progress will be reported directly to LADD s board of directors. Such a framework allows for accountability all the way through the organizational structure and a con- clusively better service provision for those who LADD supports.Exhibit 2.16 illustrates the prioritiza- tion process with the highest ranked projects selected by LADD and shows the five criteria used to do so.

Re el

A bi

lit ie

s Fi

lm Fe

st iv

al ,

Ci nc

in na

Chapter 2 Project Selection and Prioritization 57

References A Guide to the Project Management Body of Knowledge

(PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management Institute, 2017).

Barclay, Colane, and Kweku-Muata Osei-Bryson, Toward a More Practical Approach to Evaluating

Programs: The Multi-Objective Realization Approach, Project Management Journal 40 (4) (December 2009): 74 93.

Brache, Alan P., and Sam Bodley-Scott, Which Impera- tives Should You Implement? Harvard Management Update, Article reprint no. U0904B (2009).

Cannella, Cara, Sustainability: A Green Formula, 2008 Leadership in Project Management 4: 34 40.

Caron, Franco, Mauro Fumagalli, and Alvaro Riga- monti, Engineering and Contracting Projects: A Value at Risk Based Approach to Portfolio Balanc- ing, International Journal of Project Management 25 (2007): 569 578.

Chinta, Ravi, and Timothy J. Kloppenborg, Projects and Processes for Sustainable Organizational Growth, SAM Advanced Management Journal 75 (2) (Spring 2010): 22 28.

Cooper, Robert G., Winning at New Products: Path- ways to Profitable Innovation, Proceedings of PMl Research Conference 2006 (Newtown Square, PA: Project Management Institute, 2006).

Daft, Richard L., Management, 9th ed. (Mason, OH: South-Western Cengage Learning, 2010).

Eager, Amanda, Designing a Best-in-Class Innovation Scoreboard, Technology Management (January February 2010): 11 13.

Evans, R. James, and William M. Lindsay, Managing for Quality and Performance Excellence, 8th ed. (Mason, OH: South-Western Cengage Learning, 2011).

State of Federal Information Technology, https://cio. gov/wp-content/uploads/filebase/cio_document_ library/CIO-Council-State-of-Federal-IT-Report- January-2017(12).pdf, accessed April 14, 2017.

Kenny, John, Effective Project Management for Stra- tegic Innovation and Change in an Organizational Context, Project Management Journal 34 (1) (March 2003): 43 53.

Kloppenborg, Timothy J., Arthur Shriberg, and Jayashree Venkatraman, Project Leadership (Vienna, VA: Management Concepts, 2003).

Kloppenborg, Timothy J., and Laurence J. Laning, Strategic Leadership of Portfolio and Project Man- agement (New York: Business Expert Press, 2012).

Labuschagne, Les, and Carl Marnewick, A Structured Approach to Derive Projects from the Organiza- tional Vision, Proceedings of PMI Research

EXHIBIT 2.16

LADD PROJECT SELECTION AND PRIORITIZATION MATRIX

PROJECT MISSION (10)

FINANCE (9)

WORKFORCE (8)

RELATIONSHIPS (8)

COMMUNITY (7) TOTAL

Film Festival 40 36 32 32 35 175

Expand meaningful community-inclusion activities

50 27 32 40 21 170

Develop Victory Parkway site

50 36 16 40 28 170

Implement vacation/ respite services

40 36 24 24 35 168

Health and Wellness Program

50 18 40 32 21 161

58 Part 1 Organizing Projects

Conference 2006 (Newtown Square, PA: Project Management Institute, 2006).

Milosevic, Dragan Z., and Sabin Srivinnaboon, A Theoretical Framework for Aligning Project Man- agement with Business Strategy, Project Manage- ment Journal 37 (3) (August 2006): 98 110.

Organizational Project Management Maturity Model Knowledge Foundation, 2nd ed. (Newtown Square, PA: Project Management Institute, 2008).

PMI Requirements Management: A Practice Guide (New- town Square, PA: Project Management Institute 2016).

Practice Standard for Work Breakdown Structures, 2nd ed. (Newtown Square, PA: Project Management Institute, 2006).

Reginato, Justin, and C. William Ibbs, Employing Busi- ness Models for Making Project Go/No Go Decisions, Proceedings of PMI Research Conference 2006 (New- town Square, PA: Project Management Institute, 2006).

Senge, Peter, Bryan Smith, Nina Kruschwitz, Joe Laur, and Sara Schley, The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World (New York: Broadway Books, 2008).

Smallwood, Deb, and Karen Furtado, Strategy Meets the Right Projects at the Right Time, Bank Systems & Technology 46 (4) (June July 2009): 34.

The Standard for Portfolio Management, 3rd ed. (New- town Square, PA: Project Management Institute, 2013).

The Standard for Program Management, 3rd ed. (New- town Square, PA: Project Management Institute, 2013).

Steffey W. R., and V. Anantatmula, International Projects Proposal Analysis: Risk Assessment Using Radial Maps, Project Management Journal 42 (3) (2011): 62 74.

Wheatley, Malcolm, Beyond the Numbers PMNetwork 23 (8) (August 2009): 38 43.

Zhang, Weiyong, Arthur V. Hill, Roger G. Schroeder, and Keyin W. Linderman, Project Management Infrastructure: The Key to Operational Performance Improvement, Operations Management Research 1 (1) (September 2008): 40 52.

http://en.wikipedia.org/wiki/Triple_bottom_line, accessed February 2, 2010.

http://www.gcbl.org/about, accessed March 12, 2013. http://www.bia.ca/vision.htm, accessed March 5, 2013. http://ocio.os.doc.gov/s/groups/public/@doc/@os/

accessed February 7, 2017. @ocio/@oitpp/documents/content/prod01_002082.pdf,

accessed March 6, 2013. https://topnonprofits.com/examples/vision-statements/,

accessed January 9, 2017. http://www.sustainablecleveland.org accessed February

7, 2017. http://www.ecowatch.com/cleveland-a-green-city-on-a-

blue-lake-1882095827.html, accessed January 9, 2017. http://www.internetsociety.org/who-we-are/organiza-

tion-reports-and-policies/internet-society-2015- action-plan, accessed February 7, 2017.

http://pmzilla.com/proposal-evaluation-techniques- source-selection-criteria accessed February 7, 2017.

Endnotes 1. https://topnonprofits.com/examples/vision-statem

ents/, accessed January 9, 2017. 2. http://www.sustainablecleveland.org accessed Feb-

ruary 7, 2017. 3. http://www.ecowatch.com/cleveland-a-green-city-on

-a-blue-lake-1882095827.html, accessed January 9, 2017.

4. Lussier, Robert N., and Christopher F. Achua, Lead- ership: Theory, Application, Skill Development, 4th ed. (Mason, OH: Thomson South-Western, 2010): 425.

5. PMI Standard for Portfolio Management, 3rd ed. (2013): 190.

6. Kloppenborg, Timothy J., and Laurence J. Laning, Strategic Leadership of Portfolio and Project Manage- ment (New York: Business Expert Press, 2012): 21.

7. PMI Standard for Portfolio Management, 3rd ed. (2013): 190.

8. PMI Standard for Program Management, 3rd ed. (2013): 178.

9. Federal_CIO_Roadmap-[2010.07.02].pdf, p. 4, accessed February 7, 2017.

10. PMI Practice Standard for Work Breakdown Structures, 2nd ed. (2006): 121.

11. PMI Requirements Management: A Practice Guide (2016): 77.

12. PMI Business Analysis for Practitioners: A Prac- tice Guide (2015): 207.

13. Steffey, W. R., and V. Anantatmula, Interna- tional Projects Proposal Analysis: Risk Assess- ment Using Radial Maps, Project Management Journal 42 (3) (2011): 62 74.

14. http://pmzilla.com/proposal-evaluation-techniques -source-selection-criteria, accessed February 7, 2017.

Chapter 2 Project Selection and Prioritization 59

C H A P T E R 3

Chartering Projects

Planning a project is similar to putting together a large puzzle. If you were to dump a 1,000-piece puzzle on a table, you would probably not start the detailed planning right away by comparing two pieces randomly to see if they fit. You

would likely take several preliminary steps. Some of these steps might include turning the pieces so the picture side was visible on each, sorting outside pieces so you could form the boundaries, studying the picture on the box, and sorting by color so you could match pieces more easily. (A few more-organized people may like to count and make sure that there are, indeed, 1,000 pieces.) These prelimi- nary steps make the detailed planning of the puzzle much easier and more effi- cient. If completing projects is analogous to putting puzzles together, then project charters are the initial steps. Initiating a project requires some preliminary actions, including understanding the needs and concerns of stakeholders, most critically the project sponsor.

Ball Aerospace & Technologies Corp., Systems Engineering Solutions provides a wide range of air, space, and counterspace engineering and professional ana- lytic services. At Ball, we increase stakeholder buy-in by addressing and thinking about things up front; with an agreed-upon charter, this gives the project team

CHAPTER OBJECTIVES

After completing this chapter, you should be able to:

CORE OBJECTIVES: Describe what a project charter is and why it is critical to project success. List the various ele- ments of a charter and why each is used. Create each section of a charter for a small sample project using given project information.

TECHNICAL OBJECTIVES: Initialize a project in Microsoft Project and set up a milestone schedule.

BEHAVIORAL OBJECTIVES: Work with a team to create a complete charter for a real project and present it to a sponsor for ratification. Negotiate with the project sponsor to develop a realistic and achievable project charter.

A Lo

t O

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op le

/S hu

tte rs

to ck

.c om

60 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

some guidance to effectively plan and execute the effort. In addition, by going through the chartering process, stakeholders take ownership in the project.

At Ball, our project sponsors are typically U.S. government customers, and we provide work for them on a contractual basis. They provide funding and broad direction for our efforts, and we go through a formal proposal process for all our projects. Project sponsors provide initial statements of work or objectives defin- ing their goals for the task and then select among several proposals from inter- ested companies such as Ball to fulfill their requirements. The chosen company is then under an official formal contract to complete the project. This is, in effect, a pre-chartering process.

Typically, after an effort is under contract, a kickoff meeting is scheduled to review the objectives of the project between the project sponsor and the chosen company. This is part of the initiating stage, where stakeholders review and approve the following as part of the project s charter:

Overall project objectives Contrast between technical approach as written in the company s proposal for execution and sponsor expectations Milestones, checkpoints, and potential payment plans Success criteria and schedule Identification of key stakeholders and risks Processes for executing, monitoring, controlling, and overall management of the project

There are a number of things to consider when initiating a project and generat- ing a project charter. These serve as pieces of the overall puzzle of managing and executing a project. A little pre-work in initiating the project goes a long way, with increased goodwill and understanding from the project sponsor, clear tasks and goals for the project team, and a single way forward toward achieving the pro- ducts and services of the project.

Lydia Lavigne, Ball Aerospace

This chapter describes what a project sponsor, manager, and team need to understandto quickly initiate a project. The project then proceeds into planning, and the ele- ments of a charter are planned in as much detail as needed. Chapters 5 through 11 describe project planning.

11.2 Identify Risks

11.3 Perform Qualitative

Risk Analysis

6.5 Develop Schedule

13.1 Identify Stakeholders

Stakeholder Register

11.5 Plan Risk

Responses

4.4 Manage Project Knowledge

Lessons Learned Register

4.1 Develop Project Charter

Project Charter Assumptions Log

PMBOK® GUIDE Topics:

4.1 Develop project charter

4.4 Manage project knowledge

6.5 Develop schedule 13.1 Identify

stakeholders 11.2 Identify risks 11.3 Perform qualitative

risk analysis 11.5 Plan risk responses

MAJOR DELIVERABLES Project Charter Assumptions Log Stakeholder Register Lessons Learned Register

61 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

3-1 What Is a Project Charter? For a project manager, team member, or project sponsor, one of the first and most important project management concerns is a project charter. This short document (usu- ally about three pages) serves as an informal contract between the project team and the sponsor (who represents both senior management of the organization and the outside customer, if there is one).

From a behavioral perspective, the project charter reflects a common understanding and collaboration between the project sponsor and the project manager. Negotiation skills of the project manager also play an important role in developing the project charter.

Since a charter is like a contract, it is helpful to remember what a contract is. First, it is an agreement entered into freely by two or more parties. Second, one party cannot arbitrarily change it. Third, there is something of value in it for each party. Finally, it is a living document that can evolve with changing conditions if both parties agree and receive something of value for making the change. The charter signing represents the transition from the high-level project initiation stage into the more detailed project plan- ning stage. See Exhibit 3.1 for a review of the project life cycle.

The project charter is the deliverable that grants a project manager the right to con- tinue into the more detailed planning stage of a project. This may include only permis- sion to plan the project, permission to make decisions that would slow the project if delayed (such as ordering long-lead materials or hiring special workers), or permission to plan and perform the entire project in the case of a small, simple project. Officially, a charter is drafted by either project manager or sponsor and then negotiated; however, as projects are often conducted in a more collaborative fashion, some organizations are assigning core team members early enough that they can help draft the charter. Also, early input from key stakeholders may be considered.

While either party (the sponsor or the project manager) can write the rough draft, more often than not, the project manager writes the draft charter. Ideally, then, the proj- ect manager and the sponsor candidly discuss each part of the charter. Like a contract, the people who sign a charter are wise to ensure that they understand and agree to all of it. Unlike a contract, however, both parties feel obligated to the spirit (as opposed to the letter) of the charter since the project details have not yet been worked out and specifics will certainly change.

Thinking of a charter like a contract means that both the project manager and the sponsor sign the charter willingly and strive to make the project successful. When core team members have helped write the charter rough draft, they may also sign the charter. If the project man- ager feels bullied into making a change, it is not a free choice. However, the sponsor may legitimately need to insist on receiving the project results more quickly or make some other

EXHIBIT 3.1

PROJECT LIFE CYCLE

Approval: CharterSelection Kickoff Project BenefitsAdministrative closure realizedresultTo proceed

62 Part 1 Organizing Projects

change to the project. In the spirit that one party cannot arbitrarily change a contract, the sponsor would not just tell the project team, I need the project a month sooner and you get no more resources and no relief from any other work responsibilities. Rather, if the project must change, the sponsor needs to consider herself or himself to be a partner with the project team in determining how to accomplish the change.

3-2 Why Is a Project Charter Used? The four major purposes for a charter are to:

1. Authorize the project manager to proceed 2. Help the project manager, sponsor, and team members, if any are already assigned,

develop a common understanding 3. Help the project manager, sponsor, and team members commit to the spirit of the project 4. Quickly screen out obviously poor projects

First, a project charter is a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. 1 Many project managers do not have the authority to commit resources without a charter. This gives the project and the project manager offi- cial status within the parent organization.

Second, everyone involved in the upcoming project needs to develop a common understanding of what the project entails. This includes at least the broad justification for the project, how it aligns with the goals of the parent organization, determination of what is included and excluded in the project scope, rough schedule, success measures, major risks, rough estimate of resource needs, and stakeholders. On larger and more complex projects, additional understanding may be required at this point. Small, simple projects may use a simplified single-page charter. Once everyone has a common under- standing of clear project goals, several additional benefits occur:

Teamwork develops. Agreement, trust, communication, collaboration, and commitment among the spon- sor, project manager, and project team develop. The project team does not worry if management will accept a decision and can focus on the project plan. The sponsor is less likely to unilaterally change the original agreement.2

Third, each person needs to personally and formally commit to doing their level best to achieve the agreed-upon project results even when things do not go as planned. It is a moral duty of all the project team members to commit to the shared goals articulated in the charter. This formal commitment often helps a person decide to keep working hard on a project when things are not going well.

Fourth, a charter is used to quickly screen potential projects to determine which appear to be poor choices. Needless to say, a charter is much quicker to put together than a full, detailed project plan and schedule. If by constructing a charter it is determined that the project is likely to fail, much planning time (and therefore money) will be saved.

Remember, the charter helps all project stakeholders. Charters are often publicly shown to many individuals beyond the project team and sponsor for communication. The culture of some companies is more trusting, competitive, focused on time, preoccu- pied with details, and so on than at other companies. Therefore, charters used in differ- ent industries and companies have somewhat different elements and formats.

Chapter 3 Chartering Projects 63

3-3 When Is a Charter Needed? Project methods can be scaled from very simple to very detailed. Consequently, a project charter can vary in its length from one-page to multiple pages. A project manager wants to use details that are adequate enough to develop a common understanding and agree- ment between the project manager and the project sponsor.

TriHealth has developed both full and mini charters, for large and small projects, respectively. They have also developed the decision matrix shown in Exhibit 3.2 to help people determine if a full charter, mini charter, or no charter is needed.

EXHIBIT 3.2

PROJECT CHARTER DECISION MATRIX

Project Name Date When an improvement, change, or new program is going to be implemented, it is important to first determine whether or not it is a project. If it is a project, TriHealth has specific tools that should be used to guide the planning and implementation. In general, a project is a temporary endeavor undertaken to create a unique product, service, or result. If your project impacts more than one department, requires expertise or resources beyond your own department, or could affect the operations in another area, the standardized templates should be used. Answering the questions below with a check will help you determine what types of tools are needed for your project. Evaluate where the majority of your checks lie and use the most appropriate tool.

Resources Little or no monies, supplies, or change in resources

Requires moderate resources

Requires significant and/or additional FTEs

Multidisciplinary 1 discipline involved/ impacted

2 3 disciplines involved/ impacted or more than one site

More than 3 disciplines involved/impacted

Complexity Little complexity Moderate complexity; affects care delivery

Very complex

Technology Involvement

No technology changes IS consult needed IS resources assigned

Approvals None needed Approval by immediate supervisor

Executive-level approval

Potential Risk Level

Minimal impact on customer

Moderate impact on customer

Significant impact on customer

Staff Commitment Involvement of 2 3 people for solution

Small team needed to generate solutions

Requires large team of multiple departments for improvement

Communication and Education

Simple communication plan or unit-based educa- tion only

Moderate communication plan; requires education across departments

Complex communication/ education plan with various media

Metrics Requires at least a one-time follow-up check

Improvement will be tracked

Baseline and ongoing tracking of data

If the majority of your checks lie in this area:

No charter needed Complete a mini charter Complete a full project charter

Source: TriHealth.

64 Part 1 Organizing Projects

3-4 Typical Elements in a Project Charter The following sections list some of the typical key elements in a project charter. While the intent of most of these sections is included in many charters, some project teams combine sections or leave out a few of them. Furthermore, while the term charter is a widely used stan- dard, some organizations use other names such as project request, project submission form, or project preplanning form. As long as the four purposes of a charter (authorization, understand- ing, commitment, and screening) are accomplished, the exact format and title are negotiable. Typical charter elements and the question each element answers are shown in Exhibit 3.3.

The charter should be short enough so that the project team and sponsor (and any other interested stakeholder) can examine it carefully to ensure they understand and agree. One to four pages in total is generally about the right length.

3-4a Title The existence of a meaningful project title is critical. In an organization with a number of projects, the title can be used to quickly identify which project is being referenced.

3-4b Scope Overview The scope overview and business case sections are the high-level what and why of the project. They are sometimes considered to be the elevator speech that a person would use if given a very short amount of time, such as a one-floor elevator ride, to describe their project. Sometimes, an additional background statement is helpful.

The scope overview is the project in a nutshell: a high-level description of what needs to be accomplished and how it will be done. What needs to be accomplished can be described as the product scope, all the characteristics that must be present in the actual project deliverables or as requirements, each of which is an attribute that needs to be present in order to satisfy a contract, client, or other stakeholder. How it will be done is the project scope, the entirety of what will and will not be done to meet the specified

EXHIBIT 3.3

CHARTER ELEMENTS AND QUESTIONS ANSWERED

CHARTER ELEMENT ANSWERS THE QUESTION

Scope overview What?

Business case Why?

Background Why?

Milestone schedule When?

Success criteria What?

Risks, assumptions, and constraints Whoa!

Resources How much?

Stakeholders Who?

Team operating principles How?

Lessons learned How?

Signatures and commitment Who?

Chapter 3 Chartering Projects 65

requirements. The scope overview quickly describes the project work and results. The scope overview is used to distinguish between what the project will and will not do. It is used to help prevent scope creep, which is an incremental increase in the work of a project without corresponding adjustments to resources, budget, or schedule. The scope overview can be considered to define project boundaries. It states what is included and what is not at least at a fairly high level.

Quantifying the scope, such as 15 touch points will be included, helps everyone to better understand the project s size. If a project could be compared to an animal, the scope overview briefly describes both the size and features so one can tell if it is a rabbit or an elephant. By understanding what is included and what is not, the project team is more likely to accurately estimate cost, resource, and schedule needs and to understand and handle project risks.

3-4c Business Case The business case is the project purpose or justification statement. It answers the ques- tion why? and helps all parties understand the purpose of the project. A business case is used to justify the necessity of the project. It should clearly tie the project to the orga- nization s strategy and explain the benefits the organization hopes to achieve by autho- rizing the project or the strategic goals it meets.

Depending on the organization, a business case can either be just the rationale for the project, or it can also include high-level estimates of the costs and benefits of the project. A business case may also include emotional and ethical reasons for performing the proj- ect. A well-written business case should persuade decision makers to support the project and inspire the project team members and key stakeholders to work hard toward suc- cessful completion of the project.

3-4d Background Many people are quite busy and prefer short statements that can be quickly reviewed. Key project stakeholders should know enough about the project after reviewing the short scope overview and business case statements, as these statements will provide all of the information they need to know. Some other stakeholders may need more details to understand the rationale and purpose behind these statements. A more detailed back- ground statement may be helpful in these cases.

Unlike the first two statements, which should be limited to about two to four sen- tences each, the background statement can be any length. The background statement is purely optional develop one only when it is necessary.

3-4e Milestone Schedule with Acceptance Criteria The milestone schedule is a high-level plan that indicates a few significant accomplish- ments that are anticipated over the life of the project. It divides the project into a few (about three to eight) intermediate points or milestones whose completion can be veri- fied. The team estimates a date when they expect to complete each milestone. A mile- stone schedule should list major milestones and deliverables that the project team especially wants to ensure are completed both on time and to the satisfaction of key deci- sion makers. The milestone schedule is considered very useful for communicating with the key stakeholders who are not actively involved with the project.

A deliverable as defined in Chapter 1 is a unique and verifiable product, result, or capabil- ity to perform a service that is required to be produced to complete a process, phase, or project. 3 Requirements of a deliverable are often translated into specifications so that the deliverable can be validated, qualified by measurable conditions, and bounded by constraints.

Sometimes, milestones occur right before the approval of a large expenditure. At other times, they occur at completion of a critical design, a key deliverable, or a major

66 Part 1 Organizing Projects

AGILE

accomplishment of the scope. It is helpful to identify the relatively few milestones and key deliverables in the project that the team and sponsor wish to check closely.

Adding a column for acceptance criteria factors to the milestone schedule helps the project team understand who will judge the quality of the deliverable associated with each milestone and what criteria will be used for that determination. Acceptance criteria stipulate which conditions must be met in order for the deliverables to be approved.

Acceptance criteria are like the project s vital signs. A paramedic would check pulse, breath- ing, maybe skin color, and body temperature immediately when answering a 911 call. Other tests are not as critical and may be performed, just not immediately. It is important to identify the vital signs for the project. Project success is easy to measure after the project is complete. The equally important, but often more challenging, decision is how to measure success while the project is progressing so there is still time to make changes if necessary.

Another way to understand acceptance criteria is to understand how a key stakeholder such as the sponsor, customer, or end-user is going to determine if the deliverables created are of good enough quality to accept. Since some of the milestones are often preliminary (drafts, prototypes, concepts, outlines, etc.), it is helpful to have the same person who will judge the final project deliverables judge them at the intermediate milestones. By doing this, the decision maker is much less likely to state at the end of the project, No, that is not what I meant. Including advance understanding of criteria is similar to the old saying that a trial lawyer never asks a question without knowing how the witness will answer. An astute project manager never turns in a deliverable without knowing how it will be judged. An example of a milestone schedule is shown in Exhibit 3.4.

One key concept in Agile projects is that something of value will be delivered at each iteration. Something of value for IT projects means working software. For other projects, it still refers to something the user can use not just documentation. An agreement is reached during iteration planning on the definition of done meaning exactly how each feature and function must perform. This is comparable to deliverables with accep- tance criteria for each milestone as just described.

3-4f Risks, Assumptions, and Constraints A risk is an uncertain situation that could negatively or positively affect the project if it occurs. Assumptions are suppositions made during project planning that are treated as correct or factual, though they have not been proven. Project teams frequently identify, document, and validate assumptions as part of their planning process. Assumptions

EXHIBIT 3.4

MILESTONE SCHEDULE EXAMPLE

MILESTONE DATE WHO JUDGES ACCEPTANCE

1. Existing facility 9-19-16

2. Site visit/audit 9-22-16 PM/Customer Site data verified

3. Design and approval 10-22-16 Customer Customer approval

4. Equipment deliverables 12-2-16 Engineering & Manufacturing B.O.M. check

5. Project execution 1-6-17 Installation & Customer Commissioned

6. System turnover 1-13-17 Customer System throughout of 35,000 cases per day

Chapter 3 Chartering Projects 67

generally involve a degree of risk. A constraint is anything that limits the implementa- tion of a project.

Taken together, assumptions and constraints are what could cause project problems. They are included with risks so that all of the key participants sponsor, project manager, and core team are aware in advance of what could prevent them from successfully completing the project. While it is unrealistic to believe that the team can think of every single thing that could go wrong, the more comprehensive this section is, the more likely the team is to uncover problems before they occur and while there is time to easily deal with them.

If an assumption turns out to be false, it becomes a risk. A constraint that limits the amount of money, time, or resources needed to successfully complete a project is also a risk. Some organizations, especially for small projects, group all risks, assumptions, and constraints together, while others handle each as a separate char- ter section. The most important point is not how each is managed, but that each is managed.

Project managers and teams should look at risks for three reasons. First, any negative risk that is a threat that may inhibit successful project completion (to the satisfaction of stakeholders, on time, and on budget) needs to be identified. And, if it is a major risk, a plan must be developed to overcome it. Second, a positive risk is an opportunity to com- plete the project better, faster, and/or at lower cost or to capitalize upon the project in additional ways, and a plan should be developed to capitalize upon it. Third, sometimes there is more risk to the organization if the project is not undertaken and this provides additional rationale for doing the project.

For each major negative risk identified, an owner is assigned responsibility. Then one or more response plans are normally developed to either lessen the probability of the risk event from happening in the first place and/or to reduce the impact if the risk event should materialize. Sometimes, transferring the risk to a third party makes sense. The goal is not to eliminate all risk, but to reduce the risk to a level that decision makers deem acceptable.

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68 Part 1 Organizing Projects

3-4g Resource Estimates Remember that executives consider projects to be investments. The scope overview and busi- ness case sections of the charter describe the return expected, while the resources section describes what will be invested. These sections collectively help decision makers determine if the project is worth approving. Resources include the workers, tools, equipment, and anything else needed in order to execute your project. Since executives consider projects to be invest- ments of resources, they will want a rough estimate. This can be an estimate of the amount of staff time, equipment, or materials that are in short supply, and/or the amount of money that is required. Since there is only very general understanding of the project at this point, any budget will also be approximate and should be stated as such by calling it a preliminary budget and including the level of confidence one has in the estimate; this is often expressed in per- centage terms (such as plus or minus 50 percent) regarding the accuracy of the estimate.

On some internal projects, the pay for the associates who work on the project often comprises much of the expense. Frequently, however, at least a few expenses are incurred. It is helpful to identify which expenses the project manager can authorize and which the sponsor needs to control.

3-4h Stakeholder List Project success is partially dictated by identifying and prioritizing stakeholders, managing robust relationships with them, and making decisions that satisfy stakeholder objectives. Therefore, it is good practice to identify and prioritize stakeholders early in a project.

3-4i Team Operating Principles Team operating rules or principles are sometimes established to enhance team perfor- mance. The goal is to increase team effectiveness and ensure that all parties are aware of what is expected. Team operating principles that are especially useful are those that

The key players of a project show their commitment to the project by signing the commitment section of the charter.

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Chapter 3 Chartering Projects 69

deal with conducting meetings, making decisions, accomplishing work, and treating each other with respect. This concept is further elaborated on as a Team Charter in Chapter 5 because some organizations will choose to create a separate team charter instead of including team operating principles in their project charter.

3-4j Lessons Learned While every project is unique, a great deal can be learned from the successes and failures of previous projects and turned into practical advice. Lessons learned represent the knowledge acquired by the project team throughout the project planning and execution, including things that should be replicated and things that should be avoided on future projects. To ensure that lessons learned are used, a sponsor should only sign a charter authorizing the project to begin when at least one or two good, specific lessons from the successes and/or failures of recently completed projects are included. This essentially forces the new project manager and team to look at the organization s lessons learned repository to find applicable learnings. A lessons learned register is an accumulation of the knowledge gained during previous projects selection, planning, and executing that can be easily referenced to help with planning and executing future projects. These lessons could be stored in a dedicated database, on a shared drive, or in a less formal manner. The database should be intuitive to use, and it should be easy to retrieve relevant information. It is important for new project teams to learn together; otherwise, they risk repeating mistakes from previous projects.

3-4k Signatures and Commitment The commitment section of the charter lists who is involved and sometimes describes the extent to which each person can make decisions and/or the expected time commitment for each person. This is where the project sponsor, project manager, and perhaps core team members publicly and personally show their commitment to the project by signing the char- ter. By formally committing to the project, the key players are more likely to keep working hard during difficult periods and see the project through to a successful conclusion.

3-5 Constructing a Project Charter It is wonderful if the sponsor can work with the project manager and possibly core team members who have been preassigned to construct the charter. The sponsor, however, as a busy executive, often does not have time to be present for the entire chartering period. In those cases, it is very helpful if the sponsor can create the first draft however crude of the scope overview and business case. A sponsor s ability to tell the project manager and core team concisely what the project is and why it is important gets the team off to a good start. If the sponsor wants the team to consider any important constraints, assumptions, risks, or other factors, she can help the team by pointing that out up front.

Sometimes, on an especially important project, the organization s leadership team may draft more than just the business case and scope overview statements. If the leadership team feels something is very important, they can save everyone time by just stating it up front. Like- wise, if the sponsor knows he or she will only approve a charter with one of the elements writ- ten a particular way, he or she should tell the team that up front. Otherwise, the project manager, possibly with the core team, most frequently writes much of the rough draft.

3-5a Scope Overview and Business Case Instructions When possible, the first draft of these two sections should be provided by the sponsor or the leadership team. One to four sentences for each is enough but it needs to be in

70 Part 1 Organizing Projects

writing. Many teams find that, because these are the what and why of the project, it is easier to work on them at the same time. Teams often brainstorm key ideas and then craft the parts on which they agree into smooth-flowing statements. If the sponsor pro- vides a first draft of these sections, the project manager and core team carefully dissect it to ensure they both understand and agree. The project manager and team frequently propose refinements on the original draft.

Scope overview and business case examples are depicted in Exhibit 3.5.

3-5b Background Instructions The project manager and team decide whether this optional section is necessary for their project as they construct the scope overview and business case. If the scope overview and

EXHIBIT 3.5

SCOPE OVERVIEW AND BUSINESS CASE EXAMPLES

PHASE II MULTICENTER TRIAL SCOPE OVERVIEW This project will initiate a Phase II multicenter clinical trial at Cincinnati Children s Hospital Medical Center (CCHMC). The trial will be conducted at five medical centers in the United States to investigate the safety and efficacy of an investigational drug s abil- ity to improve cognitive functioning and quality of life in pediatric patients with Tuberous Sclerosis Complex. The project is a follow-up study of a Phase I clinical trial conducted at CCHMC.

ONLINE TUITION REIMBURSEMENT PROJECT SCOPE OVERVIEW This project will design, develop, and implement an online tuition reimbursement system that will provide employees with a self- service tool to submit a request for tuition reimbursement payment. This project will incorporate a workflow process that will do the following:

Move the request to the appropriate personnel for approval. Alert the employee of any additional items necessary for processing the request/ Upon approval, send the request to payroll for final processing. Notify the employee of payment processing.

DEVELOPMENT OF A BIOLOGICAL RESEARCH SPECIMEN SHIPPING CENTER PROJECT BUSINESS CASE The purpose of this shipping center is to provide professional shipping services and supplies for CCHMC employees who are responsible for shipping biological specimens as part of research. This shipping center will improve compliance, streamline ship- ping processes, enhance research productivity, reduce time and money invested in employee training, and reduce potential liability for noncompliance.

ESTABLISHING A SECOND PULMONARY FUNCTION TESTING (PTF) LAB PROJECT BUSINESS CASE An additional PTF lab will enhance patient access by:

Decreasing wait times and Providing a convenient location close to primary care appointments.

It will also improve patient outcomes by assisting in: Diagnosis, Accurate assessment, and Chronic management of pediatric lung disease.

In addition, establishing a PFT lab will increase revenue by: Increasing availability of PTF and Increasing community referrals for PFT.

Source: Cincinnati Children s Hospital Medical Center.

Chapter 3 Chartering Projects 71

business case seem detailed enough for all important stakeholders, an extra background section may not be needed. If necessary, the team probably brainstorms ideas and then combines them into a single smooth statement. An example of a background statement for a project to start a new co-op business is shown in Exhibit 3.6.

3-5c Milestone Schedule with Acceptance Criteria Instructions The first step in the iterative process of developing a project schedule is to define major milestones. This section of the charter can be developed most effectively by focusing on why you are doing a project before diving into all of the details. A method of depicting all of this information so it is simple to understand is to set up a four-column table with Mile- stone, Completion Date, Stakeholder Judge, and Acceptance Criteria heading the columns. An example of a milestone schedule with acceptance criteria for a project converting to a centralized electronic record system for a major research hospital is shown in Exhibit 3.7.

SIX STEPS IN CONSTRUCTING A MILESTONE SCHEDULE The most effective way to construct the milestone schedule with acceptance criteria is to use the six-step proce- dure described below. Identifying the end points first (Steps 1 and 2) helps project teams avoid the problem of sinking into too much detail too quickly. Note that dates are the final item to be identified. It is unethical for a project manager to agree to unrealistic dates. Even though the milestone schedule is not very detailed, it is the first time a team thinks through how the project will be performed and how long it will take at each point. This allows a bit of realism in the schedule.

Step 1 The first task is to briefly describe (in three or four words) the current situa- tion that requires the project and place this description in the first row of the milestone column. The current state may be a shortened version of the business case. The starting point for many projects is either something that exists, but does not work as well as desired, or a desire exists for something completely new. However, the starting point for some projects is the ending point of a previous project. Keep the description very short, and it will form an effective starting place. In Exhibit 3.7, the problem was paper records that were not centralized.

Step 2 Once the current state is agreed upon by the project manager and team, skip to the desired future state. Describe the project (or phase if there will be future phases) at its successful completion in three or four words. Put this description in the last row of the milestone column. It is hard for many core teams to distill this to the ideal three or four words, but keeping it concise helps the team develop a better understanding of what is

EXHIBIT 3.6

BACKGROUND SECTION EXAMPLE

Interfaith Business Builders is an organization of diverse Cincinnatians that develops and promotes community-based, employee-owned and -operated cooperative businesses (co-ops). Our co-ops cre- ate new jobs and ownership opportunities for low-income people in sustainable local businesses. Members of IBB come from a variety of faith and social backgrounds, share a passion for social jus- tice and the empowerment of people, and value community, cooperation, opportunity, and solidar- ity. Our cooperatives are businesses that follow these seven principles: voluntary and open membership; democratic member control; members economic participation; autonomy and inde- pendence; education, training, and information; cooperation among cooperatives; and concern for community.

72 Part 1 Organizing Projects

truly most important. If the current project is a phase of a larger project, also write briefly what the final successful result of the last future stage will be. In Exhibit 3.7, the desired future state is to have records centralized and available in electronic form, and the ultimate goal is for seamless information flow throughout the organization. More work will need to be completed beyond this project to reach that ultimate goal. Since contemporary project management is often iterative, many projects are part of a larger goal.

Step 3 Next, describe the acceptance criteria for the final project deliverables (at the future state). What stakeholder(s) will judge the deliverables, and on what basis? Exactly how will they become confident that the project results will work as desired? These sta- keholders will almost always demand a demonstration of project results. The project team wants to understand what that demonstration will be at this early point so they can plan to achieve it. Note that there very well could be multiple stakeholders and mul- tiple methods of ensuring the project results are satisfactory. At this point, strive to iden- tify the most important stakeholders and acceptance criteria. Place these in the bottom row of the third and fourth columns. In Exhibit 3.7, the sponsor wants a representative from each department to show they can enter and retrieve pertinent data.

Step 4 Now, go back to the milestone column. Determine the few key points where quality needs to be verified. On most small to medium-sized projects, approximately three to eight intermediate points are satisfactory. Start by identifying the three most important

EXHIBIT 3.7

MILESTONE SCHEDULE WITH ACCEPTANCE CRITERIA EXAMPLE

COMPLETION DATE MILESTONE STAKEHOLDER JUDGE ACCEPTANCE CRITERIA

Current state: Paper, noncentralized records

Needs assessment 28-Feb Ops management List of needed features

Hardware selection 15-Apr Ops management, CIO Hardware choice with contract

Vendor selection 30-May Ops management Vendor choice with contract

Installation and configuration 15-Jul Application specialist, IS department head

Functional software in test environment

Conversion 31-Aug Application specialist, IS department head

All files converted

Testing 15-Oct Application specialist, IS department head

Sign off on test

Training 30-Nov Ops management, HR Sign off on training

Future state: Electronic, centralized records

30-Nov Sponsor Ability to enter and retrieve information from all departments

Ultimate goal Seamless information flow throughout organization

Chapter 3 Chartering Projects 73

AGILE

intermediate points, and add more if necessary. If you need to identify considerably more major deliverables at this point, you might consider splitting your project into phases and concentrate on the first phase for now. Satisfactory completion of each milestone will be determined by how the sponsor and other stakeholders will judge your performance. They should be in enough detail so stakeholders are comfortable with your progress, yet not so detailed that you feel micromanaged. The project in Exhibit 3.7 has seven milestones.

On Agile projects, the first iteration is planned as a milestone with acceptance criteria just as described above. Rather than have a defined set of milestones, an agile charter after the first milestone is more of a general roadmap of the product. Subsequent mile- stones and acceptance criteria are determined on a just-in-time (JIT) basis.

Step 5 Now, for each milestone, determine who the primary stakeholder(s) is and how he or she will judge the resulting deliverable. Remember, these are intermediate deliverables, and often it is not as easy to determine desired performance. One idea to keep in mind: if practical, ask the person who will judge the overall project results at the end to judge the intermediate deliverables also to make sure you are on the right track. Quite a few different stakeholders will judge various milestones in the project in Exhibit 3.7.

Step 6 Finally, determine expected completion dates for each milestone. Do not be overly optimistic or pessimistic. You will be at approximately the right level of detail if you have a milestone somewhere between every one and six weeks on many projects. Obviously, there will be exceptions for especially large or small projects. Most of the milestones in the project in Exhibit 3.7 are about six weeks apart.

Some companies that perform many projects use templates to guide their project teams through chartering and other activities. An example of a template for the mile- stone schedule and acceptance criteria for a Six Sigma project is shown in Exhibit 3.8.

EXHIBIT 3.8

SIX SIGMA MILESTONE SCHEDULE AND ACCEPTANCE CRITERIA TEMPLATE

Measure

Analyze

Improve

Control Future State

Current Situation Define Problem in operational terms

Customers and metrics identified Project schedule and assignments

Causal relationships defined Data gathering procedures approved Sufficient data gathered

Potential variables identified; Root causes statistically proven

Problem resolution ideas gathered Solution evaluated and confirmed Solution implemented

Standards, procedures, training in place

74 Part 1 Organizing Projects

3-5d Risks, Assumptions, and Constraints Instructions First, the project manager (possibly with core team members, sponsor, and/or key stake- holders if available) should brainstorm all the things that could pose a risk to the project schedule, budget, usefulness of any project deliverables, or satisfaction of any project stakeholder. This is the process of risk identification. All of the risk processes will be covered in more detail in the risk planning chapter. Constraints that limit choices and unproven assumptions can be identified. Assumptions are especially important when a cross-functional team is performing the project because some team members may make vastly different assumptions based upon the manner in which work is normally accom- plished in their respective departments. The brainstorming often works very well with each team member writing one risk, constraint, or assumption per Post-it Note. On large, complicated projects, risks, assumptions, and constraints may form separate sec- tions of a charter. An assumptions log is often created as a living document to record all assumptions and the findings of whether they proved to be true or false. However, in this book, we deal with them together. From this point forward, all risks, assumptions, and constraints are simply referred to as risks.

Either the project manager or one of the team members can then act as a facilitator and assess one risk at a time. Risks can be assessed on probability of occurring and impact if realized. Both dimensions can be shown with a simple continuum of low to high using a flip chart or marker board. The team can agree to assess each risk at any point on the continuum. It works best if one dimension is considered at a time. For example, first ask how likely the risk event is to occur. Only after this is answered, ask how big the impact will be if it happens.

After all risks are assessed, the team needs to decide which of the risks should be con- sidered major risks. That is, which are important enough to require a formal response plan with someone assigned responsibility? The other, more minor risks are not formally considered further in the charter, but they very well may get more attention in the plan- ning and executing stages. This is the process of qualitative risk analysis.

The project team constructs a table depicting each major risk, with its contingency plan and owner. This is the process of planning risk responses.

Examples of risk assessment and major risk response planning for a hardware upgrade project in an Irish factory are shown in Exhibits 3.9 and 3.10, respectively.

3-5e Resources Needed Instructions Armed with the milestone schedule, the project manager and team may be prepared to make crude estimates of the project budget and other resource needs such as people, equipment, or space. It is imperative to describe how the estimates were developed and the level of confidence the team has in them, such as this is a rough order of magnitude estimate only based upon the milestones, and the true project cost could range from 25 percent below this to 75 percent above it. On many projects, especially those with cus- tomers internal to the organization, a budget is not established. However, a limit of spending authority for the project manager is often developed. An example of resources needed for a project is shown in Exhibit 3.11.

3-5f Stakeholder List Instructions Stakeholders are all the people who have an interest in a project. They can be internal or external to the organization, be for or against the project, and have an interest in the project process and/or the project results. The project manager and team begin by iden- tifying all stakeholders and determining which are most important. They next ask what

Chapter 3 Chartering Projects 75

EXHIBIT 3.10

RISK RESPONSE PLANNING EXAMPLE

RISK EVENT RISK OWNER RISK RESPONSE PLAN(S)

Hardware inadequate Edie 1. Techs revise existing hardware 2. Replace hardware

Associates do not have skills to perform key functions

Padraig 1. Train existing associates 2. Hire additional people

Key resource not available Ute 1. Identify external resources to fill need

EXHIBIT 3.9

RISK ASSESSMENT EXAMPLE

Minor risks below the line

Major risks above the line

Hardware inadequate

Associates do not have the skills to

perform key functions

Key resource not available

EXHIBIT 3.11

RESOURCES NEEDED ESTIMATE

MONEY PEOPLE OTHER

Marketing $10,000 Project Manager, 250 hours 1 Dedicated Conference Room

Core Team Members, 500 hours

AV and Communica- tions $5,000

Internal Consultant, 100 hours

Miscellaneous $5,000 Data Analyst, 100 hours

Focus Group Participants, 50 hours

Total $20,000 Total 1,000 hours 1 Room

76 Part 1 Organizing Projects

interest each stakeholder has in the project. A stakeholder list example for a clinical research project is shown in Exhibit 3.12. This is the process of identifying stakeholders, and the resulting list is the start of a stakeholder register. Both will be described in more detail in the stakeholder chapter.

3-5g Team Operating Principles Instructions The project manager and team will decide what project team operating principles they will use. The operating principles establish how meetings will be conducted, how deci- sions will be made, how work will get done, and how everyone will treat each other with respect. Exhibit 3.13 is an example of team operating principles.

3-5h Lessons Learned Instructions Each project by definition is at least somewhat different from any other project. That said, there are many commonalities in how projects can be planned and managed. A project manager and team need to consider what has worked well and what has worked

EXHIBIT 3.12

STAKEHOLDER LIST EXAMPLE

STAKEHOLDER PRIORITY INTEREST IN PROJECT

Institutional Review Board Key Unexpected problems, progress

Food and Drug Administration Key Serious adverse events, progress

Site Principal Investigators Key Protocol, safety reports, changes

Pharmaceutical Company (Customer) Other Serious adverse events, progress

Research Subjects (Patients) Other Purpose of study, risks and benefits, protocol

EXHIBIT 3.13

TEAM OPERATING PRINCIPLES EXAMPLE

1. Team members will be prepared with minutes from previous meeting, agenda, and project updates.

2. Meetings will normally last for up to 90 minutes. 3. Team members will rotate the role of recorder. 4. Each team member will be responsible for setting his or her own deadline. 5. In the event that a team member cannot have his or her assignment complete by

the expected date, he or she must notify the team leader prior to the due date. 6. The team leader will be responsible for drafting the minutes from the previous

meeting and the agenda for the next meeting within 48 hours. 7. Decisions will be made by:

Team leader on ____ issues. Consensus on ____ issues. Delegation on ____ issues.

Chapter 3 Chartering Projects 77

poorly on previous projects when starting a new one. A sponsor is wise not to sign a project charter authorizing work until the project manager and team show they have learned lessons from recently completed projects. One easy way to accomplish this is to have each project report lessons learned at key reviews and at project completion and to have the lessons available to all in a lessons learned knowledge base. The project man- ager and team can then look at the lessons until they find at least a couple that can help them on their project. These lessons are included in the charter. The more specific the lessons, the more likely the team will find them useful. Exhibit 3.14 is an example of project lessons learned.

3-5i Signatures and Commitment Instructions The project sponsor, manager, and team members sign the charter to publicly acknowl- edge their commitment. Sometimes other key stakeholders also sign. An example of a charter signature section is shown in Exhibit 3.15.

EXHIBIT 3.14

PROJECT LESSONS LEARNED EXAMPLE

All parties are responsible for defining and following the project scope to avoid scope creep.

All parties should share good and bad previous experiences.

Aligning team roles to sponsor expectations is critical.

Keep sponsor informed so sponsor stays committed.

Identify any possible changes as soon as possible.

Use weekly updates on project progress to avoid unpleasant schedule surprises. Review previous events for specific lessons.

EXHIBIT 3.15

CHARTER SIGNATURE EXAMPLE

Anne E., Sponsor Signature Date

Signature Date

Karen H., Project Leader Signature Date

Jim B., Team Member Signature Date

Charlie H., Team Member Signature Date

Mitch N., Team Member Signature Date

Katie S., Team Member

78 Part 1 Organizing Projects

3-6 Ratifying the Project Charter The project manager and team formally present the project charter to the sponsor for approval. In some organizations, the leadership team is also present for this meeting. The sponsor (and leadership team members, if present) ideally is supportive, but also ready to ask questions regarding any part of the charter. These questions are for both clarification and agreement. Once all questions are satisfactorily answered including any agreements regarding changes the sponsor, project manager, and core team all sign the project charter and feel bound by it.

Project managers are generally held more accountable for performance than they have the responsibility to direct people to perform. Because of this, project managers must negotiate. Here, we discuss how they need to negotiate a project charter with their spon- sor. Later in the book, we discuss how they often need to negotiate with functional man- agers for the particular people they wish to have work on the project; with customers concerning schedule, budget, scope, and a myriad of details; and with sponsors, suppli- ers, SMEs, and core team members.

Nobody loves a project as much as the project manager does. However, a project manager must remember that negotiations will be smoother if she realizes that everyone with whom she negotiates has their own set of issues and goals.

Regardless of the negotiation size or complexity, the six-step process shown in Exhibit 3.16 can serve as a guide.

The negotiation process is based on the project manager and the sponsor attempting in good faith to reach a solution that benefits both useful deliverables for the sponsor and a manageable process for the project manager.

Step 1 involves advance fact finding to determine what is needed from the negotia- tion. This includes seeking to understand both what the sponsor is likely to want and how he or she may act during the negotiations.

Step 2 is for the project manager to understand the bottom line. What is the mini- mum acceptable result? Just as when buying a car, a project manager needs to under- stand when to walk away. This can vary a great deal depending on how much power each party has. The sponsor is likely to have more power. However, project managers need to understand that if they have the power and take advantage of their negotiation partner, that partner may not work with them on a future project. Therefore, the goal is not to always drive the hardest bargain, but to drive a fair bargain.

Step 3 is for the project manager to understand the underlying needs of the sponsor and to share his or her own needs. This is not a 10-second political sound bite that says take it or leave it. This is developing a real understanding of each other s needs. Once

both parties understand what the other really needs, various creative solutions can be developed. This is the essence of Step 4.

Step 5 consists of the process and strategies of the negotiation itself. It is helpful to keep in mind the ultimate goal while focusing on the many details of information sharing, trading of concessions, and exploring possible solutions. Step 6 is actually a reminder to reach an agreement and then to document that agreement.

3-7 Starting a Project Using Microsoft Project Microsoft (MS) Project is a software application designed to aid project managers in the planning, execution, and assessment of projects. It allows the project manager to track project tasks, set milestones, create corresponding schedules, and administer resources and budgets. Throughout the text (Exhibit 3.16), various MS Project processes will be demonstrated in a series of tutorials using the textbook s running Suburban Homes

Chapter 3 Chartering Projects 79

Construction Project as a basis. A fully functioning demonstration version of MS Project 2016 is available for download from Microsoft.

3-7a MS Project 2016 Introduction MS Project 2016 is part of the Microsoft Office family; therefore, much of the basic interface and interaction with the software should seem familiar. You will find the unique aspects of the application in the project-specific tools and visuals the software provides the project manager. When you first open MS Project, you have the option to create a new (blank) plan, open a recently used or saved plan, or start a plan based on a template. The following overview showcases the visible features of the main MS Project interface once a blank project has been created.

1. Ribbon As with other Microsoft Office applications, the ribbon bar along the top of the interface contains the controls (or access to controls) used to develop and manipulate your project data. Controls are logically grouped in the following tabs:

FILE includes familiar commands such as Open, Save, Print, and Options. TASK, RESOURCE, and PROJECT tabs allow task, resource, and project data entry and adjustment. REPORT offers a variety of customizable visual and print reports of project data. VIEW offers multiple ways to visualize your project data, including Calendar, Gantt Chart, Network Diagram, Resources, and Teams. A split (or combina- tion ) view is also available, providing two different types of data displays at once. FORMAT displays formatting controls that apply to the current active view. The For- mat tab header (above the tab) identifies the currently active view (e.g., Gantt Chart).

2. Quick Access Toolbar As with other Microsoft Office applications, this customizable area allows you to create shortcuts to regularly used commands.

3. Project Schedule Details View Pane(s) Below the ribbon is the project data view pane that displays information about the project. MS Project offers several different views, but the default setting is a split, dual display of the project Timeline and Gantt

EXHIBIT 3.16

NEGOTIATION PROCESS

STEP EXPLANATION

1. Prepare for negotiation. Know what you want and who you will negotiate with.

2. Know your walk-away point. Determine in advance the minimum you need from the negotiation.

3. Clarify both parties interests. Learn what the other party really wants and share your true interests to determine a common goal.

4. Consider multiple options. Brainstorm multiple approaches even approaches that solve only part of the issue.

5. Work toward a common goal. Keep the common goal in mind: seek and share information, make concessions, and search for possible settlements.

6. Clarify and confirm agreements. Agree on key points, summarize, and record all agreements.

Source: Adapted from Aldag, Ramon J., and Loren W. Kuzuhara, Mastering Management Skills: A Manager s Toolkit (Mason, OH: Thomson South-Western, 2005): 129 132; and Baldwin, Timothy T., William H. Bommer, and Robert S. Rubin, Developing Management Skills: What Great Managers Know and Do (Boston: McGraw-Hill, 2008): 307 318.

80 Part 1 Organizing Projects

Chart views in an upper and lower pane. Although both are visible, only one view is active (indicated by a colored view name label on the far-left end of the view pane). The active view can be changed in the View tab or with the View Shortcut buttons.

Timeline View: The Timeline View shows you the big picture of your project schedule. Milestones or other key activities can be marked and highlighted in the timeline to help better visualize the project. Gantt Chart View: The Gantt Chart is a commonly used tool to represent a proj- ect schedule. Once a list of project task details is inputted into the table on the left-hand side of the view, horizontal bars populate the right side to graphically represent each task against a calendar along the top of the view.

4. Zoom Slider The zoom slider is useful in any view that contains calendar data. It quickly changes the timescale by sliding left or right.

5. View Shortcuts View Shortcuts provides a quick switch from the active view to five different views: Gantt Chart, Task Usage, Team Planner, Resource Sheet, and Report.

6. Scheduling Mode selector Scheduling Mode reports the default scheduling mode (manual or automatic) for each new task. To change it, click Control and choose the desired setting from the list (a change only applies to the active schedule). See the next section for more on Scheduling Mode.

3-7b Setting up Your First Project There are two scheduling modes in MS Project 2016: Auto Scheduled and Manually Scheduled. Auto scheduling calculates the project s running schedule based on task start and finish dates, as well as other changes you might make in the future. Manually Sched- uled is the default setting, but we will change that immediately to take advantage of the

EXHIBIT 3.17

CHAPTER CHAPTER TITLE MS PROJECT PROCESS

3 Chartering Projects Introduce MS Project 2016; Set up a project; Create a milestone schedule

7 Scope Planning Set up a work breakdown structure (WBS)

8 Scheduling Projects Set up schedule; Build logical network diagram; Understand the critical path; Display and print schedules

9 Resourcing Projects Define resources with calendars; Assign resources, including modifications; Find and resolve over-allocations

10 Budgeting Projects Develop project budget

12 Project Quality Planning and Project Kickoff

Baseline the project plan

14 Determining Project Progress and Results

Update and report on project schedule

15 Finishing Projects and Realizing Benefits Close projects

Chapter 3 Chartering Projects 81

program s automatic scheduling powers. To change the scheduling mode, do the follow- ing (Exhibit 3.18):

7. With a blank, new project open, click File tab>>Options>>Schedule. 8. In the Scheduling options for this project section:

Change the dropdown to All New Projects Change the New tasks created option to Auto Scheduled

9. Click OK.

Note: This action sets all future projects you may start in MS Project to Auto Sched- uled. These options allow you to change this setting on a project-by-project basis, or you can simply click the Scheduling Mode Selector shortcut on the left-hand side of the bottom status bar and choose your desired scheduling method.

3-7c Define Your Project Next, you need to define your project by entering the following information:

1. Set the project start date (Exhibit 3.19) Click Project tab>>Project Information In the dialog box, enter your project s start date (e.g., Mon 10/16/17) Click OK; you ll notice Timeline View has updated with your start date!

2. Enter identifying information about the project (Exhibit 3.20). Click File tab

EXHIBIT 3.18

SET AUTO SCHEDULE

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

82 Part 1 Organizing Projects

On the right-hand side of the screen, click Project Information>>Advanced Properties. In the Summary tab, enter Suburban Park Homes in the Title box Add other information as needed for future reports Click OK

3. Generate a Project Summary task row (Exhibit 3.21) Creating a Project Summary task row gives you another overview of the entire

project in the top row of the Gantt Chart view Click File tab>>Options>>Advanced On the Advanced page, scroll to the Display options for this project section Click the checkbox for Show project summary task Click OK; you ll notice a new summary row at the top of the Gantt Chart table!

3-7d Create a Milestone Schedule You will now create a milestone schedule that will capture significant deliverable comple- tion dates and be viewable in your Gantt Chart view.

Click the Gantt Chart view to make it active Enter the milestone names from the Suburban Park Homes project in the Task Name cells below the Project Summary row (You can find milestone information from the project on page 91.) In the Duration cells, use the up/down arrows to set each milestone s value to zero

EXHIBIT 3.19

SET PROJECT START DATE

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

Chapter 3 Chartering Projects 83

For each milestone row: a. Double-click the milestone name to activate the Task Information dialog box

(Exhibit 3.22) b. Click the Advanced tab; change the Constraint type to Must Finish On c. In the Constraint date box, enter the milestone date d. Click OK

Your milestone schedule in the Gantt Chart view should now look like the example in Exhibit 3.23.

Now, we will add milestone markers to the summary row so the key project dates will remain easily visible as the Gantt Chart task list expands.

Right-click the Suburban Park Homes summary task row>>Information On the General tab, check the Hide Bar and Rollup boxes Click OK (Exhibit 3.24) Hold the Shift key and click your first task row>>click the last task row Now all tasks should be selected Right-click on the selected group>>Information On the General tab, check the Rollup box until a checkmark appears Click OK (Exhibit 3.25)

EXHIBIT 3.20

ENTER IDENTIFYING INFORMATION

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

84 Part 1 Organizing Projects

EXHIBIT 3.21

CREATE A SUMMARY ROW

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

EXHIBIT 3.22

TASK INFORMATION DIALOGUE

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

Chapter 3 Chartering Projects 85

You will now see that the summary row bar has disappeared and been replaced with mile- stone markers. We need to make them stand out a bit more and have the date (Exhibit 3.26).

Select the Suburban Park Homes summary task row Click Format Tab>>Format>>Bar Styles In the Bar Styles dialog box, click the Rolled Up Milestone style In the Bars tab, change the Type to solid; change the color to blue (or your choice!) Click the Text tab, click Right (or Left if you prefer!), choose Finish from the drop-down Click OK

EXHIBIT 3.23

SUBURBAN PARK HOMES MILESTONE SCHEDULE

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

EXHIBIT 3.24

SUMMARY TASK DIALOGUE

Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.

86 Part 1 Organizing Projects

Your milestone schedule in the Gantt Chart view should now look like the example in Exhibit 3.27.

EXHIBIT 3.25

MULTIPLE TASK INFORMATION DIALOGUE

EXHIBIT 3.26

BAR STYLES DIALOGUE

Chapter 3 Chartering Projects 87

PMP/CAPM Study Ideas Whether you are studying for the CAPM or PMP exam, you will likely see many questions pertaining to the order in which processes occur and deliverables are produced throughout the lifecycle of a project. In this chapter about the project charter, it is important to remem- ber that the various subdeliverables and processes are all encompassed within the Initiating phase. In fact, it is the ratification of the project charter that allows us to proceed from the Initiating to the Planning phase.

In other words, even though the charter and its components represent a high-level project plan, you should think of this as the preplanning because it is still in rough-draft form and will be significantly expanded upon during the Planning phase. So, if you plan to sit for one of these tests, make sure you know the logical order of the steps involved in creating a charter, but also keep in mind that every single one of these precedes the more-detailed processes to come.

EXHIBIT 3.27

UPDATED SUBURBAN PARK HOMES MILESTONE SCHEDULE

Summary The project charter is a vital document since it enables the project sponsor and project manager to reach mutual understanding and agreement on the project at a high level. Often, core team members who have been preassigned and sometimes a key stakeholder or two sign also sign the charter. All parties can commit to the intent of the charter with confidence. Charters typi- cally include sections such as a scope overview, business case, milestone schedule, acceptance criteria, risks, and signatures. Many charters include additional sections.

The sponsor or leadership team might write the rough draft of the business case and scope overview, but the project manager and core team typically write the rough draft of the majority of the charter. Once the

draft is written, the sponsor meets with the project manager and core team to go over the charter in detail both to ensure understanding and to reach agreement.

The charter, by signaling commitment on the part of the team and authorization on the part of the spon- sor, is the document that completes the project initiat- ing stage. Once the charter is complete, the project team can usually turn their attention to planning the details of the project. The first detailed behavioral plan- ning topics that deal with the project team, other sta- keholders, communication, and leadership form the next book module: Leading Projects. The other detailed planning topics tend to be more technical and form the third book module: Planning Projects.

Key Terms Consistent with PMI Standards and Guides project charter, 63 requirements, 65 scope creep, 66

milestone schedule, 66 acceptance criteria, 67 risk, 68

88 Part 1 Organizing Projects

assumptions, 68 constraint, 68 resources, 68

lessons learned, 70 assumptions log, 75 lessons learned register, 70

Chapter Review Questions 1. What is a charter? 2. Describe what an effective charter should

accomplish. 3. How is a charter like a contract? How is it different

from a contract? 4. How long should a typical charter be? 5. Signing the charter marks the transition between

which two project stages? 6. Who generally writes the rough draft of a

charter? 7. Give three reasons for using a charter. 8. What are some typical elements of a charter? 9. What is scope creep and how can it be prevented?

10. When would a background section be helpful?

11. On most small to medium-sized projects, how many intermediate milestones should be identi- fied in the charter?

12. What types of resources might be included in a resources-needed section of a charter?

13. Name three reasons project managers and teams should look at risk.

14. Why should each contingency plan have an owner who is responsible for it?

15. What are the four columns of the milestone schedule?

16. With whom might the project manager and project team need to negotiate when creating the charter?

17. What is the primary difference between Auto and Manually scheduled settings in Microsoft Project?

Discussion Questions 1. Identify the purpose of each element in a project

charter. 2. Explain how a charter helps secure both formal

and informal commitment. 3. How are risks, assumptions, and constraints related? 4. If you are a project manager and have the choice

of forming your core team before or after charter approval, which would you do and why?

5. List and describe at least four lessons you have learned from previous projects. Relate how each is valuable in planning a new project.

6. In your opinion, what are the three most impor- tant items in your project charter? How did each help you initiate your project better?

7. Give an example of how an incorrect assumption could become a risk.

8. Briefly summarize the process of creating a mile- stone schedule.

9. How are project scope and product scope similar and different?

10. Upon seeing the rough draft of your charter, your project sponsor asks you to move the finish date up by two months. What do you do?

11. What are the greatest advantages to using a com- puterized scheduling program like Microsoft Project?

PMBOK ® Guide Questions 1. Which of the following is not a purpose of an

approved project charter? a. formally authorizes the existence of a project b. provides detailed information about financial

resources c. helps the team and sponsor develop a founda-

tional understanding of project requirements d. provides project manager with authority to

apply organizational resources to the project

2. Adding to the project after it has already begun without making adjustments to time, cost, or resources, is known as: a. scope creep b. risk c. milestones d. acceptance criteria

3. It is inconvenient and time consuming for employees to walk across campus every day to

Chapter 3 Chartering Projects 89

eat lunch, which is why we need an employee lunchroom in our building is an example of: a. project scope b. business case c. milestone schedule d. constraint

4. What information does the project charter con- tain that signifies how the customer or user of the final product, service, or result will judge the deli- verables, in order to determine that they have been completed satisfactorily? a. high-level project risks b. measurable objectives and acceptance criteria c. high-level project boundaries d. project assumptions

5. The project charter should include factors that are considered to be true, real, or certain without proof or demonstration. These are known as . a. risks b. assumptions c. high-level requirements d. objectives

6. The signing of the project charter represents all of these except: a. a formal acknowledgment of the sponsor s

commitment to the project b. the formal approval of the detailed project

schedule c. authorization to transition from the high-level

project initiation stage into the more detailed project planning stage

d. the organization s commitment to apply resources to the project

7. What project charter component documents sig- nificant points or events in the project and, per the author, may be developed most effectively when combined with other information such as acceptance criteria? a. network diagram b. Gantt chart

c. stakeholder management strategy d. summary milestone schedule

8. You are the project manager. Upon presenting your charter to your sponsor, she requests several changes. What do you do? a. Agree to all the changes in order to make your

sponsor happy. b. Refuse to change the charter, since that would

be unfair to your team. c. Have your team vote on whether or not to

make the changes and go with the will of the majority.

d. Negotiate with your sponsor to see how you can best accommodate her requests without agreeing to unreasonable expectations.

9. The charter is the primary deliverable of a pro- ject s phase. a. Selecting b. Initiating c. Planning d. Executing

10. According to the PMBOK, the rough order of magnitude for the summary budget within the project charter is . a. 100% to 200% accuracy b. 25% to 75% accuracy c. 5% to 10% accuracy d. none of the above

11. After identifying potential project risks, the proj- ect team should then . a. develop risk response plans for all identified

risks. b. wait for the sponsor to conduct a risk

assessment. c. move on to other components of the charter,

since identifying risks is the only risk-related activity in the initiating phase.

d. assess each risk based on probability and likely impact, and then create a risk response plan for each major risk.

Exercises 1. Consider a major team project for a class. Write

the scope overview and business case sections of a charter.

2. Write the business case and scope overview sections of a project charter for a project in which your com- pany is considering buying out another company.

3. You are part of a student team that is going to host a picnic-style party as a fundraiser event for a deserving local nonprofit. Develop a milestone schedule with acceptance criteria for this event. Include between four and eight milestones.

90 Part 1 Organizing Projects

4. You are part of a student team that has volun- teered to host an alumni event at a recently reo- pened museum in the downtown part of your city. The event has the twin purposes of estab- lishing contacts with long-lost alumni and raising awareness of the newly reopened museum. Brain- storm the potential risks for this, quantify them both according to probability and impact, assign responsibility for each major risk, and create one or more contingency plans for each major risk.

5. You are part of a student team that is hosting a number of inner-city junior high and high school students from several nearby cities at your campus for a weekend. The primary purpose is to encour- age them to attend college and, second, to attend

your college. Identify as many stakeholders as pos- sible for this project, prioritize them, and list the interests each has in your project.

6. You have started a project working with your peers at your rival college to create a cross- town help-out. You want to encourage many people in the community to contribute a day s work on a Saturday for various community pro- jects. You have a rather heated rivalry with this other college. Create a comprehensive set of team operating principles to use on this project. Which of these principles is most important and why? Do you expect any of them to be difficult to enforce and why? What do you plan to do if some of them do not work?

I N T E G R A T E D E X A M P L E P R O J E C T S

SUBURBAN HOMES CONSTRUCTION PROJECT

Scope Overview Building a single-family, partially custom-designed home as required by Mrs. and Mr. John Thomas on Strath Dr., Alpharetta, Georgia. The single-family home will have the following features:

3,200 square-feet home with 4 bedrooms and 2.5 bathrooms Flooring hard wood in the first floor, tiles in the kitchen and bathrooms, carpet in bedrooms Granite kitchen countertops, GE appliances in the kitchen 3-car garage and external landscaping Ceiling 10 in first floor and vaulted 9 ceilings in bedrooms

Business Case Suburban Homes is in the business of constructing high- quality homes at an affordable cost with luxury options to pro- vide quality of life for families. The business strategy is to use the best construction technologies and practices to enhance productivity and increase profits, while offering cost-effective and best-value homes for all its customers simultaneously. The current project, Suburban Park Homes, is aimed to expand business operations in Georgia.

Milestone Schedule and Deliverables CM Construction Manager; PM Project Manager

Milestone Completion Date Stakeholder Judge Acceptance Criteria

Approval of final drawing and all the options 2nd January Client PM and the client to approve

Land preparation, landscape, and foundation 15th January CM PM and CM approval

External work completion and utilities hookup 3rd April CM PM and CM approval

Internal and external finish work and painting 10th May CM PM and CM approval

County clearance and Certificate of Occupancy 30th May CM County Inspectors and PM

Financial settlement and handover of home 21st June PM, Client Design Specifications approval by PM and the client

Chapter 3 Chartering Projects 91

Risks

Project Risks Risk Owner Contingency Plans

County approval and permissions

Suburban Homes, PM

None

County Property Taxes hike

Client, Suburban Homes

Document as con- tract clause

Traffic congestion Client, County, DMV

None

Resources Required Funding: the client, underwriters, and Suburban Homes People: Suburban project management team, contractors, subcontractors, and skilled labor Equipment: construction equipment, tools, and machinery Material: building materials, appliances, landscaping, shrubs, and trees

Stakeholders

Stakeholders Interest in Project

Primary: The client Suburban Homes County Officers

Overall project cost, time, quality Overall project cost, time, quality, success criteria Adherence to the county standards

Others: Contractors Suppliers Utility companies

Timely payment of invoices Business expansion, profits Adherence to laws, business expansion

Team Operating Principles Commitment to project schedule: Project team and contrac- tors will complete their assigned work as per schedule. Progress Meetings: Construction team meetings sched- uled on Mondays at 8 a.m. every week and as demanded by work progress. Members should prepare for these meetings with information required for review. Communication: Regular updates of status, reporting issues, and weekly progress reports.

Lessons Learned Team participation in developing project schedule is critical. Transparent communication is encouraged for resolving issues. Conflicts must be reported to the construction manager immediately. County laws and utility standards must not be compromised.

Commitment Sponsor Department/Organization Signature

Project Manager Department/Organization Signature

Core Team Members Department/Organization Signature

92 Part 1 Organizing Projects

Semester Project Instructions Determine one member of your student project team to be the primary contact with the project sponsor (the manager or executive who came to class when projects were announced). The sponsor is also the customer representative. This sponsor was encouraged by your professor to come with a draft of the business case and scope overview sections of the charter, but some sponsors probably did a better job than others. You need to ensure that you understand these statements and how they fit with the organization s goals.

Then, your student team needs to draft the remain- der of the charter with as much help as you can get from the sponsor and/or other people at the organization.

Once the charter is in rough-draft form, submit it for comments to your professor. Armed with the professor s suggestions, you can present it to your sponsor and any other people your sponsor chooses. Often, this may involve a leadership team, department heads (functional managers), and/or project team members. One differ- ence on this project is that your student team will likely do most of the planning and only part of the execution, while members of the organization for whom you are planning the project will need to complete the execution. Therefore, you need to consider how you will transition responsibility over to the parent organization near the end of the class.

CASA DE PAZ DEVELOPMENT PROJECT

Questions for Students to Answer: 1. Given the information provided in Chapter 2 on how

this project was selected, create scope overview and business case sections for a charter.

2. If you were the project manager, what expertise would you like from the sponsor, stakeholders, or core team members to create a milestone schedule with accep- tance criteria?

3. Work with at least two other people and brainstorm pertinent risks. Assess them to determine which you believe are major risks, and develop at least one response for each major risk.

4. Who are the key stakeholders for this project and what is the interest of each? Which stakeholders have the most power?

PROJECT M ANAGEM ENT IN ACTION

Information Systems Enhancement Project Charter

The following charter was used when a nonprofit agency formed a project team to upgrade its informa- tion systems. Comments on the left side give advice

from a communications perspective regarding how to write a project charter, and comments on the right side offer suggestions regarding the content of each section.

Chapter 3 Chartering Projects 93

DESIGN PRINCIPLES

Headings: Headings facilitate scanning by identifying information covered in each section.

Heading descriptions should accurately indicate the information that follows.

Lists: Listing techniques help readers remember key details of a message.

Numbers, bullets, and other ordering devices promote retention and improve visual design.

Lists are best limited to five points so they do not look overwhelming to readers.

Lists are written in parallel structure, with the first word of each item having the same grammatical form, such as all nouns, all verbs, or all -ing words.

CONTENT PRINCIPLES

Scope Overview: The scope overview defines the major deliverables. It sets project boundaries by clarifying what is included and, sometimes, what is not included.

Business Case: The business case defines project objectives and why they are important to the parent organization.

Milestone Schedule:

The milestone schedule shows the project starting point, a few major mile- stones, and the ending point.

Acceptance Criteria Factors: These identify which stakeholder will judge the acceptability of each milestone and what criteria they will use.

PROJECT CHARTER: INFORMATION SYSTEMS ENHANCEMENT PLAN

Scope Overview This team will implement a new information system based on a needs assessment of person- nel of the agency. The project team will detail technological issues, as well as upward, down- ward, and lateral communications issues within each department and recommend software pack- age options for each program area. The sponsor will select a vendor, and the project team will oversee implementation.

Business Case Objective The agency needs to overhaul its information systems to increase productivity for staff, and create additional learning opportunities for clients. It is estimated that 20 percent more clients will be served with the new system.

MILESTONE

COM- PLETION DATE

STAKE- HOLD- ER JUDGE

ACCEP- TANCE CRITERIA

Outdated facility, poor productivity

Start 1/6/18

Staff survey 1/31/18 Sponsor Discussion with depart- ment heads

Software recomm- endations

3/14/18 Opera- tions Manager

All areas included, pilot results

Vendor selected

3/28/18 Sponsor Best meets qualifications

Technology in place

5/9/18 Project Manager

System test demonstration

Updated facility, productivity improved

5/30/18 Sponsor Two-week data reports from department heads

94 Part 1 Organizing Projects

DESIGN PRINCIPLES

Tables: Use tables to organize complex information into an easy-to-follow column and row format.

Design tables so they make sense when read independently of the text.

Use table headings that reflect logical groupings of information.

Phrase column language so it is in parallel structure.

Character Formatting: Use character formatting, including boldface, italics, underlines, and centering to highlight headings.

Use character formatting hierarchically. Boldface, underlines, and all caps are best for major headings. Use fewer or less dramatic techniques for subheadings.

Type Size and Face: Use 10-, 11-, or 12-point type for most documents. People who have poor vision often prefer larger type.

Use a conventional typeface, such as Arial, Times Roman, or Palatino.

White Space:

Use white space to separate document sections attractively and to improve readability.

Page Breaks:

When possible, complete entire sections on the same page. Redesign documents where one or two lines of text from a section run onto the next page.

Major Risks

Resources Needed This project will require the project manager to spend 50% of her time and the lead user and 3 core team members 25% of their time for 5 months. The budget estimate is $45,000.

Stakeholder List

CONTENT PRINCIPLES

Project Risks and Assumptions:

This section identifies major risks and how the team will either reduce their probability of happening and/or their impact if they do occur. One person is assigned responsibility for each risk.

Resources Needed:

This is an estimate of the money, personnel, and other resources expected to be needed.

Stakeholder List:

Identifies those individuals and groups who have an interest in either the project process and/or results.

RISK RISK OWNER RESPONSE PLANS

System may not work properly

Technical lead

Define top defect and focus on it exclusively until fixed.

Implementa- tion may cost too much

Accountant Identify areas of cost reduction and added funding.

Lack of sponsor buy-in

Project Manager

1. Conduct staff survey to identify most- needed capabilities.

2. Understand sponsor requirements.

STAKEHOLDER INTEREST IN PROJECT

Board Sponsor Department Heads

Overall cost and overall project success Overall project success, resource needs; Impact on their department, resource needs

Lead user New work methods, productivity increases

Chapter 3 Chartering Projects 95

References A Guide to the Project Management Body of Knowledge

(PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management Institute, Inc., 2017).

Altwies, Diane, and Frank Reynolds, Achieve CAPM Exam Success: A Concise Study Guide and Desk Ref- erence (Ft. Lauderdale, FL: J. Ross Publishing, 2010).

Assudani, Rashmi, and Timothy J. Kloppenborg, Managing Stakeholders for Project Management

Success: An Emergent Model of Stakeholders, Journal of General Management 35 (3) (Spring 2010): 67 80.

Evans, James R., and William M. Lindsay, The Man- agement and Control of Quality, 8th ed. (Mason, OH: Cengage, 2011).

Johnson, Craig E., Meeting the Ethical Challenges of Leadership (Los Angeles: Sage, 2009).

CONTENT PRINCIPLES

Operating Principles:

Operating principles indicate agreement on deadlines, meetings, decision making, and how participants will treat each other with respect.

Lessons Learned:

This section highlights specific learnings from previous similar projects that will help the team copy good practices and avoid problems.

Commitment:

Project principals signal agreement in principle to the project, recognizing that some of the specifics will probably change when the detailed planning is complete.

DESIGN PRINCIPLES

Sentences: To express complex ideas effectively and to make ideas easy for readers to understand, compose most sentences to be 15 25 words long.

Simple Language: So all readers understand your language easily, substitute short, action- oriented, easily understood words for long, unfamiliar, and unpronounceable words.

Team Operating Principles Commitment to timetable. The project manage- ment team members will complete their assigned work on time. Regularly scheduled project team and sponsor- ship meetings. Project team meetings will be held every Saturday at 4:15 p.m. The team will also communicate via e-mail as required. Spon- sorship meetings with the agency staff will be held bimonthly and as-needed. Timely communication. The project manage- ment team will communicate status, issues, and questions with agency via e-mail or conference call weekly. Project actions will be distributed to the team every Monday. Majority rule. The project management team will negotiate and resolve issues on a majority-rule basis.

Lessons Learned Agreeing on project scope is a key preliminary project planning activity. Maintaining project goals and timeline requires open communication and quick issue resolution. Understanding roles and responsibilities facil- itates smooth teamwork and timely project completion.

Commitment

Sponsor Project Manager

Lead User Core Team Member

Core Team Member Core Team Member

96 Part 1 Organizing Projects

Kloppenborg, Timothy J., and Laurence J. Laning, Strategic Leadership of Portfolio and Project Man- agement (New York: Business Expert Press, 2012).

Kloppenborg, Timothy J., and Joseph A. Petrick, Managing Project Quality (Vienna, VA: Manage- ment Concepts, Inc., 2002).

PMI Lexicon of Project Management Terms Version 3.0 (Newtown Square, PA: Project Management Insti- tute, Inc., 2015).

Skilton, Paul F., and Kevin J. Dooley, The Effects of Repeat Collaboration on Creative Abrasion, Acad- emy of Management Review 35 (1) (2010): 118 134.

Endnotes 1. PMI Lexicon of Project Management Terms

Version 3.0, 2015: 13. 2. Kloppenborg, Timothy J., and Joseph A. Petrick,

Managing Project Quality (Vienna, VA: Manage- ment Concepts, Inc., 2002): 39.

3. PMI Lexicon of Project Management Terms Ver- sion 3.0 (Newtown Square, PA, 2015): 7.

Chapter 3 Chartering Projects 97

ORGANIZE LEAD PERFORMPLAN

P A R T 2

LEADING PROJECTS

Chapter 4 Organizational Capability: Structure, Culture, and Roles

Chapter 5 Leading and Managing Project Teams

Chapter 6 Stakeholder Analysis and Communication Planning

Leading for success in project management includes

leading the parent organization that is conducting the

project, leading the project team, and leading the various

stakeholders who care about the project in one way or

another. Chapter 4 deals with the parent organization

giving ideas about how the organizational structure,

organizational culture, project life cycle model, and roles

of various players impact a project. Chapter 5 includes

acquiring, developing, and leading the project team.

Chapter 6 includes engaging stakeholders, managing

communications, and running project meetings.

99 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

C H A P T E R 4

Organizational Capability: Structure, Culture, and Roles

We implement project management best practices for the purpose of increasing the likelihood for project success. Formerly, as an executive, I was responsible for establishing, operating, and evolving a national project management office (PMO) for one of the nation s largest print/mail and electronic outsourcing firms. Organizational structure, culture, roles and responsibilities of project partici- pants, and project life cycle standard processes and tools were critical influen- cers to achieving project success. As there is no single way to implement project management, how we chose to address each influencer shaped the way projects were managed. A snapshot of our approach follows:

From an operations perspective, there was a strategic need to implement a centralized approach to project management. Through a number of mergers and acquisitions, 10 geographically dispersed operation centers were servicing a broad range of expanding customer needs. As a result, two key factors were at play. One: the customer base was growing from regionally based to nationally based customers. Two: the best-of-the-best operations technology needed to be leveraged across all centers. Structurally, the decision was made to consolidate

CHAPTER OBJECTIVES

After completing this chapter, you should be able to:

CORE OBJECTIVES: Compare and contrast the advantages and disad- vantages of the functional, project, strong matrix, balanced matrix, and weak matrix methods of organization; describe how each operates and when to use each. Relate how an organiza- tion s structure influ- ences the implementa- tion of its strategic plan. Describe organizational culture elements that are helpful in planning and managing projects and demonstrate how to overcome organizational culture elements that hinder project success. Describe different proj- ect life cycle models and distinguish when each is appropriate.

BEHAVIORAL OBJECTIVES: Describe the duties, motivations, and chal- lenges of each of the executive, managerial, and team roles in projects and list important attri- butes for selecting each. Given a project situation, explain ethical behavior consistent with PMI s Code of Ethics and Professional Conduct. Predict the impact of orga- nizational structure and associated culture on indi- vidual and team behaviors. Predict the impact of organizational structure and associated culture on individual and team performance.

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100 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

operation centers to three, geographically in the East, Central, and West. This meant that internal and external projects that applied nationally could no longer be managed at a regional level using only regional resources. A new type of proj- ect manager was needed to manage national resources using a standardized set of practices. Creating a matrixed project organization to serve the functional orga- nization was the first phase.

PMBOK ® 6E PRIMARY OUTPUTS

1.2 Foundational elements Life Cycle and Development Approach

2.4 Organizational systems

3.4 Project manager competencies Leader Roles and Responsibilities

4.2 Develop Project Management Plan

4.7 Close Project or Phase

4.1 Develop Project Charter

4.3 Direct and Manage Project Work

4.4 Direct and Manage Project Work

4.6 Perform Integrated Change Control

4.5 Monitor and Control Project Work

PMBOK® GUIDE Topics:

1.2 Foundational elements

2.4 Organizational systems

3.3 The project man- ager s sphere of influence

3.4 Project manager competencies

4.1 Develop project charter

4.2 Develop project management plan

4.3 Direct and manage project work

4.4 Manage project knowledge

4.5 Monitor and control project work

4.6 Perform integrated change control

4.7 Close project or phase

CHAPTER OUTPUTS Life Cycle and Devel- opment Approach Leader Roles and Responsibilities

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Ensuring the culture would accept and support these changes was critical to success as change is not easy and resistance was anticipated. Senior manage- ment buy-in was essential and plans were implemented to dialogue, collaborate, and communicate the benefits of a PMO throughout the organization. The PMO s first mission was to establish national project management standards and manage a select few strategic national projects with a limited set of project managers. Proof of concept was key to continued buy-in. Clear roles and responsibilities for executive sponsors, project managers, and project team members were collabora- tively established. Standard processes and tools used by the project teams were jointly developed. Training occurred from the executive suite to project managers and project team members. As time progressed, project success rates increased and the PMO responsibilities were expanded to include the project management of all strategic operational projects and new customer implementations. Career paths for regional project managers were established. Selected regional project managers were promoted and trained to be national project managers. The organi- zational structure changed with selected regional project managers reporting to the national PMO. The executive sponsorship roles continued to evolve along with standard processes and practices to facilitate new responsibilities. In Improving Executive Sponsorship of Projects: A Holistic Approach, additional insight on each influencer, considerations, pitfalls, and tips for project management implementa- tion approaches can be found.1

Dawne E. Chandler, PhD, PMP

C hapter 2 dealt with organizational issues of strategic planning, selecting, and resour-cing projects. Chapter 3 details how to initiate a project usually by composing and ratifying a charter. This chapter introduces both project leadership and project planning. Leadership in this chapter includes organizational structure and culture along with roles of all key project participants. Planning is introduced in the selection of the project life cycle approach and introduction to the concept of a project plan. Both project leadership and planning lead to project success, as shown in Exhibit 4.1. Effectively leading project team members and other stakeholders leads to a foundation of respect and trust, which, in turn leads to project success. Effective project planning lays the groundwork for effective project execution, monitoring, control, and closeout, which also lead to project success.

EXHIBIT 4.1

DETERMINANTS OF PROJECT SUCCESS

102 Part 2 Leading Projects

4-1 Types of Organizational Structures Contemporary companies choose among various methods for establishing their organi- zational structure. Organization structure is often developed by grouping people together based on criteria such as functional or technical skills or long-term activities. The struc- ture size and complexity increase with the increase in the number of employees. The structure is the way in which an organization divides its people into distinct tasks to achieve coordination among all these groups. Organizational structure can be considered to include work assignments, reporting relationships, and decision-making responsibility. Each method of structuring organizations has strengths and weaknesses. In this section, we will investigate various organizational methods and the impact of each on managing projects. The advantages and disadvantages of each organizational form are discussed in the following sections and then summarized in Exhibit 4.5.

4-1a Functional A functional organization is an organizational structure in which staff is grouped by areas of specialization and the project manager has limited authority to assign work and apply resources. 2 This is the traditional approach in which there are clear lines of authority according to type of work. For example, all accountants might report to a head of accounting, all marketers report to a head of marketing, and so on. An organizational chart for a functional organization is shown in Exhibit 4.2. Note that everyone in the organization reports up through one and only one supervisor. That supervisor is the head of a discipline or function (such as marketing).

The functional manager generally controls the project budget, makes most project decisions, and is the primary person who coordinates project communications outside the functional areas by contacting his or her peer functional managers.

ADVANTAGES One advantage of the functional form of organization is called unity of command all workers understand clearly what they need to do because only one boss is

EXHIBIT 4.2

FUNCTIONAL ORGANIZATION

Marketing VP Operations VP Finance VP Services VP

Chapter 4 Organizat