Kathy Schwalbe's An Introduction to Project Management PDF

An Introduction to Project Management, Sixth Edition With a Brief Guide to Microsoft Project Professional 2016 By Kathy Schwalbe Professor Emeritus, Augsburg College Department of Business Administration Minneapolis, Minnesota ...

An Introduction to Project Management, Sixth Edition With a Brief Guide to Microsoft Project Professional 2016 By Kathy Schwalbe Professor Emeritus, Augsburg College Department of Business Administration Minneapolis, Minnesota  An Introduction to Project Management, Sixth Edition Cover Photo: Dan Schwalbe ©2017 Schwalbe Publishing ISBN-13: 978-1544701899 ISBN-10: 1544701896 ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the author. Materials from Kathy Schwalbe’s Information Technology Project Management are used with permission from Cengage Learning. Microsoft and the Office logo are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All screenshots from Microsoft products are used with permission from Microsoft. Information and screenshots from MindView are used with permission from MatchWare. Information and screenshots from Basecamp are used with permission from Basecamp. Some of the product names and company names used in this book have been used for identification purposes only and may be trademarks or registered trademarks of their respective manufacturers and sellers. This publication is a derivative work of A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, which is copyrighted material of and owned by, Project Management Institute, Inc. (PMI), Copyright 2017. This publication has been developed and reproduced with the permission of PMI. Unauthorized reproduction of this material is strictly prohibited. The derivative work is the copyrighted material of and owned by, Schwalbe Publishing, Copyright 2017. PMI, PMP, CAPM, OPM3, and PMBOK are registered marks of the Project Management Institute, Inc. Published by Schwalbe Publishing in Minneapolis, MN, September 2017. Free companion website at www.intropm.com. Visit www.pmtexts.com or www.kathyschwalbe.com for more information on this and other books by Kathy Schwalbe.  For Dan, Anne, Bobby, and Scott My husband and children continue to be my inspiration. My son-in-law, Jeremy, and grandson, Freddie, are welcome additions to our family! BRIEF TABLE OF CONTENTS Chapter 1 An Introduction to Project, Program, and Portfolio Management Chapter 2 Project, Program, and Portfolio Selection Chapter 3 Initiating Projects Chapter 4 Planning Projects, Part 1 (Project Integration and Scope Management) Chapter 5 Planning Projects, Part 2 (Project Time and Cost Management) Chapter 6 Planning Projects, Part 3 (Project Quality, Resource, Communications, Stakeholder, Risk, and Procurement Management) Chapter 7 Executing Projects Chapter 8 Monitoring and Controlling Projects Chapter 9 Closing Projects Chapter 10 Best Practices in Project Management Appendix A Brief Guide to Microsoft Project 2016 Appendix B Resources Appendix C Case Studies Glossary  DETAILED TABLE OF CONTENTS Chapter 1: An Introduction To Project, Program, And Portfolio Management Introduction What Is A Project? Examples Of Projects Project Attributes Project Constraints What Is Project Management? Project Stakeholders Project Management Process Groups And Knowledge Areas Project Management Tools And Techniques Project Success Program And Project Portfolio Management Programs Project Portfolio Management The Project Management Profession Suggested Skills For Project, Program, And Portfolio Managers PMI Talent Triangle And The Importance Of Leadership Skills Project Management Certification Ethics In Project Management Project Management Careers Project Management Software Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 2: Project, Program, And Portfolio Selection Aligning Projects With Business Strategy Strategic Planning Swot Analysis Traditional And Agile Approaches To Project Planning Traditional Project Planning Process Agile Approach To Project Planning Methods For Selecting Projects Focusing On Competitive Strategy And Broad Organizational Needs Performing Financial Projections Net Present Value Analysis Return On Investment Payback Analysis Using A Weighted Scoring Model Implementing A Balanced Scorecard Addressing Problems, Opportunities, And Directives Project Time Frame Project Priority Program Selection Focusing On Coordination And Benefits Approaches To Creating Programs Project Portfolio Selection Sample Approach For Creating A Project Portfolio Five Levels Of Project Portfolio Management Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Key Terms End Notes Chapter 3: Initiating Projects Project Management Process Groups Project Life Cycle Mapping The Process Groups To The Knowledge Areas Developing A Project Management Methodology  Agile Project Management The Importance Of Top Management Commitment The Need For Organizational Standards Pre-Initiating And Initiating Global Construction’s Just-In-Time Training Project Pre-Initiating Processes And Outputs Preparing A Business Case Contents Of A Business Case Sample Business Case Initiating Processes And Outputs Identifying Stakeholders Sample Stakeholder Register And Stakeholder Analysis Creating A Project Charter And Assumptions Log Contents Of A Project Charter Sample Project Charter Contents Of An Assumption Log Sample Assumption Log Holding A Project Kick-Off Meeting Sample Kick-Off Meeting Agenda Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 4: Planning Projects, Part 1 (Project Integration and Scope Management) Project Planning Should Guide Project Execution Summary Of Planning Processes And Outputs For Integration And Scope Project Integration Management Project Management Plans Sample Project Management Plan Project Scope Management Planning Scope Management Sample Requirements Management Plan  Collecting Requirements Sample Requirements Traceability Matrix Defining Scope Sample Scope Statement Creating The Work Breakdown Structure Example Wbss Approaches To Developing Work Breakdown Structures Using Guidelines or Templates The Analogy Approach The Top-Down Approach The Bottom-Up Approach Mind Mapping Sample Wbs Creating The Wbs Dictionary Sample Wbs Dictionary Entry Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 5: Planning Projects, Part 2 (Project Time and Cost Management) Introduction Summary Of Planning Processes And Outputs Project Schedule Management Planning Schedule Management Defining Activities Creating The Activity List And Attributes Sample Activity List And Attributes Creating A Milestone List Sample Milestone List Sequencing Activities Project Schedule Network Diagrams Estimating Activity Duration  Sample Activity Duration Estimates Developing The Project Schedule Critical Path Analysis Calculating The Critical Path Growing Grass Can Be On The Critical Path Using Critical Path Analysis To Make Schedule Trade-Offs Importance Of Updating Critical Path Data Critical Chain Scheduling Sample Project Schedule Sample Project Calendar Project Cost Management Planning Cost Management Estimating Costs Cost Estimation Tools And Techniques Sample Cost Estimate Cost Budgeting Sample Cost Baseline Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Key Terms End Notes Chapter 6: Planning Projects, Part 3 (Project Quality, Resource, Communications, Stakeholder, Risk, and Procurement Management) Introduction Summary Of Planning Processes And Outputs Project Quality Management Planning Quality Management Sample Quality Management Plan Quality Metrics Sample Project Dashboard And Quality Metrics Description Project Resource Management Project Organizational Charts Sample Project Organizational Chart Responsibility Assignment Matrices  Sample Responsibility Assignment Matrix Resource Histograms Sample Resource Histogram Staffing Management Plans Sample Staffing Management Plan Team Charter Sample Team Charter Estimating Activity Resources Sample Activity Resource Requirements Project Communications Management Communications Management Plans Sample Communications Management Plan Project Websites Sample Project Website Project Stakeholder Management Stakeholder Engagement Plans Project Risk Management Planning Risk Management Sample Risk Management Plan Identifying Risks Performing Qualitative Risk Analysis Sample Probability/Impact Matrix Performing Quantitative Risk Analysis Planning Risk Responses Risk Registers Sample Risk Register Risk-Related Contract Decisions Sample Risk-Related Contract Decisions Project Procurement Management Make-Or-Buy Decisions Sample Make-Or-Buy Decision Procurement Management Plans Types Of Contracts Sample Procurement Management Plan Bid Documents: Requests For Information, Proposals, Or Quotes Sample Requests For Proposal Procurement Statements Of Work  Sample Procurement Statement Of Work Source Selection Criteria And Supplier Evaluation Matrices Sample Supplier Evaluation Matrix Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 7: Executing Projects Introduction Summary Of Executing Processes And Outputs Project Integration Management Deliverables Sample Deliverables Work Performance Data Sample Work Performance Data Issue Logs Sample Issue Log Change Requests Sample Change Request Sample Implemented Solutions To Problems Issues With Competence And Motivation Poor Conflict Management Managing Project Knowledge Lessons Learned Register Sample Lessons Learned Register Managing Quality Quality Improvement Tools And Techniques Sample Kanban Board Sample Cause And Effect Diagram Project Resource Management Motivation Maslow’s Hierarchy Of Needs Herzberg’s Motivation-Hygiene Theory  Mcclelland’s Acquired-Needs Theory Mcgregor’s Theory X And Theory Y Thamhain And Wilemon’s Influence Bases Covey’s Effectiveness Research Acquiring Resources Resource Loading And Leveling Sample Project Team Assignments Developing The Project Team Training Team-Building Activities Reward And Recognition Systems Sample Team Performance Assessment Managing The Project Team Project Communications Management Important Project Communications Concepts Formal And Informal Communications Nonverbal Communications Using The Appropriate Communications Medium Understanding Individual And Group Communication Needs The Impact Of Team Size On Project Communications Project Communications And Updating Business Processes Sample Updates To Business Processes Project Stakeholder Management Managing Stakeholder Engagement Project Risk Management Implementing Risk Responses Project Procurement Management Conducting Procurements Sample Qualified Seller List Sample Agreement Or Contract Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 8: Monitoring and Controlling Projects Introduction Summary Of Monitoring And Controlling Processes And Outputs Project Integration Management Monitoring And Controlling Project Work Forecasting With Earned Value Management Sample Forecast Using An Earned Value Chart Performance Reports Sample Performance Report Integrated Change Control Project Scope Management Validating Scope Sample Of Accepted And Unaccepted Deliverables Controlling Scope Project Schedule Management Sample Work Performance Information Project Cost Management Project Quality Management Sample Quality-Control Tools Project Resource Management Project Communications Management Project Stakeholder Management Project Risk Management Sample Risk Register Updates Project Procurement Management Sample Written Notice Of A Closed Contract Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 9: Closing Projects Introduction Summary Of Closing Outputs Project Integration Management Sample Customer Acceptance/Project Completion Form Sample Final Report Sample Transition Plan Lessons Learned Purpose And Objectives Lessons Learned Questions Project Close-Out Meeting And Knowledge Transfer Advice On Closing Projects Chapter Summary Quick Quiz Quick Quiz Answers Discussion Questions Exercises Team Projects Key Terms End Notes Chapter 10: Best Practices in Project Management Introduction Defining Project Management Best Practices The Project Management Institute’s Definition Of Best Practices Ultimate Business Library Best Practices Best Practices Of Individual Project Managers Project Management Maturity Capability Maturity Model Integration Project Management Maturity Models Research On Project Management Maturity PMI’s Pulse Of The Profession® Reports PM Solutions Research Ibbs’ The Value Of Project Management Research Thomas And Mullaly Research On Project Management Value Crawford And Cook-Davies Study On Best Industry Outcomes Pricewaterhousecoopers’ Study On Boosting Business Performance Summary Of Best Practices Mentioned In This Text Final Advice On Project Management Chapter Summary Quick Quiz  Quick Quiz Answers Discussion Questions Exercises Key Terms End Notes Appendix A: Brief Guide to Microsoft Project 2016 Introduction Project Management Software Basic Features Of Project Management Software What’s New In Project Professional 2016 Before You Begin Using The 60-Day Trial Of Project Professional 2016: Overview Of Project Professional 2016 Getting Started And Finding Help Understanding The Main Screen Elements Exploring Project Professional 2016 Using A Template File Project Professional 2016 Views Project Professional 2016 Reports Project Professional 2016 Filters Creating A New File And Entering Tasks In A Work Breakdown Structure Creating A New Project File Creating A Work Breakdown Structure Hierarchy Creating Summary Tasks Numbering Tasks Saving Project Files Without A Baseline Developing The Schedule Calendars Entering Task Durations Manual And Automatic Scheduling Duration Units And Guidelines For Entering Durations Entering Task Durations Establishing Task Dependencies Gantt Charts, Network Diagrams, And Critical Path Analysis Project Cost And Resource Management Entering Fixed And Variable Cost Estimates Entering Fixed Costs In The Cost Table Entering Resource Information And Cost Estimates  Using The Team Planner Feature Using The New Resource Engagement Feature Entering Baseline Plans, Actual Costs, And Actual Times Viewing Earned Value Management Data Integrating Project Professional 2016 With Other Applications And Apps For Office Copying Information Between Applications Creating Hyperlinks To Other Files Using Project Professional 2016 Apps Synching With Project Server And Project Online Discussion Questions Exercises End Notes Appendix B: Resources Introduction Companion Websites For Students (www.intropm.com Or www.pmtexts.com) For Instructors Template Files Mindview Software Basecamp Project Management Software Appendix C: Case Studies: Introduction Case Study 1: Real Projects Individual Homework: Project Proposal (100 Points) Individual Homework: Self-Assessment (100 Points) Syllabus Description Of Team Projects Case Study 2: New Business Venture Part 1: Initiating Part 2: Planning Part 3: Executing Part 4: Monitoring And Controlling Part 5: Closing Case 3: Fixer Upper Part 1: Initiating Part 2: Planning Part 3: Executing  Part 4: Monitoring And Controlling Part 5: Closing Glossary  PREFACE The rapidly changing world has made organizations appreciate the need for good project, program, and portfolio management skills more than ever. Many organizations, including corporations, government agencies, non- profit organizations, colleges, and universities have responded to this need by establishing courses and programs in project management. Hundreds of books are now available on this topic. After publishing the first two editions of this book, my publisher, Course Technology, now a branch of Cengage Learning, decided not to update it. They publish other books with higher sales, including my Information Technology Project Management book, now in its eighth edition. I personally used this text, An Introduction to Project Management, in my project management courses at Augsburg College since 2001 because most of my students were not majoring in information technology (IT) fields. I thank Cengage Learning for giving me the rights to self-publish the third and subsequent editions and permission to use some of the content from my IT book. I am also thankful for learning how to self-publish. I also self-published Healthcare Project Management in 2013 (after several people asked me to do so) with co-author Dan Furlong. I hope to keep writing books for years to come. If you have suggestions, let me know! What makes this book different from other project management books? First of all, people actually enjoy reading it. I get emails every week from readers like you who appreciate my straight-forward, organized writing style. They like the way that I explain concepts and then provide realistic examples to help them learn to apply those concepts. Since I use this text in my own classes, I get a lot of feedback from students and see first-hand what works and does not work in a classroom setting. Several people have commented that they like the cartoons, Jeopardy games on the companion website, and my honest, sometimes humorous style. Project management can be a boring subject, but I think it’s one of the most exciting topics and careers, especially if you want to change the world for the better. This text addresses the need for people in all majors and industries to understand and apply good project, program, and portfolio management. It includes many real-world examples in the “What Went Right,” “What Went Wrong,” “Media Snapshot,” “Best Practice,” and “Video Highlights” segments. People like to read about and watch videos about real projects to learn from the successes and failures of others. They also realize that there are projects in all aspects of life, from remodeling a house to running a political campaign to developing a new software application. I’m most excited about the fact that this book provides comprehensive samples of applying various tools and techniques to a realistic project. Many people learn best by example, so I’ve provided detailed examples of applying project management to a project everyone can relate to. I have never come across a textbook that presents project management concepts and then brings them to life in a fully developed sample project. I also provide template files for creating the sample documents. I believe this approach helps many people truly understand and apply good project management. NEW TO THE SIXTH EDITION Building on the success of the previous editions, An Introduction to Project Management, Sixth Edition introduces a uniquely effective combination of features. The main changes include the following: The entire text has been updated to align with PMI’s A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition. Chapter 1 includes a new section on the PMI Talent Triangle and the importance of leadership skills. Chapter 2 includes a new section on using an agile approach to project planning Updated examples and references are provided throughout the text, and user feedback is incorporated.  The free book website has been updated. New information will be added to the site as needed, and the Links tab will be continuously updated to provide links to recent articles and sites. APPROACH This text provides up-to-date information on how good project, program, and portfolio management can help you achieve organizational as well as individual success. Distinct features of this text include its: relationship to the Project Management Body of Knowledge as a derivative work instructions on using Microsoft Project 2016 and other resources use of MindView software comprehensive samples of applying tools and techniques to a realistic project inclusion of templates and seamless integration of various software applications robust and free companion website PMBOK® Guide Framework The Project Management Institute (PMI) created A Guide to the Project Management Body of Knowledge (the PMBOK® Guide) as a framework for understanding project management. The PMBOK® Guide is, however, just that—a guide. This text uses the PMBOK® Guide – Sixth Edition as a foundation, but goes beyond it by providing more details, highlighting additional topics, and providing a real-world context for project, program, and portfolio management. Instructions for using Microsoft Project 2016 and other resources Appendix A of the text includes basic information on project management software and detailed, step-by-step instructions on using the number one stand-alone product, Microsoft Project 2016. You do  not need to buy a separate book to learn how to use Project 2016 effectively. Appendix B provides information on other resources, including companion websites, templates, and other project management tools. Appendix C provides detailed information instructors can use for assigning case studies, real and fictitious, as part of their classes. Examples of using MindView and Basecamp software Many people like to create mind maps to perform a SWOT analysis, create a WBS, and perform other creative activities. This text includes examples of using MindView software by MatchWare, Inc. and access to a free trial of this software. It also includes a brief user guide for using Basecamp, a totally online project management tool. Comprehensive Samples of Applying Tools and Techniques to a Realistic Project After explaining basic concepts, tools, and techniques, this text shows the reader how an organization selected, initiated, planned, executed, monitored and controlled, and closed a realistic project, called the Just-In-Time Training project. It provides over 50 sample project management deliverables such as a business case, stakeholder register, project charter, project management plan, work breakdown structure, Gantt chart, cost baseline, Pareto chart, resource histogram, performance report, risk register, contract, lessons-learned report, and so on for this project. You can also access the template files used to create them from the free companion website for this text or from the author’s personal website. As one reviewer stated: It comprehensively communicates what it really takes to manage a large project, including required deliverables, work products, and documentation. I haven’t seen either a text or documentation in industry which communicates this subject this comprehensively or this accurately. (Gilbert S. Leonard, Adjunct Professor and retired project manager, Exxon Mobil Corporation) Provides Templates and Seamless Integration of Various Software Applications You do not have to reinvent the wheel when it comes to much of the documentation required for managing projects. This text uses over 50 free template files for creating various documents, spreadsheets, diagrams, and charts. Various software applications are used throughout the text in a seamless fashion. I purposely created the templates in a simple format. Feel free to modify them to meet your needs. Includes a Free Companion Website (www.intropm.com) A companion website provides you with a one-stop location to access informative links and tools to enhance your learning. This site will be a valuable resource as you access links mentioned in the text, take online quizzes, and download templates and files for Project 2016. Instructors can access a protected instructor site, which includes the same information plus copyrighted lecture slides, solution files, sample syllabi, and other information. Instructors can also share information on how they use this text in their classes ORGANIZATION AND CONTENT An Introduction to Project Management, Sixth Edition, is organized into ten chapters and three appendices. The first two chapters introduce project, program, and portfolio management and discuss different approaches for their selection. You’ll read about Global Construction, Inc. and how they decided to pursue the Just-In-Time Training project. The next seven chapters follow the five process groups of project management: initiating, planning (broken down into three chapters), executing, monitoring and controlling, and closing. These seven chapters apply various tools and techniques in each of these process groups to the Just-In-Time Training project. Chapter ten describes recent information and research on best practices. Appendix A provides general information on project management software and a step-by-step guide to using Microsoft Project Professional 2016. Appendix B includes resource information, and Appendix C provides several running case studies students can use to apply what they have learned to real or fictitious projects. PEDAGOGICAL FEATURES Several pedagogical features are included in this text to enhance presentation of the materials so that you can more easily understand the concepts and apply them. Throughout the text, emphasis is placed on applying concepts to up-to-date, real-world project management. Learning Objectives, Chapter Summaries, Quick Quizzes, Discussion Questions, Exercises, Team Projects, and Case Studies Learning Objectives, Chapter Summaries, Quick Quizzes, Discussion Questions, Exercises, Team Projects, and Case Studies are designed to function as integrated study tools. Learning Objectives reflect what you should be able to accomplish after completing each chapter. Chapter Summaries highlight key concepts you should master. The Quick Quizzes help reinforce your understanding of important concepts in each chapter. The Discussion Questions help guide critical thinking about those key concepts. Exercises provide opportunities to practice important techniques, as do the Team Projects. The Case Studies in Appendix C provide a robust means to apply what you have learned from the text to realistic case studies, similar to the example used throughout the text. Opening Case and Case Wrap-Up To set the stage, each chapter begins with an opening case related to the materials in that chapter. These scenarios spark interest and introduce important concepts in a real-world context. As project management concepts and techniques are discussed, they are applied to the opening case and other similar scenarios. Each chapter then closes with a Case Wrap-Up—some problems are overcome and some problems require more effort—to further illustrate the real world of project management. What Went Right? and What Went Wrong? Failures, as much as successes, can be valuable learning experiences. Carl Hixson, a program manager at Oracle and adjunct instructor who uses this text, said he loves the anonymous quote, “We need to learn from people’s mistakes because we’ll never have time to make them all ourselves.” Each chapter of the text includes one or more examples of real projects that went right as well as examples of projects that went wrong. These examples further illustrate the importance of mastering key concepts in each chapter. Media Snapshots, Best Practice, and Video Highlights The world is full of projects. Several television shows, movies, newspapers, websites, and other media highlight project results, good and bad. Relating project management concepts to all types of projects, as highlighted in the media, will help you understand and see the importance of this growing field. Why not get people excited about studying project management by showing them how to recognize project management concepts in popular television shows, movies, or other media? It is also important to study best practices so readers can learn how to implement project management in an optimum way. Many students also enjoy watching videos to enhance their understanding of topics, so each chapter includes summaries and links to relevant videos. Cartoons Each chapter includes a cartoon used with permission from the popular website xkcd.com. These cartoons use humor to illustrate concepts from the text. Key Terms The field of project management includes many unique terms that are vital to creating a common language and understanding of the field. Key terms are displayed in boldface and are defined the first time they  appear. Definitions of key terms are provided in alphabetical order at the end of each chapter and in a glossary at the end of the text. Application Software Learning becomes much more dynamic with hands-on practice using the top project management software tools in the industry, Microsoft Project 2016, MindView, Basecamp, as well as other tools, such as spreadsheet software. Each chapter offers you many opportunities to get hands-on experience and build new software skills by applying concepts to problems posed for them. In this way, the text accommodates both those who learn by reading and those who learn by doing. SUPPLEMENTS The following supplemental materials are available when this text is used in a classroom setting. All of the teaching tools available with this text are provided to the instructor on a secure website. Instructors must contact me at [email protected] to gain access. Instructor’s Manual: The Instructor’s Manual that accompanies this textbook includes additional instructional material to assist in class preparation, including suggestions for lecture topics and additional discussion questions. PowerPoint Presentations: The instructor site for this text includes lecture slides for each chapter created with Microsoft PowerPoint. These slides provide a teaching aid for classroom presentation, and they can be made available to students on the organization’s secure network for online review. Instructors can modify slides or add their own slides for additional topics they introduce to the class. Solution Files: Solutions to end-of-chapter questions are on the instructor site. Test Banks: In addition to the Quick Quiz questions in the text and interactive quizzes available from www.intropm.com, the  secure instructor site includes hundreds of additional test questions in various formats. Student Online Companion: As mentioned earlier, the free student site includes links to sites mentioned in the text, template files, interactive quizzes, and other helpful resources, especially from the Links tab. ACKNOWLEDGEMENTS I thank my many colleagues and experts in the field who contributed information to this book. I especially thank the main reviewers for this edition: Angela Trego, PhD, PE, PMP® from Utah Valley University; Don R. James, PMP®, Adjunct Professor, Lone Star College in Houston, Texas and Founder/Principal Consultant, PMO To Go, LLC; Peter Monkhouse, P.Eng. MBA, PMP®, University of Toronto School of Continuing Studies, Certificate Advisor, Project Management Program; and my proof reader, Gary Liebert, Ph.D. James Stewart from American University in Maryland, Ray Roche from the Canberra Institute of Technology in Australia, and Cindy LeRouge from St. Louis University provided reviews and edits of prior editions. I also thank Randall Munroe, creator of xkcd.com, for allowing me to use his great comics. I want to thank my students and colleagues at Augsburg College, the University of Minnesota, and corporate classes for providing input. Special thanks to Janet Phetsamone, Ong Thao, and Kendal Vue for their inputs on using Basecamp. I received many valuable comments from them on ways to improve my materials and courses. I am also grateful for the examples students and instructors around the world provide and the questions they ask in classes or via email. I learn new aspects of project management and teaching by interacting with students, faculty, and staff. Most of all, I am grateful to my family. Without their support, I never could have written this book. My wonderful husband, Dan, was very patient and supportive, as always. His expertise as a lead software developer for Milner Technologies (formerly ComSquared Systems) comes in handy, too. Our three children, Anne, Bobby, and Scott, continue to be very supportive of their mom’s work. Our  children all understand the main reason why I write—I have a passion for educating future leaders of the world, including them. As always, I am eager to receive your feedback on this book. Please send all feedback to me at [email protected] Kathy Schwalbe, Ph.D., PMP® Professor, Department of Business Administration Augsburg College ABOUT THE AUTHOR Kathy Schwalbe was a Professor in the Department of Business Administration at Augsburg College in Minneapolis, where she taught courses in project management, problem solving for business, systems analysis and design, information systems projects, and electronic commerce. She retired from teaching in May 2015 to focus on writing, traveling, and enjoying life! Kathy was also an adjunct faculty member at the University of Minnesota, where she taught a graduate- level course in project management in the engineering department. She also provides training and consulting services to several organizations and speaks at numerous conferences. Kathy’s first job out of college was as a project manager in the Air Force. She worked for 10 years in industry before entering academia in 1991. She was an Air Force officer, project manager, systems analyst, senior engineer, and information technology consultant. Kathy is an active member of PMI, having served as the Student Chapter Liaison for the Minnesota chapter, VP of Education for the Minnesota chapter, Editor of the ISSIG Review, Director of Communications for PMI’s Information Systems Specific Interest Group, member of PMI’s test-writing team, and writer for the community posts. Kathy earned her Ph.D. in Higher Education at the University of Minnesota, her MBA at Northeastern University’s High Technology MBA program, and her B.S. in mathematics at the University of Notre Dame. She was named Educator of the Year in 2011 by the Association of Information Technology Professionals (AITP) Education Special Interest Group (EDSIG). Kathy lives in Minnesota with her husband, Dan. They enjoy being empty-nesters after raising three children. Visit her personal website at www.kathyschwalbe.com and the text site at www.intropm.com. Other books by Kathy Schwalbe: Information Technology Project Management, Eighth Edition (Boston: Cengage Learning, 2016). Appendix A: Brief Guide to Microsoft Project Professional 2016 (Minneapolis: Schwalbe Publishing, 2016). Healthcare Project Management, co-authored with Dan Furlong, (Minneapolis: Schwalbe Publishing, 2013).. Chapter 1 An Introduction to Project, Program, and Portfolio Management LEARNING OBJECTIVES After reading this chapter, you will be able to: Understand the growing need for better project, program, and portfolio management Explain what a project is, provide examples of projects, list various attributes of projects, and describe project constraints Describe project management and discuss key elements of the project management framework, including project stakeholders, the project management knowledge areas, common tools and techniques, project success factors, and project benefits measurement Discuss the relationship between project, program, and portfolio management and their contributions to enterprise success Describe the project management profession, including the role of project managers and suggested skills, the role of professional organizations like the Project Management Institute, the importance of certification and ethics, project management careers, and the growth of project and portfolio management software  OPENING CASE Doug Milis, the Chief Executive Officer (CEO) of Global Construction, Inc., was summarizing annual corporate highlights to the board of directors. Like many other large construction companies, they had a very difficult year. After having scaled down operations a few years ago, this past year they had trouble finding enough qualified workers to meet the growing demand for new construction. When one of the board members asked what he was most proud of that year, Doug thought for a few seconds, and then replied, “Excellent question, Gabe. Honestly, I think the main reason we survived this year was because we are truly a project-based organization. We have dramatically improved our ability to quickly select and implement projects that help our company succeed and cancel or redirect other projects. All our projects align with our business strategies, and we have consistent processes in place for getting things done. We can also respond quickly to market changes, unlike many of our competitors. Marie Scott, our Director of the Project Management Office (PMO), has done an outstanding job in making this happen. And believe me, it was not easy. It’s never easy to implement changes across an entire company. But with this new capability to manage projects across the organization, I am very confident that we will have continued success in years to come.” INTRODUCTION Many people and organizations today have a new or renewed interest in project management. In the past, project management primarily focused on providing schedule and resource data to top management in just a few industries, such as the military and construction industries. Today’s project management involves much more, and people in every industry and every country manage projects. New technologies have become a significant factor in many businesses, and the use of interdisciplinary and global work teams has radically changed the work environment. The facts below demonstrate the significance of project management: Demand for projects continues to increase, with GDP contributions from project-oriented industries forecasted to be US$20.2 trillion by 2017. Employers will need 87.7 million individuals working in project management-oriented roles by 2027. “The talent gap could result in a potential loss of some US$207.9 billion in GDP through 2027.”1 “Job Outlook 2017” says the market is good for college graduates who demonstrate the most important attribute employers want: the ability to work as part of a team.2 Organizations waste $97 million for every $1 billion spent on projects, according to Project Management Institute’s (PMI’s) 2017 Pulse of the Profession® report. That represents a 20% improvement from the previous year. Organizations realize that excelling at project management definitely affects the bottom line.3 The United States (U.S.) signed The Program Management Improvement and Accountability Act (PMIAA) into law in December 2016 to enhance best practices in project and program management throughout the federal government. In 2015, the average salary for someone in the project management profession in U.S. dollars was $108,200 per year in the U.S.; $134,000 in Switzerland, (the highest-paid country); and $19,602 in Egypt (the lowest-paid country). These average salaries do not include bonuses. The average total compensation for project management workers in the U.S., for example, was $130,000. Of the 9,677 people from the U.S. who responded to PMI’s salary survey, 81% had the Project Management Professional (PMP®) credential, and their salary was over 22% higher than those without it. This data is based on responses from over 26,000 people in 34 countries.4 It is also interesting to note that 38% of the salary survey respondents were women, 11% had a degree in project management, and the project management department or Project Management Office (PMO) was the department most listed at 31%.5  Project management is also a vital skill for personal success. Managing a family budget, planning a wedding, remodeling a house, completing a college degree, and many other personal projects can benefit from good project management. WHAT WENT WRONG? In 1995, the Standish Group published an often-quoted study entitled “CHAOS.” This prestigious consulting firm surveyed 365 information technology (IT) executive managers in the U.S. who managed more than 8,380 IT application projects. As the title of the study suggests, the projects were in a state of chaos. U.S. companies spent more than $250 billion each year in the early 1990s on approximately 175,000 IT application development projects. Examples of these projects included creating a new database for a state department of motor vehicles, developing a new system for car rental and hotel reservations, and implementing a client-server architecture for the banking industry. Their study reported that the overall success rate of IT projects was only 16.2 percent. The surveyors defined success as meeting project goals on time and on budget. The study also found that more than 31 percent of IT projects were canceled before completion, costing U.S. companies and government agencies more than $81 billion. The authors of this study were adamant about the need for better project management in the IT industry. They explained, “Software development projects are in chaos, and we can no longer imitate the three monkeys—hear no failures, see no failures, speak no failures.” 6 In a later study, PricewaterhouseCoopers surveyed 200 companies from 30 different countries about their project management maturity and found that over half of all projects failed. They also found that only 2.5 percent of corporations consistently met their targets for scope, schedule, and cost goals for all types of projects. These statistics made people understand the need to improve the practice of project management.7 Although several researchers question the methodology of the CHAOS studies, their popularity has prompted organizations throughout the world to examine their practices in managing projects. Managers are recognizing that to be successful, they need to be conversant with and use modern project management techniques. People from all types of disciplines—science, liberal arts, education, business, etc.—can benefit from basic project management principles. Individuals are realizing that to remain competitive, they must develop skills to effectively manage the professional and personal projects they undertake. They also realize that many of the concepts of project management, especially interpersonal skills, will help them as they work with people on a day-to-day basis. Organizations claim that using project management provides advantages, such as: Better control of financial, physical, and human resources Improved customer relations Shorter development times Lower costs Higher quality and increased reliability Higher profit margins Improved productivity Better internal coordination Higher worker morale In addition to project management, organizations are embracing program and portfolio management to address enterprise-level needs. This chapter introduces projects and project management, describes the differences between project, program, and portfolio management, discusses the role of the project manager, and provides important background information on this growing profession. WHAT IS A PROJECT? To discuss project management, it is important to understand the concept of a project. A project is “a temporary endeavor undertaken to create a unique product, service, or result.”8 Operations, on the other hand, is work done in organizations to sustain the business. Projects are different from operations in that they end when their objectives have been reached or the project has been terminated. Examples of Projects Projects can be large or small and involve one person or thousands of people. They can be done in one day or take years to complete. Examples of projects include the following: A young couple hires a firm to design and build them a new house A retail store manager works with employees to display a new clothing line A college campus upgrades its technology infrastructure to provide wireless Internet access A medical technology firm develops a device that connects to smart phones A school implements new government standards for tracking student achievement A group of musicians starts a company to help children develop their musical talents A pharmaceutical company launches a new drug A television network develops a system to allow viewers to vote for contestants and provide other feedback on programs The automobile industry develops standards for electric cars A government group develops a program to track child immunizations VIDEO HIGHLIGHTS PMI recognizes outstanding performance in project management by announcing a Project of the Year award winner. Their website lists winners since 1989, and videos summarize several award-winning projects, such as the following: 2016: National Synchrotron Light Source II, New York USA 2015: El Segundo Refinery Coke Drum Reliability Project, California USA 2014: AP60 Phase 1 Project, Jonquiere, Quebec, Canada  You can also see how project management was used on much older projects. Mark Kozak-Holland wrote a book in 2011 called “The History of Project Management.” In describing his book, the author states the following: “Think about the Giza Pyramid, the Parthenon, the Colosseum, the Gothic Cathedrals of Medieval Europe, the great voyages of exploration, the Taj Mahal, and the mega projects of the industrial revolutions. Was project management used on these projects? Were the concepts of project management even understood? Can we connect modern and ancient project management?” A 5-minute video does an excellent job of showing how project management was used in building the Giza Pyramid as viewers listen to music while seeing images and text on the screen. You can find this and other videos on the companion website for this text at www.intropm.com. Project Attributes As you can see, projects come in all shapes and sizes. The following attributes help to further define a project: A project has a unique purpose. Every project should have a well-defined objective. For example, many people hire firms to design and build a new house, but each house, like each person, is unique. A project is temporary. A project has a definite beginning and a definite end. For a home construction project, owners usually have a date in mind when they’d like to move into their new home. A project drives change and enables value creation. A project is initiated to bring about a change in order to meet a need or desire. Its purpose is to achieve a specific objective which changes the context (a living situation, in this house project example) from a current state to a more desired or valued future state. A project is developed using progressive elaboration or in an iterative fashion. Projects are often defined broadly when they begin, and as time passes, the specific details of the project become clearer. For example, there are many  decisions that must be made in planning and building a new house. It works best to draft preliminary plans for owners to approve before more detailed plans are developed. A project requires resources, often from various areas. Resources include people, hardware, software, or other assets. Many different types of people, skill sets, and resources are needed to build a home. A project should have a primary customer or sponsor. Most projects have many interested parties or stakeholders, but someone must take the primary role of sponsorship. The project sponsor usually provides the direction and funding for the project. A project involves uncertainty. Because every project is unique, it is sometimes difficult to define the project’s objectives clearly, estimate exactly how long it will take to complete, or determine how much it will cost. External factors also cause uncertainty, such as a supplier going out of business or a project team member needing unplanned time off. Uncertainty is one of the main reasons project management is so challenging, because uncertainty invokes risk. A good project manager contributes to a project’s success. Project managers work with the project sponsors, the project team, and the other people involved in a project to define, communicate, and meet project goals. Unlike the pilot captain in the comic in Figure 1-1, project managers (and real pilots, too) must be professional on the job. You can develop skills to help manage uncertainty and other challenges you will face in managing projects.  Figure 1-1. Captain speaking (www.xkcd.com) Project Constraints Every project is constrained in different ways. Some project managers focus on scope, schedule, and cost constraints. These limitations are sometimes referred to in project management as the triple constraint. To create a successful project, project managers must consider scope, schedule, and cost and balance these three often-competing goals. They must consider the following: Scope: What work will be done as part of the project? What unique product, service, or result does the customer or sponsor expect from the project? Schedule: How long should it take to complete the project? What is the timeline? Cost: What should it cost to complete the project? What is the project’s budget? What resources are needed? Other people focus on the quadruple constraint, which adds quality as a fourth constraint.  Quality: How good does the quality of the products or services need to be? What do we need to do to satisfy the customer? The PMBOK® Guide -–Sixth Edition suggests these four constraints plus risk and resources, but states that there may be others as well, depending on the project. Figure 1-2 shows these six constraints. The triple constraint goals—scope, schedule, and cost—often have a specific target at the beginning of the project. For example, a couple might initially plan to move into their new 2,000 square foot home in six months and spend $300,000 on the entire project. The couple will have to make many decisions along the way that may affect meeting those goals. They might need to increase the budget to meet scope and time goals or decrease the scope to meet time and budget goals. The other three constraints—quality, risk, and resources—affect the ability to meet scope, schedule, and cost goals. Projects by definition involve uncertainty and resources, and the customer defines quality. No one can predict with one hundred percent accuracy what risks might occur on a project. Resources (people) working on the house might produce different results at different quality levels, and material resources may vary as well. Customers cannot define their quality expectations in detail for a project on day one. These three constraints often affect each other as well as the scope, schedule, and cost goals of a project. Figure 1-2. Typical project constraints  For example, the couple may have picked out a certain type of flooring for most of their home early in the design process, but that supplier may have run out of stock, forcing them to choose a different flooring to meet the schedule goal. This issue may affect the cost of the project. Projects rarely finish according to the discrete scope, schedule, and cost goals originally planned. Instead of discrete target goals for scope, schedule, and cost, it is often more realistic to set a range of goals that allow for uncertainties, such as spending between $275,000 and $325,000 and having the home completed within five to seven months. These goals allow for inevitable changes due to risk, resources, and quality considerations. Experienced project managers know that you must decide which constraints are most important on each particular project. If time is most important, you must often change the initial scope and/or cost goals to meet the schedule. You might have to accept more risk and lower quality expectations. If scope goals are most important, you may need to adjust schedule and/or cost goals, decrease risk, and increase quality expectations. If communications is most important, you must focus on that. If there are set procurement goals or constraints, that knowledge might be key to the project. In any case, sponsors must provide some type of target goals for a project’s scope, schedule, and cost and define other key constraints for a project. The project manager should be communicating with the sponsor throughout the project to make sure the project meets his or her expectations. How can you avoid the problems that occur when you meet scope, schedule, and cost goals, but lose sight of customer satisfaction? The answer is good project management, which includes more than meeting project constraints. WHAT IS PROJECT MANAGEMENT? Project management is “the application of knowledge, skills, tools and techniques to project activities to meet the project requirements.”9 Project managers must not only strive to meet specific scope, schedule, cost, resource, risk, and quality requirements of projects, they must also facilitate the entire process to meet the needs and expectations of the people involved in or affected by project activities.  Figure 1-3 illustrates a framework to help you understand project management. Key elements of this framework include the project stakeholders, project management process groups, knowledge areas, tools and techniques, project success, and the contribution of a portfolio of projects to the success of the entire enterprise. Each of these elements of project management is discussed in more detail in the following sections. Figure 1-3. Project management framework Project Stakeholders Stakeholders are the people involved in or affected by project activities and include the project sponsor, project team, support staff, customers, users, suppliers, and even opponents to the project. These stakeholders often have very different needs and expectations. For example, there are several stakeholders involved in a home construction project. The project sponsors would be the potential new homeowners. They would be the people paying for the house and could be on a very tight budget, so they would expect the contractor to provide accurate estimates of the costs involved in building the house. They would also need a realistic idea of when they could move in and what type of home they could afford given their budget constraints. The new homeowners would have to make important decisions to keep the costs of the house within their budget. Can they afford to finish the basement right away? If they can afford to finish the basement, will it affect the projected move-in date? In this example, the project sponsors are also the customers and users for the product, which is the house. The project manager in this example would normally be the general contractor responsible for building the house. He or she needs to work with all the project stakeholders to meet their needs and expectations. The project team for building the house would include several construction workers, electricians, carpenters, and so on. These stakeholders would need to know exactly what work they must do and when they need to do it. They would need to know if the required materials and equipment will be at the construction site or if they are expected to provide the materials and equipment. Their work would need to be coordinated since there are many interrelated factors involved. For example, the carpenter cannot put in kitchen cabinets until the walls are completed. Support staff might include the employers of the homeowners, the general contractor’s administrative assistant, and other people who support other stakeholders. The employers of the homeowners might expect their employees to complete their work but allow some flexibility so they can visit the building site or take phone calls related to building the house. The contractor’s administrative assistant would support the project by coordinating meetings between the buyers, the contractor, suppliers, and other stakeholders. Building a house requires many suppliers. The suppliers would provide the wood, windows, flooring materials, appliances, and other items. Suppliers would expect exact  details on what items they need to provide, where and when to deliver those items, and similar information. Additional stakeholders would include the city council and mayor, who would be interested in increasing revenues. They might suggest certain guidelines for the minimum value of the homes for providing adequate property taxes. The city may also have regulations to ensure the safety of the public in the area of the construction site. The local housing inspector would also be a stakeholder, concerned with ensuring that everything meets specific codes and regulations. There may or may not be opponents to a project. In this example, there might be a neighbor who opposes the project because the workers are making so much noise that she cannot concentrate on her work at home, or the noise might awaken her sleeping children. She might interrupt the workers to voice her complaints or even file a formal complaint. Alternatively, the neighborhood might have association rules concerning new home design and construction. If the homeowners did not follow these rules, they might have to halt construction due to legal issues. As you can see from this example, there are many different stakeholders on projects, and they all have different interests. Stakeholders’ needs and expectations are important in the beginning and throughout the life of a project. Successful project managers develop good relationships with project stakeholders to understand and meet their needs and expectations. Project Management Process Groups and Knowledge Areas The five project management process groups include initiating, planning, executing, monitoring and controlling, and closing activities. Chapter 3 provides more information on the process groups and how they relate to the ten project management knowledge areas. Project management knowledge areas describe the key competencies that project managers must develop. Project managers must have knowledge and skills in all ten of these areas, briefly described as follows: Project integration management is an overarching function that coordinates the work of all other knowledge areas. It affects and is affected by all other knowledge areas. Project scope management involves working with all appropriate stakeholders to define, gain written agreement for, and manage all the work required to complete the project successfully. Project schedule management includes estimating how long it will take to complete the work, developing an acceptable project schedule given cost-effective use of available resources, and ensuring timely completion of the project. Project cost management consists of preparing and managing the budget for the project. Project quality management ensures that the project will satisfy the stated or implied needs for which it was undertaken. Project resource management is concerned with making effective use of the people and physical resources needed for the project. Project communications management involves generating, collecting, disseminating, and storing project information. Project risk management includes identifying, analyzing, and responding to risks related to the project. Project procurement management involves acquiring or procuring goods and services for a project from outside the performing organization. Project stakeholder management focuses on identifying project stakeholders, understanding their needs and expectations, and engaging them appropriately throughout the project. Note that PMI renamed project time management to project schedule management and project human resource management to project resource management in the PMBOK® Guide – Sixth Edition in 2017. Project Management Tools and Techniques Thomas Carlyle, a famous historian and author, stated, “Man is a tool-using animal. Without tools he is nothing, with tools he is all.” As the world continues to become more complex, it is even more important for people to develop and use tools, especially for managing important projects. Project management tools and techniques assist project managers and their teams in carrying out work in all ten knowledge areas. For example, some popular schedule-management tools and techniques include Gantt charts, project network diagrams, and critical path analysis. Figure 1-4 lists some commonly used tools and techniques by knowledge area. You will learn more about these and other tools and techniques throughout this text. Knowledge Tools and Techniques Area/Category Integration Project selection methods, project management management methodologies, project charters, project management plans, project management software, change requests, change control boards, project review meetings, lessons-learned reports Scope management Scope statements, work breakdown structures, mind maps, statements of work, requirements analyses, scope management plans, scope verification techniques, and scope change controls Schedule Gantt charts, project network diagrams, critical- management Cost path analyses, crashing, fast tracking, schedule management performance measurements Net present value, return on investment, payback analyses, earned value management, project portfolio management, cost estimates, cost management plans, cost baselines Quality management Quality metrics, checklists, quality control charts, Resource Pareto diagrams, fishbone diagrams, maturity management models, statistical methods Motivation techniques, empathic listening, responsibility assignment matrices, project organizational charts, resource histograms, team building exercises Communications Communications management plans, kickoff management meetings, conflict management, communications media selection, status and progress reports, virtual communications, templates, project websites Risk management Risk management plans, risk registers, probability/impact matrices, risk rankings Procurement Make-or-buy analyses, contracts, requests for management proposals or quotes, source selections, supplier evaluation matrices Stakeholder Stakeholder registers, stakeholder analyses, issue management logs, interpersonal skills, reporting systems Figure 1-4. Common project management tools and techniques by knowledge area Note: The bolded items are “super tools.” A survey of 753 project and program managers was conducted to rate several project management tools. Respondents were asked to rate tools on a scale of 1–5 (low to high) based on the extent of their use and the potential of the tools to help improve project success. “Super tools” were defined as those that had high use and high potential for improving project success. These super tools included software for task scheduling (such as project management software), scope statements, requirements analyses, and lessons-learned reports. Tools that were already extensively used and have been found to improve project performance included progress reports, kick-off meetings, Gantt charts, and change requests. These super tools are bolded in Figure 1-4.10 The PMBOK® Guide – Sixth Edition now lists tools and techniques based on their purpose, as follows: Data gathering: benchmarking, brainstorming, check sheets, checklists, focus groups, interviews, market research, questionnaires and surveys, statistical sampling Data analysis: alternatives analysis, assessment of other risk parameters, assumption and constraint analysis, cost of quality, cost-benefit analysis, decision tree analysis, document analysis, earned value analysis, influence diagrams, iteration burndown chart make-or-buy analysis, performance reviews, process analysis, proposal evaluation, regression analysis reserve analysis, risk data quality assessment, risk probability and impact assessment, root cause analysis, sensitivity analysis, simulation stakeholder analysis SWOT analysis, technical performance analysis, trend analysis, variance analysis, and what-if scenario analysis Data representation: affinity diagrams, cause-and-effect diagrams, control charts, flow charts, hierarchical charts, histograms, logical data models, matrix diagrams, matrix- based charts, mind mapping, probability and impact matrix, scatter diagrams, stakeholder engagement assessment matrix, stakeholder mapping/representation, and text- oriented formats Decision making: multi-criteria decision analysis and voting Communication: feedback and presentations Interpersonal and team skills: active listening, communication styles assessment, conflict management, cultural awareness, decision making, emotional intelligence, facilitation, influencing, leadership, meeting management, motivation, negotiation, networking, nominal group, observation/conversation, political awareness, team building Ungrouped: advertising, agile release planning, analogous estimating, audits, bidder conferences, bottom-up estimating, change control tools, claims administration, colocation, communication methods, communication models, communication requirements analysis, communication technology, context diagram, contingent response strategies, cost aggregation, critical path method, decomposition, dependency determination and integration, design for X, expert judgment, financing, funding limit reconciliation, ground rules, historical information review, individual and team assessments, information management, inspections, knowledge management, leads and lags, meetings, organization theory, parametric estimating, pre-  assignment, precedence diagramming method, problem solving, product analysis, project management information system, project reporting, prompt lists, prototypes, quality improvement methods, recognition and rewards, representations of uncertainty, resource optimization, risk categorization, rolling wave planning, schedule compression, schedule network analysis, source selection analysis, strategies for opportunities strategies for overall project risk, strategies for threats, test and inspection planning, testing/product evaluations, three-point estimating, to-complete performance index, training, virtual teams These long lists of tools and techniques can be overwhelming. This text will focus on those used most often and with the most potential, providing the context and detailed examples for using them. It is crucial for project managers and their team members to determine which tools will be most useful for their particular projects. Selecting the appropriate tools and techniques (as well the processes, inputs, outputs, and life cycle phases, discussed later in this book) is part of project tailoring. Project management should be tailored to meet the unique needs of projects, organizations, and most importantly, people. After all, projects are done by, and for, people. Despite its advantages, project management is not a silver bullet that guarantees success on all projects. Some projects, such as those involving new technologies, have a higher degree of uncertainty, so it is more difficult to meet their scope, schedule, and cost goals. Project management is a very broad, often complex discipline. What works on one project may not work on another, so it is essential for project managers to continue to develop their knowledge and skills in managing projects. It is also important to learn from the mistakes and successes of past projects. Project Success How do you define the success or failure of a project? There are several ways to define project success. The list that follows outlines a few common criteria for measuring project success as applied to the example project of building a new 2,000 square foot home within six months for $300,000:  The project met scope, schedule, and cost goals. If the home was 2,000 square feet and met other scope requirements, was completed in six months, and cost $300,000, we could call it a successful project based on these criteria. Note that the CHAOS studies mentioned in the What Went Right? and What Went Wrong? examples used this definition of success. The project satisfied the customer/sponsor. Even if the project met initial scope, schedule, and cost goals, the couple paying for the house might not be satisfied. Perhaps the project manager never returned their calls and was rude to them or made important decisions without their approval. Perhaps the quality of some of the construction or materials was not acceptable. If the customers were not happy about important aspects of the project, it would be deemed a failure based on this criterion. Many organizations implement a customer satisfaction rating system for projects to measure project success. The results of the project met its main objective, such as making or saving a certain amount of money, providing a good return on investment, or simply making the sponsors happy. If the couple liked their new home and neighborhood after they lived there for a while, even if it cost more or took longer to build or the project manager was rude to them, it would be a successful project based on this criterion. As another example, suppose the owners wanted to keep the house for just a few years and then sell it for a good return. If that happened, the couple would deem the project a success, regardless of other factors involved. Note that for many projects done to meet ROI objectives, financial success cannot be determined until sometime after the project is completed. Project managers play a vital role in helping projects succeed. Project managers work with the project sponsors, the project team, and the other stakeholders involved in a project to meet project goals. They also work with the sponsor to define success for that particular project. Good project managers do not assume that their definition of success is the same as the sponsors’ definition. They take the time to understand their sponsors’ expectations. For example, if you are building a home for someone, find out what is most important: Meeting scope, schedule, and cost goals of the project to build the home Satisfying other needs, such as communicating in a certain way Ensuring the project delivers a certain result, such as providing the home of the owners’ dreams or a good return on investment. WHAT WENT RIGHT? Follow-up studies by the Standish Group (see the previously quoted “CHAOS” study in the What Went Wrong? passage) showed improvement in the statistics for IT projects: The number of successful projects (those completed on time, on budget with a satisfactory result) was 29 percent in 2015 based on a sample of over 50,000 software development projects worldwide. The number of failed projects (those canceled or not used after implementation) was 19 percent. That leaves 52% of projects as challenged (over budget, late, and/or poorly implemented). These numbers include projects of all sizes and methodologies. The 2015 CHAOS study also summarized the success rates of projects by size, showing that 62% of small projects were successful from 2011-2015 compared to only 2% of grand, 6% of large, 9% of medium, and 21% of moderate size projects. Small projects are obviously easier to complete successfully. Agile approaches were also measured across all project sizes from 2011-2015, showing that 39% of all agile projects were successful compared to 11% of waterfall projects. For small projects, 58% of agile projects were successful compared to 44% of waterfall projects. About 10,000 projects were included for these statistics.11 The success criteria should help you to develop key performance indicators (KPIs) needed to track project progress. It is important to document this information in enough detail to eliminate ambiguity. A project benefits management plan should be created early in the project life cycle and updated as needed, as described in later chapters. PROGRAM AND PROJECT PORTFOLIO MANAGEMENT About one-quarter of the world’s gross domestic product is spent on projects. Projects make up a significant portion of work in most business organizations or enterprises, and successfully managing those projects is crucial to enterprise success. Two important concepts that help projects meet enterprise goals are the use of programs and project portfolio management. Programs A program is “a group of related projects, subsidiary programs, and program activities managed in a coordinated manner to obtain benefits not available from managing them individually.” 12 Programs are not large projects; a megaproject is a very large project that typically costs over US $1 billion, affects over one million people, and lasts several years. MEDIA SNAPSHOT Popular Mechanics provides a list (including photos) of the 25 most impressive megaprojects throughout the world. Several are listed below, showing the time and cost required to complete them (US$): Panama Canal Expansion Project, Panama, Central America: 11 years, $5.25 billion. The original canal was built in 1914. The expansion project widened and deepened the canal to allow for larger ships. Port Mann Bridge, Vancouver, British Columbia, Canada: 6 years, $1.92 billion. Port Mann Bridge is the second largest bridge in North America, spanning 6,866 feet. Three Gorges Dam, China: 17 years, $22 billion. This dam on the Yangtze River is 595 feet tall, 131 feet wide, and over 7,600 feet long, with 32 main turbines producing electricity. 13  As you can imagine, it is often more economical to group projects together to help streamline management, staffing, purchasing, and other work. The following are examples of programs (Figure 1-5 illustrates the first program in the list). A construction firm has programs for building single- family homes, apartment buildings, and office buildings, as shown in Figure 1-5. Each home, apartment building, and office building is a separate project for a specific sponsor, but each type of building is part of a program. There would be several benefits to managing these projects under one program. For example, for the single-family homes, the program manager could try to get planning approvals for all the homes at once, advertise them together, and purchase common materials in bulk to earn discounts. A clothing firm has a program to analyze customer-buying patterns. Projects under this program might include one to send out and analyze electronic surveys, one to conduct several focus groups in different geographic locations with different types of buyers, and a project to develop an information system to help collect and analyze current customers’ buying patterns. A government agency has a program for children’s services, which includes a project to provide pre-natal care for expectant mothers, a project to immunize newborns and young children, and a project for developmental testing for preschool children, to name a few. Figure 1-5. Example programs  A program manager provides leadership and direction for the project managers heading the projects within the program. Program managers also coordinate the efforts of project teams, functional groups, suppliers, and operations staff supporting the projects to ensure that project products and processes are implemented to maximize benefits. Program managers are responsible for more than the delivery of project results; they are change agents responsible for the success of products and processes produced by those projects. Program managers often have review meetings with all their project managers to share important information and coordinate important aspects of each project. Many program managers worked as project managers earlier in their careers, and they enjoy sharing their wisdom and expertise with their project managers. Effective program managers recognize that managing a program is much more complex than managing a single project. In addition to skills required for project managers, program managers must also possess strong business knowledge, leadership capability, and communication skills. Project Portfolio Management A portfolio is defined as “projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives.”14 Many organizations support an emerging business strategy of project portfolio management (also called just portfolio management) by continuously selecting and managing the optimum set of projects and programs to deliver maximum business value. Portfolio managers need to understand how projects fit into the bigger picture of the organization, especially in terms of corporate strategy, finances, and business risks. They create portfolios based on meeting specific organizational goals, such as maximizing the value of the portfolio or making effective use of limited resources. Portfolio managers help their organizations make wise investment decisions by helping to select and analyze projects from a strategic perspective. Portfolio managers may or may not have previous experience as project or program managers. It is most important that they have strong financial and analytical skills and understand how projects and programs can contribute to meeting strategic goals.  The main distinction between project or program management and portfolio management is a focus on meeting tactical versus strategic goals. Tactical goals are generally more specific and short-term than strategic goals, which emphasize long-term goals for an organization. Individual projects and programs often address tactical goals, whereas portfolio management addresses strategic goals. Project and program management address questions like: Are we carrying out projects well? Are projects on time and budget? Do project stakeholders know what they should be doing? Portfolio management addresses questions like: Are we working on the right projects? Are we investing in the right areas? Do we have the right resources to be competitive? There can be portfolios for all types of projects. For example: In a construction firm, strategic goals might include increasing profit margins on large projects, decreasing costs on supplies, and improving skill levels of key workers. Projects could be grouped into these three categories for portfolio management purposes. In a clothing firm, strategic goals might include improving the effectiveness of IT, introducing new clothing lines, reducing inventory costs, and increasing customer satisfaction. These might be the main categories for their portfolio of projects. A government agency for children’s services could group projects into a portfolio based on strategies such as improving health, providing education, and so on to help make optimum decisions on use of available funds and resources. Figure 1-6 provides a comparative overview of project, program, and portfolio management. Organizational project management is a “framework in which portfolio, program, and project management are integrated with organizational enablers in order to achieve strategic objectives.” 15 Figure 1-6. Organizational project management framework (parts of figure) Source: Project Management Institute, Inc., A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition (2017).  Organizations group projects into portfolios to help them make better investment decisions, such as increasing, decreasing, discontinuing, or changing specific projects or programs based on their financial performance, risks, resource utilization, and similar factors that affect business value. If a construction firm has much higher profit margins on apartment buildings than single-family homes, for example, it might choose to pursue more apartment building projects. The firm might also create a new project to investigate ways to increase profits for single-family home projects. On the other hand, if the company has too many projects focused on financial performance and not enough focused on improving its work force, the portfolio manager might suggest initiating more projects to support that strategic goal. Just like a personal financial portfolio, a business’s portfolio should be diversified to account for risk. By grouping projects into portfolios, organizations can better tie their projects to meeting strategic goals. Portfolio management can also help organizations do a better job of managing its human resources by hiring, training, and retaining workers to support the projects in the organization’s portfolio. For example, if the construction firm needs more people with experience in building apartment buildings, they can make necessary adjustments by hiring or training current workers in the necessary skills. THE PROJECT MANAGEMENT PROFESSION As you can imagine, good project managers should have a variety of skills. Good program and portfolio managers often need additional skills and experience in managing projects and understanding organizational strategies. This section describes some of the skills that help you manage projects, and you will learn many more throughout this text. If you are serious about considering a career in project management, you should consider becoming a certified Project Management Professional. You should also be familiar with some of the project management software products available on the market today. Suggested Skills for Project, Program, and Portfolio Managers Project managers and their teams must develop knowledge and skills in the following areas: All ten project management knowledge areas The application area (domain, industry, market, etc.) The project environment (politics, culture, change management, etc.) General business (financial management, strategic planning, etc.) Human relations (leadership, motivation, negotiations, etc.) An earlier section of this chapter introduced the ten project management knowledge areas, as well as some tools and techniques that project managers use. The application area refers to the application to which project management is applied. For example, a project manager responsible for building houses or apartment buildings should understand the construction industry, including standards and regulations important to that industry and those types of construction projects. A project manager leading a large software development project must know a lot about that application area. A project manager in education, entertainment, the government, and other fields must understand those application areas. The application area is defined by the product, service, or result. Many organizations have defined their approach to creating specific products. The project is about applying that approach, i.e., the product defines the project. The project environment differs from organization to organization and project to project, but there are some skills that will help in most project environments. These skills include understanding change, and understanding how organizations work within their social, political, and physical environments. Project managers must be comfortable leading and handling change, since most projects introduce changes in organizations and involve changes within the projects themselves. Project managers need to understand the organizations they work in and how products are developed and services are provided. For example, it takes different skills and behavior to manage a project for a Fortune 100 company in the U.S. than it does to manage a government project for a new business in Poland or India. It also takes different skills and behaviors to manage a project in the construction industry from one in the entertainment or pharmaceutical industry. Project managers should also possess general business knowledge and skills. They should understand important topics related to financial management, accounting, procurement, sales, marketing, contracts, manufacturing, distribution, logistics, the supply chain, strategic planning, tactical planning, operations management, organizational structures and behavior, personnel administration, compensation, benefits, career paths, and health and safety practices. On some projects, it will be critical for project managers to have substantial experience in one or several of these general business areas. On other projects, project managers can delegate detailed responsibility for some of these areas to a team member, support staff, or even a supplier. Even so, the project managers must be intelligent and experienced enough to know which of these areas are most important and who is qualified to do the work. They must also make and/or take responsibility for all key project decisions. Achieving high performance on projects requires human relations skills, also known as soft skills. Some of these soft skills include effective communication, influencing the organization to get things done, leadership, motivation, negotiation, conflict management, and problem solving. Project managers must lead their project teams by providing vision, delegating work, creating an energetic and positive environment, and setting an example of appropriate and effective behavior. Project managers must focus on teamwork skills in order to use their people effectively. They need to be able to motivate different types of people and develop esprit de corps within the project team and with other project stakeholders. PMI Talent Triangle and the Importance of Leadership Skills PMI developed a talent triangle to emphasize the types of skills project managers need to continuously develop. The talent triangle includes: 1. Technical project management skills: Understanding the knowledge areas, process groups, and project management tools and techniques fall into this category.  2. Strategic and business management skills: Topics include strategic planning (described in more detail in Chapter 2), financial management, accounting, marketing, and other topics listed in the previous section. 3. Leadership skills: Leadership and management are terms often used interchangeably, although there are differences. Generally, a leader focuses on long-term goals and big-picture objectives, while inspiring people to reach those goals. A manager often deals with the day-to-day details of meeting specific goals. Some people say that, “Managers do things right, and leaders do the right things.” “Leaders determine the vision, and managers achieve the vision.” “You lead people and manage things.” Leadership is a soft skill, and there is no one best way to be a leader. Peter Northouse, author of a popular text called Leadership: Theory and Practice, says, “In the past 60 years, as many as 65 different classification systems have been developed to define the dimensions of leadership.”16 Some classification systems focus on group processes, while others focus on personality traits or behaviors. For example, the PMBOK® Guide – Sixth Edition briefly describes the following leadership styles: 1. Laissez-faire: Meaning “let go,” this hands-off approach lets teams determine their own goals and how to achieve them. 2. Transactional: This management by exception approach focuses on achieving goals or compliance by offering team members appropriate rewards and punishments. 3. Servant leader: People using this approach focus on relationships and community first and leadership is secondary. 4. Transformational: By working with others to identify needed changes, these leaders empower others and guide changes through inspiration. 5. Charismatic: These people can inspire others based on their enthusiasm and confidence.  6. Interactional: This leadership style is a combination of transactional, transformational, and charismatic. There are many different leadership styles in addition to the six listed above, and the one thing most experts agree on is that the best leaders are able to adapt their style to the needs of the situation. Daniel Goleman, author of Emotional Intelligence, also wrote a book called Primal Leadership, which describes six different styles of leadership and situations where they are most appropriate: 1. Visionary: Needed when an organization needs a new direction, and the goal is to move people towards a new set of shared dreams. The leader articulates where the group is going, but lets them decide how to get there by being free to innovate, experiment, and take calculated risks. 2. Coaching: One-on-one style that focuses on developing individuals, showing them how to improve their performance. This approach works best with workers who show initiative and request assistance. 3. Affiliative: Emphasizes the importance of team work and creating harmony by connecting people to each other. This approach is effective when trying to increase morale, improve communication, or repair broken trust. 4. Democratic: Focuses on people’s knowledge and skills and creates a commitment to reaching shared goals. This leadership style works best when the leader needs the collective wisdom of the group to decide on the best direction to take for the organization. 5. Pacesetting: Used to set high standards for performance. The leader wants work to be done better and faster and expects everyone to put forth their best effort. 6. Commanding: Most often used, also called autocratic or military style leadership. This style is most effective in a crisis or when a turnaround is needed. “The goal for leaders should be to develop a solid understanding of the different styles of leadership and their implications, and reach the  point where choosing the right one for the situation becomes second nature to them.”17 Project managers often take on the role of both leader and manager. Good project managers know that people make or break projects, so they must set a good example to lead their team to success. They are aware of the greater needs of their stakeholders and organizations, so they are visionary in guiding their current projects and in suggesting future ones. As mentioned earlier, program managers need the same skills as project managers. They often rely on their past experience as project managers, strong business knowledge, leadership capability, and communication skills to handle the responsibility of overseeing the multiple projects that make up their programs. It is most important that portfolio managers have strong financial and analytical ski