Chapter 1 PDF - Project Management Textbook

Introduction “Begin at the beginning, and go on till you come to the end: then stop.” —Alice’s Adventures in Wonderland and Through the Looking-Glass by Lewis Carroll he primary purpose of this book is to help you pass the Certified Associate in Project Management (CAPM) exam administered by the Pro...

Introduction “Begin at the beginning, and go on till you come to the end: then stop.” —Alice’s Adventures in Wonderland and Through the Looking-Glass by Lewis Carroll he primary purpose of this book is to help you pass the Certified Associate in Project Management (CAPM) exam administered by the Project Management Institute (PMI). Because the book has a laser-sharp focus on the exam objectives, expert project managers and project team members who want to pass the CAPM exam can use this book to ensure that they do not miss any objective. Yet this is not an exam-cram book. The chapters and the sections within each chapter are presented in a logical learning sequence: A topic and a chapter only depend upon the previously covered topics and chapters, and there is no hopping from topic to topic. The concepts and topics, both simple and complex, are clearly explained when they appear for the first time. No prior knowledge of project management is assumed. This facilitates stepwise learning, prevents confusion, and makes this book useful also for beginners who want to get up to speed quickly to pass the CAPM exam, even if they are new to the discipline of project management. T Who This Book Is For With a focus on the CAPM exam topics, this book is designed to serve the following audiences: ◆ Project management practitioners who want to prepare for the CAPM exam ◆ Entry-level project managers and project team members who want to prepare for the CAPM exam ◆ Beginners who want to join the field of project management ◆ Project managers who want a book to use as a quick and easy reference to the discipline of project management ◆ Instructors and trainers who want a textbook for a course on introductory project management Introduction How the Book Is Organized This book tells the story of project management in a cohesive, concise, yet comprehensive fashion. This book is written to the most current version of the CAPM exam based on the fourth edition of A Guide to the Project Management Body of Knowledge (PMBOK Guide) by PMI. The discipline of project management, according to the PMBOK Guide, contains nine knowledge areas, such as cost management and quality management, and five process groups: initiating, planning, executing, monitoring and controlling, and closing. The CAPM exam is solely based on the PMBOK Guide, which is organized along the knowledge areas. To keep things simple for the reader, I have also organized this book along the knowledge areas. That said, all efforts have been made to keep the presentation cohesive. All concepts are explained where they appear for the first time. All sections in a chapter and all chapters in the book are logically connected to each other to support sequential learning. A glossary at the end of the book covers all the important concepts and can be helpful for a quick check of a term at any stage of your reading. How Each Chapter Is Organized With the exception of Chapter 1, on project management framework, each chapter begins with a list of exam objectives on which the chapter is focused. These objectives are officially called tasks by PMI, and these tasks are organized into domains, which are essentially the process groups, except the last domain. I have exactly followed the order of the domains published by PMI, but I have shuffled around a few objectives to keep the topics and the subject matter in line with sequential learning and to avoid hopping from topic to topic. The first section in each chapter is an introduction in which we establish three underlying concepts or topics that will be explored in the chapter. Each chapter has the following features: ◆ Big Picture. Each chapter begins with introducing the big picture of the topics covered in the chapter. This prepares the reader for a smooth dive into the details. ◆ Study Checkpoints. Each chapter in its body presents Study Checkpoints, which are exercises to ensure that you get the crucial points in the covered material. The solutions to Study Checkpoints are presented in Appendix A. ◆ Notes and Tips. As you read through a chapter, you will find Notes that present additional helpful material related to the topic being described and Tips that provide additional real-world insight into the topic being discussed. ◆ Summary. The Summary section of each chapter provides the big, unified picture while reviewing the important concepts in the chapter. xiii xiv Introduction ◆ Exam’s Eye View. The Exam’s Eye View section highlights the important points in the chapter from the perspective of the exam: the things that you must comprehend, the things that you should watch out for because they might not seem to fit in with the ordinary order of things, and the facts that you should memorize for the exam. ◆ Review Questions. Each chapter ends with a Review Questions section that has a two-pronged purpose: to help you test your knowledge of the material presented in the chapter and to help you evaluate your ability to answer the exam questions based on the exam objectives covered in the chapter. The answers to the review questions are presented in Appendix B. About the CAPM Exam This book covers the material for the CAPM exam. Passing this exam is necessary to obtain CAPM certification. To be eligible to take the CAPM exam, you must meet a set of minimum requirements. A summary of these requirements and other details are listed in the following table. The CAPM Exam at a Glance Exam Detail CAPM Number of questions Scoreable: 135 Pretest: 15 Maximum time allowed 3 hours Question types Multiple choice Minimum educational background High school diploma, associate degree, or equivalent Minimum project management experience 1,500 hours of work on a project team or 23 contact hours of formal project management education Exam fee (given in U.S. dollars—may vary by country) Member: $225 Non-member: $300 Sign code of professional conduct Yes Note: For the most up-to-date and detailed information, visit the PMI website at www.pmi.org. Introduction If you have heard about the PMP exam or are planning to take it after obtaining CAPM certification, you should know that CAPM certification is not a requirement for qualifying to take the PMP exam. Also, the main differences between the questions in the two exams are the following: ◆ The PMP exam will have situational questions that assume you have been working in the project management field. ◆ The CAPM exam is entirely based on the PMBOK Guide, whereas the PMP exam can have questions on topics not covered in the PMBOK Guide or not covered in much detail. Some of these topics are management theories and professional and social responsibilities based on the Code of Ethics and Professional Conduct by PMI. Of course, this book covers these topics. The following points are common to both the PMP and CAPM exams: ◆ Pretest questions are randomly placed throughout the examination. Your score does not depend on these questions. ◆ Computer-based exams are preceded by a 15-minute computer tutorial, which is not part of the allotted exam time. ◆ The passing score is determined by an approach called the Modified Angoff Technique, which relies on the collective judgment of groups of CAPM certificants from around the globe. The final passing score for the examination is based on this pooled judgment and the calculation of the standard error on the mean. Finally, item analysis and reliability indices are calculated for each question. These credential examinations are offered via computer at locations in North America and in other countries around the world. For a complete list of computer-based testing locations, please visit www.2test.com. For the most up-to-date information regarding these examinations, please visit the certification section of PMI’s website at www.pmi.org. Following are a few tips that you can use while you are preparing for the exam and during the exam: ◆ PMI has a very formal way of naming processes, process groups, knowledge areas, and some documents. Know those formal names well. However, just like in real life, do not expect that the exam will always refer to these names in a formal way. To help you on this issue, this book refers to these names in both formal and informal ways. For example, controlling quality (informal) means the Perform Quality Control process (formal), scope management (informal) means Project Scope Management (formal), and initiating (or initiation) means the Initiating process group. xv xvi Introduction ◆ The questions in the CAPM exam are largely based on the PMBOK Guide. Still, you need to read the questions carefully and patiently and figure out what counts and what does not, if there is some extra information. ◆ Get comfortable with the idea that there will be some questions that you will not be able to answer correctly. In such a situation, just believe in yourself and your experience and accordingly select the best answer. You may have the option (read the instructions before starting the exam) to leave these questions for a possible review later if you have time. Key point: Move on without getting frustrated. ◆ There will be questions for which you will need to choose between an innocent way of skipping the formal process to save time and following the formal project management process. In almost all the cases, the correct answer will be to follow the process. ◆ There will be questions for which you will need to choose between facing the problem head on or taking an easy way out, such as dodging a thorny issue, ignoring a challenging problem, or postponing a difficult decision. Almost always, the correct answer is to meet the problem head on in a professional manner. ◆ To answer some questions correctly, understand that in the world of project management as seen from the perspective of PMI, project managers communicate directly and clearly and do not say things between the lines. For example, if you have a problem with a team member, you talk to the team member face to face rather than going to the member’s manager, which you might need to do eventually if you can’t solve the problem by dealing directly with the team member. ◆ Understand clearly the roles of the key stakeholders, such as the project manager, project sponsor, and customer. Especially understand your responsibilities as a project manager. You need to be proactive to make decisions and manage the project, influence the factors that contribute to changes rather than waiting for the changes to occur, and have up-to-date information about the project. ◆ Know the details of the input, output, and tools and techniques for each process. Here is an example: It’s not enough to remember that the project management plan is an input to a process. You should know that the project management plan is an input because it contains such and such subsidiary plans that are used in this process. Be prepared to see the subsidiary plan as an input in the answer options, whereas the PMBOK Guide lists the project management plan as an input. Best wishes for the exam; go for it! Chapter 1 Project Management Framework What’s Coming Ahead… Basic Concepts in Project Management Understanding Projects and Project Management Understanding the Project Lifecycle Understanding Project Management Knowledge Areas Introducing the Project Stakeholders Organizational Influences on Projects Origins of Projects Understanding Project Selection Triangular Relationship: Project, Program, and Portfolio Some Advanced Concepts Big Picture of Project Management What do the Eiffel Tower, the Internet, and this book have in common? Projects! All three of them are products of projects. Even given all the required material and knowledge, how do people really build immense and complex structures or systems, such as the Eiffel Tower of Paris, the Taj Mahal of Agra, or the Internet and the World Wide Web of the Information Age? The answer is again projects. Through projects, it is possible to build small and big and simple and complex things in an effective and efficient manner. All projects need to be managed. A so-called unmanaged project is simply a poorly managed project that is destined to fail. Therefore, the importance of project management cannot be overstated. We all know from experience that each project has (or should have) a beginning and an end. Therefore, managing a project means managing the lifecycle of the project, starting from the beginning (initiating) and going to the end (closing); this is accomplished using processes, which constitute what are called project management knowledge areas. Although you use your knowledge in terms of processes to manage projects, the management will be greatly influenced by the environment in which the project runs, such as the structure and culture of the performing organization. Projects also originate from their environments. The goal of this chapter is to walk you through the framework of project management. To that end, we will explore three avenues: the project lifecycle, project management knowledge areas, and the project environment. In the process of doing so, we will introduce some basic concepts of project management. Basic Concepts in Project Management Each discipline of knowledge, from physics to biology and from computer science to poetry, builds upon some basic concepts. The terms that refer to or define these concepts make up the language of the discipline. The very basic terms in project management are described briefly in the following list: ◆ Project. A project is a work effort made over a finite period of time with a start and a finish to create a unique product, service, or result. Because a project has a start and an end, it is also called a temporary effort or endeavor. ◆ Project phase. A project phase is a set of logically related activities that usually completes one or more major deliverables of the project. The phases are generally completed in sequence; however, an overlap is possible in some situations. Depending on its size and complexity, a project may have one or more phases. ◆ Organization. An organization is a group of individuals organized to work for some purpose or mission. Computer companies, energy companies (to whom you pay your electric bills), and cable companies are examples of organizations. An organization Basic Concepts in Project Management might offer products, such as books or donuts, or services, such as Internet access or online banking. A project is usually performed inside an organization. ◆ Project stakeholder. A project stakeholder is an individual or an organization that can be positively or negatively affected by the project execution. A project can have a wide spectrum of stakeholders, from the project sponsor, to an environmental organization, to an ordinary citizen. ◆ Process. A process is a set of related tasks performed to manage a certain aspect of a project, such as cost. Each process belongs to a knowledge area and corresponds to a process group. ◆ Knowledge area. A knowledge area in project management is defined by its knowledge requirements related to managing a specific aspect of a project, such as cost, by using a set of processes. PMI recognizes a total of nine knowledge areas, such as cost management and human resource management. ◆ Performing organization. The performing organization is the organization that is performing the project. ◆ Project management. Project management is the usage of knowledge, skills, and tools to manage a project from start to finish with the goal of meeting the project requirements. It involves using the appropriate processes. ◆ Program. A program is a set of related projects managed in a coordinated fashion to improve overall efficiency and effectiveness and to obtain benefits and control that would not be obtained by managing them individually. For example, a program could be delivering a product (or service) that consists of sub-products (or service components) delivered by the constituent projects. Also, a program might include related work that is not included in the scope of any of the constituent projects. ◆ Program management. Program management is the centralized, coordinated management of a specific program to achieve its strategic goals, objectives, and benefits. ◆ Program management office (PMO). The program management office is an entity in an organization that is responsible for providing centralized coordinated support to the program managers managing programs and unrelated projects. ◆ Project management office (PMO). The project management office refers to an entity in an organization that is responsible for providing centralized coordinated management and support for projects in the organization. ◆ Portfolio. A portfolio is a set of projects, programs, and related work that is managed in a coordinated fashion to obtain business objectives in the strategic plan of the organization. ◆ Portfolio management. Portfolio management is the centralized management of one or more portfolios that includes identifying, authorizing, prioritizing, managing, and controlling projects, programs, and other related work in order to attain specific business objectives in the strategic plan of the organization. 3 4 Chapter 1 PROJECT MANAGEMENT FRAMEWORK CAUTION Although both have the same abbreviation—PMO—the project management office and program management office are not identical. For example, only an organization that runs programs will have a program management office, whereas an organization that runs individual projects can have a project management office. This is a minimal set of terms that you need to understand before you can start your exploration of the world of project management. More terms will be introduced as you continue exploring the discipline of project management in this book. Now that you understand these basic terms, you can ask a very basic question: What does it mean to manage a project? In other words, what’s involved in managing a project? Understanding Projects and Project Management Before delving into the details of project management, you need to understand what a project is. At any organization there are many activities being executed every day. Most of these activities are organized into groups of interrelated activities. These groups fall into two categories: projects and operations. An operation is an ongoing and repetitive set of tasks, whereas a project has a lifecycle—a beginning and an end. Understanding a Project A project is a work effort made over a finite period of time with a start and a finish to create a unique product, service, or result. Because a project has a start and a finish, it is also called a temporary effort or endeavor. In other words, a project is a temporary endeavor taken to create a unique product, service, or result. So, a project has two defining characteristics: It is temporary, and it creates a unique product. Let’s explore further these two defining concepts: temporary and unique. Temporary. The temporary nature of projects refers to the fact that each project has a definite beginning and a definite end. A project can reach its end in one of two possible ways: ◆ The project has met its objectives—that is, the planned unique product has been created. ◆ The project has been terminated before its successful completion for whatever reason. Understanding Projects and Project Management The temporary nature of projects can also apply to two other aspects: ◆ The opportunity to market the product that the project will produce is temporary— that is, the product needs to be produced in a limited timeframe; otherwise, it will be too late. ◆ A project team is temporary—that is, the project team is disbanded after the project ends, and the team members may be individually assigned to other projects. However, remember that the temporary nature of a project does not refer to the product it creates. Projects can create lasting products, such as the Taj Mahal, the Eiffel Tower, or the Internet. The second defining characteristic of a project is that it must create a unique product. Unique product. The outcome of a project must be a unique product, service, or result. How do a product, service, and result differ from each other? ◆ Product. This is a tangible, quantifiable artifact that is either the end item or a component of it. The big-screen television in your living room, the Swiss watch on your wrist, and the wine bottle on your table are some examples of products. ◆ Service. Actually, when we say a project can create a service, we really mean the capability to perform a service. For example, a project that creates a website for a bank to offer online banking has created the capability to offer the online banking service. ◆ Result. This is usually the knowledge-related outcome of a project—for example, the results of an analysis performed in a research project. In this book, quite often we will refer to product, service, or result as just “product” or “project outcome” for brevity. Projects are organized to execute a set of activities that cannot be addressed within the limits of the organization’s ongoing normal operations. To clearly identify whether an undertaking is a project, you must understand the difference between a project and an operation. Distinguishing Projects from Operations An organization executes a multitude of activities as part of the work to achieve objectives. Some of these activities are to support projects, and others are to support what are called operations. An operation is a set of tasks that does not qualify to be a project. In other words, an operation is a function that performs ongoing tasks: It does not produce a unique (new) product, or it does not have a beginning and an end—or both. For example, to put together a data center is a project, but after you put it together, keeping it up and running is an operation. It is important to understand that projects and operations share some characteristics, such as the following: ◆ ◆ ◆ ◆ Both require resources, including human resources (people). Both are constrained to limited, as opposed to unlimited, resources. Both are managed—that is, planned, executed, and controlled. Both have objectives. 5 6 Chapter 1 PROJECT MANAGEMENT FRAMEWORK The distinctions between projects and operations can be made by sticking to the definition of a project—that it is temporary and unique. Operations are generally ongoing and repetitive. Although both projects and operations have objectives, a project ends when its objectives are met, whereas an operation continues toward attaining a new set of objectives when the current set of objectives has been attained. Projects can be performed at various levels of an organization; they vary in size and accordingly can involve just one person or a team. Table 1.1 presents some examples of projects. Table 1.1 Examples of Projects Project Outcome (Product, Service, or Result) Constructing Eiffel Tower Product Running presidential election campaign Results: win or lose; Products: documents Developing a website to offer online education Service Setting up a computer network in one building Service Moving a computer network from one building to another Result: network is moved Study the genes of members of Congress Results (of the research); Product: research paper STUDY CHECKPOINT 1.1 Identify each of the following items as a project or an operation. A. B. C. D. A librarian performing her daily job responsibilities A bookseller processing customer orders A network administrator ensuring that the network stays up and running 24⫻7 Taking a course in molecular biology A project can result in a product (or service) that is sustained by an operation. For example, constructing the Eiffel Tower is a project, whereas managing it for the tourists visiting it every day is an operation. How do projects come into existence? In other words, how do you come up with a project? Sure, you have an idea, a concept of some final product, but how exactly do you write it down and declare it a project? A project is born and brought up through a procedure called progressive elaboration. Understanding Projects and Project Management Understanding Progressive Elaboration As the saying goes, Rome was not built in a day. Rest aside, the product of a project—even the project plan—is not built in a day either. Usually there is a concept first and a broad vision for the end product—that is, the outcome of the project. The clearer the vision you have of the unique product that you want from the project, the more accurate the project plan will be. So, you move toward the project plan in incremental steps as the ideas about the final product are refined and as you get more and more information about the requirements in a progressive fashion. This procedure of defining (or planning) a project is called progressive elaboration. Here is an example of progressive elaboration. You wake up one morning with an idea to close the digital gap in your community. Now, you have a concept of the final product (result) of your project: Close the digital gap in your community. But what do you really mean by that? It might include many things—building computers in an economical way and providing them at low prices to those who don’t have them, raising awareness of the necessity of computer literacy, offering classes, and the like. Now you are really working to refine your idea of the final product. The second question is, how are you going to do this? Here you are referring to the project plan. You can see that the project plan and its accuracy and details depend upon how refined the idea of the final product is. The final product or objectives and the plan to achieve them will be elaborated further in steps. TIP Uncontrolled changes that make it into the project without being properly processed are called scope creep. Do not confuse progressive elaboration with scope creep. Progressive elaboration, in general, means developing something in incremental steps. The project plan will be broadly defined to start and will get more accurate, detailed, and explicit in an incremental fashion as better understanding about the project deliverables and objectives develops. It involves successive iterations of the planning process resulting in a more accurate and complete plan. Even after you have an approved final project plan and the project starts executing, progressive elaboration continues to some extent. For example, you will see later in this chapter that the execution and planning stages of the project interact with each other. Each stage of a project is managed by performing a set of processes. Understanding a Process Processes are the heart of project management. If you want to think of project management like a project management professional, think in terms of processes. Almost everything in the world of project management is done through processes. 7 8 Chapter 1 PROJECT MANAGEMENT FRAMEWORK What is a process, anyway? Back up a little and look around you; you will see processes everywhere, not only in project management. For example, when you make coffee in the morning, you go through a process. The water, the coffee filter, and the roasted hazelnut coffee made by grinding golden-colored beans are the input items to this process. The coffeemaker is the tool, and how you make the coffee is the technique. A cup of freshly brewed hazelnut coffee is an output item from this process. So, a process is a set of interrelated activities performed to obtain a specified set of products, results, or services. A process, as explained in the example and in Figure 1.1, consists of three elements: input, tools and techniques, and output. The term “raw data” in Figure 1.1 means that the input is processed to produce output. However, note that the raw data (input) for one process may be an output from another process. FIGURE 1.1 Three elements of a process: input, tools and techniques, and output. Of course, you can come up with other examples of processes that you have been using in your life without realizing it. In project management, you use processes to accomplish things, such as developing a project schedule, directing and managing the project execution, and developing and managing the project team. As illustrated in Figure 1.1, each process consists of three elements, described in the following list: ◆ Input. The input to a process consists of the raw data that is needed to start the process. For example, the list of activities that need to be scheduled is one of several input items to the process that will be used to develop the schedule of a project. ◆ Tools and techniques. Tools and techniques are the methods used to operate on the input to transform it into output. For example, project management software that helps to develop a schedule is a tool used in the schedule development process. ◆ Output. The output is the outcome or the result of a process. Each process contains at least one output item; otherwise, there would be no point in performing a process. For example, an output item of the schedule development process is, well, the project schedule. Understanding the Project Lifecycle Now that you understand what a process is, you likely realize that you will be using different processes at the different stages (not phases) of a project, such as planning and execution. Actually, the whole lifecycle of a project can be understood in terms of five stages, with each stage corresponding to a group of processes. Understanding the Project Lifecycle As you already know, each project has a beginning and an end. The time span from the project beginning to the project end is called the project lifecycle. If a project has multiple phases, all the phases are completed during its lifecycle in order to complete the project. Regardless of whether the project has multiple phases or just one phase, during this lifecycle, the project is started, organized and prepared for, carried out (project work is performed), and closed. In the standard terminology, a project is initiated, planned, executed, monitored and controlled, and closed. CAUTION Do not confuse project lifecycle with product lifecycle. A project is executed to create a product, which lasts after the project is finished. In general, the project lifecycle is contained within the lifecycle of each product it creates. For example, a project creates a product that lasts for a certain time after the project ends, and then it retires. As another example, a project is run to add features to a product that existed before the project was initiated and lasts after the project is completed. From initiation/authorization to completion/closure, a project goes through a whole lifecycle that includes defining the project objectives, planning the work to achieve those objectives, performing the work, monitoring and controlling the progress, and closing the project after receiving product acceptance. Figure 1.2 shows the different stages of the project lifecycle; the arrows indicate the flow of information. The five stages, technically called process groups, of a project lifecycle are described in the following list. CAUTION I refer to the five process groups as five stages for the purpose of helping you visualize a project. Technically and in PMBOK, they are called process groups. However, be prepared to recognize them regardless of how they are referred to in the exam; do not expect the exam to always refer to a process group, a process, or a document by its formal technical name. This is also true with the real world out there, where you will be performing projects. 9 10 Chapter 1 PROJECT MANAGEMENT FRAMEWORK FIGURE 1.2 Different stages in the lifecycle of a project. Each of these stages represents a process group. Initiating a Project This stage defines and authorizes the project. The project manager is named, and the project is officially launched through a signed document called the project charter, which contains items such as the purpose of the project, a high-level product description, a summary of the milestone schedule, and a business case for the project. Another outcome of this stage is a document called the stakeholder register, which identifies the project stakeholders and important information about them. The processes used to perform this stage fall into a group called the initiating process group. NOTE In the discipline of project management, like in many other disciplines, the term high-level means lacking details or not referring to details. Keep this meaning in mind when you read the terms in this book, such as high-level product description, high-level plan, and the like. Details are usually worked out through a process called progressive elaboration. Understanding the Project Lifecycle So, initiating a project means defining the project, getting approval to start it, and identifying and analyzing project stakeholders. During this stage, the initial scope of the project is defined; accordingly, initial resources are determined and allocated, a project manager with appropriate authority level is assigned, and project stakeholders are identified. Defining the project includes the following: ◆ Develop project objectives and describe how they are related to the organization’s business objectives and strategy. ◆ Specify the project deliverables, such as products, services, or results that will meet the objectives. In some cases, a deliverable and an objective may be the same. ◆ Based on the objectives and deliverables, define the initial scope of the project by explaining what will be done and drawing boundaries around what will be done; this means stating, where necessary, what will not be included. ◆ Based on the initial scope, estimate the project duration and the resources needed. More accurate estimates will be made during planning. ◆ Define the success criteria, which may be improved during planning. The project definition is incomplete without defining its success. ◆ Assign the initial project resources. For example, some initial resources are needed just to define and plan the project before even beginning to execute it. ◆ Assign a project manager if one is not already assigned. ◆ Authorize the project. While different organizations may have a different process to approve the projects, the standard way to do it is to approve the document that holds the definition of the project, such as the project charter. CAUTION The processes in the initiating process group, just like any other process group, can also be used to initiate a phase of a project that has multiple phases. Based on the project definition, you will identify the project stakeholders. TIP It’s a good policy to involve customers and other important stakeholders in the initiating stage of the project. It will give them a feeling of shared ownership that will greatly contribute to the success of the project by positively influencing factors such as acceptance of deliverables and stakeholder satisfaction. 11 12 Chapter 1 PROJECT MANAGEMENT FRAMEWORK Figure 1.3 presents the big picture of initiating a project by illustrating the relationships among major elements of this stage. The business need to be met by the project emerges from the organization’s business strategy, and based on the business need, somebody writes the statement of work and makes the business case. The business case and statement of work are the starting points to develop the initial project scope and thereby determine the initial resources. All this information becomes input to developing the project charter, which, in turn, is an input to the process of identifying stakeholders. FIGURE 1.3 Illustration of the relationships among the major building blocks of the big picture of initiating a project. NOTE If your project is divided into different phases, you will be going through the initiation stage at the beginning of each phase to check whether the decisions and plans made during the initiation of the project are still relevant to this phase. It helps to ensure the project is still focused on the business need for which it was started. After the project has been initiated, it needs planning. Understanding the Project Lifecycle Planning the Project In this stage, you, the project manager, along with the project management team, refine the project objectives and requirements and develop the project management plan, which is a collection of several plans that constitute a course of actions required to achieve the objectives and meet the requirements of the project. The project scope is finalized with the project scope statement. The project management plan, the outcome of this stage, contains subsidiary plans, such as a project scope management plan, a schedule management plan, and a quality management plan. The processes used to perform this stage fall into a group called the planning process group. So, project planning means the following three things: ◆ Refine the project objectives defined during project initiation and collect requirements based on stakeholder needs and expectations. ◆ Determine the scope of the project. ◆ Determine the course of action required to attain these objectives, which involves breaking down the scope and objectives into concrete, manageable tasks. It is important to plan the project because not all projects need all the planning processes, nor do they all need them to the same degree. Therefore, the content of the project management plan, the ultimate document developed from project planning, will depend upon a specific project. As the project goes through different stages, the project management plan may be updated and revised through the change control process. Following is an incomplete list of issues that project planning addresses: ◆ Which project management processes will be used for the project, what the level of implementation for each of the processes will be, and what the inputs and tools and techniques for the processes are ◆ The project baseline against which the performance of the project will be measured and against which the project will be monitored and controlled ◆ How the changes to the approved plan will be monitored and controlled ◆ What the needs and techniques for communication among the stakeholders are ◆ How the project lifecycle looks, including the project phases if the project is a multiphase one NOTE The project baseline is defined as the approved plan for the scope, schedule, and cost of the project. The project performance is measured against this baseline, and therefore this baseline is also called the performance baseline. The project baseline is also referred to in terms of its components: cost baseline, schedule baseline, and scope baseline. How do you know how the project is performing? You compare the performance to the baseline. Approved changes in scope, schedule, or cost will obviously change the baseline. Technical and quality parameters may also be included in the most fundamental baseline described here. 13 14 Chapter 1 PROJECT MANAGEMENT FRAMEWORK Figure 1.4 presents the big picture of project planning. Depending upon the complexity of the project, the project management plan can be either a summary or a collection of subsidiary plans and components, which might include the following: ◆ Standard plans from different aspects of project planning, such as the cost management plan, communication management plan, scope management plan, and risk management plan. ◆ Other components, such as the milestones list, the resource calendar, and baselines for scope, schedule, cost, and quality. A baseline is a reference plan against which all the performance deviations are measured. This reference plan can be the original or the updated plan. FIGURE 1.4 A high-level view of interactions and data flow between different components of project planning. In a nutshell, project planning involves determining exactly what will be done and how it will be done. Executing a project means implementing the project management plan for that project. Understanding the Project Lifecycle Executing the Project In this stage, you, the project manager, implement the project management plan, and the project team performs the work scheduled in the planning stage. You coordinate all the activities being performed to achieve the project objectives and meet the project requirements. Of course, the main output of this project is the project deliverables. Approved changes, recommendations, and defect repairs are also implemented in this stage. But where do these changes and recommendations come from? They arise from monitoring and controlling the project. The stakeholders can also suggest changes, which must go through an approval process before implementation. The project execution is performed using processes that fall into a group called the executing process group. So, the project work defined in the project management plan is executed by using the processes in the executing process group, as shown in Figure 1.5. As stated earlier, it is up to the project team to determine which of these processes is relevant for the project at hand. The processes in this group are used to accomplish a three-pronged goal: ◆ Coordinate people and resources used to perform the project activities ◆ Integrate and manage the project activities being performed ◆ Ensure the implementation of the project scope and approved changes FIGURE 1.5 The processes used in executing a project. 15 16 Chapter 1 PROJECT MANAGEMENT FRAMEWORK The following list defines the processes shown in Figure 1.5: ◆ Direct and Manage Project Execution. Manage various interfaces in the project execution to complete the project work smoothly in order to produce the project outcome, such as deliverables and objectives. ◆ Acquire Project Team. Obtain the project team members needed to perform the project work. ◆ Develop Project Team. Improve the competencies of team members and interaction among team members to enhance the project performance. ◆ Manage Project Team. Manage the project team, which includes tracking the performance of team members, providing feedback, resolving issues, and managing changes to improve project performance. ◆ Perform Quality Assurance. Audit the results from the quality control measurements to ensure that the quality requirements are being met. ◆ Distribute Information. Make relevant information about the project, such as project progress, available to stakeholders according to the communication management plan. ◆ Conduct Procurements. Obtain responses from the potential sellers in terms of quotes, bids, offers, and proposals for their product or services needed for the project; select sellers; and negotiate written contracts with the selected sellers. ◆ Manage Stakeholder Expectations. Stay on the same page with the stakeholders by communicating and working with them on their needs and issues. The execution of the project needs to be monitored and controlled to ensure the project stays on the planned track. Monitoring and Controlling the Project You monitor and control the project through its lifecycle, including the executing stage. Monitoring and controlling includes defending the project against scope creep (unapproved changes to the project scope), monitoring the project progress and performance to identify variance from the plan, and recommending preventive and corrective actions to bring the project in line with planned expectations. Requests for changes, such as changes to the project scope, are also included in this stage; they can come from you or from any other project stakeholder. The changes must go through an approval process, and only the approved changes are implemented. The processes used in this stage fall into a group called the monitoring and controlling process group. The monitoring and controlling process group includes processes to monitor and control project performance, changes, and risks. Monitoring includes measuring project performance, collecting information about the project performance, and evaluating the performance information to see the trends. Continuous monitoring helps the project management team identify the areas that need to be controlled closely—for example, taking corrective or preventive actions. Understanding the Project Lifecycle NOTE Monitoring and controlling does not start only after the project starts execution. Rather, the project needs to be monitored and controlled all the way from initiation through closing. A project is monitored and controlled using the Monitor and Control Project Work and Perform Integrated Change Control processes, which are high-level processes performed by executing more specific processes, such as cost control, schedule control, and scope control, as shown in Figure 1.6. All these processes are in the monitoring and controlling process group except the Direct and Manage Project Execution process, which belongs to the executing group. FIGURE 1.6 Big picture of the monitoring and controlling process group. As illustrated in Figure 1.6, work performance information generated by the Direct and Manage Project Execution process is used by most of the monitoring and controlling processes. The Control Scope, Control Schedule, and Control Cost processes analyze this information to generate work performance measurements, which are used by some other processes, such as Perform Quality Control and Report Performance. The Report Performance process generates performance reports, which are used by the Monitor and Control Risks, Administer Procurements, and Monitor and Control Project Work processes. One obvious output of most of 17 18 Chapter 1 PROJECT MANAGEMENT FRAMEWORK these processes is change requests, including recommended corrective and preventive actions, which go through the Perform Integrated Change Control process for approval. If approved, the execution of these actions and changes is managed using the Direct and Manage Project Execution process in the executing process group. Whether completed or terminated, each project needs to be closed properly. Closing the Project In this stage, you manage the formal acceptance of the project product, close any contracts involved, and bring the project to an end by disbanding the project team. Closing the project includes conducting a project review for lessons learned and possibly turning over the outcome of the project to another group, such as the maintenance or operations group. Don’t forget the last but not least task of the closing stage: celebration. Terminated projects (that is, projects cancelled before completion) should also go through the closing stage. The processes used to perform the closing stage fall into the group called the closing process group. NOTE What we refer to as project stages here are not actually the project phases. A project phase is part of the whole project in which certain milestones or project deliverables are completed. All these stages, technically called process groups, can be applied to any phase of a project that is divided into multiple phases. So, project closure refers to a set of tasks that are required to formally end the project. There are two kinds of projects that you need to close formally: ◆ Completed projects. A project that has met its completion criteria falls into this category. ◆ Terminated projects. A project that was terminated before its completion falls into this category. A project can be terminated at various stages for various reasons. Following are some examples: ◆ The project management plan is not approved for whatever reason. ◆ The project has been executing, but you have run out of resources, and no more resources are available. ◆ The project has been cancelled because it was going nowhere. ◆ The project has been indefinitely postponed because there is not a large enough market for the product it would produce. Understanding the Project Lifecycle NOTE The processes of the closing process group can be used to close a project, as well as to close a phase of a project. A project, in general, may have in-house activities—that is, the project activities being performed within the performing organization—and procurement activities. Accordingly, there are two aspects of project closure: ◆ Close the in-house activities of the project. ◆ Close the procurement part of the project. Project closure includes the following activities: ◆ Activities to verify that all deliverables have been provided and accepted ◆ Activities to confirm that all the project requirements, including stakeholder requirements, have been met ◆ Activities to verify that the completion or exit criteria have been met ◆ Activities to ensure that the project product is transferred to the right individual or group ◆ Activities to review the project for lessons learned and archive the project records You need to obtain final closure, such as acceptance signoffs, contract closure, or receipts, for both the in-house part and the procurement part of the project and from both internal and external vendors and customers. You perform this task by using standard accounting practices and following relevant organizational and legal procedures, such as SOX compliance. NOTE SOX refers to the Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002. It is a United States federal law enacted on July 30, 2002, in response to a number of major corporate and accounting scandals that affected companies such as Enron and WorldCom. These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and therefore shook public confidence in the nation’s securities markets. Figure 1.7 presents the big picture of project closure in a nutshell: 1. Verify the scope of the project deliverables developed in house. 2. Accept the procured deliverables through the procurement closure process. 3. Get the deliverables from Step 1 to Step 2 and get them accepted by the customer or sponsor to actually close the project. 4. Archive the project documents. 19 20 Chapter 1 PROJECT MANAGEMENT FRAMEWORK FIGURE 1.7 Closing a project: big picture. In the following sections, we’ll discuss details of these steps in terms of the processes shown in Table 1.2. Table 1.2 Processes Related to Closing the Project Process Process Group Knowledge Area Verify Scope Monitoring and controlling Scope management Close Project or Phase Closing Integration management Close Procurements Closing Procurement management In a nutshell, all the aspects of project closure should be covered, such as financial closure, legal closure, and administrative closure, with all the relevant parties, such as vendors and customers external and internal to the performing organization. Understanding Project Management Knowledge Areas Table 1.3 presents a summary of the project lifecycle. The initiating stage authorizes a project by naming the project manager, the planning stage further defines the project objectives and plans the work to meet those objectives, the execution stage executes the work, the monitoring and controlling stage monitors the progress of the project and controls it to keep it in line with the plan, and the closing stage formally closes the project by obtaining product acceptance. Each of these stages is performed by using a group of processes. Thereby, these stages are called process groups. In the table, these process groups are mapped to another set of names for the project stages: starting the project, organizing and preparing, carrying out the work, and closing the project. Table 1.3 The Stages of a Project Lifecycle: The Project Process Groups Process Group Corresponding Name for the Project Stage Major Goal Major Outcome Initiating Starting the project Authorize the project Project charter Planning Organizing and preparing Plan and schedule the work to perform the project Project management plan Executing Carrying out the work Perform the project work Project deliverables: product, service, results Closing Closing the project Close the project formally Product acceptance, contract closure, and archiving Monitoring and controlling Spans the project lifecycle Monitor the progress of the project to identify the variance from the plan and to correct it Change requests and recommendations for preventive and corrective actions The stages of project or process groups determine when a process is executed, whereas the processes themselves belong to certain knowledge areas of project management. Understanding Project Management Knowledge Areas Managing projects means applying knowledge, skills, and tools and techniques to project activities in order to meet the project objectives. You do this by performing some processes at various stages of the project, discussed in the previous section. That means processes are part 21 22 Chapter 1 PROJECT MANAGEMENT FRAMEWORK of the knowledge required to manage projects. Each aspect of a project is managed by using the corresponding knowledge area. For example, each project has a scope that needs to be managed, and the knowledge required to manage scope is in the knowledge area called project scope management. To perform the project work within the project scope, you need human resources, which need to be managed; the knowledge area used to manage human resources is called human resource management. You get the idea. Each process belongs to one of the nine knowledge areas discussed in the following list. Project scope management. The primary purpose of project scope management is to ensure that all the required work (and only the required work) is performed to complete the project successfully. This is accomplished by defining and controlling what is included in the project and what is not. To be specific, project scope management includes the following: ◆ Collect Requirements. Collect the requirements for the project based on the stakeholders’ needs, which will determine the project scope. ◆ Define Scope. Develop the description for the project and its products, which is the basis for the project scope. ◆ Create Work Breakdown Structure (WBS). Decompose the project deliverables into smaller, more manageable work components. The outcome of this exercise is called the work breakdown structure. ◆ Verify Scope. Obtain acceptance of the completed deliverables of the project. ◆ Control Scope. Control changes to the project scope—only the approved changes to the scope should be implemented. Obviously, these components are performed by using the corresponding processes. So, the project scope management, in part, defines the work required to complete the project. It’s a finite amount of work and will require a finite amount of time, which needs to be managed as well. Project time management. The primary purpose of project time management is to develop and control the project schedule. This is accomplished by performing the following components: ◆ Define Activities. Identify all the work activities that need to be scheduled to produce the project deliverables. ◆ Sequence Activities. Identify the dependencies among the activities that need to be scheduled (that is, the schedule activities) so that they can be scheduled in the right order. ◆ Estimate Activity Resources. For each schedule activity, estimate the types of resources needed and the quantity for each type. ◆ Estimate Activity Duration. Estimate the time needed to complete each schedule activity. ◆ Develop Schedule. Analyze the data created in the previous steps to develop the schedule. ◆ Control Schedule. Control changes to the project schedule. Understanding Project Management Knowledge Areas You perform these tasks by using the corresponding processes. It will cost you to get the activities in the schedule completed, and the cost needs to be managed, too. Project cost management. The primary goal of project cost management is to estimate the cost and to complete the project within the approved budget. Accordingly, cost management includes the following components: ◆ Estimate Cost. Develop the cost of the resources needed to complete the project, which includes schedule activities and outsourced (procured) work. ◆ Determine Budget. Aggregate the costs of individual activities to establish a cost baseline that includes timing. ◆ Control Cost. Monitor and control the cost variance in the project execution—that is, the difference between the planned cost and the actual cost during execution, as well as changes to the project budget. You will use the appropriate processes to accomplish these tasks. The resources needed to complete the project activities include human resources, which need to be managed as well. Project human resource management. The primary purpose of project human resource management is to obtain, develop, and manage the project team that will perform the project work. To be specific, project human resource management includes the following components: ◆ Develop Human Resources Plan. Identify project roles, responsibilities for each role, and reporting relationships among the roles. Also, create the staff management plan that describes when and how the resource requirements will be met. ◆ Acquire Project Team. Obtain the human resources. ◆ Develop Project Team. Improve the competencies of the team members and the interaction among members to optimize team performance. ◆ Manage Project Team. Track the performance of team members, provide them with feedback, and resolve issues and conflicts. This should all be done with a goal to enhance performance—that is, to complete the project on time and within the planned cost and scope. These components are performed by using the corresponding processes. There will be situations in which your organization does not have the expertise to perform certain schedule activities in house. For this or other reasons, you might want to acquire some items or services from an outside vendor. This kind of acquisition is called procurement, and it also needs to be managed. Project procurement management. The primary purpose of procurement management is to manage acquiring products (that is, products, services, or results) from outside the project team in order to complete the project. The external vendor who offers the service is called the seller. Procurement management includes the following: ◆ Plan Procurements. Identify purchasing needs, specify the procurement approach, and identify potential sellers. ◆ Conduct Procurements. Obtain seller responses, select sellers, and issue contracts. 23 24 Chapter 1 PROJECT MANAGEMENT FRAMEWORK ◆ Administer Procurements. Manage procurement relationships, monitor procurement performance, and monitor and control changes in procurement. ◆ Close Procurements. Complete each project procurement with a proper closure, such as accepting products and closing contracts. Be it the procured or the in-house work, there are always some uncertainties that give rise to project risks, which need to be managed. Project risk management. A project risk is an event that, if it occurs, has a positive or negative effect on meeting the project objectives. The primary purpose of project risk management is to identify risks and respond to them should they occur. To be specific, project risk management includes the following: ◆ Plan Risk Management. Plan how to determine and execute risk management tasks. ◆ Identify Risks. Identify the potential risks relevant to the project at hand and determine the characteristics of those risks. ◆ Perform Qualitative Risk Analysis. Assess the probability of occurrence and the impact for each risk in order to prioritize risks for an action or for further analysis. ◆ Perform Quantitative Risk Analysis. Estimate the effects of identified risks on project objectives. ◆ Plan Risk Responses. Develop action options for risks to maximize opportunities for and minimize threats to satisfying project objectives. ◆ Monitor and Control Risks. Track identified risks, implement risk response plans, identify new risks, and evaluate the effectiveness of risk management processes throughout the project. These tasks related to risk management are performed by using the corresponding processes. The goal of risk management is to help meet the project objectives. The degree to which the project objectives and requirements are met is called quality, which needs to be managed. Project quality management. Project quality is defined as the degree to which a project satisfies its objectives and requirements. For example, a high-quality project is a project that is completed on time and with all the work in the project scope completed within the planned budget. Project quality management includes the following: ◆ Plan Quality. Determine the quality requirements and standards that are relevant to the project at hand and how to apply them. ◆ Perform Quality Assurance. Ensure that the planned quality requirements and standards are applied. ◆ Perform Quality Control. Monitor the quality activities and record the results of these activities in order to assess performance and make necessary recommendations for corrective actions and changes. These tasks of project quality management are performed by using the corresponding processes. To unify different pieces into a whole project, the different project management activities need to be integrated. Understanding Project Management Knowledge Areas Project integration management. The project is initiated, planned and executed in pieces, and all those pieces are related to each other and need to come together. That is where integration management comes in. For example, integrating different subsidiary plans into the project management plan needs to be managed. Project integration management includes developing the project charter, developing the project management plan, directing and managing project execution, monitoring and controlling project work, performing integrated change control, and closing the project or a phase of the project. So, while managing all the aspects of the project, you, the project manager, will need to coordinate different activities and groups, and for that you need to communicate. Project communication management. It is absolutely imperative for the success of the project that the project information is generated and distributed in a timely fashion. Some would say communication is the most important aspect of a project and the most important skill for a project manager to have. But without a doubt, it is certainly a critically important component of project management and a common thread that runs through the project lifecycle. Communication management includes the following: ◆ Identify Stakeholders. Identify all individuals, groups, and organizations that will potentially be impacted by the project and find relevant information about them. ◆ Plan Communication. Determine the information and communication needs of the project at hand and the communication approach to be used. ◆ Distribute Information. Make the needed information available to the project stakeholders in a timely fashion as planned. ◆ Manage Stakeholder Expectations. Communicate and work with the stakeholders to understand and meet their needs, address issues, and manage expectations within the project scope and the project management plan. ◆ Report Performance. Collect and distribute performance information to the stakeholders to stay on the same page. As you have seen, managing a project largely means performing a set of processes at various stages of the project, such as initiating and planning. Accordingly, processes are grouped corresponding to these stages, and the groups are called process groups. Processes are part of the knowledge required to manage projects. Each of these processes belongs to one of the nine knowledge areas identified in the PMBOK Guide. So a process has a dual membership—one in a process group, indicating at what stage of the project the process is performed, and the other in a knowledge area, indicating what aspect of the project is managed by using the process. Table 1.3 shows this membership for all the processes identified in the PMBOK Guide. STUDY CHECKPOINT 1.2 What is the core difference between knowledge areas and process groups? Try to answer this question in one sentence. 25 26 Table 1.3 Mapping of the Project Management Processes to Process Groups and Knowledge Areas Initiating Process Group Planning Process Group Develop Project Charter Develop Project Management Plan Monitoring and Controlling Process Group Closing Process Group Direct and Manage Project Execution 1. Monitor and Control Project Work 2. Perform Integrated Change Control Close Project or Phase Scope Management (3) ––– 1. Collect Requirements 2. Define Scope 3. Create Work Breakdown Structure ––– 1. Verify Scope 2. Control Scope ––– Time Management (4) ––– 1. Define Activities 2. Sequence Activities 3. Estimate Activity Resources 4. Estimate Activity Durations 5. Develop Schedule ––– Control Schedule ––– Cost Management (5) ––– 1. Estimate Costs 2. Determine Budget Control Costs Human Resource Management ––– (6) Develop Human Resource Plan 1. Acquire Project Team 2. Develop Project Team 3. Manage Project Team Communications Management Identify Stakeholders (7) Plan Communications 1. Distribute Information Report Performance 2. Manage Stakeholder Expectations Quality Management (8) Plan Quality Perform Quality Assurance ––– Risk Management (9) Procurement Management (10) ––– Perform Quality Control ––– 1. Plan Risk Management ––– 2. Identify Risks 3. Perform Qualitative Risk Analysis 4. Perform Quantitative Risk Analysis 5. Plan Risk Responses Monitor and Control Risks ––– Plan Procurements Administer Procurements Close Procurements Conduct Procurements PROJECT MANAGEMENT FRAMEWORK Executing Process Group Chapter 1 Process Groups => Knowledge Areas || V Integration Management (2) Understanding Project Management Knowledge Areas NOTE Not all the processes are used in all the projects. The project management team decides which processes need to be used in a given project. STUDY CHECKPOINT 1.3 In the following table, match each item in the first column with a corresponding item in the second column: Knowledge Area A. Scope B. Cost C. Time D. Quality E. Risk F. Procurement G. Human resources H. Communication I. Integration Action 1. Manage interdependencies among different processes belonging to different knowledge areas. 2. Ensure the project includes the work required to complete the project successfully and no extra work. 3. Plan the schedule and complete the project within the planned schedule. 4. Plan the budget, track what you are spending, and complete the project within budget. 5. Ensure that you develop the right product that will satisfy the needs for which the project is undertaken. 6. Obtain the team to do the project work and lead and motivate the team to keep working in the right direction in an efficient and effective way. 7. Generate and distribute the required project information to the right stakeholders at the right time by using the right method. 8. Plan for uncertain events that could happen and deal with them when they do happen in such a way so that possible benefit is maximized and damage is minimized. 9. Identify the project work that needs to be contracted out of the performing organization and contract it out. Each project is performed by individuals, and it can affect individuals or organizations even if they are not directly (officially) involved in the project. Now we are talking about the project stakeholders. 27 28 Chapter 1 PROJECT MANAGEMENT FRAMEWORK Introducing the Project Stakeholders Right from the day you assume responsibility for managing a project, you start meeting a very special class of people called the project stakeholders. It is very important for the success of the project that you identify these individuals and communicate with them effectively throughout the project. Identifying Project Stakeholders Project stakeholders are individuals and organizations whose interests are affected (positively or negatively) by the project execution and completion. In other words, a project stakeholder has something to gain from the project or lose to the project. Accordingly, the stakeholders fall into two categories—positive stakeholders, who will normally benefit from the success of the project, and negative stakeholders, who see some kind of disadvantage coming from the project. The implications obviously are that the positive stakeholders would like to see the project succeed, and the negative stakeholders’ interests would be better served if the project was delayed or cancelled altogether. For example, your city mayor might be a positive stakeholder in a project to open a Wal-Mart store in your neighborhood because it brings business to the city, whereas some local business leaders might look at it as a threat to the local businesses and thereby may act as negative stakeholders. Negative stakeholders are often overlooked by the project manager and the project team, which increases project risk. Ignoring positive or negative project stakeholders will have a damaging impact on the project. Therefore, it’s important that you, the project manager, start identifying the project stakeholders early on in the project. The different project stakeholders can have different and conflicting expectations, which you need to analyze and manage. Identifying all the project stakeholders might be a difficult task, but the following are the obvious stakeholders, starting with you: ◆ Project manager. Include yourself, the project manager, in the list of the stakeholders to start with. ◆ Project management office (PMO). If your organization has a PMO and it is directly or indirectly responsible for the outcome of a project, then the PMO is a stakeholder in that project. ◆ Project team. This team consists of the project manager, project management team, and individuals who perform the work of the project to produce the project outcome. This team may consist of individuals from different groups and departments with different subject matter expertise and skills. ◆ Program manager. If your project is part of a program, then the program manager is certainly a stakeholder in your project. Introducing the Project Stakeholders ◆ Portfolio managers and portfolio review board. A portfolio manager is an individual who performs high-level management (governance) of a set of projects or programs and interfaces between the projects/programs and the business strategy of the organization for which the projects and programs are being run. The portfolio review board is a committee that selects and rejects projects by reviewing them for factors such as the project value, return on investment, and risks involved in performing the project. ◆ Functional managers. These are individuals who play management roles within administrative or functional areas of the organization. For example, the VP of marketing is a functional manager and so is the director of engineering. The level of authority depends on their position in the hierarchy and also the organizational structure. For example, if you are using resources that are under a functional manager, that functional manager is a stakeholder in your project. ◆ Operational management. These are the individuals who are performing management roles in the operational areas of the organization. For example, the director of IT, who is responsible for maintaining the computer network that your team is using, is a stakeholder in your project. Depending on your project, you might be handing over the product of the project to an operations group that will be responsible for providing long-term support for it. ◆ Sellers and business partners. Business partners are entities external to the performing organization, such as contractors and suppliers that enter into a contractual agreement with the performing organization to provide certain components for the project. These components are the products, services, or results that you procure. Business partners are the external organizations that fill a specific role for the project, such as installing the product of the project, providing training and support for the product, or providing a specialized expertise for the project. Business partners are different from vendors in that they have a special ongoing relationship with the organization, which often is attained by satisfying some requirements, such as a certification. ◆ Customer/user. In general, customers are the entities that will acquire the project’s outcome, such as a product, and users are the entities that will use the product. In some cases customers and users may be the same entity, and in other cases there may be a whole chain (with different layers) of customers and users. For example, a textbook produced by a project run by a publisher is recommended by instructors, bought by bookstores, and used by students. ◆ Project sponsor. This is the individual or group that provides financial resources for the project. A sponsor has a major stake in the project and may perform an active role in the project team from time to time. Following are some of the functions of a sponsor: ◆ The sponsor champions the project when it’s conceived. This includes gathering support for the project by performing actions such as acting as the project spokesperson to higher-level management and by spelling out the benefits of the project. 29 30 Chapter 1 PROJECT MANAGEMENT FRAMEWORK ◆ The sponsor leads the project through the selection process until the project is finally authorized, at which point the leadership role goes to the project manager. ◆ The sponsor plays an important role in developing the initial project scope and charter. ◆ The sponsor serves as an authority and a catalyst for issues beyond the control of project managers, such as authorizing some critical changes and other yes/no decisions. In addition to these key stakeholders, who are easy to identify, there can be a number of other stakeholders who might be more difficult to identify inside and outside of your organization. Depending upon the project, these might include investors, sellers, contractors, family members of the project team members, government agencies, media outlets, lobbying organizations, individual citizens, and society at large. Have I left anyone out? While dealing with the stakeholders, the keyword is influence. Watch out for influencers who are not direct customers or users of the product or service that will come from the project, but who can influence the course of the project due to their positions in the customer organization or performing organization. The influence can be positive or negative—that is, for or against the project. CAUTION Do not confuse the project management team with the project team. The project management team consists of individuals involved in the project management tasks. It is a subset of the project team, which includes members of the project management team and also other members, such as those who perform the actual work of the project. So, the stakeholders not only are affected positively and negatively by the project, but the project can also be impacted positively or negatively by them. It is critical for the success of the project that you identify positive and negative stakeholders early on in the project, understand and analyze their varying and conflicting expectations, and manage those expectations throughout the project. Identifying the Stakeholder Within: Project Manager You, the project manager, are a very special project stakeholder yourself. The job (role) of a project manager is extremely challenging and thereby exciting. Depending on the organizational structure of your organization, you may be reporting to a functional manager, program manager, or portfolio manager or to some other manager or executive. Nevertheless, it is your responsibility to work with your team and other relevant individuals and groups, such as program managers and portfolio managers, to bring all the pieces together and make the project happen—that is, to achieve the project objectives. You do it by using a multitude of skills, described here. Introducing the Project Stakeholders Communication. The importance of communication in project management cannot be overemphasized. Even a well-scheduled and well-funded project can fail in the hands of a hardworking team of experts due to the lack of proper communication. As a project manager, you might be dealing with a wide functional variety of individuals, ranging from executives, to marketing personnel, to technologists. You should be able to wear different communication hats depending upon whom you are communicating with. For example, you will not be using technical jargon to talk to executives or marketing folks, and you will not speak marketing lingo to the software developers. You will be speaking to different stakeholders in their language, while filling the language gap between different functional groups and eliminating misunderstandings due to miscommunication. The key point is that you put on the appropriate communication hat depending on which individual you are communicating with. Be able to switch communication hats quickly and avoid technical jargon and acronyms that are not understood by the person or group with whom you are communicating. The goal is clarity of language to convey the message accurately. You will be communicating throughout the project. So, for a given project, you must develop a communication strategy that addresses the following issues: ◆ What needs to be communicated? ◆ With whom do you want to communicate? You might need to communicate different items to different individuals or groups. ◆ How do you want to communicate—that is, what is the medium of communication? Again, this might differ depending on whom you are communicating with. ◆ What is the outcome of your communication? You need to monitor your communication and its results to see what works and what does not, so you can improve communication. Communication is an ingredient for many other skills, such as negotiation and problemsolving. Negotiation. A negotiation is give and take, with the goal of generating a win-win outcome for both parties. You might need to negotiate at any stage of the project lifecycle. Here are some examples of negotiations: ◆ Negotiating with stakeholders regarding expectations during project planning. For example, the suggested deadline for the project schedule might not be practical, or you might need a certain type or quantity of resources to make it happen. ◆ Negotiating with functional managers for obtaining human resources, such as software developers. ◆ Negotiating with team members for specific job assignments and possibly during conflict resolution among the team members. ◆ Negotiating changes to the project schedule, budget, or both because a stakeholder proposed changes to the project objectives. ◆ Negotiating with external vendors in procurement. However, in contract negotiations, representatives from the legal department might be involved. 31 32 Chapter 1 PROJECT MANAGEMENT FRAMEWORK Sometimes you will be negotiating to solve a problem. Problem-solving. Project-related problems might occur among stakeholders (including team members) or with projects. Either way, they are there to damage the project. Your task is twofold—identify the problem early enough and solve it. Here is the general technique for accomplishing this: ◆ Look for early warning signs by paying close attention to the formal progress reports and to what the team members say and do regarding the project. ◆ Once you identify a potential problem, do your homework. Understand and identify the problem clearly by collecting more information without passing judgment. ◆ Once the problem and its causes are clearly identified, work with the appropriate stakeholders, such as project team members, to explore multiple (alternative) solutions. ◆ Evaluate the multiple solutions and choose the one you will implement. The key point throughout the problem-solving process is to focus on the problem, not on the individuals, with the goal of finding the solution in order to help the project succeed. There should be no finger pointing. Sometimes, in choosing and implementing the correct solution, you will need to exercise your influencing skill. Influencing. Influencing means getting individuals or groups to do what you want them to do without necessarily having formal authority to mandate an outcome from them. This is increasingly becoming an essential management skill in today’s information economy. To exercise influence, you must understand the formal and informal structure of your organization. Again, you might need to use influencing when you are dealing with any aspect of the project—for example, controlling changes to the project, negotiating schedule or resource assignments, resolving conflicts, and the like. Leadership. In the traditional organizational structure, project managers do not have formal authority over the project team members who perform the team work. So you have no other choice than managing by leadership and not by authority (power). The good news is that managing by leadership is overall more effective and productive than managing by authority anyway. A project team is generally a group of individuals coming together for the lifetime of the project from different functional groups with different skills and experience. They need a leader to show them the vision and to excite, inspire, and motivate them toward the goals and the objectives of the project. You, the project manager, are that leader. The golden triplet. PMI recommends that in addition to skills related to application areas and management, an effective project manager must have the following three characteristics: ◆ Knowledge. That is, knowledge of project management. ◆ Performance. The ability to use the knowledge to perform the project—that is, to accomplish things and get the job done. Organizational Influences on Projects ◆ Personal. This relates to the behavior of the project manager while performing the project and related activities. This includes personal effectiveness, attitude, and leadership. In other words, an effective project manager uses personal abilities, such as a positive attitude and leadership, to apply the project management knowledge effectively in order to lead the project to success. Different organizations have different attitudes and policies toward project management. The culture and structure of the performing organization has a big influence on your job as a project manager. Organizational Influences on Projects A project is typically performed inside an organization called the performing organization, which creates an environment for the project called the project environment. Projects are influenced by the project environment, which is shaped by many elements, such as organizational culture, organizational structure, enterprise environmental factors, organizational process assets, and the maturity of the organization. Understanding the Organizational Culture Each organization often develops its own unique culture that depends on many factors, such as the application area of the organization and the general management philosophy implemented in the organization. The organizational culture includes the following elements: ◆ Work environment. The organizational culture reflects from work ethics and work hours. For example, do the employees work strictly from 8:00 a.m. to 5:00 p.m., or do they work late into the night and on weekends? ◆ Management style. The organizational culture also reflects from authority relationships. Do the managers manage by authority or by leadership? How much feedback is taken from the employees in making management decisions? How do the employees view the authority of the management? ◆ Policies. The organizational policies, methods, and procedures also reflect the organizational culture. ◆ Values and vision. A significant part of organizational culture lives in the set of values, norms, beliefs, and expectations shared within the organization. This may be impacted by the organization’s mission and vision. For example, a nonprofit organization will have different values from a for-profit organization. Furthermore, one organization may encourage an entrepreneurial approach, while another organization may be rigidly hierarchical and may take an authoritarian approach in making decisions on what to do and what not to do. 33 34 Chapter 1 PROJECT MANAGEMENT FRAMEWORK Organizational culture has an influence on multiple aspects of a project, including the following: ◆ Project selection. The organizational culture will creep into the selection criteria for projects and programs. For example, a rigidly hierarchical and authoritarian organization may not be very adaptive to programs and projects with high risk. ◆ Project management style. The project manager should adapt the management style to the organizational culture. For example, an authoritarian style may run into problems in an entrepreneurial organization with a participative culture. ◆ Team performance assessments. While making the team performance assessment, the project manager should keep in mind the established norms and expectations within the organization. ◆ Project policies and procedures. The project policies and procedures will be influenced by the organizational policies and procedures because both should be consistent with each other. The culture of an organization is greatly influenced by its structure. From the perspective of a project, there are two kinds of organizations: project-based and non-project-based. Projectbased organizations fall into two subcategories—those that derive their revenue primarily from performing projects for others and those that do in-house projects to deliver products or services for customers. Project-based organizations are well aware of the importance of project management and generally have systems to support project management. Non-project-based organizations generally have a low appreciation for and understanding of the importance of project management and often lack systems to support project management. By systems, I mean tools and facilities specialized or suitable for performing project management effectively, such as project management information systems. To do your job efficiently and effectively, you must figure out what kind of organizational structure you are working in. Understanding the Organizational Structure An effective project manager understands the organizational structure and leverages it for the success of the project. From the perspective of structure, organizations fall into three categories—functional organizations, projectized organizations, and matrix organizations. Functional Organizations A functional organization has a traditional organizational structure in which each functional department, such as engineering, marketing, and sales, is a separate entity. As shown in Figure 1.8, the members of each department (staff ) report to the functional manager of that department, and the functional manager in turn reports to an executive, such as the chief executive officer (CEO). Depending on the size of the organization, there could be a hierarchy within the functional managers—for example, directors of engineering, QA, and IT operations reporting to the vice president (VP) of engineering, who in turn reports to the CEO. Organizational Influences on Projects The scope of a project in a functional organization is usually limited to the boundaries of the functional department. Therefore, each department runs its projects largely independent of other departments. When a communication needs to occur between two departments, it is carried through the hierarchy of functional managers. FIGURE 1.8 Structure of a functional organization. Gray boxes represent staff involved in a project. All the managerial power (authority) in a functional organization is vested in the functional managers, who control the team members’ performance evaluations, salary, bonuses, hiring, and firing. With their role limited to coordinating the project activities, project managers are held responsible for the project results even though they have little say over resource assignments and holding team members accountable for their work. As a result, project managers in a functional organization are often frustrated. Their work is, at best, challenging. You, as a project manager in a functional organization, can benefit greatly from your good relationships with functional managers and team members. Networking and leadership are the key points to your success in a functional organization. A project manager in a functional organization has the following attributes: ◆ The project manager’s role and the project team are part-time. ◆ There is little or no authority over anything: resource assignments, team members, and the like. ◆ The project manager reports directly to a functional manager. ◆ There is little or no administrative staff to help with the project. 35 36 Chapter 1 PROJECT MANAGEMENT FRAMEWORK NOTE In functional organizations, project management might be conducted under other names, such as project coordinator or team leader. On the other end of the spectrum is the projectized organization. Projectized Organizations A projectized organization’s structure is organized around projects. Most of the organization’s resources are devoted to projects. As shown in Figure 1.9, the project team members report directly to the project manager, who has a great deal of independence and authority. Along with responsibility comes a high level of autonomy over the projects. The project managers are happy campers in a projectized organization. A functional organization and a projectized organization are on opposite ends of the spectrum of a project manager’s authority. A project manager in a projectized organization has the following attributes: ◆ The project manager is full-time. ◆ The project manager has full authority over the project team. ◆ There is full-time administrative staff to help with the project. FIGURE 1.9 Structure of a projectized organization. Gray boxes represent staff involved in a project under a given project manager. In the middle of the spectrum are matrix organizations. Organizational Influences on Projects Matrix Organizations A matrix organization is organized into functional departments, but a project is run by a project team, with members coming from different functional departments, as shown in Figure 1.10. On the spectrum of a project manager’s authority, matrix organizations are in the middle of two extremes: functional and projectized organizations. Matrix organizations are generally categorized into a strong matrix, which is closer to a projectized structure; a weak matrix, which is closer to a functional structure; and a balanced matrix, which is in the middle of strong and weak. FIGURE 1.10 Structure of a matrix organization. Gray boxes represent staff involved in a project. Composite Organization A composite organization is a type of organization that contains elements of all three other organizational structures: functional, matrix, and projectized. For example, consider an organization that has a traditional functional structure, but it launches a special project in which some of the project team members report to the project manager. Some of the project team members are full-time, and others are part-time. The project administration and management have some of the characteristics of a projectized organization and some of the characteristics of a matrix organization. As mentioned earlier, the organization basically is a functional organization. So, what you’ve got here is a composite organization. Tables 1.4 and 1.5 summarize the influences of the different organizational structures on projects. 37 38 Chapter 1 PROJECT MANAGEMENT FRAMEWORK Table 1.4 Influences of the Organizational Structures on Projects Organization Structure Project Characteristic Functional Matrix Projectized Project manager’s authority None to little Limited to high High to full Project manager’s role Part-time Part-time to full-time Full-time Project management administrative staff None to part-time Part-time to full-time Full-time Project budget controlled by Functional manager Functional manager, project manager, or both Project manager Resource availability None to little Limited to high High to full NOTE In a weak matrix, the role of a project manager is more of a coordinator or an expediter, and in a strong matrix, the project manager may have considerable authority, and his or her role may be very close to a true project manager. Table 1.5 Influences of the Matrix Organizational Structures on Projects Type of Matrix Structure Project Characteristic Weak Balanced Strong Project manager’s authority Limited Low to moderate Moderate to high Project manager’s role Part-time Full-time Full-time Project management administrative staff Part-time Part-time Full-time Project budget controlled by Functional manager Functional manager, project manager, or both Project manager Resource availability Limited Low to moderate Moderate to high Organizational Influences on Projects We have explored the three basic organizational structures. In the real world, some organizations use a hybrid (mix) of these structures to meet their varied needs. For example, a functional organization may run a specific project just like it would be run in a projectized organization. Such organizations are called composite organizations. Obviously, organizational structure and organizational culture heavily determine the project environment. The other two important factors that influence the project environment are enterprise environmental factors and organizational process assets. Identifying Environmental Factors and Process Assets While exploring the environment of the performing organization, you should also identify the environmental factors and the process assets that will influence your project. Some of these assets and factors can be used to help the project; others may have a negative influence. Enterprise Environmental Factors Enterprise environmental factors are factors that are related to the environment internal or external to the performing organization and can potentially impact the project. They may originate from within the performing organization, from any external organization participating in the project, or from both. These factors may have a positive or negative influence on the project, and some of these factors may give rise to constraints for the project. Organizational environmental factors include the following: ◆ Culture and structure. It refers to the culture and type of structure of the performing organization. ◆ Processes and standards. Here are some examples: ◆ The organization may have specific processes in place to do certain things in certain ways. ◆ There may be government and industry standards to follow, such as legal requirements, product standards, and quality standards relevant to the project. ◆ There may be personnel administration information, such as guidelines for hiring, firing, and performance reviews. ◆ Infrastructure and resources. This may include the following: ◆ Facilities and equipment to do the project ◆ Project management information systems, such as software tools for scheduling tasks and meetings ◆ Human resources currently available in the organization, such as skills and expertise ◆ Commercial databases, such as standardized cost-estimating data and risk databases ◆ A work authorization system of the organization, because the project needs to be authorized ◆ Communication channels and tools available in the organization, such as an email system 39 40 Chapter 1 PROJECT MANAGEMENT FRAMEWORK ◆ Internal and external conditions. Examples: ◆ Risk tolerances of the project stakeholders ◆ Marketplace conditions relevant to the project ◆ Political climate Note that the environmental factors can be internal to the performing organization, such as the organization’s culture, or external to the organization, such as market conditions. Organizational Process Assets These are the processes or process-related assets from any of the organizations involved in the project that can be used to help the project succeed. The organizational process assets are typically grouped into two categories: processes and procedures for conducting work and a corporate knowledge base for storing and retrieving information. For example, the performing organization might have its own guidelines, policies, and procedures whose effect on the project must be considered while developing the project charter and other project documents that will follow. Another example of an organization’s process assets is the knowledge and learning base acquired from previous projects. The following list contains some items from both categories: processes and procedures and the knowledge database. Processes and procedures. This category includes processes, procedures, guidelines, and requirements as described in the following list: ◆ Standardized processes and procedures. Examples are organizational-level policies, such as health and safety policies, ethics policies, project management policies, and quality policies and procedures, such as quality checklists and auditing processes. ◆ Standard guidelines and criteria. Examples are: ◆ Project closure guidelines, project acceptance criteria, proposal evaluation criteria, performance measurement criteria, and so on ◆ Guidelines and criteria for tailoring the standardized organizational processes for the purpose of the project ◆ Templates. Examples are templates to support some project management tasks, such as a list of standard risks to look for, project schedule network diagrams, and the work breakdown structure. ◆ Requirements. Examples are: ◆ Communication requirements, hiring requirements, and safety and security requirements ◆ Guidelines and requirements for project closure, such as final mandatory project audits and product acceptance criteria You need to follow these guidelines and accommodate the requirements while working out the details of the project management processes that you will perform. Origins of Projects Knowledge base. This category includes databases that allow you to store information and to retrieve the stored information when needed. Here are some items in this category: ◆ Project files. The documents and files related to the project, such as the project charter and scope statement. ◆ Measurement database. Examples are the performance measurements. ◆ Historical information and lessons learned. Archives of files from previous projects and lessons learned from them. ◆ Issue and defect management. A database that allows managing issues and defects, such as logging, controlling, and resolving an issu