Project Management Slides PDF

Chapter 17 Project Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 17: Learning Objectives  You should be able to: 1. Discuss the behavioral aspects of projects in terms of project personnel and the project manager 2. Explain the nature...

Chapter 17 Project Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 17: Learning Objectives  You should be able to: 1. Discuss the behavioral aspects of projects in terms of project personnel and the project manager 2. Explain the nature and importance of a work breakdown structure in project management 3. Give a general description of PERT/CPM techniques 4. Construct simple network diagrams 5. List the kinds of information that a PERT or CPM analysis can provide 6. Analyze networks with deterministic times 7. Analyze networks with probabilistic times 8. Describe activity ‘crashing’ and solve typical problems Instructor Slides 17-2 Projects Projects Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame Examples: Instructor Slides The Olympic Games Producing a movie Software development Product development ERP implementation 17-3 Project Life Cycle Instructor Slides 17-4 Project Manager The project manager is ultimately responsible for the success or failure of the project The project manager must effectively manage: Instructor Slides The work The human resources Communications Quality Time Costs 17-5 Avoiding Problems Many problems can be avoided or mitigated by: Effective team selection Leadership Motivation Maintaining an environment of Integrity Trust Professionalism Being supportive of team efforts Instructor Slides 17-6 Project Champion Project champion A person who promotes and supports a project Usually resides within the organization Facilitate the work of the project by ‘talking up’ the project to other managers, and who might be asked to share resources with the project team as well as employees who might be asked to work on parts of the project The project champion can be critical to the success of a project Instructor Slides 17-7 Work Breakdown Structure (WBS) WBS A hierarchical listing of what must be done during a project Establishes a logical framework for identifying the required activities for the project 1. Identify the major elements of the project 2. Identify the major supporting activities for each of the major elements 3. Break down each major supporting activity into a list of the activities that will be needed to accomplish it Instructor Slides 17-8 WBS Instructor Slides 17-9 Gantt Chart Instructor Slides 17-10 Critical Chain Project Management  To better manage projects, managers need to be aware of certain aspects of the project: 1. Time estimates are often pessimistic and with attention can be made more realistic 2. When activities are finished ahead of schedule, that fact may go unreported, so managers may be unaware of resources that could potentially be used to shorten the critical path  The critical chain is analogous to the critical path of a network  A key feature of the critical chain approach is the use of various buffers    Feeding Project Capacity Instructor Slides 17-11 Instructor Slides 12 Risk Management  Risks are an inherent part of project management  Risks relate to occurrence of events that have undesirable consequences such as  Delays  Increased costs  Inability to meet technical specifications  Good risk management involves  Identifying as many risks as possible  Analyzing and assessing those risks  Working to minimize the probability of their occurrence  Establishing contingency plans and budgets for dealing with any that do occur Instructor Slides 17-13 Operations Strategy  Projects present both strategic opportunities and risks  It is critical to devote sufficient resources and attention to projects  Projects are often employed in situations that are characterized by significant uncertainties that demand  Careful planning  Wise selection of project manager and team  Monitoring of the project  Project software can facilitate successful project completion  Be careful to not focus on critical path activities to the exclusion of other activities that may become critical  It is not uncommon for projects to fail Instructor Slides  When that happens, it can be beneficial to examine the probable reasons for failure 17-14 Project Management OPM 533 Dr. Torky Althaqafi Mosaab Habani Email: [email protected] Email: [email protected] College of Business Administration University of Business and Technology PhD - SCM DBA - Doctor of Business Administration (UK) Master of Engineering Management (Australia) Master of Engineering (Integrated Logistics Management) (Australia) Master of Management in Hospitals Administration (USA) Bachelor degree in Electrical Engineering (Jeddah) Master Project Manager (MPM) Certification (UK) Outline Project Management Process Groups Project Management Process Groups & Knowledge Area Mapping Project Charter Scope Statement Identify Stakeholder Project Management Process Groups The Project Management Institute® defines five process groups for completing a project: 1.Initiate 2.Plan 3.Execute 4.Monitor and Control 5.Close Project Charter Agreement between all involved parties One location for all overview information Definition of the project Guide for the project activities Template & Example Scope Statement The description of the project scope, major deliverables, assumptions, and constraints. ©2013 Project Management Institute. A Guide to the Project Management Body of Knowledge®, (PMBOK®Guide) –Fifth Edition All the THINGS that will be created or delivered All the WORK that will be done during the project All the THINGS and all the WORK Example Project Project: Remodel and expand a sports stadium The project will include: – installing new turf – putting in all new lighting – adding 28% more seats – constructing a new parking lot – installing a new score board What are the major deliverables for this project? New turf New lighting New scoreboard Additional seating New parking lot Elements of the Charter and Scope Statements Example of Scope of work “Design and support of Top roof cover on OutFall channel of Sea Water (made of GRP) at Independent Water & Power Plant, at Shuaibah site, through Turn-Key base.” “Design, Supply of materials, installation, Testing and Handing over of Top roof cover on Out-Fall channel of Sea Water (made of GRP) at Independent Water & Power Plant, at Shuaibah site, through Turn-Key base.” Identify Stakeholder Stakeholder Individuals and organizations that are actively involved in the project or whose interests may be positively or negatively affected as a result of the project execution or project completion. They may also exert influence over the project and its results. ©2013 Project Management Institute. A Guide to the Project Management Body of Knowledge®, (PMBOK®Guide) –Fifth Edition Wrap-Up Project Management Process Groups Project Management Process Groups & Knowledge Area Mapping Project Charter Scope Statement Identify Stakeholder Project Management OPM 533 PhD - SCM DBA - Doctor of Business Administration (UK) Master of Engineering Management (Australia) Master of Engineering (Integrated Logistics Management) (Australia) Master of Management in Hospitals Administration (USA) Bachelor degree in Electrical Engineering (Jeddah) Master Project Manager (MPM) Certification (UK) Outline Project Management Plan Work breakdown structure Top 5 Worst Quality Failures in Construction https://www.youtube.com/watch?v=wkl R7YAXN_g Project Management Plan PROJECT MANAGEMENT PLAN Project Management Plan Introduction The Introduction provides a high level overview of the project and what is included in this Project Management Plan. This should include: - a high level description of the project and - describe the projects deliverables and benefits. Excessive detail is not necessary in this section as the other sections Project Management Plan Project Management Approach This section of the Project Plan is where you: -outline the overall management approach for the project. This section should describe, in general terms, the roles and authority of project team members. It should also include which organizations will provide resources for the project and any resource Project Management Plan Project Scope The project plan needs to include a much more detailed scope than the charter. This detail should include: -what the project does and does not include. The more detail included in this section, the better the product. This will help to clarify what is Project Management Plan Milestone List Provide a summary list of milestones including -dates for each milestone. Include an introductory paragraph in this section which provides some insight to the major milestones. This section of the project plan template should also mention or discuss actions taken if any changes to the milestones or delivery dates are required. Project Management Plan Schedule Baseline and Work Breakdown Structure This section of the Project Management Plan should discuss the -WBS, -WBS Dictionary, and -Schedule baseline and how they will be used in managing the project’s scope. The WBS provides the work packages to be performed for the completion Project Management Plan Change Management Plan This section should describe the change control process. Ideally, this process will be some type of organizational standard which is repeatable and done on most or all projects when a change is necessary. Project Management Plan Communications Management Plan The Communications Management Plan defines the following: Communication requirements based on roles What information will be communicated How the information will be communicated When will information be distributed Who does the communication Who receives the communication Communications conduct Project Management Plan COST MANAGEMENT PLAN The Cost Management Plan clearly defines how the costs on a project will be managed throughout the project’s lifecycle. It sets the format and standards by which the project costs are measured, reported, and controlled. These guidelines may include which level of the WBS cost accounts will be created in and the establishment of acceptable variances. The Cost Management Plan: Identifies who is responsible for managing costs Identifies who has the authority to approve changes to the project or its budget How cost performance is quantitatively measured and reported upon Report formats, frequency and to whom they are Project Management Plan Procurement Management Plan The Procurement Management Plan should be defined enough to clearly identify the necessary steps and responsibilities for procurement from the beginning to the end of a project. The project manager will work with the project team, contracts/purchasing department, and other key players to manage the procurement activities. Project Management Plan Project Scope Management Plan It is important that the approach to managing the projects’ scope be clearly defined and documented in detail. Failure to clearly establish and communicate project scope can result in delays, unnecessary work, failure to achieve deliverables, cost overruns, or other unintended consequences. This section provides a summary of the Scope Management Plan in which it addresses the following: Who has authority and responsibility for scope management How the scope is defined (i.e. Scope Statement, WBS, WBS Dictionary, Statement of Work, etc.) How the scope is measured and verified (i.e. Quality Checklists, Scope Baseline, Work Performance Measurements, etc.) The scope change process (who initiates, who authorizes, etc.) Project Management Plan Schedule Management Plan This section provides a general framework for the approach which will be taken to create the project schedule. This section following: should include discussion of the - scheduling tool/format, - schedule milestones, and - schedule development roles and responsibilities. Project Management Plan Quality Management Plan This section should include: - quality roles and responsibilities, - quality control, - quality assurance, and - quality monitoring.. Project Management Plan Risk Management Plan This section provides a general description for the approach taken to identify and manage the risks associated with the project. It should be a short paragraph or two summarizing the approach to risk management on this project. Since risk management is a science in itself, it’s must be produced with a Risk Register and appendix. Project Management Plan Staffing Management Plan This section should include discussion on matrixed or organizational structure depending on which is being used for this project. This section should also include how resources will be procured and managed as well as the key resources needed for the project. Project Management Plan Resource Calendar The resource calendar identifies key resources needed for the project and the times/durations they'll be needed. This information must be agreed to by the Project Sponsor and Functional Managers prior to beginning the project. Project Management Plan Cost Baseline This section contains the cost baseline for the project upon which cost management will be based. The project will use earned value metrics to track and manage costs and the cost baseline provides the basis for the - tracking, - reporting, and - management of costs. Project Management Plan Quality Baseline The purpose of this baseline is to provide a basis for ensuring that quality can be measured to determine if acceptable quality levels have been achieved. It is important for all projects to clearly define and communicate quality standards and the quality baseline serves this purpose. Work breakdown structure Work breakdown structure A communication tool to communicate project strategy Represents both the project strategy and its logical relationships A technique by which the project is divided and subdivided for management and control purposes It provides better control of work definition It allows work to be delegated in coherent packages Allows work to be defined at an appropriate level for estimating and control for the current stage A WBS should achieve the following goals: Be compatible with how the work will be done and how costs and schedules will be managed; Give visibility to important or risky work; Allow mapping of requirements, plans, testing and deliverables; Foster clear ownership by managers and task leaders; Provide data for performance measurement and historical databases; Widget Mgmt. System 1 Initiation 1.1 Planning 1.2 Execution 1.3 Evaluation & Recommendations 1.1.1 Create Preliminary Scope Statement 1.2.1 Project Kickoff Meeting 1.3.1 Project Management 1.4.1 Audit Procurement 1.5.1 Develop Project Charter 1.1.2 Determine Project Team 1.2.2 Verify & Validate User Requirements 1.3.2 Project Status Meetings 1.4.2 Document Lessons Learned 1.5.2 Deliverable: Submit Project Charter 1.1.3 Project Team Kickoff Meeting 1.2.3 Design System 1.3.3 Risk Management 1.4.3 Update Files/ Records 1.5.3 Project Sponsor Reviews Project Charter 1.1.4 Develop Project Plan 1.2.4 Procure Hardware/Software 1.3.4 Update Project Management Plan 1.4.4 Gain Formal Acceptance 1.5.4 Project Charter Signed/Approved 1.1.5 Submit Project Plan 1.2.5 Install Development System 1.3.5 Milestone: Project Plan Approved 1.2.6 Testing Phase 1.3.6 Install Live System 1.3.7 User Training 1.3.8 Go Live 1.3.9 Control 1.4 Closeout 1.5 Archive Files/ Documents 1.5.5 Wrap-Up Project Management Plan Work breakdown structure Chapter Two Organization Strategy and Project Selection 2–64 Where We Are Now 2–65 Learning Objectives 1. Explain why it is important for project managers to understand their organization’s strategy 2. Identify the significant role projects contribute to the strategic direction of the organization 3. Understand the need for a project priority system 4. Apply financial and nonfinancial criteria to assess the value of projects 5. Understand how multi-criteria models can be used to select projects 2–66priority system to 6. Apply an objective Chapter Outline 2.1 The Strategic Management Process: An Overview 2.2 The Need for a Project Priority System 2.3 A Portfolio Management System 2.4 Selection Criteria 2.5 Applying a Selection Model 2.6 Managing the Portfolio System 2–67 Why Project Managers Need to Understand Strategy Changes in the organization’s mission and strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects. Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission. 2–68 The Strategic Management Process: An Overview Strategic Management Requires every project to be clearly linked to strategy. Provides theme and focus of firm’s future direction. Responding to changes in the external environment—environmental scanning Allocating scarce resources of the firm to improve its competitive position—internal responses to new programs Requires strong links among mission, goals, objectives, strategy, and implementation. 2–69 Four Activities of the Strategic Management Process Review and define the organizational mission Set long-range goals and objectives Analyze and formulate strategies to reach objectives Implement strategies through projects 2–70 Strategic Management Process FIGURE 2.1 2–71 Characteristics of Objectives S Specific Be specific in targeting an objective M Measurable Establish a measurable indicator(s) of progress A Assignable Make the objective assignable to one person for completion R Realistic State what can realistically be done with available resources T Time related State when the objective can be achieved, that is, duration EXHIBIT 2.1 2–72 The Need for a Project Priority System The Implementation Gap The lack of understanding and consensus on strategy among top management and middle-level (functional) managers who independently implement the strategy. Organization Politics Project selection is based on the influence and power of people supporting the projects. Resource Conflicts and Multitasking Multiproject environment creates interdependency relationships of shared resources which results in the 2–73 starting, stopping, and restarting Benefits of Project Portfolio Management Builds discipline into the project selection process Links project selection to strategic metrics Prioritizes project proposals across a common set of criteria, rather than on politics Allocates resources to projects that align with strategic direction Balances risk across all projects Justifies killing projects that do not support strategy Improves communication and supports EXHIBIT agreement on project 2–74 goals 2.2 A Portfolio Management System Design of a project portfolio system: Classification of a project Selection criteria depending upon classification Sources of proposals Evaluating proposals Managing the portfolio of projects. 2–75 Portfolio of Projects by Type https://bigpicture.one/blog/proj ect-portfolio-for-beginners/ FIGURE 2.2 2–76 A Portfolio Management System Selection Criteria Financial models: payback, net present value (NPV) Non-financial models: projects of strategic importance to the firm Multi-Criteria Selection Models Use several weighted selection criteria to evaluate project proposals. 2–77 Financial Models The Payback Model Measures the time the project will take to recover the project investment. Emphasizes cash flows, a key factor in business. 2–78 Financial Models (cont’d) The Net Present Value (NPV) Model Uses management’s minimum desired rateof-return (discount rate) to compute the present value of all net cash inflows. Positive NPV: project meets minimum desired rate of return and is eligible for further Net present value (NPV) is the difference between consideration. the present value of cash inflows and the present Negative NPV: project is rejected. value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or projec 2–79 Example Comparing Two Projects Using Payback Method 2–80 EXHIBIT 2.3A Example Comparing Two Projects Using Net Present Value Method 2–81 EXHIBIT 2.3b Nonfinancial Strategic Criteria To capture larger market share To make it difficult for competitors to enter the market To develop an enabler product, which by its introduction will increase sales in more profitable products To develop core technology that will be used in next-generation products To reduce dependency on unreliable suppliers To prevent government intervention and regulation To restore corporate image or enhance brand recognition To demonstrate its commitment to corporate citizenship and support for community development 2–82 Multi-Criteria Selection Models Checklist Model Uses a list of questions to review potential projects and to determine their acceptance or rejection. Fails to answer the relative importance or value of a potential project and doesn’t to allow for comparison with other potential projects. Multi-Weighted Scoring Model Uses several weighted qualitative and/or quantitative selection criteria to evaluate project proposals. Allows for comparison of projects with other potential projects. 2–83 Sample Selection Questions Used in Practice Topic Question Strategy/alignment What specific strategy does this project align with? Driver What business problem does the project solve? Success metrics How will we measure success? Sponsorship Who is the project sponsor? Risk What is the impact of not doing this project? Risk What is the project risk to our organization? Risk Where does the proposed project fit in our risk profile? Benefits, value, ROI What is the value of the project to this organization? Benefits, value, ROI When will the project show results? Objectives What are the project objectives? EXHIBIT 2.4 2–84 Sample Selection Questions Used in Practice Topic Question Organization culture Is our organization culture right for this type of project? Resources Will internal resources be available for this project? Approach Will we build or buy? Schedule How long will this project take? Schedule Is the time line realistic? Training/resources Will staff training be required? Finance/portfolio What is the estimated cost of the project? Portfolio Is this a new initiative or part of an existing initiative? Portfolio How does this project interact with current projects? Technology Is the technology available or new? EXHIBIT 2.4 cont’d 2–85 Project Screening Matrix FIGURE 2.3 2–86 Applying a Selection Model Project Classification Deciding how well a strategic or operations project fits the organization’s strategy Selecting a Model Applying a weighted scoring model to align projects closer with the organization’s strategic goals Reduces the number of wasteful projects Helps identify proper goals for projects Helps everyone 2–87 involved understand Applying a Selection Model (cont’d) Sources and Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals and Selection of Projects Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power Managing the Portfolio Senior management 2–88 input A Proposal Form for an Automatic Vehicular Tracking (AVL) Public Transportation Project FIGURE 2.4A 2–89 Risk Analysis for 500-Acre Wind Farm FIGURE 2.4B 2–90 Project Screenin g Process FIGURE 2.5 2–91 Priority Screenin g Analysis FIGURE 2.6 2–92 Managing the Portfolio System Senior Management Input Provide guidance in selecting criteria that are aligned with the organization’s strategic goals. Decide how to balance available resources among current projects. The Governance Team Responsibilities Publish the priority of every project. Ensure that the project selection process is open and free of power politics. Reassess the organization’s goals 2–93 and priorities. Balancing the Portfolio for Risks and Types of Projects Bread-and-butter Projects Involve evolutionary improvements to current products and services. Pearls Represent revolutionary commercial opportunities using proven technical advances. Oysters Involve technological breakthroughs with high commercial payoffs. White Elephants Showed promise at one time but are no longer viable. 2–94 Key Terms Implementation gap Net present value Organizational politics Payback Priority system Priority team Project portfolio Project screening matrix Project sponsor Sacred cow Strategic management process 2–95