Chapter 01 - Why Project Management

Why Project Management?

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Copyright © 2013 Pearson Education

Chapter 1 Learning Objectives After completing this chapter, students will be able to:

Understand why project management is becoming such a powerful and popular practice in business.

Recognize the basic properties of projects, including their definition.

Understand why effective project management is such a challenge.

Differentiate between project management practices and more traditional, process-oriented business functions.

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Chapter 1 Learning Objectives

After completing this chapter, students will be able to:

Understand and explain the project life cycle, its stages, and the activities that typically occur at each stage in the project.

Understand the concept of project “success,” including various definitions of success, as well as the alternative models of success.

Identify the Knowledge areas

Get exposed to PMI, PMI membership, and PMP certification

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Copyright 2012 Kathy Schwalbe LLC

Many organizations today have a new or renewed interest in project management (PM) ◦ In 2011, the average annual salary for someone in the PM

profession was $160,409 in Switzerland (the highest-paid country), $139,497 in Australia, $105,000 in the United States, and $23,207 in China (the lowest-paid country), $81,600 in Lebanon (As per many Senior PMs).

◦ CareerBuilder.com found that 44% of U.S. employers listed PM as a skill they looked for in new college graduates, behind only communication and technical skills

◦ The world as a whole spends about one-quarter of its gross domestic product on projects of all kinds

◦ Project management is also a vital skill for personal success

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A project is “a temporary endeavor undertaken

to create a unique product, service, or result”*

Operations is work done to sustain the business

Projects end when their objectives have been

reached, or the project has been terminated

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*Project Management Institute, Inc., A Guide to the Project Management Body of Knowledge (PMBOK® Guide, Fifth Edition) (2012).


Project Definitions Summarized

A project can be considered any series of activities and tasks that have:

Specific objectives to be completed within certain specifications,

Defined start and end dates,

Funding limits,

Human and nonhuman resources, and

Multifunctional focus.

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A young couple hires a firm to design and build them a new house.

A retail store manager works with employees to display a new clothing line.

A college campus upgrades its technology infrastructure to provide wireless Internet access.

A construction company designs and constructs a new office building for a client.

A school implements new government standards for tracking student achievement.

Split the atom Tunnel under the English Channel Introduce Windows 7 Plan next Olympic games in London

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Examples of Projects


These historical projects have a story to tell: Project Management did not just appear in the 20th century, it has always been there since the beginning of the civilization thousand of years ago:

History of project management

You can also learn about the history of project management (music only video)

Or hear the author’s perspective by Mark Kozak-Holland

See www.intropm.com for links to all video highlights

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C:/Users/Mona/Desktop/AUB/Pearson - EDITED/VIDEOS/The History of Project Management.mp4

http://www.youtube.com/watch?v=C1uxCBx2-UQ&feature=fvwrel

http://www.youtube.com/watch?v=C1uxCBx2-UQ&feature=fvwrel

http://www.youtube.com/watch?v=dYgMT57I7UI&list=UU_RswQacF4r9Kj1KUs_KC4Q&index=5&feature=plcp





Better control of financial, physical, and human resources

Improved customer relations

Shorter development times

Lower costs

Higher quality and increased reliability

Higher profit margins

Improved productivity

Better internal coordination

Higher worker morale

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Process vs. Project Work Project

Take place outside the normal, process-oriented world

Unique and separate from routine, process-driven work

Continually evolving

Process

• Ongoing, day-to-day activities to produce goods and services

• Use existing systems, properties, and capabilities

• Typically repetitive

A project is a temporary endeavor undertaken to create a unique product or service.

PMBoK 2008

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Elements of Projects

Complex, one-time processes

Limited by budget, schedule, and resources

Developed to resolve a clear goal or set of goals

Customer-focused

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A project: ◦ Has a unique purpose

◦ Is temporary

◦ Is developed using progressive elaboration or in an

iterative fashion

◦ Requires resources, often from various areas

◦ Should have a primary customer or sponsor

The project sponsor usually provides the direction and

funding for the project

◦ Involves uncertainty

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General Project Characteristics Ad-hoc endeavors with a clear life cycle

Building blocks in the design and execution of organizational strategies

Responsible for the newest and most improved products, services, and organizational processes

Provide a philosophy and strategy for the management of change

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General Project Characteristics Entail crossing functional and organization boundaries

Traditional management functions of planning, organizing, motivating, directing, and controlling apply

Principal outcomes are the satisfaction of customer requirements within technical, cost, and schedule objectives

Terminated upon successful completion of performance objectives

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Process & Project Management (Table 1.1)

Process

1. Repeat process or product

2. Several objectives

3. Ongoing

4. People are homogeneous

5. Systems in place to integrate

efforts

6. Performance, cost, & time known

7. Part of the line organization

8. Bastions of established practice

9. Supports status quo

Project

1. New process or product

2. One objective

3. One shot – limited life

4. More heterogeneous

5. Systems must be created to

integrate efforts

6. Performance, cost & time less

certain

7. Outside of line organization

8. Violates established practice

9. Upsets status quo

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Project Success Rates Software & hardware projects fail at a 65% rate,

Over half of all IT projects become runaways,

Only 30% of technology-based projects and programs are a success.

Only 2.5% of global businesses achieve 100% project success and over 50% of global business projects fail,

Average success of business-critical application development projects is 32%, and

Approximately 42% of the 1,200 Iraq reconstruction projects were eventually terminated due to mismanagement or shoddy construction

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Project Life Cycles Man Hours

Conceptualization Planning Execution Termination

Fig 1.3 Project Life Cycle Stages

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Project Life Cycles

Conceptualization - the development of the initial goal and technical specifications.

Planning – all detailed specifications, schedules, schematics, and plans are developed

Execution – the actual “work” of the project is performed

Termination – project is transferred to the customer, resources reassigned, project is closed out.

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Every project is constrained in different ways. Some

project managers focus on the triple constraint (meeting

scope, time, and cost goals) ◦ Scope: What work will be done as part of the project? What unique

product, service, or result does the customer or sponsor expect

from the project?

◦ Time: How long should it take to complete the project? What is the

project’s schedule?

◦ Cost: What should it cost to complete the project? What is the

project’s budget? What resources are needed?

Other constraints include quality, risk, and resources

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Quadruple Constraint of Project Success

Figure 1-6 01-20

Copyright 2012 Kathy Schwalbe LLC 21


What is a Project?

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../../VIDEOS/Introduction to Project Management.mp4


Project management is “the application of

knowledge, skills, tools and techniques to project

activities to meet project requirements.”*

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*Project Management Institute, Inc., A Guide to the Project Management Body of Knowledge (PMBOK® Guide, Fifth Edition) (2012).


Project Management Maturity Generic Model

01-24 FIGURE 1.10


Project Manager Responsibilities

1. Selecting a team

2. Developing project objectives and a plan for

execution

3. Performing risk management activities

4. Cost estimating and budgeting

5. Scheduling

6. Managing resources

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Copyright © 2013 Pearson Education FIGURE 1.12

Overview of the Project Management Institute’s PMBoK Knowledge Areas

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Knowledge area Project management process groups (PMBOK® Guide, Fifth Edition, 2012)

Initiating Planning Executing Monitoring and

Controlling

Closing

Project integration

management

Develop project

charter

Develop project

management plan

Direct and manage project

work

Monitor and control project work; Perform

integrated change control

Close project or phase

Project scope

management Plan scope

management; Collect requirements; Define

scope; Create WBS

Validate scope; Control

scope

Project time

management Plan schedule

management; Define activities; Sequence activities; Estimate activity resources; Estimate activity durations; Develop

schedule

Control schedule

Project cost

management Plan cost management;

Estimate costs;

Determine budget

Control costs

Project quality

management Plan quality

management

Perform quality

assurance

Control quality


Knowledge area Project management process groups (PMBOK® Guide, Fifth Edition, 2012)

Initiating Planning Executing Monitoring and Controlling

Closing

Project human resource

management

Plan human resource

management

Acquire project team; Develop project team;

Manage project team

Project com-munications

management

Plan communications

management

Manage

communications

Control

communications

Project risk

management Plan risk management; Identify

risks; Perform qualitative risk analysis; Perform quantitative risk analysis; Plan risk

responses

Control risks

Project procurement

management Plan procurement

management Conduct procurements Control procurements Close

procure-

ments

Project stakeholder

management

Identify stake-

holders

Plan stakeholder management Manage stakeholder

engagement

Control stakeholder

engagement


Project integration management is an overarching function that coordinates the work of all other knowledge areas. It affects and is affected by all of the other knowledge areas.

Project scope management involves working with all appropriate stakeholders to define, gain written agreement for, and manage all the work required to complete the project successfully.

Project time management includes estimating how long it will take to complete the work, developing an acceptable project schedule given cost-effective use of available resources, and ensuring timely completion of the project.

Project cost management consists of preparing and managing the budget for the project.

Project quality management ensures that the project will satisfy the stated or implied needs for which it was undertaken.

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Project human resource management is concerned with making effective use of the people involved with the project.

Project communications management involves generating, collecting, disseminating, and storing project information.

Project risk management includes identifying, analyzing, and responding to risks related to the project.

Project procurement management involves acquiring or procuring goods and services for a project from outside the performing organization.

Project stakeholder management focuses on identifying project stakeholders, understanding their needs and expectations, and engaging them appropriately throughout the project. Note that PMI added stakeholder management as a tenth knowledge area to the PMBOK® Guide, Fifth Edition in 2012.

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What Went Right? Improved Project Performance

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Follow-up studies by the Standish Group showed some improvement in the statistics for IT projects: ◦ The number of successful projects has doubled, from 16

percent in 1994 to 37 percent in 2010

◦ The number of failed projects decreased from 31 percent in 1994 to 21 percent in 2010

“The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.”


There are different ways to define project

success: ◦ The project met scope, time, and cost goals.

◦ The project satisfied the customer/sponsor.

◦ The project produced the desired results.

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Six Success Criteria (for IT Projects)

System quality

Information quality

Use

User satisfaction

Individual impact

Organizational impact

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Understanding Success Criteria

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Table 1.2

Iron Triangle Information System Benefits (Organization) Benefits (Stakeholders)

Cost Maintainability Improved efficiency Satisfied users

Quality Reliability Improved effectiveness Social and environmental

impact Time Validity Increased profits

Information quality Strategic goals Personal development

Use Organization learning Professional learning,

contractors’ profits Reduced waste

Capital suppliers, content

Project team, economic

impact to surrounding

community

What is a Program?

• A program is:

– “a group of related projects managed in a

coordinated way to obtain benefits and control not

available from managing them individually”*

– A program manager provides leadership and

direction for the project managers heading the

projects within the program

*Project Management Institute, Inc., A Guide to the Project Management Body of Knowledge (PMBOK® Guide, Fifth Edition) (2012)

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Copyright 2008



Project portfolio management is an emerging

business strategy in which organizations group and

manage projects and programs as a portfolio of

investments that contribute to the entire enterprise’s

success.

Pacific Edge Software’s product manager, Eric

Burke, defines project portfolio management as “the

continuous process of selecting and managing the

optimum set of project initiatives that deliver

maximum business value.”

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Project and program management address

questions like: ◦ Are we carrying out projects well?

◦ Are projects on time and budget?

◦ Do project stakeholders know what they should be

doing?

Portfolio management addresses questions like: ◦ Are we working on the right projects?

◦ Are we investing in the right areas?

◦ Do we have the right resources to be competitive?

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Project, program, and portfolio managers need

to develop specific skills

Certification is available for project managers

There are many software tools to assist in

project, program, and portfolio management

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A best practice is “an optimal way recognized by industry to

achieve a stated goal or objective.”* Robert Butrick

suggests that organizations need to follow basic principles

of project management, including these two mentioned

earlier in this chapter: ● Make sure your projects are driven by your strategy. Be able to

demonstrate how each project you undertake fits your business

strategy, and screen out unwanted projects as soon as possible.

● Engage your stakeholders. Ignoring stakeholders often leads to

project failure. Be sure to engage stakeholders at all stages of a

project, and encourage teamwork and commitment at all times. Use

leadership and open communications to make things happen.**

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*Project Management Institute, Inc., Organizational Project Management Maturity Model (OPM3) Knowledge Foundation (2003), p. 13.

**Ultimate Business Library, Best Practice: Ideas and Insights from the World’s Foremost Business Thinkers, Perseus Publishing (2003).


PMI provides certification as a Project

Management Professional (PMP)

A PMP has documented sufficient project

experience, agreed to follow a code of ethics, and

passed the PMP exam

The number of people earning PMP certification is

increasing quickly

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1,000 1,900 2,800 4,400 6,415 10,086 18,184

27,052 40,343

52,443

76,550

102,047

175,194

221,144

267,367

318,289

361,238

412,503

467,390

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

# P

MPs

Year






As a student, you can join PMI for a reduced fee

($40 vs. $129 in 2012)

Also consider earning the Certified Associate in

Project Management (CAPM) credential from PMI

or the Project+ certification from CompTIA

See the last section of Appendix C for more

details. If you complete a bachelor’s degree, you

do not need any work experience to earn these

two certifications.

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Ethics — a set of principles that guide our decision

making based on personal values of what is “right”

and “wrong” — is an important part of all

professions

Project managers often face ethical dilemmas.

In order to earn PMP certification, applicants must

agree to the PMP code of ethics and professional

conduct

Several questions on the PMP exam are related to

professional responsibility, including ethics

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There are hundreds of different products available today.

Three main categories of tools are the following: ◦ Low-end tools: Handle single or smaller projects well; cost

under $200 per user. Smart phone apps and/or integration with them also available

◦ Midrange tools: Handle multiple projects and users; cost $200-600 per user; Microsoft Project is the most popular

◦ High-end tools: Also called enterprise project management software; often licensed on a per-user basis

Project 2010 includes a standard and an enterprise version. See Appendix A and B for details on using Project 2010 and AtTask

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A 60-day evaluation copy of Microsoft Project is

available from Microsoft’s Web site at

www.microsoft.com/project, and users of this book can

access a special 60-day trial of MindView Business

software at www.matchware.com/intropm. Note that

both of these tools require downloads and Windows

software.

You can use the link in Appendix B for direct access to

AtTask , a totally web-based tool (no download

required, just a web browser and Internet access).

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http://www.microsoft.com/project

http://www.matchware.com/intropm



Summary

Understand why project management is becoming such a powerful and popular practice in business today.

Recognize the basic properties of projects, including their definition.

Understand why effective project management is such a challenge.

Differentiate between project management practices and more traditional, process-oriented business functions.

01-54


Summary

Understand and explain the project life cycles, its stages, and the activities that typically occur at each stage in the project.

Understand the concept of project “success,” including various definitions of success, such as the “triple constraint,” as well as alternative models of success.

Identify the Knowledge areas

Get exposed to PMI, PMI membership, and PMP certification

01-55

Copyright © 2013 Pearson Education 01-56

Documents

Chapter 01 - Why Project Management