Week 6

Problem Set #3

Attached Files:

Stakeholder Reg – Comm Matrix x (20.434 KB)

Stakeholder Register & Communications Matrix ExerciseInstructions: Using your Week 2 Business Case complete the following Stakeholder Register Exercise (Exhibit 6.4 on page 183 of the Kloppenborg text) and Project Communications Matrix (Exhibit 6.9 on page 192). Complete instructions and templates based on these exhibits have been provided (see attached document).

Week 6 Homework

There are countless sites that are willing to share the results of the data collection they perform with the general public. As analysts, it is important for us to understand how to acquire and work with a wide array of data from a wide array of sources. This week, we will focus on one open-source site:

https://www.bls.gov/data/

– or –

https://www.bls.gov/cps/tables.htm#charemp

– You will have to cut and paste this into your browser – the site does not support direct linking.This week’s assignment is to take one of the datasets available on this page and graph it using R. You have the choice of the dataset from the above page, and the type of visualization you wish to use. In your paper, describe the dataset and its significance.Your paper should be 500 words with a screenshot of the R code and the visualization you create. Feel free to cite one of this week’s study materials or one that you locate via research but you should cite at least one reference, check your work with Grammarly and follow APA format.

Week 6 AssignmentComplete the following assignment in one MS word document:Chapter 10 –discussion question #1-2 & exercise 1 & 7Chapter 11- discussion question #1-4 & exercise 4When submitting work, be sure to include an APA cover page and include at least two APA formatted references (and APA in-text citations) to support the work this week.All work must be original (not copied from any source).
Portfolio AssignmentThis week discuss a current business process in a specific industry. Note the following:-The current business process itself.-The industry the business process is utilized in.After explaining the current situation, take the current learning from the course and:
Explain a new technology that the business should deploy. Be specific, don’t only note the type of technology but the specific instance of technology. (For example, a type of technology is smart automation a specific type of automation is automated light-dimming technology).
Note the pros and cons of the technology selected.
Note various factors the business should consider prior to deploying the new technology
The above submission should be three pages in length. Remember the total length does not include the APA approved cover page or the references. There should be at least three APA approved references to support your work.
Week 6: Discussion 1
Week 6: Discussion 1Create a discussion thread (with your name) and answer the following question:
Discussion 1 (Chapter 10): There have been many books and opinion pieces writ-ten about the impact of AI on jobs and ideas for societal responses to address the issues. Two ideas were mentioned in the chapter – UBI and SIS. What are the pros and cons of these ideas? How would these be implemented?Your response should be 250-300 words. Respond to two postings provided by your classmates.
There must be at least one APA formatted reference (and APA in-text citation) to support the thoughts in the post. Do not use direct quotes, rather rephrase the author’s words and continue to use in-text citations.
Week 6: Discussion 2
Week 6: Discussion 2Create a discussion thread (with your name) and answer the following question:Discussion 2 (Chapter 11): Explain how GDSS can increase some benefits of collaboration and decision making in groups and eliminate or reduce some losses.Note: The first post should be made by Wednesday 11:59 p.m., EST. I am looking for active engagement in the discussion. Please engage early and often.Your response should be 250-300 words. Respond to two postings provided by your classmates.There must be at least one APA formatted reference (and APA in-text citation) to support the thoughts in the post. Do not use direct quotes, rather rephrase the author’s words and continue to use in-text citations.

STAKEHOLDER REGISTER

/COMMUNICATION EXERCISE

Instructions: Using your Week

Business Case complete the following

Stakeholder

on page

of the Kloppenborg text) and Project Communication Matrix (Exhibit 6.

on page 192 of the Kloppenborg text). Templates based on these exhibits have been provided below.

Copy and paste your Business Case in the space below (ensure it is single spaced, Times New Roman 12-point font). Fill in ten (

) identifiable stakeholders from your selected project. At least six (6) of the ten (10) need to be specific stakeholders that
must be key and internal
within the overall execution and completion of the project. This means that they will be a primary part of completing the project and will be integral to the planning and execution phases of the project as well as doing the actual work. Then fill in the required information as provided in the Kloppenborg text for the Register and the Matrix.

Your identified stakeholders need to be specific. For example, listing City Government is not specific enough. What department of the city government are you referring to? Is it several? A construction project could include engineering, planning and zoning, public works and even mayor/council. However, these may not be key and internal unless in is a project being specifically completed by that organization or an agency of that organization. If you can breakdown an identified stakeholder group into smaller groups then you have not been specific enough. Do not leave out obvious stakeholders. Be thorough and be specific.

Be sure each tool starts on its own page. Ensure no row is split between two pages. Adjust row height and column width as needed to format properly.

Business Case:

STAKEHOLDER REGISTER
		Stakeholder	Interest in Project	Priority	Support/Mitigation Strategies
	1
	2
	3
	4
	5
	6
	7
	8
	9
	10

Stakeholder

PROJECT COMMUNICATION MATRIX
Project Info Needs	Stakeholder Info Needs	Methods	Timing

Project Title: North Tryon Street Gateway Streetscape Project (Charlotte, NC 2022-2024)

Business Case:

The North Tryon Street Gateway Project is between Uptown Charlotte (NC) and the North End of Charlotte. New pedestrian lighting and upgrades to existing pedestrian lights are among the features being installed along North Tryon Street in Charlotte. The walking path will be covered around 30 miles of north street Gateway are being constructed using Concrete. Budget is $890,000 to cover planning and design, acquiring the right of way, consultant fees, construction, signalization, permits and landscaping. The Project in Construction stage and entire project will complete 2024.

CONTEMPORARY PROJECT MANAGEMENT, 4E

Timothy J. Kloppenborg

Vittal Anantatmula

Kathryn N. Wells

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‹#›

Stakeholder Analysis and Communication Planning

Chapter 6

‹#›

Chapter 6 Core Objectives:
List, describe, & prioritize project stakeholders
Describe each section of a project communication plan
Build a communication matrix
Develop strategies for stakeholder management
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Chapter 6 Behavioral Objectives:
Tell how to build project relationships & why they are important for communication
Develop a project communications management plan
Plan, conduct, & improve project meetings
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The Organizational Zoo
“The use of creative tools such as metaphor and reflective conversations is becoming more common and makes a significant contribution to success…”
www.organizationalzoo.com/profiler
Copyright Arthur Shelley 2013
Image artist John Szabo
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Identify Stakeholders
After charter is accepted, a good place to start detailed planning is with understanding who the stakeholders are and how to communicate with them
PM’s Stakeholder Responsibilities include:
Understanding the stakeholders
Building relationships with stakeholders
Developing a communications plan for dealing with stakeholders

Identify Stakeholders
Multiple users with different—sometimes conflicting—requirements
May not know what they want
May not be the actual user
Unreasonable requests
Stakeholders other than the users
Find Stakeholders
Analyze stakeholders
Document stakeholders
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Find Stakeholders
Who will use or be affected by the result of a project?
Work on the project
Provide people or resources
Have their routines disrupted
Who will be positively or negatively impacted by the process of performing the project?
Are stakeholders internal or external?
Identify stakeholders –the process of determining the individuals and groups who might impact or be impacted by some aspect of the project.
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Examples of Project Stakeholders
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Breakout Session! Identifying Project Stakeholders
Use classic rules of brainstorming
List project processes and results stakeholders may be interested in
Combine stakeholder list into groups
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Analyze Stakeholders
Prioritize stakeholders
Stakeholder analysis – a stakeholder identification technique composed of gathering and evaluating information to determine whose interests should be emphasized throughout the project.
Power
INTEREST
INFLUENCE
Impact
Urgency
Legitimacy
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Analyze Stakeholders
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Success Criteria for Various Stakeholders
6.3
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Breakout Session! Analyze Project Stakeholders
Prioritize among your stakeholders to ensure the most important project needs are met
Refer to Exhibits 6.2 & 6.3
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Results of Find and Analyze Stakeholders
Set clear direction
Prioritize objectives
Recognize complex tradeoffs and consequences
Facilitate necessary decisions
Develop a shared sense of risk
Build a strong relationship with customers
Lead with an empowering style
Serve as good stewards of resources
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Document Stakeholders
Create a stakeholder register
Capitalize on stakeholder support
Mitigate impact of stakeholder resistance
Stakeholder register – a repository of information regarding all project stakeholders
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Project Stakeholder Register
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Plan Stakeholder Engagement
Create Stakeholder Engagement Assessment Matrix
Define how to engage & manage stakeholders throughout project lifecycle
This matrix is primary tool that comprises stakeholder management plan
Plan to Build Relationships with Stakeholders
PM & team should engage stakeholders throughout lifecycle of project and beyond
Team-building & involving key stakeholders is especially important during planning phase
Developing relationships to influence others is critical
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Plan Stakeholder Engagement

Relationship Building with Stakeholders
“What is in it for me?”
Treat stakeholders as partners
Use core team relationship building activities
Foster respect and trust
Stakeholder engagement plan – a subsidiary component of the project management plan that defines how to effectively engage stakeholders in planning and performing the project based on the analysis of stakeholders’ needs, wants, and impacts.
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Manage & Monitor Stakeholder Engagement

Manage Stakeholder Engagement
Share planning documents
Hold informal conversations
Follow the formal change control process
Understand stakeholder assumptions
Elaborate on analysis created for charter
Document expectations regarding project deliverables & have stakeholders verify them prior to project execution
Manage stakeholder engagement – process of the project team communicating and working with stakeholders to satisfy their needs (and desires, when possible), handle issues quickly, and encourage active stakeholder participation throughout.
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Monitor Stakeholder Engagement
Relationships
Communications
Lessons learned

Monitor stakeholder engagement – the process of engaging stakeholders and managing relations with them effectively.
Educated about their roles
Alerted about changes
Asked for early and continuous feedback
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Plan Communications Management
Purposes of a project communications management plan
PM must use effective communications to set & manage stakeholders’ expectations
Ensure that project work is completed properly
Communications plan considerations
Communications matrix
Knowledge management
Communications management plan – a living document and component of the
project management plan that considers stakeholders’ information desires and guides the project communications.
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Purposes of a Project Communications Plan
“Communication leads to cooperation,
which leads to coordination,
which leads to project harmony,
which leads to project success.”
Adedeji Badiru
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Project Communications Plan Considerations
Purpose—Project communications need to be:
Clear
Concise
Courteous
Consistent
Confidential
Compelling
Structures—use existing organizational forms & supplement where necessary
Methods—can be pushed, pulled, or interactive
Timing—can be routine, tied to project life cycle, or as needed
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Project Communications Plan Considerations
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Communications Matrix
Who to learn from?
What to learn?
Who to share with?
What to know?
When to know it?
What communications method?
Who is responsible?
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Communications from Stakeholders
To authorize work
To determine requirements
To uncover and resolve issues
To receive feedback
Velocity, burn down charts, running tested features, earned business value
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Project Communications Matrix
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Breakout Session! Project Communication Matrix
Begin a Communication Matrix for your project, using the columns found in Exhibit 6.9:
Stakeholder
Project Information Needs
Stakeholder Information Needs
Methods
Timing
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Knowledge Management
Capture and reuse knowledge developed
Create a lessons learned knowledge base
Facilitate a lessons learned session for the project
Knowledge—insights derived from information and experience…can be linked & compared to other information
Manage project knowledge—the process of using & developing knoledge to help improve both the current project and the capability of the organization
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Manage Communications
Determine project information needs
Need to be handled accurately, promptly, & effectively
Different stakeholder info needs at different stages of project
Establish Information Retrieval & Distribution System
Target communication only to people who need it
Use newer technologies if helpful, but don’t discard older methods without reason
Use communication management plan & matrix
Constantly ask yourself, “who needs to know what?”
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Project Meeting Management
Establish project plans
Conduct project activities
Verify progress
Make decisions
Accept deliverables
Close out projects
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Improving Project Meetings
Meetings are a process that can be studied & improved
Apply the plan-do-check-act (PDCA) model
Any process practiced repeatedly will improve over time
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PDCA Model Applied to Project Meetings
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Project Meeting Agenda Template
PLAN-
Well-run meetings require planning

Project Meeting Minutes Template
DO
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Breakout Session! Project Meeting Management
Plan & execute a project meeting. Be prepared to share your agenda (Exhibit 6.11), meeting minutes (Exhibit 6.12), and include a short meeting evaluation (Exhibit 6.14)
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Issues Management
4 primary types of information captured in a project meeting:
Decisions made
New issues surfaced & old issues resolved
Action items agreed to
An evaluation of the meeting
Issue – a situation that requires a decision to be made, but one that cannot be made now (usually due to needing more information or more time)
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The Issues Log
All decisions made should be documented
Issues do not need to be resolved immediately, but they will need to be resolved in time
Important issues are added to the log
Ensures issues are not forgotten
Issues log – a living document in which new and ongoing issues are recorded and stored & resolved issues are removed
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Project Issues Log
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Action Items and Evaluation
Agile evaluations are called retrospectives
For each agreed upon action item, capture who will do it and when
Evaluate meetings with the plus (positives)—delta (change) template
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Summary
After charter approval—identify, prioritize, and document stakeholders
Plan, manage, and monitor stakeholder engagement—through and beyond project lifecycle
Plan & manage communications with a communications plan
Communications matrix
Managing and improving meetings
Managing and escalating issues
Capturing and using lessons learned
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PMBOK Exams
Tremendous overlap between Communications Management & Stakeholders Management (including recent changes—so make sure you are using most recent 6th edition of PMBOK to study!)
Besides developing Charter, only process in Initiating project phase is Identify Stakeholders
Main work of the next phase—the Planning Process Group—is creating the Project Management Plan.
PM plan is aggregate of plans from each of the ten knowledge areas and includes the Communications management plan & Stakeholders Management Plan
As always, be familiar with the inputs, tools & techniques, and outputs for each process
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Casa de Paz Development Project
The stakeholder priority matrix shown is a start and now we need to understand what each needs to share with us and learn from us.
This leads us to create a communications matrix.
We need to develop and use agendas, minutes, issues logs and meeting evaluations.
How would you facilitate Agile ceremonies such as stand-up meetings and retrospectives?
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Project Communication Planning for a Distributed Project
IT rollout of servers, clients, networking equipment & central data center
Need for revision of original communications plan
What finally saved the project?
PM IN ACTION
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Chapter 10 Questions
Discussion Question 1: Based on the current state of art of robotics applications, which industries are most likely to embrace robotics? Why?
Discussion Question 2:Watch the following video: https://www.youtube.com/watch?v=ggN8wCWSIx4 for a different view on the impact of AI on future jobs. What are your takeaways from the video? What is the more likely scenario in your view? How can you prepare for the day when humans indeed may not need to apply for many jobs? Write a report.
Exercise 1: Identify applications other than those discussed in this chapter where Pepper is being used for commercial and personal purposes.
Exercise 7:Conduct research to identify the most recent developments in self-driving cars. Write a report.
Chapter 11 Questions
Discussion Question 1: Explain why it is useful to describe group work in terms of the time/space framework.
Discussion Question 2: Describe the kinds of support that groupware can provide to decision makers.
Discussion Question 3: explain why most groupware is deployed today over the web.
Discussion Question 4: Explain in what ways physical meetings can be inefficient. Explain how technology can make meetings more effective.
Exercise 4: Compare Simon’s four-phase decision-making model to the steps in using GDSS. Write a report.

Contemporary
Project Management
Timothy J. Kloppenborg
•
Vittal Anantatmula
•
Kathryn N. Wells
F O U R T H E D I T I O N
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MS Project 2016 Instructions in Contemporary Project Management 4e
Chapter MS Project
3 MS Project 2016 Introduction
Ribbon, Quick Access Toolbar, view panes, Zoom Slider, Shortcuts, Scheduling Mode Selector
Setting Up Your First Project
Auto schedule, start date, identifying information, summary row
Create Milestone Schedule
Key milestones, zero duration, must finish on, information
7 Set Up a Work Breakdown Structure (WBS)
Understand the WBS definitions and displays
Enter WBS Elements (tasks), Create the outline,
Insert WBS Code Identifier column, Hide or show subtasks detail
8 Using MS Project for Critical Path Schedules
Set Up the Project Schedule
Set or update the project start date, Define organization’s working and nonworking time
Build the Network Diagram and Identify the Critical Path
Enter tasks and milestones, edit the timescale, understand and define task dependencies, assign task
duration estimates, identify the critical path, understand the network diagram view
Display and Print Schedules
9 Define Resources
Resource views, max units, resource calendars
Assigning Resources
Basic assignment, modify an assignment
Identify Overallocated Resources
Resource usage and Detailed Gantt views together
Overallocated Resources
Finding overallocated resources, dealing with overallocations
Crashing a Critical Path Activity
10 Develop Bottom-up Project Budget
Assignment costs, task costs, various cost perspectives
Develop Summary Project Budget
12 Baseline the Project Plan
First time baseline, subsequent baselines, viewing variances
14 Using MS Project to Monitor and Control Projects
What Makes a Schedule Useful?
How MS Project recalculates based on reported actuals, current and future impacts of variances, define
the performance update process (who, what, when)
Steps to Update the Project Schedule
Acquire performance data, set and display status date, Enter duration-based performance data,
reschedule remaining work, revise future estimates
15 Close Project
Creating project progress reports, sharing reports, export a report to MS Excel, archive project work,
capture and publish lessons learned
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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PMBOK® Guide 6e Coverage in Contemporary Project Management 4e
The numbers refer to the text page where the process is defined.
Project management (PM) processes and knowledge areas 10–11 Project life cycle 7–10, 62–64
Projects and strategic planning 33–37 Organizational influences 102–110
Portfolio and program management 37–42
PMBOK® Guide, 6th ed. Coverage
Knowledge
Areas
Initiating
Process
Group Planning Process Group
Executing Process
Group
Monitoring &
Controlling
Process Group
Closing
Process
Group
Project
Integration
Management
Develop
Project
Charter
60–79
Develop Project Management Plan
409–410
Direct and Manage
Project Work 459–460
Manage Project
Knowledge 192–193,
504–508
Monitor and Control
Project Work 460–462
Perform Integrated
Change Control
229–232, 462–463
Close
Project
or Phase
503,
508–511
Project Scope
Management
Plan Scope Management 211–212
Collect Requirements 212–216
Define Scope 216–220
Create WBS 220–229
Validate Scope
500–501
Control Scope
475–476
Project
Schedule
Management
Plan Schedule Management 246
Define Activities 249–253
Sequence Activities 253–255
Estimate Activity Durations 255–258
Develop Schedule 259–267
Control Schedule
476–480
Project Cost
Management
Plan Cost Management 329–330
Estimate Costs 330–341
Determine Budget 342–344
Control Costs 345,
476–480
Project Quality
Management
Plan Quality Management 401–404 Manage Quality
404–406, 469–474
Control Quality
406–409, 469–474
Project
Resources
Management
Plan Resource Management 290–295
Estimate Activity Resources 290
Aquire Resources
138–141
Develop Team 141–157
Manage Team 157–161
Control Resources 476
Project Com-
munications
Management
Plan Communications Management
188–192
Manage
Communications
193–199, 465–467
Monitor
Communications
467–468
Project Risk
Management
Plan Risk Management 360–366
Identify Risks 75, 366–368
Perform Qualitative Risk Analysis 75,
368–372
Perform Quantitative Risk Analysis
372–373
Plan Risk Responses 75, 373–377
Implement Risk
Responses 464–465
Monitor Risks
463–464
Project
Procurement
Management
Plan Procurement Management
431–433, 438–441
Conduct
Procurements
434–438
Control Procurments
441
Project Stake-
holder
Management
Identify
Stakehold-
ers 75–77,
178–184
Plan Stakeholder Engagement 184–186 Manage Stakeholder
Engagement 187–188
Monitor Stakeholder
Engagement 188
Source: Adapted from A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management
Institute, Inc., 2017): 31.
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Contemporary Project
Management
ORGANIZE LEAD PLAN PERFORM
FOURTH EDITION
TIMOTHY J. KLOPPENBORG
Xavier University
VITTAL ANANTATMULA
Western Carolina University
KATHRYN N. WELLS
Keller Williams Real Estate
Australia • Brazil • Mexico • Singapore • United Kingdom • United States
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Contemporary Project Management,
Fourth Edition
Timothy J. Kloppenborg
2019 2015
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Printed in the United States of America
Print Number: 01 Print Year: 2017
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Brief Contents
Preface xx
About the Authors xxix
PART 1 Organizing Projects
1 Introduction to Project Management 2
2 Project Selection and Prioritization 32
3 Chartering Projects 60
PART 2 Leading Projects
4 Organizational Capability: Structure, Culture, and Roles 100
5 Leading and Managing Project Teams 136
6 Stakeholder Analysis and Communication Planning 176
PART 3 Planning Projects
7 Scope Planning 210
8 Scheduling Projects 244
9 Resourcing Projects 286
10 Budgeting Projects 328
11 Project Risk Planning 358
12 Project Quality Planning and Project Kickoff 386
PART 4 Performing Projects
13 Project Supply Chain Management 426
14 Determining Project Progress and Results 456
15 Finishing the Project and Realizing the Benefits 498
Appendix A PMP and CAPM Exam Prep Suggestions 522
Appendix B Agile Differences Covered 527
Appendix C Answers to Selected Exercises 532
Appendix D Project Deliverables 537
Appendix E Strengths Themes As Used in Project Management [Available Online]
Index 539
v
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Requirements
Documents
13.1 Identify
Stakeholders
Stakeholder
Register
Stakeholder
Engagement
Assessment Matrix
Integration
Scope
Schedule
Cost
Quality
Resources
Communication
Risk
Procurement
Stakeholders
12.1 Plan
Procurement
Management
11.1 Plan
Risk
Management
10.1 Plan
Communications
Management
9.1 Plan
Resource
Management
8.1 Plan
Quality
Management
7.1 Plan
Cost
Management
6.1 Plan
Schedule
Management
5.1 Plan
Scope
Management
Duration
Estimates
Scope
Statement
Activity List
Milestone List
Network
4.1 Develop
Project Charter
Charter
Assumptions Log
Cost Baseline
Resource Requirements
RACI
Team
Charter
Quality
Mgt.
Plan
Communications
Matrix
Risk Register
Bid
Documents
Make or Buy
Analysis
6.5 Develop
Schedule
Schedule Baseline
5.2 Collect
Requirements
5.4 Create
WBS
Scope
4.2 Develop Project Management Plan
Activities
9.2 Estimate
Activity
Resources
11.2 Identify
Risks
11.3 Perform
Qualitative
Risk Analysis
11.4 Perform
Quantitative
Risk Analysis
11.5 Plan
Risk
Responses
13.2 Plan
Stakeholders
Engagement
6.4 Estimate
activity
Durations
7.3 Determine
Budget
7.2 Estimate
Costs
6.3 Sequence
Activities
1.2 Foundational Elements
2.4 Organizational Systems
3.4 Project Manager Competencies
Selecting Projects
Project Customer Tradeoff Matrix
Life Cycle and Development Approach
Elevator Pitch
Leader Roles and Responsibilities
Project Selection and Prioritization Matrix
Project Resource Assignment Matrix
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11.6 Implement
Risk Responses
13.3 Manage
Stakeholder
Engagement
13.4 Monitor
Stakeholder
Engagement
4.3 Direct and Manage
Project Work
4.4 Manage Project
Knowledge
Scope
Baseline with WBS
Resource Histogram
Project Crashing
Retrospectives
Closure
Documents
Customer
Feedback
Transition Plan
Scope
Backlog
Burn
Down/Up
Charts
Quality
Reports
s
Analysis
Realizing
s
PM Plan Baselines Life Cycle
and Development Approach 4.7 Close Project
or Phase
6.6 Control
Schedule
Earned Value
Analysis
7.4 Control
Costs
5.6 Control
Scope
5.5 Validate
Scope
8.2 Manage
Quality
9.3 Acquire
Resources
9.4 Develop
Team
9.6 Control
Resources
9.5 Manage
Team
8.3 Control
Quality
Change
Requests
10.2 Manage
Communications
11.7 Monitor
Risks
10.3 Monitor
Communications
Team
Assignments
Team
Assessments
Agendas
Minutes
Issues Log
Meeting Evaluation
Progress Report
12.2 Conduct
Procurements
12.3 Control
Procurements
Source
Selection
Matrix
Lessons
Learned
Register
Quality
Measurements
4.6 Perform
Integrated
Change Control
4.5 Monitor and
Control
Project Work
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Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxix
PART 1 Organizing Projects
CHAPTER 1
Introduction to Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 What Is a Project? 3
1.2 History of Project Management 5
1.3 How Can Project Work Be Described? 6
1.3a Projects versus Operations 6 / 1.3b Soft Skills and Hard Skills 7 / 1.3c Authority
and Responsibility 7 / 1.3d Project Life Cycle 7
1.4 Understanding Projects 10
1.4a Project Management Institute 10 / 1.4b Project Management Body of Knowledge
(PMBOK®) 10 / 1.4c The PMI Talent Triangle 11 / 1.4d Selecting and Prioritizing
Projects 14 / 1.4e Project Goals and Constraints 14 / 1.4f Defining Project Success
and Failure 15 / 1.4g Using Microsoft Project to Help Plan and Measure
Projects 16 / 1.4h Types of Projects 16 / 1.4i Scalability of Project Tools 17
1.5 Project Roles 17
1.5a Project Executive-Level Roles 18 / 1.5b Project Management-Level Roles 19 /
1.5c Project Associate-Level Roles 20
1.6 Overview of the Book 20
1.6a Part 1: Organizing and Initiating Projects 20 / 1.6b Part 2: Leading Projects 21 /
1.6c Part 3: Planning Projects 21 / 1.6d Part 4: Performing Projects 23
PMP/CAPM Study Ideas 23
Summary 24
Key Terms Consistent with PMI Standards and Guides 24
Chapter Review Questions 25
Discussion Questions 25
PMBOK® Guide Questions 26
Integrated Example Projects 27
Suburban Homes Construction Project 27
Casa DE PAZ Development Project 28
Semester Project Instructions 28
Project Management in Action 29
References 30
Endnotes 31
viii
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CHAPTER 2
Project Selection and Prioritization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.1 Strategic Planning Process 33
2.1a Strategic Analysis 33 / 2.1b Guiding Principles 34 / 2.1c Strategic
Objectives 36 / 2.1d Flow-Down Objectives 37
2.2 Portfolio Management 37
2.2a Portfolios 38 / 2.2b Programs 39 / 2.2c Projects and Subprojects 39 /
2.2d Assessing an Organization’s Ability to Perform Projects 42 / 2.2e Identifying
Potential Projects 42 / 2.2f Using a Cost-Benefit Analysis Model to Select
Projects 43 / 2.2g Using a Scoring Model to Select Projects 45 / 2.2h Prioritizing
Projects 48 / 2.2i Resourcing Projects 48
2.3 Securing Projects 49
2.3a Identify Potential Project Opportunities 50 / 2.3b Determine Which Opportunities to
Pursue 50 / 2.3c Prepare and Submit a Project Proposal 51 / 2.3d Negotiate to
Secure the Project 51
PMP/CAPM Study Ideas 52
Summary 52
Key Terms Consistent with PMI Standards and Guides 52
Chapter Review Questions 53
Discussion Questions 53
PMBOK® Guide Questions 53
Exercises 54
Integrated Example Projects 55
Casa DE PAZ Development Project 56
Semester Project Instructions 56
Project Management in Action 57
References 58
Endnotes 59
CHAPTER 3
Chartering Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.1 What Is a Project Charter? 62
3.2 Why Is a Project Charter Used? 63
3.3 When Is a Charter Needed? 64
3.4 Typical Elements in a Project Charter 65
3.4a Title 65 / 3.4b Scope Overview 65 / 3.4c Business Case 66 /
3.4d Background 66 / 3.4e Milestone Schedule with Acceptance Criteria 66 /
3.4f Risks, Assumptions, and Constraints 67 / 3.4g Resource Estimates 69 /
3.4h Stakeholder List 69 / 3.4i Team Operating Principles 69 / 3.4j Lessons
Learned 70 / 3.4k Signatures and Commitment 70
3.5 Constructing a Project Charter 70
3.5a Scope Overview and Business Case Instructions 70 / 3.5b Background
Instructions 71 / 3.5c Milestone Schedule with Acceptance Criteria
Instructions 72 / 3.5d Risks, Assumptions, and Constraints Instructions 75 /
3.5e Resources Needed Instructions 75 / 3.5f Stakeholder List Instructions 75 /
Contents ix
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3.5g Team Operating Principles Instructions 77 / 3.5h Lessons Learned
Instructions 77 / 3.5i Signatures and Commitment Instructions 78
3.6 Ratifying the Project Charter 79
3.7 Starting a Project Using Microsoft Project 79
3.7a MS Project 2016 Introduction 80 / 3.7b Setting up Your First Project 81 /
3.7c Define Your Project 82 / 3.7d Create a Milestone Schedule 83
PMP/CAPM Study Ideas 88
Summary 88
Key Terms Consistent with PMI Standards and Guides 88
Chapter Review Questions 89
Discussion Questions 89
PMBOK® Guide Questions 89
Exercises 90
Integrated Example Projects 91
Casa DE PAZ Development Project 93
Semester Project Instructions 93
Project Management in Action 93
References 96
Endnotes 97
PART 2 Leading Projects
CHAPTER 4
Organizational Capability: Structure, Culture, and Roles . . . . . . . . . . . . . . . . . . . . . 100
4.1 Types of Organizational Structures 103
4.1a Functional 103 / 4.1b Projectized 104 / 4.1c Matrix 105
4.2 Organizational Culture and Its Impact on Projects 109
4.2a Culture of the Parent Organization 110 / 4.2b Project Cultural Norms 111
4.3 Project Life Cycles 111
4.3a Define-Measure-Analyze-Improve-Control (DMAIC) Model 112 / 4.3b Research and
Development (R&D) Project Life Cycle Model 113 / 4.3c Construction Project Life
Cycle Model 113 / 4.3d Agile Project Life Cycle Model 113
4.4 Agile Project Management 114
4.4a What Is Agile? 114 / 4.4b Why Use Agile? 114 / 4.4c What Is an Agile
Mindset? 114 / 4.4d What Are the Key Roles in Agile Projects? 115 / 4.4e How Do
You Start an Agile Project? 115 / 4.4f How Do You Continue an Agile Project?
115 / 4.4g What Is Needed for Agile to Be Successful? 116
4.5 Traditional Project Executive Roles 116
4.5a Steering Team 116 / 4.5b Sponsor 117 / 4.5c Customer 119 / 4.5d Chief
Projects Officer/Project Management Office 121
4.6 Traditional Project Management Roles 121
4.6a Functional Manager 121 / 4.6b Project Manager 122 / 4.6c Facilitator 124
4.7 Traditional Project Team Roles 126
4.7a Core Team Members 126 / 4.7b Subject Matter Experts 126
x Contents
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4.8 Role Differences on Agile Projects 126
PMP/CAPM Study Ideas 128
Summary 128
Key Terms Consistent with PMI Standards and Guides 128
Chapter Review Questions 129
Discussion Questions 129
PMBOK® Guide Questions 129
Exercises 130
Integrated Example Projects 130
Casa DE PAZ Development Project 131
Semester Project Instructions 131
Project Management in Action 132
References 134
Endnotes 135
CHAPTER 5
Leading and Managing Project Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
5.1 Acquire Project Team 138
5.1a Preassignment of Project Team Members 139 / 5.1b Negotiation for Project Team
Members 139 / 5.1c On-Boarding Project Team Members 140
5.2 Develop Project Team 141
5.2a Stages of Project Team Development 142 / 5.2b Characteristics of High-Performing
Project Teams 144 / 5.2c Assessing Individual Member Capability 147 /
5.2d Assessing Project Team Capability 148 / 5.2e Building Individual and Project
Team Capability 150 / 5.2f Establishing Project Team Ground Rules 153
5.3 Manage Project Team 157
5.3a Project Manager Power and Leadership 157 / 5.3b Assessing Performance of
Individuals and Project Teams 159 / 5.3c Project Team Management Outcomes 159
5.4 Relationship Building Within the Core Team 160
5.5 Managing Project Conflicts 161
5.5a Sources of Project Conflict 162 / 5.5b Conflict-Resolution Process and
Styles 163 / 5.5c Negotiation 164
5.6 Communication Needs of Global and Virtual Teams 166
5.6a Virtual Teams 166 / 5.6b Cultural Differences 166 / 5.6c Countries and Project
Communication Preferences 167
PMP/CAPM Study Ideas 167
Summary 168
Key Terms Consistent with PMI Standards and Guides 168
Chapter Review Questions 168
Discussion Questions 169
PMBOK® Guide Questions 170
Integrated Example Projects 170
Casa DE PAZ Development Project 171
Semester Project Instructions 171
Contents xi
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Project Management in Action 172
References 174
Endnotes 175
CHAPTER 6
Stakeholder Analysis and Communication Planning . . . . . . . . . . . . . . . . . . . . . . . . . 176
6.1 Identify Stakeholders 178
6.1a Find Stakeholders 179 / 6.1b Analyze Stakeholders 180 / 6.1c Document
Stakeholders 183
6.2 Plan Stakeholder Engagement 184
6.2a Creating a Stakeholder Engagement Assessment Matrix 184 / 6.2b Planning to Build
Relationships with Stakeholders 185
6.3 Manage Stakeholder Engagement 187
6.4 Monitor Stakeholder Engagement 188
6.5 Plan Communications Management 188
6.5a Purposes of a Project Communications Plan 188 / 6.5b Communications Plan
Considerations 189 / 6.5c Communications Matrix 191 / 6.5d Manage Project
Knowledge 192
6.6 Manage Communications 193
6.6a Determine Project Information Needs 193 / 6.6b Establish Information Retrieval and
Distribution System 193 / 6.6c Project Meeting Management 194 / 6.6d Issues
Management 197
PMP/CAPM Study Ideas 199
Summary 199
Key Terms Consistent with PMI Standards and Guides 200
Chapter Review Questions 200
Discussion Questions 200
PMBOK® Guide Questions 201
Integrated Example Projects 202
Casa DE PAZ Development Project 202
Semester Project Instructions 203
Project Management in Action 204
References 206
Endnotes 207
PART 3 Planning Projects
CHAPTER 7
Scope Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
7.1 Plan Scope Management 211
7.2 Collect Requirements 212
7.2a Gather Stakeholder Input and Needs 213
7.3 Define Scope 217
7.3a Reasons to Define Scope 217 / 7.3b How to Define Scope 217 / 7.3c Defining
Scope in Agile Projects 218
xii Contents
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7.4 Work Breakdown Structure (WBS) 220
7.4a What Is the WBS? 220 / 7.4b Why Use a WBS? 221 / 7.4c WBS
Formats 222 / 7.4d Work Packages 224 / 7.4e How to Construct a WBS 226
7.5 Establish Change Control 229
7.6 Using MS Project for Work Breakdown Structures (WBS) 232
7.6a Set Up a WBS in MS Project 232
PMP/CAPM Study Ideas 237
Summary 239
Key Terms Consistent with PMI Standards and Guides 239
Chapter Review Questions 239
Discussion Questions 239
PMBOK® Guide Questions 240
Exercises 241
Integrated Example Projects 241
Casa DE PAZ Development Project 242
Semester Project Instructions 242
Project Management in Action 242
References 243
CHAPTER 8
Scheduling Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
8.1 Plan Schedule Management 246
8.2 Purposes of a Project Schedule 247
8.3 Historical Development of Project Schedules 247
8.4 How Project Schedules Are Limited and Created 248
8.5 Define Activities 249
8.6 Sequence Activities 253
8.6a Leads and Lags 254 / 8.6b Alternative Dependencies 255
8.7 Estimate Activity Duration 255
8.7a Problems and Remedies in Duration Estimating 256 / 8.7b Learning Curves 258
8.8 Develop Project Schedules 259
8.8a Two-Pass Method 259 / 8.8b Enumeration Method 263
8.9 Uncertainty in Project Schedules 264
8.9a Program Evaluation and Review Technique 265 / 8.9b Monte Carlo Simulation 266
8.10 Show the Project Schedule on a Gantt Chart 268
8.11 Using Microsoft Project for Critical Path Schedules 268
8.11a Set up the Project Schedule 269 / 8.11b Build the Network Diagram and Identify
the Critical Path 270
PMP/CAPM Study Ideas 275
Summary 276
Key Terms Consistent with PMI Standards and Guides 276
Chapter Review Questions 277
Discussion Questions 277
Contents xiii
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Exercises 278
PMBOK® Guide Questions 280
Integrated Example Projects 281
Casa DE PAZ Development Project 281
Semester Project Instructions 283
Project Management in Action 283
References 284
Endnotes 285
CHAPTER 9
Resourcing Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
9.1 Abilities Needed When Resourcing Projects 288
9.1a The Science and Art of Resourcing Projects 288 / 9.1b Considerations When
Resourcing Projects 288 / 9.1c Activity- versus Resource-Dominated Schedules 289
9.2 Estimate Resource Needs 290
9.3 Plan Resource Management 290
9.3a Identify Potential Resources 291 / 9.3b Determine Resource Availability 293 /
9.3c Decide Timing Issues When Resourcing Projects 294
9.4 Project Team Composition Issues 295
9.4a Cross-Functional Teams 295 / 9.4b Co-Located Teams 295 / 9.4c Virtual
Teams 295 / 9.4d Outsourcing 295
9.5 Assign a Resource to Each Activity 296
9.5a Show Resource Responsibilities on RACI Chart 297 / 9.5b Show Resource
Assignments on Gantt Chart 297 / 9.5c Summarize Resource Responsibilities by Time
Period with Histogram 297
9.6 Dealing with Resource Overloads 300
9.6a Methods of Resolving Resource Overloads 300
9.7 Compress the Project Schedule 303
9.7a Actions to Reduce the Critical Path 303 / 9.7b Crashing 304 / 9.7c Fast
Tracking 307
9.8 Alternative Scheduling Methods 309
9.8a Critical Chain Project Management (CCPM) 309 / 9.8b Reverse Phase
Schedules 310 / 9.8c Rolling Wave Planning 310 / 9.8d Agile Project
Planning 310 / 9.8e Auto/Manual Scheduling 310
9.9 Using MS Project for Resource Allocation 311
9.9a Step 1: Defining Resources 311 / 9.9b Step 2: Set Up a Resource Calendar 312 /
9.9c Step 3: Assigning Resources 312 / 9.9d Step 4: Finding Overallocated
Resources 315 / 9.9e Step 5: Dealing with Overallocations 316 / 9.9f Crashing a
Critical Path Activity 317
PMP/CAPM Study Ideas 319
Summary 319
Key Terms Consistent with PMI Standards and Guides 320
Chapter Review Questions 320
Discussion Questions 320
PMBOK® Guide Questions 321
Exercises 322
xiv Contents
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Integrated Example Projects 324
Casa DE PAZ Development Project 324
Semester Project Instructions 325
Project Management in Action 325
References 327
Endnote 327
CHAPTER 10
Budgeting Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
10.1 Plan Cost Management 329
10.2 Estimate Cost 330
10.2a Types of Cost 331 / 10.2b Accuracy and Timing of Cost Estimates 334 /
10.2c Methods of Estimating Costs 335 / 10.2d Project Cost Estimating Issues 338
10.3 Determine Budget 342
10.3a Aggregating Costs 342 / 10.3b Analyzing Reserve Needs 342 /
10.3c Determining Cash Flow 344
10.4 Establishing Cost Control 345
10.5 Using MS Project for Project Budgets 345
10.5a Developing a Bottom-Up Project Budget Estimate 345 / 10.5b Develop Summary
Project Budget 347
PMP/CAPM Study Ideas 349
Summary 349
Key Terms Consistent with PMI Standards and Guides 350
Chapter Review Questions 350
Discussion Questions 350
PMBOK® Guide Questions 351
Exercises 352
Integrated Example Projects 353
Casa DE PAZ Development Project 354
Semester Project Instructions 354
Project Management in Action 354
References 356
Endnotes 356
CHAPTER 11
Project Risk Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358
11.1 Plan Risk Management 360
11.1a Roles and Responsibilities 362 / 11.1b Categories and Definitions 362
11.2 Identify Risks 366
11.2a Information Gathering 366 / 11.2b Reviews 367 / 11.2c Understanding
Relationships 368 / 11.2d Risk Register 368
11.3 Risk Analysis 368
11.3a Perform Qualitative Risk Analysis 368 / 11.3b Perform Quantitative Risk
Analysis 372 / 11.3c Risk Register Updates 373
Contents xv
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11.4 Plan Risk Responses 373
11.4a Strategies for Responding to Risks 373 / 11.4b Risk Register Updates 377
PMP/CAPM Study Ideas 377
Summary 378
Key Terms Consistent with PMI Standards and Guides 378
Chapter Review Questions 379
Discussion Questions 379
PMBOK® Guide Questions 379
Exercises 380
Integrated Example Projects 381
Casa DE PAZ Development Project 381
Semester Project Instructions 382
Project Management in Action 382
References 384
Endnotes 384
CHAPTER 12
Project Quality Planning and Project Kickoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386
12.1 Development of Contemporary Quality Concepts 388
12.1a Quality Gurus 388 / 12.1b Total Quality Management/Malcolm Baldrige 389 /
12.1c ISO 9001:2008 390 / 12.1d Lean Six Sigma 390
12.2 Core Project Quality Concepts 392
12.2a Stakeholder Satisfaction 393 / 12.2b Process Management 394 / 12.2c Fact-
Based Management 396 / 12.2d Fact-Based Project Management Example 398 /
12.2e Empowered Performance 399 / 12.2f Summary of Core Concepts 400
12.3 Plan Quality Management 401
12.3a Quality Policy 401 / 12.3b Quality Management Plan Contents 403 /
12.3c Quality Baseline 404 / 12.3d Process Improvement Plan 404
12.4 Manage Quality 404
12.5 Control Quality 406
12.6 Cost of Quality 409
12.7 Develop Project Management Plan 409
12.7a Resolve Conflicts 409 / 12.7b Establish Configuration Management 410 /
12.7c Apply Sanity Tests to All Project Plans 410
12.8 Kickoff Project 410
12.8a Preconditions to Meeting Success 411 / 12.8b Meeting Activities 411
12.9 Baseline and Communicate Project Management Plan 413
12.10 Using MS Project for Project Baselines 413
12.10a Baseline the Project Plan 413 / 12.10b Create the First Time Baseline 414 /
12.10c Subsequent Baselines 414 / 12.10d Viewing Baselines and Variances 415
PMP/CAPM Study Ideas 416
Summary 417
Key Terms Consistent with PMI Standards and Guides 417
Chapter Review Questions 418
xvi Contents
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Discussion Questions 418
PMBOK® Guide Questions 418
Exercises 419
Integrated Example Projects 420
Casa DE PAZ Development Project 420
Semester Project Instructions 420
Project Management in Action 421
References 423
Endnotes 424
PART 4 Performing Projects
CHAPTER 13
Project Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
13.1 Introduction to Project Supply Chain Management 428
13.1a SCM Components 430 / 13.1b SCM Factors 430 / 13.1c SCM
Decisions 430 / 13.1d Project Procurement Management Processes 431
13.2 Plan Procurement Management 431
13.2a Outputs of Planning 431 / 13.2b Make-or-Buy Decisions 432
13.3 Conduct Procurements 434
13.3a Sources for Potential Suppliers 434 / 13.3b Approaches Used When Evaluating
Prospective Suppliers 435 / 13.3c Supplier Selection 436
13.4 Contract Types 438
13.4a Fixed-Price Contracts 439 / 13.4b Cost-Reimbursable Contracts 440 /
13.4c Time and Material (T&M) Contracts 440
13.5 Control Procurements 441
13.6 Improving Project Supply Chains 441
13.6a Project Partnering and Collaboration 442 / 13.6b Third Parties 447 / 13.6c Lean
Purchasing 447 / 13.6d Sourcing 447 / 13.6e Logistics 447 /
13.6f Information 448
PMP/CAPM Study Ideas 448
Summary 448
Key Terms Consistent with PMI Standards and Guides 449
Chapter Review Questions 449
Discussion Questions 449
PMBOK® Guide Questions 450
Exercises 451
Integrated Example Projects 451
Casa DE PAZ Development Project 452
Semester Project Instructions 452
Project Management in Action 452
References 453
Endnotes 454
Contents xvii
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CHAPTER 14
Determining Project Progress and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
14.1 Project Balanced Scorecard Approach 458
14.2 Internal Project Issues 459
14.2a Direct and Manage Project Work 459 / 14.2b Monitor and Control Project
Work 460 / 14.2c Monitoring Project Risk 463 / 14.2d Implement Risk
Responses 464 / 14.2e Manage Communications 465 / 14.2f Monitor
Communications 467
14.3 Customer Issues 469
14.3a Manage and Control Quality 469 / 14.3b Control Scope 475
14.4 Financial Issues 476
14.4a Control Resources 476 / 14.4b Control Schedule and Costs 476 / 14.4c Earned
Value Management for Controlling Schedule and Costs 476
14.5 Using MS Project to Monitor and Control Projects 480
14.5a What Makes a Schedule Useful? 480 / 14.5b How MS Project Recalculates the
Schedule Based on Reported Actuals 481 / 14.5c Current and Future Impacts of Time
and Cost Variance 481 / 14.5d Define the Performance Update Process 481 /
14.5e Steps to Update the Project Schedule 482
14.6 Replanning If Necessary 487
PMP/CAPM Study Ideas 488
Summary 488
Key Terms Consistent with PMI Standards and Guides 488
Chapter Review Questions 489
Discussion Questions 489
PMBOK® Guide Questions 490
Exercises 491
Integrated Example Projects 492
Casa DE PAZ Development Project 493
Semester Project Instructions 493
Project Management in Action 494
References 496
Endnotes 497
CHAPTER 15
Finishing the Project and Realizing the Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498
15.1 Validate Scope 500
15.2 Terminate Projects Early 501
15.3 Close Project 503
15.3a Write Transition Plan 503 / 15.3b Knowledge Management 504 / 15.3c Create
the Closeout Report 508
15.4 Post-Project Activities 509
15.4a Reassign Workers 509 / 15.4b Celebrate Success and Reward Participants 509 /
15.4c Provide Ongoing Support 510 / 15.4d Ensure Project Benefits Are
Realized 510
xviii Contents
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15.5 Using MS Project for Project Closure 511
15.5a Creating Project Progress Reports 511 / 15.5b Archiving Project Work 512
PMP/CAPM Study Ideas 515
Summary 515
Key Terms Consistent with PMI Standards and Guides 515
Chapter Review Questions 515
Discussion Questions 516
PMBOK® Guide Questions 516
Exercise 517
Integrated Example Projects 517
Casa DE PAZ Development Project 518
Semester Project Instructions 518
Project Management in Action 518
References 520
Endnotes 521
Appendix A PMP and CAPM Exam Prep Suggestions . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Appendix B Agile Differences Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527
Appendix C Answers to Selected Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532
Appendix D Project Deliverables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Appendix E Strengths Themes As Used in Project Management . . . . [Available Online]
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539
Contents xix
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Preface
While project managers today still need to use many techniques that have stood the test
of several decades, they increasingly also must recognize the business need for a project,
sort through multiple conflicting stakeholder demands. They must know how to deal
with rapid change, a myriad of communication issues, global and virtual project teams,
modern approaches to quality improvement, when to tailor their project management
approach to include methods and behaviors from Agile, and many other issues that are
more challenging than those in projects of the past.
Contemporary project management utilizes the tried-and-true project management
techniques along with modern improvements such as the most current versions of Micro-
soft® Project Professional 2016, the sixth edition of the Guide to the Project Management
Body of Knowledge (PMBOK® Guide), and many approaches derived from adaptive
(Agile) project management. Contemporary project management also uses many tools
and understandings that come from modern approaches to quality and communications,
expanded role definitions, leadership principles, human strengths, and many other
sources. Contemporary project management is scalable, using simple versions of impor-
tant techniques on small projects and more involved versions on more complex projects.
Distinctive Approach
This book covers contemporary project management topics using contemporary project
management methods. For example, when considering the topic of dealing with multiple
stakeholders, every chapter was reviewed by students, practitioners, and academics. This
allowed simultaneous consideration of student learning, practitioner realism, and aca-
demic research and teaching perspectives.
The practical examples and practitioner reviewers came from a variety of industries, dif-
ferent parts of the world, and from many sizes and types of projects in order to emphasize
the scalability and universality of contemporary project management techniques.
New to This Edition
Core, behavioral, and technical learning objectives. We have expanded the number
of learning objectives and classified them as core, behavioral, or technical. About
half of the objectives are core: what we believe every student of project management
should learn. A professor could teach a solid project management introductory class
by deeply using only the core objectives. On the other hand, there are measurable
student objectives for either a behavioral or a technical approach. All suggested stu-
dent assignments and questions are tied specifically to one of the learning objectives.
A professor could use this text for a two-semester sequence that emphasizes both in-
depth behavioral and technical approaches.
Videos. Exclusively available to those using the MindTap product for this book, we
have created dozens of short (average time, five minutes) videos to show the art of
many of the techniques. These demonstrate the use of many of the techniques in a
by-hand or spreadsheet fashion as well as using Microsoft Project 2016. Several
questions that can be assigned to students are included with the videos that
xx
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demonstrate how to use Microsoft Project to complement learning. Answers (some-
times definitive, sometimes representative, depending on the nature of the tech-
nique) are included in the instructor’s manual (IM).
Extensive flowchart to help the sixth edition of the PMBOK® Guide come to life.
All sixth edition PMBOK® Guide knowledge areas, processes, and process groups,
plus major deliverables from each process and the primary workflows between
them, are specifically included in an interactive, color-coded flowchart that is
included in full inside the back cover of the text. We also start each chapter by
showing the portion of the flowchart that is covered in that chapter. We now use
definitions both from the PMBOK® Guide, Sixth Edition and also from more than
a dozen Project Management Institute specialized Practice Guides and Standards.
The end of each chapter contains specific suggestions for PMP® and CAPM® test
preparation pertaining to the chapter’s topics plus ten PMBOK® Guide-type ques-
tions that are typical of what would be seen on PMP® and CAPM® exams.
Appendix A gives general study suggestions for the CAPM® and PMP® exams.
Project deliverables. A list of 38 project deliverables that can be used as assignments
for students and in-class exercises are included in Appendix D. Each deliverable is
specifically tied to a student learning objective and shown on the PMBOK® Guide
flowchart. About half of these are core, while the others are behavioral or technical.
Examples of completed deliverables are included in the text. Teaching suggestions
and grading rubrics are included in the IM. Appendix D identifies the type of objec-
tive, chapter covered, and PMBOK® Guide process, knowledge area, and process
group in which the deliverable is typically created on a real project.
Substantial increase in Agile coverage. Agile techniques and methods are consid-
ered much more often than even three years ago. As such, many experienced project
managers who have also become Agile proponents have contributed to the increased
Agile coverage in this book. At multiple points in most chapters, if Agile methods or
suggested behaviors are different from traditional project management, these varia-
tions are noted. We use an Agile icon to draw attention to these. We also have cre-
ated Appendix B, which is a bulleted list of the approximately 180 differences
between Agile and traditional project management that are discussed in the book.
This extensive coverage allows a professor to teach project management emphasizing
an Agile approach, if desired. It also allows a professor to develop an Agile project
management course.
Two new continuing project examples. We have created two project examples that
are included in all 15 chapters of the text. One project is a construction project by a
for-profit company that is planned and managed in a traditional fashion. The other
is a development project at a nonprofit that is planned and managed in a more (but
not exclusively) Agile fashion. In Chapter 1, we introduce both these case studies.
After that, we alternate chapters, with each chapter showing what one project did
using the concepts and techniques of a chapter and posing questions for the stu-
dents to answer about the other project. Answers to the questions are in the IM.
This can be another useful vehicle for students to practice their skills and to generate
class discussion.
Distinctive Features
PMBOK® Guide, Sixth Edition approach. This consistency with the current stan-
dard gives students a significant leg up if they decide to become certified Project
Management Professionals (PMPs®) or Certified Associates in Project Management
Preface xxi
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(CAPMs®). This text includes an color-coded PMBOK® Guide, Sixth Edition flow-
chart, all definitions consistent with PMI guides and standards, CAPM and PMP
test preparation suggestions, and test practice questions.
Actual project as learning vehicle. A section at the end of each chapter lists deliver-
ables for students to create (in teams or individually) for a real project. These assign-
ments have been refined over the last two decades while working with the local
PMI® chapter, which provided a panel of PMP® judges to evaluate projects from a
practical point of view. Included in the IM are extensive tools and suggestions devel-
oped over the last 20 years for instructors, guiding them as they have students learn
in the best possible way—with real projects. Students are encouraged to keep clean
copies of all deliverables so they can demonstrate their project skills in job inter-
views. A listing of these deliverables is included in Appendix D.
Student-oriented, measurable learning objectives. Each chapter begins with a list of
the core objectives for the chapter along with more in-depth behavioral and/or tech-
nical objectives for most chapters. The chapter also starts with showing the
PMBOK® topics covered in the chapter. The chapter material, end-of-chapter ques-
tions and problems, PowerPoint® slides, all deliverables, and test questions have all
been updated to correlate to specific objectives.
Microsoft® Project Professional 2016 fully integrated into the fabric of eight chap-
ters. Microsoft® Project Professional 2016 is shown in a step-by-step manner with
numerous screen captures. On all screen captures, critical path activities are shown
in contrasting color for emphasis. We have created videos to demonstrate these
techniques and developed questions tied to specific learning objectives that can be
assigned to the videos to test student learning.
Blend of traditional and modern methods. Proven methods developed over the past
half century are combined with exciting new methods, including Agile, that are
emerging from both industry and research. This book covers the responsibilities of
many individuals who can have an impact on projects both as they are practiced in
traditional and in Agile environments, so aspiring project managers can understand
not only their own roles, but also those of people with whom they need to interact.
Integrated example projects. A variety of experienced project leaders from around
the world have contributed examples to demonstrate many of the techniques and
concepts throughout the book. These highly experienced and credentialed managers
have worked closely with the authors to ensure that the examples demonstrate ideas
discussed in the chapter. The variety of industries, locations, and sizes of the projects
help the students to visualize both how universal project management is and how to
appropriately scale the planning and management activities.
Organization of Topics
The book is divided into four major parts. Part 1, Organizing Projects, deals with get-
ting a project officially approved.
Chapter 1 introduces contemporary project management by first tracing the history
of project management and then discussing what makes a project different from
an ongoing operation. Various frameworks that help one understand projects—
such as the PMBOK® Guide and Agile—are introduced, as well as the executive-,
managerial-, and associate-level roles in managing projects.
Chapter 2 discusses how projects support and are an outgrowth of strategic plan-
ning, how a portfolio of projects is selected and prioritized, how a client company
xxii Preface
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selects a contractor company to conduct a project, and how a contractor company
secures project opportunities from client companies.
Chapter 3 presents project charters in a step-by-step fashion. Short, powerful charters
help all key participants to develop a common understanding of key project issues and
components at a high level and then to formally commit to the project. Charters have
become nearly universal in initiating projects in recent years. Microsoft® Project Pro-
fessional 2016 is utilized to show milestone schedules within charters.
Part 2, Leading Projects, deals with understanding the project environment and roles
and dealing effectively with team members and stakeholders.
Chapter 4 deals with organizational capability issues of structure, life cycle, culture,
and roles. The choices parent organizations make in each of these provide both
opportunities and limitations to how projects can be conducted.
Chapter 5 deals with leading and managing the project team. It includes acquiring
and developing the project team, assessing both potential and actual performance of
team members and the team as a whole, various types of power a project manager
can use, and how to deal productively with project conflict.
Chapter 6 introduces methods for understanding and prioritizing various stake-
holder demands and for building constructive relationships with stakeholders. Since
many projects are less successful due to poor communications, detailed communica-
tion planning techniques are introduced along with suggestions for managing meet-
ings, an important channel of communication.
Part 3, Planning Projects, deals with all aspects of project planning as defined in
thePMBOK® Guide. It proceeds in the most logical order possible to maximize effective-
ness and stress continuity, so that each chapter builds on the previous ones, and students
can appreciate the interplay between the various knowledge areas and processes.
Chapter 7 helps students understand how to determine the amount of work the
project entails. Specifically covered are methods for determining the scope of both
the project work and outputs, the work breakdown structure (WBS) that is used to
ensure nothing is left out, and how the WBS is portrayed using Microsoft® Project
Professional 2016.
Chapter 8 is the first scheduling chapter. It shows how to schedule project activities
by identifying, sequencing, and estimating the durations for each activity. Then, crit-
ical path project schedules are developed, and methods are shown for dealing with
uncertainty in time estimates, Gantt charts are introduced for easier communica-
tions, and Microsoft® Project Professional 2016 is used to automate the schedule
development and communications.
Chapter 9 is the second scheduling chapter. Once the critical path schedule is deter-
mined, staff management plans are developed, project team composition issues are
considered, resources are assigned to activities, and resource overloads are identified
and handled. Schedule compression techniques of crashing and fast tracking are
demonstrated, and multiple alternative scheduling techniques including Agile are
introduced. Resource scheduling is demonstrated with Microsoft® Project Profes-
sional 2016.
Chapter 10 deals with project budgeting. Estimating cost, budgeting cost, and estab-
lishing cost controls are demonstrated. Microsoft® Project Professional 2016 is used
for developing both bottom-up and summary project budgets.
Chapter 11 demonstrates project risk planning. It includes risk management plan-
ning methods for identifying risks, establishing a risk register, qualitatively analyzing
Preface xxiii
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risks for probability and impact, quantitatively analyzing risks if needed, and decid-
ing how to respond to each risk with contingency plans for major risks and aware-
ness for minor risks.
Chapter 12 starts by covering project quality planning. This includes explaining the
development of modern quality concepts and how they distill into core project qual-
ity demands. Next, the chapter covers how to develop a project quality plan. It then
ties all of the planning chapters together with discussions of a project kickoff meet-
ing, a baselined project plan, and the ways Microsoft® Project Professional 2016 can
be used to establish and maintain the baseline.
Part 4, Performing Projects, discusses the various aspects that must be managed
simultaneously while the project is being conducted.
Chapter 13 deals with project supply chain management issues. Some of these issues,
such as developing the procurement management plan, qualifying and selecting ven-
dors, and determining the type of contract to use are planning issues, but for sim-
plicity, they are covered in one chapter with sections on how to conduct and control
procurements and to improve the project supply chain.
Chapter 14 is concerned with determining project results. This chapter starts with a
balanced scorecard approach to controlling projects. Internal project issues covered
include risk, change, and communication. Quality is also covered, with an emphasis
on achieving client satisfaction. Financial issues discussed are scope, cost, and sched-
ule, including how to use Microsoft® Project Professional 2016 for control.
Chapter 15 deals with how to end a project—either early or on time. This includes
validating to ensure all scope is complete, formally closing procurements and the
project, knowledge management, and ensuring the project participants are rewarded
and the clients have the support they need to realize intended benefits when using
the project deliverables.
MindTap
MindTap is a complete digital solution for your project management course. It has
enhancements that take students from learning basic concepts to actively engaging in
critical thinking applications, while learning Project 2016 skills for their future careers.
The MindTap product for this book features videos from the authors that explain
tricky concepts, videos that explain the finer points of what you can do with Project
2016, and quizzes and homework assignments with detailed feedback so that students
will have a better understanding of why an answer is right or wrong.
Instructor Resources
To access the instructor resources, go to www.cengage.com/login, log in with your SSO
account username and password, and search this book’s ISBN (9781337406451) to add
instructor resources to your account. Key support materials—instructor’s manual with
solutions, test bank in Word and Blackboard formats, data set solutions, and PowerPoint®
presentations—provide instructors with a comprehensive capability for customizing their
classroom experience. All student resources are also available on the instructor companion
site.
Instructor s Manual with Solutions. Prepared by Tim Kloppenborg and updated by
Kate Wells, based on their years of experience facilitating the student learning expe-
rience in their own project management classes (undergraduate, MBA, Masters in
xxiv Preface
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Health Informatics, and continuing education on six continents), with teaching in
classroom, hybrid, and online formats, each chapter of the instructor’s manual
includes an overview of core, behavioral, and technical learning objectives, detailed
chapter outlines, teaching recommendations for both classroom and online, and
many specific suggestions for implementing community-based projects into your
project management class. Solutions are also provided for all of the end-of-chapter
content.
Microsoft® Word Test Bank. Prepared for this edition by Joyce D. Brown, PMP®
and Thomas F. McCabe, PMP® of the University of Connecticut, this comprehen-
sive test bank builds upon the original test bank created by Kevin Grant of the Uni-
versity of Texas at San Antonio. The test bank is organized around each chapter’s
learning objectives. All test questions are consistent with the PMBOK®. Every test
item is labeled according to its difficulty level, the learning objective within the text-
book to which it relates, and its Blooms Taxonomy level, allowing instructors to
quickly construct effective tests that emphasize the concepts most significant for
their courses. The test bank includes true/false, multiple choice, essay, and quantita-
tive problems for each chapter.
Cognero Test Bank. Cengage Learning Testing Powered by Cognero is a flexible,
online system that allows you to author, edit, and manage test bank content from
multiple Cengage Learning solutions; create multiple test versions in an instant;
and deliver tests from your LMS, your classroom, or wherever you want. The Cog-
nero test bank contains the same questions that are in the Microsoft® Word test
bank.
PowerPoint Presentations. Prepared by Kate Wells, the PowerPoint presentations
provide comprehensive coverage of each chapter’s essential concepts in a clean, con-
cise format. Instructors can easily customize the PowerPoint presentations to better
fit the needs of their classroom.
Templates. Electronic templates for many of the techniques (student deliverables)
are available on the textbook companion website. These Microsoft® Word and
Excel documents can be downloaded and filled in for ease of student learning and
for consistency of instructor grading.
Student Resources
Students can access the following resources by going to www.cengagebrain.com and
searching 9781337406451. The companion website for this book has Excel and Word
Project templates, data sets for selected chapters, and instructions for how to get access
to a trial version of Microsoft Online Professional Trial. (Note that while we are happy
to provide instructions for accessing this trial, Microsoft controls that access and we are
not responsible for it being removed in the future.)
Acknowledgments
A book-writing project depends on many people. Through the last three decades of proj-
ect work, we have been privileged to learn from thousands of people, including students,
faculty members, co-trainers, co-consultants, co-judges, clients, research partners, trade
book authors, and others. Hundreds of individuals who have provided help in research
and developing teaching methods are co-members of the following:
PMI’s undergraduate curriculum guidelines development team,
PMI’s Global Accreditation Center,
Preface xxv
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Multiple chapters of the Project Management Institute,
The Cincinnati and Louisville sections of the Center for Quality of Management,
Project Management Executive Forum, and
Agile Cincinnati.
We also want to acknowledge the wonderful help of various professionals at Cengage
Learning, including Aaron Arnsparger (Sr. Product Manager) and Conor Allen (Content
Developer). We also want to thank Charles McCormick, Jr., retired Senior Acquisitions
Editor, for his extensive help and guidance on the first and second editions of Contem-
porary Project Management.
Other individuals who have provided significant content are Nathan Johnson of
Western Carolina University, who provided the Microsoft® Project 2016 material, Joyce
D. Brown, PMP® and Thomas F. McCabe, PMP® of University of Connecticut, who
revised the test bank and provided additional PMBOK® questions to each chapter, Jim
King, who professionally taped and edited videos, and Kathryn N. Wells, Independent
Consultant, PMP®, CAPM®, who provided the PowerPoint presentations.
Special thanks are also due to all the people whose feedback and suggestions have
shaped this edition of Contemporary Project Management as well as the previous two
editions:
Carol Abbott,
Fusion Alliance, Inc.
Stephen Allen,
Truman State University
Siti Arshad-Snyder,
Clarkson College
Loretta Beavers,
Southwest Virginia
Community College
Shari Bleure,
Skyline Chili
Neil Burgess,
Albertus Magnus College
Reynold Byers,
Arizona State University
John Cain,
Viox Services
Robert Clarkson,
Davenport University
Nancy Cornell,
Northeastern University
Steve Creason,
Metropolitan State
University
Jacob J. Dell,
University of Texas at
San Antonio
Scott Dellana,
East Carolina University
Maling Ebrahimpour,
Roger Williams
University
Jeff Flynn,
ILSCO Corporation
Jim Ford,
University of Delaware
Lynn Frock,
Lynn Frock & Company
Lei Fu,
Hefei University of
Technology
Patricia Galdeen,
Lourdes University
Kathleen Gallon,
Christ Hospital
Paul Gentine,
Bethany College
Kevin P. Grant,
University of Texas–San
Antonio
Joseph Griffin,
Northeastern University
Raye Guye,
ILSCO Corporation
William M. Hayden Jr.,
State University of
New York at Buffalo
Sarai Hedges,
University of Cincinnati
Marco Hernandez,
Dantes Canadian
Stephen Holoviak,
Pennsylvania State
University
Bill Holt,
North Seattle Community
College
Morris Hsi,
Lawrence Tech
University
xxvi Preface
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Sonya Hsu,
University of Louisiana
Lafayette
Paul Hudec,
Milwaukee School of
Engineering
Anil B. Jambekar,
Michigan Technological
University
Dana Johnson,
Michigan Technological
University
Robert Judge,
San Diego State
University
David L. Keeney,
Stevens Institute of
Technology
George Kenyon,
Lamar University
Naomi Kinney,
MultiLingual Learning
Services
Paul Kling,
Duke Energy
Matthew Korpusik,
Six Sigma Black Belt
Sal Kukalis,
California State
University–Long Beach
Young Hoon Kwak,
George Washington
University
Laurence J. Laning,
Procter & Gamble
Dick Larkin,
Central Washington
University
Lydia Lavigne,
Ball Aerospace
Jon Lazarus,
Willamette University
James Leaman,
Eastern Mennonite
University
Linda LeSage,
Davenport University
Claudia Levi,
Edmonds Community
College
Marvette Limon,
University of Houston
Downtown
John S. Loucks,
St. Edward’s University
Diane Lucas,
Penn State University–
DuBois Campus
Clayton Maas,
Davenport University
S. G. Marlow,
California State
Polytechnic University
Daniel S. Marrone,
SUNY Farmingdale State
College
Chris McCale,
Regis University
Abe Meilich,
Walden University
Bruce Miller,
Xavier Leadership Center
Ali Mir,
William Paterson
University
William Moylan,
Eastern Michigan
University
Merlin Nuss,
MidAmerica Nazarene
University
Warren Opfer,
Life Science Services
International
Peerasit Patanakul,
Stevens Institute of
Technology
Joseph Petrick,
Wright State University
Kenneth R. Pflieger,
Potomac College
Charles K. Pickar,
Johns Hopkins University
Connie Plowman,
Portland Community
College
Mark Poore,
Roanoke College
Antonios Printezis,
Arizona State University
Joshua Ramirez,
PMP,
MSM-PM, Columbia
Basin College
Chris Rawlings,
Bob Jones University
Natalee Regal,
Procter & Gamble
Pedro Reyes,
Baylor University
Linda Ridlon,
Center for Quality of
Management,
Division of GOAL/QPC
Kim Roberts,
Athens State University
David Schmitz,
Milwaukee School of
Engineering
Sheryl R. Schoenacher,
SUNY Farmingdale State
College
Jan Sepate,
Kimberly Clark
Patrick Sepate,
Summitqwest Inc.
Preface xxvii
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William R. Sherrard,
San Diego State
University
Brian M. Smith,
Eastern University
Kimberlee D. Snyder,
Winona State University
Tony Taylor,
MidAmerica Nazarene
University
Rachana Thariani,
Atos-Origin
Dawn Tolonen,
Xavier University
Nate Tucker,
Lee University
Guy Turner,
Castellini Company
Jayashree Venkatraman,
Microsoft Corporation
Nathan Washington,
Southwest Tennessee
Community College
Scott Wright,
University of Wisconsin–
Platteville
And we especially want to thank our family members for their love and support: Bet,
Nick, Jill, Andy, Cadence, and Ellie
—Timothy J. Kloppenborg
xxviii Preface
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About the Authors
Timothy J. Kloppenborg is an Emeritus Professor of Management at Williams Col-
lege of Business, Xavier University. He previously held faculty positions at University
of North Carolina Charlotte and Air Force Institute of Technology and has worked
temporarily at Southern Cross University and Tecnológico de Monterrey. He has
authored over 100 publications, including 10 books, such as Strategic Leadership of
Portfolio and Project Management, Project Leadership, and Managing Project Quality.
His articles have appeared in MIT Sloan Management Review, Project Management
Journal, Journal of Management Education, Journal of General Management, SAM
Advanced Management Journal, Information Systems Education Journal, Journal of
Managerial Issues, Quality Progress, Management Research News, and Journal of Small
Business Strategy. In his capacity as the founding collection editor of portfolio and
project management books for Business Expert Press, he has edited 14 books with
more in the pipeline. Tim has been active with the Project Management Institute for
over 30 years and a PMP® since 1991. He is a retired U.S. Air Force Reserve officer
who served in transportation, procurement, and quality assurance. Dr. Kloppenborg
has worked with over 150 volunteer organizations, many directly and others through
supervising student projects. He has hands-on and consulting project management
experience on six continents in construction, information systems, research and devel-
opment, and quality improvement projects with organizations such Duke Energy, Ernst
and Young LLP, Greater Cincinnati Water Works, Kroger, Procter & Gamble, Tri-
Health, and Texas Children’s Hospital. Dr. Kloppenborg has developed and delivered
innovative corporate training, undergraduate, MBA, and Executive MBA classes in
project management, leadership, teamwork, and quality improvement and he teaches
PMP Prep classes. He holds a BS in business administration from Benedictine College,
an MBA from Western Illinois University, and a PhD in Operations Management from
University of Cincinnati.
Dr. Vittal Anantatmula is a professor in the College of Business, Western Carolina
University and a campus of University of North Carolina. He is also the Director of
Graduate Programs in Project Management and was a recipient of excellence in teaching
and research awards. Dr. Anantatmula is a Global Guest Professor at Keio University,
Yokohama, Japan. He is a director and board member of the Project Management Insti-
tute Global Accreditation Center (PMI-GAC). He serves on the editorial board of several
scholarly journals. At Western Carolina University, he was recognized with the Univer-
sity Scholar Award in 2017. He has won several other awards for excellence in both
research and teaching.
Prior to joining Western Carolina University, he taught at The George Washington
University. He worked in the petroleum and power industries for several years as an
electrical engineer and project manager and as a consultant in several international orga-
nizations, including the World Bank. Dr. Anantatmula has authored more than 60 pub-
lications, five books, and about 50 conference papers. Two of his conference papers
received the best paper award. His work has been published in scholarly journals, includ-
ing Project Management Journal, Journal of Knowledge Management, Journal of Manage-
ment in Engineering, Journal of Information and Knowledge Management Systems, and
xxix
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Engineering Management Journal. He received his PhD from The George Washington
University and is a certified project management professional.
Kathryn N. Wells holds a master’s degree in Education, as well as degrees in Organi-
zational Communication and Spanish. Kate has a passion for teaching, in both academic
and corporate settings. In addition to over a decade’s experience in project management
education, Kate is a top-producing real estate agent with Keller Williams. Her blend of
experience in real estate—including working with many investors—and classroom teach-
ing gives her a unique perspective and insights into many components of project man-
agement, including Planning, Communication, Stakeholder Management, and Project
Control.
In addition to her work on Contemporary Project Management, Kate is the lead
author of Project Management Essentials (2015) and co-author of Project Management
for Archaeology (2017), both published by Business Expert Press. She has trained and
consulted with several organizations around the world and has occasionally been con-
tracted to provide translations of project management educational materials (Spanish to
English). Some of her clients include the University of Cincinnati, Children’s Hospital of
Cincinnati, Givaudan International, and Tec de Monterrey University—where Kate has
repeatedly served as visiting faculty at multiple campuses in Mexico. Kate is a certified
project management professional (PMP).
xxx About the Authors
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1
ORGANIZE LEAD PERFORMPLAN
P A R T 1
ORGANIZING PROJECTS
Chapter 1
Introduction to Project
Management
Chapter 2
Project Selection and
Prioritization
Chapter 3
Chartering Projects
Organizing for success in project management includes
several basic frameworks for understanding projects and
tools to select, prioritize, resource, and initiate projects.
Basic frameworks described in Chapter 1 include how
the work of project management can be categorized by
knowledge area and process group, how project success
is determined, and how both plan-driven and adaptive
approaches are frequently used. Chapter 2 describes
how projects are investments meant to help achieve
organizational goals. Tools are demonstrated to select,
prioritize, and resource projects. Chapter 3 describes
how charters are essential to initiating projects and then
demonstrates how to construct each portion of a charter.
1
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C H A P T E R 1
Introduction to Project Management
I have returned from a successful climb of Mount Aconcagua in Argentina; at
22,841 feet, it is the highest peak in the world outside of the Himalayas. While
there, seven other climbers died; we not only survived, but our experience was
so positive that we have partnered to climb together again.
During the three decades that I ve been climbing mountains, I ve also been
managing projects. An element has emerged as essential for success in both of
these activities: the element of discipline. By discipline, I am referring to doing
what I already know needs to be done. Without this attribute, even the most
knowledgeable and experienced will have difficulty avoiding failure.
The deaths on Aconcagua are an extreme example of the consequences asso-
ciated with a lack of discipline. The unfortunate climbers, who knew that the pre-
dicted storms would produce very hazardous conditions, decided to attempt the
summit instead of waiting. They did not have the discipline that we demonstrated
to act on our earlier decision to curtail summit attempts after the agreed-to turn-
around time or in severe weather.
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Define a project and
project management
in your own words,
using characteristics
that are common to
most projects, and
describe reasons why
more organizations
are using project
management.
Describe major activ-
ities and deliverables
at each project life
cycle stage.
List and define the ten
knowledge areas and
five process groups of
the project manage-
ment body of knowl-
edge (PMBOK ®).
Delineate measures
of project success
and failure, and
reasons for both.
Contrast predictive
or plan-driven and
adaptive or change-
driven project life
cycle approaches.
BEHAVIORAL OBJECTIVES:
Identify project roles
and distinguish key
responsibilities for
project team
members.
Describe the impor-
tance of collaborative
effort during the
project life cycle.
fra
nt
ic
00
/S
hu
tte
rs
to
ck
.c
om
2
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I ve experienced similar circumstances in project management. Often I have
found myself under pressure to cast aside or shortcut project management prac-
tices that I have come to rely on. For me, these practices have become the pillars
of my own project management discipline. One of these pillars, planning, seems to
be particularly susceptible to challenge. Managing projects at the Central Intelli-
gence Agency for three decades, I adjusted to the annual cycle for obtaining fund-
ing. This cycle occasionally involved being given relatively short notice near the end
of the year that funds unspent by some other department were up for grabs to
whoever could quickly make a convincing business case. While some may inter-
pret this as a circumstance requiring shortcutting the necessary amount of plan-
ning in order to capture some of the briefly available funds, I understood that my
discipline required me to find a way to do the needed planning and to act quickly.
I understood that to do otherwise would likely propel me toward becoming one of
the two-thirds of the projects identified by the Standish Group in their 2009
CHAOS report as not successful. I understood that the top 2 percent of project
managers, referred to as Alpha Project Managers in a 2006 book of the same
name, spend twice as much time planning as the other 98 percent of project man-
agers. The approach that I took allowed me to maintain the discipline for my plan-
ning pillar. I preplanned a couple of projects and had them ready at the end of the
year to be submitted should a momentary funding opportunity arise.
A key to success in project management, as well as in mountain climbing, is to
identify the pillars that will be practiced with discipline. This book offers an excel-
lent set of project management methods from which we can identify those pillars
that we will decide to practice with the required levels of discipline. I believe that
project management is about applying common sense with uncommon discipline.
Michael O Brochta, PMP, founder of Zozer Inc. and previously
senior project manager at the Central Intelligence Agency
1-1 What Is a Project?
Frequently, a business is faced with making a change, such as improving an existing
work process, constructing a building, installing a new computer system, merging with
another company, moving to a new location, developing a new product, entering a new
market, and so on. These changes are best planned and managed as projects.
Often, these changes are initiated due to operational necessity or to meet strategic
goals, such as the following:
Market demand
Customer request
PMBOK ® 6E COVERAGE
PMBOK ® 6E OUTPUTS
1.2 Foundational Elements Project Customer Trade-off Matrix
2.4 Organizational Systems
Project Success Definition
3.3 The Project Manager s Sphere of Influence
3.4 Project Manager Competencies
3.5 Performing Integration
PMBOK® GUIDE
Topics:
Project management
introduction
Project life cycle
Stakeholders
Project management
process
Project integration
management
CHAPTER OUTPUTS
Customer Trade-off
Matrix
Project Success
Definition
3
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Technological advance
Legal requirements or regulatory compliance
Replace obsolete equipment, technology, system, or physical facility
Crisis situation
Social need
So, what is a project?
A project is a new, time-bound effort that has a definite beginning and a definite
ending with several related and/or interdependent tasks to create a unique product or
service. The word temporary is used to denote project duration; however, it does not
mean that project duration is short; in fact, it can range from a few weeks to several
years. Temporary also does not apply to the project deliverable, although project
teams are certainly temporary.
A project requires an organized set of work efforts that are planned with a level of
detail that is progressively elaborated on as more information is discovered. Projects are
subject to limitations of time and resources such as money and people. Projects should
follow a planned and organized approach with a defined beginning and ending. Project
plans and goals become more specific as early work is completed. The project output
often is a collection of a primary deliverable along with supporting deliverables such as
a house as the primary deliverable and warrantees and instructions for use as supporting
deliverables.
Taking all these issues into consideration, a project can be defined as a time-bound
effort constrained by performance specifications, resources, and budget to create a unique
product or service.
Each project typically has a unique combination of stakeholders. Stakeholders are
people and groups who can impact the project or might be impacted by either the
work or results of the project. Projects often require a variety of people to work
together for a limited time, and all participants need to understand that completing
the project will require effort in addition to their other assigned work. These people
become members of the project team and usually represent diverse functions and
disciplines.
Project management is the art and science of using knowledge, skills, tools, and tech-
niques efficiently and effectively to meet stakeholder needs and expectations. This
includes work processes that initiate, plan, execute, control, and close work. During
these processes, trade-offs must be made among the following factors:
Scope (size and features)
Quality (acceptability of the results)
Cost
Schedule
Resources
Risks
When project managers successfully make these trade-offs, the project results meet
the agreed-upon requirements, are useful to the customers, and promote the organiza-
tion. Project management includes both administrative tasks for planning, documenting,
and controlling work and leadership tasks for visioning, motivating, and promoting work
associates. The underlying principle of project management discipline is to make effec-
tive and efficient use of all resources and it is this principle that influences some of these
trade-off decisions. Project management knowledge, skills, and methods can be applied
and modified for most projects regardless of size or application.
4 Part 1 Organizing Projects
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1-2 History of Project Management
Projects of all sizes have been undertaken throughout history. Early construction pro-
jects included the ancient pyramids, medieval cathedrals, Indian cities, and Native
American pueblos. Other large early projects involved waging wars and building
empires. In the development of the United States, projects included laying railroads,
developing farms, and building cities. Many smaller projects consisted of building
houses and starting businesses. Projects were conducted throughout most of the
world s history, but there was very little documentation. Therefore, there is no evidence
of systematic planning and control. It is known that some early projects were accom-
plished at great human and financial cost and that others took exceedingly long peri-
ods of time to complete. For example, the Panama Canal was started in 1881 and
completed in 1914.
Project management eventually emerged as a formal discipline to be studied and
practiced. In the 1950s and 1960s, techniques for planning and controlling schedules
and costs were developed, primarily on huge aerospace and construction projects. Dur-
ing this time, project management was primarily involved in determining project sche-
dules based on understanding the order in which work activities had to be completed.
Many large manufacturing, research and development, government, and construction
projects used and refined management techniques. In the 1980s and 1990s, several
software companies offered ever more powerful and easier ways to plan and control
project costs and schedules. Risk management techniques that were originally devel-
oped on complex projects have increasingly been applied in a simplified form to less
complex projects.
In the last few years, people have realized more and more that communication and
leadership play major roles in project success. Rapid growth and changes in the
information technology and telecommunications industries especially have fueled
massive growth in the use of project management in the 1990s and early 2000s.
Simultaneously, systems and processes were developed for electronic documentation
of the historical data of projects using information systems (IS) and knowledge man-
agement tools.
People who are engaged in a wide variety of industries, including banking, insurance,
retailing, hospital administration, healthcare, and many other service industries, are now
turning to project management to help them plan and manage efforts to meet their
unique demands. Project planning and management techniques that were originally
developed for large, complex projects can be modified and used to better plan and man-
age even smaller projects. Now, project management is commonly used on projects of
many sizes and types in a wide variety of manufacturing, government, service, and non-
profit organizations.
Further, in today s global economy, geographically dispersed virtual project teams are
becoming a familiar entity in many organizations. Managing a project is challenging in
the current global economy due to the exponential growth of information technology
and ever-increasing market demand that organizations offer products and services effi-
ciently and quickly. Understanding the characteristics of global projects for improving
global project performance is of critical importance.
The use of project management has grown quite rapidly and is likely to continue
growing. With increased international competition and a borderless global economy,
customers want their products and services developed and delivered better, faster, and
cheaper. Because project management techniques are designed to manage scope, quality,
cost, and schedule, they are ideally suited to this purpose.
Chapter 1 Introduction to Project Management 5
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AGILE Throughout this book, we will present concepts and techniques that are either unique to
Agile projects or are emphasized more on Agile projects. Many of these ideas can be
used to improve practice on traditional projects.
In 2001, a group of thought leaders became frustrated with the use of traditional,
plan-driven project management for software projects and as a result, they wrote a doc-
ument called The Agile Manifesto.1 The four core values of Agile as shown below are
completely consistent with our approach to Contemporary Project Management. Agile
will be defined in Chapter 3, but throughout the book, a margin icon will indicate ideas
from Agile, and the text will be in color.
Value individuals more than processes.
Value working software more than documentation.
Value customer collaboration more than negotiation.
Value response to change over following a plan.
1-3 How Can Project Work Be Described?
Project work can be described in the following ways:
Projects are temporary and unique, while other work, commonly called operations,
is more continuous.
Project managers need certain soft skills and hard skills to be effective.
Project managers frequently have more responsibility than authority.
Projects go through predictable stages called a life cycle.
Managing a project requires identifying requirements, establishing clear and achiev-
able objectives, balancing competing demands of quality, scope, cost, and time, and
meeting customer expectations by making adjustments to all aspects of the project. Due
to uniqueness, projects are often associated with uncertainties and unknowns that pres-
ent many challenges to managing project work.
1-3a Projects versus Operations
All work can be described as fitting into one of two types: projects or operations. Projects
as stated above are temporary, and no two are identical. Some projects may be extremely
different from any other work an organization has performed up to that time, such as
planning a merger with another company. Other projects may have both routine and
unique aspects, for example, building a house; such projects can be termed process ori-
ented. These projects are associated with fewer unknowns and uncertainties.
Operations, on the other hand, consist of the ongoing work needed to ensure that an
organization continues to function effectively. Operations managers can often use check-
lists to guide much of their work. Project managers can use project management methods
to help determine what to do, but they rarely have checklists that identify all the activities
they need to accomplish. Some work may be difficult to classify as totally project or totally
operations. However, if project management methods and concepts help one to better plan
and manage work, it does not really matter how the work is classified.
Both the projects and the operations are associated with processes. A process is described
as a series of actions designed to bring about the consistent and similar result or service. A
process is usually designed to improve productivity. Thus, processes are repetitive and pro-
duce consistent and similar results, whereas projects are unique: each project delivers results
that are distinct from other projects. However, one must remember that project manage-
ment discipline includes various processes (planning, risk management, communication
6 Part 1 Organizing Projects
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management, etc.) that facilitate managing projects and product- or service-oriented
processes such as scope definition, scope management, and quality management.
1-3b Soft Skills and Hard Skills
To effectively manage and lead in a project environment, a person needs to develop both
soft and hard skills. Soft skills include the ability to work in teams, interpersonal
skills, communication, conflict resolution, negotiation, and leadership activities. Hard
skills can include risk analysis, quality control, scheduling, budgeting, change control,
planning other related activities, and project execution. Soft and hard skills go hand in
hand. Some people have a stronger natural ability and a better comfort level in one or
the other, but to be successful as a project manager, a person needs to develop both,
along with the judgment about when each is needed. A wise project manager may pur-
posefully recruit an assistant who excels in his area of weakness. Training, experience,
and mentoring can also be instrumental in developing necessary skills.
Soft skills such as interpersonal relations, conflict resolution, and communication are
of critical importance in managing people. As such, of all the resources, managing
human resources presents more challenges. Managing and leading people are the most
challenging aspects of a managing a project and the project team. These challenges
underline the importance of soft skills.
1-3c Authority and Responsibility
A project manager will frequently be held accountable for work that she cannot order
people to perform. Projects are most effectively managed with one person being assigned
accountability. However, that person often needs to negotiate with a functional man-
ager, who is someone with management authority over an organizational unit. 2 Func-
tional managers negotiate for workers to perform the project work in a timely fashion.
Since the workers know their regular manager often has other tasks for them and will be
their primary rater, they are tempted to concentrate first on the work that will earn
rewards. Hence, a project manager needs to develop strong communication and leader-
ship skills to extract cooperation from functional managers and to persuade project team
members to focus on the project when other work also beckons. Often, it is the project
manager s responsibility that the work be performed, but at the same time, he or she has
no formal authority over the project team members.
1-3d Project Life Cycle
All projects go through predictable stages called a project life cycle. A project life cycle is
the series of phases that a project goes through from its initiation to its closure. 3 An
organization needs the assurance that the work of the project is proceeding in a satisfac-
tory manner, that the results are aligned with the original plan, and they are likely to serve
the customer s intended purpose. The project customer is the person or organization that
will use the project s product, service, or result. Customers can be internal to the organiza-
tion (that is, part of the company performing the project) or external to the organization.
Many different project life cycle models are used for different types of projects, such
as information systems, improvement, research and development, and construction. The
variations these pose will be explored in Chapter 4. In this book, we will use the follow-
ing project stages:
Selecting and initiating starts when an idea for a project first emerges and the proj-
ect is selected and planned at a high level, and ends when key participants commit
to it in broad terms.
Chapter 1 Introduction to Project Management 7
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AGILE
Planning starts after the initial commitment, includes detailed planning, and ends
when all stakeholders accept the entire detailed plan.
Executing starts when the plan is accepted, and includes authorizing, executing,
monitoring, and controlling work until the customer accepts the project deliverables.
Closing and realizing includes all activities after customer acceptance to ensure the
project is completed, lessons are learned, resources are reassigned, contributions are
recognized, and benefits are realized.
The pace of work and amount of money spent may vary considerably from one life
cycle stage to another. Often, the selecting is performed periodically for all projects at
a division or corporate level, and then initiating is rather quick just enough to
ensure that a project makes sense and key participants will commit to it. The plan-
ning stage can become rather detailed and will normally require quite a bit more
work. The execution stage or stages are the time when the majority of the hands-on
project tasks are accomplished. This tends to be a time of considerable work. Closing
is a time when loose ends are tied up and the work level decreases significantly, but
realizing benefits from the project occurs over time, may be measured months after
project completion, and may be done by people other than those who performed the
project. Occasionally, some of these phases overlap with each other, depending on
the project complexity, urgency of the deliverable, and ambiguity associated with
the project scope.
See Exhibit 1.1 for a predictive or plan-driven project life cycle and Exhibit 1.2 for
an adaptive or change-driven project life cycle. The primary difference is that in the
first, the product is well understood and all planning precedes all executing,
while in the second, early results lead into planning later work. The extreme of pre-
dictive is sometimes called waterfall and the extreme of adaptive is sometimes called
Agile.
EXHIBIT 1.1
PREDICTIVE OR PLAN-DRIVEN PROJECT LIFE CYCLE WITH
MEASUREMENT POINTS
Other
Approvals
Closing &
Realizing
Administrative
Closure
Benefits
Measures
Level of
Effort
Stage
Stage
Ending
Gates
Selecting &
Initiating
Charter
Selection
Planning
Kickoff
Executing
Project
Result
Progress
Reports
8 Part 1 Organizing Projects
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Three other points should be made concerning the project life cycle. First, most com-
panies with well-developed project management systems insist that a project must pass
an approval of some kind to move from one stage to the next.4 In both exhibits, the
approval to move from selecting and initiating to planning, for instance, is the approval
of a charter. Second, in some industries, the project life cycle is highly formalized and
very specific. For example, in the construction industry, the executing stage is often
described as the three stages of design, erection, and finishing. Third, many companies
even have their own project life cycle model, such as the one Midland Insurance Com-
pany has developed for quality improvement projects, as shown in Exhibit 1.3.
EXHIBIT 1.3
MIDLAND INSURANCE COMPANY PROJECT LIFE CYCLE FOR
QUALITY IMPROVEMENT PROJECTS
Initiation Planning Execution Close Out
1) De ne Problem
2) Factually Describe
Situation
3) Analyze Causes
4) Solution Planning
and Implementation
5) Evaluation of
Effects
6) Sustain Results
7) Share Results
Source: Martin J. Novakov, American Modern Insurance Group.
EXHIBIT 1.2
ADAPTIVE OR CHANGE-DRIVEN PROJECT LIFE CYCLE WITH
MEASUREMENT POINTS
Other
Approvals
Closing &
Realizing
Administrative
Closure
Benefits
Measures
Level of
Effort
Stage
Stage
Ending
Gates
Selecting &
Initiating
Charter
Selection
Planning
Executing
Planning
Executing
· · ·
Interim
Result
Interim
Result
Project
Result
Chapter 1 Introduction to Project Management 9
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This book will present examples of company-specific life cycle models, but for clarity
will use the predictive or plan-driven model shown in Exhibit 1.1 when describing con-
cepts, except when we discuss Agile with the adaptive or change-driven model. In addi-
tion to stage-ending approvals, frequently projects are measured at additional points
such as selection, progress reporting, and benefits realization, as shown in Exhibit 1.1.
1-4 Understanding Projects
Several frameworks that can help a person better understand project management are
described below: the Project Management Institute (PMI); the Project Management
Body of Knowledge (PMBOK® Guide); methods of selecting and prioritizing projects,
project goals and constraints; project success and failure; use of Microsoft Project to
help plan and measure projects, and various ways to classify projects.
1-4a Project Management Institute
Project management has professional organizations just as do many other professions
and industry groups. The biggest of these by far is the Project Management Institute.
The Project Management Institute was founded in 1969, grew at a modest pace until
the early 1990s, and has grown quite rapidly since then. As of February 2017, PMI had
well over 475,000 members. PMI publishes and regularly updates over a dozen exten-
sions, guides, and standards. The best known is A Guide to the Project Management
Body of Knowledge (PMBOK® Guide). Definitions in this book that have specific nuances
come from the most current edition of PMI standards and guides. Those definitions that
are common knowledge are defined in typical terms. PMI has established eight profes-
sional certifications, with the most popular being Project Management Professional
(PMP)®. Currently, over 650,000 people hold the PMP® certification. To be certified as
a PMP®, a person needs to have the required experience and education, pass an exami-
nation on the PMBOK® Guide, and sign and be bound by a code of professional con-
duct. PMI has also established a second certification Certified Associate in Project
Management (CAPM) that is geared toward junior people working on projects before
they are eligible to become PMPs. PMI also has established six additional credentials plus
multiple practice standards and extensions to the PMBOK® Guide in areas such as pro-
gram management, Agile, risk, scheduling, resource estimating, work breakdown struc-
tures, earned value management, construction, and government.5
1-4b Project Management Body of Knowledge (PMBOK®)
A Guide to the Project Management Body of Knowledge®, known as PMBOK®, consists of
three introductory chapters covered collectively in Chapters 1, 2, and 3 of this book; five
process groups; 10 knowledge areas; and 49 processes. A project management process
group is a logical grouping of the project management processes to achieve specific project
objectives. 6 The five process groups, paraphrased from the PMBOK® Guide, are as follows:
1. Initiating define a project or a new phase by obtaining authorization
2. Planning establish the project scope, refine objectives, and define plans and actions
to attain objectives
3. Executing complete the work defined to satisfy project specifications
4. Monitoring and controlling track, review, and regulate progress and performance,
identify changes required, and initiate changes
5. Closing formally complete or close project or phase 7
10 Part 1 Organizing Projects
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The 10 knowledge areas, paraphrased from the PMBOK® Guide, are as follows:
1. Integration management processes and activities to identify, define, combine,
unify, and coordinate the various processes and project management activities
2. Scope management processes to ensure that the project includes all the work
required, and only the work required, to complete the project successfully
3. Schedule management processes to manage timely completion of the project
4. Cost management processes involved in planning, estimating, budgeting, financ-
ing, funding, managing, and controlling costs so that the project can be completed
within the approved budget
5. Quality management processes to incorporate the organization s quality policy
regarding planning, managing, and controlling quality requirements to meet stake-
holder expectations
6. Resource management processes to identify, acquire, and manage resources
needed to successfully complete the project
7. Communications management processes to ensure timely and appropriate plan-
ning, collection, creation, distribution, storage, retrieval, management, control, mon-
itoring, and ultimate disposition of project information
8. Risk management processes of conducting risk management planning, identifica-
tion, analysis, response planning, response implementation, and monitoring risk on
a project
9. Procurement management processes to purchase or acquire products, services, or
results from outside the project team
10. Stakeholder management processes to identify the people, groups, or organizations,
that could impact or be impacted by the project, analyze their expectations and impact,
and develop strategies for engaging them in project decisions and execution 8
Project Processes There are 49 individual project work processes that are each in a
process group and a knowledge area. Exhibit 1.4 shows the general flow of when each
process occurs during a project if one reads the chart from left to right. For example,
the first two processes are to develop the project charter and identify stakeholders. Both
occur during project initiation. The charter development is part of integration manage-
ment, while stakeholder identification is part of stakeholder management. These pro-
cesses flow from one into another, as shown in the more complete flowchart in the
inside back cover of the text. These processes use inputs and create outputs. Many of
the outputs are project charts and tools that are used to plan and control the project, as
also shown on that complete flowchart. Other outputs are deliverables. A deliverable
is any unique and verifiable product, result, or capability to perform a service that is
produced to complete a process, phase, or project.9
One should remember that all these processes might not be required for all projects.
These PMBOK processes are designed to be all-inclusive and are meant for large and
complex projects.
1-4c The PMI Talent Triangle
PMI research shows that to be a successful project manager, a person needs to develop
knowledge and skills in technical areas, leadership, and strategic business management.
The objectives in this book are grouped first with those core skills and knowledge that
all project management classes would typically cover. Core objectives are those the
authors firmly believe anyone who takes a course in project management should master.
The core objectives include those that the Talent Triangle classifies as technical,
Chapter 1 Introduction to Project Management 11
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EXHIBIT 1.4
FLOWCHART OF PMBOK PROCESSES AND MAJOR OUTPUTS
13.1 Identify
Stakeholders
INITIATINGKNOWLEDGE AREAS
Integration
Scope
Schedule
Cost
Quality
Resources
Communication
Risk
Procurement
Stakeholders
12.1 Plan
Procurement
Management
11.1 Plan
Risk
Management
10.1 Plan
Communications
Management
9.1 Plan
Resource
Management
8.1 Plan
Quality
Management
7.1 Plan
Cost
Management
6.1 Plan
Schedule
Management
5.1 Plan
Scope
Management
Flowchart of PMBOK Processes and
Major Deliverables
4.1 Develop
Project Charter
6.5 Develop
Schedule
5.2 Collect
Requirements
5.4 Create
WBS
5.3 Define
Scope
PLANNING
4.2 Develop Project Management Plan
6.2 Define
Activities
9.2 Estimate
Activity
Resources
11.2 Identify
Risks
11.3 Perform
Qualitative
Risk Analysis
11.4 Perform
Quantitative
Risk Analysis
11.5 Plan
Risk
Responses
13.2 Plan
Stakeholders
Engagement
6.4 Estimate
activity
Durations
7.3 Determine
Budget
7.2 Estimate
Costs
6.3 Sequence
Activities
Section
1.2 Foundational Elements
2.4 Organizational Systems
3.3 The Project Manager’s Sphere of Influence
3.4 Project Manager Competencies
Selecting Projects
12
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11.6 Implement
Risk Responses
13.3 Manage
Stakeholder
Engagement
13.4 Monitor
Stakeholder
Engagement
EXECUTING MONITORING & CONTROLLING CLOSING
4.3 Direct and Manage
Project Work
4.4 Manage Project
Knowledge
4.7 Close Project
or Phase
6.6 Control
Schedule
7.4 Control
Costs
5.6 Control
Scope
5.5 Validate
Scope
8.2 Manage
Quality
9.3 Acquire
Resources
9.4 Develop
Team
9.6 Control
Resources
9.5 Manage
Team
8.3 Control
Quality
10.2 Manage
Communications
11.7 Monitor
Risks
10.3 Monitor
Communications
12.2 Conduct
Procurements
12.3 Control
Procurements
4.6 Perform
Integrated
Change Control
4.5 Monitor and
Control
Project Work
KNOWLEDGE AREAS
Integration
Scope
Schedule
Cost
Quality
Resources
Communication
Risk
Procurement
Stakeholders
Benefits
Analysis
Realizing
Benefits
13
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behavioral, and strategic. More advanced technical objectives appear in some chapters
for professors who wish to teach with a technical approach. More advanced behavioral
objectives are also included in some chapters for professors who wish to emphasize the
behavioral/leadership aspects of project management.
1-4d Selecting and Prioritizing Projects
During the selecting and initiating stage of a project, one of the first tasks leaders must do is to
identify potential projects. Ideally, this is accomplished in a systematic manner not just by
chance. Some opportunities will present themselves. Other good opportunities need to be dis-
covered. All parts of the organization should be involved. For example, salespeople can
uncover opportunities through open discussions with existing and potential customers. Opera-
tions staff members may identify potential productivity-enhancing projects. Everyone in the
firm should be aware of industry trends and use this knowledge to identify potential projects.
Potential projects are identified based on business needs such as capability enhance-
ment, new business opportunities, contractual obligations, changes in strategic direction,
innovative business ideas, replacing obsolete equipment, or adopting new technology.
Once identified, organizations need to prioritize among the potential projects. The best
way to do this is to determine which projects align best with the major goals of the firm.
The executives in charge of selecting projects need to ensure overall organizational priori-
ties are understood, communicated, and accepted. Once this common understanding is in
place, it is easier to prioritize among the potential projects. The degree of formality used in
selecting projects varies widely. Regardless of the company s size and the level of formality
used, the prioritization efforts should include asking the following questions:
What value does each potential project bring to the organization?
Are the demands of performing each project understood?
Are the resources needed to perform the project available?
Is there enthusiastic support both from the external customers and from one or
more internal champions?
Which projects will best help the organization achieve its goals?
One of the popular decision tools used to select projects is an evaluation model based
on selection criteria; these selection criteria, in turn, are based on project attributes, orga-
nizational indices, financial performance attributes, and strategic goals. More sophisticated
tools like decision trees, analytical hierarchical process (AHP), expected net present value,
and other economic evaluation models are sometimes used for project selection.
1-4e Project Goals and Constraints
All projects should be undertaken to accomplish specific goals. Those goals can be described
both by scope and by quality. Scope is a combination of product scope and project scope.
Product scope is the entirety of what will be present in the actual project deliverables.
Project scope is the entirety of what will and will not be done to meet the specified require-
ments. Quality is the characteristics of a product or service that bear on its ability to satisfy
stated or implied needs. 10 Taken together, scope and quality are often called performance
and should result in outputs that customers can be satisfied with as they use them to
effectively do their job. From a client perspective, projects generally have time and cost
constraints. Thus, a project manager needs to be concerned with achieving desired scope
and quality, subject to constraints of time and cost. If the project were to proceed exactly
according to plan, it would be on time, on budget, and with the agreed-upon scope and the
agreed-upon quality.
14 Part 1 Organizing Projects
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AGILE
However, many things can happen as a project is conducted. Obstacles or challenges that
may limit the ability to perform often arise, as do opportunities to exceed original expecta-
tions. A project manager needs to understand which of these four goals and constraints
(scope, quality, time, budget) should take precedence and which can be sacrificed. The proj-
ect manager needs to help the customer articulate how much he wants to enhance achieve-
ment of one of these four dimensions. The customer must also state which dimension he is
willing to sacrifice, by how much, and under what circumstances to receive better achieve-
ment of the other one. For example, on a research and development (R&D) project, a cus-
tomer may be willing to pay an extra $5,000 to finish the project 10 days early. On a church
construction project, a customer may be willing to give up five extra light switches in
exchange for greater confidence that the light system will work properly. Understanding
the customer s desires in this manner enables a project manager to make good project deci-
sions. A project manager can use a project customer trade-off matrix such as the one in
Exhibit 1.5 to reflect the research and development project trade-offs discussed above.
In addition, project plans undergo changes due to uncertainties and unknowns asso-
ciated with the project. These changes must be assessed for their impact on cost and
duration of the project before implementing them.
From an internal perspective, a project manager also needs to consider two more
constraints: the amount of resources available and the decision maker s risk tolerance.
From an Agile perspective, in a given iteration, resources (including cost) and schedule
are considered fixed and what can vary is value to the customer.
1-4f Defining Project Success and Failure
Project success is creating deliverables that include all of the agreed-upon features (meet
scope goals). The outputs should satisfy all specifications and please the project s custo-
mers. The customers need to be able to use the outputs effectively as they do their work
(meet quality goals). The project should be completed on schedule and on budget (meet
time and cost constraints).
Project success also includes other considerations. A successful project is one that is
completed without heroics that is, people should not burn themselves out to complete the
project. Those people who work on the project should learn new skills and/or refine existing
skills. Organizational learning should take place and be captured for future projects. Finally,
the performing organization should reap business-level benefits such as development of
EXHIBIT 1.5
PROJECT CUSTOMER TRADE-OFF MATRIX
ENHANCE MEET SACRIFICE
Cost Pay up to $5,000 extra if it saves 10 days
Schedule Save up to 10 days
Quality Must meet
Scope Must meet
Source: Adapted from Timothy J. Kloppenborg and Joseph A. Petrick, Managing Project Qualify (Vienna, VA:
Management Concepts, 2002): 46.
Chapter 1 Introduction to Project Management 15
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new products, increased market share, increased profitability, decreased cost, and so on.
A contemporary and complete view of project success is shown in Exhibit 1.6.
Project failure can be described as not meeting the success criteria listed in Exhibit
1.6. Many projects are fully successful in some ways but less successful in other aspects.
The goal of excellent project management is to reach high levels of success on all mea-
sures on all projects. Serious project failure when some of the success criteria are
missed by a large amount and/or when several of the success criteria are missed can
be attributed to numerous causes. In each chapter of this textbook, more specific possible
failure causes will be covered, along with how to avoid them, but some basic causes of
failure are as follows:
Incomplete or unclear requirements
Inadequate user involvement
Inadequate resources
Unrealistic time demands
Unclear or unrealistic expectations
Inadequate executive support
Changing requirements
Inadequate planning
1-4g Using Microsoft Project to Help Plan and Measure Projects
A useful tool to capture and conveniently display a variety of important project data is
Microsoft® (MS) Project. MS Project is demonstrated in a step-by-step fashion using screen
shots from a single integrated project throughout the book. If you re using the MindTap prod-
uct for this book, you have access to short videos demonstrating how to use the software.
1-4h Types of Projects
Four ways to classify projects that help people understand the unique needs of each are
by industry, size, understanding of project scope, and application.
CLASSIFYING BY INDUSTRY Projects can be classified in a variety of ways. One
method is by industry, which is useful in that projects in different industries often have
unique requirements. Several industry-specific project life cycle models are in use, and
various trade groups and special interest groups can provide guidance.
EXHIBIT 1.6
PROJECT SUCCESS
Meeting Agreements
Cost, schedule, and specifications met
Customer s Success
Needs met, deliverables used, customer satisfied
Performing Organization s Success
Market share, new products, new technology
Project Team s Success
Loyalty, development, satisfaction
Source: Adapted from Timothy J. Kloppenborg, Debbie Tesch, and Ravi Chinta, 21st Century Project Success Mea-
sures: Evolution, Interpretation, and Direction, Proceedings, PMI Research and Education Conference 2012 (Limer-
ick, Ireland, July 2012).
16 Part 1 Organizing Projects
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AGILE
CLASSIFYING BY SIZE Another method of classifying projects is by size. Large pro-
jects often require more detailed planning and control. Typically, most of the processes
outlined in PMBOK are relevant and applicable for large projects that require a few years
and hundreds of project team members for execution. However, even the smallest pro-
jects still need to use planning and control just in a more simplified manner. For exam-
ple, construction of a multistory building in China would require a highly detailed
construction schedule, but even a much simpler construction project of building a one-
car garage also needs to follow a schedule.
CLASSIFYING BY TIMING OF PROJECT SCOPE CLARITY A third method of classi-
fying projects deals with how early in the project the project manager and team are likely
to be able to determine with a high degree of certainty what the project scope will be. For
example, it may be rather simple to calculate the cubic feet of concrete that are required to
pour a parking lot and, therefore, how much work is involved. At the opposite end of the
spectrum, when developing a new pharmaceutical or developing a new technology, very
little may be determined in the project until the results of some early experiments are
reported. Only after analyzing these early experiment results is it possible to begin estimat-
ing cost and determining the schedule with confidence. For such projects, change is con-
stant and is caused by uncertainty and unknowns associated with these projects.
Consequently, it is important to manage project risks. The planning becomes iterative,
with more detail as it becomes available. In the first case, predictive or plan-driven project
techniques may work well. In the second case, adaptive or change-driven methods to iter-
atively determine the scope and plan for risks may be more important.
Agile methods are increasingly being used when scope clarity emerges slowly.
CLASSIFYING BY APPLICATION For the purpose of this book, we will discuss many
types of projects, such as those dealing with organizational change, quality and produc-
tivity improvement, research and development, information systems, and construction.
Many of these projects include extensive cross-functional work, which contributes to
the challenges associated with managing project teams and the triple constraints of
scope, duration, and cost. Remember, all projects require planning and control. Part of
the art of project management is determining when to use certain techniques, how much
detail to use, and how to tailor the techniques to the needs of a specific project.
1-4i Scalability of Project Tools
Projects range tremendously in size and complexity. In considering construction projects,
think of the range from building a simple carport to building an office tower. In both cases,
one would need to determine the wants and needs of the customer(s), understand the amount
of work involved, determine a budget and schedule, decide what workers are available and
who will do which tasks, and then manage the construction until the owner accepts the project
results. It should be easy to see that while both projects require planning and control, the level
of detail for the carport is a tiny fraction of that for the office tower. In this book, we first
demonstrate concepts and techniques at a middle level and then use a variety of project exam-
ples to demonstrate how to scale the complexity of the techniques up or down.
1-5 Project Roles
To successfully initiate, plan, and execute projects, a variety of executive, management, and
associate roles must be accomplished. Traditional project roles are shown in Exhibit 1.7.
Chapter 1 Introduction to Project Management 17
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In a large organization, a person often fills only one of these roles; sometimes, more than
one person fills a particular role. In small organizations, the same person may fill more
than one role. The names of the roles also vary by organization. The work of each role
must be accomplished by someone. Project managers are successful when they build strong
working relationships with the individuals who execute each of these roles.
1-5a Project Executive-Level Roles
The four traditional project executive-level roles are the sponsor, customer, steering
team, and the project management office. The first executive-level project role is that
of sponsor. A modern definition of executive sponsor is a senior manager serving in a
formal role given authority and responsibility for successful completion of a project
deemed strategic to an organization s success. 11 This textbook expands the sponsor s
role to include taking an active role in chartering the project, reviewing progress
reports, playing a behind-the-scenes role in mentoring, and assisting the project man-
ager throughout the project life, specifically in making critical decisions and supporting
the project team.
The second executive-level project role is that of the customer. The customer needs to
ensure that a good contractor for external projects or project manager for internal pro-
jects is selected, make sure requirements are clear, and maintain communications
throughout the project. In many traditional projects, the sponsor carries out the role of
customer. On many Agile projects, the customer role is quite significant.
The third executive role is the steering or leadership team for an organization. This
is often the top leader (CEO or other officer) and his or her direct reports. From a proj-
ect standpoint, the important role for this team is to select, prioritize, and resource pro-
jects in accordance with the organization s strategic planning and to ensure that accurate
progress is reported and necessary adjustments are made. Another important function of
this executive role is midstream evaluation of projects and portfolios to ensure that they
stay on track and produce expected results.
The fourth executive-level project role is that of project management office (PMO),
which is defined as a management structure that standardizes the project-related gov-
ernance processes and facilitates the sharing of resources, methodologies, tools and
techniques. 12 The PMO work can range from supporting project managers to control-
ling them by requiring compliance to directives in actually managing projects. The
PMO supports projects by mentoring, training, and assisting project teams and pro-
motes enterprise functions such as developing and augmenting processes, creating
and maintaining historical information, and advocating for project management
discipline.
EXHIBIT 1.7
TRADITIONAL PROJECT ROLES
EXECUTIVE ROLES MANAGERIAL ROLES ASSOCIATE ROLES
Sponsor Project Manager Core Team Member
Customer Functional Manager Subject Matter Expert (SME)
Steering Team Facilitator
Project Management Office
18 Part 1 Organizing Projects
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AGILE Agile project management roles are shown in Exhibit 1.8. Most of the same work still
needs to be accomplished in organizations using Agile methods. Some of the work is
performed by different people because of the emphasis on empowering teams, and
some is performed at different times as requirements and scope emerge gradually instead
of just at the project start. Collaborative effort and communication, specifically with the
client, are common features of Agile project teams.
On Agile projects, arguably the most essential role is the customer representative
sometimes called the product owner. This person ensures that the needs and wants of
the various constituents in the customer s organization are identified and prioritized
and that project progress and decisions continually support the customer s desires.
In Agile projects, the customer representative role is so continuous and active that we
show it as both an executive- and managerial-level role. The customer representative
does much of what a sponsor might in traditional projects, but there also may be a des-
ignated sponsor (sometimes known as a product manager) who controls the budget.
A portfolio team often performs much of the work of a traditional steering team, and
a similar office that may be titled differently such as Scrum office performs much of
the work of a project office.
1-5b Project Management-Level Roles
The most obvious management-level role is the project manager. The project manager is
the person assigned by the performing organization to lead the team that is responsible
for achieving the project objectives. 13 The project manager is normally directly account-
able for the project results, schedule, and budget. This person is the main communicator,
is responsible for the planning and execution of the project, and works on the project from
start to finish. The project manager often must get things done through the power of influ-
ence since his or her formal power may be limited. The contemporary approach to project
management is to lead in a facilitating manner to the extent possible.
Another key management role is the functional manager (sometimes called a resource
manager). Functional managers are the department or division heads the ongoing man-
agers of the organization. They normally determine how the work of the project is to be
accomplished, often supervise that work, and often negotiate with the project manager
regarding which workers are assigned to the project.
The third managerial role is that of facilitator. If the project is complex and/or con-
troversial, it sometimes makes sense to have another person help the project manager
with the process of running meetings and making decisions.
EXHIBIT 1.8
AGILE PROJECT ROLES
EXECUTIVE ROLES MANAGERIAL ROLES ASSOCIATE ROLES
Customer (product owner) Customer (product owner) Team Member
Sponsor (product manager) Scrum Master
Portfolio Team Functional Manager
Project Management/Scrum Office Coach
Chapter 1 Introduction to Project Management 19
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AGILE
AGILE
On Agile projects, the customer representative or product owner works with the team on
a continuous basis, often performing some of the work a project manager might on a
traditional project. The Scrum Master serves and leads in a facilitating and collaborative
manner. This is a more limited, yet more empowering role than the traditional project
manager. The functional manager has a similar, but sometimes more limited, role than
the traditional department head. Many organizations using Agile also have a coach who
acts as a facilitator and trainer.
1-5c Project Associate-Level Roles
The project team is composed of a selected group of individuals with complimentary
skills and disciplines who are required to work together on interdependent and interrelated
tasks for a predetermined period to meet a specific purpose or goal. 14 In this book, these
individuals are called core team members. The core team, with the project manager, does
most of the planning and makes most of the project-level decisions.
The temporary members who are brought on board as needed are called subject mat-
ter experts.
The team members in Agile projects are assigned fulltime as much as possible, so there are
few subject matter experts. The teams are self-governing, so they perform many of the plan-
ning and coordinating activities that a project manager would typically perform. Small and
co-located teams often characterize Agile projects, and they work closely together.
1-6 Overview of the Book
Contemporary project management blends traditional, plan-driven, and contemporary
Agile approaches. It is integrative, iterative, and collaborative. Project management is
integrative since it consists of the 10 knowledge areas and the 5 process groups
described in the PMBOK® Guide, and one must integrate all of them into one coherent
and ethical whole. Project management is iterative in that one starts by planning at a
high level and then repeats the planning in greater detail as more information becomes
available and the date for the work performance approaches. Project managers need to
balance planning, control, and agility. Project management is collaborative since there
are many stakeholders to be satisfied and a team of workers with various skills and
ideas who need to work together to plan and complete the project. With these thoughts
of integration, iteration, and collaboration in mind, this book has four major parts:
Organizing and Initiating Projects, Leading Projects, Planning Projects, and Perform-
ing Projects.
1-6a Part 1: Organizing and Initiating Projects
Part 1 consists of three chapters that deal with organizing for and initiating projects.
CHAPTER 2 Chapter 2 covers project selection and prioritization. This includes both
internal projects, which should be selected in a manner consistent with the strategic
planning of the organization, and external projects. It also explains how to respond to
requests for proposals.
CHAPTER 3 Chapter 3 discusses chartering projects. The project charter is a docu-
ment issued by the project initiator or sponsor that formally authorizes the existence of
a project and provides the project manager with the authority to apply organizational
20 Part 1 Organizing Projects
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resources to project activities. 15 The charter can further be considered an agreement by
which the project sponsor and project manager (and often the project core team) agree
at a high level what the project is, why it is important, key milestone points in the sched-
ule, major risks, and possibly a few other items. It allows the project manager and core
team to understand and agree to what is expected of them.
Finally, Microsoft Project, a tool that facilitates effective project planning, controlling,
and communicating, is introduced. Microsoft Project is utilized in eight chapters to dem-
onstrate how to automate various project planning and control techniques. The examples
and illustrations in this book use Microsoft Project 2016. If a person is using an earlier
version of Microsoft Project, there are slight differences. If a person is using a competing
project scheduling package, the intent remains the same, but the mechanics of how to
create certain documents may differ.
1-6b Part 2: Leading Projects
Part 2 consists of three chapters on leadership aspects of projects.
CHAPTER 4 Chapter 4 focuses on organizational structure, organizational culture,
project life cycle, and project management roles of the parent organization. The orga-
nizational structure section describes ways an organization can be configured and the
advantages and disadvantages of each in regard to managing projects. Next covered is
the culture of the parent organization and the impact it has on the ability to effectively
plan and manage projects. The industry and type of project often encourage managers
to select or customize a project life cycle model. The roles covered include executive-,
managerial-, and associate-level responsibilities that must be performed. The demands
of each role are explained, along with suggestions for how to select and develop people
to effectively fill each role, considering both the role and the unique abilities and inter-
ests of each person.
CHAPTER 5 Chapter 5 describes how to carry out the project work with a project team
in order to accomplish the project objectives. The project manager needs to simultaneously
champion the needs of the project, the team, and the parent organization. The project
manager manages the people side of the project by effectively using the stages of project
team development, assessing and building the team members capability, supervising their
work, managing and improving their decision making, and helping them maintain enthu-
siasm and effective time management. Project managers guide their team in managing and
controlling stakeholder engagement.
CHAPTER 6 Chapter 6 begins by identifying the various project stakeholders, their
wants and needs, and how to prioritize decisions among them. Chapter 5 also includes
communications planning for the project because poor communication can doom an
otherwise well-planned and well-managed project. The information needs of each stake-
holder group should be included in the communications plan.
1-6c Part 3: Planning Projects
Part 3 includes six chapters dealing with various aspects of project planning.
CHAPTER 7 Chapter 7 shows how to determine the project scope and outline it in the
work breakdown structure (WBS). The WBS is deliverable-oriented hierarchical
decomposition of the work to be executed by the project team to accomplish the project
objectives and create the required deliverables. 16
Chapter 1 Introduction to Project Management 21
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The WBS is a document that progressively breaks the project down into its compo-
nents so that each piece can be described as a deliverable for which one person can plan,
estimate the costs, estimate the time, assign resources, manage, and be held accountable
for the results. This is a critical document since it is the foundation for most of the other
planning and control activities. The chapter ends with instructions on putting a WBS
into Microsoft Project.
CHAPTER 8 Chapter 8 deals with scheduling projects. The project schedule is an
output of a schedule model instance that presents the time-based information required
by the communication plan, including activities with planned dates, durations, mile-
stone dates, and resource allocation.17 This chapter starts with background information
on project scheduling and then covers construction of schedules by defining activities,
determining the order in which they need to be accomplished, estimating the duration
for each, and then calculating the schedule. Chapter 8 also includes instructions on
how to interpret a project schedule; clearly communicate it using a bar chart called a
Gantt chart; and use Microsoft Project to construct, interpret, and communicate proj-
ect schedules.
CHAPTER 9 Chapter 9 demonstrates how to schedule resources on projects: determin-
ing the need for workers, understanding who is available, and assigning people. All of the
techniques of resourcing projects are integrated with the behavioral aspects of how to
deal effectively and ethically with the people involved. Resource needs are shown on a
Gantt chart developed in Chapter 8, the responsibilities are shown as they change over
time, conflicts and overloads are identified, and methods for resolving conflicts are intro-
duced. Alternative approaches for creating and compressing schedules are shown. Many
of the techniques in this chapter are also shown with MS Project.
CHAPTER 10 Chapter 10 discusses the project budget, which is dependent on both the
schedule and the resource needs developed in the previous two chapters. The project
budget is The sum of work package cost estimates, contingency reserve, and manage-
ment reserve.18 Cost planning, estimating, budgeting, establishing cost control, and
using MS Project for project budgets are all included.
CHAPTER 11 Chapter 11 starts with establishing a risk management plan. It covers
methods for identifying potential risks and for determining which risks are big enough
to justify specific plans for either preventing the risk event from happening or dealing
effectively with risk events that do happen. Finally, in risk response planning, strategies
for dealing with both positive risks (opportunities) and negative risks (threats) are
discussed.
CHAPTER 12 Chapter 12 begins with a discussion of how modern project quality con-
cepts have evolved. Then it deals with core project quality demands of stakeholder satis-
faction, empowered performance, fact-based management, and process management.
The third topic of this chapter is developing the project quality plan. Next, the chapter
describes various quality improvement tools for projects.
Since Chapter 12 is the last planning chapter, it concludes with a method of integrating
the various sections developed in the previous chapters into a single, coherent project plan.
Conflicts that are discovered should be resolved, judgment needs to be applied to ensure
that the overall plan really makes sense, and one or more kickoff meetings are normally
held to inform all of the project stakeholders and to solicit their enthusiastic acceptance
of the plan. At this point, the project schedule and budget can be baselined in MS Project.
22 Part 1 Organizing Projects
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While bits of the project that might have caused delays if they were not started early may
already be in progress, the formal kickoff is the signal that the project is under way!
1-6d Part 4: Performing Projects
Part 3 includes three chapters that deal with performing the project.
CHAPTER 13 Chapter 13 begins by introducing relevant supply chain concepts such as
a supply chain view of projects, the components that form a supply chain, factors to con-
sider when dealing with a supply chain, and methods of improving the performance of a
supply chain. Make-or-buy analysis and contract types lead the reader through procure-
ment planning. Identifying and selecting sellers lead into managing contracts to assure
receipt of promised supplies and services according to contractual terms. The chapter
ends with advantages and requirements of effective project partnering.
CHAPTER 14 While the project work is being performed, the project manager needs
to determine that the desired results are achieved the subject of Chapter 14. Monitor
and control project work is defined as the process of tracking, reviewing, and report-
ing the progress to meet the performance objectives defined in the project management
plan. 19 This starts with gathering performance data already identified during project
initiating and planning. The actual performance data are then compared to the desired
performance data so that both corrective and preventive actions can be used to ensure
that the amount and quality of the project work meet expectations. MS Project can be
used for this progress reporting and for making adjustments. Earned value analysis is
used to determine exactly how actual cost and schedule progress are compared with
planned progress. Overcoming obstacles, managing changes, resolving conflicts, repri-
oritizing work, and creating a transition plan all lead up to customer acceptance of the
project deliverables.
CHAPTER 15 Chapter 15 deals with finishing projects and realizing benefits. Close
project or phase is defined as all the work needed to formally close a project or phase.
This chapter includes a section on terminating projects early, in case either the project is
not doing well or conditions have changed and the project results are no longer needed,
and a section on timely termination of successful projects. Topics include how to secure
customer feedback and use it along with the team s experiences to create lessons learned
for the organization; reassign workers and reward those participants who deserve recog-
nition; celebrate success; perform a variety of closure activities; and provide ongoing sup-
port for the organization that is using the results of the project. Finally, after the project
deliverables have been used for some time, an assessment should determine if the prom-
ised benefits are being realized.
PMP/CAPM Study Ideas
Everything in this book is designed to mirror and explain the content in the latest
edition the sixth of the Guide to the Project Management Body of Knowledge
(PMBOK), the international standard produced by the Project Management Institute
(PMI). Not only will the content and questions in this book help you learn the best prac-
tices for managing and executing projects, but they will also help you prepare for one of
the licensing exams if you choose to pursue a project management credential such as the
CAPM or PMP. More information on these and other PMI certifications can be found at
www.pmi.org/certifications/types.
Chapter 1 Introduction to Project Management 23
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While either of these credentials can open doors for you professionally, the effort
needed to acquire them should not be underestimated. In addition to work and educa-
tion requirements (specified at the website noted above), you will need to pass an online
test consisting of 150 (CAPM) or 200 (PMP) questions, respectively. PMI does not pub-
lish the exact pass rates of either of these tests, but they are designed to be difficult. It
will not be enough for you to just memorize knowledge areas, process groups, and inputs
and outputs; rather, you will need a solid understanding of each of these in order to
answer higher-level thinking questions of a wide variety. In this book, we will provide
dozens of questions in each chapter for you to use as a guide.
Summary
A project is an organized set of work efforts undertaken
to produce a unique output subject to limitations of
time and resources such as materials, equipment,
tools, and people. Since the world is changing more
rapidly than in the past, many people spend an increas-
ing amount of their working time on projects. Project
management includes work processes that initiate,
plan, execute, monitor, control, and close project
work. During these processes, trade-offs must be
made among the scope, quality, cost, and schedule, so
that the project results meet the agreed-upon require-
ments, are useful to the customers, and promote the
organization.
All projects, regardless of size, complexity, or appli-
cation, need to be planned and managed. While the
level of detail and specific methods vary widely, all pro-
jects need to follow generally accepted methods. PMI is
a large professional organization devoted to promoting
and standardizing project management understanding
and methods. One of PMI s standards, A Guide to the
Project Management Body of Knowledge (PMBOK®
Guide), is composed of five process groups: initiating,
planning, executing, monitoring and controlling, and
closing; along with ten knowledge areas: integration,
scope, schedule, cost, quality, resources, communica-
tions, risk, procurement, and stakeholders.
To successfully initiate, plan, and execute projects,
two more things are needed. One is to understand what
project success is and what drives it, along with what
project failure is and its major causes. The other is an
understanding of the various executive-, managerial-,
and associate-level roles in project management. This
book is organized to be useful to students who will
enter a variety of industries and be assigned to projects
of all sizes and levels of complexity. Students will learn
how to understand and effectively manage each of
these process groups and knowledge areas. Microsoft
Project 2016 is used in eight chapters to illustrate
how to automate various planning, scheduling, resour-
cing, budgeting, and controlling activities. All defini-
tions used are from the PMBOK Guide, sixth edition.
This book follows a chronological approach through-
out a project s life cycle, emphasizing knowledge and
skills that lead to project success.
Key Terms Consistent with PMI Standards and Guides
The glossary in this book uses terms as defined in various Project Management Institute guides and standards
where they are distinct. The glossary also uses commonly understood definitions where terms are standard.
project, 4
stakeholders, 4
project management, 4
soft skills, 7
hard skills, 7
functional manager, 7
project life cycle, 7
project management process group, 10
initiating processes, 10
planning processes, 10
executing processes, 10
monitoring and controlling processes, 10
closing processes, 10
integration management, 11
scope management, 11
schedule management, 11
cost management, 11
quality management, 11
resources management, 11
communications management, 11
24 Part 1 Organizing Projects
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risk management, 11
procurement management, 11
stakeholder management, 11
deliverable, 12
scope, 13
product scope, 13
project scope, 13
quality, 13
sponsor, 16
project management office (PMO), 17
customer, 17
steering or leadership team, 17
project manager, 18
project team, 18
project charter, 19
work breakdown structure (WBS), 20
project schedule, 20
project budget, 20
monitor and control project work, 21
close project or phase, 21
Chapter Review Questions
1. What is a project?
2. What is project management?
3. How are projects different from ongoing
operations?
4. What types of constraints are common to most
projects?
5. What are the three components of the Talent
Triangle?
6. At what stage of a project life cycle are the major-
ity of the hands-on tasks completed?
7. During which stage of the project life cycle are
loose ends tied up?
8. What are the five process groups of project
management?
9. Which process group defines a new project or
phase by obtaining authorization?
10. What are the 10 project management knowledge
areas?
11. What two project dimensions are components of
project performance?
12. How do you define project success?
13. How do you define project failure?
14. List four common causes of project failure.
15. What are three common ways of classifying
projects?
16. What is predictive or plan-driven planning, and
when should it be used?
17. What is adaptive or change-driven planning, and
when should it be used?
18. What makes someone a project stakeholder?
19. What are the three project executive-level roles?
20. List and describe each of the managerial and
associate project roles.
Discussion Questions
1. Using an example of your own, describe a project
in terms that are common to most projects.
2. Why are more organizations using project man-
agement? If you were an executive, how would
you justify your decision to use project manage-
ment to the board of trustees?
3. Explain how to scale up or down the complexity
of project planning and management tools and
what effect, if any, this might have on the project
life cycle.
4. List and describe several issues that pertain to
each stage of the project life cycle.
5. Put the five project management process groups
in order from the one that generally requires the
least work to the one that requires the most.
6. Name the 10 project management knowledge
areas, and briefly summarize each.
7. Discuss how a project could be successful in
terms of some measures yet unsuccessful by
others.
8. What does project failure mean? What are some
examples?
9. Compare and contrast advantages and disadvan-
tages of predictive/plan-driven and adaptive/
change-driven project life cycle approaches.
10. You are given a project to manage. How do you
decide whether to use a predictive or adaptive
approach?
11. Contrast project managers and functional managers.
12. List as many project roles as you can, and iden-
tify what each one is responsible for in terms of
the project.
Chapter 1 Introduction to Project Management 25
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PMBOK ® Guide Questions
The purpose of these questions is to help visualize the type of questions on PMP and CAPM exams.
1. Which project role provides resources or support
for the project, promotes and protects the project
at higher levels of management, and takes an
active role in the project from the chartering
stage through project closure?
a. functional manager
b. project manager
c. project team member
d. project sponsor
2. Which PMBOK® Guide Knowledge Area
includes those processes required to ensure that
the project includes all the work required, and
only the work required, to complete the project
successfully?
a. cost management
b. scope management
c. risk management
d. quality management
3. In order to be successful, the project team must
be able to assess the needs of stakeholders and
manage their expectations through effective
communications. At the same time, they must
balance competing demands among project
scope, schedule, budget, risk, quality, and
resources, which are also known as project
.
a. plan elements
b. deliverables
c. constraints
d. targets
4. Projects pass through a series of phases as they
move from initiation to project closure. The
names and number of these phases can vary sig-
nificantly depending on the organization, the
type of application, industry, or technology
employed. These phases create the framework
for the project, and are referred to collectively
as the .
a. project life cycle
b. project management information system
(PMIS)
c. product life cycle
d. Talent Triangle
5. Based on PMI s definition, which of these is a
good example of a project?
a. manufacturing a standard commodity
b. following policies and procedures for procur-
ing an item
c. designing and launching a new website
d. using a checklist to perform quality control
6. When would a predictive project life cycle be the
preferred approach?
a. when the high-level vision has been devel-
oped, but the product scope is not well
defined
b. when the environment is changing rapidly
c. when the product to be delivered is well
understood
d. when the product will be created through a
series of repeated cycles
7. To be effective, a project manager needs to pos-
sess all of the following competencies except
.
a. personal effectiveness attitudes, core per-
sonality traits, leadership
b. authority power or right granted by the
organization
c. performance what project managers can
accomplish while applying their project man-
agement knowledge
d. knowledge of project management
understanding of project management
tools and techniques
8. In Adaptive Life Cycles (change-driven or Agile
methods), .
a. the overall scope of the project is fixed, and
the time and cost are developed
incrementally
b. the overall cost is fixed, and the project scope
and schedule are developed iteratively
c. the time and cost are fixed, but the scope is
developed iteratively
d. change control is very important
9. The two traditional project management
associate-level roles are different in each of the
following ways except .
a. duration of time spent on project
b. ability to work within project constraints
c. degree of input contributed to project planning
d. skill set
26 Part 1 Organizing Projects
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10. A freelance project manager is brought in by
Company X to lead a large, expensive project.
This project manager has excellent leadership
skills and a strong technical understanding of
the project. In order for her to optimize every
component of the Talent Triangle, what might
be a good activity for the project manager at
the start of her time with Company X?
a. familiarize herself with the long-term objec-
tives of Company X
b. host an icebreaker for all team members
c. attend a seminar on advanced leadership
techniques
d. send an email including her résumé to all
SMEs to ensure they are aware of her techni-
cal background
I N T E G R A T E D E X A M P L E P R O J E C T S
We will use two example projects throughout all 15 chapters
of this book. One will be a construction project suited to
mostly traditional project planning and management. The
other will be a development project suited more toward
Agile project planning and management. In this chapter, we
will introduce both of them. In subsequent chapters, we will
choose one to demonstrate techniques and concepts from
the chapter and ask leading questions of the other one. We
will alternate chapters so professors can choose to use the
questions as assignments if they wish.
SUBURBAN HOMES CONSTRUCTION PROJECT
Purchasing a new home is the single largest investment most
of us will make in our lifetime. You can either purchase the
home from a reputed real estate building company or manage
the construction of your home using project management
principles that you have mastered. The latter approach can
save significant amounts of money over the life of a typical
30-year mortgage. Additionally, it is likely to provide you with
one of the most satisfying experiences in your life because
you will get an opportunity to see the results of choices you
made in building your home.1 However, on the downside, if
you manage the project poorly, it also has the potential on
many levels to be a disaster.
The experience of managing the construction of a
single-family home provides a coherent account of costs,
benefits, other considerations related to construction,
risks, hazards, and critical decisions. The experience also
has the potential for joy if the project is a successful
endeavor.
Suburban Homes is a medium-sized, fast-growing con-
struction company in the Midwest region of the United
States. Due to its significant growth and good reputation for
building quality single-family homes and townhomes, the
company decided to expand its business to several Southern
states in the United States. However, Suburban Homes rec-
ognized the scope for managing resources effectively and
efficiently to increase profits. It has decided to formalize proj-
ect management practices by developing and implementing
standard and promising processes, tools, and techniques.
For this purpose, the company was looking for a competent
project manager to manage its projects. They hired Adam
Smith as their new project manager.
Adam Smith had worked for several years in the construc-
tion industry and supplemented his experience with project
management education. Consequently, he gained considerable
experience and developed expertise in managing construction
projects. Adam believes in managing projects by adhering to
various project management processes, tools, and techniques.
In his new position as the project manager, Adam s primary
task is to improve the performance of project management
and increase the project success rate.
What advice would you offer to Adam Smith?
1Suprick J. and Anantatmula V. (2010).
Chapter 1 Introduction to Project Management 27
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Semester Project Instructions
This book is designed to give your professors the option
to have you practice the concepts and techniques from
each chapter on a real project. Often, the project chosen
will be for a nonprofit group of some kind such as a
United Way agency, a church, or a school. The project
could, however, be for a company or a part of the uni-
versity. The semester project can often be one that sev-
eral students will be assigned to work on as a team.
Each chapter provides suggested assignments to
practice project management skills on the real or
potential project you are using. Depending on the
emphasis your professor chooses, you may need to per-
form some, most, or all of these assignments. At a min-
imum, your professor will probably assign the charter,
work breakdown structure, and schedule.
In any case, each of the following chapters prompts
you to perform various activities to plan and execute
the project. At some point in the first couple of weeks,
your professor will probably invite at least one repre-
sentative from each organization to your class to intro-
duce their project and to meet you. We will call these
persons sponsors and define their role more fully in
Chapter 3. Since this first chapter is a broad introduc-
tion to project management, your task for the
Chapter 1 sample project may be just to familiarize
yourself with your new student team, your sponsor,
your sponsor s organization, and the overall direction
of your project. If you have enough input from your
sponsor, your professor may also ask you to create a
customer trade-off matrix, as shown in Exhibit 1.6
and/or a definition of success for your project, as in
Exhibit 1.7. Your professor also may ask you to answer
certain specific and/or open-ended questions concern-
ing your newly assigned project.
Subsequent chapters give you more in-depth tools to
acclimate you to your project, the organization you will
be working for, and the various stakeholders who have
an interest in the project. For example, in the next chap-
ter, you learn how project selection flows from an orga-
nization s strategic planning, and you should seek to
learn why this project was chosen and how it supports
the strategic goals of the organization.
CASA DE PAZ DEVELOPMENT PROJECT
Casa de Paz is an intentional community supporting the trans-
formative journey of recovery for Latina women and their chil-
dren. It is a 501(c)(3) nonprofit organization that is just starting.
The vision is to create a communal living space for multiple
Latina women and their children. The women and their chil-
dren also would have access to a variety of service providers
in the form of graduate students living in the same building.
Two possible buildings have been identified. Some of the
many things that need to take place for this vision to become
a reality are board and working group structuring, fundraising,
accountancy, promotion, website development, community
relations development, building purchase and renovation, pro-
gram development, legal services, educational advocacy, and
English as a Second Language (ESL) tutoring, among others.
While every project has trade-offs, success on this project will
be measured more on the creation of a safe environment with
needed services than on cost and schedule.
Casadepazcinci.org
Why Is This Project So Important?
Hundreds of thousands of people are fleeing violence in
their home countries. In the United States, many of them
come from Latin America. Often, they lack communities
for support and integration as they transition from their
countries of origin. In addition, many face many obsta-
cles to stability and flourishing. How would you put
your life back together if you were a mother fleeing vio-
lence in your country of origin, and once in a new coun-
try, that same violence continues in your new home?
Few spaces offer stability and encouragement in such
circumstances, much less cultural sensitivities and pro-
fessional services to facilitate the transformation to self-
sufficiency and success. Casa de Paz/House of Peace is
an intentional community that encourages and draws out
women s resilience both by meeting them where they
are and providing time and space to heal, recover, and
grow. Most shelters for women and children are tempo-
rary; the average stay is seven to twelve days. Casa de
Paz provides up to six months of stability, community,
and professional services to support women s growth
along a continuum of self-sufficiency matrixes. It is a
community that recognizes women s dignity and cele-
brates each step toward the realization of their gifts as
human beings.
28 Part 1 Organizing Projects
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PROJECT M ANAGEM ENT IN ACTION
Using Appreciative Inquiry to Understand Project Management
Each project creates a unique product, service,
or result that certain stakeholders desire. Project
success requires understanding stakeholder require-
ments, clarifying project expectations, and agreeing
upon project scope. As such, it is imperative to iden-
tify relevant stakeholders and to have a constructive
engagement with them. One tool that is helpful for
allowing such engagement and for navigating through
complexities is appreciative inquiry (Al).
What Is Appreciative Inquiry?
The principles: Appreciative inquiry (AI) is a positive
philosophy for change, wherein whole systems
convene to inquire for change (Cooperrider, 2003).
AI recognizes the power of the whole and builds on
conversational learning that emerges out of the whole.
It operates on the belief that human systems move in
the direction of their shared image and idea of the
future, and that change is based on intentional and
positive inquiry into what has worked best in the past.
In this sense, AI suggests that human organizing and
change are a relational process of inquiry that is
grounded in affirmation and appreciation. Typically, the
process works its way through the four phases of Dis-
covery, Dream, Design, and Delivery (Conklin, 2009).
Implications of AI on Defining
Project Scope
Project success partially depends upon identifying key
stakeholders: eliciting their true wants and needs to
determine project scope; and keeping them appropri-
ately engaged throughout the entire project. The early
involvement is critical because it lays out clear goals
and boundaries of project scope. However, eliciting
accurate responses may be difficult, especially since
many projects may be planned and conducted in an
atmosphere of uncertainty. The ongoing involvement
helps to ensure stakeholders know what they will get
from the project and will be pleased.
Appreciative inquiry is a tool that may assist proj-
ect stakeholders to navigate through their inquiries via
positive conversations. For example, a typical process
may look like this:
Discovery (What has been?): This phase inquires
into and discovers the positive capacity of a group,
organization, or community. People are encouraged to
use stories to describe their strengths, assets, peak
experiences, and successes to understand the unique
conditions that made their moments of excellence
possible. In this step, stakeholders reflect on the past
to recollect instances when they believed they could
clearly articulate their true needs and wants; and
when their needs and wants were folded into the
project scope. Through storytelling, they collectively
discover the process of project selection and prioriti-
zation and articulate a gauge of project success. As
they discuss, they start generating a dense web of
understanding an understanding and an apprecia-
tion of all their capacities that make moments of
excellence possible. Agile projects use a similar
method of storytelling to understand user require-
ments and ultimately define project scope.
Dreaming (What could be?): Building on the
moments of excellence of the participants, this phase
encourages the participants to imagine what would
happen if their moments of excellence were to
become a norm. Participants dream for the ideal con-
ditions and build hope and possibility of an ideal
future. As people share their stories, the focus of the
process now shifts to dreaming of a perfect, desirable
state for the stakeholders. Through this journey, the
goal should be to enable the participants to build
positive energy around their strengths and also to
dream about the direction in which they feel comfort-
able moving.
Delivery:
What will
be?
Discovery:
What has
been?
Design:
What
should be?
Dream:
What
could be?
Chapter 1 Introduction to Project Management 29
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. Exposure Draft (Newtown
Square, PA: Project Management Institute, 2017).
Anantatmula, Vittal S., Project Teams: A Structured
Developmental Approach, 2016, New York: Business
Expert Press.
Chandler, Dawne E., and Payson Hall, Improving
Executive Sponsorship of Projects: A Holistic
Approach, 2017, New York: Business Expert Press.
Cooper, Robert G., Winning at New Products: Path-
ways to Profitable Innovation, Proceedings, PMI
Research Conference 2006 (Montreal, July 2006).
Crowe, Andy, Alpha Project Managers: What the Top
2% Know That Everyone Else Does Not (Atlanta:
Velociteach, 2006).
Kloppenborg, Timothy J., and Warren A. Opfer, The
Current State of Project Management Research:
Trends, Interpretations, and Predictions, Project
Management Journal 33 (2) (June 2002): 5 18.
Kloppenborg, Timothy J., Debbie Tesch, and Broderick
King, 21st Century Project Success Measures: Evo-
lution, Interpretation, and Direction, Proceedings,
PMI Research and Education Conference 2012
(Dublin, Ireland, July 2012).
Muller, R., and R. Turner, The Influence of Project
Managers on Project Success Criteria by Type of
Project, European Management Journal 25 (4)
(2007): 298 309.
PMI Lexicon of Project Management Terms Version
3.0, 2015 (Newtown Square, PA).
Project Management Institute, Business Analysis for
Practitioners: A Practice Guide, 2015 (Newtown
Square, PA).
Project Management Institute, Practice Standard
for Scheduling 2nd ed., 2011 Newtown Square,
PA).
Project Management Institute, Practice Standard for
Work Breakdown Structures 2nd ed., 2006 (New-
town Square, PA).
Shenhar, A. J., and D. Dvir, Reinventing Project
Management (Boston: Harvard Business School
Press, 2007).
https://asq.org/quality-resources/quality-glossary/q,
accessed February 6, 2017.
Designing (What should be?): This phase creates
design principles that will help the participants real-
ize their dream. Participants are encouraged to
stretch their imagination to move the system from
where it currently is to where the participants want it
to be. At this stage, the participants should be
encouraged to imagine a perfect world without any
constraints. Therefore, if there were no resource
constraints, what would the scope of the project look
like?
Delivery (What will be?): In this phase, participants
are encouraged to think of the various subsystems
that should take the responsibility of the design phase
to sustain the design from the dream that it discov-
ered (Cooperrider et al., 2003, p. 182). In this phase,
various stakeholders are encouraged to decide what
they will be committing themselves to.
Key Outcome
Going through this entire process allows stakeholders
to elicit and articulate their expectations from the
project. Stakeholders also have a better understand-
ing of how their needs and wants link to and lead
them to a desirable future state. Finally, in order to
sustain their dream, their commitment is clearly artic-
ulated. As stakeholders commit themselves to specific
endeavors on the project, they will implicitly revisit the
opportunities and cost that lay ahead of them, which
allows stakeholders to draw a realistic boundary
around their commitment to the project.
Projects are temporary and unique and may have
shifting boundaries over time. The process of engag-
ing stakeholders via appreciative inquiry (AI) is an
effective way to address the ambiguity and uncer-
tainty in project management.
Source: Rashmi Assudani, Associate Professor and Chair, Department of Management and Entrepreneurship, Williams College of Business, Xavier Uni-
versity. Adapted from Conklin, T. A., Creating Classrooms of Preference: An Exercise in Appreciative Inquiry. Journal of Management Education 33 (6)
(2009): 772 792. Cooperrider, D. L., D. Whitney, and J. M. Stavros, Appreciative Inquiry Handbook (Bedford Heights, OH: Lakeshore, 2003).
30 Part 1 Organizing Projects
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Endnotes
1. https://www.smartsheet.com/comprehensive-guide
-values-principles-agile-manifesto, accessed Decem-
ber 1, 2016.
2. Wikipedia https://en.wikipedia.org/wiki/Functional_
manager, accessed February 6, 2017.
3. PMI Lexicon of Project Management Terms
Version 3.0, 2015 (Newtown Square, PA): 9.
4. Robert G. Cooper, Winning at New Products:
Pathways to Profitable Innovation, Proceedings
(2006).
5. http://www.pmi.org/pmbok-guide-standards/
foundational, accessed February 6, 2017.
6. Project Management Institute, A Guide to
the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. Exposure Draft.
(Newtown Square, PA: Project Management
Institute, 2017): 15.
7. Ibid.
8. PMI Lexicon of Project Management Terms
Version 3.0, 2015 (Newtown Square, PA): 7.
9. PMI Lexicon of Project Management Terms
Version 3.0, 2015 (Newtown Square, PA): 7.
10. https://asq.org/quality-resources/quality-glossary/q,
accessed February 6, 2017.
11. Dawne E. Chandler and Payson Hall, Improving
Executive Sponsorship of Projects: A Holistic
Approach, 2017 (New York: Business Expert
Press): 1.
12. PMI Lexicon of Project Management Terms
Version 3.0, 2015 (Newtown Square, PA): 13.
13. Ibid.
14. Vittal S. Anantatmula, Project Teams: A Structured
Developmental Approach, 2016, New York: Business
Expert Press, 9.
15. PMI Lexicon of Project Management Terms
Version 3.0, 2015 (Newtown Square, PA): 5.
16. Project Management Institute, Practice Standard
for Work Breakdown Structures 2nd ed., 2006
(Newtown Square, PA): 121.
17. Project Management Institute, Practice Standard
for Scheduling 2nd ed., 2011 (Newtown Square,
PA): 138.
18. PMI Lexicon of Project Management Terms
Version 3.0, 2015 (Newtown Square, PA): 8.
19. Project Management Institute, A Guide to the Proj-
ect Management Body of Knowledge (PMBOK®
Guide), 6th ed. Exposure Draft. (Newtown Square,
PA: Project Management Institute, 2017): 15.
Chapter 1 Introduction to Project Management 31
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C H A P T E R 2
Project Selection and Prioritization
With the development of a new five-year strategic plan, significant financial growth,
and a major reorganization, Living Arrangements for the Developmentally Disabled
(LADD) found itself overwhelmed with tasks and at a point that required the thought-
ful selection and prioritization of projects. Prior strategic plans were largely dictated
by the former executive director, created in a silo of sorts. It was through the intro-
duction of a new executive director to LADD and complete new leadership at the
management level that an opportunity presented itself for new, cross-department
collaboration, innovative methods to carry out established practices, and the ability
to identify and draw on the strengths of the individual members of the team.
LADD is a medium-sized nonprofit corporation that is mission focused and
considered a leader in the field of supporting individuals with developmental dis-
abilities. Its efforts reach beyond day-to-day functions and extend in large part to
awareness, advocacy, and action. With the sponsorship of a national film festival
focused on disabilities and its work in the civic and government sectors at local
and national levels, LADD has been able to influence positive change in legisla-
tion and the inclusion of people with disabilities at all levels of society.
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Explain in your own
words the strategic
planning and portfolio
management
processes.
Describe how to
select, prioritize, and
resource projects
as an outgrowth of
strategic planning.
From a contractor s
viewpoint, describe
how to secure
projects.
TECHNICAL OBJECTIVES:
Compare the
strengths and weak-
nesses of using
financial and scoring
models to select
projects.
Given organizational
priorities and several
projects, demonstrate
how to select and
prioritize projects
using a scoring
model.
BEHAVIORAL OBJECTIVES:
Explain the strengths
an organization might
possess that could
improve its ability to
perform projects.
M
on
ke
y
Bu
si
ne
ss
Im
ag
es
/S
hu
tte
rs
to
ck
.c
om
32
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Project selection and prioritization were exactly what LADD needed because
they were trying to maintain pace with a large program and revenue growth
curve, new leadership at the helm, and federal changes in the way services
were to be delivered to those with developmental disabilities. Projects from the
strategic plan were scored based on established value sets that included criteria
such as if the project met the mission, was financially feasible, or strengthened
personal or community relationships.
LADD s strategic plan contains 32 primary goals and many more objectives.
The project selection and prioritization process was a key tool to build a frame-
work that would inspire agency success over the next five years. It is also
anticipated to be a method to reduce program competition and increase under-
standing within the management team as occasions for team development
and departmental collaboration occur. In the end, each step of the process
will lead the agency to achieve its vision of propelling the inclusion and suc-
cess of people with disabilities forward with a positive impact throughout the
community.
Amy Harpenau, Vice President, Living Arrangements
for the Developmentally Disabled.
2-1 Strategic Planning Process
One of the tasks of a company s senior leadership is to set the firm s strategic direction.
Some of this direction setting occurs when an organization is young or is being
revamped, but some needs to occur repeatedly. Exhibit 2.1 depicts the steps in strategic
planning and how portfolio management should be an integral part.
2-1a Strategic Analysis
The first part of setting strategic direction is to analyze both the external and internal
environments and determine how they will enhance or limit the organization s ability
to perform. This strategic analysis is often called strengths, weaknesses, opportunities,
and threats (SWOT). The internal analysis (elements within the project team s control)
consists of asking what strengths and weaknesses the organization possesses. The exter-
nal analysis (elements over which the project team has little or no control) consists of
asking what opportunities and threats are posed by competitors, suppliers, customers,
regulatory agencies, technologies, and so on. The leaders of an organization often need
to be humble and open to ideas that are unpleasant and contradictory to their beliefs
when conducting this analysis. Performed correctly, a strategic analysis can be very illu-
minating and can suggest direction for an organization. An example of SWOT analysis
PMBOK ® 6E COVERAGE
PMBOK ® 6E OUTPUTS
1.2 Foundational Elements Elevator Pitch
Selecting Projects Project Selection and Prioritization Matrix
Project Resource Assignment Matrix
PMBOK® GUIDE
Topics:
1.2 Foundational
Elements
Selecting Projects
CHAPTER OUTPUTS
Elevator Pitch
Project Selection and
Prioritization Matrix
Project Resource
Assignment Matrix
33
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for the Built Green Home at Suncadia is shown in Exhibit 2.2. The Built Green Home at
Suncadia, Washington, was developed using advanced sustainability concepts and a large
degree of stakeholder involvement.
2-1b Guiding Principles
Once the SWOT analysis is complete, the organization s leadership should establish
guiding principles such as the vision and mission. Some organizations break this step
into more parts by adding separate statements concerning purpose and/or values.
Often, these sections are included in the mission. For simplicity s sake, they will be trea-
ted as part of the mission in this book. It is more important to understand the intent of
each portion and achieve it rather than worry about the exact format or names of indi-
vidual portions.
VISION The vision is a one-sentence statement describing the clear and inspirational
long-term, desired change resulting from an organization or program s work.1 A clear
and compelling vision will help all members and all stakeholders of an organization
understand and desire to achieve it. Visions often require extra effort to achieve but are
considered to be worth the effort. Visions are often multiyear goals that, once achieved,
suggest the need for a new vision.
One of the visions most often cited, because it was so clear and compelling, was Pres-
ident John F. Kennedy s goal of placing a man on the moon before the end of the 1960s.
Kennedy set this goal after Russia launched Sputnik and the United States found itself
behind in the space race. His vision was very effective in mobilizing people to achieve
it; further, it rapidly transformed a huge suburban area near Houston into a developed
and sustainable economic and technology zone.
EXHIBIT 2.1
STRATEGIC PLANNING AND PORTFOLIO ALIGNMENT
34 Part 1 Organizing Projects
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A more recent example was in 2009 when hundreds of community leaders in Cleve-
land, Ohio, decided to use a systems approach to guide many interrelated social and eco-
nomic efforts in their region. The vision they stated is, Cleveland and other cities
throughout Northeast Ohio should be green cities on a blue lake. 2 They continue to
use this vision to guide regional leaders as they choose where to invest their time and
resources in bettering the region and life for its residents. They also are currently plan-
ning their 2019 Sustainable Cleveland Summit.3
Increasingly, companies are incorporating the triple bottom line into their vision
statements. This approach emphasizes the social, environmental, and economic health
of the company s stakeholders rather than a narrow emphasis only on the economic
return for shareholders. This stated desire to be a good corporate citizen with a long-
term view of the world can motivate efforts that achieve both economic return for share-
holders and other positive benefits for many other stakeholders.
MISSION STATEMENT The vision should lead into the mission statement, which is
a way to accomplish the vision. The mission statement includes the organization s core
purpose, core values, beliefs, culture, primary business, and primary customers. 3 Several
of these sections may flow together in the mission statement and, sometimes, an overall
statement is formed with expanded definitions of portions for illustration. The rationale
for including each section (either as one unified statement or as separate statements) is
as follows:
By including the organization s purpose, the mission statement communicates why
the organization exists.
By including the organization s core values, a mission statement communicates how
decisions will be made and the way people will be treated. True organizational
EXHIBIT 2.2
SWOT ANALYSIS FOR THE BUILT GREEN HOME AT SUNCADIA
STRENGTHS WEAKNESSES
Green building has a buzz
Seattle has a strong green building community
support
Strong community support
Growth in green building projects that demon-
strate value
Need to provide numbers on green building value
Committed developer and builder
Green building has not reached mainstream
Limited project resources community Distance
away from Seattle Green building is perceived
to be costly
High cost of green projects
OPPORTUNITIES THREATS
Uniqueness of product
Location
Existing thinking on green building and its
niche focus
Community surrounding house Building schedule
Lack of data on green building (wealth) value Community (location)
Rumors
Source: Brenda Nunes, developer, Built Green Home at Suncadia.
Chapter 2 Project Selection and Prioritization 35
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values describe deeply held views concerning how everyone should act especially
when adhering to those values is difficult.
By including beliefs, a mission statement communicates the ideals for which its lea-
ders and members are expected to stand. Beliefs are deeply held and slow to change,
so it is quite useful to recognize them, as they can either help or hinder an organiza-
tion s attempt to achieve its vision.
By including the organization s culture, the mission statement instructs and expects
members to act in the desired manner.
By including the primary business areas, everyone will know in what business the
organization wishes to engage.
By identifying the primary customers, everyone will understand which groups of
people need to be satisfied and who is counting on the organization. The mission
needs to be specific enough in describing the business areas and customers to set
direction, but not so specific that the organization lacks imagination.
An example of a vision and mission statement from Cincinnati Children s Hospital
Medical Center is shown in Exhibit 2.3.
2-1c Strategic Objectives
With the strategic analysis, mission, and vision in place, leaders turn to setting strategic
objectives, which should be the means of achieving the mission and vision. For most
organizations, this strategic alignment of objective setting occurs annually, but some
organizations may review objectives and make minor revisions at three- or six-month
intervals. While the planning is normally performed annually, many of the strategic
objectives identified will take well over one year to achieve. The objectives describe both
short- and long-term results that are desired, along with measures to determine achieve-
ment. Organizations that embrace a triple bottom line in their guiding values will have
objectives promoting each bottom line, and projects that are selected will contribute
toward each. These objectives should provide focus on decisions regarding which
EXHIBIT 2.3
CINCINNATI CHILDREN S HOSPITAL MEDICAL CENTER VISION AND MISSION
Cincinnati Children’s Hospital Medical Center will be the leader
in improving child health.
Cincinnati Children’s will improve child health and transform delivery of care
through fully integrated, globally recognized research, education, and
innovation. For patients from our community, the nation and the world,
the care we provide will achieve the best:
• Medical and quality of life
• Patient and family and
•
today and in the future.
Source: Cincinnati Children s Hospital Medical Center, http://www.cincinnatichildrens.org/about/mission/, accessed
January 9, 2017.
36 Part 1 Organizing Projects
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projects to select and how to prioritize them, since they are an expression of the organi-
zational focus. Many writers have stated that for objectives to be effective, they should be
SMART that is, specific, measurable, achievable, results based, and time specific. 4 An
example of strategic objectives from The Internet Society is shown in Exhibit 2.4.
2-1d Flow-Down Objectives
Once an organization s strategic objectives are identified, they must be enforced. Some
objectives may be implemented by work in ongoing operations. However, projects tend
to be the primary method for implementing many objectives. If the organization is rela-
tively small, leaders may proceed directly to selecting projects at this point. Larger orga-
nizations may elect a different route. If the organization is so large that it is impractical
for the overall leaders to make all project selection decisions, they might delegate those
decisions to various divisions or functions with the stipulation that the decisions should
be aligned with the organization s strategic planning that has taken place to this point.
Regardless of whether the organization is small and the top leaders make all project
selection decisions or whether the organization is large and some of the decisions are
cascaded one or more levels down, several methods of project selection may be used.
2-2 Portfolio Management
Companies that use a strategic project selection process to carefully align projects with
their organizational goals will find they tend to be more successful at completing their pro-
jects and deriving the expected benefits from them. Portfolio management is the central-
ized management of one or more portfolios to achieve strategic objectives.5 The goal of
portfolio management is to achieve the maximum benefit toward the strategic goals of
the company. To accomplish this, executives need to identify, select, prioritize, resource,
and govern an appropriate portfolio of projects and other work. 6 Governing will be cov-
ered in Chapter 14, and all other portfolio management topics will be covered here. Project
success at these companies is measured by how much the project contributes to the orga-
nization s objectives (business needs) as well as the traditional measures of staying within
budget and schedule and achieving the specific technical goals promised at the start of the
project to obtain a desired return on investment.
For ease of understanding how various work is related, many organizations utilize an
approach of classifying portfolios, programs, projects, and subprojects. Not all companies
use all four classifications, but understanding how they are related helps one see where
any particular portion of work fits in the organization.
PORTFOLIO EXAMPLE We are a major national health insurance company. Our
planning approach starts with creating an inventory of project initiatives, which has
been identified by the key business areas. We separate the projects into foundational pillars
EXHIBIT 2.4
INTERNET SOCIETY STRATEGIC OBJECTIVES FOR 2012 2014 PLANNING CYCLE
1. Facilitate and promote policy environments that enable the continued evolution of an open and trusted Internet.
2. Increase the global relevance of collaborative, bottom-up, technical, consensus-based, open standards development.
3. Strengthen Internet Society leadership in Internet Development.
4. Build the visibility and influence of the Internet Society as the trusted source on global Internet issues.
Source: http://www.internetsociety.org/who-we-are/organization-reports-and-policies/internet-society-2015-action-plan, accessed February 7, 2017.
Chapter 2 Project Selection and Prioritization 37
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(operation functions) and develop roadmaps of activities going out six quarters (18
months) as can be seen in Exhibit 2.5. Priority and timing of business need determine
which quarter(s) the project initiatives are developed and implemented. The roadmaps
also include smaller activities called capabilities that are integrated with the project activi-
ties. Each of these foundational pillars aligns with the supporting agile sprint teams and
the backlog of activities gets translated into stories within the sprints. A key role is the
Product Owner who represents the business area and determines which activities (stories)
go into each sprint. There is one Product Owner for each pillar and they are at a Director
level within the organization. The product owner must have a complete understanding of
the organizations strategy and short-term goals of their respective business area.
2-2a Portfolios
Organizations require many work activities to be performed, including both ongoing
operational work and temporary project work. Large organizations often have many pro-
jects underway at the same time. A portfolio is projects, programs, subportfolios, and
operations managed as a group to achieve strategic business objectives. 7 Project portfo-
lios are similar to financial portfolios. In a financial portfolio, efforts are made to diver-
sify investments as a means of limiting risk. However, every investment is selected with
the hope that it will yield a positive return. The returns on each investment are evaluated
individually, and the entire portfolio is evaluated as a whole.
Each project in the portfolio should have a direct impact on the organization. Put
another way, an organization s leaders should identify the organization s future direction
through strategic planning. Then multiple possible initiatives (or projects) can be identi-
fied that might help further the organization s goals. The leaders need to sort through
the various possible projects and prioritize them. Projects with the highest priority
EXHIBIT 2.5
2017 PROJECT & ROADMAP PLANNING
Carry Over – 121 Projects
New Business
Care4U
Claims
Consumer Exp.
Finance, Billing and Enroll.
Provider
Reg/Complince
23
64
9
6
3
10
6
Backlog – 75 Projects
New Business
Care4U
Claims
Consumer Exp.
Finance, Billing and Enroll.
Provider
Reg/Complince
n/a
37
9
3
11
13
2
Dashboard
Initial Draft
Complete
Dashboard
Initial Draft
Complete
Dashboard
In Progress
Dashboard
In Progress
Dashboard
Not Started
Source: Mark Heitkamp, PMP, MBA and appear after the words business area
38 Part 1 Organizing Projects
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vaibhav.aribenchi
Highlight

should be undertaken first. Organizations typically try to have a sense of balance in their
portfolios; that is, an organization includes in its portfolio:
Some large and some small projects
Some high-risk, high-reward projects, and some low-risk projects
Some projects that can be completed quickly and some that take substantial time to finish
Some projects that serve as efforts to enter new markets and new products or
services and some to improve current products
2-2b Programs
A program is a group of related projects, subprograms, and program activities managed
in a coordinated way to obtain benefits not available from managing them individually. 8
This group of related projects or the program often shares the same goal and requires
similar resources.
Program management is defined as applying knowledge, skills, tools, and techniques
to meet requirements and to obtain predetermined benefits. It is a systematic approach
of aligning multiple components of the program to achieve the program goals while
optimizing the integrated cost, schedule, and effort required to execute the program.
Programs and program management are of great importance, specifically for the govern-
ment and large and multinational corporations.
Programs often last as long as the organization lasts, even though specific projects
within a program are of limited duration. For example, the U.S. Air Force has an engine
procurement program. As long as the Air Force intends to fly aircraft, it will need to
acquire engines. Within the engine program are many individual projects. Some of
these projects are for basic research, some are for development of engines, some are for
purchasing engines, and a few others are for maintaining and improving the perfor-
mance of engines in use. Each project has a project manager, and the entire program
has a program manager. While the project managers are primarily concerned with the
trade-offs associated with cost, schedule, scope, and quality on their individual projects,
the program manager is concerned with making trade-offs between projects for the max-
imum benefit of the entire program. To avoid confusion, programs deal with a specific
group of related projects, while a portfolio deals with all of an organization s projects.
A portfolio can include multiple programs as well as multiple projects.
A program may include components such as portfolios, projects, and subprograms. It
is important to understand comparative analysis of projects, programs, and portfolios.
While the leadership group of a company may make portfolio decisions and delegate
the program management decisions to a program manager, both portfolios and programs
are managed at a level above the typical project manager. For practical purposes, project
managers should attempt to understand how both portfolio and program decisions
impact their projects and then spend most of their efforts focused on their project.
Some of the unique responsibilities of a program manager are leading program activi-
ties in a coordinated way, communicating with internal and external stakeholders, resolv-
ing cost, scope, schedule, risk, and quality across all projects with shared governance, and
managing external and internal factors such as culture and socioeconomic issues. See
Exhibit 2.6 for a comparison of projects, programs and portfolios.
2-2c Projects and Subprojects
Just as a program is made up of multiple projects, a large project may be composed of
multiple subprojects. A subproject is a part of a larger project organized as a project
Chapter 2 Project Selection and Prioritization 39
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vaibhav.aribenchi
Highlight

itself to make it easier to plan and manage. If the project is quite large, individuals may
be assigned as subproject managers and asked to manage their subproject as a project.
Some of those subproject managers may even work for another company. The project
manager needs to coordinate the various subprojects and make decisions that are best
for the overall project. Sometimes this may require that a particular subproject be sacri-
ficed for the greater good of the project. The relationships among a portfolio, programs,
projects, and subprojects are illustrated in Exhibit 2.7.
EXHIBIT 2.6
COMPARISON OF PROJECTS, PROGRAMS, AND PORTFOLIOS
PROJECTS PROGRAMS PORTFOLIOS
Scope Defined scope
Progressive elaboration
Larger scope
Significant benefits
Organizational scope
Changes with strategic goals
Change Change is norm
Change management
Internal and external
changes
Changes due to external and
internal environment
Plan Detailed plans High-level program plan
Detailed component plan
Create processes
Maintain processes
Monitor Project deliverables Progress of program
components
Strategic changes, risk
Resource allocation
Success Scope quality, cost, time
Customer satisfaction
Needs and benefits
of the program
Investment performance
Benefit realization
Manage Project deliverables
Project team
Program staff and PM
Vision and leadership
Portfolio staff
Adopted from PMI, Standard for Program Management, 3rd ed. (2013): p. 8.
EXHIBIT 2.7
PORTFOLIO, PROGRAM, PROJECT, AND SUBPROJECT RELATIONSHIPS
Company Portfolio
Program Alpha Program Beta
Project
A1
Project
A2
Project 3
Subproject 3.1
Subproject 3.2
40 Part 1 Organizing Projects
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Because projects are frequently performed in a fast-paced environment, it is helpful if
they can be guided by organizational priorities.
The first step is to carefully align potential projects with the parent organization s goals.
While many companies are motivated to align projects with organizational goals for these
benefits, an additional reason for companies that sell to the government is that the Federal
CIO Roadmap states, CIOs are responsible for maintaining and facilitating the imple-
mentation of a sound and integrated IT architecture; monitoring performance of IT pro-
grams; using metrics to evaluate the performance of those programs; and modifying or
terminating programs or projects. 9 This was introduced in the Sarbanes-Oxley require-
ments. All publicly traded companies must now follow certain guidelines that require
some sort of financial decision model for selecting projects for execution.
When managers assess the organization s ability to perform projects and then iden-
tify, select, prioritize, resource, and govern a portfolio of projects and other work that
they believe will help the organization achieve its strategic goals, they are performing
portfolio management. While a team of senior executives may conduct many of the port-
folio management activities, project managers should understand how their specific pro-
jects are aligned with the organization s objectives since they will need to either make or
provide input on many decisions.
When organizations consider their entire portfolio of work, they sometimes envision pro-
jects as means of developing knowledge that can be capitalized upon in ongoing work pro-
cesses to provide profit, as shown in Exhibit 2.8. Furthermore, new knowledge encourages
organizations to be creative and develop new project ideas and knowledge-building projects.
In times when the economy is poor, many companies struggle to get enough business. In
such an environment, some firms might accept almost any work they can get. Even during
bleak economic times, however, one should be careful how internal projects are selected,
since selecting one project limits resources (money, people, etc.) available to other projects.
EXHIBIT 2.8
PORTFOLIO OF PROJECTS AND OPERATIONAL WORK PROCESSES
Little Kn Reliable Kn
Knowledge ContinuumKnowledge Continuum
Examples:
Basic R&D;
Customer Research;
M&A Due Diligence
Examples:
Competitive Strategy;
Product Development;
Market Entry;
Channel Strategy
Inbound Logistics
Operations
Outbound Logistics
Sales and Marketing
Customer Service
Manufacturing
Procurement
Human Resources
Both projects and processes are intertwined to create sustainable value.
Source: Chinta, Ravi, and Timothy J. Kloppenborg, Projects and Processes for Sustainable Organizational Growth,
SAM Advanced Management Journal 75 (3) (Spring 2010): 24.
Chapter 2 Project Selection and Prioritization 41
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During good or bad economic times, people should take the same care and prudence with
external projects and ensure that they are consistent with the organization s goals.
2-2d Assessing an Organization s Ability to Perform Projects
Assessing an organization s strengths and weaknesses is an essential part of aligning projects
with the organization. If an organization does not have the right capabilities, a project that
may otherwise support organizational goals may be too difficult to successfully complete.
Some questions to ask regarding a firm s ability to support projects are as follows:
Do we have the right skills, capabilities, technical knowledge, and resources that are
required for potential projects? If we do not have them, can we acquire them easily?
Do we have a teamwork attitude, free and open communication, creativity, and
empowered decision making?
Do we have a clearly defined project management process?
Do our associates have the right attitudes, skills, and competencies to use the project
management process?
Are our leaders at each level willing to take appropriate personal risk?
Does senior leadership establish a strong leadership foundation?
Do individuals and teams exhibit leadership at their respective levels?
Do we monitor and understand our external environment?
2-2e Identifying Potential Projects
The second part of aligning projects with the firm s goals is to identify potential projects. In
general, some potential projects can be to capitalize upon a strategic opportunity or techno-
logical advance. Others may serve a social need, an environmental consideration, a customer
request, or a legal requirement. Ideally, this is accomplished in a systematic manner not
just by chance. Some opportunities will present themselves to the organization. Other good
opportunities will need to be discovered. All divisions of the organization should be involved.
This means people at all levels, from frontline workers to senior executives and people from
all functional areas need to help identify potential projects. For example, salespeople can
uncover many opportunities by maintaining open discussions with existing and potential
customers, and operations staff may identify potential productivity-enhancing opportunities
as projects. Everyone in the firm should be aware of industry trends. Many industries have
trade journals such as Elevator World or Aviation Week and Space Technology that can be
reviewed regularly for potential project ideas. One reasonable goal is to identify approxi-
mately twice as many potential projects as the organization has time and resources to per-
form. The reason is simple: under close examination, some potential projects may not be a
good fit. Any company that accepts practically every potential project will probably waste
some of its resources on projects that do not support its organizational goals.
Once potential projects are identified, the next step is to develop a brief description of
each. The leadership team that will select and prioritize projects needs to understand the
nature of the projects they are considering. While the level of documentation different
firms require varies greatly, a bare minimum can be called the elevator pitch. This is
when a person meets another waiting for an elevator and asks, I hear you are on XYZ
Project. What is it all about? The responder may have only a brief time to give a reply
before the elevator arrives and must be prepared to answer quickly with simple state-
ments about the project work and why it is important to the organization.
The work is often summarized in a brief statement of work, which is a narrative
description of products, services, or results to be supplied. 10 Why the project is important
42 Part 1 Organizing Projects
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is often summarized as a business case, which is the benefits of a selected component
used as a basis for the authorization of further project management activities. 11
The business case generally includes both why the project is needed and, if the firm
uses financial justification as part of project selection, an estimate of costs and benefits.
Armed with this elevator pitch, the series of processes that collectively are used to select,
prioritize, and initiate projects begins. Selecting and prioritizing are covered next, and
chartering is covered in Chapter 3.
METHODS FOR SELECTING PROJECTS The people in charge of selecting projects
need to ensure overall organizational priorities are understood, agreed upon, and com-
municated. Once this common understanding is in place, it is much easier to prioritize
potential projects. The degree of formality used in selecting projects varies widely. In a
smaller organization, it can be straightforward. The prioritization should consider criteria
derived from project management, finance, and strategic aspects and should include ask-
ing questions such as these:
What value does each potential project bring to the organization?
Are the demands of performing each project understood?
Are the resources needed to perform the project available?
Is it feasible to complete the project within the expected time and at the projected
cost while managing associated risks?
Is the project financially beneficial and compatible with other investment decisions?
Is there enthusiastic support both from external customers and from one or more
internal champions?
Which projects will best help the organization achieve its strategic goals?
There are several different methods of systematically selecting projects. The methods
include both financial and scoring models. The primary reason for including financial
analysis either to make the project selection decisions directly or to at least assist in
the decision making is that, from management s perspective, projects are investments.
Therefore, proper selection should yield a portfolio of projects that collectively contribute
to organizational success.
Three different approaches are commonly used to ensure both financial and nonfi-
nancial factors are considered when selecting projects. First, some organizations use
financial analysis as the primary means of determining which projects are selected, and
management merely tempers this with informal inclusion of nonfinancial factors. Sec-
ond, some organizations use financial models as screening devices to qualify projects or
even just to offer perspective; qualified projects then go through a selection process using
a scoring model. Third, at still other organizations, financial justification is one factor
used in a multifactor scoring model. The common thread in all three of these approaches
is that both financial and nonfinancial factors are considered when selecting projects. Let
us consider both financial and scoring models. Financial models will be covered in con-
cept, but the calculations will not be shown since they are explained in depth in most
required finance courses. Scoring models will be covered in both concept and calculation
since many students might not have them in another course.
2-2f Using a Cost-Benefit Analysis Model to Select Projects
Cost-benefit analysis is a financial analysis tool used to determine the benefits provided
by a project against its costs. 12 These models compare expected project costs to expected
project benefits. Several models can be used in making project selection decisions.
Chapter 2 Project Selection and Prioritization 43
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NET PRESENT VALUE (NPV) Net present value (NPV) is the most widely accepted
model and will be covered first. When using net present value, the analyst first discounts
the expected future value of both the project costs and benefits, recognizing that a dollar
in the future is worth less than a dollar today. Then the analyst subtracts the stream of
discounted project costs from the stream of discounted project benefits. The result is the
net present value of the potential project. If the net present value is positive, then the
organization can expect to make money from the project. Higher net present values pre-
dict higher profits. See the summary in Exhibit 2.9.
BENEFIT-COST RATIO (BCR) A second financial model sometimes used is benefit-
cost ratio (BCR). The ratio is obtained by dividing the cash flow by the initial cash out-
lay. A ratio above 1.0 means the project expects to make a profit, and a higher ratio than
1.0 is better. The cash flow can be determined for the life of the project using net present
or discounted value principles.
INTERNAL RATE OF RETURN (IRR) The third financial model is internal rate of
return (IRR). In this model, the analyst calculates the percentage return expected on the
project investment. A ratio above the current cost of capital is considered positive, and a
higher expected return is more favorable.
PAYBACK PERIOD (PP) The fourth financial model that is sometimes used is the
payback period (PP). In this analysis, a person calculates how many years would be
required to pay back or recover the initial project investment. The organization would
normally have a stated period that projects should be paid back within, and shorter pay-
back periods are more desirable.
ADVANTAGES AND DISADVANTAGES OF EACH METHOD Financial models are
useful in ensuring that selected projects make sense from both cost and return-
on-investment perspectives. These models have weaknesses that need to be understood
before they are used. For example, payback period models do not consider the amount of
profit that may be generated after the costs are paid. Thus, two projects with a similar pay-
back period could look equal, but if one has substantially higher revenue after the payback
period, it would clearly be superior. BCR would not be acceptable unless all costs and bene-
fits were calculated in present dollars (in which case it is similar to NPV except it is a ratio
of benefits to cost instead of the difference between revenue and cost). However, there
EXHIBIT 2.9
FINANCIAL MODELS FOR PROJECT SELECTION
NET PRESENT
VALUE (NPV)
BENEFIT-COST
RATIO (BCR)
INTERNAL RATE
OF RETURN (IRR)
PAYBACK PERIOD
(PP)
Calculation PV revenue PV cost Cash flow/Project
investment
Percentage return on
project investment
Project costs/Annual
cash flows
Neutral Result NPV $0 Ratio 1 0 IRR Cost of capital Payback period
Accepted length
If used to screen projects or
to select projects outright
NPV > Acceptable
amount
Ratio > Acceptable
amount
IRR > Acceptable
amount
Payback period < Acceptable length If used to compare projects Higher NPV better Higher ratio better Higher IRR better Shorter payback period better 44 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 are benefits and costs that are intangible and cannot be determined in financial terms. IRR and BCRs have problems if used for choosing between mutually exclusive projects because they can favor smaller projects that create less total value for the firm but have high percentage returns. For example, a huge project with a medium rate of return would create a lot of value for a firm but might not be chosen over a smaller project with a higher return if only one can be chosen. Additionally, it is sometimes quite dif- ficult to calculate an IRR if a project has nonconventional cash flows. For the most part, the finance discipline recommends using net present value. The other measures can be calculated to provide perspective on whether a project meets a minimum financial return threshold or to communicate with people who might not understand NPV. However, none of the financial models ensure alignment with an organization s stra- tegic goals. Therefore, financial analysis, while very useful, is normally not enough. 2-2g Using a Scoring Model to Select Projects In addition to ensuring that selected projects make sense financially, other criteria often need to be considered. A tool called a scoring model helps to select and prioritize poten- tial projects. It is useful whenever there are multiple projects and several criteria to be considered. A few organizations use more complex models such as analytical hierarchy process (AHP) to compare projects, but since many more organizations keep things sim- ple with variations of scoring models, that is what we will cover. IDENTIFYING POTENTIAL CRITERIA These criteria should include how well each potential project fits with the organization s strategic planning. The criteria may also include such items as risk, timing, resources needed, and so on. A normal practice is for the company s leadership team to jointly determine what criteria will be used to select projects. A list of questions executives may use to develop their list of criteria is shown in Exhibit 2.10. DETERMINING MANDATORY CRITERIA Once the leadership team agrees on a list of criteria that are important, the next step is to determine whether any of the criteria are man- datory. That is, are there any situations that dictate a project must be chosen regardless of any other considerations? Examples of this include government mandates and clear safety or EXHIBIT 2.10 EXAMPLES OF PROJECT SELECTION CRITERIA How well does this project fit with at least one organizational objective? How many customers are there for the expected results? How competitively can the company price the project results? What unique advantages will this project provide? Does the company have the resources needed? What is the probability of success? Are the data needed to perform the project available or easily collected? Do the key stakeholders agree that the project is needed? What is the expected return on investment? How sustainable will the project results be? How does this project promote (or hinder) our corporate social responsibility? What risks are there if we do not perform this project? Chapter 2 Project Selection and Prioritization 45 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 security situations. This list of must-do projects should be kept as small as possible since these projects automatically get selected and can crowd out other worthwhile projects. WEIGHTING CRITERIA Next, the leadership team determines the relative importance or weight of each decision criteria. While more complex methods of determining criteria weights and project evaluations have been used in the past, many firms now use the sim- ple methods described here for determining criteria weights. See Exhibit 2.11 for an example of project evaluations. First, executives determine which criterion is most important and give that a weight of 10. Then they ask how important in comparison each of the other criteria is. For example, if the executives in a consumer products com- pany thought development of new products was most important, it would be assigned a weight of 10. If the customer relations factor was deemed almost as important as new product development, maybe it would be assigned 8. If the factors of supplier relations and probability of project success were each deemed to be half as important as new product development, each would be assigned 5. Perhaps other criteria such as cost reduction, safely, and so forth were also considered but determined to not be as impor- tant. The resulting criteria with weights are shown in Exhibit 2.11 in the top row of the selection and prioritization matrix. Most organizations will decide to use about three to five criteria. Lesser-rated criteria can be used as tiebreakers if needed. EVALUATING PROJECTS BASED ON CRITERIA Now the leadership team evaluates each project on each criterion. The most efficient and accurate method is to concentrate on one criterion at a time, going down each column in turn. An easy method for this is to rate each project on that specific criterion, with scores ranging from 1 (potential proj- ect has very little or even negative impact on this criterion) to 5 (project has excellent impact on this criterion). The upper-left portion of each cell in the matrix can display the rating, representing how well that project satisfies that criterion. Once a project has been rated on a specific criterion, that rating should be multiplied by the weight assigned to that criterion and displayed as the weighted score in the main body of each cell. The total for each project should be added across the row. The highest- scoring projects would ordinarily be selected. If several projects have close scores (virtual ties), other criteria or discussion can be used to break the tie. For example, in Exhibit 2.12, there is a virtual tie between Projects A and B. EXHIBIT 2.11 PROJECT SELECTION AND PRIORITIZATION MATRIX Project A Project B Project C Project D 55810 46 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 SENSITIVITY ANALYSES Scoring models allow leadership teams to perform sensitiv- ity analyses that is, to examine what would happen to the decision if factors affecting it were to change. Selection criteria may be added or altered. Participants may decide that some criteria are more important than others and weight them accordingly. Missing cri- teria or new alternatives can be added and the decision revisited. For example, if the executive team evaluating the projects in Exhibit 2.12 had a bad experience with an unsuccessful project and decided to reevaluate their decisions with success probability now weighted a 9 for very important, the new project selection and priority matrix would be calculated as shown in Exhibit 2.14. Decision makers can ensure that they use very solid ratings for each potential project. For example, if one criterion was the number of customers, the marketing department could interview some potential customers to gauge their level of interest. A company might want to select several projects. If so, the scores from the selection matrix could serve as one method of prioritizing the projects. EXHIBIT 2.12 COMPLETED PROJECT SELECTION AND PRIORITIZATION MATRIX Project A Project B Project C Project D 55810 10252450 25151650 15154010 1053220 5 5 1 2 3 2 5 4 5 3 3 1 2 5 3 2 109 106 80 67 EXHIBIT 2.13 REVISED PROJECT SELECTION AND PRIORITIZATION MATRIX Project B Project A Project C Project D 95810 45151650 18252450 27154010 1853220 5 5 1 2 2 3 5 4 3 5 3 1 5 2 3 2 126 117 92 75 Source: Chris Bridges. Chapter 2 Project Selection and Prioritization 47 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Selection of projects based on certain criteria is a decision-making process that varies geographically as priorities and thinking styles tend to be different. Due to cultural differences, learning, and education principles, people think and approach a problem differently; therefore, they also adopt different decision-making styles. This aspect assumes importance due to increased diversity in workplaces that provides an opportunity to work with people from different cultures and countries. Due to these factors, someone might rely more on inductive, deductive, or a combination of these approaches in making decisions. This diversity would influence how people look at a scor- ing model or any other decision-making tool in selecting projects and making project port- folio management decisions. These issues are discussed further in Chapter 15. 2-2h Prioritizing Projects Once all projects have been selected, they will need to be prioritized that is, the deci- sion makers will need to determine which ones will get assigned resources and be sched- uled to begin first. If a company selects several projects for a year (or even for a fiscal quarter), it cannot expect to start all of them at the same time. The scoring models are useful in providing input into the starting order of projects. Most leadership teams will consider the weighted scores of each project as a starting point in assigning resources to projects and determining their start dates. The leadership team members, however, also generally discuss other issues, such as: The urgency of each project The cost of delaying the expected benefits from various projects Practical details concerning the timing Opportunity costs associated with the project For example, an important process improvement project may be far less disruptive to perform when the factory is shut down for routine maintenance. One more discus- sion frequently occurs in the prioritizing process if there is a conflict between resource needs for two projects, which one gets the needed resources first? Often, this is left to the project sponsors to iron out; especially for important projects, it may be formally decided by the leadership team. In that way, the probability of the critical project being held up by a misunderstanding is greatly decreased. Exhibit 2.14 shows how the Alternative Breaks (AB) planning committee at a university ranked spring break projects. This exhibit shows four of the twenty-six projects that were selected for trips. This book will include multiple examples of the AB project to illustrate how various project-planning tools work together. Each trip is a small or subproject, while the combination of all twenty-six trips forms the overall project. 2-2i Resourcing Projects Once all projects have been prioritized, it is time to assign resources to each. Resources can include key personnel such as sponsors, project managers, core team members, and subject matter experts. Resources can also include space, materials, equipment that may be in short supply, and the funds necessary to acquire these resources. The easiest way is to use a resource assignment matrix and begin by assigning resources to the highest-priority projects. Once an individual resource is no longer available, the organization is limited in the number of projects that it can take on during a particular time. Assigning resources like this requires a prioritized project list such as shown in Exhibit 2.13, a list of resources and how much of each is available, and an estimate of how much of each key resource each project will need. For simplicity s sake, organizations often plan for a fiscal quarter. Exhibit 2.15 shows the same four projects and choices of project 48 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 managers, team members, and the budget for each. Note that while there is enough project manager time to start all four projects, there is neither enough team member time nor enough cash. Therefore, only three projects can be started. 2-3 Securing Projects The discussion above pertains to projects that are internal to an organization. This section deals with projects a company (called the client) wants performed, but for which it may hire external resources (called contractors) to execute significant parts or all of the work. External projects can be viewed either from the perspective of the client company that wants the project to be executed or from the perspective of the contractor company that wants to perform the EXHIBIT 2.14 ALTERNATIVE BREAKS PROJECT SELECTION AND PRIORITIZATION MATRIX PROJECT/SELECTION CRITERIA ACTIVE SERVICE OPPORTUNITY ISSUE ITSELF ORGANIZATION TO WORK WITH COST 9 10 6 5 Total New York Vegan Farm 5 45 4 40 3 18 4 20 123 West Virginia Sustainability 4 36 3 30 4 24 5 25 115 Chicago Halfway House 2 18 4 40 4 24 4 20 102 El Salvador Cultural Immersion 1 9 5 50 5 30 1 5 94 EXHIBIT 2.15 RESOURCE ASSIGNMENT MATRIX PROJECT/RESOURCE PM/DEJI PM/BUD PM/CORY TEAM/ BRADLEY TEAM/ RAJEEV TEAM/ LARRY MONEY Maximum Availability 200 400 300 300 150 150 $30 million Project List Project B: PM 240, Team 200, $5M 240 200 $5M Project A: PM 200, Team 150, $10M 200 150 $10M Project C: PM 300, Team 150, $14M 300 150 $14M Project D: PM 150, Team 180, $4M Remaining Availability 0 160 0 100 0 0 $1M Chapter 2 Project Selection and Prioritization 49 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 work. Client companies may first put prospective external projects through a selection and prioritization process as described above and, if selected, then decide whether to perform the work internally (make) or hire the project to be performed by others (buy). If the decision is to buy, then the client company needs to plan and conduct the procurement. Contractor companies need to identify potential project opportunities, determine which they will pursue, submit proposals, and be prepared to either bid or negotiate to secure the work. We consider the client company s perspective in Chapter 12, Project Supply Chain Management. We consider the contractor s perspective next. 2-3a Identify Potential Project Opportunities Contractors seeking external projects to perform should pursue this in a fashion similar to that of any company considering internal projects, as described earlier in this chapter in the portfolio alignment section on identifying potential projects. Additionally, since they need to look for projects externally, contractor companies should have representatives at trade shows, professional conferences, and anywhere information on the intentions of potential customers and competitors may surface. Contractor companies should also actively practice customer relationship management by establishing and nurturing per- sonal contacts at various levels and functions. Contractor companies can also practice cus- tomer relationship management by linking information systems to the extent practical so as to identify any useful information concerning potential future projects and improve management of current projects. 2-3b Determine Which Opportunities to Pursue Just as all companies should decide which internal projects to select, as previously described in the methods for selecting projects, most contractor companies are best served by targeting the projects they wish to pursue. Some companies have a policy that they will bid on every potential project, knowing that if they do not bid, they will not be awarded the project. More companies find that if they target their opportunities, their hit rate or probability of securing the work on any given proposal increases. It takes time and resources to put together a good proposal, so it makes sense to increase the acceptance rate by developing a bid/no-bid decision strategy. Each company has strengths and weaknesses compared to its competitors. Hence, a quick SWOT analysis could be used to decide whether to pursue a potential project, N ap pi ne ss /p ix ab ay .c om 50 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 just as a more involved version of SWOT analysis was described earlier and depicted in Exhibit 2.2. Decision makers can also ask how well a potential project will help achieve their objectives. If they determine a project will help achieve their objectives, the next considerations are the cost to pursue the work and the probability of successfully secur- ing the project given the likely competition. A company frequently considers risks both of pursuing and not pursuing a potential project13 Finally, does the company have the capability to perform the work if it is awarded? 2-3c Prepare and Submit a Project Proposal When a firm prepares to submit a proposal, it is really conducting a small project with the primary deliverable of the project being a compelling and complete proposal. The contrac- tor should understand the project s source selection criteria, the basic minimum criteria the sellers have to be fulfilled to get shortlisted. 14 While criteria will vary extensively from one project to another, generally a client will likely want to be convinced that the potential contractor is technically, managerially, financially, and operationally competent. Successful project managers try hard to convince potential clients that they are capable on all four dimensions. A short list of these factors is shown in Exhibit 2.16. 2-3d Negotiate to Secure the Project Negotiation is an approach to redefine an old relationship that is not working effectively or to establish a new relationship. Negotiations should aim at a win-win solution, and the outcome must benefit both the parties involved in negotiations. Once all proposals have been delivered and evaluated, the client company may elect to either award the project or enter into negotiations with one or more potential contrac- tors. On more routine projects, the contract may be awarded at this point. Further clar- ifications and negotiations may follow for complex projects. A client company and a contractor company may negotiate the amount of money to be paid for a project. They may also negotiate the contractual terms, schedule, specific personnel to be assigned to work on the contract, quality standards, reporting mechan- isms, and various other items. A project manager may need to make arrangements with potential suppliers to secure the products and services needed to perform the project. All these considerations will be covered in subsequent chapters. Successful project managers understand that they need to prepare well for negotiations. This starts with a clear understanding of what is most important to their management. Often, it includes fact finding with the client company to understand its needs and abili- ties. Armed with an understanding of both perspectives, a project manager attempts to find a solution that allows the organization to secure the project work with enough profit potential and with the start of a good working relationship with the client. In the end, the client company will select the contractor(s) and award the contract(s). EXHIBIT 2.16 TYPICAL SOURCE SELECTION CRITERIA TECHNICAL MANAGEMENT FINANCIAL OPERATIONAL Technical experience Management experience Financial capacity Production capacity Needs understanding Project charter Life cycle cost Business size and type Technical approach Planning and scheduling Cost basis and assumptions Past performance Risk mitigation Project control Warranties References Chapter 2 Project Selection and Prioritization 51 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 PMP/CAPM Study Ideas You won t see a whole lot of questions on either of these tests pertaining to portfolio or pro- gram management, since these happen at an executive level, beyond the purview of individual projects or project managers. At the same time, it is imperative that you understand the inter- relationship of portfolio and project management, as well as how they relate to an organiza- tion s mission: the mission leads to strategic objectives, and projects are the primary vehicle through which these objectives are achieved. As with other chapters, make sure you are familiar with the PMBOK terms especially statement of work and business case and be prepared to put them into context with real projects. You will ultimately need to know how to calculate net present value. Finally, be familiar with the common causes of project failure and how to prevent them. Summary Project selection does not occur in isolation. Ideally, it begins with the organization s strategic planning. This planning begins with a strategic analysis of the organi- zation s internal strengths and weaknesses as well as the external threats and opportunities it faces. The organization should then develop its guiding principles such as mission and vision statements. Most companies will have an annual planning session in which strategic objectives are developed. Larger organizations will con- tinue this effort with one or more levels of planning in which the overall objectives are flowed down to deter- mine objectives that are appropriate for each organiza- tional level. Once the strategic planning is accomplished, the organization s leadership team engages in portfolio management. The first part is an open and honest assessment of the organization s ability to perform projects. The decision makers need to understand how many resources are available, the organization s overall capabilities, and the capabilities of the indivi- duals who will be assigned to projects. An ongoing portfolio management activity is for everyone in the firm to identify possible opportunities that they feel might help the organization achieve its goals. Each potential project should be described at least by stat- ing in a sentence or two what work is involved and how it would help the organization achieve one or more of its goals. Once potential projects are identified and briefly described with statements of work and business cases, they should be put through a process to determine which will be selected and what their relative priorities are. Both financial and scoring models are frequently used to evalu- ate potential projects. Net present value is the preferred financial method, although others are sometimes used. Financial analysis tells the leadership team how much each potential project is worth from a benefits- versus-cost comparison, but it does not tell how each potential project may help to achieve the organization s goals. Scoring models can incorporate various goals and should also be used. Once a project list is selected, the projects need to be prioritized so some can start right away and others can start later. Contractor companies need to be constantly on the lookout for potential project opportunities. Once potential projects are identified, companies need to decide which ones they pursue. Just as for internal pro- jects, some external projects will be better at helping an organization reach its goals because they are a better fit. The contractor needs to prepare and submit proposals for desired projects and be prepared to follow up and often negotiate in order to secure them. Key Terms Consistent with PMI Standards and Guides portfolio management, 38 portfolio, 38 program, 38 vision, 38 mission statement, 38 strategic objectives, 38 program management, 38 cost benefit analysis, 38 subproject, 39 statement of work, 42 business case, 42 source selection criteria, 50 52 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Chapter Review Questions 1. List and describe each step in the strategic plan- ning process. 2. Name at least four things that a mission state- ment should include. 3. What does the strategic analysis acronym SWOT stand for? 4. What is the most widely accepted financial model for selecting projects? 5. What are some advantages and disadvantages of using a financial model for selecting projects? 6. What are some advantages and disadvantages of using a scoring model for selecting projects? 7. What are some common reasons for project failure? 8. Who should be involved in identifying potential projects? 9. If there is a conflict between resource needs for two projects, who decides which one gets the needed resources first? 10. In a project scoring model, why is each decision criteria given a weight? 11. What purpose do sensitivity analyses serve in using scoring models to choose projects? 12. If several projects have close scores as the result of a scoring model, what can be done to break the vir- tual tie? 13. Why might a contractor company perform a SWOT analysis prior to bidding on a potential project? 14. Why is it important for a contractor to under- stand the source selection criteria a client uses to decide to whom they will award a project? 15. Name five things that may be negotiated between a client company and a contractor company. Discussion Questions 1. How might the internal and external parts of a SWOT analysis affect one another? 2. Describe the interaction between vision and mission statements. 3. How is a company s portfolio similar to and different from a financial portfolio? 4. What is the best way for an organization to prioritize among selected projects? Does it vary among organizations? 5. Why is aligning potential projects with the parent organization s goals the first step in avoiding project failure? 6. Why is it a good practice for organizations to identify twice as many potential projects as they plan to implement? 7. Suppose you are purchasing a new car, and you decide to use a scoring model to decide among four options. What would be your top three criteria, and what would be each criterion s relative weight? 8. Under what circumstances should a selected project take precedence over other selected projects? 9. If you are a contractor looking for project work, why might you decide not to pursue a particular project opportunity? 10. What are the four main areas of competency a client company is looking for in a project man- ager? How can you best demonstrate these com- petencies to a potential client? PMBOK ® Guide Questions 1. A collection of projects, programs, and opera- tions managed as a group to achieve strategic objectives is called a: a. process b. portfolio c. subprogram d. life cycle 2. Projects may be undertaken as a result of any of the following strategic reasons except: a. social need b. market demand c. need to keep workers busy during slow times d. environmental considerations 3. A narrative description of products, services, or results to be delivered by the project is a/an: a. request for information b. business case c. project statement of work d. elevator pitch 4. All of the following statements are true except: a. A portfolio may contain multiple programs and projects. Chapter 2 Project Selection and Prioritization 53 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 b. A project manager has the discretion to make trade-offs in regard to which programs to pursue. c. A program manager has the discretion to make trade-offs in regard to which projects to pursue. d. Projects have a finite timeline, while programs may exist as long as the parent organization does. 5. Which of the following is a financial analysis tool that an organization may use to determine the cost-value of potential projects? a. Payback period (PP) b. Internal rate of return (IRR) c. Net present value (NPV) d. All of the above 6. All projects should be aligned with their organi- zation s strategic plan, which includes the organi- zation s vision, goals, and objectives. Which of these describes an organization s vision? a. Conveys a larger sense of organizational pur- pose, and is both inspiring and guiding b. Describes short- and long-term results along with measures to determine if they have been achieved c. Includes the organization s core purpose, core values, beliefs, culture, primary business, and primary customers d. Is SMART: specific, measurable, achievable, results-based, and time-specific 7. The best describe(s) why a project is being undertaken. a. statement of work b. business case c. subprojects d. source selection criteria 8. The document that includes the necessary information to determine whether a project is worth the required investment, and is used for decision making by upper management, is called the: a. project scope statement b. project charter c. business case d. case study 9. An organization s vision often includes reference to its social, environmental, and economic health, collectively referred to as the: a. triple bottom line b. business case c. statement of work (SOW) d. net present value (NPV) 10. A business case typically contains information regarding the business need and a financial anal- ysis. Which model divides the cash flow by the initial cash outlay? a. Benefit-cost ratio (BCR) b. Internal rate of return (IRR) c. Net present value (NPV) d. Payback period (PP) Exercises 1. Complete the following scoring model. Show all your work. Tell which project you would pick first, second, third, and last. How confident are you with each choice? If you lack confidence regarding any of your choices, what would you prefer to do about it? 2. Complete the following scoring model. Show all your work. Tell which project you would pick first, second, third, and last. How confident are you with each choice? If you lack confidence regarding any of your choices, what would you prefer to do about it? Project A Project B Project C Project D 4610 4 3 2 1 3 2 4 3 5 3 3 4 Project A Project B Project C Project D 3710 1 3 5 2 3 5 4 3 4 3 3 1 54 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3. Pretend you are on the leadership team for a phar- maceutical company that is in a difficult financial situation due to patents that have expired on two of your most profitable drugs. Brainstorm a list of criteria by which you would select and prioritize projects. Weight the criteria. 4. Pretend you are on the leadership team of a manufacturing company that is currently chal- lenged by low-cost competition. Brainstorm a list of criteria by which you would select and pri- oritize projects. Weight the criteria. I N T E G R A T E D E X A M P L E P R O J E C T S SUBURBAN HOMES CONSTRUCTION PROJECT Suburban Homes, like any other real estate company, has many strategic directions to pursue to expand the company operation and increase revenue and profits. To explore and pursue various investment opportunities that would eventually translate into projects, the company developed strategic directions to suc- cessfully invest in real estate. It identified six options for portfolio project management. They are investments in purchasing land for future development, communities for single-family homes, multifamily properties, small-scale apartment buildings, large- scale apartment complexes, and commercial investments. 1. Purchasing land in areas that have potential for future growth makes sense, as the cost of land tends to be sub- stantially cheaper 10 20 years before it is turned into a developed suburban area. At an appropriate opportunity, the land can be improved to add value, or it can be leased or rented to create cash flow. Further, the land can be divided and parts of it can be sold for a profit. However, this option requires a vision for future growth and devel- opment and consequently, risks are also associated with this strategic direction. 2. Building single-family homes in suburban areas is one of the best and most popular strategic directions for growth for companies like Suburban Homes. Most of the clients who are interested in a quality life and view their home as an investment prefer buying single-family homes. Clients realize that it is easy to rent, sell, and finance. 3. Small multifamily properties usually consist of two to four units. They also present similar advantages that are asso- ciated with a single-family home such as easy financing and being a wise investment option for clients while pro- viding a good residence for their family. 4. Small apartment buildings usually consist of 5 to 50 units for clients to reside in. They are more popular among those who prefer urban areas and a busy social life. Clients are usually unmarried or married with no children. These properties can be more difficult to finance because they rely on commercial lending standards. For this invest- ment option, Suburban Homes must look for investment opportunities closer to densely populated areas, and the investor must provide parking areas. 5. Large apartment complexes require that you include pools, a gym, tennis courts, and parking facilities, in addition to other attractions that lure people to choose the complex as a residence. Such a complex requires full-time staff to manage the property, provide safety and security, and pro- vide good customer service. These properties can be very expensive to purchase. However, this investment option provides steady revenue flow. 6. Commercial investment, in its truest sense, is an invest- ment for growth and diversity in a portfolio. The aim of this investment is to lease the property for business. Size, style, and purpose also vary. Clients could range from small business owners to large malls and mega office complexes. This investment option offers a consis- tent cash flow. However, occupancy would depend largely on the local economy and could prove to be risky. Further, investments are of higher magnitude and Suburban Homes is seriously considering this option after establish- ing steady growth in the residential market and improving their financial stability and growth. Given these six options, Suburban Homes has approached you to develop a project selection model to maintain a balanced portfolio. Reference https://www.biggerpockets.com/real-estate-investing/strate- gies-niches Chapter 2 Project Selection and Prioritization 55 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Semester Project Instructions Your instructor may bring example projects to class and facilitate the assignment of students to the vari- ous project teams. Alternatively, your instructor may ask you to identify potential projects. Therefore, you may or may not be involved in project selection. If your instructor has each student bring in a project idea, you will first need to create your elevator pitch to describe tersely what work is involved in your project and why it is important. Then you and a small team will likely need to select one of the potential projects using a scoring model. Unlike the criteria for selecting among projects in a typical organization, for your class, you may use criteria that will help you learn. You may want to include size and complexity criteria so the project is involved enough for you to benefit by using many of the techniques in this book, but small enough so you can do the work in a reasonable amount of time. Finally, you may need to identify resources to accom- plish the project using a resource matrix. Regardless of whether your project is student or fac- ulty generated, one of the first things you should do when assigned to a project is to learn about the company or other organization that wants the project to be com- pleted. Why did they select this project? Is it a must- do project or did it get chosen over other competing projects? By understanding what makes the project so important, you will make better decisions and will be more motivated through the term. If your project is a must-do project, explain why. If it is not a must-do project, explain how it was selected. Explain where it fits in priority with other work of the organization. CASA DE PAZ DEVELOPMENT PROJECT Casa de Paz is an ambitious project with several dimensions to it. There is a shelter that provides six-month housing for families, along with professional services to support a process of healing and transformation. There is a support group for women that serves residents and nonresidents alike. The early meetings for Casa de Paz include seeking volun- teers to serve on the board and the three main working groups. Then a facilitated meeting is being held to determine the minimal viable product (MVP) to build. This is an open and operating facility. Some of the features that are needed include a director, staff, a building, remodeling the building, funding, a website, programming, and volunteers. Organiza- tional responsibilities also must be defined. An important question is: What can Casa de Paz do quickly without waiting for other things to happen? What are some of the things they need to do concurrently? How many projects can each of the groups (the board and the three working groups) realistically begin right away? Armed with the answers to these questions, each of the probable projects should have an elevator pitch: What is included and why is it important? Then the most critical few projects can be selected, resourced, and chartered. An example of an elevator pitch is: There is a need to acquire a building and there is competition for both buildings under consideration. One building is more attractive than the other as the cost is considerably less although the number of families served would be less. Another elevator pitch is the need for website develop- ment. A fledgling website exists, but there are so many communication, fundraising, volunteer soliciting, and other possible uses of the website that early development is attractive. The elevator pitch could answer the following questions: Why is enhancing the website so important? How can the website help us do other work we desire to perform? Where are we now? What do we want? 56 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 PROJECT M ANAGEM ENT IN ACTION Prioritizing Projects at LADD LADD s project prioritization process introduced at the start of this chapter brought along a few sur- prises. It was not a clean and quick process. With a staff of seven directors in the room, all with varying levels of experience and understanding, many con- versations transpired requesting clarification and explanation on why peers used criteria to rank pro- jects higher or lower than the overall average. The wall of the board room was covered with paper that contained projects, numbers, and many markings that could be deciphered only by those involved in the process. Some directors provided unsolicited advice as to why their program s project deserved higher marks. Such requests were generally met with equal banter, advocacy for one s own project, and ultimately ended in a fruitful discussion that resolved any discord. As projects were scored and then ranked, the outcomes were not always predictable. A project such as the film festival emerged as the top priority because it was so closely linked with the scored cri- teria of generating revenue and having a large com- munity impact. Creating an infrastructure for IT needs was last because it would cost a significant amount of money and have no direct return for the individuals LADD supports. From the process, it was evident that a small handful of projects were nonne- gotiable and would require completion in order to establish a base for other larger, more impactful projects. Ultimately, the leadership team was able to create a plan of action that is scheduled to accomplish all of the objectives outlined in the strategic plan in a delib- erate, organized manner within the five-year timeline. LADD s leadership team members assumed the title of project manager for the majority of projects. They will work across departments, employing the strengths of many and be held accountable to their peers weekly when the prioritization plan is reviewed at the direc- tor s meeting. Although in its infancy, LADD has taken the top- ranked 12 projects and broken down quarterly expected outcomes for each. The outcomes may be revenue based and focused on generating income for the organization or task based with a method of planning and implementation. Whatever the method, program managers are held responsible for the project being supervised, and project progress will be reported directly to LADD s board of directors. Such a framework allows for accountability all the way through the organizational structure and a con- clusively better service provision for those who LADD supports.Exhibit 2.16 illustrates the prioritiza- tion process with the highest ranked projects selected by LADD and shows the five criteria used to do so. Re el A bi lit ie s Fi lm Fe st iv al , Ci nc in na ti Chapter 2 Project Selection and Prioritization 57 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 References A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management Institute, 2017). Barclay, Colane, and Kweku-Muata Osei-Bryson, Toward a More Practical Approach to Evaluating Programs: The Multi-Objective Realization Approach, Project Management Journal 40 (4) (December 2009): 74 93. Brache, Alan P., and Sam Bodley-Scott, Which Impera- tives Should You Implement? Harvard Management Update, Article reprint no. U0904B (2009). Cannella, Cara, Sustainability: A Green Formula, 2008 Leadership in Project Management 4: 34 40. Caron, Franco, Mauro Fumagalli, and Alvaro Riga- monti, Engineering and Contracting Projects: A Value at Risk Based Approach to Portfolio Balanc- ing, International Journal of Project Management 25 (2007): 569 578. Chinta, Ravi, and Timothy J. Kloppenborg, Projects and Processes for Sustainable Organizational Growth, SAM Advanced Management Journal 75 (2) (Spring 2010): 22 28. Cooper, Robert G., Winning at New Products: Path- ways to Profitable Innovation, Proceedings of PMl Research Conference 2006 (Newtown Square, PA: Project Management Institute, 2006). Daft, Richard L., Management, 9th ed. (Mason, OH: South-Western Cengage Learning, 2010). Eager, Amanda, Designing a Best-in-Class Innovation Scoreboard, Technology Management (January February 2010): 11 13. Evans, R. James, and William M. Lindsay, Managing for Quality and Performance Excellence, 8th ed. (Mason, OH: South-Western Cengage Learning, 2011). State of Federal Information Technology, https://cio. gov/wp-content/uploads/filebase/cio_document_ library/CIO-Council-State-of-Federal-IT-Report- January-2017(12) , accessed April 14, 2017. Kenny, John, Effective Project Management for Stra- tegic Innovation and Change in an Organizational Context, Project Management Journal 34 (1) (March 2003): 43 53. Kloppenborg, Timothy J., Arthur Shriberg, and Jayashree Venkatraman, Project Leadership (Vienna, VA: Management Concepts, 2003). Kloppenborg, Timothy J., and Laurence J. Laning, Strategic Leadership of Portfolio and Project Man- agement (New York: Business Expert Press, 2012). Labuschagne, Les, and Carl Marnewick, A Structured Approach to Derive Projects from the Organiza- tional Vision, Proceedings of PMI Research EXHIBIT 2.16 LADD PROJECT SELECTION AND PRIORITIZATION MATRIX PROJECT MISSION (10) FINANCE (9) WORKFORCE (8) RELATIONSHIPS (8) COMMUNITY (7) TOTAL Film Festival 40 36 32 32 35 175 Expand meaningful community-inclusion activities 50 27 32 40 21 170 Develop Victory Parkway site 50 36 16 40 28 170 Implement vacation/ respite services 40 36 24 24 35 168 Health and Wellness Program 50 18 40 32 21 161 58 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Conference 2006 (Newtown Square, PA: Project Management Institute, 2006). Milosevic, Dragan Z., and Sabin Srivinnaboon, A Theoretical Framework for Aligning Project Man- agement with Business Strategy, Project Manage- ment Journal 37 (3) (August 2006): 98 110. Organizational Project Management Maturity Model Knowledge Foundation, 2nd ed. (Newtown Square, PA: Project Management Institute, 2008). PMI Requirements Management: A Practice Guide (New- town Square, PA: Project Management Institute 2016). Practice Standard for Work Breakdown Structures, 2nd ed. (Newtown Square, PA: Project Management Institute, 2006). Reginato, Justin, and C. William Ibbs, Employing Busi- ness Models for Making Project Go/No Go Decisions, Proceedings of PMI Research Conference 2006 (New- town Square, PA: Project Management Institute, 2006). Senge, Peter, Bryan Smith, Nina Kruschwitz, Joe Laur, and Sara Schley, The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World (New York: Broadway Books, 2008). Smallwood, Deb, and Karen Furtado, Strategy Meets the Right Projects at the Right Time, Bank Systems & Technology 46 (4) (June July 2009): 34. The Standard for Portfolio Management, 3rd ed. (New- town Square, PA: Project Management Institute, 2013). The Standard for Program Management, 3rd ed. (New- town Square, PA: Project Management Institute, 2013). Steffey W. R., and V. Anantatmula, International Projects Proposal Analysis: Risk Assessment Using Radial Maps, Project Management Journal 42 (3) (2011): 62 74. Wheatley, Malcolm, Beyond the Numbers PMNetwork 23 (8) (August 2009): 38 43. Zhang, Weiyong, Arthur V. Hill, Roger G. Schroeder, and Keyin W. Linderman, Project Management Infrastructure: The Key to Operational Performance Improvement, Operations Management Research 1 (1) (September 2008): 40 52. http://en.wikipedia.org/wiki/Triple_bottom_line, accessed February 2, 2010. http://www.gcbl.org/about, accessed March 12, 2013. http://www.bia.ca/vision.htm, accessed March 5, 2013. http://ocio.os .gov/s/groups/public/@doc/@os/ accessed February 7, 2017. @ocio/@oitpp/documents/content/prod01_002082 , accessed March 6, 2013. https://topnonprofits.com/examples/vision-statements/, accessed January 9, 2017. http://www.sustainablecleveland.org accessed February 7, 2017. http://www.ecowatch.com/cleveland-a-green-city-on-a- blue-lake-1882095827.html, accessed January 9, 2017. http://www.internetsociety.org/who-we-are/organiza- tion-reports-and-policies/internet-society-2015- action-plan, accessed February 7, 2017. http://pmzilla.com/proposal-evaluation-techniques- source-selection-criteria accessed February 7, 2017. Endnotes 1. https://topnonprofits.com/examples/vision-statem ents/, accessed January 9, 2017. 2. http://www.sustainablecleveland.org accessed Feb- ruary 7, 2017. 3. http://www.ecowatch.com/cleveland-a-green-city-on -a-blue-lake-1882095827.html, accessed January 9, 2017. 4. Lussier, Robert N., and Christopher F. Achua, Lead- ership: Theory, Application, Skill Development, 4th ed. (Mason, OH: Thomson South-Western, 2010): 425. 5. PMI Standard for Portfolio Management, 3rd ed. (2013): 190. 6. Kloppenborg, Timothy J., and Laurence J. Laning, Strategic Leadership of Portfolio and Project Manage- ment (New York: Business Expert Press, 2012): 21. 7. PMI Standard for Portfolio Management, 3rd ed. (2013): 190. 8. PMI Standard for Program Management, 3rd ed. (2013): 178. 9. Federal_CIO_Roadmap-[2010.07.02] , p. 4, accessed February 7, 2017. 10. PMI Practice Standard for Work Breakdown Structures, 2nd ed. (2006): 121. 11. PMI Requirements Management: A Practice Guide (2016): 77. 12. PMI Business Analysis for Practitioners: A Prac- tice Guide (2015): 207. 13. Steffey, W. R., and V. Anantatmula, Interna- tional Projects Proposal Analysis: Risk Assess- ment Using Radial Maps, Project Management Journal 42 (3) (2011): 62 74. 14. http://pmzilla.com/proposal-evaluation-techniques -source-selection-criteria, accessed February 7, 2017. Chapter 2 Project Selection and Prioritization 59 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 C H A P T E R 3 Chartering Projects Planning a project is similar to putting together a large puzzle. If you were to dump a 1,000-piece puzzle on a table, you would probably not start the detailed planning right away by comparing two pieces randomly to see if they fit. You would likely take several preliminary steps. Some of these steps might include turning the pieces so the picture side was visible on each, sorting outside pieces so you could form the boundaries, studying the picture on the box, and sorting by color so you could match pieces more easily. (A few more-organized people may like to count and make sure that there are, indeed, 1,000 pieces.) These prelimi- nary steps make the detailed planning of the puzzle much easier and more effi- cient. If completing projects is analogous to putting puzzles together, then project charters are the initial steps. Initiating a project requires some preliminary actions, including understanding the needs and concerns of stakeholders, most critically the project sponsor. Ball Aerospace & Technologies Corp., Systems Engineering Solutions provides a wide range of air, space, and counterspace engineering and professional ana- lytic services. At Ball, we increase stakeholder buy-in by addressing and thinking about things up front; with an agreed-upon charter, this gives the project team CHAPTER OBJECTIVES After completing this chapter, you should be able to: CORE OBJECTIVES: Describe what a project charter is and why it is critical to project success. List the various ele- ments of a charter and why each is used. Create each section of a charter for a small sample project using given project information. TECHNICAL OBJECTIVES: Initialize a project in Microsoft Project and set up a milestone schedule. BEHAVIORAL OBJECTIVES: Work with a team to create a complete charter for a real project and present it to a sponsor for ratification. Negotiate with the project sponsor to develop a realistic and achievable project charter. A Lo t O f Pe op le /S hu tte rs to ck .c om 60 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 some guidance to effectively plan and execute the effort. In addition, by going through the chartering process, stakeholders take ownership in the project. At Ball, our project sponsors are typically U.S. government customers, and we provide work for them on a contractual basis. They provide funding and broad direction for our efforts, and we go through a formal proposal process for all our projects. Project sponsors provide initial statements of work or objectives defin- ing their goals for the task and then select among several proposals from inter- ested companies such as Ball to fulfill their requirements. The chosen company is then under an official formal contract to complete the project. This is, in effect, a pre-chartering process. Typically, after an effort is under contract, a kickoff meeting is scheduled to review the objectives of the project between the project sponsor and the chosen company. This is part of the initiating stage, where stakeholders review and approve the following as part of the project s charter: Overall project objectives Contrast between technical approach as written in the company s proposal for execution and sponsor expectations Milestones, checkpoints, and potential payment plans Success criteria and schedule Identification of key stakeholders and risks Processes for executing, monitoring, controlling, and overall management of the project There are a number of things to consider when initiating a project and generat- ing a project charter. These serve as pieces of the overall puzzle of managing and executing a project. A little pre-work in initiating the project goes a long way, with increased goodwill and understanding from the project sponsor, clear tasks and goals for the project team, and a single way forward toward achieving the pro- ducts and services of the project. Lydia Lavigne, Ball Aerospace This chapter describes what a project sponsor, manager, and team need to understandto quickly initiate a project. The project then proceeds into planning, and the ele- ments of a charter are planned in as much detail as needed. Chapters 5 through 11 describe project planning. 11.2 Identify Risks 11.3 Perform Qualitative Risk Analysis 6.5 Develop Schedule 13.1 Identify Stakeholders Stakeholder Register 11.5 Plan Risk Responses 4.4 Manage Project Knowledge Lessons Learned Register 4.1 Develop Project Charter Project Charter Assumptions Log PMBOK® GUIDE Topics: 4.1 Develop project charter 4.4 Manage project knowledge 6.5 Develop schedule 13.1 Identify stakeholders 11.2 Identify risks 11.3 Perform qualitative risk analysis 11.5 Plan risk responses MAJOR DELIVERABLES Project Charter Assumptions Log Stakeholder Register Lessons Learned Register 61 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3-1 What Is a Project Charter? For a project manager, team member, or project sponsor, one of the first and most important project management concerns is a project charter. This short document (usu- ally about three pages) serves as an informal contract between the project team and the sponsor (who represents both senior management of the organization and the outside customer, if there is one). From a behavioral perspective, the project charter reflects a common understanding and collaboration between the project sponsor and the project manager. Negotiation skills of the project manager also play an important role in developing the project charter. Since a charter is like a contract, it is helpful to remember what a contract is. First, it is an agreement entered into freely by two or more parties. Second, one party cannot arbitrarily change it. Third, there is something of value in it for each party. Finally, it is a living document that can evolve with changing conditions if both parties agree and receive something of value for making the change. The charter signing represents the transition from the high-level project initiation stage into the more detailed project plan- ning stage. See Exhibit 3.1 for a review of the project life cycle. The project charter is the deliverable that grants a project manager the right to con- tinue into the more detailed planning stage of a project. This may include only permis- sion to plan the project, permission to make decisions that would slow the project if delayed (such as ordering long-lead materials or hiring special workers), or permission to plan and perform the entire project in the case of a small, simple project. Officially, a charter is drafted by either project manager or sponsor and then negotiated; however, as projects are often conducted in a more collaborative fashion, some organizations are assigning core team members early enough that they can help draft the charter. Also, early input from key stakeholders may be considered. While either party (the sponsor or the project manager) can write the rough draft, more often than not, the project manager writes the draft charter. Ideally, then, the proj- ect manager and the sponsor candidly discuss each part of the charter. Like a contract, the people who sign a charter are wise to ensure that they understand and agree to all of it. Unlike a contract, however, both parties feel obligated to the spirit (as opposed to the letter) of the charter since the project details have not yet been worked out and specifics will certainly change. Thinking of a charter like a contract means that both the project manager and the sponsor sign the charter willingly and strive to make the project successful. When core team members have helped write the charter rough draft, they may also sign the charter. If the project man- ager feels bullied into making a change, it is not a free choice. However, the sponsor may legitimately need to insist on receiving the project results more quickly or make some other EXHIBIT 3.1 PROJECT LIFE CYCLE Approval: CharterSelection Kickoff Project BenefitsAdministrative closure realizedresultTo proceed 62 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 change to the project. In the spirit that one party cannot arbitrarily change a contract, the sponsor would not just tell the project team, I need the project a month sooner and you get no more resources and no relief from any other work responsibilities. Rather, if the project must change, the sponsor needs to consider herself or himself to be a partner with the project team in determining how to accomplish the change. 3-2 Why Is a Project Charter Used? The four major purposes for a charter are to: 1. Authorize the project manager to proceed 2. Help the project manager, sponsor, and team members, if any are already assigned, develop a common understanding 3. Help the project manager, sponsor, and team members commit to the spirit of the project 4. Quickly screen out obviously poor projects First, a project charter is a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. 1 Many project managers do not have the authority to commit resources without a charter. This gives the project and the project manager offi- cial status within the parent organization. Second, everyone involved in the upcoming project needs to develop a common understanding of what the project entails. This includes at least the broad justification for the project, how it aligns with the goals of the parent organization, determination of what is included and excluded in the project scope, rough schedule, success measures, major risks, rough estimate of resource needs, and stakeholders. On larger and more complex projects, additional understanding may be required at this point. Small, simple projects may use a simplified single-page charter. Once everyone has a common under- standing of clear project goals, several additional benefits occur: Teamwork develops. Agreement, trust, communication, collaboration, and commitment among the spon- sor, project manager, and project team develop. The project team does not worry if management will accept a decision and can focus on the project plan. The sponsor is less likely to unilaterally change the original agreement.2 Third, each person needs to personally and formally commit to doing their level best to achieve the agreed-upon project results even when things do not go as planned. It is a moral duty of all the project team members to commit to the shared goals articulated in the charter. This formal commitment often helps a person decide to keep working hard on a project when things are not going well. Fourth, a charter is used to quickly screen potential projects to determine which appear to be poor choices. Needless to say, a charter is much quicker to put together than a full, detailed project plan and schedule. If by constructing a charter it is determined that the project is likely to fail, much planning time (and therefore money) will be saved. Remember, the charter helps all project stakeholders. Charters are often publicly shown to many individuals beyond the project team and sponsor for communication. The culture of some companies is more trusting, competitive, focused on time, preoccu- pied with details, and so on than at other companies. Therefore, charters used in differ- ent industries and companies have somewhat different elements and formats. Chapter 3 Chartering Projects 63 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3-3 When Is a Charter Needed? Project methods can be scaled from very simple to very detailed. Consequently, a project charter can vary in its length from one-page to multiple pages. A project manager wants to use details that are adequate enough to develop a common understanding and agree- ment between the project manager and the project sponsor. TriHealth has developed both full and mini charters, for large and small projects, respectively. They have also developed the decision matrix shown in Exhibit 3.2 to help people determine if a full charter, mini charter, or no charter is needed. EXHIBIT 3.2 PROJECT CHARTER DECISION MATRIX Project Name Date When an improvement, change, or new program is going to be implemented, it is important to first determine whether or not it is a project. If it is a project, TriHealth has specific tools that should be used to guide the planning and implementation. In general, a project is a temporary endeavor undertaken to create a unique product, service, or result. If your project impacts more than one department, requires expertise or resources beyond your own department, or could affect the operations in another area, the standardized templates should be used. Answering the questions below with a check will help you determine what types of tools are needed for your project. Evaluate where the majority of your checks lie and use the most appropriate tool. Resources Little or no monies, supplies, or change in resources Requires moderate resources Requires significant and/or additional FTEs Multidisciplinary 1 discipline involved/ impacted 2 3 disciplines involved/ impacted or more than one site More than 3 disciplines involved/impacted Complexity Little complexity Moderate complexity; affects care delivery Very complex Technology Involvement No technology changes IS consult needed IS resources assigned Approvals None needed Approval by immediate supervisor Executive-level approval Potential Risk Level Minimal impact on customer Moderate impact on customer Significant impact on customer Staff Commitment Involvement of 2 3 people for solution Small team needed to generate solutions Requires large team of multiple departments for improvement Communication and Education Simple communication plan or unit-based educa- tion only Moderate communication plan; requires education across departments Complex communication/ education plan with various media Metrics Requires at least a one-time follow-up check Improvement will be tracked Baseline and ongoing tracking of data If the majority of your checks lie in this area: No charter needed Complete a mini charter Complete a full project charter Source: TriHealth. 64 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3-4 Typical Elements in a Project Charter The following sections list some of the typical key elements in a project charter. While the intent of most of these sections is included in many charters, some project teams combine sections or leave out a few of them. Furthermore, while the term charter is a widely used stan- dard, some organizations use other names such as project request, project submission form, or project preplanning form. As long as the four purposes of a charter (authorization, understand- ing, commitment, and screening) are accomplished, the exact format and title are negotiable. Typical charter elements and the question each element answers are shown in Exhibit 3.3. The charter should be short enough so that the project team and sponsor (and any other interested stakeholder) can examine it carefully to ensure they understand and agree. One to four pages in total is generally about the right length. 3-4a Title The existence of a meaningful project title is critical. In an organization with a number of projects, the title can be used to quickly identify which project is being referenced. 3-4b Scope Overview The scope overview and business case sections are the high-level what and why of the project. They are sometimes considered to be the elevator speech that a person would use if given a very short amount of time, such as a one-floor elevator ride, to describe their project. Sometimes, an additional background statement is helpful. The scope overview is the project in a nutshell: a high-level description of what needs to be accomplished and how it will be done. What needs to be accomplished can be described as the product scope, all the characteristics that must be present in the actual project deliverables or as requirements, each of which is an attribute that needs to be present in order to satisfy a contract, client, or other stakeholder. How it will be done is the project scope, the entirety of what will and will not be done to meet the specified EXHIBIT 3.3 CHARTER ELEMENTS AND QUESTIONS ANSWERED CHARTER ELEMENT ANSWERS THE QUESTION Scope overview What? Business case Why? Background Why? Milestone schedule When? Success criteria What? Risks, assumptions, and constraints Whoa! Resources How much? Stakeholders Who? Team operating principles How? Lessons learned How? Signatures and commitment Who? Chapter 3 Chartering Projects 65 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 requirements. The scope overview quickly describes the project work and results. The scope overview is used to distinguish between what the project will and will not do. It is used to help prevent scope creep, which is an incremental increase in the work of a project without corresponding adjustments to resources, budget, or schedule. The scope overview can be considered to define project boundaries. It states what is included and what is not at least at a fairly high level. Quantifying the scope, such as 15 touch points will be included, helps everyone to better understand the project s size. If a project could be compared to an animal, the scope overview briefly describes both the size and features so one can tell if it is a rabbit or an elephant. By understanding what is included and what is not, the project team is more likely to accurately estimate cost, resource, and schedule needs and to understand and handle project risks. 3-4c Business Case The business case is the project purpose or justification statement. It answers the ques- tion why? and helps all parties understand the purpose of the project. A business case is used to justify the necessity of the project. It should clearly tie the project to the orga- nization s strategy and explain the benefits the organization hopes to achieve by autho- rizing the project or the strategic goals it meets. Depending on the organization, a business case can either be just the rationale for the project, or it can also include high-level estimates of the costs and benefits of the project. A business case may also include emotional and ethical reasons for performing the proj- ect. A well-written business case should persuade decision makers to support the project and inspire the project team members and key stakeholders to work hard toward suc- cessful completion of the project. 3-4d Background Many people are quite busy and prefer short statements that can be quickly reviewed. Key project stakeholders should know enough about the project after reviewing the short scope overview and business case statements, as these statements will provide all of the information they need to know. Some other stakeholders may need more details to understand the rationale and purpose behind these statements. A more detailed back- ground statement may be helpful in these cases. Unlike the first two statements, which should be limited to about two to four sen- tences each, the background statement can be any length. The background statement is purely optional develop one only when it is necessary. 3-4e Milestone Schedule with Acceptance Criteria The milestone schedule is a high-level plan that indicates a few significant accomplish- ments that are anticipated over the life of the project. It divides the project into a few (about three to eight) intermediate points or milestones whose completion can be veri- fied. The team estimates a date when they expect to complete each milestone. A mile- stone schedule should list major milestones and deliverables that the project team especially wants to ensure are completed both on time and to the satisfaction of key deci- sion makers. The milestone schedule is considered very useful for communicating with the key stakeholders who are not actively involved with the project. A deliverable as defined in Chapter 1 is a unique and verifiable product, result, or capabil- ity to perform a service that is required to be produced to complete a process, phase, or project. 3 Requirements of a deliverable are often translated into specifications so that the deliverable can be validated, qualified by measurable conditions, and bounded by constraints. Sometimes, milestones occur right before the approval of a large expenditure. At other times, they occur at completion of a critical design, a key deliverable, or a major 66 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE accomplishment of the scope. It is helpful to identify the relatively few milestones and key deliverables in the project that the team and sponsor wish to check closely. Adding a column for acceptance criteria factors to the milestone schedule helps the project team understand who will judge the quality of the deliverable associated with each milestone and what criteria will be used for that determination. Acceptance criteria stipulate which conditions must be met in order for the deliverables to be approved. Acceptance criteria are like the project s vital signs. A paramedic would check pulse, breath- ing, maybe skin color, and body temperature immediately when answering a 911 call. Other tests are not as critical and may be performed, just not immediately. It is important to identify the vital signs for the project. Project success is easy to measure after the project is complete. The equally important, but often more challenging, decision is how to measure success while the project is progressing so there is still time to make changes if necessary. Another way to understand acceptance criteria is to understand how a key stakeholder such as the sponsor, customer, or end-user is going to determine if the deliverables created are of good enough quality to accept. Since some of the milestones are often preliminary (drafts, prototypes, concepts, outlines, etc.), it is helpful to have the same person who will judge the final project deliverables judge them at the intermediate milestones. By doing this, the decision maker is much less likely to state at the end of the project, No, that is not what I meant. Including advance understanding of criteria is similar to the old saying that a trial lawyer never asks a question without knowing how the witness will answer. An astute project manager never turns in a deliverable without knowing how it will be judged. An example of a milestone schedule is shown in Exhibit 3.4. One key concept in Agile projects is that something of value will be delivered at each iteration. Something of value for IT projects means working software. For other projects, it still refers to something the user can use not just documentation. An agreement is reached during iteration planning on the definition of done meaning exactly how each feature and function must perform. This is comparable to deliverables with accep- tance criteria for each milestone as just described. 3-4f Risks, Assumptions, and Constraints A risk is an uncertain situation that could negatively or positively affect the project if it occurs. Assumptions are suppositions made during project planning that are treated as correct or factual, though they have not been proven. Project teams frequently identify, document, and validate assumptions as part of their planning process. Assumptions EXHIBIT 3.4 MILESTONE SCHEDULE EXAMPLE MILESTONE DATE WHO JUDGES ACCEPTANCE 1. Existing facility 9-19-16 2. Site visit/audit 9-22-16 PM/Customer Site data verified 3. Design and approval 10-22-16 Customer Customer approval 4. Equipment deliverables 12-2-16 Engineering & Manufacturing B.O.M. check 5. Project execution 1-6-17 Installation & Customer Commissioned 6. System turnover 1-13-17 Customer System throughout of 35,000 cases per day Chapter 3 Chartering Projects 67 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 generally involve a degree of risk. A constraint is anything that limits the implementa- tion of a project. Taken together, assumptions and constraints are what could cause project problems. They are included with risks so that all of the key participants sponsor, project manager, and core team are aware in advance of what could prevent them from successfully completing the project. While it is unrealistic to believe that the team can think of every single thing that could go wrong, the more comprehensive this section is, the more likely the team is to uncover problems before they occur and while there is time to easily deal with them. If an assumption turns out to be false, it becomes a risk. A constraint that limits the amount of money, time, or resources needed to successfully complete a project is also a risk. Some organizations, especially for small projects, group all risks, assumptions, and constraints together, while others handle each as a separate char- ter section. The most important point is not how each is managed, but that each is managed. Project managers and teams should look at risks for three reasons. First, any negative risk that is a threat that may inhibit successful project completion (to the satisfaction of stakeholders, on time, and on budget) needs to be identified. And, if it is a major risk, a plan must be developed to overcome it. Second, a positive risk is an opportunity to com- plete the project better, faster, and/or at lower cost or to capitalize upon the project in additional ways, and a plan should be developed to capitalize upon it. Third, sometimes there is more risk to the organization if the project is not undertaken and this provides additional rationale for doing the project. For each major negative risk identified, an owner is assigned responsibility. Then one or more response plans are normally developed to either lessen the probability of the risk event from happening in the first place and/or to reduce the impact if the risk event should materialize. Sometimes, transferring the risk to a third party makes sense. The goal is not to eliminate all risk, but to reduce the risk to a level that decision makers deem acceptable. w av eb re ak m ed ia /S hu tte rs to ck .c om 68 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3-4g Resource Estimates Remember that executives consider projects to be investments. The scope overview and busi- ness case sections of the charter describe the return expected, while the resources section describes what will be invested. These sections collectively help decision makers determine if the project is worth approving. Resources include the workers, tools, equipment, and anything else needed in order to execute your project. Since executives consider projects to be invest- ments of resources, they will want a rough estimate. This can be an estimate of the amount of staff time, equipment, or materials that are in short supply, and/or the amount of money that is required. Since there is only very general understanding of the project at this point, any budget will also be approximate and should be stated as such by calling it a preliminary budget and including the level of confidence one has in the estimate; this is often expressed in per- centage terms (such as plus or minus 50 percent) regarding the accuracy of the estimate. On some internal projects, the pay for the associates who work on the project often comprises much of the expense. Frequently, however, at least a few expenses are incurred. It is helpful to identify which expenses the project manager can authorize and which the sponsor needs to control. 3-4h Stakeholder List Project success is partially dictated by identifying and prioritizing stakeholders, managing robust relationships with them, and making decisions that satisfy stakeholder objectives. Therefore, it is good practice to identify and prioritize stakeholders early in a project. 3-4i Team Operating Principles Team operating rules or principles are sometimes established to enhance team perfor- mance. The goal is to increase team effectiveness and ensure that all parties are aware of what is expected. Team operating principles that are especially useful are those that The key players of a project show their commitment to the project by signing the commitment section of the charter. Pr es sm as te r/ Sh ut te rs to ck .c om Chapter 3 Chartering Projects 69 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 deal with conducting meetings, making decisions, accomplishing work, and treating each other with respect. This concept is further elaborated on as a Team Charter in Chapter 5 because some organizations will choose to create a separate team charter instead of including team operating principles in their project charter. 3-4j Lessons Learned While every project is unique, a great deal can be learned from the successes and failures of previous projects and turned into practical advice. Lessons learned represent the knowledge acquired by the project team throughout the project planning and execution, including things that should be replicated and things that should be avoided on future projects. To ensure that lessons learned are used, a sponsor should only sign a charter authorizing the project to begin when at least one or two good, specific lessons from the successes and/or failures of recently completed projects are included. This essentially forces the new project manager and team to look at the organization s lessons learned repository to find applicable learnings. A lessons learned register is an accumulation of the knowledge gained during previous projects selection, planning, and executing that can be easily referenced to help with planning and executing future projects. These lessons could be stored in a dedicated database, on a shared drive, or in a less formal manner. The database should be intuitive to use, and it should be easy to retrieve relevant information. It is important for new project teams to learn together; otherwise, they risk repeating mistakes from previous projects. 3-4k Signatures and Commitment The commitment section of the charter lists who is involved and sometimes describes the extent to which each person can make decisions and/or the expected time commitment for each person. This is where the project sponsor, project manager, and perhaps core team members publicly and personally show their commitment to the project by signing the char- ter. By formally committing to the project, the key players are more likely to keep working hard during difficult periods and see the project through to a successful conclusion. 3-5 Constructing a Project Charter It is wonderful if the sponsor can work with the project manager and possibly core team members who have been preassigned to construct the charter. The sponsor, however, as a busy executive, often does not have time to be present for the entire chartering period. In those cases, it is very helpful if the sponsor can create the first draft however crude of the scope overview and business case. A sponsor s ability to tell the project manager and core team concisely what the project is and why it is important gets the team off to a good start. If the sponsor wants the team to consider any important constraints, assumptions, risks, or other factors, she can help the team by pointing that out up front. Sometimes, on an especially important project, the organization s leadership team may draft more than just the business case and scope overview statements. If the leadership team feels something is very important, they can save everyone time by just stating it up front. Like- wise, if the sponsor knows he or she will only approve a charter with one of the elements writ- ten a particular way, he or she should tell the team that up front. Otherwise, the project manager, possibly with the core team, most frequently writes much of the rough draft. 3-5a Scope Overview and Business Case Instructions When possible, the first draft of these two sections should be provided by the sponsor or the leadership team. One to four sentences for each is enough but it needs to be in 70 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 writing. Many teams find that, because these are the what and why of the project, it is easier to work on them at the same time. Teams often brainstorm key ideas and then craft the parts on which they agree into smooth-flowing statements. If the sponsor pro- vides a first draft of these sections, the project manager and core team carefully dissect it to ensure they both understand and agree. The project manager and team frequently propose refinements on the original draft. Scope overview and business case examples are depicted in Exhibit 3.5. 3-5b Background Instructions The project manager and team decide whether this optional section is necessary for their project as they construct the scope overview and business case. If the scope overview and EXHIBIT 3.5 SCOPE OVERVIEW AND BUSINESS CASE EXAMPLES PHASE II MULTICENTER TRIAL SCOPE OVERVIEW This project will initiate a Phase II multicenter clinical trial at Cincinnati Children s Hospital Medical Center (CCHMC). The trial will be conducted at five medical centers in the United States to investigate the safety and efficacy of an investigational drug s abil- ity to improve cognitive functioning and quality of life in pediatric patients with Tuberous Sclerosis Complex. The project is a follow-up study of a Phase I clinical trial conducted at CCHMC. ONLINE TUITION REIMBURSEMENT PROJECT SCOPE OVERVIEW This project will design, develop, and implement an online tuition reimbursement system that will provide employees with a self- service tool to submit a request for tuition reimbursement payment. This project will incorporate a workflow process that will do the following: Move the request to the appropriate personnel for approval. Alert the employee of any additional items necessary for processing the request/ Upon approval, send the request to payroll for final processing. Notify the employee of payment processing. DEVELOPMENT OF A BIOLOGICAL RESEARCH SPECIMEN SHIPPING CENTER PROJECT BUSINESS CASE The purpose of this shipping center is to provide professional shipping services and supplies for CCHMC employees who are responsible for shipping biological specimens as part of research. This shipping center will improve compliance, streamline ship- ping processes, enhance research productivity, reduce time and money invested in employee training, and reduce potential liability for noncompliance. ESTABLISHING A SECOND PULMONARY FUNCTION TESTING (PTF) LAB PROJECT BUSINESS CASE An additional PTF lab will enhance patient access by: Decreasing wait times and Providing a convenient location close to primary care appointments. It will also improve patient outcomes by assisting in: Diagnosis, Accurate assessment, and Chronic management of pediatric lung disease. In addition, establishing a PFT lab will increase revenue by: Increasing availability of PTF and Increasing community referrals for PFT. Source: Cincinnati Children s Hospital Medical Center. Chapter 3 Chartering Projects 71 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 business case seem detailed enough for all important stakeholders, an extra background section may not be needed. If necessary, the team probably brainstorms ideas and then combines them into a single smooth statement. An example of a background statement for a project to start a new co-op business is shown in Exhibit 3.6. 3-5c Milestone Schedule with Acceptance Criteria Instructions The first step in the iterative process of developing a project schedule is to define major milestones. This section of the charter can be developed most effectively by focusing on why you are doing a project before diving into all of the details. A method of depicting all of this information so it is simple to understand is to set up a four-column table with Mile- stone, Completion Date, Stakeholder Judge, and Acceptance Criteria heading the columns. An example of a milestone schedule with acceptance criteria for a project converting to a centralized electronic record system for a major research hospital is shown in Exhibit 3.7. SIX STEPS IN CONSTRUCTING A MILESTONE SCHEDULE The most effective way to construct the milestone schedule with acceptance criteria is to use the six-step proce- dure described below. Identifying the end points first (Steps 1 and 2) helps project teams avoid the problem of sinking into too much detail too quickly. Note that dates are the final item to be identified. It is unethical for a project manager to agree to unrealistic dates. Even though the milestone schedule is not very detailed, it is the first time a team thinks through how the project will be performed and how long it will take at each point. This allows a bit of realism in the schedule. Step 1 The first task is to briefly describe (in three or four words) the current situa- tion that requires the project and place this description in the first row of the milestone column. The current state may be a shortened version of the business case. The starting point for many projects is either something that exists, but does not work as well as desired, or a desire exists for something completely new. However, the starting point for some projects is the ending point of a previous project. Keep the description very short, and it will form an effective starting place. In Exhibit 3.7, the problem was paper records that were not centralized. Step 2 Once the current state is agreed upon by the project manager and team, skip to the desired future state. Describe the project (or phase if there will be future phases) at its successful completion in three or four words. Put this description in the last row of the milestone column. It is hard for many core teams to distill this to the ideal three or four words, but keeping it concise helps the team develop a better understanding of what is EXHIBIT 3.6 BACKGROUND SECTION EXAMPLE Interfaith Business Builders is an organization of diverse Cincinnatians that develops and promotes community-based, employee-owned and -operated cooperative businesses (co-ops). Our co-ops cre- ate new jobs and ownership opportunities for low-income people in sustainable local businesses. Members of IBB come from a variety of faith and social backgrounds, share a passion for social jus- tice and the empowerment of people, and value community, cooperation, opportunity, and solidar- ity. Our cooperatives are businesses that follow these seven principles: voluntary and open membership; democratic member control; members economic participation; autonomy and inde- pendence; education, training, and information; cooperation among cooperatives; and concern for community. 72 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 truly most important. If the current project is a phase of a larger project, also write briefly what the final successful result of the last future stage will be. In Exhibit 3.7, the desired future state is to have records centralized and available in electronic form, and the ultimate goal is for seamless information flow throughout the organization. More work will need to be completed beyond this project to reach that ultimate goal. Since contemporary project management is often iterative, many projects are part of a larger goal. Step 3 Next, describe the acceptance criteria for the final project deliverables (at the future state). What stakeholder(s) will judge the deliverables, and on what basis? Exactly how will they become confident that the project results will work as desired? These sta- keholders will almost always demand a demonstration of project results. The project team wants to understand what that demonstration will be at this early point so they can plan to achieve it. Note that there very well could be multiple stakeholders and mul- tiple methods of ensuring the project results are satisfactory. At this point, strive to iden- tify the most important stakeholders and acceptance criteria. Place these in the bottom row of the third and fourth columns. In Exhibit 3.7, the sponsor wants a representative from each department to show they can enter and retrieve pertinent data. Step 4 Now, go back to the milestone column. Determine the few key points where quality needs to be verified. On most small to medium-sized projects, approximately three to eight intermediate points are satisfactory. Start by identifying the three most important EXHIBIT 3.7 MILESTONE SCHEDULE WITH ACCEPTANCE CRITERIA EXAMPLE COMPLETION DATE MILESTONE STAKEHOLDER JUDGE ACCEPTANCE CRITERIA Current state: Paper, noncentralized records Needs assessment 28-Feb Ops management List of needed features Hardware selection 15-Apr Ops management, CIO Hardware choice with contract Vendor selection 30-May Ops management Vendor choice with contract Installation and configuration 15-Jul Application specialist, IS department head Functional software in test environment Conversion 31-Aug Application specialist, IS department head All files converted Testing 15-Oct Application specialist, IS department head Sign off on test Training 30-Nov Ops management, HR Sign off on training Future state: Electronic, centralized records 30-Nov Sponsor Ability to enter and retrieve information from all departments Ultimate goal Seamless information flow throughout organization Chapter 3 Chartering Projects 73 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE intermediate points, and add more if necessary. If you need to identify considerably more major deliverables at this point, you might consider splitting your project into phases and concentrate on the first phase for now. Satisfactory completion of each milestone will be determined by how the sponsor and other stakeholders will judge your performance. They should be in enough detail so stakeholders are comfortable with your progress, yet not so detailed that you feel micromanaged. The project in Exhibit 3.7 has seven milestones. On Agile projects, the first iteration is planned as a milestone with acceptance criteria just as described above. Rather than have a defined set of milestones, an agile charter after the first milestone is more of a general roadmap of the product. Subsequent mile- stones and acceptance criteria are determined on a just-in-time (JIT) basis. Step 5 Now, for each milestone, determine who the primary stakeholder(s) is and how he or she will judge the resulting deliverable. Remember, these are intermediate deliverables, and often it is not as easy to determine desired performance. One idea to keep in mind: if practical, ask the person who will judge the overall project results at the end to judge the intermediate deliverables also to make sure you are on the right track. Quite a few different stakeholders will judge various milestones in the project in Exhibit 3.7. Step 6 Finally, determine expected completion dates for each milestone. Do not be overly optimistic or pessimistic. You will be at approximately the right level of detail if you have a milestone somewhere between every one and six weeks on many projects. Obviously, there will be exceptions for especially large or small projects. Most of the milestones in the project in Exhibit 3.7 are about six weeks apart. Some companies that perform many projects use templates to guide their project teams through chartering and other activities. An example of a template for the mile- stone schedule and acceptance criteria for a Six Sigma project is shown in Exhibit 3.8. EXHIBIT 3.8 SIX SIGMA MILESTONE SCHEDULE AND ACCEPTANCE CRITERIA TEMPLATE Measure Analyze Improve Control Future State Current Situation Define Problem in operational terms Customers and metrics identified Project schedule and assignments Causal relationships defined Data gathering procedures approved Sufficient data gathered Potential variables identified; Root causes statistically proven Problem resolution ideas gathered Solution evaluated and confirmed Solution implemented Standards, procedures, training in place 74 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3-5d Risks, Assumptions, and Constraints Instructions First, the project manager (possibly with core team members, sponsor, and/or key stake- holders if available) should brainstorm all the things that could pose a risk to the project schedule, budget, usefulness of any project deliverables, or satisfaction of any project stakeholder. This is the process of risk identification. All of the risk processes will be covered in more detail in the risk planning chapter. Constraints that limit choices and unproven assumptions can be identified. Assumptions are especially important when a cross-functional team is performing the project because some team members may make vastly different assumptions based upon the manner in which work is normally accom- plished in their respective departments. The brainstorming often works very well with each team member writing one risk, constraint, or assumption per Post-it Note. On large, complicated projects, risks, assumptions, and constraints may form separate sec- tions of a charter. An assumptions log is often created as a living document to record all assumptions and the findings of whether they proved to be true or false. However, in this book, we deal with them together. From this point forward, all risks, assumptions, and constraints are simply referred to as risks. Either the project manager or one of the team members can then act as a facilitator and assess one risk at a time. Risks can be assessed on probability of occurring and impact if realized. Both dimensions can be shown with a simple continuum of low to high using a flip chart or marker board. The team can agree to assess each risk at any point on the continuum. It works best if one dimension is considered at a time. For example, first ask how likely the risk event is to occur. Only after this is answered, ask how big the impact will be if it happens. After all risks are assessed, the team needs to decide which of the risks should be con- sidered major risks. That is, which are important enough to require a formal response plan with someone assigned responsibility? The other, more minor risks are not formally considered further in the charter, but they very well may get more attention in the plan- ning and executing stages. This is the process of qualitative risk analysis. The project team constructs a table depicting each major risk, with its contingency plan and owner. This is the process of planning risk responses. Examples of risk assessment and major risk response planning for a hardware upgrade project in an Irish factory are shown in Exhibits 3.9 and 3.10, respectively. 3-5e Resources Needed Instructions Armed with the milestone schedule, the project manager and team may be prepared to make crude estimates of the project budget and other resource needs such as people, equipment, or space. It is imperative to describe how the estimates were developed and the level of confidence the team has in them, such as this is a rough order of magnitude estimate only based upon the milestones, and the true project cost could range from 25 percent below this to 75 percent above it. On many projects, especially those with cus- tomers internal to the organization, a budget is not established. However, a limit of spending authority for the project manager is often developed. An example of resources needed for a project is shown in Exhibit 3.11. 3-5f Stakeholder List Instructions Stakeholders are all the people who have an interest in a project. They can be internal or external to the organization, be for or against the project, and have an interest in the project process and/or the project results. The project manager and team begin by iden- tifying all stakeholders and determining which are most important. They next ask what Chapter 3 Chartering Projects 75 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 vaibhav.aribenchi Highlight vaibhav.aribenchi Highlight EXHIBIT 3.10 RISK RESPONSE PLANNING EXAMPLE RISK EVENT RISK OWNER RISK RESPONSE PLAN(S) Hardware inadequate Edie 1. Techs revise existing hardware 2. Replace hardware Associates do not have skills to perform key functions Padraig 1. Train existing associates 2. Hire additional people Key resource not available Ute 1. Identify external resources to fill need EXHIBIT 3.9 RISK ASSESSMENT EXAMPLE Minor risks below the line Major risks above the line Hardware inadequate Associates do not have the skills to perform key functions Key resource not available EXHIBIT 3.11 RESOURCES NEEDED ESTIMATE MONEY PEOPLE OTHER Marketing $10,000 Project Manager, 250 hours 1 Dedicated Conference Room Core Team Members, 500 hours AV and Communica- tions $5,000 Internal Consultant, 100 hours Miscellaneous $5,000 Data Analyst, 100 hours Focus Group Participants, 50 hours Total $20,000 Total 1,000 hours 1 Room 76 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 interest each stakeholder has in the project. A stakeholder list example for a clinical research project is shown in Exhibit 3.12. This is the process of identifying stakeholders, and the resulting list is the start of a stakeholder register. Both will be described in more detail in the stakeholder chapter. 3-5g Team Operating Principles Instructions The project manager and team will decide what project team operating principles they will use. The operating principles establish how meetings will be conducted, how deci- sions will be made, how work will get done, and how everyone will treat each other with respect. Exhibit 3.13 is an example of team operating principles. 3-5h Lessons Learned Instructions Each project by definition is at least somewhat different from any other project. That said, there are many commonalities in how projects can be planned and managed. A project manager and team need to consider what has worked well and what has worked EXHIBIT 3.12 STAKEHOLDER LIST EXAMPLE STAKEHOLDER PRIORITY INTEREST IN PROJECT Institutional Review Board Key Unexpected problems, progress Food and Drug Administration Key Serious adverse events, progress Site Principal Investigators Key Protocol, safety reports, changes Pharmaceutical Company (Customer) Other Serious adverse events, progress Research Subjects (Patients) Other Purpose of study, risks and benefits, protocol EXHIBIT 3.13 TEAM OPERATING PRINCIPLES EXAMPLE 1. Team members will be prepared with minutes from previous meeting, agenda, and project updates. 2. Meetings will normally last for up to 90 minutes. 3. Team members will rotate the role of recorder. 4. Each team member will be responsible for setting his or her own deadline. 5. In the event that a team member cannot have his or her assignment complete by the expected date, he or she must notify the team leader prior to the due date. 6. The team leader will be responsible for drafting the minutes from the previous meeting and the agenda for the next meeting within 48 hours. 7. Decisions will be made by: Team leader on ____ issues. Consensus on ____ issues. Delegation on ____ issues. Chapter 3 Chartering Projects 77 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 poorly on previous projects when starting a new one. A sponsor is wise not to sign a project charter authorizing work until the project manager and team show they have learned lessons from recently completed projects. One easy way to accomplish this is to have each project report lessons learned at key reviews and at project completion and to have the lessons available to all in a lessons learned knowledge base. The project man- ager and team can then look at the lessons until they find at least a couple that can help them on their project. These lessons are included in the charter. The more specific the lessons, the more likely the team will find them useful. Exhibit 3.14 is an example of project lessons learned. 3-5i Signatures and Commitment Instructions The project sponsor, manager, and team members sign the charter to publicly acknowl- edge their commitment. Sometimes other key stakeholders also sign. An example of a charter signature section is shown in Exhibit 3.15. EXHIBIT 3.14 PROJECT LESSONS LEARNED EXAMPLE All parties are responsible for defining and following the project scope to avoid scope creep. All parties should share good and bad previous experiences. Aligning team roles to sponsor expectations is critical. Keep sponsor informed so sponsor stays committed. Identify any possible changes as soon as possible. Use weekly updates on project progress to avoid unpleasant schedule surprises. Review previous events for specific lessons. EXHIBIT 3.15 CHARTER SIGNATURE EXAMPLE Anne E., Sponsor Signature Date Signature Date Karen H., Project Leader Signature Date Jim B., Team Member Signature Date Charlie H., Team Member Signature Date Mitch N., Team Member Signature Date Katie S., Team Member 78 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 3-6 Ratifying the Project Charter The project manager and team formally present the project charter to the sponsor for approval. In some organizations, the leadership team is also present for this meeting. The sponsor (and leadership team members, if present) ideally is supportive, but also ready to ask questions regarding any part of the charter. These questions are for both clarification and agreement. Once all questions are satisfactorily answered including any agreements regarding changes the sponsor, project manager, and core team all sign the project charter and feel bound by it. Project managers are generally held more accountable for performance than they have the responsibility to direct people to perform. Because of this, project managers must negotiate. Here, we discuss how they need to negotiate a project charter with their spon- sor. Later in the book, we discuss how they often need to negotiate with functional man- agers for the particular people they wish to have work on the project; with customers concerning schedule, budget, scope, and a myriad of details; and with sponsors, suppli- ers, SMEs, and core team members. Nobody loves a project as much as the project manager does. However, a project manager must remember that negotiations will be smoother if she realizes that everyone with whom she negotiates has their own set of issues and goals. Regardless of the negotiation size or complexity, the six-step process shown in Exhibit 3.16 can serve as a guide. The negotiation process is based on the project manager and the sponsor attempting in good faith to reach a solution that benefits both useful deliverables for the sponsor and a manageable process for the project manager. Step 1 involves advance fact finding to determine what is needed from the negotia- tion. This includes seeking to understand both what the sponsor is likely to want and how he or she may act during the negotiations. Step 2 is for the project manager to understand the bottom line. What is the mini- mum acceptable result? Just as when buying a car, a project manager needs to under- stand when to walk away. This can vary a great deal depending on how much power each party has. The sponsor is likely to have more power. However, project managers need to understand that if they have the power and take advantage of their negotiation partner, that partner may not work with them on a future project. Therefore, the goal is not to always drive the hardest bargain, but to drive a fair bargain. Step 3 is for the project manager to understand the underlying needs of the sponsor and to share his or her own needs. This is not a 10-second political sound bite that says take it or leave it. This is developing a real understanding of each other s needs. Once both parties understand what the other really needs, various creative solutions can be developed. This is the essence of Step 4. Step 5 consists of the process and strategies of the negotiation itself. It is helpful to keep in mind the ultimate goal while focusing on the many details of information sharing, trading of concessions, and exploring possible solutions. Step 6 is actually a reminder to reach an agreement and then to document that agreement. 3-7 Starting a Project Using Microsoft Project Microsoft (MS) Project is a software application designed to aid project managers in the planning, execution, and assessment of projects. It allows the project manager to track project tasks, set milestones, create corresponding schedules, and administer resources and budgets. Throughout the text (Exhibit 3.16), various MS Project processes will be demonstrated in a series of tutorials using the textbook s running Suburban Homes Chapter 3 Chartering Projects 79 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 vaibhav.aribenchi Highlight vaibhav.aribenchi Highlight vaibhav.aribenchi Highlight vaibhav.aribenchi Highlight vaibhav.aribenchi Highlight Construction Project as a basis. A fully functioning demonstration version of MS Project 2016 is available for download from Microsoft. 3-7a MS Project 2016 Introduction MS Project 2016 is part of the Microsoft Office family; therefore, much of the basic interface and interaction with the software should seem familiar. You will find the unique aspects of the application in the project-specific tools and visuals the software provides the project manager. When you first open MS Project, you have the option to create a new (blank) plan, open a recently used or saved plan, or start a plan based on a template. The following overview showcases the visible features of the main MS Project interface once a blank project has been created. 1. Ribbon As with other Microsoft Office applications, the ribbon bar along the top of the interface contains the controls (or access to controls) used to develop and manipulate your project data. Controls are logically grouped in the following tabs: FILE includes familiar commands such as Open, Save, Print, and Options. TASK, RESOURCE, and PROJECT tabs allow task, resource, and project data entry and adjustment. REPORT offers a variety of customizable visual and print reports of project data. VIEW offers multiple ways to visualize your project data, including Calendar, Gantt Chart, Network Diagram, Resources, and Teams. A split (or combina- tion ) view is also available, providing two different types of data displays at once. FORMAT displays formatting controls that apply to the current active view. The For- mat tab header (above the tab) identifies the currently active view (e.g., Gantt Chart). 2. Quick Access Toolbar As with other Microsoft Office applications, this customizable area allows you to create shortcuts to regularly used commands. 3. Project Schedule Details View Pane(s) Below the ribbon is the project data view pane that displays information about the project. MS Project offers several different views, but the default setting is a split, dual display of the project Timeline and Gantt EXHIBIT 3.16 NEGOTIATION PROCESS STEP EXPLANATION 1. Prepare for negotiation. Know what you want and who you will negotiate with. 2. Know your walk-away point. Determine in advance the minimum you need from the negotiation. 3. Clarify both parties interests. Learn what the other party really wants and share your true interests to determine a common goal. 4. Consider multiple options. Brainstorm multiple approaches even approaches that solve only part of the issue. 5. Work toward a common goal. Keep the common goal in mind: seek and share information, make concessions, and search for possible settlements. 6. Clarify and confirm agreements. Agree on key points, summarize, and record all agreements. Source: Adapted from Aldag, Ramon J., and Loren W. Kuzuhara, Mastering Management Skills: A Manager s Toolkit (Mason, OH: Thomson South-Western, 2005): 129 132; and Baldwin, Timothy T., William H. Bommer, and Robert S. Rubin, Developing Management Skills: What Great Managers Know and Do (Boston: McGraw-Hill, 2008): 307 318. 80 Part 1 Organizing Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Chart views in an upper and lower pane. Although both are visible, only one view is active (indicated by a colored view name label on the far-left end of the view pane). The active view can be changed in the View tab or with the View Shortcut buttons. Timeline View: The Timeline View shows you the big picture of your project schedule. Milestones or other key activities can be marked and highlighted in the timeline to help better visualize the project. Gantt Chart View: The Gantt Chart is a commonly used tool to represent a proj- ect schedule. Once a list of project task details is inputted into the table on the left-hand side of the view, horizontal bars populate the right side to graphically represent each task against a calendar along the top of the view. 4. Zoom Slider The zoom slider is useful in any view that contains calendar data. It quickly changes the timescale by sliding left or right. 5. View Shortcuts View Shortcuts provides a quick switch from the active view to five different views: Gantt Chart, Task Usage, Team Planner, Resource Sheet, and Report. 6. Scheduling Mode selector Scheduling Mode reports the default scheduling mode (manual or automatic) for each new task. To change it, click Control and choose the desired setting from the list (a change only applies to the active schedule). See the next section for more on Scheduling Mode. 3-7b Setting up Your First Project There are two scheduling modes in MS Project 2016: Auto Scheduled and Manually Scheduled. Auto scheduling calculates the project s running schedule based on task start and finish dates, as well as other changes you might make in the future. Manually Sched- uled is the default setting, but we will change that immediately to take advantage of the EXHIBIT 3.17 CHAPTER CHAPTER TITLE MS PROJECT PROCESS 3 Chartering Projects Introduce MS Project 2016; Set up a project; Create a milestone schedule 7 Scope Planning Set up a work breakdown structure (WBS) 8 Scheduling Projects Set up schedule; Build logical network diagram; Understand the critical path; Display and print schedules 9 Resourcing Projects Define resources with calendars; Assign resources, including modifications; Find and resolve over-allocations 10 Budgeting Projects Develop project budget 12 Project Quality Planning and Project Kickoff Baseline the project plan 14 Determining Project Progress and Results Update and report on project schedule 15 Finishing Projects and Realizing Benefits Close projects Chapter 3 Chartering Projects 81 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 program s automatic scheduling powers. To change the scheduling mode, do the follow- ing (Exhibit 3.18): 7. With a blank, new project open, click File tab>>Options>>Schedule.
8. In the Scheduling options for this project section:
Change the dropdown to All New Projects
Change the New tasks created option to Auto Scheduled
9. Click OK.
Note: This action sets all future projects you may start in MS Project to Auto Sched-
uled. These options allow you to change this setting on a project-by-project basis, or you
can simply click the Scheduling Mode Selector shortcut on the left-hand side of the
bottom status bar and choose your desired scheduling method.
3-7c Define Your Project
Next, you need to define your project by entering the following information:
1. Set the project start date (Exhibit 3.19)
Click Project tab>>Project Information
In the dialog box, enter your project s start date (e.g., Mon 10/16/17)
Click OK; you ll notice Timeline View has updated with your start date!
2. Enter identifying information about the project (Exhibit 3.20).
Click File tab
EXHIBIT 3.18
SET AUTO SCHEDULE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
82 Part 1 Organizing Projects
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On the right-hand side of the screen, click Project Information>>Advanced
Properties.
In the Summary tab, enter Suburban Park Homes in the Title box
Add other information as needed for future reports
Click OK
3. Generate a Project Summary task row (Exhibit 3.21)
Creating a Project Summary task row gives you another overview of the entire
project in the top row of the Gantt Chart view
Click File tab>>Options>>Advanced
On the Advanced page, scroll to the Display options for this project section
Click the checkbox for Show project summary task
Click OK; you ll notice a new summary row at the top of the Gantt Chart table!
3-7d Create a Milestone Schedule
You will now create a milestone schedule that will capture significant deliverable comple-
tion dates and be viewable in your Gantt Chart view.
Click the Gantt Chart view to make it active
Enter the milestone names from the Suburban Park Homes project in the Task
Name cells below the Project Summary row (You can find milestone information
from the project on page 91.)
In the Duration cells, use the up/down arrows to set each milestone s value to zero
EXHIBIT 3.19
SET PROJECT START DATE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 3 Chartering Projects 83
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For each milestone row:
a. Double-click the milestone name to activate the Task Information dialog box
(Exhibit 3.22)
b. Click the Advanced tab; change the Constraint type to Must Finish On
c. In the Constraint date box, enter the milestone date
d. Click OK
Your milestone schedule in the Gantt Chart view should now look like the example in
Exhibit 3.23.
Now, we will add milestone markers to the summary row so the key project dates will
remain easily visible as the Gantt Chart task list expands.
Right-click the Suburban Park Homes summary task row>>Information
On the General tab, check the Hide Bar and Rollup boxes
Click OK (Exhibit 3.24)
Hold the Shift key and click your first task row>>click the last task row
Now all tasks should be selected
Right-click on the selected group>>Information
On the General tab, check the Rollup box until a checkmark appears
Click OK (Exhibit 3.25)
EXHIBIT 3.20
ENTER IDENTIFYING INFORMATION
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
84 Part 1 Organizing Projects
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EXHIBIT 3.21
CREATE A SUMMARY ROW
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 3.22
TASK INFORMATION DIALOGUE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 3 Chartering Projects 85
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You will now see that the summary row bar has disappeared and been replaced with mile-
stone markers. We need to make them stand out a bit more and have the date (Exhibit 3.26).
Select the Suburban Park Homes summary task row
Click Format Tab>>Format>>Bar Styles
In the Bar Styles dialog box, click the Rolled Up Milestone style
In the Bars tab, change the Type to solid; change the color to blue (or your choice!)
Click the Text tab, click Right (or Left if you prefer!), choose Finish from the
drop-down
Click OK
EXHIBIT 3.23
SUBURBAN PARK HOMES MILESTONE SCHEDULE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 3.24
SUMMARY TASK DIALOGUE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
86 Part 1 Organizing Projects
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Your milestone schedule in the Gantt Chart view should now look like the example in
Exhibit 3.27.
EXHIBIT 3.25
MULTIPLE TASK INFORMATION DIALOGUE
EXHIBIT 3.26
BAR STYLES DIALOGUE
Chapter 3 Chartering Projects 87
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PMP/CAPM Study Ideas
Whether you are studying for the CAPM or PMP exam, you will likely see many questions
pertaining to the order in which processes occur and deliverables are produced throughout
the lifecycle of a project. In this chapter about the project charter, it is important to remem-
ber that the various subdeliverables and processes are all encompassed within the Initiating
phase. In fact, it is the ratification of the project charter that allows us to proceed from the
Initiating to the Planning phase.
In other words, even though the charter and its components represent a high-level project
plan, you should think of this as the preplanning because it is still in rough-draft form and
will be significantly expanded upon during the Planning phase. So, if you plan to sit for one of
these tests, make sure you know the logical order of the steps involved in creating a charter, but
also keep in mind that every single one of these precedes the more-detailed processes to come.
EXHIBIT 3.27
UPDATED SUBURBAN PARK HOMES MILESTONE SCHEDULE
Summary
The project charter is a vital document since it enables
the project sponsor and project manager to reach
mutual understanding and agreement on the project at
a high level. Often, core team members who have been
preassigned and sometimes a key stakeholder or two
sign also sign the charter. All parties can commit to
the intent of the charter with confidence. Charters typi-
cally include sections such as a scope overview, business
case, milestone schedule, acceptance criteria, risks, and
signatures. Many charters include additional sections.
The sponsor or leadership team might write the
rough draft of the business case and scope overview,
but the project manager and core team typically write
the rough draft of the majority of the charter. Once the
draft is written, the sponsor meets with the project
manager and core team to go over the charter in detail
both to ensure understanding and to reach agreement.
The charter, by signaling commitment on the part
of the team and authorization on the part of the spon-
sor, is the document that completes the project initiat-
ing stage. Once the charter is complete, the project
team can usually turn their attention to planning the
details of the project. The first detailed behavioral plan-
ning topics that deal with the project team, other sta-
keholders, communication, and leadership form the
next book module: Leading Projects. The other detailed
planning topics tend to be more technical and form the
third book module: Planning Projects.
Key Terms Consistent with PMI Standards and Guides
project charter, 63
requirements, 65
scope creep, 66
milestone schedule, 66
acceptance criteria, 67
risk, 68
88 Part 1 Organizing Projects
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assumptions, 68
constraint, 68
resources, 68
lessons learned, 70
assumptions log, 75
lessons learned register, 70
Chapter Review Questions
1. What is a charter?
2. Describe what an effective charter should
accomplish.
3. How is a charter like a contract? How is it different
from a contract?
4. How long should a typical charter be?
5. Signing the charter marks the transition between
which two project stages?
6. Who generally writes the rough draft of a
charter?
7. Give three reasons for using a charter.
8. What are some typical elements of a charter?
9. What is scope creep and how can it be prevented?
10. When would a background section be helpful?
11. On most small to medium-sized projects, how
many intermediate milestones should be identi-
fied in the charter?
12. What types of resources might be included in a
resources-needed section of a charter?
13. Name three reasons project managers and teams
should look at risk.
14. Why should each contingency plan have an
owner who is responsible for it?
15. What are the four columns of the milestone
schedule?
16. With whom might the project manager and project
team need to negotiate when creating the charter?
17. What is the primary difference between Auto and
Manually scheduled settings in Microsoft Project?
Discussion Questions
1. Identify the purpose of each element in a project
charter.
2. Explain how a charter helps secure both formal
and informal commitment.
3. How are risks, assumptions, and constraints related?
4. If you are a project manager and have the choice
of forming your core team before or after charter
approval, which would you do and why?
5. List and describe at least four lessons you have
learned from previous projects. Relate how each
is valuable in planning a new project.
6. In your opinion, what are the three most impor-
tant items in your project charter? How did each
help you initiate your project better?
7. Give an example of how an incorrect assumption
could become a risk.
8. Briefly summarize the process of creating a mile-
stone schedule.
9. How are project scope and product scope similar
and different?
10. Upon seeing the rough draft of your charter,
your project sponsor asks you to move the finish
date up by two months. What do you do?
11. What are the greatest advantages to using a com-
puterized scheduling program like Microsoft
Project?
PMBOK ® Guide Questions
1. Which of the following is not a purpose of an
approved project charter?
a. formally authorizes the existence of a project
b. provides detailed information about financial
resources
c. helps the team and sponsor develop a founda-
tional understanding of project requirements
d. provides project manager with authority to
apply organizational resources to the project
2. Adding to the project after it has already begun
without making adjustments to time, cost, or
resources, is known as:
a. scope creep
b. risk
c. milestones
d. acceptance criteria
3. It is inconvenient and time consuming for
employees to walk across campus every day to
Chapter 3 Chartering Projects 89
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eat lunch, which is why we need an employee
lunchroom in our building is an example of:
a. project scope
b. business case
c. milestone schedule
d. constraint
4. What information does the project charter con-
tain that signifies how the customer or user of the
final product, service, or result will judge the deli-
verables, in order to determine that they have
been completed satisfactorily?
a. high-level project risks
b. measurable objectives and acceptance criteria
c. high-level project boundaries
d. project assumptions
5. The project charter should include factors that
are considered to be true, real, or certain without
proof or demonstration. These are known
as .
a. risks
b. assumptions
c. high-level requirements
d. objectives
6. The signing of the project charter represents all
of these except:
a. a formal acknowledgment of the sponsor s
commitment to the project
b. the formal approval of the detailed project
schedule
c. authorization to transition from the high-level
project initiation stage into the more detailed
project planning stage
d. the organization s commitment to apply
resources to the project
7. What project charter component documents sig-
nificant points or events in the project and, per
the author, may be developed most effectively
when combined with other information such as
acceptance criteria?
a. network diagram
b. Gantt chart
c. stakeholder management strategy
d. summary milestone schedule
8. You are the project manager. Upon presenting
your charter to your sponsor, she requests several
changes. What do you do?
a. Agree to all the changes in order to make your
sponsor happy.
b. Refuse to change the charter, since that would
be unfair to your team.
c. Have your team vote on whether or not to
make the changes and go with the will of the
majority.
d. Negotiate with your sponsor to see how you
can best accommodate her requests without
agreeing to unreasonable expectations.
9. The charter is the primary deliverable of a pro-
ject s phase.
a. Selecting
b. Initiating
c. Planning
d. Executing
10. According to the PMBOK, the rough order of
magnitude for the summary budget within the
project charter is .
a. 100% to 200% accuracy
b. 25% to 75% accuracy
c. 5% to 10% accuracy
d. none of the above
11. After identifying potential project risks, the proj-
ect team should then .
a. develop risk response plans for all identified
risks.
b. wait for the sponsor to conduct a risk
assessment.
c. move on to other components of the charter,
since identifying risks is the only risk-related
activity in the initiating phase.
d. assess each risk based on probability and likely
impact, and then create a risk response plan
for each major risk.
Exercises
1. Consider a major team project for a class. Write
the scope overview and business case sections of
a charter.
2. Write the business case and scope overview sections
of a project charter for a project in which your com-
pany is considering buying out another company.
3. You are part of a student team that is going to
host a picnic-style party as a fundraiser event for
a deserving local nonprofit. Develop a milestone
schedule with acceptance criteria for this event.
Include between four and eight milestones.
90 Part 1 Organizing Projects
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4. You are part of a student team that has volun-
teered to host an alumni event at a recently reo-
pened museum in the downtown part of your
city. The event has the twin purposes of estab-
lishing contacts with long-lost alumni and raising
awareness of the newly reopened museum. Brain-
storm the potential risks for this, quantify them
both according to probability and impact, assign
responsibility for each major risk, and create one
or more contingency plans for each major risk.
5. You are part of a student team that is hosting a
number of inner-city junior high and high school
students from several nearby cities at your campus
for a weekend. The primary purpose is to encour-
age them to attend college and, second, to attend
your college. Identify as many stakeholders as pos-
sible for this project, prioritize them, and list the
interests each has in your project.
6. You have started a project working with your
peers at your rival college to create a cross-
town help-out. You want to encourage many
people in the community to contribute a day s
work on a Saturday for various community pro-
jects. You have a rather heated rivalry with this
other college. Create a comprehensive set of team
operating principles to use on this project. Which
of these principles is most important and why?
Do you expect any of them to be difficult to
enforce and why? What do you plan to do if
some of them do not work?
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Scope Overview
Building a single-family, partially custom-designed home as
required by Mrs. and Mr. John Thomas on Strath Dr., Alpharetta,
Georgia. The single-family home will have the following features:
3,200 square-feet home with 4 bedrooms and 2.5
bathrooms
Flooring hard wood in the first floor, tiles in the kitchen
and bathrooms, carpet in bedrooms
Granite kitchen countertops, GE appliances in the kitchen
3-car garage and external landscaping
Ceiling 10 in first floor and vaulted 9 ceilings in
bedrooms
Business Case
Suburban Homes is in the business of constructing high-
quality homes at an affordable cost with luxury options to pro-
vide quality of life for families. The business strategy is to use
the best construction technologies and practices to enhance
productivity and increase profits, while offering cost-effective
and best-value homes for all its customers simultaneously.
The current project, Suburban Park Homes, is aimed to
expand business operations in Georgia.
Milestone Schedule and Deliverables
CM Construction Manager; PM Project Manager
Milestone Completion Date Stakeholder Judge Acceptance Criteria
Approval of final drawing and all the options 2nd January Client PM and the client to approve
Land preparation, landscape, and foundation 15th January CM PM and CM approval
External work completion and utilities hookup 3rd April CM PM and CM approval
Internal and external finish work and painting 10th May CM PM and CM approval
County clearance and Certificate of Occupancy 30th May CM County Inspectors and PM
Financial settlement and handover of home 21st June PM, Client Design Specifications approval
by PM and the client
Chapter 3 Chartering Projects 91
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Risks
Project Risks Risk Owner Contingency Plans
County approval
and permissions
Suburban Homes,
PM
None
County Property
Taxes hike
Client, Suburban
Homes
Document as con-
tract clause
Traffic congestion Client, County,
DMV
None
Resources Required
Funding: the client, underwriters, and Suburban Homes
People: Suburban project management team, contractors,
subcontractors, and skilled labor
Equipment: construction equipment, tools, and machinery
Material: building materials, appliances, landscaping, shrubs,
and trees
Stakeholders
Stakeholders Interest in Project
Primary:
The client
Suburban Homes
County Officers
Overall project cost, time, quality
Overall project cost, time, quality,
success criteria
Adherence to the county standards
Others:
Contractors
Suppliers
Utility companies
Timely payment of invoices
Business expansion, profits
Adherence to laws, business
expansion
Team Operating Principles
Commitment to project schedule: Project team and contrac-
tors will complete their assigned work as per schedule.
Progress Meetings: Construction team meetings sched-
uled on Mondays at 8 a.m. every week and as demanded
by work progress. Members should prepare for these
meetings with information required for review.
Communication: Regular updates of status, reporting
issues, and weekly progress reports.
Lessons Learned
Team participation in developing project schedule is critical.
Transparent communication is encouraged for resolving
issues.
Conflicts must be reported to the construction manager
immediately.
County laws and utility standards must not be
compromised.
Commitment
Sponsor Department/Organization Signature
Project Manager Department/Organization Signature
Core Team Members Department/Organization Signature
92 Part 1 Organizing Projects
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Semester Project Instructions
Determine one member of your student project team to
be the primary contact with the project sponsor (the
manager or executive who came to class when projects
were announced). The sponsor is also the customer
representative. This sponsor was encouraged by your
professor to come with a draft of the business case
and scope overview sections of the charter, but some
sponsors probably did a better job than others. You
need to ensure that you understand these statements
and how they fit with the organization s goals.
Then, your student team needs to draft the remain-
der of the charter with as much help as you can get from
the sponsor and/or other people at the organization.
Once the charter is in rough-draft form, submit it for
comments to your professor. Armed with the professor s
suggestions, you can present it to your sponsor and any
other people your sponsor chooses. Often, this may
involve a leadership team, department heads (functional
managers), and/or project team members. One differ-
ence on this project is that your student team will likely
do most of the planning and only part of the execution,
while members of the organization for whom you are
planning the project will need to complete the execution.
Therefore, you need to consider how you will transition
responsibility over to the parent organization near the
end of the class.
CASA DE PAZ DEVELOPMENT PROJECT
Questions for Students to Answer:
1. Given the information provided in Chapter 2 on how
this project was selected, create scope overview and
business case sections for a charter.
2. If you were the project manager, what expertise would
you like from the sponsor, stakeholders, or core team
members to create a milestone schedule with accep-
tance criteria?
3. Work with at least two other people and brainstorm
pertinent risks. Assess them to determine which you
believe are major risks, and develop at least one
response for each major risk.
4. Who are the key stakeholders for this project and what
is the interest of each? Which stakeholders have the
most power?
PROJECT M ANAGEM ENT IN ACTION
Information Systems Enhancement Project Charter
The following charter was used when a nonprofit
agency formed a project team to upgrade its informa-
tion systems. Comments on the left side give advice
from a communications perspective regarding how to
write a project charter, and comments on the right side
offer suggestions regarding the content of each section.
Chapter 3 Chartering Projects 93
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DESIGN PRINCIPLES
Headings:
Headings facilitate scanning
by identifying information
covered in each section.
Heading descriptions
should accurately indicate
the information that
follows.
Lists:
Listing techniques help
readers remember key
details of a message.
Numbers, bullets, and other
ordering devices promote
retention and improve
visual design.
Lists are best limited to five
points so they do not look
overwhelming to readers.
Lists are written in parallel
structure, with the first word
of each item having the
same grammatical form,
such as all nouns, all
verbs, or all -ing words.
CONTENT PRINCIPLES
Scope Overview:
The scope overview defines
the major deliverables. It
sets project boundaries by
clarifying what is included
and, sometimes, what is not
included.
Business Case:
The business case defines
project objectives and why
they are important to the
parent organization.
Milestone Schedule:
The milestone schedule
shows the project starting
point, a few major mile-
stones, and the ending point.
Acceptance Criteria
Factors:
These identify which
stakeholder will judge
the acceptability of each
milestone and what
criteria they will use.
PROJECT CHARTER: INFORMATION
SYSTEMS ENHANCEMENT PLAN
Scope Overview
This team will implement a new information
system based on a needs assessment of person-
nel of the agency. The project team will detail
technological issues, as well as upward, down-
ward, and lateral communications issues within
each department and recommend software pack-
age options for each program area. The sponsor
will select a vendor, and the project team will
oversee implementation.
Business Case Objective
The agency needs to overhaul its information
systems to increase productivity for staff, and
create additional learning opportunities for clients.
It is estimated that 20 percent more clients will be
served with the new system.
MILESTONE
COM-
PLETION
DATE
STAKE-
HOLD-
ER
JUDGE
ACCEP-
TANCE
CRITERIA
Outdated
facility, poor
productivity
Start
1/6/18
Staff survey 1/31/18 Sponsor Discussion
with depart-
ment heads
Software
recomm-
endations
3/14/18 Opera-
tions
Manager
All areas
included,
pilot results
Vendor
selected
3/28/18 Sponsor Best meets
qualifications
Technology
in place
5/9/18 Project
Manager
System test
demonstration
Updated
facility,
productivity
improved
5/30/18 Sponsor Two-week
data reports
from
department
heads
94 Part 1 Organizing Projects
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DESIGN PRINCIPLES
Tables:
Use tables to organize
complex information into
an easy-to-follow column
and row format.
Design tables so they
make sense when read
independently of the text.
Use table headings that
reflect logical groupings
of information.
Phrase column language
so it is in parallel structure.
Character Formatting:
Use character formatting,
including boldface, italics,
underlines, and centering
to highlight headings.
Use character formatting
hierarchically. Boldface,
underlines, and all caps
are best for major headings.
Use fewer or less dramatic
techniques for subheadings.
Type Size and Face:
Use 10-, 11-, or 12-point type
for most documents. People
who have poor vision often
prefer larger type.
Use a conventional
typeface, such as Arial,
Times Roman, or Palatino.
White Space:
Use white space to separate
document sections
attractively and to improve
readability.
Page Breaks:
When possible, complete
entire sections on the same
page. Redesign documents
where one or two lines of
text from a section run onto
the next page.
Major Risks
Resources Needed
This project will require the project manager
to spend 50% of her time and the lead user
and 3 core team members 25% of their time
for 5 months. The budget estimate is $45,000.
Stakeholder List
CONTENT PRINCIPLES
Project Risks and
Assumptions:
This section identifies major
risks and how the team
will either reduce their
probability of happening
and/or their impact if they
do occur. One person is
assigned responsibility
for each risk.
Resources Needed:
This is an estimate of the
money, personnel, and
other resources expected
to be needed.
Stakeholder List:
Identifies those individuals
and groups who have an
interest in either the project
process and/or results.
RISK
RISK
OWNER RESPONSE PLANS
System may
not work
properly
Technical
lead
Define top defect and
focus on it exclusively
until fixed.
Implementa-
tion may
cost too much
Accountant Identify areas of cost
reduction and added
funding.
Lack of
sponsor
buy-in
Project
Manager
1. Conduct staff survey
to identify most-
needed capabilities.
2. Understand sponsor
requirements.
STAKEHOLDER INTEREST IN PROJECT
Board
Sponsor
Department
Heads
Overall cost and overall project
success Overall project success,
resource needs; Impact on their
department, resource needs
Lead user New work methods, productivity
increases
Chapter 3 Chartering Projects 95
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. (Newtown Square, PA:
Project Management Institute, Inc., 2017).
Altwies, Diane, and Frank Reynolds, Achieve CAPM
Exam Success: A Concise Study Guide and Desk Ref-
erence (Ft. Lauderdale, FL: J. Ross Publishing, 2010).
Assudani, Rashmi, and Timothy J. Kloppenborg,
Managing Stakeholders for Project Management
Success: An Emergent Model of Stakeholders,
Journal of General Management 35 (3) (Spring
2010): 67 80.
Evans, James R., and William M. Lindsay, The Man-
agement and Control of Quality, 8th ed. (Mason,
OH: Cengage, 2011).
Johnson, Craig E., Meeting the Ethical Challenges of
Leadership (Los Angeles: Sage, 2009).
CONTENT PRINCIPLES
Operating Principles:
Operating principles
indicate agreement on
deadlines, meetings,
decision making, and how
participants will treat each
other with respect.
Lessons Learned:
This section highlights
specific learnings from
previous similar projects
that will help the team copy
good practices and avoid
problems.
Commitment:
Project principals signal
agreement in principle to
the project, recognizing that
some of the specifics will
probably change when the
detailed planning is
complete.
DESIGN PRINCIPLES
Sentences:
To express complex ideas
effectively and to make
ideas easy for readers to
understand, compose most
sentences to be 15 25
words long.
Simple Language:
So all readers understand
your language easily,
substitute short, action-
oriented, easily understood
words for long, unfamiliar,
and unpronounceable
words.
Team Operating Principles
Commitment to timetable. The project manage-
ment team members will complete their
assigned work on time.
Regularly scheduled project team and sponsor-
ship meetings. Project team meetings will be
held every Saturday at 4:15 p.m. The team will
also communicate via e-mail as required. Spon-
sorship meetings with the agency staff will be
held bimonthly and as-needed.
Timely communication. The project manage-
ment team will communicate status, issues, and
questions with agency via e-mail or conference
call weekly. Project actions will be distributed to
the team every Monday.
Majority rule. The project management team will
negotiate and resolve issues on a majority-rule
basis.
Lessons Learned
Agreeing on project scope is a key preliminary
project planning activity.
Maintaining project goals and timeline requires
open communication and quick issue resolution.
Understanding roles and responsibilities facil-
itates smooth teamwork and timely project
completion.
Commitment
Sponsor Project Manager
Lead User Core Team Member
Core Team Member Core Team Member
96 Part 1 Organizing Projects
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Kloppenborg, Timothy J., and Laurence J. Laning,
Strategic Leadership of Portfolio and Project Man-
agement (New York: Business Expert Press, 2012).
Kloppenborg, Timothy J., and Joseph A. Petrick,
Managing Project Quality (Vienna, VA: Manage-
ment Concepts, Inc., 2002).
PMI Lexicon of Project Management Terms Version 3.0
(Newtown Square, PA: Project Management Insti-
tute, Inc., 2015).
Skilton, Paul F., and Kevin J. Dooley, The Effects of
Repeat Collaboration on Creative Abrasion, Acad-
emy of Management Review 35 (1) (2010): 118 134.
Endnotes
1. PMI Lexicon of Project Management Terms
Version 3.0, 2015: 13.
2. Kloppenborg, Timothy J., and Joseph A. Petrick,
Managing Project Quality (Vienna, VA: Manage-
ment Concepts, Inc., 2002): 39.
3. PMI Lexicon of Project Management Terms Ver-
sion 3.0 (Newtown Square, PA, 2015): 7.
Chapter 3 Chartering Projects 97
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2
ORGANIZE LEAD PERFORMPLAN
P A R T 2
LEADING PROJECTS
Chapter 4
Organizational Capability:
Structure, Culture, and Roles
Chapter 5
Leading and Managing
Project Teams
Chapter 6
Stakeholder Analysis and
Communication Planning
Leading for success in project management includes
leading the parent organization that is conducting the
project, leading the project team, and leading the various
stakeholders who care about the project in one way or
another. Chapter 4 deals with the parent organization
giving ideas about how the organizational structure,
organizational culture, project life cycle model, and roles
of various players impact a project. Chapter 5 includes
acquiring, developing, and leading the project team.
Chapter 6 includes engaging stakeholders, managing
communications, and running project meetings.
99
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C H A P T E R 4
Organizational Capability: Structure,
Culture, and Roles
We implement project management best practices for the purpose of increasing
the likelihood for project success. Formerly, as an executive, I was responsible
for establishing, operating, and evolving a national project management office
(PMO) for one of the nation s largest print/mail and electronic outsourcing firms.
Organizational structure, culture, roles and responsibilities of project partici-
pants, and project life cycle standard processes and tools were critical influen-
cers to achieving project success. As there is no single way to implement project
management, how we chose to address each influencer shaped the way projects
were managed. A snapshot of our approach follows:
From an operations perspective, there was a strategic need to implement a
centralized approach to project management. Through a number of mergers and
acquisitions, 10 geographically dispersed operation centers were servicing a
broad range of expanding customer needs. As a result, two key factors were at
play. One: the customer base was growing from regionally based to nationally
based customers. Two: the best-of-the-best operations technology needed to be
leveraged across all centers. Structurally, the decision was made to consolidate
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Compare and contrast the
advantages and disad-
vantages of the functional,
project, strong matrix,
balanced matrix, and
weak matrix methods of
organization; describe
how each operates and
when to use each.
Relate how an organiza-
tion s structure influ-
ences the implementa-
tion of its strategic plan.
Describe organizational
culture elements that are
helpful in planning and
managing projects and
demonstrate how to
overcome organizational
culture elements that
hinder project success.
Describe different proj-
ect life cycle models and
distinguish when each is
appropriate.
BEHAVIORAL OBJECTIVES:
Describe the duties,
motivations, and chal-
lenges of each of the
executive, managerial,
and team roles in projects
and list important attri-
butes for selecting each.
Given a project situation,
explain ethical behavior
consistent with PMI s
Code of Ethics and
Professional Conduct.
Predict the impact of orga-
nizational structure and
associated culture on indi-
vidual and team behaviors.
Predict the impact of
organizational structure
and associated culture
on individual and team
performance.
M
on
ke
y
Bu
si
ne
ss
Im
ag
es
/S
hu
tte
rs
to
ck
.c
om
100
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operation centers to three, geographically in the East, Central, and West. This
meant that internal and external projects that applied nationally could no longer
be managed at a regional level using only regional resources. A new type of proj-
ect manager was needed to manage national resources using a standardized set
of practices. Creating a matrixed project organization to serve the functional orga-
nization was the first phase.
PMBOK ® 6E PRIMARY OUTPUTS
1.2 Foundational elements Life Cycle and Development Approach
2.4 Organizational systems
3.4 Project manager competencies Leader Roles and Responsibilities
4.2 Develop Project
Management Plan
4.7 Close Project
or Phase
4.1 Develop
Project Charter
4.3 Direct and Manage
Project Work
4.4 Direct and Manage
Project Work
4.6 Perform Integrated
Change Control
4.5 Monitor and
Control Project Work
PMBOK® GUIDE
Topics:
1.2 Foundational
elements
2.4 Organizational
systems
3.3 The project man-
ager s sphere of
influence
3.4 Project manager
competencies
4.1 Develop project
charter
4.2 Develop project
management plan
4.3 Direct and manage
project work
4.4 Manage project
knowledge
4.5 Monitor and control
project work
4.6 Perform integrated
change control
4.7 Close project or
phase
CHAPTER OUTPUTS
Life Cycle and Devel-
opment Approach
Leader Roles and
Responsibilities
M
on
ke
y
Bu
si
ne
ss
Im
ag
es
/S
hu
tte
rs
to
ck
.c
om
101
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Ensuring the culture would accept and support these changes was critical
to success as change is not easy and resistance was anticipated. Senior manage-
ment buy-in was essential and plans were implemented to dialogue, collaborate,
and communicate the benefits of a PMO throughout the organization. The PMO s
first mission was to establish national project management standards and manage
a select few strategic national projects with a limited set of project managers.
Proof of concept was key to continued buy-in. Clear roles and responsibilities for
executive sponsors, project managers, and project team members were collabora-
tively established. Standard processes and tools used by the project teams were
jointly developed. Training occurred from the executive suite to project managers
and project team members. As time progressed, project success rates increased
and the PMO responsibilities were expanded to include the project management
of all strategic operational projects and new customer implementations. Career
paths for regional project managers were established. Selected regional project
managers were promoted and trained to be national project managers. The organi-
zational structure changed with selected regional project managers reporting to the
national PMO. The executive sponsorship roles continued to evolve along with
standard processes and practices to facilitate new responsibilities. In Improving
Executive Sponsorship of Projects: A Holistic Approach, additional insight on each
influencer, considerations, pitfalls, and tips for project management implementa-
tion approaches can be found.1
Dawne E. Chandler, PhD, PMP
C hapter 2 dealt with organizational issues of strategic planning, selecting, and resour-cing projects. Chapter 3 details how to initiate a project usually by composing and
ratifying a charter. This chapter introduces both project leadership and project planning.
Leadership in this chapter includes organizational structure and culture along with roles
of all key project participants. Planning is introduced in the selection of the project life
cycle approach and introduction to the concept of a project plan. Both project leadership
and planning lead to project success, as shown in Exhibit 4.1. Effectively leading project
team members and other stakeholders leads to a foundation of respect and trust, which,
in turn leads to project success. Effective project planning lays the groundwork for effective
project execution, monitoring, control, and closeout, which also lead to project success.
EXHIBIT 4.1
DETERMINANTS OF PROJECT SUCCESS
102 Part 2 Leading Projects
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4-1 Types of Organizational Structures
Contemporary companies choose among various methods for establishing their organi-
zational structure. Organization structure is often developed by grouping people together
based on criteria such as functional or technical skills or long-term activities. The struc-
ture size and complexity increase with the increase in the number of employees. The
structure is the way in which an organization divides its people into distinct tasks to
achieve coordination among all these groups. Organizational structure can be considered
to include work assignments, reporting relationships, and decision-making responsibility.
Each method of structuring organizations has strengths and weaknesses. In this section,
we will investigate various organizational methods and the impact of each on managing
projects. The advantages and disadvantages of each organizational form are discussed in
the following sections and then summarized in Exhibit 4.5.
4-1a Functional
A functional organization is an organizational structure in which staff is grouped by
areas of specialization and the project manager has limited authority to assign work
and apply resources. 2 This is the traditional approach in which there are clear lines of
authority according to type of work. For example, all accountants might report to a head
of accounting, all marketers report to a head of marketing, and so on. An organizational
chart for a functional organization is shown in Exhibit 4.2. Note that everyone in the
organization reports up through one and only one supervisor. That supervisor is the
head of a discipline or function (such as marketing).
The functional manager generally controls the project budget, makes most project
decisions, and is the primary person who coordinates project communications outside
the functional areas by contacting his or her peer functional managers.
ADVANTAGES One advantage of the functional form of organization is called unity of
command all workers understand clearly what they need to do because only one boss is
EXHIBIT 4.2
FUNCTIONAL ORGANIZATION
Marketing VP Operations VP Finance VP Services VP
Chapter 4 Organizational Capability: Structure, Culture, and Roles 103
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giving them instructions. Communication is vertical and clearly established. Another
advantage is that since all workers in a discipline report to the same supervisor, they will
have an opportunity to interact frequently and can learn readily from each other and keep
their technical skills sharp. Having the same supervisor also acts as a motivating factor for
several employees to maintain and improve their technical expertise. A third advantage is
that workers know that when they finish work on a project, they will still have a job
because they will continue to report to the same functional manager. For small projects
that require most of the work from one department, the functional organization often
works well, both because of the advantages already stated and because the functional man-
ager can share resources among various small projects and centrally control the work.
DISADVANTAGES That said, the functional form of organization can slow down com-
munications when multiple functions need to have input. It also can be challenging from a
technical standpoint if input is required from multiple disciplines. The functional manager is
probably quite good within his or her domain, but may have less understanding of other dis-
ciplines. However, in small organizations where most people have been forced to understand
multiple areas, this may be less of an issue. Coordination between departments is frequently
conducted at the manager level as the functional managers have a great deal of decision-
making authority. This often means communication needs to first travel up from an
employee at a low level in the structure to the manager, then across from one functional
manager to another manager, and then down from the manager to an employee at a low
level who will be working on it. This can become more complex when organizations have
multiple levels of hierarchy within functional divisions and a chain of command must be fol-
lowed. In short, coordination in a functional organization is complex and time consuming.
These long communication channels often make for slow decision making and slow response
to change. Integration becomes difficult and it may lead to frustration and a decrease in moti-
vation and innovation. Also, decisions will tend to favor the strongest functional group or
division. For these reasons, some organizations choose other forms of organization.
4-1b Projectized
The exact opposite form of functional organization is the projectized organization, which
is defined as group employees, collocated or not, by activities on a particular project. The
project manager in a projectized structure may have complete, or very close to complete,
power over the project team. 3 In this organizational form, the larger organization is bro-
ken down into self-contained units that support large projects, geographies, or customers.
Most people in the organization are assigned to a project and report upward through the
project manager, as can be seen in Exhibit 4.3. While the structure of the two organiza-
tional charts appears similar, the reporting manager is a project manager instead of a func-
tional manager. The project manager has extensive authority for budgets, personnel, and
other decision-making issues in this organizational structure. This provides adequate time
for the project manager to make decisions. Projectized organization structure provides an
opportunity to maintain expertise on a given project.
ADVANTAGES The advantages of the projectized organizational form are very differ-
ent from the advantages of the functional form. Because people from different functions
now report to the same project manager, traditional department barriers are reduced.
Since the project manager is responsible for communications, response times and deci-
sion making tend to be swift. All workers understand clearly what they need to do
because only one boss the project manager is giving them instructions.
Projectized organizational structures often utilize the technique of co-location, which
is an organizational technique in which the project team members are moved to
104 Part 2 Leading Projects
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alternate locations (either full time or only for parts of days) to allow them to better
work with one another, and on the project in general. 4 This co-location often results
in enhanced project team identity as well as trust, collaboration, coordination, strong
customer focus, and effective integration of effort on the project.
DISADVANTAGES However, this organizational form also has disadvantages. Team
members are often assigned to just one project, even if the project only needs part of their
time, which leads to idle time. This can be costly because project team members are retained
during and even after completing the project. Since the project manager is in charge and the
team may be physically located on-site rather than with the rest of the organization, some
projects tend to develop their own work methods and disregard those of the parent organi-
zation. While some of the new methods may be quite useful, project teams not watched
closely can fail to practice important organizational cultural norms, or accepted practices,
and they sometimes fail to pass the lessons they learn on to other project teams. Team
members who are co-located, while learning more about the broader project issues, often
do not keep up their discipline-specific competence as well. Team members sometimes
worry about what they will do when the project is completed, which leads to adverse motiva-
tional, morale, and security issues. In short, motivating people could become a challenge.
4-1c Matrix
Each of the extreme strategies already described (extreme in the sense that either the
functional manager or the project manager has a great deal of authority) has strong
advantages, but also significant weaknesses. In an attempt to capture many of the advan-
tages of both, and to hopefully not have too many of the weaknesses of either, many
organizations use an intermediate organizational strategy in which both the project man-
ager and the functional manager have some authority and share other authority.
This intermediate strategy is the matrix organization, which is any organization in
which the project manager or project team leader actually shares responsibility for the
project with a number of individual functional managers. 5 A matrix organization is
shown in Exhibit 4.4. Note that project team members report to both functional and
EXHIBIT 4.3
PROJECTIZED ORGANIZATION
Project Manager 1 Project Manager 2 Project Manager 3 Project Manager 4
Chapter 4 Organizational Capability: Structure, Culture, and Roles 105
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project managers. This is a clear violation of the unity-of-command principle; however,
it is necessary to enjoy the benefits of a matrix organization. In short, the hoped-for ben-
efit of a matrix structure is a combination of the task focus of the projectized organiza-
tional structure with the technical capability of the functional structure.
ADVANTAGES Matrix organizations have many advantages, which is why an increas-
ing number of companies are using some variation of them today. One advantage is that
because both project and functional managers are involved, there is good visibility into
who is working where, and resources can be shared between departments and projects.
This reduces possible duplication a major advantage in this age of lean thinking in busi-
ness. Since both types of managers are involved, cooperation between departments can be
quite good. There is more input, so decisions tend to be high quality and are better
accepted. This is a major issue since enthusiastic support for controversial decisions often
helps a project team work through challenges. Since people still report to their functional
manager, they are able to develop and retain discipline-specific knowledge. Since the vari-
ous disciplines report to the same project manager, effective integration is still possible.
Because people report to both the project manager, who is responsible for capturing les-
sons learned, and to the functional manager, who is responsible for how the work in a
function is performed, lessons learned can be shared effectively between projects. Further-
more, policies and procedures for each project can be set separately. The project manager
can commit resources and respond to changes, conflicts, and project needs quickly.
Yet another advantage of the matrix form is its flexibility. The amount of decision-
making authority can be shared in whatever manner is desired. When the functional
managers have relatively more power, it is almost like a functional organization. This is
the way many organizations start evolving by giving project managers a bit more
decision-making authority. This is called a weak matrix since the project managers have
less authority than the functional managers. The next step in the progression is a bal-
anced matrix in which project managers and functional managers have about equal
EXHIBIT 4.4
MATRIX ORGANIZATION
Marketing VP Operations VP Finance VP Services VPManager of
Project Managers
Project Manager 1
Project Manager 2
Project Manager 3
Project Manager 4
106 Part 2 Leading Projects
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power. Finally, a strong matrix is one where the project managers have more power than
functional managers. This is more similar to a projectized organizational form. The pro-
gression of forms is shown in Exhibit 4.5.
DISADVANTAGES The matrix organizational form has drawbacks as well. Some people
claim that having two bosses (both a functional manager and a project manager) is a disad-
vantage. This problem certainly needs to be managed because the two managers may each
try to do what they think is best for their project or department and may give conflicting
advice. Dual responsibility and accountability can be demotivating for some people. How-
ever, this is common territory for most people. Most students take multiple classes per
term. Most companies have multiple customers. Having to balance competing demands
can be difficult, but it is often the norm. Since more people are providing the necessary
input, there are more sources of conflict, more meetings, and more challenges to control.
Decisions may not get made as fast. Also, priorities are likely to change routinely.
Firms need to consider which organizational structure is best for them so they can
capitalize on its advantages and mitigate its disadvantages. These decisions can change
over time. Exhibit 4.6 summarizes a comparison of organizational structures.
Note that in a matrix organization, a new role is inserted in the organizational chart
that of manager of project managers. Sometimes this person leads an office called the
project management office (PMO). This does not mean that other organizations cannot
have a PMO. In some organizations, an additional manager will be in the reporting
chain between the project managers and the person in charge (shown as the president).
In other matrix organizations, the project managers report directly to the person in
charge. For simplicity, this chart shows each function with four workers and each project
with four team members. In reality, some functions may have more workers than others,
and some projects may have more team members than others. In fact, some people may
only report to a functional manager since they are not currently assigned to a project,
and others may report to more than one project manager since they are assigned on a
part-time basis to multiple projects. Those people will have more than two supervisors.
While both project managers and functional managers have certain authority in any
matrix organization, the extent of this authority can vary substantially. Often, the project
manager has authority to determine what work needs to be accomplished and by when.
The functional manager often retains authority to determine how the work is accom-
plished. Sometimes, the two managers will negotiate to determine which workers will
be assigned to the project. While both hopefully want the best for the overall organiza-
tion, each has specific responsibilities. For example, the functional manager with several
workers reporting to her wants each employee to have enough work but not be over-
loaded. She also wants all workers to grow in expertise. The project manager, on the
other hand, wants the best workers for the project so she can be more assured of deliv-
ering good results. In a case like this, when they negotiate, the project manager may want
the best resource (who is already busy), but the functional manager may offer the least
experienced resource (who is available).
EXHIBIT 4.5
PROGRESSION OF ORGANIZATIONAL FORMS
ORGANIZATIONAL
FORM FUNCTIONAL WEAK MATRIX BALANCED MATRIX STRONG MATRIX PROJECTIZED
Who has power? FM almost all FM more Equally shared PM more PM almost all
Chapter 4 Organizational Capability: Structure, Culture, and Roles 107
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One other source of potential conflict between the project and functional managers deals
with performance reviews. Often, the functional manager is tasked with writing performance
reviews, yet some workers may spend a great deal of their time on projects. If the project
managers are not allowed to provide input into the performance reviews, some project
team members will work harder to please their functional managers and the projects can
suffer. One project manager offers ideas regarding performance reviews in Exhibit 4.7.
Closely related to the organizational structure is another organizational decision that
needs to be made that of organizational culture. Project managers are not often part of
the executive group that decides on organizational structure or organizational culture,
EXHIBIT 4.7
360-DEGREE PERFORMANCE REVIEWS
In some organizations, the functional manager performs a 360-degree evaluation. This appraisal style
requires that the functional manager seek feedback from a representative sample of the staff who
have worked with that project team member to provide feedback on a 360-degree form. Being
appraised by your peers or team members on a given project is considered best practice because
they ve observed the individual in action in the trenches. Many large organizations use this
appraisal technique, since in large and/or complex organizations some staff rarely see their direct
supervisor or manager, depending upon their function in that organization.
Source: Naomi J. Kinney, CPLP, principle consultant, Multilingual Learning Services.
EXHIBIT 4.6
ORGANIZATIONAL STRUCTURE COMPARISON
FUNCTIONAL MATRIX PROJECTIZED
Who makes most
project decisions?
Functional manager Shared Project manager
Advantages Good discipline-specific
knowledge
Easy for central control
Effective for shared resources
One boss
Clear career path for
professionals
Flexible
Easy to share resources
Good cooperation between
departments
More input for decisions
Wide acceptance of decisions
Good discipline-specific
knowledge
Effective integration on
project
Increased knowledge transfer
between projects
Break down department
barriers
Shorter response time
Quicker decisions
One boss
Enhanced project team
identity
Customer focus
Effective integration on
project
Disadvantages Slow communication between
departments
Slow response to change
Slow decision making
Two bosses
Many sources of conflict
More meetings
Slow reaction time
Hard to monitor and
control
Duplication of resources
Rules not always respected
Potential lessons learned can
be lost
Discipline-specific knowledge
can slip
Less career continuity for
project team members
Source: Adapted from Richard L. Daft, Management, 9th ed. (Mason, OH: South-Western Cengage Learning, 2010): 250 255; and PMBOK® Guide, 21 26.
108 Part 2 Leading Projects
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but they certainly need to understand how these decisions impact reporting relation-
ships, decision-making methods, and commitment for their projects.
4-2 Organizational Culture and Its Impact on
Projects
Just as project managers need to understand the structure of the parent organization, they
also need to understand the culture of the parent organization if they are to communicate
effectively. Organizational culture consists of values, social rituals, symbols, work ethics,
organizational behavior, beliefs, and practices that are shared among members of the orga-
nization and are taught to new members. Values serve as a moral compass to guide us
and provide a frame of reference to set priorities and determine right or wrong. 6 Values
are implemented through social rituals such as meetings, training, and ceremonies, along
with symbols such as work layout and dress code.7 Collectively, these can informally:
Motivate the ethical actions and communications of managers and subordinates;
Determine how people are treated, controlled, and rewarded;
Establish how cooperation, coordination, collaboration, competition, conflict, and
decision making are handled; and
Encourage personal commitment to the organization and justification for its behavior.8
Once a project manager understands the culture of the parent organization, he can
determine how to best foster the culture within his project. Many projects are completed
cooperatively between two or more parent organizations, or one organization (a contractor)
will perform the project for the other organization (a client). Whenever more than one par-
ent organization is involved, the project manager needs to understand the culture of each
well enough to facilitate effective project communications and decision making.
G
ly
nn
is
Jo
ne
s/
Sh
ut
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rs
to
ck
.c
om
Chapter 4 Organizational Capability: Structure, Culture, and Roles 109
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4-2a Culture of the Parent Organization
When a project manager studies the culture of the parent organization, she needs to ask
the following questions:
What is the corporate culture in general?
What are the ascribed values?
Are there standard project management practices and policies?
How is the organization viewed by others in terms of being true to its values?
How does the organization like to communicate internally and externally?
How well does the organization support project management specifically?
TYPES OF POWER One framework that is helpful in understanding a corporate
culture distinguishes the following four types of culture according to what is the most
powerful motivator:
1. Power culture
2. Role culture
3. Task culture
4. Personal culture
Power cultures exist when the supervisor exerts a great deal of economic and political
power and everyone tries to please the boss. Those in formal authority control competi-
tion, conflict resolution, and communication.
Role cultures motivate everyone to understand and closely follow their appointed
roles. Reliable workers follow formal designations of responsibility with utmost respect
for regulations and laws.
In task cultures, it is more important to get the job done than to worry about who
does the work or who gets credit. Hallmarks of task cultures are skill-based assignments,
self-motivated workers, and more deference paid to knowledge than to formal authority.
In personal cultures, people show genuine interest in the needs of workers, consider
worker development as critical to the organization s success, and display an attitude that
collaboration is satisfying and stimulating.9
Many organizations will have one dominant culture modified by at least one of the
other types. An astute person will look not only for what people say when trying to
understand the culture but also will look for actions, decisions, symbols, and stories
that guide behavior.
A variety of organizational culture characteristics make project success more likely.
These characteristics include appreciation for project management; formal recognition for
project management; collaboration to meet organizational goals; engagement of stake-
holders; desire to provide value to customers; teamwork across cultures; integrity; trust;
transparency; insistence on continual learning; knowledge management practices that are
tied to individual and organization learning; and provision of appropriate rewards and rec-
ognition. Recent research has added the following organizational culture themes as helpful
in achieving project success: vision-led, egalitarian, goal-oriented, timely and effective com-
munication, and flexible leadership with rapid decision making.10
MIDLAND INSURANCE COMPANY Midland Insurance Company espouses its
values by giving every employee the One Pager that lists the organization s mission,
strategic imperatives, and core values. The CEO will often pull his One Pager out at
meetings and expects everyone else to do likewise. In talk and in action, Midland tries
to live out the core values that comprise its organizational culture. Exhibit 4.8 shows
Midland s culture.
110 Part 2 Leading Projects
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4-2b Project Cultural Norms
While some of the project team s culture is dictated by that of the parent organization,
effective sponsors and project managers can do many things to promote good working
cultural norms within the project. Many times, participants on a project might not have
worked together previously and may even come from parts of the organization (or out-
side organizations) that have historically been rivals. The sponsor and project manager
need to understand organizational politics and work to develop cooperation both within
the core project team and among the various groups of project stakeholders. A project
team charter helps to formalize this process and set expectations specifically for existing
team members and inducting new team members.
When the project sponsor and manager are determining how to create the project cul-
ture, ethics should be an important consideration. One aspect of an ethical project culture
is to determine how people should act. Project sponsors and managers learn that they need
to act in the best interests of three constituencies: (1) the project itself attempting to
deliver what is promised, (2) the project team encouraging and developing all team
members, and (3) the other project stakeholders satisfying their needs and wants. Ethical
project managers make decisions so that one of the three constituencies does not suffer
unfairly when satisfying the other two. One list of behaviors adapted from the PMI Code
of Ethics and Professional Conduct tells project managers to exhibit the following:
Responsibility take ownership for decisions.
Respect show high regard for ourselves, others, and resources.
Fairness make decisions and act impartially.
Honesty understand the truth and act in a truthful manner.11
The other aspect of an ethical culture is how people actually act. Every project has dif-
ficult periods, and the measure of project ethics is how people act at those times. The proj-
ect manager needs to show courage both in personally making the right decisions and in
creating an atmosphere in which others are encouraged to make the right decisions. An
ethical project culture in which people know how to act and have the courage to do so
yields better ideas; when a spirit of mutual trust prevails, everyone participates with their
ideas and effective partnering relationships within and beyond the project team.
4-3 Project Life Cycles
All projects go through a predictable pattern of activity, or project management life
cycle, which we refer to as project life cycle. Project planning teams use project life
cycle models because various types of projects have differing demands. A research and
development (R&D) project may require a certain test to be performed before manage-
ment approves the expenditure of large amounts of cash, while the manager of a quality
improvement project may need to document how the work is currently performed before
EXHIBIT 4.8
MIDLAND INSURANCE COMPANY VALUES
Integrity Win/Win
Team
Humility
Strong Work Ethic
Creativity
Propriety
Sharing/Caring
Personal Growth
Source: Martin J. Novakov, American Modern Insurance Group.
Chapter 4 Organizational Capability: Structure, Culture, and Roles 111
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it makes sense to experiment with a new method. The major types of project life cycle
models, while differing in details, have some things in common:
They all have definite starting and ending points.
They involve a series of phases that need to be completed and approved before pro-
ceeding to the next phase.
The phases generally include at least one initiating, one planning, one closing, and
one or more executing phases.
The various life cycle models are all frequently adapted based on how they align
with the organizational culture and language.
We will now look at several models that represent those used in improvement, research,
construction, and Agile projects. We introduce the Agile approach to project management
immediately after its life cycle model. In the remainder of the book, we will deal with the
generic, plan-driven model that includes selecting and initiating, planning, executing, and
closing and realizing benefits, as shown in Exhibit 4.9. We will post an Agile icon in the
margin wherever we highlight how the Agile or adaptive approach is different.
4-3a Define-Measure-Analyze-Improve-Control (DMAIC) Model
Many firms use projects to plan and manage quality and productivity improvement
efforts. Various models are used for these improvement efforts. While these models
appear to be somewhat different, they all strive to use facts to make logical decisions
and to ensure that the results are as desired. The Six Sigma approach to quality improve-
ment (a popular current approach explained in Chapter 11) uses the DMAIC model. A
simple version of this model is shown in Exhibit 4.10.
EXHIBIT 4.9
GENERIC PROJECT LIFE CYCLE MODEL
Approval:
to proceed
Charter Kickoff Project
result
Administrative
closure
EXHIBIT 4.10
DMAIC MODEL
Approval:
to proceed
Problem
statement
Fact gathering
defined and
facts collected
Root causes identified
and statistically
proven
Solution
implemented
Methods in place
to maintain
improvements
112 Part 2 Leading Projects
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AGILE
4-3b Research and Development (R&D) Project Life Cycle Model
Many organizations use project management techniques to organize, plan, and manage
research and development efforts. These can vary in length from as much as a decade for
taking a new pharmaceutical product from idea to successful market introduction to as
little as a few weeks to reformat an existing food product and deliver it to a client. Some
R&D project models are complex and have many phases because of huge risks and
demanding oversight; yet some are much simpler. One simple R&D model adapted
from defense development projects is shown in Exhibit 4.11.
4-3c Construction Project Life Cycle Model
Just as in other project applications, since construction projects differ greatly in size and
complexity, a variety of project life cycle models are in use. A generic construction proj-
ect life cycle model used for design build projects is shown in Exhibit 4.12.
4-3d Agile Project Life Cycle Model
One type of model increasingly used in information systems and some other projects
allows for incremental plans and benefits. These approaches have been variously called
iterative, incremental, adaptive, or change driven. While Agile is the umbrella name, some
of the specific approaches are called SCRUM, XP, Crystal, EVO, phased delivery, rapid pro-
totyping, and evolutionary. While these models may start like other project life cycle mod-
els, they provide short bursts of planning and delivery of benefits in multiple increments
during project execution. A generic Agile project life cycle model is shown in Exhibit 4.13.
EXHIBIT 4.11
R&D PROJECT LIFE CYCLE MODEL
Approval:
to proceed
Opportunity
analysis
Business case Proven concept Prototype First lot and
hand off
EXHIBIT 4.12
CONSTRUCTION PROJECT LIFE CYCLE MODEL
Phase Pre-Planning Design Procurement Construction Start Up
Approval
to proceed
Scope definition
and execution
strategy
Procurement
and construction
documents
Materials and
services
Facilities and
processes
Production
attainment
Source: Adapted from James D. Stevens, Timothy J. Kloppenborg, and Charles R. Glagola, Quality Performance Measurements of the EPC Process: The
Blueprint (Austin, TX: Construction Industry Institute, 1994): 16.
Chapter 4 Organizational Capability: Structure, Culture, and Roles 113
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4-4 Agile Project Management
In this section, we introduce several basic ideas from Agile. In subsequent chapters, we
will explain some of them in more detail. In many situations, project managers find the
most useful method takes good practices from both plan-driven and change-driven
approaches, just as the matrix form of organizing takes good ideas from both functional
and projectized organizations.
4-4a What Is Agile?
Agile is a form of adaptive or change-driven project management largely reacting to
what has happened in the early stages of a project rather than planning everything in
detail from the start. Documentation is minimal early in the project but becomes pro-
gressively more complete. To understand Agile, one needs to know both the methods
and the mindset of Agile practice. For the methods, a project vision is developed and
shared early often as part of a charter. Project teams plan in short bursts (generally of
one to four weeks), often called sprints or iterations. The details are planned for the
upcoming iteration and very little change is allowed during it. Products are defined and
delivered one iteration at a time with an output that has business value successfully
delivered at the end of each iteration. Then the next iteration is planned. The mindset
is empowering, engaging, and openly communicating as detailed as follows.
4-4b Why Use Agile?
Traditional plan-driven project management works well in many situations, but if the scope
is hard to define early in the project and/or when much change is expected, an Agile
approach often works better. For these ill-defined and rapidly changing projects, Agile pro-
ponents claim to decrease time, cost, and risk while increasing visibility and innovation.
4-4c What Is an Agile Mindset?
While much has been written about Agile, starting with the Agile Manifesto, a simplified
version of the mindset needed to successfully plan and manage Agile projects boils down
to four key ideas:
1. Satisfy the customer by placing emphasis on outputs that fulfill their needs.
2. Engage all participants through empowerment, cooperation, and knowledge sharing.
EXHIBIT 4.13
AGILE PROJECT LIFE CYCLE MODEL
Production
release
Product
backlog
Incremental Implementation
Charter
Project
Envisioning
Requirements
Gathering
Plan
Replan Test
Develop
Close
Sprint
Plan
Replan Test
Develop
Close
Sprint
Plan
Replan Test
Develop
Close
Sprint
114 Part 2 Leading Projects
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3. Facilitate that engagement through servant leadership and visible and continual
communication.
4. Keep things simple with a sustainable pace or cadence and emphasis on process
improvement.
4-4d What Are the Key Roles in Agile Projects?
All Agile roles are more collaborative than confrontational. Arguably the most essential
role is the customer representative sometimes called the product owner. This person
ensures that the needs and wants of the various constituents in the customer s organi-
zation are identified and prioritized and that project progress and decisions continually
support the customer s desires. The customer representative does much of what a
sponsor might in traditional projects and also works with the team on a continuous
basis, often performing some of the work a project manager might on a traditional
project.
The scrum master serves and leads in a facilitating and collaborative manner, empha-
sizing the need to facilitate and remove obstacles. The scrum master is a more limited,
yet more empowering role than that of a traditional project manager. The team members
in Agile projects are assigned full time and co-located as much as possible. The teams are
self-governing, so the team now accomplishes many of the planning and coordinating
activities a project manager would typically perform.
4-4e How Do You Start an Agile Project?
An Agile project should start with a charter, as any other project should. This high-level
agreement between the product owner, scrum master, and empowered team will help
share the compelling project vision, create commitment, uncover risks, identify stake-
holders, ensure common understanding of success criteria, and establish working agree-
ments and ground rules as needed. Often, the first iteration is used to determine the
product to be built and prioritize the most valuable work for the next iteration.
4-4f How Do You Continue an Agile Project?
Perhaps the easiest way to understand the process of running an Agile project is to visu-
alize the four types of meetings (often called ceremonies) used:
1. Iteration planning meetings have the product owner share the highest value-added
output he or she would like the team to work on next, along with a definition of
what done or quality completion is. The project team then commits to how much
output it can deliver in the iteration. This meeting may include backlog grooming,
which is reprioritizing the work, or backlog grooming may be conducted in a separate
meeting.
2. Daily stand-up meetings are often held for 15 minutes early in the morning and each
team member shares the previous day s accomplishments, the plans for the current
day, and any issues. Problem solving is not done in these team meetings, but if one
teammate can help another, the two talk off-line afterward.
3. Demonstration meetings are held at least once per iteration where the team demon-
strates usable product. Only a completed, usable product is shown.
4. Retrospective meetings are held at the end of each iteration where the project team,
scrum master, product owner, and possibly other key stakeholders openly share what
worked well and what could work better by making a change of some sort. The goal is
to improve the work processes.
Chapter 4 Organizational Capability: Structure, Culture, and Roles 115
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4-4g What Is Needed for Agile to Be Successful?
Experienced and motivated team members are needed because one hallmark of Agile is
self-managed teams. Without experience and willingness to be a cross-functional team
member, the teams would likely flounder. A key stakeholder, often called the product
owner or customer, needs to commit to frequent and detailed meetings, as described
above, with the development team both for initial chartering and requirements gathering,
but also for ongoing prioritization and evaluation. Trust between the client and contrac-
tor (or user and developer) is needed because the details of the requirements and scope
are initially unknown. Trust is also needed as the client needs to prioritize to get maxi-
mum value, given time and resource constraints, and the project team needs to commit
to creating certain working output during each iteration.
4-5 Traditional Project Executive Roles
Projects do not exist in a vacuum. They exist in organizations where they require resources
and executive attention. Projects are the primary method that organizations use to reach
their strategic goals. As such, a variety of players need to be involved at the executive,
managerial, and associate levels, as shown in Exhibit 4.14. Especially in small organiza-
tions, one person may perform more than one role. For example, a sponsor may perform
some or all of the activities normally expected from the customer. The four project exec-
utive roles are the steering team (ST), the sponsor, the customer, and the chief projects
officer (CPO), often known as the project management office (PMO).
4-5a Steering Team
In small to medium-sized organizations, the steering team (sometimes known as the
executive team, management team, leadership team, operating team, or other titles)
often consists of the top person in the organization and his or her direct reports. They
should collectively represent all of the major functions of the organization. In larger
organizations, there may be steering teams at more than one level. When that occurs,
the steering teams at lower levels are directed and constrained by decisions the top-
level steering team makes. Some organizations divide the duties of the steering team by
creating project review committees and delegating tasks to them. In any event, the duties
of the steering team revolve around the following five activities:
1. Overall priority setting
2. Project selection and prioritization
3. Sponsor selection
4. General guidance
5. Encouragement
EXHIBIT 4.14
TRADITIONAL PROJECT EXECUTIVE, MANAGERIAL, AND ASSOCIATE ROLES
EXECUTIVE LEVEL MANAGERIAL LEVEL ASSOCIATE LEVEL
Steering Team (ST) Functional Manager (FM) Core Team Member
Sponsor Project Manager (PM) Subject Matter Expert (SME)
Customer Scrum master
Chief Projects Officer (CPO) Facilitator
116 Part 2 Leading Projects
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The steering team generally sets overall organizational priorities with the CEO. This is
a normal part of strategic planning, as described in Chapter 2. Once the overall organi-
zational goals have been set, the steering team agrees on the criteria for selecting projects
and then selects the projects the organization plans to execute during the year. Once the
overall project list is complete, they determine the relative priorities of the projects to
determine which will start first.
Simultaneously, the steering team often helps the CEO decide who will sponsor
potential upcoming projects. In turn, the steering team often helps the sponsor select
the project manager. In some cases, the steering team even gets involved in deciding
which critical team members will be on the project. This is especially true if very few
people in the organization have highly demanded skills. The steering team can decide
which project these people will work on as part of the prioritizing effort.
Guidance from the steering team includes feedback during formal reviews as well as
informal suggestions at other times. Since steering teams understand how important
project success is in achieving organizational objectives, they normally demand to have
formal project reviews. These can occur either at set calendar times or at a project mile-
stone, which is a significant point or event in the project. 12 At these formal reviews,
the steering team can tell the project team to continue as is, to redirect their efforts in
a specific manner, or to stop the project altogether.
In terms of informal suggestions, it is very empowering to project participants if the
steering team members ask how the project is going and offer encouragement when they
run into each other in the normal course of work. It shows project participants that their
work is important and has high visibility in the organization.
4-5b Sponsor
We defined a sponsor in Chapter 1 as a senior manager serving in a formal role given
authority and responsibility for successful completion of a project deemed strategic to an
organization s success. 13 In this sense, the sponsor is normally an individual who has a
major stake in the project outcome. Sponsors often perform a variety of different tasks
that help a project, both in public and behind the scenes. Major sponsor responsibilities
are shown by project stage in Exhibit 4.15. The sponsor for major projects is often a
member of the steering team. On smaller projects, the sponsor may hold a lower position
in the organization. The interaction indeed, the partnership of the sponsor and proj-
ect manager is critical to project success.
As a member of the steering team, the sponsor should understand the corporate strat-
egy and be prepared to help with project selection and prioritization to link each project
explicitly with organizational strategy.14 Sponsors should pick the project manager and
core team (sometimes with help from the project manager and/or others). Sponsors
should mentor the project manager to ensure that person understands his role and has
the skills, information, and desire to successfully manage the project.
In the previous chapter, we discussed chartering. Sponsors ideally take an active role in
chartering the project by creating a first draft of the business case and scope overview state-
ments for the project. If a sponsor does not take time for this, the project manager needs to
ask questions to elicit this business case and scope overview information. Then the sponsor
should insist that a milestone schedule, preliminary budget, risk identification, assessment cri-
teria, communication plan, and lessons learned be developed by the project manager and team.
In this way, the sponsor sets performance goals and establishes priorities.15 The sponsor then
either personally approves the charter or takes the charter to the steering team for approval.
As the project progresses, the sponsor helps behind the scenes by obtaining resources,
removing roadblocks, making high-level decisions, and interfacing between the project
core team and the executive team. Sponsors often share their vision for the project with
Chapter 4 Organizational Capability: Structure, Culture, and Roles 117
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various stakeholders. When providing staff, sponsors ensure they are adequate in number
and skill. This may include training. It may also include negotiating for staff. Sponsors
often let their project managers arrange this training and negotiate for resources. How-
ever, the sponsor needs to make sure that both are satisfactorily completed.
Once again, sponsors with experienced project managers may merely need to ensure
their project managers have the means in place to monitor and control their projects.
Large projects with many stakeholders often have formal kickoff meetings. The sponsor s
presence demonstrates corporate commitment. Sponsors represent the customer to the
project team. The sponsor must ensure that several important customer-related tasks
are performed as follows:
All customers (stakeholders) have been identified.
Their desires have been uncovered and prioritized.
The project delivers what the customers need.
The customers accept the project deliverables.
Again, the project manager should do much of this, but the sponsor is also responsi-
ble for its completion. While sponsors represent their projects, they also represent the
larger organization. As such, they often should be one of the first persons to determine
the need to stop a project that is no longer needed or is not performing adequately.
Finally, after the project results have been used for a period of time, the sponsor should
make sure the expected results have been achieved.
So, who makes a great sponsor? In addition to having a major stake in the project
outcome and fulfilling the responsibilities described above, the following general beha-
viors and temperaments are desirable:
Excellent communication and listening skills
Ability to handle ambiguity
Ability to self-manage
Approachability
Collaborative attitude
Responsiveness16
EXHIBIT 4.15
SPONSOR RESPONSIBILITIES BY STAGE
STAGE SPONSOR RESPONSIBILITIES
Overarching Provide resources, manage stakeholder relationships, deliver results
Selecting Identify, select, prioritize projects
Initiating Select and mentor project manager, charter project
Planning Meet key stakeholders, ensure planning
Executing Nurture key stakeholders, ensure communications, ensure quality
Closing Ensure stakeholder satisfaction, closure, and knowledge management
Realizing Ensure benefits are achieved and capability is increased
Source: Adapted from Timothy J. Kloppenborg and Laurend J. Laning, Strategic Leadership of Portfolio and Project
Management (Business Expert Press, New York 2012): 47; Timothy J. Kloppenborg, Debbie Tesch, and Chris Manolis,
Project Success and Executive Sponsor Behaviors: Empirical Life Cycle Stage Investigations, Project Management
Journal (February/March, 2014): 15 17; and Timothy J. Kloppenborg and Debbie Tesch, How Effective Sponsors
Influence Project Success, MIT Sloan Management Review (Spring 2015): 28 30.
118 Part 2 Leading Projects
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4-5c Customer
While the specific demands of the customer role are spelled out here, understand that
some or all of this role may be carried out by the sponsor particularly for projects inter-
nal to a company. When a busy customer buys something, it may be tempting to just place
an order and have it delivered. That process is fine for an off-the-shelf item or for a trans-
actional service. However, when it is a one-of-a-kind project, hands-off ordering does not
work. The question then becomes: What does a customer need to do to ensure the desired
results? Exhibit 4.16 shows a list of seven tasks a customer can do before and during a
project to enhance the probability of success. The customer performs three of these tasks
independently and the other four jointly with the project manager. The three customer-
only project tasks are prioritizing the project need, carefully selecting a good contractor,
and killing the project if necessary. The four joint tasks are writing and signing the project
charter, developing clear and detailed requirements, setting up and using project control
systems, and conducting a great project kickoff meeting.
INDEPENDENT TASKS The first requirement is to prioritize each project. The knowl-
edge that one particular project is the highest priority for a company should be
EXHIBIT 4.16
CUSTOMER TASKS ON PROJECTS
INDEPENDENT TASKS JOINT TASKS WITH PROJECT MANAGER
1. Prioritize project
2. Select good contractor
3. Kill project if needed
1. Write and sign charter
2. Develop clear requirements
3. Use control system
4. Conduct kickoff meeting
N
ej
ro
n
Ph
ot
o/
Sh
ut
te
rs
to
ck
.c
om
Chapter 4 Organizational Capability: Structure, Culture, and Roles 119
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communicated, and that project should be tackled by the A team. A related prioritiza-
tion question is: Do we need this project so badly right now that we are willing to start it
even without the skilled personnel, resources, or technology on hand that would improve
the probability of successful completion? If so, ensure this particular project gets top bill-
ing. If not, consider delaying it. A third prioritizing decision that needs to be made
repeatedly is what project requirements must be satisfied first so the project team is
working on what matters most to the customer.
The second customer task is to carefully select a competent and honest contractor to
perform the project. All of the important joint tasks are much easier with the right con-
tractor, the probability of success goes up, and everyone s stress level goes down.
The third customer task is to determine whether to pull the plug on a troubled project.
This could happen right at the start if the project appears to be impractical. It could happen
during detailed planning when the requirements, schedule, budget, risks, or other aspects indi-
cate trouble. More often, it occurs during project execution when the project progress does not
live up to the plan. A customer needs to decide when to stop throwing good money after bad.
JOINT TASKS WITH PROJECT MANAGER The first joint task for customers and
project managers is to create and ratify the project charter. The charter is a broad
agreement concerning the project goals, rationale, risks, timeline, budget, approach,
and roles even though all of the details have yet to be determined. The charter should
help to identify projects that appear risky or otherwise impractical from the outset.
These projects should either be scrapped, or a different approach should be used. If
the project looks promising, both the contractor and the customer normally sign the
charter and feel morally bound to its spirit.
Once the charter is signed, the contractor and customer need to develop detailed
requirements. Some of the challenges many customer companies face are differing
project expectations among the members of the organization. Somehow, the conflicting
desires of multiple people in the customer s organization must be combined into one
set of requirements that will be provided to the people who will perform the project
work. Senior customer representatives and project managers frequently work together
to determine the requirements.
The customer and the contractor often collaborate on the setup and use of several
project control systems. One of these is a communications plan (which is explained in
Chapter 6). Since the customer is often the recipient of communications, he needs to
tell the contractor what he needs to know, when he needs to know it, and what format
will be most convenient. This should include regular progress reports. Second is a change
control system (explained in Chapter 7). Most projects will have multiple changes. A
method must be created to approve potential changes, document their impact, and
ensure that they are carried out as agreed. Third is a risk management system (explained
in Chapter 11). Customers should work with developers to brainstorm possible risks,
consider how likely each risk is to occur, measure a risk s impact should it happen, and
develop contingency plans. The customer needs to ensure that effective communications,
change management, and risk management systems are used.
Customers must help plan and participate in a project kickoff meeting. This meeting
should be widely attended, give everyone involved in the project a chance to ask ques-
tions, and be used to build excitement for the project.
Customers get what they pay for on projects, but only when actively involved in key
activities. Customers have the sole responsibility of prioritizing their own needs, selecting
a contractor to perform their project, and terminating a project that is not working. Cus-
tomers and contractors share the responsibility for crafting and agreeing to a project
charter, articulating requirements, developing and using project control systems, and
conducting an informative and energetic project kickoff.
120 Part 2 Leading Projects
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4-5d Chief Projects Officer/Project Management Office
Organizations need to have one person who owns their project management system
and is responsible for all the people who work on projects. While different companies
use different titles for this position (such as project director or manager of project man-
agers), we will use the title chief projects officer (CPO). Just as companies size and com-
plexity vary greatly, so does the role of CPO. Large companies frequently have a project
management office (PMO). The PMO performs the CPO role. At small companies, the
CPO role may be performed informally by the CEO, who also juggles many other time
demands. Companies in the medium-size range may find it useful to appoint an execu-
tive who already has other responsibilities as the CPO. Ensuring projects are planned
and managed well is so central to the success of most companies that a highly capable
individual is normally assigned this responsibility.
To be effective, the CPO must consider organizational enablers for project success:
these include standardized supporting processes such as approvals and appointments;
standardized execution guidance such as performance assessment criteria and templates;
well-defined responsibility systems such as sponsor and project team roles; and a mature
organizational structure that fosters cooperation and joint problem solving.17
So, what are the responsibilities of the chief projects officer? They include ensuring
that the company s steering team:
Identifies potential projects during strategic planning
Selects a manageable set of projects to be implemented
Prioritizes effectively within that set
Ensures enough resources (people, money, and other resources) are available to per-
form the projects
Selects appropriate project sponsors and teams
Charters the project teams
Monitors and controls the implementation of the projects
Rewards the participants
Celebrates the results of successful projects!
If that is not enough, the CPO also ensures that each individual serving on a project:
Receives the training he or she needs
Captures lessons learned from completed projects
Uses lessons learned from previous projects on new projects
Uses templates and standards when appropriate
4-6 Traditional Project Management Roles
The manager-level roles in traditional projects include the functional manager, project
manager, and facilitator.
4-6a Functional Manager
Functional managers are often department heads. Projects come and go, but departments
generally remain. Functional managers have a large role in deciding how the project
work in their functional area is done. Functional managers and project managers may
negotiate who will be assigned to work on the project.
Generally, top management in an organization needs to decide how the relative
decision-making power in the organization is divided between project managers and
functional managers. Organizations that are new to formalized project management
often start with functional managers having more power. Often, this changes over time
until project managers for big projects have relatively more power.
Chapter 4 Organizational Capability: Structure, Culture, and Roles 121
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4-6b Project Manager
The project manager is the focal point of the project. He or she spends a large amount of time
communicating with everyone who is interested in the project. The project manager leads the
planning, execution, and closing of the project. This person ideally should be a flexible, facili-
tating leader. Since project managers are responsible for the project schedule, they have a
large role in deciding when project activities need to be accomplished. Project managers are
trusted with delivering project results needed by their parent organizations. As such, project
managers need to be worthy of that trust by possessing both integrity and necessary skills.
DESIRED BEHAVIORS Exhibit 4.17 shows a few of the behaviors project managers
can develop first in regard to integrity and then in regard to each of the 10 project man-
agement knowledge areas needed to successfully plan and manage projects. This book
describes some of the factual knowledge project managers need to acquire to become
proficient. Project managers also need to acquire experiential knowledge by practicing
EXHIBIT 4.17
DESIRED PROJECT MANAGER BEHAVIORS
INTEGRITY: A PM demonstrates integrity by making honest decisions, protecting people, defend-
ing core values, leading major change, honoring trust, showing respect, establishing a culture of
honesty, and displaying total commitment to project and people.
INTEGRATION: A PM is an effective integrator by leading the chartering process, coordinating
assembly of a detailed and unified project plan, balancing the needs of all stakeholders, making logi-
cal trade-off decisions, and keeping focus on primary objectives.
SCOPE: A PM deftly handles project scope by obtaining a deep understanding of stakeholder wants
and needs, determining true requirements, learning if proposed changes are essential, stopping
unnecessary scope creep, and demonstrating needed flexibility.
TIME: A PM is an effective scheduler by leading schedule development, understanding resource and
logic limitations, understanding the project life cycle, focusing on key milestones, and making
schedule decisions while being aware of cost and scope issues.
COST: A PM maintains cost control by developing an accurate understanding of project scope,
determining reliable cost estimates, controlling all project costs, and calculating and honestly report-
ing all variances in a timely and transparent manner.
QUALITY: A PM achieves project quality by learning customer expectations and how they relate to
organizational objectives, insisting project decisions are based upon facts, utilizing lessons learned,
ensuring effective work processes are used, and leading testing.
HUMAN RESOURCES: A PM effectively handles human resource issues by leading in a facilitating
manner when possible and forcefully when needed, attracting and retaining good workers, develop-
ing a self-directed project team, and creating a sense of urgency.
COMMUNICATIONS: A PM displays good communications by listening and speaking well, advo-
cating the project vision, maintaining enthusiasm, focusing attention on key issues, establishing
order, working through conflict, seeking support, and openly sharing.
RISK: A PM effectively deals with project risk by openly identifying risks and opportunities, hon-
estly evaluating each, developing avoidance strategies when practical and mitigation strategies when
needed, and courageously recommending needed actions.
PROCUREMENT: A PM effectively procures needed goods and services by accurately documenting
all requirements, identifying and fairly considering all potential sellers, proactively managing con-
tracts and relationships, and ensuring all deliveries.
STAKEHOLDER: A PM deals effectively with stakeholders by robustly identifying all who are
interested in the project, asking probing questions to understand their desires, and ensuring someone
on the project team maintains effective relationships with each.
122 Part 2 Leading Projects
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these behaviors on projects. Not all project managers will become equally adept at each
behavior, but an understanding of the behaviors exhibited by excellent project managers
is a great way to start. Remaining chapters in this book elaborate on these behaviors.
Collectively, all of these skills make for a great, well-rounded project manager.
COMMUNICATION CHANNELS Envision a bicycle wheel, as shown in Exhibit 4.18. The
project manager is like the hub, and the spokes are like the many communication channels
the project manager needs to establish and use with project stakeholders. While there are
many project manager requirements, some of the technical needs can probably be delegated,
but every project manager needs integrity, leadership, and communications skills.
CHALLENGES Project managers deal with several challenges. One is that they often
have more responsibility than authority. This means they need to persuade people to
accomplish some tasks rather than order them to do so. Project managers can create inter-
esting and challenging work assignments for their team members. Many people find this
stimulating. Project managers can more effectively attract followers when they display high
integrity and the ability to get the job done. This includes both technical ability and com-
munications ability. Project managers primarily deal with networks of people both within
and outside their parent company. An effective project manager knows how to get to the
source of the networks. A challenge for project managers is determining how networks
function within certain organizational cultures. This is why organizational culture is so
important. What are the networks within the organization? How do people work, commu-
nicate, and problem solve beneath the function of their job titles?
A rookie project sponsor and rookie project manager should not be assigned to the
same project. While the sponsor normally mentors the project manager, when a sponsor
is new, some of the mentoring may go the other way just as a master sergeant may help
a new lieutenant learn about leading troops.
JUDGMENT CALLS Due to the very nature of projects each one having a unique set
of stakeholders, output, and project team project managers cannot always follow a cook-
book approach in how they manage. They must develop judgment. Exhibit 4.19 lists some
judgment calls that project managers need to be prepared to make on a frequent basis.
COMPETENCIES BY PROJECT STAGE Just as sponsor demands vary by project life
cycle stage, so do those of project managers, as shown in Exhibit 4.20.
PROJECT LEADERSHIP Many people have become convinced that project managers
need to provide leadership in various ways. Knowing the tools and techniques of project
management and even knowing the content of the PMBOK Guide is useful, but not
enough to be a great project manager. A dozen of the more common leadership chal-
lenges faced by project managers are shown in Exhibit 4.21. Anther way to understand
EXHIBIT 4.18
PROJECT MANAGER COMMUNICATION CHANNELS
Project Manager
Stakeholders
Chapter 4 Organizational Capability: Structure, Culture, and Roles 123
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leadership demands of project managers is to consider the core competencies at a glance
shown in Exhibit 4.22.
4-6c Facilitator
Some project management situations require facilitation because the situation is so com-
plex and/or because the opinions are so varied. Sometimes, the workers on a project need
to expand their thinking by considering the many possibilities (possible projects,
approaches, risks, personnel, and other issues). Other times, the workers on the project
EXHIBIT 4.19
PROJECT MANAGER JUDGMENT CALLS
A few general questions project managers need to ask themselves is when to:
Act versus analyze
Lead versus follow
Lead versus administer
Repeat versus change
Change expectations versus accept them
Take over versus let the team perform
Focus on the big picture versus focus on details
Focus on technical versus focus on behavioral
Focus on short term versus focus on long term
Promote order (control) versus promote innovation (freedom)
Allow (constructive) conflict versus discourage (destructive) conflict
Focus communications inside the project versus focus communications outside
Demonstrate optimism versus demonstrate pessimism
Advocate for the project versus accept termination
Focus on project goals versus organizational, personal, or team member goals
Enhance, maintain, or accept changes in scope, quality, cost, and schedule
EXHIBIT 4.20
PROJECT MANAGER COMPETENCIES BY PROJECT LIFE CYCLE STAGE
STAGE COMPETENCY
Initiation Effective questioning/generating feedback
Persuasiveness/Marketing/Selling
Listening skills
Vision oriented/articulate the business problem
Consensus building
Planning Project management skills and knowledge
Consensus building
Technical skills/theoretical knowledge
Implementation Ability to get along/team player
Results oriented
Truthful/honest
Close Writing skills
Share information and credit
Pride in workmanship/qualitytruthful/honest
Source: Gregory J. Skulmoski and Francis T. Hartman, Information Systems Project Manager Soft Competencies: A
Project-Phase Investigation, Project Management Journal (March 2010): 61 77.
124 Part 2 Leading Projects
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EXHIBIT 4.21
A DOZEN PROJECT LEADERSHIP CHALLENGES
General Project Leadership
Provide situational and shared leadership
Develop trust
Manage and negotiate conflicts
Manage political, social, cultural, and ethical issues
Team Leadership
Develop high-performing project teams
Participate in self-organizing project teams
Overcome team-building obstacles
Facilitate team decision making
Stakeholder Leadership
Engage all stakeholders
Influence stakeholder behavior
Maintain effective multidirectional communications
Deal with changes in the environment and within the project
Source: Adapted from unpublished discussion of Project Management Executive Forum meeting, October 10, 2106,
Cincinnati, OH.
EXHIBIT 4.22
AGILE PROJECT LIFE CYCLE MODEL
Decision maker,
lead by example,
have integrity
Strategic thinker,
company goals
Skills training,
ongoing education
PMI Certification:
PMP®, CAPM®
Different size projects
& complexity
Stakeholders,
project teams,
communicator
Goal setting,
results driven,
be accountable
Finance, customer
& internal needs
PM terminology,
PM best practices
Program Mgmt,
Agile, other PMI
certifications
Virtual teams, global
projects
Motivate, inspire,
reward and
recognize
Ask questions,
active listener,
follow-through
Industry, market Sales skills,
continuous
improvement
Industry and
technical
certifications
Diversity in viewpoints,
backgrounds, teams,
cultures
Relationship
builder, influencer,
get buy-in
Project leader and
business leader
Competition,
trends
Project close-out:
use Lessons
Learned
Volunteer projects,
contribute your
expertise
Proven success on
projects and teams
Maximize
everyone’s
strengths
Core Competencies
Experience
Certification
Knowledge
Business
Leadership
Developed by Connie Plowman, PMP, based on her experiences as a hiring manager, practitioner and instructor. connie@plowman.us www.linkedin.com/in/connieplowman
PASSION
People
Source: Connie Plowman, PMP, Chief Operating Officer (retired), PMI Eric Jenett Project Management Excellence Award Recipient
Chapter 4 Organizational Capability: Structure, Culture, and Roles 125
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AGILE
need to focus their thinking by selecting from many options (a project, an approach, a
contractor, or a mitigation strategy). Most project managers and sponsors can and do facil-
itate many meetings. However, the project manager may prefer to focus on the content of
a meeting and enlist a facilitator to help focus on the process of the meeting. In these
situations, an outside facilitator may be useful. Often, a disinterested sponsor or project
manager (one who works on other projects, but not on this one) is used when a facilitator
is needed. Sometimes, the chief projects officer or an outside consultant is used to facilitate.
4-7 Traditional Project Team Roles
The team- or associate-level roles in projects are core team members and subject matter
experts (SMEs).
4-7a Core Team Members
Core team members are the small group of people who are on the project from start to
finish and who jointly with the project manager make many decisions and carry out
many project activities. If the project work expands for a period of time, the core team
members may supervise the work of SMEs who are brought in on an as-needed basis.
Ideally, the core team is as small as practical. It collectively represents and understands
the entire range of project stakeholders and the technologies the project will use. It is
generally neither necessary nor useful to have every single function represented on the
core team, since that would make communication and scheduling meetings more diffi-
cult. Also, if every function is represented directly, team members tend to fight for turf.
The ideal type of core team member is one who is more concerned with completing
the project (on time, with good quality, and on budget, if possible) than with either per-
sonal glory or with only doing work in his or her own discipline. He or she does what it
takes to get the project done.
4-7b Subject Matter Experts
While core team members are typically assigned to the project from start to finish, many pro-
jects also have a specific and temporary need for additional help. The necessary help may be
an expert who can help make a decision. It may be extra workers who are needed at a busy
time during the life of the project. Some extra help may be needed for as little as one meeting;
other extra help may be needed for weeks or months. These extra helpers are often called
subject matter experts (SMEs) since they are usually needed for their specific expertise.
SMEs are brought in for meetings and for performing specific project activities when nec-
essary. A project could have almost any number of SMEs, depending on its size and com-
plexity. SMEs are not on the core team but still are essential to the project. SMEs may be on
a project for a long time and thus be almost indistinguishable from core team members.
However, SMEs may spend only a little time on a particular project and, therefore,
may not relate strongly to it. At times, it is a struggle to get them scheduled and com-
mitted. Typically, a project manager would have a newly assigned SME read the project
charter and the minutes from the last couple of meetings before discussing the project
with him. It is a balancing act to ensure that the SME understands what she needs to
do and how important it is, without spending a great deal of time in the process.
4-8 Role Differences on Agile Projects
Agile project management roles are shown in Exhibit 4.23. Most of the same work still
needs to be accomplished in organizations using Agile methods. Some of the work is
126 Part 2 Leading Projects
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performed by different people as there is an emphasis on empowering teams, and some
is performed at different times as requirements and scope emerge gradually instead of
just at the project start. Collaborative effort and communication specifically with the cli-
ent are common features of Agile project teams.
On Agile projects, arguably the most essential role is the customer representative
sometimes called the product owner. This person is responsible for the return on
investment earned by the project and accepting or rejecting acceptance of deliverables
at the end of each iteration. The customer representative ensures that the needs and
wants of the various constituents in the customer s organization are identified and pri-
oritized and that project progress and decisions continually support the customer s
desires. In Agile projects, the customer representative role is so continuous and active
that we show it as both an executive- and managerial-level role. The customer repre-
sentative does much of what a sponsor might in traditional projects, but there also may
be a designated sponsor (sometimes known as a product manager) who controls the
budget. The customer representative or product owner works with the team on a con-
tinuous basis, often performing some of the work a project manager might on a tradi-
tional project.
A portfolio team often performs much of the work of a traditional steering team and
a similar office that may be titled differently, such as scrum office, performs much of the
work of a project office.
The scrum master serves and leads in a facilitating and collaborative manner. In
effect, this is a project manager who serves and leads in a collaborative, facilitating
manner. This is totally consistent with contemporary project management since many
individuals do much better work when they actively plan rather than have work
assigned to them. The scrum master guides team members as they prioritize tasks and
removes obstacles to their progress. This is a more limited, yet more empowering role
than the traditional project manager. In this book, we consider the scrum master to be
the project manager.
The functional manager (sometimes called a resource manager) has a similar, but
sometimes more limited, role than the traditional department head. Many organizations
using Agile also have a coach acting as a facilitator and trainer.
The team members in Agile projects are assigned full time as much as possible, so
there are very few subject matter experts. The teams are self-governing, so the team
now accomplishes many of the planning and coordinating activities a project manager
would typically perform. Small and co-located teams often characterize Agile projects
and they work closely together. They organize themselves and exhibit significant matu-
rity. They create their own estimates and report to each other daily. The same mem-
bers should be on the team for the entire project or at least for an entire iteration,
EXHIBIT 4.23
AGILE PROJECT ROLES
EXECUTIVE ROLES MANAGERIAL ROLES ASSOCIATE ROLES
Customer (product owner) Customer (product owner) Team Member
Sponsor (product manager) Scrum Master
Portfolio Team Functional Manager
Project Management/Scrum Office Coach
Chapter 4 Organizational Capability: Structure, Culture, and Roles 127
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although the team can change from one iteration to the next. The members should be
co-located and assigned to the project full time for the duration of the iteration.
PMP/CAPM Study Ideas
When it comes to studying for the CAPM or PMP exams, make sure you know the Proj-
ect Management Code of Ethics & Professional Conduct (referenced on p. 111 of this
chapter) inside and out. This is one of the few things not found in the PMBOK® Guide
itself but can be accessed directly from the PMI website. While only eight pages long,
this code generally shows up multiple times on either test, thus providing a great deal
of bang for your buck in terms of studying.
In this chapter, we highlight the fact that a project s life cycle is often industry-specific
or even unique to an organization. Regardless, PMI has identified five generic Process
Groups, representing the stages that are typical of most projects. These include Initiation,
Planning, Executing, Monitoring & Controlling, and Closing. You will be expected to
know these in a great deal of detail, including inputs and outputs of each stage; into
which process group and knowledge area each of the 49 individual processes fit; and
how these processes interact with one another. This flow is shown graphically in the
inside back cover of this book to help you visualize it. This will require a tremendous
amount of studying and should not be underestimated.
Summary
Projects are accomplished either within an organization or
between multiple organizations when different firms work
together. Project managers are more effective if they under-
stand the impact the organization has on the project. In
contemporary society, different organizations choose dif-
ferent organizational structures because they feel there is
an advantage in their unique circumstances. While many
are still officially organized in a traditional functional man-
ner, an increasing number of organizations have at least
informal matrix relationships. The days of having only
one boss are gone for many workers and especially for
many project managers. Each form of organization has
strengths and challenges with respect to projects.
Organizations also have a culture the formal and
informal manner in which people relate to each other
and decisions are made. The hierarchical approach with
the boss having supreme authority has long vanished in
many places. Many organizations today use a more col-
laborative approach some much more than others.
Whatever the approach, project managers need to
understand it and the impact it creates on their project.
Project managers and sponsors need to create a culture in
their project that is consistent with, or at least can work
effectively with, that of the parent organization. Both
organizational structure and culture can become more
complicated if more than one organization is involved
in the project and if they differ in these respects.
Projects follow a predictable pattern or project life
cycle. Many industries have typical project life cycles,
but they vary greatly. A project manager needs to at
least understand what project life cycle model is used at
her organization and often needs to select or modify the
project life cycle to the specific demands of the project.
Multiple executive-, managerial-, and associate-level
roles need to be performed in projects. The project
manager is a central role and the subject of this book.
Project managers need to understand the other roles
and relate effectively to them, regardless of whether
their project is being conducted using a traditional,
Agile, or hybrid approach.
Key Terms Consistent with PMI Standards and Guides
functional organization, 102
projectized organization, 104
co-location, 105
matrix organization, 105
agile, 114
milestone, 117
128 Part 2 Leading Projects
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Chapter Review Questions
1. Describe how a strong (project) matrix is differ-
ent from a weak (functional) matrix.
2. Which organizational structure is often used for
small projects that require most of their work
from a single department?
3. List advantages and disadvantages of
functional, projectized, and matrix forms of
organization.
4. What is co-location, and why is it used?
5. What are organizational values, and why should
a project manager be aware of them?
6. List and describe four different types of corporate
culture.
7. If more than one parent company is involved in a
project, why is it important for the project man-
ager to understand the culture of each?
8. The project manager and sponsor need to
act in the best interest of which three
constituencies?
9. According to the PMI Code of Ethics and Profes-
sional Conduct, project managers need to exhibit
which four behaviors?
10. In your own words, describe an ethical project
culture.
11. What are some characteristics of almost all proj-
ect life cycles?
12. What does the DMAIC model acronym stand
for? When is this type of model used?
13. What distinguishes an Agile project life cycle
model from other types of life cycle models?
14. For what five activities is the project steering
team responsible?
15. Who should select the project manager and the
core team?
16. Who is responsible for ensuring that the steering
team completes its tasks?
17. What types of control systems should a customer
and contractor work together to set up and utilize?
Discussion Questions
1. Marissa Mayer, former CEO of Yahoo!, sparked a
national debate when she insisted that all her
employees be physically present for work. Debate
the merits of co-location, including its advan-
tages and disadvantages.
2. Identify each of the four organizational culture
types with respect to power, and the strongest
motivator for each type. In which organizational
cultures do you feel most and least comfortable
working? Why?
3. List and describe at least four organizational cul-
ture characteristics that increase the likelihood of
project success. Why is each characteristic helpful?
4. Explain multiple methods through which project
managers can lead by example.
5. Define your personal project code of ethics.
6. Brainstorm techniques that effective project lea-
ders can use to resolve ethical conflicts on
projects.
7. You work for a software company. What benefits
do you achieve by utilizing an Information Sys-
tems project life cycle model as opposed to other
project life cycle models?
8. If a project will be divided into many phases,
which life cycle model would you recommend
using to plan it? Why?
9. Describe a possible imbalance between a project
manager s authority and responsibility. What
impact might it have on a project?
10. Is it important to choose a member from every
impacted function of a project for the core team?
Explain why or why not.
PMBOK ® Guide Questions
1. All of the following are characteristics of a pro-
jectized organization except:
a. Decision making is streamlined.
b. Coordination is the responsibility of project
managers.
c. Functional managers have the majority of
authority.
d. Focus is on the customer.
2. Characteristics of an organizational culture can
have a major impact on a project s success. All
of these are attributes of an organizational cul-
ture except:
a. motivation and reward systems
b. risk tolerance
c. code of conduct
d. financial control procedures
Chapter 4 Organizational Capability: Structure, Culture, and Roles 129
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3. organization structures can be clas-
sified as weak, balanced, or strong, depending on
the relative level of influence between the func-
tional manager and the project manager.
a. Silo
b. Matrix
c. Composite
d. Projectized
4. A hierarchical organization where each employee
has one clear superior, and staff are grouped by
areas of specialization and managed by a person
with expertise in that area is known as a:
a. composite organization
b. functional organization
c. projectized organization
d. weak matrix organization
5. In an Agile life cycle model, .
a. the scrum master controls the team
b. detailed planning precedes execution
c. customer requirements are gathered early in
the project
d. the team is self-directed
6. The project sponsor s responsibilities during the
executing stage include:
a. reviewing and signing the project charter
b. signing off on the detailed project plan
c. ensuring communications with key
stakeholders
d. producing project status reports
7. Group phenomena that evolve over time and
include established approaches to initiating and
planning projects, the acceptable means for
getting the work done, and recognized decision-
making authorities are referred to as:
a. organization structures
b. roles and responsibilities
c. project culture (norms)
d. vision and mission
8. Customer responsibilities on a project might
include all of the following except:
a. perform the work of the project to achieve its
objectives
b. advise on project requirements
c. review and accept project deliverables
d. participate in status or kickoff meetings
9. The Chief Projects Officer s or PMO s responsi-
bilities might include:
a. signing the project charter
b. ensuring enough resources are available to
perform the project
c. working with the team to create a project
schedule and budget
d. promoting the project at the executive level of
the organization
10. PMI s Code of Ethics and Professional Conduct is
a guide for project management practitioners
that describes the expectations that they should
hold for themselves and others. Which of these is
not one of the desired behaviors and basic obli-
gations referenced by the code of conduct?
a. fairness
b. honesty
c. authority
d. respect
Exercises
1. Given a scenario, select a preferred organiza-
tional structure and justify your selection.
2. Describe examples of ethical (or nonethical) behav-
ior as outlined in PMI s Code of Ethics and Profes-
sional Conduct exhibited on a project in the news.
3. Describe, with examples, how a project manager
on a project you have observed did or did not
exhibit desirable project manager behaviors as
described in Exhibit 4.17.
4. Briefly describe how the sponsor of your project
is or is not displaying appropriate life cycle
specific behaviors as described in Exhibit 4.15.
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Suburban Homes, once a medium-sized company, is rapidly ex-
panding its business to southern states and is focused on main-
taining its status as the fastest-growing construction company in
the Midwest region of the United States. Its significant growth
and good reputation for building quality single-family homes
and townhomes presents both challenges and opportunities.
130 Part 2 Leading Projects
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Semester Project Instructions
For your example project, describe the organizational
structure of the agency or company for which you are
planning the project. Describe as many of the organiza-
tional culture attributes as you can. List, by name, as
many of the project executive, management, and team
roles as you can identify. Be sure to assign roles to your-
self and your classmates if you are doing the project as a
team. How do you anticipate that the organizational
structure, culture, and role assignments help or hurt
your ability to successfully plan this project? Describe
the project life cycle model that is used in the
organization and if one is not currently used, describe
the life cycle model you plan to use and tell why it is
appropriate.
CASA DE PAZ DEVELOPMENT PROJECT
First, the organizational structure for Casa de Paz is in a sepa-
rate document. We still need names of individuals who are
volunteering for each working group. For this book, we will list
names by first name and initial of last name to protect privacy.
How do you envision this organization operating? Casa de
Paz has a strong ethos of community, rooted in values of
human dignity and a recognition that all of us thrive better in
an atmosphere of mutual respect and care. Every subset of
the community, from board members to staff to volunteers
and affiliates to residents, communicates care and respect in
their interactions with one another. Other behavioral norms
stem from both these values and the vulnerability of the popu-
lation we serve. Given the need, at times, for the organization
to respond rapidly to serious, stressful, even life-threatening
situations, board members, working group members, and
even volunteers need to maintain confidentiality, think carefully,
use discretion, and behave in a trustworthy manner.
For each project selected, we will have one person from
the board serve as sponsor (product owner) and one person
from the respective working group serve as project manager
(scrum master). The product owner for multiple products is
sometimes referred to as a product manager. This person is
Gillian A. The chair of the board and the scrum master for the
entire effort is ___.
Since Casa de Paz is a 501(c)(3) nonprofit organization, part
of the culture is voluntary. One challenge from a project man-
agement perspective is to get people to commit to completing
certain work according to schedule when many have other full-
time jobs. Helping the project teams make team decisions may
be relatively easy. The pillars of PMI s Code of Ethics and Pro-
fessional Conduct of responsibility, respect, fairness, and hon-
esty should be very well accepted and valued.
An Agile approach makes the most sense for this project
as many of the requirements are poorly understood at the
start and many things are changing rapidly such as having
two buildings to consider with competition for both such that
a third building might need to be found. Also, in Agile, we ask
for commitment. If the team cannot commit to the body of
work for the iteration, the plan is changed. The commitment
is made at the team level at the start of the iteration.
Suburban Homes is considering various options to
expand its operations while retaining its focus on managing
resources effectively and efficiently to increase profits:
Given the nature of its projects, Suburban Homes is con-
sidering either a projectized or matrix organization struc-
ture. However, a functional organization structure has not
been ruled out.
With its focus on maintaining high quality in its construction
tasks and end-product (home for the customer) as well as
quality assurance in implementing project management pro-
cesses, the company is actively considering a combination
of the DMAIC model with a traditional project life-cycle
approach.
Organization culture plays an important role in sustaining
and promoting efficiency. The culture, in turn, is influenced
by the organization structure. Suburban Homes is highly
committed to employee development and functional exper-
tise through training, mentoring, and collaborative learning.
Which type of organization structure is more suitable as
Suburban Homes opens new offices in other states? What is
your advice to the company to address all these issues com-
prehensively and coherently?
Chapter 4 Organizational Capability: Structure, Culture, and Roles 131
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PROJECT M ANAGEM ENT IN ACTION
Project Leadership Roles at TriHealth
TriHealth is a company that manages several large
hospitals and a variety of other health organizations,
such as physical fitness facilities and nursing services.
Due to the company s increasing size and complexity,
TriHealth leadership decided they needed to formally
define roles of project executive sponsor, project
leader, performance improvement consultant, core
team member, and subject matter expert. These roles
are shown as follows.
Project Executive Sponsor Initiating
Stage
Empower Project Leader with well-defined char-
ter, which is the overarching guide
Clearly define expected outcomes
Demonstrate commitment to and prioritization of
project
Define decision-making methods and responsibility
sponsor/project leader/team
Partner with Project Leader to identify obstacles,
barriers, and silos to overcome
Planning Stage
Ensure Project Leader understands business con-
text for organization
Ensure Project Leader develops overall project plan
Assist Project Leader in developing vertical and
horizontal communication plan
Demonstrate personal interest in project by invest-
ing time and energy needed
Secure necessary resources and organizational
support
Executing Stage
Communicate and manage organizational politics
Visibly empower and support Project Leader ver-
tically and horizontally
Build relationships with key stakeholders
Actively listen to and promote team and project to
stakeholders
Remove obstacles and ensure progress of project
Ensure goals are met and stakeholders are
satisfied
Closing Stage
Ensure closure; planned completion or termination
Ensure results and lessons learned are captured
and shared
Ensure assessment of related applications or
opportunities
Ensure any necessary next steps are assigned
and resourced
Recognize contributions and celebrate completion
Negotiate follow-up date(s) to assess project status
Project Leader
All of the roles listed are the ultimate responsibility of
the Project Leader. However, in the development of
the charter, the Sponsor and the Project Leader will
have a discussion about the Project Leader role. At
that time, the individuals will determine if the Project
Leader needs additional assistance or skills to facili-
tate the project success and which of these responsi-
bilities need to be delegated to others with expertise
in those areas.
Leads negotiation with Sponsor for charter
definition.
Collaborates with Sponsor to clarify expectations.
Provides direction to the team with integrity, lead-
ership, and communication skills.
Facilitates productive meetings and supports the
team s decisions.
Prepares the high-level work plan and timeline.
Champions the project on the management level
and with the staff.
Leads the implementation of the project.
Manages project flow, including agenda setting,
meeting documentation, and coordination of
team assignments.
Develops implementation, education, and com-
munication plans for the project.
Responsible for the team and project progress
and proactively intervenes to promote team and
project success.
Identifies, communicates, and facilitates the re-
moval of barriers to enable successful project
completion.
132 Part 2 Leading Projects
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Supports the team with tools and methodologies
to accomplish goals.
Facilitates collection and analysis of data.
Leads the team in developing a plan to sustain the
change and monitor effectiveness.
Leads the team in developing recommended next
steps.
Closes project with Sponsor and ensures lessons
learned are captured.
Establishes with Sponsor the dates for post-
project checkup and overall measurable effective-
ness of project.
Performance Improvement Consultant
If the Sponsor and the Project Leader determine
additional support/expertise is needed, a Performance
Improvement Consultant can provide the following
expertise:
Provides direction to the Project Leader in estab-
lishing targets and a measurement and monitor-
ing system.
Mentors the Project Leader on leading the team
through the project management process.
Collaborates with the Project Leader to prepare a
work plan and timeline for the project.
Proactively intervenes to promote team and
project success based on teamwork and
interactions.
Assists the Project Leader in identifying, commu-
nicating, and removing barriers to enable suc-
cessful project completion.
Assists in the researching, best practices, and
benchmarking.
Coaches the Project Leader on the development
and implementation of a comprehensive commu-
nication, education, and change management
plan.
Provides the Project Leader support in ensuring
regular communication with the Sponsor and
Stakeholders.
Offers expertise to the team with tools and meth-
odologies to accomplish goals.
Collaborates with the Project Leader on the collec-
tion and analysis of data.
Ensures a system-wide perspective is considered
and downstream effects analyzed.
Provides change management education and
assists the Project Leader in developing key strat-
egies for successful change management.
Provides coaching to the Project Leader on key
strategies for successful planning, implementa-
tion, and sustainability of the project.
Core Team Member
Takes responsibility for the success of the team.
Attends meetings for duration of the project.
Actively participates in team meetings.
Understands the entire range of the project.
Actively participates in the decision-making process.
Supports the team s decisions.
Completes outside assignments.
Carries out many of the project activities; pro-
duces deliverables on time.
Provides testing or validation of decisions being
made by the team.
Provides data collection and reporting.
Participates in the communication, education,
implementation, and evaluation of the project.
Gathers input from the areas they represent, if
appropriate.
Shares team decisions and plans throughout the
project.
May work directly with Stakeholders or Subject
Matter Experts.
Subject Matter Expert
Not a core team member of the team.
Participates in demonstrations/presentations and/
or team meetings, as needed.
Carries out project activities as assigned; pro-
duces deliverables.
Responsible for supplying requirements.
Provides input to the team or complete activities
based on a specific expertise he or she possesses
that is essential to the project.
Source: TriHealth.
Chapter 4 Organizational Capability: Structure, Culture, and Roles 133
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Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

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Endnotes
1. Chandler, Dawne, and Payson Hall. Improving Exec-
utive Sponsorship of Projects: A Holistic Approach
(New York, NY: Business Expert Press, 2016).
2. PMI Lexicon of Project Terms, 2015, 4.
3. http://www.whizlabs.com/blog/projectized-orga-
nization/, accessed February 7, 2017.
4. http://project-management-knowledge.com/defi-
nitions/c/co-location/, accessed February 7, 2017.
5. http://project-management-knowledge.com/defi-
nitions/m/matrix-organization/, accessed Febru-
ary 7, 2017.
6. Johnson, Craig E., Meeting the Ethical Challenges
of Leadership: Casting Light or Shadow, 3rd ed.
(Thousand Oaks, CA: Sage Publications, Inc.,
2009): 89.
7. Aronson, Zvi H., Aaron J. Shenhar, and Peerasit
Patanakul, Managing the Intangible Aspects of a
Project: The Affect of Vision, Artifacts, and
Leader Values on Project Spirit and Success in
Technology-Driven Projects, Project Manage-
ment Journal (February 2013): 51.
8. Adapted from Erling S. Andersen, Understand
Your Project s Character, Project Management
Journal (December 2003): 4 11; and Ramon J.
Aldag and Loren W. Kuzuhara, Mastering Man-
agement Skills (Mason, OH: Thomson South-
Western, 2005).
9. Adapted from Erling S. Andersen, Understand
Your Project s Character, Project Management
Journal (December 2003): 4 11.
10. Collyer, Simon, Culture, Communication, and
Leadership for Projects in Dynamic Environ-
ments, Project Management Journal (Decem-
ber/January 2017): 111.
11. PM1 Code of Ethics and Professional Conduct,
http://www.pmi.org/-/media/pmi/documents/
public/pdf/ethics/pmi-code-of-ethics , accessed
January 23, 2017.
12. Practice Standard for Scheduling, 2nd ed. (New-
town Square, PA: Project Management Institute,
2011): 134.
13. Chandler, Dawne E., and Payson Hall, Improving
Executive Sponsorship of Projects: A Holistic Approach
(New York: Business Expert Press, 2017): 1.
14. Chandler, Dawne E., and Janice L. Thomas,
Does Executive Sponsorship Matter for Realiz-
ing Project Management Value? Project Man-
agement Journal (October/November 2015): 47.
15. Kloppenborg, Timothy J., and Debbie Tesch,
How Executive Sponsors Influence Project Suc-
cess, MIT Sloan Management Review (Spring
2015): 28 29.
16. Chandler, Dawne E., and Payson Hall, Improving
Executive Sponsorship of Projects: A Holistic
Approach (New York, NY: Business Expert
Press, 2016): 83 88.
17. Wen, Qi, and Maoshan Qiang, Enablers for
Organizational Project Management in the Chi-
nese Context, Project Management Journal (Feb-
ruary/March 2016): 121.
Chapter 4 Organizational Capability: Structure, Culture, and Roles 135
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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C H A P T E R 5
Leading and Managing Project Teams
Gallup Consulting is a global research-based consultancy, specializing in
employee and customer management. Our goal is to take discoveries in behav-
ioral economics and apply them to management and business problems. Every
organization has an enormous, but largely untapped, potential for breakthrough
improvements in productivity through leveraging how human nature drives busi-
ness performance. This unrealized potential can be measured and managed to
improve performance.
Our consulting work is managed as a series of projects. At the start of each
client engagement, project leaders gather the high-level information required to
identify the client s problems and possible remedies, while understanding any
constraints that will affect project success over the long term. The resulting
project charter is a business case for the project and a description of how
Gallup will add value to the client s organization. Codifying these commitments
also helps in enumerating the roles and responsibilities of the project team
members.
w
av
eb
re
ak
m
ed
ia
/S
hu
tte
rs
to
ck
.c
om
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Describe stages of
team development
and strategies to
move teams through
the project life cycle.
Describe characteris-
tics of a high-
performing project
team; assess your
individual and team
capability; and
describe how your
team can improve.
Describe methods of
project team decision
making and the circum-
stances in which each is
likelytobemosteffective.
BEHAVIORAL OBJECTIVES:
Explain how to utilize the
project team relation-
shipandprocessground
rules to improve it.
Describe types of
project manager
power and when
each is appropriate.
Describe typical
sources of project
conflict along with the
steps in a conflict-
resolution process,
styles of handling
conflict, and steps in
a negotiation process.
Summarize how
to develop high-
performance
traditional and
virtual teams.
136
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Staffing a team is critical to project success. Our research shows that there
are three keys to being an effective project leader:
1. Knowing and investing in your own strengths and the strengths of your project
team.
2. Getting people with the right talents on your team.
3. Satisfying the four basic needs of those who follow your leadership: trust,
compassion, stability, and hope.
By strength, I mean an ability to provide consistent, near-perfect perfor-
mance in a specific activity. The first step to building strength is to identify your
greatest talents the ways in which you most naturally think, feel, or behave.
Strengths are created when your naturally powerful talents are combined with
learnable skills, such as how to put together a project budget. Gallup has studied
more than 6 million people, and we have found that individuals have much more
potential for growth and productivity in areas of great talent than areas of
weakness.
A strengths-based approach improves team cohesion and generates better
results. We have found that high-performing teams are more likely to match indi-
viduals talents to assigned tasks and emphasize individual strengths versus
seniority in making personnel decisions. High-performing teams also have lea-
ders who meet the needs of trust, compassion, hope, and stability.
We have found that while each team member has his or her own unique
strengths, the most successful and cohesive teams possess a broader array of
strengths. A tool like the Clifton StrengthsFinder® is useful for helping team
members identify the ways they can best contribute to the team s goals. Our
research shows that the 34 StrengthsFinder themes naturally cluster into these
four groups:
1. Executing making things happen
2. Influencing reaching a broader audience
3. Relationship building holding the team together
4. Strategic thinking focusing on all the possibilities
The student website describes these strengths from a project management
perspective and tells you how to discover your own unique strengths.
Jim Asplund, Gallup Consulting
9.2 Estimate
Activity
Resources
9.3 Acquire Resources
9.6 Control
Resources9.1 Plan Resource
Management
RACI
Team Charter
Resource
Requirements
9.4 Develop Team
9.5 Manage Team
Team Assignments
Team Assessments
4.2 Develop Project
Management Plan
PMBOK® GUIDE
Topics:
Acquire project team
Develop project team
Manage project team
CHAPTER OUTPUTS
Team charter
Resource
requirements
Team assignments
Team assessments
137
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An experienced project manager envisions project performance as two related activi-ties. First, people must perform their roles in completing work activities according
to the plan. Performance by people is the topic of this chapter. Second, data must be
collected and used to determine the project progress and results. Data collection and
determining project progress as measured in schedule, cost, quality, and risk terms are
the subject of Chapter 14. While determining progress and results is conducted largely
in parallel with people performing the project, the two are covered in separate chapters
to emphasize exactly what needs to be done in each.
“Management is the attainment of organizational goals in an effective and efficient
manner through planning, organizing, leading, and controlling organizational
resources.”1 Chapters 7 to 15 of this book deal primarily with planning, organizing, and
executing the project. This chapter deals mostly with managing and leading project
teams. While certain aspects of both management and leadership are necessary in deal-
ing with project teams, in the contemporary approach to projects, the project manager
works collaboratively with the project team to the extent possible while continually push-
ing to reach project goals. “Leadership is the influencing process of leaders and followers
to achieve organizational objectives through change.”2
To further elaborate on the focus of this chapter, management is generally focused on
traditional functions such as planning, organizing, and controlling. In this chapter, man-
agement is concerned with making decisions and working in teams to improve opera-
tional efficiency and effectiveness. Leadership, on the other hand, is about providing
direction, motivating, and guiding people and teams to realize their potential and achieve
challenging organizational goals.
This chapter starts with acquiring the project team up to the point that team mem-
bers have been successfully brought on board to the project. The second section deals
with various activities needed to develop the project team’s capability—many of which
require leadership from the project manager. The third section includes several consid-
erations for the project manager when managing the performance of the project team.
The fourth section covers how to develop effective relationships within the core project
team. The fifth section presents issues about conflict and resolution that occur when
dealing with both team members and stakeholders. Finally, the concluding section details
actions to develop virtual teams.
5-1 Acquire Project Team
Acquire project team is “the process of confirming human resource availability and
obtaining the team necessary to complete project assignments.”3 Chances are the core
team has already been assembled, as it is very helpful to have the core team together for
planning—and even earlier, for chartering a project. However, on some projects, some
core team members may be added later. Also, on many large projects, subject matter
experts (SMEs) may be added during the early stages. This section deals with the timing
of assigning a project team member (preassignment), securing the needed and desired
team members (negotiation), and successfully adding them to the project team (on-
boarding).
It is not necessary for the project manager to always have an opportunity to select the
project team members. However, she is still responsible for their performance. Likewise,
in certain organizational settings, the project manager may not have total authority over
the team member, but she still is accountable for all individuals’ and the team’s
performances.
138 Part 2 Leading Projects
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5-1a Preassignment of Project Team Members
Generally, it is helpful for a project to assign both core team members and SMEs as early
as possible for various reasons. One reason is that people often do not like to be told
what they must do, but are usually enthusiastic if they get a chance to help in creating
a project plan. Therefore, it is good for motivational purposes to include the implemen-
ters in planning. A second reason is that when the people who will perform the work
help to plan it, many more details may be considered and the resulting plans are often
more realistic. Yet another reason to assign project team members early is to be sure they
will be dedicated and be available when needed. For external projects, it is a common
practice to list specific workers who will be assigned to a project team in the proposal,
and occasionally they must be approved by the client. If the project is secured, it is help-
ful to bring the workers onto the project as quickly as possible.
The downside to bringing SMEs on board before they need to complete project activ-
ities is that it could be expensive. For a highly paid expert, this decision can be substan-
tial and impractical. Another problem with bringing people on board early is that they
may first be committed to finishing work on a previous project and may not devote the
necessary attention to the new project. Regardless of how early you bring a person on a
project, it is helpful to keep communications open with the prospective team member
and his or her boss so they understand when the person is needed. This is especially
critical if the project has a tight deadline and/or if the organization is using critical
chain project management.
5-1b Negotiation for Project Team Members
Depending on the norms of the organization, a project manager may need to negotiate
with the functional manager and/or a prospective team member directly to secure his or
her services for a project. The functional manager (perhaps called a department head or
line manager) has the responsibility of running his or her department. For example, the
head of accounting is responsible for how the accounting function is performed. She
wants to keep all of her workers busy, but not too busy, and wants all of her workers
to progress in their capability.
The functional manager may see this project as a good opportunity for some on-
the-job training to help a newer employee gain experience. The project manager, on the
other hand, wants the “best” resource for his or her project. The best resource may
already be busy. Wise project managers often develop good relationships with functional
managers to have leverage in negotiating for a good worker. Functional and project man-
agers may look at the situation from the perspective of the department or project, respec-
tively, and have different ideas of who is the appropriate person to work on the project.
A project manager cannot expect to have the best resource from every department
(unless perhaps the project is the highest priority project for the company). The func-
tional manager may sometimes need to agree to a different resource from what he or
she prefers. In short, most projects have a combination of experienced and inexperienced
resources. If a project manager finds all functional managers are only offering inexperi-
enced people, he should probably ask his sponsor for support.
In many organizations, project managers also need to persuade workers to work on
their project. For experienced project managers, reputation goes a long way. A project
manager can earn a reputation of being a good boss by caring for team members, help-
ing people develop, and assisting them in securing interesting work and promotions at
the end of a project. It is important to align individual aspirations and goals with project
goals to get the best results from everyone on the project team.
Chapter 5 Leading and Managing Project Teams 139
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Many employees campaign hard to work for a great project manager and avoid a
poor project manager. When negotiating with a potential team member, a project man-
ager wants to sell the project to the person. Of course, strong technical skills are impor-
tant for SMEs and are helpful for core team members. However, especially for core team
members, it may be more critical to be an excellent generalist and skilled at communica-
tion and making decisions. Many core team members need to deal with a variety of
issues beyond their discipline and focus on making trade-offs that key stakeholders
demand.
Sometimes, it is necessary to recruit project team members from outside of the parent
organization. Tatro, Inc., uses this strategy, as described in Exhibit 5.1.
5-1c On-Boarding Project Team Members
The ideal time to bring team members and even a few SMEs on board, is when the proj-
ect charter is being written. When that is not possible, the first thing a project manager
might do is share the charter and the meeting minutes with the new member and then
have a one-on-one discussion with that person. There are several purposes for this dis-
cussion. The first is to ensure that the new person understands the project at a high level
and is enthusiastic about being part of it. The second is to learn about the person’s per-
sonal and professional aspirations. The most effective and happy workers are those who
understand how their personal goals and project goals are aligned. Does he or she want
to experience the joy of working on something new, travel, training, new coworkers,
and so on? What unique strengths does he or she already bring to the project, and
what strengths does he or she want to further develop? At this point, the project man-
ager can accomplish the third purpose of the talk, which is to assign the new team mem-
ber to specific activities and develop a plan for personal improvement. Exhibit 5.2
illustrates how one consulting company that has many projects acquires and on-boards
resources.
EXHIBIT 5.1
TATRO, INC., STRATEGY FOR RECRUITING PROJECT TEAM MEMBERS
Tatro, Inc., is a designer and builder of high-end landscape projects. Its strategy is to retain its core
strengths of securing contracts, designing exceptional landscapes, and managing projects with
demanding clients. It subcontracts most other work, but wants to be very careful that the work is
done as well as possible. Tatro understands it needs to have self-motivated workers who are very
presentable to discriminating clients. Tatro primarily relies on recommendations to identify potential
workers. To screen potential workers, Tatro performs extensive background checks. It examines pre-
vious work performed by the worker, talks to previous clients, and attempts to ensure the worker’s
finances will allow him or her to be stable.
At that point, it attempts to recruit these proven workers. Chris Tetrault, president of Tatro, Inc.,
states that he uses a combination of four strategies to recruit, as follows:
1. Pay well.
2. Pay quickly.
3. Provide signature projects for the workers to showcase their skills.
4. Try to get them to like me.
Source: Chris Tetrault, President, Tatro, Inc. Reprinted with permission.
140 Part 2 Leading Projects
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5-2 Develop Project Team
Develop project team is “the process of improving the competencies, team member
interaction, and overall team environment to enhance project performance.”4 Developing
a highly effective project team requires the following six activities from the project man-
ager. Note these six activities build upon each other and are overlapping.
5-2.1.1 Understand stages of project team development.
5-2.1.2 Understand characteristics of high-performing project teams.
5-2.1.3 Assess individual member capability.
5-2.1.4 Assess project team capability.
5-2.1.5 Build both individual and team capability.
5-2.1.6 Establish team ground rules (team charter).
EXHIBIT 5.2
ACQUIRING AND ON-BOARDING RESOURCES AT ATOS-ORIGIN
Resources are the most important assets of a consulting company. It becomes very important to
nurture them, utilize them effectively, and at the same time make money for the company. At
Atos-Origin (a leading IT consulting company), a structured process is followed to manage
resources. Resource skills, credentials, and travel preferences; the business unit to which the
resource belongs; a summary of projects worked on; and so forth are maintained in a searchable
database. Utilization (amount of time a resource is used on projects) is tracked on at least a weekly
basis. Resource availability (amount of time each resource is idle or is available for client projects)
is also tracked and published to a large group of managers to keep in mind for upcoming
assignments.
A central resource manager is responsible for tracking and managing resource utilization. If
any member of the management team has an open requirement, the resource manager is first
notified of the requirement, so that work can begin on tracking the right person for the role.
Resource managers from each business unit meet regularly to discuss staff availability and open
positions.
Weekly meetings are held with senior management teams to understand the open staffing require-
ments. As a first fit, internal available resources are aligned (based on the skills required, time frame
of the project, and whether the role aligns with a person’s career preferences) with open positions.
Since Atos-Origin is a global organization, this helps the company to increase utilization of the indi-
vidual resource and of the group as a whole. If existing resources are not available or do not fit into
the assignment, a requisition to hire new resources is completed, and the job is posted for
recruitment.
Atos-Origin considers three different types of external hires: full-time employees (the preferred
option), hourly employees (work on an hourly basis; the option used when the project is for a
short period of time or when the right resource does not want to accept a full-time offer), and
subcontractors (contracting with other companies; the option used sometimes to mitigate resource
risks).
The new resource who is hired is on-boarded to the company in a structured fashion, and the same
process for managing the person’s utilization and availability is followed. This structured process has
helped reduce attrition, increased internal transfer of resources, helped individual resource growth,
and increased the company’s profitability.
Source: Rachana Thariani, PMP, Atos-Origin.
Chapter 5 Leading and Managing Project Teams 141
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5-2a Stages of Project Team Development
Project teams typically go through a predictable set of stages as they work together. By
effectively using project tools and developing trust and understanding within their teams,
project managers can greatly diminish some of the negative aspects of project team
development stages. While almost all teams go through these stages, the duration of
each stage varies for each team, based on various factors such as familiarity among the
team members, corporate culture, uncertainties and unknowns associated with the proj-
ect, and the urgency of the project. Consequently, some teams get “stalled” in an early
stage and do not progress. Some get further along and then have a setback. Setbacks for
project teams can also come from losing or gaining core team members or SMEs,
changes in project requirements, quality problems with project deliverables, or other rea-
sons. The good news for a team that suffers a setback is that because they worked
through the team development stages once, they can probably work through the stages
more quickly the second time. The bad news is that they do need to work their way
through.
Each stage of team development has its own challenges. For a project manager to suc-
cessfully help a team develop, he or she should be aware of how team members feel and
what behaviors they frequently attempt at each stage. People have a tendency to be
friendly with people who have similar values, while differences are often seen as a threat
that may affect collaboration and lead to undesirable attitudes and behaviors. This
behavioral issue presents challenges in managing teams, specifically global project
teams, where diversity and cultural differences are the norm.
Exhibit 5.3 presents information about behavioral characteristics of the team during
each stage of team development and ideas for managing them.
In learning about and using some of the project management tools that are described
throughout this book, one can implement quite a few of the strategies for team
EXHIBIT 5.3
• Low familiarity among the team
• Individual roles not clear
• Emphasis on collective goals
• Interdependence of members
• Manage differences and conflict
• Focus on consensus-building
• High mutual trust
• High commitment
• Self-managed team
• Participation & empowerment
• Commitment to team goals
• Roles and Responsibilities
1.
Forming
2.
Storming
4.
Performing
3.
Norming
Source: Anantatmula, Vittal, Project Teams: A Structured Development Approach, Business Expert Press, 2016: 12.
142 Part 2 Leading Projects
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development. For example, when a team works together to create a good charter, they
rapidly work through the project-forming stage and often begin to develop the openness,
understanding, and trust that help make their storming stage faster and easier. Informa-
tion regarding the issues, behaviors, and strategies associated with each stage is displayed
in Exhibit 5.4.
Understanding the stages of development that project teams typically progress
through is a basis for project goal attainment and project team development. For exam-
ple, if a project manager of a new team wants to help his or her team progress through
the stages without too much trouble, he or she can look at the top and bottom rows of
Exhibit 5.4. New members often feel a combination of excitement about being picked for
the new team and concern that the work may be difficult. The project manager can help
the new team develop team-operating methods early—when they construct the project
charter. Having the team decide how they will work together helps establish workable
methods and simultaneously helps the team members start to know and trust each
EXHIBIT 5.4
PROJECT TEAM PROGRESSION THROUGH DEVELOPMENT STAGES
FORMING STORMING NORMING PERFORMING ADJOURNING
Team member
relationship
issues
Feel excitement, yet
skepticism
Feel resistance, yet
longing to commit
to project
Feel part of team
and believe project
will succeed
Feel close to
teammates and
understand
teammates
Feel strong attach-
ment to team and
feel loss when team
disbands
Team members
attempt to
Understand expec-
tations, activities
needed, and power
structures
Jockey for power,
ask many ques-
tions, and estab-
lish dubious goals
Accept team mem-
bers, hold open
discussions, and es-
tablish team norms
Improve self, pre-
vent and solve
problems, and ex-
pand beyond offi-
cial role
Complete project on
high note, maintain
relationships with
teammates, and seek
next challenge
PM strategies to
promote
organization
needs
Develop business
case and acceptance
criteria in charter
Develop stake-
holder analysis,
communication
plan, budget, and
quality plan
Manage trade-offs
per stakeholder de-
sires, include spon-
sor in talks, and
conduct audit
Share applied
learnings with or-
ganization and
report progress to
stakeholders
Secure customer
acceptance of deli-
verables, honestly
appraise team
members, and pro-
vide ongoing sup-
port to users
PM strategies to
promote project
needs
Develop scope
overview, milestone
schedule, risks, and
learnings in charter
Develop scope
statement, WBS,
schedule, and risk
register
Add SMEs as need-
ed, authorize work,
and improve work
processes
Monitor and con-
trol project ac-
cording to plan
and update plans
as needed
Test project deli-
verables and secure
team member en-
dorsement of them
PM strategies to
promote team
member needs
Develop team op-
erating methods
and commitment in
charter, and help
members build
relationships
Clarify each
member’s role,
encourage all to
participate, and
determine team
ground rules
Personalize each
member’s role, col-
laborate when pos-
sible, and assess and
build members and
team capability
Capture applied
learnings and im-
prove meeting
and time
management
Celebrate success,
reward team mem-
bers, and help team
members secure
follow-on work
Source: Adapted from Barbara J. Streibel, Peter R. Sholtes, and Brian L. Joiner, The Team Handbook, 3rd ed. (Madison, WI: Oriel Incorporated, 2005): 6–8.
Chapter 5 Leading and Managing Project Teams 143
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other. Once the initial forming is over, it is common for teams to “storm”—that is, to
feel more stress as they begin to understand how big and difficult the project appears
upon closer scrutiny. Some of the team members may want to participate in the project
performance yet may resist committing fully. The project manager may work with the
team to help ensure that everyone understands and accepts their respective roles. Fur-
ther, when each team member understands the other members’ roles, they can see how
the project will be accomplished. The project manager can continue to encourage all
team members to actively participate and to refine the team operating methods into
ground rules if necessary.
Once a project team weathers the storming period, the members often are relieved
because they start to believe they will be successful. Continued team building can help a
team to refine its ability to perform. As team members are encouraged to collaborate and
build capability, the team moves to a higher level, which is often called the performing
stage. Not every team reaches this level. However, it is very satisfying for the teams that
do because the team members realize and increase their potential. Also, this level is a
valuable milestone at which lessons learned can be realized and used to help improve
other project teams. Finally, project teams disband when the project is over. If the proj-
ect has been successful, team members often feel both excited about facing new chal-
lenges and sad about leaving a satisfying experience and good friends. Project managers
should use celebration, rewards, and appropriate follow-on work to guide the team
through this last stretch.
5-2b Characteristics of High-Performing Project Teams
Once a project manager understands the typical stages of team development, it is time to
understand the characteristics of high-performing project teams. These characteristics,
which are an elaborate expansion of the performing column in Exhibit 5.4, reflect the
ideals toward which a project manager tries to guide his or her team.
Teams eager to become high performing often create and use a team charter to
enhance their effectiveness. A team charter presents information about how members
are expected to collaborate in the activities of the project and participate in making deci-
sions. Specifically, team members work in concert with one another. The team charter
also specifies professional performance and the personal behavior of the team members
to achieve harmony, teamwork, team spirit, and dedication.
Developing a team charter promotes collaboration and synergy among the team
members and leads to better team performance. The team charter describes group
norms, which are either written or unwritten rules that dictate behaviors and expecta-
tions of the team members. The charter guides team members regarding work ethics,
honesty, integrity, respect, conflict management, decision making, and communication
protocols. It is preferred for a project team to develop a team charter to improve its per-
formance by defining norms for common understanding and agreement, as shown in
Exhibit 5.5.
This chain of high-performing project team characteristics is shown in Exhibit 5.6.
Remember, this is the ideal. Many project teams perform well and exhibit some, but
not all, of these characteristics. Nevertheless, a conscientious project manager keeps
these characteristics in mind and strives to help his team develop each one.
The characteristics of high-performing project teams start with the personal values of
individual team members. While a project manager can and should strive to improve
upon these values, it is far easier if team members are recruited with a good start on
the following values:
144 Part 2 Leading Projects
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High need for achievement
Understanding and acceptance of personal responsibility
Commitment to self-development and self-directed behavior
Ability to put project needs before their own needs within reason
Willingness to consider alternative views and to change
Personal commitment to the project
EXHIBIT 5.5
PROJECT TEAM CHARTER
• Reporting/Processes
• Elemental Data Reporting
• Responsibilities and Assignments
• Set Consequences of Nonconformance
• Timeliness (Attendance as Well as Delivery)
• Work Hours
• Time Spent
• Obligations
• Reporting
• Deliverables
• Knowledge Sharing
• Tracking (Plan vs. Actual)
• Civility
• Meeting Protocols
• Social Graces
• Decision Protocol
• Receiving/Offering Assistance
• Cooperative Stance
• Honest Communication
• Conflict Recognition
• Negotiations
• Teamwork
• Demeanor
• Communication
• Conflict management
• Negotiation
• Trust
• Team Spirit
• Harmony
• Cohesiveness
• Rare major conflicts
• Commitment
Source: Anantatmula, Vittal, Project Teams: A Structured Development Approach, Business Expert Press, 2016:
136–139.
EXHIBIT 5.6
CHARACTERISTICS OF HIGH-PERFORMING PROJECT TEAMS
Personal
Rewards
Project
Results
Feelings for
Each Other
Personal
Values
Behavior
Methods
Communication
Methods
Project
Methods
Chapter 5 Leading and Managing Project Teams 145
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AGILE
The personal values can be enhanced by utilizing the following effective team behav-
ior methods:
Team members are selected to represent the right skill mix.
Team members help each other.
Team members demonstrate a constant focus on improvement.
Team members use effective time management, including for meetings.
Team members strive for innovation with few formal procedures.
Team members capture, share, and use lessons learned.
The personal values can be further improved by practicing the following beneficial
communications methods:
Information is freely and widely shared within and beyond the team.
All important topics are openly discussed.
Conflict over approaches is valued, but personal conflict is discouraged.
Potential problems are proactively reported.
Teams conduct frequent debriefings and reflect to collectively learn.
Barriers to communication are overcome.
Project managers can certainly use some of the following project management meth-
ods to further the team development:
Agree on common goals and objectives for the project.
Jointly plan the project.
Use the charter to guide joint decision making.
Work together to accomplish activities.
Proactively identify and solve problems.
Hold each other mutually accountable with individualized feedback.
Using effective team, communications, and project management methods leads to
development of the following appropriate feelings that team members can begin to hold
toward one another:
Recognizing how interdependent they are
Being flexible on how each contributes to the project
Being willing to share risks with teammates and having tolerance for minor mistakes
Understanding, appreciating, liking, and trusting each other
Sharing in strong project leadership
This chain leads to two favorable outcomes. The first set of outcomes is personal
rewards that each team member is likely to receive such as the following:
Enjoyment of their work
High spirit and team morale
Pride in being part of the team
Satisfaction in project accomplishments
The other set of favorable outcomes includes the following strong project results:
Persevering despite challenges
Producing high-quality results
Consistently meeting or exceeding stakeholder expectations.5
In addition to these characteristics, agile teams are often described as being self-
managed, focused on project goals, strong communicators, able to decide quickly, more
146 Part 2 Leading Projects
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responsible, and willing to trust their instincts once they understand their sponsor. The
result is that these team members are more satisfied, flexible, and accommodating.
Traditional projects use distributed work teams and more specialists and adopt a
process-oriented approach. On the other hand, teams on agile project typically employ
co-located teams to manage rapid changes and increments. However, agile teams can
be in multiple locations. Further, agile teams require motivated members with a higher
level of commitment. Agile teams have these seven desirable traits:
Question everything
Focus on innovation
Fail their way to success
Communicate thoughts and ideas
Deliver value
Change incrementally
Connect with their purpose6
The Agile project team members are also responsible for regularly checking for devia-
tions and should be capable of detecting aspects of the project that violate the
specifications.
5-2c Assessing Individual Member Capability
Synergy results in a team having a collective capability that exceeds the sum of individual
capabilities. Conversely, if team synergy is absent, the collective capability would fall
short of individual capabilities put together. More often than not, individual team mem-
bers with high capability can effectively be developed into a strong team. So, what capa-
bilities should project team members possess? Five types of useful project team member
capabilities are as follows:
1. Activity-specific knowledge and skills
2. Personal planning and control
3. Personal learning
4. Organizational understanding
5. Interpersonal skills and sensitivity
The first three capabilities are necessary for a person to be a strong individual per-
former, and the last two capabilities help a person become a valuable team player.
While all five are useful, if a project manager wants to develop a strong project team,
the last two capabilities may be more important. Too many teams have not achieved
the expected success because team members were content with their individual
performance.
The first type is activity-specific capability. If a team member is responsible for a spe-
cific function such as managing the construction of a stone wall, he or she should under-
stand in detail what needs to be accomplished to create a desirable stone wall. If she will
personally build the wall, she also needs the skills to do so. A second desirable capability
is personal planning and control, for example, setting personal goals, accomplishing
work as planned, and managing time wisely. Regarding the third capability, project
team members should desire to continually improve and invest effort in their personal
improvement. Learning should never stop.
The fourth useful capability is understanding the organizational structure, culture, and
roles and using that knowledge to support the project manager in accomplishing project
activities. This involves knowing the informal methods and networks within the parent
organization. If the project is being performed for a client, it can also include knowing
Chapter 5 Leading and Managing Project Teams 147
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how things work within the client’s organization. The last useful team member capability
is interpersonal skills and sensitivity. This includes skills such as active listening, effective
speaking, and conflict management. It also includes possessing emotional intelligence
and having sensitivity toward others who have different personalities or backgrounds.
5-2d Assessing Project Team Capability
When assessing project team capability, the project manager should remember that his
or her responsibilities are to simultaneously support the parent organization, the project,
and the project team. These three are intertwined in many ways. While much has been
written concerning teams, Exhibit 5.7 summarizes the success factors of project teams.
Note the related chapter number and specific topic where this book gives guidance to
help achieve each success factor. Many practices of good project management (and
good organizational management) help a project team to excel, just as many team suc-
cess factors help a project team deliver desired project and organizational results.
For example, the project charter covered in Chapter 3 is helpful in achieving many of
the project team success factors. The entire project charter is a basis for more detailed
project planning and for understanding project objectives. Working together to develop,
sign, and distribute the charter greatly aids in communications and commitment. Spe-
cific sections of the charter also help teams develop successfully as they realize shared
goals and challenges. The team operating methods section helps guide team member
behaviors as they resolve conflicts, the applied learnings help create a stimulating work
environment, and the acceptance criteria help team members understand when they sat-
isfy project stakeholders.
Following is a brief description of why each project team success factor listed in
Exhibit 5.7 is useful:
1. Project teams with strong leadership are more likely to be successful. Leadership can
occur at every level within a project team. Each member performs better by under-
standing both his or her own role and those of all the other executives, managers,
and associates that are part of the team. Part of project team leadership is the project
culture nurtured by the sponsor and project manager.
2. Effective team leadership can lead to mutual trust, respect, and credibility among all
parties.
3. This, in turn, can lead to the cross-functional cooperation and support that help guide
a project through turbulent situations.
4–5. Project managers have many project tools to guide a team—charters, stakeholder
analysis, communications plans, scope statements, WBSs, schedules, and kickoff
meetings. Collectively, they help to create clarity and active support for the project.
It is difficult to overestimate the impact that effective communication has on proj-
ect teams. When people are not given information, they must guess. Proactive proj-
ect managers realize that developing and implementing an effective two-way
communication plan is a major key to their teams’ success.
6–8. The next three project team success factors—skills, objectives, and behaviors—apply
specifically to the team. Assembling the right blend of skills and experience for the
project team can be quite challenging. This is especially true in the current work
environment of cost-control measures. One option for project managers is to staff the
project with a combination of experienced and inexperienced members because it
often costs less to include an inexperienced person in the project team. An expectation
148 Part 2 Leading Projects
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EXHIBIT 5.7
PROJECT TEAM SUCCESS FACTORS
PROJECT TEAM SUCCESS FACTORS CPM CHAPTER TOPIC
1 Team leadership in setting direction and project
culture
4 Project management roles, organization, and project
cultures
2 Mutual trust, respect, and credibility among team
members and leaders
4 Project management roles
6 Build relationships
5 Develop project team
3 Cross-functional cooperation, communication,
and support
3 Project charter
6 Communications planning
4 Clear project plans created by team and sup-
ported by organization
3 Project charter
6 Stakeholder analysis
7 Scope and WBS
8 Activity schedule
12 Kick off project
5 Effective communications including feedback on
performance
6 Communications planning
6 Information distribution
14 Report progress
15 Secure customer acceptance
6 Team skills and experience appropriate and
adequate
9 Resource projects
5 Acquire and develop project team
14 Manage overloads and resolve resource conflicts
7 Clearly defined and pursued project and team
objectives
3 Project charter
14 Direct and manage project execution
8 Use of task and relationship behaviors to resolve
conflicts and problems
3 Team operating methods
6 Build relationships, meeting management
11 Risk planning
9 Stimulating work environment with opportu-
nities for improvement and learning
3 Applied learnings
14 Process improvement
15 Capture and share applied learnings
10 Opportunity for team and personal recognition
when project satisfies stakeholders
3 Acceptance criteria
15 Celebrate success
Source: Adapted from Hans J. Thamhain, “Team Leadership Effectiveness in Technology-Based Project Environments,” Project Management Journal 35 (4)
(December 2004): 38–39; and Roy C. Herrenkohl, Becoming a Team: Achieving a Goal (Mason, OH: Thomson South-Western, 2004): 9, 25.
Chapter 5 Leading and Managing Project Teams 149
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can be set for the more experienced person to mentor the junior person. This pro-
motes organizational learning as well as achieving the project’s goals at a lower cost.
Many project teams include a section in their charter on team operating methods.
This section often spells out methods of decision making, meeting management, and
demonstrating professionalism. While working through staffing decisions, an astute
project manager may recognize people in two categories: task oriented or people ori-
ented (relations). Both types are necessary, and the project manager will have to man-
age a balance by developing or recruiting team members.
9–10. When the first eight project team success factors are adequately accomplished, the
last two are often realized. These last two—stimulating work and opportunity for
recognition—have shown the strongest correlation to successful project performance
as perceived by senior managers.6 People work hard and enthusiastically if they find
their work stimulating and believe they will be rewarded for it. Appropriate and sin-
cere recognition can often be at least as powerful a motivation as monetary rewards.
Project managers can use their creativity to reward all who merit it.
All 10 of these project team success factors can be influenced by a project manager.
Many of the success factors require some early work, such as the project charter, and
some require continuing work as the project progresses. A new project manager can
ask questions to determine to what extent his project team currently displays each of
these success factors. Then he will be ready to build the team’s capacity upon this base.
5-2e Building Individual and Project Team Capability
Project managers have many tools at their disposal for developing individuals and teams.
Many of the methods can be used together and reinforce each other. Seven methods that
many project managers find useful are as follows:
1. Demonstrate personal leadership.
2. Utilize project management tools.
3. Demand situational leadership.
4. Create a desirable team identity.
5. Teach personal responsibility.
6. Develop understanding and respect.
7. Use a learning cycle.
PERSONAL LEADERSHIP A good way for project managers to build the capability of
their team is to start by being an effective leader. An effective leader creates and shares a
strong vision for the project. Leading by example gives team members a model to follow.
A project manager leads by balancing the demands of the parent organization, the project,
and the team members. In this context, the project manager is a team member—but one
who treats herself and all the other team members in a respectful manner. The project
manager must use the highest levels of honesty and ethics. This includes never stating any-
thing that is false, but also not giving any false impressions. This can cause a bit of extra
work or conflict in the short term, but it is the only appropriate behavior and pays great
dividends in the long run by encouraging (and even demanding) everyone else to do what
is right. Transparency in communication and action and aligning both are critical and will
set an example for the rest of the team and instill trust among all team members.
PROJECT MANAGEMENT TOOLS Project managers can use project management
tools to develop focus and cohesion among team members. For example, the charter
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helps a team to start quickly and collectively. The WBS, schedule, and other project
management tools each help to focus the team in explicit ways. Specifically, the WBS is
the best tool for project integration and assimilation of the project team to work toward
specific goals and shared outcomes.
SITUATIONAL LEADERSHIP Depending on the team’s initial capability, a project
manager may need to start as a strong individual leader, but the goal is to develop mul-
tiple leaders on the project team. In fact, in a great project team, leadership is situational;
that is, each member may have a leadership role in certain circumstances and follower
roles in other situations. In areas in which a junior team member has specific knowledge,
he or she should ensure that everyone understands the situation. Even a junior team
member is often expected to lead in certain situations. Furthermore, during the initial
stages of team development, the project manager assumes the roles of directing and
monitoring team activities, but those change to supporting and facilitating roles once
the team moves to the performing stage.
DESIRABLE TEAM IDENTITY Another way to build team capacity is to create a desir-
able team identity. Frequently, the project manager and sponsor start thinking about this
even before they recruit the first team members. People want to be associated with a win-
ner. If people believe that a project is vital to the organization and that the work is profes-
sionally stimulating, they want to be part of the team. Depending on the organization,
some teams give detailed thought to the project name and “brand.” Military organizations
and sports teams often do well in developing and maintaining team identity by associating
themselves with pride and prestige. Uniforms demonstrate this identity externally.
RESPONSIBILITY Project team members need to understand they all have three
responsibilities. The first is to complete their individual work on time, on budget, and
correctly as specified in the WBS dictionary. Second, they must complete their joint
work responsibilities with teammates on time, on budget, and according to the plan.
Third, each team member is responsible for improving work methods. Everyone needs
to improve his or her personal work and work with the team to jointly improve the proj-
ect team’s capabilities.
UNDERSTANDING AND RESPECT Project team members need to develop under-
standing and trust in each other to develop team capability. Understanding other team
members starts with understanding oneself. A self-aware individual is more effective in
establishing relationships by better appreciating and valuing the contributions of others
and being willing to learn from them. One method of understanding both oneself and
others better is to use StrengthsFinder and to realize how each individual strength can be
productively applied on projects, as shown on the student website. As team members
understand one another and develop interdependence, they are naturally able to under-
stand and develop interdependence beyond the project team. Since most projects have
multiple stakeholders, this ability to connect at many levels is vital to team development.
LEARNING CYCLE Building project team capability can be envisioned as a learning
cycle in which the team uses creativity to jointly develop and consider alternative
approaches while striving to learn at each point in the process. This learning cycle can
be easily understood using the plan-do-check-act (PDCA) model. The project team capa-
bility building cycle is shown in Exhibit 5.8.
Project team capacity building is performed in the context of planning and executing
project work. Project teams can pass through this capability-building cycle repeatedly as
Chapter 5 Leading and Managing Project Teams 151
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they progressively learn how to work better together to reach their project goals. Free
and open communications along with a willingness to challenge each other are impor-
tant because the project team may need to unlearn or give up past behaviors in favor
of new approaches that might be more effective.
In the “plan” step, project teams are challenged with using lessons learned from previ-
ous projects to drive their improvement efforts. These lessons need to be compared to the
emerging requirements for the project that the team learns from methods such as gather-
ing requirements, meeting with customers, brainstorming risks, and holding design
reviews. Further, historical data from Earned Value Management (EVM) of previously exe-
cuted projects, which provide actual and realistic data, can improve accuracy of cost and
time estimates of the current project, specifically for similar or identical WBS elements.
In the “do” step, the project team then uses this knowledge to develop shared mean-
ing and potential approaches that they may use. The team uncovers assumptions, brain-
storms alternative approaches, and often develops rolling wave plans so the results of
early work will give the information needed to create good plans for later work.
In the “check” step, the project team evaluates the potential approaches and selects
one. They can use techniques such as piloting new technology, creating a subject matter
expert panel for recommendations, conducting feasibility studies, and reviewing the
problem with key stakeholders to obtain a clear decision.
In the “act” step, the project team finishes the planning, carries it out, and gathers
data regarding it. This data can be verified with the planned data for continuous
improvement of the planning process of scope, cost, and time. Simultaneously, the team
seeks acceptance beyond their team through articulating the project’s business case,
involving key stakeholders, proactively communicating according to plans, and not act-
ing until enough support is in place.
The cycle then repeats. Project teams that are serious about improving their capability
repeat this cycle quickly within project stages, at key milestones, and from project to
EXHIBIT 5.8
PROJECT TEAM CAPABILITY BUILDING CYCLE
Use lessons from
previous projects to drive
learning
Develop shared
meaning and approaches
Evaluate approaches
and select desired approach
Enact approach and gain
broader commitment
P
DC
A
Source: Adapted from Peter Senge, Richard Ross, Bryan Smith, Charlotte Roberts, and Art Kleiner, The Fifth Disci-
pline Fieldbook: Strategies and Tools for Building a Learning Organization (New York: Doubleday, 1994): 59–63.
152 Part 2 Leading Projects
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project. The improved capacity of one project team can be shared with other projects
through lessons learned and sharing core team members and SMEs with other projects.
5-2f Establishing Project Team Ground Rules
Project teams often create a brief set of operating principles in their charter as described
in Chapter 3. For small teams performing simple projects, these principles are enough to
guide their behavior. This is especially true if the company has a track record of success
with teams. However, many managers understand that more specific ground rules can
help prevent many potential problems that some project teams encounter. Ground rules
are acceptable behaviors adopted by a project team to improve working relationships,
effectiveness, and communication. Therefore, many times, the simple set of operating
principles is expanded into a broader set of ground rules.
Exhibit 5.9 lists a dozen of the most frequent topics that project teams choose to create
ground rules to cover. Note the topics are classified as either dealing primarily with pro-
cess issues or primarily with relationship issues. Note also that there is more than one way
to implement each ground rule. Also listed in Exhibit 5.9 are two strengths from the stu-
dent website that might be used in very different ways to accomplish each ground rule—
and other strengths could be applied as well—each in its own unique manner.
RELATIONSHIP TOPICS The relationship topics both help the team make better deci-
sions and help project team members feel valued. People who feel valued often work
with much more enthusiasm and commitment.
Encourage Participation The first relationship topic is to encourage balanced partici-
pation. This balance can include drawing out an introverted person and asking a
Select team members with a variety of strengths to ensure balanced participation.
m
oo
db
oa
rd
/A
la
m
y
St
oc
k
Ph
ot
o
Chapter 5 Leading and Managing Project Teams 153
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talkative person to let another individual speak. Balance can mean ensuring that all func-
tions are given the opportunity to provide input. Balanced participation can also mean
sharing leadership roles. The project manager certainly needs to be a leader, but each
project team member can provide leadership in certain situations.
Discuss Openly and Protect Confidentiality The second relationship topic is to
encourage open discussion. When some topics are off limits for discussion, sometimes
important issues are not raised, and poor decisions are made. Closely related to open dis-
cussion is the issue of protecting confidentiality. People should have trust that a sensitive
issue will not be repeated outside of the project team. It is hard to work effectively together
if team members are concerned that important issues could be shared inappropriately.
Avoid Misunderstandings Since projects are often staffed by people from different
functions and even different companies, there is a strong potential for misunderstand-
ings. Both the person stating something and the person listening have a responsibility
to avoid potential misunderstandings. Many active listening techniques are useful for
this purpose, such as summarizing what was said, asking the listener to restate what
was conveyed, or asking for an example.
Develop Trust The fifth relationship topic is to develop trust. Each project team member
has two responsibilities to establish trust. First, one should always be worthy of the trust of
his or her teammates. This means accomplishing work as promised, communicating trans-
parently, and being completely truthful always. Part of being truthful may be expressing in
advance a concern about the ability to do certain work due to reasons such as skills, knowl-
edge, or time constraints. The second responsibility is to trust his or her teammates unless
and until one proves unworthy of trust. Many people live up to the expectations of others.
EXHIBIT 5.9
A DOZEN GROUND RULE TOPICS FOR PROJECT TEAMS
RELATIONSHIP TOPICS PROCESS TOPICS
1. Encourage participation.
Consistency
Includer
1. Manage meetings.
Achiever
Discipline
2. Discuss openly.
Communication
Intellection
2. Establish roles.
Arranger
Individualization
3. Protect confidentiality.
Deliberative
Relator
3. Maintain focus.
Command
Focus
4. Avoid misunderstandings.
Connectedness
Harmony
4. Consider alternatives.
Analytical
Strategic
5. Develop trust.
Belief
Responsibility
5. Use data.
Context
Input
6. Handle conflict.
Adaptability
Empathy
6. Make decisions.
Activator
Restorative
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By practicing the highest ethical standards and expecting the same from other team mem-
bers, a project manager can expect most team members to demonstrate their trustworthi-
ness. That does not mean that you trust an inexperienced person naively to figure out how
to perform a complex task independently. Common sense must be exercised in assigning
work and determining the level of support required for everyone in the team.
Handle Conflict The final relationship ground rule topic is how to handle conflict. Con-
flict can bring out creative discussion and lead to better methods and solutions if the conflict
is confined to a technical or task issue. However, conflict that becomes personal can be
destructive and demotivating. Therefore, conflict over ideas is often encouraged (up to a
point), while personal conflict is often settled by the concerned individuals off the project.
The project manager may get involved and/or may bring in a neutral third party if necessary
to resolve people-related conflicts. Conflict management is covered later in this chapter.
PROCESS TOPICS Process topics include how a project team works together as they
gather data, meet, and make important project decisions.
Manage Meetings The process topic regarding meeting management is introduced in
Chapter 6 in the context of improving and documenting meetings. Special applications
of meeting management are covered in Chapter 12 for kickoff meetings and Chapter 14
for progress reporting meetings.
Establish Roles The second process topic is to establish roles. People are usually
assigned to a project team in the role of project manager, core team member, or subject
matter expert. Within the team, however, it is often helpful to assign roles regarding
items such as who plans a meeting, who watches the time, and who records the minutes.
One important principle with these role assignments is to try to help everyone feel val-
ued. A person who is constantly assigned to perform unpleasant tasks may not feel as
important or as motivated to contribute. Another part of assigning roles is to assign
tasks to project team members between meetings. Each worker is then responsible for
completing their assignments and to report if these assignments are not completed as
planned. However, it is good practice to follow up with the members between meetings
to ensure that project tasks are completed as planned.
Maintain Focus Project managers and the team are often under pressure to complete
the project below the budget and ahead of schedule. Therefore, project managers need to
ensure that the team stays focused. A periodic review of actual progress using the project
plan and project documents to resolve disagreements regarding decisions can help
greatly. The project charter and the plan remind the team what they are trying to accom-
plish and why. Another means of maintaining focus is referring to the stakeholder anal-
ysis and the trade-off decisions that the key stakeholders have indicated. The key with
focus is to spend the most time and energy on important issues and to delegate, post-
pone, or ignore less important issues.
Consider Alternatives The fourth process-oriented ground rule topic is to always con-
sider at least two alternative approaches before proceeding. It is amazing how many project
teams simply agree with the first suggestion that someone makes. A team that invests as little
as a couple of minutes of time can ensure that they have considered alternative approaches.
Quite often, a much better idea emerges from a second or third suggestion than from the
first one. Also, many times a project team decides to combine the better parts of two alter-
natives. This consideration of alternatives not only often yields a better approach, but it also
often results in better commitment because more people’s ideas were considered.
Chapter 5 Leading and Managing Project Teams 155
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For example, in a project to install a suite of equipment at a customer’s site, a final
site investigation revealed that a major piece of equipment was not functional. One
answer was to expedite the shipment of a duplicate piece of equipment, while a compet-
ing alternative was to use overtime labor and consultants to refurbish the onsite equip-
ment. Both alternatives were expensive, and neither looked very promising. However,
upon further discussion, it was determined that one section of the equipment was the
primary concern, so a new section could be airfreighted in and the workers onsite
could install it. This hybrid alternative proved to be far less expensive and more practical
than either alternative that the panicked team first considered.
Use Data The fifth process-oriented ground rule topic is to always use data when pos-
sible. Gather the facts instead of arguing over opinions. In meetings, make the data visi-
ble to everyone on the team so that all can use it to help make informed decisions. It is
possible that a team will generate more alternatives if the data is presented in meetings
because it promotes constructive discussions and synergy. Many of the quality tools
listed in Exhibit 14.9 help the project team to gather, organize, prioritize, and analyze
data for making informed decisions.
Make Decisions The final process-related topic is decision making. Project decisions
can be made in several different ways. Adherence to the other ground rule topics will
help regardless of which decision-making method is chosen. Methods that project
teams often use to make decisions include the following:
The project manager or sponsor makes the decision.
One or two team members recommend or make the decision.
The project team uses consensus to make the decision.
The project team votes to make the decision.
On some issues, the project sponsor or project manager retains the right to make a
decision. Sometimes, this is because a decision needs to be made quickly or it takes higher
authority. A sponsor or project manager may also ask for input from the team and then
make the decision. While this is often a good idea, that person should be very careful to
tell the team up front that he or she still intends to make the decision. Otherwise, the team
members who provided input may feel that their ideas were not considered.
Project managers may choose to delegate a decision to one or two team members—
either members of the core team or SMEs. This strategy works well when not enough
information or time is available at the current meeting and the decision needs to be
made before the following meeting. Decisions that primarily impact one or two members
rather than the entire project team are ripe for delegation. Delegating to two team mem-
bers has the secondary benefit of their getting to know each other better and working
well together for the rest of the project duration. A variation on this delegation strategy
is to ask one or two team members to investigate and recommend a solution on which
the team can decide at the next meeting. Over the course of a project, most team mem-
bers will probably get the chance to make certain decisions.
Consensus is wonderful, but reaching it requires a time-consuming technique. True consen-
sus means each person actively supports the decision—even if it is not his or her first choice.
The team tells stakeholders that after discussion they understand the decision that was made is
the best one for the project. To reach this true consensus, each person needs to be able to artic-
ulate what he or she believes is important in the decision and why. Creative approaches may
need to be developed when none of the original ideas pleases everyone. Consensus is helpful
when significant commitment is necessary to implement the decision. Consensus also might
involve cultural issues, so it is important to include everyone in making decisions.
156 Part 2 Leading Projects
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One final method that project teams might use to make decisions is to vote. This is
often a poor choice since the losers of the vote may not be very enthusiastic and may not
support implementation of the choice wholeheartedly. Another method may be better
than standard voting. A straw vote—that is, a test for agreement—is a method by
which a team may take a nonbinding vote. If most of the team agrees, then it may not
take long to drive toward consensus. If many members do not agree, then delaying the
decision, gathering more data, or agreeing to let one person make the decision may be in
order.
5-3 Manage Project Team
Manage project team is “the process of tracking team member performance, providing
feedback, resolving issues, and coordinating changes to optimize project performance.”7
When managing the project team, a project manager uses various forms of power to get
team members to prioritize and commit to project work. Project managers are often
called upon to either assess members’ performance or to at least provide input for the
performance assessments.
5-3a Project Manager Power and Leadership
Since project managers often rely on people who do not report directly to them to perform
some of the project work, they need to use various forms of power to encourage people to
perform. Types of power available to project managers are shown in Exhibit 5.10.
EXHIBIT 5.10
TYPES OF PROJECT MANAGER POWER
TYPE OF POWER BRIEF DESCRIPTION WHEN USED
Legitimate Formal authority based upon
user’s position
Asking people to perform within their
job description
Reward Persuading others based upon
giving them something
If team members perform well and if
negotiating for resources
Coercive Punishing others for not
performing
Only when needed to maintain disci-
pline or enforce rules
Referent Persuading others based upon
personal relationship
Frequent since project managers often
lack legitimate power based upon
position
Expert Persuading others based upon
your own knowledge and skills
When others respect your opinions
Information Control of information Frequent, as a large part of a project
manager’s role is to convey information
Connection Informal based upon user’s
relationships with influential
people
When working with project sponsors
and when negotiating for resources
Source: Adapted from Robert N. Lussier and Christopher F. Achua, Leadership: Theory, Application, Skill Develop-
ment, 4th ed. Mason, OH: South-Western Cengage Learning, 2010: 110–117.
Chapter 5 Leading and Managing Project Teams 157
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LEGITIMATE POWER Project managers often may not have authority over the project
team members, although they are responsible and accountable for their performance.
Therefore, project managers often have less legitimate power than other managers. How-
ever, to the extent that project managers can ask team members to perform certain activ-
ities, they should do so. In contemporary project management, a project manager often
has a core team to help plan and manage major parts of the project. These core team
members are probably the people the project manager can instruct to perform certain
activities, but he or she would be better served when it is possible to ask them to plan the
activities. The old axiom is true: people tend to support the things they helped to create.
REWARD AND COERCIVE POWER Reward and coercive power are opposites of each
other. Not all rewards cost money. In fact, stimulating work is one of the most powerful
rewards. Enticing people to perform well so they can be assigned to more interesting
and/or challenging work helps the team member, the immediate project, and the organi-
zation. While reward power is the preferred method, there are times when a person is
not performing and a threat, or coercion, may be necessary. This is especially true if
most members of the project team are performing and one or two members are not.
People who work hard value teammates who also work hard and are often upset when
some members do not contribute their share.
REFERENT POWER Referent power is when a project team member works for the proj-
ect manager out of personal desire. Project managers sow the seeds for referent power
when interviewing candidates for their project team. If the project manager takes the
time to understand the personal motives of each team member, he or she can create desir-
able opportunities for each. Individual project managers who remember the adage “no one
loves your project as much as you do” use their referent power by continuing to describe
their project’s purpose in ways that appeal to each individual worker’s desires. Many suc-
cessful project managers work hard to develop both friendships and respect with their
team members. Loyalty must go both ways. If a team member believes a project manager
has his or her best interests at heart and will advocate for him or her, then that team mem-
ber is more likely to demonstrate loyalty to the project manager by working hard.
EXPERT POWER Generally, people want to succeed in whatever they do. Project man-
agers can tap into this desire by using expert power. If a project manager has a reputa-
tion for success and can convince others that he or she understands enough of the
project management technology and politics to successfully guide the project, then peo-
ple will be more inclined to work hard on the project. They will be convinced that their
efforts will pay off and that they will have a chance to learn and grow professionally.
INFORMATION POWER Information power is something that project managers want
to use, but not in a coercive manner. While information is power, withholding or dis-
torting information is unethical. A project manager’s responsibility is to ensure that
whoever needs certain information receives it in a timely manner, in a form they can
understand, and with complete honesty and accuracy. That does not mean sharing con-
fidential information inappropriately. It does mean empowering the core team to distrib-
ute information promptly and accurately according to the communication plan. This
gives the core team more knowledge power.
CONNECTION POWER The very reason for having executives sponsor projects is
because the sponsor frequently has more legitimate power than the project manager. Project
managers can use the power of the sponsor when necessary. A project manager who
158 Part 2 Leading Projects
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frequently asks the sponsor to intervene looks weak. On the other hand, a project manager
who does not ask for the sponsor’s help when it is really needed lacks judgment. Project
managers can create many champions for their project by continuing to expand their con-
tacts with important people and by continuing to talk about the importance of their project.
5-3b Assessing Performance of Individuals and Project Teams
The second aspect of managing project teams is assessing the performance of both indi-
viduals and the project team. Goals of performance assessments include administrative
uses such as rewards and promotions and professional development such as determining
areas for improvement and training. In many organizations, a large percentage of people
dread performance assessments. Many people do not enjoy giving honest feedback—
particularly about shortcomings. Also, many people do not like to receive constructive
feedback. However, for both reward purposes and to improve performance, honest
assessments are needed. Performance assessment can be both informal and formal. Proj-
ect managers often perform informal assessments by observing, asking questions, and
providing suggestions. This improves performance if it is done regularly, as timely and
specific feedback is most effective.
Formal performance assessments are often the primary responsibility of the manager
toward people who directly report to him. In many organizations, this is a functional man-
ager. However, because many project team members spend significant time on a project, the
project manager is often asked to provide input for the formal performance assessment. The
ideal situation for this input is when the team member helped participate in the project plan-
ning and is judged by how his or her work corresponds to the planned work. Many project
team members may work on several projects during the formal assessment period. When
that is the case, the projects where they spent the greatest time would ideally count the
most toward their performance rating. On some large projects, a project manager may seek
input from other team members regarding the team member’s performance.
5-3c Project Team Management Outcomes
A variety of outcomes may result from managing the project team, such as the following:
Morale changes
”Quarter-mile stones” to “inch stones”
Staff changes
Training needs
Discipline
Role clarification
Issues
Lessons learned
MORALE CHANGES Many projects have periods that are difficult, when work demands
are high and milestones to celebrate are few. During these times, the project manager
needs to remember that the way he or she wields power, communicates, appraises prog-
ress, and generally manages can enhance or detract from the morale of all involved. Con-
tinuing to reinforce the project’s purpose, encouraging and supporting workers, and trying
hard to understand their concerns can go a long way toward boosting morale.
QUARTER-MILE STONES TO INCH STONES When constructing the project charter,
the team developed a list of milestones that could be used to measure progress. On some
projects, that is enough detail against which performance can be measured. On other
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projects, however, more details are needed. Perhaps these greater details could be consid-
ered “quarter-mile stones”—giving the ability to check progress more frequently. When
assessing the performance of individual workers, if one individual worker consistently
does not perform well, the project manager may decide that more detailed oversight is
necessary. This could result in “yard, foot, or inch stones,” depending on the level of
oversight deemed necessary. Hopefully, for most projects and most workers, this addi-
tional oversight will not be necessary. It takes time and effort that could be spent on
other productive activities. However, a wise project manager is not going to let a project
get derailed because of one worker who is not performing well.
STAFF CHANGES Poor appraisals, insufficient progress, conflict, necessary reassign-
ments, or other causes may warrant staff changes on a project. When this occurs, wise
project managers treat everyone with respect and recognize that changes are happening.
When new people are added, they are given a formal introduction to the team and pro-
vided information about the project.
TRAINING NEEDS In the course of performance appraisals, training needs are some-
times identified. Project managers should keep the immediate project needs along with
the training needs in mind as they approve training.
DISCIPLINE Performance on some projects is so poor that employees need to be disci-
plined. While coercive power is often considered a last resort, it should be used at times. Proj-
ect managers must ensure that prior warnings of poor performance are issued to a struggling
team member so that person has an opportunity to make amends. Specific behaviors or lack of
progress are documented, the need for the discipline is explained clearly, and specific improve-
ment strategies are developed to reduce the chance that further discipline will be needed.
ROLE CLARIFICATION Sometimes, progress may be lacking because of misunder-
standings in responsibilities or miscommunication. In those cases, the project manager
can clarify roles of all impacted employees by detailing their roles in completing WBS
tasks, responsibilities toward other team members and the project, and what is expected
of them in terms of project tasks and professional behavior.
ISSUES AND LESSONS LEARNED Many project managers keep issue logs. These
serve as living documents of issues that arise while managing the project and the project
team. As issues are raised, they are added to the log, and once they are resolved, they are
deleted. The resolved issues sometimes make good lessons learned if they can help future
project teams avoid similar problems. These lessons can be documented and stored for
easy retrieval in a lessons-learned knowledge base.
5-4 Relationship Building Within the Core Team
Project sponsors and managers who wish to create highly productive workplaces ensure
that core team members understand what is expected of them, have the chance to do
work they are well suited to perform, receive appropriate recognition, have good cowor-
kers, have their opinions considered, and have opportunities to grow and develop.8 The
sponsor and the project manager ideally begin by asking one another about personal
expectations regarding the project and project goals such as specific capabilities of the
project deliverables. Both the project manager and sponsor may have individual motives
also. It is helpful to disclose and acknowledge these personal goals to each other.
The project manager, in turn, asks each core team member what he or she personally
wants from being involved in the project. These conversations not only help the project
160 Part 2 Leading Projects
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manager understand priorities but also understand motivations. For example, core team
members may want to participate in a stimulating experience, gain new skills, or earn a
promotion. Understanding these motivations will make it easier for the project manager
to address them. Aligning individual aspirations with project goals in determining indi-
vidual roles and responsibilities is desirable and productive.
The project manager can encourage open and transparent communication such as
keeping people informed, demonstrating that everyone’s input is valued, personally shar-
ing feelings, and respecting confidentiality. She should set the expectation that all team
members practice these habits.
Joint establishment of project meeting agendas helps in building relations because all
team members feel their concerns are addressed, and they develop a greater sense of
ownership in meetings. When members get to share in meaningful project learning,
they feel their insight is valued. Frequent celebration of small successes helps project
team members share the enjoyment of working on a project, which in turn helps them
stay committed to successful project completion.
One other key relationship-building activity that needs to start early and continue
throughout the project is concerned with appropriate decision making and problem solv-
ing. The project manager and core team need to understand who makes each type of
project decision and how those decisions are made. One consideration is that people
involved in making decisions tend to support them. Decisions made by groups tend to
take longer, and projects are often pushed for time. Some decisions are best made by a
single expert, while others are best made by a group that represents various points of
view. Each project team will need to determine who will make which types of decisions.
Exhibit 5.11 gives general advice that can be applied in making this determination.
5-5 Managing Project Conflicts
Projects create unique outputs, work with diverse stakeholders, are represented by team
members from various functions and even different companies, and frequently operate in
a matrix environment. These factors, along with scope, time, and cost constraints, con-
tribute to potential conflicts. Many project management initiating and planning tools
exist to reduce destructive aspects of conflict, at least partly. This section discusses differ-
ent ways to view conflict, along with various styles and approaches for dealing with it.
This section also introduces a project conflict-resolution process model.
In dealing with task-related conflicts, project charters are meant to help the project core
team, project manager, and sponsor understand many aspects of the project at a high level
and head off potential conflict between individuals. Several components included in charters,
EXHIBIT 5.11
PROJECT DECISION-MAKING GUIDE
PERSON/METHOD WHEN
Sponsor decides
Project manager decides
Functional manager decides
Core team discusses and project manager decides
Core team consensus
Delegated to one or two team members to recommend
Delegated to one or two team members to decide
Critical decision, large monetary stake, “big picture” needed
Time is critical, no need for other input
“How” functional work is done
Team input is useful
Buy-in is critical
Needs to be investigated, team input useful
Needs to be investigated, team input not needed
Chapter 5 Leading and Managing Project Teams 161
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for example, assumptions, risks, roles, responsibilities, and acceptance criteria are examples
of potential sources of conflict. Stakeholder analysis and communications planning can iden-
tify needs and desires of many others who will be impacted by either the process of perform-
ing the project or a deliverable of the project. These tools help to identify and deal with
potential sources of conflict among the broader stakeholders. The more-detailed planning
tools such as the WBS, schedule, and budget help to identify other conflict sources.
People-related conflicts can be effectively addressed by developing a team charter, as
discussed in Section 5-2b of this chapter. Everyone comes with unique experience,
knowledge, IQ, and personality type and these differences can be a source of conflict. A
team charter helps to define norms, attitudinal preferences, work ethics, and responsibil-
ities for all team members. Adherence to team charter elements promotes mutual under-
standing and conflict resolution.
5-5a Sources of Project Conflict
Some conflicts on projects are useful; other conflicts can be destructive. Conflict over ideas
on how to proceed with a project can lead to more creative approaches. Conflict over how
to complete a project with a tight schedule can also be positive. Competition for ideas on
how to best handle a project activity has the potential for generating more innovative and
successful approaches and can be highly stimulating work. However, when conflict
becomes personal, it can often become negative. These types of conflict need to be handled
with care. A few typical sources of project conflict are shown in Exhibit 5.12. Generally, it
is better to deal with conflict on projects promptly—or even proactively. Conflicts do not
get better with time! This is especially true for projects with significant pressure to stay on
schedule or on budget (in other words, many projects).
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162 Part 2 Leading Projects
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Virtually all studies have determined that relationship conflict can be detrimental to project
team success. When people spend time and emotional energy arguing, they have less energy
to work on the project. Also, when people have personal conflicts to the point where they
really do not like each other, they often feel less committed to the project and to their team.
Task conflict is a bit more complicated. A certain amount of task conflict can encour-
age people to consider alternative approaches and to better justify decisions. Up to that
point, task conflict can be useful. However, beyond a certain point, when people spend a
great deal of time arguing over task-type issues, conflict takes away from the project team’s
progress and camaraderie. The timing of task conflict can also make a difference on
whether it helps or hurts the project. The best times to discuss different options are during
the initiating stage, when high-level approaches are being decided, and during the plan-
ning stage, when more detailed decisions are being made. However, once the plans are
made, a project team needs to be a bit more careful because prolonged discussions during
the executing periods of the project can lead to schedule slippage and cost overruns.
In general, conflict occurs due to incompatible goals and differences in thoughts or
emotions among the team members. It is a common experience with any team or a
group of highly skilled and exceptionally creative individuals to interpret facts and events
differently. The project manager must capitalize on this intellectual diversity using effec-
tive communication techniques and debates to identify the most appropriate resolution.
5-5b Conflict-Resolution Process and Styles
Once a project manager recognizes that a conflict exists, if it is a task conflict, he or she
tries to utilize it to develop a better solution. If it is a relationship conflict, he or she tries
to resolve it before it escalates. A project manager can use the six-step project conflict-
resolution process, making sure to pay attention both to the tasks and relationships
needed at each step.
Six-Step Project Conflict-Resolution Process
1. Understand the conflict.
2. Agree on conflict-resolution goals.
3. Identify causes of the conflict.
4. Identify potential solutions for the conflict.
5. Pick the desired conflict solution.
6. Implement the chosen solution.
First, the project manager and the team investigate the situation: What are the signs of the
conflict? Is it specific to a certain stage in the project? Does each party in the conflict
EXHIBIT 5.12
TYPICAL SOURCES OF PROJECT CONFLICT
RELATIONSHIP SOURCES TASK SOURCES
Roles and responsibilities
Lack of commitment
Communications failure
Different personalities
Stakeholder relationships
Personal motives of participants
Energy and motivation
Next project assignment
Individual rewards
Stakeholder expectations
Unique project demands
Money and other resources
Technical approach
Priorities
Differing goals of stakeholders
Task interdependencies
Schedule
Risks
Chapter 5 Leading and Managing Project Teams 163
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understand it the same way? If not, they need to ask clarifying questions, summarize how the
other person has stated the problem, and confirm that they have a common understanding.
Next, ensure that all parties agree on what a successful conflict resolution would be. While
there are often conflicting goals on projects, all stakeholders typically want useful deliverables
on time and on budget. Use the project goals as a basis for what the solution needs to cover.
Many conflicts have multiple causes, such as those shown in Exhibit 5.12. Identify
potential causes and then verify which cause(s) are contributing to the conflict.
The next step is to identify potential solutions to the conflict. This is clearly a time
where creativity and mutual trust are helpful. It is important to focus on the conflict
issue and not the person. Also, potential solutions should be considered based on their
value and should not be evaluated based on the person who suggests a solution.
The fifth step is deciding how to resolve the conflict. There are five general styles for
resolving project conflict, as depicted in Exhibit 5.13.
The collaborative style is preferred for important decisions that require both parties to
actively support the final decision. However, collaboration requires both parties to
develop trust in each other and, therefore, often takes longer than the other styles.
Therefore, each style in 5.13 has its value in dealing with project conflicts.
The final step is to implement the chosen solution. For a major conflict, this could be
almost like a mini-project plan with activities identified and responsibility assigned. It is
vital to include communication of the solution to all concerned parties.
5-5c Negotiation
Negotiation is about redefining an old relationship that is not working effectively or
establishing a new relationship.9 Negotiation is the most commonly used process and
the first step to resolve a dispute, a difference, or a conflict.
Project managers are generally held accountable for more performance issues than
they have responsibility to direct people to perform. Because of this, project managers
must negotiate. As stated earlier in this chapter, they often need to negotiate with func-
tional managers for the people they wish to have on the project team. Project managers
EXHIBIT 5.13
STYLES OF HANDLING PROJECT CONFLICT
STYLE
CONCERN
FOR SELF
CONCERN FOR
OTHERS WHEN APPROPRIATE FOR PROJECTS
Forcing/
Competing
High Low Only when quick decision is necessary, we are sure we are right, and
buy-in from others is not needed
Withdrawing/
Avoiding
Low Low Only when conflict is minor, there is no chance to win, or it is
helpful to secure needed information or let tempers cool
Smoothing/
Accommodating
Low High Only when we know we are wrong, it is more important to other
party, or we are after something bigger later
Compromising Medium Medium Only when an agreement is unlikely, both sides have equal power,
and each is willing to get part of what they want without taking
more time
Collaborating/
Problem Solving
High High Whenever there is enough time, trust can be established, the issue is
important to both sides, and buy-in is needed
Source: Adapted from Richard L. Daft, Management, 9th ed. (Mason, OH: Southwestern Cengage Learning, 2010): 519–520; Ramon J. Aldag and Loren
W. Kuzuhara, Mastering Management Skills: A Manager s Toolkit (Mason, OH: Thomson South-Western, 2005): 416–419; and PMBOK® Guide 240.
164 Part 2 Leading Projects
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often need to negotiate with customers and other key stakeholders concerning schedule,
budget, scope, and a myriad of details. They also often need to negotiate with sponsors,
suppliers, SMEs, and core team members.
Nobody is as committed to or involved with a project as much as the project man-
ager. However, a project manager must remember that negotiations will be smoother if
she realizes that everyone she negotiates with has their own set of issues and goals.
Many of the project management tools discussed thus far in this book, such as char-
ters, stakeholder analysis, communication plans, schedules, budgets, and change control,
make negotiations easier. Several of the soft skills discussed in this book, such as involv-
ing your team in planning, treating everyone with respect, keeping communications
open, and establishing trust, also simplify negotiations. The issues project managers
need to negotiate can greatly vary in size and complexity. For example, many small
issues can involve day-to-day scheduling issues. On the other hand, the entire set of proj-
ect deliverables with accompanying schedule and budget are often negotiated.
Regardless of the negotiation size or complexity, the six-step process shown in Exhibit
5.14 can serve as a guide.
The negotiation process is based on the project manager and the other party attempting
in good faith to reach a solution that benefits both—in other words, a win-win solution.
Project managers need to be vigilant, however, because not everyone they must negotiate
with takes that same attitude. Smart project managers recognize that their reputation is
based on how they act in all situations. Therefore, even when negotiating against someone
who plays hardball, it is still wise to stay ethical and keep emotions in check.
Step 1 involves advance fact-finding to determine what is needed from the negotia-
tion. This may include checking with the sponsor and/or other stakeholders and deter-
mining the impact that various settlements may have on the project. It also includes
seeking to understand both what the other party is likely to want and how he or she
may act during the negotiations.
Step 2 is for the project manager to understand the bottom line. What is the minimum
acceptable result? Just as when buying a car, a project manager needs to understand when to
walk away. This can vary a great deal depending on how much power each party has. Project
EXHIBIT 5.14
NEGOTIATION PROCESS
STEP EXPLANATION
1. Prepare for negotiation Know what you want and who you will negotiate with.
2. Know your walk-away point Determine in advance the minimum you need from the
negotiation.
3. Clarify both parties’ interests Learn what the other party really wants and share your true
interests to determine a common goal.
4. Consider multiple options Brainstorm multiple approaches—even approaches that only
solve part of the issue.
5. Work toward a common goal Keep the common goal in mind: seek and share information,
make concessions, and search for possible settlements.
6. Clarify and confirm agreements Agree on key points, summarize, and record all agreements.
Source: Adapted from Ramon J. Aldag and Loren W. Kuzuhara, Mastering Management Skills: A Manager s Toolkit
(Mason, OH: Thomson South-Western, 2005): 129–132; and Timothy T. Baldwin, William H. Bommer, and Robert
S. Rubin, Developing Management Skills: What Great Managers Know and Do (Boston: McGraw-Hill, 2008): 307–318.
Chapter 5 Leading and Managing Project Teams 165
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managers need to understand that if they have the power and take advantage of their nego-
tiation partner, that partner may not work with them on a future project. Therefore, the goal
is not to always drive the hardest bargain, but to drive a fair bargain. It is worth mentioning
that if one party has more power than the other party, even if it is only a perception, negoti-
ation may not be the right option until the inequality issue is addressed.
Step 3 is for the project manager to understand the underlying needs of the other party
and to share his or her own needs. This is not a 10-second political sound bite that says,
“Take it or leave it.” This is developing a real understanding of each other’s needs.
Step 4 is to create multiple options. This is easy once both parties understand what
the other party really needs because various creative solutions can then be developed
that help to satisfy those underlying needs.
Step 5 consists of the process and strategies of the negotiation itself. It is helpful to
keep in mind the ultimate goal while focusing on the many details of information shar-
ing, trading of concessions, and exploring possible solutions.
Step 6 is actually a reminder to reach an agreement and then to document that agree-
ment. A consultant friend of mine often says: we have reached a violent agreement” when
people essentially have agreed, but keep talking. Clarify and document your agreement.
5-6 Communication Needs of Global and
Virtual Teams
As organizations change more rapidly, more projects are conducted with member from
various parts of the larger organization, various organizations, and even various parts of
the world. These teams draw from a wider pool of talent, but can pose added challenges.
5-6a Virtual Teams
In contemporary project management, project managers use less-onerous command and
control than they might have a few years ago. This trend is even more pronounced with
global and virtual teams. A virtual team is also sometimes known as a distributed team.
They rarely meet in person, but rely on communications technology. When project
teams operate in a virtual mode, many of the following characteristics are present:
Team members are physically dispersed.
Time boundaries are crossed.
Communication technologies are used.
Cultural, organizational, age, gender, and functional diversity are present.10
5-6b Cultural Differences
Cultural patterns differ in various parts of the world, so project team members need to
be more sensitive as to how their actions are interpreted. For example, in some cultures,
making eye contact signifies that you are paying close attention. In other parts of the
world, however, eye contact is considered rude; in these cultures, people may look
slightly downward in deference to authority. When people do not have face-to-face con-
tact, they do not have the opportunity to see and learn from a person’s body language.
Project managers working with global and virtual project teams need to be especially
mindful of the increased need for communications using methods other than face to
face. Reading comprehension and listening skills are valuable for virtual teams.
Cultural differences make communication challenges more difficult. The various meth-
ods regarding charter development described in Chapter 4, along with stakeholder analysis
and communications planning in this chapter, are even more critical on virtual and global
166 Part 2 Leading Projects
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teams partially due to cultural differences. The more unusual a team is, the more critical
charters and communications vehicles become. Exhibit 5.15 lists some of the extra com-
munications challenges posed by virtual and global project teams. Note that each project
management need has a specific and increased challenge—for example, the third need,
relationship building, needs more time since people do not have the advantage of full
face-to-face communication. Project managers and teams can enhance stakeholder satis-
faction by learning the cultural ethics and values of all their stakeholders, working hard
to establish trust, and ensuring that they use fast and reliable information systems.
5-6c Countries and Project Communication Preferences
It is helpful if the project team members can meet each other face to face, even one time.
While this can be expensive, it may be much less expensive than poor performance on
the project. Sometimes, the core project team is assembled to write and approve the proj-
ect charter. The core team members then get to know each other and are inclined to give
each other the benefit of doubt in case of any misunderstandings. Another method that
is frequently used is to confirm meetings and calls with quick meeting minutes or e-mail
follow-ups. By documenting any decisions, it is easier to remember what happened and
to uncover lessons learned when the project is complete.
While abundant differences exist among people from various countries, the method
and timing of project communications are of interest here. For example, Ralf Mueller
and J. Rodney Turner studied how cultural differences impact preferred modes of project
management communication.11 They examined how collectivism versus individualism,
along with the extent individuals in various cultures accept unequal power and ambigu-
ity, impact project communications preferences. The results show that country prefer-
ences can be shown in four categories with common preferences on frequency and type
of communications for each group.
PMP/CAPM Study Ideas
While PMI absolutely recognizes the importance of the “soft skills” regarding management
and communication, you shouldn’t expect to see many—if any—questions directly from the
lists in this chapter. Rather, you will be expected to understand the best practices we describe
and to apply them to mock situations. One type of question you will see in many guises has
to do with change requests. Whether a customer, sponsor, or team member requests a
change, if you have already completed your project management plan, any change must go
through a change request process. In other words, it may be your natural instinct to want to
EXHIBIT 5.15
INCREASED CHALLENGES FOR VIRTUAL AND GLOBAL PROJECT TEAM
PROJECT MANAGEMENT NEED INCREASED CHALLENGES
1. Initiate project 1. More unique project needs
2. Understand stakeholders 2. More difficult to understand
3. Build relationships 3. Needs more time
4. Determine communications needs and methods 4. More unique needs, more reliance on electronic means
5. Establish change control 5. More facilitating than directing
6. Manage the meeting process 6. Less nonverbal clues, interest may wander
7. Control issues 7. With less group interaction, harder to identify
Chapter 5 Leading and Managing Project Teams 167
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please the person making the request—especially if the change seems small—but the best
practice/correct answer will always be to go through the change control process (more infor-
mation on this is provided in Chapters 7 and 14).
Other test questions you may see from this chapter include the stages of team
development—forming, storming, norming, performing, and adjourning—and both cap-
turing and utilizing lessons learned.
Summary
While the project core team is ideally assembled early in
the project to participate in chartering and planning the
project, SMEs are commonly assigned as needed. Project
managers try to secure the services of these important
people as early in the project as possible. This often
involves negotiating with the functional managers to
whom the SMEs report. When new project team mem-
bers arrive, they need to be on-boarded; that is, they need
to understand the project and start to develop working
relationships with their new team members. Experienced
project managers ensure that the new members under-
stand project goals but also share their personal goals so
that both can simultaneously be achieved.
Teams progress through typical stages of develop-
ment. High-performing project teams share a number
of characteristics. Project managers can use understand-
ing of these stages and characteristics to guide their team
to better performance. They do this by assessing indi-
vidual and team capabilities and developing strategies to
improve both. The project team often develops team
operating principles in the charter. Many teams expand
upon these with more specific team ground rules. The
ground rules are tailored to the unique needs of the
project situation, but generally include both rules for
improving relationships among team members as well
as improving the process of how the team works.
The project manager must manage the human side of
his project. This involves utilizing appropriate forms of
power in managing the project team to obtain desired
results. Project teams also need to manage and control
stakeholder engagements through understanding their
expectations, delivering on those expectations, and com-
municating effectively. Projects are ripe for many kinds
of conflict. Constructive conflict over ideas often yields
better approaches, but destructive conflict that gets per-
sonal needs to be headed off when possible and dealt
with when it occurs. Many good project management
practices and techniques are helpful in channeling con-
flict in constructive directions. Project managers also
need to utilize many general conflict reduction techni-
ques not only within the project team, but also with and
between various stakeholders.
Key Terms Consistent with PMI Standards and Guides
management, 138
leadership, 138
acquire project team, 138
develop project team, 141
manage project team, 157
negotiation, 164
virtual teams, 166
Chapter Review Questions
1. What is the potential downside to bringing in
project workers too early in the project?
2. Why is it often necessary for project managers to
persuade workers to be part of the project team?
3. When is the best time to on-board core team
members?
4. What are the five stages of team development?
5. During which stage do team members often feel
close to one another and have a good under-
standing of how to work together?
6. List two personal values of individual team mem-
bers that contribute to a high-performing team.
List two team behaviors that can enhance these
personal values.
7. What are the two favorable outcomes of fostering
a high-performing project team?
8. During all five stages of team development, is it
important that the project manager keep in mind
the needs of which three groups?
168 Part 2 Leading Projects
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9. Why might it be helpful to bring out the charter
when people are arguing over a decision?
10. What is meant by the term ground rules? Give
examples.
11. Under which circumstances might a project
manager or sponsor retain the right to make a
project decision?
12. What are the benefits of delegating a decision to
one or two team members?
13. When might consensus be the best decision-
making strategy?
14. power is the ability to persuade
others based upon the project manager’s personal
knowledge and skills.
15. power should be used by a project
manager when she is asking her team members
to perform a task within their job description.
16. power should only be used in
instances in which it is necessary to maintain
discipline.
17. In order to manage stakeholders’ expectations, a
project manager needs to understand the stake-
holders’ assumptions. Which document(s) can
help with this?
18. The collaborative style for handling conflict has
a(n) concern for self and
a(n) concern for others.
19. Why is it important for project managers to have
one-on-one discussions with their core team
members?
20. What is a virtual team?
21. Name three increased challenges for a global
and/or virtual team.
22. Why is it helpful for a virtual team to meet in
person at least once?
Discussion Questions
1. You are a project manager leading an IT develop-
ment project. Halfway through your project, you
realize you need to hire an additional worker in
order to complete the project on time. How will
you convince your project sponsors to authorize
the hire? How will you on-board your new worker?
2. Describe how to use project documents to
help a team progress through the stages of
development.
3. How can a project manager promote the needs of
the organization during the norming phase?
4. How can a project manager promote the team
members’ needs during the forming stage?
5. Describe in your own words what a high-
performing project team can do.
6. Describe, in your own words, what you believe
are the four most important characteristics of
high-performing project teams. Tell why you
believe each is so critical, explain how they are
related to each other, and give at least two spe-
cific suggestions for each.
7. Assess your individual capability for project
teamwork. Tell why you feel you are strong in
certain capabilities, and give strategies for improv-
ing in areas you feel you need to develop.
8. What is meant by the term situational leader-
ship? How can you apply this as a project
manager?
9. Describe the three responsibilities of project team
members.
10. Pick the four ground rule topics for project teams
that you believe are the most important. Tell why
you believe each is so critical, explain how they
are related to each other, and give at least two
specific suggestions for each.
11. Using examples, describe how a project manager
can use active listening. Why is this useful?
12. Describe each method of decision making a proj-
ect team may use. Using examples, tell when each
is most appropriate.
13. In your opinion, why is it necessary for the proj-
ect manager to assess the performance of both
individual team members and the project team
as a whole?
14. List several characteristics of a project that can
often result in creating conflict.
15. Give an example of when a conflict would be
beneficial to a project and an example of when
conflict would be harmful to a project.
16. You are working for a multinational organization
and need to relay information to Japan. Which
communication method would you choose to use
and why?
17. Give as many examples of cultural differences as
you can, using information from this text and
your own experiences.
Chapter 5 Leading and Managing Project Teams 169
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PMBOK® Guide Questions
1. is the process of “confirming human
resource availability and obtaining the team nec-
essary to complete project activities.”
a. Plan Human Resource Management
b. Acquire Project Team
c. Develop Project Team
d. Manage Project Team
2. All of these are stages of team development
except:
a. adjourning
b. storming
c. learning
d. performing
3. establish(es) clear expectations
regarding acceptable behavior by project team
members, and may cover topics such as protect-
ing confidentiality, establishing trust, and han-
dling conflict.
a. The employee handbook
b. Ground rules
c. Management by objectives
d. Personnel directives
4. The objective of the process is to
improve competencies, team member interaction,
and overall team environment to enhance project
performance.
a. Plan Human Resource Management
b. Acquire Project Team
c. Develop Project Team
d. Manage Project Team
5. All of these are techniques for managing project
conflicts except:
a. smooth/accommodate
b. withdraw/avoid
c. collaborate/problem solve
d. none of the above
6. A document used to manage points of discussion
or dispute that arise during projects, in order to
monitor them and ensure that they are eventually
resolved and added to lessons learned, is called
a(n) .
a. risk register
b. stakeholder register
c. SWOT analysis
d. issue log
7. Which of these is not a challenge of working on
global and virtual teams?
a. competencies
b. language
c. time zones
d. culture
8. An output of the process Develop Project Team,
an evaluation of the team’s success in achieving
project objectives for schedule, budget and qual-
ity levels, is called team .
a. project performance review
b. performance assessments
c. annual review
d. work performance reporting
9. Which of the following steps is not part of the
six-step project conflict-resolution process?
a. Identify causes of conflict
b. Identify potential solutions
c. Determine which teammate was in the wrong
d. Understand the conflict
10. The sources of most project conflicts can be
grouped into those related to and
those related to .
a. relationships; tasks
b. technical skills; budget
c. personalities; deadlines
d. schedule; risks
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Suburban Homes, a medium-sized, fast-growing construction
company, has an ambitious plan to expand its business to
several southern states in the United States as a result of
its significant growth and good reputation for building quality
single-family homes and townhomes.
As a project manager, Adam Smith worked for several
years in the construction industry and supplemented his
experience with project management education. From his ini-
tial realization that managing projects successfully requires
implementation of various project management processes,
170 Part 2 Leading Projects
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Semester Project Instructions
Assess your project team’s capability. Develop a strat-
egy to improve your team’s capability. Develop ground
rules to use on your project.
As a team, audit one of the other project teams in your
class and have them audit your team. Develop an improve-
ment strategy for that team based on the audit results.
Brainstorm situations for your project for which
each source of power makes sense.
Identify what you have done to manage and con-
trol stakeholder engagement and how you know the
current level of satisfaction that your stakeholders
feel. Identify issues you may need to negotiate and
determine the style you will use to handle the conflict
and your expectations at each step of the negotiation
process.
CASA DE PAZ DEVELOPMENT PROJECT
Questions for students to answer:
1. What actions do you suggest to help the project team
through the stages of team development?
2. What would you want to see in a team charter for this
development project?
3. Construct a RACI chart with major tasks you see and
the type of person you feel should do each.
4. List types of decisions that will need to be made and
the appropriate person, group, or method for each, for
example, individual team member, team collectively,
scrum master, and product owner.
tools, and techniques, Adam recognized the importance of
building project teams composed of well-trained staff. From
his experience managing a few projects in the Midwest and
based on the lessons learned from these projects, it was evi-
dent to Adam that Suburban Homes did not place a strong
emphasis on people-related factors and team development.
Adam recognized the scope for improvement in managing
and developing high-performance teams and decided to act
on this knowledge immediately.
Adam s primary task was to improve the performance of
project management and increase the project success rate,
so he wanted to address project team selection and the
team development processes. Further, he realized that
employee turnover and the expansion of the business in
southern states led Suburban Homes to recruit more
employees. Many of these new recruits have prior experi-
ence in the construction industry. In addition, the workforce
now represents different work cultures, attitudes, commit-
ment, and work ethics.
Adam recognized the immediate need to manage human
resources effectively and efficiently. He decided to formalize
project team selection, development, and management so
that all the locations in the Midwest and South will have sim-
ilar team management philosophy and practices. To achieve
these purposes, Adam has considered the following:
1. Train project managers as leaders. Also, project managers
must be trained to identify talent, select project team
members, and nurture their growth.
2. Develop a team charter so that all the team members
are aware of performance expectations, professional
behavior, and other team norms. The charter should also
help in training newly recruited employees to improve
productivity, collaboration, coordination, communications,
and conflict resolution.
3. Develop a conflict management plan and prepare guide-
lines for all employees to identify and manage conflicts.
4. Design and implement a decision-making protocol for all
the projects and in all locations.
5. Develop norms for high-performing teams.
You are hired as a consultant to develop the above five
deliverables.
Chapter 5 Leading and Managing Project Teams 171
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PROJECT M ANAGEM ENT IN ACTION
Centralizing Planning and Control in a Large
Company after Many Acquisitions
The restaurant chain where I work was founded over
50 years ago. Through internal growth and external
acquisitions, this company has become a Fortune 500
company. The company recently decided to centralize
merchandizing, retail operations control, advertising,
and sales planning for the enterprise.
Human resources (HR) and other support
organizations needed to improve their performance
to support this massive change. Cycle times were
too long, service quality was too low, and internal
customers frequently complained about corporate
functions. HR started its transformation by creating
a process improvement team to lead toward a
process-driven structure with work drivers
identified to establish staffing levels. A new HR
vice president had a vision for the operation,
and her leadership was critical to make anything
happen.
Up to this point, process engineering had only
been applied to manufacturing and distribution
operations. The culture for process engineering, proj-
ect management, and change management was gen-
erally immature in the company. This was declared to
be the biggest change to our HR function in 35 years.
A vice president was assigned to make the HR transi-
tion happen.
The project manager assigned to this project
immediately interviewed the various management
members of the HR organization and the retail opera-
tions transition team. He created a project charter to
define the scope, objectives, problem statement, out-
comes expected, benefits, team members, and inputs
for this project. This project manager interviewed all
senior staff members for their insights.
A communications plan was drafted because this
change directly touched several hundred persons and
indirectly many tens of thousands. The company is a
very large distributed organization with many global
operations. Therefore, a great deal of collaboration
was required to create the buy-in needed. A confer-
ence was held for all HR leaders to begin developing
this needed buy-in.
In preparation for the conference, the project man-
ager created the following high-level WBS:
1. Planning the HR Transformation
2. Initiating the Project
3. Planning the Workshops
4. Stakeholder Analysis
5. Communications Plan
6. Planning the Project
7. Executing the Plan
8. Holding the Workshops
9. Identifying Opportunities for Improvements
10. Obtaining the VOC (Voice of Customer)
11. Creating the Foundational Communications
12. Initial Launch
13. Executing the Implementation Plan
14. Sustaining the Transformation
A schedule was created that reflected all the WBS
elements needed to perform this massive organiza-
tional change initiative, driven by process analysis
and by meeting all the relevant PMI PMBOK® guide-
lines for project management good practices. This
project schedule covered the elements of a plan to
gather Voice of the Customer information and per-
form workshops for the identified Centers of
Excellence:
1. The business processing center
2. Total reward systems
3. Administration systems
4. Workforce planning systems
5. Talent management systems
6. Systems and data management
7. Training and development
The project schedule included all the communi-
cations needed to create synergy toward an agreed-
upon solution. At the end of the first conference, we
had a core team meeting of five leaders. The job of
the core team was to define a vision for the orga-
nization, a mission statement for the operation, and
an elevator speech that defined the project s objec-
tives and could be repeated in less than 45 seconds
172 Part 2 Leading Projects
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to a novice on the topic. This team s efforts gave us
great clarity regarding what we were trying to
accomplish.
Next, we brought in over 100 HR professionals
from around the company for a series of workshops.
An agenda and handouts were created to drive the
workshops. During the workshops, artifacts were
created to define the as is and to be process
states. These models were built in Supplier, Input,
Process, Output, Customer (SIPOC), and organization
deployment process maps. In addition, we created
organization structures to support the future-state
process maps. Once we designed structures, we
built job description documents and measurement
plans for the new and old processes. The processes
modeled impacted all HR operations. We needed to
know where the work would be accomplished.
We started the detailed organization chart reviews.
We needed to know where the work was done,
and by how many persons, today. Then we could
start to estimate how many resources might be
needed in a future state by location and by element
of work.
We evolved a framework of principles to drive the
project forward, which included:
Streamline every process using the lean Six
Sigma tools.
Focus on quality, speed, and cost while delivering
improved value.
Take transactions out to a service center where a
lower cost is achieved.
Drive all outside agreements toward negotiated
service level agreements.
Consider multiple alternatives for the sourcing of
needed services.
Improve the client-facing organization.
Build Centers of Excellence that deliver improved
value.
Push employee support closer to them while
leveraging consolidated service center capabilities.
Monthly HR leader conference calls, weekly status
reports, preliminary design sessions, corporate staff
design sessions, and follow-up conferences for
leaders were all part of the high-touch, high-
communications approach to this project. We expect
the many automation initiatives, headcount reduc-
tions, vendor outsourcing efforts, and in-sourcing of
transactions to a wholly owned service center to
deliver millions of dollars of cost reductions across the
company. We promoted lean and improvement ideas
continually to the leadership. We have collected field-
based best practices and have moved into a phase to
validate these practices. Once validated, these best
practices will be rolled out to all operations. We com-
municate by posting everything to a SharePoint site
for all to see. We also use e-mail communications and
have many one-on-one telephone calls.
We are now presenting the new design for imple-
mentation and are getting buy-in. We continue to
involve others and to learn what will meet their
needs and so far we are spot on with high accep-
tance. At one time, we thought all regions were dif-
ferent, and they are, but their processes and structures
are nearly 80 percent the same. We have reached
agreement that one common process is acceptable to
all regions asked. This is a major breakthrough. We
also have had concessions from labor relations
regarding its role and from those regions that were
already down the road on a couple key position
implementations.
The team concepts that were applicable to this
project were as follows:
Recognize the Forming, Storming, Norming, and
Performing stages.
Create a strong vision to rally the team.
Ask the customers of the process for
requirements.
Have consistent sponsorship of the project.
Respect, empower, and engage everyone in a
change initiative.
Respect differences and leverage the value of
diversity.
You cannot overcommunicate so communicate.
Make everything an open book.
Source: William Charles (Charlie) Slaven, PMP.
Chapter 5 Leading and Managing Project Teams 173
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. (Newtown Square, PA:
Project Management Institute, 2017).
Aldag, Ramon J., and Loren W. Kuzuhara, Mastering
Management Skills: A Manager s Toolkit, 1st ed.
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ment Approach (Business Expert Press: New York,
NY, 2016).
Baldwin, Timothy T., William H. Bommer, and Robert S.
Rubin, Developing Management Skills: What Great
Managers Know and Do (Boston: McGraw-Hill, 2008).
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ship: Theory, Application, Skill Development, 4th ed.
(Mason, OH: South-Western Cengage Learning,
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Melkonian, Tessa, and Thierry Picq, “Opening the
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Merla, E., The Agile Minded Professional: 7 Habits
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ences in Project Owner–Project Manager Commu-
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Opfer, Warren, “Building a High-Performance Project
Team,” in David I. Cleland, ed., Field Guide to
Project Management, 2nd ed. (Hoboken, NJ: John
Wiley & Sons, 2004): 325–342.
Owen, Jill, et al., “The Role of Leadership in Complex
Projects,” Proceedings Project Management Insti-
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Project Teams (Hoboken, NJ: John Wiley & Sons,
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174 Part 2 Leading Projects
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Thamhain, Hans J., “Team Leadership Effectiveness in
Technology-Based Project Environments,” Project
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Endnotes
1. Daft, Richard L., Management, 9th ed.
(Mason, OH: Southwestern Cengage Learning,
2010): 5.
2. Lussier, Robert N., and Christopher F. Achua,
Leadership: Theory, Application, Skill Develop-
ment, 4th ed. (Mason, OH: South-Western Cen-
gage Learning, 2010): 6.
3. PMBOX® Guide 526.
4. PMBOK® Guide 537.
5. Adapted from Herrenkohl, Roy C., Becoming a
Team: Achieving a Goal (Mason, OH: Thomson
Southwestern, 2004): 185 and 216–217; Opfer,
Warren, “Building a High-Performance Project
Team,” in David I. Cleland, ed., Field Guide to
Project Management, 2nd ed. (Hoboken, NJ:
John Wiley & Sons, 2004): 326–327; and Melk-
onian, Tessa, and Thierry Picq, “Opening the
Black Box of Collective Competence in Extreme
Projects: Lessons from the French Special
Forces,” Project Management Journal 41 (3)
(June 2010): 79–90.
6. Merla, E., The Agile Minded Professional: 7
Habits to Agility Success, Project Management
Institute, 2011.
7. Thamhain, Hans J., “Team Leadership Effective-
ness in Technology-Based Project Environ-
ments,” Project Management Journal 35 (4)
(December 2004): 39.
8. Adapted from Herzog, Valerie Lynn, “Trust
Building on Corporate Project Teams,” Project
Management Journal 32 (1) (March 2001): 33–
34; and Kloppenborg, Timothy J., and Joseph A.
Petrick, “Leadership in Project Life Cycles and
Team Character Development,” Project Manage-
ment Journal 30 (2) (June 1999): 11.
9. Anantatmula, Vittal, Project Teams: A Structured
Development Approach (Business Expert Press:
New York, NY, 2016).
10. Adapted from Schlenkrich, Lara, and Christo-
pher Upfold, “A Guideline for Virtual Team
Managers: The Key to Effective Social Interaction
and Communication,” Electronic Journal of Infor-
mation Systems Evaluation 12 (1) (2009): 110.
11. Mueller, Ralf, and J. Rodney Turner, “Cultural
Differences in Project Owner–Project Manager
Communications,” Innovations Project Manage-
ment Research 2004 (Newtown Square, PA: Proj-
ect Management Institute, 2004): 403–418.
Chapter 5 Leading and Managing Project Teams 175
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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C H A P T E R 6
Stakeholder Analysis and
Communication Planning
Humans are social animals who engage with each other in complex ways, espe-
cially in artificial environments such as organizations and projects. Inexperienced
project managers can become buried in the control of the project plan s tactical
aspects and miss the more strategic components like stakeholder engagement
and effective communication. Ultimately, successful delivery of a project is
about both managing the tangible outputs (which are generally easily and objec-
tively measured (time, cost, and project deliverables) and leading others through
the more strategic and intangible outcomes (relations, power, influence, motiva-
tion, interests, etc.). Traditionally, measures of success focus on scope, time,
cost, and quality to determine the success of the project as an entity. However,
a more accurate measure of success also considers the longer-term outcomes
delivered by what your project stimulated to happen after it was complete.
For example, the Sydney Opera House was a disaster as a project, but it made
highly significant contributions to the culture, identity, meaning, and belonging of
the Australian nation well beyond being a failed project, and there are many other
examples like this in human history. Equally, there are project successes that
am
op
ho
to
_a
u/
Sh
ut
te
rs
to
ck
.c
om
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Enumerate, describe,
and prioritize each
set of stakeholders
for a project.
List each section
of a project commu-
nications plan and
describe the role
each plays.
Build a communica-
tions matrix for a
real project.
Develop strategies
for stakeholder
management.
BEHAVIORAL OBJECTIVES:
Tell how to build
project relationships
and why they are
important for
communications.
Develop a project
communications
management plan
for a real project.
Plan, conduct, and
improve project
meetings.
176
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only make negative contributions to society. This is because your stakeholders
have varying perceptions of the worth of the project.
Stakeholders and your communications with them are highly subjective
aspects of projects and more difficult to manage than some of the hard skills dis-
cussed in earlier chapters. As such, these aspects are often not managed with
anywhere near the time and thought investment of the tangible aspects of a proj-
ect. And while not every project manager (PM) needs to be a skilled wordsmith
or a psychologist (though these would, in fact, be very useful skills for a PM to
have), the PMBOK ® is now starting to build more content around these aspects
of leading and managing projects, and there is increasing literature acknowledg-
ing the importance of the soft skills required to be a successful project man-
ager. Capable project managers invest effort to create and maintain informed
stakeholder engagement matrices and insightful communications plans. They
know whom to engage at what stage of the project (including critical stake-
holders before the project starts, at times), at what frequency, and through
what medium to secure optimal results. They then implement this plan and
adjust as circumstances change. In essence, this is the art of project
management.
One effective and fun way a PM can accelerate the development of their
stakeholder engagement and communication skills is to use metaphor reflections
developed by Arthur Shelley. This approach uses animals to represent behaviors
and stimulate constructive conversations about interactions between people. The
Organizational Zoo describes a set of 27 characters that collectively represent the
most common behaviors in the Zoo (that is, your team, project, organization, or
community). They are easy to remember (one for each letter of the alphabet,
plus one double ), and the cartoon characters help to make the conversation
fun. Team members profile themselves and their stakeholders in order to under-
stand what they are like and how they should engage with them. Because we all
have considerable prior knowledge of animals, understanding is intuitive, and the
tool makes it easy to quickly assess our behavioral environments. It is clear a
10.2 Manage
Communications
10.1 Plan
Communications
Management
Communications
Matrix
Agendas
Minutes
Issues Log
Meeting Evaluation
Lessons Learned
Register and
Retrospectives
13.3 Manage
Stakeholder
Engagement
13.2 Plan Stakeholder
Engagement
Stakeholder
Engagement
Assessment matrix
13.4 Monitor
Stakeholder
Engagement
13.1 Identify
Stakeholder
Stakeholder
Register
4.2 Develop Project
Management Plan
4.4 Manage
Project Knowledge
PMBOK® GUIDE
Topics:
Identify stakeholders
Plan stakeholder
engagement
Manage stakeholder
engagement
Monitor stakeholder
engagement
Plan communications
management
Manage
communications
CHAPTER OUTPUTS
Stakeholder register
Stakeholder engage-
ment assessment
matrix
Strategies for manag-
ing different
stakeholders
Communications
matrix
Meeting agenda
Meeting minutes
Issues log
Meeting evaluation
177
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mouse does not approach a lion in the same way it would approach a dog, and a
lion leader is different from an eagle.
In projects, the use of creative tools such as metaphor and reflective conversa-
tions is becoming more common and makes a significant contribution to success
and the learning experiences of those involved. The free online profiler can be
used for project team activities and to discover more about your own inner
animals.
www.organizationalzoo.com/profiler
Copyright Arthur Shelley, 2013
Image artist John Szabo
6-1 Identify Stakeholders
Projects are undertaken because someone needs the project’s output. A project must sat-
isfy its users and their needs to be successful. Several things can complicate this goal.
First, there may be multiple users, and each may have different wants and needs. Second,
often end-users may not fully understand what they want because they do not know
what alternatives may be available. Third, the customer who pays for the project may
not be the actual person or group who uses the project deliverable or outcome, and the
customer may not fully understand the end-users’ needs. Fourth, when someone else is
©
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178 Part 2 Leading Projects
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paying for the project, some users will ask for many project outcomes that are expensive
or time consuming to deliver. Finally, many stakeholders, in addition to the users of a
project’s outcomes, have an interest in the project. Project managers need to first under-
stand their stakeholders, build relationships with them, and then develop a communica-
tions management plan for managing them.
6-1a Find Stakeholders
One way to understand who stakeholders are is to ask, “Who will use, will be affected by,
or could impact this project?” The answer includes users of the project results and others
who may have some changes forced upon them by the project outcomes. It also includes
people and groups who might choose to influence the project in some way. We use the
identify stakeholders process to determine the people, and groups, who might impact or
be impacted by some aspect of our project. Stakeholders include people who:
Work on the project
Provide people or resources for the project
Have their routines disrupted by the project
Monitor regulations, laws, and standards of practice at local, county, state, and fed-
eral levels
Another way to identify stakeholders is to determine whether they are internal to the
organization performing the project or external to it. Examples of project stakeholders
based on these categories are shown in Exhibit 6.1. Note that there are potentially more
types of stakeholders affected by the process of performing the project than by the proj-
ect results and more external than internal stakeholders.
Project managers and project core teams (often in consultation with the project spon-
sor) can use the examples in Exhibit 6.1 to find possible project stakeholders. This can be
done using a brainstorming technique. Classic rules of brainstorming apply—initially, the
emphasis is on generating a long list of potential stakeholders in the first column of a
EXHIBIT 6.1
EXAMPLES OF PROJECT STAKEHOLDERS
INTERNAL EXTERNAL
Affected by Project Process Owner
Sponsor
Project Manager
Functional Managers
Competing Projects
Financing SourceProject Core Team
Subject Matter Experts
Employees
Stockholders
Suppliers
Partners
Creditors
Government Agencies
Special Interest Groups
Neighbors
Client
Professional Groups
Media
Taxpayers
Union
Competitors
Affected by Project Result Internal Customer
Sponsor
Users
Client
Public
Special Interest Groups
Chapter 6 Stakeholder Analysis and Communication Planning 179
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chart without evaluating and analyzing them. It may be easy to construct this chart on a
large work surface such as a whiteboard or flip chart. Another suggestion is to be spe-
cific; identify stakeholders by name when possible.
For each potential stakeholder, list the various project processes and results in which
he or she might have an interest. Consider financial, legal, and emotional interests of
potential stakeholders. The project charter can be useful here. Many stakeholders have
an interest in multiple aspects of a project. Once the stakeholders and their interests
have been listed, they may be combined into like groups with the same interests.
6-1b Analyze Stakeholders
Stakeholder analysis is a stakeholder identification technique composed of gathering
and evaluating information to determine whose interests should be emphasized through-
out the project. The first part of stakeholder analysis is to prioritize the stakeholders.
Prioritization is important because on many projects, there are too many stakeholders
to spend a great deal of time with each. While it is important not to ignore any stake-
holder, it also makes sense to concentrate on those who are most vital. Stakeholders are
frequently prioritized based upon level of:
1. Power—ability to get others to do something
2. Legitimacy—perception that their actions are appropriate
3. Urgency—time sensitivity and legitimacy of claim1
Some organizations use additional criteria such as interest, influence, and impact.
Some organizations only use two or three criteria; others may use up to six. Each aspect
used can be rated on a simple scale of 1 to 3, with 3 representing the highest priority. For
the first aspect, power, a stakeholder who could order the project shut down or changed
in a major way would be a 3, and a stakeholder who could not change the project much
would be a 1. The other aspects can be analyzed in a similar fashion. The scores from the
aspects are added to form a total prioritization score.
We will use an example of an African university that changed its entire curriculum to
a modular approach—a major change project. This large university was in danger of clo-
sure because of failed quality ratings and public criticism of its performance. Major
improvements were required. The newly appointed vice chancellor decided to modular-
ize all the courses offered by the university, which allowed the students to “pick and
mix” topics and create courses that better suited their needs. This change impacted
every part of the university, and it was not a popular decision. The appropriate engage-
ment of stakeholders was crucial. One of the major challenges to the modularization pro-
gram was the shift in power base from academic management (the deans of faculty) to
the academic registry. In Exhibit 6.2, you can see that the academic registrar scores
highly in every line. This shift in power was always going to meet resistance, and the
program manager would need to carefully consider the positions of the three key stake-
holder groups to find an appropriate strategy.
By determining who the stakeholders are and what each group wants, project man-
agers effectively:
Set clear direction for further project planning, negotiating, and execution
Prioritize among competing objectives
Learn to recognize complex trade-offs and the consequences of each
Make and facilitate necessary decisions
Develop a shared sense of risk
Build a strong relationship with their customers
180 Part 2 Leading Projects
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Lead associates, customers, and suppliers with empowering style and principles
Serve as good stewards of the resources of both the parent and customer
organizations
The project team should next select the top 10 to 15 stakeholders for emphasis in the
remainder of their planning. The stakeholders with the highest total scores are often con-
sidered to be key influencers for the project. The project manager and the core team
should also plan to periodically review this prioritized list of stakeholders, as the relative
importance may change as the project progresses, especially if the project goals are not
clear at the outset. While from a practical standpoint, project managers need to be espe-
cially attentive to the top stakeholders, the enlightened “management for stakeholders”
approach also encourages project managers to ensure that interests of all the stake-
holders, including less powerful ones, are considered.2 This approach of giving prefer-
ence to the most important stakeholders while recognizing needs of all stakeholders
requires judgment, and the advice of the sponsor is often helpful.
One additional consideration is that various stakeholders often have competing inter-
ests. For example, the client may want the work done quickly, while the accountant is
worried about cash flow. Exhibit 6.3 itemizes how different types of stakeholders fre-
quently define project success. Another consideration is that each project was selected
to support a specific business purpose and that purpose should help determine the rela-
tive importance of various stakeholders.
It is not necessary that all stakeholders favor the project. Competitors in the business,
public interest groups, voluntary organizations that promote environmental sustainability
and, occasionally, a segment of end-users may oppose the project and its execution. The
project manager must identify them and monitor their actions closely.
EXHIBIT 6.2
MODULAR COURSES: STAKEHOLDER IDENTIFICATION AND PRIORITIZATION MATRIX
VICE
CHANCELLOR
DEANS OF
FACULTY (*)
ACADEMIC
REGISTRAR: LECTURERS: (*)
STUDENT
SUPPORT STUDENTS
What Is
Important to
This Stakeholder
Power 3 3 3 2 1 1
Interest 3 1 2 1 2 2
Influence 1 3 2 2 1 1
Impact 3 2 3 1 1 1
Urgency 2 1 2 1 1 1
Legitimacy 2 1 3 3 1 3
Total: 14 11 15 9 7 6
Priority
(Key or Other):
Key Key Key Secondary Other Other
(*) Lecturers and the deans are unlikely to be homogeneous in their views—more information is needed to identify groupings and interest areas. For this
case, we have kept it simple. Source: Louise Worsley.
Chapter 6 Stakeholder Analysis and Communication Planning 181
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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If the project team developed the stakeholder identification and prioritization matrix
without their sponsor, now would be a good time to share it with the sponsor and ask
for feedback. Chances are good the sponsor will want to make some adjustments before
the team continues with the stakeholder management plan. Sponsors are especially useful
in helping to sort out conflicting priorities. Typically, when a conflict exists, external
paying customers and top management are considered to be highly important stake-
holders. The project team primarily considers these top stakeholders while they:
Develop a communications plan (later in this chapter)
Define the scope of the project (see Chapter 7)
Identify threats and opportunities (see Chapter 11)
Determine quality standards (see Chapter 12)
Prioritize among cost, schedule, scope, and quality objectives (see Chapter 12)
6-1c Document Stakeholders
The primary output of the “identify stakeholders” process is a stakeholder register. The
stakeholder register is a repository of information regarding all project stakeholders.
Teams use it to develop strategies to either capitalize upon stakeholder support or to miti-
gate the impact of their resistance. The stakeholder register provides input to relationship
building with the various stakeholders and helps determine their requirements. In turn,
these requirements serve as the basis of developing project scope. The stakeholder register
is a living document that changes as needed. A stakeholder register often is in the format
of a matrix. In the stakeholder register shown in Exhibit 6.4, we start to evaluate the
interests of the different stakeholder groups. Sometimes referred to as the WIIFT
EXHIBIT 6.4
MODULAR COURSES: PROJECT STAKEHOLDER MATRIX
STAKEHOLDER INTEREST IN PROJECT PRIORITY SUPPORT/MITIGATION STRATEGIES
Vice Chancellor Make major improvements in university
services and avoid government intervention.
Key Consult on target improvement areas—use his
power to support key and difficult changes.
Deans of Faculty Protect against changes that could influence
their power base. Reduce detrimental impact
on faculty activities.
Key Work with nominated representatives to
identify and seek out solutions to barriers to
change. Establish and communicate wins for
faculties.
Academic
Registrar (AR)
Develop the power base of AR—demand
and obtain quality improvements on courses
across the university.
Key Increase visibility and power of AR. Increased
visible support for AR regarding resources and
political support from senior management.
Lecturers Be kept informed of impacts upon them.
Reduce or resist changes that are considered
negative to them.
Secondary Identify supportive champions. Create, test,
and deliver carefully considered communica-
tion strategy.
Student support Be able to prepare and train staff on how to
roll out new schemes to current and
prospective students.
Other Help student support guide staff through
process—develop training programs and
online web support.
Students University shows signs of improvement and
ensures students’ needs are considered.
Other Set up consultation and communication
groups. Keep informed.
Source: Louise Worsley.
Chapter 6 Stakeholder Analysis and Communication Planning 183
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(what’s-in-it-for-them), this analysis can be used to help identify where there may be com-
mon areas of interest between the groups, and note that what made this particular pro-
gram complex was the absence of common ground. Strategies would need to be sought
to change positions or reduce the impact of the behaviors of some of the groups.
6-2 Plan Stakeholder Engagement
Project teams plan stakeholder engagement both by creating a tool called a stakeholder
engagement assessment matrix and by planning to build relationships with the
stakeholders.
6-2a Creating a Stakeholder Engagement Assessment Matrix
Project teams create a stakeholder engagement plan to define how they will effectively
engage stakeholders in planning and performing the project based on the analysis of
the stakeholders’ needs, wants, and impacts. A primary tool used in this plan is the
stakeholder engagement assessment matrix. This matrix typically includes a first col-
umn showing the stakeholders. For each stakeholder, additional columns may repre-
sent how much they are currently supporting or opposing the project, where you
would like them to be, barriers to their changing, and strategies you may employ to
move them. Strategies for powerful and supporting stakeholders may include accepting
their ideas, compromising, or offering them trade-offs, while strategies for opponents
might entail doing the minimum possible or fighting their demnds.3 It is not uncom-
mon to think that the best one can do with opposing stakeholders is to help move
them to a neutral position, while those who are unaware of or neutral toward the proj-
ect may be turned into supporters.
Fi
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184 Part 2 Leading Projects
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Exhibit 6.5 identifies both the current and target positions of the stakeholder
groups. The greater the change in position, the greater the risk and the greater the
engagement effort required. Student Services had a relatively unimportant position in
the old system but would be critical to the new modularized operation. Significant
expenditure was anticipated in this area. It is of interest to note that the initial analysis
(see Exhibit 6.4) had identified this group as “other stakeholder.” As the nature and
impact of changes become clearer, they can alter the relative importance of different
groups. Stakeholder positions and stakeholder strategies must be reevaluated through-
out the project.
6-2b Planning to Build Relationships with Stakeholders
Project managers and teams seek to develop strong working relationships with important
stakeholders. This is an ongoing process throughout the life of the project. In fact, the
project manager normally continues to nurture the relationship even after the project is
completed to increase the chances of securing future project work and to maintain good
will with the external stakeholders. In building relationships both within the project core
team and with other stakeholders, project managers need to remember that mutual respect
and trust greatly enhance the prospect of project success. Therefore, relationship-building
activities that lead to respect and trust should be planned and carried out carefully.
EXHIBIT 6.5
MODULAR COURSES STAKEHOLDER ENGAGEMENT ASSESSMENT MATRIX
STAKEHOLDER
CURRENT
POSITION
TARGET
POSITION BARRIERS TO CHANGE STRATEGY
Vice Chancellor Leading Leading Competing day-to-day priorities Ensure engagement is ‘efficient’ and effec-
tive. Consider extending role of deputy
Chancellor to cover for some day-to-day
activities.
Deans of Faculty Resistant Neutral,
Supportive,
or Leading
Some Deans more powerful than
others (relates to student numbers
and academic ratings). ‘Power
owners’ are very influential.
Consider each Dean’s WIIFT individually.
Consider strategies for individuals as well
as the group.
Academic
Registrar (AR)
Supportive Leading Competing day-to-day
priorities—lack of leadership
skills.
Engage deputy, provide skills and
mentorship.
Lecturers Unaware
to neutral
Neutral or
supportive
Very large group with veto power
through unionized actions.
Involve HR and legal department to evalu-
ate all changes that may impact lecturers.
Identify supportive champions and stake-
holder groupings for engagement.
Student support Neutral Leading Not considered important by
academic staff—services currently
limited and not highly rated.
Provide consultancy support to team to re-
design and promote new services (includ-
ing student website).
Students Unaware Neutral Very large group. Student repre-
sentative council not well resourced
or highly valued by students.
Set up consultation and communication
groups. Keep informed. Consider use of
social media.
Chapter 6 Stakeholder Analysis and Communication Planning 185
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AGILE A principal idea in Agile is that relationships with stakeholders need to be based upon
collaboration, communication, and trust. Analyzing stakeholder information helps the
Agile team understand them better and leads to effective relationship building. It makes
more sense for Agile as client interaction is continuous and desirable throughout the
project life cycle.
Typically, relationship-building activities are most effective when they are used in the
process of planning a project. Project relationship-building activities (described more
fully below) that are especially useful include the following:
Share individual motives.
Encourage open communication.
Jointly establish agenda.
Use shared learning.
Regularly celebrate success.
Share enjoyment of project.
Use appropriate decision-making and problem solving.4
Establishing a positive relationship early with all key stakeholders is vital for two rea-
sons. First, it helps create a desire on the part of stakeholders to give positive support to
the project—or at least refrain from disrupting the project. This early building of a coali-
tion of supporters and engagement of opposition can help to positively shape the social
and political context of the project and lead to success.5 Second, it serves as the commu-
nications foundation for the project. The remainder of the project planning and execu-
tion are greatly enhanced by effective communication channels with key project
stakeholders.
The sponsor, project manager, and core team can establish powerful and meaningful
relationships with key stakeholders by delivering on all promises, always providing fair
treatment, creating a sense of pride by association, and even helping the stakeholder
develop a passion for the project.6 This starts by learning what motivates each stake-
holder. The old saying “What is in it for me?” describes what each stakeholder wants,
and that is what the project team needs to understand. Stakeholders who feel threatened
can disrupt a project during its process and are less likely to perceive that they receive
project benefits in the end. Unhappy stakeholders are a sign of project failure. On the
other hand, stakeholders can be treated as partners right from the start of planning by
speaking their language and providing them opportunities to participate. Here are some
things that customers (one of the primary stakeholders) value most from a contractor
who is performing the project:
A sincere invitation to early and continued involvement
Responsiveness
Transparency
Reliability7
These stakeholders are more likely to take ownership in the project by educating the
project team about their needs and making timely project decisions. Consequently, sta-
keholders are more likely to feel that their expectations are in line with the project team’s
plans. They are more likely to go beyond merely inspecting results and writing checks.
Further, they may participate early and often when their input is meaningful and they
feel that the project is successful. The important thing for project managers to remember
is that developing respect and trust among all project stakeholders is a goal that must be
186 Part 2 Leading Projects
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started early and continued throughout the project. Stakeholder relations and engage-
ment are just as critical to project success as the more technical planning and should
demand equal attention from project managers.
6-3 Manage Stakeholder Engagement
Manage stakeholder engagement is a process of the project team communicating and
working with stakeholders to satisfy their needs (and additional desires, when possible),
handle issues quickly, and encourage active stakeholder participation throughout. This
process can be visualized as shown in Exhibit 6.6, with managing on the left and moni-
toring on the right.
The first part of managing stakeholder engagement—understanding stakeholder
assumptions—was performed while creating the charter (Chapter 3), along with the stake-
holder register and stakeholder engagement assessment matrix discussed earlier in this
chapter. The requirements matrix, which will be developed in the following chapter, is
also helpful in understanding stakeholder assumptions. Different stakeholders may hold
very different assumptions concerning the project at the outset, and these assumptions
form the basis of their expectations. Therefore, the project manager clarifies the assump-
tions, challenges and negotiates some of them, and uses them in project planning.
These clarified assumptions are then stated as expectations regarding project deli-
verables, features of the product, timelines, costs, quality measures, and generally
how the project manager and team will act. Next, the stakeholders have a chance to
agree or challenge the expectations before committing to them. The expectations are
then documented.
EXHIBIT 6.6
MANAGING AND MONITORING STAKEHOLDER ENGAGEMENT
Understand
Stakeholder
Assumptions
Clarify
Stakeholder
Assumptions
Achieve
According to
Stakeholder
Assumptions
Adjust
Strategies as
Needed
Reconfirm
Stakeholder
Expectations
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ed
Chapter 6 Stakeholder Analysis and Communication Planning 187
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AGILE
During project execution, the team works toward satisfying these expectations. This
involves work between project meetings to complete assigned activities and to quickly
resolve problems that have surfaced. Concurrent with the achievement of expectations
is the continual recommitment to the expectations. One method that project teams can
use to reconfirm expectations is to share planning documents, such as schedules, with
stakeholders. The team informs the stakeholders that all the planning documents reflect
the team’s understanding of what has been asked to do. It is what the team is expected to
achieve and be judged against.
Some stakeholders may identify further expectations when they see everything
spelled out. Project managers often hold informal conversations with various stake-
holders to ensure that they fully understand and agree with all of the planning details.
Finally, as project teams report progress to stakeholders, additional expectations
emerge. When additional expectations emerge, they need to be considered in terms of
the project’s formal change control process and, if accepted, the project plan will be
revised and these additional expectations would become additional project activities to
be performed. All of the activities related to managing engagement increase support
from those stakeholders who favor the project and decrease resistance from other
stakeholders.
6-4 Monitor Stakeholder Engagement
Monitor stakeholder engagement is the process of engaging stakeholders and managing
relations with them effectively. The vertical box on the right in Exhibit 6.6 shows three
things a project manager must monitor throughout the process of managing stakeholder
expectations: relationships, communications, and lessons learned. Through honest and
ethical behavior, the project manager and project team must build trust with all project
stakeholders. They need to continually manage effective two-way communications with
all stakeholders as described in the communications plan. This includes a true willing-
ness to encourage stakeholders to ask probing questions, as that is an effective way to
develop confidence with some stakeholders. Finally, they should use lessons learned
from previous projects and previous phases of the current project. Armed with trusting
relationships, effective communications, and methods to overcome some problems from
previous projects, the team is prepared to adjust strategies and plans as needed to control
stakeholder engagement.
On Agile projects, stakeholders need to be educated about their roles; alerted in advance
concerning changes; and request early and continuous feedback. These are all excellent
methods to use on any project.
6-5 Plan Communications Management
The project team should next create the communications management plan. This plan
considers stakeholders’ information desires and guides the project communications. It
needs to be a living document that adapts to changing project needs.
6-5a Purposes of a Project Communications Plan
Projects face many challenges, including technical, cost, and schedule difficulties. Failure
to manage any of them well can throw off a project. Perhaps the most common
188 Part 2 Leading Projects
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challenge to project success is communication. Many projects require a group of people
to work together who have not done so before. Projects may involve people from various
functional areas that all have their own unique challenges. Sometimes, people from mul-
tiple companies may end up working together on projects. All projects are unique and
therefore they have a different set of stakeholders. “Communication leads to cooperation,
which leads to coordination, which leads to project harmony, which leads to project
success.”8
6-5b Communications Plan Considerations
A myriad of considerations must be kept in mind when creating a communications plan.
A project team can develop a workable communications plan, use it, and improve it as
the project progresses. Some factors that Fiesta® San Antonio organizers considered
when creating a project communication plan are shown in Exhibit 6.7. These factors
apply to all project communications. Therefore, we discuss these factors first and then
explain who provides information needs to the project team and to whom the team
needs to supply information.
PURPOSE COLUMN The first column in Exhibit 6.8 instructs a project team to con-
sider the purpose for each communication. Without good use for the communication, it
makes no sense to develop it. A project manager must use effective communications to
set and manage expectations of all stakeholders as well as to ensure that project work is
completed properly and on time. Communications from stakeholders are necessary in
EXHIBIT 6.7
FIESTA SAN ANTONIO COMMUNICATION PLAN NEEDS
In August 2012, the Institute of Texan Cultures, a museum specializing in Texas culture and diver-
sity, forged a partnership with the Fiesta® San Antonio Commission to produce a series of exhibi-
tions showcasing the traditions of Fiesta®, San Antonio’s premiere festival. Fiesta® is an annual 10-
day festival of over 100 events and 5 large parades. The festival draws 3.5 million visitors. It is tradi-
tion for Fiesta® events to commission new medals each year to give to event-goers to wear and trade
throughout the festival.
The museum’s leadership team convened with the Fiesta® San Antonio Commission’s executive
director at the end of August to assemble a project management plan. The parties identified sta-
keholders who would be impacted by the project. They prioritized stakeholders by influence, and
divided responsibilities for developing and maintaining relationships with each of those
stakeholders.
The following challenges were anticipated:
It would take time for the 120 Participating Member Organizations (PMOs) to reach their
members and assemble a full collection of medals to loan to the museum.
Some PMOs might be offended if their medals were not displayed more prominently than
other PMOs.
The museum would be engaging the same PMOs to support future exhibitions, so it was
critical to maintain positive relationships.
It was clear that a comprehensive communications plan would need to be implemented to estab-
lish lines of communication, nurture relationships, and manage the flow of information between
stakeholders.
Source: Aaron Parks, Institute of Texan Cultures
Chapter 6 Stakeholder Analysis and Communication Planning 189
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authorizing work, determining requirements, uncovering and resolving issues and
assumptions, and receiving feedback on project progress and results. Different stake-
holders often have conflicting desires; effective communications are necessary to under-
stand and resolve these differences. Communications to stakeholders are necessary to
help them make good decisions (by understanding options and risks), assure them of
adequate understanding and project progress, enable them to fully commit to the project,
and be ready to accept project deliverables. Yet another communication purpose is to
plan and manage escalation of issues that cannot be handled in a timely manner by the
project manager. Wise project managers determine in advance how soon an issue will be
escalated to the sponsor and/or other decision makers. Finally, communications plans
ensure that at project conclusion, meaningful lessons can be documented to benefit
future projects.
A project manager develops trust with her core team and other stakeholders partly by
using open and transparent communications to the extent possible. However, she needs
to respect all promises of confidentiality and to use good judgment on what is or is not
appropriate to share.
STRUCTURES COLUMN The second column suggests that when an organization has
adequate existing communication structures, it should use them! There is no need to
reinvent every document and, indeed, it would be confusing and costly to do so. Many
stakeholders in organizations are accustomed to a particular method of communications,
and using that method will make it easier for them to understand you. When no exact
organizational model is available for a specific communication, one can use a template,
which is still easier than creating an entirely new type of document.
EXHIBIT 6.8
PROJECT COMMUNICATIONS PLAN CONSIDERATIONS
PURPOSES STRUCTURES METHODS TIMING
Authorization Existing organizational
forms (reuse)
Push methods: Project life cycle
Direction setting
Project specific:
Instant messaging Charter
Information seeking
Templates (adapt)
E-mail Project plan
Status reporting:
Unique (create)
Voice mail Milestones
Schedule Text Output acceptance
Cost Pull methods: Project close-out
People Shared document repositories Routine time
Risk Intranet Daily—member
Issues Blog (repository) Weekly—core team
Quality Bulletin boards Monthly—sponsor
Change control Interactive methods: As needed—others
Approval of project outputs Telephone—teleconferencing
Escalation Wikis
Lessons learned VOIP/videoconferencing
Groupware
190 Part 2 Leading Projects
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Using any of the three choices, project teams need to maintain version control on all
of their communications. One easy method is to end the file name of every document
with six numbers representing year, year, month, month, and day, day. For example, an
early version of this chapter was saved on February 1, 2017, and the file name given was
“Chapter 6 Stakeholder Analysis and Communication Planning 170201.” The advantage
of a simple system is that the files can still be easily found by their descriptive named
titles, but they can also be sorted easily by the last date they were updated.
METHODS COLUMN The third column in Exhibit 6.8 deals with methods of commu-
nicating. Projects rely on “push” methods in which communications are sent or pushed;
“pull” methods where communications are posted either on paper or in electronic form
and interested stakeholders need to take the initiative to receive the communication; and
interactive methods in which communications flow in multiple directions. A typical proj-
ect communication plan will utilize a variety of these methods.
TIMING COLUMN The fourth column is a reminder that a project team needs to con-
sider timing issues when developing a project communications plan. Communications
typically are delivered according to one of three types of timing schedules. First is the
project life cycle, with communications typically needed at the end of each major stage
in the project and upon completion of each major project deliverable. The second timing
schedule follows a more formal organizational structure. Project progress is often
reported at regularly scheduled meetings. Meetings at the frontline level are usually
more frequent than reports to higher levels within the organization. The third timing
scheme is on an as-needed basis. Many times, a stakeholder wants to know a certain
fact about a project and cannot wait until the next formal meeting or report. Project
teams need to keep themselves up to date so they can handle the as-needed requests.
6-5c Communications Matrix
At this point, project teams will normally assemble a project communications matrix.
This matrix lists the following information:
The communications needs of each project are unique and, therefore, the assignment
of communications responsibilities will vary widely from project to project. A partially
completed project communications matrix for the Modular courses program is shown
in Exhibit 6.9. This identifies the information needs of the program team and the stake-
holders. Various methods of communication are proposed, depending on the purpose of
the communication and the constraints within which the stakeholder engagement must
take place. It won’t be possible to meet with the program board every day, so weekly
meetings, supplemented by short one-on-one stand-ups with the Vice Chancellor are
planned. It was decided to create a program board made up of key decision makers—to
Who does the project team need to learn from?
What does the team need to learn from this stakeholder?
Who does the project team need to share with?
What does this stakeholder need to know?
When do they need to know it?
What is the most effective communications method for this stakeholder to
understand?
Who on the project team is responsible for this communication? (the owner)
Chapter 6 Stakeholder Analysis and Communication Planning 191
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serve as an important communication and decision-making conduit for the program.
The actual communication plans impact the scope of the project. For example, having a
program newsletter adds to the scope—the effort and costs of the project. In complex
projects, the communications plan can form a major proportion of the project scope.
Stakeholders want to know how much work has been successfully delivered (accep-
tance tests passed) and how much work is remaining. Project team members use the
information to motivate and improve their performance. Sponsors use the information
to strategically understand if the project team will complete all work on time and within
budget. Other stakeholders may share the sponsors’ overall concern but want details of
work that concerns their functions. While these communication needs are common on
all projects, Agile projects have unique reports such as velocity, burn-down charts, run-
ning tested features, and earned business value.9
6-5d Manage Project Knowledge
If a company does extensive project work and uses project management capability as an
organizational strength, it is important to keep developing expertise in it. One way to
develop and expand expertise is to capture and reuse the knowledge developed. Knowl-
edge can be defined as insights derived from information and experience. Knowledge
also is “a conclusion drawn from information after it is linked to other information and
compared to what is already known.”10 Ironically, knowledge will remain dormant, and
not very useful, until it is reflected in future actions. Manage project knowledge is the
process of using and developing knowledge to help improve both the current project and
the capability of the organization.
To increase knowledge and the successful use and reapplication of it, organizations often
create a lessons learned knowledge base. For this database to be useful, it is important to
EXHIBIT 6.9
MODULAR COURSES – PROJECT COMMUNICATIONS MATRIX
STAKEHOLDER
PROJECT INFO.
NEEDS
STAKEHOLDER
INFO. NEEDS METHODS TIMING
Program Board
(Vice Chancellor)
Direction, strategy,
budget,
authorizations
Status—progress
and SH positions
Scheduled board meetings, cir-
culated minutes, one-on-ones
with Vice Chancellor
Weekly and as needed
Daily 15-min. stand-up with
Vice Chancellor
Deans of Faculty Concerns, WIIFT Plans, changes to
practices affect-
ing their staff
Program newsletter, across-
faculty workshops, informal
one-on-ones consultation
Every 2-3 weeks depending
upon concerns.
Academic
Registrar (AR)
Requirements Resource com-
mitments, status
Workshops with team, e-mails Frequent in early stages then
timed to delivery points.
Lecturers Concerns Plans, changes to
practices affect-
ing them
Program newsletter, presenta-
tions, e-mails
Monthly
Student support Requirements Resource com-
mitments, status
Workshops with team, e-mails Frequent in early stages then
timed to delivery points
Students Concerns Changes to
enrollment
procedures
Social media, e-mails,
presentations
E-mail and meetings
192 Part 2 Leading Projects
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communicate project successes and failures from all aspects of the project process. Captured
throughout the life of the project, recommendations to improve future performance can be
based on technical, managerial, and process aspects of the project. In addition, part of the
project closeout process should include facilitating a lessons learned session for the entire
project, especially on unsuccessful projects. Remember, “people learn, not organizations. …
Knowledge is created and exchanged through trusted relationships and social interaction.”11
6-6 Manage Communications
Manage communications includes all the work associated with the project communica-
tions plan, starting with planning for it; generating it; organizing and sharing it; and, finally,
storing and disposing of it. In order to successfully communicate the right project informa-
tion to the right stakeholders, in the right format, at the right time, several things must hap-
pen. First, all of the information required to develop the project communications
management plan should be assessed and obtained. Then, while the project is under way,
the project manager and team need to determine any additional information needs not
already uncovered, establish an information retrieval and distribution system, collect infor-
mation on executed work and work in progress, and then report progress to all stakeholders.
6-6a Determine Project Information Needs
Many stakeholder information needs were identified during communications planning,
such as authorization to proceed, direction setting, status reporting, and approval of out-
puts. Often, other information needs arise during project execution. All needs must be han-
dled accurately, promptly, and in a manner that balances effectiveness with cost and effort.
Communicate accurately—Accurate communications means not only being factually
honest but also presenting information in a manner that people are likely to inter-
pret correctly.
Communicate promptly—“Promptly” means providing the information soon
enough so that it is useful to the recipient to facilitate timely decisions.
Communicate effectively—Effectiveness is the extent to which the receiver opens,
understands, and acts appropriately upon the communication.
It is very easy to just copy everyone on an e-mail, but that is neither convenient nor
effective for some people. Face-to-face communication tends to be the most effective, the
telephone less so, and e-mail and formal reports even less. It is in the project manager’s
best interest to communicate effectively since the information provided allows stake-
holders to make decisions, understand real challenges, remain motivated, and believe
that the project is in control.
6-6b Establish Information Retrieval and Distribution System
Project information can be retrieved from many different sources. It can also be distrib-
uted via many systems. Project management software such as MS Project is frequently
used for schedule information and sometimes for cost and human resource information.
Project managers use many methods of communicating. In this information age, project
managers need to keep three things in mind with communications:
1. Target the communications. More is not better when people are already overloaded.
2. Many methods are available, and the choices change rapidly. Use new methods if use-
ful, but do not discard proven methods just for the sake of change.
Chapter 6 Stakeholder Analysis and Communication Planning 193
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AGILE
3. Projects often have many stakeholders who need specific information. Use your com-
munications plan and always keep asking if there is any other stakeholder in need of
upward, downward, or sideways communications.
Tatro, Inc., uses a hosted project management page on its website that clients can
access with a password to witness project progress from anywhere in the world on a
24/7 basis. It displays photos that show actual progress for the client to view.
One specific and important skill that project managers can use to retrieve information
is active listening. Active listening requires focus on what the person is saying. The active
listener can ask clarifying questions and paraphrase to ensure that he or she understands
exactly what is meant. Making eye contact and using body language that shows eagerness
encourage the speaker to continue. An effort to simultaneously understand both the
meaning of the message and the hidden emotions helps the receiver to understand the
full message. Recognize that many speakers are not especially skilled in communications,
so paying more attention to their message than their style of delivery also helps. Often, a
project manager can successfully end the conversation by orally confirming what he or
she just heard and by following up with an e-mail for documentation.
6-6c Project Meeting Management
Planning and conducting projects require a variety of meetings, such as meetings to:
Establish project plans
Conduct the project activities
Verify progress
Make decisions
Accept deliverables
Close out projects
Meetings are an important process on projects since many important decisions are
made at meetings and much time of expensive project personnel is invested in meetings.
One common feature of Agile projects is the “stand-up meeting.” These short (15 minute
or less) meetings are often held at the start of each day with no comforts such as coffee
or chairs. Each project team member briefly states what she accomplished the previous
day, what she plans to accomplish this day, and what obstacles may challenge her.
Project meetings should be conducted as efficiently and effectively as possible. One
way to improve the project meeting process is to apply the simple and effective plan-
do-check-act (PDCA) model.
PDCA MODEL The idea behind process improvement with the PDCA is that any pro-
cess practiced repeatedly, focusing on reusing and adapting things that worked well and
avoiding things that did not work well, improves over time. Exhibit 6.10 depicts the
PDCA model as it is applied to project meetings. Each of the four sections will be
explained in more detail in the following sections, but, in short, this model gives advice
on how to do the following for meetings:
P Plan: prepare an advanced agenda to guide the meeting
D Do: conduct the meeting and write meeting minutes
C Check: evaluate the meeting and
A Act: perform in-between meeting tasks.
194 Part 2 Leading Projects
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PROJECT MEETING AGENDA TEMPLATE When applying the PDCA improve-
ment model specifically to improving project meetings, the first step is planning the
project meeting in advance. The project manager assures that the agenda is prepared
and distributed ahead of time. If a project team is meeting often, this advance agenda
EXHIBIT 6.10
PDCA MODEL APPLIED TO PROJECT MEETINGS
prepare
advance agenda
conduct
meeting, write minutes evaluate meeting
perform
in-between
meeting tasks
Source: Adapted from Timothy J. Kloppenborg and Joseph A. Petrick, “Meeting Management and Group Character
Development,” Journal of Managerial Issues (Summer 1999): 168–172.
w
av
eb
re
ak
m
ed
ia
/S
hu
tte
rs
to
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.c
om
Chapter 6 Stakeholder Analysis and Communication Planning 195
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preparation may be done at the end of the meeting for the next meeting. That
way, everyone understands beforehand what will be covered in the upcoming meeting
and will have the opportunity to prepare for the meeting. The agenda also can
be helpful in deciding whether to invite a particular subject matter expert (SME)
or other guest to the meeting. A project meeting agenda template is shown in
Exhibit 6.11.
The top part of the agenda contains meeting logistics. The second item on the tem-
plate is the meeting purpose. If a project manager cannot state in a sentence why he
wants to conduct a meeting, perhaps the meeting is not necessary. The main body of
the agenda has three columns. First is a list of the topics. This starts with a quick
review of the agenda, because projects often move quickly, and this provides an
opportunity to add or delete an item from the agenda. Also, it helps busy people rush-
ing from another meeting to manage their time and focus on relevant agenda items.
The major topics of the meeting are listed next in the order in which they will be
covered. Often, remaining items from previous meetings or other urgent matters top
the list. However, a project manager wants to be sure to cover the most important
matters, even if they may not have the same sense of urgency. The second-to-the-last
item on the standard agenda is the meeting summary. The project manager sum-
marizes major decisions that were made as well as work assignments that were distrib-
uted. This helps people remember what they agreed to do. The final item on the
agenda is an evaluation of the meeting. This is explained in the check step of the
PDCA model.
The second column lists the person responsible for each topic on the agenda. Typi-
cally, the project manager takes care of the meeting start and close, but individual project
team members may be assigned specific action items. When people know in advance that
they are responsible for an action item, they are more likely to be prepared. Additionally,
if the advance agenda is available for key stakeholders to see, some of the stakeholders
may contact the responsible person in advance to provide input. This is a good way to
keep stakeholders engaged.
The third column is a time estimate for each item. While the project manager does
not need to be a slave to the clock, recognition of how long team members are in
EXHIBIT 6.11
PROJECT MEETING AGENDA TEMPLATE
Project Team PlaceTimeDate
Topic 1
Topic 2
Topic 3
Review agenda
Summary
Meeting evaluation
2 min
2 min
5 min
196 Part 2 Leading Projects
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meetings and how many items are accomplished goes a long way. People are more likely
to attend a meeting if they are sure it will end on time.
PROJECT MEETING MINUTES TEMPLATE The second step in the PDCA process—
“do”—means to conduct the meeting and to capture minutes as the meeting is con-
ducted. Many project teams rotate the role of minutes taker so each team member feels
equal. A template for taking project minutes is shown in Exhibit 6.12.
6-6d Issues Management
The project minutes mirror the agenda to the extent that both refer to the same meeting.
The top part of the minutes form is logistics, just as in the agenda. The four primary
types of information captured in a project meeting are:
1. Decisions made
2. New issues surfaced and old issues resolved
3. Action items agreed to
4. An evaluation of the meeting
DECISIONS AND ISSUES First, any decisions that were made should be documented.
Second, any new issues that surfaced or existing issues that were resolved should be
recorded. An issue is a situation that requires a decision to be made, but one that the
team cannot make now, usually either due to needing information or more time. An
issues log is a dynamic repository of information regarding both open issues and those
that have been resolved. Issues logs benefit a project in at least two ways. First, when
an important issue—but not one that can be solved in the immediate meeting—is intro-
duced, the project manager can add it to the open issues and not spend time on it in the
EXHIBIT 6.12
PROJECT MEETING MINUTES TEMPLATE
Resolved Issues
New Issues
Project Team TimeDate
Chapter 6 Stakeholder Analysis and Communication Planning 197
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AGILE
current meeting when more pressing matters need to be settled. Second, the issues
log ensures that important issues are not forgotten. An issues log template is shown in
Exhibit 6.13.
ACTION ITEMS The third type of project information is action items. Each of these is
a task that one or more members of the project team agree to perform by a specific date.
These are recorded, and the project manager reminds the team at the end of each meet-
ing what each member agreed to do.
EVALUATION The final item to be recorded on the project meeting minutes is an
evaluation of both good points from the project meeting that the team would like to
repeat or at least adapt and poor points from the meeting that the team would like to
avoid or perform in a different manner in the future. An experienced team can collect
these points in a minute or two; the time they save in future meetings often pays great
dividends. An easy way to capture these evaluations is a Plus-Delta template, as shown
in Exhibit 6.14.
On Agile projects, this evaluation is called retrospectives.
When assessing the project meeting with a Plus-Delta method, a project manager can
simply draw the form on a flip chart or marker board. Then, each person is asked to
offer his opinion on at least one aspect of the meeting that either was good (+) that she
would like to see repeated or one thing that was poor ( ) and could be overcome in
future meetings. The key to making this work for the project manager is how she
responds to any deltas. If the project manager responds defensively, the team members
may not want to offer further suggestions.
EXHIBIT 6.13
PROJECT ISSUES LOG
O P E N I S S U E S
NAME DATE OPENED ORIGINATOR POTENTIAL IMPACT PROGRESS
C L O S E D I S S U E S
NAME DATE OPENED ORIGINATOR HOW RESOLVED DATE CLOSED
198 Part 2 Leading Projects
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Finally, the “act” part of the PDCA cycle for project meetings is for every team mem-
ber to complete the action items they promised and for the project manager to commu-
nicate with the team members to make sure nothing is holding them back from their
commitments. Wise project managers keep active but informal contact with team mem-
bers between meetings to ensure action items are completed on time. When all steps of
the PDCA cycle are applied to project meetings, the meetings improve; the team mem-
bers gain satisfaction; and the project makes better progress.
PMP/CAPM Study Ideas
There is a great deal of overlap between Project Communications Management and Proj-
ect Stakeholders Management. Each edition of the PMBOK makes changes with and
between these two groups, so be sure you are using the sixth edition if you are studying
for one of the PMI certification tests. Besides developing the project charter—which is
like a mini pre-plan that gives the project manager and team the authority to begin plan-
ning in more detail—the only other activity that takes place during the Initiating Process
Phase is Identify Stakeholders.
The main work of the next phase—the Planning Process Group—is creating the Proj-
ect Management Plan. The project management plan is the aggregate of plans from each
of the ten knowledge areas, including the Communications management plan and Stake-
holders Management Plan. As always, you will need to be familiar with the inputs, tools
and techniques, and outputs that go into each.
EXHIBIT 6.14
PROJECT MEETING PLUS-DELTA EVALUATION TEMPLATE
Summary
Projects frequently have many diverse stakeholders.
Some stakeholders do not know exactly what they
want, and different stakeholders sometimes want dif-
ferent things. The project manager and sponsor need
to build effective working relationships with the project
team and stakeholders. When good relationships are
built and maintained, the project team can enjoy the
trust that is so helpful in successfully completing the
project.
Armed with the stakeholder analysis and the project
charter, a project team is ready to create a communica-
tions management plan. One important component of
Chapter 6 Stakeholder Analysis and Communication Planning 199
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this plan is the communications matrix. This is the
document that answers these questions:
Who needs to know something about the project?
What does each need to know?
When do they need to know it?
What format is easiest for them to receive and
understand the information?
Who is responsible for sending it?
Other important aspects of a project communica-
tions management plan include managing and improv-
ing meetings; managing and escalating issues; and
capturing and using lessons learned.
Once stakeholders have been analyzed and communi-
cations are planned, the project team can get into more
detailed planning of scope, schedule, resources, budget,
risks, and quality—the topics of the next six chapters.
Key Terms Consistent with PMI Standards and Guides
identify stakeholders, 179
stakeholder analysis, 180
stakeholder register, 183
plan stakeholder engagement, 184
stakeholder engagement plan, 184
stakeholder engagement assessment matrix, 184
manage stakeholder engagement, 186
monitor stakeholder engagement, 197
plan communications management, 188
communications matrix, 191
knowledge, 192
manage project knowledge, 192
manage communication, 193
issue, 197
issues log, 197
Chapter Review Questions
1. List three reasons why understanding stakeholders
is important to successful project management.
2. What is the difference between an internal and
external stakeholder?
3. Which three criteria should you consider when
prioritizing stakeholders?
4. When should relationship building between the
project manager/other core team members and
important stakeholders occur?
5. What are some ways to build relationships within
the core team?
6. What are some ways to build relationships with
key stakeholders?
7. What are some important functions of commu-
nication from stakeholders?
8. What are some important functions of commu-
nication to stakeholders?
9. In order to manage stakeholders’ expectations, a
project manager needs to understand the stake-
holders’ assumptions. Which document(s) can
help with this?
10. What is the difference between “push” and “pull”
methods of communication? Give examples of
each.
11. What are three types of project communications
timing schedules?
12. What six columns should a communications
matrix contain?
13. Why is it so important to capture lessons learned
in a knowledge database?
14. List the items that go into a project team meeting
agenda and tell the purpose of each.
15. Describe an Agile “stand-up” meeting.
Discussion Questions
1. A new grocery store is being erected that
will demolish a neighborhood basketball court.
Who would be some internal stakeholders?
Who would be some external stakeholders?
2. With a few of your classmates, conduct an Agile
stand-up meeting and briefly discuss the three
meeting components mentioned in this chapter.
3. Think of a recent project you completed and
choose three stakeholders. Prioritize them, using
the six-criteria model.
4. In your opinion, what is the single most impor-
tant component of building relationships within
a project team? Why?
200 Part 2 Leading Projects
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5. In your opinion, what is the greatest benefit of
having good communication between the project
team and project stakeholders? Why?
6. Imagine you are the project manager of a team
tasked with building a new hotel. When brain-
storming project communication plan considera-
tions, what would you list under “purposes”?
7. Using the same scenario as question 6, which
timing schedule would you choose to use for
each communication? Why?
8. Create a project meeting agenda for an upcoming
project (or class) meeting you have.
9. Give an example of a time you have used push,
pull, and interactive communication methods.
Why did you choose the method you did based
on the circumstances?
10. Betty, a project manager, sent out agendas before
an upcoming meeting to everyone involved.
During the meeting, she got a team member to
take minutes. After the meeting, Betty followed
up with team members to check on their prog-
ress. Evaluate Betty’s actions using the PDCA
model. What, if anything, could she have done
better?
PMBOK ® Guide Questions
1. The “component of the project management plan
that describes how project communications will
be planned, structured, and monitored” is the:
a. communication model
b. communications management plan
c. stakeholder register
d. organizational breakdown structure
2. In order for a new grocery store to be erected, a
neighborhood basketball court located on the
building site will have to be demolished. The
neighborhood children who liked to play basket-
ball there could be considered .
a. subject matter experts
b. internal stakeholders
c. external stakeholders
d. customers
3. A common method of prioritizing stakeholders is
based on the stakeholders’:
a. legitimacy
b. power
c. urgency
d. all of the above
4. The components of a project communications
management plan should typically include the
purpose of the communication, structure (for-
mat, content, etc.), methods or technologies to
be used, and :
a. work performance data
b. time frame and frequency
c. stakeholder priorities
d. lessons learned
5. Most project meetings are formal, planned events
between project stakeholders. Effective meetings
typically have a purpose, a prearranged time and
place, a list of attendees and their roles, and an
agenda with topics and issues to be discussed.
After the meeting, are circulated.
a. refreshments
b. business cards
c. meeting minutes
d. lessons learned
6. The “project document that includes the identifi-
cation, assessment, and classification of project
stakeholders” is called the .
a. stakeholder engagement matrix
b. organizational breakdown structure
c. stakeholder register
d. weighted scoring model
7. A document used to manage points of discussion
or dispute that arise during projects, in order
to monitor them and ensure that they are even-
tually resolved and added to lessons learned, is
called a(n) .
a. risk register
b. stakeholder register
c. SWOT analysis
d. issue log
8. One of the key responsibilities of a project man-
ager is to manage stakeholder expectations. It is
important for the project manager to have inter-
personal or “soft” skills that include: overcoming
resistance to change, resolving conflict, active lis-
tening, and .
a. displaying confidence
b. subject matter expertise
c. ability to command and control
d. building trust
Chapter 6 Stakeholder Analysis and Communication Planning 201
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9. The process of communicating with stakeholders
and working with them to meet their expecta-
tions, address issues as they occur, and obtain
their continued commitment to the success of
the project is called .
a. Manage Stakeholder Engagement
b. Monitor Stakeholder Engagement
c. Monitor Communications
d. Manage Project Team
10. The communication method that is used for large
audiences or large volumes of information and
requires recipients to access the content at their own
discretion, is called communication.
a. push
b. pull
c. synchronous
d. interactive
CASA DE PAZ DEVELOPMENT PROJECT
In this chapter, the first thing we need to do is understand
who our stakeholders are and the importance of each set of
stakeholders. The initial look at stakeholders is shown in the
matrix below.
Once we have our stakeholder priority matrix, we will
ask each stakeholder what they want from this project.
We will then use that information to develop a commu-
nications matrix showing for each stakeholder what they
need to know from the project team and what they
need to share with the project team, along with the most
effective methods and times for these communications
to take place and who on the project team is respon-
sible for each communication. We will also develop
meeting agendas, minutes, issues logs, and meeting
evaluations.
In Agile, the role of communication with stakeholders is
much more formalized to enable the team to focus on the
work. The product owner is the primary contact for all stake-
holders and acts as a buffer between stakeholders and team
members while the iteration is under way. The ceremonies in
some Agile approaches act as a time for the stakeholders to
see the progress and make comments.
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Suburban Homes realizes the importance of maintaining
excellent relations with all its key stakeholders. Among the
stakeholders are clients who purchase homes, local law
enforcement agencies, potential buyers, county and state
agencies for real estate development, environmental regula-
tory agencies, both local and federal, community leaders,
contractors, subcontractors, local construction material sup-
pliers, and the list goes on.
Suburban Homes decided to build a new community of
120 homes in a suburb of Atlanta. It has acquired 15 acres
of land for this purpose. It also has submitted a preliminary
plan to the local county government for approval.
Suburban Homes is thinking of hiring a consultant
for developing a stakeholder management plan and
communication plan. For its stakeholder management plan,
they would like to identify all the stakeholders and develop
a stakeholder register. Further, it is considering selection of
at least six key stakeholders for a detailed analysis of a priori-
tization matrix, as shown Exhibit 6.2, and to develop a stake-
holder matrix, as shown in Exhibit 6.4.
As a consultant to Suburban Homes, you are asked to
develop a stakeholder engagement plan (Exhibit 6.5) and a
comprehensive stakeholder management plan after develop-
ing the stakeholder prioritization matrix and stakeholder
matrix, as shown in Exhibits 6.2 and 6.4, respectively.
Using the stakeholder management plan, the company
has also requested you to develop a communication plan
that makes use of Exhibits 6.8 and 6.9.
202 Part 2 Leading Projects
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Semester Project Instructions
Do each of the following for your project:
Develop a stakeholder analysis. Identify as many
stakeholders as you can using Exhibit 6.1. List sta-
keholders by name and title where possible.
Prioritize the listed stakeholders, as shown in
Exhibit 6.2.
Specifically identify each stakeholder’s interests, as
shown in Exhibit 6.4. Recognize that some stake-
holders may have an interest in multiple aspects of
the project process or results.
Describe the activities you are using to build rela-
tionships with your stakeholders.
Create a stakeholder engagement matrix like
Exhibit 6.5.
Develop a communications matrix like Exhibit 6.9.
Be sure to use considerations in Exhibit 6.8 for
ideas regarding purpose, structures, methods, and
timing for each communications need.
Document a project meeting with an advance
agenda, meeting minutes, issues log, and Plus-
Delta form of evaluation like Exhibits 6.11 through
6.14.
Stakeholder Prioritization
Project: Casa de Paz
Stakeholder Power Legitimacy Urgency Total
Parish Council 5 5 4 14
Casa de Paz Staff 5 5 4 14
Board Members 5 5 3 13
Community Council 3 5 4 12
Casa de Paz Volunteers 2 4 4 10
Residents/Future Residents of Casa de Paz 1 5 4 10
Members of Phoenix Support Group 1 5 4 10
Donors 2 3 4 9
Student Interns 2 4 2 8
Su Casa (who also serves sme community 1 5 1 7
YWCA 1 5 1 7
Protective Services 1 5 1 7
1 5 1 7
Chapter 6 Stakeholder Analysis and Communication Planning 203
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PROJECT M ANAGEM ENT IN ACTION
Project Communication Planning for a Distributed Project
During an IT rollout of servers, clients, networking equipment, and a central data center involving a range of
subcontractors at each of the roughly 50 regional schools, the original communication plan showed:
Original communication plan
After being appointed PM for rollout and implementation, I noticed that this was far from enough and needed to
be amended.
Revised communication plan
Main contractor
Subcontractor 1
Subcontractor 2
Subcontractor N
School 1
School 2
School N
Joint edu association
or
administration union
Subproj 1
Subproj 2
Subproj 50
Joint edu association
or
administration union
School 1
School 2
School N
Team Team
Team
Team
Team
Team
Team
Team
Team
C
or
e
te
am
Main contractor
(bundling crafts and trades)
Subcontractor 1
Subcontractor 2
Subcontractor N
204 Part 2 Leading Projects
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First of all, two on-site visits at each location were
introduced in order to
1. get to know the location and the people involved
and
2. make sure all environmental preconditions agreed
upon had been properly set up.
For each location, there were between 5 and 20
people involved who all needed special information
(depending on their role), thus multiplying the
planned effort of communication considerably. How-
ever, the still early discovery of the complex stake-
holder situation also facilitated a degree of fast-
tracking and intensifying the cooperation, which was
essential to finalize the project in quality, time, and
budget, despite several buffer-consuming events,
with very favorable media coverage and proper proj-
ect close, which otherwise would have been
impossible.
Apart from the headmaster and IT teacher, what
other roles did we discover ?
All teachers whose classrooms were involved
(receiving equipment, have to move/exchange fur-
niture, rearrange the room).
Caretaker (usually the one who knew about walls,
wires, changes to the building, and the construc-
tion history where there were no drawings
available).
Owner of the building (community, private owner,
society).
Sponsor for each individual school (who had to
agree to a detailed plan and a float sum of
money. This was quite a topic since originally it
was thought that a float lump sum of money
could be spent on the whole project moving
money between sites according to need. The
need differed greatly since a newly build school
(concrete/steel) poses a whole different range of
tasks as compared to 150-year-old converted cas-
tle schools with thick walls (think of wireless LAN,
think of protection of historical monuments =
no drilling of holes anywhere and a long analysis
and certificates for every little change to the build-
ing, think of moist or even wet intended server
locations).
The schools all had preferred local partners for elec-
tricity (dedicated electrical phases for 19 server,
power supply and network equipment, ideally dry
and ventilated and cool, usually a small moist place
with no air flow at all like a broom closet of the
Harry Potter type in Privet Drive).
Structural fire protection authority (they had seri-
ous words for the people who suggested drilling
through a bulkhead firewall).
Regional politicians who support the improve-
ment of learning environments.
Media who supported the project in terms of
regional development and marketing the initiative
to improve education and bring up-to date learn-
ing facilities also to the more rural areas.
And not to forget the neighborhood and espe-
cially the parents (in particular, the ones less IT
enthusiastic) who needed a good portion of con-
vincing that this was something big and essential
to their kids development and future chances.
What finally saved the project?
1. Initial core team brainstorming and proper stake-
holder analysis (no matter whether according to
PMI, IPMA, or PRINCE2, list them all, check their
expectation, interests, influence, power, degree of
potential support, and involvement).
2. Two alternative Meetings informing all interested
parties (obligatory to certain stakeholders and
open to the public and invited media), so everyone
KNEW, everyone received a roughly 50-page hand-
out with detailed plans and intentions, involvement
of all relevant parties, order of steps, phases of
progress, ways of communication, etc.
3. A short pilot consisting of 8 schools, 2 schools
of every one of the 4 different types (primary/
small, secondary/middle, gymnasium/large, special
needs) helped us group the remaining location in
mixed regional groups for each rollout team.
Scheduling the whole procedure was a challenge
because due to different sizes and varying numbers
of equipment, totally different buildings, etc., there
was no chance to cut everything into weekly time
boxes à la sprints in Agile scrum. Instead, every
team had their own stream of tasks, consisting of
nearly the same steps, however, with independent
underlying amounts of effort.
4. At virtually every first on-site visit, someone unex-
pected played a vital role (relevant for interdepen-
dency of activities, e.g., schedule, cost, resources,
communication, risks, basically the whole range of
Chapter 6 Stakeholder Analysis and Communication Planning 205
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. (Newtown Square, PA:
Project Management Institute, 2017).
Aaltonen, Kirsi, et al., “Stakeholder Dynamics During
the Project Front-End: The Case of Nuclear Waste
Repository Projects,” Project Management Journal
46 (6): 15–41.
Alderton, Matt, “What’s Your Number?” PMNetwork
26 (12) (December 2012): 48–53.
Anantatmula, Vittal, and Michael Thomas, “Managing
Global Projects: A Structured Approach for Better
Performance,” Project Management Journal 41 (2)
(April 2010): 60–72.
Assudani, Rashmi, and Timothy J. Kloppenborg, “Man-
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An Emergent Model of Stakeholders,” Journal of
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Badiru, Adedeji B., Triple C Model of Project Man-
agement: Communication, Cooperation, and Coor-
dination (Boca Raton, FL: CRC Press, 2008).
Basten, Dirk, Georgios Stavrou, and Oleg Pankratz,
“Closing the Stakeholder Expectation Gap: Manag-
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Developing Information Systems,” Project Manage-
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Stakeholder Influence: Two Australian Examples,”
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Ringhofer, “Stakeholder Inclusiveness: Enriching
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Theory,” Project Management Journal 46 (6): 42–53.
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PM topics), we (the project core team on whistle-
stop tour, usually four to five people) explained
everything we said at the two kickoff meetings
again, answered more questions, and made clear
that local support according to schedule was vital,
and deliberately failing to meet deadlines meant
moving down the list and along the time line.
5. During the second on-site meeting, we checked the
preconditions ready and if so delivery and setup
of IT equipment were approved, if not another
school from further down the list was invited to
move up if they met the criteria.
6. Every piece of equipment had a checklist, all func-
tions were tested and ticked off by a technician and
a school representative reporting status green,
which automatically approved the final steps includ-
ing training of staff on-site by the same technicians
who worked on-site the 1 2 weeks beforehand.
Bear in Mind:
1. Have a plan. You need to follow a systematic
approach throughout the project.
2. Employ structured Information.
3. Pilot what you do.
4. Communicate face to face on site.
5. Have clear rules.
6. Have a realistic time line, including buffers for all
sorts of risks and additional stakeholder involve-
ment wherever necessary.
Source: Martin Kontressowitz.
206 Part 2 Leading Projects
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Mueller, Ralf, and J. Rodney Turner, “Cultural Differ-
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Endnotes
1. Turkulainen, Virpi, Kirsi Aaltonen, and Paivi
Lohikoski, “Managing Project Stakeholder
Communication: The Qstock Festival Case,”
Project Management Journal 46 (6) (December
2015/January 2016): 76.
2. Eskerod, Pernille, Martina Huemann, and Claudia
Ringhofer, “Stakeholder Inclusiveness: Enriching
Project Management with General Stakeholder
Theory,” Project Management Journal 46 (6): 45.
3. Yang, Rebecca, Yaowu Wang, and Xiao-Hua Jin,
“Stakeholder’s Attributes, Behaviors, and
Decision-Making Strategies in Construction Pro-
jects: Importance and Correlations in Practice,”
Project Management Journal 46 (6): 78–79.
4. Bourne, Lynda, and Derek H. T. Walker, “Visu-
alizing Stakeholder Influence: Two Australian
Examples,” Project Management Journal 37 (1)
(March 2006): 5–21.
5. Aaltonen, Kirsi, et al., “Stakeholder Dynamics Dur-
ing the Project Front-End: The Case of Nuclear
Waste Repository Projects,” Project Management
Journal 46 (6): 28.
6. Adapted from John H. Fleming and Jim Asplund,
Human Sigma (New York: Gallup Press, 2007): 97.
7. Basten, Dirk, Georgios Stavrou, and Oleg Pank-
ratz, “Closing the Stakeholder Expectation Gap:
Managing Customer Expectations Toward the
Process of Developing Information Systems,”
Project Management Journal 46 (6): 76.
8. Badiru, Adedeji B., Triple C Model of Project Man-
agement: Communication, Cooperation, and Coor-
dination (Boca Raton, FL: CRC Press, 2008): 29.
9. Alderton, Matt, “What’s Your Number?” PMNet-
work 26 (12) (December 2012): 48–53.
10. Daft, Richard L., Management, 9th ed. (Mason, OH:
South-Western Cengage Learning, 2010): 631.
11. Shelley, Arthur, KNOWledge SUCCESSion: Sus-
tained Performance and Capability Growth Through
Strategic Knowledge Projects (New York: Business
Expert Press, 2016): 18.
Chapter 6 Stakeholder Analysis and Communication Planning 207
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3
ORGANIZE LEAD PERFORMPLAN
P A R T 3
PLANNING PROJECTS
Chapter 7
Scope Planning
Chapter 8
Scheduling Projects
Chapter 9
Resourcing Projects
Chapter 10
Budgeting Projects
Chapter 11
Project Risk Planning
Chapter 12
Project Quality Planning and
Project Kickoff
Planning is a large and critical part of project manage-
ment. Planning may be largely completed before much
executing work begins in traditional project manage-
ment, in a completely iterative fashion using Agile, or
somewhere in between in a hybrid environment. Project
planning tends to be collaborative with many people
involved and integrative in that many factors need to be
considered. That said, we cover the various aspects of
planning in distinct chapters to clarify what needs to be
done in each. Chapter 7 shows how to plan the scope by
collecting requirements and creating work breakdown
structures. Chapter 8 shows how to create and commu-
nicate project schedules. Chapter 9 follows closely by
resourcing projects and dealing with overloaded workers
and the frequent need to compress schedules.
Chapter 10 shows how to create a time-phased project
budget that will be used for control. Chapter 11 covers
details of identifying, assessing, and dealing with a myr-
iad of project risks. Finally, Chapter 12 deals with quality
planning and with integrating all parts of the schedule
into a single coherent whole.
209
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C H A P T E R 7
Scope Planning
You re browsing a favorite retailer s website and you notice the onscreen recom-
mendations are just right for you. The site seems to know what you ve bought
before. This great customer service is enabled by the retailer s web intelligence
solution from Teradata.
Teradata is the world s largest company focused solely on enterprise data ware-
housing and analytic solutions. The simple web-shopping scenario is just one exam-
ple of how our customers use information to improve their relationship with you.
So what does this have to do with project scope management? In this example,
the retailer purchased a Teradata solution that included hardware, software, and a
consulting project for the implementation. Teradata implemented this project based
on our experience and a methodology built upon a foundation of scope management.
We can manage scope in various ways ranging from traditional waterfall to
Agile approaches to deliver the right solution in an effective manner.
The first step in project scope management is to mutually agree on what the
project will deliver, or in the case of Agile, what we will focus on. In our example,
the retailer needed to integrate data from their web analytics software, an
in-house customer relationship system, and other sources. They also had require-
ments for reports and the technical integration with their IT infrastructure. The
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Describe the planning
of scope manage-
ment, collecting
requirements, and
defining scope
processes.
Create a require-
ments traceability
matrix, project scope
statement, and
change request form.
Describe a work
breakdown structure
(WBS) and its impor-
tance to project
planning and control.
Compare different
methods of develop-
ing a WBS.
TECHNICAL OBJECTIVE:
Create a WBS,
including work
packages and a
numbering system for
the code of accounts,
both by hand and
using MS Project.
Ra
w
pi
xe
l.c
om
/S
hu
tte
rs
to
ck
.c
om
210
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Teradata team elicited requirements in a way that uncovered what the customer
really needed.
Projects often use a statement of work (SOW) or similar document to outline the
high-level scope. In a Teradata project, this is part of our customer contract. We then
elaborate on more detailed requirements in a traceability matrix. This ensures all
requirements tie end to end from the contract through project testing and cus-
tomer acceptance. The time spent up front in requirements management pays divi-
dends during project testing and customer acceptance, where discovering unknown
requirements is much more time consuming and expensive.
Teradata follows traditional project management practice to develop a work break-
down structure (WBS) as the basis for a detailed project schedule and resource plan.
We typically use Microsoft Project as a scheduling tool; a plan based on the WBS
makes it easy to track and communicate the status of each deliverable.
Finally, the entire set of requirements is managed under change control. This
is an important process, because the team must balance control and flexibility.
We also must meet (or agree to change) the project cost and schedule para-
meters. Our project manager facilitates an analysis of the technical, schedule,
and cost impact, and then all parties reach an agreement on how to proceed.
This simple example illustrates how the Teradata project methodology builds
upon a foundation of scope management to deliver exactly what the customer
needs in the most efficient manner. An effective scope management approach
fosters open communications and sound decision making to ensure all parties
get the business value expected from the project.
Mike Van Horn, Teradata
7-1 Plan Scope Management
Once all the stakeholders for a project have been identified, the project team members
develop a scope management plan, assess project requirements, develop the project’s scope,
and create a work breakdown structure (WBS). These are the scope planning processes that
will be covered in this chapter. When planning scope, it is also wise to plan for changes.
While this is not technically part of scope planning, it will also be covered in this chapter
because accurate assessment of the client’s requirements can minimize scope changes, and,
to that extent, scope planning is an effective means to control changes to the project.
The flow of scope planning is illustrated in Exhibit 7.1. The boxes represent the proj-
ect work processes involved, and the documents shown before and after the boxes repre-
sent major inputs needed to perform the processes as well as major outputs created by
the work processes. Documents covered in previous chapters (Charter in Chapter 3 and
Stakeholder Register in Chapter 6) are needed inputs for the first two processes.
4.2 Develop Project Management Plan PM Plan
Baselines
5.5 Validate
Scope
5.6 Control
Scope
5.4 Create
WBS
Scope Baseline
with WBS
5.3 Define
Scope
5.2 Collect
Requirements
Requirements
Documents
5.1 Plan Scope
Management
Scope
Statement
PMBOK® GUIDE
Topics:
Plan scope
management
Collect requirements
Define scope
Create WBS
CHAPTER OUTPUTS
Requirements
documents
Scope statement
Scope baseline with
WBS
211
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AGILE
The first scope process, plan scope management, is the process of developing a plan
that includes the total scope of what needs to be done and what is excluded from the
project, implementation and validation of the scope, and control deviations from the
scope statement. The product scope describes features and functions of a project out-
come such as product, and, in some cases, service or result. The project team also
needs to determine the project scope, which is the work required to be performed for
delivering a product, service, or result with the required features and functions. Together,
the product scope (the outputs the team will deliver to its customers) and the project
scope (the work they need to perform to create the project’s outputs) form the total
scope. In other words, the project team members determine what they will do to ensure
they have identified and organized all the project work so they can use it as the basis of
all other planning activities and then as the basis for executing and controlling the proj-
ect work. For many projects, the client or the end user may not be concerned about the
project scope and may be interested only in the product scope.
The priority of the product in Agile is more significant than in traditional project man-
agement. The outcome, or the product, will drive the elaboration of the project. The end
state of the product is not predetermined. In Agile, we flip the 80/20 proposition on its
head and focus on the product 80 percent of the time and the project 20 percent. While
this model will not work in all project scenarios, it does work in projects in which the
main product is a creative, virtual result. Agile aligns to the needs of the customer. How-
ever, if an intermediary is managing scope and cost, the project manager needs to main-
tain alignment and remain focused on delivering value through the product.
7-2 Collect Requirements
A requirement is a condition or capability needed by a user to solve a problem or
achieve an objective that satisfies a standard, a specification, or any other formally docu-
mented need.
Collect requirements is a systematic effort to understand and analyze stakeholder
needs to define and document these needs and requirements with a focus on meeting
project objectives. The first step in collecting requirements is to ensure that the project
team is clear on the project objectives. This could be accomplished by reviewing the
EXHIBIT 7.1
SCOPE PLANNING FLOW
Plan Scope
Management
Scope
Management
Plan
Stakeholder
Register
Charter
Collect
Requirements
Define
Scope
Create
WBS
Perform
Integrated
Change Control
Approved
Changes and
Updates
Scope
Baseline
with WBS
Scope
Statement
Requirements
Traceability
Matrix
212 Part 3 Planning Projects
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AGILE
project charter—particularly the “why” section that justifies the project. The project team
members then may describe in more depth what each believes the expected project ben-
efits are and/or what problems the project is attempting to overcome. On simple pro-
jects, this may not take a lot of time. On complex projects, a project manager may
choose to use idea generation, grouping, and/or cause-and-effect techniques to make
sure that everyone on the project team understands why the project is being conducted.
Understanding broad project objectives will help in making more-detailed decisions later.
This also reinforces the project’s importance and may help motivate team members and
other stakeholders during challenging periods in project execution. It is especially useful
with multifunctional, virtual, and global project teams. Finally, a clear understanding of
the project’s objectives helps if the project plan needs to be revised at some point.
Collecting requirements is the same no matter what type of project approach you undertake;
however, in more iterative projects, the documentation of the requirement is normally much
less formal. Agile leverages the progressive elaboration mindset that allows for the project to
unfold before the implementation team. This works best when the expected outcome is
unclear or customers may change their mind once they see the initial product.
7-2a Gather Stakeholder Input and Needs
The second step is to gather input from the various project stakeholders. Needs assessment
begins with a high level of understanding of the client needs during the project inception.
A project manager is assigned and more detailed requirements assessment is done after a
project’s core team is selected. This core team size would depend on the nature of the proj-
ect and the number of disciplines required to plan and execute the project.
When a project manager and team listen closely to both internal and external customers,
they understand better both what their needs are and what risks and issues may confront
them during the project. Successful project managers know that for a project outcome to
be useful to the project’s customers, the customers need to be able to use the output to better
serve their own customers in turn. In other words, end-users of the project deliverable, the
product of the project, and their needs must be integral to the list of requirements.
The methods of developing deep understanding of customers and their needs vary
extensively from one industry to another. The traditional methods of obtaining and doc-
umenting requirements are many, such as:
Meetings with key stakeholders
Interviews
Focus groups
Questionnaires
Surveys
Observations
Prototypes
Industry standards
Reference documents,
Market analysis
Competitive analysis
Requests from the client
Standard specifications
For example, in new product development projects, teams often use voice of the cus-
tomer (VOC) techniques to elicit the benefits and features the customers want out of the
Chapter 7 Scope Planning 213
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project expressed in the customer’s language. Teams using VOC try to understand the
customer by not only asking questions but also by placing themselves in the customer’s
situation. If a project team is designing a new system that is to be used in the field,
the team member should get down in the mud with the mechanic and hand the
mechanic repair tools to see from the mechanic’s point of view how the new system
will be used.
Requirements can be classified as functional/technical and nonfunctional. The first
category is usually the focus of needs assessment exercises and is centered on perfor-
mance of the deliverable—such as the mechanic’s needs just described. The second cate-
gory includes requirements such as scalability, reliability, maintainability, and testability.
Once captured, these customer wants and needs are then stated in operational terms
that the people performing the project work can use to plan that work. If the customer
wants blue food coloring in a food item, the project team developing the item needs to
know the precise desired shade of blue, the quality grade, the tolerance for color varia-
tion, and how the blue color may interact with other ingredients.
The project manager wants to understand how a project’s success will be determined
from the customer’s perspective. The best way to gain this understanding (and to begin
building a strong relationship with customers) is to directly ask customers. The project
leaders can ask the customer(s) to specify how they will judge the quality of the project
based on both functional and nonfunctional requirements.
On an information systems project, the team may use a joint application design (JAD)
session to elicit customer requirements. This is often a facilitated session in which users
of the software should articulate their preferences regarding how the software should
work. The project manager and the team often send their understanding of the project
objectives and deliverables in advance to all the users so that they are better prepared to
discuss their needs and provide clarifications. Only one group of users is normally in this
meeting at a time, while the project manager and the technical workers are in the session
for its duration. Each possible feature of the system should be discussed. If the system is
large and complicated, the amount of time that can be spent per item may be scheduled.
Users often wish to talk in depth about how they want to use the system, while develo-
pers often want a detailed discussion about how they plan to create the feature. To avoid
sinking into too much detail, the project manger can ask the users to start with only a
high-level description of their reasons for the requested feature and then guide the dis-
cussion with the following five questions:
1. What do we not understand about the feature?
2. What is the business reason for the feature?
3. What is the impact of not providing this feature?
4. What action items need to be accomplished if we do this?
5. What impact will this have on other features of the project or elsewhere?
Exhibit 7.2 lists requirement along with other related information such as acceptance
criteria for each requirement, which can be either high level or very detailed (using speci-
fication in measurable terms). The requirement type suggests whether the requirement is
functional, nonfunctional, or needed by a particular stakeholder. The traceability matrix
also includes the status of the requirement, its priority, and who is responsible for the
requirement.
On some types of projects, the customers can provide their ideas using one of the
techniques above, and the project team can be confident that the customers’ wants and
needs have been captured. On other projects, once the customers’ viewpoint is captured,
it makes sense to create a model or prototype of some sort so the customers can decide if
their wishes have been fully and accurately captured. Often, this extra step helps the
214 Part 3 Planning Projects
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customers become more fully vested in the project and creates a strong working relation-
ship that is helpful when difficulties arise during project execution.
It is helpful to list requirements and their supporting information in a requirements
traceability matrix such as that shown in Exhibit 7.2.
EXHIBIT 7.2
REQUIREMENTS TRACEABILITY MATRIX
ID REQUIREMENT ACCEPTANCE CRITERIA TYPE STATUS
STAKE-
HOLDER
GROUP(S) PRIORITY OBJECTIVES
1 The BA must be able to
customize the information
collected for requirements
Stakeholder Approved BA Must PO#1
1.1 The system shall allow for
renaming of requirement
attributes
1. BA can rename an existing field
2. Field displays new name on input
forms
3. Field dispalys new name on reports
Functional Approved BA Must PO#1
1.2 The system shall allow new
requirement fields to be
identified
1. BA can add a new field
2. BA can set field attributes
3. BA can indicate field lookup values
4. Custom field available for input
5. Custom field available for reports
Functional Approved BA Should PO#1
1.3 The system shall allow for
lookup of allowable fields
for a requirements attribute
1. BA can enter custom list of lookup
value
2. Lookup fields can be provided
from an external system through
data interface
Functional Approved BA Should PO#1
2 The BA must be able to
provide different reports
for different audiences
Stakeholder Approved BA, Team,
Sponsor,
Stakeholders
Must PO#1
2.1 The system shall include a
base set of standard reports.
Reports include
1. Requirements Traceabilty Matrix
2. Business Requirements
Documents
Functional Approved BA, Team,
Sponsor,
Stakeholders
Must PO#1
2.2 The system shall allow a
business analyst to filter
reports based on various
requirement attributes
1. BA can filter report based on
a. Type
b. Stakeholder
c. Status
d. Priority
e. Objective
Functional Approved BA Must PO#1
2.3 The system shall provide an
option to download data to
an Excel supported file so
the BA can customize
1. BA can select to extract data to an
Excel supported file
2. Extracted data is formatted as a
tabular data set with no row breaks
Functional Proposed BA Should PO#1
2.4 The system shall allow for
customization of reports
to include filtering and
displayed fields.
1. BA can selected fields to include or
exclude in resulting report
2. BA can filter report (see 2.2.1)
Functional Approved BA Should PO#1
PO#1 – Project Objective #1 – “record, manage, communicate, and update requirements so that requirements can be captured once and then managed and communi-
cated efficiently”
Priority uses MoSCoW – Must be include in release (mandatory), Should be included in release (highly desired), Could be included in release (nice to have), Won’t be
included in release (out of scope)
Source: Vicki James, PMP, CBAP, PMI-PBA, CSM.
Chapter 7 Scope Planning 215
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AGILE
When requirements are complete, each requirement needs to be:
Traceable back to the business reason for it
Identified with the stakeholder(s) who need it
Unambiguous
Qualified by measurable conditions
Validated for its value and completion
Bounded by constraints
Prioritized according to value, cost, time risk, or mandate so trade-off decisions can
be made if needed
Once these requirements are developed, they are translated into specifications, as
shown in Exhibit 7.3.
There are several differences in gathering stakeholder input in Agile. In an Agile proj-
ect, the Product Owner is the interface to the product stakeholders and is responsible
for aligning stakeholders to priorities and capabilities. Agile focuses on delivering value
to the customer quickly, so feedback can get to the development team quickly. This
eliminates waste. Agile further assumes that the people doing the work know how to
do the work, and requirement writers are not qualified to tell them how to do that
work. At every iteration, the delivered product should be ready for use, if the customer
would choose to do so. As you can see, this would not work for a building that does
not have windows, so the type of project in which you engage will start to take shape
as you see the outcome being requested. In Agile, we are more likely to produce a
color of blue that seems to make sense to the team and get feedback. The goal is not
to be right: it is to get feedback. In a more Agile environment, there is only the judg-
ment of how well the product works. The customer ideally would not get involved in
how the product is created. Creating a model or prototype described above is analo-
gous to Agile delivering working software every few weeks to get feedback. If all is
well, we keep going; if not, we pivot and deliver more. In Agile, the requirements are
captured in a product backlog. The product manager prioritizes them on an ongoing
basis. They are delivered in short iterations and reviewed with the stakeholders on a
normal cadence.
EXHIBIT 7.3
REQUIREMENTS TRANSLATED INTO SPECIFICATIONS
REQUIREMENTS SPECIFICATIONS
Unambiguous—not subject to
interpretation
Complete—nothing left out
Consistent—no conflicts, which also
means no duplication
Modifiable—amenable to change
Traceable—to a customer need
Verifiable—means provided to verify the
requirement
Unique set—each stated only once
Normalized—should not overlap
Linked set—shows relationships
Complete—nothing left out
Consistent—no conflicts
Bounded—specifies nonnegotiable constraints
Modifiable—amenable to change
Configurable—traceable changes
Granular—right level of abstraction
Adopted from: IEEE 1233
216 Part 3 Planning Projects
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7-3 Define Scope
Define scope is the process of translating stakeholder needs and requirements into
detailed specifications of the project outcomes and products. Essentially, the project
scope statement includes three things regarding the total scope. First, the team needs to
determine both what they will deliver to the project stakeholders at the end of the project
and what they need to deliver along the way to ensure they will be successful in the end.
These are the deliverables—the product scope. For example, if a final project deliverable is
a new computer program, intermediate deliverables may include an outline of what will
be included and a prototype. Second, the team should decide what work needs to be
accomplished to create the deliverables. This is the project work statement—the project
scope. Third, the team needs to determine what will limit or influence the project work—
such as exclusions, constraints, and assumptions.
7-3a Reasons to Define Scope
Scope definition is an important part of project planning because all other planning is
based on the project scope. While the requirements collected represent the customers’
statement of what they need, the defined scope is the project team’s response—asking
the customer, “If we provide this, will it solve your problem?” It is impossible to estimate
how much a project will cost, how many (and what type of) workers will be needed, how
long a project will take, what risks are involved, or what quality standards will be
invoked without first understanding what work is included in the project.
Scope definition also is vital in preventing scope creep. Scope creep happens for two
common reasons. First, if the scope is not clearly defined and agreed upon, it is easy to
add additional work (scope creep) to the project with or without realizing that more time
and resources (additional cost) will be required. Second, sometimes when a project is going
as planned, a customer is so excited that he or she asks an innocent-sounding question:
“Can the project output also do … ?” The person performing the project work is often
flattered and agrees without understanding the implications of making this change. In con-
temporary business, pleasing the customer is desirable. However, the best time to gain cus-
tomer understanding is when the project team is defining the scope—not while executing
the project scope work.
7-3b How to Define Scope
Scope definition can vary greatly from one project to another. For a small, routine con-
struction project, it may be quite simple to determine what project outputs will be cre-
ated and what work is involved in creating them. On other projects, such as one large
company acquiring another, it may be very difficult to determine the total amount of
work that needs to be accomplished. Regardless of how easy or difficult it may be to
define scope and despite industry-specific methods that may be helpful in doing so, all
project teams need to complete each part of this process.
LIST DELIVERABLES AND ACCEPTANCE CRITERIA The first step is to list project
deliverables. The requirements elicited from the customer often lead to some of the final
deliverables. Project teams need to understand that there are often multiple deliverables.
For example, if a project entails constructing a house, the homeowners probably want
not only the house but also documentation on systems within it, perhaps an explanation
(training) on how to use certain items such as an innovative thermostat, and a warranty
procedure. The project team also needs to list intermediate deliverables—those things
that need to be developed while making progress to complete the project. Some of
Chapter 7 Scope Planning 217
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AGILE
these were probably listed in the charter, but others may not yet be identified. Then the
project team needs to determine the acceptance criteria for each deliverable.
ESTABLISH PROJECT BOUNDARIES The second step in defining scope is to estab-
lish the project boundaries. Think of the project boundaries as the sidelines on an ath-
letic field. By understanding what is in play and what is not, athletes know clearly when
to play and when to stop. Likewise, project team members need to know which tasks
should be executed and which tasks need not be executed.
The first part of the boundary definition is to decide which features and work elements
are included (in scope) and which are excluded (out of scope). Collectively, clients and end
users often request far more features and work than a project is originally planning to
deliver or can deliver. Therefore, the team needs to know and decide what is included
and what is not. Usually, the sponsor makes decisions regarding larger scope decisions,
but the project manager and team still have many detailed scope decisions to make.
The second part is to manage expectations regarding any project. The project team
members need to understand the constraints imposed on the project. If the work must
be delivered by a certain date or if only limited resources are available, the project may
be constrained, and the team should be careful to promise only what it can deliver. In
planning, people make assumptions about dates, times, and availability of resources; for
example, a shipment of required materials will arrive by the date the supplier promised.
These assumptions should be stated. If an assumption proves to be false, it frequently
increases the project risk and may also limit the project scope.
CREATE A SCOPE DESCRIPTION The final step is to create a scope description.
This description briefly states the work that needs to be accomplished to create the proj-
ect deliverables.
A project scope statement guides the project team during subsequent planning and
execution. For some very small projects, a well-developed project charter could also
serve as a scope statement. On most projects, a scope statement needs to be developed
prior to development of the WBS. An example scope statement for the Alternative
Breaks project is shown in Exhibit 7.4.
7-3c Defining Scope in Agile Projects
Agile strives to use smaller iterations to get feedback because understanding the desired
outcome tends to evolve as the customers see the work being done by the team.
Humans tend to be poor estimators, and the more unique the project, where volumes of
reliable data are not available for making estimates, the harder it is to be predictable. In
construction, for example, there are software packages that help estimate how long it will
take to hang drywall or run electrical wire. However, in more creative endeavors like cre-
ating software, there is little documented knowledge of how long a project will take. This
is where the adage to underpromise and overdeliver becomes words to the wise.
With Agile projects, the project manager is challenged with conflicting aspirations
and actions between finalizing the scope specifications and maintaining flexibility to
modify them to meet changing business needs or adding new requirements of stake-
holders. Agile scope definition is a complex process as the scope is not clear to either
the project team or the client. The project manager and the project team must demon-
strate greater adaptability to frequently changing scope and employ iterative or phased
planning of scope. Consequently, Agile projects present more flexibility.
On Agile projects, the scope definition starts with large chunks of work; for example,
we want to be able to take credit card payments on a website. This large feature, and
218 Part 3 Planning Projects
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EXHIBIT 7.4
SCOPE STATEMENT
ALTERNATIVE BREAKS PROJECT SCOPE STATEMENT
Scope Description: This project will educate groups of 12 students on social justice issues, send
them out to perform direct service on the issues, and provide reflective opportunities throughout
the process. Key deliverables with acceptance criteria (product scope):
KEY DELIVERABLES ACCEPTANCE CRITERIA
Project plan Secured housing,Agreement with organization
Fundraising Adequate money
Education Syllabus
Reorientation Digital archives
Trip itself Return safely, pre- and post-evaluation
Exclusions: No alcohol, drugs, or romances; ratio number of trips to student population
Constraints: Van holds only 12 people—11 students and one faculty or staff; number of highly
qualified site leaders
Assumptions: Service builds active citizens; international trips add more value than expense; a
trip is better with a staff or faculty member.
Source: Chris Bridges.
Chapter 7 Scope Planning 219
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there will be many of them for a fully functioning website, will be broken down into stories
and prioritized later. The team creates “personas,” which are fictional people who repre-
sent user types. These personas provide information about what they will do with the proj-
ect deliverables and how they will benefit. These user stories define scope and
functionality. Acceptance tests will also be agreed upon during the scope definition phase
by describing the way project deliverables will be tested and how they should prove work-
able. At the project outset, the overall scope is only defined at a high level, and a backlog of
possible work is identified. The customer representative (sometimes called the owner)
prioritizes the scope based upon business need, value, cost, and risk. The team then com-
mits to the amount of work they can perform in the first iteration. As the project pro-
gresses, the scope is described more specifically and is documented more closely. The
level of documentation is less important and takes a secondary role. The primary measure
of success in an Agile project is working software. The Agile method for defining scope is
primarily applicable when the project scope is unclear or poorly defined.
7-4 Work Breakdown Structure (WBS)
After scope definition is complete, the project manager will have a greater clarity about project
work and milestones as compared to the high-level understanding of the project when the
project charter is defined (discussed in Chapter 3). The milestones defined in the project char-
ter are not necessarily accurate due to lack of complete understanding of the total project
work. It is important to note that the project charter must be seen as an authorization docu-
ment with accuracy of estimates (cost and time) in the range of + 50 percent. With the defini-
tion of scope, more details about the project are available to develop WBS and new milestones.
A detailed understanding of the project scope and work to be performed must be simpli-
fied for execution, and it is essential to divide the total work into smaller and manageable
elements. A tool that is used on virtually all traditional projects is the WBS. To understand
this tool, we will first define it, tell why it is important, show several common formats to use
when constructing one, and then demonstrate the steps required to construct a WBS.
7-4a What Is the WBS?
The WBS is, or should be, a uniform, consistent, and logical method for dividing the
project into small, manageable components to manage project scope and for planning,
estimating, and monitoring (Rad and Anantatmula, 2009). It is a project planning tool
that is defined as the concept of hierarchical decomposition for transforming the project
scope into deliverable work elements at the highest level. Its composition continues
until it facilitates managing these work elements effectively. The WBS helps develop an
optimum project schedule and cost estimates at the work element level.
The WBS is a tool that project teams use to progressively divide the deliverables of a proj-
ect into smaller and smaller pieces. The project team members start by identifying the major
deliverables to be created and by continuously asking: “What are the components of this
deliverable?” The WBS is not a list of work activities, an organizational chart, or a schedule.
The WBS is a framework that is used as a basis for further planning, execution, and control.
The WBS also is an important project planning tool that uses the concept of hierar-
chical decomposition for transforming the scope into deliverable work elements. Typi-
cally, the WBS is created after the scope is defined on large projects. In contemporary
project management, particularly on small and middle-sized projects, the WBS may be
created concurrently with the scope statement.
The WBS is normally developed by listing deliverables—major deliverables first and
then progressively smaller ones until the team feels that every deliverable has been
220 Part 3 Planning Projects
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identified. Managers of smaller projects sometimes perform another process concurrent
with WBS development: defining activities and milestones. Define activity is a project
planning process that identifies and determines specific actions to develop and deliver
the project outcomes, such as products, services, or results. Many people find that work
activities can be easily defined once the various deliverables are itemized. To clearly dis-
tinguish between the work processes of WBS development and activity development,
WBS development is covered in this chapter, and activity development is covered as
part of project scheduling in the next chapter. Developing the WBS and defining the
activities form an example of how two separate work processes are sometimes performed
together (especially on small or simple projects) and sometimes separately (especially on
large or complex projects).
7-4b Why Use a WBS?
The reasons for using a WBS are many. Planning projects requires discipline and visibil-
ity. A properly developed WBS encourages a systematic planning process, reduces the
possibility of omission of key project elements, and simplifies the project by dividing it
into manageable units (Rad and Anantatmula, 2009).
A WBS can be used as a pictorial representation of project deliverables. By using a
systematic process for creating a WBS, project team members can ensure that they
Framing a house is a major deliverable in a house project.
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Chapter 7 Scope Planning 221
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include all deliverables that are required to be created. Deliverables that are not planned,
but need to be, often add to schedule delays and budget overruns.
The WBS provides a framework of common reference for all project elements, for
specific tasks within the project, and ultimately for better schedules and better estimates.
It is the basis for all subsequent planning of such important functions as schedule,
resources, cost, quality, and risk. It also serves as an outline for integrating all these plan-
ning elements. The WBS is easily modified and thus can handle the changes that often
occur on projects. The impact of these changes is then shown in the schedule, budget,
and other control documents. If a problem occurs during project execution, the WBS is
helpful in understanding exactly where and why the problem occurred. This helps to
diagnose problems, manage the quality of the project deliverables, and keep all the
other facets of the project on schedule while the isolated problem is fixed.
The WBS is also helpful in project communications. Typically, many stakeholders contrib-
ute to developing the WBS, and this effort helps them understand the project. Further, it
clearly shows the importance of each work element, why it is required, and how it is inte-
grated with project deliverables. In a nutshell, the WBS presents the entire scope of the project
and serves as an excellent communication and integration tool. Software such as Microsoft
Project enables a WBS to be shown in its entirety to people who need to understand the
details, but it also allows project details to be hidden so that others can see the big picture.
7-4c WBS Formats
There are various formats for constructing a WBS, but they all have the same purpose.
The overall project is considered the first level, as shown in Exhibit 7.5. In this example,
a WBS for a house is presented in the indented outline format.
The second level in this example depicts major deliverables from the house project,
namely the house in its framed state, when it is wired, and when it is drywalled. This
second level is indented one tab. Note that a section is included for the work of planning
and managing the project.
A WBS usually has one or more intermediate levels, which generally represent items that
need to be created to produce the final deliverables, such as drafts, prototypes, and designs.
These are frequently called interim deliverables. All levels of the WBS with at least one level
EXHIBIT 7.5
HOUSE WBS IN INDENTED OUTLINE FORMAT
HOUSE
Project Management
Framed House
– Framing Contractor
– Wood
– Assembled Frame
Wired House
– Wiring Contractor
– Wiring
– Installed Wiring
Drywalled House
– Drywall Contractor
– Drywall
– Hung Drywall
222 Part 3 Planning Projects
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below are considered summary levels. The completion of summary-level elements is based upon
completion of all levels underneath. For example, in Exhibit 7.5, the house would not be framed
until the framing contractor, wood, and assembled frame interim deliverables were complete.
Exhibit 7.5 used the indented outline format for the WBS method, but other methods are
sometimes used. Another method is the hierarchical or “org chart” (short for organizational
chart, which it resembles) method. A third method is called free format because the facilitator
is free to draw it in any manner. The same house project shown in Exhibit 7.5 in indented
outline format is shown in Exhibit 7.6 in org chart format and in Exhibit 7.7 in free format.
EXHIBIT 7.6
WBS IN ORG CHART FORMAT
EXHIBIT 7.7
WBS IN FREE FORMAT
Framing
Contractor
Wood
Assembled Frame
Wiring Contractor Wiring
Installed Wiring
Drywall Contractor
Drywall
Hung Drywall
Project
Manage-
ment
Chapter 7 Scope Planning 223
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A marker board or flip chart can be used to develop all these methods and also offers
plenty of room to add additional elements as the scope is revised. The WBS method
using indented outlines can easily be imported into MS Project. Teams using the org
chart or free format methods for WBS generally translate them into the indented outline
format for input into software.
7-4d Work Packages
The house example above has only three levels as follows:
1. The first level, or project title level
2. One intermediate level, or summary level
3. The lowest level, or work package level
This process of dividing the deliverable items is continued until the project has been
divided into manageable, discrete, and identifiable items requiring simple tasks to com-
plete. A practical rule is to keep dividing the project until it no longer can be divided
realistically. This point may differ from project to project. The lowest level is known as
a work package.
In a WBS, an element at the lowest level is called a work package, which is usually
the work component at the lowest level of the WBS for which cost and duration can be
estimated and managed. Work packages are the basis for all subsequent planning and
control activities. Exhibit 7.8 shows a WBS in org chart format with work packages in
solid boxes.
One frequently asked question when breaking the deliverables into work packages is
how small is small enough. The answer is, “It depends.” In Exhibit 7.8, work packages
occur at levels 3, 4, and 5. The work package is the point from which:
Work activities are defined
The schedule is formed
EXHIBIT 7.8
WBS DEPICTING WORK PACKAGES
PM
Project
AB CD EF
Level
1
2
3
4
5
Source: Kevin P. Grant, UTSA.
224 Part 3 Planning Projects
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Resources are assigned
Many of the control features are developed
Work packages need to be detailed enough to facilitate further planning and control.
If they are too detailed, the burden of tracking increases. The project manager needs to
feel confident that the work to create the work package can be assigned to one person
who can estimate the schedule and cost and can be held responsible for its completion.
However, the work package may require multiple resources (including more than one
person) to complete it.
If the work is composed of a single deliverable that is well understood, it is clear how
the deliverable will be judged for quality and completeness, and the assigned workers
have proven credentials, then the work package may not have to be too detailed. On
the other hand, if the deliverable and/or how it will be judged for its completion are
poorly understood, and the assigned worker or workers are yet to be proven reliable, a
more detailed work package may make sense.
For ease of communication and comprehension, work packages and other components
of a WBS are usually stated in very few words; one should avoid verbs and instead use
adjectives to describe WBS elements at all levels. A WBS component is a work element
that is part of the WBS at any level. The phrases or words to describe WBS elements
should not be repeated. However, because the names are typically short, there is still the
potential to get confused by exactly what is included in a work package or WBS compo-
nent. Therefore, WBS components are often defined further using a WBS dictionary. A
WBS dictionary is a document that provides detailed information about each work pack-
age by providing details about the associated deliverable, activity, scheduling information,
predecessor, successor, person responsible for it, resources required, and associated risks.
An example of a WBS dictionary entry with detailed information for a work package is
shown in Exhibit 7.9. Note that some of this additional information such as activities,
resource assignments, effort, and cost will be described in subsequent chapters.
EXHIBIT 7.9
WORK PACKAGE DETAIL
Project: Expansion to Full Scale Production Work Package: Assembly Hardware Test
Description:
Plan, conduct, evaluate, and report results
of tests to ensure proper function of the
assembly hardware.
Deliverable(s):
Test results summary.
Input(s):
Assembly hardware prototype
Activities Resource Expected
Duration
Cost
Prepare test plan Production Analyst 8h $ 720
Conduct test Production Analyst 16h 1,440
Evaluate test results Production Analyst 6h 540
Prepare test results summary Production Analyst 8h 720
$3,420
Source: Kevin P. Grant, UTSA.
Chapter 7 Scope Planning 225
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7-4e How to Construct a WBS
The information for a WBS is drawn primarily from the project objectives statement,
and from historical files containing planning information of past projects. When a proj-
ect team needs to construct a WBS, it needs to include in its planning team a subject
matter expert (SME) who understands how each segment of the work will be accom-
plished. Teams approach this task in two ways. The first approach is that teams include
only the core team members and plan the WBS as in as much detail as they can. At that
point, different core team members are assigned to identify and seek the SMEs to plan
the remaining details. In the second approach, teams invite the SMEs to the WBS plan-
ning meeting right from the start and utilize their input throughout the WBS develop-
ment. Often, the choice of how to include SMEs is determined by the size and
complexity of the project and by the cultural norms of the company.
The planning team uses a top-down approach in creating the WBS. This is easy to
start when the type of project is familiar and at least some members of the planning
team are likely to understand the general flow of work. If the project is similar to past
projects, either a template or the WBS from a previous project can be used as a starting
point. Then, using this template or WBS, the project team would identify additional
project needs for inclusion and irrelevant elements of the previous project for deletion.
Templates and previous examples can save teams a great deal of time, but caution must
be exercised because each project is unique.
Sometimes, however, a project is so unique and different from previous projects
that the team finds it useful to jump-start the WBS construction by brainstorming to
identify a list of project deliverables to help to understand and develop the overall
structure of the project WBS. However, once the overall structure is understood, the
team proceeds with the typical top-down approach for the remainder of the WBS
development.
IDENTIFY MAJOR DELIVERABLES The team defines the project deliverables by
reviewing the project planning completed thus far. The team members review the project
charter, requirements traceability matrix, and scope statement to define the project’s
major deliverables. Remember that while many projects may have a primary deliverable
such as a house, almost all projects have additional deliverables such as documentation
and customer support. These could include training, service, or other means of helping
the customer use the project’s products effectively.
One of the first decisions is how to organize the second level of the WBS. (Remember,
the first level is the overall project.) As defined earlier, the WBS is, or should be, a uni-
form, consistent, and logical method for dividing the project into small manageable com-
ponents. WBS development is viewed as the process of grouping all project elements into
several major categories, normally referred to as level one; each of these categories will
itself contain several subcategories, normally referred to as level two. Alternately, and
more accurately, development of a WBS involves dividing the project into many parts
that, when combined, would constitute the project deliverable. This process of dividing
the deliverable items is continued until the project has been divided into manageable,
discrete, and identifiable items requiring simple tasks to complete.
Three methods are shown in Exhibit 7.10. One method is by project phase, with the
second level being the signing of a contract, building the foundation, and framing the
house. Alternatively, the second level can be organized by design components
(deliverable-basis), such as kitchen, bedrooms, and bathrooms. Finally, the second level
can be organized by work function (resource-basis). A house project organized this way
might have carpentry, plumbing, and electrical as second-level elements.
226 Part 3 Planning Projects
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Organizing by project phase (schedule-basis) has the advantage of using the mile-
stones in the project charter as an organizing principle. It also facilitates rolling wave
planning. Rolling wave planning is a planning technique of identifying and defining
the work to be completely accomplished in the near term and planning the future work
at a higher level. In other words, once the near-term work is complete, the next phase of
the project is planned in detail. In essence, it is an iterative process. If the planners of the
project in Exhibit 7.10 used rolling wave planning, the work associated with the contract
would be planned in detail immediately, and work for the foundation and framing might
only be planned at a high level at first with more detail worked out as the project team
worked on the contract. Rolling wave planning allows a team to get a quick start on a
project—especially one in which details of later phases may depend on the results of work
performed during early phases. Rolling wave planning helps a project team avoid either of
two extremes. One extreme is to never start doing anything because the plan is not yet com-
plete, which is also known as analysis paralysis. The opposite extreme is not planning at all
because of fear that planning will take too long; this is known as ready, fire, aim.
Organizing by either phase or design components/deliverables helps to focus commu-
nications on project deliverables and their interactions. Organizing by work function
allows the functions to focus on their specific activities, but often does not promote
cross-functional discussion. Handoffs of work from one group to another are not always
as smooth. Therefore, if a project manager decides to organize the WBS by work func-
tion, extra care needs to be taken in establishing interfunctional communications.
Of the three approaches, the most generally useful, and the most difficult, method for
developing a WBS is to use design components/deliverables as the basis of the break-
down of the project. It is also known as a deliverable-based WBS. The deliverable-basis,
or design-basis, is developed by looking at the project from the client’s perspective and
not from the project execution perspective. Further, it makes sense to all key stake-
holders and facilitates easy communication.
In this deliverable-basis or design-basis mode, the project is divided into individual dis-
tinct components that ultimately comprise the project, such as hardware, software, physical
structure, concrete foundation, or steel roof. This deliverable-based WBS division can be
based on product, function, or physical location of the deliverable (Rad and Anantatmula,
2009). The deliverable basis of WBS development is far superior to the other bases because
it is customer focused and easy to facilitate during project execution.
Note that one additional second-level item is shown on all three methods—that of
project management. This includes the work of planning and managing the effort and
EXHIBIT 7.10
WBS ORGANIZATION EXAMPLES
PROJECT PHASE
DESIGN COMPONENTS/
DELIVERABLES
WORK FUNCTION/
SUBPROJECT
Project Management
Contract
Foundation
Framed House
…
Project Management
Kitchen
Bedrooms
Bathrooms
…
Project Management
Carpentry
Plumbing
Electrical
…
Chapter 7 Scope Planning 227
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includes preparing documents, attending meetings, integrating diverse portions of the
project, handling communications, and so on. Since much of the work involved in proj-
ect management is the level of effort, this section may not be decomposed. If the work of
managing the project is left out, it is more likely that the project will not be completed
on time and within the budget.
It is very important to understand that, in many cases, the client is not concerned
about the intricacies of project execution or project management activities. From a cli-
ent’s perspective, the focus is only on what is delivered as the project outcome. So, proj-
ect management is not typically included in a deliverable-based WBS. However, there are
exceptions to this rule. For large and mega projects, programs, and federal government
contracts, it is possible that the client is interested in project management activities and
project progress reports. In such cases, including project management in the WBS may
be sensible, even in a deliverable-based WBS.
DECOMPOSE DELIVERABLES Once the major deliverables have been defined, it is
time to break them into smaller deliverables or components. This is called decomposi-
tion, a method of dividing the project scope into many parts that, when combined,
would constitute the project deliverable. It is the process of breaking down the project
scope until it has been divided into manageable, discrete, and identifiable components
requiring simple tasks to complete.
The team members can use the top-down approach, asking what all the components
of each major deliverable are. Alternatively, the team members may use a bottom-up
approach by brainstorming a list of both interim and final deliverables that they feel
need to be created. Each deliverable can be written on an individual Post-it Note. These
deliverables are then assembled on a large work space where team members group the
smaller deliverables either under the major deliverables that have been previously identi-
fied or into additional related groups that are then headed by major deliverables.
CONTINUE UNTIL DELIVERABLES ARE THE RIGHT SIZE At this point, the WBS
has been formed and can be reviewed for completeness. Once it is determined to be
complete, the team can ask if the deliverables at the lowest level need to be divided fur-
ther for planning and control as described above. For example, in the new car develop-
ment project in Exhibit 7.11, level-two components, such as product design, are at too
high of a level to plan and control. Therefore, at least one more level should be included.
If some of those components, such as Product Goals, are still too broad, yet another level
would need to be developed.
REVIEW At this point, several things should be considered to ensure that the WBS is
structured properly. One consideration with WBS construction is the parent-child con-
cept. The higher level is considered the parent and the lower-level elements are consid-
ered children. For example, in Exhibits 7.5, through 7.7, “Framed House” is a parent to
the children: “framing contractor,” “wood,” and “assembled frame.” “Framed House,” in
turn, is a child to “HOUSE.” The framed house component is not complete until all of
its children components are complete. The team asks if, once these elements are com-
plete, the framing is complete. In an effort to simplify the WBS, where only one child
element for a parent exists, you would not break it down. In fact, a good rule of thumb
is to have somewhere between three and nine child elements for each parent. The fewer
levels a WBS has, the easier it is to understand.
To avoid confusion, each component in the WBS needs to have a unique name.
Therefore, two similar components may be draft report” and final report,” instead of
merely calling each “report.” The team also assigns a unique number to each component.
228 Part 3 Planning Projects
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In one common numbering system, the number for a child item starts with the number
assigned to its parent and adds a digit. An example of a WBS with components num-
bered is shown in Exhibit 7.12.
Different organizations sometimes develop their own unique variations of project plan-
ning and control techniques. Exhibit 7.13 describes the manner in which a large, complex
organization (the U.S. Central Intelligence Agency) combines stakeholder analysis with
WBS.
7-5 Establish Change Control
A baseline is the approved project plan mainly consisting of scope, schedule, and cost. It
is not normally altered unless a formal change control request is approved for modifying
these plans. The project team looks at the scope statement and WBS to ensure complete-
ness and seeks to validate the scope by verifying it with the sponsor, customers, and/or
other stakeholders. Simultaneously, the project team can be planning other aspects of the
project such as schedule, resources, budget, risks, and quality. Once all these plans are
complete and any impacts to scope have been accounted for, it is time to baseline the
scope statement and the entire project plan. This is discussed in more detail at the end
of the planning stage (Chapter 12).
Most projects are planned and conducted in an environment of uncertainty. Projects
are planned with assumptions based upon the best information available to the project
team, but many things can change during the course of a project. Therefore, project
teams deal with change by establishing and using a change control system that entails
processes to receive and review change proposals and accept or reject them after
evaluating their impact on project scope, cost, and schedule. In essence, it is a system
of managing and controlling changes and modification to the project plan and
EXHIBIT 7.11
PARTIAL WBS OF CAR DEVELOPMENT PROJECT
Car Development Project
Project Management
Product Design
Product Goals
Concept Design
Modeling Design
Vehicle Integration
Engineering Feasibility
Detailed Engineering Design
Performance Development
Regulatory Certification
Process Development
Prototype
Production Materials Procurement
General Materials Procurement
Trial Manufacture
Chapter 7 Scope Planning 229
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EXHIBIT 7.12
LIBRARY PROJECT WBS WITH COMPONENTS NUMBERED
LIBRARY PROJECT
1. Project Management
2. Facility Needs
2.1 VISION STATEMENT
2.2 STAKEHOLDER INPUT
2.3 OPTIONS
3. Building Proposal
3.1 RECOMMENDED SIZE AND SCOPE
3.2 SITING
3.3 COST RATIONALE
4. Building Approval
4.1 VP OF FINANCE APPROVAL
4.2 PRESIDENT APPROVAL
4.3 BOARD APPROVAL
5. Staff Education
5.1 LITERATURE REVIEW
5.2 LIBRARY VISITS
5.3 SUPPLIER INPUT, PROCESS, OUTPUT, CUSTOMER ANALYSIS
5.4 TRAINING
6. Fundraising
6.1 POTENTIAL DONOR LIST
6.2 RELATIONSHIP BUILDING WITH POTENTIAL DONORS
6.3 EDUCATION OF POTENTIAL DONORS
6.4 DONATIONS
6.5 FOLLOW-UP WITH DONORS
7. Building Documents
7.1 FACILITY AND SITE SPECIFICATIONS
7.2 SCHEMATIC DESIGNS
7.3 DEVELOPMENT PLANS
7.4 CONTRACT DOCUMENTS
8. Building Construction
8.1 ARCHITECT
8.2 CONTRACTORS
8.3 CONSTRUCTION
8.4 FURNISHINGS
9. Building Acceptance
9.1 BUILDING AND GROUNDS ACCEPTANCE
9.2 BUILDING OCCUPANCY
9.3 BUILDING DEDICATION
9.4 WARRANTY CORRECTIONS
230 Part 3 Planning Projects
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project deliverables. Uncontrolled change is known as scope creep. Sometimes, the
effects of scope creep are so bad that a well-started project can run into serious
trouble.
The critical aspect of a change control system is the method of documenting changes.
Each potential change to a project is normally documented by some sort of change
request, which is a written request or a formal proposal to propose changes to any proj-
ect planning component such as a document, project deliverable, or baseline (scope, cost,
and time).
This means every change to a project needs to be formally proposed. The potential
change is then either accepted or not. If it is accepted, the project plans are changed to
reflect the impact of the change. Most people quickly understand the need to docu-
ment major changes, but some resist the effort it takes to document small changes.
The impact of many small changes is like the old saying, “killed by a thousand small
cuts.” Many small changes individually have small impacts on a project, but collec-
tively they have a major impact. Project managers need to create an expectation that
all changes be formally documented using a simple change request form so all team
members will document proposed changes. A simple change request form is shown
in Exhibit 7.14.
Change request forms typically include several sections. The top section lists basic
information to track the change request to the project and to the person who submit-
ted it. The second section contains two simple statements describing the change and
why the change is needed. The third section details the impact expected from the
potential change. This can vary in length from a simple check and comment section,
as in Exhibit 7.14, to an extremely involved description of potential impact on complex
system projects such as designing an aircraft. In complex projects, small changes can
EXHIBIT 7.13
STAKEHOLDER ANALYSIS AND WBS AT THE CIA
At the CIA, where I created and run our agency-wide project management training and certification program, I come in contact
with large numbers of dedicated project managers. With enrollment averaging about 2,500 students per year, I encounter a work-
force with a broad spectrum of experiences, skills, and expectations. One of the more prevalent expectations is associated with
stakeholder analysis and communication; employees invariably feel that they pretty much know most or all they need to know in
this area and may even begrudge somewhat the three days associated with our Project Communications Management course.
What they discover are the shortcomings in their appreciation for and knowledge about project communications. Using a five-
point Likert scale, we have every student perform a self-assessment of their communications proficiency prior to and after the
class. To the students’ surprise, proficiency increases average a full point; student feedback virtually always includes statements to
the effect that they didn’t realize just how much more effective they can be in project management by investing more in the proj-
ect communications area.
The organizational chart plays a central role in how the CIA approaches the analysis of stakeholders. Employees learn through
classroom exercises to use the organizational chart as a roadmap for identifying the stakeholders. As they march through the branches
in this chart, they make conscious decisions about whether the function represented by the title or box on the chart or whether the
individual performing that function is a stakeholder. Once they have identified the stakeholders and performed the associated stake-
holder analysis, they then turn to the WBS to help with the planning and implementation of the communications tasks that follow.
In fact, communications for the types of projects undertaken at the CIA have taken on such importance that we advocate it be placed
at the first level of WBS decomposition alongside equally important components such as project management. For projects of suffi-
cient size, a full-time leader is often assigned to the communications component; the scope of their duties includes communications
within the project as well as communications outside the project.
Source: Michael O’Brochta, PMP, director, PPMC Program, CIA.
Chapter 7 Scope Planning 231
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sometimes have catastrophic impacts. Finally, there should be a space for the change to
be approved. Regardless of the complexity and format, the most important consideration
is that potential changes must be submitted and documented whether they are approved
or not.
7-6 Using MS Project for Work Breakdown
Structures (WBS)
As you have likely realized, the WBS is one of the most important and powerful project
planning tools available to the project manager. It is one of the key building blocks on
which all further project activities are based. By creating a WBS in MS Project, the proj-
ect manager lays the foundation for automating many other planning and communica-
tion tools the software has to offer. Complete the following steps to set up a WBS in MS
Project.
7-6a Set Up a WBS in MS Project
Setting up a WBS in MS Project has five basic steps:
1. Understand the WBS definitions and displays.
2. Enter project deliverable and work package elements.
EXHIBIT 7.14
CHANGE REQUEST FORM
ORIGINATOR: PROJECT #:
Date
Description of Change:
Why needed:
Impact on project scope:
Impact on deadline dates:
Impact on budget:
Impact on quality:
Impact on risk:
Impact on team:
Date approved:
Project manager Sponsor Customer
_______________ _______________ _______________
232 Part 3 Planning Projects
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3. Create the outline of your WBS.
4. Insert a WBS code identification column.
5. Hide (or show) the desired amount of detail in the WBS.
STEP 1: UNDERSTAND THE WBS DEFINITIONS AND DISPLAYS MS Project refers
to WBS task elements as summary tasks, tasks, and subtasks and displays them in an
indented outline table format:
Summary tasks are the main or interim WBS deliverables and are displayed in bold
font.
Subtasks are all the tasks that make up the deliverables (work packages) and are
indented below their parent summary task.
WBS tasks can also be viewed in Gantt views with different graphical shapes:
For instance, a summary task might also be a milestone that you would want to
denote graphically in your Gantt chart (typically a diamond in MS Project).
You will see these graphical representations in future tutorials.
Exhibit 7.15 shows a Gantt table view of a WBS in MS Project. Note that MS Project
codes the overall project (Suburban Park Homes) as level zero, not level one. The task
durations have not been defined at this point and show “1 day?” for all tasks. If you
are following along in MS Project, you will notice “Start” and “Finish” columns to the
right of the Duration column that also have not been defined. The Start and Finish col-
umns are not shown in the following exhibits for clarity’s sake.
STEP 2: ENTER WBS ELEMENTS (TASKS) In Exhibit 7.16, you will see WBS task
elements added to the existing Suburban Park Homes project milestone list (from
Chapter 3). In this WBS example, the existing milestones will double as the main deliver-
ables (summary tasks). Enter these WBS elements to your project as follows:
1. In the Task Name field, select the row below where you want the new row to be (after
making your selection, holding the SHIFT key and selecting a different row will high-
light all rows between the two selections and result in that number of blank rows
being inserted in the next step).
2. Click Task Tab>>Insert Group>>Task.
a. Alternatively, you can Right-Click>>Insert Task.
3. You will see a new row (or rows if you added multiple) with the words
in the Task Name field. Click on and enter the name of the desired WBS
element (you may have to delete before typing in your new task name).
4. Repeat these processes as needed to enter additional tasks between the Suburban Park
Homes milestones until your WBS looks like Exhibit 7.16.
STEP 3: CREATE THE OUTLINE FOR YOUR WBS You now need to set up the out-
line structure of the WBS to show summary tasks and subtasks (deliverables, interim
deliverables, and work packages). To do this, use the Indent and Outdent controls
shown in Exhibit 7.17 (Task Tab>>Schedule Group>>Green Arrows).
1. Click the Task Name field of the row to be indented.
2. Task Tab>>Schedule Group>>Indent Task (right Green Arrow).
a. The task element above the indented task(s) becomes a summary row as indi-
cated by a bold font.
Chapter 7 Scope Planning 233
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b. Indenting a summary row will also indent its lower-level items.
c. Multiple rows under a summary row can be indented (or outdented) at the same
time by Shift-Click selecting all of them before clicking the Indent control.
3. Clicking Task Tab>>Schedule Group>>Outdent Task (left Green Arrow) will simi-
larly decrease indentation of the selected row(s) or summary task.
4. Indent to create deliverables, interim deliverables, and work packages until your WBS
resembles the outline shown in Exhibit 7.15.
STEP 4: INSERT WBS CODE IDENTIFIER COLUMN MS Project can automatically
assign identifier codes to all your WBS tasks. WBS codes allow the Project Team to easily
categorize and communicate information about project tasks in the WBS. In this
example, WBS codes will be assigned in a new column to the left of the Task Name
column:
1. Right-click the Task Name column heading and click Insert Column.
2. A drop-down list appears in a new column.
EXHIBIT 7.15
GANTT CHART VIEW THREE-LEVEL WBS
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
234 Part 3 Planning Projects
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3. From the drop-down list, choose WBS, as shown in Exhibit 7.18.
a. A WBS code column is now in place.
b. Resize the column to conserve space.
4. Right-click the Task Mode column heading and click Hide Column.
5. Your result should look like Exhibit 7.19.
EXHIBIT 7.16
ENTER SUMMARIES (DELIVERABLES)
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 7.17
INDENT AND OUTDENT CONTROLS ON THE TASK TAB
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 7 Scope Planning 235
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STEP 5: HIDE (OR SHOW) SUBTASKS DETAIL Some stakeholders will not want or
need to see the lower levels of WBS detail (particularly in large, complex projects with
lots of WBS detail). You can easily “roll-up” (or “un-roll”) subtasks underneath their
parent summary task to hide (or show) detail. To display the appropriate level of detail,
complete one or both of the following steps:
Click the tiny triangle before the task name of any summary task to hide underlying
detail (all details will be “rolled-up” under the summary task).
Click the tiny triangle again to show underlying detail (all details “un-roll” under the
summary task and are again visible).
In Exhibit 7.20, the underlying detail for the “Land preparation, landscape, and foun-
dation” deliverable and the “Framing” interim deliverable summaries has been hidden.
EXHIBIT 7.18
READY TO INSERT SELECTED WBS COLUMN
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
236 Part 3 Planning Projects
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PMP/CAPM Study Ideas
It has been said that the discipline of project management lends structure to common
sense. Nowhere is this more true than with scope planning. If you can remember to con-
duct your planning with the end goal in mind, many of the processes and activities in
this chapter will seem intuitive. Another way of saying this is that you will work back-
ward from the outcome you desire (a successful product and/or project).
Begin by identifying what it would take for your product—and your project—to be
successful. Be sure to include your customers and end users in making this determina-
tion (“Collect requirements”), as well as subject matter experts who can speak to the
technical expertise needed and the feasibility of the project plan. Identify the final deli-
verables, as well as any important interim deliverables.
EXHIBIT 7.19
WBS COLUMN INSERTED
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 7 Scope Planning 237
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Discussing these deliverables and what it will take to produce them is a good chance
for the team to further “define scope,” or determine what is included—and not
included—in your project.
Once you have the main deliverables, you will use the process of decomposition to
break them down into smaller pieces, thus creating a Work Breakdown Structure. It is
important to remember that the WBS deals with things, not activities (though on a very
small project, these may be planned concurrently). The lowest level of the WBS is the
“work package,” which is small enough that it can be easily planned and overseen by one
person.
To be sure, this is an oversimplification of everything that goes into planning scope,
and you will need to be fluent in all the activities and processes in this chapter in order
to pass a CAPM or PMP test. But it can be helpful to remember that there is an organiz-
ing structure to all this work—one that begins with the end result in mind.
EXHIBIT 7.20
HIDE OR SHOW UNDERLYING DETAIL
238 Part 3 Planning Projects
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Summary
Once a project is formally approved by a sponsor rati-
fying its charter, it is time for detailed planning. While
project planning is iterative, normally the first steps are
to identify stakeholders, plan communications, and
determine what will be created on the project. Project
teams start this process by asking customers what end-
of-project deliverables they want. From the customers’
response, the planning team can determine both what
interim deliverables need to be created and what work
needs to be performed to create all of the deliverables.
Just as important as determining what will be produced
during the project is determining what will not be pro-
duced. These boundaries of what will and will not be
included constitute the project’s scope.
Once the scope is defined, it can be organized into
a work breakdown structure (WBS). A WBS is used to
progressively decompose the project into smaller and
smaller pieces until each can be assigned to one per-
son for planning and control. The WBS serves as a
basis for determining the project schedule, budget,
personnel assignments, quality requirements, and
risks. As those other functions are planned, items
are commonly identified that should be added to the
WBS.
Some teams create their WBS by hand using the org
chart or free format methods, while others directly type
their WBS into project scheduling software such as
Microsoft Project.
Key Terms Consistent with PMI Standards and Guides
plan scope management, 212
requirement, 212
collect requirements, 212
define scope, 217
define activity, 221
work package, 224
WBS component, 225
WBS dictionary, 225
rolling wave planning, 227
baseline, 229
decomposition, 228
change control system, 229
change request, 231
Chapter Review Questions
1. What is the first step in developing a project
scope management plan?
2. What three tasks comprise the “define scope”
process?
3. For a construction project, the house is the
deliverable, and how-to instruc-
tion sheets are deliverables.
4. Why is scope definition important?
5. What are two common causes of scope creep?
6. What does the acronym WBS stand for?
7. What are the advantages of using a WBS?
8. List three ways of organizing a WBS.
9. The lowest level of the WBS is known as a(n)
.
10. What is a WBS dictionary used for?
11. What is rolling wave planning?
12. What is uncontrolled change known as?
13. Why do project teams use change control
systems?
14. List the major sections that should be included in a
change request form, and tell why each is important.
15. What is a project baseline?
Discussion Questions
1. Are the product scope and project scope ever
the same? Cite examples to support your
answer.
2. Create a template of a change request form.
What sections did you include and why?
Chapter 7 Scope Planning 239
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3. Compare the strengths and weaknesses of the
three formats of constructing a WBS: indented
outline, organizational chart, and free format.
4. Give an example of scope creep from one of your
own projects or from a project that has made the
news in recent years.
5. What are the advantages of completing the
“define activity” process after creating the
WBS?
6. Describe the roles various executives, managers,
and associates play in scope planning.
7. You are the project manager in charge of
expanding a popular restaurant. How could you
use voice of the customer (VOC) techniques to
gain insight into your stakeholders?
8. Identify two projects your company or school
will be performing in the future. Which one
do you think will have a more detailed WBS?
Why?
9. The sponsor for a project you have been managing
sends you an e-mail that he would like to make a
small change to the project. What is your response
and why?
10. A potential client wants you to be project man-
ager for the construction of a new house, but she
is vague about the details. List a few questions
you could ask her to gain a better understanding
of the scope of the project.
PMBOK ® Guide Questions
1. The process where project deliverables and proj-
ect work are subdivided into smaller and smaller
pieces is called .
a. collect requirements
b. define scope
c. plan scope management
d. create WBS
2. The project scope baseline consists of the approved
versions of three of the four documents listed
below. Which of these documents is not included
in the project scope baseline?
a. project scope statement
b. project charter
c. work breakdown structure (WBS)
d. WBS dictionary
3. Which of the following statements about a work
package is true?
a. It requires the work of the entire project team.
b. It is the responsibility of the project manager.
c. It is the lowest level of the WBS.
d. It consists of a single activity.
4. During WBS creation on a large, complex proj-
ect, the product and project deliverables are
broken down into progressively lower levels of
detail. Once the WBS has been defined at the
second or third level of detail, whose input is
essential in order to break down the work
further?
a. sponsor
b. subject matter experts
c. internal stakeholders
d. external stakeholders
5. Which of the following is not a common method
for organizing a WBS?
a. free format
b. indented outline
c. hierarchical
d. cross-functional
6. A “component of the project management plan
that describes how the scope will be defined,
developed, monitored, controlled, and verified”
is the .
a. project statement of work
b. requirements management plan
c. scope management plan
d. WBS dictionary
7. A grid that links product requirements from their
origins (e.g., business reason needed, stakeholder
who requested them) to the deliverables that satisfy
them is referred to as a .
a. network diagram
b. Gantt chart
c. requirements traceability matrix
d. stakeholder register
8. Which of these is not a component of a Project
Scope Statement?
a. summary budget
b. project deliverables
c. acceptance criteria
d. project exclusions or boundaries
240 Part 3 Planning Projects
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9. The key output of the scope planning process is
an approved version of the scope baseline.
After this baseline is established, it can be
referenced during project execution in order
to .
a. staff the project properly with the right skill
sets
b. link requirements back to their origins
c. communicate with stakeholders effectively
d. identify changes in scope that will go through
formal change control procedures
10. The process of breaking the WBS into smaller
and smaller deliverables is called:
a. decomposition
b. functional design
c. detailed specifications
d. value engineering
Exercises
1. Create a requirements traceability matrix like
Exhibit 7.2 for a project in which you plan an
event on your campus.
2. Create a scope statement like Exhibit 7.3 for a proj-
ect in which you plan an event on your campus.
3. Construct a WBS in indented outline format like
Exhibit 7.11 for a project in which you plan an
event on your campus. Be sure to number each
row. Also, construct the same WBS in MS Project
like Exhibit 7.18.
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Refer to the project charter from Chapter 3. The initial scope
as identified in the project charter is mentioned below:
Building a single-family, partially custom-designed home as
required by Mrs. and Mr. John Thomas on Strath Dr., Alpharetta,
Georgia. The single-family home will have the following features:
3,200 square-feet home with 4 bedrooms and 2.5 bathrooms
Flooring hard wood in the first floor, tiles in the kitchen
and bathrooms, carpet in bedrooms
Granite kitchen countertops, GE appliances in the kitchen
3-car garage and external landscaping
Ceiling 10 in first floor and vaulted 9 ceilings in bedrooms
Summary Milestone Schedule
Approval of final drawing and all the options: 02 January
2017
Land preparation, landscape, and foundation: 15 January
2017
External work completion and utilities hookup: 03 April 2017
Internal and external finish work, appliances, and painting:
10 May 2017
County clearance and Certificate of Occupancy: 30 May 2017
Financial settlement and handover of the property: 21 June
2017
High-Level Assumptions and Constraints
List of options are limited and cost of the house would vary
based on options selected
Client must choose one model among the models
offered
Seven-year warranty for structure and two-year warranty
for finishing components
When this charter was developed, Suburban Homes did not
have complete information on all the customer requirements
and needs and complete understanding of the project. The
company realizes that the milestone schedule is not accurate
and will be subject to changes.
Tasks to Complete
You are asked to obtain requirements from the client. To
do so, Suburban Homes requests that you develop a
Requirements Template that will capture all the needs
of the client. Then, Suburban Homes will have complete
information to develop a scope plan.
Develop a scope statement along with inclusions, exclu-
sions, assumptions, and constraints.
Develop a deliverable-based (design-focused) Work Break-
down Structure (WBS) for this project.
Chapter 7 Scope Planning 241
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Semester Project Instructions
For your example project, create the following:
1. Scope management plan to direct your efforts
2. Requirements traceability matrix like Exhibit 7.2 to
understand customer desires
3. Scope statement like Exhibit 7.3
4. Change request form like Exhibit 7.13
5. WBS first using either the free format or the org
chart format like Exhibits 7.5 and 7.6
6. WBS in MS Project like Exhibit 7.18
CASA DE PAZ DEVELOPMENT PROJECT
Note that this is a larger project and from this point forward
in the book, we will focus on the features and the work for
the Promotion and Community Relations Working Group
only. The Development and Fundraising Working Group
and the Program Development Working Groups are concur-
rently performing similar planning and executing of the proj-
ect. The work within each group is planned and executed
primarily by the team members with the project manager
(scrum manager) removing roadblocks and coordinating
between groups.
The Promotion and Community Relations Working Group
needs to:
1. Document the requirements needed by the users of the
project deliverables.
2. Determine what work will be included and what will be
excluded.
3. Organize everything into a product backlog that can be
used for all subsequent planning.
These three actions can be accomplished in a facilitated
meeting by first asking the question: To open on time on Octo-
ber 1, what are the three to five most important things that need
to be created? To make it easier for your practice, the project
team chose the following five features of the project:
Features of the Project:
Website
Location/building
Partnerships/sponsors
Communication methods
Joint venture (between university and Casa de Paz)
Now, for each feature, what details do you believe need
to be accomplished to create the features? These are the
stories. The features and supporting stories form the scope
of this project and will be in the backlog until selected for
work in a given iteration.
PROJECT M ANAGEM ENT IN ACTION
Work Breakdown Structure Template
This WBS for an industrial complex presents a
deliverable-oriented approach to developing it by
employing a consistency in the division basis for each
level of the WBS. Usually, we can develop a deliverable
WBS using function, product, or physical location.
However, within a level of WBS, we must employ only
one of these to develop WBS into the next level. The
first-level division basis is physical as an industrial
complex is divided into a powerhouse, factory, office,
and grounds. The division basis for the second level of
242 Part 3 Planning Projects
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References
1233-1998 – IEEE Guide for Developing System
Requirements Specifications, http://ieeexplore.ieee.
org/document/741940/.
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 5th ed. (Newtown Square, PA:
Project Management Institute, 2013).
Caudle, Gerrie, Streamlining Business Requirements:
The XCellR8 Approach (Vienna, VA: Management
Concepts, Inc., 2009).
Collyer, Simon, Clive Warren, Bronwyn Hemsley,
and Chris Stevens , “Aim, Fire, Aim—Project
Planning Styles in Dynamic Environments,”
Project Management Journal (September 2010):
41 (4): 106–121.
Fister Gale, Sarah, “The Evolution of Agile,” PMNetwork
26 (1) (January 2012): 28–33.
Hass, Kathleen B., Don Wessels, and Kevin
Brennan, Getting It Right: Business Requirement
Analysis Tools and Techniques Structures
(Vienna, VA: Management Concepts, Inc., 2008).
Haugan, Gregory T., Effective Work Breakdown Structures
(Vienna, VA: Management Concepts, Inc., 2002).
Howard, Dale, and Gary Chefetz, What’s New Study
Guide Microsoft Project 2010 (New York: Chefetz
LLC dba MSProjectExperts, 2010).
Hunsberger, Kelley, “Change Is Good: For Agile
Projects, Redefining Scope Isn’t Such a Creepy
Thing,” PMNetwork (February 2011)
25 (2): 48–53.
Miller, Dennis P. Building a Project Work Breakdown
Structure: Visualizing Objectives, Deliverables,
Activities, and Schedules (Boca Raton, FL: CRC
Press, 2009).
Project Management Institute Practice Standard
for Work Breakdown Structures, 2nd ed.
(Newtown Square, PA: Project Management
Institute, 2006).
Rad, Parviz, and Vittal Anantatmula, Integrated Project
Planning (Berkeley Heights, NJ: Project Management
Excellence, 2009).
Rad, Parviz, and Vittal Anantatmula, Project Planning
Techniques (Vienna, VA: Management Concepts,
Inc., 2005).
Turk, Wayne, “Scope Creep Horror: It’s Scarier than
Movie Monsters,” Defense AT&L (March–April
2010): 53–55.
Warner, Paul, and Paul Cassar, “Putting Together a
Work Breakdown Structure,” in David I. Cleland,
Field Guide to Project Management, 2nd ed.
(Hoboken, NJ: John Wiley & Sons, 2004).
the Powerhouse is a functional basis as it is divided
into a steam-generation system, electrical-generation
system, and electrical-transmission system. The divi-
sion basis for the second level of the Factory is a
product basis as it is divided into receiving equipment,
processing equipment, and packaging equipment. The
second level of WBS for the Office is a physical basis
as it is divided into first floor, second floor, and third
floor. Finally, the division basis for Grounds is again
a product-basis division as it is divided into shrubs and
trees, lawn, walkways, and a parking lot. This WBS is
focused on the what aspect of the project and not on
how we execute the project. Essentially, this WBS is
developed from the client s perspective and not from
the project team s perspective, which is focused on
how the project is likely to be executed (schedule-
oriented WBS).
Vittal Anantatmula, PMP, PhD.
Chapter 7 Scope Planning 243
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C H A P T E R 8
Scheduling Projects
Scheduling and Agile
The need to comply with government regulations by mandated deadlines does not
change when a company switches from waterfall to Agile. And Agile organizations
still suffer by not having enough time to deliver what s been requested at a reasonable
cost. But I ve worked with people who mistakenly think Agile makes project manage-
ment principles irrelevant. Or that the Agile methodology is incompatible with con-
cepts like Schedule, Scope, and Cost. Communicating with team members and
sponsors with those beliefs has been quite challenging for me as a project manager.
One of my colleagues tells organizations they have these options for manag-
ing a project s triple constraint no matter what methodology is used Agile,
waterfall, or hybrid:
Scope-driven: deliver what is requested no matter how long it takes (Sched-
ule) or how much it Costs
Schedule-driven: meet the deadline by
Delivering whatever Scope you can within the budget (Cost)
Ra
yw
oo
/S
hu
tte
rs
to
ck
.c
om
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Describe five ways in
which a project s
schedule is limited and
how to deal with each.
Use the activity on node
(AON) method to develop
a project schedule.
Identify the critical path
using both the two-
pass and enumeration
methods, and identify
all float.
Depict a project sched-
ule on a Gantt chart by
hand, showing the criti-
cal path and all float.
TECHNICAL OBJECTIVES:
Describe how to adjust
a project s sequence
logic using leads, lags,
and alternative
dependencies.
Build and display the
logical network dia-
gram showing critical
path and all float with
MS Project 2016.
Depict a project sched-
ule on a Gantt chart
using MS Project 2016,
showing the critical path
and all float.
BEHAVIORAL OBJECTIVES:
Describe potential pro-
blems in estimating time
accurately and how to
overcome them.
Resolve potential
scheduling conflicts.
244
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Investing as many resources as needed (Cost) to deliver the Scope
Cost-driven: deliver whatever Scope you can until the budget is exhausted.
Your Schedule ends when the money runs out.
I ve been on projects companies decided should be schedule-driven, but team
members delivered as though they were scope-driven and sponsors monitored
like they were cost-driven. In these circumstances, I ve had to keep reminding
people what option was chosen for the project, and why, throughout its duration,
sometimes years. And this communication has been vitally important to manag-
ing the schedule.
Agile has made some of my projects easier to schedule and others a lot
more difficult! With a software manufacturer using a single team for each of
its products, the developers themselves took more ownership of the schedule.
On the job, they learned how to estimate activities better and apply dependen-
cies, leads, lags, and float within their daily stand-ups. The teams were on the
same iteration cycles, so ceremonies like sprint retrospectives naturally became
milestones in the project schedule, on cadences familiar to the folks doing the
work.
But I ve also been on projects where Agile, waterfall, and hybrid teams
from different organizations were dependent on one another to deliver results.
Not only did the varying methodologies and terminologies hamper scheduling
but our Agile teams iteration cycles also were completely different. So once
we d identified activities, sequenced them, identified mandatory dependen-
cies and figured out whether they were FS, FF, SS, or SF, there were gaps
caused by teams varying iterations that extended schedule duration with no
corresponding benefits. And that was just in the planning stage: different geo-
graphic locations, vocabulary, iterations, and systems made the schedule vir-
tually unmanageable because communicating changes to it was nearly
impossible. Luckily, everyone decided to align on a common iteration cycle,
which went a long way toward solving our problems. But that is not always
possible.
Investing team members in a project s schedule beyond just completing their
own activities has always been a challenge for me, but Agile has made that even
tougher. People feel they are succeeding as long as they make incremental prog-
ress every day, but they can do that while our team still fails to meet the sched-
ule. That s why continuing to study this chapter, and discussing its content with
other project managers, is important to me.
Carol A. Abbott, PMP
4.2 Develop Project Management Plan
Network
Schedule
Baseline
Duration
Estimates
Activity List
Milestone List
PM Plan
Baselines
6.1 Plan
Schedule
Management
6.3
Sequence
Activities 6.5 Develop
Schedule
6.2 Define
Activities
6.4 Estimate
Activity
Durations
PMBOK® GUIDE
Topics:
Develop project man-
agement plan
Plan schedule
management
Define activities
Sequence activities
Estimate activity
durations
Develop schedule
CHAPTER OUTPUTS
Activity list
Milestone list
Network
Duration estimates
Schedule baseline
245
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8-1 Plan Schedule Management
As is true of other project planning knowledge areas, planning for time is iterative. A
project manager and team usually develop as much of the schedule as they can based
upon the information in the work breakdown structure (WBS). The communication
plan, requirements traceability matrix, and scope statement are often either complete or
at least in draft form at this point. Once a project is scheduled, the budget can be formu-
lated, resource needs can be identified and resources assigned, risks can be identified and
plans developed to deal with the identified risks, and a quality management plan can be
created. In many projects, these are not all treated as discrete activities, and some of
them may be performed together. However, for clarity, each of these planning processes
will be described individually.
The building blocks of a project schedule are activities. An activity is “a component of
project scope work performed during the course of a project.”1 For activities to be useful
as schedule building blocks, they should have the following characteristics:
Clear starting and ending points
Tangible output that can be verified
Scope small enough to understand and control without micromanaging
Resources, other costs, and schedule that can be estimated and controlled
A single person who can be held accountable for each activity (Often more than
one person is required to complete the work; however, one person should be
responsible.)2
Since activities represent work that needs to be performed, they should be listed in a
verb-noun format, such as “prepare budget,” “build frame,” “test code,” “transmit infor-
mation,” “analyze data,” and “develop plan.” Each activity should be clearly differentiated
from other activities, so it is often helpful to write the activities in verb-adjective-noun
format, such as “write draft report” and “write final report.”
The Project Management Institute (PMI) has divided project time management into
the following seven work processes.
1. Plan schedule management—arranging how to develop, manage, execute, and con-
trol the project schedule
2. Define activities—a project planning process that identifies and determines specific
actions to develop and deliver the project outcomes, such as products, services, or
results
3. Sequence activities—determining the predecessor and successor relationships among
the project activities
4. Estimate activity durations—the process of approximating the number of work per-
iods needed to complete individual activities with estimated resources3
5. Develop schedule—the process of analyzing activity sequences, durations, resource
requirements, and schedule constraints to create the project schedule4
6. Control schedule—the process of regulating changes to the project schedule5
Planning schedule management, defining activities, sequencing activities, estimating
activity durations, and part of developing schedules will be covered in this chapter. The
remainder of developing schedules will be discussed in Chapter 9 (Resourcing Project
Activities). Chapter 14 (Determining Project Progress and Results) will focus on control-
ling the schedule.
246 Part 3 Planning Projects
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8-2 Purposes of a Project Schedule
Projects are undertaken to accomplish important business purposes, and people often
want to use the project results as quickly as possible. Many specific questions such as
the following can be answered by having a complete and workable schedule:
When will the project be complete?
What is the earliest date a particular activity can start, and when will it end?
What activity must begin before which other activities can take place?
What would happen if a delivery of material were one week late?
Can a key worker take a week of vacation the first week of March?
If one worker is assigned to do two activities, which one must go first?
How many hours do we need from each worker next week or month?
Which worker or other resource is a bottleneck, limiting the speed of our project?
What will the impact be if the client wants to add another module?
If I am willing to spend an extra $10,000, how much faster can the project be completed?
Are all of the activities completed that should be by now?
How many resource types are required, and are they available?
How much time and effort are required from each resource?
What time constraints is the project likely to encounter?
8-3 Historical Development of Project Schedules
Throughout history, projects have been performed, but many early projects such as cathe-
drals in Europe took decades or longer to complete. As competition drove the need for
more rapid completion, systematic methods were developed for scheduling projects.
In the 1950s, two project scheduling methods were developed: program evaluation
and review technique (PERT) and critical path method. The critical path method
(CPM) is “A technique used to determine the amount of scheduling flexibility (float)
on various logical network paths in the project schedule network, and to determine the
minimum total project duration.”6
Both CPM and PERT were founded on the concepts still in place today of identifying
activities, determining their logical order, and estimating the duration for each. Networks
representing the activities were developed and the schedule calculated. Each of the tech-
niques also boasted a capability the other did not possess.
PERT was developed in the Navy’s Special Program Office because the Navy was develop-
ing the large and complex Polaris Weapons System. To complete it as quickly as possible,
many activities needed to be worked on simultaneously. Furthermore, many aspects of the
Polaris used unproven technology. There was considerable uncertainty regarding how long
some of the new technology would take to develop. PERT enabled project managers to esti-
mate the most likely amount of time needed to complete a project, and the level of confidence
in completing it in a particular time. This has proven to be useful in research and develop-
ment projects involving individual activities that are hard to estimate precisely. How uncer-
tainty in project schedules is handled by PERT will be discussed more in Section 8.9.
CPM was developed in the Engineering Services Division of DuPont. DuPont needed
to plan large projects when it built and refurbished enormous plants. Planners using
CPM estimated the time for each individual work activity using a single time estimate.
The focus was on understanding the longest sequence of activities, which determined
how long the project would take. CPM enabled project managers to ask what-if ques-
tions such as “If the project needs to be finished three weeks early, which activities
should be speeded up and how much will it cost?” This proved to be useful in the
Chapter 8 Scheduling Projects 247
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construction industry where delays such as rain and other weather-related issues often
necessitate the acceleration of a project.
PERT and CPM originally used a method for displaying the work activities called activity
on arrow (AOA) or arrow diagramming method (ADM), in which schedule activities are
represented by arrows and connected at points called nodes. Because it is often confusing to
draw an accurate AOA network, this method is rarely used today. The more common method
used today is called activity on node (AON) or the precedence diagramming method
(PDM). AON or PDM is “a technique in which the scheduled activities are represented by
nodes and are graphically linked by one or more logical relationships to show the sequence
in which the activities are performed.”7 A small project schedule is shown in Exhibit 8.1 with
work activities A through D connected by arrows showing logical relationships (A must be
complete before B and C can begin and both B and C must finish before D can begin).
The basic logic of these techniques still serves as the backbone of many project sche-
dules today. However, other advances have added to scheduling capability, and since
computers have become much more powerful and easier to use, they’ve allowed many
additional features to be added to project schedules. Another trend is that with many
organizations operating in a “lean” mode, resource limitations rather than just the logical
order of activities are a major determinant of project schedules.
8-4 How Project Schedules Are Limited and Created
There is generally a trade-off among the three constraints—scope, cost, and schedule—
and the project should have flexibility to manipulate at least one of these three con-
straints. Project schedules sometimes get higher priority over scope and cost when it is a
time-constrained project. In addition to these constraints, the project schedule is con-
straints by other factors. One way to understand project schedules and how they are con-
structed is to understand that five factors may limit how fast a project can be completed:
1. Logical order
2. Activity duration
3. Resource availability
4. Imposed dates
5. Cash flow
The first factor is the logical order in which activities need to be completed. For
example, one needs to dig a hole before cement can be poured in it. This is covered
in the section on sequencing activities.
EXHIBIT 8.1
AON FORMAT SCHEDULE EXAMPLE
A
B
C
D
248 Part 3 Planning Projects
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AGILE
The second factor is how long each individual activity will take to complete. This is
discussed in the section on estimating activity duration. It includes methods for esti-
mating durations, problems with estimates, and remedies to those problems.
The third factor is how many key resources are available at specific times in the
project. For example, if six rooms were available to be painted at the same time,
and fewer than six painters were available, progress would be slower. This is dis-
cussed in Chapter 9 in the section on resource availability.
The fourth factor is imposed dates. For example, a project working on a government
contract may not be able to start until the government’s new fiscal year, which starts
on October 1.
The fifth and final factor is cash flow. Projects may not start until the budget is
approved, but progress may also be slowed until enough revenue arrives to cover
expenses. This is covered in Chapter 10.
Because project schedules are limited by these five factors, creating a realistic schedule is
an iterative process. A common method of developing the schedule is to do the following:
1. First, identify all of the activities and then determine the logical order by creating a
network diagram.
2. Once the order is determined, make an estimate of the time required for that activity.
3. Then assign resources to each activity, and if an assigned resource is not available
when the activity is scheduled, make an adjustment of some type. The schedule can
be computed with all of this information.
4. Next, it is time to compare the emerging schedule with any imposed dates and cash
flow estimates.
Any inconsistencies may cause the team to adjust the schedule. Other factors often
need to be considered, such as quality demands and risk factors. When all of these
have been planned, the final schedule can be approved.
The pressure to complete a project as quickly as possible is often great. The sponsor
or customer may try to dictate a schedule before anyone knows whether it is feasible or
not. Before agreeing, the project manager must first understand what makes sense in
terms of a schedule before she is in a position to know whether to accept a sponsor’s
suggestions or to argue about why it may be impractical. A project manager has the eth-
ical responsibility to determine a schedule that is possible to achieve, persuade all stake-
holders that the schedule makes sense, and then see to it that the project is delivered
according to that agreed-upon schedule.
The remainder of this chapter and the other planning chapters describe in detail how to
plan for each of these, culminating in an approved schedule and project plan that all stake-
holders believe is reasonable. The project manager is then accountable to deliver the project
on schedule. That project delivery is the essence of the final three chapters of this book.
In Agile projects, schedules are created by first considering the product backlog to be
accomplished. The overall project schedule may be developed only at a high level. Within
an iteration, the team will consider how much uncertainty and complexity exist in the out-
puts they plan to create. At this detailed level, the number of team members as resources is
often the primary limitation to the schedule, but logical order may also be considered.
8-5 Define Activities
The first process in developing a project schedule is to define all of the work activities.
The last row or the lowest level of a WBS represents the work packages or the lowest-
Chapter 8 Scheduling Projects 249
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level deliverables. Now is the time to ask: “What work activities must be completed to
create each of the project deliverables?” Exhibit 8.2 shows a WBS with the deliverables
identified by numbers 1 through 9, and Exhibit 8.3 shows the same project with the
activities required to create the deliverables listed. Notice that project management is
the first section of the WBS and that each row in both exhibits has a unique number.
The number of each activity shows the deliverable it helps to create. For example, activity
4.2, contact local bands, is needed for higher-level deliverable 4. entertainment.
As teams define activities, they need to be careful not to omit any work elements. It is
a good idea to have someone on your project team play devil’s advocate to challenge the
team to identify additional activities. It is better to identify activities that need not be
accomplished than to forget activities that will need to be added later. The team may
think all of the activities have been identified; however, when the next process is
performed—activity sequencing—it may become obvious that some activities have been
forgotten. Another activity can always be added later. Remember, the schedule will not
be approved until all of the related planning is in place. It is better to discover a missing
activity in the later stages of planning than after the schedule is approved. Activities that
need to be added after the final schedule is approved will add time and money to the
project, perhaps driving it over budget and causing it to fall behind schedule.
If the project being planned is similar to previous projects, the team can look at those
projects both for defining activities and for other planning that follows. Some organiza-
tions have templates or checklists for certain types of projects or certain project deliver-
ables that can be used as a starting point in defining activities. Regardless of the starting
point, team members should keep on asking how the project at hand is different from pre-
vious ones. Often, a new project includes a few unique activities that need to be included.
In addition to the activity list, the project milestones should be listed. A milestone is an
important point in a project schedule that the project sponsor and manager want to use as a
checkpoint. A few major milestones are often identified in the project charter, but quite
commonly more milestones are identified during project schedule planning. Common mile-
stones include completion of a major deliverable, completion of a critical activity, or the time
just before a large amount of money needs to be committed to the project. A team may also
decide to put a milestone at a merging point in the project schedule where multiple activities
need to be complete before any further progress can be made. The common denominator in
each of these decisions is to identify a few key points in the life of a project at which man-
agement can determine if the project is progressing as planned.
A milestone list is shown in Exhibit 8.4. Note that the line numbers assigned to the
milestones are one greater than the line numbers of the activities that must be completed
EXHIBIT 8.2
WORK BREAKDOWN STRUCTURE WITH DELIVERABLES ONLY
COLLEGE FUNDRAISER PROJECT
1. Project Management
2. Location
3. Information
4. Entertainment
5. Safety
6. Parking
7. Food
8. Sanitation
9. Volunteers
250 Part 3 Planning Projects
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for each milestone. For example, the milestone “Information needs finalized” (item 3.6)
represents the point in time that all of the information-related activities (items 3.1
through 3.5) are completed. For clarity, items 3.1 through 3.5 have been imported from
Exhibit 8.3 and set in a lighter font. Notice also that the verb choice on the milestones is
past tense, such as “confirmed,” “finalized,” and so on. This indicates that the activities
leading up to each milestone must be complete.
EXHIBIT 8.3
WORK BREAKDOWN STRUCTURE WITH ACTIVITY LIST ADDED
COLLEGE FUNDRAISER PROJECT
1. Project Management
2. Location
2.1 CONTACT UNIVERSITY FOR PERMISSION
2.2 DETERMINE IDEAL LOCATION TO MEET CAPACITY
2.3 DETERMINE ALTERNATIVE LOCATION IN CASE OF INCLEMENT WEATHER
3. Information
3.1 PROVIDE TEAM INFORMATION
3.2 PRODUCE PRE-EVENT ADVERTISEMENTS
3.3 DISPLAY WELCOME SIGNS AT ALL ENTRANCES
3.4 SET UP SIGN-IN TABLE
3.5 DISPLAY SIGNS WITH RULES
4. Entertainment
4.1 FIND INFORMATION ABOUT LOCAL NOISE ORDINANCES
4.2 CONTACT LOCAL BANDS
4.3 SET UP STAGE, SPEAKERS, FUN BOOTHS
5. Safety
5.1 DETERMINE LIGHTING NEEDS
5.2 CONTACT LOCAL FIRE DEPARTMENT (EMS)
5.3 CONTACT LOCAL POLICE DEPARTMENT
5.4 OBTAIN PERMISSION TO USE WALKIE-TALKIES
5.5 COORDINATE FIRST AID BOOTH
6. Parking
6.1 FIND ADEQUATE LOTS TO ACCOMMODATE CAPACITY
6.2 COORDINATE SHUTTLE SERVICE FROM LOTS TO SITE
6.3 RESERVE SPECIAL PLACES FOR HANDICAPPED
7. Food
7.1 CONTACT FOOD/BEVERAGE VENDORS FOR CONCESSIONS
7.2 MAKE GOODIE BAGS FOR CHILDREN
7.3 ORDER SUFFICIENT WATER
8. Sanitation
8.1 PROVIDE TRASH RECEPTACLES
8.2 PROVIDE ADEQUATE NUMBER OF PORTA-JOHNS
8.3 COORDINATE POST-EVENT CLEAN-UP
8.4 PURCHASE PAPER PRODUCTS AND SOAP
9. Volunteers
9.1 RECRUIT VOLUNTEERS
9.2 PRODUCE A MASTER VOLUNTEER ASSIGNMENT LIST
9.3 MAKE NAMETAGS FOR ALL VOLUNTEERS
Chapter 8 Scheduling Projects 251
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EXHIBIT 8.4
WORK BREAKDOWN STRUCTURE WITH MILESTONE LIST
COLLEGE FUNDRAISER PROJECT
1. Project Management
2. Location
2.4 LOCATION CONFIRMED
3. Information
3.1 PROVIDE TEAM INFORMATION
3.2 PRODUCE PRE-EVENT ADVERTISEMENTS
3.3 DISPLAY WELCOME SIGNS AT ALL ENTRANCES
3.4 SET UP SIGN-IN TABLE
3.5 DISPLAY SIGNS WITH RULES
3.6 INFORMATION NEEDS FINALIZED
4. Entertainment
4.4 BAND CONTRACT SIGNED
4.5 ENTERTAINMENT ARRANGED
5. Safety
5.6 SAFETY REQUIREMENTS COMPLETED
6. Parking
6.4 ALL PARKING NEEDS ARRANGED
7. Food
7.4 FOOD AND BEVERAGES READIED
8. Sanitation
8.5 ALL SANITATION NEEDS IN PLACE
9. Volunteers
9.4 VOLUNTEERS PREPARED
iS
to
ck
.c
om
/w
ra
gg
252 Part 3 Planning Projects
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AGILE On Agile projects, typically the product owner and the team agree on what work will be
completed in an iteration, and the team then identifies all of the work activities for that
iteration. The team commits to the body of work for the iteration, without having the
how worked out in detail yet.
8-6 Sequence Activities
Once the activities have been identified, it is time to determine the logical order in which
they can be accomplished. This process is called sequence activities and it entails deter-
mining the predecessor and successor relationships among the project activities. This
sequencing activity is routinely performed for traditional (waterfall) projects and per-
formed for each iteration of Agile projects. A common method of determining this
sequence is to put each defined activity on a Post-it Note and to display them on a
large work space (whiteboard, several flip chart sheets on a wall, etc.). The activities
that are expected to be accomplished early in the project can be placed on the left por-
tion of the work surface, those activities expected to be accomplished midway in the
project near the middle, and those expected to be last on the right. Then, one person
can serve as a facilitator by asking, “What activity or activities can be started right away
and do not depend on any others?” Once one or more of these initial activities have been
identified, the facilitator asks, “What activity or activities can we start now?” The initial
activity is called a predecessor activity, which is “The schedule activity that determines
when the logical successor activity can begin or end.”8 The following activity is called a
successor activity, which is “the schedule activity that follows a predecessor activity, as
determined by their logical relationship.”9 The facilitator then places the successor activ-
ity after its predecessor and draws an arrow to show the relationship, such as finish-
to-start. Four types of relations are possible, and the default relation is finish-to-start.
The team continues with this analysis until all activities have been placed on the work
surface with arrows showing the predecessor–successor relationships. At that time, the
team should mentally go through the network to ensure that no “dead-ends” are present
where the chain of arrows from the project start to end is broken.
Exhibits 8.5 and 8.6 illustrate sequencing activities with the simple example of
upgrading a product. The activities are identified in Exhibit 8.5, and their sequence is
shown in Exhibit 8.6. The first activity is to determine the product features. As soon as
that is done, two other activities can be performed.
This product upgrade example illustrates the basic logic of showing predecessor–
successor dependency relationships. Dependencies can be either mandatory or discretion-
ary. A mandatory dependency is “a logical relationship between activities that that must
happen—usually due to a physical or legal demand.” A discretionary dependency is “a
logical relationship between activities that is considered desirable, usually based upon expe-
rience or best practice.” A mandatory example is “the hole must be dug before concrete
EXHIBIT 8.5
ACTIVITY LIST FOR PRODUCT UPGRADE PROJECT
Determine product features
Acquire prototype materials
Produce prototype
Design marketing campaign
Design graphics
Conduct marketing
Perform sales calls
Chapter 8 Scheduling Projects 253
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can be poured into it,” and a discretionary example is “past experience tells us it is better
to delay designing product graphics until the marketing plan is complete.” The team needs
to include all of the mandatory dependencies and use its judgment on which discretionary
dependencies to include. Most teams include no more dependencies than necessary since
more dependencies give the project manager fewer choices as the project progresses.
8-6a Leads and Lags
Exhibit 8.6 shows the most common type of logical dependency, finish-to-start (FS),
which is “a logical relationship where initiation of work of the successor activity depends
upon the completion of work of the predecessor activity.”10 In this example, the market-
ing plan must be completely designed before the graphics design starts. However, maybe
the graphics design could start five workdays before the marketing campaign design is
complete. This could be modeled as a lead, which is “a modification of a logical relation-
ship that allows an acceleration of the successor activity.”11 With this lead of five work-
days, the arrow connecting design marketing campaign and design graphics would still
represent a finish-to-start relationship, only with a five-day overlap during which time
people could work on both activities. Leads are helpful if a project needs to be completed
quickly since they show how a successor activity can be overlapped with its predecessor
instead of waiting until the predecessor is completely finished.
Perhaps in the example, the salespeople are more effective if the design graphics are
completed 10 days before they start performing sales calls so they have extra time to bet-
ter understand the graphics. This could be shown by a lag, “a modification of a logical
relationship that directs a delay in the successor activity.”12 In this example, the arrow
connecting design graphics and perform sales calls would still represent a finish-to-start
relationship, only with a 10-day gap during which no one could work on either activity.
EXHIBIT 8.6
NETWORK FOR PRODUCT UPGRADE PROJECT
254 Part 3 Planning Projects
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AGILE
8-6b Alternative Dependencies
Other types of relationships exist besides finish-to-start, including the following:
Finish-to-finish (FF) is “the logical relationship where completion of work of the suc-
cessor activity cannot finish until the completion of work of the predecessor activity.”13
For example, perhaps the graphics could be designed while the marketing campaign is
being designed, but could not be completed until the marketing campaign is completed.
Start-to-start (SS) is “a logical relationship where initiation of the work of the suc-
cessor schedule activity depends upon the initiation of the work of the predecessor
schedule activity.”14 For example, perhaps the graphics design could not start until
the design marketing campaign started.
Start-to-finish (SF) is “the logical relationship where completion of the successor sched-
ule activity is dependent upon the initiation of the predecessor schedule activity.”15 This
is the least used relationship. An example is for a project to replace an old system where
the new capability must be started before the old one is completely discontinued.
On Agile projects, the sequencing is performed at a high level for the entire project or for
the product release (often three to six months). Then for each iteration, the team develops
the sequence by which the detailed activities of that sequence need to be completed.
8-7 Estimate Activity Duration
You can begin estimating activity durations once the activities have been defined and
sequenced. Estimating activity durations is the process of approximating the number of
work periods needed to complete individual activities with estimated resources. Duration
is “the total number of work periods (not including holidays or other nonwork periods)
required to complete a schedule activity … usually expressed as workdays or workweeks.”16
It makes sense to identify the people who will work on each activity as soon as possi-
ble since they often have the most knowledge about how to actually do the work and
how long it will take. Also, the length of time to perform an activity is often dependent
upon who will do that work. We discuss resource assignments in Chapter 9.
When estimating how long activities are expected to take, each activity should be
evaluated independently. All assumptions and constraints made when estimating should
be documented since a change in one of these assumptions could change the estimate.
For the first estimate of each activity, a normal level of labor and equipment and a nor-
mal workweek should be assumed. If overtime is planned right from the start, the project
manager is unlikely to have much flexibility if the schedule needs to be accelerated. For
each activity, the output to be created and the skill level required to perform the work
should be identified. Any predetermined completion date can be disregarded at this
point. Negotiation with a customer or supplier may be necessary, but the project man-
ager needs to understand what is reasonable under normal circumstances before entering
those negotiations. When a past project is being used as a guide, it is preferable to use
actual time to perform the activities and not the estimated or planned time. Additional
suggestions for creating good estimates include the following:
Ensure the WBS is complete.
Do not include anything outside the WBS in the estimate.
Clearly identify each activity.
Include appropriate contingencies.
Use relevant and sufficient data.
Include all relevant stakeholders in making estimates.
Chapter 8 Scheduling Projects 255
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Conduct an independent review.
Revise the estimate if there is a major project change.17
Exhibit 8.7 is a continuation of the product upgrade example with the times estimated for
individual activities. Note that the estimated times in this example are in workdays. It is impor-
tant to keep time estimates in the same unit of measure, be it hours, days, weeks, or another
increment of time. Exhibit 8.8 includes suggestions for creating realistic time estimates.
When using the actual time from a previous project, adjust the estimate up or down
based upon size, familiarity, and complexity differences.
8-7a Problems and Remedies in Duration Estimating
Many factors can impact the accuracy of activity duration estimates. A list of potential
problems, remedies for those problems, and the chapter in which each is discussed is
EXHIBIT 8.7
ACTIVITY DURATION ESTIMATE EXAMPLE
TIME ESTIMATE IN WORKDAYS ACTIVITY NAME
5 Determine new product features
20 Acquire prototype materials
10 Produce prototype
10 Design marketing campaign
10 Design graphics
30 Conduct marketing
25 Perform sales calls
EXHIBIT 8.8
SUGGESTIONS FOR CREATING REALISTIC TIME ESTIMATES
1. Verify all time estimations with the people doing the work. Or, even better, have the people doing the work provide the initial
estimates of the activity completion time.
2. Estimate times of completion of work without initial reference to a calendar. Just consider how long you believe each activity
will take under normal working conditions.
3. Make sure all time units are identical: workdays, work weeks, months (consider time off for company holidays), or another measure.
4. Some people tend to estimate optimistically. Keep in mind the following time constraints:
Unexpected meetings
Learning curves
Competing priorities
Vacation
Resources or information not available on time
Inaccuracy in work instructions
Interruptions
Emergencies and illness
Rework
5. Contrary to point 4, some people estimate pessimistically in order to look good when they bring their project or activities in
under budget and under schedule. Try to develop an understanding of the estimator’s experience along with their optimistic
or pessimistic tendencies and try to encourage balance in estimates.
6. Don’t initially worry about who is going to do the work, and don’t worry about the mandatory deadline. Figure out a realistic
estimate first, and then figure out what to cut later.
256 Part 3 Planning Projects
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shown in Exhibit 8.9. These techniques are not mutually exclusive. Many organizations use
several of them; however, few organizations use them all. It is important for business stu-
dents to be aware of these techniques and their potential benefits, since some companies
use each. Many companies customize the mechanics of how they use these techniques.
EXHIBIT 8.9
ACTIVITY DURATION ESTIMATING PROBLEMS AND REMEDIES
POTENTIAL ACTIVITY DURA-
TION ESTIMATING PROBLEM REMEDY CHAPTER
Omissions Refining scope and WBS
Checklists, templates, devil’sadvocate
Lessons learned
7
8
15
General uncertainty in estimate Rolling wave planning
Reverse phase schedule
Learning curve
Identify and reduce sources of uncertainty
Manage schedule aggressively
7
9
8
11, 12
14
Special cause variation Risk analysis
Resolve risk events
3, 11
14
Common cause variation PERTMonte Carlo
Project buffer
8
8
9
Merging (multiple predecessors) Milestones
Reverse phase schedule
Feeding buffer
Manage float
3, 8
9
9
14
Queuing Staggering project start dates
Resource leveling
Resource buffer
2
9
9
Multitasking Prioritizing projects
Carefully authorize start of noncritical activities
2
9, 14
Student syndrome (starting late) Float
Critical path meetings
8
14
Not reporting early completion of
rework
Project culture
Project communications
Contract incentives
Project leadership
Progress reporting
4
6
13
5
14
Source: Adapted from Larry Leach, “Schedule and Cost Buffer Sizing: How to Account for the Bias between Project
Performance and Your Model,” Project Management Journal 34 (2) (June 2003): 44.
Chapter 8 Scheduling Projects 257
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AGILE
8-7b Learning Curves
The concept behind learning curves is simple: The more times a person performs an
activity, the better and faster he or she becomes. This concept can be utilized for activity
duration estimating, as the rate of improvement can be studied and predicted. Therefore,
on types of projects where certain activities are performed many times, a project planner
can predict how long it will take each time to perform the activity. The rate of improve-
ment can vary widely depending on many factors, such as:
How much the culture of the organization stresses continual improvement
How much skill is involved in the activity
How complex that activity is
How much of the activity is dependent on the worker versus dictated by the pace of
a machine
If there is frequent job rotation
The amount of time necessary to perform an activity is calculated based upon a rate
of improvement that occurs every time the number of repetitions doubles. For example,
if the learning rate is 80 percent and the first time the activity was performed (by pro-
ducing the first unit), it took 100 minutes, then after doubling the number of units pro-
duced, the second unit would require 80 minutes. To double the repetitions again, the
fourth unit would require 64 minutes. The time estimates for each time the activity is
performed can be found in learning curve tables such as the one shown in Exhibit 8.10.
Notice that the rate of learning is very important since more rapid learning leads to
much faster performance times for successive times an activity is performed.
For consumers, one result is rapidly declining prices when an industry has a steep
learning curve. People expect prices to decline for new electronics and other consumer
items. As a project manager, you also need to plan for the amount of learning that may
take place. Further, as a project manager, you need to create and sustain the environ-
ment that encourages and expects rapid learning so you can always become more
competitive.
On Agile projects, duration estimates improve with each iteration and as early iterations
are completed. Armed with more specific knowledge of how long certain activities take,
later iterations can be estimated more accurately. Project managers can use velocity of
progress to estimate how much work will be accomplished in each iteration. Velocity is
“the sum of the estimates of delivered (i.e., accepted) features per iteration … measured
in the same units as feature estimates, whether this is story points, days, ideal days, or
hours that the team delivers.”18
EXHIBIT 8.10
LEARNING CURVE TABLE
ACTIVITY 60% 70% 80% 90%
1 100 100 100 100
2 60 70 80 90
4 36 49 64 81
8 21.6 34.3 51.2 72.9
258 Part 3 Planning Projects
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8-8 Develop Project Schedules
All the scheduling processes discussed thus far must be completed even if you use Micro-
soft Project or another scheduling tool. At this point, you have defined, sequenced, and
estimated the duration for all the schedule activities. Now is the time to use all of this
information to develop a project schedule. Once the schedule is developed based upon
this information, resource needs and availability and cash flow constraints often extend
the proposed schedule, while imposed date constraints often suggest the need for sched-
ule compression.
The first major task in developing the project schedule is to identify the critical path,
which is “the sequence of schedule activities determining the duration of the project.
Generally, it is the longest path through the project.”19 Because it is the longest sequence
of activities, the critical path determines the earliest possible end date of the project. Any
time change to an activity on the critical path changes the end date of the entire project.
If the project manager changes an activity on the critical path to start at a later date, then
the whole project will end at a later date. If the amount of work for an activity on the
critical path is increased, then the project will be delayed and it will end at a later date.
If, on the other hand, an activity on the critical path is performed faster than planned,
the entire project could be completed sooner. The critical path gets its name not because
it is the most critical in terms of cost, technical risk, or any other factor, but because it is
most critical in terms of time. Since virtually everyone wants to complete projects at the
promised time, the critical path gets a great deal of attention.
The two methods for determining the critical path are the two-pass and enumeration
methods. Each uses the same activity identification, duration estimate, and activity
sequencing data but processes the data in a different manner. While both determine the
critical path, each also determines other useful information.
8-8a Two-Pass Method
The two-pass method is used to determine the amount of slack or float each activity has.
To perform this method, two logical passes should be made through the network. The
first pass is called the forward pass. The forward pass is “the calculation of the early
start and early finish dates for the uncompleted portions of all network activities.”20 On
the forward pass, the project team starts at the beginning of the project and asks how
soon each activity can begin and end. If the project is being scheduled with software,
actual calendar dates are used. Often, when calculating the schedule by hand, a team
starts at date zero. In other words, the first activity can begin after zero days. To envision
this, consider Exhibit 8.11, where all of the previously determined information has been
displayed.
A legend is shown in the lower-right corner of Exhibit 8.11. This explains each bit of
information that is displayed for each activity. For example, the first activity name is
“Determine new product features.” The estimated duration for this activity is five days.
This activity is coded with the letter A. The four corners of each block display four
important times for each activity:
Early start date (ES)—“the earliest possible point in time on which uncompleted
portions of a schedule activity can start, based upon the schedule network logic,
the data date, and any schedule constraints.”21
Early finish date (EF)—“the earliest possible point in time on which uncompleted
portions of a schedule activity can finish, based upon the schedule network logic,
the data date, and any schedule constraints.”22
Chapter 8 Scheduling Projects 259
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Late start date (LS)—“the latest possible point in time that a schedule activity can
start, based upon the schedule network logic, the project completion date, and any
schedule constraints.”23
Late finish date (LF)—“the latest possible point in time when a schedule activity
can finish based upon the network logic, the project completion date, and any
constraints.”24
“Determine new product features,” for example, has an early start time of zero since it
can begin as soon as the project is authorized.
FIRST OR FORWARD PASS The first pass is then used to calculate the early finish,
which is the early start plus the estimated duration (ES + Duration = EF). In this case, 0
+ 5 = 5 means the activity “Determine new product features” can be completed after five
days. (The zero for the first activity means it can start after zero days—meaning at the
beginning of the first day.) Each activity that is a successor can start as soon as its pre-
decessor activity is complete. Therefore, the next two activities can each start after five
days. (That means at the start of the sixth day.) To calculate the early finish for each of
these activities, add its duration to the early start of 5, for early completion times of 25
and 15, respectively. The difficult part of calculating the first pass comes when an activity
has more than one predecessor. For example, “Perform sales calls” cannot begin until all
three preceding activities (“Produce prototypes,” “Design graphics,” and “Conduct
EXHIBIT 8.11
TWO-PASS EXAMPLE SCHEDULE SET UP
260 Part 3 Planning Projects
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marketing”) are complete. Therefore, its early start is 45. This is true even though “Pro-
duce prototypes” and “Design graphics” have earlier finish times, because “Conduct mar-
keting” cannot be completed until day 45. The later time is always taken. The results of
the first pass are shown in Exhibit 8.12. Note that the earliest the entire project can be
completed is 70 workdays.
SECOND OR BACKWARD PASS The second pass is sometimes called the backward
pass. The backward pass is “the calculation of late finish dates and late start dates for the
uncompleted portions of all schedule activities. Determined by working backward
through the schedule network logic from the project’s end date.”25 When performing
the backward pass, teams start at the end and work backward, asking, “How late can
each activity be finished and started?” Unless there is an imposed date, the late finish
for the last activity during planning is the same as the early finish date. In our example,
we know the earliest we can finish the entire project is 70 days, so we will use that as the
late finish date for the last activity. If the activity “Perform sales calls” must end no later
than 70 and it takes 25 days, then it must start no later than day 45. In other words,
calculate the late start by subtracting the duration from the late finish (LF duration =
LS). The confusing part of calculating the second pass is when there is more than one
successor. In Exhibit 8.13, one place this occurs is at the first activity, “Determine new
product features,” since two activities are immediate successors. Enough time must be
left for all of the successors, so whichever one must start soonest dictates the late finish
EXHIBIT 8.12
SCHEDULE EXAMPLE FIRST PASS COMPLETE
Chapter 8 Scheduling Projects 261
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date of the predecessor. In this example, “Design marketing campaign” must start no
later than after day 5; therefore, five days is the late finish for the first activity.
FLOAT AND THE CRITICAL PATH Once both passes are complete, the early and late
start dates for every activity and the amount of time the entire project will take to com-
plete are known. However, the team also wants to know the critical path. This is calcu-
lated easily by first determining each activity’s float (sometimes float is called slack).
Float can be total float, which is “the amount of time a schedule activity may be delayed
from its early start date without delaying the project end date”26 or free float, which is
“the amount of time a schedule activity can be delayed without delaying the early start of
immediately following schedule activities.”27 A project manager wants to know how
much float each activity has in order to determine where to spend her time and atten-
tion. Activities with a great deal of float can be scheduled in a flexible manner and do
not cause a manager much concern. Activities with no float or very little float, on the
other hand, need to be scheduled and managed very carefully.
Float is calculated by the equation Float = Late start – Early start (Float = LS ES). The
critical path is the sequence of activities from start to finish in the network that have no
float. In Exhibit 8.14, activities A, D, F, and G have no float and, therefore, create the
critical path. It is typical to mark the critical path in red and/or in boldface to call atten-
tion to it. Activities B, C, and E each have float and are not on the critical path. If
EXHIBIT 8.13
SCHEDULE EXAMPLE SECOND PASS COMPLETE
262 Part 3 Planning Projects
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activity B is delayed, it will delay the start of activity C; therefore, activity B has total
float. While activity B can be delayed up to 10 days without delaying the entire project,
any delay to activity B would delay the start of activity C. On the other hand, activities C
and E can be delayed by 10 and 20 days, respectively, without causing any other activity
to be delayed. Therefore, their float is free float—impacting neither the overall project
nor any activity in it.
Project managers carefully monitor the critical path activities. They also closely watch
activities with little float—think of these as “near-critical” activities. A project with many
activities that have little float is not very stable. Even small delays on near-critical activi-
ties can change the critical path. Project managers can sometimes “borrow” resources
from an activity with plenty of float to use first on an activity that is either already criti-
cal or nearly critical. Chapter 9 discusses resource scheduling in detail.
8-8b Enumeration Method
The second method of determining the critical path is the enumeration method. To com-
plete this, we list or enumerate all of the paths through the network. The advantage of this
method is that since all of the paths are identified and timed, if a team needs to compress the
project schedule, they will know both the critical path and the other paths that may be
nearly critical (or those with very little float). It is imperative to keep track of both critical
and near-critical paths when compressing a schedule. In Exhibit 8.15, three paths are
EXHIBIT 8.14
TWO-PASS COMPLETE SCHEDULE EXAMPLE
Chapter 8 Scheduling Projects 263
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identified, and the total duration for each is calculated. ADFG is the critical path with an
expected duration of 70 days, just as was determined with the two-pass method. Now, how-
ever, we also know that path ABCG is expected to take 60 days (10 fewer than the critical
path), and path ADEG is expected to take 50 days (20 fewer than the critical path).
8-9 Uncertainty in Project Schedules
On some projects, it is easy to estimate durations of activities with confidence. On
others, so many uncertainties exist that managers have far less confidence in their ability
to accurately estimate. However, project managers still need to tell sponsors and clients
how long they believe a project will take and then be held accountable for meeting those
dates. One common strategy for handling this potential problem is to construct the best
schedule possible and then manage the project very closely. A different strategy is to esti-
mate a range of possible times each individual activity may take and then see what
impact that has on the entire schedule. PERT and Monte Carlo are two methods some-
times used for this strategy.
EXHIBIT 8.15
ENUMERATION METHOD EXAMPLE SCHEDULE
Path
ABCG
ADEG
Total Duration
60
50
264 Part 3 Planning Projects
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8-9a Program Evaluation and Review Technique
Program evaluation and review technique (PERT) was developed during the 1950s to
better understand how variability in the individual activity durations impacts the entire
project schedule. To use PERT, a project team starts by sequencing the activities into a
network, as described in Section 8.6 earlier in this chapter. However, instead of creating
one time estimate to complete each activity, they create three estimates: optimistic, most
likely, and pessimistic. For example, the first activity, “Determine new product features,”
will most likely take five days, but it could take as little as four days if everything works
well and as long as 12 days if a variety of things interfere. The person scheduling the
project then calculates the estimated time to perform each activity as shown in Exhibit
8.16 using the following equation:
Estimated time
Optimistic 4 Most likely Pessimistic
6
Therefore, for the first activity, the estimated time
4 4 5 12
6
6
The primary advantage of PERT is that it helps everyone realize how much uncer-
tainty exists in the project schedule. When people use single time estimates, sometimes
there is a tendency to believe that the estimates foretell exactly what will happen. On
many projects, a great deal of uncertainty exists, and PERT helps to make it visible. In
addition to making the overall uncertainty more visible, calculations often show that the
expected time is actually longer than the most likely time; if many things go very well on
an activity, generally only a little time can be saved, but if many things go terribly wrong,
a great deal of time can be lost.
However, using PERT involves difficulties. First, it is often hard enough to create one
estimate of how long an activity will take, so it takes even more effort (and therefore
money) to create three estimates. Second, there is no guarantee of how good any of
the three estimates are. In other words, it is not necessarily the case that a three-point esti-
mate of an activity would be more accurate than a single duration estimate. Third, PERT
can underestimate the risk of a schedule running long because it does not accurately
address when two or more activities need to be completed before a third one can begin.28
EXHIBIT 8.16
PERT TIME ESTIMATE EXAMPLE
ACTIVITY OPTIMISTIC MOST LIKELY PESSIMISTIC EXPECTED
Determine new product
features
4 5 12 6
Acquire prototype
materials
16 20 30 21
Produce prototype 8 10 12 10
Design marketing
campaign
9 10 14 10.5
Design graphics 6 10 20 11
Conduct marketing 28 30 50 33
Perform sales calls 20 25 30 25
Chapter 8 Scheduling Projects 265
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Since PERT highlights uncertainty in project duration, its logic is useful to project man-
agers. However, since it has some problems, only a few project managers actually use it to
calculate and monitor project schedules. Some project managers informally use three time
estimates for a few key activities on the critical path to get a sense for the amount of
uncertainty and to better understand the activities that need close monitoring. Other proj-
ect managers who want to understand the potential variation use Monte Carlo simulation.
Students of project management need to be aware that both PERT and Monte Carlo simu-
lations are sometimes used to help understand uncertainty in project schedules.
8-9b Monte Carlo Simulation
Monte Carlo simulation is “a computerized mathematical technique that allows people
to account for risk in quantitative analysis and decision making that furnishes the deci-
sion maker with a range of possible outcomes and the probabilities with which they will
occur.”29 Monte Carlo is more flexible than PERT, in that an entire range of possible
time estimates can be used for any activity or the project itself. The project schedule is
calculated many times (perhaps 1,000 or more), and each time, the estimate for a partic-
ular activity is generated based upon the likelihood of that time as determined by the
project manager. For example, suppose a project manager estimated that for a particular
activity, there was a 10 percent chance of taking five days, a 30 percent chance of taking
six days, a 40 percent chance of taking seven days, and the remaining 20 percent chance
of taking eight days. Then, for each 100 times the computer generated a project schedule,
when it came to that activity, 10 times it would choose five days, 30 times it would
choose six days, 40 times it would choose seven days, and 20 times it would choose
eight days. The output from the computer would include a distribution of how often
the project would be expected to take each possible length of time. Many other possible
outputs can also be generated from Monte Carlo simulations.
One advantage of Monte Carlo analysis is the flexibility it provides. This allows more
realistic estimates. Another advantage is the extent of information it can provide regard-
ing individual activities, the overall project, and different paths through the project that
may become critical.
A disadvantage of Monte Carlo is the amount of time necessary to estimate not just a
most likely duration for each activity, but an entire range of possible outcomes. Another
disadvantage is that special software and skill are necessary to effectively use Monte
Carlo. This disadvantage is not as large as it once was because more software is available
and most students are learning at least the fundamentals of simulation in statistics or
operations courses.
A project manager needs to decide when some of the more specialized techniques are
worth the extra effort for a project. The old saying that a person should spend $100 to
save $1,000, but should not spend $1,000 to save $100, applies. If the savings on a project
from using techniques such as learning curves, PERT, or Monte Carlo are significant,
project managers should consider using one of them. If not, they should create the best
estimates possible without the specialized techniques, incorporate risk management by
carefully identifying and planning for specific risks as discussed in Chapter 11, and man-
age the project schedule very carefully as discussed in Chapter 14.
These specialized techniques are sometimes used in research and development (R&D)
projects. However, some R&D projects do not need this level of sophistication. Exhibit 8.17
shows an actual R&D project schedule used by D. D. Williamson of Louisville, Kentucky,
when a Chinese customer asked it to develop a new product somewhat different from any
it had previously developed. Once D. D. Williamson decided to take the job, it developed
266 Part 3 Planning Projects
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and communicated the project schedule to all stakeholders both in its company and the cus-
tomer’s company within the first week.
Australian researchers have discovered that two primary causes of late delivery of IT
projects are variance in time to complete individual work activities and multiple depen-
dencies for some activities. Suggestions for overcoming these two problems are shown in
Exhibit 8.18.
EXHIBIT 8.17
NEW PRODUCT DEVELOPMENT SCHEDULE IN CHINA EXAMPLE
Week one—Request is received from the customer for a product that is darker than anything we have in our current offering. Our
sales manager forwards the request to our VP sales and our R&D department. A quick review of the potential price versus cost of
materials is completed by the VP sales (with finance input), and the product is deemed saleable at an acceptable margin.
Week two—A trial cook in our “baby cooker” is conducted by our R&D department. Within two attempts, a product that is
within the customer-requested specs is produced. An additional trial is conducted to quickly check repeatability. The trial product
is express shipped to the customer and to our China facility for comparison purposes.
Week three—The formulation and related instructions for cooking are communicated to our China operations with a “red sheet”
process. China has anticipated the receipt of this red sheet and is able to schedule time in production within a week.
Week four—The initial red sheet production is successful and passes the specification tests in China and in Louisville.
Week five—Customer confirms purchase order and the first shipment is sent. The product contributes significantly to the reven-
ues and profitability of the China facility. Success!
Key factors—Strong communication between all the players and a clear understanding of the customer expectations up front.
Source: Elaine Gravatte, D. D. Williamson.
EXHIBIT 8.18
INITIATIVES TO IMPROVE ON-TIME SCHEDULE DELIVERY
CAUSE OF LATE
DELIVERY INITIATIVE EXPLANATION
Activity variance Increase activity transparency
Increase user participation
Reduce project size
Manage expectations, e.g., set realistic
goals by drawing from “outside views”
Use packaged software
Allows for better planning
Ensures that the product delivered
meets the user needs
Ensures that estimates for tasks are
more accurate
Mitigates optimism bias and
misrepresentation
Provides a standard within which to
develop the system
Activity
dependence
De-scope
Improve requirements definition
Reduce activity coupling
Stage projects (incremental develop-
ment or iterative development)
Reduces the number of dependencies
Ensures that there is no confusion
over what is to be developed and
when If activity links are reduced,
then dependencies exert less influence
Reduces delay bias by minimizing
multitasking, merging, queuing (i.e.,
reduces the dependencies)
Source: Vlasic, Anthony and Li Liu, “Why Information Systems Projects Are Always Late,” Proceedings Project Man-
agement Institute Research and Education Conference 2010 (Oxon Hill, MD, July 2010).
Chapter 8 Scheduling Projects 267
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8-10 Show the Project Schedule on a Gantt Chart
The discussion in this chapter so far has been how to determine the project schedule.
While this is necessary, it can be confusing to show people a network diagram. A tool
for communicating a project schedule that is much easier to understand is a Gantt or
bar chart. A Gantt chart is a horizontal bar chart that shows each work activity on a
separate line with the bar placed from the early start date to the early finish date for
each activity on a timescale. It is not uncommon to use Gantt chart for small projects.
The simplest Gantt charts show a bar for each activity stretched out over a time line.
Many stakeholders also want to see which activities are critical and the amount of float
noncritical activities have. Therefore, critical activities are normally shown in red or bold-
face, noncritical activities are normally shown in blue or normal face, and the amount of
float is shown in a muted or thin line out to the late finish of each noncritical activity. The
units of time are the units the project team used in creating the schedule, whether that is
hours, days, weeks, or another unit of measure. A Gantt chart is shown in Exhibit 8.19. It
is easy to understand when each activity should be performed. However, the basic Gantt
chart does not show other useful information such as predecessor–successor relationships,
late start dates, and so forth. These can all be easily displayed on a Gantt chart that is
developed using scheduling software such as Microsoft Project. The instructions for using
MS Project to create and print Gantt charts are covered in the following section.
8-11 Using Microsoft Project for Critical Path
Schedules
As you begin to work with schedules, remember there are five major elements affecting
project completion: logical order (or sequence) of project tasks, duration of each task, the
number of resources available when needed to complete those tasks, imposed dates, and
cash flow. When building schedules in MS Project, you will find it helpful to keep these
limitations in order. In the following tutorial, we’ll determine the sequence of tasks
before coming up with durations for them. Since the bottom line for many stakeholders
is often “How long is this going to take and how much will it cost me?” you may find
more success if you allow decision makers to focus on determining the sequencing order
of tasks first, rather than how long each activity will take.
Keep in mind that we are continuing with the Suburban Parks Home project from the
tutorial in Chapter 7 (if you have not completed that tutorial, this one will not make
EXHIBIT 8.19
GANTT CHART EXAMPLE
0 10 155 20 25 30 35 40 45 50 55 60 65 70
Determine new product features
Acquire prototype materials
Produce prototype
Design marketing campaign
Design graphics
Conduct marketing
Perform sales calls
268 Part 3 Planning Projects
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much sense). First, we will inspect the project calendar to make any adjustments neces-
sary. Next, steps to develop the network diagram will be explained. Finally, the critical
path will be discussed as well as how to view and manage the developing schedule.
8-11a Set up the Project Schedule
Setting up the project schedule begins with ensuring the correct start date for the project
is set, and then defining your organization’s working days, hours, and holidays.
SET (OR UPDATE) THE PROJECT START DATE In the Chapter 3 tutorial, we set the
start date for the project. Often that time can change once planning begins and needs to
be updated. To do that:
1. Click Project Tab>>Project Information
2. Set the start date to 12/4/17
3. Click OK
DEFINE YOUR ORGANIZATION S WORKING AND NONWORKING TIMES MS
Project’s calendar system defines working and nonworking time. The calendar system
consists of a default project calendar and a resource calendar for each resource. The
project calendar refers to what you think of as a normal calendar: the working and non-
working dates for a project, including holidays. The resource calendar pertains to the
resources of a project—that is, the people, equipment, space, or materials used in a proj-
ect. In this tutorial, we are focused on the project calendar (the resource calendar will be
addressed in a future tutorial).
To avoid unrealistic project schedules, you must ensure your organization’s working
and nonworking times are defined in the project calendar (as well as resource vacations
in resource calendars). The default project calendar has all days, except Saturday and
Sunday, defined as eight-hour working days. The working hours during the day are
8:00 to 12:00 and 1:00 to 5:00. By default, no holidays are defined and must be defined
as nonworking days. All project calendar content is copied into all resource calendars.
Resource calendars are used to block out vacation days and other resource-specific non-
working days. Resource calendars are then used to determine when a resource assign-
ment can be scheduled. If there are no resource assignments, the project calendar is
used to determine scheduling.
Use the following steps to change a working day to nonworking in the Suburban
Parks Home project, as shown in Exhibit 8.20. The legend explains the different shadings
on the calendar days. To open the project calendar:
1. Click Project Tab>>Change Working Time
2. Make sure “Standard (Project Calendar)” is selected in the “For calendar:” box
3. Use the scroll bar to the right of the calendar to find the date you want to edit
4. Click on the date you want to edit
5. Click the Exceptions Tab in the table below the calendar, then click an empty row
6. Enter a description for the nonworking day in the Name column
7. Click another cell in the same row (or Tab) to review the results
8. Repeat these steps until all nonworking days are defined as in Exhibit 8.20
a. You can also type your nonworking days into the table and set the Start and
Finish dates without clicking on them in the calendar
9. Deleting a row restores the default working hours for that day
10. Click OK to close the project calendar options
Chapter 8 Scheduling Projects 269
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To change the working time for a day, as shown in Exhibit 8.21:
1. Select the day and enter a description in the table below the calendar
2. Click the Tab key to fill the Start and Finish dates
3. Click Details…
4. Choose the “Working Time radio button and modify the “From:” and “To:” values
in the table
5. To eliminate one set of work times (such as afternoon), select those times and click
the delete key so only morning times are working
6. Click OK twice
8-11b Build the Network Diagram and Identify the Critical Path
We will now begin to build the network diagram for the Suburban Parks Home project.
The steps to create a network diagram in MS Project are as follows:
1. Enter tasks and milestones
2. Edit the timescale
3. Understand and define task dependencies
4. Assign task duration estimates
EXHIBIT 8.20
STANDARD CALENDAR WITH TWO HOLIDAYS PLUS A HALF
DAY AND A WORKING SATURDAY
Source: Microsoft product screen shots reprinted with permission from Microsoft Corporation.
270 Part 3 Planning Projects
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5. Identify the critical path
6. Understand the network diagram view
STEP 1: ENTER TASKS AND MILESTONES In the Chapter 7 tutorial, you populated
the Gantt chart’s table with project tasks and used the milestones from the Suburban
Parks Home project as WBS deliverables (summary tasks). We will now add two mile-
stone tasks so they will show graphically (as a diamond) on the Gantt chart.
To add a milestone task, do the following:
1. Click on the intermediate summary task “Foundation Work” (WBS ID 2.4) to select it
2. Click Task Tab>>Insert Group>>Milestone
3. You will see a new milestone added to the task list; name it “Construction Begins”
4. Tab over to the Start date column, and type in the date 1/10/18
a. Note since a milestone typically has zero days of duration, MS Project automati-
cally populates the Finish column with the same date
5. On the Gantt chart’s right side, you should see a diamond appear along with a date
6. Repeat this step for the summary task “County clearance” (WBS ID 5) and type
“Construction Complete”
7. To show the name of the milestone (instead of the date) on the Gantt chart’s graphi-
cal side, do the following:
a. Format Tab>>Format>>Bar Styles
b. Select Milestone from the list; click the Text Tab
EXHIBIT 8.21
DETAILS DIALOG FOR HALF WORKING DAY
Source: Microsoft product screen shots reprinted with permission from Microsoft Corporation.
Chapter 8 Scheduling Projects 271
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c. In the “Right” field of the table, change to Name
d. Click OK
e. The milestone name should replace the date on the right side
STEP 2: EDIT THE TIMESCALE Along the top of the right side of the Gantt chart is
the timescale. This is different from the Timeline view. If the Timeline view is showing
above your entire Gantt chart, you can hide it by clicking View Tab>>Split View
Group>>Uncheck Timeline
The default view of the timescale is likely set to show the Year and Quarter in a “two-tier”
layout. For our project, we want to show Months and Weeks. To change the timescale:
1. Right-Click the time scale>>Timescale
2. Click the Middle Tier Tab
3. Change Units to Months; Label to January; set Count to 1; set Size to 55
a. Note: Size sets the space between each tick mark on the timescale for that item
4. Click the Bottom Tier Tab
5. Change Units to Weeks; Label to 1/25, 2/1, ; set Count to 1; set Size to 55
6. Click OK
7. Your timescale should now resemble the one in the Preview window of Exhibit 8.22
STEP 3: UNDERSTAND AND DEFINE TASK DEPENDENCIES As related earlier in
this chapter, a task dependency definition includes both a logical link type (finish-to-start,
start-to-start, finish-to-finish, or start-to-finish) and any associated lead or lag value. The
default link type in MS Project is finish-to-start. The default lead or lag value is zero days.
Task dependencies may be established and viewed graphically in the Network Diagram
view and in several different Gantt views.
For the Suburban Parks Home project example, determining dependencies and
sequencing is fairly straightforward. Most deliverables in this example must be
EXHIBIT 8.22
GANTT CHART VIEW WITH WBS ELEMENTS, TASKS, AND MILESTONES
Source: Microsoft product screen shots reprinted with permission from Microsoft Corporation.
272 Part 3 Planning Projects
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completed before the next one can be started. Subtasks of each deliverable likely need
some sequencing, and it is helpful to think about what tasks could be done in parallel
or where there could be overlap. Sequencing decisions are usually made with the input
of the project manager, the sponsor, and other key project stakeholders. Projects of any
real size are rarely as straightforward as this example.
Before defining dependencies, ensure the “Start”, “Finish”, and “Predecessors” col-
umns are visible. You can show more columns on the Gantt chart to the right of the
“Duration” column by sliding the view divider to the right. The “Predecessors” column
shows the Task ID number (not the WBS code) for predecessor tasks.
Dependencies can be defined using the following steps:
1. Click on the Task Name field to select the predecessor task row
2. Press and hold Ctrl while selecting the successor task
3. Release Ctrl after you click your selection
4. Click the Task Tab>>Schedule Group>>Link Tasks (chain icon)
a. Delete a dependency definition by again selecting both tasks, and then clicking on
Unlink Tasks (broken chain icon)
5. Adding (or deleting) Task ID numbers in the “Predecessor” column is another way
you can define task dependencies
A series of dependencies can also be defined or deleted in a similar manner:
1. Select all of the tasks to be linked in a series
a. Click and drag with the mouse or Shift-Click the first and last task in the series
2. Click the Task Tab>>Schedule Group>> Link Tasks or Unlink Tasks
As you start defining task dependencies, you will notice the durations and the start/finish
dates change as MS Project begins to build the schedule. The right side of the Gantt chart
also begins to take shape. Task relationship arrows show finish-to-start links. Using the Pre-
decessors column as a guide, update your task dependencies to match those in Exhibit 8.23.
STEP 4: ASSIGN TASK DURATION ESTIMATES Once the logical sequence of proj-
ect tasks is established, it is time to assign duration estimates to those tasks so the critical
path can be identified and the actual working schedule can be determined. This is
accomplished by first assigning duration estimates and then by instructing MS Project
to identify the critical path.
The first principle to keep in mind is to use the same unit of time for each task. Mix-
ing up hours, days, or weeks will create confusion. The default time unit is days, so this
tutorial uses days. The second principle is to only assign duration estimates to subtasks,
not their summaries. MS Project calculates the duration for WBS summaries based on
the durations selected for the tasks that comprise each summary.
To assign duration to a task:
1. Click the Duration cell of the task and enter the duration value
a. If days are being used, an adjustment can be made up or down with the arrows
b. A number can also be deleted and then another number typed in the cell
2. MS Project will automatically determine the duration for each summary task as you
adjust subtask durations
3. Assign durations to your project using Exhibit 8.23 as a guide
STEP 5: IDENTIFY THE CRITICAL PATH In most graphical task views, MS Project
can mark Gantt bars of critical path tasks and network diagram task nodes in red.
Chapter 8 Scheduling Projects 273
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274 Part 3 Planning Projects
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Unfortunately, this is not the default behavior. To enable this visual cue, do the
following:
1. Click the Task Tab>>Format Tab>>Bar Styles Group>>check Critical Tasks
2. You should now see all your critical tasks shown in red (as in Exhibit 8.23)
STEP 6: UNDERSTAND THE NETWORK DIAGRAM VIEW The Network Diagram
view shows all tasks, summary tasks, and milestones as shown in Exhibit 8.24. The network
diagram can be used to verify the logical flow of the project, find tasks with no predecessor
or successor, spot opportunities to complete tasks in parallel or overlap, and see the critical
path across the project. Again, the Suburban Parks Home project is a straightforward exam-
ple, so the network diagram is not as useful as it could be in more complex projects.
Although they can be printed, network diagrams in MS Project are best viewed on the
computer as they can become quite large. Printing the entire diagram usefully requires
piecing multiple sheets of paper or a large-format printer. Network diagrams in MS Proj-
ect can be unwieldy and difficult to work with, but there are a few ways to make them
slightly more user-friendly:
1. Click the View Tab>>Task Views Group>>Network Diagram
a. The network diagram appears
b. Logical links between tasks can be seen as link lines in blue (noncritical path) and
red (critical path)
2. Zoom the view out using the zoom slider at the bottom right of the screen (or Ctrl-Scroll)
3. Click the Format Tab>>uncheck Summary Tasks
4. Click the Format Tab>>Format Group>>Layout>>uncheck “Show page breaks” and
check “Hide all fields except ID” (tasks are denoted by Task ID)
5. Click OK
6. Zoom in to see the simplified network diagram as in Exhibit 8.25
PMP/CAPM Study Ideas
The scheduling portion of Project Management has been around for decades and is well
established. It is also easier to quantify than some of the other knowledge areas, so you
should expect to see several questions like the ones in the Exercises above. Be prepared
EXHIBIT 8.24
BANK PROJECT WITH STARTUP AND INITIATION DETAILS
Source: Microsoft product screen shots reprinted with permission from Microsoft Corporation.
Chapter 8 Scheduling Projects 275
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to make calculations based on a variety of information, including Start and Finish times,
activity durations, and logical dependencies. Make your decisions and calculations with
an eye toward maintaining the critical path above all else, since delays in the critical path
will put your entire project behind schedule.
EXHIBIT 8.25
BANK PROJECT WITH EXECUTING AND CLOSING ACTIVITIES
Source: Microsoft product screen shots reprinted with permission from Microsoft Corporation.
Summary
Project schedules are created by listing all of the activi-
ties that need to be performed. This information
should be derived from the work packages at the lowest
level of the work breakdown structure. Each work
package may require one or more activities to be com-
pleted to create the required deliverable. Each activity
needs to be defined in enough detail that it can be
assigned to one person who can accurately determine
how it will be accomplished and by whom, estimate
how long it will take and how much it will cost, and
then be held accountable to ensure it is accomplished.
Once all of the activities have been defined, they
need to be sequenced—that is, the team must deter-
mine which activities must go first (predecessors) and
which activities depend on others to be accomplished
before they can start (successors). Many people find
that determining these relationships is easiest with
Post-it Notes and a large work space.
A person on the planning team needs to estimate
how long each activity will take. This is greatly depen-
dent on who will do the work, which is discussed in the
next chapter. Care should be taken when creating the
estimates since some people tend to be optimistic and
many things can interfere with the ability to work on a
specific activity. Other people tend to pessimistically
pad their estimates to make sure they can finish early
and look good.
The three time-management processes described
above—activity definition, activity sequencing, and activ-
ity duration estimating—need to be accomplished even if
scheduling software will be used, since the scheduling
software is only as good as the logic behind it! The next
step is schedule development. Some teams use Post-it
Notes to develop this schedule manually by making two
logical passes through the network to determine both the
earliest and latest any activity can be started and ended.
However, this requires tedious calculations and is greatly
simplified by using software such as MS Project.
Schedule development is an iterative process. Once
an initial schedule is developed, it needs to be com-
pared to resource limits, imposed dates, and cash
flow. Often, a sponsor or customer wants the project
sooner than the original schedule suggests. In these
cases, many approaches may be considered to expedite
the schedule. These schedule adjustments will be con-
sidered in Chapters 9 and 10.
Key Terms Consistent with PMI Standards and Guides
activity, 246
plan schedule management, 246
sequence activities, 246
estimate activity durations, 246
develop schedule, 246
control schedule, 246
276 Part 3 Planning Projects
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critical path method (CPM), 247
precedence diagramming method (PDM), 248
sequence activities, 253
predecessor activity, 253
successor activity, 253
mandatory dependency, 253
discretionary dependency, 253
finish-to-start (FS), 254
lead, 254
lag, 254
finish-to-finish (FF), 255
start-to-start (SS), 255
start-to-finish (SF), 255
estimate activity durations, 255
duration, 255
velocity, 258
critical path, 259
forward pass, 259
early start date (ES), 259
early finish date (EF), 259
late start date (LS), 260
late finish date (LF), 260
backward pass, 261
total float, 262
free float, 262
Monte Carlo simulation, 266
Gantt chart, 268
Chapter Review Questions
1. When can the first draft of a project schedule be
constructed?
2. What is the difference between an activity and a
work package?
3. What is another name for activity on node
diagramming?
4. What purpose do project milestones serve?
5. Describe the relationship between a predecessor
activity and a successor activity.
6. Describe the four most common types of logical
dependency.
7. One potential problem that can occur with activity
duration estimating is having omissions. What are
three potential remedies for this problem?
8. What two methods can be used to determine the
critical path of a schedule?
9. If an activity on the critical path falls behind
schedule, what effect will this have on the entire
project?
10. If a painted room must dry for four hours before
work can continue, the result is a delay in the
successor activity. The wait for the paint to dry
is an example of a .
11. A professor cannot grade his students’ exams
until the students have completed taking the
test. What kind of relationship is this?
12. What is one advantage and one disadvantage of
Monte Carlo analysis for predicting a project
schedule?
13. How can a Gantt chart be helpful in project
planning?
14. A lead is a change in the logical relationship
that results in the of the successor
activity.
15. How do you calculate float? What is the differ-
ence between free float and total float?
Discussion Questions
1. Describe the five factors that may limit how fast a
project can be completed. Give an example of
each.
2. Think of one thing you have to do this week.
Describe how it does or does not meet all five
parts of the definition of an activity.
3. Discuss at least four potential problems in creat-
ing accurate duration estimates for activities and
two methods for dealing with each potential
problem.
4. Describe how a WBS and a schedule work
together.
5. You are the project manager assigned to build
and decorate a model home. What might be an
example of a lead you encounter when schedul-
ing work activities? A lag?
6. Describe the process used to calculate float.
Describe how you can tell if it is total float or
free float.
Chapter 8 Scheduling Projects 277
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Exercises
1. Label the box below to create a two-pass schedule
legend.
2. If the learning rate is 60 percent and the first
time the activity was performed took 200 min-
utes, the second time performing the activity
should take minutes, and the fourth
time should take minutes.
3. In the example below, label which activities are
predecessors and which activities are successors.
4. Create a logical network using the activities listed
below.
Planting a Flower Bed
1. Purchase flowers, potting soil, and tools.
2. Water flowers.
3. Prepare soil by weeding and adding fertilizer.
4. Plant flowers.
5. Dig hole.
5. Calculate early start, early finish, late start, late fin-
ish, and float for each of the activities in the net-
work below. The duration of each activity is given.
6. Identify the critical path for the network in
Exercise 5. How long should the project take?
7. Display the schedule from Exercise 5 on a Gantt
chart showing critical activities, noncritical activ-
ities, and float.
8. Given the information below, create the project
schedule network. Then, using the two-pass
method, calculate and show the early and late
starts and float for each activity and the critical
path. Show the schedule on a Gantt chart show-
ing critical and noncritical activities and float.
ACTIVITY DAYS
IMMEDIATE
PREDECESSOR
A 5
B 2 A
C 4 A
D 7 A
E 3 B
F 6 B, C
G 8 D, E, F
9. Given the information below, create the project
schedule network. Then, using the enumeration
method, calculate and show all of the paths
through the network. Show how long each path
will take. Identify the critical path. Show the
schedule on a Gantt chart showing critical and
noncritical activities and float.
ACTIVITY DAYS
IMMEDIATE
PREDECESSOR
A 7 B
B 2 –
C 3 A
D 5 A
E 7 B
F 3 C
G 4 D
H 6 E, F
I 5 G, H
278 Part 3 Planning Projects
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10. Using the data below, schedule the problem in
MS Project. Display and print the schedule in a
Gantt chart showing the critical path and the
predecessors.
WBS ACTIVITY
IMMEDIATE
PREDECESSOR
DURATION
IN WEEKS
1 Operational
definition
1.1 Research
literature
3
1.2 Identify and
define terms
1.1 1
1.3 Obtain approval
of definition
1.2 2
2 Target Selection
2.1 Solicit partners
for pilot
2
2.2 Hold brain-
storming
meeting
2.1 2
2.3 Identify charac-
teristics of targets
2.2, 3.1 1
2.4 Obtain approval
of partners
2.3, 1.2, 3.4 1
3 Question set
3.1 Identify process
group members
2
3.2 Develop question
set
2.3 4
3.3 Prototype and
validate
question set
3.2 3
3.4 Add partners 3.1, 2.1 3
4 Pilot process
4.1 Schedule with
target audience
2.4 2
4.2 Conduct beta test 3.4, 2.4 2
4.3 Process feedback
from target
audience
4.2 2
4.4 Conduct pilot 4.3 2
4.5 Analyze results 4.4 2
11. Using the data below, schedule the problem in
MS Project. Display and print the schedule in a
Gantt chart showing the critical path and the
predecessors.
ACTIVITY
IMMEDIATE
PREDECESSOR
DURATION
IN DAYS
A Evaluate
freezers
2
B Chart
temperatures
6
C Review service
record
2
D Consult with
HVAC
engineer
A, B, C 3
E Develop
construction
plan
D 10
F Complete IC
assignment
E 2
G Complete
ROI analysis
E 5
H Conduct
regulatory
review
E 4
I Obtain
construction
approval
F, G, H 2
12. Using the information for Exercise 8.8, input the
data into MS Project. Display and print the
schedule in Gantt chart format as shown in
Exhibit 8.19.
13. Using the information for Exercise 8.9, input the
data into MS Project. Display and print the
schedule in Gantt chart format as shown in
Exhibit 8.19.
Chapter 8 Scheduling Projects 279
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PMBOK ® Guide Questions
1. The Midlands Company is eager to develop a
project schedule. They have already completed
the scope statement, work breakdown structure,
and schedule management plan. What is the next
thing they should do in order to start creating a
project schedule?
a. define activities
b. nothing; they are ready to proceed
c. sequence activities
d. estimate activity durations
2. Which of the following is not a characteristic of
an activity?
a. It is a distinct, scheduled portion of work
performed during a project.
b. It has clear starting and ending points.
c. It is defined using a verb/noun format.
d. It is one of the deliverables at the lowest level
of the WBS.
3. Another term for “activity on node,” the most
commonly used technique for constructing a
schedule model, is:
a. precedence diagramming method (PDM)
b. arrow diagramming method (ADM)
c. activity on arrow (AOA)
d. activity attribute method (AAM)
4. You are planning the schedule and come to an
activity you are unfamiliar with. Your SMEs give
you the following time estimates: most likely = 5
hours; optimistic = 2 hours; pessimistic = 14
hours. Using PERT, which activity duration do
you use in your plan?
a. 6 hours
b. 2 hours
c. 5 hours
d. 10 hours
5. A critical path activity has float dur-
ing the planning process.
a. the most
b. zero
c. negative
d. positive
6. The Bluestar Creative Agency is developing a
new marketing campaign for a client. They have
determined that the client’s marketing plan must
be completed before the graphic design can
begin. This situation describes what type of
dependency?
a. start-to-start (SS)
b. start-to-finish (SF)
c. finish-to-start (FS)
d. finish-to-finish (FF)
7. What is an advantage of using Monte Carlo anal-
ysis when estimating the duration for an activity?
a. It uses historical data from a similar activity or
project to calculate the duration.
b. It uses brainstorming techniques to reach a
team consensus for the duration.
c. It can provide a great deal of information
about how activity times may vary.
d. It is less costly and time consuming than other
estimating techniques.
8. A Gantt chart represents project schedule infor-
mation in an easy-to-read, graphical format.
Which of these is not a component of this type
of Gantt chart?
a. activities
b. budget data
c. start and end dates
d. durations
9. As a project manager, which of the following
situations would concern you the most?
a. a three-day delay on an activity with five days
total float
b. realizing that an activity on your critical path
only took two days instead of the four you
assigned it using the PERT method
c. a one-day delay to an activity with 0 total float
d. a two-day delay to a noncritical path activity
with two predecessor activities
10. How do you calculate Late Start, using the two-
pass method?
a. Late Finish – Duration
b. Duration – Early Start
c. Early Finish – Early Start
d. Late Finish – Early Finish
280 Part 3 Planning Projects
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I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Refer to the project charter from Chapter 3 and the WBS in
Chapter 7. The initial scope as identified in the project charter
is mentioned below:
Building a single-family, partially custom-designed home
as required by Mrs. and Mr. John Thomas on Strath Dr.,
Alpharetta, Georgia. The single-family home will have the fol-
lowing features:
3,200 square-feet home with 4 bedrooms and 2.5
bathrooms
Flooring hard wood in the first floor, tiles in the kitchen
and bathrooms, carpet in bedrooms
Granite kitchen countertops, GE appliances in the kitchen
3-car garage and external landscaping
Ceiling 10 in first floor and vaulted 9 ceilings in bedrooms
In the previous chapter (Chapter 7), you were asked to
develop a WBS. If you have not already done so, Suburban
Homes is requesting that you complete the WBS to several
levels such that the lowest level represents work packages
and activities. Also, you need to make sure that no work
components are missing to deliver the project outcome: a
single-family home. You are asked to exclude the project
management part of it and instead focus on the what aspect
of the project and not on the how aspect of the WBS. Once
the WBS is completely developed, please perform the fol-
lowing tasks.
Tasks to Complete
Expand the WBS (Chapter 7) so that work packages or
activities are defined at the lowest level.
Develop a project schedule at the lowest level of WBS
work elements after defining logical relations.
Estimate durations of each element in the network.
Compute forward pass and backward pass to determine
project duration.
Determine critical path for the project.
CASA DE PAZ DEVELOPMENT PROJECT
This is an example of the five features and the several stories
that comprise each feature as developed by the Promotion
and Community Relations Working Group. In their next meet-
ing, they created a more detailed list of tasks that need to be
accomplished and determined the first few they would
accomplish (selected stories from their backlog to accom-
plish during their first iteration).
Ti
m
ot
hy
Kl
op
pe
nb
or
g
Chapter 8 Scheduling Projects 281
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Website Location/Building
Partnerships
Sponsors
Communication
Materials
Joint
Ventures
Key Contact
SM
Update site
Zoning/Building Permits
Insurance
St. Bernard Church
Bellarmine Chapel
St. Leo’s Church
St. Carlos Church
St. Susana Church
Our Savior (PJ)
LOGO March Visit to
Chicago Casa de
Paz
Expand Donation
Options
Example: Room
Sponsorship
Remodeling (Security and Safety)
Update Bathrooms
Basement Laundry
Painting
Carpet on stairs
Locks (doors and windows)
Security Cameras
Corporations(Duke
Energy, GE, PG, etc.)
Sign Su Casa
YWCA
WHW
Santa Maria
Immigrant
Women
Phoenix group
Post Progress
Updates (Pictures)
Construction Crews
Professionals
Habitat for Humanity
Health and Education
Providers
Brochures University interns
Calendar
Current events
Donation of construction
materials
Furniture
Local Hispanic
Organizations
Social Media
Facebook
CFJ/students
Volunteer
Opportunities
Recruiting Volunteer Employment
opportunities
Press Release
(C. Telegraph, etc.)
Service Leaning
Date Action Steps
March 1–10 Visit St. Bernard Rectory
Visit Casa de Paz Chicago
SM to get website access from Ashley and start collecting information that needs posting
March 15–30 Contact Phoenix Group (Alejandra, Laura)
Support Gill for March 21 presentation
List of potential building contractors and volunteers (Alejandra)
List of Churches (Tim)
List of Education groups (Kathleen)
List of Health organizations (Laura
April 1–15 Zoning/Building permits
282 Part 3 Planning Projects
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Semester Project Instructions
Take the WBS you have already developed. Define all
of the activities that will be necessary to create each
deliverable in your WBS. Create a schedule for your
sample project. First, create the schedule by hand using
Post-it Notes and then put the information into MS
Project. Create a printed copy of the schedule on a
Gantt chart with no more than 40 lines per page. Do
not use more pages than necessary. Sponsors do not
like to flip pages. Be sure to include all of the summary
rows (including the first row for the project title) and
any key milestones. Make sure the critical path is easy
to see.
PROJECT M ANAGEM ENT IN ACTION
Sample Project Schedule for an Iterative/Incremental
Software Development Project
This is a typical schedule for an iterative/incremental
software development project as used by an African
consulting company. It can be easily modified
depending on the complexity of the project. The
schedule is shown below with notes that follow to
explain several sections.
Review and Signoff (Project Charter)
Depending on the organization and the project, the
process to review and signoff the project charter
may take longer than a few days. The project may
be critical in nature and may require a signoff by
senior stakeholders in the organization who may not
be easily available. This should be considered and
communicated by the project manager during the
project kickoff meeting. Should the project manager
choose to continue the project before signing off
the charter, he/she should identify and
communicate relevant risks of doing so to the
steering committee.
Onboarding Project Team
The period between signing off the project charter and
commencing the analysis of the business require-
ments should be used to work out a more detailed
plan and communicate the project objectives, mile-
stones, deliverables and timelines, as well as roles
and responsibilities, with the project team.
Chapter 8 Scheduling Projects 283
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References
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request for approval dates as this will attract a neg-
ative perception of the project management ability on
the project.
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284 Part 3 Planning Projects
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Journal 31 (1) (March 2000): 24–31.
Webster, Francis W., Jr., “They Wrote the Book: The
Early Literature of Modern Project Management,”
PM Network 13 (8) (August 1999): 59–62.
Endnotes
1. Practice Standard for Scheduling 2nd ed.:122.
2. Adapted from Gregory T. Haugan, Project Plan-
ning and Scheduling (Vienna, VA: Management
Concepts, Inc., 2002): 52.
3. Practice Standard for Project Estimating: 71
4. Practice Standard for Project Estimating: 70.
5. Practice Standard for Scheduling: 117.
6. Ibid.
7. Practice Standard for Scheduling: 124.
8. Practice Standard for Scheduling: 124.
9. Practice Standard for Scheduling: 133.
10. Practice Standard for Scheduling: 120
11. Practice Standard for Scheduling: 121.
12. Practice Standard for Scheduling: 121.
13. Ibid.
14. Practice Standard for Scheduling: 120.
15. Practice Standard for Scheduling: 133.
16. Practice Standard for Project Estimating: 71.
17. Practice Standard for Project Estimating: 14.
18. https://www.versionone.com/agile-101/agile-
management-practices/agile-scrum-velocity/.
19. Practice Standard for Scheduling: 117.
20. Practice Standard for Scheduling: 120.
21. Practice Standard for Scheduling: 131.
22. Ibid.
23. Practice Standard for Scheduling: 133.
24. Ibid.
25. Practice Standard for Scheduling: 127.
26. Practice Standard for Scheduling: 148.
27. Practice Standard for Scheduling: 133.
28. David T. Hulett, “Project Schedule Risk Assess-
ment,” Project Management Journal 26 (1)
(March 1995): 21–31; and David T. Hulett, “Proj-
ect Schedule Risk Analysis: Monte Carlo Simula-
tion or PERT?” PM Network 14 (2) (February
2000): 43–47.
29. http://www.palisade.com/risk/monte_carlo_si-
mulation.asp.
Chapter 8 Scheduling Projects 285
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C H A P T E R 9
Resourcing Projects
How does a more than fifty-five-year-old prepress company transform its busi-
ness from that of a manufacturer to a service provider? Schawk, Inc. was
founded in 1953 in the basement of a Chicago home by entrepreneur Clarence
W. Schawk. The product being manufactured was printing plates. More than
fifty years and fifty acquisitions later, Schawk, with offices all over the world, is
recognized as a global leader in brand point management.
How did we get here? Schawk capitalized on its knowledge and skills in
streamlining processes and managing color. Today, one of the key challenges
for product manufacturers is bringing new and/or modified products to market
quickly, accurately, and consistently. This is especially challenging in high-
growth, emerging markets where additional challenges, such as counterfeiting
and trademark infringement, cost manufacturers 10 to 15 percent of their reve-
nue. Being agile enough to respond to evolving consumer demand while demand
is high can be key to achieving category leadership and maximizing sales. Being
first to market can confer long-lasting benefits to the brands seen as the
original. Ultimately, bringing products to market that help brands win at the
shelf where the consumers vote with their wallets delivers measurable, long-
lasting benefits to brand owners.
Many of the world s most respected organizations struggle with managing
projects globally. While their products and marketing strategies may be innova-
tive, their go-to-market processes are often linear, time-consuming, and very in-
efficient. Their progress toward achieving strategic business goals through the
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Show resource
assignments on RACI
chart, Gantt chart,
and resource
histogram.
Develop an effective
project schedule,
considering resource
constraints.
Describe methods of
resolving resource
overloads.
BEHAVIORAL OBJECTIVES:
Create a Resources
Management Plan,
including role
descriptions.
Assign roles and
responsibilities based
on strengths.
TECHNICAL OBJECTIVES:
Compress a project
schedule using
crashing and fast
tracking, and
describe the advan-
tages and disadvan-
tages of both.
Compare various
alternative scheduling
methods.
Using MS Project,
assign resources,
pinpoint overloads,
and describe methods
of dealing with them.
©
Ja
ku
b
Ji
rs
ák
/D
re
am
st
im
e.
co
m
286
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launch of new brands and products is thwarted by many factors, including silo-
ization and heterogeneous cultures, languages, government regulations, and
time zones.
Schawk has adapted by integrating our strategic, creative, and executional
capabilities, which are supported by BLUE, our primary brand management tech-
nology product. BLUE enables global companies to unite their stakeholders (inter-
nal and external), projects, and processes into a single, streamlined workflow
management system regardless of geographic boundaries. While workflows are
unique to each company, they often combine on-, near-, and off-site project
teams around the world.
Increasingly, companies outsource their non-core competencies such as inter-
nal design and production departments to Schawk, because that is a core compe-
tency of ours, and we can manage these functions more efficiently. This allows
the client s project manager to manage a single Schawk point of contact, allow-
ing him or her to spend more time focusing on higher-value strategic issues.
We identify and help remove process bottlenecks, offer online collaborative
project management tools, and provide knowledgeable human talent to deliver
what we call brand point management. Brand point management helps companies
create compelling and consistent brand experiences across brand touch points.
Patti A. Soldavini, director, Corporate Marketing, Schawk, Inc.
H ow do you decide who you need to work on your project? How do you know whenyou need each project team member? How do you secure the services of those peo-
ple? How do you make sure each worker has a steady amount of work to do, but not an
overwhelming amount at any time? How do you make sure that each project team mem-
ber is challenged to perform at optimum level? How do you make sure your project
schedule is realistic, considering who will do the work?
These and many other related questions are answered when you correctly resource a
project. Resources include people (human resources), along with machines, space, and
other things you need to get the project done. In this chapter, we will primarily discuss
human resources.
The total means available to a company for increasing production, service, or profit
are considered resources. People, equipment, materials, tools, and licenses are typical
resources for any organization. For projects, a resource refers to anything that will cost
money to obtain and is necessary for the completion of work. Therefore, money is not a
resource, but it is considered a means to acquire resources because it is a common denom-
inator for all resources. If required resources are in abundance, managing resources will
not be an issue. However, that is not the case in most situations (Anantatmula, 2014).
6.4 Estimate
Activity
Durations
6.5 Develop
Schedule
9.3 Acquire
Resources
9.2 Estimate
Activity
Resources Resource Requirements
Duration
Estimates
Resource Histogram
Project Crashing
PMBOK® GUIDE
Topics:
Estimate activity
resources
Plan human resource
management
Develop schedule
CHAPTER OUTPUTS
Resource
requirements
Resource histogram
Project crashing
287
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AGILE People management may be the largest deviation from traditional project management
that an agile approach embodies. The ideas in this chapter are, in particular, very differ-
ent from the approach agile takes. In traditional project management (using a plan-
driven approach), one needs to reduce uncertainty and then primarily follow the plan.
In agile (a change-driven approach), uncertainty is embraced.
9-1 Abilities Needed When Resourcing Projects
Project managers need two types of abilities to resource a project effectively and effi-
ciently. The first type of skill is technical. Various techniques can be used to estimate
resource demands, assess competencies required, create a staffing management plan,
assign one or more persons for each activity, ensure that each team member’s workload
is at an optimum level (no less or excess workload), schedule a project with optimum
resources, and compress (speed up) a project schedule.
The second type of skill needed is behavioral. As you might guess, many behavioral
issues are involved in completing project resourcing tasks, such as:
Selecting the right people
Identifying exactly what each person needs to accomplish
Ensuring that each person has the capability needed (or develops that capability)
Dealing with difficult individual work schedules
Getting people to work overtime when there are schedule conflicts
Making honest and open estimates of the amount of work required
Assembling an effective team
Dealing with people from diverse backgrounds
Deciding where each person will work
Deciding how a geographically dispersed team can work effectively and virtually
9-1a The Science and Art of Resourcing Projects
The science and art of project resourcing are to perform the technical and behavioral
aspects together in a manner that reinforces and complements each aspect. A resource-
based schedule that is technically brilliant, but has little acceptance from those who must
do the work, has little value. Likewise, an effective project team, whose members have
impractical resource assignments, is still likely to struggle. If one needs to choose between
the two, a motivated team with poor assignments or very challenging assignments is more
likely to be successful. However, when both the technical and behavioral aspects are
addressed well, the project will have a much higher probability of achieving good results.
This chapter covers both technical and behavioral aspects of determining and secur-
ing effective human resources for a project. While each specific skill and behavioral con-
sideration is introduced separately, keep in mind that people are inclined to support
what they have helped to plan. Therefore, when possible, identify your key people as
soon as possible and get them engaged in the planning.
9-1b Considerations When Resourcing Projects
As we cover the specific skills and behavioral aspects of resourcing projects, the following
ideas should be kept in mind:
If some of the key people on a project do not have the skills to participate, managers
should help them develop those skills.
288 Part 3 Planning Projects
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AGILE
Projects always have trade-offs; with respect to resources, trade-offs—time versus
human resources versus other costs versus scope—should be considered. Which of
these takes precedence on the project you are planning?
Project managers need to understand resource limitations to prevent overpromising.
Often, after activities are tentatively scheduled, as discussed in the previous chapter, it
appears that the project can be completed by a specific date. However, the schedule
may become unrealistic if required resources are not available at key points in time.
People are often a large portion of total project cost. This is especially true when a
project requires special knowledge.
Of all the resources, managing people is the most challenging aspect of a project.
Resource availability, specifically human resources, is a major constraint for projects.
Many times, we need these resources for simultaneous execution of project activities to
reduce project duration and to utilize resources efficiently. Caution must be exercised to
avoid overloading or assigning multiple tasks at the same time.
9-1c Activity- versus Resource-Dominated Schedules
All project schedules are based in part on the individual activities (both the estimates of
how long each activity will take and their logical order, as discussed in Chapter 8) and in
part on the number of human resources who are available when needed (the topic of this
chapter). However, in some circumstances, the schedule is based more on the activities,
and in others, it is based more on the resource limits. Exhibit 9.1 lists situations where
schedules are based more on activities or more on resources. Some organizations use
critical chain (explained in Section 9.8) or agile in situations where the schedule is dom-
inated more by resources.
Agile techniques are often used when the client does not fully understand their needs at
the project start, when a rapid rate of scope change will probably occur on the project,
and/or when multiple short deliveries are possible. The client and project team can col-
laborate to reduce the impact of interdependency of activities. Agile project schedules are
limited to the amount of work the assigned resources can handle. The team of workers
assigned to an agile project should remain on the project for at least each iteration, and
preferably for the entire duration. An agile team is a cross-functional team with general
EXHIBIT 9.1
ACTIVITY VS. RESOURCE-DOMINATED SCHEDULE BASIS COMPARISON
MORE ON
ACTIVITY
MORE ON
RESOURCE
Time in project when scope is determined Early Late
Confidence in duration estimates Great Little
Rate of resource learning Small Extensive
Specialization of resources Commodity Unique
Availability of resources Easily available Tight availability
Firmness of activity predecessors (order) Absolute Optional
Concurrency of activities Little Significant
Chapter 9 Resourcing Projects 289
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expertise that puts them together on a long-term basis. They develop skills as needed to
produce the product needed by the business. The idea is that the work flows to the team
and not the other way around.
9-2 Estimate Resource Needs
A starting point in resourcing a project is to estimate how many resources of each type
and skill or knowledge level are needed to execute all the activities identified by the WBS.
The WBS identifies project activities, yet it includes no estimates of time, resources, or
project costs. However, it facilitates the process of integrating project plans for time,
resources, and scope.
Estimating activity resources is a process of assessing all types of resources—people,
materials, tools, and equipment (along with quantities)—required for each activity to
complete it as specified in project scope. This can be accomplished at either a detailed
or an overview level. When a project team determines a detailed list of activities that
must be performed, it makes sense to ask what type of person (by specific knowledge
or skill) is needed to perform each of these activities. However, when a project team
does not identify individual activities, they still need to determine how many resources
and what knowledge and skill each needs to complete the project. If the team uses roll-
ing wave planning, they probably develop detailed resource requirements for the early
part of the project for which they have identified specific activities, and less detailed
requirements for later project phases for which the activity-specific details are not
developed yet.
When estimating resource needs, the team also must consider support needs such as
information systems and other services. Specific constraints are placed on some types of
workers as to how they are hired, scheduled, and released. Further, co-located teams and
highly skilled resources often require more detailed resource planning. Many issues may
be involved in securing specific knowledge or skills. When estimating resource needs, it
is wise to include time to communicate between activities as well as time to perform activ-
ities. “Handoffs” occur when one person or group passes work on to another group.
9-3 Plan Resource Management
Plan Resource Management is the process of identifying resources and required skills
for the project, defining and assigning roles and responsibilities to all the resources,
developing a reporting hierarchy, and communicating expectations. Roles and responsi-
bilities for project participants can be documented in role descriptions. These often
include title, assigned duties, and limits of authority, as shown in Exhibit 9.2.
A staffing management plan is a proposal focused on acquiring, developing, and
retaining human resources for as long as you need them on the project. The staffing man-
agement plan addresses how to identify potential internal and/or external human resources
for the project; determine the availability of each; and decide how to handle timing issues
with regard to building up, developing, rewarding, and releasing the project team.
It is important to document roles and responsibilities, authority, responsibility, and the
required competency for each role. Then reporting relations can be established using a
project organization chart and subsequently, a staff management plan can be developed.
Once the roles and responsibilities of project team members are identified with all the
WBS activities, it is captured as a responsibility matrix. It serves as a good staff manage-
ment plan and helps the project manager to promote teamwork and productivity.
290 Part 3 Planning Projects
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9-3a Identify Potential Resources
The project manager should plan, estimate, and manage all tasks and their respective
resources independent of where the resources reside, administratively or physically. Iden-
tifying people who might work on a project differs significantly from one organization to
another. Often, many organizations practice a lean approach for staffing and have few
people from whom to choose. In a small organization, one particular person may often
be the logical choice for certain types of work on a project. However, in larger organiza-
tions and in situations where outside resources may be hired, identifying potential people
becomes a bigger issue. Whatever the situation, a project manager needs to understand
who is potentially available to work on her project. A project manager also keeps in
mind the estimated resources needed when identifying the people who could potentially
work on the project. This information can include factors such as:
Work functions (may include job titles and range of responsibilities)
Professional discipline (may include degrees and professional certifications)
Skill level (may include experience and performance ratings)
Physical location (may include willingness to relocate and travel)
Organizational/administrative unit (may include costs and contractual issues)1
Once the required information is identified for the most likely pool of people, a proj-
ect manager can compare the available people to the estimated resource needs to identify
both gaps in specific skills that are needed and gaps in the number of people available
versus those needed.
A resource breakdown structure (RBS) is defined as grouping all resources into
main categories in level one and populating each main category with resources based
on either function or skill level. Consistency in the division bases remains a crucial com-
ponent of the structure. RBS is a very useful tool for developing a staff management
plan. Like WBS, in-house resources of the project should be scrutinized and categorized
by the creation of the RBS. It classifies and catalogs the resources that are required to
meet project objectives. In many ways, the RBS claims advantages in improving commu-
nication, integration, planning, and estimating. Similar to the WBS, the RBS provides a
consistent framework for dividing the resources into small units for planning, estimating,
and managing. Exhibit 9.3 is an example of an RBS.
EXHIBIT 9.2
ROLE DESCRIPTION EXAMPLE
ROLE: Project Team Member
ASSIGNED DUTIES:
Achieves the project objective, working closely with the PM and project team
Applies Project Management concepts, methodology, and best practices
Works well with co-located teams, virtual teams, cross-functional teams
Delivers on commitments, completes tasks on time, communicates clearly
LIMITS OF AUTHORITY:
Takes action and contributes to decisions within the parameters of the project (cost, schedule,
scope, quality)
Accountable to and reports to the Project Manager
Source: Connie Plowman, PMP, COO (retired), PMI Eric Jenett Project Management Excellence Award Recipient
Chapter 9 Resourcing Projects 291
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If it is clear that more and/or different people are needed, then the project manager
needs to look elsewhere. That could mean other departments or divisions of the com-
pany, or it could mean looking outside the organization. A project manager, perhaps
with help from the sponsor, continues the identification of potential resources until an
adequate number and mix of potential people have been identified.
Key people should be identified as early as possible. The project core team is ideally
identified and assigned soon enough to participate in chartering the project and defining
the scope based on the client’s requirements. Beyond the core team, it is helpful to get
key subject matter experts (SMEs) on board early if possible, not only to help plan the
project, but also to help develop the project culture and get it off to a quick start. People
are more likely to be enthusiastic about performing work they helped to plan, and this
motivation often comes in handy during difficult stretches in a project.
EXHIBIT 9.3
RESOURCE BREAKDOWN STRUCTURE EXAMPLE
UNIT RATE
1.0 Personnel
1.1 Management
1.1.1 Project Manager hour $100.00
1.1.2 Project Engineer hour $ 80.00
1.2 Design
1.2.1 Civil Engineer hour $ 80.00
1.2.2 HVAC Engineer hour $ 80.00
1.3 Construction
1.3.1 Foreman hour $ 70.00
1.3.2 Draftsman hour $ 50.00
1.3.2 Electrician hour $ 60.00
1.3.3 Carpenter hour $ 40.00
1.3.4 Mason hour $ 35.00
2.0 Materials
2.1 Civil/Architectural
2.1.1 Lumber each $ 4.00
2.1.2 Paint gallon $ 20.00
2.1.3 Drywall (0.5 4 8 ) each $ 8.50
2.2 Electrical
2.2.1 Wire foot $ 0.75
2.2.2 Switches each $ 4.75
2.2.3 Lighting fixtures each $ 55.00
292 Part 3 Planning Projects
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When possible, create options for people—try not to assign people who are unwilling
participants. Experienced project managers understand that the better they take care of
people who work with them on one project, the easier it is to recruit capable and enthu-
siastic people for their next project.
Project managers must make opportunities equally available to qualified candidates.
First of all, project managers need to do this both from legal and ethical perspectives. Suc-
cessful project managers also find many advantages in having diverse teams. It is beneficial
to consider different perspectives in making decisions as it may help avoid major risks that
a single perspective would not have uncovered. Further, diverse opinions help to consider
more creative approaches. More stakeholders are effectively managed since a diverse group
of project team members sometimes relate better to various stakeholders.
9-3b Determine Resource Availability
Once the potential resources have been identified and compared to the estimated
resource needs, it is necessary to discover if the identified people are available and to
secure their commitment. This is necessary even for internal projects because multiple
projects often choose resources from the same resource pool. An RBS is very useful in
identifying resources that are available for the project. A schedule is preliminary until
needed resources are committed to the project.
In terms of resource availability, full- and part-time resources as well as internal and
external resources may be available. If the new project is of higher priority than an exist-
ing project, resources that were already committed may be freed up. Regarding ability to
commit at a very detailed level, some people have individual calendars with specific vaca-
tion or other unavailable times. Exhibit 9.4 shows how a consulting company determines
resource availability.
G
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Chapter 9 Resourcing Projects 293
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9-3c Decide Timing Issues When Resourcing Projects
Projects, because of their temporary nature and unique outputs, have timing issues
unlike those of ongoing operations. Early in the project, one timing issue is when to
bring people on board. Bringing them on before they are needed can be costly. How-
ever, if the project manager takes a chance with an important resource and that person
is not available, the schedule will probably be delayed. The general solution to the first
timing issue is to assign key players as quickly as possible. This helps establish good
project planning, effective project culture, and early project progress. Of course, a proj-
ect manager may need to negotiate not just for who will be assigned to his project, but
also when they will be assigned.
As members are brought on board, timing issues involve getting the team functioning
effectively and keeping them motivated and on schedule. Team development is covered
in Chapter 5.
Near the end of a project, timing issues include rewarding, recognizing, and releasing
project team members. How are they rewarded? Under what circumstances are they
released from the project, and what provision is made for them to be assigned to new
work and/or promoted? These issues are addressed in Chapter 15.
The staffing management plan deals with these three issues: how the project planners
identify potential people for the project, how they determine who is available to secure
their services, and how to deal with timing issues of building up and then releasing the
project workforce.
EXHIBIT 9.4
MANAGING RESOURCE AVAILABILITY
Under pressure to complete the next phase of a new product being developed, a product development team urgently needed tal-
ented manpower. The existing team consisted of mostly technical talent (engineers, designers, and technicians). The product
development team performed a review to find potential resources. Potential sources included:
Existing staff
Within their department
Within their company but outside their department
Staff misfit but talented
Staff burned out and in need of a fresh challenge
Temporary staff
External supplier and customer staff
To the team’s frustration, requests for additional staff were declined. To their surprise, upon further investigation, multiple oppor-
tunities developed:
Product development staff working on separate projects had some idle time. Staff members thought to be dedicated to only a
specific project were available for part-time support due to gaps in their schedule.
Product development staff disinterested or “burned out” with their current project were eager for a different challenge.
Underemployed staff members (at large) were found to be eager to step up to the plate. Existing projects did not keep them
fully challenged.
Some of the work required for completion of the next project phase was highly technical, requiring advanced knowledge,
computer hardware, and very costly analysis software. To the team’s delight, dedicated supplier staff was available to help
with development. Advanced computer hardware and software, otherwise unreachable by the core team, were available if
potential sales would justify the time investment. A balance was struck where the manufacturer and supplier effectively met
each other’s needs for mutual benefit. The product development team could overcome their technical hurdles, while the sup-
plier could grow the business through new sales.
Source: Jeff Flynn, ILSCO Corporation.
294 Part 3 Planning Projects
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AGILE Estimating resource needs is done quite differently on agile projects. The budget is set at the
people level and then the product is produced at the pace the team can maintain. This is a very
different approach compared to estimating head count and then delivering a budget for func-
tionality. So, again, we are determining how much investment goes into a particular product.
9-4 Project Team Composition Issues
Project teams are often composed of people from many sources—both within and out-
side a parent company. Several of these issues, such as who will be on the project and
where each will be physically located, are best considered when selecting team members.
These issues are introduced here, and the management of teams with these compositions
is discussed in Chapter 5.
9-4a Cross-Functional Teams
Projects typically require inputs from multiple disciplines and, therefore, require cross-
functional teams. When people representing different disciplines and skills work
together, misunderstandings often arise. An engineer may be predisposed to look at an
issue one way, while an accountant may look at the same issue a different way. This
could be due to different thinking styles and perspectives based on education, experience,
culture, and/or personality. A project manager may feel sometimes that she is a transla-
tor between various functions that are working on the project. It is useful for project
managers to develop the ability to understand and speak effectively with various techni-
cal experts. The project manager may not be the expert, but she must understand the
experts, communicate with them effectively, and have the experts trust her judgment.
9-4b Co-Located Teams
Another team issue involves where everyone physically performs work. Co-located teams are
when the members are assigned work spaces near each other or in proximity to each other,
such as being in the same building or in another building in the vicinity. Many minor deci-
sions are made every day. Often, a person might not feel that something is important
enough to create a document or make a phone call, but he or she might ask the person sit-
ting in the next desk or someone they pass in the hall. Sometimes a person does not want to
interrupt her thought process, but would casually ask a person at the next desk a question.
Co-location helps to create these opportunities for easy communications, relationship build-
ing, and productivity improvement. On some projects, members of a supplier company and/
or representatives from the customer may have a desk in the project workspace.
However, project managers and teams can often take advantage of many modern informa-
tion and communication technologies for communicating remotely and from anywhere on
the planet. These methods are used often, especially for larger decisions and global projects.
9-4c Virtual Teams
Due to advances in information and communication technologies, virtual teams are
common and represent the opposite approach from co-location. Virtual teams are the
norm for global projects and multinational organizations. However, co-located teams
sometimes also communicate virtually. Members of virtual teams do not meet face to
face very often. Sometimes a project requires the expertise of many people who are geo-
graphically dispersed, and it is impractical to have them all work in the same area. These
teams require many forms of communications. Many people report that if they have met
another person face to face even once, they feel they can relate better to that person.
Therefore, even for geographically dispersed teams, it is common to bring people
Chapter 9 Resourcing Projects 295
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AGILE
together for project chartering or project kick-off sessions. Of course, some project man-
agers travel frequently to allow for regularly scheduled face-to-face contact with impor-
tant team members, customers, and suppliers.
9-4d Outsourcing
Project managers often are faced with the prospect of not finding the necessary talent
within their organization. When that is the case, project managers often need to hire
expertise from other organizations. This is discussed in Chapter 13. The author remembers
one project where he worked for a European consulting firm that was hired to establish
project management discipline at the IT headquarters of a large U.S. accounting firm.
Although the accounting firm had fired its internal consultants and replaced them with
those of the European company, it decided to keep one of its own consultants from each
of its Boston and New York offices on the team for political reasons. This was an awkward
arrangement as most of the work was outsourced, but two internal consultants were
retained. This type of situation occurs often. Outsourcing can allow a project to bring in
talent from anywhere in the world, but it can also lead to some tense situations.
Team composition is done at a high level and might include some database experience, some
GUI experience, and so forth. Specific skills are not optimized for in this outsourcing model.
People are assigned to a long-standing team and they figure out how to get the work done.
9-5 Assign a Resource to Each Activity
Once you have identified the people needed for the project, you will be able to easily get
them if your project is a high priority for your organization or if you have already devel-
oped a reputation as a project manager with whom many people would like to work.
However, it is not a common experience for other projects, and a project manager is
A
nd
re
y_
Po
po
v/
Sh
ut
te
rs
to
ck
.c
om
296 Part 3 Planning Projects
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unlikely to secure all the necessary highly qualified resources he needs. He is expected to
negotiate to obtain the desired people.
Hopefully, the core team was assigned during the initiating stage and participated in char-
tering the project. Now is the time to ensure that the core team is complete and has no
undue overlaps. It is also the time to assign team members to each activity. On small pro-
jects, most of these assignments are assigned to core team members. On larger projects, other
individuals may be involved as subject matter experts. It is also helpful to specify exactly
what each person is responsible for and what authority and responsibility that person has.
9-5a Show Resource Responsibilities on RACI Chart
A responsibility assignment matrix (RAM) is “a matrix that shows all the work
packages and the resources assigned for various responsibilities regarding each work
package.” A RACI chart is a popular form of RAM that presents roles of key stake-
holders and their roles defined as responsible (R), accountable (A), consult (C), and
inform (I) for project activities in a matrix form. The first column on the RACI is usually
the WBS coding of work packages and activities. The second column includes the names
of the work packages and project activities that correspond to the WBS. The remaining
columns each represent a person who is involved with the project. A partial RACI chart
example is shown in Exhibit 9.5.
In Exhibit 9.5, many activities involve more than one person. For example, for the
activity “conduct student surveys,” Dan is responsible for completing the work, but the
project manager is the one person who is accountable for the results. Dan needs to con-
sult with team member Ben and the students and needs to inform everyone else. In a
RACI chart, only one person should have primary accountability for any activity. If
more than one person has accountability, it is too easy for them to blame each other
when something goes wrong.
RACI charts are extremely useful for assigning activities to project core team mem-
bers, subject matter experts, and the project manager. They are also useful in managing
project communications. They go further than the original communications plan in that
they identify every project activity and specify the exact involvement of each stakeholder.
9-5b Show Resource Assignments on Gantt Chart
Once it has been decided who will perform each activity, it is easy to show the assign-
ments on a project schedule. For example, the responsible person for each activity for a
portion of a space utilization project is listed right next to the activity in the Gantt chart
schedule in Exhibit 9.6. Showing the responsibilities directly on the schedule is a simple,
visual way to communicate responsibilities. For simplicity’s sake, we are saying either of
our two workers can do any activity and each is available full time for this project. In
some projects, some people will spend a smaller percentage of their time on a project
since they have other responsibilities, and because some activities may require only a
small fraction of their time during the activity. Generally, people are available for work
on a project less than 100 percent of their time for many reasons. Nevertheless, this
demonstrates how to keep track of the time a person spends working on a project. Direc-
tions for how to construct each of the exhibits regarding resources in MS Project are
given in Section 9.9.
9-5c Summarize Resource Responsibilities by Time Period
with Histogram
Once it is clear who is responsible for each activity, it is time to understand how the
multiple demands add up on each resource. Are any of the resources overloaded?
Chapter 9 Resourcing Projects 297
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To answer this question, the demands for each resource at each time period should be
added. Note that a resource can be an individual worker such as Mary, or a resource
could be a class of worker such as carpenter. Exhibit 9.7 shows the responsibilities for
our resource, who we call worker for the various activities.
EXHIBIT 9.5
PARTIAL RACI CHART
WBS
WORK
PACKAGES AND
ACTIVITIES
SPON-
SOR
(LYNDA)
PROJECT
MANAGER
(JOE)
TEAM
MEMBER
(ALI)
TEAM
MEMBER
(BEN)
TEAM
MEMBER
(DAN) STUDENTS PARENTS
0.0 High School
Recruitment Plan
1.0 Project
Management
1.1 Manage Key
Stake-holder
Expectations
A R C C C I I
1.2 Develop Operating
Methods
A C R C
1.3 Create Communi-
cations Plan
I A R R R
1.4 Control Progress I A C C R
2.0 Information
Assessment
2.1 Conduct Campus
Visit
C A R R R I I
2.2 Conduct Students
Surveys
I A I C R C I
2.3 Lead Group
Discussion
I A C C C C
3.0 Workshop/
Activities
3.1 Develop Ideas C A C C R C
3.2 Analyze Possible
Techniques
C A C C R C C
3.3 Compile
Activities/
programs
C A C C R C I
3.4 Respond to
Sponsor Feedback
R A I I I
3.5 Reassess Activity
Plan
C A C C C I I
3.6 Secure Sponsor
Approval
R A I I I I I
298 Part 3 Planning Projects
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AGILE
Note a couple of things regarding this resource histogram. First, we are using our two
workers for whichever activities are needed, so the 100 percent capacity of the resource
really means two people working full-time (80 hours per week). If we had only one per-
son working 10 hours per week on our project, the 100 percent line would then be
10 hours per week. Second, we show the amount of work within the resource’s capacity
in blue and the amount of overload in red. You can see that the worker is overloaded by
50 percent for the first seven workdays. Another thing to note is that we use the same
timescale for the resource histogram that we used on the Gantt chart, making it easy to
see which activities contribute to the overload.
The team members on an agile project decide among themselves who will do each work
activity. The ideal team member on an agile project is described as a generalized special-
ist, meaning that she can accomplish very specific things, but she can also be quite flexi-
ble when needed. Team members pick up the next-highest-priority story when they
finish what they have been working on. If they need help, they ask; if they need to
learn, they learn.
EXHIBIT 9.6
SCHEDULE WITH RESOURCES EXAMPLE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 9.7
RESPONSIBILITY HISTOGRAM EXAMPLE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 9 Resourcing Projects 299
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9-6 Dealing with Resource Overloads
Once it is obvious that a particular person has been overloaded at a given point in time,
it is helpful to pinpoint exactly which activities are involved. One easy way to do that is
to compare the resource histogram, such as the one in Exhibit 9.7, to the Gantt chart
schedule, shown in Exhibit 9.6. It is desirable and helpful to view both charts together
using the same timescale, as shown in Exhibit 9.8
Clearly, our workers were scheduled to perform three activities at the same time dur-
ing the first seven workdays and are overloaded at that time. Project scheduling software
helps to deal with resource overloads by pinpointing when the overloads occur for each
worker and by identifying which activities that worker is assigned to perform. How
should this be resolved? Software greatly assists in identifying and understanding the
problem, but it takes management decisions to solve the problem.
9-6a Methods of Resolving Resource Overloads
Once a project manager understands who is overloaded and what activities are involved,
she can employ many possible methods to rework the project schedule so the worker is
not too overloaded. Some of these methods are as follows:
Assign certain activities to other workers.
Sometimes an activity can be split into two activities, with the first part being
performed as scheduled and the last part delayed. This is often not an attractive
strategy because many activities take more total time when split. It also takes
people a little time to remember where they left off when they resume work.
However, it would be productive if you split an activity into two activities and
then execute them in parallel, but with different resources. We will discuss this
later in this chapter.
EXHIBIT 9.8
PARTIAL SCHEDULE AND RESOURCE HISTOGRAM EXAMPLE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
300 Part 3 Planning Projects
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Another method of resolving the overloads is to reorder the activities. This may include
questioning the logic that was used when creating the schedule. One means of reorder-
ing activities, fast tracking, is covered in Section 9.8 on compressing schedules.
Sometimes when people understand how badly overloaded a resource is, they realize
the need and decide to acquire or borrow additional resources.
If a resource is impossibly overloaded, perhaps the project scope needs to be reduced
or the schedule needs to be extended.
If there is a severe overload and one of the above strategies needs to be employed, it
usually makes sense to inform the sponsor. The project manager needs to under-
stand who is overloaded, when the overload occurs, and what activities cause the
overload. Good project managers will then be able to determine possible courses of
action. However, it may be up to the sponsor to make the final decision on how to
resolve the overload.
It is often helpful to resource-level the overloaded person’s schedule as described below.
Resource leveling is a project execution technique of adjusting the use of resources
based on resource availability and the amount of float on activities to accomplish work
as soon as possible, given the limited resource availability. The most common form of
resource leveling is when activities are delayed so the person does not need to perform
as many activities at the same time. Normally, noncritical activities are delayed by an
amount no more than their slack period in the hope that the overloads can be resolved
without extending the project schedule. However, if none of the alternative strategies dis-
cussed above is feasible and delaying the noncritical activities within their slack is not
sufficient, the project schedule will slip. Essentially, this delay reduces peak demand and
smoothens the period-to-period resource usage. An example follows, starting with
Exhibit 9.9.
This is the same example we have been using, but we now put blocks around the
amount of time needed for each activity. For example, Activity 1.1.1 (Identify Needs)
EXHIBIT 9.9
RESOURCE LEVELING EXAMPLE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 9 Resourcing Projects 301
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takes one worker four days and can start right away, so it is shown during the first four
days. The easiest way to understand the work demands and be able to adjust the sched-
ule within the limits of the available work time starts with creating a critical path sched-
ule, as shown in the top portion of Exhibit 9.9. It is helpful to clearly mark the critical
path and to “front load” the schedule—that is, to show every activity starting as soon as
the activities that precede it are complete. Then, a resource histogram can be built for
each person who may be overloaded. Start by placing the critical path activities on the
bottom, because those activities need to be completed as scheduled or the entire project
will be late. In our example, these critical path activities are 1.1.1, 1.1.2, 1.1.3, and 1.2.3.
Next, place all of the noncritical path activities above the critical path activities at the
earliest time they can be scheduled. In our example, these are 1.2.1, 1.2.2, 1.3.1, 1.3.2,
1.4.4, and 1.4.2. For example, all of the other activities have some float and can be
delayed if needed. With the 100 percent line showing our workers’ maximum available
time, it is easy to see that they cannot complete everything as scheduled.
To visualize resource leveling, think about the game Tetris. In that game, one tries to
fit shapes into spaces. That is exactly what we are doing here. If you can play Tetris, you
can resource level. In our initial schedule, we have seven workdays of more work than
our workers can handle, as shown by the blocks around activities 1.1.1 and 1.4.2. Note
also that we are only working Monday through Friday, so weekends are shown as non-
work days. The question is, can we level the demand for our workers without extending
the project? In this example, you can see the critical activities on the bottom are still
scheduled as originally planned and Activities 1.2.1 and 1.2.2 are both still scheduled as
originally planned. All of the other activities have been delayed a bit without violating
their constraints. Each has been delayed by no more than the amount of float. The result
is that the project is still scheduled to be completed on time, but now instead of seven
workdays of overload, there are just two days. Resource leveling often reduces an over-
load, but it does not always eliminate it entirely.
EXHIBIT 9.10
PARTIALLY LEVELED RESOURCE SCHEDULE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
302 Part 3 Planning Projects
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AGILE
If the noncritical activities must be completed at the rate of effort shown in the origi-
nal schedule, some of them may need to be assigned to another worker. Resource level-
ing can be as much art as science. The combination of the critical path schedule and
resource histogram allows a project manager to understand who is overloaded, at what
time, and by what specific activities. Then, the project manager seeks to move some of
the noncritical activities within their slack to level the demand for that worker. If enough
leveling can be done, the project can proceed as scheduled. If not, some activities must
be accomplished by other means, the schedule will slip, or perhaps the scope will need to
be reduced.
Resource overloads are not a serious problem in agile since the team is cross-functional and
the team commits to get the work done in the iteration. They self-manage the conflicts.
9-7 Compress the Project Schedule
Once the schedule is prepared and loaded with resources, the project manager will know
the project duration. Then he can compare it with what the sponsor or customer wants.
If the expected time is too long, he will need to reduce the critical path to reduce the
total completion time (remember that because the critical path is the longest, it dictates
the total project duration). Sometimes, this adjustment must be done when project activ-
ities during the initial phase take longer to complete than planned. Also, when the scope
of the project is increased but the customer requests the project completion as originally
planned, the project manager needs to explore options for schedule compression.
9-7a Actions to Reduce the Critical Path
A variety of actions can be taken to reduce the critical path as follows:
Reduce the project scope and/or quality.
Overlap sequential activities using finish-to-finish (FF), start-to-start (SS), or start-
to-finish (SF) relationships.
Partially overlap sequential activities by using time leads.
Increase the number of work hours per day or workdays per week.
Schedule activities that are normally in sequence at the same time.
Shorten activities by assigning more resources.
Shorten activities that cost the least to speed up.
Shorten the activity with the least probability of increasing project risk.
The first item, reducing scope and/or quality, normally requires permission from the
sponsor and/or customer. Scope reductions are common. Sometimes, the original scope
includes features that are nice to have but are not essential, which people are willing to
give up when they understand the schedule impact. Quality reductions are far less com-
mon and are discussed in Chapter 12.
The next two items, time leads and alternative dependencies, are discussed in Chapter 8.
The last four items, on the other hand, describe two well-known techniques to compress
schedules, which are generally recognized categories or methods:
Fast Tracking
Crashing
Fast tracking is a method to expedite a project by executing activities at the same
time that ordinarily would be done one after the other. In a design-to-production
Chapter 9 Resourcing Projects 303
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project, one way to accomplish this is to overlap the design and production phases. In
other words, the design is not complete when construction starts, which is against the
conventional approach of completing the design and then moving on to the construction
phase. Research has shown that this can be an effective method of expediting.
Crashing is speeding up the critical path, often by adding additional resources or
employing existing resources for longer hours and/or more days per week. While this
may shorten a schedule, it does so at an additional cost, both in terms of the costs of
labor (in terms of overtime pay) and also in lost productivity or efficiency.
One simple way to understand the differences between crashing and fast tracking is to
determine what is given up in return for the faster schedule. Crashing almost always
costs more money to speed up the schedule. Fast tracking almost always increases the
risk to speed up the schedule. Both the approaches result in making the project more
difficult to manage since either more activities take place at the same time and/or more
activities have workers on overtime. Let us turn to the specifics of each.
9-7b Crashing
When crashing a project schedule, certain activities are performed at a faster-
than-normal pace. This often requires overtime pay, but could also require extra charges
for expedited deliveries, more expensive machinery, or employing more skilled people
who can do the activity faster and better. When deciding which activities to speed up,
two questions must be asked: First, which activities are on the critical path? Since the
critical path determines how long the project takes, speeding up any activity not on the
critical path makes no difference to project duration. Second, which critical path activity
costs the least on a per-day basis to speed up? There is no sense in paying more than
necessary. We will use the project in Exhibit 9.11 to illustrate crashing.
Note that the enumeration method was used to identify each path and its duration.
Path ABEG at 25 days is the critical path. This example is in days, but it works equally
well with weeks or any other unit of time. Also note that three small tables of informa-
tion are included in Exhibit 9.10 to help us keep track of times and costs as we make the
crashing decisions. The first table is the list of the paths with duration. Remember, we
only want to crash activities on the critical path. Every time we reduce the length of an
activity, we record the impact on the affected path(s). As you speed up activities on the
critical path, you may find yourself left with a new critical path (or paths), which is now
the longest in terms of duration.
The second information table lists each activity along with the normal time and cost
(the expected time and cost if this activity is not crashed), the crash cost and time (the
fastest the activity could be accomplished and the total cost incurred if it is crashed), and
the crash cost per unit of time (in this example, per day). The activities that are on the
critical path are identified by a triangle symbol. Two activities, A and C, have the same
crash time as normal time. This means they cannot be crashed and are crossed out. We
need the information in this table to identify which critical path activities cost the least
to speed up.
We use the third small table to keep track of how long the project is, which activity
(ies) we choose to speed up, and how much it costs. Using the normal time for all activ-
ities, the project is expected to take 25 days. We crash activities one day at a time. Note
that path ADFG requires 24 days—only one day less than the critical path.
Activities A, B, E, and G are on the critical path. Activity A cannot be crashed. Some
activities are impractical to speed up, even for extra cost. Activity B at $50 is the least
expensive of the choices, so that is the one to crash first. Note that activity F only
304 Part 3 Planning Projects
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costs $25 to speed up, but it is not on the critical path, so it is not chosen. Once we
speed up B by one day, the resulting information is placed into the tables, as shown in
Exhibit 9.12.
In the first table, path ABEG has been reduced to 24 days since B is now being
crashed. In the second table, activity B is now shown as seven days since it has been
crashed one day. In the third table, the duration is now 24 days, B is crashed, the incre-
mental cost is $50, and so is the cumulative cost because that is the only activity crashed
so far. Now there are two critical paths of 24 days each. The activities on the second
critical path, ADFG, are identified by a circular symbol. To further crash the project,
both paths need to be shortened. This could be accomplished by crashing one activity
on each critical path, such as B or E on the first path and D or F on the second path.
It could also be accomplished by crashing one activity that is on both paths, such as
activity G. The least expensive of these alternatives is B and F for a total cost of $75.
The results of this are shown in Exhibit 9.13.
After two rounds, both critical paths are 23 days. Note that path ACFG is also
reduced, as F is on it and F was crashed. Since F cannot be crashed any further, a line
is drawn through it. The cumulative cost of crashing the project two days is $125.
EXHIBIT 9.11
CRASHING EXAMPLE SET UP
PROJECT
DURATION
25
ACTIVITY(IES)
CRASHED
–
INCREMENTAL
CRASH COST
0
CUMULATIVE
CRASH COST
0
PATH DURATION
ABEG 25
ACEG 19
ACFG 20
ADFG 24
Activity Normal Time Normal Cost Crash Time Crash Cost Crash Cost per Day
A 5 $300 5
B 8 250 5
C 2 100 2
D 6 300 3
E 3 150 2
F 4 275 3
G 9 700 8
$300
400
100
600
300
300
900
N/A
50
N/A
100
150
25
200
Chapter 9 Resourcing Projects 305
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Exhibit 9.14 shows the choices of continuing to crash activities until it is no longer
worthwhile. That is called an “all-crash” schedule. Note that even in that circumstance,
activity D is not reduced the full amount possible since reducing it further would not
make a difference in the length of the overall project.
Many questions can be answered with this information, such as the following:
How fast can the project be completed?
To crash the project one day, what activity would be crashed, and what would it
cost?
To crash the project two days, what activities would be crashed, and what would it
cost in total?
If there is a bonus of $125 per day for finishing early, what activities would be
crashed, and how fast would the project be completed?
If there is a bonus of $225 per day for finishing early, what activities would be
crashed, and how fast would the project be completed?
Crashing is called swarming in agile; actually, it comes from XP (Extreme
Programming—one type of agile). It happens within the iteration when the team
falls behind on meeting their commitment. They swarm on a problem to help the
team get back on track. In this way, the planning for problems is handled by the
team and done almost in real time.
EXHIBIT 9.12
CRASHING EXAMPLE AFTER ONE ROUND
PROJECT
DURATION
25
24
ACTIVITY(IES)
CRASHED
–
B
INCREMENTAL
CRASH COST
0
$50
CUMULATIVE
CRASH COST
0
$50
PATH DURATION
ABEG 25 24
ACEG 19
ACFG 20
ADFG 24
Activity Normal Time Normal Cost Crash Time Crash Cost Crash Cost per Day
A 5 $300 5
B 8 7 250 5
C 2 100 2
D 6 300 3
E 3 150 2
F 4 275 3
G 9 700 8
$300
400
100
600
300
300
900
N/A
50
N/A
100
150
25
200
•
•
•
•
AGILE
306 Part 3 Planning Projects
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9-7c Fast Tracking
Fast tracking occurs when activities that are normally performed in series (one after
the other) are performed at the same time. In Exhibit 9.15, fast tracking could poten-
tially be accomplished at several points. For example, while A is being done, B could
also be performed. This certainly can speed things up as more things can be done at
the same time. There is a risk, however. For example, if activity A is to design a part
and activity B is to order material for the part, the normal routine would be to wait
until the part is designed to be sure to order the correct materials. By performing
both at the same time, there is a risk that the design will call for different materials
than expected and the materials will need to be reordered. One strategy to gain ben-
efits of fast tracking while attempting to control risk is to use a combination of alter-
nate dependencies with time leads and lags to only partially overlap activities, as
described in Chapter 8. Partial activity overlaps entail less risk than full overlaps.
Another strategy is to overlap only a few activities so you can manage them closely.
One would ordinarily look for long-duration activities on the critical path for this
overlapping.
EXHIBIT 9.13
CRASHING EXAMPLE AFTER TWO ROUNDS
PROJECT
DURATION
25
24
23
ACTIVITY(IES)
CRASHED
INCREMENTAL
CRASH COST
CUMULATIVE
CRASH COST
PATH DURATION
ABEG 25 24 23
ACEG 19
ACFG 20 19
ADFG 24 23
Activity Normal Time Normal Cost Crash Time Crash Cost Crash Cost per Day
A 5 $300 5
B 8 7 6 250 5
C 2 100 2
D 6 300 3
E 3 150 2
F 4 275 3
G 9
3
700 8
$300
400
100
600
300
300
900
N/A
50
N/A
100
150
25
200
•
•
•
•
0
$50
125
$50
0
75 (50+25)
–
B
B & F
Chapter 9 Resourcing Projects 307
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EXHIBIT 9.14
CRASHING EXAMPLE IN ALL-CRASH MODE
PROJECT
DURATION
ACTIVITY(IES)
CRASHED
INCREMENTAL
CRASH COST
CUMULATIVE
CRASH COST
PATH DURATION
ABEG 25 24 23 22 21 20
ACEG 19 18 17
ACFG 20 1819
ADFG 24 23 22 21 20
Activity Normal Time Normal Cost Crash Time Crash Cost Crash Cost per Day
A 5 $300 5
B 8 7 6 5 250 5
C 2 100 2
D 6 5 4 300 3
E 3 150 2
F 4 275 3
G 9
2
3
8 700 8
$300
400
100
600
300
300
900
N/A
50
N/A
100
150
25
200
•
•
•
•
0
$50
125
275
475
725
0
$50
75 (50+25)
150 (50+100)
200
250 (100+150)
–
B
B & F
B & D
G
D & E
25
24
23
22
21
20
EXHIBIT 9.15
FAST TRACKING EXAMPLE
308 Part 3 Planning Projects
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9-8 Alternative Scheduling Methods
Several alternative approaches are used in certain industries or certain situations to cre-
ate project schedules, including critical chain, reverse phase, agile, auto/manual, and roll-
ing wave scheduling. These approaches are not mutually exclusive—a person can use
some of the logic from more than one of these methods on the same project.
9-8a Critical Chain Project Management (CCPM)
There are several problems with scheduling projects in many organizations that tradi-
tional critical path scheduling, even with resource leveling, does not always address satis-
factorily. Some of these problems are as follows:
Many people make conservative duration estimates. Often, people are punished for
completing work late, so they give themselves plenty of time in their estimates.
Durations of some activities vary greatly. The part of this variation that is due to specific
possible events taking place can be managed by risk management techniques, as dis-
cussed in Chapter 11. The other part of the variation, known as common cause or ran-
dom variation, sometimes is just difficult to accurately estimate.
Many project team members tend to use all the time available to them. Instead of
finishing early and getting the work to the next person, they keep fine-tuning their
work and turn it in on time. It is partly due to a belief that if you complete the work
early, it may be perceived as poor quality.
To keep multiple projects moving, many workers are asked to multitask. Up to a
point, multitasking is helpful in keeping multiple projects moving and keeping the
workers stimulated. However, many people are asked to multitask far beyond that
point; by not focusing on a limited number of things, they sometimes cannot give
adequate attention to any.
People in the project team delay the start of an activity (student syndrome), although
there is no justifiable reason to postpone the activity.
One approach to address problems such as these is called critical chain project manage-
ment (CCPM). CCPM is also sometimes known as the critical chain method. The critical
chain method is an alternate scheduling technique that modifies project schedule by tak-
ing resource constraints into account. It makes use of principles of theory of constraints.
This method allows the project team to place buffers on any project schedule path to man-
age constraints associated with limited resources and project uncertainties. Simply put,
rather than calculate the critical path based upon predecessor–successor relationships
alone, it also incorporates calculations on resource availability. Once the resource that is
most in demand is identified, efforts are made to keep that resource appropriately busy
on critical chain activities (those critical both because of the predecessor–successor rela-
tionships and because of resource shortages) but not overloaded. Other components of
the CCPM system include the following:
Avoiding multitasking
Estimating aggressively how quickly each activity can be completed
Putting a feeding buffer of time directly in front of critical chain activities to ensure
they will not be delayed
Putting the time normally reserved for the uncertainty in each individual activity at the
end of the project as a total project buffer that the project manager can use as needed
Finishing activities early if possible and passing the work on to the next worker
Chapter 9 Resourcing Projects 309
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AGILE
Proponents of critical chain say it is a major innovation that helps to overcome some
of project management’s most difficult scheduling and resourcing problems. Detractors
say it is another approach that may work in certain circumstances. It requires a great
deal of reeducation and communication on everyone’s part to make it successful, and
when resources are reallocated from the buffer to a task in trouble, more work may be
created.
9-8b Reverse Phase Schedules
Another alternative scheduling method that is sometimes used in the construction industry
is called a reverse phase schedule or Last Planner System. The reverse phase schedule is
developed by the people closest to the work (often either the hands-on workers or the fore-
persons who directly supervise work) by starting with the final project deliverables and
continually asking what needs to be completed prior to starting work on this deliverable.
As each activity is defined, its order is established, and the person proposing it verifies that
their company has manpower to complete the activity as shown in the tentative schedule.
Using this method, the team systematically thinks from the end of the project toward
the beginning. This is also a good practice to help ensure that all of the project deliverables
and the list of activities are both complete because by working backward, missing deliver-
ables and activities tend to be easier to identify. This approach is similar to developing a
deliverable WBS—looking at the project from the client’s or end user’s perspective.
9-8c Rolling Wave Planning
The idea behind rolling wave planning is to plan the first part of the project in as much
detail as needed and to plan later phases only at a high level. This allows the project
team to focus on the near term without ignoring the longer term. It means the project
team needs to plan progressively in more detail as information becomes available. Roll-
ing wave planning is illustrated near the end of Chapter 10 by showing a dummy activity
for a later project phase. The extreme of rolling wave planning is agile.
9-8d Agile Project Planning
The fundamental ideas behind agile project planning are to use a collaborative approach
with the project team and other stakeholders heavily involved in planning; to recognize
that while it may be difficult to scope the entire project at the outset, stakeholders do
want to have a ballpark idea of total cost, schedule, and functionality before approving a
project; and to understand that while uncontrolled change is bad, too strenuous change
control often means valid emergent stakeholder wishes are not met. These ideas permeate
the contemporary project management approach of this book. They have been introduced
in several earlier chapters and identified with margin icons and are explained in more
detail in the Project Management in Action example at the conclusion of this chapter.
9-8e Auto/Manual Scheduling
Microsoft Project now includes a feature called manual scheduling to enable users to
more closely emulate MS Excel. This may be comforting for users who are more familiar
with Excel than Project. When people are chartering a project and want to show the few
milestones without committing to dates, manual scheduling may be a good starting
point. Also, for projects with few predecessor–successor relationships, manual scheduling
310 Part 3 Planning Projects
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may sometimes be useful. However, for the majority of projects, the ability of MS Project
to plan and track activities based upon logical relationships is useful and suggests manual
scheduling is not enough.
9-9 Using MS Project for Resource Allocation
Up to this point in the Suburban Park Homes project tutorials, you have created a file
with a project in MS Project, created the WBS for the project, defined the predecessor–
successor relationships among the tasks, entered the expected duration for each task,
and shown the critical path. This covers the first two ways in which a project schedule
may be constrained—namely the logical order of tasks and the expected duration of each.
Now it’s time to consider a third way in which a project schedule can be constrained—the
number of resources available when needed. Using MS Project to understand resource lim-
itations includes five steps:
1. Defining resources
2. Setting up a resource calendar (as needed)
3. Assigning resources
4. Identifying overallocated resources
5. Dealing with overallocations
While MS Project is well suited to handle the first three, dealing with overallocations
requires involvement of the project manager.
9-9a Step 1: Defining Resources
For a resource to be available to a project, it must first be described in MS Project’s data-
base. A resource may be a single unit, such as a person, or a resource may be a pool of
like units, such as five crane trucks. Resources can include people, materials, supplies,
facilities, or office spaces—anything necessary for the completion of a task.
To define your project’s resources, do the following:
1. Click the View Tab>>Resource Views Group> click Resource Sheet
2. In the first blank row, enter the resource name in the Resource Name cell
3. In the Initials cell, enter the initials of the resource (if different from the auto-
generated)
4. Click the Max Units cell and enter the resource’s maximum availability
Max Units defines the availability of a resource for project work. Although the default
is 100 percent, people resources are rarely 100 percent available (even if they are working
full-time on a project), so availability will typically be something less than eight hours if
that is the normal working day. For example, a person assigned primarily to one project
may be available about six hours per day (or 75 percent of eight hours) for that project.
If so, 75 percent would be the Max Units for that resource. Note in Exhibit 9.16 that
Bruce is available up to 75 percent of his time for the project, while Jack is only available
25 percent of his time; none of the resources are available 100 percent of the time.
While MS Project offers many fields to define resources, Resource Name and Max
Units are the only fields that require definition (if costs are to be modeled, then the
Std. Rate, Ovt. Rate, Cost/Use, and Accrue At values must also be defined). Keep in
mind that whatever names you assign to resources will be seen throughout your project
data. Make sure resource names are relevant to your project team and other key stake-
holders who may interact with your MS Project data. Update your Suburban Park
Homes project to match Exhibit 9.16.
Chapter 9 Resourcing Projects 311
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9-9b Step 2: Set Up a Resource Calendar
Resource calendars are used to block out vacation days and other resource-specific non-
working days. Resource calendars inherit project-wide working day definitions from the
project calendar (set up in the Chapter 8 tutorial) when the resource is first defined.
Resource calendars are used by MS Project to determine when a resource assignment can
be scheduled. If a task has no resource assignment, then the project calendar is used to
determine task scheduling. To set nonworking days or hours for a specific resource:
1. Click the View Tab>>Resource Sheet
2. Double-click the row of the resource whose calendar needs revision to activate the
Resource Information dialog (see Exhibit 9.17)
3. On the General Tab, confirm the correct resource is chosen in “Resource Name” field
4. Click Change Working Time
5. Make revisions to resource working hours as needed as described in the Chapter 8 tutorial
Update your Suburban Park Homes project so Bruce’s vacation dates match exhibit 9.17.
9-9c Step 3: Assigning Resources
During resource assignment, a project manager allocates one or more resources to an
activity. MS Project then generates assignment information based on activity informa-
tion, resource information, software settings, and any overrides. Assigning a resource to
an activity with no existing resource assignments (using default settings) includes the fol-
lowing steps and is illustrated in Exhibit 9.18:
1. Click the Task Tab>>View Group>>Gantt Chart
2. Right-click in the Start column header >>Insert Column>> type Work>> press
Enter to add the Work column
3. Click the View Tab>>Split View Group>> click Details>> choose Task Form in
the drop-down list
4. Right-click the form in the lower pane and select Resources and Predecessors
5. In the upper pane, click the task row needing a resource assignment
6. Click the first blank row in the Resource Name column in the lower pane’s form
7. Choose the resource name from the drop-down list
8. Repeat Steps 6 and 7 to add additional resources to the assignment list
EXHIBIT 9.16
DEFINING RESOURCES
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
312 Part 3 Planning Projects
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9. Enter a Units value if the Max Units value is not correct for any assignment:
i. If the Max Units entered in the Resource Sheet is correct, you can leave this
blank and it will autofill
10. Click the OK button (no assignment is made until the OK button is clicked)
11. Note that Work is calculated and the activity duration value did not change
When creating resource assignments, keep the following in mind:
Duration is the number of time units between the activity start and end (the default
display value is in days spanning eight work hours).
Units represents the availability of a resource for work each day.
Work (hours assignment) is calculated by multiplying the Duration value (converted
to hours) by the Units value.
Task type determines which of three values (duration, units, and work) changes when
one of the other two is modified (choices are Fixed Units, Fixed Duration, and Fixed
Work).
(Note: For the purposes of the rest of this tutorial’s screenshots, all resources will be
assigned to multiple tasks in the Suburban Park Homes project. You can do the same,
but your screenshots may not exactly match the ones in the rest of the tutorial).
EXHIBIT 9.17
RESOURCE INFORMATION DIALOG BOX, CHANGE WORKING TIME TAB
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 9 Resourcing Projects 313
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BASIC ASSIGNMENT CALCULATION WITH FIXED UNITS SELECTED (DEFAULT
SETTINGS) When an assignment is made, MS Project uses the Duration and Units values
to calculate the number of hours a resource will work on the activity. In the Task Usage View
(View Tab>>Task Views>>Task Usage), the Work field value in an activity row (e.g., Electri-
cal) is the sum of the Work field values for resources assigned to that task. In the Resource
Usage view (View Tab>>Resource Views>>Resource Usage), the Work field value in a
resource row (e.g., Bruce) is the sum of the Work field values for tasks assigned to that
resource. Here are some basic calculations that MS Project makes with resource assignments:
Activity with no prior resource assignments
MS Project uses the Duration and Units values to calculate the assignment work
value and sums the assignment work values into the activity Work field.
The assignment of a 100 percent available resource (Units 100%) to a two-
day-duration activity (eight-hour days) results in 16 hours of resource work
across the two-day duration.
%resource available converted to decimal 8 hour workday
2 work days 1 number of resources
16 hours of the resource working on the task
An assignment of two 75 percent available resources (Units 75%) results in
24 hours of work assigned across the two-day duration.
75 %resource available converted to decimal 8 hour workday
2 work days 2 number of resources
24 hours of the resource working on the task
EXHIBIT 9.18
RESOURCE ASSIGNMENT
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
314 Part 3 Planning Projects
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Activity with one or more resources already assigned
When yet another resource(s) is added, MS Project holds the activity Duration
value constant and adjusts the activity Work value.
The addition of a 100 percent available resource (Units 100%) to a two-day
duration activity that already has a 100 percent available resource assigned
results in 32 hours of activity work across the two-day duration activity, with
each resource assigned 16 hours of assignment work.
Removal of resources works in reverse of the above
Removal of the resource from an activity with one resource assigned results in
zero task work.
Removal of one resource from an activity with two resources assigned results in
the activity duration held constant, work calculated for the remaining resource
assignment, and the activity work value the same as the assignment value.
MODIFYING AN ASSIGNMENT After a resource assignment is made, MS Project
maintains the relationships among the Duration, Units, and Work values. To see this
behavior in action:
1. Ensure the Task Form View is activated in the lower pane
2. Select a task that has resources assigned to it in the upper Gantt chart pane
3. In the Task Form View options, set the “Task type” drop-down to Fixed Units
If you change the Duration and click OK, MS Project changes the assignment
work and task work values.
If you change the Work and click OK, MS Project changes the duration and
assignment work values.
If you change Units and click OK, MS Project holds the assignment work value
constant and changes the task duration.
When modifying resource assignment, keep the following in mind:
If you don’t like MS Project adjusting the Duration value as you add and remove
resources assignments, an alternative is to switch the “Task type” setting in the
Task Form View to Fixed Work.
Note: If desired, you can make this a global change in the MS Project for all
new projects in two steps:
Click File Tab>>Options>> Schedule>> change “Default task type” to
Fixed Work
Change “Scheduling options for this project” to All New Projects
Since trying different resource assignments on an activity makes it easy to lose
the original duration value, you may find saving the original estimated duration
value helpful:
Click the Task Tab>>Gantt Chart>> right-click Duration column heading>>
Insert column>>enter Duration 1
Right-click the Duration 1 heading>>Field Settings>> enter Estimated Duration in
the Title box to name the column
You can now enter the duration of any task you want to play with and not lose
the original duration
9-9d Step 4: Finding Overallocated Resources
Resource overallocation usually occurs when a resource is assigned to two or more activi-
ties whose start and finish dates overlap, or if an assignment Units value is greater than the
resource’s Max Units value. The Gantt chart’s “Indicators” field (first column with “i”
icon) will display a red stick figure if an assigned resource is overallocated.
Chapter 9 Resourcing Projects 315
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MS Project can find and understand resource overallocation to help project managers
determine solutions; however, most solutions cannot be automatically implemented. For
instance, you can level resources to resolve most overallocations by delaying the start of all
but one of the conflicting activity assignments by clicking the Resource Tab>>Level Resource.
While powerful and quick, it may produce an unacceptably lengthened schedule. This auto-
mated tool is just one of many solution options that the project manager must evaluate.
RESOURCE ALLOCATION VIEW With slight modification, the Resource Allocation
View is very helpful to find and analyze resource overallocation. The Detail Gantt
marks the critical path (red) and graphically displays free slack following each activity
(how much the activity can be delayed before creating a new, longer critical path). In
addition, you also will be able to see the total assignment hours for each resource in
the upper pane. To do so, make the following changes:
1. Click the Task Tab>>View Group>>Gantt Chart drop-down menu >>click More
Views
2. On the More Views dialog>> scroll to Resource Allocation>> click Edit
3. On the View Definition dialog>> click Details Pane drop-down >> choose Detail
Gantt
4. Click the Show in menu checkbox
5. Click OK>> click Apply
6. In the upper pane, right-click the Work column header>>Insert Column
7. Enter Max Units>> click Enter
8. In the lower pane, right-click the Leveling Delay column header>>Insert Column
9. Enter Work>> click Enter
10. In the upper pane, click the empty box to the left of the Indicators icon to select all rows
11. Click the View Tab>>Data Group>>Outline>> click Hide Subtasks
The results of these steps can be seen in Exhibit 9.19.
The Resource Allocation View is a combination view with the Resource Usage view
in the upper pane and the Detail Gantt view in the lower pane. The timescale in the
upper pane is synchronized with the Gantt graphic in the lower pane, and adjusting the
zoom affects both panes. Once you have adjusted settings in the steps above, you can
quickly reach this view by clicking the View Tab>>Resource Views Group>>Resource
Usage>>Resource Allocation.
The Gantt bars in the lower pane represent the duration of the work hours displayed
in the upper pane. Selecting a resource in the upper pane’s table displays the assignments
of that resource in the lower pane. If the resource data in the upper pane’s table is red,
that resource is overallocated (you will also see a red stick figure in the Indicators col-
umn). In Exhibit 9.19, Bruce, Liam, and Oliver are all overallocated.
A straightforward method to analyze overallocated resources in this view is as follows:
1. Set the timescale to the start of the schedule.
2. Slowly scroll the timescale toward the end of the schedule.
3. Analyze each instance of cell values displayed in red for cause and severity.
9-9e Step 5: Dealing with Overallocations
Once overallocations are identified, the project manager has many options. In this tuto-
rial, MS Project is a tool only. It is helpful in identifying overallocations, but the project
manager is responsible for deciding what to do with them. Remember, each action will
have associated risks, and often one change can “break” something down the line, so be
sure to protect your critical path. Below are a few choices:
316 Part 3 Planning Projects
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Replace an overallocated resource with one that has time for the assignment.
Reduce the Units assignment, extending the activity duration (this could affect the
finish date of the project).
Lessen the scope of one or more activities.
Ignore the overload if the resource impact is temporary.
Try Resource Tab>>Level Group>>Level Resource or Level All and see what hap-
pens to your timeline (remember, the Undo command is Ctrl-Z).
9-9f Crashing a Critical Path Activity
If your overall project duration needs to be shortened, one way to accomplish it is to
“crash” an activity on the critical path. Crashing is simply adding resources to a task in
order to shorten the time it takes to complete it.
For this example, we will add three Plumbers to our Resource Sheet and then add
them to the Plumbing task to crash the activity and shorten the overall project length:
1. Click the View Tab>>Split View>> uncheck Details
2. Click the View Tab>>Resource Sheet
3. In the next available row, type “Plumbers” in the Resource Name column
4. In the Initials cell, enter the initials of the resource (if different from the auto-generated)
5. Click the Max Units cell and enter the resource’s maximum availability as 300% (This
means the project has three plumbers who can work 100% of the time on the project.)
6. Your Resource Sheet should now look like Exhibit 9.20
7. Click the View Tab>>Task Views>>Gantt Chart (Readjust timescale and column
views as needed; ensure you can see the Start and Finish columns.)
EXHIBIT 9.19
RESOURCE USAGE AND DETAILED GANTT VIEWS
Chapter 9 Resourcing Projects 317
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8. Double-click the Plumbing task>> Resources Tab
9. In the first row of the Resource Name column, drop-down menu and choose Plum-
bers>> click OK
10. This assigns one plumber to work on this task (100%)
11. You will notice work hours are added, but neither the critical path nor project’s
duration has changed
Now assume that the project manager decides the Plumbing task needs to be
completed more quickly, and the decision to crash that task is made.
12. Double-click on the Plumbing task >>Resources Tab again
13. Change the Units from 100% to 300% (This will assign three plumbers to the task.)
14. Click OK (See Exhibit 9.21.)
15. You will now see that the critical path Gantt bar has shortened, the duration of the
task has shortened, and the overall project finish date has shifted back (because
Plumbing was a critical path activity).
16. Good job! You just got the plumbing done sooner!
EXHIBIT 9.20
DEFINING RESOURCES
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 9.21
VIEW DEFINITION DIALOG BOX
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
318 Part 3 Planning Projects
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Remember that you only want to crash tasks on the critical path because they will be the
only tasks to shorten the overall project. Also keep in mind that crashing is simply one option
available to the project manager. Sometimes throwing more resources at a task isn’t always
the best option. For simplicity’s sake, we added more plumbers in this example. However,
sometimes adding more people resources can actually end up increasing the time it takes to
complete a task. Not every resource may be as qualified or up to speed as the next, and time-
consuming spin up or training might be required before they can be effective helpers on a
task. Also as noted earlier, rarely can a resource be available 100 percent of the time. When
an activity is crashed, the project manager still has to worry about overallocation of resources
and the consequences of removing resources from one task to put them on another.
PMP/CAPM Study Ideas
Keep in mind how resourcing a project ties in to the other project work you have com-
pleted so far. When resourcing your project, a good starting place is to take the WBS you
created and use it to identify resources needed (human and other). Make sure you are
very familiar with all steps of Plan Resource Management, as well as two important deli-
verables: the staffing management plan and resource breakdown structure (RBS).
As is the case with scheduling and budgeting, resourcing projects is a hands-on skill,
and you should anticipate that the majority of resource questions you may see will be
exercises, such as those given above. Since the critical path determines the project’s dura-
tion, you will need to know all things pertaining to it—especially how to calculate it and
how, if required, to reduce the critical path (fast tracking or crashing).
Summary
Resourcing projects goes hand in hand with scheduling
(Chapter 8) and budgeting (Chapter 10). To ensure that
adequate human and other resources are assigned to a
project, first the project manager needs to look at the
listed activities and estimate the resources needed to per-
form each. Potential resources need to be identified, and
their availability needs to be confirmed. The project
manager may need to negotiate to secure the services
of the needed people. Usually, some people assigned to
the project are ready to go, while others need training
and/or mentoring. Project teams sometimes need to rely
on co-located and/or outsourced team members.
Several tools are useful in identifying and scheduling
people. A human resource management plan with role
descriptions and a staffing management plan as compo-
nents helps the team plan. Resource assignments are
often posted directly on a Gantt chart schedule. RACI
charts are matrices that depict work activities on the verti-
cal scale (often in the form of a WBS) and the various
people who are involved on the horizontal scale. Work
responsibilities are shown by code in the cells. Once work-
ers have been assigned, responsibility histograms can be
developed for each worker to determine whether he or
she is overloaded at any point.
The combination of the critical path schedule with
resource assignments and the resource histogram allows
project planners to determine who is overloaded, at what
time, and by what activities. Resource leveling is the
method of using this information to reduce the peak
demands for workers by postponing some of the noncrit-
ical activities within the amount of available slack. Some-
times this solves the problem. If not, some work might be
assigned to a different person, the schedule might be
delayed, the project scope might be reduced, and/or
other methods might be employed. Often, the sponsor
will want to be involved in making these decisions.
Once the project schedule is established and resources
are assigned, it sometimes appears that the hoped-for
completion date is not attainable. In these cases, it is com-
mon to look for methods of accelerating (or compressing)
the project schedule. One frequently used method is
crashing, in which a decision is made to pay extra
money (often in the form of overtime pay) to speed up
certain activities on the critical path. Another frequently
used method is fast tracking, whereby activities that are
normally conducted in sequence are either overlapped or
performed in parallel. Fast tracking can lead to faster sche-
dules. However, the risk is increased because the activity
Chapter 9 Resourcing Projects 319
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that normally is a successor depends on the output of its
predecessor, and if that output is not as expected, the suc-
cessor activity may need to be reworked.
Several alternative methods of scheduling can be
used alone or combined with traditional scheduling
and resourcing. These methods include critical chain,
reverse phase, rolling wave, agile, and auto/manual
scheduling. Experienced project managers attempt to
use the best ideas from several of these alternative
approaches.
Project scheduling software such as Microsoft Project
is extremely useful when determining the resources for a
project. This software helps pinpoint exactly when each
worker is needed, for what activity, and where there are
overloads. Despite the power of these scheduling systems,
they do not make all of the decisions for a project. The
project manager needs to understand the output of the
software and be able to ask a number of what-if ques-
tions. Ultimately, the project manager needs to make the
decisions—often in conjunction with the sponsor.
Key Terms Consistent with PMI Standards and Guides
estimate activity resources, 290
plan resource management, 290
staffing management plan, 290
resource breakdown structure, 291
responsibility assignment matrix, 297
RACI chart, 297
resource leveling, 301
fast tracking, 303
crashing, 304
critical chain method, 309
reverse phase schedule, 310
rolling wave planning, 311
Chapter Review Questions
1. In addition to technical skills, what other skills
must a project manager have in order to success-
fully resource a project?
2. Why is it important to involve workers in the
planning phase of a project when possible?
3. What does a staffing management plan address?
4. What are the three “r” activities that take place
near the end of a project, regarding team mem-
bers and timing issues?
5. What does RAM stand for, and what is its purpose?
6. What does each column of a RACI chart depict?
7. Why is it necessary to have only one person
assigned primary accountability for an activity?
8. What can a project manager use to help deter-
mine if workers are overloaded?
9. Whom should the project manager consult when
performing resource leveling?
10. What will happen to a project’s schedule if an
activity on the critical path is delayed?
11. In regard to resource leveling, why are noncritical
path activities generally the first to be delayed?
12. What are two techniques used to compress a
project schedule?
13. When crashing a project, what two criteria are con-
sidered when deciding which activities to speed up?
14. In addition to predecessor–successor relation-
ships, what does critical chain project manage-
ment (CCPM) factor into its scheduling?
15. Who develops the schedule when using Reverse
Phase Scheduling?
Discussion Questions
1. Identify three examples of when a project man-
ager uses technical skills and three examples of
when she uses behavioral skills.
2. Compare a project you’ve worked on that was
limited mostly by activities with another project
you’ve worked on that was limited mostly by
resources. Which did you find more challenging?
Why?
3. List at least four factors a project manager should
consider when identifying individuals to work on
a project. Why is each important?
4. Describe a potential timing issue that can occur
early in a project and a potential timing issue that
can occur at the end of a project. How would you
address each of these issues in your project?
5. Describe two ways a project manager can resolve
resource overloads. Under what circumstances
should each be used?
6. Describe how to perform resource leveling.
7. Give an example of what is given up in a project
when it is crashed and when it is fast-tracked and
an appropriate time to use each.
320 Part 3 Planning Projects
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8. Cite problems with traditional project scheduling
techniques and why some organizations might
opt to use critical chain project management.
9. List three common problems that can occur
when traditional critical path scheduling is used.
How would you address each?
10. As a project manager, how can you ensure that
your activity and resource estimates are as accu-
rate as possible?
11. Give an example of a project on which you might
expect to see Reverse Phase Scheduling.
PMBOK ® Guide Questions
1. Crashing the following activity chains would save
time and cost extra money as follows:
AGJQ—2 days $300
CDIL—3 days $400
Which sequence of activities would you, as a
project manager, choose to crash?
a. AGJQ
b. CDIL
c. neither AGJQ nor CDIL
d. depends on which, if either, is on the critical path
2. A addresses when and how project
team members will be acquired and how long
they will be needed.
a. resource histogram
b. staffing management plan
c. project organization chart
d. responsibility matrix
3. The process “Estimate Activity Resources”
involves identification of the and
of resources required for each activ-
ity within a work package.
a. types; quantities
b. costs; quantities
c. names; locations
d. types; costs
4. Recognition and rewards .
a. should be used on rare occasions, for excep-
tional performance
b. are the responsibility of the functional manager
c. should be included in the project’s Staffing
Management Plan
d. are perquisites reserved for the project manager
and project sponsor
5. A “schedule compression technique in which
activities or phases normally done in sequence
are performed in parallel for at least a portion
of their duration” is referred to as .
a. critical path
b. critical chain
c. crashing
d. fast tracking
6. In RACI chart, the single individual who will
have to provide an explanation if something
goes wrong is indicated with a(n) .
a. R—Responsible
b. A—Accountable
c. C—Consult
d. I—Inform
7. The “process of identifying and documenting
project roles, responsibilities, required skills,
reporting relationships, and creating a staffing
management plan” is called .
a. Identify Stakeholders
b. Create Stakeholder Management Strategy
c. Plan Resource Management
d. Acquire Project Team
8. After creating a Staffing Management Plan, the proj-
ect manager and team might create a chart that pro-
vides a visual representation of project resource
needs by type of resource and time period (weeks,
months, etc.) This chart is called a(n) .
a. project Gantt chart
b. resource histogram
c. network diagram
d. organization chart
9. An iterative planning technique where “the work
to be accomplished in the near term is planned in
detail, while the work in the future is planned at a
higher level” is referred to as .
a. three-point estimating
b. rolling wave planning
c. parametric estimating
d. analogous estimating
10. When the demand for resources is greater than the
available supply, the project manager can use a
scheduling method that adjusts the start and finish
dates of activities in order to address resource limits
or constraints. This technique is called .
a. fast tracking
b. crashing
c. resource leveling
d. critical path method
Chapter 9 Resourcing Projects 321
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Exercises
1. A certain project has three activities on its critical path. Activity A’s normal completion time is five days. It
can be crashed to three days at a cost of $500. Activity B’s normal completion time is six days, and it can
be crashed to four days at a cost of $50. Activity C’s normal completion time is eight days. It can be
crashed to three days at a cost of $1,000. Which activity should the project manager crash and by how
many days? How much will it cost?
2. Using the data below, create the project schedule using normal times. Determine the order in which you
would crash the project one day, two days, and so on until it is in an all-crash mode. Identify how much
it would cost for each day you crash the schedule.
Activity Predecessor Normal Time Normal Cost Crash Time Crash Cost Crash Cost per Day
A – 12 200 9 350
B A 8 300 8 300
C A 9 250 7 450
D B 6 400 5 600
E B, C 5 150 4 225
F C 10 500 9 650
G D, E, F 8 400 6 900
3. Using the data below, create the project schedule using normal times. Determine the order in which you
would crash the project one day, two days, and so on until it is in an all-crash mode. Identify how much
it would cost for each day you crash the schedule.
Activity Predecessor Normal Time Normal Cost Crash Time Crash Cost Crash Cost per Day
A B 5 200 4 350
B 8 220 8 220
C B 6 250 4 650
D A 9 500 5 600
E A, C 10 150 9 500
F E 10 500 9 650
G D, F 8 400 6 900
4. Using the data below, create the project schedule in MS Project. Be sure to use both the predecessor rela-
tionships and the resource assignments. Use a split screen to show both the Gantt chart with critical path
and resource assignments with overloads.
WBS Activity Immediate Predecessor Duration in Weeks Resource
1 Operational definition
1.1 Research literature 3 Becky
1.2 Identify and define terms 1.1 1 Ann
322 Part 3 Planning Projects
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WBS Activity Immediate Predecessor Duration in Weeks Resource
1.3 Obtain approval of definition 1.2 2 Clive
2 Target Selection
2.1 Solicit partners for pilot 2 Ann
2.2 Hold brainstorming meeting 2.1 2 Becky
2.3 Identify characteristics of targets 2.2, 3.1 1 Ann
2.4 Obtain approval of partners 2.3, 1.2, 3.4 1 Clive
3 Question set
3.1 Identify process group members 2 Clive
3.2 Develop question set 2.3 4 Ann
3.3 Prototype and validate question set 3.2 3 Becky
3.4 Add partners 3.1, 2.1 3 Becky
4 Pilot process
4.1 Schedule with target audience 2.4 2 Becky
4.2 Conduct beta test 3.4, 2.4 2 Clive
4.3 Process feedback from target audience 4.2 2 Ann
4.4 Conduct pilot 4.3 2 Clive
4.5 Analyze results 4.4 2 Clive
5. Using the data below, create the project schedule in MS Project. Be sure to use both the predecessor rela-
tionships and the resource assignments. Use a split screen to show both the Gantt chart with critical path
and resource assignments with overloads.
Activity Immediate Predecessor Duration in Days Resource
A Evaluate freezers 2 Alcides
B Chart temperatures 6 Joan
C Review service record 2 Alcides
D Consult with HVAC engineer A, B, C 3 Alcides
E Develop construction plan D 10 Joan
F Complete IC assignment E 2 Alcides
G Complete ROI analysis E 5 Joan
H Conduct regulatory review E 4 Joan
I Obtain construction approval F, G, H 2 Alcides
Chapter 9 Resourcing Projects 323
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I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Refer to the project charter from Chapter 3, WBS in Chapter 7,
and the project schedule in Chapter 8. The initial scope as
identified in the project charter is mentioned below:
Building a single-family, partially custom-designed home as
required by Mrs. and Mr. John Thomas on Strath Dr., Alpharetta,
Georgia. The single-family home will have the following features:
3,200 square-feet home with 4 bedrooms and 2.5
bathrooms
Flooring hard wood in the first floor, tiles in the kitchen
and bathrooms, carpet in bedrooms
Granite kitchen countertops, GE appliances in the kitchen
3-car garage and external landscaping
Ceiling 10 in first floor and vaulted 9 ceilings in
bedrooms
After developing the WBS and the project schedule using
the CPM method, you were asked to identify resources for all
the activities identified in the schedule. To begin, you need to
identify all the available resources in-house and resources
required externally. One of the promising practices is to develop
a resource breakdown structure (RBS). Once the RBS is
completely developed, please perform the following tasks:
Tasks to Complete
Identify resources (people, materials, equipment, etc.)
required for each element in the schedule.
Analyze resource constraints (the same resource may be
required for two or more activities at the same time) based
on resource availability.
Develop a responsibility assignment matrix (RAM) and
RACI table.
Develop a resource histogram for the entire project.
Identify resource overloads and propose resolutions to
address them by resource leveling.
Estimate time required to complete each work element by
considering resource constraints.
If required, calculate the project schedule again. Compute
forward pass and backward pass to determine project
duration. Determine the critical path for the project.
If the new project duration exceeds the commitment dead-
line, develop schedule-compression strategies to com-
plete the project on time.
Develop a resource calendar.
As a part of this exercise, update the WBS and project
schedule, if required.
CASA DE PAZ DEVELOPMENT PROJECT
Based on the scope and the schedule, the team discussed
how this would be very challenging. Members of the team
are volunteers, and most work full time and have family com-
mitments. Given both this challenge and the partnerships
Casa de Paz has started with various organizations, what
suggestions do you have for reducing the risk of the project
being late because the workers who are volunteers are
overloaded? Note that because this project is being conducted
in an agile fashion, rather than look at details of exactly who is
scheduled to perform a particular activity at a particular time,
the planners use judgment to eyeball the amount of work
needed and then determine if more resources are needed, if
the project schedule can be delayed, or if less work can be
completed and the project still be finished adequately.
324 Part 3 Planning Projects
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Semester Project Instructions
For your example project, create the following:
1. A Human Resource Management plan, including
role descriptions and staffing management plan
2. RACI chart
3. Gantt chart with resource assignments
4. Histogram of demands on each key participant’s
time
5. Plan for resolving resource overloads
PROJECT M ANAGEM ENT IN ACTION
Managing Software Development with Agile Methods and Scrum
The Scrum process was described for use in agile
software development by Ken Schwaber and Mike
Beedle. Exhibit 9.22 illustrates the Scrum process.
In practice, many agile methods and variations are
utilized, but they all share a basis in iterative develop-
ment, extensive verbal communication, team interac-
tion, and the reduction of resource-intensive
intermediate products. Agile software development
methods attempt to minimize risk via short time boxes
called iterations or Sprints. Typically, the time boxes
are from one to a maximum of four weeks and usually
include numerous subtasks. Each Sprint is frequently
like a software development project in and of itself
and includes planning, requirements analysis, design,
coding, testing, documentation, and validation of
deliverables. Some iterations may generate new
products or capabilities, but most are integrated into
larger groups to be released as new products. Scal-
ability is one of the benefits of the approach, and
another is the opportunity to reevaluate priorities in an
incremental fashion. This technique, therefore, can be
used effectively for software maintenance and
enhancements, as well as new product development.
Scrum is facilitated by a scrum master, who orga-
nizes the project like any good project manager. This
person has the primary task of removing impediments
to the ability of the team to deliver the Sprint goal and
project objectives. The scrum master is not necessar-
ily the leader of the team in the traditional formal
sense (as the teams are self-organizing), but acts as a
productivity buffer between the team and any desta-
bilizing influences. This encourages the emergence of
EXHIBIT 9.22
SCRUM APPROACH TO NEW PRODUCT DEVELOPMENT PROJECTS
5–20 Day Cycle with
Daily SCRUM
Sessions
Incremental
Product
Prioritized
Backlog
Sprints
Integration
& QA
Testing
Source: Adapted from Ken Schwaber and Mike Beedle, Agile Software Development with SCRUM (Prentice Hall, Upper Saddle
River, NJ 2001).
Chapter 9 Resourcing Projects 325
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informal leadership and team cohesiveness. Scrum
includes the following elements, which define the
process:
A dynamic backlog of prioritized work to be
accomplished
The use of short iterations or Sprints
A brief daily meeting or Scrum session during
which progress is explained, upcoming work is
described, and impediments are identified and, if
possible, immediately resolved
A brief planning session during which the
prioritized backlog of items for the Sprint is
identified and further defined by the team
A brief retrospective during which all team members
reflect about the past Sprint and any design or other
influences on future Sprints or objectives
This approach keeps everyone on the team
engaged and focused. It works very well when every-
one is co-located to facilitate verbal communications,
but has been shown to work well in virtual teams or
geographically dispersed teams as well. The emphasis
on verbal communications has proven to be particu-
larly useful for international teams where written
communications alone may not be clearly understood.
The use of video conferencing and virtual develop-
ment environments is also beneficial in these
situations.
Agile software development teams include all
resources necessary to accomplish the tasks and fin-
ish the software product. This includes designers,
architects, analysts, testers, technical writers, man-
agers, and customers (the people who define the final
product).
The primary metric for progress in this environ-
ment is working software based on the scope as
identified in the Sprints. Schedules and other
resources are based on accomplishing the Sprints and
removing impediments. With their preference for ver-
bal communications, agile methods produce little
written documentation relative to other methods. That
is not to say that the team produces no documenta-
tion, as it is important to have requirements, design,
and other aspects of the software product documen-
ted to facilitate maintenance and support and in some
cases to meet industry regulatory compliance
requirements. This reduced emphasis on documenta-
tion has resulted in criticism of agile methods as
undisciplined or, as some have called it, cowboy
coding. As a rule, this does not seem to be the case
in practice because, if properly implemented, the
requirements are documented in the prioritized back-
log; the design is documented in the Sprints and
Scrum sessions; and the testing, user, and technical
documents complete the documentation set. It is
important to note that the use of a scribe during
Scrum sessions, planning, or retrospective sessions is
vital to capture what is transpiring, since the sessions
tend to be short and intense by nature.
Many companies have now embraced the agile
methods to reduce development time, foster innova-
tion, and reduce development risk. One example is a
Seattle-based company that has utilized Scrum to
shorten development cycle time and improve quality
for software deliveries to its clients. It uses Sprints to
group similar requirements and provide a two-week
window of work for its developers. Daily Scrum ses-
sions help it stay focused and deal immediately with
impediments. This works ideally, in that it keeps
task scope to a minimum for the developers, and
everyone on the team is aware of what is transpiring
throughout the development process. This has
shortened development time and led to more rapid
release of products and enhancements to the clients,
thus reducing development costs and improving
margins.
Another example is an Ohio company that utilizes
agile methods and Scrum for software development
for clients in the highly regulated pharmaceutical, bio-
tech, and medical device industries. A recent software
system developed to be used in manufacturing data
acquisition and control for products requiring com-
plete traceability, including raw materials and pro-
cesses, was designed and developed in five months to
beta delivery. The software will ultimately track and
control all of the company s production when fully
implemented. The system was put into a pilot
manufacturing line. It was working within thirty min-
utes of software installation and processed product
through the pilot production facility the same day
without a glitch. The system was delivered essentially
bug free. This was unheard of previously using tradi-
tional development methods and would have taken a
year or more to get to beta delivery, with many more
issues. The company accounts for this success due to
the use of the agile process, Scrum, and thorough
326 Part 3 Planning Projects
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References
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Improves Project Performance,” Project Management
Journal 30 (2) (June 1999): 39–51.
Piney, Crispin, “Critical Path or Critical Chain: Com-
bining the Best of Both,” PM Network 14 (12)
(December 2000): 51–55.
“PMI Code of Ethics and Professional Conduct,” PMI
Today (December 2006): 12–13.
Rad, Parviz, and Vittal Anantatmula, Project Planning
Techniques (Vienna, VA: Management Concepts,
Inc., 2005).
Trietsch, Dan, “Why a Critical Path by Any Other
Name Would Smell Less Sweet?” Project Management
Journal 36 (1) (March 2005): 27–36.
Tsou, Chi-Ming, “On the Project Management Sched-
uling Based on Agent Technology and Theory of
Constraint,” International Journal of Electronic
Business Management 10 (4) (2012): 286–295.
www.ambysoft.com/essays/agileProjectPlanning.html,
accessed May 22, 2013.
www.youtube.com/watch?v=IExA5fuWFgg, accessed
May 22, 2013.
http://jbep.blogspot.com/2010/01/rolling-wave-planning
-or-sliding.html, accessed August 3, 2010.
www.brighthub.com/office/project-management/articles
/8717.aspx, accessed August 3, 2010.
http://office.microsoft.com/en-us/project-help/fast-track
-tasks-to-shorten-your-project-schedule-HA010036399
.aspx, accessed August 3, 2010.
http://en.wikipedia.org/wiki/Critical_Chain_Project_
Management, accessed August 3, 2010.
Endnote
1. Adapted from Rad, Parviz, and Vittal Anantat-
mula, Project Planning Techniques (Vienna, VA:
Management Concepts, Inc., 2005): 68–72.
quality testing. The requirements in this regulated
environment were developed in a traditional manner;
however, once the requirements were approved by
the client management, the Scrum approach was
used, which represented a departure from the tradi-
tional waterfall approach. Each module of the system
was developed separately using the Scrum approach
by focusing on developing a few design elements at a
time rather than trying to focus on the entire system
design at once. In this way, the development team
could focus and accomplish a few things at a time and
leave the big picture design and architecture to the
scrum master and development management. Use of
this approach exceeded all expectations.
Source: Warren A. Opfer, CCP, PMP®.
Chapter 9 Resourcing Projects 327
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C H A P T E R 10
Budgeting Projects
I sold escalators and elevators for my first job out of business school. As part of
my training, before I was sent to the field, I would look over the estimates made
by the sales staff. This served to double-check their math so the company had
confidence in their estimates. It also served to teach me many of the little nuan-
ces that more experienced estimators used. I had my training manuals, lists of
standards, main methods of calculation, and so forth, but learning from others
experience instead of making all my own mistakes helped.
One of the last parts in my training was to spend eight weeks at the Denver
branch to get seasoned a little bit. Construction was booming in Denver during
the late 1970s. In fact, some days I needed to bid more than one job. The
first part of putting together a bid was to go the office where the requests for
proposals, plans, specifications, and the like were stored. Then, armed with that
information, I would put together an estimate. Finally, the actual bidding took
place usually over the phone. The problem was that creating a detailed esti-
mate would generally take at least half a day. If that was my only duty (it was
not), I would still have had a hard time when multiple jobs were let for bid on
the same day. Something had to give.
SB
7/
Sh
ut
te
rs
to
ck
.c
om
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Define project cost
terms and tell how
each is used in esti-
mating project cost.
Compare and contrast
analogous, paramet-
ric, and bottom-up
methods of estimating
cost.
Create a time-phased,
bottom-up budget for
a project.
TECHNICAL OBJECTIVES:
Show both summary
and bottom-up project
budget information
with cumulative costs
using MS Project.
BEHAVIORAL OBJECTIVES:
Describe issues in
project cost estimat-
ing and how to deal
with each.
328
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Every morning around 10 A.M., I met the construction superintendent for
coffee. We would discuss each bid that was due. What other job was it like?
How was it bigger or smaller than a recently completed job? What features did
it include more or less than a previous job? Did we make money on that job?
We used these questions to compare an upcoming job to other recently com-
pleted jobs. We would also ask, What do we think our competition will bid?
By the end of the conversation, we had determined our strategy for bidding the
job. If we won the bid, we would complete a detailed cost estimate to see if we
were close.
After my training, I was transferred to Kansas City. Kansas City had less con-
struction than Denver. I had enough time to perform detailed cost estimates
before I submitted bids. Therefore, we were more certain that if we got the bid,
we would have a good chance of making money.
I worked for the same company in both cities. However, we used two very
different methods of estimating cost. Both made sense where they were used.
In Denver, if we wanted to bid every job (and you cannot win the job if you do
not bid on it), we needed a fast method. In Kansas City, we had the time to
develop detailed cost estimates, and so we took the time. There are many meth-
ods of estimating project costs and each has its place.
Timothy J. Kloppenborg
10-1 Plan Cost Management
This chapter starts with estimating project costs. Once the overall cost is estimated, the
next step is to develop the budget by aggregating the costs and determining the project’s
cash flow needs. Project managers also need to establish a system to report and control
project costs. The final section of the chapter deals with how to use Microsoft Project to
aid in cost management activities.
Cost and schedule are closely related. Sometimes, the two move in the same direc-
tion. The schedule is maintained by the use of resources, and resources expend parts of
the budget. For example, when a schedule calls for materials to be delivered, or for
workers to perform, money must be available to pay for the materials or workers.
Sometimes, they move in opposite directions. For example, if a project needs to be
completed earlier than planned, more money probably will need to be found to pay for
overtime.
Plan cost management is the process to determine how to plan, estimate, and control
project costs. Cost planning entails developing a cost management plan for your project.
4.2 Develop Project Management Plan
7.4 Control
Costs
7.3 Determine
Budget Cost Baseline
PM Plan
Baselines
7.2 Estimate
Costs
7.1 Plan Cost
Management
PMBOK® GUIDE
Topics:
Plan Cost
Management
Estimate cost
Determine budget
Control cost
CHAPTER OUTPUT
Cost Baseline
(Aggregated project
budget)
329
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The cost management plan is “a continuous activity which requires reforecasting and
refinement of the cost estimates throughout the project.”1 The cost management plan
defines the cost baseline, modifies it whenever necessary, and uses it for monitoring
and controlling costs. On small projects, this can be as simple as ensuring accurate esti-
mates are made, securing the funding, and developing cost reporting procedures to
ensure that the money is spent correctly. On large projects, each of these processes can
be much more involved; in addition, developing and using accurate cash flow estimates
become critical. A project cost management plan includes descriptions, procedures, and
responsibilities for the following:
Costs included (such as internal and external, contingency, etc.)
Activity resource estimating
Cost estimating
Cost baseline
Budget determination
Cost control, including metrics, reporting, and change approvals
A project cost management plan needs to be consistent with the methods of the par-
ent organization. In many organizations, project managers are provided with specific
guidance on setting up their cost management plan. The plan provides guidelines to the
project manager and other stakeholders to serve several purposes:
First and most fundamentally, it shows how to develop and share relevant, accurate,
and timely information on cost that the project manager, sponsor, and other stake-
holders can use to make intelligent and ethical decisions.
It provides feedback, thereby showing how the project’s success is linked to the busi-
ness objectives for which it was undertaken.
It provides information at a detailed level for those who need details and at appro-
priate summary levels for those who need that.
It helps all project stakeholders focus appropriately on schedule and cost performance.2
10-2 Estimate Cost
Estimate cost is “the process of developing an approximation of monetary resources
needed to complete project activities.”3 Cost estimating is linked closely with scope,
schedule, and resource planning. To understand cost implications completely, a project
manager needs to understand what the work of the project includes, what schedule
demands exist, and what people and other resources can be used. When more of these
details are available, the cost estimates can be more precise.
The first principle in dealing with project costs is for the project manager to never
lie to himself. Many times, in dealing with project costs, the project manager will
need to negotiate with sponsors, customers, and other stakeholders. If he does not
understand what the project costs really are, he is just trading meaningless numbers.
That is neither an effective nor an ethical method of establishing and committing to sen-
sible budgets.
The second principle in dealing with project costs is for the project manager to never
lie to anyone else. Since sponsors, customers, and other stakeholders can often drive hard
bargains, it is sometimes tempting to shade the truth to secure necessary funding. This is
wrong on two counts: First, it is ethically wrong. Second, as a practical matter, a project
manager’s reputation goes a long way for good or for bad. People are more inclined to
work with project managers who are viewed as being honest and trustworthy.
330 Part 3 Planning Projects
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To estimate project costs accurately, the project manager must understand the various
types of costs, the timing and accuracy of cost estimates, the different methods that can
be employed to estimate costs, and a variety of cost-estimating issues.
10-2a Types of Cost
Costs can be better understood by considering various types of classifications such as
those shown in Exhibit 10.1.
FIXED VERSUS VARIABLE COSTS Costs can first be classified as either being fixed
or variable. Fixed costs are those that remain the same regardless of the size or volume
of work. For example, if you need to buy a computer for your project, the cost is the
same regardless of how much you use it. Variable costs are those that vary directly
with the volume of use. For example, if you were building a cement wall, the cost of
the cement would vary directly with the size of the wall. To understand the importance
of fixed versus variable costs, a project manager ideally structures costs and the impact of
changes on those costs. When a project manager understands how big a project is likely
to be, she will try to determine how to complete all of the project work at the lowest
possible cost. On many projects, there are choices of how to perform certain activities.
Some of these choices reflect a high-fixed-cost and low-variable-cost alternative such as
buying an expensive machine that can make parts with low variable costs versus a more
manual process of inexpensive machines but high labor costs. These choices require both
some fixed and some variable costs. Ideally, the cost curve for the expected project vol-
ume appears as shown in Exhibit 10.2. This reflects the lowest possible total cost at the
size the project is expected to be. Unfortunately, problems may occur if the volume of
the project work is substantially larger or smaller than first expected. If the volume
drops a little bit, the total costs may drop very little. If the volume expands a little, the
costs may go up significantly. Therefore, when considering fixed and variable cost
choices, it is important to understand the project scope.
DIRECT VERSUS INDIRECT COSTS A second classification divides project costs into
direct and indirect costs. Direct costs are those that only occur because of the project
and are often classified as either direct labor or other direct costs. For example, direct
EXHIBIT 10.1
COMPARISON OF COST TERMS
Fixed Variable
Direct Indirect
Recurring Nonrecurring
Regular Expedited
Internal External
Lease Purchase
Labor Material
Estimate Reserve
Source: Adapted from Kim LaScola Needy and Kimberly Sarnowski, “Keeping the Lid on Project Costs,” in David I.
Cleland, ed., Field Guide to Project Management, 2nd ed. (Hoboken, NJ: John Wiley & Sons, 2004): 145–147.
Chapter 10 Budgeting Projects 331
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labor includes workers who are hired specifically to work on the project and who will be
either assigned to a new project or released when the project is complete. Other direct
costs may include such items as materials, travel, consultants, subcontracts, purchased
parts, and computer time.
Indirect costs are those that are necessary to keep the organization running, but are
not associated with one specific project. The salaries of the company executives and the
cost of company buildings, utilities, insurance, and clerical assistance are examples. These
costs are allocated among all of the projects and other organizational and internal work
that benefit from these resources. The methods of allocating these costs have evolved in
recent years thanks to activity-based costing, as described in the cost estimating issues
section. Exhibit 10.3 shows both direct and indirect costs for a work package.
RECURRING VERSUS NONRECURRING COSTS The third cost comparison is recur-
ring versus nonrecurring costs. Recurring costs are those that repeat as the project work con-
tinues, such as the cost of writing code or laying bricks. Nonrecurring costs are those that
happen only once during a project, such as developing a design that, once approved, guides
the project team. Nonrecurring costs tend to occur more often during project planning and
closing, while recurring costs tend to occur more often during project execution.
REGULAR VERSUS EXPEDITED COSTS A fourth cost comparison is regular or expe-
dited. Regular costs are preferred and occur when progress can be made by normal work
hours and purchasing agreements. Expedited costs occur when the project must be con-
ducted faster than normal and overtime for workers and/or extra charges for rapid deliv-
ery from suppliers are necessary. The comparison of these costs shows why it is vital to
understand schedule pressures and resource demands as costs are estimated.
OTHER COST CLASSIFICATIONS The next several cost comparisons require little
explanation. They are helpful to understand both in structuring the cost estimates and as
checklists to help remember items that may be forgotten. One comparison is costs internal
EXHIBIT 10.2
PROJECT COST AND VOLUME CURVE
Total
cost
Expected project volume
Volume
332 Part 3 Planning Projects
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to the parent organization versus those external to it. Major external cost items such as equip-
ment can be either leased or purchased. Direct cost items are often employees or materials.
Estimate versus reserve costs form the next comparison. The estimate is “a quantified
assessment of the likely amount. … It should always include an indication of accuracy.”4
The reserve is extra money in the project budget to be used if necessary—usually if a risk
event occurs. Reserves are often classified more specifically as a management reserve or
contingency reserve. Management reserve is money assigned to the project for unknown
possible costs and money that senior management controls. By contrast, contingency
reserve is money assigned to the project and allocated for identified risks for which con-
tingent responses are developed.
Just as uncertainly exists when estimating how long an activity will take, there is
uncertainty regarding how much an activity will cost. Some activities are easy to estimate
with higher levels of accuracy. Other less familiar activities have many uncertainties, and
estimating their cost is more like guessing. If one were to estimate conservatively on each
uncertain activity, the total estimate for the project would likely be too high to be
approved. To overcome this problem, project managers are sometimes encouraged to
estimate at least a bit more aggressively. That means some activities will run over their
estimates, while others will cost less. Project managers frequently add a contingency
reserve to cover the activities that run over their aggressive estimates. In any event, one
must remember the two principles of ethical estimating discussed earlier in the chapter
(not to lie to yourself and to others).
EXHIBIT 10.3
DIRECT AND INDIRECT COSTS IN A WORK PACKAGE
PROJECT: ACCOUNTS PAYABLE
REFINEMENT
WORK PACKAGE:
INSTALL MODULE 1
Description:
Install accounts payable refinement
application and related hardware.
Deliverable(s):
Installed and functioning accounts payable
module.
Cost Categories Quantity Total
Direct Labor
Programmer 120 hrs @ $ 75/hr 9,000
Systems Analyst 40 hrs @ $ 100/hr 4,000
Systems Architect 20 hrs @ $ 120/hr 2,400
Other Direct
Hardware 20,000
Software 8,400
Consultant Services 12,000
Indirect Costs (.6 * DL) 9,240
Total 65,040
Source: Kevin P. Grant, University of Texas, San Antonio. Adapted with permission.
Chapter 10 Budgeting Projects 333
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10-2b Accuracy and Timing of Cost Estimates
Project managers need to understand when cost estimates should be developed, how
accurate they need to be, and how they will be used. During project initiation, many
project managers need to develop cost estimates to have their project charters approved.
At this point, very little detail is understood regarding the project, so the estimates are
only approximate. However, as the scope becomes well defined in the work breakdown
structure (WBS), schedules are planned, and specific resources are assigned, the project
manager knows much more and can estimate costs associated with each work package
more precisely. Many organizations have specific names and guidance for their estimates
and these vary widely. Normally, estimates should be documented, and the level of con-
fidence in the estimate should be described. Exhibit 10.4 shows several points regarding
different types of project cost estimates.
ORDER OF MAGNITUDE ESTIMATES Several things should be noted from these
comparisons. First, estimates go by several different names. For example, order of mag-
nitude estimates that are often used to seek initial charter approval are also sometimes
called ballpark, conceptual, initial, or level-one estimates. These early estimates are often
created during the project initiating stage when very little information is available about
the project. At this point, a very rough order of magnitude estimate could underestimate
the project by as much as 100 percent (that is, the final cost could be double the initial
estimate). And it may be the only possible estimate. There is no way to really know how
accurate an estimate is until the project has been completed, but with less detailed
knowledge concerning the project in the initiating stage, there is likely to be a larger
margin of error. Order of magnitude cost estimates and the parallel high-level views in
EXHIBIT 10.4
PROJECT COST ESTIMATE COMPARISONS
Approval Admin.
Closure
Level of
Effort
Stage
Charter Project
Plan
Project
Result
Estimate
Name
Order of
Magnitude
Budget Definitive
Accuracy
Level
−40% to
+100%
−30% to
+50%
−10% to
+15%
Possible
Method
Analogous Parametric Bottom-Up
Rolling Wave
334 Part 3 Planning Projects
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AGILE
each of the other planning areas can quickly give enough information to approve the
project charter and begin to invest time and money into detailed planning.
A concept of progressive elaboration applies here. Progressive elaboration is “Continu-
ously improving and detailing a plan as more detailed and specific information and more
accurate estimates become available as the project progresses, thereby producing more accu-
rate and complete plans that result from the successive iterations of the planning process.”5
BUDGET AND DEFINITIVE ESTIMATES Once a project plan enters into the more
detailed planning stage, it is generally possible to create a more accurate cost estimate.
This is the same thought that goes into creating a more detailed project schedule, resource
estimates, risk profiles, quality plans, and communications plans. Depending on the com-
plexity and size of their projects and organizational norms, some project managers can
proceed directly to definitive cost estimates at this point. Others may still need to look at
one or more intermediate levels of detail before they have enough detailed knowledge to
create cost estimates with accuracy. At the end of project planning, cost estimates should
have a small enough margin of error that they can be used to create a project budget, show
cash flow needs, and be used as a basis for controlling the project. Most project organiza-
tions prefer an accuracy level of no more than plus or minus 10 to 15 percent, and some
require considerably better, such as plus or minus 5 percent.
On agile projects, project managers may use rolling wave planning to estimate costs.
They do this by creating a definitive estimate for the first iteration of the project (and
committing to it) and an order of magnitude estimate for the remainder of the project.
As the work on the first iteration nears an end, the project manager, equipped with
detailed information about scope for the next iteration, then creates a definitive estimate
for the second iteration and reevaluates the order of magnitude estimate for the remain-
der of the project. At each stage, the project manager has more information than at the
preceding stage and can create more accurate estimates.
10-2c Methods of Estimating Costs
Many methods can be used for estimating project costs. Most are variations of one of the
methods discussed in this section. While these methods can sometimes also be used to
estimate project scope or duration, the discussion in this chapter centers on using them
to estimate project cost. Exhibit 10.4 indicates that as more details of a project are known
as planning progresses, more detailed estimating methods may be used. However,
Exhibit 10.5 shows that even at the end of project planning, a project manager may
sometimes use a combination of cost estimating methods. If the organization has estab-
lished accurate analogous and parametric estimating methods and capable estimators,
sometimes parts of a project can be estimated by those methods instead of the more
detailed (and time-consuming) bottom-up methods. The method chosen for cost estima-
tion should account for the extent of complexity, risk, interdependencies, work force spe-
cialization, and site-specific issues of the project.6
ANALOGOUS ESTIMATING Analogous estimating is “an estimating technique that
uses the values of parameters on a scale, such as scope, cost, budget, and duration or
measures of scale such as size, weight, and complexity from a previous and similar activ-
ity or project as the basis for estimating the same parameter or measure for a future
activity or project respectively.”7 Analogous estimating was the technique used in Denver
in this chapter’s opening vignette. To create a bid for a project—in this case, the installa-
tion of elevators—a similar project was considered as the starting point. Immediately,
Chapter 10 Budgeting Projects 335
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EXHIBIT 10.5
WBS DEPICTING ESTIMATING METHODS
PM
Project
AB CD EF
Level
1
2
3
4
5
Bottom-up Analogous
Analogous Parametric
Source: Kevin P. Grant, University of Texas, San Antonio. Adapted with permission.
Sy
da
Pr
od
uc
tio
ns
/S
hu
tte
rs
to
ck
.c
om
336 Part 3 Planning Projects
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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questions were asked regarding how this job compared in size and complexity with the
previous job.
Several things need to be in place for analogous estimates to be effective. First, the
organization needs to have experience in performing similar projects and know actual
costs of each of those projects (not just what they were estimated to cost). Second, the
estimator needs to know how and to what extent the proposed project differs from the
previous project. Third, the estimator needs to have experience with the methods and
processes by which the project will be performed. In the Denver example, sales and con-
struction people jointly discussed how much the project would cost.
PARAMETRIC ESTIMATING Parametric estimating is “an estimating technique that
uses a statistical relationship between historical data and other variables (e.g., square foot-
age in construction, lines of code in software development) to calculate an estimate for …
scope, cost, and duration.”8 Parametric estimating can be used to determine the impact of
key variables on project costs. A bit more information is needed to complete a parametric
cost estimate as compared to an analogous estimate. Exhibit 10.5 shows this graphically by
suggesting that another level of detail in the WBS might be used. In the chapter opener
example of estimating the cost of elevator installation projects, parametric estimates
might involve finding a bit more information regarding the project. For example, one
might want to know how tall the elevator was, how fast it needed to travel, how large the
platform would be, the trim level, the complexity of the controls, and the like. Each of
those factors would have an impact on the elevator installation cost. For example, the
cost per foot traveled might be calculated (this would cover the cost of providing and
installing guide rails, wiring, etc.). Another cost might be associated with speed because
faster elevators require bigger motors, more stability, stronger brakes, and so on.
BOTTOM-UP ESTIMATING Bottom-up estimating is “a method of estimating …
what is needed to meet the requirements of each of the lower, more detailed pieces of
work, preferably the lowest level of WBS work elements, and these estimates are then
aggregated into a total quantity.”9 For a bottom-up estimate, the WBS needs to be bro-
ken down to the most detailed level, and the specifications need to be very clear. In the
elevator example, bottom-up estimates were created in Kansas City. Details to be esti-
mated included exactly how many buttons the control panel had, exactly what kind of
light fixtures were mounted in the ceiling, what kind of finish was requested, and so
on. The cost was estimated for each item. For example, for the process of installing the
guide rail, first there was a small amount of time, such as one hour, to set up or get
everything in place to do this step. Then, it took a certain fraction of an hour of labor
to secure each foot of the rail into position. A material charge was incurred for the guide
rails themselves and the fasteners that held them in place. The cost of supervision was
charged for the foreperson, who ensured the work was scheduled and performed prop-
erly. Finally, overhead costs (indirect costs) were allocated to each dollar of fixed costs.
Bottom-up estimating is the most detailed, time-consuming, and potentially the most
accurate way to estimate. Many projects use this method eventually to serve as a basis for
estimating cash flow needs and for controlling the project. One important caution on
bottom-up estimating is to ensure that every item is included. If a portion of the
project is left out, that portion is underestimated by 100 percent! A WBS detailing all
deliverables is best suited for bottom-up estimating. Some organizations first create a
bottom-up estimate and then compare it to a top-down view to consider adjusting it if
the top-down view yields a much higher number. Exhibit 10.6 summarizes differences in
cost estimating methods.
Chapter 10 Budgeting Projects 337
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10-2d Project Cost Estimating Issues
Regardless of what method is used to estimate project costs, several issues need to be
considered. Some of these issues are pertinent to all projects; others pertain only to cer-
tain projects. These issues are shown in Exhibit 10.7.
SUPPORTING DETAIL Supporting detail for project cost estimates includes describing
the scope, method used to create the estimate, assumptions, constraints, and range
of possible outcomes. The project scope tends to be the least well defined at the project
outset and becomes increasingly well defined throughout project planning. Each estimate
should state exactly what scope it is based on. Version control is critical for this purpose.
The method used might be analogous, parametric, or bottom-up. The name of the
method and exactly how the method is used should be described.
When creating an estimate, many assumptions and constraints are considered.
Assumptions should be outlined because two different people coming from two different
backgrounds may view a situation differently and assume that two different things will
happen. Even if everyone involved with planning a project assumes the same thing, it
still may not happen. Assumptions that are not true often cause more work or other pro-
blems for a project such as changes in scope, cost, and schedule. As more details are
available, a project manager may review assumptions with an eye toward uncovering
assumptions that have now proven to be false. When this happens, the project manager
can investigate any impact this may have on the project budget (and schedule and
scope). Examples of assumptions that may arise when estimating the cost of direct
labor might include the following:
Workers will be paid at the prevailing wage rate of $14 per hour.
Workers are already familiar in general with the technology being used on the project.
Workers will be paid for 40 hours per week whether there is always that much work
for them or not.
EXHIBIT 10.7
ISSUES IN PROJECT COST ESTIMATING
Supporting detail Activity-based costing
Causes of variation Life cycle costing
Vendor bid analysis Time value of money
Value engineering International currency fluctuations
EXHIBIT 10.6
COST ESTIMATING METHOD COMPARISON
ANALOGOUS PARAMETRIC BOTTOM-UP
Amount of Information Required Least Middle Most
Amount of Time Required Least Middle Most
Accuracy Obtained Lowest Middle Highest
338 Part 3 Planning Projects
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Overtime will never be authorized.
The project schedule can be delayed if the only alternative is to pay overtime.
Constraints are also important since they often dictate the methods available for per-
forming the project work. Examples of constraints include:
Only in-house workers will be used.
No extra space will be provided.
No extra budget will be allowed.
The current version of the XYZ software will be incorporated into the design.
The range of possible outcomes should always be stated with a project cost estimate. If
the range is not stated, people may lock onto the first number they hear and remember it.
If the actual project costs could be 100 percent higher than the order of magnitude esti-
mate, the project manager had better state that accuracy level loud and clear, or she may
find herself continually explaining why she is grossly over budget. In fact, many estimators
resist giving an order of magnitude estimate because they fear they will be held to it. A
natural tension exists between managers who try to effectively manage their departments
by establishing budgets as soon as possible and project managers who try to provide bud-
get estimates as late as possible (once they know more about the project).
CAUSES OF VARIATION There are many causes for project costs to vary. On routine
projects using proven technology, with fewer uncertainties, and an experienced and well-
known project team, the causes may be relatively few and easy to categorize. On other
projects where some of these factors are not true, more causes of uncertainty in project
costs may exist, and some of those may be from unknown sources. Statisticians classify
variation as coming from either normal or special causes, as shown in Exhibit 10.8.
Variation occurs in all work processes. The more routine a process is and the more
work is driven by machines, the less variation occurs. Projects, however, tend to have
novel work and high human interaction, so there are many opportunities for variation.
Normal variation comes from many small causes that are inherent in a work process. For
EXHIBIT 10.8
NORMAL AND SPECIAL CAUSE VARIATION
Normal Cause Variation
+ −
Special
Cause
Variation
Special
Cause
Variation
Average
Chapter 10 Budgeting Projects 339
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instance, the variation in the productivity of a programmer writing code could be from
phone calls, instant messages, and in-person interruptions that occur each day. Special
cause variation, on the other hand, is when something out of the ordinary occurs. For exam-
ple, a lightning strike could cause such a large power surge that it overwhelms the normal
protectors and destroys some of the computers. Most causes of variation are of the normal
variety, and improving work methods (as discussed in Chapter 12) can help to reduce this
type of variation. Special causes, however, are handled more as risks, as discussed in
Chapter 11. Both types of variation add to project costs and need to be considered.
VENDOR BID ANALYSIS On some projects, most or all of the cost is internal to the
parent organization. On other projects, a substantial portion of the budget goes to securing
services and supplies from vendors and external sources. Vendor bid analysis is used to
determine whether the price being asked by the vendors appears to be reasonable. If sev-
eral vendors compete for the work, it is reasonable to believe that the lowest responsible
offer is fair. In the absence of competition, however, other methods may be needed to
ensure a fair price. On some items, prices are determined in the marketplace and reported
in business papers and websites for anyone to read. On specialized services and products,
one often must negotiate with a vendor. In the absence of any other method, for an expen-
sive item, a project manager may need to develop a sound cost estimate. That is, try to
determine how much effort the vendor may need to expend, and then add a fair profit
margin to arrive at the price you believe the vendor should charge.
VALUE ENGINEERING Value engineering is “a formal, structured process to ensure
projects meet or exceed cost objectives without compromising quality … divides the total
project scope into components, examining each individual component for alternatives
that offer benefits.”10 It is aimed at increasing the value or productivity of a work ele-
ment while minimizing the cost. In other words, it is a ratio of function to the cost asso-
ciated with the product or service. Value engineering can be a very powerful method of
double-checking all of the chosen methods for accomplishing work and the features of
the project deliverable. Frequently, stakeholders find that a feature in the specifications
costs more than they wish to pay.
In a project to update an older church, the liturgical committee proposed many con-
trols for special lighting that would be used only on special occasions. The general con-
tractor suggested simplifying the controls, while retaining all the new lights, at a savings
of $100,000! While the liturgical committee was disappointed, the church council readily
agreed. Value engineering is so common in some industries that a separate stage is incor-
porated late in the project planning to ensure that time is spent for this purpose to
reduce project cost and/or time and to improve project quality and/or usefulness.
ACTIVITY-BASED COSTING (ABC) Another issue project managers need to under-
stand when estimating costs is what type of accounting system the organization employs.
Historically, most companies used functional-based accounting systems. When using these
systems, overhead (indirect) costs are assigned to a cost pool, which is often allocated to
direct costs based on volume. When direct costs were a large percentage of total costs, this
made sense. In more contemporary times, indirect costs form a much larger percentage of
total costs, so careful allocation of them is necessary both for selecting the projects that truly
will contribute the most profit and for ensuring a focus on controlling the highest costs.
ABC is another accounting approach, by which indirect costs are allocated to fixed costs
based upon four different types of drivers. The cost drivers are number of units produced
(frequently, the only method used in functional-based accounting), number of batches run,
number of product variations, and amount of facility utilized. ABC requires more involved
340 Part 3 Planning Projects
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methods for allocating indirect costs, but yields more accurate cost information. By furnish-
ing more specific information on cost drivers, ABC also helps to support process improve-
ment and justify spending money on expensive equipment. Project managers need to
understand how costs are allocated in their organization so they can accurately estimate
the amount of indirect costs that will be assigned to their projects.
LIFE CYCLE COSTING Life cycle costing is another concept project managers need to
understand when estimating their project costs. Many project selection decisions are
made based upon the total costs of both creating the project and of using the result of
the project during its useful life. This total cost is called the life cycle cost, in which life
cycle denotes the life of the product or deliverable of the project. Many times, trade-off
decisions are considered that might involve spending more during the project to create a
product that costs less to operate during its useful life. In an age in which environmental
concerns are appropriately being considered more heavily, to calculate total life cycle
costs, a project manager may also need to consider disposal costs of the product after
its useful life is complete. This can entail designing more recyclable parts (even at a
higher cost) into the product and adopting sustainable approaches for project execution
that would reduce the project cost in the long run.
TIME VALUE OF MONEY AND INTERNATIONAL CURRENCY FLUCTUATIONS
When considering future costs and revenues, project managers must know how to calcu-
late the time value of money. One dollar today is presumably worth more than one dol-
lar next year. Discounting the value of future revenue and cost streams enables better
project decisions. Often, the finance department at a company tells the project manager
what rate to use as a discount factor. The rate depends upon the prevailing inflation rate
plus the cost of capital. On international projects, it can also depend upon international
currency fluctuations.
O
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ta
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Chapter 10 Budgeting Projects 341
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10-3 Determine Budget
Once the project costs have been estimated, it is time to establish the project budget.
Determine budget is “the process of aggregating the estimated costs of individual activi-
ties or work packages to establish an authorized cost baseline.”11 To develop the budget,
the project manager starts by aggregating all the costs. Once those are totaled, it is time
to determine how much money is required for reserve funds. Finally, the project man-
ager must understand cash flow—both in terms of funding and requirements to meet
costs for activities on a day-to-day basis.
10-3a Aggregating Costs
When the entire project costs, both direct and indirect, have been added up, the result is
a cost baseline, which is “that part of the project baseline that handles the amount of
money the project is predicted to cost and on the other side when that money will be
spent. It is an approved budget usually in a time distribution format used to estimate,
monitor, and control the overall cost performance of the project.”12
The work packages of a WBS not only take time, but also cost money. The project
budget can be aggregated from the work packages. Exhibit 10.9 shows how six work
packages appear on a Gantt chart with the cost of each work package listed on a monthly
basis. The total cost for the month is shown and the cumulative cost for the project
shown below that. Finally, a graph appears at the bottom that shows the cumulative
cost of the project at each point in time. This represents the time-phased project budget.
This will be used for control purposes as the project progresses. Note the cumulative cost
curve approximates an “S” shape with slow expenditures (and progress) early in the proj-
ect, rapid in the middle, and gradual late in the project. This is normal as projects often
require much planning during the early phases of a project and have fewer activities to
finish at the end.
10-3b Analyzing Reserve Needs
Another view of project cost variation is to consider how well it is understood and how
each type is handled. This is displayed in Exhibit 10.10.
Variation in project costs (and schedules) can be partially explained by the presence
of certain events associated with a project. These events are classified as known knowns,
known unknowns, or unknown unknowns, depending on the extent to which they are
understood and predicted. Known knowns are discovered during planning and can be
estimated directly. An example could be that when a construction crew takes soil sam-
ples, they discover that extra pilings are required to stabilize the new building, and they
add the cost into the project estimate to cover that expense.
Known unknowns are events discovered during risk identification that may or may
not occur. An example could be snowstorms that cause traffic problems for three days
at a critical time, preventing workers from getting to their jobs. In the next chapter on
risk, methods for calculating costs associated with known unknowns are discussed. They
will appear as contingency reserves.
Finally, sometimes things happen that are totally unexpected and can cause an
increase in cost and/or schedule. For example, a very dependable supplier goes out of
business perhaps due to the sudden death of the owner. These unknown unknowns
(commonly called unk unks) also need to be covered in the project budget. The money
used to cover them is frequently called management reserve and is usually authorized by
company executives.
342 Part 3 Planning Projects
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The amount placed into contingency reserve is calculated during risk analysis. The
amount placed into management reserve is determined by how much uncertainty man-
agement feels exists in the project. Typical ranges are from 5 percent of project costs for
well-understood, routine projects to 30 percent or more of project costs for poorly
EXHIBIT 10.10
ESTIMATING COSTS OF PROJECT VARIATION
HOW VARIATION IS
UNDERSTOOD KNOWN KNOWNS KNOWN UNKNOWNS UNKNOWN UNKNOWNS
How It Is Discovered Scope definition Create WBS Risk identification Situation occurs
Stage When It Is Usually
Uncovered
Initiating or planning Initiating or planning Executing
Method of Estimating Costs Estimate directly Contingency reserves Management reserves
EXHIBIT 10.9
AGGREGATION OF PROJECT BUDGET
WP 1221
WP 1222
WP 1231
WP 1232
WP 1233
WP 1241
WP 1221 ($10,000)
WP 1222 ($10,000)
WP 1231 ($45,000)
WP 1232 ($20,000)
WP 1233 ($15,000)
WP 1241 ($20,000)
$10,000
$20,000
$15,000
$10,000 $10,000
$120K
$100K
$80K
$60K
$40K
$20K
0
$20,000
$35,000
$50,000
$85,000
$25,000
$110,000
$10,000
$120,000
$15,000
$15,000
Cost per month
Cumulative cost
$5,000 $5,000
$30,000$15,000
Source: Kevin P. Grant, University of Texas, San Antonio. Adapted with permission.
Chapter 10 Budgeting Projects 343
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understood, unusual projects. These costs are not to be used to overcome poor estimat-
ing or project execution.
Once the cost baseline is determined along with both contingency and management
reserves, it is time to determine if sufficient funds are available. On many potential pro-
jects, a funding limit exists. The project sponsor for internal projects and the customer
for external projects need to be very clear if the necessary funds exceed the limit of what
is available. If enough funds are not available, this is the time to look hard at all the esti-
mates, schedule, and scope to determine what changes need to be made before the proj-
ect management plan is accepted. It does no good for anyone to deliberately start a
project with insufficient funds.
10-3c Determining Cash Flow
Projects require cash to make progress with the work. Suppliers and workers need to be
paid in a timely fashion. A common difficulty is that the project’s customer may not pay
for the work until it is completed—often months after project bills were supposed to be
paid. Therefore, the timing of cash inflow and outflow for a project is just as important
as the amount of money required.
Just as the demands on individual workers can be applied to individual activities in the
project schedule to determine where overloads may occur, expenses can be applied to indi-
vidual activities in the schedule to see when cash is needed. Revenue can also be tracked to
interim deliverables in the project schedule to show when revenue can be expected. If a proj-
ect is internal to a company, the timing of cash availability is also important to understand.
While workers may work every day and suppliers may deliver frequently, cash may be sup-
plied through organizational budgets only on a periodic basis. A project manager needs to
ensure that the cumulative amount of cash coming into the project either from internal bud-
geting or from customer payments meets or exceeds the demands for paying cash out. This
cash flow is shown in Exhibit 10.11 where incoming cash is in large increments, yet outgoing
cash is almost continuous. The cumulative revenue at project completion minus the cumula-
tive cost at project completion equals the profit (or surplus) generated by the project.
EXHIBIT 10.11
PROJECT CUMULATIVE CASH AND REVENUE
Cumulative
Cost/Revenue
($)
Time
EndStart
Revenue
Cost
344 Part 3 Planning Projects
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10-4 Establishing Cost Control
The approved project budget with contingency reserves (and any amount of manage-
ment reserve that has already been approved) serves as a baseline for project control.
The budget shows both how much progress is expected and how much funding is
required at each point in time. These are used for establishing project control. Control
cost is the process of monitoring the project costs and managing changes to the cost
baseline. Cost control is discussed in Chapter 14.
When establishing cost control, a typical measuring point is a milestone. Major mile-
stones are often identified in the milestone schedule in the project charter, and additional
milestones may be identified while developing the project schedule. Project managers can
use the cash flow projections they have made to determine how much funding they
expect to need to reach each milestone. This can then be used for determining how
well the project is progressing. The sponsor and project manager often jointly determine
how many milestones to use. They would like to have enough milestones to keep track of
progress, but not so many that they become an administrative burden. Microsoft Project
and other software can be used to automate the cost reporting.
10-5 Using MS Project for Project Budgets
MS Project supports both bottom-up and summary level cost modeling. Bottom-up cost
modeling is primarily based on the cost of each resource assignment to WBS tasks.
Assignment costs can be seen in the related task’s Cost field (when shown) in the
Gantt chart and other views. Task costs are summarized at the parent WBS levels (sum-
mary tasks).
Summary costs allow the project manager to make a “summary level” estimate of the
cost of the project. Often when the complete details of later stages of the project are not
known, placeholder or “dummy” tasks are added to the schedule and costs are estimated.
Using summary cost estimates, a projected duration and cost estimate of the entire proj-
ect can be provided to project stakeholders.
The following examples will continue to use the Suburban Park Homes project from
previous chapters’ examples.
10-5a Developing a Bottom-Up Project Budget Estimate
To develop a bottom-up project budget estimate, a project manager needs to understand
the assignment and task costs for each task of the project. MS Project allows the user to
view costs from different perspectives in order to better understand where costs are com-
ing from and which tasks are cost centers for the project. We will now look at assign-
ment and task costs in more detail.
ASSIGNMENT COSTS The following data are used to compute each assignment’s
cost value:
Assignment work hours (calculated when the work assignment is made)
Resource standard rate
Resource overtime rate (only if modeling overtime)
An assignment cost value is the total number of assignment hours multiplied by the
standard rate (cost) of that resource (e.g., $50 an hour). Each resource has a standard
rate; some may have an overtime rate as well. Cost rates can be assigned when defining
Chapter 10 Budgeting Projects 345
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the resource in the Resource Sheet (View Tab>>Resources Sheet), as described in
Chapter 9, or assigned later when costs are known. Exhibit 10.12 shows the Resource
Sheet with standard rates assigned to the project resources.
TASK COSTS The task cost value is the sum of all assignment cost values, plus any
task’s fixed cost value (e.g., a building permit). Exhibit 10.13 displays the Task Usage
View in the top pane (with the Cost column inserted) and the Task Form View in the
lower pane. To generate this view:
1. Click the Task Tab>>View Group>> click Task Usage
2. Click the View Tab>>Split View Group>> click Details>> choose Task Form
3. Right-click in the form in the lower pane and choose “Work”
4. In the upper pane, right-click the Start column header >>Insert Column>> type
“Cost”
5. Your screen should now look like Exhibit 10.13 (with adjustment of view dividers)
In Exhibit 10.13, rows 1, 5, 9, and 12 are summary tasks; rows 2, 3, 4, 6, 7, 8, 10, and
11 are subtasks. The unnumbered rows are resource assignments. Two resources are
assigned to the task “Remove Trees” (Row 6). Bruce is assigned to work 24 hours on
the task, and Jack is assigned eight hours. Reviewing the Resource Sheet reveals their
standard cost rates are $55 and $50 per hour, respectively. Their individual costs to the
task are calculated in the cost column cells at $1,320 and $400. Since they are the only
two resources assigned to the task “Remove Trees,” summing the two values provides the
total cost of the task. Therefore, the task of removing the trees from the lot will cost the
project $1,720 as calculated 24 $55 8 $50 $1,720 , and shown in the sum-
mary row’s Cost column cell. The assignment Units and Work values for the “Remove
Trees” task are shown in the Task Form View in the lower pane.
VIEW COSTS FROM A DIFFERENT PERSPECTIVE The preceding discussion has
been from the view of the WBS, or task perspective. Cost data may also be viewed
EXHIBIT 10.12
ASSIGN COST RATES
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
346 Part 3 Planning Projects
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from a resource perspective using the Resource Usage View. In this view, assignment
costs are summarized at the resource level (as seen in Exhibit 10.14). To activate
this view:
1. Click the View Tab>>Split View>> uncheck Details
2. Click the View Tab>>Resource Views Group>>Resource Usage
3. Insert a Cost column in the left pane (if one is not already showing)
4. In the right pane, right-click >> choose Cost
a. Work is the default view in the Details column; this adds Cost to Details
In Exhibit 10.14, the most indented rows are tasks. The “Unassigned” set represents
tasks with no assigned resources. If a resource has no show/hide control, then it has not
been assigned.
10-5b Develop Summary Project Budget
Once duration and costs have been determined for project tasks, a simple summation of
all summary row durations and costs gives the project manager an overall estimate of the
project’s total duration and cost. However, as discussed earlier, details of later project
phases may not be completely identified in earlier stages of the project. In other words,
there may be tasks later in the project whose details cannot be known early in the
project.
Regardless of project unknowns, stakeholders will want ongoing estimates of the com-
pletion date and cost of the project. One way the project manager can manage these
unknowns and still provide estimates is to add “dummy tasks” under any summary
task where there is not enough information to plan in detail. A dummy task is simply a
EXHIBIT 10.13
TASK USAGE VIEW WITH RESOURCE WORK FORM
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Chapter 10 Budgeting Projects 347
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AGILE
placeholder for future project work. When creating a dummy task, the project manager
estimates both duration and cost of the task. This estimate becomes part of the overall
project summary cost and duration estimate. As details of later project phases emerge,
dummy tasks can be replaced with actual task data. Each update further sharpens overall
project duration and cost estimates.
A dummy task example can be seen in Exhibit 10.15. The “County clearance &
Certificate of Occupancy” summary row has the dummy task “Codes rework” added.
Since the project manager cannot know if rework on the house will be necessary due to
a failed codes inspection (the inspection will happen after the project is almost com-
pleted), codes rework makes for a useful dummy task. No resources are assigned to the
task yet, but a cost and duration estimate are assigned, allowing the project manager to
factor this task into project estimates. Dummy tasks should not be carelessly added to
the project since they affect project timelines and cost estimates. With experience and
good planning, the project manager can judiciously add dummy tasks that will serve
both the project and the stakeholders.
Agile projects commonly use dummy tasks to summarize the work for future project
iterations that have not yet been defined. Since the number of workers is often
known and the length of the iteration is known, the amount of cost can usually be
established. However, the exact task activities are only determined during iteration
planning.
EXHIBIT 10.14
RESOURCE USAGE VIEW
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
348 Part 3 Planning Projects
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PMP/CAPM Study Ideas
Whether you are sitting for your CAPM or PMP exam, you are likely to see at least a
couple questions pertaining to methods of cost estimating. Be able to identify
parametric, analogous, and bottom-up estimating by description or via an example.
Make sure you know the relative benefits and weaknesses of using each.
While budgeting occurs in countless domains, budgeting for projects is different in
several ways from budgeting for ongoing operations. Specifically, you will need to
familiarize yourself with the “S curve” of project expenditures and predict and answer
questions about cash-flow problems that may result. Also, make sure you know the
difference between contingency and management reserves and who controls each.
EXHIBIT 10.15
DUMMY ACTIVITY FOR LATE PHASE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
Summary
The cost management plan outlines how to structure
and control project costs. On a small project, it can be
very simple. On a large, complex project, it may need
more structure. It guides the project manager during
the project.
Cost estimating can be challenging because some
activities may have a great deal of variation. Many
methods are available to assist in cost estimating. Use
a simple method if it will suffice, and use more rigorous
methods, if necessary. Generally as project planning
identifies more specifics, more detailed and accurate
cost estimates can be made.
Cost budgeting includes aggregating individual costs,
analyzing needs for cost reserves where uncertainty exists,
and determining cash inflow and outflow. Establishing
cost controls includes establishing cost reporting systems.
MS Project can assist in developing either bottom-up
project budgets or summary project budgets.
Chapter 10 Budgeting Projects 349
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Key Terms Consistent with PMI Standards and Guides
plan cost management, 329
cost management plan, 330
estimate cost, 330
fixed cost, 331
variable cost, 331
direct cost, 331
indirect cost, 332
recurring cost, 332
nonrecurring cost, 332
estimate, 333
reserve, 333
management reserve, 333
contingency reserve, 333
order of magnitude estimates, 334
analogous estimating, 335
parametric estimating, 337
bottom-up estimating, 337
value engineering, 340
life cycle costing, 341
determine budget, 342
cost baseline, 342
control cost, 345
Chapter Review Questions
1. What type of cost does not depend on the size of
a project?
2. During which phase of a project do recurring
costs typically occur?
3. What are some examples of expedited costs?
4. What is the purpose of an order of magnitude
cost estimate?
5. Under which conditions can analogous estimat-
ing be effective?
6. Which method of estimating can produce the most
accurate estimate: parametric or bottom-up?
7. What are some examples of supporting detail
pertaining to cost estimates?
8. Is it possible to completely avoid variation in a
project? Why or why not?
9. What can be used to determine whether a ven-
dor’s bid is reasonable?
10. Define value engineering.
11. What is the “time value of money,” and why is it
relevant to project management?
12. For a routine project, what is a typical percentage
of total project costs that should be placed into
contingency reserves? For an unusual project?
13. What is used to compare actual project spending
with planned expenditures to determine if cor-
rective action is needed?
14. What three types of data does Microsoft Project
use to compute each assignment’s cost value?
15. Explain the importance of creating a cost man-
agement plan.
16. Why is it important for project managers to under-
stand the fixed and variable costs of a project?
17. Describe the difference between direct and indi-
rect project costs.
18. During which phase(s) of a project do nonrecur-
ring costs typically occur? Give an example of a
nonrecurring cost.
19. The project manager at a software company pre-
dicts her project’s costs based on previous pro-
jects she has worked on that were similar. (She
takes into account the differences between her
current and previous projects, as well.) What
type of cost estimating is she using?
20. Why is it important for assumptions to be listed
in the cost estimate?
Discussion Questions
1. A rockslide closes down a major highway on
your delivery route and leads to unforeseen
costs. Does the extra money needed come from
contingency reserves, management reserves, or
elsewhere? Why?
2. You are the project manager in charge of construc-
tion of a new school building. Give one possible
example each of a known known, known unknown,
and unknown unknown you might encounter.
3. Using the same project described in question 2,
what are a few examples of milestones at which
you might measure cost control?
4. Using the same project described in questions 2 and
3, which method(s) of estimating cost would you use
in order to establish a baseline budget? Why?
5. Give an example of how a project manager could
run into problems with cash flow, even when he
is within budget on the overall project.
350 Part 3 Planning Projects
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6. Describe a few normal causes and special causes
of variation on a project you have worked on.
How did you address these variations?
7. What is the purpose of dummy tasks, and on
what types of project would you use them for
budgeting purposes?
8. The order of magnitude budget estimate you cre-
ated during chartering is deemed by your spon-
sor to cost far more than your organization is
willing to spend on your project. What are your
options as a project manager?
PMBOK ® Guide Questions
1. The “process that establishes the policies, proce-
dures, and documentation for planning, manag-
ing, expending, and controlling project costs” is
referred to as:
a. determine budget
b. estimate costs
c. plan cost management
d. control costs
2. Activity cost estimates, the basis of estimates and
other supporting detail, are outputs of which process?
a. determine budget
b. estimate costs
c. plan cost management
d. control costs
3. As the project progresses from initiation through
planning and executing, and additional detail is
gathered, the range of values for the project cost
estimate will:
a. broaden
b. stay the same
c. narrow
d. be replaced with a single number
4. is “the process of aggregating the
estimated costs of individual activities or work
packages to establish an authorized time-phased
project budget or cost baseline.”
a. Determine cash flow
b. Determine budget
c. Determine cost estimates
d. Determine funding requirements
5. A(n) is used to compare actual project
spending with planned expenditures over time to
determine if corrective action is needed.
a. cost baseline
b. funding limit reconciliation
c. reserve analysis
d. activity resource estimate
6. Jason, a project manager, is working with his
team to estimate the total cost of developing a
web-based CRM system. After reviewing the
planned scope of work with Jason, his sponsor
suggests that Jason use the budget from a previ-
ous, similar project as the basis for his project
budget. The estimating process that Jason’s spon-
sor is using is called .
a. three-point estimating
b. parametric estimating
c. analogous estimating
d. single-point estimating
7. One of the principle benefits of creating a bottom-
up estimate during planning is that the estimate:
a. can be created quickly
b. is very accurate
c. matches the high level estimate in the project
charter
d. will not change once the project is in flight
8. The amount of project budget reserved for
unforeseen project work that addresses the
“unknown unknowns” that can affect a project
is the .
a. project buffer
b. funding limit
c. contingency reserve
d. management reserve
9. Ellen is estimating how much it will cost to recar-
pet the executive conference room. After selecting
the grade and pattern of carpet, Ellen multiplies
the carpet price per square yard times the num-
ber of square yards in the conference room to
derive the total price of the material. This esti-
mating method is called .
a. expert judgment
b. analogous estimating
c. parametric estimating
d. three-point estimating
10. The budget within the cost baseline that is allo-
cated for identified risks, for which mitigating
responses are developed, is called the .
a. contingency reserve
b. management reserve
c. control account
d. activity cost estimate
Chapter 10 Budgeting Projects 351
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Exercises
1. A baker has a contract to bake three dozen chocolate chip cookies for a customer’s party. Create a bottom-
up estimate that includes both items needed for the project and the cost. According to your estimate, how
much should the baker charge for the cookies?
2. Using the data below, create a time-phased budget for the project. Show how much the daily and cumula-
tive costs for the project are, just as the monthly and cumulative costs are shown in Exhibit 10.9.
Activity
Immediate
Predecessor
Duration
in Days Resource
Hourly
Cost
Work Hours
per Day
A Evaluate freezers 2 Alcides $45 6
B Chart temperatures 6 Joan $50 4
C Review service record 2 Alcides
D Consult with HVAC engineer A, B, C 3 Alcides
E Develop construction plan D 10 Joan
F Complete IC assignment E 2 Alcides
G Complete ROI analysis E 5 Joan
H Conduct regulatory review E 4 Joan
I Obtain construction approval F, G, H 2 Alcides
3. Using the data below, create a time-phased budget for the project. Show how much the daily and cumula-
tive costs for the project are, just as the monthly and cumulative costs are shown in Exhibit 10.9.
WBS Activity
Immediate
Predecessor
Duration
in Weeks Resource
Hourly
Cost
Hours per
Week
1 Operational definition
1.1 Research literature 3 Becky $35 30
1.2 Identify and define terms 1.1 1 Ann $60 30
1.3 Obtain approval of definition 1.2 2 Clive $50 20
2 Target Selection
2.1 Solicit partners for pilot 2 Ann
2.2 Hold brainstorming meeting 2.1 2 Becky
2.3 Identify characteristics of targets 2.2, 3.1 1 Ann
2.4 Obtain approval of partners 2.3, 1.2, 3.4 1 Clive
3 Question set
3.1 Identify process group members 2 Clive
3.2 Develop question set 2.3 4 Ann
3.3 Prototype and validate question set 3.2 3 Becky
3.4 Add partners 3.1, 2.1 3 Becky
352 Part 3 Planning Projects
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WBS Activity
Immediate
Predecessor
Duration
in Weeks Resource
Hourly
Cost
Hours per
Week
4 Pilot process
4.1 Schedule with target audience 2.4 2 Becky
4.2 Conduct beta test 3.4, 2.4 2 Clive
4.3 Process feedback from target
audience
4.2 2 Ann
4.4 Conduct pilot 4.3 2 Clive
4.5 Analyze results 4.4 2 Clive
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
You developed the WBS of multiple levels, including work
packages, at the lowest level based on the initial project
requirements below, which were further elaborated. Also,
you were asked to identify all the available resources in-
house and resources required externally in Chapter 9 for
this case study. If not developed, it is important now to
develop a resource breakdown structure (RBS) to estimate
the total budget of the project.
Building a single-family, partially custom-designed home
as required by Mrs. and Mr. John Thomas on Strath Dr.,
Alpharetta, Georgia. The single-family home will have the fol-
lowing features:
3,200 square-feet home with 4 bedrooms and 2.5
bathrooms
Flooring hard wood in the first floor, tiles in the kitchen
and bathrooms, carpet in bedrooms
Granite kitchen countertops, GE appliances in the kitchen
3-car garage and external landscaping
Ceiling 10 in first floor and vaulted 9 ceilings in
bedrooms
7-year warranty for structure and 2-year warranty for finish-
ing components
Using the WBS and RBS, you were asked to develop a
bottom-up cost estimate. This approach will require you to
identify resources required for each lowest-level WBS activ-
ity. Once resources are identified, you will estimate the effort
required for each resource. The cost estimate is derived from
the resource effort required.
This approach tends to be more stable because, when
estimating, errors have a chance to balance out. However,
it requires more preparation effort than top-down estimates.
In essence, the estimate is based on a more detailed under-
standing of the project
Tasks to Complete
The resource expenditure of each lowest-level WBS activ-
ity is estimated.
Resource effort (duration and cost) in monetary terms is
estimated for all the resources.
Costs for all the activities under the same WBS element at
the next higher level are rolled up.
This process is continued for all the WBS elements to
determine the overall project estimate.
Chapter 10 Budgeting Projects 353
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Semester Project Instructions
Create a time-phased budget for your example project
using bottom-up estimating. To the extent that your
sponsor supplies rates for workers, use those. Use
approximate rates for ones you cannot get. Ask your
sponsor how they treat indirect costs. Be sure to include
direct labor costs for yourself and your teammates. Bud-
get your costs at the starting salary you expect to receive
when you graduate (or your current salary, if you are
employed). Divide your annual salary by 2,080 hours
and add 20 percent for fringe. State all assumptions
and constraints you have used when creating your bud-
get. State how confident you are in your estimates and
what would make you more confident. Give examples of
known knowns and known unknowns on your project.
Tell how you have budgeted for both of them as well as
how you have budgeted for unknown unknowns.
PROJECT M ANAGEM ENT IN ACTION
The Value of Budget Optimization
At a major midwestern electric utility, budgeting for
the ongoing capital expansion of the electric power
system represents a process at the core of the orga-
nization s strategy and operations. During extensive
annual planning efforts, a three-year capital project
portfolio is developed for implementation and bud-
geted. The budgeting process is used to ensure that
available capital is carefully scrutinized by manage-
ment and applied judiciously to those projects pro-
viding the greatest strategic value on a schedule
minimizing overall risk. Maintaining the forecasted
budget and completing projects as planned ensures
the integrity of the electrical system and the financial
strength of the business.
The budgeting process itself is actually conducted
year-round as planners, engineers, project managers,
and financial experts endeavor to balance multiple
competing objectives into a rational, achievable, and
ongoing capital spending plan. There is little margin
for error. Annual spending for major capital projects is
typically over $250 million, representing approxi-
mately 500 projects to be completed across a five-
state area. Underbudgeting means that projects
potentially critical to the reliability of the electrical
network may not be completed. Overbudgeting could
result in investment dollars not yielding a return and
reducing earnings.
As with any enterprise, the electric utility capital
budget is restricted by annual spending targets nec-
essary to maintain prudent financial ratios. In the case
of capital spending, one key element involves main-
taining a targeted debt-to-equity ratio. For this reason,
judgments need to be made about the cost versus the
value of projects considered for investment and the
CASA DE PAZ DEVELOPMENT PROJECT
We received a donation of $20,000 from a personal friend
who wants to remain anonymous.
We will need a total of 12 (instead of 8) donations at the
$5,000.00 level for a total of $60,000, for start-up funds.
An annual event, a list of corporations as sponsors, and
grant seeking are still developing.
Our choice of building will have major budget ramifications.
The list of repairs considered necessary for our second
considered building (Saint Bernard) is complex and totals
somewhere between $100,000 and $150,000.
Two other possible buildings are Mitchell Avenue,
estimated at $50,000.00, and Virginia Avenue, estimated at
$74,000.
354 Part 3 Planning Projects
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risks associated with potentially postponing projects
to maintain favorable financial ratios.
To enable this entire process to work continuously
and effectively, the utility adopted a project portfolio
optimization process to create, analyze, and refine
the budget for the project portfolio. This process
involves executive management in creating a strate-
gic value and risk scoring methodology that is
applied during the planning phase for each project.
The method assigns a value and risk score based on
each individual project s forecasted impact in five
critical strategic areas: financial, reliability, customer,
regulatory, and system operations. A computer-
based mathematical algorithm is used to optimize all
possible spending portfolios to maximize value and
minimize risk at specified budget levels. Within
hours, the utility can analyze multiple optimized
budget scenarios at various annual spending levels
involving thousands of projects and nearly $1 billion
of investment.
This methodology has several key benefits for the
electric utility that can be applied to any organization
attempting to make budgeting decisions for complex
project portfolios.
Budget strategy well understood and communi-
cated through the organization The process
starts with an annual review by executive man-
agement of the strategy categories to which
value and risk assessments will be applied.
These categories and relative importance weight-
ings can be adjusted to match the organization s
current strategic emphasis. These categories and
their relative weightings are published, communi-
cated, and used throughout the organization.
Budget optimized for strategic objectives The
scores of value and risk for each project are applied
to the strategy categories and optimized to provide
maximum value and minimum risk for the capital
spending available. Computer software allows
instant scenario changes and what-if options to be
analyzed. The outcome provides management with
consistent and well-understood decision-making
information.
Consistent organizational strategy ensured Pro-
jects are submitted for budget consideration in
the capital portfolio from throughout the utility s
five-state operating area. There is a diverse array
of business and financial reasons for each project
to be evaluated. The use of a single enterprise-
wide tool allows all projects to be analyzed on
an equal basis, providing assurance that the orga-
nizational strategy is universally applied.
Risk thresholds and tolerance understood Post-
poning projects to conserve capital brings with it
certain risks. The budget optimization process
provides detailed risk analysis information on all
deferred projects. Widespread communication of
these risks and expert analysis of the conse-
quences and probability allow management to
make calculated and carefully considered deci-
sions. Importantly, management gains recogni-
tion of its own risk tolerance and risk threshold
levels as a result.
Planning horizon and purchasing power
expanded The most significant result of the bud-
get optimization process is the certainty with which
implementation (the project execution phase) of the
budget plan can be approached. The high levels of
up-front management scrutiny leave little doubt
about executive support for the plan going forward.
This enables the planning horizon to be significantly
expanded into future years and brings with it an
enormous level of labor and material purchasing
power in the market.
Project dynamics accounted for Although the
three-year budget plan is updated annually,
there are still elements of uncertainty associated
with implementation of a large project portfolio.
These changes might be items such as significant
shifts in public policy or regulations, fundamental
changes to the business model, unexpected
weather events, and so on. These midstream
shifts can be dealt with readily, if needed, by
changing project scoring criteria, reoptimizing
the project mix, and reevaluating the resulting
information for options going forward.
Source: Paul R. Kling, PE, PMP, director of project management and controls, Duke Energy.
Chapter 10 Budgeting Projects 355
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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References
A Guide to the Project Management Body of
Knowledge (PMBOK® Guide), 6th ed. (Newtown
Square, PA: Project Management Institute,
2017).
Practice Standard for Project Estimating (Newtown
Square, PA: Project Management Institute, 2011).
Good, Gordon K., “Project Development and Cost
Estimating: A Business Perspective,” AACE Inter-
national Transactions (2009) TCM.01.01–TCM
01.14.
Goodpasture, John C., Project Management the Agile
Way: Making It Work in the Enterprise (Fort Lau-
derdale, FL: J. Ross Publishing, 2010).
Hansen, Don R., and Maryanne M. Mowen, Manage-
rial Accounting, 9th ed. (Mason, OH: Cengage
South-Western, 2010).
Kim, Byung-Cheol, and Kenneth F. Reinschmidt,
“Combination of Project Cost Forecasts in Earned
Value Management,” Journal of Construction Engi-
neering and Management 137 (11) (November 1,
2011): 958–966.
Kim, Yong-Woo, et al. “A Case Study of Activity-Based
Costing in Allocating Rebar Fabrication Costs to
Projects,” Construction Management and Economics
29 (May 2011): 449–461.
Kinsella, Steven M., “Activity-Based Costing: Does It
Warrant Inclusion in A Guide to the Project Man-
agement Body of Knowledge (PMBOK® Guide)?
Project Management Journal 33 (2) (June 2002):
49–56.
Kwak, Young Hoon, and Rudy J. Watson,
“Conceptual Estimating Tool for Technology
Driven Projects: Exploring Parametric Estimating
Techniques,” Technovation 25 (12) (2005):
1430–1436.
Li, Huimin, et al. “Factors That Affect Transaction
Costs in Construction Projects,” Journal of Con-
struction Engineering and Management 139 (1)
(January 1, 2013): 60–67.
Madden, Debbie, “Your Agile Project Needs a Budget,
Not an Estimate,” Harvard Business Review, https://
hbr.org/2014/12/your-agile-project-needs-a-budget-
not-an-estimate, accessed April 10, 2017.
Milosevic, Dragan Z., Project Management Toolbox:
Tools and Techniques for the Practicing Project
Manager (New York: John Wiley & Sons, 2003).
Needy, Kim LaScola, and Kimberly Sarnowski, “Keep-
ing the Lid on Project Costs,” in David I. Cleland,
ed., Field Guide to Project Management, 2nd ed.
(Hoboken, NJ: John Wiley & Sons, 2004).
Rad, Parviz F., Project Estimating and Cost Manage-
ment (Vienna, VA: Management Concepts, Inc.,
2002).
Rad, Parviz F., and Vittal S. Anantatmula, Project
Planning Techniques (Vienna, VA: Management
Concepts, Inc., 2005).
Tichacek, Robert L., “Effective Cost Management: Back
to Basics,” Cost Engineering 48 (3) (March 2006):
27–33.
Todd, Greg, “Five Considerations to Improve Project
Estimates,” Information Management (November/
December 2009): 45–47.
Uppal, Kul B., “Cost Estimating, Project Performance
and Life Cycle,” AACE International Transactions
(2009): TCM.03.01–TCM.03.09.
http://www.fluor.com/services/engineering/pages/
value-engineering.aspx, accessed April 10, 2017.
http://www.rationalplan.com/projectmanagementblog/
creating-budget-or-cost-baselines-for-projects/,
accessed April 10, 2017.
Endnotes
1. Practice Standard for Project Estimating, 18.
2. Adapted from Kim LaScola Needy and Kimberly
Sarnowski, “Keeping the Lid on Project Costs,” in
David I. Cleland, ed., Field Guide to Project Man-
agement, 2nd ed. (Hoboken, NJ: John Wiley &
Sons, 2004): 150.
3. Practice Standard for Project Estimating, 83.
4. Ibid.
5. Practice Standard for Project Estimating, 85.
6. Greg Todd, “Five Considerations to Improve
Project Estimates,” Information Management
(November/December 2009): 47.
356 Part 3 Planning Projects
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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7. Practice Standard for Project Estimating, 81.
8. Practice Standard for Project Estimating, 84.
9. Practice Standard for Project Estimating, 82.
10. http://www.fluor.com/services/engineering/
pages/value-engineering.aspx, accessed April 10,
2017.
11. Practice Standard for Project Estimating, 82.
12. http://www.rationalplan.com/projectmanage-
mentblog/creating-budget-or-cost-baselines-for-
projects/, accessed April 10, 2017.
Chapter 10 Budgeting Projects 357
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C H A P T E R 11
Project Risk Planning
The Texas Medical Center (TMC) is composed of forty-nine not-for-profit institu-
tions that are dedicated to the highest standards of patient care, research, and edu-
cation. These institutions include thirteen renowned hospitals and two specialty
institutions, two medical schools, four nursing schools, and schools of dentistry,
public health, pharmacy, and virtually all health-related careers. People come from
all walks of life and from all over the world to have access to the best healthcare
anywhere. Member institutions specialize in every imaginable aspect of healthcare,
including care for children and cancer patients, heart care, organ transplantation,
terminal illness, mental health, and wellness and prevention.
Currently, 11 major construction projects are underway, including the Texas Chil-
dren s Hospital s 407,000-square-foot Neurological Research Institute and 720,000-
square-foot Maternity Center, along with a 12-story, 27,000-square-foot concrete-
frame addition to the M. D. Anderson Cancer Center of the University of Texas Med-
ical Center. Collectively, these major projects will add facilities that will be staffed by
up to 27,000 additional employees. When complete, TMC will have 40 million
square feet of occupied space. If you consider downtown business space, by itself
it forms the seventh-largest downtown business district in the United States.
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Describe how to plan
for risk management,
identify risks, analyze
risks, and create
response plans for
identified risks.
Identify and classify risks
for a project and popu-
late a risk register.
Describe various risk
assessment techniques
and tell when each is
appropriate to use.
Prioritize each risk on a
project using an appro-
priate assessment tech-
nique and develop and
defend at least one
strategy for each of the
high-priority risks.
Compare and contrast
the various strategies
for dealing with risks.
BEHAVIORAL OBJECTIVES:
Determine an indivi-
dual s propensity to
accept risk and use that
to strategize about
which risks to accept.
Determine an organi-
zation s propensity to
accept risk and use
that knowledge to
strategize about which
risks to accept.
TECHNICAL OBJECTIVES:
Select and utilize an
appropriate quantita-
tive risk analysis tool if
qualitative risk analysis
is not sufficient.
D
av
id
R.
Fr
az
ie
r
Ph
ot
ol
ib
ra
ry
,
In
c.
/A
la
m
y
St
oc
k
Ph
ot
o
358
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With hurricane season approaching, TMC held a conference for over 100 con-
tractors to review how to prepare for a potential hurricane. Contractors must
have a plan in place detailing how they are going to secure their construction
sites and keep materials from becoming airborne missiles in the event of a hurri-
cane. Conference attendees were given a handout describing TMC s hurricane
guidelines. These guidelines call for storm preparations to be completed 24 hours
before tropical storm winds are predicted to hit land. Examples of storm prepara-
tions include dismantling scaffolds and privacy screens, securing giant cranes,
emptying and weighting down dumpsters, photographing all buildings and assets,
and unblocking all streets for emergency access.
While project managers cannot prevent hurricanes, through careful risk plan-
ning, actions can be taken to greatly mitigate the impact.
Rhonda Wendler, Texas Medical Center News
I magine you are asked to plan for risks on two different projects. One is a major con-struction project at TMC with hurricane season approaching. The other is planning a
small fund-raising event for charity. Would you handle the risks on these two projects
the same way? Would you invest the same level of time and energy into planning these
two projects? The answers are yes and no. Yes, you would approach the risks in the same
way. But you would not spend the same amount of time planning for risk on both pro-
jects. You would spend considerably more time and money on risk management plan-
ning for the major construction project that is vulnerable to a hurricane than for the
small fund-raiser project. Just as in other types of project planning, there is an approach
to planning for risks that all projects follow; however, the depth of planning depends
greatly on the potential project risks and consequences if some of these risks are not
managed. In other words, a smart project manager gladly spends $100 in risk planning
to save $1,000 in expected consequences, but does not gladly spend $1,000 to save $100.
The purpose of risk management is to reduce the overall project risk to a level that is
acceptable to the project sponsor and other key stakeholders. The methods that project
managers use in risk management start with identifying as many risks as possible. Once
the risks are identified, each risk is analyzed in terms of its likelihood of occurrence and
impact on project goals if it occurs. Using this analysis, the project team can concentrate
their attention on the most critical risks. Analysis always consists of a qualitative or judg-
mental approach for all the identified risks and sometimes also includes a quantitative
approach for the critical risks. In the final risk management process, the project team
decides how to respond to each potential risk. Once all the risk management planning
has initially been accomplished, the response plans are incorporated into the overall
4.2 Develop Project Management Plan PM Plan
Baselines
11.7 Monitor
Risks
11.2 Identify
Risks
11.5 Plan Risk
Responses
11.6 Implement
Risk Responses
Risk Register
11.1 Plan Risk
Management
11.3 Perform
Qualitative
Risk Analysis
11.4 Perform
Quantitative
Risk Analysis
PMBOK® GUIDE
Topics:
Plan risk management
Identify risks
Perform qualitative
risk analysis
Perform quantitative
risk analysis
Plan risk responses
CHAPTER OUTPUT
Risk register
359
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AGILE
project management plan. Changes may need to be made to the schedule, budget, scope,
or communication plans to account for certain risks. These risk management planning
processes are covered in this chapter. Risk management also includes monitoring and
controlling the risks according to plan. These are covered, along with ongoing risk plan-
ning, in Chapter 14: Determining Project Progress and Results.
Agile projects are similar to other projects in regard to developing early risk planning,
assessment, and response planning at a high level. However, more detailed and timely
risk management occurs in planning each subsequent iteration, in daily stand-up meet-
ings, and in retrospectives at the end of each iteration.
11-1 Plan Risk Management
Plan risk management is “the process of defining how to conduct risk management
activities for a project.”1 A future event is considered a project risk if it threatens the
successful accomplishment of a project goal. Obviously, a project manager must first
understand the project’s objectives to plan for project risks. A project manager develops
this understanding initially by realizing what project success in general is and then by
understanding the specific priorities of the most important project stakeholders, as dis-
cussed in Chapter 6. Exhibit 11.1 summarizes current project success research results.
The first set of general project success measures is meeting various agreements associ-
ated with a project. This includes meeting the project requirements while not going over
the cost and schedule agreements. The second set of project success measures focuses on
the project’s customers, specifically addressing questions such as the following: Did the
project results or outcomes meet the customers needs? Did the customers use the project
result? Did it enhance the customers satisfaction? The third set deals with the future of
the performing organization, the one that manages the project. The specific measures
vary, but essentially, they focus on whether the project helped the performing organiza-
tion. The performing organization is an enterprise whose employees have a direct
involvement in executing and completing the project. Typical project success measures
for the performing organization include market share, new markets and/or technologies,
and commercial success of the project output. The final set of project success measures
deals with the project team, for example: Did they become better and more dedicated
EXHIBIT 11.1
PROJECT SUCCESS MEASURES
Meeting Agreements
Cost, schedule, and specifications met
Customer s Success
Needs met, deliverables used, customer satisfied
Performing Organization s Success
Market share, new products, new technology
Project Team s Success
Loyalty, development, satisfaction
Source: Kloppenborg, Timothy J., Debbie Tesch, and Broderick King, “21st Century Project Success Measures: Evolu-
tion, Interpretation, and Direction,” Proceedings, Project Management Institute Research and Education Conference,
July 2012, Limerick, Ireland.
360 Part 3 Planning Projects
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employees? Did they meet professional and personal aspirations and personal development
goals?
The specific priorities of the project’s most important stakeholders can be summa-
rized in a table such as Exhibit 11.2. In general, the unspoken expectations from the
project team are to complete the project sooner and below the budget while delivering
the agreed-upon scope and quality. A project manager and the project team need to
understand not only what the project plans call for but also what area(s) the most
important stakeholders would like to improve and what area(s) they are willing to sacri-
fice to enable those improvements. For example, consider a project that calls for building
a four-bedroom house of 2,800 square feet. Perhaps the homeowner (the most important
stakeholder) insists on keeping the size at 2,800 square feet and insists on the normal
quality (no leaks, square walls, etc.), but would like to improve on the cost (pay less
money). To improve on the cost objective, one of the other objectives probably needs
to be sacrificed. Perhaps the homeowner would be willing to move in a month late if
the savings were $5,000.
Once the project team understands the project success measures and priorities, atten-
tion is turned to understanding the project risks. All projects have some risk, and the
more unique a project is, the more risk there will be. Uniqueness of a project is usually
associated with uncertainties and unknowns, which contribute to project risks. It is
impossible to remove all sources of risk. It is undesirable to even try to remove all risks
because that means the organization is not trying anything new. Without risk, there is no
gain or progress.
A project risk is anything that may impact the project team’s ability to achieve the gen-
eral project success measures and the specific project stakeholders’ priorities. This impact
can be something that poses a threat, which is “a condition or situation unfavorable to the
project that presents a negative set of circumstances or events or consequences. A threat
also is a risk that will have a negative impact on a project objective if it occurs.”2
The impact of a threat, on the other hand, could be something that poses an opportu-
nity or “a condition or situation favorable to the project, a positive set of circumstances, a
positive set of events, a risk that will have a positive impact on project objectives.”3
Wise project managers strive to develop a risk management plan, an important plan
that is integral to the comprehensive project management plan that describes how risks
EXHIBIT 11.2
SPECIFIC PROJECT STAKEHOLDER PRIORITIES
IMPROVE KEEP
Scope X
Quality X
Time 1 month to save $5,000
Cost Want to save
Contribution to Organization X
Contribution to Society X
Source: Adapted from Timothy J. Kloppenborg and Joseph A. Petrick, Managing Project Quality (Vienna, VA:
Management Concepts, Inc., 2002), 46.
Chapter 11 Project Risk Planning 361
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are prioritized, monitored for changing priorities, and how prioritized risk management
activities will be planned and performed. Usually, a risk management plan develops a
mitigation strategy for all the prioritized risks before these risk events occur. By docu-
menting risk information in a proactive manner, a project manager can eliminate or
reduce the impact of some threats and capitalize on some opportunities. The risk man-
agement plan is also useful for communicating with the various project stakeholders and
for later analysis to determine what worked well and may be good practice to use on
future projects, as well as what went poorly and should be avoided on future projects.
Some risk management plans include all the topics in this chapter. Others are smaller.
For example, a risk management plan template for an IT consulting company is shown
in Exhibit 11.3.
11-1a Roles and Responsibilities
It is a good practice to encourage wide participation in risk management activities. One
reason is that everyone brings a different perspective, and the more perspectives that are
considered, the more likely it is that important risks will be uncovered early. Another
good reason is that people often resist when they are told what to do but work with
great enthusiasm if they participated in the planning. The surest way to get the various
project stakeholders to buy into a risk management approach is to involve them in risk
management planning right from the beginning. Potential critics can be turned into allies
if their concerns are included.
The risk management plan should define who is responsible for each risk manage-
ment activity. On small projects, often the project manager or a core team member is
responsible for most risk activities. On larger projects, the plan can be more elaborate
and subject matter experts may be involved at many points.
11-1b Categories and Definitions
Most projects have many types of possible risks. Therefore, it is helpful to look at risks in
a systematic manner so as to consider as many types of risks as possible. One way to
look at risk is by considering when it occurs in the project life cycle. For example:
Certain types of risks, such as a customer not agreeing on the price, may occur dur-
ing project initiation.
Others, such as not finding a capable supplier, may occur during project planning.
Risks, such as delivery difficulties from a supplier, may occur during project
execution.
EXHIBIT 11.3
RISK MANAGEMENT PLAN GUIDANCE FOR AN IT CONSULTING COMPANY
Risk management includes guidance on how to perform three risk management activities:
1. Decide what level of risk premium to charge for the project. The team must rate factors such as project size, complexity, tech-
nology, and type. The combined ratings dictate that a risk premium of 0, 10, or 20 percent be added to the estimated project
cost or, for very risky projects, that executive approval is mandated.
2. Mitigate risk external to the firm through contract clauses and risk internal to the firm through agreements.
3. Manage the risk very carefully through specifically designed weekly conference call meetings and reports.
Source: Rachana Thariani, PMP®
362 Part 3 Planning Projects
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Omission of some of the essential activities in the WBS may also be realized during
the project execution.
Risks, such as the project deliverable not actually working properly, may even
appear near the project conclusion.
The number and costs of project risks over a project life cycle are graphed in Exhibit 11.4.
More project risks are typically uncovered early in the life of a project. However, the cost
per risk discovered early is often less since there will be an opportunity and time to make
changes to the project plan. Risks discovered late in a project can prove to be very expen-
sive. Experienced project managers work hard to uncover risks as early in the project as
feasible. Usually, some risks are uncovered when chartering the project. On small or sim-
ple projects, this may be the biggest risk identification push, but on other projects, a great
deal of time and effort may also be expended during project planning.
In addition to being categorized by when they might occur in a project, risks can also
be categorized by what project objective they may impact, such as cost, schedule, scope,
and/or quality. Risks can also be classified as external to the performing organization and
internal to it, or by whether they are operational or strategic. Many organizations have
developed lists of risks for certain types of projects they routinely perform. In addition,
many writers have created general lists of risk factors for certain types of projects. For
example, recent research has shown the largest risks on megaprojects include risks from
nine causes:
1. Design
2. Legal and political
3. Contractual
EXHIBIT 11.4
RISKS OVER THE PROJECT LIFE CYCLE
Project Life Cycle Stage
Initiating Planning Executing Closing
Number of Risks Discovered Cost per Risk Discovered
Chapter 11 Project Risk Planning 363
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4. Construction
5. Operation and maintenance
6. Labor
7. Customer/user/society
8. Financial
9. Force majeure (an unforeseen event that prevents a contract from being fulfilled)4
Another recent study found that green retrofit projects classify their biggest risks as
coming from eight areas:
1. Post-tenants’ cooperation
2. Regulatory
3. Industry
4. Financial
5. Pre-retrofit tenant’s cooperation
6. Varying concerns from different stakeholders
7. Material supply and availability
8. Quality5
For a few further examples, Exhibit 11.5 shows the biggest 14 risks on the Panama
Canal expansion (which might be similar to those of other major construction pro-
jects). Exhibit 11.6 shows major risk categories for international projects generally, and
Exhibit 11.7 shows common risks for information systems projects. Any of these categor-
izations can be shown as a risk breakdown structure, which presents a hierarchical
organization of risks based on categories such as operational, strategic, finance, external,
and project management. A Risk Breakdown Structure is similar to a WBS or a resource
breakdown structure (RBS) in its hierarchical representation. It can be presented in
graphic or table format.
Yet another method to classify project risk is by what is known and what is not
known about each risk. Something that is a known known can be planned and managed
with certainty; therefore, it is not a risk. An example is that cement will harden. The next
level is known unknowns, which are risks that can be identified as risk but the likelihood
of them is not known. In other words, a known unknown may or may not happen.
These risks should be identified, and an analysis (qualitative for sure and quantitative if
EXHIBIT 11.5
FOURTEEN MOST IMPORTANT RISKS IN PANAMA CANAL EXPANSION
Changes in design and quantities Extreme bad weather
General inflation Inadequate claims administration
Ineffective contracting process Inefficient planning
Insufficient revenues Lack of controls
Lack of skilled and local labor Local labor strikes
Material, equipment, and labor cost Organizational risks
Owner-driven changes Referendum delays
Source: Alarcon, Luis F., et al., “Risk Planning and Management for the Panama Canal Expansion Program,” Journal
of Construction Engineering and Management (October 2011): 762–770.
364 Part 3 Planning Projects
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helpful) must be made to identify a mitigation strategy before a contingency reserve is
established to pay for them. An example on a long construction project is that bad
weather will probably happen at some points, but no one knows exactly when or how
bad it will be. The final level is for the true uncertainties. These are called unknown
EXHIBIT 11.6
TOP RISKS IN EACH FACTOR FOR INTERNATONAL PROJECTS
CULTURAL VIRTUAL
Number of languages Communication issues
Trust level Number of countries
Economic culture Management experience
Number of religions Number of time zones
POLITICAL REGIONAL
Government desire for project Crime rate
Government unrest Climate/weather
Laws and regulations Housing availability
Relationship with government Safety issues and procedures
Source: Steffey, Robert W., and Vittal S. Anantatmula, “International Projects Proposal Analysis: Risk Assessment
Using Radial Maps,” Project Management Journal (April 2011): 62–70.
EXHIBIT 11.7
TOP RISKS IN EACH FACTOR FOR SOFTWARE PROJECTS
EXECUTION MANAGEMENT USER COORDINATION
Configuration management system User evaluation of progress
Formality of status reports User understanding of complexity
Specification approval process Care in user manual preparation
Post-project audits Coordination with user
Regularity of technical reviews Informal communication channels
HUMAN RESOURCE MANAGEMENT PROJECT PLANNING
Flexibility of working hours Frequency of software reuse
Individual performance incentives Planning tools used
Technical assistance availability Minimum cost software design
Recognition for extra work Removal of unnecessary requirements
Enforced attendance system Individual accountability
Source: Thomas, Sam, and M. Bhasi, “A Structural Model for Software Project Risk Management,” Journal of Manage-
ment (March 2011): 71–84.
Chapter 11 Project Risk Planning 365
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unknowns (or unk unks by people who must deal with them). Since they cannot even be
envisioned, it is hard to know how much reserve time and money are needed to cover
them. They are usually covered by a management reserve, and the amount of this reserve
is often negotiated based upon the confidence level the project manager and key stake-
holders have regarding how well they understand the project. An example could be a
100-year flood that covers a construction site that everyone thought was on high enough
ground to stay dry—an event so rare it is expected to happen only once a century. The
tsunami that devastated a part of Japan in March 2011 was completely unexpected and
an unknown risk that many projects in that region did not anticipate.
Savvy organizations are now often encouraging their project managers to reduce the
number of unk unks by learning more about them so they can be known unknowns.
They learn more by a combination of design approaches such as analyzing scenarios,
using checklists, considering weak signals that might have been previously ignored, and
mining big data. They also use behavioral approaches such as frequent and effective
communication and creating incentives for discovery.6
11-2 Identify Risks
Once the risk management planning is in place, it is time to begin identifying specific
risks. Identify risks is “the process of determining which risks may affect the project
and documenting their characteristics.”7 Project managers are ultimately responsible for
identifying all risks, but often they rely upon subject matter experts to take a lead in
identifying certain technical risks.
11-2a Information Gathering
A large part of the risk identification process is gathering information. The categories
shown in Exhibits 11.5, 11.6, and 11.7 and/or project stages can be a good starting
point in this information gathering. The project manager either needs to act as a facilita-
tor or get another person to serve as facilitator for information gathering. This is essen-
tially a brainstorming technique, during which time the question “What could go
wrong?” is repeatedly asked of everyone who is present for every activity identified in
the WBS. It is helpful to use Post-it Notes and write one risk per note to prepare for
further processing the risks during risk analysis.
Classic rules for brainstorming are used. For example, every idea is treated as a useful
idea. The risks will be assessed next. Even if a suggested risk does not prove to be impor-
tant, it is preferable to keep it on the list. Also, sometimes a risk that is obviously not
important—or is even humorous—may cause another person to think of an additional
risk they would not have considered otherwise.
While it is helpful to have as many stakeholders together as possible to “piggyback”
on each other’s ideas, with the information technology available today, much of the same
interaction can be achieved by global and virtual teams; it just takes more careful plan-
ning. Variations, combinations, and extensions of possible risks can help a project team
to identify additional risks.
Several other techniques are also used in risk identification. The project team
members may choose to interview stakeholders, specifically when a project is big,
complex, and is associated with many uncertainties. In certain cases, SWOT analysis,
which is a detailed analysis of the project’s and project management’s strengths,
weaknesses, opportunities, and threats, might be used. Remember, risks can be both
threats to overcome and opportunities to exploit. Yet another method of identifying
366 Part 3 Planning Projects
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risks is the Delphi technique, an information gathering technique used as a way to
reach a consensus among experts on a subject, with the experts participating anony-
mously in order to avoid groupthink and prejudice. Responses are summarized and
recirculated for further comments and improvements. Finally, a team can use a struc-
tured review to identify risks.
11-2b Reviews
A project manager and team can review a variety of project documents to uncover pos-
sible risks. Exhibit 11.8 lists some of the documents a project manager may use and typ-
ical questions he or she would ask for each. Project teams can often identify risks from
each type of review shown in the exhibit. Of these, assumptions and the WBS are espe-
cially important sources for identifying risks. Every wrong assumption becomes a project
risk. We initially develop a list of assumptions and constraints in the project charter.
However, the list needs to be updated during the project planning phase and must be
critically examined during the risk management planning to assess if all these assump-
tions are correct. Likewise, each work package in the WBS must be examined to identify
risks associated with it. It is important to maintain balance between the extent of the
reviews and the amount of useful information for identifying risks. As with the brain-
storming mentioned previously, it is better to identify many possible risks and later
determine that some of them are not major, rather than to not identify what does turn
out to be a big risk.
EXHIBIT 11.8
PROJECT RISK REVIEWS
TYPE OF REVIEW QUESTION
Charter Is there clarity and common understanding in each section?
Stakeholder register What could upset any of them?
Communication plan Where could poor communications cause trouble?
Assumptions Can you verify that each assumption is correct?
Constraints How does each constraint make the project more difficult?
WBS What risks can you find going through the WBS item by item?
Schedule What milestones and other merge points might be troublesome?
Resource demands At what points are certain people overloaded?
Touch points What difficulties may arise when some project work is handed off from
one person to another?
Literature What problems and opportunities have been published concerning similar
projects?
Previous projects What projects and opportunities have similar projects in your own
organization experienced?
Peers Can your peers identify any additional risks?
Senior management Can senior management identify any additional risks?
Chapter 11 Project Risk Planning 367
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11-2c Understanding Relationships
Project managers can also seek to identify risks by learning the cause-and-effect relation-
ships of risk events. One useful technique is a flow chart that shows how people, money,
data, or materials flow from one person or location to another. This is essentially what the
team does when it reviews the project schedule, provided it looks at the arrows that show
which activities must precede others. By studying the flows, a person can consider which
“handoffs” (when one person or team passes deliverables to another) might be risky.
A second method of understanding risk relationships is to ask why a certain risk event
may happen. This can be accomplished through root cause analysis, which is an analytical
technique to ascertain the fundamental or causal reason or reasons that affect one or more
variances, defects, or risks. A simple approach to root cause analysis is to simply consider
each risk one at a time and ask, “Why might this happen?” At this point, since many poten-
tial risks have probably been identified, project teams do not spend a large amount of time
on any single risk. If necessary, the project team can perform more detailed root cause anal-
ysis of the few risks that have been designated as major risks during risk analysis.
One more type of relationship project managers like to understand is trigger condi-
tions, or a “circumstance under which a risk strategy or risk action will be invoked.”8
A trigger can be specific to an individual risk, such as when a key supplier stops return-
ing phone calls, which may jeopardize their delivery of materials.
11-2d Risk Register
The primary output of risk identification is the risk register. When complete, the risk
register is “the document containing the results of the qualitative risk analysis, quantita-
tive risk analysis, and risk response planning. It details all identified risks, including
description, category, cause, probability of occurring, impact(s) on objectives, proposed
responses, owners, and current status.”9 At this point (the end of risk identification),
the risk register includes only the risk categories, identified risks, potential causes, and
potential responses. The other items are developed during the remainder of risk plan-
ning. An example of a partial risk register is shown in Exhibit 11.9.
The risk register is a living document. As a risk is identified, it is added. More infor-
mation regarding a risk can be added when it is discovered. It is normal to identify more
risks during all the phases of the project. As risks are addressed, they can be removed
from the risk register because they no longer are of the same level of concern. On smaller
projects, a spreadsheet works fine for a risk register. On larger, more complex projects,
some organizations use databases.
11-3 Risk Analysis
Every project team must consider risks diligently. If a project team is serious about risk
identification, they will uncover quite a few risks. Next, the team needs to decide which
risks are major and need to be managed carefully, as opposed to those minor risks that
can be handled more casually. The project team should determine how well they under-
stand each risk and whether they have the necessary reliable data. Ultimately, they must
be able to report the major risks to decision makers.
11-3a Perform Qualitative Risk Analysis
Perform qualitative risk analysis is “the process of prioritizing risks for further analysis
or action by assessing and combining their probability of occurrence and impact.”10
All project teams should perform this analysis. If the project team understands enough
368 Part 3 Planning Projects
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about the risks at this point, it can proceed directly to risk response planning for the
major risks. If not, they use more quantitative techniques to help them understand the
risks better. The risk factor of a risk is the product of probability and consequence. Risks
with higher risk factors are considered for quantitative analysis.
DIFFERENTIATING BETWEEN MAJOR AND MINOR RISKS Project teams use two
primary questions in qualitative risk analysis: How likely is this risk to happen? If it does
happen, how big will the impact be? This was shown in Exhibit 3.8 (see page 74). A
somewhat more involved example is shown in Exhibit 11.9. Note that for each
dimension—probability and impact—in Exhibit 11.10, a scale of 1 to 5 is used with
descriptions. The scale used does not matter, as long as it is applied consistently and is
easy for everyone to understand. Note also the dark line. This line separates the major
and catastrophic risks that need either further analysis and/or specific contingency
plans from minor and moderate risks that can just be listed and informally monitored.
Without making a distinction like this, project teams may be tempted to either ignore all
risks or to make contingency plans for all risks. Ignoring all risks is not desirable because
it almost warrants that the project has problems. Making contingency plans for even
minor risks is a terrible waste of time and draws focus away from the critical risks.
Some people choose to make a finer distinction in their risk analysis by coding the
biggest risks red, moderate ones yellow, and smaller ones green like stoplights. This
Teams should assess potential risks and predict possible
outcomes involved in a project.
Pa
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Chapter 11 Project Risk Planning 369
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

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370 Part 3 Planning Projects
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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may be good practice on bigger, more complex projects. The important point is to make
sure to have specific plans for big risks while not overreacting to small ones.
Project teams must ask, regarding each risk: When it is likely to occur in the project
lifecycle? This can be useful because those risks that are likely to occur earlier often need
to be assigned a higher priority. Teams may also inquire how easy it is to notice and
correctly interpret the trigger condition. Risks with triggers that are difficult to notice
or interpret often are assigned a higher priority.
CAUSE-AND-EFFECT RELATIONSHIPS One additional type of qualitative risk analy-
sis is to determine cause-and-effect relationships. This is part of root cause analysis,
which was described in the previous section on understanding relationships. While
effects are often more visible, it is easier to change the effect by changing the underlying
cause. For example, assume that a construction worker is not laying stones evenly for a
patio (the effect). Perhaps the easiest way to ensure that future stones are placed evenly is
to understand why the worker is having problems. The cause may turn out to be incon-
sistent stone size, incorrectly prepared ground, the cement for holding the stones having
bigger gravel than normal, or an improperly functioning leveling tool. Once the causes
are understood, they can serve as trigger conditions to identify that a risk event may be
about to happen. This knowledge is useful when developing responses to risks.
CAUSE-AND-EFFECT DIAGRAM A tool that is useful in this analysis is the cause-
and-effect diagram. Many project teams use this diagram to identify possible causes for
a risk event. An example is shown in Exhibit 11.11.
The cause-and-effect diagram is also known as the fishbone diagram because its many
lines make it look like the skeleton of a dead fish. To construct the cause-and-effect dia-
gram, the project team first lists the risk as the effect in a box at the head of the fish. In
this example, it is late delivery. The more specifically the risk is stated, the more likely it
is that the team can uncover its real causes. The next step is to name the big bones. In
this case, there are four big bones named people, machines, methods, and materials.
There can be any number of big bones, and they can be named whatever makes sense
to the team constructing the diagram. Team members are then encouraged to keep ask-
ing the question “Why?” For example: Why could people be a cause? Two reasons are
shown: they are not trained properly or they are overallocated. Often, a team proposes
EXHIBIT 11.10
QUALITATIVE RISK ASSESSMENT
P R O B A B I L I T Y I M P A C T
INSIGNIFICANT (1) MINOR (2) MODERATE (3) MAJOR (4) CATASTROPHIC (5)
Almost certain (>90%
chance)
High High Extreme Extreme Extreme
Likely (50–90%) Moderate High High Extreme Extreme
Moderate (10–50%) Low Moderate High Extreme Extreme
Unlikely (3–10%) Low Low Moderate High Extreme
Rare (<3%) Low Low Moderate High High Chapter 11 Project Risk Planning 371 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 many possible reasons. The team continues to break down the reasons—that is, asking “why” until it no longer makes sense to ask why. Cause-and-effect diagrams are fre- quently much fuller than this small example (Exhibit 11.11), with dozens of potential causes. Once the team no longer can think of possible causes, they need to determine which of the many possible causes are true causes. Selecting a few likely causes and then testing them can determine this. 11-3b Perform Quantitative Risk Analysis Perform quantitative risk analysis is “the process of numerically analyzing the effect of identified risks on overall project objectives.”11 While all projects use qualitative risk analysis, quantitative risk analysis is used only when necessary and only on selected risks. Bigger, more complex, riskier, and more expensive projects often can benefit from the additional rigor of these more structured techniques. Quantitative risk analysis is often used when predicting with confidence the probability of completing a project on time, on budget, and with the agreed-upon scope and/or when the agreed-upon quality is critical. Some of the more frequently used quantitative techniques follow: Decision tree analysis: a graphic tool depicting alternative choices as branches, mul- tiple options for each alternative, and evaluating potential outcomes in terms of uncertainty and monetary value. Expected monetary value (EMV) analysis: a statistical technique to calculate pres- ent value of future outcomes to choose the best alternative. It is generally used for engineering economics and cost-benefit analysis. Failure mode and effect analysis (FMEA): “a step-by-step approach for identifying all possible failures in a design, a manufacturing or assembly process, or a product or service.”12 EXHIBIT 11.11 CAUSE-AND-EFFECT DIAGRAM Not working Not available Method used Order of work Untrained Over allocated Defective materials Wrong materials Scheduled on other activities Scheduled on other projects Lack prioritization Too many promises Safety hazards 372 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Sensitivity analysis: a quantitative what-if risk analysis technique that presents com- parative analyses of various desirable outcomes with respect to a financial measure or uncertainty. It can be used to determine which risks have the most impact on the project outcomes or goals. Tornado diagrams are often used to represent this analysis. A tornado diagram is a special type of bar chart and data where project goals are listed vertically and risk uncertainties are depicted horizontally as probability. The order of presenting the categories is that that the largest bar appears on the top and the smallest bar appears at the bottom. Simulation: a technique that mimics real situations using uncertainties and asses- sing their impact on project objectives. In the context of projects, the simulation technique called Monte Carlo analysis develops probability distribution of risks and their impact on project goals such as cost and time. Criteria to help select a suitable quantitative risk technique or methodology should do the following: Use explicit knowledge of the project team members. Allow quick response. Help determine project cost and schedule contingency. Foster clear communication. Be easy to learn and use. 11-3c Risk Register Updates The probability of each risk occurring and the impact if it does happen are added to the register for each risk. The priority for each risk is also listed. Some organizations use a “Top 10” list to call attention to the highest-priority risks. In addition, some organiza- tions choose to place higher priority on risks that are likely to happen soon. Some orga- nizations want to call attention to risks that are difficult to detect—that is, risks with obscure trigger conditions. Any of these means of calling attention to certain risks are also listed in the risk register. If the project team performed any quantitative risk analy- sis, the results are also documented in the risk register. 11-4 Plan Risk Responses Once risks have been identified and analyzed, the project team decides how they will handle each risk. Plan risk responses is “the process of developing options and actions to enhance opportunities and to reduce threats to project objectives.”13 This is often a creative time for project teams as they decide how they will respond to each major risk. Sometimes a team develops multiple strategies for a single risk because they do not believe one strategy will reduce the threat or exploit the opportunity as much as the sta- keholders would like. The team may decide that it is not worth the effort to eliminate a threat completely. In those cases, the goal is to reduce the threat to a level that the spon- sor and other stakeholders deem acceptable. 11-4a Strategies for Responding to Risks Because so many possible strategies can be developed for dealing with project risks, it helps to classify the strategies. Common risk strategies are shown in Exhibit 11.12. Chapter 11 Project Risk Planning 373 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AVOID RISK Many people prefer to avoid a risk if possible, and often, that is the best strategy. Sometimes, a project plan can be altered to avoid a risk by deleting the risky section or work element. For example, if the local police tell the organizers of a parade that traffic patterns on one section of their route are very difficult to control, perhaps they may alter the route. Project risk response strategy decisions often must be made with a thorough understanding of the key stakeholders’ priorities of cost, schedule, scope, and quality. In this example, if no powerful stakeholder had a strong interest in the exact route, the change might be easily made. However, project managers need to understand that every decision they make regarding risk response strategies may impact something else. Another avoidance strategy is to ensure communications are good, especially concern- ing risky issues. Many risks can be more easily addressed with prompt and accurate information. The ultimate avoidance strategy is to not perform the project at all. This choice is sometimes made when the risks posed by the project are deemed unacceptably large compared to the potential benefits. Before a decision is made not to perform a project at all, normally each of the other strategies is considered. TRANSFER RISK Sometimes, a decision is made to transfer a part of or an entire proj- ect risk to another organization. One common means to do so is through insurance. Project insurance works like any other type of insurance: a premium is paid to another organization, which will assume a level of risk. Higher premiums need to be paid for more risk to be assumed (think of lower deductibles). Therefore, using insurance as a risk transfer strategy is a two-part decision: Do we transfer risk, and, if so, how much risk do we transfer? The answer generally is “enough so the overall risk is acceptable to key stakeholders.” A second transfer strategy deals with the type of contract used. An owner wishing to transfer risk to a developer will want to use a fixed-price contract. The developer who Le o/ Sh ut te rs to ck .c om 374 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 accepts the risk would insist on a higher price to cover her uncertainty. A fixed-price contract can be used when the scope is well defined. A developer who wishes to trans- fer risk to an owner would prefer a cost-plus contract under which she is compensated for her cost plus a certain amount of profit. The owner, in turn, would prefer to drive for a low cost in such an arrangement because he is assuming the risk. This risk trans- fer strategy of using contracts is employed when the scope cannot be defined completely. Other types of contracts can be written so that both parties share the proj- ect risk. A third risk transfer strategy is to hire an expert to perform the risk and to hold that person accountable. None of the transfer strategies eliminate risk; they just transfer the risk and let someone else assume it. EXHIBIT 11.12 COMMON PROJECT RISK STRATEGIES STRATEGY TYPE OF RISK EXAMPLES Avoid Threat 1. Change project plan and/or scope 2. Improve project communications 3. Decide not to perform project Transfer Threat 1. Insurance 2. Fixed-price contract 3. Hire expert Mitigate Threat 1. Lower probability and/or impact of threat 2. Build in redundancy 3. Use more reliable methods Accept Threat and opportunity 1. Deal with it if and when it happens 2. Establish triggers and update frequently 3. Establish time and/or cost contingencies Research Threat and opportunity 1. Get more and/or better information 2. Verify assumptions 3. Use prototype Exploit Opportunity 1. Assign talented resources to project 2. Give more emphasis to project Share Opportunity 1. Allocate partial ownership to third party 2. Form joint venture Enhance Opportunity 1. Increase probability and/or positive impact 2. Identify and maximize key drivers 3. Add more resources Source: Adapted from A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (Newtown Square, PA: Project Management Institute, 2008): 261–263; Paul S. Royer, Project Risk Management: A Proactive Approach (Vienna, VA: Management Concepts, Inc., 2002): 35; and Eric Verzuh, The Fast Forward MBA in Project Manage- ment, 2nd ed. (Hoboken, NJ: John Wiley & Sons, 2005): 100–103. Chapter 11 Project Risk Planning 375 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 MITIGATE RISK Mitigation strategies are those in which an effort is made to lower risk. In general, this means either reducing the probability of a risk event happening and/or reducing the impact if it does happen. For example, a major risk could be that a key resource may not be available. To reduce the probability of that happening, perhaps the person could be hired well in advance of the project and then not be assigned to work on any other projects. To reduce the impact if this person were not available, per- haps the project team would like to use the second mitigation strategy of building redun- dancy. They could train another team member to do the work of the key resource. Redundancy is a way of life in systems projects. An example is building a redundant sys- tem when developing an aircraft to increase reliability and safety. However, we must be judicious in selecting redundancy because the weight of the aircraft would increase and could become prohibitive in cost. In such cases, a third mitigation strategy is often uti- lized: use more reliable methods. If the primary way of performing a key activity is highly reliable, there is less need for other mitigation strategies. ACCEPT RISK A fourth risk response strategy is to accept the risk. This is often used for risks that are deemed to be minor. The project team deals with them if and when they happen. If the risks are deemed to be minor, most of them will not hap- pen, and when they do, most will not cause major disruptions. However, some risks can have significant impact on the project if left untended. Therefore, project teams often define a trigger condition for some of these accepted risks. The trigger condition marks the dividing point where, instead of just monitoring the risk, the team starts to deal with it. For fruit and vegetable growers in California, the trigger condition may be a weather report predicting cold temperatures. Armed with that knowledge, the growers enact strategies to protect their crops to the extent possible. The growers are willing to accept the risk of cold weather occasionally because they make enough money at other times to compensate for the loss. If they were in a climate with more cold weather, they may choose not to grow sensitive crops during the cold season. One other acceptance strategy is to put contingencies of time and/or money into the project plan to cover the risks that transpire. Each of these acceptance strategies can also be used to take advantage of opportunities. All the strategies—establishing trigger conditions to notify the team when an opportunity is present, dealing with it as it happens, and having a little extra time and money to alter the project plans to reap the potential benefits—make sense. An example of these three strategies applied to an opportunity could be when a company develops a new style of hat, a celebrity wears it on TV, and then the demand takes off. By using more money to advertise to the unexpected customers, the company may generate many additional sales. RESEARCH RISK In certain instances, the best way to handle a risk is to learn more about it. The first research strategy, therefore, is to secure better and/or more informa- tion so the project team understands what they are dealing with. Projects often are con- ducted in a rapidly changing environment in which decisions need to be made quickly, often based upon imperfect and incomplete information. It is unusual to gather and ver- ify all the information desired, and we may not be able to do so; however, at times it is useful to gather as much information as possible. Another research strategy is to verify assumptions that have been made. Assumptions that prove to be false become risks. Yet another research strategy is to perform the project on a small scale first to see if it works. This can include developing a prototype, test 376 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE marketing a new product, running new software in one department first, and so on. Proj- ect teams can often learn a great deal from trying their ideas on a small scale first. These research strategies work well for both reducing threats and capitalizing on opportunities. EXPLOIT OPPORTUNITY One strategy that is aimed exclusively at opportunities is exploitation. A project manager may identify trigger conditions that, if reached, will allow her to go to her sponsor to request that the project be assigned a higher priority. If the organization wants to exploit opportunities, they can assign more or better resources to the project, remove barriers, and give it more visibility in management reviews. SHARE OPPORTUNITY One additional exploitation strategy deals with the results of the project. Perhaps the project team can develop a new product or service so revolution- ary that the parent organization is not capable of fully exploiting it. In a case like this, the parent organization may spin off a nimble subsidiary, form a joint venture with another firm, or sell the rights to the product. ENHANCE OPPORTUNITY Essentially, a project team wants to either maximize the probability that an opportunity will occur and/or maximize the benefit if it does. The project manager wants to identify key drivers of these positive impacts and develop strat- egies to capitalize upon them. Certainly, adding more or better resources is one way to enhance opportunities. 11-4b Risk Register Updates The project manager sees that the risk register is updated with the results of the response plan- ning. For each risk, the response strategy is noted. It also means that a single person is assigned as the “owner” of each risk, and that person is responsible for understanding the trig- ger and for implementing the strategy. Finally, any changes that need to be made to the proj- ect schedule, budget, resource assignments, and communications plan should be included. Risks associated with agile projects are often associated with development process conflicts, business process conflicts, and people conflicts. Development process conflicts relate to functionality and short and focused iterations. They are different from traditional projects that aim at optimizing development. Business process conflicts in agile projects are due to higher ambiguity and uncertainty that compel us to focus on short-term results and long- term haziness. Further, the WBS is developed incrementally. On the other hand, agile projects demand that the product owner remain closely involved throughout the project. This focus can reduce risk because many details are handled as they arise. Also, since something of value needs to be delivered at each itera- tion with a test to confirm that it works, risks tend to be uncovered quickly, before they become too significant. PMP/CAPM Study Ideas As a project manager, your goal is to complete your project on time, on budget, at an agreed-upon level of quality, and to the satisfaction of your client and other stakeholders. Risks are anything that could impede or help you in this goal. Remember that, accord- ing to the Project Management Institute, project risks can be negative or positive. The strategies for dealing with negative risks, or threats, are as follows: avoid, transfer, miti- gate, research, and accept. Conversely, the strategies for dealing with positive threats, or opportunities are the following: exploit, enhance, share, research, and accept. Chapter 11 Project Risk Planning 377 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 In creating a risk management plan, the first step is to identify all possible risks. While it may seem counterintuitive (and, therefore, you may see a question or two about it on your CAPM or PMP test), you do not want to plan for all risks. That is why your next step is to categorize them based on both probability of occurrence and potential impact. Only the risks that emerge as “major” based on these two criteria are actively planned for. All projects make use of qualitative planning, and larger projects often proceed to quantitative planning (if may help you to remember that the “l” in qualitative comes alphabetically before the “n” in quantitative). You won’t need to be an expert, but you should be familiar with the most common quantitative assessments. Summary All projects have some risks. More unique projects have more uncertainties and unknowns and, therefore, more risks. A project manager needs to use an appro- priate level of detail in risk planning—enough to plan for major risks, yet not so much that a great deal of time is spent on minor risks. Risk management planning starts with understand- ing what constitutes success for the upcoming project. This may require understanding the trade-off decisions that key stakeholders are willing to make among the project scope, cost, time, and quality. Risk management planning is part of the overall project management plan and may be performed concurrently with other project planning components. Identifying risks includes gathering information on potential risks. This can be accomplished by having the project core team and selected subject matter experts brainstorm all of the possible risks. Many times, a core team can review documents such as the project charter, WBS, communication plan, or schedule to help identify risks. The core project team can look beyond project documents for external risks using reviews of literature and consulting with external experts. Once risks have been identified, the core team creates the risk register with each risk categorized. Sometimes, a team also lists potential causes for each risk and potential responses. The next major activity is to analyze the risks. At a minimum, this involves determining which risks are major—at least from the standpoints of how likely each risk event is to occur and how big of an impact it will have if it does occur. Sometimes, more sophisticated analysis is performed to identify the root causes of risks, to identify the trigger conditions that signify the risk event is about to happen, or to consider more complex relationships among risks. Quantitative techniques are sometimes used to determine which risks are major in terms of prob- ability to occur and potential to impact project goals. Risk response planning involves determining in advance how to respond to each major risk. Minor risks are handled by simply being aware of their poten- tial and dealing with them if they occur. Eight types of risk response strategies that can be applied to major risks are avoid, transfer, mitigate, accept, research, exploit, share, and enhance. A project manager may decide to use multiple strategies on a large and critical risk. Armed with proper risk planning, a project man- ager can confidently begin even a risky project. Key Terms Consistent with PMI Standards and Guides plan risk management, 360 performing organization, 360 project risk, 361 threat, 361 opportunity, 361 risk management plan, 361 risk breakdown structure, 364 identify risks, 366 SWOT analysis, 366 Delphi technique, 367 root cause analysis, 368 trigger condition, 368 risk register, 368 perform qualitative risk analysis, 368 perform quantitative risk analysis, 372 decision tree analysis, 372 expected monetary value (EMV) analysis, 372 failure mode and effect analysis (FEMA), 372 sensitivity analysis, 373 tornado diagram, 373 simulation, 373 plan risk responses, 373 378 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Chapter Review Questions 1. A negative impact is known as a(n) , while a positive impact is known as a(n) . 2. Who should be involved in identifying potential risks for the project? 3. List and describe the four different categories of project success measures. 4. During which stage of a project are most risks typically uncovered? 5. Relative to the project’s life cycle, when is the cost per risk discovered typically highest? 6. When a project manager is gathering informa- tion about risks, is it a good idea for her to set a limit on the number of risks that will be con- sidered? Why or why not? 7. What does a SWOT analysis examine? 8. What is a root cause analysis? 9. Name three different ways to categorize project risks. 10. A key supplier for your project has not been returning your calls or responding to your e-mails. This is an example of a(n) , which indi- cates that a risk is likely to occur. 11. What two main criteria are used when evaluating risks during qualitative risk analysis? 12. Should every risk, no matter how major or minor, have a contingency plan created to address it? Why or why not? 13. Are both qualitative and quantitative risk analy- ses used on all projects? Why or why not? 14. What is an example of transferring risk? 15. Describe the various types of information that are often contained in the risk register. Why is each included? 16. In the risk register, why should only one person be assigned “owner” of a risk? 17. Which three risk strategies are used specifically for dealing with opportunities? Discussion Questions 1. Give one example each of a known known, known unknown, and unknown unknown you have encountered on previous projects. 2. Describe trade-offs that may need to be made among project stakeholders’ priorities. How would you address these trade-offs as a project manager? 3. List three methods that can be used for categoriz- ing project risks. For a fund-raising project, give examples of risk using each categorizing method. 4. To help identify risks, what are some questions a project manager could ask when reviewing the project charter and WBS? 5. You are hosting a large dinner party. What are two possible risks you would encounter? Identify at least one trigger condition for each. 6. What is the difference between a major risk and a minor risk? How do you determine which risks are major versus minor? 7. List and describe at least three common quantitative risk analysis techniques. Under what circumstances would you find each one useful? 8. Name the eight common risk responses that are used and describe how you might use two or three of them together on a project. 9. You are the project manager of a construction project for a large organization and will be relying mostly on independent contractors to execute the project work. Which type of contract would you prefer to use to procure their services? Why? 10. Give an example of a risk you have chosen to accept on a previous project. How did you make the decision to accept it? In retrospect, was that the right decision to make? PMBOK ® Guide Questions 1. A SWOT analysis is an information-gathering tool that helps increase the range of identified risks by examining strengths, weaknesses, , and threats to a project. a. opportunities b. options c. origins d. organizations Chapter 11 Project Risk Planning 379 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 2. The is a living document in which the results of risk analysis and risk response plan- ning are recorded. a. root cause analysis b. risk register c. risk management plan d. cause-and-effect diagram 3. While all projects use risk analy- sis, risk analysis is used only when it is needed and there is sufficient data to develop appropriate models. a. quantitative, qualitative b. quantitative, opportunity c. opportunity, qualitative d. qualitative, quantitative 4. A team’s attempt to list, on individual sticky notes, all of the possible threats and opportu- nities that could occur to an upcoming project might be used during the process. a. plan risk responses b. perform qualitative risk analysis c. identify risks d. perform quantitative risk analysis 5. Avoid risk, mitigate risk, accept risk, and are all strategies for responding to negative risks, also known as threats. a. enhance risk b. prevent risk c. transfer risk d. share risk 6. An analytical technique used to determine the basic underlying source of a variance, a defect, or a risk is called . a. qualitative risk analysis b. Monte Carlo analysis c. SWOT analysis d. root cause analysis 7. The Risk Management Plan describes the methodology, roles and responsibilities, budget- ing, timing, and risk categories for potential causes of risk. These risk categories can be struc- tured into a hierarchical representation called a(n): a. organizational breakdown structure (OBS) b. risk breakdown structure (RBS) c. work breakdown structure (WBS) d. threats breakdown structure (TBS) 8. Risks that have been identified and may or may not happen are referred to as known unknowns, and a should be established to cover them if they are triggered. a. contingency reserve b. management reserve c. funding reserve d. risk buffer 9. is a quantitative risk analysis model- ing technique used to help determine which risks have the most powerful impact on the project. Using a tool such as a tornado diagram, it “exam- ines the extent to which the uncertainty of each project element affects the objective being studied when all other uncertain elements are held at their baseline values.” a. Fishbone diagram b. Monte Carlo technique c. Expected monetary value analysis d. Sensitivity analysis 10. Expected monetary value (EMV) is commonly used within this type of analysis: a. root cause b. decision tree c. Monte Carlo d. cost/benefit Exercises 1. For a project in which you are planning a campus event with a well-known speaker, identify and quantify risks and develop contingency plans for the major risks. 2. For the same campus event project, perform a literature review to identify risks. 3. Engage another student team to perform a peer review of project risks for your project. In turn, you perform a peer review for theirs. 4. For one of the risks identified in Exercises 1 through 3 above, construct a cause-and-effect diagram to determine possible root causes. Deter- mine which of the possible root causes are prob- able. Describe how you would test each probable root cause to determine if it really is a root cause. 5. For the risks identified in Exercises 1 through 3 above, identify trigger conditions that indicate each risk may be about to happen. 380 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 6. Brainstorm and group at least twelve risk factors (as shown in Exhibits 11.5, 11.6, and 11.7) for risks in one of the following types of projects: Research and development projects Organizational change projects Quality improvement projects I N T E G R A T E D E X A M P L E P R O J E C T S SUBURBAN HOMES CONSTRUCTION PROJECT Refer to the project WBS from Chapter 7. You developed the WBS of multiple levels, including work packages at the low- est level based on the initial project requirements below, which were further elaborated. Building a single-family, partially custom-designed home as required by Mrs. and Mr. John Thomas on Strath Dr., Alpharetta, Georgia. The single-family home will have the following features: 3,200 square-feet home with 4 bedrooms and 2.5 bath- rooms Flooring hard wood in the first floor, tiles in the kitchen and bathrooms, carpet in bedrooms Granite kitchen countertops, GE appliances in the kitchen 3-car garage and external landscaping Ceiling 10 in first floor and vaulted 9 ceilings in bed- rooms High-level Assumptions and Constraints The list of options is limited and the cost of the house would vary based on options selected. The client must choose one from among the models offered. 7-year warranty for structure and 2-year warranty for finish- ing components After the WBS was developed, it is necessary to identify risks associated with the project and include prioritized risks in revising cost and schedule estimates. For this purpose, you were asked to develop a comprehensive risk manage- ment plan. Tasks to Complete Identify all the risks. To do so, you will use a WBS and ask yourself, What can go wrong with this work package? for each work package identified at the lowest level of the WBS. Also, you can identify more risks by challenging all the assumptions listed in your project plan. Develop a risk register as discussed throughout the chapter. Develop a risk breakdown structure. Perform qualitative assessment to prioritize risks. Develop risk response strategies for the top ten risks in the prioritized list of risks. Choose a critical risk and develop a greater understanding of the risk using quantitative risk assessment. CASA DE PAZ DEVELOPMENT PROJECT Questions for students to answer first for the project overall and then for each iteration in turn at a smaller scale are the following: 1. Brainstorm all of the risks you can imagine. 2. Assess the risks to determine which you believe are big. 3. Create response plans for the big risks, including who owns each and what the triggers are that indicate they may happen soon. 4. Which of the risks do you feel are showstoppers? Chapter 11 Project Risk Planning 381 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Semester Project Instructions Create a risk register for your example project. Catego- rize each risk, list potential causes, and list potential responses for each cause, as shown in Exhibit 11.9. Describe what each project success measure (from Exhibit 11.1) looks like on your example proj- ect. Identify at least three risks to each success mea- sure, determine which are major risks, and for each major risk, develop one or more contingency plans. Identify whether the contingency plan is an avoid- ance plan (reducing the probability of the risk event), a mitigation plan (reducing the impact of the event), or both. Facilitate a discussion with the sponsor and other key stakeholders of your project. Have them determine the relative importance of their priorities and docu- ment them, as shown in Exhibit 11.2. Perform a risk review for your example project. Use at least three types of review, as shown in Exhibit 11.8. Which of these types gave you the most useful infor- mation? Why? PROJECT M ANAGEM ENT IN ACTION Risk Management on a Satellite Development Project Introduction Proactive risk management is definitely one of the key advantages in implementing and using standardized project management practices today. We always have the balancing act of managing the triple constraints of cost, time, and scope, and on top of that, we need to effectively assure project quality and that we have enough resources to do the job. In this age, we are continuously asked to optimize our performance and be more efficient; often, this is because we simply have too much work and not enough people to do it. So, in practice, we work with risks every day from the risk of not spending enough time planning to the risk of not having enough supplies, or even the risk of not running a thorough enough risk management program. Some time ago, I worked on a satellite develop- ment project that involved a lot of research technolo- gies. There were many unknowns, with variables in the manufacture of components, integration of sys- tems, working with subcontractors, tests, and other areas that made the project full of risk. Additionally, we were on a tight timeline for production and had only limited budget reserves available to handle cost overruns. Thus, we needed a practical way to manage and deal with the risks of the project. By systemati- cally working with the risks of the project, we were better able to prepare responses to the risks if and when they occurred. Planning For our project, it was essential to have an integrated system and mechanism for risk management. Thus, at the outset of the project, during the planning phase, we developed our risk management plan and estab- lished with the team the process for dealing with not only risk but also any subsequent changes that could occur with the project as a result of the risk. This was done during a daylong clinic where we exclusively worked on developing this risk plan, as we knew our project was high risk and we wanted to make sure we could work with the plan. We developed criteria for evaluating probabilities of occurrence and impact for the risk and also for prioritizing risks. Furthermore, we researched and compared our methods to industry standards for risk management such as those from SEI®.14 Execution Once we had a solid approach for risk management in this project, we then went forward with the pro- cesses of identifying our project risks, analyzing the risks, developing potential responses for the risks, and deciding upon next steps for the risks. Our approach to all this was an integrated one, using a risk management database tool we developed as its cornerstone. This tool allowed for anyone in the project team to view the risks, enter new risks, and provide input for potential risk responses. An 382 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 example of a similar type of tool is shown in 11.13, where each risk is logged as a record in the data- base. The database allowed the team to have a sin- gle repository for recording and logging all the risks for the project, which was critically important because the risks in satellite development were con- stantly changing. Every other month, the project team would hold a risk management review, in which each risk would be discussed and any decisions on actions would be made. Typically, we would meet and review the risks logged in the database in this group setting, and the risk s assigned owner would talk about the back- ground of the risk, things that occurred since the risk was first logged (or since the last risk review), and what he or she felt the next steps needed to be. Project team members brought up other areas of the project that might have been impacted by the risk or new risks that resulted from the occurrence of the risk, or pro- vided potential ideas for deferring, transferring, miti- gating, or accepting the risk. The team also determined whether the risk decision needed to be elevated. Another reason we held risk management reviews was to make sure that the team was up to date with the overall project s risks. Based on the criteria we defined in developing the risk management plan, the database tool provided us a prioritized report of all the project s risks. That risk report was used by the group to make decisions about the project and look at mitigation strategies for the project as a whole. The risk management review provided us with an avenue through which we could work together to resolve the high-priority risks of the project. Often, the high-priority risks were related to overall project drivers, and it was essential to be as proactive as possible in managing those risks. Moreover, by examining and analyzing the project risks in this manner, potential risks for other related projects, in this case other satellite development projects, were also identified. The level of risk management necessary for a project can vary greatly. On the satellite development project, it was necessary to have a comprehensive program to address risk because there were many unknowns. We performed all our duties with the notion of understanding risk, and thus the risk man- agement program addressed both the daily needs of logging and updating risks and the long-term strategic needs of understanding risk implications. However, for a smaller or more well-defined project, having such a detailed level of risk management may be unwieldy and difficult to manage. The key is finding the appro- priate level for the project at hand. Source: Lydia Lavigne, PMP, Ball Aerospace Co. Reprinted with permission. EXHIBIT 11.13 RISK MANAGEMENT WORKSHEET Source: Microsoft product screenshot(s) reprinted with permission from Microsoft Corporation. Chapter 11 Project Risk Planning 383 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 References A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 6th ed. (Newtown Square, PA: Project Management Institute, 2017). Alarcon, Luis F., et al., “Risk Planning and Manage- ment for the Panama Canal Expansion Program,” Journal of Construction Engineering and Manage- ment, October 2011: 762–770. http://asq.org/learn-about-quality/process-analysis- tools/overview/fmea.html, accessed March 28, 2017. Browning, Tyson R. and Ranga V. Ramasesh, “Reduc- ing Unwelcome Surprises in Project Management,” MIT Sloan Management Review, Spring 2015: 53–62. Hwang, Bon-Gang, Yi Lin See, and Yun Zhong, “Addressing Risks in Green Retrofit Projects: The Case of Singapore,” Project Management Journal, August/September 2015: 76–89. Kloppenborg, Timothy J., Arthur Shriberg, and Jayashree Venkatraman, Project Leadership (Vienna, VA: Management Concepts, Inc., 2003). Kloppenborg, Timothy J., Debbie Tesch, and Broderick King, “21st Century Project Success Measures: Evo- lution, Interpretation, and Direction,” Proceedings, PMI Research and Education Conference 2012 (Dublin, Ireland, July 2012). Kloppenborg, Timothy J. and Deborah Tesch, “Using a Project Leadership Framework to Avoid and Miti- gate Information Technology Project Risks,” in Dennis P. Slevin, David I. Cleland, and Jeffrey K. Pinto, eds., Innovations: Project Management Research 2004 (Newtown Square, PA: Project Management Institute, 2004). Kloppenborg, Timothy J., and Joseph A. Petrick, Managing Project Quality (Vienna, VA: Management Concepts, Inc., 2002). Krane, Hans Peter, et al., “How Project Manager- Project Owners Interaction Can Work Within and Influence Project Risk Management,” Project Man- agement Journal, April 2012: 54–67. Lehtiranta, Liisa, “Relational Risk Management in Construction Projects: Modeling the Complexity,” Leadership and Management in Engineering, April 2011:141–154. Mbachu, Jasper, “Sources of Contractor’s Payment Risks and Cash Flow Problems in New Zealand Construction Industry: Project Team’s Perceptions of Risks and Mitigation Measures,” Construction Management and Economics (October 2011) 29: 1027–1041. Papadopoulos, Thanos, et al., “The Criticality of Risk Factors in Customer Relationship Projects,” Project Management Journal (February 2012): 65–76. Practice Standard for Project Risk Management (New- town Square, PA: Project Management Institute), 2009. Royer, Paul S., Project Risk Management: A Proactive Approach (Vienna, VA: Management Concepts, Inc., 2002). Sanchez-Cazorla, Alvaro, Rafael Alfalla-Luque, and Ana Isabel Irima-Dieguez, “Risk Identification in Megaprojects as a Crucial Phase of Risk Manage- ment: A Literature Review,” Project Management Journal (December/January 2017): 75–93. Steffey, Robert W., and Vittal S. Anantatmula, “Inter- national Projects Proposal Analysis: Risk Assess- ment Using Radial Maps,” Project Management Journal (April 2011): 62–70. Thomas, Sam, and M. Bhasi, “A Structural Model for Software Project Risk Management,” Journal of Management (March 2011): 71–84. Yeh, Chung, et al. “Risk Assessment and Action Selec- tion in Preliminary Design,” International Journal of Innovation and Technology Management 8 (1) (2011): 77–94. Endnotes 1. Practice Standard for Project Risk Management, 122. 2. Practice Standard for Project Risk Management, 124. 3. Practice Standard for Project Risk Management, 122. 4. Sanchez-Cazorla, 2017: 85–86. 5. Hwang, 2015: 82. 6. Browning and Ramasesh, 2015: 59. 7. Practice Standard for Project Risk Management, 121. 8. Practice Standardfor Project Risk Management, 124. 384 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 9. Practice Standardfor Project Risk Management, 124. 10. Practice Standard for Project Risk Management, 122. 11. Practice Standard for Project Risk Management, 122. 12. http://asq.org/learn-about-quality/process-analysis- tools/overview/fmea.html accessed May 23, 2017. 13. Practice Standard for Project Risk Management, 122. 14. www.sei.cmu.edu/risk/ Accessed May 23, 2017. Chapter 11 Project Risk Planning 385 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 C H A P T E R 12 Project Quality Planning and Project Kickoff Founded in 1947, General Tool Company is a Cincinnati-based contract manufac- turer of highly engineered defense and aerospace hardware. GTC s Fortune 500 customers include Lockheed Martin, General Electric, General Dynamics, Raytheon, Boeing, and others. Performing to the exacting standards of such a demanding clientele is an entry barrier that few contract manufacturers can overcome. A failure to provide objec- tive quality evidence of sound and auditable project, risk, and quality planning sys- tems can (and usually does) exclude would-be subcontractors from the bid and proposal process. For example, most major manufacturers of flight safety hard- ware are required to adhere to AS 9100c, which incorporates the well-known ISO 9001:2000 quality management system standards. In short, for GTC, proper quality planning is more than good project management it is a matter of survival! CHAPTER OBJECTIVES After completing this chapter, you should be able to: CORE OBJECTIVES: Define each core project quality con- cept and explain why each is vital in plan- ning and managing projects. Explain what may be included in a project quality management plan. Compile a complete project management plan, including all parts covered in the last several chapters. TECHNICAL OBJECTIVES: Baseline your com- plete project plan in Microsoft Project. BEHAVIORAL OBJECTIVES: Describe the major contributions to con- temporary project quality made by each of the quality gurus and by TQM, ISO, and Six Sigma. Kick off a project with effective premeeting preparation, a kickoff meeting, and documentation. Develop a quality- conscious approach to managing project activities and decisions. Be ttm an n/ G et ty Im ag es 386 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 Quality and Risk As if manufacturing highly complex, tight-tolerance aerospace and defense hard- ware is not challenging enough, the majority of related contracts transfer risk to the subcontractor through firm-fixed-price arrangements. Under such arrange- ments, the subcontractor agrees to manufacture hardware at an agreed-upon fixed price, assuming all risks associated with schedule and cost overruns (unless otherwise specified through an approved change order process). In such an environment, it is imperative for the subcontractor to understand all quality and technical performance requirements prior to beginning the manufacturing process. Within GTC s quality planning system, vendor selection requires special investigation to ensure the following criteria can be met: The vendor is on the GTC Approved Vendor list. The vendor is capable of providing the service in the required timeframe and has available capacity to meet the demand. The vendor can meet all the procedural requirements and provide the required certifications for traceability and part pedigree. Failing to flow-down all quality requirements at the start of a project can create significant, if not irreversible, challenges to part delivery. This makes the quality planning process especially important to companies operating within the firm-fixed-price environments, like GTC. Few knowledge areas are more important than project quality management; and this is especially true where the safety of aviation and defense personnel are involved. Brad Brezinski, Jim Stewart, Korey Bischoff, and Mark Butorac of General Tool Corporation P erhaps the best way to understand the contemporary approach to project manage-ment is to learn how the contemporary approach to project quality management developed. Many people have influenced the modern approaches to quality, and their contributions have largely been meshed together to give project managers a full under- standing of project quality demands, processes, and tools. With this understanding, proj- ect managers are ready to perform project quality management—all the necessary work to ensure that project deliverables satisfy their intended purpose. This chapter includes the first part of project quality management, namely plan quality management, which is “the process of identifying quality requirements and/or standards for the project and its deliverables, and documenting how the project will demonstrate compliance.”1 The remaining parts of quality management are covered in Chapter 14. 4.2 Develop Project Management Plan 8.3 Control Quality Quality Reports Quality Measurements Project Quality Management Plan PM Plan Baselines 8.1 Plan Quality Management 8.2 Manage Quality PMBOK® GUIDE Topics: Plan quality management Perform quality assurance Control quality Develop project management plan CHAPTER OUTPUT Project quality management plan 387 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 This is the final chapter dealing with project planning. Quality planning is often per- formed simultaneously with other aspects of project planning. In certain ways, quality of the project deliverable is integrated with scope planning as requirements are translated into specification with clearly defined qualitative and quantitative parameters based on standards and industry practices. Once the various aspects of planning are complete, the project manager leads the team in sorting out any inconsistencies. The team then takes the completed project plan to the sponsor and other stakeholders for approval. Once the plan is accepted, it is communicated widely, and the project execution formally begins. Completing and approving the overall project management plan in this manner demonstrates how con- temporary project management is integrative, iterative, and collaborative. 12-1 Development of Contemporary Quality Concepts The contemporary approach to quality management has evolved first from the teachings of several quality “gurus” from the 1950s through the 1980s and then through various frameworks popularized during the last 25 years. 12-1a Quality Gurus Arguably the most influential thought leader in quality was W. Edwards Deming. One concise way to summarize his ideas is his four-part Profound Knowledge System, shown in Exhibit 12.1. Deming started as a statistician and initially preached that under- standing variation was essential to improving quality. By the time he had fully developed this system, he also stated that it is important to understand how companies operate as systems; that managers need insight in order to accurately predict the future; and that leaders need to understand individual motivations. Joseph Juran, who was a contemporary of Deming, also wrote and lectured prolifically for decades. Juran is perhaps best known for his Quality Trilogy of quality planning, quality control, and quality improvement, as shown in Exhibit 12.2. The PMBOK® Guide coverage of quality largely mirrors Juran’s approach. Many other pioneers in quality, particularly Japanese and American, have added to the body of quality concepts and tools. Several of the most influential thought leaders and their contributions that apply specifically to project quality are shown in Exhibit 12.3. Much of the work of these pioneers and many others has been incorporated into three popular frameworks that many organizations use to define and organize their EXHIBIT 12.1 DEMING S PROFOUND KNOWLEDGE SYSTEM Systems Interactions occur among parts of a system, and parts cannot be managed in isolation. Variation Managers need to understand common and special causes of variation and then work to reduce both. Knowledge Managers need to learn from the past and understand cause-and-effect relationships to predict future behavior. Psychology Leaders need to understand what motivates each individual and how different people and groups interact. Source: Adapted from James R. Evans and William M. Lindsay, The Management and Control of Quality, 8th ed. (Mason, OH: Cengage Learning South- Western, 2011): 94–99. 388 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 quality initiatives. These frameworks are Total Quality Management (TQM), the Interna- tional Organization for Standardization (ISO), and Six Sigma. 12-1b Total Quality Management/Malcolm Baldrige TQM came into vogue during the late 1980s when it was becoming more widely appar- ent that the old way of trying to catch quality problems by inspection was not adequate. Many early advocates of TQM used slightly different ways of describing it. What they had in common was implied by the first word in the name: total. Most serious practi- tioners included several components in their TQM system. In the United States, govern- ment, business, consulting, and academic specialists in quality worked together to develop a common means of describing TQM. This description forms the key areas of the Malcolm Baldrige National Quality Award, as shown in Exhibit 12.4. EXHIBIT 12.3 OTHER PROJECT QUALITY PIONEERS THOUGHT LEADER ADDITIONAL KEY PROJECT QUALITY CONTRIBUTIONS Clifton High-quality organizations encourage individuals to develop their strengths. Crosby Quality is meeting requirements, not exceeding them. The burden of quality falls on those who do the work. Quality costs least when work is done correctly the first time. Quality improves more by preventing defects rather than fixing them. Harrington Business processes can be improved using a systematic method. Ishikawa Quality outputs start with understanding customers and their desires. Work to identify and remove root causes, not just symptoms. All workers at all levels must engage to improve quality. Most quality problems can be solved by using simple tools. Senge Team learning is necessary to improve quality. Shiba Societal networking accelerates quality improvement. When continual improvement is not enough, a breakthrough is needed. Taguchi Reducing variation saves money. Project deliverables will be better with a focus on improving methods. Zeithaml Services pose different challenges from manufacturing when improving quality. EXHIBIT 12.2 JURAN S QUALITY TRILOGY Quality Planning Identify all customers and their needs, develop requirements based upon those needs, and develop the methods to satisfy those requirements. Quality Control Determine what to control, establish measurement systems, establish standards, compare performance to standards, and act on differences. Quality Improvement Select and support improvement projects, prove causes, select and implement solutions, and maintain control of improved processes. Source: Adapted from James R. Evans and William M. Lindsay, The Management and Control of Quality, 8th ed. (Mason, OH: Cengage Learning South- Western, 2011): 104–106. Chapter 12 Project Quality Planning and Project Kickoff 389 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 12-1c ISO 9001:2008 While the Baldrige Award is a framework developed in the United States, ISO represents a framework developed in Europe. The International Organization for Standardization has developed many technical standards since 1947. ISO 9001 is the quality management stan- dard, and the 2015 designation is the latest revision of the standard. When the standards first appeared, they focused largely on documenting work processes. However, over the years, the standards have evolved, and the current seven quality management areas with specific requirements are shown in Exhibit 12.5. Notice that they contain many of the same ideas as the current Baldrige Award key areas and specific responsibilities. 12-1d Lean Six Sigma Lean evolved from lean manufacturing ideas of eliminating as much waste as possible from work processes. Sigma stands for standard deviation a statistical term for the amount of variation in data. Six Sigma quality literally means quality problems are measured in parts per million opportunities. Many projects have few routine activities and many unusual and nonroutine activities, so the rigor of the statistics in Six Sigma is not always applicable. However, the ideas behind Six Sigma provide a meaningful framework for project quality. As of this writing, Six Sigma is a popular approach to quality as Motorola, General Elec- tric, and many other companies have promoted its application and usage. General Electric, EXHIBIT 12.4 MALCOLM BALDRIGE NATIONAL QUALITY AWARD KEY AREAS AND SPECIFIC CRITERIA KEY AREA SPECIFIC CRITERIA 1. Leadership Senior leaders’ personal ethical behavior and integrity Organization governance system 2. Strategic Planning Develop strategic objectives and action plans Deploy strategic objectives and action plans Measure progress 3. Customer Focus Engage customers Build customer-focused culture Listen to voice of customer and use this information to improve 4. Measurement, Analysis, and Knowledge Management Select, gather, analyze, manage, and improve data, information, and knowledge assets Manage information technology Reviews and uses reviews for performance improvement 5. Workforce Focus Engage, manage, and develop workforce; assess workforce capability and capacity; build workforce environment conducive to high performance 6. Operations Focus Design, manage, and improve work systems Design, manage, and improve key processes Prepare for emergencies 7. Results Performance and improvement in all focus areas Performance levels relative to competitors Source: Adapted from https://www.nist.gov/sites/default/files/documents/baldrige/publications/Baldrige_20_20 , accessed April 10, 2017. 390 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE in particular, expanded the focus of Six Sigma to include many service processes that peo- ple had previously said were too difficult to measure. Six Sigma uses a disciplined process called the define, measure, analyze, improve, and control (DMAIC) process to plan and manage improvement projects. The DMAIC methodology is a 15-step process broken up into five project phases: define, measure, analyze, improve, and control, as shown in Exhibit 12.6. The DMAIC process is illus- trated to show objectives within each of the five key stages. It is shown as a continuous, circular flow because DMAIC is typically used as a method of implementing continuous improvement and thus can be practiced repeatedly. Lean Six Sigma uses DMAIC and waste elimination together to improve performance. On agile projects, quality is planned at a high level for the entire project at the outset and at a detailed level just before the start of each iteration. Therefore, you might envision conducting the equivalent of a small kickoff meeting and plan for each iteration rather than a large one for the entire project. All of the gurus and approaches described above have a general characteristic in com- mon. They all build upon established technical approaches with an increased emphasis on human behavior. Agile does the same in terms of project management. While some EXHIBIT 12.5 ISO 9001: 2015 AREAS AND SPECIFIC RESPONSIBILITIES AREA SPECIFIC REQUIREMENT Context Understand your organization and its unique context Clarify the needs and expectations of interested parties Define the scope of your quality management system (QMS) Leadership Focus on quality and customers Establish a suitable quality policy Define roles and responsibilities Planning Define actions to manage risks and address opportunities Set quality objectives and develop plans Plan changes to your QMS Support Provide the necessary resources Ensure that people are competent and know how to help Manage your communications and documentation Operations Develop, implement, and control your operational processes Determine and document product and service requirements Control product and service release Control nonconforming outputs and document actions taken Evaluation Monitor, measure, analyze, and evaluate QMS performance Use internal audits to examine conformance and performance Carry out management reviews and document your results Improvement Determine improvement opportunities and make them Control nonconformities and take corrective action Enhance the effectiveness of your QMS Source: Adapted ISO 9001 2015 Translated into Plain English, http://www.praxiom.com/iso-9001.htm and ISO/DIS Quality Management Systems–Guidelines for quality management on projects, https://www.iso.org/obp/ui/#iso:std: iso:10006:dis:ed-3:v1:en, accessed April 10, 2017. Chapter 12 Project Quality Planning and Project Kickoff 391 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 agile proponents deemphasize many project management techniques, essentially, agile builds upon good project practice and much of what is added emphasizes behavioral possibilities. Just as total quality dramatically changed general management in the 1990s, agile is dramatically changing project management in the 2010s. In agile projects, the conditions of acceptance are the proxy for quality. We have gen- eral quality requirements for all stories, like it must run on this set of web browsers. We must have unit test coverage above 90 percent, and so forth. As an agile thought exercise, consider what the quality expectations are for an e-mail. This similar to the discussion that the Product Owner and team may have while they are refining a story in the backlog. 12-2 Core Project Quality Concepts Each of the quality gurus and frameworks provides input into the contemporary under- standing of project quality. When defining quality, a number of perspectives should be considered, including: Product—the presence of desired attributes Value—the ratio of benefits to price Manufacturing—consistency in goods and services Customers—ability to satisfy given needs and expectations2 We condense these ideas, as stated in Chapter 1, into a simple definition of project quality: “the characteristics of a product or service that bear on its ability to satisfy stated or implied needs.” Remembering that customer satisfaction is the most important goal EXHIBIT 12.6 THE DMAIC METHODOLOGY • Create Procedures and Documentation • Train Workers and Monitor Performance • Share Learnings • Develop Possible Solutions for Root Cause • Select and Pilot Solution • Analyze and Confirm Results • Describe the Process in Detail • Define Needed Data and the Collection Plan • Baseline Current Performance • Understand Voice of the Customer • Describe the Process at an Overview Level • Charter the Improvement Project • Identify Possible Root Causes • Collect Data • Confirm Root Causes through Data Analysis Source: Timothy J. Kloppenborg and Laurence J. Laning, Strategic Leadership of Portfolio and Project Management (New York: Business Expert Press, 2012), 122. 392 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 on most projects, this emphasis on satisfying needs is critical to project success. How- ever, to fully understand both the meaning of this definition and how to achieve it, one needs to understand the four contemporary core project quality concepts that have evolved from the sources above: 1. Stakeholder satisfaction 2. Process management 3. Fact-based management 4. Empowered performance 12-2a Stakeholder Satisfaction Stakeholder satisfaction consists of identifying all stakeholders and understanding the stakeholders’ ultimate quality goals using a structured process to determine relevant quality standards. External stakeholders may include customers, suppliers, the public, and other groups. Internal stakeholders may include shareholders and workers at all levels and all functions within the organization. DEVELOPING QUALITY STANDARDS BASED UPON STAKEHOLDER REQUIRE- MENTS The decision process for developing relevant quality standards on a project consists of the following steps: 1. Identify all stakeholders. 2. Prioritize among the stakeholders. 3. Understand the prioritized stakeholders’ requirements. 4. Develop standards to ensure the requirements are met. 5. Make trade-off decisions. Some stakeholders actively participate in the process of developing quality standards. Therefore, they make judgments about the quality of a process based on what they see. Thus, the quality both of project work processes and of deliverables is monitored and judged. When making trade-off decisions, the project manager often facilitates the pro- cess, and the stakeholders actually make the decisions. Stakeholders frequently need to be reminded that the relative importance of cost, schedule, scope, and quality can be very helpful in determining sensible standards. Often, quality costs money and requires more time. Sacrificing quality may save money and time, but the stakeholder satisfaction could be in jeopardy. STAKEHOLDER SATISFACTION SAYINGS When satisfying stakeholders, it is helpful to remember a few sayings. One is the old carpenters’ advice of “measure twice, cut once.” This careful planning tends to yield less variation, less cost, and faster delivery—all of which satisfy stakeholders. Another saying is “meet requirements, but exceed expectations.” Con- tractually, a project must meet the agreed-upon specifications, but if stakeholders see excel- lent work processes and experience clear communications, their expectations will be exceeded, and they will be even happier. This point regarding meeting requirements while exceeding expectations comes from two sources. Good project management practice is to meet requirements without spending extra money or time. Good quality practice is to not only satisfy but also to delight customers. The third saying is “a smart project manager develops capable customers.” That means the customer is able to use the project deliverables to do his or her job better. This often results in opportunities for additional revenue streams by partnering, training, and supporting the customer. Chapter 12 Project Quality Planning and Project Kickoff 393 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 12-2b Process Management A process is “a sequence of linked activities that is intended to achieve some result, such as producing a good or service for a customer.”3 To effectively manage project processes, project managers need to understand, control, and improve them. PROCESS UNDERSTANDING WITH A SIPOC MODEL The first part of understand- ing a project is to demonstrate that all work flows from suppliers, through the project, to customers. A useful way to envision this is a tool called a supplier-input-process-output- customer (SIPOC) model, as shown in Exhibit 12.7. In Exhibit 12.7, the process boundaries are clearly defined. This prevents future scope creep from occurring by eliminating previous or later steps in the process. The SIPOC above also begins to identify key stakeholders who both provide inputs into the process (suppliers) and receive benefits from the process (customers) and shows feedback loops that provide useful information. One way to interpret the SIPOC is to think backward from the project’s customers. As described previously in the stakeholder satisfaction section, it is helpful for a project manager to identify all the customers for his or her project and their desired outputs. Since that is usually a far-reaching list, prioritization decisions need to be made. At that point, the project manager can work with the project core team to define the work pro- cesses necessary to create those outputs. Then they can identify the inputs to accomplish those activities and determine who will supply them. Once the supplier-customer view is understood, it is time to determine whether the process is capable of creating the project deliverables. This discussion should be initiated when the project charter is developed. As people discuss the milestone schedule, risks, EXHIBIT 12.7 PDE DELIVERABLE ANALYSIS FUNCTIONAL MODEL Input Adjustment Feedback Input $ Deliverable Deliverable Process Deliverable Adjustment Feedback Supplier • Upstream Functional Interface •Qualities •Characteristics •Standards •Localized Items •Timing •Conditional Needs •Qualities •Characteristics •Standards •Localized Items •Timing •Conditional Needs Resources •Labor/Skill Sets •Materials/Equipment •Vendors •Applications Customer • Downstream Functional Interface Source: Paul Kling, PMP. 394 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 and constraints, any serious doubts people have should be raised. On some small pro- jects, that may be enough to determine if the proposed methods of creating the project deliverables will work. On others, more detailed analysis of schedule, resources, and risks may yield further insight. When considering if a project process is capable, the project manager needs to understand the conditions in which the project may operate and ensure that the methods can be flexible enough to handle various contingencies that might develop. Experienced project managers understand that it is far better to design quality into their processes than to find problems only upon inspection. In the first place, it costs more to make junk and then remake to obtain good outputs. Second, having to rework anything aggravates time pressure that already exists on many projects. Finally, even the best inspec- tors do not find every mistake, and some of the mistakes are likely to reach customers. PROCESS CONTROL The second aspect of process management is process control. Control is “the activity of ensuring conformance to the requirements and taking correc- tive action when necessary to correct problems and maintain stable performance.”4 The purpose of process control is to have confidence that outputs are predictable. Process control is covered in Chapter 14. If the outputs are not predictable—or if they are pre- dictable but not satisfactory—then a project manager needs to use the third aspect of process management: process improvement. PROCESS IMPROVEMENT WITH A PDCA MODEL Processes can be improved in either a continuous or a breakthrough fashion. All project core team members and sub- ject matter experts (SMEs) should be thinking of little ways they can improve at any time. Slow and steady improvement is a good foundation. However, sometimes substan- tial improvement is necessary, and a breakthrough is in order. Regardless of the size of improvement desired, many models exist to guide the effort. Improvement models such as DMAIC are usually based upon the plan-do-check-act (PDCA) improvement cycle, as displayed in Exhibit 12.8. EXHIBIT 12.8 PLAN-DO-CHECK-ACT MODEL Select needed improvement, understand process and reasons for trouble, and create plan Try the change on a small scale and collect data Compare the results after the change with those before to see if there was an improvement If results are good enough, implement the improvement, otherwise try again P DC A Chapter 12 Project Quality Planning and Project Kickoff 395 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 When project managers are considering process improvements, they often involve sup- pliers and/or customers in a partnering arrangement. Often, they need to forecast changes in their work environment, technology, or customer desires. Organizations that take a balanced view of long-term improvement and short-term results create a culture in which project pro- cess improvement can thrive. Organizations that focus almost exclusively on short-term results make it hard for project managers to devote much energy to process improvement. 12-2c Fact-Based Management One challenge many project managers face is making decisions based upon facts. Making decisions using facts sounds like an obvious thing to do, yet it is difficult because: Opinions get in the way. It is hard to know what data need to be collected. Projects often operate with so much time pressure that decisions need to be made quickly. Four aspects of fact-based management are understanding variation, deciding what to measure, working correctly with data, and using the resulting information appropriately. UNDERSTANDING VARIATION Project decision makers need to understand the dif- ference between two types of variation. A common cause is variation that is a result of the product design and the method of making it and is exhibited by a random pattern within predictable limits. On the other hand, a special cause is variation that comes from external sources that are not inherent in the process and can be quite unpredictable. It is important to determine when there is variation on a project whether it is within the range of what can be expected for that particular work activity or deliverable (common Even with good inspectors, somemistakes will reach customers if poor quality exists in project processes. A ki m ov Ig or /S hu tte rs to ck .c om 396 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 cause) or whether something unusual is happening (special cause). If the variation is due to a common cause, but the results are still not acceptable, some change needs to be made to the system—the way in which the work is accomplished. However, if the change is due to a particular cause, then the way to improve is to change that particular cause and not the entire system. Many quality proponents estimate that a large majority of var- iation is due to common causes, yet many managers are quick to try to find a person or issue to blame (special cause). The problem is often compounded when a cause is really part of the system, yet individuals are blamed. The problem does not go away, and peo- ple become fearful. Management by facts requires an understanding that variation can be due to either common or special causes, a determination to discover which type, and the resolve to act appropriately upon that discovery. DETERMINING WHAT TO MEASURE A project manager wants to avoid the extreme of not measuring anything since he or she is in a hurry and there is not enough time and the other extreme of measuring many things just to be sure. As project managers become more experienced, they develop an understanding of how many data are useful to collect and when they need to move into action regardless of the data they have. A quality metric is “a measurement used to ensure customers receive acceptable pro- ducts or deliverables.”5 Measures may include project attributes such as on-time or on- budget performance or product attributes such as defect frequency. A milestone sched- ule, in a good project charter, with acceptance criteria for each milestone can provide useful measures. Project teams often can seek useful measures when they study lessons learned from previous projects. Many lessons state either what worked well and should be repeated on future projects or what worked poorly and should be avoided on future projects. Both of these aspects can provide ideas for useful measures. The project man- ager and sponsor should agree on what measures will be taken, when they will be taken, and under what circumstances. While many sponsors can be quite busy, the more spe- cific this agreement becomes, the more useful the data collected are likely to be. WORKING CORRECTLY WITH DATA A third aspect of management by facts is how the identified data are collected, handled, and stored. Data is information in a raw or unorganized form that refer to, or represent, conditions, ideas, or objects.6 Generally, the persons closest to the situation are best for collecting data. Efforts should be made to ensure that the data are complete, without errors, and timely. Many project teams either use templates from their organization or create their own forms for collecting data. When more than one person is involved, consistency must be ensured. Once the data are collected, they should be analyzed. A great deal can be learned by using simple tools to look for patterns and trends in data. On larger, more complex projects and sophisticated Six Sigma projects, more detailed statistical analysis is often used. The anal- ysis should turn the raw data into information for decision making. USING THE RESULTING INFORMATION APPROPRIATELY The final aspect of mak- ing fact-based decisions is how the information is used. Information is data that is (1) accu- rate and timely, (2) specific and organized for a purpose, (3) presented within a context that gives meaning and relevance, and (4) can lead to an increase in understanding and decrease in uncertainty.7 Project communications plans often spell out how the information is dis- seminated. The best project cultures encourage facts and transparency in communication— even when it is inconvenient. People are encouraged to use information to challenge opi- nions and decisions. Making decisions based upon facts often requires courage. It also requires judgment because challenges that are of a factual nature are helpful; yet, if the chal- lenges become personal and are not fact based, they can be destructive and demotivating. Chapter 12 Project Quality Planning and Project Kickoff 397 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 12-2d Fact-Based Project Management Example A rapidly growing, fast, casual restaurant chain was experiencing growing pains that were manifest in delays for restaurant openings. SWOT analysis revealed a number of broad issues that were threats to opening the restaurants on time, but the issues needed to be quantified for improvement. The company had been keeping records on the time required to open a restaurant after breaking ground. Exhibit 12.9 shows that 80 percent of the restaurants opened within 160 days or fewer, but some of the others took much longer. At $5,000 lost revenue per day for the franchisee and a 4 percent loss for the franchisor, it was in the interest of all stakeholders to dissect the facts and determine the causes for delayed openings. With the anticipation of expanding to an additional 500 restaurants in the next two to three years, every improvement of one day would result in a $0.5 M increase to revenue, assuming the same 20 percent of the troubled projects were lagging the average for the 80 percent of excellent or healthy performing projects. The corporate franchising organization needed to determine the root cause of the delays. Exhibit 12.10 is a Pareto chart showing the frequency of causes in the troubled pro- jects. Seven causes for delays were identified for the troubled projects. The top four causes were found in 80 percent of the troubled projects. This led to a focus on improv- ing projects by better managing the risks associated with each cause or by making EXHIBIT 12.9 DAYS FROM BREAKING GROUND TO OPENING DAYS FREQUENCY CUMULATIVE % 60 0 0% 80 1 1% 100 8 10% 120 26 41% 140 23 67% 160 11 80% 180 8 90% 200 5 95% 220 2 98% 240 1 99% 260 1 100% 280 0 100% More 0 100% Total 86 Source: Scott C Wright, PhD, P.E., PMP (University of Wisconsin–Platteville) 398 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 changes to management processes that were negatively impacting the project’s time objective. Based on root cause information, a risk breakdown structure was used to cate- gorize threats causing delays and develop appropriate responses to avoid or mitigate the risks for future openings. 12-2e Empowered Performance The fourth and final core project quality concept is empowered performance. The goal of empowered performance is to have capable and willing workers at every level and every function within a company. Corporate leaders set the stage for this by developing the organizational culture. Project sponsors and managers, in turn, develop the project cul- ture. Remember from Chapter 4 that organizational culture includes the formal and informal practices utilized, along with the values shared by members of an organization. Part of an empowered performance culture is setting an expectation for managers to encourage their associates to take appropriate risks and to treat risk events as learning opportunities, not as a time to punish. Part of it is training and equipping workers so they are willing to take risks. Part is getting managers to let go of some decision- making authority so those lower in the organization can make some decisions. Yet another aspect of empowered performance is helping to develop specialists who can aid anyone in the organization. For example, a person trained as a Black Belt in a Six Sigma organization can become an expert in guiding process improvement projects, or an inter- nal coach/mentor in an organization that is adopting agile can observe the team and pro- vide suggestions. EXHIBIT 12.10 FREQUENCY OF CAUSES IN THE TROUBLED PROJECTS 0% 20% 40% 60% 80% Number of Occurrences Cumulative Percentage 100% 0 5 10 15 20 25 30 Franchise System Processes Site Inspections and Permits Contractors Franchise Owner Abnormal Events Supply Chain Source: Scott C Wright, PhD, P.E., PMP (University of Wisconsin–Platteville) Chapter 12 Project Quality Planning and Project Kickoff 399 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE RECOGNIZE INDIVIDUALITY One essential understanding in creating capable and willing workers is to recognize everyone’s individuality and diversity. Leaders at all levels must promote inclusiveness and recognize that diversity is not only to be accepted, but it is also very helpful as projects develop. CAPITALIZE ON INDIVIDUAL STRENGTHS Outstanding project managers not only want to recruit people with unique skills and develop a strong project team, but they also want to capitalize on each person’s strengths. Every team member feels validated when he uses his unique skills and gets an opportunity to improve them. When a person feels his boss understands him and works to create opportunities for him to do both what he most wants to do and what he has the potential to be best at doing, he is motivated to perform at the highest level. EMPHASIZE INDIVIDUAL RESPONSIBILITIES Empowered performance requires that people understand and accept their responsibilities. Much of the responsibility falls upon the project manager and core team. However, SMEs are responsible for their indi- vidual activities. Functional managers, who are the technical supervisors of the SMEs, are responsible for work methods in their functional areas. Sponsors share a high-level responsibility for project completion with project managers. Customer representatives are responsible for understanding the impact of directives they may give a project man- ager. Ultimately, everyone must understand what they need to do, realize how it fits in the bigger picture, and then commit to both completing their work correctly and accept- ing the consequences of their decisions. USE APPROPRIATE COLLABORATION Finally, appropriate collaboration is a key to developing empowered performance. This is true both within and beyond the organiza- tional boundaries. Cross-functional teams perform a great deal of project work and are most effective when individual, team, and organizational learning flourishes. One effec- tive method of encouraging this learning in projects is to develop lessons learned at the completion of project milestones and at project closure. These lessons then need to be shared openly with other project teams. Collaboration and learning accelerate when peo- ple share information outside their parent organization. Of course, some things such as information that provides a competitive advantage cannot be shared, but a surprising number of things can be shared. When the recipients of those lessons reciprocate, the first team learns something new. This type of external sharing can take place through conferences, company exchanges, or other means. An example of a unique project chal- lenge that required empowered performance to be successful is the vintage aircraft- shipping project in Exhibit 12.11. 12-2f Summary of Core Concepts A summary of project quality core concepts is shown in Exhibit 12.12. Advice given on agile projects is to communicate often (maybe daily) with the owner and other stakeholders. This is good advice for any project. This approach provides shorter faster feedback loops. Everything in this section applies to agile. It is a discussion of how much of these tools you need for the product of the project. As such, an agile project deliverable often goes through routine quality checks and tests to confirm desired performance and these checks are used as feedback to modify project management processes and plans. Customer involvement throughout the project execution presents the unique advantage of quality audit and control. 400 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 12-3 Plan Quality Management The quality management plan “defines the acceptable level of quality, which is typically defined by the customer, and describes how the project will ensure this level of quality in its deliverables and work processes.”8 Therefore, a logical place to start is by understand- ing what a quality policy is and how it governs the actions of a project manager and team. The remainder of this section discusses the components of a project quality man- agement plan and process improvement plan. 12-3a Quality Policy The top management of an organization normally writes a concise statement to guide their company’s quality efforts. This policy reflects top management’s principles of achieving quality and the benefits they hope to achieve with good quality. Project EXHIBIT 12.11 VINTAGE AIRCRAFT SHIPPING PROJECT Global Shipping Company (GSC) was approached by an individual who was interested in selling and shipping an antique $1 mil- lion 1942 Staggered-Wing Beech aircraft from Cincinnati to a buyer in Australia. Since the aircraft was fragile, a plan needed to be developed for moving it as economically as possible while avoiding damage. One challenge was handling the entire project in-house using only the company’s staff, equipment, and resources, and the other was devising a custom solution for moving this unusual piece of cargo. GSC has an organizational culture that encourages cross-training, collaboration among departments, risk-taking, and designing creative approaches to problem solving while minimizing cost. Because of the size and fragility of the aircraft, a strategy was devised to dismantle it and ship via containerized ocean freight. The project was broken down into five distinct segments: pickup, disman- tling, packing, loading, and shipping. To pick up the entire aircraft, the equipment, permits, and escorts had to be arranged to get the aircraft intact from the air- port and move it to the warehouse down a major street on the back of a flatbed truck. In order to fit in a standard ocean con- tainer, the aircraft had to be dismantled—under the supervision of the FAA—and documented to meet FAA regulations. To avoid damage, each piece had to be individually packaged. Different types of cloth and foam had to be tested and selected in order to prevent scratching the aircraft. Due to the height restrictions, the warehouse personnel had to design and build a cus- tom gurney to allow the body of the plane to be wheeled into the container and secured. Once packaged, the individual pieces were then loaded, blocked, and braced into the container to prevent damage while in transit; then the aircraft was shipped. The dismantling, documentation, and packing process was designed in a way that the new owner of the aircraft could replicate it in order to move the plane for air shows and events. The project’s success was achieved by having the courage to take on the project in the first place, the abil- ity to use the company’s resources creatively and effi- ciently, and the ability to adapt the plan when unexpected events occurred. The result was a project that was successfully completed, meeting all FAA stan- dards, exceeding stakeholder expectations, and develop- ing a shipping process that can be replicated. Source: Danny McKee, Global Shipping Company. © D an ny M cK ee Chapter 12 Project Quality Planning and Project Kickoff 401 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 managers normally first consider using the quality policy of their parent company—if it is a good fit. If not, or if the project is a partnership between organizations, the project manager may need to combine and/or supplement the quality policies. However, the project’s quality policy should never violate the intent of the quality policies of either the parent company or of a major customer. A study of 25 organizational quality policies in 2017 found that they vary widely. Some are fewer than 30 words, while others are over 100 words. The content and style can be quite different. The frequency of terms that interest project managers is shown in Exhibit 12.13. Several interesting patterns can easily be found. First, the most frequent terms are cus- tomers and improving processes. Many include satisfying requirements, but very few include exceeding requirements. This means that, for most companies, quality is mea- sured by how well requirements are met, not surpassed. A large percentage of policies mention both products and services—a reminder to project managers that services and information are frequently needed along with products to satisfy a customer’s needs. EXHIBIT 12.12 SUMMARY OF PROJECT QUALITY CORE CONCEPTS CONCEPT SPECIFIC GUIDANCE Stakeholder Satisfaction Identify all internal and external stakeholders. Prioritize among the stakeholders. Understand the prioritized stakeholders’ requirements. Develop standards to ensure the requirements are met. Make trade-off decisions. Realize stakeholders will judge quality both of work processes and deliverables. Measure twice, cut once. (Plan and check the plan.) Meet requirements, but exceed expectations. Develop capable customers. Process Improvement Learn about process with the supplier-input-process-output-customer model. Realize designing a quality process is far better than merely trying to find mistakes. Ensure project processes are capable and flexible. Control project processes to make them predictable. Improve project processes using a model based upon the plan-do-check-act concept. Fact-Based Management Understand the difference between common and special causes of variation. Select a few key well-defined items to measure. Carefully collect data and use appropriate analysis techniques to create useful information. Encourage truthful, transparent, and challenging communication when making decisions. Empowered Performance Develop capable and willing workers at every level and every function. Develop a risk-taking project culture. Understand each person is an individual. To the extent possible, let everyone do what they will enjoy doing and what their strengths support. Ensure everyone understands and accepts their responsibilities. Share lessons learned and other information as widely as possible. 402 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 What is interesting is that five concepts now appear in a higher percentage of quality policies than a few years ago: 1. Sustainability 2. Employee engagement 3. Leadership and commitment 4. Communication 5. Suppliers This shows that more organizational leaders are concerned both with sustainability and with a variety of behavioral aspects of great project leadership. Remember, many of these policies are very short and only include a few key thoughts. They are meant to set direction, not plan detail. 12-3b Quality Management Plan Contents In addition to the quality policy, most project quality management plans describe which quality standards the project will use and how the project team will implement them. The quality management plan may include a description of the quality baseline by which the project will be judged, along with methods for quality assurance and control. The quality management plan is a portion of the overall project management plan. On many small, simple projects, the quality planning is performed concurrently with other planning, and the quality plan is seamlessly incorporated into the project plan. On some large, complex, or unusual projects, the quality planning is handled separately, EXHIBIT 12.13 EVOLUTION OF TERMS IN QUALITY POLICIES 2013 TO 2017 TERM PERCENT OF POLICIES IN 2013 PERCENT OF POLICIES IN 2017 Customer 92 80 Improve Process 84 80 Satisfy Requirements/Meet Standards or Laws 68 72 Sustainable/Reliable/Dependable 36 64 Employee 44 60 Commitment/Leadership 40 52 Product 72 48 Best/Excellent/High Quality/Exceed Requirements 44 44 Service 64 36 Value/Cost 56 28 Communication * 28 Suppliers 16 24 Safety/Risk 16 20 *Communication did not appear on any of the 25 quality policies surveyed in 2013. Chapter 12 Project Quality Planning and Project Kickoff 403 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE and the plan, while a portion of the overall project plan, appears as an additional plan document. A project quality management plan should describe how to identify some or all of the following: Quality objectives Key project deliverables and processes to be reviewed for satisfactory quality level Quality standards Quality control and assurance activities Quality roles and responsibilities Quality tools Plan for reporting quality control and assurance problems9 12-3c Quality Baseline At the point of developing the quality baseline, the project work should be clearly defined in a scope statement and/or a work breakdown structure. Appropriate quality standards are selected for the materials and other inputs, work activities, documentation, and project deliverables. These standards might be industry norms, customer-specific standards, or government regulations. The project manager is ultimately responsible for selecting appropriate standards and developing additional standards that may be needed. However, project managers normally take their cues from functional managers and SMEs for many standards dealing with methods and from customers on standards deal- ing with documentation and deliverables. The quality baseline reflects the agreed-upon quality objectives. It can include metrics that define exactly what will be measured, how each will be measured, and the target value of each. 12-3d Process Improvement Plan A process improvement plan is “a subsidiary plan of the project management plan. It documents the steps for analyzing processes with the purpose of improvement. It consid- ers process boundaries, process configuration, process metrics, and targets for improved performance.”10 Process improvement was discussed earlier in the process management core concept. On agile projects, a definition of done (completion) is explicitly stated. This includes acceptance criteria of features, agreement of what done is for each iteration, and a dem- onstration to prove the deliverables work as intended. Quality is what happens to the product in agile. It normally is not focused on other aspects or ideas. So when we think about agile projects and quality, it is worth maintain- ing this focus. For all other areas, it is about continual improvement. 12-4 Manage Quality Manage quality is the process of using the quality plan and policy to perform tasks that will most likely lead to creating project outputs to customers’ satisfaction. A key part of managing quality is the forward-looking quality assurance. Perform quality assurance is “an executing process that is primarily concerned with overall process improvements to ensure that each time a deliverable is produced it is error free.”11 Quality assurance 404 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 ensures that proper methods and standards are used. It consists of a broad set of proac- tive management activities designed to give key stakeholders confidence that sensible methods and capable people are working on the project. This hopefully yields good proj- ect deliverables and documentation. Quality assurance is one way to simultaneously improve quality and manage stakeholder relations. Perhaps quality assurance is best understood by considering two of its primary meth- ods: the quality audit and process analysis. A quality audit is “a key tool used in quality assurance. Quality audits enable us to review the project to evaluate which activities tak- ing place in the project should be improved and which meets the quality standards. Quality audits have dual objectives in improving acceptance of the product, identifying areas of improvement, and improving the overall cost of quality.”12 A quality audit is used to determine what methods are being used (hopefully the methods determined in the quality baseline) and whether they are effective. For audits to be effective, people need to be convinced that the real purpose is to improve work methods and not to pun- ish individuals. Quality audits sometimes show the need to request changes. These requests may include recommendations for: Preventive actions—“steps taken when the project is trending away from the planned scope, schedule, cost, or quality requirements. Preventive actions are proac- tive in nature, based on a variance and trend analysis.”13 Preventive actions are taken to ensure future performance is acceptable. Corrective actions—“steps taken when the project has deviated from the planned scope, schedule, cost, or quality requirements. Corrective actions are reactive in nature and are intended to bring the project’s performance back into alignment with the agreed-upon project baselines.”14 Defect repair—“steps taken when the product or deliverable does not meet the documented quality requirements.”15 Not all defects can be repaired, so judgment is required to decide if the output is repairable or if it needs to be scrapped and a new output will be created. Process analysis is “a step-by-step breakdown of the phases of a process, used to determine the inputs, outputs, and operations that take place during each phase. A pro- cess analysis can be used to improve understanding of how the process operates, and to determine potential targets for process improvement through eliminating waste and increasing efficiency.”16 It can follow an improvement model such as the DMAIC method shown in Exhibit 12.6 or the PDCA model shown in Exhibit 12.8. Process improvement is used to improve both quality and productivity. It can be of a continuous nature, in which many incremental improvements are made over time, or of a break- through nature, in which a substantial change is planned and implemented at once. Processes can be measured for both efficiency and effectiveness. Efficiency is the ratio of outputs to inputs. A more efficient process uses fewer inputs to create the same num- ber of outputs. This could equate to fewer work hours or less money spent to create the same project deliverable. Effectiveness is the extent to which a process is creating the desired deliverables. A more effective process is one that creates higher-quality deliver- ables and better pleases the stakeholders. Process improvement can deal with both effi- ciency and effectiveness and is akin to the concept of value engineering for products and services. There are many avenues for improving project processes. One is to interpret the results of quality control measurements with an eye toward process improvement. Feed- back from customers, suppliers, work associates, and other stakeholders can often lead to Chapter 12 Project Quality Planning and Project Kickoff 405 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 suggestions for improving processes. These suggestions might pinpoint opportunities to improve both the inputs into a process and the actions within the process. Another useful method of process improvement is benchmarking. Benchmarking is a structured consideration of how another organization performs a process with an eye toward determining how to improve one’s own performance. It is not directly copying the methods. Benchmarking consists of 10 steps: 1. Determine a process that needs dramatic improvement. 2. Identify another organization that performs that process very well. 3. Make a deal with that organization to learn from them (they might require payment or the sharing of one of the observer’s best practices with them). 4. Determine what needs to be observed and what questions need to be asked. 5. Make a site visit to observe and question the other organization. 6. Decide which observed methods will help the organization. 7. Adapt the methods to fit the organization’s culture and situation. 8. Try the new methods on a small scale. 9. Evaluate the results. 10. If the methods are good enough, adopt them. Quality assurance is a continuous process in each iteration and provides incremental progress toward higher product or service quality for the customer. 12-5 Control Quality Control quality is “the activities … used to verify that deliverables are of acceptable quality and that they are complete and correct. Examples of quality control activities include inspection, deliverable peer reviews, and the testing process.”17 This detailed set of reactive technical activities verifies whether specific project deliverables meet their quality standards. The purposes of quality control on projects are to reduce the number of defects and inefficiencies, as well as to improve the project process and outputs. Qual- ity control consists of the following: Monitoring the project to ensure that everything is proceeding according to plan Identifying when things are different enough from the plan to warrant preventive or corrective actions Repairing defects Determining and eliminating root causes of problems Providing specific measurements for quality assurance Providing recommendations for corrective and preventive actions Implementing approved changes as directed by the project’s integrated change con- trol system. MONITOR THE PROJECT QUALITY Project managers use quality control focus on project inputs, processes, and outputs. When considering inputs, a project manager wants to ensure that the assigned people can do their work. He also works with suppliers to ensure that materials, information, and other inputs meet the required specifications and perform satisfactorily. When considering the project processes, the manager wants to minimize rework because it wastes time, effort, and money, which are in short supply on most projects. Rework also often has negative impacts on both worker morale and stakeholder relations because it is very discouraging to make and/or receive an inferior product, even if it is fixed eventually. When considering outputs, a project manager 406 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 may first use internal inspection to ensure the deliverables work before they are sent to the customer. External inspection may also be required to convince the customer that the deliverables are developed to meet the desired performance. While the specifics vary greatly from project to project, there are some useful general lessons regarding the timing and types of project inspections, including the following: Conduct an inspection before a critical or expensive process to make sure the inputs are good before spending a large amount of money or time on them. Process stages in which one worker hands off work to another worker are good times for both the workers to conduct inspections. Milestones identified in the project charter provide good inspection points. As practiced in software development, think of an inspection in terms of units (indi- vidual components), integration (how components work together), and the system (how the deliverable performs). QUALITY CONTROL TERMS Many terms with specific meanings are used in project quality control. Exhibit 12.14 shows pairs of terms that are sometimes confused, and the differences between each pair are described in the following paragraphs. While few pro- jects repeat processes enough times to formally use statistical quality control, the con- cepts are still quite useful in making good decisions. Prevention versus Inspection Prevention is keeping errors out of a process, while inspection is trying to find errors after they occur to correct these errors before they reach the customer. Preventing a problem in the first place is preferred over trying to use an inspection to find it. Prevention is a cheaper alternative. Inspec- tion does not guarantee that a problem is detected. Inspection should be practiced, but every effort should be made to prevent problems from happening in the first place. Sample versus Population Sample and population are the factors considered for determining the scope of inspection. A population is all of the possible items in a set, such as all the students in a class. It is often costly, difficult, or even impossible to inspect an entire population. Instead, a sample or subset is inspected. Three EXHIBIT 12.14 PAIRS OF PROJECT QUALITY CONTROL TERMS TERM: SOMETIMES CONFUSED WITH: Prevention Inspection Sample Population Attribute Variable Precision Accuracy Tolerance Control limit Capable In-control Special cause Common cause Preventive action Corrective action Chapter 12 Project Quality Planning and Project Kickoff 407 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE students, picked randomly, would be a sample. The key is to use a big enough sam- ple to be representative of the population, but a small enough sample that it is cost and time effective. Attribute versus Variable Quality is measured either as an attribute or a variable. An attribute is determined with a yes-or-no test, while a variable is something that can be measured. Either one may be chosen. For example, if one of the goals of a project was to teach all the people in a client’s company, an attribute for each employee might be, “Did that person pass the test?” A variable might be, “How many questions did each employee score correctly?” Attributes are usually quicker (and cheaper) to observe, but may not yield as much detailed information. Project managers make a trade-off between more information and more cost when they decide if they will count or measure. Precision versus Accuracy A process is precise when the outputs are consistently very similar, such as shooting three shots at a target that all land in a cluster near each other. A process is accurate when, on the average, it produces what the cus- tomer wants. Ideally, a process is both precise and accurate. Tolerance versus Control Limit A tolerance limit is what the customer will accept and is sometimes called the voice of the customer. This could be if the customer wants a 1-inch bolt, perhaps they are willing to accept bolts ranging from a lower tolerance limit of 0.99 inches to an upper tolerance limit of 1.01 inches. A control limit reflects what the process can consistently deliver when things are behaving normally and is sometimes called the voice of the process. The upper and lower con- trol limits are often statistically calculated to be three standard deviations above or below the process average. Capable versus In Control A process is determined to be in control when the out- puts are all within the control limits. A process is considered capable when control limits are within the tolerance limits so that customers can remain satisfied with project performance even when the performance is outside its tolerance. Project managers try to ensure that their processes are both in control and capable of con- sistently delivering acceptable quality. Special versus Common Cause Special causes are statistically unlikely events that usually mean something is different from normal. Common causes are normal or random variations that are considered part of operating the system at its current capability. Special causes are identified by individual points outside the control lim- its or by unusual patterns within the limits. Common causes need systematic change for improvement—perhaps new methods or better training or tools that would allow workers to more consistently produce excellent quality. Special causes, on the other hand, require specific interventions that include identifying the root causes and making changes so those same root causes do not happen again. Preventive versus Corrective Action Preventive action is a proactive approach of making a change because a problem may occur otherwise. Corrective action is a reactive approach of making a change to fix a problem that has occurred. Agile creates and measures quality in small batch sizes and as small chunks of work. This is often different in larger integrated systems where the components are dependent on other components to demonstrate they are of quality. There is not as much focus on the quality process in agile projects because agile pro- jects tend to allow more variability for the sake of speed to market. The concept of Min- imum Viable Product (MVP) has emerged in the agile community to indicate the least 408 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 amount of value that could be perceived by the customer. This does not mean that MVP delivered is not of the appropriate quality. 12-6 Cost of Quality Even with good inspectors, some mistakes will reach customers if poor quality exists in project processes. Cost of quality is a sum of the cost of conformance of quality and cost of nonconformance of quality. Quality decisions should be based on costs associated with all the factors listed in Exhibit 12.15. 12-7 Develop Project Management Plan Chapters 5 through 11 have all dealt with aspects of project planning. On small and sim- ple projects, the various portions of this planning may already be combined to a large extent. On larger, more complex projects, specific methods are often used to plan the various project aspects separately, such as cost, schedule, resources, communications, risk, and quality. If they have not been planned together, they need to be compiled into a unified project management plan. Conflicts need to be resolved. A configuration man- agement system needs to be selected or developed. The project manager should apply a sanity test to all project plans. There is often a formal project kickoff of some sort, and after everything is agreed, the scope, schedule, budget, and so forth are baselined, and the baseline becomes part of the project management plan. 12-7a Resolve Conflicts Sometimes, when all parts of the plan come together, it becomes obvious that the overall plan is impractical. If this occurs, the key stakeholders may need to determine their priorities and trade-offs. What do they really most want and need from the project? Are all of the quality standards truly mandatory, or can one of them be relaxed a bit? Is the imposed deadline really critical, or, considering the impact it poses for costs and risks, can it be relaxed a bit? Is the budget a true maximum, or can it be adjusted to secure the desired features? EXHIBIT 12.15 COSTS OF QUALITY COST OF CONFORMANCE COST OF NONCONFORMANCE Planning Training Process control and validation Product design validation Test and evaluation Quality audits Maintenance and calibration Inspection Field testing Scrap Rework and repair Additional material Inventory Warranty repairs and service Compliant handling Liability judgments Product recalls Field service Expediting Chapter 12 Project Quality Planning and Project Kickoff 409 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE These questions and others like them have probably been asked all along, but now they take on added urgency because once the project plan is approved, it may be more difficult to make these changes. 12-7b Establish Configuration Management Project planning can be hard work. Once the plan is in place, it still takes a lot of hard work to control the project. One last part of planning is to create a configuration manage- ment system to aid project control. A configuration management system has four parts: 1. Process for identifying and uniquely naming items that need to be controlled 2. Activity of managing the project deliverables and documentation 3. Recording and reporting all changes 4. Verifying the correctness of all deliverables and components of them18 12-7c Apply Sanity Tests to All Project Plans A common saying is appropriate to consider here: “can’t see the forest for the trees.” This means that sometimes a person is so concerned with details that they forget the big picture. During the initial stage of a project (initiating), the team creates the primary deliverable, a project charter. The charter is a high-level view of a project, so seeing the big picture is easy. During the more detailed planning stage, however, the team looks in great detail at scope, schedule, resources, cost, communications, risks, and quality. Now they need to step back a bit and ask if all these elements work well together. The project manager and core team should apply a sanity test to their project plans by asking one another questions to ensure that the comprehensive project plan makes sense. Some of these questions could be as follows: Does the critical path look reasonable? Do the milestones look achievable? Are some resources overallocated? Does everyone understand what they are supposed to do? Do we really understand our customers? Are the customers’ desires likely to change? How well do we understand the standards we will be judged against? Are the methods for completing our work really sensible? Are we confident we can gather and analyze the data we need to control the plan? On agile projects, the overall plan for the project (called the release plan) is only at a high level, while the detailed plans for each iteration are baselined right before each iter- ation starts. The idea is to allow as much flexibility as possible, up until the last respon- sible minute to respond as quickly as possible to the changing needs of the customer. 12-8 Kickoff Project Project kickoff meetings are conducted for many reasons. First, everyone should express their legitimate needs and desires and should strive to understand the desires of all the other stakeholders. If the leader, charged with accomplishing the project, does not have the full authority to direct all the project work activities, she needs to use her influence to get everyone excited about the project, to feel pride in their participation, to feel they share in the risks and rewards the project offers, and to be motivated to self-manage as much as possible. Many people may have helped with some parts of the project 410 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 planning. This is their chance to see how all the parts fit together. Since many projects fail because of “touchpoints” where one person hands off work to another, it is critical for all parties to understand these potential trouble spots. Kickoff meetings are also help- ful in convincing all the project stakeholders that the project leaders (sponsor, project manager, and core team) will be good stewards of the customer’s and the parent organi- zation’s assets. Answering any remaining questions and overcoming lingering concerns helps to accomplish this. Finally, all interested parties (outside customers, top manage- ment, functional managers, frontline workers, and any others) should be eager to com- mit to the project and get on with the work! 12-8a Preconditions to Meeting Success Several preconditions must be met for project kickoff meetings to be successful: The sponsor and project manager need to set clear direction during the planning. The core team needs to commit to the project first—it is hard for them to convince others if they do not believe in it themselves. Everyone should contribute to setting up an atmosphere of trust and relationship building. Project leaders need to practice active listening to uncover potential problems. As many people as possible should be included in parts of the planning to enhance chances that they will buy in to the resulting project plan. 12-8b Meeting Activities The formality of a kickoff meeting can vary considerably depending on the size and type of project. Typical activities that might be included in the kickoff meeting are the following: The sponsor and project manager describing the importance of the project M on ke y Bu si ne ss Im ag es /S hu tte rs to ck .c om Chapter 12 Project Quality Planning and Project Kickoff 411 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 The customer(s) describing their acceptance standards, sense of urgency, and budget concerns The project manager outlining the project goals The project manager and the core team describing work expectations The project manager unfolding the project plan and its current status (if work has commenced) The core team explaining the communications, risk, and quality plans Everyone asking questions and making suggestions The project manager authorizing appropriate changes to the project plan Everyone concurring with the overall plan and to his or her individual action items On small, simple projects, presenting the charter and signing can take the place of a kickoff meeting. However, on many projects, the team needs to perform much more detailed planning after the charter is signed. Project kickoff meetings are vital for com- munications and commitment on these projects. Exhibit 12.16 is an example of how the EXHIBIT 12.16 IS&T PROJECT LAUNCH ASSESSMENT AGENDA Purpose: The Project Manager is to illustrate to an executive audience the chartered IS&T project’s readiness to successfully launch. Upon conclusion of the Project Manager’s presentation, the execu- tive audience will determine and document the actions required for the project to launch. Prerequisite: The Project Manager is required to complete the Project Deliverable Review and receive documented approval from the Project Deliverable Review Board in order to proceed to the Project Launch Assessment. Standard Participants Core Group (CG) (CIO and IS&T Director) PMO Manager Project Manager Functional Manager PMO Consult Quality Consult Security Consult (Optional) Test Coordinator Sponsor Required Documents: The Project Manager is required to present the PLA materials online. If a paper copy is needed, it should be printed double-sided. Project Charter PMO Risk Forms Project Financial Worksheet Master Test Plan Progress Report—PDR Project Launch Assessment Agenda: The Project Manager is required to present all of the listed deli- verables in the provided order, focusing on specifically the identified components and content specified. 1. Project Charter—Discuss Business Need, Purpose, Logical Scope: In-Scope, Out-of-Scope, and Assumptions. 2. Master Test Plan—Discuss Sections 1.3—Test Levels, Objectives, and Deliverables; 3—Test Time- line and Key Events; and 5—Define System Characteristics, Relative Importance, and Subsystems. 3. Privacy and Security—Discuss the Security and HIPAA Template for PMO Projects. 4. Risk Forms—Discuss all populated and scored forms created to date. 5. Project Financial Worksheet—Discuss populated spreadsheet. 6. Progress Report (PDR)—Speak to the current status of all actions provided for each deliverable. Source: Nancy D’Quila, PMP. 412 Part 3 Planning Projects Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 AGILE information systems and technology division of a major healthcare company kicks off a project. In scaled agile models, there is a large meeting every planning cycle that behaves much like a kickoff meeting. 12-9 Baseline and Communicate Project Management Plan Once the project plan is complete and accepted by the stakeholders, the plan is baselined. A baseline is the approved plan. Many project plans are developed iteratively as more information comes to light. A project plan is considered to be in draft form until enough information is available for the key stakeholders to commit to all of the details and base- line the plan. At that point, it becomes official, and any changes in the future need to be formally approved and documented. This is a time of great joy because this marks the transition between planning and executing the project. In reality, on many projects, some activities that are on the critical path or nearly critical paths are started before the official project kickoff. Planning also continues in the form of replanning to adjust to changing circumstances. However, the majority of planning is done, and the majority of executing is just starting. The project management plan needs to be communicated in accordance with the communications plan requirements. Hopefully, many of the key stakeholders are able to attend the kickoff meeting. Regardless of who is present, proper communication needs to be sent to all stakeholders. 12-10 Using MS Project for Project Baselines MS Project can be used as a tool to automate and communicate many facets of a project. A key job of the project manager is monitoring and controlling the project. MS Project can assist the project manager in this effort by creating a project baseline to measure against as the project is executed. Before a baseline is created with MS Project, the proj- ect manager needs to verify that the following items have been incorporated in the plan- ning (you’ll probably note some of these are glaringly omitted in our running Suburban Park Homes tutorial): Quality assurance and quality control activities are included. Risk response plan activities (or duration compensation) are included. Performance posting activities are included. All “hard” date constraints are incorporated. A realistic start date has been chosen. Organizational holidays and resource vacations are entered. Resource allocations are realistic and overloads are addressed. Management and contingency reserves are in the schedule. Time and cost trade-offs are applied to the schedule. 12-10a Baseline the Project Plan Once the project plan has been completed as above and agreed on by the key stake- holders, it is important to “lock in” the plan, or baseline it. Baselining is important so Chapter 12 Project Quality Planning and Project Kickoff 413 Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 the project manager can track and measure how well actual project performance matches the original plan (the baseline). Tracking and measuring these variances is one way the project manager monitors and controls the project. Up to this point, the project manager has inputted start, finish, and duration data into MS Project, along with resources, their costs, and assignments. These values, together with project quality and scope targets, are what the stakeholders agreed to, approved, and expect as key measures of project success. Collectively, these values and targets, along with the risk and communications plans, form the project management plan. However, once work begins on the project (execution), the actual value of the inputs will begin to vary from the planned value for most if not all of these inputs (unless the project is executed exactly to plan, which is unlikely). When the baseline is created, MS Project makes a project plan snapshot of all planned input values (i.e., duration, start, stop, resources). With this snapshot, MS Project begins to track the variance between baseline and actual values as the project is executed. The project manager can use MS Project to compare the baseline with actual schedule, work, and cost variance values and display these graphically and in tables. This comparison can be used to know where the project is doing well, and where it may need help. Baseline variance can also help predict future impacts to time and cost targets. With these bits of information, proj- ect managers can take action to get the project back on track where needed, and reduce or eliminate undesirable future impacts to the project. 12-10b Create the First Time Baseline Once key stakeholders agree to the project plan, the baseline is created by: 1. Click the Project Tab>>Schedule Group>>click Set Baseline>>click Set Baseline
2. The defaults should be accepted as shown in Exhibit 12.17, click OK
12-10c Subsequent Baselines
For any number of reasons, it may not be useful to continue to manage to the present
baseline. Reasons to change the baseline might include changes to the project scope,
project delay, or unavailability of planned resources (among a host of other reasons). If
EXHIBIT 12.17
SET FIRST TIME BASELINE
Source: Microsoft product screen shots reprinted with permission from Microsoft Corporation.
414 Part 3 Planning Projects
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AGILE
a change is approved, the changed tasks must be re-baselined, as well as the WBS parents
of the new or changed tasks (Step 3 below):
1. Select the changed or added activities, milestones, and WBS elements
2. Click the Project Tab>>Schedule Group>>click Set Baseline>>click Set Baseline
3. Ensure the original baseline is selected in the drop-down menu under “Set baseline”
4. Click Selected tasks>>check To all summary tasks
5. Click OK
Instead of re-baselining as above, you may wish to create an entirely new baseline. MS
Project supports up to 11 baselines. Some project managers like to save a baseline for
each iteration of planning to compare different values, while others like creating a new
baseline as each phase or milestone of a project is reached. Steps for creating additional
baselines match those of creating the original baseline, only the drop-down menu under
“Set baseline” needs to be changed to Baseline 1 (or Baseline 2, 3, 4, etc., whichever
number of baseline the project happens to be on).
12-10d Viewing Baselines and Variances
The Gantt Chart view can be formatted to show “baseline bars,” which provide a graph-
ical view of differences between the planned and actual schedule of each task. To display
baseline bars in the Gantt view:
1. Click the View Tab>>Task Views>>Gantt Chart
2. Click the Format Tab>>Bar Styles Group>>Baseline>>click the Baseline you want
to view
A good way to view the difference between a task’s baseline value versus its actual value
is side by side. This is easily accomplished in MS Project using the Variance table:
1. Click the View Tab>>Task Views>>click Other Views>>Task Sheet
2. In the Data Group>>Tables>>Variance
The variance table appears and shows you several columns as in Exhibit 12.18. Once
the project has entered the execution phase, many of your start and finish dates will
likely be different from what was originally planned (baselined). The variance table
shows you the Start and Finish dates (the actual dates you executed on) and the base-
lined Start and Finish dates (the dates you planned to execute on). It also shows you
the Start and Finish variance (the difference between the planned and the actual date).
As you can see in Exhibit 12.18, a date change in the project has been made to the
task “Architect sign-off.” The original plan was for this task to start on Monday
12/4/17 (the Baseline Start). However, the actual start was on Wednesday 12/6/17 as
seen in the Start column. This change shows up in the Start and Finish Variance col-
umns as a two-day variance. If you go back to the Gantt view (View Tab>>Task
Views>>Gantt Chart), you will notice that the baseline bars have been revealed more
prominently as the task bars have shifted to the right.
As other project tasks shift, variances will ripple down through the project and give
the project manager an idea of how the schedule will shift on the project. This is just
another tool the project manager can use to examine critical path activities and plan to
crash or make other adjustments to the schedule as necessary.
Agile embraces the idea of building quality into the product at the smallest batch
size.
There is not a separate step for quality.
Chapter 12 Project Quality Planning and Project Kickoff 415
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The saying that helps us remember this is: aim small miss small.
There is little planning for quality, other than the team owns quality, and the Con-
dition of Acceptance for each story is the definition acceptable to the customer.
Architectural runway is an aspect of quality in more agile environments and this
speaks to how the infrastructure where the software will run needs to prepared.
When this is done as a critical path activity, the product quality is higher.
While agile has been predominately used in software and product development
environments, much of what agile does with regard to quality could work in other
areas as well.
PMP/CAPM Study Ideas
You are likely to see a few elements from this chapter on either a CAPM or PMP test.
One of the paramount things to remember is the difference between quality assurance
EXHIBIT 12.18
PROJECT TASK VARIANCES
416 Part 3 Planning Projects
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(forward-looking/preventative) and quality control (inspection) and how a quality policy
or plan can integrate the two.
Understand how to follow an improvement model such as PDCA or DMAIC and
know the difference between common causes and special causes of variation. Be familiar
with the contributions of some of the thought leaders in the field of quality—especially
Deming and Juran. Finally, know what Six Sigma means and why it is relevant and be
prepared to use its standard deviation formula to determine whether a process is in con-
trol or out of control. We will delve into more specific quality tools in Chapter 14.
Summary
Deming, Juran, and many other people have contrib-
uted to the modern approaches to quality. The Mal-
colm Baldrige Award, ISO certification, and Six Sigma
each present a framework with many good points. The
contemporary approach to project quality draws upon
all of these sources.
The first concept in contemporary project quality
management is stakeholder satisfaction. It is critical to
understand project stakeholders, prioritize their needs,
manage toward those needs, keep the relationships
strong, and always strive to ensure that the customer is
capable of using the project deliverables. The second
concept is process management. This includes under-
standing both continual and breakthrough forms of
improvement, seeking the root cause of problems, and
using an appropriate model such as DMAIC to guide
improvement efforts. The third concept is fact-based
management. This entails understanding variation, mak-
ing good decisions regarding what to measure, capturing
and analyzing data correctly, and using the information
in an open and honest decision-making manner. The
final concept is empowered performance. Project man-
agers want to have capable and willing workers through-
out their project and should treat each person as an
individual, ensure people accept responsibility, and
strive to get more done through collaboration.
When project managers perform quality manage-
ment planning, the first thing they need to do is either
adopt the quality policy of their parent organization or
supplement it. The policy should broadly guide their
efforts. The quality plan should include the quality
baseline defining performance expectations. It should
also include instructions for how the quality assurance
and quality control will be handled.
Many quality tools have been developed over the
years, and quite a few of them work well on projects.
Many of these tools can be used in additional project
management activities.
Once the quality management plan and all of the
other subsidiary plans have been developed, it is time
to iron out any inconsistencies among the various
plans. The overall project management plan needs to
make sense. Quality, cost, schedule, human resources,
risk, and communications may have been planned
somewhat independently on a large project, and now
is the time to make sure they all work well together.
The project core team usually asks themselves a
number of questions concerning the practicality of
the overall plan and then holds a kickoff meeting
with all of the project stakeholders. Hopefully, the out-
come of the meeting is commitment and excitement all
around. Now, the project officially moves into execu-
tion. While some of the project activities may already
be under way (or even complete), the approval of the
project plan signals the change from primarily plan-
ning to primarily execution. Ongoing planning and
replanning still occur, but managing the performance
of project activities and communicating with various
stakeholders consume much of the project manager’s
time from this point forward.
Key Terms Consistent with PMI Standards and Guides
plan quality management, 387
project quality, 392
stakeholder satisfaction, 393
process, 394
control, 395
four aspects of fact-based management, 396
quality metrics, 397
data, 397
information, 397
quality management plan, 401
process improvement plan, 404
manage quality, 404
Chapter 12 Project Quality Planning and Project Kickoff 417
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perform quality assurance, 404
quality audit, 405
preventive actions, 405
corrective actions, 405
defect repair, 405
process analysis, 405
control quality, 406
cost of quality, 409
configuration management system, 410
Chapter Review Questions
1. What is the name of the process that identifies
which quality standards are relevant to the proj-
ect and how to comply with them?
2. Who was the influential thought leader in the
area of quality who created the Profound Knowl-
edge System?
3. Who is best known for creating the Quality
Trilogy?
4. What does the acronym TQM stand for? How
does it apply to project management?
5. What does the name Six Sigma refer to?
6. Define the term project quality.
7. Give some examples of external stakeholders.
8. What are the four core project quality concepts?
9. What are three main reasons it is better to design
quality into a process than to find problems upon
inspection?
10. Identify and describe the steps of the PDAC model.
11. What is the difference between common and spe-
cial causes of variation?
12. Define quality assurance and the primary meth-
ods that can be used to achieve it.
13. Define quality control and the primary methods
that can be used to achieve it.
14. What activities are typically included in a project
kickoff meeting?
15. What marks the transition between the planning
and executing project phases?
Discussion Questions
1. What did Deming mean when he said that orga-
nizations operate as systems? Give examples.
2. Identify similarities and differences among
TQM, ISO, and Six Sigma. What strengths and
weaknesses are inherent in each of these
approaches?
3. Rank the seven quality management areas of ISO
from most to least important. What rationale is
your list based upon?
4. Describe the process of achieving stakeholder sat-
isfaction. How would you address a situation in
which two stakeholders have mutually exclusive
goals for the project?
5. Give examples of how a single company might
use continuous process improvement and/or
breakthrough process improvement.
6. Give some examples of common and special
cause variation that you have witnessed. Which
of these causes of variation can be addressed
through continuous improvement?
7. Discuss the four areas of fact-based decision
making. In your opinion, what is the greatest
obstacle to using fact-based decision making?
8. Discuss the costs of conformance versus noncon-
formance and how they both factor into the over-
all cost of quality. What percent of your budget
would you put toward conformance-related tasks
compared to nonconformance-related tasks?
Why?
9. In your own experience, have you seen compa-
nies integrate quality within their project plan-
ning processes? If so, how and when have they
done so? If not, do you think it would have been
more beneficial to address quality in one area of
the overall project plan or continuously through-
out the plan?
PMBOK ® Guide Questions
1. An important input to the Plan Quality Manage-
ment process is requirements documentation.
This is because:
a. the organization will have a uniform set of
specific quality requirements that every proj-
ect must adhere to.
418 Part 3 Planning Projects
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b. requirements include the schedule and cost
information that must be balanced against
quality needs for the project.
c. requirements documentation captures the
stakeholder expectations that the project
should meet.
d. the sponsor’s directives for the project’s
level of quality are expressed in the
requirements.
2. Which of the following is part of a Configuration
Management System?
a. process for identifying and uniquely naming
items that need to be controlled
b. recording and reporting all changes
c. verifying the correctness of all deliverables and
components of them
d. all of the above
3. What cycle is the basis for Six Sigma quality
planning and improvement?
a. DMAIC
b. PDCA
c. DOE
d. TQM
4. All of these are components of a work flow dia-
gram called the SIPOC model except:
a. customer
b. process
c. input
d. support
5. The PMBOK® Guide defines quality as:
a. exceeding customer expectations by delivering
more than they requested.
b. achieving the highest-possible level of value
using objective measures.
c. the degree to which a set of inherent charac-
teristics fulfills requirements.
d. a category used to distinguish items that have
the same functional use.
6. During quality management planning, the proj-
ect manager and team determine what will be
measured during the Control Quality process.
Project or product attributes such as on-time
performance, defect frequency, and costs versus
budget are known as .
a. quality metrics
b. quality thresholds
c. quality tolerances
d. quality boundaries
7. Preventive action .
a. is primarily addressed in the Control Quality
process
b. realigns the performance of the project work
with the project management plan
c. seeks to ensure the future performance of the
project work is aligned with the project man-
agement plan
d. modifies a nonconforming product or product
subcomponent
8. According to the PMBOK, which of the following
is not a quality management process?
a. Plan Quality Management
b. Monitor Quality
c. Perform Quality Assurance
d. Control Quality
9. Once the project management plan is complete
and accepted by the stakeholders, the approved
plan is .
a. reviewed
b. baselined
c. followed
d. documented
10. Who came up with the four-part Profound
Knowledge System?
a. Deming
b. Juran
c. Maslow
d. Ford
Exercises
1. Create a SIPOC for an everyday activity (i.e.,
paying bills, parallel parking, or making
cookies).
2. Identify key quality project plan steps that you
feel should be included within a typical overall
project plan. Be sure to include quality items
throughout the project plan life cycle.
3. Create a SIPOC model for a project where
your university is modernizing its student center
to include space for on-campus, student-run
businesses. Be sure to include all relevant stake-
holder groups. Describe how you would use
this information to design quality into your
project.
Chapter 12 Project Quality Planning and Project Kickoff 419
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4. Improve a work process using either the DMAIC
or the PDCA model to guide your actions. What
project quality tools did you use, and why did
you select each?
5. Identify the quality policy for a local company.
Speculate how the policy focuses the efforts on
a project in that company. Find a project man-
ager at that company and ask his or her opinion
of the quality policy’s impact.
Semester Project Instructions
Talk with your sponsor to determine if the organiza-
tion for which you are planning your example project
has a quality policy. If it does, determine whether you
will adopt it as is or ask to augment it. Tell why you
wish to either accept or modify it.
With your sponsor, determine the quality baseline
for your project. What standards will you use?
Perform a stakeholder analysis. After completing the
tool, are there any stakeholders that you didn’t think of
before? Are there any who are opponents? What
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
Suburban Homes realized that its ambitious plan of expand-
ing its business to several Southern States in the United
States is possible if it is known for its high-quality homes
that meet local, state, and federal standards as well as
exceed industrial standards for quality.
Even though Suburban Homes did not place a strong
emphasis on quality but focused on meeting industrial stan-
dards, the company has realized that it must exceed all the
quality standards to expand its business successfully. Although
Adam Smith worked for several years in the construction indus-
try, he is not specifically trained in quality management and he
is not well versed with quality management tools and techni-
ques. He is actively seeking help internally and externally.
In the previous chapters, you have developed a scope
plan (WBS), schedule network, cost estimation along RBS,
and risk assessments for the project described. Now, the
quality management plan needs to be added to make the
project plan comprehensive project.
Adam s primary task is to develop a quality manage-
ment plan. Further, he realized that employee turnover
and the expansion of the business in the southern states
has led to Suburban Homes developing a centralized
quality management team. You are hired as a con-
sultant to develop a comprehensive quality management
plan.
Tasks to Complete
Assess quality expectations of a typical home buyer who is
the primary stakeholder and other key stakeholders to
develop a plan for stakeholder satisfaction.
Identify relevant standards of quality.
Develop quality measures for monitoring project
performance.
Develop a quality management plan as described in this
chapter.
Perform a qualitative assessment to prioritize risks.
Develop a quality policy.
Develop a process improvement plan.
Define a quality assurance approach.
CASA DE PAZ DEVELOPMENT PROJECT
Some of the quality implications the team needs to address
include the following:
Zoning and building codes
Professional standards for various programs (nursing,
ESL, career readiness, etc.)
Credentialed staff
420 Part 3 Planning Projects
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actions could you take to try to change those who are
opponents into enthusiasts?
Create a SIPOC for your project. What did you
learn that surprised you? How will your project plan
be different because of what you learned?
Create an agenda for a kickoff meeting for your
project. Conduct the kickoff meeting and capture min-
utes for it. Tell what went as you expected and what
went differently from what you expected.
Baseline your project management plan with the
activity baseline start, activity baseline finish, activity
baseline duration, activity baseline cost, and activity
baseline work shown in MS Project. Also show in
your project management plan the agreed-upon
quality and scope targets, risk, and communications
plans.
Pick one work process related to your example proj-
ect. Use the DMAIC model to improve the process.
Perform the define and measure steps. Tell what you
learned. Identify what project quality tools you expect
to use on the remaining steps and tell why you will use
them.
PROJECT M ANAGEM ENT IN ACTION
Quality Planning at GTC
Every customer-facing project performed by General
Tool Company (GTC) has an associated Quality Plan
Requirements (QPR) document. The QPR is an output
of the technical review process and is performed by
the Quality Engineer (QE) during the preliminary
planning stages of the project. The QPR is derived
from various source documents, including the Pur-
chase Order Agreement, Statement of Work, technical
publications, customer flow-down requirements, and
drawing notes. Familiarity with the customer s quality
system requirements is an essential element of the
review process. It is not uncommon for a customer to
mistakenly leave out critical quality requirements
when issuing a purchase order or request-
for-proposal. However, by being familiar with the
customer s quality systems and manufacturing needs,
GTC is able to work with the customer to correct any
deficiencies prior to beginning the manufacturing
process.
Through the QPR process, the QE may (and often
does) uncover project risks previously unknown to the
team. Such risks may impact cost, schedule, scope, or
any combination thereof. At a minimum, identified risk
must be investigated by the project manager so as to
EXHIBIT 12.19
SUPPLIER SCORECARD
Supplier Rating:
Quarter 1, 2, 3 & 4 of 2012
General Tool Company
Suppliers will be categorized into one of four tiers; A, B, C or D.
A) An A tier supplier has a rating of 85 – 100.
B) A B tier supplier has a rating of 75 – 84.
C) A C tier supplier has a rating of 65 – 74.
D) A D tier supplier has a rating of 64 or less.
Below are the charts and graphs that represent GTC s performance in the last 4 quarters.
Chapter 12 Project Quality Planning and Project Kickoff 421
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ensure there are no changes to the scope of work as
originally proposed. While many tools exist to identify
and address quality-related risks (DMIAC, Ishikawa
Diagram, 5 Whys, etc.), GTC utilizes the Quality
Improvement Action Plan for planning and in-process
management of project risks.
Of course, not all risks are uncovered during the
planning phase. Unsuspecting performance issues
can arise at any point during the project s lifecycle
and must be dealt with appropriately to ensure cost,
schedule, and performance objectives are met. In
the example on the following pages, GTC identified,
by way of the supplier scorecard in Exhibit 12.19,
delivery issues associated with a particular aero-
space project. The scorecard led the project team
down the continuous improvement path, in an effort
to bolster the supplier rating. The relationship
between the supplier scorecard and the Quality
Improvement Action Plan is clearly indicated (as
well as the marked improvement in the subsequent
quarter).
By working closely with the customer and the QE,
the project manager ensures that the project s quality
and technical requirements are properly identified and
integrated into the project plan. In addition, the QPR
process provides an opportunity to validate the team s
underlying assumptions from the bid process. Any
incongruences can be addressed before the
manufacturing process begins, thus giving the project
the best opportunity for a successful outcome. Fur-
ther, it is often during the quality planning process
that the customer comes to realize the significant
costs associated with heightened quality and technical
requirements. In a firm-fixed-price environment, this is
the best time for the subcontractor to negotiate any
associated cost impact, as the risk is squarely on the
shoulders of the subcontractor once the purchase
order agreement is accepted.
Overall Rating: A Tier.
On Time Delivery:
Delivery issues due to Quality misses in 3rd Quarter. Process improvements have restored highest rating.
Quality List of defects:
Cert accuracy missing information/incomplete documents delayed product receipt.
Machining failure caused decrease in 3rd Quarter Quality rating. GTC implemented Corrective Actions.
Reference GTC Quality Action Plan.
Source: Brad Brezinski, Jim Stewart, Korey Bischoff, and Mark Butorac of General Tool Corporation.
0
10
20
30
40
50
60
70
80
90
100
On Time Deliver Quality System Product Quality Overall Rating
GTC 1Q 12
GTC 2Q 12
GTC 3Q 12
GTC 4Q 12
422 Part 3 Planning Projects
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References
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Chapter 12 Project Quality Planning and Project Kickoff 423
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Endnotes
1. PMBOK® Guide 6th Edition Exposure Draft 20.
2. Adapted from James R. Evans and William M.
Lindsay, Management for Quality and Performance
(Mason, OH: Cengage Learning, 2015): 6–8.
3. Evans. James R., and William M. Lindsay, Man-
agement for Quality and Performance 205.
4. Evans, James R., and William M. Lindsay, Man-
agement for Quality and Performance 222.
5. http://www.projectmanagementdocs.com/proj-
ect-documents/quality-metrics.html#axzz4d-
se9892h, accessed April 10, 2017.
6. http://www.businessdictionary.com/definition/
data.html, accessed April 10, 2017.
7. http://www.businessdictionary.com/definition/
information.html, accessed April 10, 2017.
8. https://pma.doit.wisc.edu/plan/3-2/what.html,
accessed April 10, 2017.
9. Adapted from http://www.pma.doit.wisc.edu/
plan/3-2/what.html, accessed April 10, 2017.
10. http://www.projectmanagementdocs.com/project-
planning-templates/process-improvement-plan.
html#axzz4dse9892h, accessed April 11, 2017.
11. https://www.simplilearn.com/project-quality-
management-article, accessed April 11, 2017.
12. Ibid.
13. https://www.passionatepm.com/blog/corrective-
versus-preventive-actions-versus-defect-repairs-
pmp-concept-38, accessed April 11, 2017.
14. Ibid.
15. Ibid.
16. http://www.businessdictionary.com/definition/
process-analysis.html, accessed April 11, 2017.
17. http://www.diffen.com/difference/Quality_Assur-
ance_vs_Quality_Control, accessed April 11,
2017.
18. Adapted from http://www.deepfriedbrainproject.
com/2010/05/activities-configuration-manage-
ment.html, accessed April 11, 2017.
424 Part 3 Planning Projects
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4
ORGANIZE LEAD PERFORMPLAN
P A R T 4
PERFORMING PROJECTS
Chapter 13
Project Supply Chain
Management
Chapter 14
Determining Project Progress
and Results
Chapter 15
Finishing the Project and
Realizing the Benefits
Performing a project includes leading, managing, and
controlling all of the various knowledge areas of the
PMBOK® Guide simultaneously so as to ensure progress
is being made and results will be delivered. Chapter 13
deals with the procurements area, including all work with
suppliers and partners in the supply chain. Chapter 14
includes the ongoing work concerning scope, schedule,
cost, quality, communications, risks, and stakeholders.
Chapter 15 wraps up the project, showing how to suc-
cessfully close a project and reap the benefits.
425
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C H A P T E R 13
Project Supply Chain Management
The Challenge As an independent inventor, IP owner, and entrepreneur, the
greatest challenge is the need to muster the required organizational support, critical
capital, and project management input while staying agile and responsive to devel-
oping conditions. Project management adds crucial skills you need to generate
cooperation from your resources without implicit or granted hierarchal authority.
Background This story was born when I encountered a challenge on a land-
scaping project. The solution to the previous project became a significant inde-
pendent project called Super Absorbent Polymer Turf (SAPTURF). The problem
is that synthetic turf systems generate extreme heat of 50 to 60 degrees above
the ambient temperature on the surface, which is unpleasant and even danger-
ous. As a small, independent individual, I developed and patented a polymer
that solves this problem in many situations.
Initially, I chose a large multinational based in Europe to partner with on the next
step in commercializing SAPTURF. I chose this international partner because they
are the market leaders. I still controlled the intellectual property (IP) and entered
into an agreement to further test my technology to calibrate the value.
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Identify the role of
supply chain man-
agement in project
management and its
importance for
ensuring project
success.
Describe how to plan,
conduct, control, and
close project
procurements.
BEHAVIORAL OBJECTIVES:
Explain how to use
the contemporary
approach to project
partnering and
collaboration.
TECHNICAL OBJECTIVES:
Describe the various
formats for supply
contracts and when
each type is
appropriate.
Given a project situa-
tion, determine which
activities, supplies, or
service should be
purchased, create bid
documents for one of
them, determine the
criteria you would use
to select a seller, and
then determine and
justify the type of
contract to be used.
M
ar
k
H
er
re
id
/S
hu
tte
rs
to
ck
.c
om
426
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Stay Agile After the trial process, I ended up choosing a different firm in the
synthetic turf industry as a long-term partner and licensee. I chose Shaw Indus-
try, a Berkshire Hathaway company. Shaw Industries operates three synthetic
turf divisions. Shaw s experience as the largest flooring manufacturer in the
United States and its financial stability as a Berkshire Hathaway company were
additional reasons I selected them as a long-term partner. I also developed confi-
dence that they would respect both my knowledge and my intellectual property.
I entered into a long-term license agreement with Shaw Industries and they trade-
marked my technology HydroChill. HydroChill is being commercialized worldwide.
In addition to my license agreement, I provide consultancy services to
Shaw Industries and some of their affiliates on an ongoing basis, which
allows me to stay close to the shop floor and facilitates ongoing implementation
and improvement of the HydroChill technology. This also allows me to share some
of my tacit knowledge to increase probabilities that applications are successful.
The Product Our technology is applied to a field where components react
and form a coating on the infill. The field is watered to activate HydroChill, and
then energy from sunlight drives out water, removing heat from the surface.
PMBOK® GUIDE
Topics:
Plan procurement
management
Conduct
procurements
Control procurements
CHAPTER OUTPUTS
Make or buy analysis
Bid documents
Source selection
matrix
4.2 Develop Project Management Plan
Bid documents
Make or Buy Analysis
Source Selection
Matrix
12.1 Plan Procurement
Management
12.2 Conduct
Procurements
12.3 Control
Procurements
Slow-Released
Evaporative Cooling
Sunlight/Heat
Turf Fibers
Infill with HydrochilTM
427
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The cooling effect of HydroChill after watering can last two to three days. Water-
ing alone can result in some cooling, but temperatures can rise and quickly
exceed uncomfortable levels of heat. HydroChill creates a substantial and sus-
tained temperature difference.
Applications HydroChill projects have been executed in the categories of
large-scale athletic fields, parks, roof gardens, and residential lawns throughout
the world. One of the most recent and notable HydroChill projects is a complete
par three golf course in the French Riviera town of Grimaud. A few of the other
applications include:
Athletic field HydroChill application, http://www.shawsportsturf.com/, http://
www.shawhydrochill.com/
Landscape and Golf HydroChill application, http://www.southwestgreens
.com/, https://www.youtube.com/watch?v=m8As-rUnOZA, https://www.youtube
.com/watch?v=ZR-B68MBdJY, http://hydrochill.cool
And the Beat Goes On
Our flexible contracts for licensing the technology and for supporting further
development allow us to continue our first love developing exciting new pro-
jects. My son and I are developing other applications outside the synthetic turf
industry under the Taro Inc. flag. One application we are currently commercializ-
ing is Equestrian footing product. Operators in the dressage, jumper, and rodeo
categories have embraced the Equestrian footing application.
Chris Tetrault, owner and founder, SAPTURF
13-1 Introduction to Project Supply Chain
Management
Can you provide a project example that is fully completed by the project organization
itself, without using any products or services from outside suppliers? Most likely, the
answer is no. As the opening case illustrates, in-house personnel complete almost no seri-
ous projects from scratch anymore. In fact, outsourcing part of project tasks has been a
well-established practice in various industries for a long time. In many cases, companies
have to rely on external suppliers for acquiring many of the unique resources they need.
In this chapter, we consider the interorganizational purchasing-related issues (hereafter
referred to as supply chain management) in the context of project management.
A supply chain consists of all parties involved, directly or indirectly, in fulfilling a cus-
tomer request. In project management, this request can be made by the project team in
order to acquire some specific product or service required for completing various stages
of the project. The customer can also make the request. As a result, supply chain opera-
tions require managerial processes that span functional areas within individual organiza-
tions and link trading partners and customers across organizational boundaries.
In recent years, the topic of supply chain management has evolved into a systematic
approach for managing all material, service, monetary, and information flows across supply
chain partners. With its broader coverage and profound impact, project supply chain man-
agement has become a challenge to many firms. Because the ultimate goal of serving project
customers hinges on the systematic and coordinated performance of all partners (suppliers,
transporters, and so forth), supply chain management becomes a critical project manage-
ment activity. However, many companies traditionally have been concerned with purchasing
and procurement, where the goal was to obtain necessary goods and services at the lowest
428 Part 4 Performing Projects
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possible price. In this chapter, we cover not only traditional procurement and contractual
management topics but also supplier partnership and collaboration issues.
We define project supply chain management as a system’s approach to managing the
entire flows of physical products, information, and funds from suppliers and producers,
through resellers, and finally through the project organization for creating customer sat-
isfaction. A sample project supply chain is shown in Exhibit 13.1.
The traditional purchasing perspective is only concerned with the relationship
between the project team and its supplier(s)—those who supply the project organization
directly. At its most extensive, supply chain management involves strategic and opera-
tional issues concerned with all organizational partners involved in projects. Doubtless,
all supply chain parties need to work together to complete the project faster, better,
and/or cheaper. They all need to remember that the key project stakeholders determine
the trade-offs for better results in achieving project outcomes.
In traditional project procurement management literature, purchasing, supply chain
management, and procurement are usually used interchangeably to refer to the integra-
tion of related functions to purchase or acquire the needed materials and services for
the project team. Thus, procurement management is concerned with more than the stan-
dard steps in the purchasing process, such as recognizing needs, translating needs into
commercially equivalent descriptions, and searching for suppliers. Further responsibili-
ties of a project supply chain may also include receiving, inspection, storage, inbound
and outbound transportation, and disposal. Project procurement management can also
be extended to cover various stages of the supply chain for providing the necessary
goods or services (e.g., the supplier’s supplier). It is helpful to think in terms of the
following:
Owner—the “person or entity that owns the product of the project and to whom
that product will be handed over at the time of its completion”1
General contractor—a person or agency that “does not specialize in one kind of
work; often used to refer to the primary contractor who employs specialty subcon-
tractors”2
Subcontractor—a “contractor who is holding a contract with a prime contractor
(also referred to as a first-tier subcontractor) or is holding a contract with a subcon-
tractor to the prime contractor (i.e., lower-tier subcontractor)”3
Though supply chain management (SCM) and project management (PM) are tradi-
tionally separate business areas, we find that integrating SCM into PM can significantly
enhance the effectiveness of project management. We also discuss project procurement
management. The last section of the chapter covers how to improve project supply chain
performance.
EXHIBIT 13.1
A PROJECT SUPPLY CHAIN VIEW
Supplier’s
Supplier
Supplier Project Team Customer Consumer
Chapter 13 Project Supply Chain Management 429
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13-1a SCM Components
In particular, this chapter focuses on the following project supply chain management
components:
Make-or-buy decisions—These are “the act of choosing between manufacturing a
product in-house or purchasing it from an external supplier.”4
Contract types—We introduce the contact types and compare their advantages and
disadvantages in case a buy decision is warranted.
Collaboration and cooperation—As different firms take care of their own interests, it
is essential to coordinate their project activities to ensure the deliverables are pro-
duced as scheduled. The project at hand should become the common goal of all
the parties concerned.
System integration—This concerns the trade-offs among project goals such as time,
cost, and quality.
13-1b SCM Factors
Generally, supply chain management is more important to projects in which a large por-
tion of the work is being subcontracted and more collaboration is needed. Other factors
include the following:
The value of the outsourced products or services relative to the total value of the
project
The timing of the work being purchased
The capability of the project team
The role of the outsourced work in the entire project
The number of suppliers required
The structure of the procurement supply chain (the number of stages in the supply
chain and the nature of the intercompany relationship)
As noted earlier, it is common for a significant part of the value of a project to come
from various external suppliers. It is also increasingly common for some organizations to
exist only as coordinators of activities, without having their own capability of producing
and offering the project deliverables. In the meantime, not only do large companies out-
source project tasks, but many small businesses also outsource. In fact, small firms tend to
rely more on outside resources as they may not have the special capability of in-house exe-
cution for certain project activities or the working capital to own and employ resources.
13-1c SCM Decisions
Some of the major project supply chain management decisions are:
Distribution network configuration
Inventory control in a supply chain
Logistics
Supply contracts
Distribution strategies
Supply chain integration and strategic partnering
Outsourcing and procurement strategies
Product design
Information technology and decision-support systems
Matching internal inadequacies with external expertise
430 Part 4 Performing Projects
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In practice, these decisions often involve quantitative analysis. All of these decisions
can play an important role in managing a complex project. The implication is that proj-
ect managers must be aware of these methodologies for ensuring project completion in a
timely and cost-effective way.
13-1d Project Procurement Management Processes
Project procurement management includes the following three processes.
1. Plan procurement management
2. Conduct procurements
3. Control procurements
13-2 Plan Procurement Management
Plan procurement management is determining how project procurement decisions,
approach, and dealing with sellers will be accomplished and documented. It identifies
those project needs that can be met by acquiring products or services from outside
suppliers, determines what to purchase or acquire, and finalizes when and how to do
so. On some projects, a portion of the services or materials may be sourced from
another company; on other projects, the bulk or even all of the work may be per-
formed by an external company. A client company needs to plan for purchasing and
acquisition, whether it is for part or all of a project. The needs of the parent organiza-
tion should be considered as well as those of the project when deciding how to acquire
necessary items because it may be better for the parent organization to buy an item
rather than to rent it for the current project and then rent it again for a future
project.
To effectively plan for purchasing and acquisition of materials and services, a project
team typically finishes identifying customer requirements and most of the project plan-
ning to understand what are the true project needs. At a minimum, the project team
requires knowing the project scope, which was defined in Chapter 1 as the entirety of
what will and will not be done to meet the specified requirements. Once the require-
ments are identified, a project manager should be able to determine whether or not to
buy and if buying, what to buy and the quantity to buy.
13-2a Outputs of Planning
One primary output of this planning is a procurement management plan, which is the
portion of the project management plan that describes how a project team will acquire
goods and services they choose to purchase. The procurement management plan can
include guidance for types of contracts to be used, risk management issues, and how
to select potential suppliers. This plan guides the client company’s efforts through all
activities dealing with the acquisition of all the necessary materials and services to com-
plete the project. Another major output is the procurement statement of work, which
documents the portion of work to be purchased, described in enough detail so potential
suppliers can decide if they feel they are capable of and interested in providing it. This
document should ensure that both the contractor and the client companies clearly
understand the work that is being requested; for example, the document should provide
information such as specifications, quantity desired, quality standards, performance data,
work requirements, schedules, inspections, and other needs.
Chapter 13 Project Supply Chain Management 431
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13-2b Make-or-Buy Decisions
Project procurement can be considered from the view of the buyer–seller interface.
Depending on the application areas, the seller can be called a supplier, supplier’s sup-
plier, or contractor. Depending on the buyer’s position in the project acquisition cycle,
the buyer can be called an owner, a customer, a service requestor, or a purchaser. The
seller can be viewed during the contract life cycle first as a bidder and then as the con-
tracted supplier or vendor.
For any products or services needed in a project, during the purchase planning phase,
the project team determines which project needs can best be met by purchasing or
acquiring products and services from an outside provider and which project needs can
be accomplished by the project team. Buying from an outside supplier to meet project
needs is a well-established practice. For example, many firms outsource information
technology requirements, accounting work, legal functions, logistics, and so on.
REASONS TO BUY OR SELL The make-or-buy decision is not trivial. It involves
intricate issues such as a project organization’s competitive analysis and demand analy-
sis. The project team also needs to evaluate the advantages and disadvantages of outsour-
cing from the viewpoint of time, cost, and performance control. The analysis should also
include both direct and indirect costs so that the final decision is based on equal com-
parisons. The project personnel evaluate alternative suppliers and provide current, accu-
rate, and complete data that are relevant to the buy alternative. Exhibit 13.2 lists a variety
of considerations for make-or-buy decisions.
Most firms begin conducting a strategic outsourcing analysis by identifying their
major strengths and then building on them. A firm’s competitive advantage is often
defined as lower cost, product differentiation (better quality), and/or responsiveness
(fast delivery). To project teams, these have different levels of importance, depending
on the wishes of the customer and the progress the project is making at the moment.
Project time-cost analysis often helps generate insights about making efficient procure-
ment decisions. For example, a noncritical activity may be outsourced with a focus on
minimizing cost but not necessarily receiving the fastest delivery. However, during differ-
ent stages of a project, a noncritical task can become a critical task, which raises the
importance of timing and shifting priorities. Factors like this can hold quite different
implications for a make-or-buy decision in different phases of project execution.
While make-or-buy investigations usually begin with a cost analysis, various qualita-
tive factors frequently portend more far-reaching consequences than does the cost analy-
sis. A thorough investigation is clearly complicated by the dynamics and uncertainties of
various project activities.
EXHIBIT 13.2
REASONS TO MAKE OR BUY
REASONS TO MAKE REASONS TO BUY
1. Lower production cost
2. More control over quality and time
3. Lack of suitable suppliers
4. Obtain a customized item
5. Utilize project team’s expertise and time
6. Protect proprietary design or knowledge
1. Frees project team to deal with other important
activities
2. Ability to utilize specialized suppliers
3. Flexibility in procurement
4. Inadequate managerial or technical resources
5. Inadequate capacity
6. Small volume requirements
432 Part 4 Performing Projects
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OUTSOURCING ISSUES While outsourcing has gained in popularity, there are poten-
tial issues related to outsourcing. Some of these are relatively important with regard to
the goal of projects:
Loss of time control for completing project activities
Lack of cost control for outsourced activities
Gradual loss of special skills for doing some specific activities
Loss of project focus and a potential conflict of interest
Ineffective management as a result of complicated business interactions
Loss of confidentiality and double outsourcing when a third party is used
Sharing of proprietary knowledge that impacts competitive advantage
The concepts and techniques of project supply chain management possess strategic
importance because of these potential issues related to outsourcing. Purchasing can con-
tribute to the achievement of benefits such as higher product quality, shorter lead times,
and lower costs. Project procurement strategies can change often and differ from corpo-
rate procurement strategies because of constraints, availability of critical resources, and
specific project requirements that change dynamically. After making the make-or-buy
decision, the project team proceeds to the next step of project outsourcing for selecting
the right supplier and negotiating the contract.
The outputs of procurement planning also include documents and criteria for
selecting a supplier, if a buy decision has been made. When multiple suppliers are
available, selection standards such as total cost of ownership and risk also need to be
developed.
When a buy decision is made, the client company is attempting to create a situation
in which prospective contractor companies have the capability and motivation to pro-
vide useful and complete proposals that are easy to evaluate in order to determine
which one best suits the client company’s needs. The client company typically uses
procurement documents, which are documents that define the requirements and con-
tractual relationship between suppliers and customers of services and products used on
a project.
Project procurement personnel need to understand the differences between types of
requests so they use the correct one.
Request for Information (RFI) is “a proposal requested from a potential seller or a
service provider to determine what products and services are potentially available in
the marketplace to meet a buyer’s needs and to know the capability of a seller in
terms of offerings and strengths of the seller.”5 An RFI is used to learn about the
potential sellers and/or the products or services.
Request for Quotation (RFQ) is a type of procurement document “used when dis-
cussions with bidders are not required (mainly when the specifications of a product
or service are already known) and when price is the main or only factor in selecting
the successful bidder.”6 An RFQ is used to compare prices from various vendors of
standard items.
Request for Proposal (RFP) is a type of procurement document used at “an early
stage in a procurement process issuing an invitation for suppliers, often through a
bidding process, to submit a proposal on a specific commodity or service.”7 An
RFP is often used to compare different approaches for nonstandard items.
The client company creates evaluation criteria to define how they will evaluate and
rank the proposals. Armed with these documents, the client company is now prepared
to conduct the procurement.
Chapter 13 Project Supply Chain Management 433
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13-3 Conduct Procurements
The second project procurement management process is to conduct procurements,
which includes receiving seller responses, selecting a seller, and awarding a contract. Cli-
ent firms need to decide which potential contractor companies they wish to solicit and
then make sure those companies know about the potential project. Sometimes, firms
develop a qualified sellers list and only allow listed companies to submit a proposal on
the upcoming project. Other times, they advertise widely in hopes of attracting new con-
tractors’ interest. In either event, a formal request is normally sent out with hopes that
competent firms will compete for the right to perform the project.
One Singapore company describes its project procurement process in Exhibit 13.3.
The first part of the procurement process encompasses gathering of market intelligence,
developing a procurement strategy, and developing a contract.
The intelligence gathering phase includes defining the scope for the procurement, ana-
lyzing the needs of the end user, and the articulation of upstream and downstream market
forces. It is important to question whether the procurer has leverage or is beholden to the
tight supply situation. A strategy is then developed and some parts are shared with “part-
ner vendors” so that there is a clear understanding of the needs, available supply, and the
satisfaction criteria of procurement. After understanding the total cost of procurement, a
Go to Market position needs to be developed. The procurer needs to be armed with the
best alternatives. The culmination of the strategy phase is to obtain clear mandates to
negotiate. A contract is then developed. The contract should articulate clearly, without
contradictory clauses, the legal aspects, technical requirements, and commercial terms.
These developments are the result of continuous dialogue between the procurer and
prospective suppliers.
13-3a Sources for Potential Suppliers
Based on the nature of what is being requested in early procurement stages, the project
team usually starts the selection process by establishing a robust list of potential suppli-
ers. The following information sources are frequently used to identify these potential
suppliers:
Supplier websites
Supplier information files
Supplier catalogs
EXHIBIT 13.3
PROCURER, PROSPECTS, AND THE PROJECT MANAGER
INTELLIGENCE STRATEGY CONTRACTING
Scope Statement Legal
Needs Analyses Technical
Market forces Go to Market direction Commercial
Alternatives
Mandates
Source: Raji Sivaraman, M.S., PMI-ACP, PMP-2017
434 Part 4 Performing Projects
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Trade journals
Phone directories
Sales personnel
Trade shows
Professional organizations and conferences
Electronic search engines
Published information by local, state, and federal governments
13-3b Approaches Used When Evaluating Prospective Suppliers
Once potential contractors submit bids or proposals, the client company applies previ-
ously defined selection criteria to select one or more sellers who are qualified to perform
the work and are acceptable as sellers. On some projects in which the services or materi-
als are commodities, the selection decision is made mostly or entirely on price. On other
projects, the client chooses the contractor on the basis of life cycle cost—that is, the cost
to both purchase the item and use it for the entirety of its useful life. On still other pro-
jects, price is one of multiple considerations. With more complex projects, the client
company may very well decide that one company is more capable than another on tech-
nical, managerial, financial, or experiential grounds. The evaluation criteria developed
during the plan procurement process should guide this decision.
For example, a research study in the Middle East involving a range of public sector con-
tracting agencies revealed that when a client selects a design-build contractor (one who
supervises both the design and construction for a project with many other companies
involved), several tangible and intangible selection factors are considered, as shown in
Exhibit 13.4. In essence, the selection of a design-build contractor is chiefly guided by cli-
ents’ business needs, functional requirements, and expectations of the outcome of the
design-build process. Clients look for a sound business partner who is capable of and com-
mitted to delivering the design-build promise of producing better projects faster and at a
reduced cost. The design-build contractor selection process is indeed twofold: one is
process-related, focusing on project outcomes, and the other is organization-related,
focusing on the actual abilities and qualities of the design-build contractor’s organization.
After developing a comprehensive list of potential suppliers, the project team needs to
evaluate each prospective supplier individually. The approaches and analyses can include
the following:
Supplier surveys that provide sufficient knowledge of the supplier to make a decision
to include or exclude the firm from further consideration
Financial condition analysis that reveals whether a supplier is clearly incapable of
performing satisfactorily
Third-party evaluators such as Dun and Bradstreet that can be hired for obtaining
relevant information
Facility visits to allow the project team to obtain firsthand information concerning
the adequacy of the firm’s technological capabilities, manufacturing or distribution
capabilities, and managerial orientation
Quality ability analysis that examines the potential supplier’s quality capability
Delivery ability analysis that estimates the supplier’s capability to deliver the
required product or services on time; backup solutions can also be considered
The analyses listed above should not necessarily be limited to potential first-tier sup-
pliers. In some cases when second- or even third-tier suppliers are involved, the project
team needs to evaluate all these suppliers as well. This proactive screening process
Chapter 13 Project Supply Chain Management 435
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usually generates a handful of potential suppliers with good standing. If the organization
has a list of current qualified sellers, it can form the basis for new projects.
13-3c Supplier Selection
After one or more potential suppliers have passed the evaluation process, the selection
process must begin. The project team now invites potential suppliers to submit bids or
proposals. Procurement documents are used to solicit proposals from various vendors.
The most common procurement document is the request for proposal (RFP). The RFP
can be a foundation for the future working relationship between the buyer and the sup-
plier. In fact, the proposal prepared by the vendor often becomes a part of the final con-
tract, as an addendum or exhibit, between the supplier and the vendor. A request for
proposal usually includes the following items:
Purchasing overview
Basic supplier requirements
EXHIBIT 13.4
FACTORS TO CONSIDER WHEN SELECTING A DESIGN-BUILD CONTRACTOR
Component A: Process-related design-build contractor selection factors:
PRIORITY FACTOR DEFINITION
I Shorten Duration To reduce the overall project delivery time as compared to
other project delivery methods
II Reduce Cost To reduce the overall project delivery cost as compared to
other project delivery methods
III Reduce Claims To eliminate claims raised by contractors due to design
errors or shortcomings
IV Establish Cost To fix project budget early on, long before completing
detailed designs and specifications
V Establish Schedule To fix schedule of project benefits long before completing
detailed designs and specifications
VI Innovation To benefit from the innovation opportunity created by
designers and builders’ interaction
VII Reduce Coordination To reduce client risk and effort of coordinating between
contractors and designers
Component B: Organization-related design-build contractor selection factors:
TECHNICAL MANAGERIAL FINANCIAL EXPERIENTIAL
Know-how
Expertise
Plant/equipment
Specialism
Design capacity
Brand
Culture
Trust/integrity
Methodology
Organization
Financial strength
Marketability
Stability
Audit reports
Turnover
Design-build similar
projects
Diversity
Resources
Reputation
Source: Adapted from Dr. Sherif Hashem, “The Power of Design-Build: A Guide to Effective Design-Build Project Deliv-
ery Using the SAFEDB-Methodology” (Business Expert Press: USA, August 2014).
436 Part 4 Performing Projects
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Technical requirements
Managerial requirements
Pricing information
Appendices
The basic supplier selection decision is a classic decision tree problem. This is a choice
between alternatives under uncertainty. The outcome is concerned with both price and
performance, including delivery time. Does the decision maker wish to trade a higher
price against supply assurance under all circumstances? The difficulty in quantifying all
consequences reinforces the need for sound judgment in key decisions.
Evaluation criteria are used to rate proposals and other supplier characteristics. The
criteria can be objective or subjective, and they are often provided in the RFP. Typically,
the most important evaluation criterion is price. Other important criteria include the
vendor’s technical capability, reputation, and so on. Exhibit 13.5 shows factors in addi-
tion to price that can be used in assessing suppliers.
The project team selects one or more sellers who are both qualified and acceptable as
sellers. Many tools and techniques, including the following, can be used in the seller
selection decision process:
Weighting system
Independent estimates
Screening system
Seller rating system
Expert judgment
Proposal evaluation techniques
The goal of selecting suppliers is to award a contract. A contract is “a mutually bind-
ing legal relationship obligating the seller to furnish supplies or services and the buyer to
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Chapter 13 Project Supply Chain Management 437
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provide consideration for them.”8 A contract establishes a legal relationship between par-
ties, and it is subject to remedy in the court system. The project organization can be a
seller in dealing with the project owner or customer and a buyer in a more prevalent
procurement setting. In many project management scenarios, the project manager must
be aware of how a wide range of contracts is developed and executed. A procurement
contract is awarded to each selected seller. The contract can be in the form of simple
purchase order or a complex document detailing generic and specific conditions of the
contract. The major components in a contract document generally include the following:
Statement of work
Schedule baseline
Period of performance
Roles and responsibility
Pricing
Payment terms
Place of delivery
Limitation of liability
Incentives
Penalties
13-4 Contract Types
Different types of contracts can be used as tools in planning acquisitions specified in the
make-or-buy decision. Contracts differ by type with regard to how the risk is distributed
and how the project is performed. The seven most common types of project procure-
ment contracts are shown in Exhibit 13.6.
EXHIBIT 13.5
FACTORS USED IN ASSESSING POTENTIAL SUPPLIERS
Replenishment lead time: This is the lead time between placing an order and receiving the
order, which can be translated into the required responsiveness for purchasing.
On-time performance: This affects the variability of the lead time.
Supply flexibility: It is the amount of variation in order quantity that a supplier can tolerate
without letting other performance factors deteriorate.
Delivery frequency and minimum lot size, which affect the size of each replenishment lot
ordered by a firm.
Supply quality: A worsening of supply quality increases the variability of the supply of compo-
nents available to the firm.
Inbound transportation cost: The total cost of using a supplier includes the inbound transpor-
tation cost of bringing materials in from the supplier.
Information coordination capability affects the ability of a firm to match supply and demand.
Design collaboration capability.
Exchange rates, taxes, and duties can be quite significant for a firm with a global manufacturing
and supply base.
Supplier viability is the likelihood that the supplier will be around to fulfill the promises it
makes. This consideration can be especially important if the supplier is providing mission-
critical products for which it would be difficult to find a replacement. If a supplier has two
key people who can each perform the necessary work, the second worker is sometimes consid-
ered to be “truck insurance” in case the first worker gets run over by a truck.
438 Part 4 Performing Projects
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13-4a Fixed-Price Contracts
A fixed-price contract is an agreement that binds the seller to perform the agreed-upon
work for the agreed-upon money. The contract may also include an agreed-upon date
for completion. The most common types of fixed-price contracts are firm-fixed-price
(FFP), fixed-price-incentive-fee (FPIFD), and fixed-price-economic-price-adjustment
(FP-EPA).
FIRM-FIXED-PRICE (FFP) CONTRACT The firm-fixed-price contract is a contract in
which the seller has to complete the job for the agreed-upon amount of money regard-
less of the actual cost incurred. Any cost increase due to adverse performance is the
responsibility of the seller, who is obligated to complete the effort. A simple form of a
firm-fixed-price contract is a procurement order for a specified item to be delivered by
a certain date for a specified price, such as a truckload of mulch delivered on the job site
of 3110 Elm Street on May 15 for $300.
FIXED-PRICE-INCENTIVE-FEE (FPIF) CONTRACT The fixed-price-incentive-fee
contract is a contract in which the price is fixed as defined by the contract, but the seller
can earn an additional amount as incentive if the seller meets defined project metrics. An
example is a contract for rebuilding a bridge for a fixed price of $1,250,000 with an
incentive of an extra $3,000 for every day it is complete before the scheduled date of
September 15. The buyer would like to have use of the bridge sooner, and the seller
would like to earn a higher fee, so both have an incentive to finish the project early.
Performance incentives can also include bonuses for better quality, more features, or
anything else that the buyer wishes to maximize and is willing to pay for.
FIXED-PRICE-ECONOMIC-PRICE-ADJUSTMENT (FP-EPA) CONTRACT The fixed-
price-economic-price-adjustment contract is a fixed-price contract with a clause to
protect the seller from conditions such as inflation or commodity cost increases. An
example is a contract that states the contractor will receive $400,000 to supply all of the
EXHIBIT 13.6
TYPES OF CONTRACTS
CONTRACT TYPE
COST RISK
ABSORBED BY APPROPRIATE WHEN
Firm-fixed-price Seller Costs are well known
Fixed-price-incentive-fee Mostly seller Costs are well known and buyer wants to maximize
some performance aspect
Fixed-price-economic-
price-adjustment
Both Project may be long duration and inflation and
commodity prices may fluctuate
Cost-plus-incentive-fee Mostly buyer Costs are not well known and buyer wants to
maximize some performance aspect
Cost-plus-award-fee Mostly buyer Both parties agree most of fee is based upon buyer’s
opinion of seller performance on stated criteria
Cost-plus-fixed-fee Buyer Costs not well known
Time and material Buyer Cost rates known, volumes are unknown
Chapter 13 Project Supply Chain Management 439
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gravel for a project, but the price may be adjusted based upon market price for gravel at
the dates when it is delivered.
Fixed-price contracts provide low risk for the buyer, since the buyer does not pay
more than the fixed price regardless of how much the project actually costs the seller.
Consequently, a seller bidding on a fixed-price project must develop accurate and com-
plete cost estimates and include sufficient contingency costs. Certainly, overpricing
should be avoided, as a competing contractor with a lower price might be selected. In
case the seller does not have a clear understanding about the project scope, the next
type of contract should be considered as an alternative.
Cost-reimbursable contracts, unlike fixed-price contracts, provide lower risk for the
seller and higher risk for the buyer. They are generally more appropriate when it is diffi-
cult to estimate the project cost.
13-4b Cost-Reimbursable Contracts
Cost-reimbursable contracts are a type of contract in which the seller is reimbursed for
the actual approved costs of completed work, plus a fee typically representing profit. The
three variations of commonly used cost-reimbursement contracts are cost-plus-fixed-fee,
cost-plus-award-fee, and cost-plus-incentive-fee.
COST-PLUS-FIXED-FEE (CPFF) CONTRACT The cost-plus-fixed-fee contract is a
type of contract in which the buyer reimburses the seller for all of the seller’s allowable
costs plus a fixed amount of profit (fee). An example is a research project in which all
scientist hours spent on the project are paid along with a fee of $5,000 regardless of how
many hours the scientist spent.
COST-PLUS-AWARD-FEE (CPAF) CONTRACT The cost-plus-award-fee contract is a
type of contract that involves payments to the seller for all allowed costs incurred for
completed work, plus an award fee based on satisfying certain subjective performance
objectives. An example is a development contract that pays the contractor $3,000,000
plus puts in escrow an award fee pool of $210,000, and an executive in the customer’s
organization has sole discretion regarding how much of the award fee pool is given
based upon customer satisfaction criteria.
COST-PLUS-INCENTIVE-FEE (CPIF) CONTRACT The cost-plus-incentive-fee con-
tract is a type of contract in which the buyer reimburses the seller for the seller’s allow-
able costs and pays the seller a fee if it meets defined performance criteria. These criteria
can be for schedule, cost, and/or performance. An example of a schedule criterion is a
contract for constructing a college dormitory that calls for completion by August 15 so
it is ready for the fall semester. A cost criteria example is the buyer of a small house
negotiating a total project cost of $150,000. A performance criteria example is when an
auto company enters a contract with a supplier to develop a battery that can get 55 miles
per gallon in a 3,000-pound car. In each of these cases, the contract can call for the seller
to receive a bonus if it does better than the agreed-upon target and/or a penalty if it does
worse. Both the buyer and the seller can benefit if performance criteria are met.
13-4c Time and Material (T&M) Contracts
Time and material contracts are hybrid contracts containing aspects of both cost-
reimbursement and fixed-price contracts generally used when the deliverable is labor hours
and/or amounts of materials. In this type of contract, the unit rate for each hour of labor or
pound of material is set in the contract as it is practiced in a fixed-price contract. However,
440 Part 4 Performing Projects
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the amount of work is not set, so the value of the contract can grow like a cost-reimbursement
contract. The seller simply charges for the work to produce the product or service in the con-
tract. This can be problematic if the time scheduled for production is greatly underestimated.
This type of contract is used when the scope of the project work is ambiguous.
In choosing the right type of contract, the nature of the outsourced project activity
influences the decision. The requirements that a buyer imposes on a seller, along with
other planning considerations such as the degree of market competition and degree of
risk, also determine which type of contract is used. The following items are frequently
considered when selecting the right type of contract:
Overall degree of cost and schedule risk
Clarity about the scope of work
Type and complexity of requirements
Extent of price competition
Cost and price analysis
Urgency of the requirements
Performance period
Contractor’s responsibility
Contractor’s accounting system
Extent of subcontracting
One of the important factors to consider is the degree of risk for the seller and the
buyer that each type of contract presents. Each of the contract types has risk attached
to it. When considering different contracts, it must be clear who assumes the most
risk—the buyer or the seller. Under normal conditions, the greatest risk to the buyer is
when the cost-plus-fixed-fee contract is chosen. The contract with the greatest risk to the
seller is the firm-fixed-price contract. Generally, the buyer and seller negotiate details of
the contract risks and benefits that both parties can accept.
One risk management technique that is rapidly becoming popular for insuring large
projects is the use of wrap-ups. A wrap-up, or owner-controlled insurance program
(OCIP), is a single insurance policy providing coverage for all project participants, includ-
ing the owner and all contractors and subcontractors. An OCIP can potentially reduce an
owner’s total project cost by 1 to 2 percent compared to traditional fragmented programs.
Its major advantages include broader coverage, volume discounts, and reduced claims due
to comprehensive loss-control programs. The type and complexity of the agreements may
also necessitate assistance from legal specialists, buyers, and contracting experts.
13-5 Control Procurements
Control procurements include managing relationships between sellers and customers, mon-
itoring contract performance, and making changes and corrections if needed. Both buyers
and sellers administer contracts to make sure that the obligations set forth in the contract
are met and to make sure neither party has any legal liability. Both must perform according
to the contract terms. The seller creates performance reports, and the buyer reviews these
reports to ensure that the performance of the seller satisfies the obligations of the contract.
13-6 Improving Project Supply Chains
Project supply chain performance can be improved by careful and innovative use of part-
nering, third-party involvement, lean purchasing, sourcing, logistics, and information.
Chapter 13 Project Supply Chain Management 441
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13-6a Project Partnering and Collaboration
Companies are constantly in need of outsourcing or contracting significant segments
of project work to other companies. The trend for the future suggests that more and
more projects will involve working with people from different organizations in a partner-
ing relationship. Partnering is “a long-term relationship between an owner and a con-
tractor in which the contractor acts as a part of the owner’s organization for certain
functions.”9
Research also finds that through strategic partnering, companies are more likely to
access advanced technology, share risks, and improve project-based performance and rel-
ative competitiveness. This section extends the previous discussion of project procure-
ment and contracting by focusing specifically on issues surrounding working with
different suppliers to complete a project. The term partnering is used to describe this
process. Partnering is a method for transforming contractual arrangements into a cohe-
sive, collaborative project team with a single set of goals and established procedures for
resolving disputes in a timely and cost-efficient manner. The single set of goals takes care
of the customer requirements and the entire project instead of each individual organiza-
tion. Exhibit 13.7 presents an excellent example of project partnering and collaboration
in the international airport industry.
SOURCES OF CONFLICT DURING PROJECT PURCHASING In the procurement
and purchasing environment, conflicts are inevitable. For example, many people envision
the purchasing process as a type of zero-sum game, meaning what one party loses is
what the other party gains. (The most common type of conflict is this: lower price
means cost reduction for the buyer, but it also means revenue loss to the seller.) In
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442 Part 4 Performing Projects
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fact, many types of interest conflicts arise among different companies. For example,
delays in construction are common and expensive, and litigation related to design and
construction is rising.
Obvious conflicts of interest predispose owners and contractors to be suspicious of
one another’s motives and actions. Suspicion and mistrust prevent effective problem
solving throughout the process. In taking care of each party’s own interests, mistakes
and problems are often hidden. When conflicts emerge, they often create costly delays
as well as questionable responses simply because the information transferred may be dis-
torted many times before it reaches the decision maker. The consequences, however, are
avoidable from the beginning.
RESOLVING PROJECT PURCHASING CONFLICTS One approach to resolving con-
flict is to use project partnering as an effective way to engage both the project owner
and contractors. Project partnering naturally developed as people began to realize that
the traditional win/lose adversarial relationship between owner and contractor degener-
ates into a costly lose/lose situation for all the parties involved. The systematic project
supply chain management view goes beyond this traditional view to increase the baseline
of trust and collaboration.
Ten key elements for effective project partnerships are shown in Exhibit 13.8.
MUTUAL GOALS IN PROJECT PARTNERSHIPS Some common goals warrant a
more supportive relationship. For example, both the buyer and seller would like to com-
plete the project on time and safely. Both parties would prefer to avoid costly and time-
consuming litigation. On the other hand, once the specified project can be finished on a
faster and less-expensive basis, either party is in a better position of getting better opera-
tional rewards. Some of the many advantages for establishing a project partnership are
shown in Exhibit 13.9.
EXHIBIT 13.7
JORGE CHAVEZ INTERNATIONAL AIRPORT, LIMA, PERU
The location of Lima in the center of the west coast of South America presents an extended area of attraction, making the airport
into a natural international hub. The proximity of Jorge Chavez International Airport (JCIA) to Port Callao, the principal port of
Peru, offers the possibility of developing a sea/air plan in favor of external commerce.
LIMA AIRPORT PARTNERS
Fraport-Bechtel-Cosapi Consortium won the international public tender for the concession of the JCIA. With an equity contribu-
tion of $30 million, the consortium founded Lima Airport Partners (LAP). The three consortium partners each have impressive
track records. Fraport AG operates the Frankfurt Airport, considered one of the largest in continental Europe. Fraport also pro-
vides other airport services such as handling and other commercial services. Fraport participates in more than 50 projects around
the world. Bechtel is a private construction company founded in 1898. It has participated in more than 1,000 projects in 67 coun-
tries, of which 80 have been airport projects. Cosapi is a local construction company founded in 1960 with projects in South
America. Currently, LAP’s shareholders are Fraport AG, the International Finance Corporation (IFC), and the Fund for Invest-
ment in Infrastructure, Utilities and Natural Resources, managed by AC Capitales SAFI S.A.
LAP’s objectives are to improve both facilities and operation of JCIA. The improved facilities will be transferred to the State of
Peru. The concession term is 30 years with an option for a 10-year extension.
Source: Patricia Quiroz, Professor of Pontificia Universidad Catolica del Peru.
Chapter 13 Project Supply Chain Management 443
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For example, Procter & Gamble (P&G) started using the Web to share information
and streamline purchasing a few years ago. Ford used 900 virtual workspaces to
design cars and hold meetings. In one project, Ford used digital conference rooms
from eRoom to manage the formation of the auto industry e-marketplace Covisint.
EXHIBIT 13.8
Ten key elements of a successful partnership:
1. Recognition of the need for a partnership
2. Clear and agreed purpose and objectives
3. Commitment and ownership
4. Trust between partners
5. Create clear and robust partnership arrangements
6. Good communication with all partners
7. Mutual benefits for all partners
8. Conflict resolution and mediation
9. Systems to monitor, measure and learn
10. Outcomes that live on beyond the life of the partnership
Source: Sustainability Learning Guide: Successful Partnerships: https://www.lgnsw.org.au/files/imce-uploads/35/
SLG_successful_partnerships , accessed April 24, 2017.
EXHIBIT 13.9
ADVANTAGES OF PROJECT PARTNERSHIPS
ADVANTAGES TO
BOTH PARTIES ADVANTAGES TO CLIENTS ADVANTAGES TO VENDORS
Shared motivation More effectively managed risks Clearly stated expected outcome
Flexibility Reduced up-front project cost Greater potential profit
Reduced administration of
frequent bids
Potential of lower cost More dependable stream of work
Improved project
execution
Ability to focus on core
capabilities
Opportunity to prove oneself
Ability to explore new
technologies
Improved communication
Ability to make better
decisions
Improved resource
utilization
Source: Adapted from Tom Chaudhuri and Leigh Hardy, “Successful Management of Vendors in IT Projects,” PM
Network 15 (6) (June 2001): 48; and He Zhang and Peter C. Flynn, “Effectiveness of Alliances Between Operating
Companies and Engineering Companies,” Project Management Journal 34 (3) (September 2003): 49.
444 Part 4 Performing Projects
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Lawyers from law firms and three automakers shared virtual rooms to haggle over
contracts.
EFFECTIVE PROJECT PARTNERING APPROACHES Many differences exist between
the way traditional project procurement unfolds and the way contemporary project pro-
curement takes place in a partnering mode. Exhibit 13.10 lists some of the requirements
of effective project partnering.
Many large Japanese manufacturers have found a middle ground between purchasing
from a few suppliers and vertical integration. These manufacturers are often financial
supporters of suppliers through ownership or loans. The supplier then becomes part of
a company coalition known as a keiretsu. Members of the keiretsu are assured long-term
relationships and are therefore expected to function as partners, providing technical
expertise and stable quality production to the manufacturer. Members of the keiretsu
can also have suppliers farther down the chain, making second- and even third-tier sup-
pliers part of the coalition. Most partners value their membership and work hard to do
their part. In the rare instance in which a partner consistently takes advantage of the
situation, the partner is eventually dropped.
Companies can use different purchasing modes for specific purchasing items when
dealing with large projects. For example, one major Chinese petroleum company used
five purchasing models for multiple projects, which include purchasing mechanisms
for strategic materials, full competitive products, limited resource products, nonstan-
dard products, and existing long-term collaboration suppliers. Third-party inspection
companies were hired to conduct on-site assessment and quality approval for the
incoming materials of multiple projects at the same time. The integrated on-site
warehousing management system streamlined the management process, reduced
EXHIBIT 13.10
EFFECTIVE PROJECT PARTNERING APPROACHES
Organization-wide willingness to:
Use long-term perspective
Share power with partner
Trust partner
Adapt to partner
Go beyond contractual obligations
Mutual commitment to:
Quality
Continuous improvement
Clearly understand partner
Ongoing relationship with partner
Effective methods:
Openly share information
Develop contractual relationships
Develop interpersonal relationships
Resolve conflict
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unnecessary inventory to almost zero, and minimized the total investment of the
projects.
SECURING COMMITMENT TO PARTNERING When developing a project supply
chain partnership, a project manager may want to consider contractors with a mutual
interest and expertise in partnerships. At the beginning, the owner needs to get the
commitment of the top management of all firms involved. All the benefits of the
partnership and how the partnership would work need to be described in detail.
Team building is an effective approach for involving all the key players from different
firms. Separate training sessions and workshops are offered to promote a collabora-
tive spirit. One of the major goals of the team-building sessions is to establish a
“we” as opposed to an “us and them” attitude among the different participants. A
second objective of the sessions is to establish a mechanism in advance designed to
ensure that this collaborative spirit is able to withstand the problems and setbacks
that will invariably occur on the project. Some of the most significant mechanisms
are as follows:
Problem resolution—Solving problems at the lowest level of organizations and hav-
ing an agreed-upon escalation procedure
Continuous improvement—Endless process of waste elimination and cost
reduction
Joint assessment—Reviewing the partnering process jointly
Persistent leadership—Displaying a collaborative response consistently
More project organizations are pursuing partnering relationships with each other.
Project partnering represents a proactive way for managing many of the challenges asso-
ciated with working with different organizations. The process usually starts with some
agreed-upon procedures and provisions for dealing with problems and issues before
they happen. One way is to design a contract with specific incentives and penalties. On
the other hand, partnering is not just about relationship contracting. For example,
although many companies may wish to develop company-wide policies and procedures
for inter-firm conflict resolution, this method is less effective since each project and each
company different. The partnering approach has to be dynamic to unite a wide variety of
suppliers and contractors for some common goals that everyone cares about. Although
the project purchasing relationship has been moved from short-term arrangements
based on contracts to long-term relationships based on trust, this change is by no
means universally applicable.
Partnering fosters a strong desire to contain costs when changes are necessary and
leads to a team approach in resolving any financial and time consequences. In the next
section, we discuss the integrated project supply chain management approach.
Partnering seeks to recast relations between actors in projects by promoting the use of
collaborative, more open relationships. The integrated supply chain perspective further
shifts traditional channel arrangements from loosely linked groups of independent busi-
nesses that buy and sell products or services to each other toward a managerially coordi-
nated initiative to increase collaboration, customer satisfaction, overall efficiency,
continuous improvement, and competitiveness. For example, in the construction indus-
try, the construction supply chain (CSC) consists of all the construction partners such as
client, designer, general contractor, subcontractor, supplier, and consultant. In fact, the
CSC itself represents a concept of systematic coordination of relevant business activities
within the supply chain.
446 Part 4 Performing Projects
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13-6b Third Parties
In general, third parties can increase the supply chain performance effectively if they are
able to aggregate supply chain assets or flows to a higher level than a firm can by itself.
Third parties can use various mechanisms to grow the supply chain performance (e.g.,
reducing delivery time and cost), by aggregating:
Capacity Information
Inventory Receivables
Transportation Relationships
Warehousing
13-6c Lean Purchasing
Lean purchasing refers primarily to a manufacturing context and implementation of
just-in-time (JIT) tools and techniques to ensure every step in the supply process adds
value while various costs are kept at the minimum level. By reducing ordering cost for
placing orders (e.g., the fixed part of the shipping cost), project organizations can use JIT
for eliminating waste in ordering time and cost, which eventually results in timely com-
pletion of projects and customer satisfaction.
Doubtlessly, integrating SCM into project management helps project managers create
win/win situations for all parties involved in the project supply chain as they become
more efficient and effective. The specific supply chain techniques can help project man-
agers make better trade-offs between project costs and time to create better customer
satisfaction.
13-6d Sourcing
Sourcing encompasses all processes required for a firm to purchase goods from suppli-
ers. Effective sourcing decisions thus have a significant impact on project performance.
Good project sourcing decisions can improve project performance by aggregating orders,
making procurement transactions more efficient, achieving design collaboration with
suppliers, facilitating coordinated forecasting and planning with suppliers, and improv-
ing customer satisfaction.
13-6e Logistics
Logistics, in contrast to supply chain management, is the work required to move and
position inventory throughout a supply chain. Supply chains use a combination of the
following modes of transportation:
Air Water
Package carrier Pipeline
Truck Intermodal
Rail
The transportation cost a supply chain incurs is closely linked to the degree of
responsiveness the supply chain aims to provide. Thus, decision makers must consider
the trade-off between responsiveness and transportation cost when making the relevant
logistics decisions. Moreover, the necessity of shipping speed needs to be considered, as
noncritical project activities tend to have some slack.
Chapter 13 Project Supply Chain Management 447
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13-6f Information
Information is also key to the success of project supply chain management because it
enables management to make decisions over a broad scope that crosses both func-
tions and firms. For instance, information sharing in many cases can allow the proj-
ect supply chain to shorten the delivery time and, at the same time, offer better-
quality products or services to meet the dynamic demand of a project. Information
must have the following characteristics to be useful when making supply chain
decisions:
Accurate
Accessible in a timely manner
Of the right kind
Information is a key ingredient not just at each stage of the project supply
chain but also within each phase of supply chain decision making. This is where
IT comes into play. IT consists of the hardware, software, and people throughout
a project supply chain that gather, analyze, and execute procurement actions based
on information. In today’s business world, IT-based information management is
crucial to the performance of project supply chains simply because it provides the
basis of decision making, which has profound impacts for every aspect of project
management.
PMP/CAPM Study Ideas
Some of the questions you will see on the material covered in this chapter will be at least
partly based on vocabulary. For example, there are several types of contracts, and some
of their names are similar, but you need to completely understand the difference between
terms such as cost-plus-award-fee and cost-plus-incentive-fee, as well as when each type of
contract may be used and how each type of contract divides risk between buyer and
seller.
Likewise, similar terms are used in the seller selection process, and you will need to
know the difference between a Request for Information (RFI), Request for Quotation
(RFQ), and Request for Proposal (RFP) and to apply that knowledge to a variety of ques-
tions/problems.
Summary
More and more companies are seeking cooperative
relationships with each other to compete in today’s
demanding marketplace. Project supply chain manage-
ment represents a set of proactive responses to many
challenges created by people from different organiza-
tions working together on one-time projects. By identi-
fying the project needs and wants, project
organizations start with assessing the need to outsource
part of the project work. Contracting is commonly used
to specify and manage supplier–buyer relationships.
Purchasing details such as scope, deliverables, and
quality expectations are legally enforced in the contract.
As such, project teams take great care in selecting a
specific and attainable contract to meet customer deliv-
ery expectations and internal profitability goals. How-
ever, project supply chain management is not just
about contracting. Partnering and coordinating pur-
chasing across all supplier stages allow a firm to maxi-
mize economies of scale in purchasing and also to
reduce transaction costs.
448 Part 4 Performing Projects
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Key Terms Consistent with PMI Standards and Guides
supply chain management, 427
owner, 427
general contractor, 427
subcontractor, 427
make-or-buy decisions, 428
plan procurement management, 429
procurement management plan, 429
procurement statements of work, 429
procurement documents, 431
request for information, 431
request for quotation, 431
request for proposal, 431
conduct procurements, 432
contract, 437
fixed-price contracts, 437
firm-fixed-price contracts, 437
fixed-price-incentive-fee contracts, 437
fixed-price-economic-price-adjustment contracts, 437
cost-reimbursable contracts, 438
cost-plus-fixed-fee contract, 438
cost-plus-award-fee contracts, 438
cost-plus-incentive-fee contract, 438
time and material contracts, 438
control procurements, 439
partnering, 440
lean purchasing, 445
sourcing, 445
logistics, 445
Chapter Review Questions
1. Do small businesses often outsource project
work? Why or why not?
2. Name the three processes that make up project
procurement management.
3. In supply chain management, what are some
other names for the seller? What are some
other names for the buyer?
4. List three functional areas that are frequently
outsourced by business organizations.
5. What is the difference between a request for quo-
tation (RFQ) and a request for proposal (RFP)?
6. After an organization has developed a list of
potential suppliers, how should the organization
evaluate each supplier individually?
7. What are four potential information sources that
organizations can use to identify potential sellers?
8. Describe two methods that can be used to evalu-
ate potential suppliers.
9. What items are generally included in a request
for proposal?
10. In a fixed-price contract, who assumes the great-
est level of risk?
11. What type of contract is good to use if it is nec-
essary for both parties to share the risk?
12. In what type of contract does the buyer assume
the greatest level of risk?
13. What is the name of a single insurance policy
that is used to provide coverage for all project
participants?
14. What is meant by logistics and how does it relate
to project management?
15. is a method for transforming con-
tractual arrangements into a cohesive, collabora-
tive project team with a single set of goals and
established procedures for resolving disputes.
Discussion Questions
1. Why does the project team require a project scope
statement prior to planning procurements?
2. List three reasons an organization might choose
to make a product or service in-house and three
reasons why an organization might choose to buy
or outsource the work.
3. Should activities on the critical path be out-
sourced? Why or why not?
4. Which of the three competitive advantages do
you think companies are most willing to out-
source for? List any examples you can think of.
5. Your company is hoping to outsource some of
its work constructing a new development of
condominiums. What would you use as selection
criteria to narrow down your list of potential
sellers?
Chapter 13 Project Supply Chain Management 449
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6. You decide to board your dog at the vet’s office
while you are on vacation and sign papers saying
you will pay $25 per day plus $15 for a bath every
third day. What type of contract have you
entered into?
7. What would be your top two considerations
when selecting a type of contract to enter into?
8. Describe three differences between a partnering rela-
tionship and a traditional seller–buyer arrangement.
9. What are some potential issues related to out-
sourcing? How could you mitigate these issues?
10. You are the project manager in charge of reno-
vating a large apartment building, and your team
has decided to outsource the installation of a new
septic system. Do you put out an RFQ or RFP to
interested contractors? Why?
PMBOK ® Guide Questions
1. The Project Procurement Knowledge Area
includes all of the following processes except:
a. plan procurement management
b. conduct procurements
c. close procurements
d. control procurements
2. In order to plan for procurements, the project
team uses a project document that includes a
list of deliverables, acceptance criteria, project
assumptions and constraints, and a description
of the product, service or result. This document
is called the .
a. work breakdown structure (WBS)
b. project charter
c. project contract
d. project scope statement
3. One output of the Plan Procurement Manage-
ment process is the , a document
that describes the item to be procured “in suffi-
cient detail to allow prospective sellers to determine
if they are capable of providing the products,
services, or results.”
a. request for proposal
b. procurement statement of work
c. scope statement
d. procurement management plan
4. Which of the following contracts is riskiest for a
buyer?
a. time and material
b. cost reimbursable
c. firm-fixed-price
d. fixed-price-economic-price-adjustment
5. A analysis is a technique that results
in a decision about whether particular work can
best be accomplished by the project team or
should be purchased from external sources.
a. make-or-buy
b. SWOT
c. sensitivity
d. vendor
6. Which contract type puts the most risk on the
seller?
a. time and material
b. cost reimbursable
c. firm-fixed-price
d. fixed-price-economic-price-adjustment
7. What is a hybrid type of contract that is often
used for staff augmentation or any outside sup-
port in which a precise statement of work cannot
be defined, and which often includes a not-
to-exceed value and time limit to prevent unlim-
ited cost growth?
a. time and material
b. cost reimbursable
c. fixed price
d. incentive fee
8. The type of procurement document that might
be used to request prices for standard products
or services is called a(n) .
a. request for proposal (RFP)
b. request for information (RFI)
c. invitation for negotiation (IFN)
d. request for quotation (RFQ)
9. During which of the following processes is eval-
uation criteria developed, in order to evaluate
potential sellers?
a. plan procurement
b. conduct procurement
c. control procurement
d. plan communication management
10. Procurement performance reviews, contract
change control system, payment systems, and
450 Part 4 Performing Projects
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performance reporting are all tools and techni-
ques for which procurement process?
a. plan procurement management
b. conduct procurements
c. close project
d. control procurements
Exercises
Find a story in your local newspaper about a project that
is about to start. For that project, answer each of the
following questions and justify your answers:
1. Using the ideas in Exhibit 13.2, speculate on what
activities, supplies, or services could be con-
tracted out.
2. Create a request for information for one por-
tion of the project work that could be con-
tracted out.
3. Using ideas from Exhibits 13.4 and 13.5, determine
criteria you would use to select sellers for the por-
tion of contract work under consideration.
4. Determine what type of contract you would use
for this work and explain why.
5. Describe the extent to which any partnering
makes sense for this project. What are the chal-
lenges and benefits to this partnering? What
would prevent any further partnering?
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
A well-known aspect of the construction industry is that it is
a fragmented industry with a large share of working people
engaged with it. Due to its nature of operations and fluctua-
tions in demand, the construction industry thrives on hiring
contractors and subcontractors on an as-needed basis. Like-
wise, one can find multiple sources of suppliers nationwide
for all the hardware items such as windows, doors, drywall,
doorknobs, and HVAC equipment. Suburban Homes, as an
organization, realizes the importance of long-term partnership
with various suppliers and contractors and the many benefits
of such a partnership. Suburban Homes is planning to revisit
their existing partnerships with various suppliers and contrac-
tors because competition is rising and profit margins are
declining. Suburban Homes is looking for partners and suppli-
ers to improve profits and increase customer satisfaction.
Suburban Homes developed a set of criteria to select part-
ners for construction work and supply of materials:
Collaboration
Reliability
Value engineering (higher quality at a competitive price)
Performance
Trust
Transparency in commercial deals and communication
With its ambitious plan of expanding its business to sev-
eral southern states and its vision to deliver high-quality con-
struction that adheres to local, state, and federal standards
as well as exceed industrial standards for quality, Suburban
Homes is willing to identify, negotiate, and partner with com-
petent and reliable suppliers and contractors. Adam Smith
entrusted you with the task to develop a procurement and
supply chain management plan. For this purpose, you were
asked to do the following tasks:
Tasks to Complete
Assess the current market situation.
Identify prospective partners for supply of materials and
construction work.
Select an appropriate type of contract for each supplier (it
may not be same for everyone).
Assess risks associated with each contract.
Develop contract terms and conditions.
Perform qualitative assessment to prioritize risks.
Develop a procurement policy.
Chapter 13 Project Supply Chain Management 451
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Semester Project Instructions
Using the ideas in Exhibit 13.2, determine what
activities, supplies, or services needed on your exam-
ple project could be contracted out. Create a request
for information for one portion of the project work
that could be contracted out. Using ideas from
Exhibits 13.4 and 13.5, determine criteria you
would use to select sellers for the portion of contract
work under consideration. Determine what type of
contract you would use for this work and tell why.
Describe the extent to which you are partnering on
your example project. Describe the extent to which
any other person or group may be partnering on
the project. What are the challenges and benefits to
any partnering that is occurring? What is preventing
any further partnering?
PROJECT M ANAGEM ENT IN ACTION
Implications for Project Management in a Networked Organization Model
What Is a Networked Organization?
In a small organization, it is quickly recognized that
you cannot do it all. You need to develop a business
model where you leverage the strengths and exper-
tise of your core team, while partnering and net-
working with specialized organizations and experts
where you build trusted alliances and long-term
relationships.
Our company is a project management training
and consulting firm. We have seven people on our
core team. These individuals are critical to the success
of the company. They perform the essential func-
tions required to run the business primarily opera-
tions such as accounting, legal, contracting, sales, and
project management. Functions we do not have to do
ourselves are outsourced to experts such as human
resources (we have seven employees), information
technology (we had seven computers), fulfillment
(packing and shipping training materials), marketing
(branding and social media), and independent con-
tractors (hired as expert trainers and consultants
under contract with the firm
As a seven-person company, we must have a high-
performance team and a solid network of business
partners who are considered part of our team, but not
part of our payroll.
The Challenges
Running a business with a number of external part-
ners has its challenges. Do they understand our busi-
ness to be a key contributor? Will they have time for
our projects while they are working with other orga-
nizations? Will they be working with competitors while
they are servicing us?
In addition, so that we could better service our
worldwide clients with local providers, we decided to
CASA DE PAZ DEVELOPMENT PROJECT
Casa de Paz has multiple supply chain issues. Some ques-
tions to answer include the following:
1. Will Casa de Paz rent or buy a building? If renting, how
much can they help pay for needed upgrades? How can
they partner with a potential landlord for the best long-
term goals of each?
2. What kind of organizations can Casa de Paz partner with for
professional services such as nursing, English as a Second
Language, occupational readiness, counseling, and so forth?
3. What kind of partnership can they establish in the reli-
gious and nonprofit communities? What should they
look for in potential partners?
452 Part 4 Performing Projects
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. (Newtown Square, PA:
Project Management Institute, 2017).
Alderman, N., and C. Ivory, “Partnering in Major
Contracts: Paradox and Metaphor,” International
Journal of Project Management 25 (2007):
386–393.
Benton, W. C, Purchasing and Supply Management
(New York: McGraw-Hill, 2007).
Bowersox, D. J., D. J. Closs, and M. B. Cooper, Supply
Chain Logistics Management, 3rd ed. (McGraw-Hill,
2010).
Bozarth, Cecil C., and Robert B. Handfield, Introduc-
tion to Operations and Supply Chain Management,
2nd ed. (Upper Saddle River, NJ: Pearson Prentice
Hall, 2008).
Chaudhuri, Tom, and Leigh Hardy, “Successful Man-
agement of Vendors in IT Projects,” PM Network
15 (6) (June 2001): 45–48.
Chen, Wei Tong, and Tung-Tsan Chen, “Critical Suc-
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wan,” International Journal of Project Management
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Chopra, S., and P. Meindl, Supply Chain
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globalize the company. This added another element of
complexity time zones, language and cultural differ-
ences, and in-country laws for contracting their
services.
Our Approach
1. Establish a common PM Methodology Since our
company uses PMI s Guide to the Project Manage-
ment Body of Knowledge (PMBOK® Guide) as a
foundation, our global partners also use the
PMBOK Guide, translated in their local language.
This created a common terminology for all of us,
which helped discussions and accelerated problem
solving.
2. Have a central point of contact Communications
is key. As the chief operating officer (COO), my
role is to be the go-to person for all business part-
ners. It is crucial to establish an element of trust and
transparency, especially when negotiating and exe-
cuting contracts.
3. Establish a Quality Management System We
became ISO 9001 certified. This enables us to
help our business partners be accountable for the
delivering of our products and services under our
brand name. To accelerate doing business
together, one of the ISO processes is establishing
and documenting shared expectations with each
business partner. Not only does this include the
specific details about services being delivered,
but also the financial aspects of procurement, pay-
ments, and fulfilling various types of contracts. ISO
also gives us a competitive advantage in the
marketplace.
4. Invite strategic partners into the business In our
networked organization, we call our outside
experts business partners or strategic
alliances. They are not vendors. They are critical
to the success of our business and are invited to
attend our strategic planning sessions and busi-
ness planning meetings. If they are involved in a
project, they attend the project status meetings
and participate on project teams. They are key to
our success.
It is amazing what seven people in an organization
can do. With the right partners, the right resources,
the right contracts, and the right relationships,
we can make an international footprint as a
leading project management training and consulting
firm.
Source: Connie Plowman, PMP, Chief Operating Officer (retired), PMI Eric Jenett, Project Management Excellence Award Recipient.
Chapter 13 Project Supply Chain Management 453
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Construction Extension to the PMBOK® Guide (New-
town Square, PA: Project Management Institute,
2016).
Haried, Peter, and K. Ramamurthy, “Evaluating the
Success in International Sourcing of Information
Technology Projects: The Need for a Relational
Client-Vendor Approach,” Project Management
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Hashem, Sherif, The Power of Design-Build: A Guide to
Effective Design-Build Project Delivery Using the
SAFEDB-Methodology (New York: Business Expert
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Huston, Larry, and Nabil Sakkab, “Connect and
Develop: Inside Procter & Gamble’s New Model for
Innovation,” Harvard Business Review 84 (3)
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make-or-buy-decision.asp, accessed April 21,
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Leenders, M. R., P. F. Johnson, A. E. Flynn, and H. E.
Fearon, Purchasing and Supply Management: With
50 Supply Chain Cases, 13th ed. (New York:
McGraw-Hill, 2006).
Love, Peter E. D., Dina Mistry, and Peter R. Davis,
“Price Competitive Alliance Projects: Identification
of Success Factors for Public Clients,” Journal of
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Lu, S. K., and H. Yan, “An Empirical Study on
Incentives of Strategic Partnering in China:
Views from Construction Companies,” Interna-
tional Journal of Project Management 25 (2007):
241–249.
Martinsuo, Miia, and Tuomas Ahola, “Supplier Inte-
gration in Complex Delivery Projects: Comparison
Between Different Buyer-Supplier Relationships,”
International Journal of Project Management 28 (2)
(2010): 107–116.
National Contract Management Association: The
Contract Management Standard Final Edition
Version 1.0, http://www.ncmahq.org/docs/default-
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management-standard ?sfvrsn=4, accessed April
24, 2017.
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used in Project Management, https://pmstudycir-
cle.com/2013/12/types-of-procurement-contracts-
used-in-project-management/, accessed April 24,
2017.
Shane, Jennifer S., et al., “A Multidimensional Model of
Project Leadership,” Leadership and Management in
Engineering (April 2011): 162–168.
Simchi-Levi, David, et al, Designing & Managing
the Supply Chain (New York: McGraw-Hill,
2009).
Sustainability Learning Guide: Successful Partnerships,
https://www.lgnsw.org.au/files/imce-uploads/35/
SLG_successful_partnerships , accessed April 24,
2017.
Tutorialspoint, https://www.tutorialspoint.com/man-
agement_concepts/procurement_documents.htm,
accessed April 24, 2017.
Wang, Fang, “Standardization of Modes of Project
Purchase Management,” Journal of Sinopec Man-
agement Institute 10 (3) (2008): 72–74.
Zhang, He, and Peter C. Flynn, “Effectiveness of Alli-
ances Between Operating Companies and Engi-
neering Companies,” Project Management Journal
34 (3) (September 2003): 48–52.
Endnotes
1. Construction Extension to the PMBOK® Guide
220.
2. Construction Extension to the PMBOK® Guide
220.
3. Construction Extension to the PMBOK® Guide
221.
4. http://www.investopedia.com/terms/m/make-or-
buy-decision.asp, accessed April 21, 2017.
5. https://www.tutorialspoint.com/management_
concepts/procurement_documents.htm, accessed
April 24, 2017.
6. https://www.tutorialspoint.com/management_
concepts/procurement_documents.htm, accessed
April 24, 2017.
454 Part 4 Performing Projects
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7. https://www.tutorialspoint.com/management_
concepts/procurement_documents.htm, accessed
April 24, 2017.
8. http://www.ncmahq.org/docs/default-source/
default-document-library/pdfs/the-contract-
management-standard ?sfvrsn=4, accessed April
24, 2017.
9. Construction Extension to the PMBOK® Guide
220.
Chapter 13 Project Supply Chain Management 455
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C H A P T E R 14
Determining Project Progress
and Results
The fundamental reason for determining project progress and results comes down
to one thing presenting actionable, decision-making information to project leaders.
A major U.S. electric utility company is continuously faced with the daunting
task of managing over 1,200 simultaneous projects in all phases of planning, exe-
cution, and completion over a geographic area consisting of five states. These
projects are supported by over 40 departments within the utility and hundreds
of external contractors and equipment suppliers. Over 85 percent of these pro-
jects take place over multiple years. There are over 15,000 activities tracked for
active projects every month. Today, many of these projects are related to Smart-
Grid efforts to fundamentally change the way the electric utility system delivers
power to homes, schools, and businesses.
This utility regularly sets the standard for its industry each year by completing
over 90 percent of its projects on time and utilizing its annual project budget
within just a few percentage points. How is this accomplished?
By identifying and collecting just the right amount of financial, scheduling,
resource, and risk management data, and by focusing intently on turning raw
data into actionable information for the groups leading and supporting the
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Develop and demon-
strate use of a change
control system.
Demonstrate how to
monitor and control
project risks with
various resolution
strategies.
Create and present a
project progress
report.
BEHAVIORAL OBJECTIVES:
Describe the impor-
tance of formal
reporting and
communications.
Demonstrate negoti-
ating skills.
Manage conflicts
during the project
execution
TECHNICAL OBJECTIVES:
Describe project
quality control tools,
including how and
when to use each.
Calculate current
project schedule and
budget progress, and
predict future prog-
ress, using earned
value analysis.
Document project
progress using MS
Project.
W
av
eb
re
ak
m
ed
ia
/S
hu
tte
rs
to
ck
.c
om
456
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projects, the utility s project controls staff can continuously find and highlight the
information that requires leadership attention and project team action.
With the large number of projects being managed, the focus on individual projects
decreases and management of the entire group of projects as a portfolio becomes par-
amount. The actionable information presented highlights significant issues for individual
projects, but more important, forecasts trends over the entire portfolio and extended
spans of time, helping turn earned-value statistics into meaningful strategies.
Presenting valuable decision-making data to the multiple resource and leader-
ship groups required to support a project provides the critical linkage between
the feedback of raw data and the ability to successfully control a single project
or an entire multiyear portfolio. Project data collection and management present
the opportunity to simultaneously manage an organization s profit, people, and
planet objectives in an optimal way.
As you move forward with this chapter and your own projects, consider the
use and impact of the project information that needs to be collected. What are
the key factors for your project financial, environmental, resource management,
scheduling, risk identification, stakeholder management, or others? Who needs
the project progress data, and exactly what do they need to know to make
good decisions and successfully achieve organizational objectives?
Identifying, collecting, managing, and presenting data that allow you to control
critical aspects of your projects are fundamental elements of project success.
Paul Kling, director project management and controls,
Power Delivery Engineering, Duke Energy
T he word determine in the context of “determine project progress and results” hasmultiple meanings. While each offers a slightly different perspective, collectively,
they help a project manager understand what she needs to do to ensure that her project
4.3 Direct and Manage Project Work 4.5 Monitor and Control Project Work
4.6 Perform Integrated Change Control
5.6 Control Scope
6.6 Control Schedule
7.4 Control Costs
8.3 Control Quality
9.6 Control Resources
10.3 Monitor Communications
11.7 Monitor Risks
13.3 Monitor Stakeholder
Engagement
13.2 Manage Stakeholder
Engagement
11.6 Implement Risk Responses
10.2 Manage Communications
8.2 Manage Quality
Scope Backlog
Burn Up Chart
Change RequestProgress Report
Earned Value Analysis
PMBOK® GUIDE
Topics:
Direct and manage
project work
Monitor and control
project work
Perform integrated
change control
Monitor risks
Manage
communications
Monitor
communications
Manage quality
Control quality
Control scope
Control schedule
Control costs
CHAPTER OUTPUTS
Progress report
Scope backlog
Burndown chart
Earned value analysis
Change request
457
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is progressing adequately and will yield the intended results in the end. Determine can
mean the following:
To give direction to or decide the course of
To be the cause of, to influence, or to regulate
To limit in scope
To reach a decision
To come to a conclusion or resolution1
Project managers, in the course of planning, give direction to a project. Many projects
also require replanning due to any number of causes. Project managers sometimes can
influence only how work is accomplished (when people do not report to them), but
they may be able to regulate or demand the work to be accomplished at a certain time
or in a specific manner. To be successful in influencing and regulating project work, the
project manager needs to consider the stakeholder priorities and communications needs,
as discovered in Chapter 6, and use those to design the monitoring and control mechan-
isms described in this chapter. Many stakeholders on projects attempt to persuade the
project manager and team to deliver more scope, but one important role of the project
manager is to jealously guard the agreed-upon scope. Throughout a project, decisions
will be made. In such instances, the project manager can do one of the following:
Personally make these decisions
Be part of a group that makes decisions
Delegate decisions to others
Facilitate the process by which each decision is made
Often, project managers need to follow up to ensure that decisions are made and then
carried out. Finally, the project manager is responsible for making sure that the project is
satisfactorily completed.
14-1 Project Balanced Scorecard Approach
To successfully accomplish all five aspects of project determination (direct, regulate,
limit, decide, and conclude) in managing project progress, a project manager can think
in terms of a balanced scorecard approach. The concept behind a balanced scorecard is
that an organization needs to be evaluated from the perspectives of customer, internal
business, financial, and growth and innovation. If one considers a project as a temporary
organization, the same perspectives make sense when monitoring and controlling a proj-
ect. Exhibit 14.1 shows a project balanced scorecard approach to project determination.
When a project manager seeks to monitor and control a project, different critical
aspects are often interrelated, and thus, their impacts on each other must be considered.
For example, a proposed change may impact the scope, quality, schedule, and/or cost.
However, to understand project control, one must consider each aspect individually
before assessing the impact on all other factors. This chapter begins with the project
manager controlling internal project issues. The next major section of this chapter deals
with the customer-related issues of quality and scope. The final sections deal with the
financial issues of resources, schedule, and cost. The project manager can utilize a num-
ber of tools to manage schedule overloads and conflicts and to reprioritize the work.
Earned value and project scheduling software such as MS Project can prove to be useful
to manage these issues. Growth and innovation include issues of participant develop-
ment covered in Chapter 5 and managing project knowledge covered in Chapter 15.
458 Part 4 Performing Projects
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14-2 Internal Project Issues
While all aspects of a project are important and interrelated when determining progress
and results, a logical starting place is with the project work that needs to be accom-
plished. Closely related are the risks that may impede the work and adequate communi-
cation. Collectively, these form the project’s internal issues. These issues can be
envisioned as the project’s nerve center. Problems in any of them travel to all other proj-
ect areas just as nerves in a body carry information throughout. When dealing with this
project nerve center, project managers direct and manage project work; monitor and
control the project work; perform integrated change control; implement risk responses
monitor project risks; and manage and monitor communications.
14-2a Direct and Manage Project Work
Directing and managing project work is performing the work as defined in various com-
ponents of the project management plan, including approved changes with an intent to
accomplish project objectives. When project managers authorize project work, they should
empower others to the extent possible, yet control them to the extent necessary. It should
be clear who is allowed to authorize each portion of work to commence. The project man-
agement plan identifies work to be accomplished, but the project manager or her appoin-
tee must tell someone when it is time to perform the work. Often, spending limits are
intertwined with work authorization (e.g., “Please perform this activity and do not spend
more than $X on it. Report back to me for approval if you need to spend more.”).
The work to be performed can come from one of several sources. The primary source is
the work package level of the work breakdown structure. However, approved corrective
actions, preventive actions, and defect repairs may also trigger work to be authorized.
When directing project work, trade-offs are often present both between projects and
other work within the project itself. Organizations often have many projects and a vari-
ety of other work that must all be accomplished. Some work is of higher priority than
other work. A project manager needs to understand where her work fits in the priority.
If her project is relatively low in priority, she may have trouble getting people and
resources to perform the project-related activities as per the planned schedule. In a case
EXHIBIT 14.1
BALANCED SCORECARD APPROACH TO PROJECT DETERMINATION
INTERNAL PROJECT CUSTOMER FINANCIAL
Direct and manage project work Manage quality Control resources
Monitor and control project work Control quality Control schedule
Perform integrated change control Control scope Control costs
Implement risk responses
Monitor risks
Manage communication
Monitor communication
Source: Adapted from Kevin Devine, Timothy J. Kloppenborg, and Priscilla O’Clock, “Project Measurement and Success:
A Balanced Scorecard Approach,” Journal of Healthcare Finance 36 (4) (2010): 38–50.
Chapter 14 Determining Project Progress and Results 459
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like that, the project manager and sponsor should have open and transparent communi-
cations so the sponsor can either help the project manager secure the resources needed
or understand that the project could be delayed.
Projects often are resource-constrained or time-constrained. In resource-constrained
projects, the project is limited by budget constraints. In this case, the project schedule
gets extended. When a project is time-constrained or its completion date is nonnegotia-
ble, organizations may have to expend more resources to complete the project, and proj-
ect cost is likely to exceed the planned cost. In both the resource- and time-constrained
projects, project scope is often not compromised. However, one should remember that
the project manager should have some leeway with one of the three constraints. If all
the three constraints (cost, time, and scope) are fixed, it is unlikely that the project man-
ager and the team will be successful in completing the project within time, on budget,
and with the promised scope and acceptable quality.
As the project progresses, are there changing priorities that impact project importance?
Remember, any proposed change to the project scope, quality, schedule, or budget needs to
be processed through the integrated change control system described later in this chapter.
Projects are undertaken with scope goals and with constraints on cost, schedule, and
quality. Exhibit 14.2 gives an example of Tatro, Inc., dealing with project trade-offs.
Well-developed project charters, effective stakeholder management, and clear commu-
nications help the project manager make sensible trade-off decisions. Sometimes, an
owner representative works closely with the project manager to make these decisions.
Skills an owner representative can use when working closely with a project manager to
make these trade-off decisions effectively are shown in Exhibit 14.3.
14-2b Monitor and Control Project Work
Monitoring and controlling project work includes a series of activities such as identifying
work packages for tracking, reviewing, and documenting the progress to ensure that the
project execution meets performance objectives as defined in the project plan. The term
monitor refers to reviewing the progress and capturing project performance data with ref-
erence to the project plan; developing performance measures; and communicating perfor-
mance information. Control means assessing actual performance obtained from
monitoring a work element and comparing it with planned performance, determining var-
iances, analyzing trends to identify and implement process improvements, evaluating pos-
sible alternatives, and finally, recommending appropriate corrective action as needed.
A variance is a measurable departure from a planned baseline or expected value.
Variance is often measured in quantitative terms, but qualitative measures cannot be
EXHIBIT 14.2
PROJECT TRADE-OFF DECISIONS AT TATRO, INC.
Tatro, Inc., is a company that describes itself as a designer, builder, and caretaker of fine landscap-
ing. It has both commercial and private (homeowner) clients. Landscaping projects for private
homes often cost well over $100,000. Homeowners who contract for landscaping projects of this
magnitude are ultra-successful people who will not change their mind once they decide they want
something special. These clients tend to focus closely on the process of a project. They wish to have
polite, skilled workers with no interruptions. The reason they wish to have the project completed is
to create a “wow factor.” Therefore, they will rarely compromise at all on either scope or quality, but
they will often compromise on the necessary cost and schedule.
Source: Chris Tetrault, president, Tatro, Inc. Reprinted with permission.
460 Part 4 Performing Projects
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ruled out. Monitoring and controlling activities allow a project manager to keep an eye
on many project activities that can indicate how well the project performance is progres-
sing. This prepares her to act if necessary to get the project back on track. The most
difficult part of monitoring and controlling is figuring out what metrics to keep, what
to measure, and how to report the results to various decision makers as necessary.
Monitoring and controlling are not activities that are done only once. Monitoring and
controlling activities occur along with project execution. Monitoring and controlling are
a continuous, overarching part of an entire project’s life cycle, from project initiation
through project closing. Since the purpose of monitoring and controlling project work
is to be able to take corrective action, these activities need to be timely. In fact, the
reverse of an old adage is in order. Instead of shooting the messenger when there is
bad news, reward the messenger if the message is delivered quickly enough to bring the
project back into control and at low cost.
To the extent possible, letting people self-control their work adds to their enthusiasm.
In other words, make them responsible and accountable by empowering people and del-
egating the work. That said, the project manager is ultimately accountable for all of the
project results and needs to develop a sense for how much control is necessary, given the
work and the person performing it.
TYPES OF PROJECT CONTROL While this section deals with monitoring and con-
trolling project work, the remainder of this chapter deals with monitoring and control-
ling each of the other project management knowledge areas. Two types of control are
used extensively on projects and both compare actual performance against the project
plan. One type is steering control, in which the work is compared to the plan on a con-
tinual basis to see if progress is equal to, better than, or worse than the project plan.
Adjustments can be made as often as necessary. The second type of control is go/no-go
control. Go/no-go control requires a project manager to receive approval to continue.
EXHIBIT 14.3
USEFUL OWNER REPRESENTATIVE SKILLS IN PROJECT
TRADE-OFF DECISION MAKING
Partnership Building trust
Improving relations
Collaborating
Creating alliances
Assuring quality
Management Planning
Managing change
Aligning resources
Leadership Communicating
Team building
Technical Project management
Knowledge of criteria
Source: Adapted from Denis R. Petersen and E. Lile Murphree, Jr., “The Impact of Owner Representatives in a
Design-Build Construction Environment,” Project Management Journal 35 (3) (September 2004): 35–36.
Chapter 14 Determining Project Progress and Results 461
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This control is often used at milestones (such as those developed in the project charter)
or when someone needs to determine if a key deliverable is acceptable or not. If it is
acceptable, the project continues as planned. If not, either the work needs to be redone
or the project could even be cancelled. For both types of control, resulting change
requests can include corrective actions, preventive actions, or defect repair.
The results of monitoring and controlling project work, schedule, budget, risks, or
anything else can range from minor to major, depending on how close the actual prog-
ress is to the plan. This can be seen in Exhibit 14.4.
Depending on the extent to which actual progress performance varies from planned
performance, the results of monitoring and controlling activities can suggest anything
from modifying the charter to transferring project deliverables as planned. Some of the
monitoring and controlling decisions are listed below:
1. If the actual progress is very different from the original intent, perhaps the project
charter needs to be revisited to ensure that the project still makes sense.
2. If progress is somewhat different from what was planned but the charter is still a good
guide, perhaps the project plan needs to be adjusted.
3. If the project plan is still a useful guide, perhaps minor adjustments need to be made
in day-to-day instructions within the project executing stage.
4. Finally, if the results indicate the customer is ready to accept the project deliverables,
perhaps it is time to proceed into the project closing stage.
PERFORM INTEGRATED CHANGE CONTROL George and John are new project
managers fresh out of college. Both are approached by internal customers of their pro-
jects (managers of departments where the project deliverables will be used). Their custo-
mers tell them what a fantastic job the two of them are doing. The customers then say,
“This is great! Could you add these couple of little improvements to it? Then it would be
even more valuable to me.” George, wanting to please his customer, says, “Yes, we can
add that little bit.” John’s immediate answer is, “Let’s see what impact that might have
on the schedule, budget, quality, and project team. I will be happy to consider it, but
EXHIBIT 14.4
RESULTS OF MONITORING AND CONTROLLING A PROJECT
Phase: Initiating
Approval
to proceed
Charter Project
plan
Project
deliverables
Administrative
closure
Monitoring and
controlling project
1 2 3 4
ClosingExecutingPlanning
462 Part 4 Performing Projects
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I want to be sure to deliver the project results we promised on time and on budget.”
George, in his eagerness to please the customer, made a classic mistake. Many great pro-
jects have been derailed because someone stroked the ego of a project manager who then
agreed to changes without understanding their impact.
Perform integrated change control is reviewing all change proposals, estimating their
impact on project goals wherever appropriate, approving or declining changes, and man-
aging changes to deliverables, schedules, budgets, and the project management plan.
Change control is a process wherein change proposals to various project planning ele-
ments are acknowledged, formally documented, and either approved or declined after
review. Change control includes considering the impact of any change, deciding whether
to agree to the change, and then documenting and managing that change. An observant
project manager will ensure that changes that were not approved are not somehow
slipped in anyway by a stakeholder who does not take no for an answer. Proposed
changes are documented in a change request such as the one shown in Exhibit 7.14.
The decision to approve the proposed change needs to be made by the appropriate
person or group responsible for it. Generally, if the proposed change requires a modifi-
cation to the project charter (or contract for an external project), then the sponsor and/
or customer would decide. If the change does not rise to that level, often a project man-
ager is empowered to make the decision. Some organizations use a change control board,
which consists of a formal group authorized and responsible for reviewing, evaluating,
approving, delaying, or rejecting any changes to any aspect of the project plan by following
a formal communication method of documenting the decision process. The change con-
trol board often consists of the project manager, sponsor, project core team, and perhaps
other key stakeholders. Since some changes have far-reaching impacts, it is often wise to
include people with diverse knowledge and skills on the change review board.
Change is a reality on virtually all projects. While we cannot predict or plan what
changes will occur, we can plan for how we will deal with those changes. Some projects
are easier than others to plan, especially the later phases of the project. If the planning
team can plan most details at the outset, change control may be the primary method
they use for handling change. On other projects, where it is difficult to plan the later
phases or parts in detail until results from the early parts of the project are known,
change control is still used, but it is not enough. What is also used in these cases is the
rolling wave planning described in Chapter 9. The early parts of the project are planned
in detail, and the later parts are planned in less detail until later when additional detail is
added. Often, a detailed plan for the following section of the project is required before
being allowed to proceed. Agile projects are planned in a rolling wave fashion.
14-2c Monitoring Project Risk
During project planning, the project team normally develops a risk management plan
that is used to guide risk monitoring and response activities. They also normally create
a risk register to record each identified risk, its priority, potential causes, and potential
responses. The risk management plan and risk register are used to monitor and imple-
ment responses to project risks and to resolve them when they occur.
Monitor risks is the process of adhering to the risk response plan of tracking identi-
fied risks, identifying new risks, monitoring residual risks, and evaluating the effective-
ness of the risk response process throughout the project. On some projects, the
majority of risk events that materialize are ones that the project team has previously
identified. Efforts needed on these risks largely include tracking the identified risks, exe-
cuting the response plans, and evaluating their effectiveness. Project managers know it is
Chapter 14 Determining Project Progress and Results 463
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wise to consider multiple responses to a given risk. This is true both because some risks
cannot be fully handled with just one strategy and because the first strategy may not
always be the best strategy.
On other projects, however, many unanticipated risks may materialize. This could be
partly due to poor or incomplete risk planning. It could also be partly due to events that
would have been so unlikely that the team could not have been expected to plan for
them. In either event, specific contingency plans may not be in place to deal with these
risks. Identifying these new risks is vital—and the sooner the better. Two categories of
project management methods can help to deal with previously unidentified risks. First,
the project team in planning may recognize that unknown risks may surface, and they
may add a contingency reserve of time, budget, and/or other resources to cover these
unknowns. Good project management practice suggests a need for this. The amount of
cost and budget reserves that are included can vary extensively based upon the custo-
mer’s perception of risk and the type of project that is involved. Competitive pressures
often dictate a lower limit on reserves than project managers may prefer.
The second category of project management methods includes a number of good
practices that project managers often employ anyway. These practices can be classified
according to whether the project team has full, partial, or no control over the events, as
shown in Exhibit 14.5. Note especially the second column, which deals with risks par-
tially within a project manager’s control. A project manager cannot completely control
many situations, but by using good leadership and ethics, the project manager can cer-
tainly help create a situation in which others want to help the project.
14-2d Implement Risk Responses
Implement risk responses is the process where when a risk event occurs or is quite
likely to occur soon, the person assigned to that risk executes the strategy identified in
EXHIBIT 14.5
RISK EVENT RESOLUTION STRATEGIES
RISKS WITHIN PROJECT CONTROL
RISKS PARTIALLY WITHIN
PROJECT CONTROL RISKS OUTSIDE PROJECT CONTROL
Understand and control WBS Establish limits to customer expectations Understand project context and
environment
Closely monitor and control activity
progress
Build relationships by understanding
project from client’s perspective
Actively monitor project environment
Closely manage all project changes Use honesty in managing client
expectations
Understand willingness or reluctance of
stakeholders to agree to changes
Document all change requests Work with client to reprioritize cost,
schedule, scope, and/or quality
Increase overtime to stay on schedule Carefully escalate problems
Isolate problems and reschedule other
activities
Build team commitment and enthusiasm
Research challenging issues early
Source: Adapted from Hazel Taylor, “Risk Management and Problem Resolution Strategies for IT Projects: Prescription and Practice,” Project Management
Journal 37 (5) (December 2006): 55–60.
464 Part 4 Performing Projects
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the risk management plan. Exhibit 11.12 outlines the most typical strategies with exam-
ples of each. One core team member should be assigned to each risk. That person should
be alert to any trigger condition that suggests the risk event may happen and be prepared
to implement the response strategy quickly. Possible outcomes of implementing a risk
response include updates to the risk register, approved change orders, and perhaps les-
sons learned so that both this project and future projects may avoid that same risk event
in the future.
14-2e Manage Communications
Manage communications as defined in Chapter 6 is all the work connected with the
project communications plan, starting with planning for it; generating it; organizing
and sharing it; and, finally, storing and disposing of it. This includes determining project
information needs and establishing an information system as described in Chapter 6.
Then, while the project is under way, the project manager and team need to determine
any additional information needs that were not already uncovered, collect information
on executed work and work in progress, and then report progress to all stakeholders.
COLLECT INFORMATION ON EXECUTED WORK AND WORK IN PROGRESS Proj-
ect managers gather data on the work they have authorized so they can understand
the progress being made. This information is necessary for scheduling additional work,
for understanding how the project is doing with respect to the schedule, and for quality
purposes. A project manager may try to gather data to answer the following typical
questions:
How well is this particular activity proceeding in terms of time and budget?
How well is the entire project proceeding in terms of time and budget?
How much more money will need to be spent to finish?
To what extent does the quality of this work meet requirements?
How many hours of human resources have we used to complete this activity, com-
pared to how much we estimated?
What methods have we used that are worth repeating?
What methods have we used that need to be improved before we do that type of
work again?
What evidence supports the answers to the above questions?
REPORT PERFORMANCE Performance reporting includes gathering work perfor-
mance data and using it to create work performance information and reports. Work per-
formance data are the actual and raw observations and measurements during execution of
project activities. Work performance information is the performance data collected from
these processes, analyzed in context, and then integrated, considering relations across
areas. Work performance reports are the compilation of work performance information
in some physical or electronic form that are presented as project documents intended to
generate awareness, discussions, decision making or other suitable actions.
Performance can be reported either at fixed time intervals or at key project mile-
stones. Detailed progress can be reported informally but frequently within the project
team and to functional managers who control resources—perhaps weekly or even daily
on a project with critical time pressure. More general progress may be reported formally
but on a less frequent basis to sponsors, senior management, and clients—perhaps semi-
weekly or monthly. If regular reports and meetings already exist within the parent orga-
nization that can serve for performance reporting vehicles for a project, they can
Chapter 14 Determining Project Progress and Results 465
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substitute for these reports. On the other hand, if your project needs additional or differ-
ent meetings and reports, then develop and use those as well.
Progress reporting within the project team and to functional managers who control
resources is often done in the form of meetings. The emphasis should be on specifics.
Each team member can report for each deliverable for which he is responsible: the target
date, status, and what other work or information on which progress depends. Once all
the deliverables have been reported, the project team can update the risk register and
issues log. Recommended changes that are within the project manager’s discretion are
either approved or rejected and then documented. Recommended changes beyond the
project manager’s discretion are formally sent to the sponsor or change control board
for consideration. Approved changes become part of the project plan with activities,
responsibilities, and timing assigned. Consequently, the project baseline will be updated.
Finally, progress reporting meetings are a great time to capture lessons learned.
Performance reporting to sponsors, management, and clients can be in the form
of either meetings or reports. Think in terms of three time horizons, as shown in
Exhibit 14.6. It is often helpful to establish an agenda for progress report meetings
based upon what sponsors wish to know concerning each of these three time horizons.
1. Past time period—The first time horizon is the immediate period between your last
report and now. When looking back like this, it is important to be able to state what
was planned to be accomplished during that time and what actually was accom-
plished. Any variance or difference between the approved plan and actual perfor-
mance, along with reasons for the variance, should also be part of the retrospective
portion of performance reporting.
2. Current time period—The second time horizon is from now until the next performance
report is due: What work is to be accomplished during this time period (current plan)?
What risks and issues are foreseen? Finally, what changes need to be approved?
Ph
ov
oi
r/
Sh
ut
te
rs
to
ck
.c
om
466 Part 4 Performing Projects
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AGILE
3. Future time period—The third time horizon is after the next reporting period. Spon-
sors especially want to know what future risks and issues are envisioned because they
may be able to head some problems off before they grow. Remember the concept of
rolling wave planning—the plan for the later part of the project might still be evolv-
ing, but what is known about it right now?
14-2f Monitor Communications
Monitor communications is monitoring and controlling communications throughout the
project life cycle to make certain that the information needs of all the project stakeholders
are met. The project manager and core team often discuss whether the project communica-
tions are following the plan, how effective they are, and how to improve their effectiveness.
Self-directed teams on agile projects are largely empowered to decide what work to do
and when to do it, consistent with the prioritizing of deliverables by the product owner.
On Agile projects, change is expected, and the only part that is planned in detail at the
outset is the first iteration. Subsequent iterations are planned in a rolling wave fashion.
Within an iteration, there is great reluctance to change. Conducted well, agile projects may
have less risk because communication is so frequent and specific; because during each itera-
tion, the team needs to demonstrate that the project deliverables perform correctly; and
because it is common practice to maintain a visible, monitored, prioritized risk list.
Communication is frequent and rapid on agile projects. Often, a directional indicator
showing that things are getting better or worse in some manner is more valuable than a
more detailed and polished report. Teams generally display highly visible information regis-
ters so everyone concerned can tell in a transparent manner how the project is proceeding.
Progress report meetings are held every morning as brief (15 minutes) standup meetings.
Each core team member discusses the previous day as the past time period and today as the
current time period. The more distant future is generally not discussed in these meetings.
Documentation often starts very tersely and becomes more complete as the deliver-
ables are better understood. Progressively more complete working product is the primary
measure of progress.
EXHIBIT 14.6
TIME HORIZONS FOR PROJECT PERFORMANCE
Previous
Report
Current
Report
Next
Report
Project
End
Past time period Current time period Future time period
Approved plan
Actual progress
Variances
Reasons
Current plan
Current risks
Current issues
Changes
Plan to
completion
Future risks
Future issues
Chapter 14 Determining Project Progress and Results 467
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Agile projects often use a Burndown Chart to show the amount of work remaining. A
Burndown Chart is useful to Scrum Masters as it projects how close to plan the team is
within a given time box—that is, it is a graphical representation of work effort remaining
in an iteration (or similar) versus the days left in an iteration.
The vertical axis is typically the number of effort hours remaining in an iteration. The
horizontal axis identifies how many days are left in an iteration. Exhibit 14.7 displays a
straight line, which is called the ideal line. It depicts a team with a velocity of 300 effort
hours and 10 days of iterations.
The way this works is that each day, the members of the Scrum Team let the Scrum
Master know how many effort hours of work they have left to complete for the current
iteration. Velocity, which is used to draw the ideal line, is determined by tracking the
team’s historical progress. Exhibit 14.8 displays a Burndown Chart with the team con-
stantly behind schedule.
EXHIBIT 14.7
BURNDOWN CHART WITH IDEAL LINE
Es
tim
at
ed
e
ff
or
t h
ou
rs
le
ft
in
it
er
at
io
n
Burndown Chart
“Ideal Line” Where
Velocity Is 300 Effort
Hours
300
200
100
10 9 8 7 6 5
Days left in iteration
4 3 2 1 0
EXHIBIT 14.8
BURNDOWN CHART WHERE TEAM IS BEHIND SCHEDULE THE
ENTIRE ITERATION
Es
tim
at
ed
e
ff
or
t h
ou
rs
le
ft
in
it
er
at
io
n
Burndown Chart
Where Team Is
Behind Schedule the
Entire Iteration
This line represents the
effort amount of work
remaining by day left in the
iteration
The dashed
line is the
“ideal line”
300
200
100
10 9 8 7 6 5
Days left in iteration
4 3 2 1 0
Source: Brain Vanderjack PMP, MBA, CSM, SAFe Certified
468 Part 4 Performing Projects
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14-3 Customer Issues
The second major perspective included in a balanced scorecard approach to project con-
trol is that of the customer. Customers need the deliverables of the project. They want
the results to be useful (quality) and complete (scope).
14-3a Manage and Control Quality
As previously defined in Chapter 12, manage quality is the process of using and improv-
ing the quality plan and policy to perform tasks that will most likely lead to creating
project outputs to customers’ satisfaction. This forward-looking, broad management pro-
cess (often known as quality assurance), both ensures that work is performed correctly
and that key stakeholders are convinced that the work is performed correctly.
Also as previously defined in Chapter 12, control quality is “the activities … used to
verify that deliverables are of acceptable quality and that they are complete and correct.
Examples of quality control activities include inspection, deliverable peer reviews, and
the testing process.”2 This backward-looking, detailed set of reactive technical activities
verifies whether specific project deliverables meet their quality standards.
QUALITY MANAGEMENT AND CONTROL TOOLS A variety of quality management
and control tools can be used effectively on projects. Some of the most common tools
and their primary uses on projects are shown in Exhibit 14.9.
The following discussion presents a small example of a project process that is used to
demonstrate a few of the project quality tools. A straightforward presentation of each
tool is demonstrated. Multiple variations exist for some of the tools, and an interested
student can find more detailed examples and instructions in a statistics or quality
textbook.
Flow Chart A flow chart is a tool that project managers use as they begin to control
quality. Flow charts can be used to show any level of detail from the overall flow of an
entire project (such as a network diagram of the project schedule) down to very specific
details of a critical process. Flow charts show clearly where a process starts and ends.
A box shows each step in the process. Arrows show the direction in which information,
money, or physical things flow. Exhibit 14.10 is a flow chart of the process of estimating
project cost.
This is a high-level flow chart of the process. Perhaps the project team looks at this
and realizes labor cost estimates are unreliable. They might decide they need more
detailed understanding of this step. One method would be to create a more detailed
flow chart of just that step. Another method is to gather some data using a check sheet
such as the one shown in Exhibit 14.11.
Check Sheet Check sheets are customized for each application. Decide exactly what
data will be useful in understanding, controlling, and improving a process, and create a
form to collect that information. It is helpful to also collect the date or time when each
event happened and notes regarding the impact or any special circumstances. When cre-
ating categories on a check sheet, it is wise to have a category titled “other” because
many times, a problem comes from an unexpected source.
Pareto Chart Once a check sheet is used, the gathered data can be displayed on an
analysis tool such as the Pareto chart shown in Exhibit 14.12. The purpose of the Pareto
chart is to quickly understand the primary sources of a problem using the 80/20 rule,
wherein 80 percent of defects often come from only about 20 percent of all the sources.
Chapter 14 Determining Project Progress and Results 469
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Note that, in this example, the error of using an incorrect scope shows the highest
cost impact by far. Therefore, that is probably the first place the project team looks for
improvements.
Cause-and-Effect Diagram Exhibit 14.13 shows how the largest bar on the Pareto
chart often becomes the head of the fish on the cause-and-effect diagram—the result
that the project team tries to improve.
EXHIBIT 14.9
PROJECT MANAGEMENT AND QUALITY TOOLS
TOOL CHAPTER DESCRIPTION
Charter 3 High-level agreement to start project describing authority, scope,
expectations, and resources
Lesson learned 3 and 15 Knowledge from experience captured and shared
Stakeholder analysis 6 Identification and prioritization of stakeholder desires
Communication management plan 6 Document that guides and assigns responsibility for communication with
stakeholders
Voice of the customer 7 Captured desired benefits and features in customer’s own words
Brainstorming 7 Quick generation of many ideas to identify gaps, issues, roadblocks, or
potential solutions
Quality metrics 7 Crisp definition of what and how to measure specific performance
Project risk review 11 Thorough document review to uncover risks
Root cause analysis 11 Technique to discover underlying reason for problem
Cause and effect diagram 11 A visual outline, often resembling a fish skeleton, used to identify and
organize possible causes of a stated outcome
Supplier, input, process, output,
customer (SIPOC)
12 High-level view of process and stakeholders
Quality audit 12 Structured process to ensure project activities comply with organizational
policies
Benchmarking 12 Identifying and analyzing best practices for improvement ideas
Flow chart 14 A visual model used to show inputs, flow of work, and outputs and to
identify possible data collection points for process improvement
Check sheet 14 A simple, structured form used to gather and organize data for analysis
Pareto chart 14 A vertical bar graph used to identify and plot problems or defects in
descending order of frequency or cost
Histogram 14 A vertical bar chart used to show the average, extent of variation, and shape
of measurements recorded for a process variable
Run chart 14 A special type of scatter diagram in which one variable is time, used to see
how the other variable changes over time
Control chart 14 A run chart with process average and control limits used to distinguish
between common and special causes of variation
470 Part 4 Performing Projects
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The cause-and-effect diagram (also commonly known as the fishbone diagram,
because it resembles a fish skeleton, and the Ishikawa diagram, named after its devel-
oper) is constructed with each “big bone” representing a category of possible causes.
For example, in Exhibit 14.13, one of the possible categories is “deliverable design,”
meaning that maybe something about the design of the project’s deliverables contributed
to problems with the “head of the fish”—in this case, using incorrect scope to estimate
the labor cost. Once categories of possible causes are identified, the project team brain-
storms ideas with the goal of identifying as many potential causes as possible. Once the
EXHIBIT 14.10
ESTIMATING PROJECT COST FLOW CHART
Identify
possible
project
Compare
scope with
fabricator
Process startProcess start
Calculate
material
cost
Calculate
labor
cost
Calculate
equipment
cost
Determine
desired
markup
Calculate
financing
cost
Process endProcess end
Negotiate
job
Previous
Process
Previous
Process
Following
Process
Following
Process
EXHIBIT 14.11
CHECK SHEET FOR LABOR COST ESTIMATING
LABOR COST ISSUE DOLLAR IMPACT DATE DISCOVERED ACTION TAKEN
Incorrect scope used
Category of labor
Quantity of labor
Hourly rate
Pace of labor learning
Unexpected experience level
Mathematical error
Other (be specific)
Chapter 14 Determining Project Progress and Results 471
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team can think of no additional possible causes, they decide to test one or more possible
causes to see if they actually have an impact. Testing can be done by gathering more data
on the project as it is currently operating. Alternatively, a project team can test a new
method and then collect data on it.
EXHIBIT 14.12
PARETO CHART OF LABOR ESTIMATING PROCESS PROBLEMS
$50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Type of Error
C
os
t
Cost of Labor Estimating Errors
In
co
rr
ec
t
sc
op
e
us
ed
M
at
he
m
at
ic
al
er
ro
r
Q
ua
nt
ity
o
f
la
bo
r
W
ro
ng
h
ou
rly
ra
te
W
ro
ng
p
ac
e
of
la
bo
r
le
ar
ni
ng
U
ne
xp
ec
te
d
ex
pe
rie
nc
e
le
ve
l
W
ro
ng
ca
te
go
ry
o
f
la
bo
r
O
th
er
EXHIBIT 14.13
PARETO CHART CAUSE AND EFFECT RELATIONSHIP
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
In
co
rr
ec
t s
co
pe
u
se
d
Q
ua
nt
it
y
of
la
bo
r
H
ou
rl
y
ra
te
M
at
he
m
at
ic
al
e
rr
or
Pa
ce
o
f l
ab
or
le
ar
ni
ng
U
ne
xp
ec
te
d
ex
pe
ri
en
ce
le
ve
l
C
at
eg
or
y
of
la
bo
r
O
th
er
(
be
s
pe
ci
fic
)
Incorrect
scope used
MethodsPeople
Deliverable
design
Timing
472 Part 4 Performing Projects
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Histogram Once the additional data are gathered, they can be analyzed using a histo-
gram, run chart, and/or control chart. For example, if one of the potential causes of
using incorrect scope is that the client demands the cost estimate within four days of
job notification (that is, within the timing category), perhaps the charts would appear
as shown in Exhibit 14.14, Exhibit 14.15, or Exhibit 14.16.
A project manager can interpret several things from a histogram such as the one
shown in Exhibit 14.14. First, if nothing unusual is happening, a normal or bell-shaped
EXHIBIT 14.14
HISTOGRAM OF IMPACT OF NUMBER OF DAYS TO CREATE ESTIMATE
4 Days 5 Days 6 Days 7 Days 8 Days ≥9 Days
EXHIBIT 14.15
RUN CHART EXAMPLE
M T W R F M T W R F
100
90
80
70
60
50
40
30
20
10
0
Pe
rc
en
t A
cc
ep
ta
bl
e
Day
Chapter 14 Determining Project Progress and Results 473
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curve might be expected. However, this histogram is highly skewed, with much more
impact happening when the client demands an estimate within four days. When the client
demands the estimate in four days, the impact is approximately $1,600. When comparing
that to the total impact of about $15,000 for using the wrong scope, this error appears to
explain only a bit more than 10 percent of the total problem. It might be worth changing
this, but most of the problem will still exist. Therefore, changing this factor alone does not
solve the entire problem.
Run Chart Perhaps the project team wants to see how one specific aspect of the work
process may change over time. If they collect data for two weeks on a daily basis and
show them on a run chart such as the one in Exhibit 14.15, they could determine trends
in how the process is changing over time.
The team could look for three types of variation. First, is there a trend either up or
down? In this example, there is an upward trend. Second, is there a repeating pattern,
such as a low every Monday or a high every Wednesday? In this case, it is too early to
tell. Both Tuesdays are up from Mondays, and both Thursdays are low, but day of week
does not seem like the major source of variation. The third type of variation is abrupt
changes, such as either a single point far higher or lower than the others or all of the
points suddenly being much higher or lower than previous points. The question teams
ask when trying to find this variation is: “How big of a change is big enough to count?”
Control Chart Quality control charts are helpful in answering this question. Exhibit
14.16 displays the same data on a control chart with a process average and control limits
shown. This chart shows the final point above the upper control limit. This means the
variation is enough that it is not likely to have happened purely by chance. Something is
causing the variation—some sort of special cause.
When considering any of these quality control tools, remember that it is easy to get
lost in the details, but the purpose of quality control is to make sure the agreed-upon
scope and quality are met per the project charter.
EXHIBIT 14.16
CONTROL CHART EXAMPLE
M T W R F M
Day
Pe
rc
en
t A
cc
ep
ta
bl
e
T W R F
100
90
80
70
60
50
40
30
20
10
0
Process
average
Upper
control
limit
Lower
control
limit
474 Part 4 Performing Projects
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14-3b Control Scope
Control scope is the act of closely monitoring the project and product scope status and
only allowing necessary changes to the scope baseline. Ideally, project managers
and teams practice scope control proactively. They attempt to understand what might
cause changes to either the product scope (the features of the project deliverables) or
the project scope (the work that must be done to create the deliverables). Once a project
team discovers something that may cause a need to change the scope, their first
effort is typically to head it off. It is easiest if the stakeholders can still be satisfied and
project objectives can be met without changing the scope. However, many times, it may
be necessary to make a scope change. A scope change is any change to the project work
activities or deliverable. When the scope changes, the project cost and/or schedule also
need to change. For this reason, proposed scope changes are processed through the inte-
grated change control system to determine what impact each might have on other critical
aspects of the project goals. Some scope changes start as proposed changes to cost or
schedule, just as some changes to cost or schedule start as proposed scope changes.
As with any type of proposed change, one must have a scope baseline in order to
understand scope changes; that is, the approved scope definition and work breakdown
structure must be clearly understood. Only then can the project team determine how
big a proposed scope change is, what impact it will have, and how to best manage it.
Variance analysis is the process of determining both the cause and the amount of
difference between planned and actual performance. Variance analysis includes deter-
mining how large the difference is between the actual and planned scope (or schedule
or budget), the reasons for the difference, and whether any action is necessary to resolve
it. For scope variances, the action can include updating the scope definition and work
breakdown structure.
D
m
itr
y
Ka
lin
ov
sk
y/
Sh
ut
te
rs
to
ck
.c
om
Chapter 14 Determining Project Progress and Results 475
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AGILE Quality is enhanced on agile projects by having the appropriate team members resolve
issues quickly. Success of the product is predicted by having team members, including
the product owner, use the product before users do.
14-4 Financial Issues
Cost control is obviously a financial issue. Cost, schedule, and scope are often so closely
intertwined that they are monitored and controlled simultaneously, and a change in one
of them impacts the others. The amount of resources of all kinds needed to perform the
project has a direct impact on cost, so we also cover controlling resources here.
14-4a Control Resources
Control resources is a process by which all of the physical resources needed to perform
the project are planned and monitored, and changes are made if needed. This occurs
throughout the life of the project. Obviously, if needed resources are late, the project
can be delayed. If needed resources are in short supply, the cost and schedule might
both be impacted unfavorably. Project managers need to look ahead at potential trends,
be willing to proactively solve problems, and work cooperatively with a myriad of stake-
holders to ensure the needed resources are available when required.
14-4b Control Schedule and Costs
Schedule and cost control are very similar in concept to control. The project manager
should start with the approved cost and schedule baseline. Next, the current status of
the schedule and cost should be determined.
If the schedule or budget has changed by at least a previously agreed amount, changes
should be formally recommended and managed through the integrated change control
system to ensure that any impacts on other areas are considered. Cost control often has
one additional consideration—that is, ensuring that no more money is spent than the
authorized amount. This may force other changes on the project, such as delaying the
schedule or reducing part of the project scope. While many methods exist for controlling
cost and schedule, the two discussed in this chapter are two of the most common: earned
value management and project scheduling software such as MS Project.
Very often, the project manager must work with his or her company’s finance depart-
ment or CFO to get the proper data on accounts payable, accounts receivable, and other
information. The project may require the help of someone skilled at financial software. If
the project manager is not personally adept at using such software, the finance depart-
ment representative might be included in the project team either as a core team member
or in SME capacity.
14-4c Earned Value Management for Controlling Schedule and Costs
Earned value management is “a disciplined, structured, objective, and quantitative
method to integrate technical work scope, cost, and schedule objectives into a single
cohesive contract baseline plan called a Performance Measurement Baseline for tracking
contract performance.”3 Earned value allows a project team to understand the project’s
progress in terms of cost and schedule as well as to make predictions concerning the
project’s schedule and cost control until the project’s conclusion. Earned value is used
as a decision-making tool. The project manager can quickly assess how the project is
doing according to the baseline plan and whether the project will end without major
cost and/or schedule overruns. The earned value data presents a snapshot of the status
476 Part 4 Performing Projects
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of his or her project at a given point in time. It is valid only for the day that the cost and
schedule progresses are measured.
When interpreting earned value management, cost and schedule must be considered
independently. A project can be either ahead or behind the planned schedule and either
over or under the planned budget. Second, all earned value terms deal with one of two
time frames. Each represents either status as of the last date that project data were gath-
ered or a prediction for the end of the project. Exhibit 14.17 lists 11 questions and
answers that introduce all of the earned value management terms.
Exhibit 14.18 uses an example to show each of the earned value management terms.
Currently known values for the example are stated, followed by their definitions. Var-
iances, indexes, and estimates are next defined, and calculations for the example are
shown.
CURRENTLY KNOWN VALUES In this example, the first several items are provided:
PV $250,000, EV $200,000, AC $400,000, and BAC $750,000
Each of these terms also has a formal definition.
Planned value (PV) is “the approved value of the work to be completed in a given
time. It is the value that should have been earned as per the schedule.”4 In our example,
we expected to spend $250,000 for the work we planned to have accomplished by now.
EXHIBIT 14.17
EARNED VALUE MANAGEMENT TERMS
QUESTION TIMING ANSWER ACRONYM
How much work should be done? Now Planned value PV
How much work is done? Now Earned value EV
How much did the is done work cost? Now Actual cost AC
How much was the total project
supposed to cost?
End Budget at completion BAC
How much is the project schedule ahead
or behind?
Now Schedule variance SV
How much is the project over or under
budget?
Now Cost variance CV
How efficient is the project so far with
its schedule?
Now Schedule performance
index
SPI
How efficient is the project so far with
its budget?
Now Cost performance
index
CPI
How much more do we expect to spend to
finish the project?
End Estimate to complete ETC
What do we now think the total project
will cost?
End Estimate at completion EAC
How efficient do we need to be to finish
on budget?
End To-complete
performance index
TCPI
Chapter 14 Determining Project Progress and Results 477
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Earned value (EV) is the value of the work actually completed to date. In our example,
the work that has been completed is worth $200,000.
Actual cost (AC) is the total of costs incurred in accomplishing work on the activity
during a given period. In our example, we owe $400,000 for the work that has been
completed.
Budget at completion (BAC) is the total amount budgeted for the entire project. In
this example, our approved budget for the entire project is $750,000. Now that we know
these four pieces of information, we can calculate answers to all of the remaining questions
listed in Exhibit 14.16.
VARIANCES Schedule variance (SV) is the difference between the earned value (EV)
and the planned value (PV), and it denotes schedule performance. In our example, it is
calculated as $200,000 $250,000 $50,000. We know we are behind schedule because
the variation is negative (unfavorable):
SV EV PV
Cost variance (CV) is the difference between earned value (EV) and actual cost (AC),
which reflects cost performance. In our example, it is calculated as $200,000 $400,000
$200,000. We know we are over budget because the variation is negative
(unfavorable):
CV EV AC
The two variances help us understand, in dollar terms, how poorly or well we are per-
forming on cost and schedule. In this example, we are performing poorly in terms of
EXHIBIT 14.18
EARNED VALUE MANAGEMENT EXAMPLE
$000s
1,000
900
800
700
600
500
400
300
200
100
BAC
$750,000
250 = PV
200 = EV
400 = AC
Now
Time
Start Expected
Completion
CV
SV
478 Part 4 Performing Projects
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both cost and schedule. These are commonly used indicators. However, some people
prefer to use efficiency measures to understand in percentage terms how well or poorly
the project is performing.
INDEXES Schedule performance index (SPI) is a schedule performance measure
expressed as the ratio of earned value (EV) to planned value (PV). In our example, it is
calculated by $200,000 $250,000 80%. We know our project is behind schedule
because we only accomplished 80 percent of what we planned:
SPI EV PV
With performance indexes, 100 percent means right on plan, less than 100 percent
means less efficient than planned, and over 100 percent means more efficient than
planned.
Cost performance index (CPI) is a cost performance measure expressed as the ratio
of earned value (EV) to actual cost (AC). In our example, it is calculated by
$200,000 $400,000 50%. We know our project is over budget because we have only
received $0.50 worth of results for every dollar we have spent:
CPI EV AC
Now that we understand how we have performed so far (poorly in our example), it is
time to forecast how we will perform for the remainder of the project. The simplest way
to estimate future performance is to predict that the past performance trend will con-
tinue. The following calculations are based upon that assumption. There are projects,
however, that may have unusual circumstances in the early stages that are not likely to
be repeated later. In those instances, the project manager and sponsor need to use judg-
ment to determine if the original estimates for the remaining work or some other
method of estimating it are better predictors. In each case, an estimate is made for
the remaining work and added to the actual cost of work completed to provide the over-
all estimate. We will use the two most common methods of estimating the remaining
work.
ESTIMATES Estimate to complete (ETC) is the expected budget required to complete
all the remaining project work. In our example, if we predict that our future performance
will have the same efficiency as our past performance, it is calculated by:
BAC EV CPI $750,000 $200,000 50% $1,100,000 :
First method Work to date is good estimate of future ETC BAC EV CPI
Unless we improve upon our efficiency, we can expect to pay more for the remaining
project work than we originally expected to pay for the entire project!
The second method of calculating the ETC is to believe that the original plan is a
better predictor than the work to date (maybe because of unusual circumstances
that are unlikely to continue). This method is calculated by budget at completion
BAC EV $750,000 200,000 $550,000 :
Second method (original plan is good estimate of future) ETC BAC EV
Estimate at completion (EAC) is the total cost of completing all the project work
expressed as the sum of actual cost to date and the estimate to complete. In our example,
if we believe our efficiency to date is a good predictor of the future, it is calculated by
$400,000 $1,100,000 $1,500,000. On the other hand, if we believe what happened
Chapter 14 Determining Project Progress and Results 479
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so far will not be repeated and our original plan is good for the remaining work, it is
calculated by $400,000 $550,000 $950,000 :
EAC AC ETC
Because our cost efficiency is only half of our plan (as we learned from our CPI), unless
we become more efficient, we can expect to pay double our original estimate! Even if we
match our original plan for the rest of the project, we will still be over the budget in the
end. Perhaps our sponsor still wants to know what it would take for us to finish on budget.
The to-complete performance index (TCPI) is a measure of the cost performance
required to complete the remaining project work within the remaining budget. This is
the ratio of the remaining work to the remaining budget and on our example is calcu-
lated as ($750,000 $200,000)/($750,000 $400,000) = 157%. That means that so far,
our cost efficiency as measured by our CPI is 50% and we need to suddenly raise it to
157% for the remainder of the project to complete on budget!
TCPI BAC EV BAC AC
Each term in earned value management helps project managers understand a bit
more about their project’s performance. Collectively, the earned value management
terms give project managers insight for monitoring and controlling project cost and
schedule. In addition to and often in conjunction with earned value management, many
project managers use scheduling software to help control their projects.
14-5 Using MS Project to Monitor and
Control Projects
When used to its fullest, MS Project can be a powerful tool for monitoring and control-
ling the project schedule, cost, and resources. Once a project has entered into the execu-
tion phase, the job of the project manager shifts primarily to tracking the project to see if
it is executing according to plan. To understand how MS Project assists in this regard, it
is helpful for the project manager to understand the following:
1. What makes a schedule useful
2. How MS Project recalculates the schedule based upon reported and inputted actuals
3. The current and future impacts of time and cost variances
Once these concepts are understood, the project manager can use MS Project to
update the schedule in a step-by-step fashion.
14-5a What Makes a Schedule Useful?
To properly control a project, the project manager must provide useful status reports,
produce accurate assignment dates, take timely corrective actions, and make other neces-
sary management decisions. This is difficult or impossible to do well without a suffi-
ciently useful schedule. To be useful, three sets of schedule data must exist for
comparison purposes. Each set includes dates, duration, work, and cost (along with any
approved changes). The three sets are as follows:
1. The Baseline Set (sometimes called the planned schedule)
a. This set is the original stakeholder-approved scheduled values (as discussed in
Chapter 12).
b. Data includes the Baseline Start, Baseline Finish, Baseline Duration, Baseline
Work, and Baseline Cost.
480 Part 4 Performing Projects
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2. The Actual Set (sometimes called the performance data)
a. This set is what actually happens during project execution as reported by the
resources assigned to project tasks.
b. Data includes the Actual Start, Actual Finish, Actual Duration, Actual Work, and
Actual Cost.
3. The Scheduled Set
a. This set is the future estimated time and costs and is calculated by MS Project.
b. Data includes the Start, Finish, Duration, Work, and Cost.
c. Values are continuously recalculated during project execution as tasks and esti-
mates are entered, as the project network is defined, as resources are assigned
and balanced, and as actual execution data is entered.
14-5b How MS Project Recalculates the Schedule Based
on Reported Actuals
As actual data is entered into a task’s Actual field, MS Project copies that data into the
task’s Scheduled field, replacing the estimated values. MS Project then recalculates the
schedule for future tasks based on a combination of what actually happened and the esti-
mates of the remaining tasks.
14-5c Current and Future Impacts of Time and Cost Variance
With the three sets of data, comparisons can be made between any two of the sets. This
is useful in understanding future impacts of various issues, such as:
Time and cost performance variances from baseline
Critical path changes
Resource allocation issues
Emerging risks
Remaining contingency and management reserves
The impacts of proposed changes
14-5d Define the Performance Update Process
The performance update process is simply the project manager updating actual project
data as the project is executed. The update process is defined by the project manager
informing the project team on who needs to report, what information is needed in each
report, and when each report needs to be submitted. The following guidelines will help
the project manager keep the schedule updated and accurate.
WHO REPORTS? All team members and suppliers assigned to tasks that were sched-
uled during the past reporting period need to report. Also, any resource wanting to
change the estimate of a soon-to-be-starting task needs to report the new estimate.
WHAT IS REPORTED? Actual Start, Actual Finish, Actual Duration Complete, and
Estimated Remaining Duration are reported. The sooner the project manager learns of
variances from estimates, the sooner he or she can take corrective action, making Esti-
mated Remaining Duration and Actual Finish among the most important values to
update accurately.
WHEN TO REPORT? The project manager determines what day of the week resources
will report performance (“Status Date” or “As of Date”), as well as the frequency. The
Status Date is usually driven by the date of stakeholder review meetings and the time
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needed to make adjustments before that meeting. The project manager wants to walk
into that meeting with the most accurate and up-to-date status information as possible.
14-5e Steps to Update the Project Schedule
The process of updating the project schedule in MS Project includes six steps as described
below. Please note: for the purposes of this chapter’s tutorial, a simplified version of the
running Suburban Park Homes example has been used.
STEP 1: ACQUIRE THE PERFORMANCE DATA Performance data is duration-based
data. From each resource assignment, collect the date when the task started, how much
duration has been completed, how much duration remains, and the actual finish date
(if the task has been finished).
STEP 2: SET THE STATUS DATE (AS OF) The Status Date, or “as of” date, is the
date the project manager sets for the team to report on the progress of the project. To
be useful, the Status Date must be updated every time the project manager requires per-
formance data reported.
1. Click the Project Tab>>Properties Group>>Project Information
2. Click the “Status date” drop-down
3. Set status date to 12/7/17 (as shown in Exhibit 14.19)
4. Click OK
STEP 3: DISPLAY THE STATUS DATE LINE ON THE GANTT CHART Displaying a
Status Date line on the Gantt chart provides a visual cue as to how much of the work has
been completed for each task (once the update data is entered).
1. Click the Task Tab>>View Group>>Gantt Chart
2. Right-click on the right pane>>select Gridlines
EXHIBIT 14.19
DISPLAY STATUS DATE LINE
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
482 Part 4 Performing Projects
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3. In the “Line to change list”, select Status Date (as shown in Exhibit 14.20)
4. In the “Normal” box, choose dashed dotted line; choose Green for the color
5. Click OK
STEP 4: ENTER THE DURATION-BASED PERFORMANCE DATA Exhibit 14.21
shows a simplified Suburban Park Homes project schedule in the Gantt Chart View
with resource assigned tasks A–F (Task IDs two through seven) and beginning and end
milestones (Task IDs one and eight). To the right of the Task Name column, a user-
defined text column has been inserted (Right click>>Insert Column>>type a heading
name) to record the performance report from the assigned resource(s). The Status Date
is end of day on Thursday December 7, 2017 (denoted by the vertical dashed line in the
right side pane of the Gantt view). Resources have been assigned to each task and are
denoted by the resource name in the right-side pane. Updating reported performance
data for each task is demonstrated in the next steps.
EXHIBIT 14.20
SET THE STATUS DATE (AS OF)
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 14.21
SCHEDULE BEFORE ANY ACTUALS ARE APPLIED
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
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Anniston reports Task A’s performance was as scheduled through the end of day on
Thursday (remember that Thursday, December 7 is the Status Date).
1. Click Task A in the Gantt chart
2. Click the Task Tab>>Schedule Group>>click Mark on Track
3. Notice a dark progress bar line appears in the Gantt bar through the end of day on
Thursday (the Status Date)
Bruce reports Task B’s performance as scheduled, but the estimated remaining dura-
tion is two days instead of one.
1. Click Task B
2. Click the Task Tab>>Schedule Group>>click the Mark on Track drop-down>>click
Update Tasks
3. In the Update Tasks dialog:
a. Actual dur: enter 4d
b. Remaining dur: enter 2d as shown in Exhibit 14.22.
4. Click OK
5. Notice Task B’s duration has updated to six days and extends through the end of day
Monday, as shown in Exhibit 14.23
Jack reports that Task C finished two days early.
1. Click Task C
2. Click the Task Tab>>Schedule Group>>click the Mark on Track drop-down>>click
Update Tasks
3. In the Update Tasks dialog:
a. Actual dur: enter 3d
b. Remaining dur: enter 0d
4. Click OK
5. Notice in Exhibit 14.24 that Task C’s duration is now three days and the activity is
marked complete (as denoted by a checkmark in the Indicators column)
EXHIBIT 14.22
UPDATE TASKS DIALOG BOX
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
484 Part 4 Performing Projects
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Judah reports that no work was done for two of the five days on Task D.
1. Click Task D
2. Click the Task Tab>>Schedule Group>>click the Mark on Track drop-down>>click
Update Tasks
3. In the Update Tasks dialog:
a. Actual dur: enter 2d
b. Remaining dur: enter 3d
4. Click OK
5. Notice Task D’s dark progress bar indicates there is still work scheduled for Wednes-
day and Thursday
Brady reports that Task E started one day late.
1. Click Task E
2. Click the Task Tab>>Schedule Group>>click the Mark on Track drop-down>>click
Update Tasks
EXHIBIT 14.24
GANTT CHART VIEW WITH ACTUALS APPLIED TO ACTIVITIES A THROUGH E
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
EXHIBIT 14.23
GANTT CHART VIEW WITH ACTIVITIES A AND B UPDATED
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
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3. In the Update Tasks dialog:
a. Actual Start: enter 12/5/17
b. Actual dur: enter 3d
c. Remaining dur: enter 0d
4. Click OK
5. Notice that Task E is marked complete
Oliver and Liam report that no work was done on Task F. This update will be
addressed in the next step.
STEP 5: RESCHEDULE REMAINING WORK Both tasks D and F still have work
scheduled for dates prior to the Status date. This work must be moved to start no earlier
than the day following the Status Date.
1. Click Task D
2. Click the Project Tab>>Status Group>>click Update Project
3. In the Update Project dialog, click “Reschedule uncompleted work to start after:
4. Enter the Status Date if not already entered as shown in Exhibit 14.25
5. Click on Selected tasks
6. Click OK
7. Repeat these steps for Task F
As seen in Exhibit 14.26, Task D is now split with the completed work showing on Mon-
day and Tuesday, and the remaining work rescheduled to resume on Friday. If a more likely
date to resume work is not Friday, the Gantt bar can be dragged to the likely date.
Task F is also scheduled to resume on Friday. When all of a task is rescheduled, a
“start-no-earlier” constraint is automatically applied. That constraint can be modified to
select a more likely resume date. Ignoring unfinished work that is scheduled earlier than
the Status Date is a risky practice.
STEP 6: REVISE FUTURE ESTIMATES The most accurate estimates are made just
before a task gets started. Therefore, at any status meeting, it’s a good practice to ask
project team members if they believe the estimates for any of their upcoming tasks need
updating.
EXHIBIT 14.25
RESCHEDULING WORK ON A GANTT CHART
Source: Microsoft product screenshots reprinted with permission from Microsoft Corporation.
486 Part 4 Performing Projects
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AGILE
14-6 Replanning If Necessary
Sometimes it becomes necessary to replan a project. The project manager can use the
integrated change control system to understand the impact the proposed changes may
have and to secure approval to make the change. The changes are then reflected in a
revised plan. The schedule, cost, and resource changes can be shown on an updated MS
Project schedule. Other changes can be reflected in risk register updates or issues log
updates. Two questions still exist regarding replanning: “What kinds of changes might
be made in response to the problems?” and “Does the approval for a change need to be
escalated to higher management?”
Changes a project manager may need to recommend include reassigning activities to
different workers, splitting activities so at least some work can get started, reordering
activities so they may be accomplished sooner, borrowing or acquiring additional
resources, reducing scope, and so on. Many of these types of change can help a project
get back on track; however, make sure the appropriate stakeholders agree with the
changes because many times, a change that improves one aspect of a project degrades
another.
Consider that people at each level in an organization have the ability to make specific
decisions and are generally allowed a certain amount of time to deal with a problem
before notifying a superior. Whoever makes the decision is still expected to document it
appropriately. If a very minor problem occurs on a project, perhaps a team member can
make the decision regarding how to handle it. A bit larger problem may fall in the
domain of the project manager. Large decisions may go to the sponsor, and really critical
decisions may be sent to the leadership of the parent organization. Escalation answers
the question of what kinds of decisions are submitted to a higher level and how much
time the lower-level person gets before raising the problem. A person who escalates
minor decisions, or even major decisions very quickly, gives the impression of being
weak and indecisive. However, a person who does not escalate important decisions or
who takes so long to escalate them that the problem has worsened, exhibits poor
judgment.
Replanning is conducted for each release and each iteration in agile. Within an iteration,
once the replanning is complete, very little additional change is allowed.
EXHIBIT 14.26
GANTT CHART WITH COMPLETED WORK RESCHEDULED
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PMP/CAPM Study Ideas
You can expect to see several questions using Earned Value Management (EVM) on
either the CAPM or PMP, and you will not be provided with the formulas. We rec-
ommend that you memorize all of the following formulas and write them down on the
blank paper you are provided as soon as you enter the testing room so you can refer
to them throughout the test:
CV cost variance EV AC
SV schedule variance EV PV
CPI cost performance index EV AC
SPI schedule performance index EV PV
ETC estimate to complete BAC EV CPI BAC EV
EAC estimate at completion AC ETC
TCPI To complete performance index BAC EV BAC AC
You will need to apply these formulas for the test, so refer back to section 14-4c of
this book to review abbreviations, when to use each formula, and how to interpret the
results. In addition to EVM, you can expect at least a few questions pertaining to the
Integrated Change Control process. Remember that once the project management plan
is approved and you have a baseline, any proposed change to schedule, budget, or
scope needs to go through the change control process.
Summary
For a project manager to effectively determine that
the desired project progress is being made and results
are being delivered, a multitude of things need to
be monitored and controlled. Many of these are inter-
dependent, so a project manager needs to under-
stand how changes in one area might impact another
area.
Project managers need to monitor and control the
actual work of the project or the activities. This entails
observing the work as it is executed and making adjust-
ments as needed. Any adjustments that may have a
sizable impact must be processed through the project’s
integrated change control process. Each potential
change is proposed, approved or disapproved, and
documented, and the approved changes are implemen-
ted. A risk register is maintained to keep track of active
risks, whether the risk events transpire, and how they
are handled. New risks are added as they are discov-
ered, and no-longer-relevant risks are retired.
Project managers also need to control the various
aspects of the project that are subject to potential
trade-offs—namely, scope, quality, cost, and schedule.
When controlling these, the project manager looks for
variances—that is, any difference between what was
planned and what has actually happened. The project
manager also seeks to understand how a change in any
one area will impact the others. Several tools exist for
helping project managers with this control. Many quality
tools are widely used when seeking to understand what
the quality level is, where problems may exist, what the
root causes are for problems, and how to improve the
project processes so the problems do not reoccur. Spon-
sors and other stakeholders want to understand progress
made on the project, current plans, and what might derail
the project. Regular progress meetings and reports serve
this purpose. Earned value management and MS Project
are both quite helpful in understanding, documenting,
and improving upon cost and schedule progress.
Key Terms Consistent with PMI Standards and Guides
direct and manage project work, 459
monitor and control project work, 460
monitor, 460
control, 460
488 Part 4 Performing Projects
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variance, 460
perform integrated change control, 463
change control, 463
change control board, 463
monitor risk, 463
implement risk responses, 464
manage communications, 465
work performance data, 465
work performance information, 465
work performance reports, 465
monitor communications, 467
manage quality, 469
control quality, 469
control scope, 475
scope change, 475
variance analysis, 475
control resources, 476
earned value management, 476
planned value (PV), 477
earned value (EV), 478
actual cost (AC), 478
budget at completion (BAC), 478
schedule variance (SV), 478
cost variance (CV), 478
schedule performance index (SPI), 479
cost performance index (CPI), 479
estimate to complete (ETC), 479
estimate at completion (EAC), 479
to-complete performance index, 480
Chapter Review Questions
1. What five aspects of project success are evaluated
in the balanced scorecard approach?
2. Give three categories of internal project issues
and an example of each.
3. In addition to the WBS, what might trigger proj-
ect work to be authorized and performed?
4. What is an advantage of letting workers self-
control their work?
5. What are two types of control frequently used on
projects?
6. What members of the project team should serve
on the change control board?
7. What is the difference between work perfor-
mance data and work performance information?
8. Which time periods are discussed in Agile project
progress meetings?
9. What three sets of data should a project manager
have after completing a project audit?
10. Give some examples of times in the project
lifecycle when an inspection might be especially
useful.
11. Why is prevention preferable to inspection?
12. What is the difference between an attribute and a
variable?
13. The highest bar on a Pareto chart often becomes
the “head of the fish” in the .
14. What three types of variation should one look for
in a Run Chart?
15. How does one calculate schedule variance?
16. What does cost performance index (CPI)
measure?
17. What should your initial response be if a cus-
tomer asks for a change to your project?
18. What is the main purpose of monitoring and
controlling a project?
19. Describe the purpose of using an integrated
change control system.
20. Describe the three time horizons for project per-
formance reporting, what should be reported in
each, and why.
Discussion Questions
1. Describe how a project manager can determine
project progress for each element in the project
balanced scorecard.
2. In your opinion, under what conditions should
the sponsor approve a project change, and when
is it okay for the project manager to authorize a
change? Give an example of each.
3. Give specific examples of risks on a project that
are within the team’s control, partially within the
team’s control, and outside the team’s control.
Tell how you would deal with each.
4. As project manager, what would be your reac-
tion to learning that, as of the last audit, your
project’s SPI was and your CPI was Why?
Chapter 14 Determining Project Progress and Results 489
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5. What is the difference between efficiency and
effectiveness? Give an example of something
that is one but not the other.
6. In your own words, what is the difference
between Manage Quality and Control Quality
on a project?
7. List and give an example of when to use each of
the seven project quality control tools described
in this chapter.
8. Give an example of a common cause and a special
cause, and describe how you would address each.
9. If you were sponsoring a project, would you want
to be updated in terms of cost and schedule vari-
ance or cost and schedule performance indexes?
Why?
10. When it comes to monitoring progress, which
parts of Microsoft Project schedule do you find
most useful? Why?
PMBOK ® Guide Questions
1. In regard to Project Work, which activity refers
to “reviewing the progress and capturing project
performance data with reference to the project
plan, developing performance measures, and
communicating performance information?”
a. controlling
b. monitoring
c. executing
d. managing
2. Juan is a project manager for a project that has
been baselined and is now under way. When a cus-
tomer approaches Juan and asks him to increase
the project’s scope, Juan’s response should be
to .
a. comply with the customer’s request if it seems
reasonable
b. determine the schedule performance index
(SPI)
c. perform integrated change control
d. calculate the Estimate to Complete (ETC)
3. Which of the following formulas represents the
schedule performance index (SPI)?
a. EV/PV
b. EV PV
c. EV AC
d. EV/AC
4. If your sponsor asks for an estimate as to how
much more money your team needs to complete
all project work as scheduled, which of the fol-
lowing formulas might you use?
a. BAC EAC
b. EV/PV
c. (BAC EV)/CPI
d. (BAC EV)/(EAC AC)
5. What is the final step in the Perform Integrated
Change Control process?
a. Review Change Proposals
b. Manage changes to deliverables and Project
Management Plan
c. Estimate impact of proposed changes on
project goals
d. Approve or Decline change requests
6. Which quality control tool is a special type of
vertical bar chart that is used to identify the pri-
mary (vital few) sources that are responsible for
causing most of a problem’s effects, often
referred to as the 80/20 rule?
a. Ishikawa diagram
b. Pareto diagram
c. Control chart
d. Force field analysis
7. Which quality control tool is sometimes referred
to as a “fishbone diagram” because it places a
problem statement at the head of the fishbone
and uses each “big bone” in the fish’s skeleton
as a category of probable cause, in order to deter-
mine the root cause of the problem?
a. Ishikawa diagram
b. Pareto diagram
c. Control chart
d. Force field analysis
8. Good project management practice suggests a
need to include a within the cost
baseline in order to cover identified risks that
are accepted, and for which responses have been
developed.
a. contingency reserve
b. project buffer
c. control account
d. management reserve
9. The “methodology that combines scope, sched-
ule, and resource measurements to assess project
performance and progress” is called .
a. cost management (CM)
490 Part 4 Performing Projects
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b. funding limit reconciliation
c. triple constraint management
d. earned value management (EVM)
10. The “ToComplete Performance Index” (TCPI)
is a measure of the cost performance required
in order to finish the outstanding work within
the remaining budget. The formula for this index
is .
a. BAC EAC
b. AC BAC EV
c. EV/AC
d. (BAC EV)/(BAC AC)
Exercises
1. Use the following information to answer parts a
through h. Describe what the results of each cal-
culation mean to you as a project manager. What
do you propose to do?
PV $500,000
EV $350,000
AC $550,000
BAC $1,200,000
a. Schedule variance (SV)
b. Cost variance (CV)
c. Schedule performance index (SPI)
d. Cost performance index (CPI)
e. Estimate to complete (ETC—first method)
f. Estimate to complete (ETC—second method)
g. Estimate at completion (EAC)
h. To-complete performance index (TCPI)
2. Use the following information to answer parts a
through h. Describe what the results of each cal-
culation mean to you as a project manager. What
do you propose to do?
PV $25,000
EV $30,000
AC $29,000
BAC $1,000,000
a. Schedule variance (SV)
b. Cost variance (CV)
c. Schedule performance index (SPI)
d. Cost performance index (CPI)
e. Estimate to complete (ETC—first method)
f. Estimate to complete (ETC—second method)
g. Estimate at completion (EAC)
h. To-complete performance index (TCPI)
3. A project manager has just learned that the
schedule performance index (SPI) for his project
is 85 percent. The calculation of the cost perfor-
mance index (CPI) is 107 percent. How would
you describe this project both in terms of budget
and schedule?
4. Document the flow of a project work process. Be
sure to identify the starting and ending points.
5. Create a check sheet to gather data regarding a
step in the process flow chart you constructed in
Exercise 4 above.
6. For a cost savings project, you have captured data
that show the following costs: delays between
operations = $900; broken/missing tools =
$1,200; water losses = $3,700; poor seals =
$1,500; other = $2,000. Construct a Pareto chart.
What would your next course of action be?
7. For a productivity improvement project, you dis-
cover the most frequent cause of delays in receiv-
ing payment is incorrect invoices. Construct a
fishbone diagram to identify possible reasons
for this problem. What action do you recom-
mend with the results of your fishbone
diagram?
8. Using the data below, construct a run chart to
visualize how the number of customer com-
plaints is changing over time. Describe what
you find in terms of trends, repeating patterns,
and/or outliers.
Date Day Complaints
1 Mon 14
2 Tue 17
3 Wed 11
4 Thu 12
5 Fri 21
8 Mon 15
9 Tue 21
10 Wed 19
11 Thu 22
12 Fri 23
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Date Day Complaints
15 Mon 27
16 Tue 11
17 Wed 29
18 Thu 31
19 Fri 35
9. Using the data below, construct a schedule in MS
Project. Show where the project is ahead and/or
behind schedule. Be specific. Which activities did
the best? Which had the most problems?
Planned
Start
Planned
Finish
Actual
Start
Actual
Finish
8/31 9/5 8/31 9/5
8/25 9/8 8/25 9/8
9/5 9/8 9/5 9/8
8/25 9/2 8/26 9/3
8/26 8/27 8/28 8/29
8/25 9/8 8/28 9/8
8/25 9/6 8/29 9/6
8/25 9/1 8/29 9/6
9/1 9/2 9/5 9/11
9/1 9/6 9/5 9/11
9/1 9/8 9/6 9/14
Planned
Start
Planned
Finish
Actual
Start
Actual
Finish
9/8 9/15 9/13 9/22
8/25 10/26 8/31 10/31
8/25 9/16 8/31 9/23
9/16 9/29 9/23 10/9
9/16 9/19 9/23 9/25
9/20 9/28 9/30 10/6
9/20 9/21 9/30 10/21
9/22 9/28 10/3 10/28
9/16 9/27 9/26 10/27
9/16 9/20 9/27 10/10
9/21 9/26 10/6 10/16
9/28 10/6 10/15 11/6
9/28 10/5 10/22 11/5
10/7 10/10 11/7 11/20
10. Find a company (or other organization) that has
a reputation for excellence in some aspect of
project work. Benchmark their methods and
determine how you can use the results to help
your team improve.
11. Create a process improvement plan using the
DMAIC model in Exhibit 4.9 to improve a proj-
ect work process either for your own project or
for another one.
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
The project monitoring and controlling phase is where most
of the resources are employed for project execution, and it
is essential that the project execution happen strictly
according to the project plan. Projects often experience
changes during the execution because everything cannot
be anticipated. However, Suburban Homes has an excellent
track record of completing projects on time and within the
budget and delivering its products to the customer s
satisfaction.
With its plans to expand operations to other states, Sub-
urban Homes is acutely aware of its inadequacies in new
working environments and with new stakeholders. Specifi-
cally, it is more concerned with risk management, change
management, quality expectations, and communication
issues.
Suburban Homes has requested to review and modify its
existing project management practices and processes. They
want to use your comprehensive understanding of the
492 Part 4 Performing Projects
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Semester Project Instructions
For your semester project, complete the following at a
minimum:
1. Document the change requests and their disposition (if
you have had any changes proposed to your project).
2. Identify any changes to your risk register with new
risks added and/or old ones removed.
3. Show any quality tools you have used and explain
how you interpret and act upon the results from
them.
4. Show your progress updates on MS Project.
5. If you are tracking cost on your project, show the
most current status of the 10 earned value manage-
ment terms.
6. Create one key deliverable for your project. This should
be one deliverable that your sponsor asked your team
to create when you wrote the charter. Gather informa-
tion regarding your process of creating the deliverable.
7. Describe trade-off issues on your project. These can
include trade-offs between the needs of your spon-
sor’s organization, the project, and your project
importance of project baselines for scope, cost, and sched-
ule. They also want to use your knowledge of project control,
progress reports including earned value analysis the
importance of communications, and change control. Specifi-
cally, you are requested to develop templates and checklists
to do the following:
Develop a communication (formal and informal) plan with
details about frequency, intended receivers, and medium
of communication
Review and modify the change management plan
Monitor risks and develop a risk response plan
Revise the quality assurance plan and incorporate new
quality control tools and techniques
CASA DE PAZ DEVELOPMENT PROJECT
As with many development projects managed in a largely agile
fashion, Casa de Paz has proceeded in unexpected ways. The
board voted to negotiate a one-year lease on the target building
without a commitment to do substantial work on it. The negoti-
ated agreement included an option to extend the lease for up to
five years with a negotiated agreement on the amount of
money spent on upgrades that Casa de Paz would pay and
what the owner would pay. This allows for the further develop-
ment of the community for the target population that Casa de
Paz will ultimately serve, without sinking large amounts of cash
into a building that may not be suitable. It means that Casa de
Paz will continue with most other aspects of the project, includ-
ing developments such as the following:
Programs
Strategic partnerships
Community building
Website
Fundraising
Volunteers
This approach lessens risk because large commitments
are not being made until more people are engaged and
more is understood. It also allows for further board and
working group development so the people side of the infra-
structure will be able to communicate effectively and handle
the increased demands when the building opens. It also
recognizes that the primary goal is to help abused Latina
women and their children develop self-sufficiency. Meetings
and outreach can serve many more families than the few
who can be served more intensively through the residency
program.
Chapter 14 Determining Project Progress and Results 493
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team. The trade-offs can also be within the project
objectives and constraints of scope, quality, time,
cost, other resources, and stakeholder satisfaction.
8. Show the information you have collected using the
information retrieval and distribution system you
set up (introduced in Chapter 6).
PROJECT M ANAGEM ENT IN ACTION
Controlling, Monitoring, and Reporting
Projects at a Major Medical Center
The Emergency Medicine Division of Cincinnati
Children s Hospital Medical Center typically has a
large number of active quality improvement pro-
jects that require effective control, monitoring,
and reporting. Division leadership aims for three
levels of effective monitoring and control and
reporting:
1. Team-level monitoring: Self-monitoring progress
against process and outcome measures at daily,
weekly, or monthly intervals.
2. Division-level monitoring: Main outcome and select
process measures reported to division leaders who
can then guide and support teams as needed.
3. Institutional-level monitoring: Main outcome mea-
sure progress followed and presented along with
other projects to institutional leadership and other
stakeholder groups.
An essential part of effective monitoring is the
development of a well-defined aim. Each aim is
associated with a primary outcome measure and is
supported by process measures. For the division s
strategic flow project, the primary aim was a reduc-
tion in the length of stay for patients and was sup-
ported by process measures representing specific
intervals of this time, such as time from arrival in the
department to being seen by a physician and time
from being able to leave the department to actually
leaving.
Team-Level Monitoring
Team-level monitoring functions in slightly different
ways from those of the other two levels. On the
ground, the feedback loop for evaluating tests needs
to be nimble and timely. Rather than using a single
outcome measure to gauge progress, teams utilize a
number of process measures, the collection of which
typically represents the main identified outcome
measure of a given project. Process measures are
tracked frequently as the teams conduct tests within
the system and during the course of a project are
often displayed in daily, weekly, and monthly for-
mats. Ad hoc analysis supplements these measures,
particularly for tests that are run for discrete periods
of time.
At this level, changes are tested for short periods of
time. Individual tests are evaluated using process
measures; often, the daily variants of the measure or
ad hoc analysis are employed, particularly in the first
three to six months of a project or during intensive
periods of testing. Teams meet weekly and discuss
tests, adapting, adopting, or abandoning tests as they
are evaluated. Weekly charts are used to minimize the
noise of day-to-day variance, and teams monitor these
over time. Monthly charts are used to view larger
trends over time and are more important in months
six through twelve as changes are implemented and
systems experience this change for longer periods of
time. An example measure used by a team is shown
in Exhibit 14.27.
Division-Level Monitoring
Individual teams organize work into 90-day blocks
for planning, execution, and reporting purposes.
Teams formally report after each 90-day cycle to a
group of senior leaders using a preestablished
reporting template. Team presentations typically last
20 minutes and include data reporting in the form of
annotated run charts for all key performance mea-
sures. Teams share special challenges and seek
guidance on issues blocking progress. Teams also
share goals, work plans, and predictions of key
494 Part 4 Performing Projects
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measure progress for the next 90-day cycle. A
formal leadership letter follows each team presenta-
tion summarizing key discussion points and action
items.
High-Level Reporting Structure and
Management (Macro)
At the highest level, individual team progress is dis-
played on a department-wide dashboard. Aggregating
each individual measure across all projects, this
dashboard is designed to provide visibility to depart-
ment leads, institutional stakeholders, and hospital
leadership on the progress of projects. Historical data
for measures, along with current performance, yearly
goals, and immediate past quarterly performance, are
indicated. High-level trend lines are provided, and
links to individual charts are embedded within the
dashboard itself. A dashboard example is shown in
Exhibit 14.28.
The intent of this dashboard is to provide hospital
leadership with a high-level view of recent progress
on individual projects. Reporting at this level occurs
monthly to department leadership and three times
a year to institutional leadership. Feedback from
these groups is given to teams depending on
progress.
EXHIBIT 14.27
EXAMPLE MEASURE USED BY TEAMS FOR ONGOING MONITORING
3.5
3.0
2.5
2.0
Week Ending
A
ve
ra
g
e
L
O
S
in
H
o
u
rs
Primary Aim 2: Fast Track Average Length of Stay
1.5
1.0
Baseline
Period Near Final
Design
0.5
0.0
Average LOS in Hours Center Line-Median
Degradation
Final Design
11
/1
4/
09
n
=
18
1
11
/2
8/
09
n
=
39
5
12
/1
2/
09
n
=
40
6
12
/2
6/
09
n
=
36
5
1/
9/
10
n
=
38
5
1/
23
/1
0
n=
50
2
2/
6/
10
n
=
46
3
2/
20
/1
0
n=
39
6
3/
6/
10
n
=
45
5
3/
20
/1
0
n=
46
8
4/
3/
10
n
=
43
3
4/
17
/1
0
n=
55
7
5/
1/
10
n
=
48
3
5/
15
/
10
n
=
47
6
5/
29
/
10
n
=
49
1
6/
12
/
10
n
=
44
2
6/
26
/
10
n
=
46
9
7/
10
/1
0
n=
43
0
7/
24
/1
0
n=
39
5
8/
7/
10
n
=
36
6
8/
21
/1
0
n=
38
4
9/
4/
10
n
=
49
2
9/
18
/1
0
n=
50
9
10
/2
/1
0
n=
40
8
10
/1
6/
10
n
=
44
2
10
/3
0/
10
n
=
40
0
11
/1
3/
10
n
=
45
2
11
/2
7/
10
n
=
37
4
12
/1
1/
10
n
=
41
0
12
/2
5/
10
n
=
32
3
1/
22
/1
1
n=
58
9
2/
5/
11
n
=
68
8
2/
19
/1
1
n=
74
7
3/
19
/1
1
n=
65
9
4/
2/
11
n
=
51
1
4/
16
/1
1
n=
53
6
4/
30
/1
1
n=
52
9
5/
14
/1
1
n=
49
9
5/
28
/1
1
n=
52
8
6/
11
/1
1
n=
47
7
6/
25
/1
1
n=
49
8
7/
9/
11
n
=
47
9
7/
23
/1
1
n=
46
0
8/
6/
11
n
=
49
0
8/
20
/1
1
n=
50
9
9/
3/
11
n
=
57
7
9/
17
/1
1
n=
56
6
10
/1
/1
1
n=
55
1
11
/1
2/
11
n
=
50
3
10
/2
9/
11
n
=
52
3
10
/1
5/
11
n
=
56
1
3/
5/
11
n
=
63
6
1/
8/
11
n
=
45
9
Prototype
Test
Source: James M. Anderson Center for Health System Excellence.
Chapter 14 Determining Project Progress and Results 495
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. (Newtown Square, PA:
Project Management Institute, 2017).
Anbari, Frank T., Earned Value Project Management
Methods and Extensions, Project Management
Journal 34 (4) (December 2003): 12–23.
Cerpa, Narciso, and June M. Verner, Why Did Your
Project Fail? Communications of the ACM 52 (12)
(December 2009): 130–134.
Devine, Kevin, Timothy J. Kloppenborg, and Priscilla
O’Clock, Project Measurement and Success: A Bal-
anced Scorecard Approach, Journal of Health Care
Finance 36 (4) (2010): 38–50.
Evans, James R., and William M. Lindsay, The Man-
agement and Control of Quality and Performance,
10th ed. (Mason, OH: South-Western Cengage
Learning, 2015).
Howard, Dale, and Gary Chefetz, What s New Study
Guide Microsoft Project 2010 (New York: Chefetz
LLC dba MSProjectExperts, 2010).
Kloppenborg, Timothy J., Arthur Shriberg, and
Jayashree Venkatraman, Project Leadership (Vienna,
VA: Management Concepts, Inc., 2003).
Kloppenborg, Timothy J., and Joseph A. Petrick,
Managing Project Quality (Vienna, VA: Manage-
ment Concepts, Inc., 2002).
Meier, Steven R., Causal Inference of the Cost Overruns
and Schedule Delays of Large-Scale U.S. Federal
Defense and Intelligence Acquisition Programs, Proj-
ect Management Journal 41 (1) (March 2010): 28–39.
Norie, James, and Derek H. T. Walker, A Balanced
Score-card Approach to Project Management Lead-
ership, Project Management Journal 35 (4)
(December 2004): 47–56.
Office of the Assistant Secretary of Defense for Acqui-
sition, http://www.acq.osd.mil/evm/, accessed April
28, 2017.
PM Study Circle: A PMP Exam Preparation Blog,
https://pmstudycircle.com/2012/05/planned-value-
pv-earned-value-ev-actual-cost-ac-analysis-in-proj-
ect-cost-management-2/, accessed April 28, 2017.
Paquette, Paul, and Milan Frankl, Agile Project Man-
agement for Business Transformation Success (New
York: Business Expert Press, 2016).
Rozenes, Shai, Gad Vitner, and Stuart Spraggett, Proj-
ect Control: Literature Review, Project Management
Journal 37 (4) (September 2006): 5–14.
Sharma, V. K., Earned Value Management: A Tool for
Project Performance, Advances in Management 6
(5) (May 2003): 37–42.
Stewart, Wendy E., Balanced Scorecard for Projects, Proj-
ect Management Journal 32 (1) (March 2001): 38–53.
Taylor, Hazel, Risk Management and Problem Resolu-
tion Strategies for IT Projects: Prescription and
Practice, Project Management Journal 37 (5)
(December 2006): 49–63.
EXHIBIT 14.28
EXAMPLE OF HIGH-LEVEL DASHBOARD REPORT TEMPLATE
Source: Michael Buncher and Kartik Varadarajan, Cincinnati Children’s Hospital, Division of Emergency Medicine.
496 Part 4 Performing Projects
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Vanderjack, Brian, The Agile Edge: Managing Projects
Effectively Using Agile Scrum (New York: Business
Expert Press, 2015).
Yosua, David, Karen R. J. White, and Lydia Lavigne,
Project Controls: How to Keep a Healthy Pulse on
Your Projects, PMI Global Congress Proceedings
2006, Seattle, WA.
Endnotes
1. Adapted from http://www.merriam-webster.com/
dictionary/determine and http://dictionary.refer-
ence.com/browse/determine?s=t, accessed May 18,
2013.
2. https://www.coursehero.com/file/pp9dfj/Quality-
Control-is-the-ongoing-effort-to-maintain-the-
integrity-of-a-Quality/, accessed May 24, 2017.
3. http://www.acq.osd.mil/evm/, accessed April 28,
2017.
4. https://pmstudycircle.com/2012/05/planned-
value-pv-earned-value-ev-actual-cost-ac-analysis-
in-project-cost-management-2/, accessed April 28,
2017.
Chapter 14 Determining Project Progress and Results 497
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C H A P T E R 15
Finishing the Project and
Realizing the Benefits
After managing a number of projects to successful completion, it wasn t until I
was overseeing a project in Trinidad and Tobago that I fully realized the impor-
tance of the project team celebrating its success.
Trinidad and Tobago is the southernmost Caribbean island, seven miles off the
coast of Venezuela. The client company, Trinmar Limited, was formed as a joint
venture between Texaco and Petrotrin, wholly owned by the government. Tex-
aco had recently sold its equity share in Trinmar, leaving state-owned Petrotrin
to produce 35,000 to 40,000 barrels of oil per day.
Many of the rigs Trinmar inherited were over 25 years old and declining in produc-
tion. In addition to building a new organization and strategy, Trinmar faced the difficult
decision of whether to upgrade the existing rigs or invest in building new rigs.
Our consulting team quickly identified over 80 potential projects. Working
closely with the executive team, we were able to facilitate a portfolio optimiza-
tion process to establish the strategic criteria and help Trinmar evaluate, prioritize,
and make decisions regarding each project. The company invested in only a few
new capital projects, while focusing on monthly well output and proactive pre-
ventative maintenance, resulting in an overall increase in production.
CHAPTER OBJECTIVES
After completing this
chapter, you should
be able to:
CORE OBJECTIVES:
Describe how to
determine when a
project should be
terminated early and
the process for ter-
minating a project in
normal completion
time.
Describe the impor-
tance of the project
closing activities and
how to perform them.
Create and present a
transition plan for the
project, including a
plan for ongoing sup-
port and sharing les-
sons learned.
Capture and share
project lessons
learned.
BEHAVIORAL OBJECTIVES:
Secure customer
feedback and accep-
tance of the project.
Assist senior man-
agement in managing
talent and managing
resources for upcom-
ing projects.
TECHNICAL OBJECTIVES:
Close your projects
administratively using
MS Project.
Li
ly
an
a
Vy
no
gr
ad
ov
a/
Sh
ut
te
rs
to
ck
.c
om
498
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Flying in from Miami to discuss the final steps of the project closing process, I
was greeted at the airport by the company driver offering a gift bag. Inside was a
polo shirt with a company logo and a card.
The day was spent in semiformal meetings with company executives and the port-
folio team. We presented and discussed the culmination of customer reviews that
had been conducted throughout the project customer feedback, areas for improve-
ment, lessons learned, project results, and approval of the final deliverables.
The evening had a much different tone, with live music, local delicacies, and
drinks flowing freely. All company executives and their spouses were joined by
everyone associated with the project. Several team members brought relatives,
including cousins. Partway into the evening, the CEO stood and made an announce-
ment, describing the project success and complimenting our partnership. He person-
ally recognized everyone associated with the project. Each team member received
an award of accomplishment and had their picture taken with the CEO Before he
left, the CEO pulled me aside and said, Mr. Miller, on behalf of our company and
country, we sincerely thank you for hosting us with this generous celebration.
When I arrived back at the hotel early the next morning after settling the evening s
bill, I saw the gift bag and finally opened the card. It read Mr. Bruce Miller cordially
invites you and your guest to join us in a celebration of our project success.
It was only later that I was sheepishly advised by one of my fellow consultants
that he had offered to have our company sponsor the celebration and did not have
the chance to tell me in advance. But the true impact of the celebration reflected
in the sincere joy and pride of the project team members as they received the sin-
cere thanks of their CEO had already proven the value of the event.
Bruce Miller, PMP, managing partner, Xavier
Leadership Center, Xavier University
Projects are often started with great enthusiasm. They serve as vehicles to accomplishimportant organizational objectives. Many things happen during the course of
a project that may impact its success. Regardless of the level of success achieved by the
project, going out on a strong note is good for everyone involved.
When purchasing a new home, buyers and a builder’s representative do a “walk-
through” to inspect the finished product and discuss mechanical functions and features
of the home.
Project completion is either pleasant and predictable or unpleasant and unexpected.
In the first case, the project team successfully meets project goals. In the second case,
reasons could be different: performance is inadequate, the project deliverable may no
longer be needed, or project constraints such as time or cost prevent the team from com-
pleting the project.
5.5 Validate Scope
Customer Feedback
Transition Plan
Closure Documents
Realizing Benefits Stage
Benefits Analysis
4.7 Close Project or Phase
PMBOK® GUIDE
Topics:
Validate scope
Close project or phase
CHAPTER OUTPUTS
Customer feedback
Transition plan
Closure documents
Benefits analysis
499
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A project moves into the closing stage when its customers validate that the scope is
complete and accept the project deliverables. A project can close as planned or be termi-
nated early. In either event, closing activities include securing customer feedback and
approval, planning and conducting a smooth transition of project deliverables to a client
or into ongoing operations, capturing and sharing lessons learned, performing adminis-
trative closure, celebrating success, and providing ongoing support.
15-1 Validate Scope
Validate scope is formally accepting the completed project deliverables. Stakeholders val-
idate that scope is complete with interim deliverables throughout the project and with
final deliverables near the end. When the stakeholders formally accept the final project
deliverables, the project completes the executing stage and proceeds into the closing and
realizing stages. To illustrate, imagine you have contracted with a construction company
to build a new home. Before you close on the house, you want to make sure the house
has been properly finished and a certification of occupancy is obtained. Therefore, the
common practice is to have a “walk-through,” where as a customer you literally walk
through the house with a representative from the building company. The representative
points out features and describes how things work. You try light switches, look at the
finish, and consider all of the things you wanted (and agreed to pay for) in the house.
Often, a few little things are not yet finished, and these can form a “punch list” of
items to complete. The punch list is the list of “work items that are identified during a
final inspection that need to be completed.”
Bl
en
d
Im
ag
es
/S
up
er
st
oc
k
500 Part 4 Performing Projects
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If the punch list is small enough, as a customer you agree to formally take possession of the
house subject to the contractor finishing the punch list items. Once you formally agree the
work is complete and agree to take possession, the house becomes an accepted deliverable.
However, if there are major concerns and/or a long punch list, you may decide not to
formally accept the house until certain things are complete. Most projects are like this:
The customer only formally accepts the deliverables once he or she is convinced they will
work as planned. At that point, the buyer provides the seller with a formal written accep-
tance, and the project transitions from the executing stage to the closing stage.
Project managers need to ensure that all work on their project has been successfully
completed. They can refer to the charter, scope statement, WBS, schedule, and all com-
munications plans to verify that everything they committed to do is actually done. Many
organizations also use project closeout checklists that itemize typical project activities
and/or deliverables. These can be used to assign responsibility to each item concerning
project closeout. An example of a project closeout checklist is shown in Exhibit 15.1.
15-2 Terminate Projects Early
Ideally, all projects continue until successful conclusion, with all deliverables meeting
specifications and pleasing customers. However, this is not always the case. Sometimes,
a project is terminated before its normal completion. Early termination can be the result
of mutual agreement between the contractor and buyer, because one of the parties has
defaulted (for cause), or for convenience of the buyer.
MUTUAL AGREEMENTS On some projects, by closeout, not all of the deliverables
are completed. Remaining deliverables need to be integrated into another project,
stopped altogether, or continued as a lesser project or a further phase of the finishing
project. If both parties agree to stop the project before its planned completion, a nego-
tiated settlement may take place. If some of the deliverables or documentation is not
completed, the project manager may need to negotiate with the customer. Perhaps the
customer would rather have most of the capability now rather than all of it later. The
project team may have made a larger-than-expected breakthrough in one area and can
negotiate with the customer to deliver more in that area and less in another. Ideally, both
parties agree what deliverables or partial deliverables go to the buyer and what compen-
sation goes to the seller, and any outstanding issues are resolved. If agreement cannot be
reached by direct negotiations, either courts or alternative dispute resolution can be used
to reach a settlement. Perhaps it is in all parties’ best interest to finish the project as is
and part as friends.
TERMINATIONS FOR DEFAULT Terminations for default occur for projects executed
externally and often result from a problem with the project’s cost, schedule, or perfor-
mance. A buyer can also decide to terminate a project early because he or she has lost
confidence in the contractor who is performing the project. Good project management
practices consistently applied throughout the project can lessen the chance of early ter-
mination for cause by managing stakeholder expectations and by delivering what custo-
mers want on spec, on time, and on budget.
TERMINATIONS FOR CONVENIENCE OF BUYER Projects can also be cancelled for
the convenience of the buyer. This can happen through no fault of the contractor. Some-
times, the buyer faces unexpected difficulties or changing priorities. If a customer’s needs
change, it might decide that the resources assigned to a project could be more profitably
applied to a different project. If a customer decides to terminate a project for
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convenience, it invokes a contract clause. This clause normally stipulates that the con-
tractor is reimbursed for the money it has spent up to that point and the customer
takes ownership of the deliverables in whatever form they currently exist. Internal pro-
jects can also be terminated if organizational priorities change.
EXHIBIT 15.1
EXAMPLE PROJECT CLOSEOUT CHECKLIST
Closeout Date:
Project Manager:
Sponsor:
Final Certificate of Occupancy
Punch List Complete
Notice of Punch List Completion
Certificate of Substantial Completion
Utilities Transferred to Owner
Notice to Owner on Insurance
Facility Manual
As-Built Drawings
Attach Job Files to Database
Update Projects Database
Final Retainage Billing
Release of Subcontractor Retainage
Complete Subcontractor Evaluations
Team Close-Out Meeting
Send Out Owner Survey
Bond Release
Estimating Feedback Cost Report
Approved for Closeout:
Project Manager Sponsor Vice President–Construction
502 Part 4 Performing Projects
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Project managers can pursue two avenues to possibly head off early termination. First, a
project manager who has been serious about managing stakeholder relationships may be able
to find other stakeholders in the customer organization or elsewhere who can provide some
funds to keep the project viable—even if the scope has to be reduced. Second, the project
manager can look internally to find ways of continuing with the project, but at lower cost.
Project managers serve as the strongest advocates for their projects throughout the
project’s life. Considering that most projects face many challenges, this unwavering sup-
port is often critical to project success. However, when a project is no longer needed or
no longer viable, project managers owe honest and timely communication to their parent
organization. Project managers need to present the facts of project progress and make
recommendations for early termination if they feel it is warranted.
If a decision is made to terminate a project early, the project manager is obligated to
communicate this decision to his or her team quickly and honestly. Let the team know as
soon as possible and tell them exactly why the decision was made. Care must be taken to
ensure that no unjust blame is placed on anyone. It is absolutely unethical to have repu-
tations and careers suffer for a termination in which the impacted party was not at fault.
Once a decision is made and communicated to terminate a project early, much of the
remaining work is similar to that of a project that is completed as planned.
15-3 Close Project
As stated in Chapter 1, closing a project entails finalizing all activities needed to finish
the project. The remainder of this chapter details what a project team does when finish-
ing a project on time. Customers are asked both to accept the project deliverables and to
provide feedback. Lessons learned are captured and shared. Contracts are closed. Partici-
pants are reassigned and rewarded. Reports are created and archived. Success is cele-
brated, and the project team ensures that customers receive the ongoing support they
need to successfully use the project deliverables.
A few key challenges arise at the end of projects. One is to keep the right workers
engaged until project completion. Some of the final activities are administrative. Often,
new projects are starting up that are more exciting and cause distraction.
15-3a Write Transition Plan
A project manager may decide to create a transition plan to help the customer to use
the project deliverables successfully. Project transition plans are a sort of instruction
manual on how the customer should use the project deliverables once the project team
has completed its work.
The reason a project is performed is that some person or organization needs the result-
ing deliverables. Some project deliverables are created by one group and turned over to
another group. Sometimes the group performing the project also uses the results or deli-
verables. In either case, a transition plan can ensure that all responsibilities are considered
and all deliverables—whether complete or not—are handed over with appropriate docu-
mentation to the people who will use them. If any activities remain incomplete when the
deliverables are transitioned, they should be itemized, and responsibility for each should be
clearly identified. For example, if a home buyer wanted to close on a house before every-
thing is complete, a punch list of remaining items would be determined, and the contrac-
tor would agree to complete them. A transition plan helps to ensure the following:
Quality problems are avoided during the transition.
The project deliverables transition into their service or operational role.
The needed maintenance, upgrades, and training take place.
Chapter 15 Finishing the Project and Realizing the Benefits 503
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15-3b Knowledge Management
The fourth area identified in using the balanced scorecard approach to controlling and
improving projects is growth and innovation. While the portion of this pertaining to
team development is covered in Chapter 5, the portion concerning knowledge manage-
ment is covered here. Knowledge management should occur throughout the project life,
but it may become most apparent as a project comes to an end. Project customers,
whether internal or external to a company, can provide valuable feedback concerning
both the project process and results. Ask them what they think! Exhibit 15.2 is a simple
form for asking project customers for their opinions.
CAPTURE LESSONS LEARNED Lessons learned are the useful knowledge gained by
project team members as they perform a project and then reflect on both the process of
EXHIBIT 15.2
PROJECT CUSTOMER FEEDBACK FORM
1. How would you rate the
quality of our deliverables?
2. How well did we control
schedule?
3. How well did we control
budget?
4. How would you rate
stakeholder relationships?
5. How effective were
our communications?
6. Overall, how would you
rate your satisfaction?
7. How can we improve?
1 5
Poor Avg. Excellent
1 5
Poor Avg. Excellent
1 5
Poor Avg. Excellent
1 5
Poor Avg. Excellent
1 5
Poor Avg. Excellent
1 5
Poor Avg. Excellent
Date:Customer:
504 Part 4 Performing Projects
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doing the work and the results that transpired. Lessons can include what worked well
that the project team members think should be copied and/or adapted for use on future
work. Lessons can also include areas for which a different method may yield better
results. Furthermore, information about mistakes and what went wrong should be cap-
tured to avoid repeating them again. The project meeting Plus-Delta evaluation template
shown in Exhibit 6.14 is an example of capturing lessons learned at the end of a project
meeting. Lessons can also be captured at milestones and at the end of a project. On long-
duration projects, it is often better to capture lessons frequently because people may not
remember clearly what happened months previously. Therefore, the best project man-
agers capture lessons learned early and often. A project manager may wish to capture
lessons learned first from the core project team and then from all of the stakeholders.
The first step in capturing end-of-the-project lessons learned is for the project man-
ager to send an e-mail asking the participants to identify major project issues. Then, the
actual meeting begins with each participant writing his or her top issues on a flip chart
or other workspace where everyone can see them. Once all participants have listed their
top issues, the entire group can vote on the top five (or perhaps top ten on a large proj-
ect). Then the project manager can go through one top issue at a time by asking leading
questions to determine what went wrong and how it might be avoided in future projects.
Likewise, the participants can list significant successes on the project and discuss fac-
tors that contributed to each. They can then ask what practices can be used to re-create
similar successes on future projects.
Some organizations use a standard form for capturing project lessons learned, such as
the one shown in Exhibit 15.3.
DISSEMINATE AND USE LESSONS LEARNED The process of capturing and discuss-
ing lessons learned is valuable learning for the participants. However, for the remainder of
the organization to capitalize on those lessons, a method must be established for document-
ing and sharing the lessons. More organizations effectively collect lessons learned than effec-
tively disseminate and use them. One problem is deciding how to store the lessons so all
workers in a company can easily access them. Some companies have created databases,
shared folders, or wikis for this purpose. Many companies that do a good job with lessons
learned have one person assigned to “own” and be responsible for designing and maintaining
the lessons-learned database. Every project team that collects lessons then sends the new les-
sons to this “owner,” who compares the new lessons with existing lessons and decides
whether to modify, combine, or add the lessons and to possibly remove an old lesson. Thus,
the database only grows when unique and useful new lessons are added. Another idea some
companies use is to have the person who submitted each lesson list her cell phone number
and e-mail so another person considering the lesson can contact her to ask questions. This is
especially helpful because it is hard to document all tacit knowledge, and even if a person did
so, the lessons would be so long, many people would not take the time to read them.
Coding each lesson by factors such as the type of project, stage in project life cycle or
project phase, issue it concerns, and project knowledge area helps future project teams
when they search for new lessons to apply. Many organizations find that it is helpful to
have a limited number of categories and have each lesson stored according to the cate-
gory in which it is best suited. The ten PMBOK® Guide knowledge areas can be a useful
starting point when determining useful categories. Exhibit 15.4 shows thirteen categories
used by a company along with two or three lessons in each category.
Another problem is that most people are busy and do not seek lessons learned just for
fun. One way to overcome this is for sponsors to sign charters only if lessons from other
recently completed projects are included. That forces project teams to consider what les-
sons they can use.
Chapter 15 Finishing the Project and Realizing the Benefits 505
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Another effective way to transfer lessons is to assign roles to people. One person in
the organization can serve as process owner with responsibility to continue to improve
that particular work process regardless of what project it is performed on. Also, every
project team member can have an additional role as improvement team member.
One of the challenges in using lessons-learned information is that most people are busy.
One way to overcome this issue is for sponsors to sign the project charter only if lessons
EXHIBIT 15.3
LESSONS-LEARNED PROJECT CLOSING DOCUMENT
Project Number:
Closing Date:
As your project comes to a close, please capture continuous improvements, lessons learned and issues to
consider for future projects. Please focus on the positive aspects that would help other teams in the future
and you would like to see done again (+) and on things that could be changed/improved upon in the future
( ∆) . These learnings will be entered into a database for future reference to help all associates.
+ ∆
Outcome
• Future state achieved?
• Success measure
(attach graph/data)
Schedule
• Milestones
• Completion
Cost (Cap Ex)
Hours required:
• Project Manager
• Sponsor
• Core team members
• SMEs
+ ∆
+ ∆
Source: Elaine Gravatte, D. D. Williamson.
506 Part 4 Performing Projects
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EXHIBIT 15.4
LESSONS-LEARNED EXAMPLE
ACCOUNTABILITY: Use formal accountability and measurement systems down to the individual performance level.
Ensure all team members have clearly defined roles and responsibilities.
BUY-IN AND
COMMITMENT:
It is helpful when directors attend project meetings.
Be sure sponsor secures buy-in from other executives.
Involve people with decision-making authority early in the project.
COMMUNICATION: Develop and follow a communications management plan to develop trust.
Communication about change needs to be ongoing.
Communication needs to be early and ongoing with all key audiences and stakeholders.
COMPLEXITY: Many projects are multifaceted and involve numerous trade-offs that need to be managed.
Project manager should attend some client meetings and sponsor should attend some team
meetings to ensure integration.
CULTURE AND CHANGE: Lean concepts challenge the organization’s culture for data collection and transparency.
Commitment to transparency and change is needed prior to project initiation.
Educating leaders in change management strategies helps them deal with resistance.
EXPECTATIONS: Set and state clear expectations.
Define and stay within scope.
Manage expectations of sponsor, stakeholders, customers, and project team.
MEETINGS: Team members will be prepared with previous meeting minutes, agenda, and project updates.
End a meeting with clear action items and due dates for each team member.
Plan meetings in advance to make them more efficient.
PLANNING: Have well-defined roles and responsibilities.
Scale planning at the appropriate level of detail.
Expect many revisions.
PROCESS
IMPROVEMENT:
Always discuss what we could have done better.
Keep working to sustain results on completed projects.
Investigate feedback provided to assure it is understood and utilized as appropriate.
PROJECT TEAM: Listen to and respect input from all team members.
Let each team member be responsible for setting his or her own timetable to the extent possible.
Determine in advance how project team will make decisions.
SCOPE: Define success early.
Be specific about scope.
Manage scope creep.
SPONSOR SUPPORT: Sponsors and other leaders need to publicly endorse the project and remove barriers.
Speak candidly and informally to your sponsor in addition to formal reports.
Obtain sponsor’s signature on charter before proceeding.
STAKEHOLDERS: Invite key stakeholders to specific meetings.
Be sensitive to the political climate within your client’s organization.
Be open to constructive criticism and other input from stakeholders.
Chapter 15 Finishing the Project and Realizing the Benefits 507
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AGILE
from other recently completed projects are considered and relevant aspects are included.
Some lessons learned are more effectively transferred by informal means such as conversa-
tions, unscheduled meetings, or having a project team member also serve as a team member
on another project. An organization that seriously uses a lessons-learned process makes con-
tinual improvements in its project management processes and develops an organizational
learning culture. The best lessons learned are only of value if they are used!
Closure of a project entails ensuring that all work has been accomplished, all resources
have been reassigned, and all documentation is complete. The project manager and team
can review the project charter, WBS, and schedule to make sure that everything that was
promised was delivered. They can review the issues log and risk register to ensure all items
on both of them have been addressed. They can review the communications plan to check
that all documentation was created. The customer feedback and scope verification should
also be reviewed to verify that the customers thought everything was accomplished.
However, closure activities can take place during the project execution as well. Many
of the quality assurance activities fall in that category. Also, the project team can review
the communications plan to check that all documentation was created and used as man-
dated, which brings a closure to the project communication plan.
15-3c Create the Closeout Report
Many organizations have formal procedures for closeout reports and archiving project
records. The closeout report usually includes a summary status of the project that can
be gleaned from progress reports. The closeout report also normally includes lessons
learned. Finally, the closeout report often contains a review of the project’s original jus-
tification. Did the project accomplish what it was originally approved to do? This is an
important question because many projects change along the line. The exact timing, costs,
and deliverables may have changed, but did the project still accomplish its goals? Finally,
the project manager needs to ensure that the records are in a workable format and stored
in a manner that will allow others in the organization easy access for lessons learned,
financial audits, or other uses.
Organizations often create templates for closeout reports such as the one in Exhibit 15.5.
See the Project Management in Action feature at the end of this chapter for more ideas
on how to effectively capture, share, and use lessons learned.
EXHIBIT 15.5
CLOSEOUT REPORT TEMPLATE
This deliverable, required for each small project, contains the project charter, the original work breakdown structure, summary of
weekly progress reports, and client feedback summary.
P R O J E C T S U M M A R Y R E P O R T F O R P R O J E C T
TASK OR ITEM DESCRIPTION SATISFACTORY UNSATISFACTORY COMMENTS
A. Project charter updated and included
B. Original WBS included
C. Weekly progress report summary included
D. Client feedback summary included
508 Part 4 Performing Projects
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Knowledge management is hugely important on agile projects. At the end of every
two- to four-week iteration, a ceremony (meeting) called a retrospective is held to deter-
mine what worked well and what can be improved with an eye toward improving the
current project, not just future projects. As with many organizations, if asked what
worked well and what did not, many team members initially do not have much to
offer. Therefore, many scrum masters (project managers) will use gimmicks and jokes
to liven the mood and truly get team members to share and even joke about what hap-
pened. That way, not only do good ideas surface but because most team members dis-
cussed them, there also is widespread buy-in.
15-4 Post-Project Activities
15-4a Reassign Workers
Project managers owe the members of their team timely updates for their personnel
records, honest recommendations, help securing their next assignments, and rapid noti-
fication of any issues. Wise project managers know it is not only ethical to treat their
members well, but if a project manager also develops a reputation for taking good care
of team members, it becomes much easier to recruit team members for future projects.
Helping good workers secure follow-on work is one of the most important things a proj-
ect manager must do near the end of a project. Many of these workers will be eager to
work again for that project manager and will share their good experience with others in
the organization.
It is important to understand aspirations and recognize individual strengths of all the
project team members to recommend future project assignments. Ideally, it would be
immensely beneficial for organizations when individual aspirations and professional
goals are aligned with project objectives. The project manager plays an important role in
advising senior management and support in meeting this issue of strategic importance.
15-4b Celebrate Success and Reward Participants
The successful conclusion of a project should be celebrated for many reasons. Perhaps
one way to understand the many reasons is to utilize a play on the very word celebrate:
Challenge
Energize
Limit
Exert
Believe
Recognize
Acknowledge
Transition
Ease Stress
When people are reminded of their recent accomplishments, they realize they just met
a large challenge and are motivated to undertake new challenges. The team members are
frequently energized to finish the last few administrative chores so they can move on to
another project. By recognizing their accomplishments, they are now ready to say “the
project is over; we will limit any additional work on this project.” The team members
exert themselves to finish the last few items. Celebrations can persuade members to
believe they can do just a bit more than they might otherwise think is possible.
Chapter 15 Finishing the Project and Realizing the Benefits 509
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Celebrations are excellent times to recognize and acknowledge both effort and results.
Celebrations mark transition points as people leave one project and move on to another.
Finally, celebrations of success ease the stress of working hard for a prolonged period of
time trying to accomplish a project.
When a primary project deliverable is quite visible, such as a new building, celebrat-
ing right at the project site makes sense. People feel success partly just by observing the
deliverable. When the project deliverables are less visible, project managers can still cre-
ate ceremonial deliverables to demonstrate the project results. Project managers may be
able to use specially packaged software, oversized checks, posters of thanks from custo-
mers, or other creative means of visualizing project results.
15-4c Provide Ongoing Support
Ultimately, a project manager should ensure that customers can effectively use the proj-
ect deliverables. This may include providing ongoing support in the forms of training,
change management, and/or other services. A transition plan can guide this support.
Project managers aim to create useful project deliverables on time and on budget. They
want to turn those deliverables over to capable, satisfied customers who will directly pro-
vide more project work in the future and who will enthusiastically tell others how
pleased they are.
15-4d Ensure Project Benefits Are Realized
Many organizations insist that project managers follow up with customers weeks or
months after the project deliverables are in use. One of the most important measures of
project success is how well the customers can use the project deliverables. When consid-
ering the full impact of the project results, project managers are encouraged to consider
use by direct customers and other stakeholders (people), and also how the results
ra
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510 Part 4 Performing Projects
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contribute to the other parts of the triple bottom line—profit for the parent company
and sustainability of the planet.
15-5 Using MS Project for Project Closure
15-5a Creating Project Progress Reports
As your project executes and eventually enters into the closing phase, there are likely
to be multiple occasions where you must generate project reports to share with stake-
holders. Often, organizations have existing templates, web portals, or other specific
methods they want used to report project data. If not, you can quickly create customized
or prebuilt (canned) reports within MS Project to share with project stakeholders. Using
the simplified Suburban Park Homes project from Chapter 14, the following will demon-
strate how to create a canned project report. However, you can easily create these reports
with any MS Project file.
CREATE A CUSTOMIZABLE CANNED REPORT Although the Report Tab gives the
project manager the option to create a new report from scratch (Report Tab>>View
Reports Group>>New Report), it also contains a variety of canned reports from which
to choose, including Resources, Costs, and In-Progress reports. There are also several
Dashboard style reports that provide overviews of the project, for example, the “Project
Overview” in Exhibit 15.6 and “Cost Overview” in Exhibit 15.7. The variety of canned
reports, and the ability to customize them once generated, greatly reduces the need for
the project manager to struggle with creating a new report from scratch. To create a
Project Overview report like the one in Exhibit 15.6, do the following:
1. Click the Report Tab>>View Reports Group>>Dashboards>>Project Overview
Once generated, the elements of the report can be manipulated and customized. Ele-
ment position can be changed by clicking and dragging to different areas of the report,
and fonts, colors, shading, and effects can be altered by double-clicking elements to open
EXHIBIT 15.6
Chapter 15 Finishing the Project and Realizing the Benefits 511
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formatting panels. In addition, images from a file can be added to the report if desired.
Formatting techniques and image insertion follow the same conventions as other Micro-
soft Office applications. Many of the controls for formatting can also be accessed from
the Design Tab once the report is active on-screen.
SHARING REPORTS Once the report is formatted to your specification, it can be
printed or saved as a PDF and published to e-mail, a web portal, or other location. MS
Project has native support for sharing to e-mail or MS SharePoint in the File>>Share
menu options, as seen in Exhibit 15.8.
EXPORT A REPORT TO MS EXCEL MS Project can also export a variety of reports to
MS Excel. The following steps will create a customizable report, as seen in Exhibit 15.9:
1. Click the Report Tab>>Export Group >>Visual Reports
2. Click the Resource Summary Tab>> select Resource Remaining Work Report
3. Click View
4. The report will build and then open in MS Excel (where is can be customized and
distributed)
5. Click Close to close the Visual Reports dialog (Exhibit 15.10) in MS Project
15-5b Archiving Project Work
Just as software such as MS Project can be useful in planning, managing, and reporting
on a project, it also can be useful when closing out a project and leveraging the benefits
EXHIBIT 15.7
512 Part 4 Performing Projects
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EXHIBIT 15.8
EXHIBIT 15.9
Chapter 15 Finishing the Project and Realizing the Benefits 513
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for future projects. Specifically, it is helpful to complete and archive the schedule and to
capture lessons learned from to the scheduling process:
1. Complete the schedule to maximize its future usefulness. This includes the following:
Applying performance data
Applying approved changes
Ensuring all activities are complete
2. Archive the schedule for use as a template or “starter” file. A good way to start a new
project, particularly if it is similar in nature, is to reference or build from the last
project:
Decide the data format—MS Project or a longer-term format.
Schedule data from the Gantt chart can easily be copied and pasted into applica-
tions like MS Excel or Word.
Decide which baselines to keep (if there were multiples due to changes).
3. Capture and publish lessons learned about the effectiveness and efficiency of the
employed schedule and cost management processes. Having this data as you start
your next project, particularly the lessons learned, will give you an edge. Consider
retaining items such as the following:
Frequency and method of team member performance data collection
Activity duration maximum and minimum limits
Status reporting to stakeholders
Communication technologies employed and their effectiveness
Schedule and cost estimate accuracy
Max Units value—maximum availability of a resource for work
WBS structure
EXHIBIT 15.10
514 Part 4 Performing Projects
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PMP/CAPM Study Ideas
Fewer than 10 percent of the PMP test questions concern the Closing Process Group.
That said, there are no formulas and only a handful of processes associated with closing,
so you should do well if you can remember a few important things.
First, be sure that you are studying from the most current (6th) edition, since there
have been substantial changes made within the Closing Process Group. Most notably,
there used to be a Close Procurements process, but it has been removed in the PMBOK’s
6th edition, and its activities have been reassigned to either Control Procurements or
Close Project or Phase. In other words, all closing activities—whether contractual, admin-
istrative, or other—now fall under the Close Project or Phase process.
Second, PMI likes to stress knowledge management, so remember the importance of
capturing, storing, and disseminating lessons learned (this can and should happen
throughout the project but is especially important at a project’s end). This needs to
take place whether or not the project reaches a successful conclusion.
Third, Close Project or Phase is the very last step of a project. It cannot be completed
until everything else has taken place. Close Project or Phase is also known as the Admin-
istrative Close, since it involves gathering and storing lessons learned, writing reports,
and updating project documents. Whether or not a project reaches a successful conclu-
sion, recognize that the project manager often has limited authority and that the sponsor
should be involved in the Close Project.
Summary
Hopefully, most projects will be successfully completed.
However, some projects are terminated early either
because the customer is dissatisfied or wishes to invest
their time and money in a different way. Regardless of
whether a project was terminated early or on time, a vari-
ety of closeout procedures are required. All activities
must be completed, money paid and accounted for,
documentation completed and distributed, workers reas-
signed and rewarded, lessons learned recorded, and suc-
cess celebrated. A project manager would like to end a
project with team members eager to work for her again
and satisfied customers who will either hire the project
manager again or direct other potential customers her
way by their enthusiastic singing of her praises.
Key Terms Consistent with PMI Standards and Guides
validate scope, 500
punch list, 501
transition plan, 503
lessons learned, 504
closure of a project, 508
closeout report, 508
Chapter Review Questions
1. When does a project move into the closing stage?
2. What is validate scope?
3. What is the purpose of a “punch list”?
4. What should a project manager refer back to in
order to make sure that all planned work has, in
fact, been completed?
5. Under what conditions can a project be termi-
nated early?
6. If both parties agree to stop the project before
its planned completion but cannot reach an
agreement via direct negotiation, what can be
done?
7. Terminations for default often result from a prob-
lem with the project’s , ,
or .
8. When might a contract clause be invoked?
9. During project closing, customers are asked
both to accept the project deliverables and to
.
Chapter 15 Finishing the Project and Realizing the Benefits 515
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10. What should be done with any activities that
remain incomplete at the time of project
closure?
11. What is the first step in capturing lessons learned
at the end of a project?
12. How is a project transition plan similar to an
instruction manual?
13. What does a typical closeout report include?
14. How can Microsoft Project be useful during the
closing stage of a project?
Discussion Questions
1. Give two examples of why a project might be ter-
minated early for cause and two examples of why a
project might be terminated early for convenience.
2. How can a project manager help to prevent a
project from being terminated early?
3. If an early termination of his project seems likely,
what two avenues can a project manager explore
to increase the likelihood of being able to con-
tinue the project?
4. A project manager is in the finishing stage of her
project. It is apparent that one of the project’s
deliverables will not be completed before the proj-
ect is wrapped up. What options does the project
manager have for this uncompleted deliverable?
5. Provide an example of how poor escalation of a
project problem can create additional problems.
6. How does celebrating the completion of a project
benefit the project manager?
7. Why is it important to go through the process of
closing, even for projects that are terminated
early?
8. Why is it important as a project manager to help
your team members secure follow-up work
toward the end of your project?
9. Imagine you are creating a lessons-learned data-
base for a recent project you have completed.
What would you list as your top issues? Your top
successes?
10. The sponsor of a large multiphased project you
are managing suddenly decides to terminate the
project early. How do you respond? How and
when do you notify your team members?
PMBOK ® Guide Questions
1. The process of meeting with customers and/
or key stakeholders to formalize acceptance
of completed project deliverables is called
.
a. validate scope
b. control scope
c. close procurements
d. manage stakeholders
2. During which project management process
would a company auditor verify that all contracts
have been completed and all required purchasing
standards and methodologies have been followed
for the project?
a. Validate scope
b. Close contracts
c. Close project or phase
d. Conduct procurements
3. Terminations for often result from a
problem with the project’s cost, schedule, or
performance.
a. convenience
b. completion
c. default
d. confidence
4. At the end of the project or phase, lessons learned
are finalized and transferred to the company
knowledge base for future use. These lessons
learned can include all of the following except:
a. project issues log
b. individual performance reviews
c. project risk register
d. which techniques did and did not work well
5. If the buyer decides to terminate a project early,
his or her responsibilities to the contractor are
laid out in the project’s .
a. work breakdown structure (WBS)
b. communications plan
c. scope statement
d. procurement agreement
6. During the “close project or phase” process, the
team and project manager may wish to review
the .
a. project charter
b. WBS
516 Part 4 Performing Projects
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c. risk register
d. all of the above
7. What key input is required before a project or
project phase can move to the closing stage?
a. Accepted deliverables
b. Change Requests
c. Updated Issues Log
d. Work Performance Reviews
8. The new management team at a large company
has reevaluated ongoing initiatives and has iden-
tified new goals and objectives for the year. They
direct that all contracts in progress be terminated
immediately. This is an example of .
a. management by objectives
b. termination for cause
c. termination for convenience
d. termination by consensus
9. What serves as an instruction manual in order to
help the customer use the project deliverables as
intended?
a. lessons-learned database
b. transition plan
c. executed work contract
d. issues log
10. Contracts can be terminated early for any of the
following reasons except:
a. default
b. mutual agreement
c. convenience of buyer
d. convenience of seller
Exercise
1. Utilizing the ideas in Exhibits 15.1 and 15.3, cre-
ate a project closeout checklist for a project of
one of the following types:
Information systems
Research and development
Quality improvement
Organizational change
I N T E G R A T E D E X A M P L E P R O J E C T S
SUBURBAN HOMES CONSTRUCTION PROJECT
The closeout phase is often assigned less importance
because project-executing organizations are in a hurry to
assign resources to new projects as quickly as possible
while the project is still in the closing phase. The construc-
tion industry is no different. As soon as the construction
work is complete, the resources are assigned to new pro-
jects and the closeout phase is often managed by only a
few people responsible for tying up any loose ends. This is
often the source of customer dissatisfaction.
Project closeout consists of two important activities. First, it
is about formalizing acceptance of the project or phase and bring-
ing it to an orderly end, and second, closing the contract after
ensuring its completion and then settlement of the contract.
Suburban Homes realizes that there is a scope to improve
its existing closeout processes and practices for both sched-
uled completion and unexpected termination of projects. The
existing closeout process includes the following:
Take stock of entire project.
Tie up loose ends.
Write the final report.
Ensure that documentation is in good order.
Account for and reassign resources.
Meet with customers to ensure their needs are addressed
Prepare for the handover with warranty documentation.
To improve customer satisfaction, Suburban Homes is
planning to redefine its closeout process. Adam Smith has
requested that you develop a checklist for closing the proj-
ect. The closeout process must address the following:
Improve morale and a sense of achievement for the proj-
ect team.
Enhance customer satisfaction.
Close the contract properly to avoid future legal
implications.
Provide Suburban Homes with a detailed project cost.
Capture lessons learned for easy retrieval and use them to
improve the performance of future projects.
Chapter 15 Finishing the Project and Realizing the Benefits 517
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Semester Project Instructions
For your example project, complete the following:
1. Capture customer feedback concerning your project
using the questions from Exhibit 15.2 or other ques-
tions of your choice.
2. Capture lessons learned from your project to date
using the questions from Exhibit 15.2 or other ques-
tions of your choice. Show how you will use these
lessons both to improve the remainder of your
project and for the next project on which you may
work. Organize the lessons into categories such as
PMBOK knowledge areas, ideas from Exhibit 15.4,
or your own ideas.
3. Create a transition plan so that the recipients of
your project deliverables will be capable and enthu-
siastic users. Secure client acceptance of your
project.
CASA DE PAZ DEVELOPMENT PROJECT
Since the primary Casa de Paz project vision is to enable Lati-
nas and their children to be able to live independently and
achieve success in work and school, it is critical for those
women to take a very active role in running Casa de Paz.
What would you include in the transition plan to help them
be successful? How would you capture lessons learned?
Who would you share these lessons with? (Hint: Think
about the partnerships developed in this project.)
PROJECT M ANAGEM ENT IN ACTION
The Power of Lessons Learned
Projects are discrete. They have a beginning and an
end, at which time the project team disbands and
moves on to other things. Despite the fact there has
inevitably been significant tacit learning during the
project, there is often only a limited capture of this into
a sharable form for future reuse. Too often, as the
project team dissolves, the learning fades into the
memories of individuals minds. This makes it
extremely difficult for others to benefit in the future
from the insights learned. The usual excuses for this
loss echoing through the corridors include just too
hard, not enough time, team disbanded before
we had the chance, and many more. The key error
here is the incorrect assumption that learning during
or from projects is an added bonus or a nice-
to-have luxury. This is not the case in best practice
environments.
Those fortunate enough to work on a well-led
project will have observed how learning is just part of
how we work together. Experienced and
knowledgeable project leaders understand the value
in capturing lessons learned, as an embedded part of
normal daily activities. They engage the team to
deliberately harness knowledge and highlight lessons
throughout the project to provide insights and
enhance performance (during the project and
beyond). The value of doing this greatly outweighs
the costs of implementation when it is done well and
there is a culture of trust and collaboration. This cap-
ture of learning at each stage builds the capabilities of
those involved and can form a knowledge base to be
used by the team or by others in future stages and
future projects. In some cases, this knowledge base
remains only in the heads of those involved because
there is no attempt to capture it in explicit form. This
is a mistake because it is difficult to transfer this
knowledge beyond the immediate team (although it
can be to some extent if there is a culture of story-
telling and low staff turnover).
There are many barriers to developing an effective
lessons-learned knowledge base, and culture is often
518 Part 4 Performing Projects
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the primary villain. If people involved in the project are
not reflective and not willing to invest a little time to
capture and share their insights, the lessons are not
captured. Equally, culture influences the motivation to
look at what has been learned through the discovery
process before the project starts.
Good projects start with more questions than
answers:
Has this been done before?
Did it work? I so, why? If not, why?
What has changed since the last time? (Something
that did not work before might now if the context is
different.)
If we did it the same, would it still work, or do we
need to adapt it?
These questions can be effectively answered only if
there is some access to what was learned previously
and those seeking answers can find it in a convenient
and trusted way. This is why talking to someone you
know and trust, who was actually involved in the prior
project, is always the preferred option. However, in
modern organizations, this is becoming increasingly
difficult to achieve because of challenges such as high
use of contracted team members, high employee
mobility, regular restructures, incomplete records in
lessons-learned systems (which may be poorly
designed), and the fast change of supporting technol-
ogies. So what other good options exist?
Some organizations (including NASA and the U.S.
military) have developed quite sophisticated lessons-
learned databases. These are usually supported by
processes that require people to submit comments
into the project systems that will help other people in
the future. Over time, these what we know based
systems build a large volume of data that can be
interrogated to provide relevant insights when you
need them (hopefully proactively to avert a potential
risk becoming an issue, rather than reactively when
the issue has occurred). These systems work best
when people make it part of their normal work activi-
ties to record both errors and their solutions as well as
what went right and why. Insights of both types are
essential to ongoing success. The danger of rigid
processes and systems is that people do not see the
value in recording something that they believe is for
the benefit of unknown others in the future and will
not help them (but costs them precious time). So they
either just don t do it, or they record only very basic,
nonspecific information that will not be particularly
helpful for someone in a future context. Some orga-
nizations have a stick approach and link recording
of quality lessons learned to performance reviews or
project sign-offs. Others take a carrot approach and
: Cyclic at all stages
: Collaboration leadership, Knowledge capture & sharing, Attitude biased toward leverage,
Seek before reinvent, participative learning, Support for development programs
: Learn Before, During, and After. : Capture and sharing
: Knowledge base, Functions for capture, classification, search, storage, retrieval, and communication
: Intranet, Connectivity, Reliability, Performance, Security, Measures
: Knowledge activities embedded into normal operations and used routinely
“KM Supports”: Discovery, Benefits definition, Measures, Capture, Transfer & Capability build
Search, Develop
Search, Adopt,
Adapt
: Connect, Dialogue, Relationships, Peer Assist, Profiles, Regular Interactions
Roles, Purpose, Development, Succession plans, Benefit focused
New
opportunities
or extensions
Confirm
Benefits
Leverage
Outcomes
Plan from
known
foundation
Assess
feasibility
Chapter 15 Finishing the Project and Realizing the Benefits 519
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References
A Guide to the Project Management Body of Knowledge
(PMBOK® Guide), 6th ed. (Newtown Square, PA:
Project Management Institute, 2017).
Barclay, Corlane, Knowledge Management Practices in
IT Projects: An Exploratory Assessment of the State
of Affairs in the Caribbean, Proceedings, Project
Management Institute Research and Education
Conference 2010.
Carrillo, Patricia, et al., Knowledge Discovery from
Post-project Reviews, Construction Management
and Economics 29 (July 2011): 713–723.
Construction Extension to the PMBOK® Guide (New-
town Square, PA: Project Management Institute,
2016.
Chroneer, Diana, and Fredrik Backlund, A Holistic
View on Learning in Project-Based Organizations,
Project Management Journal 46 (3) (June/July 2015):
61–74.
Daft, Richard L., Management, 9th ed. (Mason, OH:
South-Western Cengage Learning, 2010).
Dobson, Michael S., and Ted Leemann, Creative Project
Management (New York: McGraw-Hill Company,
2010).
Kloppenborg, Timothy J., and Joseph A. Petrick,
Managing Project Quality (Vienna, VA: Manage-
ment Concepts, Inc., 2002).
Kloppenborg, Timothy J., Arthur Shriberg, and
Jayashree Venkatraman, Project Leadership
(Vienna, VA: Management Concepts, Inc., 2003).
Knutson, Joan, Transition Plans, PMNetwork 18 (4)
(April 2004): 64.
Lussier, Robert N., and Christopher F. Achua, Leader-
ship: Theory, Application, Skill Development, 4th. ed.
(Mason, OH: South-Western Cengage Learning,
2010).
Meyer, Werner G., Early Termination of Failing Pro-
jects: Literature Review and Research Framework,
Proceedings, Project Management Institute Research
and Education Conference 2012, Limerick, Ireland.
Milosevic, Dragan Z., Project Management Toolbox:
Tools and Techniques for the Practicing Project
Manager (Hoboken, NJ: John Wiley & Sons, 2003).
Pritchard, Carl L., Project Termination: The Good, the
Bad and the Ugly, in David I. Cleland, ed., Field
Guide to Project Management, 2nd ed. (Hoboken,
NJ: John Wiley & Sons, 2004), 503–520.
Reich, Blaize Horner, Andrew Gemino, and Chris
Sauer, Modeling the Knowledge Perspective of IT
Projects, Project Management Journal 39 (2) (2008):
S4–S14.
Wang, Xiaojin, and Lonnie Pacelli, Pull the Plug,
PMNetwork 20 (6) (June 2006): 38–44.
reward those who record effective lessons learned as
judged by other people who found and applied the
lessons.
Another approach used by an international project
management organization is to combine a content-
based system (as described above) and an under-
standing of who knows what. People seeking
insights can ring a service desk with their questions
and the (experienced) employee answering the phone
discusses what it is they need to find out. The service
person can be from a range of backgrounds, such as a
librarian, a semiretired employee with a long history
of the organization s projects, a specialist, or a nomi-
nated representative of an internal group such as a
technical committee or community of practice.
Sometimes these people will know the answer, but if
they do not, they can find a person or document that
can guide the seeker. This PM organization records all
questions asked and the relevant resources that
helped the seeker in a database that can be interro-
gated in the future. This hybrid of tacit and explicit
knowledge was found to be highly effective for fast
discovery of ideas. It enabled good ideas to be quickly
applied elsewhere and helped to prevent reinvention
of ideas already developed in other parts of the orga-
nization. It also enabled the discovery process at the
beginning of projects to reduce repeating of errors
from earlier experiences.
Successful people learn from Their mistakes AND
the mistakes of OTHERS. Sir John Templeton
Source: Arthur Shelley, http://www.organizationalzoo.com/about/arthur_shelley.
520 Part 4 Performing Projects
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Whitten, Neil, Celebrate, PMNetwork 19 (8) (August
2005): 21.
Wiewiora, Anna, et al., Uncovering the Impact of
Organizational Culture Types on the Willingness to
Share Knowledge Between Projects, Proceedings,
Project Management Institute Research and Educa-
tion Conference 2012, Limerick, Ireland.
Wiewiora, Anna, Liang Chen, and Bambang Trigu-
narsyah, Inter- and Intra-Project Knowledge
Transfer: Analysis of Knowledge Transfer Techni-
ques, Proceedings, Project Management Institute
Research and Education Conference 2010, Washing-
ton, DC.
Endnotes
1. Construction Extension to the PMBOK® Guide
221.
2. Dobson, Michael S., and Ted Leemann, Creative
Project Management (New York: McGraw-Hill
Company, 2010), 216.
3. Chroneer, Diana and Fredrik Backlund, “A
Holistic View on Learning in Project-Based
Organizations”, Project Management Journal
46 (3) (June/July 2015): 70.
Chapter 15 Finishing the Project and Realizing the Benefits 521
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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A P P E N D I X A
PMP and CAPM Exam
Prep Suggestions
Introduction
The Project Management Professional (PMP) and
Certified Associate in Project Management (CAPM) are
globally recognized professional certifications adminis-
tered by the leading global project management profes-
sional group Project Management Institute (PMI).
CAPM is appropriate for an undergraduate with limited
work experience, and PMP is appropriate for either a
nontraditional undergraduate or an MBA with three or
more years of full-time project management experience
or its equivalent. Both test detailed knowledge of the
Guide to the Project Management Body of Knowledge,
Sixth Edition (PMBOK® Guide 6e).
Study Aids in Contemporary
Project Management, Fourth
Edition (CPM4e)
Several features of this text have been designed to help
you study for and pass the CAPM and PMP exams.
These features include the following:
Inside front cover spreadsheet showing PMBOK®
Guide 6e knowledge areas, process groups, and
processes
Partial flowchart of PMBOK ® Guide 6e pro-
cesses and major outputs (color coded by process
group) and flows covered in each chapter at start
of chapter
Lists of PMBOK® Guide 6e processes and major
outputs covered in each chapter at start of chapter
All terms defined in chapters consistent with both
PMBOK® Guide 6e and the latest versions of 15
more in-depth PMI standards, practice guides, and
extensions to the PMBOK® Guide 6e
Chapter-specific study suggestions at the end of
each chapter
Ten practice questions at the end of each chapter
Glossary of terms consistent with PMBOK® Guide
6e and PMI standards, practice guides, and extensions
Detailed color-coded flowchart of all PMBOK®
Guide 6e processes with major outputs and most
common flows depicting work and information
General Guidance
You need to read through the PMBOK® Guide 6e very
carefully every single page. Look up words you do
not know because some questions are vocabulary
and the correct answers are from the PMBOK® Guide
Glossary.
Put a Post-it note on page 61 of the PMBOK®
Guide. The inside front cover of Contemporary Project
Management, Fourth Edition (CPM4e) shows the
exact pages in which each PMBOK process is covered.
It is a map mirroring page 61 of the PMBOK® Guide
6e. Every time you study a new process, note carefully
what process group and knowledge area it falls in. As
you study each process, note the inputs, tools and tech-
niques, and outputs. Many of the questions are sce-
nario questions that deal with timing (what would
you do first in a situation?). Since the output of one
process is often the input to another process, noting
inputs and outputs will help you identify what goes
first or last.
We encourage you to use CPM 4e in conjunction with
the PMBOK® Guide 6e. The PMBOK® Guide is the
what of project management (essentially a 700-page
encyclopedia of project management) and CPM is the
how with examples. For many people, the explanation
of how along with examples make it much easier to
remember all the detailed what that will be tested.
Few people are good at memorizing encyclopedias.
Detailed suggestions of how to understand the
PMBOK® Guide 6e material that is covered in each
chapter of CPM 4e is briefly described at the end of
each chapter. Right after those suggestions, ten example
questions, typical of those seen on the actual exams, are
given on the chapter material with the answers, ratio-
nale, and page references in the instructor s manual.
This appendix offers general suggestions for study
522
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that you can combine with the chapter-by-chapter sug-
gestions to form a comprehensive study plan.
Many people find it useful to go through the
PMBOK® Guide one chapter at a time, very carefully
comparing the what from the PMBOK® Guide to the
how with examples from CPM. We encourage you to
make sure you understand each chapter well before you
continue, but go fairly quickly so you do not forget the
first chapters by the time you take the exam. The first
two chapters are the project management framework.
They correspond to the first three chapters in CPM.
Always answer questions according to the PMI stan-
dard process, not the way you would necessarily do it
in your industry or the way an emotional appeal sug-
gests. If one answer is a general category and other
answers are specific examples, often the correct answer
is the more general one. Choose the answer that is
most correct most of the time, not one that is some-
times correct in certain circumstances.
PMBOK® Guide 6e is the latest update on the body of
knowledge that began with leading project manager
thought leaders expressing a need for some sort of stan-
dard over 30 years ago. During most of the intervening
time, most project management was conducted in a
plan-driven mode, meaning one planned the project and
then managed it closely, including tight change-control
procedures. In recent years, a growing number of projects
are being managed in an agile fashion. PMBOK® Guide 6e
calls this adaptive project management where one plans
at a high level only at the start and then in more detail as
work progresses. While PMBOK® Guide 6e recognizes
agile or adaptive projects, most of the PMBOK® Guide 6e
structure and most of the exam questions still reflect a
plan-driven approach. The primary exception to this
occurs in section 1.2.5 Tailoring, of the PMBOK® Guide
6e, where advice is given on how to determine how much
plan-driven and how much adaptive methodology should
be used for a given project situation.
Test Format
There are ten knowledge areas and five process groups
in the PMBOK® Guide 6e, with a total of 49 individual
processes. Know these well!
We suggest you either make a note sheet or flash
cards to study each process. You will not be able to
bring a note sheet to the exam, but you can study it
right up to the moment you begin the exam. You will
be given paper for notes and you may write as many
formulas as you can remember before you start with
the questions. Many people write down formulas they
have a hard time memorizing so they can study them
just before the exam starts.
At any place in the PMBOK® Guide where you find a
list of three, the question might ask which of the follow-
ing is not. Therefore, when studying inputs, tools,
and techniques, or outputs of a particular process, try
to remember anytime there is a list of three items.
If a question is long, read the last sentence first. That
is the question and the rest is the background.
All questions are multiple choice with four possible
answers. Answer all questions because the only thing
that is scored is correct answers. When in doubt guess
instead of leaving it blank. For each question, you can
answer it and move on, answer it and mark it to return,
or not answer it. We suggest that you never return to
the questions you feel confident enough to answer
without marking. You have four hours for the PMP
and three hours for the CAPM. In both cases, it should
be more than enough time. You are allowed to go to a
restroom, but the clock keeps going.
PMBOK® Guide
All ten knowledge areas include at least one planning
process in the planning process group. Several include
one managing process in the executing group, and all
include at least one process in the monitoring and con-
trolling process group. Make sure you understand the
subtle differences between the monitoring and control-
ling processes in groups that include both. The key to
understanding the difference is there are some things
the project manager can directly control, but there are
plenty of other things the project manager can only
influence.
Many processes occur in parallel with other pro-
cesses and/or are repetitive. However, some processes
clearly occur before others. Know the order! The partial
flowcharts at the start of each chapter and the compre-
hensive flowchart in the inside back cover help one to
visualize the order.
Most knowledge areas include quite a bit of vocab-
ulary. You not only want to remember the official
PMBOK® Guide definition but also what each really
means when it is applied. CPM helps with the applica-
tion. All definitions in the CPM glossary are either
taken directly from a PMI guide, standard, or extension
or are written in plain terms consistent with the intent
of the definition in the PMI document that we thought
was more difficult to understand directly.
Appendix A: PMP and CAPM Exam Prep Suggestions 523
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Several knowledge areas refer to audits. In this con-
text, an audit is meant to improve the way work is per-
formed. Following are a few specific suggestions for each
knowledge area.
The PMBOK® Guide often uses the term register for a
repository of information. For example, the stakeholder
register is the recorded information about project
stakeholders who they are, what they want, how they
are prioritized, and so forth. Risks are recorded in a risk
register in a similar fashion. The repository for issues, on
the other hand, is called an issue log. In yet another
repository example, requirements are often stored in a
requirements traceability matrix. In each case, think of
these repositories as living documents that change with
project progress and additional information. Know the
types of information that each may include.
Project Integration
Management
Integration describes how decisions in one aspect of a
project often impact another area, such as when a change
is proposed, it may impact cost, schedule (time), and
scope. In fact, if a question deals with one of those
three items (such as cost), the correct answer may include
the other two. One way to consider integration is to imag-
ine a very large project in which different people plan
portions and integration is used to make sure the entire
plan makes sense. The last integration process closing
the project ends with capturing lessons learned. Develop
project charter is the integration process that occurs dur-
ing initiating. Chapter 3 of CPM is all about writing and
approving the charter.
The first process overall is Develop Project Charter,
and the last process overall is Close Project or Phase
both are integration processes. Capturing lessons
learned and archiving or distributing them are both
part of an executing process called manage project
knowledge and last activity (Close Project or Phase)
to be performed as part of project closure.
There may be multiple questions on the project man-
agement plan. This is the umbrella plan with many sub-
sidiary plans such as budget and schedule. You can note
two-headed arrows between the process of developing the
project management plan and planning all of the subsidi-
ary portions of the plan. You will also note arrows from
developing the project management plan into many of
the executing processes. A plan is baselined at the end
of planning when all parties agree on the scope, schedule,
and budget. Any changes after that time should go
through an integrated change control process. Of course,
if using agile, the overall scope is only confirmed at a high
level and the scope for a given iteration is confirmed just
prior to the start of that iteration. Change is greatly
resisted within an iteration.
Project Scope Management
Scope is defined by what is and what is not included in the
project. Product scope is the features and functions of the
project deliverables (products, services, or results). Project
scope is the work performed to deliver the product, service,
or result with the specific features and functions.
A work breakdown structure (WBS) is like the out-
line of the project. It includes all of the project deliver-
ables, including interim and detailed deliverables
everything that needs to be produced. It does not
include the work activities needed to create those deli-
verables. Defining activities is considered a schedule
management process. The work package is the lowest
level on the WBS.
Scope, time, and cost are all highly interrelated. All
have multiple planning processes and one monitoring
and controlling process. If a question contains two of
the three knowledge areas of scope, schedule, and cost,
the answer very well may be the third one.
Project Schedule Management
Rolling wave planning is a form of progressive elabo-
ration in which the near term is planned in great
detail, while the latter parts of the project are planned
in a much more general fashion with intent to plan
them more carefully when the time draws nearer.
Agile is a form of rolling wave planning that is gaining
popularity. Agile notes are included in many sections
of this book.
Be able to schedule using activity on node (AON)
(also called precedence diagramming method or PDM).
Also know how to use alternative dependencies of SS,
FF, and SF and lead and lag. Know the difference
between free float (no other activity is impacted) and
total float (the entire project is not impacted, but the
next activity in line is). Be able to compute the critical
path using the two-pass method so you can answer
questions regarding float. Also be able to compute the
enumeration method so you can more quickly answer
what-if questions, such as what will happen if an activ-
ity now takes five days instead of eight.
524 Appendix A: PMP and CAPM Exam Prep Suggestions
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Crashing speeds up the schedule by performing cer-
tain critical path activities faster than normal, but it
usually costs more money. Fast tracking speeds up
the schedule by performing activities concurrently
that are normally performed in sequence. This often
adds risk to the project.
Resource optimization techniques include resource
leveling and resource smoothing. Know the difference!
Resource leveling postpones certain noncritical activi-
ties so a resource is not overloaded, but this often
requires more time to complete the project. Resource
smoothing also reduces the demand for overloaded
resources, but not beyond the point where the project
schedule would need to be lengthened.
Network diagrams, Gantt (bar) charts, and mile-
stone schedules are all approved means of showing
project schedules.
Project Cost Management
Know how to construct a time-phased, bottom-up
project budget and the difference between various
means of estimating costs and needed reserves, as
shown on CPM page 335 337. Know how to calculate
earned value and the definitions of all of the terms on
CPM pages 477 480. Be prepared that you may see
questions that ask you to calculate estimates to com-
plete in different ways depending on whether the work
to date is deemed to be representative of future work or
not. Know common financial terms such as those in
CPM, Exhibits 2.8 and 10.1.
Project Quality Management
Manage quality is a forward-looking, executing process
and gives stakeholders confidence the project team can
do the work correctly. It is proactive and includes man-
agement systems and audits to ensure people are work-
ing correctly. Control quality, a monitoring and
controlling process, is technically looking at deliver-
ables and asking if they pass specific standards. It
looks backward to determine if the outputs are good
enough. Both manage quality and control quality are
needed. In addition to what is in the PMBOK® Guide,
know the quality tools on pages 469 474 of CPM
and the quality control terms on pages 405 408 of
CPM. The project manager has ultimate responsibility
for quality (and almost everything else). In addition,
each person has primary responsibility for their
own work. Prevention keeps errors out of the
process, while inspection keeps errors away from the
customer.
Project Resources Management
All of Chapter 5 in CPM and parts of Chapter 9 apply
to Project Resources Management. There are multiple
lists in this knowledge area, so try to understand the
differences between items dealing with topics such as
teams, power, conflict, and negotiation, as shown in the
exhibits in CPM.
Know the differences among functional, matrix, and
projectized forms of organization. A simple summary is
on CPM page 107. Make sure you understand the dif-
ferences between various roles, as described in
Chapter 4 of CPM. While roles can be shown on an
organizational chart or described in a document as
text, they are often also shown in a matrix. A matrix
may be called a RAM or RACI. Know the stage of team
development, such as on CPM page 143. Scenario ques-
tions are often used to distinguish stages. Know forms
of power, as shown on page 157 of CPM and conflict
resolution, as shown on page 164 of CPM.
Project Communications
Management
According to PMI, project managers spend about 90
percent of their time on communication in one way or
another. Know how to calculate the number of commu-
nication channels based upon the formula channels =
(n2 n)/2, when n is the number of people on a
team. Authorization to perform work is always a formal
communication, but it need not be written. Communi-
cation can be more complex in a matrix organization. A
war room is a single location where the project team can
keep their stuff and use it for any purpose. Exhibit 14.6
in CPM is an easy visual to help understand perfor-
mance reporting.
Project Risk Management
The purpose of project risk management is to reduce
the risk to a level acceptable to decision makers. It is
not to eliminate all risks. Consider both positive risk
(opportunity) and negative risk (threat). The most
risks occur at the start of the project life cycle, but
Appendix A: PMP and CAPM Exam Prep Suggestions 525
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each risk costs the most money if identified late in
the life cycle after decisions are already in place. In
charters, risks are identified, qualitative analysis is
performed by asking the probability and impact of
each, and response planning is conducted for major
risks. Qualitative analysis is performed on every
project. If that is not enough, quantitative analysis
is also performed. All risk management processes
occur throughout the project life cycle.
Project Procurement
Management
Procurement in the sixth edition of the PMBOK® Guide
includes only three processes of plan, conduct, and control
procurements. Understand contracts, both in general and
each specific type. Understand the differences between var-
ious procurement documents. The RFI is not used to solicit
an offer, while the others are. Sole source is when only one
vendor is available, but single source is when a decision is
made to select a specific vendor.
Project Stakeholder
Management
The PMBOK® Guide process of identify stakeholders
includes identifying each potential stakeholder, deter-
mining what interest each has in the project, and
prioritizing the long list of stakeholders so more atten-
tion can be paid to the most powerful and important
stakeholders. This occurs very early as part of the
initiating process group. Most projects have multiple
stakeholders with conflicting desires, and the increased
focus created by establishing stakeholder management
as a distinct process group reflects this.
Ethics
Know the code of Ethics and Professional Responsibility
very well! There are more questions per page on this
short document than on any other topic. You may
download this document from http://www.pmi.org/
about/ethics/code for free. It has aspirational standards
as ideal goals and mandatory standards as bare mini-
mums in the four areas of responsibility, respect, fair-
ness, and honesty.
Ending Suggestions
Do not underestimate either the CAPM or the PMP
exam! The first-time pass rate typically is between 50
and 70 percent and that includes many people who
have taken exam-prep courses. However, we have
taught many of these prep courses and many of our
students have successfully passed both exams using
these suggestions. We are repeatedly told that by com-
paring the what from PMBOK® Guide with the
how and examples from this book (Contemporary
Project Management), people felt very well prepared.
Good luck and let us know how you did!
Timothy J. Kloppenborg, PMP, PhD,
kloppenborgt@xavier.edu
Vittal Anantatmula, PMP, PdD,
vittal@email.wcu.edu
Kathryn N. Wells, PMP, MEd,
katenoelwells@gmail.com
526 Appendix A: PMP and CAPM Exam Prep Suggestions
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A P P E N D I X B
Agile Differences Covered
The points listed in this appendix are described in
more depth in the chapters indicated. Some represent
methods and behaviors that are completely different on
Agile projects; others are methods and behaviors that
are emphasized more or in a different manner on Agile
projects. Many behaviors emphasized in Agile also can
help traditional project managers. Many of these points
have far-reaching impacts, but they are listed here in
the order of their first appearance.
Chapter 1: Introduction to
Project Management
The Agile Manifesto stresses four values:
Value individuals more than processes.
Value working software more than documen-
tation.
Value customer collaboration more than nego-
tiation.
Value response to change over following a plan.
Adaptive or change-driven project life cycle
In a given iteration, resources (including cost) and
schedule are considered fixed and what can vary is
value to the customer.
Most of the same work still needs to be accom-
plished in organizations using Agile. Different peo-
ple perform some of the work.
Agile emphasizes empowering teams.
Some work is performed later in a project with
Agile because requirements and scope emerge
gradually.
Collaborative effort and communication specifi-
cally with the client are common features.
The most essential role is the customer
representative sometimes called the product owner.
The customer representative does much of what a
sponsor might in traditional projects.
There may also be a designated sponsor (some-
times known as a product manager).
A portfolio team often performs much of the work
of a traditional steering team.
The scrum master serves and leads in a facilitating
and collaborative manner.
This is a more limited, yet more empowering role
than the traditional project manager.
Many organizations using Agile also have a
coach acting as a facilitator and trainer.
The team members in Agile projects are assigned
full time as much as possible.
The teams are self-governing.
Teams are often small and co-located and they
work closely together.
Chapter 3: Chartering Projects
Something of value will be delivered at each
iteration.
An agreement is reached during iteration planning
on the definition of done.
This is comparable to deliverables with acceptance
criteria for each milestone.
The first iteration is planned as a milestone with
acceptance criteria.
Subsequent milestones and acceptance criteria are
determined just in time (JIT).
Ensure common understanding of success criteria
and value.
Determine minimum acceptable output to fulfill
project vision and have a working output.
Project vision is developed and shared early.
Establish a shared vision.
Align project and team goals through vision sharing.
Chapter 4: Organizational
Capability: Structure, Culture,
and Roles
Practice servant leadership acting as guides and
coaches.
Give teams the environment and support they
need to be self-organizing.
Organizational culture needs to foster cooperation
among many stakeholders and at many levels.
Transparency must be valued within the organiza-
tional culture.
527
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Create a feeling of safety and allow quick failure
with constructive feedback.
Used in information systems and some other pro-
jects; allows for incremental plans and benefits.
These approaches have been variously called itera-
tive, incremental, adaptive, or change-driven.
While Agile is the umbrella name, some of the specific
approaches are called SCRUM, XP, Crystal, EVO,
phased delivery, rapid prototyping, and evolutionary.
While these models may start like other project life
cycle models, they provide short bursts of planning
and delivery of benefits in multiple increments
during project execution.
Agile is a form of adaptive or change-driven proj-
ect management largely reacting to what has hap-
pened in the early stages of a project rather than
planning everything in detail from the start.
Documentation is minimal early in the project but
becomes progressively more complete.
A project vision is developed and shared early.
Project teams plan in short bursts (generally of one
to four weeks), often called sprints or iterations.
The details are planned for the upcoming iteration
and very little change is allowed during it.
Products are defined and delivered one iteration
at a time with an output that has business value
successfully finished in each iteration.
The mindset is empowering, engaging, and openly
communicating.
If the scope is hard to define early in the project
and/or when much change is expected, an Agile
approach often works better.
The Agile mindset includes four key ideas:
1. Satisfy the customer by placing emphasis on
outputs that fulfill their needs.
2. Engage all participants through empowerment,
cooperation, and knowledge sharing.
3. Facilitate that engagement through servant lead-
ership and visible and continual communication.
4. Keep things simple with a sustainable pace or
cadence and emphasis on process improvement.
All Agile roles are more collaborative than con-
frontational.
The scrum master facilitates and removes obstacles.
The teams are self-governing, so the team now
accomplishes many of the planning and coordinating
activities a project manager would typically perform.
Often the first iteration is used to determine the
product to be built and prioritize the most valuable
work for the next iteration.
Agile projects use four types of meetings (often
called ceremonies):
1. Iteration planning meetings have the product
owner share the highest value-added output he
or she would like the team to work on next,
along with a definition of what is done. The
project team commits to how much work they
can do in the iteration.
2. Daily stand-up meetings are often held for
15 minutes early in the morning, and each
team member shares the previous day s accom-
plishments, the plans for the current day, and
any issues.
3. Demonstration meetings are held at least once
per iteration where the team demonstrates
usable product.
4. Retrospective meetings are held at the end of
each iteration where the project team, scrum
master, product owner, and possibly other key
stakeholders openly share what worked well
and what could work better.
Experienced and motivated team members are
needed.
A key stakeholder, often called the product owner
or customer, needs to commit to frequent and
detailed meetings.
Trust between the client and contractor (or user
and developer) is needed because the details of the
requirements and scope are initially unknown.
Chapter 5: Leading and
Managing Project Teams
Agile teams are often described as being self-
managed, focused on project goals, strong commu-
nicators, able to decide quickly, more responsible,
and willing to trust their instincts once they under-
stand their sponsor.
Build teams around motivated individuals.
Agile project teams typically employ co-located
teams to manage rapid changes and increments.
Seven desirable habits of Agile teams are:
1. Question everything.
2. Associate with innovation.
3. Fail your way to success.
4. Communicate thoughts and ideas.
5. Deliver value frequently.
6. Change incrementally.
7. Connect with your purpose.
528 Appendix B: Agile Differences Covered
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The Agile project team members are also responsible
to check for deviations regularly and should be capa-
ble of detecting aspects that violate the specifications.
The best solutions arise from self-organizing teams.
Trust teams to get things done.
Teams cooperatively devise ground rules.
Co-locate teams and/or use collaborative tools.
Discover team and individual motivators.
Reduce distractions.
Team members break down barriers and become
experts on the product they are creating.
Team members must develop a sense of ownership
of the product and commitment to the team.
All team members act as leaders when needed.
Team members resolve issues.
Promote knowledge sharing.
Chapter 6: Stakeholder Analysis
and Communication Planning
Relationships with stakeholders are based upon
collaboration, communication, and trust.
Client interaction needs to be continuous through-
out the project life cycle.
Stakeholders need to be educated about their roles,
alerted in advance concerning changes, and
request early and continuous feedback.
The highest priority is to satisfy the customer through
early and continuous delivery of valuable product.
Change is harnessed to the customer s competitive
advantage.
Face-to-face communication is used when possi-
ble, with visualization.
Solicit stakeholder feedback early and often.
Form working agreements.
Design for customer to evaluate deliverables and
receive feedback from users.
The emphasis needs to be on effective rather than
efficient communication.
Conflict must be facilitated, not ignored.
Chapter 7: Scope Planning
Agile focuses more on the product than the
process even when the customer does not know
what they want.
The documentation in Agile of the requirement is
normally much less formal.
Agile leverages the progressive elaboration mindset.
The Product Owner is the interface to the product
stakeholders and is responsible for aligning stake-
holders to priorities and capabilities.
Agile focuses on delivering value to the customer
quickly, so feedback can get to the development
team quickly.
Agile assumes that the people doing the work
know how to do the work.
At every iteration, the delivered product should be
able to be used.
The goal is not to be right; it is to get feedback.
There is only the judgment of how well the prod-
uct works.
The customer ideally would not get involved in
how the product is created.
Creating a model or prototype on many kinds of
projects other than software is analogous to Agile
delivering working software every few weeks to get
feedback.
The requirements are captured in a product backlog.
The product manager prioritizes them on an ongo-
ing basis.
They are delivered in short iterations and reviewed
with the stakeholders on a normal cadence.
Smaller iterations are used to get feedback.
The team is challenged with conflicting aspirations
between finalizing the scope specifications and
maintaining flexibility.
Scope at the outset is not clear to either the project
team or the client and is described only at a high
level.
The project team must demonstrate greater adapt-
ability to frequently changing scope and employ
iterative or phased planning of scope.
Scope definition starts with large chunks of work.
Large features will be broken down into stories and
prioritized later.
The team creates personas, which are fictional
people who represent user types.
User stories define scope and functionality.
Acceptance tests will also be agreed upon during
the scope definition phase by describing the way
project deliverables will be tested and how they
should prove workable.
The customer representative prioritizes the scope
based upon business need, value, cost, and risk.
The team commits to the amount of work they can
perform in the first iteration.
Determine the minimum acceptable number of
product features by asking what are the three to
Appendix B: Agile Differences Covered 529
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five most important things needed for our customer
to use our deliverables.
Embrace changing requirements, even late in the
process.
Reprioritize as conditions change.
Engage an empowered business stakeholder.
Prioritize collaboratively.
Chapter 8: Scheduling Projects
Ceremonies like sprint retrospectives naturally
become milestones in the project schedule, on
cadences familiar to the folks doing the work.
Schedules are created by first considering the
product backlog to be accomplished.
The overall project schedule may initially be devel-
oped only at a high level.
Within an iteration, the team will consider how
much uncertainty and complexity exist in the out-
puts they plan to create.
The number of team members as resources is often
the primary limitation to the schedule, but logical
order may also be considered.
Typically, the product owner and the team agree
on what work will be completed in an iteration.
The team then identifies all of the work activities
for that iteration.
The team commits to the body of work for the
iteration, without having the how worked out in
detail yet.
Sequencing is performed at a high level for the
entire project or for the product release (often
three to six months).
Then, for each iteration, the team develops the
sequence by which the detailed activities of that
sequence need to be completed.
Duration estimates improve with each iteration
and as early iterations are completed.
Teams can use velocity of progress to estimate how
much work will be accomplished in each iteration.
Chapter 9: Resourcing Projects
Agile techniques are often used when the client
does not fully understand their needs at the project
start, a rapid rate of scope change will probably
occur on the project, and/or multiple short deliv-
eries are possible.
The client and project team can collaborate to
reduce the impact of interdependency of activities.
Schedules are limited to the amount of work the
assigned resources can handle.
The team of workers assigned to an Agile project
should remain on the project for at least each iter-
ation, and preferably for the entire duration.
An Agile team is a cross-functional team with gen-
eral expertise that puts them together on a long-term
basis.
The budget is set at the people level and then the
product is produced at the pace the team can
produce.
Team composition is done at a high level.
People are assigned to a long-running team and
they figure out how to get the work done.
The team members on an Agile project decide
among themselves who will do each work activity.
Team members pick up the next-highest-priority
story when they finish what they have been working
on.
Resource overloads are not a serious problem in
Agile since the team is cross functional and the
team commits to get the work done in the itera-
tion. They self-manage the conflicts.
If a team member needs help, he will ask; if he
needs to learn, he learns.
The fundamental ideas behind Agile project plan-
ning are to use a collaborative approach with the
project team and other stakeholders heavily
involved in planning.
Teams recognize that while it may be difficult to
scope the entire project at the outset, stakeholders
do want to have a ballpark idea of total cost, sched-
ule, and functionality before approving a project.
While uncontrolled change is bad, too strenuous
change control often means valid emergent stake-
holder wishes are not met.
Chapter 10: Budgeting Projects
Teams may use rolling wave planning to estimate
costs.
They create a definitive estimate for the first iteration
of the project (and commit to it) and an order of
magnitude estimate for the remainder of the project.
As the work on the first iteration nears an end, the
team then creates a definitive estimate for the sec-
ond iteration and reevaluates the order of magni-
tude estimate for the remainder of the project.
Dummy tasks are often used to summarize the
work for future project iterations that have not yet
530 Appendix B: Agile Differences Covered
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been defined. Since the number of workers is often
known and the length of the iteration is known, the
amount of cost can usually be established.
Chapter 11: Project Risk
Planning
Agile projects develop early risk planning, assess-
ment, and response planning at a high level.
More detailed and timely risk management occurs
in planning each subsequent iteration, in daily
stand-up meetings, and in retrospectives at the
end of each iteration.
Development process risks relate to functionality
and short and focused iterations.
Business process risks are due to higher ambiguity
and uncertainty that compel us to focus on the
short-term result and long-term haziness.
The product owner must remain closely involved
throughout the project. This focus can reduce risk
because many details are handled as they arise.
Since something of value needs to be delivered at each
iteration with a test to confirm it works, risks tend to
be uncovered quickly, before they become large.
Chapter 12: Project Quality
Planning and Project Kickoff
Quality is planned at a high level for the entire
project at the outset and at a detailed level just
before the start of each iteration.
Agile builds upon established technical approaches
with an increased emphasis on human behavior.
Advice given on Agile projects is to communicate
often (maybe daily) with the owner and other
stakeholders.
On Agile projects, a definition of done is explicitly
stated. This includes acceptance criteria of features;
agreement of what done is for each iteration, and a
demonstration to prove the deliverables work.
Teams use retrospectives to improve both methods
and quality.
Identifying dependencies and need for coordina-
tion helps reduce potential quality problems.
The better a team is able to plan a sustainable pace
and cadence, the better is the quality that should
emerge.
Teams plan for continuous improvement and
reflection rather than optimizing a process.
On Agile projects, the overall plan for the project
(called the release plan) is only at a high level,
while the detailed plans for each iteration are base-
lined right before each iteration starts.
Chapter 13: Project Supply
Chain Management
Customer collaboration is preferable to contract
negotiation.
Everyone must work together regularly throughout
the process.
Encourage collaboration.
Chapter 14: Determining Project
Progress and Results
Self-directed teams are largely empowered to
decide what work to do and when to do it, consis-
tent with the prioritizing of deliverables by the
product owner.
Change is expected, and the only part that is
planned in detail at the outset is the first iteration.
Subsequent iterations are planned in a rolling wave
fashion.
Within an iteration, there is great reluctance to
change.
Risk is reduced due to frequent and specific com-
munication, demonstration of working product at
each iteration, and use of a visible, monitored, pri-
oritized risk list.
Simple directional indicators updated frequently
guide project teams.
Progress report meetings as stated above are held
every morning as brief (15 minutes) stand-up
meetings.
Each team member discusses yesterday as the past
time period and today as the current time period.
Documentation becomes more complete.
Working product is the primary measure of
progress.
Agile projects often use a burndown chart to show
the amount of work remaining.
People doing the work should be able to maintain
a sustainable pace, and cadence is monitored.
Maintain highly visible information registers.
Appendix B: Agile Differences Covered 531
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A P P E N D I X C
Answers to Selected Exercises
Note: Some chapters have only behavioral material and
do not have exercises.
Chapter 2
2-1 Select Project A first since Project A scored con-
siderably higher than all others (A 78 vs. B 54,
C 56, and D 44). The second project to be
selected is Project B, but Project C is in a virtual
tie, so we would prefer to discuss the relative mer-
its of each, perhaps considering additional tieb-
reaking criteria, before making the final selection.
2-3 Answers vary. The criteria developed would apply to
projects that are either starting with a new com-
pound (entirely new drug that may take a long
time to get to market), a variation on a compound
that is already partially studied (getting a variation of
a drug to market sooner), or the purchase of a drug
another company has fully or partially developed
(perhaps getting the drug to market much quicker).
Some criteria might include: speed in getting a new
pharmaceutical to market, probability of success, cost
of the project, and similarity with the company s
existing products (alignment). The weightings can
also vary, but students should be prepared to explain
the logic behind why they chose the weights they did.
Speed in getting a drug to market should be one of
the highly rated criteria.
Chapter 3
3-1 Answers vary depending on the assignment. There
should be a clear description of exactly what the
team will do and why it is important. Each of those
statements should be one to four complete sen-
tences and should be easy to understand.
3-3 Answers vary. Use the four-column format of
Exhibit 3.6. Both the current and future state
descriptions should be very brief about three or
four words. The future state is likely to be some-
thing like satisfying, profitable picnic. The mile-
stones need to make sense and enable a stakeholder
to judge each with easily measurable acceptance cri-
teria that would accompany each.
Chapter 4
4-1 Answers vary depending on the scenario. Use ratio-
nale for the chosen structure. An example scenario
might be an R&D organization that started many
projects and canceled many early, but the remain-
ing projects typically grew to be very large. In this
situation, you might suggest a matrix structure. Tell
why such as resource-sharing needs among the
many start-ups, yet need for specific attention to
the large projects that survive.
4-3 Answers vary. You need to detail specific beha-
viors and determine which category from Exhibit
4.17 each represents.
Chapter 7
7-3 Answers vary. Here is a typical WBS:
1 Campus Event
1.1 Site
1.1.1 Selection
1.1.2 Environment
1.1.3 Neighbors
1.1.4 Preparation
1.1.5 Cleaning after
1.1.6 Handover
1.2 Promotion
1.2.1 Campus newspapers
1.2.2 Internet
1.2.3 Other
1.3 Finance
1.3.1 Sponsorship
1.3.2 Tickets
1.3.3 Budget
1.3.4 Audit
1.4 Human Resources
1.4.1 Marketing
1.4.2 Security
1.4.3 Ticket sales
1.4.4 Management
532
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5
2
7 92
B
7
0
0
0 55
A
5 5
0
5 94
C
9 9
0
9 156
F
15
15
0
15 238
G
23
5
3
8 157
D
5 10 15 20 250
A
B
C
D
E
F
G
12
7
5
12 197
E
10
1.5 Entertainment
1.6 Staging
Chapter 8
8-1
ES EF
Activity Name
Slack
Duration
LS LF
8-8
8-3 A and B are predecessors, while C is a successor.
8-5 A B C D E
Early start 0 12 16 12 19
Early finish 12 16 17 19 22
Late start 0 14 18 12 19
Late finish 12 18 19 19 22
Slack 0 2 2 0 0
Activity Days Immediate Predecessor ES LS EF LF Slack CP?
A 5 0 0 5 5 0 yes
B 2 A 5 7 7 9 2 no
C 4 A 5 5 9 9 0 yes
D 7 A 5 8 12 15 3 no
E 3 B 7 12 10 15 5 no
F 6 B,C 9 9 15 15 0 yes
G 8 D,E,F 15 15 23 23 0 yes
Appendix C: Answers to Selected Exercises 533
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Chapter 9
9-3 Duration Activity(ies) Crashed Incremental Crash Cost Cumulative Crash Cost
42 (normal)
41 F 150 150
40 C 200 350
39 G 250 600
38 G 250 850
37 A&C 350 1200
36 E 400 1600
Chapter 10
10-2 You can calculate the answers to this on MS Proj-
ect, on Excel, or by hand. You first need to create
the project schedule, create resource assignments,
assign costs to each resource, and assign
resources to each task. You will discover Alcides
has a conflict right away, but one of the activities
can be delayed within its slack. Joan has a conflict
late that will force the noncritical task to be
delayed, which will delay the entire project. The
cumulative costs for the entire project are $7970.
In the Gantt chart and budget aggregation table
below, it may be noted that the final task, conduct
regulatory review, was delayed since it conflicted
with the previous task, conduct ROI analysis. The
total budget for the project remains unchanged,
but the project is now scheduled to take a bit
longer, and the cash flow corresponds to the
schedule.
5 10 15 20 25 300
Evaluate freezers
Chart temperatures
Review service record
Consult with HVAC engineer
Develop construction plan
Complete IC assignment
Complete ROI analysis
Conduct regulatory review
Obtain construction approval
Cost per week
Cumulative cost
2080
2080
1210
3290
1000
4290
1270
5560
1270
6830
1140
7970
A
A
J
J
J
J
A
A
A
534 Appendix C: Answers to Selected Exercises
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Chapter 11
11-1 Answers vary. An example follows.
Major Risks Counter Measures
1. No back-up plan
2. Security
3. Presidential candidate
unavailable
4. Date not available
5. Important donor not
invited
6. Low attendance
7. No or low media
interest
8. Issue with speaker
9. Loss of money
10. Over extending staff
and resources
1. Write a back-up plan
2. Continuous internal
communication w/security
3. Refer to back-up plan
4. Find different venue/
renegotiate contract
5. Ensure update accurate list
6. Invitations/Adv./PR in
timely manner
7. Have and execute media
plan
8. Establish crisis plan
9. Budget/forecasting
10. Set realistic expectations
and stick to them
11-5 Answers vary. Show logical relationships and trig-
gers that should be something easily observable
that occurs before the risk event. For example,
major risk 6 in exercise 1 above (low attendance)
could have a trigger in low response to RSVPs that
are sent out two weeks before the event.
Chapter 12
12-2 Within a quality management plan, some or all of
the following topics should be addressed with the
supporting documentation and definitions:
The mission and quality policy of the
organization
Roles and responsibilities of management and
staff with respect to audit and/or quality
activities
Quality system description
Personnel qualifications and training; imple-
mentation of work processes
Corrective actions procedures
Standard operating procedures
Quality improvement description
Procurement of items and services
Documentation and records
Computer hardware and software
12-5 Answers vary. Include the entire quality policy
because it is likely to be short. Articulate specifi-
cally some ways the policy will guide the project.
An example from Colgate follows:
Colgate Quality Policy: Our goal is to provide con-
sumers with the highest-quality products by assur-
ing their performance, consistency, safety, and
value. This commitment is rooted in our corporate
values and is essential to our continued growth
and success. We will meet our comprehensive
Global Colgate Quality Standards in the design,
manufacturing, and distribution of our products
as well as meet or exceed all government require-
ments and consumer expectations worldwide. We
will maintain these high-quality standards as we
design and manufacture our products by the most
efficient means possible to ensure they are afford-
able to the greatest number of consumers through-
out the world. Our commitment to quality is vital
to all we do.
Performance, consistency, and safety are all dimen-
sions of quality that are stressed. Value is also men-
tioned. Time is not. This would suggest that quality is
the most important variable for their projects, followed
by cost. Schedule then might take a backseat.
Chapter 14
14-1
a. Schedule variance (SV). EV PV
$150,000. This project is behind schedule.
b. Cost variance (CV). EV AC $200,000.
This project is over budget.
c. Schedule performance index (SPI). EV/PV
70%
d. Cost performance index (CPI). EV/AC
64%
e. Estimate to complete (ETC first method).
(BAC EV)/CPI $1,328,125
f. Estimate to complete (ETC second method).
BAC EV $850,000
g. Estimate at completion (EAC). AC ETC
$1,878,125
h. To-complete performance index (TCPI)
(BAC EV)/(BAC AC) 131%
Appendix C: Answers to Selected Exercises 535
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14-6
$0
$1,000
$2,000
$3,000
$4,000
Water
Losses
Poor Seals Broken/
Missing
Tools
Delays
between
Operations
Other
The next course of action would be to investigate the top issue water losses.
14-8
0
5
10
15
20
25
30
35
40
Mon Tue Wed Thu Fri Mon Tue Wed Thu Fri Mon Tue Wed Thu Fri
There is an upward trend. Tuesday of the final week appears to be an outlier (it is considerably below others near
it). There does not appear to be a strong repeating pattern.
536 Appendix C: Answers to Selected Exercises
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A P P E N D I X D
Project Deliverables
PROJECT DELIVERABLE
Type of
Objective Chapter(s) PMBOK® Process
PMBOK® Knowledge
Area (or section)
PMBOK®
Process Group
Customer Trade-Off Matrix behavioral 1 1.2 Foundational
Elements
Project Success Definition core 1 1.2 Foundational
Elements
Elevator Pitch core 2 1.2 Foundational
Elements
Project Selection and
Prioritization Matrix
technical 2 Selecting Projects
Project Resource Assignment
Matrix
technical 2 Selecting Projects
Project Charter core 3 Develop Project
Charter
Integration Initiating
Assumptions Log behavioral 3 Develop Project
Charter
Integration Initiating
Life Cycle and Development
Approach
behavioral 4 Develop Project
Management Plan
Integration Planning
Leader Roles and
Responsibilities
behavioral 4 3.4 Project Manage-
ment Competencies
Team Charter behavioral 5 Plan Resource
Management
Resources Planning
Team Assessments behavioral 5 Develop Team Resources Executing
Stakeholder Engagement
Assessment Matrix
core 6 Plan Stakeholder
Engagement
Stakeholder Planning
Communication Matrix core 6 Plan Communications
Management
Communications Planning
Meeting Agenda behavioral 6 Manage
Communications
Communications Executing
Meeting Minutes behavioral 6 Manage
Communications
Communications Executing
Issues Log behavioral 6 Manage
Communications
Communications Executing
Meeting Evaluation behavioral 6 Manage
Communications
Communications Executing
Requirements Traceability
Matrix
core 7 Collect Requirements Scope Planning
Scope Statement core 7 Define Scope Scope Planning
Scope Baseline with WBS technical 7 Create WBS Scope Planning
Activity List core 8 Define Activities Schedule Planning
537
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PROJECT DELIVERABLE
Type of
Objective Chapter(s) PMBOK® Process
PMBOK® Knowledge
Area (or section)
PMBOK®
Process Group
Milestone List core 8 Define Activities Schedule Planning
Network core 8 Sequence Activities Schedule Planning
Duration Estimates core 8 Estimate Activity
Durations
Schedule Planning
Schedule Baseline core 8 Develop Schedule Schedule Planning
RACI Chart core 9 Plan Resource
Management
Resources Planning
Resource Histogram core 9 Develop Schedule Schedule Planning
Project Crashing technical 9 Develop Schedule Schedule Planning
Cost Baseline core 10 Determine Budget Cost Planning
Risk Register core 11 Identify Risks Risk Planning
Project Management Plan
Baseline
technical 12 Develop Project Man-
agement Plan
Integration Planning
Bid Documents technical 13 Plan Procurement
Management
Procurement Planning
Make or Buy Analysis technical 13 Plan Procurement
Management
Procurement Planning
Contract Type Justification technical 13 Plan Procurement
Management
Procurement Planning
Source Selection Matrix technical 13 Conduct Procurements Procurement Executing
Change Request core 14 Perform Integrated
Change Control
Integration Monitoring &
Controlling
Progress Report core 14 Monitor
Communications
Communications Monitoring &
Controlling
Earned Value Analysis technical 14 Control Costs Cost Monitoring &
Controlling
538 Appendix D: Project Deliverables
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Index
Terms from the PMBOK® Guide are set in bold in this index.
A
Abbott, Carol A., 245
acceptance criteria, 66–67, 217
accept risk strategy, 376
accuracy and timing of cost estimate, 334–335
accuracy vs. precision, 408
accurate communications, 193
acquire project team
definition of, 138
negotiation for team members, 139–140
on-boarding team members, 140
preassignment of team members, 139
action items, 198
active listening, 194
activity, 246
assignment of resources to, 296–299
duration, 249
activity-based costing (ABC), 340–341
activity durations, estimate, 246
activity list
for product upgrade project, 253
work breakdown structure with, 251
activity on arrow (AOA), 248
activity on node (AON), 248
activity resources, estimating, 290
activity sequencing, 250
activity-specific capability, 147
actual cost (AC), 478
aggregating costs, 342
agile, 8
agile project life cycle model, 113–114, 125
agile project management, 114–116
continuing agile, 115
definition of agile, 114
key roles, 115
mindset, 114–115
needs for successful, 116
reasons for using, 114
role differences, 126–128
starting, 115
agile project planning, 310
agile projects
define scope, 219–220
duration estimates, 258
agile software development methods, 325–327
“all-crash” schedule, 306
alternative dependencies, 255
analogous estimating, 335–337
analysis paralysis, 227
arrow diagramming method (ADM), 248
Asplund, Jim, 137
assumptions, 67, 75
assumptions log, 75
Atos-Origin, 141
attribute vs. variable, 408
authority, 7
auto scheduling, 310–311
Aviation Week and Space Technology jour-
nal, 42
avoid risk strategy, 374
B
background, 66, 71–72
backward pass, 261–262
balanced scorecard approach, 458–459
Baldridge, Malcolm, 389
Ball Aerospace & Technologies Corp., 60–61
baseline, 229, 404
Bechtel, 443
Beedle, Mike, 325
benchmarking, 406
benefit-cost ratio (BCR) model, 44
Bischoff, Korey, 387
Boeing, 386
bottom-up estimating, 337
Brezinski, Brad, 387
budget. see project budgets
budget at completion (BAC), 478
budget optimization, 354–355
Built Green Home at Suncadia, Washington,
35
burndown chart, 468
business case, 43, 66, 70–71
Butorac, Mark, 387
C
capable vs. in control, 408
CAPM. see Certified Associate in Project
Management
cash flow, 249
cause-and-effect diagram, 371–372, 470–472
cause-and-effect relationships, 371
celebrate success, 509–510
Central Intelligence Agency, 3, 231
Certified Associate in Project Management
(CAPM), 10
Chandler, Dawne E., 101
change control, 229–232
change control system, 229
change request, 231–232
change request form, 232
check sheets, 469, 471
chief projects officer (CPO), 121
Cincinnati Children’s Hospital Medical
Center, 36
Clifton StrengthsFinder® tool, 137
closeout report, 508–509
closeout report, creating, 508–509
closeout report template, 508
close procurements, 515
close project/phase, 23, 515
closing process group, 10
closing project, 503–509
closeout report, 508–509
knowledge management, 504–508
report template, 508
transition plan, 503
closing stage, 8
closure of project, 508
collect requirements, 212–216
definition of, 213
stakeholder input and needs, 213–216
co-located teams, 295
539
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co-location technique, 105
commitment, 70, 78
common vs. special cause, 408
communication channels, 123
communication needs
countries and project communication
preferences, 167
cultural differences, 166–167
global team, 166–167
virtual team, 166–167
communications, 122
communications management, 11
communications management plan
communications matrix, 191–192
considerations, 189–191
manage project knowledge, 192–193
purposes of, 188–189
communications matrix, 191–192
communications plan, 188–189
methods column, 191
purpose column, 189–190
structures column, 190–191
timing column, 191
company management. see manage
communications
conduct procurement, 434–438
definition of, 434
evaluating prospective suppliers, 435–436
factors used in assessing potential sup-
pliers, 438
selection of design-build contractor, 436
sources for potential suppliers, 434–435
supplier selection, 436–438
configuration management system, 410
conflict management, 161–167
conflicts
managing, 161–167
negotiation, 164–166
people-related, 162
resolution process and styles, 163–164
resolving, 443
sources of, 162–163, 442–443
task-related, 161–162
connection power, 157, 158–159
constraint, 68, 75
construction project life cycle model, 113
contingency reserve, 333
contracts
cost-plus-award-fee (CPAF), 440
cost-plus-fixed-fee (CPFF), 440
cost-plus-incentive-fee (CPIF), 440
cost-reimbursable, 440
firm-fixed-price (FFP), 439
fixed-price, 439–440
fixed-price-economic-price-adjustment
(FP-EPA), 439
fixed-price-incentive-fee (FPIF), 439
time and material (T&M), 440–441
types of, 438–439
control, 395
control chart, 474
control limit vs. tolerance, 408
control procurements, 441
control quality, 406–409, 469
control resources, 476
control schedule, 246
control scope, 475
core team
members, 126
relationship building within, 160–161
corrective actions, 405
corrective vs. preventive action, 408
cost, 122
cost baseline, 342
cost-benefit analysis, 43–45
cost-benefit analysis model
advantages/disadvantages of, 44–45
benefit-cost ratio, 44
internal rate of return, 44
net present value, 44
payback period, 44
cost control, 345, 476
cost estimate, 330–341
accuracy and timing of, 334–335
activity-based costing, 340–341
analogous estimating, 335–337
bottom-up estimating, 337
budget, 335, 342–344
definitive, 335
life cycle costing, 341
methods of, 335–338
order of magnitude estimates, 334–335
parametric estimating, 337
project issues, 338–341
value engineering, 340
variation, 339–340
vendor bid analysis, 340
cost management, 11
cost management plan, 330
cost of quality, 409
cost performance index (CPI), 479
cost-plus-award-fee (CPAF) contract, 440
cost-plus-fixed-fee (CPFF) contract, 440
cost-plus-incentive-fee (CPIF) contract,
440
cost-reimbursable contracts, 440
costs
aggregating, 342
direct vs. indirect, 331–332
estimate vs. reserve, 333
fixed vs. variable, 331
internal vs. external, 332–333
other cost classifications, 332–333
recurring vs. nonrecurring, 332
regular vs. expedited, 332
types of, 331–333
cost variance (CV), 478–479
CPO (chief projects officer), 121
crashing, 304–307
criteria
determining mandatory, 45–46
evaluating projects, 46
identifying potential, 45
weighting, 46
critical chain method (CPM), 309
critical chain project management (CCPM),
309–310
critical path
crashing and, 304–307
definition of, 259
enumeration method and, 263–264
fast tracking, 307–309
float and, 262–263
reducing actions, 303–304
critical path method (CPM), 248
cross-functional teams, 295
Crystal, 113
cultural differences, 166–167
currency fluctuations, international, 341
currently known values, 477–478
current time period, 466
customer, 18, 116, 119–120
customer issues, 469–476
control scope, 475–476
manage and control quality, 469–474
D
daily stand-up meetings, 115
data, 397, 465
D.D. Williamson, 226, 506
decision tree analysis, 372
decomposition, 228
defect repair, 405
define activities, 221, 246, 249–253
define, measure, analyze, improve, and
control (DMAIC) model, 112, 391–392
define scope, 216–220
Agile projects, 219–220
definition of, 216
reasons to, 217
steps to, 217–218
definitive estimate, 335
deliverable
decompose, 228
in defining scope, 217
definition of, 11
identify, 226–228
work breakdown structure with, 250
Delphi technique, 367
Deming, W. Edwards, 388
demonstration meetings, 115
desired behaviors, 122–123
determine, 457
determine budget, 342–344
aggregating costs, 342
cash flow, 344
definition of, 342
reserve needs, analyzing, 342–344
develop project management plan,
409–410
configuration management, establish, 410
resolve conflicts, 409–410
sanity tests, apply, 410
develop project team, 141–157
activities for, 141
capabilities, building individual/team,
150–153
characteristics of high-performing teams,
144–147
definition of, 141
ground rules, establishing, 153–157
individual member capabilities, assessing,
147–148
stages of, 142–144
team capabilities, assessing, 148–150
540 Index
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develop schedule, 246
direct costs
definition of, 330–331
in work package, 333
directing and managing project work,
459–460
direct vs. indirect costs, 331–332
discipline, 160
discretionary dependency, 253
DMAIC Model. see define, measure,
analyze, improve, and control
(DMAIC) model
draft report, 228
Duke Energy,PowerDelivery Engineering,
457
DuPont, Engineering Services Division,
247
duration
definition of, 255
example, 256
learning curves, 258
problems and remedies in estimating,
256–257
suggestions for, 255–256
E
early finish date (EF), 259
early start date (ES), 259
earned value (EV), 478
earned value management, 476–480
definition of, 476
estimates, 479–480
example, 478
indexes, 479
known values, 477–478
terms, 477
variances, 478–479
effective communications, 193
Elevator World journal, 42
empowered performance, 399–400
enhance opportunity, 377
enumeration method, 263–264
estimate(s), 333. see also cost estimates
estimate activity durations
definition of, 246, 255
example, 256
learning curves, 258
problems and remedies in, 256–257
suggestions for, 255–256
estimate at completion (EAC), 479–480
estimate cost, 330
estimate to complete (ETC), 479
estimating activity resources, 290
EVO, 113
evolutionary, 113
executing process group, 10
executing stage, 8
expected monetary value (EMV) analysis,
372
expedited costs, 332
experienced team members, 116
expert power, 157, 158
exploit opportunity, 377
external vs. internal costs, 332–333
F
facilitator, 19, 124, 126
fact-based management, 396–399
failure mode and effect analysis (FMEA),
372
fast tracking, 303–304, 307–309
Fiesta® San Antonio Commission, 189
final report, 228
financial issues, 476–480
control resources, 476
earned value management, 476–480
schedule and cost control, 476
finish-to-finish (FF) relationship, 255
finish-to-start (FS), 254
firm-fixed-price (FFP) contract, 439
first pass, 260–261
fishbone diagram, 371, 471
fixed costs, 330
fixed-price contracts, 439–440
fixed-price-economic-price-adjustment
(FP-EPA) contract, 439
fixed-price-incentive-fee (FPIF) contract,
439
fixed vs. variable costs, 331
float
critical path and, 262–263
definition of, 262
flow chart, 469
flow-down objectives, 37
forward pass, 259
Fraport-Bechtel-Cosapi Consortium, 443
free float, 262
functional manager
definition of, 7, 19
project management-level role, 19, 121
functional organization, 102–104
Fund for Investment in Infrastructure,
Utilities and Natural Resources, 443
future time period, 467
G
Gallup Consulting, 136–137
Gantt charts
aggregating costs, 342
project schedules, 268
resourcing projects, 297
general contractor, 429
General Dynamics, 386
General Electric, 390
General Tool Company (GTC), 386–387,
421–422
generic project life cycle model, 112
global project teams, 167
Global Shipping Company (GSC), 401
ground rules
establishing project team, 153–155
process topics, 155–157
relationship topics, 153–155
guiding principles, 34–35
H
hard skills, 7
Harpenau, Amy, 33
high-performing teams, characteristics of,
144–147
histograms, 297–300, 473
human resources, 122
I
identify risks, 366–368
definition of, 366
information gathering, 366–367
relationships, understanding, 368
reviews, 367
risk register, 368
identify stakeholders, 178–184
definition of, 178
implement risk responses, 464–465
imposed dates, 249
Improving Executive Sponsorship of Projects:
A Holistic Approach (Chandler), 101
in control vs. capable, 408
independent tasks, 119–120
indirect costs
definition of, 331
in work package, 333
individual member capabilities, assessing,
147–148
individual performance, assessing, 159
information
fact-based management, 397
project supply chain management, 448
work performance, 465
information gathering, 366–367
information needs, determining project, 193
information power, 157, 158
information retrieval and distribution
system, 193–194
initiating process group, 10
initiating stage, 7
inspection vs. prevention, 407
Institute of Texan Cultures, 189
integrated change control, performing,
462–463
integration, 122
integration management, 11
integrity, 122
internal project issues, 459–468
directing and managing project work,
459–460
implement risk responses, 464–465
manage communications, 465–467
monitor communications, 467–468
monitoring and controlling project work,
460–463
monitoring risk, 463–464
performing integrated change control,
462–463
project control, 461–462
reporting performance, 465–467
internal rate of return (IRR) model, 44
internal vs. external costs, 332–333
International Finance Corporation (IFC),
443
International Organization for Standardiza-
tion (ISO), 390
Internet Society, 37
Index 541
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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interpersonal skills and sensitivity, 148
ISO 9001:2008, 390–391
issue, 197
issues log, 197
issues management, 197–199
action items, 198
decisions and issues, 197–198
evaluation, 198–199
IS&T project launch, 412
iteration planning meetings, 115
iterative/incremental software development
project, 283–284
J
joint tasks, 120
Jorge Chavez International Airport (JCIA),
443
judgment calls, 124
Juran, Joseph, 388
just-in-time (JIT) basis, 74
tools and techniques, 447
K
keiretsu, 445
Kennedy, John F., 34
kickoff project, 410–413
meeting activities, 411–413
preconditions, 411
Kling, Paul, 457
Kloppenborg, Timothy J., 329
knowledge, 192
knowledge management
capturing lessons learned, 504–505
closeout report, 508–509
disseminate and use lessons learned,
505–508
known knowns, 342
known unknown, 342
L
lag
definition of, 254
sequence activities, 254
Last Planner System, 310
late finish date (LF), 260
late start date (LS), 260
Lavigne, Lydia, 61
lead
definition of, 254
sequence activities, 254
leadership
definition of, 138
personal, 150
situational, 151
leadership team, 18
lean purchasing, 447
Lean Six Sigma, 390–392
learning curves, 258
learning cycle, 151–153
legitimate power, 157, 158
lessons learned
capturing project-end, 504–505
D.D. Williamson example, 506
definition of, 70
disseminate and use, 505–508
example, 507
issues and, 160
in project charter, 77–78
lessons learned register, 70
life cycle costing, 341
Lima Airport Partners, 443
Living Arrangements for the Developmen-
tally Disabled (LADD), 32–33
Lockheed Martin, 386
logical order, 248
logistics, 447
M
make-or-buy decisions
outsourcing issues, 433
plan procurement management, 430
reasons to buy or sell, 432
Malcolm Baldrige National Quality Award,
389–390
manage communications, 465–467
definition of, 193
information needs, determining, 193
information retrieval and distribution
system, 193–194
issues management, 194–197, 197–199
meeting management, 194–197
management, 138
management reserve, 333
manage project knowledge, 192–193
manage project team
assessing individual performance, 159
definition of, 157
outcomes, 159–160
project manager power and leadership,
157–159
manage quality, 404–406, 469
manage stakeholder engagement, 187–188
mandatory dependency, 253
manual scheduling, 310–311
matrix organization, 105–108
M. D. Anderson Cancer Center of the Uni-
versity of Texas Medical Center, 358
Microsoft® (MS) Project. see MS Project
Midland Insurance Company, 9, 111
milestone list, work breakdown structure
with, 252
milestone schedule, 66–67
with acceptance criteria, 66–67, 72–73
constructing, 72–74
constructing in MS Project, 83–88
definition of, 66–67
example, 67
Six Sigma, 74
Miller, Bruce, 499
Minimum Viable Product (MVP), 408–409
mission statement, 35–36
mitigate risk strategy, 376
monitor and control project work, 23
monitor communications, 467–468
monitoring and controlling process group,
10
monitoring and controlling project work,
460–463
monitoring risks, 463–464
monitor stakeholder engagement, 188
Monte Carlo simulation, 266–267
morale changes, 159
motivated team members, 116
Motorola, 390
MS Project
constructing milestone schedule, 83–88
for critical path schedules, 268–275
defining, 82–83
introduction to, 80–81
to monitor and control projects,
480–487
planning, controlling, and communicating
projects, 21
project budgets, 345–349
for project closure, 511–514
for project quality baselines, 413–416
setting up, 81–82
for work breakdown structure (WBS),
233–238
Mueller, Ralf, 167
mutual agreements, 501
N
negotiation, 51, 80, 164–166
net present value (NPV) model, 44
networked organization model, 452–453
network for product upgrade project, 254
new product development schedule, 267
nonrecurring costs, 332
O
O’Brochta, Michael, 3
on-time schedule delivery, 267
opportunity, 361
order of magnitude estimates, 334–335
organizational culture
impact on projects of, 108–111
of parent organization, 109–110
of project, 111
types of power in, 110
organizational forms, progression of, 106
organizational structures
comparison of, 107
types of, 102–108
organizational understanding, 147–148
Organizational Zoo, 177–178
outcomes of project team management,
159–160
outsourcing, 296
outsourcing issues, 433
owner, 429
owner-controlled insurance program
(OCIP), 441
P
parametric estimating, 337
Pareto chart, 469–470, 472
partially leveled resource schedule, 302
partial risk register, 370
542 Index
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Participating Member Organizations
(PMOs), 189
partnering, 442. see also project partnering
and collaboration
past time period, 466
payback period (PP) model, 44
PDM (precedence diagramming method),
248
people-related conflicts, 162
performance assessment, 159
performance reporting, 465–467
performing integrated change control,
462–463
performing organization, 360
perform qualitative risk analysis, 368
perform quality assurance, 404
perform quantitative risk analysis,
372–373
personal culture, 110
personal leadership, 150
personal learning, 147
personal planning and control, 147
phased delivery, 113
plan communications management, 188–
193
plan cost management, 329
plan-do-check-act (PDCA) model, 151–152,
194–195, 395
planned value (PV), 477
planning process group, 10
planning stage, 8
plan procurement management, 431–433
definition of, 431
make or buy decisions, 432–433
outputs of planning, 431
plan quality management, 387
plan risk management, 360
plan risk responses
definition of, 373
risk register updates, 377
strategies for, 373–377
plan schedule management, 246
plan scope management, 211–212
plan stakeholder engagement, 184
plus-delta evaluation template, 198–199
PMBOK® Guide (A Guide to the Project
Management Body of Knowledge),
10–11, 23, 388, 505
PMI (Project Management Institute), 10, 11,
14
PMI Code of Ethics and Professional
Conduct, 111
PMOs (Participating Member Organiza-
tions), 189
Polaris Weapons System, 247
population vs. sample, 407–408
portfolio alignment, 34. see also portfolio
management
portfolio management, 37–49
ability to perform projects, assessing,
42
cost-benefit analysis selection method,
43–45
definition of, 37
portfolios, 38–39
potential projects, identifying, 42–43
prioritizing projects, 48
programs, 39
projects/subprojects, 39–42
resourcing projects, 48–49
scoring model selection method, 45–48
selection methods for projects, 43
portfolios, 38–39
post-project activities, 509–511
celebrate success, 509–510
ongoing support, 510
project benefits, 510–511
reassign workers, 509
reward participants, 509–510
power culture, 110
PP (payback period) model, 44
precedence diagramming method (PDM),
248
precision vs. accuracy, 408
predecessor activity, 253
prevention vs. inspection, 407
preventive actions, 405
preventive vs. corrective action, 408
process, 394
process analysis, 405
process improvement plan, 404
process quality management, 394–396
process topics, 155–157
Procter & Gamble (P&G), 444
procurement, 122
procurement documents, 433
procurement management, 11
procurement management plan, 431
procurement statement of work, 431
product owner, 116
product scope, 216
Profound Knowledge System, 388
program, 39
program evaluation and review technique
(PERT), 266–266
program management, 39
project(s)
ability to perform, assessing, 42
budget, 22
classifying, 16–17
close or chase, 23
cultural norms, 111
definition of, 4
evaluating criteria, 46
goals and constraints, 14–15
measure, 16
vs. operations, 6–7
potential, identifying, 42–43
prioritizing, 48
resourcing, 48–49
schedules, 22
securing, 49–51
selecting and prioritizing, 14
selection methods for, 43
subprojects, 39–42
success and failure, defining, 15–16
types of, 16–17
project associate-level roles, 20
project boundaries, 217–218
project budget, 328–355
cost control, 345
definition of, 22
determine budget, 342–344
estimate cost, 330–341
MS Project, 345–349
plan cost management, 329–330
project charter
benefits of, 63
constructing, 70–78
decision matrix, 64
definition of, 20–21, 62–63
elements in, 65–70
information systems enhancement,
93–96
needs of, 64
project title, 65
purposes of, 63
ratifying, 79
project classifications
application, 17
industry, 16
size, 17
timing of project scope clarity, 17
project closeout checklist, 502
project completion, 498–515
close project, 503–509
MS project for project closure, 511–514
post-project activities, 509–511
validate scope, 500–501
project conflicts
managing, 161–167
negotiation, 164–166
resolution process and styles, 163–164
sources of, 162–163
styles of handling, 164
project control, types of, 461–462
project cost flow chart, estimating, 471
project decision-making guide, 161
project executive-level roles, 18–19
chief projects officer, 121
customer, 18, 119–120
leadership team, 18
project management office, 121
sponsor, 18, 117–118
steering team, 18, 116–117
projectized organization, 104–105
project kickoff, 410–413
meeting activities, 411–413
preconditions, 411
project leadership, 123–124
challenges, 125
roles at TriHealth, 132–133
project life cycle, 7–10
definition of, 7
examples of, 8–10
models of, 111–114
stages of, 7–8
project management
definition of, 4
history of, 5–6
quality tools and, 470
tools, 150–151
Index 543
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Project Management in Action
Agile methods, 325–327
appreciative inquiry to understand
stakeholders, 29–30
budget optimization, 354–355
centralize planning and control in large
company, 172–173
communication planning for distributed
project, 204–206
controlling, monitoring, reporting
projects, 494–496
implications in networked organization
model, 452–453
information systems enhancement project
charter, 93–96
iterative/incremental software development
project, 283–284
power of lessons learned, 518–520
prioritizing projects at LADD, 57–58
project leadership roles at TriHealth,
132–133
quality planning at General Tool
Company (GTC), 421–422
scrum, 325–327
work breakdown structure template,
242–243
Project Management Institute (PMI), 10,
246
project management-level roles, 19–20
customer representative, 20
facilitator, 19, 124, 126
functional manager, 19, 121
project manager, 19, 122–124
Scrum Master, 20
project management office (PMO)
definition of, 18
project management role of, 121
role in matrix organization, 107
project management process group, 10
Project Management Professional (PMP)®, 10
project management, real world examples
Atos-Origin, 141
Built Green Home at Suncadia,
Washington, 35
Cincinnati Children’s Hospital Medical
Center, 36
D. D. Williamson, 226, 506
DuPont, Engineering Services Division,
247
Gallup Consulting, 136–137
Organizational Zoo, 177–178
Schawk, Inc., 286–287
Sydney Opera House, 176–177
Tatro, Inc., 140
Teradata, 211
Texas Medical Center (TMC), 358–359
TriHealth, 132–133
U. S. Navy, Special Program Office, 247
project manager(s), 19, 122–124
challenges, 123
communication channels, 123
competencies by project life cycle stage,
124
definition of, 19
desired behaviors, 122–123
joint tasks with, 120
judgment calls, 124
power and leadership, 157–159
project manager power, 157–159
project meeting agenda template, 195–197
project meeting management
agenda template, 195–197
minutes template, 197
plan-do-check-act (PDCA) model,
194–195
plus-delta evaluation template, 198–199
project milestone, 117
project partnering and collaboration,
442–446
advantages of, 444
conflict sources, 442–443
effective approaches to, 445–446
mutual goals in, 443
resolving conflict sources, 443
securing commitment to, 446
project preplanning form, 65
project processes, 11
project procurement management. see also
project supply chain management
processes, 431
project progress/results, determining, 456–487
balanced scorecard approach, 458–459
customer issues, 469–476
financial issues, 476–480
internal project issues, 459–468
MS Project to monitor and control,
480–487
replanning, 487
project proposal, 51
project quality
concepts of, 392–401
definition of, 392
monitoring, 406–407
project quality core concepts
empowered performance, 399–400
fact-based management, 396–399
process management, 394–396
stakeholder satisfaction, 393
project quality planning, 386–422
baseline, 413
control quality, 406–409
core project quality concepts, 392–401
cost of quality, 409
development of contemporary quality
concepts, 388–392
kickoff project, 410–413
manage quality, 404–406
MS Project for baseline, 413–416
project management plan, 409–410
quality management plan, 401–404
project request, 65
project risk, 361
project risk planning, 358–383
identifying risks, 366–368
risk analysis, 368–373
risk management, 360–366
risk responses, 373–377
project risk strategies
accept risk, 376
avoid risk, 374
enhance opportunity, 377
exploit opportunity, 377
mitigate risk, 376
research risk, 376–377
share opportunity, 377
transfer risk, 374–375
project roles, 17–18
associate-level, 20
executive-level, 18–19
management-level, 19–20
project schedule, 244–284
construction of, 248–249
define activities for, 249–253
definition of, 22
developing, 259–264
estiamting activity duration, 255–258
Gantt charts, 268
historical development of, 247–248
limitations of, 248–249
purposes of, 247
sequence activities, 253–255
uncertainty in, 264–267
using MS Project for critical path
schedules, 268–275
project scope, 14
project scope statement, 218
project stakeholders. see stakeholders
project submission form, 65
project success, determinants of, 102
project supply chain management, 426–448
components of, 430
conduct procurement, 434–438
conflicts, 442–443
contracts, 438–441
control procurements, 441
decisions, 430–431
definition of, 429
factors, 430
improving, 441–448
introduction to, 428–431
partnering, 442
plan procurement, 431
project team
acquiring, 138–140
capability building cycle, 152
characteristics of, 144–147
charter, 145
core team members, 126
definition of, 20
development activities, 141–157
ground rules, 153–157
management outcomes, 159–160
performance assessments of individuals,
159
progression through development stages,
143
roles, 126
stakeholder engagement, managing,
187–188
subject matter experts, 126
success factors, 149
project team members
negotiation for team members, 139–140
on-boarding team members, 140
preassignment of team members, 139
544 Index
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

project title, 65
project tools, scalability of, 17
project work
description of, 6–10
monitor and control, 23
statement, 216–217
prompt communications, 193
punch list, 500–501
Q
qualitative risk analysis, 368
qualitative risk assessment, 371
quality, 14, 122
quality assurance, 404
quality audit, 405
quality baseline, 404
quality control
monitoring, 406–407
terms, 407–409
tools, 469–474
quality control chart, 474
quality gurus, 388–389
quality management, 11
quality management plan
baseline, 404
contents, 403–404
definition of, 401
process improvement plan, 404
quality policy, 401–403
quality metric, 397
quality policy, 401–403
Quality Trilogy, 388–389
quantitative risk analysis, 372–373
quarter-mile stones to inch stones, 159–160
R
RACI chart, 297
rapid prototyping, 113
Raytheon, 386
realizing stage, 8
reassign workers, 509
recurring costs, 332
recurring vs. nonrecurring costs, 332
referent power, 157, 158
regular costs, 332
regular vs. expedited costs, 332
relationship building
within core team, 160–161
stakeholders, 185–186
relationship topics, 153–155
replanning a project, 487
reporting performance, 465–467
request for information (RFI), 433
request for proposal (RFP), 433
request for quotation (RFQ), 433
requirements, 65, 212
requirements traceability matrix, 215
Research and Development (R&D) project
life cycle model, 112–113
research risk strategy, 376–377
reserve, 333
reserve needs, analyzing, 342–344
resource(s), 69, 75
assignments, 297
availability, 249, 293–294
potential, 291–293
responsibilities, 297–299
resource breakdown structure (RBS),
291–293
resource management, 11
resource manager. see functional manager
resourcing overloads, 300–303
resolving, 300–303
resource leveling, 301
resourcing projects, 286–327
abilities needed, 288–290
activity assignments, 296–299
activity vs. resource-dominated schedules,
289–290
alternative scheduling methods, 309–311
considerations, 288
estimating resource needs, 290–295
Gantt chart, 297
MS Project for, 311–319
project schedule, compress, 303–308
project team composition issues, 295–296
RACI chart, 297
resource allocation, MS Project for,
311–319
resourcing overloads, 300–303
science and art of, 288
staffing management plan, 290
timing issues, 294–295
responsibility, 7, 151
responsibility assignment matrix (RAM),
297
retrospective meetings, 115
reverse phase schedule, 310
reward and coercive power, 157158
reward participants, 509–510
risk, 67, 75, 122
risk analysis, 368–373
cause-and-effect diagram, 371–372
cause-and-effect relationships, 371
major and minor risks, 369–371
qualitative, 368
quantitative, 372–373
risk register, 373
techniques, 372–373
risk breakdown structure, 364
risk management, 360–366
categories and definitions, 362–366
definition of, 11
information gathering, 366–367
for international projects, 365
Panama Canal expansion, 364
planning, 360–366
relationships, 368
reviews, 367
risk register, 368
roles and responsibilities, 362
satellite development project, 382–383
for software projects, 365
risk management plan, 361
risk register, 373
updates, 373, 377
risk register, 368
risk response planning, 373
risks, identifying, 366–368
risk strategies. see project risk strategies
role clarification, 160
role culture, 110
rolling wave planning, 310
rolling wave planning, 227
root cause analysis, 368
run chart, 473, 474
S
sample vs. population, 407–408
sanity tests, 410
SAPTURF (Super Absorbent Polymer Turf),
426
satellite development project, 382–383
scalability, project tools, 17
Schawk, Clarence W., 286
Schawk, Inc., 286–287
schedule management, 11
schedule performance index (SPI), 479
schedule variance (SV), 478
Schwaber, Ken, 325
scope, 14, 122
scope change, 475
scope creep, 66
scope description, 218
scope management, 11
scope overview, 65–66, 70–71
scope planning, 210–243
change control, 229–232
collect requirements, 212–216
define scope, 216–220
flow, 212
plan scope management, 211–212
using MS Project in, 233–238
work breakdown structure, 220–229
scope statement, 218
scoring models, 45–48
evaluating projects criteria, 46
mandatory criteria, 45–46
potential criteria, 45
sensitivity analyses, 47–48
weighting criteria, 46
SCRUM, 113
Scrum Master, 20
second pass, 261–262
selecting stage, 7
sensitivity analysis, 47–48, 373
sequence activities
alternative dependencies, 255
definition of, 246, 253
lags, 254
leads, 254
share opportunity, 377
Shaw Industries, 427–428
Shelley, Arthur, 177–178
sigma, 390
signatures, 70, 78
simulation, 373
situational leadership, 151
Six Sigma, 390–392
SMART, 37
SMEs (subject matter experts), 126
soft skills, 7
Soldavini, Patti A., 287
source selection criteria, 51
Index 545
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sourcing, 447
special vs. common cause, 408
sponsor, 18, 117–118
sprints, 114, 325
Sputnik, 34
staff changes, 160
staffing management plan, 290
stakeholder(s), 122
analyze, 180–183
definition of, 4
document, 183–184
examples of, 179
find, 179–180
identification and prioritization matrix, 181
identify, 178–184
prioritize, 180
in project charter, 69, 75–77
project matrix, 183
relationships with, 185–186
success criteria for, 182
stakeholder analysis, 180
work breakdown structure and, 231
stakeholder engagement, 187
stakeholder engagement assessment
matrix
creating, 184–185
definition of, 184
stakeholder engagement plan, 184
stakeholder list, 69, 75–77
stakeholder management, 11
stakeholder register, 183
stakeholder satisfaction, 393
stand-up meeting, 194
start-to-finish (SF) relationship, 255
start-to-start (SS) relationship, 255
statement of work, 42–43
steering team, 18, 116–117
Stewart, Jim, 387
strategic analysis, 33–34
strategic objectives, 36–37
strategic planning process, 33–37
flow-down objectives, 37
guiding principles, 34–36
strategic analysis, 33–34
strategic objectives, 36–37
strengths, weaknesses, opportunities, and
threats (SWOT), 33, 35
subcontractor, 429
subject matter experts (SMEs), 126
subprojects, 39–42
successor activity, 253
Super Absorbent Polymer Turf (SAPTURF),
426
supplier-input-process-output customer
(SIPOC) model, 394–395
supply chain management (SCM). see
project supply chain management
supporting detail, 338–339
SWOT analysis, 366
Sydney Opera House, 176–177
T
task culture, 110
task-related conflicts, 161–162
Tatro, Inc., 140
team identity, desirable, 151
team operating principles, 69–70, 77
teams. see also project team members;
project teams
co-located, 295
cross-functional, 295
global, 167
virtual, 166–167, 295–296
Teradata, 211
termination of projects
for convenience of buyer, 501–503
for default, 501
mutual agreements, 501
Tetrault, Chris, 428
Texas Medical Center (TMC), 358–359
Texas Medical Center News, 359
third parties, 447
threat, 361
360-degree performance reviews, 108
time, 122
time and material (T&M) contracts,
440–441
time horizons, 467
time period, 297–299
time value of money, 341
to-complete performance index (TCPI),
480
tolerance vs. control limit, 408
tornado diagram, 373
total float, 262
Total Quality Management (TQM), 389
tradeoff decision making, 461
training needs, 160
transfer risk strategy, 374–375
transition plan, 503
trigger conditions, 368
Trinmar Limited, 498
trust, 116
Turner, J. Rodney, 167
two-pass method, 259–263
U
unity of command, 103
unknown unknowns, 342
unk unks, 342
U.S. Air Force, 39
U. S. Navy, Special Program Office, 247
V
validate scope, 500–501
value engineering, 340
Van Horn, Mike, 211
variable costs, 330
variable vs. attribute, 408
variance analysis, 475
variation, 396–397
causes of, 339–340
velocity, 258
vendor bid analysis, 340
vintage aircraft shipping project, 401
virtual team, 166–167, 295–296
vision, 34–35
voice of the customer (VOC), 214
volume curve and project costs, 332
W
walk through, 500
waterfall, 8
WBS. see work breakdown structure
Wendler, Rhonda, 359
work breakdown structure (WBS)
with activity list, 251
car development project, 229
component, 225
constructing, 226–229
definition of, 21–22, 220–221
with deliverables, 250
depicting estimating methods, 336
dictionary, 225
formats, 222–224
in free format, 223
in indented outline format, 222
library project, 230
with milestone list, 252
in organization chart format, 223
organization examples, 227
reasons for using, 221–222
stakeholder analysis and, 231
work packages, 224–225
work breakdown structure template,
242–243
work packages, 224–225
work performance data, 465
work performance information, 465
work performance reports, 465
wrap-ups, 441
X
Xavier Leadership Center, Xavier University,
499
XP, 113
Z
Zozer Inc., 3
546 Index
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

11.6 Implement
Risk Responses
Requirements
Documents
13.1 Identify
Stakeholders
13.3 Manage
Stakeholder
Engagement
13.4 Monitor
Stakeholder
Engagement
Stakeholder
Register
Stakeholder
Engagement
Assessment Matrix
Integration
Scope
Schedule
Cost
Quality
Resources
Communication
Risk
Procurement
Stakeholders
12.1 Plan
Procurement
Management
11.1 Plan
Risk
Management
10.1 Plan
Communications
Management
9.1 Plan
Resource
Management
8.1 Plan
Quality
Management
7.1 Plan
Cost
Management
6.1 Plan
Schedule
Management
5.1 Plan
Scope
Management
Duration
Estimates
4.3 Direct and Manage
Project Work
4.4 Manage Project
Knowledge
Scope
Statement
Scope
Baseline with WBS
Resource Histogram
Project Crashing
Retrospectives
Activity List
Milestone List
Network
Closure
Documents
Customer
Feedback
Transition Plan
Scope
Backlog
Burn
Down/Up
Charts
Quality
Reports
Bene�ts
Analysis
Realizing
Bene�ts
PM Plan Baselines Life Cycle
and Development Approach
4.1 Develop
Project Charter
4.7 Close Project
or Phase
Charter
Assumptions Log
6.6 Control
Schedule
Earned Value
Analysis
7.4 Control
Costs
5.6 Control
Scope
5.5 Validate
Scope
Cost Baseline
8.2 Manage
Quality
9.3 Acquire
Resources
9.4 Develop
Team
9.6 Control
Resources
9.5 Manage
Team
8.3 Control
Quality
Change
Requests
10.2 Manage
Communications
11.7 Monitor
Risks
10.3 Monitor
Communications
Resource Requirements
RACI
Team
Charter
Quality
Mgt.
Plan
Team
Assignments
Team
Assessments
Communications
Matrix
Agendas
Minutes
Issues Log
Meeting Evaluation
Progress Report
12.2 Conduct
Procurements
12.3 Control
Procurements
Source
Selection
Matrix
Risk Register
Bid
Documents
Make or Buy
Analysis
Lessons
Learned
Register
6.5 Develop
Schedule
Schedule Baseline
Quality
Measurements
4.6 Perform
Integrated
Change Control
4.5 Monitor and
Control
Project Work
5.2 Collect
Requirements
5.4 Create
WBS
5.3 De�ne
Scope
4.2 Develop Project Management Plan
6.2 De�ne
Activities
9.2 Estimate
Activity
Resources
11.2 Identify
Risks
11.3 Perform
Qualitative
Risk Analysis
11.4 Perform
Quantitative
Risk Analysis
11.5 Plan
Risk
Responses
13.2 Plan
Stakeholders
Engagement
6.4 Estimate
activity
Durations
7.3 Determine
Budget
7.2 Estimate
Costs
6.3 Sequence
Activities
1.2 Foundational Elements
2.4 Organizational Systems
3.3 The Project Manager’s Sphere of In�uence
3.4 Project Manager Competencies
Selecting Projects
Project Customer Tradeoff Matrix
Project Success De�nition
Life Cycle and Development Approach
Elevator Pitch
Leader Roles and Responsibilities
Project Selection and Prioritization Matrix
Project Resource Assignment Matrix
06451_bes06_07_pt01_hires.indd All Pages 30/08/17 5:47 PM
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Cover
Brief Contents
Contents
Preface��
About the Authors��
Part 1: Organizing Projects
Chapter 1: Introduction to Project Management
1-1 What Is a Project?
1-2 History of Project Management
1-3 How Can Project Work Be Described?
1-4 Understanding Projects
1-5 Project Roles
1-6 Overview of the Book
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Integrated Example Projects��
Suburban Homes Construction Project��
Casa dE Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 2: Project Selection and Prioritization
2-1 Strategic Planning Process
2-2 Portfolio Management
2-3 Securing Projects
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 3: Chartering Projects
3-1 What Is a Project Charter?
3-2 Why Is a Project Charter Used?
3-3 When Is a Charter Needed?
3-4 Typical Elements in a Project Charter
3-5 Constructing a Project Charter
3-6 Ratifying the Project Charter
3-7 Starting a Project Using Microsoft Project
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��

Part 2: Leading Projects
Chapter 4: Organizational Capability: Structure, Culture, and Roles
4-1 Types of Organizational Structures
4-2 Organizational Culture and Its Impact on Projects
4-3 Project Life Cycles
4-4 Agile Project Management
4-5 Traditional Project Executive Roles
4-6 Traditional Project Management Roles
4-7 Traditional Project Team Roles
4-8 Role Differences on Agile Projects
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 5: Leading and Managing Project Teams
5-1 Acquire Project Team
5-2 Develop Project Team
5-3 Manage Project Team
5-4 Relationship Building within the Core Team
5-5 Managing Project Conflicts
5-6 Communication Needs of Global and Virtual Teams
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Integrated Example Projects��
Casa de Paz Development Project
Project Management in Action��
References��
Endnotes��
Chapter 6: Stakeholder Analysis and Communication Planning
6-1 Identify Stakeholders
6-2 Plan Stakeholder Engagement
6-3 Manage Stakeholder Engagement
6-4 Monitor Stakeholder Engagement
6-5 Plan Communications Management
6-6 Manage Communications
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��

Part 3: Planning Projects
Chapter 7: Scope Planning
7-1 Plan Scope Management
7-2 Collect Requirements
7-3 Define Scope
7-4 Work Breakdown Structure (WBS)
7-5 Establish Change Control
7-6 Using MS Project for Work Breakdown Structures (WBS)
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Chapter 8: Scheduling Projects
8-1 Plan Schedule Management
8-2 Purposes of a Project Schedule
8-3 Historical Development of Project Schedules
8-4 How Project Schedules Are Limited and Created
8-5 Define Activities
8-6 Sequence Activities
8-7 Estimate Activity Duration
8-8 Develop Project Schedules
8-9 Uncertainty in Project Schedules
8-10 Show the Project Schedule on a Gantt Chart
8-11 Using Microsoft Project for Critical Path Schedules
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
Exercises��
PMBOK Guide Questions
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 9: Resourcing Projects
9-1 Abilities Needed When Resourcing Projects
9-2 Estimate Resource Needs
9-3 Plan Resource Management
9-4 Project Team Composition Issues
9-5 Assign a Resource to Each Activity
9-6 Dealing with Resource Overloads
9-7 Compress the Project Schedule
9-8 Alternative Scheduling Methods
9-9 Using MS Project for Resource Allocation
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnote��
Chapter 10: Budgeting Projects
10-1 Plan Cost Management
10-2 Estimate Cost
10-3 Determine Budget
10-4 Establishing Cost Control
10-5 Using MS Project for Project Budgets
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 11: Project Risk Planning
11-1 Plan Risk Management
11-2 Identify Risks
11-3 Risk Analysis
11-4 Plan Risk Responses
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 12: Project Quality Planning and Project Kickoff
12-1 Development of Contemporary Quality Concepts
12-2 Core Project Quality Concepts
12-3 Plan Quality Management
12-4 Manage Quality
12-5 Control Quality
12-6 Cost of Quality
12-7 Develop Project Management Plan
12-8 Kickoff Project
12-9 Baseline and Communicate Project Management Plan
12-10 Using MS Project for Project Baselines
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��

Part 4: Performing Projects
Chapter 13: Project Supply Chain Management
13-1 Introduction to Project Supply Chain Management
13-2 Plan Procurement Management
13-3 Conduct Procurements
13-4 Contract Types
13-5 Control Procurements
13-6 Improving Project Supply Chains
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 14: Determining Project Progress and Results
14-1 Project Balanced Scorecard Approach
14-2 Internal Project Issues
14-3 Customer Issues
14-4 Financial Issues
14-5 Using MS Project to Monitor and Control Projects
14-6 Replanning If Necessary
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercises��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��
Chapter 15: Finishing the Project and Realizing the Benefits
15-1 Validate Scope
15-2 Terminate Projects Early
15-3 Close Project
15-4 Post-Project Activities
15-5 Using MS Project for Project Closure
PMP/CAPM Study Ideas��
Summary��
Key Terms Consistent with PMI Standards and Guides��
Chapter Review Questions��
Discussion Questions��
PMBOK Guide Questions
Exercise��
Integrated Example Projects��
Casa de Paz Development Project
Semester Project Instructions��
Project Management in Action��
References��
Endnotes��

Appendix A: PMP and CAPM Exam Prep Suggestions
Appendix B: Agile Differences Covered
Appendix C: Answers to Selected Exercises
Appendix D: Project Deliverables
Index
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Week 6 – Identifying Stakeholders & Problem Set #3

Posted on: Monday, February 7, 2022 11:56:26 AM EST

As previously discussed, the Initiating phase of Project Management has two processes: Developing the Project Charter and Identifying Stakeholders. The course is designed to work toward the first process as each Problem Set completed will aid in creating the Final Project Charter to be submitted at the end of the term.

Problem Set #3 will cover the second process of Identifying Stakeholders. Be sure to watch the video in the Content folder to see a basic guide on how to Identify Stakeholders using a very basic project. We will continue to use this basic Townhouse Kitchen Remodel project for future Problem Set guides.

Identifying Stakeholders

There are many ways that stakeholders can be identified and the textbook explains many of these. The video demonstrates two ways to complete this task. One is to identify sub-projects or Key Deliverables and then determine what stakeholders will be needed to complete these sub-projects. The second is then to determine what other stakeholders may be involved that are not necessarily specifically completing the hands-on work.

Lowest Stakeholder ID Possible

In mathematics, there is a process where you reduce a fraction to the lowest (or smallest) term possible. If you have the fraction 45/100 you would need to reduce this to its lowest term which would be 9/20. The same principle exists in project management. You will need to identify you stakeholders in the lowest (or smallest) group possible. We will see this in a couple of weeks when you will identify the smallest work packages (or tasks) possible for the Work Breakdown Structure (WBS).

Using the Townhouse Kitchen Remodel project from the video we identified two groups (Neighbors and Townhouse Owners). However, we needed to break these down into smaller groups and there were smaller groups (or individuals) within this larger group that had different roles. For example, our Townhouse Owners has Mr. Elder and Mrs. Elder. Mr. Elder was serving in the role of Project Manager so he had a different role than Mrs. Elder so the Townhouse Owners needed to be broken down to reflect these two different roles. If Mr. Elder had not been the Project Manager, then they would have been in identical roles and could have been identified at the Townhouse Owner level.

For the category of Neighbors, we identified three smaller groups that had to be identified as they had differing roles in relation to the project. These were Immediate Neighbors, Non-immediate Neighbors and HOA Board (which could overlap with either of the other two, but since those specifically on the Board would have a different role than these other two then it is a separate stakeholder category). Immediate Neighbors and HOA Board were left in the stakeholder list as they fit into one of the four categories (I/K, I/S, E/K, ES). We ignored the Non-immediate Neighbors as the project would have very minimal if any impact on them. Though they would potentially fit in the E/S category, once again, there is not enough impact to list them.

Internal vs. External & Key vs Secondary

After developing your list of stakeholders, the next step is to figure out in which category they would fit. These are Internal & Key (I/K), Internal & Secondary (I/S), External & Key (E/K) and External & Secondary (E/S).

Keep in mind the brief definition provided in the video. Internal means within the project and External means outside of the project. You must focus on the project and not the business or overall organization that is completing the project. If a city is completing a road project, just because the city treasurer pays the invoices does not mean they are internal to the project. They may be internal to the city government working on the road but they are not internal to the road project.

Once you have identified Internal vs. External, you will identify whether they are Key or Secondary. Key means the stakeholder directly impacts the project, while Secondary means very minimal impact to the project or the project impacts them. In our Townhouse example, the Immediate Neighbors are External and Secondary. They are outside the project and Secondary because the project of remodeling would impact them through noise and perhaps some workers going in and out of the neighboring unit could be a minor nuisance. However, in the city road project above, even though the city treasurer was External to the project, they are Key as they impact the project. If they do not pay the invoices, contractors may quit or work stop. So, they impact the project even though they are External.

As you develop your initial Stakeholder List to complete your Stakeholder Register and Communication Matrix, keep this in mind:

1. Identify smallest Stakeholder group (or possibly individual)

2. Properly categorize each stakeholder (I/K, I/S, E/K, ES), and

3. Ensure that 6 of your 10 identified stakeholders for Problem Set #3 are (I/K)

If you have any questions on this after reviewing this full Announcement and watching the video, please email me.

Video

Week 6 – Identifying Stakeholders & Problem Set #3

Posted on: Monday, February 7, 2022 11:56:26 AM EST

Identifying Stakeholders

Lowest Stakeholder ID Possible

Internal vs. External & Key vs Secondary

As you develop your initial Stakeholder List to complete your Stakeholder Register and Communication Matrix, keep this in mind:

1. Identify smallest Stakeholder group (or possibly individual)

2. Properly categorize each stakeholder (I/K, I/S, E/K, ES), and

3. Ensure that 6 of your 10 identified stakeholders for Problem Set #3 are (I/K)

If you have any questions on this after reviewing this full Announcement and watching the video, please email me.

Video

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Week 6

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Week 6 Homework

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