Case study 6.3 johnson & rogers software engineering inc

Case Study

Questions:

The U.S. Department of Defense has a long history of sponsoring projects that have questionable usefulness. If you were assigned as a member of a project review team for a defense project, what criteria would you insist such a project has in order to be supported? In other words, what are the bare essentials needed to support such a project?
Why, in your opinion, is there such a long history of defense projects overshooting their budgets or failing some critical performance metrics? (Consider other project cases in this text, including the Expeditionary Fighting Vehicle discussed in Chapter 5.)
"The mystery is not that the Zumwalt was canceled. The mystery is why it took so long for it to be canceled." Do you agree with this assessment? Why or why not?
Google "criticisms of the Littoral Combat Ship" and identify some of the problems that critics have listed. In light of these problems, why do you think the Navy has pressed ahead with the development of the LCS?
Writing Requirements

5-7 pages in length (excluding cover page, abstract, and reference list)
APA format, Use the APA template located in the Student Resource Center to complete the assignment.
Please use the Case Study Guide as a reference point for writing your case study.

List of Cases by Chapter

Chapter 1 Development Projects in Lagos, Nigeria 2 “Throwing Good Money after Bad”: the BBC’s

Digital Media Initiative 10 MegaTech, Inc. 29 The IT Department at Hamelin Hospital 30 Disney’s Expedition Everest 31 Rescue of Chilean Miners 32

Chapter 2 Tesla’s $5 Billion Gamble 37 Electronic Arts and the Power of Strong Culture

in Design Teams 64 Rolls-Royce Corporation 67 Classic Case: Paradise Lost—The Xerox Alto 68 Project Task Estimation and the Culture of “Gotcha!” 69 Widgets ’R Us 70

Chapter 3 Project Selection Procedures: A Cross-Industry

Sampler 77 Project Selection and Screening at GE: The Tollgate

Process 97 Keflavik Paper Company 111 Project Selection at Nova Western, Inc. 112

Chapter 4 Leading by Example for the London Olympics—

Sir John Armitt 116 Dr. Elattuvalapil Sreedharan, India’s Project

Management Guru 126 The Challenge of Managing Internationally 133 In Search of Effective Project Managers 137 Finding the Emotional Intelligence to Be a Real Leader 137 Problems with John 138

Chapter 5 “We look like fools.”—Oregon’s Failed Rollout

of Its ObamacareWeb Site 145 Statements of Work: Then and Now 151 Defining a Project Work Package 163 Boeing’s Virtual Fence 172 California’s High-Speed Rail Project 173 Project Management at Dotcom.com 175 The Expeditionary Fighting Vehicle 176

Chapter 6 Engineers Without Borders: Project Teams Impacting

Lives 187 Tele-Immersion Technology Eases the Use of Virtual

Teams 203 Columbus Instruments 215 The Bean Counter and the Cowboy 216 Johnson & Rogers Software Engineering, Inc. 217

Chapter 7 The Building that Melted Cars 224 Bank of America Completely Misjudges Its Customers 230 Collapse of Shanghai Apartment Building 239 Classic Case: de Havilland’s Falling Comet 245 The Spanish Navy Pays Nearly $3 Billion for a Submarine

That Will Sink Like a Stone 248 Classic Case: Tacoma Narrows Suspension Bridge 249

Chapter 8 Sochi Olympics—What’s the Cost of National

Prestige? 257 The Hidden Costs of Infrastructure Projects—The Case

of Building Dams 286 Boston’s Central Artery/Tunnel Project 288

Chapter 9 After 20 Years and More Than $50 Billion, Oil is No Closer

to the Surface: The Caspian Kashagan Project 297

Chapter 10 Enlarging the Panama Canal 331 Project Scheduling at Blanque Cheque Construction (A) 360 Project Scheduling at Blanque Cheque Construction (B) 360

Chapter 11 Developing Projects Through Kickstarter—Do Delivery

Dates Mean Anything? 367 Eli Lilly Pharmaceuticals and Its Commitment to Critical

Chain Project Management 385 It’s an Agile World 396 Ramstein Products, Inc. 397

Chapter 12 Hong Kong Connects to the World’s Longest Natural

Gas Pipeline 401 The Problems of Multitasking 427

Chapter 13 New York City’s CityTime Project 432 Earned Value at Northrop Grumman 451 The IT Department at Kimble College 463 The Superconducting Supercollider 464 Boeing’s 787 Dreamliner: Failure to Launch 465

Chapter 14 Duke Energy and Its Cancelled Levy County Nuclear

Power Plant 478 Aftermath of a “Feeding Frenzy”: Dubai and Cancelled

Construction Projects 490 New Jersey Kills Hudson River Tunnel Project 497 The Project That Wouldn’t Die 499 The Navy Scraps Development of Its Showpiece

Warship—Until the Next Bad Idea 500

Project ManageMent achieving coMPetitive advantage

Jeffrey K. Pinto Pennsylvania State University

Boston Columbus Indianapolis New York San Francisco Hoboken Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi

Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

F o u r t h E d i t i o n

To Mary Beth, my wife, with the most profound thanks and love for her unwavering support. And, to our children, Emily, AJ, and Joseph—three “projects” that are definitely

over budget but that are performing far better than I could have hoped!

VP, Product Management: Donna Battista Editor-in-Chief: Stephanie Wall Acquisitions Editor: Dan Tylman Program Manager Team Lead: Ashley Santora Program Manager: Claudia Fernandes Editorial Assistant: Linda Albelli VP, Marketing: Maggie Moylan Product Marketing Manager: Anne Fahlgren Field Marketing Manager: Lenny Raper Strategic Marketing Manager: Erin Gardner Project Manager Team Lead: Judy Leale Project Manager: Nicole Suddeth Operations Specialist: Carol Melville Cover Designer: Lumina Datamatics, Inc Cover Photo: f11photo/Fotolia

VP, Director of Digital Strategy & Assessment: Paul Gentile Manager of Learning Applications: Paul Deluca Digital Editor: Brian Surette Digital Studio Manager: Diane Lombardo Digital Studio Project Manager: Robin Lazrus Digital Studio Project Manager: Alana Coles Digital Studio Project Manager: Monique Lawrence Digital Studio Project Manager: Regina DaSilva Full-Service Project Management and Composition: Integra Printer/Binder: Edwards Brothers Cover Printer: Phoenix Color/Hagerstown Text Font: 10/12 Palatino

Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text.

Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services. The documents and related graphics contained herein could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time. Partial screen shots may be viewed in full within the software version specified.

Microsoft® Windows®, and Microsoft Office® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation.

Copyright © 2016, 2013, 2010, 2007 by Pearson Education, Inc. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permissions, request forms and the appropriate contacts within the Pearson Education Global Rights & Permissions department, please visit www.pearsoned.com/permissions/.

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Library of Congress Cataloging-in-Publication Data

Pinto, Jeffrey K. Project management : achieving competitive advantage/Jeffrey K. Pinto.—Fourth edition. pages cm Includes index. ISBN 978-0-13-379807-4 (alk. paper)—ISBN 0-13-379807-0 (alk. paper) 1. Project management. I. Title. HD69.P75P5498 2016 658.4'04—dc23 2014036595

10 9 8 7 6 5 4 3 2 1

ISBN 10: 0-13-379807-0 ISBN 13: 978-0-13-379807-4

http://www.pearsoned.com/permissions/
iii

BrIEF COnTEnTS

Preface xiii

Chapter 1 Introduction: Why Project Management? 1

Chapter 2 The Organizational Context: Strategy, Structure, and Culture 36

Chapter 3 Project Selection and Portfolio Management 76

Chapter 4 Leadership and the Project Manager 115

Chapter 5 Scope Management 144

Chapter 6 Project Team Building, Conflict, and Negotiation 186

Chapter 7 Risk Management 223

Chapter 8 Cost Estimation and Budgeting 256

Chapter 9 Project Scheduling: Networks, Duration Estimation, and Critical Path 296

Chapter 10 Project Scheduling: Lagging, Crashing, and Activity Networks 330

Chapter 11 Advanced Topics in Planning and Scheduling: Agile and Critical Chain 366

Chapter 12 Resource Management 400

Chapter 13 Project Evaluation and Control 431

Chapter 14 Project Closeout and Termination 477

Appendix A The Cumulative Standard Normal Distribution 509

Appendix B Tutorial for MS Project 2013 510

Appendix C Project Plan Template 520

Glossary 524

Company Index 534

Name Index 535

Subject Index 538

iv

COnTEnTS

Preface xiii

Chapter 1 IntroduCtIon: Why ProjeCt ManageMent? 1 Project Profile: Development Projects in Lagos, Nigeria 2

Introduction 4

1.1 What Is a Project? 5 General Project Characteristics 6

1.2 Why Are Projects Important? 9 Project Profile: “Throwing Good Money after Bad”: the BBC’s Digital

Media Initiative 10

1.3 Project Life Cycles 13 ◾ Box 1.1: Project Managers in Practice 15

1.4 Determinants of Project Success 16 ◾ Box 1.2: Project Management Research in Brief 19

1.5 Developing Project Management Maturity 19

1.6 Project Elements and Text Organization 23 Summary  27  •  Key Terms  29  •  Discussion Questions  29 •  Case Study 1.1 MegaTech, Inc.  29  •  Case Study 1.2 The IT  Department at Hamelin Hospital  30  •  Case Study 1.3 Disney’s Expedition  Everest  31  •  Case Study 1.4 Rescue of Chilean Miners  32  •  Internet  Exercises  33  •  PMP Certification Sample Questions  34  •  Notes  34

Chapter 2 the organIzatIonal Context: Strategy, StruCture, and Culture 36

Project Profile: Tesla’s $5 Billion Gamble 37

Introduction 38

2.1 Projects and Organizational Strategy 39

2.2 Stakeholder Management 41 Identifying Project Stakeholders 42 Managing Stakeholders 45

2.3 Organizational Structure 47

2.4 Forms of Organizational Structure 48 Functional Organizations 48 Project Organizations 50 Matrix Organizations 53 Moving to Heavyweight Project Organizations 55

◾ Box 2.1: Project Management Research in Brief 56

2.5 Project Management Offices 57

2.6 Organizational Culture 59 How Do Cultures Form? 61 Organizational Culture and Project Management 63 Project Profile: Electronic Arts and the Power of Strong Culture in Design Teams 64

Summary  65  •  Key Terms  67  •  Discussion Questions  67  •  Case Study 2.1 Rolls-Royce Corporation  67  •  Case Study 2.2 Classic Case: Paradise Lost—The Xerox Alto  68  •  Case Study 2.3 Project Task Estimation and the Culture of “Gotcha!”  69  •  Case Study 2.4 Widgets ’R Us 70 •  Internet Exercises  70  •  PMP Certification Sample Questions  70  •  Integrated Project—Building Your Project Plan  72  •  Notes  74

Contents v

Chapter 3 ProjeCt SeleCtIon and PortfolIo ManageMent 76 Project Profile: Project Selection Procedures: A Cross-Industry Sampler 77

Introduction 78

3.1 Project Selection 78

3.2 Approaches to Project Screening and Selection 80 Method One: Checklist Model 80 Method Two: Simplified Scoring Models 82 Limitations of Scoring Models 84 Method Three: The Analytical Hierarchy Process 84 Method Four: Profile Models 88

3.3 Financial Models 90 Payback Period 90 Net Present Value 92 Discounted Payback 94 Internal Rate of Return 94 Choosing a Project Selection Approach 96 Project Profile: Project Selection and Screening at GE: The Tollgate Process 97

3.4 Project Portfolio Management 98 Objectives and Initiatives 99 Developing a Proactive Portfolio 100 Keys to Successful Project Portfolio Management 103 Problems in Implementing Portfolio Management 104

Summary  105  •  Key Terms  106  •  Solved Problems  107  •  Discussion Questions  108  •  Problems  108  •  Case Study 3.1 Keflavik Paper Company  111  •  Case Study 3.2 Project Selection at Nova Western, Inc.  112  •  Internet Exercises  113  •  Notes  113

Chapter 4 leaderShIP and the ProjeCt Manager 115 Project Profile: Leading by Example for the London Olympics—Sir John Armitt 116

Introduction 117

4.1 Leaders Versus Managers 118

4.2 How the Project Manager Leads 119 Acquiring Project Resources 119 Motivating and Building Teams 120 Having a Vision and Fighting Fires 121 Communicating 121

◾ Box 4.1: Project Management Research in Brief 124

4.3 Traits of Effective Project Leaders 125 Conclusions about Project Leaders 126 Project Profile: Dr. Elattuvalapil Sreedharan, India’s Project Management Guru 126

4.4 Project Champions 127 Champions—Who Are They? 128 What Do Champions Do? 129 How to Make a Champion 130

4.5 The New Project Leadership 131 ◾ Box 4.2: Project Managers in Practice 132

Project Profile: The Challenge of Managing Internationally 133

4.6 Project Management Professionalism 134

vi Contents

Summary  135  •  Key Terms  136  •  Discussion Questions  136  •  Case Study 4.1 In Search of Effective Project Managers 137 •  Case Study 4.2 Finding the Emotional Intelligence to Be a Real Leader 137 •  Case Study 4.3 Problems with John  138  •  Internet Exercises  141 •  PMP Certification Sample Questions  141  •  Notes  142

Chapter 5 SCoPe ManageMent 144 Project Profile: “We look like fools.”—Oregon’s Failed Rollout of Its Obamacare

Web Site 145

Introduction 146

5.1 Conceptual Development 148 The Statement of Work 150 The Project Charter 151 Project Profile: Statements of Work: Then and Now 151

5.2 The Scope Statement 153 The Work Breakdown Structure 153 Purposes of the Work Breakdown Structure 154 The Organization Breakdown Structure 159 The Responsibility Assignment Matrix 160

5.3 Work Authorization 161 Project Profile: Defining a Project Work Package 163

5.4 Scope Reporting 164 ◾ Box 5.1: Project Management Research in Brief 165

5.5 Control Systems 167 Configuration Management 167

5.6 Project Closeout 169 Summary  170  •  Key Terms  171  •  Discussion Questions  171  •  Problems  172  •  Case Study 5.1 Boeing’s Virtual Fence 172 •  Case Study 5.2 California’s High-Speed Rail Project  173  •  Case Study 5.3 Project Management at Dotcom.com  175  •  Case Study 5.4 The Expeditionary Fighting Vehicle  176  •  Internet Exercises  178  •  PMP Certification Sample Questions  178  •  MS Project Exercises  179  •  Appendix 5.1: Sample Project Charter  180  •  Integrated Project— Developing the Work Breakdown Structure  182  •  Notes  184

Chapter 6 ProjeCt teaM BuIldIng, ConflICt, and negotIatIon 186 Project Profile: Engineers Without Borders: Project Teams Impacting Lives 187

Introduction 188

6.1 Building the Project Team 189 Identify Necessary Skill Sets 189 Identify People Who Match the Skills 189 Talk to Potential Team Members and Negotiate with Functional Heads 189 Build in Fallback Positions 191 Assemble the Team 191

6.2 Characteristics of Effective Project Teams 192 A Clear Sense of Mission 192 A Productive Interdependency 192 Cohesiveness 193 Trust 193 Enthusiasm 193 Results Orientation 194

Contents vii

6.3 Reasons Why Teams Fail 194 Poorly Developed or Unclear Goals 194 Poorly Defined Project Team Roles and Interdependencies 194 Lack of Project Team Motivation 195 Poor Communication 195 Poor Leadership 195 Turnover Among Project Team Members 196 Dysfunctional Behavior 196

6.4 Stages in Group Development 196 Stage One: Forming 197 Stage Two: Storming 197 Stage Three: Norming 198 Stage Four: Performing 198 Stage Five: Adjourning 198 Punctuated Equilibrium 198

6.5 Achieving Cross-Functional Cooperation 199 Superordinate Goals 199 Rules and Procedures 200 Physical Proximity 201 Accessibility 201 Outcomes of Cooperation: Task and Psychosocial Results 201

6.6 Virtual Project Teams 202 Project Profile: Tele-Immersion Technology Eases the Use

of Virtual Teams 203

6.7  Conflict Management  204 What Is Conflict? 205 Sources of Conflict 206 Methods for Resolving Conflict 208

6.8 Negotiation 209 Questions to Ask Prior to the Negotiation 209 Principled Negotiation 210 Invent Options for Mutual Gain 212 Insist on Using Objective Criteria 213

Summary  214  •  Key Terms  214  •  Discussion Questions  215  •  Case Study 6.1 Columbus Instruments  215  •  Case Study 6.2 The Bean Counter and the Cowboy  216  •  Case Study 6.3 Johnson & Rogers Software Engineering, Inc.  217  •  Exercise in Negotiation  219  •  Internet  Exercises  220  •  PMP Certification Sample Questions  220  •  Notes  221

Chapter 7 rISk ManageMent 223 Project Profile: The Building that Melted Cars 224

Introduction 225 ◾ Box 7.1: Project Managers in Practice 227

7.1 Risk Management: A Four-Stage Process 228 Risk Identification 228 Project Profile: Bank of America Completely Misjudges Its Customers 230

Risk Breakdown Structures 231 Analysis of Probability and Consequences 231 Risk Mitigation Strategies 234

viii Contents

Use of Contingency Reserves 236 Other Mitigation Strategies 237 Control and Documentation 237 Project Profile: Collapse of Shanghai Apartment Building 239

7.2 Project Risk Management: An Integrated Approach 241 Summary  243  •  Key Terms  244  •  Solved Problem  244  •  Discussion  Questions  244  •  Problems  244  •  Case Study 7.1 Classic Case: de Havilland’s Falling Comet  245  •  Case Study 7.2 The Spanish Navy Pays Nearly $3 Billion for a Submarine That Will Sink Like a Stone  248  •  Case Study 7.3 Classic Case: Tacoma Narrows Suspension Bridge  249  •  Internet  Exercises  251  •  PMP Certification Sample Questions  251  •  Integrated  Project—Project Risk Assessment  253  •  Notes  255

Chapter 8 CoSt eStIMatIon and BudgetIng 256 Project Profile: Sochi Olympics—What’s the Cost of National Prestige? 257

8.1 Cost Management 259 Direct Versus Indirect Costs 260 Recurring Versus Nonrecurring Costs 261 Fixed Versus Variable Costs 261 Normal Versus Expedited Costs 262

8.2 Cost Estimation 262 Learning Curves in Cost Estimation 266

◾ Box 8.1: Project Management Research in Brief 270 Problems with Cost Estimation 272

◾ Box 8.2: Project Management Research in Brief 274

8.3 Creating a Project Budget 275 Top-Down Budgeting 275 Bottom-Up Budgeting 276 Activity-Based Costing 276

8.4 Developing Budget Contingencies 278 Summary  280  •  Key Terms  281  •  Solved Problems  282  •  Discussion Questions  283  •  Problems  284  •  Case Study 8.1 The Hidden Costs of Infrastructure Projects—The Case of Building Dams 286 •  Case Study 8.2 Boston’s Central Artery/Tunnel Project  288  •  Internet  Exercises  290  •  PMP Certification Sample Questions  290  •  Integrated  Project—Developing the Cost Estimates and Budget  292  •  Notes  294

Chapter 9 ProjeCt SChedulIng: netWorkS, duratIon eStIMatIon, and CrItICal Path 296

Project Profile: After 20 Years and More Than $50 Billion, Oil is No Closer to the Surface: The Caspian Kashagan Project 297

Introduction 298

9.1 Project Scheduling 299

9.2  Key Scheduling Terminology  300

9.3 Developing a Network 302 Labeling Nodes 303 Serial Activities 303 Concurrent Activities 303 Merge Activities 304 Burst Activities 305

9.4 Duration Estimation 307

Contents ix

9.5 Constructing the Critical Path 311 Calculating the Network 311 The Forward Pass 312 The Backward Pass 314 Probability of Project Completion 316 Laddering Activities 318 Hammock Activities 319 Options for Reducing the Critical Path 320

◾ Box 9.1: Project Management Research in Brief 321 Summary  322  •  Key Terms  323  •  Solved Problems  323  •  Discussion Questions  325  •  Problems  325  •  Internet  Exercises  327  •  MS Project Exercises  328  •  PMP Certification  Sample Questions  328  •  Notes  329

Chapter 10 ProjeCt SChedulIng: laggIng, CraShIng, and aCtIvIty netWorkS 330

Project Profile: Enlarging the Panama Canal 331

Introduction 333

10.1 Lags in Precedence Relationships 333 Finish to Start 333 Finish to Finish 334 Start to Start 334 Start to Finish 335

10.2 Gantt Charts 335 Adding Resources to Gantt Charts 337 Incorporating Lags in Gantt Charts 338 ◾ Box 10.1: Project Managers in Practice 338

10.3 Crashing Projects 340 Options for Accelerating Projects 340 Crashing the Project: Budget Effects 346

10.4 Activity-on-Arrow Networks 348 How Are They Different? 348 Dummy Activities 351 Forward and Backward Passes with AOA Networks 352 AOA Versus AON 353

10.5 Controversies in the Use of Networks 354 Conclusions 356 Summary  356  •  Key Terms  357  •  Solved Problems  357  •  Discussion  Questions  358  •  Problems  358  •  Case Study 10.1 Project Scheduling at Blanque Cheque Construction (A)  360  •  Case Study 10.2 Project Scheduling at Blanque Cheque Construction (B)  360  •  MS Project  Exercises  361  •  PMP Certification Sample Questions  361  •  Integrated  Project—Developing the Project Schedule  363  •  Notes  365

Chapter 11 advanCed toPICS In PlannIng and SChedulIng: agIle and CrItICal ChaIn 366

Project Profile: Developing Projects Through Kickstarter—Do Delivery Dates Mean Anything? 367

Introduction 368

11.1 Agile Project Management 369 What Is Unique About Agile PM? 370

x Contents

Tasks Versus Stories 371 Key Terms in Agile PM 372 Steps in Agile 373 Sprint Planning 374 Daily Scrums 374 The Development Work 374 Sprint Reviews 375 Sprint Retrospective 376 Problems with Agile 376

◾ Box 11.1: Project Management Research in Brief 376

11.2 Extreme Programming (XP) 377

11.3 The Theory of Constraints and Critical Chain Project Scheduling 377 Theory of Constraints 378

11.4 The Critical Chain Solution to Project Scheduling 379 Developing the Critical Chain Activity Network 381 Critical Chain Solutions Versus Critical Path Solutions 383

Project Profile: Eli Lilly Pharmaceuticals and Its Commitment to Critical Chain Project Management 385

11.5  Critical Chain Solutions to Resource Conflicts  386

11.6 Critical Chain Project Portfolio Management 387 ◾ Box 11.2: Project Management Research in Brief 390

11.7 Critiques of CCPM 391 Summary  391  •  Key Terms  393  •  Solved Problem  393  •  Discussion Questions  394  •  Problems  394  •  Case Study 11.1 It’s an Agile World  396  •  Case Study 11.2 Ramstein Products, Inc. 397 •  Internet Exercises  398  •  Notes  398

Chapter 12 reSourCe ManageMent 400 Project Profile: Hong Kong Connects to the World’s Longest Natural

Gas Pipeline 401

Introduction 402

12.1 The Basics of Resource Constraints 402 Time and Resource Scarcity 403

12.2 Resource Loading 405

12.3 Resource Leveling 407 Step One: Develop the Resource-Loading Table 411 Step Two: Determine Activity Late Finish Dates 412 Step Three: Identify Resource Overallocation 412 Step Four: Level the Resource-Loading Table 412

12.4 Resource-Loading Charts 416 ◾ Box 12.1: Project Managers in Practice 418

12.5 Managing Resources in Multiproject Environments 420 Schedule Slippage 420 Resource Utilization 420 In-Process Inventory 421 Resolving Resource Decisions in Multiproject Environments 421 Summary  423  •  Key Terms  424  •  Solved Problem  424  •  Discussion Questions  425  •  Problems  425  •  Case Study 12.1 The Problems of Multitasking  427  •  Internet Exercises  428  •  MS Project  Exercises  428  •  PMP Certification Sample Questions  429  •  Integrated  Project—Managing Your Project’s Resources  430  •  Notes  430

Contents xi

Chapter 13 ProjeCt evaluatIon and Control 431 Project Profile: New York City’s CityTime Project 432

Introduction 433

13.1 Control Cycles—A General Model 434

13.2 Monitoring Project Performance 435 The Project S-Curve: A Basic Tool 435 S-Curve Drawbacks 436 Milestone Analysis 437 Problems with Milestones 438 The Tracking Gantt Chart 439 Benefits and Drawbacks of Tracking Gantt Charts 440

13.3 Earned Value Management 440 Terminology for Earned Value 441 Creating Project Baselines 442 Why Use Earned Value? 443 Steps in Earned Value Management 444 Assessing a Project’s Earned Value 445

13.4 Using Earned Value to Manage a Portfolio of Projects 450 Project Profile: Earned Value at Northrop Grumman 451

13.5 Issues in the Effective Use of Earned Value Management 452

13.6 Human Factors in Project Evaluation and Control 454 Critical Success Factor Definitions 456 Conclusions 458 Summary  458  •  Key Terms  459  •  Solved Problem  459  •  Discussion Questions  460  •  Problems  461  •  Case Study 13.1 The IT Department at Kimble College  463  •  Case Study 13.2 The Supercon- ducting Supercollider  464  •  Case Study 13.3 Boeing’s 787 Dreamliner: Failure to Launch  465  •  Internet Exercises  468  •  MS Project  Exercises  468  •  PMP Certification Sample Questions  469  •  Appendix 13.1: Earned Schedule*  470  •  Notes  475

Chapter 14 ProjeCt CloSeout and terMInatIon 477 Project Profile: Duke Energy and Its Cancelled Levy County Nuclear

Power Plant 478

Introduction 479

14.1 Types of Project Termination 480 ◾ Box 14.1: Project Managers in Practice 480

14.2 Natural Termination—The Closeout Process 482 Finishing the Work 482 Handing Over the Project 482 Gaining Acceptance for the Project 483 Harvesting the Benefits 483 Reviewing How It All Went 483 Putting It All to Bed 485 Disbanding the Team 486 What Prevents Effective Project Closeouts? 486

14.3 Early Termination for Projects 487 Making the Early Termination Decision 489 Project Profile: Aftermath of a “Feeding Frenzy”: Dubai and Cancelled

Construction Projects 490

xii Contents

Shutting Down the Project 490 ◾ Box 14.2: Project Management Research in Brief 492

Allowing for Claims and Disputes 493

14.4 Preparing the Final Project Report 494 Conclusion 496 Summary  496  •  Key Terms  497  •  Discussion Questions  497  •  Case Study 14.1 New Jersey Kills Hudson River Tunnel Project  497  •  Case Study 14.2 The Project That Wouldn’t Die  499  •  Case Study 14.3 The Navy Scraps Development of Its Showpiece Warship—Until the Next Bad Idea  500  •  Internet Exercises  501  •  PMP Certification Sample  Questions  502  •  Appendix 14.1: Sample Pages from Project Sign-off  Document  503  •  Notes  507

Appendix A The Cumulative Standard Normal Distribution 509

Appendix B Tutorial for MS Project 2013 510

Appendix C Project Plan Template 520

Glossary 524

Company Index 534

Name Index 535

Subject Index 538

xiii

PrEFACE

Project management has become central to operations in industries as diverse as construction and information technology, architecture and hospitality, and engineering and new product development; therefore, this text simultaneously embraces the general principles of project management while addressing specific examples across the wide assortment of its applications. This text approaches each chapter from the perspective of both the material that is general to all disciplines and project types and that which is more specific to alternative forms of projects. One way this is accomplished is through the use of specific, discipline-based examples to illus- trate general principles as well as the inclusion of cases and Project Profiles that focus on more specific topics (e.g., Chapter 5’s treatment of IT “death march” projects).

Students in project management classes come from a wide and diverse cross section of uni- versity majors and career tracks. Schools of health, business, architecture, engineering, information systems, and hospitality are all adding project management courses to their catalogs in response to the demands from organizations and professional groups that see their value for students’ future careers. Why has project management become a discipline of such tremendous interest and applica- tion? The simple truth is that we live in a “projectized” world. Everywhere we look we see people engaged in project management. In fact, project management has become an integral part of practi- cally every firm’s business model.

This text takes a holistic, integrated approach to managing projects, exploring both technical and managerial challenges. It not only emphasizes individual project execution, but also provides a strategic perspective, demonstrating the means with which to manage projects at both the program and portfolio levels.

At one time, project management was almost exclusively the property of civil and con- struction engineering programs where it was taught in a highly quantitative, technical man- ner. “Master the science of project management,” we once argued, “and the ‘art’ of project management will be equally clear to you.” Project management today is a complex, “manage- ment” challenge requiring not only technical skills but a broad-based set of people skills as well. Project management has become the management of technology, people, culture, stake- holders, and other diverse elements necessary to successfully complete a project. It requires knowledge of leadership, team building, conflict resolution, negotiation, and influence in equal measure with the traditional, technical skill set. Thus, this textbook broadens our focus beyond the traditional project management activities of planning and scheduling, project control, and termination, to a more general, inclusive, and, hence, more valuable perspective of the project management process.

What’s NeW iN the foUrth editioN?

New features

• Agile Project Management • Project Charters • MS Project 2013 Step-by-Step Tutorials • Appendix—Project Execution Plan Template • New Project Managers in Practice Profiles • Risk Breakdown Structures • Extreme Programming • Updated Problems in Chapters • New Project Management Research in Brief: “Does Agile Work?” • All MS Project Examples and Screen Captures Updated to MS Project 2013 • All Project Management Body of Knowledge (PMBOK) Referencing Updated to

5th Edition • Quarterly Updates for All Book Adopters on Latest Cases and Examples in Project

Management

Updated Project Profiles

Chapter 1 Introduction: Why Project Management? • Development Projects in Lagos, Nigeria • “Throwing Good Money after Bad”: The BBC’s Digital Media Initiative

Chapter 2 The Organizational Context: Strategy, Structure, and Culture • Tesla’s $5 Billion Gamble • Electronic Arts and the Power of Strong Culture in Design Teams

Chapter 3 Project Selection and Portfolio Management • Project Selection Procedures: A Cross-Industry Sampler

Chapter 4 Leadership and the Project Manager • Leading by Example for the London Olympics—Sir John Armitt • Dr. E. Sreedharan, India’s Project Management Guru

Chapter 5 Scope Management • “We look like fools.” Oregon’s Failed Rollout of Their Obamacare Website • Boeing’s Virtual Fence • California’s High-Speed Rail Project—What’s the Latest News? • The Expeditionary Fighting Vehicle

Chapter 6 Project Team Building, Conflict, and Negotiation • Engineers without Borders: Project Teams Impacting Lives

Chapter 7 Risk Management • The Building That Melted Cars • Bank of America Completely Misjudges Its Customers • Collapse of Shanghai Apartment Building • The Spanish Navy Pays Nearly $3 Billion for a Submarine That Will Sink Like a Stone

Chapter 8 Cost Estimation and Budgeting • Sochi Olympics—What’s the Cost of National Prestige? • The Hidden Costs of Infrastructure ProjectsThe Case of Building Dams

Chapter 9 Project Scheduling: Networks, Duration Estimation, and Critical Path • After 20 Years and More than $50 Billion, Oil Is No Closer to the Surface: The Caspian

Kashagan Project Chapter 10 Project Scheduling: Lagging, Crashing, and Activity Networks • Enlarging the Panama Canal

Chapter 11 Critical Chain Project Scheduling • Developing Projects through Kickstarter—Do Delivery Dates Mean Anything? • Eli Lilly Pharmaceutical’s Commitment to Critical Chain Project Scheduling

Chapter 12 Resource Management • Hong Kong Connects to the World’s Longest Natural Gas Pipeline

Chapter 13 Project Evaluation and Control • New York City’s CityTime Project • Boeing’s 787 Dreamliner: Failure to Launch (with update) • Earned Value Management at Northrop Grumman

Chapter 14 Project Closeout and Termination • Duke Energy and Its Cancelled Levy County Nuclear Power Plant • Aftermath of a “Feeding Frenzy”—Dubai and Cancelled Construction Projects • New Jersey Kills Hudson River Tunnel Project • The Navy Scraps Development of Its Showpiece Warship—Until the Next Bad Idea

oUr focUs

This textbook employs a managerial, business-oriented approach to the management of projects. Thus we have integrated Project Profiles into the text.

• Project Profiles—Each chapter contains one or more Project Profiles that highlight cur- rent examples of project management in action. Some of the profiles reflect on significant

xiv Preface

Preface xv

achievements; others detail famous (and not-so-famous) examples of project failures. Because they cover diverse ground (IT projects, construction, new product development, and so forth), there should be at least one profile per chapter that is meaningful to the class’s focus. There is a deliberate effort made to offer a combination of project success stories and project failures. While successful projects can be instructive, we often learn far more from examining the variety of reasons why projects fail. As much as possible, these stories of success and failure are intended to match up with the chapters to which they are attached. For example, as we study the uses of projects to implement corporate strategy, it is useful to consider Elon Musk’s $5 billion dollar decision to develop a “gigafactory” to produce batteries for his Tesla automobiles.

The book blends project management within the context of the operations of any successful or- ganization, whether publicly held, private, or not-for-profit. We illustrate this through the use of end-of-chapter cases.

• Cases—At the end of each chapter are some final cases that take specific examples of the material covered in the chapter and apply them in the alternate format of case studies. Some of the cases are fictitious, but the majority of them are based on real situations, even where aliases mask the real names of organizations. These cases include discussion ques- tions that can be used either for homework or to facilitate classroom discussions. There are several “classic” project cases as well, highlighting some famous (and infamous) examples of projects whose experiences have shaped our understanding of the discipline and its best practices.

Further, we explore both the challenges in the management of individual projects as well as broad- ening out this context to include strategic, portfolio-level concepts. To do this, we ask students to develop a project plan using MS Project 2013.

• Integrated Project Exercises—Many of the chapters include an end-of-chapter feature that is unique to this text: the opportunity to develop a detailed project plan. A very beneficial exercise in project management classes is to require students, either in teams or individu- ally, to learn the mechanics of developing a detailed and comprehensive project plan, in- cluding scope, scheduling, risk assessment, budgeting, and cost estimation. The Integrated Project exercises afford students the opportunity to develop such a plan by assigning these activities and illustrating a completed project (ABCups, Inc.) in each chapter. Thus, students are assigned their project planning activities and have a template that helps them complete these exercises.

And finally, we have integrated the standards set forth by the world’s largest governing body for project management. The Project Management Institute (PMI) created the Project Management Body of Knowledge (PMBOK), which is generally regarded as one of the most comprehensive frameworks for identifying the critical knowledge areas that project managers must understand if they are to master their discipline. The PMBOK has become the basis for the Project Management Professional (PMP) certification offered by PMI for professional project managers.

• Integration with the PMBOK—As a means to demonstrate the coverage of the critical PMBOK elements, readers will find that the chapters in this text identify and cross-list the corresponding knowledge areas from the latest, fifth edition of PMBOK. Further, all terms (including the Glossary) are taken directly from the most recent edition of the PMBOK.

• Inclusion of Sample PMP Certification Exam Questions—The Project Management Professional (PMP) certification represents the highest standard of professional qualifi- cation for a practicing project manager and is administered by the Project Management Institute. As of 2014, there were more than 600,000 PMPs worldwide. In order to attain PMP certification, it is necessary for candidates to undergo a comprehensive exam that tests their knowledge of all components of the PMBOK. This text includes a set of sample PMP certification exam questions at the end of most of the chapters, in order to give read- ers an idea of the types of questions typically asked on the exam and how those topics are treated in this book.

xvi Preface

other PoiNts of distiNctioN

The textbook places special emphasis on blending current theory, practice, research, and case studies in such a manner that readers are given a multiple-perspective exposure to the project management process. A number of in-chapter features are designed to enhance student learning, including:

• MS Project Exercises—An additional feature of the text is the inclusion at the end of several chapters of some sample problems or activities that require students to generate MS Project output files. For example, in Chapter 9 on scheduling, students must create an MS Project network diagram. Likewise, other reports can be assigned to help students become mini- mally adept at interacting with this program. It is not the purpose of this text to fully develop these skills but rather to plant the seeds for future application.

• Research in Brief—A unique feature of this text is to include short (usually one-page) text boxes that highlight the results of current research on the topics of interest. Students often find it useful to read about actual studies that highlight the text material and provide additional information that expands their learning. Although not every chapter includes a “Research in Brief” box, most have one and, in some cases, two examples of this feature.

• Project Managers in Practice—An addition to this text is the inclusion of several short profiles of real, practicing project managers from a variety of corporate and project settings. These profiles have been added to give students a sense of the types of real-world challenges project managers routinely face, the wide range of projects they are called to manage, and the satisfac- tions and career opportunities available to students interested in pursuing project manage- ment as a career.

• Internet Exercises—Each chapter contains a set of Internet exercises that require students to search the Web for key information and perform other activities that lead to student learn- ing through outside-of-class, hands-on activities. Internet exercises are a useful supplement, particularly in the area of project management, because so much is available on the World Wide Web relating to projects, including cases, news releases, and Internet-based tools for analyzing project activities.

• MS Project 2013 Tutorials—Appendix B at the end of the text features two in-depth tutorials that instruct students in the rudiments of developing a project schedule, resource leveling, and critical path development. A second tutorial instructs students in methods for updating the project plan, generating output files such as earned value metrics, and tracking ongoing project activities. These tutorials are not intended to substitute for fuller instruction in this valuable software, but they do provide a critical means for initial familiarization with the package.

• Project Execution Plan Template—Appendix C provides a template for developing a fully evolved project execution plan. Instructors using previous versions of this text noted the value in requiring that students be able to create a project plan and requested a more comprehensive template that could be employed. This template addresses the critical elements of project scope, as well as offers a method for putting these details in a logical sequence.

instructor resources At the Instructor Resource Center, www.pearsonhighered.com/irc, instructors can easily register to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical support team is ready to help with the media supple- ments that accompany this text. Visit http://247.pearsoned.com for answers to frequently asked questions and toll-free user support phone numbers.

The following supplements are available with this text:

• Instructor’s Solutions Manual • Test Bank • TestGen® Computerized Test Bank • PowerPoint Presentation

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Preface xvii

ackNoWledgmeNts

In acknowledging the contributions of past and present colleagues to the creation of this text, I must first convey my deepest thanks and appreciation for the 30-year association with my origi- nal mentor, Dr. Dennis Slevin of the University of Pittsburgh’s Katz Graduate School of Business. My collaboration with Denny on numerous projects has been fruitful and extremely gratifying, both professionally and personally. In addition, Dr. David Cleland’s friendship and partnership in several ventures has been a great source of satisfaction through the years. A frequent collaborator who has had a massive influence on my thinking and approach to understanding project manage- ment is Professor Peter W.G. Morris, lately of University College London. Working with him has been a genuine joy and constant source of inspiration. Additional mentors and colleagues who have strongly influenced my thinking include Samuel Mantel, Jr., Rodney Turner, Erik Larson, David Frame, Francis Hartman, Jonas Soderlund, Young Kwak, Rolf Lundin, Lynn Crawford, Graham Winch, Terry Williams, Francis Webster, Terry Cooke-Davies, Hans Thamhain, and Karlos Artto. Each of these individuals has had a profound impact on the manner in which I view, study, and write about project management. Sadly, 2014 saw the passing of three of these outstanding project management scholars—Hans Thamhain, Sam Mantel and Francis Hartman. I hope that my efforts help, in some small part, to keep their vision and contributions alive.

Over the years, I have also been fortunate to develop friendships with some professional project managers whose work I admire enormously. They are genuine examples of the best type of project manager: one who makes it all seem effortless while consistently performing minor miracles. In par- ticular, I wish to thank Mike Brown of Rolls-Royce for his friendship and example. I would also like to thank friends and colleagues from the Project Management Institute, including Lew Gedansky, Harry Stephanou, and Eva Goldman, for their support for and impact on this work.

I am indebted to the reviewers of this text whose numerous suggestions and critiques have been an invaluable aid in shaping its content. Among them, I would like to especially thank the following:

Kwasi Amoako-Gyampah— University of North Carolina, Greensboro Ravi Behara—George Mason University Jeffrey L. Brewer—Purdue University Dennis Cioffi—George Washington University David Clapp—Florida Institute of Technology Bruce DeRuntz—Southern Illinois University at Carbondale Ike Ehie—Kansas State University Michael H. Ensby—Clarkson University Lynn Fish—Canisius College Linda Fried—University of Colorado, Denver Mario Guimaraes—Kennesaw State University Richard Gunther—California State University, Northridge Brian Gurney—Montana State University, Billings Gary Hackbarth—Iowa State University Mamoon M. Hammad—George Washington University Scott Robert Homan—Purdue University John Hoxmeier—Colorado State University Alex Hutchins—ITT Technical Institute Richard Jensen—Hofstra University Robert Key—University of Phoenix Homayoun Khamooshi—George Washington University Dennis Krumwiede—Idaho State University George Mechling—Western Carolina University Julia Miyaoka—San Francisco State University

xviii Preface

LaWanda Morant—ITT Technical Institute Robert Morris—Florida State College at Jacksonville James Muller—Cleveland State University Kenneth E. Murphy—Willamette University John Nazemetz—Oklahoma State University Patrick Penfield—Syracuse University Ronald Price—ITT Techincal Institute Ronny Richardson—Southern Polytechnic State University John Sherlock—Iona College Gregory Shreve—Kent State University Randall G. Sleeth—Virginia Commonwealth University Kimberlee Snyder—Winona State University Jeff Trailer—California State University, Chico Leo Trudel—University of Maine Oya Tukel—Cleveland State University Darien Unger—Howard University Amy Valente—Cayuga Community College Stephen Whitehead—Hilbert College

I would also like to thank my colleagues in the Samuel Black School of Business at Penn State, the Behrend College. Additionally, my thanks goes to Dana Johnson of Michigan Technological University for preparing the PowerPoints for this edition, and Geoff Willis of University of Central Oklahoma for preparing the Test Bank. Extra-special thanks go to Kerri Tomasso for her help in preparing the final manuscript and for her integral role in permissions research and acquisitions. I am espe- cially indebted to Khurrum Bhutta, who accuracy checked this edition. I am very grateful for his time and effort, and any errors that may remain are entirely my own.

In developing the cases for this edition of the textbook, I was truly fortunate to develop wonderful professional relationships with a number of individuals. Andrea Finger and Kathleen Prihoda of Disney were wonderfully helpful and made time in their busy schedules to assist me in developing the Expedition Everest case for this text. Stephanie Smith, Mohammed Al-Sadiq, Bill Mowery, Mike Brown, Julia Sweet, and Kevin O’Donnell provided me with invaluable information on their job responsibilities and what it takes to be a successful project manager.

Finally, I wish to extend my sincere thanks to the people at Pearson for their support for the text during its development, including Dan Tylman, editor, and Claudia Fernandes, program manager. I also would like to thank the Pearson editorial, production, and marketing staffs.

feedBack

The textbook team and I would appreciate hearing from you. Let us know what you think about this textbook by writing to college.marketing@pearson.com. Please include “Feedback about Pinto” in the subject line.

If you have questions related to this product, please contact our customer service department online at http://247pearsoned.custhelp.com.

Finally, it is important to reflect on an additional salient issue as you begin your study of project management: Most of you will be running a project long before you are given wider management responsibilities in your organizations. Successful project managers are the lifeblood of organizations and bear the imprint of the fast track. I wish you great success!

Jeffrey K. Pinto, Ph.D. Andrew Morrow and Elizabeth Lee Black Chair

Management of Technology Samuel Black School of Business Penn State, the Behrend College

jkp4@psu.edu

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1

1 ■ ■ ■

Introduction Why Project Management?

Chapter Outline Project Profile

Development Projects in Lagos, Nigeria introduction 1.1 What is a Project?

General Project Characteristics 1.2 Why are Projects imPortant?

Project Profile “Throwing Good Money after Bad”:

The BBC’s Digital Media Initiative 1.3 Project life cycles Project managers in Practice

Stephanie Smith, Westinghouse Electric Company

1.4 determinants of Project success Project Management Research in Brief Assessing Information Technology (IT) Project

Success

1.5 develoPing Project management maturity

1.6 Project elements and text organization

Summary Key Terms Discussion Questions Case Study 1.1 MegaTech, Inc. Case Study 1.2 The IT Department at Hamelin

Hospital Case Study 1.3 Disney’s Expedition Everest Case Study 1.4 Rescue of Chilean Miners Internet Exercises PMP Certification Sample Questions Notes

Chapter Objectives After completing this chapter, you should be able to:

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

2. Recognize the basic properties of projects, including their definition. 3. Understand why effective project management is such a challenge. 4. Differentiate between project management practices and more traditional, process-oriented

business functions. 5. Recognize the key motivators that are pushing companies to adopt project management

practices. 6. Understand and explain the project life cycle, its stages, and the activities that typically occur

at each stage in the project. 7. Understand the concept of project “success,” including various definitions of success, as well

as the alternative models of success.

2 Chapter 1 • Introduction

8. Understand the purpose of project management maturity models and the process of bench- marking in organizations.

9. Identify the relevant maturity stages that organizations go through to become proficient in their use of project management techniques.

Project MAnAgeMent Body of Knowledge core concePts covered in this chAPter

1. Definition of a Project (PMBoK sec. 1.2) 2. Definition of Project Management (PMBoK sec. 1.3) 3. Relationship to Other Management Disciplines (PMBoK sec. 1.4) 4. Project Phases and the Project Life Cycle (PMBoK sec. 2.1)

The world acquires value only through its extremes and endures only through moderation; extremists make the world great, the moderates give it stability.1

Project Profile

Development Projects in lagos, Nigeria

Lagos is the capital of Nigeria and home to an estimated 15–20 million people, making its population larger than London or Beijing. As the largest and fastest-growing city in sub-Saharan Africa (estimates are that 600,000 people are added to Lagos’ population each year), Lagos is in desperate need of developing and maintaining infrastructure to support its population, while supporting its claim as a high-technology hub on the African continent. Considering that about 85% of the world’s population resides in the developing world and transitioning economies, and nearly two-thirds of that population is below the age of 35, the need for infrastructure to support critical human needs is im- mense. About 70% of the city’s population is believed to live in slums, while a 2006 United Nations report estimated that only 10% of households in the Lagos Metropolitan area were directly connected to a municipal water supply. In spite of these problems, Nigeria is Africa’s biggest economy, driven by economic growth in Lagos, home to film and fashion industries, financial markets, and consumer goods manufacturers.

The list of critical items on the list for urban improvement is large. For example, for a city of more than 15 million, electricity is scarcely to be found. Lagos power stations only generate a mere 2,000 megawatts of electricity—less than half of that available for a single city block in midtown Manhattan! “We have about two hours, maybe, of public power a day,” says Kola Karim, CEO of Nigeria’s Shoreline Energy International. “It’s unbearable.” Everywhere in the city people are using gasoline or diesel generators to supply power when the inevitable rolling blackouts resume.

Additionally, Lagos is critically short on housing. To overcome this shortage people of Lagos resort to living in shanty towns, one such shanty town is Makoko. Makoko is situated on the mainland’s Lagos lagoon. Home to several hundred thousand inhabitants, Makoko lacks access to basic services, including clean drinking water, electricity, and waste disposal, and is prone to severe environmental and health hazards. Consisting of rickety dwellings on stilts perched over the foul-smelling lagoon, Makoko is one of the many chaotic human settlements that have sprouted in Lagos in recent years. As these cities spread out and move too close to major bridges or electrical towers, the govern- ment periodically sends in troops to demolish portions of the floating village.

How did the city get to this point? A big reason was a lack of forethought and development planning. In metro- politan Lagos there are 20,000 people per square kilometer with thousands more arriving each day. Given the physical constraints of the city, originally built on a narrow strip of land and bordering the ocean, there is just not enough space to absorb the new inhabitants. Urban planning, as we know it today, simply did not exist and the city swelled organi- cally, without forethought or a sense of direction. Thus, Lagos has no urban transportation system, few functioning traffic lights, and a crumbling and outdated road system.

The problems do not stop there. Land prices in Lagos are extremely high, due to lack of space for commercial development. However, because of the unreliable electricity supply that makes elevator use questionable, there are few high-rise apartments or office buildings in the city. Banks have been reluctant to invest in real estate trans- actions because of past failures and general economic instability. Faced with the need to drastically change the direction of the city, Babatunde Fashola, Lagos’ visionary governor who took power in 2010, has launched a series

Project Profile 3

of urban development projects to address a variety of the city’s needs. Fashola has announced $50 billion in new infrastructure projects for Lagos, to be developed over the next 10 years. These new project initiatives include the following:

lagos Metro Blue line

The blue line is a major cosmopolitan light-rail transport project to connect districts in Nigeria’s largest city. Designed to ease congestion and speed up journey times for the city’s inhabitants, the Blue Line will run between Marina and Okokomaiko, stopping at 13 stations, and is part of the Lagos Rail Mass Transit program implemented by the govern- ment. Originally proposed in 2008, funding issues have pushed the launch of the Blue Line back to at least 2015. The Line is set to cost $1.2 billion and will be funded by the Lagos State Government.

eko Atlantic

Eko Atlantic is an ambitious land reclamation project, a pioneering residential and business development located on Victoria Island, along its upmarket Bar Beach coastline. The project is being built on three and a half square miles of land reclaimed from the Atlantic Ocean and is expected to provide accommodation for 250,000 people and employ- ment opportunities for a further 150,000. The complex will function as a city-within-a-city, including recreational facilities, business and shopping districts, and modern conveniences.

Bus rapid-transit System

To ease the crush of public transportation, the Bus Rapid Transport (BRT) system was introduced 10 years ago to streamline and modernize the motley collection of buses that had transported residents around the city. Lagos has long suffered from an unregulated transportation system in which a variety of different “buses,” ranging from bat- tered minibuses to old, yellow-painted school buses, competed for customers. Fares were also unregulated, leaving

Figure 1.1 traffic congestion in lagos, Nigeria

Source: Femi Ipaye/Xinhua Press/Corbis

(continued)

4 Chapter 1 • Introduction

introduction

Projects are one of the principal means by which we change our world. Whether the goal is to split the atom, tunnel under the English Channel, introduce Windows 9, or plan the next Summer Olympic Games in Rio de Janeiro, the means through which to achieve these challenges remains the same: project management. Project management has become one of the most popular tools for organizations, both public and private, to improve internal operations, respond rapidly to exter- nal opportunities, achieve technological breakthroughs, streamline new product development, and more robustly manage the challenges arising from the business environment. Consider what Tom Peters, best-selling author and management consultant, has to say about project management and its place in business: “Projects, rather than repetitive tasks, are now the basis for most value- added in business.”3 Project management has become a critical component of successful business operations in worldwide organizations.

One of the key features of modern business is the nature of the opportunities and threats posed by external events. As never before, companies face international competition and the need to pursue commercial opportunities rapidly. They must modify and introduce products constantly, respond to customers as fast as possible, and maintain competitive cost and operating levels. Does performing all these tasks seem impossible? At one time, it was. Conventional wisdom held that a company could compete using a low-cost strategy or as a product innovator or with a focus on customer service. In short, we had to pick our competitive niches and concede others their claim to market share. In the past 20 years, however, everything turned upside down. Companies such as General Electric, Apple, Ericksson, Boeing, and Oracle became increasingly effective at realiz- ing all of these goals rather than settling for just one. These companies seemed to be successful in every aspect of the competitive model: They were fast to market and efficient, cost-conscious and customer-focused. How were they performing the impossible?