This assignment consists of five parts that must be saved and submitted as one document.
Please read Case Study 3.1: Keflavik Paper Company on pages 111–113 of the textbook, and respond to the questions for discussion. Please make sure that each question is answered thoroughly using a minimum of 200 words for each case study question.
Please read Case Study 3.2: Project Selection at Nova Western, Inc. on pages 112–113 of the textbook, and respond to the questions for discussion. Please make sure that each question is answered thoroughly using a minimum of 200 words for each case study question.
Prepare a fictional group project. You may use one of the following for your model:
§ enterprise resource planning (ERP) system implementation,
§ website development project,
§ a marketing plan for a new product,
§ a process improvement project, or
§ an information system development project.
Develop a statement of work for the project using the following format:
4. tasks or requirements,
5. selection criteria,
6. deliverables or delivery schedule,
8. place of performance, and
9. period of performance.
You may refer to the statement of work section in the textbook on pages 150–151; you can also refer to the template in Table 5.2 on page 152 for an example.
Next, create a work breakdown structure (WBS) for the project. What are the key steps, including work packages, tasks, and any related subtasks for the project? You may refer to the Integrated Project in Chapter 5 on page 182 of the textbook for an example.
Please use at least four fictional group members, and create a responsibility matrix. You may refer to the Integrated Project in Chapter 5 on page 183 of the textbook for an example.
Your paper should be no less than five pages in length, not counting the title and reference pages. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations and must be formatted according to APA guidelines.
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.
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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
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
Company Index 534
Name Index 535
Subject Index 538
Chapter 1 IntroduCtIon: Why ProjeCt ManageMent? 1 Project Profile: Development Projects in Lagos, Nigeria 2
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
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
Chapter 3 ProjeCt SeleCtIon and PortfolIo ManageMent 76 Project Profile: Project Selection Procedures: A Cross-Industry Sampler 77
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
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
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
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
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
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
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
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
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
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
11.1 Agile Project Management 369 What Is Unique About Agile PM? 370
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
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
Chapter 13 ProjeCt evaluatIon and Control 431 Project Profile: New York City’s CityTime Project 432
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
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
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
Company Index 534
Name Index 535
Subject Index 538
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?
• 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
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
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
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.
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
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
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.
The textbook team and I would appreciate hearing from you. Let us know what you think about this textbook by writing to firstname.lastname@example.org. Please include “Feedback about Pinto” in the subject line.
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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
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
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
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 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
4 Chapter 1 • 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?
Obviously, there is no one answer to this complex question. There is no doubt, however, that these companies shared at least one characteristic: They had developed and committed themselves to project management as a competitive tool. Old middle managers, reported Fortune magazine,
are dinosaurs, [and] a new class of manager mammal is evolving to fill the niche they once ruled: project managers. Unlike his biological counterpart, the project manager is more agile and adaptable than the beast he’s displacing, more likely to live by his wits than throwing his weight around.4
Effective project managers will remain an indispensable commodity for successful organiza- tions in the coming years. More and more companies are coming to this conclusion and adopting
drivers free to charge whatever fares they chose. “They might charge $1 in the morning for one trip one way and by afternoon they can go to $3,” says Dayo Mobereola, managing director of the Lagos Metropolitan Area Transport Authority, noting that commuters spend on average 40% of their income on transportation. Before the project was announced, the city had projected that it would transport 60,000 passengers daily, but now it transports over 200,000 passengers daily. The BRT system has reduced waiting times at bus stops, the travel time across the city, all at a reduced rate when compared to the old system.
Schools, Bridges, and Power Plants
Part of the aggressive infrastructure modernization includes improving traffic by building the first suspension bridge in West Africa, as well as adding a number of new schools around the city. Two new power plants are also slated to be constructed, bringing a more dependable source of power to the city, including powering street lights to ease crime and other problems. The city has even launched a fleet of brand new garbage trucks to deal with the 10,000 tons of waste generated every day.
Lagos’ modernization efforts in recent years have come not a moment too soon in support of its citizens. As Professor Falade observed, these efforts to modernize the city’s facilities are a breath of fresh air. “The difference is clear, the evidence is the improved landscape of Lagos in the urban regeneration project.”2
1.1 What Is a Project? 5
project management as a way of life. Indeed, companies in such diverse industries as construction, heavy manufacturing, insurance, health care, finance, public utilities, and software are becoming project savvy and expecting their employees to do the same.
1.1 What is a Project?
Although there are a number of general definitions of the term project, we must recognize at the outset that projects are distinct from other organizational processes. As a rule, a process refers to ongoing, day-to-day activities in which an organization engages while producing goods or services. Processes use existing systems, properties, and capabilities in a continuous, fairly repetitive manner.5 Projects, on the other hand, take place outside the normal, process-oriented world of the firm. Certainly, in some organizations, such as construction, day-to-day processes center on the creation and development of projects. Nevertheless, for the majority of organizations, project management activities remain unique and separate from the manner in which more routine, process-driven work is performed. Project work is continuously evolving, establishes its own work rules, and is the antith- esis of repetition in the workplace. As a result, it represents an exciting alternative to business as usual for many companies. The challenges are great, but so are the rewards of success.
First, we need a clear understanding of the properties that make projects and project manage- ment so unique. Consider the following definitions of projects:
A project is a unique venture with a beginning and end, conducted by people to meet estab- lished goals within parameters of cost, schedule, and quality.6
Projects [are] goal-oriented, involve the coordinated undertaking of interrelated activities, are of finite duration, and are all, to a degree, unique.7
A project can be considered to be any series of activities and tasks that: • Have a specific objective to be completed within certain specifications • Have defined start and end dates • Have funding limits (if applicable) • Consume human and nonhuman resources (i.e., money, people, equipment) • Are multifunctional (i.e., cut across several functional lines)8
[A project is] [o]rganized work toward a predefined goal or objective that requires resources and effort, a unique (and therefore risky) venture having a budget and schedule.9