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Project management for engineering business and technology fifth edition pdf

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Take Home Exam For Project Managment

Project Management for Engineering, Business and Technology FIFTH EDITION

Project Management for Engineering, Business and Technology, 5th edition, addresses project management across all industries. First covering the essential background, from origins and philosophy to methodology, the bulk of the book is dedicated to concepts and techniques for practical application. Coverage includes project initiation and proposals, scope and task definition, scheduling, budgeting, risk analysis, control, project selection and portfolio management, program management, project organization, and all-important “people” aspects—project leadership, team building, conflict resolution and stress management.

The Systems Development Cycle is used as a framework to discuss project management in a variety of situations, making this the go-to book for managing virtually any kind of project, program or task force. The authors focus on the ultimate purpose of project management—to unify and integrate the interests, resources, and work efforts of many stakeholders, as well as the planning, scheduling, and budgeting needed to accomplish overall project goals.

This new edition features:

• Updates throughout to cover the latest developments in project management methodologies

• New examples and 18 new case studies to help students develop their understanding and put principles into practice

• A new chapter on agile project management and lean • Expanded coverage of program management, stakeholder engagement,

buffer management, and managing virtual teams and cultural differences in international projects.

• Alignment with PMBOK terms and definitions for ease of use alongside PMI certifications

• Cross-reference to IPMA, APM, and PRINCE2 methodologies • Extensive instructor support materials, including an Instructor’s Manual,

PowerPoint slides, answers to chapter review questions, problems and cases, and a test bank of questions.

Taking a technical yet accessible approach, Project Management for Business, Engineering and Technology, 5th edition, is an ideal resource and reference for all advanced undergraduate and graduate students in project management courses as well as for practicing project managers across all industry sectors.

John Nicholas, PhD, is Professor of Operations Management at Loyola University, Chicago, USA.

Herman Steyn, PhD, is a Professor in the Graduate School of Technology Management, University of Pretoria, South Africa where he specializes in project management.

“As a Professor who has taught Project Engineering for the last 14 years, I have also performed large scale Project Engineering throughout my first career (over 20 years) in Aerospace, Defense and Information Technology. When deciding on a textbook for my graduate Project Engineering class, I looked long and hard. I wasn’t finding what I was looking for and was going to write my own, until I found Project Management for Engineering, Business and Technology. This is the textbook I would have written. It is robust, complete and easy to follow. The graphics, charts and figures are all very descriptive and real. And my students like the paperback nature of the book. I highly recommend this textbook for anyone teaching Engineering, Business or Technology Project Management/Engineering. I also recommend it as a ‘keeper’ for students who will be guiding projects in the future.”

Mark Calabrese, University of Central Florida, USA

“The publication of the 5th edition of Project Management for Engineering, Business and Technology by John Nicholas and Herman Steyn is an important milestone in a continuing conversation between the authors and the current and future practitioners of project management around the world. This book has long been a comprehensive but accessible publication that provides valuable insights into the strategic and day-today management of projects both large and small. There are numerous publications in this field but Nicholas and Steyn have found the balance between the needs of experienced practitioners looking for ways to improve project outcomes, and the needs of students who are new to the project management field. The concepts are clearly and logically laid out, and the language is appropriate for a wide range of audiences. It continues to be a benchmark in a crowded field of publications offering both practical and strategic insights into the art and craft of project management.”

Barrie Todhunter, University of Southern Queensland, Australia

“I have been using the earlier editions of this book in my Project Management teaching to working executives of a major engineering company employing close to 40000 people in various types of projects. I have evaluated the current 5th edition of the book from the perspective of (a) a teaching resource (b) study material and (c) as a resource for case studies and references. I find that the 5th edition has been thoroughly revamped and incorporates several relevant resources and is presented in a very lucid and structured way. I have absolutely no hesitation in recommending this book as a standard resource for teaching students in a university set up and/or for working executives in a project environment. The book is also a good resource as a study material for certification courses.”

Krishna Moorthy, Ex-Dean, Larsen & Toubro Institute of Project Management, India

“Project Management for Engineering, Business and Technology is one of the most comprehensive textbooks in the field. Nicholas and Steyn explain the matter in a readable and easy-to-understand way, illustrated with interesting examples. The authors combine the ‘hard matter’ of project management with relevant behavioural aspects. Overall, a useful work for anyone new to the field or as reference for the more advanced project manager.”

Martijn Leijten, Delft University of Technology, The Netherlands

“Project management plays a vital role in achieving project objectives. Projects bring change and project management is recognised as the most effective way to managing such change. This book encourages readers to become interested and involved in the change towards renewed project management and management of projects.”

Benita Zulch, University of the Free State, South Africa

“A very comprehensive text. An excellent mix of materials to enable students to learn techniques and engage in discussion of scenarios.”

Richard Kamm, University of Bath, UK

Project Management for Engineering, Business and Technology

FIFTH EDITION

John M. Nicholas Loyola University Chicago

Herman Steyn University of Pretoria

Fifth edition published 2017

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2017 John Nicholas and Herman Steyn

The right of John Nicholas and Herman Steyn to be identified as authors of this work has been asserted by

them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any

electronic, mechanical, or other means, now known or hereafter invented, including photocopying and

recording, or in any information storage or retrieval system, without permission in writing from the

publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used

only for identification and explanation without intent to infringe.

Fourth edition published by Routledge 2012

Third edition published by Elsevier Inc. 2008

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data

A catalog record for this book has been requested

ISBN: 978-1-138-93735-2 (hbk)

ISBN: 978-1-138-93734-5 (pbk)

ISBN: 978-1-315-67631-9 (ebk)

Typeset in Joanna by Servis Filmsetting Ltd, Stockport, Cheshire

Visit the companion website: www.routledge.com/cw/nicholas

http://www.routledge.com/cw/nicholas
To Sharry, Julia, Joshua, and Abigail J.M.N.

To Karen and Janine H.S.

Brief Contents

Introduction

PART I: PHILOSOPHY AND CONCEPTS 1 What Is Project Management? 2 Systems Approach

PART II: PROJECT LIFE CYCLE 3 Project Life Cycle and Project Conception 4 Project Definition and System Definition

PART III: SYSTEMS AND PROCEDURES FOR PLANNING AND CONTROL 5 Basic Project Planning Techniques 6 Project Schedule Planning and Networks 7 Advanced Project Network Analysis and Scheduling 8 Cost Estimating and Budgeting 9 Project Quality Management 10 Project Risk Management 11 Project Execution, Monitoring, and Control 12 Project Evaluation, Communication, Implementation, and Closeout 13 Agile Project Management and Lean

PART IV: ORGANIZATION BEHAVIOR 14 Project Organization Structure and Integration 15 Project Roles and Stakeholders 16 Managing Participation, Teamwork, and Conflict

PART V: PROJECT MANAGEMENT IN THE CORPORATE CONTEXT 17 Meta-Management of Projects and Program Management

18 Project Selection and Portfolio Management 19 International Project Management

Appendix A: RFP for Midwest Parcel Distribution Company Appendix B: Proposal for Logistical Online System Project (LOGON) Appendix C: Project Evaluation Plan for Logistical Online System

Index

Contents

Cover Title Copyright Dedication Brief Contents Contents Preface Acknowledgements About the Authors Introduction

I.1 In the Beginning… I.2 What Is a Project? I.3 All Projects are Not the Same I.4 Project Management: The Need I.5 Project Goal: Time, Cost, and Performance I.6 Project Management: The Person, The Team, The Methodology I.7 Project Management Standards of Knowledge and Competencies I.8 About This Book I.9 Study Project Appendix: Relation Between Professional Standards and Chapters of This Book Review Questions Case I.1 The Denver Airport Questions About the Case

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Endnotes

PART I: PHILOSOPHY AND CONCEPTS

1 What Is Project Management?

1.1 Functions of Management 1.2 Features of Project Management 1.3 Evolution of Project Management 1.4 Where is Project Management Appropriate? 1.5 Management by Project: A Common Approach 1.6 Different Forms of Project-Related Management 1.7 Project Environments 1.8 New Product and Systems Development Projects 1.9 Construction Projects 1.10 Service-Sector Projects 1.11 Public-Sector and Governmental Projects and Programs 1.12 Miscellaneous Projects 1.13 Summary Review Questions Questions About the Study Project Case 1.1 Disaster Recovery at Marshall Field’s Case 1.2 Flexible Benefits System Implementation at Shah Alam Medical Center Endnotes

2 Systems Approach

2.1 Systems and Systems Thinking 2.2 Systems Concepts and Principles 2.3 Systems Approach 2.4 Systems Engineering 2.5 Project Management: A Systems Approach 2.6 Summary

Review Questions Questions About the Study Project Case 2.1 Glades County Sanitary District Case 2.2 Life and Death of an Aircraft Development Project Case 2.3 Jubilee Line Extension Project Case 2.4 Santa Clara County Traffic Operations System and Signal Coordination Project Endnotes

PART II: PROJECT LIFE CYCLE

3 Project Life Cycle and Project Conception

3.1 Project Life Cycle 3.2 Systems Development Cycle 3.3 Phase A: Conception 3.4 Project Feasibility 3.5 The Project Proposal 3.6 Project Contracting 3.7 Summary Appendix: Kinds of Contracts Review Questions Questions About the Study Project Case 3.1 West Coast University Medical Center Case 3.2 X-Philes Data Management Corporation: RFP Matters Case 3.3 Proposal Evaluation for Apollo Spacecraft Case 3.4 Contract Mess-Up at Polanski Developers Endnotes

4 Project Definition and System Definition

4.1 Phase B: Definition 4.2 Project Definition

4.3 Phased (Rolling Wave) Project Planning 4.4 System Definition 4.5 Summary Appendix A: Stages of Systems Engineering Appendix B: Quality Function Deployment Review Questions Questions About the Study Project Case 4.1 Star-Board Construction and Santaro Associates: Requirements Snafu Case 4.2 Revcon Products and Welbar, Inc.: Client– Contractor Communication Case 4.3 Lavasoft.com: Interpreting Customer Requirements Case 4.4 Proposed Gold Mine in Canada: Phased Project Planning Endnotes

PART III: SYSTEMS AND PROCEDURES FOR PLANNING AND CONTROL

5 Basic Project Planning Techniques

5.1 Planning Steps 5.2 The Project Execution Plan 5.3 Scope and Statement of Work 5.4 Work Definition 5.5 Project Organization and Responsibilities 5.6 Scheduling 5.7 Planning and Scheduling Charts 5.8 Line of Balance (Linear Scheduling Method) 5.9 Procurement Management 5.10 Summary Review Questions Questions About the Study Project Case 5.1 Barrage Construction Company: Sean’s WBS

Case 5.2 Startrek Enterprises, Inc.: Deva’s Project Plan Case 5.3 Walter’s Project Plan Case 5.4 Planning the Boca Implementation at Kulczyński Products Endnotes

6 Project Schedule Planning and Networks

6.1 Network Diagrams 6.2 The Critical Path 6.3 Converting to Gantt Calendar Schedules 6.4 Management Schedule Reserve 6.5 Alternative Relationships 6.6 Scheduling with Resource Constraints 6.7 Criticisms of Network Methods 6.8 Summary Appendix A: AOA Diagrams Appendix B: Alternate Scheduling Method: Project Starts at Day 1 Review Questions and Problems Questions About the Study Project Case 6.1 Network Diagram for a Large Construction Project Case 6.2 Melbourne Construction Company, A Case 6.3 Melbourne Construction Company, B Case 6.4 Melbourne Construction Company, C Endnotes

7 Advanced Project Network Analysis and Scheduling

7.1 CPM and Time-Cost Tradeoff 7.2 Variability of Activity Duration 7.3 PERT 7.4 Allocating Resources and Multiple Project Scheduling

7.5 Theory of Constraints and Critical Chain Method 7.6 TOC Method for Allocating Resources to Multiple Projects 7.7 Discussion and Summary Summary List of Symbols Review Questions and Problems Questions About the Study Project Case 7.1 Bridgecon Contractors Case 7.2 LOGON Project Case 7.3 Papua Petera Village Project Endnotes

8 Cost Estimating and Budgeting

8.1 Cost Estimates 8.2 Cost Escalation 8.3 Cost Estimating and the Systems Development Cycle 8.4 Cost Estimating Process 8.5 Elements of Estimates and Budgets 8.6 Project Cost Accounting Systems 8.7 Budgeting Using Control (or Cost) Accounts 8.8 Cost Summaries 8.9 Cost Schedules and Forecasts 8.10 Life Cycle Costs 8.11 Summary Review Questions and Problems Questions About the Study Project Case 8.1 Life Cycle Costs for Fleet of Tourist Spaceships Case 8.2 Estimated Costs for the Chunnel Project Case 8.3 Fiona’s Estimate for the Gorgy Project Case 8.4 Melbourne Construction Company, D Endnotes

9 Project Quality Management

9.1 The Concept of Quality 9.2 Project Quality Management Processes 9.3 Techniques for Quality Assurance in System Development 9.4 Techniques for Quality Control 9.5 Summary Review Questions Questions About the Study Project Case 9.1 Ceiling Panel Collapse in the Big Dig Project Case 9.2 FIFA 2010 World Cup South Africa Case 9.3 Airbag Adversity Endnotes

10 Project Risk Management

10.1 Risk Concepts 10.2 Risk Identification 10.3 Risk Assessment 10.4 Risk Response Planning 10.5 Risk Monitoring and Response 10.6 Project Management Is Risk Management 10.7 Summary Appendix: Risk Analysis Methods Review Questions and Problems Questions About the Study Project Case 10.1 The Sydney Opera House Case 10.2 Infinity & Beyond, Inc. Case 10.3 The Nelson Mandela Bridge Endnotes

11 Project Execution, Monitoring, and Control

11.1 Phase C: Execution

11.2 Detail Design Stage 11.3 Production/Build Stage 11.4 Monitoring and Control Process 11.5 Work Packages and Control Accounts 11.6 Project Monitoring and Control Emphasis 11.7 Performance Analysis and Earned Value Management 11.8 Issue Management 11.9 Change Control 11.10 Contract Administration 11.11 Problems with Monitoring and Controlling Projects 11.12 Summary Summary of Variables Review Questions and Problems Questions About the Study Project Case 11.1 Cybersonic Project Case 11.2 SA Gold Mine: Earned Value After a Scope Change Case 11.3 Change Control Process at Dynacom Company Endnotes

12 Project Evaluation, Communication, Implementation, and Closeout

12.1 Project Evaluation 12.2 Project Communication Management 12.3 Project Management Information Systems 12.4 Informal Communication 12.5 Implementation Stage 12.6 Project Termination and Closeout 12.7 Project Summary Evaluation 12.8 After the Project—Phase D: Operation 12.9 Summary

Review Questions Questions About the Study Project Case 12.1 Status Report for the LOGON Project Case 12.2 SLU Information Central Building Case 12.3 Formal and Informal Communication Endnotes

13 Agile Project Management and Lean

13.1 Traditional Project Management 13.2 Agile Project Management, APM 13.3 Scrum 13.4 APM Controversy 13.5 Lean Production and Project Management 13.6 Summary Review Questions Questions about the Study Project Case 13.1 Grand Entry for Accent, Inc. Case 13.2 Technology to Track Stolen Vehicles Endnotes

PART IV: ORGANIZATION BEHAVIOR

14 Project Organization Structure and Integration

14.1 Formal Organization Structure 14.2 Organizational Design by Differentiation and Integration 14.3 Requirements of Project Organizations 14.4 Integration of Subunits in Projects 14.5 Liaison Roles, Task Forces, and Teams 14.6 Project Expeditors and Coordinators 14.7 Pure Project Organizations 14.8 Matrix Organizations 14.9 Selecting an Organization Form for Projects

14.10 Project Office and PMO 14.11 Integration in Large-Scale Projects 14.12 Integration in Systems Development Projects 14.13 Concurrent Engineering 14.14 Summary Review Questions Questions about the Study Project Case 14.1 Organization for the LOGON Project Case 14.2 Pinhole Camera and Optics, Inc.: Why Do We Need a Project Manager? Case 14.3 Implementing a Matrix Structure in an R&D Laboratory Endnotes

15 Project Roles and Stakeholders

15.1 The Project Manager 15.2 Project Management Authority 15.3 Project Manager Qualifications 15.4 Filling the Project Management Role 15.5 Roles in the Project Team 15.6 Roles Outside the Project Team 15.7 Project Stakeholder Engagement 15.8 Summary Review Questions Questions About the Study Project Case 15.1 The LOGON Project Case 15.2 Selecting a Project Manager at Nuwave Products Company Case 15.3 Stakeholders in Boston’s Big Dig Endnotes

16 Managing Participation, Teamwork, and Conflict

16.1 Leadership in Project Management

16.2 Participative Management 16.3 Teams in Project Management 16.4 The Team-Building Approach 16.5 Improving Ongoing Work Teams 16.6 Building New Teams 16.7 Intergroup Problem Solving 16.8 Virtual Teams 16.9 Conflict 16.10 Managing Group Conflict 16.11 Managing Emotional Stress 16.12 Summary Review Questions Questions About the Study Project Case 16.1 Wilma Keith Case 16.2 Mars Climate Orbiter Spacecraft Endnotes

PART V: PROJECT MANAGEMENT IN THE CORPORATE CONTEXT

17 Meta-Management of Projects and Program Management

17.1 Project Management Maturity and Maturity Models 17.2 Project Management Methodology 17.3 Managing Project Knowledge 17.4 Project Management Office 17.5 Program Management 17.6 Program Phases 17.7 Program Management Themes 17.8 Program Organization 17.9 Special Considerations 17.10 Summary Review Questions Questions About the Study Project

Case 17.1 Maxim Corporation America (MCA) Case 17.2 Motorola’s M-Gate Methodology and the RAZR Project Case 17.3 Tecknokrat Company Case 17.4 Mercury Exploration Program Endnotes

18 Project Selection and Portfolio Management

18.1 Project Portfolio Management 18.2 Framework for Project Selection and Portfolio Management 18.3 Methods for Assessing Individual Projects 18.4 Methods for Comparing and Selecting Projects 18.5 Integrating the Gating Process and Portfolio Management 18.6 Summary and Discussion Review Questions and Problems Question About the Study Project Case 18.1 Consolidated Energy Company Case 18.2 Proposed Cement Factory for PCS Company Endnotes

19 International Project Management

19.1 International Projects 19.2 Problems Managing International Projects 19.3 Local Institutions and Culture 19.4 Local Stakeholders 19.5 Geo-National Issues 19.6 Project Manager 19.7 Local Representative 19.8 Top Management, Steering Committee, and PMO 19.9 Team and Relationship Building 19.10 Project Definition

19.11 Project Monitoring 19.12 Communication 19.13 Risks and Contingencies 19.14 Summary Review Questions Questions About the Study Project Case 19.1 Mozal Project—International Investment in an Undeveloped Country Case 19.2 Spirit Electronics’ Puerto Rico Office Endnotes

APPENDIX A RFP for Midwest Parcel Distribution Company APPENDIX B Proposal for Logistical Online System Project (LOGON) APPENDIX C Project Execution Plan for Logistical Online System Index

Preface

When people see or use something impressive—a bridge arching high over a canyon, a space probe touching down on a distant planet, an animated game so realistic you think you’re there, or a nifty phone/camera/computer the size of your hand—they sometimes wonder, “How did they do that?” By they, of course, they are referring to the creators, designers, and builders, the people who created —thought up and made—those things. Seldom do they wonder about the leaders and managers, the people who organized and led the efforts that brought those astounding things from concept to reality and without whom most neat ideas would never have been achieved. This book is about them—the managers of project managers, the mostly unsung heroes of engineering, business, and technology who stand outside the public eye but ultimately are responsible for practically everything that requires collective human effort.

The project manager is but one of many people involved in the creation of society’s products, systems, and artifacts, yet it is he or she who gets the others involved and organizes and directs their efforts so everything comes out right. Occasionally, the manager and the creator happen to be the same: Burt Rutan, Woody Allen, and Gutzon Borglum are examples; their life work—in aerospace, motion pictures, and monumental sculptures, respectively—represent not only creative or technological genius, but leadership and managerial talent as well.

In the last several decades businesses have expanded from domestic, nationalistic enterprises and markets into multinational, global enterprises and markets. As a result, from a business perspective there is more of everything to contend with—more ideas, competitors, resources, constraints, and, certainly, more people doing and wanting things. Technology is advancing and products and processes evolving at a more rapid pace; as a result, the life cycles of most things in society are getting shorter. This “more of everything” has had a direct impact on the conduct of projects—including projects to develop products,

systems, or processes that compete in local, domestic, and international markets; projects to create and implement new ways of meeting demand for energy, recreation, housing, communication, transportation, and food; and projects to answer basic questions in science and resolve grave problems such as disease, pollution, global warming, and the aftermath of natural disasters. All of this project activity has spurred a growing interest in improved ways to plan, organize, and guide projects to better meet the needs of customers, markets, and society within the bounds of limited time and resources.

Associated with this interest is the growing need to educate and train project managers. In the past—and still today—project managers were chosen for some demonstrated exceptional capability, although not necessarily managerial. If you were a good engineer, systems analyst, researcher, architect, or accountant, eventually you would become a project manager. Somewhere along the way, presumably, you would pick up the “other” necessary skills. The flaw in this reasoning is that project management encompasses a broad range of skills— managerial, leadership, interpersonal—that are much different from and independent of skills associated with technical competency. And there is no reason to presume that the project environment alone will provide the opportunity for someone to “pick up” these other necessary skills.

As a text and handbook, this book is about the “right” way to manage projects. It is intended for advanced undergraduate and graduate university students and practicing managers in engineering, business, and technology. As the title says, it is a book about principles and practice, meaning that the topics in it are practical and meant to be applied. It covers the big picture of project management— origins, applications, and philosophy, as well as the nitty-gritty, how-to steps. It describes the usual project management topics of schedules, budgets, and controls, but also the human side of project management, including leadership and conflict.

Why a book on project management in engineering and business and technology? In our experience, technology specialists such as engineers, programmers, architects, chemists, and so on, involved in “engineering/technology projects” often have little or no management or leadership training. This book, which includes many engineering and technology examples, provides somewhat broad exposure to business concepts and

management specifics to help these specialists get started as managers and leaders.

What about those people involved in product development, marketing, process improvement, and related projects commonly thought of as “business projects”? Just as technology specialists seldom receive formal management training, students and practitioners of business rarely get formal exposure to practices common in technology projects. For them, this book describes not only how “business” projects are conducted, but also the necessary steps in the conception and execution of engineering, system development, construction, and other “technology” projects. Of course, every technology project is also a business project: it is conducted in a business context and involves business issues such as customer satisfaction, resource utilization, deadlines, costs, and profits.

Virtually all projects—engineering, technology, and business—originate and are conducted in a similar way, in this book conceptualized using a methodology called the Systems Development Cycle (SDC). The SDC serves as a general framework for discussing the principles and practices of project management, and illustrating commonalities and differences among a wide variety of projects.

This book is an outgrowth of the authors’ combined several decades of experience teaching project management at Loyola University Chicago and University of Pretoria to business and engineering students, preceded by several years’ experience in business and technology projects, including for aircraft design and flight test, large-scale process facility construction, and software applications development and process improvement. This practical experience gave us an appreciation not only for the business-management side of project management, but also for the human-interpersonal side as well. We have seen the benefits of good communication, trust, and teamwork, as well as the costs of poor leadership, emotional stress, and group conflict. In our experience, the most successful projects are those where leadership, trust, communication, and teamwork flourished, regardless of the formal planning and control methods and systems in place. This book largely reflects these personal experiences. Of course, comprehensive coverage of project management required that we look much beyond our own experience and draw upon the published works of many others and the wisdom and suggestions of colleagues and reviewers.

In this fifth edition we have revised and added material to incorporate new

topics of interest, current examples, and the growing body of literature in project management. Among significant new additions are a chapter on agile project management and lean production, extended coverage of program management, as well as 18 new end-of-chapter case studies. The Introduction includes tables that relate sections of the book to the most-common project management knowledge areas and methodologies: PMI PMBOK, IPMA, APM, and PRINCE2. Books tend to grow in size with each new edition; to combat that all chapters have been rewritten to make everything more readable and concise. Despite the inclusion of new material, we’ve held the page count to roughly what it was in the previous edition.

Our goal in writing this book is to provide students and practicing managers the most practical, current, and interesting text possible. We appreciate hearing your comments and suggestions. Please send them to us at jnichol@luc.edu and herman.steyn@up.ac.za.

Acknowledgments

Like most projects, writing a book reflects the contributions of many people. We want to acknowledge and give special thanks to those who contributed the most. First, thanks to our research assistants. Research assistants in general do a lot of work—academic as well as gofer, and without their toiling efforts most professors would accomplish far less. We were fortunate to have had the assistance of several such bright and capable people, particularly Elisa Denney, Hollyce James, Diane Petrozzo, Miguel Velasco, Gaurav Monga, Cary Morgan, Louis Schwartzman, and Brian Whelan.

Special thanks to current and former colleagues at Loyola University Chicago and the University of Pretoria. In Chicago, thanks to Dr. Gezinus Hidding for his enthusiasm and contributions to the field of project management; and to Drs. Enrique Venta, Harold Dyck, Samuel Ramenofsky, and Donald Meyer, and Elaine Strnad, Paul Flugel, John Edison, Sharon Tylus, and Debbie Gillespie for their suggestions and support for this and earlier editions. In Pretoria, thanks to Dr. Tinus Pretorius for encouraging education and research in project management at the Graduate School of Technology Management and for supporting the work on this book. I (Herman) also want to express appreciation to Dr. Giel Bekker, Philip Viljoen, Dr. Taryn Bond-Barnard, Dr. Pieter Pretorius, Dr. Krige Visser, Corro van Waveren, Dr. Michael Carruthers and Dr. Marie-Louise Barry for their direct and indirect contributions to this book and for all I have learned from them. I (John) want to acknowledge the influence of three of my professors, Dr. Charles Thompson and Dr. Gustave Rath at Northwestern University, and Dr. Dick Evans at the University of Illinois, whose philosophies and teachings helped shaped this book. I also want to thank Chris Phares and Bob Zimmerman, dear friends and project managers extraordinaire, for ongoing sharing of their wisdom on the meaning and significance of project leadership.

Special thanks also to our wives Sharry and Karen. Sharry provided numerous

suggestions to the first edition and helped reduce the amount of “techno-jargon” in the book; she managed the home front and freed up time so that I (John) could pursue and complete this project. Karen provided wifely support and encouragement; as in the case of so many other projects I (Herman) have been involved in, my contribution to this project would never have materialized had not it been for her support.

Thanks also to Amy Laurens and the folks at Routledge and Taylor and Francis, and special thanks to Holly Davis for her ongoing support throughout preparation of this fifth edition.

Other colleagues, students, and friends, some mentioned in the endnotes throughout the book, provided support, encouragement, and reference materials; to them also we say thank you. Despite the assistance of so many people and our own best efforts, there are still likely to be omissions or errors. We had final say and accept responsibility for them.

John M. Nicholas

Herman Steyn

About the Authors

JOHN NICHOLAS is Professor Operations Management and Project Management in the Quinlan School of Business at Loyola University Chicago. He is an active teacher, writer, and researcher in project management and production management, and conducts executive seminars and consults on project management and process improvement. John is the author of numerous academic and technical publications, and five books including Lean Production for Competitive Advantage (2011) and The Portal to Lean Production (2006). He has held the positions of team lead and engineer on aircraft development projects at Lockheed-Martin Corporation, team lead and business systems analyst on operations projects at Bank America, and researcher on energy-environmental research projects at Argonne National Laboratory. He has a BS in aeronautical and astronautical engineering and an MBA in operations research from the University of Illinois, Urbana-Champaign, and a PhD in industrial engineering and applied behavioral science from Northwestern University.

HERMAN STEYN is Professor of Project Management in the Graduate School of Technology Management, University of Pretoria, South Africa. He has been involved in projects in industry since 1975, has managed a variety of large and small engineering projects (system, product, and process development) in the minerals, defense and nuclear industries, and has also managed programs and project portfolios. In 1996 he was appointed to his current position at the University of Pretoria where he initiated a masters’ program in project management. Besides supervising project management research and teaching graduate project management courses, Herman has conducted more than 200 seminars and workshops on project management. He has a bachelor’s degree and graduate diploma in metallurgical engineering, an MBA, and a PhD in engineering management.

Introduction

I.1 In The Beginning…

Sometime during the third millennium BC, workers on the Great Pyramid of Cheops set the last stone in place. They must have felt jubilant, for this event represented a milestone of sorts in one of humanity’s grandest undertakings. Although much of the ancient Egyptians’ technology is still a mystery, the enormity and quality of the finished product remains a marvel. Despite the lack of sophisticated machinery, they were able to raise and fit some 2,300,000 stone blocks, weighing 2 to 70 tons apiece, into a structure the height of a modern 40- story building. Each facing stone was set against the next with an accuracy of 0.04 inch (1 mm), and the base, which covers 13 acres (52,600 m2), deviates less than 1 inch (25 mm) from level (Figure I.1).1

Equally as staggering was the number of workers involved. To quarry the stones and transport them down the Nile, about 100,000 laborers were levied. In addition, 40,000 skilled masons and attendants were employed in preparing and laying the blocks and erecting or dismantling the ramps. Public works were essential to keep the working population employed and fed, and it is estimated that no less than 150,000 women and children also had to be housed and fed.2 But just as mind-boggling was the managerial ability exercised by the Egyptians throughout the 20-year duration of the pyramid construction. Francis Barber, a nineteenth-century pyramid scholar, concluded that:

It must have taken the organizational capacity of a genius to plan all the work, to lay it out, to provide for emergencies and accidents, to see that the men in the quarries, on the boats and sleds, and in the mason’s and smithies shops were all continuously and usefully employed, that the means of

transportation was ample … that the water supply was ample … and that the sick reliefs were on hand.3

Building the Great Pyramid is what we today would call a large-scale project. It stands among numerous projects from early recorded history that required massive human works and managerial competency. Worthy of note are the managerial and leadership accomplishments of Moses. The Biblical account of the exodus of the Hebrews from the bondage of the Egyptians gives some perspective on the preparation, organization, and execution of this tremendous undertaking.

Supposedly Moses did a magnificent job of personnel selection, training, organization, and delegation of authority.4 The famed ruler Solomon also was the “manager” of great projects. He transformed the battered ruins of many ancient cities and crude shantytowns into powerful fortifications. With his wealth and the help of Phoenician artisans, Solomon built the Temple in Jerusalem. Seven years went into the construction of the Temple, after which Solomon took 13 years more to build a palace for himself. He employed a workforce of 30,000 Israelites to fell trees and import timber from the forests of Lebanon.5 That was almost 3,000 years ago.

Figure I.1 The Great Pyramid of Cheops, an early (circa 2500BC) large-scale project.

Photo courtesy of iStock.

With later civilizations, notably the Greeks and Romans, projects requiring

extensive planning and organizing escalated. To facilitate their military campaigns and commercial interests, the Romans constructed networks of highways and roads throughout Europe, Asia Minor, Palestine, and northern Africa so that all roads would “lead to Rome.” The civilizations of Renaissance Europe and the Middle and Far East undertook river engineering, construction of aqueducts, canals, dams, locks, and port and harbor facilities. With the spread of modern religions, construction of temples, monasteries, mosques, and massive urban cathedrals was added to the list of projects.

With the advent of industrialization and electricity, projects for the construction of railroads, electrical and hydro-electrical power facilities and infrastructures, subways, and factories became commonplace. In recent times, development of large systems for communications, defense, transportation, research, and information technology have spurred different, more complex kinds of project activity.

As long as people do things, there will be projects. Many projects of the future will be similar to those in the past. Others will be different either in terms of increased scale of effort or more advanced technology. Representative of the latter are two recent projects, the English Channel tunnel (Chunnel) and the International Space Station. The Chunnel required tremendous resources and took a decade to complete. The International Space Station (Figure I.2) required development of new technologies and the efforts of the US, Russian, European, Canadian, and Japanese space agencies.

Figure I.2 The International Space Station, a modern large-scale project.

Photo courtesy of NASA.

I.2 What Is a Project?

From these examples it is clear that humankind has been involved in project activities for a long time. But why are these considered “projects” while other human activities, such as planting and harvesting a crop, stocking a warehouse, issuing payroll checks, or manufacturing a product, are not?

What is a project? This is a question we will cover in much detail later. As an introduction though, below are listed some characteristics that warrant classifying an activity as a project.6

1. A project has a defined goal—a purpose with well-defined end-items, deliverables, results, or products to achieve specific benefits.

2. It is unique; it requires doing something different than was done previously. It is a one-time activity, never to be exactly repeated again.

3. It is a temporary organization that seeks to accomplish the goal within a scheduled time frame.

4. It utilizes people and other resources from different organizations and functions.

5. Given that each project is unique, it carries unfamiliarity and risk.

The examples described earlier are for familiar kinds of projects such as construction (pyramids) and technology development (space station). In general, the list of activities that qualify as projects is long and includes many that are commonplace. Weddings, remodeling a home, and moving to another house are projects; so are company audits, major litigations, corporate relocations, and projects; and so are efforts to develop new products and implement new systems. Military campaigns also qualify as projects; they are temporary, unique efforts directed toward a specific goal. The Normandy Invasion in World War II on June 6, 1944 is an example:

The technical ingenuity and organizational skill that made the landings possible was staggering. The invasion armada included nearly 5,000 ships of all descriptions protected by another 900 warships. The

plan called for landing 150,000 troops and 1500 tanks on the Normandy coast in the first 48 hours.7

Most artistic endeavors are projects, too. Composing a song or symphony, writing a novel, or making a sculpture are one-person projects. Some artistic projects also require the skills of engineers and builders, for example Mount Rushmore, the Statue of Liberty, and the Eiffel Tower.

Many efforts at saving human life and recovering from man-made or natural disasters become projects. Examples are the massive cleanup following the Soviet nuclear accident at Chernobyl, and rescue and recovery operations following disastrous earthquakes in Chile, Haiti, China, Pakistan, Mexico, Turkey, and elsewhere, the Indian Ocean tsunami of 2004, and the Ebola outbreak in western Africa in 2014.

Figure I.3 shows diverse project endeavors and examples of well-known projects, and where the projects fall with respect to complexity and uncertainty. Complexity is measured by the magnitude of the effort—the number of groups and organizations involved and the diversity of skills or expertise needed to accomplish the work. Time and resource commitments tend to increase with complexity.

Uncertainty is measured roughly by the difficulty in predicting the final outcome in terms of the dimensions of time, cost, and technical performance. In most projects there is some uncertainty in one or two dimensions (e.g. weddings); in complex projects there is uncertainty in all three dimensions (e.g. the space station).

Generally, the more often something is done, the less uncertainty there is in doing it. This is simply because people learn by doing and so improve their efforts—the “learning curve” concept. Projects that are very similar to previous ones and about which there is abundant knowledge have lower uncertainty. These are found in the lower portion of Figure I.3 (e.g. weddings, highways, dams, system implementation). Projects with high uncertainty are in the upper portion of the figure.

When the uncertainty of a project drops to nearly zero, and when the project effort is repeated a large number of times, then the work is usually no longer considered a project. For example, building a skyscraper is definitely a project, but mass construction of prefabricated homes more closely resembles a scheduled, repetitive operation than a project. The first flight to the South Pole by Admiral Byrd was a project, but modern daily supply flights to bases there are

not. When in the future tourists begin taking chartered excursions to Mars, trips there will not be considered projects either. They will just be ordinary scheduled operations.

The cost curve in Figure I.3 indicates that a project’s expense tends to increase roughly in proportion to its complexity and uncertainty. Cost, represented in terms of time or economic value, is at the level of tens or hundreds of labor hours for projects with low complexity and uncertainty, but increases to millions and billions of hours for projects with the greatest complexity and uncertainty.

In all cases, projects are conducted by organizations that after the project is completed go on to do something else (construction companies) or are disbanded (Admiral Byrd’s crew, the Mars exploration team). In contrast, repetitive, high- certainty activities (prefabricated housing, supply flights, and tourist trips to Antarctica or Mars) are performed by permanent organizations that do the same thing repeatedly, with little changes in operations other than scheduling. Because projects are not repetitive is the reason they must be managed differently.

I.3 All Projects are Not the Same8

Besides Figure I.3, another way to illustrate the diversity in projects is with the so-called NTCP model, which classifies projects and their end-results or products into four dimensions, each with three or four possible levels. The dimensions and levels are:

• Novelty: This represents how new the project end-item or product is to customers and potential users and how well defined are its initial product requirements. It includes three levels:

Figure I.3 A typology of projects.

• Derivative—the project end-item or product is an extension or improvement of an existing product or system; e.g. new features to an existing car model;

• Platform—the end-item or product is a new generation of an existing product line in a well-established market; e.g. a new car model;

• Breakthrough—the end-item or product is new to the world; e.g. the first mobile telephone, the first 3M Post-it notes.

• Technology: This represents the project’s technological uncertainty and whether it is new or mature. It addresses the question of how much new technology is required to create, build, manufacture and enable the use of the product and how much technical competency is needed by the project manager and the team. It has four levels:

• Low-tech—involves only well-established technologies; • Medium-tech—uses mainly existing technologies, but also limited

use of some new technology or new features; e.g. automotive and appliances industries;

• High-tech—uses technologies that are mostly new to the firm but already exist and are available at project initiation; typical of many defense and computer projects; is synonymous with “high- risk”;

• Super-high-tech—relies on new technologies that do not exist at project initiation. The project goal is well defined, but the solution is not; e.g. landing a man on the moon; is often synonymous with “very high-risk.”

• Complexity: This measures the complexity of the product and the project organization. There are three levels:

• Assembly—the project involves combining a collection of elements, components, and modules into a single unit or entity that performs a single function; e.g. developing a new coffee machine or creating a department to manage a single function (such as

payroll); • System—involves a complex collection of interactive elements and

subsystems that jointly perform multiple functions to meet specific operational needs; e.g. a new car, new computer, entirely new business;

• Array—the project involves a large variety of dispersed systems (a system of systems, or “super system”) that function together to achieve a common purpose; e.g. national communications network, mass transit infrastructure, regional power generation and distribution network, an entire corporation.

• Pace: This refers to time available for the project—the urgency or criticality of meeting the project’s time goals. There are four levels:

• Regular—no urgency; time is not critical to immediate success; • Fast/competitive—complete project in adequate time to address

market opportunities, create a strategic positioning, or form a new business unit; e.g. launching a new drug, introducing a new product line;

• Time-critical—complete project by a specific deadline; missing the deadline means project failure; e.g. Y2K projects; construction of facilities for the Olympic Games; launch of space probe to a comet;

• Blitz—a crisis project; the criterion for success is solving a problem as fast as possible; e.g. save people from a sinking ship.

All projects can be characterized according to the four dimensions. In Figure I.4, each of the dimensions is represented by a quadrant on the graph. The diamond- shaped profiles show the four dimensions for two examples, the Apollo lunar program and the space shuttle program.

Figure I.4 Shenhar and Dvir’s NTCP Diamond model contrasting the Apollo and space shuttle programs.

Source: Shenhar A. and Dvir D. Reinventing Project Management: The Diamond Approach to Successful

Growth and Innovation. Cambridge, MA: Harvard Business School Press; 2007.

I.4 Project Management: The Need

Although mankind has been involved in projects since the beginning of recorded history, obviously the nature of projects and the environment have changed. Many modern projects involve technical complexity and challenges in terms of assembling and directing large temporary organizations while subject to constrained resources, limited time schedules, and environmental uncertainty. An example is the NASA Pathfinder Mission to land and operate a rover vehicle on the surface of Mars. Such a project is unparalleled not only in terms of technical difficulty and organizational complexity, but also in terms of the requirements imposed on it. In ancient times, the requirements were flexible. If the Pharaohs needed more workers, then more slaves or more of the general population were conscripted. If Renaissance builders ran out of funding during construction of a cathedral, the work was stopped until more funds could be raised (one reason why cathedrals took decades or centuries to complete). If a king ran out of money while building a palace, he simply raised taxes. In cases where additional money or workers could not be found or the project delayed, then the scale of effort or quality of workmanship was reduced to accommodate the constraints.

In the Pathfinder project, many of the requirements were inflexible: the mission team was challenged with developing and landing a vehicle on Mars in less than 3 years’ time and on a $150 million budget, which was less than half the time and 1/20th the cost of the last probe NASA had landed on Mars. The project involved advanced research and development and explored new areas of science and engineering. Technical performance requirements could not be compromised; to do so would increase the risk to undertakings that were already very risky.

Constraints and uncertainty in project work are not restricted to large-scale governmental science programs. They are common in everyday business and technology where organizations continually strive to develop and implement new products, processes, and systems, and to adapt to changing requirements in a changing world. Consider Dalian Company’s development of “Product J,” a product development project that exemplifies what companies everywhere must do to be competitive and survive. Product J is a promising but radically new idea.

To move the idea from a concept to a real product will require the involvement of engineers and technicians from several Dalian divisions and suppliers. Product J will require meeting tough technical challenges, launching the product well ahead of the competition, and doing it for a cost the company can afford.

Another example is Shah Alam Hospital’s installation of a new employee benefits plan. The project would involve developing new policies, training staff workers, familiarizing 10,000 employees with the plan, and installing a new computer network and database, and require active participation from personnel in human resources, financial service, and information systems, as well as experts from two consulting firms. It typifies “change” projects everywhere—projects initiated in response to changing needs and with the goal of transforming the organization’s way of doing things.

Finally, consider that virtually every company has or will have a website. Behind each site are multiple projects to develop or enhance the website and to integrate electronic business technology into the company’s mainstream marketing and supply-chain operations. Such projects are also examples of organizations’ need to change, in this case to keep pace with advances in information technology and business processes.

Activities such as these examples defy traditional management approaches for planning, organization, and control. They are representative of activities that require modern methods of project management to meet difficult technological or market-related performance goals in spite of limited time and resources.

I.5 Project Goal: Time, Cost, and Performance

Figure I.5 Three-dimensional project goal.

Source: Adapted from Rosenau M., Successful Project Management. Belmont, CA: Lifetime Learning

Publications; 1981, p, 16.

The goal of virtually every project can be conceptualized in terms of hitting a target that floats in three-dimensional space—the dimensions being cost, time, and performance (Figure I.5). Cost is thespecified or budgeted cost for the project. Time is the scheduled period over which the work is to be done. Performance is what the project end-item, deliverables, or final result must do; it includes whatever the project customer, end-user, and other stakeholders consider necessary or important. The target represents a goal to deliver a certain something to somebody by a certain date and for a certain cost. The purpose of project management is to hit the target—i.e., to achieve the goal of the project.9

But technological complexity, changing markets, and an uncontrollable

environment make it difficult to hit the target. Time, cost, and technical performance are interrelated, and exclusive emphasis on any one will likely undermine the others. In trying to meet schedules and performance requirements, costs increase; conversely, in trying to contain costs, work performance erodes and schedules slip. In earlier times, one or two aspects of the goal were simply allowed to slide so that the “most fixed” could be met. Most projects, as the Pathfinder, Dalian Company, and Shah Alam Hospital examples show, do not have this luxury. Project management offers a way to maintain focus on all three dimensions and to control the tradeoffs among them.

I.6 Project Management: The Person, The Team, The Methodology

Three key features distinguish project management from traditional forms of management: the person, the team, and the methodology.

The most prominent feature about project management is the role of the project manager—the individual who has overall responsibility to plan, direct, and integrate the efforts of everyone involved in the project (stakeholders) to achieve the project goal. In the role of project manager, one person is held accountable for the project and is totally dedicated to achieving its goals. The project manager coordinates the efforts of every functional area and organization in the project and oversees the planning and control of costs, schedules, and work tasks. As we will discuss later, numerous other parties (stakeholders) are involved in and crucial to project management; nonetheless, the role of project manager is a key feature that distinguishes project- from non-project management.

Doing a project is a team effort, and project management means bringing individuals and groups together to form the team and directing them toward the common goal. The team will often consist of people and groups from different functional areas and organizations. Depending on the project, the size and composition of the team may fluctuate; usually the team disbands after the project is completed.

The project manager and project team typically perform work in phases according to a “project management methodology.” This methodology provides for integrative planning and control of projects, which according to Archibald refers to

the pulling together of all important elements of information related to (1) the products or results of the project, (2) the time, and (3) the cost, in funds, manpower, or other key resources … for all (or as many as practical) phases of the project. [It] requires continual revision of future plans, comparison of actual results with plans, and projection of total time and cost at completion through interrelated evaluation of all elements of information.10

As a project proceeds from one phase to the next, the project manager relies on the methodology to (1) identify the project tasks, (2) identify the required

resources and the costs, (3) establish priorities, (4) plan and update schedules, (5) monitor and control end-item quality and performance, and (6) measure project performance.11

I.7 Project Management Standards of Knowledge and Competencies

Project management has become a recognized vocation supported by several professional organizations around the world. These organizations have advanced project management by establishing standards, guidelines, and certifications. Among the more well-known of these organizations are IPMA (International Project Management Association), APM Group (Association for Project Management), and PMI (Project Management Institute). The PMI is based in the US and is the largest of these organizations; the IPMA, based in the Netherlands, is an international group of national project management associations in Europe, Africa, Asia and North and South America; the APM is based in the UK.

These professional organizations have gathered the accepted best practices of project management and published them as standards or “bodies of knowledge” (BOKs) and competencies for the profession.12 Although none of the standards or BOKs covers everything about project management, they have become recognized norms about what minimally a project management professional should know. The organizations also offer levels of qualification and certification that include, for example, PMI’s PMP (Project Management Professional) certification; APM’s APMP (APM professional), and IPMA’s CPMA (Certified Project Management Associate). PMI’s and APM’s certifications are “body of knowledge-based”; IPMA’s certifications are “competency-based.” Another certification popular in Europe and particularly the UK is based upon PRINCE2 (PRojects IN Controlled Environments, Version 2), a methodology for managing projects originated by the UK Office of Government Commerce.13

For readers interested in professional certification, Tables I.1 through Table I.4 in the Appendix to the chapter show the correspondence between the knowledge areas, competencies expected, and methods from PMI, IPMA, APM, and PRINCE, and chapters in this book most relevant to them.

I.8 About This Book

Philosophy and Objectives

As a philosophy and an approach, project management is broader and more sophisticated than traditional management of repetitive activities. It has roots in many disciplines, including management science, systems theory, accounting, operations management, organizational design, law, and applied behavioral science. What has evolved, and will continue to evolve, are a philosophy, approach, and set of practices, the sum total of which comprise project management. Some managers fail to understand this, believing that application of techniques alone, such as “Gantt charts,” “PERT,” or “matrix management” (all explained later) make for successful project management. Project management is much more than these.

C.P. Snow wrote an essay entitled “Two Cultures” about the cultural gap that separates scientists from the rest of society.14 Managers and management scholars also tend to separate the world into either of two perspectives: (1) the “quantitativists” tend to view projects in terms of costs, dates, and economic variables; (2) the “behaviorists” view projects in terms of peoples’ behavior, skills, and attitudes, and systems of organization.

The intent of this book is to give a balanced view that emphasizes both the behaviorist and quantitativist sides of project management. The philosophy of this book is that for managers to “do” project management, they must gain familiarity with four topical areas: system methodology; systems development process; management methods, procedures, and systems; and organization and human behavior; correspondingly, the objectives of this book are to cover in depth:

1. The principles and philosophy that guide project management practice. 2. The logical sequence of stages in the life of a project. 3. The methods, procedures, and systems for defining, planning, scheduling,

controlling, and organizing project activities. 4. The organizational, managerial, and human behavioral issues in project

management.

In recent years the scope of project management has grown to encompass more than the management of individual projects, recognizing that project success involves more than the skills and talent of a good project manager; hence, a final objective of the book is to cover:

5. Responsibilities of the organization for assuring effective project management and successful projects.

Organization of This Book

Beyond this introductory chapter, the book is divided into five main sections. The first section is devoted to the basic concepts of project management. This section describes project management principles, systems methodologies, and the systems approach—the philosophy that underlies project management. Also covered are the origins and concepts of project management, situations where it is needed, and examples of applications. The second section describes the logical process in the creation and life of a system. Called the Systems Development Cycle, it is the sequence of phases through which all human-made systems move from birth to death. The cycle is described in terms of its relation to projects and project management. The third section is devoted to methods and procedures for planning, scheduling, cost estimating, budgeting, resource allocation, controlling, and terminating a project. The topics of resource planning, computer and web- based project management, and project evaluation are also covered. The fourth section is devoted to project organizations, teams, and the people in projects. It covers forms of project organization, roles and responsibilities of project managers and team members, styles of leadership, and methods for managing teamwork, conflict, and emotional stress. The last section covers topics that lie beyond the project manager but are crucial for project success and, more broadly, the success of the organizations and communities that sponsor and undertake projects. It also covers a topic that spans most other topics in this book but

requires special attention, managing projects in different countries. The five stated objectives of this book are roughly divided among chapters in

the book’s five sections:

1. Basic concepts and systems philosophy: Chapters 1 and 2. 2. Systems development and project life cycle: Chapters 3 and 4. 3. Methods, procedures, and systems for planning and control: Chapters 5

through 13. 4. Organization, management, and human behavior: Chapters 14 through 16. 5. The corporate context and international project management: Chapters 17

through 19.

Three Appendices provide examples of topics mentioned throughout the book: request for proposal (Appendix A), project proposal (Appendix B), and project execution plan (Appendix C).

I.9 Study Project

The best way to learn about project management is to actually participate in it or, failing that, to witness it. At the end of every chapter in this book are two kinds of questions: the first kind are the usual chapter review questions, the second are called “Questions About the Study Project.” The latter are intended to be applied to a particular project of the reader’s choosing. This will be called the “study project.” The purpose of these questions and the study project is to help the reader relate concepts from each chapter to real-life situations.

The study project questions can be used in two ways:

1. For readers who are currently working in projects as managers or project team members, the questions can be related to their current work. The questions serve to increase the reader’s awareness of key issues surrounding the project and to guide managers in the conduct of project management.

2. For readers who are currently full- or part-time students, the questions can be applied to “real-life” projects they are permitted to observe and research. Many business firms and government agencies are happy to allow student groups to interview managers and collect information about their projects. Though secondhand, this is nonetheless an excellent way to learn about project management practice (and mismanagement).

Assignment

Select a project to investigate. It should be a “real” project; that is, a project that has a real purpose and is not contrived just so you can investigate it. It can be a current project or one already completed; whichever, it must be a project for which you can readily get information.

If you are not currently involved in a project as a team member, then you must find one for which you have permission to study (collect data and interview people) as an “outsider.” The project should include a project team (minimum of

five people) with a project leader and be at least 2 or 3 months in duration. It should also have a specific goal in terms of a target completion date, a budget limit, and a specified end-item result or product. In general larger projects afford better opportunity to observe the concepts of project management than smaller ones.

If you are studying a project as an outsider it is also a good idea to do it in a team with three to six people and an appointed team leader (i.e., perform the study using a team). This, in essence, becomes your project team—a team organized for the purpose of studying a project. You can then readily apply many of the planning, organizing, team building, and other procedures discussed throughout the book as practice and to see how they work. This “hands-on” experience with your own team combined with what you learn from the project you are studying, will give you a fairly accurate picture about problems encountered and management techniques used in real-life project management.

Appendix: Relation Between Professional Standards and Chapters of this Book

Table I.1 PMI Project Management Bodies of Knowledge and Process Groups

PMBOK GUIDE AND TEN KNOWLEDGE AREAS

CHAPTERS ADDRESSING THESE AREAS

MOST RELEVANT RELATED

1. Introduction 0, 1 15, 16 2. Organizational influence & project Life

cycle 3, 14, 16 1, 2, 4, 5, 13, 14–

17 3. Project management processes 3, 13

4. Project integration management* 4, 11 2, 5, 9, 12, 14, 19 5. Project scope management* 4, 5, 11 2, 13, 19

6. Project schedule management* 6, 7, 11 5, 13, 19 7. Project cost management* 8, 11 19

8. Project quality management* 9 11, 13 9. Project resource management* 6, 16 7, 11, 14, 15, 19

10. Project communications management* 11, 12 13, 19 11. Project risk management* 10 7, 11, 18, 19

12. Project procurement management* 3, 5 11 13. Project stakeholder engagement* 15 1, 2, 3, 19 14. Appendix X3: Interpersonal &

behavioral skills 16

*Knowledge area Process Groups

Initiating Process Group 3, 4 Planning Process Group 5, 6, 7, 8 9, 10, 13, 19 Executing Process Group 11 13, 19

Monitoring and Controlling Process Group 11 12, 13, 19 Closing Process Group 12

Table I.2 IPMA Project Management Competencies

ICB - IPMA COMPETENCE BASELINE

CHAPTERS ADDRESSING THESE COMPETENCIES

MOST RELEVANT RELATED 1. Technical competencies

 1.01 Project management success 3, 5, 9  1.02 Interested parties 15 1, 3, 19

 1.03 Project requirements & objectives

4, 5 2, 11, 19

 1.04 Risk & opportunity 10 7, 11, 18, 19  1.05 Quality 9 11, 13

 1.06 Project organization 14, 15 13, 16, 19  1.07 Teamwork 16 13

 1.08 Problem resolution 16 2, 9, 10  1.09 Project structures 5, 14 1, 4, 8, 13, 15

 1.10 Scope & deliverables 4, 5 2, 3, 13  1.11 Time & project phases 3, 4, 6, 7 3

 1.12 Resources 5, 6, 7 8, 11, 12, 14, 16, 18, 19  1.13 Cost & finance 8 -

 1.14 Procurement & contract 3, 5 11, 19  1.15 Changes 11 13

 1.16 Control & reports 11 13, 19  1.17 Information & documentation 9, 12

 1.18 Communication 11, 12 19  1.19 Startup 3, 4 16

 1.20Closeout 12 2. Behavioral competencies

 2.01 Leadership 16 15, 19

 2.02 Engagement 15, 16  2.03 Self-control 16  2.04 Assertiveness 16  2.05 Relaxation 16  2.06 Openness 16  2.07 Creativity 9, 10

 2.08 Results orientation 16  2.09 Efficiency 5–9, 11, 16

 2.10 Consultation 5, 16  2.11 Negotiation 3, 16

 2.12 Conflict & crisis 16  2.13 Reliability 5–9, 16

 2.14 Values appreciation 16  2.15 Ethics 16

3. Contextual competencies  3.01 Project orientation I, 1, 17  3.02 Program orientation 17 1  3.03 Portfolio orientation 18 1

 3.04 Project, program & portfolio implementation

18 17

 3.05 Permanent organization 4, 14, 17  3.06 Business 14, 17–19

 3.07 Systems, products & technology 2, 3, 4 9  3.08 Personnel management 6, 16, 19  3.09 Health, security, safety &

environment 3 4, 10

 3.10 Finance 8, 11, 18

 3.11 Legal 3, 19

Table I.3 APM Project Management Knowledge Areas

APMP QUALIFICATION 37 CHAPTERS ADDRESSING THESE

KNOWLEDGE AREAS AREAS

MOST RELEVANT RELATED

Project management in context  1.1 Project management 1 I, 17, 19

 1.2 Programme management 17 1  1.3 Portfolio management 18 1

 1.4 Project context 1 2  1.5 Project sponsorship 15 19

 1.6 Project office 17 14 Planning the strategy

 2.1 Project success & benefits management

3 9

 2.2 Stakeholder management 15 1–3, 19  2.4 Project management plan 4 5–10  2.5 Project risk management 10 7, 11, 18, 19

 2.6 Project quality management 9 11, 13  2.7 Health and safety 3 4, 10 Executing the strategy

 3.1 Scope management 4, 5, 11 2, 13, 19  3.2 Scheduling 6,7 5, 11, 13, 19

 3.3 Resource management 5–7 8, 11, 12, 14, 16, 18, 19

 3.4 Budgeting & cost management 8 11, 19  3.5 Change control 11 13

 3.6 Earned value analysis 11  3.7 Information management & reporting 12 19

 3.8 Issue management 11 Techniques

 4.1 Requirements management 4,5 2, 11, 13, 19  4.3 Estimating 8

 4.7 Configuration management 8 2, 11

 4.7 Configuration management 8 2, 11 Business and commercial

 5.1 Business case 3  5.4 Procurement 3, 5 11

Organisation and governance  6.1 Project life cycles 3 13, 17

 6.5 Handover and closeout 12  6.6 Project reviews 12 9, 13

 6.7 Organizational structure 14  6.8 Organizational roles 15

 6.9 Methods and procedures 17 13  6.10 Governance of project management 17, 18

People and the profession  7.1 Communication 12

 7.2 Teamwork 16 13  7.3 Leadership 16 15, 19

 7.4 Conflict management 16  7.5 Negotiating 3, 16

Table I.4 PRINCE2 Methodology: Principles, Themes, Processes

PRINCE 2 CHAPTERS ADDRESSING PRINCIPLES,

THEMES, PROCESSES

MOST RELEVANT RELATED 1. Seven principles

 Continued business justification

18

 Learn from experience 17 4, 13  Defined roles and

responsibilities 15

 Manage by stages 3 2, 4  Manage by exception 9  Focus on products 4,5,9

 Tailor to suit the project environment

1 I, 17

2. Seven themes  Business case 3  Organization 5, 14 1, 4, 8, 13, 15

 Quality 9 11, 13  Plans 5 6–10  Risk 10 7, 11, 18, 19

 Change 11 9, 13  Progress 11 11, 19

3. Seven processes  Starting up a project 3, 4 16  Directing a project 11 12, 13, 19  Initiating a project 3, 4  Managing a stage

boundary 4

 Controlling a stage 11  Managing product delivery 11

 Closing a project 12

Review Questions

1. Look at websites, newspapers, magazines, or television for examples of projects. Surprisingly, a great number of newsworthy topics relate to current and future projects, or to the outcome of past projects. Prepare a list of these topics.

2. Prepare a list of activities that are not projects. What distinguishes them from project activities? Which activities are difficult to classify as projects or non-projects?

3. Because this is an introductory chapter, not very much has been said about why projects must be managed differently from ordinary “operations,” and what constitutes project management—the subject of this book. Now is a good time to speculate about these: Why do you think projects and non-projects need to be managed differently? What do you think are some additional or special considerations necessary for managing projects?

Case I.1 The Denver Airport15

When the Denver Airport project was initiated in 1989, the planned 4-year timeframe seemed adequate. However, despite abundant political backing and adequate funding, the project suffered a 16-month delay and a $1.5 billion cost overrun. The NTCP model can be used in retrospect to explain the root cause of much of the project’s unsatisfactory performance. With 20- 20 hindsight one may argue that a relatively simple NTCP analysis of the project and its sub-projects at an early stage (and adjusting the management style accordingly) might have significantly improved performance.

To enable aircraft turnaround around in less than 30 minutes as requested by United Airlines, one of the airport’s largest tenants, an automated baggage sorting and handling system was necessary to improve efficiency

over the traditional manual handling system. In December 1991 BAE Automatic Systems was contracted to design and implement the automated system in an estimated 2.5-year timeframe.

By August 1994 the system was 11 months late and was severely hampering airport operations. Management decided to build an alternative, more traditional baggage system as a backup at an additional $50 million cost, and only United would use the BAE system for its own terminal concourse. In January 1995 a full-scale practice run of the BAE system was successfully executed, and in February 1995 the airport was opened—16 months late.

Building the airport was mostly a typical large construction project; in terms of NTCP it would be classified as follows: Novelty—Platform; Technology—Low-tech; Complexity—Array; Pace—Fast/Competitive. The snag in the project was that one element—the automatic baggage-handling system: it was new technology and, thus, riskier than the rest of the project, a risk that was not considered. The system was the first of its kind (it had been used before only on a much smaller scale) and required several design cycles and intensive testing. It therefore should have been considered “High- tech” and managed accordingly. As discussed later in the book, high-risk projects need to be managed differently from low-risk projects. The NTCP profiles of the total project and the baggage-handling system are illustrated in Figure I.6.

Figure I.6 “Diamond” profiles for the Denver Airport and for the Baggage-Handling System.

Source: Shenhar A. and Dvir D. Reinventing Project Management: The Diamond Approach to

Successful Growth and Innovation. Cambridge, MA: Harvard Business School Press; 2007.

Questions About the Case

1. In what ways should High-tech projects be managed differently from Low-tech ones?

2. BAE Automatic Systems is a reputable high-technology corporation and was familiar with building automated baggage-handling systems. What might have convinced them to accept a schedule of 2.5 years for designing and construction of the baggage-handling system?

3. If an NTCP analysis had been done and the profile of the baggage- handling system identified, what should the project manager have done to help ensure project success?

4. Explain how the NTCP model makes provision for 144 different types of projects.

Endnotes

1. Tompkins P. Secrets of the Great Pyramids. New York, NY: Harper & Row; 1976, pp. 233–234; Poirier R.

The Fifteen Wonders of the World. New York, NY: Random House; 1961, pp. 54–67.

2. Ibid., pp. 227–228.

3. Barber F. The Mechanical Triumphs of the Ancient Egyptians. London, UK: Tribner; 1900.

4. George C.S. The History of Management Thought. Upper Saddle River, NJ: Prentice Hall; 1968, p. 11.

5. Potok C. Wanderings. New York, NY: Fawcett Crest; 1978, pp. 154–162.

6. See Archibald R.D. Managing High-Technology Projects. New York, NY: Wiley; 1976, p. 19; Meredith J.

and Mantel S. Project Management: A Managerial Approach, 3rd edn. New York, NY: Wiley; 1995, pp. 8–

9; Roman D. Managing Projects: A Systems Approach. New York, NY: Elsevier; 1986.

7. See Terraine J. The Mighty Continent. London, UK: BBC; 1974, pp. 241–242.

8. This section is adapted from: Shenhar A. and Dvir D. Reinventing Project Management: The Diamond

Approach to Successful Growth and Innovation. Cambridge, MA: Harvard Business School Press, 2007.

Since publication of the book, the NTCP model has been revised: “Breakthrough” has been split into

New-to-Market, and New-to-World; to “Complexity” the level of Component has been added below

Assembly.

9. See Rosenau M.D. Successful Project Management. Belmont, CA: Lifetime Learning; 1981, pp. 15–19.

10. Archibald, Managing High-Technology Projects, pp. 6–7.

11. Kerzner H. Project Management: A Systems Approach to Planning, Organizing, and Controlling, 10th

edn. Hoboken, NJ: John Wiley & Sons; 2009, p. 16.

12. APM Body of Knowledge, 6th edn. Association for Project Management, 2013; IPMA Competence

Baseline: ICB, International Project Management Association. Available for download at

http://ipma.ch/certification/competence/ipma-competence-baseline/ (accessed December 30, 2014); A

Guide To The Project Management Body of Knowledge (PMBOK Guide), 5th edn. Project Management

Institute, 2013.

13. Managing Successful Projects with PRINCE2, 2009 edn. Office of Government Commerce. Available for

download at https://www.prince2.com/downloads (accessed December 30, 2014).

http://ipma.ch/certification/competence/ipma-competence-baseline/
https://www.prince2.com/downloads
14. Snow C.P. The Two Cultures and a Second Look. Cambridge, UK: Cambridge University Press; 1969.

15. Shenhar A. and Dvir D. Reinventing Project Management: The Diamond Approach to Successful Growth

and Innovation. Boston, MA: Harvard Business School Press; 2007.

Part I Philosophy and Concepts

1 What Is Project Management?

2 Systems Approach

The two chapters in this section describe the philosophy and concepts that differentiate project management from traditional, non-project management. The first chapter introduces features associated with project management and project management variations. Project management is an application of what has been called the systems approach to management; the second chapter describes the principles, terminology, and methodology of that approach. The two chapters set the stage for more detailed coverage in later sections.

Chapter 1 What Is Project Management?

The projects mentioned in the Introduction—the Great Pyramid of Egypt, the International Space Station, the Chunnel, and the development of “Product J” have something in common with each other and with every other undertaking of human organizations: they all require, in a word, management. Although the resources, work tasks, and goals of these projects vary greatly, none of them could have happened without management. This chapter contrasts project management and non-project management and looks at the variety of ways and places where project management is used.

1.1 Functions of Management1

The role of management is to plan, organize, and integrate resources and tasks to achieve the organization’s goals. Although the specific responsibilities of managers vary greatly, all managers—whether corporate presidents, agency directors, line managers, school administrators, movie producers, or project managers—have this same role.

The activities of managers, including project managers, can be classified into the five functions identified in Figure 1.1. First is deciding what has to be done and how it will be done. This is the planning function, which involves setting a purpose or goal and establishing the means for achieving it consistent with higher-level organizational goals, resources, and constraints in the environment.

Second and related to planning is arranging for the work to be done; this is the organizing function. This involves (1) hiring, training, and gathering people into a team with specified authority, responsibility, and accountability relationships; (2) acquiring and allocating materials, capital, and other resources; and (3) creating an organization structure with policies, procedures, reporting patterns, and communication channels.

Third is directing and motivating people to attain the goal. This is the leadership function.

Fourth is monitoring work performance with respect to the goal and taking necessary action whenever work deviates from the goal; this is the control function.

The four functions are aimed at the goal, which implies a fifth function: assessing the four functions to determine how well each of the functions is doing and whether the functions or the goals need to be changed.

On a day-by-day basis, rarely do managers perform the functions in Figure 1.1 in sequence. Although planning logically precedes the others, there is always a need to organize activities, direct people, and evaluate work, regardless of sequence. Managers constantly face change, which means that plans, activities, performance standards, and leadership styles must also change.

Figure 1.1 The functions of management.

Different managers’ jobs carry different responsibilities depending on the functional area and managerial level of the job. Some managers devote most of their time to planning and organizing, others to controlling, and others to directing and motivating. At some time or another, project managers perform all these functions.

1.2 Features of Project Management

Project management is a systems approach to management. A system is a collection of interrelated components or elements that in combination do something. A project can be thought of as a system: it is a collection of elements —work tasks, resources, and stakeholders (individuals, teams, organizations)— aimed at achieving some goal. The focus of the systems approach is to optimize the overall system (not its individual elements) so as to achieve the goal. The approach starts by defining the goal, identifying components or elements of the system that contribute to or detract from meeting the goal, and then managing the elements to best achieve the goal. It involves all the functions of management —planning, organizing, leadership, and so on.

As described in the Introduction, projects differ from non-projects. Non-project activities such as mass production in factories or delivery of routine services are routine and seldom change; there is little uncertainty or risk involved. They tend to involve the same people doing the same procedures, day-in, day-out. In contrast, every project is unique and unfamiliar in some sense, and requires people or teams from different functions or organizations. This creates uncertainty and risk and makes it harder to achieve the desired goal. So the question is: How do you manage such a thing as a project? The answer: Use project management.

The key features of project management are:2

1. A single person, the project manager, heads the project organization and works independently of the normal chain-of-command. The project organization reflects the cross-functional, goal-oriented, temporary nature of the project.

2. Because each project requires a unique variety of skills and resources, project work might be performed by people from different functional areas or outside contractors.

3. The project manager is responsible for integrating people from the different functional areas or outside contractors.

4. The project manager works directly with functional managers or contractors who might be responsible for the individual work tasks and personnel within the project.

5. Whereas project managers focus on delivering particular products or services on time and on budget, functional managers might be responsible for providing project workers and resources from their departments. As a result, conflict may arise between project and functional managers over the people and resources allotted to projects.

6. A project might have two chains-of-command, one functional and one project, so people working in a project report to both a project manager and a functional manager.

7. Decision making, accountability, outcomes, and rewards are shared between the project team and supporting functional units and outside contractors.

8. Although the project organization is temporary, usually the functional or subcontracting units from which it is formed are permanent. When a project ends, the project organization is disbanded and people return to their functional or subcontracting units.

Because projects require the coordinated efforts of different individuals and units from within and outside the organization, managers and workers in different units and at different levels work directly with each other. Formal lines of communication and authority are frequently bypassed and a horizontal hierarchy is created. This horizontal hierarchy enables people in the project organization from different functional areas and outside organizations to work directly with each other as needed.

In non-project organizations, managers tend to be specialized and responsible for a single functional unit or department. A project, however, since it might involve many departments, needs someone from beyond these departments to take responsibility for meeting the project’s goals. That person is the project manager. The emphasis on project goals versus the goals of each functional unit is a key feature that distinguishes project managers from functional managers.

Project managers often direct people who are not “under” them but who are “assigned” to them from different areas of the organization as needed. This

potentially makes being a project manager more complicated (and difficult) than being a departmental manager. Project managers must know how to use diplomacy, resolve conflicts, and be able to function without the convenience of always having the same team reporting to them.

1.3 Evolution of Project Management

No single individual or industry can be credited with the idea of project management. It is often associated with the early missile and space programs of the 1960s, but clearly its origins go back much earlier. Techniques of project management probably first appeared in the major construction works of antiquity, such as the Pyramids and the Roman aqueducts, and were later modified for use on other projects such as shipbuilding. Starting in the early twentieth century, managers developed techniques for use in other kinds of projects, such as for designing and testing new products, and building and installing specialized machinery. During World War I a new tool called the Gantt chart for scheduling and tracking project-type work was developed (examples in Chapter 5), followed about 40 years later by the project network diagram (discussed in Chapter 6).

By the 1950s, the size and complexity of many projects had increased so much that existing management techniques proved inadequate. Repeatedly, large-scale projects for developing aircraft, missiles, communication systems, and naval vessels suffered enormous cost and schedule overruns. To grapple with the problem, two new “network-based” methods for planning and control were developed, one called PERT, the other called CPM (described in Chapters 6 and 7). A decade later, network-based methods were refined to integrate project cost accounting with project scheduling. These methods came into widespread usage in the 1960s when the US government mandated their usage in projects for the Department of Defense, NASA, and large-scale efforts such as nuclear power plants. In the 1970s, the earned value method of project tracking was developed (see Chapter 12); this led to performance measurement systems that simultaneously track work expenditures and work progress.

See Chapters 5 and 6

See Chapters 6 and 7

See Chapter 12

The last 50 years have witnessed the increased computerization of project management. Whereas initial project planning and tracking systems cost $10,000 to $100,000, today relatively low-cost software and freeware make it possible to use a variety of tools for planning, scheduling, costing, and controlling virtually any size project.

Associated with the evolution of project management was the emergence of project forms of organization and the role of project manager. Not until World War II was “the project” recognized as a distinct organizational form. In the urgency to develop sophisticated weaponry and organize massive task forces of troops and material, the “pure-project” form of organization evolved (described in Chapter 14), and it was not until the 1960s that companies began to use the term “project manager” as a formal title and role (see Chapter 15).

In recent years, project management has proliferated throughout all industries around the world. The most widespread applications and examples of each are discussed in the following sections.

See Chapters 14 and 15

1.4 Where is Project Management Appropriate?3

Fact is, project management is applied everywhere, and there are few industries or situations where it is not applied at least some of the time. This section identifies conditions and situations where a project-type organization applies or is essential.

Project management can be applied to any “ad hoc” undertaking. As shown in Figure I.3 in the Introduction, “ad hoc” includes activities that range from writing a term paper or remodeling a kitchen, to fundraising and constructing theme parks. Generally, the more unfamiliar or unique the undertaking, the greater the need for project management; the more numerous, interdisciplinary, and interdependent the activities in the undertaking, the greater the need for project management to ensure everything is coordinated, integrated, and completed, and nothing is overlooked.

Customers such as major corporations and governments frequently request or mandate formal project management because they believe it offers better cost, schedule, and quality control, and they prefer having a single point of contact— the project manager—with whom to deal.

See Introduction

Criteria

Cleland and King list five criteria for determining when to use project management methods and organization:4

1. Unfamiliarity

By definition, a project involves doing different things, doing the same things but differently, or both. For example, whereas continuous minor changes in products

such as small improvements in automobile parts can usually be accomplished without project management, modernizing an automotive plant, which calls for non-routine efforts such as upgrading facilities, replacing equipment, retraining employees, and altering procedures, would certainly require project management.

2. Magnitude of the Effort

When a job requires substantially more resources (people, capital, equipment, etc.) than are normally employed by a department or organization, project management may be necessary. Examples include relocating a facility, merging two corporations, or developing a new product and placing it on the market. Even when the job lies primarily within the realm of one functional area, the task of coordinating the work with other functional areas might be large. For example, although a corporate software installation project might seem to fall entirely within the functional area of information technology, in fact it might require a meshing of the procedures and resources of all departments affected by the installation and involve hundreds of people.

3. Dynamic Environment

Industries such as aerospace, biotechnology, computers, electronics, pharmaceuticals, and communications face continual change driven by an environment characterized by high innovation, intense competition, and shifting markets and consumer demands. Project management provides the necessary flexibility to deal with emerging threats and opportunities in such environments.

4. Interrelatedness

Functional areas tend to be self-serving and work independently. When the effort requires that they work together, project management is necessary to build relationships between the areas, expedite work, and reconcile conflicts. The project manager coordinates the efforts of internal functional areas and with

outside subcontractors and vendors.

5. Reputation of the Organization

If failure to satisfactorily complete a project would result in financial ruin, loss of market share, damaged reputation, or loss of future contracts, the case for using project management is strong. Project management cannot guarantee success, but it does improve the odds by reducing the inherent risks in large, complex undertakings.

Example 1.1 Renovating the Statue of Liberty5

Ninety-five years after the Statue of Liberty was presented to the American people, its surface and interior structure had become so badly corroded that it was judged structurally unsound. To oversee restoration of the statue and other buildings on nearby Ellis Island, the US Department of Interior established a foundation.

Very little of the restoration work qualified as “standard.” It involved highly specialized skills such as erecting the scaffolding, constructing a new torch, building windows for the crown, and replacing the interior framework—expertise that tends to be found in smaller firms. As a result, the work was accomplished by a legion of over 50 small businesses, many of whose workers were immigrants or descendants of immigrants whom the statue had welcomed to America.

There were myriad notable features about the job. The scaffolding surrounding the statue never touched it at any point. Constructed of hundreds of thousands of pieces of aluminum, it qualified for the Guinness Book of World Records as the largest free-standing scaffolding ever built. To renovate the statue’s interior, 1,699 5-foot (1.5 m) bars were painstakingly fashioned from 35,000 pounds (15,900 kg) of stainless steel, and then individually installed. Around the crown 25 windows were replaced. Each was handcrafted and had to be treated as a project unto itself. To fashion an entirely new torch, French artisans practiced an ancient copper shaping

technique. The project was truly a marriage of art and engineering. The 30-month, $31 million renovation effort involved thousands of tasks

performed by hundreds of people. Most of the tasks were non-routine and interrelated, and all had to be completed within a tight budget and schedule; such a situation calls for project management. (Chapter 16 discusses the company responsible for managing the renovation.)

See Chapter 16

Where Project Management is not Appropriate

The obverse of all of this is that the more familiar and routine the undertaking, the more stable the environment, the less unique and more standardized the end- item, and the lower the stake in the result, the less the need for project management. Production of standardized industrial and agricultural outputs, for example, is generally more efficiently managed by tried and true operations planning and control procedures than by project management. This is because for standardized, repetitive operations, there is much certainty in the process and outcome; for such operations, standardized, routine procedures for production planning, scheduling, and budgeting are well-suited, and project management is not.

1.5 Management by Project: A Common Approach

Though not appropriate for every situation, project management applies to a great many, and not only large-scale, infrequent undertakings, but also all kinds of smaller, more frequent activities as well. Whenever an undertaking involves activities that are somewhat unique or unfamiliar and requires cooperation from several parties, project management applies.

For example, consultants in most every industry perform work on a project-by- project basis. Whenever their work calls for coordinated participation of several individuals or groups, project management applies. The more people or groups involved, the more the applicability of project management.

Similarly, groups that develop or implement new products, systems, or services also work on a project-by-project basis. The larger, riskier, more complex, costly, innovative, or different the thing being developed or implemented, the greater the applicability of project management.

Further, any group that performs unique work on a client-by-client basis (so- called made-to-order, or made-to-engineer) is performing project work. If the work requires coordinated efforts from different parties, project management applies.

Think about these situations for a moment and you start to realize the many cases where projects happen and project management applies.

Managing any kind of work as a discrete project is referred to as “managing by project,” or MBP.6 With MBP, an undertaking or set of activities is planned and managed as if it were a project. In particular, MBP implies that the undertaking will have well-defined objectives and scope, firm requirements for the end- results, a plan of work, a completion date, and a budget for the required resources. A team is formed for the sole purpose of performing the work, and a project manager or team leader is assigned to guide and coordinate the work.

At some time, all organizations do projects. Even in stable repetitive industries, small projects involving a few individuals are always in progress: new machines are installed, old ones are repaired; the office is remodeled; the cafeteria is renovated. When these or larger project efforts arise, a formalized project group

is formed and a project manager appointed.

Example 1.2 Relocation of Goman Publishing Company

Many companies, regardless of size (headquarters for a multi-billion dollar corporation or a storefront family restaurant), at some point face the decision to relocate. Relocation requires planning and coordination of numerous tasks involving many individuals, departments, and outside contractors. It is an important event that if done properly can be an exciting and profitable experience, but if done poorly can lead to financial loss or ruin. It is also representative of a situation wherein a company must do something it does not ordinarily do.

Goman Publishing was experiencing rapid growth and expected to outgrow its current facility. The initial task in relocating the company was to decide between two options: buying land and constructing a new building, or leasing or buying an existing structure. After deciding to build, the next task was to select a site. The main selection criteria were purchase expense, distance from current location, prestige and size of the new location, and access to major highways. The next task was the relocation planning, which had two major phases: design and construction of the new facility, and the physical move, each involving numerous considerations. For example, Goman wanted to retain its current employees, and so as to maximize the new facility’s appeal it chose to build an indoor employee parking area and a large, well-appointed cafeteria. Among the many move- related considerations were furniture procurement, special handling of computers, hiring movers, informing employees and clients about the move, and maintaining corporate security. Further, the relocation would have to be scheduled to minimize downtime and interruption of operations.

To oversee the project and ensure that construction and the physical move would go as planned, Goman appointed a project manager. The project manager worked with architects and building contractors during the design and construction phases, and with representatives from functional

departments and moving contractors during the relocation move. Despite the scope and unfamiliarity of the project, Goman was able to complete the construction and physical move on time and on budget.

1.6 Different Forms of Project-Related Management

Project management takes different forms with different names, including systems management, task force management, team management, ad hoc management, matrix management, and program management. All these forms share two features: (1) a project team or project organization created uniquely for the purpose of achieving a specific goal, and (2) a single person—a project manager—assigned responsibility for seeing that the goal is accomplished. Beyond these, features of the forms are somewhat different.

The first section below covers “basic” project management, the most commonly understood concept of project management. The other sections cover management forms similar to project management or related to project selection.

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