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Project Change Request Assessment + Assessing The Impact Of Ethics On Project Management

Assignment Overview:

For this assignment, you will be assessing a proposed change to the scope of the project, proposing an overview of a change management process, drafting a change request form, and discussing how the change will be communicated to the stakeholders inclusive of the sponsor.

Learning Connection:

This assignment is directly linked to the following key learning outcomes from the course syllabus:

Discuss critical success factors
Introduce leading vs. lagging indicators
Discuss why the Integrated Change Control process is so critical
Discuss risk and issue escalation process to project sponsors and stakeholders
In addition to these key learning outcomes, you will also have the opportunity to evidence the following skills through completing this assignment:

Critical thinking
Problem-solving
Quantitative analysis
Professional writing

Assignment Instructions:

For this assignment, you will be assessing a requested change to the scope, preparing a change request form, and utilizing your stakeholder analysis, to determine how the information should be disseminated. Please be sure to start this assignment early to allow for sufficient time. Below are the assignment guidelines and files.

Assignment Files:

To complete this assignment, you will use the following file:

1. Continuation Week Five Case Study document which is attached above. This is a continuation of the case study introduced in Week Two.

Guide to Files

The Case Study file attached here and the original case study document from Week Two can be leveraged for this assignment. This will provide you some context to the evaluation you will be using and allow you to make some reasonable assumptions about the context of the changes to the project.

Using the information gathered from the original case study, and the new information provided, write a 4 - 5 page paper using the following structure:

Report / Executive Summary - Summarize the finding of the impact of the change briefly (1 or 2 paragraphs); this should include the finding of your report, as well as, your recommendations to your sponsor regarding the implementation of the change. It should be concise and direct.
Current Status of Project - In this section, you want to provide details regarding the current status. Which indicators from the case study are you leveraging to describe the current status?
Identify any leading vs. the lagging indicators in your analysis.
Provide an overview of the change process you will follow to incorporate the change including the approval process. Will there be a change control board? Will the PM review prior to submission for approval? Does the sponsor need to approve your change request form? Consider including a flow chart and a summary explaining the flow chart.
Recommendations - Based on your analysis of the change, tell us what areas of the project are of concern. Is cost or time a concern in these areas? Does the scope need be considered? What are some possible solutions for cost and schedule related impacts of the change that might be applicable?
Please insert a draft change request form in your submitted assignment completed with the relevant information that your sponsor will need to approve the change.
Here are some general guidelines for formatting:

Use section headers so that it is clear what the sections of the report are
Make good use of tables and/or charts to report the data
Be concrete; reference the case study and specifics regarding performance
Include page numbers
All Assignment files are due by Sunday 11:59 pm, End of week 5
Remember completion of an assignment does not guarantee an 'A'. Please refer to the attached grading rubric as a guide to how the assignment will be assessed.

Part 2:

Analyze and assess the impact of Ethics on Project Management:

Read Gray & Larson pages 353 - 359.
Identify two external articles on Ethical Practices in Project Management.
Write a 2-3 page paper which accomplishes the following:

Summarizes the Gray & Larson material and synthesizes the information in the two external articles.
Draft your own personal ethical statement of practice in which you identify key characteristics of your ethical self.
Identify one area of focus in project management that can be more suspectible to ethical pressure and how you would address the situation.
Ensure you follow APA style guidelines

The Managerial Process

The McGraw-Hill Series Operations and Decision Sciences

OPERATIONS MANAGEMENT

Beckman and Rosenfield, Operations, Strategy: Competing in the 21st Century, First Edition

Benton, Purchasing and Supply Chain Management, Second Edition

Bowersox, Closs, Cooper, and Bowersox, Supply Chain Logistics Management, Fourth Edition

Brown and Hyer, Managing Projects: A Team-Based Approach, First Edition

Burt, Petcavage, and Pinkerton, Supply Management, Eighth Edition

Cachon and Terwiesch, Matching Supply with Demand: An Introduction to Operations Management, Third Edition

Cooper and Schindler, Business Research Methods, Twelfth Edition

Finch, Interactive Models for Operations and Supply Chain Management, First Edition

Fitzsimmons, Fitzsimmons, and Bordoloi, Service Management: Operations, Strategy, Information Technology, Eighth Edition

Gehrlein, Operations Management Cases, First Edition

Harrison and Samson, Technology Management, First Edition

Hayen, SAP R/3 Enterprise Software: An Introduction, First Edition

Hill, Manufacturing Strategy: Text & Cases, Third Edition

Hopp, Supply Chain Science, First Edition

Hopp and Spearman, Factory Physics, Third Edition

Jacobs, Berry, Whybark, and Vollmann, Manufacturing Planning & Control for Supply Chain Management, Sixth Edition

Jacobs and Chase, Operations and Supply Management: The Core, Third Edition

Jacobs and Chase, Operations and Supply Management, Fourteenth Edition

Jacobs and Whybark, Why ERP? First Edition

Larson and Gray, Project Management: The Managerial Process, Sixth Edition

Leenders, Johnson, and Flynn, Purchasing and Supply Management, Fourteenth Edition

Nahmias, Production and Operations Analysis, Sixth Edition

Olson, Introduction to Information Systems Project Management, Second Edition

Schroeder, Goldstein, Rungtusanatham, Operations Management: Contemporary Concepts and Cases, Sixth Edition

Seppanen, Kumar, and Chandra, Process Analysis and Improvement, First Edition

Simchi-Levi, Kaminsky, and Simchi-Levi, Designing and Managing the Supply Chain: Concepts, Strategies, Case Studies, Third Edition

Sterman, Business Dynamics: Systems Thinking and Modeling for Complex World, First Edition

Stevenson, Operations Management, Eleventh Edition

Swink, Melnyk, Cooper, and Hartley, Managing Operations Across the Supply Chain, Second Edition

Thomke, Managing Product and Service Development: Text and Cases, First Edition

Ulrich and Eppinger, Product Design and Development, Fourth Edition

Zipkin, Foundations of Inventory Management, First Edition

QUANTITATIVE METHODS AND MANAGEMENT SCIENCE

Hillier and Hillier, Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets, Fifth Edition

Stevenson and Ozgur, Introduction to Management Science with Spreadsheets, First Edition

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Project Management

The Managerial Process Sixth Edition

Erik W. Larson Oregon State University

Clifford F. Gray Oregon State University

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PROJECT MANAGEMENT: THE MANAGERIAL PROCESS, SIXTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2 014 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous Edition © 2011. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-0-07-809659-4 MHID 0-07-809659-6

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All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Cataloging-in-Publication Data

Gray, Clifford F. Project management : the managerial process / Erik W. Larson, Clifford F. Gray.—Sixth edition. pages cm Previous editions published as: Project management : the managerial process / Clifford F. Gray, Erik W. Larson. ISBN 978-0-07-809659-4 (alk. paper) 1. Project management. 2. Time management. 3. Risk management. I. Larson, Erik W., 1952- II. Title. HD69.P75G72 2014 658.4904—dc23 2013027472

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

www.mhhe.com

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About the Authors Erik W. Larson ERIK W. LARSON is professor of project management at the College of Busi- ness, Oregon State University. He teaches executive, graduate, and undergraduate courses on project management and leadership. His research and consulting activ- ities focus on project management. He has published numerous articles on matrix management, product development, and project partnering. He has been honored with teaching awards from both the Oregon State University MBA program and the University of Oregon Executive MBA program. He has been a member of the Portland, Oregon, chapter of the Project Management Institute since 1984. In 1995 he worked as a Fulbright scholar with faculty at the Krakow Academy of Economics on modernizing Polish business education. He was a visiting professor at Chulalongkorn University in Bangkok, Thailand, and at Baden-Wuerttemberg Cooperative State University in Bad Mergentheim, Germany. He received a B.A. in psychology from Claremont McKenna College and a Ph.D. in management from State University of New York at Buffalo. He is a certified project manage- ment professional (PMP) and Scrum Master.

Clifford F. Gray CLIFFORD F. GRAY is professor emeritus of management at the College of Business, Oregon State University. He continues to teach undergraduate and grad- uate project management courses overseas and in the United States; he has per- sonally taught more than 100 executive development seminars and workshops. His research and consulting interests have been divided equally between opera- tions management and project management; he has published numerous articles in these areas, plus a text on project management. He has also conducted research with colleagues in the International Project Management Association. Cliff has been a member of the Project Management Institute since 1976 and was one of the founders of the Portland, Oregon, chapter. He was a visiting professor at Kasetsart University in Bangkok, Thailand, in 2005. He was the president of Project Man- agement International, Inc. (a training and consulting firm specializing in project management) 1977–2005. He received his B.A. in economics and management from Millikin University, M.B.A. from Indiana University, and doctorate in oper- ations management from the College of Business, University of Oregon. He is certified Scrum Master.

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“Man’s mind, once stretched by a new idea, never regains its original dimensions.”

Oliver Wendell Holmes, Jr.

To my family who have always encircled me with love and encouragement—my parents (Samuel and Charlotte), my wife (Mary), my sons and their wives (Kevin and Dawn, Robert and Sally) and their children (Ryan, Carly, Connor and Lauren).

C.F.G.

“We must not cease from exploration and the end of all exploring will be to arrive where we begin and to know the place for the first time.”

T. S. Eliot

To Ann whose love and support has brought out the best in me. And, to our girls Mary, Rachel, and Tor-Tor for the joy and pride they give me. Finally, to my muse, Neil, for the faith and inspiration he instills.

E.W.L

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vii

Preface Our motivation in writing this text continues to be to provide a realistic, socio-technical view of project management. In the past, textbooks on project management focused almost exclusively on the tools and processes used to man- age projects and not the human dimension. This baffled us since people not tools complete projects! While we firmly believe that mastering tools and processes is essential to successful project management, we also believe that the effectiveness of these tools and methods is shaped and determined by the prevailing culture of the organization and interpersonal dynamics of the people involved. Thus, we try to provide a holistic view that focuses on both of these dimensions and how they interact to determine the fate of projects. The role of projects in organizations is receiving increasing attention. Projects are the major tool for implementing and achieving the strategic goals of the orga- nization. In the face of intense, worldwide competition, many organizations have reorganized around a philosophy of innovation, renewal, and organizational learning to survive. This philosophy suggests an organization that is flexible and project driven. Project management has developed to the point where it is a pro- fessional discipline having its own body of knowledge and skills. Today it is nearly impossible to imagine anyone at any level in the organization who would not ben- efit from some degree of expertise in the process of managing projects.

Audience

This text is written for a wide audience. It covers concepts and skills that are used by managers to propose, plan, secure resources, budget, and lead project teams to successful completions of their projects. The text should prove useful to students and prospective project managers in helping them understand why organizations have developed a formal project management process to gain a competitive advan- tage. Readers will find the concepts and techniques discussed in enough detail to be immediately useful in new-project situations. Practicing project managers will find the text to be a valuable guide and reference when dealing with typical prob- lems that arise in the course of a project. Managers will also find the text useful in understanding the role of projects in the missions of their organizations. Analysts will find the text useful in helping to explain the data needed for project imple- mentation as well as the operations of inherited or purchased software. Members of the Project Management Institute will find the text is well structured to meet the needs of those wishing to prepare for PMP (Project Management Profes- sional) or CAPM (Certified Associate in Project Management) certification exams. The text has in-depth coverage of the most critical topics found in PMI’s Project Management Body of Knowledge (PMBOK). People at all levels in the organization assigned to work on projects will find the text useful not only in pro- viding them with a rationale for the use of project management processes but also because of the insights they will gain on how to enhance their contributions to project success.

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viii Preface

Our emphasis is not only on how the management process works, but more importantly, on why it works. The concepts, principles, and techniques are univer- sally applicable. That is, the text does not specialize by industry type or project scope. Instead, the text is written for the individual who will be required to man- age a variety of projects in a variety of different organizational settings. In the case of some small projects, a few of the steps of the techniques can be omitted, but the conceptual framework applies to all organizations in which projects are important to survival. The approach can be used in pure project organizations such as construction, research organizations, and engineering consultancy firms. At the same time, this approach will benefit organizations that carry out many small projects while the daily effort of delivering products or services continues.

Content

In this and other editions we continue to resist the forces that engender scope creep and focus only on essential tools and concepts that are being used in the real world. We have been guided by feedback from practitioners, teachers, and stu- dents. Some changes are minor and incremental, designed to clarify and reduce confusion. Other changes are significant. They represent new developments in the field or better ways of teaching project management principles. Below are major changes to the sixth edition.

• Computer exercises and MS Project examples have been updated to MS Project 2010, and 2013 including video tutorials to help students master the basics of MS Project.

• Terms and concepts have been updated to be consistent with the fifth edition of the Project Management Body of Knowledge (2013).

• The chapters on Agile Project Management and Careers in Project Manage- ment have been expanded.

• Chapter 6 utilizes a new example that clarifies the differences between free and total slack. Chapters 1, 2, 4, 5 and 14 have been updated.

• A description of the Activity on Arrow (AoA) method for calculating networks has been deleted from the text and is now available only in the Instructor’s Manual.

• New student exercises and cases have been added to many chapters. • The Blue Zuma computer exercise in Appendix 2 has been replaced by the new

Red Zuma exercise. • The Snapshot from Practice boxes feature a number of new examples of project

management in action as well as new Research Highlights that continue to pro- mote practical application of project management.

• The Instructor’s Manual contains a listing of current YouTube videos that cor- respond to key concepts and Snapshots from Practice.

Overall the text addresses the major questions and issues the authors have encoun- tered over their 60 combined years of teaching project management and consult- ing with practicing project managers in domestic and foreign environments. The following questions represent the issues and problems practicing project managers find consuming most of their effort: What is the strategic role of projects in con- temporary organizations? How are projects prioritized? What organizational and

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Preface ix

managerial styles will improve chances of project success? How do project manag- ers orchestrate the complex network of relationships involving vendors, subcon- tractors, project team members, senior management, functional managers, and customers that affect project success? What factors contribute to the development of a high-performance project team? What project management system can be set up to gain some measure of control? How do managers prepare for a new interna- tional project in a foreign culture? How does one pursue a career in project management? Project managers must deal with all these concerns to be effective. All of these issues and problems represent linkages to an integrative project management view. The chapter content of the text has been placed within an overall framework that integrates these topics in a holistic manner. Cases and snapshots are included from the experiences of practicing managers. The future for project managers appears to be promising. Careers will be determined by success in managing projects.

Student Learning Aids

The text website (www.mhhe.com/larsongray6e) includes study outlines, online quizzes, PowerPoint slides, videos, Microsoft Project Video Tutorials and web links. The trial version of Microsoft Project software is included on its own CD-ROM free with the text.

Acknowledgments

We would like to thank Lacey McNeely for updating the Test Bank and Online Quizzes; Charlie Cook for revising the PowerPoint slides; Oliver F. Lehmann for providing access to PMBOK study questions; and Pinyarat Sirisomboonsuk for accuracy checking the text and Instructor’s Resource Manual content. Next, it is important to note that the text includes contributions from numer- ous students, colleagues, friends, and managers gleaned from professional conver- sations. We want them to know we sincerely appreciate their counsel and suggestions. Almost every exercise, case, and example in the text is drawn from a real-world project. Special thanks to managers who graciously shared their cur- rent project as ideas for exercises, subjects for cases, and examples for the text. Shlomo Cohen, John A. Drexler, Jim Moran, John Sloan, Pat Taylor, and John Wold, whose work is printed, are gratefully acknowledged. Special gratitude is due Robert Breitbarth of Interact Management, who shared invaluable insights on prioritizing projects. University students and managers deserve special accolades for identifying problems with earlier drafts of the text and exercises. We are indebted to the reviewers of past editions who shared our commitment to elevating the instruction of project management. The reviewers include Paul S. Allen, Rice University; Denis F. Cioffi, George Washington University; Joseph D. DeVoss, DeVry University; Edward J. Glantz, Pennsylvania State University; Michael Godfrey, University of Wisconsin–Oshkosh; Robert Key, University of Phoenix; Dennis Krumwiede, Idaho State University; Nicholas C. Petruzzi, Uni- versity of Illinois–Urbana/Champaign; William R. Sherrard, San Diego State University; S. Narayan Bodapati, Southern Illinois University at Edwardsville; Warren J. Boe, University of Iowa; Burton Dean, San Jose State University; Kwasi

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x Preface

Amoako-Gyampah, University of North Carolina–Greensboro; Owen P. Hall, Pepperdine University; Bruce C. Hartman, University of Arizona; Richard Irving, York University; Robert T. Jones, DePaul University; Richard L. Luebbe, Miami University of Ohio; William Moylan, Lawrence Technological College of Business; Edward Pascal, University of Ottawa; James H. Patterson, Indiana Uni- versity; Art Rogers, City University; Christy Strbiak, U.S. Air Force Academy; David A. Vaughan, City University; and Ronald W. Witzel, Keller Graduate School of Management. Nabil Bedewi, Georgetown University; Scott Bailey, Troy University; Michael Ensby, Clarkson University; Eldon Larsen, Marshall Univer- sity; Steve Machon, DeVry University–Tinley Park; William Matthews, William Patterson University; Erin Sims, DeVry University–Pomona; Kenneth Solheim, DeVry University–Federal Way; and Oya Tukel, Cleveland State University. Gregory Anderson, Weber State University; Dana Bachman, Colorado Christian University; Alan Cannon, University of Texas, Arlington; Susan Cholette, San Francisco State; Michael Ensby, Clarkson University; Charles Franz, University of Missouri, Columbia; Raouf Ghattas, DeVry University; Robert Groff, West- wood College; Raffael Guidone, New York City College of Technology; George Kenyon, Lamar University; Elias Konwufine, Keiser University; Rafael Landaeta, Old Dominion University; Muhammad Obeidat, Southern Polytechnic State University; Linda Rose, Westwood College; Oya Tukel, Cleveland State Univer- sity; and Mahmoud Watad, William Paterson University. In the sixth edition we continue to commit to improving the text content and improving instruction of project management. We are grateful to those reviewers who provided helpful critiques and insights on the fifth edition, which helped us prepare this revision. The reviewers for the sixth edition include Victor Allen, Lawrence Technological University; Mark Angolia, East Carolina University; Alan Cannon, University of Texas at Arlington; Robert Cope, Southeastern Louisiana University; Kenneth DaRin, Clarkson University; Ron Darnell, Amberton Uni- versity; Jay Goldberg, Marquette University; Mark Huber, University of Georgia; Marshall Issen, Clarkson University; Charles Lesko, East Carolina University; Lacey McNeely, Oregon State University; Donald Smith, Texas A&M University; Peter Sutanto, Prairie View A&M University; Jon Tomlinson, University of North- western Ohio. We thank you for your many thoughtful suggestions and for making our book better. Of course we accept responsibility for the final version of the text. In addition, we would like to thank our colleagues in the College of Business at Oregon State University for their support and help in completing this project. In par- ticular, we recognize Prem Mathew and Ping-Hung Hsieh for their helpful advice and suggestions. We also wish to thank the many students who helped us at different stages of this project, most notably Neil Young, Saajan Patel, Katherine Knox, Dat Nguyen, Lacey McNeely and David Dempsey. Mary Gray deserves special credit for editing and working under tight deadlines on earlier editions. Special thanks go to Pinyarat (“Minkster”) Sirisomboonsuk for her help in preparing the last four editions. Finally, we want to extend our thanks to all the people at McGraw-Hill/Higher Education for their efforts and support. First, we would like to thank Thomas Hayward and Wanda Zeman for providing editorial direction, guidance, and management of the book’s development for the sixth edition. And we would also like to thank Jane Mohr, Heather Ervolino, Nichole Birkenholz, Arpana Kumari, and Janean Utley for managing the final production, design, supplement, and media phases of the sixth edition.

Erik W. Larson

Clifford F. Gray

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Note to Student You will find the content of this text highly practical, relevant, and current. The concepts discussed are relatively simple and intuitive. As you study each chapter we suggest you try to grasp not only how things work, but why things work. You are encouraged to use the text as a handbook as you move through the three levels of competency:

I know.

I can do.

I can adapt to new situations.

Project management is both people and technical oriented. Project manage- ment involves understanding the cause-effect relationships and interactions among the sociotechnical dimensions of projects. Improved competency in these dimensions will greatly enhance your competitive edge as a project manager. The field of project management is growing in importance and at an expo- nential rate. It is nearly impossible to imagine a future management career that does not include management of projects. Résumés of managers will soon be primarily a description of the individual’s participation in and contributions to projects. Good luck on your journey through the text and on your future projects.

Chapter-by-Chapter Revisions for the Sixth Edition

Chapter 1: Modern Project Management

• New Snapshot: Project Management in Action 2013. • Makes stronger case for why project management is essential skill set for

anyone’s career. • New Snapshot: A Dozen Examples of Projects Given to Recent College

Graduates.

Chapter 2: Organization Strategy and Project Selection

• New Snapshot: Does IBM’s Watson’s Jeopardy Project Represent a Change in Strategy?

• New Snapshot: HP’s Strategy Revision. • Expanded discussion on the importance of project sponsors. • Revamped description of how project risks are assessed during the proposal

phase. • New case: Fund Raising Project Selection Case.

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xii Note to Student

Chapter 3: Organization: Structure and Culture

• New Snapshot: Google-y. • New case: Horizon Consulting.

Chapter 4: Defining the Project

• A new central example of a Work Breakdown Structure (WBS). • Discussion of Process Breakdown Structure (PBS). • Inclusion of “power/interest” map for assessing stakeholders.

Chapter 5: Estimating Project Times and Costs

• New Snapshot: Reducing Estimating Error. • Introduction to Reference Class Forecasting methodology. • New case: Post Graduation Adventure.

Chapter 6: Developing a Project Schedule

• A new central example that clarifies the differences between free and total slack.

• A description of the Activity on Arrow (AoA) method for calculating networks has been deleted from the text and is now available only in the Instructor’s Manual.

Chapter 7: Managing Risk

• New Snapshot: Playing Soccer in the Desert. • New case: Sustaining Project Risk Management during Implementation.

Chapter 8 Appendix 1: The Critical-Chain Approach

• New Snapshot: Critical Chain Applied to Airplane Part Arrivals.

Chapter 9: Reducing Project Duration

• New Snapshot: Smartphone Wars.

Chapter 10: Leadership: Being an Effective Project Manager

• New case: The Blue Sky Project. • New ethical dilemmas mini-case: Old Princeton Landing.

Chapter 11: Managing Project Teams

• Expanded discussion on project vision.

Chapter 12: Outsourcing: Managing Interorganizational Relations

• New Snapshot: The Boeing 787 Dreamliner. • New Snapshot: U.S. Department of Defense’s Value Engineering Awards 2013. • New case: Shell Case Fabricators.

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Note to Student xiii

Chapter 15: International Projects

• More extensive discussion of financial risks associated with international projects.

• New Snapshot: Project X–Namibia, Africa. • New exercise assessing relative safety of different countries.

Chapter 17: An Introduction to Agile Project Management

• Elaborates on the role of product owner in Scrum. • Includes all the principles of Agile Manifesto. • Introduces the use of Sprint and Release Burndown charts to monitor progress

on Agile projects. • Discusses the use of hybrid models that combine elements of Agile and

Waterfall.

Chapter 18: Project Management Career Paths

• New Snapshot: Ron Parker. • Discussion on how to take advantage of opportunities at a university to de-

velop project management skills. • Expanded discussion of the value of certification. • New Snapshot: Grooming the Next Generation at Intel.

Appendix 2: Computer Project Exercises

• The Blue Zuma computer exercise in Appendix 2 has been replaced by a new Red Zuma exercise.

• A video tutorial that demonstrates step by step how to complete and answer the original Blue Zuma exercise is available online for students.

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Brief Contents Preface vii

1. Modern Project Management 2

2. Organization Strategy and Project Selection 24

3. Organization: Structure and Culture 66

4. Defining the Project 100

5. Estimating Project Times and Costs 128

6. Developing a Project Plan 160

7. Managing Risk 204

8. Scheduling Resources and Costs 250

9. Reducing Project Duration 304

10. Leadership: Being an Effective Project Manager 338

11. Managing Project Teams 374

12. Outsourcing: Managing Interorganizational Relations 418

13. Progress and Performance Measurement and Evaluation 456

14. Project Closure 510

15. International Projects 538

16. Oversight 572

17. An Introduction to Agile Project Management 590

18. Project Management Career Paths 614

APPENDIX One Solutions to Selected Exercises 627

Two Computer Project Exercises 641

GLOSSARY 658 ACRONYMS 667 PROJECT MANAGEMENT EQUATIONS 668 INDEX 669

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Contents Preface vii

Chapter 1 Modern Project Management 2

What Is a Project? 6 The Project Life Cycle 8 The Project Manager 9 Being Part of a Project Team 10

Current Drivers of Project Management 11 Project Governance 15

Alignment of Projects with Organizational Strategy 16

Project Management Today: A Socio-Technical Approach 17 Summary 18

Chapter 2 Organization Strategy and Project Selection 24

The Strategic Management Process: An Overview 26

Four Activities of the Strategic Management Process 29

The Need for a Project Portfolio Management System 32

Problem 1: The Implementation Gap 32 Problem 2: Organization Politics 33 Problem 3: Resource Conflicts and Multitasking 34

A Portfolio Management System 36 Classification of the Project 36

Selection Criteria 37 Financial Criteria 37 Nonfinancial Criteria 39

Applying a Selection Model 42 Sources and Solicitation of Project Proposals 43 Ranking Proposals and Selection of Projects 44

Managing the Portfolio System 46 Balancing the Portfolio for Risks and Types of Projects 48

Summary 49 Appendix 2.1: Request for Proposal (RFP) 63

Chapter 3 Organization: Structure and Culture 66

Project Management Structures 67 Organizing Projects within the Functional Organization 68 Organizing Projects as Dedicated Teams 71 Organizing Projects within a Matrix Arrangement 74 Different Matrix Forms 75

What Is the Right Project Management Structure? 79

Organization Considerations 79 Project Considerations 79

Organizational Culture 81 What Is Organizational Culture? 81 Identifying Cultural Characteristics 83

Implications of Organizational Culture for Organizing Projects 86 Summary 89

Chapter 4 Defining the Project 100

Step 1: Defining the Project Scope 102 Employing a Project Scope Checklist 102

Step 2: Establishing Project Priorities 106 Step 3: Creating the Work Breakdown Structure 108

Major Groupings Found in a WBS 108 How WBS Helps the Project Manager 109 A Simple WBS Development 109

Step 4: Integrating the WBS with the Organization 113 Step 5: Coding the WBS for the Information System 113

Process Breakdown Structure 116 Responsibility Matrices 117 Project Communication Plan 118 Summary 122

Chapter 5 Estimating Project Times and Costs 128

Factors Influencing the Quality of Estimates 130 Estimating Guidelines for Times, Costs, and Resources 131

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xvi Contents

Top-Down versus Bottom-Up Estimating 133 Methods for Estimating Project Times and Costs 135

Top-Down Approaches for Estimating Project Times and Costs 135 Bottom-Up Approaches for Estimating Project Times and Costs 139 A Hybrid: Phase Estimating 141

Level of Detail 143 Types of Costs 144 Refining Estimates 146 Creating a Database for Estimating 149 Summary 150 Appendix 5.1: Learning Curves for Estimating 155

Chapter 6 Developing a Project Plan 160

Developing the Project Network 161 From Work Package to Network 162 Constructing a Project Network 164

Terminology 164 Basic Rules to Follow in Developing Project Networks 164

Activity-on-Node (AON) Fundamentals 165 Network Computation Process 169

Forward Pass—Earliest Times 169 Backward Pass—Latest Times 171 Determining Slack (or Float) 173

Using the Forward and Backward Pass Information 175 Level of Detail for Activities 176 Practical Considerations 176

Network Logic Errors 176 Activity Numbering 176 Use of Computers to Develop Networks 177 Calendar Dates 180 Multiple Starts and Multiple Projects 180

Extended Network Techniques to Come Closer to Reality 180

Laddering 180 Use of Lags to Reduce Schedule Detail and Project Duration 180 An Example Using Lag Relationships—The Forward and Backward Pass 185 Hammock Activities 186

Summary 187

Chapter 7 Managing Risk 204

Risk Management Process 205 Step 1: Risk Identification 207 Step 2: Risk Assessment 210

Probability Analysis 213 Step 3: Risk Response Development 214

Mitigating Risk 214 Avoiding Risk 215 Transferring Risk 216 Retaining Risk 216

Contingency Planning 216 Technical Risks 218 Schedule Risks 220 Cost Risks 220 Funding Risks 221

Opportunity Management 221 Contingency Funding and Time Buffers 222

Budget Reserves 223 Management Reserves 223 Time Buffers 224

Step 4: Risk Response Control 224 Change Control Management 225 Summary 229 Appendix 7.1: PERT and PERT Simulation 239

Chapter 8 Scheduling Resources and Costs 250

Overview of the Resource Scheduling Problem 251 Types of Resource Constraints 253 Classification of a Scheduling Problem 255 Resource Allocation Methods 255

Assumptions 255 Time-Constrained Project: Smoothing Resource Demand 255 Resource-Constrained Projects 257

Computer Demonstration of Resource- Constrained Scheduling 262

The Impacts of Resource-Constrained Scheduling 268 Splitting Activities 268 Benefits of Scheduling Resources 270 Assigning Project Work 270 Multiproject Resource Schedules 271 Using the Resource Schedule to Develop a Project Cost Baseline 273

Why a Time-Phased Budget Baseline Is Needed 273 Creating a Time-Phased Budget 274

Summary 279 Appendix 8.1: The Critical-Chain Approach 293

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Contents xvii

Chapter 9 Reducing Project Duration 304

Rationale for Reducing Project Duration 305 Options for Accelerating Project Completion 307

Options When Resources Are Not Constrained 308 Options When Resources Are Constrained 310

Project Cost–Duration Graph 313 Explanation of Project Costs 313

Constructing a Project Cost–Duration Graph 314 Determining the Activities to Shorten 314 A Simplified Example 316

Practical Considerations 318 Using the Project Cost–Duration Graph 318 Crash Times 319 Linearity Assumption 319 Choice of Activities to Crash Revisited 319 Time Reduction Decisions and Sensitivity 320

What if Cost, Not Time, Is the Issue? 321 Summary 323

Chapter 10 Leadership: Being an Effective Project Manager 338

Managing versus Leading a Project 339 Managing Project Stakeholders 340 Influence as Exchange 344

Task-Related Currencies 345 Position-Related Currencies 346 Inspiration-Related Currencies 346 Relationship-Related Currencies 346 Personal-Related Currencies 347

Social Network Building 347 Mapping Dependencies 347 Management by Wandering Around (MBWA) 349 Managing Upward Relations 350 Leading by Example 352

Ethics and Project Management 355 Building Trust: The Key to Exercising Influence 357 Qualities of an Effective Project Manager 359 Summary 362

Chapter 11 Managing Project Teams 374

The Five-Stage Team Development Model 377 Situational Factors Affecting Team Development 378

Building High-Performance Project Teams 380 Recruiting Project Members 380 Conducting Project Meetings 383 Establishing a Team Identity 387 Creating a Shared Vision 388 Managing Project Reward Systems 391 Orchestrating the Decision-Making Process 392 Managing Conflict within the Project 394 Rejuvenating the Project Team 398

Managing Virtual Project Teams 399 Project Team Pitfalls 403

Groupthink 403 Bureaucratic Bypass Syndrome 404 Team Spirit Becomes Team Infatuation 404 Going Native 404

Summary 405

Chapter 12 Outsourcing: Managing Interorganizational Relations 418

Outsourcing Project Work 419 Best Practices in Outsourcing Project Work 423

Well-Defined Requirements and Procedures 424 Extensive Training and Team-Building Activities 426 Well-Established Conflict Management Processes in Place 427 Frequent Review and Status Updates 427 Co-Location When Needed 429 Fair and Incentive-Laden Contracts 430 Long-Term Outsourcing Relationships 431

The Art of Negotiating 432 1. Separate the People from the

Problem 433 2. Focus on Interests, Not Positions 434 3. Invent Options for Mutual Gain 435 4. When Possible, Use Objective Criteria 435 Dealing with Unreasonable People 436

A Note on Managing Customer Relations 437 Summary 440 Appendix 12.1: Contract Management 449

Chapter 13 Progress and Performance Measurement and Evaluation 456

Structure of a Project Monitoring Information System 457 The Project Control Process 458 Monitoring Time Performance 459

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Development of an Earned Value Cost/Schedule System 462

What Costs Are Included in Baselines? 465 Methods of Variance Analysis 465

Developing a Status Report: A Hypothetical Example 467

Assumptions 467 Baseline Development 467 Development of the Status Report 468

Indexes to Monitor Progress 473 Performance Indexes 473 Project Percent Complete Indexes 474 Technical Performance Measurement 475 Software for Project Cost/Schedule Systems 475 Additional Earned Value Rules 476

Forecasting Final Project Cost 476 Other Control Issues 479

Scope Creep 479 Baseline Changes 481 The Costs and Problems of Data Acquisition 482

Summary 483 Appendix 13.1: The Application of Additional Earned Value Rules 499 Appendix 13.2: Obtaining Project Performance Information from MS Project 2010 506

Chapter 14 Project Closure 510

Types of Project Closure 512 Wrap-up Closure Activities 513

Creating the Final Report 516 Post-Implementation Evaluation 517

Team Evaluation 517 Individual, Team Member, and Project Manager Performance Reviews 520

Retrospectives 522 Why Retrospectives? 522 Initiating the Retrospective Review 523 Use of an Independent Facilitator 524 Selection of a Facilitator 524 Roles of a Facilitator 524 Managing a Retrospective 525 Overseeing a Post-Project Retrospective 526 Utilization of Retrospectives 529 Archiving Retrospectives 529 Concluding Retrospective Notes 530

Summary 530 Appendix 14.1: Project Closeout Checklist 533 Appendix 14.2: Euro Conversion—Project Closure Checklist 535

Chapter 15 International Projects 538

Environmental Factors 540 Legal/Political 540 Security 541 Geography 542 Economic 542 Infrastructure 544 Culture 545

Project Site Selection 547 Cross-Cultural Considerations: A Closer Look 548

Adjustments 549 Working in Mexico 552 Working in France 553 Working in Saudi Arabia 555 Working in China 556 Working in the United States 557 Summary Comments about Working in Different Cultures 559 Culture Shock 560 Coping with Culture Shock 562

Selection and Training for International Projects 563 Summary 566

Chapter 16 Oversight 572

Project Oversight 573 Importance of Oversight to the Project Manager 574 Portfolio Project Management 574 Project Office 574 Phase Gate Methodology 577

Organization Project Management in the Long Run 582

Organization Project Management Maturity 582 The Balanced Scorecard Model 586

Summary 586

Chapter 17 An Introduction to Agile Project Management 590

Traditional versus Agile Methods 591 Agile PM 594 Agile PM in Action: Scrum 596

Roles and Responsibilities 598 Scrum Meetings 598 Product and Sprint Backlogs 600 Sprint and Release Burndown Charts 601

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Contents 1

Applying Agile PM to Large Projects 603 Limitations and Concerns 604 Summary 606

Chapter 18 Project Management Career Paths 614

Career Paths 615 Pursuing a Career 618 Professional Training and Certification 619

More on Certification 620 Gaining Visibility 621 Mentors 622 Success in Key Projects 623 Summary 624

Appendix 1: Solutions to Selected Exercises 627

Appendix 2: Computer Project Exercises 641

Glossary 658

Acronyms 667

Project Management Equations 668

Index 669

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C H A P T E R O N E

Modern Project Management

2

Project networks

6

Managing risk 7

Monitoring progress

13

Teams 11

Outsourcing 12

Leadership 10

Strategy 2

Introduction 1

Organization 3

Schedule resources & costs

8

Inter natio

nal

proje cts

15

18

Oversig ht

Agile PM

Career paths

17

16 Project closure

14

Estimate 5

Reducing duration

9

Define project

4

Modern Project Management What Is a Project?

Current Drivers of Project Management

Project Governance

Project Management Today—A Socio-Technical Approach

Summary

Text Overview

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All of mankind’s greatest accomplishments—from building the great pyra- mids to discovering a cure for polio to putting a man on the moon—began as a project.

This is a good time to be reading a book about project management. Business leaders and experts have proclaimed that project management is critical to sus- tainable economic growth. New jobs and competitive advantage are achieved by constant innovation, developing new products and services, and improving both productivity and quality of work. This is the world of project management. Proj- ect management provides people with a powerful set of tools that improves their ability to plan, implement, and manage activities to accomplish specific organiza- tional objectives. But project management is more than just a set of tools; it is a results-oriented management style that places a premium on building collabora- tive relationships among a diverse cast of characters. Exciting opportunities await people skilled in project management. The project approach has long been the style of doing business in the construc- tion industry, U.S. Department of Defense contracts, and Hollywood as well as big consulting firms. Now project management has spread to all avenues of work. Today, project teams carry out everything from port expansions to hospital re- structuring to upgrading information systems. They are creating next generation, fuel efficient vehicles, developing sustainable sources of energy, and exploring the farthest reaches of outer space. The impact of project management is most pro- found in the electronics industry, where the new folk heroes are young profession- als whose Herculean efforts lead to the constant flow of new hardware and software products. Project management is not limited to the private sector. Project management is also a vehicle for doing good deeds and solving social problems. Endeavors such as providing emergency aid to areas hit by natural disasters, devising a strategy for reducing crime and drug abuse within a city, or organizing a community effort to renovate a public playground would and do benefit from the application of modern project management skills and techniques. Perhaps the best indicator of demand for project management can be seen in the rapid expansion of the Project Management Institute (PMI), a profes- sional organization for project managers. PMI membership has grown from 93,000 in 2002 to more than 434,000 currently. See the PMI Snapshot from Practice, for information regarding professional certification in project management. It’s nearly impossible to pick up a newspaper or business periodical and not find something about projects. This is no surprise! Approximately $2.5 trillion (about 25 percent of the U.S. gross national product) are spent on projects each year in the United States alone. Other countries are increasingly spending more on projects. Millions of people around the world consider project management the major task in their profession.

3

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4 Chapter 1 Modern Project Management

Most of the people who excel at managing projects never have the title of proj- ect manager. They include accountants, lawyers, administrators, scientists, con- tractors, public health officials, teachers, and community advocates whose success depends upon being able to lead and manage project work. For some, the very nature of their work is project driven. Projects may be cases for lawyers, audits for accountants, events for artists, and renovations for contractors. For others, proj- ects may be a small, but critical part of their work. For example, a high school teacher who teaches four classes a day is responsible for coaching a group of stu- dents to compete in a national debate competition. A store manager who oversees daily operations is charged with developing an employee retention program. A sales account executive is given the additional assignment of team lead to launch daily deals into a new city. A public health official who manages a clinic is also responsible for organizing a Homeless Youth Connect event. For these and others, project management is not a title, but a critical job requirement. It is hard to think of a profession or a career path that would not benefit from being good at manag- ing projects. Not only is project management critical to most careers, the skill set is transfer- able across most businesses and professions. At its core, project management fun- damentals are universal. The same project management methodology that is used to develop a new product can be adapted to create new services, organize events, refurbish aging operations, and so forth. In a world where it is estimated that each person is likely to experience three to four career changes, managing projects is a talent worthy of development.

The Project Management Institute (PMI) was founded in 1969 as an international society for project managers. Today PMI has members from more than 180 countries and more than

424,600 members. PMI professionals come from virtually every major industry, including aerospace, automotive, business management, construction, engineering, financial services, information technology, pharmaceuticals, health care, and telecommunications. PMI provides certification as a Project Management Pro- fessional (PMP)—someone who has documented sufficient project experience, agreed to follow the PMI code of profes- sional conduct, and demonstrated mastery of the field of proj- ect management by passing a comprehensive examination. The number of people earning PMP status has grown dramat- ically in recent years. In 1996 there were fewer than 3,000 cer- tified project management professionals. By June of 2013 there were more than 537,400 Professional credential holders.

S N A P S H O T F R O M P R A C T I C E The Project Management Institute*

Just as the CPA exam is a standard for accountants, passing the PMP exam may become the standard for project managers. Some companies are requiring that all their proj- ect managers be PMP certified. Moreover, many job post- ings are restricted to PMPs. Job seekers, in general, are finding that being PMP certified is an advantage in the marketplace. PMI added a certification as a Certified Associate in Project Management (CAPM). CAPM is designed for project team members and entry-level project managers, as well as qualified undergraduate and graduate students who want a credential to recognize their mastery of the project manage- ment body of knowledge. CAPM does not require the exten- sive project management experience associated with the PMP. For more details on PMP and CAPM, “Google” PMI to find the current Web site for the Project Management Institute.

*PMI Today, June 2013, p. 4

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Chapter 1 Modern Project Management 5

S N A P S H O T F R O M P R A C T I C E A Dozen Examples of Projects Given to Recent College Graduates

The significance of project management can also be seen in the classroom. Twenty years ago major universities offered one or two classes in project manage- ment, primarily for engineers. Today, most universities offer multiple sections of project management classes, with the core group of engineers being supplemented by business students majoring in marketing, management information systems

1. Business information: Join a project team charged with installing new data security system.

2. Physical education: Design and de velop a new fitness program for senior citizens that com- bines principles of yoga and aerobics.

3. Marketing: Execute a sales program for new home air purifier.

4. Industrial engineering: Manage a team to create a value chain report for every aspect of key product from design to customer delivery.

5. Chemistry: Develop a quality control program for orga- nization’s drug production facilities.

6. Management: Implement a new store layout design.

7. Pre-med neurology student: Join project team linking mind mapping to an imbedded prosthetic that will allow blind people to function near normally.

8. Sports communication: Join Olympic project team that will promote women’s sport products for the 2016 Games in Reo de Janeiro, Brazil.

9. Systems engineer: Become a project team member of a project to develop data mining of medical papers and studies related to drug efficacy.

10. Accounting: Work on an audit of a major client. 11. Public health: Research and design a medical mari-

juana educational program. 12. English: Create a web-based user manual for new

electronics product.

© Troels Graugaard/E1/Getty Images

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6 Chapter 1 Modern Project Management

The Project Management Institute provides the following definition of a project:

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

Like most organizational effort, the major goal of a project is to satisfy a customer’s need. Beyond this fundamental similarity, the characteristics of a project help

(MIS), and finance, as well as students from other disciplines such as oceanography, health sciences, computer sciences, and liberal arts. These students are finding that their exposure to project management is providing them with distinct advantages when it comes time to look for jobs. More and more employers are looking for graduates with project management skills. See the nearby Snapshot from Practice for examples of projects given to recent college graduates. The logical starting point for developing these skills is understanding the uniqueness of a project and of project managers.

What Is a Project? What do the following headlines have in common?

Millions watch Olympic Opening Ceremony Citywide WiFi system set to go live Hospitals respond to new Health Care Reforms Apple’s new iPhone hits the market City receives stimulus funds to expand light rail system

All of these events represent projects.

© Lars Baron/Getty Images

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Chapter 1 Modern Project Management 7

differentiate it from other endeavors of the organization. The major characteristics of a project are as follows:

1. An established objective. 2. A defined life span with a beginning and an end. 3. Usually, the involvement of several departments and professionals. 4. Typically, doing something that has never been done before. 5. Specific time, cost, and performance requirements.

First, projects have a defined objective—whether it is constructing a 12-story apartment complex by January 1 or releasing version 2.0 of a specific software package as quickly as possible. This singular purpose is often lacking in daily organizational life in which workers perform repetitive operations each day. Second, because there is a specified objective, projects have a defined endpoint, which is contrary to the ongoing duties and responsibilities of traditional jobs. In many cases, individuals move from one project to the next as opposed to staying in one job. After helping to install a security system, an IT engineer may be assigned to develop a database for a different client. Third, unlike much organizational work that is segmented according to func- tional specialty, projects typically require the combined efforts of a variety of spe- cialists. Instead of working in separate offices under separate managers, project participants, whether they be engineers, financial analysts, marketing profession- als, or quality control specialists, work closely together under the guidance of a project manager to complete a project. The fourth characteristic of a project is that it is nonroutine and has some u nique elements. This is not an either/or issue but a matter of degree. Obviously, accomplishing something that has never been done before, such as building a electric automobile or landing two mechanical rovers on Mars, requires solving previously unsolved problems and breakthrough technology. On the other hand, even basic construction projects that involve established sets of routines and procedures require some degree of customization that makes them unique. Finally, specific time, cost, and performance requirements bind projects. Proj- ects are evaluated according to accomplishment, cost, and time spent. These triple constraints impose a higher degree of accountability than you typically find in most jobs. These three also highlight one of the primary functions of project man- agement, which is balancing the trade-offs between time, cost, and performance while ultimately satisfying the customer.

What a Project Is Not Projects should not be confused with everyday work. A project is not routine, repetitive work! Ordinary daily work typically requires do- ing the same or similar work over and over, while a project is done only once; a new product or service exists when the project is completed. Examine the list in Table 1.1 that compares routine, repetitive work and projects. Recognizing the difference is important because too often resources can be used up on daily oper- ations which may not contribute to longer range organization strategies that require innovative new products.