Work breakdown structure for airline reservation system

I N F ORMAT I O N T ECHNOLOGY PRO J EC T MANAGEMEN T

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I N F ORMAT I O N T ECHNOLOGY PRO J EC T MANAGEMEN T

Seventh Edition

Kathy Schwalbe, Ph.D., PMP Augsburg College

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BRIEF CONTENTS

Preface xix

Chapter 1

Introduction to Project Management 1

Chapter 2

The Project Management and Information Technology Context 43

Chapter 3

The Project Management Process Groups: A Case Study 81

Chapter 4

Project Integration Management 139

Chapter 5

Project Scope Management 187

Chapter 6

Project Time Management 225

Chapter 7

Project Cost Management 271

Chapter 8

Project Quality Management 311

Chapter 9

Project Human Resource Management 359

Chapter 10

Project Communications Management 405

Chapter 11

Project Risk Management 439

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Chapter 12

Project Procurement Management 479

Chapter 13

Project Stakeholder Management 509

Appendix A

Guide to Using Microsoft Project 2010 A.1

Appendix B

(Available on CengageBrain.com)

Appendix C

(Available on CengageBrain.com)

Glossary G.1

Index I.1

viii Brief Contents

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TABLE OF CONTENTS

Preface xix

Chapter 1 Introduction to Project Management 1 Introduction 2 What Is a Project? 4

Examples of IT Projects 4 Project Attributes 6 Project Constraints 7

What Is Project Management? 9 Project Stakeholders 10 Project Management Knowledge Areas 11 Project Management Tools and Techniques 12 Project Success 14

Program and Project Portfolio Management 16 Programs 17 Project Portfolio Management 17

The Role of the Project Manager 21 Project Manager Job Description 21 Suggested Skills for Project Managers 22 Importance of People Skills and Leadership Skills 24 Careers for IT Project Managers 25

The Project Management Profession 26 History of Project Management 26 The Project Management Institute 30 Project Management Certification 30 Ethics in Project Management 32 Project Management Software 33

Chapter Summary 36 Quick Quiz 37 Quick Quiz Answers 38 Discussion Questions 38 Exercises 39 Key Terms 40 End Notes 41

Chapter 2 The Project Management and Information Technology Context 43 A Systems View of Project Management 45

What Is a Systems Approach? 45 The Three-Sphere Model for Systems Management 46

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Understanding Organizations 47 The Four Frames of Organizations 47 Organizational Structures 49 Organizational Culture 51

Stakeholder Management 52 The Importance of Top Management Commitment 54 The Need for Organizational Commitment to Information Technology 55 The Need for Organizational Standards 56

Project Phases and the Project Life Cycle 56 Product Life Cycles 59 The Importance of Project Phases and Management Reviews 62

The Context of Information Technology Projects 64 The Nature of IT Projects 64 Characteristics of IT Project Team Members 64 Diverse Technologies 65

Recent Trends Affecting Information Technology Project Management 65 Globalization 65 Outsourcing 66 Virtual Teams 67 Agile Project Management 69

The Manifesto for Agile Software Development 70 Scrum 70 Agile, the PMBOK® Guide, and a New Certification 71

Chapter Summary 73 Quick Quiz 74 Quick Quiz Answers 75 Discussion Questions 75 Exercises 76 Key Terms 77 End Notes 78

Chapter 3 The Project Management Process Groups: A Case Study 81 Project Management Process Groups 82 Mapping the Process Groups to the Knowledge Areas 87 Developing an IT Project Management Methodology 88 Case Study 1: JWD Consulting’s Project Management Intranet Site Project (Predictive Approach) 91

Project Pre-Initiation and Initiation 91 Pre-Initiation Tasks 92 Initiating 96

Project Planning 100 Project Execution 109 Project Monitoring and Controlling 114 Project Closing 117

Case Study 2: JWD Consulting’s Project Management Intranet Site Project (Agile Approach) 120

Scrum Roles, Artifacts, and Ceremonies 121 Project Pre-Initiation and Initiation 123 Planning 124

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Executing 127 Monitoring and Controlling 127 Closing 129 Templates by Process Group 129

Chapter Summary 133 Quick Quiz 133 Quick Quiz Answers 135 Discussion Questions 135 Exercises 136 Key Terms 137 End Notes 138

Chapter 4 Project Integration Management 139 What Is Project Integration Management? 140 Strategic Planning and Project Selection 143

Strategic Planning 143 Identifying Potential Projects 145 Aligning IT with Business Strategy 146 Methods for Selecting Projects 148

Focusing on Broad Organizational Needs 148 Categorizing IT Projects 148 Performing Net Present Value Analysis, Return on Investment, and Payback Analysis 149 Net Present Value Analysis 149 Return on Investment 152 Payback Analysis 153 Using a Weighted Scoring Model 154 Implementing a Balanced Scorecard 156

Developing a Project Charter 157 Developing a Project Management Plan 161

Project Management Plan Contents 161 Using Guidelines to Create Project Management Plans 164

Directing and Managing Project Work 166 Coordinating Planning and Execution 166 Providing Strong Leadership and a Supportive Culture 167 Capitalizing on Product, Business, and Application Area Knowledge 167 Project Execution Tools and Techniques 168

Monitoring and Controlling Project Work 169 Performing Integrated Change Control 171

Change Control on IT Projects 172 Change Control System 173

Closing Projects or Phases 175 Using Software to Assist in Project Integration Management 175 Chapter Summary 178 Quick Quiz 178 Quick Quiz Answers 180 Discussion Questions 180

Table of Contents xi

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Exercises 181 Running Case 182 Tasks 183 Key Terms 184 End Notes 185

Chapter 5 Project Scope Management 187 What Is Project Scope Management? 188 Planning Scope Management 189 Collecting Requirements 191 Defining Scope 194 Creating the Work Breakdown Structure 198

Approaches to Developing Work Breakdown Structures 203 Using Guidelines 203 The Analogy Approach 204 The Top-Down and Bottom-Up Approaches 204 Mind Mapping 205

The WBS Dictionary 206 Advice for Creating a WBS and WBS Dictionary 207

Validating Scope 208 Controlling Scope 210

Suggestions for Improving User Input 212 Suggestions for Reducing Incomplete and Changing Requirements 212

Using Software to Assist in Project Scope Management 214 Chapter Summary 216 Quick Quiz 216 Quick Quiz Answers 218 Discussion Questions 218 Exercises 219 Running Case 220 Tasks 221 Key Terms 221 End Notes 222

Chapter 6 Project Time Management 225 The Importance of Project Schedules 226 Planning Schedule Management 229 Defining Activities 229 Sequencing Activities 232

Dependencies 232 Network Diagrams 233

Estimating Activity Resources 236 Estimating Activity Durations 237 Developing the Schedule 238

Gantt Charts 238 Adding Milestones to Gantt Charts 240 Using Tracking Gantt Charts to Compare Planned and Actual Dates 241

Critical Path Method 243 Calculating the Critical Path 243 Growing Grass Can Be on the Critical Path 244

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Using Critical Path Analysis to Make Schedule Trade-Offs 245 Using the Critical Path to Shorten a Project Schedule 247 Importance of Updating Critical Path Data 248

Critical Chain Scheduling 248 Program Evaluation and Review Technique (PERT) 251

Controlling the Schedule 252 Reality Checks on Scheduling and the Need for Discipline 253

Using Software to Assist in Project Time Management 255 Words of Caution on Using Project Management Software 256

Chapter Summary 258 Quick Quiz 259 Quick Quiz Answers 261 Discussion Questions 261 Exercises 261 Running Case 265 Tasks 265 Key Terms 265 End Notes 268

Chapter 7 Project Cost Management 271 The Importance of Project Cost Management 272

What Is Cost? 274 What Is Project Cost Management? 274

Basic Principles of Cost Management 275 Planning Cost Management 279 Estimating Costs 280

Types of Cost Estimates 280 Cost Estimation Tools and Techniques 282 Typical Problems with IT Cost Estimates 283 Sample Cost Estimate 284

Determining the Budget 289 Controlling Costs 291

Earned Value Management 291 Project Portfolio Management 297

Using Project Management Software to Assist in Project Cost Management 299 Chapter Summary 301 Quick Quiz 301 Quick Quiz Answers 303 Discussion Questions 303 Exercises 304 Running Case 305 Tasks 305 Key Terms 306 End Notes 308

Chapter 8 Project Quality Management 311 The Importance of Project Quality Management 312 What Is Project Quality Management? 314 Planning Quality Management 316 Performing Quality Assurance 318

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Controlling Quality 319 Tools and Techniques for Quality Control 320

Statistical Sampling 327 Six Sigma 328

How Is Six Sigma Quality Control Unique? 329 Six Sigma and Project Selection and Management 330 Six Sigma and Statistics 331

Testing 333 Modern Quality Management 335

Deming and His 14 Points for Management 336 Juran and the Importance of Top Management Commitment to Quality 336 Crosby and Striving for Zero Defects 337 Ishikawa’s Guide to Quality Control 338 Taguchi and Robust Design Methods 338 Feigenbaum and Workers’ Responsibility for Quality 338 Malcolm Baldrige National Quality Award 338 ISO Standards 339

Improving IT Project Quality 340 Leadership 340 The Cost of Quality 341 Organizational Influences, Workplace Factors, and Quality 343 Expectations and Cultural Differences in Quality 343 Maturity Models 344

Software Quality Function Deployment Model 344 Capability Maturity Model Integration 344 Project Management Maturity Models 345

Using Software to Assist in Project Quality Management 347 Chapter Summary 348 Quick Quiz 348 Quick Quiz Answers 350 Discussion Questions 350 Exercises 351 Running Case 352 Tasks 352 Key Terms 352 End Notes 355

Chapter 9 Project Human Resource Management 359 The Importance of Human Resource Management 360

The Global IT Workforce 360 Implications for the Future of IT Human Resource Management 361

What Is Project Human Resource Management? 363 Keys to Managing People 365

Motivation Theories 365 Maslow’s Hierarchy of Needs 365 Herzberg’s Motivation-Hygiene Theory 366 McClelland’s Acquired-Needs Theory 367 McGregor’s Theory X and Theory Y 368

Thamhain and Wilemon’s Influence and Power 368

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Covey and Improving Effectiveness 370 Developing the Human Resource Plan 373

Project Organizational Charts 374 Responsibility Assignment Matrices 376 Staffing Management Plans and Resource Histograms 377

Acquiring the Project Team 378 Resource Assignment 379 Resource Loading 381 Resource Leveling 383

Developing the Project Team 384 Training 385 Team-Building Activities 386

The Myers-Briggs Type Indicator 386 The Social Styles Profile 388 DISC Profile 389

Reward and Recognition Systems 390 Managing the Project Team 390

Tools and Techniques for Managing Project Teams 391 General Advice on Managing Teams 393

Using Software to Assist in Human Resource Management 394 Chapter Summary 396 Quick Quiz 397 Quick Quiz Answers 399 Discussion Questions 399 Exercises 399 Running Case 400 Key Terms 401 End Notes 402

Chapter 10 Project Communications Management 405 The Importance of Project Communications Management 406 Keys to Good Communications 408

Focusing on Group and Individual Communication Needs 409 Formal and Informal Methods for Communicating 410 Distributing Important Information in an Effective and Timely Manner 411 Setting the Stage for Communicating Bad News 412 Determining the Number of Communication Channels 412

Planning Communications Management 414 Managing Communications 416

Using Technology to Enhance Information Creation and Distribution 416 Selecting the Appropriate Communication Methods and Media 417 Reporting Performance 420

Controlling Communications 420 Suggestions for Improving Project Communications 421

Developing Better Communication Skills 421 Running Effective Meetings 423 Using E-Mail, Instant Messaging, Texting, and Collaborative Tools Effectively 424 Using Templates for Project Communications 427

Using Software to Assist in Project Communications 430

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Chapter Summary 433 Quick Quiz 433 Quick Quiz Answers 435 Discussion Questions 435 Exercises 435 Running Case 436 Key Terms 437 End Notes 437

Chapter 11 Project Risk Management 439 The Importance of Project Risk Management 440 Planning Risk Management 447 Common Sources of Risk on IT Projects 448 Identifying Risks 452

Suggestions for Identifying Risks 453 The Risk Register 455

Performing Qualitative Risk Analysis 457 Using Probability/Impact Matrixes to Calculate Risk Factors 457 Top Ten Risk Item Tracking 459

Performing Quantitative Risk Analysis 461 Decision Trees and Expected Monetary Value 461 Simulation 463 Sensitivity Analysis 465

Planning Risk Responses 467 Controlling Risks 469 Using Software to Assist in Project Risk Management 469 Chapter Summary 471 Quick Quiz 472 Quick Quiz Answers 474 Discussion Questions 474 Exercises 474 Running Case 475 Key Terms 476 End Notes 478

Chapter 12 Project Procurement Management 479 The Importance of Project Procurement Management 480 Planning Procurement Management 483

Types of Contracts 485 Tools and Techniques for Planning Procurement Management 489

Make-or-Buy Analysis 489 Expert Judgment 490 Market Research 490

Procurement Management Plan 491 Statement of Work 491 Procurement Documents 493 Source Selection Criteria 494

Conducting Procurements 495 Controlling Procurements 497 Closing Procurements 499

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Using Software to Assist in Project Procurement Management 499 Chapter Summary 502 Quick Quiz 503 Quick Quiz Answers 504 Discussion Questions 504 Exercises 505 Running Case 505 Key Terms 506 End Notes 507

Chapter 13 Project Stakeholder Management 509 The Importance of Project Stakeholder Management 510 Identifying Stakeholders 512 Planning Stakeholder Management 516 Managing Stakeholder Engagement 516 Controlling Stakeholder Engagement 519 Using Software to Assist in Project Stakeholder Management 522 Chapter Summary 524 Quick Quiz 524 Quick Quiz Answers 526 Discussion Questions 526 Exercises 526 Running Case 527 Key Terms 527 End Notes 527

Appendix A Guide to Using Microsoft Project 2010 A.1 Introduction A.2

New Features of Project 2010 A.3 Before You Begin A.4

Overview of Project 2010 A.5 Starting Project 2010 and Using the Help Feature A.5 Main Screen Elements A.7 Project 2010 Views A.11 Project 2010 Filters A.15

Project Scope Management A.17 Creating a New Project File A.17 Developing a Work Breakdown Structure A.20

Creating Summary Tasks A.22 Numbering Tasks A.23

Saving Project Files with or without a Baseline A.24 Project Time Management A.24

Manual and Automatic Scheduling A.24 Entering Task Durations A.25 Establishing Task Dependencies A.30 Changing Task Dependency Types and Adding Lead or Lag Time A.33 Gantt Charts A.36 Network Diagrams A.38 Critical Path Analysis A.40

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Project Cost Management A.42 Fixed and Variable Cost Estimates A.43

Entering Fixed Costs in the Cost Table A.43 Entering Human Resource Costs A.43 Adjusting Resource Costs A.44

Assigning Resources to Tasks A.45 Assigning Resources Using the Entry Table A.45 Assigning Resources Using the Resource Tab A.46 Assigning Resources Using the Split Window A.47 Viewing Project Cost Information A.49

Baseline Plan, Actual Costs, and Actual Times A.51 Establishing a Baseline Plan A.51 Entering Actual Costs and Times A.52

Earned Value Management A.57 Project Human Resource Management A.60

Resource Calendars A.60 Resource Histograms A.61 Resource Leveling A.63 Using the New Team Planner Feature A.65

Project Communications Management A.66 Common Reports and Views A.66 Using Templates and Inserting Hyperlinks and Comments A.68

Discussion Questions A.72 Exercises A.72

Exercise A-1: Homework Assignments A.72 HW1: Project 2010, Part 1 (100 points, 25 points for each item) A.72 HW2: Project 2010, Part 2 (100 points, 25 points for each item) A.73

Exercise A-2: Web Site Development A.73 Exercise A-3: Software Training Program A.75 Exercise A-4: Project Tracking Database A.76 Exercise A-5: Real Project Application A.79

Appendix B (Available on CengageBrain.com)

Appendix C (Available on CengageBrain.com)

Glossary G.1 Index I.1

xviii Table of Contents

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PREFACE

The future of many organizations depends on their ability to harness the power of information technology, and good project managers continue to be in high demand. Colleges have responded to this need by establishing courses in project management and making them part of the information technology, management, engineering, and other curricula. Corporations are investing in continuing education to help develop effective project managers and project teams. This text provides a much-needed framework for teaching courses in project management, especially those that empha- size managing information technology projects. The first six editions of this text were extremely well received by people in academia and the workplace. The Seventh Edition builds on the strengths of the previous editions and adds new, important information and features.

It’s impossible to read a newspaper, magazine, or Web page without hearing about the impact of information technology on our society. Information is traveling faster and being shared by more people than ever before. You can buy just about anything online, surf the Web on a mobile phone, or use a wireless Internet connection at your local coffee shop. Companies have linked their systems together to help them fill orders on time and better serve their customers. Software companies are continually developing new products to help streamline our work and get better results. When technology works well, it is almost invisible. But did it ever occur to you to ask, “Who makes these complex technologies and systems happen?”

Because you’re reading this text, you must have an interest in the “behind-the- scenes” aspects of technology. If I’ve done my job well, you’ll begin to see the many innovations society is currently enjoying as the result of thousands of successful information technology projects. In this text, you’ll read about IT projects around the world that went well, including Mittal Steel Poland’s Implementation of SAP that uni- fied IT systems to improve business and financial processes; Dell Earth and other green computing projects that save energy and millions of dollars; Six Sigma projects such as the project to improve case load management at Baptist St. Anthony’s Hospital in Amarillo, Texas; the systems infrastructure project at the Boots Company in the United Kingdom that takes advantage of supplier competition to cut costs and improve services; and many more. Of course, not all projects are successful. Factors such as time, money, and unrealistic expectations, among many others, can sabotage a promising effort if it is not properly managed. In this text, you’ll also learn from the mistakes made on many projects that were not successful. I have written this book in an effort to educate you, tomorrow’s project managers, about what will help make a project succeed—and what can make it fail. You’ll also see how projects are used in everyday media, such as television and film, and how companies use best practices in project management. Many readers tell me how much they enjoy reading these real- world examples in the What Went Right?, What Went Wrong?, Media Snapshot, and Best Practice features. As practitioners know, there is no “one size fits all” solution to

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managing projects. By seeing how different organizations successfully implement project management, you can help your organization do the same.

Although project management has been an established field for many years, managing information technology projects requires ideas and information that go beyond standard project management. For example, many information technology projects fail because of a lack of user input, incomplete and changing requirements, and a lack of executive support. This book includes suggestions for dealing with these issues. New technologies can also aid in managing information technology projects, and examples of using software to assist in project management are included throughout the book.

Information Technology Project Management, Seventh Edition, is the only text- book to apply all 10 project management knowledge areas and all five process groups to information technology projects. As you will learn, the project management knowledge areas are project integration, scope, time, cost, quality, human resource, communications, risk, procurement, and stakeholder management. The five process groups are initiating, planning, executing, monitoring and controlling, and closing.

This text builds on the PMBOK® Guide, Fifth Edition, an American National Standard, to provide a solid framework and context for managing information tech- nology projects. It also includes an appendix, Guide to Using Microsoft Project 2010, that many readers find invaluable. A second appendix provides advice on earning and maintaining Project Management Professional (PMP) certification from the Project Management Institute (PMI) as well as information on other certification programs, such as CompTIA’s Projectþ certification. A third appendix provides additional case studies and information on using simulation and mind-mapping software to help readers apply their project management skills.

Information Technology Project Management, Seventh Edition, provides practical lessons in project management for students and practitioners alike. By weaving together theory and practice, this text presents an understandable, integrated view of the many concepts, skills, tools, and techniques of information technology project management. The comprehensive design of the text provides a strong foundation for students and practitioners in project management.

N E W T O T H E S E V E N T H E D I T I O N

Building on the success of the previous editions, Information Technology Project Management, Seventh Edition, introduces a uniquely effective combination of fea- tures. The main changes in the Seventh Edition include the following:

• Several changes were made to synchronize the Seventh Edition with the PMBOK® Guide, Fifth Edition. Changes were made based on the exposure draft released in February 2012. The biggest change was the addition of a tenth knowledge area, Project Stakeholder Management. This text includes a new chapter to address this important topic.

• Includes additional information on agile project management. Chapter 2 includes general information on this popular concept, and Chapter 3 provides a second case study illustrating the outputs produced for the JWD Consulting project when using an agile approach. For example, you can see a sample product backlog, a sprint backlog, a burndown chart, and key artifacts or outputs produced when using Scrum, the most popular agile method.

xx Preface

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• Appendix C, Additional Cases and Software, provides information about using several simulation software tools. Several suppliers offer discounts to users of this text. A new section provides instructions for accessing a special 60-day trial of MindView Business software. This software provides the capability to create mind maps, a powerful tool for creating a SWOT analysis or work breakdown structure. The software also allows users to convert a mind map into a Gantt chart.

• A new feature, Global Issues, provides examples of how project management concepts and practices affect people around the globe.

• Updated examples are provided throughout the text. You’ll notice several new examples in the Seventh Edition that explain recent events in managing real information technology projects. Several of the What Went Right?, What Went Wrong?, Media Snapshot, and Best Practice examples have been updated to keep you current. Additional examples and results of new studies are included throughout the text, with appropriate citations.

• User feedback is incorporated. Based on feedback from reviewers, students, instructors, practitioners, and translators, you’ll see several additional changes to help clarify information. (This book has been translated into Chinese, Japanese, Russian, and Czech.)

• A new CourseMate site for the Seventh Edition (www.cengagebrain.com) provides access to informative links from the end notes, lecture notes, inter- active quizzes, templates, additional running cases, suggested readings, and many other items to enhance your learning.

A C C E S S I N G T H E C O U R S E M A T E S I T E

To access the CourseMate site, open a Web browser and go to www.cengage brain.com. Search by ISBN, author name, or title, and click Create My Account to begin the registration process.

A P P R O A C H

Many people have been practicing some form of project management with little or no formal study in this area. New books and articles are written each year as we discover more about the field of project management, and project management software con- tinues to advance. Because the project management field and the technology industry change rapidly, you cannot assume that what worked even a few years ago is still the best approach today. This text provides up-to-date information on how good project management and effective use of software can help you manage projects, especially information technology projects. Six distinct features of this text include its relation- ship to the Project Management Body of Knowledge, its detailed guide for using Microsoft Project 2010, its value in preparing for Project Management Professional and other certification exams, its inclusion of running case studies and online tem- plates, its companion (premium) Web site, and its inclusion of a 60-day trial of MindView Business software.

Preface xxi

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Based on PMBOK® Guide, Fifth Edition The Project Management Institute (PMI) created the Guide to the Project Management Body of Knowledge (the PMBOK® Guide) as a framework and starting point for understanding project management. It includes an introduction to project management, brief descriptions of all 10 project management knowledge areas, and a glossary of terms. The PMBOK® Guide is, however, just that—a guide. This text uses the PMBOK® Guide, Fifth Edition exposure draft (2012) as a foundation, but goes beyond it by providing more details, highlighting additional topics, and providing a real-world context for project management. Information Technology Project Management, Seventh Edition, explains project management specifically as it applies to managing information technology projects in the 21st century. It includes several unique features to bring you the excitement of this dynamic field. (For more infor- mation on features, see the Pedagogical Features section.)

Detailed Guide for How to Use Microsoft Project 2010 Software has advanced tremendously in recent years, and it is important for project managers and their teams to use software to help manage information technology projects. Information Technology Project Management, Seventh Edition, includes a detailed guide in Appendix A for using the leading project management software on the market—Microsoft Project 2010. Examples that use Project and other software tools are integrated throughout the text. Appendix A, Guide to Using Microsoft Project 2010, teaches you in a systematic way to use this powerful software to help in project scope, time, cost, human resource, and communications management.

Resource for PMP and Other Certification Exams Professional certification is an important factor in recognizing and ensuring quality in a profession. PMI provides certification as a Project Management Professional (PMP), and this text is an excellent resource for studying for the certification exam as well as the entry-level Certified Associate in Project Management (CAPM) exam. This text will also help you pass other certification exams, such as CompTIA’s Project+ exam. Having working experience on projects does not mean you can easily pass the PMP or other certification exams.

I like to tell my students a story about taking a driver’s license test after moving to Minnesota. I had been driving safely and without accidents for over 16 years, so I thought I could just walk in and take the test. I was impressed by the sophisticated computer system used to administer the test. The questions were displayed on a large touch-screen monitor, often with an image or video to illustrate traffic signs or driving situations. I became concerned when I had no idea how to answer several questions, and I was per- plexed when the test seemed to stop and a message appeared: “Please see the person at the service counter.” This was a polite way of saying I had failed the test! After control- ling my embarrassment, I picked up one of the Minnesota driving test brochures, studied it for an hour or two that night, and passed the test the next day.

The point of this story is to emphasize the importance of studying information from the organization that creates the test and not to be overconfident that your experience is enough. Because this text is based on PMI’s PMBOK® Guide, Fifth Edition, it provides a valuable reference for studying for PMP certification. It is also

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an excellent reference for CompTIA’s Project+ exam. I have earned both of these certifications and kept them in mind when writing this text.

Exercises, Running Cases, Templates, Sample Documents, and Optional Simulation Software Based on feedback from readers, the Seventh Edition continues to provide challeng- ing exercises and running cases to help students apply concepts in each chapter. The text includes more than 50 templates, examples of real project documents, and infor- mation on several simulation software tools that you can use to practice your skills in managing a project. All of these features help the subject matter come alive and have more meaning.

O R G A N I Z A T I O N A N D C O N T E N T

Information Technology Project Management, Seventh Edition, is organized into three main sections to provide a framework for project management, a detailed description of each project management knowledge area, and three appendices to provide practical information for applying project management. The first three chap- ters form the first section, which introduces the project management framework and sets the stage for the remaining chapters.

Chapters 4 through 13 form the second section of the text, which describes each of the project management knowledge areas—project integration, scope, time, cost, quality, human resource, communications, risk, procurement, and stakeholder man- agement—in the context of information technology projects. An entire chapter is dedicated to each knowledge area. Each of these chapters includes sections that map to their major processes as described in the PMBOK® Guide, Fifth Edition. For example, the chapter on project quality management includes sections on planning quality management, performing quality assurance, and controlling quality. Additional sections highlight other important concepts related to each knowledge area, such as Six Sigma, testing, maturity models, and using software to assist in project quality management. Each chapter also includes detailed examples of key project manage- ment tools and techniques as applied to information technology projects. For exam- ple, the chapter on project integration management includes samples of various project-selection documents, such as net present value analyses, ROI calculations, payback analyses, and weighted scoring models. The project scope management chapter includes a sample project charter, a project scope statement, and several work breakdown structures for information technology projects.

Appendices A through C form the third section of the text, which provides practical information to help you apply project management skills to real or practice projects. By following the detailed, step-by-step guide in Appendix A, which includes more than 60 screen illustrations, you will learn how to use Project 2010. Appendix B summarizes what you need to know to earn PMP or other certifications related to project management. Appendix C provides additional running cases and information on using simulation and mind-mapping software to help you practice your new skills.

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P E D A G O G I C A L F E A T U R E S

Several pedagogical features are included in this text to enhance presentation of the materials so that you can more easily understand the concepts and apply them. Throughout the text, emphasis is placed on applying concepts to current, real-world information technology project management.

CourseMate Engagement Tracker

How do you assess your students’ engagement in your course? How do you know your students have read the material or viewed the resources you’ve assigned? How can you tell if your students are struggling with a concept? With CourseMate, you can use the included Engagement Tracker to assess student preparation and engagement. Use the tracking tools to see progress for the class as a whole or for individual students. Identify students at risk early in the course. Uncover which concepts are most diffi- cult for your class. Monitor time on task. Keep your students engaged.

Interactive Teaching and Learning Tools

CourseMate includes interactive teaching and learning tools:

• Quizzes • Flashcards • Games • and more

These assets enable students to review for tests and prepare for class, and they address the needs of students’ varied learning styles.

Interactive eBook

In addition to interactive teaching and learning tools, CourseMate includes an inter- active eBook. Students can take notes as well as highlight, search, and interact with embedded media specific to their book. Use it as a supplement to the printed text or as a substitute—the choice is your students’ with CourseMate.

Opening Case and Case Wrap-Up To set the stage, each chapter begins with an opening case related to the material presented in that chapter. These real-life case scenarios, most of which are based on the author’s experiences, spark student interest and introduce important concepts in a real-world context. As project management concepts and techniques are discussed, they are applied to the opening case and other similar scenarios. Each chapter then closes with a case wrap-up—with some ending successfully and some failing—to fur- ther illustrate the real world of project management.

What Went Right? and What Went Wrong? Failures, as much as successes, can be valuable learning experiences. Each chapter of the text includes one or more examples of real information technology projects that went right, as well as examples of projects that went wrong. These examples further illustrate the importance of mastering key concepts in each chapter.

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Media Snapshot The world is full of projects. Television shows, movies, newspapers, Web sites, and other media highlight project results that are good and bad. Relating project manage- ment concepts to the types of projects highlighted in the media helps you understand the importance of this growing field. Why not get people excited about studying proj- ect management by showing them how to recognize its concepts in popular television shows, movies, or other media?

Best Practice Every chapter includes an example of a best practice related to topics in that chapter. For example, Chapter 1 describes best practices written by Robert Butrick, author of The Project Workout, from the Ultimate Business Library’s Best Practice book. He instructs organizations to ensure that their projects are driven by their strategy and to engage project stakeholders.

Global Issues Every chapter includes an example of global issues of importance today. For example, Chapter 2 describes some of the problems with outsourcing, such as rioting in Beijing when customers could not buy the latest iPhones.

Key Terms The fields of information technology and project management include many unique terms that are vital to creating a workable language when the two fields are com- bined. Key terms are displayed in boldface and are defined the first time they appear. Definitions of key terms are provided in alphabetical order at the end of each chapter and in a glossary at the end of the text.

Application Software Learning becomes much more dynamic with hands-on practice using the top project management software tool in the industry, Microsoft Project 2010, as well as other tools, such as spreadsheet software and the Internet. Each chapter offers you many opportunities to get hands-on experience and build new software skills. This text is written from the point of view that reading about something only gets you so far—to really understand project management, you have to do it for yourself. In addition to the exercises and running cases at the end of each chapter and in Appendix C, sev- eral challenging exercises are provided at the end of Appendix A, Guide to Using Microsoft Project 2010.

S U P P L E M E N T S

The following supplemental materials are available when this text is used in a classroom setting. All of the teaching tools available with this text are provided to the instructor on a single CD-ROM or can be accessed with your single sign on (SSO) account at login. Cengage.com/sso.

• Electronic Instructor’s Manual The Instructor’s Manual that accompanies this textbook includes additional instructional material to assist in class preparation, including suggestions for lecture topics and additional discussion questions.

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• Exam View® This textbook is accompanied by Exam View, a powerful testing software package that allows instructors to create and administer printed, computer (LAN-based), and Internet exams. Exam View includes hundreds of questions that correspond to the topics covered in this text, enabling stu- dents to generate detailed study guides that include page references for fur- ther review. The computer-based and Internet testing components allow students to take exams at their computers, and save the instructor time by grading each exam automatically.

• PowerPoint Presentations This text comes with Microsoft PowerPoint slides for each chapter. These slides are included as a teaching aid for classroom presentation, to make available to students on the network for chapter review, or to print for classroom distribution. Instructors can add their own slides for additional topics they introduce to the class.

• Solution Files Solutions to end-of-chapter questions are available on the Instructor Resource CD-ROM and at the Cengage Learning Web site at login. cengage.com/sso. The solutions are password-protected.

A C K N O W L E D G M E N T S

I never would have taken on the project of writing this book, including all the prior edi- tions, without the help of many people. I thank the staff at Cengage Learning for their dedication and hard work in helping me produce this book and in doing such an excellent job of marketing it. Kate Mason, Aimee Poirier, Dan Seiter, Jennifer Feltri-George, Divya Divakaran, and many more people did a great job in planning and executing all of the work involved in producing this book.

I thank my many colleagues and experts in the field who contributed information to this book. Joseph W. Kestel, PMP, provided outstanding feedback on the new agile infor- mation in this text based on his personal experience in leading agile projects. David Jones, Rachel Hollstadt, Cliff Sprague, Michael Branch, Barb Most, Jodi Curtis, Rita Mulcahy, Karen Boucher, Bill Munroe, Tess Galati, Joan Knutson, Neal Whitten, Brenda Taylor, Quentin Fleming, Jesse Freese, Nick Matteucci, Nick Erndt, Dragan Milosevic, Bob Borlink, Arvid Lee, Kathy Christenson, Peeter Kivestu, and many other people provided excellent materials included in this book. I enjoy the network of project managers, authors, and consultants in this field who are passionate about improving the theory and practice of project management.

I also thank my students and colleagues at Augsburg College and the University of Minnesota for providing feedback on the earlier editions of this book. I received many valuable comments from them on ways to improve the text and structure of my courses. I learn something new about project management and teaching all the time by interacting with students, faculty, and staff.

I also thank faculty reviewers for providing excellent feedback for me in writing this edition: Brian Cameron, Pennsylvania State University; Jennelle Davis, ECPI University; Wendy Gem Davis, ECPI University; Marcus Goncalves, Boston University; Sue McDaniel, Bellevue University; Dawn Owens, Bellevue University; Arthur Thomas, Syracuse University; and Johnathan Yerby, Macon State College. I also want to thank the many reviewers of the earlier editions of this text. I thank the many instructors and readers who have contacted me directly with praise as well as suggestions for improving this text. I appreciate the feedback and do my best to incorporate as much as I can.

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Most of all, I am grateful to my family. Without their support, I never could have written this book. My wonderful husband, Dan, has always supported me in my career, and he helps me keep up to date with software development because he is a lead architect for ComSquared Systems, Inc. Our three children, Anne, Bobby, and Scott, think it’s cool that their mom writes books and speaks at conferences. They also see me managing pro- jects all the time. Anne, now 28, teases me for being the only quilter she knows who treats each quilt as a project. (Maybe that’s why I get so many done!) Our children understand the main reason I write—I have a passion for educating future leaders of the world, including them.

As always, I am eager to receive your feedback on this book. Please send comments to me at schwalbe@augsburg.edu.

Kathy Schwalbe, Ph.D., PMP Professor, Department of Business Administration Augsburg College

A B O U T T H E A U T H O R

Kathy Schwalbe is a Professor in the Department of Business Administration at Augsburg College in Minneapolis, where she teaches courses in project man- agement, problem solving for business, systems analysis and design, information systems projects, and electronic commerce. Kathy was also an adjunct faculty member at the University of Minnesota, where she taught a graduate- level course in project management in the engineering department. She provides training and consulting services to organizations and speaks at conferences. She also writes and self-publishes additional books on project management.

Kathy worked for 10 years in industry before entering academia in 1991. She was an Air Force officer, systems analyst, project manager, senior engineer, and information technol- ogy consultant. Kathy is an active member of PMI, having served as the Student Chapter Liaison for the Minnesota chapter of PMI, VP of Education for the Minnesota chapter, Director of Communications and Editor of the Information Systems Specific Interest Group (ISSIG) Review, and member of PMI’s test-writing team. Kathy earned her Ph.D. in Higher Education at the University of Minnesota, her MBA at Northeastern University’s High Technology MBA program, and her B.S. in mathematics at the University of Notre Dame. She was named Educator of the Year by the Association of IT Professionals in 2011. Visit her Web site at www.kathyschwalbe.com.

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I N F ORMAT I O N T ECHNOLOGY PRO J EC T MANAGEMEN T

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C H A P T E R1 INTRODUCTION TO PROJECT MANAGEMENT

L E A R N I N G O B J E C T I V E S

After reading this chapter, you will be able to:

• Understand the growing need for better project management, especially for information technology (IT) projects

• Explain what a project is, provide examples of IT projects, list various attributes of projects, and describe the triple constraint of project management

• Describe project management and discuss key elements of the project management framework, including project stakeholders, the project man- agement knowledge areas, common tools and techniques, and project success

• Discuss the relationship between project, program, and portfolio manage- ment and the contributions each makes to enterprise success

• Understand the role of project managers by describing what they do, what skills they need, and career opportunities for IT project managers

• Describe the project management profession, including its history, the role of professional organizations like the Project Management Institute (PMI), the importance of certification and ethics, and the advancement of project management software

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O P E N I N G C A S E

Anne Roberts, the director of the Project Management Office for a large retail chain, stood in front of 500 people in the large corporate auditorium to explain the company’s new strategies. She was also broadcasting to thousands of other employees, suppliers, and stockholders throughout the world using live video via the Internet. The company had come a long way in implementing new information systems to improve inventory control, sell products using the Web, streamline the sales and distribution processes, and improve customer service. However, the stock price was down, the nation’s economy was weak, and people were anxious to hear about the company’s new strategies.

Anne began to address the audience, “Good morning. As many of you know, our CEO promoted me to this position two years ago. Since then, we have completed many projects, including the advanced data networks project. That project enabled us to pro- vide persistent broadband between headquarters and our retail stores throughout the world, allowing us to make timely decisions and continue our growth strategy. Our cus- tomers love that they can return items to any store, and any sales clerk can look up past sales information. Local store managers can make timely decisions using up-to-date information. Of course, we’ve had some project failures, too, and we need to continually assess our portfolio of projects to meet business needs. Two big IT initiatives this coming year include increasing online sales and providing enhanced online collaboration tools for our employees, suppliers, and customers. Our challenge is to work even smarter to decide what projects will most benefit the company, how we can continue to leverage the power of information technology to support our business, and how we can exploit our human capital to successfully plan and execute those projects. If we succeed, we’ll continue to be a world-class corporation.”

“And if we fail?” someone asked from the audience. “Let’s just say that failure is not an option,” Anne replied.

INTRODUCTION

Many people and organizations today have a new—or renewed—interest in project man- agement. Until the 1980s, project management primarily focused on providing schedule and resource data to top management in the military, computer, and construction indus- tries. Today’s project management involves much more, and people in every industry and every country manage projects. Project management is a distinct profession with degree programs, certifications, and excellent career opportunities. New technologies have become a significant factor in many businesses. Computer hardware, software, networks, and the use of interdisciplinary and global work teams have radically changed the work environment. The following statistics demonstrate the significance of project management in today’s society, especially for projects involving information technology (IT). Note that IT projects involve using hardware, software, and networks to create a product, service, or result.

• The overall information and communications technology (ICT) market grew by 6 percent to almost $3 trillion in 2010. Spending on computer systems, peripherals, storage devices, mobile devices, and network equipment increased by 16 percent, the fastest rate of growth for hardware investment

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since 1996. Storage spending grew by 14 percent, server spending by 9 percent, and PC spending by 11 percent.1

• In the United States, the size of the IT workforce topped 4 million workers for the first time in 2008. Demand for talent is high, and several organizations throughout the world cannot grow as desired due to difficulties in hiring and recruiting the people they need.2

• The unemployment rate for IT professionals is generally half the rate of the overall labor market in the United States. Moody’s Analytics publicly pre- dicted the addition of about 150,000 tech jobs by the end of 2011 in the United States. “Fueled by explosive growth in mobile and cloud-based applications, as well as federally mandated electronic medical records reforms, this surge has been driven in part by a wave of Angry Birds, smartphones, DropBoxes and compliance requirements. American businesses are crying out for tech-savvy talent.”3

• In 2011, the average salary for project management professionals in U.S. dollars was $105,000 per year in the United States, $139,497 in Australia, $160,409 in Switzerland (the highest-paid country), and $23,207 in China (the lowest-paid country). These average salaries do not include bonuses.4

• The number of people earning their Project Management Professional (PMP) certification continues to increase each year. CareerBuilder.com found that 44 percent of employers listed project management as a skill they looked for in new college graduates, behind only communication and technical skills.5

• A research report showed that the United States spends $2.3 trillion on projects every year, an amount equal to 25 percent of the nation’s gross domestic product. The world as a whole spends nearly $10 trillion of its $40.7 trillion gross product on projects of all kinds. More than 16 million people regard project management as their profession.6

Today’s companies, governments, and nonprofit organizations are recognizing that to be successful, they need to use modern project management techniques, especially for IT projects. Individuals are realizing that to remain competitive in the workplace, they must develop skills to become good project team members and project managers. They also realize that many of the concepts of project management will help them in their everyday lives as they work with people and technology on a day-to-day basis.

W H A T W E N T W R O N G ?

In 1995, the Standish Group published an often-quoted study titled “The CHAOS Report.” This consulting firm surveyed 365 IT executive managers in the United States who managed more than 8,380 IT application projects. As the title of the study suggests, the projects were in a state of chaos. U.S. companies spent more than $250 billion each year in the early 1990s on approximately 175,000 IT application development projects. Examples of these projects included creating a new database for a state department of motor vehicles, developing a new system for car rental and hotel reservations, and

continued

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implementing a client-server architecture for the banking industry. The study reported that the overall success rate of IT projects was only 16.2 percent. The surveyors defined success as meeting project goals on time and on budget. The study also found that more than 31 percent of IT projects were canceled before completion, costing U.S. companies and government agencies more than $81 billion. The study authors were adamant about the need for better project management in the IT industry. They explained, “Software development projects are in chaos, and we can no longer imitate the three monkeys—hear no failures, see no failures, speak no failures.”7

In a more recent study, PricewaterhouseCoopers surveyed 200 companies from 30 different countries about their project management maturity and found that over half of all projects fail. The study also found that only 2.5 percent of corporations consistently meet their targets for scope, time, and cost goals for all types of projects.8

Although several researchers question the methodology of such studies, their popularity has prompted managers throughout the world to examine their practices in managing projects. Many organizations assert that using project management techniques provides advantages, such as:

• Better control of financial, physical, and human resources • Improved customer relations • Shorter development times • Lower costs and improved productivity • Higher quality and increased reliability • Higher profit margins • Better internal coordination • Positive impact on meeting strategic goals • Higher worker morale

This chapter introduces projects and project management, explains how projects fit into programs and portfolio management, discusses the role of the project manager, and provides important background information on this growing profession. Although project management applies to many different industries and types of projects, this text focuses on applying project management to IT projects.

WHAT IS A PROJECT?

To discuss project management, it is important to understand the concept of a project. A project is “a temporary endeavor undertaken to create a unique product, service, or result.”9 Operations, on the other hand, is work done in organizations to sustain the busi- ness. Projects are different from operations in that they end when their objectives have been reached or the project has been terminated.

Examples of IT Projects Projects can be large or small and involve one person or thousands of people. They can be done in one day or take years to complete. As described earlier, IT projects involve using hardware, software, and networks to create a product, service, or result. Examples of IT projects include the following:

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• A team of students creates a smartphone application and sells it online. • A company develops a driverless car. • A small software development team adds a new feature to an internal software

application for the finance department. • A college upgrades its technology infrastructure to provide wireless Internet

access across the whole campus. • A company develops a new system to increase sales force productivity and

customer relationship management that will work on various laptops, smart- phones, and tablets.

• A television network implements a system to allow viewers to vote for contestants and provide other feedback on programs via social media sites.

• A government group develops a system to track child immunizations. • A large group of volunteers from organizations throughout the world develops

standards for environmentally friendly or green IT. • A global bank acquires a smaller financial institution and needs to reconcile

systems and procedures into a common entity. • Government regulations require new reporting of commercial business data

for a manufacturing company. • A multinational firm decides to consolidate its information systems into an

integrated enterprise resource management approach.

Gartner, Inc., a prestigious consulting firm, identified the top 10 strategic technologies for 2012. A few of these technologies include the following:

• Media tablets and beyond: Gartner does not believe that a single platform or technology will dominate the market, but that tablet sales will soon surpass laptop sales. Companies must manage employees who bring their own smart- phones and tablet devices to work.

• Mobile-centric applications and interfaces: User interfaces will be mobile-centric, emphasizing touch, gesture, search, voice, and video. Applications themselves are likely to shift to become more focused and simple Web apps.

• Contextual and social user experience: A contextually aware interface antici- pates a user’s needs and provides the most appropriate and customized con- tent, product, or service. The interfaces for applications will also resemble social networks.

• Internet of things: Internet usage will expand as sensors are added to physical items that are connected to the Internet. For example, Near Field Communi- cation allows users to make payments, board airplanes, and perform other tasks by placing their phones in front of a reader.

• Cloud computing: Enterprises will move from trying to understand the cloud to making decisions on when to implement cloud services and where they need to build private clouds. IT will be challenged to bring operations and development groups closer together to approach the speed and efficiencies of public cloud service providers.10

As you can see, a wide variety of projects use information technologies, and organizations rely on them for success.

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M E D I A S N A P S H O T

Another one of Gartner’s top 10 strategic technologies includes application stores and marketplaces for smartphones and tablets. Gartner predicts that by 2014, there will be more than 70 billion mobile application downloads every year.11 As Apple counted down to 10 billion total app downloads in 2011, it unveiled a page in the iTunes Store that shows the top app downloads of all time, broken into several categories.12 Many users search these categories to decide what apps to try. In January 2012, the top three iPhone apps in each category included the following:

• Top free: Temple Run, Angry Gran, and Zombie Farm • Top paid: Words With Friends, Angry Birds, and Cameraþ • Top grossing: Temple Run, DragonVale, and NBA Game Time

Notice that all of these apps can be considered unproductive in most work environ- ments. All of them are games, except for Cameraþ, which helps you produce better pictures with your phone, and NBA Game Time, which lets you follow your favorite National Basketball Association teams.

For the iPad2, the top apps were as follows:

• Top free: Words With Friends HD, Where’s My Water?, and Pages • Top paid: CloudOn, Bejeweled Blitz, and Mystery Manor: Hidden Adventure

All but two of these iPad apps are games; Pages and CloudOn are productivity tools. Of course, business professionals use phone applications for productive purposes; the challenge is to develop useful apps and get workers to focus on them instead of the many distracting options available.

Project Attributes As you can see, projects come in all shapes and sizes. The following attributes help to define a project further:

• A project has a unique purpose. Every project should have a well-defined objec- tive. For example, Anne Roberts, the director of the Project Management Office in the chapter’s opening case, might sponsor an IT collaboration project to develop a list and initial analysis of potential IT projects that might improve operations for the company. The unique purpose of this project would be to cre- ate a collaborative report with ideas from people throughout the company. The results would provide the basis for further discussions and projects. As you can see from this example, projects result in a unique product, service, or result.

• A project is temporary. A project has a definite beginning and end. In the IT collaboration project, Anne might form a team of people to work immediately on the project, and then expect a report and an executive presentation of the results in one month.

• A project is developed using progressive elaboration. Projects are often defined broadly when they begin, and as time passes, the specific details of the project become clearer. Therefore, projects should be developed in increments. A project team should develop initial plans and then update them with more detail based on new information. For example, suppose that a

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few people submitted ideas for the IT collaboration project, but they did not clearly address how the ideas would support the business strategy of improv- ing operations. The project team might decide to prepare a questionnaire for people to fill in as they submit their ideas to improve the quality of the inputs.

• A project requires resources, often from various areas. Resources include peo- ple, hardware, software, and other assets. Many projects cross departmental or other boundaries to achieve their unique purposes. For the IT collaboration project, people from IT, marketing, sales, distribution, and other areas of the company would need to work together to develop ideas. The company might also hire outside consultants to provide input. Once the project team has selected key projects for implementation, they will probably require additional resources. To meet new project objectives, people from other companies—product suppliers and consulting companies—may be added. Resources, however, are limited and must be used effectively to meet project and other corporate goals.

• A project should have a primary customer or sponsor. Most projects have many interested parties or stakeholders, but someone must take the primary role of sponsorship. The project sponsor usually provides the direction and funding for the project. In this case, Anne Roberts would be the sponsor for the IT collaboration project. Once further IT projects are selected, however, the sponsors for those projects would be senior managers in charge of the main parts of the company affected by the projects. For example, a vice pres- ident of sales who initiates a project to improve direct product sales using the Internet might be the project sponsor. In this situation, Anne might become part of a project steering committee, helping other managers understand dif- ferent project objectives, resolve priorities, research issues, or alter con- straints within a given project or across multiple projects.

• A project involves uncertainty. Because every project is unique, it is sometimes difficult to define its objectives clearly, estimate how long it will take to complete, or determine how much it will cost. External factors also cause uncertainty, such as a supplier going out of business or a project team member needing unplanned time off. This uncertainty is one of the main reasons project management is so challenging, especially on projects involving new technologies.

An effective project manager is crucial to a project’s success. Project managers work with the project sponsors, the project team, and the other people involved to meet project goals.

Project Constraints Every project is constrained in different ways, often by its scope, time, and cost goals. These limitations are sometimes referred to in project management as the triple constraint. To create a successful project, a project manager must consider scope, time, and cost and balance these three often-competing goals:

• Scope: What work will be done as part of the project? What unique product, service, or result does the customer or sponsor expect from the project? How will the scope be verified?

• Time: How long should it take to complete the project? What is the project’s schedule? How will the team track actual schedule performance? Who can approve changes to the schedule?

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• Cost:What should it cost to complete the project? What is the project’s budget? How will costs be tracked? Who can authorize changes to the budget?

Figure 1-1 illustrates the three dimensions of the triple constraint. Each area—scope, time, and cost—has a target at the beginning of the project. For example, the IT collaboration project might have an initial scope of producing a 40- to 50-page report and a one-hour pre- sentation on about 30 potential IT projects. The project manager might further define project scope to include providing a description of each potential project, an investigation of what other companies have implemented for similar projects, a rough time and cost estimate, and assessments of the risk and potential payoff as high, medium, or low. The initial time estimate for this project might be one month, and the cost estimate might be $45,000–$50,000. These expectations provide the targets for the scope, time, and cost dimensions of the project. Note that the scope and cost goals in this example include ranges—the report can be between 40 to 50 pages long and the project can cost between $45,000 and $50,000. Because projects involve uncertainty and limited resources, projects rarely finish according to their original scope, time, and cost goals. Instead of discrete target goals, it is often more realistic to set a range of goals, such as spending between $45,000 and $50,000 and having a 40- to 50-page report. These goals might mean hitting the target, but not the bull’s eye.

Successful project management means meeting all three goals (scope, time, and cost)—and satisfying the project’s sponsor!

Target

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FIGURE 1-1 Project constraints

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Managing the triple constraint involves making trade-offs between scope, time, and cost goals for a project. For example, you might need to increase the budget for a project to meet scope and time goals. Alternatively, you might have to reduce the scope of a proj- ect to meet time and cost goals. Experienced project managers know that you must decide which aspect of the triple constraint is most important. If time is most important, you must often change the initial scope and cost goals to meet the schedule. If scope goals are most important, you may need to adjust time and cost goals.

For example, to generate project ideas, suppose that the project manager for the IT collaboration project sent an e-mail survey to all employees, as planned. The initial time and cost estimate may have been one week and $5,000 to collect ideas based on this e-mail survey. Now, suppose that the e-mail survey generated only a few good project ideas, and the scope goal was to collect at least 30 good ideas. Should the project team use a different method like focus groups or interviews to collect ideas? Even though it was not in the initial scope, time, or cost estimates, it would really help the project. Because good ideas are crucial to project success, it would make sense to inform the project sponsor that adjustments are needed.

Although the triple constraint describes how the basic elements of a project interre- late, other elements can also play significant roles. Quality is often a key factor in projects, as is customer or sponsor satisfaction. Some people, in fact, refer to the quadruple con- straint of project management, which includes quality as well as scope, time, and cost. A project team may meet scope, time, and cost goals but might fail to meet quality standards and satisfy the sponsor. For example, Anne Roberts may receive a 50-page report describ- ing 30 potential IT projects and hear a presentation that summarizes the report. The proj- ect team may have completed the work on time and within the cost constraint, but the quality may have been unacceptable.

Other factors might also be crucial to a particular project. On some projects, resources are the main concern. For example, the entertainment industry often needs particular actors for movies or television shows. Project goals must be adjusted based on when par- ticular people are available. Risk can also affect major project decisions. A company might wait to start a project until the risks are at an acceptable level. The project manager should be communicating with the sponsor throughout the project to make sure it is meeting expectations. Chapter 10, Project Communications Management, and Chapter 13, Project Stakeholder Management, address communicating with stakeholders and under- standing their expectations in greater detail.

How can you avoid the problems that occur when you meet scope, time, and cost goals, but lose sight of customer satisfaction? The answer is good project management, which includes more than managing project constraints.

WHAT IS PROJECT MANAGEMENT?

Project management is “the application of knowledge, skills, tools, and techniques to project activities to meet project requirements.”13 Project managers must strive not only to meet specific scope, time, cost, and quality goals of projects, they must also facilitate the entire process to meet the needs and expectations of people involved in project activ- ities or affected by them.

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Introduction to Project Management

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Figure 1-2 illustrates a framework to help you understand project management. Key elements of this framework include the project stakeholders, project management knowl- edge areas, project management tools and techniques, and the contribution of successful projects to the enterprise.

Project Stakeholders Stakeholders are the people involved in or affected by project activities, and include the project sponsor, project team, support staff, customers, users, suppliers, and even oppo- nents of the project. These stakeholders often have very different needs and expectations. For example, building a new house is a well-known example of a project. There are several stakeholders in a home construction project.

• The project sponsors would be the potential new homeowners. They would be the people paying for the house and they could be on a very tight budget, so they would expect the contractor to provide accurate estimates for the costs of building the house. They would also need a realistic idea of when they could move in and what type of home they could afford given their budget constraints. The new homeowners would have to make important decisions to keep the costs of the house within their budget. Can they afford to finish the basement right away? If they can afford to finish the basement, will it affect the projected move-in date? In this example, the project sponsors are also the customers and users of the product, which is the house.

• The house may require financing by a bank or other financial institution like a credit union, which will secure a legal interest (lien) in the property and the finished home. This institution is an example of a legal stakeholder who must be informed of any changes to the plans or schedule because the project is part of a legal contract.