erik larson project management chap 1 and 2
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Erik Larson Project ManagementTRANSCRIPT
THE MANAGERIAL PROCESS Clifford F. GrayEric W. Larson
Pr ojec t ManagementPr ojec t Management
Chapter 1Chapter 1
Modern Project ManagementModern Project Management
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–2
What is a Project?What is a Project?
• Project Defined–A complex, non-routine, one-time effort limited by
time, budget, resources, and performance specifications designed to meet customer needs.
• Major Characteristics of a Project–Has an established objective.–Has a defined life span with a beginning and an end.–Requires across-the-organizational participation.–Involves doing something never been done before.–Has specific time, cost, and performance
requirements.
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–3
Programs versus ProjectsPrograms versus Projects
• Program Defined–A series of coordinated, related, multiple projects that
continue over an extended time and are intended to achieve a goal.
–A higher level group of projects targeted at a common goal.
–Example:•Project: completion of a required course in project
management.•Program: completion of all courses required for a
business major.
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–4
Comparison of Routine Work with ProjectsComparison of Routine Work with Projects
TABLE 1.1
Routine, Repetitive Work
Taking class notes
Daily entering sales receipts into the accounting ledger
Responding to a supply-chain request
Practicing scales on the piano
Routine manufacture of an Apple iPod
Attaching tags on a manufactured product
ProjectsWriting a term paper
Setting up a sales kiosk for a professional accounting meeting
Developing a supply-chain information system
Writing a new piano piece
Designing an iPod that is approximately 2 X 4 inches, interfaces with PC, and stores 10,000 songs
Wire-tag projects for GE and Wal-Mart
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Project Life CycleProject Life Cycle
FIGURE 1.1
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The Challenge of Project ManagementThe Challenge of Project Management
• The Project Manager–Manages temporary, non-repetitive activities and
frequently acts independently of the formal organization.
•Marshals resources for the project.•Is linked directly to the customer interface.•Provides direction, coordination, and integration to
the project team.•Is responsible for performance and success of the
project.–Must induce the right people at the right time to
address the right issues and make the right decisions.
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–7
The Importance of Project ManagementThe Importance of Project Management
• Factors leading to the increased use of project management:–Compression of the product life cycle–Global competition–Knowledge explosion–Corporate downsizing–Increased customer focus–Rapid development of Third World and
closed economies–Small projects that represent big
problems
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Integrated Project Management SystemsIntegrated Project Management Systems
• Problems resulting from the use of piecemeal project management systems:–Do not tie together the overall strategies of the firm.
–Fail to prioritize selection of projects by their importance of their contribution to the firm.
–Are not integrated throughout the project life cycle.
–Do not match project planning and controls with organizational culture to make appropriate adjustments in support of project endeavors.
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–9
Integrated Integrated Management of Management of
ProjectsProjects
FIGURE 1.2
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–10
The Technical and The Technical and Sociocultural Sociocultural DimensionsDimensions
of the Project of the Project Management Management
ProcessProcess
FIGURE 1.3
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–11
An Overview of Project Management 3e.An Overview of Project Management 3e.
THE MANAGERIAL PROCESS Clifford F. GrayEric W. Larson
Pr ojec t ManagementPr ojec t Management
Chapter 2Chapter 2 Organization Strategy Organization Strategy and Project Selectionand Project Selection
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–13
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–14
Why Project Managers Need to Understand Why Project Managers Need to Understand the Strategic Management Processthe Strategic Management Process
• Changes in the organization’s mission and strategy–Project managers must respond to changes with
appropriate decisions about future projects and adjustments to current projects.
–Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission.
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–15
Strategic Strategic Management Management
ProcessProcess
FIGURE 2.1
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Characteristics of ObjectivesCharacteristics of Objectives
EXHIBIT 2.1
S Specific Be specific in targeting an objective
M Measurable Establish a measurable indicator(s) of progress
A Assignable Make the objective assignable to one person forcompletion
R Realistic State what can realistically be done with availableresources
T Time related
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–17
Project Portfolio Management ProblemsProject Portfolio Management Problems
• The Implementation Gap–The lack of understanding and consensus on strategy
among top management and middle-level (functional) managers who independently implement the strategy.
• Organization Politics–Project selection is based on the persuasiveness and
power of people advocating the projects.• Resource Conflicts and Multitasking
–The multiproject environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects.
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–18
Benefits of Project Portfolio ManagementBenefits of Project Portfolio Management
• Builds discipline into project selection process.• Links project selection to strategic metrics.• Prioritizes project proposals across a common set of
criteria, rather than on politics or emotion.• Allocates resources to projects that align with strategic
direction.• Balances risk across all projects.• Justifies killing projects that do not support organization
strategy.• Improves communication and supports agreement on
project goals.
EXHIBIT 2.2
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Portfolio of Projects by TypePortfolio of Projects by Type
FIGURE 2.2
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A Portfolio Management SystemA Portfolio Management System
• Selection Criteria–Financial: payback, net present value (NPV), internal
rate of return (IRR)–Non-financial: projects of strategic importance to the
firm.• Multi-Weighted Scoring Models
–Use several weighted selection criteria to evaluate project proposals.
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Project Screening MatrixProject Screening Matrix
FIGURE 2.3
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Applying a Selection ModelApplying a Selection Model
• Project Classification–Deciding how well a strategic or operations project fits
the organization’s strategy.
• Selecting a Model–Applying a weighted scoring model to bring projects to
closer with the organization’s strategic goals.•Reduces the number of wasteful projects•Helps identify proper goals for projects•Helps everyone involved understand how and why a
project is selected
Copyright © 2006 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 1–23
Project ProposalsProject Proposals
• Sources and Solicitation of Project Proposals–Within the organization–Request for proposal (RFP) from external sources
(contractors and vendors)• Ranking Proposals and Selection of Projects
–Prioritizing requires discipline, accountability, responsibility, constraints, reduced flexibility, and loss of power.
• Managing the Portfolio–Senior management input–The priority team (project office) responsibilities
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Major Project Major Project ProposalProposal
FIGURE 2.4A
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Risk Risk AnalysisAnalysis
FIGURE 2.4B
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Managing the PortfolioManaging the Portfolio
• Senior Management Input–Provide guidance in selecting criteria that are aligned
with the organization’s goals–Decide how to balance available resources among
current projects• The Priority Team Responsibilities
–Publish the priority of every project–Ensure that the project selection process is open and
free of power politics.–Reassess the organization’s goals and priorities–Evaluate the progress of current projects
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Project Screening Project Screening ProcessProcess
FIGURE 2.5
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Project Portfolio MatrixProject Portfolio Matrix
FIGURE 2.7
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Project Portfolio Matrix DimensionsProject Portfolio Matrix Dimensions
• Bread-and-butter projects– Involve evolutionary improvements to current products and
services.
• Pearls– Represent revolutionary commercial advances using proven
technical advances.
• Oysters– Involve technological breakthroughs with high commercial
payoffs.
• White elephants– Projects that at one time showed promise but are no longer
viable.