opma 5364 project management part 1 projects and project goals

OPMA 5364Project Management

Part 1

Projects and Project Goals

Part 1 - Projects & Project Goals 2

Topic Outline: Projects and Project Goals

• Why organize an activity or job as a project• Project goals and performance tradeoffs• Examples of projects and goals• Project life cycles• How are projects selected• Organizational structures and projects• Project selection exercise


What are Projects?

A temporary endeavor undertaken to create a unique product, service or result (PMI-PMBOK)

Specific, timely, usually multidisciplinary, and always conflict ridden (Mantel et al.)

Series of activities or tasks, specific objectives, defined start and end dates, funding limits, consumes resources, multifunctional (Kerzner)


Why Projects?

Why organize an activity or job as a project?• It allows you to better structure and organize the

tasks that need to be performed• Well developed approaches and tools are

available for managing projects• Easy-to-use software is available for scheduling

and budgeting projects• Experience has shown that the work/job can be

done faster, cheaper, and better when managed as a project


Project Performance Goals

• Outcomes/Quality (deliverables and quality)– exactly what needs to be accomplished at

what quality level• Time

– doing it quickly or on schedule• Cost

– doing it cheaply or on budget

Unfortunately, tradeoffs among these goals exist


Project Goal Tradeoffs

Outcomes/Quality

Cost

Time

All Goals Met

Budget limit

Due Date

Desired Outcome/Quality


Project Performance Goals

Which goal is more important: time, cost, or outcomes?

Who decides which goal is more important?

Why is it important for the Project Manager (PM) to know which goal is more important?


Examples of Projects and Goals

• What are examples of non-project activities?

• What are some examples of projects you’ve worked on?– What were the desired deliverables/outcomes?– What was the project time frame?– What was the biggest challenge during the project?– Which goals were more important?– Were all goals fully met?


Project Life Cycles

The pace of project progress throughout the project

There are many patterns that project life cycles can follow, but the following chart depicts a fairly common pattern:– slow start– quick momentum– slow finish


A Common Project Life Cycle

Time0

100

Slow start

Quick momentum

Slow finish

% P

roje

ct c

ompl

etio

n


A Common Project Life Cycle

• Slow Start– manager is selected– team is assembled– initial resources are allocated– work program is organized

• Quick Momentum– work progresses– momentum builds

• Slow Finish– many loose ends to tie up


A Different Project Life Cycle

Time0

100

% P

roje

ct c

ompl

etio

n


Resources & Project Life Cycle

Start

TimeFinish

Res

ourc

es

Concept Planning Execution Wrap-up

Required Resources


Implications of Project Life Cycles

• Project life cycle shape will affect the timing of resource and funding needs

• Understanding the general project life cycle may help the stakeholders better understand and accept the current status of the project

• Understanding the general project life cycle may also help the PM make better goal tradeoff decisions at particular times during the project


Selecting Projects

Who decides which projects will be undertaken by an organization?

What are some examples of criteria that might be used in selecting projects?

Why should the PM be made aware of why a project was selected?


Some Nonnumeric Selection Methods

• Sacred Cow (president’s pet project)– Do you want to keep your job?– Examples

• Operating/Competitive Necessity– You must do this project to stay in business– Examples

• Comparative Benefits– Examine +/- of each potential project– Examples


Factor Scoring Method

Example: 3 projects; 4 factors; 1-5 scale (5=best)

Factor ProjectA ProjectB ProjectC

Cost 2 4 3

Risk 4 3 1

Suitable 4 2 5

Skills 2 2 5

Total Score: 12 11 14


Weighted Factor Scoring Method

Example: 3 projects; 4 factors; 1-5 scale (5=best)

Factor Wt. ProjectA ProjectB ProjectC

Cost .4 2 4 3

Risk .3 4 3 1

Suitable .1 4 2 5

Skills .2 2 2 5

Wtd. Score: 2.8 3.1 3.0


Some Numeric Selection Methods

Common Financial Assessment Methods– Payback Period

• Simple to use and easy to understand• Ignores returns beyond payback period and

time value of money

– Discounted Cash Flow (NPV)• Considers time value of money and all returns• Favors short-term projects• Ignores all non-monetary factors except risk


Payback Period Example

Expected project costs are $700,000

Expected returns are $200,000 per year

Payback period = 700,000 ÷ 200,000 = 3.5 years

Revenues would cover investment costs in 3.5 yrs.


Discounted Cash Flow

Net Present Value

where

I0 = initial cash investment

Ft = net cash inflow in period t

k = required rate of return or hurdle rate

n

1tt

t0

k1

FI)project(NPV


Discounted Cash Flow

Initial cost = $700,000; 4-year annual cash flow = $200,000; required rate of return = 15%

NPV = -700,000 + 200,000/(1.15)1

+ 200,000/(1.15)2 + 200,000/(1.15)3

+ 200,000/(1.15)4

NPV = -700,000 + 173,913 + 151,229 + 131,503 + 114,351NPV = $-129,004Should they do this project?


Mix of Projects

The mix of projects undertaken should support the firm’s corporate strategy.

• Derivative projects—small improvements• Platform projects—develop new line of

products using existing technology• Breakthrough projects—new generation of

products using new technology• R&D projects—develop new knowledge


Organizational Structures

Organizational structure describes the management reporting relationships in the org.

Organization charts show these relationships.

How do projects fit within an organization?• Traditional functional organization• Functional project organization• Pure project organization• Matrix project organization


Traditional Functional OrganizationCompany President

MarketingVice President

ManufacturingVice President

ProcurementVice President

CustomerService

Manager

EngineeringVice President

DomesticSales

Manager

InternationalSales

Manager

SystemsEngineering

Manager

ElectronicsEngineering

Manager

SoftwareEngineering

Manager

MechanicalEngineering

Manager

FabricationManager

AssemblyManager

TestingManager

ProductionSchedulingManager

PurchasingManager

Receiving &InspectionManager

TechnicalDocumentation

Manager

ShippingManager

Finance &AdministrationVice President

HumanResources

Vice President


Functional Project Organization

• Project organized and controlled within a functional unit or department

• Usually for smaller projects with a narrower focus

• What are the advantages of this structure?• What are the disadvantages?


Functional Project OrganizationCompany President


ManufacturingVice President

ProcurementVice President

CustomerService

Manager

EngineeringVice President

DomesticSales

Manager

InternationalSales

Manager

SystemsEngineering

Manager

ElectronicsEngineering

Manager

SoftwareEngineering

Manager

EngineeringProject A

FabricationManager

AssemblyManager

TestingManager

ShippingManager

PurchasingManager

Receiving &InspectionManager

EngineeringProject B

ManufacturingProject 1


HumanResources

Vice President


Pure Project Organization

• Each project is organized as a separate division reporting to senior management

• Effective for large projects, not small. Why?• Each project owns its resources/personnel• Each project may not have much depth of

technical expertise, but it should have breadth


Pure Project Organization

CompanyPresident

Project AProject Manager

Project BProject Manager


HumanResources

Vice President


LegalVice President

EngineeringManager

ManufacturingManager

ProcurementManager

Consultants

EngineeringManager

ManufacturingManager

ProcurementManager

Subcontractors


Matrix Project Organization

• Most common organizational structure• Has many advantages of functional project and

pure project structures• Project team members have two bosses• Team members may be assigned part-time to

project and may have less loyalty to the project


President

ProgramManager

Manufacturing Marketing Finance R & D Personnel

Project 1

Project 2

Project 3

3

1

0

1 1/2

4

1/2

1/2

1/4

3

4

1 1/2

1/2

1/2

1/4

1

Matrix Project Organization


Project Selection Exercise

Quality Fleet Ads case• Divide into small groups• Read case (5 min.)• Assignment: (25 min.)

– Discuss the advantages of each project– Discuss the cost and budget implications– Rank the projects from most important to least

– Which set of projects do you recommend?– What is your proposed budget?

opma 5364 project management part 1 projects and project goals

Documents

project project goals

project slide

projects project goals12

projects project goals10

projects project goals11

projects project goals3

projects project goals4

project management