Chapter 1

The World of Project Management

MEM 612 Project Management

WHAT IS A PROJECT?

MEM 612 Project Management

Why the emphasis on project
management?
• Many tasks do not fit neatly into business-
as-usual.
• Need to assign responsibility and authority
for achievement of organizational goals.

MEM 612 Project Management

Characteristics of Projects
• Unique
• Specific Deliverable
• Specific Due Date

MEM 612 Project Management

Other Common Characteristics of
Projects
• Multidisciplinary
• Complex
• Conflict
• Part of Programs

MEM 612 Project Management

PMI Definition
“A temporary endeavor undertaken to create
a unique product or service”

Project Management Institute, 2000

MEM 612 Project Management

PROJECT MANAGEMENT VS.
GENERAL MANAGEMENT

MEM 612 Project Management

Skill Requirements for Effective
Project Management
• Conflict Resolution
• Creativity and Flexibility
• Ability to Adjust to Change
• Good Planning
• Negotiation
– win-win versus win-lose

MEM 612 Project Management

 WHAT IS MANAGED? THE
THREE GOALS OF A PROJECT

MEM 612 Project Management

Figure 1-1: Performance, Cost,
and Time Project Targets

MEM 612 Project Management

THE LIFE CYCLES OF
PROJECTS

MEM 612 Project Management

Figure 1-2 The Project Life Cycle

MEM 612 Project Management

Figure 1-3 An Alternate Project
Life Cycle

MEM 612 Project Management

SELECTING PROJECTS

MEM 612 Project Management

Nonnumeric Selection Methods
• The Sacred Cow
• The Operating/Competitive Necessity
• Comparative Benefits

MEM 612 Project Management

Figure 1-4 The Q-Sort Method

MEM 612 Project Management

Numeric Selection Methods
• Financial Assessment Methods
– payback period
– discounted cash flow
• Scoring Methods
– unweighted 0-1 factor method
– weighted factor scoring method

MEM 612 Project Management

Payback Period

Initial Fixed Investment

Annual Net Cash Inflows

MEM 612 Project Management

Discounted Cash Flow

n
Ft
NPV (project)  - I 0  
t 1 (1  k )
t

where
I0 = the initial investment
Ft = the net cash flow in period t
k = the required rate of return or hurdle rate
MEM 612 Project Management
The Weighted Scoring Model

n
Si   sij w j
j 1

where
Si = the total score of the ith project
sij = the score of the ith project on the jth criterion
wj = the weight or importance of the jth criterion

MEM 612 Project Management

Confronting Uncertainty – The
Management of Risk

MEM 612 Project Management

What uncertainties are encountered
in project management?
• Time required to complete a project
• Availability of key resources
• Cost of resources
• Timing of solutions to technological
problems
• Actions taken by competitors

MEM 612 Project Management

Can uncertainty surrounding
projects ever be eliminated?
• No, but it can be managed

MEM 612 Project Management

Risk Analysis
• Estimate probabilities or distributions
associated with key parameters
• Develop analytic or simulation model
• Analyze distribution of outcomes
generated by model

MEM 612 Project Management

Risk Analysis with Crystal Ball
• Assumption Cells
• Distribution Gallery
• Forecast Cells

MEM 612 Project Management

THE PROJECT PORTFOLIO
PROCESS

MEM 612 Project Management

The Project Portfolio Process
• Step 1: Establish a Project Council
• Step 2: Identify Project Categories and Criteria
• Step 3: Collect Project Data
• Step 4: Assess Resource Availability
• Step 5: Reduce the Project and Criteria Set
• Step 6: Prioritize the Projects within Categories
• Step 7: Select the Projects to be Funded and
Held in Reserve
• Step 8: Implement the Process

MEM 612 Project Management

The Aggregate Project Plan

MEM 612 Project Management

Figure 1-12 An Example
Aggregate Project Plan

MEM 612 Project Management

Copyright
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MEM 612 Project Management