SPM8000 Project Management

Summary of Nicholas and Steyn

Delft, 17-04-2017

Dear reader,

This document is a summary of the Project Management book of Nicholas and Steyn. It can be
considered as an extended table of contents or reading guide. The information written down is NOT
complete and can mostly NOT be used directly on the exam. Further elaboration on topics can be
found in the book on the pages as mentioned throughout the summary. It helped me to get through
the contents of the book; what is discussed and where. Enjoy the reading and good luck with
preparing for the exam!

Anna van Veenen

Chapter 1 – What is project Management?

1.4. Where is project management appropriate?
Cleland and King list five criteria for determining when to use project management methods and
organization: Further elaboration can be found on page 24.
1. Unfamiliarity
2. Magnitude of the Effort
3. Dynamic Environment
4. Interrelatedness
5. Reputation of the Organization
Project management is not appropriate when more familiar and routine tasks are done. The process
and outcome are certain and standardized.

 Different types of project managers:

1. Project expeditors: speed up work, unity of communication (funneling information from
technical to executives).
2. Project coordinators: unity of control, no authority over workers.
3. Matrix Managers: unity of direction, authority to plan, direct and control project work.
4. Pure Project Managers: unity of command, integrators, and generalists rather than technical
specialist. Balance technical and human factors

1.6. Different forms of project related management

There are five different forms of project related management. They all have two things in common 1)
a project team is created for achieving a specific goal 2) a project manager is assigned to have
responsibility for accomplishing the goal. Further elaboration can be found on page 27.
1. Basic project management
2. Program management (program is bigger than project) All the cycle
3. New venture management
4. Product management
5. Commercial/For-Profit Project Management
6. Government and Non-Profit Project Management
7. Military project management
8. Project portfolio management
  Environment and boundary: “Can I do anything about it?” “Is it relevant to the system and its
objectives?”

1.13. Summary on page 37

Project management includes the organization, systems and procedures to enable the project
manager to plan, organize, direct and integrate everything necessary to achieve project goals.

Chapter 2 – Systems approach

2.1. Systems and systems thinking
A system has the following features:
1. Parts of the system affect the system and are affected by it (human body)
2. The assemblage of parts does something: it serves a purpose or goal
3. The assemblage is of particular interest

2.2. Systems concepts and principles

The following concepts and principles apply to all systems: Further elaboration can be found on page
43.
1. Goals and Objectives
2. Elements and Subsystems
3. Attributes
4. Environment and Boundary
5. System Structure
6. Inputs, Process, Outputs, Interfaces
7. Constraints and Conflicts
8. Integration
9. Open Systems and Closed Systems
10. Organizations and Environment
11. Natural Systems and Human-Made Systems

 System approach:
(a) Orderly Way of Appraisal: Analyse the situation from all the angles.
1. The objectives and the performance criteria of the whole system
2. The environment and constraints of the system
3. The resources of the system
4. The elements of the system, their functions, attributes, and performance measures
5. The interaction among the elements
6. The management of the system.
(b) Systems models – Sensitivity Analysis
1. Physical model
2. Conceptual model

 Systems Life Cycle

 Stage 1: Needs Identification and Conceptual Design (71)

(a) Stakeholders and Needs Identification
(b) Requirements definition
- Objectives
- Life cycle
- Operational modes
- Constraints
 - Interfaces
(c) Feasibility
(d) System Requirements Analysis
(e) Functional requirements
(f) Performance and verification requirements
(g) Synthesis (OTS: Off The Shelf)  System specification

 Stage 2: Preliminary Design

(a) Functions of subsystems (FFBD)
(b) Grouping of functions: architecture and configuration items (CIs)
(c) Requirements allocation
(d) Interfaces
(e) Synthesis and evaluation

 Stage 3: Detailed Design and System Development

 Stage 4: System Fabrication, Construction and/or Production
 Stage 5: System Operation and Support

2.6. Summary on page 55

The principle components of the systems approach are
1. The objectives and performance criteria of the system
2. The system environment and constraints
3. The resources of the system
4. The elements of the system, their functions, attributes and performance measures
5. The interaction among the elements
6. The management of the system

Chapter 3 – Project Life Cycle and Project Conception

3.2. Systems Development Cycle
All human-made systems follow the following four phases of the development cycle: Further
elaboration on page 68.
1. Conception phase A
a. Initiation stage  project initiation & initial investigation page 73
b. Feasibility stage  feasibility study page 76
c. Proposal preparation  project proposal page 84
2. Definition phase B  Chapter 4 page 109
a. Project definition
b. System definition
c. User and system requirements
3. Execution phase C  Chapter 11 page 385
a. Design stage
b. Production/build stage
i. Fabrication
ii. Testing
c. Implementation stage
i. Training
ii. Acceptance tests
iii. Installation
d. Termination
 4. Operation phase D
a. System maintenance and evaluation
b. System improvement or termination

There are several stakeholders within the SDC: Further elaboration on page 72.
1. System customers (buyers, clients, owners) including customer management and users and
operators
2. System contractors (systems development organization, developer, promoter, consultant)
including contractor top management, project management, the doers

3.4. Project Feasibility

The project feasibility is an assessment process of studying a need, problem and solution in sufficient
detail to determine if an idea is economically/technically/commercially viable and worth developing.
It consists of several parts: Further elaboration on page 76.
1. Request for Proposal
2. The Feasibility Study
3. The Business Case
a. Cost-benefit analysis
b. Estimated project duration
c. Financial aspects
d. Risks
e. Assumptions
4. Needs Definition
5. User Requirements Definition
a. Requirements for Objectives Life Cycle
b. Requirements for Operational Modes
c. Requirements for Constraints and Interfaces
6. The Current System
7. Analysis of alternative solutions
8. Environmental Impact
9. Sustainability

3.6. Project Contracting

The contract environment and process is discussed on page 90. It consists of:
1. Subcontracting
2. Contract Negotiation
3. Contract Statement of Work and Work Requisitions

3.7. Summary on page 97

The first phase, conception, includes formulating the problem, defining needs and user
requirements, evaluating alternative solutions, and preparing a proposal to conduct the project. At
the start most activities are in hands of the client and in the end most activities are transferred to the
contractor.

Appendix: Kinds of Contracts

Examples of different kinds of contracts are mentioned in this appendix. Further elaboration can be
found on page 98. In general requirements about the service and the payment include:
1. Scope of work to be done
2. Duties of the contractor in providing the work
3. Time schedule allowed
4. Duties of the client regarding payments
5. How changes to the contract and disputes will be handled
 6. How risk will be handled

The variables that are specified in the contract include: page 98

1. Cost: Expected cost and actual cost of the project under normal circumstances
2. Fee: Amount paid to the contractor in addition to reimbursable costs
3. Price: The price the clients pays for the project. Includes reimbursable costs incurred by the
contractor plus contractor’s fee.

Types of contracts:
1. Fixed Price Contracts
a. Fixed Price Contract
b. Fixed Price with Redetermination
2. Cost-Plus Contracts
a. Cost Plus Fixed Fee
b. Guaranteed Maximum Price
c. Time and Materials Contract
3. Incentive Contracts
a. Cost Plus Incentive Fee
b. Fixed Price Incentive Fee
c. Other

Chapter 4 – Project Definition and System Definition

The second phase, definition, is about defining the work to be done before it is actually done. It is
about thinking before acting. Scope changes can only be made in the very beginning of the project,
otherwise it becomes very expensive (figure 4.2 page 111). Definition can be spilt up in two parts:
project definition and system definition. Taking both into account is important. A project always
starts with a project kickoff (page 111) and a suitable project name should be chosen (page 112).

4.2. Project definition

Aims at specifying what the project team must do in the project to produce the end-item.  effort
based. Further elaboration on page 112.
1. Detailed project planning
2. Project execution plan
3. Phased Project Planning
4. Project charter

4.4. System definition:

Aims at achieving good understanding of what the end-item must do to satisfy user requirements. 
result based. Further elaboration on page 118.
1. Revised User Requirements
2. System Requirements
3. Functional Requirements
4. Requirements Priority and Requirements Margin
5. Requirements Breakdown Structure
6. System Specifications
7. Traceability
8. Iterative Design-testing and Rapid Prototyping
9. Agile Project Management
10. Team Involvement in Definition
4.5. Summary on page 127
When the customer is more demanding and the schedule and budget are constraint, success
depends on a well-defined description of what the end result must be and do including the user
requirements and system requirements. It is very important to conduct the definition phase well to
prevent cost and time overruns later in the project.

Appendix A: Stages of Systems Engineering

Systems Engineering is a logical process employed in the evolution of a system from the point when a
need is first identified, through the system’s planning, design, construction, and ultimate deployment
and operation by a user. It encompasses the following stages: Further elaboration on page 128.
1. Needs Identification and Conceptual Design
a. Stakeholder and Needs Identification
b. Requirements Definition
c. Feasibility
d. Requirements Analysis
e. Functional Requirements
f. Performance and Verification Requirements
g. Synthesis  relation between system level requirements
2. Preliminary Design
a. Functions of Subsystems
b. Grouping of Functions: Architecture and Configuration Items
c. Requirements Allocation
d. Interfaces
e. Synthesis and Evaluation
3. Detailed Design and System Development
4. System Fabrication, Construction and/or Production
5. System Operation and Support

Appendix B: Quality Function Deployment

Quality Function Deployment (QFD) is a methodology for defining requirements and, specifically, for
translating customer needs into system or product characteristics, and specifying the processes and
tasks needed to produce the system or product. Further elaboration on page 141.
1. House of Quality: can be used to transfer needs into technical requirements
2. QFD Process
a. Create House of Quality
b. Develop initial version of the project
c. Create design matrix
d. Create process matrix
e. Create control matrix
f. Refine the project plan

Chapter 5 – Basis Project Planning Techniques

There are six questions that need to be answered within the planning process (page 156):
1. What is the desired end result?
2. How will the result be achieved?
3. Who will do it?
4. When and in what order?
5. How much?
6. How well?
5.4. Work Definition
When the objectives and deliverables have been set in the scope they have to be translated into
well-defined work activities. This can be done by doing the following activities: Further elaboration
on page 161.
1. Work Breakdown Structure: breaking down the total project into small work packages.
2. Responsibility Matrix: work packages are shown in the responsibility matrix. It prescribes
which units and individuals, both internal and subcontractors, have project responsibility and
the kind of responsibility for each.

5.6. Scheduling
A project schedule shows the timing for work tasks and when specific events and project milestones
should occur (page 170). There are several types of schedules like: project schedule (general), activity
schedule (specific, Gantt chart).

5.10. Summary on page 182

Chapter 6 – Project Schedule Planning and Networks

6.1. Network Diagrams
A network diagram shows project activities or tasks and their logical relationships (precedence
relationships and dependencies). Relationships can be either mandatory or discretionary.

6.2. The Critical Path

In order to determine the critical path in a network diagram the following data is needed: Further
elaboration on page 195.
1. Duration
2. Early Start
3. Early Finish = Early Start + Duration
4. Late Start = Late Finish - Duration
5. Late Finish
6. Slack = Late Start – Early Start or Late Finish – Early Finish
7. Free Slack = ES(earliest successor) – EF(activity)

6.5. Alternative Relationships

Network diagrams assume finish to start relationships between activities. One activity cannot start
before the other is finished. There are also other relationships: further elaboration on page 204.
1. Start to Start
2. Finish to Finish
3. Start to Finish

6.6. Scheduling with Resource Constraints

Projects need resources, however those resources are not always available. For example, money,
workers, equipment and machinery. This leads to a longer project duration than when resources are
always available. Solutions are: Further elaboration on page 210
1. Levelling a Time-Constrained Project: shift activities in such a way that resources are levelled
over the project duration. This can be done by using slack and moving non-critical activities
forward.
2. Splitting activities, Multi-Tasking and Hand-Over Points: The moral is: once an activity has
started, it is usually better to finish it uninterrupted. So splitting and multi-tasking are often
not beneficial.
3. Levelling Multiple Sources: Focus should be on the highest priority resources. This can be
done by delaying activities, eliminate activities, substitute resources, substitute activities.
Critical chain: the path connecting activities that require the same constrained resource.

6.8. Summary on page 217

Knowledge of critical activities tells managers where to focus; knowledge of slack enables them to
address the problems of non-uniform resource requirements and limited resources.

Chapter 7 – Advanced Project Network Analysis and Scheduling

7.1. Critical Path Method (CPM) and Time-Cost Tradeoff
The CPM is a way to reduce the project duration by allocating resources among activities for the least
cost. It is a mathematical procedure for estimating the tradeoff between project duration and cost.
Further elaboration on page 232.

Crashed activity: when the maximum effort is applied so that the activity can be completed in the
shortest possible time. It becomes also the most costly activity.
7.3. PERT
PERT is a method to apply in project with uncertain activities duration. Further elaboration on page
241. It consists of the following parts:
1. Three Time Estimates: optimistic, pessimistic and most likely duration. They are used to
calculate the expected duration of an activity, and the variance. The riskier the activity the
higher the variance. See assignment 1.
2. Probability of Finishing by a Target Completion Date: expected duration will be exceeded
50% of the time. Can be approached by a normal distribution. Therefore, chance that a
project will be finished within a certain amount of time.
3. Near Critical Paths
4. Meeting the Target Date: three ways to speed up the process to meet the target date,
however each solution has its drawbacks:
a. Fast-track activities on the critical path
b. Add resources to critical and near-critical activities
c. Substitute time-consuming activities or delete them
5. Monte Carlo Simulation of a PERT Network
6. Why Projects are Often Late

7.4. Allocating Resources and Multiple Project Scheduling

There are some heuristic methods for allocating resources: more elaboration on page 251
1. As soon as possible
2. As late as possible
3. Most resources
4. Shortest task time
5. Least slack
6. First come first served
7. Earliest due date

7.7. Summary on page 262

Chapter 8 – Cost Estimating and Budgeting

8.2. Cost Escalation
The amount by which actual costs grow to exceed initial estimates is referred to as cost escalation.
There are several reasons: further elaboration on page 276.
1. Uncertainty and Lack of Accurate Information
2. Changes in Requirements or Design
3. Economic and Social Factors
4. Inefficiency, Poor Communication and Lack of Control
5. Ego Involvement in the Estimator
6. Project Contract
7. Information and Assumptions
8. Bias and Ambition

8.4. Cost Estimation Process

The cost estimation process includes the following parts: Further elaboration on page 281
1. Estimate versus Target or Goal
2. Accuracy versus Precision (PERT to improve accuracy)
3. Classifying Work Activities and Costs: work  developmental/off the shelf, costs 
recurring/nonrecurring. Estimates are made using the following methods:
a. Expert Judgement
b. Analogous Estimate
c. Parametric Estimate
d. Cost Engineering
4. Contingency Amount: activity contingency vs project contingency. Allowance to cover
overruns.
5. Top-Down versus Bottom-Up
6. Reconciling Estimates
7. Reducing Costs

8.5. Elements of Estimates and Budgets

The difference between estimate and budget is that the estimate comes first, the budget is based on
the estimate. They share the following elements: Further elaboration on page 289
1. Direct labour expense
2. Direct non-labour expense
3. Overhead expense
4. General and administrative expense
5. Profit and total billing

8.9. Cost Schedules and Forecasts

Examples of forecasting costs based on the estimated pattern of expenditures: page 300
1. Cost Analysis with Early and Late Start Times
2. Effect of Late Start Time on Project Net Worth
3. Cash Flow

8.11 Summary on page 308

The aggregate of cost estimates for all the work elements plus overhead costs becomes the cost
estimate for the overall project. Ideally expenditures and income are balanced so that the contractor
can maintain a positive cash flow.

Chapter 9 – Project Quality Management

Besides meeting the budget and schedule, project success depends on how well a project meets
performance requirements.
9.1. The Concept of Quality
Quality is meeting specifications or requirements, fulfilling the customer expectations. It is fitness for
purpose and absence of defects. However, sometimes good enough quality is sufficient because of
the tradeoff with time and money. Quality is not the product’s grade; it only has to be fit for purpose.

9.2. Project Quality Management Processes

Project quality management has three processes: page 320
1. Quality Planning
a. Cost of Quality
b. Project Quality Management Plan
2. Quality Assurance
a. Continuous Improvement and Project Post-Completion Reviews
3. Quality Control

9.3/9.4 Techniques for Quality Control / Assurance in System Development

There are several ways in which quality can be monitored: page 324
1. Configuration Management
a. Configuration Identification
b. Configuration Control
2. Design Reviews
a. Formal reviews
b. Informal reviews
3. Audits
4. Classification of Characteristics
5. Failure Mode and Effect Analysis
6. Modelling and Prototyping
7. System Inspection and Testing
8. Documentation Inspection
9. Inspection and Acceptance Testing of the Final Product
10. Tools of Quality Control
a. Run Chart
b. Control Chart
c. Pareto Diagram
d. Cause-and-Effect Diagram
11. Other Tools

9.5. Summary on page 338

Quality does not imply the highest grade, most production features or zero defects; it is whatever is
considered best in terms of costumer expectations.

Chapter 10 – Project Risk Management

10.1. Risk Concepts
The notion of project risk is a function of two concepts: the likelihood that some problematical event
will occur, and the impact of the event if it does occur. Risk can also be positive  opportunity.

10.2. Risk Identification

You can only manage risks if you are aware of them. Risks can be found throughout the whole life
cycle of the project. Identifying risks can be done according to the following principles: page 348.
1. Risk Sources
 a. Internal sources
i. Market risks
ii. Assumptions risks
iii. Technical risks
b. External sources examples on page 349
2. Identification Techniques
a. Project Analogy
b. Checklists / Risk Matrix
c. Work Breakdown Structure
d. Process Flowchart
e. FMEA and HAZOP
f. Project Networks and Convergence Points
g. Brainstorming and Cause-and-Effect Diagram
h. Delphi Technique
3. Risk Symptoms and Triggers

10.3. Risk Assessment

What is considered significant within assessing risks is: page 353, also see assignment 2.
1. Risk Likelihood: probability that a certain risk event will happen
2. Risk Impact: the result when the risk event happens
3. Risk Consequence: likelihood × impact
4. PERT and Monte Carlo Simulation
5. Risk Priority: any risk with a severe impact should never be ignored, independent of the
probability.

10.4. Risk Response Planning

Risk response planning is about how to deal with the risk. Responses are: page 360
1. Transfer: risk can be transferred between customers, contractors, and other parties
contractual incentives, warranties, penalties or insurance.
a. Insurance
b. Subcontract Work
c. Risk Responsibility
2. Avoid: in most cases, rather than avoiding risks they should be reduced to an acceptable level
3. Reduce: examples on page 363 and 364
4. Contingency Planning
5. Accept (do nothing): mostly chosen for risks with low consequence

10.7. Summary on page 370

Project risk management involves identifying the risks, assessing them, and planning the taking of
appropriate responses.

Appendix: Risk Analysis Methods

Several risk analysis methods are described: page 370
1. Expected Value
2. Decision Trees
3. Uncertainty and Payoff Tables
4. Simulation
Chapter 11 – Project Execution, Monitoring and Control
By the end of the definition phase the project manager should have prepared a full set of
requirements and specifications and a somewhat complete plan for the next phases. Keeping the
project moving and on target, tracking process, and overcoming obstacles is the purpose of project
control.

11.2. Detail Design Stage

In the detail design stage, system specifications are converted into plans, sketches, or drawings. A
distinguish can be made between a functional design and a physical design.
Fast tracking: when part of the system is already built when some other parts are still in design.
It encompasses: page 387
1. Interaction Design
2. Controlling Design
3. Planning for Production/Build and later stages

11.3. Production/Build Stage

The main activities in this stage are: page 389
1. System Fabrication
2. Testing
3. Planning for Implementation

11.4. Monitoring and Control Process

Project monitoring and control is about keeping the project moving in the direction as laid out by the
execution plan. It follows the following steps: page 390
1. Setting the performance standard
2. Comparing actual performance to the standard
3. Taking corrective action to remove any variance
Also, monitoring consists of:
1. Project monitoring: tracking the project, assessing how well it is doing, and forecasting it
2. Internal and external monitoring: internal  contractor’s procedures to monitor work,
reporting status and taking action. External  additional procedures imposed by others
(client).
3. Traditional cost control: comparison of how much of the budget is spend and what the
progress is
4. Cost-Accounting Systems for Project Control

11.6. Project Monitoring and Control Emphasis

Project monitoring and control addresses the following areas: page 395
1. Scope Control: projects have the tendency to grow over time because of changes and
additions to the scope  scope creep.
2. Quality Control
3. Schedule Control
a. Time Buffers and Fever Charts
b. Frequently Report Activity Status
c. Publicize Consequences of Delays and Benefits of Early Finish
4. Cost Control
5. Procurement Control

11.7. Performance Analysis and Earned Value Management

The performance of a project can be assessed with three variables: PV, AC and EV: page 400. Also
see assignment 3.
 1. PV = planned value/budgeted costs of the work scheduled. The sum cost of all work and
apportioned effort scheduled to be completed within in a given time period as specified in
the original budget.
2. AC = actual costs of the work performed. The actual expenditure as of a given time period.
3. EV = earned value/budgeted costs of the work performed. The value of the work performed
so far according to the original budget.
a. For a complete task: EV = PV
b. For a partially complete task: EV = % complete × budget
Application of these variables is called earned value management. It can also be used to calculate the
variances: page 402. Also see figure 11.9
1. Schedule Variance: SV = EV – PV
2. Time Variance: TV = status date – budgeted cost, scheduled performance
3. Cost Variance: CV = EV - AC
The performance of a project can be computed by two performance indices: page 402.
1. Schedule Performance Index: SPI = EV/PV
2. Cost Performance Index: CPI = EV/AC
It can be necessary to update scheduled completion days: page 407.
1. Forecast finish date for a task = start date + time remaining
2. Time remaining = percent of task remaining/percent progress per day
3. Percent progress per day = percent of task completed so far/days worked on task so far
A forecast can be made which is an estimate of the time and cost needed to complete the project:
page 470.
1. Estimated cost to complete project: ETC = (PV-EV)/CPI
2. Estimated cost at completion: EAC = AC+ETC

11.9. Change Control

Change control consists of several parts: page 416.
1. The impact of changes
2. Reasons for changes. Changes:
a. In project scope
b. In design
c. Mandated by government codes
d. That are believed to improve the rate of return
e. That are perceived to improve original requirements
3. Change control system and configuration management

11.12. Summary on page 420

Chapter 12 – Project Evaluation, Communication, Implementation,

and Closeout