PROJECT MANAGEMENT

Ahmed El Gabry
 Part A
Project management: Explore

Content
A.1 Project management Define
A.2 Project Management and Organizational context
A.3 Project Selection & portfolio management
 A.1|Project management Define
Projects examples

Split the atom

Tunnel between London and Design of Boeing 747

New York

What are common characteristics of

mentioned projects?
 A.1|Project management Define

Q: State whether following statements about projects are correct or wrong

A project is a temporary endeavor undertaken to

create a unique product, service, or result. The
temporary nature of projects indicates that a project
has a definite beginning and end

Project management is the application of

knowledge, skills, tools, and techniques to
project activities to meet the project
requirements.

Traditional process management functions of

planning, organizing, and controlling do not apply to
project management.
 A.1|Project management Define
Project definition

A project is a temporary endeavor undertaken to create a unique product,

service, or result. The temporary nature of projects indicates that a project
has a definite beginning and end
PMBOK 5th edition
Projects, rather than repetitive tasks, are now the basis for most value-
added in business
Tom
Peters
A project is a unique venture with a beginning and an end, conducted by
people to meet established goals within parameters of cost, schedule
and quality.
Buchanan & Boddy 92
Projects are goal-oriented, involve the coordinated undertaking of
interrelated activities, are of finite duration, and are all, to a degree
unique
Frame 95
 A.1|Project management Define
Let’s see the movie
 A.1|Project management Define
Project Elements

Complex, one-time processes, more than one department are

involved, project team disbands after completion

Limited by budget, schedule, and resources

Developed to resolve a clear goal or set of goals

Customer-focused
 A.1|Project management Define
Exercise A.1-1

Use match cards and allocate

each card in the place that best
describe either process or
project
 A.1|Project management Define
Project Vs process: Compare
Process
• Repeat process or product
• Several objectives
• Ongoing
• People are homogeneous
• Systems in place to integrate
efforts
• Performance, cost, & time
known
• Part of the line organization
• Bastions of established
practice
• Supports status quo
Project
• New process or product
• One objective
• One shot – limited life
• More heterogeneous
• Systems must be created to
integrate efforts
• Performance, cost & time less
certain
• Outside of line organization
• Violates established practice
• Upsets status quo
 A.1|Project management Define
Project importance

Shortened product life cycles

Narrow product launch windows

Increasingly complex and

technical products

Emergence of global markets

Economic period marked by

low inflation
 A.1|Project management Define
Project characteristics

Ad-hoc endeavors with a clear life cycle

Building blocks in the design and execution of organizational

strategies

Responsible for the newest and most improved products, services,

and organizational processes

Provide a philosophy and strategy for the management of change

Entail crossing functional and organization boundaries

Traditional management functions of planning, organizing, motivating,

directing, and controlling apply

Principal outcomes are the satisfaction of customer requirements within

technical, cost, and schedule constraints

Terminated upon successful completion

 A.1|Project management Define
Project Lifecycle

Monitoring & Controlling

Level of Activity

Executing

Planning
Initiating/con
ceptualization Closing

Tim
 A.1|Project management Define
Project Lifecycle

Conceptualization - the development of the initial goal and

technical specifications.
Planning – all detailed specifications, schedules, schematics,
and plans are developed
Execution – the actual “work” of the project is performed
Termination – project is transferred to the customer,
resources reassigned, project is closed out.
 A.1|Project management Define
Project Lifecycle & level of resources
Man Hours

Conceptualization Planning Execution Termination

Time
 A.1|Project management Define
Project Lifecycle & stakes
Client Interest

Project Stake

Resources

Creativity

Uncertainty

Conceptualization Planning Execution Termination

Time
 A.1|Project management Define
Cost of change Vs project stages
 A.1|Project management Define
Project Success criteria
 A.1|Project management Define
Project management knowledge areas

Process Groups
Initiating Planning Executing Monitoring Closing
Process Process Process and Process
Knowledge areas

Group Group Group Controlling Group

Process
Group

See table3.1, Page 61, PMBOK 5th edition.

“Appendix A.1”
A.1|Project management Define

End of Section 1
 Part A
Project management: Explore

Content
A.1 Project management Define
A.2 Project Management and Organizational context
A.3 Project Selection & portfolio management
 A.2| Project Management and Organizational context
Strategy

Strategy: Strategic management

Strategic planning
The science of formulating, implementing and evaluating cross-functional
decisions that enable an organization to achieve its objectives.
 A.2| Project Management and Organizational context
Strategy
Strategy and planning cycle

Vision What
Objectives

Tactics
Goals

Mission Planning Cycle

Programs
How
Review

Actions

Project
s
 A.2| Project Management and Organizational context
Strategy, culture and structure
Strategy and projects
Projects are stepping stones of corporate strategy
The firm’s strategic development is a driving force behind project development

Examples
A firm wishing to… may have a project

redevelop products or processes, to reengineer products or processes.

change strategic direction or product to create new product lines.

portfolio configuration,

improve cross-organizational to install an enterprise IT system.

communication & efficiency
 A.2| Project Management and Organizational context
Stakeholder Management
Stakeholders are all individuals or groups who have an active stake in the
project and can potentially impact, either positively or negatively, its
development.

Internal Stakeholders External Stakeholders

• Top management • Clients
• Accountant • Competitors
• Other functional managers • Suppliers
• Project team members • Environmental, political,
consumer, and other interveners
groups
 A.2| Project Management and Organizational context
Stakeholder Management
Parent
Organization
Other External
Functional Environment
Managers

Project Top
Clients Management
Manager

Project
Accountant Team
 A.2| Project Management and Organizational context
Managing stakeholders
Identify
Stakeholders
1. Assess the environment Implement
Stakeholder Gather
Management Information on
2. Identify the goals of the
Strategy Stakeholders
principal actors
Project
Management
3. Assess your own capabilities Predict Team Identify
Stakeholder
4. Define the problem Stakeholders’
Behavior
Mission
5. Develop solutions Identify
Stakeholder Determine
6. Test and refine the solutions Strategy Stakeholder
Strengths &
Weaknesses

Stakeholder Management cycle

 A.2| Project Management and Organizational context
Organizational structure
Elements Organizational structure:

➢ Designates formal reporting relationships

• number of levels in the hierarchy
• span of control
➢ Groupings of:
• individuals into departments
• departments into the total organization
➢ Design of systems for
• effective communication
• coordination
• integration across departments
 A.2| Project Management and Organizational context
Forms of Organizational structure

Functional organizations – group people performing similar activities into

departments

Project organizations – group people into project teams on temporary

assignments

Matrix organizations – create a dual hierarchy in which functions and

projects have equal prominence

Composite/hybrid organization
 A.2| Project Management and Organizational context
Forms of Organizational structure

Who’s Who
Role play
 A.3 | Project Selection & portfolio management
Payback Period Example

A project requires an initial investment of $200,000 and will

generate cash savings of $75,000 each year for the next five
years. What is the payback period?
Year Cash Flow Cumulative Divide the cumulative
amount by the cash flow
0 ($200,000) ($200,000) amount in the third year
and subtract from 3 to
1 $75,000 ($125,000) find out the moment
2 $75,000 ($50,000) the project breaks even.

3 $75,000 $25,000
 A.2| Project Management and Organizational context
Forms of Organizational structure

Watch the play, identify advantage

and disadvantages of

Function Organization
Select them from the cards you have
and allocate them in either
advantages or disadvantages
 A.2| Project Management and Organizational context
Forms of Organizational structure

Watch the play, identify advantage

and disadvantages of

Project based organization

Select them from the cards you have
and allocate them in either
advantages or disadvantages
 A.2| Project Management and Organizational context
Forms of Organizational structure

Watch the play, identify advantage

and disadvantages of

Matrix Organization
Select them from the cards you have
and allocate them in either
advantages or disadvantages
 A.2| Project Management and Organizational context
Forms of Organizational structure

Review Appendix A.2 and A.2.1

 A.2| Project Management and Organizational context
Organizational Culture
The unwritten rules of behavior, or norms that are used to shape and guide
behavior, is shared by some subset of organization members and is taught to
all new members of the company.

Key factors that affect culture development

➢Technology
➢Environment
➢Geographical location
➢Reward systems
➢Rules and procedures
➢Key organizational members
➢Critical incidents
 A.2| Project Management and Organizational context
Organizational Culture
The unwritten rules of behavior, or norms that are used to shape and guide
behavior, is shared by some subset of organization members and is taught to
all new members of the company.

Culture affects project management in terms of:

➢Departmental interaction

➢Employee commitment to goals

➢Project planning

➢Performance evaluation
 A.2| Project Management and Organizational context
Project management Offices

Centralized units that oversee or improve the management of projects

Resource centers for:
➢Technical details offloaded from manager
➢Expertise in project management skills
➢Repository of lessons learned, documentation
➢Center for project management excellence

Forms of PMO’s
Weather station – monitoring and tracking

Control tower – project management is a skill to be protected

and supported

Resource pool – maintain and provide a cadre of skilled project

professionals
A.2| Project Management and Organizational context

End of Section 2
 Part A
Project management: Explore

Content
A.1 Project management Define
A.2 Project Management and Organizational context
A.3 Project Selection & portfolio management
 A.3 | Project Selection & portfolio management

Why Project selection is important?

Screening models help managers pick winners from

a pool of projects. Screening models are numeric or
nonnumeric and should have:

Project
Project Alfa For effective screening approach, it should have
Beta
Realism
Project Capability
Gama
Flexibility
Ease of use
Cost effectiveness
Comparability
Project Delta
 A.3 | Project Selection & portfolio management

Screening & Selection Issues

 A.3 | Project Selection & portfolio management

Screening & Selection Issues

• Risk – unpredictability to the firm

• Commercial – market potential
• Internal operating – changes in firm operations
• Additional – image, patent, fit, etc.

All models have both objective and subjective

factors imbedded
 A.3 | Project Selection & portfolio management
Approaches to Project Screening

➢Checklist model
➢Simplified scoring models
➢Analytic hierarchy process
➢Profile models
➢Financial models Project
Project
Alfa
Beta

Project
Gama

Project Delta
 A.3 | Project Selection & portfolio management
Checklist Model

A checklist is a list of criteria applied to suspect projects.

✓ Requires agreement on criteria

✓ Assumes all criteria are equally important

Checklists are valuable for recording opinions and encouraging discussion

 A.3 | Project Selection & portfolio management
Simplified Scoring Models

Each project receives a score that is the weighted sum of its grade on a list of
criteria. Scoring models require:
▪ agreement on criteria
▪ agreement on weights for criteria
▪ a score assigned for each criteria

Relative scores can be misleading!

 A.3 | Project Selection & portfolio management
Analytic Hierarchy Process

The AHP is a four step process:

1. Construct a hierarchy of criteria and subcriteria
2. Allocate weights to criteria
3. Assign numerical values to evaluation dimensions
4. Scores determined by summing the products of numeric evaluations and weights
Unlike the simple scoring model, these scores can be compared!
 Profile Models
A.3 | Project Selection & portfolio management
Shows risk/return options for projects.

X6
Maximum Criteria
Desired Risk X2
X4 X5 selection as
R axes
i X3
s X1
k Efficient Frontier
Rating each
Minimum project on
Return
Desired Return criteria
 Financial Models
A.3 | Project Selection & portfolio management
Based on the time value of money principal

➢ Payback period
➢ Net present value
➢ Internal rate of return
➢ Options models

All of these models use discounted cash flows

 A.3 | Project Selection & portfolio management

Payback Period

Determines how long it takes for a project to reach a

breakeven point

Cash flows should be discounted

Lower numbers are better (faster payback)
 A.3 | Project Selection & portfolio management

Net Present Value

Projects the change in the firm’s stock value if

a project is undertaken.

Higher NPV values

are better!
 A.3 | Project Selection & portfolio management
Net Present Value Example

Should you invest $60,000 in a project that will return $15,000 per year
for five years? You have a minimum return of 8% and expect inflation
to hold steady at 3% over the next five years.

Year Net flow Discount NPV

The NPV column
0 -$60,000 1.0000 -$60,000.00 total is negative,
1 $15,000 0.9009 $13,513.51 so don’t invest!
2 $15,000 0.8116 $12,174.34
3 $15,000 0.7312 $10,967.87
4 $15,000 0.6587 $9,880.96
5 $15,000 0.5935 $8,901.77
-$4,561.54
 A.3 | Project Selection & portfolio management

Project Portfolio Management

The systematic process of selecting,

supporting, and managing the firm’s
collection of projects.
Portfolio management requires:
decision making,
prioritization,
review,
realignment, and
reprioritization of a firm’s projects.
 A.3 | Project Selection & portfolio management

Keys to Successful
Project Portfolio Management

❖Flexible structure and freedom of

communication

❖Low-cost environmental scanning

❖Time-paced transition
 A.3 | Project Selection & portfolio management

Problems in Implementing
Portfolio Management

➢Conservative technical communities

➢Out of sync projects and portfolios

➢Unpromising projects

➢Scarce resources
End Of Section 3