Chapter 1

Projects in Contemporary
Organizations

Copyright 2009 John Wiley & Sons, Inc.

Introduction

Much of project management developed by the

military

Navys Polaris program

NASAs space program
Strategic defense initiative

Project management has found wide acceptance in

industry
It has many applications outside of construction

Managing legal cases

Managing new product releases

Introduction

Main forces in driving the acceptance of

project and other forms of management:
1.
2.
3.

Continued

The exponential growth of human knowledge

The growing demand for a broad range of
complex goods and services
Increased worldwide competition

All of these contribute to the need for

organizations to do more and to do it faster
Project management is one way to do more
faster

Projects Tend to be Large

Projects

The Channel Tunnel, or Chunnel

Denver International Airport
Panama Canal expansion project
Three Gorges Dam, China

Projects

tend to be large

are getting larger over time

Flying: balloons planes jets rockets

reusable rockets

The

more we can do, the more we try to do

Project Management Also Getting

Smaller
1.

2.
3.

More people are seeing the

advantages of project management
techniques
The tools are become cheaper
The techniques are becoming more
widely taught and written about

Main Goals of Project Management

1.
2.
3.

Time
Cost
Performance

Time, cost, and performance are all related

on a project

Direct Project Goals: Performance,

Cost, Time

Figure 1-1

Project Management Institute (PMI)

The

Project Management Institute is the

major project management organization
Founded in 1969
Grew from 7,500 members in 1990 to over
260,000 in 2007
The Project Management Journal and PM
Network are the leading project management
journals

Project Manager
Project

manager is the key individual

on a project
Project manager is like a mini-CEO
While project manager always has
responsibility, may not have necessary
authority

Trends in Project Management

Achieving

strategic goals
Achieving routine goals
Improving project effectiveness
Virtual projects
Quasi-projects

Recent Changes in Managing

Organizations
1.
2.
3.

Consensual management
Systems approach
Projects as preferred way to
accomplish goals

The Definition of a Project

A project is an interrelated set of activities
that has a definite starting and ending point
and that results in a unique outcome for a
specific allocation of resources. Typical
competitive priorities for such processes
include on-time delivery and customization. A
project process is the mechanism for
completing a project.

Major activities associated with project

processes
Project process management involves some
definite activities for the successful
accomplishment of project objectives. These
activities are:
Defining and Organizing the Projects,
Planning Project,
Monitoring and Controlling Project.

I. DEFINING AND ORGANIZING

PROJECTS

Successful projects begin with a clear definition of

scope, objective and tasks. Three important activities
are involved in the initial phase of managing project:
Selecting the Project Manager and Team:
Managing project process begins with the selection of
a project manager who is responsible for the
successful accomplishment of the project. The project
manager establishes the project goals and
determines the means to achieve those project goals.
The project manager leads a project team consisting
of members from different functional areas and
expertise.

Defining the project scope and Objectives: Defining the

scope and objectives of the projects include preparing a
through statement of project scope, time frame, and allocated
resources needed to execute the project.
Planning the Project Format: Planning the project format is a
key activity for making process decisions. The managers of
successful project processes specify the format for how the
team will make decisions and who will make them. Such a
format sets down guidelines for meetings, for resolving issues
and for communication among team members.

II. PLANNING PROJECTS

Once the project has been defined and

the project process organized, the team
must formulate a plan that identifies the
specific tasks to be accomplished and
a schedule for their completion.
Planning projects involves five steps:

Defining the work breakdown structures:

The work breakdown structure (WBS) is a
statement of all work that has to be
completed. In the WBS step, major work
components are broken down to smaller
tasks by the teams. Care must be taken to
incorporate all-important tasks in the WBS,
otherwise project delays are possible.

Diagramming the Network: Network planning methods can

help managers monitor and control projects. These methods
treat a project as a set of interrelated activities that can be
visually displayed in a network diagram, which consists of
nodes and arcs that depict the relationships between activities.
Two network planning methods are used to planning,
scheduling and controlling projects. These techniques are
Program Evaluation and Review Technique (PERT) and Critical
Path Method (CPM). The drawing of PERT/CPM requires
establishing precedence relationships of each activity and
selecting a network diagram approach.

Developing the Schedule: Next, the project team

must make time estimates for activities. There are
several ways to get time estimates in situations
where uncertainty and risks are involved. Statistical
methods, learning curve theory and managers
opinion and judgment are used to estimate time
requirements for all activities. The time estimates
involve the determination of the earliest start and
earliest finish time and latest start and latest finish
time of each activity to find the slack time.

 Analyzing

Cost-time Trade-offs: The

project manager must try to keep the project
costs at acceptable levels vis--vis meeting
schedule dates. Such precondition calls for
estimating the normal costs and crash costs
at normal time and crash time respectively.
This analysis will help the project manager
minimize the total project costs.

Assessing the Risk: Risk is a measure of the

probability and consequence of not reaching a
defined project goal. Often, project teams must deal
with uncertainty caused by labor shortages, weather,
supply delays, or the outcomes of critical tests. A
major responsibility of the project manager at the
start of a project is to develop a risk-management
plan. Team members should have an opportunity to
describe the key risks to the projects success and
prescribe ways to circumvent them; either by
redefining key activities or by developing
contingency plans in the events problems occur.

III. MONITORING AND CONTROLLING

Once project planning is over, the

challenge becomes keeping the project
on schedule within the budget of
allocated resources. In this stage, the
following activities are carried out.

Monitoring Project Status: A good tracking

system will help the project team accomplish
its project goals. Often, the very task of
monitoring project progress motivates the
team as it sees the benefits of its planning
efforts come to fruition. It also focuses
attention on the decisions that must be made
as the process unfolds. Effective tracking
systems collect information on three topics:
open issues, risks, and schedule status.

Monitoring Project Resources: The resources

allocated to a project are consumed at an uneven
rate that is a function of the timing of the schedules
for the projects activities. Projects have a life cycle
that consists of four major phases: definition and
organization, planning, execution, and close out.
Project manager must monitor the resource
consumption at different phases of the project
accomplishment. Resource problems may arise in
different stages of the project implementation
process.

Project managers have several options to alleviate

resource problems, including:

Resource Leveling: Resource leveling is an attempt to

reduce the peaks and valleys in resource needs by shifting
the schedules of conflicting activities within their earliest
and latest start dates.
Resource Allocation: Resource allocation is an attempt to
shift resources from activities with slack to those on the
critical path where resources are overloaded.
Resource acquisition: It simply adds more of an
overloaded resource to maintain the schedule of an activity.

Major Characteristics of a Project

Importance
Performance
Life

cycle with a finite due date

Interdependencies
Uniqueness
Resources
Conflict

Why Project Management?

The

main purpose for initiating a project is to

accomplish some goal
Project management increases the likelihood
of accomplishing that goal
Project management gives us someone (the
project manager) to spearhead the project
and to hold accountable for its completion

 Long

term commitment of resources

Better control and better customer
relations
Increase in return on investment
Shorter development times,
Lower costs,
Better quality and reliability;

 Higher

profit margins
Sharper orientation toward results
Better interdepartmental coordination
Higher worker morale

Negative Side to Project Management

Greater

organizational complexity
Likely violation of organizational policy
Higher costs
More management difficulties
Low personnel utilization

The Project Life Cycle

Most

projects go through similar stages

on the path from origin to completion.
We define these stages as the project
life cycle. These stages are:

Slow start
Quick Momentum
Slow Finish

The Project Life Cycle

Figure 1-3

Time Distribution of Project Effort

Figure 1-4

Another Possible Project Life Cycle

Figure 1-5

Risk During at the Start of the Life

Cycle

Figure 1-6

Risk During the Life Cycle

Figure 1-7

The Structure of this Text

Follows

the project life cycle

Some topics stand-alone
Other topics incorporated throughout

Part I: Project Initiation

1.
2.
3.
4.
5.

Projects in Contemporary Organizations

Strategic Management and Project
Selection
The Project Manager
Negotiation and the Management of Conflict
The Project in the Organizational Structure

Part II: Project Planning

6.
7.
8.
9.

Project Activity Planning

Budgeting and Cost Estimation
Scheduling
Resource Allocation

Part III: Project Execution

10.
11.
12.
13.

Monitoring and Information Systems

Project Control
Project Auditing
Project Termination