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Project Management
Learning Objectives
• Defining project management

• The importance of project management
• The role of the project manager
• Keys to successful projects
• Managing the Contractor
• Managing the Project
Learning Objectives
 Defining project management

• The importance of project management
• Keys to a successful project
PROJECT
• A project is a sequence of Unique, Complex
and connected activities having one goal or
purpose must be completed by a specific
time, within budget, and according to
specification
What is a Project?
A temporary and one-time endeavor

undertaken to create a unique product or
service, which brings about beneficial
change or added value
Professional project management is
critical to a successful outcome!
Projects are temporary
Projects have both routine and unique characteristics
Operations consist of the ongoing work needed to ensure that an
organization continues to function effectively
Project Management 101
The very first thing you learn in project

management is..
that the focus of a Project Manager is

always…
PM Triple Constraints
• Time
• Cost
• Scope
Manage these or they will
manage you!
Defining Project
Management
• The application of knowledge, skills, tools
and techniques to project activities to
meet project requirements
• Organizing and managing resources so

the project is completed within defined
scope, quality, time and cost constraints
leadership
Learning Objectives
 Defining project management?

 The importance of project management
• Keys to a successful project
Why Aviation Projects Fail
• Weak business case
• Lack of senior management

commitment
• Inadequate project planning

(budget, schedule, scope, etc.)
(cont’d)
• Absence of user involvement
• New or unfamiliar technology
• Lack of defined, clear,

or concise requirements
Why Aviation Projects Succeed
Why Aviation Projects
Succeed
1. Sound project management

processes
2. Project tied to the organization’s

business goals
3. Senior management commitment

Succeed
4. Good change management
5. Detailed requirements
6. Realistic schedule
7. Good stakeholder relationships

Succeed
8. Empowered project manager

9. Skilled and appropriate team
members with defined roles and
responsibilities
10. Availability of funding
What makes this all work?
A good, solid professional project

manager
Learning Objectives

 The role of the project manager
• Keys to successful projects
lead
EMPOWERMENT
Project Management Skills
• Program area knowledge, standards,

and regulations
• Understand the project environment

Project Management Skills
• General management skills

(budgeting, scheduling)
• Communication skills
• Interpersonal skills
The project manager makes
things happen!
Learning Objectives
 Defining project management?

 Keys to successful projects
Keys to Successful
Projects
or
…Duh?!?
Things you already

know but let’s review
anyway
PLAN
PLAN
• Identify all stakeholders up front!
• Develop the project plan before
starting the project
• Establish communications protocols

PLAN
• Define your requirements in detail
• Establish a speedy conflict resolution

process
• Make contingency plans
• Plan a reasonable roll-out schedule

LEAD
LEAD
• Ensure strong, committed management

support
• Connect the business goals to the
project
LEAD
• Establish clearly defined directions
• Be proactive
• Give team a seat at the table

LEAD
• Set clear performance expectations
• Ask for technical assistance
• Do not start roll-out until pilot is

complete!
COMMUNICATE
Communicate
• Communicate objectives frequently
• Recognize different perspectives
• Check assumptions frequently

Communicate
• Manage expectations
• Share success and broadcast

achievements
• Invite feedback
MANAGE
Manage
• Ensure the system design reflects
sound planning
• Hold the reins on irrational

exuberance!
(Ensure the system design reflects the
system you need and can afford at this point
in time)
Manage
• Train all staff in a timely fashion
• Make extensive testing a priority!
• Make the most of pilot testing!

Challenges
together
A good project team can
be the key to a successful
project!
Think Big, Think Fast, Think Ahead
Learning Objectives

 Defining the role of the project manager
 Keys to a successful project
 Managing the Contractor
Manage the Contractor
Enforce the terms of the contract and meet the

requirements
Manage the Contractor
• Don’t “marry” the contractor

• Trust but question
• Their bottom line is the bottom line
• Your bottom line is a working system
• Nothing is ever free
• The end product is only as good as
your requirements
Provide Performance
Feedback
• Build performance reviews into the
contract
• Be clear and specific
• Be timely
• The State is ultimately accountable for the
project
Learning Objectives
 What is project management?

 Why is it important?
 Keys to success projects
 Keys to a successful projects
 Managing the Project
Manage the Project
Successful project
management is delivering a
quality product that meets the
customer’s requirements within
time, scope, and budget.
PM Triple Constraints
• Time
• Cost
• Scope
Manage these or they will
manage you!
Project Management Potholes
Project Management
Potholes
Giving away the farm
Giving the contractor or developer too

much control, responsibility, or
authority
Project Management
Potholes
Being a Sugar Daddy
Not managing scope creep

Beware of scope creep
But what is it?
• Gradual, progressive increase in the
project’s scope that is not noticed
immediately
• Occurs when additional requirements result

in scope change and can cause cost and
schedule overruns
Ask these questions!
• Is it a must?
• Can the customer/user do the job without it?
• Does it contribute to the viability of the
system?
• Does it add value as a feature/function to the
system?
• Is it worth the additional cost?
Keeping Control of the Budget
Budget/Cost Management
• Monitor project spending

• When a variance occurs,
determine the cause
• Change the execution of the
project, reduce scope, or
submit an APDU
• Prevent unapproved
changes to the project
Project Management
Potholes
Buying a car without

checking under the hood
Focusing on the system front-end

processes
Focus on the entire project
Report?
What report?
What is a report?
Documentation….duh…
Project Management
Reporting
• Establish reporting requirements upfront
• Include the good, the bad, and the ugly
• Be brief but accurate
• Management really does want to know!

Project Management
Potholes
You snooze, you lose
Not obtaining prior approval

Not Obtaining Federal Prior Approval
May cost the State funding that

may have been approved if
submitted in advance!
Retroactive
Approvals
Summary
 Defined project management

 Importance of project management
 Role of the project manager
 Keys to successful projects
 Managing the Project
Project Management Resources
• Project Management Institute – home of the Project

Management Body of Knowledge (PMBOK)
http://www.pmi.org/Pages/default.aspx
• NYS Project Management Guidebook Release 2

http://www.oft.state.ny.us/pmmp/guidebook2/index.htm
• FNS Handbook 901, Chapter 5

http://www.fns.usda.gov/apd/Handbook_901/V_1-
2/Chapter_5.pdf
Session-2
PLANNING
THE
PROJECT
After attending this chapter you will be able to understand
• Why project plan and how to plan.

• Establish Project Priorities.
• What is OBS and how to design OBS.
• What is WBS and how to design WBS.
• Difference between OBS & WBS.
• How to define Activities, their dependencies,
Relationship, Resources and Time.
Project Planning
is the 2nd Stage
of
Project Life Cycle
Why Plan
That said, there are a number of good reasons to plan:
■ to understand your project better

■ to work out the best way to approach things
■ to communicate to both your team and the client or
customer exactly how the project is going to be approached
■ to help you get work done and keep track of progress
■ to provide direction
What to plan?
• Traditional project planning is focused around

o Tasks
o Jobs that you need to do or
o actions you need to take.
• At first glance, this might seem sensible. A task-based plan will
literally give you a list of items that you need to do, like a to-do list
for the entire project.
The problem with tasks, however, is that they’re hard to measure,

and are rarely a good indication of progress. If you’ve completed
80% of your tasks, does that mean that 80% of the project is
complete? How can you measure whether a task is 10% complete
or 90% complete?
So, if we’re not planning tasks, what
should we plan instead?
Deliverables
Task Deliverables
Task is the job you’re busy while the deliverable is the

doing (building, designing, product you end up with (a
creating), wall, a design, a document).
1-Establish Project
Priorities
cost (budget), time (schedule), and
performance (scope) of the project
SCOPE
QUALITY
COST TIME
The interrelationship among these
criteria varies.
• sometimes it is necessary to compromise the

performance and scope of the project to get
the project done quickly or less expensively.
Often the longer a project takes, the more
expensive it becomes.
• Other times project costs can be reduced by

using cheaper, less efficient labor or
equipment that extends the duration of the
project.
2-
Creating the Work
Abram’s Advice
When eating an elephant, and Organization
take one bite at a time breakdown
structure.
(OBS) & (WBS)
Organization Breakdown Structure.(OBS)
Organization Breakdown Structure or OBS is

a hierarchical model describing the
established organizational framework for
project planning, resource management,
time and expense tracking,
cost allocation, revenue/profit reporting,
and work management.
Developing OBS
To develop an Organization Breakdown Structure:
1. Draw of the entire organization as a hierarchy

2. Define all departments and project teams.
3. Specify functional (where cost for the work the
user does is allocated to) and approval (who
approves the work the user performs and any
leave time approvals) groups for every user.
SAMPLE OBS
Work Breakdown Structure
WBS
WBS is a hierarchical Breakdown of the

scope of work into deliverable, Activities
and tasks.
Purpose of WBS
• First is that is helps more accurately and specifically
define and organize the scope of the total project.
• The second reason for using a WBS in your project is

to help with assigning responsibilities, resource
allocation, monitoring the project and controlling the
project.
• Finally, it allows you double check all the deliverables,

specifics with the stakeholders and make sure there is
nothing missing or overlapping.
Approaches to Developing WBS
The analogy approach:

– Review WBSs of similar projects and tailor to your project
The top-down approach:

– Start with the largest items of the project and break them down
The bottom-up approach:

– Start with the detailed tasks and roll them up
Mind-mapping approach:
– Write down tasks in a non-linear format and then create the
WBS structure
Mind-Mapping Approach
WBS Chart EXAMPLE
WBS Outline EXAMPLE
0.0 Retail Web Site
1.0 Project Management
2.0 Requirements Gathering
3.0 Analysis & Design
4.0 Site Software Development
4.1 HTML Design and Creation
4.2 Backend Software
4.2.1 Database Implementation
4.2.2 Middleware Development
4.2.3 Security Subsystems
4.2.4 Catalog Engine
4.2.5 Transaction Processing
4.3 Graphics and Interface
4.4 Content Creation
5.0 Testing and Production
WBS –Basis of Many Things
•Network scheduling
•Costing
•Risk analysis
•Organizational structure
•Control
•Measurement
Difference between
OBS & WBS
As the Work Breakdown Structure (WBS)

identifies the work to be done, the
Organization Breakdown Structure (OBS)
identifies the people that will do the work.
Build A WBS
SITUATION:
You are driving a car and have just had
a “blow-out”. Your problem/objective is to
FIX THE FLAT (change the tire) and
continue on your journey safely. Given
the individual tasks/steps listed below,
develop a work breakdown structure to
accomplish your objective.
Assume unlimited
resources.
• stop car • remove tire
• get spare tire • put on spare
• replace lugs • lower car
• open trunk • drive off safely
• get jack • tighten lugs
• loosen lugs • replace screwdriver
• get screwdriver • replace hub cap
• position jack • get lug wrench
• put flat in trunk • remove jack
• remove hub cap • close trunk
• jack up car • remove lugs
Solution
1.0 Stop Car 2.0 Change Tire 3.0 Drive Off
1.1Stop Car 2.1 Get Tools and Spare 3.1 Drive off Safely
2.1.1 Open Trunk
2.1.2 Get Jack
2.1.3 Get Screwdriver
2.1.4 Get Lug wrench
2.1.5 Get Spare
2.2 Jack up Car
2.2.1 Position Jack
2.2.2 Remove Hubcap
2.2.3 Loosen Lugs
2.2.4 Jack up Car
2.3 Remove Flat
2.3.1 Remove Lugs
2.3.2 Remove Tire
2.4 Replace with Spare
2.4.1 Put on Spare
2.4.2 Replace Lugs
2.4.3 Tighten Lugs
2.5 Lower Car
2.5.1 Lower Car
2.5.2 Replace Hubcap
2.6 Replace Tools/Spare
2.6.1 Put Flat Tire Away
2.6.2 Replace Screwdriver
2.6.3 Replace Wrench
2.6.4 Replace Jack
2.6.5 Close Trunk
3-
Define Activities, their
dependencies, Relationship,
Resources and Time
Sequence & Estimated
Identify Identify Activities
Coding the Relationship Time For each
Activities Activities Activity
CPM Estimated Allocate

Draw Network
GANTT/PERT Resource For People For
Diagram
Chart each Activity each Activity
Create Project
Chart
a. Identify Activities
Activity definition involves developing a more

detailed WBS and supporting explanations to
understand all the work to be done so you can
develop realistic duration estimates
b. Sequence and coding the
Activities
• The purpose of sequencing project activities is to arrange them
in a logical order for completion. Since activity sequencing
enables you to determine the order of activity completion that
best manages the time and resources available for completing
the project, it is an important part of scheduling.
Types Of Activities
Activity Type Detail

Predecessor and Predecessor activities must be finished before other activities can begin.
successor The activities that follow predecessor activities are known as successor,
or dependent, activities
Concurrent Concurrent, or parallel, activities are another type of activity that may be
activities part of your project.
Dummy activities Another type of activity you may include in your project schedule is a
dummy activity. Dummy activities are used to demonstrate how concurrent
activities relate to one another, and they can be used to improve the
layout of your project schedule.
Lag activities . Lag activities do not require the use of any resources since they occur
when there is a waiting period, or ''lag'' time, between the time that one
activity is completed and the next one begins
Milestones Milestones do not require work, use time, or expend resources. They are
used in project scheduling to indicate that a series of activities is
complete, to represent progress points, or to denote when a meeting
should be held.
c. Identify Activity Relationship
• A finish-to-start relationship exists if one

activity must finish before another activity starts.
• A start-to-start relationship exists if one activity
cannot start until another activity starts.
• A finish-to-finish relationship exists if the one
activity cannot finish until another activity
finishes.
• Finally, a start-to-finish relationship exists if
one activity must start before another can finish.
114
Earliest start duration earliest finish
Latest start critical path and slack latest finish
FINISH TO START - MOST COMMON
EARLIEST DURATION EARLIEST EARLIEST DURATION EARLIEST

START FINISH START FINISH
ACTIVITY DESCRIPTION ACTIVITY DESCRIPTION
LATEST CRITICAL PATH LATEST LATEST CRITICAL PATH LATEST

START SLACK TIME FINISH START SLACK TIME FINISH
START TO START


START TO FINISH


EARLIEST DURATION EARLIEST EARLIEST EARLIEST
DURATION
LATEST
START
CRITICAL PATH
SLACK TIME
LATEST
FINISH
FINISH TO LATEST
START
CRITICAL PATH
SLACK TIME
LATEST
FINISH
FINISH
Alternate Methods to
define Relationships.
• Define Predecessor
• Define Successor.
d. Estimated Time For each Activity
After defining activities and determining their

sequence, the next step in time management is
duration estimating.
• Duration includes the actual amount of time

worked on an activity plus elapsed time
• Effort is the number of workdays or work hours
required to complete a task. Effort does not
equal duration
• People doing the work should help create
estimates, and an expert should review them
e. Draw Network Diagram
A wire diagram, Also known as a PERT

network diagram. A diagram that shows tasks
and their relationships. Limited because it
shows only task relationships. Strength: easy
to read task relationships.
Class Activity
Example
Code of the
activity Task/Activity Predecessors
A Start-up planning and design

B Equipment determination and planning A
C Specific software determination A
Draw a Network D Production line planning and determination B

E Equipment planning B
Diagram Of F Software planning C
Given Situation G Equipment documentation E
H Documentation of operational system F
I Detailed hardware blueprints E
J Hardware component orders I
K Hardware component delivery J
L Integration of phase 1 D,G,H,K
M Prototype development L
N Prototype introduction M
O System evaluation and improvement N
P Hardware assembly N
Q Computer system installation P
R Project documentation O,P
S Integration of phase 2 Q,R
CPM
Critical
Path
Method
g. Critical Path Method (CPM)
A small set of activities, which make up the

longest path through the activity network
control the entire project.
GANTT / PERT
CHART
What are they?
Gantt and PERT charts are both “CPM”

(Critical Path Method) tools to:
Gantt Charts
Henry Laurence Gantt (1861-1919)
Gantt Chart
• It is a project planning technique tool that can be
used to represent the timing of tasks required to
complete a project
• It helps the manger to
• List down the key activities related to project
• The minimum time each activity will take to
finish
• Which task need to be completed before other
can start
• keep the team and sponsors informed of the
project progress
Steps in creating a Gantt chart
– List down the key activities related to

project
– Determine the duration of each task
– Identify the type of relationship between
activity
• Sequential
• Parallel
– Make a visual diagram on the basis of
identified activities and time calculation .
For example
you have to plan a party for your friends and family

Step 1: list down key activities related to project
Sr. No. Activity
1 Decide on the date of party
2 Book bouncy castle
3 Send invitations
4 Receive replies
Step2: Determine the duration of each
task
Sr.
Activity Time (hrs)
No.
A Decide on the date of party 5
B Book bouncy castle 3
C Send invitations 08
D Receive replies 12
– Remember you can take the time in days, hours etc..

Step 3: Identify the type of relationship (often called predecessors)
between activity
– Sequential: such activities which are dependent on the
previous activities
– Parallel: such activities which can be done at the same
time.
Sr. No. Pred Activity Time (hrs)

A None Decide on the date of party 5
B A Book bouncy castle 3
C A Send invitations 08
D C Receive replies 12
Step 4: Present in a visual diagram
– List each task down the vertical axis of chart

» In general, list tasks to be performed first at the top
and then move downward as the tasks will happen
– Use horizontal axis for the dates
– Determine start and finish dates for activities
» Consider which tasks must be completed or
partially completed before the next task
Cont…
Decide party date
Book bouncy castle
Send invitations
Receive replies
0
5 10 15 20 25
Gantt Basics
Basically, a timeline with tasks that can be

connected to each other
 Can be created with simple tools like Excel, but

specialised tools like Microsoft Project make life
easier
137
A FAMILY Routine:
Task Name Duration Predecessor
1 Alarm Goes Off 5 Min
2 Wake family 5 Min 1
3 Mom shower 40 Min 2
4 Son shower 30 Min 2
5 Walk dog 10Min 2
6 Father shower 15 Min 5
7 Prepare breakfast 15 Min 3
8 Eat breakfast 15 Min 7,4,6
9 Load car 5 Min 8
10 Drive to game 25 Min 9
11 Arrive at Game 0 Min 10
Questions
1. Draw a network diagram.
2. What tasks are on the critical path?
3. What is the minimum time it would take for
the family to reach the footy game after
getting the alarm goes off?
4. How much more time could dad walk the dog
before eating breakfast got delayed? (Note:
Mum insists the entire family eats together)
5. What is this amount of time called?
6. If mum skipped her 40 minutes shower, how
much earlier would they get to the game?
CAR PURCHASE
DECISION
ACTIVITY DESCRIPTION OF ACTIVITY IMMEDIATE PREDECESSOR DURATION IN DAYS
A Conduct feasibility study No 3
B Find potential customer for existing car A 14
C List possible models A 1
D Research all possible models C 3
E Conduct interviews with mechanics C 1
F Collect dealer propaganda C 2
G Compile and organise all pertinent information D, E, F 1
H Choose top three models G 1
I Test drive all three choices H 3
J Gather warranty and financing information H 2
K Choose one car I, J 2
L Compare dealers and choose dealer K 2
M Select colour and goodies options L 4
N Test drive first choice again-CHECK IMPRESSIONS L 1
O Purchase new car B, M, N 3

Car Purchase CPA
3 14 17
6 3 20
0 0 0 0 3 3
4 3 7
Start A
D
0 0 0 0 0 3 9 3 12
4 0 7 16 4 20
I
M
9 0 12
16 0 20 20 3 23 23 0 23
3 1 4 4 1 5 7 1 8 8 1 9 12 2 14 14 2 16
C E
E G H K L 0 Finish
3 0 4 6 2 7 7 0 8 8 0 9 12 0 14 14 0 16 20 0 23 23 0 23
16 1 17
9 2 11
N
J
4 2 6 19 3 20
10 1 12
F
5 1 7
CRITICAL PATH = C – D – G – H – I – K – L – M -O
critical path
• The critical path is the sequence of activities
with the longest duration. A delay in any of
these activities will result in a delay for the
whole project.
Float Determination
• Once you've identified the critical path for the
project, you can determine the float for each activity.
Float is the amount of time an activity can slip before
it causes your project to be delayed. Float is
sometimes referred to as slack.
• Figuring out the float using the Critical Path Method

is fairly easy. You will start with the activities on the
critical path. Each of those activities has a float of
zero. If any of those activities slips, the project will
be delayed.
QUIZ
ASSIGNMEMT
Plan Your Project as Following Steps.

• Build WBS.
• Identify Activities.
• Build Relationship.
• Draw Network Diagram.
Project Management
Fundamentals
PM Fundamentals
What is a Project?
A temporary endeavor with an

established beginning and end time,
that has a set of defined tasks and
assigned resources, undertaken to
deliver a unique product, service or
result.
PM Fundamentals
What is Project Management?
o The application of knowledge, skills, tools,

techniques, people, and systems focused on
meeting or exceeding stakeholder needs.
o A discipline that will support the planning,
implementation, tracking, and control of
projects.
PM Cycle
What are Project Phases?
1. Initiation
• Define project’s objective
2. Planning
• Detail who does what when
3. Execution and Control
• Actual work occurs
• Compare performance to plan, make
corrections
4. Closeout
• Project’s deliverables are accepted
PM Fundamentals
Initiation Phase
1. Describe the characteristics of the product or
service expected from the project.
2. Analyze the project’s requirements, identify
potential solutions, determine the technical and
economic feasibility of each, compare and
select the best solution.
3. Develop the project proposal
– What is to be done
– Why is it to be done
– How is it to be done
– How much risk is involved
PM Fundamentals
4. Approve the project
 Based on the ROI (Return On Investment) of
cost, resources, time
5. Select a Project Manager
 Responsible for managing all aspects of the
project
Output of Initiation Phase – Project Charter

PM Fundamentals
Planning Phase
1. Define an orderly arrangement of activities
and resources to deliver the product or
service.
2. Begin by outlining all tasks (the work)
3. Identify the resources (people, hardware,
software, services, etc.) required for all tasks
4. Organize the tasks into sequences of
chronological events (schedule)
5. Develop a spending plan within the budget
PM Fundamentals
5. Arrange to procure external resources
6. Identify all stakeholders and the method
(how), frequency (how often), and content
(what) of communications to them
7. Analyze risks and decide what can be done
about them
• Accept, Mitigate, or Transfer
8. Determine how to measure success
Output of Planning Phase – Project Plan

PM Fundamentals
• Depending on complexity, project plans
can contain:
1. Work Breakdown Structure
2. Resource Breakdown Structure
3. Schedule
4. Budget and Spending Plans
5. Performance Plan
6. Risk Management Plan
PM Fundamentals
7. Procurement Plan
8. Communications Plan
9. Change and Configuration Management
Plan
10. Quality Management Test Plan
The Project Plan is used to guide

project execution and project control.
PM Fundamentals
Execution and Control Phase
• Execution of the Project Plan is the act of
performing tasks and activities that result in
the production of project deliverables.
• Performance must be monitored against the
plan
• Schedule Deviation
• Cost Overruns
• Project Issues
• Change Requests
PM Fundamentals
• Project Managers produce regular Status
Reports for key stakeholders
• Not meeting scheduled dates, exceeding
spending plans, unresolved issues and
requests for changes should be reported to
stakeholders and addressed immediately
Outputs of Execution and Control Phase

are the Project Deliverables.
PM Fundamentals
Closeout Phase
• Closeout occurs when the sponsor accepts the
project deliverables and the project’s oversight
authority concludes the project has met all
goals
• New systems are turned over to operations,
project documentation is archived, lessons
learned are cataloged, any staff and resources
are returned
Output of Closeout Phase is User Acceptance

PM Fundamentals
The Trilogy of Project Management –
Scope, Budget, Schedule
1. Scope
– Defines what the project will do and what it
won’t
– Scope Creep occurs when additional
requirements are allowed to sneak in
– PM must know how to say NO!
PM Fundamentals
2. Budget
– Highly visible measure of Project Managers
– Requires constant monitoring, immediate
corrective action
– Vendor management is key
3. Schedule
– Most likely to change
– Unexpected events can and do occur
– This is where PMs earn their salary
Four phases summary
Project Organization
“Organize - to form into an

association for a common purpose
or arrange systematically”
Chapter 4 Project Organization 174

Project as Part of Functional
Organization
• E.g. new technology project – under vice
president of engineering
• Introduction of new product line – under vice
president of marketing
• Project assigned to the functional unit that
has most interest

President
VP Finance VP Marketing VP VP
Manufacturing Engineering
New Layout –
Robot Line
Project New
Model Proton
SURIE
Functional Organization
Major Advantages
• Maximum flexibility in the use of staff
• Individual experts can be utilized by many
different projects
• Specialist in the division can be grouped to
share knowledge and experience
• Functional division serves as a base of
technological continuity

Disadvantages
• The client is not the focus of activity and
concern
• Tend to be oriented towards functional
activities
• No individual is given full responsibility for
the project
• Slow response to client’s needs
• Motivation of project team is weak
• Does not facilitate a holistic approach to the
project
Pure Project Organization
• Project is separated from the rest of the
parent system
• Becomes self contained unit

Advantages
• PM has full line authority over the project
• All project workforce directly responsible to
the PM
• Lines of communication are shortened
• Maintain permanent group of experts
• High level of commitment
• Ability to make swift decisions
• Unity of command
• Simple and flexible structure
• Support holistic approach
Chapter 4 Project Organization to the 180
project
Project Organization
P r e s id e n t
V ic e P r e s id e n t P r o je c t A V ic e P r e s id e n t P r o je c t B V i c e P r e s id e n t P r o je c t C
F in a n c e M a n u f a c t u r in g F in a n c e M a n u f a c t u r in g F in a n c e M a n u f a c t u r in g

Disadvantages
• Duplication of effort
• Stockpile equipment and technical
assistance “just in case”
• Lack of expertise in high technology project
• Project takes on a life of its own
• Worry about “life after project ends”

Matrix Organization
• Combination of functional and pure project
organizations
• Matrix project is not separated from parent
organizations
• Individuals come from respective functions
divisions and are assigned to the project full
time or part time

Matrix Organization
President
Manufacturing Program Manager R&D Marketing
PM1
PM2
PM3

Matrix Organization
• Cross-functional team members
• Draw temporarily on technological expertise
of relevant functions
• Close coordination and communication
among all parties

Advantages of Matrix Approach
• The project is the point of emphasis
• Reasonable access to pools of technical
talents
• Less anxiety about what happens after
project completion
• Rapid response to client needs
• Access to administrative units of the parent
firms
• Better balance of company resources in
multiple projects
Disadvantages
• Delicate balance of power
• Movement of resources – conflict
• Projects resist death
• Complex division of authority and
responsibility
• Violates the principle of unity of command

Choosing an Organizational
•Form
Functional form – major focus on in-depth
technology, require large capital investment
• Pure project – large number of similar
projects
• Matrix organization – require integration of
inputs from several functional areas and
involves reasonably sophisticated
technology and several projects must share
technical expertise
• Matrix organizations are complex
WORK BREAKDOWN
STRUCTURE
• A Work Breakdown Structure (WBS) is a
decomposition of all the work necessary to
complete a project. A WBS is arranged in a
hierarchy and constructed to allow for clear
and logical groupings, either by activities or
deliverables. The WBS should represent the
work identified in the approved Project
Scope Statement and serves as an early
foundation for effective schedule
development and cost estimating.
Provide banquet plan and supervisor dinner room and equipment guests staff
speakers
WBS Example - Banquet
Provide
Level 1 1.0
Banquet
Level 2
1.1 1.2 1.3 1.4 1.5 1.6
Plan and Room and

Dinner Guests Staff Speakers
Supervise Equipment
1.3.1
1.1.1 Create 1.2.1 Make 1.4.1 Make 1.5.1 Hire
Identify Site/ 1.6.1 Invite
Plan Menu Guest List Shoppers
Room
1.2.2
1.4.2
1.1.2 Make Create 1.3.2 Set up 1.5.2 Hire 1.6.2
Receive
Budget Shopping Tables/Chairs Cooks Transport
RSVPs
List
1.1.3 Prepare 1.6.3
1.3.3 Lay out 1.4.3 Create 1.5.3 Hire
Disbursements/ 1.2.3 Shop Coordinate
Settings/Utensils Name Tags Servers
Reconciliation Topics
1.1.4
1.4.4 Review 1.5.4 Hire 1.6.4 Backup
Coordinate 1.2.4 Cook 1.3.4 Decorate
Special Needs Hosts for No-shows
Activities
Level 3 1.3.5 Prepare

1.2.5 Serve 1.5.5 Hire 1.6.5 Send
Equipment, Pots,
Dinner Cleanup Thank Yous
Etc.
The 9 Things in the
PMBOK
19-Nov-08
The 9 Things
• an area of project management defined by its knowledge
requirements and described in terms of its associated
process, practices, inputs, outputs, tools and techniques
• identified knowledge areas (the ‘things’)
1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
9 Things in the PMBOK 19-Nov-08 192
1. Project Integration
Management
• effective integration of the processes required to

accomplish project objectives
• processes include
1. project charter development
2. preliminary project scope statement
development
3. project management plan development
4. project execution
5. monitoring and control of project work

2.Project Scope
Management
• defines and controls what is and is not included in

the project
1. scope planning
2. scope definition
3. creation of a Work Breakdown Schedule
4. scope verification
5. scope control

3. Project Time
Management
• includes processes required for the timely

completion of a project
1. defining activities
2. sequencing activities
3. estimating resource activities
4. estimating duration of activities
5. developing the project schedule
6. controlling the project schedule

4. Project Cost Management
• planning, estimating, budgeting and controlling
costs to ensure the project can be completed
within the approved budget
1. cost estimating
2. cost budgeting
3. cost control

5. Project Quality
Management
• all activities that determine quality policies,

objectives and responsibilities for the project to
satisfy the needs for which it was undertaken
1. quality planning
2. performing quality assurance
3. performing quality control

6. Project Human Resource Management
• processes that organize and manage the project
team
• processes include:
1. human resource planning
2. acquiring the project team
3. developing the project team
4. managing the project team

7. Project Communications Management
• activities to ensure project information is timely
and appropriately generated, collected,
distributed, stored, retrieved and disposed of
1. communications planning
2. information distribution
3. performance reporting
4. managing stakeholders

8. Project Risk Management
• processes to increase the probability and impact of
positive events and decrease the probability and
impact of negative events
• updated throughout the project
1. risk management planning
2. risk identification
3. qualitative risk analysis
4. quantitative risk analysis
5. risk response planning
6. risk monitoring and control
9. Project Procurement
Management
• processes to purchase/acquire the products, services

or results needed to perform the project work
• includes contract management and change control
processes to administer contracts or purchase orders
• processes include:
1. planning purchases and acquisitions
2. contract planning
3. requesting seller responses
4. selecting sellers
5. contract administration
6. contract closure
PM Process Initiating Process Planning Process Group Executing Process Monitoring & Controlling Closing
Groups / Group Group Process Group Process
Knowledge Area Group
Processes
Project Develop Project Develop Project Management Direct and Manage Project Monitor and Control Project Work Close Project
Management Charter Plan Execution Integrated Change Control
Integration Develop Prelim Project
Scope Statement
Project Scope Scope Planning

PM Knowledge Areas Scope Verification
Management Scope Definition Scope Control
& Process GroupsCreate WBS
Project Time Activity Definition & Sequencing Schedule Control

Management Resource Estimating
Duration Estimating
Schedule Development
Project Cost Cost Estimating Cost Control

Management Cost Budgeting
Project Quality Quality Planning Perform Quality Assurance Perform Quality Control
Management
Project HR Human Resources Planning Acquire Project Team Manage Project Team
Management Develop Project Team
Project Communications Planning Information Distribution Performance Reporting

Communications Manage Stakeholders
Management
Project Risk Risk Management Planning Risk Monitoring and Control

Management Risk Identification
Qualitative / Quantitative Risk
Analysis
Risk Response Planning
Project Plan Purchases and Acquisitions Request Seller Responses Contract Administration Contract
Procurement Plan Contracting Select Sellers Closure
Management
In conclusion . . .
. . . follow process and progress will follow.

The end.

Project Management
7. Managing Teams
Our goal today is to develop and facilitate
leadership, team building, performance
management, and conflict management skills
Effective Team Characteristics
Why Join Teams?
Team Development
Keys to Managing People
Managing Project Teams
Project Team Conflict
Project Team Pitfalls
What is a Team?
A team
is a group of individuals who cooperate and work together to
achieve a given set of objectives or goals (Horodyski, 1995).
Team-building
is high interaction among group members to increase trust and openness
Teamwork
is close cooperation between cross-trained employees who
are familiar with a wide range of jobs in their organization
1
Project Team Size
2
Common Characteristics
Project Team Size
Performance is based on balance of members carrying out roles and meeting
social and emotional needs
Project teams of 5 to 12 members work best
There are
problems you
encounter as size
increases
1. It gets more difficult to
interact with and influence
the group
2. Individuals get less

satisfaction from their
involvement in the team
3. People end up with less

commitment to the team
goals
4. It requires more
centralized decision
making
5. There is lesser feeling as

being part of team
Project Team Size
The Mythical Man-Month

Assigning more programmers to a project running behind schedule will make it
even later, due to the time required for the new programmers to learn about
the project, as well as the increased communication overhead.
- Fred Brooks
Group Intercommunication Formula
n(n − 1) / 2
Fred Brooks
n(n − 1) / 2
Examples
Fred Brooks
n(n − 1) / 2
Examples
5 developers -> 5(5 − 1) / 2 = 10

channels of communication
Fred Brooks
n(n − 1) / 2
Examples
5 developers -> 5(5 − 1) / 2 = 10

10 developers -> 10(10 − 1) / 2 =

45 channels of communication
Fred Brooks
n(n − 1) / 2
Examples
5 developers -> 5(5 − 1) / 2 = 10

10 developers -> 10(10 − 1) / 2 =

45 channels of communication
50 developers -> 50(50 − 1) / 2 =

Fred Brooks
1225 channels of communication The Mythical Man-Month
Common Characteristics of High Performing Teams
Goals are clearly defined and matched with
measurable outcomes
Accurate effective 2-way communication
Leadership is shared and participation encouraged
Effective decision making and problem solving
Team identity and cohesiveness
Diverse backgrounds and experience
Cooperation and collaboration
They share a common identity
Why Join Teams?
Why do people want to join teams?
Individual reasons
Security
Status
Self-esteem
Affiliation
Power
Goal achievement
Why do teams work well for organizations?
Team Development
Project team
Project teams usually come together for a project

and then disband. What challenges does this
create?
Tuckman (1960s) published five stage model of team development
Prestage 1 stage forming 1 stage 2 storming stage 3
norming stage 4 performing stage 5 adjourning
Figure 9.1 Stages of Team Development

(Robbins et al, 1998, p309)
Recent studies suggest that there is no standardized
pattern of group development. What do you think about
Punctuated Equilibrium Model
(1988) Gersick found that there are natural transition points during the life of
teams in which the group is receptive to change and that such a moment
naturally occurs at the scheduled midpoint of a project
By imposing a series of deadlines, with milestones, it is possible to create
multiple transition points for natural group development
Mid point
Training
The main goal of team

development is to help
people work together more
effectively to improve project
performance.
Training can help

people understand
themselves and each
other, and understand
how to work better in
teams.
Team building activities include physical challenges
and psychological preference indicator tools
The Max Wideman MTBI article
“Do we have enough of the right kind of people?”
R. Max Wideman, (1998) Project Teamwork, Personality Profiles and the Population at Large:
Do we have enough of the right kind of people? FPMI, AEW Services, Vancouver, BC, Canada.
http://www.maxwideman.com/papers/profiles/profiles.pdf
Another model
Social Styles Profile

Assertiveness
People are perceived as

behaving primarily in one of four
zones, based on their
assertiveness and
responsiveness
Responsiveness
Another model
Task
Analytical Driver
Responsiveness
Amiable Expressive
People
Ask Assertiveness Tell

Reward and Recognition Systems
Team-based reward and recognition systems can

promote teamwork
Focus on rewarding teams for achieving specific

goals
Allow time for team members to mentor and help

each other to meet project goals and develop
http://www.flickr.com/photos/hi-phi/1100036300/
Keys to Managing People
Psychologists and management theorists have devoted
much research and thought to the field of managing
people at work. Important areas related to project
Motivation
Intrinsic motivation causes people to Extrinsic motivation causes people to

participate in an activity for their own do something for a reward or to avoid
enjoyment a penalty
eg. read, gardening… eg. homework
Motivation Theorists
– Maslow’s hierarch of
needs
– Herzberg’s motivation-
Maslow’s Hierarchy of Needs
(1960s) Abraham Maslow

developed a hierarchy of needs
to illustrate his theory that
people’s behaviors are guided
by a sequence of needs
Maslow argued that humans

possess unique qualities that
enable them to make
independent choices, thus giving
Self actualization
esteem
Love belonging
Safety physiology
Maslow’s Hierarchy of Needs

http://talkingtails.wordpress.com/2007/07/23/maslow-greek-philosophy-indian-mysticism/
Hertzberg’s Motivation-Hygiene
Theory
In the late 1960s Frederick
Herzberg wrote about worker
motivation.
He distinguished between
motivation factors and hygiene
factors.
motivation factors hygiene factors
Help motivate workers cause dissatisfaction if
directly absent but do not
eg. achievement, motivate,
recognition, work, eg. Money, working
responsibility conditions,
Motivation factor growth advancement responsibility the work it self
recognition achievement
Hygiene factors job security status interpersonal relations

salary working conditions supervision company’s policies
and administration
http://www.provenmodels.com/21/motivation-hygiene-theory/herzberg-mausner-snyderman
Thamhain and Wilemon’s
influence bases
(1970’s) HJ Thamhain and

DL Wilemon identified nine
influence bases available to
project managers
1. authority
2. assignment
3. budget
4. promotion
5. money
6. penalty
7. work challenge
8. expertise
Steven Covey’s 7 habits
Ca be applied to improve
effectiveness on projects
1. Be proactive
2. Begin with the end in mind
3. Put first things first
4. Think win/win
5. Seek first to understand,
then to be understood
6. Synergize
7. Sharpen the saw
Covey’s Habit 5: Seek first to understand, then to
be understood
END of the Course
Good Luck
Introduction 90 percent project managers spend their time
Communication management
Importance of Good
Communications
• The greatest threat to many projects
is a failure to communicate
• Our culture does not portray Project
professionals as being good
communicators
• Research shows that Project
management professionals must be
able to communicate effectively to
succeed in their positions
267
Communication model
Communication methods
Communication management communication blocker
Noise distance improper encoding of message language culture saying that is a bad idea
Project Communications
Management Processes
• Communications planning: determining the

information and communications needs of
the stakeholders
• Information distribution: making needed
information available in a timely manner
• Performance reporting: collecting and
disseminating performance information
• Administrative closure: generating,
gathering, and disseminating information to
formalize phase or project completion
271
Communications Planning
• Every project should include some type of
communications management plan, a
document that guides project
communications
272
Communications Management
Plan Contents
• A description of a collection and filing structure for
gathering and storing various types of information
• A distribution structure describing what information
goes to whom, when, and how
• A format for communicating key project information
• A project schedule for producing the information
• Access methods for obtaining the information
• A method for updating the communications
management plans as the project progresses and
develops
273
• A stakeholder communications analysis
Stake holders communication analysis customer management customer business staff
Customer technical staff internal management training subcontractor software
subcontractor internal business and technical staff
Sample Stakeholder Analysis

for Project Communications
274
Information Distribution
• Getting the right information to the
right people at the right time and in
a useful format is just as important
as developing the information in
the first place
• Important considerations include
– using technology to enhance
information distribution
– formal and informal methods for
distributing information
275
What Went Wrong?
A well publicized example of misuse
of e-mail comes from the 1998
Justice Department's high profile,
antitrust suit against Microsoft. E-
mail emerged as a star witness in
the case. Many executives sent
messages that should never have
been put in writing. The court used
e-mail as evidence, even though the
senders of the notes said the
information was being interpreted
out of context.
276
Table 10-2. Media Choice Table
Excellent
Adequate
inappropriate
277
Figure 10-1. The Impact of the
Number of People on
Communications Channels
278
Performance Reporting
• Performance reporting keeps
stakeholders informed about how
resources are being used to achieve
project objectives
– Status reports describe where the
project stands at a specific point in
time
– Progress reports describe what the
project team has accomplished during
a certain period of time
– Project forecasting predicts future
project status and progress based on
past information and trends
– Status review meetings often include
279 performance reporting
Administrative Closure
• A project or phase of a project requires
closure
• Administrative closure produces
– project archives
– formal acceptance
– lessons learned
280
Suggestions for Improving
Project Communications
1. Manage conflicts effectively
2. Develop better communication skills
3. Run effective meetings
4. Use e-mail effectively
5. Use templates for project communications
281
Conflict Handling Modes in
Preference Order
• Confrontation or problem-solving: directly
face a conflict
• Compromise: use a give-and-take approach
• Smoothing: de-emphasize areas of
differences and emphasize areas of
agreement
• Forcing: the win-lose approach
• Withdrawal: retreat or withdraw from an
actual or potential disagreement
282
Conflict Can Be Good
• Conflict often produces important results,
such as new ideas, better alternatives, and
motivation to work harder and more
collaboratively
• Groupthink can develop if there are no
conflicting viewpoints
• Research by Karen Jehn suggests that task-
related conflict often improves team
performance, but emotional conflict often
depresses team performance
283
Developing Better
Communication Skills
• Companies and formal degree programs for

project management professionals often
neglect the importance of developing
speaking, writing, and listening skills
• As organizations become more global, they
realize they must invest in ways to improve
communication with people from different
countries and cultures
• It takes leadership to improve
communication
284
Running Effective Meetings
• Determine if a meeting can be avoided
• Define the purpose and intended outcome of
the meeting
• Determine who should attend the meeting
• Provide an agenda to participants before the
meeting
• Prepare handouts, visual aids, and make
logistical arrangements ahead of time
• Run the meeting professionally
285
• Build relationships
Using E-Mail Effectively
• Make sure that e-mail is an appropriate
medium for what you want to communicate
• Be sure to send the e-mail to the right people
• Use meaningful subjects
• Limit the content to one main subject, and be
as clear and concise as possible
• Limit the number and size of attachments
• Delete e-mail you don’t need, and don’t open
it if you question the source
• Make sure your virus software is up to date
• Respond to and file e-mails quickly
• Learn how to use important features
286
Using Templates for Project
Communications
• Many technical people are afraid to ask for

help
• Providing examples and templates for
project communications saves time and
money
• Organizations can develop their own
templates, use some provided by outside
organizations, or use samples from
textbooks
• Recall that research shows that companies
287 that excel in project management make
Plan communication tools and technology lines of communication n(n-1)2
Number of stakeholders
Communication methods
3 fastest means of communication
Chapter 7:
Project Cost Management
Learning Objectives
• Understand the importance of project cost

management
• Explain basic project cost management
principles, concepts, and terms
• Discuss different types of cost estimates and
methods for preparing them
29
2 Information Technology Project Management, Fifth Edition, Copyright 2007
Learning Objectives (continued)
• Understand the processes involved in cost

budgeting and preparing a cost estimate,
and budget for an information technology
project
• Understand the benefits of earned value
management and project portfolio
management to assist in cost control
• Describe how project management software
can assist in project cost management
29
What is Cost and
Project Cost Management?
• Cost is a resource sacrificed or foregone to achieve
a specific objective or something given up in
exchange
– Costs are usually measured in monetary units like
dollars
• Project cost management includes the processes
required to ensure that the project is completed
within an approved budget
– Project managers must make sure their projects are
well defined, have accurate time and cost sestimates
and have a realistic budget that they were involved in
approving
29
The Importance of Project Cost
Management
• Generally projects have a poor track record for
meeting budget goals
• The CHAOS studies found the average cost
overrun (the additional percentage or dollar
amount by which actual costs exceed estimates)
ranged from 180 percent in 1994 to 43 percent in
2002; other studies found overruns to be 33-34
percent
29
What Went Wrong?
• The U.S. Internal Revenue Service (IRS) continues to
provide examples of how not to manage costs
– A series of project failures in the 1990s cost taxpayers more
than $50 billion a year
– In 2004, CIO Magazine reported problems with the IRS’s $8
billion modernization project
– In 2006, the IRS was in the news for a botched upgrade to its
fraud-detection software, costing $318 million in fraudulent
refunds that didn’t get caught
• The United Kingdom’s National Health Service IT
modernization program was called the greatest IT disaster
in history by a London columnist, with an estimated $26
billion overrun
– Incompatible systems; resistance from physicians who felt
they were not consulted enough about system features;
arguments amoung contractors regarding responsibility
29
Reasons for Cost Overruns
• Not emphasizing the importance of realistic project
cost estimates from the outset
– Many of the original cost estimates for projects are
low to begin with and based on very unclear project
requirements
• Many professionals think preparing cost estimates
is a job for accountants when in fact it is a very
demanding and important skill that project
managers need to acquire
• Many projects involve new technology or business
processes which involve untested products and
inherent risks
29
Project Cost Management Processes
• There are three project cost management
processes:
– Cost estimating: developing an approximation or
estimate of the costs of the resources needed to
complete a project
– Cost budgeting: allocating the overall cost
estimate to individual work items to establish a
baseline for measuring performance
– Cost control: controlling changes to the project
budget
29
Basic Principles of Cost Management
• Most members of an executive board better
understand and are more interested in financial
terms than IT terms, so IT project managers must
speak their language
– Profits are revenues minus expenditures
– Profit margin is the ratio of profit to revenues
• $2 profit per $100 revenue  2% profit margin
– Life cycle costing considers the total cost of
ownership, or development plus support costs, for a
project
• A project could take 2 years to build and be in place
for 10 years; costs and benefits must be estimated for
the entire lifetime of the project
29
Direct cost and indirect cost
30 Project Cost Management

0
Variable cost

1
Fixed cost

2
Sunk cost

3
Opportunity cost

4
Cash flow
Expenses money spent

5
– Cash flow analysis determines the estimated annual
costs and benefits for a project and the resulting annual
cash flow
• Too many projects with high cash flow needs in the same
year may not be able to be supported which will impact
profitability
• Tangible costs or benefits are those costs or benefits
that an organization can easily measure in dollars
– A task that was allocated $150,000 but actually costs
$100,000 would have a tangible benefit of $50,000 if
the assets allocated are used for other projects
• Intangible costs or benefits are costs or benefits that
are difficult to measure in monetary terms
– Costs – resources used to research related areas of a
project but not billed to the project
– Benefits – goodwill, prestige, general statements of
30 improved productivity not easily translated in dollars
• Learning curve theory states that when many items
are produced (or tasks are performed) repetitively, the
unit cost of those items decreases in a regular pattern
as more units are produced (or more tasks
performed)
• Reserves are dollars included in a cost estimate to
mitigate cost risk by allowing for future situations that
are difficult to predict
– Contingency reserves allow for future situations
that may be partially planned for (sometimes called
known unknowns) and are included in the project
cost baseline
• Recruiting and training costs for expected personnel
turnover during a project
– Management reserves allow for future situations
that are unpredictable (sometimes called unknown
unknowns)
30 • Extended absence of a manager; supplier goes out of
7
business
Information Technology Project Management, Fifth Edition, Copyright 2007
Cost Estimating
• A rough order of magnitude (ROM) estimate provides an
estimate of what a project will cost.
– Also referred to as a ballpark estimate, a guesstimate,
a swag, or a broad gauge.
– Done very early in a project, often three or more years
prior to project completion, or even before a project is
officially started to help PMs make project selection
decisions.
– Accuracy is typically -50 percent to +100 percent,
meaning the project’s actual costs could be 50 percent
below the ROM estimate or 100 percent above.
• A ROM estimate that actually cost $100,000 would range between
$50,000 to $200,000. The accuracy range is often much wider for
IT projects.
– Often IT project estimates for software development are doubled
30
8 because of the history of cost overruns
Cost Estimating
• A budgetary estimate is used to allocate money
into an organization’s budget.
– Many organizations develop budgets at least two
years into the future.
• Budgetary estimates are made one to two years
prior to project completion.
– The accuracy of budgetary estimates is typically
-10% to +25%
• A budgetary estimate that actually costs $100,000
would range between $90,000 to $125,000.
30
Cost Estimating
• A definitive estimate provides an accurate
estimate of project costs (most accurate of the three
types).
– Definitive estimates are used for making many
purchasing decisions for which accurate estimates
are required and for estimating final project costs.
– For example, if a project involves purchasing 1000
personal computers from an outside supplier in the
next three months, a definitive estimate would be
required to aid in evaluating supplier proposals and
allocating the funds to pay the chosen supplier.
– Definitive estimates are made one year or less prior
to project completion
– Accuracy range is normally -5% to +10%
31
Types of Cost Estimates
Definitive
Budgetary
Rough order
of magnitude
rom
It is important to provide supporting details

(assumptions, project scope, WBS, etc) used in
computing estimates so that it will be easier to prepare
updates as needed or similar estimates on other
projects.
31
Cost Management Plan
• A cost management plan is a document that
describes how the organization will manage cost
variance on the project
– For example, how to respond to proposals from
suppliers that are higher or lower than estimates
– A large percentage of total project costs are often
labor costs, so project managers must develop and
track estimates for labor
• Many organizations estimate the number of people
or hours they need by department or skill over the
life cycle of a project
31
Cost Estimation Tools and Techniques
• Analogous or top-down estimates: use the actual cost of a
previous, similar project as the basis for estimating the cost
of the current project
– How similar the current and previous project are determines the
accuracy of the estimate. Using a different language or hardware
can skew the estimate
• Bottom-up estimates or Activity Based Costing : involve
estimating individual work items or activities and summing
them to get a project total
– The smaller the work items, the better the estimate but these
estimates are usually time intensive and expensive to develop
31
Cost Estimation Tools and Techniques
• Parametric modeling: uses project characteristics
(parameters) in a mathematical model to estimate project
costs
31
Typical Problems with Cost Estimates1
• Estimates are done too quickly
– Many estimates must be done quickly, before clear system
requirements have been produced
• Lack of estimating experience
– The people developing the costs estimates often don’t have
much experience, especially on large projects
– There is not enough accurate, reliable project data available on
which to base estimates
• Human beings are biased toward underestimation
– Senior team members make estimates based on their skill level
but should take into account the junior people on the project
• Management desires accuracy but wants to spend less in order to win a
bid or internal funding
– Top management never forgets the first estimate and rarely, if
ever, remembers how approved changes affect the estimate.
• The PM must keep the communication lines open at all times
_______________________________________________________________
1. DeMarco, Tom, Controlling Software Projects, New York:Yourdon Press, 1982.
31
Media Snapshot
• Australia: problems with the installation of an ERP system at
Crane Group Ltd. led to an estimated cost overrun of $11.5 million
• India: as many as 274 projects currently under implementation in
the Central sector are suffering serious cost and time overruns.
Only 65 are being monitored on a regular basis
• Pakistan: Pakistan has sustained a cost overrun of Rs 1.798
billion (over $30 million U.S. dollars) in the execution of the 66.5
megawatt Jagran Hydropower Project in the Neelum Valley.
Caused by massive mismanagement, embezzelment of funds
and unapproved changes in the project
• United States: Northern California lawmakers were outraged
over Governor Arnold Schwarzenegger's announcement that
commuters should have to pay construction costs on Bay Area
bridges. Cost of one of the bridges has grown from $1.1 billion to
$5.1 billion Maybe it takes the Terminator to help control costs!
31
Project Portfolio Management
• Many organizations collect and control an entire
suite of projects or investments as one set of
interrelated activities in a portfolio
• Five levels for project portfolio management
1. Put all your projects in one database
2. Prioritize the projects in your database
3. Divide your projects into two or three budgets
based on type of investment
4. Apply modern portfolio theory, including risk-
return tools that map project risk on a curve
317
Benefits of Portfolio Management
• Schlumberger saved $3 million in one year by
organizing 120 information technology projects
into a portfolio
– 80% of the projects overlapped
– 14 separate projects were trying to accomplish the
same thing
• META Group research shows that:
– Organizations that evaluate information technology
projects by what their business impacts are and
what their potential business values will be
implement projects that result in 25 percent more
improvement to the bottom line
– Business executives state that using project
portfolio management allows managers to make
decisions faster and with more confidence
31

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• ALL OF YOU HAVE

• Defining project management

 Defining project management

A temporary and one-time endeavor

The very first thing you learn in project

that the focus of a Project Manager is

• Organizing and managing resources so

 Defining project management?

• Weak business case

• Lack of senior management

• Inadequate project planning

• New or unfamiliar technology

• Lack of defined, clear,

1. Sound project management

2. Project tied to the organization’s

3. Senior management commitment

4. Good change management

7. Good stakeholder relationships

8. Empowered project manager

A good, solid professional project

 Defining project management

• Program area knowledge, standards,

• Understand the project environment

• General management skills

 Defining project management?

Things you already

• Establish communications protocols

• Establish a speedy conflict resolution

• Make contingency plans

• Plan a reasonable roll-out schedule

• Ensure strong, committed management

• Establish clearly defined directions

• Give team a seat at the table

• Ask for technical assistance

• Do not start roll-out until pilot is

• Recognize different perspectives

• Check assumptions frequently

• Share success and broadcast

• Hold the reins on irrational

• Make extensive testing a priority!

• Make the most of pilot testing!

 Defining project management

Enforce the terms of the contract and meet the

• Don’t “marry” the contractor

 What is project management?

Giving away the farm

Giving the contractor or developer too

Being a Sugar Daddy

Not managing scope creep

• Occurs when additional requirements result

• Monitor project spending

Buying a car without

Focusing on the system front-end

• Establish reporting requirements upfront

• Include the good, the bad, and the ugly

• Be brief but accurate

• Management really does want to know!

You snooze, you lose

Not obtaining prior approval

May cost the State funding that

 Defined project management

• Project Management Institute – home of the Project

• NYS Project Management Guidebook Release 2