Project Management: A Systems Approach to Planning, Scheduling, and Controlling

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1 Project Management: A Systems Approach to Planning, Scheduling, and Controlling Kerzner, H ISBN-13: Table of Contents Prefacex xi 1 OVERVIEW Introduction Understanding Project Management Defining Project Success The Project Manager Line Manager Interface Defining the Project Manager s Role Defining the Functional Manager s Role Defining the Functional Employee s Role Defining the Executive s Role Working with Executives The Project Manager as the Planning Agent Project Champions The Downside of Project Management Project-Driven versus Non Project-Driven Organizations Marketing in the Project-Driven Organization Classification of Projects Location of the Project Manager Differing Views of Project Management Concurrent Engineering: A Project Management Approach Studying Tips for the PMI Project Management Certification Exam 30 Problems 33 Case Study Williams Machine Tool Company 35 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS Introduction General Systems Management Project Management: Project Management: Project Management: Resistance to Change Systems, Programs, and Projects: A Definition 54

2 2.7 Product versus Project Management: A Definition Maturity and Excellence: A Definition Informal Project Management: A Definition The Many Faces of Success The Many Faces of Failure The Stage-Gate Process Project Life Cycles Gate Review Meetings (Project Closure) Project Management Methodologies: A Definition Organizational Change Management and Corporate Cultures Project Management Intellectual Property Systems Thinking Studying Tips for the PMI Project Management Certification Exam 85 Problems 88 3 ORGANIZATIONAL STRUCTURES Introduction Organizational Work Flow Traditional (Classical) Organization Developing Work Integration Positions Line Staff Organization (Project Coordinator) Pure Product (Projectized) Organization Matrix Organizational Form Modification of Matrix Structures The Strong, Weak, Balanced Matrix Center for Project Management Expertise Matrix Layering Selecting the Organizational Form Structuring the Small Company Strategic Business Unit (SBU) Project Management Transitional Management Studying Tips for the PMI Project Management Certification Exam 131 Problems 133 Case Study Jones and Shephard Accountants, Inc ORGANIZING AND STAFFING THE PROJECT OFFICE ANDTEAM Introduction The Staffing Environment Selecting the Project Manager: An Executive Decision Skill Requirements for Project and Program Managers 148

3 4.4 Special Cases in Project Manager Selection Selecting the Wrong Project Manager Next Generation Project Managers Duties and Job Descriptions The Organizational Staffing Process The Project Office The Functional Team The Project Organizational Chart Special Problems Selecting the Project Management Implementation Team Studying Tips for the PMI Project Management Certification Exam 183 Problems MANAGEMENT FUNCTIONS Introduction Controlling Directing Project Authority Interpersonal Influences Barriers to Project Team Development Suggestions for Handling the Newly Formed Team Team Building as an Ongoing Process Dysfunctions of a Team Leadership in a Project Environment Life-Cycle Leadership Organizational Impact Employee Manager Problems Management Pitfalls Communications Project Review Meetings Project Management Bottlenecks Communication Traps Proverbs and Laws Human Behavior Education Management Policies and Procedures Studying Tips for the PMI Project Management Certification Exam 249 Problems 254 Case Studies The Trophy Project 264 Leadership Effectiveness (A) 266

4 Leadership Effectiveness (B )271 Motivational Questionnaire MANAGEMENT OF?YOUR?TIME AND STRESS Introduction Understanding Time Management Time Robbers Time Management Forms Effective Time Management Stress and Burnout Studying Tips for the PMI Project Management Certification Exam 292 Problems 293 Case Study The Reluctant Workers CONFLICTS Introduction Objectives The Conflict Environment Conflict Resolution Understanding Superior, Subordinate, and Functional Conflicts The Management of Conflicts Conflict Resolution Modes Studying Tips for the PMI Project Management Certification Exam 306 Problems 308 Case Studies Facilities Scheduling at Mayer Manufacturing 311 Telestar International 312 Handling Conflict in Project Management SPECIAL TOPICS Introduction Performance Measurement Financial Compensation and Rewards Critical Issues with Rewarding Project Teams Effective Project Management in the Small Business Organization Mega Projects Morality, Ethics, and the Corporate Culture Professional Responsibilities Internal Partnerships External Partnerships 346

5 8.10 Training and Education Integrated Product/Project Teams Virtual Project Teams Breakthrough Projects Studying Tips for the PMI Project Management Certification Exam 355 Problems THE VARIABLES FOR SUCCESS Introduction Predicting Project Success Project Management Effectiveness Expectations Lessons Learned Understanding Best Practices Studying Tips for the PMI Project Management Certification Exam 380 Problems WORKING WITH EXECUTIVES Introduction The Project Sponsor Handling Disagreements with the Sponsor The Collective Belief The Exit Champion The In-House Representatives Studying Tips for the PMI Project Management Certification Exam 397 Problems 398 Case Study Corwin Corporation PLANNING Introduction Validating the Assumptions General Planning Life-Cycle Phases Proposal Preparation Kickoff Meetings Understanding Participants Roles Project Planning The Statement of Work Project Specifications Milestone Schedules Work Breakdown Structure 434

6 11.12 WBS Decomposition Problems Role of the Executive in Project Selection Role of the Executive in Planning The Planning Cycle Work Planning Authorization Why Do Plans Fail? Stopping Projects Handling Project Phaseouts and Transfers Detailed Schedules and Charts Master Production Scheduling Project Plan Total Project Planning The Project Charter Management Control The Project Manager Line Manager Interface Fast-Tracking Configuration Management Enterprise Project Management Methodologies Project Audits Studying Tips for the PMI Project Management Certification Exam 480 Problems NETWORK SCHEDULING TECHNIQUES Introduction Network Fundamentals Graphical Evaluation and Review Technique (GERT) Dependencies Slack Time Network Replanning Estimating Activity Time Estimating Total Project Time Total PERT/CPM Planning Crash Times PERT/CPM Problem Areas Alternative PERT/CPM Models Precedence Networks Lag Scheduling Problems The Myths of Schedule Compression Understanding Project Management Software 530

7 12.17 Software Features Offered Software Classification Implementation Problems Critical Chain Studying Tips for the PMI Project Management Certification Exam 536 Problems 539 Case Study Crosby Manufacturing Corporation PROJECT GRAPHICS Introduction Customer Reporting Bar (Gantt) Chart Other Conventional Presentation Techniques Logic Diagrams/Networks Studying Tips for the PMI Project Management Certification Exam 568 Problems PRICING AND ESTIMATING Introduction Global Pricing Strategies Types of Estimates Pricing Process Organizational Input Requirements Labor Distributions Overhead Rates Materials/Support Costs Pricing Out the Work Smoothing Out Department Man-Hours The Pricing Review Procedure Systems Pricing Developing the Supporting/Backup Costs The Low-Bidder Dilemma Special Problems Estimating Pitfalls Estimating High-Risk Projects Project Risks The Disaster of Applying the 10 Percent Solution to Project Estimates Life-Cycle Costing (LCC) Logistics Support Economic Project Selection Criteria: Capital Budgeting 614

8 14.22 Payback Period The Time Value of Money Net Present Value (NPV) Internal Rate of Return (IRR) Comparing IRR, NPV, and Payback Risk Analysis Capital Rationing Project Financing Studying Tips for the PMI Project Management Certification Exam 622 Problems COST CONTROL Introduction Understanding Control The Operating Cycle Cost Account Codes Budgets The Earned Value Measurement System (EVMS) Variance and Earned Value The Cost Baseline Justifying the Costs The Cost Overrun Dilemma Recording Material Costs Using Earned Value Measurement The Material Accounting Criterion Material Variances: Price and Usage Summary Variances Status Reporting Cost Control Problems Studying Tips for the PMI Project Management Certification Exam 686 Problems 689 Case Studies The Bathtub Period 708 Franklin Electronics 709 Trouble in Paradise TRADE-OFF ANALYSIS IN A PROJECT ENVIRONMENT Introduction Methodology for Trade-off Analysis Contracts: Their Influence on Projects Industry Trade-off Preferences Conclusion 739

9 16.5 Studying Tips for the PMI Project Management Certification Exam RISK MANAGEMENT Introduction Definition of Risk Tolerance for Risk Definition of Risk Management Certainty, Risk, and Uncertainty Risk Management Process Plan Risk Management Risk Identification Risk Analysis Qualitative Risk Analysis Quantitative Risk Analysis Probability Distributions and the Monte Carlo Process Plan Risk Response Monitoring and Control Risks Some Implementation Considerations The Use of Lessons Learned Dependencies between Risks The Impact of Risk Handling Measures Risk and Concurrent Engineering Studying Tips for the PMI Project Management Certification Exam 804 Problems 808 Case Studies Teloxy Engineering (A) 815 Teloxy Engineering (B) LEARNING CURVES Introduction General Theory The Learning Curve Concept Graphic Representation Key Words Associated with Learning Curves The Cumulative Average Curve Sources of Experience Developing Slope Measures Unit Costs and Use of Midpoint Selection of Learning Curves Follow-on Orders 830

10 18.11 Manufacturing Breaks Learning Curve Limitations Prices and Experience Competitive Weapon Studying Tips for the PMI Project Management Certification Exam 835 Problems CONTRACT MANAGEMENT Introduction Procurement Plan Procurement Conducting the Procurements Conduct Procurements: Request Seller Responses Conduct Procurements: Select Sellers Types of Contracts Incentive Contracts Contract Type versus Risk Contract Administration Cycle Contract Closure Using a Checklist Proposal-Contractual Interaction Summary Studying Tips for the PMI Project Management Certification Exam QUALITY MANAGEMENT Introduction Definition of Quality The Quality Movement Comparison of the Quality Pioneers The Taguchi Approach The Malcolm Baldrige National Quality Award ISO Quality Management Concepts The Cost of Quality The Seven Quality Control Tools Process Capability (CP) Acceptance Sampling Implementing Six Sigma Lean Six Sigma and DMAIC Quality Leadership Responsibility for Quality 916

11 20.16 Quality Circles Just-in-Time Manufacturing (JIT) Total Quality Management (TQM) Studying Tips for the PMI Project Management Certification Exam Modern developments project Management Introduction The Project Management Maturity Model (PMMM) Developing Effective Procedural Documentation Project Management Methodologies Continuous Improvement Capacity Planning Competency Models Managing Multiple Projects End-of-Phase Review Meetings THE BUSINESS OF SCOPE CHANGES Introduction Need for Business Knowledge Timing of Scope Changes Business Need for a Scope Change Rationale for Not Approving a Scope Change THE?PROJECT?OFFICE Introduction Present-Day Project Office Implementation Risks Types of Project Offices Networking Project Management Offices Project Management Information Systems Dissemination of Information Mentoring Development of Standards and Templates Project Management Benchmarking Business Case Development Customized Training (Related to Project Management) Managing Stakeholders Continuous Improvement Capacity Planning Risks of Using a Project Office Managing Crisis Projects Introduction 971

12 24.1 Understanding Crisis Management Ford versus Firetone The Air France Concorde Crash Intel and the Pentium Chip The Russian Submarine Kursk The Tylenol Poisonings Nestlé s Marketing of Infant Formula The Space Shuttle Challenger Disaster The Space Shuttle Columbia Disaster Victims versus Villains Life-Cycle Phases Project Management Implications The Rise, Fall, and Resurrection of Iridium: A Project Management Perspective Introduction Naming the Project Iridium Obtaining Executive Support Launching the Venture The Iridium System The Terrestial and Space-Based Network Project Initiation: Developing the Business Case The Hidden Business Case Risk Management The Collective Belief The Exit Champion Iridium s Infancy Years Debt Financing The M-Star Project A New CEO Satellite Launches An Initial Public Offering (IPO) Signing up Customers Iridium s Rapid Ascent Iridium s Rapid Descent The Iridium Flu Searching for a White Knight The Definition of Failure (October, 1999) The Satellite Deorbiting Plan Iridium Is Rescued for $25 Million Epilogue 1015

13 25.26 Shareholder Lawsuits The Bankruptcy Court Ruling Autopsy Financial Impact of the Bankruptcy What Really Went Wrong? Lessons Learned Conclusion 1023 Appendix A. Solutions to the Project Management Conflict Exercise 1025 Appendix B. Solution to Leadership Exercise 1031 Appendix C. Dorale Products Case Studies 1037 Appendix D. Solution to the Dorale Products Case Studies Answers 1049 Appendix E. Crosslisting of PMBOK to the Text 1055 Author Index 1061 Subject Index

COPYRIGHTED MATERIAL. Contents

COPYRIGHTED MATERIAL. Contents Contents Preface xxiii 1 OVERVIEW 1 1.0 Introduction 1 1.1 Understanding Project Management 2 1.2 Defining Project Success 7 1.3 Success, Trade-Offs, and Competing Constraints 8 1.4 The Project Manager