Systematic Project Management

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1 Systematic Project Management Karlos A. Artto at HUT S Product Development of Telecommunication Systems Lecture on March 16, 2001

2 Systematic Project Management CONTENTS 1 What are the capabilities in project managers? 2 Managing projects in different environments 3 Standards, Bodies of Knowledge (BoKs) 4 Projects in their contexts: individuals vs. processes 5 Evolution of PM knowledge areas 6 The future: individuals, risk management, trust 7 Methodologies

3 The Australian PM Competence Research: Characteristics in a Project Manager Standards Characteristics Competence Effectiveness PMP Exam Knowledge Attribute Based Curriculum Vitae Qualifications & Experience Input Competencies Caliper Profile Core Personality Process Competencies Project Management Competence Project Management Effectiveness Performance Based AIPM National Competence Std Demonstrable Performance Output Competencies Source: Crawford

4 Managing Projects in Different Environments Methods well defined No Yes Type 2: Product Development Type 1: Engineering Type 4: Research & Organizational Change Type 3: Systems Development Yes No Goals well defined

5 What is a Body of Knowledge (BoK)? The topics and their definitions that the professional project management societies use : to define the areas that project management practitioners ought to be knowledgeable in; as the basis of their examination and certification programs. There are two basic models: the simpler on time, in budget, to scope PMI kind the broader management of projects APM, IPMA kind.

6 A BoK Definition on Project Management (Areas) The project management processes/knowledge areas are (ISO 10006, PMI PMBOK) : Project Integration Management Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Human Resource Management Project Communications Management Project Risk Management Project Procurement Management

7 APM update Association for Project Management APM, UK To be on a systematic, properly researched basis. Structure seen initially as not so important Focus on the Topics that PM practitioners should be knowledgeable in - topics and their descriptions, e.g. Value Management? Configuration Management? Etc. Source: Morris & Dixon, 2000

8 The research Used a strawman list based initially on extended APM list Approximately 120 companies input into research High degree on agreement on breadth of topics to be included Source: Morris & Dixon, 2000

9 100% agreed on the need for Leadership, Legal Awareness, Procurement to be included, 99% on Safety Health and Environment, 98% on Life Cycles, 96% on Purchasing, 95% on Risk Management, 94% on Financial Management, 93% on Industrial Relations and on Scheduling, 89% on the Business Case, Project Organisation, and on Testing, Commissioning & Hand-over, 87% on the Project Context, 86% on Close-out, 85% on Programme Management, 84% on Quality Management and on Teamwork, 81% on Project Management Plan, 80% on (Post-) Project Evaluation Review, 79% on Contract Planning and Administration and on Project Management as a general topic, 78% on Monitoring & Control, 77% on Resources Management and on Project Launch, 75% on Configuration Management and Change Control. Source: Morris & Dixon, 2000

10 Some uncertainties... 28% only agreed on Goals, Objectives and Strategies (surprising considering how important these are), 32% on Requirements Management (ditto), 33% on Integrative Management (not surprising: it is covered by Project Management), 36% on Systems Management (not surprising: this has long caused difficulty), 42% on Success Criteria (relatively surprising), 44% on Performance Measurement i.e. Earned Value (this is very interesting considering how central to project management theory and Best Practice it is considered by writers and experts), 46% on Information Management. Source: Morris & Dixon, 2000

11 Also.. Construction and IS rated Marketing & Sales 40% Goals, Objectives & Strategies 20% IS rated Requirements only 22%! Performance Measurement (EVA) only 29% in IS (and 21% in Facilities Management). Source: Morris & Dixon, 2000

12 APM PROJECT MANAGEMENT BODY OF KNOWLEDGE General 10 Project Management 12 Project Context 11 Programme Management Strategic 20 Project Success Criteria 23 Risk Management 21 Strategy/ Project Management Plan 24 Quality Management 22 Value Management 25 Health, Safety & Environment Control 30 Work Content & Scope Management 31 Time Scheduling/ Phasing 32 Resource Management 33 Budgeting & Cost Management 34 Change Control 35 Earned Value Management 36 Information Management Technical 40 Design,Implementation & Hand - Over Management 41 Requirements Management 42 Estimating 43 Technology Management 44 Value Engineering 45 Modelling & Testing 46 Configuration Management Commercial 50 Business Case 51 Marketing & Sales 52 Financial Management 53 Procurement 54 Legal Awareness Organisational 60 Life Cycle Design & Management 61 Opportunity 62 Design & Development 63 Implementation 64 Hand-over 65 (Post) Project Evaluation Review [O&M/ILS] 66 Organisation Structure 67 Organisation Roles People 70 Communication 71 Teamwork 72 Leadership 73 Conflict Management 74 Negotiation 75 Personnel Management Opportunity Identification Design & Development Implementation Hand-over Post-Project Evaluation Concept/ Marketing Feasibility/ Bid Design, Modelling & Procurement Make, Build & Test Test, Commission, Start-up Operation & Maintenance / Integrated Logistics 1 Source: Morris & Dixon, 2000

13 Processes or People -An Integrated Model Organizational Performance Strategic issues Company s project culture Company management processes Project management processes Tools Suppliers prosesses Customer s prosesses A B SUCCESS IN BUSINESS C Environment, Topology D Project type or application area Applied technology base Line of business Organizational context Geographical area, local conditions, culture Individual Performance CEO Company managers Project managers Project team members Employees Supplier s personnel Customer s personnel - Source: Artto & Arenius

14 Decade Focus in PM Applications Focus in Project Risk Management 1950 Administration, Procurement, Planning Schedule Network Models 1960 Scheduling, Project Management Systems Scheduling (e.g. PERT), Probalilistic Network Models 1970 Organization, Leadership, Teams Probabilistic Models, Decision Trees, Subjective Probabilities Models and Computerized Applications, Quality Processes, Information and Communication Technology, Networking Cooperation Models, Virtual Organizations, Creativity, Learning, Project Companies and Project Business Probabilistic Software, Check Lists, Response Lists, Influence Diagramming, Team Work Applications, Contract Management Team Work, Communication, Organizational Learning, Learning from Failures, Risk Management Processes and Organizing for Risk Management Risk Management Knowledge Bases as Organizational Memories, Learning, Creativity, Cooperation, Response Planning, Project Company Perspective Source: Artto, Kähkönen, Pitkänen 2000

15 Future Trends Boundaries between industries are falling. It is easier for companies to make crossovers. Companies using a new logic enter new industrial branches. This occurs as to them as traditional industrial boundaries make no sense. The underlying idea is that their knowledge and capabilities, not their physical resources, can be used to compete successfully in several industries. Individuals play an important role. Tacit knowledge is important.

16 Future Implications: High Tolerance for Mistakes - Risks and Opportunities An innovative environment must have an exceptionally high tolerance for mistakes. No failures; no development. Companies must become breeding grounds of risk takers. New leaders must produce uncertainty. Real leaders challenge people. They do not control people. True leaders set people free. Source: Ridderstråle, Nordstöm 2000

17 The University of Calgary PM Maturity Model 5 COLLABORATION - individual characteristics, cooperative spirit, multicultural aspects, - networking, partnering - trust 3 CONNECTIONS & FUTURE - e.g. critical success factors - e.g. strategic planning - e.g. business view - e.g. soft issues COMPETENCIES - in a wide range - with application of processes & tools - e.g. dynamic orgs - e.g. learning 2 TOOLS - for improvements & replacements - e.g. PMBOK /I SO & procedures 1 OPERATIONS

18 Which Resources Do You Manage? Communication? Trust? Commitment? Motivation?

19 Risk Identification Methodologies in Industry Group work PM does Checklists Brainstorming Surveys A x x x B x x C x x D x E x F x x G x x H x Source: Pitkänen 1999

20 Risk Quantification Methodologies in Industry Probability min Most probable max Cost

21 Risk Analysis Case RISK ITEMS (1-6) OF THE PLANT DELIVERY Risk impacts on the basic estimate: The following risk items are identified as items that Minimum Most Maximum affect the overall baseline concept of the turnkey Probable delivery. ($ million) ($ million) ($ million) Risk impacts are estimated in monetary values as independent impacts on the $200 million basic estimate that corresponds to the original risk-free baseline. 1 TECHNICAL RISKS 1.1 Reduced output 0,0 0,0 0,0 1.2 Reduced efficiency 0,0 0,0 0,0 1.3 Scope of supply risks, main contractor -0,1 1,0 2,0 1.4 Scope of supply risks, others -0,1 0,5 1,0 Considerations at a detailed level of dependent delay items SCHEDULE RISKS Minimum Most prob. Maximum 2.1 Delays due to offshore works 0,0 1,0 15,0 2.2 Delays due to process or commissioning problems 0,0 1,0 5,0 2.3 Delays due to problems in building construction 0,0 0,5 3,0 2.4 Problems originated by accidents 0,0 0,0 5,0 2.5 Strikes 0,0 0,0 2, Joint estimate of delay effects 0,0 2,5 25,0 3 CONTRACTUAL RISKS WITH MAIN CONTRACTOR 3.1 Claims by the contractor 0,5 1,0 3,0 3.2 Force Majeure 0,0 0,0 5,0 4 REGULATIONS RISKS 4.1 Delays due to authorities 0,0 0,5 2,0 4.2 Environmental problems 0,0 0,5 2,0 5 PRODUCTION START RELATED PROBLEMS 0,0 1,0 2,0 6 WARRANTY PERIOD 6.1 Spare parts 0,0 0,0 0,0 6.2 Maintenance 0,0 0,0 0,0 6.3 Availability 0,0 0,5 5,0 6.4 Additional decrease of efficiency 0,0 0,0 2,0 COMBINED RISK ESTIMATE (PERT) Total risk impact, mean value 13,2 Total risk impact, standard deviation 4,4

22 Risk Analysis Case cont d COMBINED RIS K IMPACT ES TIMATE (Ris k ite ms 1-6) Co s t ($ millio n)

23 Risk Analysis Case cont d MAGNITUDES OF RISKS (by standard deviation) 4,5 0,0 1.1 Reduced output 1.2 Reduced efficiency 1.3 Scope of supply risks, main contractor 1.4 Scope of supply risks, others Joint estimate of delay effects 3.1 Claims by the contractor 3.2 Force Majeure 4.1 Delays due to authorities 4.2 Environmental problems 5 PRODUCTION START RELATED PRO Spare parts 6.2 Maintenance 6.3 Availability 6.4 Additional decrease of efficiency Ris k Ite ms Magnitude of Risk (Standard deviation) $ million

24 The Importance of Team Work: The Risk Analysis Day Concept Results Open Communication Pre-assignment Individual opinions of important risks Risk Analysis Day Response Development and Responsibilities Increased Awareness Integration: 1) Within the team 2) Within the risk management process 3) Response integration to company s responsibility areas Documentation, reports

25 An Analogy in Critical Chain -method: Team Focus on Buffers

26 Conclusions (The Contents Was:) 1 What are the capabilities in project managers? 2 Managing projects in different environments 3 Standards, Bodies of Knowledge (BoKs) 4 Projects in their contexts: individuals vs. processes 5 Evolution of PM knowledge areas 6 The future: individuals, risk management, trust 7 Methodologies

Construction Project Management Training Curriculum Integration Map

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