PROJECT
MANAGEMENT
The Elements of Project Management
Management is generally perceived to be concerned with the planning, organization, and control of an ongoing
process or activity such as the production of a product or delivery of a service. Project management is different
in that it reflects a commitment of resources and people to a typically important activity for a relatively short
time frame, after which the management effort is dissolved. Projects do not have the continuity of supervision
that is typical in the management of a production process. As such, the features and characteristics of project
management tend to be somewhat unique.
1. PROJECT PLANNING
• Objectives—A detailed statement of what is to be accomplished by the project, how it will achieve the company’s goals and meet the strategic plan, and an
estimate of when it needs to be completed, the cost, and the return.
• Project scope—A discussion of how to approach the project, the technological and resource feasibility, the major tasks involved, and a preliminary schedule; it
includes a justification of the project and what constitutes project success.
• Contract requirements—A general structure of managerial, reporting, and performance responsibilities, including a detailed list of staff, suppliers, subcontractors,
managerial requirements and agreements, reporting requirements, and a projected organizational structure.
• Schedules—A list of all major events, tasks, and subschedules, from which a master schedule is developed.
• Resources—The overall project budget for all resource requirements and procedures for budgetary control.
• Personnel—Identification and recruitment of personnel required for the project team, including special skills and training.
• Control—Procedures for monitoring and evaluating progress and performance, including schedules and cost.
• Risk and problem analysis—Anticipation and assessment of uncertainties, problems, and potential difficulties that might increase the risk of project delays and/or
failure and threaten project success
PROJECT RETURN
ROI is a performance measure that is often used to evaluate the expected outcome of a project or to compare
a number of different projects. To calculate ROI, the benefit (return) of a project is divided by the cost of the
project; the result is expressed as a percentage or a ratio:
The Project Team
A project team typically consists of a group of individuals selected from other areas in the organization, or from
consultants outside the organization, because of their special skills, expertise, and experience related to the project
activities.
The most important member of a project team is the project manager. The job of managing a project is subject to a
great deal of uncertainty and the distinct possibility of failure.
The project team members are often from diverse areas of the organization and possess different skills, which must
be coordinated into a single, focused effort to successfully complete the project.
Scope Statement
A scope statement is a document that provides a common understanding of a project. It includes a justification
for the project that describes what factors have created a need within the company for the project. It also
includes an indication of what the expected results of the project will be and what will constitute project
success. Further, the scope statement might include a list of the types of planning reports and documents that
are part of the project management process.
A similar planning document is the statement of work (SOW).
Work Breakdown Structure
The work breakdown structure (WBS) is an organizational chart used for project planning. It organizes the work
to be done on a project by breaking down the project into its major components, referred to asmodules.
These components are then subdivided into more detailed subcomponents, which are further broken down
into activities, and, finally, into individual tasks. The end result is an organizational structure of the project
made up of different levels, with the overall project at the top level and the individual tasks at the bottom.
Responsibility Assignment Matrix
After the WBS is developed, to organize the project work into smaller, manageable elements, the project
manager assigns the work elements to organizational units—departments, groups, individuals, or
subcontractors—by using an organizational breakdown structure (OBS). An OBS is a table or chart that shows
which organizational units are responsible for work items. After the OBS is developed, the project manager can
then develop a responsibility assignment matrix (RAM). A RAM shows who in the organization is responsible
for doing the work in the project.
2. PROJECT SCHEDULING
A project schedule evolves from the planning documents discussed previously. It is typically the most critical
element in the project management process, especially during the implementation phase (i.e., the actual
project work), and it is the source of most conflict and problem.
Developing a schedule encompasses four basic steps. First, define the activities that must be performed to
complete the project; second, sequence the activities in the order in which they must be completed; third,
estimate the time required to complete each activity; and fourth, develop the schedule based on the
sequencing and time estimates of the activities.
Developing a schedule encompasses four basic steps. First, define the activities that must be performed to
complete the project; second, sequence the activities in the order in which they must be completed; third,
estimate the time required to complete each activity; and fourth, develop the schedule based on the
sequencing and time estimates of the activities.
The Gantt Chart
Using a Gantt chart is a traditional management technique for scheduling and planning small projects that have
relatively few activities and precedence relationships. This scheduling technique (also called a bar chart) was
developed by Henry Gantt, a pioneer in the field of industrial engineering at the artillery ammunition shops of
the Frankford Arsenal in 1914. The Gantt chart has been a popular project scheduling tool since its inception
and is still widely used today.
3. PROJECT CONTROL
Project control is the process of making sure a project progresses toward successful completion. It requires
that the project be monitored and progress measured so that any deviations from the project plan, and
particularly the project schedule, are minimized.
Several key elements of project control
Time management is the process of making sure a project schedule does not slip and that a project is on time.
This requires monitoring of individual activity schedules and frequent updates. If the schedule is being delayed
to an extent that jeopardizes the project success, it may be necessary for the project manager to shift
resources to accelerate critical activity.
Cost management is often closely tied to time management because of the time–cost tradeoff occurrences
mentioned previously. If the schedule is delayed, costs tend to go up in order to get the project back on
schedule.
Performance managementis the process of monitoring a project and developing timed (i.e., daily, weekly,
monthly) status reports to make sure that goals are being met and the plan is being followed.
Several key elements of project control
Earned value analysis (EVA)is a specific system for performance management. Activities “earn value” as they
are completed. EVA is a recognized standard procedure for numerically measuring a project’s progress,
forecasting its completion date and final cost, and providing measures of schedule and budget variation as
activities are completed. For example, an EVA metric such as schedule variance compares the work performed
during a time period with the work that was scheduled to be performed; anegative variance means the
project is behind schedule.Cost variance is the budgeted cost of work performed minus the actual cost of the
work; a negative variance means the project is over budget. EVA works best when it is used in conjunction with
a WBS that compartmentalizes project work into small packages that are easier to measure. The drawbacks of
EVA are that it is sometimes difficult to measure work progress, and the time required for data measurement
can be considerable.
Project Risk
Managing project risks is best addressed in the planning stage. A risk management plan documents how risks
will be managed throughout the project. In addition to identifying potential risks, it specifies which team
members are responsible for managing various areas of risk, how risks will be monitored throughout the
project life cycle, how contingency plans for risks that materialize will be developed and implemented, and
how project resources will be allocated to handle risk.
Managing project risk is proactive. The first step is to identify all of the possible risks that can be anticipated in
the project. This might include such things as resource changes, wrong assumptions, a change in company
objectives and needs, and technology changes. Risks that are identified should then be evaluated in terms of
their impact and possible eventuality (i.e., probability), and possibly quantified. Although any kind of risk
evaluation and measurement is obviously an estimate, the objective is to have a process to compare the risks
to one another in order to prioritize them in terms of which ones will most threaten project success. The most
important risks that are controllable can be mitigated, and strategies should be developed to mitigate those
that can’t be controlled.
Critical path method (CPM) and project evaluation and
review technique (PERT) were originally developed as
separate techniques.
There were originally two primary differences between CPM
and PERT. With CPM, a single estimate for activity time was
used that did not allow for variation; activity times were
treated as if they were known with certainty. With PERT,
multiple time estimates were used for each activity that
reflected variation; activity times.
AOA Networks
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When CPM and PERT were first developed, they employed different conventions for drawing a network.
With CPM, the nodes in Figure 8.5 represent the project activities. The branches with arrows in between the nodes indicate the
precedence relationships between activities. For example, in Figure 8.5, activity 1, represented by node 1, precedes activity 2, and 2
must be finished before 3 can start. This approach to constructing a network is called activity-on-node (AON).
With PERT, the branches in between the nodes represent activities, and the nodes reflect events or points in time such as the end of one
activity and the start of another. This approach is called activity-on-arrow (AOA), and the activities are identified by the node numbers at
the start and end of an activity (for example, activity 1 S 2, which precedes activity 2 S 3in Figure 8.5).