Table of Contents
Chapter 1. - The World of Project Management ....................................................................... 2
Chapter 2 - The Manager, the Organization, and the Team ................................................. 7
Chapter 3 – Project Activity and Risk Planning..................................................................... 13
Chapter 4 – Budgeting the Project ............................................................................................ 16
Chapter 5: Scheduling The Project ............................................................................................ 20
Chapter 6: Allocating Resources to the Project ..................................................................... 21
Chapter 7 – Monitoring and controlling the project............................................................ 23
Chapter 8 – Evaluating and Terminating the Project ......................................................... 29
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Chapter 1. - The World of Project Management
1) What is a project?
Each work activity that is unique with a specific deliverable aimed at meeting a specific
need or purpose.
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Project Management Institute (PMI): “A temporary endeavour undertaken to
create a unique product, service or result”
o Program  projects  tasks  subtasks
Multidisciplinary teams are complex and often result into conflict.
Why projects? We form projects in order to fix the responsibility and authority
for the achievement of an organizational goal on an individual or small group
when the job does not clearly fall within the definition of routine work.
Trends in Project Management:
o Achieving Strategic Goals
o Achieving Routine Goals  projectizing: artificial deadlines and budgets
are created to accomplish specific, though routine, departmental tasks.
o Improving Project Effectiveness  Project Management Office (PMO)
takes responsibility for many of the administrative and specialized tasks
of project management.
 Evaluate an organization’s project management ‘maturity’, or skill
and experience in managing projects.
 Educate project managers about the ancillary goals of the
organisation
 Achieving better control over each project through the use of phase
gates, earned value and critical ratios.
o Virtual Projects
o Quasi-Projects
2) Project Management vs. General Management
Project manager (PM) has special skills in conflict resolution. Projects are unique so PM
must be flexible, creative and have the ability to adjust rapidly to changes.

Major differences
o Scope
 Product scope = the performance requirements of a project
 Project scope = the work required to deliver the product scope
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3) What is managed? The three goals of a project
 Scope, meet the budget and the time (“schedule”)
o Manage trade-offs between these three elements to reduce unavoidable
uncertainty.
 Risk analysis: identify potential uncertain events and the likelihood that any or
all may occur  minimize (fourth goal)
o Risk profiles
o Projects must have some flexibility, otherwise it is overdetermined (every
resource fixed)
4) The life cycles of projects
Either time (schedule) or resources (budget)
 Early stage: project plan reflects the wishes of the client as well as the abilities of
project team and is consistent with the parent organization’s goals and
objectives.
 Implementation stage: keep the project on schedule and budget or (when shit
goes down) negotiate the appropriate trade-offs to correct or minimize damage.
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End of project: “fuss-budget” to assure that the specifications of the project are
truly met
5) Selecting Projects To Meet Organizational Objectives
“Enterprise project management/management by projects” = a new kind of organization
that deals with the accelerating growth in the number of multiple simultaneously
ongoing, and often interrelated projects in organizations.
o Was created to tie projects more closely to the organization’s goals and
strategy and to integrate and centralize management methods for the
growing number of ongoing projects.
 Project Portfolio Process: the process of strategically selecting the best set of
projects for implementation.
o Profitable?
o Mandate?
o Does the firm have the required knowledge to successfully carry out
project?
o Project builds competencies consistent with firm’s strategic plans?
o Does the organization have the capacity for proposed schedule?
o In case of R&D projects, does it meet all requirements to make
economically successful?
 Nonnumeric Selection Methods
o The Sacred Cow  senior executive gives blessing to a project
o The Operating/Competitive Necessity  this method selects any project
that is necessary for continued operation of a group, facility or the firm
itself.
o Comparative Benefits  selection committee ranks the potential projects.
 Q-sort  separate projects into three subsets “good”, “fair” and
“poor”. If there are more than 7 or 8 member in the subsets,
subdivide the groups even more e.g. good-plus, good-minus.
4
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Numeric Selection Methods
o Financial Assessment Methods
 Payback period = the initial fixed investment in the project divided
by the estimated annual net cash inflows from the project (which
include the cash inflows from depreciation of the investment).
Defect: Does not include time value of money.
 Discounted cash flow
𝑛
NPV (project) = 𝐼0 + ∑ 𝐹𝑡 /(1 + k)𝑡
𝑡=1
o
o
k = the required rate of return or hurdle rate
 If a project is competing for funds with alternative investments,
the hurdle rate may be the opportunity cost of capital, the rate of
return the firm must forego if it invests in the project instead of
making an alternative investment. Defects:
(1) it ignores all nonmonetary factors except risk
(2) bias the selection system by favoriting short-run projects
Financial Options and Opportunity Costs
Scoring Methods
 Unweighted 0-1 factor method
 Weighted factor scoring method
(1) the categories for each scale need not be in equal intervals
(2) the five-point scales can be based on either quantitative or
qualitative data, thus allowing inclusion of financial and other
“hard” data (cash flows, NPV…) as well as “soft” subjective data (fit
with the organization’s goals, personal preferences…)
6) The Project Portfolio Process (PPP)
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Step 1: Establish a Project Council
o Responsible for establishing and articulating a strategic direction for
projects. Also for allocating funds to projects and controlling the
allocation of resources and skills to those projects.
o Exists out of senior management, PM major projects, head of PMO and
relevant GM (those who identify key opportunities etc.) and finally those
who can derail the progress of the PPP later in the process.
Step 2: Identify Project Categories and Criteria
o Wheelwright and Clark (1992) developed a matrix “aggregate project
plan” to position many of the product and process changes:
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1. Derivative projects: These are projects with objectives or deliverables
that are only incrementally different in both product and process from
existing offerings. They are often meant to replace current offerings or
add an extension to current offerings.
2. Platform projects: The planned outputs of these projects represent
major departures from existing offerings in terms of either the
product/service itself or the process used to make and deliver it, or
both.
3. Breakthrough projects: (newer than platform) maybe disruptive in the
industry or something proprietary that the organization has been
developing over time.
4. R&D projects: “blue sky” projects oriented towards using newly
developed technologies, or existing technologies in a new manner.
Step 3: Collect Project Data
Step 4: Assess Resource Availability
Step 5: Reduce the Project and Criteria Set
Step 6: Prioritize the Projects within Categories
Step 7: Select the Projects to Be Funded and Held in Reserve
Step 8: Implement the Process
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Chapter 2 - The Manager, the Organization, and the Team
1) The PM’s Roles
Facilitator
 Facilitator vs Supervisor
The PM must ensure that those who work on the project have the appropriate
knowledge and resources, including that most precious resource, time, to
accomplish their assigned responsibilities.
o Manager’s responsibility is to make sure that the required resources are
available and that the task is properly concluded.
o PM uses system’s approach to understand and solve problems
 Includes study of the bits and pieces, but also an understanding of
how they fit together, how they interact, and how they affect and
are affected by their environment.
 Conducts the group so that it contributes to total system
optimization  all subsystem optimized (suboptimization) does
not mean the total system is not even close to optimum
performance.
o Traditional manager uses analytic approach
 Centers on understanding the bits and pieces in a system. It
prompts study of the molecules, then atoms, then electrons, and so
forth.
 Manages his or her group (subsystem of the organization) with a
desire to optimize the group’s performance.
 Systems Approach
The PM is responsible for planning, organizing, staffing, budgeting, directing and
controlling the project. The PM ‘manages’ it.
 Micromanagement
At times, the PM may work for a program manager who closely supervises and
second-guesses every decision the PM makes. Such bosses are also quite willing
to help by instructing the PM exactly what to do.
Communicator
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Scope creep: Client drops into check on project and asks to alter project scope. PM
suggest changes given the added cost and delayed delivery.
Virtual Project Manager
Meetings, Convener and Chair
2) The PM’s Responsibilities To The Project
 Acquiring Resources
 Fighting Fires and Obstacles
 Leadership and Making Trade-Offs
 Negotiation, Conflict Resolution, and Persuasion
o Jay Conger (1998) describes skill of persuasion as having four essential
parts: (1) effective persuaders must be credible to those they are trying to
persuade, (2) they must find goals held in common with those being
persuaded, (3) they must use ‘vivid’ language and compelling evidence;
and (4) they must connect with the emotions of those they are trying to
persuade.
3) Selection of a Project Manager
 Credibility
o Technical and administrative credibility
 Sensitivity
 Leadership, Style, Ethics
o The more technical uncertain a project, the more flexible the style of
management should be. The more complex a project, the more formal the
style should be.
 Flexibility: the degree that new ideas and approaches are
considered.
 Formality: the degree to which the project operates in a structured
environment.
5)Fitting Projects Into The Parent Organization
 “Why projects?”
o Devising product development programs by integrating product design,
engineering, manufacturing and marketing functions in one team not only
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improved the product, it also allowed significant cuts in the time-tomarket for the product.
o The product development/design process requires input from different
areas of specialized knowledge.
o The explosive expansion of technical capabilities in almost every area of
the organization tends to destabilize the structure of the enterprise 
project organization can handle this change, traditional org can’t
o Many upper-level managers we know lack confidence in their ability to
cope with and respond to such large-scale change, but project
organizations can.
o The rapid growth of globalized industry often involves the integration of
activities carried out by different firms located in different countries, often
on different continents. Organizing such activities into a project improves
the firm’s ability to ensure overall compliance with the laws and
regulations of dissimilar governments as well as with the policies of
widely assorted participating firms.
Pure Project Organization
o Large, complex projects that often required the service of hundreds of
people. Involves hiring specialists from all kinds of fields.
o Once project is finished, PM and specialists return to their parent firm and
await next job.
o For large projects  effective and efficient
o For small projects  very expensive way to operate
o Drawbacks: broad range of specialists, but limited technological depth.
o “Projectitis”: the project begins to take life on its own, employees are
worried whether or not there is life after the project, they’re very attached
to the project  foot dragging
Figure – Pure Project Organization
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Functional Project Organization
o Embedded in the functional group where the project will be used.
o The functional project has immediate, direct and complete contact with
the most important technologies it may need, and it has in depth access.
o The fractional resource problem is minimized for anyone working in the
project’s functional group. Functionally organized projects do not have the
high personnel costs associated with pure projects because they can easily
assign people to the project on a part-time basis.
o Even projectitis will be minimized because the project is not removed
from the parent organization and specialists are not divorced from their
normal career tracks.
o Two major problems:
 Communications across functional department boundaries are
rarely as simple as most firms think they are  technological
breadth is missing (slow communication)
 The project is rarely a high priority item in the life of the division

Matrix Project Organization
o Advantages:
 Matrix project closely resembles the pure project with many
individuals assigned full-time to the project = “strong” matrix or a
“project” matrix
 Functional departments assign resource capacity to the project
rather than people = “weak” matrix or “functional” matrix
 Hybrid former two = “balanced” matrix
 Most important strength is this flexibility in the way it can interface
with the parent organization. The way it utilizes the services of the
several technical units need not be the same for each unit. This
allows the functional department to optimize their contributions to
any project.
o Disadvantages:
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The specialists borrowed from a function have two bosses  faced
with conflicting orders from the PM and the functional manager.
Violates “Unity of Command”
Superiority FM>PM
The ability to balance resources among several projects has dark
side, has to be monitored which is a though job.
Intrateam conflicts
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Mixed Organizational Systems
o Operate all three types of projects simultaneously
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The Project Management Office and Project Maturity
o Set-up PMO as a functional group  useful when the system operates
many small projects with short lives.
o Works well when the specialists have fairly routine projects.
o E(nterprise)PMO maintains oversight of the entire portfolio of projects
carried out by the firm, acting as a project selection committee, making
sure that the set of projects is consistent with the firm’s strategies.
o PM3 – (measures the degree to which individual organizations have
mastered state-of-the-art project management practices) in this system
the final project “maturity” of an organization is assessed as being at one
of five levels
 Ad-hoc (disorganized, accidental success, and failures)
 Abbreviated (some processes exist, inconsistent management,
unpredictable results)
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Organized (standardized processes, more predictable results)
Managed (controlled and measured processes, results more in line
with plans)
Adaptive (continuous improvement in processes, success is
normal, performance keeps improving).
6) The Project Team
 They must be technically competent.
 Senior members of the project team must be politically sensitive  project
champion
 Members of the project team need a strong problem orientation.
 Team members need a strong goal orientation.
 Project workers need high self-esteem.
 Intrateam Conflict
o Integration management (aka systems engineering) is the task of bringing
the work of all the departments together to make a harmonious whole.
o Interface coordination (aka interface management) is the job of managing
this work across multiple groups.
7) Multidisciplinary Teams – Balancing Pleasure and Pain
 Integration Management
o Parallel tasking (aka concurrent engineering or simultaneous engineering)
was invented as a response to the time and cost associated with the
traditional method.  allows all groups involved in designing a project to
work as a single group and join together to solve design problems
simultaneously rather than separately and solving the problems
sequentially.
 Design Structure Matrix (DSM)
o Useful when information from some project activities is required to
complete other activities.
 Comments on empowerment and work teams
o Important advantages of empowerment are:
 Teams generate high quality solutions to appropriate problems
 Micromanagement is avoided
 The team is given accountability for some part of the project
deliverable
 Synergistic solutions are frequent
 The PM has a tool for timely team evaluation and feedback.
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Chapter 3 – Project Activity and Risk Planning
1. The basis of a project plan – the “project charter"
 The PMBOK Project Plan is comprehensive and refers to the Project Charter and
all the elements concerning the planning, execution and control of the project.
 The multiple elements a plan should include are:
o Purpose
o Objectives (project mission statement)
o Overview
o Schedules
o Resource requirements (project budget)
o Personnel and stakeholders
o Risk management
o Evaluation methods
3. The planning process – nuts and bolts
The launch meeting – and subsequent meetings
 Purpose of this interview is to:
1) Make sure that the PM understands the expectations that the
organization, the client and other stakeholders have for the project
2) To identify those among the senior managers who have an interest in this
project.
3) To determine if anything about the project is atypical for projects of the
same general kind
 The results of the launch meeting should be that:
1) The project’s scope is understood and temporarily fixed
2) the various functional managers understand their responsibilities and
have committed to develop an initial task and resource plan
3) Any potential benefits to the organization outside the scope if the project
are noted.
 Baseline plan, when signed off, it becomes part of the Project Charter, a contractlike document affirming that all major parties-at-interest to the project are in
agreement on the deliverables, the cost and the schedule.
Sorting Out the Project – The Work Breakdown Structure (WBS)
 The hierarchical planning process, which is how to build a Work Breakdown
Structure (WBS).
o Start with project objective  PM makes list of major activities to be
achieved (level 1 activities)  breakdown until activities who cannot be
broken down any further.
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4. More on the work breakdown structure and other aids
The Responsible-Accountable-Consult-Inform Matrix (RACI Matrix)
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5. Risk management
Includes three areas:
 Risk identification
 Risk analysis
 Response to risk
The process of accomplishing these three tasks is broken down into six subprocesses:
1) Risk Management Planning
2) Risk Identification
3) Qualitative Risk
o Scenario Analysis
o Failure Mode and Effect Analysis (FMEA)
4) Quantitative Risk
o Estimates
o Expected Value
5) Risk Response Planning
o Contingency Plan
o Logic Chart
6) Risk Monitoring and Control
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Chapter 4 – Budgeting the Project
1. Methods of budgeting
Budgeting is simply the process of forecasting what resources the project will require,
what quantities of each will be needed, when they will be needed, and how much they
will cost.
 A cost may be viewed from three perspectives different perspectives:
o PM recognizes a cost once a commitment is made to pay someone for
resources or services
o The accountant recognizes an expense when an invoice is received
o The controller perceives an expense when the check for the invoice is
mailed.
 Top-Down budgeting  based on the collective judgements and experiences top
and middle managers concerning similar past projects. These managers estimate
the overall project cost by estimating the costs of major tasks, which estimates
are then given to the next lower level of managers to split up among the tasks
under their control, and so on, until all the work is budgeted.
o Advantages:
 Overall budget costs can be estimated with fair accuracy, though
individual elements may be in substantial error.
 Errors in funding small tasks need not be individually identified.
 When a small but important task was overlooked, this does not
usually cause a serious budgetary problem.
 Bottom-Up budgeting  Individual budget to one main budget. The PM then adds,
according to organizational policy, indirect costs such as general and
administrative, a reserve for contingencies, and a profit figure to arrive at a final
project budget.
o More accurate in the detailed tasks, but risk the chance of overlooking
some small but costly tasks
o Common in organizations with a participative management philosophy
and leads to better morale, greater acceptance of the resulting budget, and
heightened commitment by the project team.
o Rare
o Allows the budget to be controlled by people who play little role in
designing and doing the work required by the project. It should be
obvious that this will cause problems - and it does.
2. Cost Estimating
 Work Element Costing: the fully costed task will include direct costs for labor,
machinery and resources such as materials, plus overhead charges, and finally,
GS&A (general, sales and administrative) costs.
 The Impact of Budget Cuts
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o Jobs always look easier, faster and cheaper to the boss than to the person
who has to do them.
o Bosses are usually optimistic and never admit that details have been
forgotten or that anything can or will go wrong
o Subordinates are naturally pessimistic and want to build in protection for
everything that might possibly go wrong.
 Important assumption: boss and employee reasonably honest
o For projects with S-shaped life cycles, the top-down budgeting process is
probably acceptable. For J-shaped life-cycle projects, it is dangerous for
upper management not to accept the bottom-up budget estimates.
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Activity vs. Program Budgeting
o Traditional organizational budgets are typically activity oriented and
based on historical data accumulated through an activity-based
accounting system  show lines of standard activity by actual and budget
for given time periods.
o Program budgeting: the budget is divided by task and expected time of
expenditure, thereby allowing aggregation across projects.
3. Improving Cost Estimates
 Learning curves
o Each time the output doubles, the worker hours per unit decrease by a
fixed percentage of their previous value = learning rate, typical value
between 70 and 95 percent. The higher values are for more mechanical
tasks, while the lower, faster-learning values are for more mental tasks.
 Tracking signals
o Random error = when there is a roughly equal chance that estimates are
above or below the true value of a variable, and the average size of the
error is approximately equal for over and under estimates.  cancel out
 Not cancel out?  biased = systematic error
 Tracking signal is a cancelation that can reveal if there is
systematic bias in cost and other estimates and whether bias is
positive or negative.
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Other factors
o Changes in resources are a common problem  resolve by increasing all
cost estimate by some fixed percentage.
o Another problem is overlooking the need to factor into the estimated costs
an adequate allowance for waste and spoilage.  determine individual
rates of waste and spoilage each task
o A similar problem is not adding an allowance for increased personnel
costs due to loss and replacement of skilled project team members.
o The Brooks’s “mythical man-month” effect: as workers are hired, either
for additional capacity or to replace those who leave, they require training
in the project environment before they become productive. The training is
informal on-the-job training conducted by their co-workers who must
take time from their own project tasks, thus resulting in ever more
reduced capacity as more workers are hired.
4) Budget Uncertainty And Project Risk Management
 Budget Uncertainty
o Three causes for Change:
 Some changes are due to errors the cost estimator made about how
to achieve the tasks identified in the project plan. (technological
uncertainty)
 Other changes result because the project team or client learns
more about the nature of the scope of the project or the setting in
which it is to be used. This derives from an increase in the team’s
or client’s knowledge or sophistication about the project
deliverables.
 The mandate: a new law is passed, a governmental regulatory
agency adopts a new policy, a trade organization sets a new
standard.
o Handling Changes
 Least preferred way = accept a negative change and take a loss on
the project.
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Best approach = prepare for change ahead of time by including
provisions in the original contract for such changes.
Three ways to revise a budget during the course of the project:
1. Changes are early elements of the project and are not seen
to impact the rest of the project  new budget can be
estimated as the old budget plus the changes from the early
elements.
2. Some systemic has changed that will impact the costs of the
rest of the project tasks as well  new budget estimate will
be the accumulated costs to date plus previous estimates of
the rest of the budget multiplied by some correction factor
for the systemic change.
3. Some individual changes now perceived to impact specific
elements of the remaining project tasks  actual costs to
date plus the expected costs for the remaining project tasks.
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Chapter 5: Scheduling The Project
1) PERT and CPM Networks
 PERT (Program Evaluation and Review Technique) developed by US Navy, BoozAllen Hamilton, and CPM by Dupont De Nemours Inc.
o Both methods identified a critical path of tasks
o Identified activities with slack (or float)
o Traditional PERT is used less often than CPM
 The language of PERT/CPM
o Activity – A task or set of tasks required by the project, use resources and
time
o Event – An identifiable state resulting from the completion of one or more
activities. Events consume no resources or time.
o Milestones – Identifiable and noteworthy events marking significant
progress on the project.
o Network
o Path
o Critical Path – the set of activities on a path from a projector’s start event
to its finish event that, if delayed, will delay completion date project.
o Critical Time – The time required to complete all activities on the critical
path.
 Building the network
o Two ways to display a project network:
 Activity-on-arrow (AOA) network, usually associated with PERT.
 Activity-on-node (AON) network, usually associated with CPM.
o Dummy activity is used in situations where two activities have the same
starting and finishing nodes or where a single activity connects two or
more nodes  require no time and no resources
 Finding the Critical Path and Critical Time
o Check exercises & examples page 156-159
2) Project uncertainty and risk management
 Calculating Probabilistic Activity Times
o Task duration (Td) a or lower 1% of the time  optimistic
o Td b or greater 1% of the time  pessimistic
o Recommend looking at page 162-165
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Chapter 6: Allocating Resources to the Project
1) Expediting a Project
 Critical Path Method:
𝑐𝑟𝑎𝑠ℎ 𝑐𝑜𝑠𝑡−𝑛𝑜𝑟𝑚𝑎𝑙 𝑐𝑜𝑠𝑡
o 𝑠𝑙𝑜𝑝𝑒 = 𝑐𝑟𝑎𝑠ℎ 𝑡𝑖𝑚𝑒−𝑛𝑜𝑟𝑚𝑎𝑙 𝑡𝑖𝑚𝑒
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Focus on expensiveness and activities on the critical path
Fast-tracking a Project
o Construction industry, an expediting technique in which the design and
planning phases of a project are not actually completed before the
building phase is started.
2) Resource loading
Refers to the number of specific resources that are scheduled for use on specific
activities or projects at specific times.
4) Allocating Scarce Resources to Projects
 Some priority rules:
o As soon as possible – Activities are scheduled to start on their earliest
start times (ES), and resources are made available with that in mind.
o As late as possible – Resources are made available so that activities start
on their latest start times (LS) whenever possible without increasing the
project’s duration  preserves the firm’s resources and delays cash
outflows if possible.
o Shortest task duration first – Always consistent with technological
precedence, shorter tasks are given priority over longer tasks 
maximizes number of tasks that can be completed by a system within a
given time period.
o Minimum slack first – Tasks are supplied with resources in inverse order
of their slacks. This rule usually minimizes the number of late activities.
o Most critical followers – The rationale here is that such activities would
cause the greatest damage to the desired project schedule if they were
late.
o Most successors – The same as the previous rule except that all successors
are counted.
o Most resources first – The greater the use of a specific resource on a task,
the higher the task’s priority for the resource. This rule assumes that more
important activities have greater demand for scarce resources.
5) Allocating Scarce Resources to Several Projects
 Criteria of Priority Rules
o Schedule slippage measures the amount by which a project or a set of
projects is delayed by application of a levelling rule (or by extending a
pseudo activity so that a project finishes later because it starts later).
6) Goldratt’s Critical Chain
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Much research has been done on scheduling with constrained resources, and the
findings verify what was expected – projects are completed faster when there are fewer
of them struggling for attention from a limited set of facilities.
 The critical chain – to address the need to consider both precedence
relationships and resource dependencies, Goldratt proposes thinking in terms of
the longest chain of consecutively dependent tasks where such dependencies can
arise from a variety of sources including precedence relationships among the
tasks and resource dependencies.  definition: the longest chain of
consecutively dependent activities.
 Two potential sources that can delay completion project
1. In the tasks that make up the critical chain, the project buffer protects
against these delays
2. In the tasks external to the critical chain. These tasks can also delay the
completion of the project if delays in these “feeder” paths end up delaying
one or more of the tasks on the critical chain.
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Chapter 7 – Monitoring and controlling the project
Monitoring is the collection, recording and reporting of project information that is of
importance to the project manager and other relevant stakeholders.
 Purpose: ensure all interested parties have available when needed the
information required to exercise control over the project using tools.
Control uses the monitored data and information to bring actual performance into
agreement with the plan.
1.The Plan-Monitor- Control cycle
Constitutes a “closed loop” process that continues until the project is completed.
Should not be underestimated when used for challenging projects.
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Designing the Monitoring system – the key is to identify the special
characteristics of scope, cost, and time that need to be controlled in order to
achieve the project goals as stated in the project plan.
2. Data collection and reporting
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Data Collecting
o Frequency counts: a simple tally of the occurrence of an event
o Raw numbers: actual amounts are used, usually in comparison to some
expected or planned amount
o Subjective numeric ratings: subjective estimates of some quality offered by
specialists in the topic, such as ordinal “rankings” of performance.
o Indicators and surrogates: used when it is difficult to find a direct measure
of a variable. (e.g. Body temperature as an indicator of infection)
o Verbal characterizations: other variables that are difficult to measure, such
as team spirit.
Reporting and Report Types
o Routine performance reports should include:
 Status reports
 Progress reports
 Forecasts
o All tables, charts, and especially project plans should reflect current
reality.
o Include “comparables” (previous data from similar project) to better
interpret data.
o In general, avoid periodic reports except when flow of data is periodic
(accounting)  another exception is when required by senior
management
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

o Three types of reports:
 Routine
 Exception - primarily intended for special decisions or unexpected
situations in which affected team members and outside managers
need to be made aware of change, and the change itself needs to be
documented
 Special analysis – prepared to disseminate the results of a special
study in a project concerning a particular opportunity or problem
for the project.
Meetings
o Often face-to-face meetings, these meetings can range from regular, highly
formalized and structured presentation/question/answer sessions to
informal, off-the-cuff get-togethers. Project review meetings are always
important.
 Hold meetings only for making group decisions or generating input
among meeting members for dealing with important problems or
opportunities.
Virtual meetings – more effective and timely use of project information for
planning, monitoring, and communicating.
o Virtual project teams are created with members contributing their own
pieces of the project and being monitored and controlled by the PM at
another location.
3. Earned Value
The performance of a task or project cannot be evaluated by considering cost factors
alone.

The earned value (EV) of a task (project) is the budgeted cost of the work actually
performed.
Calculated by multiplying the budgeted cost of the task by the percentage of completion
of the task and summing over all tasks for the project.
There is no satisfactory way to measure accurately the percent of completion of most
tasks, let alone to measure accurately the percent of completion of an entire project.
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Figure 7-5 p.255
1) A negative variance is bad and a positive good
2) The spending and schedule variances are calculated as the earned value minus
some other measure.
Cost of spending variance = earned valued (EV) – actual cost (AC)
Scheduled variance = EV – planned cost (PV)
Cost Performance Index (CPI) = EV/AC
Schedule Performance Index (SPI) = EV/PV
 values less than 1.0 are undesirable
Calculations used when nothing is done to correct the problem.
 Estimated (remaining cost) to completion (ETC) and the projected (total cost)
estimated at completion (EAC).
Budget at completion (BAC)
ETC = (BAC – EV)/CPI
This assumes that the work will be completed at the same level of efficiency or
inefficiency as conducted thus far. Total cost to complete the task:
EAC = ETC + AC
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Variance at completion: VAC = BAC – EAC
4. Project Control
Control has the primary purpose of ensuring that the project is in compliance with its
objectives. Involves both mechanical and human elements, and because it is closely
concerned with human behaviour, it is one of the most difficult tasks of the PM.

Purposes of Control
1) The stewardship of organizational assets
 Physical asset control is concerned with the maintenance and use of
the project’s physical assets  includes the timing as well as the
quality of maintenance being conducted on the assets.
 The stewardship of human resources primarily involves controlling
and maintaining the growth and development of the project team.
 Financial control involves stewardship of the organization’s
expenditures on the project, including both conservation of
financial resources and regulation of resource use.
2) The regulation of results through the alteration of activities
5. Designing the control system
The control system should be cost-effective and should operate with the minimum force
required to achieve the desired end results.
Three mechanisms:
 Process reviews – is directed to an analysis of the process of reaching the project
objectives rather than on the results.
 Personnel assignment – based on past project productivity
 Resource allocation – can be a powerful (de)motivator. Resources are allocated to
the more productive or important tasks and this can significantly influence the
attainment of project results.
Types of Control Systems

To control a project requires the following components:
o Each control must have a sensor, the duty of which is to measure any
aspect of the project’s output that one wishes to control.
o The control system must have a standard for each thing measured.
o Next, the control system needs a comparator, a mechanism that compares
the output of the sensor with the standard.
o Given the results of the comparison, the control system needs a decision
maker to decide if the difference between what the sensor measured and
the standard is large enough to warrant attention.
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



o The final piece required in a control system is an effector. If the decision
maker decides that some action is required to reduce the difference
between what the sensor measures and the standard requires, the effector
must take some action.
Some control systems use all five elements automatically = “cybernetic control
systems”, “negative feedback loops” or “steering controls”
The go/no-go control takes the form of tests (sensors) to determine if some
specific precondition (standard and comparator) has been met before permission
is granted to continue (decision maker and effector).
The “phase-gate” method of monitoring and control (also known as “quality
gate,” “toll gate” and other names) often makes use of the natural milestones in a
project as phase gates, though some may be ignored or other phases added.
Post-controls (aka postperformance reviews) are applied after the project has
been completed.
Tools for Control
 Critical ratio – indicates to a manager when a task or process is becoming
unacceptable, typically when the ratio drops below 1.
CR= (actual progress/schedule progress)x(budgeted cost/actual cost)
Note that the two ratios are equally important in the calculation of the critical ratio. If
one ratio is bad, it can be offset by the other ratio if it is equally good. For example, if the
actual progress is 2 and the scheduled progress is 3, resulting in a schedule ratio of 2/3,
and the budgeted cost is 6 and the actual cost is 4, resulting in a cost ratio of 3/2, their
product = 2/3 x 3/2 = 1. Thus although the project is behind schedule, the cost is
correspondingly below budget so everything is fine if lateness is no problem for this
project.
 Variance analysis
 Trend projections (figure p.266)
 Earned Value Analysis
 Control Charts
 Benchmarking
6. Scope Creep and Change Control
The most common source of changes is the natural tendency of the client, as well as the
project team members, so try to improve the project’s output as the project progresses =
“scope creep”  most common result of a scope creep is an upset client who was not
(or claims not to have been) told how long the change would delay the project and how
much it would raise the project’s cost.
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
Change control system – a well-controlled, formal process whereby new
requirement and need changes can be introduced and accomplished with as little
distress as possible.
o Purpose is to evaluate each change formally to determine its benefits as
well as its costs and other impacts on the project.
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Chapter 8 – Evaluating and Terminating the Project
1. Evaluation
 Evaluation criteria:
o “success” to date
o 1st dimension: project’s efficiency in meeting the budget and schedule
o 2nd dimension: customer impact/satisfaction
o 3rd dimension: business/direct success:
 External projects: factors such as the level of commercial success
and market share and for internal projects
 Internal projects: the achievement of the project’s goals such as
improved yields or reduced throughput time.
o 4th dimension: future potential: establishing a presence in a new market,
developing a new technology, and such.
Table p. 282
Sufficient for purely routine projects. Nonroutine projects require two more criteria:
 the project’s contribution to the organization’s unstated goals and objectives
 the project’s contributions to the objectives of project team members
2. Project Auditing
A thorough examination of the management of a project, its methodology and
procedures, its records, properties, inventories, budgets, expenditures, progress and so
on  broader than the traditional management audit.

The Audit Process
o Early  focuses on technical issues
o Later  focus more on budget and schedule, typically less of value to the
project team and of more interest to general management. (postproject
audit)
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o Three levels:
o General audit: usually constrained by time and cost and limited to a brief
investigation of project essentials.
o Detailed audit: often initiated if the general audit finds something that
needs further investigation.
o Technical audit: usually performed by person/team with special technical
skills.
Table 8-2
Table 8-3
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
o Typical steps in a project audit are:
 Familiarize the audit team with the requirements of the project,
including its basis for selection and any special charges by upper
management
 Audit the project on-site
 Write up the audit report in the required format
 Distribute the report
2. The audit team must have free access to all information relevant to the
project.
 Primary source = project team
 Needs to understand the politics of the project team, the
interpersonal relationships of the team members, and must deal
with this confidential knowledge respectfully.
 Remain neutral and be honest
The Audit Report – should be written in a professional, constructive tone.
1. Introduction
2. Current status: compares the work actually completed to the project plan
along several measures of performance.
3. Future project status: the auditor’s conclusions regarding project progress
and recommendations for changes in technical approach, schedule, or
budget
4. Critical management issues: any issues that the auditor feels senior
management should monitor.
5. Risk analysis and risk management: the potential for project failure or
monetary loss.
6. Final comments: caveats, assumptions, limitations, and information
applicable to other projects.
3. Project Termination
Has a major effect on the organization’s successful use of projects in the future.

When to Terminate a Project
o Based on two criteria
 The degree to which the project has met its goals and objectives
 The degree to which the project qualifies against a set of factors
generally associated with success or failure. (Most common reason
is the probability of a a technical or commercial failure)
o Four generic factors associated with project success:
 The efficiency of project execution
 Customer satisfaction and use
 Impact on the firm conducting the project
 Contribution to the firm’s future
o Four fundamental reasons associated with project failure:
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A project was not required for this task in the first place
Insufficient support from senior management
Naming the wrong project manager (excellent tech skills, weak
managerial skills)
 Poor up-front planning
Types of Project Termination
o Project extinction occurs when the project activity suddenly stops,
although there is still property, equipment, materials and personnel to
disburse or reassign. Project terminated because either it was successfully
completed or because expectation of failure was too high.
 Termination by ‘murder’ = characterized by its unexpected
suddenness and initiated by events such as the forced retirement of
the project’s champion or the merger of the firm conducting the
project with another firm.
o Termination-by-addition occurs when an “in-house” project is successfully
completed, and institutionalized as a new, formal part of the organization.
o Termination-by-integration, the output of the project becomes a standard
part of the operating systems of the sponsoring firm, or the client. The
new software becomes the standard, and the new machine becomes a
normal part of the production line.
o Termination-by-starvation occurs when it is impolitic to terminate a
project but its budget can be squeezed until it is a project in name only.
The Termination Process
o Termination manager (project undertaker), to complete the long and
involved process of shutting down (interring) a project, preferably
someone with experience in terminating projects.
The Project Final Report
o History of the project, following items should be addressed:
 Project performance – perhaps the most important information is
what the project attempted to achieve, what it did achieve, and the
reasons for the resulting performance.
 Administrative performance – administrative practices that worked
particularly well, or poorly, should be identified and the reasons
given.
 Organizational structure – projects may have different structures,
and the way the project is organized may either aid or hinder the
project.
 Project teamwork – a confidential section of the final report should
identify team members who worked particularly well, and possibly
those who worked poorly with others.
 Project management techniques – project success is so dependent
on the skill and techniques for forecasting, planning, scheduling,
resource allocation, control, risk management, and so on that






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procedures that worked well or badly should be noted and
commented upon.
o Fundamental purpose final report = to improve future projects.
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