Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
HPP3310
Projektitöö / Project work
Project work
Ćompiled by
Mart Murdvee
Project
is an organized set of work efforts undertaken
to produce a unique output subject to
limitations of time and resources such as
money and people.
• Project management includes work processes
that initiate, plan, execute, monitor and control,
and close project work.
• During these processes, tradeoffs must be made
among the scope, quality, cost, and schedule, so
that the project results meet the agreed-upon
requirements, are useful to the customers, and
promote the organization.
Main project factors:
• Scope (size)
• Schedule
• Quality (acceptability of
the results)
• Resources
• Cost
• Risks
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Project work specifics:
• Projects are temporary and unique
while other work, commonly called
operations, is more continuous.
• Operations consist of the ongoing work
needed to ensure that an organization
continues to function effectively.
• Operations managers can often use
checklists to guide much of their work.
• Project managers can use project
management methods to help
determine what to do, but they rarely
have checklists that identify all of the
activities they need to accomplish.
Project management
is the application of
knowledge, skills, tools and
techniques to project activities
to meet project requirements includes work processes that
initiate, plan, execute, control,
and close work.
• Project management includes:
– administrative tasks for
planning, documenting, and
controlling work and
– leadership tasks for visioning,
motivating, and promoting work
associates.
Stakeholders
- an individual, group, or
organization who may
affect, be affected by, or
perceive itself to be
affected by a decision,
activity, or outcome of a
project.
• Each project typically has
a unique combination of
stakeholders
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Project Life Cycle
is the series of phases that a project goes through from its
initiation to its closure.
• Selecting and initiating - starts when an idea for a project first
emerges and the project is selected and planned at a high level,
and ends when key participants commit to it in broad terms.
• Planning - starts after the initial commitment, includes detailed
planning, and ends when all stakeholders accept the entire
detailed plan.
• Executing - starts when the plan is accepted, and includes
authorizing, executing, monitoring, and controlling work until the
customer accepts the project deliverables.
• Closing and realizing - includes all activities after customer
acceptance to ensure project is completed, lessons are learned,
resources are reassigned, contributions are recognized, and
benefits are realized.
Project management process
group
- a logical grouping of the project management
inputs, tools and techniques, and outputs.
1. Initiating - define a project or a new phase by
obtaining authorization
2. Planning - establish the project scope, refine
objectives and define actions to attain objectives
3. Executing - complete the work defined to satisfy
project specifications
4. Monitoring and controlling - track, review, and
regulate progress and performance, identify
changes required, and initiate changes
5. Closing - finalize all activities to formally close
project or phase
Predictive or plan-driven project
life cycle with measurement points
Predictive or plan-driven project - the product is well-understood and all
planning precedes all executing
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Adaptive or change-driven project
life cycle with measurement points
Adaptive or change-driven project - early results lead into planning
later work.
10 main project knowledge areas
1. Integration management - processes and activities to identify,
define, combine, unify, and coordinate the various processes and
project management activities.
2. Scope management - processes to ensure that the project
includes all the work required, and only the work required, to
complete the project successfully
3. Time management - processes to manage timely completion of
the project
4. Cost management - processes involved in planning, estimating,
budgeting, financing, funding, managing, and controlling costs so
that the project can be completed within the approved budget
5. Quality management - processes and activities of the
performing organization that determine quality policies,
objectives, and responsibilities so that the project will satisfy the
needs for which it was undertaken
10 main project knowledge areas
6.
Human resources management - processes that organize, manage,
and lead the project team
7. Communications management - processes to ensure timely and
appropriate planning, collection, creation, distribution, storage, retrieval,
management, control, monitoring, and ultimate disposition of project
information
8. Risk management - processes of conducting risk management
planning, identification, analysis, response planning, and control… to
increase the likelihood and impact of positive events and decrease the
likelihood and impact of negative events in the project
9. Procurement management - processes to purchase or acquire
products, services, or results from outside the project team
10. Stakeholder management - processes to identify the people, groups,
or organizations, that could impact or be impacted by the project,
analyze their expectations and impact, and develop strategies for
engaging them and managing conflicting interests
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Project goals and constraints
• All projects should be undertaken to
accomplish specific goals.
• Goals can be described:
– by scope - the sum of the products, services,
and results to be provided as a project
– by quality - the degree to which a set of
inherent characteristics fulfills requirements.
• Scope and quality are often called
performance and should result in outputs
that customers and/or stakeholders can be
satisfied.
• From a client perspective, projects generally
have time and cost constraints.
Defining project success and
failure
PROJECT SUCCESS
PROJECT FAILURE
• Meeting Agreements:
Cost, schedule, and
specifications met
• Customer’s Success:
Needs met, deliverables used,
customer satisfied
• Performing:
Organization’s Success
Market share, new products,
new technology
• Project Team’s Success:
Loyalty, development,
satisfaction
• Not meeting the success
criteria
• Serious project failure when some of the success
criteria are missed by a
large amount and/or when
several of the success
criteria are missed
Basic causes of project failure:
• Not enough resources are
available for project completion.
• Not enough time has been given
to the project.
• Project expectations are unclear.
• Changes in the scope are not
understood or agreed upon by all
parties involved.
• Stakeholders disagree regarding
expectations for the project.
• Adequate project planning is not
used.
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Project failure warning signs
• Lack of agreement on goals
• Continuosly changing
requirements
• No written project
implementation plan
• Rapidly growing budget
• Repeated contract
modifications
• Major deliverables are late
• Project managed solely by
contractor
Types of Projects
• CLASSIFYING BY INDUSTRY – government, healthcare,
construction, information systems, entertainment, education,
transportation…
• CLASSIFYING BY SIZE
• CLASSIFYING BY TIMING OF PROJECT SCOPE
CLARITY - with how early in the project the project manager
and team are likely to be able to determine with a high
degree of certainty what the project scope will be.
• CLASSIFYING BY APPLICATION – simple or crossfunctional.
Project roles
EXECUTIVE ROLES
MANAGERIAL ROLES
ASSOCIATE ROLES
Steering team – leadership team for an
organization is often the top
leader (CEO or other officer) and his or her
direct reports
Project manager - the person assigned by the
performing organization to lead the team that is
responsible for achieving the project objectives,
directly accountable for the project results,
schedule, and budget. The main communicator,
responsible for the planning and execution of
the project, and works on the project from start
to finish.
Core team member members who are directly
involved in project
management activities
Chief projects officer - select, prioritize,
and resource projects in accordance with
the organization’s strategic planning and to
ensure that accurate progress is reported
and necessary adjustments are made
Functional manager - department heads - the
ongoing managers of the organization. They
normally determine how the work of the project
is to be accomplished, often supervise that
work, and often negotiate with the project
manager regarding which workers are assigned
to the project.
Subject matter expert - used
on an as-needed basis
Sponsor - the person or group that
provides resources and support for the
project and
is accountable for enabling success
Facilitator - running meetings and making
decisions.
Senior customer representative ensures that the needs and wants of the
various constituents in the customer’s
organization are identified and prioritized
and that project progress and decisions
continually support the customer’s desires
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
HPP3310
Projektitöö / Project work
Selecting and
prioritizing projects
Basic questions:
• What is project
success and
what drives it?
• What is project
failure and its
major causes?
Involvement of stakeholders
• Project success partially
depends upon identifying
key stakeholders: eliciting
their true wants and
needs to determine
project scope; and
keeping them
appropriately engaged
throughout the entire
project.
• The early involvement is
critical because it lays out
clear goals and
boundaries of project
scope.
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Involvement of stakeholders
Discovery (What has been?): This
phase inquires into and discovers
the positive capacity of a group,
organization, or community. People
are encouraged to use stories to
describe their strengths, assets,
peak experiences, and successes
to understand the unique
conditions that made their
moments of excellence possible. In
this step, stakeholders reflect on
the past to recollect instances
when they believed they could
clearly articulate their true needs
and wants; and when their needs
and wants were folded into the
project scope.
Involvement of stakeholders
Dreaming (What could be?):
Building on the moments of
excellence of the participants,
this phase encourages the
participants to imagine what
would happen if their moments
of excellence were to become a
norm. Participants dream for
the ideal conditions and build
hope and possibility of an ideal
future. As people share their
stories, the focus of the process
now shifts to dreaming a
perfect, desirable state for the
stakeholders.
Involvement of stakeholders
Designing (What should be?):
This phase creates design
principles that will help the
participants realize their dream.
Participants are encouraged to
stretch their imagination to
move the system from where it
currently is to where the
participants want it to be.
At this stage, the participants
should be encouraged to
imagine a perfect world without
any constraints.
Therefore, if there were no
resource constraints, what
would the scope of the project
look like.
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Involvement of stakeholders
Delivery (What will be?): In this phase,
participants are encouraged to think of
the various subsystems that should take
the responsibility of the design phase to
sustain the design from the dream that it
discovered. In this phase, various
stakeholders are encouraged to decide
what they will be committing themselves
to.
Going through this entire process
allows stakeholders to elicit and
articulate their expectations from the
project. Stakeholders also have a
better understanding of how their
needs and wants link to and lead
them to a desirable future state.
Strategic planning process
STRATEGIC ANALYSIS
• The first part of setting strategic direction is to
analyze both the external and internal environments
and determine how they will enhance or limit the
organization’s ability to perform.
• This strategic analysis is often called strengths,
weaknesses, opportunities, and threats (SWOT).
VISION & MISSION STATEMENT
• Vision - a larger sense of organizational purpose. It
should be both inspiring and guiding, describing the
organization as it can be in the future, but stated in
the present tense. A clear and compelling vision will
help all members and all stakeholders of an
organization understand and desire to achieve.
• Mission statement is a way to achieve the vision.
The mission statement includes the organization’s
core purpose, core values, beliefs, culture, primary
business, and primary customers.
Need for mission statement
•
•
•
•
•
•
By including the organization’s purpose, the mission statement communicates why
the organization exists.
By including the organization’s core values, a mission statement communicates
how decisions will be made and the way people will be treated. True organizational
values describe deeply held views concerning how everyone should act especially when adhering to those values is difficult.
By including beliefs, a mission statement communicates the ideals for which its
leaders and members are expected to stand. Beliefs are deeply held and slow to
change, so it is quite useful to recognize them, as they can either help or hinder an
organization’s attempt to achieve its vision.
By including the organization’s culture, the mission statement instructs members to
act in the desired manner.
By including the primary business areas, everyone will know in what business the
organization wishes to engage.
By identifying the primary customers, everyone will understand which groups of
people need to be satisfied and who is counting on the organization. The mission
needs to be specific enough in describing the business areas and customers to set
direction, but not so specific that the organization lacks imagination.
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Strategic planning process
STRATEGIC OBJECTIVES
• Strategic objectives - means of achieving the
mission and vision.
• The objectives describe both short- and longterm results that are desired along with
measures to determine achievement.
• Objectives should provide focus on decisions
regarding which projects to select and how to
prioritize them, since they are an expression of
the organizational focus.
• For objectives to be effective, they should be
SMART - specific, measurable, achievable,
results-based, and time-specific.
Strategic planning process
FLOW-DOWN OBJECTIVES
• Some of the decisions can be cascaded one or more
levels down, several methods of project selection
may be used.
PORTFOLIO MANAGEMENT
• Portfolio management aligns with organizational
strategies by selecting the right projects, prioritizing
work, and providing needed resources.
• The goal of portfolio management is to achieve the
maximum benefit toward the strategic goals of the
company. To accomplish this, executives need to
identify, select, prioritize, resource, and govern an
appropriate portfolio of projects and other work.
Portfolio
is projects, programs, subportfolios, and operations
managed as a group to achieve strategic business
objectives.
• Each project in the portfolio should have a direct impact on
the organization.
• An organization’s leaders should identify the organization’s
future direction through strategic planning.
• Then multiple possible initiatives (or projects) can be
identified that might help further the organization’s goals.
• The leaders need to sort through the various possible
projects and prioritize them.
• Projects with the highest priority should be undertaken
first.
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Portfolio, program, project, and
subproject relationships
• Program - a group of
related projects,
subprograms, and
program activities
managed in a
coordinated way to
obtain benefits not
available from
managing them
individually.
• Subproject - a smaller
portion of the overall
project created when a
project is subdivided
into more manageable
components or pieces.
Assessing an organization’s ability
to perform projects
Some questions to ask regarding a firm’s ability to support
projects:
• Do we have a teamwork attitude, free and open
communication, creativity, and empowered decision
making?
• Do we have a clearly defined project management
process?
• Do our associates have the right attitudes, skills, and
competencies to use the project management process?
• Are our leaders at each level willing to take appropriate
personal risk?
• Does senior leadership establish a strong leadership
foundation?
• Do individuals and teams exhibit leadership at their
respective levels?
• Do we monitor and understand our external
environment?
Project selection, prioritization,
and initiation
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Methods for selecting projects
The prioritization should include
asking questions such as these:
• What value does each potential
project bring to the organization?
• Are the demands of performing
each project understood?
• Are the resources needed to
perform the project available?
• Is there enthusiastic support both
from external customers and from
one or more internal champions?
• Which projects will best help the
organization achieve its goals?
Examples of project selection
criteria
• How well does this project fit with at least one organizational
objective?
• How many customers are there for the expected results?
• How competitively can the company price the project results?
• What unique advantages will this project provide?
• Does the company have the resources needed?
• What is the probability of success?
• Are the data needed to perform the project available or easily
collected?
• Do the key stakeholders agree that the project is needed?
• What is the expected return on investment?
• How sustainable will the project results be?
• How does this project promote (or hinder) our corporate social
responsibility?
• What risks are there if we do not perform this project?
Financial models for project
selection
NET PRESENT
VALUE (NPV)
BENEFIT-COST
RATIO (BCR)
INTERNAL
RATE OF
RETURN (IRR)
PAYBACK
PERIOD (PP)
Calculation
PV revenue – PV Cash
cost
flow/Project
investment
Percentage
return on project
investment
Project
costs/Annual
cash flows
Neutral Result
NPV = $0
Ratio = 1.0
IRR = Cost of
capital
Payback period
= Accepted
length
If used to screen
projects
NPV >
Acceptable
amount
Ratio >
Acceptable
amount
IRR >
Acceptable
amount
Payback period
< Acceptable
length
If used to
compare
projects
Higher NPV
better
Higher ratio
better
Higher IRR
better
Shorter payback
period better
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Scoring Model to Select Projects
Scoring model helps to select and prioritize potential projects. It
is useful whenever there are multiple projects and several
criteria to be considered.
• IDENTIFYING POTENTIAL CRITERIA
These criteria should include how well each potential project fits
with the organization’s strategic planning. The criteria may also
include such items as risk, timing, resources needed, and so on.
• DETERMINING MANDATORY CRITERIA
Once the leadership team agrees on a list of criteria that are
important, the next step is to determine whether any of the criteria
are mandatory. This list of “must do” projects should be kept as
small as possible.
• WEIGHTING CRITERIA
Next, the leadership team determines the relative importance or
weight of each decision criteria.
Scoring Model to Select Projects
Criteria 1
Criteria 2
Criteria 3
Criteria Weight
Criteria 4
Weighted
Total Score
Project A
Project B
Project C
Project D
EVALUATING PROJECTS BASED ON CRITERIA
The leadership team evaluates each project on each criterion. The most efficient and accurate
method is to concentrate on one criterion at a time, going down each column in turn. An easy
method for this is to rate each project on that particular criterion with scores ranging from 1
(potential project has very little or even negative impact on this criterion) to 5 (project has
excellent impact on this criterion). The upper left portion of each cell in the matrix can display
the rating, representing how well that project satisfies that criterion. Once a project has been
rated on a particular criterion, that rating should be multiplied by the weight assigned to that
criterion and displayed as the weighted score in the main body of each cell. The total for each
project should be added across the row. The highest-scoring projects would ordinarily be
selected.
Prioritizing Projects
• Once all projects have been selected, they will
need to be prioritized—that is, the decision
makers will need to determine which ones will
get assigned resources and be scheduled to
begin first.
• The scoring models are useful in providing input
into the starting order of projects.
• Other issues:
– The urgency of each project
– The cost of delaying the expected benefits from
various projects
– Practical details concerning the timing
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Projektitöö / Project work. Lecture 1. Introduction. Selecting and prioritizing projects
Resourcing Projects
• Once all projects have been prioritized, it is time to
assign resources to each.
• Resources can include:
– key personnel such as sponsors, project managers, core
team members, and subject-matter experts.
– money, space, and equipment that may be in short supply
– etc
• The easiest way is to use a resource assignment
matrix and begin by assigning resources to the
highest priority projects. Once an individual resource
is no longer available, the organization is limited in the
number of projects that it can take on during a
particular time.
Securing Projects
External projects from the perspective of
the contractor company that wants to
perform the work:
• Identify Potential Project Opportunities
• Determine Which Opportunities to Pursue
• Prepare and Submit a Project Proposal
(NB! The contractor should understand
the project’s source selection criteria, the
set of attributes desired by the buyer
which a seller is required to meet or
exceed to be selected for a contract.)
• Negotiate to Secure the Project
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