CE 4101W-01
Project Management and Economics
Fall 2005
Tim Eiler
Class Roll
• If you are NOT officially enrolled in
this class, see me at break or at end
of class tonight
• All students sign the sheet being
passed around
• All students obtain and complete an
information sheet – turn in at class
end
Agenda
• Why are we here tonight?
• Expectations – of the class, of me, of you
• Course mechanics – how it all will work
• What is PM and Why is it important?
• Starting out with basic PM
• Homework 1 assigned
Open PM Discussion
• Why are you in this class?
• What questions do you have
about PM?
What’s The Point of This Class?
• For those of you who see themselves as future PM’s…
– Figure out what PM is and isn’t
– More importantly, figure out why PM is important to your
businesses and careers
• For those who see themselves as engineers, but not PM’s…
– It’s the soft stuff that’s hard, the hard stuff is easy
(Doug Wilde, quoted in Leifer, 1997)
– “Those organizations that take project management seriously
as a discipline, as a way of life, are likely to make it into the
21st century. Those that do not are likely to find themselves in
good company with dinosaurs.” (Tom Peters)
– In the new economy, all work is project work.
(Tom Peters; The Wow Project ;Fast Company, 24, 116)
Why is any business in business?
$ € £ ¥
Why Project Management (PM)?
• Increases profit (margin) by reducing
cost/unit output
– Increasing work output by the same resources
– Reducing cost of work done
• Drives Innovation
– In how individual contributor & management (mgmt)
work is done
– In product
Why PM?
• Increases sales
– Improved quality
– Ability to be a price leader
– Differentiates your company
“The difference between a company and its competitor
is the ability to execute. If your competitors are
executing better than you are, they’re beating you in
the here and now…Execution is the great unaddressed
issue in the business world today. Its absence is the
single biggest obstacle to success…”
Ram Charan & Larry Bossidy, Execution: The Discipline of Getting Things Done, 2002,
Crown Business
Why PM?
In short:
Project Management (PM) strives to achieve
success from entropy-driven chaos…
Why Is PM Important?
A recent survey of technology projects in the
United States by the Project Management
Institute reveals some startling percentages:
• Close to half of the projects started were
never finished
• 30% were completed but took at least twice as
long - some took 5 times as long
• Only 10% of the projects were finished on time
Secret 1 About This Course
This course has wide breadth with less topic depth
Secret 2 About This Course
Project Management (PM) isn’t rocket science
Secret 3 About This Course
This class is yours if you choose to own it.
If you choose not to get involved in it, you only have yourself to
blame at the end for not getting something from it.
Being involved means joining in discussions, doing the work,
understanding why things are done the way they are
"Learning occurs when people engage in complicated undertakings and
find a way to reflect on how they're doing it - and perhaps engage a
coach or mentor who has some tools and methods for learning. Those
tools are different from answers. Answers are for lazy people who
don't want to learn how to use a thinking method to learn how to
deal with a practical problem. I have zero respect for trying to find
an "answer". There is a profound difference between having an answer
and having an approach you can use to deal with a complicated and
difficult practical problem. "
Peter Senge
Secret 4 About This Course
“Simple is Sexy. Complex Sucks.”
Rob Thomsett, Radical Project Management
The Story of The Skilcraft Method…
What You Can Expect…
This is an application-level course
– Needs critical thinking…
not just formulaic regurgitation
–5th - Explain
–Process:
–4th - Synthesize
•3rd – Apply
–3rd - Challenge
•2nd – Practice
–2nd - Listen
•1st – Know
–1st - Read
What You Can Expect…
Getting new knowledge…
– Interactive, Socratic-style Lecture
• Listen
• Ask questions
• Answer questions
• Discuss topics
– Examples
•The right way (we hope) first
•One planned for crucial or difficult topics
•More as you require
What You Can Expect…
Practicing to solidify new knowledge…
– Facilitated Practice
• Use the knowledge you have
• Apply it to new situation
– In class assignment
• Given information
• Do (use a tool, create a document, etc.)
– Group-style work
• Ask questions
• Help each other
What You Can Expect…
• Applying what you know…
– Requires melding of appropriate concepts
• Given in the class
• “Common sense” and practical experience
• Readings
– You WILL NOT always have everything spelled
out to you in checklist format
– Sometimes you will have to MAKE
ASSUMPTIONS to fill in the missing pieces
What You Can Expect…
• This is a Civil Engineering course
• It will use mostly examples and homework related
to Civil Engineering
• It is also a course in Project Management
• It is not exclusive to Civil Engineering
– Not all the examples, homework, etc will be exactly
in the CE domain
– You are to focus on PM 1st and CE second…I will not
be evaluating you on your CE prowess
I Expect of You…
• Do the readings
• Attend class
Be An Active
Learner
• Ask questions & challenge the instructor
• Actively participate in discussions & groups
• Speak up when you have a question or concern
• Satisfactorily complete (on time) all writing
assignments, examinations, projects, homeworks &
exams.
Syllabus Review
• Syllabus is posted at course site on WebCT
• You are responsible for printing it if you
want a printout
• You are responsible to keep up with
revision updates
Syllabus Review
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Course Objectives
Teaching Team
Textbook(s)
Computer Use
Homework
Grading
Calendar
Attendance
Academic Honesty
Etc…
READ THE
SYLLABUS
Syllabus Review - Slide Decks
Available via WebCT
• You are responsible for printing if you want
a printout
• All slides are posted already
Syllabus – Cont’d
• Demonstrate knowledge of the concepts and principles of
project management and economics
• Formulate and analyze project management and engineering
economics problems
• Use project management and communications software
• Demonstrate knowledge of teamwork and interpersonal skills
• Process group work and the overall functioning of the course
• Demonstrate written and verbal skills
• Actively reflect on and process your learning in the course
• Apply concepts, principles, methods, algorithms, and heuristics
Syllabus – Cont’d
• Teaching Team
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Office Hours: As Needed
Instructor: Tim Eiler
Office: CE 147
Phone 1: 612.327.1553 (cell)
Phone 2: 952.446.1615 (home)
Email 1: eiler012@umn.edu
Email 2: timothy.eiler@gmacrfc.com
Rhetoric Consultant:
Dave Kmiec
Teaching Assistant:
Ryan Owen
Office:
Office:
952.239.9349
Phone: 612.379.3251, 919.749.5580 (c Phone:
)
Email: kmiec004@umn.edu
Email: owen0138@umn.edu
Teaching Team – Tim Eiler
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Program Manager
GMAC-RFC, Bloomington, MN (current)
Manage software development program office and staff of project managers and technical resources (6)
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Adjunct Professor of Project Management
U of MN, Minneapolis, MN (current)
Manage and deliver project management course content
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Partner
RocketScienz Group LLC, Rosemount, MN
Graphic Design, Web Development and Hosting, Software Development, Training, PM Consulting
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Release Manager
Tellabs, Plymouth, MN
Led $300M, 36-month project to develop optical broadband switch
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Manager of Project Management Digi International, Minnetonka, MN
Managed project management office/project management staff
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Project Manager
ADC Telecommunications, Minnetonka, MN
Managed broadband access equipment product development projects
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Project Manager
Microwave Network Systems, Houston, TX
Managed microwave radio/radio network equipment development projects
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Astronaut Instructor
Rockwell Space Operations, Houston, TX
Provided multi-discipline technical training to US & foreign astronauts
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PMP (Project Mgmt Professional) Certification Project Mgmt Institute (PMI)
MBA University of Houston
BS ME/IEOR University of Minnesota
CTM Certification Toastmasters International
National Board of Directors Triangle Fraternity
Syllabus – Cont’d
• Computer Use
– WebCT
• This course uses WebCT for disseminating and
collecting information
• If you don’t know how to use WebCT, contact the
department office for further instructions
– MS-Project and Other Tools
• You will be required to perform work using MS-Project
and other software applications
• If you do not now have access to MS-Project, please
arrange to get it
Syllabus – Cont’d
Calendar
– See Syllabus
– Shows week numbers and date of Monday of each week
– Explains lecture material to be covered in class week
– Identifies prep. reading assignments for each class:
• PMBOK 2004 edition
• Other
• Note that reading assignments and/or homework
assignments may not seem 100% synchronous with
lecture material
– Identifies work to be assigned in each class
– Identifies work to be submitted in each class (or week)
Academic Honesty
– Expectation: All students are expected to complete coursework
responsibilities with fairness and honesty.
– Definition: Scholastic dishonesty means plagiarizing; cheating
on assignments or examinations; engaging in unauthorized
collaboration on academic work; taking, acquiring, or using test
materials without faculty permission; submitting false or
incomplete records of academic achievement; acting alone or in
cooperation with another to falsify records or to obtain dishonestly
grades, honors, awards, or professional endorsement; altering
forging , or misusing a University academic record; or fabricating
or falsifying data, research procedures, or data analysis.
– Consequences: Scholastic dishonesty WILL result in
disciplinary action. Within this course, a student responsible for
scholastic dishonesty can be assigned a penalty up to and
including an "F" or "N" for the course.
Reasonable Accommodation
If you have a special need that requires any additional
reasonable accommodation, I encourage you to please see
or contact me at any time
Contract Grading
To Receive an A
To Receive a B
To Receive a C
Abide by all Class Policies
Abide by all Class Policies
Abide by all Class Policies
Actively engage in class
discussions – small group and
whole class
Actively engage in class
discussions – small group and
whole class
Actively engage in class
discussions – small group
Submit 100% of homework
Submit 100% of homework
Submit 100% of homework
Receive P grade on
Problem/Solution Memo
Receive P grade on
Problem/Solution Memo
Receive P grade on
Problem/Solution Memo
Receive P grade on Project
Proposal
Receive P grade on Project
Proposal
Receive P grade on Project
Proposal
Receive P grade on 100%
quizzes and assignments given
in class
Receive P grade on 90%
quizzes and assignments given
in class
Receive P grade on 80%
quizzes and assignments given
in class
Receive a cumulative mean
score of >= 90% for 2 exams
Receive a cumulative mean
score of >= 80% for 2 exams
Receive a cumulative mean
score of >= 70% for 2 exams
Receive P grade on Project
Plan
Receive P grade on Project
Plan
Complete Writing Interview
Form
NOTE: In cases of conflict between these slides and the syllabus, the syllabus will have precedence
Grading – Cont’d
Assignments
• Exams  3
Quality
Quantity
• Out of class assignments 
• In class assignments  TBD
• Quizzes  TBD
• Mastery Learning – you may, at my discretion only,
resubmit homework NLT one week following receipt of
graded work
Attendance
Incredibly important in a class of this type
You lose much more than your grade by not coming
I will be flexible with attendance and assignments IFF…
Class Groups
• Form groups of 6
• Each person to collect contact information
(phone, email, etc) from ALL 5 other people on
the team – also submit your group’s info to me
• Class Group is your first line of defense. Call
them 1st to:
– Get info you need if you missed class
– Get help obtaining or using a tool
– Etc.
• Class Group is your team for assignments
• If your group shrinks < 4 people, see me
Breaks
• The literature says that classes should be
broken up to have a break after roughly
every 45-50 minutes of class.
• I assume you’re all adults, though, and
you can make your own choices and
follow through on those choices.
• Do you want 1 or 2 breaks during each
class period?
General Course Organization
1. PM Planning
2. PM Execution
3. PM Leadership and Ethics
4. Project Closure
What Is Project Management?
Project Management is the application of knowledge,
skills, tools, and techniques to project activities to meet
project requirements.
It is accomplished through the use of processes such
as initiating, planning, executing, controlling, and
closing.
(PMBOK, 2000, PMI)
Project Management is the intersection of:
Tools
People
Systems
(Lewis, James P. 2000. Project Planning, Scheduling & Control, 3rd ed. McGraw-Hill)
Why Is PM Important To You?
What Employers Want
• Learning to Learn
• Listening and Oral Communication
• Competence in Reading, Writing, and Computation
• Adaptability: Creative Thinking and Problem Solving
• Personal Management: Self-Esteem, Goal Setting/Motivation, and
Personal/Career Development
• Group Effectiveness: Interpersonal Skills, Negotiation, and
Teamwork
• Organizational Effectiveness and Leadership
Workplace basics: The skills employers want. 1988. American Society for Training and Development and U.S. Department of Labor.
Why Is PM Important To You?
Employer’s Checklist C: Boeing Company[1]
 A good grasp of these engineering fundamentals:
Mathematics (including statistics), Physical & life sciences, Information
technology
 A good understanding of design & manufacturing processes
(i.e. understanding of engineering concepts and practice)
 A basic understanding of the context in which engineering is practiced, including:
Economics and business practice, History, The environment, Customer and
societal needs
 A multidisciplinary systems perspective
 Good communication skills: Written, Verbal, Graphic, Listening
 High ethical standards
 An ability to think critically, creatively, and independently & cooperatively
 Flexibility--an ability and the self-confidence to adapt to rapid/major change
 Curiosity and a lifelong desire to learn
 A profound understanding of the importance of teamwork
[1]ASEE
Prism, December 1996, p. 11
.
Why Is PM Important To You?
Desired Attributes of a Global Engineer
A good grasp of these engineering science fundamentals, including:
Mechanics & dynamics, Math (including statistics), Physical & life sciences, Information science/technology
A good understanding of the design & manufacturing process
(i.e., understands engineering and industrial perspective)
A multidisciplinary, systems perspective, along with a product focus
A basic understanding of the context in which engineering is practiced, including:
Customer & societal needs/concerns, Economics & finance, The environment & its protection,
The history of technology & society
Awareness of the boundaries of one’s knowledge, along with an appreciation for other areas of
knowledge & their interrelatedness with one’s own expertise
Awareness & appreciation of other cultures & their diversity, distinctiveness, & inherent value
Commitment to teamwork, including extensive experience/understanding with team dynamics
Good communication skills, including written, verbal, graphic, and listening
High ethical standards (honesty, sense of personal and social responsibility, fairness, etc)
An ability to think both critically and creatively, in both independent and cooperative modes
Flexibility: the ability and willingness to adapt to rapid and/or major change
Curiosity and the accompanying drive to learn continuously throughout one’s career
An ability to impart knowledge to others
[1]A Manifesto
for Global Engineering Education, Summary Report of the Engineering Futures Conference,
January 22-23, 1997. The Boeing Company & Rensselaer Polytechnic Institute.
Why Writing In this Course?
• Professional skills – memos, reports,
directives, plans, proposals, etc.
• Critical element of engineering and project
management
– Key to project management effectiveness (90%
rule)
– Employers concerned about communication skills
• Writing Intensive Curriculum Requirement
Why Writing Intensive?
ABET Criteria 2004-2005 Criteria for Accrediting Engineering Programs
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Engineering programs must demonstrate that their graduates have:
(a) ability to apply knowledge of mathematics, science, and engineering
(b) ability to design and conduct experiments, & to analyze and interpret data
(c) ability to design a system, component, or process to meet desired needs
(d) an ability to function on multi-disciplinary teams
(e) an ability to identify, formulate, and solve engineering problems
(f) an understanding of professional and ethical responsibility
(g) an ability to communicate effectively
(h) the broad education necessary to understand the impact of
engineering solutions in a global and societal context
– (i) a recognition of the need for, and an ability to engage in life-long learning
– (j) a knowledge of contemporary issues
– (k) an ability to use the techniques, skills, and modern engineering tools
necessary for engineering practice.
Source: ABET. 2004-2005 Criteria for Accrediting Engineering Programs. Accessed June 12, 2004.
available: <http://www.abet.org/images/Criteria/E001%2004-05%20EAC%20Criteria%2011-20-03.pdf>
Meeting the ABET criteria
• Interviewing a Practicing Engineer in your Area
– (f) an understanding of professional and ethical
responsibility
– (g) an ability to communicate effectively
• Writing and Peer Reviewing a Problem-Solution Memo
– (d) an ability to function on multi-disciplinary teams
– (f) an understanding of professional and ethical
responsibility
– (g) an ability to communicate effectively
• Writing a Proposal in a Collaborative Team
– (d) an ability to function on multi-disciplinary teams
– (g) an ability to communicate effectively
Writing as a Process
– To succeed in these assignments, you will need to
think of writing as a process, not a product.
– Be sure to follow the steps specified in the
assignment for the purposes of this course. As you
write in your career, you can find ways to adapt this
basic process to the needs in your organization.
- Your writing assignments are graded pass/fail
based on whether you:
* follow the writing process
* apply the writing process effectively to your subject
Why Engineering Economics?
• Critical element of project management
– economics used in making decisions
• related to engineering projects
– Even if you aren’t the decision maker, you will be
a participant in some form
– same principles are used for many other types of
decisions
• Life skills – loans, mortgages, etc.
• FE, PE Exam
Engineering Econ - Examples
• Is a 3-year payback on your project sufficient to meet
company objectives?
• If you have competing repeatable projects with different
lives, you can use the lowest common multiple of their
project lives as the period of analysis…True or False?
• You just heard through the grapevine that the company is
changing the way it handles depreciation expense. You
shouldn’t worry about how that will affect how your project
is accepted…True or False?
• (FE exam problem) A bank uses the following formula to
compound interest in a passbook savings account F = P
(1 + i/4)4n. Interest is stated as an annual rate. How are
they compounding? (1) Daily, (2) Weekly, (3) Monthly, (4)
Quarterly, (5) Annually
What Is Project Management?
Earlier, we saw these definitions:
Project Management is the application of knowledge, skills, tools, and
techniques to project activities to meet project requirements.
(PMBOK, 2000)
Project management focuses on a project. Management, bringing together
and optimizing the resources necessary to successfully complete the
project. These resources include the skills, talents, and cooperative
efforts of a team of people; facilities, tools and equipment; information,
systems and techniques; and money.
(Haynes, 1989)
So, if Project Management (PM)
“focuses on a project,”
what is a project?
What Is A Project?
“A temporary endeavor undertaken to create a unique
product or service”
A Guide to the Project Management Body of Knowledge,
Project Management Institute
A project is a one-time, multitask job with a definite
starting point, definite ending point, a clearly defined
scope of work, a budget, and (usually) a temporary
team. Lewis (2000).
… a combination of human and nonhuman sources
pulled together in a temporary organization to achieve
a specified purpose. (Cleland and Kerzner, 1985; Nicholas, 1990)
Characteristics Of A Project?
• Temporary, with specific endpoint
• Unique
• Specific Deliverable
• Specific Spending Limit
• Element of Risk
• (Typically) Involve groups, across organizational lines
Defining a Project - Old
TRIPLE CONSTRAINT
Defining a Project – Current
Budget = Cost
Schedule = Time
Performance = Itself
Client Acceptance
a.k.a Customer
Satisfaction
QUADRUPLE
CONSTRAINT
Is PM Art, Science, or Both?
• Science
– Tools-based
– Process-based
– Some things are essentially same across projects & time
• Art
– Relies on Heuristics (Rules of Thumb)
– Many aspects not consistent across time or projects
– Critical decisions require experience basis
Fundamental Tools
Fundamental tools for the new generation
of engineers and project managers…
• Basic Thinking (Occam’s Razor)
• Systems/ systems thinking/ systems
engineering
• Models
• Teamwork
• Quality
PM Process at the High-Level
Planning
Customer
Request
Execution
customer
internal
Closure
The PM Process – Detail Level
SOW
Project Charter
Requirements Document
WBS
customer
Stakeholder Analysis
internal
Network Diagram
Critical Path Assessment
Duration Estimation
Schedule
Comm Plan
Resource Assignment
Budget
Project Plan
Quality Plan
Admin Plan
Predictors of Lowered Project Success
• Unrealistic project work plans
• Inability to deal early with suspected problem
issues
• Technical complexities not well
communicated to team members
• Conflict between client expectations and the
state of deliverables
• Insufficient involvement on the part of senior
management early in the life cycle
Project Management
Project
Function 1
Function 2
Function n
Other
Program Management
Program
Project 1
Function 1
Project 2
Function 2
Project n
Function n
Other
Other
Project Life Cycle
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It’s only funny because it’s so
true…
Wild enthusiasm
Disillusionment
Total confusion
Search for the guilty
Punishment of the innocent
Praise and honors for the non-participants
Project Life Cycle
Feasibility,
Planning/Design,
Construction,
Turnover/Startup
Project Life Cycle
PM Attention/Methods over PLC
• Early: ensure project is defined correctly to:
– Meet the needs of the client
– Fit the abilities of the team
– Be consistent with goals, objectives, values
of the firm
– Speculation
• Middle: keeping project “on” triple constraint
targets, negotiating project trade-offs
• End: “Punch list” mentality…ensuring
everything is done and done correctly
PM’s Role Over PLC
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Planning
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Organizing
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Staffing
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Directing
•
Controlling
PM Role Over PLC - Planning
Planning
• Establish project objectives and performance
requirements
• Involve key participants in the process
• Establish well-defined milestones with deadlines
• Build in contingencies to allow for unforeseen problems
• Prepare formal agreements to deal with changes
• Clearly define responsibilities, schedules, and budgets
1Oberlender,
G.D. 1993. Project management for engineering and construction.
New York: McGraw-Hill.
PM Role Over PLC – Organizing/Staffing
Organizing
• Develop a WBS that divides project into units of work
• Create a project organization chart
• Clearly define responsibilities, schedules, and budgets
Staffing
• Select team members using work requirements and
input from appropriate managers’ input
• Orient team members to overall project
• Seek each team members’ input to define & agree
upon scope, budget, and schedule
• Set specific performance expectations with each team
member
PM Role Over PLC – Directing/Controlling
Directing
• Coordinate all project components
• Display positive attitude
• Be available to team members
• Investigate potential problems as soon as they arise
• Research and allocate necessary resources
• Recognize good work of team members & guide necessary
improvement
Controlling
• Measure project performance using record of planned &
completed work
• Chart planned and completed milestones chart
• Chart monthly project costs
• Document agreements, meetings, telephone conversations
• Communicate regularly with team members
The PM Process – Planning Detail
SOW
Project Charter
Requirements Document
WBS
customer
Stakeholder Analysis
internal
Network Diagram
Critical Path Assessment
Duration Estimation
Schedule
Comm Plan
Resource Assignment
Budget
Project Plan
Quality Plan
Admin Plan
The Process Steps - Overview
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SOW – what the customer wants
Charter – turns the project “ON”, identifies project rules
Requirements Doc – Details of the customer “wants”
WBS – breaks work into manageable “packages”
Stakeholder Analysis – identifies who can impact project
Network Diagram – identifies dependencies of tasks
Duration Estimation – estimates task length
Critical Path Assessment – finds the longest schedule
Resource Assignment – assigning the right people to tasks
Schedule – ND + Duration Estimates + Resources
Communication Plan – who needs to know what, when, how
Budget – based on estimates, how many & for project
Quality Plan – how quality of project output will be ensured
Admin Plan – how mundane aspects of the project will be handled
Project Plan – single location of most of the above (and more)
What it takes to be successful PM
• Relentless Planning
• Vision
• Servant Leadership Approach
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Delegation
Communication
Support
Optimism
Tenacity
Balance
Listening
• Accountability
PM: A Different Way of Thinking Required
• PM (indeed, management in general)
requires a different way of thinking that most
engineers are taught to use.
• YOU have to figure out how to make the
transition .
• The good thing is that the shift is not as
difficult as it might first seem.
Where Do Projects Come From?
It is not only all about the
customer…
It all starts with the customer!
• Customer’s need
• Internal vs external customer
Where Do Projects Come From?
So how does the customer tell
the “do-er” what is needed (and
constraints)?
The Statement of Work (SOW)
Statement of Work (SOW)
• What is the purpose of an SOW?
Narrative description of the work/deliverables required for the
project contract
• Is an SOW created before or after charter?
Before OR After…depends on type of project and who the “vendor” is
• Who is accountable for creating the SOW?
The “customer” who requires the final output
• What are the “typical” contents of a SOW?
User-level requirements
SOW
• Constraints
– Procedural
– Methodology
– Materials
• Documentation Rules
– What documentation is required
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Testing results
Manufacturers’ literature
Samples
Product data
Color selections
Etc.
– When documentation is required
– Format required for documentation
Statement of Work (SOW)
• There is no “official standard version” of an
SOW
• An example (paper airplane)
Where Do Projects Come From?
1.
Every project a company executes either contributes to that company's
success of that company's failure. There is no in-between. A project that
"does no harm" uses resources that could be better spent on a project that
contributes to the company's objectives
2.
All projects are not created equal. Every project contributes differently. In is
not in the company's best interests to treat projects equally.
3.
There are more good projects than there are resources with which to
accomplish them. The corollary is "you can not do them all." Many foolish
companies try to do too much and the result of this is poor quality, missed
dates, cost overruns, and dissatisfied customers.
4.
Not all projects contribute to all corporate objectives. It would be nice if
everything we did contributed to every company objective, but the do not and
will not. It is acceptable to have a project that does not contribute to one or
more company objectives. It is even acceptable from time to time to have a
project that actually goes against an objective!
Case Study Used In Course
The Situation:
The Avanti Motors Corporation of Norcross, GA, has begun
production of the Studebaker XUV and needs a new parts
warehouse (depot) in the midwest. They’ve chosen Bloomington,
MN, have purchased the land, and have solicited bids. Your
company (your group) submitted a bid and won.
Further Definition To Be Available In:
• SOW
• Homework Instructions
Case Study Used In Course
Statement Of Work
Parts Depot
333 W 78th St
Bloomington, MN
Avanti Motor Corporation of America
19740 Inglewilde Dr
Norcross, Georgia
Mark Ross, Customer Representative
Case Study Used In Course
1.
General Requirements
Not Applicable
2.
Site work
2.1 Excavation
Flat and compacted to support slab foundation and building
2.2 Landscaping
Turf
3.
Concrete
3.1 Footing and Slab
Poured, reinforced concrete
3.2 Parking lot and street edging
Curb and gutter
3.3 Walls
Precast, reinforced concrete
Typical Project Documents
• Request For Information (RFI)
A memo requesting specific information from
someone
• Transmittal
A memo that introduces/outlines/explains the
material being sent (much like a fax cover sheet)
Homework 1
1. Genuinely and sincerely thank at least one person who performs routine
cleaning maintenance on a building in which you work or live.
Doing this activity in person is strongly recommended. If you choose to
do this activity other than in person, you must include a copy of any
correspondence you use to accomplish it.
You must provide the name of this person and the building in which s/he
works. You must also provide me with some way of remotely contacting
this person (phone number or email address preferred).
•
Submit via hardcopy
•
Submit in next class (no late homework accepted)
•
Your signature must be on the submitted version
Homework 1
2. Find 2 examples of SOWs to study and submit as part of the
assignment. Answer the following questions:
•
What is the expected outcome required by each SOW (describe
briefly)?
•
Were the formats similar? If not, what were some of the major
differences between them?
•
Was the content of each similar even if the formats were not? What
were some of the similar content items? What were some of the
different content items?
•
Who (organization) wrote each SOW? Who was the SOW being
given to do the work to develop the expected outcome (if you can
tell)?
•
Submit by hardcopy a copy of each SOW and the answers to the
questions.
•
Submit in next class (no late homework accepted)
Statement of Work (SOW)
• What is the purpose of an SOW?
Narrative description of the work/deliverables required for the
project contract
• Who is accountable for creating the SOW?
The “customer” who requires the final output
• What are the “typical” contents of a SOW?
User-level requirements
User-Level Requirements
• What is a User-Level Requirement?
– I (the customer) want the output to do x
– I (the customer) want the output to be like y
• How is a User-Level Requirement different
than other requirements?
– Focus on the need rather than the how need fulfilled
– Often less detailed than requirements used to design/develop output
The Project Charter
• Who is accountable for creating project charter?
– The Project Sponsor
• What does charter tell the project team & others?
– There is a project (formal authorization)
– The project’s output will be “x” (product description)
– The business need fulfilled by the project is “y”
– The project manager will be <name>
– The project manager has accountability & responsibility
– The project will have listed constraints & assumptions
Project Charter
• Break into support groups
• In 10 minutes, create a project charter for the
paper airplane project
• If you have a question the answer to which all
groups might need to know, please ask it
• Turn in a copy of the charter with all group
members’ names affixed
Requirements
• Detailed description of the external perceptions of the
desired outcome of project (triple
constraint…transforming into quadruple constraint)
• Can be several “levels” or “layers” of requirements,
each with successive levels of detailed
(recommended) or tailored to a different audience (be
careful).
• One of most reliable methods of ensuring project
success is to have (& widely communicate) correctly &
fully documented requirements
Requirements
• Need to be clear, complete, reasonably
detailed, cohesive, attainable, and testable
• Take care to involve as many of a project’s
stakeholders in requirements development as
feasible. Anyone who could later derail the
project should her/his expectations not be met
should be included as a customer here.
• Quality Function Deployment (QFD) is a good
tool for requirements development if you have
available time to use it
Requirements Semantics
• Will:
Used to indicate a factual statement or assumption
“This class will end” “This class will end on time”
• Shall:
Used to direct mandatory action
“The student shall complete the homework”
Synonyms include must, required to, necessary to
• Should:
Used to request non-mandatory work
“The student should purchase supplementary
reading materials”
Statement of Work (SOW)
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Your design/build firm has been contracted to act as general contractor design and install a new parts
depot at 333 W 78th St in Bloomington, MN for the Avanti Corporation of America. The company is
based in Norcross, GA and has just launched the Studebaker XUV into the American automobile
market. It also currently sells two models of the Avanti sports car originally introduced in 1963 by the
original Studebaker Corporation of South Bend, IN.
At the initial meeting with your team, the client told you that it already has chosen the site.
The rough particulars of site and building are:
Facility to be used for automobile parts (14,000 parts) warehousing & some light assembly
100,000 total square feet – 200’ x 500’ (lot size is 500’ x 1000’, details as attached)
One story
Steel frame
Concrete pre-fabricated exterior
Steel stud & drywall interior
Two closed offices (each 15’ x 15’)
One conference room (20’ x 20’)
Lunch room (20’ x 20’)
Restrooms (1 each for male and female)
Loading dock (2 delivery stalls)
Air conditioning & heating plant required to support entire space
Security & fire suppression systems required to support entire space
On-site parking required – 2 visitor spaces, 5 employee spaces
Statement of Work (SOW)
• Break into support groups
• In 5 minutes, create as detailed an SOW as
possible for building a 3-car residential garage
Project Evaluation Criteria
• These are the measurements which the Project Manager
(and hopefully others) will use to judge whether the
project has been successful:
– Along the way
– When the project is complete
• Why is this important? If you have:
–
–
–
–
a car that gets 30 mpg,
10 gallons of gas in the car
$50 for gas @ $2/gallon
One day
How far could you go?
To what city could you get?
Project Evaluation Criteria
• To be manageable, criteria must originate from project
goals & objectives (there is an important difference
between those concepts, by the way)
– Goal
– Objective
• From where do the goals and objectives – and then
eval criteria - come?
• What manageable targets should the evaluation
criteria cover? (hint: TC)
• Do they need to be approved once they’ve been
identified? If so, by whom?
Small Team Kickoff Meeting
• PM gather personnel on the internal team
• Meet to discuss the initial requirementsgeneration part of the project (a mini-project of
its own, for the most part)
– Establish objectives
– Review the process to be followed
– Determine the information to be obtained
– Establish team member data-gathering/other roles to
perform
Goals, Objectives (and Tasks)
• What’s the difference?
– Goal: very broad in scope, only the final outcome
measurable
– Objective: a clearly measurable outcome,
typically related to triple/quadruple constraint
– Task: A specific, measurable activity required to
accomplish the objective(s)
• Determining which is which is often as much
art as science
Defining Requirements
• Requirements are the detailed description of the
external perceptions of the desired outcome of the
project (triple constraint…transforming into
quadruple constraint)
• Requirements need to be clear, complete, reasonably
detailed, cohesive, attainable, and testable
Defining Requirements
• One of the most reliable methods of ensuring project
success is to have (and widely communicate)
correctly and fully documented requirements
• Take care to involve as many of a project’s
stakeholders in requirements development as
feasible. Anyone who could later derail the project
should her/his expectations not be met should be
included as a customer here.
• Quality Function Deployment (QFD)
Project Planning
Project Planning
is Extremely
ITERATIVE
Why? Because projects are progressively elaborated!
Concept Note: Rolling Wave Planning
Reflective Listening
• SOW, Requirements Documents, and charter
(and other documents) “talk to each other”
• Acceptance Criteria – how will the
customer/you know when the project is done?
Requirements Analysis/Agreement
• Review SOW, specs, drawings for
completeness
• Document issues in Requests For Information
(RFI)
• Get customer addendums and do it all again
until you’re satisfied
Reflective Listening Example
• SOW says: “3.0 No more than three folds”
• Requirements Document (Rdoc) says:
“Requirement 3.0: No more than three folds
3.1 Direction of folds not specified
3.2 That any/all folds must be in parallel direction not specified
3.3 That folds must be all in same direction not specified”
• From where did the Rdoc get the added detail?
Organization Types
• Differentiated by:
– Whether PM coordination is vertical or horizontal
– How much authority a PM has
• On a linear continuum from functional to projectized
– Functional: silos, staff reports to a mgr, PM reports to a mgr
– Matrix: staff report to both mgr and PM
• Weak Matrix
• Balanced Matrix
• Strong Matrix
– Composite: same as matrix, but there is a “functional” PM group
– Projectized: everyone reports to a PM (but…)
– Mixed: Some projectized, some matrix
• Important because it affects how a PM manages
Organization Types - Functional
CEO
Engineering
Manufacturing
Human
Resources
Finance
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Project control
Organization Types - Functional
• Advantages
– technological depth
– High degree of standardization and control in each silo
• Drawbacks
– lines of communication outside functional department slow
– technological breadth
– project rarely given high priority
Organization Types - Matrix
CEO
Engineering
Manufacturing
Human
Resources
Finance
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Project control
In a Balanced Matrix, one staff is replaced by a PM
In a Composite Matrix, PM has its own functional organization
Organization Types - Matrix
• Advantages
–
–
–
–
flexibility in way it can interface with parent organization
strong focus on the project itself
contact with functional groups minimizes projectitis
ability to manage fundamental trade-offs across projects
• Drawbacks
– violation of the Unity of Command principle
– complexity of managing full set of projects
– conflict
Organization Types - Projectized
CEO
PM 1
PM 2
PM 3
PM 4
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Staff
Project control
There is likely to be a separate network of functional managers
A Mixed Organization is a mix of projectized, matrix/functional
Organization Types - Projectized
• Advantages
–
–
–
–
Effective and efficient for large projects
Resources available as needed
Broad range of specialists
short lines of communication
• Drawbacks
–
–
–
–
May require high levels of duplication for some specialties
Expensive for small projects
Specialists may have limited technological depth
No “home” for staff at end of project
Organization Types - PMO
• Project Management Office (PMO)
– Not very standard in objective/work
– May be responsible for providing support functions (project
coordination, other admin functions), to providing “process
ownership” and training, to actually being responsible for
project results
• Sometimes known by other names
– Project Management Process Group
– Project Management Center Of Excellence
Organization Types - Summary
Functional
Weak Matrix
Balanced
Matrix
Strong Matrix
Projectized
PM Authority
Little/None
Limited
Low/Moderate
Moderate/High
High/Total
% assigned
personnel
full-time on
project work
Virtually None
0-25%
15-60%
50-95%
85-100%
Part-time
Part-time
Full-time
Full-time
Full-time
Common PM
Titles
Project
Coordinator/
Project Leader
Project
Coordinator/
Project Leader
Project Manager/
Project Officer
Project Manager/
Program
Manager
Project Manager/
Program
Manager
PM Admin
Staff
Part-time, if any
Part-time, if any
Part-time, if any
Full-time
Full-time
PM Role
Project Management Institute, 2000, PMBOK, p. 19
Organization Types - Selection
• Organization types typically evolve,
rather than get “selected”
• Some factors influencing the evolution
1.
2.
3.
4.
5.
6.
Technology
Finance and accounting
Communication
Responsibility to a project/product
Coordination
Customer relations
Organization Types - Selection
• Why would an organization choose
functional form over projectized form?
• Why would an organization choose
strong matrix from the matrix options?
Project Plan
• Once the SOW and charter are available, PM begins
the process of creating the Project Plan.
• The Project Plan is a document that essentially:
• Helps organize the project planning process
• Helps communicate project planning information
• Puts all project planning information into one,
easily-obtained location
• Why is is important to have a PM process?
Elements of a Project Plan
• Overview
– brief description of
project
– deliverables
– milestones
– expected profitability and
competitive impact
– intended for senior
management
• Objectives
– detailed description of
project’s deliverables
– project mission statement
• General Approach
– technical and managerial
approaches
– relationship to other
projects
– deviations from standard
practices
• Contractual Aspects
– agreements with clients
and third parties
– reporting requirements
– technical specifications
– project review dates
Project Plan
• Now that you know what a Project Plan is, is
for, and what specific concept areas make up
its contents, we’re going to move on.
• Keep those concepts in mind, however, as we
move along.
• The tools you learn during the next few
weeks feed the Project Plan (they become the
contents).
Work Breakdown Structure
• What is a WBS?
– deliverable-oriented grouping of project
components that organizes and defines the total
scope of the project
• What is a DELIVERABLE?
Work Breakdown Structure
• What a WBS does:
– Break the work down into smaller, more
manageable parts (what does “more manageable”
mean?)
– Clearly/visually show the full scope of the project
• Work not in the WBS is OUTSIDE scope of the project
• Aids development/confirmation of common scope
definition/understanding
Work Breakdown Structure
• Break down the project level either by functional
area/activity or by timeline area/activity (Gozinto
Analysis)
• Can be graphical or numbered text (outline) format
• Each descending level represents an increasingly
detailed description of project deliverables
Work Breakdown Structure
• How to create it:
– Break the work down (decompose the work) into smaller, more
manageable parts (Identify deliverables)
• Until sub/deliverables are defined in sufficient detail to support mgmt
(can adequate duration & cost estimates be developed?)
• Each descending level represents an increasingly detailed description of
project deliverables
• ID tangible, verifiable constituent components of
deliverables (to facilitate performance measurement)
• Verify correctness of the decomposition
WBS Exercise
Create a WBS using this information
WBS Exercise
1. Create a WBS
1.0 Office Remodel Project
1.1 Procure
2. Is this (at right)
organized by project
life cycle phase or by
function?
3. What would
happen when
decomposing
deliverables far in the
future?
1.1.1 Procure Paint
1.1.2 Procure New Carpet
1.1.2.1 Request Bids
1.1.2.2 Purchase
1.1.2.3 Receive Carpet
1.1.3 Procure New Furniture
1.2 Prepare
1.2.1 Remove Old Furniture
1.2.2 Remove Old Carpet
1.2.3 Scrub Walls
1.3 Install
1.3.1 Paint Walls
1.3.2 Install New Carpet
1.3.3 Move in New Furniture
WBS Exercise
1.0 Office Remodel Project
1.1 Procure
1.1.1
Procure
Paint
1.1.3 Procure
New
Furniture
1.1.2
Procure New
Carpet
1.1.2.1 Request
Bids
1.1.2.2
Purchase
1.1.2.3 Receive
Carpet
1.2 Prepare
1.1.1
Remove Old
Furniture
1.1.3 Scrub
Walls
1.1.2
Remove Old
Carpet
1.3 Install
1.1.1
Paint Walls
1.1.3 Move In
New
Furniture
1.1.2 Install
New Carpet
Network Diagrams
•
Ok, up to now you’ve learned to:
1.
2.
3.
4.
5.
•
Receive the customer specification
Officially start the project
Get the requirements right
Figure out who the project stakeholders are and what they want
Break the work down
So now what?
 Put the work into a flow/logical sequence
 Identify and assign resources
 Create a schedule plan
Network Diagrams
• How does PM put activities in logical order?
– Activities progressively dependent upon each other
– Start at the project end and work backward
– Start at the project start and work forward
• Purpose
– Gives schematic display of the logic relationships of project activities
Note: Sequence order – NOT time order
– Helps find which activities most important according to current plan
Network Diagrams
• The Language of Network Diagrams:
– Task: specific work items that require resources
– Activity: Synonymous with task, but may also be task groups
– Event: Zero-time, zero-resource state resulting from
completion of one or more predecessor activities
– Milestone: Zero-time, zero-resource marking point (significant
progress, etc)
– Network: Diagram of nodes & lines (arrows) showing work
flow logic
– Path: Series of connected activities between 2 or more nodes
Network Diagrams
• Dependencies
–
–
–
–
Finish-Start: successor can’t start until predecessor finishes
Finish-Finish: successor cannot finish until predecessor finishes
Start-Start: successor can’t start until predecessor starts
Start-Finish: successor can’t finish until predecessor starts
• AON vs AOA
– AON = Activity on Node
(Precedence Diagramming – PDM)
– AOA = Activity on Arrow
(Arrow Diagramming – ADM)
Network Diagram Example - AON
Network Diagram Example - AOA
Sticky Note Project Planning
• It really ISN’T project planning, but…
– It is what is often done in practical settings
– It is network diagramming
– It leads to the initial stages of scheduling
• How To:
– Group (project team) activity
– One task per sticky note
• Task name
• Task description
• Estimated duration (see estimating duration)
– Arrange sticky notes in network diagram form
– Draw/string arrows to indicate dependencies
– Rearrange, add tasks as required
Network Diagram Example
Estimating Activity Duration
•
THE WORK:
Tim shall walk across the room, turning off the projector along
the way, & then write “The Instructor Is Only As Good As His
or Her Students” on the chalkboard
•
YOUR TASK:
A) Individually estimate (write it) how long (seconds) the work will take
(30 seconds)
B) In Groups, estimate (write it) how long the work will take
(3 minutes)
•
•
•
•
How did your individual estimates compare to group estimates?
Why?
What strategies did you use to derive the estimates?
Consistency of estimate…
Estimating Activity Duration
1.
Heuristic: Activity length between 0.5%
and 2% of project duration. E.G. If an activity
takes a year, each activity should be between a
day and a week.
2.
Critical activities that fall below this range
should be included.
3.
If the number of activities is very large (say,
above 250), consider dividing the project into
subprojects, and individual schedules developed
for each. Why?
Responsibility Assignment
• A next step beyond WBS for process of assignment of resources
• Must have a good “catalog” or “database” of resource capabilities
• Use functional managers to assign resources
Network Diagrams - CPM
• CPM = Critical Path Method
- Method used to determine the longest time for the project to
take according to plan
• Critical Path
–
–
–
–
Path that, if delayed, will delay completion of project
The series of activities that determines project duration
The longest path through the project
Change in start or finish time of a critical task will affect
project end
• Critical Time
– Time required to complete all activities on the critical path
Network Diagrams - CPM
• Calculate float to determine which activities have the
least scheduling flexibility
• Float = amount of time a task may be delayed without
impacting project finish date
(a/k/a total slack)
• Visual Method:
– Find EVERY path
– Add each path
– Longest path is critical path
CPM Example
Task
Predecessor
Duration
a
--
4
b
--
6
c
a
3
d
b
4
e
b
5
f
c, d
2
g
e
7
Find the critical path and the critical time
CPM - Practice
1
2
0
0
1
1
2
2
1
3
2
0
Slack
• Since critical path activities cannot be delayed
without causing the project to be delayed, it
follows that activities not on the critical path
CAN be delayed without delaying the project.
• BUT – only within limits.
Slack
• Critical Path activities have 0 slack
3
Task 1
3
Task 3
3
Task 2
End
Star
t
• The amount of time a non-critical path
task may be delayed without delaying
the project end (or internally to the
network, a later task) is called
slack or float.
Slack
• Calculated by:
Displayed by:
LST – EST = LFT – EFT = slack
EST
Where:
LST = Latest Start Time
EST = Earliest Start Time
LFT = Latest Finish Time
EFT = Earliest Finish Time
0
5 5
5
Task A
S
T
Task
LST
6
Forward Pass
11
5
11
E
N
D
A
R
0
6
LFT
Task B
5
0
EFT
6
T
Task C
5
Number Convention
Backward Pass
11
0
1
2
3
4
5
6
7
10
11
12
1
2
3
4
5
6
7
8
9
10
11
PERT
• PERT = Program Evaluation Review Technique
• Formula calculation using std dev of project completion date using
weighted averages of the durations
• Uses 3 input estimates of duration to counter uncertainty in the
individual activity durations (CPM only uses 1)
– Low duration (fastest likely)
– Medium duration (most likely)
– High duration (longest likely)
PERT
• Sometimes called “Method of Moments”
• Network Diagrams often mistakenly called PERT
Charts
• Examples of projects in which PERT is good?
Network Diagrams - PERT
MS Project PERT representation
Questions
Knowing what you have learned up to this point
in the course:
• What are some likely things that can cause
project failure? (Impact, Probability)
• What are some things you can try as PM to
overcome the possible, typical causes of
project failure?
Scheduling
• What is scheduling?
Bringing together as much information as is
known at a given time regarding tasks, tasks
sequence, and task durations
Scheduling
• What is the purpose of scheduling?
– Helps PM/Team determine project task order,
time requirements, personnel
requirements/choices, budget, etc.
– “Whole project” big picture
– Visual representation
– “One Stop” Convenience
– Monitor/Control
• What If? Analysis
• Risk ID/Assessment
Scheduling
• How is scheduling done?
– What do we know already?
– What do we need to find out?
– How should we go about getting that info?
Scheduling
• What do we know already?
– Activities Identified (WBS)
– Activities Sequenced (Network diagram)
Scheduling
• What do we need to find out?
– Estimates of how long the tasks will take
• How should we go about getting the info?
– Personnel assignments
– Expert input
– Historical information
• Can/should PM do this on her/his own?
Resource Planning
• Who/What else could/should be involved?
–
–
–
–
–
–
Impacted by Organizational Structure
Functional Managers?
Expert Staff?
Resource skills database?
Other PMs?
Historical records?
Scheduling
• At what level should PM’s schedule be?
– Top-down estimation
– Bottom-up estimation
• How do you think the organizational
structure of the company affects this
effort?
Responsibility Assignment
• A next step beyond WBS for process of assignment of resources
• Must have a good “catalog” or “database” of resource capabilities
• Use functional managers to assign resources
Milestone Chart
• Used as a high-level summary
• Typically Zero-Time Events
• Easier to understand for managers Sometimes also called Waterfall
Diagram because of the way the milestones tend to “flow” downward
over time in the chart
• Milestones may be events “inside” or “outside” schedule
Milestone Chart
CE 4101W-01: Spr 2005
Class start
Exam 1
Exam 2
Exam 3
Grades posted
Jan
Feb
Mar
Apr
May
Milestone Chart
CE 4101W-01: Fall 2003
Labor Day
Class start
9/3
9/4
Exam 1
10/7
Exam 2
11/4
Exam 3
12/9
Grades posted
12/19
Sep
Oct
Nov
Dec
Jan
Milestone Chart - Example
• Break into support groups
• 5 minutes
• Using the course syllabus, create a
milestone chart of the course assignments
and exams
Gantt Chart
• Used to represent the timing of tasks
• Column 1 = task, each additional column is a time period
• Each task on its own row
• Expected time for each task represented by a horizontal bar
< Left end of the bar marks the expected beginning of the task
> Right end of the bar marks the expected end of the task
• Tasks may run sequentially, in parallel, or overlapping
• Milestones (tasks with no time) may be included
(represented by diamonds, triangles, etc)
Gantt Schedules
Task 1
10/7
Task 2
Task 3
Task 4
Task 5
t1
t2
t3
Gantt Schedules
• Project progress is marked by filling in a task bar
Task 1
75%
10/7
Task 2
Task 3
Task 4
Task 5
t1
t2
t3
Modified Gantt Chart
Possible
• Show dependencies (this example)
Modifications:
• Show resource assignments
• Task roll-ups (this example)
Modified Gantt Chart
Better way to do task ID notation
Scheduling - Practice
Break into support groups…In 10 minutes:
• Draw two network diagrams (AON, AOA)
• Determine the critical path (CPM)
• Draw a Gantt AND a Modified Gantt chart
Project Management – Resource Leveling
Task
Duration
Resources
Predecessor
1
7
8
2
5
6
3
4
4
2
4
2
4
1, 3
5
3
6
2
6
1
6
5
Scheduling Computer Tools
• Which ones are there?
•
•
•
•
• AMS RealTime
Microsoft Project
• Scitor Project Scheduler
ABT Project Manager Workbench
Primavera Tools (SureTrak, Expedition, etc) • Artemis
MS-Office tools (Exel, Word, Access, etc)
• Many Others
• What are they good for?
• Automation of tasks
• Handling large numbers of tasks
• Power to handle complex tasks
• “What if” Analysis
• Resource leveling
• “Any form of network analysis in which scheduling decisions are
driven by resource management concerns (e.g. limited resource
availability or difficult to manage changes in resource levels).”
• Resource Histogram
Scheduling Computer Tools
• Example Schedule in Microsoft Project
• Use information from previous exercise
Project Calendars
• Project Scheduling Tools have the option of
setting project calendars
– Number of hours/workday
– Number of workdays/week
– Default setting is *usually* 7 8-hour days/week
Project Calendars
1. Why is it important to set your calendar for
the correct days of the week, correct hours
per day, and correct holidays?
2. How should overtime be factored into the
project (tool) calendar?
Theory Of Constraints
• What is it (TOC)?
•
Real systems must have at least one constraint – a factor
that limits the system from getting more of whatever it is
trying to achieve
•
To achieve more, one must manage the constraint(s)
•
TOC models system as a chain. To improve strength of a
chain, must identify weakest link & concentrate efforts on
strengthening weakest link
Theory Of Constraints
• TOC Goals:
•
Increase system throughput
•
Reduce work in process (WIP)
•
Decrease costs
•
Reduce lost income by achieving schedule prediction
90+% of time
Theory Of Constraints
Processes & Tools
Problem-solving tools - the Thinking Processes (TP) –
logically/systematically answer 3 questions needed for process of ongoing improvement: "What to change?", "To what to change?" & "How
to cause the change?";
Daily management tools - taken from Thinking Processes - can be
used to significantly improve vital management skills, such as
communication, effecting change, team building and empowerment
Proven solutions - created by applying Thinking Processes to
specific application areas, such as production (as introduced in The
Goal), distribution (Its Not Luck), Marketing/Sales (Its Not Luck),
project management, & setting company direction, to name only a
few.
Theory Of Constraints
•
How does it work?
1. Identify the System's constraints.
Analyze process to identify task/activity limiting system productivity
2. Decide how to exploit the system's constraints.
Modify/redesign task/activity to perform work more effectively/efficiently
3. Subordinate everything else to the step 2 decision.
Direct all efforts to improving performance of constraining task/activity &
other tasks/activities directly affecting constraining task/activity
4. Elevate the system's constraint.
Add capacity to increase (elevate) output of constraining task/activity
5. If a constraint has been broken in previous step, go
back to step 1 but do not allow inertia to cause a new
constraint
This sets up a process of ongoing improvement
Theory Of Constraints
•
How to identify constraints?
1. Look for bottlenecks
2. Can stem from physical constraints or policy constraints
Physical:
• Machine, people, facilities, tangible sources
• Easier to identify and break
Policy:
• Rules, training, measures (RTM)
• More difficult to identify and break
•
Identify possible constraints in a building project
Critical Chain
• Get realistic Commitments
• Eliminate multi-tasking
• Manage constraints
• Manage Uncertainty
Critical Chain
Rules:
• Aggressive estimates
 Planned pad hierarchy
 Parkinson’s Law
 Student Syndrome
• Include dependencies other than time in management focus
• No multi-tasking on critical chain
• Relay-runner ethic/system
• Report early finishes
• Aggregate safety (buffers) and manage to the buffers
Planned Pad Hierarchy
Feeder
Task 1
Feeder
Task 2
Feeding
Buffer
C.C.
Task 1
C.C.
Task 2
C.C.
Task 3
C.C.
Task 4
Project
Buffer
End
Communication Planning
• What is Project Communication?
Exchanging project-specific information from sender to
recipient
Communication is best done when it is:
• Recipient-focused
• Done to serve an end
Communication Planning
• What is Communications Planning?
Determining the information and communications
needs of the stakeholders:
• Who needs information?
• What information do they need?
• When will they need that information?
• What options do you have to give them the information
and which way(s) are best?
Communication Planning
• What’s the purpose of it?
• How is it done?
• Why not just do it “on the fly” instead of
early/in the project planning stages?
• Does it change with scale (duration, cost,
complexity) of project? Other scales?
Communication Planning
• Who needs information?
• Do internal stakeholders need more or
different information than external
stakeholders? Explain…
Communication Planning
• What data/information do they need?
• What’s the difference between “data” and
“information?”
Communication Planning
• Communication Management Plan:
– Methods/procedures for info collection/storage structure
– Details of data/info distribution structure for various data/info types
– Description of data/info to be distributed
– Schedules showing when each type of communication is
anticipated to be produced
– Methods for accessing data/info between scheduled
communications
– Methods for updating/refining the CMP over time
• Review PMBOK Chapter 10!
Communication Planning
• When will they need that information?
– Before “event”
– During “event”
– After “event”
– Periodically vs. ad hoc
Communication Planning
• What options do you have to give them the
information and which way(s) are best?
– Reports
– Briefings
– Status meetings
– Email
– Others?
Communication Planning
• What options do you have to give them the
information and which way(s) are best?
– Reports
– Briefings
– Status meetings
– Email
– Others?
Communication Planning - Example
• Project: Student going to school
Stakeholder
1
2
3
n
Data/Info Needed?
Main Distrib Method(s)?
When Distrib?
How Distrib?
Methods/Procedures for info collection/storage
Methods for data access between scheduled communications
Methods for updating/refining CMP over time
Who is responsible?
When will it be done?
Typical Project Documents
• Submittal
A specific artifact/item to be reviewed for approval,
archived, etc.
• Transmittal
A memo that outlines/explains submittals included
with the transmittal and the actions required by the
recipient
Typical Project Documents
• There are no world-wide formats for these
documents.
• Formats will be:
– Company specific
– Recipient specific
– Industry specific
– Project specific
Procurement Planning
• Is it likely that you will be able to do all the
work with internal resources?
• How do you decide what to outsource?
• How do you procure the outsourced work?
Procurement Planning
• Procurement Management Plan: Describes
how procurement process – from solicitation planning
through contract closeout – will be managed
• Types of contracts to be used
• If independent estimates to be used, who will prepare them and
when
• If there is a procurement organization in your company, what
actions PM/Project Team can take independently
• Where procurement documents can be found
• How each contractor will be managed
• How procurement processes will coordinate with other PM
processes
• Includes your SOW to the contractor
Make or Buy Analysis
• Expert Judgment
Do you have the right resources for the job?
Do you have the right skills to do a quality job?
Experts might include: internal experts, other units,
consultants, professional and technical associations,
other industry groups, etc.
• Opportunity Cost Analysis & Cost/Benefit
Analysis
Can we use internal resources more productively than this
job?
• Lease vs. Buy Analysis
Opportunity Cost
• What is it?
The cost of making a trade-off
• Why is important?
• A well run business or project doesn’t have a great deal of
excess (i.e. unallocated) cash/other resources lying around
• Projects compete with one another for resources
• Goal is to optimize use of limited supply
• Requires making trade-offs
Cost/Benefit Analysis
• Cost Benefit Analysis is a tool to evaluate options
 Is it worth spending $5000 to crash a schedule and gain 5 days?
 Is it worth dropping a product feature from this software release in
order to be able to achieve the baseline schedule release or would
it be better to keep the feature and slip the scheduled release by
20 days?
• You first need to have the costs and benefits
 Costs and benefits must be in a quantifiable unit (dollars,
production units gained or lost, days, etc.)
 Costs do NOT have to be in equivalent units to Benefits
• You also need to know the acceptable target tradeoff
range(s) if there are absolute values (otherwise, rely
on relative comparisons)
 I once caught a fish this big |
Buy vs. Lease
Lessor: The one who owns the capital
Lessee: The one receiving the capital
A lease “acts like” an amortized purchase – for both lessor and lessee
Why lease instead of buying?
• Avoid technical obsolescence
• Tax advantages
• Asset/payment flexibility
Why buy instead of leasing?
• Possibility of salvage value + value obtained from asset use being
greater than amortized cost
• Tax advantages
Main Types of Contract
• Firm Fixed Price
Buyer pays seller a set amount regardless of seller costs
• Fixed Price Incentive Fee
Buyer pays seller a set amount & seller can earn additional fee if
performance criteria are met
• Cost Plus Fixed Fee
Buyer reimburses seller costs plus a fixed profit fee
• Cost Plus Incentive Fee
Buyer reimburses seller costs & seller earns profit if performance
criteria met
• Time & Material (T&M)
“Hybrid” of cost reimbursement and fixed fee
• Purchase Order
• Who has the risks in each type?
Solicitation
1. Send bid/proposal request documents to prospective
vendors
o Presumes you have a sufficient list of applicable vendors
o Distribution may be direct, via bidder conference, via advertising,
etc.
o Bid & Quote used when selection based on price
o Proposal used when other than price (tech skills, etc) paramount
o Request for Bid (RFB), Invitation to Bid (IFB)
o Request for Quote (RFQ), Invitation to Quote (IFQ)
o Request for Proposal (RFP), Invitation for Proposal (IFP)
o Include SOW, description of required response/response format,
explanation of pro forma contract terms and agreement structure
Solicitation
2. Obtain bids/proposals from sellers
3. Evaluate bids/proposals & cycle thru SOW updates
4. Select bidder (based on criteria), negotiate, & award
contract
Contracts
• You are the owner of a small excavation
contracting business that has a multi-year
T&M contract with a customer. The contract
specifies the rate of pay for personnel types
on the project.
1. Qualify the risks you face related to
management of the contract.
2. Qualify the risks the buyer faces.
Quality For Project Managers
• What does the word “quality” mean?
– Features and functionality
• Scope requirements filled and working properly
• Conformance to specification or design
– Fitness for use
• Degree of excellence at an acceptable price
• Control of variability at an acceptable cost
• How well the product fits patterns of user preferences
• Why is it important for the PM to focus on quality?
– Driver of customer satisfaction: Triple/Quadruple Constraint
• Time (schedule)
• Cost (budget)
• Performance (specifications/quality)
Quality For Project Managers
• What is the cost of quality?
 Prevention costs – costs incurred to prevent failure and minimize
appraisal costs
 Appraisal costs – discovering the condition of the process or
product
 Internal Failure costs – costs due to raw materials, WIP, or
finished goods not being manufactured
right 1st time
 External Failure costs – costs from customer discovering a lack of
product quality
Quality For Project Managers
• Management’s Role:
 Ask questions:
o What is next?
o What can I do?






Preach
Teach
Be an example
Provide resources
Seek never-ending improvement
Follow Deming’s 14 points
• It is the PM’s role to be a leader of quality in your projects
Quality Systems You Can Use
• Quality Systems
 TQM (Kaizen/Continuous Improvement)
 Six Sigma
 ISO standards
 Quality Circles
 Minnesota Quality Award
 Baldrige Award
 Deming Prize
Total Quality Management
• TQM (Total Quality Management)
– Objective: Improve quality by analyzing the whole “production
process” using quantitative and qualitative information
– Method:
•
•
•
•
Clear, visible leadership from top
Ensure that the system is ‘known’
Use statistical measurements to monitor the system
Use statistical measurements to make changes only when needed and
relatively predictable
• Use statistical measurements to monitor the changes
(PLAN, DO, CHECK, ANALYZE)
Fourteen Points of Quality
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Create constancy of purpose toward improvement
Adopt the new philosophy
Cease dependence on inspection.
Minimize total costs
Constant and perpetual improvement
Institute training
Institute leadership
Drive out fear
Break down internal barriers
Eliminate slogans, targets etc.
Eliminate management by objective
Remove barriers
Institute program of education and self-improvement.
Everybody’s job is to accomplish the transition.
- W. Edwards Deming
Deming’s 7 Deadly Diseases
1.
Lack of constancy of purpose to improve products & services by
providing resources for long-term planning, for research, & for
training
2.
An emphasis on short-term profits & quarterly dividend
3.
Individual performance evaluations through merit ratings & annual
reviews
4.
Managers who are highly mobile & hop from company to company
5.
Management use of numbers & figures that are visible & available
with no thought of info that may be needed, but unknown or hidden
6.
Excessive medical costs
7.
Excessive legal liability costs, which can be swelled by lawyers who
work on “contingency” fees
Continuous Quality Improvement
Four Basic Principles
1.
Develop a Strong Customer Focus
2.
Continually Improve All Processes
Identify Them
Improve Them (Plan, Do Check, Act)
3.
Involve Employees
4.
Mobilize Both Data & Team Knowledge to Improve Decision
Making
(The Memory Jogger: A Pocket Guide of Tools for Continuous Improvement and
Effective Planning)
Six Sigma
• Six Sigma
– Objective:
• A comprehensive and flexible system for achieving, sustaining, and
maximizing business success. Six Sigma is uniquely driven by close
understanding of customer needs, disciplined use of facts, data, and
statistical analysis, and diligent attention to managing, improving, and
reinventing business processes.
• Encompasses a broad array of business best practices and skills
(some advanced, some common sense) that are essential ingredients
for success and growth.
• Applicable to all types of organizations
• As much about people excellence as technical excellence
– Method:
• There are many “Six Sigma Ways.” – there is no fixed prescription
• Sort of a culmination/combination of various other systems
Six Sigma – Essential Themes
1. A genuine focus on the customer
2. Data- and fact-driven management
3. Process focus, management &
improvement as an engine for growth &
success
4. Proactive management
5. Boundaryless collaboration
6. A drive for perfection, and yet a tolerance
for failure
Six Sigma
Mc-Graw Hill, 2000
Six Sigma Roadmap
1. Identify core processes & key
customers
2. Define customer Requirements
3. Measure current Performance
4. Prioritize, analyze & implement
improvements
5. Expand & integrate six sigma system
DMAIC: Define, Measure, Analyze, Improve, Control
Six Sigma – Methods/Tools
•Continuous Improvement
•Process Design/Redesign
•Analysis of Variance
•Balanced Scorecard
•Voice of the Customer
•Creative Thinking
•Design of Experiments
•Process Management
•Statistical Process Control
ISO Standards
– ISO standards (900x, 1400x, etc.)
– Objective:
• Improve processes & reduce process variation
– Method:
•
•
•
•
“Tell me what you’re going to do. Do it. Show me that you did it.”
Set requirements for process performance in various operational areas
Company establishes process to comply with the ISO specifications
Registrar evaluates company ISO system
• ISO system meets/exceeds ISO standard, company is
“certified”/”registered”
• ISO system does not meet/exceed, company goes back to previous step
• Company uses periodic audits to validate process validity and
adherence
• Internal
• External (registrar)
• Failures found during audits must be dealt with via a process
established as part of the company’s ISO system
Quality Circles
– Objective:
• Improve product quality by soliciting group input from workers (and
sometimes customers and/or users) in order to improve product
process, features, etc.
– Method:
• Bring teams together to brainstorm solutions to a problem, then
implement the ones that seem logical, are generally desirable, and are
economically feasible and see what happens.
Quality Tools
• Quality Tools













Inspection
Benchmarking
Process flowcharting
Run chart
Histogram
Scatter diagram
Ishikawa Diagram
Pareto analysis
Fault-tree analysis/FMEA
Control Charts (X-bar, R)
Auditing
Simulation (Monte Carlo, What-if)
QFD
Procurement Planning
• Is it likely that you will be able to do all the
work with internal resources?
• How do you decide what to outsource?
• How do you procure the outsourced work?
Procurement Planning
• Procurement Management Plan: Describes
how procurement process – from solicitation planning
through contract closeout – will be managed
• Types of contracts to be used
• If independent estimates to be used, who will prepare them and
when
• If there is a procurement organization in your company, what
actions PM/Project Team can take independently
• Where procurement documents can be found
• How each contractor will be managed
• How procurement processes will coordinate with other PM
processes
• Includes your SOW to the contractor
Make or Buy Analysis
• Expert Judgment
Do you have the right resources for the job?
Do you have the right skills to do a quality job?
Experts might include: internal experts, other units,
consultants, professional and technical associations,
other industry groups, etc.
• Opportunity Cost Analysis & Cost/Benefit
Analysis
Can we use internal resources more productively than this
job?
• Lease vs. Buy Analysis
Opportunity Cost
• What is it?
The cost of making a trade-off
• Why is important?
• A well run business or project doesn’t have a great deal of
excess (i.e. unallocated) cash/other resources lying around
• Projects compete with one another for resources
• Goal is to optimize use of limited supply
• Requires making trade-offs
Cost/Benefit Analysis
• Cost Benefit Analysis is a tool to evaluate options
 Is it worth spending $5000 to crash a schedule and gain 5 days?
 Is it worth dropping a product feature from this software release in
order to be able to achieve the baseline schedule release or would
it be better to keep the feature and slip the scheduled release by
20 days?
• You first need to have the costs and benefits
 Costs and benefits must be in a quantifiable unit (dollars,
production units gained or lost, days, etc.)
 Costs do NOT have to be in equivalent units to Benefits
• You also need to know the acceptable target tradeoff
range(s) if there are absolute values (otherwise, rely
on relative comparisons)
 I once caught a fish this big |
Buy vs. Lease
Lessor: The one who owns the capital
Lessee: The one receiving the capital
A lease “acts like” an amortized purchase – for both lessor and lessee
Why lease instead of buying?
• Avoid technical obsolescence
• Tax advantages
• Asset/payment flexibility
Why buy instead of leasing?
• Possibility of salvage value + value obtained from asset use being
greater than amortized cost
• Tax advantages
Main Types of Contract
• Firm Fixed Price
Buyer pays seller a set amount regardless of seller costs
• Fixed Price Incentive Fee
Buyer pays seller a set amount & seller can earn additional fee if
performance criteria are met
• Cost Plus Fixed Fee
Buyer reimburses seller costs plus a fixed profit fee
• Cost Plus Incentive Fee
Buyer reimburses seller costs & seller earns profit if performance
criteria met
• Time & Material (T&M)
“Hybrid” of cost reimbursement and fixed fee
• Purchase Order
• Who has the risks in each type?
Solicitation
1. Send bid/proposal request documents to prospective
vendors
o Presumes you have a sufficient list of applicable vendors
o Distribution may be direct, via bidder conference, via advertising,
etc.
o Bid & Quote used when selection based on price
o Proposal used when other than price (tech skills, etc) paramount
o Request for Bid (RFB), Invitation to Bid (IFB)
o Request for Quote (RFQ), Invitation to Quote (IFQ)
o Request for Proposal (RFP), Invitation for Proposal (IFP)
o Include SOW, description of required response/response format,
explanation of pro forma contract terms and agreement structure
Solicitation
2. Obtain bids/proposals from sellers
3. Evaluate bids/proposals & cycle thru SOW updates
4. Select bidder (based on criteria), negotiate, & award
contract
Contracts
• You are the owner of a small excavation
contracting business that has a multi-year
T&M contract with a customer. The contract
specifies the rate of pay for personnel types
on the project.
1. Qualify the risks you face related to
management of the contract.
2. Qualify the risks the buyer faces.
Quality For Project Managers
• What does the word “quality” mean?
– Features and functionality
• Scope requirements filled and working properly
• Conformance to specification or design
– Fitness for use
• Degree of excellence at an acceptable price
• Control of variability at an acceptable cost
• How well the product fits patterns of user preferences
• Why is it important for the PM to focus on quality?
– Driver of customer satisfaction: Triple/Quadruple Constraint
• Time (schedule)
• Cost (budget)
• Performance (specifications/quality)
Quality For Project Managers
• What is the cost of quality?
 Prevention costs – costs incurred to prevent failure and minimize
appraisal costs
 Appraisal costs – discovering the condition of the process or
product
 Internal Failure costs – costs due to raw materials, WIP, or
finished goods not being manufactured
right 1st time
 External Failure costs – costs from customer discovering a lack of
product quality
Quality For Project Managers
• Management’s Role:
 Ask questions:
o What is next?
o What can I do?






Preach
Teach
Be an example
Provide resources
Seek never-ending improvement
Follow Deming’s 14 points
• It is the PM’s role to be a leader of quality in your projects
Quality Systems You Can Use
• (some) Quality Systems
 TQM (Kaizen/Continuous Improvement)
 Six Sigma
 ISO standards
 Quality Circles
Total Quality Management
• TQM (Total Quality Management)
– Objective: Improve quality by analyzing the whole “production
process” using quantitative and qualitative information
– Method:
•
•
•
•
Clear, visible leadership from top
Ensure that the system is ‘known’
Use statistical measurements to monitor the system
Use statistical measurements to make changes only when needed and
relatively predictable
• Use statistical measurements to monitor the changes
(PLAN, DO, CHECK, ANALYZE)
Fourteen Points of Quality
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Create constancy of purpose toward improvement
Adopt the new philosophy
Cease dependence on inspection.
Minimize total costs
Constant and perpetual improvement
Institute training
Institute leadership
Drive out fear
Break down internal barriers
Eliminate slogans, targets etc.
Eliminate management by objective
Remove barriers
Institute program of education and self-improvement.
Everybody’s job is to accomplish the transition.
- W. Edwards Deming
Deming’s 7 Deadly Diseases
1.
Lack of constancy of purpose to improve products & services by
providing resources for long-term planning, for research, & for
training
2.
An emphasis on short-term profits & quarterly dividend
3.
Individual performance evaluations through merit ratings & annual
reviews
4.
Managers who are highly mobile & hop from company to company
5.
Management use of numbers & figures that are visible & available
with no thought of info that may be needed, but unknown or hidden
6.
Excessive medical costs
7.
Excessive legal liability costs, which can be swelled by lawyers who
work on “contingency” fees
Continuous Quality Improvement
Four Basic Principles
1.
Develop a Strong Customer Focus
2.
Continually Improve All Processes
Identify Them
Improve Them (Plan, Do Check, Act)
3.
Involve Employees
4.
Mobilize Both Data & Team Knowledge to Improve Decision
Making
(The Memory Jogger: A Pocket Guide of Tools for Continuous Improvement and
Effective Planning)
Six Sigma
• Six Sigma
– Objective:
• A comprehensive and flexible system for achieving, sustaining, and
maximizing business success. Six Sigma is uniquely driven by close
understanding of customer needs, disciplined use of facts, data, and
statistical analysis, and diligent attention to managing, improving, and
reinventing business processes.
• Encompasses a broad array of business best practices and skills
(some advanced, some common sense) that are essential ingredients
for success and growth.
• Applicable to all types of organizations
• As much about people excellence as technical excellence
– Method:
• There are many “Six Sigma Ways.” – there is no fixed prescription
• Sort of a culmination/combination of various other systems
Six Sigma – Essential Themes
1. A genuine focus on the customer
2. Data- and fact-driven management
3. Process focus, management &
improvement as an engine for growth &
success
4. Proactive management
5. Boundaryless collaboration
6. A drive for perfection, and yet a tolerance
for failure
Six Sigma
Mc-Graw Hill, 2000
Six Sigma Roadmap
1.Identify core processes & key customers
2. Define customer Requirements
3. Measure current Performance
4. Prioritize, analyze & implement
improvements
5. Expand & integrate six sigma system
Six Sigma – Methods/Tools
•Continuous Improvement
•Process Design/Redesign
•Analysis of Variance
•Balanced Scorecard
•Voice of the Customer
•Creative Thinking
•Design of Experiments
•Process Management
•Statistical Process Control
ISO Standards
– ISO standards (900x, 1400x, etc.)
– Objective:
• Improve processes & reduce process variation
– Method:
•
•
•
•
“Tell me what you’re going to do. Do it. Show me that you did it.”
Set requirements for process performance in various operational areas
Company establishes process to comply with the ISO specifications
Registrar evaluates company ISO system
• ISO system meets/exceeds ISO standard, company is
“certified”/”registered”
• ISO system does not meet/exceed, company goes back to previous step
• Company uses periodic audits to validate process validity and
adherence
• Internal
• External (registrar)
• Failures found during audits must be dealt with via a process
established as part of the company’s ISO system
Quality Circles
– Objective:
• Improve product quality by soliciting group input from workers (and
sometimes customers and/or users) in order to improve product
process, features, etc.
– Method:
• Bring teams together to brainstorm solutions to a problem, then
implement the ones that seem logical, are generally desirable, and are
economically feasible and see what happens.
Quality Tools
• Quality Tools













Inspection
Benchmarking
Process flowcharting
Run chart
Histogram
Scatter diagram
Ishikawa Diagram
Pareto analysis
Fault-tree analysis/FMEA
Control Charts (X-bar, R)
Auditing
Simulation (Monte Carlo, What-if)
QFD
ISO Standards
– ISO standards (900x, 1400x, etc.)
– Objective:
• Improve processes & reduce process variation
– Method:
•
•
•
•
“Tell me what you’re going to do. Do it. Show me that you did it.”
Set requirements for process performance in various operational areas
Company establishes process to comply with the ISO specifications
Registrar evaluates company ISO system
• ISO system meets/exceeds ISO standard, company is
“certified”/”registered”
• ISO system does not meet/exceed, company goes back to previous step
• Company uses periodic audits to validate process validity and
adherence
• Internal
• External (registrar)
• Failures found during audits must be dealt with via a process
established as part of the company’s ISO system
Quality Circles
– Objective:
• Improve product quality by soliciting group input from workers (and
sometimes customers and/or users) in order to improve product
process, features, etc.
– Method:
• Bring teams together to brainstorm solutions to a problem, then
implement the ones that seem logical, are generally desirable, and are
economically feasible and see what happens.
Quality Tools
• Quality Tools













Inspection
Benchmarking
Process flowcharting
Run chart
Histogram
Scatter diagram
Ishikawa Diagram
Pareto analysis
Fault-tree analysis/FMEA
Control Charts (X-bar, R)
Auditing
Simulation (Monte Carlo, What-if)
QFD
Inspection
 Inspection
–
OLD WAY: Check at the end of a process to see if it meets specified parameters.
Throw away or rework (and check again) output that doesn’t meet specifications.
YOU CAN’T INSPECT QUALITY INTO A PRODUCT
– NEW WAY:
– Confirm the process is in statistical control by checking planned
random samples of output at planned stages of the process
– Feedback to the production process to correct the process for future
revisions
– Throw away or rework (and check again) output that doesn’t meet
specifications
 Where will you find inspection during your typical projects?
Benchmarking
–
Systematized, planned method of looking at processes other than
the one in which you’re interested to
a)
b)
–
Compare the process in question to the comparable processes
Find out new ways to make the process in question better
(Best Practices)
Be very careful with benchmarking…It seems easy, but without
proper analysis, it is very easy to fool oneself into thinking
that a = b = c and that is NOT ALWAYS THE CASE.
Flowcharting
– Can’t improve a process until all
understand and agree what the
process actually is
Start
Step A
– Flowchart is a model of the process
Step B
– Improvement can come in the form of:
• Whole team working in concert rather than
against each other
• Make changes to the process steps
– Eliminate
– Shorten
– Rearrange
No
Pass?
Yes
Step C
End
–
The 80/20 chart
–
Used to determine priorities
–
May be able to determine what you can
do to fix the problem directly from this
chart
–
May need to subsequently use other
tools to figure out what to fix
–
Once you’ve corrected the first priority
problem, may need to go through
subsequent rounds
Defects
Pareto Analysis
Ishikawa Diagram
 Also known as Cause & Effect Diagram, Fishbone Diagram
–
–
–
–
–
–
The process of chart creation is itself useful (discussion that causes people to learn)
Helps keep focus on issue at hand, reducing complaints & irrelevant discussion
Results in an active search for the cause
Data often must be collected for study
Demonstrates the level of understanding…more complex the diagram, the more sophisticated the users are about
the process
Problem Agnostic
Major Cause 1
Minor Cause
Minor Cause
Minor Cause
Major Cause 2
Minor Cause
May also be
situation desired
Minor Cause
Problem
to solve
Major Cause 3
Major Cause 4
Fault Tree Analysis/FMEA
– “What happens if” chart
– Study causes and effects of failures
A.0
– Focuses thinking on system functioning
and interaction of system component
parts
A.1
– Define all ways that a system can fail
A.2
A.3
– Decomposes potential faults through
several fault ‘layers’
A.3.1
A.3.2
– Allows assignment of risk factors to the
possible faults
– Next probable step is a Pareto
Statistical Process Control
 Run Chart
•
Trend analysis
 Histogram
•
Trend analysis
 Scatter Plot
•
•
Trend analysis
Should use some statistical
validation as well as visual
Statistical Process Control
 Control Charts
–
–
–
–
Measurement (# defective, etc)
–
Upper Control Limit (UCL)
Sometimes called Statistical Process Control
(SQC) or Statistical Quality Control (SQC)
Average
A run chart with statistically determined upper
and lower control limits drawn on either side of
the process average. (limits are NOT
specifications)
Every process has variation. Once the process
Lower Control Limit (LCL)
is in statistical control (i.e. it is running on its
own – no special correcting influence from
humans – and there are very few points
beyond the control limits), it is possible to more
time
economically and scientifically decrease
variation in the process output
– Rule of 7: a process can be out of
Special cause: 90%. easier to eliminate.
Show up as points outside the limits
control even if there are no outliers…for
Common cause: 10%. changeable only by
instance, when there are 7 contiguous
management
points on either side of the line.
– You’ll never eradicate
variation…(“average” will get in your
way), but see Deming point 5
Process Auditing
 Auditing
-
Independent, objective review of the effectiveness of a system
• Process
• Product
• System
• Management
-
Identify whether process failure is common cause or special cause
-
Provide for tracking of appropriate corrective actions to process
-
Everyone dislikes being criticized, but REMEMBER that the audit function is
intended to help the company be better at what it does.
-
Being better can mean a competitive advantage (cha-ching) or, as in most cases, it can
simply mean that you are able to remain competitive (like the ante into a poker game).
-
Don’t hate the auditor…unless he comes to deserve it!
Simulation
– Set up models of a process or situation and vary parameters to see
what outcome will be after simulating what might happen
– “What if” Analysis
• Once the model is established and verified, varying a parameter by a
specified amount and see what happens to the outcome parameter(s)
– Monte Carlo Simulation
• Once the model is established and verified, vary a parameter or
parameters through use of randomized (statistically distributed
histogram randomization) trials to see what happens to the outcome
parameter(s).
Quality Function Deployment
– Focus on creating a connection between quality, from the perspective
of the user, through the ENTIRE process of creation
– QFD matrices are used to show the links between the user’s quality
concepts and technical quality. Successive decompositions of needsrelated quality into quality associated with subsystems allows relation
of every important aspect of project quality to competitive quality
Product Planning
Product Design
Process Planning
Control
Methods
Key Processes
Key
Processes
Component
Characteristics
Component
Characteristics
Design
Requirements
Customer
Requirements
Design
Requirements
Process Control
Planning
Quality For Project Managers
Please Remember:
1)
No chart or equation will ever improve a process…
People improve processes
2)
Think before you decide.
Numbers are only models of reality.
Garbage In…Garbage Out (GIGO)
Project Budgeting
• “It’s hard to predict, especially the future”
– Niels Bohr
• “Life is what happens when you’re making
other plans”
– John Lennon
• If it’s so hard to predict and everything is already
obsolete by the time it’s “on paper,” why
budget?
Project Budgeting
• Budgets are plans for allocating organizational
resources to project activities
– Must forecast required resources, quantities needed,
when needed, and costs
• Budgets help tie project to organizational objectives
- Requires decisions of priority
• Budgets can be used as tool by upper management
to monitor and guide projects
- We anticipated spending $100M by this time. How
much did we actually spend?
Zero Base Budgeting
• Most budgeting is done by multiplying a factor
x “last year’s budget data”
• ZBB calls for starting from a “clean sheet of
paper” and then estimating the necessary
functions from educated “scratch.” Often
goes hand-in hand with Activity Based
Costing Practice.
• This can be tedious, but is very useful
because it requires you to think about each
budget line item more clearly
Zero Base Budgeting
• Non ZBB:
– This year’s budget had $5000 for employee project
management training
– For next year’s budget, because we know that we are
intending to continuously move toward PM practice at our
company (but don’t have everything planned out yet), we’ll
“bump” the budget up from last year by 1.5
• ZBB:
– Throw out last year’s budget
– Start over with a total replanning effort using more distinct,
factual analysis
Top Down Budgeting
• Based on collective judgements and experiences of
top and middle managers.
• Overall project cost estimated by estimating costs of
work packages/major tasks from WBS
• Advantages
– Accuracy of estimating overall budget
– Errors in funding small tasks need not be individually
identified
• Disadvantages
– May miss a material, though small-appearing, item
Project Budgeting
How Top-Down Budgeting works (a very, very basic example):
WBS Task
2.0 Design
3.0 Concrete
4.0 Frame
5.0 Electrical
Cost
$50,000
$500,000
$200,000
$ 75,000
Bottom Up Budgeting
•
WBS identifies elemental tasks
•
Those responsible for executing these tasks
estimate resource requirements
•
Technical Estimation
•
Time & Cost Estimation
•
Advantage
–
•
More accuracy from detailed lower-level analysis
Disadvantage
–
–
–
Tedious, long
Not focused on larger picture; can get lost in details
GIGO
Project Budgeting
How Bottom-Up Budgeting works (a very, very basic example):
WBS Task
2.0 Design
2.1 Site Survey
2.2 Architectural Design
2.3 Drafting
3.0 Concrete
3.1 Excavation
3.2 Pour Concrete
3.3 Test Concrete
4.0 Frame
4.1 Arrange Materials
4.2 Erect Walls
5.0 Electrical
5.1 Arrange Materials
5.2 Run Circuit Wiring
5.3 Test Electrical Systems
Resource Duration (day)
4
1
2
3
20
12
Cost
$44,160
$ 7,680
$24,000
$12,480
Work Element Costing
• Determine resource requirements, then task costs
–
–
–
–
fixed costs (e.g., materials)
labor time & labor rate
equipment time & equipment rate
Overhead/G&A
• Levels of Estimate
– ROM = Rough Order of Magnitude (~20% accurate, 10
minutes)
– System Estimate (~10% accurate, 1 day)
– Unit Estimate (~5% accurate, 1-3 weeks)
Work Element Costing
Engineering News Record, http//:www.enr.com/cost/cost1.asp
ENR publishes both a Construction Cost Index and a Building Costs Index that are widely used in the
Construction Industry. This web site contains an explanation of the indexes methodology and a complete
history of the 20-city national average for the CCI and BCI.
Both indexes have a material and labor component. In the second issue of each month ENR publishes
the CCI and BCI, materials index, skilled labor index and common labor index for 20 cities and the
national average. The first issue also contains an index review of all five national indexes for the latest 14
month period.
ENR also publishes various materials prices in each issue for the 20 US cities and 2 Canadian cities. The
first issue of the month contains prices for paving asphalt, portland cement, ready-mix concrete, concrete
block, brick and aggregates. The second issue for the month has prices for various pipe including
reinforced concrete pipe, corrugated steel pipe, PVC water and sewer pipe, ductile iron pipe and copper
water tubing. The third issue of the month contains prices for lumber, plywood, plyform, particle board
and gypsum board. The fourth issue of the month has prices for structural steel reinforcing bar,
aluminum, and stainless steel sheet and plate. If a month has 5 Mondays, the fifth issue will have union
wage rates for 21 trades in all 20 cities.
The 20 US cities that ENR maintains cost data on are: Atlanta, Baltimore, Birmingham, Boston, Chicago,
Cincinnati, Cleveland, Dallas, Denver, Detroit, Kansas City, Los Angeles, Minneapolis, New Orleans, New
York, Philadelphia, Pittsburgh, St. Louis, San Francisco, Seattle. ENR also tracks cost data for Montreal
and Toronto, Canada.
In addition, ENR publishes four quarterly cost reports in the last issue of March, June, September and
December. These issues analyze cost trends from ENR’s data base and explain the movement in the
indexes. They also contain various other cost data including open-shop wage rates, workers
compensation rates and international prices, wages and cost indexes just to name a few.
Tim Grogan, Senior Editor, Costs, Data & Material Prices.
ENR - Building Cost Index History
How ENR builds the Index: 66.38 hours of skilled labor at the 20-city average of bricklayers, carpenters and structural ironworkers rates,
plus 25 cwt of standard structural steel shapes at the mill price prior to 1996 and the fabricated 20-city price from 1996, plus 1.128 tons of
Portland cement at the 20-city price, plus 1,088 board.ft of 2X4 lumber at the 20-city price (cwt = hundred weight. 45.36 kg, 0.04536 tons).
YEAR
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
AVER
1978
1609
1617
1620
1621
1652
1663
1696
1705
1720
1721
1732
1734
1674
1979
1740
1740
1750
1749
1753
1809
1829
1849
1900
1900
1901
1909
1819
1980
1895
1894
1915
1899
1888
1916
1950
1971
1976
1976
2000
2017
1941
1981
2015
2016
2014
2064
2076
2080
2106
2131
2154
2151
2181
2178
2097
1982
2184
2198
2192
2197
2199
2225
2258
2259
2263
2262
2268
2297
2234
1983
2311
2348
2352
2347
2351
2388
2414
2428
2430
2416
2419
2406
2384
1984
2402
2407
2412
2422
2419
2417
2418
2428
2430
2424
2421
2408
2417
1985
2410
2414
2406
2405
2411
2429
2448
2442
2441
2441
2446
2439
2428
1986
2440
2446
2447
2458
2479
2493
2499
2498
2504
2511
2511
2511
2483
1987
2515
2510
2518
2523
2524
2525
2538
2557
2564
2569
2564
2589
2541
YEAR
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
AVER
1988
2574
2576
2586
2591
2592
2595
2598
2611
2612
2612
2616
2617
2598
1989
2615
2608
2612
2615
2616
2623
2627
2637
2660
2662
2665
2669
2634
1990
2664
2668
2673
2676
2691
2715
2716
2716
2730
2728
2730
2720
2702
1991
2720
2716
2715
2709
2723
2733
2757
2792
2785
2786
2791
2784
2751
1992
2784
2775
2799
2809
2828
2838
2845
2854
2857
2867
2873
2875
2834
1993
2886
2886
2915
2976
3071
3066
3038
3014
3009
3016
3029
3046
2996
1994
3071
3106
3116
3127
3125
3115
3107
3109
3116
3116
3109
3110
3111
1995
3112
3111
3103
3100
3096
3095
3114
3121
3109
3117
3131
3128
3111
1996
3127
3131
3135
3148
3161
3178
3190
3223
3246
3284
3304
3311
3203
1997
3332
3333
3323
3364
3377
3396
3392
3385
3378
3372
3350
3370
3364
YEAR
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
AVER
Estimating Expertise
There is no evidence of mystical inborn talent for cost- estimating.
‘Expertise’ is not a universal phenomenon, but rather very project-specific.
The most crucial attributes of good estimators are knowledge and care.
Good estimators have exactly the same attributes as good gamblers:
• they research selectively and thoroughly.
• they weigh each decision against possible outcomes & behave accordingly
Different building types demand different approaches.
Special attention is required for complexity of the project.
The easiest projects to estimate are the industrial factories and residential
houses.
Office construction projects are hardest to estimate, due to design/option
variety
Skitmore, R.M., Stradling, S.G., & Tuohy, A.P. 1994. Human effects in early stage contract price forecasting. IEEE
Transactions on Engineering Management, 41 (1), 29-39.
Hybrid Budgeting
•
Best of both Top-down and Bottom-up mixed
•
Can be conflict (in fact, you want it)
•
If you have the time and the expertise available,
this is, IN MY OPINION, the best approach
Future Value (FV)
• Find FV of $1 today invested for n years at i%/year
• Timeline Method
FV1 = PV1 (1 + i)
1
0
i%
$PV
2
i%
i%
FV
3
FV2
1
• Generic Case Equation
FV = PV (1 + i)n
4
5
i%
i%
FV
FV
FV
3
4
5
Present Value (PV)
• Find PV of $1 today of FV dollars received n years in
the future, assuming i%/year
PV =
FV
x
1 =
(1+i)n
FV
(1+i)n
Compounding
• What is it?
• Why is important?
Group Work
• Use Timeline Method: How much money will
be your return at the end of 5 years with 5%
annual interest on a deposit of $500
• How would the situation change if you had a
second investment of $250 in the third year?
How would the formulaic calculation change?
• Think of 3 specific examples when you might
need to know the concept of PV/FV and how
to calculate it.
Annuity
• What is it?
A series of equal payments at fixed intervals for a
specified number of periods
E.G. – marketing tells you that Project X, of which
you’ll be the PM, will generate $1M per year for 5
years starting at project release in January 2005
• How is it calculated?
FVAn = PMT/(1+i) + PMT/(1+i)2 + … + PMT/(1+i)t
n
= PMT Σ 1/(1+i)t
t=1
Annuity
• Example
Promise to pay $1000/year for 3 years. If you were to receive this money and
invest it with a 4% return, how much would you have at the end of 3 years?
1
0
i%
2
i%
i%
$1000
3
$1000
Are we solving for PV or FV?
$1000
i=
t=
n=
PMT =
Answer?
• Why is it important?
• Couldn’t we just do an FV analysis on a $5M payback at the end
of 5 years in the 5 year, $5M project example?
• In the example above, what amount of money would you want
to receive now to be able to turn down the $1000/year for 3 year
deal?
Net Present Value (NPV)
n
NPV = Σ (FVt / (1+i)t) - I
t=1
FVt = incremental, after tax net cash flow in year t
I = the investment (capital outlay), which is assumed to all happen in
year 0)
NPV > 0 is good (project or activity may be chosen)
Depreciation
• Paying the equipment
Suppose you buy a machine for $100k, use it for 5 years to do “your thing,”
and then scrap it. The cost of the work produced by the machine must
include a charge for the machine (depreciation).
As depreciation increases, net income decreases
Unlike paying the staff, depreciation is NOT a cash charge – cash flows are
not decreased…
Depreciation actually increases cash flow!!!
• Methods
•
•
•
•
•
Straight Line
Double declining balance
Sum of the years’ digits
Accelerated Cost Recovery System (ACRS)
Modified Accelerated Cost Recovery System (MACRS)
Depreciation
• Straight Line Method
(Purchase Amount – Salvage Value) / Depreciation life
Depreciation Life determined by the estimated useful life of the asset
Salvage Value = value the asset is expected to have at end of depreciation life
Purchase
Value
What is the effect
on cash flow of
changing the
salvage value?
Salvage
Value
Year 1
Year 2
Year 3
Year 4
Modified Accelerated Cost Recovery System
• MACRS
•
Sum of purchase price for any year x the depreciation % for that year
•
Depreciation Life determined by Asset Class rules
Class
Asset Type
3 year
Computers & research equipment
5 year
Automobiles, tractors, light duty trucks, computers
7 year
Industrial equipment, furniture, fixtures
10 year
Certain long-lived equipment
27.5 year
Residential rental property
31.5 year
Non-residential property
MACRS Continued
•
•
21.5 and 31.5 year class property uses straight line method
3, 5, 7, 10 year class property uses accelerated method in table below (or
alternative straight line method for very small businesses)
Ownership year
3
5
7
10
1
33%
20%
14%
10%
2
45
32
25
18
3
15
19
17
14
4
7
12
13
12
5
11
9
9
6
6
9
7
7
9
7
8
4
7
9
7
10
6
11
3
MACRS Continued
Half-year convention: Assumes property put in service in middle of first
year – extends recovery period by one more year (3 year class property
is depreciated over 4 years)
Depreciable basis: Purchase price + shipping and installation costs
[NOTE: NO classes allow salvage value as part of depreciable basis]
Salvage Value: Add the difference of (actual sale price – undepreciated
value) to normal operating income for taxation at the normal rate
E.G. - $100k equipment with 5 year class life sold at end of year 4 for $25k
$25,000 – ($100,000(.11+.06)) = $8000 to add to operating income
MACRS Example
Excellanz buys a computer for $150k. It requires an additional $15k for
delivery and $15k for installation. The company expects to be able to
sell the equipment for $25k at the end of the straight line depreciable
life.
What is the depreciable basis?
What is the depreciation for each year and the total depreciation?
Baselines
• What is a baseline?
“snapshot” of project schedule, cost (budget), or scope
• When are the “snapshots” taken?
When the plan (schedule, scope (budget), scope) is considered
feasible technically and in terms of resources
• How are they used?
•
•
Used as the basis for measuring and reporting actual performance
against the plan (schedule, cost, scope)
Used to manage project changes to scope, schedule, cost (i.e. –
get rid of the “creep”)
Homework 4
• Posted via WebCT
Project Control and Configuration Mgmt
Risk Mgmt
Project Budgeting
• Due 7/18 via hardcopy
• Work in support groups (only)
Simulation
– Set up models of a process or situation and vary parameters to see
what outcome will be after simulating what might happen
– “What if” Analysis
• Once the model is established and verified, varying a parameter by a
specified amount and see what happens to the outcome parameter(s)
– Monte Carlo Simulation
• Once the model is established and verified, vary a parameter or
parameters through use of randomized (statistically distributed
histogram randomization) trials to see what happens to the outcome
parameter(s).
Risk Management
• What is it?
– Risk is anything that affects triple constraint objectives
– PMBOK: Systematic process of identifying,
analyzing, and responding to project risks
– AKA: Crossing bridges before you get to them
Risk Management
• Why do it?
– The future is uncertain
– When those unplanned, unplannable good or bad things
happen to a project, the PM must be ready to deal with
them and their consequences in order to meet the
triple/quadruple constraint
Risk Management
• How do you manage risks?
– Initiate the process,
– Identify the risks,
– Assess/analyze the risks,
– Organize (rank) the risks,
– Plan responses to the important risks,
– Implement the RMP (Risk Management Plan),
• Monitoring
• Reporting
• Responding
– Review (cyclical)
The RMP Table
• How you do it? - The Risk Mgmt Plan table
• Risk Identifier
• Risk
• Probability of risk occurrence (P)
• Impact if risk occurs (I)
• Risk “Rank”
• Risk Owner
• Monitoring Plan
• Response Strategy
• Response Plan (outline)
Risk Management
Risk Identifier
• Helps you track the risk
• Helps you communicate the risk
• May be nothing more than a sequential system
• May be something other than sequential
• What do you do with the risk ID when the risk “goes away?”
1.
Critical person lost time injury
1.
Critical person lost time injury
2.
Fire damages structure
2.
Fire damages structure
3.
Rain delay to critical path task
3.
Risk Management
Risk (Identification)
• Something that affects triple constraint objectives
• Negative
• Positive (Examples?)
• Measurable/Quantifiable is best, but sometimes there will be
qualifiable-only risks
• Risks can be identified with use of many tools, methods
• Project Plan, Network Diagram, Schedule, Policies, Expert
Opinion, Historical Information, WBS, FMEA, etc.
• Risk identified by a group effort
• Risk identified
• At project start
• Over and over, repeatedly, again and again, until project end
Risk Management
Probability of risk occurrence (P)
• How likely is the risk event?
• Can be classified by judgment
• Can be classified by statistical tools
Risk Management
Impact if risk occurs (I)
• What will happen if the risk event occurs?
• Can be classified by judgment
• Can be classified by statistical tools
Risk Management
Risk Rank
• You can’t have everything…where would you put it?
• PxI
• Group all the equally ranked items together
• There can be multiple 1, 2, 3, etc.
• If multiple 1’s, 2’s, etc, can rank inside each group
(use time of likely occurrence, relative impact, etc)
• May have to go through several rounds of
successively detailed analysis to get top (10, 20, 50,
75, 100)
Risk Management
Risk Owner
• Handles monitoring & responding (within
constraints)
• Why doesn’t the PM just do the risk monitoring?
• Who can the PM assign to be a risk monitor?
Risk Management
Monitoring Plan
• How/what will you/r team watch to see if the risk
may be happening?
• Discuss some examples
Risk Management
Response Strategy
• Avoid: Do something to ensure risk won’t occur (100%
mitigation)
• Mitigate: Accept that risk might happen, but do something to
alleviate the either/both the P or I if it does
• Accept: What’s left when there’s nothing feasible to do
Accept
Mitigate
Avoid
• Transfer: Do something to allocate the risk onto someone
else
Risk Management
Response Plan
• What do you intend to do if the risk starts happening/happens?
• In outline form – things change too rapidly, frequently to
warrant more
Who is responsible for keeping the Risk
Management Plan (RMP)?
Risk Management
Example:
Project: Create a lighted sign for a new
building into which an engineering forensics
company will be moving in 2 months.
RMP creation example/discussion
Risk Management
In support groups:
Project: Build a four-car garage
Constraints: Cost not to exceed $10,000,
Construction to be completed NLT 2 months
from project initiation
Complete an RMP with 10 risks. At least 3
must be cost-related, 3 must be qualityrelated, and 4 must be schedule-related
Schedule Management
How can you use a project schedule to
actually manage (not just plan) a project?
How do you collect status from the people
doing the work?
• GIGO
• Reporting/data gathering systems
• use of % complete
Schedule Compression
• Scheduling is extremely iterative process
– In fact, changes during last few days are likely!
– Management always wants it done faster and/or
cheaper!
• So how can you shorten the schedule?
– Scope Modification: Delete task(s)
– Crashing: Adding more resources to task(s)
– Fast Tracking: Doing more tasks in parallel
Schedule Compression
• Scope Modification
– Eliminate task(s)
– Shrink work required to do particular task(s)
– Not always viable – why not?
Schedule Compression
• Crashing
– Add more resources to shorten time required to
do the work (1+1=2)
Not always feasible/viable option – why not?
– Appropriate resources may not be available at all or only
with equal or worse impact
– Learning curves can actually result in 1+1=0.5
– Can increase cost more than budget allows
Schedule Compression
• Fast Tracking
– Reworking task sequencing so more activities are
done in parallel rather than sequentially
Not always feasible/viable option – why not?
– Often results in rework
– Increases risk (often dramatically)
– Increases confusion
Schedule Compression
• Can we agree that getting the project
done late (after pre-agreed time) is BAD?
• Is it BAD to come in ahead of schedule:
– By a little bit?
– By a lot?
– Why/Why not?
Configuration Management
What is it?
Establish revision control and change control methods
Similar to baseline
Why is it done?
Communication – keeping everyone on the same page
Limit unnecessary scope creep
Change impact estimation
Work billing
Configuration Management
How does it work?
Written process (per project, per company, etc)
Identify change possibility (acceptable person?)
If CR accepted, evaluate
Decide outcome of change
If outcome is to proceed,
• create/publish ECN
• Update plan information
Configuration Management
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Management by Stage Gates
What is it?
Exception Management for the Manager(s) of the Project Manager
Reqmts Gathering
Pre-solicitation
Solicitation
Bid
Award
Buildout
Project Planning
Completion
Project Execution
Do you suppose your (PM) manager will just say “go at
it and let me know when you’re done”?
Compounding
• What is it?
• Why is important?
Future Value (FV)
• Find FV of $1 today invested for n years at i%/year
• Timeline Method
FV1 = PV1 (1 + i)
1
0
i%
$PV
2
i%
i%
FV
3
FV2
1
• Generic Case Equation
FV = PV (1 + i)n
4
5
i%
i%
FV
FV
FV
3
4
5
Present Value (PV)
• Find PV of $1 today of FV dollars received n years in
the future, assuming i%/year
PV =
FV
x
1 =
(1+i)n
FV
(1+i)n
Group Work
• Use Timeline Method: How much money will
be your return at the end of 5 years with 5%
annual interest on a deposit of $500
• How would the situation change if you had a
second investment of $250 in the third year?
How would the formulaic calculation change?
• Think of 3 specific examples when you might
need to know the concept of PV/FV and how
to calculate it.
Annuity
• What is it?
A series of equal payments at fixed intervals for a
specified number of periods
E.G. – marketing tells you that Project X, of which
you’ll be the PM, will generate $1M per year for 5
years starting at project release in January 2005
• How is it calculated?
FVAn = PMT/(1+i) + PMT/(1+i)2 + … + PMT/(1+i)t
n
= PMT Σ 1/(1+i)t
t=1
Annuity
• Example
Promise to pay $1000/year for 3 years. If you were to receive this money and
invest it with a 4% return, how much would you have at the end of 3 years?
1
0
i%
2
i%
i%
$1000
3
$1000
Are we solving for PV or FV?
$1000
i=
t=
n=
PMT =
Answer?
• Why is it important?
• Couldn’t we just do an FV analysis on a $5M payback at the end
of 5 years in the 5 year, $5M project example?
• In the example above, what amount of money would you want
to receive now to be able to turn down the $1000/year for 3 year
deal?
Net Present Value (NPV)
n
NPV = Σ (FVt / (1+i)t) - I
t=1
FVt = incremental, after tax net cash flow in year t
I = the investment (capital outlay), which is assumed to all happen in
year 0)
NPV > 0 is good (project or activity may be chosen)
Depreciation
• Paying the equipment
Suppose you buy a machine for $100k, use it for 5 years to do “your thing,”
and then scrap it. The cost of the work produced by the machine must
include a charge for the machine (depreciation).
As depreciation increases, net income decreases
Unlike paying the staff, depreciation is NOT a cash charge – cash flows are
not decreased…
Depreciation actually increases cash flow!!!
• Methods
•
•
•
•
•
Straight Line
Double declining balance
Sum of the years’ digits
Accelerated Cost Recovery System (ACRS)
Modified Accelerated Cost Recovery System (MACRS)
Depreciation
• Straight Line Method
(Purchase Amount – Salvage Value) / Depreciation life
Depreciation Life determined by the estimated useful life of the asset
Salvage Value = value the asset is expected to have at end of depreciation life
Purchase
Value
What is the effect
on cash flow of
changing the
salvage value?
Salvage
Value
Year 1
Year 2
Year 3
Year 4
Modified Accelerated Cost Recovery System
• MACRS
•
Sum of purchase price for any year x the depreciation % for that year
•
Depreciation Life determined by Asset Class rules
Class
Asset Type
3 year
Computers & research equipment
5 year
Automobiles, tractors, light duty trucks, computers
7 year
Industrial equipment, furniture, fixtures
10 year
Certain long-lived equipment
27.5 year
Residential rental property
31.5 year
Non-residential property
MACRS Continued
•
•
21.5 and 31.5 year class property uses straight line method
3, 5, 7, 10 year class property uses accelerated method in table below (or
alternative straight line method for very small businesses)
Ownership year
3
5
7
10
1
33%
20%
14%
10%
2
45
32
25
18
3
15
19
17
14
4
7
12
13
12
5
11
9
9
6
6
9
7
7
9
7
8
4
7
9
7
10
6
11
3
MACRS Continued
Half-year convention: Assumes property put in service in middle of first
year – extends recovery period by one more year (3 year class property
is depreciated over 4 years)
Depreciable basis: Purchase price + shipping and installation costs
[NOTE: NO classes allow salvage value as part of depreciable basis]
Salvage Value: Add the difference of (actual sale price – undepreciated
value) to normal operating income for taxation at the normal rate
E.G. - $100k equipment with 5 year class life sold at end of year 4 for $25k
$25,000 – ($100,000(.11+.06)) = $8000 to add to operating income
SL Example
Excellanz buys a computer for $150k. It requires an additional $15k for
delivery and $15k for installation. The company expects to be able to
sell the equipment for $25k at the end of the straight line depreciable
life.
What is the depreciable basis?
What is the depreciation for each year and the total depreciation?
Baselines
• What is a baseline?
“snapshot” of project schedule, cost (budget), or scope
• When are the “snapshots” taken?
When the plan (schedule, scope (budget), scope) is considered
feasible technically and in terms of resources
• How are they used?
•
•
Used as the basis for measuring and reporting actual performance
against the plan (schedule, cost, scope)
Used to manage project changes to scope, schedule, cost (i.e. –
get rid of the “creep”)
Earned Value
• Earned Value Management
– Performance measurement system:
A methodology used to measure & communicate the real, physical
progress of a project.
– Integrates scope, cost, & schedule measures:
Takes work complete, time taken, and costs incurred to complete that work
into account.
– Useful as a risk management monitoring tool
EV helps evaluate & control project risk by measuring project progress
using a standard measure (monetary terms).
Earned Value
• Earned Value Management
– How it works:
• We plan how we will accomplish a task(s)
– How long it will take
– Resources required
– Estimated costs
• We spend time and materials in completing a task.
– If we are efficient, we complete task with time to spare & minimum
wasted materials.
– If we are inefficient, we take longer than planned and waste materials.
• Take a snapshot of the project and calculate EV metrics to:
– Compare planned vs actual and use that to make a subjective
assessment of progress
– Extrapolate the information to estimate future costs & probable
completion date
Earned Value
• Planned Value (PV – aka BCWS)
– Budgets for each activity planned (Portion of cost estimate planned to be spent on
an activity during a given period)
• Actual Cost (AC – aka ACWP)
– Real, Total cost incurred during work on an activity during a given period
– Must correspond to budgeted value for the PV and EV
• Earned Value (EV – aka BCWP)
– Value of work actually completed (The planned costs of the work allocated to the
completed activities)
•
•
•
•
•
Cost Variance (CV) = EV – AC
Schedule Variance (SV) = EV – PV
Cost Performance Index (CPI) = EV/AC (CPI < 1 is bad)
Schedule Performance Index (SPI) = EV/PV (SPI < 1 is bad)
Estimate at Completion (EAC) = ACWP + ((BAC-BWCP)/CPI)
Communications During Execution
• You’re having a problem on your project –
when do you tell the stakeholders?
• You’re *not* having a problem on your project –
when do you tell the stakeholders?
• Is there such a thing as overcommunication?
• An example of the communication balance
Communications During Execution
From: Eiler, Timothy
Sent: Wednesday, August 31, 2003 11:27 AM
To: Bob Jones (contractor)
Subject: Communication
Bob,
When a customer-affecting release does not go as planned, you need to call the appropriate Account Manager
to let her know that it failed, even if you don't yet know why that happened. They need to know so that they
can decide what communication is needed with the customer's business contacts to smooth feathers, etc. This
is particularly critical now as we try to assuage hurt customer feelings so that we can keep relationships with
them alive for loan purchases. Depending on the impact scope, of course, you probably don't need to call them
seconds after the failure or anything, but they do need to know fairly soon.
After you've let them know about the initial failure, as you learn more and have updates to status and correction
plans and progress, call them again as judgment dictates.
Even if the failure is corrected fairly quickly, you should let them know it occurred so they can be aware of what
happened. Essentially, after any customer-affecting release, call them to let them know an executive summary
of how it went - success or failure. I'm assuming, given the time of day most releases happen, that they will
each want to be called at their desk phones, with you leaving voice mail, but you need to work that out with
each of them individually, and probably for individual releases, as well.
You also need to call me to let me know of the failure, though I have less need for late night calls about
correction plans and progress. I can generally, depending on the impact of the failure, of course, wait until
morning to know about correction plans and progress. Calls to my cell, with voice mail left if I don't answer, are
what I need.
Overall, the goal is to rationally over communicate this information - while not being passive-aggressive, of
course. :-)
Tim
Storytelling for Communication
• Use of examples – how could I have used an
example to help Bob understand and accept?
• Use of analogies – how could I have used an
analogy to help Bob understand and accept?
• Other ways storytelling can be an aid
Typical Project Documents
• Dunning Letter
A memo identifying specific things done
wrong/currently late/etc and the ramifications of
continuing to fail to address the issues
• Transmittal
A memo that outlines/explains submittals included
with the transmittal and the actions required by the
recipient
Managing
• Is the plan right?
– Are things going as they should?
– If not, how far off are we?
– Does it need changes?
• What do we need to do to be where we need to be?
– What changes or corrections are needed?
– When do the changes need to be made?
– Who on the project team needs to make “course
corrections” in order to achieve the plan?
• Iterate!
Managing
• What do you watch?
• How often?
• How?
Managing Project Teams
“Design team failure is usually due to failed team dynamics.”
(Leifer, Koseff & Lenshow, 1995).
“It’s the soft stuff that’s hard; the hard stuff is easy.”
(Doug Wilde, quoted in Leifer, 1997)
In order to make sense out of leading project teams,
you need to understand
• the concept of “team,”
• the concept of “lead,” and
• the concept of “manage.”
Seven Habits Of Highly Effective People
Be Pro-Active:
Take initiative & the responsibility to make things happen.
Begin With an End in Mind:
Start with a clear destination to understand
where you are now, where you're going, & what you value most.
Put First Things First:
Manage yourself. Organize & execute around priorities.
Think Win/Win:
See life as a cooperative, not a competitive arena where
success is not achieved at the expense or exclusion of the success of others.
Seek First to Understand:
Understand then be understood to build the skills
of empathic listening that inspires openness and trust.
Synergize:
Apply the principles of cooperative creativity and value differences.
Renewal:
Preserving and enhancing your greatest asset, yourself, by renewing
the physical, spiritual, mental and social/emotional dimensions of your nature.
Steven Covey, 1989
Managing Project Teams
A team is a small number of people with complementary
skills who are committed to a common purpose,
performance goals, and approach for which they hold
themselves mutually accountable
• SMALL NUMBER
• COMPLEMENTARY SKILLS
• COMMON PURPOSE & PERFORMANCE GOALS
• COMMON APPROACH
• MUTUAL ACCOUNTABILITY (to project, to team, to each other)
--Katzenbach & Smith (1993) The Wisdom of Teams
Leadership vs Management
• Is there a difference?
Hey!!! Wrong Forest!!!
•
•
•
http://www.see.ed.ac.uk/~gerard/MENG/ME96/Documents/Intro/leader.html
http://www.bus.ualberta.ca/rfield/papers/LeadershipDefined.htm
http://www.lazarusconsulting.com/company/hot_topics/leadership_vs_management.html
Leadership vs Management
LEADERSHIP FUNCTIONS
MANAGEMENT FUNCTIONS
Assessing Organizational Performance
Tracking Operational Performance
Aligning Organizational Practices with Values & Vision
Aligning Operations with Customers' Values
Altering Organizational Practices & Standards
Maintaining Operational Practices & Standards
Initiating Organizational Improvements
Implementing Operational Plans & Projects
Facilitating Quality Interactions
Solving Operational Problems
Integrating Organizational Systems & Processes
Procuring Operational Resources
Educating for Quality Performance
Accounting for Resource Performance
Leadership vs Management
Author(s)
Bennis & Nanus
(1985)
Czarniawska-Joerges
& Wolff (1991)
Spreitzer & Quinn
(1996)
Zaleznik (1977, 1992)
McConkey (1989)
McConnell (1994)
Buhler (1995)
Sanborn (1996)
Fagiano (1997)
Sharma (1997)
Maccoby (2000)
Leaders
do the right things
people as great assets
commitment
outcomes
what and why things could be
done
sharing information
networks
Symbolic performance,
expressing the hope of control
over destiny
Transformational
Managers
do things right
people as liabilities
control
rules
how things should be done
compliance
secrecy
formal authority (hierarchy)
Introducing order by coordinating flows of
things & people toward collective action
Energize the system, their
working environment is often
chaotic
Provide proper conditions for the
people to manage themselves.
Vision, inspiration, courage,
human relationships, profound
knowledge.
Give people purpose, push the
boundaries, need vision and
ability to articulate it.
Create change and ensure that
others embrace it. The word lead
means to go from – leaders tend
to take their followers from one
place to another.
Help others do the things they
know need to be done to achieve
a common vision.
Innovation
Leadership is a relationship –
selecting, motivating, coaching,
building trust.
Ensure the stability of the system
Transactional
Concerned with controlling conditions and
others.
Allocate resources, design work methods,
create procedures, set objectives and create
priorities.
Accomplish work through others, follow the
rules, rely on legitimate power.
Change when they have to. The word manage
means to handle.
Get things done through other people.
Conformity
Management is a function – planning,
budgeting, evaluating, facilitating.
http://www.bus.ualberta.ca/rfield/papers/LeadershipDefined.htm
Managing Project Teams
Six Basic Principles of Team Discipline
1.
2.
3.
4.
5.
6.
Have and develop a common purpose
Keep team membership small
Ensure team members have complementary skills
Set common goals
Establish agreed-upon ground-rules and approach
Integrate team and individual accountability
Katzenbach & Smith (2001) The Discipline of Teams
Leading Project Teams
Leadership is any action that helps
a group achieve its goals AND
maintain cooperative relationships
among members of the group.
• List as many characteristics in 2 minutes that come to
find for followers you admire
• List as many characteristics in 2 minutes that come to
mind for followers you admire
New Leadership Competencies
1. Ability to think in terms of systems & knowing how to lead
systems.
2. Ability to understand the variability of work in planning &
problem solving.
3. Understanding how people learn, develop, & improve; leading
true learning and improvement.
4. Understanding people & why they behave as they do.
5. Understanding the interaction & interdependence between
systems, variability, learning, and human behavior; knowing how
each affects the others.
6. Giving vision, meaning, direction, & focus to the organization.
The Leader's Handbook (Scholtes, 1998)
Ten Commandments of Leadership
8 Crucial Elements of System Leadership
1. Quality information must be used for improvement,
not to judge or control people
2. Authority must be equal to responsibility
3. There must be rewards for results
4. Cooperation, not competition, must be the basis for
working together
5. Employees must have secure jobs
6. There must be a climate of fairness
7. Compensation should be equitable
8. Employees should have an ownership stake
Managing Project Teams
• What’s involved in managing teams?
• What are the obstacles a PM must overcome
to create and manage a successful project
team?
Managing Project Teams
Team Charter
• Team name, membership, roles
• Team Mission Statement
• Anticipated results (goals)
• Specific tactical objectives
• Ground rules/guide principles for team
participation
• Shared expectations/aspirations
Managing Project Teams
What it takes to be a good project manager (Posner, 1987)
Communication Skills (84%)
Listening
Persuading
Organizational skills (75%)
Planning
Goal-setting
Analyzing
Team Building Skills (72%)
Empathy
Motivation
Esprit de Corps
Leadership Skills (68%)
Sets Example
Energetic
Vision (big picture)
Delegates
Positive
Coping Skills (59%)
Flexibility
Creativity
Patience
Persistence
Technological Skills (46%)
Experience
Percentages represent the percentage of
Project Knowledge
respondents to a Posner survey who included the
skill in the list of importance
Managing Project Teams
Skills necessary for effective project managers
Planning
•
•
•
•
Work breakdown
Project scheduling
Knowledge of PM software
Budgeting and costing
Pinto and Kharbanda (1995):
Organizing
•
•
•
Team building
Establishing team structure and reporting assignments
Define team policies, rules and protocols
Leading
•
•
•
•
•
Motivation
Conflict management
Interpersonal skills
Appreciation of team members' strengths and weaknesses
Reward systems
Controlling
•
•
Project review techniques
Meeting skills
James M. Kouzes & Barry Z. Posner. 1993.
Credibility: How leaders gain and lose it, why
people demand it. San Francisco: Jossey-Bass.
Managing Project Teams
Managing Project Teams
Five Top Criteria of a Competent Project Manager
1. They have enthusiasm
2. They have high tolerance for ambiguity
3. They possess high coalition and team-building
skills
4. They have client-customer orientation
5. They have a business orientation
Graham, Robert J. & Englund, Randall L. 1997.
Creating an environment for successful projects.
San Francisco: Jossey-Bass
Power Tools
• 5 Types of Power for Leaders and Managers
Type
People do what you ask because…
Formal
Organization tells them to
Expert
You are perceived as an expert in “x”
Referent
They like or trust you
Reward
You can give them something in return
Coercive You can take something from them/hurt them
• Situational!!
Keys For PM Success
•Communicate regularly in person with key team members
•Keep management informed
•Keep informed on all aspects of the project
•Delegate tasks to team members
•Listen to input from team members
•Be able to take criticism
•Respond to and/or act on suggestions for improvement
•Develop contingency plans
•Address problems
•Make decisions
--Lientz and Rea (1996)
•Learn from past experience
•Run an effective meeting
•Set up and manage the project file
•Use project management tools to generate reports
•Understand trade-offs involving schedule and budget
•Have a sense of humor
Meetings and More Meetings
“I used to think, ‘oh no, not another meeting’ until I worked for you.”
- A former employee of mine
People hate meetings.
People think meetings are a waste of time The sad part is that most of them are
You will spend a good portion of your work
in meetings. Fool people – make them gain
respect for you by making your meetings an
EFFECTIVE use of their time
Meetings and More Meetings
Some reasons that people think badly of
meetings:
• Purpose is unclear
• Participants are unprepared
• Key people are absent or missing
• The conversation veers off track
• Participants don’t discuss issue but instead
dominate, argue, or take no part at all
• Meeting decisions not followed up
Guidelines for Holding Meetings
• Hold meetings for group decision making
– avoid weekly progress report meetings
• If meeting is held to address a specific issue, restrict
meeting to this issue alone
• Ensure everyone properly prepared
– Distribute written agenda in advance of meeting
– Tell where and when
– State and repeat the objective of the meeting
• Avoid excessive formality
• Chair and participants control
Meeting – use groundrules
Meetings – The Right Way
BEFORE
Plan: Clarify meeting purpose & outcome, Identify meeting participants,
Select methods to achieve purpose, Develop & distribute agenda,
Set up room
DURING
Start: Check-in, Review agenda, Set/review ground rules, Clarify roles
Conduct: Cover one item at a time, Manage discussions,
Maintain focus & pace
Close: Summarize decisions, Review action items, Solicit agenda items
for next meeting, Review time & place for next meeting, Evaluate
the meeting, Thank participants
AFTER
Follow-up: Distribute or post meeting notes promptly, File agendas, notes,
& other documents, Do and/or check up on action items/assignments.
Meetings – The Right Way
Five Meeting Roles
• Chair
• Recorder
• Timekeeper
• Presenter
• Participant
NO ONE SHOULD PLAY MORE THAN 2
ROLES AT ONCE!!!!!
Meetings and More Meetings
• Virtual PM – what’s different?
– Virtual Project Teams
– Use of the Technology to meet
– Use of Software Programs
• How does the new situation change PM
processes?
Groupthink
Groups without conflict where
there is a strong norm of
“Concurrence Seeking”
Avoiding Groupthink
1. Know the Symptoms of Groupthink
Overestimation of the Group
Illusion of invulnerability
Belief in group morality
Closed Mindedness
Rationalization
Stereotyping Outgroups
Pressures Toward Uniformity
Self-censorship
Direct pressure
Mindguards
Illusion of unanimity
Avoiding Groupthink
2. Strategies for avoiding Groupthink
• Promote an open climate
• Avoid the isolation of the team
• Appoint critical evaluators
• Avoid being too directive
Controversy
Controversy exists when one
person’s ideas, information,
conclusions, theories, and
opinions are incompatible with
those of another person and the
two seek to reach an agreement.
Controversy
“. . . Controversy is a great thing.
Unfortunately, controversy gets a bad rap.
Most people scurry about their lives trying to
avoid controversy, avoiding disagreements with
others, avoiding messy debates. . .Our world is
awash in controversy. And rightly so. . . We
need it. We need to discuss controversial
subjects. We need to settle differences of
opinion. . . Acknowledging and resolving issues
that divide us is a good thing. It’s what
separates us from the apes. . . “
Vernon Felton, Frame of Mind -- Bike, 8 (4), May 2001
Managing Conflict
“The work life of a project manager is a life of
conflict. Although conflict is not necessarily bad,
it is an issue that has to be resolved by the
project manager. Without excellent negotiation
skills, the project manager has little chance for
success.”
Taylor, J. 1998. A survival guide for project managers. AMACON.
Managing Controversy
Mitigating The Bad Effects of Controversy
• Cooperative Context
• Positive Interdependence – Commitment to a
Common Goal
• Individual and Group Accountability
• Face-to-Face Promotive Interaction
• Teamwork Skills
• Group Processing
• Heterogeneity Among Members
• Distribution of Information
• Skilled Disagreement
Managing Controversy
Rules for Constructive Controversy
1. I am critical of ideas, not people. I challenge & refute the ideas
of the opposing group, but I do not personally reject them.
2. I remember that we are all in this together, sink or swim. I focus
on coming to the best decision possible, not on winning.
3. I encourage everyone to participate & to master all relevant info.
4. I listen to everyone’s ideas, even if I don’t agree.
5. I restate what someone has said if it is not clear.
6. I first try to bring out all the ideas & facts supporting both sides,
and then I try to put them together in a way that makes sense.
7. I try to understand all sides of the issue.
8. I change my mind when evidence clearly indicates I should
BOEING Code of Cooperation
•EVERY member is responsible for the team’s progress and success.
•Attend all team meetings and be on time, Come prepared.
•Carry out assignments on schedule.
•Actively listen to & show respect for contributions of other members
•CONSTRUCTIVELY criticize ideas, not persons.
•Resolve conflicts constructively,
•Pay attention, avoid disruptive behavior like holding side conversations
•Only one person speaks at a time.
•Everyone participates, no one dominates.
•Be succinct, avoid long anecdotes and examples.
•No rank in the room.
•Respect those not present.
•Ask questions when you do not understand.
•Attend to your personal needs at any time but minimize team disruption.
•HAVE FUN!!
•?
Adapted from Boeing Aircraft Group Team Member Training Manual
FORD Code of Cooperation
• Help each other be right, not wrong.
• Look for ways to make new ideas work, not for reasons they won't.
• If in doubt, check it out! Don't make negative assumptions about
each other.
• Help each other win, and take pride in each other's victories.
• Speak positively about each other & your organization at every
chance.
• Maintain positive mental attitude no matter what the circumstances.
• Act with initiative and courage, as if it all depends on you.
• Do everything with enthusiasm; it's contagious.
• Whatever you want; give it away.
• Don't lose faith.
• Have fun
Managing Conflict
Strategies for Dealing With Conflict
Withdrawing: Neither the goal nor the relationship are important
- withdraw from the interaction.
Forcing: The task is important but not the relationship
- use all your energy to get the task done.
Smoothing: The relationship is more important than the task.
- work to be liked and accepted.
Compromising: Both task & relationship important but there
is lack of time - you both gain and lose something.
Confronting: Task & relationship are equally important.
- define conflict as a problem-solving
situation and resolve through negotiation.
Managing Conflict
Which strategies do effective team
members use? Ineffective team
members?
Under what conditions are each of these
conflict strategies important?
What words and phrases are needed to
set up each strategy?
Managing Conflict
Blake & Mouton
Conflict Model
- Importance of the Goal
- Importance of the
Relationship
Managing Conflict
Heuristics for dealing with conflicts:
1. Do not withdraw from or ignore the conflict.
2. Do not engage in "win-lose" negotiations.
3. Assess for smoothing.
4. Compromise when time is short.
5. Confront to begin problem-solving
negotiations.
6. Use your sense of humor.
Managing Conflict
A confrontation is the direct expression of one's view of the conflict
and one's feelings about it while inviting the opposition to do the
same. Suggested guidelines for confrontation are:
1. No "hit-and-run": confront only when there is time to
jointly define the conflict and schedule a negotiating session.
2. Openly communicate: express feelings about & perceptions of
issues involved in the conflict, & try to do so in minimally
threatening ways.
3. Seek 1st to understand: accurately & fully comprehend
opponent's views of the feelings about the conflict.
A successful confrontation sets up opportunity to negotiate.
Managing Conflict
Skilled Disagreement
1. Define Decision as a mutual problem, not as a winlose situation.
2. Be critical of ideas, not people (Confirm others'
competence while disagreeing with their positions).
3. Separate one's personal worth from others' reactions
to one's ideas.
4. Differentiate before trying to integrate.
5. Take others' perspectives before refuting their ideas.
6. Give everyone a fair hearing.
7. Follow the canons of rational argument.
Managing Conflict
Escalation of Conflicts – Strategies for Resolving
•
•
•
•
•
•
•
Informal Negotiation
Formal Negotiation
Mediation
Third-Party Mediation
Arbitration
Binding Arbitration
Litigation
Managing Conflict
Negotiation is a conflict resolution process
by which people who want to come to an
agreement, but disagree about the way to
resolve, try to work out a settlement.
Managing Conflict
Recommended steps in conflict negotiation:
1. Define the conflict mutually.
2. Communicate feelings and positions.
3. Communicate cooperative intentions.
4. Take the other person's perspective.
5. Coordinate the motivation to negotiate.
6. Reach agreement satisfactory to both
sides -SEEK WIN-WIN OR DON’T NEGOTIATE.
Managing Conflict
Negotiating Guidelines
4 Steps in Principled Negotiation
1. Separate the people from the problem
2. Focus on interests, not positions
3. Create options
4. Insist on standards
Fisher & Ury - Getting to Yes
Managing Conflict
1.
Promoting Controversy
Present Viewpoints.
2. Highlight Disagreements.
3. Be Impartial and Rational.
4. Require Critical Evaluation.
5. Assign Devil’s Advocate Role.
6. Use Advocacy Subgroups
7. Have “Second Chance” Meetings
Star Tribune 12/3/98
Star Tribune 12/3/98
Health & Safety
Job-related fatalities up in '04
http://www.bizjournals.com/twincities/stories/2005/08/22/daily40.html?hbx=e_du
John Vomhof Jr. Staff Writer, The Business Journal – 8/25/2005
There were 80 fatal work-related injuries recorded in the state in 2004, the Minnesota
Department of Labor & Industry reported Thursday. That is up from 72 in 2003,
and one less than in 2002. The state averaged 74 work-related deaths from 1999
to 2003.
In 2004, the agriculture industry recorded the most worker fatalities, with 18; the
industry had 19 deaths in 2003 and 21 in 2002. Construction had 16 fatalities in
2004, an increase from 10 in 2003 and 15 in 2002. Nine government workers
were fatally injured in 2004, up from three in 2003, but down from 12 in 2002.
Transportation incidents accounted for 29 of the 80 work-related deaths in 2004. That
compares to 30 in 2003 and 44 in 2002.
Contact with objects and equipment led to 18 fatalities in 2004, while assaults and
violent acts killed 11. Falls also led to 11 work-related deaths.
Women accounted for seven of the 80 people fatally injured on the job in 2004.
The Census of Fatal Occupational Injuries is conducted annually by the U.S.
Department of Labor's Bureau of Labor Statistics. There were a total of 5,703
fatal work injuries recorded nationwide in 2004.
Causes of Constr. Deaths
Cause
Deaths
Other
Falls
377
Violence
Transportation
283
Harmful
Contact with Objects,
Equipment
200
Harmful Substances,
Environment
186
Violence
32
Other
29
Contact
Transp.
Falls
0
100
Source : U.S. Department of Labor, Star Tribune 12/3/98
200
300
400
Health & Safety
Star Tribune, 12/3/98, Two killed in accident at Piper Site, By Joy Powell
Two electricians were killed at a downtown Minneapolis construction site on
12/2/98, after a 10,000-pound steel column being moved by a crane slipped off
its mark and slammed into a beam.
That apparently dislodged a storage bin weighing more than a 1,000 pounds
that was resting on the beam. The bin, full of nuts and bolts and studs,
crashed through eight floors to the ground.
Darryl J. Hilgendorf, 49, of Minneapolis, and a second worker whose name
wasn’t released died in the 9:20 a.m. accident.
They were working on the 6th floor of the Piper Jaffray Center under
construction at S. 8th St. and Nicollet Mall when they were either hit by the bin
or fell through the hole alongside it.
“We’re just sick about this”, said Robert Cutshall, vice president of
construction for Ryan Companies, the general contractor. ”We feel terrible,
and our hearts go out to the families of these two men killed today”.
A Minneapolis building inspector is also expected to tour the site today, and
state investigators will continue to look into the case.
Workers were building the 8th story of a 30 story tower. They had laid decking,
sheets of corrugated steel 1/16th of an inch thick, that will have concrete
poured on them to make floors.
Health & Safety
History: Other Construction Fatalities in the Twin Cities
June 1992, Minnesota Zoo: A worker on the zoo’s amphitheater was
fatally injured when a 400-pound fixture holding 8 bird cages fell on him.
May 1991, Mall of America: One man died and another was injured when
scaffolding they were on collapsed.
April 1991, Mall of America: One man died and two other workers were
injured when concrete flooring collapsed in a mall parking garage.
April 1990, Lake St. Marshall Av. bridge: A worker fell 90 feet to his death
when a concrete arch span of the new bridge collapsed into the Mississippi
river.
April 1990, Minneapolis Veterans Medical Center: A construction worker
was killed when a section of crane he was helping dismantle collapsed on
him
October 1989, Cray Research, Inc.: A fall from a scaffold killed a worker
at the Eagan site of a Cray building.
Star Tribune 12/3/98, by Linda Scheimann and James Walsh
Health & Safety
Workers (millions/10)
Injury and Fatality Statistics
Deaths
Death Rate*
Disabling Injury Rate **
100
80
60
40
20
0
Years 1
6
Workers – 100,000s
Deaths – 100s
11
16
21
26
31
Death rate – per 100,000 workers
Disabling injury rate – per 1,000 workers
36
Health & Safety
• What responsibilities do engineers and
PMs have for health and safety?
• What can PMs do to minimize risks and
make the workplace safer?
Ethics Outline
• What is ethics?
– Definition
– Fundamentals
– Codes of ethics
• Why do we care about ethics?
What Is Ethics??
• Ethics provide a systematized framework for
making decisions where values conflict
Differentiating the Confusion
• Ethical – decision-making in a systemic
manner that conforms to accepted
professional standards of conduct
• Moral – decision-making based on principles
of right and wrong behavior
• Legal – decision-making conforming to rules
of the law
Source: WWWebster Dictionary
Why Is Ethical Behavior Important??
• Trust is defined as “certainty based on past
experience”
• …. ethics concerns concepts of the individual or
group by which actions are judged “right” or “wrong.”
Source: J Campbell Martin
• Systems of ethics are used to guide our
decision-making and behavior in
human-to-human relationships
Systems of Ethics
• There are many systems of ethics
• The two major theories:
– Decisions are made on the basis of the
consequences of an act or decision
– Decisions are made on the basis of the morality of
acts (is act right or wrong?)
Ethics – What Guides Your Choices?
• Is the commonly made decision always the right one ?
• Is the legal decision always the morally right decision?
• Is the morally right decision always the one in your best
interest?
• Is the morally right decision always the most economical?
• Is following orders that are not proper a legal or a moral
defense?
Fundamentals – Moral Development
Attributed to Kohlberg
• Preconventional level - Moral behavior or
actions are judged by the person the
behavior or actions benefits. e.g. to a child
taking a toy from another child is moral
(ethical.)
Behavior can be modified by desire to avoid
punishment or to seek approval.
Fundamentals – Moral Development
• Conventional level - behavior is based on the
norms of the family, group or society that are
accepted. Most adults do not go beyond this
level.
• Postconventional level - At this level the
individual is autonomous and can ask “what
is best?” Individuals are guided by integrity,
self respect and respect for others.
Utility Theory
• Attributed to Mill
• Balance between good and bad
consequences.
• Utilitarianism - acts should always maximize
utility.
Duty Theory
• Attributed to Kant
• Duties - honesty, fairness, commitment,
gratitude, ......
• Duties
– show respect for others,
– express moral imperatives, and
– are universal.
Human Rights Theory
• Attributed to Kant.
• Duties exist because of the rights of others.
• Rights are to
– life,
– liberty, and
– property gained by one’s labor.
Virtues Theory
• Attributed to Aristotle
• Moral virtues represent a balance between
extremes between excess and deficiency in
conduct, emotion, desire and attitude.
Ethics – The Dilemma
• A dilemma is a choice between two (or more) options that
are fundamentally opposed and which carry generally
equal weight.
• “Engineers are always confronted with two ideals,
efficiency and economy, and the world’s best computer
could not tell them how to reconcile the two. There is
never ‘one best way.’ Like doctors or politicians or poets,
engineers face a vast array of choices every time they
begin work, and every design is subject to criticism and
compromise.”
Source: Billington, D.P., 1986, “In defense of engineers,”
The Wilson Quarterly, January.
Ethics in Practice
“Treat others as you would want them
to treat you”
• Engineering ethics is important in
– interpersonal relationships
– developing products and facilities
– impacting future generations......
Ethics in Practice
If a builder builds a house for man and does not make its
construction firm and
• the house collapses and causes the death of the owner of
the house - that builder shall be put to death.
• it destroys property, he shall restore whatever is destroyed,
and because he did not make the house firm he shall
rebuild the house which collapsed at his own expense.
If a builder builds a house for a man and does not make its
construction meet the requirement and a wall falls - that
builder shall strengthen the wall at his own expense.
The Code of Hammurabi
(2250 BCE)
University of MN Honor Code
I recognize academic integrity as essential to the
University of Minnesota’s and its students’ equitable
and uncompromised pursuit of their joint endeavors.
As a student I promise to practice it to the best of my
ability and to do nothing that would give me unfair
advantage at the expense of my fellow students.
If I cheat in spite of making this declaration, I expect to
be penalized according to the offense, up to and
including notation of cheating recorded on my transcript
and permanent expulsion from the University of
Minnesota.
http://www1.umn.edu/usenate/reports/saicrept.html (accessed 4/25/00)
Our Ethical Values
(Lockheed-Martin)
•
•
•
HONESTY: to be truthful in all our •
endeavors; to be honest and
forthright with one another and
•
with our customers, communities,
suppliers and shareholders.
INTEGRITY: to say what we mean,
to deliver what we promise, and to
stand for what is right.
RESPECT: to treat one another with
•
dignity and fairness, appreciating
the diversity of our workforce and
the uniqueness of each individual.
TRUST: to build confidence through
teamwork and open, candid
communication.
RESPONSIBILITY: to speak up –
without fear of retribution – and report
concerns in the work place, including
violations of laws, regulations and
company policies, and seek
clarification and guidance whenever
there is doubt.
CITIZENSHIP: to obey all the laws of
the United States and the foreign
countries in which we do business and
to do our part to make the
communities in which we live a better
place to be.
PM Ethics
Preamble: In the pursuit of the PM profession, it is vital that PMI
members conduct their work in an ethical manner in order to earn &
maintain the confidence of team members, colleagues, employees,
employers, clients, the public, & the global community
Member Code of Ethics: As a professional in the field of PM, I pledge
to uphold and abide by the following:
•
I will maintain high standards of integrity & professional conduct
•
I will accept responsibility for my actions
•
I will continually seek to enhance my professional capabilities
•
I will practice with fairness & honesty
•
I will encourage others in the profession to act in an ethical &
professional manner
Project Management Institute
Engineering Ethics
Engineers, in the fulfillment of their professional duties, shall:
•
Hold paramount the safety, health and welfare of the public.
•
Perform services only in areas of their competence.
•
Issue public statements only in an objective and truthful manner.
•
Act for each employer or client as faithful agents or trustees.
•
Avoid deceptive acts.
•
Conduct themselves honorably, responsibly, ethically, and lawfully so
as to enhance the honor, reputation, and usefulness of the
profession.
National Society of Professional Engineers (NSPE)
http://www.nspe.org/ethics/eh1-code.asp
Ethical Decision Evaluation
Possible Process
1.
Problem Definition
•
Identify ethical issues
•
Determine relevant facts
•
Identify/Gather required missing data
2.
Determine relevant ethical principles
3.
Discuss practical constraints
4.
Identify possible solutions
•
Seek ways to avoid the original problem
•
List action items
5.
Make preliminary judgments (apply evaluation tests)
6.
Review decisions and synthesize discussion into a solution
Ethics Evaluation Tests
•
Harm Test: Does this option do less harm?
•
Publicity Test: Would I want my choice to appear in the newspaper next to
my name?
•
Mother Test: What if my mom knew about the choice I made?
•
Defensibility Test: Could I defend my choice before a committee of my peers
(or others)?
•
Reversibility Test: Would I think the choice was good if I were the one
affected by it?
•
Colleague Test: What do my colleagues say when I describe the problem
and my solution?
•
Professional/Organizational Test: What might ASCE (IIE, IEEE, ASME, etc)
say about my choice?
Ethics EvaluationTests
•
Is it honorable (would you hide this action from anyone)?
•
Is it honest (does it betray a trust)?
•
Does it fall within your area of competence?
•
Does it avoid a conflict of interest (will your judgment be biased)?
•
Is it fair (does it violate the legitimate interests of others)?
•
Is it considerate (does it violate privacy or confidentiality)?
•
Is it conservative (in terms of time and resources required)?
You're sitting across from a peer of yours, who is also a good friend on a
professional level, who you know is trying to get a small business up and
running "on the side." You already have recognized that he is, frankly,
not the highest performer. Over the past several weeks, you have also
noticed that he is doing things for his business while at work. Today, you
notice that he has been holding a phone call with someone about his side
business (not chatting, but actually conducting business) and that call is
now just into the start of the second hour.
What do you do?
You are attending a conference in the U.S. as a representative of
your company. A supplier passes out a small electronic
gadget, valued at about $40, to everyone at the meeting. What
do you do?
1. Accept the thoughtful gesture – since the gift is valued under
$50, there is no need to report it.
2. Accept the gift, but be sure and report it to your manager. If
your manager tells you to return it, you are required to comply.
3. Accept the gift, if declining puts you or the company in a
awkward position. Then, immediately consult the Ethics Office
for disposition.
4. Politely refuse to accept the gift.
(Ethics Challenge -- Case 6)
You work in Quality Assurance. You rejected some parts as nonconforming to specifications, but your manager told you to
accept the part “As Is.” You don’t agree with the decision.
What do you do?
a) Do nothing. It’s the manager’s decision to make.
b) Discuss it with your manager.
c) Call the Ethics HelpLine.
d) Ask the engineers who are responsible for the specification to
clarify the situation.
(Ethics Challenge -- Case 18)
Employees in the department have noticed that your supervisor
spends a good portion of his day doing homework for a
company-sponsored college course. He also spends a
significant amount of time making phone calls that they suspect
are personal, and may be made a company expense. What
should you do?
a) Tell the employees to just do their work & mind their own
business.
b) Tell the employees that you don’t want to risk your job by
becoming involved.
c) Suggest that your fellow employees contact the Ethics Officer
or another company official.
d) Raise the issue directly with your supervisor.
(Ethics Challenge -- Case 24)
In a department meeting, your supervisor takes credit for some
excellent work done by an absent colleague. What do you
do?
a) Put the word out to your fellow workers as to who really did
the work.
b) Seek a private meeting with the supervisor in order to make
sure your colleague gets proper credit.
c) During an informal conversation with “the big boss,” casually
let it slip that your colleague did not get the credit he deserved
on a recent project.
d) Inform your colleague as to what took place, and let him take
whatever action he desires.
(Ethics Challenge -- Case 29)
A co-worker is injured on the job. You are a witness and what you
saw reflects poorly on the company. What do you do?
a) Don’t get involved
b) Contact the injured co-worker and offer to testify on her behalf.
c) Report what you saw to the company.
d) Protect the company by refusing to testify as a witness for the
injured person.
(Ethics Challenge -- Case 30)
When a particular male supervisor talks to any female employee,
he always addresses her as “Sweetie.” You have overheard
him use this term several times. As the supervisor’s manager,
what should you do?
a) Nothing, since no one has complained.
b) Talk to the supervisor and explain that, while he may have only
good intentions, his use of “Sweetie” could be offensive to
employees and must stop.
c) Order the supervisor to call an all-hands meeting to discuss
the company policy on sexual harassment.
d) At the next staff meeting, remind all supervisors of their
obligation to maintain a professional work environment, free of
discrimination or harassment of any kind.
(Ethics Challenge -- Case 42)
You work in Production Control. You plan to add a porch to your
house, and you visit a lumberyard to get ideas and a price.
During the discussion, the sales manager says, “Oh, you work
for the XYZ company. They buy a lot from us, so I’m going to
give you a special discount.” What do you do?
a) Like finding a $20 bill on the street, take the discount. When
you get back to the office on Monday, ask the supervisor if all
employees were eligible for the discount.
b) Say “I work for a different division of the XYZ Company – am I
still eligible for the discount?”
c) Ask for clarification – “Is that special discount available to all
XYZ employees?”
d) If a deal sounds too good to be true, it probably is.
(Ethics Challenge -- Case 44)
A subordinate (direct report) on one of your projects has trouble
getting along with others. What do you do?
a) Don’t get involved.
b) Confront the worker, indicating what needs to change, how it
needs to change, how you will monitor for improvement, and
working with the employee to come up with solutions, etc.
c) Report what you saw to your manager.
d) Protect the company by documenting the problem.
As a senior research scientist, you receive a research paper for peer
review. The paper essentially duplicates research you are writing for
publication. If this paper is published before your paper you will be
“scooped” in the profession. Christmas holidays are coming – and
you had planned to use the free time to complete your paper and
submit it for open literature review. Reviewing the competing paper
will take valuable time, and allowing it to be published first will
drastically affect your career. What do you do?
a)
Without reading the paper, and knowing its contents could affect your
conclusions, you return the manuscript to the journal editor, explaining
your situation. Then you quickly finalize your paper and submit it.
b)
Let Christmas holidays “conveniently” delay the review, then provide
negative review comments, knowing that this will delay publication.
c)
With the editor’s permission, contact the other author to see if you
might combine efforts and produce an even better paper.
d)
Review the paper, provide objective comments and return it promptly.
(Ethics Challenge -- Case 47)
Ethics Summary
• As an engineer, you have a duty to protect
the safety of workers and the public
• As an engineer, you also have a duty to
respect the interests/desires of your employer
or client
• At times, these two goals may be at odds
• Having a basis on which to evaluate the
ethics of decisions is extremely important
Project Closure
• Also known as:




Project Termination
Project Administrative Closure
Project Feedback
Project Audit
• Why should this be a formal, pre-planned
activity rather than just an ad hoc, deal with
it as it happens situation?
Project Closure
• Closure activities?






Verify product/service output
Closeout financial system
Gather lessons learned
Update records
Complete final project performance reporting
Archive records
• Closure results/outputs?




Project Closure/Formal Acceptance
Lessons Learned Documents
Project Archives
Released Resources
Project Closure
•
Verify product/service output
•
Does/Did it do everything you said it would?
• As judged by the CUSTOMER
• Partly objective judgment based on hard
metrics
•
Is the customer satisfied?
• As judged by the CUSTOMER
• Partly subjective judgment
• What might make customer dissatisfied even
though the objective evidence says it was
good?
Project Closure - Financial
•
Closeout financial system
•
“Collect” revenue
•
•
Pay final bills
•
•
What do you do if revenue is to be paid you over a
time period?
How do you “close out” a long term bill?
Complete cost records
•
•
What records?
How does organization structure affect how this is
handled?
Project Closure – Post Mortem
•
Gather lessons learned
•
Sometimes called “post mortem”
•
Analyze what went right and what went wrong on project
•
Analyze what would have been done differently in hindsight
•
Quite a few companies fail to do this at all
•
Most companies try to do this in one meeting at the end
•
Best practice:
•
Plan for “interim” evaluation along the way
•
Have the meetings necessary to evaluate outcome
•
Get information via “non meetings” also
Project Closure - Archiving
•
Update and Archive records
•
Finalize project records
•
Put all files, letters, correspondence, and other
records of the project into an ORGANIZED file
•
Ensure the organized file is in a place that is
accessible by the appropriate people for future
projects
•
How would you protect the records for future
use?
•
Update skill set information for resources
Project Closure
•
Complete final project performance reporting
•
Analyze, document, and report success and
effectiveness of project
Project Closure
• Closure results/outputs?
 Project Closure/Formal Acceptance

“Last minute” documents to customer



As Builts
Manuals
A formal document of acceptance
 Lessons Learned Documents
 Project Archives
 Released Resources
 Final resources need formal leave from the project
 The PM can check out but can never leave
Project Management Office
• Project Management Office (PMO)
– Not very standard in objective/work
– May be responsible for providing support functions (project
coordination, other admin functions), to providing “process
ownership” and training, to actually being responsible for
project results
• Sometimes known by other names
– Project Management Process Group
– Project Management Center Of Excellence
– Program Management Office
PM Miscellaneous - PMI
•
Project Management Institute (PMI) and Various
Engineering Discipline Institutes
•
Valuable education and extra insight
•
Help make you that extra bit competitive
•
Benchmarking opportunity
•
Networking, Networking, Networking
PM Miscellaneous - PMMM
•
Project Management Maturity Model (PMMM)
Organizations with a solid project management
infrastructure achieve an average of 20 %
improvements in productivity, customer
satisfaction, cost reductions, & ROI.
From "The Value of Project Management in Organizations," a report based on
research conducted by Project Management Solutions Inc. & The Center for
Business Practices
PM Miscellaneous - PMMM
•
Project Management Maturity Model (PMMM)
•
Progressive development of an enterprise-wide project
management approach, methodology, strategy, and
decision-making process. Appropriate level of maturity will
vary by organization based on specific goals, strategies,
resource capabilities, scope, needs, etc.
•
Maturity to which an organization should strive is
determined during a detailed assessment conducted by a
professional PM consulting team. The organization has
achieved full project management maturity when it has met
the requirements and standards for project management
effectiveness as defined by the Project Management
Maturity Model and can demonstrate improvements like
organizational efficiency, on-time project delivery, cost
control/controlled cost reductions, and profitability.
My PM Words To Live By
• Learn how your business works!
•
How the business makes money
•
How what you do contributes to making money
•
How you can do things better to make money
•
How you can avoid doing things that will hurt other
parts of the business’ ability to make money
My PM Words To Live By
In order to win the game, you must score more than your opponent.
Knowing that even the best athlete only scores a certain percentage of the
times s/he makes an attempt, to increase the number of points s/he
scores, s/he must take more shots and/or improve her/his skills. Those
are the only choices available.
A new player, particularly one without a great deal of natural talent, can
improve his/her percent of shots scored to shots taken through diligent
practice. Practice with the help of an experienced coach can increase the
percentage even further.
There comes a point where the athlete will score fewer and fewer
additional points for every hour spent practicing (the law of diminishing
returns). Her/his gains from learning fall off more and more drastically.
That doesn’t mean the athlete should stop practicing! It only means s/he
needs to find another way of increasing the chances of scoring.
Short of cheating or only playing against drastically inferior opponents, the
sole, honest remaining other way to score more is to make more attempts!
My PM Words To Live By
•
Be honest, always
•
Be straightforward, always
•
Don’t be afraid to admit you’re wrong
•
Take your work seriously, not yourself
•
Don’t let your fears get in the way of progress
•
Learn to understand and be proficient at politics
•
Remember *everyone* on your team – even a small,
innocuous thing like a piece of foam can destroy a
complex machine like the space shuttle