Project Management Fundamentals
1
1
Project Management Concepts
2
Chapter Concepts
Definition of a project and its attributes
Key constraints within which a project must be
managed
Life cycle of a project
Definition of project management
Elements of the project management process
Implications of global project management
Project Management Institute
Benefits of project management
3
Learning Outcomes
Define what a project is
List and discuss the
attributes of a project
Explain what is meant by
project objective
Define what is meant by
project deliverable
Provide examples of
projects
Discuss project constraints
Describe the phases of the
project life cycle
Define and apply project
management
Discuss the steps of the
planning process
Identify the three elements
of the executing process
Discuss some implications
of global project
management
Discuss the Project
Management Institute
List benefits of project
management techniques
4
Project Management Knowledge Areas from PMBOK® Guide
Project Integration Management
5
Feds and Contractor Share Blame
for Afghan Plant Delays
Background
Initial plant costs $125 million
Similar plants cost $105 million
Scope and budget changes were
estimated at $260 million
Planned completion date > year
delayed
Modifications and issues
Costs ~ $300 million
Fast tracking required turbines
built in Germany and flown to site
Contractor had cost-plus contract
Subcontractors had fixed price
contracts
Outcomes
The plant may not be used

Operation costs three times
similar plants
Mistakes were made



Not pay attention to lessons
learned
Failure related to needs,
resources, risks, and schedules
Lack of critical project
management components
Planners ignored local officials'
alternative recommendations
6
Causal Inferences on the Cost Overruns and Schedule
Delays of Large-Scale U.S. Federal Defense and
Intelligence Acquisition Programs
Causes for Delays
Failures to translate customer
needs into specific capabilities
Incorrect commercial products
selected
Delays cost $12 million a week in
personnel costs
Non-existent succession planning
Solutions
Communication with
stakeholders
Mentoring of junior project
personnel
Adoption and execution of
project management skills and
techniques
7
Project Attributes
Clear objective
Series of interdependent tasks
Various resources
Specific time frame
Unique, one-time endeavor
Sponsor or customer
Degree of uncertainty
8
Student Discussion
List examples of projects
9
Possible responses to
Student Discussion
List examples of projects
Staging a theatrical production
Developing and introducing a new product
Planning a wedding
Designing and implementing a computer
system
Issuing a new $1.00 coin
Modernizing a factory
Consolidating two manufacturing plants
Converting a basement to a family room
Hosting a conference
Designing and producing a brochure
Executing an environmental cleanup of a
contaminated site
Holding a high school reunion
Building a shopping mall
Performing a series of surgeries on an
accident victim
Organizing a community festival
Rebuilding a town after a natural disaster
Hosting a dinner for 20 relatives
Designing a business internship program
for high school students
Building a tree house
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Balancing Project Constraints
11
Student Discussion
List unforeseen circumstances that jeopardize the
project with respect to:
Scope
Cost
Schedule
12
Possible responses to
Student Discussion
List unforeseen circumstances
that jeopardize the project
with respect to
 Scope
 Cost
 Schedule
Costs are more than
estimated
Inclement weather
Additional redesign
Modifications
Delivery of critical
components is delayed
Key project team member
leaves the project
13
Project Manager Actions
Prevent, anticipate, overcome
Have good planning and communication
Be responsible
14
The Project Life Cycle
15
Initiating Phase
First phase
Identify need, problem, or
opportunity
Determine if select project
Develop project charter




Rationale
Project objective
Expected benefits
General requirements and
conditions
Decide if RFP needed
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Planning Phase
Second Phase
Show how project scope will be
accomplished
Plan the work and work the plan
Develop baseline plan






What needs to be done -- scope,
deliverable
How it will get done -- activities,
sequence
Who will do it -- resources,
responsibilities
How long it will take -- durations,
schedule
How much it will cost -- budget
What the risks are
Have actual resources plan the work
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Performing Phase
Third phase
Accomplish project objectives


Project manager leads
Project team completes the
project
Increase pace as more resources
are added
Monitor and control progress
Take corrective action as needed
Manage and control changes with
sponsor approval
Achieve customer satisfaction
with acceptance of deliverable
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Closing Phase
Final phase
Collect and make final
payments
Recognize and evaluate staff
Conduct post project
evaluation
Document lessons learned
Archive project documents
Record lessons learned
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Project Planning Process
Establish project objective
Define scope
Create WBS
Assign responsibility
Define specific activities
Sequence activities
Estimate activity resources
Estimate activity durations
Develop project schedule
Estimate activity costs
Determine budget
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Create WBS and Assign Responsibility
21
Sequence Activities
22
Develop the Project Schedule
23
Determine Budget
24
Student Discussion
Why is it critical to develop a baseline plan
for a project?
25
Possible responses to
Student Discussion
Why is it critical to develop a
baseline plan?
Many projects overrun their
budgets or miss completion
dates
A baseline plan helps to
compare progress
The graphical or tabular
display shows the start and
finish dates for each activity
The amounts of resources are
known
The budget is displayed for
each time period and the
project
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Execute the Project Plan
Perform the work
Monitor and control
progress
Control changes
27
Global Project Management
Globalization
Adds a dimension of
complexity
Changes project dynamics
Requires awareness of
factors



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

Cultural differences
Currency
Codes and regulations
Business organization
Political relations
Workforce availability
Helpful Competencies
Foreign language skills
Knowledge of




Cultures
Geography
World history and
contemporary events
International economics
Awareness of


Customs and etiquette
Geopolitical environment
Technology adoption and
translation software
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Project Management Associations
Project Management Institute
Worldwide not-for-profit
association of practitioners


350,000 members in >170
countries
250 chapters in >70 countries
Global Associations
Links available at
www.cengagebrain.com
Online communities for
collaboration
PMBOK® Guide
PMI Code of Ethics and
Professional Conduct
Certifications
www.pmi.org
29
Student Discussion
What are benefits of Project Management?
30
Possible responses to
Student Discussion
What are benefits of Project
Management?
Customer satisfaction
Complete the project scope in
a quality manner, on time,
and within budget
Project managers have
satisfaction, enhance their
reputation, and expand their
career opportunities
Project team members
contribute to the project's
success, expand knowledge,
and enhance skills
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When projects are successful,
everyone wins!
32
Critical Success Factors
Planning and communication are critical to successful project management. They prevent
problems from occurring or minimize their impact on the achievement of the project
objective when they do occur.
Taking the time to develop a well thought-out plan before the start of the project is critical
to the successful accomplishment of any project.
A project must have a clear objective of what is to be accomplished and defined in terms of
end product or deliverable, schedule, and budget; and is agreed upon by the customer.
Involve the sponsor or customer as a partner in the successful outcome of the project
through active participation during the project.
Achieving customer satisfaction requires ongoing communication with the customer to keep
the customer informed and to determine whether expectations have changed.
The key to effective project control is measuring actual progress and comparing it to planned
progress on a timely and regular basis and taking any needed corrective action immediately.
After the conclusion of a project, the project performance should be evaluated to learn what
could be improved if a similar project were to be undertaken in the future. Feedback should
be obtained from the sponsor or customer and the project team.
Learning and understanding the culture and customs of other project participants will
demonstrate respect, help build trust, and aid in developing an effective project team; and it
is critical for successful global project management.
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Summary
A project is an endeavor to accomplish a specific objective through a unique set of
interrelated tasks and the effective utilization of resources.
The successful accomplishment of the project objective could be constrained by many
factors, including scope, quality, schedule, budget, resources, risks, and customer
satisfaction.
The project life cycle has four phases: initiating, planning, performing, and closing the
project.
Project management is planning, organizing, coordinating, leading, and controlling resources
to accomplish the project objective. The project management process involves two major
functions: first establishing a plan and then executing that plan to accomplish the project
objective.
Globalization changes the dynamics of a project and adds a layer of complexity that can
adversely affect the project outcome if the project participants are not aware of what they
can encounter regarding cultural differences and multinational economic transactions.
The Project Management Institute is a premier worldwide not-for-profit association for
practitioners in the project management profession.
The ultimate benefit of implementing project management techniques is having a satisfied
customer—whether you are the customer of your own project or a business (contractor)
being paid by a customer to perform a project.
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Chapter Questions
35
Question 1
Define project.
A project is an endeavor to
accomplish a specific
objective through a unique
set of interrelated tasks and
the effective utilization of
resources.
36
Question 2
Define the term project
objective and give some
examples.
A project has a well-defined
objective—an expected result
or product. The objective of a
project is usually defined in
terms of scope, schedule, and
cost. Furthermore, it is
expected that the work scope
will be accomplished in a
quality manner and to the
customer’s satisfaction.
For example, to produce
5,000 two-page marketing
brochures by July 1 for a cost
of $15,000.
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Question 3
List some examples of
resources that are used on a
project.
The list of resources will be
dependent upon the type of
project.
Some examples are:




People
Equipment
Money
Materials
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Question 4
What role does a customer
have during the project life
cycle?
Why is it important to satisfy
the customer?
The customer should be
involved throughout the
project life cycle.
The customer is the one who
is paying for the project.
Unsatisfied customers have
been known to withhold
payments, to deny repeat
business, and to spread the
word of their dissatisfaction.
On the other hand, a satisfied
customer will do the opposite
of those things.
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Question 5
What aspects of a project
might involve some degree of
uncertainty? Why?
Many aspects can have some
degree of uncertainty, such as
the schedule or the budget.
 An unexpected snowstorm may
delay a highway construction
project.
 Increased lumber rates may
increase the cost of building a
new home.
Not everything in a project
can be planned, scheduled, or
budgeted.
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Question 6
Define scope, schedule, cost,
and customer satisfaction.
Why are these considered to
be constraints?
The scope of a project is all the work that must be
done in order to satisfy the customer that the
deliverables meet the requirements or acceptance
criteria agreed upon at the onset of the project.
The cost of a project is the amount the customer has
agreed to pay for acceptable project deliverables.
The project cost is based on a budget that includes
an estimate of the costs associated with the various
resources that will be used to accomplish the
project.
The schedule for a project is the timetable that
specifies when each activity should start and finish.
The project objective usually states the time by
which the project scope must be completed in terms
of a specific date agreed upon by the customer and
the individual or organization performing the work.
Customer Satisfaction is the level to which the
customer is pleased with the end result of the
project.
The objective of any project is to complete the scope
within budget by a certain time to the customer’s
satisfaction. Any of these four factors can put
limitations on the final product.
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Question 7
List and describe the main
phases of the project life cycle.
The first phase, the initiating phase, is when
projects are identified and selected. They are then
authorized, using a document referred to as a
project charter.
The second phase is the planning phase and
includes defining the project scope, identifying
resources, developing a schedule and budget, and
identifying risks, all of which make up the baseline
plan for doing the project work.
The third phase, the performing phase, the
project plan is executed and work tasks are carried
out to produce all the project deliverables and to
accomplish the project objective. During this
phase, the project progress is monitored and
controlled to assure the work remains on schedule
and within budget, the scope is fully completed
according to specifications, and all deliverables
meet acceptance criteria. Also, any changes need
to be documented, approved, and may be
incorporated into an updated baseline plan.
The final phase of the project life cycle is the
closing phase, project evaluations are conducted,
lessons learned are identified and documented to
help improve performance on future projects, and
project documents are organized and archived.
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Question 8
List and describe
the steps required
to develop a
baseline plan.
Establish project objective -- clearly define the project objective and have it agreed
upon by the sponsor or customer.
Define scope -- include customer requirements, define the major work tasks or
elements, as well as provide a list of deliverables and associated acceptance criteria
that can be used to verify that the work and deliverables meet specifications.
Create a work breakdown structure -- divide and subdivide the project scope into
pieces or work packages.
Assign responsibility - identify the person or organization responsible for each work
item in the work breakdown structure.
Define the specific activities -- develop the list of detailed activities that need to be
performed for each work package to produce any required deliverables.
Sequence activities -- graphically portray the activities in a network diagram to
display the sequence and dependent relationships of the detailed activities.
Estimate activity resources -- determine which types and skills or expertise of
resources and how many of each resource are needed for each activity with
consideration of the availability of the resources.
Estimate activity durations -- make a time estimate for how long it will take to
complete each activity, based on the estimate of the resources that will be applied.
Develop the project schedule -- develop the overall project schedule, including
when each activity is expected to start and finish, as well as the latest times that
each activity must start and finish in order to complete the project by the project
required completion date.
Estimate activity costs -- determine the costs for the types and quantities of
resources estimated for each activity using the appropriate labor cost rate or unit
cost for each type of resource.
Determine the budget -- aggregate the cost estimates for each activity.
43
Question 9
Why must a manager monitor
the progress of a project?
What can be done if a project
is not proceeding according to
plan?
A manager must monitor
progress to ensure that
everything is going according to
plan. It is also necessary to
measure actual progress and
compare it to planned progress.
If at any time during the project
the comparison of actual
progress to planned progress
reveals that the project is behind
schedule, overrunning the
budget, or not meeting the
technical specifications,
corrective action must be taken
to get the project back on track
within the scope, schedule, and
budget constraints of the project
objective. These actions include
adding or changing resources to
make up time and get back on
schedule.
44
Question 10
Describe how a global project
can be more complex than a
project performed within just
one country.
How might these elements
affect the successful outcome
of the global project?
Global projects have several unique
influencing factors such as currency
fluctuations and exchange rates,
country-specific work codes and
regulations, corporate joint
ventures and partnerships creating
entities with a presence and
facilities in multiple countries,
political relations between
countries, and availability of highdemand workforce skills.
Globalization changes the dynamics
of the project and adds a layer of
complexity, which can adversely
affect the project outcome if the
project participants are not aware
of what they might encounter
regarding cultural differences and
multinational economic
transactions.
45
Question 11
List some benefits of using
project management
techniques.
The ultimate benefit of
implementing project management
techniques is having a satisfied
customer.
Completing the full project scope in
a quality manner, on time, and
within budget provides a great
feeling of satisfaction.
It could lead to additional business.
Successful projects can expand
career opportunities.
A feeling of satisfaction from being
on a winning team.
An expansion of knowledge,
enhancement of skills, and
preparation of more complicated
projects.
When projects are successful,
everybody wins!
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Question 12
Consider a project in which you
are currently involved (or in
which you have been involved
recently).
a.
b.
c.
d.
e.
f.
Describe the objectives, scope,
schedule, cost, and any assumptions
made.
Where are you in the project life cycle?
Does this project have a baseline plan? If
yes, describe it. If not, create it.
Are you or is anyone else monitoring the
progress of the project? If so, how? If
not, how could you do so?
Describe some unexpected
circumstances that could jeopardize the
success of the project.
Describe the anticipated benefits of the
project.
Answers to this question will vary
depending on the student.
Responses should include the
definition of a project, an endeavor
to accomplish a specific objective
through a unique set of interrelated
tasks and the effective utilization of
resources.
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Internet Exercises
Project Management
Project Management Institute
Executive Planet TM
48
Internet Exercises
Using your favorite Web search engine,
perform a search for “project
management.”
Do several additional Web searches by
adding, after the words “project
management,” some of the key words
listed in this chapter.
Check out the PMI website for
information regarding memberships,
certification, education, and
publications.
Search for PMI Global Congresses.
Executive PlanetTM provides valuable
tips on business etiquette, customs,
and protocol for doing business
worldwide. Go to the organization’s
website and explore the business
culture guides for three different
countries.
Examination of broad field of
project management will reinforce
the growth of the project
management field.
Many organizations are realizing the
value of employees having project
management training and
certifications.
Exploration of the project
management information provides
information about additional
education or certifications.
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Case Study 1
A Not-For-Profit Organization
50
Case Study 1
Question 1
What are the needs that have
been identified?
They need to find a way to get
more funds.
They need more volunteers.
They need more space.
Some respondents may point
out that they do not have a
project plan for how to spend
their current funding and
need a project plan for their
current work.
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Case Study 1
Question 2
At this point they don’t all
agree on the objective.
What is the project objective?
52
Case Study 1
Question 3
What assumptions, if any,
should be made regarding the
project to be undertaken?
You must always be careful
when making assumptions.
However, the following
statements are made in the
case study. Some may or may
not actually be true.
 They will run out of funds in
two months.
 The local government is not
able to provide additional
funds.
 The demand is increasing.
 They need more space and
more volunteers.
 They get some food donations,
but maybe not on a regular
basis.
53
Case Study 1
Question 4
What are the risks involved in
the project?
If the statements in the story
are true, then the risk of not
succeeding with this project is
that the organization will have
to shut down and members of
the community in need of
food will no longer have this
student community service
organization as a source of
assistance.
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Case Study 2
E-Commerce For A Small Supermarket
55
Case Study 2
Question 1
What are the needs that have
been identified?
They believe that putting
their grocery store on-line will
bring increased sales.
They also have a need to
repave the parking lot.
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Case Study 2
Question 2
What is the project objective?
At this point, Matt and Grace
have not decided.
They have an idea to create
an online ordering site or just
have a page with a picture of
the market and them.
57
Case Study 2
Question 3
What are some things Matt
and Grace should do before
they talk with the consultant?
They must list, and possibly test,
some of their assumptions. You
must always be careful when
making assumptions. However, the
following statements are made in
the case study. Some may or may
not actually be true.
 They can increase sales by putting
their operation online.
 There is a demand for online services.
 The benefits of doing this will
outweigh the costs.
Matt and Grace also need to
determine the motivations of the
consultant. They need to find out if
the consultant is selling services for
web development or if the
consultant is a technical assistance
specialist that will provide wellinformed suggestions to Matt and
Grace.
58
Case Study 2
Question 4
What should the consultant
tell Matt and Grace?
An honest consultant would
determine the feasibility of
this project.
It might very well not be
feasible, but it is very possible
that the consultant will just
give them a price for building
the system.
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2
Identifying and Selecting Projects
60
Chapter Concepts
How projects are identified and selected
A project charter
Outsourcing projects using a request for proposal
The proposal solicitation process
61
Learning Outcomes
Discuss how projects are identified
Explain how projects are prioritized and selected
Identify and describe at least eight elements of a
project charter
Prepare a project charter
Prepare a request for proposal
62
Project Management Knowledge Areas from PMBOK® Guide
Project Integration Management
Project Procurement Management
63
King County and Phoenix Schools Prioritized
Safe Routes to School
Background
National Center for Safe Routes to
School
Three-step identification process



Prioritize schools that could benefit
Assess traffic, geography, and costs
on same form
Evaluate criteria and make decision
about solution and implementation
Determine highest priority
locations and countermeasures
Work to have the greatest benefit
for the most number of students
Outcomes
Used same metrics for all
schools
Completed side-by-side
comparison to determine
greatest needs
Completed project
identification efficiently
Two schools were featured
to explain process used


King County, Washington
Phoenix, Arizona
64
Spokane Builder and Others Propose
Methow Project
Problem Identification
Local business employees have
difficulty finding affordable
housing
Employees make long commute
to work in the Methow Valley
A seven-acre parcel could be
developed with affordable
housing
No RFP was developed, any
proposals for development are
unsolicited
Solution
Development firm build
relationship with housing
authority
Market survey being completed


Determine the housing
requirements for seniors, farm
workers, and others
Develop the evaluation criteria
for the project proposal
Needs assessments would inform
funding proposals
65
Project Identification
Start of Initiating phase
Recognize need, problem, or
opportunity
Various ways for identification



Organizations strategic planning
Response to unexpected events
Group organized to address a
need
Important to clearly identify need
to determine if worth pursuing
Use decision making process to
prioritize and select project with
greatest need
66
Project Selection
Evaluate needs, costs,
benefits
Determine which are
projects
Select project




Develop criteria
List assumptions
Gather data
Evaluate each opportunity
Combine “gut” feelings and
quantitative information to
make decision
67
Student Discussion
Describe the positives and negatives for this
development project.
68
Positives
Possible responses to
Student Discussion
Describe the positives and
negatives for this development
project.
 All projects will be evaluated on
common criteria
 Project A gets to market in the least
time
 Project B gains the greatest market
share
 Project B has highest ROI
 Projects A and C have high chance
of success
Negatives
 Prices for each project have great
differences; implying that each has
a different level of effort for the
project solution
 Project B has high risk and medium
chance of success
 Project C may not be accepted
globally
 Project B may put the company
reputation at risk if the technology
does not work as expected
69
Project Charter
Purpose
Provides sponsor approval
Commits funding for the
project
Summarizes key conditions
and parameters
Establishes framework to
develop baseline plan
Possible Elements
Project title
Purpose
Description
Objective
Success criteria
or expected
benefits
Funding
Major
deliverables
Acceptance
criteria
Milestone
schedule
Key assumptions
Constraints
Major risks
Approval
requirements
Project manager
Reporting
requirements
Sponsor designee
Approval
signature
70
Student Discussion
Examine the project charter and comment on
- the completeness of the information
- possible evaluation criteria
71
Completeness of information
Possible responses to
Student Discussion
Examine the project charter
and comment on
 Completeness of the
information
 Possible evaluation criteria



Describes the project that
needs to be addressed
Lists requirements, constraints,
assumptions, and risks
An RFP could be developed
from the charter’s information
Possible evaluation criteria






Meets the purpose
Cost
Reduces delivery costs by 26%
the first year
Experience
Risks
Appropriate instructional
strategies
72
Preparing a Request for Proposal
Decision made to outsource to external resource
Comprehensively describe project requirements
 Includes need, problem, or opportunity description
 Allows contractors to develop a thorough proposal
 Facilitates the development of evaluation criteria
May be communicated informally or formally, in
writing or verbally
73
Guidelines for Developing an RFP
State project objective or purpose
Provide a statement of work
Include customer requirements
State deliverables the customer
expects
State acceptance criteria
List customer supplied items
State approvals required
State type of contract
State payment terms
State schedule and key
milestones
List format and content
instructions
Indicate due date
Include evaluation criteria
Include level of effort or funds
available
74
Student Discussion
Examine the RFP example. What additional
questions need to be answered?
75
Possible responses to
Student Discussion
Examine the RFP example.
What additional questions
need to be answered?
Will AJACKS supply the names
of the firms to be surveyed?
What manufacturing
industries are the target?
What marketing information
already exists?
What are the page limitations
for the proposal and
supplemental information?
What is an acceptable return
rate on the survey?
76
Soliciting Proposals
Solicitation
Notify potential contractors


Identify selected group in
advance to send copy
Advertise in selected journals,
newspapers, or websites
Maintain competitive
situation


Conditions
Requirements are sometimes
communicated verbally instead of
via a formal RFP
All RFPs start with identification
of a need, problem, or
opportunity
Provide equal information to
all bidders
Hold bidders’ meeting to
answer questions
77
Critical Success Factors
The need must be clearly defined before preparing a request for proposal (RFP).
When selecting a project from among several needs or opportunities, the decision should be
based on which project will provide the greatest overall benefits compared to its costs and
possible consequences.
Having a well-understood evaluation and selection process and a well-rounded committee
will increase the chances of making the best project selection decision.
Establish quantitative project success criteria, or expected benefits.
A good RFP allows contractors to understand what the customer expects so that they can
prepare a thorough proposal that addresses the customer’s needs and requirements.
A request for proposal should include a statement of work, customer requirements, expected
deliverables, and the criteria by which the customer will evaluate proposals.
An RFP should provide instructions for the format and content of contractor proposals so
that the customer will be able to make a consistent and fair comparison and evaluation of all
the proposals.
Customers must be careful not to provide information to only some of the contractors
because it would give these contractors an unfair competitive advantage in preparing their
proposals.
78
Summary
The initiating phase of the project life cycle starts with recognizing a need, problem, or
opportunity for which a project or projects are identified to address the need.
Sometimes organizations identify several or many needs but have limited funds and people
available to pursue potential projects to address all of those needs. In such cases, the
company must go through a decision-making process to prioritize and select those projects
that will result in the greatest overall benefit.
Project selection involves evaluating potential projects and then deciding which should move
forward to be implemented.
Once a project is selected, it is formally authorized using a document referred to as a project
charter, sometimes called a project authorization or project initiation document.
In some cases, an organization does not have the expertise or staff capacity to plan and
perform the project or major portions of the project, and therefore decides to have the
project completed by an external resource (contractor) and prepares and RFP.
Once the RFP has been prepared, the customer solicits proposals by notifying potential
contractors that the RFP is available.
Not all project life cycles include the preparation of a written request for proposal by a
customer and subsequent submittal of proposals from contractors. Some endeavors move
from the initiating phase, where a project is identified and selected, into the planning and
performing phases of the life cycle.
79
Chapter Questions
80
Question 1
Why is it important to do a
thorough and detailed job of
needs identification?
It is important to thoroughly
study the problem or
opportunity in order to
develop a quality RFP and/or
quality solution.
If the need is not clearly
defined, you cannot expect
the proposed solutions to be
clearly defined either.
81
Question 2
Describe a situation in your life
in which you performed needs
identification.
Answers will vary from
student to student.
Answers should contain a
description of why the
student identified the need,
problem, or opportunity.
82
Question 3
Why is it important to select
the right project before you
begin working?
In reality, too many projects
are started that should never
have been.
It is wise to take the time to
decide which plans to address
identified needs, problems, or
opportunities should go
forward as a project before
you start working.
83
A four-step process is
recommended:
Question 4
Describe how a business
selects which projects to work
on when there are numerous
projects that could be done.




1) Develop a set of criteria
against which the opportunity
will be evaluated
2) List assumptions that will be
used as the basis for each
project
3) Gather data and information
for each project
4) Evaluate each opportunity
against the criteria
84
Question 5
Which elements of a project
charter would you use to help
plan if you have a project that
does not require a project
charter? Why?
Student responses will vary.
Responses should include the
elements of a project charter
that describe the outcomes of
the student's project with
enough clarity for the
contractor to deliver an
approved product at the end
of the project.
85
Question 6
Give examples of situations in
which a business might
develop a request for proposal.
There are many possible
answers to this question.
Some examples might include
an RFP for a new billing
system, an RFP for a
comprehensive management
training program, an RFP for a
new heating system for a
major office building, etc.
Responses should include a
description of an activity that
cannot be completed by the
organization or is better
completed by an external
resource or contractor.
86
Question 7
Give examples of situations in
which an individual might
develop a request for proposal.
There are many possible
answers to this question.
Some examples might include
an RFP for a new in-ground
pool, a new deck, or a new
house. These may or may not
be written.
Responses should include a
description of an activity that
cannot be completed by the
person, or that is better
completed by an external
resource or contractor.
87
Question 8
Why is it important for a
business to try to quantify the
expected benefits of
implementing a solution to a
problem?
If a business did not quantify
the benefits of a solution in
advance, it might discover
that the costs of the solution
exceed the benefits.
In addition, because most
businesses have limited
resources, they must
prioritize their projects based
on the expected benefits.
88
Question 9
What should be contained in a
statement of work?
A statement of work should
define the scope of the
project and outline the tasks
or work elements to be
performed.
The SOW should be very
precise.
89
Question 10
What is meant by customer
requirements? Why must they
be precise?
The RFP must include the
customer requirements, which
define specifications and
attributes. Requirements cover
size, quantity, color, weight,
speed, performance, and other
physical or operational
parameters that the contractor’s
proposed solution must satisfy.
These requirements must be
very precise because this is what
the contractor will use as a
guideline as he or she develops
the proposal and/or solution;
the customer may also use it as
acceptance criteria for the
project.
90
Question 11
Why would an RFP state the
approvals that will be required
during the project? Give some
examples.
It is important to state the
approvals required during the
project so the final solution
matches what the customer
expects.
Examples might include:
reviewing the design
specifications for a house before
construction begins, reviewing a
prototype user interface for a
new software system before
coding begins, etc.
Examples will vary and should
include projects of a sufficient
complexity level where changes
as the project advances could
result in higher costs.
91
Question 12
Why would a customer give
contractors instructions in the
RFP to submit their proposals
according to a standard
format?
Instructions ensure that all
proposals have a standard
form and are thus easier to
evaluate and compare.
 If instructions were not followed,
one proposal might be 5 pages and
another might be 50 pages. One
might include technical
specifications and another might
not.
92
Question 13
Develop an RFP for a realworld project such as
landscaping the grounds
surrounding a nearby business
office, building a deck for your
house, or holding a big
graduation celebration. Be
creative in specifying your
needs. Feel free to come up
with unique ideas for the RFP.
Answers will vary from
student to student.
Responses should include the
guideline elements as the
elements are appropriate for
the need, problem, or
opportunity defined by the
student.
93
Internet Exercises
Request for Proposals
94
Internet Exercises
Using your favorite Web search engine,
perform a search for “requests for
proposals.”
For an RFP that was found
 What company developed the
RFP, and what is the company
looking to accomplish?
 What are the strengths and
weaknesses of the RFP?
 What is missing from the RFP?
 How should the RFP be revised?
Search for suggestions for developing
an RFP. How does this compare to the
chapter’s suggestions?
Download a software system for
developing an RFP. Describe how it
works.
Many RFPs are available on
the Web that address needs,
problems, and opportunities.
Some RFPs will be very short
and others many pages long.
Use the guidelines to evaluate
an RFP for its strengths,
weaknesses, and missing
aspects.
Revisions to the RFP should
clarify the information and
provide enough detail for the
development of proposals
that will address the need of
the RFP.
95
Case Study 1
A Midsize Pharmaceutical Company
96
Case Study 1
Question 1
How should Jennifer go about
making her decision?
She has identified an opportunity.
She has $2,000,000 of unexpected
profits that she would like reinvest
in the company. In this case, she is
soliciting proposals from her
internal managers.
She should state comprehensively,
and in detail, what she expects in
the proposals including several of
those items discussed in this
chapter (due date for proposals,
format required, evaluation criteria
to be used, etc.).
In this case, the RFP may or may
not be in written form. She should
then evaluate each proposal
submitted based on the stated
criteria.
97
Case Study 1
Question 2
What kind of additional data or
information should she collect?
Among other things,
information on cost and
benefits should be collected.
 Costs should include one-time
and on-going expenses.
Additional data such as
specific tasks and timeframes
is also needed
98
Case Study 1
Question 3
What exactly should Jennifer
require the others to submit in
the way of proposals?
Each proposal should include
the cost and anticipated
benefits of the project.
At a minimum, it should also
include the tasks to be
performed, the resources
used, and a schedule
99
Case Study 1
Question 4
What do you think Jennifer
should do with the
$2,000,000? In explaining your
answer, address the concerns
and positions of Julie, Tyler,
Jeff, and Joe.
At this point, it is too early to
tell.
Jennifer must evaluate each of
the proposals based on the
established criteria and then
select the proposal or proposals
that provide the greatest benefit
to the company.
Responses should include a
description of each person's
position and additional
information that Jennifer would
need to evaluate their response.
The responses should include
why or why not Jennifer would
fund the projects based upon
the student's experiences and
interpretation of the projects.
100
Case Study 2
Transportation Improvements
101
Case Study 2
Question 1
What criteria should Zachary
use to evaluate the projects?
Various options can be used, as
discussed in this chapter.
The criteria should be defined in
advance of evaluating the projects.
Explain why the particular criteria
was selected to evaluate the
projects.
102
Case Study 2
Question 2
What assumptions should he
make?
Zachary has to make
assumptions regarding the
safety to the entrance outside
of Big John’s superstore, the
need to widen and repair Elk
Mountain Road, and the
condition of County Route
1045 and the bridge.
Each of Zachary's
assumptions needs to be
evaluated.
103
Case Study 2
Question 3
What data and information
should he gather and how
should he go about gathering
the data and information?
Surveys and various types of
research methods could be
used to gather data related to
the assumptions in the case
study.
104
Case Study 2
Question 4
After he has evaluated each
project against the evaluation
criteria, how should he decide
the priority of the three
projects?
The four step project
selection process is a possible
way to evaluate the three
projects.
105
3
Developing Project Proposals
106
Chapter Concepts
Building relationships with customers and partners
Proposal marketing strategies
Decision making to develop a proposal
Creating winning proposals
The proposal preparation process
Elements that may be included in a proposal
Pricing considerations
Customer evaluation of proposals
Types of contracts between the customer and the
contractor
Measuring the success of proposal efforts
107
Learning Outcomes
Develop relationships with customers and partners
Decide whether to prepare a proposal in response to
a customer’s RFP
Create a credible proposal
Determine a fair and reasonable price for a proposal
Discuss how customers evaluate proposals
Explain types of contracts and various terms and
conditions
Measure the success of proposal efforts
108
Project Management Knowledge Areas from PMBOK® Guide
Project Procurement Management
109
Mortenson Construction Selects Skire Unifier as
Enterprise Project Management System
Background
A collaboration platform as
needed
Improved quality and
timeliness of information
required
Skire built relationship with
Mortenson
Skire identified needs
required
Outcomes
Six months of evaluation
 Determine integration
 Reduce costs
 Improve quality
Solution system selected
 Had evaluation criteria
 Built relationship into strategic
partnership with Skire
Providing the solution was
more than answering the RFP
110
Kings Arena Proposal Gains Support
Background
New arena needed in Sacramento
Desire to create a multi-use
development
Pre-RFP meetings with
developers and officials
Developers with long history of
successful development projects
invited to bid
Desire to create new revenue for
city
Solutions
Winning proposal had creative
funding that did not use tax funds
Development plan included
additional areas of the city
Redevelopments at other
locations were a better use of the
land
Winning bidders developed
relationships with key
stakeholders
Winning bidders listened to
needs of officials and the city
111
Student Discussion
Why is this statement true?
Customers (clients) and partner organizations
prefer to work with people they know and trust.
112
Possible responses to
Student Discussion
Why is this statement true?
Customers (clients) and
partner organizations prefer to
work with people they know
and trust.
Organizations know what to expect.
Organizations know they will get a
good product.
They know how each party
communicates and communications
may be easier than with a stranger.
Past knowledge of the organization
helps the customer perform the
same work for less money because
they have gone through the
learning curve already.
113
Building Relationships
with Customers and Partners
Foundation for successful funding and opportunities
Requires good listening and constant learning
Frequent and regular contact; express appreciation for
the client’s time
Trust is key and ethics are imperative
First impression is important
Problem solving and credibility grows with good
performance
Partner with several key individuals in an organization
114
Building effective and
successful relationships
takes time and work;
it does not happen overnight.
115
Pre-RFP/Proposal Marketing
Begin developing the relationship before RFP is prepared
 Can help client identify needs
 Better position to win the contract
 Develop a more clearly focused response to RFP
Pre-RFP and pre-proposal efforts are business development
 No cost to the customer
 Help build the relationship
Unsolicited proposals and uncompetitive contracts
 Result of identified needs and problem solving
 Eliminates preparation of an RFP and soliciting process
116
Student Discussion
Why should contractors not wait until an RFP is
announced to start developing the proposal?
117
Possible responses to
Student Discussion
Why should contractors not
wait until an RFP is announced
to start developing the
proposal?
Proposal development times
are often very short
Can develop a better proposal
in response to the RFP
Prepare for bidders’ meeting
Increase percentage of
proposals being funded
Proposal development takes
effort
118
Decision to Develop a Proposal
Development is costly and time consuming
Contractors must be realistic about their probability
of winning a contract
Evaluate bid/no-bid decision
Many non-winning proposals hurt reputation
May be hard to decide to no-bid an RFP
119
Bid or No-Bid?
Factors to consider








Competition
Risk
Mission
Extension of capabilities
Reputation
Customer funds
Proposal resources
Project resources
120
Student Discussion
Bid or No-Bid?
Should a proposal
be submitted?
121
Possible responses to
Student Discussion
Bid or No-Bid?
Should a proposal be
submitted?
Yes, a proposal should be
developed
Positives
 Rated highly in five categories
 Low risk project
Reputation and experience
could outweigh lack of
familiarity with the client
122
Creating a Winning Proposal
Selling document
The best idea to solve the
problem
Highlight unique factors
Emphasize benefits to the
customer
Be simple and concise
Addresses requirements
from RFP
Be realistic
123
Proposal Preparation
Proposal team
 Can be one person or many
 Various skills and expertise
 Proposal manager for large proposals
Proposal development
 Time for writing, review, and management approval
 Length dependent upon the RFP requirements
 Cost of proposal development is part of normal business
costs
124
Proposal Contents
Three sections
 Technical
 Management
 Cost
Detail level
 Depends on complexity of the project
 Requirements from the RFP
125
Technical Section
Understand the need
Proposed approach or
solution
Benefits to the
customer
126
Management Section
Description of work tasks
Deliverables
Project schedule
Project organization
Related experience
Equipment and facilities
127
Cost Section
Include estimated costs











Labor
Materials
Equipment
Facilities
Subcontractors and
consultants
Travel
Documentation
Overhead
Escalation
Contingency
Fee or profit
128
Student Discussion
Why is it beneficial to have a person who would
be responsible for the major work tasks to help
write the project proposal?
129
Possible responses to
Student Discussion
Why is it beneficial to have a
person who would be
responsible for the major work
tasks to help write the project
proposal?
The person can estimate the project
organization, schedule, and costs
more accurately.
The experience will be reflected in
the language used to describe the
solution.
The person can list related
experiences that show expertise.
The person can describe what
makes the contractor unique and
demonstrate the benefits of the
solution.
130
Pricing Considerations
Competition
Price
 Not overpriced or
underpriced
Factors
 Reliability of cost
estimates
 Risk
 Value of project to the
contractor
 Customer’s budget
 Competition level
131
Simplified Project Proposal
Complex
Large number of pages
Defined sections
Charts and figures
Tables of information
Simplified
Statement of the customer’s
need
Assumptions
Project scope
Deliverables
Resources
Schedule
Price
Risks
Expected benefits
132
Proposal Submission and Follow-up
Submission
On time
Formatted properly
Sent in manner required
Follow-up
Be proactive
Professional manner
Follow RFP guidelines
 Hard copies
 E-mail
 Electronic form
Two sets by different
delivery methods
133
Customer Evaluation of Proposals
Customer sets criteria
Customer may request
a best and final offer
(BAFO)
Helps to have common
comparison criteria
134
Student Discussion
List examples of criteria used by customers
to evaluate contractor proposals.
135
Possible responses to
Student Discussion
List examples of criteria used
by customers to evaluate
contractor proposals.
Compliance with the
customer’s statement of work
(SOW)
Understanding of the
problem/need
Soundness of the proposed
approach
Contractor’s experience with
similar projects
Experience of key individuals
Management capability
Realism of schedule
Price
136
Contracts
Agreement
Contract must be signed
before starting work
Establishes communication
Agreement of deliverables
for a certain price
Types
Fixed Price




Price remains fixed
Low risk for customer
High risk for contractor
For well-defined projects with
little risk
Cost-Reimbursement




Price for actual costs
High risk for customer
Low risk for contractor
For higher risk projects
137
Contract Terms and Conditions
Misrepresentation of costs
Notice of cost overruns or schedule delays
Approval of subcontractor
Customer furnished equipment of information
Patents
Disclosure of proprietary information
International considerations
Termination
Terms of payments
Bonus/penalty payments
Changes
138
Measuring Proposal Success
Measures
Win ratio
 Number won/number
submitted
 All proposals weighted
equally
Total dollar value
 Value won/value submitted
 More weight to larger values
Strategies
Submit many to win fair
share
 Increase chances of winning
 May be viewed negatively
Bid on potential successes
 Respond where better than
average chance to win
 Must have bid/no-bid process
139
Critical Success Factors
Customers and partner organizations prefer to work with people they know and
trust. Relationships establish the foundation for successful funding and contract
opportunities.
Establishing and building trust is key to developing effective and successful
relationships with clients and partners.
The first impression one makes on a client is pivotal to developing a continuing
and fruitful relationship.
Pre-RFP/proposal efforts are crucial to establishing the foundation for eventually
winning a contract from the customer.
Do not wait until formal RFP solicitations are announced by customers before
starting to develop proposals. Rather, develop relationships with potential
customers long before they prepare their RFPs.
Working closely with a potential customer puts a contractor in a better position to
be selected as the winning contractor. Learn as much as possible about the
customer’s needs, problems, and decision-making process during preRFP/proposal marketing.
140
Critical Success Factors (continued)
Becoming familiar with the customer’s needs, requirements, and expectations will
help in preparing a more clearly focused proposal.
Be realistic about the ability to prepare a quality proposal and about the
probability of winning the contract. It is not enough just to prepare a proposal;
rather, the proposal must be of sufficient quality to have a chance of winning.
A proposal is a selling document, not a technical report. It should be written in a
simple, concise manner and should use terminology with which the customer is
familiar.
In a proposal, it is important to highlight the unique factors that differentiate it
from competitors’ proposals.
Proposals must be realistic. Proposals that promise too much or are overly
optimistic may be unbelievable to customers, and may raise doubt about whether
the contractor understands what needs to be done or how to do it.
When bidding on a fixed-price project, the contractor must develop accurate and
complete cost estimates and include sufficient contingency costs.
141
Summary
Interested contractors develop proposals in response to a customer’s RFP.
Relationships establish the foundation for successful funding and contract opportunities.
Relationship building requires being proactive and engaged.
Contractors should develop relationships with potential customers long before customers
prepare an RFP.
Because the development and preparation of a proposal take time and money, contractors
interested in submitting a proposal in response to an RFP must be realistic about the
probability of being selected as the winning contractor.
It is important to remember that the proposal process is competitive and that the proposal is
a selling document that should be written in a simple, concise manner. In the proposal, the
contractor must highlight the unique factors that differentiate it from competing contractors.
Proposals are often organized into three sections: technical, management, and cost.
Customers evaluate contractors’ proposals in many different ways.
Once the customer has selected the winning contractor, the contractor is informed that it is
the winner, subject to successful negotiation of a contract: fixed-price and cost
reimbursement are the two types of contracts.
Contractors measure the success of their proposal efforts by the number of times their
proposals are selected by customers and/or by the total dollar value of their proposals that
are selected.
142
Chapter Questions
143
Question 1
Describe why building
relationships with customers
and partners is important. How
is this accomplished?
It is important to build
relationships with customers
and partners, since they prefer
to work with people they know
and can trust.
Relationships establish the
foundation for successful
funding and contract
opportunities.
Relationship building requires
being proactive and engaged.
Relationship building, in many
ways, is a contact sport. It
requires getting out of the office
and having face-to-face
interactions. It cannot be done
as effectively through e-mail or
phone conversations.
144
Question 2
Describe what is meant by preRFP/proposal marketing.
Why should contractors do it?
Pre-RFP/proposal marketing is an
opportunity for a client to help
customers identify areas in which the
customers might benefit from the
implementation of projects that
address needs, problems, or
opportunities.
Contractors should not wait until
formal RFP solicitations are
announced by customers before
starting to develop proposals.
Contractors need to develop
relationships with potential
customers long before the customers
prepare RFPS.
Contractors should maintain frequent
contacts with past customers and
current customers and initiate
contacts with potential new
customers. Working closely with a
potential customer puts a contractor
in a better position to be selected
eventually as the winning contractor
when the customer issues an RFP.
145
Question 3
Discuss why contractors must
make bid/no-bid decisions and
the factors involved in making
these decisions.
Give an example of when a
contractor should bid and
when a contractor should not
bid.
Most companies have limited
resources and preparing a
proposal can be a time
consuming and costly process.
Therefore companies must make
bid/no-bid decisions.
Some factors to be considered
are the competition, risk
involved, mission of the
company, opportunity to extend
capabilities, reputation with the
customer, available customer
funds, proposal resources, and
project resources.
146
Question 4
Define proposal, and describe
the purpose of a proposal. In
addition, list the three major
sections of a proposal and the
purpose and elements of each.
A proposal is a selling
document and its purpose is
to convince the customer that
you understand what the
customer wants and that you
are the best one for the job.
Sections
 Technical – describe solution
 Management – describe
capabilities and experience
 Cost – estimate budget
147
Question 5
What factors must be
considered when a contractor
develops the proposal price?
Why is this not an easy task?
Some factors to be considered
include: reliability of cost estimates;
risk; value of the project to the
contractor; customer’s budget; and
the competition.
The proposal process is
competitive.
 Contractors must make sure
they do not bid too high or they
might lose the bid.
 Contractors must make sure
they do not bid too low or they
might lose money even if they
win the contract.
148
Question 6
Should a contractor try to
contact a customer after a
proposal has been submitted?
Why or why not?
Contractors must continue to be
proactive even after the proposal is
submitted.
 The contractor should call the
customer to confirm that the
proposal was received.
 After several days, the contractor
should contact the customer again
and ask whether the customer has
any questions or needs clarification of
anything in the proposal.
 Such follow-up needs to be done in a
professional manner in order to make
a favorable impression on the
customer.
 Some industrial and government
customers usually do not respond to
attempted follow-up communications
from contractors so that no
contractor gains an unfair advantage
in influencing the proposal evaluation
process. This is one of the reasons
why it pays to do some good preproposal marketing, so you know
your customers better and know
what is acceptable.
149
Question 7
How do customers evaluate
proposals?
What factors might they
consider?
Customers evaluate contractors’
proposals in many different
ways.
 Some customers first look at the
prices.
 Other customers initially screen
out those proposals with prices
above their budget or those
whose technical section does not
meet all the requirements stated
in the RFP.
 Others, especially on large
projects, create a proposal review
team that uses a scorecard to
determine whether each proposal
meets all requirements in the RFP
and to rate the proposal against
predefined evaluation criteria,
such as price, schedule,
capabilities, and experience.
150
Question 8
Should the lowest-priced
proposal always be selected as
the winner? Why or why not?
Give examples.
No. The lowest-priced proposal
should not always be selected as
the winner.
There are many other factors to
consider, such as the reputation
of the contractor, their
experience, materials used, etc.
An example would be selecting
the right company to build an
addition to your house. One
contractor might come highly
recommended, use top quality
materials, and be able to fit the
project into your schedule.
Another company might be
much lower in price, but it has a
questionable reputation, uses
cheap materials, and does not
provide a schedule.
151
Fixed-price contract
Question 9
Describe two different types of
contracts, when each should
be used, and the risks
associated with each.
 Well-defined projects with low
risk
 Low risk for customer
 High risk for contractor
Cost-reimbursement contract
 Projects that involve risks
 High risk for customer
 Low risk for contractor
152
Question 10
Give examples of some
miscellaneous provisions that
might be found in a contract.
Payments will be made at the
end of the project
Bonus or penalty payments
related to schedule
performance
Misrepresentation of costs
Approval of subcontractors
Customer furnished
equipment or information
Disclosure of information
International considerations
Termination
Handling of changes
153
Win ratio
Question 11
Describe two methods for
measuring the effectiveness of
your proposal efforts.
 Number of proposals won /
Number of proposals submitted
Total dollar value of proposals
 Value of proposals won / Value
of proposals submitted
154
Question 12
Develop a complete proposal
in response to the RFP you
created for question 13 at the
end of Chapter 2.
Responses will vary.
Responses should match the RFP
developed for Chapter 2, Question 13
Responses should include at least the
information in a simplified proposal









Statement of the customer’s need
Assumptions
Project scope
Deliverables
Resources
Schedule
Price
Risks
Expected benefits
If the three sections are used, they
do not have to be labeled
155
Internet Exercises
Project Proposals
156
Internet Exercises
Using your favorite Web search engine,
perform a search for sample proposals.
For a proposal that was found
 What company developed the
proposal, and what is the
company looking to accomplish?
 What are the strengths and
weaknesses of the proposal?
 What is missing from the
proposal?
 How should the proposal be
revised?
Search for suggestions for developing a
proposal. How does this compare to
the chapter’s suggestions?
Download a software system for
developing a proposal. Describe how it
works.
Many proposals are available on
the Web that address needs,
problems, and opportunities.
Some proposals will be very
short and others many pages
long.
Use the guidelines to evaluate a
proposal for its strengths,
weaknesses, and missing
aspects.
Revisions to the proposal should
clarify the information and
provide enough detail for the
evaluators to determine if the
need is being addressed and the
project can be successful.
157
Case Study 1
Medical Information Systems
158
Case Study 1
Question 1
The purchasing manager was
not familiar with their firm.
Why didn’t this team receive
the RFP at the same time the
larger consulting firms did?
159
Case Study 1
Question 2
Why is this team being
considered as a candidate to
submit a proposal?
This team is being considered
because Paul had completed
a project for Dr. Houser when
she had a private practice and
she told him about it.
160
Case Study 1
Question 3
Develop a bid/no bid checklist
to help determine if they
should submit a proposal.
Student answers will vary.
Responses should contain the
information presented in the
structure provided in the
chapter.
Students should develop
appropriate scores.
161
Case Study 1
Question 4
What should Maggie, Paul, and
Steve do? In explaining your
answer, address the concerns
of each of the three team
members.
If any of them can find the time
(and maybe Maggie cannot), they
should make a serious attempt to
put together a quality proposal.
They should also contact the
purchasing manager, based on Dr.
Houser’s comments, and see if they
can get some additional
information.
In their proposal, they should also
stress their previous success with
Dr. Houser.
If they win the contract, this is a
great opportunity to grow the firm.
162
Case Study 2
New Manufacturing Facility In China
163
Case Study 2
Question 1
Is there anything the team
should have done when they
received only three proposals
by June 30?
Since very few proposals were
received, the team should have
reviewed their RFP and included the
budget cost.
They should have asked each of the
contractors to give an oral
presentation of their proposals.
164
Case Study 2
Question 2
Should the team consider the
proposal from Asia General
Contractors? Why or why not?
Responses will vary between
yes and no.
 Yes. Since very few proposals
were received. Asia General
Contractors’ proposal fits within
budget and timelines and the
have the experience to be
evaluated at par with the other
contractors.
 No, the proposal was submitted
late and should not be
accepted. It is not fair to the
others that submitted on time
and could have used the
additional time to further
develop their proposals.
165
Case Study 2
Question 3
After sharing their individual
comments at the start of the
July 15 meeting, how should
the team proceed with the rest
of the meeting and any followup?
The team should evaluate and
decide upon a contractor based
upon their evaluation criteria –
taking into consideration budget,
timeliness, experience, and
ethical standards of the
contractors.
They should schedule meetings
with each of the shortlisted
contractors to address any
questions.
Most importantly, the team
should provide the budget
details and ask contractors that
are above budget to return with
a best and final offer.
166
Selection process improvements
Case Study 2
Question 4
How could the selection
process have been improved?
Is there anything the Board,
I.M. Uno, Alysha, or the team
could have done differently?
 The RFP should have included
funding information.
 They could have been strategic
with the placement of the
proposal bid – which may have
increased the number of
responses.
 The evaluation criteria should be
streamlined to ascertain
credibility and capability of the
contractors.
They could have had more preRFP meetings and been familiar
with the companies and the
number of companies that
potentially would have bid on
the project.
167
4
Defining Scope, Quality, Responsibility, and
Activity Sequence
168
Chapter Concepts
Clearly defining the project objective
Preparing a project scope document
Understanding the importance of planning for quality
Creating a work breakdown structure
Assigning responsibility for work elements
Defining specific activities
Creating a network diagram
Utilizing a project management methodology called the
systems development life cycle for information systems
development projects
169
Learning Outcomes
Establish a clear project objective
Prepare a project scope document
Discuss the importance and elements of a project
quality plan
Develop a work breakdown structure
Prepare a responsibility assignment matrix
Describe how to define specific activities
Create a network diagram
170
Project Management Knowledge Areas from PMBOK® Guide
Project Integration Management
Project Scope Management
Project Quality Management
Project Time Management
171
Plan of Attack
Background
Boeing developed the FA-18E/F
for the US Navy
Costs exceeded budget
150 stakeholders reviewed
proposal in a two-week meeting
Line-by-line proposal review
Determine deliverables

Only those necessary
Reduced costs to within budget
Adopted rigorous change control
processes
Project Manager Advice
“If you start out on the
wrong foot with a program,
it likely will get worse.”
“There’s no question your
plan will change along the
way—but if you don’t at
least start with a good plan,
it’s almost impossible to
succeed.”
172
What Went Wrong?—Learning from Past Postmortems
Developer Comments
“Competing demands for time and
resources …”
Keeping the schedule … it’s
absolutely critical.”
“… didn’t hire aggressively
enough.”
“ … things tended to fall through
the cracks.”
“Playing catch up from day one …”
Solutions
Schedule assignment of resources
Keep the schedule that is agreed
upon
Acquire enough resources to
complete the tasks
Have a solid project management
structure
Have proper schedule and project
management
173
Establish Project Objective
Planning process is based on the project objective
 Establishes what is to be accomplished
 Often stated in the project charter or RFP
 Is the tangible end product
Project objective includes




Expected benefits
Primary project end product or deliverable
Date required to be completed
Budget
Changes agreed upon by customer and contractor
174
Student Discussion
List examples of project objectives.
175
Possible responses to
Student Discussion
List examples of
project objectives
To increase emergency room capacity by 20 percent and
reduce average patient waiting time by 50 percent
through a reconfiguration and process improvement
project to be completed in 12 months and within a
$400,000 budget.
To reduce outstanding accounts payable by $20 million
by implementing a new billing, collection, and receiving
system by May 31 with a budget not to exceed $220,000.
To raise $40,000 for hunger relief by organizing a
community festival for the last weekend in September
with a budget of $3,000.
To double annual sales revenue by creating an online
shopping and fulfillment capability by April 30 with a
budget not to exceed $40,000.
To expand market share by 3 percent by introducing a
new portable food preparation appliance within 10
months with a budget of $2 million.
To increase August sales revenue by 10 percent above
that of last August by producing and distributing a backto-school catalog by July 15 with a budget not to exceed
$40,000.
To meet new environmental regulatory requirements by
installing a new filtration system within 15 months and a
budget of $3.2 million.
176
Define Project Scope
Project Scope
Defines what needs done
Includes


Items contained in project
charter, RFP, proposal
More detail
Establishes common
understanding of scope
with stakeholders
Project Scope Document
Usually contains





Customer requirements
Statement of Work
Deliverables
Acceptance Criteria
Work Breakdown Structure
Establishes baseline
Change control system to
avoid scope creep
177
Student Discussion
Why should scope creep be avoided?
178
Possible responses to
Student Discussion
Why should scope creep be
avoided?
Informal changes to the
project
No approvals for changes
Additional work that is not
documented
May cause errors
May cause rework
Could make the project
overtime and over budget
179
Plan for Quality
Complete work according to specifications and
standards
Plan for assuring quality as project progresses
Include
 References for specifications and standards
 Written procedures for quality tools and techniques
Key aspects
 Monitor as the project progresses
 Do work right the first time rather than rework
180
Student Discussion
It is often said that some people think they never
have enough time to do the work right the first
time, but then must take the time later to redo it
correctly—haste makes waste!
What can be done to change this thinking?
181
Possible responses to
Student Discussion
It is often said that some
people think they never have
enough time to do the work
right the first time, but then
must take the time later to
redo it correctly—haste makes
waste!
What can be done to change
this thinking?
Clearly list quality standards
Have monitors in place to see
if the work is meeting quality
standards
Submit sample work to be
sure work meets standards
If it means a higher quality
product, determine the
effects and costs of a later
delivery
182
Create Work Breakdown Structure
Deliverable-oriented hierarchical decomposition
Organize project work and deliverables
Create logical groupings
Subdivide into more manageable components




Deliverable is output of work package
Resource requirements and durations can be assigned
Accountability can be assigned
Project manager can monitor and control
Graphic chart or indentured list
183
WBS with Breakdown to Different Levels
184
WBS
Graphic Chart
Indentured List
185
Assign Responsibility
Responsibility assignment matrix

Designate responsible individuals



P = Primary responsibility
S = Support responsibility
Associates responsibility


For each work item
For each individual
Only one primary per work item
186
Define Activities
Responsible resources
define activities



Breakdown work packages to
work items
Level needed to perform
deliverable
May not be able to define all
Comprehensive activity list


Not always require
expenditure of effort
Could be wait time
187
Sequence Activities
Network diagram


Defines the sequence of
activities and relationships
Tool for arranging order
Common techniques



PERT
CPM
PDM
188
Network Principles
Activities



Represented by a box
Consume time
Described by verb
Relationships


Linked in serial sequence
Complete concurrently
189
Loops
Illogical relationship
among activities
Perpetually repeats itself
Not acceptable
190
Laddering
Set of repeating activities
Serial sequence
 One work
 Two wait
Can be performed at same time
Would need triple resources
Ladder activities
Allow for shortest possible time
for completion
Best use of the three workers and
experts
191
Create Network Diagram
Tips and Techniques
Logical sequence of activities
Show dependent relationships
Elaborate as project progresses
Use subnetworks for similar
activity sequences and
relationships
Development of Diagram
Questions to answer



Finish before next start?
Done concurrently?
Cannot be started next?
Guidelines for detail level




Define each work package
Draw summary level network
then add detail
Detail to responsibility or
deliverable change
Duration less than project
progress review
192
Planning
for Information Systems Development
Definition
Computer-based system



Accepts data as input
Processes the data
Produces useful information
Examples




Computerized order entry
E-commerce
Automatic teller machines
Billing, payroll, and inventory
Process
Plan, execute, and control
Systems Development Life Cycle






Problem definition
System analysis
System design
System development
System testing
System implementation
193
An IS Example: Internet Applications
Development for ABC Office Designs
ABC Office Designs
Large number of sales
representatives
Sell office furniture to major
corporations
State assignments in four regions
Management monitor state and
regional sales
Build Web-based IS system to
track prices, inventory, and
competition
Project
Project manager identified
WBS follows SDLC
Responsibility assignment
matrix completed
List of tasks compiled and
predecessors identified
Network diagram created
194
IS Example: WBS follows SDLC
195
IS Example:
Responsibility
Assignment
Matrix
196
IS Example:
Task List and
Predecessors
197
IS Example: Network Diagram
198
Project Management Information Systems
Wide variety of systems available
Plan and control projects in interactive mode
Plan and test different options
Create reports, diagrams, and charts
Interface with other software applications
Appendix A has additional information
199
Critical Success Factors
Plan the work and then work the plan. It is important to develop a plan before starting to
perform the project. Taking the time to develop a well-thought-out plan is critical to the
successful accomplishment of any project.
Participation builds commitment. By participating in the planning of the work, individuals
will become committed to accomplishing it according to the plan.
The project must have a clear objective of what is to be accomplished. The objective should
be defined in terms of end product or deliverable, schedule, and budget, and it must be
agreed upon by the customer and the project team that will perform the project.
The project scope document is valuable for establishing a common understanding and
agreement among project stakeholders regarding the scope of the project.
Having a quality plan at the outset of the project is extremely beneficial because it will help
prevent incurring additional costs and schedule extensions due to rework caused by work
and deliverables that fail to meet quality requirements and customer expectations.
The key to quality control is to monitor the quality of the work early and regularly
throughout the performance of the project, rather than waiting until all the work is
completed before checking or inspecting for quality.
The network diagram is also is a communication tool for the project team because it shows
who is responsible for each activity and how each person’s work fits into the overall project.
200
Summary
The planning process is based on the project objective, which establishes what is to be
accomplished.
The project scope defines what needs to be done.
The project scope document usually contains the customer requirements, statement of
work, deliverables, acceptance criteria, and a work breakdown structure.
The quality plan must include or reference the specifications, industry or government
standards, and codes that must be used and met during the performance of the project
work.
The work breakdown structure establishes the framework for how the work will get done
to produce the project deliverables.
A responsibility assignment matrix defines who will be responsible for the work.
Activities define more specifically how the work will get done.
A network diagram defines the sequence of how and when the activities will be
performed.
Project planning is a critical activity in developing an information system (IS).
A project management planning tool or methodology, called the systems development life
cycle (SDLC), is often used to help plan, execute, and control IS development projects.
Numerous project management information systems are available to help project
managers plan, track, and control projects in a completely interactive way.
201
Chapter Questions
202
Question 1
What is meant by planning a
project?
What does this encompass?
Who should be involved in
planning the work?
Planning is the systematic
arrangement of tasks to
accomplish an objective.
The plan lays out what needs
to be accomplished and how
it is to be accomplished.
The people who will be
involved in performing the
work should be involved in
planning the work.
203
Question 2
What is meant by the term
project objective? What might
happen if a project objective is
not clearly written?
Give three examples of clearly
written project objectives.
The project objective is the
target—the tangible end
product that the project team
must deliver. The objective
must be clear, attainable,
specific and measurable.
If the objective is not clearly
written, the end product may
not meet the needs of the
customer
Responses should contain the
expected benefits of the
project, the primary project
end product or deliverable,
and the date required for
completion.
204
Question 3
Describe a project scope
document.
Why is it important to clearly
define the project scope?
A project scope document
includes sections for the
customer requirements,
statement of work, project
deliverables, acceptance
criteria, and work breakdown
structure.
It is important to clearly
define the project scope to
establish a common
understanding among project
stakeholders regarding what
needs to be done to produce
all the deliverables for the
project.
205
Question 4
What is a work breakdown
structure?
What is a responsibility
assignment matrix?
How are they related?
The WBS is a hierarchical tree or
an indentured list of end items
that will be accomplished.
The responsibility assignment
matrix is a method used to
display, in tabular format, the
individuals responsible for
accomplishing the work items in
the WBS.
The WBS and the responsibility
assignment matrix are related.
All the work items and work
packages listed in the WBS are
also listed in the responsibility
assignment matrix.
206
Question 5
Why is creating a plan for
quality important?
From your experiences, give an
example of how having and
controlling a quality plan could
have prevented quality
problems in a project.
Creating a project quality plan
is important to prevent poor
quality and to avoid quality
problems.
Responses should reference
how knowing the
specifications, industry or
government standards, and
codes that were to be met
during the project could have
helped to prevent the quality
problems of the project.
207
Question 6
What is an activity? Does it
always require human effort?
Refer to Figure 4.1.
 Provide a detailed list of
activities needed to
accomplish work package 3.3.
 Do the same for work
package 4.2
An activity is a defined piece of work
that consumes time. It does not
necessarily require the expenditure of
effort by people.
List of detailed activities needed to
accomplish work package 3.3:






Prizes
Identify prizes
Specify the number and type of prizes
Buy prizes
Gift wrap prizes
Move prizes to festival site
List of detailed activities needed to
accomplish work package 4.2:





Permits
Identify required permits
Specify where the permits need to be
acquired from
Identify costs and timelines for acquiring
permits
Obtain the permits
208
Question 7
Refer to Figure 4.9. What
activities must be
accomplished before “Input
Response Data” can start?
What activities can start after
“Review Comments & Finalize
Questionnaire” has finished?
List two activities that can be
done concurrently.
“Mail Questionnaire & Get
Responses” and “Test Software”
must be done before “Input
Response Data” can start.
“Prepare Mailing Labels,” “Print
Questionnaire,” “Develop Data
Analysis Software,” and
“Develop Software Test Data”
can start after “Review
Comments & Finalize
Questionnaire” has been
completed.
Any of the four activities listed
above that can start after
“Review Comments & Finalize
Questionnaire” has been
completed. They can be done
concurrently.
209
Question 8
When would you use laddering
in a network diagram?
Give an example, different
from the one provided in the
chapter, and draw the
corresponding network
diagram.
Laddering should be used
when a project has a set of
activities that are repeated
several times and appropriate
resources are available to
handle tasks concurrently.
Specific examples will vary.
Responses should contain a
set of activities that are
repeated and for which there
are adequate resources to do
the tasks concurrently.
210
Question 9
Why would you recommend
project management software
to someone involved in project
management?
What features and benefits
does it provide?
They allow the project
manager and the project
team to plan and control
projects in a completely
interactive mode.
Features and benefits include
the ability to:




Plan and control projects in
interactive mode
Plan and test different options
Create reports, diagrams, and
charts
Interface with other software
applications
211
Question 10
Draw a network diagram
representing the following
logic:
As the project starts,
activities A and B can be
performed concurrently.
When activity A is finished,
activities C and D can start.
When activity B is finished,
activities E and F can start.
When activities D and E are
finished, activity G can start.
The project is complete when
activities C, F, and G are
finished.
212
Question 11
Draw a network diagram
representing the following
information:
The project starts with three
activities, A, B, and C, which
can be done concurrently.
When A is finished, D can
start; when B is finished, F
can start;
When B and D are finished, E
can start.
The project is complete when
C, E, and F are finished.
213
Question 12
Draw a network diagram that
represents the following IS
development task list.










Activity Immediate Predecessor
1. Problem Definition —
2. Study Current System 1
3. Define User Requirements 1
4. Logical System Design 3
5. Physical System Design 2
6. System Development 4, 5
7. System Testing 6
8. Convert Database 4, 5
9. System Conversion 7, 8
214
Internet Exercises
Project Planning Tools
International Project Management Association
International Journal of Project Management
215
Internet Exercises
Using your favorite Web search
engine, perform a search for
project planning tools and
describe what you found.
Visit the International Project
Management Association website.


Explore the site.
Click on the “Young Crew” link.
Go to the International Journal of
Project Management homepage.



Click on the “Free Tables of
Contents and Abstracts” link.
Do a search for planning.
Click on the “View Related
Articles” link.
The IPMA website has
information related to
certifications, memberships,
publications, awards, events,
and educational opportunities.
The “Young Crew” site has
information about nurturing
future project management
leaders.
The International Journal of
Project Management contains a
number of articles related to
project management. Issues
often have a topic for the
articles.
Look at the references for the
chapters to see additional
articles that are supplemental to
the information presented in the
chapters.
216
Case Study 1
A Not-For-Profit Medical Research Center
217
Case Study 1
Question 1
Establish the project objective
and make a list of your
assumptions about the project.
Responses should include their
interpretation of the project
objective and list the assumptions
for the project.
One possible response: The project
objective is to create a new annual
report. An assumption is that the
new shorter report will bring in
additional funding for the center.
218
Case Study 1
Question 2
Develop a work breakdown
structure.
Responses should have an
indentured list or a
hierarchical structure for the
WBS, that shows the major
tasks necessary to achieve the
project objective.
219
Case Study 1
Question 3
Prepare a list of the specific
activities that need to be
performed to accomplish the
project objective.
The WBS should contain
enough detail for the student
responses to manage the
tasks and assign responsibility
and resources to the tasks.
220
Case Study 1
Question 4
Responses should show the
name of the person
responsible for each task.
For each activity, assign the
person who will be
responsible.
221
Case Study 1
Question 5
Create a network diagram that
shows the sequence and
dependent relationships of all
the activities.
Responses should sequence
the tasks to show the
dependencies of the tasks
and what tasks can be done
concurrently, if any.
222
Case Study 2
The Wedding
223
Case Study 2
Question 1
Make a list of assumptions that
will be used as the basis for
planning the wedding.
And no, it is not acceptable to
assume that Tony and Peggy
Sue will just elope, no matter
how tempting that may be!
Responses should include
their interpretation of the
project objective and list the
assumptions for the project.
One possible response: the
project objective is Peggy Sue
and Tony have a wedding that
they want. An assumption is
that Peggy Sue's mother and
Tony's mother decide that
they do not have to control
everything and slow down a
little on the plans.
224
Case Study 2
Question 2
Develop a work breakdown
structure.
Responses should include an
indentured list or a
hierarchical structure for the
WBS that shows the major
tasks necessary to achieve the
project objective.
225
Case Study 2
Question 3
Make a list of the specific
activities that need to be done
between now and the wedding
day.
The WBS should contain
enough detail for the student
responses to manage the
tasks and assign responsibility
and resources to the tasks.
226
Case Study 2
Question 4
Responses should show the
name of the person
responsible for each task.
For each activity, identify the
person (Tony, Peggy Sue, etc.)
who will be responsible for
seeing that the activity is
accomplished.
227
Case Study 2
Question 5
Create a network diagram that
shows the sequence and
dependent relationships of all
the activities.
Responses should sequence
the tasks to show the
dependencies of the tasks
and what tasks can be done
concurrently, if any.
228
Appendix
Microsoft Project
229
Appendix activities are
Appendix
Microsoft Project
Most widely used project
management software system in
the business environment today.
It is powerful, easy to use, and
available at a very reasonable
price.
A free trial version is included with
new copies of the text or on the
Microsoft website.
The Gantt Chart View and the Task
ribbon are the default view when
Microsoft Project is first opened.
Other views are chosen by clicking
on the arrow in the View group on
the Task ribbon and selecting the
name from the drop down list.




Enter the work breakdown
structure in a hierarchical
indentured list format
Determine predecessors for
tasks
Assign responsibility for each
activity
Create the network diagram
230
Figure 4A.1, Project Properties
231
Figure 4A.2, Project Information
232
Figure 4A.3, Work Package and Activity Entry
233
Figure 4A.4, Tasks – Entering Predecessor Data
234
Figure 4A.5, Resources
235
Figure 4A.6, Network Diagram
236
Figure 4A.7, Set Baseline for Project
237