core concepts of project management

Samuel J Mantel, Jr Jack R Meredith Scott M Shafer Margaret M Sutton JOHN WlLEY & SONS, INC ACQUISITIONS EDITOR MARKETING MANAGER PRODUCTION EDITOR SENIOR DESIGNER OUTSIDE PRODUCTION MANAGEMENT COVER DESIGN COVER PHOTOGRAPH Beth Golub Jessica Garcia Patricia McFadden Harry Nolan Suzanne Ingrao/Ingrao Assoc Howard Grosstnan OAndrew Sacks/Stone Thts book was set in 10 W12 Goudy by UG / GGS Information Services, Inc and printed and hound by R R Donnclley & Sons The cover was printed by Phoenix Color This book is printed o n acid-free paper ( 00\ i/ Copyright 20010 John Wiley & Sons, Inc All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwtse, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authortzation through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470 Requests to rhe Publisher for permission should be addressed to the Permissions Department, John Wiley &Sons, Inc., 11 River Street, Hoboken,N J 07030,(201) 748-6011, fax (201) 748-6008, E-Mail: PERMREQQWILEY.COM To order books please call l(800)-225-5945 ISBN 0-471-37162-9 Printed in the United States of America To Dotti: gentle critic, careful editor, loving wife S J M Jr To a brave 15-year-old traveling alone from Wales to Virginia: Robert Meredith 1662-1 727 J R M To Brianna and Sammy G., my most important and rewarding projects S M S T o Frank, Kyle, and Ali for their support, encouragement, and tolerance And to Bobbi, leader and coach, who helped me discover why I love my career as a project manager M M S THE APPROACH Over the past several decades, more and more work has been accomplished through the use of projects and project management T h e use of projects has been growing at an accelerated rate T h e exponential growth of membership in the Project Management Institute (PMI) is convincing evidence, as are the sales of computer software devoted to project management Several societal forces are driving this growth, and many economic factors are reinforcing it W e describe these in Chapter of this book A secondary effect has also been a major contributor to the use of project activity As the use of projects has grown, its very success as a way of getting complex activities carried out successfully has become well established T h e result has been a striking increase in the use of projects to accomplish jobs that in the past would simply have been turned over to someone with the comment, "Take care of it." What happened then was that some individual undertook to carry out the job with little or no planning, little or n o assistance, few resources, and often with only a vague notion of what was really wanted T h e simple application of routine project management techniques significantly improved the consistency with which the outcomes resembled what the organization had in mind when the chore was assigned Later, this sort of activity came to be known as "enterprise project management," "management by projects," and several other names, all of which are described as the project-oriented organization Some of these projects were large, but most were quite small Some were complex, but most were relatively straightforward Some required the full panoply of project management techniques, but most did not All of them, however, had to be managed and thus required a great many people to take o n the role of project manager in spite of little or no education in the science or art of project management O n e result was rising demand for education in project management T h e number of college courses grew apace, as did the number of consulting firms offering seminars and workshops Perhaps most striking was the growth in educational opportunities through post-secondary schools offering "short coursesn-schools such as DeVry Institute, ITT, and others In addition, short courses were offered by colleges and community colleges concentrating o n both part-time and full-time education for individuals already in the work force A n exemplar of this approach is the University of Phoenix Communications from some instructors in these institutions told us that they would like a textbook that was shorter and focused more directly on the "technical" aspects of project management than those currently available They were willing to forego most of the theoretical aspects of management, particularly if such were not directly tied to practice Their students, who were not apt to take advanced course work in project management, had little use for understanding the historical development of the field They felt no need to read about the latest academic research on the management of knowledge-based projects in a manufacturing environment Finally, instructors asked vii viii PREFACE for increased use of project management application software, though they added that they did not want a replacement for the many excellent "step-by-stepnand "computingfor-dummies" types of books that were readily available They wanted the emphasis to be on project management, not o n project management software These requests sounded sensible to us and we have tried to write such a book ORGANIZATION A N D CONTENT With few exceptions, both readers and instructors are most comfortable with project management texts that are organized around the project life cycle, and this book is so organized W e start by defining in Chapter a project and differentiating project management from general management After discussing the project life cycle, we briefly cover project selection W e feel strongly that project managers who understand why a project was selected by senior management also understand the firm's objectives for the project Understanding those things, we know, will be of value in making the inevitable trade-offs between time, budget, and performance Chapter is devoted to the various roles the project manager must play and to the skills required to play them effectively In addition, we cover the various ways in which projects can be organized The nature of the project team and the behavorial aspects of projects are also briefly discussed Project planning, budgeting, and scheduling are covered in Chapters 3-5 Beginning with planning in Chapter and budgeting in Chapter 4, the use of project tnanagement software is covered in increasing detail Software is used throughout the book, where relevant, to illustrate the use and power of such software to aid in managing projects Chapter uses standard manual methods for building project schedules, and Microsoft Projectm is demonstrated in parallel Risk management software, Crystal Ball@2000, is referenced in several chapters Excelm is used in Chapter t o solve a problem o n crashing a project Detailed instructions are given Chapter also deals with resource allocation problems in a multiproject setting A major section of this chapter is devoted to the insights of E Goldratt in his book Critical Chain." Chapter concerns monitoring and controlling the project Earned value analysis is covered in some detail The final chapter deals with auditing, evaluating, and terininating projects Interest in risk management has grown rapidly in recent years, but the subject gets only minimal attention in most introductory level project management textbooks W e deal with risk throughout this book, introducing methods of risk management where relevant to the subject at hand For example, simulation is referred to in Chapter during our discussion of project selection models and is demonstrated in Chapter by using Microsoft Excel@for the purpose Simulation is also demonstrated in Appendix C using Crystal Ballm 2000 Detailed applications are made to project selection, budgeting, and scheduling problems Crystal Ballm 2000 also simulates networks discussed in the section o n the Critical Chain (see Chapter 6) W e are certainly aware that no text o n project management could be structured to reflect the chaos that seems to surround some projects throughout their lives, and a large majority of projects now and then The organization of this book reflects a tidiness and sense of order that is nonexistent in reality Nonetheless, we make repeated references to the technical, interpersonal, and organizational glitches that impact the true day-to-day life of the project manager *Goldratt, E M Critical Chain Great Barrington, M A : North River, 1997 ix PREFACE PEDAGOGY The book includes several pedagogical aids The end-of-chapter material includes Review Questions that focus on the textual material Discussion Questions emphasize the implications and applications of ideas and techniques covered in the text Where ap, propriate, there are Problems that are primarily directed at developing skills in the tech, nical areas of project management as well as familiarizing the student with the use of relevant software In addition to the above, we have included lncidents for Discussion in the form of caselettes In the main, these caselettes focus o n one or more elements of the chapter to which they are appended Several of them, however, require the application of concepts and techniques covered in earlier chapters so that they also serve an integrative function More comprehensive cases are also appended to each chapter A set of these beginning in Chapter is associated with the same project-the planning, building, and marketing of an assisted living facility for people whose state of health makes it difficult for them to live independently, but who are not yet ill enough to require nursing home care Each chapter is followed by another major case calling upon the ideas and methods covered in the chapter With all these cases, integration with material in other chapters is apt to be required W e have used ExcelB spreadsheets where appropriate throughout the book Microsoft Office@ is widely available, and with few exceptions students and professional project managers are familiar with its operation W e include instructions in the body of the text for running Excel'sm Random Number Generation and its Solver tools A free 120-day trial edition of Microsoft Project 2000@is included in each copy of the book The attached CD-ROM includes a complete version of Project 0 ~as well as a comprehensive user's guide to the software and an overview of how to "get started" using it The CD-ROM also contains a complete tutorial with step-by-step instructions on how to use the software including several case studies and descriptions of how specific companies use software to manage their projects Preprogrammed, standard printouts are shown as illustrations throughout the text Microsoft ProjectB was chosen because it is a competent piece of software that is used by a large majority of all project management software users While Project 2000@ comes with this book, schools and professionals with access to earlier versions (specifically Project 4.0@and Project 98@)are not at a disadvantage Almost all the relevant commands are the same in all three versions, and the standard printouts are very similar O n e exception is found in the case of earned value calculations and reports There are slight variations among versions, and all three vary slightly from the Project Management Institute standards The differences are easily handled and are explained in Chapter With this exception, we not differentiate between the versions and refer to them all as Microsoft Project (MSP) A free trial edition of Decisioneering's Crystal Ballm 2000 is also included in each copy of the book W e have noted in Chapters , , ,and some of the problems where the use of statistical decision models and simulation can be very helpiul in managing risk Because we felt that some instructors might desire an option to delay consideration of applied risk analysis to more advanced courses, applications of Crystal Ball@2000 are not integrated into the various chapters, but they are grouped in Appendix C Detailed instructions are given In addition, a number of the end-of-chapter problems have been rewritten to adapt them for solution by Crystal BallB These can be found in the Instructor's Resource Guide along with added instructions for use of the software Crystal Ball@ was chosen because it works seamlessly with Excel@and is user ti-iendly PREFACE X As we have noted elsewhere, projects have failed because the project manager attempted to manage the software rather than the project W e feel strongly that students and professionals should learn to use the basic project management techniques by hand-and only then turn to software for relief from their manual efforts As is true with any textbook, we have made some assumptions about both the students and professionals who will be reading this book W e assume that they have all had some elementary training in management, or have had equivalent experience W e also assume that, as managers, they have some slight acquaintance with the fundamentals of accounting, behavioral science, finance, and statistics We even assume that they have forgotten most of the statistics they once learned; therefore, we have included an Appendix o n relevant elementary statistics and probability as a memory refresher SUPPLEMENTS T h e Instructor's Resource Guide will provide assistance to the project management instructor in the form of answers/solutions to the questions, problems, incidents for discussion, and end-of-chapter cases This guide will also reference relevant Harvard Business School type cases and readings, teaching tips, and other pedagogically helpful material T h e publisher maintains a web site for this and other books T h e address is www.wiley.com/college/~rojectmgt.The site contains an electronic version of the Instructor's Resource Guide, an extensive set of PowerPoint slides, sample course outlines, links to relevant material organized by chapter, and sample test questions to test student understanding ACKNOWLEDGMENTS There is no possible way to repay the scores of project managers and students who have contributed to this book, often unknowingly The professionals have given us ideas about how to manage projects and students have taught us how to teach project management W e are grateful beyond our ability to express it W e are also grateful to a small group of individuals, both close friends and acquaintances, who have been extraordinarily willing to let us "pick" their brains They graciously shared their time and knowledge without stint We send our thanks to: James Cochran, Louisiana Tech University; James Evans, University of Cincinnati; Karen Garrison, 3X Consulting Corporation; Timothy Kloppenborg, Xavier University, Ohio; Samuel Mantel, 111, Cisco Systems, Inc.; Gerhard Rosegger, Case Western Reserve University; and above all to Suzanne Ingrao, Ingrao Associates, without whom this book would have been unreadable Finally, we owe a massive debt to those colleagues who reviewed the manuscript for this book: George R Dean, DeVry lnstitute of Technology, DuPage; William C Giauque, Brigham Young University; Bill Leban, Keller Graduate School of Management; J Wayne Patterson, Clemson Uniuersity; Patrick Philipoom, University of South Carolina; Arthur C Rogers, City University; Dean T Scott, DeVry Institute of Technology, Pomona; Richard V Sheng, DeVry lnstitute of Technology, Long Beach; William A Sherrard, Sun Diego State University; Louis C Terminello, Stevens Institute of Technology; and Jeffrey L Williams, University of Phoenix W e owe a special thanks to Byron Finch, Miami University, for a number of particularly thoughtful suggestions for improvement While we give xi PREFACE these reviewers our thanks, we absolve each and all of blame for our errors, omissions, and wrong-headed notions Samuel J Mantel, Jr Joseph S Stern Professor Emeritus of Operations Management College of Business Administration University of Cincinnati 608 Flagstaff Drive Cincinnati, OH 45215 Jack R Meredith Broyhill Distinguished Scholar and Chair of Operations Babcock Graduate School of Management Wake Forest University Winston Salem, N C 27 109 mantelsj@einail.uc.edu (5 13) 93 1-2465 jack.meredith@mba wfu edu (336) 758-4467 Scott M Shafer Babcock Graduate School of Management Wake Forest University P.O Box 7659 Winston Salem, N C 27 109 Margaret M Sutton Sutton Associates 46 North Lake Avenue Cincinnati, OH 45246 scott.shafer@mba eufu.edu (336) 758-3687 www mba.wfu.edulfacultylshafer mmsutton@fuse.net (513) 543-2806 THE WORLD OF PROJECT MANAGEMENT I 1.IWhat Is a Project? 1.2 Project Management vs General Management 1.3 What Is Managed? The Three Goals of a Project 1.4 The Life Cycles of Projects 1.5 Selecting Projects Nonnumeric Selection Methods Numeric Selection Methods 1.6 The Aggregate Project Plan 16 1.7 The Materials in this Text 19 Review Questions 20 Discussion Questions 21 Problems 21 Incident for Discussion 22 Case: United Screen Printers 22 Case: Handstar lnc 24 THE MANAGER, THE ORGANIZATION, AND THE TEAM 2.1 The PM's Roles 27 Facilitator 27 Communicator 29 Virtual Project Manager 30 Meetings, Convenor and Chair 31 2.2 The PM's Responsibilities t o the Project 31 Acquiring Resources 32 Fighting Fires and Obstacles 33 Leadership and Making Trade-offs 33 Negotiation, Conflict Resolution, and Persuasion 33 2.3 Selection of a Project Manager 34 Credibility 35 Sensitivity 35 Leadership, Style, Ethics 35 2.4 Project Management as a Profession 36 2.5 Fitting Projects into the Parent Organization 38 More on "Why Projects?" 39 Pure Project Organization 39 Functional Project Organization 41 Matrix Project Organization 42 Mixed Organizational Systems 45 The Project Staff Office 45 26 AUTHOR INDEX Hughes, T P., 53 Hulett, D T., 157 Ibbs, C W., 203,237 Ingram, T., 237,250 Jandt, F E., 25 Johnson, R A., 267 Johnson, R V., 203 Kamburowski, J., 157 Kandt, D B., 237 Kaplan, R S., 25 Keefer, D L., 157, 267 Keelin, T., 25 Kefalas, A G., 54 Kharbanda, P., 54 Kimball, R., 250 Kloppenborg, T J., 25 Knutson, J., 81 Koppleman, J M., 237 Kotter, J P., 53 Kretlow, W J., 25 Kurstedt, H A., Jr., 109 Kurtulus, I., 203 Kwak, Y.-H., 237 Langle~,A., 81 Lavold, G D., 81 Lawrence, A O., 109 Lawrence, J A., Jr., 157 Lee, S A., 203 Levine, H A., 53 Levy, O., 250 Li, J I., 203 Liberatore, M J., 109 Littlefield, T K Jr., 157 Mallak, L M., 109 Mandelbaum, A., 203 Mantel, S J., Jr., 25,53, 109, 157, 250 Martin, J E., 110 Martin, M G., 81 Martin, P K., 81 Matson, E., 53 McGuigan, J R., 25 McLaughlin, F S., 81 McMahon, C S., 157 Mendenhall, W., 267 Meredith, J R., 25, 110, 157, 203,237, 250 Moyer, R C., 25 Narula, S C., 203 Netter, J., 267 Nixon, T R., 237 Nguyen, V., 203 Olson, D L., 109,283 Pasternak, B A., 157 Patterson, N., 53 Patzak, G A., 109 Pells, D L, 81 Peters, T., 55 Peterson, M., 74 Pinto, J K., 53,54,250 Prentis, E L., 81 Pritsker, A A B., 157 Pyron, T., 157 Raiffa, H., 25 Randolph, P H., 157 Reif, W E., 81 Reith, W D., 237 Ruskin, A M., 157 Sasieni, M W., 157 Schaeffer, R L., 267 Schoderbek C G., 54 Schoderbek, P P., 54 Schwerer, E., 203 287 AUTHOR I N D E X Sharp, P., 25 Shafer, S M., 110, 203, 237 Shenhar, A J., 35,51,54, 250 Simon, H., 110 Slevin, D P., 53 Smith, D P., 81 Souder, W E., 25 Stone, G S., 53 Sweeney, D., 267 Swift, J., 187 Tadisina, S K., 250 Tate, K., 81 Teplitz, C J., 109 Thamhain, H J., 47,48,54, 237 Thomas, H., 109 Titus, G J., 109 Toney, F., 237 Townsend, H W R., 110 Ury, W., 25 Verdini, W A., 157, 267 Wackerly, D., 267 Wasserman, W., 267 Webster, J L., 81 Wheelwright, S C., 17, 21, 25, 81 Whitehouse, G E., 110 Whitmore, G.A., 267 Wilemon, D, L., 47,48, 54 Williams, T., 267 Womer, N K., 109 Wu, C., 237 Action plan See Planning Activity See also Scheduling budgeting, 89-90 definition, 112 dummy, 114 pseudoactivity, 187-188 slack, 117-1 18 time estimation See also Time estimation at the 90% and 95% levels, 122 deterministic, 112 expected time, 121 probabilistic (stochastic), 121-122 standard deviation of, 122 variance of, 122 Activity-on-arrow (AOA), activity-onnode (AON) See Scheduling Aggregate project plan, 16-19,57 breakthrough projects, 17-18,56 derivative projects, 17-18, 56 platform projects, 17-18,56 R&D projects, 18 Atlantic States Chemical Laboratories, 249 Auditing, 240-245 behavioral aspects, 243 financial vs project audits, 241-242 process of, 240-243 reports, 243-245 types of, 214 Barry, D., Baseline plan See Planning Benchmarking, 227-228, 239 Beta distribution, 121-122, 133, 269 Booz-Allen Hamilton, 112 Brainstorming, 59-60, 67 Budget See also Cost activity budgeting, 89-90 bottom-up, 85-86,89 cuts, impact of, 87-88 life cycle, impact of, 88-89 methods of, 83-86 monitoring, 82, multiproject, 89 negotiation process, 88-89 program budgeting, 89-90 risk management, 101-105 simulation, 275-278 top-down, 85, 89 uncertainty, 99-101 reasons for, 98-101 Buffers See Critical chain Bureau of Labor Statistics, 96, 100 Cash flow, 85 Central Arizona Project (CAP), 29 Central Limit Theorem See Statistics Change order, 61 Charter See Project charter Chrysler See Daimler Chrysler Cincinnati Enquirer, 222, 229 Clinton, President Wm 247 Cochran, J., x Comparative benefit selection method, Communications, 29-3 on virtual projects, 30-3 290 SUBJECT INDEX Concurrent engineering, 49, 73-75 Conflict and conflict resolution, 2, 47-50,73-77 and the life cycle, 48-50 intrateam, 47-50 matrix team, 44,47-50 multidisciplinary team, 73-77 project evaluation, 240 sources of, 48-49 Conflict avoidance, 49 Contingency plan, 104 Control benchmarking, 22 7-228, 239 definition, 204, 220 mechanisms of, 223 milestone status reports, 224-225 plan-monitor-control cycle, 204-206 project baseline, 61, 206, 214, 216 project management maturity model, 228 purposes of, 22 1-222 system design, 222-228 components of, 223-224 tools for control, 225-228 control charts, 226-227 critical ratio, 225-227 types of control systems, 223-225 cybernetic controls, 224 go/no-go controls, 223-224 post-project controls, 223-225 Cost See also Budget account numbers, 85 direct, 87 GS&A, 87 overhead, 84 perspectives on, 85 Cost estimation, 83, 86-97 direct cost (work element costing) errors, correcting for bias, 95-96 random, 95-96 improving, 91-97 learning curve, 92-94 tracking signal, 94-96 mean absolute ratio (MAR), 95-96 influence of organizational climate, 97 overhead costs, 87 padding cost estimates, 193 Cost variance See Earned value CPM See Scheduling Critical chain, 191-197 definition, 197 example, 196-197 feeding buffer, 197 multitasking, 194-195, 196 simulation, 192-193 Prochain@,206 project buffers, 196-197 student syndrome, 186, 193 Theory of Constraints, 191, 196 time buffers, 196 Critical path See Scheduling Critical Path Method (CPM) See Scheduling Critical time See Scheduling Crystal Ball@2000," 16, 20, 268-283 Distribution Gallery, 270 fitting statistical distribution to data, 208 simulation, 268 project budgeting, 275-278 project selection, 269-275 networks, 140, 148, 194 resource allocation, 28 1-283 *Decisioneeringls Crystal Ball@2000 is referenced frequently throughout the book, and page entries will not be cited except for discussions of the use of the software SUBJECT INDEX Daimler Chrysler, 39, 74 Dean, G R., x Decision table (payoff matrix) See Risk management Dupont de Nemours, 112 Earned value, 13-220 actual cost of the work performed (ACWP), 215-216 baseline plan See Planning budget at completion (BAC), 216 budgeted cost of the work performed (BCWP), 215-216 budgeted cost of the work scheduled (BCWS), 215-216 conventions for calculations, 14 cost performance index (CPI), 16, 219 cost variance, 14-216 definition, 213 estimated (cost) at completion (EAC), 216 estimated (cost) to complete (ETC), 216 MSP calculations, 219 differences from PMI standards, 19 MSP budget at completion (BAC), 219 MSP cost variance (CV), 219 MSP estimate at completion (EAC), 19 MSP variance at completion (VAC), 19 schedule performance index (SPI), 216,219 schedule variance, 14-2 16 Employee Involvement (EI), 76 See also Empowerment Empowerment (work teams), 76-77 effectiveness of, 76-77 Enterprise project management See Project-oriented organization Ethics, 36-37, 92, Evaluation, 238-240 conflict, 240 criteria for success, 239 measurement, 240 definition, 238 evaluation report, 239 post-project evaluation, 238-239 Evans, J R., x Event (node) definition, 112 Excel@,*20 calculating probabilities, 129-130 crashing a project, 165-170 histogram, 138 network simulation, 132-138 random number generation, 135 resource loading display 183 Solver, use of, 166-1 70 Expected value See Risk management Fast tracking, 170 Finch, B., xi Functional project organization See Organization Gantt chart See Scheduling Gantt, H., 140 Garrison, K., x General Electric Co., Giauque, W C., x Goodwill Industries, 38 Gozinto chart, 69 *Microsoft Excel@2000 is referenced so frequently throughout the book, that page entries will not be cited except for discussions on the use of the software 292 SUBJECT INDEX Harvard Business Review, 34 Hierarchical planning process See Planning Hurdle rate of return, 10-1 Ingrao, S., x Integration management See Concurrent engineering, 49 Interface coordination (Interface management), 49,75-76 mapping, 75-76 Johnson Controls, 228,239 John Wiley & Sons, 80-81 Kloppenborg, T J., x Labor pools, 180, 183 Launch meeting See Project launch meeting Learning curve, 92-94 Learning rate, 92-93 Leben, B., x Life cycle, 6-8 budget, impact on, 88-89 managerial focus, 6-7 resource allocation, impact on, 189-190 S-shaped, J-shaped, 7-8 Limerick nuclear power generator, 87 Linear responsibility chart (LRC), 72-73,101 Line balancing, 184 Lockheed Martin Corp., 112 Management by projects See Projectoriented management Mantel, S J., 111, x Matrix management See Organization Mean absolute ratio (MAR), 95-96 Meetings, 31, 59-61, 211-213 guidelines, 11-2 12 launch See Project launch meeting Micromanagement, 28-29,77, 159 Microsoft Excel@.See Excel@ Microsoft Project@(MSP)," 20 earned value See also Earned value calculations, 19 Gantt charts, 141-145 strengths and weaknesses, 145 multiple project scheduling, 187-188 project calendar, 127 reports, 11 resource calendar, 172-1 73 resource leveling, 177-183 resource loading, 170-1 76 loading display, 175 resource loading, leveling reports, 177-183 tracking a project, 206 Project Central@,212 use to build networks, 118-120 use to calculate critical path, time, and slack, 118-120 use to plan, 64-67 use in probabilistic networks, 124-127 Microsoft Word@,2 11 Milestone, 118 definition, 112 Mission statement, 56 See also Planning Mixed form See Organization Monitoring baseline, 206, 214, 216 benefits of, 10 data collection, 207-210 *Microsoft Project@is referenced so frequently throughout the book that page entries will not be cited except for discussions on the use of the software I I l I I SUBJECT I N D E X analysis, 208-209 formats for reporting, 207 definition, 204 earned value See Earned value meetings, 21 1-213 objectives of, 204 plan-monitor-control cycle, 204-206 system design, 206 reports, 209-213 report timing, 10 types of, 10-2 11 updating reports, 209 virtual reports, 209-2 10, 12-2 13 tracking a project, 206 Monte Carlo simulation See Crystal Ball@2000 and Simulation) Multidisciplinary teams, 73-77 conflict, 47-50, 73-77 Multiple projects, 89 budgeting, 89 resource allocation and scheduling, 185-190 See also Resource allocation Multitasking See Critical chain NASA, 82,89 Negotiation, 4,49, 70 budget, 88-89 life cycle, impact of, 88-89 plan, 70 win-lose, win-win, Net present value, 10-13 Network See Scheduling Node See Event Normal probability distribution table, 130,258 Northrop-Grumman Corp., 33 Nippon Sanso, Inc., 74 Nucor Corp., 249 Operating/Competitive benefit selection method, Opportunity cost of capital, 13 Organization (of projects) functional, 41-42 matrix, 42-44 balanced, 43 strong, 43 weak, 43 mixed form, 54 pure project, 39-41 Ortec International, 249 Participatory decision making/ management, 60, 76-77 Path See Scheduling Patterson, J W., x Persuasion, 34 PERT See Scheduling Philipoom, P., x Plan-monitor-control cycle, 204-206 Planning action plan, 63-67, 70-72 aggregate plan See Aggregate project plan baseline plan, 61, 206, 214, 216 contents of plan, 55-57 hierarchical planning process, 61-63 master plan, 56-57, 61 elements of, 56-57 master schedule, 70 process, 7-68 sequence (steps to plan), 58 sign-offs, 61, 70 templates, 57, 67 work breakdown structure (WBS), 69-72,85,101 account numbers, 85 process of constructing, 69-72 PM Network, 38 294 SUBJECT INDEX Portfolio management See Aggregate project plan Post-project evaluation See Evaluation Precedence diagramming See Scheduling Probability, 259-262 definition, 259-260 event relationships, 259-262 addition rule, 262 multiplication rule, 261-262 laws, 260-262 standard distributions, 267 types of, 259-260 Procter&Gamble, Program, budgeting, 89-90 Program evaluation and review technique (PERT) See Scheduling Project breakthrough, 17-18,56 calendar, 127 characteristics, 1-2, charter, 61 definition, 2, derivative, 17-18, 56 goals, 5, platform, 17-18, 56 portfolio, 16-19 purpose of, R&D, 18 resource constrained, 159 reports See Monitoring slack, 118 subdivisions, time constrained, 159 vs nonprojects, 3-4 Project audit See Auditing Project champion, 30,59 Project control See Control Project evaluation See Evaluation Project final report See Termination Project history, 209 Projectitis, 41 Project launch meeting, 59-61 outcomes of, 60-61 Project management professional standards, 37-38 reasons for growth, 39 vs general management, 3-4 Project Management Body of Knowledge, 25,37,54, 101,219, 228 Project Management Institute (PMI), 2, 6, 19,37,38, 54, 219 Code of Ethics, 37,92 Standards Committee, 25,54, 110 Project Management Journal, 38 Project management maturity model, 228 Project manager authority, 3-4 career, 38 responsibilities, 3-4, 1-34 acquiring resources, 32 firefighting, 32-33 leadership, 33,35-36 making trade-offs, 33 negotiation, conflict resolution, persuasion, 33-34 roles, 27-31 facilitator, 27 communicator, 29-30 selection of, 26,34-36 required characteristics, 6,34-36 credibility, 35 sensitivity, interpersonal and political, 35-36 Project monitoring See Monitoring Project office, 45,47 Project oriented organization, Project scope, 59, 98-100, 228-230 Project selection, 8-19 non-numeric methods, 8-10 comparative benefits, 9-10 SUBJECT INDEX w operating/competitive necessity, sacred cow, 8-9 numeric methods, 9-16 financial assessment, 10-1 payback period, 10 discounted cash flow, 10-13 scoring methods, 13-16 unweighted 0-1 method, 13-14 weighted factor method, 13-16 risk management, 16 selection committee, simulation, 269-275 Project staff office See Project office Project success, 239, 246 See also Evaluation and Termination Project team, 46-50 See also Multidisciplinary teams characteristics of effective team, 46-47 matrix team problems, 47-50 Project termination See Termination Project uncertainty See Risk management Pseudoactivities, 187-188 Pure project See Organization Quality circles (QC), 76 See also Empowerment Queues (waiting lines), 189 length of queue, formula, 189 Q-sort, 9-10 Random number generation See Excel@ and Crystal Ball@) Required rate of return, 1I Resource allocation See also Scheduling borrowing resources, 190 constrained resources, 185 priority rules, 185-1 86 criteria for choice, 186, 188 Walts, 185,188 Critical Path Method (CPM), 159-170 crashing a project, 159-170 using Excel@,165-1 70 descheduling, 190 life cycle, impact of, 189-190 multiple projects, 187-190 multiple project scheduling, 187-188 using Microsoft Project@,187-188 priority rules, 185-186, 188, 189 resource calendar, 172-1 73 resource leveling, 177-184 using Microsoft Project@,177-183 under uncertainty, 183-1 84 resource loading, 170-1 76 Microsoft Project@display, 175 monitoring, 176 under uncertainty, 183-184 resource loading, leveling reports, 177-183 resource usage standard practice, 159-160 simulation, 28 1-283 Resource calendar See Resource allocation Resource constraints See Resource allocation Resource leveling See Resource allocation Resource loading See Resource allocation Responsibility matrix See Linear responsibility chart Risk management, 16, 101-105 See also Activity contingency planning, 104 decision table (payoff matrix), 16-1 7, 103 dress rehearsal, 105 expected value, 103 game theory, 103 SUBJECT I N D E X Risk management (Continued) path merge calculation problem, 131, 132 probability of path (project) completion, 127-129 probabilistic activity times, 121-122 risk analysis, 101-105 risk identification, 101 risk profile, 101 scheduling, 121-140 table top exercise, 105 uncertain activity times See Activity uncertainty of critical path and time, 123 Rogers, A C., x Rosegger, G., x San Francisco Metro Turnback project, 22 Sacred cow selection method, Schedule variance See Earned value Scheduling See also Activity activity slack, 117-1 18 computer, use of, 118-120, 124-127 crashing a project See Resource Allocation critical path, 112, definition, 112 critical path method (CPM), 101, 112-120,159-170 See also Resource Allocation critical time, 112, definition, 112 definition of terms, 112 earliest start (finish) time, 115-1 18 float (see slack) Gantt chart, 140-145 construction of, 141 strengths and weaknesses, 145 using MSP, 141-145 Graphical Evaluation and Review Technique (GERT), 145, 147-148 latest start (finish) time, 115-1 18 Microsoft Project@,use of, 118-120, constructing network, 118-120, 124-127 constructing Gantt chart, 141-145 precedence diagramming, 147 multiple projects See Resource allocation network (AOA and AON) construction, 113-1 15 definition, 112 slack, 117-1 18 path merge problem, 131-132, 139-140 precedence diagramming, 146-147 linkages defined, 146-147 probability of project or path completion, 127-129 project (network) slack, 118 program evaluation and review technique (PERT), 101, 112-120 Q-GERT, 148 simulating a schedule See Simulation slack calculation, 117-1 18 free slack, 120 total slack, 120 sources of problems for schedules, 195-196 Scope change change control system, 229-230 control of change, 228-230 reasons for, 98-100 Scope creep See Scope change Scoring models See Project selection Scott, D T., x Selection See Project selection SUBJECT INDEX Self-directed teams (SDT), 76 See also Empowerment Self-directed work teams (SDWT), 76 See also Empowerment Self-managed teams (SMT), 76 See also Empowerment Sheng, R V., xi Sherrard, W A., xi Simulation See also Crystal Ball@ Monte Carlo simulation, 104, 132-138, 192-193 project network simulation Excel@,132-138, 148 Crystal Ball@,140, 148, 268-281 table top exercise, 105 vs statistical analysis, 138-140 Slack See also Scheduling and Activity) SmithKline Beecham, 18-19 Statistics, 262-267 Central Limit Theorem, 129, 265-266 descriptive statistics, 263-265 inferential statistics, 263, 265-266 measures of central tendency mean, median, mode, 264 measures of dispersion range, 264 sample mean, 266 sample standard deviation, 265-266 sample variance, 265-267 normal probability distribution table, 130,258 path merge probability calculation, 131-132, 139-140 population mean (X),264 population standard deviation (a), 265 population variance (a2), 265 statistical independence, 128 vs simulation, 138-140 Student syndrome, 186, 193 Suboptimization, 28 Subtask, Superconducting supercollider (SSC), 247 Systems approach, 27-29 Systems engineering See Concurrent engineering Task, Termination, 245-250 criteria for, 246-247 failure, 246-247 success, 246-247 project final report, 249-250 contents of, 249-250 manager, 248-249 process, 248-249 timing of, 246 types of, 247-248 Terminello, L C., xi Theory of Constraints, 191, 196 Thermos Co., 74 Time estimation at the 90% and 95% levels, 122 deterministic, 112 expected time, 121 improving, 1-97 errors, correcting for bias, 95-96 random, 95-96 learning curve, 92-94 tracking signal, 94-96 mean absolute ration (MAR), 95-96 probabilistic (stochastic), 121-122 standard deviation of, 122 variance of, 122 Total quality management (TQM), 76 See also Empowerment SUBJECT INDEX Tracking signal, 94-96 mean absolute ratio, 95-96 Trade-offs, 5-6,33 influence of organizational climate on, 33 project vs project, 187-190, 191 resources vs time, 159-170 Transdisciplinary teams See Multidisciplinary teams Trump, Donald, 38 Uncertainty, 5-6, 16, 98-101 See also Risk management United States Department of Commerce, 38, 96 United States Navy, 112 United Way, Unity of Command, 44 ViewStar Corporation, 219 / Virtual projects, 30-3 communications, 30-3 meetings See Monitoring reports See Monitoring Wall Street Journal, 30 Walt Disney Co., 47 Walts, 185, 188, 196 War room See Project office Williams, J L., xi Work breakdown structure (WBS) See Planning Work teams, 76-77 See also Multidisciplinary teams Young Men's Christian Association (YMCA), 125, 126, 127 ... WORLD OF PROJECT MANAGEMENT I 1.IWhat Is a Project? 1.2 Project Management vs General Management 1.3 What Is Managed? The Three Goals of a Project 1.4 The Life Cycles of Projects 1.5 Selecting Projects... accomplished through the use of projects and project management T h e use of projects has been growing at an accelerated rate T h e exponential growth of membership in the Project Management Institute... large majority of all project management software users While Project 2000@ comes with this book, schools and professionals with access to earlier versions (specifically Project 4.0@and Project 98@)are