Project management

j PROJECT :" I MANAGEMENT TED ICLASTmRIN CD-ROM included PROJECT MANAGEMENT Tools and Trade-08s PROJECT MANAGEMENT Tools and Trade-08s TED KLASTORIN University of Washington Acquisitions Editor Beth Lung Golub Editorial Assistant Ailsa Manny Media Editor AlIie Keim Marketing Manager Gitti Lindner Managing Editor Lari Bishop Associate Production Manager Kelly Tavares Production Editor Sarah Woljiman-Robichaud Illustration Editors Jennifer Fisher and Kris Pauls Cover Design Jennifer Fisher Cover Image O Chad J ShafferJStock Illustration Source/Images.com This book was set in Times by Leyh Publishing LLP It was printed by RR Donnelly-Willard The cover was printed by Phoenix Color Corp This book is printed on acid-free paper Copyright O 2004 by John Wiley & Sons, Inc ' 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 otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Dnve, Danvers, MA 01923, (978)750-8400, fax.(978)750-4470 Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201)748-6011, fax (201)748-6008, E:Mail:*PERMREQ@WILEY.COM To order books or for customer service please call 1-800-CALL WILEY (225-5945) USA ISBN: 0-471-41384-4 WIE ISBN: 0-471-45 186-X Printed in the United States of America I To Susan, Rachel, and Anna, whose presence are my blessings BRIEF CONTENTS PREFACE xiii ABOUT THE AUTHOR xvii CHAPTER INTRODUCTION TO PROJECTMNAGEMENT CHAPTER PROJECT INITIATION SELECTION AND PLANNING CHAPTER PROJECT TEAMS AND ORGANIZATIOA'AL RELATIONSHIPS CHAPTER PRECEDENCE NETWORKS AND THE CRITICAL PATH METHOD 1CPM) CHAPTER PLANNING TO MINIMIZE COSTS 107 CHAPTER PLANNING WITH UNCERTAINTY 135 CHAPTER RISK MANAGEMENT CHAPTER RESOURCE MNAGEMENT CHAPTER MONITORING AND CONTROL CHAPTER 10 MANAGING MULTIPLE PROJECTS EPILOGUE INDEX 23 62 83 165 175 205 218 225 COPILOTPORTABLE MARINE RADAR PROJECT APPENDIX 227 237 vii CONTENTS PREFACE xiii ABOUT THE AUTHOR CHAPTER xvii INTRODUCTION TO PROJECT MANAGEMENT What Defines a Project? Not All Projects Are the Same Measures of Project Success/Failure Information Technology Project Outcomes PO 11 When to "Pull the Plug" on a Project Project Life Cycle 12 Project Management Trade-offs 13 Scope of This Book 16 Managing Project Risks 16 History of Project Management 17 Project Management Software 18 Project Management Institute 18 Project Management Maturity Models 18 Appendix 1A Medicare Transactions: A $50 Million Lesson in Project Management Study Problems 21 References 21 CHAPTER PROJECT INITIATION, SELECTION, AND PLANNING 19 23 Project Initiation and Selection 24 Numerical Measures 25 Real Options Approach 33 Scoring and Ranking Methods 34 Evaluating Project Portfolios 37 Project Planning 41 Work Breakdown Structure (WBS) 43 46 Estimating Task Costs and Durations Dealing with Uncertainty 48 Conclusions 53 Study Problems 54 References 58 Appendix 2A Christopher Columbus, Inc Voyage to Discover Trade Routes to Asia 59 interest payment equal to 25 percent of the total amount borrowed There is also a percent loan fee that is paid "up-front" when the loan is secured Playing the Game A week represents one turn of the game At the beginning of each week (after negotiating a long-term loan), each team makes hiring and firing decisions (including a senior design engineer), and then proceeds with feasible tasks At the end of the week, each team reports its current status A team may start any activity if all of its predecessor activities have been completed After each team has completed an activity, it marks the activity 'completed' with a colored dot All relevant information is also entered on each team's calendar and cash balance sheet Mergers and Acquisitions At any time, two or more teams can agree to merge If they so, then the new (merged) team acquires the combined debt of both teams up to the time of merger; after that time, they operate as a single team It is assumed that the new (merged) team has finished all tasks completed by either team If one team purchases another team, then the acquiring team assumes both the debt of the purchased team as well as any cost of purchase With respect to the design characteristics of a team's radar unit, any radar unit that has a different number of features is considered to be a new product-although any remaining time in the development cycle of the acquired team is reduced by one-half For example, assume that a team has successfully completed the development of a radar unit with no features and currently has that unit in production If they acquire a team that is developing a radar unit with, say, five features, the new (merged) team cannot sell the more advanced radar unit until it has been successfully developed, test-marketed, etc In this case, however, the time to complete each step in the development process is calculated normally-and then reduced by a factor of one-half Licensing Technology At any time, a team that has successfully developed a marine radar unit can license their developed technology to another team The team that has bought this technology sells the product in exactly the same way as if they had developed the product themselves Licensing fees can be in the form of a single (one-time) fee or can be negotiated on a royalty basis (i.e., a part of the selling price goes back to the licensing firm) Specific arrangements are negotiated between individual teams Ending the Game The game ends when all teams have started commercial production of the new radar unit or withdrawn from the market (i.e., filed for bankruptcy) and the last team to enter the market has generated three weeks of sales The first team to enter the market receives a bonus of $750,000 from foreign licensing agreements, the second team receives $500,000, and the third team to enter the market receives $250,000 (Other teams receive no foreign licensing payments.) When the game ends, each team should calculate their average weekly demand during the last three weeks of the game and assume that this demand will continue for one more year (fifty-two weeks) At the end of the one-year period, the effective life of the marine radar unit ends as it is superceded by new technologies Weekly profits during this 52-week period are calculated as follows: [(Average demand for last weeks) x (Selling Price)] - [Weekly rents/salaries/expenses] After all loans and interest have been paid, the team that has earned the highest profit wins the game, the team with the next highest profit takes second place, etc ACTIVITY REQUIREMENTS SHEET Lease OfficeIManufacturing Space As soon as your long-term loan is arranged, you must rent a location for your office, R&D, and manufacturing space Your real estate agent, Ms Holly Park, has identified two possible sites The first location becomes available next week with a rental fee of $2,50O/week and requires a $30,000 non-refundable deposit The second location costs $1,00O/week (with no deposit); however, there is some uncertainty when this space will become available since the space is currently occupied If you select the second space, roll a die once per week until you roll a or less; as soon as you are successful, the space is immediately available Order Lab Equipment You can purchase lab equipment from either of two vendors: Slickquick and Pennycrawl Pennycrawl offers you a good deal on the equipment, everything you need for only $125,000, but delivery time can be erratic Slickquick, on the other hand, guarantees ontime delivery, but charges $200,000 for the same equipment Equipment cannot be delivered until the space is available Payment is made when equipment is delivered If you selected Pennycrawl, roll a die once per turn until you roll a or less (if successful, Pennycrawl will deliver your equipment in one week) If you selected Slickquick, the equipment is delivered in exactly four weeks Select a vendor and pay the appropriate amount If you select Slickquick, it is assumed that the contract with Slickquick cannot be cancelled once it is announced However, if you select Pennycrawl and not succeed in rolling a or less in any given week, you have the option of switching vendors in the following week (For example, if you are unsuccessful in rolling a or less in week #4, then you cannot sign a contract with Slickquick until week #5 Lab equipment will then be delivered at the beginning of week #9.) Press Release After securing your long-term loan, you hold a press conference to publicly announce your team's efforts to develop a portable marine radar unit During the conference some unpleasant questions are raised about past business dealings of your team members Roll a die to determine if the local paper takes a positive or negative position toward your project If you roll a or less, the paper prints a negative article and you must hire a public relations firm (at a cost of $20,000) to overcome the bad publicity If you receive bad publicity, it takes three weeks to conduct a media campaign to overcome this bad publicity Otherwise, the press release is completed in one week Setup ManufacturingIOffice Space Once the manufacturing and office space has been leased and the equipment has been delivered, it takes one week to set up the facilities before design work can begin Design of Physical Unit The mechanical engineers working on the physical design indicate that the design time is very sensitive to the number of technicians on the payroll Roll one die If the number on the die is less than or equal to the number of technicians on your payroll, the design task is completed in one week Technicians must remain on the payroll for the remainder of this task If the number you roll is greater than the number of technicians on your payroll, you will have to repeat the process the following week; continue trying each week until the design is successful Design of Electronics and Circuits The time needed to complete the electronic design is determined by two factors: the number of senior design engineers on your payroll and the number of features you select for the radar unit There are five possible features: 110 VAC built-in adapter GPS (Global Positioning System) interface Variable range option Low power standby option Anchoring (warning) zone alarm The time needed to complete the electronic design is given by the following equation: ] [ Time = (D)(F+ 1) N+1 where D = random number thrown on a die, F = number of features selected, and N = number of senior design engineers on your staff (0 < N ) and [x] indicates the smallest integer greater than or equal to x For example, if you select four features (F=4), roll a three on the die (D =3), and have one senior design engineer on your staff (N =I), then [ + ] [TI Time = (3x4 1) = 1+1 = [7.5]= weeks Note that this function cannot be completed unless there is at least one senior design engineer on your staff, and having more than one senior engineer results in no additional benefits Programming Programming is a major part of the design of the radar unit since the software will determine how the unit will operate Once the design of the electronics is completed, programming can begin The programming instructions, after being written and hlly tested, are then placed on ROM (Read-Only Memory) chips that become part of the radar unit To find out how long this task takes, roll two dice If the total number on both dice is less than or equal to the number of programmers on your staff, then you have successfully completed the programming task this week If not, you must roll the dice again next week and continue in this manner until you are successful Assembly Prototype Unit Once the programming and the design of the physical unit are completed, you can assemble a prototype unit Roll a die, divide the number on the die by 2, and round up to the nearest integer to determine the number of weeks needed to complete this task The same number of technicians is needed to complete this task as required to design the physical unit Beta Test of Prototype The prototype Copilot Radar is now subjected to both field and laboratory tests in which the unit is tested under various external conditions (e.g., weather, usage, etc.) This task takes three weeks to complete and requires the same number of technicians as was needed to assemble the prototype unit At the end of the beta test, you will find out if the prototype fails the beta test and if parts of the unit need to be redesigned To determine if the prototype fails, roll two dice; the total number on both dice is used to determine the following outcomes: # on Dice Outcome - or greater - Failure of both mechanical and electronics; must return to both functions Mechanical failure; must return to "Design of the Physical Unit" Electronics failure; must return to "Design of Electronics and Circuits" Prototype passes beta tests Market Test Once the beta test is successfblly completed, the Copilot Radar Unit can be test marketed This task includes the use of focus groups and limited advertising campaigns in a few selected cities Roll two dice If the total number on both dice equals twelve, the market test fails and indicates that there is virtually no demand for the Copilot Marine Radar unit; in this case, the game ends for your team The number of weeks needed to complete the market test is determined by the smaller number on the two dice (e.g., if the two dice showed and 6, then the test market task would be completed in weeks) Set Up Manufacturing Facility Once the market test is completed, you must set up the manufacturing facility Production equipment must be purchased, and it is expensive and temperamental You have a choice: buy the highest quality equipment for $200,000 and proceed with a roll of or less or buy the "Econo-line" equipment for $100,000 and proceed with a roll of or less Keep trying, one roll per week, until you get the equipment to work You only need to purchase equipment once Obtain FCC Approval Once the market test is completed, you must hire lawyers to negotiate with the FCC for their approval (you cannot sell a radar unit until you have FCC approval) You can choose experienced lawyers for $25,000 or inexperienced lawyers for $10,000 Experienced lawyers will get you through with a roll of or less, inexperienced lawyers with a roll of or less If you don't get approval, try again next week You must pay your lawyers on each try Obtain UL (Underwriters Laboratory) Approval You might want to have UL approval of your Copilot Marine Radar before you put the unit on the market To determine if you get UL approval, choose a number between zero and six; multiply this number times $5,000 to determine the UL application cost Roll a die If the number on the die is equal to or less than your chosen number, you get UL approval (If you selected the number six, it's not necessary to roll a die as you get automatic approval; if you selected zero, you not have to roll a die as you have obviously decided to forgo UL approval.) If you don't get UL approval, you must reduce your selling price by $50 per unit If you apply for UL approval, the process takes one week If you decide not to apply for UL approval, there is no time required for this activity and it can be ignored Production and Sales Once you have set up your manufacturing facility, hired assembly line workers, and secured FCC approval (UL approval is optional), you can begin to produce and sell radar units Remember that each assembly line worker can produce a maximum of fifteen units per week, and it takes two weeks to train a new assembly line worker before she can be used on the production line Assembly line workers can be hired or fired at the beginning of each week that the game is being played Selling Price The market price for your radar unit is a function of the number of other competitors on the market (regardless of the design of their units) and the number of features built into your unit The following table determines the selling price: Total Number of Companies Selling Portable Marine Radar Units No of Features 1 $1,000 1,125 1,250 1,375 1,500 1,625 $ 850 975 1.100 1,225 1,350 1,475 $ 700 825 950 1,075 1,200 1,325 $ Remember to subtract $50 per unit if you don't have UL approval 550 675 800 925 1,050 1,175 $ 400 525 650 775 900 1,025 Market Demand To find the weekly market demand, each team rolls two dice and divides the sum of the number on the dice hy the total number of companies (including yours) selling portable marine radar units Take the resulting number and multiply by 20; round up to the nearest integer (For example, if you roll an "8" and there are three companies on the market, then the market demand is 54 units this week.) In general, Weekly Sales = Minimum (Market Demand, Production Capacity) where the production capacity is determined by the number of assembly line workers on your payroll Multiply weekly sales times the selling price to find the weekly revenue INDEX A Activity-based costing (ABC, consideration of in budget, 109 Activity-on-arc (AOA) networks, 84-85 critical path method calculations for, 97-100 mathematical programming formulation for, 99-100 Activity-on-arc (AOA) notation, 182 Activity-on-node (AON) precedence networks, 84,2 18 Actual cost of work performed (ACWP), 207-8 Algorithms branch and bound, 194 optimization, 181 single pass, 185 task-based, 188 time-based, 188-89 Alliances, 80 Alternative precedence relationships, 104-6 finish-to-finish relationship, start-to-start relationship, 104-5 Array projects, Artemis Schedule Publisher, 194-95 Assembly projects, B Backward scheduling process, 188 Balanced matrix, 73, 76 Balanced portfolio in risk management, 165 BC Hydro, Beta distributions, 49, 52, 135-36, 139 Black-Scholes formula, 33 Black-Scholes model, 38 Bottom-up budgets, 108, 110 Branch and bound algorithms, 194 Break-through projects, Brook's Law, 125 Budget(s) activity-based costing in, 109 bottom-up, 108, 110 direct costs in, 108-9 indirect costs in, 108, 109 material costs in, 108, 109 overhead costs in, 108, 109 penalty andlor bonus cots in, 108 project, 108-1 top-down, 108 Budget at completion (BAC), 10 Budgeted cost of work performed (BCWP), 208 Budgeted cost of work scheduled (BCWS), 208 Budget uncertainties, 109 CA Super-Project, 194 Cash flows managing, 112-1 relationship between task scheduling and, 115 Catalytic Construction Company, 17 Change management, See also Project management project management and, 63 Change orders, 78 Christopher Columbus, Inc., 59-61 Classic Program Evaluation and Review Technique model, 144 defined, 135-43 limitations of, 139-43 Colossus of Rhodes, 17 Commercial risk, 173 Commercial software packages, resource allocation capabilities of, 193-95 Communication intra-team, 67 project outcome and, time-cost trade-offs and, 125-26 Communications industry, 4-3-3 rule for, Competitive bidding system in selecting subcontractors, 78 Complete control environment, 22 Complexity in classifying projects, Concave time-cost trade-offs, 121-22 Concurrent engineering, 69-70 Confidence interval, budget uncertainties and, 109 Conflict management styles, relationship between project success or failure and, 63-64 Constraints, theory of, 149-52 Contingency action, 166 Contingency plan, 166 Contract(s) cost-plus, 77,78, 168 fixed-price, 77, 165, 168-69 linear, 77 optional scope, 15 relative risk and type of, 168-70 signaling, 77 units, 77 Contract incentives, 169 Convex time-cost trade-off, 121-22 Cost(s) direct, 108-9 direct labor, 108-9 indirect, 109 inventory, 126-28 material, 109, 126-28 overhead, I09 planning to minimize, 107-29 standard, 108-9 Cost and schedule estimates, updating, 13-1 Cost index (CI), 209 Cost mode, using, to assess and manage risks, 171-73 Cost-plus contract, 77, 78, 168 Crash limit, 116 Crashing project, 107 Critical chain, 149-50, 192 resource allocation and, 192-93 Critical path, 87, 139-40 Critical path method (CPM), 17, 18, 136 calculations for Activity-on-Arc networks, 97-1 00 concepts and calculations, 86-95 Critical path rule, 222 Criticality index, 143, 157 Crystal Ball*, 168 Cutoff rate, 26 Cycling in precedence networks, Dealing with uncertainty, 48-53 Denver International Airport, Derivative projects, Design-build teams, 78 Deterministic discounted cash flow, 25-26 Direct costs, consideration of, in budget, 108-9 Direct labor costs, estimates of, 108-9 Discounted cash flow (DCF), 25-27 Discrete probability distributions, Monte-Carlo simulation with, 145-46 Discrete time-cost trade-offs, 123-25, 181 Disney, 2, Dollar-months, 114 criterion of minimizing, 114-1 relationship between net present value and, 133-34 Doubly constrained resources, 181 Due dates, setting, in multiproject environment, 221-23 DuPont Corporation, 17 Earned value, 208 Earned value approach, 207-1 El Giza, Egyptian pyramids of, 17 Endogenous risks, 165 Enterprise resource planning (ERP) implementation project, 166 Enterprise resource planning (ERP) systems, 5, 128 Estimate at completion (EAC), 14 Estimates for task costs and durations, updating cost and schedule, 13-14 Estimation bias, 150 Exogenous uncertainty, sources of, 165 Expected commercial value (ECV), 27-32 Expected duration of task, 136 Expected project duration task variation and, 155-56 worker behavior and, 153-55 Exponential scale, 35 Extreme programming (XP), 72 Family tree, 43 Feasible solutions, finding, for renewable resource allocation problem, 185-87 Feeding buffers, 150, 193 Finish-to-finish relationship, 105-6 First in system, first served, 221 Fixed-price contract, 77, 168-69 risks and, 165 Formal monitoring systems, 205 Forward scheduling process, 188 4-3-3 rule for communications industry, Fractiles, 52-53 INDEX 239 Loss leader, 107 Low-tech projects, Free slack, 91-92 Functional matrix, 73 M Gantt charts, 18,95-96,184,2 10 drawing, using MS-Excel, 103 Gated approach, 19 Goes-into chart, 43 Group cohesiveness, balance between group contentiousness and, 66-67 Group contentiousness, balance between group cohesiveness and, 66-67 Group size, relationship between project performance and, 67 Health Care Financing Administration, Medicare transactions and, 19-2 Heuristic algorithms for renewable resource allocation problem, 187-89 Heuristics parallel, 188-89 serial, 188 High-tech project, Hurdle rate, 26 I Impact analysis, 170 Incentives, project teams and, 69,220-21 Independent slack, 92 Indirect costs, consideration of, in budget, 108, 109 Informal monitoring systems, 205 Information technology (IT) projects, outcomes, 10-1 success of, Internal rate of return (IRR), 27 Intraproject coordination, 73 Intra-team communication, relationship between team size and, 67 Inventory costs, 126-28 Life-cycle phases, 43 Linear contract, 77 Linear programming (LP) formulations, 93-95 Linear programming (LP) model, 113 for time-cost trade-offs, 117-2 Linear time-cost trade-offs, 117-2 Makespan, 87 Manufacturing process change, Mars Climate Orbiter mission, 11 Mars Lander project, 7, 107 Master production schedule (MPS), 128 Material costs, consideration of, in budget, 108 Material requirements planning (MRP) system, 128-29 Mathematical programming formulation for Activityon-Arc networks, 99-1 00 Matrix organization, 72-74,75 balanced, 73,76 functional, 73 project, 73,76 Mean flow due-date rule, 222 Medium-tech projects, Microsoft Project, 194 Minimum late finish time based on the due date, 221 Minimum slack based on the due date, 221 Minimum task duration from shortest remaining project, 222 Minimum total cost project plan rule, 107 Money, time value of, 112 Monitoring, earned value approach to, 207-13 Monitoring system, designing effective, 205-7 Monte-Carlo simulation models, 16, 143-49, 168 with discrete probability distributions, 145-46 MS-Excel, drawing Gantt chart using, 103 Multifunctional project teams, 3-4 Multiple projects, multitasking with, 18-20 Multiproject environment, allocating resources and setting due dates in dynamic, 221 Multitasking with multiple projects, 18-20 Myers-Briggs Type Indicator, 68 N Net present value (NPV), 25-27,30, 114 impact of cash flows on, 112 relationships between dollar-months and, 133-34 Net present value (NPV)/discounted cash flow (DCF), 24 New product development, cycling in precedence networks, 14649 Nonlinear time-cost trade-offs, 121-23 Nonrenewable resources, 18 allocation problems for, 195-98 Null hypothesis, testing of, 206 Number of activities rule, 222 Numerical measures, 25-32 Optimization algorithm, 181 Optional scope contracts, 15 Options pricing theory (OPT), 33 Organizational structure comparison of project performance and, 74-75 project management and, 72-76 Overhead costs, consideration of, in budget, 108, 109 Pair programming, 72 Parallel heuristics, 188-89 Parkinson's Law, 150, 153-55 Partial control environment, 22 Partnerships, 76-80 Payback period, 25 Penalty andlor bonus costs, consideration of, in budget, 108 Penalty fee, 78 Personality types, diversity of, on project teams, 68-69 PERTICost system, 207 Planned value, 208 Planning to minimize costs, 107-29 Planning with uncertainty, 135-58 Platform projects, Polaris Fleet Ballistic Missile program, 17 Pooling, 79-80 Positive values of z, 163-64 Precedence networks activity-on-arc (AOA), 84-85 activity-on-node (AON), 84 comparison of activity-on-arc and activity-on-node, 85-86 cycling with, 146-49 defined, 83-86 Preventive action, 166 Primavera Project Planner, 194 Priority values, 22 Probabilistic branching, 148 Product change, Product development projects, risks in new, 173 Product life cycles, Program Evaluation and Review Technique (PERT), 17, 18, 135 See also Classic Program Evaluation and Review Technique model task durations and, Project(s) array, assembly, break-through, defined, 3-6 derivative, differences in, 4-6 high-tech, life span of, 3,23 low-tech, managing risks, 16-17 measures of success/failure, 7-12 medium-tech, multitasking with multiple, 18-20 new product development, 173 phases of, 23 platform, relationship between conflict management styles and success or failure of, 63-64 scheduling, 95-96 systems, termination of, 11-1 tools for analyzing risk in, 166-68 Project breakdown structure (PBS), 43n Project budgeting, 108-1 Project buffer, theory of, 149-52 Project complexity, Project compression, 115-26,22 with uncertain task durations, 156-57 Project cost, minimizing, 107 Project diversification, 38 Project initiation and selection, 24-37 numerical measures, 25-32 real options approach, 33-34 scoring and ranking methods, 34-37 Project life cycle, 12-1 Project makespan, minimizing, 107 Project management, 1-2 1, 135 application of theory of constraints to, 149-52 change management and, 63 history of, 17-1 increased focus on, organizational structure and, 72-76 6P Rule of, 13 Project Management Institute (PMI), 18 Project management maturity models, 18-19 Project management software, 9-10, 18, 108 Project management trade-offs, 13-1 Project manager, roles and responsibilities of, 62-72 Project Manager Workbench, 194 Project matrix, 73, 76 Project performance balance between technical excellence and, 74 comparison of organizational structure and, 74-75 relationship between group size and, 67 Project planning, 41-53 dealing with uncertainty, 48-53 estimating task costs and durations, 46-48 work breakdown structure, 43-46 Project portfolios, evaluating, 37-41 Project Scheduler, 194 Project teams characteristics of effective, diversity of, forming, 6%7 incentives and, 69, 220-21 multifunctional, 3-4 relationship between intra-team communication and size of, 67 roles and responsibilities of, 62-72 Project uncertainty, implications of, 152-56 Q critical chain and, 192-93 in multiproject environment, 22 1-23 Resource allocation problem, 180-85 finding feasible solutions for the renewable, 185-87 nonrenewable, 195-98 with random task durations, 198-202 Resource buffers, 150, 193 Resource leveling problem, 175-80 Resource management, 175-202 Resource profiles, 178-79 @Risk, 168 Risk(s) associated with product development personnel, 173 commercial, 173 defining, in projects, 165 endogenous, 165 technical, 173 Risk assessment, 170 Risk identification, 170 Risk management, 16-1 7, 165-74 balanced portfolio in, 165 case study, 170-73 subcontracting in, 165 Risk mitigation plan, 170 Risk probability, 170 @Risk product, 146 Risks, in new product development projects, 173 Quantity discounts, 77 Questionnaires in assessing intra-team characteristics, 66 R R & D projects, sources of uncertainty associated with, 16546 Random-number generators, 167 Random task durations, resource allocation problems with, 198-202 Range, budget uncertainties and, 109 Ranking method, 34-37 Real options approach, 33-34 Relative risk, contract types and, 168-70 Renewable resource allocation problem easily solvable, 190-92 finding feasible solutions for, 185-87 heuristic algorithms for, 187-89 Renewable resources, 180, 181 Request for bids (RFBs), 78-79, 80 Resource allocation capabilities of commercial software packages, 193-95 Safety slack, 92 Scheduled finish time due-date rule, 222 Schedule index (SI), 209 Scheduling process, task-based versus time-based, 187-88 Scheffe multiple range test, 222 Scoring method, 34-37 Sensitivity chart, 167-68 Serial heuristics, 188 Set-covering problem, Shortest task from shortest project, 221 Signalling contract, 77 Single pass algorithms, 185 6P Rule of project management, 13 Skyline profiles, 178-79 Slacks, 1-92 Software project management, 9-1 0, 18, 108 resource allocation capabilities of commercial packages, 193-95 Software Engineering lnstitute (SEI), 19 Capability Maturity Model, 19 Spending variance, 209 Splitting, 79 Spreadsheet add-on program, 168 Spreadsheet model, 41 Stage-gate approach, 33-34 Stakeholders, role of project manager with, 62-63 Standard costs, 108-9 Standard normal distribution table, 163-64 Start-to-start relationship, 104-5 Statistical process control (SPC), 206 Subcontracting, 76-80 in risk management, 165 Subcontractors competitive bidding system in selecting, 78 pooling versus splitting, 79 Symington, Fife, System scope, Systems projects, discrete, 123-25 linear, 117-2 nonlinear, 121-23 problem, 107 Time Line, 194 Time value of money, 112 Time variance, 10 Titanic (movie), Toll-gate approach, 33-34 Top-down budgets, 108 Tornado diagram, 166-67 Total slack, Total variance, 10 Trade-offs project management, 13-1 time-costs, 115-26 Trigger point, 166 Uncertain task durations, project compression with, 156-57 Uncertainties budget, 109 in classifying projects, dealing with, 48-53 planning with, 135-58 Units contract, 77 T Taco Bell, Task-based algorithms, 188 Tasks, estimating costs and durations, 46-48 , expected duration of, 136 fixed versus dynamic ordering, 187 PERT and duration of, 48-49 project compression with uncertain duratigns, 156-57 relationship between cash flows and schedJi;lg, 115 resource allocation problems with tandom durations, 198-202 shortest, from shortest project, 221 variability of durability, 155 variation in, and expected project duration, 155-56 Teams See also Project teams design-build, 78 intra-, 66, 67 Technical excellence, balance between project performance and, 74 Technical risk, 173 Texas Instruments, 74 Theory of constraints (TOC), 192-93 Time-based algorithms, 188-89 Time-cost trade-offs, 115-26 concave, 121-22 convex, 121-22 with coordination and communication considerations, 125-26 # i t - - v Van Allen Construction Company, 169 'Vaporware, 74 Variance spending, 209 time, 210 total, 10 W Work breakdown structure (WBS), 188 in defining tasks or work packages¶23, 83 in project planning, 4 tasks, 108 Worker behavior and expected project duration, 153-55 X Xerox Corporation, 74 Z 2, positive values of, 163-64 Explore real-world project management issues and trade-offs - I If you want to bring a project to completion effectively and efficiently, project management software will only take you so far To truly succeed, you'll need to understand the difficult problems and difficult trade-offs that project managers often face in the real world With Ted Klastorin's PROJECT MANAGEMENT: TOOLS AND TRADE-OFFS, you'll have the practical and conceptual foundation you need to effectively address complex project management issues The text describes the tools and methodologies that have been developed to assist project managers using spreadsheet models and templates, and shows how these tools and methodologies can be extended to deal with realistic problems Key Features Excel spreadsheets make analysis more realistic and intuitive Takes an analytical and applied approach that shows how real managers work Relates the material in the text to business and engneering Presents a unique balance of theory and practice, with an emphasis on the uncertain, risky projects that managers have to manage in the real world Includes a new product development game and numerous short case stules that illustrate the complex issues faced by project managers Presents current research that is relevant to PM practitioners and managers An accompanying CD-ROM includes a student version of Wcrosofi Project, a student version of the @RISKadd-on to Microsofi Project, spreadsheet templates described in the text, and a Powerpoint presentation for the text I,! ... Project Project Life Cycle 12 Project Management Trade-offs 13 Scope of This Book 16 Managing Project Risks 16 History of Project Management 17 Project Management Software 18 Project Management. .. TO PROJECT MANAGEMENT What Defines a Project? Not All Projects Are the Same Measures of Project Success/Failure Information Technology Project Outcomes PO 11 When to "Pull the Plug" on a Project. .. people focusing on project management today? What can project management offer that other management methodologies cannot? The reasons for the rapidly increasing focus on project management (PM)