Juta Support Material To access supplementary student and lecturer resources for this title visit the support material web page at http://jutaacademic.co.za/support-material/detail/guide-to-project-management-a Student Support This book comes with the following online resources accessible from the resource page on the Juta Academic website: • Exam and study skills • Project management templates in MS Word and Excel • The Project Management Workbook (ISBN 978 4851 1194 8), consisting of selfassessment questions and exercises, group activities and exercises, and guidelines for completion of a summative assignment / portfolio of evidence based on SAQA Unit Standards and chapter outcomes • Answers to the questions in Section A of The Project Management Workbook Lecturer Support Lecturer resources are available to lecturers who teach courses where the book is prescribed To access the support material, lecturers register on the Juta Academic website and create a profile Once registered, log in and click on My Resources All registrations are verified to confirm that the request comes from a prescribing lecturer This textbook comes with the following lecturer resources: PowerPointđ slides Help and Support For help with accessing support material, email supportmaterial@juta.co.za For print or electronic desk and inspection copies, email academic@juta.co.za A Guide to Project Management Second edition Gerrit van der Waldt and William Fox WM04_Project Management_Book_v5_1 April.indd 1/4/2015 5:29 PM The Guide to Project Management 2e First published 2015 First print published 2007 Second edition 2015 Juta and Company Ltd PO Box 14373, Lansdowne, 7779, Cape Town, South Africa © 2015 Juta & Company Ltd ISBN 978 48510 555 (Print) ISBN 978 48511 472 (WebPDF) All rights reserved No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publisher Subject to any applicable licensing terms and conditions in the case of electronically supplied publications, a person may engage in fair dealing with a copy of this publication for his or her personal or private use, or his or her research or private study See Section 12(1)(a) of the Copyright Act 98 of 1978 Project manager: Marlene Rose Editor: Dione Mentis Proofreader: Anne-Louise Taylor Cover designer: Mignon Deacon Typesetter: WaterBerry Designs Indexer: Michel Cozien The author and the publisher believe on the strength of due diligence exercised that this work does not contain any material that is the subject of copyright held by another person In the alternative, they believe that any protected pre-existing material that may be comprised in it has been used with appropriate authority or has been used in circumstances that make such use permissible under the law contents Acknowledgements Preface viii ix Chapter – Essentials of Project Management William Fox and Gerrit van der Waldt 1.1 Introduction 1.2 Clarifying project and project management concepts 1.2.1 Components of projects 1.2.2 Project management’s triple constraint 1.3 Differences between organisational processes and projects 1.4 Difference between programmes and projects 1.5 Types of projects 1.5.1 Uniqueness of public sector projects 11 1.6 Benefits of project management applications 11 1.7 Project management: reasons for failures and key success factors 12 1.8 Project management processes 14 1.8.1 Initiation 15 1.8.2 Planning 15 1.8.3 Implementation 15 1.8.4 Control 15 1.8.5 Termination 16 1.9 Origins of project management as management application, discipline and profession 1.10 Models for the study and application of projects 16 20 1.10.1 Maturity models 20 1.10.2 Project life-cycle models 22 1.11 Global trends and international standards for project management 28 1.12 Project-based management 29 1.12.1 A strategic systems perspective of projects 1.13 Conclusion WM04_Project Management_Book_v5_1 April.indd 31 36 1/4/2015 5:29 PM A guide to project management Chapter – Project management life-cycle William Fox and Gerrit van der Waldt 2.1 Project life-cycle phases 37 2.2 Initiation phase 38 2.2.1 Project specifications 38 2.2.2 Project feasibility 39 2.2.3 Stakeholders 41 2.3 Planning 46 2.4 Execution 46 2.5 Monitoring, controlling and evaluation phase 47 2.6 Termination 48 2.7 Management checklist for the project life-cycle 49 2.8 Project impact assessments 53 2.8.1 Environmental impact assessments 2.9 Conclusion 54 54 Chapter – Project planning Gerrit van der Waldt 3.1 Introduction 56 3.2 Planning within the life-cycle 57 3.3 Project planning tools and techniques 59 3.3.1 Work Breakdown Structure (WBS) 60 3.3.2 Gantt charts 65 3.3.3 Network diagrams and Critical Path Method (CPM) 67 3.3.4 Program Evaluation and Review Technique (PERT) 68 3.4 Types of project planning 70 3.4.1 Risk management plan (RMP) 70 3.4.2 Quality management plan (QMP) 73 3.4.3 Communication management plan 73 3.4.4 Cost management plan (CMP) 74 3.4.5 Procurement plan 75 3.4.6 Human resource management plan (HRMP) 77 iv WM04_Project Management_Book_v5_1 April.indd 1/4/2015 5:29 PM contents 3.5 Detailed steps to be taken during planning 78 3.5.1 Determining the purpose 79 3.5.2 Project scoping 80 3.5.3 Identifying project activities 81 3.5.4 Estimating duration and sequencing 85 3.5.5 Assigning resources 85 3.5.6 Planning the budget 86 3.5.7 Documenting the plan 86 3.6 Conclusion 86 Chapter – Organisational arrangements and project governance Gerrit van der Waldt 4.1 Introduction 87 4.2 Project-based organisational structures and arrangements 89 4.2.1 Organisation/project interfaces 91 4.2.2 Benefits of a project-based approach 95 4.3 Challenges and considerations in organisational arrangements 97 4.3.1 Organisation structure and chart 97 4.3.2 Organisational cultures and style 104 4.3.3 Fear of control or loss of control 104 4.3.4 Lack of senior management commitment 105 4.3.5 Success criteria and measurement 105 4.3.6 Lack of knowledge and skills 106 4.4 Establishing project management offices (PMOs) 106 4.4.1 Typical responsibilities of a project management office (PMO) 108 4.4.2 The implementation of a project management office (PMO) 109 4.5 Project governance 116 4.5.1 Project steering committees 118 4.5.2 Project sponsor or project director 120 4.5.3 Terminating or absorbing project governance 122 4.6 Project outsourcing and contractual arrangements 123 4.6.1 Tender specifications 124 4.6.2 Service level agreements (SLAs) 124 v WM04_Project Management_Book_v5_1 April.indd 1/4/2015 5:29 PM A guide to project management 4.6.3 Contract management 125 4.6.4 Public–private partnerships (PPPs) 126 4.7 Conclusion 127 Chapter – Project management knowledge areas William Fox and Gerrit van der Waldt 5.1 Introduction 129 5.2 The project management body of knowledge 130 5.2.1 Project Risk Management 131 5.2.2 Project Quality Management 140 5.2.3 Project Communication Management 143 5.2.4 Project Stakeholder Management 147 5.2.5 Project Integration Management 148 5.2.6 Project Scope Management 149 5.2.7 Project Human Resources Management 151 5.2.8 Project Cost Management 154 5.2.9 Project Time Management 156 5.2.10 Project Procurement Management 159 5.3 Project leadership 160 5.4 Conclusion 162 Chapter – Applied technology and project documentation Gerrit van der Waldt 6.1 Introduction 164 6.2 Managing knowledge in projects 165 6.2.1 Knowledge management principles 167 6.3 Projects as learning systems 170 6.4 Information management practices and considerations 171 6.4.1 Key considerations 6.5 Information technology and projects 6.5.1 Web-enabled project management 6.6 Project management computerised systems and software applications 173 175 176 178 6.6.1 Project management information systems (PMISs) 178 6.6.2 Software applications 180 vi WM04_Project Management_Book_v5_1 April.indd 1/4/2015 5:29 PM contents 6.7 Project documentation 183 6.7.1 Project business plan 184 6.7.2 Business case or project proposal 188 6.7.3 Project brief 189 6.7.4 Project plan (PP) 190 6.7.5 Risk Assessment Matrix and risk log or register 191 6.7.6 Lessons learned report 193 6.8 Conclusion 195 Bibliography 196 Index 202 vii WM04_Project Management_Book_v5_1 April.indd 1/4/2015 5:29 PM ACKNOWLEDGEMENTS We would like to acknowledge our families for bearing with us, once again, during the preparation of this manuscript We sincerely appreciate your loving support We also would like to thank the Juta-team, especially Corina Pelser, Marlene Rose, Dione Mentis and Ann-Louise Taylor for their professionalism and expert proofreading We especially appreciate the speed with which this project was concluded Gerrit van der Waldt and William Fox WM04_Project Management_Book_v5_1 April.indd 1/4/2015 5:29 PM A guide to project management The team should make provision for additional costs for each risk as a ‘risk allowance’ Threat/risk Likelihood Low Inadequate funding Medium High Low Medium X Lack of skills X Not enough time High X X Political interference Natural disaster Impact X X X X X X Figure 6.5 Example of a Risk Assessment Matrix Risk identification number Risk type (will assist in the design of appropriate contingency plans) Risk owner (who takes responsibility for the risk) Date identified Date last updated Description Cost if it materialises Probability, impact and proximity Possible response actions Chosen action Target date Closure date Cross-references to plans and associated risks Figure 6.6 An example of a risk register 192 WM04_Project Management_Book_v5_1 April.indd 192 1/4/2015 5:29 PM chapter – APPLIED TECHNOLOGY AND PROJECT DOCUMENTATION RED ‘Major concern – escalate to the next level.’ Slippage greater than 10% of remaining time or budget, or quality severely compromised Corrective action not in place, or not effective Unlikely to deliver on time, to budget or quality requirements AMBER ‘Minor concern – being actively managed.’ Slippage less than 10% of remaining time or budget, or quality impact is minor Remedial plan in place GREEN ‘Normal level of attention.’ No additional attention needed Figure 6.7 Example of a RAG status for risk assessment (RAG = Red, Amber and Green) A ‘RAG status’ is used to track and assess potential risks during the completion of each milestone This is specifically helpful for reporting purposes to the steering committee or other governance structures Issues and risks can be raised by anyone involved in the project or its stakeholders throughout its life-cycle Where suppliers and/or partners are involved, it is essential to have a shared understanding of risks and agreed plans for managing them The risk register is set up during the start-up of the project, ready to record project risks, including any noted in the project brief It is an important component of the risk management framework of the organisation 6.7.6 Lessons learned report Once the project is completed, the project team should compile a lessons learned report (LLR) In line with the principles of a learning organisation, the purpose of the LLR is to identify deviations from the original plan, to record best practice and to outline any lessons learned during the planning and execution of project that can be applied to similar projects in future At the close of the project, all stakeholders and role-players are typically invited to a project ‘post-mortem’ session to deliberate on project successes and failures It should be noted that a steering committee is not the ideal mechanism to record these lessons learned since this committee will be dissolved after the closure of the project and then all of this information might get lost It is rather best practice for a permanent structure in the organisation such as a project support office (PSO) or a project management office (PMO) to record, safeguard and disseminate this information to the rest of the organisation The LLR should evaluate every management control and record all the reasons for all the tolerance deviations and corrective actions This will provide a benchmark against 193 WM04_Project Management_Book_v5_1 April.indd 193 1/4/2015 5:29 PM A guide to project management which future similar projects can be evaluated The steering committee and/or project team has to analyse the success of each activity and perform quality reviews The LLR should contain which management and quality processes went well, which went badly and which were lacking Furthermore, it should contain a description of any abnormal events causing deviations from plans, an assessment of technical methods and tools used, as well as recommendations for future enhancement or modification of the project management method As such it should include notes on effective and ineffective quality reviews and other tests, including reasons why they worked well or badly PROJECT INFORMATION 1.1 Original aim of the project 1.2 Responsibilities FINAL PROJECT DELIVERABLE 2.1 Deliverable description 2.2 Deliverable approval and sign-off PROJECT PROCESS 3.1 The planned approach 3.2 Problems experienced and lessons learned PROJECT FINANCES 4.1 Original budget 4.2 Actual project cost 4.3 Reasons for deviations PROJECT SCHEDULE 5.1 Original dates 5.2 Actual dates 5.3 Reasons for schedule deviations ACHIEVEMENTS / BEST PRACTICES (lessons learned) Project manager Date Figure 6.8 Example of a project closure report as the basis for lessons learned The LLR should be viewed as information that can be shared as well as what would be valuable for similar projects in the future The report should make recommendations on any enhancements or modifications At the start of a new project, previous LLRs 194 WM04_Project Management_Book_v5_1 April.indd 194 1/4/2015 5:29 PM chapter – APPLIED TECHNOLOGY AND PROJECT DOCUMENTATION should be reviewed to consider how lessons learned from previous projects could be applied to the project The data in the report should be used by a quality assurance structure, which is responsible for the quality management system, in order to refine, change and improve operating procedures, standards and best practices 6.8 CONCLUSION Knowledge and information management are necessary to spread the word of the project management initiative in the organisation, to build support for it and to sustain it Formal and informal mechanisms should exist for the acquiring, disseminating, storing and managing of project-relevant knowledge Applied technology and the methodologies associated with knowledge and information management projects do, indeed, provide a route map, best practices and benchmarks However, project managers should routinely ask themselves the question whether technology and methodology make them good project managers It certainly helps, but project management is more than just the mechanics of the process It is about interpersonal skills, stakeholder 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5:29 PM bibliography INTERNET SOURCES Burk, M 1999 Knowledge Management: Everyone Benefits by Sharing Information http://www fhwa.dot.gov/km/prart.htm (Accessed 10 January 2007) National Treasury South African National Treasury 2004 PPP Manual, Module 1: South African Regulations for PPPs Pretoria: South African National Treasury, Public Private Partnership Unit http://www.ppp.gov.za/Legal%20Aspects/PPP%20Manual/Module%2001.pdf (Accessed 18 March 2014) Novins, P & Armstrong, R 1999 Choosing Your Spots for Knowledge Management http://www.businessinnovation.ey.com/journal/issue1/features/choosi/body.html (Accessed 18 January 2007) Pennypacker, J 2004 What’s it worth to you? 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Into Management Computerworld www.computerworld.com (Accessed 13 December 2006) Wideman, R.M 2001 The Future of Project Management AEW Services, Vancouver, BC, Canada www.maxwideman.com/papers/ future/intro.htm (Accessed 12 November 2006) Wikipedia http://en.wikipedia.org/wiki/Project_management_process (Accessed 17 July 2006) 201 WM04_Project Management_Book_v5_1 April.indd 201 1/4/2015 5:29 PM INDEX Page numbers in italics point to figures and tables A absorbing or terminating projects 122–123 activities in projects that require investments 169 Activity-on-Node (A-o-N) diagrams 67–68, 68 adaptive project management 28 agile project management 28 applications, benefits of 11–12 assigning resources 85–86 assumptions and agreements 83 available knowledge, making most use of 172–173 B benefits of applications 11–12 body of knowledge 17–20 budgeting 155–156 budget planning 86 business case 188–189 Business Wrappers™ model 93–94, 94 C chain of command 83 communication management 143–148 Communication Management Plan (CMP) 73–74 communication plan 83 contingency planning 136–137 contractual arrangements see project outsourcing and contractual arrangements contract management 125–126 WM04_Project Management_Book_v5_1 April.indd 202 control, fear of or loss of 104–105 copyright and intellectual property 174 core project teams, roles in projects 45 cost and schedule estimates 82 cost management 154 Cost Management Plan (CMP) 74–75 costs, estimating 155 cost structure as per WBS 75 Critical Path Method (CPM) 67–68 cultural settings of information management practices 173–174 customers, roles in projects 43 D data vs information vs knowledge 166 delegation, effective 158 deliverables 7, 82 documentation of projects see project documentation documenting plans 86 document management 147 duration and sequencing estimation 83–84 E environmental forces to consider during environmental scanning 33 Environmental Impact Assessments (EIAs) 54 estimating costs 155 execution phase 46–47 1/4/2015 5:29 PM index F K failures, reasons for 12–13 fear of or loss of control 104–105 feasibility phase 39–41 fitness for purpose analysis 188 functional managers, roles in projects 43–44 knowledge vs data vs information 166 making most use of 172–173 knowledge and skills, lack of 106 knowledge communities, building 175 knowledge management 165–170 activities that require investments 169 data, information, knowledge 166 four processes 168 principles 167–170 G generic planning steps and associated outcomes 79 global trends 28–29 goals and objectives 82 H hierarchical functional structures 98 hierarchy of project objectives 92–93 human resource management plan (HRMP) 77–78 human resources management 151–154 I implementation teams, roles in projects 44–45 important projects, identifying 40–41 information management practices and considerations 171–174 available knowledge, making most use of 172–173 copyright and intellectual property 174 cultural settings 173–174 information security 173 key considerations 173–174 information security 173 information technology, and projects 175–177 information delivery systems, classification 176 knowledge communities, building 175 web-enabled project management 176–177 information vs data vs knowledge 166 initiation phase 38 integration management 148–149 intellectual property and copyright 174 international standards 29 L lack of knowledge and skills 106 leadership 160–162 leadership and motivation 151–152 life-cycle, project planning within 57–58 line managers, roles in projects 43–44 lists of stakeholders 83 loss of control 104–105 M management checklist for project life-cycle 49–52 management teams, roles in projects 44 maturity models 20–22 Method 123 Project Methodology (MPMM) 24–25 milestones in projects models for study and application of projects 20–28 monitoring, controlling and evaluation phase 47–48 N network diagram information 68 network diagrams and Critical Path Method (CPM) 67–68 O Objective Directed Project Management (ODPM) 94–95 organisational arrangements, challenges and considerations 97–106 203 WM04_Project Management_Book_v5_1 April.indd 203 1/4/2015 5:29 PM A guide to project management control, fear of or loss of 104–105 hierarchical functional structures 98 knowledge and skills, lack of 106 matrix organisational structure 101–102, 102 organisational cultures and styles 104 Organisation Breakdown Structures (OBSs) 97–103 organisation structure and chart 97–103 placing an OBS on a WBS 101 project-based organisation 99 roles and responsibilities 103 senior management commitment, lack of 105 success criteria and measurement 105–106 organisational cultures and styles 104 organisational learning, three stages 171 organisational processes vs projects Organisation Breakdown Structures (OBSs) 97–103 placing on a WBS 101 organisation/project interfaces Business Focused Project Management (BFPM™), 93, 94–95 hierarchy of project objectives 92–93 Objective Directed Project Management (ODPM) 94–95 Wrappers™ model 93–94, 94 P performance indicators and standards 142–143 personnel acquisition 152–153 phases of project life-cycle 16 planning as a process 58 planning phase 46 plan of communication 83 Prince2 23–24 processes of project management 14–16 procurement management 159–160 procurement plans 75–76 procurement plan template 76 programmes vs projects project activities, identifying 81–84 project approval document 187 project-based approach, benefits 95–97 project-based management 29–36 strategic system perspective of projects 31–36 project-based organisation 99 project-based organisational structures and arrangements 89–97, 96 benefits of a project-based approach 95–97 organisation/project interfaces 91–95 project closure report 194 project communication management 143–148 communication information management 146 distorting factors 144–145 document management 147 project communication plans (PCPs) 74, 145–146, 146 project documentation 183–195 business case or project proposal 188–189 lessons learned report 193–195 project approval document 187 project brief 189–190, 190 project business plan 184–187, 186 project closure report 194 project plan (PP) 190–191 risk assessment matrix and risk log or register 191–193 risk register 192 project governance 116–123 project sponsor or project director 120–122 project sponsor, roles and responsibilities 121 project steering committees 118–120 project steering committees, roles and responsibilities 119 terminating or absorbing 122–123 project impact assessments 53–54 project lists 40 project management benefits of applications 11–12 defined 4–5 failures, reasons for 12–13 origins of 16–20 processes 14–16 success factors 13–14 Project Management Body of Knowledge (PMBOK™) 18–20, 29 communication management 143–148 cost management 154 human resources management 151–154 integration management 148–149 leadership 160–162 procurement management 159–160 204 WM04_Project Management_Book_v5_1 April.indd 204 1/4/2015 5:29 PM index quality management 140–143 risk management 131–140, 131–140 scope management 149–150 stakeholder management 147–148 time management 156–158 Project Management Information Systems (PMISs) 178–180 Project Management Institute (PMI) 17–18 project management life-cycle execution 46–47 feasibility 39–41 important projects, identifying 40–41 initiation 38 management checklist 49–52 models 22–28 monitoring, controlling and evaluation 47–48 phases 16 planning 46 project lists 40 specifications 38–39 stakeholders 41–45 termination 48–49 Project Management Maturity Matrix model 36 project management offices (PMOs) establishing 106–116 implementation 109–116 responsibilities, typical 108–109 project outsourcing and contractual arrangements 123–127 contract management 125–126 public–private partnerships (PPPs) 126–127 service level agreements 124–125 tender specifications 124 Project Performance Indicator Tracking Systems (PPITSs) 179 project plan (PP) 190–191 project planning checklist 58 detailed steps 78–86 within the life-cycle 57–58 types of 70–78 project planning tools and techniques A-o-N diagram 67–68, 68 network diagram information 68 network diagrams and Critical Path Method (CPM) 67–68 planning as a process 58 Program Evaluation and Review Technique (PERT) 68–70, 69 tools, typical 59 Work Breakdown Structure (WBS) 60–65, 61 project proposals 188–189 project quality management performance indicators and standards 142–143 quality assurance 141 quality control 142 quality planning 140–141 project risk management contingency planning 136–137 quality risk planning 140 risk management plans, developing 138–139 risk management vs non-risk management, benefits 138 Risk Matrix 132–138, 133 risk register 133 scope risk planning 139–140 time risk planning 140 projects categories 10 components 6–7 definition of concept 2–3 five fundamentals identifying important ones 40–41 as learning systems 170–171 vs organisational processes vs programmes public sector 11 public sector projects, uniqueness of 11 six most important features types of 9–11 project sponsor or project director 120–122 roles and responsibilities 121 project steering committees 118–120 roles and responsibilities 119 projects within the strategic process 32 public–private partnerships (PPPs) 126–127 public sector projects, uniqueness of 11 purpose of project, determining 79–80 205 WM04_Project Management_Book_v5_1 April.indd 205 1/4/2015 5:29 PM A guide to project management Q quality assurance 141 quality control 142 quality management 140–143 quality management plan (QMP) 73 quality planning 140–141 quality risk planning 140 R Red, Amber, Green (RAG) 193 Responsibility Assignment Matrix (RAM) 83, 84 risk assessment matrix and risk log or register 191–193 risk management plan (RMP) 70–72, 72 risk management plans, developing 138–139 risk management vs non-risk management, benefits 138 Risk Matrix 132–138, 133 risk register 133, 192 S Sashimi model 27 scheduling 157–158 scope risk planning 139–140 scope statements 82 scoping 80–81 senior management commitment, lack of 105 sequencing and duration estimation 83–84 service level agreements (SLAs) 124–125 skills and knowledge, lack of 106 SMART Management 23 software applications 180–182 Spiral model 27 sponsors, roles in projects 43 stakeholder management 147–148 stakeholders list of 83 project life-cycle phases 41–45 stakeholders and their contributions 42 statements of purpose 82 Statements of Work (SOWs) 81–83 strategic system perspective of projects 31–36 success criteria and measurement 105–106 success factors 13–14 SWOT analyses 33–36, 35 systemic elements in a project context 31–32 T team development 153–154 tender specifications 124 terminating or absorbing of projects 122–123 termination phase 48–49 time management 156–158 time risk planning 140 total quality management (TQM) 154 triple constraint V V-model 24 W Waterfall models 26–27 web-enabled project management 176–177 Work Breakdown Structure (WBS) levels 81 Wrappers™ model 93–94, 94 206 WM04_Project Management_Book_v5_1 April.indd 206 1/4/2015 5:29 PM ... experiences to uncover critical success factors for their project According to Baker and Baker (2000:8) the following factors are essential to the success of all projects: yy Agreement among the project. .. stakeholders and role-players to appreciate the nature of the project and to sign a project charter to acknowledge the project s scope in operationalising its objective yy The project lacks client or... stating when the project should be completed and a budget limiting the number of people, supplies and money that may be used to complete the project To further give meaning to the concept of projects,